Chapter 11 Knowledge Management

Jason C. H. Chen, Ph.D.Professor of MIS

School of Business AdministrationGonzaga UniversitySpokane, WA 99258

chen@jepson.gonzaga.edu

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What is Data Mining?• Data mining – the process of analyzing data to extract

information (unknown patterns) not offered by the raw data alone

• To perform data mining users need data-mining tools– Data-mining tool – uses a variety of techniques to find

patterns and relationships in large volumes of information and infers rules that predict future behavior and guide decision making

– A wide range of data mining techniques are being used by organization to gain a better understanding of their customers and their operations and to solve complex organizational problems.

• An example– Grocery Store in UK

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ProjectDeliveryModel

Customer Relations

Resource Management

Process Management

Project Management

Accounting and other functional areas

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___________________IT-Intensive Radical Redesign

_________________________ for

“Paradigm Shifts”

Radical Rethinking of the Businessand Organization

for a “World of Re-everything”

“Old World” of Business

E-Worldof Business

________________ Streamlining Bottlenecks

_______________ Replacing humans with

machines

From “Old World” to E-World of Business: Knowledge Management for “Paradigm Shifts”

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Database vs. Datawarehouse

DBMSDBMS Database

Datawarehouse??????

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Business Analytics

• Business Analytics (BA) is an ________ term including data __________, business __________, enterprise information management, enterprise performance management, analytic applications, and governance, risk, and compliance.

• Business Intelligence (BI) is a set of ___________ and ___________ used to describe business performance.

• Companies find success through better use of analytics.• Many companies offer similar products and user

comparable technologies.• Business processes are among the last remaining points of

differentiation.• Focus on ___-based management to drive decision making.

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What's The Difference? Business Analytics vs Business Intelligence

• Business Analytics (BA) is a close cousin of Business Intelligence (BI). Both are meant to help companies make better decisions by analyzing business data. The difference is in their methods, and in the general direction of their analysis.

• Business Intelligence, the most common form, concentrates on ______ from the present and the immediate past, and drawing conclusions from that.

• Business Analytics makes more of an effort to predict the future using more complex tools relying heavily on anything from _________ to neural nets.

http://it.toolbox.com/blogs/inside-erp/whats-the-difference-business-analytics-vs-business-intelligence-58672

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The Architecture of BI

• A BI system has four major components:– 1. a data _________, with its source data– 2. business ________, (or analytical environment)

a collection of tools for manipulating, mining, and analyzing the data in the data warehouse;

– 3. business __________ _________ (BPM) for monitoring and analyzing performance

– 4. a user _______ (e.g., dashboard)

performance management

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Fig. 1.3: A High-level Architecture of BI

1. 2. 3.

4.

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Business Analytics (cont.)• Davenport and Harris

suggest that companies who are successful competing with business analytics have these five capabilities:– Hard to ______– Uniqueness– _________– Better than competition– __________

• Characteristics of strategic resources are:– ________, – ______, – non-_______, – non-transferable, – non-substitutable,– combinable, and – ________

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Figure 11.6 Components of Business Analytics

Component

Definition Example

Data Repository

Servers and software used to store data

Software Tools Applications and processes for statistical analysis, forecasting, predictive modeling and optimization.

_________________Forecasting software package

Analytics Environment

Organizational environment that creates and sustains the use of analytics tools

________________ thatencourages the use of the analytics tools; willingness to test or experiment

Skilled Work Force

Work force that has the training, experience and capability to use the analytics tools

Harrahs and Capital One have such work forces

To successfully build B.A. capabilities in the enterprise, companies make a significant investment in their: 1)___________, 2) _______, and 3) strategic decision-making __________

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Knowledge management vs. Information technology projects

Knowledge Management Project Information Technology Project

• Emphasizes _____________ information for users

• Support organization improvement and innovation

• Adds value to content by filtering, interpretation, and synthesis

• Require on-going user contributions

• Balanced focus on both technology and culture

• Variety of inputs often precludes automated capture of knowledge

• Emphasizes __________ of information for users

• Support existing operations

• Delivers content only

• Emphasizes one-way transfer of information

• Primary focus on technology

• Assumes capture of all information inputs can be automated

Then, is there a general rule to determine a project is a KM project or a IT project?

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KM Project vs. IT Project

• According to Davenport and Prusak point out in their “_________ %rule,”– if more than one-third of the time and money

spent on a project is spent on technology, the project becomes an IT project rather than a KM project.

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Data Base

Data Warehouse/Data Mart

Online Transaction Process vs. Online Analytic Process

Business__________

OLTP

(Daily operations)Real-Time,Relational DB

OLAP

(copied to)

(Non-daily operations)(for quick and easy access)

Not Real-Time

Business__________

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A Generic Data Warehouse Framework

DataSources

ERP

Legacy

POS

OtherOLTP/wEB

External data

Select

Transform

Extract

Integrate

Load

ETL Process

EnterpriseData warehouse

Metadata

Replication

A P

I

/ M

iddl

ewar

e Data/text mining

Custom builtapplications

OLAP,Dashboard,Web

RoutineBusinessReporting

Applications(Visualization)

Data mart(Engineering)

Data mart(Marketing)

Data mart(Finance)

Data mart(...)

Access

No data marts option

Fig. 2.3 A Data Warehousing Framework and Views

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Economic reliance on knowledge workers is increasing

• Knowledge _____• Customers and businesses want a more

integrated approach.• Best to say you are in the knowledge

business

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Working Smarter, Not Harder• Overlapping ______/_________/_____________ factors

in KM:

___________

________________

______________i Knowledge

N

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Why Knowledge Management?

• Business evolve from competing on ____, to competing on _____, to competing on ____________.

• Effectively managing knowledge as a strategic asset will enable companies– to adapt to ____________,– to respond to change quickly and easily, and– to adopt a _____________ when defining products and

services.

N

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What is Knowledge Management? • Knowledge management is defined as the

processes needed to generate, capture, codify and transfer knowledge across the organization to achieve competitive advantage – Pearlson and Saunders.

• Technology plays a significant role in managing knowledge.

• __________ and ___________ are essential to knowledge management.

• In short, KM is a process (practice) of capturing a corporation’s collective experiences.

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Intellectual Capital and KM• _________ capital is defined as knowledge

that has been identified, captured, and leveraged to produce higher-value goods.

• Intellectual capital is a synonym of KM• KM is related to IS in three ways:

1. IT makes up the ____________ for KM systems

2. KM systems make up the _________ for many IS applications

3. KM is often referred to as an _______ of IS

N

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Figure 12.1 The relationships between data, information, and knowledge.

Data

More human contribution

Greater value

Information

Data endowed with relevance and purpose

Requires unit of analysis

Needs consensus on meaning

Human mediation necessary

Often garbled in transmission

Knowledge

Valuable information from the human mind;

includes reflection, synthesis, context

Hard to transfer

Often tacit

Hard to capture electronically

Hard to structure

Highly personal to the source

Data Information Knowledge

Data

Simple observation of states of the world

Easily captured

Easily structured

Easily transferred

Compact, quantifiable

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The Content of Human Mind • According to Russell Ackoff, a systems theorist and

professor of organizational change, the content of the human mind can be classified into five categories:– Data: symbols or ______– Information: data that are processed to be useful;

provides answers to "who", "what", "where", and "when" questions

– Knowledge: application of data and information; answers “_____" questions

– Intelligence/Understanding: appreciation of “____“– Wisdom: evaluated understanding.

Data Information _________ Intelligence ________

Value Chain Data of the Enterprise

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Tacit vs. Explicit Knowledge

• _______ knowledge is personal, context-specific and hard to formalize and communicate

• _______ knowledge can be easily collected, organized and transferred through digital means.

We know what we know

(________ knowledge)

We don’t know what we know

(______ knowledge)

We know what we don’t know

We don’t know what we don’t know

Types of Knowledge

What w

e K

nowW

hat we

don’t know

We Know We don’t know

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Tacit and Explicit KNOWLEDGE

Oral Communication“Tacit” Knowledge

50-95%

Information Request

“Explicit” Knowledge

Explicit Knowledge Base5-50 %

Information Feedback

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The Four Modes of Knowledge Conversion

Tacit Knowledge

Explicit Knowledge

Tacit Knowledge

Explicit KnowledgeA. ___________

(Sympathized Knowledge)

C. ___________(Operational Knowledge)

B. ___________(Conceptual Knowledge)

D. ___________(Systematic Knowledge)

Transferring tacit knowledge through shared experiences, apprenticeships, mentoring

relationships, on–the-job training, “Talking at the water cooler”

Articulating and thereby capturing tacit knowledge through use of

metaphors, analogies, and models

Converting explicit knowledge into tacit knowledge; learning by

doing; studying previously captured explicit knowledge

(manuals, documentation) to gain technical know-how

Combining existing explicit knowledge through exchange and

synthesis into new explicit knowledge

FR

OM

TO

Source: Ikujiro Nonaka and Hirotaka Takeuchi, The Knowledge-Creating Company, 1995

Which mode is the one for classroom processes? _____

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From Managing Knowledge to BI• Managing knowledge is not a new concept, but one

reinvigorated by ___. • KM is still an emerging discipline• _______ _______ (BI) is a set of technologies and

processes used to describe business performance.– BI is a component of KM.

• Business Analytics – use of quantitative and predictive models, and fact based management to drive decisions.

• An organization’s only sustainable competitive advantage lies with how its employees apply knowledge to business problems

• KM is not a magic bullet.

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Key to Success: A Learning Organization need to have four characteristics critical to successful Knowledge Management

N

S

W E

_____________________

_________ AS ASSETS STRUCTURES AND PROCESSES

In general, a successful KM effort requires leadership with _____, _________, and an organizational culture that facilitates collaboration.

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CoreCompetency

________ Knowledgederivative

InformationCommunicationIndustries

Intellectual & ________ AssetsPartnershipPatentsData bases

______ Explicit, Codified Knowledge Methods

____ CapitalWellspring of

Knowledge

SkillExperienceKnowledge

Learning

Learning

Manage Core Competency

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3

4

5

Information & Comm. Technology Infrastructure

Know-whatKnow-howKnow-why

QualityInformation

ExplicitKnowledge

Tacit KnowledgeRaw Information

OrganizationalKnowledge

_______CompetenceCrystallize Core Competence

Generalize Best Practice for Reuse

Produce Best Practice

Contextualize Organizational Knowledge

Create Organizational

Knowledge

Improve quality of information Make tacit

knowledge explicit

______ Practice

Figure: From Organizational Knowledge to Core Competency

Knowledge HuntingKnowledge Hardening

[_______ knowledge]

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THE WORLD OF RE-EVERYTHING

• Knowledge is productive ONLY when _______________.

• ____________ requires decentralized intelligence.

• We need to empower ________ workers• Top performers can be a problem; they are

not the most _______.

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Sustainable Competitive Advantages

• Any sustainable competitive advantages?• How can an organization sustain its

competitive advantage?• Firms may create/improve their competitive

advantages only if they:– have __________ to learn,– employ _________ management approach,– learning to ______ and learning to _____

(life-long learning environment)

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Conclusion__________ + ________________________ +__________________ =

Opportunity for New

Societal Infrastructure

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• A wise CEO will make better decisions and inspire greater loyalty and trust than just a knowledgeable CEO.

-- Schrage, 1996• Imagination is more important than Knowledge.

-- Albert Einstein

“Knowledge is the beginning of practice; doing is the completion of .”

(relevant to Buck Lab Case)

-- Wang Yang Ming, 1498 (one of great Chinese philosophers)

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From Data to Knowledge:How Can Organization Gain Competitive Advantage?

(Survive and Prosper in the Digital Economy)

Data process _________ _________Information

Accessible

Organizational ___________

SharableCollaborative

-As a productNOT byproduct

-As core intellectual capitalNOT merely a few smart employers

DecisionMakingAvailable

Reusable

CRMAccountingFinanceOperationsManufacturing

Externalcustomers

D. B.

D.B.:Structured: R-DBMSUnstructured: Document Mgt. Systems

context,experience

a_______ i_______ i_______ N

Useable

________

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Summary

• KM is related to information systems in three ways: IT makes up its infrastructure, KM makes up the data infrastructure for many IS and apps, and KM is often referred to as an app of IS.

• Data, information, and knowledge should not be seen as interchangeable.

• The 2 kinds of knowledge are tacit and explicit.• Manage knowledge carefully, there are many valid

and of course legal reasons.• KM projects can be measured using project-based

measures.