Learning Unit 5

Strategies of Managing Knowledge (Week 3)

WHAT IS A STRATEGY?

A comprehensive master plan stating how the corporation will achieve its mission and objectives. It maximizes competitive advantage and minimizes competitive disadvantage.

Strategy Development Routes

Hierarchy of Strategy
Corporate Strategy
Business Strategy

Functional Strategy

Business Strategies

Focuses on improving the competitive position of a companys or business units products or services within the specific industry or market segment that the firm serves.

The Knowledge Strategy Development

What is it? it identifies opportunities for improving organizational performance through better knowledge management. It starts with a review of current business strategies, assesses the best knowledge levers to exploit, and reviews current KM performance, capabilities and potential.

Seven Knowledge Levers

Customer Knowledge Stakeholder Relationship Business Environment Insights Organizational Memory Knowledge Processes Knowledge in Products and services Knowledge in People Developing deep knowledge sharing relationships. Understanding the needs of your customers' customers. Articulating unmet needs. Identifying new opportunities. Improving knowledge flows between suppliers, employees, shareholders, community etc. using this knowledge to inform key strategies. Systematic environmental scanning, including political, economic, technology, social and environmental trends. Competitor analysis. Market intelligence systems. Knowledge sharing. Best practice databases. Directories of expertise. Online documents, procedures and discussion forums. Intranets. Embedding knowledge into business processes and management decision making Knowledge embedded in products. Surround products with knowledge e.g. in user guides, and enhanced knowledge-intensive services Knowledge sharing fairs. Innovation workshops. Expert and learning networks. Communities of knowledge practice.

KNOWLEDGE STRATEGY
Refers to the firms business strategy that takes into account its intellectual resources and capabilities.
Involves the identification of : Knowledge gaps and surpluses Then the management of these gaps and surpluses to enhance organizational performance (Zack, 1999)

Knowledge strategy involved aligning organizational knowledge to a defined business strategy (Jones, 2000)

Strategic Drivers
Growth through share, market strength, distribution external market focus Forging long-term, deep relationships with customers external focus, growing with customer success

Market Growth

Customer Intimacy

Operational Effectiveness

Profit through productivity and cost control internal development focus

Traditional KM driver, but should not be the only one!

What drives Knowledge Strategy

Business Strategy What knowledge does it take to compete? What are your critical knowledge gaps? Product Innovation Can you design breakthrough products? Spark innovation through a participatory culture? Organizational Complexity How can you adapt to speed & information overload? Build a quick-learning organization? Customers and Markets Profound customer understanding Radically improved time to market Knowledge leverage in the marketplace

Core Competencies
Imitability of core competencies determined by:

Transparency Transferability Replicability

Core competencies can be: Explicit Knowledge Tacit Knowledge

Resource Sustainability

Corporate Value Chain

Four Enabling Dimensions

Knowledge Resources
What do we know and where is it ?

Practices
What processes leverage that know-how?

Culture and Learning

How do we participate with this know-how?

Collaborative Technology
How do we support this know-how?

A strategic Framework for Mapping Knowledge

Gap Analysis

A Knowledge Strategy Framework

Exploration vs. Exploitation Internal vs. External Knowledge Aggressive vs. Conservative

Source: Michael H. Zack

Exploration vs. Exploitation

operating on a lower knowledge level than required: internal knowledge gap -compare the own to the higher knowledge of the competitors: external knowledge gap result: The organinzation is an explorer - a creator or acquirer of the knowledge required -knowledge resources and capabilities exceed significantly the requirements of a competitive position result: The organization's requirement is to be a knowledge exploiter
Source: Michael H. Zack

Internal vs. External Knowledge

-knowledge generated within the firm is especially valuable because it tends to be unique, specific, and tacitly held difficult for competitors to imitate -Knowledge from outside can provide for fresh thinking and a context for benchmarking internal knowledge more abstract, more costly to obtain, more widely available to competitors
Source: Michael H. Zack

Aggressive vs. Conservative

-conservative: exploiting internal knowledge -aggressive: unbounded innovators (knowledgeintensive industries)
unbounded aggressive

external

internal

conservative

Exploiter Explorer

Innovator
Source: Michael H. Zack

Knowledge domains
Your company can develop knowledge domains to assist your company in sharing knowledge

What is a knowledge domain?

 Knowledge A

gaps are often identified

knowledge gap occurs when a problem has been identified, but the knowledge required to solve it is not available build up a knowledge domain, however, you must push for knowledge creation and knowledge transfer in your company

To

Knowledge Creation and Transfer

Knowledge creation enhances the potential of creating innovations Processes typically take place in steps in groups of a limited size: o jointly experiencing new work processes o make their collective experiences explicit o subject becomes available to scrutiny o transformed into a prototype process o to integrate the newly created knowledge in existing processes

Knowledge transfer transfer with external partners is important A typical knowledge transfer goes like this: o Identify the knowledge to be transferred, o Receiver assesses the value of knowledge for local use, and the sender assesses the potential gain or loss o Packaging and distribution of knowledge must occur in such a way as to enhance the receivers potential to act. o Includes adoption, in which the transferred knowledge is integrated with the local knowledge

Four Knowledge Strategies

Leveraging Strategy

Focus: Transferring knowledge throughout the organisation Ensures transfer of existing knowledge through o consolidation of activities o standardisation of tasks o internal benchmarking programme Knowledge can be shared

knowledge workshops

o o o

trust between participants creativity and entrepreneurship reduction of repetitive mistakes

Two types of learning o technical and process learning Manage risk of overtaxing resources
(von Krogh, et al., 2002).

The leveraging strategy impacts on strategic goals

Efficiency Share Knowledge in the organisation, e.g. on manufacturing, product development, marketing, sales. Share knowledge between domains to improve innovation processes. Share knowledge to reduce risk of overtaxing resources. Share knowledge on competitors and regulatory environment

Innovation

Managing Risks

The Expansion Strategy

The expansion strategy targets knowledge creation by focusing on existing data, information and knowledge. The emphasis here is placed on increasing the scope and depth of knowledge by refining what is known and by bringing in additional expertise relevant for knowledge creation (von Krogh, et al., 2002).
Better

understanding of key processes Identification of knowledge gaps

How the expansion strategy impacts on strategic goals

Efficiency Expanding on knowledge related to existing processes.

Innovation Creating new processes and product innovations from existing knowledge domain Managing Developing knowledge domains to reduce Risk the risk of overtaxing resources. Developing knowledge domains to reduce the exposure to the risk of deterioration. Developing knowledge domains on the regulatory and competitive environment

Appropriation Strategy
An externally oriented strategy whereby a unique knowledge domain is developed by transferring knowledge from an external source as the knowledge does not exist in the organisation (von Krogh, et al., 2002).
Aids in achieving operation efficiency

Organizations should develop partnerships Attain innovative goals through a partner Capturing new knowledge External environment Emerging technology developments Decrease the risk of overtaxing resources Competitive environment

How the appropriating strategy impacts on strategic goals

Efficiency Transferring new knowledge from partners, e.g. in manufacturing, sales, marketing and product development.

Innovation Transferring new knowledge from partners for future innovation. Managing Risk Transferring new knowledge from partners to reduce risk of overtaxing resources. Transferring new knowledge from partners to reduce exposure to risk of deteriorating knowledge domain. Transferring new knowledge on regulatory environment and competitors.

Probing Strategy
Allows teams to develop new knowledge domains. This involves identifying participants and providing them with the responsibility to generate new ideas (von Krogh, et al., 2002).
orequires

identification of participants ointerest in doing something new oloose idea or visions for a future knowledge domain oimperative to the long term performance and survival

Using

new data, insights, models, concepts and technologies processes and tasks in a new light exposure to knowledge deterioration

Business Reduces

obalanced

portfolio oenabling the company to act on current business opportunities

How the probing strategy impacts on strategic goals

Efficiency Creating new knowledge that can improve business process

Innovation Creating new knowledge for radical product and process innovation and better adaptation Managing Risk Reducing exposure to risk of existing knowledge domain deterioration

However, simplistic solutions and "one-size-fits-all" is not the way. This approaches leave executives with little in the way of practical advice about how to transform the entire knowledge-management system. What's more, this fuzziness makes it difficult for executives to see a clear link between their knowledge-management investments and business value. e.g.
Industry Structure: Fragmented Industry Many small and medium-sized local companies compete for small shares of total market Consolidated industry Mature industry dominated by a few large companies Product: Do you offer standardized or customized ? Do you have a mature or innovative products?

Knowledge Management Framework

framework to help management to associates specific knowledgemanagement strategies with specific challenges that companies face.

Knowledge Management Framework: Work Models

*A one size fits all approach to developing a knowledge management system will not work Knowledge workers
Collaboration

Integration Model
Systematic, repeatable work Highly reliant on formal processes, methodologies, or standards Dependent on tight integration across functional boundaries

Collaboration Model
Improvisational work Highly reliant on deep expertise across multiple functions Dependent on ability to build high commitment, fluid/flexible teams

Level of Interdependence

Transaction Model
Routine work Highly reliant on formal rules, procedures and training Dependent on low-discretion workforce or automation, and enforcement of strict rules
Routine

Expert Model
Judgment-oriented work Highly reliant on individual expertise and experience Dependent on star performers characterized by star cultures
Interpretation / Judgment

Individual Actors

Complexity of Work

Knowledge Management Framework: Challenges

*The barriers to success will vary with each model Integration Model
Collaboration

Collaboration Model Achieving breakthrough innovation

Learning through trial and error Knowledge linking across complex disciplines Sense making & decision-making under extreme uncertainty

Orchestrating across functions Creating a common big picture Driving a common big picture Driving toward standard methods based on best practices Balancing functional objectives against the good of the whole

Level of Interdependence

Transaction Model
Consistent, low-cost performance Standardizing the inputs (people), output and processes Creating clear operating guidelines to control behaviors Overcoming low worker morale

Expert Model
Getting results from stars Attracting & motivating stars Decreasing individual learning curves Reducing vulnerability to turnover Overcoming expert tunnel Interpretation / vision
Judgment

Individual Actors Routine

Complexity of Work

Knowledge Management Framework: Strategies

*Each model suggests specific strategies to follow to help achieve success Knowledge workers
Collaboration

Integration Model
Integrated processes Integrated teams Best practice benchmarking

Collaboration Model
Strategic framing Knowledge linking Action learning

Level of Interdependence

Transaction Model
Routinization Automation Productization

Expert Model
Experienced hiring Apprenticeships/development Capability protection

Individual Actors Routine

Complexity of Work

Interpretation / Judgment

References

Von Krogh, G., Nonaka, I., and Aben, M. (2001). Making the most of your companys knowledge: a strategic framework. Long Range Planning, 34(4), pp. 421-440. Zack, M. (1999), Developing a Knowledge Strategy, California Management Review, 41(3), Spring, pp. 125-145. Hansen, Morten T., Nohria, Nitin, Tierney, Thomas, (1999), Whats your strategy for managing knowledge?, Harvard Business Review, 77(2), March/April, pp.106-116. Haggie, Knox, and Kingston, John, (2003), Choosing your Knowledge Management Strategy, Journal of Knowledge Management Practice, June 2003. Maier, Ronald, and Remus, Ulrich, (2003), Implementing processoriented knowledge management strategies, Journal of Knowledge Management, 7 (4), pp. 62-74 . Bell, H. (2001). Measuring and Managing Knowledge. New York, McGraw-Hill Tiwana, A. (2002). The Knowledge Management Toolkit: Orchestrating IT, Strategy and Knowledge Platforms. New Jersey, Prentice-Hall.