MIS 580 KNOWLEDGE MANAGEMENT

1. MIS 580KNOWLEDGE MANAGEMENT Shilpa Govada Rachana Pejaver Shirish Kandekar John Wahlman

2. Reading packet 1-3 • Firm Resources and Sustained Competitive Advantage • Jay Barney • The Eleven Deadliest Sins of Knowledge Management • Liam Fahey & Laurence Prusak • What’s Your Strategy for Managing Knowledge • Morten T. Hansen, Nitin Nohria, & Thomas Tierney MIS 580 - Knowledge Management

3. Firm Resources and Sustained Competitive Advantage Jay Barney Journal of Management VOL 17, NO. 1 1991

4. Overview of the reading MIS 580 - Knowledge Management

5. Relation between Internal And External Analysis Internal Analysis External Analysis Strengths Weaknesses Opportunities Threats RESOURCE BASED ENVIRONMENTAL MODELS MODEL OF COMPETITIVE ADVANTAGE • Implement strategies that exploit internal strengths • Respond to environmental opportunities • Neutralize external threats • Avoid internal weaknesses MIS 580 - Knowledge Management

6. KeyConcept :FirmResources Firm Resources: include all assets, capabilities, organizational processes, firm attributes, information, knowledge etc. that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness. There are 3 types of firm resources: Physical Capital Resources Human Capital Resources Organizational Capital Resources MIS 580 - Knowledge Management

7. Physical technology used in a firm • Firm’s plant & equipment • Geographic location • Access to raw materials • Training • Experience • Judgment • Intelligence • Relationships • Insight • Formal reporting structure • Formal and informal planning • Controlling and Coordinating systems • Informal relationships among groups (internal and external to firm) MIS 580 - Knowledge Management

8. Key Concepts: Competitive Advantage & Sustained Competitive Advantage Competitive Advantage: Implementing a value creating strategy not simultaneously being implemented by any current or potential competitors. Sustained Competitive Advantage: When a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy. MIS 580 - Knowledge Management

9. Assumptions for the competitive environmental models Firms within an industry are identical in terms of the strategic relevant resources they control and the strategies they pursue. These models assume that should resource heterogeneity develop in an industry or group through new entry, that this heterogeneity will be short lived because the resources that the firms use to implement these strategies are highly mobile. MIS 580 - Knowledge Management

10. Resource Homogeneity and Mobility and First-Mover advantages The first firm in an industry to implement a strategy can obtain a sustained competitive advantage over other firms. Eg. Gain access to distribution channels, develop goodwill with customers, develop a positive reputation However, homogeneous and highly mobile resources would not generate the first-mover. MIS 580 - Knowledge Management

11. Resource Homogeneity and Mobility and Entry/Mobility Barriers Strong entry or mobility barriers would enable the firms to obtain a sustained competitive advantage vis-à-vis firms that are not in their group. However, barriers to entry and mobility only exist when resources are heterogeneous and immobile. MIS 580 - Knowledge Management

12. Assumptions of the resource based model Firms within an industry or group may be heterogeneous with respect to the strategic resources they control. These resources may not be perfectly mobile across firms, and thus heterogeneity can be long lasting. MIS 580 - Knowledge Management

13. Attributes of firm resources providing sustained competitive advantage MIS 580 - Knowledge Management

14. Imperfectly imitable • Unique historical conditions: Firm’s ability to acquire and exploit some resources depends on its unique position in time and space and other idiosyncratic attributes • Causal ambiguity: The link between the resources controlled by a firm and a firm’s sustained competitive advantage isn’t understood or understood imperfectly by the competitors • Social complexity Resources may be socially complex- beyond the ability of firms to systematically manage and influence Eg. Interpersonal relations among managers, firm’s reputation among suppliers and customers etc. MIS 580 - Knowledge Management

15. Resource based view MIS 580 - Knowledge Management

16. Resource based view framework applications: MIS 580 - Knowledge Management

17. Additional Research • Resource-Based View of Knowledge Management for Competitive Advantage1 • Leila A. Halawi, Jay E. Aronson and Richard V. McCarthy • Nova Southeastern University, Fort Lauderdale, USA • Terry College of Business, The University of Georgia, Athens, USA • Lender School of Business, Quinnipiac University, Hamden, USA “Success in today’s global, interconnected economy springs from the fast and efficient exchange of information. Sustainable competitive advantage is no longer rooted in physical assets and financial capital, but in effective channeling of intellectual capital” 1. Electronic Journal of Knowledge Management; 2005, Vol. 3 Issue 2, p75-86 MIS 580 - Knowledge Management

18. How km is used for competitive advantage MIS 580 - Knowledge Management

19. Framework to position knowledge for competitive advantage MIS 580 - Knowledge Management

20. ninTENDO2 ... GREAT EXAMPLE 2.The Nintendo Strategy, http://www.n-sider.com/articleview.php?articleid=495 • Current video game industry vs. other video game industry • The Nintendo creates difference by developing low cost hardware and software, new, intuitive game play input and original game genres for sustaining competitive advantage • Nintendo achieves strategic positioning by two key factors: Strong Community Immersive games MIS 580 - Knowledge Management

21. Discussion POINTS Do you consider knowledge as the most important valuable resource for firms to create sustained competitive advantage in today’s information centric world? With new upcoming technologies and the internet for ease of availability of information, do you think that there exists a threat for resource imitability? MIS 580 - Knowledge Management

22. The Eleven Deadliest Sins of Knowledge Management Liam Fahey • Laurence Prusak California Management Review VOL 40, NO. 3 SPRING 1998

23. The Eleven Deadliest Sins of Knowledge Management • The Eleven Sins • 1: Not developing a working definition of knowledge • 2: Emphasizing knowledge stock to the detriment of knowledge flow • 3: Viewing knowledge as existing predominantly outside the heads of individuals • 4: Not understanding that a fundamental intermediate purpose of managing knowledge is to create shared context • 5: Paying little attention to the role and importance of tacit knowledge • 6: Disentangling knowledge from its uses • 7: Downplaying thinking and reasoning • 8: Focusing on the past and the present and not the future • 9: Failing to recognize the importance of experimentation • 10: Substituting technological contact for human interface • 11: Seeking to develop direct measures of knowledge • What can be done? MIS 580 - Knowledge Management

24. Error 1: Not developing a working definition of knowledge • Knowledge is different from data or information • Yet managers seem reluctant to distinguish between the three • There is little education or training to prepare managers for the concept of knowledge • This is a critical error and contributes directly to all errors that follow • Reluctance to use the “knowledge” word due to anti-knowledge culture; compelled to do knowledge work by stealth MIS 580 - Knowledge Management

25. Error 2: Emphasizing knowledge stock to the detriment of knowledge flow • Knowledge is a flow, not a stock item • It is in constant flux and change • Individuals create it and it is largely self-generating • It is inseparable from the individuals who develop, transmit, and leverage it • This view results from: • Education system: • learn facts and regurgitate them • Information Technology: • capture > store > retrieve > transmit MIS 580 - Knowledge Management

26. Error 3: Viewing knowledge as existing predominantly outside the heads of individuals • Knowledge • is what a knower knows; there is no knowledge without someone knowing it • originates “between the ears” of individuals • can be represented in and embedded in organizational processes, routines, and networks • cannot truly originate outside the heads of individuals • Emphasis on knowledge as stock shifts the focus of knowledge work away from individuals MIS 580 - Knowledge Management

27. Error 4: Not understanding that a fundamental intermediate purpose of managing knowledge is to create shared context A fundamental purpose of managing knowledge is to build a “shared context” Shared context means a shared understanding of an organization’s external and internal worlds and how they are connected Knowledge is a direct outcome of experiences, reflection, and dialogue – three activities that use up the most precious managerial asset – time MIS 580 - Knowledge Management

28. Error 5: Paying little attention to the role and importance of tacit knowledge Tacit knowledge plays a central role in shaping and influencing explicit knowledge Tacit knowledge is the means by which explicit knowledge is captured, assimilated, created, and disseminated Organizations are reluctant to grapple with managing tacit knowledge; fear it is inaccessible and impossible to influence Example: refusal to believe explicit knowledge that conflicts with long-held tacit beliefs MIS 580 - Knowledge Management

29. Error 6: Disentangling knowledge from its uses • Knowledge is about imbuing data and information with decision and action relevant meaning • Knowledge is inseparable from thinking and acting • False assumptions in approaching KM: • Access to information is equivalent to insight, value, or utility • The value of data is anything but obvious • Tendency to segregate knowledge users from those generating knowledge • Knowledge efforts of many organizations are misdirected • Commit extensive resources to refining and perfecting data and information at the expense of deriving decision and action implications MIS 580 - Knowledge Management

30. Error 7: Downplaying thinking and reasoning • Getting to different states of knowledge development requires some form of reasoning • Explicating thinking and reasoning processes is especially critical in the case of explicit knowledge • Many organizations pay little attention to modes of reasoning • Dominance of tacit knowledge is principal reason; managers beliefs overwhelm conflicting data • Need to challenge prevailing modes of thinking and reasoning to prevent knowledge from solidifying MIS 580 - Knowledge Management

31. Error 8: Focusing on the past and the present and not the future • To inform and influence decision making, knowledge must focus on the future • Knowledge creates a shared context for addressing the future • Yet most organizations use knowledge predominately for understanding the past • Discussing the future is rarely the driving focus of knowledge work • Causes include the comfort and ease of collecting data about the past and present as opposed to the future MIS 580 - Knowledge Management

32. Error 9: Failing to recognize the importance of experimentation • Experiments are a crucial source of the data and information necessary for the invigoration of knowledge and the creation of new knowledge • New approaches to analysis, initiating pilot projects, doing things on trial-and-error • The use of technology tends to result in standardized approaches • Distinctly new knowledge stems from experimenting MIS 580 - Knowledge Management

33. Error 10: Substituting technological contact for human interface Widespread tendency to validate significant IT investment by reference to contribution to developing and leveraging knowledge Pivotal error: technological contact is equated to face-to-face dialogue IT can never substitute for the rich interactivity, communication, and learning that is inherent in dialogue Knowledge is primarily a function and consequence of the meeting and interaction of the minds MIS 580 - Knowledge Management

34. Error 11: Seeking to develop direct measures of knowledge • Many organizations seek to measure knowledge directly rather than its outcomes, activities, and consequences • Emphasize the scope, depth, number, and quality of databases; the number of “hits” on intranets • Proxies for outcomes include patents, new products developed and introduced, customer retention, and process innovation • Stock is given prominence while flow, because it is so difficult to measure, receives minimal attention MIS 580 - Knowledge Management

35. What Can Be Done? • Three actions to avoid errors • Continuously reflect on knowledge as an organizational phenomenon • Develop shared understanding at local levels • Allow individuals frequent opportunities to discuss and debate what knowledge is • Help individuals identify their current and desired knowledge roles • Ask individuals to identify knowledge implications for group behavior and processes MIS 580 - Knowledge Management

36. What Can Be Done? • Managers must be obsessive about noting and correcting errors in their stock of knowledge • Must go beyond verification of so-called “facts” • Expose knowledge content and subject it to scruitiny in every way • Managers must be vigilant about detecting and correcting errors in the processes of knowing – the generating, moving, and leveraging of knowledge throughout the firm MIS 580 - Knowledge Management

37. Additional research:The World is Round by Laurence Prusak3 “Several technological and political forces have converged, and that has produced a global, Web-enabled playing field that allows for multiple forms of collaboration without regard to geography or distance –or, soon, even language.” -- Thomas Friedman, author of The World is Flat 3. Harvard Business Review; April2006, Vol. 84 Issue 4, p18-20, 3p, 1c This playing field is flattened by the unfettered transfer of information Prusak: Friedman and others make a fundamental error when they argue that brute connectivity will level the playing field Their mistake is that they’re confusing information with knowledge MIS 580 - Knowledge Management

38. Additional research:The World is Round by Laurence Prusak • No amount of IT can speed the acquisition of knowledge • IT infrastructure is good at moving information, but not knowledge, from one place to another • It takes just as long today to learn French, calculus or chemistry as it did 200 years ago • Knowledge is time-consuming and expensive to develop, retain and transfer • Most people in the world remain out of the knowledge loop and off the information grid • Giving everyone access to email and Google will never in itself flatten the earth MIS 580 - Knowledge Management

39. Discussion POINTS Do you agree or disagree with Prusak’s argument that “No amount of IT can speed the acquisition of knowledge”? Do you agree or disagree with any of Fahey and Prusak’s Eleven Deadliest Sins of Knowledge Management? How do we know if knowledge management efforts produce satisfactory results? MIS 580 - Knowledge Management

40. The Eleven Deadliest Sins of Knowledge Management 1: Not developing a working definition of knowledge 2: Emphasizing knowledge stock to the detriment of knowledge flow 3: Viewing knowledge as existing predominantly outside the heads of individuals 4: Not understanding that a fundamental intermediate purpose of managing knowledge is to create shared context 5: Paying little attention to the role and importance of tacit knowledge 6: Disentangling knowledge from its uses 7: Downplaying thinking and reasoning 8: Focusing on the past and the present and not the future 9: Failing to recognize the importance of experimentation 10: Substituting technological contact for human interface 11: Seeking to develop direct measures of knowledge MIS 580 - Knowledge Management

41. What's your strategy for managing knowledge? Morten T Hansen • NitinNohria •Thomas Tierney Harvard Business Review March-April 1999

42. Strategies used for managing knowledge MIS 580 - Knowledge Management

43. Codification Vs Personalization MIS 580 - Knowledge Management

44. Different Strategies, Different Drives 1. Create Value for Customer MIS 580 - Knowledge Management

45. Different Strategies, Different Drives 2. Turning a profit: MIS 580 - Knowledge Management

46. Different Strategies, Different Drives 3. Managing People: MIS 580 - Knowledge Management

47. KM in different industries - Healthcare Access Health Memorial Sloan-Kettering Cancer Center MIS 580 - Knowledge Management

48. KM in different industries – Computer industry Dell Hewlett Packard MIS 580 - Knowledge Management

49. KM in different industries – consulting industry Anderson Consulting / Ernst & Young Bain, Boston Consulting Group/ McKinsey MIS 580 - Knowledge Management

50. Do Not Straddle MIS 580 - Knowledge Management