Knowledge Management. Presentation ICPM Boston, June 6-8. Eduard van Gelderen, CEO APG Asset Management

Transcription

1 Management Presentation ICPM Boston, June 6-8 Eduard van Gelderen, CEO APG Asset Management

2 Agenda From a production-based to knowledge-based economy Introduction to knowledge management Study Management in Asset Management Follow-up research

3 -based economy Definitions of knowledge Epistemological definition is justified true beliefs Practice-based defintion, unlike information, is about beliefs and commitment. is a function of a particular stance, perspective, or intention., unlike information, is about action. It is always knowledge to some end

4 -based economy Definitions of knowledge Explicit knowledge Explicit knowledge can be expressed and recorded as words, numbers, codes, mathematical and scientific formulae, and musical notations. It is easy to communicate, store and distribute and can be separated from the individual who possesses it. Tacit knowledge Tacit knowledge is unwritten, unspoken, difficult to codify and hidden. Every individual possesses a vast storehouse of valuable tacit knowledge, based on his or her emotions, experiences, insights, intuition, observations, and internalized information.

5 -based economy Based Assets Human Capital Fixed Assets -Based Assets Financial Assets Value of the Firm Management Employees Culture Structural Capital Intellectual Capital Processes ICT Relationship Capital Networks Brand Customers

6 -based economy KBA specific characteristics KBA is treated as an expense; not as an asset on the balance sheet Often no marktprice is available; exceptions are goodwill and patents Value of KBA increases in time; knowledge is not burnt Sharing of knowledge leads to knowledge creation is not owned by the firm

7 -based economy KBA Investments Investments in Based Assets and Fixed Assets as % of GDP US 800 Total Patents Grants (x 1000) Based Assets Fixed Assets Asia Europe N-America

8 Management Definition management is the organizational efforts designed to capture knowledge, to convert personal knowledge to groupavailable knowledge; to connect people to people, people to knowledge, knowledge to people, and knowledge to knowledge, and to measure that knowledge to facilitate management of resources and help understand its evolution creation transfer sharing application Process Wheel mapping codification storing

9 Management Measurement Human Resource Accounting Calculated Intangible Value Economic Value Added Tobin s Q Balanced Score Card / Skandia Navigator Key Performance Indicators

10 Management Management in Asset Management Study Management in Asset Management with the aim to determine to what degree the asset management industry is familiar with knowledge management Results are based on two surveys (VBA and P&I) and twenty in-depth interviews over a two-year period Authors: Ashby Monk & Eduard van Gelderen Published in Journal of Financial Transformation, no 43, 2016

11 Management Management in Asset Management Asset Management is a knowledge intensive industry In the end knowledge is managed to achieve (superior) investment returns Markets are dynamic and knowledge creation is crucial to remain in business can only exist when the basic layers of data and information are in place is a strategic asset and should therefore be high on the Board s agenda 1. What is the focus area with regards to knowledge management? 2. What knowledge is considered most important to generate investment returns? 3. What are the specific topics of interests related to knowledge management?

12 Management Management in Asset Management 1. Appreciation and familiarity 2. Significance and relevance 3. Measurement and calibration The respondents proclaimed to appreciate KM and even noted its important role in superior investment results. This appreciation, however, rarely translated into pro-active KM policies, let alone KM resources being allocated deliberately. The value of KM is often perceived differently among investment organizations. There was no consensus as to the kinds of knowledge that were particularly valuable, albeit tacit knowledge was more directly linked to excess returns. Nor was there a consensus on the drivers of KM s value. Developing a coherent and well-designed KM organization can be costly. Justifying this cost demands that KPI s be developed that allow for the assessment of KM policies. In addition, these KPI s also help with the assessment of the on-going value of existing knowledge. The research showed that hardly any investment organization has KM related KPI s in place.

13 Management Management in Asset Management 4. Technology and infrastructure 5. Governance and leadership Embedding KM into investment organizations will inevitably require technological sophistication to allow for transparency, institutional memory, rapid query and communication. IT is insufficient. Developments in technology are not always fully understood by senior management with could lead to underinvestments and a suboptimal knowledge management process. The Board and C-suite should be leading the way in defining the strategic benefits of KM and not treat KM as a by-product of its operating model. Too often it is considered a HR or IT activity 6. Culture Human capital and culture are of utmost importance to developing knowledge, which means investment organizations must focus on hiring people with different backgrounds and traits, and prioritize collective knowledge as a core value.

14 Management Management in Asset Management First steps in Management approach: 1. Determine the value of the investment beliefs and the translation into investment strategies 2. Determine the required skill set, data and technology in the investment chain 3. Determine the appropriate KPIs in the investment chain 4. Check for knowledge consistency and alignment of KPIs in the investment chain Investment Beliefs Investment Strategy Investment Ideas Execution Performance

15 Follow-up research Current research is based on a broad group of participants to come to a general overview. The next step is to zoom in on specific participants, such as asset owners. Research questions include a.o.: 1) what is the impact of a long-term perspective on KM efforts? 2) What value is given to the three categories of knowledge based assets? 3) do asset owners assess KM efforts of their external managers? A IPCM webinar will be organized shortly to deepen the topic of knowledge management and the follow-up research agenda.