Information presented, researched, and compiled by: Paul S. Medley 2008Please do not use without permission. Contact paul_medley7@yahoo.com

Knowledge Management(Maximizing Human Potential)

Paul Medley 2008

The Business Climate

• “Time accelerates. Distance shrinks. Networks expand. Interdependencies grow geometrically. Uncertainty dominates. Complexity overwhelms. Such is the environment and the context within which current organizations must survive and thrive.”

• - Alex Bennett• Co-Author The Evolution of Organizations:

• From Bureaucracy to Intelligent Complex Adaptive Systems

Paul Medley 2008

What is Knowledge Management?

• An emerging academic discipline and An emerging academic discipline and management process that addresses how management process that addresses how people, workgroups, and organizations use people, workgroups, and organizations use knowledge principles, processes, knowledge principles, processes, technologies, and training to leverage technologies, and training to leverage intellectual capital by increasing knowledge intellectual capital by increasing knowledge flow, flow, organizational learningorganizational learning, innovation, and , innovation, and performanceperformance

Paul Medley 2008

• Knowledge management caters to the critical issues of organizational adaptation, survival, and competence in the face of increasingly discontinuous environmental change.

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• KM in a organization is concerned with strategy, processes and technologies to acquire, store, share and secure organizational understanding, insights and core distinctions.

• Knowledge management gives priority to the way in which people construct and use knowledge.

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Why Knowledge Management ?

• KM embodies organizational processing capacity of information technologies, and the creative and innovative capacity of human beings. It seeks to make the best use of the knowledge that is available to an organization, creating new knowledge, increasing awareness and understanding in the process

Paul Medley 2008

• Managing knowledge consists of deciding with whom to share, what is to be shared, how it is to be shared, and ultimately sharing and using it.

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• Peter Drucker amplified this point when he wrote the following in the January/February 1995 Harvard Business Review:

• “To achieve this, management must first define the company’s information needs, then communicate them to the rest of the organization. They must "think through what is information for them, that is, what data they need; first, to know what they are doing; then, to be able to decide what they should be doing; and finally, to appraise how well they are doing,"

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The Distinction Between Knowledge & Information Management

• Working with objects (data or information) is Information Management and working with

people is Knowledge Management.

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What constitutes intellectual or knowledge-based assets?

•Not all information is valuable. Therefore, it's up to individual organizations to determine what information qualifies as intellectual and knowledge-based assets.

• In general, however, intellectual and knowledge-based assets fall into one of two categories:

Paul Medley 2008

Tacit Knowledge

• Much harder to grasp is the concept of tacit knowledge, or the know-how contained in people's heads.

• The challenge inherent with tacit knowledge is figuring out how to recognize, generate, share and manage it. Identifying tacit knowledge is a major hurdle for most organizations.

Paul Medley 2008

Explicit Knowledge

• Assets such as patents, trademarks, business plans, marketing research and customer lists. As a general rule of thumb, explicit knowledge consists of anything that can be documented, archived and codified, often with the help of IT (information technology).

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Knowledge Management Vs. Information Management

• We can quibble endlessly over what makes "information" different from "knowledge," but the important point is that we should always be trying to add value to what we have by turning data into information and information into knowledge

Paul Medley 2008

Knowledge Management

• Managing knowledge is ultimately everyone's job. Virtually every industry today is becoming knowledge-intensive. What our organization knows is clearly one of its only sustainable competitive advantages.

Paul Medley 2008

Knowledge Management Valuation

• Grey Matters: CFO's Magazine’s Third Annual Knowledge Capital Scorecard

• Valuing things like patents, R&D, and human capital may not be easy, but with intangible assets now driving corporate performance, evaluating the investment in those areas has become critical.

• Andrew Osterland, CFO MagazineApril 01, 2001

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• As the Scorecard shows, knowledge earnings and

capital are relevant to more than just New Economy and pharmaceutical companies. Consider Ford Motor and General Motors.

• The book value of Ford as of its September 30, 2000, 10Q filing was $18.3 billion, compared with $31.5 billion for GM. Ford posted knowledge earnings of $6.7 billion, more than 50 percent higher than GM's $4.3 billion.

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• This comparison suggests that Ford is doing a much better job managing the intangible drivers of value in the motor vehicles business.

• Knowledge capital is not just a New Economy metric, it indicates a company's profitability, both historical and anticipated, above an expected rate of return on physical and financial assets.

Paul Medley 2008

Current Business Environment & Workforce Trends

• The “Brain Drain” of Government and private business sectors caused by an aging workforce.

• The inability of organizations being able to effectively replace experienced personnel leaving the organization.

• More competitive local and global economies. • Growing complexities in the business

environmentPaul Medley 2008

Federal Government

• Knowledge management is of such critical importance that it has also attracted the attention of the Federal government, which like the private sector also experienced profound changes during the 1990’s.

• Payrolls were cut by 600,000 positions; the use of information technology was expanded to improve performance, and management reforms were enacted to improve performance and to increase accountability to the American people.

Paul Medley 2008

• At the beginning of the 21st century, the Federal government faces serious human capital issues as it strives to improve service and be more accountable. It must compete for workers, as its workforce grows older. The average age of a federal worker is 46 years.

• Approximately 71% of federal senior executives will be eligible to retire by 2005. And unless the knowledge of those leaving is retained, service to citizens will likely suffer.

Full-Time Permaments - “Profile of Federal Civilian Non-Postal Employees”, U.S. Office of Personnel Management, September 30, 2000

“Major Management Challenges and Program Risks: A Government wide Perspective,” General Accounting Officer Report GAO-01-241 of January 1, 2001

Paul Medley 2008

• “ Widespread inattentiveness to strategies, human capital management has created a government-wide risk - one that is fundamental to the federal governments ability to effectively serve the American people - both now and in the future.

• As our recent Performance & Accountability Series (PAS) reports make clear, serious human capital shortfalls are eroding the ability of many federal agencies- and threatening the ability of others- to economically, efficiently, and effectively perform their missions.”

• Report of Senator Fred Thompson, Chairman Committee on Governmental Affairs, on Management Challenges Facing the New Administration, Part 2: Federal Workforce Challenges, October 2000

Paul Medley 2008

The Brain Drainin Washington State

(we’ve been expecting it, and now it’s here)

• By contrast, more than 50% of Washington state employees are 45 or older, and 15% are 55 or over. By comparison, only 35% of the state’s general workforce is over 45.

• The state will experience significantly higher turnover due to increasing retirement rates, with some agencies and job categories impacted to a much greater extent than others.

• Statewide more than 50% of Executive Level and 30% of Mid-Level managers will be eligible to retire by 2005.   

• Impact of Aging Trends on the Washington State Government Workforce. Prepared by: The Task Force on the Changing Age Profile of the Washington State Government Workforce - Published June 2000

Paul Medley 2008

• At least four agencies likely to experience significantly higher than average retirement rates between now and 2005 based on high percentages of retirement eligible PERS 1 employees in their agencies:

• State Treasurer (29 percent), Employment Security (27 percent), Department of Printing (26 percent), and the Department of Personnel (24 percent)

• Impact of Aging Trends on the Washington State Government Workforce. Prepared by: The Task Force on the Changing Age Profile of the Washington State Government Workforce - Published June 2000

Paul Medley 2008

• As a comparison, the overall state average retirement rate expected during this period is just over 12 percent.

• “Employers are concerned about the great numbers of retirees that will be leaving and the experience they will take with them. These conditions have also been referred to as loss of “institutional memory”.

Gov Exec.Com A Service of Government Executive Magazine, Graying Government, January, 1998

Paul Medley 2008

NEWS FLASH! NASA Loses Saturn 5 Rocket Plans!

• The knowledge drain from the boomer retirement wave already has had some far-reaching consequences. As author David DeLong reports in his book, Lost Knowledge: Confronting the Threat of an Aging Workforce (Oxford Univ. Press, 2004), NASA lost the plans for the Saturn 5 rocket, which was used to launch the lunar landing craft.

• No one knows where the plans are. DeLong writes:

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• In an era of cost-cutting and downsizing, the engineers who designed the huge Saturn 5 rocket ... were encouraged to take early retirement from the space program. With them went years of experience and expertise about the design trade-offs that had been made in building the Saturn rockets.

• Also lost were what appear to be the last set of critical blueprints for the Saturn booster, which was the only rocket ever built with enough thrust to launch a manned lunar payload.

Paul Medley 2008

Business Response to Brain Drain

• An article in Management Issues – September 2007 stated that research by online recruiter Monster suggests that a mere one in five American companies have a formal strategy in place to capture critical knowledge and experience from older employees approaching retirement and transfer this knowledge to newer employees.

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• To make matters worse, only 12 percent of human resource managers said that knowledge retention was seen as high priority within their organizations - despite the fact that a third of them acknowledge that 20 per cent or more of their workforce will be eligible for retirement over the next few years.

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• The study suggests that while HR managers may recognize the looming issue of losing institutional knowledge due to retirement, many face barriers to establishing strategies and tactics that could help to pre-empt the problem.

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• The article further stated that concrete steps organizations can take to help mitigate the affects of brain drain include appointing a Chief Knowledge Officer responsible for organizational knowledge.

• Implementing programs to identify knowledge assets, sources, and offering knowledge-sharing incentives for employees and incorporate standards in performance reviews.

Paul Medley 2008

• Other tactics include leveraging technology – using things like blogs and wikkis to enable employees to redistribute and access organizational knowledge.

• In closing, the article stated that while brain drain is a looming problem for employers, it also presents an excellent opportunity for innovative companies to position themselves for better competitive advantage.

Paul Medley 2008

What benefits can be expected

from effective KM initiatives?

• An effective KM program should help our organization accomplish the following:

• Foster innovation by encouraging the free flow of ideas

• Improve customer service by streamlining response time

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• Increase visibility and accountability, manage budget, and deliver new and improved services to our customers faster

• Get better use of staff talent

• Enhance employee retention rates by recognizing the value of employees' knowledge and rewarding them for it

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• Streamline operations and reduce costs by eliminating redundant or unnecessary work

• Provide an enhanced systematic means of managing and achieving continual change that is aligned with the organization's overall business strategy

• Increase our market position and further solidify our stature as “thought leaders” in our industry

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• I think it is a fair assessment to say we need improvement in the areas of Knowledge Management, Idea Management, Competitive Intelligence, and Marketing.

• In can be difficult to address those needs in the workforce with state government, due to thin or non-existent job classifications covering the needed skillset(s). This leaves the option of outsourcing, almost synonymous with “consultants”, which is definitely synonymous with lots of money.

Paul Medley 2008

ASSESSMENT

• I would like to recommend that we bridge these gaps between organizational needs, thin or nonexistent job classifications, limited options (outsourcing), in a different way.

• I would suggest (budget or creativity provided) that the agency hire someone or a group of no more than two people assigned to work specifically in “hybrid” positions covering the areas of Knowledge Management, Idea Management, Business Intelligence, Competitive Intelligence, and Marketing.

Paul Medley 2008

• Although these are different disciplines it would be prudent to pay attention to, and give more time and focus to each of these activities on a daily basis.

• We should have regular programs dedicated to each of these areas that are designed to enhance and support our specific organizational strategic plans and objectives

Paul Medley 2008

• An individual with solid general knowledge and familiarization in each of these areas could still be highly effective and at much less cost to the agency than outsourcing full time.

• Consider that research at PayScale.com shows the median salary for a Business Intelligence Analyst is typically in the $50,000 to $90,000 range,

Paul Medley 2008

• Consultant, Business Process/Management- less than 1 year experience $53,965, 1-4 years experience $60,828, 5-9 $80,561, 20 + years experience $99,731 (not taking reputation into account).

• Marketing Consultants from $49,316 to $70,922 Senior Competitive Analyst $67,000. It all adds up if the agency were to outsource all of these activities.

Paul Medley 2008

• A better idea would be to have someone in these “hybrid” positions to get our programs up and running and then… if needed bring in the occasional consultant or two to fine tune things.

• We’d get more bang for our buck paying someone on state payroll that has the necessary business savvy and skills on the WMS scale (manager) and subordinates as a Management Analyst 4 or 5 than we would expending $300,000 and more a year in consulting fees.

Paul Medley 2008

Call to Action

• We should implement a full time knowledge management program to keep pace with the vast number of lasting changes in our economic environment and competition.

• Leveraging our knowledge-based assets will ensure the organizations “survivability” in what has proven to be a challenging and competitive environment for resources, markets, skilled employees, and innovations.

Paul Medley 2008

• We must do all that is necessary to minimize the loss of “institutional memory”.

• We must minimize the effects of long term, seasoned employees leaving state service, and the potential negative impact on our ability to grow, manage change, and provide what our customers view as valued products and services.

Paul Medley 2008

KM Quotable Quotes• “Today’s KM processes are contingency planning

for tomorrow’s decisions.” - Alex Bennet, Chief Information Officer for

Enterprise Integration for the Department of Navy

• “If we only knew what we know, we would be 30 percent more productive.”

Lewis Platt, CEO of Hewlett-Packard (1992-1999)

Paul Medley 2008

Thank You & Make it a great day!

Paul Medley 2008