APM Welcome, APM North West Network Conference, Synergies Across Sectors
Knowledge management
1. KNOWLEDGE MANAGAMENT
by Morten T. Hansen, Nitin Nohria, Thomas Tierney
Ahmed Ahmed
Stefanie Schiefer
Pasha Binyatov
Uchenna Egbete
Meera Segar
Nadeen Alkaydi
Niccolo Colatrella
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2. What is the knowledge?
• Knowledge is the fact or condition of knowing
something with familiarity gained through
experience or association
• In 1990s
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Natural
Resources
Intellectual
Assets
Industrialized economy
3. What is the knowledge management?
Strategies and processes designed to identify, capture,
structure, value, leverage, and share an organization's
intellectual assets to enhance its performance and
competitiveness.
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Knowledge management based on two critical
activities:
• capture and documentation of individual
explicit and tacit knowledge
• And its dissemination within the organization.
4. What is the explicit and tacit knowledge?
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Explicit
knowledge
Tacit
knowledge
• Explicit knowledge - is rational knowledge that can be
expressed as data which includes theoretical approaches,
problem solving, manuals and databases
• Tacit knowledge – is experience based knowledge that can
not be expressed as data which includes cognitive skills such
as beliefs, images, intuition and mental models as well as
technical skills such as craft and know- how.
5. Why is Knowledge Management
important?
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6. Knowledge management in consulting
business
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Consulting
Business
Codification
Strategy
Personalization
Strategy
• Codification strategy – in some companies knowledge is
carefully codified and stored in databases to make it
accessible by anyone in the company
• Personalization strategy– in other companies
knowledge is closely tied to the person who developed it
this kind of knowledge shared through person to person
contacts
7. Codification vs. Personalization
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Codification Personalization
provide high-quality,
reliable, fast information-
systems
Competitive Strategy provide creative, analytical
advice
Reusing codified
knowledge
Channeling individual
expertise
once investing in
knowledge asset; reuse it
many times
Large teams with high ratio
Economic Model Customized solutions to
individual problems
Small teams with low ratio
Focus: generating large
overall revenues
Focus: maintaining high
profit margins
Electronic document to
codify
Knowledge Mgnt. Strategy Networks to link people
People to documents Person to person
8. Codification vs. Personalization
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Codification Personalization
Invest heavily in IT Information Technology Invest moderate in IT
Goal: to connect people
with reusable codified
knowledge
Goal: to facilitate
conversations
Train people in groups Human Resources Train people in one-to-one
meetings
Hire people who are well
suited to reuse of
knowledge
Hire MBAs who like
problem solving
Focus: reward people for
using/contributing to
document databases
Focus: reward people for
directly sharing knowledge
with others
11. Codification Vs. Personalization
• Pick the best strategy.
• Use knowledge
effectively.
• Do Not Straddle.
• Do not Choose one over
the other.
• A firm cannot be
equally perfect in both.
• Very costly
• Not fully effective
• Need to excel on one
more than the other.
– Mix of Codification &
Personalization.
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12. Problems with document-driven
systems
Major U.S company
• Relying on a consulting
company because of comfort.
Bain consulting Company
• Relying on documents only
do not get full information
needed.
CSC Index and Straddling
• Fully established both
strategies.
• Two kinds of staff:
– Initial IT focus
– Corporate Strategy focus
• Both groups had different
interests Clash!
• Firm overtaken by rivals.
• Lack of competitiveness.
• Revenues went down.
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13. Getting The Incentives Right
• People need incentives to
participates in the knowledge
sharing process.
• The two knowledge management
strategies call for different
incentive systems.
• In the codification model,
managers need to develop a
system that encourages people
to write down what they know
and to get those documents into
the electronic repository.
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14. Getting The Incentives Right
• The level and quality of employees’ contributions
to the document database should be part of their
annual performance reviews.
• In the companies that are following the
personalization approach, managers need to
reward people for sharing knowledge directly with
other people.
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15. Incentives & Technology
Codification
• Encourage employees to
document knowledge.
– Part of annual performance
reviews.
– E.g. Ernst & Young strategy.
• Heavy investment in IT
Personalization
• Reward for sharing
knowledge.
– E.g. Bain strategy.
• Low investment in IT
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16. Do Managers Need To Isolate
Knowledge Management?
• Some CEOs have put knowledge management at the
top of their agendas.
• Others have not given it the same attention as they
have given cost cutting, restructuring, or international
expansion.
• Companies that isolate knowledge management risk
losing its benefits, which are highest when it is
coordinated with HR, IT, and competitive strategy.
• That coordination requires the leadership of the
general manager.
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17. Don’t Isolate Knowledge Management
• When CEOs and general managers actively choose a
knowledge management approach both the company
and its customers benefit.
• When top people fail to make such a choice both
suffer.
• Customers may end up paying for a customized
solution when a standard solution would have worked
perfectly well.
• Within the organization, employees will be confused
about priorities.
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18. Don’t Isolate Knowledge Management
• The issue will quickly become politicized, and
people will battle for resources without seeing
the whole picture.
• Only strong leadership can provide the
direction a company needs to choose,
implement, and overcome resistance to a new
knowledge management strategy.
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19. Choosing the right strategy
• Competitive strategy should drive the knowledge
management strategy.
• What values do customers expect from the
company?
• How does the knowledge that resides in the
company add value to the customer?
• Clear answers are needed to make a knowledge
management strategy.
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20. • Do company’s offer Standardized or customized
products?
• Knowledge management is based on the reuse companies that create
standardized products.
• Customized products are unique and vary dramatically, KM brings limited
value.
• Do you have a mature or an innovative product?
• Matured products normally benefit form the KM.
• Do people rely on explicit or tacit knowledge to
solve problems?
• Tacit knowledge is hand to be codified whereas explicit can be easily
stored.
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Choosing the right strategy
In 1990s industrialized economies has shifted from natural resources to intellectual assets, companies started to think about the knowledge underlying their business and how that knowledge is used.
- For example, Ernst & Young at performance reviews, consultants are evaluated along five dimensions, one of which is their “contribution to and utilization of the knowledge asset of the firm”.
At Bain, the partners are evaluated each year on a variety of dimensions, including how much direct help they have given colleagues. The degree of high quality person to person dialogue a partner has had with others can account for as much as one quarter of his or her annual compensation.
Ernst & Young is one of the world's leading professional services organizations, helps companies across the globe to identify and capitalize on business opportunities.
http://www.ey.com/CH/en/home
Bain & Company is a global management consulting firm. Our business is making companies more valuable.
http://www.bain.com/
