Knowledge management in-global-firm

©[email protected] 1

Effective Training Program On

Knowledge management in

Global knowledge-based firm

Effective Training Program

On Knowledge management

in global knowledge-based

firm


Growth

Time

Output of information and knowledge

Human absorptive capacity

A world of increasing knowledge flows….

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

organizations

Casper & Murray 2002


What is globalization?

The extent to which networks of individuals and organizations, markets, and

technologies are interconnected across geographic and cultural boundaries – Beech and Chadwick 2004, Friedman 2002


What is

your company’s

global strategy?


From a multi-domestic company to a successful global firm

Multi-domestic

Global

Sub7

HQ Sub10

Sub9

Sub8

Sub13

Sub11

Sub3

Sub5

Sub4

Sub1

Sub2

Sub6

Sub14

Sub14

Integrated


Globalstrategy

Aligning operations increases success

CompetenceManagement

MotivationManagement


• Profitable growth through higher efficiency and innovation– Preventing the waste of valuable resources - avoid reinventing the wheel– Ensuring the use of leading-edge technology and thinking across the firm– Increasing customer satisfaction through shorter lead-times and consistent

behavior– Creating a competitive cost structure– Facilitating breakthrough and incremental innovations through combination

of technologies and ideas from across and outside the firm

• An attractive workplace that encourages cross-functional co-operation across the globe– Attracting and retaining key individuals

What are the benefits of knowledge management?


What is knowledge?


From tacit to articulate knowledge

“We know more than we can tell.”

Michael Polanyi, 1966

TacitArticulated

High Low

MANUALHow to

play soccer

Codifiability


The majority of a company’s valuable

knowledge is tacit and resists being articulated

The knowledge management challenge


An organization’s structures, systems, and practices that facilitate..

…with the goal of enhancing the organization’s competitiveness

What is knowledge management?

Creating knowledge

Embeddingknowledge

Disseminating knowledge

Organizing knowledge

C

KM


• Who does your company target as customers?

• What products or services does your company offer these targeted customers?

• How does your company do this efficiently?

KM must be aligned with strategy

Globalstrategy

KM

What knowledge supports this strategy?•Do we have this knowledge? (Create)•How should we organize this knowledge? (Organize)•Who needs this knowledge, when, and how? (Disseminate)•How do we ensure we get value from this knowledge? (Embed)


Information technology for KM

1) Stocks of knowledge: Database and database management systems to collect and hold information

2) Flows of knowledge: Communication channels to connect individuals independent of location

IT is an enabler!


Challenges to knowledge databases

• Time consuming and difficult– Takes times for writer to document experiences– Takes time for reader to search through databases,

information overload– Often weak incentives to contribute golden nuggets

• Difficult to understand– Difficult for writer to explain context, tacit ->explicit– Difficult for reader to interpret experience and use in

own situation• Data becomes out-of-date very quickly

– Difficult to maintain, especially in fast moving industries


Avoid creating information junkyards

Building knowledge repositories Inform

ation ju

nkyards

or

Empty lib

raries


• Physical layout• Appropriate KM functions and units • Cross-functional and cross-location teams• Centers of excellence

– Institutionalized, recognized areas of expertise

• Socialization measures – Job rotation, cross-office training programs, etc.

Organizational structure for KM


Physical layout

An organization’s office layout

reflects a company’s

knowledge flows

18


Creating centers of excellence

COE

HQ


San Francisco

Stockholm London

Brussels

Helsinki

MadridCopenhagen

Improving knowledge transfer through job rotation

Rotated from Stockholm


Where do individuals go for help in solving problems?

Co-located colleagues

IntranetNon-electronic

documents

Internalelectronicnetworks

Contacts inother officesF

irm b

ou

nd

aryExternal

electronicnetworks

Internet

Non-electronicdocuments

Othercontacts


Knowledge networking through communities of practice

Connecting peopleso that they

collaborate, share ideas, and create

knowledge


One of the things that we’re struggling with is moving towards a more consistent way of doing business around the world. I think the knowledge communities are a vehicle to speed up that process.

– President, Montgomery Watson Harza Americas


What are communities of practice?

• Groups of people who come together to share and to learn from one another face-to-face and/or virtually.

• They are held together by a common interest in a body of knowledge and are driven by a desire and need to share problems, experiences, insights, templates, tools, and best practices.

• Members deepen their knowledge by interacting on an ongoing basis.

• This interaction leads to continuous learning and innovation


CPs are not teams or personal networks

-Obligation-Job requirement

-Value-Commitment

- FriendshipGlueGlue

-Planned-Actively discovered-Serendipitously discovered

Value Value CreationCreation

-Organize tasks-Meetings-Informal communications

-One-on-oneActivityActivity

-Assigned-Defined boundary

-Mostly volunteers-Permeable boundary

-Friends & acquaintances-No boundary

MembersMembers

-Accomplish goal-Solve problems-Share info. & ideas-Expand knowledge

-Share information-Friendship

PurposePurpose

TeamTeamCommunityCommunity

of Practiceof Practice

Personal Personal NetworkNetwork

McDermott 2001


Communities are the grease in the KM wheel

Creating knowledge

Embeddingknowledge



C

KM


Role of communities of practice

• Create: Own & develop knowledge– Develop & manage good practice– Build organizational competence

• Organize: Develop & manage materials– Develop tools, guidelines, templates – Manage databases

• Disseminate: Connect people across boundaries– Who knows what – Home in changing organization & an uprooted society

• Embed: Share ideas & insights – Share tacit, complex ideas & insights– Help each other solve problems & find innovations


Helping

Best-practice

Innovation

Knowledge stewarding

Communities can have a different primary purpose


Community membership and roles

CoordinatorCoordinator

PeripheralPeripheral

Core GroupCore Group

ActiveActive


Two extreme communities of practice

Face-to-face

Virtual


Communities cross all boundaries

CompanyCompanySuppliersSuppliers

CustomersCustomers

CompetitorsCompetitors


Organization

Don’t forget to support informal external networks at the individual level!

Electroniccommunities

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

Community Type and MembersObjectives Communication

channel

eRelationship Vodafone

-Inter-organizational

-1400 members in 10 countries

-Use internet to design joint e-business platform

-Virtual

Competence Groups

-Intra-organizational

-200 members in 14 countries

-Ensure sharing of best practices and commonality

- Primarily face-to-face

Ericsson Foresight

- Inter-organizational including universities, experts, & institutions

- 600 with core of 40

- Think tank on emerging trends in society, technology, & consumers

- Virtual and face-to-face

Ericsson System Architect Program, ESAP

- Intra-organizational

- 20 members from 14 countries

-Facilitate inter-project learning and innovation

-Retain key individuals

Primarily face-to-face

Magnusson & Davidsson 2004


Ericsson Competence Groups• Background and objective

– To improve knowledge sharing between Flow Control centers worldwide that responsible for order fulfillment and complete order flow

• Organization – 14 Competence Groups focused on one Flow Control function each,

e.g., forecasting, invoicing, consisting of one member from each of 14 Flow Control Centers worldwide

– Each CG headed by one leader who devotes 30% of time to CG

• Activities– 14 CG leaders meet once a month and all CG members meet 3-4 times

a year at 2 day seminar– Develop common terminology and processes– Discuss process improvements and how can be implemented– Monthly phone conferences to discuss ongoing work

• Critical success factors– Well designed organization – All allowed to contribute and suggest improvements


©[email protected] 36C

ountry 1

Country 2

Country 14

1. Process & IT

2. Order mgt

14. Customer care

Function

Countries

Ericsson Competence Groups for worldwide Flow Control Centers

3. Forecasting

CG Function Leaders•14 leaders meet monthly•Work 30% on CG

CG Function Members•2 day seminar 3-4 xs/year•Monthly phone conference•Work 3-5 days/mth on CG

•Program Manager•Coordinator

•Web Assistant



Cap Gemini – NCN MS Electronic Community

• Background and objective– To provide programmers working with Microsoft products a

forum to help each other solve problems • Organization

– 345 programmers across Nordic countries• Activities

– Helping each other through posting questions and responses on listserv nicknamed “L2A2L” (Learn to ask to learn)

• Critical success factors– “Eldsjäl” – one who burned for community and walked the

talk– High level of reciprocity


An organization’s structures, systems, and practices that facilitate ..

..with the goal of enhancing the organization’s competitiveness

Globalstrategy

What is knowledge management?

Creating knowledge

Embeddingknowledge



C

KM


What is your organization’s KM vision?

British Petroleum’s KM Vision

BP knows what it knows, learns what it needs to learn, and uses

knowledge to create overwhelming sustainable advantage.

©[email protected]

In global organizations KM is increasingly complicated …

Three types of boundaries• Internal

– Geographical (physical & cultural)– Organizational (horizontal &

vertical)

• External– Organizational (formal & informal

relationships)


…and difficult to achieve.

0%10%20%30%40%50%60%70%80%90%

100%

HQexpectations

HQ Perceptions Subsidiaryreality

Both prov/rec

Primarily rec

Primarily prov

Neither prov/rec

Gupta & Govindarajan 2000

Number of subsidiaries providing and receiving

knowledge and skills


Challenges to successful KM processes

• Individual level

• Subsidiary level


Two departments within the same firmDepartment 1 Department 2

Higher degree of learning & knowledge sharing

Poorer degree of learning & knowledge sharing


Unawareness and power gamesSurprise!! Bottleneck

Icon programmers – Stockholm


San FranciscoStockholm

London

Brussels

Helsinki

MadridCopenhagen

Islands of competence despite intensive KM efforts

Icon programmers – Worldwide


Biggest difficulties to successfully managing knowledge in organizations

19

22

28

28

30

32

54

0 10 20 30 40 50 60

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

9

15

28

34

40

43

56

0 10 20 30 40 50 60

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?

You gotta remember that we’re hired to be stars here and not team players.

- Researcher at one high technology firm with poor knowledge flow

Sometimes I get calls from other offices. It feels weird if I don’t know the person. I like to help them only if I know them.

- Programmer at software multinational


•Lack of awareness•Not-invented-here•Lack of incentive •Time constraint

•Knowledge is power•Lack of understanding •Lack of incentive•Time constraint

What are some barriers to successful knowledge management?


Challenges with external networks

Everybody knows that if you recruit one talented programmer, you’ll get twenty for free…

- Support manager with a larger Swedish Telecom company

Lundkvist 2003


Loyalty

Loyalty

Individuals often have conflicting loyalties

OrganizationProfession

Firm

b

ou

nd

ary


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-timeperformance

–

Creativeperformance


But here we see the reverse

A high degree of participation in

dispersedelectronic communities

-

On-timeperformance

+

Creativeperformance


In summary, individuals have choices about how they use their knowledge…

• Knowledge resides in the minds of individuals• Individuals make own choices about knowledge

– Share openly for the benefit of the organization– Protect and use only in work practice

• Perception that an individual’s value is diminished if share knowledge

• Knowledge is power– Protect and use only in external relationships for own

benefit• Knowledge leakage

– Leave the firm and take knowledge with them


…and most importantly, management cannot mandate social relationships

Jan

Lars Pia

Anna

Nils

Bill

Erik

Mike

Al

AlexJohn

Eva

Hans

Miguel

Paul


Challenges to successful KM processes

• Individual level

• Subsidiary level


A constant local vs global tension

We do not want to be managed in our choice of competence elements. We would want to select those elements that we need.

– Line Manager, Ericsson Norway

Spontaneity and creativity could be the losers in some areas by implementing global solutions. However, the “Best Practice” policy in Ericsson concerns capturing good ideas, which of course may come from other areas in the organization.

– HR Manager, Ericsson Norway

Hustad & Munkvold 2005


Conflicting demands on subsidiaries lead to resistance to global KM processes

Sub7

HQ Sub10

Sub9

Sub8

Sub11

Sub3

Sub5

Sub4

Sub1

Sub2

Sub6

Sub14

Sub14

Sub13

•Opportunity cost of time •Opportunity cost of resources

•Not-invented-here•Knowledge is power


Internal turf wars

It would have been much easier for me to transfer from the New York office to the California office if I had just quit the organization in New York and then reapplied for a job in the California one.

» Researcher, Xerox California


The challenge of knowing what is best practice

Evaluation of Market Practices

Firm A

Subsidiaries' self-evaluations

3210-1-2-3

Co

rpo

rate

ma

na

ge

me

nt's

eva

lua

tion

s

3

2

1

0

-1

-2

-3

Evaluation of Market Practices

Firm B

Subsidiaries' self-evaluations

210-1-2-3-4

Co

rpo

rate

ma

na

ge

me

nt's

eva

lua

tion

s

3

2

1

0

-1

-2

-3

Here one knows

Here one does not know

Arvidsson 2002


Globalstrategy





Supporting global KM processes



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

• Competence system• Recruiting• Incentives• Networks • A visionary organization




Creating a competence management system

• Standardization– Create common structure and terminology

– Define professional, business, and human competencies related to global strategy and KM goals

• Don’t underestimate this task!Don’t underestimate this task!

• Analysis– Personal development discussions

– Mapping of present and future target competence levels for individuals and then for business units

– Defining competence gap at both levels

• Planning and implementation– Prepare competence development plan

– Implement and evaluate



Creating competence charts at Ericsson

1

1,5

2

2,5

3

3,5

4

4,5

5

Ind 1 Ind 2 Ind 31

1,5

2

2,5

3

3,5

4

4,5

5

Unit 1 Unit 2 Unit 3

Individuals in one unit Comparison of units

Professional – Operations, financial, etc.

Business – Markets, core business, strategy, etc.

Human – Interpersonal, communication, KM attitudes, etc.



CM supports KM

I think that competence management can play an important role in knowledge management. You

can search for persons with certain competencies very easily through that tool. People having the same competencies and interests can be accessed and get together.

» Competence Manager, Ericsson Croatia

Hustad & Munkvold 2005


A variety of tools





Recruiting – What should one look for?

• An experienced professional who has worked extensively in another company with different values and philosophy

• A young person who lacks professional experience but has the right attitude

It is cheaper and easier to develop technical skills than trying to change mentality.

HR Manager, Ericsson Russia

OR


…..you “hire” his or her network.

When you hire someone…


A variety of tools





Aligning incentives with KM

• Recognize and reward for collaborative behavior – At individual, unit, and organizational levels

• Show management commitment

Status and recognition

Challenge

Satisfaction

$$$Monetary


Examples of incentives

• Monetary– Nucor Steel: Bonuses based on

performance of relevant group, e.g., individuals and their workgroup, department managers and their plant

• Status and recognition– McKinsey: Practice Development Flyers– Xerox: Tip of the Month

• Challenge– McKinsey: PD Olympics Sa

tisfa

ctio

n


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

Worldwide innovation& learning

Worldwide innovation& learning

Globalefficiency

Globalefficiency

Nationalresponsiveness

Nationalresponsiveness


Working on empowerment is a key challenge in China. Our employees are not used to

working in an empowered environment, and it takes a long time and much effort to explain

what empowerment is all about. We are working on this and have made some progress, but we have a way to go.

»General Manager, Tetra Pak Hoyer China

Fey, Pavlovskaya, & Tang 2004


Our headquarters in Sweden provides us with a clear platform... Yet we still adjust it to the Chinese situation. For example, when we design our compensation and benefits, we need to think about what the Chinese government requires us to do for social security and medical insurance and what will motivate Chinese employees best. Thus, some differences exist between the system in China and that found in Sweden

»HR Director, Electrolux China



“Work-to-live”culture

Risk avoidance

Knowledgeacquisition

Knowledgesharing

+

—

Cultural differences affect KM behaviors

+


A variety of tools





San FranciscoStockholm

London

Brussels

Helsinki

MadridCopenhagen

Promote socialization to build networks

Rotated from Stockholm

Icon programmers – Worldwide


Why encourage socialization?

Trust, commitment, and an open

environment are essential for

knowledge exchange in networks


Socialization examples

• Cross-office and cross-function training programs– McKinsey’s introduction and development training programs

• Cross-office projects– Projects often involve more than one office at Ericsson R&D

• Job rotation– “There are 12 different ways to rotate at HP.”– Online career development tool at Novartis

• Slack shops– HP R&D allows time and provides resources to experiment on new ideas with

others who have same interests• Informal events

– Plant managers at Nucor Steel organize business meetings throughout year so every employee attends one meeting per year


Myths and reality checks about networks

• I already know what’s going on in my network.

• Those who think they know their network the best are usually the ones who know the least.

• To build networks, we have to communicate more.

• To build better networks, focus on a structured analysis of them.

• We can’t do much to help informal networks.

• Informal networks can be supported through changing the organizational context.

• How people fit into networks is a matter of personality (which can’t be changed).

• How people fit into networks is a matter of intentional behaviors (which can be influenced).

Adapted from Cross, Nohria, & Parker 2002


Leverage and understand internal and external networks

• Identify which networks are important to understand– E.g., product development, merger integration, etc.

• Collect network data– E.g., observe, interview people, conduct questionnaire,

track email, etc.– Ask appropriate questions, e.g., advice, trust, innovation,

etc.– Pretest survey on employee sample for reactions

• Determine causes of fragmented networks– E.g., physical layout, workflow, job description, leadership

style, knowledge attitudes, etc.

Adapted from Cross, Nohria, & Parker 2002


Improve connectedness and unplug bottlenecks internally

• Reevaluate design of teams, roles, etc.• Rethink work processes and provide support• Reassign tasks, rotate individuals, etc.• Shift responsibilities

Department 1 Department 2


A variety of tools





Nurturing a visionary organization - A framework

A well-conceived vision consists of two major components:

(2) What we aspire to become, achieve, & create

(changing)

Collins & Porras 1996

(1)What we stand for & why we exist(constant)


1) Why we exist and what we stand for

Mission / purpose• The organization’s reason for being – not a goal or a

strategy• Captures the soul of the organization and should last

“a 100 years”• Can never be fully realized – but inspires change and

progress• Is the star on the horizon – seen and to be chased

forever

3M To solve unsolved problems innovativelyMerck To preserve and improve human lifeWalt Disney To make people happyWal-Mart To give ordinary folks the chance to buy the

same things as rich peopleCollins & Porras 1996


1) Why we exist and what we stand for

Core values• A small set (often no more than 5) of guiding principles with

intrinsic value and importance to those inside the organization

• Stand the test of time, even when circumstances around change

• Cannot be forced upon people – must be shared at the outset

MerckCorporate social responsibility

Science-based innovationHonesty and integrity

Excellence in all aspects of the companyProfit, but profit from work that benefits humanity



1) Core values

You gotta remember that we’re hired to be stars here and not to be team players.

- Researcher at a high technology firm

Sometimes I get calls from other offices. It feels weird if I don’t know the person. I like to help them only if I know them.

- Programmer at software multinational

One of our core values is teamwork. 99% of the time if I ask anyone for help anywhere in the company, I’ll get it.

- Researcher at a high technology firm


2) What we aspire to become, achieve, and create

Big Hairy Audacious Goal• A challenging and stretching goal to stimulate progress• Serves as unifying focal point of effort and acts as a

catalyst for team spirit• Has a clear finishing line• But takes 10 to 30 years and only 50 to 70 percent

probability of achieving• “We can do it”

Wal-Mart (1990) Become a 125 billion dollar company by the year 2000

Nike (1960s) Crush Adidas



But ensuring widespread understanding across the organization is a difficult task

Management’s conception

Programmer reality

Vision •Best global company •Best function

Values •Professionalism•Creative problem solving

•Responsibility•Creating new solutions

Icon Medialab


Cultural differences add yet another challenge

An important role of HR is to teach employees the Ericsson way of doing things. In Finland, most people have a similar mindset so this happens naturally. In Russia and China, more attention is needed to using more formal practices to make sure this acculturation occurs.

» HR manager, Ericsson Corporate Stockholm



• Performance appraisals recognizing and rewarding key networking activities at individual and unit level

• Management support for informal and formal networking activities including those crossing both internal and external boundaries

• Extensive socialization: personnel rotation, cross-office teams

• Management commitment throughout organization • A visionary organization

– Clearly defined mission: ”To make technical contributions for the advancement and welfare of humanity”

– Pervading core values, e.g., teamwork– Company-wide goal of World’s Best Laboratory

Hewlett-Packard (1990s)


Aligned operations provides results

Company A

R&D Ericsson

R&D HP

R&D Global knowledge flows

3 1 2

% Revenue from products dev’d in last three years

3 1 1

Speed, time to market

2 3 1

End customer satisfaction

3 2 1

1 - Superior performance 2 - Medium performance 3 - Poor performance


• Profitable growth through higher efficiency and innovation– Preventing the waste of valuable resources - avoid reinventing the wheel– Ensuring the use of leading-edge technology and thinking across the firm– Increasing customer satisfaction through shorter lead-times and consistent

behavior– Creating a competitive cost structure– Facilitating breakthrough and incremental innovations through combination

of technologies and ideas from across and outside the firm

• An attractive workplace that encourages cross-functional co-operation across the globe– Attracting and retaining key individuals

What are the benefits of knowledge management?


Globalstrategy




KM


Interested in learning more or better yet, participating in a research study?

• Selected publications by others Hustad, E. & Munkvold, E. 2005. IT-Supported Competence Management: A

Case Study at Ericsson. ISM Journal. Fey, C., Pavlovskaya, A., & Tang, N. 2004. Does One Shoe Fit Everyone? A

Comparison of Human Resource Management in Russia, China, and Finland. Organizational Dynamics.

Magnusson, M. & Davidsson, N. Knowledge Networking at Ericsson: A Study of Knowledge Exchange and Communities of Knowing. Chalmers Working Paper.

Cross, R. & Prusak, L. 2002. The People Who Make Organizations Go – or Stop. Harvard Business Review.

Cross, R., Borgatti, S.,, & Parker, A. 2002. Making Invisible Work Visible: Using Social Network Analysis to Support Strategic Collaboration. California Management Review.

Collins, J.C. & Porras, J.I. 1996. Building Your Company's Vision. Harvard Business Review.

• Publications by Robin

Knowledge management in-global-firm

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