Knowledge Based Assets for Competitive Success - Session 1


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Knowledge Based Assets for Competitive Success - Session 1

  1. 1. Knowledge based assets for competitive success Session 1 Dr. Daniel Chandran Faculty of Engineering & Information Technology University of Technology, Sydney August 2009 Dr. Daniel Chandran, UTS 1
  2. 2. Objectives • What is Knowledge? • What is Knowledge Management? • Why Knowledge Management? • Why KM fails? • Business Strategy Map • KM Implementation Strategy Dr. Daniel Chandran, UTS 2
  3. 3. Question - 1 • If you were asked to detail your specialist knowledge, how would you describe your knowledge? • Have you ever thought of the market value of your knowledge and what this may be? Dr. Daniel Chandran, UTS 3
  4. 4. Question - 2 Given that there is a competitive market for your knowledge and skills, how do you ensure that your knowledge is state-of-the-art and kept up to date? Dr. Daniel Chandran, UTS 4
  5. 5. Data, Information and Knowledge - Distinction • Data are the raw material of which Systems are built - a number, a word, an image, a picture • Information is processed data (for a purpose) or value-added data – Aggregation of data that makes decision making easier • Knowledge is understanding what the information means or implies – Refers to information that enables action and decisions (Info with direction) – Key resource in determining competitive advantage and marketplace success Dr. Daniel Chandran, UTS 5
  6. 6. Knowledge Types • Explicit Knowledge – Expressed into words and numbers – Can be shared formally and systematically. – Explicit knowledge is codified and digitized • Eg.manuals,drawings, video tapes… • Tacit Knowledge – includes insight, intuition and hunches – Difficult to express and formalize and difficult to share – Based on personal experience – Best communicated through dialogue and scenarios with use of metaphors – Personal, hard to formalize and complex – Chunking knowledge – knowledge stored in an expert’s memory as chunks • Characteristics of Knowledge – Can be Born, Die, Owned and Stored Dr. Daniel Chandran, UTS 6
  7. 7. Explicit and Tacit knowledge Oral Communication “Tacit” Knowledge 50-95% Information Request “Explicit” Knowledge Information Feedback Explicit Knowledge Base 5% Dr. Daniel Chandran, UTS 7
  8. 8. Definition From a practical business perspective: “KM is a deliberate, systematic business optimisation strategy that selects, distills, stores, organises, packages and communicates information essential to the business of a company in a manner that improves employee performance and corporate competitiveness”. Bergeron, B.2003 It is a systematic approach to managing intellectual assets for competitive advantage Dr. Daniel Chandran, UTS 8
  9. 9. Knowledge Management: Benefits People more productive Quicker to prepare outcomes Revenue Better quality outcomes People costs Reduced cost in producing outcomes Dr. Daniel Chandran, UTS 9
  10. 10. Overlapping factors of KM PEOPLE (Workforce) TECHNOLOGY ORGANIZATIONAL (IT Infrastructure) PROCESSES Dr. Daniel Chandran, UTS 10
  11. 11. Knowledge Derivation • Customer Knowledge – their needs, who to contact, customer buying power, etc • Product Knowledge – products in the market place, who is buying them, what prices they are selling at etc • Financial knowledge – capital resources, where to acquire capital and at what cost • Personnel practices Knowledge – expertise available, the quality service they provide, how to go about finding experts etc Indicators of Knowledge: thinking actively and ahead; not passively and behind Dr. Daniel Chandran, UTS 11
  12. 12. THE KNOWLEDGE ORGANIZATION Culture Competition Collect Create Organize Techno- logy Maintain Intelligence Knowledge Organization Disseminate Refine Knowledge Management Leadership Process KM Drivers Dr. Daniel Chandran, UTS 12
  13. 13. KNOWLEDGE MANAGEMENT & INNOVATION Existing methods/ Outside processes • New products Environment • New markets • Smarter problem-solving •Value-added innovation Learning •Better quality customer Conversion service PEOPLE •More efficient processes Insights New ideas •More experienced staff Knowledge Creation Organizational Knowledge Benefits Base Codified Technology Dr. Daniel Chandran, UTS 13
  14. 14. KM Life Cycle Four-Process View of KM: • Capturing – data entry, scanning, voice input, interviewing, brainstorming • Organizing – cataloging, indexing, filtering, linking, codifying • Refining – Contextualising, collaborating, compacting, Projecting, mining • Transferring – flow, sharing, alert, push Dr. Daniel Chandran, UTS 14
  15. 15. Business Strategy drives KM • Understand business strategy in order to develop KM strategy • Balanced Scorecard Strategy Map – To align business activities to the vision and strategy of the organisation – Monitor organisation performance against strategic goals – Originated by Kaplan and Norton, HBS Dr. Daniel Chandran, UTS 15
  16. 16. Mission / Values/Vision/Strategy • Mission – why we exist? – Starting point by defining why the organisation exists • Values – what’s important to us? – Remains fairly stable over time • Vision – what we want to be (mid to long term)? – Organisation’s direction and sets the organisation in motion • Strategy – how do we get there? – Evolves over time to meet the changing conditions posed by the external environment and internal capabilities – Strategy maps and Balanced Scorecards can be developed for any strategic approach Dr. Daniel Chandran, UTS 16
  17. 17. The Strategy Map Financial Perspective Creates Value for “If we succeed, how will we the Enterprise look to our shareholders?” Customer Perspective “To achieve our vision, how must we look to our customers?” Internal Process Perspective “To satisfy our customers, which processes must we excel at?” Learning & Growth Perspective Knowledge “To achieve our vision, how must our Management organization learn and improve?” Dr. Daniel Chandran, UTS 17
  18. 18. Business Strategy Map: cause and effect GAME PLAN Financial Perspective Financial Long-Term Revenue Outcomes Productivity Shareholder value Growth Customer Perspective Relationship Customer Image Product/Service Attributes Partnership Outcomes Brand Price Quality Time Function Internal Process Perspective Value-Creating Manage Processes Manage Manage Regulatory & Manage Operations Innovation Social Customers Processes Learning & Growth Perspective Intellectual Human Information Organisation Assets and Capital Capital Capital Activities to create value Dr. Daniel Chandran, UTS 18
  19. 19. Learning and Growth Perspective: Intangible Assets Knowledge that exists in an organisation to create differential advantage or the capabilities of the company’s employees to satisfy customer needs. Intangible Assets must be aligned with the strategy in order to create value. – E.g. TQM and CRM • Human capital • Information capital • Organisation capital Dr. Daniel Chandran, UTS 19
  20. 20. Internal Process Perspective • Manage operations • Manage Customers • Manage Innovation • Manage regulatory & social Processes Dr. Daniel Chandran, UTS 20
  21. 21. Customers Perspective • Target segments – How the organisation will create differentiated, sustainable value to targeted segments • Growth targets by segment (product mix & product performance required) – Customer Retention – Customer Acquisition • Revenues per customer (lifetime value/profitability) vs Cost per customer • Customer value proposition: Define the conditions to create value for the customers: cost leadership? product leadership? Customer intimacy? – Product/service attribute • Price, quality, availability, selection, functionality – Customer relationship / experience • Service, partnership – Image / brand strength Dr. Daniel Chandran, UTS 21
  22. 22. Financial Perspective • Growth targets (overall & by customer, by product/service) – Selling more – Spending less – Revenue growth by deepening relationships with existing customers • Banks – Home loans • Introducing new products e.g. Woolworths - Petrol • Cost/productivity targets – Lowering direct and indirect expenses • Spending less on people, energy and supplies • Utilising their financial and physical assets more efficiently • To deliver the vision / outcomes desired Dr. Daniel Chandran, UTS 22
  23. 23. 5 Ps of Strategic KM 1. Planning • Defined knowledge needs • Systems and processes 2. People • Participants commitment • Sharing culture • Leadership values 3. Processes • Alignment of strategy, Principles, Processes and practices 4. Products • Capture • Distribution 5. Performance Dr. Daniel Chandran, UTS 23
  24. 24. KM Implementation Strategy • Why – Intent? (From Business Strategy) – E.g. Business ability to cross-sell product lines based on customer needs • Who – knowledge worker? – E.g. Financial Advisor, Senior Manager etc • What knowledge? – Customers – Products – Processes / systems – Business relationships – Competitors – Partners / suppliers – Regulations • How – Infrastructure? – Formalized knowledge process (create, store, distribute, collaborate, protect) – System Assets (Customer, Product Databases) – Training & informal best-practice knowledge sharing – Certification institutions Dr. Daniel Chandran, UTS 24
  25. 25. Successful Knowledge Management…when • Strategy aligned with the Business Strategy • Supported people in their work and activities to create value • Inculcated as a business discipline (corporate culture) supporting critical business processes • Used to improve the business processes • Measured against the strategic objectives Dr. Daniel Chandran, UTS 25
  26. 26. Conclusion - Business Challenges • Optimize the performance of operational processes to reduce costs and enhance quality • Commercialize the products at the lowest price possible Dr. Daniel Chandran, UTS 26
  27. 27. References • Awad, E.M. and Ghaziri, H.M. (2004). Knowledge Management. Pearson. • Becerra-Fernandez, I, Gonzales,A and Sabherwal, R. (2004). Knowledge Management: Challenges, solutions and technologies. Pearson. • Davenport, T.H. and Probst, G.J.B.(2002). Knowledge Management Casebook. John Wiley. • Debowski, S.(2006). Knowledge Management. Wiley. • Kaplan, R.S. and Norton, D.P. (2004). Strategy Maps: Converting intangible assets into tangible outcomes. Harvard Business School Press. • Nonaka, I. And Takeuchi, H(1995). The Knowledge Creating Company. OUP. • Thompson and Strickland. 2010. Crafting and executing strategy. McGraw-Hill. Dr. Daniel Chandran, UTS 27
  28. 28. Knowledge Exercise • 5 groups to present on the following scenario: “Suppose you were asked to do a 15-minute presentation before the managers of a small retailer about the pros and cons of KM. What would you say? Outline the content of your talk.” Dr. Daniel Chandran, UTS 28