Working Knowledge : How Organizations Manage What They Know

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Working Knowledge How Organizations Manage What
They Know

• By Thomas H. Davenport
• And Laurence Prusak
• Elridge D'Mello
• Graduate Student in Computer Engineering

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Ch 1 What do we talk about when we talk about
knowledge?

• Data
• Information
• Knowledge
• Related, but not interchangeable!

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Data

• Set of discrete, objective facts about events.
• Organizational context structured records of
  transactions.
• Needed by all organizations especially Banks,
  insurance companies, government agencies
• More not always better
• Can be difficult to make sense of in large volume
• No inherent meaning in data
• Why is data important?
• It is the essential raw material for the creation
  of information

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Information

• Data endowed with meaning and relevance Peter
  Drucker
• Data that makes a difference
• Data sent from sender to receiver intended to
  alter the receivers perception of something
• Moves in hard and soft networks
• Traditional networks hard networks
• A note, an FYI soft network

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How to add value to Data

• Contextualized
• Categorized
• Calculated
• Corrected
• Condensed

Information
Data
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Knowledge

• Knowledge derives from minds at work.
• Definition
• Fluid mix of framed experience, values,
  contextual information, and expert insight that
  provides a framework for evaluating and
  incorporating new experiences and information.
  It originates and is applied in the minds of
  knowers. In organizations, it often becomes
  embedded not only in documents or repositories
  but also in organizational routines, processes,
  practices and norms.

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How to Transform Information into Knowledge

• Comparison how does this info compare with other
  situations weve known?
• Consequence 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?
• These knowledge creating activities take place
  within and between humans

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How do we know if it's any good?
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Components of knowledge

• Experience
• Knowledge develops over time, through experience
• Provides a historical perspective from which to
  view and understand new situations and events.
• Firms hire experts buy experience-based
  insights.
• Ground Truth
• Knowing what really works and what does not.
• Armys After Action Review (AAR) program.

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Components of knowledge

• Complexity
• Knowledge is not a rigid structure that excludes
  what doesnt fit it it can deal with complexity
  in a complex way.
• Knowledge is aware of what it doesnt know.
• Judgment
• It judges and refines itself in response to new
  situations and information.
• When knowledge stops evolving, it turns into
  opinion or dogma.

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Components of knowledge

• Rules of Thumb and Intuition
• Those with knowledge dont have to build an
  answer from scratch every time, thus offering
  speed.
• Intuition is compressed expertise
• Values and Beliefs
• Values and beliefs are integral to knowledge
• Knowledge, unlike information, is about beliefs
  and commitment. -- Nonaka Takeuchi

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Knowledge as a Corporate Asset

• Effect of the Changing Global Economy
• No room for inefficient production.
• Organization that knows how to do new things well
  and quickly will thrive over the next decade.
• Product and Service Convergence
• Knowledge and related intangibles are
  increasingly becoming part of the products
  firms offer
• The intangibles that add value to most products
  and services are knowledge-based.

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Knowledge as a Corporate Asset

• Sustainable Competitive Advantage
• Today, it is very easy for competitors to figure
  out the secrets of a companys products use
  of reverse engineering, information flow,
  advanced technology.
• But knowledge can provide a sustainable
  advantage.
• Unlike material assets which decrease with use,
  knowledge assets increase with use.

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Information Technology and Knowledge Exchange

• Caveat Having more information technology will
  not necessarily improve the state of
  information/knowledge.
• E.g. TV was supposed to be device that bridged
  culture gaps and foster world understanding.
• Networked computers can be used as knowledge
  enablers.

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Case Study British Petroleum (BP)

• British Petroleums Virtual Teamwork Program
• BP Exploration 42 separate business assets
• Goal Agility of small company with resources of
  a large one
• Implementation
• Stressed corporate behavior vs. technology
• Coaches and teams Coaches helped team members
  link business objectives to system capabilities
  challenged individuals
• Emphasis person-to-person interaction and
  understanding vs. system requirements

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Case Study British Petroleum (BP)

• Results
• 4 of the 5 pilot groups had great success
• Measurable savings (time and money)
• Participant enthusiasm
• Volume of use
• Case in point Equipment failure on mobile
  drilling ship
• Utilized communication media to consult a
  remotely located expert and fixed the problem in
  a few hours ? huge financial savings of avoided
  downtime.

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Ch1 Summary

• Data Information Knowledge hierarchy
• Knowledge fluid in peoples minds
• Knowledge is the way to maintain a sustainable
  economic advantage

Knowledge
Information
Data
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Ch2 The Promise and Challenge of Knowledge
Markets

• Knowledge is exchanged, bought, bartered, found,
  generated, and applied to work.
• Knowledge transactions occur because all the
  participants expect the transactions to provide
  utility.
• Fact of life people rarely give away valuable
  possessions (including knowledge) without
  expecting something in return.
• Important fact to realize for any knowledge
  initiative there are markets for knowledge.

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Political Economy of Knowledge Markets

• Meet the players
• Buyers
• Knowledge seekers looking for insights, judgments
  and understanding.
• Seeks answers imbued with emotional subtexts that
  are key to our sense making.
• Sellers
• People with an internal market reputations for
  having substantial knowledge about a process or
  subject.
• Brokers
• Gatekeepers, boundary spanners.
• Examples Managers, corporate librarians.

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Factors that affect the Price System

• Reciprocity
• Most important factor
• Seller will spend time and effort needed to share
  knowledge effectively if he expects the buyers
  to be willing sellers when he is in the market
  for their knowledge, a.k.a. The favor bank.
• Related to the next most important factor
  Repute.

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Factors that affect the Price System

• Repute
• Intangible, but produces tangible results
• Importance of repute is increasing
• Workers at all levels feel considerable pressure
  to heighten their individual repute for their
  demonstrated knowledge, skills, and competencies.
  
• Altruism
• The seller is just a nice guy/gal

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The Trump card Trust!

• An essential condition of a functioning knowledge
  market.
• Established in the following ways
• Must be visible
• Must be ubiquitous
• Must start at the top
• A firms knowledge market must be founded on
  mutual trust.

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Knowledge Market Signals

• Indicate both where knowledge actually resides
  and how to gain access to it.
• Position and Education
• Not a consistent signal
• Informal Networks
• Possibly the best knowledge market signals flow
  during chats at the water cooler, cafeteria, etc.
• Disadvantage undocumented not readily available
  to all who need them
• Communities of Practice
• Employee initiated common interest groups.

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Knowledge Market Inefficiencies Responsible
Factors

• Incompleteness of Information
• Lack of maps and yellow pages to guide the buyers
  to the sellers.
• Asymmetry of Knowledge
• Some asymmetry is needed, strong asymmetry
  prevents knowledge from getting to where it is
  needed.
• Localness of Knowledge
• People usually get knowledge from their
  organizational neighbors

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Knowledge Market Pathologies

• Monopolies
• Knowledge will come at a high price
• Not be there to benefit the company
• Artificial Scarcity
• Monopoly is one form
• Downsizing can cause a scarcity as well
• Trade Barriers
• Refusal to accept new knowledge
• Status difference between seller and buyer
• Lack of good knowledge transfer infrastructure

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Developing Effective Knowledge Markets

• Using Information Technology Wisely
• Tech developments can change market dynamics
  dramatically.
• Pitfalls and Limitations of using IT
• Trying to force fluid knowledge into rigid data
  structures
• Focusing too much on the system and not enough on
  the content

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Developing Effective Knowledge Markets

• Building Marketplaces
• Create virtual spaces dedicated to knowledge
  exchange
• Members of an organization must be given time to
  shop for knowledge
• Talk rooms, knowledge fairs, live and
  electronic forums
• Creating and Defining knowledge Market Value
• Recognize, promote, reward employees for sharing
  knowledge

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Peripheral Benefits of Knowledge Markets

• Higher Workforce Morale
• Employees see that their expertise is valued
• Greater Corporate Coherence
• Shared awareness of corporate goals and
  strategies
• Richer Knowledge Stock
• Continuously refined and validated
• Stronger Meritocracy of Ideas
• Test official beliefs and expose flaw

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Ch2 Summary

• Knowledge markets exist
• Important factors reciprocity, repute.
• Trust is the key!
• Organizations should value knowledge
• Reward knowledge sharers
• Promote culture of sharing

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Ch3 Knowledge Generation

• Modes of Knowledge Generation
• Acquisition
• Dedicated resources
• Fusion
• Adaptation
• Networking

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Modes of Knowledge Generation

• Acquisition
• Knowledge does not have to be newly created
• Well stolen is half done Spanish proverb
• Most effective way buy it!
• Increasingly, firms acquire other companies for
  their knowledge
• Knowledge acquisitions can be problematic must
  be handled with care
• Various agencies trying to create metrics to
  quantify value of knowledge

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Modes of Knowledge Generation

• Rental
• Knowledge can be leased or rented
• Funded research, consultants
• Likely to include some knowledge transfer
• Make sure to take steps to retain it too!

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Modes of Knowledge Generation

• Dedicated Resources
• Establish units or groups specifically for that
  purpose
• Research and Development (RD) groups
• Fusion
• Bringing together people with different
  perspectives to work on a project
• Group members must find some common ground need
  to understand one another

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Modes of Knowledge Generation

• Adaptation
• External (and internal) changes cause businesses
  to adapt. E.g. new competitors products, new
  tech., etc.
• The business world has become aware that success
  can lead to unwillingness to adapt
• Ability to adapt based on
• have existing resources and ability to change
• being open to change
• It is important to adapt new knowledge before a
  crisis occurs

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Modes of Knowledge Generation

• Networks (communities of knowers)
• People brought together by common interests
  (informally) ? often generates new knowledge
  within firms
• Consulting and service firms have organized their
  previously informal networks into formal
  networks, with budgets, coordinators, librarians,
  etc

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Common Factors to the Modes of Knowledge
Generation

• All these efforts need adequate time and space
  devoted to knowledge creation or acquisition
• Critical that managers recognize
• Knowledge generation is both an important
  activity for success
• It must be nurtured
• The firm that fails to generate new knowledge
  will probably cease to exist!!

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Ch3 Summary

• Various modes of knowledge generation
• Acquire (buy/rent), Dedicate resources, Fusion,
  Adapt, Network
• Organizations need to be flexible
• Process takes time
• Must be done carefully

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Ch4Knowledge Codification and Coordination

• Codification means converting knowledge into
  accessible and applicable formats
• Basic principles to codify knowledge
• What goals will be served
• Identify appropriate forms to reach goal
• Evaluate utility and appropriateness for
  codification
• Identify an appropriate medium for codification
  and distribution

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Major challenge Codifying Tacit Knowledge

• Tacit knowledge
• Internal to the knower difficult to articulate
• E.g. the distinctive style of a master musician
• Codification
• Usually limited to locating someone with the
  knowledge and interacting
• This method is more efficient than trying to
  capture it electronically or on paper.

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Mapping Knowledge

• A knowledge map is a picture of what exists and
  where it is located
• Developing a knowledge map involves
• Locating important knowledge in the org
• Publishing a list or picture showing where to
  find it
• Can be used as a tool to evaluate the corporate
  knowledge stock
• Reveal strengths and weaknesses!!

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Assembling the Map

• Every employee has a piece of the map in his/her
  head
• Creating an org wide map is a matter of combining
  these individual mini-maps.
• Technology can be useful for mapping
• Yellow-pages
• Continuously updated ? better than paper
• Common tools Lotus notes/intranet systems
• Word of caution
• Politics of mapping knowledge!
• Knowledge matters

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Back to Capturing Tacit Knowledge

• As mentioned earlier, very difficult, but tacit
  knowledge has substantial value ? worth the
  effort
• Narratives very useful
• Knowledge communicated most effectively through a
  convincing narrative delivered with elegance and
  passion
• Recall AAR program war stories that convey
  ground truth very effective to communicate
  knowledge
• Embedded Knowledge
• Some tacit, internal knowledge can be
  externalized in a companys products or services
• Knowers use their expertise to develop a process
  or product

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Codifying Knowledge in Systems

• History of AI excessive claims of ability of
  computers
• Bounded, unambiguous, rule-based knowledge can be
  embedded in an expert system. E.g. Deep-Blue
• Evaluating Explicit Knowledge
• Some forms of knowledge already codified and
  explicit patents
• Evaluating codified knowledge and making it
  available is integral to the codification process

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Continuing Codification Challenge

• Challenge is to codify knowledge and still leave
  its distinctive attributes intact, putting in
  place codification structures that are as
  flexible as the knowledge itself.
• Stories and rhetoric provide the richest and most
  flexible approach to this task
• For the near future this is more art than science

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Ch4 Summary

• Difficult, not impossible to codify knowledge
• Explicit knowledge codification
• Usually possible to document
• Implicit/tacit knowledge codification
• Difficult
• Utilize narratives
• Develop knowledge maps (of where the knowledge
  is)
• Utilize electronic communication resources to
  keep the knowledge fresh.

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Cross Cutting Themes

• Knowledge resides within people
• Intangibility and fluidity of knowledge pose new
  challenges for organizations
• Organizations should be willing to pay the price
  for an intangible asset - knowledge
• Organizations must be aware of what they
  know/dont know
• Effective knowledge management is the key to
  success in todays economy

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Comments

• Authors present well rounded view of the subject
• Plenty of examples
• Illustrates authors expertise in the field
• Use their own experiences as examples
• Convincing argument for effective knowledge
  management

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Reviews and References of Working Knowledge

• Knowledge management is a business issue for
  competitive advantage, not just an information
  technology issue. It will become increasingly
  important, especially for large enterprises
  needing to create, share, and reapply knowledge
  on a global scale. Working Knowledge is as
  thorough and complete a book on this subject as
  exists today. --Todd A. Garrett, Senior Vice
  President and Chief Information Officer, Procter
  Gamble
• News article in the Financial Times, The
  challenge of managing knowledge, that references
  Working Knowledge
• http//www.sbs.ox.ac.uk/html/news_article.asp?ID6
  2
• Presents the practical challenges that arise in
  trying to implement a system based on Working
  Knowledge and other similar books
• Building a Knowledge Culture Whitepaper by A.
  Andrew Anderson
• http//www.robbinsgioia.com/library/whitepapers/Kn
  owledgeMgmt.pdf
• Presents practical steps in implementing a KM
  system

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Additional Resources

• Interview with the authors
• http//www.brint.com/km/davenport/working.htm
• Davenports website with list of latest books,
  articles
• http//www.tomdavenport.com/

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Questions?