Leveraging Knowledge for Competitive Advantage

Transcription

1 Leveraging Knowledge for Competitive Advantage Presentation at the conference New Times, New Challenges: Managing People in the Knowledge Organization Athens, 12 April 2000 Gregoris Mentzas

2 Overview of Presentation (1) What is Corporate Knowledge? Managing Knowledge Approaches To KM Implementing Knowledge Management G. Mentzas 12 April

3 The need to focus on knowledge Downsizing Taking vast knowledge bases from organisations Mobile Workforce Need for constant access to know-how & interactive on-line support Need to Focus on Corporate Learning Ability Rapid Changes Need to benefit from lessonslearned and minimise costs of reinventions Globalisation Need to generate globalwide practices and support global collaboration G. Mentzas 12 April

4 Data, Information and Knowledge Data Context Information Experience Skills Insights Knowledge Static Independent of individual Explicit Digital Easy to duplicate Easy to broadcast Meaningless Dynamic Dependent on individual Tacit Analogue Must be recreated Face-to-face Meaningful Access Assess Action G. Mentzas 12 April

5 Corporate Knowledge is... capability for effective action FROM knowledge that is: fragmented & dispersed difficult to locate & share redundant & inconsistent TO knowledge that: solves business problems produces corporate value enhances competitiveness G. Mentzas 12 April

6 Where is corporate knowledge found? Corporate knowledge is created by individuals and is embedded / embodied in: People Systems Networks Processes Training Documentation Databases Expert Systems Formal Informal Policies Procedures G. Mentzas 12 April

7 Attributes of Corporate Knowledge There is an inherent value in knowledge The value of corporate knowledge increases with use (law of increasing returns) Sharing enriches knowledge, Knowledge decays with time, the value of knowledge increases timeliness of knowledge with the number of people that use it is important G. Mentzas 12 April

8 Knowledge Types Explicit Knowledge Tacit Knowledge formal and objective informal and subjective validated by management developed through practice can be articulated in embedded in individual formal language experience stored in databases, communicated through libraries, etc. word-of-mouth or through informal communications Tacit and Explicit knowledge are mutually complementary Human knowledge is created and expanded through social interaction between tacit and explicit knowledge Source: Nonaka & Takeuchi (1995) G. Mentzas 12 April

9 The Spiral of Knowledge Tacit Knowledge TO Explicit Knowledge Tacit Knowledge SOCIALISATION EXTERNALISATION FROM INTERNALISATION COMBINATION Explicit Knowledge Source: Nonaka & Takeuchi (1995) G. Mentzas 12 April

10 The need to manage knowledge Knowledge management is absolutely critical to the success of my company 60% of Chief Executive Officers surveyed in a 1998 CEO survey sponsored by the World Economic Forum Enterprises that lack KM programmes will lag KMenabled companies by 30-40% in speed of deployment of new products and services Gartner Group (1999) The average percent or revenue spent on KM in Europe is expected to increase to 5.5% in the next three years Which is more than European companies spend on R&D G. Mentzas 12 April

11 Overview of Presentation (2) What is Corporate Knowledge? Managing Knowledge Approaches To KM Implementing Knowledge Management G. Mentzas 12 April

12 What is KM? The tools and the fusion are NEW! Has been compared to OR! Corporate Knowledge Management is the new discipline of enabling Teams and communities are indispensable! individuals, teams and entire organisations to collectively and systematically Not just water-cooler discussions, but planned ICT, processes & behaviours Reuse corporate create, share and apply knowledge Marshall knowledge to respond to threats and opportunities Improve knowledge to better achieve employee organisational skills efficiency, responsiveness, competency and innovation Create and share new ideas G. Mentzas 12 April

13 Managing Corporate Knowledge means having Leadership Adapt Apply Create Measurement Share Corporate Knowledge Identify Culture Organise Collect Technology Source: APQC G. Mentzas 12 April

14 Poor Knowledge Management Reinventing the Wheel Inability to access knowledge in a timely/useful manner. Having knowledge and expertise leave when people leave. Knowledge Hoarding Knowledge is power Knowledge is job security Poor Decisions Potential useful knowledge is ignored when making decisions Trying to apply old rules to new situations G. Mentzas 12 April

15 Indicative Successful Cases Buckman Labs Monsanto Xerox Corp. Texas Instruments EDF Royal Shell Chevron IBM Ernst & Young EDS British Petroleum Hoffman LaRoche Hewlett Packard Microsoft Arthur Andersen ICL Dow Chemical Hughes Space Sequent Compaq Skandia AFS informed business decisions improved customer service less time spent for: recreating work searching for information increased speed to market high ROIs as high as 1700% short payback periods G. Mentzas 12 April

16 Current state of the corporate KM market OVUM global market analysis (1999) $3,100 $4,500 $12,000 European S/W market $200 $350 $1,500 European Services market $1000 $1,500 $4,000 (numbers in $million) Suppliers Management consultants Software Vendors Intranets Groupware tools Search and retrieval tools Document management Agent and push technology Corporate portals Other (ERP, RDBMS, etc) Users Consultancy services Chemicals Software companies High-tech manufacturing Banks and financial Insurance Pharmaceuticals Utilities G. Mentzas 12 April

17 Overview of Presentation (3) What is Corporate Knowledge? Managing Knowledge Approaches To KM Implementing Knowledge Management G. Mentzas 12 April

18 The product view Proposition: knowledge can be represented as a thing that can be located and manipulated as an independent object it is possible to capture, distribute, measure and manage knowledge Focus: on products and artifacts containing and representing knowledge usually, this means managing documents, their creation, storage, and reuse in computer-based corporate memories. The process view Proposition: it is only feasible to promote, motivate, encourage, nurture or guide the process of knowing the idea of trying to capture and distribute knowledge seems senseless Focus: on KM as a social communication process which can be improved by various aspects and tools of collaboration and cooperation support. G. Mentzas 12 April

19 Strategic Implications of Product & Process Views Product View Process View competitive strategy: exploit organised, standardised and re-useable knowledge focus of KM strategy: connect people with reusable codified knowledge focus of IT strategy: heavy emphasis develop document management systems focus of HR strategy: train in groups reward for using and contributing to databases competitive strategy: empower and channel individual and team expertise focus of KM strategy: facilitate conversations to exchange knowledge focus of IT strategy: moderate emphasis develop network management systems focus of HR strategy: train by apprenticeship reward for sharing knowledge with others G. Mentzas 12 April

20 Strategic Implications of Product & Process Views Product View competitive strategy: exploit organised, standardised and re-useable knowledge focus of KM strategy: connect people with reusable codified knowledge focus of IT strategy: heavy emphasis develop document management systems focus of HR strategy: train in groups reward for using and contributing to databases Integration Process View competitive strategy: empower and channel individual and team expertise focus of KM strategy: facilitate conversations to exchange knowledge focus of IT strategy: moderate emphasis develop network management systems focus of HR strategy: train byt apprenticeship reward for sharing knowledge with others G. Mentzas 12 April

21 IT Implications of Product & Process Views Knowledge as a Product (knowledge storage) Intranet Knowledge maps Semantic Analysis Integration structured document White-boarding repositories Automatic Profiling Full text retrieval File management systems Shared files Push Technology Real-time messaging Net Conferencing Discussion Groups Knowledge as a Process (knowledge transfer) G. Mentzas 12 April

22 The Know-Net participating companies Greek Management Consultancy firm - Coordinator of KnowNet International knowledge management and technology consulting organisation The Centre for Advanced Learning Technologies of INSEAD Research Center for AI, research institute in the field of innovative software technology FHBB The CIM-Zentrum Muttenz (CZM), a department of the Fachhochschule beider Basel (FHBB) The Credit Risk Valuation department of one of the world's leading financial services groups Institute of Communications and Computer Systems (ICCS) of the National Technical University of Athens A UK firm of Chartered Surveyors and Commercial Property Agents G. Mentzas 12 April

23 Overview of the Know-Net framework Organisation Strategy Knowledge Management Infrastructure Interorganisation Structure Assets Processes Team Systems Levels of Knowledge Networking Individual G. Mentzas 12 April

24 Knowledge Assets Human Knowledge Assets Staff capabilities Staff experience Staff skills Creativity of staff Innovation of staff Structural Knowledge Assets Patents, Methods Best Practices Administrative systems Training Seminars R&D Material Company standards/processes Market Knowledge Assets Knowledge about Industry Knowledge about Customers Knowledge about Partners Knowledge about Competitors G. Mentzas 12 April

25 Building Blocks of the Know-Net Method Awareness Stage I: Plan Stage II: Develop Measurement Stage III: Operate Training G. Mentzas 12 April

26 Stage I: Strategic Planning Stage II Stage I Stage III Measurement Link KM to Corporate Strategy Provide Leadership Perform Knowledge analysis Develop the KM Case Obtain Top Mngmt Approval Assess Risk & Change Readiness Goals of Stage I: Align Knowledge strategy Assess Change Readiness Define KM Business Case G. Mentzas 12 April

27 Stage II Stage II: Developing the K.Org Stage I Stage III Analyse Leverage Measurement Knowledge in Business Processes Knowledge in People Networks Integrate the KM Architecture Information Technology Systems Develop Knowledge Asset Schema Goals of Stage II: Leverage Knowledge Process/People/Technology Define Knowledge Objects Integrate the KM Architecture G. Mentzas 12 April

28 Measuring knowledge assets Stage II Stage I Stage III Measurement Focus on key knowledge assets Distinction between stocks and flows Must be linked to strategy Both business and KM strategy Company-specific Market Assets Structural Assets Human Assets G. Mentzas 12 April

29 Measuring the Performance of KM initiatives Indicators for: Financial Value Growth Partner equity Growth Renewal Share of Fees from High Margin clients Investment / depreciation Efficiency ROE Gross Margin Intangible Assets Market Assets Structural Assets Human Assets Fee Growth Big job ratio % Average grade Fee share from Fee share from Share postgraduates Image enhancing organisation of employees clients enhancing clients % time on maintaining existing clients Fees from new clients as % of fees % time on developing new clients % time on developing new clients Win/Loss Tender index Satisfaction index of old clients % time on proposals Average size of jobs Share fees from 25% most satisfied clients Share fees from 25% least satisfied clients. Share of fees from new concepts / services % time on R&D Fees per Support Staff % Support staff utilisation Satisfaction Index of support Staff % time on training courses Training time /total fees Capacity Utilisation Deficiency rate Satisfaction Index of consultants Valued added per consultant Stability Solidity Support Staff turnover Liquidity Median age support staff Rookie Ratio G. Mentzas 12 April Seniority of consultants Consultants' turnover Median age of consultants

30 For more information visit the site: G. Mentzas 12 April

31 Overview of Presentation (4) What is Corporate Knowledge? Managing Knowledge Approaches To KM Implementing Knowledge Management G. Mentzas 12 April

32 KM: Discipline and art KM as a management discipline Processes can be defined and implemented to capture the knowledge to make it available to workers Techniques can be defined, taught, learned, customised and applied to yield outcomes Technology can be harnessed as a key enabler KM as art Evolving people s attitudes and work behaviours to effect new types of collaboration Changing people s value paradigm from information is power, to sharing is power New incentive systems, performance metrics G. Mentzas 12 April

33 Concluding remarks We have entered the knowledge economy in which knowledge is the basis of competitive advantage. Potential benefit areas are increased innovation potential, improved staff morale and better decision-making and communication Knowledge management is common sense but it is not yet common practice. Most companies still have to go a long way in building a truly valuebased knowledge organisation as they recognise that they insufficiently master essential knowledge-based competencies G. Mentzas 12 April

34 The task of leadership is to create the environment for managing for knowledge. It s not about managing hired hands, it s about setting context and energizing hired minds. Our challenge is to manage the stage, so to speak, for the human spirit to thrive and create in the emerging knowledge society. Paul Allaire, CEO, Xerox Keynote presentation in in the the Conference Knowledge in in International Corporations, 1997