Building a Customer-focused and Learning Culture with KM

Philip FungVice Chairman of KMDC

July 2005

Agenda

Challenges to managers in the new economy

Building a new work culture KM practices in retail shops

Challenges to managers in the new economy

Knowledge Based Economy

An economy in which the production,

distribution and use of knowledge is the

main driver of growth, wealth creation

and employment across all industries

Knowledge Workers

Knowledge workers will own the tools of production because they own their knowledge and will take it with them where ever they go.

Peter Drucker, Post Capitalist Society

Challenges

Globalization and competition ICT has changed the way we work Knowledge becomes obsolete quickly Increased demand from customers Low staff loyalty

Impact on Work Life

Work more with less Stress High staff turnover Low morale

Building a New Work Culture with KM

New Work Culture

Customer focus Team work Continuous learning

Value of Customer Knowledge

An important asset that companies own

Origin of most improvements in products and customer service

Vital for companies to create and sustain their competitive advantage

Sources of Customer Knowledge

Directly from customers Indirectly through knowledgeable

employees, suppliers and partners Systems that capture and analyze sales

transaction, customer profile, usage pattern and etc.

Acquisition of Customer Knowledge

Market researchMarket research

Loyalty programLoyalty program

CRM programCRM programFocus groupFocus group

InvolvingInvolvingfrontline stafffrontline staff

Customer user-groupCustomer user-group

Company hotlineCompany hotline

& web site& web site

Problems with Customer Knowledge

Gather by different business units for their specific objectives

Not properly managed throughout the life cycle

Lack of a “central clearing house” and senior executives to take quick and appropriate actions

Low participation from frontline staff Focus on explicit knowledge and data

Customer Knowledge in Fashion Retailing

Nature of Fashion Market

Short selling period- in months or weeks Demand unstable- influenced by weather,

mass media or film stars Low predictability- difficult to do accurate

forecast High impulse buying- most buying

decisions are made in the store

What Retailers Do?

POS dataPOS data

LoyaltyLoyaltycardcard

programprogram

MarketMarketresearchresearch

What Retailers May Not Know?

The store traffic Conversion rate- how many shoppers are

“converted” into buyer The amount of time a shopper spends in a shop The interception rate- the percentage of

customers who have some contact with sales staff

The waiting time Why customers don’t buy

Customer Knowledge Strategy

Identify customer knowledge as the most important knowledge to the business

Apply KM principles and practices to maximize the value of customer knowledge

Build up a customer-focused and learning culture

Two Examples using KM

Use frontline staff to build a customer-focus culture

Use AAR meeting to build a learning culture

Shop Customer knowledge Management (CKM)

Why CKM?

We know that in order to gain competitive

advantages in this constant changing

environment, we will need superior customersuperior customer

knowledgeknowledge, and the ability to applyapply that

knowledge to improve our product and our product and

service deliveredservice delivered.

What is Shop CKM?

Our front-line staffs generate many insightful

knowledge through their day-by-day

interaction with the customers …

The question is : how do we manage all how do we manage all

these collective tacit knowledge?these collective tacit knowledge?

Support for the Front-line Staff:Support for the Front-line Staff:

Training on observation skills

Emphasis on their benefits when head

office better understand their difficulties whilst

selling products to the customers.

Implementation Shop CKM

DiscoveriesDiscoveries

LearningLearning

ActionAction

Through front-line staffs observations and sharing own tacit knowledge with team member.

Codify collective knowledge standard from. Fax to office for storage and analysis.

Relevant parties to develop action plan according to the learning discovered.

The Knowledge-transfer Process:The Knowledge-transfer Process:

Benefits of Shop CKM

Shop After Action Review (AAR)

U.S. Army’s After Action Review

A review meeting held after an action, with the purpose to capture lessons and re-use in next battle or mission.

Ground Rules of AAR Meeting

Discover the “ground truth” Focus on issues, not people No personal attack Don’t blame for mistake or failure Be Open, positive, constructive

4 Questions in AAR

Q1. What did we set out to do ?

Q2. What actually happened ?

Q3. Why did it happen ?

Q4. What are we going to do next time ?

AAR as a KM tool

Capture Lessons Learned

ExperienceExperience

KnowledgeKnowledge

AAR as a KM tool

Knowledge Transfer

IndividualIndividual

TeamTeam

How to start KM initiatives?

Three approaches to change

Top down Bottom up Middle-up-down

Middle-up-down

Middle managers are often attacked as the obstacles to changes

In the knowledge-based economy, middle managers are the key to innovation

Knowledge is created by middle managers who are leaders of task forces

Stages of Implementation

Stage 1GettingStarted

Stage 2Explore andExperiment

Stage 3Pilots and

KMInitiatives

Stage 4Expand

andsupport

Stage 5Institutionalize

KM

Source: APQC