icac 2009 1

Dr. Daniel Chandran, UTS 1

Knowledge based assets for competitive success

Session 1

Dr. Daniel Chandran Faculty of Engineering & Information Technology

University of Technology, SydneyAugust 2009


Objectives

• What is Knowledge?• What is Knowledge Management?• Why Knowledge Management?• Why KM fails?• Business Strategy Map• KM Implementation Strategy


Question - 1

• If you were asked to detail your specialist knowledge, how would you describe your knowledge?

• Have you ever thought of the market value of your knowledge and what this may be?


Question - 2

Given that there is a competitive market for your knowledge and skills, how do you ensure that your knowledge is state-of-the-art and kept up to date?


Data, Information and Knowledge - Distinction

• Data are the raw material of which Systems are built - a number, a word, an image, a picture

• Information is processed data (for a purpose) or value-added data– Aggregation of data that makes decision making easier

• Knowledge is understanding what the information means or implies– Refers to information that enables action and decisions (Info with direction)– Key resource in determining competitive advantage and

marketplace success


Knowledge TypesKnowledge Types

• Explicit Knowledge – Expressed into words and numbers – Can be shared formally and systematically. – Explicit knowledge is codified and digitized

• Eg.manuals,drawings, video tapes…• Tacit Knowledge – includes insight, intuition and hunches

– Difficult to express and formalize and difficult to share – Based on personal experience– Best communicated through dialogue and scenarios with

use of metaphors– Personal, hard to formalize and complex– Chunking knowledge – knowledge stored in an expert’s

memory as chunks• Characteristics of Knowledge

– Can be Born, Die, Owned and Stored


Explicit and Tacit knowledge

Oral Communication“Tacit” Knowledge

50-95%

Information Request “Explicit” Knowledge

Explicit Knowledge Base5 %

Information Feedback


Definition

From a practical business perspective: “KM is a deliberate, systematic business optimisation

strategy that selects, distills, stores, organises, packages and communicates information essential to the business of a company in a manner that improves employee performance and corporate competitiveness”.

Bergeron, B.2003

It is a systematic approach to managing intellectual assets for competitive advantage


Knowledge Management: Benefits

People more productive

Quicker to prepare outcomes

Better quality outcomes

Reduced cost in producing outcomes

Revenue

People costs


Overlapping factors of KM

PEOPLE(Workforce)

TECHNOLOGY(IT Infrastructure)

ORGANIZATIONALPROCESSES


Knowledge Derivation

• Customer Knowledge – their needs, who to contact, customer buying power, etc

• Product Knowledge – products in the market place, who is buying them, what prices they are selling at etc

• Financial knowledge – capital resources, where to acquire capital and at what cost

• Personnel practices Knowledge – expertise available, the quality service they provide, how to go about finding experts etc

Indicators of Knowledge: thinking actively and ahead; not passively and behind


THE KNOWLEDGE ORGANIZATION

KnowledgeOrganization

Collect

Organize

RefineDisseminate

Culture

Leadership

Techno-logy IntelligenceMaintain

Competition

KnowledgeManagementProcess

KM Drivers

Create


KNOWLEDGE MANAGEMENT & INNOVATION

PEOPLE

KnowledgeBase

OutsideEnvironment

Existing methods/processes

Learning

Newideas

Conversion

Insights

KnowledgeCreation

OrganizationalBenefits

Codified Technology

• New products• New markets• Smarter problem-solving•Value-added innovation•Better quality customer service•More efficient processes•More experienced staff


KM Life Cycle

Four-Process View of KM:• Capturing – data entry, scanning, voice input,

interviewing, brainstorming• Organizing – cataloging, indexing, filtering,

linking, codifying• Refining – Contextualising, collaborating,

compacting, Projecting, mining• Transferring – flow, sharing, alert, push


Business Strategy drives KM

• Understand business strategy in order to develop KM strategy

• Balanced Scorecard Strategy Map– To align business activities to the vision and strategy of

the organisation– Monitor organisation performance against strategic goals– Originated by Kaplan and Norton, HBS


Mission / Values/Vision/Strategy

• Mission – why we exist?– Starting point by defining why the organisation exists

• Values – what’s important to us?– Remains fairly stable over time

• Vision – what we want to be (mid to long term)?– Organisation’s direction and sets the organisation in

motion

• Strategy – how do we get there? – Evolves over time to meet the changing conditions

posed by the external environment and internal capabilities

– Strategy maps and Balanced Scorecards can be developed for any strategic approach


The Strategy Map

Financial Perspective

Customer Perspective

Internal Process Perspective

Learning & Growth Perspective

“If we succeed, how will we look to our shareholders?”

“To achieve our vision, how must we look to our customers?”

“To satisfy our customers, which processes must we excel at?”

“To achieve our vision, how must our organization learn and improve?”

Creates Value for the

Enterprise

Knowledge Management


Long-Term Shareholder value


Productivity

Revenue Growth

Customer Perspective

Price Quality Time Function

Partnership BrandProduct/Service Attributes

Relationship Image


Learning & Growth Perspective

Manage Innovation

Manage Operations

Manage Customers

Manage Regulatory & Social Processes

Human Capital

Information Capital

Organisation Capital

Business Strategy Map: cause and effect GAME PLAN

Financial Outcomes

Customer Outcomes

Value-Creating Processes

Intellectual Assets and Activities to create value


Learning and Growth Perspective: Intangible Assets

Knowledge that exists in an organisation to create differential advantage or the capabilities of the company’s employees to satisfy customer needs.

Intangible Assets must be aligned with the strategy in order to create value.– E.g. TQM and CRM

• Human capital• Information capital• Organisation capital



• Manage operations• Manage Customers• Manage Innovation• Manage regulatory & social Processes


Customers Perspective

• Target segments– How the organisation will create differentiated, sustainable

value to targeted segments• Growth targets by segment (product mix & product

performance required)– Customer Retention – Customer Acquisition

• Revenues per customer (lifetime value/profitability) vs Cost per customer

• Customer value proposition: Define the conditions to create value for the customers: cost leadership? product leadership? Customer intimacy? – Product/service attribute

• Price, quality, availability, selection, functionality– Customer relationship / experience

• Service, partnership– Image / brand strength



• Growth targets (overall & by customer, by product/service) – Selling more– Spending less– Revenue growth by deepening relationships with existing

customers• Banks – Home loans• Introducing new products e.g. Woolworths - Petrol

• Cost/productivity targets– Lowering direct and indirect expenses

• Spending less on people, energy and supplies • Utilising their financial and physical assets more

efficiently

• To deliver the vision / outcomes desired


5 Ps of Strategic KM

1. Planning• Defined knowledge needs• Systems and processes

2. People• Participants commitment• Sharing culture• Leadership values

3. Processes• Alignment of strategy, Principles, Processes and practices

4. Products• Capture• Distribution

5. Performance


KM Implementation Strategy

• Why – Intent? (From Business Strategy)– E.g. Business ability to cross-sell product lines based on customer

needs• Who – knowledge worker?

– E.g. Financial Advisor, Senior Manager etc• What knowledge?

– Customers– Products – Processes / systems– Business relationships– Competitors– Partners / suppliers– Regulations

• How – Infrastructure?– Formalized knowledge process (create, store, distribute,

collaborate, protect)– System Assets (Customer, Product Databases)– Training & informal best-practice knowledge sharing– Certification institutions


Successful Knowledge Management…when

• Strategy aligned with the Business Strategy• Supported people in their work and activities to

create value• Inculcated as a business discipline (corporate

culture) supporting critical business processes• Used to improve the business processes• Measured against the strategic objectives


Conclusion - Business Challenges

• Optimize the performance of operational processes to reduce costs and enhance quality

• Commercialize the products at the lowest price possible


References

• Awad, E.M. and Ghaziri, H.M. (2004). Knowledge Management. Pearson.

• Becerra-Fernandez, I, Gonzales,A and Sabherwal, R. (2004). Knowledge Management: Challenges, solutions and technologies. Pearson.

• Davenport, T.H. and Probst, G.J.B.(2002). Knowledge Management Casebook. John Wiley.

• Debowski, S.(2006). Knowledge Management. Wiley.• Kaplan, R.S. and Norton, D.P. (2004). Strategy Maps:

Converting intangible assets into tangible outcomes. Harvard Business School Press.

• Nonaka, I. And Takeuchi, H(1995). The Knowledge Creating Company. OUP.

• Thompson and Strickland. 2010. Crafting and executing strategy.

McGraw-Hill.


Knowledge Exercise

• 5 groups to present on the following scenario:“Suppose you were asked to do a 15-minute

presentation before the managers of a small retailer about the pros and cons of KM. What would you say? Outline the content of your talk.”

icac 2009 1

Education

easier knowledge

knowledge distinction

indicators of knowledge

specialist knowledge

knowledge based assets

product knowledge products

stored knowledge types

video tapes tacit knowledge