qf-l1 introduction

7/26/2019 QF-L1 Introduction

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IS6921 - Knowledge Management

Session 1 Introduction to KM

Dr. Yulin FANG ([email protected])

Week1, 2009 Spring


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Agenda

Objectives Knowledge Management (KM)

Why KM

Myths about KM

KM Driving Forces

Knowledge Management Systems


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Knowledge Management

A Socio-Technical Perspective

From a managerial perspective, KM is more about

organizational culture/processes than

technologies.

This course takes a balanced view of KM and you

will learn some organizational issues (Lectures 1

- 7) and some technologies (lectures 8 - 10).


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Objectives

Describe what KM is and why KM

Discuss benefits and challenges

Explain knowledge management systems(KMS) and their role in the organization.


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Agenda


Why KM

Myths about KM

KM Driving Forces



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Knowledge Management

In general, KM focuses on organizing andmaking available important knowledge,wherever and whenever it is needed.

Defined as performing the activities involved indiscovering, capturing, sharing, andapplying knowledge so as to enhance, in a

cost-effective fashion, the impact of knowledgeon an organizations' goal achievement.


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Knowledge Management Nobody can really manage an asset (intellectual capital)

which resides in the heads of employees, and is shared

primarily through conversation. What you can do: to manage the environment in

which knowledge can be created, discovered,captured, shared, distilled, validated, transferred,

adopted, adapted and applied to create businessvalue.


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Intellectual Capital

What is the difference between Knowledge and Intellectual Capital?

Intellectual Capital: the most valuable enterprise resources.

Human Capital: refers to the body of knowledge the company possessand residing in the minds of the companys employees, vendors, and

customers;

Structural Capital: is everything that remains after the employees gohome e.g., databases, customer files, software manual, trademarks,copyrights, and organisational structures.


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Skandias Intellectual Capital Structuring


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KM statistics (Global)

40% of Fortune 1000 firms have put someone in charge of KM, or have

a formal program.

Economist survey

62% companies see KM as extremely important today

77% see KM as extremely important within 3 years

58% are currently sharing knowledge worldwide

73% will share knowledge worldwide within 3 years

Every leading firms has had KM initiatives of some sort (2006)


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KM in Hong Kong

The service sector already makes up a higher proportion of Hong

Kong's GDP than any other economy in Asia and a significantsegment of its population are knowledge workers employed ininformation-intensive businesses.

KM adds to this by strengthening companies' ability to innovate,respond and compete through sharing and leveraging people's

knowledge and expertise.

Hong Kong moved further toward the "knowledge economy" todaywith the launch of the Hong Kong Knowledge ManagementSociety (HKKMS). HKKMS founders include: Public sector: Trade Development Council

Private sector: Cathay Pacific, Gartner, KPMG,


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Agenda


Why KM

Myths about KM KM Driving Forces



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Why KM

The most vital resource of todays enterprise is the

collective knowledge residing in the minds of anorganization's employees, customers, and vendors.

Therefore, effective processes and tools must be

developed to manage such vital resource for thesurvival of any organizations, and for organisations toachieve competitive advantage productivity, agility,innovation, reputation).


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Why KM

Make organizations better suited to compete

successfully in a much more demandingenvironment. Increase relevant information access

Facilitate collaboration & knowledge sharing

Retain institutional knowledge

Overcome organizational & geographical boundaries

Shorten cycle time: eliminates redundant processes

Resulting in:

Increased productivity

Lower cost of doing business Higher quality products, decisions & recommendations

More time analyzing rather than collecting data

Improved customer service and efficiency

Source: 2001-2005 About-Goal-Setting.com


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Does KM really pay off?

KM -> higher profit ratios? Return on assets (ROA)

Return on sales (ROS)

Operating income to assets (OI/A)

Operating income to sales (OI/S)

Operating income to employees (OI/E)

KM-> lower cost ratios?

Total operating expenses to sales (OEXP/S)

Cost of goods sold to sales (COGS/S) Selling and general administrative expenses to sales (SGA/S)


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MAKE Study

Most Admired Knowledge Enterprise (MAKE)study by Teleos and its KNOW Network.

Since 1998, the study recognizes 20 MAKE

winners each year. The study uses Delphi-oriented approach, a

panel of KM experts, and 8 KM performance

criteria.


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The Approach and the Panel

The panel of KM experts:

CEO, CFO, and CIO of Fortune Global 500 (by sales).

Plus nearly 300 CKOs and leading KM practitioners.

The Delphi-oriented approach

Make a worldwide list of candidate organizations.

Nominate up to 3 winners within and 3 winners outside

of their own companys industry; firms nominated by at

least 20% of the panelists are considered finalists.Each panelist rates each finalist against 8 criteria.


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The 8 KM Performance Criteria

Establish an enterprise knowledge culture;

Top management support for KM;

Develop knowledge-based products;

Maximize the value of intellectual capital;

Create an environment of knowledge sharing;

Establish a culture of continuous learning;

Manage customer knowledge for loyalty;

Manage knowledge in ways creating shareholder value.


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Methodology (Holsapple and Wu 2008)

Take two samples (winners and other matched ones)and compare the profit and cost performance of

each firm in one sample (KM winners) with a

matched firm in the other sample treatment sample - firms with superior KM performance.

control sample - firms matched to the treatment sample

by size and type.


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Results (Holsapple and Wu 2008)


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0.083

0.124

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1998 1999 2000 2001 2002 2003 2004 2005

Year

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Winner Firms

Control FirmsReturn on Assets



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Summary of Results

KM winners enjoy higher profitability.

KM winners achieve lower total costs

(OEXP).

KM winners tend to have lower productioncosts (COGS).

KM winners tend to have higher overheadcosts (SGA).


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2007 MAKE Winners

Global Winners (BOTH 2007 AND 2008)

McKinsey & Company (Global, overall) Accenture (Global, 11 times-winner)

Ernst & Young (Global)

Wikipedia (Global)

North America

Apple (United States) Fluor (United States)

General Electric (United States)

Google (United States)

IBM (United States)

Intel (United States) Microsoft (United States)

3M (United States)

Europe

Nokia (Finland) Royal Dutch Shell (The

Netherlands/United Kingdom)

BP (United Kingdom)

British BroadcastingCorporation (United Kingdom)

Asia

Toyota (Japan)

Samsung Group (S. Korea)

Wipro Technologies (India)

Infosys Technologies (India)

Source: 2007 Global Most Admired Knowledge Enterprises (MAKE) Report


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Agenda


Why KM




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Three myths (What KM is not)(adapted from CIO Magazine)

Myth #1: KM technologies can proactively deliver the

right info to the right person at the right time This is missing the point based on outdated notion that we can anticipate

& predict our future info needs, decision makers and timing we cannot.

Myth #2: KM technology can store human expertise

Not even close in fact, KM efforts to date are largely a misnomer (abetter term might be document management). Given the tacit and

diffused attributes of much information, we often do not even know what

we know!

Myth #3: KM technology can provide SCA Technology itself will not yield SCA, but it can symbolically and practically

foster a learning culture. With proper care & feeding, this can yield long

term competitive advantages.


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What KM is

Knowledge is first created in the peoples minds.

must first identify ways to encourage and

stimulate the ability of employees to develop

new knowledge.

must enable effective ways to elicit, represent,

organize, re-use, and renew this knowledge.

Must celebrate and recognize their position as

experts in the organization.


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What KM is

The people using the KM systems are the

integral part of the KM systems.

We use social mechanisms andtechnologies to facilitate knowledge

workers to discover, share, and apply their

knowledge!


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Agenda

Learning Objective Knowledge Management (KM)

Why KM




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KM Driving Forces

Organizations need knowledge to make decisions!

Decision makers (e.g., a sales manager) employdomain knowledge and experience to act quickly anddecisively based on the information available in thebusiness world.

Recent trends in the global business environment have

increase the stakes/importance of effectively managingknowledge for decision making.


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KM Driving Forces1. Increasing Domain Complexity: Intricacy of internal

and external processes, increased competition, and therapid advancement of technology all contribute toincreasing domain complexity.

2. Accelerating Market Volatility: The pace of change,or volatility, within each market domain has increasedrapidly in the past decade.


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KM Driving Forces

3. Intensified Speed of Responsiveness: The time

required to take action based upon subtle changeswithin and across domains is decreasing.

4. Diminishing Individual Experience: High employee

turnover rates have resulted in individuals withdecision-making authority having less tenure withintheir organizations than ever before.


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So

Faced with increased complexity, market volatility and

accelerated responsiveness, todays younger managerfeels less adequate to make the difficult decisions faced

each day.

KM is important for organizations that continually face

downsizing or a high turnover percentage due to the nature

of the industry.


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Agenda

Learning Objective

Knowledge Management (KM)

Why KM




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Knowledge management mechanisms (e.g., mentoring,

retreats, etc.) are organizational or structural means usedto promote knowledge management.

The use of leading-edge information technologies (e.g.,

Web-based conferencing) to support KM mechanisms

enables dramatic improvement in KM.

knowledge management systems (KMS): the synergy

between latest technologies and social/structural

mechanisms


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KM, ERP, & CRM??

Does KM differ from content management, Enterprise

Resource Planning (ERP) and Customer RelationshipManagement (CRM)?

Many software vendors market content management

systems as KM systems. However, Knowledge is morethan Information, and so KM systems should encompasssystem functionality more than that of contentmanagement systems


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Discussions


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KM Scenario 1

Auto Repair Shop (Vignette 1-1, p6)

The owner of an auto repair shop possesses theknowledge for repairing Toyota family cars. The highturnover rate of his mechanics caused problem in thequality of the repair service and eventually the survival ofthe shop.

He has the repair knowledge, and needs to capture it in away that it is easy to disseminate to the new mechanics.He must find a way to manage this knowledge to survive.


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KM Scenario 2

The loan manager of the commercial loan department

at a commercial bank (e.g., HSBC) utilizes her rules ofthumbs e.g.,

(1) excellent history of the customer -> approving

(2) customers recent financial performance is good ->approving

(3) and some official guidelines to approve or reject acommercial loan application (usually involved millionsto billions of dollars).


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KM Scenario 2

This manager may be on short leave (e.g., maternity leave)

or permanent leave (retirement). Clearly, this is a need toarchive and re-use the commercial loan evaluation

knowledge.

qf-l1 introduction

Documents