Forster N. - Maximum performance (2005)(en)

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average, the companies they surveyed each spent $US20 million a year on gathering competitive intelligence from their environments. More significantly, the study also showed that 95 per cent of all the information that a typical business needs to know about its rivals ‘is in the public domain – and the remaining 5 per cent of what you need you can surmise from your own experience and knowledge’ (Hollands, 2001). However, collecting this kind of data is the easier part of this process. At the beginning of 2004, there were at least 200 software tools available on the market to collect and sort information from the external environment. While these software packages are good at retrieving and storing massive amounts of information, interpreting and disseminating this information is the more difficult part. So four questions need to be considered by organizations when evaluating the selection of knowledge management software:4

•How will we collect the data and will the new software enable us to ‘trawl’ for the information that our organization really needs?

•What parameters and screening protocols need to be set up within the software to identify potentially important information and omit trivia?

•Who will have access to this information and who will be responsible for analysing and interpreting it?

•How will this information be disseminated and, most importantly, how will it be integrated into operational strategies and management decision-making processes?

Effective knowledge management must also be linked to an organization’s strategic intelligence capabilities. This is described by Marchand as ‘what a company needs to know about its business environment to enable it to anticipate change, as a basis for designing strategies that will create business value for customers, and will be profitable in new markets and industries in the future’ (Marchand, 1997: 16). On several occasions in this book, we’ve seen that the ability to anticipate future trends is now a core organizational and leadership competency. Consequently, the challenge for many companies is to replace old knowledge sets that may have stood them in good stead for many years, and build new ones that can encompass the changing needs of their customers and clients, and help them to deal with new competition in their markets and to deal with unanticipated threats and challenges. The gathering of strategic intelligence and knowledge can help in this process.

Some companies, like Royal Dutch Shell, have long relied on a formal strategic planning group to carry out research on future trends and have used this information to develop policies linked to the company’s

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corporate business and strategic plans (de Geus, 1997). Many larger companies entrust the monitoring of future trends to specific groups of research and development staff. Others rely on specialist research companies, market forecasters and ‘future-casters’, on the assumption that outsiders bring fresh information and form unbiased views of product and market trends (some examples of these can be found in note 4). Strategic intelligence is different to ‘competitor intelligence’ (what is already known about the existing competition) and ‘competitive intelligence’ (information created by intelligence analysts). The challenge of true strategic intelligence is to increase the intelligence gathering quotient (IGQ) of all employees in an organization, rather than leaving this in the hands of one department or group of senior managers. By definition, the more eyes and ears you have scouring the environment for useful knowledge and intelligence, the more responsive your organization will be to external opportunities, threats and challenges. This approach regards the acquisition of knowledge from outside the business as being a responsibility, not just of senior managers, but of everyone within the organization. For example, one of the key findings of a 12-year in-depth study of Intel was that the longterm strategic success of any firm can no longer be driven solely from the top by senior management. Every business must now foster a culture that embraces bottom-up ideas about strategic change, by developing ‘internal ecologies’ that support continuous innovation, learning and knowledge sharing, with ideas garnered from both within and outside the organization’s boundaries.

One of the biggest problems facing many organizations is that employees naturally filter out information they consider to be irrelevant to their functional domains, rather than considering how extraneous information could benefit other functions or serve the interests of the organization as whole. Hence a sales department will focus primarily on information about customers and clients; a marketing department on market trends; an R&D group on developments in research and technology; manufacturing on process innovations and product engineering; and so forth. Up to a point, this may suffice. However, a bunker mentality or a fragmented IGQ will be insufficient if a company needs to be able to anticipate change quickly as the basis for developing new strategies before they are forced on the company. In this kind of environment, strategic intelligence and the sharing of this knowledge has to become part of a company’s collective culture and mindset, rather than being grafted onto one function or being left solely in the hands of senior managers.

In summary, the acquisition of knowledge and strategic intelligence from outside a business can no longer be left as the sole preserve of the

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senior managers or leaders of organizations. Businesses that allow individuals or groups of employees to hoard knowledge on a ‘need to know basis’ cannot anticipate the future effectively. They are unlikely to survive in the long term, because most organizations now need as many ‘feelers’ as possible out in their competitive environments to sense, collect, organize, process and utilize new information. The old organizational adage ‘Knowledge is power’ is fast being replaced by a new one: ‘Knowledge will ensure our collective survival and long-term success.’

In order to check (in an explicit and codified form) how much implicit/personal knowledge you have acquired from reading this chapter, please complete self-development Exercise 10.2. All the answers can be found in the preceding pages.

Exercise 10.2

Knowledge management quiz

Across

1.Effects or consequences that result from the sharing of information by employees. These effects can be difficult to quantify.

5.Abbreviated name of a network of large numbers of individuals with their own mental models, who interact with each other according to a set of behavioural rules.

6.The value of an organization’s relationships with its customers, particularly intangibles such as loyalty to a company or a product.

8.Learning about the nature of learning.

11.Knowledge regarding markets, products, technologies, resources, skills and systems that a business owns or controls, and which it uses to achieve its objectives. The term is sometimes used interchangeably with ‘intangible assets’ and ‘intellectual capital’.

13.The knowledge, skills, attitudes and behaviours of people in the organization. Unlike structural capital, it is owned by individuals rather than the organization. It is the renewable part of intellectual capital.

14.Someone who is responsible for managing an organization’s knowledge, and leveraging its intangible assets to create value.

Down

2.Know-how, brands, processes that affect the success of a business, but aren’t measured or monitored as part of a corporate growth strategy.

3.A computer program that simulates human decision making.

4.Unspoken, non-codified know-how that usually resides in the heads of people and is gained mainly through experience.

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7.The collective brainpower of the organization that can be put to use to create wealth, including human capital (skills and knowledge of individuals), customer capital (the value of continuing relationships with customers) and structural capital (codified knowledge such as patents, databases, files, trademarks).

9.Programs that help people to work together collectively while located remotely from each other. They facilitate information sharing and email handling, so all employees can share their knowledge systemically (for example, Lotus® Notes and Microsoft® Exchange Server).

10.The data-driven extraction of information from large databases that can reveal trends, correlations and patterns to improve business processes and working practices.

12.A large database containing information about particular subjects, gathered from a variety of sources and integrated into a systemic whole.

For a bonus point, why does the computer company Apple have a logo that features an apple with a chunk bitten out of it?5

Note: If you don’t want to go back and locate the answers in the preceding sections, these can be found in note 6.

Source: Adapted from Bagshaw and Phillips (2000); used with permission

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Conclusion: linking culture, innovation, learning and knowledge management

Knowledge has become the key economic resource and the dominant and, perhaps, even the only source of competitive advantage.

(Peter Drucker, Post-Capitalist Society, 1993)

There are five broad conclusions that can be drawn from the theory and practice of employee knowledge management. First, in common with all change initiatives, introducing knowledge management into organizations is not a paint-by-numbers exercise. This requires a careful diagnostic of the specific needs of an organization and its employees, and only then introducing the appropriate blend of personalized and/or codified systems to support its core business activities, and their daily work. This means that all knowledge management initiatives must take into account the hardware (the storage/dissemination systems to be introduced), the software (the Intra/Internet tools that people will be allocated to acquire and share knowledge) and, most importantly, the wetware (the human beings who will be using these systems).

Second, these initiatives must be driven from the top, while simultaneously giving employees as much ownership as possible over the creation and introduction of knowledge management strategies. Without strong leadership, a shared vision (and so on), workable strategies and appropriate incentives, employees will not buy into knowledge management initiatives, and resistance to these will build up. Effective knowledge management is a two-way top-down/bottom- up process that recognizes that the only truly effective way to capture knowledge is by setting up systems that can capture the innovations and ideas of employees, at all levels of an enterprise, rewarding people when they make effective use of this information in their daily work and making full use of it in the creation and delivery of new products and/or services.

Third, simply introducing knowledge management initiatives alone will not instantly make a company more profitable or more adaptable to change and uncertainty. These can certainly help, but in themselves are not enough. It is also a managerial paradigm that has little chance of success if it is introduced in isolation from other organizational changes. The power of organizational culture, in enhancing employee performance and engendering positive attitudes to change, has been highlighted several times in this book. The same principle applies to knowledge management initiatives. For example, one of the few comprehensive studies of the relationships

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between culture, learning, innovation and knowledge management (in Australian e-companies) concluded that culture is the bedrock of employee learning, this in turn drives creativity and innovation and these foster the creation and fast dissemination of new knowledge, both within and from outside the boundaries of these businesses. This then melds into a self-reinforcing, mutually reciprocal, quadru- ple-loop process, and no single element can then exist in isolation from the others. And, when they do coexist in this symbiotic fashion, this creates what can be accurately described as a ‘Fifth Element’, an organizational mind-set that is operationally superior to the four single components of culture, organizational learning, innovation and knowledge management (Woodward, 2001). Combined with the intelligent and judicious use of new technologies, this combination of elements may well represent the Holy Grail of organizational management for the next decade or so.

Fourth, if an organization’s culture does not first support and reward (un)learning, creativity and innovation, there is little chance that knowledge management initiatives will be successful, because knowledge creation is still driven by employees. In turn, culture, the symbolic framework that defines the way we do things in organizations, drives these three elements. All available research literature supports the view that knowledge management and organizational culture are inextricably linked, and it is impossible to introduce knowledge management initiatives into an organization that does not have the right kind of learning culture to support it (see, for example, Woodward, 2001; McLean, 2000; Choo, 1998; Lucier and Torsilieri, 1997).

Fifth, although there may be difficulties introducing knowledge management initiatives into organizations, many academic researchers and business leaders believe that knowledge management, like the Learning Organization, is something more than an organizational fashion accessory or a short-lived consulting fad. As Dixon observed more than a decade ago, ‘We have entered the Knowledge Age, and the new currency is learning. It is learning, not knowledge itself that is critical. Knowledge is the result of learning and is ephemeral, constantly needing to be revised and updated. Learning is “sense making”: it is the process that leads to knowledge’ (Dixon, 1994: 1). As with change management, innovation and learning, the organizational imperative underpinning knowledge management is the desire never to become complacent, never to allow inertia and atrophy to set into the organization’s collective mind-set, and to be continuously looking for new and better ways of doing things. It’s also important to remember that information is not the same as

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knowledge, and knowledge is not the same as wisdom (one of the building blocks of leadership described in Chapter 1). It still requires creative human beings to make sense of (and utilize) the staggering quantities of information that are now available to all Internet-linked organizations, and without this capability ‘information paralysis’ will inevitably set in.

In summary, employee knowledge and intellectual capital now account for a disproportionate share of competitive advantage in business and, consequently, the profits of many companies. The explosion in rich connectivity and the homogenization of information standards and protocols are enabling the most open exchange of information and knowledge in human history. Knowledge management is an approach to organizational management that regards the strategic acquisition of this knowledge and information as every employee’s responsibility, not just senior managers’; as something that must become ingrained in a culture of learning and in the behaviour and working practices of employees throughout the business. Becoming an organization that manages its knowledge well is a journey that can certainly have a clear and definable start, but is also one without end, regardless of the profession we work in or the organization we work for. This is because both individuals and organizations now have less and less time to acquire more and more information and new knowledge. Increasingly, we no longer have the luxury or the time to learn by doing, or to rely on experience and common sense accumulated over many years. We must acquire and utilize information in faster, more efficient and more creative ways, not only from our colleagues but also from company databases and from outside organizational boundaries. The end goal of this process is to create an organization that has a very high level of creative intelligence and adaptability. Organizations that do not have these attributes will find it difficult to survive over the next decade, as will those who have not grasped the potential and limitations of new technologies as drivers of organizational performance and success. This topic is addressed in the next chapter.

Knowledge is a difficult thing to ‘manage’. It does not thrive well in captivity and does not survive for long outside its natural habitats – people’s minds. To add to this difficulty, the life span of knowledge ranges from mere seconds to eons. Despite all of this, the sentiments of almost every executive who has utilised knowledge management echo those of Drucker: that leveraging organizational knowledge is not only important, it may be the most important job that management now has.

(Abridged from Ruggles, 1998: 89)

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Exercise 10.3

Having read through this chapter, how can you convert any new insights you have acquired about the management of employee knowledge and intellectual capital into your organization’s operational strategies in the future?

1.

2.

3.

4.

Notes

1In organizations these have been variously labelled: knowledge officers, brokers, facilitators, consultants, engineers, editors, navigators, experts, strategists and stewards.

2PWC was taken over by IBM during 2001.

3If you’re interested in more information on knowledge management options and the management of intellectual capital, a complementary source is C. Choo (1998), The Knowing Organization: How Organizations Use Information to Construct Meaning, Create Knowledge and Make Decisions, Oxford: Oxford University Press: very academic in tone, but one of the most thorough books on the creation, dissemination and management of knowledge in organizations.

For practitioners there are several ‘how to’ books on the market that also describe common mistakes that have been made by organizations when introducing knowledge management initiatives. These include M. Rumizen (2001), The Complete Idiot’s Guide to Knowledge Management, New York: Alpha Books; British Standards Institute (2001), Knowledge Management: A Guide to Good Practice, London: British Standards Institute; and M. Bagshaw and P. Phillips (2000), Knowledge Management, Ely, Cambs: Fenman Limited, a practitioner’s training and development manual that describes strategies for introducing knowledge management initiatives into organizations for the first time.

4A detailed analysis of the large range of codified intelligence gathering systems now available to organizations is beyond the scope of this book. If you’d like more information on this, a good starting point is the Bagshaw and Phillips manual. Many organizations such as IBM and Hewlett-Packard have commercially available strategic intelligence gathering systems. In addition to these, there are more than 100 current websites advertising strategic intelligence gathering services and products. There is also a variety of websites that predict everything from the emergence of future technologies, to new drugs and self-driving cars (www.newsfutures.com, www.ideosphere.com, and www.incentivemarkets.com), sites that test consumer preferences for products that don’t yet exist (www.anderson.ucla.edu/faculty/ ely.dahan) and those that deal with scenario mapping (www.gbn.org).

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5This symbolizes the birth or creation of new knowledge, derived from the fable of Adam and Eve in Christian creation mythology.

6Knowledge management quiz answers:

Across: (1) Emergent properties, (5) CAS (Complex Adaptive System), (6) Customer capital, (8) Metalearning, (11) Knowledge assets, (13) Human capital, (14) Knowledge manager

Down: (2) Intangible assets, (3) Expert system, (4) Tacit knowledge, (7) Intellectual capital, (9) Groupware, (10) Datamining, (12) Data warehouse