This document discusses the evolution of knowledge management (KM) over the past 20 years. It describes how KM's early focus was on strengthening operations through improving knowledge and availability, but its emerging focus is on making enterprises more competitive from strategic perspectives. It also outlines how KM provides opportunities for improved decision making at both personal and organizational levels, which can lead to benefits such as greater economic growth, competitiveness, and social progress.

1. Knowledge Management 20 years after ... The evolution and increasing significance of Knowledge Management 2004 Karl M. Wiig Knowledge Research Institute, Inc. Arlington, TX 76016-3517 phone: (817) 572-6254 fax: (817) 478-1048 e-mail: kmwiig@krii.com –– website: www.krii.com

2. KM’s Role Is Changing  The Early Focus: Strengthen Operations by Improving Knowledge and Its Availability  The Emerging Focus: Make the Enterprise More Competitive from Strategic Perspectives “ To Survive and Prosper You Need to Innovate Faster Than Your Competitors – It is Not Enough to Learn Faster!”

3. KM – The Stage Is Set 1950s Deming & Durant: Quality requires knowledge and understanding 1956 Kenneth Boulding: “The Image: Knowledge in Life and Society” 1966 Peter Drucker: Knowledge Worker in “The Effective Executive” 1966 Kenneth Boulding: “The Economics of Knowledge and the Knowledge of Economics” 1969 Peter Drucker: Knowledge Worker in “The Age of Discontinuity” 1970s AI Promises: Expert Systems to automate knowledge processes 1978 Peter Keen: “Decision Support Systems: An Organizational Perspective ”  WWII changed the World economy  War ravaged nations built new, efficient industrial capabilities  Global competition shifted to higher quality and lower prices  Knowledge content increased in complex products and services  Computers began to provide “Knowledge Amplifiers”

4. KM – The Early Days – 1980s+ 1980s IBM & Others Personal Computer for business 1981 DEC, ADL, etc. Knowledge-Based System Applications 1985 Arthur D. Little “Knowledge Management and Applied AI” 1986 Böhme & Stehr: “The Knowledge Society” 1987 Sveiby & Lloyd: “Managing Knowhow” 1990 Senge “The Fifth Discipline” (Learning Organization) 1991 Thomas Stewart: “Brainpower” article in Fortune 1993 Prusak & alia: Boston KM Conference (150 participants) 1993 Wiig “Knowledge Management Foundations”   AI- based Expert Systems   Knowledge Sharing    Beginning Focus on Intellectual Capital

5. Intellectual Capital Management (ICM) From <http://www.sveiby.com/articles/icmmovement.htm>

6. The Field Is Dynamic! We continue to learn about people and knowledge with profound consequences for KM  Successful KM requires understanding of underlying knowledge-related mechanisms in people and organizations  Much more than realized, decisions are made by tacit activation of mental reference models  Mental models are often encoded stories of static scenes, dynamic episodes, procedures for work, and complex situations  People learn / remember stories and concepts better than fact s  Expertise is a tacit and abstract personal capability to innovate, learn, blend mental models, see implications, and to act

7. Situation Handling Requires Knowledge Copyright © 2003 Knowledge Research Institute, Inc.

8. KM – Its Basic Nature KM Ideally, KM governs knowledge-related activities and processes in all parts of society to:  Improve effectiveness of personal actions – at work and at home  Strengthen enterprise behavior to:   Increase value to customers   Provide strong competitive position   Improve stakeholder relations   Capability to be responsible societal citizen

9. Effective Actions Are Needed at All Levels

10. An Important Change Within the Knowledge-Vigilant enterprise most people possess an “ Asset Management Mentality” to create, maintain, exchange, and utilize Intangible Capital to be as effective as possible in all their pursuits KM is cornerstone of Integral Management

11. Remember – KM Covers Five Domains!

12. Knowledge Management Counts! Progress and viability are driven by human capital Most studies have been inconclusive . . . However, long-term effects of improved knowledge indicate:  1 % literacy score increase leads to  2.5 % personal productivity increase  1.5 % increase in GDP Source: International Adult Literacy Survey: Literacy scores, human capital and growth across fourteen OECD countries Serge Coulombe, Jean-François Tremblay, and Sylvie Marchand - Statistics Canada - Human Resources and Skills Development

13. Few Are Knowledge Vigilant!  Within the enterprise, KM often pursue separate and disjointed efforts like:   KM/IT Applications   Learning Organization   Intellectual Capital Management  Advanced enterprises pursue KM as part of Integrative Management Qualitative Estimates

14. KM – Its Significance  Personal : Improved earnings potentials More effective personal decision making Raised quality of life  Industrial : Greater competitive effectiveness Better products and services Beneficial for customers and consumers  Societal : Increased progress from better educated citizenry Improved social and economic environments More desirable society

15. KM Scope Shifts to Wider Focus Qualitative Estimates Relative Frequency Knowledge Scope

16. KM – Its Real Significance KM provides opportunities for people and organizations to make more effective and knowledgeable decisions You must be knowledgeable to see the implications of situations described by information Being Informed IS NOT Being Knowledgeable! Success in today’s global society requires being Knowledgeable and Informed – Both!

17. KM – Societal Significance Strategic goal for 2010 set for Europe at the Lisbon European Council – March 2000: &quot;to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.&quot;

18. KM and Innovation Are Key “ A Focus on Cost-Cutting and Efficiency Has Helped Many Organizations Weather the Downturn, But This Approach Will Ultimately Render Them Obsolete. Only the Constant Pursuit of Innovation Can Ensure Long-Term Success.” DF Muzyka, FT Sep 17, 2004 Knowledge Management Is the Innovation Enabler by Providing the Driving Intellectual Capital Resources!

19. Extra Slides Added for Reference

20. Our Work Is Becoming More Complex

21. Small Actions Lead to Broad Behavior R&D-Marketing Engineering Manufacturing Delivery & Start-Up

22. Most Decisions Are Nonconscious and Result from Activating Mental Reference Models!

23. Some Inter-Domain Functions

24. Examples of KM Domain Areas

25. Knowledge-Based Business Diagnostics

26. Maybe – Just Maybe – We Need to Understand Financial Times March 6 2004