Knowledge Strategy:
Aligning Knowledge Programs
to Business Strategy
Peter H. Jones, Ph.D.
Origin Technology in Business
KM World 2000
Wednesday, September 13, 2000
Copyright 2000 – Origin
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The Knowledge Strategy Game
Our Learning
With the
Model
Knowledge
Strategy
Model
PRICE $200
Conclusions
Understanding
Knowledge
Strategy
The Resource
Strategy
Model
FOLLOW INSTRUCTIONS
ON TOP CARD
Topics:
Understanding Knowledge Strategy
Discussion?
The Resource View of Strategy
Knowledge Strategy Model
Our Learning with the Model
Conclusions
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Basic Notions …
Survival vs. Advancement (von Krogh, Roos, Slocum, 1994)

Survival – maintaining current level of success,
mastering current markets and competitors

Advancement – Future success based on new
markets, nonreplicability – requires knowledge
creation
How do you plan/design strategy?

Formal strategy and planning – Traditional
strategy sets positions, targets, measures.
Alignment means “follow the leader.”

Learning and emergence – New thinking (not
always in practice) shows strengths in org
learning and preparing for conditions.
Alignment means “Learn and collaborate.”
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Knowledge Strategy –
What do we mean?

Tierney, (1999) “A company’s KM strategy should
reflect its competitive strategy.” With focus on
creating value for customers, turning a profit, and
managing people. (HBR)

Zack, (1999) “… the most important context for
guiding knowledge management is the firm’s
strategy. Knowledge is the fundamental basis of
competition.
Competing successfully on knowledge requires either
aligning strategy to what the organization knows, or
developing the knowledge and capabilities needed to
support a desired strategy.” (CMR)
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Business and Knowledge Strategy
Linkage between drivers:
Business Strategy
• Marketplace uncertainty
• Growth vs. Profit strategy
• Customer growth vs. retention
• Leverage core competencies
• Competitors and emerging products
• Complementary capability
• Alliances and mergers
• Learning organization
• Enabling knowledge creation
• Learning from practice
• Community development
Knowledge
Strategy
Strategy as Pattern and
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Learning
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Strategic Drivers
Growth through share,
market strength,
distribution – external
market focus
Market
Growth
Customer
Intimacy
Forging long-term, deep
relationships with
customers – external
focus, growing with
customer success
Operational
Effectiveness
Profit through productivity
and cost control – internal
development focus
Traditional KM driver,
but should not be the only one!
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Strategic Drivers
Expand - Enter
Knowledge
Strategy
Business
Strategy
Enhance
“Embrace”
Product Innovation
Knowledge Creation
New Competency
Process Innovation
Knowledge Sharing
Developing Learning
Culture
Business Innovation
Customer Knowledge
Integration
Branding Knowledge
Product Sales
Time to Market
Distribution Networks
Pricing Strategy
Patent & Product
Leverage
Process streamlining
Supply chain mgt
Accounting &
Financing
Customer retention
Customer product needs
Revenue growth
Partnering / Alliancing
Market
Growth
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Operational
Effectiveness
Customer
Intimacy
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Resource Strategy Model
Potential Entrants
Suppliers
Industry
Buyers
Porter’s 5 Forces strategic model
(SWOT approach) breaks when applied
to leverage of specific firms. Chaotic
business dynamics now require we
leverage unique strengths.
Substitute Products
Knowledge
Resources
Organization,
Capabilities, Core
Competencies
A resource strategy addresses
firm’s only competitive
differentiation - renewable
resources of knowledge, skills,
and capabilities (Penrose, Zack,
Teece, Quinn, Grant, Kogut).
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Firm’s Knowledge
Strategy
Customer
Relationships
Strategic
Resources
Networks, Partners
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Resource Strategy...

Penrose theory
(1959)
 Firm’s only competitive advantage from superior adaptation
 Superior coordination of internal resources (knowledge)
 Explains diversification, uniqueness, culture

Uniqueness of firm gives it competitive strength
 Diversification exploits imperfections in markets
 Development of dynamic capabilities and market responses

In turbulent business environments:
 Focus on what we can know – Resources: Strengths and
Weaknesses
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Resource-View of Strategy
How does this show up in practice?

Collective Practice
(Spender, 1994)
 Routines and embedded practices
 Tacit social knowledge, effective, yet unknown to individuals
 Upside: Competitive cultures (e.g., Microsoft, Cisco)
 Downside: Ultra-stable processes can’t easily change
Also: Founder-based cultures (start-ups) slow to change
 Embedded values in organization resist new approaches

Organizational culture as an inimitable strength
(Barney, 1991)
 Beliefs, values, shared meaning
 Culture cannot be exported or replicated
 Social communities prevent overdependence on individuals
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Dynamic Capabilities

Dynamic adaptability as organizational resource
 Flexibility, Speed of response
 Requires dynamic strategy

Critical knowledge and markets change rapidly
 New business models
 Internet economy
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Dynamic Learning

Adaptive, dynamic learning fundamental to
organizational competitiveness

Learning cycles key limiter of knowledge strategy
 Core competency learning – Time to core capability
 Dynamic learning cycle – Time to new capability

E.g. Asian economic recovery
Honda’s entry into US motorcycle market
 No “strategy” as plan at all! Entirely emergent …
 Cultural learning, Acquisition of knowledge
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Knowledge Resource Building
Core Knowledge
 Shared by all members of industry – No competitive value
 E.g., Internet technology, XML, Knowledge depreciation
Advanced Knowledge
 Differentiated, but accessible
 Positioning of available knowledge
 E.g., advanced UIs for Web products, usability
Innovative Knowledge
 Significant, nonreplicable differentiation
 Products, processes, and markets interrelated
 E.g., Intel’s lead in processors affords superior access to
market and next-generation PC products
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Where do you stand?
Your
Organization
Innovator
Innovative
Leader
Viable
Competitor
Advanced
Laggard
advancement
At Risk
Core
“exit strategy”
Core
Knowledge
Advanced
Knowledge
Innovative
Knowledge
Competitors
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Quick Case Example
Client: A pharmaceutical company
Business Problem: A drug a manufacturer sees investment in
its Internet strategy as poor if not failed. Sales have not
increased and new products are not being developed.
Change Approach: Revisit strategy & customers, drivers.
Changed from Growth to Customer Intimacy. Redefined the
business, brand, and competitive premise.
Transformation Occurred: 5 target customer groupings
identified - doctors, patients, pharmacists, media and
shareholders of the company. In the business of health not
drug manufacture; promoted and acted on customer centric
innovation and direction.
Value Gained: Shored up market position by listening to the
customer -- and redefining its advanced knowledge. More
proactive, with focus on health and healthy living.
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Knowledge Strategy Model
Zack’s model “14 Steps”
1. How do you want to play the game?
2. What do you need to know?
3. What do you know?
4. What’s your internal knowledge gap?
5. What do your competitors know?
6. What’s your external knowledge gap?
7. What is your learning cycle?
8. What are your competitors’ and industry learning cycles?
9. What is your learning gap?
10. What is your internal strategic gap?
11. What’s your external strategic gap?
12. What’s your industry cycle strategic gap?
13. What’s your new current and future strategy?
14. What’s your knowledge strategy?
Zack, M. (1999). Developing a Knowledge Strategy. California Management Review.
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How we adapted it …
1
Envisioning
Business
Strategy
2
Knowledge
Valuation
Creating
Knowledge
Strategy
3
4
Knowledge
Pathbuilding
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Identified and developed a business strategy, and linked initial
knowledge needs. This phase used strategy workshops and
scenario planning sessions to develop the initial strategy.
Analyzed the current state of the organization, diagnosing
gaps, rate of learning, and other knowledge issues. The phase
delivered knowledge maps and an organizational assessment.
Analyzed impacts and developed strategies for addressing
gaps and redesigning processes. Organizational design and
development aligned knowledge work to the strategy.
Designed knowledge architecture to support full participation.
Coordinated plans, people, and information resources to
integrate the strategy into organizations, systems, product
lines, and business processes.
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Creating Knowledge Strategy

Knowledge SWOT
 Business + Knowledge
 Strengths, Weaknesses, Opportunities, Threats

Strategic Scenario Planning

Shared models of potential future conditions

People remember stories; SWOT points fall away quickly.

Mapping to Core Practices

Mapping to Core Competencies

Four Knowledge Enablers
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Knowledge Enablers
Knowledge
Resources
What do we know and where is it ?
Culture &
Learning
Practices
What processes leverage
that know-how?
How do we participate
with this know-how?
Collaborative
Technology
How do we support this know-how?
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Middle-Up-Down Management
Top-Down
- Middle sees organizational needs best
- Top-down knowledge strategy authoritarian
- Communities have limited access to big picture
- Dynamic business conditions require view
from the middle
Recognition of:
Opportunity for knowledge integration:
Customers, Context,
Constituents
Strategically linked, Organizational
Knowledge communities,
local initiatives
Bottom-Up
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What we learned …
1
Envisioning
Business
Strategy
Reviewed and redesigned our business strategy
Linked initial knowledge needs to scenarios,
across 6 critical business processes
>> Rapid phase of strategy + assessment
2
Knowledge
Valuation
Organizational assessment of 4 knowledge enablers
Assessed state-of-knowledge, networks, competencies
>> Time-consuming phase, requiring qualitative research
Creating
Knowledge
Strategy
Strategic gaps identified against KS
Priorities set by evaluating ranked impacts
>> Direction for action planning & KM planning
Knowledge
Pathbuilding
In progress –
Client/Project knowledge network project underway …
Process and practice relationships redefined
Open sharing within communities
3
4
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Strategic Knowledge Applications
Knowledge
Resources
Core and complementary competencies
Organizational capabilities
Structured and unstructured information
Personal knowledge and unique skills
Customer relationships
Intellectual property
Knowledge assets
Collaborative
Technology
Infrastructure and standard systems
Groupware and email applications
Web-enabled portals and Internet
applications
Process management systems
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Strategic Knowledge Applications
Practices
“Knowledged” business processes
New organizational routines
Embedded and specialized processes
Practice communities
“How things are done”
Culture and
Learning
Core organizational values
Personal values and leadership
Organizational ecology
Hiring and enculturation
“How we see ourselves”
Individual and group skill development
Organizational learning
Style of management, work, engagement
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Knowledge Strategy Toolkits
Alignment with Strategic Priorities:

Strategy Design – Scenario Building

Cultural Assessment ….Readiness assessment

Knowledge Framework to embed Business Plan

Portfolio of Knowledge Management Projects

‘Value from Knowledge’ Plan

Business review process

Knowledge Pathbuilding
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What we learned …

Not enough to visit strategy once.
 Business strategy must be dynamic and ongoing.

SWOT is simple and efficient, communicates well.
 However, scenarios create a shared vision of possible
business – in practice, are much more actionable.

Initial knowledge strategy develops quickly.
 Take advantage of momentum and use initial findings.

It’s the rest of the process that takes time!
 Not about strategic planning, but about knowledge creation
and sharing in the domain of business strategy.

Work parallel efforts, using multiple disciplines.
 Knowledge strategy requires broad participation.
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Discussion Questions

What’s been your experience?
 SWOT, scenarios, planning workshops …

Where do things get stuck?
 How do you get the organization unstuck?

Should you assess knowledge strategy readiness?

What drivers push knowledge strategy?

What drivers obviate it? When should you wait?

What are your enabling conditions?

What are you waiting for?
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