Knowledge Management
Presented by
Brad L. Hershberger, Itthipat Limmaneerak, M.Faisal Fariduddin A.
Nasution, Melanie Swearengin, & Scott Shaw
1
Knowledge Management Trends
•
Survey of 423 organizations in the UK, Europe, and the
US found:
– 64% had KM strategy in place
– 81% had KM, or were considering, a KM program
– 75% believed KM can play a significant role in
improving competitive advantage.
(KPMG Consulting)
Source: Reference 1
2
Knowledge Management Trends
Spending on KM
Billion of dollars
15
KM Software
10
KM Services
5
0
2000
2004
Total KM
Services and
Software
• Overall worldwide
spending on KM has been
estimated to increase
from approximately $3.1
billion in 2000 to over $12
billion by 2004.
“Document and Knowledge
Management: After-Hype: KM
Enters Critical Phase.”
Source: Reference 2
3
What is Knowledge Management?
What is knowledge?
4
Knowledge Hierarchy
Knowledge
Information
Data
5
What are data?



Data are a set of
discrete, objective facts
about events.
Data are facts, numbers
or individual entities
without context or
purpose.
Example: A company
has total sales of five
billion dollars in Q3 of
the year 2003.
Source: Reference 2 and 3
6
What is information?



Information is data that has been
added value through context,
categorization, calculation,
corrections, and condensation.
Information has an impact on a
user’s judgment and behavior ( to
aid decision making).
Example: Five billion dollars in Q3
of this year are 10% increasing in
sales revenues in Q3 of last year.
Source: Reference 2 and 3
7
What is knowledge?
•
•
•
Knowledge is the fact or condition of
knowing something with familiarity
gained through experience or
association.
Knowledge is the human capacity
(potential & actual ability) to take
effective action in varied and uncertain
situations.
Example: To gain higher growth rate in
sales revenue, a company not only
focuses on the domestic market, but
also looks for the exporting market.
Source: http://www.bus.utexas.edu/kman/answers.htm and Reference 3
8
What is difference between
information and knowledge?
Knowledge life cycle
9
Knowledge Life Cycle (in business)
The user will learn what
worked well and not so well
as a result of applying the
knowledge gained
Learn
Learn
Create
Create
Store
Store
Use
The knowledge can be
put to use towards some
productive purpose
It must be created either
within or outside the
organization
Find
Find
Acquire
Acquire
It can be stored in
somewhere
Those who need the
specific knowledge must
find out where it is, when
they need it
the user will then go through
the act of actually acquiring
Source: www.processrenewal.com/files/def-km.doc
10
When does information become
knowledge?
Create
Create

Learn
Learn
Learn
Store
Store

Use
Find
Find
Without the learning
component, the cycle
becomes an information
delivery strategy.
The concept of learning is
a key contributor
Acquire
Acquire
Source: www.processrenewal.com/files/def-km.doc
11
Types of Knowledge
It is also important to know and distinguish
between the two kinds of knowledge that must
be addressed in organizations
Tacit knowledge
Explicit knowledge
12
Tacit & Explicit Knowledge
13
Tacit Knowledge Defined
“We know more than we can tell”
“Something that we know when no one asks us,
but no longer know when we are supposed to
give an account of it, is something that we need
to remind ourselves of”
“All knowledge (is) personal and all knowing (is)
action”
Source: Reference 6, 7 and 8
14
Tacit Knowledge Explained
 Can
you calculate the arc, velocity and
energy needed to successfully make a
free-throw?
 Explain to someone the mathematical
formula for riding a bike.
 Why does your favorite recipe, cooked by
your grandmother, never seem to turn out
the way you remember?
15
What’s wrong with tacit
knowledge?



Tacit knowledge posses difficulties in
Knowledge Management for 3 main
reasons:
We are not fully aware of having it
There is no personal need to make it
explicit
There is a risk of losing power and
competitive advantage
Source: Reference 9
16
Explicit Knowledge Defined
 Explicit
knowledge uses a different part of
the brain than tacit knowledge
 Explicit knowledge can be codified and
explained
 Explicit knowledge can be separated from
the individual
Source: Reference 10
17
Examples of Explicit
Knowledge
 Documentation
 Procedures
 Mathematical
Formulas
 Intranets
Information = Explicit Knowledge
18
What’s wrong with explicit
knowledge?
 “Instead
of storing information in our
brains, we design our environments to
make it easy to find the information we
need”
 Explicit knowledge is devoid of action and
“our knowledge is in our action”
 “The narrative in itself is not enough for
the other part to gain a complete
understanding…”
Source: Reference 11, 12 and 13
19
Knowledge Management
(useful definition)
“The systematic process of creating,
maintaining and nurturing an organization to
make the best use of knowledge to create
business value and generate competitive
advantage.”
Source: Reference 6 and 7
20
Interesting KM Statistics
 Who
is pushing hardest
 The benefits achieved
 Use of technology to manage information
21
Methodology
KM Research Report 2000 by KMPG Consulting
Respondents
Financial services
22%
Industrial products
Consumer markets
Chemicals, pharmaceuticals and
energy
Services
Actual
%
USA
101
24
UK
100
24
Germany
83
20
France
77
18
Netherlands
15
3
Scandinavia
15
3
Elsewhere (Italy, Spain)
32
8
423
100
20%
20%
14%
13%
Transport 5%
Inforamtion, communication and
2%
entertainment
Government 2%
Others 2%
0%
5%
10%
15%
20%
25%
% Respondents
Total
Source: Reference 1
22
Who is pushing hardest?
Board
32%
Senior
management
41%
Middle
namagement
11%
Grass roots/
2%
employees
0%
10%
20%
30%
40%
50%
This indicates that the leaders of organizations understand
the significance of KM and are driving their
organization’s KM initiative
Source: Reference 1
23
The Benefits Achieved
B etter decisio n making
F aster repo nse to key business issues
B etter custo mer handling
Impro ved emplo yee skills
Impro ved pro ductivity
N ew ways o f wo rking
R educed co sts
C reate additio nal business o ppo rtunities
Sharing best practice
Increased pro fits
Increased market share
Impro ved new pro duct develo pment
Staff attractio n/ retentio n
Increased share price
71%
68%
64%
63%
60%
58%
57%
54%
53%
52%
50%
42%
30%
20%
0% 10% 20% 30% 40% 50% 60% 70% 80%
% benefits achieved
The most significant benefits achieved included better decision
making (71%), faster response to key business issues (68%)
and better customer handling (64%).
Source: Reference 1
24
Use of technology to implement KM
Internet
93%
Intranet
78%
Data warehouseing / mining
63%
Document management systems
61%
Decision support
49%
Groupware
43%
Extranet
38%
Artificial intelligence
22%
0%
20%
40%
60%
80%
100%
% Use of technology


Internet (93%) and intranet (78%) are favored technology
used in accessing data
Data warehousing and mining techniques are favored
technology used in analyzing data
25
Source: Reference 1
KM in E-Business
26
The Transition
 The disconnect
between IT expenditures and the
firm’s organizational performance.
 Transitions made:
 Reason


Transition from information
processing to knowledge creation.
Transition from Total Quality
Management to Business Process
Reengineering.
Source: Reference 4
27
The Transition
 Old

World:
Phases:
• Automation.
• Rationalization of procedures.
• Reengineering.
 What
is the new world
of “e-business”?
Source: Reference 4
28
The Transition
Source: Reference 4
29
KM in E-Business Strategy

Transition  paradigm shifts:






Paradigm shift in business strategy.
Paradigm shift in design and use of technology.
Paradigm shift in the role of senior management.
Paradigm shift in organizational knowledge
processes.
Paradigm shift in economics of organizational assets.
Paradigm shift in organizational design.
Source: Reference 4
30
KM E-Business Strategy
intranet  should be viewed as a
KM environment with perspectives such
as:
 Using



Information perspective
Awareness perspective
Communication perspective
Source: Reference 5
31
Case Study
32

BioTechnology research and manufacturing
company
 5450 employees in 130 countries (Main
headquarters in LaBalme, France. NA
headquarters in Durham, NC.)
 63 different manufactured products in 4 different
disciplines (Bacteriology, Hemostatsis,
Immunoassays, Molecular Biology)
33
34
35
Case Study
36
Company Profile:
Employees
Products
Customers
-145,000 employees
-Audit & Tax Consulting
-SEC, Fortune 500
CIO reports to committee of partners
 Over 400 IS professionals (25) on the
SALT side.

Source: Reference14
37
Merger - 1998
Price Waterhouse and Coopers & Lybrand
 Combined six lines of business across 24
industries in over 152 countries worldwide with
over 150,000 employees
 Different IT platforms
 Thousands of servers with various information

Source: Reference 14
38
Goals for Merger

Meet Increasing Client Needs

Expand Globally with Clients

Establish a Global Knowledge Base (Intellectual
Capital)
 Expand Range of Services
 Become More Technology Oriented
 Grow Revenue
 Dominate Market
Source: Reference 14
39
Building the Knowledge Base

“To a great extent it is all we have and all we
share and sell. It is the basis of what we do. We
sell to clients the knowledge our consultants
have and have access to. So managing the
resources effectively and making sure we can
share it across the consultancy is vital to us. It is
the lifeblood of the organization”
-Julia Collins, Head of PwC Global Knowledge Group
Source: Reference 14
40
Issues and Challenges
of Building the New
PwC KM Tool
Each line of business at the old companies only
had access to their knowledge.
 Differences in IT systems and organizations
structure
 E-mail networking and Intranet using Lotus Notes
 Integration of databases and servers
 Eliminate the senior executives from controlling
access to information

41
Final Results and Successes

IT staff worked on a region basis instead of local
office
 Choose consistent information language (SQL,
Novell, etc.)
 Combined databases and choose individuals to
update them
 Linked e-mail and lotus notes for a strong internal
communication system
 Creation of a global wide area network to link wide
area networks of PW & CL
42
What is KM to Me?
Knowledge Management enable the efficient
prioritisation, creation, retrieval and leverage
of relevant content that:

Builds and strengthens our client relationships
 Supports the professional development and
productivity of our people
 Facilitates the development of innovative, quick-tomarket solutions
 Fosters a continuous learning culture
43
How Do I Use PwC’s KM?
PwC’s Knowledge Management Tool (TALK)
What is TALK?
• Tax and Legal Knowledge
TALK
• A collection of resources, both
internal and external
Facts & Stats
• A source for new developments,
products and applications,
research, publications, bulletins
and discussion forums.
--1,000
databases
--1,780 websites
-- 62 countries
• A complete archive of old
information
44
TALK U.S. Homepage
45
Knowledge Management divided
into External & Internal sources
External Sources:






BNA
WestLaw
CCH
Self study tutorials/reference guides
In-house training classes
Electives offered at major training conferences
46
External Sources:
47
Internal Sources

WNTS
 WNTS tax developments communicates legislative
and technical tax developments to the U.S. tax
practice through WNTS Alerts and Spotlights.
Info Source
Worldwide Tax Summaries
123 countries
Corporate Taxes
Individual Taxes
Tax References Files
Technical documents
Practice Tools
Speeches & Presentations
PwC Authored
Articles
48
Pinnacle
Internal Source
Incentives to contribute
 Certain mandates to contribute when working on certain projects
49
Tax Daily News


Content: Daily electronic US Tax newsletter including leadership
announcements and a summary of TALK contributions
Mailed daily to each tax professional
50
Tax Yellow Pages
What is it?
Online, annually updated, directory of US Tax
professionals and their principal areas of practice.
What does it do?
Reduce the time spent by professionals locating people
and expertise across the US Tax practice.
Issues Addressed:
Clients want to contact PwC professionals with
specialized experience; PwC partners need to dialogue
with peers whose competence they trust; PwC staff need
information on who works in area and how to contact
them.
51
52
Case Study
53
Company History:

Founded by Dr. Stanley Buckman in 1945


5 employees; Initial customers were large paper facilities
Customer base expanded
leather, paint, sugar processing, agriculture, plastics industries
and water treatment industries

1978
Sales = $29 million; 493 employees; 20 companies
worldwide; 8 manufacturing plants; over 1,000 specialty
chemicals in their product line
 New Leadership1978 Bob Buckman became chairman
and CEO
“If you expand the ability of individual members of the
organization, you expand the ability of the organization.”
Source: Reference 17
Bob Buckman
54
Knowledge Sharing Evolution
STEP 1  Send out PhDs to gather best practices

Costly & Inefficient
STEP 2  Runners

Slow & Limited Knowledge
STEP 3  GMs connected through network for email

Wrong People
Conclusion  “The people who really need the
information were the people in front
of the customer.” Bob Buckman
STEP 4  Field Sales people given access
55
Knowledge Management
Strategy

Simplify the lines of communication
 Gives everyone access to the knowledge base of the
company
 Allow each individual to enter knowledge into the system
 Function across time and space with the knowledge
base available 24/7
 User friendly
 Communicate in whatever language is best for the user
 Update automatically – the accumulation of technical
Q&A should generate knowledge bases for future
Source: Reference 17
56
Knowledge Transfer
Department
1992 – Knowledge Transfer Department created
(Head reporting directly to the Chairman.)
 Company’s network on CompuServe, the public online
service
 Sales people got a leased notebook with a modem
 Point-point link with headquarters by a phone call
Time frame: 30 days to implement
Cost: $75,000 per month in access charges
Source: Reference 17
57
K’Netix System
Forums:
 Tech Forum – open to all employees, message board,
conference room, library section

Internal Forum – focused on internal improvement

Business Forum – focused on helping the customer
ALL Forums:


Monitored by System Operators & Section Leaders
All forums set up in English - translators were hired
58
Source: Reference 18
59
Motivation
“Those individuals who have something intelligent to say
now have a forum in which to say it…Those who will not
or cannot contribute also become obvious and can be
intelligently eliminated from the organization.”
Bob Buckman


1994 invited 150 top knowledge shares to Scottsdale,
Arizona for retreat
Received a new IBM ThinkPad 755
Source: Reference 17
60
Evaluation
Ways to Improve:

Increase participation by non U.S. Associates


Cultural issues - not cool to type or ask for help
Language problems - Forums set up in different languages
Results:





1994 KTD = $8.4 million (plans to spend $9.5 million in
1995)
65% of sales people out selling - 16% in 1979
33% sales from products less than 5 years old - 22%
prior to K’Netix
1999 sales = over $300 million
Received the Arthur Andersen Enterprise Award &
Smithsonian Computerworld for Knowledge Sharing
Source: Reference 17
61
Summary
62
Summary






Definition of knowledge
management
What distinguishes knowledge
management over information
and data
Types of knowledge
Interesting statistics of knowledge
management
The transition to implement
knowledge management for
e-business
Implementing knowledge
management to firms
63
Disadvantages of and challenges to
implementing knowledge
management



Not all people in the firm would
share their knowledge.
Not all people in the firm
understand the concept of and
how to implement knowledge
management.
The implementation of knowledge
management can be considered
as another expenditure to the firm
by the senior executives and / or
non-IT people in the firm  the
chance of failure like the other IT
projects.
64
Best Practices

Foster communication between skill areas.
 Promote product training.
 Create open physical work environment.
 Encourage independence and risk taking.
 Provide extensive documentation.
 Make support resources easily available.
 Expect large learning curves in projects.
65
Best Practices




Developed to be highly specialized  By country,
industry, idea, business unit.
Divided by external and internal sources:
rd party information
 Can take advantage from 3
services.
 Can take advantage of internal ideas.
Available to clients:
 Filtered information is available to clients.
Highly accessible to firm employees:
 Intranet, Lotus Notes and Internet.
66
Best Practices

Simplify the lines of communication
 Get information to the people in front of
the customer
 Give everyone access to knowledge
base of the company
 Operate 24/7
 Operate in users preferred language
 Track all research for later use
67
References
1. KMPG Consulting; “Knowledge Management Research Report 2000”, p.5-9, 14-16.
2. “Document and Knowledge Management: After-Hype: KM Enters Critical Phase.”
Computing Canada, April 14, 2000. p13
3. “The Introduction to Knowledge Management” by Dr. Nancy Shaw, an assistant
professor at George Mason University's School of Management”, URL:
http://www.icasit.org/km/intro/intro.htm , slide page.5-7
4. Yogesh Malhotra, ‘‘Knowledge Management for E-Business Performance: Advancing
Information Strategy to Internet Time’’, In the Executive’s Journal, V.16, No. 4, pp.
5-16, 2000.
5. Dick Stenmark, “Information vs. Knowledge: The Role of Intranets in Knowledge
Management”, URL: http://www.viktoria.se/results/result_files/183.pdf
6. Polanyi, M. The tacit dimension. Reprinted in L. Prusak (ed.), Knowledge in
Organization. Boston: Butterworth-Heinemann, 1998, pp. 135-146.
7. Wittgenstein, L. (1958). Philosophical Investigations. Oxford: Blackwell.
8. Tsoukas, H. Do we really understand tacit knowledge. Presented to Knowledge
Economy and Society Seminar, LSE Department of Information Systems, 14 June
2002.
9. Stenmark, D. Leveraging Tacit Organizational Knowledge. Journal of Management
Information Systems; Winter 2000/2001; 17, 3; ABI/INFORM Global pp 9.
10. Schachter, D.L., 1998, ‘Memory and Awareness’, Science 280, 59-60.
68
References
11. Gorman, M.E. Types of Knowledge and Their Roles in Technology Transfer. Journal
of Technology Transfer; Jun 2002; 27, 3; ABI/INFORM Global pg 219.
12. Schön, D. A., The Reflective Practitioner, Basic Books, 1983.
13. Stenmark, D. Information vs. Knowledge: The Role of intranets in Knowledge
Management. Proceedings of the 35th Hawaii International Conference on System
Sciences, 2002.
14. McCauley, M. PricewaterhouseCoopers: Building a Global Network. Case Study,
Centre for Asian Business Cases, School of Business, The University of Hong
Kong. 2000.
15. Behrend, E. Knowledge Management Resources. Tax Start, Philadelphia. August 13,
2002.
16. Weinreibh, A. SALT Knowledge Management Resources. Tax Start, St. Louis. July
18, 2002.
17. Fulmer, William E., Buckman Laboratories (A), Harvard Business School, 9-800-160,
January 22, 2003.
18. Buckman Laboratories, www.knetix@buckman.com, October, 2003.
19. Buckman Laboratories, Bulab Holdings Annual Report 2002.
69