Working Knowledge : How Organizations Manage What They Know

By Thomas H. DavenportAnd Laurence Prusak

Elridge D'MelloGraduate Student in Computer Engineering

Ch 1: What do we talk about when we talk about knowledge?

Data Information Knowledge

Related, but not interchangeable!

Data

Set of discrete, objective facts about events. Organizational context: structured records of

transactions. Needed by all organizations especially Banks,

insurance companies, government agencies More not always better

Can be difficult to make sense of in large volume No inherent meaning in data

Why is data important? It is the essential raw material for the creation of

information

Information

“Data endowed with meaning and relevance” – Peter Drucker

Data that makes a difference Data sent from sender to receiver

intended to alter the receiver’s perception of something

Moves in hard and soft networks Traditional networks – hard networks A note, an FYI – soft network

How to add value to Data

Contextualized Categorized Calculated Corrected Condensed

Data

Information

Knowledge Knowledge derives from minds at

work. Definition:

Fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organizations, it often becomes embedded not only in documents or repositories but also in organizational routines, processes, practices and norms.

How to Transform Information into Knowledge Comparison: how does this info compare

with other situations we’ve known? Consequence: what implications does the

information have for decisions and actions? Connections: how does this bit of

knowledge relate to others? Conversation: what do other people think

about this information?

These knowledge creating activities take place within and between humans

How do we know if it's any good?

Difficult to trace the path between knowledge

and action

What are the resultant decisions or actions?

Knowledge

Informativeness

Usefulness

Connectivity

Transaction

Information

Timeliness

Relevance

Clarity

Cost

Speed

Capacity

Data

Qualitative MeasureQuantitative Measure

Components of knowledge

Experience Knowledge develops over time, through

experience Provides a historical perspective from which to

view and understand new situations and events. Firms hire experts – buy experience-based

insights. Ground Truth

Knowing what really works and what does not. Army’s “After Action Review” (AAR) program.

Components of knowledge Complexity

Knowledge is not a rigid structure that excludes what doesn’t fit it; it can deal with complexity in a complex way.

Knowledge is aware of what it doesn’t know. Judgment

It judges and refines itself in response to new situations and information.

When knowledge stops evolving, it turns into opinion or dogma.

Components of knowledge Rules of Thumb and Intuition

Those with knowledge don’t have to build an answer from scratch every time, thus offering speed.

Intuition is “compressed expertise” Values and Beliefs

Values and beliefs are integral to knowledge “Knowledge, unlike information, is about beliefs

and commitment.” -- Nonaka & Takeuchi

Knowledge as a Corporate Asset Effect of the Changing Global Economy

No room for inefficient production. Organization that knows how to do new things

well and quickly will thrive over the next decade.

Product and Service Convergence Knowledge and related intangibles are

increasingly becoming part of the “products” firms offer

The intangibles that add value to most products and services are knowledge-based.

Knowledge as a Corporate Asset

Sustainable Competitive Advantage Today, it is very easy for competitors to

figure out the “secrets” of a company’s products – use of reverse engineering, information flow, advanced technology.

But knowledge can provide a sustainable advantage.

Unlike material assets which decrease with use, knowledge assets increase with use.

Information Technology and Knowledge Exchange Caveat: Having more information

technology will not necessarily improve the state of information/knowledge. E.g. TV was supposed to be device that

bridged culture gaps and foster world understanding.

Networked computers can be used as knowledge enablers.

Case Study: British Petroleum (BP) British Petroleum’s Virtual Teamwork Program

BP Exploration: 42 separate business assets Goal: Agility of small company with resources of a

large one Implementation

Stressed corporate behavior vs. technology Coaches and teams: Coaches helped team members

link business objectives to system capabilities; challenged individuals

Emphasis: person-to-person interaction and understanding vs. system requirements

Case Study: British Petroleum (BP)

Results: 4 of the 5 pilot groups had great success:

Measurable savings (time and money) Participant enthusiasm Volume of use

Case in point: Equipment failure on mobile drilling ship Utilized communication media to consult a remotely

located expert and fixed the problem in a few hours huge financial savings of avoided downtime.

Ch1: Summary

Data – Information – Knowledge hierarchy

Knowledge – fluid; in people’s minds Knowledge is the way to maintain a

sustainable economic advantage

Data

InformationKnowledge

Ch2: The Promise and Challenge of Knowledge Markets Knowledge is exchanged, bought, bartered,

found, generated, and applied to work. Knowledge transactions occur because all

the participants expect the transactions to provide “utility”.

Fact of life: people rarely give away valuable possessions (including knowledge) without expecting something in return.

Important fact to realize for any knowledge initiative: there are markets for knowledge.

Political Economy of Knowledge Markets Meet the players:

Buyers Knowledge seekers looking for insights, judgments

and understanding. Seeks answers imbued with emotional subtexts that

are key to our sense making. Sellers

People with an internal market reputations for having substantial knowledge about a process or subject.

Brokers Gatekeepers, boundary spanners. Examples: Managers, corporate librarians.

Factors that affect the Price System

Reciprocity Most important factor Seller will spend time and effort needed

to share knowledge effectively if he expects the buyers to be willing sellers when he is in the market for their knowledge, a.k.a. “The favor bank.”

Related to the next most important factor – Repute.

Factors that affect the Price System

Repute Intangible, but produces tangible results Importance of repute is increasing

Workers at all levels feel considerable pressure to heighten their individual repute for their demonstrated knowledge, skills, and competencies.

Altruism The seller is just a “nice guy/gal”

The Trump card – Trust!

An essential condition of a functioning knowledge market.

Established in the following ways: Must be visible Must be ubiquitous Must start at the top

A firm’s knowledge market must be founded on mutual trust.

Knowledge Market Signals Indicate both where knowledge actually

resides and how to gain access to it. Position and Education

Not a consistent signal Informal Networks

Possibly the best knowledge market signals flow during chats at the water cooler, cafeteria, etc.

Disadvantage: undocumented; not readily available to all who need them

Communities of Practice Employee initiated common interest groups.

Knowledge Market Inefficiencies – Responsible Factors

Incompleteness of Information Lack of maps and yellow pages to guide

the buyers to the sellers. Asymmetry of Knowledge

Some asymmetry is needed, strong asymmetry prevents knowledge from getting to where it is needed.

Localness of Knowledge People usually get knowledge from their

organizational neighbors

Knowledge Market Pathologies Monopolies

Knowledge will come at a high price Not be there to benefit the company

Artificial Scarcity Monopoly is one form Downsizing can cause a scarcity as well

Trade Barriers Refusal to accept new knowledge Status difference between seller and buyer Lack of good knowledge transfer infrastructure

Developing Effective Knowledge Markets

Using Information Technology Wisely Tech developments can change market

dynamics dramatically. Pitfalls and Limitations of using IT

Trying to force fluid knowledge into rigid data structures

Focusing too much on the system and not enough on the content

Developing Effective Knowledge Markets Building Marketplaces

Create virtual spaces dedicated to knowledge exchange

Members of an organization must be given time to shop for knowledge “Talk rooms”, knowledge fairs, live and electronic

forums Creating and Defining knowledge Market

Value Recognize, promote, reward employees for

sharing knowledge

Peripheral Benefits of Knowledge Markets

Higher Workforce Morale Employees see that their expertise is valued

Greater Corporate Coherence Shared awareness of corporate goals and

strategies Richer Knowledge Stock

Continuously refined and validated Stronger Meritocracy of Ideas

Test official beliefs and expose flaw

Ch2: Summary

Knowledge markets exist Important factors – reciprocity,

repute. Trust is the key! Organizations should value knowledge

Reward knowledge sharers Promote culture of sharing

Ch3: Knowledge Generation

Modes of Knowledge Generation Acquisition Dedicated resources Fusion Adaptation Networking

Modes of Knowledge Generation

Acquisition Knowledge does not have to be newly created “Well stolen is half done” – Spanish proverb Most effective way – buy it! Increasingly, firms acquire other companies for

their knowledge Knowledge acquisitions can be problematic –

must be handled with care Various agencies trying to create metrics to

quantify value of knowledge

Modes of Knowledge Generation

Rental Knowledge can be leased or rented

Funded research, consultants Likely to include some knowledge

transfer Make sure to take steps to retain it too!

Modes of Knowledge Generation

Dedicated Resources Establish units or groups specifically for

that purpose Research and Development (R&D) groups

Fusion Bringing together people with different

perspectives to work on a project Group members must find some

common ground – need to understand one another

Modes of Knowledge Generation

Adaptation External (and internal) changes cause

businesses to adapt. E.g. new competitors products, new tech., etc.

The business world has become aware that success can lead to unwillingness to adapt

Ability to adapt based on: have existing resources and ability to change being open to change

It is important to adapt new knowledge before a crisis occurs

Modes of Knowledge Generation

Networks (communities of knowers) People brought together by common

interests (informally) often generates new knowledge within firms

Consulting and service firms have organized their previously informal networks into formal networks, with budgets, coordinators, librarians, etc

Common Factors to the Modes of Knowledge Generation

All these efforts need adequate time and space devoted to knowledge creation or acquisition

Critical that managers recognize Knowledge generation is both an important

activity for success It must be nurtured

The firm that fails to generate new knowledge will probably cease to exist!!

Ch3: Summary

Various modes of knowledge generation Acquire (buy/rent), Dedicate resources,

Fusion, Adapt, Network Organizations need to be flexible

Process takes time Must be done carefully

Ch4:Knowledge Codification and Coordination

Codification means converting knowledge into accessible and applicable formats

Basic principles to codify knowledge: What goals will be served Identify appropriate forms to reach goal Evaluate utility and appropriateness for

codification Identify an appropriate medium for codification

and distribution

Major challenge: Codifying Tacit Knowledge

Tacit knowledge Internal to the knower; difficult to

articulate E.g. the distinctive style of a master

musician Codification

Usually limited to locating someone with the knowledge and interacting This method is more efficient than trying to

capture it electronically or on paper.

Mapping Knowledge A knowledge map is a picture of what

exists and where it is located Developing a knowledge map involves

Locating important knowledge in the org Publishing a list or picture showing

where to find it Can be used as a tool to evaluate the

corporate knowledge stock Reveal strengths… and weaknesses!!

Assembling the Map Every employee has a piece of the map in

his/her head Creating an org wide map is a matter of

combining these individual “mini-maps.” Technology can be useful for mapping

“Yellow-pages” Continuously updated better than paper Common tools: Lotus notes/intranet systems

Word of caution Politics of mapping knowledge! Knowledge matters

Back to Capturing Tacit Knowledge As mentioned earlier, very difficult, but tacit

knowledge has substantial value worth the effort

Narratives very useful Knowledge communicated most effectively through a

convincing narrative delivered with elegance and passion

Recall AAR program: “war stories” that convey “ground truth”; very effective to communicate knowledge

Embedded Knowledge Some tacit, internal knowledge can be externalized in a

company’s products or services Knowers use their expertise to develop a process or

product

Codifying Knowledge in Systems

History of AI: excessive claims of ability of computers

Bounded, unambiguous, rule-based knowledge can be embedded in an expert system. E.g. Deep-Blue

Evaluating Explicit Knowledge Some forms of knowledge already codified and

explicit: patents Evaluating codified knowledge and making it

available is integral to the codification process

Continuing Codification Challenge

Challenge is to codify knowledge and still leave its distinctive attributes intact, putting in place codification structures that are as flexible as the knowledge itself.

Stories and rhetoric provide the richest and most flexible approach to this task

For the near future: this is more art than science

Ch4: Summary Difficult, not impossible to codify

knowledge Explicit knowledge codification

Usually possible to document Implicit/tacit knowledge codification

Difficult Utilize narratives Develop knowledge maps (of where the

knowledge is) Utilize electronic communication resources to keep

the knowledge fresh.

Cross Cutting Themes Knowledge resides within people Intangibility and fluidity of knowledge pose

new challenges for organizations Organizations should be willing to pay the

price for an intangible asset - knowledge Organizations must be aware of what they

know/don’t know Effective knowledge management is the

key to success in today’s economy

Comments

Authors present well rounded view of the subject

Plenty of examples Illustrates authors’ expertise in the field Use their own experiences as examples

Convincing argument for effective knowledge management

Reviews and References of “Working Knowledge” “Knowledge management is a business issue for competitive

advantage, not just an information technology issue. It will become increasingly important, especially for large enterprises needing to create, share, and reapply knowledge on a global scale. Working Knowledge is as thorough and complete a book on this subject as exists today.” --Todd A. Garrett, Senior Vice President and Chief Information Officer, Procter & Gamble

News article in the Financial Times, The challenge of managing knowledge, that references “Working Knowledge” http://www.sbs.ox.ac.uk/html/news_article.asp?ID=62 Presents the practical challenges that arise in trying to implement

a system based on “Working Knowledge” and other similar books

“Building a Knowledge Culture” – Whitepaper by A. Andrew Anderson http://www.robbinsgioia.com/library/whitepapers/Knowle

dgeMgmt.pdf Presents practical steps in implementing a KM system

Additional Resources

Interview with the authors: http://www.brint.com/km/davenport/wor

king.htm Davenport’s website with list of latest

books, articles http://www.tomdavenport.com/

Questions?