Knowledge Management

1
Knowledge Management

• Chuck Audet
• Amy Schoenbeck
• Matt Eilerman
• Josh Baclesse

2
KM Vital to Success

• 79 of the CEOs surveyed in 1999 by the
  American Management Association believed that
  knowledge management was vital to the success of
  their company.
• Source Networked knowledge. CMA Management,
  Feb 2003.

3
Spend on KM
(In Billions of Dollars)
Source "Document and Knowledge Management
After-hype KM Enters Critical Phase," Computing
Canada, April 14, 2000.
4
What is Knowledge Management?

• Knowledge management involves the capture of
  your organizations information and experience so
  that it becomes part of your organizations
  know-how and expertise which can be pooled,
  disseminated and used by your skilled staff in
  doing and winning profitable business.
• Source www.retaininternational.com

5
Knowledge Hierarchy

• Knowledge
• Information
• Data

6
Data

• Raw data is the simplest and most abundant
  component of a knowledge management system
• Data on its own has no meaning
• Source The Free On-line Dictionary of Computing

7
Information

• Once organized and defined, data becomes
  information.
• Data on its own has no meaning, only when
  interpreted by some kind of data processing does
  it take on meaning and become information.
• Source The Free On-line Dictionary of Computing

8
Knowledge

• Information that has been processed.
• If information is data plus meaning then
  knowledge is information plus processing.
• Source The Free On-Line Dictionary of Computing

9
An Example to Clarify

• 1234567.89 is data.
• Youre bank balance jumped 8,087 to
  1,234,567.89 is information.
• Nobody owes me that much money is knowledge.
• Source The Free On-Line Dictionary of Computing

10
Two Kinds of Knowledge

• Explicit Knowledge
• Tacit Knowledge

11
Explicit Knowledge

• As a general rule of thumb, explicit knowledge
  consists of anything that can be documented,
  archived and codified, often with the help of
  IT.
• Examples of Explicit Knowledge include
• Any step-by-step process that has been documented
• Company policies and manuals
• Source The ABCs of Knowledge Management

12
Tacit Knowledge

• The know-how contained in peoples heads.
• Examples of Tacit Knowledge
• Knowing how to hit a baseball
• Knowledge in any job where you can skip
  steps/contacts to get what you need more quickly
• Source The ABCs of Knowledge Management and
  Reference 5.

13
What is Knowledge Management Trying to Solve?

• The problem of spending more time trying to find
  information than actually using it.
• Increase consistency of information/standardizatio
  n of processes in order to improve efficiency
  and/or effectiveness.
• Retain knowledge as workers retire or leave the
  company.
• Avoid re-inventing the wheel.
• Increase efficiency of accessing the specific
  information that workers need.
• Sources www.retaininternational.com and
  References 3 and 5.

14
What is Knowledge Management Trying to Solve?

• Goals of KM at Maritz
• Streamline and improve internal communications
• Increase cost savings through reduction in
  redundancies
• Goals of KM at Edward Jones
• Increase business process efficiencies
• Increase globalization/standardization of
  business practices

15
Different Aspects of Knowledge Management

• Creation and Capture of knowledge
• Sharing of information
• Codification of information
• Protection of information
• Retrieval of information
• Ability to update information easily
• Sources See References 2 and 3.

16
Why Knowledge Management?

• Old Knowledge Equation
• Knowledge Power, so hoard it.
• New Knowledge Equation
• Knowledge Power, so share it and it will
  multiply.
• Source See Reference 1.

17
The Benefits of Knowledge Management

• An effective KM program should help a company do
  one or more of the following
• Foster innovation by encouraging the free flow of
  ideas
• Improve customer service by streamlining response
  time
• Boost revenues by getting products and services
  to market faster
• Source The ABCs of Knowledge Management

18
The Benefits of Knowledge Management (cont)

• Enhance employee retention rates by recognizing
  the value of employees knowledge and rewarding
  them for it
• Streamline operations and reduce costs by
  eliminating redundant or unnecessary processes.
• Source The ABCs of Knowledge Management

19
The Challenges of Knowledge Management

• Most difficult challenge appears to be getting
  employees to buy-in that KM benefits them
• Determining what is and what is not useful
  information
• Deciding what information should be retained
• What quantities of information to retain
• Source The ABCs of Knowledge Management

20
Maritz Inc. Case Study
21
Maritz Inc.History

• 1894-E. Maritz Jewelry Mfg. Co. - wholesaler and
  manufacturer of jewelry and watches
• 1929-company nearly fails when stock market
  crashed-forced to take new direction-offers
  merchandise to large corporations as sales
  incentives and service awards
• 1950s-purchased small Detroit travel co.-Maritz
  added group travel as incentive award
• As 60s ended, Maritz had laid groundwork for
  ventures in communications, marketing research,
  training and meeting production

22
History cont.

• Established a presence in Europe and opened a
  travel office in Mexico
• 1981-several acquisitions made Maritz a major
  supplier of corporate travel services
• Today-Maritz operates across three major lines of
  business, Performance Improvement, Travel, and
  Marketing Research

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Maritz Performance Improvement Co.

• Worlds largest provider of incentive services to
  improve the performance of employees, channel
  partners, and customers who use the clients
  products.
• Primary services-merchandise and travel awards,
  learning systems, communications, and fulfillment
• Primary industries served-automotive,
  telecommunications, financial services, and hi
  tech

24
Maritz Travel Co.

• Global leader in providing meeting, event and
  incentive travel programs to help clients achieve
  business results through sales meetings, product
  launches, incentive award programs, technology
  conferences and more
• Primary services-meeting, event and incentive
  travel programs

25
Maritz Research

• Largest marketing research firm in the U.S
• Provides large-scale qualitative and quantitative
  research, brand studies, customer satisfaction
  and customer loyalty studies
• Primary industries served-automotive, financial,
  telecommunications, healthcare, hospitality, and
  technology

26
Company statistics

• Multinational company headquartered in Fenton, MO
  with 240 offices worldwide in a total of 42
  countries
• Approximately 6,000 employees worldwide
• Ranked 157 in 2000 Forbes listing of 500 Biggest
  Privately Help Companies
• Clients include 40 of the 50 largest companies in
  the world

27
Revenues (in Billions)
28
IT at Maritz

• 700 FT domestic employees
• Additional 125 employees located in Canada and UK
• 58 contractors devoted to application development

29
IT Spend at Maritz

• Annual IT budget is 99.2 million 7.34 of
  revenues in 02
• 60 million devoted to application development
  labor
• 39.2 million devoted to infrastructure

30
Organization Chart
31
KM at Maritz

• First intranet site December 1997
• 19 independently operated intranet sites across
  the organization
• As they developed, there was less and less
  uniformity
• Costly to maintain
• Difficult to share information and keep it all
  current

32
Transition to Central Portal

• November 19, 2002 - 19 websites condensed into
  one main portal
• Content Management Tool
• Developed new mission and goals related to this
  new site

33
Mission

• To help generate revenue and profit by providing
  an easy-to-use repository of tools and
  information for Maritz people whose job is to
  understand, sell, and profitably deliver our
  product/service offering

34
Goals of the New KM tool

• Create brand identity
• Cross sell between BUs by using a common easy to
  use navigation
• Develop international shared resources

• Improve inter-organizational alliances
• Streamline and improve internal communications
• Cost efficiencies (labor hours) through reduction
  in redundancies

35
Gauss Technology

• Gauss is a recognized market leader of
  Enterprise Content Management (ECM) software that
  supports the optimization of business processes
  across and between organizations
• Used to develop new portal
• Quick and easy to develop, though unfamiliar to
  most Maritz programmers-could add new portal in
  one week with a small team

36
Gauss VIP Content Manager

• Professional mgmt system for creating and
  maintaining websites.
• Enables users to create, manage and publish
  websites in a short period of time using
  applications such as Dreamweaver or MS Word.
• Includes Portal Manager, to integrate dynamic
  components and personalize content, and Content
  Miner, a Search Engine component.

37
Gauss VIP Content Manager

• Provides quality-assured content and design based
  on a three-server concept (edit, QA and
  production).
• Handles the administration of websites, users and
  access rights.
• Allows design experts, SMEs and programmers to
  work simultaneously without stepping on each
  other.

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Benefits of New Central KM Portal

• Content manager
• Updates can be added to certain users/groups
• Quicker access to information
• Easier navigation among site
• Uniformity among portals

40
Problems with new KM Portal

• Getting employees to take full advantage of
  resources
• Overall, new portal has been very successful
• Minor glitches, but nothing major

41
Knowledge Security vs. Open Information Sharing

• Fewer content managers to control information
  posted on the site
• Postings can be selectively made to certain
  users/groups

42
Future Vision

• Optimization of business process across entire
  company
• Enable re-use of content
• Common interface
• Consistent communication across entire company

43
Future Vision

• Support ISO process for company-wide use
• Cost Savings
• IT cost savings (infrastructure, administration,
  and maintenance)
• Business process cost savings
• Soft benefits accrued by BUs (reduction in
  search time, increased knowledge sharing and
  visibility)

44
Lessons Learned

• Minimize number of users who have ability to
  update intranet
• In order to get employees to use all the
  resources, information must be up-to-date and
  easy to access

45
Case Study

• Edward D. Jones Investments
• Mission To provide the investments, services,
  and information individuals need to achieve their
  financial goals

46
Company Background and Overview

• Financial Services firm founded in 1871
• Headquarters in St. Louis
• Largest brokerage firm in the U.S. headquartered
  outside of NY
• Only national brokerage firm that serves
  individual investors exclusively
• Operated as a partnership

http//www.edwardjones.com/cgi/getHTML.cgi?page/U
SA/careers/ej_story.html
47
Offices

• More than 8,800 offices throughout the U.S.,
  Canada, and United Kingdom
• Over 25,000 employees
• Growth rate of 200 new branch offices per month

Source Matt Eilerman, Edward Jones, April 1, 2003
48
Growth
Source Edward D. Jones Investments
49
Industry RankingsAmong All Firms

• No. 1 in offices
• No. 4 in employees
• No. 5 in brokers
• No. 34 in capital

Source Matt Eilerman, Edward Jones, April 1,
2003.
50
Industry RankingsAmong Regional Firms

• No. 1 in offices
• No. 1 in employees
• No. 1 in brokers
• No. 13 in capital

Source Matt Eilerman, Edward Jones, April 1,
2003.
51
Recognition

• Ranked No.1 for the second year in a row in
  Fortune magazines 100 Best Companies to Work
  For in America(January 2003)
• Ranked No.1 for the tenth consecutive year in
  Registered Representative magazines annual
  brokerage ranking(December 2002)
• Ranked No.1 full-service broker by Kiplingers
  Personal Finance Magazine(October 2002)

http//www.edwardjones.com/cgi/getHTML.cgi?page/U
SA/aboutEJ/in_the_news.html
52
Client Characteristics

• Individual Investors
• Average Age is 53
• Average Annual Income of 50,075
• Average Net Worth of 377,216

Source Personal Interview, Pat Buffum, IT
Director, February 2003
53
Total Revenue
In Thousands
Source Edward D. Jones Investments
54
IT Department

• Try to develop almost all technology internally
• Business Process Modeling(BPM)
• 80 EDJ Associates
• 20 Contractors who work internally
• Annual budget usually around 200 million(10 of
  2002 revenues), but EDJ does not set a limit on
  its IT budget.

Source Personal Interview, Pat Buffum, IT
Director, February 2003
55
Organizational ChartIT Department
Source Personal Interview, Pat Buffum, IT
Director, February 2003
56
Why Utilize Knowledge Management?

• Edward Jones currently operates over 8,800 branch
  offices in the U.S., Canada, and U.K.
• Over 10,000 home office associates work in
  conjunction with these branches
• Investor demands are always changing

Source Personal Interview, Pat Buffum, IT
Director, February 2003
57
IT Vision through KM Utilization

• Enable the firm to reach 25,000 branch offices
  worldwide by leveraging technology efficiently
  and effectively.
• Intranet
• Enable the firm to expand internationally
• Intranet
• To ensure IT is synchronized with business and
  focused on the future.
• Business Process Model(BPM)

Source https//devnet.edwardjones.com/bpm/index.h
tml
58
Intranet

• Internal web site developed for and by Edward
  Jones
• Introduced in 1997
• Connects local branch offices to the home office
• Features include division listings, trades,
  research, department Knowledge Bases, company
  policies, and product information

Source Matt Eilerman, Edward Jones, April 1,
2003.
59
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60
Business Process Modeling(BPM)Overview

• The Edward Jones methodology for documenting the
  firms business processes.
• Provides a set of tools, techniques, and modeling
  that allow the IT department to analyze the
  business processes.
• Results in recommendations for improvement and
  streamlining of business process and internal
  systems.

Source Personal Interview, Pat Buffum, IT
Director, February 2003
61
Business Process Modeling(BPM)Purpose

• Business Process Improvement- By gaining
  efficiencies through detailed analysis of current
  and future business processes.
• Business and IS Alignment- To promote integration
  of business processes and technologies by
  identifying IS projects in support of business
  initiatives.
• Identify and Leverage Global Processes- To
  identify the firms core business processes and
  leverage those processes to share and reuse
  across global boundaries.
• Establish New Country Blueprint- Define the
  business processes that will provide a common
  blueprint for establishing new target markets.

https//devnet.edwardjones.com/BPM_purpose/cgi/get
.html.
62
Business Process Modeling(BPM)Objectives

• Analyze all business processes from a global
  perspective
• Analyze all business processes from both current
  and future vision perspectives
• Clarify business requirements
• Recommend opportunities for process automation,
  elimination, reassignment and optimization
• Quantify the benefits and savings to the firm for
  each proposed project

https//devnet.edwardjones.com/BPM_objective/cgi/g
et.html.
63
BPM Possible Roadblocks

• Not all employees or departments are open to
  change
• Current employee complacency
• Re-training costs
• monetary
• time

Source Personal Interview, Pat Buffum, IT
Director, February 2003
64
Successes

• All explicit and tacit knowledge throughout the
  company has been moved to the Intranet
• Several business processes have been
  streamlined(trades, web site integration)
• BPM is still in its infancy and it may be too
  early to tell whether or not it will be a success

Source Personal Interview, Pat Buffum, IT
Director, February 2003
65
How does Edward Jones motivate associates to
share knowledge?
Our firm has a culture that encourages the
sharing of knowledge and ideas. Since we are not
a publicly traded company and are run as a
partnership, almost all of our associates are
partners in the firm. They share directly in the
profitability of the firm. Basically, the better
we perform through their hard work and knowledge,
the more the firm and its partners profit. - IT
Director
Source Personal Interview, Pat Buffum, IT
Director, February 2003
66
Best Practices for Knowledge Management
The average knowledge worker spends a quarter of
of his or her day looking for information.
67
Best Practices

• Two Kinds of Knowledge
• Explicit Codification strategy
• Tacit Personalization strategy
• Both types are used by all organizations to some
  degree
• Must add value to for employees to contribute
  and utilize.

68
Best PracticesA knowledge management strategy
should

• Reflect the goals of upper management
• The Maritz mission statement is a definition of
  knowledge management
• Focus on one strategy
• Every company uses both, follow and allow for
  the 80/20 split
• Incorporate core competencies
• What sets us apart, how does managing knowledge
  add value to our organizational goals
• Tacit Knowledge Systems Co.
• Knowledge Mail product

69
The 80/20 Split

• Tacit Heavy Organization
• 80 Tacit, 20 Explicit
• Competitive advantage dictates strategy
• Outsource explicit needs such as messaging and
  software customization

• Explicit Heavy Organization
• 80 Explicit, 20 Tacit
• Competitive advantage dictates strategy
• Benefits by achieving economies of scale in
  knowledge through reuse

70
How do we create this new and wonderful KM
strategy?
71
Best Practices

• Identify what strategy is best with 3 questions.
• 1.) Do you offer standardized or customized
  products?
• 2.) Is your product in a mature or innovative
  stage of its life cycle?
• 3.) Do associates rely on tacit or explicit
  knowledge? Organizational structure.

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1.) Standardized or customized
products?

• Maritz
• Highly customized products, supported by tacit
  knowledge
• Edward Jones
• Standardized financial solutions, access to
  explicit and codified knowledge

73
2.) Product Life Cycle Innovative of mature
stage?

• Edward Jones
• Financial services are a mature offering
• Innovative solutions
• Maritz
• Corporate rewards is now a mature market
• New and innovative ideas to promote selling

74
3.) Information needed by associates, tacit or
explicit?

• Maritz
• Employees rely on explicit knowledge
• Knowledge gained through experience
• Edward Jones
• Employees rely on tacit knowledge
• Formats, portfolios, transactions, fees, are
  easily recorded and reused

75
Best Practices and Strategy

• Maritz
• Tacit knowledge
• Offer a highly customized product
• Mature market with new and mature products
• Personalization strategy to support sharing of
  explicit knowledge and associate development

• Edward Jones
• Explicit knowledge
• Standardized products
• Mature product and market
• Codification strategy or database that shares
  formulas, formats, assumptions, client, market,
  and investment information

76
Failure to Use

• Internal discomfort
• Unsatisfied customers
• Organization that cannot find identify its target
  market
• Misallocation of financial and human resources
  Xerox example
• 450 Million lost annually to information
  mismanagement

77
Summary of Best Practices

• Knowledge management strategy should
• reflect the goals of upper management
• Should align with
• Customer expectations
• Strategic advantages
• Environmental Trends
• Organizational structure
• Product type
• Treat end users as customers and consumers
• Should include incentives and be fostered by
  management

78
Questions?
79
References

1. Allee, Verna. 12 Principles of Knowledge
   Management, pp 1-7, from www.astd.org/CMS/templat
   es/template_1.html?articleid10595, viewed
   February 1, 2003.
2. Santosus, Megan and Surmacz, Jon. The ABCs of
   Knowledge Management, pp. 1-4, from
   www.cio.com/research/knowledge/edit/kmabcs.html,
   viewed on February 1, 2003.
3. What is Knowledge Management (KM)? pp 1-4, from
   www.sims.berkeley.edu.courses/is213/s99/Projects/P
   9/web_site/about_km.html, viewed February 1,
   2003.
4. Hansen, Nohria, Tierney. Whats your strategy
   for managing knowledge? Harvard Business Review,
   March 1999, pp 106-119.
5. Davenport, Thomas, and Prusak, Laurence.
   Working Knowledge How Organizations Manage What
   They Know. Harvard Business School Press.
   Boston, Massachusetts. 1998, pp xiv and 71.