Comprehensive intellectual capital management step by step phần 4

80 THE THREE STAGES OF INTELLECTUAL CAPITAL MANAGEMENT with organizational memory loss. Parts of the organizational brain do not know the experience or have access to the knowledge of other parts, and the knowledge is lost. No matter how advanced the knowledge in one part, if not communicated, transferred, and transformed to organizational learning, then it is apt to be lost. Organizational memory loss occurs when one part of the organizational brain is oblivious to the knowledge that other parts possess. Memory loss is also noted when the same department or division forgets the knowledge it gained from previous experiences or projects. As a result, organizations tend to reinvent the wheel every time a new, yet in many respects similar, project is undertaken. This also means the organization will repeat the same mistakes, given that it has not learned from previous experiences. Many organizations that are skeptical of the business value of KM can hardly deny the losses they sustain as a result of losing valuable knowledge resources. Memory lost is knowledge lost, which requires investment to be recreated, jeopardizing the effi-ciency and quality of the value creation process, and the productivity of the organizational oper-ations. Indeed, the Gartner Group forecasted that in 2001 organizations that lack KM programs will lag by 30 to 40 percent in speed of deployment of new products and services.2 The main reason behind this is that organizations do not know what they know. Not knowing what you know as an organization would result in serious underutilization of knowledge resources, as strategic decisions get made without full appreciation of the actual ability of the organization to compete in a certain area of knowledge. It cuts both ways. In some situations, there is an overesti-mation of the depth or breadth of organizational knowledge that an organization possesses com-pared to the desired competitive position, resulting in impaired ability to attain that position. Discovering this at a time when things can still be saved is not enough since the cost of acquiring the requisite knowledge resources will undermine profits. On the other end of the spectrum are organizations that underestimate their knowledge and as a result lose many opportunities to capi-talize on these resources. What makes this more eminent is that knowledge as a resource has a short life cycle and can be rendered obsolete in a short time if not grown and developed. Examples abound. Look at your own organization. How many times has your division or department spent thousands of dollars to acquire the required information or knowledge, only to find out that another department has done most of the work before? How many times has a team adopted a solution that another team in the organization has tried and, finding that it does not work, perfected another? Repeating the same errors, looking for resources externally that are available somewhere else in the organization, and not being able to repeat your success are all manifestations of organizational memory loss. Take Ford, for example. Deciding to replicate its unprecedented success with Taurus, Ford looked for the practices behind Taurus success. Though the procedures and processes were codi-fied, that did not provide the reason why and how Taurus was so successful. There were other secrets that only those who worked on the project possessed. Ford found that the team who worked closely with the Taurus model, and thus had the requisite tacit knowledge, had left the company without passing this knowledge to any other employee. The knowledge behind Taurus’s success was lost forever. The only way Ford could regain it was to invest again in creating that knowledge from scratch.3 Not wanting the Taurus experience to recur, Ford created the Best Prac-tice Replication (BPR) program, with the main goal of collecting, verifying, and transferring best practices between the 53 plants of the organization with exponential profits. Ford’s BPR program generated more than 2,800 best practices by 2000, with an actual added value of $886 million and a projected added value of $1.26 billion.4 In fact, the phenomenon of memory loss is very prevalent, particularly in big organizations. Departmental and divisional isolationism, as well as knowledge hoarding, have been behind many financial losses and poor performance. In a food processor company with 42 plants, it was THE KNOWLEDGE MANAGEMENT STAGE AND ORGANIZATIONAL IQ 81 found that although all the plants used essentially the same manufacturing processes and tech-nologies, their practices differed greatly. Not only had each plant developed its own practices, but performance levels were so varied that there was a 300 percent difference in performance between the worst and the best performing plants.5 The different plants, and the organization as a whole, were learning from neither their mistakes nor their successes. No plant knew what the other plants knew. The memory loss problem is compounded by another deficiency in the organizational brain— the brain drain, wherein valuable knowledge resources are lost with employees leaving the organ-ization. It happens when management fails to capture the tacit knowledge of its employees by transferring it to explicit knowledge. Only 10 to 30 percent of an organization’s codified (explicit) knowledge in databases and man-uals is the knowledge needed for them to operate the enterprise.6 The rest are tacit knowledge resources. This means that employees’brainpower, tacit knowledge, or human capital is the most important resource in the organization’s value creation process. If employees remained with organizations forever, then there would be no real need to instill the critical knowledge of employ-ees into the organizational knowledge base or transfer it to other employees. However, high turnover makes it inevitable that some knowledge workers will walk out with valuable knowledge resources that the organization will lose forever and have to reinvent again. An estimated 30 per-cent of the workforce in the U.S. private sector leaves in the first couple of years of employment. The figures are more alarming for government agencies, with an estimated 50 percent of the work-force retiring every year.7 Confusingknowledgewithinformation,manyorganizationsthoughtimplementingrobustinfor-mation technology (IT) programs would enable them to capture the tacit knowledge of their employees. Information databases were kept sometimes of e-mail communications, and tools were provided to facilitate information flow across the whole organization. The result was a great disap-pointment.Informationmanagementandtechnology,thoughimportantenablersofKM,willnotdo the trick. People will not share their knowledge simply because they have e-mail, nor will they update the information resources in databases if not related and relevant to their jobs. The brain drain problem cannot be solved without understanding that knowledge creation is also a social process. That is what KM offers by explaining what knowledge is in the organizational context. Defining organizational knowledge is one of the main contributions of KM. KM practitioners repeatedly stress the distinction between knowledge and information resources. By doing so, the relationship between knowledge and information, tacit and explicit knowledge, and hence KM and IT/information management is clarified. This is very important since there are still many organizations that mistakenly believe that to implement an IT infrastructure to connect people together, and to build a database, is to manage knowledge. This confusion stems from a mis-understanding of what knowledge is. So what is knowledge, anyway? WHAT IS KNOWLEDGE? KNOWLEDGE IS TO KNOW! “What is knowledge?” is a 5,000-year-old question, which is still the subject of much philosophi-cal, psychological, and epistemological research. It is defined as the act of knowing where a per-son analyzes information, evaluates the situation, and then creates knowledge! Luckily, the discipline of KM found a way to avoid joining this 5,000-year-old debate by adopting two work-ing definitions of knowledge. The first is that knowledge is not information, and the second is that the knowledge of an organization is more than the aggregate knowledge of its individual members. Understanding these two definitions lays the basis for KM. 82 THE THREE STAGES OF INTELLECTUAL CAPITAL MANAGEMENT The Information/Knowledge Interface—Two Sides of a Coin or Two Levels of Consciousness If information and knowledge are one and the same, then an organization with the best informa-tion databases and technology should be the most knowledgeable. Information cannot substitute for knowledge despite the fact that to know is partly to have all the information you can get about something. This is because knowledge, unlike information, cannot stand alone from the knower—the human being. Knowledge is the outcome of the human cognitive abilities to under-stand, perceive, sense, and evaluate a situation. The human element is what distinguishes knowl-edge from information. This means the best information databases and technology systems cannot result in knowledge unless and until processed by the human mind. It is the human mind that transforms data and information into applicable knowledge expressed in action or stored in the mind as experience. The link between information and knowledge is so close that some define knowledge as the next level of abstraction that information is taken to when applied to more specific situations by the human mind.8 Others define knowledge as “information that has been understood, inter-preted, and validated in the context of application.”9 The relationship between information and knowledge has been studied thoroughly, because if the process by which information is converted into knowledge can be rationally analyzed, then it can be computed. Interestingly, this is the quest of Artificial Intelligence, wherein the goal is to have a computer replicate human thinking. In fact, many attempts have been made to replicate the brain’s neurological transfer of information in computing programs without success so far, other than in providing what is called intelligent decision support programs.10 However, it seems that until they can install a heart into a computer, no computer will be able to replicate the human brain’s ability to know. This is because, as neurological research has shown, information bits transferred by the neurons of the brain are loaded with parcels of emo-tional charges that trigger memories. When the memory is triggered, the brain accesses reser-voirs of past experiences, sometimes unrelated experiences, to judge a certain situation, producing knowledge. Added to that is the human intuitive or psychic ability, which intensifies the depth of human knowledge. The external input of information into one’s brain alone is not what produces knowledge, but those combined with internal inputs as well. The relevance of this to KM is that no matter how robust your computational and technological systems are, unless the human aspect of knowledge generation is understood and accommodated, a KM pro-gram will not be effective. While IT is a crucial enabler of communication, and hence sharing and transfer of information and knowledge, it alone cannot capture the depth of tacit human knowledge. Though IT tools facilitate change of behavior, they will not necessarily enable or enhance the knowledge creation process. Trillions of dollars are spent every year on IT with very few returns, and studies of com-puters in the workplace have shown no increase in efficiency or effectiveness.11 In fact, overre-liance on IT by organizations implementing KM programs was found to be the main reason behind the failure of these programs.12 IT supremacy should not be confused with knowledge, and value, creation. Many organizations declare “We operate at Internet speed, and we have an internal response time of 10 minutes” without realizing that it is not the number of e-mails or user hits that are critical for knowledge creation. A survey by Ernst and Young of 431 U.S. companies in 1997 showed that almost all of the companies restricted their KM initiatives to creating an intranet (47%), creating knowledge repositories (33%), or implementing decision support tools (33%). Only 24% created networks of knowledge workers (a structural/cultural change), and 18% mapped sources of internal expertise (to locate tacit knowledge).13 THE KNOWLEDGE MANAGEMENT STAGE AND ORGANIZATIONAL IQ 83 To enable knowledge creation, the IT system should enable the conversion of tacit into explicit knowledge resources on a continuous basis, in order to retain as many resources as possible when employees leave. To do that, the IT system should accommodate the human/social aspect of knowledge creation. This human/social aspect of KM stems from the nature of organizational learning itself. While individual learning is a cognitive venture, group learning is more of a social activity in which the members interact, share, and challenge each other’s interpretation, then act. Through this interaction, new knowledge is created and individual tacit knowledge is trans-formed into explicit organizational knowledge. The IT system/infrastructure should not only pro-vide the necessary communication tools, but should also be designed to support the knowledge creation cycle of the core business processes of the organization. The IT system should also be based on a clear understanding of how individual knowledge is converged into organizational knowledge and vice versa. The Individual/Organizational Knowledge Interface— One for All and All for One The definition of knowledge as the understanding gained from experience, and applied to new sit-uations, ties knowledge closely to the individual. This implies that the term organizational knowledge is a mere metaphor to denote the aggregate knowledge of an organization’s employ-ees. After all, an organization cannot have a brain or a memory to have knowledge. But if an orga-nization’s knowledge is merely the aggregate knowledge and brainpower of its employees, then how do we classify organizational behavioral patterns reflected in databases, records, and hun-dreds of practices and operations? What about the wisdom gleaned from the organization’s past experiences and transactions, and the insight gained from contact (relationships and networks) with customers, suppliers, and possibly competitors? Though all these resources have been cre-ated and are still maintained by individual employees, a considerable part of them remains with the organization after employees leave at the end of the day. There is no doubt that the knowledge of a newly established organization with few members is that of its employees. But as organizations grow in size and life span, organizational knowledge takes other forms as well. As the organization grows, its knowledge base surpasses the knowl-edge of its individual members, to include past experiences and behavioral routines that develop as a result of the application of knowledge to an insurmountable number of settings. These behav-ioral patterns and routines have stored in them past experiences, and hence knowledge or wis-dom, that affect the organization’s modus operandi and the way it responds to the changing environment. In addition to these routines and practices, an organization has a wealth of information resources that it collected and codified through the years. This represents the informational plat-form, which the employees process to produce more knowledge, and hence is part of the orga-nizational knowledge base. The value of information databases lies in their potential to facilitate the generation of new knowledge by employees and thus should be based on their learning needs and the competencies that the organization plans to develop. That is why knowledge man-agers refer it to as the knowledge base, since it provides the basic knowledge resources that an employee needs to advance on the learning curve. The interaction between the individual knowledge and the various forms of organizational knowledge, and the conversion from one form to the other, is what creates value in an organization. But, like the information/knowledge interface, it is hard to determine with any precision when individual knowledge ends and organizational knowledge begins. This is because of the complex nature of knowledge, human and organizational behavior. To clarify the matter, KM practitioners 84 THE THREE STAGES OF INTELLECTUAL CAPITAL MANAGEMENT Tacit Explicit Tacit Tacit to Tacit Socialization Tacit to Explicit Externalization Explicit Explicit to Tacit Internalization Explicit to Explicit EXHIBIT 5.1 Tacit/Explicit Knowledge Conversions created the concept of tacit/explicit knowledge, which incorporates both dichotomies (informa-tion/knowledge and individual/organizational knowledge) in a manner that enables an organiza-tion to understand the knowledge and value creation process. Under the tacit/explicit distinction, explicit knowledge includes all that can be codified or expressed in documents, manuals, and databases. Tacit knowledge, on the other hand, encom-passes all that cannot be clearly articulated but is the real source of knowledge and the basis of decision making. In addition to experience, skills, and competence, tacit knowledge includes intuition and things that the employee “just knows.” The most efficient and effective way to pass this knowledge is through personal contact. To enable effective decision making, KM practition-ers search for ways by which an organization can locate, externalize, and capture the tacit knowl-edge of its employees. Once captured, the tacit knowledge is converted into explicit knowledge, by being codified, and later shared. But there are other individual/organizational or tacit/explicit knowledge conversions that take place as well. Nonaka and Takeuchi14 explain that there are four modes of knowledge conversions based on the tacit/explicit concept, as illustrated in Exhibit 5.1. First, knowledge can be converted from tacit to tacit through mentoring and apprenticeship and other forms of personal contact (i.e. socialization). Second, knowledge can be converted from tacit to explicit when the individual articulates the basis of her or his decision and thus conveys knowledge (i.e., externalization). Then there is the internalization of knowledge wherein explicit is transferred to tacit knowledge when the employee learns from the organization’s codified knowledge (reports, manuals, etc). Finally, explicit is transferred to other explicit knowledge where documents or information are shared and added to the organizational information database. These four modes of knowledge conversions on the individual/organizational interface and the information/knowledge conversion in the human brain are what KM tries to boost to maximize value creation. Misunderstanding of these knowledge relations and conversions lies at the heart of so many failed KM initiatives. It is important to note that KM is not only about implementing a number of solutions to minimize organizational memory loss, prevent the brain drain, and sup-plement IT tools, though many organizations use it just for this purpose. Using it restrictively limits the potential of KM in advancing the whole organization on its journey to become a learn-ing organization. British Petroleum proved that by implementing a robust KM program whereby the whole organization was transformed to a “big brain,” boosting its overall performance exten-sively, and pulling it from the brink of bankruptcy.15 ... - tailieumienphi.vn