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KM Concepts Module 6: KM as a Business Strategy

Objectives:

To review business scenarios that have benefited from Knowledge Management and discuss how innovation is the key element in a business strategy.

You will learn to:

  • demonstrate an understanding of KM applied to an industry, including success factors and results
  • recognize the hype, the marketing claims, and the facts about knowledge management
  • define innovation and recognize the five characteristics of innovation
  • demonstrate an understanding of technology and diffusion

 


All of the following types of problems and situations are the concerns of Knowledge Management:

  • Employees leaving the company
  • Keeping consultants because they hold valuable knowledge
  • Hiring people because of their experience or expertise
  • Acquiring knowledge by hiring people away from other firms
  • Acquiring another firm to gain access to the its knowledge base
  • Analyzing the market for your products
  • Deciding on whether to imitate or innovate
  • Increasing the rate of innovation

These are the type of concerns and dilemmas that many organizations face, and they represent areas where Knowledge Management can be applied.

A Success Story

Software programmers have gone through several "revolutions" in the last 20 years.  The most recent and notable is the switch from a structured programming method to Object-Oriented Programming Method (O-OP).  To practice an object-oriented method requires a radical shift in the way a programmer thinks about software design and coding.

In the earliest programming languages, code had to be newly written for everything.  However, software programmers using O-OP create code in "bundles" that can be reused in the present application or by other programs or programmers.  A new way to diagram and manage the development software is required.  The skill shift is large, and it can be a difficult transition.  It usually takes usage on several projects to see any return on the investment in money and time.  The transition of a team usually takes a year, with a 25% dropout if all goes well.  Management is at first skeptical, so the traditional way to approach this is by making one team the pilot program.

One company needed to make the transition faster with as many teams as possible.  They also wanted to apply O-OP to a critical program (connected to their most critical business process) as their "pilot project."

Using a Knowledge Management approach and team, here were their success factors.

  • Executive sponsorship came from a Marketing VP.

  • Multi-team learning was designed using eight IT teams, and four business process re-engineering teams

  • They had an intensive five-day kickoff workshop in which the teams practiced sharing knowledge with each other.

  • People were rewarded for sharing observations, insights, and lessons learned.  Rewards were built into their performance reviews.

  • Communication bridges to the knowledge sources of the organization were identified, mapped, and created.

  • All software was Internet-enabled.

A Knowledge Management Center created on their Intranet provided

  • Links to Internet Java and other software languages
  • Software development method FAQs
  • Business process re-engineering FAQs
  • Lessons Learned (best practices) from other teams
  • Video conferencing, chat rooms, electronic whiteboards

The results were amazing!

  • Learning time (Learning Curve) was reduced approximately one-third because they leveraged the learning of other teams. 

  • Strong teams helped weak teams.  Some teams became experts on individual topics because of the interests of the team.  This helped create a knowledge balance across the teams.

  • Software production increased with fewer errors.

This Business Process Re-engineering (BPR) project leveraged new results from the lessons-learned of the other BPR groups, resulting in a shorter learning curve and more efficient reuse of other teams’ knowledge.  The project was completed in half the anticipated time,.   


* Application exercise #1

QUESTION 1
Give three examples of business situations or environments in which a KM initiative might not help.   Why would they have failed?

Hype or Fact?

How does a company or individual looking for knowledge management training, consulting and software separate the hype from the reality while helping their organization to be more innovative?  Here are some of the typical marketing claims one must sort through.

Marketing ClaimKM Systems can manage your company’s knowledge.  If you manage your company’s knowledge, your company will be more successful.
Fact: If KM is applied properly, if you have executive support, if the company makes it part of their strategic plan, if the culture accepts it, if the stock market does not crash, etc., KM can help the company be successful.  But it cannot guarantee it.

Here are some other marketing claims that add to the confusion:

  • KM is document management, help desks, Inter or Intranet, human resource development, expert systems, data warehouses, databases, records and archives, library management, information science, etc.
  • “KM is something a computer does"
                    – overheard at a KM conference  
  • “A software development company will create a product that will do KM for us"
                      a large telecom company president  

Fact:  Strip away the computers and proposed tools, and you still end up with people managing knowledge.

KM processes have changed little since the first tribe.  One of the most powerful and ancient KM processes is storytelling.  In a business environment, stories are transmitted in informal situations such as around the coffeepot, water cooler, bull pens, etc., without the use of advanced technology.

Technology in KM

Many people do not see the role of technology as a tool to assist the social process, but both are important in helping us manage knowledge.

There are many assumptions about technology – its use and meaning in the context of knowledge management.  As defined for our KM training, technology is a design for instrumental action that reduces the uncertainty in the cause-effect relationship involved in achieving a desired outcome.

Most people think only of hardware (computers or the latest espresso machine) when they think of technology or a “technological advance."  Yet, technology usually has two components:    

  1. A hardware aspect: the tool that embodies the technology as a material or physical object
  2. A software aspect: the information and knowledge base for the tool

For example, we often speak of “computer hardware,” consisting of semiconductors, transistors, electrical connections, and the metal frame to protect these electronic components, and “computer software” consisting of the coded commands, instructions, and other information aspects which really are the systematic instructions that allow us to extend human capabilities in solving certain problems.  So, when we discuss technology throughout the KM training, we are really speaking of both hardware and software, with the software instructions frequently coming first. 

Innovation 

The goal of knowledge management is innovation, an idea, practice or object that is perceived as new by an individual or other unit of adoption (Everett Rogers).  With an innovation in a community or an organization, there are certain characteristics which a knowledge claim must meet in order to be considered an innovation.  These characteristics help to explain why consumer innovations like mobile telephones or VCRs may require only a few years to reach widespread adoption in the United States, while other new ideas such as the metric system or using seat belts in cars require decades to reach full usage.

Characteristics Needed for Successful Innovation

  1. Relative advantage – the degree to which an innovation is perceived as better than the idea it supersedes.  Like the mobile telephone, the greater the perceived relative advantage of an innovation, the more rapid its rate of adoption will be.
  1. Compatibility – the degree to which an innovation is perceived as being consistent with the existing values, past experiences, and needs of potential adopters.  An idea that is incompatible with the ideas and norms of a social system will not be adopted as rapidly as an innovation that is compatible.  For example, the use of contraceptive methods in Moslem and Catholic countries where religious beliefs discourage use of family planning is an incompatible innovation.
  1. Complexity – the  degree to which an innovation is perceived as difficult to understand and use.  New ideas that are simple to understand are adopted more rapidly than innovations that require the adopter to develop new skills and understanding.   
  1. Trialibility – the degree to which an innovation may be experimented with on a limited basis.  New ideas that can be tried in smaller stages will generally be adopted more quickly than innovations that are not divisible.  People are more inclined to bite off a pilot of an idea or try a new product if it does not require a long-term investment or commitment.  
  1. Observability – the degree to which the results of an innovation are visible to others.  The easier it is for individuals to see the results of an innovation, the more likely they are to adopt it.  Solar collectors are often found in neighborhood clusters in California, with three or four located in the same block.  Other consumer innovations like home computers are relatively less observable, and thus diffuse more slowly.

Meta Innovation

Combining these characteristics of innovations with the concept of meta-levels of knowledge management is the goal of Extreme Innovation.  The purpose of the Meta Innovation technique is to accelerate the rate of successful innovation as defined by the organization. Meta-innovation means innovating innovation!

The principles of Meta Innovation are:

  • Define a clear target toward which to innovate 
  • Leverage the diversity of ideas generated by diverse teams 
  • Use multiple layers of meta-innovation teams

With Meta Innovation, it is important to have a clear innovation target with the proper tension and then to engineer the knowledge environment to accelerate the rate of innovation. 

Some of the important innovation targets are:

  • Determining the organization’s innovation success targets
  • Improving the idea/successful product/service ratio
  • Planning the project so that the payoff of innovation is significantly greater than the cost of the innovation
  • Reducing cycle-time of idea-to-successful product delivery

In designing an Meta Innovation project, it is important to understand not just the characteristics of innovation adoption but also the characteristics of innovation diffusion so that we understand the components of engineering and the proper knowledge environment. 

The following case study of a diffusion that failed will help you to understand the concept of innovation diffusion.

The public health service in Peru attempts to introduce innovations to villagers to improve their health and lengthen their lives.  This change agency encourages people to install latrines, to burn garbage daily, to control house flies, to report cases of infectious diseases, and to boil drinking water.  These innovations involve major changes in thinking and behavior for Peruvian villagers, who do not understand the relationship of sanitation to illness.  Water boiling is an especially important health practice for villagers in Peru.  Unless they boil their drinking water, patients who are cured of infectious diseases in village medical clinics often return within a month to be treated again for the same disease. 

A two-year water boiling campaign conducted in Los Molinas, a peasant village of 200 families in the coastal region of Peru, persuaded only eleven housewives to boil water.  From the viewpoint of the public health agency, the local health worker, Nelida, had a simple task:  to persuade the housewives of Los Molinas to add water boiling to their pattern of daily behavior.  Even with the aid of a medical doctor, who gave public talks on water boiling before the campaign, Nelida’s diffusion campaign failed.  To understand why, we need to take a closer look at the culture, the local environment, and the individuals in Los Molinas. 

Most residents of Los Molinas are peasants who work as field hands on local plantations.  Water is carried by can, pail, gourd, or cask.  The three sources of water in Los Molinas include a seasonal irrigation ditch close to the village, a spring more than a mile away from the village, and a public well whose water most villagers dislike.  All three sources are subject to pollution at all times and show contamination whenever tested.  Of the three sources, the irrigation ditch is the most commonly used.  It is closer to most homes, and the villagers like its taste.

Although it is not feasible for the village to install a sanitary water system, the incidence of typhoid and other water-borne diseases could be greatly reduced by boiling the water before it is consumed.  During her two-year campaign in Los Molinas, Nelida made several visits to every home in the village but devoted especially intensive efforts to twenty-one families.  She visited each of these selected families between fifteen and twenty-five times; eleven of these families now boil their water regularly.

What kinds of persons do these numbers represent?  We describe three village housewives – one who boils water to obey custom, one who was persuaded to boil water by the health worker, and one of the many who rejected the innovation – in order to add further insight into the process of diffusion.

Mrs. A:  Custom-Oriented Adopter.  Mrs. A is about forty and suffers from a sinus infection.  The Los Molinas villagers call her a “sickly one.”  Each morning, Mrs. A boils a potful of water and uses it throughout the day.  She has no understanding of germ theory, as explained by Nelida; her motivation for water boiling is a complex local custom of “hot” and “cold” distinctions.  The basic principle of this belief system is that all foods, liquids, medicines, and other objects are inherently hot or cold, quite apart from their actual temperature.  In essence, hot-cold distinctions serve as a series of avoidances and approaches in such behavior as pregnancy, child-rearing, and the health-illness system. 

Boiled water and illness are closely linked in the norms of Los Molinas; by custom, only the ill use cooked, or “hot” water.  Once an individual becomes ill, it is unthinkable to eat pork (very cold) or drink brandy (very hot).  Extremes of hot and cold must be avoided by the sick; therefore, raw water, which is perceived to be very cold, must be boiled to make it appropriate to consume. 

Villagers learn from early childhood to dislike boiled water.  Most can tolerate cooked water only if a flavoring, such as sugar, cinnamon, lemon, or herbs, is added.  Mrs. A likes a dash of cinnamon in her drinking water.  The village belief system involves no notion of bacteriorological contamination of water.  By tradition, boiling is aimed at eliminating the “cold” quality of unboiled water, not the harmful bacteria.  Mrs. A drinks boiled water in obedience to local norms, because perceives herself as ill.

Mrs. B:  Persuaded Adopter.  The B family came to Los Molinas a generation ago, but they are still strongly oriented toward their birthplace in the Andes Mountains.  Mrs. B worries about lowland diseases that she feels infest the village.  It is partly because of this anxiety that the change agent, Nelida, was able to convince Mrs. B to boil water.

Nelida is a friendly authority to Mrs. B (rather than a “dirt inspector” as she is seen by other housewives), who imparts useful knowledge and brings protection.  Mrs. B not only boils water but also has installed a latrine and has sent her youngest child to the health center for a checkup.

Mrs. B is marked as an outsider in the community of Los Molinas by her highland hairdo and stumbling Spanish.  She will never achieve more than marginal social acceptance in the village.  Because the community is not an important reference group to her, Mrs. B deviates from village norms on health innovations.  With nothing to lose socially, Mrs. B gains in personal security by heeding Nelida’s advice.  Mrs. B’s practice of boiling water has no effect on her marginal status.  She is grateful to Nelida for teaching her how to neutralize the danger of contaminated water, which she perceives as a lowland peril. 

Mrs. C:  Rejector.  This housewife represents the majority of Los Molinas families who were not persuaded by the efforts of the change agents during their two-year water-boiling campaign.  In spite of Nelida’s repeated explanations, Mrs. C does not understand germ theory.  How, she argues, can microbes survive in water that would drown people?  Are they fish?  If germs are so small that they cannot be seen or felt, how can they hurt a grown person?  There are enough real threats in the world to worry about – poverty and hunger – without bothering about tiny animals one cannot see, hear, touch, or smell.  Mrs. C’s allegiance to traditional village norms is at odds with the boiling of water.  A firm believer in the hot-cold superstition, she feels that only the sick must drink boiled water.

 


 Application exercise #2

QUESTION
  • Based on your understanding of the characteristics of innovations, why did the diffusion of water boiling in the case study fail?
  • Identify one change in the campaign that might have worked better, incorporating the characteristics of innovations.
  • Identify a small or large idea or innovation campaign in your organization that failed.  What innovation characteristic was missing in the campaign?
 

We can define diffusion as a process by which an innovation is communicated through certain channels over time among the members of a social system.  It is a type of communication where the focus of the messages is about new ideas, and it is a key element in engineering knowledge claims and increasing the speed and quality of innovations in organizations.  It will be a focus in more depth in future courses.


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