Working Knowledge: How organizations manage what they know

Working Knowledge: How organizations manage what they know Author: Thomas H. Davenport and Laurence Prusak Presented By: Rahul Sharma January 29, 2006

Agenda • Knowledge • Knowledge Markets • Knowledge Generation • Knowledge Codification • Lessons learned • Comments • My opinion • Reviews and references

CH-1 What do we talk about when we talk about knowledge • Data • Information • Knowledge These are all transformation from one to another.

Data • Set of unorganized and unprocessed facts but highly objective • Used mainly in organizations like Banking, Insurance and other governmental organizations as structured records for transactions • No judgment and no sustainable basis of action • Data is essential for information creation • Data Management is evaluated in terms of Cost, Speed and Accuracy

Information • Information has impact on receiver's judgment and behavior • It has a sender and receiver • Information has its relevance and purpose • Information means to shape the person who gets it, to make some difference in his outlook or insight • Information moves through Hard and soft Networks.

Data transferred into information in following ways • Contextualized • Categorized • Calculated • Corrected • Condensed

Knowledge • Essential component of Human Progress • Knowledge is a fluid mix of framed experiences, values, contextual information that provides a framework for evaluating and incorporating new info. • Knowledge is a mixture of various elements, intuitive, hard to capture in words • Delivered through structured media such as books, documents and contacts • Comparisons, connections, consequences, conversations helps in transformations to knowledge

Knowledge in Action • Better knowledge can lead to efficiency in product development and production • Knowledge moves down value chain to information and data • Knowledge has key components as experience, truth, judgment and rules of thumb

Knowledge Components • Experience • Refers to things done in the past and happened previously. • They have been tested and trained by experience • Firm hire experts with experienced based thought • Knowledge born of experiences make familiar connections between what is happening in present and past • Ground Truth • Real Life Knowledge and real situations experiencing close up • “After Action Review Program” which helps in examining what happened in a mission and what can be learned from disparities

Knowledge Components • Complexity • Knowledge can deal with complexity in a complex way • Knowing what is important leads to better decisions • Judgment • It judges and refines itself in response to new situations and information • When knowledge stops evolving, it turns into opinion or dogma

Knowledge components • Thumb and intuition rules • It gives shortcut solutions to complex problems that are solved by experienced workers • It gives “compressed expertise”. Phrase describing how knowledge works • E.g. Skill of experienced driver drives series of complex actions without thinking about them

Knowledge Components • Values and Beliefs • Organizations have history, value and beliefs derived from people’s action and words that express corporate values and beliefs • Integral components to knowledge serving as “seeing” aspects of organization • Power of knowledge comes from values and beliefs as much as from logic and information

Knowledge as a corporate asset • Companies hire for experience in spite of intelligence or education • Managers get two third of info. And knowledge from working mass • Organizations hire expert people for a particular subject

Knowledge as Corporate asset • Changing global economy • Companies are fiercely competitive and competition is for every marginal dollar of profit • Companies require quality, value, service, speed to market. e.g. Outsourcing • Product and services convergence • Knowledge based intangibles are part of “products” firms offer • Intangibles that add value to product’s are part of product’s firms offer

Knowledge as Corporate asset • Sustainable competitive advantage • Trade secrets are not difficult to find with use of reverse engineering, information flow, technology • Knowledge assets value increase and provide a sustainable competitive advantage • Networked computers are not difficult to find as knowledge source

Case Study: British Petroleum • BP’s virtual Team work program • 42 separate business models • Goal :Agility of small company with resources of large one • Implementation: • Stressed Corporate behavior vs. technology • Coaches and Teams • Knowledge Management Teams • Emphasis was on Person to Person interaction and system requirements

Results • 4 of the 5 Pilot groups have great success • Great savings • Better Enthusiasm • Case in Point: • Equipment failure on mobile driving ship • Utilized communication media to localized communication expert to solve problem in few hours for localized savings

Ch-1 Summary • Data, Information and knowledge are forms of transformation • Knowledge originates and resides in people’s mind • Technology enables new knowledge behaviors • Knowledge sharing must be encouraged and rewarded • Knowledge initiatives should begin with a Pilot program • Knowledge sharing requires Trust

Chapter 2: The promise and challenge of Knowledge Markets • Composes of buyers and sellers who use their market knowledge to create power bases • Knowledge is bartered, bought, found, generated, and applied to work • People rarely give their valuable knowledge without something in return • Recognizing markets of knowledge is very important

Political Economy of Knowledge markets • Social, Economic and Political realities must be taken into consideration • Cultural Norms restrict knowledge to be shared • Buyers, Sellers and brokers are people in KM • Buyers • Knowledge seekers looking for insight, judgment and understanding • 15-20 % of knowledge time is spent in knowledge search and responding to Knowledge requests • Complex answers embed with emotional subtexts important to our decision making

Political Economy • Sellers: • People are skilled but unable to articulate their tacit knowledge ,they need specialized knowledge • Knowledge sharing is rewarded more than Knowledge hoarding • Brokers: • Make connections b/w buyers and sellers, hence act as gatekeepers • Corporate librarians are natural knowledge brokers • Informal Knowledge Brokers set out to become experts on knowledge and its exploitation

Price System • Markets have a price system so that value exchanges can be efficiently rendered and recorded • Within the organizations, the medium is money but there are agreed upon currencies to drive the KM

Factors affecting Price System • Reciprocity • Within the organizations, the medium is money but there are agreed upon currencies to drive the KM • Time, energy and knowledge are valuable resources unless they bring valuable return • Related to Repute

Factors for Price System Repute: • Value of knowledge depends upon political and social structures of organization • Many Consulting firms, bonuses are tied to knowledge generation and transfer • Likelihood of cooperation leading to future tangible benefits will increase • Length of service and loyalty erodes in most businesses, hence it is important

Factors Altruism • Nice people who want to help others • Likelihood of cooperation leading to future tangible benefits will increase

Factors • Trust: Most important factor that can positively affect the efficiency of KM • Established in 3 ways i.e. : • Trust must be visible • It should be ubiquitous • It should start at the top • Firm’s KM should be established upon mutual trust

Knowledge Market Signals Position and education • Most common frame signal for indicating who has valuable knowledge, not consistent signal Informal Networks • Informal chats like chats in Cafeteria, water cooler • Disadvantage is undocumented and ramble, hence not readily available to market Communities of Practice • Self organized groups to share knowledge with one another, hence share work practice, interests

Knowledge Market Inefficiencies • Clear Pricing system is very essential for efficient markets i.e. consumer info, classifieds. • Efficient markets generate most good at least cost • 3 key factors: Incompleteness of information: • Location of existing knowledge • Absence of explicit information about pricing structure

Inefficiencies Asymmetry of knowledge • Prepares knowledge from getting where it is needed Localness of Knowledge • KM depends on trust and trust is very important for people you know • People get knowledge from their organizational neighbours

Knowledge Market pathologies • Monopolies • Knowledge will come at higher price • They establish that fact to establish position of power • Knowledge won’t be their when people need it the most • Artificial Scarcity • Hoarding culture keeps scarce for departments and groups • It walks out of the door during downsizing

KM Pathologies • Trade Barriers • Refusal to accept new knowledge • Status difference b/w seller and buyer • Hampers organizational markets by hoarding departments • Downsizing and reengineering ends to damage KM Infrastructure

Effective KM • Using IT widely • Technical developments change IT Structure dramatically • Trying to force fluid knowledge into rigid data structures • Focusing more on the system • Building Market places • Knowledge transfer is to create market place for physical and virtual spaces

Effective KM • Talk rooms are formalized and sanctioned locations for conversations • Creating and defining KM value • Employees rewarded for sharing knowledge proves that value exists for knowledge

Peripheral benefits of KM • Higher workforce morale • Employees see that their work is valuable . • They may be more satisfied with their work • Greater corporate coherence • Shared Awareness of Corporate goals and strategies • Richer Knowledge stock • Constantly refined and validates the organization knowledge • Stronger Meritocracy of Ideas • Genuinely open KM will test official beliefs and expose flaws of faulty ones before they can do any damage

Ch-2 Summary • Knowledge Markets exists and should be recognized • Buyers, Sellers and brokers are important for KM • Price System depends upon reciprocity, repute, altruism, trust • KM pathologies like monopolies, artificial scarcity and trade barriers should be removed • Knowledge market benefits are higher workforce morale, greater corporate coherence, richer knowledge stock

Ch-3 Knowledge Generation • Hire smart people and leaving them alone Modes of Knowledge generation • Knowledge Acquisition • Dedicated Resources • Fusion • Adaptation • Networking

Acquisition • Knowledge focused firm needs appropriate knowledge available • Effective way to acquire knowledge is to buy it • Determining the value of knowledge is hard to quantify • Cultural and political barriers to accepting and absorbing acquisition's knowledge

Knowledge Generation Modes Rental • Renting knowledge means to take steps to retain it too • Knowledge can be leased or rented • Knowledge rentals involve Knowledge transfer • Make sure to take steps to retain knowledge

Knowledge Generation Modes • Dedicated Resources • Establish units or groups for this purpose • Many R & D groups use these • Fusion • Brings people together with a joint answer • Combining people with different ideas, skills and values • Group members find some common ground to understand one another

Adaptation • Imposing various environmental threats • New products from competitors, new technologies drive Knowledge generation • Most organizations are incapable of changing attitudes of lifetime. • Employees who are willing to learn new things are vital to adapting company

Networks • Knowledge is generated by informal, self organizing networks within organizations • Conversation often generates new knowledge within firms • A particular practice can become part of knowledge capital of the firm

Common Factors • Need for adequate time and space • Time is the most important factor • Recognition by managers that Knowledge Generation is important factor for success • Firms that fail to generate new knowledge will cease to exist

Ch-3 Summary • Modes of knowledge generation are acquire, dedicated resources, fusion, adapt and network • Organizations needs to focus more on time, not on physical storage

Ch-4 Knowledge Codification and Coordination • Basic Principles • Business goals for codified knowledge should be identified • They should evaluate knowledge for usefulness in codification • Managers must be able to identify knowledge for reaching goals • Codifiers must identify appropriate medium for codification • Labor intensive and company knowledge are successful for codification knowledge

Codifying different knowledge Codifying Tacit Knowledge • Tacit, complex knowledge is impossible to reproduce in database • Knowledge incorporates accrued and embedded learning that it is impossible to separate from individual acts • We simply can’t represent knowledge outside the human mind

Codifying different knowledge • Providing access to people with tacit knowledge is difficult to capture and modify • Mapping and modeling knowledge • It is a guide not a repository • Locating important knowledge in organization with picture to find it • Employee with good knowledge base has access to knowledge sources • A good Knowledge map goes beyond boundaries

Technology of Mapping knowledge • Creates an organizational wide map, better for individual mini-maps • Improves search speed • Electronic map can be revised more frequently • Value of map is quality and depth of info.

Politics of Mapping knowledge • Map has a picture of status and success as well as a knowledge locator • A limit should be made to see if politics exceed the good sign of maps

Capturing Tacit knowledge • Substantial value of tacit knowledge makes it worth effort for codifying it • Difficult to locate dividing line between Tacit knowledge and fully embedded knowledge • Transfer maximum knowledge through mentoring or apprenticeship • A good story is best way to convey meaningful knowledge

Codifying tacit knowledge • Expert system represents explicit attempt to capture human knowledge using rules • Evaluating codified knowledge and making it available is integral part of process • Evaluation of existing knowledge is classification based on quantitative, structured, unstructured, qualitative contents

Working Knowledge: How organizations manage what they know