Sharpening Knowledge Innovation Capabilities An Information and Knowledge Perspective

1
????????????Sharpening Knowledge Innovation
Capabilities An Information and Knowledge
Perspective

• A Presentation to the Doctoral Students in
  Business Management
• June 30, 2005
• ???
• Wen-Jang (Kenny) Jih
• Department of Computer Information Systems
• Jennings A. Jones College of Business
• Middle Tennessee State University
• Murfreesboro, TN 37132

2
Generic Capabilities for Knowledge Economy

• Strategic Thinking
• Systematic (Holistic) Thinking
• Critical Thinking
• Creative (Innovative) Thinking
• Ethical Thinking (Conscience)
• Collaborative (Community-Minded) Thinking
• Supplementary and Complementary

3
Innovation?

• Innovation is an economic and social term. Its
  criterion is not science or technology, but a
  change in the economic and social environment, a
  change in the behavior of people, as consumer or
  producer.
• Drucker, 1974

4
Classification of Innovation

• Technological Innovation
• Product (Functional, Form, Ergonomics)
• Process
• Plant
• Equipment
• Operation
• Social Innovation
• Market (Customer) Innovation
• Organizational (Leadership) Innovation

5
Innovation A Key Determinant in Knowledge
Economy

• APQC identified three focus areas for value
  proposition
• Customer intimacy
• Product-to-market excellence
• Operational excellence
• All require an innovative community of knowledge
  workers.
• Innovation is a core competency.

6
Dynamic capabilities An expanded paradigm for
competitive advantage

• Competitive forces framework
• Game-theoretic models
• Resource-based framework
• Dynamic capability framework
• Winners in global marketplace have been firms
  demonstrating timely responsiveness and rapid and
  flexible product innovation, along with the
  management capability to effectively coordinate
  and redeploy internal and external competencies.
  (David Teece and Gary Pisano)

7
Globalization Threat and Opportunity

• Globalization 1.0 (1492 1800) World shrunk
  from large to medium by countries for resources
  and imperial conquest
• Globalization 2.0 (1800 2000) Size medium to
  small, Companies, markets and labor
• Globalization 3.0 (2000 - ) Small to tiny and
  flattening of playing field, Individuals

8
Ten Driving Forces of Globalization

• 1st The Fall of the Berlin Wall on Nov. 9, 1989
• 2nd Netscapes going public
• User interface
• Overinvestment in fiber-optic telecommunications
  cable
• 3rd Development of workflow and other
  collaboration software

9
Ten Driving Forces of Globalization (Continued)

• 4th Flattener Outsourcing (All kinds of works
  could be digitized, disaggregated and shifted to
  any place where it can be done better and
  cheaper.)
• 5th Flattener Offshoring
• 6th Flattener Open-sourcing
• 7th Flattener Insourcing (e.g., UPS)
• 8th Flattener Supply-chaining (If Wal-mart were
  a country, itd be Chinas 8th-largest trading
  partner)
• 9th Flattener Informing (e.g., Google, Yahoo and
  MSN Search)
• 10th Flattener Wireless access and VoIP

10
Whos participating in globalization?

• Globalization 1.0 and 2.0 European and American
  companies
• Globalization 3.0 Every color of human rainbow
• 30 years ago, if you had a choice of being born a
  B student in Boston or a genius in Bangalore or
  Beijing, you probably would have chosen Boston,
  because a genius in Beijing or Bangalore could
  not really take advantage his or her talent.

11
Second Wave Offshoring U.S. PerspectiveThe
Big SqueezeRichard Ernsberger Jr.Newsweek
International05/23/2005

• Chinas export grows by 30 percent annually.
• Americas trade deficit with China 162B (Total
  610B)
• Forrester Research estimates that more than 3
  million U.S. jobs will be moved overseas in the
  next 10 years.
• Since 2001 U.S. productivity has risen by about 4
  percent annually, but wage growth has averaged
  only 1.5 percent.
• U.S. software industry lost 16 percent of its
  jobs from March 2001to March 2004.
• College student enrollment in computer and
  engineering programs is down 23 percent between
  2002 and 2003.
• More than 100 multinationals have set up RD
  centers in India.
• From job security to employment security
• Where is Taiwans opportunity?

12
Management Education at Risk

• Report of the Management Education Task Force to
  the AACSB-International Board of Directors
• April 2002
• Curricular Relevance
• Remain globally relevant
• Blur boundaries between educational disciplines
• Offer innovative programs
• Ally with other providers to increase offerings
• Doctoral Faculty Shortage The annual U.S.
  production of business doctorates decreased by
  19.3 between 1995 and 2000, and only 62.1 of
  those Ph.D.s planned to teach at a university.
  it takes approximately 7.6 years to earn a
  doctoral degree in business.

13
Innovating is

• A habit
• A way of life
• A commitment
• A necessity
• A culture
• A winning strategy
• A science
• An art
• An action
• A management responsibility

14
Innovation is a generic capability

• Marketing
• Product design
• Supply chain management
• Finance
• Accounting
• Human resource management
• Information / communications
• Strategic management

15
Information Exchange
Execute
Enable
Decision Support
Facilitate
Technology
Value and Business Activities
Information Technology View of E-Business
Knowledge-Management of E-Business
Achieve and Enhance
Nurture and Stimulate
Business Goals
Adapted from (Holsapple Singh, 2000)
16
Innovation leads to more innovation.
Business Opportunities
Business Innovation
Technological Innovation
Expectation For More Technology
17
Inhibitors of Innovation

• A forgotten capability (Comes natural with
  children) Friction and inertia
• Pride
• Ignorance
• Environmental constraints
• Lack of motivation (internal, external, sense of
  entitlement, laziness)
• Lack of knowledge and skills
• Confined by experience
• Blind loyalty to authority
• Lack of leadership

18
The Role of Information Technology

• Not sufficient, but essential
• Facilitates and enables
• Recent business management innovations are driven
  by technology
• TQM, BPR, SCM, CRM, Learning Organization, EC,
  EB, Virtual Organization, Outsourcing,
  Insourcing, Concurrent product design, etc.
• New technologies in old contexts (e.g., software
  agent in SCM)
• Old technologies in new contexts (e.g., Hilton
  Hotels database of help tips)

19
What does psychiatrist say about under-performing
smart people?

• Attention deficit trait (ADT) A neurological
  phenomenon identified by Edward M. Hallowell,
  Psychiatrist, Founder of the Hallowell Center for
  Cognitive and Emotional Health
• Attention deficit/hyperactivity disorder (ADD) A
  genetic neurological disorder can be aggravated
  by environmental and physical factors 5 of
  adult population
• ADT is caused by environmental factors, brain
  overload

20
Symptoms of ADT

• Distractibility, inner frenzy, impatient
• Difficulty staying organized, setting priority,
  and managing time
• Reacting to problems as they happen, rather than
  actively managing them
• Symptoms come upon a person gradually through a
  series of minor emergencies, a constant low level
  of panic and guilt.

21
Brain

• When asked to process dizzying amounts of data,
  its ability to solve problems flexibly and
  creatively declines and the number of mistakes
  increases.
• Frontal lobes (Executive Functioning, EF)
  Decision making and planning, organization and
  prioritization of information and ideas, time
  management, and various other sophisticated,
  uniquely human, managerial tasks
• As long as our frontal lobes remain in charge,
  everything is fine.

22
Brain (Continued)

• Beneath the frontal lobes lie the parts of the
  brain devoted to survival. These deep centers
  govern basic functions like sleep, hunger, sexual
  desire, breathing, and heart rate, as well as
  crudely positive and negative emotions.
• When you are doing well and operating at peak
  level, the deep centers send up messages of
  excitement, satisfaction, and joy. They pump up
  your motivation and help you maintain attention.
• When your brain is overloaded, it begins to
  panic. I switches to the survival mode. Fear
  shifts us into survival mode. Survival signals
  are irresistible.

23
Managing ADT

• Promote positive emotions
• Build a positive, fear-free emotional atmosphere,
  because emotion is the on/off switch for
  executive functioning.
• Leaders demand deep thinking, rather than fast
  thinking (second-rate thinking)
• Matching skills to tasks

24
Managing ADT (Continued)

• Take Physical care of your brain
• Sleep, good diet, exercise
• Develop tactics for getting organized

25
Innovation for Business Management Research

• Model-based induction and deduction - building
  blocks and tools
• Innovating by integrating (multidisciplinary
  research, technology application and management)
• Innovating by organizing or re-organizing (e.g.
  Meta-analysis, literature review)
• Innovating by pioneering

26
Business thinking without constraints
Benefit
Significance and Contribution
Competitive Advantage
Efficiency and Productivity
Challenge
27
Wisdom
Stakeholder
Design Focus

Knowledge
User
Information
Technology
Data
Hierarchical Structuring
Relational Specification
Network Mapping
Modeling Paradigm
Evolution of Enterprise Application Design
28
Knowledge-Based Innovation Lessons from Nucor
Steel

29
Who is Nucor Steel

• Largest steel producer in the United States
• Over 6.2 billion in sales annually
• Nation's largest recycler
• over 14 million tons of scrap steel annually
• Origins are with auto manufacturer Ransom E.
  Olds, who founded Oldsmobile and then Reo Motor
  Cars.
• 1972-company adopted the name Nucor Corporation
• Since 1972, Nucor has built
• Three more Vulcraft facilities,
• eight steel mills, and
• expanded into other steel products.

Source http//www.nucor.com/aboutus.htm Date
obtained February 12, 2005
30
Who is Nucor Steel contd.

• In 2002, purchase Birmingham Steel Corporation
• Four operating mills in Alabama, Illinois,
  Washington, and Mississippi.
• Today, Nucor has operating facilities in 14
  states. 
• Products include 
• carbon and alloy steel in bars, beams, sheet, and
  plate
• steel joists and joist girders
• steel deck
• cold finished steel
• steel fasteners
• metal building systems
• light gauge steel framing

Source http//www.nucor.com/aboutus.htm Date
obtained February 12, 2005
31
Who is Nucor Steel contd.

• More than 9,900 employees
• Seeks to hire and retain highly talented and
  productive people.
• Simple, streamlined organizational structure
• allow employees to innovate and make quick
  decisions
• Highly decentralized
• most day-to-day operating decisions made by the
  division general managers and their staff
• The organizational structure at a typical
  division is made up of only four layers
• General Manager
• Department Manager
• Supervisor/Professional
• Hourly Employee

Source http//www.nucor.com/aboutus.htm Date
obtained February 12, 2005
32
Two Central Tasks of KM

• Creating and acquisition
• Creation of new knowledge
• Acquisition of external knowledge
• Retention of proprietary knowledge
• Sharing and mobilization
• Identification of opportunities for sharing
• Inflow/outflow or motivation of receiving/sharing
• Transmissionbuilding effective transmission
  channels

33
Employee relations at Nucor are based on four
clear-cut principles

• Manage so that employees have the opportunity to
  earn according to their productivity.
• Employees should be able to feel confident that
  if they do their jobs properly, they will have a
  job tomorrow.
• Employees have the right to be treated fairly and
  must believe that they will be.
• Employees must have an avenue of appeal when they
  believe they are being treated unfairly.

Source http//www.nucor.com/aboutus.htm Date
obtained February 12, 2005
34
How Nucor Accumulates Knowledge

• Knowledge creation
• Superior human capital
• Locates in rural areas
• Large supply of labor with good work ethic
• High-powered incentives
• Motivates desired behaviors
• Become process experts
• Hold each other accountable
• Empowered employees
• Push decision-making down to lowest level
• Experimentation with accountability

35
How Nucor Accumulates Knowledge

• Knowledge acquisition
• Abilities
• Better knowledge of processes that personnel at
  other steel companies
• Mind-set and behaviors
• Experts in the industry
• Better than those in comparable roles at other
  locations
• Confidence in organizations ability
• New technologies risks
• Together, we can do it attitude

36
How Nucor Accumulates Knowledge

• Knowledge retention
• Lowest turnover rate in industry
• Successful in identifying mutual interests and
  goals
• Operating policies cultivate loyalty and
  commitment
• Shared pain policy
• No layoffs during recessions
• Reduced work week reduced wages
• Greater reduction in pay for managers and CEOs
• Classless Benefits

37
How Nucor Mobilizes and Shares Knowledge

• Identifying opportunities to share knowledge
• Systematic collection and sharing of performance
  data and best practices
• Knowledge outflow/inflowencouraging employees to
  share/receive knowledge
• Group-based incentives
• Shop-floor pay linked to team performance
• Managers pay linked to plants performance
• Plant managers pay linked to companys
  performance
• Individual performance had minimal impact on
  his/her bonus if team performed poorly
• Motivated sharing of knowledge and best practices

38
How Nucor Mobilizes and Shares Knowledge

• Knowledge transmission
• Structure of knowledge requires appropriate
  channel for transmission
• Highly structured/codified
• Via information technology
• Tacit knowledge
• Face-to-face communication
• Transfer of people between departments and plants
• Within plant
• Limited size bewteen 250 and 300
• Fostered family atmosphere
• Promoted trust and open communications
• Annual dinner with plant manager

39
How Nucor Mobilizes and Shares Knowledge

• Knowledge transmission contd.
• Between plants
• Detailed performance data shared on regular basis
• General managers met three times/year
• Composite teams would visit plants to share best
  practices
• Reassigned people from one plant to another on
  basis of expertise
• Best practices built in to new plant start-ups

40
Framework for Effective KM

• Maximizing knowledge creation and acquisition
• Set stretch goals
• Set goals that require some innovation
• Provide high-powered incentives
• Potential for reward must match or exceed level
  of risk
• Cultivate Empowerment and Provide Slack
  Resources
• Provide opportunity to be creative and work on
  individual projects without asking
• Provide a Well-defined Sandbox
• A safety-net for organization
• Sets boundaries for slack resources
• Cultivate a market for ideas within the company
• Employees allowed to market ideas outside of
  department

41
Framework for Effective KM

• Maximizing knowledge sharing
• Ban Knowledge Hoarding and Champion Knowledge
  Givers
• Rely on Group-Based Incentives
• Reinforce knowledge sharing as a cultural norm
• Make individual performance visible
• Empower group to fire the chronic underperformer
• Invest in Codifying Tacit Knowledge
• Note that there are limits
• Match Transmission Mechanisms to Type of Knowledge

42

• The goal is an organization that is constantly
  making its future rather than defending its past.
• - Hamel Valiksngas, 2003

43
Thank You!Questions or Comments?

• kjih_at_mtsu.edu