UNIT – I

LIFE IN ORGANIZATIONS
People have always been central to organizations, but their strategic importance is growing in
today’s knowledge-based organizations. An organization’s success increasingly depends on
the knowledge, skills, and abilities of employees, particularly as they help establish a set of
core competencies that distinguish an organization from its competitors. When employees’
talents are valuable, rare, difficult to imitate and organized, an organization can achieve a
sustained competitive advantage through people. Advanced technology has given rise to
reduced number of jobs that require little skill and has increased the number of jobs that
require considerable skill, thus a shift is taking place from touch labour to knowledge work.
This displaces some employees and requires that others be retrained. In addition, information
technology has influenced HRM through human resources information systems (HRIS) that
streamline the processing of data and make employee information more readily available to
managers.
Both proactive and reactive change initiatives require HR managers to work with line
managers and executives to create a vision for the future, establish an architecture that enables
change, and communicate with employees about the processes of change. In order to contain
costs, organizations have been downsizing, outsourcing and leasing employees, and enhancing
productivity. HR’s role is to maintain the relationship between a company and its employees,
while implementing the changes. The workforce is becoming increasingly diverse and
organizations are doing more to address employee concerns and to maximize the benefit of
different kinds of employees. Demographic changes, social and cultural differences, and
changing attitudes towards work can provide a rich source of variety for organizations. But to
benefit from diversity, managers need to recognize the potential concerns of employees and
make certain that the exchange between the organization and employees is mutually
beneficial. Through strategic planning, organizations set major objectives, and develop
comprehensive plans to achieve those objectives. Once the strategy is set, executives must
make primary resource allocation decisions, including those pertaining to structure, processes,
and human resources.
Companies such as Domino’s Pizza, Sony, Southwest Airlines, and Wal-Mart revolutionized
their industries by developing skills – core competencies – that others didn’t have. These
competencies helped them gain advantage over their competitors and leverage this advantage
by learning faster than others in their industries. Underlying a firm’s core competencies is a

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 portfolio of employee skills and human capital. In any given organization, different skill
groups can be classified according to the degree to which they create strategic value and are
unique to the organization. Core knowledge workers. This group of employees has firm-
specific skills that are directly linked to the company’s strategy e.g., R&D scientists in a
pharmaceutical company, computer scientists in a software development company. These
employees are typically engaged in knowledge work that involves considerable autonomy and
discretion. Companies tend to make long-term commitments to these employees, investing in
their continuous training and development and perhaps giving them an equity stake in the
organization.
Traditional job-based employees. This group of employees has skills that are quite valuable to
a company, but not unique e.g., sales people in a department store, truck drivers for a courier
service. These employees are employed to perform a predefined job. As it is quite possible
that they could leave to go to another firm, managers frequently make less investment in
training and development and tend to focus more on paying for short-term performance
achievements. Contract Labour. This group of employees has skills that are of less strategic
value and generally available to all firms e.g., clerical workers, maintenance workers, staff
workers in accounting and human resources. Individuals in these jobs are increasingly hired
from external agencies on a contract basis, and the scope of their duties tends to be limited.
Employment relationships tend to be transactional, focused on rules and procedures, with very
little investment in development.
Alliance/partners. This group of individuals has skills that are unique, but not directly related
to a company’s core strategy e.g., attorneys, consultants, and research lab scientists. Although
companies perhaps cannot justify their internal employment, given their tangible link to
strategy, these individuals have skills that are specialized and not readily available to all firms.
As a consequence, companies tend to establish longer-term alliances and partnerships with
them and nurture an ongoing relationship focused on mutual learning. Considerable
investment is made in the exchange of information and knowledge.
An increasingly vital element of strategic planning for organizations that compete on
competencies is determining if people are available, internally or externally, to execute an
organization strategy. Managers have to make tough decisions about whom to employees
internally, whom to contract externally, and how to manage different types of employees with
different skills who contribute in different ways to the organization. Human resource planning
plays an important role in helping managers weigh the costs and benefits of using one
approach to employment versus another.

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 Changes in the external environment have a direct impact on the way organizations are run
and people are managed. Environmental Scanning is the systematic monitoring of the major
external forces influencing the organization. Managers attend to a variety of external issues;
however, the following six are monitored most frequently :
• Economic factors, including general and regional conditions.
• Competitive trends, including new processes, services, and innovations.
• Technological changes, including robotics and office automation.
• Political and legislative issues, including laws and administrative rulings.
• Social concerns, including child care and educational priorities.
• Demographic trends, including age, composition, and literacy.

By scanning the environment for changes that are likely to affect an organization, managers
can anticipate their impact and make adjustments proactively. In a rapidly changing
environment, it is extremely dangerous to be caught off guard. The labour-force trends
illustrate the importance of monitoring demographic changes as a part of human resource
planning. Such changes can affect the composition and performance of an organization’s
workforce.
In addition to scanning the external environment, organizations such as Syntex, Lotus
Development, and Southwest Airlines are careful to also scan their internal environments.
Because these companies view their employee-oriented cultures as critical to success, they
conduct cultural audits to examine the attitudes and activities of the workforce. Sears has
found that positive employee attitudes on ten essential factors – including workload and
treatment by superiors – are directly linked to customer satisfaction and revenue increases.
Cultural audits essentially involve discussions among top-level managers of how the
organization’s culture reveals itself to employees and how it can be influenced or improved.
The cultural audit may include such questions as :
• How do employees spend their time?
• How do they interact with each other?
• Are employees empowered?
• What is the predominant leadership style of managers?
• How do employees advance within the organization?

By conducting in-depth interviews and making observations over a period of time, managers
are able to learn about the culture of their organization and the attitudes of its employees.
Cultural audits can be used to determine whether there are different groups, or subcultures,
within the organization that have distinctly different views about the nature of work the quality
of managers, and so on. Any knowledge management strategy designed to improve business

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 performance must address three components : the work processes or activities that create and
leverage organizational knowledge; a technology infrastructure to support knowledge capture,
transfer, and use; and behavioral norms and practices (organizational culture) that are essential
to effective knowledge use.
Even though the economic incentives are becoming clearer and technological capabilities now
exist to support knowledge-based organizations, pioneers in knowledge management are
finding the behaviours supported by their existing organizational cultures to be a major barrier
to this transformation. In short, the organizational knowledge and culture are intimately
linked, and that improvements in how a firm creates, transfers, and applies knowledge are
rarely possible without simultaneously altering the culture to support new behaviours.

CONCEPT AND CHARACTERISTICS OF KBOs

The definition of the knowledge-based organization is centered around three attributes : its
principal mission is to acquire, manipulate and deploy information and knowledge; it strives to
be a “learning organization” in which its members, both individually and collectively, are
continuously enhancing their capacity to produce results and adapt to changing circumstances;
and it is guided by a commitment to organizational excellence through such pursuits as bench-
marking, best practices and the fostering of collaborative relationships among its various
stakeholders. Knowledge organizations have been characterized as enterprises in which the
key asset is knowledge. Their competitive advantage comes from having and effectively using
knowledge. Examples include the law office, accounting firm, marketing firm, software
company, most of the government agencies, universities, the military, and significant parts of
most of the manufacturing companies, whether they make cookies or cars.
A knowledge-based organization has four characteristics which can be summarized in terms of
process, place, purpose and perspective. Process refers to the activities within an organization,
some of which are directly involved with making a product or selling a service and others that
are ancillary but no less important. Place refers to the boundaries of the organization, which
for the purpose of sharing and creating knowledge often go beyond traditional legal
boundaries. Purpose refers to the mission and strategy of the organization – how it intends to
profitably serve its customers. Perspective refers to the worldview and culture that influences
and constrains the decisions and actions of an organization. Each of these elements forms a
basis for evaluating the degree to which knowledge is an integral part of the organization and
the way it competes. Executives who understand how the four elements interact will be able to

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 start changing their companies to take advantage of the vast intellectual assets hidden bellow
the surface.
Process : Knowledge Sharing and Creation
Most organizations are primarily focused on the concrete and observable activities that make
up what they do on a day-to-day basis. A knowledge-based organization attends to two related
processes that underlie these direct processes: the effective application of existing knowledge
and the creation of new knowledge. The goal is fourfold: to ensure that knowledge from one
part of a company is applied to activities in other parts; to ensure that knowledge is shared
over time so that the company benefits from past experience; to make it possible for people
from various parts of the organization to find each other and collaborate to create new
knowledge; and to provide opportunities and incentives for experimentation and learning.
Consider how a company whose process for making its main product has been essentially
unchanged for more than 100 years – Holcim, one of the world’s largest suppliers of cement –
took on this challenge. The company operates more than 100 cement-manufacturing facilities,
240 quarries and 600 mixed-concrete facilities in over 70 countries. Although it functions in a
highly decentralized manner (country managers have the authority to make many decisions on
their own), Holcim realized several years ago that the exchange of knowledge and expertise is
the glue that holds the company together. It now explicitly regards knowledge as its key
resource and learning as its key capability.
In order to make that view operational, an internal group, Holcim Management and Consulting
(now Holcim Group Support), was reorganized in 1996 to develop, identify, transfer and apply
strategic knowledge among all Holcim’s entities worldwide. The group reports directly to the
executive committee, a clear indication of its strategic importance. In addition to facilitating
interaction among managers worldwide, Holcim Management and Consulting is itself a
repository of knowledge, expertise and best practices that it shares and reapplies by consulting
to the company’s various units. For example, energy costs are the most expensive part of
cement production, and Holcim Management and Consulting helped plants improve process
efficiency by diffusing knowledge about how to use cheaper and more efficient fuels. A
related problem facing Holcim has been the need to reduce carbon dioxide emissions, as part
of its strategy to be a responsible corporate citizen promoting worldwide sustainable
development.
Holcim Management and Consulting helps Holcim to document and transfer new energy-
related technologies and manufacturing methods among the company’s plants worldwide.
Company engineers and managers have, therefore, invested effort in learning more about

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 alterative fuels. For example, Holcim Switzerland developed the use of waste plastic, used
tyres, and dried sewerage sludge as replacement fuels alongwith the technologies to burn them
cleanly. In addition, the company has enjoyed product innovation (possible even with cement)
as plants experimented with various admixtures to vary and improve the properties of cement
for different local market applications. Even though it makes a simple, industrial-age product,
Holcim is clearly operating as a knowledge-based organization.
Place : Knowledge Boundaries
Knowledge creation and sharing in today’s economy are not bound by the traditional physical
and legal limits of the corporation. Companies are increasingly realizing that knowledge is
often produced and shared as a by-product of daily interactions with customers, vendors,
alliance partners and even competitors. The knowledge-based organization, then, is a
collection of people and supporting resources that creates and applies knowledge via
continued interaction. Its boundaries are blurred, malleable and dynamic. At some point, the
knowledge-based organization stops worrying about who works for whom and focuses instead
on who needs to work with whom. For example, the field-service technicians at Buckman
Labs, an international specialty chemicals company, spend more time on the premises of their
customers than at Buckman offices.
Similarly, when Procter & Gamble was creating a new supply chain management process with
Wal-Mart, it sent several of its information management people to work with their
counterparts at Wal-Mart’s headquarters so that they could mutually learn how to implement
their vision of better sales management via the sharing of information. Holcim built
knowledge communities within its global organization that transcended formal boundaries; it
also made the necessary investments to learn from customers. The knowledge-based
organization recognizes that the dangers of failing to share knowledge across traditional
boundaries outweigh any potential benefits that may come from hoarding it.

Purpose: Knowledge Strategy

Even a highly effective set of knowledge management processes does not guarantee that an
organization will perform well or better than its competitors. Only a few years ago Polaroid,
for example, had generally effective processes in place to capture and share knowledge about
products, customers, applications, technologies and the competitive environment. The culture
was conducive to sharing and cooperation, and the company had implemented a reasonably
good information system for supporting virtual collaboration. All in all, it appeared to be

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 managing knowledge well. The knowledge being created and shared, however, was entirely
focused on analog film and cameras. Polaroid knew little about digital imaging and this
contributed to its eventual bankruptcy.
Companies that succeed over the long term align their knowledge management processes with
their strategy. The knowledge-based organization recognizes that knowledge is a key strategic
resource, and asks what do we need to know to formulate and execute our desired strategy?
What do we know? And what do our competitors know? The gap between what an
organization knows and needs to know focuses attention internally, just as the strengths and
weaknesses components of a SWOT analysis does. The gap between what it knows and what
its competitors know focuses attention externally on the opportunities and threats. Companies
must seek to close those knowledge gaps, both external and internal, faster and more
effectively than their competitors.
Holcim clearly recognized the strategic nature of its knowledge. Given its strategy to provide
the best quality and most innovative cement-based products using the most efficient,
sustainable and environmentally friendly processes, it engaged the hearts and minds of its
entire organization in managing the knowledge and learning to support that strategy.

Perspective: The Knowledge Point of View

The knowledge-based organization, regardless of whether its products are tangible or not,
holds a knowledge-oriented image of itself. That is, it takes knowledge into account in every
aspect of its operation and treats every activity as a potentially knowledge-enhancing act. It
uses knowledge and learning as its primary criteria for evaluating how it organizes, what it
makes, where it locates, who it hires, how it relates to customers, the image it projects, and the
nature of its competition.
Buckman Labs has the knowledge perspective. The company started in 1945 manufacturing
chemical microbicides – products that would kill or control the growth of microbes in pulp
and paper manufacturing and leather treatment. Over time, however, it realized that its
products were becoming commodities and that to stay competitive it would need to deliver
knowledge-based services. To support that strategy, Buckman implemented processes,
technologies, training and incentives to promote the development, sharing and delivery of
knowledge about how to actually apply microbicidal chemicals to solve customers’ treatment
problems.
The company has continually refreshed its strategic knowledge and directs all activity toward
learning as much as possible about its customers. This approach culminated in the decision to

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 learn more about how to manage the chemistry of their customers’ plants than even its
customers knew. In the late 1990s, Buckman undertook to learn about customers’ operations
in detail, the economics of their businesses, and their strategic direction – a tall order for a
bunch of chemists.
To accomplish this learning, the company first implemented a business-oriented training
program tailored to the specifics of their customers’ industries. It then entered into a learning
partnership with a major paper manufacturer. For a fixed fee, Buckman became the exclusive
provider of all chemicals and treatment services the manufacturer needed. Though sales
technicians were formerly rewarded for selling as much chemical products as possible, now
they were rewarded for minimizing chemical use. They were free to use any product,
regardless of who made it, that created the most efficient and effective customer operation. In
return, Buckman gained exclusive access to the customer and thus the opportunity to learn
more about how to service that segment of the market than any of its competitors.
Buckman now considers itself to be in the knowledge business : Chemicals are merely the
tangible tip to their knowledge iceberg. Many other companies in recent years have made a
similar transition in perspective by redefining their fundamental mission from one based on
selling traditional products and services to one based on exploiting knowledge.
If knowledge is a raw resource, who should benefit from it? A close link between knowledge
and power has widely been recognized. For example, the World Health Organization states
that as a knowledge-based organization in an environment where knowledge has become a
raw material, serious consideration should be given to how such knowledge is managed,
disseminated and used. Integrity and value-based leadership are recurring themes in the case
of knowledge-based organizations. Also relevant in this context is the attention paid by the
organizations to the pursuit of excellence in their work. In the majority of cases, this involves
a commitment to engage in research and programming which is of a supervisor quality, and
addresses the actual needs and priorities of the target population.
In a May 1997 report prepared for the International Institute for Sustainable Development,
Geoffrey Oldham and Rob McLean suggested that knowledge activities encompass five
distinct dimensions : knowledge creation, knowledge acquisition, knowledge assimilation,
knowledge use, and knowledge dissemination. Turning to issues related to knowledge creation
and acquisition, the organizations dedicate considerable resources either to the execution of
research, thereby generating new knowledge, or to scoping exercises designed to identify and
gather relevant information generated elsewhere. However, the means by which they pursue

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 these activities vary considerably from organization to organization. In a large measure, this
variance can be explained by differences in funding base and mandate.
Knowledge creation is not the only challenge facing the organizations. Knowledge
assimilation, which might also be termed knowledge management, is arguably of equal
importance, since this is what allows one to exploit the information generated, and ensure that
it is accessible when and where it is needed. For example, International Development
Research Center (IDRC) acts principally as a sponsor of research carried out by outside
experts, though it also engages in a range of information gathering activities. The latter
includes the maintenance of an extensive library collection along with the development of
information systems to document and evaluate center activities, and to preserve a corporate
memory. Deployment and use of new information technology is one way in which
organizations can effectively manage their knowledge base, and the International
Development Research Center in particular has been a world leader in this area.
Not surprisingly, knowledge creation and acquisition is also a priority for the World Health
Organization. A particularly noteworthy example in this area is its Evidence and Information
for Policy (EIP) Cluster, a programme established in 1998 with a mission to strengthen the
scientific and ethical foundations of health policies and programmes so that they respond
better to the needs of populations. With an emphasis on building effective partnerships, the
EIP cluster compiles, analyses, and disseminates an evidence base on the major dimensions of
health and health systems. Organizational learning is an important dimension of knowledge
assimilation. In short, if an organization is to continue to generate new knowledge, or put
existing knowledge to work, its members must have an understanding of key issues and be
able to relate them to the organization’s mandate. In the case of United Nations Development
Fund for Woman (UNIFEM), for instance, it prides itself on having put into place a feedback
process of pioneering, learning, information-sharing and advocacy.
Closely related to the issue of knowledge assimilation is knowledge use and dissemination.
While the organizations exploit their knowledge resources in a wide variety of ways, they can
nonetheless be categorized in the following manner:
• Dissemination of knowledge resources (e.g., research reports, activity or status
reports, policy statements) to a general audience through mass media channels e.g.,
Internet, wide circulation publications.
• Dissemination of knowledge resources to a limited audience e.g., policy makers,
politicians and experts through selective channels e.g., narrow circulation journals,
conferences.
• Use of knowledge resources for the purposes related to advocacy or to the
development of policies, programs or projects; and

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 • Use of knowledge resources for the purposes related to the generation of new
knowledge.

Dimensions of HRM in KBOs

Conventionally, acquisition, development, motivation and maintenance of human resources
are seen as four major dimensions of human resource management with quality of work life,
productivity and readiness for change as outputs. In 1983, American Society for Training and
Development identified nine human resource areas, which were considered by them as spokes
of the Human Resource wheel. Each area affected the outputs which were placed in the center
of the wheel. The human resource areas identified by ASTD were : Training and
Development, Organization Development, Organization/Job Design, Human Resource
Planning, Selection and Staffing, Personnel Research and Information Systems,
Compensation/Benefits, Employee Assistance, and Union/Labour Relations. Although line
managers and HR managers need to work together, their responsibilities are different, as are
their competencies and expertise. The dimensions of human resource management can also be
understand in terms of the major activities for which an HR manager is typically responsible,
such as Advice and Counsel, Service, Policy Formulation and Implementation, and Employee
Advocacy.
1. Advice and Counsel : The HR manager often serves as an in-house consultant to
supervisors, managers and executives. Given their knowledge of internal
employment issues (policies, labour agreements, past practices, and the needs of
employees) as well as their awareness of external trends (economic and
employment data, legal issues, and the like), HR managers can be an invaluable
resource for making decisions. As in-house consultants, HR managers should be
concerned with the operating goals of the managers and supervisors. In turn, these
managers must be convinced that the HR staff is there to assist them in increasing
their productivity rather than to impose obstacles to their goals. This requires not
only the ability on the part of the HR executive to consider problems from the
viewpoint of line managers and supervisors but also skill in communicating with
the managers and supervisors.

2. Service : HR managers also engage in a host of service activities, such as

recruiting, selecting, testing, planning and conducting training programs and
hearing employee concerns and complaints. Technical expertise in these areas is
essential for HR managers and forms the basis of HR program design and
implementation.

3. Policy Formulation and Implementation : HR managers generally propose and

draft new polices or policy revisions to cover recurring problems or to prevent
anticipated problems. Ordinarily, these are proposed to the senior executives of the
organization, who actually issue the policies. HR managers may monitor

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 performance of line departments and other staff departments to ensure conformity
with established HR polices, procedures, and practice. Perhaps more importantly,
they are a resource to whom managers can turn for policy interpretation.

4. Employee Advocacy : One of the enduring roles of HR managers is to serve as an

employee advocate – listening to the employee’s concerns and representing their
needs to managers. Effective employee relations provides a support structure when
disruptive changes interfere with normal daily activities.

In the process of managing human resources, increasing attention is being given to the
personal needs of the participants. Increasingly, employees and the public at large are
demanding that employers demonstrate greater social responsibility in managing their human
resources. Complaints that some jobs are devitalizing the lives and injuring the health of
employees are not uncommon. Charges of discrimination against women, minorities, the
physically and mentally disabled, and the elderly with respect to hiring, training, advancement,
and compensation are being leveled against some employees. Issues such as comparable pay
for comparable work, the high cost of health benefits, day care for children of employees, and
alternative work schedules are concerns that many employers must address as the workforce
grows more diverse. All employers are finding that privacy and confidentiality of information
about employees are serious matters and deserve the greatest protection that can be provided.
Top management generally recognizes the contributions that the HR program can make to the
organization and thus expects HR managers to assume a broader role in the overall
organizational strategy. In view of this, HR managers need to acquire a complementary set of
competencies. HR professionals need to know the business of their organization thoroughly.
This requires an understanding of its economic and financial capabilities so that they can “join
the team” of business managers. It also requires that HR professionals develop skills of
external relations focused on their customers. HR professionals are the organization’s
behavioral science experts. In the areas, such as staffing, development, appraisal, rewards,
team building and communication, HR professionals should develop competencies that keep
them abreast of changes. HR professionals have to be able to manage change processes so that
HR activities are effectively merged with the business needs of the organization. This involves
interpersonal and problem-solving skills, as well as creativity and innovativeness.
HR professionals must establish personal credibility in the eyes of their internal and external
customers. Credibility and trust are earned by developing personal relationships with
customers, by demonstrating the values of the firm, by standing up for one’s own beliefs, and
by being fair-minded in dealing with others. The ability to integrate business, HR and change

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 competencies is essential. By helping their organizations build a sustained competitive
advantage and by learning to manage many activities well, HR professionals are becoming full
business partners. Forward-looking CEOs make certain that their top HR executives report
directly to them and help them address key issues. At lower levels in the organization, a
rapidly growing number of companies assign HR representatives to business teams to make
certain that HR issues are addressed on the job and that HR representatives, in turn, are
knowledge about business issues rather than simply focusing on the administrative function.
NEW ROLES AND CHALLENGE FOR HRM IN KBOs
Roles of the HR Function
How is the HR function being affected by the growing importance of knowledge capital, and
why should HR managers be concerned about it. One reason is that people-related issues are
the key to knowledge capital. No organizational function is better suited to spearhead the
maximization of knowledge capital than the HR function. Cultivating knowledge capital
requires concerted action in all areas of the HR function at once. In the context of this trend,
compliance-oriented practitioners resist change, supporting the old command-and-control
structures of the past, which only frustrate the development of knowledge capital by creating a
work environment that diminishes the value of individual creativity and motivation.
Supporters are passive, doing only what they are told. Since line managers are not usually as
knowledgeable about the formal processes related to people issues as are HR practitioners, HR
practitioners operating from a supporter role will only continue to do what has been done in
the past.
Performance consultants are analytical, applying skills to specific situations in which they
troubleshoot problems or discover opportunities. They can create situations that will develop
individuals and groups, but their approach is often too tactical to be felt by the organization on
a strategic level. They must be cognizant of the business issues facing the organization and
the capabilities of people to confront them. This requires more than a tactical approach. HR
leaders are proactive, taking initiative to influence others to achieve competitive advantage
through the human side of the enterprise. HR leaders are thus best suited to encourage
managers and other stakeholders to think about people as creators of wealth rather than as
expenses. HR leaders may also involve top managers or other key stakeholders in group
activities that can help them think about how the growing importance of knowledge capital
affects the HR function, components of the organization or the organization as a whole, the
causes of those changes, their likely consequences, and HR action plans or strategies needed to
address those changes.

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 What Business Needs Require Change from the HR Function? To remain competitive in the
future, businesses need to find ways to make the most of human talent and creativity. While
this goal certainly requires flexible and adaptable HR systems and processes, business trends
facing organizations are at the centre of this HR change endeavour. By understanding these
trends, HR practitioners can develop processes that enrich the knowledge capital of their
organizations.

What Changes are Needed from Each HR Functional Area? It needs to be examined that how
each HR functional area can make an impact on business operations while dealing with the
growing importance of knowledge capital.
Rewards and Recognition: People must be rewarded for cultivating knowledge that is useful to
the organization. That may mean that decision makers will need to explore such strategies as
pay-for-knowledge programs in which individuals, and groups, are rewarded for cultivating
valuable competencies of use to the organization. In addition, non-pay-related incentives can
be used to reward the attainment and use of knowledge capital, such as promotion, title
differentiation, access to or membership in special teams or task force efforts, and nomination
to attend special development programs.
Employee Relations: Employee communications programs, vital to employee relations, should
be launched to show employees and managers alike what is meant by knowledge capital, how
it applies to them individually, why it is important to the organization, what happens when
knowledge capital is not cultivated or developed, and how knowledge capital can be
developed and evaluated. Above all, employees must be informed that developing work-
related knowledge is key to the success of the business, and to their career security at a time
when jobs are disappearing. Employees have a self-interested and self-directed role to play in
their own development, and they should be told what that is ----- and, when necessary, how to
take proactive steps to develop themselves for future career growth inside or outside the
organization. Job security can best be enhanced by profitability and growth. To work toward
this security, employees need information about the business environment, the industry, and
the organization’s finances for informed decision making.
Organizational Effectiveness: Organizations need to launch programs that encourage learning
and knowledge acquisition. By pursuing efforts to create learning organizations and high-
performance workplaces, decision makers can set the right tone to support continued
individual and team growth and development. Changes in company culture do not occur
overnight, so it is important to establish a track record of experiences in the organization to

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 show that development and creativity do matter and are considered in pay raises, promotions,
work assignments, and other issues of importance to employees. Organizational effectiveness
is enhanced when people have targets of focus. What a better target than effectively servicing
a customer or beating the competition? Knowledge attainment centered around such
endeavours can change a corporate culture.
Professional Development: Training and development is a key means by which to groom
individuals for the future. Training is, of course, an individualized change effort that is
designed to narrow gaps between what people know or do and what they should know or do to
be successful. Training has also been associated more recently with efforts to generate
creative solutions to difficult problems farcing organizations. Training-related activities are
likely to lead organizational efforts to build and maintain competitive knowledge capital. HR
will be responsible for maximizing the productivity of the workforce through initiatives that
build organization community. Well-educated and well-trained workforce will be deployed,
and HR practitioners will be required to function as consultants, not as police officers.
Training can be used to build a sense of community by facilitating cohesive performance by
work teams. It can also be used to enhance communication by providing information about
the reasons to take action and by articulating approaches to individual development.
Training can be used to show people how to become more self-directed in their approaches to
learning on their own, and to fostering the development of others in the organization. Training
can be used to direct attention to a broad array of human performance improvement strategies
that can be used to develop bench strength, troubleshoot human performance problems, and
seize human performance improvement opportunities. Money spent on professional
development efforts has increased over the past decades. Yet, expectations by organizations
have changed concerning the return on investments of such efforts. Professional development
providers are thus having to take both an individual and organizational view of these
development efforts.
Resource and Productivity Management: Although defined differently by various experts, HR
planning is often characterized as long-term planning for the people needed by an
organization. It is perhaps the single most important issue to consider in building knowledge
capital. While HR planning has traditionally been focused on identifying and closing current
and projected gaps in headcount, shortfalls between labour demand and supply, it can also be
focused on identifying and acting to close present or future gaps in talent, shortfalls between
present and future talent demand and supply. One way that HR can lead the way towards
building human capital is to introduce and use a systematic approach to HR planning in the

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 organization. Too many organizations many needs from vacancy to vacancy. But with HR
planning, an organization’s decision makers can link corporate core competencies directly to
individual competencies and work to build them over time.
An effective HR planning process can also be useful in conducting strategic planning for HR,
bringing a systematic approach to succession planning, integrating HR functions horizontally
around meeting desired HR needs, and providing information about current or anticipated
“overdrafts” in human capital. In order to tap into the knowledge capital of an organization,
senior leaders first need to know where and with whom it resides. This is the job of HR
function – to track and identify knowledge communities and match them with the needs of the
business. This task must be done for both current and future knowledge capital requirements.
Once the task is accomplished, only then can the HR function be deployed appropriately
within the organization to address both “now” and “then” business issues.
Recruiting and Staffing : Recruiting and selecting people are also central to building
knowledge capital. After all, the individuals chosen by the organization affect its supply of
knowledge capital, the competencies on which it can draw to meet business objectives. HR
practitioners must find ways to achieve the following:
• Recruit and select the right talent to meet pressing organizational needs.
• Retain the right talent once it is available
• Leverage the talent through appropriate uses of rotations, temporary and permanent team
assignments, transfers, and promotions so that the organization’s knowledge capital is
brought to bear on the most pressing challenges.
These goals may require focusing on specific universities, competitors, or other talent pools to
attract people with the specific competencies needed to help address business trends.
Challenges and Opportunities
In an era of globalization and rapid technological change, the prospects for knowledge-based
organizations would appear to be bright. Certainly, Internet based communications and
plummeting information processing costs provide ample opportunities in such areas as
research, networking and information management. However, by the same taken, the
organizations face challenges in a number of areas.
How can funding affect the vision of a knowledge-based organization? Funding availability is
a case in point. Stability of funding remains a concern. Funding that pushes institutions from
crisis to financial crisis works against the development of a strategic posture and leads to
weaker rather than stronger institutions.

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 How do information overload and uncertainty affect the viability of a knowledge-based
organization? With the rapid growth of Internet and computer processing power, another
challenge often facing knowledge-based organizations is the over-abundance of information,
or information of an uncertain quality.
How does data quality affect the vitality of knowledge-based organizations? Also relevant in
this regard is the issue of data quality. That is to say, for an organization to remain credible, it
must be assured of the accuracy, comprehensiveness and relevance of the information it is
using to implement projects or formulate policy options. For example, the Australian
Indigenous Health Info Net addresses quality assurance in two main ways. First, they have
documented procedures for all aspects of their day-to-day operations. These procedures ensure
that all materials have been subjected to quality control checks before being added to their site.
To complement their internal procedures, they have established a network of Health Info Net
Consultants, whose functions include peer review of any substantial academic material to be
added to the site.
How does a knowledge-based organization maintain its visibility? While the publication of
such material on the Internet may be extremely useful to academics, policy makers and other
experts, its relevance is somewhat less obvious to an individual living in a remote community
without access to adequate shelter, sewerage or health services. Accordingly, knowledge-
based organizations must grapple with the challenge of remaining relevant to their
constituencies at the risk of alienating them and losing their support. On one hand, good
leadership is critical in this regard, both in fostering constructive relationships with
community members, and in focusing organizational energies in the ways which reflect
constituents’ concerns. On the other hand, feedback mechanisms also provide a valuable
means of ensuring that organizational priorities are in harmony with community needs.

QUESTIONS FOR DISCUSSION

1. Can different skill groups be classified in an organization? Discuss various such

groups to highlight the life in organization.
2. What is environmental scanning? What are the external issues that are frequently
monitored by the managers? Discuss with appropriate examples?
3. What is cultural audit? Discuss its importance in a knowledge-based organization.

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 4. Discuss the characteristics of a knowledge-based organization in terms of process,
place, purpose and perspective.
5. What are the dimensions of Human Resource Management in KBOs? Discuss in
detail.
6. Discuss the roles of HR function in KBOs.
7. Discuss the challenges faced by a knowledge-based organization.

Unit – II

MANAGING KNOWLEDGE FOR ORGANIZATIONAL

EFFECTIVENESS

Process and Methods

Organizations face a number of important competitive challenges such as adapting to global

business, embracing technology, managing change, responding to customers, developing
intellectual capital and containing costs. With these competitive challenges very important
employee concerns, such as managing diverse workforce, recognizing employee rights,
adjusting to new work attitudes and balancing work and family demands have emerged. Best
organizations go beyond simply balancing these sometimes, competing demands; they create
work environments that blend these concerns to simultaneously get the most from employees,
contribute to their needs, and meet the short-term and long-term goals of the organization. For
organization to be effective, they need to identify the primary principle that support high
performance work systems. There are four powerful principles :
• Shared information
• Knowledge development

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 • Performance – reward linkage
• Egalitarianism
These principles have become the building blocks for managers who want to create high-
performance work systems for organizational effectiveness.
The Principle of Shared Information : The principle of shared information is critical for the
success of empowerment and involvement initiatives in an organization. Traditionally,
employees were not given and did not ask for information about the organization. People were
hired to perform narrowly defined jobs with clearly specified duties. Today organizations are
relying on the expertise and initiative of employees to react quickly to incipient problems and
opportunities without timely and accurate information about the business. Employees can do
little more than simply carry out order and perform their roles in a relatively perfunctory way.
They are unlikely to understand the overall direction of the business or contribute to
organizational success. On the other hand, when employees are given timely information
about business performance plans and strategies, they are more likely to make good
suggestions for improving the business and to cooperate in major organizational changes.
They are also likely to feel more committed to new courses of action, if they have input in the
decision making. The principle of shared information typifies a shift in organizations away
from the courses of command and control towards employee commitment. If executives do a
good job of communicating with employees, and create a culture of information sharing,
employees are more likely to work towards the achievement of goals for the organization.
The Principle of Knowledge Development: In today’s scenario number of jobs requiring little
knowledge and skill is declining while the number of jobs requiring greater knowledge and
skill is growing rapidly. As organizations attempt to compete through people, they must invest
in employee development. This includes both selecting the best and brightest candidates
available in the labour market and providing all employees opportunities to continually hone
their talents. In the contemporary work environment employees need a broad range of
technical, problem solving and interpersonal skills to work either individually or in teams on
cutting-edge projects. Because of the speed of change, knowledge and skills requirements
must also change. Employees must learn continuously. Stop gap training programs must not
be enough. Employees need to learn real time, on the job, using innovative new approaches to
solve novel problems.

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 The Principle of Performance – Reward Linkage: In an organization people may
intentionally or unintentionally pursue outcomes that are beneficial to them but not necessarily
to the organization as a whole. Things tend to go more smoothly when there is some way to
align employee and organizational goals. When rewards are connected to performance.
Employees will naturally pursue outcomes that are mutually beneficial to themselves and the
organization. Supervisor may not have to constantly watch to make employees do the right
thing. In fact employees may go out of their way above and beyond the call of duty, to make
certain that co-workers are getting the help they need, systems and processes are functioning
efficiently and customers are happy. Connecting rewards to organizational performance also
ensures fairness and tends to focus on employees in the organization. Equally important,
performance based rewards ensure that employees share in the gains that result from any
performance improvement.
The Principle of Egalitarianism
Status and power differences tend to separate people and magnify whatever disparities exist
between them. The “US versus them” battles that have traditionally been there between
managers, employees and labour unions have to be replaced by more cooperative approaches
for managing work. More egalitarian work environments eliminate status and power
differences and in the process, increase collaboration and teamwork. When this happens,
productively can improve if people who once worked in isolation begni to work together.
Moving power downward in organizations that is, empowering employees frequently requires
structural changes. Managers often use employee surveys, suggestion systems, quality circles,
employee involvement groups that work in parallel with existing organizational structure. In
addition work flow can be redesigned to give employees more control and influence over
decision making. Job enlargement, enrichment and self managing work teams are typical
methods for increasing the power. Employees can influence decisions and make suggestions
for change. With decreasing power distances, employees can become more involved in their
work, their quality of work life is simultaneously increased and organizational performance is
improved. One cannot claim that there is a fool proof list of best practices that can be
implemented by every organization for every work situation, yet there are clean trends in work
design, HR practices, leadership role and information technologies that can increase
organizational effectiveness.
• Work-Flow Design and Teamwork: Total Quality Management (TQM) and reengineering
have driven many organization to redesign their work-flow. Instead of separating jobs into

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 discrete units, most experts now advise managers to focus on the key business process that
derive customer value and then create teams that are responsible for those processes.
Federal Express, for example, redesigned its delivery process to give truck drivers
responsibility for scheduling their own routes and for making necessary changes quickly.
Because the drivers had detailed knowledge of customers and routes, Federal Express
managers empowered them to inform existing customers of new products and service. In
doing so, drivers also filled a type of sales representative role for the company. In addition,
FedEx drivers also worked together as a team to identify bottlenecks and solve problems
of slow delivery. To facilitate this, advanced communications equipment was installed in
the delivery trucks to help teams of drivers balance routes among those with larger or
lighter loads.
• Complementary Human Resource Policies and Practices: work redesign, in itself, does
not constitute a high-performance work system. Other supportive elements of HRM are
necessary to achieve high performance. Several studies suggest that both performance and
satisfaction are much higher when organizations combine their changes in work-flow
design with HR practices that encourage skill development and employee involvement. By
selecting skilled individuals with the ability to learn continuously and work cooperatively,
organizations are likely to make up for the time and expense they invest in selection.
Talented employees come up to speed more quickly and take less time to develop.
Organizations that do not adhere to this are often seen at the risk of taking wrong people
and spending more on training and/or out placement, severance and recruitment and
replacement.
• Emphasis on Teamwork : involvement and continuous improvement requires that
employees develop a broader understanding of work processes performed by others around
them rather than rely on first knowing their own jobs. To accomplish this, organizations
increasingly use cross-training, that is the training of employees in jobs in areas closely
related to their own.
• Another Important factor is the Compensation Package : Many organizations experiment
with alternative compensation plans. In order to link pay and performance, high-
performance work systems often include some type of employee incentives.
Organizational incentives such as gain sharing, profit sharing, and employee stock
ownership plans focus employee efforts on outcomes that are beneficial to both themselves
and the organization as a whole. Some organizations also incorporate skill, based pay

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 plans. By paying employees on the basis of the number of different job skills they hope to
create both a broader skill base among employees and a more flexible pool of people to
rotate among interrelated jobs. Both of these qualities are beneficial for organizational
effectiveness and may justify the added expense in compensation.
• Management Processes and Leadership : With fever layers of management and a focus
on team based organization, the role of managers and supervisors is substantially different
in a environment of knowledge based organizations. Managers and supervisors are seen
more as coaches, facilitators and integrators of team efforts. Rather than imposing their
demands on employees and closely watching to make certain that the workers comply,
managers share responsibility for decision making with employees. Typically the team
manager is replaced by the term ‘team leader’. And in growing number of cases leadership
is shared among team members.
In the literature of knowledge management, four components of knowledge management
architecture have been described. The analysis, plans and actions are usually formulated in
terms of the four basic operations of knowledge that can be found in organizations’
development, distribution, consolidation and combination. The four basic knowledge
processes are :
• Developing Knowledge : Companies survive by the continuous deployment of new
knowledge based on creative ideas, the analysis of failures, daily experiences and work
in R&D departments. Corporate memories can support these processes by recording
failures and successes.
• Consolidating Knowledge : Knowledge must be safeguarded against loss due to
different cause (e.g., people retiring, documents that cannot be accessed any more, etc).
Consolidation could be supported by, for instance, corporate memories, knowledge
transfer programmes etc. The knowledge, thus stored, must be available at the right
time and place.
• Distributing Knowledge : Knowledge must be actively distributed to those who can
make use of it. The turnaround speed of knowledge is becoming crucial for the
competitiveness of companies. To support this process, corporate memories need a
facility for deciding who should be informed about a particular new piece of
knowledge. Actions to improve knowledge distribution include the installation of help
desks and use of intranets.

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 • Combining Available Knowledge : An organization can only perform at its best if all
available knowledge areas are combined in its new products. If an organization is
unable to combine the knowledge available, it will miss opportunities and eventually
lose market share. Products and services are increasingly being developed by multi-
disciplinary teams. Corporate memories may facilitate this by making it easier to
access knowledge management system in knowledge based organization should
involve the continuous streamlining of the above four basic knowledge processes to
improve the organization learning capability.

KNOWLEDGE KNOWLEDGE
GOALS ASSESSMENT

KNOWLEDGE KNOWLEDGE
IDENTIFICATION RETENTION

KNOWLEDGE KNOWLEDGE
ACQUISITION UTILIZATION

KNOWLEDGE KNOWLEDGE
DEVELOPMENT DISTRIBUTION

Figure 1. Knowledge Management Framework

Source : Mohan Tanniru and Tom Lauer; “Knowledge Audit and Knowledge Management
System”; Infovision; New Dehli, Tata Infotech Limited; January 2002; pp 2-3.
Supportive Information Technology : Technologies of various kinds create an infrastructure
for communicating and sharing information vital to business performance. There are the
information needs for business plans and goals, unit and corporate operating results, incipient
problems and opportunities and competitor’s performance.

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 Careful planning helps to make certain that the processes fit together and are linked with the
overall strategic goals of the organization. Horizontal fit occurs when all the internal elements
of the work system complement and reinforce one another. For example, a first rate selection
system may be of no use if it is not working in conjunction with training and development
activities. If a new compensation program reinforces behaviours that are directly opposed to
the goals laid out in performance planning, the two components would be working at cross-
roads. Horizontal fit means testing to make certain that all the HR practices, work designs,
management processes and technologies complement one another. The synergy achieved
through overlapping work and human resource practices is at the heart of what makes
organization system effective.
To achieve vertical fit the work system must support the organization’s goals and strategies.
This has to begin with an analysis and discussion of competitive challenges, organizational
values and the concern of employees and results in a statement of the strategies being pursued
by the organization. Efforts to achieve vertical fit help focus the design of performance work
systems on strategic priorities. Objectives such as cost containment, quality enhancement,
customer services and speed to market has a direct impact what is expected of employees and
the skills they need to be successful. Words such as involvement, flexibility, efficiency,
problem solving and teamwork are not just buzzwords. They get translated directly from the
strategic requirements of today’s organizations. However, for all their potential, implementing
is not an easy task. The systems are complex and they require a good deal of close partnering
among executives, like managers, HR professionals, union representatives and employees.
Ironically, it is the very complexity that leads to competitive advantage.

INTELLECTUAL CAPITAL AND LEARNING ORGANIZATION

Intellectual Capital
Driven by changing technology, the increasing globalization of business, increasing speed in
market change, continuing cost containment and increasing rate and magnitude of change
itself, the need for intellectual capital is a key trend facing businesses. The competitive
environment requires that companies levrage the knowledge and expertise of their employees
to create and sustain competitive advantage. The business world is moving too fast to rely on
the traditional command and control management style. Human creativity and talent has to be
realized to have quantum break through in innovation, productivity, product and service
quality and customer satisfaction.

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 Intellectual capital means the collective experience of an organization workforce. It is the sum
of information and linking generated by the human resources in the organization. It includes
the collective experience of an organization workforce called institutional memory (what
people remember about what the organization has done in the past); the current mix of know-
how available to the organization, known as the talent pool (who is available to meet the
organization’s current challenges); and the future prospects of the organization’s workforce to
come up with innovative solutions to problems, known as creativity (how well people in the
organization are positioned to come up with break through ideas to address past, present or
future problems faced by the organization. According to Peter Drucker (1997) knowledge
capital is important since it is different from all other kinds of resources. It constantly makes
itself obsolete, with the result that today’s advanced knowledge is tomorrow’s ignorance and
knowledge that matters is subject to rapid and abrupt shifts from pharmacology to genetics in
the health care industry for example, and from PCs to the Internet in the computer industry.
There can be little doubt that knowledge capital, more than financial capital is growing in
importance (Bondreau and Ramstad, 1989). There are three major consequences that stem
from the growing importance of intellectual capital
• The need to distinguish between technical and management compliancy
• The increasing business and worker mobility
• Increasing need for training
Need to Distinguish Between Technical and Management Competency
Successful manager must now possess several capabilities : technical expertise, understanding
of the dynamics shaping the market environment, ability to build relationships inside and
outside the company and ability to identify new opportunities to enhance the company’s
offerings (Vicene and Fulmen, 1996). If companies hope to rely on knowledge workers to
create competitive advantage, then the decisions those workers make must be consistent with
the company’s values and purpose. Otherwise, these empowered employees will not make
decisions leading to company success. The challenges confronting executives then, is to
communicate the company’s values and purpose underlined. In addition executives must hire
and retain employees who demonstrate the ability and willingness to act within the company’s
values system. Only technical proficiency is not sufficient to generate a good employee.
Increasing Business and Worker Mobility
Business goes where skills and knowledge are available, the new capitalism. The decisive
factor for industries in the developed world will be the productivity of knowledge and

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 knowledge workers because organization will be competing based on knowledge and not on
capital or technology. Because knowledge workers are extremely mobile and the knowledge
needs of an organization will change rapidly, an increasing number of the most valuable
people will identify more with their own knowledge rather than with the organization. Many
of these people will not be employees of the organization but will serve as contractors,
consultants, experts and joint venture partners and the organizations are to be defined for a
specific task, time, place and culture and therefore, management of knowledge resources will
become the most important area of focus and consequently management will have to extend
beyond enterprises.
Increasing Need for Training
Another consequence of the trend toward the growing importance of knowledge capital is an
increasing, incessant need to educate workers. But education in a business environment that
prizes knowledge capital takes on new dimensions that go beyond what training has meant in
the past. Employees at all levels must be educated to understand the market environment, the
company’s strategy, and their role in influencing the organization’s financial performance.
Employee education and training will become a forum to create broader perspectives and to
give employees a broader perspective in which to operate. The importance of training in
developing knowledge employees is underscored by the dramatic increases in expenditures
linked to all forms of training. In the midst of ever increasing dynamics, people are required to
do more, do it faster and do it with less-resources. It is imperative for employees at all levels
to possess a broad, general management perspective and the ability to think strategically.
Therefore, companies are using education to derive strategic initiatives. Custom–designed
programming affords tailoring to the needs of the organization. Companies are increasingly
demanding immediate applicability resulting in the growth of action learning and on the job
techniques, any where, anytime asynchronous distance education and less time away from the
job for training and education while organization understands the need to educate the
workforce to enhance knowledge capital. Many organizations want to ensure that they are
getting a quick nature on training investments.
KNOWLEDGE AND ROLE RELATED ISSUE
The greatest opportunity resulting from the growing importance of knowledge capital is the
possibility that organization can seize competitive advantage by finding ways to leverage and
exploit worker’s knowledge. Those organization which are best able to collect market
intelligence, harness and unleash worker creativity, translate startingly innovative ideas into
valuable product and service offerings and get these products and services quickly to dynamic

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 market do definitely succeed. Organizations that cannot meet these challenges and cling to the
bureaucratic, controlling, un-imaginative and (for employees) frustrating approach of the past
will fail and go bankrupt or will be merged with other, more successful firms.
Today, business Organizations face a number of issues relating to the effective sourcing,
storage and dissemination of knowledge. According to Shermon (2002), these issues include.
• Loss of knowledge as job requirements change rapidly and personnel move across
department. Knowledge moves with such personnel and is not captured at a control
place for future use.
• Lack of organizational culture for sharing of knowledge employees are often reluctant
to share information with in the organization “Why should I part with my knowledge?
Knowledge gives me power”. Clearly, the mindset of employees need to undergo a
significant change towards knowledge management.
• Absence of adequate knowledge systems that capture and store tacit knowledge
residing in the minds of personnel (having technical/scientific or other expert
knowledge. For example, when technical service personnel do not file reports after
field visits, the next team that goes out for the same work has to start afresh and
reinvent the wheel.
• Absence of an effective learning organizational culture is another issue. Many
organizations have inadequate filing and database management system. There is a need
to setup common knowledge domains (e.g., power point presentations, preliminary
questions, training materials, suggestion scheme inputs, computer programmers,
library research results, patents and relative publications, internal publications etc. This
also includes establishing effective content management and knowledge delivery
systems.
• Inadequate to and fro dissemination of knowledge between the knowledge center and
other key stakeholders including manufacturing, logistics and marketing divisions,
institutional customers, academic institutions, quality standard institutions and
equipment builders.
• Developing and sharing best practices across various centers an well as access to
external best practices and continuously evaluating and upgrading best practices.
• Searching for knowledge resources, organization need to establish mechanisms for
tapping internal and external resources (including personal search) and developing
communities of practice setting up technology bulletin boards and identification of
experts.

Ragnekar (2001) has identified the following challenge for the implementation of knowledge
management systems in organizations
• Motivating employees to search, accept and adopt best industry practices
• Developing metrics towards appraising the effectiveness of a knowledge management
programme and measuring its results
• Motivating employees to share knowledge
• Identifying and representing the organization’s existing knowledge.
• Lack of common understanding of the company’s business model and strategic drivers.
• Changing the bureaucratic culture and organization structure.

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 Learning Orgnaizations

Peter Senge (1990) introduced the notion of the learning organization, which has become the
ideal for companies desiring to compete in the age of knowledge capital. Senge has defined
learning organizations as those whose people continually expand their capacity to create the
results they truly desire, where new and expansive patterns of thinking are nurtured, where
collective aspiration is set free and where people are continually learning how to learn
together. The organizations that truly excel in the future will be the organizations that discover
how to tap people’s commitment and capacity to learn at all levels in an organization (Senge,
1990). Learning organizations are typified in several ways. First, personal mastery forms the
spritual foundation of the learning organization. Individuals become committed to life-long
learning, continually clarifying personal vision and focusing energy. Personal mastery is
important to organizations because of the reciprocal commitment between the organization
and the individual. Second, building shared vision is essential. It is the common sense to
identify and view future that motivates the individuals in the organization. Third, team
learning occurs when the collective results and learning of the team far exceed what could
have been achieved individually. Fourth, mental models are explicitly articulated and
constantly analyzed. Mental models are deeply ingrained assumptions, generalizations, or ever
pictures or images that influence how we understand the world and how to take action. By
recognizing, scrutinizing and challenge the organization’s view of what can and cannot be
done, management teams can collectively change their view of the world and engage in
institutional learning. Finally, systems thinking integrates the other four disciplines. By taking
a systems view, organizations can focus on the interrelationships of all functions, activities
and individuals in an organization. Systems thinking is essential for building a whole that
exceeds that sum of its parts to build a system which can capture, utilize and leverage external
information in a way that constantly directs the experiences toward improving organizational
performance. Towards that end, it is essential to establish the following :
• A Sense of Purpose : a clearly articulated, shared view of the future direction of the
organization.
• Information Flows : a systematic method to capture and disseminate knowledge and
experience throughout the company to provide real time information to those who need
it.
• Decision Processes : Processes for making decisions that question previous
assumptions about the business and encourage those involved to move beyond the
status quo.

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 • Communication : An organizational communication style that encourages the sharing
of knowledge, innovation and calculated risk taking and catalyzes employees around
the common purpose.
• Culture : Once barriers to learning have been removed, a culture is encouraged were
each individual continually learns and facilitates the growth of the organization.

Knowledge capital may not have precisely the same definition in every organization, every
division, every department, every function or every work unit. The key to understanding
knowledge capital is understanding what makes an organization competitive that is its core
competence and the collective knowledge, talent and marketability of the people working
in the organization. So the definition of knowledge capital varies by the nature of the
business and the collective knowledge, experience and creativity of the individuals who
make the business operate.

Business Strategy

Knowledge Management Strategoy

Culture Organization Infrastructure Intellectual

and Development and Assets
People Process Facilities

Figure 2. Knowledge Management Strategy

Source : Angela Abell and Nigel Oxbrow, 1999, People Who Make Knowledge Management
Work.
Action Plans or Strategies for Growing Importance of Knowledge Capital

• Prepare for the Realities and Need to Educate the Workforce : Employees should be
shown how each individual’s efforts impacts corporate success. Employees should also
be given tools to support appropriate decision making and they should be rewarded in
ways that are matched to desired organizational results. According to Peter Drucker

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 (1992) because of the vastly expanding corpus of knowledge it is imperative that
member learn how to learn.
• See People as a Competitive Advantage and Invest : Asset Leadership should be
encouraged at all levels. Leaders must fulfill a role of creating a learning organization
that stimulates and challenges people by providing strategic directives, encouraging
learning and facilitating the transfer of experience. Leaders can determine that learning
takes place by the questions they ask and by the approaches they use. Leaders must
actively participate in capturing and transferring learning inside the organization.
• Look at Long-term Plans for the Workforce : There has to be a long term planning for
the workforce skills and talents needed by the organization. Planning for talent is
different from planning for production. It requires careful consideration of the
competencies required at each level and in each function of the organization. It also
requires state-of-the art approaches to succession planning that go beyond the simple
replacement plans of the past or even the talent pools of the present to build
competitive bench strength throughout the organization over the long term (Rothwell,
1994). That is, in fact, a powerful way for the HR function to contribute to developing
knowledge capital for an organization (Kelley, 1997).
• Support Ways to Deploy Knowledge Assets : Organization’s strategic planning process
should be revamped so that it encourages creativity and information sharing within and
across functions. The strategic planning process should be used to reexamine the
organization acting in a dynamic environment and create a dialogue with the
company’s leaders and employees so that people are constantly thinking about what
they should do and how it would affect the organization in a changing environment.
• Determine Skills and Competencies of the Workforce (Skills Inventory) : The focus on
identifying and developing leadership as well as technical competencies should be
given. These leadership competency models clarify how the organizations expects
decisions to be made and how individuals should demonstrate leadership. These
models can also be used during selection and promotional processes to determine what
characteristics and behaviours indicate that an individual is likely to be successful in
any leadership position.
• Revisit Matrix Management : By using matrix management, organizations can avoid
the turf battles that can stem from more traditional command-and-control structures.
Moreover, matrix management is well suited to application in setting where many
temporary project teams come together and work quickly to address problems tapping
the talent of many specialists. Another benefit of matrix management is that it gives
employees exposure to differing management styles, which can help to develop them
for dealing with the future challenge they face by seeing the effects of those styles in
action.
• Develop Teams : Another action to build on the growing importance on knowledge
capital is to develop teams, defined as cohesive groups assembled to address a
problem, manager a process compare steps in a process, or work to improve
productivity. Teams may be temporary or permanent; they may be formed form
individuals doing the same work (functional teams) or different work (cross-functional
teams); they may be led by one or more people (directed teams) or by team members
(self-directed teams). A key advantage of most teams, however, is that they help
organizations and individuals depart from traditional and bureaucratic, motions how
work is organized, who is responsible for doing it and how people work together to
achieve common goals and carry out similar activities.
• Develop Reward Systems for Sharing Information : Ways should be developed for
rewarding people for sharing information. The balanced scorecard is one way that

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 organizations have been attempting to do that. This approach is based on the
philosophy that effective measurement is an integral part of the management process,
the balanced score card provides a framework to translate a company’s strategic
objectives into performance measures. Four critical areas of employee and
organizational performance are measured : financial results, performance for
customers, internal processes and innovation and growth. By using internal and
external measures, these four areas discourage managers and employees alike from
making unfavourable trade-offs among critical success factors (Kaplan and Norton,
1993). The balanced score card facilitates rewards for information sharing because it
measures success in each area. Within each area, relevant knowledge that must be
shared can be identified, measured and appropriately rewarded.
• Developing Strategies for Building Knowledge Capital Experiences and Assignments
in Succession Planning : Development experiences are planned to build individual
competencies and can be linked to the competencies required for success of the
organization with a strategy. Peter Drucka (1992) emphasized that are way of
educating people is to view the whole, of course, is through work is cross-functional
task forces. The real challenge lies in the building on experience and leverage
knowledge quickly and widely throughout the organization.

The role of HR function goes well beyond value recognition. For knowledge capital to add
value to organizations, key people should be identified, and made to transfer the information
to others, use it in HR strategic planning processes and to spark innovation and creativity
among the workforce.

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 Use and leverage
knowledge

To act intelligently for

success and viability

Deploy knowledge Create new knowledge:

Learn, Innovate and
Research
To improve
processes,
products and Using prior knowledge
services and imports

Organize and Capture and store

transform knowledge knowledge
To re-use and build
To make it broadly upon it, and to
available and to leverage it in other
embed it ways

Figure 3. The Knowledge Life Cycle

Source : Knowledge Research Institute, Quoted in Business Today, May 7-21, 1999, p. 86.

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 PERFORMANCE APPRAISAL
Knowledge based organizations have to be adept at engaging their workforce to achieve goals
that benefit the organization as well as the individuals. In a continuing effort to monitor the
pulse of the market place, more organizations are trying operational yard sticks to the
traditional financial gauges. It is a common view among managers that staff will perform
better if they understand the contribution that their work makes to meeting the written
objectives and goals of the organization. It follows, therefore, that anything that makes this
connection cleaner to employees should enhance performance. This insight encourages
organizations to publish documents that show through the medium of a programme structure,
how all the myriad jobs undertaken contributed to meeting the organization’s objectives.
Feedback is as important as understanding the significance and contribution of one’s work.
Many managers believe that feedback should be based on measurement (Watson, 1994(a)) and
consequently much of the effort under the heading of performance management is used to
develop system for measuring performance. Most measurement methods are based on a
systems model that attempts to measure the input to an organization, the uses to which those
resources are put and the services and benefits that arise from that activity. Performance
measures only have value, as information rather than data, if they are constructed as ratio that
put one piece of statistical data into the context of another. There are a number of issues that
arise out of the use of performance measure. For instance, there are four basic types of
processes that may require differing emphasis in the measures
• Operational
• Developmental
• Managerial
• Support

Each measure has to have a reasonable standard of performance. The individual measure must
directly support and align with the next higher level of measures well aligned with the
objectives and the ultimate strategic goals. Measures provide focus, quantify objectives and set
standards. Objectives have to be quantified by developing measures to adequately express
each dimension. Detailed measures are combined and can be summarized on dimensions of
higher level objectives.
Management in partnership with the workforce, must find opportunities for development,
empowerment and performance that meet both organizational and personal interests and

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 objectives. Management must provide opportunities for all employees to develop skills,
experience and knowledge that can improve their performance and increase their capabilities.
Without developmental knowledge and experiences, performance will be disappointing. In
addition to developmental opportunities, management must provide opportunities for
employees to demonstrate, practice, perform, learn and improve their performance and
capabilities. Monitor and assess measures provide for both internal and independent
monitoring and assessment. Measure of performance should be monitored by external groups
with interests in the outcomes, or groups that are at least impartial. For example customers,
peer groups, senior management are likely candidates for monitoring. This is what is called
360° appraisal.
The intention of 360° appraisal is to give a broader and more objective assessment of people’s
competence, although from another angle these systems must multiply the biases and
distortions of judgement to which all appraisal is proof. Stewart (1998) pointed out that much
assessment procedure in organizations accepts a logical fallacy that the sum of many
subjective judgements is an objective one. Managers are often willing to accept multi-rate
appraisal within certain constraints. They accept its use for developmental purposes, but are
less willing to see it to be used as a basis for judgement concerning pay, performance or
promotion. Multirater feedback is often only used when a manager has, in different cases,
four, five or eight people reporting to them. With small numbers it may be difficult to maintain
the raters’ anonymity and the judgements made be sweetened to avoid any danger of reprisals.
In a fully 360° system, there is also a problem of the weightage to be given to the various
perspectives; should the views of subordinates have the same value as those of senior
colleagues and how seriously should the assessment of customers or clients be taken. It can be
argued that upward appraisal (if not the full 360°) is an appropriate balancing of the power
relations between management and non-management staff.
It is essential to measure what you reward and reward what you measure. Otherwise, no strong
motivational effect will be created. If new measures are needed, or if existing measures need
modification, create fix them as soon as possible. Rewards should take many forms, including
money, recognition time off, empowerment, work selection, advancement and development.
And rewards should celebrate successes, as well as desired behaviours such as collaborating,
experimenting, risk-taking and learning. One interesting aspect is that results and outcomes are
the objectives being managed, not processes. First by emphasizing outcomes that is product,
services and financials, the organization focuses on meeting customer needs and business
needs, not internal functional or political needs. Second it gives managers of each

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 organizational unit the flexibility to organize the processes and enabling business system
components to best fit their local needs and personal management style, but holds them
accountable for meeting the outcomes. Third, the work force is primarily rewarded for results,
not for internals. What is most important thing you can and must do to change the existing
culture and mindsets so that they are receptive supportive and committed to the precepts of the
knowledge organization? Motivate everyone by providing equal opportunities and
development, as well as just appraisal and rewards.
Management must measure and reward the performance, behavours and attitudes that are
needed and desired. It is essential to measure what you reward and reward what you measure.
Kaplan and Norton’s Balanced Scorecard approach both measures and rewards. This approach
is then combined with core values of providing good values to the customer, servicing the
customer, high performance, leading with expertise, innovation and sharing and cooperating.
Therefore following should be rewarded :
• Customer satisfaction
• High performance
• Personal knowledge and expertise
• Team work and sharing of expertise and knowledge
• Creating new and extending existing knowledge and expertise
• Using and applying the knowledge and expertise in the knowledge repository
• Proactive problem solving and problem prevention

The balance score and approach has following basic measurement dimensions:
1. Customer
Value (Product, Service, Price)
Satisfaction
2. Financial
Expenses
Income
Net Earnings
Net Worth
3. Process
Quality
Time
Cost
Capacity
Flexibility/Adaptability
4. Workforce (added by many organizations)
Development
Empowerment
Motivation
Collaboration, Sharing, Team Work
5. Learning

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 Core Capability
Expertise
Knowledge
Innovation

CONCLUSION
The knowledge based organizations will have to use integrated approach in doing business.
Through the use of employee knowledge profits, they will assemble to best internal,
multidisciplinary teams to handle their business transactions and client engagements. They
will tap into their knowledge repositions and global case bases to learn how similar
assignments were handled and solved. They will use their company intranets and knowledge
management exchange tools to access, store and retrieve important information, knowledge
and heuristics relating to their situation or business activity. Expert systems also will play a
major role in providing an active advisory component to the organization’s knowledge
repositories and corporate memory. Integrated performance support systems supported by
knowledge repositories can turn out to be the break through concepts needed to implement this
integrated approach. Organizations need to cure their corporate amnesia in order to maintain
their competitive edge. Organizations will continue to merge, reengineer, downsize, and
flatten. As a result, a turnover of employees will be created which could result in a brain drai
effect. To overcome this potential problem, knowledge repositories must be created, and
maintained to capture the expertise before people leave. To cope up with these trends, future
organizations may well need to be more focused and specialized in their business strategies,
relying on alliances and partnerships to produce products and deliver services that would have
been previously performed internally. According to Robert Dunham of Enterprise Design, the
power of incorporating action into our interpretation of knowledge is that it puts the focus on
the actions to be produced, not just on understanding or information that requires another step
to get to action. Understanding and information are still aspects of knowledge, but they are no
longer the end product.
Organizations need to be proactive, and put knowledge into action. Their actions should
produce value for customers. The only thing that gives an organization a competitive edge, the
only thing that is sustainable is what it knows, how it uses what it knows and how fast it can
know something new. This knowledge advantage will be a major competitive advantage for
the organization in years to come.

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 According to Brook Manville, Director of Knowledge Management at McKinsey and
Company, and Nathaniel Foote, McKinsey’s Director of Knowledge and Practice
Development.

• Knowledge – based strategies begin with strategy, not knowledge. A company has to
know the kind of value if intends to provide and to whom. Only then it can think of its
knowledge resources in ways that make a difference.
• Knowledge-based strategies aren’t strategies unless you can link them to traditional
measures of performance. If knowledge can’t be connected to measurable improvement
in performance, including improvements on the bottom line then the knowledge
revolution will be short lived.
• Executing a knowledge-based strategy is not about managing knowledge, it is about
nurturing people with knowledge. Also, people will not willingly share it with coworkers
if their workplace culture does not support learning, cooperation and openness.
• Organizations leverage knowledge through net works of people who collaborate.
• People networks leverage knowledge, through organization pull rather than centralized
information push.

Above all organizations need to continue developing their organizational intelligence.

Organizational intelligence is an organization’s capability to process, interpret, encode,
manipulate and access information in a purposeful goal directed manner so that it can increase
its adaptive potential in the environment in which it operates (Glynn, 1996).

QUESTIONS FOR DISCUSSION

1. What is organizational effectiveness? How can high performance work systems

improve organizational effectiveness?
2. Discuss the various principles underlying high performance work systems.
3. Discuss the various components of knowledge management architecture. How can
they contribute to the organizational effectiveness?
4. What is intellectual capital? Discuss its growing importance in changing business
scenario.
5. What is performance appraisal. How can it be made effective in a KBO.
6. Discuss various strategies used for the growing importance of knowledge
management.
7. Discuss various issues relating to the knowledge management in organizations.

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 SUGGESTED READINGS

1. Drucker, P. (1992). Managing For the Future : The 1990s and Beyond. New York :
Dutton.
2. Drucker, P. (1995). Managing in a Time of Great Change. New York : Dutton.
3. Kellay, B. (1997). King Makers. Human Resource Executive, 11(2).
4. Rothewell, W. J. (1994). Effective Succession Planning : Ensuring Leadership
Continuity and Building Talent From Within. New York : AMACOM.
5. Rothwell, Willian J.; Prescott Robert K. and Taylor, Masia, W. (2005). Strategic
Human Resource Leader. Mumbai : Jaico.
6. Kaplan, R. and Norton, D. (1993). Putting the Balance Score Card to Work. Harvard
Business Review.
7. Glynn, M.A. (1996). Innovative Genies : A Framework for Relating Individual and
Organizational Intelligences to Innovation. Academy of Management Review, 21(4).
8. Liebowitz, Jay and Beckman, Tom (1998). Knowledge Organizations What Every
Manager Should Know. New York : St. Lucie Press.

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 Unit III

KNOWING WHAT THERE IS TO KNOW

The world is changing fast and the world of business is changing faster. In the
new millennium, business corporations will have to deal with entirely new challenges
to meet customer demands, move from competition to collaborative reconfiguration,
dovetail supplier and subcontractor processes to the corporate goals and empower
employees to be able to meet and surpass customer expectations.

The challenge of meeting higher customer expectations is not something that

has emerged suddenly. This evolution has been happening over the last 30 years,
accelerated in this last decade because of rapid expectation pulls, like the impact of the
information explosion and entry of global brands into all international markets. This
revolution has been further fortified by the push of new technologies like pervasive
Computing and the Internet, which have allowed the promise of Net-Centric
Computing to extend into the work and life styles of the next generation of prospective
buyers in the world’s new economics.

In the relentless competitive search for new business, the customer today is seen
by breathless marketers as a fickle and mercenary shopper, who respects no brand, has
no loyalty and demands higher value for money with every transaction. They also
expect new products and services to be available every day. This has brought in the
concept of the market facing enterprise, where every process and activity within the
organization is pointed towards increasing customer value. Business process re-
engineering, which was once seen as a euphemism for downsizing, has taken its
rightful place as a tool for simplifying customer interaction with the organization.
Information Technology has begun to pervade all activities within and beyond the
physical boundaries of the firm and the focus of Total Quality Management initiatives
and benchmarking initiatives have all become oriented to the stated and implied needs
of customers.

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 This has resulted in changes in the expectations and profile of employees too,
who have to become customer rather than task focused, exhibit high capabilities in the
use of technology to maximize their own productivity and significantly cut down
learning times for any new task or role.
New paradigms are also emerging in the organization’s relationship with its
suppliers and subcontractors. They are now seen as key partners in the new virtual
corporation, providing the ability for the entire supply chain to be fine tuned towards
changing market needs.
Take the case of the transnational European Insurance Corporation. In early
1998, it realized that its profit margins were being eroded by two factors. First, the
inability to command the right price for its services, because of inadequate knowledge
of customer expectations and competitive scenarios; and second, repeated failure of
attempts to train new employees well enough and fast enough to respond to customer
needs for information and new services. This corporation, like many others in the
service delivery business today is faced with three key challenges.

1. How to change its method of attracting customers and servicing their needs
in the new world of Internet and Electronic Commerce.
2. How to transform its processes and implement Information Technology
Enablement to build the market facing enterprise.
3. How to re-engineer the mindsets of its employees and enable individual and
corporate learning to happen in an institutionalized manner.

The challenges themselves are not new and in an organization with a long and
successful history of delivering customer services all over the world, there is no doubt
that enough capability exists to address each challenge with the collective wisdom of
generations of managers and leaders, and emerge successful. But in this statement of
the solution lie the problems that face, schools, universities many organizations and
even governments. These are the problems of identifying the sources of knowledge
that exist within the organization. These are issues of finding the correct method of

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 sharing and disseminating knowledge across the enterprise and to transform the
customer satisfaction capabilities of each and every member of the organization
through timely availability and use of the collective knowledge base.
This is the dilemma that has moved the concept of knowledge from the
conceptual third stage in a continuum of data-information-knowledge-wisdom into an
addressable and important component of an organization’s customer satisfaction
arsenal. The realization that knowledge can be sourced, stored, disseminated and used
has today spawned multiple research projects, led to the development of a number of
tools, become part of the agenda of over ninety percent of the global corporations and
has even taken knowledge management to the very peak of the present day
Information Technology Hype Cycle. The nascent state-of-the-art and science of KM
can be gauged from the fact that less than half a dozen enlightening books exist on the
subject today – we hope this book will add to that body of knowledge. But the interest
in the subject is evident from the scramble of consultants building knowledge
management practices, the gaggle of information technology tools and products that
are being rechristened as knowledge management, and of course the numbers of
information management strategists and researchers of the 1980’s and early 1990’s
who now claim to have over a decade of expertise in knowledge management as their
claim to fame.

UNDERSTANDING THE IMPORTANCE OF KNOWLEDGE

Before delving into the esoteric and still fuzzy art and science of knowledge
management, let us understand the term “knowledge” itself in an organizational
context. The difference between the ordinary and the extraordinary handling of any
task, process or interaction – between employees, with customers or with any other
stakeholder of the firm – has always been the explicit and tacit usage of knowledge by
the person guiding the transaction. This knowledge has often been confused with
information and sometimes with wisdom because of the somewhat blurred boundaries
that exist between the three. While we shall analyse these differences in detail in a

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 later chapter, it is important to understand that information is nothing but the result of
the processing of large amounts of data that are created during the regular operations of
any organization. This information in the form of Management Information Systems,
Decision Support Systems or just through the picking up of a telephone, is available to
all who are authorized to access it. When the component of experience in handling
similar situations is added, including the ability to use images, text and transactional
intelligence for taking more enriched decisions, true knowledge is brought to bear on
every transaction. The continuous practice of the art of using knowledge can add to the
collective capability of the individual, a workgroup and a function and can eventually
become the collective wisdom of the organization.
The application of knowledge and the practice of knowledge management as a
precise science can create wonderful results in any organizational context. The work
of every employee can become richer through access to Best Practices at any stage of a
business process or customer project, the suppliers and subcontractors to the
organization can become part of a close working group where early involvement is
possible in all the business thinking, particularly in the highly competitive business
situations. Customers can be delighted with every transaction, becoming richer and
more productive. Thus, the transition form being an aorganizatin that is invwardly
focused to becoming a true market facing enterprise can be achieved. Most important,
in the current environment of value addition measurement at all a levels, and
shareholder value creation, the conscious capture, storage and archiving of knowledge
can lead to the creation of invaluable intellectual property that has both practical and
long term strategic value for the organization.
Managing knowledge is becoming a business imperative for those corporations
who want to protect their present market share, build future opportunity share and stay
ahead of competition. Knowledge will also be the key driver for those firms who are
keen to innovate and change the rules of the game. It is no secret that many consumer
electronics firms already have two or three future models ready even as they are
introducing today’s model into the marketplace. This ability to create the future rather
than try to predict it accurately has often been the result of knowledge about the present
and future customer needs that preempt the customer’s own ability to visualize the

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 future. And in large organizations, this is best done not by seeking external help, but
by using the explicit and tacit knowledge of the entire employee and partner
community. To quote the CEO of Hewlett Packard, one of the world’s most successful
corporations, “Successful companies of the 21st century will be those who do the best
job of capturing, storing, and leveraging what their employees know.”

In business corporations, effective and timely usage of knowledge can also

result in the reduction of cycle time and assist in the business process re-engineering
and organizational delayering process.

The ability to enable academics, students, bureaucrats or citizens to quickly

identify and resolve problems will be the key to successfully managed institutions and
E-Governance in the new millennium. The benefits of applying knowledge are truly
universal and are imperative for success in the new millennium.
THE TECHNOLOGY PUSH FOR KNOWLEDGE MANAGEMENT

The concept of knowledge itself is not new, because theneed and importance of
knowledge has been the basis for the development of various cultures, philosophies and
religions. What has really made it possible for people and even organizatins today to
even contemplate harnessing knowledge energies for better management has been the
rapid evolution in technology that we have seen over the last decades.
The role of technology, particularly information technology in defining and
reviatalizing corporate strategy has evolved over the last forty years or so. In the 1960s
and ‘70s, computers were confined to glass cabins and sometimes as departmental
number crunches. Information strategy was always seen as something that would come
in after the corporate strategy had been defined. It was only with the introduction of
the personal computer in the early 1980s and the subsequent spread of the networking
phenomenon that changed the role of information technology from being a passive
consequence of corporate strategy to a pre-requisite to the development of strategy.

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 The pull factors exerted on the corporation by its external environment are
compounded by the push given by rapid advances in information technology,
particularly in the area of intro-organization and inter-organization communications.
This push, largely driven by the rapid proliferation of the Internet and the usage
of associated Internet technologies within corporations in the form of intranets and
extranets has resulted in the emergence new paradigms of business. A case in point is
amazon.com, the virtual bookstore that has caught the fancy of shoppers and stock
market analysts alike and zoomed to a revenue run rate of a billion dollars and a market
capitalization many times that, this company has proved that the traditional model of
business is slowly but surely giving way to new methods of planning and developing
business opportunities that will change the face of marketing strategy in the new
millennium.
Other significant players are also beginning to generate significant revenues in
the other three segments. FedEx, Cisco and Intel are reporting multi-billion dollar
business-to-business transactions. Another popular internet startup, eBay, has brought
the concept of the Virtual Auction to the consumer-to-consumer space. Pioneers like
priceline.com are turning the entire marketing paradigm on its head. It has made
consumer-to-business transactions the new way of booking airline tickets, hotel rooms
and soon, every form of service where the customer is keen to name his price rather
than ask for discounts. All these phenomena are changing the every organizations deal
with customers and even customer expectations from organizations.
While E-Commerce is one visible usage of the Internet phenomenon, another
internal innovation that is happening in many business corporations worldwide is that
of knowledge management. The ability that the Internet provides to seamlessly
integrate the business processes of organizations with activities spread all over the
globe is encouraging organizations to look at knowledge capture, archival,
dissemination and usage as the logical method of improving customer response through
institutionalized and technology-enabled processes. Through the deployment of data
and knowledge capture, storage and mining tools on knowledge networks, the objective
seems to be to capture every form of explicit and tacit information and knowledge and
build ongoing corporate learning.

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 The Corporate Portal is the logical culmination of technological advances in the
areas of knowledge archival and dissemination, the internet, intranets and extranets and
managerial innovations in the areas of shared learning and corporate experience
building. In its early deployment in many organizations, the corporate portal is nothing
more than a customized computing front-end for each and every employee in an
organization which permits a customized user interface with the large storehouse of
data, information and knowledge that exists in departmental, corporate and industry
databases and data warehouses. It combines many evolutions like the electronic mail,
GroupWare computing capabilities, personalized information retrieval and
collaborative working with the new science of knowledge networks which enables the
conversion, storage and on-tap availability of erstwhile tacit knowledge in explicit and
accessible formats.
The early beginnings of the corporate portal actually happened in the business to
consumer space. This caught the fascination of consumers and the global investor
community alike, sending many Internet stocks into stratospheric levels. Front runners
like Yahoo were the early pioneers in moving from generic portals, which provided a
launching apad for surfers and information seekers alike, to customized individual
access points like My Yahoo, one of today’s most popular personalized internet
services. The reason why more and more consumers find this concept fascinating is
that it avoids the clutter of searching through multiple web sites for information,
education and entertainment, that is most commonly accessed by creating a template
for capturing only those information elements from the internet that one is actually
interested in. This is enabling the concept of the customized newspaper, selecting
scanning of high interest web sites and pull-based access of information on new
products and services. In the consumer segment, the personal portal is already
sounding alarm bells for traditional marketers who have been used to traditional push
forms of advertising and product promotion. The formation of virtual communities
consisting of groups of internet users with similar interests across countries and
continents is being accelerated by this new portal concept.
The corporate portal will go one step further in integrating the work style of
every individual into the information strategy of the organization. With the current

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 trend in the US and Europe towards telecommuting and hot desking, an employee can
start working anywhere in the world by sitting at a computer in any airport or hotel or
business center or even at home and getting his individual working environment
conjured up in seconds to enable him to commerce work. With many of the world’s
leading technology firms including Microsoft, Oracle and IBM as well as some of the
most innovative Silicon Valley startups putting billions of dollars of investment monies
into new tools and technologies for Net-centric hardware, software and
communications capabilities, the next few years may change the entire paradigm of the
business corporation.
FROM ART TO SCIENCE : KNOWLEDGE MANAGEMENT
A knowledge management initiative is best taken up if an organization finds
value in building an institutional memory or a comprehensive knowledge base for the
firm to enable better application, sharing and managing of knowledge across the
various entities within and outside the organization.
Let us revisit the case of the European Insurance Corporation that was
mentioned earlier in this chapter. The size of the knowledge challenge can be
estimated by the parameters of its operation – a network of nearly two million
customers with over tow thousand new enrolments every week. Call center operators
are inundated with nearly 10,000 calls every day ranging from simple policy queries to
membership changes and a host of unexpected demands for information from pleasant
as well as irate customers. With an annual volume of over 30,000 insurance claims and
payouts in excess of a million-and –a-half pounds, any improvement in the efficiency
of the operation could have a significant impact on the customer satisfaction levels as
well as the overall profitability of the enterprise.
Compounding the problem for the organization was the fact that one of the
toughest categories of people to hire, train and retain in the call center employee. With
call centers becoming one of the most popular customer servicing mechanisms across
Europe and the USA, attrition level of employees is very high with the result that the
company was spending enormous time and effort on training and retraining its
employees on an ongoing basis.

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 The European Corporation set for itself one major objectives as its knowledge
management initiative-to achieve a five percent improvement in claims processing
accuracy with a resultant ten percent improvement in overall profitability, which would
be possible since both underpayment and overpayment of claims was resulting in major
cash losses through waste on one hand and expensive law suits on the other. Three
strategies became the focus for achieving these goals.
• Get new employees trained on all aspects of Call Center operation in the
shortest possible time with new technologies applied for pre-requisite, skills and
reinforcement/remedial learning. This would eliminate the need for expensive
and time-consuming classroom based training of new recruits and refresher
training for existing employees.
• Have knowledge available on tap about company policies, frequently asked
questions and explicit and tacit customer knowledge.
• Improve quality of customer response as well as capability to process customer
claims efficiently and accurately on an ongoing basis.
The eventual outcome for the knowledge management initiative had been
defined in clear business terms and the strategies clearly defined before the
technologists were put on the job. Very often, knowledge management initiatives fail
simply because the reasons for embarking on the project are not clear and the critical
strategic issues are not identified. Today, this company is on the verge of achieving its
objectives of just-in-time training, claims processing accuracy and customer
satisfaction and will soon see a knowledge workstation with a customized enterprise
knowledge portal on the worktable of every knowledge worker.
But it takes a lot to get there and the organization will have to grapple with a
range of technological and behavioural challenges before it sees full success. Many of
these are presented and analyzed in detail in subsequent parts of this book.

Knowledge management has enabled many organizations of worldwide repute

to comprehensively change their approach and service delivery capability, both
towards their internal employee community and towards external stakeholders. Many
large European and American banks are focusing on the task of building and

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 institutionalizing organizational memory. Knowledge is being built about vital
processes and practices. Models are being developed to describe tasks, processes and
customer relationship functions that employees are engaged in with detailed objectives
and best practices that are oriented towards achieving them.
Chase Manhattan Bank has developed a comprehensive relationship
management system by using the visual basic programming environment wherein bank
employees have complete customer knowledge available on tap, including information
on loan histories, deposits, investments and other explicit and tacit knowledge that
facilitates better customer relationships.
In the oil industry, Chevron has been successful in deploying a comprehensive
knowledge management framework. It uses Lotus Notes in a comprehensive Group
Ware solution that is deployed on a corporate intranet. This establishes communities
of best practice and enables sharing of best practices across the company. The
company holds regular internal conferences for best practices exchange and provides
access to corporate and industry news, human resources information, financial and
library services on the same knowledge network. A variety of on-line training courses
enrich the information and knowledge available on this network.
Dow Chemicals has a comprehensive intellectual asset management system. It
includes the management of know how, copyrights, patents, trademarks and trade
secrets. Pharmaceutical giants like Glaxo and Welcome are setting up intranet-based
executive information systems which enable knowledge sharing on people, key
business activities and best practices. It enables internal and external benchmarking on
an ongoing basis. Various financial institutions like bankers trust are deploying
collaborative computing technologies to enable sharing of knowledge of financial
markets between employees to create in-house knowledge bases that catalogue and
share the knowledge acquired in various parts of the firm. They also plan to extend the
in-house knowledge base to key customers, which will not only increase customer
satisfaction but also minimize the time that would need to be spent on actual one-to-
one interaction with the customer in any transaction.
The real difficulty in implementing knowledge networks is the ongoing
intellectual effort that will be required to ensure that real benefits accrue to the

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 organization. The cost itself may be only of an incremental nature, since corporate
intranets are now a common feature in many companies. It is only the software that
will need to be procured and implemented to get the knowledge network functional.
One major challenge to implementing knowledge management successfully is the
tendency for many corporate chieftains and even functional heads to disbelieve the
notion that it is really possible to capture, store, analyse and disseminate knowledge for
shared usage. Until this realization sinks in and CEOs take the first few steps to
establishing a knowledge performance index for the critical and repetitive activities of
the organization, knowledge management will remain a topic for magazine articles and
intellectual seminars.
However, the business environment demands it, technologies are enabling it and
effective knowledge management will be the difference between the winners and the
also-rans in the corporate world of the new millennium.
Implementing KM in your Organization
At the end of a talk by a leading international speaker at a recent seminar on
knowledge management, there was some unexpected feedback from a rather agitated
gentleman in the audience. Surprising because, the session by any yardstick had been
an interesting one and gave some useful insights on the subject. The cause of his
concern, however, was the fact that the world already knew that knowledge
management is a clear business imperative. However, most thinkers on the subject
resort to talking about rather abstruse theories and broad generalizations and tend to
take umbrage under the assertion that specific answers have to be figured out by each
organization. How does one ensure that knowledge management is seen as anal
pervasive way of life rather than a pilot project that lost its luster after an overdose of
hype and unrealistic expectations? What is required is an unambiguous action plan,
clear guidelines on what is to be doen, how, when and by whom. Mere pontifications
are no longer enough. Hard-nosed businessmen would rather depend on a scientific
approach to success than leave it to the probable brilliance of a few believers who
practice knowledge management as an art form.
Aspiring practitioners of knowledge management primarily have two major
questions:

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 • How can knowledge management be interwoven into the organizations’s
mainstream activities and functions rather than be looked upon as a discrete
experiment.
• For an organization to embark on a sustainable and successful knowledge
management program, is there a clear implementation methodology that can be
followed.
Both these are very real concerns. For KM to get institutionalized it requires not
only organizational conviction but clear processes and methodologies for achieving the
same. However strong the intuitive conviction about an initiative may be, its longevity
can be ensured only by :
(a) a clear correlation to business objectives and strategies.
(b) Identification of quantifiable milestones and outcomes towards the
achievement of these objectives.
There are any number of examples where knowledge solutions have been
implemented without any questions asked because the CEOs saw it as an absolute
necessity. The ability to derive an organization’s knowledge strategy out of its
business strategy lends clarity to this intuitive conviction, enables a sounder approach
for prioritizing various activities of knowledge acquisition and provides for setting up
of processes and metrics to enable an ROI justification.
Knowledge management and more specifically knowledge sharing is extremely
depenent on the organizational ethos. However, implementation cannot be an open
ended exercise whose fate is determined by the employees. For any initiative to get
institutionalized it need to be supported by clearly defined processes, individual
responsibilities and technological enablers.

While it is not our instent to over-simplify the issue by purporting to provide a solution
to the last teail, our experience in various KM engagements leads us to believe that it is
indeed possible to arrive at a well-defined approach to go about such initiatives. It is
both feasible and beneficial to clearly link knowledge management with business
strategy and planning. That way one can associate some quantifiable outcomes from
KM towards achieving business objectives rather than merely seeing it as a desirable

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 initiative. Moreover, while KM as a subject has reahed nowhere near the maturity of,
say defining a software engineering process (for perhaps the simple reason that it is to
do more with people than with software) it is possible to chalk out a clear
implementation methodology. Hopefully, what has been shared here will give on (of
many) possible approaches that could translate into a clear plan of action of the
organization.

LINKING KNOWLEDGE STARTEGY TO BUSINESS STRATEGY.

In chapter 5 we examined the process of identifying KM solutions from the

business strategy perspective as one of the possible approaches. This can be viewed as
the top down approach to knowledge initiative. There are organizations that have
started knowledge initiatives in areas that seemed to be the obvious choices are
possibly represented only the low hanging fruit. This has the obvious advantage of
being able to embark on a KM project without much of a premble and time lag and also
ensure an initial success. However, the not so obvious disadvantage of this approach is
the difficulty in identifying similar projects, prioritizing them and ensuring that they
can be retrofitted into some kind of a cohesive knowledge strategy in future. The
initial project has the distinct possibility of being a lone initiative, albeit being a much-
acclaimed and talked about one. It does not necessarily snowball into an organization-
wide phenomenon that can yield business benefits, on reaching a certain critical mass.
The top down approach on the other hand ensures that there is a clearly defined
knowledge strategy in place. Pilots can then be chosen and projects can be chosen and
projects can be prioritized based on various techno-cultural issues. It ensures that there
are some clearly defined goals in the knowledge domain that are not lost sight of
irrespective of initial successes or failures. In fact, the feedback from such initiatives
can become valuable inputs for refining business strategies.
THE K-GAP ANALYZER AS A TOOL
An organization needs to be able to identify what are the knowledge assets
required to meet its business strategy. Obviously, the business strategy would be
dictated by an organization’s core competence. ,[s has been elucidated by Hamel and

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 Prahalad1 in their path-breaking work, core competence has to be looked at in the
context of building competitive advantage. This means that business strategy has to be
based not merely on current activities and existing knowledge assets, but on the way
the organization can build on its current core competence towards achieving
competitive advantage. This in turn would decide what would be the knowledge assets
that need to be acquired.
Business strategy has got to be broken down into a comprehensive list of key
business drivers, with milestones and time linmes for each business activity. For each
KBD, the complete set of knowledge assets (K-sets) required to achieve that KBD need
to be identified. This forms the starting pint for evolving an organization-wide
knowledge strategy.
It is in this context that the use of a tool christened the K-Gap Analyzer is likely
to be of immense help. This is a deceptively simple tool which when used iteratively
has multiple utilities. Some of the processes it aids are:
• Building the knowledge strategy
• Aiding a K-Need analysis
• Evolving a learning strategy as a well integrated subset of the knowledge
strategy
• Synchronizing a top down knowledge strategy with a bottom up skills
acquisition plan
• Providing a basis for a quantitative analysis of investments in knowledge
acquisition versus realization of business objectives

We will examine each one of these facets as we go along. But right now we
will see how this tool can be used in the context of business strategy. Once the
knowledge sets for each business function have been arrived at, the next step would be
to perform an As-Is Analysis. This entails pegging the current knowledge levels of the
organization as high, medium or low. While some organizations might like to do this
exercise based on the collective judgement of their key personnel, the K-Gap Analyser,
when used in the K-Need analysis phase, helps to yield some quantifiable results by
breaking down each activity into sub-activities and cumulating the knowledge scores.

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 Simultaneously, one needs to arrive at a similar rating for key competitors that
is based on market intelligence reports and expert judgement. By plotting the
organization’s skill levels against those of the competitors, it gives a quick pictorial
summary of:
• Where the organization currently stands
• What kind of skill acquisition plans need to be contemplated
• What are the requisite timeframes, based on the knowledge gap between the
organization and its key competitors.

It also serves as a ‘reality check’ to figure out whether the business strategy is
indeed feasible, given the current knowledge base of the organization and how far and
how quickly it has to go.

An analysis of the nature and extent of the knowledge gap can enable top
management to take certain strategic decisions, depending on whether the gap can be
bridged through incremental knowledge acquisition or requires quicker, more
comprehensive strategies through tie-ups, mergers or acquisitions. A classic case in
point was the example discussed in Chapter 2, where a knowledge gap analysis clearly
revealed the existing holes in the overall product offering from Lotus Learning Space,
prompting a tie-up with Macromedia.

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 THE FOUR PHASE KM METHODOLOGY

We have described here a four-phase methodology for KM projects, Obviously

this methodology does assume a certain chronology of processes in implementing KM
solutions. A number of KM initiatives have succeeded without adhering to well
defined methodologies or processes. It is equally true, though, that these organizations
have been unable to answer the “What next?” question that crops up immediately after
implementing the first project. While quick initiatives are certainly worth encouraging
simultaneously, following a more systematic and rigorous methodology for evolving a
knowledge strategy ensures that there is a sense of direction in the overall approach,
this also aoolws the retrofitting of the gains and learning from the first few projects into
the future course of action.

The four phases are as follows:

1. K-Need Identification
2. K-Acquisition Framework
3. K-Net Design
4. K-Net Implementation

K-Need Identification
At the business strategy level one can look at broad groups of knowledge
categories or K-Sets for being able to take some strategy decisions. However, in the K-
Need Identification and Analysis phase, a more rigorous analysis is called for. The K-
Gap analyzer comes in handy during this phase too.
The underlying principle behind a knowledge strategy is that an organization
needs to know how the presence or absence of specific knowledge entities is affecting
its overall business. Towards this end the following correlations have to be
established:

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 1. Translate Business Strategy to KBDs.
2. Identify those KBDs that pertain to new areas of operation. For these, a fresh
analysis of knowledge requirements needs to be done. For current areas, an as-
is analysis as described below, needs to be done.
3. Translate each KBD into Key Business Processes (KBP). This assumes that the
organization has already gone through an exercise of optimizing its business
processes. It is best to do it at this stage if it has not been done. This will
prevent the organization from investing its time and resources to supplement
knowledge levels for activities that might be redundant.
4. For each KBP, identify all the activities involved.
5. Depending on the size and complexity of the organization, each activity might
have to be broken down into several levels.
6. Each activity (or sub-activity) would be executed by one or more individuals.
In the ‘need identification’ phase, each employee will need to establish this
reference in terms of linking his activity to the corresponding KBP and KBD,
besides the regular process of identifying the department or project that they are
working in. This exercise by itself will help to identify redundancies within the
system. It aso, in a subtle way, gives each employee a sense of participation and
responsibility towards the overall business endeavor.
7. The employee then identifies their knowledge needs to perform their specific
activity. These are listed as a comprehensive list of knowledge entities and are
highly specific to the nature of the task being performed. Examples of such
entities could be the previous marketing proposals for a marketing executive,
manpower resource availability for a project manager, patient referrals for a
sales person in a pharmaceutical company or Java application development
skills for a programmer.
8. Once the ‘knowledge entities’ are identified, the employee would have to rate
each of them on a scale of low, medium or high along two dimensions. These
two dimensions are the knowledge level required for executing that particular
job and the knowledge level currently available. The knowledge entity would
get a score of 1,2 or 3 (for low, high and medium respectively) and of course a

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 score of 0 if it is non-existent. Hence the ‘required knowledge score’ as well as
the ‘current knowledge score’ can be arrived at. It needs to be understood that
the current knowledge score should connote the knowledge immediately
available so that is also reflects the time lag, if any, to obtain it and the ease or
difficulty in being able to access it on time. For instance, access to previous
proposals of a similar type would constitute a knowledge element of a high
rating for a marketing executive in their ability to put together high quality
proposals quickly. If they find that a similar proposal was made elsewhere in
the organization, but it takes a considerable amount of effort to contact the right
people and access the content, then obviously the current knowledge availability
(or rather accessibility) to the marketing executive is low. It is important to
understand that a good knowledge strategy has to take cognizance of both
availability and dissemination of knowledge assets. Depending on the nature of
the organization, a facility can be provided for employees’ assessments of their
knowledge scores, to be refined by their superior who is likely to have a more
holistic understanding of organizational activities.
This seems like an involved and complex procedure that would take up a lot of
time and effort. Actually, this is not so. If the K-Gap Analyzer is available as an
automated tool on the company’s intranet, it would take each employee barely 15
minutes to file the required details on-line, once the organization level details of
business strategy, objectives and processes are worked out as an initial, one-time effort.
The gap analyzer is then capable of analyzing these inputs and scores at multiple levels
of consolidation to yield some extremely useful insights. Let us look at some of them.

The total knowledge score can be computed as :

Total Knowledge Score = Σ i Σ j ()Τϕ
K ij /Φ4 18.781 Τφ 1 0
Which gives the total knowledge scores of all knowledge entities K i (i = 1 to m) across
all organizational activities (j = 1 to n).

The differences between the knowledge score required and the current
knowledge score gives the extent of the knowledge gap. The number of knowledge

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 entities, when clubbed into homogenous knowledge sets, is indicative of the range or
diversity of skill sets required.
On another dimension when scores of a single K-set are cumulated across
activities, processes or projects, it gives the relative score (compared to other K-sets) of
both the criticality and extent of the K-gap. Since the scores are consolidated from
individual assessment, if more people experience a knowledge gap, it correspondingly
increases the overall knowledge gap in the organization, thereby automatically
prioritizing itself. This acts as a facilitator for prioritizing various knowledge
initiatives on the basis of the actual need. Of course there would be other issues like
cultural and technological factors and overall business priorities that might influence
the final decision.

The knowledge gap analyzer can be used to consolidate scores at either a project
or departmental level to be able to find patterns of knowledge distribution and
adequacy.

Depending on the criticality of the knowledge gap, decisions can be taken

regarding what kind of investments would be justified for knowledge initiatives. If
figures of opportunity costs because of delayed availability or non-availability of

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 knowledge or skills are also captured when employees fill the K-Gap analysis forms, it
greatly helps in an ROI analysis at a later date.

The K-Gap Analyzer therefore prepares the ground for identifying areas in
which KM initiatives need to be undertaken. These probable KM projects can then be
prioritized depending on overall business needs, technical feasibility, costs, expected
benefits, required timelines, visibility and current work group culture. Even if all other
parameters strongly drive the need for a knowledge initiative, the current
organizational culture could very often tilt the balance in a feasibility exercise of this
kind. If the knowledge is more tacit than explicit in nature, and the current
organizational climate is just not conducive to knowledge sharing, it might be well
worth postponing the KM project until such time that a comprehensive Change
Management initiative can be undertaken to create an environment that can sustain a
knowledge sharing culture.

However, it needs to be kept in mind that most of the early KM projects in any
organization are bound to entail change management issues. This phase would be the
right time to create the ‘Change Vision’. Behavioral changes especially in an
organizational context cannot be expected to happen overnight. The process has to
start right at the beginning of the project so that by the time the technical solution is
ready for a rollout, significant progress has also been made to create the right culture
for implementation. Towards this end, at this stage the ‘change management agents’
either by way of external consultants or internal leadership or both have to be
identified.
K-Acquisition Framework
Once the knowledge gaps have been established and the KM project(s)
identified, the next step is to figure out how and from where these knowledge
components have to be acquired and disseminated. The following need to be achieved
at this stage:
• Knowledge codification
• Identification of sources for acquiring these knowledge inputs

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 • Creation of knowledge maps by linking source and destination for knowledge
elements
The starting point for this is ‘knowledge codification’ as discussed in Chapter2.
Our experience has been that knowledge codification in virtually every context has
been simplified if we keep the Dual Knowledge Solution Model in mind. Broadly
speaking, the Transformation model deals with explicit knowledge while the
Independent model attempts to find solutions to sharing of tacit knowledge. Detailed
classification of knowledge is something that can be determined by each organization
depending on what typology it is most comfortable with and suits the needs of the
organization best. For each K-Set or K-Entity, the source for acquisition can broadly
be classified as under:

I to K Transformation Category
- from structured databases
- from information repositories – both text and multimedia (existing)
- from information repositories – existing but non-digitized

Independent Knowledge Category

- skill enhancement programs (training)
- external resources (people/organizations/sites)
- internal expertise (people / products)

For creation of knowledge maps, a knowledge need as represented by a K-Set or

a K-Entity has to be associated with corresponding knowledge objects (K-object)
which are going to be the knowledge source for acquiring that piece of knowledge. A
K-Object could be an individual (expert), book, document, e-mail, manual, web
content, website address, project reports or any multimedia content. So, in our
example of the marketing executive, the K-entity would be ‘previous proposals’ and
the K-Object to provide him with those inputs could be say a list of Word or
PowerPoint files available at a certain remote server or even the names of his
counterparts working elsewhere in the same organization with details of their clients.

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 Having identified the sources for K-Objects, the probable destinations would
also need to be identified to complete the K-Map at a conceptual level. (Creating K-
Maps ar the time of implementation has other aspects to it as well, like providing an
on-line guide, a complete catalogue of K-Objects customized for every knowledge
worker, a navigation aid and so on). The K-Acquisition Framework phase thus
provides the blueprint for identifying, capturing and tagging all the required sources of
knowledge. Simultaneously, the blueprint for managing the soft or behavioral issues
should also be in place. A clear action plan has to be drawn up by the change agents.

K-Net Design

The stage is know set for the technical design of the KM solution. The
following activities are done in this phase:
• Identification of the KM application portfolio
• Selection of appropriate technology for implementing the solutions
• Specifying the infrastructure requirements in terms of hardware, network and
software
• Choice of the appropriate KM tool or framework, should any be required
• Detaining the technical specifications for the KM solution

One of the advantages of viewing KM projects through the Dual Model

approach is that it lends itself to an easy delineation of the software application
portfolio that needs to be developed for the KM project. Once the knowledge sources
for the required knowledge sets are classified under the two models, as we saw in the
acquisition phase, it becomes simple to identify the application layer. A representative
sample is illustrated here:

K-Solution K-Sets K-Sources Application Layer

Model
Transformation (As identified •Structured •Datamining/knowledge
Model in the Need databases extraction applications

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 Analysis •Interface and gateways
phase) to bedrock systems
•Existing •Text mining and
information retrieval applications
repositiories •Workflow and
messaging applications
•Non-digitized •Document capture and
sources management, search
and retrieval
Independent •Skill applications
Model enhancement •Web-based training
programs solutions with
Learning Management
•External Systems
resources
-People/ •Yellow paging
organizations applications
-Web sites •Web crawler and
broadcast applications
•Internal
expertise •Communities of
- People Practice (using expert
locators, collaboration,
virtual work space
- products/ applications)
processes •Best Practice Sharing
(using knowledge
repositories and
Discussion Group
based applications)

The application portfolio would determine what technologies are to be used as

discussed in detail in Chapter 4. This analysis also makes it relatively simpler to
determine the associated technology costs of developing these applications. Depending
on the relative criticality of these knowledge components or sets, it could even be
decided to start with certain ‘simple’ applications within a KM project. For instance,
technologically speaking, setting up some collaborative frameworks would be
relatively easier and less expensive compared to an extensive data warehousing/mining
application. A quick cost benefit analysis usually helps to take certain operational
decisions. Simultaneously, one would have to determine the infrastructure requirement

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 in terms of the network connectivity, bandwidth requirements, servers, etc. based on
data and content volumes, the number of employees and their geographic spread. Of
course, more often than not, companies might already have an intranet infrastructure
which means there would be no incremental investments excepting perhaps for
additional servers and some upgrades, besides purchase of commodity software.
If the application portfolio consists of solutions to be developed in the
Independent model category, then it might warrant a choice of either a KM tool or a
WBT tool or both. We have already discussed, the approach that can be followed for
making an informed decision on these issues, with the help of consulting aids like a
Tool Retrieval Engine.
At this stage the detailed functionality and technical specifications of the
proposed solution would need to be worked out. Processes and procedures for
knowledge capture, storage, dissemination, retrieval, updation and archiving have to be
clearly spelt out. In KM projects, it definitely helps to use the Prototyping and Rapid
Application Development methodologies adhering to standards like UML that ensure a
constant interaction between the developers and knowledge workers. This is important
to ensure buy-in by knowledge workers at an early stage by providing GUIs that are
intuitive and users are most comfortable with. Where knowledge or skill enhancement
through on-line training is concerned, this too needs to be elaborated out in terms of
both features and content. It is important to customize content as closely as possible to
the knowledge worker’s requirement. Interestingly, the K-Gap Analyzer, because of
its innate ability to be used at any level of detail, can actually be used to even structure
the contents of a learning session. Fig. shows how learning objectives can be
prioritized and structured based on an actual analysis of specific skill gaps.

This diagram depicting the use of the gap analyzer shoes that merely because a
project team is working on an E-Commerce project, it is not right to come to the
conclusion that putting the entire team through a standard training program will suffice.
Although a standard training program on E-Commerce may have all the components

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 enumerated above, a particular project team might require specific content to be
sourced and provided as dictated by the K-Gap. In this example for instance the
project does not require much skills based on TCP/IP concepts. So it does not have to
be a part of the learning objectives. While the project does require javascript and
HTML skills, the current skill levels are more than adequate. Hence the course can be
structured in such a way that it lays additional emphasis on issues like firewall and
security, OOAD and EJB and perhaps gives the latest updates on topics like VRML
and Active X. This analysis can be done either at a group level, based on the
cumulative scores of the entire project team versus the overall skill requirements, in
case a regular instructor-led training program is being contemplated; or it could be
done at the individual project member level in case the personalized web-based
learning systems are available. This is a very strong mechanism of ensuring that the
inputs being given are exactly tailored to project requirements.

Training therefore could be an important dimension in the overall K-acquisition

process. However, it still has to be viewed as a subset of a larger knowledge initiative
for an organization. This issue needs to be clearly understood. For, in our interactions
with people about to launch KM projects, we have very frequently encountered
concerns about whether a K-Need identification process does not turn out to be a mere
Training Need Analysis which their human resource department is already carrying out
anyway. The K-Gap analyzer clearly establishes the linkages between learning
programs and the overall knowledge strategy in both conceptual and quantitative terms.

By the end of this phase, therefore, all components of the knowledge solutin
would be worked out to the last detail. The technical solution for the knowledge
initiative would have been completely developed and tested, and the necessary
infrastructure (hardware, software, network, etc.) for the eventual implementation
would have to be in place. Equally important is the change management initiative,
which needs to be well underway. Top management along with the change agents need
to ensure that employee buy-in is ensured at an early stage (at around the time that the
technical solution is being rolled out). Creating a positive environment of preparedness

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 and eagerness among the prospective knowledge workers to be a part of the knowledge
sharing activity is an extremely vital ingredient to a successful KM implementation.

K-Net Implementation

This is perhaps the most critical phase of any KM project. It is perhaps a

misnomer to call it a phase, thereby suggesting that it has a start and end point. Unlike
in most other projects, where KM is concerned, implementation has to lead to
internalization and assimilation of the knowledge processes as part of the mainstream
activities.

The activities and processes thus far are fairly simple to execute, but it is during
implementation that the best skills of all people concerned have to come to the fore.
The infrastructure is in place, the technical solution has been developed and validated,
what is left to achieve is the buy-in from people. It is precisely this heavy dependence
on people that gives a larger-than-life implication to a KM project. If it has the power
and backing of all the people behind it, a KM implementation can lead to benefits that
are most often much larger than what was contemplated at the outset. There are
tangible and intangible spin-offs that are seldom foreseen at the beginning of the
exercise. On the other hand non-acceptance by the people can make such projects an
unmitigated disaster as well. Unlike software projects, success does not depend merely
on clearly quantifiable and measurable parameters like how technically robust the
solution is, whether it has been adequately tested and meets the performance
requirements. It depends on that highly subjective and unpredictable parameter called
‘people involvement’. As Davenport2 has said while talking about Information
Ecology, the right balance of IT and cultural factors is necessary: “From where I sit,
successful knowledge management always occurs through a combination of
technological and behavioural change.”

It is the subjectivity on account of the people and culture component that makes
it difficult to come up with standard solutions for KM implementations. People and

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 culture specific issues make it difficult to make generalizations even within a single
organization, leave alone evolving solutions that could be applied uniformly across
organizations. It is here that an organization has to rely heavily on the ingenuity of its
own people rather than leave it to external consultants who at best might have a partial
knowledge of the practical realities within an organizational set-up. External change
agents or consultants can be used to give an initial impetus to the change management
initiative. However, these need to be sustained. The only mechanism for doing this is
for the organization to internalize the process and provide tangible recognition for
knowledge sharing efforts. Formal mechanisms like story telling are also being
increasingly used to spread awareness and share successes for institutionalizing KM.
Story telling asn an enabler has some very strong protagonists to the extent where there
are several story telling communities over the Net.
There are certain activities that are necessary precursors to most knowledge
solution implementations. Some of these are:

1. Content Population and Organization: The repositories will need to be

populated with the requisite content. In the Transformation Model, the
underlying databases or data warehouses would already be available. These
would have to be appropriately interfaced with the overall solution and possibly
other sources of more unstructured date. If content is either dispersed or non-
digitized, these need to be classified, organized and supplemented with
necessary metadata structures for easy retrieval. Check-in, checkout procedures
need to be followed for constant updates on the repositories.
2. Cataloguing of knowledge Objects: In the knowledge acquisition phase, the
sources of knowledge and the related knowledge objects would have been
identified. Now is the time to actually catalog these objects, arrive at a
codification scheme that is often dictated by the nature of knowledge objects in
each organization and store the details. The automated knowledge map then
uses these indexes to create an on-line route map for knowledge workers to
locate these knowledge objects easily.

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 3. Identifying the Knowledge Workers: The content access would be
determined by several layers of security as required in the context of each
organizational activity. Generally there would be access rights at
organizational, work group and knowledge worker levels. Therefore, each
knowledge worker would have to identify herself into the system and specify
the work group or special interest groups that she might belong to. In a
knowledge organization, it would be important to remember that the system
should enable as much free flow of knowledge and content as possible, unless
they deal with sensitive information. The underlying philosophy of the
knowledge network should always be kept in mind while configuring roles and
this is to enable greater interaction and knowledge sharing. Therefore,
classifying knowledge workers should be looked at in terms of being able to
provide personalized and relevant information, rather than a mechanism that
puts artificial boundaries to knowledge dissemination and assimilation.
4. Setting up the Expertise Database: This is an important activity for being
able to locate the right people at the right time. In most cases the use of an
automated tool for K-Gap analysis, automatically provides the skills inventory
of the employees and helps to populate the expertise database. However, this
basic layer needs to be supplemented with additional information on the
availability of expertise that might be external to the organization, yet accessible
to it through its network of consultants or business partners. In addition it is
important to substantiate a perceived level of expertise in people (either through
self-assessment or by the assessment of the superior) by more quantifiable
mechanisms. Intel (which was rated second worldwide in MAKE’99-Most
Admired Knowledge Enterprise) for instance, has been exploring ways of
identifying experts through an analysis of e-mails. In Aptech, on the other hand,
we have had a fair measure of success in identifying capabilities even among the
more reticent employees by their contribution in solving problems addressed to
the Helpdesk.
5. Processes, Roles and Responsibilities: In our consulting engagements, we
have often perceived a strange dichotomy when it has come to defining

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 mechanisms and roles in a knowledge solution. On the one hand is the though
that any kind of rigidity in a system could discourage spontaneity and creativity,
two very fundamental pre-requisites for sustaining a knowledge culture. On the
other hand is the harsh though undeniable reality that ‘everybody’s
responsibility’ is ‘nobody’s responsibility’. We believe that defining at least
some fundamental processes, roles and responsibilities area virtual pre-requisite
for being able to effectively institutionalize a system. However, while doing so,
it is extremely important for all those who are involved in the exercise to
remember the guiding principle that these are meant to be used as enablers
rather than a set of rules. For instance, there should be guidelines that are
clearly spelt out for checking documents in and out of the knowledge repository,
for removing dated content, for monitoring discussions, specifying who should
be the knowledge integrators for different groups, fr administration services
including enabling and disabling access and so on.

A lot of the activities mentioned above are generic in nature and would be valid for
a number of situations. It is in this context that it is useful to have automated
knowledge frameworks as a quick start to an overall solution. The correlation
between the requirements as described above and the functionality provided by
such frameworks (such as the Aptech KMF) described on KM Tools are quite
obvious. These provide a quick mechanism to understand both the processes and
activities involved, besides being able to quickly start some basic initiatives and
providing a quick ramp up of the overall solution.

CREATING THE KNOWLEDGE

ORGANIZATION – DOES IT REQUIRE A CKO?

However, the job of making the solution work just about starts here. As pointed out
earlier a KM implementation is not really about the success of a single KM project. It
is about setting up a knowledge organization. This means addressing a whole array of
issues from organization structure, values, managerial systems, employee satisfaction

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 levels and formal and informal communication systems. For KM to become a way of
life it has to be presaged by creating a conducive environment for the same. This is
something that is much easier said than done. Where sharing of information or explicit
knowledge is concerned, people are amenable to the idea much more easily. However
when it comes to the transfer of tacit knowledge, the barriers for acceptance are much
higher. In a competitive world where the indispensability and therefore the worth of
people is determined buy the amount of knowledge they possess, the natural tendency
to part with knowledge is rather low. This compounded with the fact that experts very
often are not the best of communicators, makes it virtually impossible to even attempt a
knowledge capture exercise. In such cases the best that a K-Net solution can do is to
enable the expert to be tracked quickly, so that his services can be used through
technology like audio/video conferencing. It is indeed a reality, although even in the
Internet era, it is often only the traditional methods of knowledge transfer through on-
the-job training or working as an understudy, which are most effective.

However, it is impossible to belittle the significant gains that are feasible

through setting up Communities of Practice or sharing of Best Practices. For
organizations to be able to truly elevate themselves to a position where its people can
have knowledge enhancing interactions rather than mere information transfer practices,
it is important to set up meaningful Communities of Practice and enable sharing of tacit
knowledge, however arduous the task may be. This is where an organization needs a
knowledge evangelist. There has been a lot of debate about whether the role of skill
should she possess and what should be her responsibilities.

It is our firm belief that an organization cannot make a knowledge culture a

reality and knowledge sharing to be an all pervasive endeavor unless it is carried
forward with single-minded devotion and zeal. Whether this is achieved by the CEO
or a CKO or a group of CKOs is a matter of detail. At least in the initial years it is
important for a group of individuals to make enablement of knowledge sharing their
sole priority. The magnitude of the task would require a CKO (or the knowledge
evangelist) to be supported by a committed group of ‘knowledge officers’ and

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 ‘knowledge integrators’. Often these two terms are used interchangeably. However,
they clearly have different roles to play, knowledge integrators (KIs) are responsible
for ensuring that the content that goes into the repositories is validated, collated, stays
updated, is relevant and worthy of being there.
Some companies prefer to entrust the responsibility of administration to their
KI’s while others might want it to be centrally administered by a knowledge
administration. Knowledge officers can be seen as the catalysts within each division or
work group who ensure that the benefits and importance fo a knowledge sharing
exercise are understood and internalized by every member of the group. These
knowledge officers have to belong to and be an integral part of each of these divisions
or groups and not be seen as an outside element. These are the people on whom the
success of the entire project depends. Hence, they have to be the people with a great
degree of conviction about its need. It helps tremendously if these knowledge officers
happen to be highly placed in the division’s hierarchy. This way the activity is seen as
being relevant not merely because the top management sees it as an imperative, but
because the people at the operational level see it as something beneficial to their
activities. Positive signals sent in this manner tend to have a snowballing effect, with
people actually being anxious to contribute as much as they can.

In the case of the Aptech Education Division, there was a significant amount of
skepticism towards the first knowledge initiative from some quarters. Though the
stated objective of the CRS (Customer Response System) was to provide an enhanced
level of customer satisfaction through a knowledge solution, there were those who
actually though that it would entail parting with information that was ‘theirs’. The
head of one of the regional offices during a prototype validation session actually
wanted to ensure that the system had adequate controls so that complaints pertaining to
his region could not be viewed by others. His concern was that this could be used
either a s policing mechanism by the head office or for other regions to try to make
some unfair comparisons depending on the number of complaints. No implementation
rulebook can ever give guidelines on how to deal with individual idiosyncrasies. In
this case, however, the management made a very concerted effort towards ensuring that

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 the solution was understood in its right spirit. No attempt was made to link this to any
performance appraisal systems. What was more, it was decided that knowledge
sharing would be subtly encouraged by measures such as a T-Shirt that carried the logo
“I am a Knowledge Enricher” for those knowledge workers who contributed actively to
discussion forums and helped resolve a good number of complaints. The proof was
when the regional head in question was among the first to significantly enhance his
connectivity infrastructure for better access to knowledge repositories. There is a very
thin line between unhealthy comparisons and healthy competition. The transition can
be made through the effort of an enterprising CKO and a supportive and a supportive
management.

THE DUAL SOLUTION MODEL AND THE IMPLEMENTATION

STRATEGY

While tools like the K-gap Analyzer could help in carrying out an objective of
knowledge requirements and therefore prioritize the KM projects, the eventual
implementation strategy to be followed might once again be determined by the nature
of the knowledge solution. A transformation model solution relying more on explicit
knowledge has fewer ramifications in terms of organization culture and change
management issues. A pilot implementation, followed by solution fine-tuning and
subsequently spreading the solution to encompass all work groups could be a pattern
that could easily be used for solutions where the imponderables on account of
acceptance by the people are far lesser. This is certainly not so in the case of most
independent model solutions ( with the possible excepting of web-based learning
solutions), which rely heavily on tacit knowledge. An organization might have a
preponderance of solutions based on either one of the models or in some cases it could
have an equal mix of both. In arriving at an overall implementation strategy and
determining which projects should be undertaken first, each organization would have
to use a good measure of its own judgement.

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 In organizations where employee morale is low and there is a perceptible degree
of insecurity among employees, solutions based on the transformation model are more
likely to succeed. One needs to understand though that even for the transformation
model solutions to be really effective, there has to be a good measure of value addition
to the information layers from the people concerned. Initial successes on these kinds of
projects may well pave the way for a more ambitious tacit knowledge sharing exercise.
Besides just the technolofy isues and culture issues, there could be other parameters as
well, which might influence the overall strategy.

The same organization could even start with both strategies simultaneously. A
case in point is Aptech itself. The training division started with the transformation
model initiatives primarily on account of the following reasons:

1. Its customer base is extremely large.

2. The division is one of the oldest in the company where business processes have
been clearly identified and streamlined.
3. The information flow is fairly structured.
4. These have already been automated through bedrock systems.
5. While existing information systems have only looked at capturing and analyzing
data, there is a clear case (at least in the case of student complaints), where it
was felt that these systems house an enormous amount of knowledge.
Knowledge in terms of how problems have been resolved sometimes through
the exceptional trouble – shooting skills of certain individuals – knowledge that
is rarely recognized and probably never re-used.
6. The division follows a well-delineated organizational hierarchy and
communication channels are formally defined since it entails interaction with a
very large number of business partners (franchisees).

On the other hand, take the software division of the same company that is
characterized by the following features:

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 1. It is a relatively new division.
2. processes are still evolving and have not really reached a great level of
maturity.
3. The division has a very loose and non-hierarchical structure.
4. Information flow is not really streamlined and uses more informal rather than
formal channels.
5. The key strength of the division is the sheer brilliance of some of its people and
not so much the maturity of its processes.
6. there is not much that has been done currently by way of automated systems.

Did this division wait for basic systems to fall in place to follow the
transformation approach from information to knowledge? No. It went right ahead with
several knowledge initiatives that had nothing to do with IT initiatives that were being
evolved. One of them was the Help Desk and Expert Panel facility. Every knowledge
worker is assigned to one or more knowledge groups depending on her area of
work/previous experience/interest. Each knowledge worker publishes her skill areas.
In case of a problem where any one would wish to request for help, it is logged in
through the intranet based help desk facility. It can either be logged as a general
request or it can be directed to a specific person. In the latter, the person concerned is
automatically notified. The person either sends in a response or could redirect it to a
discussion forum. Resolved problems get achieved for future reference. In a very
short time this solution has resulted in significant time saving on projects. With
multiple projects working with similar skill-sets, this has facilitated a very vibrant
culture of knowledge sharing . Of course, it has to be gently but surely encouraged by
the management, too. In this case anyone who attends to a number of help desk
requests in a particular area becomes a defacto’guru’. There is nothing like peer
recognition to nurture and encourage knowledge sharing.

KNOWLEDGE MANAGEMENT IN THE ORGANIZATIONAL CONTEXT

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 Let us first profile the corporation of the new millennium to understand the role
that various initiatives and information technology tools play in building it up. Then
we would conduct an analysis to see how these initiatives could be approached in an
evolutionary manner or as a co-existing set of projects.

The profile of the millennium corporation can be built by looking at its ability
and its arsenal to address each of the five imperatives mentioned earlier.

IMPERATIVE SOLUTION
• Customer focused business processes - Aligning processes to E-
Business
• Highest quality at lowest prices - Enterprise-wide integration
• IT playing a transformational role - A whole array of tools
• Best in class performance measures - Knowledge capture
• Right people for the right roles - Learning / Knowledge
integration

Organizations all over the world have already embarked on a number of

initiatives to achieve these objectives which will enable them to become leaders in the
global marketplace. We will briefly examine some of the major ones and see what
tools are being deployed in each area. We will then see how an overall knowledge
management initiative links up many of these initiatives

• Improved Customer Service

The current trend in this area, pioneered by early Internet and E-Commerce
adopters, is Customer Self Service. Giving customers the ability to access
information themselves has resulted in quantum jumps in customer satisfaction
and also significantly reduced the cost of employing large numbers of customer
service representatives. Web Technologies, the integration of internet systems
with corporate intranets and the use of Group Ware and collaborative computing
systems to enable the customer to dig deep into the knowledge bases of the

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 organization within a designed security network have been the key technology
enablers in this area.
• Customer care and managing relationships
Customer Relationship Management is emerging as the new Gold Standard
application of the new millennium with new consulting firms like 12
Technologies leading the way with products that extend the virtual organization
into the office of the business customer and the hoem of the retail customer. On
the organization side, CRM tools help in linking the customer orders and queries
into the legacy systems for order processing and enquiry or link directly to the
Enterprise Resource Planning implementation of the organization.

E-Business is also becoming a popular way of managing relationships both at

the business-to-business level and at the business-to-customer level. While
legendary successes like the virtual bookstore amazon.com and the auction site
ebay.com have created waves in the business-to-consumer market space, it is
widely believed that the biggest potential of the Internet and electronic
commerce will lie in enabling business-to-business transactions. International
technology majors like CISCO and Intel are already transacting a major
percentage of their business with partners and corporate customers through
these electronic transactions and even professional communities like doctors and
lawyers and governments all over the world are now embracing this new
medium of interaction.
• Enterprise-wide integration
What is expected to be complementary in an organization that enables its
customers to interact and delve deep into its internal business processes is the
ability to provide quick response through a set of business processes that are re-
engineered for quick response and the ability to be truly ‘market facing’. The
process of Internal Integration has been addressed in the past two decades by
waves of solutions ranging from Material Requirement Planning to
Manufacturing Resources Planning to the now ubiquitous Enterprise Resource
Planning with tools like SAP and Baan now becoming market leaders in their

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 chosen segments. In addition, collaborative computing enables information and
decision-making to be shared across corporate networks. Tools like Lotus
Notes, Microsoft Exchange and GroupWare systems support and enhance the
capability of both ERP and legacy systems in organizatrions. Business
intelligence, data warehousing and data mining capabilities are also being
brought into organizations to further tighten the capture, sharing and usage of
data and information to benefit internal as well as external business transactions.
• Tighter integration across the Supply Chain
With more and more focus on core competencies, the need for outsourcing non-
essential services and even large portions of the manufacturing or service
delivery process has become the order of the day. This has consequently led to
the imperative of managing the entire supply chain tightly to ensure that the
customer does not suffer on account of the handoffs from the organization to its
partners. Supply Chain Management tools are now becoming as popular as
CRM products and are inevitably finding linkages to the ERP systems that most
organizations have implemented. These also link to the internal collaborative
systems, making seamless interfaces within and across the organization, one of
the key features of the millennium enterprise.
• Inducting and Retaining Talent
In most industries today, attracting and retaining human resources is one of the
most crucial activities. It is the focus of considerable attention at all levels.

This is one area where information technology has probably contributed the
least. Evolutions in technology-based training, performance support and knowledge
networks have enabled organizations to speed up the training processes and reduce
costs. Even relatively mediocre employees are empowered to perform at peak levels
through finely crafted performance support systems. These initiatives help primarily in
induction and training. Retention mechanisms are being built through information
technology in the form of career planning and tracking systems. They also provide for
Internet and intranet enabled environments which allow free sharing of ideas across
organizational hierarchies and geographies. With every mentor andboss being just a

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 mouse click away, behavioral scientists are being continuously forced to reassess
organization development initiatives, and design newer and newer means of keeping
high performers motivated and intellectually challenged.

INTEGRATING KNOWLEDGE MANAGEMENT INTO THE MILLENNIUM

ENTERPRISE

Some Imperatives and Challenges

Knowledge management presents an opportunity to integrate all the people and

processes that exist within an organization towards stated corporate objectives. These
objectives have already been defined and range from employees to suppliers to
subcontractors and to the customers. And today’s tools range from the array of
information technology solutions – Business Intelligence, GroupWare, ERP, SCM,
intranets, the Internet – to every possible form of E-Commerce. The question is
whether each of these is disparate and independent optional initiatives or whether
knowledge management can provide a thread of continuity to integrate and align all
these initiatives towards the common goals of the millennium enterprise.

All corporations today are faced with enormous challenges that threaten their
supremacy even in relatively unchallenged domains. This fiercely competitive
environment has been created by a combination of competitive pull factors like
globalization and privatization, and technology pushes, primarily caused by the rapid
proliferation of the Internet. The ease of the crumbling of the Berlin wall has brought
down many erstwhile entry barriers. In an environment where product superiority is
transient and brand loyalty is becoming an anachronism, the only differentiator will be
the quality of the organization’s processes and its ability to attain and sustain ‘customer
intimacy’. Once the customer intimacy objective has been translated into specific
consumer to business electronic interfaces and customer service and response
mechanisms, the next stage is to ensure that the enterprise’s business processes are all

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 oriented to the needs of the customer. A true market facing enterprise ensures that
customer needs flow quickly down to the last level of response in the organization and
the needs and actions are captured in the legacy systems or ERP bedrock of the
organization. The quick capture, storage, dissemination and use of data, information
and knowledge is essential to ensure that quick actions and responses are facilitated by
information technology at all levels. This ‘process energy’ needs to be supplemented
by the third imperative – that of People Empowerment.

This is where a knowledge-centric approach can really enable a corporation to

succeed beyond the expectations of its customers and the capabilities of its
competitors. A true knowledge Corporation will be one where the principles of
knowledge management are applied as an underlying philosophy for all strategic
initiatives, ranging from customer interfaces to internal integration of systems to
business-to-business Interfaces. Included of course is the full continuum of the
learning organization from learning systems to performance support to knowledge
management.

An analysis of the potential of knowledge management tools and techniques to

transform the implementation of each of the initiatives will put the real potential of
knowledge management in perspective. These are discussed at great length .
Consumer-to-business and businee-to-consumer transactions can range all the way
from simple customer queries and feedback through a Web Storefront to
comprehensive Customer Relationship Management (CRM) tools.

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 The trends in Business-to-Consumer (B2C) E-Commerce point towards more and
more self-help for the customer to enable customers to access deep down into the
innards of the organization and conduct secure transactions with very little interaction
with the employees of the firm. Thinking through the knowledge interventions
required to facilitate these self-help environments will call for a deeper understanding
of customer buying patterns and psychology so that all the intelligence derived form
significant customer interactions can become part of the institutional memory of the
enterprise. This will ensure that every future interaction of the customer with the firm
becomes richer and will enable the concept of customer intimacy to really come alive.

Consumer to business transactions would be meaningless if the organization did

not build processes to quickly enable the flow of expressed and implied customer needs
through the enterprise. Collaborative computing involves the implementation of Group
Ware and messaging solutions and tolls like Lotus Notes have become synonymous
with knowledge management. The ability to build ‘communities of best practices’ and
shared ideas is one of the key capabilities of any significant knowledge management
initiative and will catalyze the development of a Quick Response and Reflective
Organization. Added to this are collaborative knowledge capture and usage
capabilities provided by business intelligence tools which again ensure that processes
respond more creatively to customer issues and a true market Facing Enterprise is built.

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 Legacy systems and enterprise resource planning applications are typically
complete in themselves. The role of knowledge management in the integration of
GroupWare or business intelligence tools with these larger segments of applications
would be to ensure seamless interfacing. This ensures that the results of discussions
and intelligence built over a period of time are able to enrich the data or context-
specific information stored and also enable customers to get better Reponses. In the
Insurance Company, the real cutting edge to customer response comes when the Call
Center employee’s interface is able to give in real time not just the data about policies
or information about the customer’s queries, but also tacit guidance on the best
behavioural stance to adopt with the customer based on previous interactions.
Knowledge management also needs to be integrated with the data integration
strategy of the enterprise. When this is achieved, it will also enable the business to
business transactions from the firm to its virtual enterprise parterners – suppliers, sub-
contractors, distributors and agents – to be energized through knowledge-based
interactions. Picture an extended ERP situation where a comprehensive customer
contract has to be executed, involving significant outsourcing and subcontracting and
delivery to be made in installments. Synchronization of all business processes across
the supply chain and intelligence and knowledge sharing across the virtual organization
will ensure minimum hiccups and maximum customer and partner satisfaction.

And the knowledge Continuum itself? There is no doubt that knowledge

management tools are the best way of making Peter SEnge’s concept of the Learning
Organization come true. While purists argue that there is a lot more to learning and
knowledge than just technology, there is no doubt that the availability of learning,
electronic performance support and knowledge bases on tap for ready access are the
great potential areas for improving corporate knowledge capabilities. As we move
deeper into the new millennium and knowledge processes, tools and technologies get
internalized at every stage of business interactions. Knowledge management will
provide the visionary organizations with a capability level that will prove a major
source of competitive advantage in the new Information Society.
DISSEMINATION TECHNOLOGIES

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 Dissemination can either be through pull-based or push-based technologies. Pull-based
technologies would include the regular IR technologies that we have looked at earlier
including query and search. Push technologies include broadcasting, alerts and
triggers, channels, software agents, etc. Most solutions would use a combination of
push and pull technologies.
KBMS
One would be loath to call knowledge Base Management Systems (KBMSs) a separate
technology. There are some that believe DBMSs are to Information Systems what
KBMSs are to KM. it is not so. A ‘knowledge base’ is more of a conceptual entity
than a technology by itself. What we need to understand is what a knowledge base
really connotes. To recap from the last chapter:

A knowledge base is information along with inter-relationships and contexts.

Technologically, this translates into a database or an information repository with

advanced search capabilities.

Therefore, any set of technologies that would enable the above would also
facilitate creation and maintenance of a knowledge base. It is more important to
understand the conceptual implication of a knowledge base as being different from a
database or an information repository, rather than add to the technological muddle by
classifying it as a separate technology all together.

So which technologies should an organization settle for?

It is always easier for any organization to leverage onits existing technological

skill-base to implement solutions. An information to knowledge Transformation
model will need to build on the technologies used in its bedrock systems, whether it is
through RDBMSs, data mining/data warehousing or Document management
applications and enable knowledge sharing and generation by supplementing it through
technologies like collaboration search. An independent knowledge solution model

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 does not have to be built bottom upwards. Several quick solutions can be built by
merely ensuring the necessary connectivity between people and the use of powerful
collaboration and conferencing mechanisms. This is not to say that the latter should
not use what are commonly designated as IS technologies. Conversely, most
transformation model solutions may also use some of the independent model
technologies. The functionality provided by a number of these technologies is
complementary in nature and can be judiciously used to evolve a suitable solution.

The key technological elements that are driving knowledge management

forward according to a Delphi research note2 are:

• The broad acceptance of intranets and extranets as the network backbone for
automated business processes

• The growing sophistication of object technologies and their deployment in new

software applications
• The arrival of practical standards for data integration and metadata management
in the I-net environment, specifically the XML standard; and
• The merging of knowledge management priorities into the competition among
the major software platform developers, specifically IBM/Lotus and Microsoft

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 Further, according to a Delphi User Survey in 1999, respondents have identified
Intranets, Text Search and navigation. Tools, GroupWare/Collaboration Software,
document management and the Internet/World Wide Web as the most significant
technologies in their KM initiatives. The respondents current efforts are focused on
organizing, leverging and sharSearch and navigation. Tools, GroupWare/Collaboration
Software, document management and the Internet/World Wide Web as the most
significant technologies in their KM initiatives. The respondents current efforts are
focused on organizing, leveraging and sharing exiting efforts are focused organizing,
leaveraging and sharing existing corporate knowledge. They feel that the next round of
technologies will help them generate new knowledge and uncover hidden knowledge.
This runs congruent to our earlier hypothesis that the Transformation model calls for a
higher degree of effort and technological maturity. Hence, both an analysis of the
relevant technologies, as well as hard data from existing organizations who have
undertaken KM initiatives, seem to reveal that starting with the relatively simple
Independent model technologies with an initial focus on explicit knowledge might be a
good starting point for organizations embarking on a KM journey.

Reference

1. Managing Knowledge Workers, “Frances Horibe” John Wiley & Sons,

2. Knowledge Management – Enabling Business Growth “Ganesh Natarajan and
Sandhya Shekhar”, Tata McGRAW – Hill Publishing Company Limited.
3. Management by Consciousness, Edited by Dr. G.P. Gupta. Sri, Aurobindo
Society, Pondicherry.

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 Paper XIII
Unit 4

Content Outline
1. HRIS for KBOs
2. Performance Management in KBOs with special reference to balance score card
3. Software requirements for the performance management

Teams in IT projects have traditionally involved two parties: end users and IT staff. However,
for a knowledge management system, teams need to be more comprehensive to be effective. A
knowledge management system is built on expertise, knowledge understanding, skills and
insights brought into the project by a variety of stakeholders who might have little in common
from a functional standpoint. The quality of the collaborative relationship between these
stakeholder and mines the ultimate success of the system. Having the world’s best knowledge
management system still does not guarantee successful management of knowledge: That
success comes come from KM’s implementation and cultural embodiment by both the
knowledge workers and the employees who will ultimately use it. This relationship is complex
and often highly problematic. Therefore, selecting the right blend of team members to lead
the knowledge management project is a critical step.

The fifth step on the KM roadmap involves design of the knowledge management that will
build, implement, focus, and deploy the KM system. In this chapter we identify sources of
internal and external expertise needed, prioritize stakeholder needs, evaluate member selection
criteria, and examine team life span and sizing issues. We identify characteristics of the KM
project leader to determine mechanisms to streamline internal dynamics and maximize users’
participation. Next, we identify tasks for the KM team and fit them to the risk evaluation
matrix to circumvent common points of failure.

SOURCES OF EXPERTISE

Companies implementing knowledge management must draw their expertise from several
different sources:
• Internal, centralized IT departments
• Team local experts
• External vendors, contractors, partners, and consultants

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 • End users and front-line staff
Although we cannot undermine the importance of IT staff who will actually build a system,
the most important part of this team member set is the set of local team – based expert(s). The
burden of balancing counteracting requirements falls on the shoulders of the knowledge
management ream. Drawing from a variety of functional groups within and outside your
company is essential. If done properly, this approach will become the strength of your
knowledge management team and a major contributor to the success of such an endeavor.

LOCAL EXPERTS AND INTRA-DEPARTMENTAL GURUS

Active end-user involvement throughout the knowledge management project is critical to its
success. In most companies, there are the early adopters of technology—the so-called gurus
within your company. These are the people who come in early or stay late to play with new
tools that become available. Even though many of these folks tend to be non-technologists,

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 They are the best people to gauge the possible usefulness of each feature that your system has.
These local experts are often the first to notice the limitations of existing systems, and to think
of possible upgrades and changes to meet the evolving needs of their group. Examples of such
workers include marketing people who realize that existing technology could possibly be used
to deliver the latest sales figures and data needed by traveling salespeople in remote locations.

INTERNAL IT DEPARTMENTS

Relying solely on local experts, of course, has its limitations. Even though local experts might
possess a fairly high degree of technical knowledge besides knowledge of their own job, they
might lack an understanding of the interdependencies between complex systems, networks,
and technology that pure technologists like the IT staff might be able to bring in. While the
local experts will bring in the business case and ideas, it is IT staff who will bring in
knowledge of:

• Infrastructural capabilities and limitations

• Connective and compatibility among the team-based systems and the overall
organizational technology infrastructure
• Standardization issues across different platforms, applications and tools
• Technicalities underlying the adaptation of these tools by various knowledge worker
groups within the company

When you are selecting team members from the internal IT department within your company,
it is critical that you select personnel with credibility in the eventual user group. This helps
ensure that the relevant set of stakeholder needs are adequately represented. With increased
emphasis on customer service, it is easy for internal customers to outsource their development
services to external consultants. Therefore, delegates selected from the IT department must
have a more expansive view of who the customer is. This must include the internal customer
at the same level of significance, as they would view an external customer or buyer. Technical
skills, of course, are a priority in making these decisions.

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 NON-LOCAL EXPERTS AND EXTRADEPARTMENTAL GURUS

Non local experts and extra departmental proponents promote team laterality. Laterality refers
to the ability to cut across functional boundaries and relate to people from different areas.
People who exhibit this characteristic are best suited to be on a knowledge management team.
Such members can:

• Act as a bridge and as interpreters between people from different backgrounds, skill
areas, and specializations
• Learn faster than the average person in your company and are not defensive about
• Their lack of understanding or knowledge in areas other than their own
• Bring value to the overall team synergy as they tend to be confident but not
egoistically constrained
• Learn the basic lingo and understand the frameworks that their collaborators refer to
• Have the ability to deal creatively and rationally with the problems that the
aforementioned differences can, and often do, lead to

Groups of such people have also been referred to as communities of practice; they ate charac-
terized by

• Multifunctional groups that incorporate diverse viewpoints, training, ages, and roles

• Enacting a common purpose by engaging in real work, building things, solving

problems, delivering service, and using real tools
• Developing intellectual property, knowledge, firm culture, internal language, and new
skills
• Making lasting changes in the people and the competency that they embody

CONSULTANTS

Even though most of the technical, design, and soft skills needed for the knowledge
management project might be available in there might be some areas that are no one’s strength
within the company. These shortcomings can often be overcome by bringing in external

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 consultants. Internal participants might have slight cultural differences owing to their differing
departmental and functional affiliations, but they are still tied together by a common frame of
reference built around the overall company culture, dominant values, and image. However,
extern consultants do not always fir into this frame of reference. Because external participants
often lack this common frame of reference, it is essential that other binding mechanisms, such
as their personal characteristics be strongly matched with those of internal team members.

Nevertheless, this lack of shared culture can often be turned from a liability into an asset.
These external participants can bring balanced, unbiased our perspective into the entire design
process.

In such cases, rust becomes another significant issue. Give the nature of the consulting
business; it should come as no surprise if the consultant is developing exactly the same type
Of system for your competitor a few months down the road. Selecting a consultant should
therefore be partially based on the extent to which die person (or consulting company) is
willing to transfer existing skills to your company’s employees. Some of the other issues that
must be considered while selecting a consultant include:
• The consultant’s reputation for integrity
• The consultant’s history that demonstrates the ability to maintain confidentiality about
past projects
• Whether the consultant has worked successfully for your own company on earlier projects
• Whether the consultant (or consulting company) is working on a similar project for a
competitor.
• Whether your internal team trust and has confidence in the consulting company.

In any case, highly specialized and capable consultants are often hard to find. Since
knowledge management projects are strategically oriented, the level of confidentiality must be
based up with specific, legal nondisclosure agreements. Where highly confidential material is
involved, it might be a better idea to have an employee trained in the deficient area rather
consultant from the consulting position to a permanent job within your company. However,
corporate budgets can often restrict this option.

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 KM stakeholders should typify the group that they represent. For example, the person
representing your company’s human resources department should be one who is typical
(where the meaning of typical is highly subjective) of the HR department, and has had a
sufficient level of experience within your own company.
The human resources and project sponsors or senior management provide overall stability to
the knowledge management project team.
The human resources and project sponsors or senior management provide overall stability to
the knowledge management project team.
MANAGERS

The status and influence of senior managers would make one assume that they are the least
likely group to be left out of the development process. However, several studies have shows
that this exclusion is not only possible but one that also frequently does happen. As teams
become too deeply engrossed in the user/developer relationship, senior managers tend to be
left out of the loop. As we understand that the managers should be kept active in the
knowledge management project; and without their active involvement the entire project may
end up on shaky ground.

STRUCTURING THE KNOWLEDGE MANAGEMENT TEAM

Focus Shareholder Role in the knowledge Characteristics

Group Management Project Strongly Desired

Teams User teams Provide functional Must understand work

Expertise. Processes in their area.

Finance Provide business Must have good inter-

expertise in their personal and team skills.
Specific area.

Other functional Participate in the Must have a certain

areas with which process design stage degree of credibility
knowledge within other participating
management groups.

Help in the implementation Must be willing to see

stages of the system from other functional
viewpoints.

Technology IT experts/ Provide technology Must understand

Information systems expertise. technology in depth.

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 Internal IT staff Participate in the actual Must have good inter-
implementation and personal skills.
design.

External Consultants Represent the internal Must be willing to

and internally proficient understand the per-
technologists. Specialities brought in by
other team members and
actually incorporate them
into the design.

Bring in a perspective Must be willing to learn

on functional capabilities
and limitations of existing. Must be credible.

Must have an expansive

customer orientation.

STRUCTURING THE KNOWLEDGE MANGEMENT TEAM (Cont.)

Focus Shareholder Role in the knowledge Characteristics

Organizational Senior Support the legitimacy of the Understand the

Management/ project. Management and
sponsors/ strategic processes
knowledge Bring in vision that correlates
champion(s) with the overall company wide Must be credible
/CKO vision.

Serve on steering committees Must have a clear

(if needed) idea of the bigger
Picture of where
Commit the resources Knowledge
needed leveraging should
take the company.

Must “eat their

Own dog food,”
that is, they must
themselves believe
what they say.

Need to be
thoroughly
convinced of the
worth of the
project.

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 TEAM COMPOSITION AND SELECTION CRITERIA

As with most other technologically driven enterprise-wide teams, functional diversity in

knowledge management teams should be taken as a given characteristic. Teams need to be
designed for effectiveness. While there is not straightforward formula for designing a good
knowledge management team, the team’s design has much to do with the nature of the project
itself. Functional diversity can lead to only two possible outcomes, depending on how its
handled. The first, and very common, outcome is destructive conflict and tension. The
second, more desirable, outcome is characterized by synergy, creativity, and innovation. This
happens only when laterality among team members is high and there is sufficient room to
accommodate different backgrounds, values, skills, perspectives, and assumptions that the
members bring into the team. Summarize the major team design considerations.

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 TEMPORARY VERSUS PERMANENT TEAM MEMBERS

Knowledge management is not like a typical business restructuring or technology introduction

project. Those projects are temporary and depend on temporary teams, whereas a knowledge
management project needs at least a small portion of the group to be permanent. A knowledge
management project is not over once a knowledge management system is implemented; it
must go on and continually improve and change with changing external and internal
environments. While some members might be needed on the team only during the initial
stages, others are not as temporary. Core team refer to this permanent, essential group. Team
members can be dedicated to the project either full time or part time. The size of the core
team must be kept to the smallest size possible-the smallest member count that can actually do
the to work. Temporary team members often belong to specific user groups. The core team
should consist of only the following participants:

• Knowledge champion or a senior manager.

• IT staff.
DESIGNING THE KNOWLEDGE MANAGEMENT PROJECT TEAM

Team Design Characteristics of the knowledge Notes

Management Team Members selected

Defining the The leader of the team: These criteria can be also
Must be credible used for selecting the
Project leader.
Must have a sufficient level of authority
and resource capability.

Should not change; must be stable.

Must know how to facilitate, consult,

and resolve conflicts.

Must take charge of the conventional project

management, scheduling, and coordination
duties.

Must have direct reporting capability to

upper management or should be drawn
from within upper middle management.

Must manage the life cycle of the team, as

well as selection of the core team members.

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 Defining the team Knowledge management project team members All groups that
composition and must be drawn from different functional areas and will be affected by
selection criteria departments of the firm. As expected, they will the knowledge
for team members have different areas of specialization and back management pro-
grounds. The following common characteristics ject and conversely
must be shared by members selected for the team: all groups that are
Must have specialized expertise. expected to use
and contribute to
Must have had sufficient experience within this knowledge and
the company or working with the company knowledge manag-
as an external consultant. ment efforts must
be adequately and
Must have the required competencies that accurately repres-
truly represent the concerns of the department ented in the team.
or functional area that the team member
represents

Might work full time or part time on this project.

Might be a member of the core team or the

temporary startup team.

Must demonstrate laterality.

Must believe in the project and must have

a clear vision for what improved knowledge
flows can and should do for this unit or
department.

• User delegates representing the core business area that is going to depend on the
knowledge management system. This could be engineering staff in case the knowledge
management system is built to support research and development; it could be marketing if
the KM system is for sales force enablement, etc.
The remaining participants, in most cases, should be involved in the startup phases of the
project and can be called in later for further input as and when needed.
TEAM LIFE SPAN AND SIZING ISSUES
There are two schools of thought on the future of knowledge management: One school
believes that knowledge management will continue to depend on people to manage knowledge
throughout the lifetime of the organization; the second and more convincing school believes
that knowledge management is a self-eliminating field. This means that as a company begins
to accept knowledge management practices, they should, over several years, become so
second nature to employees as the company evolves that eventually there should be no need

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 for a knowledge manager or CKO to manage knowledge. Knowledge workers themselves
should be able to handle all KM tasks once KM becomes embedded in the company culture
and in work practices.
One would argue why the knowledge management team would, in the first place, do their job
so well that it would eliminate their very need! That is a hard question to answer. Though
there is a lot of ongoing research to find an answer to this question, there is little other than
very strong financial and promotional incentives that can help here. For that matter, team
members on the knowledge management team should be promised strong rewards and
promotions should the knowledge management initiative truly succeed. A team that sets out
to work with the fear of losing their job by performing too well is bound to be under
motivated, if not unmotivated.

PROTOTYPES:

Systems developers have long realized the value of prototypes. A prototype provides both the
developers, in this case the knowledge management team, and the users with an idea of how
the system in its final form will function.

By using such a prototype, even if it is incomplete, users can see the possibilities of the
knowledge management system under construction, and this improved understanding of the
final product can lead to, or trigger, highly desirable refinement of its features, interface,
functionality, and design. Tweaking the system’s design based on user feedback in the
prototype stages can save your company much headache and unnecessary rework-related
expenses at a later date. Other ways the project manager can link to the final user.

THE KM TEAM’S PROJECT SPACE

One of the first tasks that the knowledge management team needs to undertake is that of
understanding the project’s strategic intent, organizational context, technological constraints,
monetary limitations, and short-term as well as long-term goals. Members of your knowledge
management team should be able to provide adequate answers to these questions collectively;

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 1. What is the company’s strategic goal ?
2. What is the company’s performance goal? Knowing where the company stands before
the project provides a healthy basis for answering this question in specific terms.
3. Where does the knowledge management team fit in the organizational hierarchy?
4. Does the knowledge management project fit vertically or horizontally in the value
chain?
5. What are the financial constraints?
6. What are the technical limitations in terms of existing platforms, company-wide
network standards, etc. ?
7. What are the critical missing elements in terms of skills, people, and knowledge that
are still missing in the team? Can consultants help? If so, which ones and how”
8. What is the time frame within which the project must be delivered?
9. What are the immediate payoffs? If there are none, when will the payoffs begin to
show up? If that is not viable either, how will the value of the project be demonstrated
and tested?
10. What level of commitment does the team have from the senior management and from
the users? If it’s poor, what can be done about it? Are there representatives from both
these camps on the knowledge management team?
11. What are the cultural bloakades that should be expected? Does the company culture
actually fit with the knowledge-sharing attitude that is needed to make a knowledge
management system work? If not, what changes in reward structure are necessary?
Who has the authority to make such changes? Are they willing to make them?

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 12. Has any competitor or non competing firm implemented a project like this? What do
we know about it? If it was successful, is there some way to get a key participant to
switch jobs? Should we call that transfer of experiential knowledge?

Judging the true value of the project is a critical issue. If the project costs more than the long
term value that it adds to the firm, it’s probably not worth the investment. Therefore,
exploring these initial questions is critical before the next step can be taken. If there are no
direct answers, surrogate measures might be adopted. If your knowledge management team
cannot collectively answer these questions, revisit its structure and constituents. For example,
if the primary objective of the knowledge management project is to improve product quality
by managing past and current knowledge about product quality problems, it might be valuable
to question quality quantitatively. How much quality and at what costs? Can the customers
tell the difference. Will they be willing to pay say, 7 percent more for the same product if
higher quality is guaranteed?

MANAGING STAKEHOLDER EXPECTATIONS

The second task, after the knowledge management team has decided on an initial set of
objectives for the knowledge management initiative, is to formally present this work to various
stakeholders groups. The biggest advantage of such an interaction is that it can help the team
compare the projects objective with stakeholder expectations and perceptions. Resolving
differences at this point is a more efficient approach than trying to fix basic design
assumptions and errors after the fact – when the project is ready for implementation.

TEAM CONSTITUTION VALIDITY. SUMMARIZING THE PROCESS

The initial process that the knowledge management team must go through before the initial
design effort is organized well enough to proceed to the next stage. Examine this process
flowchart and determine if your team, as constituted, is collectively able to elicit these
requirement and design goals for the knowledge management system.

POINTS OF FAILURE

Lets take a quick look at the key points of failure in systems-oriented KM projects. Perhaps
the most important study of project risks is by some colleagues, who examined software
project risks in several international companies. In the United States alone, almost $60 billion

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 was spent in cost overruns and another $80 billion in canceled projects in 1995 alone.
Although other, more recent figures abound, this is perhaps one of the most rigorous studies
done in this area, and the figures proposed here are depressing! An informal study of a group
of 2,600 CEOs, CIO, and technology managers by the Cambridge Information Network in
1999 revealed that approximately 90 percent of IT projects exceed their budgets and over 20
percent exceed their budgets by more than 100 percent.
THE BREAKPOINT. BUY-IN-FAILURE
Lack of an active role of the top management has been identified as the primary reason why
many projects fail; and the second reason is failure of the users to buy in to the project. If you
decide to invest in a knowledge management project, and either your top management remains
unconvinced of the value of the idea or the users you are building it for fail to see why they
need the system, you are venturing in murky waters.

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 CATEGORIZING RISKS

The below figure, illustrates the four categories in which knowledge management project risks
can be classified. This framework describes four quadrants on which project risk can be
classified the level of risk (high/low) and the level of control that a project manager has on

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 each category. Customer mandate, the shaded quadrant, is a high-risk area over which you
have little control.

Customer mandate refers to the level of buy-in from the ultimate users, who is effect are your
system’s customers. Unless they buy in to the whole notion of the knowledge management
system that you are building or planning to build, they will have neither the inclination to use
it nor support it.
Similarly, initial commitment from the top management is a necessary but insufficient
condition for your project’s success. This support must be ongoing and active throughout the
project. The problem with many of the companies that we have studied often falls into one of
these two areas. Once a project has been initiated, the project leader must gauge the level of
commitment from both senior management and the end-user community to avoid being caught
in a situation where support for the project suddenly evaporates.
CONTROLLING AND BALANCING REQUIREMENTS
As shown in Fig, there are some areas where you, as the knowledge champion or knowledge
management project manager, have significant control. However, there are some areas in
which you have little or no control. Not having control over an area does not, by any stretch
of imagination, mean that it will not contribute to the potential failure of your project.
Customer or end-user buy-in and the environment in which the knowledge management

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 system will be used are two such factors. The only thing you can do about customer buy-in
problems is to try selling the project harder, and gauge end-user needs more appropriately; the
operating environment is a wholly different story. That is where the cultural aspects of a
knowledge management system and the people around it come into play. While all these risks
must be thought be together rather than independently, a strong focus must be on the risks
over which you have little control.
TRADITIONAL METRICS

FINANCIAL ROI AND TOBINS

Albert Einstein, very thought provokingly, reminds us that what can be measured is not always
important and what is important cannot always be measured. It does not take an Einstein to
conclude that the value of knowledge management cannot be fully measured in terms of
financial return on investment.
A relatively old measure that has been in use for many years within business and academic
circles is Tobin’s q. This metric essentially measures the ratio between the firm’s marker
valuation and the cost of replacing its physical assets. While Tobin’s q provides a snapshot of
the firm’s state of intellectual health at a given point in time, it provides no direction for
knowledge management strategy development. It does not tell you what you are doing wrong
or what to focus on. What is needed is a more dynamic view of knowledge performance that
can help a firm trace both the growth and decline of its knowledge assets and the reasons
underlying such changes. Traditional metrics like Tobin’s q do not tell a firm how it can
create further value, prevent imitation or substitution, and leverage its knowledge assets to
gain a sustainable competitive advantage.
Nevertheless, when it comes to measuring returns on investment in knowledge management,
two conventional approaches are in common use: putting a dollar figure on intellectual assets,
and determining the dollar amounts saved or earned by using existing knowledge.
TOTAL COST OF OWNERSHIP

Current methods of measuring and evaluating information technology investments do little

justice to information technology itself. How, then, can we expect those methods to be able to
give us a clear picture of how our knowledge investments- which stretch far beyond pure
technology alone- are faring? Out interviews and studies show that companies do not always
demand solid business cases for IT investments but have trouble handling decisions based on
soft gains and benefits. Maturity of judgment becomes a distinctive inhibiting factor that
prevents them from making decisions where limited quantitative data exists.

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 Many companies have responded by falling back on a total cost of ownership approach, which
is much touted by Microsoft’s release of windows 2000. This methodology identifies and
measures components of IT expense beyond the initial cost of implementation. While TCO
can be a useful tool to reduce ongoing costs by improving IT management practices, it does
not provide a sound foothold for decision making. TCO does not cut it as a sufficient
knowledge metric for several reasons:

• It leaves out significant cost categories, such as complexity costs.

• It ignores benefits beyond pure costing.
• It neglects strategic factors.
• It provides little or no basis for comparison with other departments and other companies,
such as competing firms operating in the same markets.
• Lifecycle costs are difficult to gauge.
Applying TCO blindly can lead to bad and highly impolitic decisions. For example, the
decision to switch vendors to get the lowest prices does not capture the implicit cost of
supporting multiple vendors, the cost of dealing with compatibility issues, or the benefits of
high volume purchasing. Total cost of ownership (or a similar measure fails) to do justice,
comprehensively or completely, to the decisions made.
LEARNING MORE FROM THE TELEPHONE

Just as a telephone is hard to cost-justify and evaluate, knowledge management is something

firms often find difficult to cost-justify in the face or other needed investments, but is
something they want to and should have. Even though middle managers feel the need for a
strong knowledge management initiative, convincing senior management to shell out the
couple of million dollars for an initiative with intangible results can be a hard sell. However,
there are ways and means to measure the short-term gains to demonstrate the need for, the
extent of the longer-term guestimations of value added by knowledge management to the
firm’s bottom line and competitive standing.

THE METRIC IS THE LIMITATION

A recurring problem in knowledge management is the problem posed by a lack of standard

metrics for measuring the impact of KM. Two of the most widely cited research projects

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 relating to knowledge management and organizational learning are the case descriptions
provided by DeGeus at Shell Corporation and by Ray Stata at Analog Devices. DeGeus
approach at shell used scenarios in the strategic planning cycle that encouraged managers to
revisit and challenge commonly accepted assumptions. The underlying belief was that
learning would not take place unless managers exposed the hidden and embedded assumptions
with which they approached new problems.
Similarly, Stata found that focusing on activities, such as improving response time in external
changes and utilizing planning and quality improvement as learning tools rather than purely
administrative tools, could accelerate learning.
Chaparral Steel, a large U.S. steel producer, similarly found that there was a lot to gain by
emphasizing problem solving, constantly integrating internal and external knowledge into
daily work-related activities of employees, and allowing the time and resources needed to
make this integration happen. In addition, a good reward structure helped further.
COMMON PITFALLS IN CHOOSING METRICS
No metric is better than one that is absolutely wrong. A choice of a wrong metric can have
more ill effects than positive ones. Metrics, when applied to knowledge work, or in general,
are vulnerable to seven common pitfalls.

USING TOO MANY METRICS

A few robust are better than a number of marginally significant ones. A good rule of thumb is
about 20 metrics. They need to focus on the past, present, and future simultaneously to be
able to relate past performance, present processes, and future results. The common problem
that many measurement programs become victims of is that of putting too much emphsis on
the past. Knowing the past is good, but it rarely is sufficient to give you a concrete idea about
where your present efforts are leading your company. As John Naisbitt put it, “We are
drawning in a sea of information and starving for knowledge. ”Make sure you do not add any
further to that glut of information by introducing more metrics than can be effectively,
accurately and efficiently tracked. Forget quantity; focus instead on linking measures to
strategic capabilities, competitive positioning, customer expectations, and financial indicators.
As John Billings once said, “Knowledge is like money, the more he gets, the more he craves.
Nothing perhaps captures the essence of manger’s rush to add more metrics once “they” figure
out that they have found something that affects their company’s bottom line. In this rush,
many finally end up with more metrics than they can simultaneously keep track of.

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 Robert Kaplan and David Norton have an interesting discussion between a pilot and a
passenger on the opening page of their book. The pilot says that he need to work on air-speed,
so he ignores the altitude and fuel gauge altogether. “It is not what I am focusing on,” he says.
Amused at their own interesting analogy, they think that you would not want to fly in his
plane, ever! Isn’t this very close to what companies do when they focus on a single metric
such as a bottom line or market share? On the other hand, some hand, some go to the opposite
extreme and try to track too many at the same time. This is where lean metrics fit in. Lean
metrics are the few but essential metrics that can be simultaneously tracked.
Some metrics might seem reasonable, but when they are put into action, they result in
counterproductive consequences. A good lean metric must be precise, tied to overall value
(not just profits), applicable, and designed to motivate extra normal effort from employees.
.DELAYED AND RISKY REWARD TIES
Rewards that are tried to metrics with a relatively longer term focus should be robust and
structured in a manner that allows employees to reap short-term benefits by successfully
achieving them. Job mobility is a fact of life. Delayed rewards will only bias employees to
work toward metrics that deliver short-term payoffs to them. To keep the long view, select
metrics that can be measured today but impact future outcomes. Alternatively, the long-term
gains of the firm should be tied closely to the compensation of the employees (Stock options
are a good example)
CHOOSING METRICS THAT ARE HARD TO CONTROL
Companies often make the grave mistake of implementing metrics that are beyond the control
of their employees. Phrases such as “Build a $2 billion browser market by 2001, “Let every
hand in America hold a Palmtop by the dawn of the next millennium, “ or “Put a Net PC on
every desktop” are visionary ideas but almost impossible to control or achieve even through
systematic efforts. There are exceptions of course: Microsoft’s Internet strategy and
Netscape’s browser business are a few of those. But these are exceptions rather than examples
of what can be normally achieved. Similarly for knowledge management systems, you cannot
have metrics that cannot be controlled. Statements such as “Build the largest knowledge
repository of Website design solutions” look good on paper, and that’s about it.
CHOOSING METRICS THAT ARE HARD TO FOCUS ON
Performance of a company is not solely based on internally generated ideas. 3M and Xerox
are leaders in innovation. But the difference is that 3M has actually commercialized more
ideas than Xerox. The result has been that Bill Gates and Steve Jobs built entire industries on
a few ideas that Xerox created (in its Palo Alto Research Center, PARC) but never used.

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 If you think that the Palm Pilot family of plan PCs are surprisingly successful products coming
out of 3COM’s bag of tricks, remember that the product was externally acquired from US
Robotics (which had previously bought out Palm Computing, the commercial originator of the
device). The key idea is that the metrics that you select must encourage decisions that also
move your company in the same direction as its long-term goals.
CHOOSING METRICS THAT EMPHASIZE HARD RESULTS AND NEGLECT THE
“SOFT STUFF”
Many companies emphasize hard (often financial) results while neglecting or totally ignoring
soft ones. A national survey of U.S. organizations revealed that about 60 percent of the
organizations studied never officially set any soft goals related to managing people, suppliers,
customers, and innovation even when the hard goals were clearly laid out. Inspite of all the
windy rhetoric about loving customers, empowerment, and learning, not many executives are
willing to put measures where their mouths are. It is dangerous for top management to focus
on hard results and expect lower-level managers to take care of the rest. Financial success, for
example,

as many research studies have shown, is highly dependent on ‘soft” employee attitudes and
behavior. Make sure that your hard and soft measures go hand in hand and are well balanced.

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 CHOOSING METRICS THAT ARE TOO REAR-VIEW ORIENTED

Too often, measurement is not used to anticipate the future but to record the past. One way to
avoid this trap is to ask yourself this question: Do we have metrics that can serve as early
sorting signals for future problems and signal future opportunities?

MEASURING THE WRONG THINGS

Companies can run into troubled waters when they decide to measure things that are precisely
wrong. This is very different from the notion that a few good measures today are better than
a perfect one tomorrow. One lousy metric tomorrow is better than a wrong one today. If that
happens tomorrow might never come!
Wrong metrics can often prove more damaging than helpful. Not all metrics, such as calls
answered per hour or sales pitches per week, that can be measured easily and cleanly are
necessarily good. Similarly, for knowledge work, measuring aspects such as time spent
reading tw1edge reports or intranet screens are poor metrics. I could as well be sipping coffee
(God forbid vodka!) while playing Quake II on my laptop while my desktop is connected to
the knowledge management system at work! A poor metric would still create a perception of
productivity The number of contributions by employees to a knowledge repository is an
equally worthless measure. Employees then try to maximize the number of contributions, and
then the due of those contributions takes a second place! There is something to be learned
from McKinsey; McKinsey places value on the number of times its consultants’ contributions
are by other consultants.
ALL THE RIGHT THINGS NOT MEASURED

The other side of the coin is not measuring all the right things. ‘Without getting into Ito
complexities of agency-agent conflict theory, a manager or employee will tend to maximize
William Schienmann and his colleagues point to the serious gulf between what should be
measured and what actually is measured. See Schienmann, William, and John Lingle. Seven
Greatest Myths of Measurement, IEEE Engineering Management Review, Spring (1998),
“...tomorrow might never coma,” from a song by Janis Joplin, in The Best of Janis Joplin,
Warner Music.
The metrics that are actually measured. If a manager is told that a high market share for a
product indicates brand value, he will try to maximize the market share of that product, even
though quality (not measured) might be equally important. John Hauser and Gerald Katz
explain this concept, which is further illustrated in fig.

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 Let A, B,C, Y and Z be some arbitrary metrics. If all five of these are important, but only
three of these, A,B and X, are actually measured, employees will focus only on those and
simply ignore Y and Z, however important they might be. Managers and employees who
maximize A, B and X will be rewarded for their performance even if Y and Z go to the dogs.
Soon the entire company or department is focused on improving the metrics that are actually
measured, as they alone provide an indication of the quality of their work, If A,B and X lead
to productive results, then the metrics are considered effective. If they fail to produce good
results, they are considered ineffective. Hauser and Katz suggest that the chosen metrics gain
tremendous inertia and that employees who have painfully learned to maximize the chosen
metrics fear to change course. The problem begins right there.

Knowledge sharing and creation often tend to be akin to metric Y-ignored and little rewarded.
Knowledge-intensive companies, on the other hand, have included knowledge sharing and
creation in their repertoire of critical metrics. Every employee’s compensation is, in part,
determined by the amount of knowledge that the employee adds and the frequency with which

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 other employees refer back to that contribution. Choosing the right metrics is therefore critical
both to evaluate the performance of your knowledge management strategy and to make it work
in the first place.
THREE WAYS TO MEASURE
We met Roger Bohn’s Stages of Knowledge Growth framework in the preceding Thanks to its
simplicity and ease of use, it provides a more readily usable method for the measurement of
process and technological knowledge. However, the biggest strength of this work is also its
primary weakness. The Stages of Knowledge technique is good at providing a15,000-foot
view and a clear bigger picture, but it does not let you examine progress improvements at a
lower level. While we began with that model, we will need to some technique that is better
suited for a micro level analysis.
Let us examine three possible approaches to measuring edge work and the efficacy of the
knowledge management system. The first is as ward benchmarking methodology; this can be a
good starting point, but in the long term this technique loses value and flexibility The second
technique is the House of Quality. That competes with the third technique: the balanced
scorecard approach. The advantage the House of Quality (QFD) methodology is that it has
been widely used and a number of low cost software tools can partially automate its
application.
BENCHMARKING
Robert Camp aptly describes benchmarking as the “search for industry wide best practices that
lead to superior performance.” In plain English, this simply means that benchmarking is an
undertaking of companies that aim to emulate the ways things are done best, anywhere in or
outside their firm, industry, or sector. Many large firms have adopted bench a significant,
systematic technique for measuring the company’s performance toward its strategic goals.
This concept was popularized by Carla O’Dell and her colleagues at the American
Productivity and Quality Center (www.apqc.org). One argument for benchmarking is that
there are existing best practices within different parts of the same company. So we should
begin by identifying those skills and capabilities within our own organizations before we look
outside. Companies repeatedly end up solving the same problems that have already solved in
other offices or locations of the same company; they expend time and money building
solutions to issues that have already been addressed: If only we knew what we know! Texas
Instruments, Harris Corporation, AMP, UNISYS, and Rank Xerox have tried this approach
and reaped substantial benefits and cost savings.

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 The benefits of benchmarking are not limited just to process improvement or reuse; they
extend far beyond and promote both the growth and acceptance of a learning culture through
out the organization. Benchmarking efforts can often provide insights into various areas.
Anecdotal evidence suggests that managers do not buy into ideas that strain finances of a
company without short-term payoffs for too long. Even though a comprehensive knowledge
management strategy might be at work in the background, show your senior management
some short-term outcomes.
Make it rare. Focus on the areas of knowledge that give you an edge over competition.
Through benchmarking studies, you can easily figure out the areas in which your com petition
is not strong. If any of those areas are a possible source of competitive advantage, by all
means, support them!
Gateway for example, is known for its customer service. If you have a problem with a
computer you bought from them, you know that you will probably find a knowledge able
customer support representative on the other end. Almost all PC manufacturers have some
kind of customer support, but Gateway decided to strengthen this over any thing else. Most
Gateway’s customers tend to be repeat buyers simply because of their excellent customer
service. Gateway also uses a customer knowledge repository to be able to track all previous
problems that a customer might have had in the past.
Some companies build a competitive advantage by taking one of the given metrics to a level
that is rare and that customers value. NEC has built on this rarity as well. NEC’S printer
division provides an overnight replacement warranty for all its laser printers for two years
from the date of purchase. By being able to track customer information through a sophisticated
knowledge retrieval system, NEC provides overnight replacements after asking little more
than one question (the printer’s serial number) on the phone.
Make it hard to copy. Customer data is an excellent example of a resource that is very hard to
copy. Benchmarking can help you figure out the resources that you have and your competition
does not. If you focus on resources that can be copied, it will, at best, buy you a temporary
competitive advantage. However, if you focus on knowledge areas in which your employees
possess skills, you can make it immensely difficult for your competition to copy those without
luring away your employees. Consulting companies have known this for a long time, and it’s
about time you thought of applying the same idea to the knowledge assets within your own
company.

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 Make it hard to substitute. Whatever categories of knowledge that you focus on, make sure
that straightforward substitutes do not exist. Companies that thought they had gained an edge
by outsourcing a part of their manufacturing operations to firms in Third World countries did
not take long to realize that everyone else could do the same. And they did.
Knowledge relating to skills, reputation, and experience cannot be easily substituted with close
equivalents. Make sure you focus on such areas when you begin.
Benchmarking is unlikely to reveal such areas unless a high level of job diversity in the
employee pool that is involved in the effort).
Benchmarking practices often reveal anecdotal evidence and impressions about competition
It’s dangerous to rely on such impressions because they cannot be generalized in any
Benchmarking is most useful when you know what your expectations and objectives are and
the process itself is closely tied to your firm strategic knowledge drivers.
HOUSE OF QUALITY AND QUALITY FUNCTION DEPLOYMENT
The House of Qua1ity approach was developed by Hauser and Clausing in an original paper
that appeared in the Harvard Business Review. This methodology has been successfully
adapted to link customer needs to business processes and internal decisions.
HOUSE OF QUALITY METRICS MATRIX
Figure shows the basic House of Quality metrics matrix. We begin by listing the desirable
outcomes on the left wall of the house. As the quality function deployment (QFD) method
incorporates an increasing number of these desired outcomes, the outcomes house begins to
build up.
Be careful to select outcomes that are that observable without much delay and a seen clearly.
Being able to see outcomes clearly does not imply that they must be easily measurable
quantitatively. Outcomes can be high level or low level. Examples of such target out- comes
include:
• Improve knowledge sharing to a level where 20 percent of an average employee’s work is
based on existing knowledge.
• Speed up problem solving by a factor of 5 percent over the next six months.
• Improve quality such that the rate of failure of product X decreases by 15 percent within the
next 12 months.
• Generate more conversations among employees in our Atlanta and Barbados offices (a
relatively vague but measurable outcome).
• Increase customer satisfaction levels by 50 percent

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 • Create a comprehensive knowledge repository on our Winblows 2004 (fictitious product)
operating system for use by support representatives within three years, etc.

Although these should not exactly be your own goals, the point is that even though some of
the objectives might be high level, the outcomes are observable. On the other hand, an
objective like “create new knowledge” or “dominate the South American coffee markets”
(where the coffee market is a vague definition, domination is not articulated, and the extent of
what is considered South American is unclear) is too vague. You’ll never know when you get
there, and when you get there you’ll never know that you are already there!
To attach relative priorities to each of these objectives, we attach weights to each of them.
These weights form the right-hand wall of the house and indicate the importance of the issues
in question. See Fig, for an example.
• Overall productivity of knowledge investments
• Service quality
• Customer satisfaction and the operational level of customer service
• Time to market in relation to other competitors
• Costs, profits, and margins Distribution
• Relationships and relationship management

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 Even though the term benchmarking probably did not exist when Aristophanes made the
above quote in 414 B.C., he said something very profound about it! By benchmarking your
own business against your competitor’s, you get information on how to tweak your company’s
performance goals to stay competitive in relation to your competitors. Arthur Andersen, an
international consulting firm, perhaps took the first strike at the intimidating problem of
measuring knowledge work. Andersen developed a tool in association with APQC called the
Knowledge Management Assessment Tool (KMAT); it contained a series of questions on a
scale. Answers to these questions could then be compared to the industry-specific and cross-
industry averages of the responses. This process is, in essence, benchmarking.
By using such a relative measure, all companies stand to gain. By knowing where they stand
on the intellectual forefront in relation to their competition, companies can focus on improving
processes and process knowledge in areas where their scores are below average.
Benchmarking, like any other business process, is most likely to produce a payback when
strategic business objectives and goals drive it.
Benchmark Targets
Possible targets against which you can benchmark your company’s knowledge management
initiatives. You can identify other relevant targets from your own company, from rival firms,
from nonrival firms, or from averages representing your industry or sector, Each has its own
benefits and downsides, and the choice, finally, is one of subjective judgment and weighted
costs.
Stephen Drew proposed the original version of the target set that this table is built upon. He
also suggested that a possible target was international firms. I disagree with this stand and
have not included that as a potential target, since the preceding options, by themselves,
encompass international firms. Rarely do American firms compete solely with domestic rivals.
There are companies that represent the ideal firm within each industry. Lacking any other
options. this is usually the best place to begin. These firms have performance levels that other
WHAT DO YOU BENCHMARK AGAINST?

Benchmark Target Upsides Downsides

Other units within This breaks down internal Internal policies might come into
your company barriers to communication play; the measures are not
and conversation between indicative of what is considered
various divisions and performance in your industry
offices of your company;
targets are easily accessible

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 Competing firms Your company is measured Legalities can make this
against its direct competition; difficult; if a trusted third party
you get a fair understanding such as a consulting firm
of the knowledge assets of is brought additional costs
your competitors as an are imposed.
aggregate; partners can easily
be identified.

Industry All of the above; this also This can be very expensive;
lets you gauge your privacy issues begin to surface.
company’s standing in the
overall market.

Cross-industry You might be able to gain All of the above; this does not let
valuable insights from you gauge your company’s
noncompeting firms and standarding in relation to your
apply them to your own competitors; the sample popu-
company. lation is not truly representative
of your own industry or sector; it
is often difficult participate in
such an effort; the cost of such an
effort is rarely worth it

firms aspire to achieve. In the software industry arguably, every firm aspires to be a Microsoft.
In terms of customer loyalty every firm aspires to be an Apple Computer Other examples,
including some provided by Stephen Drew, of such role models can be listed.
Although benchmarking can be a good starting point, you need to be aware of its limitations.
Benchmarking, by itself, cannot be used as a strategy for knowledge management. The best
that it can do is provide a relative set of measures that can help gauge what your efforts are
leading to. Many companies, including Xerox, have successfully used in their 10- steps
program; however, it is not a sufficient metric for knowledge work in and of itself.
THE BENCHMARKING PROCESS
On the lines of Xerox’s benchmarking program, M.J. Spendolini’ has suggested a five-
procedure thy benchmarking efforts. An adapted version of this process. applied to knowledge
work is shown in Fig
Prevalent Role Models in the Benchmarking Process

Speed of product development Netscape Corporation

Knowledge management integration Buckman Labs

Knowledge management technology

implementation Platinum Technology

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 Software development and marketing Microsoft Corporation

Innovation and new product development 3M

Customer loyalty Apple Computer

Brand Management Disney

JIT manufacturing Toyota

Logistics and enterprise-wide It leverage Wal-Mart

Knowledge management measurement

efficacy Skandia

Mail order Dell, L.L. Bean, Lands End, Gateway

Franchising McDonald’s

Quality Management Motorola

Product line recognition O’Reilly publishers

Strategic planning General Electric

Cost-based competition through E-machines Inc., Airtran, Southwest Airlines, Apollo

logistics and market demand Printers
Volume

The benchmarking process can be used for self-comparison as well. That is, you can use the
benchmark to obtain an initial benchmark value before you implement a knowledge manage-
ment system or program. You can then, at a later stage, run the same benchmark to see if any-
thing improved from last time. For example, you might want to see if your knowledge sharing
network and customer support repository have a positive effect on the average level of
customer satisfaction. You can benchmark the level of customer satisfaction both before and
after the new system is implemented and see if any changes occurred. Be cautioned, however,
that this is a slippery road: If you select the wrong benchmark, you will end up focusing on the
wrong set of processes.

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 MBA-HRM HRM in Knowledge based Organisation

BENCHMARK LESSONS
If you consider your company’s knowledge management system as a
competitive resource, then build into the four things that benchmarking teaches:
1. Make it valuable. Focus on including knowledge that is most valuable and
then expand the coverage to less valuable knowledge. The key phrase is
“valuable knowledge with rel
The balanced scorecard can also be used to evaluate the impact of the
knowledge management system on four complementary criteria. The four
processes involved in using the balanced scorecard approach for managing
knowledge are described in Figure. These processes specifically put in the
context of knowledge management, involve the following steps.
1. Translate the knowledge management vision. As Figure describes, this is the
first process in the balanced scorecard strategy. At this stage, managers need to
reach consensus
as to why knowledge is being managed or needs to be managed. What are the
firm’s visions for the knowledge management investment? The vision needs to
be translated into concrete goals and objectives before any actions can be
measured. The beauty of the balanced scorecard is that it can be used to create
short-term, specific go individual employees, all of which feed to the
organizational vision.
While we are on the subject of vision, let me make it very clear that this rarely
comes by copying the mission statement! Mission statements often carry too
much fluff or are at too high a level to be actually useful. They need to be
brought down to the level where two people can agree on what it says after
reading the same documents and that is rarely the case with mission statements
that most companies have. That’s probably the reason why most mission
statements are updated only when the next year’s annual reports are due.

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 MBA-HRM HRM in Knowledge based Organisation

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 MBA-HRM HRM in Knowledge based Organisation

2. Communicate and link. This lets you measure as you go along your objective
of selling the idea to your company’s employees. You can gauge how well your
employees are being trained to use the system as a part of their work. You can
also measure how well you have linked rewards to both the effective use and
contribution of knowledge. Here, the KM champion must communicate the
strategy along the entire rung of employees and demonstrate the links between
individual employee goals, and the departmental/organizational goals in terms of
leveraging knowledge.

3. Do a reality check. This part of the balanced scorecard strategy determines

how well your chosen metrics, explicated goals, targets, and allocated resources
align with the initial ideas you had in mind for the knowledge management
system.
4. Incorporate learning and feedback. The balanced scorecard lets you evaluate
the goals, metrics, and targets that you have chosen for your knowledge
management system and then analyze how well they are actually working.
In summary, the balanced scorecard approach lets you track the current health of
the knowledge management strategy that you have chosen for your company.
By replacing the original four perspectives with measures successfully used by
Skandia, a knowledge-based version of the balanced scorecard can be obtained.

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 MBA-HRM HRM in Knowledge based Organisation

The underlying implementation and use would be akin to the conventional

balanced scorecard method, but the measures provided will be those relating to
knowledge management. This way, the financial, customer-related, process-
capability-related, and employee-performance-related gains coming from the
knowledge management system can be simultaneously tracked.
The actual implementation and use of the balanced scorecard approach is
beyond the intended scope of this chapter. Now, you have a starting point for
applying the balanced score card to knowledge management. For
implementation level details, I recommend reading The Balanced Scorecard
(Harvard Business School Press, 1996) by Kaplan and Norton.
As Kaplan and Norton state, a balanced scorecard need not just have four
dimensions. It can have five, six, or seven. The only concern of going beyond
seven is that you have too much to keep track of and a lot of it isn’t even critical.
KPMG, for example, uses five different dimensions for its scorecards.
Although these choices seem reasonable, I recommend that you initially try
using the dimensions similar to those suggested in Fig, which are based on
Skandia’s Navigator and which the company has used very effectively. The
choice of dimensions is not set in stone. As long as you are sure about what you
are measuring and why you are measuring it, that variable has a justifiable place
on the balanced scorecard that your company adopts.

KPMG’S CHOICE OF DIMENSIONS FOR ITS BALANCED

SCORECARD

Balanced Scorecard Dimensions Questions

Client Orientation What do I want to achieve with my

existing
Clients?

Market orientation What am I going to do to decrease

existing

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 MBA-HRM HRM in Knowledge based Organisation

client turnover and find new

clients? What am I
going to do to strengthen my
position in the
business?

People orientation What am I going to do to enable the

team that I
am managing to function better and
to help my
employees gain stronger
competencies?

Result orientation How can I attain better results with

the same
inputs? How can I increase the
added value of
my teams and myself?

Personal effectiveness What am I going to do in the

coming year to
improve weak points and
strengthen strong
points?

Professionalism How do I keep abreast of the

newest
developments?
How do I collaborate with my peers
more
extensively?

ADVANTAGES OF KM BALANCED SCORECARDS

The balanced scorecard has some characteristics that the other approaches
discussed in this chapter do not have. These characteristics make it especially
useful as a knowledge metric.
• Ability to provide a snapshot of the intellectual health of your firm at any point
in time.

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 MBA-HRM HRM in Knowledge based Organisation

• Built-in cause-and-effect relationships that can help you guide your knowledge
management strategy.
• Sufficient (neither too many nor too few number of performance drivers and
metrices.
• Capability to communicate the knowledge management strategy throughout
the firm.
• Capability to link individual goals with the overall knowledge strategy of the
firm. This implies that each employee can k his own and continue to contribute
toward the goals of the knowledge management system and strategy without
even realizing it!
• A direct, and often missing, link between long-term knowledge and
competence goals of the firm and its annual budget.
• Translation of the lofty visions of a firm into more doable, realistic,
manageable, and specific performance goals.
• Logical integration into the overall strategy of your business, and still make
sense.
• Objective measurement of the contribution of knowledge to the more
intangible sources of competitive advantage, such as customer satisfaction and
employee skills and competencies.

The selected objectives are grouped and listed on the left-hand side of the house
matrix.
The relative weights are assigned to each of these objectives on a scale of 1 to 5.
Some other tools let you attach weights on a percentage scale of 0 to 100, as
originally proposed in the House of Quality approach. A simple 5-point scale is
easier to track. than a 100-point scale, which only makes some decisions and
weight assignments both arbitrary and confusing.

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 MBA-HRM HRM in Knowledge based Organisation

Appropriate performance metrics can then be listed and clustered on the top of
the matrix (the ceiling). The matrix itself indicates the levels of correlation
between the metrics and the performance outcomes. Figure, for example, uses
three different symbols to rep resent these levels of correlation (high, medium,
and low). Alternatively, a numerical value can be used, The decisions and
metrics that also improve the outcome are said to have a high level of
correlation. The interrelationships between all these parameters are represented
on the roof of the house: By looking at the correlations within the body of the
matrix, we can accurately focus on those areas of knowledge management that
are most likely to affect overall company performance and help us move toward
preset goals.

SOFTWARE TOOLS FOR QFD ANALYSIS

A variety of software tools can help automate the QFD analysis process. One of
the more popular tools is QFD Designer (by Qualisoft Corporation) shown in
Figure. Software tools allow real-time evaluation of the percentage of fills along
different dimensions.
Skaridia’s Intellectual Capital (IC) annual report also provides indicators of
some other parameters that can be added to the House of Quality outcomes for
analysis of knowledge management effectiveness. Some ideas, including some
found in Skandia’s annual IC report, for such parameters are the following:
• Competence development expenses per employee in dollars
• Employee satisfaction
• Marketing expense per customer
• Time spent on systematic packaging of know-how for future use, after a
project is
completed
• Research and development expense to overhead expense ratios
• Training expenses per employee
• Payback on development activities

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 MBA-HRM HRM in Knowledge based Organisation

• Average development time per new product

• Expense per dollar earned (e.g., in consulting)
• Renewal expense per existing customer
• Level of customer attrition
• Expense of business development (new customers) per dollar spent on
overheads

• Training expenses per customer per year in dollars

• Information-gathering expenses per existing customer
• Total competitive intelligence expense per year
• Expense (dollars) of distribution of new sales material and data
• Time spent per unsuccessful business bid
• Total number of patents held
• Number of patents pending
• Average time of approval for pending patents
• Employee attrition rate
• Dollar figure value of losses per employee lost
• Dollar figure value of tosses per employee lost to a competing firm
• Expense of reinventing solutions per year
• Success ratio of new products and/or services
• Number of ideas implemented from the “suggestion box”
• Total production capacity or internal production capacity (this can be applied
both to
production and service firms)
• Capacity utilization
• Delivery time deviation rate

THE BALANCED SCORECARD TECHNIQUE

The third approach that is a viable method for measuring knowledge-centric

performance of your organization is the balanced scorecard approach. Kaplan
and Norton originally proposed the balanced scorecard in their landmark article
published in the Harvard Business Review. The balanced scorecard provides a
technique to “maintain a balance between long-term and short; term objectives,
financial and non-financial measures, lagging and leading indicators, ad between
internal and external perspectives.” The basic scorecard for translating vision
and strategy into actual goals is shown in Figure.

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 MBA-HRM HRM in Knowledge based Organisation

• Direct link to financial measures and your knowledge management system’s

effect on the company bottom line.
LIMITATIONS OF KM BALANCED SCORECARDS

On the downside, a well-designed balanced scorecard is more difficult to levels

a similar QFD/HoQ (House 0 Quality) model. It is rarely possible to directly
adopt another firm’s balanced scorecard because subtle differences exist even
between very similar However, there are some software tools that can make the
initial ride lesser bumpy, such as the balanced scorecard tool, Gentia Balanced
Scorecard, sold by Gentia Inc. (http://nee tia.com).
CLASSIFYING AND EVALUATING PROCESSES

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 MBA-HRM HRM in Knowledge based Organisation

This section touches on a very useful taxonomy that can help you classify sort,
and
processes by their category. Understanding and classi5’ing processes helps firms
manage these processes as well as the knowledge that drives them. The sales
process, fore pie, might have very little to do with the sales department in some
high technology companies where primary customer interaction is with the
engineering staff. What can be readily used here is a taxonomy of processes that
has been developed by the American Productivity, and Quality Center (APQC)
benchmarking clearinghouse.

The process classification framework (PCF) was originally developed as a

collaborative effort across 80 organizations and envisioned as a taxonomy of
business processes in 1991. A primary issue with the PCF continues to be the
enablement of process benchmarking across industry boundaries. The utility of
this process taxonomy is not just limited to benchmarking. It can be used to
better structure the clustering of processes and functionalities your own
company. The biggest strength of this framework comes from the fact that it was
built by the joint effort of almost 100 U.S. organizations, many 0 which had an
inter al presence.
The APQC process classification framework serves as a high-level, generic
enterprise model that encourages businesses and other organizations to see their
activities from a cross-industry process-oriented viewpoint rather than from a
narrow, functionalist viewpoint. The process classification framework supplies a
genetic view of business processes often found in multiple industries and sectors
and service companies, health care, government, education, and. others, thereby
allowing companies to compare processes meaningfully to other, different
organizations.

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 MBA-HRM HRM in Knowledge based Organisation

The process classification framework represents major processes and sub

processes, functions, through its structure and vocabulary. The framework does
not list all processes found within any specific organization. Likewise, not every
process listed in the framework present in every organization.
THE APQC PROCESS CLASSIFICATION FRAMEWORK

1.0 UNDERSTAND MARKETS AND CUSTOMERS

1.1 Determine customer needs and wants

1.1.1 Conduct qualitative assessments
1.1.1.1 Conduct customer interviews
1.1.1.2 Conduct focus groups
1.1.2 Conduct quantitative assessments
1.1.2.1 Develop and implement surveys
1.1.3 Predict customer purchasing behavior
1.2 Measure customer satisfaction
1.2.1 Monitor satisfaction with products and services
1.2.2 Monitor satisfaction with complaint resolution
1.2.3 Monitor satisfaction with communication
1.3 Monitor changes in market or customer expectations
1.3.1 Determine weaknesses of product/service offerings
1.3.2 Identify new innovations that are meeting customer needs
1.3.3 Determine customer reactions to competitive offerings
2.0 DEVELOP VISION AND STRATEGY

2.1 Monitor the external environment

2.1.1 Analyze and understand competition

2.1.2 Identify economic trends
2.1.3 Identify political and regulatory issues
2.1.4 Assess new technology innovations
2.1.5 Understand demographics
2.1.6 Identify social and cultural changes
2.1.7 Understand ecological concerns

2.2 Define the business concept and organizational strategy

2.2.1 Select relevant markets

2.2.2 Develop long-term vision
2.2.3 Formulate business unit strategy

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2.2.4 Develop overall mission statement

2.3 Design the organizational structure and relationships between
organization al
units

2.4 Develop and set organizational goals

TABLE THE APQC PROCESS CLASSIFICATION FRAMEWORK

(CONT.)

3.0 DESIGN PRODUCTS AND SERVICES

3.1 Develop new product/service concept and plans

3.1.1 Translate customer wants and needs into product and/or

set
requirements
3.1.2 Plan and deploy quality targets
3.1.3 Plan and deploy cost targets
3.1.4 Develop product life cycle and development timing
targets
3.1.5 Develop and integrate leading technology into
product/service concept

3.2 Design, build, and evaluate prototype products and services

3.2.1 Develop product/service specifications

3.2.2 Conduct concurrent engineering
3.2.3 Implement value engineering
3.2.4 Document design specifications
3.2.5 Develop prototypes
3.2.6 Apply for patents

3.3 Refine existing products/services

3.3.1 Develop product/service enhancements

3.3.2 Eliminate quality/reliability problems
3.3.3 Eliminate outdated products/services

3.4 Test effectiveness of new or revised products or services

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3.5 Prepare for production

3.5.1 Develop and test prototype production process

3.5.2 Design and obtain necessary materials and equipment
3.5.3 Install and verify process or methodology

3.6 Manage the product/service development process

4.0 MARKET AND SELL

4.1 Market products or services to relevant customer segments

4.1.1 Develop pricing strategy
4.1 .2 Develop advertising strategy
4.1.3 Develop marketing messages to communicate benefits
4.1.4 Estimate advertising resource and capital requirements
4.1.5 Identify specific target customers and their needs

before you begin the process externally. Remember that benchmarks do tell you
what to do next, but not how to do it.
• QEDs relate high-level goals to discrete actions. QEDs let you link goals,
relationships, perceived significance, and outcomes for each strategic step
that you take with your knowledge management system. QFDs integrate
inputs from all stakeholders and provide explicit direction for enhancing
your company’s knowledge management strategy. QFDs can be automated
to a fairly high degree with readily available soft ware. You can translate
high-level goals to specific tasks, and these tasks can further be
decomposed into measurable and manageable actions.
• The balanced scorecard links strategy, technology, competitiveness, and
knowledge management. The KM BSC method helps you translate the
knowledge management vision into action, communicate the KM strategy
bottom up validate your choice of metrics, and analyze results of knowledge
management in the long run. It will provide a robust direct link between
knowledge management, the system, your company’s clients, markets,
people, results, and profitability.
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 MBA-HRM HRM in Knowledge based Organisation

• Do not ignore the soft stuff Metrics must take both hard and soft results into
account to present a true picture of your firm’s intellectual health.
• Metrics in the rearview minor appear more significant than they are. Ask
yourself: Do we have metrics that can serve as early warning signals for
future problems and those that signal future opportunities?

In conclusion, we need to take a closer look at the cases of some companies

representing a diversity of industries. All of them have one thing in common:
They are immensely successful both from a competitive standpoint and a
financial one because they realized the value of knowledge management and
appropriately put their idle knowledge to work, and work hard.
Review Questions
1. Discuss the contributions of team managers in implementation of HRIS
in the organization.
2. Discuss the concept of Balance Score Card in detail.
3. Discuss the APQC classification framework.
4. Discuss the contribution of experts and consultants in managing the
HRIS of an organization.

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Unit - V

CASE STUDIES

OBJECTIVES

• Understand how high performance companies manage knowledge.

• Understand process distribution in successful knowledge management
projects.
• analyze HRM in KBO and km case studies from the aerospace ,
software, consumer technology, telecommunications, publishing, consumer
products, pharmaceuticals and consulting industries.
• understand the strategic alignment of a successful knowledge
management project with existing business processes.
• understand how your knowledge management project can build both
upon the failures and success of these companies.

Introduction

In this unit we will take a closer look at some companies that have implemented
knowledge management system. Their outcomes have had mixed results. Some
have fallen flat while others have provided their organizations with an
unprecedented competitive advantage. There is a lot to learn from these early.
Pionee5rs who dared to make that leap of faith in the face of analyzing the
HRM in KBO and rewarding the compensation.

HRM performing knowledge management projects how focused on activities

involving delivery and production of services, customer support, competitive

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 MBA-HRM HRM in Knowledge based Organisation

intelligence and external knowledge integration, project management in virtual

teams, sales enablement and intellectual asset management.

This unit will give you an idea about the areas on which you must focus your
knowledge management investments. The common failure points in a
knowledge management system was found to be the lack of commitment or
resources for managing the system once it was implemented.

Case 1

Knowledge management in the aerospace industry the case of rolls Royce

Introduction – rolls Royce was founded in 1906. in addition to making

expensive cars. Rolls Royce is also a market leader in the long- haul aircraft
engines market. As of 1999, rolls Royce was serving about 300 commercial
airlines where its competitive stance was the total cost of ownership.

The problem – the problem with rolls Royce was that everything that was done
to maintain engines was time sensitive. However 20 million pages of paper.
documenting a variety of aspects of aircraft engine parts ( refer table 1) were
produced by the company. Each engine model had over 20 variants. Each
variant needed to be serviced differently about a 100 airlines with which rolls
Royce had active relationships were based in other countries. Even with several
gigabytes of data in the companies mainframes it was often difficult to get the
right piece of information in time. The consequences were not just limited to
productivity and financial health of the company but also linked to safety of the
aircraft that company employees worked on.

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Problem scope – rolls Royce decided to scope the problem down to the critical
issues that had immediate paybacks for the firm. They decided that the key
players to be considered would be limited to

• Airlines
• Airframe manufacturers
• Engine and engine part manufacturers
• Component manufacturers

It was also decided that the scope of the initial knowledge management project
would be restricted to enabling different levels of reuse. mechanisms that would
allow workers to find use reuse and reintegrate knowledge related to servicing
long haul commercial engines.

Such scooping is essential to place reasonable limits on the expectations from a

knowledge management system. scooping helps firms figure out if the targets of
their knowledge management investments are the one that need immediate
attention both in terms of business sense and strategic urgency.

Rolls Royce and referential sources of knowledge.

Air craft Referential knowledge

Trent 700 Engine maintenance manuals
Trent 800 Illustrated catalogs of parts
RB 211 - 524 Supply diagram
RB 211 – 535 Service bulletins
Time limits manuals
Standard practices

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 MBA-HRM HRM in Knowledge based Organisation

Overhaul manuals
Maintenance manuals
Tay
IAE V2 500 A1A5
IAE V2500 – D5

Knowledge management project goals

Rolls Royce was very good at laying out realistic and achievable goals up front.
The initial set of goals specified for the KM systems were classified in two
broad categories.

• Customer oriented goals-these were goals that would accrue benefits for
the customer

1. reducing equipment downtime for maintenance

2. doing it right for the first time
3. improving maintenance quality
4. improving maintenance scheduling
5. reducing data handling as well as access and search costs.

• Internal goals – these were the benefits in terms of improved internal

efficiency that were expected from the rolls Royce knowledge management
system. The knowledge management team hoped that the new system would
help the company in the following ways.

1. improve customer data access across multiple platforms

2. deliver applications that required little or no training

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 MBA-HRM HRM in Knowledge based Organisation

3. reduce publishing costs, ensure security and comply with ATA( air
transport association )
Measurement – lacking any other mechanisms for measurements, rolls Royce
measured its return on investment by using surrogate financial measures.
Most of these figures were translated into dollar figures as shown below.
• Paper costs saving of $3 million
• Customer productivity savings worth $1 million
• 5% improvement in maintenance time
• un measured savings in data processing costs.

Solution – this system resembles the improved version of an intranet. It had user
specific table of contents a customizable interface, the ability to add
annotations, provided dynamic updates and delivered notifications.
Case 2 knowledge management in sales and marketing – the case of platinum
technology
Platinum technology inc based in Oakbrook terrau. Illinois is a company on the
first track with close to $ 800 million in revenues in 1997 lane platinum has
been on an acquisition war path since 1994. between 1994 and 1998 the
company brought out 70 other companies.
The series of acquisitions resulted in a 500 percent growth I n its portfolio of
product offerings. Platinum has almost 7000 employees and has been a six fold
growth in its sales force head count since 1995. these employees are distributed
across platinum’s 120 offices world wide.

Platinum realized early on that managing the companies knowledge assets was a
critical enabler that would allow it to sustain this growth with strong
commitment from senior management platinum has been exploring the use of
knowledge management in the following areas of operation.

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 MBA-HRM HRM in Knowledge based Organisation

• Sales and marketing

• New product development
• Contracting and outsourcing
• Customer and partner interaction knowledge management
• Consulting
• Education

In the sales and marketing division alone an employee has a number of potential
sources that she can tap into for information needed to make a sale or to pursue
a prospective customer these include

• Over 100 lotus notes databases

• Two custom developed applications
• 35 intranet sites
• Thousands of networked disk drives
• Printed documentation
• Discussion forums

The problem

Platinum’s marketing and sales department was faced not with information
paucity but with information overload and redundancy. Even if an employee
making a sales call could retrieve information that see needed she would com e
across multiple versions of it in different locations. There was no telling what
content was current and applicable. To overcome these challenges, platinum’s
marketing and sales department took its first step towards building a
comprehensive knowledge management system.
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The system

The knowledge management system that platinum built was called jaguar.
Jaguar began with two components an intranet based system that contained
detailed documents and information and jaguar direct a machine resident bullet
style nugget information repository. The system was built on documenters
EDMS software and easy software from wisdom aware for capturing context
and tacit forms of knowledge. The driving web servers were based in the united
states , Singapore and Europe and were supplemented with fortnightly updated
notes databases replicated on 65 servers worldwide. Since the system was meant
to support sales and marketing staff it provided the following information

• Platinum’s products
• Current pricing
• Competitive information
• Enterprise wide information including that about other divisions of the
company
• World wide sales calendars
• Information on platinum’s partners
• Details ion mergers and acquisitions that were relevant to the company
• References to documents and manuals
• Subscription service that allowed users to subscribe to content of interest

Development stages
Platinum started at the point where it was easy to get a stable start managing
explicit knowledge. Only later did the company proceed to manage tacit forms

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 MBA-HRM HRM in Knowledge based Organisation

of knowledge. The system made extensive use of icons to represent different

types of content and each intent element and meta data attached to it. Easily
recognizable icons were used to identify information that was newer than two
weeks and information that had changed in the preceding seven days. As a
knowledge management team member put it, “ we are a very visual society sop
we made excessive use of icons. Ridiculous? Yes ! but effective ? yes !
Through out the development process the knowledge management team asked
the actual sales staff about what seemed to work and what did not., based on
their feedback the systems developers promptly incorporated relevant
suggestions and features. The companies knowledge champion says that over
50% of the enhancements came from end user suggestions. As a result about 40
% of the companies sales force personnel use of the system daily. With such an
exceptionally high level of usage, platinum found that banner advertisements
with in the site were the most effective way of making company wide
announcements.
Throughout the development process the knowledge management team asked
the actual sales staff about what seemed to work and what did not. Based on
their feedback the systems developers promptly incorporated relevant
suggestions and features. The companies knowledge champion says that over
50% of the enhancements came from end user suggestions, as a result about
40% of the companies sales force personnel use the system daily. With such an
exceptionally high level of usage, platinum found that banner advertisements
with in the site were the most effective way of making company wide
announcements.
At a later stage, the system introduced push content delivery. Users should
select content areas that were of interest to them. As new content came in users
could either opt to receive it in an e-mail message or go to a personalized page
on the site and follow hyperlinks pointing them to new relevant information as it

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 MBA-HRM HRM in Knowledge based Organisation

became available. General updates were automatically sent every Sunday. The
company hopes that analyzing usage statistics on jaguar it can predict sales
activity Ahead of time. To ensure the content is relevant and up to date emails
are sent to contributors by the system one week before an expiration date. If
they do not review their contribution, it gets archived, since the additional
burden of validating and reviewing their own contributions was placed on
employees, platinum made sure that they were given extra time to spend on the
task.

The initial version of the system was implemented with in four months of its
initial approval. The system was so successful that it became the second most
widely used application in the company next only to email.
Measurement :

Lacking any other formal mechanisms for demonstrating a return on investment

for their knowledge management investments, platinum demonstrated the
success of its system entirely in terms of the financial benefits. Benefits
quantified in terms of their effect on the companies bottom line are easier to sell
to senior management. the knowledge management teams quantified benefits in
the following terms.

• The system paid for itself in 1.5 months

• The knowledge management system resulted in cost savings of about $ 6
million in its very first year.
• Sales force productivity increased by a then current run rate of 6%
• The system reduced international FedEx shipments by 15% ( primarily
resulting from the savings resulting from not having to produce and

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 MBA-HRM HRM in Knowledge based Organisation

distribute lotus notes and database CD-ROM updates to several dozen

offices worldwide, every few weeks.)

The knowledge management team further estimated that jaguar saved an

average sale a and marketing person about two hours every week, created a
bottom up pull of knowledge and contributed to the competitive stand of the
firm as a whole. Although the aforementioned benefits delivered a lot more
value to the company, the knowledge management team initially quantified
these benefits only in terms of FedEx savings that resulted from the introduction
of this system. by choosing such a metric the KM team was able to successfully
demonstrate the tangible benefits of the system ( even though one might argue
that they were pessimistically underestimated)
Case 3- knowledge management in customer support - the case of Nortel

Nortel corporation sells a suite of design and manufacturing applications in the

united states and Europe. The global support group provides support to both
European customers and units states. There are group of support personnel in
both the united states and Europe. Nortel is required to provide 24 hour support,
seven days a week, with limited budgets and restricted head counts of workers.

Issues – Nortel was facing problem providing support to its customers

primarily because there was no suitable mechanism that allowed a support
representative to check if anyone in the support organization had encountered a
citation problem before. This meant that the teams in different offices did not
share any of their knowledge related to problem solving and ended up
reinventing solutions time and again. Nortel identified several knowledge
related problems that its support group faced.

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 MBA-HRM HRM in Knowledge based Organisation

• Unclear definition of roles and responsibilities of personnel

• Lack of a formal process and guiding documentation
• Informal service level agreements
• Inconsistent measures of customer satisfaction
• Lack of formal training for support staff
• No centralized collection of repository of predefined solutions
• European and US offices operating as groups of teams rather than as a
single distributed team
• Excessive rework and reinvention of solutions ( no formal mechanism for
capturing problems and solutions existed)

• Lack of knowledge sharing between teams based in the two continents.

The three phases of organizing knowledge

The support group knowledge management team at Nortel decided to manage

knowledge more effectively, hoping to help the support group perform better,
given budget and head count constraints,, they decided to tackle the whole
process of managing knowledge in three discrete steps.

Phase 1: capturing knowledge and processes that were being used by their
American and European support offices.

Phase 2: consolidating these processes to provide an environment for co

operative trans pacific problem solving.

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Phase 3: implementing integrated systems to enable collaborative knowledge

intensive processes.

Nortel began by bringing in an external consultant who interviewed support

staff both in Europe and the United States. After receiving positive feedback
from these interviewees, the knowledge management team concluded that it had
the support of prospective end users. to gain acceptance, the external consultants
presented their understanding of the process to key stakeholders and support
staff. Following this feedback from employees was incorporated into the
process descriptions that the consulting company had written. The processes
identified were then classified into different areas of process ownership. Roles
were assigned to each area on the basis of training provided to support
employees.

Nortel support staff members were then trained in terms of the new integrated
process that were synthesized, as a final step, Nortel implemented an integrated
progress tracking system that allowed team members to track progress on
solving a problem s teams across the globe worked on it. The final step in terms
of support technology was the implementation of a centralized database where
all problems and their outcomes were recorded.

Although the implementation done by Nortel seems to be less sophisticated in

comparison to some other companies knowledge systems its results were
delivered exactly where they were needed most. Remember that esoteric notions
of organizational good cannot drive knowledge management until it is helping
the company solve critical process problems and eliminating knowledge related
problems that are threatening to bring the company down. Nortel expended
more effort on the people side than it did on the technology side: a perfect way

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 MBA-HRM HRM in Knowledge based Organisation

to begin when the processes themselves are not clearly understood or explicitly
defined. The lesson here is that the problem should define knowledge
management technology, technology should define the problem. The effort paid
strong dividends. Nortel is a leading provider in its markets and enjoys high
levels of customer loyalty.
Case 4 knowledge management in the semi conductor industry – gasonics
international

Gasonics is a company operating out of north America, Europe, Asia and the
pacific rim with annual revenues in the range of $120 million. gasonics
produces processing systems for fabrication of semiconductor wafrs. companies
manufacturing electronic chips for use in electronic equipment use systems such
as the ones that the gasonics produces.

Gasonics systems have for a long time enjoyed a reputation for high reliability
and low systems downtime when compared to industry averages. The company
depends on its customers for feedback and it extensively uses this feedback to
improve both its existing systems and services. Faced with extremely low
margin like other competitors operating in the industry, gasonicse operating
costs and improve internal efficiencies since the whole process of designing and
building wafer processing equipment is knowledge intensive, gasonics decided
that the answer lay in stream lining its use of internal knowledge.

The Starting Point : Technical Publications

The technical publications department wrietes , typests, updates, provides and

support technical manuals, literature and other information that support gasonics

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products. The company found that its technical publications department was an
increasingly major cost centre for four reasons.

1.as equipment sold by gasonics was expensive, typically over $1000000 a

piece downtime costs for customers resulted in thousands of dollar worth of
loses every time the system went down. Hence the technical publications
department at gasonics needed to provide an increasingly high number of
customers custonmised version of their publications, this in effect is similar to
mass customization.

2.updates were frequently required.

3.customers demanded electronic versions of product manuals.

4.the cost of archiving old documentation was increasing at an abnormal rate.

Gasonics realized that its technical publications department was the most logical
place to begin its knowledge management initiative. since the goals of the
business unit and the technical publications departments were highly congruent,
improving one the company hoped would improve the other

The below table shows the two se4ts of objectives.

Technical publications department Business unit goals

goals

Speed up delivery of technical Reduce training and support costs

Documentation

Improve usability of documentation Increase equipment uptime Reduce

and application manuals training and support costs

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Improve content and currency of Increase equipment uptime, increase

publications service revenues, reduce training and
support costs, improve customer
service through better feedback
mechanisms.
Link publications to other enterprise Improve customer service
resources

Make technical literature, Improve product and service

documentation and publications easily offerings, improve customer service.
accessible.

The goal : three months to target

Gasonics planned for a knowledge management system that could be

operational within three months. the challenges that came up included:

• The need to replace legacy data and paper based information with
consistent and accurate electronic data equivalents.

• The ability of customers to customize product and service documentation

electronically.

• Integration with other enterprise systems.

• Justification of costs involved in doing the above.

Gasonics reduced paper related costs by 50% immediately. besides this obvious
financial benefit, the company reducing training costs used technicians instead
of engineers for providing support, and improved the quality of solutions
provided by making maintenance efforts work right the first time more
frequently than it had done in the past.

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Case 5 knowledge management pilot case : Monsanto nutrition and consumer

products

Monsanto a Chicago based company with over 2000 employees is the owner of
leading brands of nutrition products such as nutria sweet and equal. The
employee base consists of sales, marketing, research, manufacturing and
administrative personnel. Monsanto began its knowledge management efforts
with a small community of analysts consisting of marketing and business
strategy analysts. This effort served as a pilot project for the large scale
deployment of its knowledge sharing network based on plum tree knowledge
server. As john Ferrari the process and technology manager at Monsanto aptly
puts it you do not want to focus too much time and energy into solving
technology problems; focus on process issues and use off the shelf customizable
applications where possible.

By using a pilot deployment, Monsanto identified the areas in which expected

problems of deploying a large scale, organization wide knowledge management
system were concentrated. The pilot implementation led it to believe that about
75% of the issues were concentrated. The pilot implementation led it to believe
that about 75% of the issues were people, process and culture. Technology the
easy part was the remaining 25%.

Case 6 Knowledge Management To Build Economies Of Reuse – The Case Of

Texas Instruments

Texas instruments the semiconductor firm that is credited with

commercialization of the integrated circuit ( also known as an electronic chip),
began its knowledge management initiatives centered on its technical literature

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 MBA-HRM HRM in Knowledge based Organisation

and documentation. As one would expect .TI has over whelming amounts of
data relating to its semiconductor products this data needs to be managed
updated and effectively distributed. for example

• TI has about 3100 data sheets relating to its semiconductor products. each of
these average about 12 pages in length.
• TI produces and maintains about 50 user guides each of which averages 250
pages.
• TI supports its products with 400 application notes each of which is between
2 to 100 pages in length.
• TI maintains 14 gigabytes of SMGL files and 12 gigabytes of meta data.
• TI revises about 90000 pages of documentation every year
• TI has about 100 technical writers, 5 illustrators and 10 team leaders who
collectively manage this process.

Texas instruments decided to change these work processes so that they would
be better aligned with the ways in which documentation staff worked on these
documents and technical literature. the focus was on creating content in a
manner that allowed ease of reuse and enabled production of multiple outputs
from a single input or data source. By toggling all content, I hoped to be able to
manage context along with associated data. I uses the notion of a fundamental
shift to describe this process migration from document thinking to object
thinking.

To make this shift happen the knowledge management team actually converted
all paper documents to an electronic form. These expense of the conversion
process was justified on the basis of the following.

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 MBA-HRM HRM in Knowledge based Organisation

• Cost containment –reusing portions of existing documents resulted in cost

savings of up to 70% of the cost o new documents.
• Value added – by adding non textual information to documents ( such as
code, models, executable files and demo files)additional context was added
to knowledge that was well explicated and codified.
• Reduced labor cost – it took fewer people to do the same job so savings in
employee compensation were a direct outcome.

The important lesson to take from this highly specialized initiative that
primarily focused on managing already confided knowledge is that a good place
is to begin knowledge management is with content that is already there.
Creating meta data for that content is the next logical step. but Jeff Barton of
Texas instruments warns that creating such met can be the expensive part of the
process.
Conclusion – we looked at cases analyzing knowledge management projects in
some of the most innovative pioneers in knowledge management. We examined
the strategic drivers for knowledge management have put these programs into
place primarily as a vehicle for increasing revenues and cost containment. The
common thread running through most of these cases was an intent to leverage
best practices, improve collaboration, profit from knowledge, strengthen
organizational competence, widen competitive gaps and leverage expertise.

Clearly identify the business objectives that drive knowledge management. All
these companies have demonstrated their ability to show tangible even if small
returns on their knowledge management investments otherwise it is all too easy
to lose focus of what the project is supposed to actually accomplish.

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