Knowledge management

1. Knowledge management = information combined with experience, context, reflection, interpretation • Davenport, DeLong, & BeersSloan Management Review 1998 = formal process of figuring out • what information company has • that can benefit others in company • & developing ways to make it easily available • Harvard Management Update February 1999 Knowledge management

2. Knowledge management forms • Knowledge management can take many forms: • Simple procedures to archive & reuse • templates, • outlines • “boilerplate” clauses (law firm) and • project proposals • Elaborate hierarchical “knowledge bases” • Customer contact histories • Best practices • Solutions in various contexts • Face-to-face “communities of practice” Knowledge management

3. Knowledge management in oil & gas Borrelli - Collaboration & competition in oil & gas • Learning comes from knowing where you’ve been • “We can improve production and cut operating costs by doing post-mortem work, quarterly look-backs, etc.” • “You create advantage from your history by codifying the learning process” ============= • Beyond oil & gas: Buckman Labs: water treatment chemicals • Pioneer in equipping technical sales force with laptops loaded with best practice and solutions • Sales force could contribute & query via e-mail Knowledge management

4. Knowledge management process • Creating repository of information about best practices, • Setting up networks for transferring information between employees who interact with customers and those who create the product / service • Creating formal procedures and incentives to ensure that lessons learned in projects are passed along to others doing similar tasks • Harvard Management Update February 1999 Knowledge management

5. 1. People-to-documents Develop electronic document system to collect, disseminate & reuse codified knowledge High investment in IT HR strategy Hire college grads who are suited to reusing knowledge and implementing solutions Train in groups & DL Reward for contributing to KM databases 2. Person-to-person Develop networks for linking people to share tacit knowledge Low investment in IT HR strategy Hire MBAs who like problem solving and tolerate ambiguity Train one-on-one by mentoring Reward for sharing knowledge with others Two knowledge management strategies Hansen, Nohria & Tierney HBR 1999 Knowledge management

6. 1. Codification strategy (people-to-documents) Andersen Consulting Ernst & Young Provide high-quality, reliable, & fast solution Apply codified knowledge (“reuse”) 2. Personalization strategy (person-to-person) McKinsey & Co. Bain & Co Provide creative, analytically rigorous advice High-level strategy problems Channel individual expertise Knowledge management strategies in consulting firms Hansen, Nohria & Tierney HBR 1999 Knowledge management

7. 1. Codification strategy Andersen Consulting Ernst & Young REUSE LOGIC Invest once in knowledge asset => reuse many times Revenue generated by high volume ($600/d) Large teams High ratio associates to partners 2. Personalization strategy McKinsey & Co. Bain & Co EXPERT LOGIC Charge high fees for highly customized solutions to unique problems Revenue through high margins ($2000 fee/day) Small teams Low ratio associates to partners Knowledge management strategies in consulting firms-2 Hansen, Nohria & Tierney HBR 1999 Knowledge management

8. 1.Codification strategy codified knowledge Health Access Health call-in center Nurse uses “clinical decision architecture” to assess symptoms (300 algorithms) Computers DELL Assemble to order 40,000 possible configurations 2. Personalization strategy tacit knowledge Health Memorial Sloan-Kettering Cancer Center, NYC Intense face-to-face collaboration between researchers and clinicians and between types of clinicians Computers Hewlett-Packard Emphasis on person-to-person exchanges to share tacit knowledge Knowledge management strategies in other firms Hansen, Nohria & Tierney HBR 1999 Knowledge management

9. Codification strategy codified knowledge Need to encourage people to record what they know and enter documents into electronic repository Contributions to (quantity and quality) and utilization of knowledge base need to be part of annual performance reviews Personalization strategy tacit knowledge Need to encourage people to share knowledge directly with others Help to colleagues forms part of annual performance review Up to 25% of compensation at Bain Incentives in knowledge management strategies Hansen, Nohria & Tierney HBR 1999 Knowledge management

10. Knowledge management pitfalls • Mixing the 2 strategies inappropriately • Ok to do 80%/20% split • Excessive codification undermines personalization strategy by delivering standard solutions • Excessive costly person-to-person interaction undermines cost-structure of codification strategy Hansen, Nohria & Tierney HBR 1999 Knowledge management

11. Knowledge management pitfalls - 2 • Starting too big • Need pilot projects & success stories before gearing up • Overinvesting in knowledge management • Payoffs greatest if multiple locations or large number of employees • Overinvesting in the IT side for technology “fix” • If you build IT, they won’t necessarily come. • Often need human help desks + search engines • Anecdotal stories may be more effective than IT Knowledge management

12. Knowledge management pitfalls - 3 • Neglecting the cultural prerequisites of KM • Pride of authorship can inhibit learning from other or previous solutions (World Bank challenge) • Experts may feel sharing threat to job, skills, power • Neglecting formal incentives to contribute & use • Need to reward those who share knowledge • Neglecting need to “walk the talk” • Model the desired knowledge sharing • Ask people • How they’re leveraging knowledge • How they’re sharing knowledge from last project Knowledge management

13. Starting too big: Africa region, World BankRoome’s “KM cathedral” for Africa: page 6 of 12 Knowledge management

14. Starting too complex Davenport, DeLong, & Beers SMR 1998 • Over-engineering the KM process • One firm defined organizational learning as having • 4 subprocesses • 15 sub-subprocesses • 53 sub-sub-subprocesses • At end of 12 months only 5 percent of project had been implemented Knowledge management

15. Knowledge management projects Davenport, DeLong, & Beers SMR 1998 • Study of 31 KM projects in 24 companies • Common features • Creating knowledge repositories • External knowledge (competitive intelligence) • Structured (more codified) internal knowledge: research reports, product attributes, technologies • Informal (more tacit) internal knowledge: best practices, lessons learned, discussion databases • Improving knowledge access • Enhancing knowledge environment • Managing knowledge as an asset Knowledge management

16. Knowledge management projects - 2 Davenport, DeLong, & Beers SMR 1998 • Creating knowledge repositories • Models for collecting, pruning, classifying, interpreting, routing information • Discussion threads (Lotus Notes or Web) for tacit knowledge • Improving knowledge access • Electronic Yellow Pages & search engines • Communities of practice with help desks • Video conferencing Knowledge management

17. Knowledge management projects - 3 Davenport, DeLong, & Beers SMR 1998 • Enhancing knowledge environment • Change incentives, norms to encourage contributions to and use of knowledge base • e.g. Value time to market more than original design • Formal incentives • Risk of over-structuring the process • Managing knowledge as an asset • Skandia, Sweden (financial services) • Intellectual capital audit included in annual report to shareholders • Leveraging patents (Dow, Texas Instruments) Knowledge management

18. Knowledge management projects - 4 Davenport, DeLong, & Beers SMR 1998 • Hypothesized attributes of successful KM • Link to economic performance / value • Appropriate technical & organizational infrastructure(National Semiconductor: engineers on Web, sales force on Lotus Notes for laptop replication) • Standard but flexible knowledge structure • Knowledge-friendly culture (downsizing hurts) • Clear purpose (distinguishing knowledge from data) • Change in motivation, incentives • Multiple channels for knowledge transfer • Face-to-face aids KM “bandwidth” • Senior management support(Wolfensohn: W&S) Knowledge management

19. Knowledge management at World Bank • Changing context: • Official development assistance declining relative to private capital flows to developing countries • Down to 1/5 of total flows prior to Asia crisis • But private flows highly concentrated: • China, Mexico, Indonesia etc. not Rwanda, Bhutan, Paraguay, Haiti, etc. • World Bank Strategy • Become Knowledge Bank for development • KM strategy launched mid-1990s Knowledge management

20. STRATEGIC CONTEXT • Strategic Compact ‘97: “...Making the Bank a premier global knowledge organization is priority.” • World Bank Development Report ‘98: “Knowledge has become...the most important factor [ in development ].” • Action Review of Knowledge Management ‘99: “Knowledge Bank [requires] mobilizing global knowledge from inside and outside the organization and applying it to solve local development problems in timely fashion.” Knowledge management

21. The vision By 2000, the World Bank Group is the first port of call for development expertise: - good practice & cutting edge knowledge - internal and external sharing - global network - common institutional approach Knowledge management

22. Sep 96 Sep 97 Sep 98 Pilot KM projects #s of knowledge objects Coverage of help desks Coverage of sectors in KMS Yes 100 5% 5% Yes 2030 40% 25% Yes (Yes) (30) Yes 5800 Most Most Yes Yes (100+) Decided (Yes) -- -- -- -- Governance mechanism Budget for KM Thematic Groups KM in personnel evaluation Staff use of KM resources -- -- -- Implementation Knowledge management

23. Knowledge management at World Bank • World Bank external advisory panel for KM: • Bob Buckman (Buckman Labs) • Wendy Coles (General Motors) • Carlos Cruz (Monterey Tech Virtual University) • Tom Davenport (Andersen Consulting) • Eric Darr (Ernst & Young) • Kent Greenes (BP) • Brook Manville (McKinsey), plus consultants: • Larry Prusak (IBM Institute for KM), etc. Knowledge management

24. Knowledge management at World Bank - Challenges (April 1999) • Top management needs to restate knowledge management strategy as route to Knowledge Bank goal • Less than half of respondents thought strategy was clear • 3 of 5 “Networks” (broad groups of specialists) had effective knowledge collections on intranet • 4 of 6 Regions had knowledge management activities • DEC & WBI considered all of their activities to be knowledge management, no separate budget • Key units not aware of or not acknowledging key components of knowledge management Knowledge management

25. Knowledge management at World Bank - Challenges - 2 • Thematic groups (more than 110) were found to be functioning well overall (communities of practice) but wide variation in activity & quality • 70% felt thematic groups added value • Bank-wide directory of expertise (30% coverage) not linked to thematic groups, not searchable Knowledge management

26. Knowledge management at World Bank - Challenges - 3 • Electronic knowledge resources highly fragmented and scattered over • Intranet • Regional vs. Networks • Some domains well organized but • Many empty taxonomy trees & 900 dead ends • External web, and • Lotus Notes • Other issues • Only 13% felt there were adequate incentives for knowledge sharing • Only 37% of respondents found knowledge resources easily accessible Knowledge management

27. Dissent on knowledge management Crossan, Lane & White (AMR 1999) • Knowledge management (or intellectual capital) focuses mainly on cognition rather than action • Crossman, Lane & White urge focus on organizational learning to link cognition and learning • Organizational learning involves interplay • Exploration - assimilating new learning • Exploitation - using what has been learned Knowledge management

28. Organizational learning Crossan, Lane & White (AMR 1999) • Organizational learning occurs at 3 levels: individual, group, and organization, through • Intuiting • individual level • Interpreting • individual and group levels • Integrating • group level • Institutionalizing • organizational level Knowledge management