Chapter 6 Aligning KM and Business Strategy

1. Chapter 6Aligning KM and Business Strategy The Knowledge Management Toolkit Amrit Tiwana

2. Introduction • A clear articulated link between KM and business strategy is the key predictor of its success. • Obsession with IT is a common trap. • Effective KM requires a balanced mix of technology, cultural change, purposeful reward systems, and business focus that is in step with the company’s business strategy.

3. Strategic Visioning • Companies are too often driven by strategic plans, not strategic visions. • Managers and businesses need to capture what they learn both from the soft insight and experiences and from hard market data, then synthesize that learning into a vision worth pursuing.

4. Strategic Visioning • Such strategic orientation requires knowledge of the complex environment in which your company operates and comprehension of the complex process that it undertakes. • This requires you to think about three issues: • What is the industry context in which your business operates? • What is the level and nature of turbulence within it? • How profound is the uncertainty in your business?

5. Knowledge transfer versus integration: the strategic dichotomy • Knowledge transfer assumes certain conditions that do not necessarily always hold. • The two transacting individuals possess certain shared knowledge in order to effectively communicate. • Sufficient time is available to engage in such transfer. • Knowledge that is transferred remains valid by the time a transfer is completed.

6. Knowledge transfer versus integration: the strategic dichotomy • A strategy that emphasizes knowledge integration promotes synthesis of individually held knowledge at the project or task level while keeping cross-member learning down to a bare-minimum level.

8. Knowledge transfer versus integration: the strategic dichotomy • Knowledge transfer refer to a general strategy of facilitating learning and exchange, whereas knowledge integration stresses rapid application of existing but disconnected knowledge. • The level of uncertainty, needed variety, speed of response, and nature of turbulence in the business context can help determine which of these approaches best suit your KM initiative.

9. Real options under uncertainty • With increasingly high uncertainty of markets, technologies, and customer desires, the right strategic bets have high payoffs far more quickly; the wrong ones can spell systemic catastrophe. • Managers must recognize that they never face an all-or-nothing scenario.

11. Levels of uncertainty • Level 1: the future of your company is fairly predictable • Level 2: a single predictable future cannot be visualized but several possible and likely outcomes are foreseeable • Level 3: a range of possible outcomes exists • Level 4: no basis for forecasting the future exists, and little can be said about the ways in which a given market might evolve

12. The responsiveness quadrahedron: variety and speed

13. The responsiveness quadrahedron: variety and speed • Q1: high level of variety must be delivered without speed • Q2: both variety and responsiveness are needed there • Q3: high responsiveness requirements and low variety mean that a KM initiative must nurture operational flexibility • Q4: where the need for both responsiveness and variety is low

14. Business models and executability • A business model can be though of as a clearly articulated plan for adding economic value by applying knowledge to a set of resources to create a marketable product or service offering. • Considering where your business falls on this grid can guide managers about the feasibility of knowledge transfer or integration approaches to KM.

16. Codification or Personalization? • For any KM initiative to be successful, both approaches must be present in the knowledge orientation of the firm but not with equal weight. • It’s foolish to try using both approaches to the same degree. • It is equal unsound to use only one.

17. The personalization strategy • More focused on connecting knowledge workers through networks • better suited to companies that face “one-off” problems that depend more on tacit knowledge and expertise than on codified knowledge.

18. The codification strategy • More focus on technology that enables storage, indexing, retrieval, and reuse. • Better suited to companies that repeatedly deal with similar problem and decisions.

22. Knowledge Maps to Link Knowledge to Strategy • Effective KM strategies using such knowledge maps can help companies build a defensible competitive knowledge position – a long-term effort that requires foresight, hindsight, careful planning, alignment, and luck.

23. Start at the Top

24. Start at the top • For our initial high-level analysis, we can categorize knowledge into three classifications “buckets”: • Core knowledge • Basic level of knowledge required just to play the game • Advanced knowledge • What makes your company competitively viable • Innovative knowledge • Allow a company to lead its entire industry to an extent that clearly differentiates it from competition

25. Creating a Knowledge Map • Knowledge is not static. • What is innovative knowledge today will become the core knowledge of tomorrow. • The knowledge map provides a snapshot of where your company is at any given time (such as today) relative to its competitors.

27. Analyzing knowledge Gaps • The gap between what your company is doing and what it should be doing represents its strategic gap. • Knowledge gap is represented by what your company should (and possibly can) know and what it does know is order to support the competitive position that it has adopted.

29. Analyzing knowledge Gaps • KM strategy must then address how your company’s knowledge gap in identified critical processed are best bridged. • In addition to balancing personalization and codification, you must then balance the level of exploration and exploitation that you want your company to engage in.

30. Analyzing knowledge Gaps • Exploration implies the intent of your company to develop knowledge that help it create new niches for its products and services. • Exploitation implies the intent to focus on deriving financial and productivity gains from knowledge that is already existing, both inside and outside, your company.

31. Analyzing knowledge Gaps • Your KM system must support exploitation of available and accessible knowledge before it can begin supporting exploration.

32. Adding up the numbers

33. Summary

36. Strategic imperatives for a successful KM system • KM holds the potential to help your company not just to outcompete within given industry conditions but also to create fundamentally new and superior value that makes competitors irrelevant. • As we begin to plan for managing knowledge in an organization, we must focus our undivided attention on a key set of attributes.

37. Saleability necessitates demonstration of short-term impact • Continuing support for KM projects in the real world often depends on the demonstration of some tangible and short-term results. • Showing short-term benefits is akin to another more technical but badly executed activity – documentation of programming code.

38. Assessing focus • The challenge of business and KM is to address the three-way strategic alignment between business, knowledge, and technology. • A company must consistently focus information technology and KM to support the primary business strategy.

40. Assessing focus • How can we turn knowledge we have into something that adds value to the markets in which we operate? • What do we know, or think we know, about different aspects of our customers? Are we actually doing something with what we know about them?

41. Assessing focus (Cont.) • How can we generate meaningful knowledge, rather than simply flooding our organization with indiscriminate information? • How can we create a knowledge-supportive organizational culture in which everybody is convinced of the contribution that knowledge can make to the success of the company?

42. Assessing focus (Cont.) • Can we cut costs, reduce time-to-market, improve customer service, or increase margins by more effectively sharing knowledge and leveraging what we already know? Could such knowledge be applied to the activities of other divisions of our company, in other locations, and in foreign manufacturing sites? How can we ever transfer them and then make them work?

43. Assessing focus (Cont.) • Are there any fundamental errors in what we think we know as a company? What will be the consequences of these errors? How can these be proactively fixed? • How can we manage our people, who will increasingly become knowledge workers or professionals, motivating them to generate knowledge and share it with their peers?

44. Assessing focus (Cont.) • Which of these people actually play critical roles in developing and testing new knowledge and information that gets used here?

45. Assessing focus (Cont.) • Are exciting ideas emerging within the company but failing to be commercialized? If these ideas are not reaching the market, what incentives, structures, or management processes seem to be blocking them? How can valuable knowledge that exists within the company be applied to produce benefits?

46. Assessing focus (Cont.) • Maybe our company has more money than ideas. Are there opportunities to form partnerships with companies that may be more in the flow of innovative and knowledge? Given different cultures, how can this ever work?

47. Assessing focus (Cont.) • Is the “not invented here” syndrome so strong that we are missing attractive business opportunities? Could knowledge-based collaboration (i.e., integration of external knowledge) with a wider range of innovative companies increase our value?

48. Assessing focus (Cont.) • How does tacit knowledge – skills, intuitive abilities, employee experience – affect the generation and transfer of explicit forms of knowledge in our company?

49. Detecting lost opportunities • While prioritizing the explication of knowledge, companies can easily fall into the trap of attempting to explicate knowledge that is not explicable and falling to explicate knowledge that should have been converted from tacit to explicit.