Session Knowledge Map

1. Session Knowledge Map 7P K Market Navigation The Knowledge Economy - Trends, mega- macro- Knowledge Commerce $$$ Knowledge Packaging and Commercialization Economic Landscape - Virtual, valuable, volatile Market Maps & Opportunities

2. Three megatrends Technology - Performance; Connectivity; Mobility Virtualization & Globalization - of markets, products and resources/labour Information/Knowledge Work > 70% of work (US/EUR) information intensive

3. The New Economy Networked Knowledge Economy Global and interdependent

4. Few conferences, books and articles A few leading firms Sharing best practice Learning ICT - groupware US - Scandinavia Skandia, Dow, Glaxo-Wellcome, Hewlett-Packard, BP, Buckman Labs 100+ conferences, books, 10+ journals Large firms + governments Innovation / conversion Communities / trading Intranets, e-commerce World-wide World Bank, OECD, iqport, Xerox EU, China, ‘competitiveness’ etc. Knowledge Trends - Macro 1995-82001-2004

5. Knowledge Trends - Micro A New Dimension Strategic Initiative Best Practices Inward Focus on Sharing Knowledge Processes Recognized Discipline Routine Practice Breakthrough (10x) Practices External Focus on Value Knowledge Objects

6. Intellectual Capital Knowledge Maps Knowledge Centres Knowledge Communities Knowledge Management Tradeable Knowledge Knowledge Navigators/Agents Knowledge Hubs & Networks Knowledge Markets Knowledge Innovation Knowledge Trends - Micro (cont.)

7. The New Opportunity Internal Focus External Focus Knowing and sharing what we know Creating and converting knowledge (innovation) Existing Products & Services Knowledge Products & Services Intranet Extranet Internet

8. K-Commerce Knowledge Products/Services E-commerce (transactions) K-Commerce Marketing / Distribution Internet

9. The Best Opportunity? Ideas Ideas IPOs

10. Internet Stock Valuation • P-E ratios: 35 (S&P500) - Yahoo! 450 - eBAY 700 • Priceline.com > Delta + United + US Airways • AOL = 1.4 x Times-Warner • Amazon.com Barnes & Noble Revenues $ 600m $ 3,000m Valuation $11,000m $ 2,500m N.B. All figures subject to wild fluctuations! … Value is complex and volatile

11. K-Commerce Products/Services Advisory, training, consultancy, web devt. e.g. NextEra, Jupiter, US Interactive, SciNet User Services Applications/ Markets Communities, auctions, markets e.g. Fatbrain, Deja, QXL, Priceline, Chemdex, TKE Enabling Services Directories, payments, trading, advertising e.g. Yahoo! Sina.com, WorldPay, iqport, LinkShare Servers, multimedia, e-commerce e.g. RealNetworks, BackWeb, Tradex, Ecash Software Networks, satellites, telcos, ISPs e.g. Teledesic, Qwest, Freeserve, China.net Infrastructure . . . . Innovative Opportunities (and risks!) at every level!

12. Add-on services installation training consultancy Customization grows smarter with use New knowledge products databases Knowledge Enhanced Products Knowledge Core Product Surround

13. Knowledge Packaging Create Convert Commercialize Customized Products/ Services Diffused Codified E.g. processes, databases documents, drawings Uncodified

14. Best Practice Sharing Expertise Directories Intellectual Assets Intranets Domain know-how Communities (internal) Customer Knowledge Knowledge Centres Best Practice Databases Consultancy teams IPR - licences, patents Extranets Expert systems, consultancy Communities (e.g. industry) Customer profiles, databases Advisory Services Types of Packaging (examples) Internal KM Activities External K-Products

15. Knowledge Products / Services Uncodified (tacit) Broadcasting Consulting Lectures Research K-Commerce Accountancy Software Online databases Publications Codified (encapsulated, explicit) Passive (one way) Active (interactive)

16. The Internet Effect Value Consulting Higher Volumes (globally) Lower Costs (marketing, delivery) Courses Publications Volume

17. Creating Value (knowledge assets) • Identify demand for knowledge - FAQs • Review assets vs. user needs • Make them accessible / usable - formatted, organized • Customize - think customer decisions, processes • Quality e.g. assessed, accredited • Connections - e.g. hyperlinks, links to advisory services • Add intelligence - expert commentary, dialogue • Well marketed - increased usage enhances value

18. Examples • IPR e.g. Dow, Project Alba • Consultancies e.g. ERNIE, GBP • Market specific portals e.g. Chemdex • Online info e.g. PracticeDatabase.com • Customised info e.g. Reuters Inform • Knowledge networks e.g. Teltech • Trading Platforms e.g. iqport Learn from the Leaders …...

19. Internet and 4Ps of Marketing • Product • many variants possible, faster time to market • Price • expectations of much lower prices; information is “free” • Place • direct to end-users; disintermediation/re-intermediation • Promotion • direct, can be more targeted, but audience has more choice and control (oblivion is just a click away!)

20. 4Ps Become 7 Packaging Positioning Portals/Pathways Page Impression(s) Progression Payments Performance Product Promotion Place Price

21. 7Ps of Internet Marketing • Packaging - same knowledge, different/customized packages • Positioning - rising above the crowd, something distinctive • Portals and Pathways - from where your customers go first • Page impression(s) - informative, helpful, ‘stickiness’ • Payment mechanisms - make it easy to do business • Progression - from free to things they will pay for • Performance - responsiveness, service, statistical analysis

22. Summary - Opportunities • Human capital (people-based knowledge) • product knowledge surround: add-on services • advisory services using expertise • create communities • Structural capital (object-based knowledge) • package / sell existing or by-product information • give access to databases (extranet) • harvest / convert some human capital to explicit • Hybrid - explicit plus expertise Use the Internet for Volume and Reach

23. Summary - Challenges • Internet speed - 100 days - are you fast enough? • Unique knowledge - what does your IC audit show? • Expectations of ‘free’ • ‘Independence’ vs. consultancies • External marketing focus - vs. internal pull • Internet marketing - how fast up learning curve? • Constraints/Culture of main business- cf. Reflect.com

24. Our Learning With the Model Knowledge Strategy Model The Resource Strategy Model UnderstandingKnowledge Strategy FOLLOW INSTRUCTIONS ON TOP CARD PRICE $200 Conclusions ? Discussion? ? The Knowledge Strategy Game Topics: Understanding Knowledge Strategy The Resource View of Strategy Knowledge Strategy Model Our Learning with the Model Conclusions

25. Basic Notions … Survival vs. Advancement(von Krogh, Roos, Slocum, 1994) • Survival – maintaining current level of success, mastering current markets and competitors • Advancement – Future success based on new markets, nonreplicability – requires knowledge creation How do you plan/design strategy? • Formal strategy and planning – Traditional strategy sets positions, targets, measures. Alignment means “follow the leader.” • Learning and emergence – New thinking (not always in practice) shows strengths in org learning and preparing for conditions.Alignment means “Learn and collaborate.”

26. Knowledge Strategy – What do we mean? • Tierney, (1999) “A company’s KM strategy should reflect its competitive strategy.” With focus on creating value for customers, turning a profit, and managing people. (HBR) • Zack, (1999) “… the most important context for guiding knowledge management is the firm’s strategy. Knowledge is the fundamental basis of competition. Competing successfully on knowledge requires either aligning strategy to what the organization knows, or developing the knowledge and capabilities needed to support a desired strategy.” (CMR)

27. Business Strategy • Marketplace uncertainty • Growth vs. Profit strategy • Customer growth vs. retention • Competitors and emerging products • Alliances and mergers • Leverage core competencies • Complementary capability • Learning organization • Enabling knowledge creation • Learning from practice • Community development Knowledge Strategy Business and Knowledge Strategy Linkage between drivers: Strategy as Pattern and Learning

28. Strategic Drivers Growth through share, market strength, distribution – external market focus Forging long-term, deep relationships with customers – external focus, growing with customer success MarketGrowth CustomerIntimacy OperationalEffectiveness Profit through productivity and cost control – internal development focus Traditional KM driver, but should not be the only one!

29. Strategic Drivers Expand - Enter Enhance “Embrace” Product InnovationKnowledge CreationNew Competency Process InnovationKnowledge SharingDeveloping Learning Culture Business InnovationCustomer Knowledge IntegrationBranding Knowledge KnowledgeStrategy Process streamliningSupply chain mgt Accounting & Financing Product SalesTime to MarketDistribution NetworksPricing StrategyPatent & Product Leverage Customer retentionCustomer product needs Revenue growthPartnering / Alliancing BusinessStrategy Market Growth OperationalEffectiveness CustomerIntimacy

30. Resource Strategy Model Potential Entrants Porter’s 5 Forces strategic model (SWOT approach) breaks when applied to leverage of specific firms. Chaotic business dynamics now require we leverage unique strengths. Buyers Industry Suppliers Substitute Products Knowledge Resources Firm’s KnowledgeStrategy Organization, Capabilities, Core Competencies CustomerRelationships A resource strategy addresses firm’s only competitive differentiation - renewable resources of knowledge, skills, and capabilities (Penrose, Zack, Teece, Quinn, Grant, Kogut). Strategic Resources Networks, Partners

31. Resource Strategy... • Penrose theory (1959) • Firm’s only competitive advantage from superior adaptation • Superior coordination of internal resources (knowledge) • Explains diversification, uniqueness, culture • Uniqueness of firm gives it competitive strength • Diversification exploits imperfections in markets • Development of dynamic capabilities and market responses • In turbulent business environments: • Focus on what we can know – Resources: Strengths and Weaknesses

32. Resource-View of Strategy How does this show up in practice? • Collective Practice (Spender, 1994) • Routines and embedded practices • Tacit social knowledge, effective, yet unknown to individuals • Upside: Competitive cultures (e.g., Microsoft, Cisco) • Downside: Ultra-stable processes can’t easily changeAlso: Founder-based cultures (start-ups) slow to change • Embedded values in organization resist new approaches • Organizational culture as an inimitable strength (Barney, 1991) • Beliefs, values, shared meaning • Culture cannot be exported or replicated • Social communities prevent overdependence on individuals

33. Dynamic Capabilities • Dynamic adaptability as organizational resource • Flexibility, Speed of response • Requires dynamic strategy • Critical knowledge and markets change rapidly • New business models • Internet economy

34. Dynamic Learning • Adaptive, dynamic learning fundamental to organizational competitiveness • Learning cycles key limiter of knowledge strategy • Core competency learning – Time to core capability • Dynamic learning cycle – Time to new capability • E.g. Asian economic recoveryHonda’s entry into US motorcycle market • No “strategy” as plan at all! Entirely emergent … • Cultural learning, Acquisition of knowledge

35. Knowledge Resource Building Core Knowledge • Shared by all members of industry – No competitive value • E.g., Internet technology, XML, Knowledge depreciation Advanced Knowledge • Differentiated, but accessible • Positioning of available knowledge • E.g., advanced UIs for Web products, usability Innovative Knowledge • Significant, nonreplicable differentiation • Products, processes, and markets interrelated • E.g., Intel’s lead in processors affords superior access to market and next-generation PC products

36. Where do you stand? YourOrganization Innovator Innovative Leader Viable Competitor Advanced Laggard advancement At Risk Core “exit strategy” AdvancedKnowledge CoreKnowledge InnovativeKnowledge Competitors

37. Quick Case Example Client: A pharmaceutical company Business Problem: A drug a manufacturer sees investment in its Internet strategy as poor if not failed. Sales have not increased and new products are not being developed. Change Approach: Revisit strategy & customers, drivers. Changed from Growth to Customer Intimacy. Redefined the business, brand, and competitive premise. Transformation Occurred: 5 target customer groupings identified - doctors, patients, pharmacists, media and shareholders of the company. In the business of health not drug manufacture; promoted and acted on customer centric innovation and direction. Value Gained: Shored up market position by listening to the customer -- and redefining its advanced knowledge. More proactive, with focus on health and healthy living.

38. Knowledge Strategy Model Zack’s model “14 Steps” • How do you want to play the game? • What do you need to know? • What do you know? • What’s your internal knowledge gap? • What do your competitors know? • What’s your external knowledge gap? • What is your learning cycle? • What are your competitors’ and industry learning cycles? • What is your learning gap? • What is your internal strategic gap? • What’s your external strategic gap? • What’s your industry cycle strategic gap? • What’s your new current and future strategy? • What’s your knowledge strategy? Zack, M. (1999). Developing a Knowledge Strategy. California Management Review.

39. Envisioning 1 Business Strategy Knowledge 2 Valuation Creating 3 Knowledge Strategy 4 Knowledge Pathbuilding How we adapted it … Identified and developed a business strategy, and linked initial knowledge needs. This phase used strategy workshops and scenario planning sessions to develop the initial strategy. Analyzed the current state of the organization, diagnosing gaps, rate of learning, and other knowledge issues. The phase delivered knowledge maps and an organizational assessment. Analyzed impacts and developed strategies for addressing gaps and redesigning processes. Organizational design and development aligned knowledge work to the strategy. Designed knowledge architecture to support full participation. Coordinated plans, people, and information resources to integrate the strategy into organizations, systems, product lines, and business processes.