1-Background of KM

7/30/2019 1-Background of KM

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Year End Sharing - Dec 23, 2003

Knowledge ManagementKM Conference & Seminar Sharing December 23, 2003


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Agenda Today

Knowledge Management Overview

Case Study & Lessons Learned

Knowledge Management for APP

Discussion


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Serpong, December 23, 2003

Knowledge Management Overview

Why So Much Focus on

Knowledge Today?


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If there was a mass exodus of people fromyour organisation at 12:00 noon such that no-

one was left, and at 14:00 a completely new

group of people arrived,would they have to start from scratch or would

they be able to start with an infrastructure of

accumulated knowledge and wisdom?

Imagine this:


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The Knowledge Economy

For several decades the worlds best-known

forecasters of societal change have predicted

the emergence of a new economy in which

brain power, not machine power, is the criticalresource.

But the future has already turned into the

present, and the era of knowledge has arrived.

The learning Organization,Economist Intelligence Unit


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Knowledge Management

The move from an industrially-based economyto a knowledge or information-based one in the21st Century demands a top-notch knowledge

management system to secure a competitiveedge and a capacity for learning.


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Knowledge Economy

The new source of wealth is knowledge, and notlabor, land, or financial capital. It is the intangible,intellectual assets that must be managed.

The key challenge of the knowledge-basedeconomy is to foster innovation.


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What is New Economy

Organization

Old Economy / Industr ial era

Organization

New Economy /

Knowledge EconomyObjectives:

Shareholder value &Stakeholder value

Customer value:

Input:

Physical Asset

Financial Asset

Objectives:

Customer value

Shareholder value

Input Assets:

Physical Asset

Financial Asset

Knowledge asset

(Intellectual Asset)


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What is Knowledge EconomyKnowledge Based CompanyKnowledge Based Company


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Lotus Inc. Acquisit ion: In 1995, IBM purchased Lotus Notes for US$3.5 billion,

which was 14 times Lotus' book valuation of $250 million.

The US$ 3.25 billion premium IBM paid represents itsappraisal of Lotus' unique knowledge of Notes. The mindsthat invented Notes are more valuable than the softwareitself(Harvard Business Review, 1995). J Menzie

Goodwill vs. intellectual Assets (knowledge) In old economy Goodwill = 3.25 billion?

Knowledge economy = 3.25 billion worth of K

Knowledge is the new wealth of organization

How do we manage knowledge?



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What is Knowledge EconomyMarket Value to Book Value RatioMarket Value to Book Value Ratio

Source: Robert E. Hall, The Stock Market and Capital Accumulation, April 13th, 2001. Here q is

understood as the ration of the value of ownership claims on the firm less the book value of inventories

to the reproduction cost of plant an equiptment. Focus in non-fram, non-financial sector.


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What is Knowledge EconomyIncreasing value of Intangible assets in OrganizationsIncreasing value of Intangible assets in Organizations

38%62%

75%

1982 1992 2002

Source: Niven, Balanced Score Card, 2003


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The Organisation as a Tree

APPLESas tangible assets

ROOTS/TRUNK/BRANCHES

as intangible assets

= the strength of the tree


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$ 6.7 Bn


T. Asset = vsb. Equity + Debt

= $ 11 Bn

Int. Asset = Mkt Val vsb. Equity

= 190 6.7

= $ 183 Bn


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Asset = vsb.Equity + Debt

= $ 17 Bn + 7 Bn

= $ 24 Bn

Int Asset = MktVal vsb.Equity

= $110 Bn $ 17 Bn

= $ 93 Bn

Int Asset in 2003 ?



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Examples of Intellectual Capitalas a percentage of market value

Industrials

ICI 54%British Aerospace 78%GEC 74%

GKN 85%Vickers 59%GE 82%ABB 85%Honda 60%

BP 74%3M 82%National Grid 85%

Services

Barclays 75%Coca-Cola 97%Marks & Spencer 72%

High-Tech

Zeneca 92%

Intel 85%BT 70%Microsoft 97%Vodafone 95%


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INTELLECTUAL CAPITAL

Market Value(no. of shares x share value)

equalTangible assets

(measured according accepted

accounting rules)plus

Intangible Assets(for which no measurement rules exist)

Intellectual Capital


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MARKET VALUE

INTELLECTUAL CAPITALFINANCIAL CAPITAL

CUSTOMERCAPITAL

STRUCTURALCAPITAL

HUMANCAPITALKnowledge

Drives current Drives Future

Knowledg

e Knowledge


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Definition of Intellectual Capital

The factors not shown in thetraditional balance sheet,

but which are of critical importanceto a companys future success

Source: Intellectual Capital Sweden


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IC RatingTM Platform

IntellectualCapital

OrganizationalStructural

Capital

RelationalStructural

Capital

IntellectualProperties

Process Management Employees CustomersNetwork

HumanCapital

Brand

BusinessRecipe

Business idea Strategies Position

Operation ofcompany


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IC RatingTM three focuses

Accounting

Present day

3. Renewal and Development

2. Risk

1. Efficiency

Efficiency: Present value of IC efficiency in creating future financial value Risk:Threat against present efficiency and probability of threat coming true

Renewal & Development: Efforts to review and develop present efficiency


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IC RatingTM Scales

Efficiency Risk Renewal & Development

AAA

AAA

BBB

BB

B

CCC

CC

C

D

AAA

AAA

BBB

BB

B

CCC

CC

C

D

-

RRR

RRR


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IC RatingTM Efficiency


BusinessRecipe

Organizational Human Relational


Process Management Employees Network Brand Customers

ACC

BB BBB

C

BBBBB

ABBB

CC

BB


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IC RatingTM Renewal & Development


BusinessRecipe




ABB

BBB

BBBBB BB

BB BBB

A A A

CCC


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IC RatingTM Risk


BusinessRecipe




RR

RR

RRR

R

RR

RRR

R

RR


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MARKET VALUE

FINANCIAL CAPITAL INTELLECTUAL CAPITAL

CUSTOMER STRUCTURAL HUMANCAPITAL CAPITAL CAPITAL

(adapted from Skandia)


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THE VALUE-CREATING CHAIN

Stakeholder Value

Return on Intangible assets

Growth of Intangible Assets

Growth of Knowledge, Wisdomand Capability

Process, Technology,Culture


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Ikujiro Nonaka


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L What the organization knowsL How it uses what it knowsL How fast it can know something new


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Sir Francis Bacon, 1597

2002 Gl b l MAKE A d


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2002 Global MAKE AwardMost Admired Knowledge Enterprises)

Accenture

BP

Buckman Laboratories

Clarica Life Insurance

Ernst & Young

General Electric Hewlett-Packard

International Business Machines

KPMG

McKinsey & Company

Microsoft

Nokia Royal Dutch/Shell

Schlumberger

Siemens

Skandia

Toyota

Unilever US Government

World Bank

Xerox

1. Creating a corporate knowledge culture

2. Developing knowledge leaders

3. Delivering knowledge-based

products/services/solutions4. Maximizing enterprise intellectual capital

5. Creating an environment forcollaborative knowledge sharing

6. Creating a learning organization

7. Focusing on customer knowledge

8. Transforming knowledge intoshareholder value

The Global MAKE Finalists aremeasured against each of the eightknowledge performance

dimensions which are the visibledrivers of competitive advantage:

(www.knowledgebusiness.com)


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Japan MAKE 2002

Toyota Motor vehicles Honda Motor vehicles Sony Kao products Asahi Brewery

IBM J apan IT solutions

Ricoh Fuji Xerox Canon

Toyota organizational learning; enterpriseknowledge culture and knowledge leadership.

Honda developing knowledge-basedgoods/services; organizational learning; managing

customer knowledge. Sony developing knowledge-based goods/services;

knowledge leaders; enterprise knowledge culture.

Kao developing knowledge-based goods/services;knowledge leaders; managing customer knowledge.

IBMJ apan managing customer knowledge;knowledge leaders; collaborative enterpriseknowledge sharing.

Ricoh developing knowledge-based goods/services;maximizing the enterprises intellectual capital;knowledge leaders.

Asahi Brewery knowledge leaders; enterpriseknowledge culture; collaborative enterpriseknowledge sharing.

Fuji Xerox knowledge leaders; enterpriseknowledge culture; collaborative enterpriseknowledge sharing.

Canon knowledge leaders; organizational learning;developing knowledge-based goods/services.

(www.knowledgebusiness.com)

2002 MAKE Winners StrengthsJapan MAKE 2002 Winners

1-Background of KM

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