The document discusses measuring the strategic value of knowledge using a knowledge lifecycle model, using the case of the Indian banking sector. It presents a knowledge lifecycle model with seven stages: obtaining knowledge, using knowledge, learning from knowledge, contributing to knowledge, assessing knowledge, building knowledge, and divesting knowledge. Confirmatory factor analysis was used to analyze survey data from banking professionals to determine the contribution and strategic value of elements in each knowledge lifecycle stage. The results show which elements contribute most, moderately, and least to each stage, allowing banks to identify areas for development or restructuring to better manage knowledge for competitiveness.

1. Measuring Strategic Value of Knowledge using Knowledge Lifecycle
Model: Case of Indian Banking
Himanshu Dutt
Doctoral Research Scholar
Centre for Management Studies
Jamia Millia Islamia (Central University)
New Delhi, INDIA
Presented @ IIM Kozhikode – GLOGIFT Eleventh Global Conference
during December 2011

2. Why Measure (or Rate) Knowledge?
• increasing commodification of intellectual capital – to stay competitive
• customers, products, processes, mistakes and successes accumulated over a
period of time - piling up the data
• what part of organisational knowledge has helped the organisation yield
competitiveness?
• and in what mix ?
• so that knowledge creation capabilities can be shaped and improved
• find out core knowledge activities which is evident in what they do and how
• these activities reside in how products, processes, management and technologies
interact and integrated within the organization

3. Knowledge Lifecycle Concept
• measuring knowledge require looking at the process of knowledge creation that is
typically represented through a knowledge lifecycle
• first phase is knowledge creation which is when organisation solves a unique
problem or a big problem in parts
• second phase is preservation of knowledge that records the problem and its
solution generated in the first phase as a new knowledge
• third phase is dissemination of the preserved knowledge that becomes the input
for solving problems further
• each phase is the input for another phase in a cyclical manner to build knowledge
upon itself

4. Knowledge Lifecycle Model
Obtaining Knowledge
Building Knowledge Measure Creation
Using Knowledge
Divesting Knowledge Knowledge
Lifecycle
Learning from
Knowledge
Assessing Knowledge
Sharing Managing
Contributing to Knowledge
knowledge lifecycle is the manifestation of knowledge management framework

5. Measuring Organisational Knowledge
• identifies high-low strategic value knowledge elements for each knowledge
lifecycle stage based on their contribution towards building knowledge
• low-value knowledge elements for each stage of knowledge lifecycle either could
be improved or dropped
• strategic value of knowledge thus, can be measured and segregated from highly
contributing to least contributing element using KLC
• having known the critical knowledge elements, organisations can fill the
knowledge-based gaps, discover new arrangements to create its knowledge-mix
and acquire knowledge at faster pace and at lesser costs
• but how business value can be extracted rests upon the organisation’s composition
of knowledge lifecycle elements

6. Few Challenges
• tacitness
• fear of sharing knowledge/ lack of trust
• different experience due to age, beliefs (psycho-demographics)
• large hierarchies that makes sharing slow
• technical incompatibility (infrastructure, training…)
• no focus on individual knowledge requirements - what is known and what must be
known
• finding out source of knowledge, kind of knowledge its people possess and its
quality, and the infrastructure that unites culture and business needs.

7. Banking as a Case Study
• mandatory automation (computerization) as part of financial sector reforms
• banking generates pile of data from their multiple products and services
(accounts, loans, insurance, financial advisory) and different interaction points
(ATM, internet, mobile), that often causes ‘information overload’.
• with international norms like BASEL accord & core-banking; the demand for
technological infrastructure to meet competitiveness is rising upwardly.
• risk management is another area that statutorily requires banks to document its
processes (service point interactions) and systems (technology, software etc.) for
compliance management.
• above all, the fact is tangible assets can help up to a certain extent and businesses
are continuously looking towards its intellectual assets to derive competitiveness.

8. Research Purpose
• to find out contribution of knowledge lifecycle elements in banks that will enable
banks to analyze their composition of knowledge to meet their knowledge
requirements and enhance/sustain competitiveness.
• two questions to ponder on:
– What is the contribution of each element in building knowledge in the banks?
– How these elements must be arranged (composition or arrangement-mix) in order to
meet strategic knowledge requirements?

9. Methodology Adopted
– sample size fit to proceed for data analysis: 164 respondents obtained
from 26 commercial banks (3 public sector, 14 private and 9 foreign)
– respondents: experienced KM professionals from Indian commercial banks
– questionnaire: 5 point based Likert Scale (1=strongly disagree, 3=slightly
disagree, and 5= strongly agree) with 30 statements (compiled under7
items) that represent knowledge lifecycle
– questionnaire adapted from Wendi and Bukowitz KM Toolkit (1999) and
OECD KM Project (2002) and KMAT developed by APQC
– data analyzed using Confirmatory Factor Analysis (CFA) under SEM.
– measures of fit are Chi-square value, P-value, and Root Mean Square Error
of Approximation (RMSEA).
• small chi-square corresponds to good fit i.e. 0 is perfect fit.
• P-value: 0.05 means good fit; however 1.0 is perfect fit;
• RMSEA value: 0.05 indicates good fit; however 0 is perfect fit.

10. Model Validation for
0.75 obtain1
0.73 obtain2
0.72 obtain3 Knowledge Lifecycle Elements
1.23 obtain4
1.27 obtain5
0.45
0.80 use1
0.81
0.66
0.55 use2
0.51
0.16
0.52 use3
0.52 learn1 0.76
0.85
1.01 learn2 0.47
obtain 1.00
0.24 learn3
0.43
0.53
use 1.00
0.48 learn4
0.75
0.37
0.98 contri1
learn 1.00
0.88 contri2 0.78
0.69
0.84 contri3 0.85 contri 1.00
1.00
0.49
0.84 contri4
asses 1.00
0.40
0.84 asses1
0.70
0.93
0.74 asses2 build 1.00
0.59
0.43 asses3
0.73 divest 1.00
0.33
1.20 asses4 0.89
0.45
1.56 asses5
0.40 build1
0.46
1.01
0.80 build2
1.07
0.17
0.74 build3
0.41
0.85 divest1
0.71 divest2
0.51 divest3
1.58 divest4
1.56 divest5
Chi-Square=303.32, df=266, P-value=0.05744, RMSEA=0.030

11. Findings
• as based on p-value (0.05) and RMSEA value (0.03), CFA proves that all manifest
variables are valid measurement (good measure of fit) to the main (independent)
variable Knowledge Management.
• the path coefficient shows contribution of each manifest variable in developing
knowledge management model for banks.
• it can be interpreted, as for an example, that Obtaining Knowledge in banks is
composed of manifest variables - obtain1 (0.45), obtain2 (0.81), obtain3
(0.66), obtain4 (0.51) and obtain5 (0.16) and the contribution of the manifest
variable obtain2 is the highest.
• increasing every one unit of obtain2 will increase 0.81 units in ‘obtaining
knowledge’ for banks and thus, contributes in developing knowledge management
model.
• accordingly, the banks can decide which component to develop, drop or re-
structure.

12. Knowledge Lifecycle Stages High Strategic Value Medium Strategic Value Least Strategic Value
Obtaining Knowledge Employees routinely document and Information is easy to identify Employees can quickly contact
share information about their because everyone knows where to subject matter experts who play a
expertise. look for it. role in identifying important
information and tools for people to
work.
Using Knowledge Involve customer (knowledge) in We give all promising ideas Mostly knowledge is used is to
developing new products/ services. thorough consideration, no matter improve the value to the customer.
who they come from.
Learning from Knowledge Our learning process often includes Lessons learned (success or failure) People have some overlapping
gathering feedback from customers. from work experiences are responsibilities, so that it is easier to
documented to establish (or learn from one another.
discard) practice.
Contributing Knowledge Electronic tools are seamlessly Knowledge seeking (or sharing) Organisation acknowledges
integrated into work activities of behavior is built into the individual contribution by linking
people for contributing to the performance appraisal system. name of the original author to the
knowledge. content, to publicly recognize.
Assessing Knowledge People understand what measures are Senior management assesses what We recognize customer knowledge
used to monitor the knowledge and its knowledge needs to be developed. as major strategic asset.
results.
Building Knowledge We have expert(s) appointed to lead It does not matter which group We find ourselves increasingly
our knowledge management effort. came up with an idea or technology, teaming up with other organizations
everyone collaborates to build it. to bring new/innovative products to
market.
Divesting Knowledge We routinely examine whether we are We evaluate strategic importance of We outsource skills and expertise
supporting non-strategic knowledge at knowledge in financial projections. that do not support our core
the expense of strategically critical competencies.
knowledge.

13. Repercussions
• Staff in the banks obtains knowledge by routinely documenting and sharing their
expertise and people know where to look for this information. It proves that
documenting and sharing (managing knowledge) isn’t enough, staff should also
know where and how to retrieve it ( sharing and creating knowledge). This reflects
that banks have a value system intended to promote knowledge sharing.
• Banks have appointed the experts to lead their knowledge management efforts
but banking staff believes that real experts are always too busy to help.
• Hence, in such a case it becomes responsibility of the bank staff to take ownership
of their own learning and demonstrate it through sharing it which is not really
much evident in banks.
• For this to happen, staff must have appropriate technological skills and sufficient
expertise so that staff could identify information by searching for it over a wide
variety of applications and databases.

14. • Mostly the use of knowledge involves customers to develop new products and
services. In fact, using customer knowledge to develop new product or services
can be seen as a subset of customer value.
• Learning from knowledge in banks often includes gathering feedback from
customers but generally do not involve applying the ideas developed in the past to
new situations. That means knowledge developed in the past remains un-used
which is contrary to the principal of knowledge management.
• Not applying the practices learned in the past would mean not using the best
practices in work routines and more liable to repeat mistakes of the past. Also
stocking the information that remains un-used (for long) will be a cost burden and
therefore the assessment of right knowledge makes good sense.
• Not all the knowledge can be used and it is therefore banks first assess their use of
knowledge depending upon how much of it can be leveraged by them.

15. • Contribution to knowledge in banks has been linked to performance appraisal
system of the staff to inculcate the knowledge sharing behaviour.
• The staff knows how their contribution will be monitored and what will be its
results. Ironically, the banks do not seem to place much emphasis on having
written policies and strategies for knowledge sharing. One step in this direction
could be measuring the increment in employee satisfaction with KM use. Staff sees
KM as an additional function separate from work.

16. THANKS
himanshudutt@gmail.com
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