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Knowledge management  in a global knowledge-based firm Dr. Robin Teigland Stockholm School of Economics September 2007 robin.teigland@hhs.se
A world of increasing knowledge flows…. Growth Time Output of information and knowledge Human  absorptive capacity Cohen, WM och Levinthal, D A, Absorptive Capacity: A new Perspective on Learning and Innovation, Working paper, Carnegie Mellon University and University of Pennsylvania, October 1989
… that is increasingly connected. Nodes are individuals and colors represent organization s   Casper & Murray 2002
What is globalization? ,[object Object],[object Object]
[object Object],[object Object],[object Object]
From a multi-domestic company to a successful global firm Multi-domestic Global Integrated Sub7 HQ Sub10 Sub9 Sub8 Sub13 Sub11 Sub3 Sub5 Sub4 Sub1 Sub2 Sub6 Sub14 Sub14
Aligning operations increases success Global strategy Competence Management Motivation Management  Knowledge Management
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],What are the benefits of knowledge management?
[object Object]
From tacit to articulate knowledge  ,[object Object],[object Object],Tacit Articulated High Low Codifiability MANUAL How to play soccer
The knowledge management challenge The majority of a company’s  valuable  knowledge is  tacit  and  resists   being articulated
[object Object],[object Object],What is knowledge management? C reating  knowledge E mbedding knowledge D isseminating  knowledge O rganizing knowledge  C C O D E KM
[object Object],[object Object],[object Object],KM must be aligned with strategy Global strategy CODE KM ,[object Object],[object Object],[object Object],[object Object],[object Object]
Information technology for KM  ,[object Object],[object Object],IT is an enabler!
Challenges to knowledge databases ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Avoid creating information junkyards Building knowledge repositories Information junkyards or Empty libraries
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Organizational structure for KM
Physical layout ,[object Object]
Creating centers of excellence COE HQ
San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Improving knowledge transfer through  job rotation Rotated from  Stockholm
Where do individuals go for help in solving problems? Co-located  colleagues Intranet Non-electronic documents Internal electronic networks Contacts in other offices Firm boundary External electronic networks  Internet Non-electronic documents Other contacts
Knowledge networking through communities of practice Connecting people so that they collaborate, share ideas, and create knowledge
[object Object],[object Object]
What are communities of practice? ,[object Object],[object Object],[object Object],[object Object]
CPs are not teams or personal networks McDermott 2001 -Obligation -Job requirement -Value -Commitment - Friendship Glue -Planned -Actively discovered -Serendipitously  discovered Value Creation -Organize tasks -Meetings -Informal communications -One-on-one Activity -Assigned -Defined boundary -Mostly volunteers -Permeable boundary -Friends & acquaintances -No boundary Members -Accomplish goal -Solve problems -Share info. & ideas -Expand knowledge -Share information -Friendship Purpose Team Community of Practice Personal Network
Communities are the grease in the KM wheel C reating  knowledge E mbedding knowledge D isseminating  knowledge O rganizing knowledge  C C O D E KM
Role of communities of practice  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Communities can have a different primary purpose Helping Best-practice Innovation Knowledge stewarding
Community membership and roles Coordinator Peripheral Core Group Active
Two extreme communities of practice Face-to-face Virtual
Communities cross all boundaries Company Suppliers Customers Competitors
Don’t forget to support  informal external networks at the individual level! Organization Electronic communities Partners Customers and suppliers Previous work and school colleagues External Large portion of new ideas and formal collaboration relationships come from personal external contacts
Encourage an open innovation attitude Not all the smart people work for us.  We need to work with smart people inside and outside the company. The smart people in our field work for us. If you create the most and the best ideas in the industry, you will win. If you make the best use of internal and external ideas, you will win. Closed attitude Open attitude Chesborough 2003
Examples of communities of practice at Ericsson Magnusson & Davidsson 2004 - Primarily face-to-face  -Ensure sharing of best practices and commonality ,[object Object],[object Object],Competence Groups Primarily face-to-face  ,[object Object],[object Object],[object Object],[object Object],Ericsson System Architect Program, ESAP - Virtual and face-to-face  - Think tank on emerging trends in society, technology, & consumers - Inter-organizational including universities, experts, & institutions - 600 with core of 40 Ericsson Foresight -Virtual -Use internet to design joint e-business platform ,[object Object],[object Object],eRelationship Vodafone Communication channel Objectives Type and Members Community
Ericsson Competence Groups ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Magnusson & Davidsson 2004
Ericsson Competence Groups for worldwide  Flow Control Centers Country 1 Country 2 Country 14 1. Process & IT 2. Order mgt  14. Customer care Function Countries 3. Forecasting  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Magnusson & Davidsson 2004
Cap Gemini – NCN MS Electronic Community ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],What is knowledge management? Global strategy C reating  knowledge E mbedding knowledge D isseminating  knowledge O rganizing knowledge  C KM CODE
What is your organization’s KM vision? ,[object Object],[object Object]
In global organizations  KM is increasingly complicated … ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
…and difficult to achieve. Gupta & Govindarajan 2000 Number of subsidiaries  providing and receiving  knowledge and skills
Challenges to successful KM processes ,[object Object],[object Object]
Two departments within the same firm Department 1 Department 2 Higher degree of learning & knowledge sharing Poorer degree of learning & knowledge sharing
Unawareness and power games Icon programmers – Stockholm  Surprise!! Bottleneck  
Islands of competence despite intensive KM efforts San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Icon programmers – Worldwide
Biggest difficulties to successfully managing knowledge in organizations  Culture Top management’s failure to signal importance Lack of shared understanding of strategy Organizational structure IT / Communication restraints Incentive system Lack of problem ownership Ruggles 1998
Biggest difficulties   to knowledge transfer  Changing people’s behavior  Measuring value/performance  of knowledge assets Determining what knowledge should be managed Justifying use of scarce resources for KM initiatives Making knowledge available Attracting and retaining talented people Mapping organization’s existing knowledge  Ruggles 1998
So, why should I share? ,[object Object],[object Object],[object Object],[object Object]
What are some barriers to  successful knowledge management? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Challenges with external networks ,[object Object],[object Object],[object Object]
Loyalty Loyalty Individuals often have conflicting loyalties Organization Profession Firm boundary
Is knowledge trading good or bad for a firm? We pass over the nondisclosure agreements of different companies and trade company secrets all the time.
Who owns the knowledge? Organizational information   vs.  Personal expertise
What about individual performance? A high degree of participation  in local communities of practice  + On-time performance  – Creative performance
But here we see the reverse A high degree of participation  in dispersed electronic communities - On-time performance  + Creative performance
In summary, individuals have  choices   about how they use their knowledge… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
…and most importantly, management  cannot mandate  social relationships John Eva Hans Miguel Paul Jan Lars Pia Anna Nils Bill Erik Mike Al Alex
Challenges to successful KM processes ,[object Object],[object Object]
A constant local vs global tension ,[object Object],[object Object],[object Object],[object Object],[object Object]
Conflicting demands on subsidiaries  lead to resistance to global KM processes ,[object Object],[object Object],[object Object],[object Object],Sub7 HQ Sub10 Sub9 Sub8 Sub11 Sub3 Sub5 Sub4 Sub1 Sub2 Sub6 Sub14 Sub14 Sub13
Internal turf wars ,[object Object],[object Object]
The challenge of knowing what is best practice Here one  knows Here one  does  not  know Arvidsson 2002 Evaluation of Market Practices Firm A Subsidiaries' self-evaluations 3 2 1 0 -1 -2 -3 Corporate management's evaluations 3 2 1 0 -1 -2 -3 Evaluation of Market Practices Firm B Subsidiaries' self-evaluations 2 1 0 -1 -2 -3 -4 Corporate management's evaluations 3 2 1 0 -1 -2 -3
Aligning operations increases success Global strategy KM CODE KM CODE Competence Management Motivation Management
Supporting global KM processes Competence Management  Motivation Management  Providing the organization with the right mix of talent to meet existing and future needs Creating an open, knowledge sharing culture with a high degree of company loyalty
A variety of tools ,[object Object],[object Object],[object Object],[object Object],[object Object],Competence Management  Motivation Management
Creating a competence management system ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Magnusson & Davidsson 2004
Creating competence charts at Ericsson Individuals in one unit Comparison of units Professional – Operations, financial, etc.  Business – Markets, core business, strategy, etc. Human – Interpersonal, communication, KM attitudes, etc. Magnusson & Davidsson 2004
CM supports KM ,[object Object],[object Object],[object Object]
A variety of tools ,[object Object],[object Object],[object Object],[object Object],[object Object],Competence Management  Motivation Management
Recruiting – What should one look for? ,[object Object],[object Object],[object Object],[object Object],OR
When you hire someone …  … ..you “hire”  his or her  network.
A variety of tools ,[object Object],[object Object],[object Object],[object Object],[object Object],Competence Management  Motivation Management
Aligning incentives with KM ,[object Object],[object Object],[object Object],Challenge Satisfaction $$$ Monetary Status and  recognition
Examples of incentives ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Satisfaction
Encourage experimentation and accept failure Every Nucor plant has its little storehouse of equipment that was bought, tried, and discarded. Just don’t keep making bad decisions.  - Chairman, Nucor Steel
But be aware of local differences Global efficiency National responsiveness Worldwide  innovation & learning
[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object]
Cultural differences affect KM behaviors “ Work-to-live” culture Risk  avoidance + — + Knowledge acquisition Knowledge sharing
A variety of tools ,[object Object],[object Object],[object Object],[object Object],[object Object],Competence Management  Motivation Management
Promote socialization to build networks San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Rotated from  Stockholm Icon programmers – Worldwide
Why encourage socialization? Trust, commitment, and an open environment are essential for knowledge exchange in networks
Socialization examples ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Myths and reality checks about networks ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Leverage and understand  internal and external networks  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Improve connectedness and  unplug bottlenecks internally ,[object Object],[object Object],[object Object],[object Object],Department 1 Department 2
A variety of tools ,[object Object],[object Object],[object Object],[object Object],[object Object],Competence Management  Motivation Management
Nurturing a visionary organization - A framework ,[object Object],(2) What we aspire to become, achieve, & create (changing) Collins & Porras 1996 ,[object Object],[object Object]
1) Why we exist and what we stand for ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Collins & Porras 1996
1) Why we exist and what we stand for ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Collins & Porras 1996
1) Core values ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
2) What we aspire to become, achieve, and create ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Collins & Porras 1996
But ensuring widespread understanding  across the organization is a difficult task Icon Medialab ,[object Object],[object Object],Vision ,[object Object],[object Object],[object Object],[object Object],Values Programmer reality Management’s conception
Cultural differences add yet another challenge ,[object Object],[object Object],[object Object]
Hewlett-Packard (1990s) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Aligned operations provides results 1 - Superior performance  2 - Medium performance   3 - Poor performance
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],What are the benefits of knowledge management?
Aligning operations increases success Global strategy Competence Management Motivation Management  KM CODE
Interested in learning more  or better yet, participating in a research study? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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Knowledge Management In Global Firm

  • 1. Knowledge management in a global knowledge-based firm Dr. Robin Teigland Stockholm School of Economics September 2007 robin.teigland@hhs.se
  • 2. A world of increasing knowledge flows…. Growth Time Output of information and knowledge Human absorptive capacity Cohen, WM och Levinthal, D A, Absorptive Capacity: A new Perspective on Learning and Innovation, Working paper, Carnegie Mellon University and University of Pennsylvania, October 1989
  • 3. … that is increasingly connected. Nodes are individuals and colors represent organization s Casper & Murray 2002
  • 4.
  • 5.
  • 6. From a multi-domestic company to a successful global firm Multi-domestic Global Integrated Sub7 HQ Sub10 Sub9 Sub8 Sub13 Sub11 Sub3 Sub5 Sub4 Sub1 Sub2 Sub6 Sub14 Sub14
  • 7. Aligning operations increases success Global strategy Competence Management Motivation Management Knowledge Management
  • 8.
  • 9.
  • 10.
  • 11. The knowledge management challenge The majority of a company’s valuable knowledge is tacit and resists being articulated
  • 12.
  • 13.
  • 14.
  • 15.
  • 16. Avoid creating information junkyards Building knowledge repositories Information junkyards or Empty libraries
  • 17.
  • 18.
  • 19. Creating centers of excellence COE HQ
  • 20. San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Improving knowledge transfer through job rotation Rotated from Stockholm
  • 21. Where do individuals go for help in solving problems? Co-located colleagues Intranet Non-electronic documents Internal electronic networks Contacts in other offices Firm boundary External electronic networks Internet Non-electronic documents Other contacts
  • 22. Knowledge networking through communities of practice Connecting people so that they collaborate, share ideas, and create knowledge
  • 23.
  • 24.
  • 25. CPs are not teams or personal networks McDermott 2001 -Obligation -Job requirement -Value -Commitment - Friendship Glue -Planned -Actively discovered -Serendipitously discovered Value Creation -Organize tasks -Meetings -Informal communications -One-on-one Activity -Assigned -Defined boundary -Mostly volunteers -Permeable boundary -Friends & acquaintances -No boundary Members -Accomplish goal -Solve problems -Share info. & ideas -Expand knowledge -Share information -Friendship Purpose Team Community of Practice Personal Network
  • 26. Communities are the grease in the KM wheel C reating knowledge E mbedding knowledge D isseminating knowledge O rganizing knowledge C C O D E KM
  • 27.
  • 28. Communities can have a different primary purpose Helping Best-practice Innovation Knowledge stewarding
  • 29. Community membership and roles Coordinator Peripheral Core Group Active
  • 30. Two extreme communities of practice Face-to-face Virtual
  • 31. Communities cross all boundaries Company Suppliers Customers Competitors
  • 32. Don’t forget to support informal external networks at the individual level! Organization Electronic communities Partners Customers and suppliers Previous work and school colleagues External Large portion of new ideas and formal collaboration relationships come from personal external contacts
  • 33. Encourage an open innovation attitude Not all the smart people work for us. We need to work with smart people inside and outside the company. The smart people in our field work for us. If you create the most and the best ideas in the industry, you will win. If you make the best use of internal and external ideas, you will win. Closed attitude Open attitude Chesborough 2003
  • 34.
  • 35.
  • 36.
  • 37.
  • 38.
  • 39.
  • 40.
  • 41. …and difficult to achieve. Gupta & Govindarajan 2000 Number of subsidiaries providing and receiving knowledge and skills
  • 42.
  • 43. Two departments within the same firm Department 1 Department 2 Higher degree of learning & knowledge sharing Poorer degree of learning & knowledge sharing
  • 44. Unawareness and power games Icon programmers – Stockholm Surprise!! Bottleneck 
  • 45. Islands of competence despite intensive KM efforts San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Icon programmers – Worldwide
  • 46. Biggest difficulties to successfully managing knowledge in organizations Culture Top management’s failure to signal importance Lack of shared understanding of strategy Organizational structure IT / Communication restraints Incentive system Lack of problem ownership Ruggles 1998
  • 47. Biggest difficulties to knowledge transfer Changing people’s behavior Measuring value/performance of knowledge assets Determining what knowledge should be managed Justifying use of scarce resources for KM initiatives Making knowledge available Attracting and retaining talented people Mapping organization’s existing knowledge Ruggles 1998
  • 48.
  • 49.
  • 50.
  • 51. Loyalty Loyalty Individuals often have conflicting loyalties Organization Profession Firm boundary
  • 52. Is knowledge trading good or bad for a firm? We pass over the nondisclosure agreements of different companies and trade company secrets all the time.
  • 53. Who owns the knowledge? Organizational information vs. Personal expertise
  • 54. What about individual performance? A high degree of participation in local communities of practice + On-time performance – Creative performance
  • 55. But here we see the reverse A high degree of participation in dispersed electronic communities - On-time performance + Creative performance
  • 56.
  • 57. …and most importantly, management cannot mandate social relationships John Eva Hans Miguel Paul Jan Lars Pia Anna Nils Bill Erik Mike Al Alex
  • 58.
  • 59.
  • 60.
  • 61.
  • 62. The challenge of knowing what is best practice Here one knows Here one does not know Arvidsson 2002 Evaluation of Market Practices Firm A Subsidiaries' self-evaluations 3 2 1 0 -1 -2 -3 Corporate management's evaluations 3 2 1 0 -1 -2 -3 Evaluation of Market Practices Firm B Subsidiaries' self-evaluations 2 1 0 -1 -2 -3 -4 Corporate management's evaluations 3 2 1 0 -1 -2 -3
  • 63. Aligning operations increases success Global strategy KM CODE KM CODE Competence Management Motivation Management
  • 64. Supporting global KM processes Competence Management Motivation Management Providing the organization with the right mix of talent to meet existing and future needs Creating an open, knowledge sharing culture with a high degree of company loyalty
  • 65.
  • 66.
  • 67. Creating competence charts at Ericsson Individuals in one unit Comparison of units Professional – Operations, financial, etc. Business – Markets, core business, strategy, etc. Human – Interpersonal, communication, KM attitudes, etc. Magnusson & Davidsson 2004
  • 68.
  • 69.
  • 70.
  • 71. When you hire someone … … ..you “hire” his or her network.
  • 72.
  • 73.
  • 74.
  • 75. Encourage experimentation and accept failure Every Nucor plant has its little storehouse of equipment that was bought, tried, and discarded. Just don’t keep making bad decisions. - Chairman, Nucor Steel
  • 76. But be aware of local differences Global efficiency National responsiveness Worldwide innovation & learning
  • 77.
  • 78.
  • 79. Cultural differences affect KM behaviors “ Work-to-live” culture Risk avoidance + — + Knowledge acquisition Knowledge sharing
  • 80.
  • 81. Promote socialization to build networks San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Rotated from Stockholm Icon programmers – Worldwide
  • 82. Why encourage socialization? Trust, commitment, and an open environment are essential for knowledge exchange in networks
  • 83.
  • 84.
  • 85.
  • 86.
  • 87.
  • 88.
  • 89.
  • 90.
  • 91.
  • 92.
  • 93.
  • 94.
  • 95.
  • 96. Aligned operations provides results 1 - Superior performance 2 - Medium performance 3 - Poor performance
  • 97.
  • 98. Aligning operations increases success Global strategy Competence Management Motivation Management KM CODE
  • 99.