Massachusetts Institute of Technology Sloan …

Massachusetts Institute of TechnologySloan School of Management

Executive ProgramsProf. Tom Allen, MIT

Knowledge Management

• Gaining Knowledge

– Technology Transfer • Between Organizations

• Within Organizations

– Gatekeepers

• Disseminating Knowledge– Technical Communication

• Organization Structure

• Physical Structure of Facilities

What do we know about technology transfer?

• It is a 'people process'.

• Transferring documentation is, at best, an auxiliary process.

• People must be in direct contact and understand each other to transfer knowledge.

• The best 'package' for knowledge is the human mind.

• Moving people is the most effective way to move knowledge

• This can imply either organizational or geographical movement.

• Organizational boundaries impose a serious barrier to the transfer of technology

• This is due to the development of different organizational cultures.

The Context of the Study

Project Team

Organization

'Twin' Projects

Company 'B'Company 'A'

Sources of Technology

Internal Staff

Outside Experts

Literature

Literature & Documentation

InternalStaff

OutsideExperts

Literature18%

People as Sources of

Technology

InternalStaff

OutsideExperts

Literature

People Outside

People Inside

All Written Material

Proportion of Messages

Technology Sources for Product Development Projects

10 20 30 40 50 60

People as Sources of Technology

OutsideExperts

Positive

Negative X XX

InternalStaff

Literature

Customer Evaluation of Solutions as a Function of Idea Source

High Low

Internal

External

Evaluation of Solution Source of Idea

'Boundary Impedance' of the Organization

OutsideExperts

Negative

InternalStaff

Literature

Science and Technology

• Science is Universal.

• Technology is Local.

Technology

• Technology is defined in terms of:

• The Business Goals

• The Marketing Strategy

• and most importantly,

• The Culture

• of the organization in which it is developed.

• Technical problems are thus defined in terms of that culture and its system of values.

The Local Nature of Technology

• This implies that:

• Anyone outside of the organization cannot fully understand the way that those within the organization define technical problems without understanding the organization's culture.

• This difficulty in understanding the problem is the principal barrier to technology fransfer.

• Barriers of this sort arise any time that we try to transfer knowledge across organizational boundaries.

• It thus holds true for internal communication as well as communication with other organizations.

• It is one of the causes of poor interfunctional relations in organizations.

Performance in Transferring Designs to Manufacturing

as a Function of CAD System Use for Communication

0 10 .2 0 .4 0 .6 0 .8 1 . 2 1 .4

H ig h

Mean Com m unications per Day

(T hrough C AD System )

p < 0.02

Using a Common Reference to Reduce Ambiguity in Communication

Product Development Manufacturing

Engineering

Effectiveness of Strategies for Reaching Common Understanding of Problems by Product Development and

Manufacturing Engineering

Freque

nt Mee

r m a n

Product Development

Prototype

Partial Layout of the BMW Forschung und Ingenieurung Zentrum

The Effect of Transfers

Continuing Relations

Potential Contacts

More Continuing Relations

Potential Contacts

Referrals

A Typical Technical Communication Network

(N > 600)

Netgraph of Communication Among Software Developers

Netgraph of Communication Related to Age

20 30 40 50

Year Year Year Year

Olds Olds Olds Olds

to Organizational Structure

A1B1C1C2C3C4C5C6C7C8C9D1D2

Netgraph of Communication Related

Physical Location

Fl 1 Fl 2 Fl 1

Bldg. A1

Bldg. B1

Bldg. C3

Bldg. C2

Bldg. A1

Bldg. B1 Bldg. C1

Netgraph of Communication Related to

Bldg. C1 Bldg. C2 Bldg. C3

Communication

Related to

Organizational

Structure

Netgraph of

Manufacturing Plant

Manufa

Communication Mapping

• location Order by

Communication Mapping

Project

Development

Process

Order by

Among Groups in Laboratory ‘K’.

Netgraph Showing the Low Level of Communication

Groups

Communication Network in a Small Laboratory

of Refereed Journals

Laboratory 'A'

Laboratory 'G'

Laboratory 'E'

Laboratory 'L'

Laboratory 'M'

Laboratory 'H'

Laboratory 'S'

Laboratory 'T'

Laboratory 'U'

Laboratory 'V'

0 5 10 15 20

Mean Journal Readership

High Communicators

All Other Staff

High Communicators Compared with Colleagues in Readership

p < 0.001

p < 0.02

p < 0.01

p < 0.05

p < 0.01

High Communicators Compared with Colleagues in Terms of

Laboratory 'A'

Laboratory 'G'

Laboratory 'E'

Laboratory 'L'

Laboratory 'M'

Laboratory 'H'

Laboratory 'F'

0 1 2 3 4 5 6

Mean Number of Contacts

High Communicators

All Other Staff

Regular Informal Contact Outside of the Organization

p < 0.05

p < 0.01

p < 0.001

The Gatekeeper as a Link to Outside

Technology

Literature

Outside Experts

Gatekeeper

Gatekeeper Characteristics

• High Technical Performance

• Not 'just communicators’

• Highest technical performers in the organization.

• Cannot be created by management.

• Low in the Organizational Hierarchy

• Concentrated at first level of technical supervision or below.

• Seldom found at higher levels of management.

• Seldom found on the technical ladder.

• Visibility

• They are easy to identify.

• Everyone knows who they are.

• Approachability

• Must be at least receptive to people.

International Gatekeepers

�International Gatekeepers tend to be Engineers or Scientists, who have worked in other countries and returned home.

�Engineers and Scientists visiting from other countries had very high foreign contact, but insufficient domestic contact to be International Gatekeepers.

A Managerial Career

SH $$$

The Dual Ladder

TechnicalManagerial

SDSS $$$

SSS $$

Engineer A

Engineer B

Engineer C

Distribution of Positions in One Firm's Dual Ladder

Managerial Technical

The Dual Ladder

TechnicalManagerial

$$$ SDSS $$$

SSS $$

Engineer A

Engineer B

Engineer C

Criteria for Technical Ladder Promotion

TechnicalManagerial

Engineer A

Engineer B

Engineer C

The Biggest Problem with the Dual Ladder

TechnicalManagerial

Engineer A

Engineer B

Engineer C

The Dual Ladder

TechnicalManagerial

Engineer A

Engineer B

Engineer C

Choosing Each of Three Possible Career Paths

Proportion of Engineers & Scientists in Ten Organizations

� MANAGEMENT 32%

� TECHNICAL LADDER 20%

� PROJECT ASSIGNMENT 48%

Career Preference as a Function of Age (N = 1,402)

20 30 40 50 60

Technical Ladder

Projects

Age (Years)

Management

Interesting

Career Preferences of Technical Ladder Staff as a Function of Age (N = 351)

Interesting

60 Projects

Management

Technical10

Ladder

20 30 40 50 60

Age (Years)

Career Preferences of Managers as a Function of

Age (N = 374)

20 30 40 50

Technical Ladder

Projects

Age (Years)

Management

Interesting

The Process of Innovation

INNOVATION

Technology

Market

Departmental Organization

D1 D6D2 D3 D4 D5

Technology

Market

Departmental Organization

D1 D2 D3 D4 D5

Technology

Market

Time & Coordination

Project Team Organization

Technology

P1 P6P2 P3 P4 P5

Market

Matrix Organization

Technology

Market

D1 D6D2 D3 D4 D5

P4 P5 P6 P7 P8P1 P2 P3

Matrix Organization

Technology

Market

D1 D6D2 D3 D4 D5

P1 P2 P3 P4 P5 P6 P7 P8

The Basic Tradeoff and Dilemma in Product Development Organization

• Departmental Organization • Project Team Organization• Departmental structure is more

closely mapped to the structure of the supporting technologies

• Project Team structure groups people from different disciplines together in a single team all reporting to a common manager.

• It thereby provides a better connection to those • It thereby provides better

technologies and better coordination of the project tasks and increased sensitivity to

ongoing technical support to market dynamics.

the project effort. • This is, however, accomplished

• This is, however, accomplished at the cost of much greater difficulty in coordination of the project tasks and less responsiveness to market change.

at the cost of a separation from the disciplinary knowledge underlying the project effort. When this is carried to an extreme, it will gradually erode the technology base of the organization.

Organizational Structure Space I

subsystem interdependenceIss =

rate of change of knowledge

dK dt =

Organizational Structure Space II

o oo o

Project Team

Departments

Organizational Structure Space III

Department

Project

T1 > T2

Structuring the Organization

• Standard Industrial Practice– Ignores the rate at which technologies are

developing (despite the fact that this can often be measured).

– Usually ignores the interdependencies in project work (seasoned project managers are an exception).

– Focuses on project duration (and usually makes the wrong decision on this parameter).

Organizational Structure Space IV

Department

Project

Organizational Structure Space V

Department

Project

Department dM dt

BMW FIZ I Concurrent Engineering

Matrix Connections to Market and Technology

Technology

Mgr Mark

Matrix Connections to Market and Technology

Technology

Head Dept

Mgr IPT

Some Problems

Head Head Dept

Head Dept

Technology

Competition for Resources

Problems with Imbalance

Head Head Dept

Head Dept

Technology

The Need for Balance

Head Head Dept

Head Dept

Technology

BALANCE

The Inescapable Conflict

Head Head Dept

Head Dept

Technology

CONFLICT

A More Complete Matrix Using Integrated Product Teams

Head Head Head Head Dept Dept Dept

Head IPT

MFGMKTG Integrated

Product

Matrix Connections to Product Development and

HeadDept

Product

Development

Head Dept

Manufacturing

Engineering

Integrated

Product

Management of Transitions

• The critical points of vulnerability in the life of a project are the points of transition. – Transitions can involve many parameters, for example:

• People

• Management

• Leadership & leadership style.

• Primary organizational responsibility and reporting relationships.

• Nature of the work.

• Types of knowledge required.• Physical location.

• To change all of these simultaneously is to court disaster.

Management of Transitions II

Transition Points P

Management of Transitions IV

• Projects must be protected through transitions. – There must be areas of continuity to offset the areas of

change.

– Team size must grow in a gradual fashion.• This has implications for both organizational structure and

physical architecture.

• Both must be very flexible to allow this to happen along with a gradual transition in reporting relationship.

– There should be an extra effort to retain a sense of ‘ownership’ among team members.

• Avoid ‘runway management’.

Management of Transitions III

Transition Points

social order

Tom Allen, MITspatial order organizational order

Transition Performance

Separate Co-Located

Location of Engineers

p < 0.001

PERFORMANCE AS A FUNCTION OF

GROUP AGE

(PELZ & ANDREWS

0 2 4 6 8 10 12

Mean Tenure of Group Members (Years)

Project Performance as a Function of Team

(45 Chemical Industry Projects)

0 2 4 6

Mean Tenure of Project Team Members

(Years)

External Technical Communication as a Function of Team Age

0 2 4 6 8

Mean Tenure of Project Team Mem bers

(Years)

TENURE

(PELZ & ANDREWS)

0 2 4 6 8 10 12

WORK PREFERENCES AS A FUNCTION OF MEAN

PREFERENCE FOR BROAD

PREFERENCE FOR DEEP

Mean Tenure of Group Members (Years)

Perceived Influence Over Project Goals &

Objectives (Teams with Mean Tenure Greater Than Five Years)

HighPro

Engineers Project Manager

0 0.2 0.4 0.6 0.8 1

Mean Perceived Influence

PERFORMANCE AS A FUNCTION OF GROUP AGE

(PELZ & ANDREWS)

0.5 2.5 4.5 6.5 8.5 10.5

Mean T enure of Group Members (Years)

Project Performance as a Function of Team Age

(45 Chemical Industry Projects) S

0 2 4 6 8 10 12 14

Mean Tenure of Team Members (Years)

Project Performance as a Function of Team Age(45 Chemical Industry Projects)

0 2 4 6 8

Project Performance and External Communication as a

Function of Team Age

0 1 2 3 4 5 6

Project Performance and External Communication as a

Function of Team Age

0 2 4 6 8

TENURE

(PELZ & ANDREWS)

0 2 4 6 8

WORK PREFERENCES AS A FUNCTION OF MEAN

10 12 Mean Tenure of Group Members

(Years)

Broad Exploration of New Areas

Deep Exploration of Narrow Areas

Perceived Influence Over Project Goals & Objectives

(Teams with Mean Tenure Greater Than Five Years)

0.2 0.4 0.6 0.8

Degree of Influence

Project Manager

T eam Members

We Shape Our Buildings

"On the night of May 10, 1941, with one of the last bombs of the last

serious raid, our House of Commons was destroyed by the violence of the

enemy, and we have now to consider whether we should build it up

again,and how, and when. We shape our buildings, and afterwards our

buildings shape us. Having dwelt and served for more than forty years in

the late Chamber, and having derived very great pleasure and advantage

therefrom, I, naturally, should like to see it restored in all essentials to its

old form, convenience and dignity."

-WSC, 28 October 1943 to the House of Commons (meeting in the House

of Lords).

Notes: The old House of Commons was rebuilt in 1950 in its old form,

remaining insufficient to seat all its members. Churchill was against "giving

each member a desk to sit at and a lid to bang" because, he explained, the

House would be mostly empty most of the time; whereas, at critical votes and

moments, it would fill beyond capacity, with members spilling out into the

aisles, in his view a suitable "sense of crowd and urgency."

Distance Measurement

Distance

Proportion of Communication Partners as a Function of

Probability of Technical Communication as a Function of P

Distance Between Work Stations

0 20 40 60 80 100

Separation Distance (Meters)

Intradepartmental and Interdepartmental Communication and Physical Separation

0 20 40 60

INTRA-DEPARTMENTAL

INTER-DEPARTMENTAL

Separation Distance (Meters)

The Effect of Organization I

DISTANCE

D = f(1/N)

The Effect of Organization II

DISTANCE

D = f(1/N)

P = f(Iss)

Some Obvious Points

<S3 S1

Distance

Departmental Size

0 10 20 30 40

Size of Department

Smoothed P(C)

Raw Data

Power (Raw Data)

Face-to-Face and Telephone Communication

0.0001 0.0002 0.0005 0.001 0.002 0.005 0.01 0.02 0.050.0001

0.0002

0.0005

PROBABILITY OF FACE-TO-FACECOMMUNICATION

‘Bandwidth’ Limitation

Within a

Building

Within a

Building

Between

Low Complexity Information

Within a

Between

High Complexity Information

0 20 40 60 80 100 0 20 40 60 80 100

Proportion of ContactsProportion of Contacts

Face-to-Face Telephone Face-to-Face Telephone

Steelcase Ground Floor

Steelcase Third Floor

Effect of New Steelcase Building on Breadth of Communication

M ove to New Building

0 2 4 6 8 10 12 14 16 18 20

Time (Weeks)

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