Session Two. Organizational Knowledge Management

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1 Knowledge Management Session Two Organizational Knowledge Management Intellectual capital Intellectual capital is combination of the Intellectual property (IP) held by a business and the people in that business that can exploit and increase it. The difference between the market value of a publicly held company and its official net book value is the value of its intangible assets (Svieby, 1997) Intellectual material knowledge, information, intellectual property, experience that can be put to create wealth (Stewart, 1997) The economic value of two categories of intangible assets of a company: organisational ( structural ) capital and human capital (OECD, 1999) 1

2 Reasons for measuring intellectual capital To improve management practices? For external analysts, bankers, brokers, customers, etc. Can we measure the tacit know how? Are snapshots meaningful? Fluctuations in capital markets? Dangers of benchmarking? Conceptual roots of intellectual capital 2

3 Social capital Structural dimension showing the linkages and connections between actors such as the density and hierarchy of networks Relational dimension that provides the history of interactions between individuals resulting in certain levels of trust, norms and expectations Cognitive dimension that leads to shared meanings, interpretations, mental models and alignment of views Organizational capital Pure form such as organisational structure Hybrid form embodied in individuals through socialisation Investments will lead to greater worker productivity? Differences between structural, human and organisational capital? 3

4 Intellectual property Intellectual assets documents, drawings, software programs, data, inventions and processes Intellectual property claim ownership to patents, copyrights, trademarks and trade secrets In knowledge based economy, do we need to manage intellectual property strategically? Patent Offer greatest level of protection Gather revenue from licensing agreements 1998 method of doing business patents in US Smart patents extend the life by using continuation patents File patent application at Patent Office undergoes few years of examination period Normal life 20 years WTO Agreement on Trade Related Aspects of Intellectual Property Rights in

5 Copyright Prevent infringements on copying, distributing, performing or displaying material Protect the original works for a longer period of 100 years Problems of copyright in the digital age and the potential need for encryption Knowledge audit: value-based perspective 5

6 A learning cycle Single-loop and double-loop learning Behavioural learning single-loop learning involves maintaining an organisation s theory-inuse Cognitive learning double-loop learning involves questioning assumptions and values 6

7 What drives organizational learning? Sensemaking (1) Making sense of ambiguous situations of high complexity and uncertainty e.g. nuclear attack Involves process of situational awareness to understand linkages between people, places and events Allows inferences to be made of future scenarios Lack of situational awareness is primary factor affecting human error 7

8 Sensemaking (2) Use mental models from previous experiences Cognitive gap between mental models and new observations or circumstances World is different from expectations Meaning arises from labelling and characterisation socially defined Not about truth or accuracy but updating plausible stories through dialogue Identity shapes our mental models and actions Sensemaking and situation awareness 8

9 Organizational learning Knowledge acquisition Information distribution Information interpretation Organisational memory Knowledge acquisition Congenital learning Experiential learning (experiments, self-appraisal, unintentional, learning curve) Vicarious learning learning that occurs as a function of observing, retaining and replicating behavior observed in others. Grafting Searching and noticing (scanning, focused search, performance monitoring) 9

10 Information distribution Links with organisational communication Probability that A will rout information to B (member or unit) Probability of delay in routing information by A to B Probability and extent of information distortion by A when communicating to B Information intepreatation Cognitive maps and framing Media richness variety of cues medium can convey and rapidity of feedback Information overload detracts from effective interpretation Unlearning discarding obsolete and misleading knowledge 10

11 Organizational memory Personnel turnover results in loss of organisational memory Non-anticipation of future needs means that memory may not be stored Who has the information I want? Storing and retrieving information Computer-based organisational memory Unlearning Unlearning is a process through which learners discard knowledge. Unlearning makes way for new responses and mental maps Challenge and negate processes to unlearn world views Challenge and negate connections between stimuli and responses Challenge and negate connections between responses 11

12 Dynamic capability is a learned and stable pattern of collective activity through which the organisation systematically generates and modifies its routines in pursuit of improved effectiveness Double-loop learning? Learning mechanisms (experience, knowledge articulation and codification) lead to dynamic capabilities which, in turn, lead to evolution of operating routines Social perspective of organizational learning Learning takes place through interactions between people shaped by cultural norms Social and political processes impact on organisation s ability to absorb new knowledge and practices Similarities with social capital? 12

13 Absorptive capacity Ability of organisations to absorb and apply new knowledge Capacity to learn and solve problems Knowledge capacity driven by high previous experience, diversity and commonality Knowledge capability driven by problem solving and knowledge transfer abilities Gatekeepers important to transfer knowledge across boundaries Absorptive capacity processes 13

14 Politics and organizational learning Organizational learning versus learning organization 14

15 Systems characteristics Drivers for KM systems Deming and Juran most errors arose from ineffective systems rather than operators PDCA: Plan, Do, Check, Act TQM and continuous improvement BPR led to flatter hierarchies Lean production including just-in-time and eliminating zero-value activities 15

16 Electronic document management systems Convergence of document processing, imaging and IT Combines text with digital audio and video Forms management allows organisation and structure of data Indexing, searching and retrieval Challenges for EDMS Privacy sensitive information Currency can add date of last change Performance whether the existing bandwidth Security encryption, intelligent firewalls etc. 16

17 Decision support systems Assist decision making by combining data, analytical tools and models to support structured and unstructured decisions May use statistical models and trend analyses Analyse data to produce graphs, charts and reports May use internal and external data A typical DSS 17

18 Group decision support systems Interactive system to facilitate solution of unstructured problems working in a group Electronic brainstorming and idea organisation tools Questionnaire tools Voting and priority setting tools Stakeholder identification tools Policy formation tools Executive information systems Help senior managers with unstructured problems Avoid information overload by filtering organisational data into graphical form Can drill down to lower levels of detail Can use OLAP tools 18

19 Performance support systems Assist groups or individuals to perform certain tasks May contain multimedia delivery and use techniques such as expert systems and natural language recognition Examples: assisting with tax returns or creating an entry for a financial transaction Workflow management systems Allows documents and other forms of knowledge to be routed among individuals and applications according to predefined processes Processes may be predefined or vary according to certain rules Workflows set up as users, types of information, processes, timing, alternatives etc. May alert users to problems that need resolution 19

20 Customer relationship management systems To coordinate all business and technological processes dealing with the customer Share customer information between sales, marketing finance and service divisions Consolidate customer data from various sources and use analytical tools to answer questions Goals of KM systems Cost savings? Quality control and assurance TQM cultural change Partnering Benchmarking BPR radical change by questioning organisational processes Lean production by using less human effort, manufacturing space and equipment by focusing on value 20

21 Time for reflection Why are cooperative and competitive cultures both unlikely to lead to the most effective forms of organisational learning? 21

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