Knowledge Management
Minder Chen, Ph.D.
MBA 550
Process
Knowledge Management
• Introduction
• Case Studies
• KM Principles
• Framework for Knowledge Management
• IT Enablers for Knowledge Management
• Implementation of Knowledge Management
• Some of the Big-Six Internal Practices
• Conclusions
© Minder Chen, 1996-2010
KM - 2
Reference Books:
• The Knowledge-Creating Company : How Japanese Companies Create
the Dynamics of Innovation by Ikujiro Nonaka, Hirotaka Takeuchi,
Takeuchi Nonaka, Published by Oxford Univ Pr (Trade), May 1, 1995
• Working Knowledge : How Organizations Manage What They Know, by
Thomas H. Davenport, Laurence Prusak, Published by McGraw-Hill,
December 1, 1997
• If Only we Knew What We Know: The Transfer of Internal Knowledge
and Best Practice, Carla O"dell and C. Jackson Grayson, Jr., Free
Press, 1998.
• Wellsprings of Knowledge : Building and Sustaining the Sources of
Innovation, by Dorothy Leonard-Barton, Published by Harvard
Business School Press, October 1, 1995
• Knowledge Management Tools (Resources for the Knowledge-Based
Economy) by Rudy L. Ruggles (Editor), Published by ButterworthHeinemann, December 1, 1996
• Intellectual Capital : The New Wealth of Organizations, by Thomas A.
Stewart, Published by Doubleday, March 1997
© Minder Chen, 1996-2010
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Knowledge Management (KM)
• "I wish we knew what we know…"
- a CEO -
© Minder Chen, 1996-2010
KM - 4
Definition of KM
Knowledge Management is the broad
process of locating, organizing,
transferring, and using the information and
expertise within an organization.
The overall knowledge management
process is supported by four key enablers:
leadership, culture, technology, and
measurement.
-- American Productivity & Quality Center
© Minder Chen, 1996-2010
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Knowledge Hierarchy
Wisdom
Knowledge
Information
Data
© Minder Chen, 1996-2010
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Information
• Information has meaning, relevance and purpose.
•
Information is organized with purpose and it can
potentially shape the receiver.
• Data becomes information when it’s creator adds
meaning. We transform data into information by adding
value in various ways:
– Contextualized: we know for what purpose the data
was gathered
– Categorized: we know the units of analysis or key
components of the data
– Calculated: the data may have been analyzed
mathematically or statically
– Corrected: errors have been removed from the data
– Condensed: the data may have been summarized in a
more concise form
© Minder Chen, 1996-2010
Source: Working Knowledge, p4
KM - 7
Knowledge
• Knowledge guides us in the process of analyzing
data and utilizing information.
• Knowledge derives from information as
information derives from data. This
transformation happens through the following
processes:
– Comparison: how does information about the situation
compare to other situations we have known?
– Consequences: what implications does the information
have for decisions and actions?
– Connections: how does this bit of knowledge relate to
others?
– Conversation: what do other people think about this
information?
© Minder Chen, 1996-2010
Source: Working Knowledge, p. 6
KM - 8
Wisdom Is…
• Unselfish
• Enlightening
• Insightful
• Uncommon common sense
• Creative interpretation of patterns or
phenomenon
• Applying knowledge and information for the
goodness of the world
© Minder Chen, 1996-2010
KM - 9
Information Overloading (Pollution)
"The impact of information is obvious. It
consumes the attention of its readers.
Therefore, a wealth of information creates a
poverty of attention."
-- Herbert Simon --
"Information absorbs the attention of the
recipient. Therefore an overabundance of
information creates a deficit of attention."
-- Jeff Hire, Owens Corning Fiberglass --
© Minder Chen, 1996-2010
KM - 10
Moving Up the Knowledge Hierarchy
• Where is the knowledge we have lost in
information?
• Where is the wisdom we have lost in knowledge?
• Where is the life we have lost in living?
T.S. Eliot, Choruses from "The Rocks," 1934
© Minder Chen, 1996-2010
KM - 11
Buckman Labs
• Buckman Labs makes chemicals - but it
sells knowledge. The challenge: invent a
way for the global sales force to spend
more time with customers and share its
brainpower. What CEO Bob Buckman came
up with was…
Nothing but Net
Source: Glenn Rifkin, "Buckman Labs In Nothing but Net," Fast
Company, June-July 1996, p. 118
http://www.fastcompany.com/03/buckman.html
© Minder Chen, 1996-2010
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Knowledge Network
• Close the gap with the customer. Stay in touch
with each other. Bring all of the company's
brainpower to bear in serving each customer.
– How do we stay connected?
– How do we share knowledge?
– How do we function anytime, anywhere - no matter
what?
• "When you ask one person a question, you
have the power of 1,200 employees behind you."
• "Our knowledge network is the pillar of our
culture. And it's there to help you (the
customer)."
© Minder Chen, 1996-2010
KM - 13
K'Netix
• Used CompuServe to set up intra-company
private bulletin boards and e-mail access
($75,000 in monthly access charges).
• Every Buchman salesperson has an notebook
computer with a modem.
• A case in point: 1 question on pitch-control
strategies, received 11 replies from 6 countries,
and secured a $6 million order from a
Indonesian mill.
© Minder Chen, 1996-2010
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Lessons Learned at Buckman Labs
• Effectively engage with the customer on the front line:
– To deploy knowledge at the point of sale
– To win business and serve the customer
– By creating private forums for core customers
• Knowledge sharing is power.
– The most powerful people are those who become a source of
knowledge by sharing what they know
• Knowledge builds trust, trust build knowledge.
– "What happen here is 90% culture change. You need to change
the way you relate to one another. If you can't do that, you won't
succeed."
• New knowledge, new metrics.
– The number of people in the organization working on relationship
with the customer, relative to the total people of the organization,
will determine the momentum of the organization (1979: 16%
1997: 50%)
© Minder Chen, 1996-2010
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Knowledge Management Principles
• KM is expensive (but so is stupidity!)
• Effective management of knowledge requires hybrid
solutions of people and technology.
• KM is highly political.
• KM requires knowledge managers.
• KM benefits more from map than models, more from
markets than from hierarchies.
• Sharing and using knowledge are often unnatural acts.
• KM means improving knowledge work processes.
• Knowledge access is only the beginning.
• KM never never ends.
• KM requires a knowledge contract.
Source: Thomas Davenport, "Some Principles of Knowledge Management,"
http://www.utexas.edu/kman/kmprin.htm
© Minder Chen, 1996-2010
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Knowledge Management Principles
• The more your share, the more you gain.
• The knowledge acquisition process should be
part of the work process.
• Integration of knowledge from multiple
disciplines has the highest probability of
creating new knowledge and value-added.
• Knowledge valuation should be conducted from
customers’ perspective.
• KM focus should be on core knowledge critical
to sustaining company’s competitive edge.
© Minder Chen, 1996-2010
KM - 17
Organizational Knowledge Management Model
KM Process
Share
Leadership
Apply
Organization
Culture
Create
Group
Organize
Individual
Adapt
Identify
Collect
Performance
Measurement
Business
Process
Technology
Source: Adapted from Arthur Andersen and the American Productivity and Quality Center
KM - 18
© Minder Chen, 1996-2010
Knowledge Management Context
• IT infrastructure is a critical component of knowledge
management (KM); however, KM encompasses much
more than IT does.
• Business strategy/goals
• Customer/supplier alliance
• Competitive factors
•
•
•
•
Collaborative processes
Information sharing
Process teams
Reward system
• Best practices
• External/internal knowledge
• Process models/templates
•
•
•
•
Intranets/groupware/e-mail
Object databases
Document management
Videoconferencing/EMS
© Minder Chen, 1996-2010
Business Environment
Business Process &
Work Environment
Context & Content
IT Infrastructure
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Knowledge Assets
Codified Knowledge Assets (Legally Owned)
Patents
Copyrights
Trademarks
Documents
•
•
•
•
•
•
Tip of the
iceberg
Working Solutions
Web of Relationships
Communities of Practice
Experience
Expertise and Theoretical Knowledge
Database
© Minder Chen, 1996-2010
Source: The Knowledge Evolution, p. 35
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Knowledge Management Cycle
Creation
Acquisition
Integration
Learning
Utilization
Categorization
Storage
Dissemination
© Minder Chen, 1996-2010
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Knowledge Management Cosmology
Gathering
Organizing
•
•
•
•
•
•
•
•
Data entry, OCR
Pull
Search
Voice input
Cataloging
Filtering
Indexing
Linking
Knowledge
Management
Disseminating
•
•
•
•
Push
Sharing
Alert
Flow
Refining
•
•
•
•
Compacting
Collaborating
Contextualizing
Mining
Source: Adapted from Jeff Angus and Jeetu Patel, Knowledge-Management
Cosmology, Information Week, March 16, 1998, p. 59.
© Minder Chen, 1996-2010
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Theory of Organizational Knowledge Creation
• Tacit knowledge is personal, context-specific, and
therefore hard to formalize and communicate.
• Explicit or codified knowledge is transmittable in formal,
systematic language.
Tacit Knowledge
(Subjective)
Explicit Knowledge
(Objective)
Knowledge of experience
(body)
Knowledge of rationality
(mind)
Simultaneous knowledge
(here and now)
Sequential knowledge
(there and then)
Analog knowledge
(practice)
Digital knowledge
(theory)
© Minder Chen, 1996-2010
Source: Knowledge-Creating Company, p. 57.
KM - 23
Two Dimensions of Knowledge Creation
Epistemological
Dimension
Explicit
Knowledge
Current
Focus
Tacit
knowledge
Individual
Group Organization
Inter-organization
Ontological
Dimension
Knowledge Level
Source: Adapted from Knowledge-Creating Company, p. 57.
© Minder Chen, 1996-2010
KM - 24
Four Modes of Knowledge Conversion
To
Tacit knowledge
Tacit
knowledge
Socialization
Explicit knowledge
Externalization
From
Internalization
Combination
1+1
Explicit
knowledge
3
Source: Knowledge-Creating Company, p. 62.
© Minder Chen, 1996-2010
KM - 25
Four Modes of Knowledge Conversion
• Socialization:
– A process of sharing experiences
– Apprenticeship through observation, imitation, and practice
• Externalization:
– A process of articulating tacit knowledge into explicit concepts
– A quintessential knowledge-creation process involving the creation
of metaphors, concepts, analogies, hypothesis, or models
– Created through dialogue or collective reflection
• Internalization:
–
–
–
–
A process of embodying explicit knowledge into tacit knowledge
Learning by doing
Shared mental models or technical know-how
Documents help individual internalize what they experience
• Combination:
– A process of systemizing concepts into a knowledge system
– Reconfiguration of existing information and knowledge
© Minder Chen, 1996-2010
KM - 26
Metaphor and Analogy for Concept Creation
Product(Company)
Metaphor/Analogy
City
(Honda)
“Automobile Evolution” Hint of maximizing passenger
(metaphor)
space as ultimate auto development
“Man-maximum,machine-minimum”
Mini-Copier
(Canon)
Home Bakery
(Matsushita)
© Minder Chen, 1996-2010
Influence on Concept Creation
The sphere
(analogy)
Hint of achieving maximum passenger
space through minimizing surface area
“Tall and short car(Tall Boy)”
Aluminum beer can
(analog)
Hint of similarities between
inexpensive aluminum beer can
and photosensitive drum manufacture
“Low-cost manufacturing process”
Hotel bread
(metaphor)
Hint of more delicious bread
Osaka International
Hotel head baker
(analogy)
“Twist dough”
Source: Knowledge-Creating Company, p. 66.
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Knowledge Spiral
Dialogue
(Collective Reflection)
Socialization
Externalization
Linking
Explicit
Knowledge
Field
Building
Internalization
Combination
Learning by Doing
Source: Knowledge-Creating Company, p. 71.
© Minder Chen, 1996-2010
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Contents of Knowledge Created in Four Modes
Tacit knowledge
Tacit
knowledge
From
Explicit
knowledge
•
•
•
•
To
Explicit knowledge
(Socialization)
Sympathized
Knowledge
(Externalization)
Conceptual
Knowledge
(Internalization)
Operational
Knowledge
(Combination)
Systemic
Knowledge
Sympathized knowledge: Shared mental models and technical skills.
Conceptual knowledge: Analogies & metaphors of products or processes.
Systemic knowledge: Prototypes or new technologies.
Operational knowledge: Project management, production process, new
product usage, and policy implementation.
© Minder Chen, 1996-2010
Source: Knowledge-Creating Company, p. 72.
KM - 29
Two Dimensions of Knowledge Creation
Epistemological
Dimension
Explicit
Knowledge
Tacit
knowledge
Individual
Group Organization
Inter-organization
Ontological
Dimension
Knowledge Level
Source: Adapted from Knowledge-Creating Company, p. 73.
© Minder Chen, 1996-2010
KM - 30
Two Ways of Knowledge Transfer
Information
Tradition
Transfers articulated information
Transfers unarticulated
and articulated abilities
Independent of the individual
Dependent and independent
Static
Dynamic
Quick
Slow
Codified
Uncodified
Easy mass distribution
Difficult mass distribution
Source: The New Organizational Wealth, p. 45
© Minder Chen, 1996-2010
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Japanese-Style vs. Western-Style Organizational Knowledge Creation
Japanese Organization
• Group-based
• Tacit knowledge-oriented
• Strong on socialization and
internalization
• Emphasis on experience
• Danger of group thinking & overadaptation to past successes
• Ambiguous organizational intention
• Group autonomy
• Creative chaos through overlapping
tasks
• Less fluctuation from top
management
• Less redundancy of information
• Requisite variety through crossfunctional teams
© Minder Chen, 1996-2010
Western Organization
• Individual-based
• Explicit knowledge-oriented
• Strong on externalization and
combination
• Emphasis on analysis
• Danger of paralysis by analysis
• Clear organizational intention
• Individual autonomy
• Creative chaos through individual
differences
• Less fluctuation from top
management
• Less redundancy of information
• Requisite variety through
individual differences
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Communities of Practice
• "A group of people who are informally bound to one
another by exposure to a common class of problem,
common pursuit of solutions, and thereby themselves
embodying a store of knowledge."
-- Brook Manville, Director of Knowledge Management at McKinsey & Co.
• Shadowy groups called communities of practice are
where learning and growth happen. Learning is social.
• The shop floor of human capital.
• You can't control them -- but they are easy to kill if you try
to manage them.
• They have history -- they develop over time.
• A community of practice has an enterprise - but not an
agenda.
• They develop customs, culture, and a way of dealing with
the world they share. Source: Thomas Stewart and Victoria Brown, "The
© Minder Chen, 1996-2010
Invisible Key to Success," Fortune, August 5, 1996.
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Knowledge Categorization
• Knowledge of products/services
• Knowledge of processes/procedures
• Knowledge of production technology
• Knowledge of customers and markets
• Knowledge of your competitors
• Knowledge of your own people
• Meta-knowledge
© Minder Chen, 1996-2010
KM - 34
KM Enabling Technologies
• Groupware
• Data warehouse and data mining
• Expert systems and knowledge based systems
• Intranet
• Electronic Performance Support Systems
• CBT, WBT
• Problem/Solution Database (Case-Based
Reasoning Systems)
© Minder Chen, 1996-2010
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Knowledge Acquisition Sample
• Goal: To capture the knowledge of high-performance Customer Service
Representatives (CSR)
– Fosters learning
– If the high-performing CSR left the firm, their knowledge would
remain
• Knowledge Needed:
– What roles do the CSRs play? (expert, confidant, friend, salesman,
sympathizer?)
– What makes one CSR better than another?
– What skills are required to be a good CSR?
– What kinds of knowledge do CSRs need (procedures, regulations,
products, industry trends)?
– How do CSRs get this knowledge and keep it current?
– What knowledge and skills are not supported by current tools and
training?
– What personality types tend to be more effective in this job?
© Minder Chen, 1996-2010
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APQC KM Inventory
1. Do you know what knowledge you have now? Who has
it? How to get it?
2. Are you systematically transferring knowledge inside
your own organization? How? Who?
3. Are you systematically acquiring outside knowledge?
How? From whom? Is it being used?
4. Are you creating new knowledge? How? Where? Who?
Is it being captured? Shared?
5. Are you leveraging knowledge: As a product? In your
products?
© Minder Chen, 1996-2010
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APQC KM Inventory
6. Are you measuring your knowledge assets? Your
return on knowledge? Are you investing in it? Where
does the investment appear in your financials?
7. Are you using technology to acquire, disseminate, and
transfer knowledge? To everyone? Everywhere?
Anytime?
8. Are you encouraging...or discouraging...knowledge
sharing? Are people sharing? If not, why not?
9. Do senior managers understand and support
management of knowledge as a business strategy?
10. Are you looking at metaphors from the "new science"
to help improve knowledge management?
© Minder Chen, 1996-2010
KM - 38
Friction and Possible Solutions
• Lack of trust
– Build relationships and trust through face-to-face meetings
• Different cultures, vocabularies, frames of reference
– Create common ground through education, discussion, publications,
teaming, job rotation
• Lack of time and meeting places:narrow idea of productive work
– Establish times and places for knowledge transfers:fairs,talk
rooms,conference reports
• Status and rewards go to knowledge owners
– Evaluate performance and provide incentives based on sharing
• Lack of absorptive capacity in recipients
– Educate employees for flexibility; provide time for learning; hire for
openness to ideas
• Belief that knowledge is prerogative of particular groups not “invented
here” syndrome
– Encourage nonhierarchical approach to knowledge; quality of ideas more
important than status of source
• Intolerance for mistakes or need for help
– Accept and reward creative errors and collaboration; no loss of status from
not knowing everything
© Minder Chen, 1996-2010
Source: Working Knowledge, p. 97
KM - 39
Ernst & Young’s Framework for KM
Storage
Acquire
• Engagement
based
• Non
engagement
based
• External
•
•
•
•
•
Input, Purge
Archive, Abstract
Index, Catalog
Coordinate
Content
Add Value
• Identify needs
• Research
• Develop
proprietary
• Package
Deploy
•
•
•
•
•
•
•
On-demand
Repeatable
Event-based
Subscription
Commercialize
Monitor usage
Measure
satisfaction
Provide Infrastructure
Organization - Culture - Technology - Public Relations
Source: Ernst & Young, and “A Note on Knowledge Management,” Harvard Business School 9-398-031, 1997
© Minder Chen, 1996-2010
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KPMG Peat Marwick U.S.: The Giant Brain
Function
• Assurance
• Tax
• Consulting
Geographic
Areas
•
•
•
•
•
•
West
Southwest
Midwest
Southeast
MidAtlantic
Northeast
© Minder Chen, 1996-2010
Line of Businesses
•
•
•
•
•
Financial services
Healthcare & life services
Information and communication & entertainment
Manufacturing, retail, and distribution
Public services
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KPMG Intranet Categories
• Industry
• Competitor
• Client
• Practice
• Engagement
• Product
• News
• Web
© Minder Chen, 1996-2010
KM - 42