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Working Knowledge : How Organizations Manage What They Know
By Thomas H. DavenportAnd Laurence Prusak
Elridge D'MelloGraduate Student in Computer Engineering
Ch 1: What do we talk about when we talk about knowledge?
Data Information Knowledge
Related, but not interchangeable!
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
Information
“Data endowed with meaning and relevance” – Peter Drucker
Data that makes a difference Data sent from sender to receiver
intended to alter the receiver’s perception of something
Moves in hard and soft networks Traditional networks – hard networks A note, an FYI – soft network
How to add value to Data
Contextualized Categorized Calculated Corrected Condensed
Data
Information
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.
How to Transform Information into Knowledge Comparison: how does this info compare
with other situations we’ve 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
How do we know if it's any good?
Difficult to trace the path between knowledge
and action
What are the resultant decisions or actions?
Knowledge
Informativeness
Usefulness
Connectivity
Transaction
Information
Timeliness
Relevance
Clarity
Cost
Speed
Capacity
Data
Qualitative MeasureQuantitative Measure
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. Army’s “After Action Review” (AAR) program.
Components of knowledge Complexity
Knowledge is not a rigid structure that excludes what doesn’t fit it; it can deal with complexity in a complex way.
Knowledge is aware of what it doesn’t know. Judgment
It judges and refines itself in response to new situations and information.
When knowledge stops evolving, it turns into opinion or dogma.
Components of knowledge Rules of Thumb and Intuition
Those with knowledge don’t 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
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.
Knowledge as a Corporate Asset
Sustainable Competitive Advantage Today, it is very easy for competitors to
figure out the “secrets” of a company’s 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.
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.
Case Study: British Petroleum (BP) British Petroleum’s 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
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.
Ch1: Summary
Data – Information – Knowledge hierarchy
Knowledge – fluid; in people’s minds Knowledge is the way to maintain a
sustainable economic advantage
Data
InformationKnowledge
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.
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.
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.
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”
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 firm’s knowledge market must be founded on mutual trust.
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.
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
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
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
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
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
Ch2: Summary
Knowledge markets exist Important factors – reciprocity,
repute. Trust is the key! Organizations should value knowledge
Reward knowledge sharers Promote culture of sharing
Ch3: Knowledge Generation
Modes of Knowledge Generation Acquisition Dedicated resources Fusion Adaptation Networking
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
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!
Modes of Knowledge Generation
Dedicated Resources Establish units or groups specifically for
that purpose Research and Development (R&D) 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
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
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
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!!
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
Ch4:Knowledge 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
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.
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!!
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
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
company’s products or services Knowers use their expertise to develop a process or
product
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
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
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.
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/don’t know Effective knowledge management is the
key to success in today’s economy
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
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?ID=62 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/Knowle
dgeMgmt.pdf Presents practical steps in implementing a KM system
Additional Resources
Interview with the authors: http://www.brint.com/km/davenport/wor
king.htm Davenport’s website with list of latest
books, articles http://www.tomdavenport.com/
Questions?