This is a presentation that I make on knowledge management in multinational firms. Much of it is also suitable for domestic firms.

1. Knowledge management in a global knowledge-based firm Dr. Robin Teigland Stockholm School of Economics September 2007 robin.teigland@hhs.se

2. A world of increasing knowledge flows…. Growth Time Output of information and knowledge Human absorptive capacity Cohen, WM och Levinthal, D A, Absorptive Capacity: A new Perspective on Learning and Innovation, Working paper, Carnegie Mellon University and University of Pennsylvania, October 1989

3. … that is increasingly connected. Nodes are individuals and colors represent organization s Casper & Murray 2002

6. From a multi-domestic company to a successful global firm Multi-domestic Global Integrated Sub7 HQ Sub10 Sub9 Sub8 Sub13 Sub11 Sub3 Sub5 Sub4 Sub1 Sub2 Sub6 Sub14 Sub14

7. Aligning operations increases success Global strategy Competence Management Motivation Management Knowledge Management

11. The knowledge management challenge The majority of a company’s valuable knowledge is tacit and resists being articulated

16. Avoid creating information junkyards Building knowledge repositories Information junkyards or Empty libraries

19. Creating centers of excellence COE HQ

20. San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Improving knowledge transfer through job rotation Rotated from Stockholm

21. Where do individuals go for help in solving problems? Co-located colleagues Intranet Non-electronic documents Internal electronic networks Contacts in other offices Firm boundary External electronic networks Internet Non-electronic documents Other contacts

22. Knowledge networking through communities of practice Connecting people so that they collaborate, share ideas, and create knowledge

25. CPs are not teams or personal networks McDermott 2001 -Obligation -Job requirement -Value -Commitment - Friendship Glue -Planned -Actively discovered -Serendipitously discovered Value Creation -Organize tasks -Meetings -Informal communications -One-on-one Activity -Assigned -Defined boundary -Mostly volunteers -Permeable boundary -Friends & acquaintances -No boundary Members -Accomplish goal -Solve problems -Share info. & ideas -Expand knowledge -Share information -Friendship Purpose Team Community of Practice Personal Network

26. Communities are the grease in the KM wheel C reating knowledge E mbedding knowledge D isseminating knowledge O rganizing knowledge C C O D E KM

28. Communities can have a different primary purpose Helping Best-practice Innovation Knowledge stewarding

29. Community membership and roles Coordinator Peripheral Core Group Active

30. Two extreme communities of practice Face-to-face Virtual

31. Communities cross all boundaries Company Suppliers Customers Competitors

32. Don’t forget to support informal external networks at the individual level! Organization Electronic communities Partners Customers and suppliers Previous work and school colleagues External Large portion of new ideas and formal collaboration relationships come from personal external contacts

33. Encourage an open innovation attitude Not all the smart people work for us. We need to work with smart people inside and outside the company. The smart people in our field work for us. If you create the most and the best ideas in the industry, you will win. If you make the best use of internal and external ideas, you will win. Closed attitude Open attitude Chesborough 2003

41. …and difficult to achieve. Gupta & Govindarajan 2000 Number of subsidiaries providing and receiving knowledge and skills

43. Two departments within the same firm Department 1 Department 2 Higher degree of learning & knowledge sharing Poorer degree of learning & knowledge sharing

44. Unawareness and power games Icon programmers – Stockholm Surprise!! Bottleneck 

45. Islands of competence despite intensive KM efforts San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Icon programmers – Worldwide

46. Biggest difficulties to successfully managing knowledge in organizations Culture Top management’s failure to signal importance Lack of shared understanding of strategy Organizational structure IT / Communication restraints Incentive system Lack of problem ownership Ruggles 1998

47. Biggest difficulties to knowledge transfer Changing people’s behavior Measuring value/performance of knowledge assets Determining what knowledge should be managed Justifying use of scarce resources for KM initiatives Making knowledge available Attracting and retaining talented people Mapping organization’s existing knowledge Ruggles 1998

51. Loyalty Loyalty Individuals often have conflicting loyalties Organization Profession Firm boundary

52. Is knowledge trading good or bad for a firm? We pass over the nondisclosure agreements of different companies and trade company secrets all the time.

53. Who owns the knowledge? Organizational information vs. Personal expertise

54. What about individual performance? A high degree of participation in local communities of practice + On-time performance – Creative performance

55. But here we see the reverse A high degree of participation in dispersed electronic communities - On-time performance + Creative performance

57. …and most importantly, management cannot mandate social relationships John Eva Hans Miguel Paul Jan Lars Pia Anna Nils Bill Erik Mike Al Alex

62. The challenge of knowing what is best practice Here one knows Here one does not know Arvidsson 2002 Evaluation of Market Practices Firm A Subsidiaries' self-evaluations 3 2 1 0 -1 -2 -3 Corporate management's evaluations 3 2 1 0 -1 -2 -3 Evaluation of Market Practices Firm B Subsidiaries' self-evaluations 2 1 0 -1 -2 -3 -4 Corporate management's evaluations 3 2 1 0 -1 -2 -3

63. Aligning operations increases success Global strategy KM CODE KM CODE Competence Management Motivation Management

64. Supporting global KM processes Competence Management Motivation Management Providing the organization with the right mix of talent to meet existing and future needs Creating an open, knowledge sharing culture with a high degree of company loyalty

67. Creating competence charts at Ericsson Individuals in one unit Comparison of units Professional – Operations, financial, etc. Business – Markets, core business, strategy, etc. Human – Interpersonal, communication, KM attitudes, etc. Magnusson & Davidsson 2004

71. When you hire someone … … ..you “hire” his or her network.

75. Encourage experimentation and accept failure Every Nucor plant has its little storehouse of equipment that was bought, tried, and discarded. Just don’t keep making bad decisions. - Chairman, Nucor Steel

76. But be aware of local differences Global efficiency National responsiveness Worldwide innovation & learning

79. Cultural differences affect KM behaviors “ Work-to-live” culture Risk avoidance + — + Knowledge acquisition Knowledge sharing

81. Promote socialization to build networks San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Rotated from Stockholm Icon programmers – Worldwide

82. Why encourage socialization? Trust, commitment, and an open environment are essential for knowledge exchange in networks

96. Aligned operations provides results 1 - Superior performance 2 - Medium performance 3 - Poor performance

98. Aligning operations increases success Global strategy Competence Management Motivation Management KM CODE