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Knowledge ManagementPresented by

Brad L. Hershberger, Itthipat Limmaneerak, M.Faisal Fariduddin A. Nasution, Melanie Swearengin, & Scott Shaw

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Knowledge Management Trends

• Survey of 423 organizations in the UK, Europe, and the US found:

– 64% had KM strategy in place– 81% had KM, or were considering, a KM program– 75% believed KM can play a significant role in

improving competitive advantage.

(KPMG Consulting)

Source: Reference 1

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Knowledge Management Trends• Overall worldwide

spending on KM has been estimated to increase from approximately $3.1 billion in 2000 to over $12 billion by 2004.

“Document and Knowledge Management: After-Hype: KM Enters Critical Phase.”

0

5

10

15

2000 2004

KM Software

KM Services

Total KMServices andSoftware

Spending on KMBillion of dollars

Source: Reference 2

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What is Knowledge Management?What is Knowledge Management?

What is knowledge?

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Knowledge HierarchyKnowledge Hierarchy

Data

Information

Knowledge

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What are data?What are data?

Data are a set of discrete, objective facts about events.

Data are facts, numbers or individual entities without context or purpose.

Example: A company has total sales of five billion dollars in Q3 of the year 2003.

Source: Reference 2 and 3

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What is information?What is information?

Information is data that has been added value through context, categorization, calculation, corrections, and condensation.

Information has an impact on a user’s judgment and behavior ( to aid decision making).

Example: Five billion dollars in Q3 of this year are 10% increasing in sales revenues in Q3 of last year.

Source: Reference 2 and 3

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What is knowledge?What is knowledge?

• Knowledge is the fact or condition of knowing something with familiarity gained through experience or association.

• Knowledge is the human capacity (potential & actual ability) to take effective action in varied and uncertain situations.

• Example: To gain higher growth rate in sales revenue, a company not only focuses on the domestic market, but also looks for the exporting market.

Source: http://www.bus.utexas.edu/kman/answers.htm and Reference 3

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What is difference between What is difference between informationinformation and and knowledgeknowledge??

Knowledge life cycle

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Knowledge Life Cycle Knowledge Life Cycle (in business)(in business)

It must be created either within or outside the organization

It can be stored in somewhere

Those who need the specific knowledge must find out where it is, when they need it

the user will then go through the act of actually acquiring

The knowledge can be put to use towards some productive purpose

The user will learn what worked well and not so well as a result of applying the knowledge gained

Create

Store

Find

Acquire

Use

Learn

Create

Store

Acquire

Use

Learn

Find

Source: www.processrenewal.com/files/def-km.doc

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When does information become When does information become knowledge?knowledge?

Without the learning component, the cycle becomes an information delivery strategy.

The concept of learning is a key contributor

Create

Store

Find

Acquire

Use

Learn

Create

Store

Acquire

Use

Learn

Find

Learn

Source: www.processrenewal.com/files/def-km.doc

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Types of KnowledgeTypes of Knowledge

It is also important to know and distinguish between the two kinds of knowledge that must

be addressed in organizations

Tacit knowledgeTacit knowledge Explicit knowledgeExplicit knowledge

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Tacit & Explicit Knowledge

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Tacit Knowledge DefinedTacit Knowledge Defined

“We know more than we can tell”

“Something that we know when no one asks us, but no longer know when we are supposed to give an account of it, is something that we need to remind ourselves of”

“All knowledge (is) personal and all knowing (is) action”

Source: Reference 6, 7 and 8

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Tacit Knowledge ExplainedTacit Knowledge Explained

Can you calculate the arc, velocity and energy needed to successfully make a free-throw?

Explain to someone the mathematical formula for riding a bike.

Why does your favorite recipe, cooked by your grandmother, never seem to turn out the way you remember?

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What’s wrong with tacit What’s wrong with tacit knowledge?knowledge?

Tacit knowledge posses difficulties in Knowledge Management for 3 main reasons:

We are not fully aware of having it There is no personal need to make it

explicit There is a risk of losing power and

competitive advantage

Source: Reference 9

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Explicit Knowledge DefinedExplicit Knowledge Defined

Explicit knowledge uses a different part of the brain than tacit knowledge

Explicit knowledge can be codified and explained

Explicit knowledge can be separated from the individual

Source: Reference 10

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Examples of Explicit KnowledgeExamples of Explicit Knowledge

Documentation Procedures Mathematical Formulas Intranets

Information = Explicit Knowledge

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What’s wrong with explicit What’s wrong with explicit knowledge?knowledge?

“Instead of storing information in our brains, we design our environments to make it easy to find the information we need”

Explicit knowledge is devoid of action and “our knowledge is in our action”

“The narrative in itself is not enough for the other part to gain a complete understanding…”

Source: Reference 11, 12 and 13

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Knowledge ManagementKnowledge Management (useful definition)(useful definition)

“The systematic process of creating, maintaining and nurturing an organization to make the best use of knowledge to create business value and generate competitive

advantage.”

Source: Reference 6 and 7

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Interesting KM StatisticsInteresting KM Statistics

Who is pushing hardest The benefits achieved Use of technology to manage information

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MethodologyMethodology KM Research Report 2000 by KMPG ConsultingKM Research Report 2000 by KMPG Consulting

2%

2%

2%

5%

13%

14%

20%

20%

22%

0% 5% 10% 15% 20% 25%

Others

Government

Inforamtion, communication andentertainment

Transport

Services

Chemicals, pharmaceuticals andenergy

Consumer markets

Industrial products

Financial services

% Respondents

Respondents Actual %

USA 101 24

UK 100 24

Germany 83 20

France 77 18

Netherlands 15 3

Scandinavia 15 3

Elsewhere (Italy, Spain) 32 8

Total 423 100

Source: Reference 1

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Who is pushing hardest?Who is pushing hardest?

2%

11%

41%

32%

0% 10% 20% 30% 40% 50%

Grass roots/employees

Middlenamagement

Seniormanagement

Board

This indicates that the leaders of organizations understand the significance of KM and are driving their

organization’s KM initiative

Source: Reference 1

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The Benefits AchievedThe Benefits Achieved

The most significant benefits achieved included better decision making (71%), faster response to key business issues (68%) and

better customer handling (64%).

20%30%

42%50%52%53%54%57%58%60%63%64%68%71%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Increased share priceStaff attraction/ retention

Improved new product developmentIncreased market share

Increased profitsSharing best practice

Create additional business opportunitiesReduced costs

New ways of workingImproved productivity

Improved employee skillsBetter customer handling

Faster reponse to key business issuesBetter decision making

% benefits achieved

Source: Reference 1

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Use of technology to implement KMUse of technology to implement KM

Internet (93%) and intranet (78%) are favored technology used in accessing data

Data warehousing and mining techniques are favored technology used in analyzing data

22%

38%

43%

49%

61%

63%

78%

93%

0% 20% 40% 60% 80% 100%

Artificial intelligence

Extranet

Groupware

Decision support

Document management systems

Data warehouseing / mining

Intranet

Internet

% Use of technology

Source: Reference 1

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KM in E-Business

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The TransitionThe Transition

Reason The disconnect between IT expenditures and the firm’s organizational performance.

Transitions made: Transition from information

processing to knowledge creation. Transition from Total Quality

Management to Business Process Reengineering.

Source: Reference 4

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The TransitionThe Transition

Old World: Phases:

• Automation.• Rationalization of procedures.• Reengineering.

What is the new world

of “e-business”?

Source: Reference 4

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The TransitionThe Transition

Source: Reference 4

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KM in E-Business StrategyKM in E-Business Strategy

Transition paradigm shifts: Paradigm shift in business strategy. Paradigm shift in design and use of technology. Paradigm shift in the role of senior management. Paradigm shift in organizational knowledge

processes. Paradigm shift in economics of organizational assets. Paradigm shift in organizational design.

Source: Reference 4

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KM E-Business StrategyKM E-Business Strategy

Using intranet should be viewed as a KM environment with perspectives such as: Information perspective Awareness perspective Communication perspective

Source: Reference 5

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Case Study

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BioTechnology research and manufacturing company

5450 employees in 130 countries (Main headquarters in LaBalme, France. NA headquarters in Durham, NC.)

63 different manufactured products in 4 different disciplines (Bacteriology, Hemostatsis, Immunoassays, Molecular Biology)

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Case StudyCase Study

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Employees -145,000 employees

Products -Audit & Tax Consulting

Customers -SEC, Fortune 500

CIO reports to committee of partners Over 400 IS professionals (25) on the SALT side.

Company Profile:

Source: Reference14

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Merger - 1998Merger - 1998

Price Waterhouse and Coopers & Lybrand Combined six lines of business across 24 industries in over 152 countries worldwide with over 150,000 employees Different IT platforms Thousands of servers with various information

Source: Reference 14

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Goals for MergerGoals for Merger

Meet Increasing Client Needs Expand Globally with Clients

Establish a Global Knowledge Base (Intellectual Capital) Expand Range of Services Become More Technology Oriented Grow Revenue Dominate Market

Source: Reference 14

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Building the Knowledge BaseBuilding the Knowledge Base

“To a great extent it is all we have and all we share and sell. It is the basis of what we do. We sell to clients the knowledge our consultants have and have access to. So managing the resources effectively and making sure we can share it across the consultancy is vital to us. It is the lifeblood of the organization”

-Julia Collins, Head of PwC Global Knowledge Group

Source: Reference 14

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Issues and Challenges Issues and Challenges of Building the New of Building the New

PwC KM ToolPwC KM Tool Each line of business at the old companies only had access to their knowledge. Differences in IT systems and organizations structure E-mail networking and Intranet using Lotus Notes Integration of databases and servers Eliminate the senior executives from controlling access to information

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Final Results and SuccessesFinal Results and Successes

IT staff worked on a region basis instead of local office Choose consistent information language (SQL, Novell, etc.) Combined databases and choose individuals to update them Linked e-mail and lotus notes for a strong internal communication system Creation of a global wide area network to link wide area networks of PW & CL

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Knowledge Management enable the efficient Knowledge Management enable the efficient prioritisation, creation, retrieval and leverage of prioritisation, creation, retrieval and leverage of relevant content that:relevant content that:

Builds and strengthens our client relationships Supports the professional development and productivity of our people Facilitates the development of innovative, quick-to-market solutions Fosters a continuous learning culture

What is KM to Me?

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PwC’s Knowledge Management Tool (TALK)PwC’s Knowledge Management Tool (TALK)

What is TALK?• Tax and Legal Knowledge

• A collection of resources, both internal and external

• A source for new developments, products and applications, research, publications, bulletins and discussion forums.

• A complete archive of old information

TALK

Facts & Stats

--1,000 databases

--1,780 websites

-- 62 countries

How Do I Use PwC’s KM?

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TALK U.S. HomepageTALK U.S. Homepage

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Knowledge Management divided into Knowledge Management divided into External & Internal sourcesExternal & Internal sources

BNA WestLaw CCH Self study tutorials/reference guides In-house training classes Electives offered at major training conferences

External Sources:

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External Sources:

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Internal SourcesInternal Sources

WNTS WNTS tax developments communicates legislative and

technical tax developments to the U.S. tax practice through WNTS Alerts and Spotlights.

Info SourceWorldwide Tax Summaries

123 countriesCorporate TaxesIndividual Taxes

Tax References FilesTechnical documents Practice ToolsSpeeches & Presentations PwC Authored Articles

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Pinnacle Pinnacle Incentives to contribute Certain mandates to contribute when working on certain projects

Internal Source

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Tax Daily NewsTax Daily News Content: Daily electronic US Tax newsletter including leadership

announcements and a summary of TALK contributions Mailed daily to each tax professional

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Tax Yellow PagesTax Yellow Pages

What is it?Online, annually updated, directory of US Tax professionals and their principal areas of practice.

What does it do?Reduce the time spent by professionals locating people and expertise across the US Tax practice.

Issues Addressed:Clients want to contact PwC professionals with specialized experience; PwC partners need to dialogue with peers whose competence they trust; PwC staff need information on who works in area and how to contact them.

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Case StudyCase Study

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Founded by Dr. Stanley Buckman in 19455 employees; Initial customers were large paper facilities

Customer base expanded leather, paint, sugar processing, agriculture, plastics industries and water treatment industries

1978 Sales = $29 million; 493 employees; 20 companies worldwide; 8 manufacturing plants; over 1,000 specialty chemicals in their product line New Leadership1978 Bob Buckman became chairman and CEO

“If you expand the ability of individual members of the organization, you expand the ability of the organization.”

Bob Buckman

Company History:Company History:

Source: Reference 17

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Knowledge Sharing EvolutionKnowledge Sharing Evolution

STEP 1 Send out PhDs to gather best practices Costly & Inefficient

STEP 2 Runners Slow & Limited Knowledge

STEP 3 GMs connected through network for email Wrong People

Conclusion “The people who really need the information were the people in front

of the customer.” Bob Buckman

STEP 4 Field Sales people given access

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Knowledge Management StrategyKnowledge Management Strategy

Simplify the lines of communication Gives everyone access to the knowledge base of the

company Allow each individual to enter knowledge into the system Function across time and space with the knowledge

base available 24/7 User friendly Communicate in whatever language is best for the user Update automatically – the accumulation of technical

Q&A should generate knowledge bases for future

Source: Reference 17

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Knowledge Transfer DepartmentKnowledge Transfer Department

1992 – Knowledge Transfer Department created

(Head reporting directly to the Chairman.) Company’s network on CompuServe, the public online

service Sales people got a leased notebook with a modem Point-point link with headquarters by a phone call

Time frame: 30 days to implement

Cost: $75,000 per month in access charges

Source: Reference 17

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K’Netix SystemK’Netix SystemForums: Tech Forum – open to all employees, message board,

conference room, library section

Internal Forum – focused on internal improvement

Business Forum – focused on helping the customer

ALL Forums: Monitored by System Operators & Section Leaders All forums set up in English - translators were hired

59Source: Reference 18

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Motivation Motivation

“Those individuals who have something intelligent to say now have a forum in which to say it…Those who will not or cannot contribute also become obvious and can be

intelligently eliminated from the organization.”

Bob Buckman

1994 invited 150 top knowledge shares to Scottsdale, Arizona for retreat

Received a new IBM ThinkPad 755

Source: Reference 17

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EvaluationEvaluationWays to Improve: Increase participation by non U.S. Associates

Cultural issues - not cool to type or ask for help Language problems - Forums set up in different languages

Results: 1994 KTD = $8.4 million (plans to spend $9.5 million in

1995) 65% of sales people out selling - 16% in 1979 33% sales from products less than 5 years old - 22%

prior to K’Netix 1999 sales = over $300 million Received the Arthur Andersen Enterprise Award &

Smithsonian Computerworld for Knowledge SharingSource: Reference 17

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SummarySummary

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SummarySummary

Definition of knowledge management

What distinguishes knowledge management over information and data

Types of knowledge Interesting statistics of knowledge

management The transition to implement

knowledge management for

e-business Implementing knowledge

management to firms

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Disadvantages of and challenges to Disadvantages of and challenges to implementing knowledge managementimplementing knowledge management

Not all people in the firm would share their knowledge.

Not all people in the firm understand the concept of and how to implement knowledge management.

The implementation of knowledge management can be considered as another expenditure to the firm by the senior executives and / or non-IT people in the firm the chance of failure like the other IT projects.

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Best PracticesBest Practices Foster communication between skill areas. Promote product training. Create open physical work environment. Encourage independence and risk taking. Provide extensive documentation. Make support resources easily available. Expect large learning curves in projects.

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Best PracticesBest Practices Developed to be highly specialized By country,

industry, idea, business unit. Divided by external and internal sources:

Can take advantage from 3rd party information services.

Can take advantage of internal ideas. Available to clients:

Filtered information is available to clients. Highly accessible to firm employees:

Intranet, Lotus Notes and Internet.

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Best PracticesBest Practices

Simplify the lines of communication Get information to the people in front of

the customer Give everyone access to knowledge

base of the company Operate 24/7 Operate in users preferred language Track all research for later use

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ReferencesReferences1. KMPG Consulting; “Knowledge Management Research Report 2000”, p.5-9, 14-16.

2. “Document and Knowledge Management: After-Hype: KM Enters Critical Phase.” Computing Canada, April 14, 2000. p13

3. “The Introduction to Knowledge Management” by Dr. Nancy Shaw, an assistant professor at George Mason University's School of Management”, URL: http://www.icasit.org/km/intro/intro.htm , slide page.5-7

4. Yogesh Malhotra, ‘‘Knowledge Management for E-Business Performance: Advancing Information Strategy to Internet Time’’, In the Executive’s Journal, V.16, No. 4, pp. 5-16, 2000.

5. Dick Stenmark, “Information vs. Knowledge: The Role of Intranets in Knowledge Management”, URL: http://www.viktoria.se/results/result_files/183.pdf

6. Polanyi, M. The tacit dimension. Reprinted in L. Prusak (ed.), Knowledge in Organization. Boston: Butterworth-Heinemann, 1998, pp. 135-146.

7. Wittgenstein, L. (1958). Philosophical Investigations. Oxford: Blackwell.8. Tsoukas, H. Do we really understand tacit knowledge. Presented to Knowledge

Economy and Society Seminar, LSE Department of Information Systems, 14 June 2002.

9. Stenmark, D. Leveraging Tacit Organizational Knowledge. Journal of Management Information Systems; Winter 2000/2001; 17, 3; ABI/INFORM Global pp 9.

10. Schachter, D.L., 1998, ‘Memory and Awareness’, Science 280, 59-60.

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ReferencesReferences

11. Gorman, M.E. Types of Knowledge and Their Roles in Technology Transfer. Journal of Technology Transfer; Jun 2002; 27, 3; ABI/INFORM Global pg 219.

12. Schön, D. A., The Reflective Practitioner, Basic Books, 1983.13. Stenmark, D. Information vs. Knowledge: The Role of intranets in Knowledge

Management. Proceedings of the 35th Hawaii International Conference on System Sciences, 2002.

14. McCauley, M. PricewaterhouseCoopers: Building a Global Network. Case Study, Centre for Asian Business Cases, School of Business, The University of Hong Kong. 2000.

15. Behrend, E. Knowledge Management Resources. Tax Start, Philadelphia. August 13, 2002.

16. Weinreibh, A. SALT Knowledge Management Resources. Tax Start, St. Louis. July 18, 2002.

17. Fulmer, William E., Buckman Laboratories (A), Harvard Business School, 9-800-160, January 22, 2003.

18. Buckman Laboratories, www.knetix@buckman.com, October, 2003.19. Buckman Laboratories, Bulab Holdings Annual Report 2002.