OPTIMIZING RESEARCH AND DEVELOPMENT PERFORMANCE … · 3.7.3 Benefits of Interspire Knowledge...

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OPTIMIZING RESEARCH AND DEVELOPMENT PERFORMANCE USING KNOWLEDGE

MANAGEMENT

A thesis submitted in partial fulfillment of the requirements for the degree of

Ph. D Mechanical Engineering

Author

Haider Abbas 08F-UET/Ph D-ME-46

Research Supervisor

Prof. Syed Shahab Khushnood Ph. D

Research Monitoring Committee Members

1. Prof. Arshad Hussain Qureshi Ph. D 2. Prof. Khalid Akhtar Ph. D 3. Prof. Mahmood Anwar Khan Ph.D

DEPARTMENT OF MECHANICAL ENGINEERING

UNIVERSITY OF ENGINEERING AND TECHNOLOGY, TAXILA

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ABSTRACT

In recent years there has been a lot of discussion going on in identifying, accumulating, making best use of it and accounting of organization’s intangible assets. Research and Development (R&D) organizations are specifically meant for creating innovative solutions and generate lot of outcome in the form of ‘knowledge’. When the knowledge increases, it becomes extremely difficult to classify the available knowledge in different domains. Since, knowledge is the most vital asset of the organization; it needs to be carefully dealt with. This research highlights the facilitating & enabling role of Knowledge Management in R&D. Knowledge Management meets the essential requirements of problem solving, generation of new ideas and productivity enhancement activities of R&D organizations. R&D processes are different to typical organizational processes with well defined procedures and instructions. In R&D, knowledge creation, capturing, organizing, storing and its utilization, all are going in parallel and require utmost care for maximizing benefits. Performance of R&D organizations engaged in research and development programs has got significant potential for improvement especially in Pakistan. Recent global financial recession has resulted in scarcity of resources and is most likely to hamper investment in R&D; therefore it is envisaged to improve efficiency and outcomes so as to attract uninterrupted investment. In this research initially knowledge management, its strategies, factors affecting its implementation, frame work for launching this initiative and parameters for measuring effectiveness of knowledge management system have been elaborated. In next step the R&D process and factors affecting it have been discussed along with its measurement parameters. Later, the awareness level of knowledge management and its best practices in R&D organizations of Pakistan has been determined by developing a questionnaire on the basis of literature review and conducting surveys supported by interviews. The basic statistical means were utilized to rank the case study organizations in terms of compliance with knowledge management philosophy. Also, the extent of problems of R&D organizations which were identified through interviews were measured and statistically analyzed by seeking responses on the questionnaire as well. After establishing the need for improvement, a roadmap for implementation of knowledge management has been prepared along with proposing a hybrid strategy. A research hypothesis for optimization of R&D performance has been developed on the basis of a model which highlights the problem solving ability of knowledge management and validated by conducting another survey. Finally, the research also contributes a mathematical model to determine the impact of knowledge management initiative on organization’s processes and overall performance. The conclusion of this research is that the performance of R&D organizations can be optimized by using Knowledge Management.

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DECLARATION

I certify that research work titled “Optimizing Research and Development Performance using Knowledge Management” is my own work. The work has not been submitted any where else for evaluation. Where ever the material has been used from other sources, it has been properly acknowledged.

Haider Abbas 08F-UET/Ph D-ME-46

COUNTERSIGNED BY Prof. Syed Shahab Khushnood Ph. D

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ACKNOWLEDGEMENTS

All the praises are for Almighty Allah, who is whole and sole source of all knowledge endowed to mankind and gave me courage, caliber and strength to complete this research work. After Allah unbound praises and thanks are also for His dearest Prophet, Hazrat Muhammad Mustafa (Peace be Upon Him), who is everlasting torch of guidance and knowledge for humanity as a whole. I am highly indebted to Prof. Syed Shahab Khushnood for his guidance and constant supervision as well as for providing necessary information regarding the research & also for his continuous support and motivation in completing this manuscript. I will also not forget to mention my acknowledgements for the affectionate help, prayers, encouragement and support by my parents and sisters. I am also thankful to the UET, Taxila for providing the financial assistance in acquisition of a software i.e. Interspire Knowledge Manager Professional Edition 20 user’s license, which subsequently helped me in understanding the real time functioning of software related to knowledge management.

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TABLE OF CONTENTS

Chapter 1 Introduction 10 1.1 Background 10 1.2 Importance of the Subject 11 1.3 Motivation for the Current Research 12 1.4 Objectives 13 1.5 Research Questions 13 1.6 Research Hypothesis 14 1.7 Methodology 14 1.8 Structure of thesis 15 Chapter 2 Literature Review 16 2.1 Introduction 16 2.2 The need for Knowledge Management 16 2.3 Benefits of Knowledge Management 18 2.4 The Scope of knowledge management department 19 2.5 Knowledge Management Strategies 21 2.5.1 Codification strategy 21 2.5.2 Personalization strategy 23 2.6 Factors affecting KM adoption in organization 24 2.7 Framework for implementation of KM in an organization 26 2.8 Knowledge Management Best Practices 28 2.8.1 Formal Training 29 2.8.2 Knowledge Repositories 29 2.8.3 Knowledge Fairs 29 2.8.4 Communities of Practice 29 2.8.5 Talk Rooms 29 2.8.6 Web Portals 30 2.9 Measurement of KM performance and maturity in an organization 30 2.10 Effect of KM on organization’s performance 35 2.11 Research & Development 37 2.12 R&D Process 38 2.13 Sources of R&D Knowledge 39 2.14 Factors affecting R&D 41 2.15 R&D performance measurement parameters 47 2.16 Application of KM in R&D Organizations 47 Chapter 3 KM in R&D Organizations of Pakistan 56 3.1 Introduction 56 3.2 KM Status in R&D Organizations of Pakistan 56 3.2.1 Reliability Test 57 3.2.2 Results and Analysis 57 3.2.3 Knowledge Management Index 58 3.3 Activities of R&D Organizations 59 3.4 Problems of R&D organizations of Pakistan 60 3.4.1 Reliability Test 60 3.4.2 Results and Analysis 61

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3.4.3 R&D Problems Index 62 3.5 Proposed Hybrid strategy 65 3.6 Roadmap for implementing KM in R&D organizations of Pakistan 66 3.7 Knowledge Management Softwares 68 3.7.1 Overview of Interspire Knowledge Manager 68 3.7.2 Features of Interspire Knowledge Manager 70 3.7.3 Benefits of Interspire Knowledge Manager 72 3.7.4 Utility of Interspire Knowledge Manager 73 3.8 Measurement of KM performance 73 3.9 Measurement of R&D performance 74 3.10 Case Studies 75 Chapter 4 Optimization of R&D Performance 78 4.1 Introduction 78 4.2 Problem solving model of KM for R&D organizations 78 4.3 Research Hypothesis 80 4.4 Survey parameters 80 4.5 Results and analysis 81 4.6 Reliability Test 82 4.7 Regression Analysis 82 4.8 Validity 83 4.9 Mathematical model 84 Chapter 5 Conclusion 88 5.1 Summary of the Research 88 5.2 Recommendations for R&D Managers 88 5.3 Limitations of the Research 89 5.4 Avenues for the Future Research 90 References 91 Appendix- I: Screenshots of Interspire Knowledge Manager 100 Appendix-II: Questionnaire to assess level of KM Best Practices 103 Appendix-III: Questionnaire to assess Problems of R&D Organizations 104 Appendix-IV: Questionnaire to verify the KM Problem Solving Model 105

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LIST OF FIGURES

Figure 2.1. Pilot KM program by Levett and Guenov (2000) 27 Figure 2.2. Road map for application of KM-Bots and Bruijn (2002) 28 Figure 2.3 Three dimensional KM maturity model by Hung and Chou (2005) 32 Figure 2.4. Two dimensional KM maturity model by Minonne and Turner (2009) 34 Figure 2.5 KM & organization’s performance by Marque´s & Simo´n (2006) 36 Figure 2.6 KM framework for R&D organizations by Hao and Liu (2009) 54 Figure 3.1. Overall performance of KM in R&D organizations of Pakistan 59 Figure 3.2. Overall comparative problem status for R&D organizations 63 Figure 3.3. Roadmap for implementation of knowledge management 69 Figure 3.4. Overview of Interspire Knowledge Manager 70 Figure 4.1. Problem solving model of KM for R&D organizations 81 Figure 4.2 Mathematical model for optimization of R&D Performance 85

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LIST OF TABLES

Table 2.1 KM maturity model by Feng (2006) 32 Table 2.2 KM maturity model by Feng (2006) 33 Table 2.3 KM maturity model by Feng (2006) 33 Table 2.4 KM challenges & managerial solutions by Kalling (2003) 36 Table 2.5 Stages of R&D process by Wenyong & Yuan (2009) 39 Table 2.6 Knowledge types in R&D by Wenyong & Yuan (2009) 39 Table 2.7 Sources of R&D knowledge by Parikh (2001) 40 Table 2.8 Nine attributes that foster excellence in R&D by Jordan (2003) 44 Table 2.9 Nine attributes that foster excellence in R&D by Jordan (2003) 44 Table 2.10 Nine attributes that foster excellence in R&D by Jordan (2003) 45 Table 2.11 Nine attributes that foster excellence in R&D by Jordan (2003) 45 Table 2.12 Generation wise characteristics of R&D by Park & Kim (2005) 49 Table 2.13 Generation wise needs of KM by Park & Kim (2005) 50 Table 2.14 KM activities in R&D by Wenyong & Yuan (2009) 53 Table 3.1 Descriptive Statistics for awareness of KM in R&D organizations 58 Table 3.2 Extent of existence of knowledge management 60 Table 3.3 Descriptive Statistics for problems of R&D organizations 62 Table 3.4 Extent of Problems of R&D organizations 63 Table 4.1 Descriptive Statistics for survey of hypothesis 83

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NOMENCLATURE

CIO - Chief Information officer: Leading Executive in charge of the organizational information management and technology matters

CKO - Chief knowledge officer: Leading executive in charge of the organizational knowledge management department.

CoP - Community of practice: Group of people in an organization that share what they know and learn from one another’s knowledge.

HRM - HRM is the management of an organization's employees.

IC - Intellectual capital: The human and structural assets of an organization.

IT - Information technology: Computer hardware, software, data, storage technology and networks.

JIT - Just in time: It is a strategy which is used to enhance return on investment by reducing in process inventory and accordingly associated costs.

KM - Knowledge management: The set of processes developed in an organization to create, collect, store and distribute the organization’s knowledge to where it is required.

KMS - Knowledge Management System: It is a system for managing knowledge in an organization including various processes like creation, capturing, storage and distribution.

KPIs- Key performance indicators: Measure of Performance parameters which are commonly used by an organization to evaluate its success.

NPD- New product development: It is the complete process of designing and manufacturing a new product followed by launching in market and includes various sub processes like feasibility, design, prototyping etc.

QMS- Quality Management System: A system which is established to implement quality management and comprises of various procedures and processes etc.

R&D- Research and Development: Set of activities which are carried out for generation of new knowledge, products, processes and technologies etc.

ROI - Return on investment: The money an organization makes from the purchase of an asset.

SME - Small and Medium organizations: These are the organizations whose number of employees or profit falls below certain limits. For example in case of Germany it is 255 and in Belgium it is 100.

ToT – Transfer of Technology: It is the process of transferring skills, knowledge, technology, manufacturing techniques and equipment etc.

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CHAPTER 1 INTRODUCTION

1.1 Background We live in a world that changes by the every minute. The changes often move organizations and advance people’s intellect. For any change to be effective, organizations as well as people must change. However, even the most intelligent individuals can become handicapped in ineffective organizations. People being creatures of habit are so busy in working the jobs that they fail to see the change around them. They get carried away with the behavior that did well in the past, not realizing that it no longer produces effective results in a fast changing business. The key to survival is alertness, sharing of knowledge and coming up with innovative ways of staying ahead of competition. Present business scenario has become very complex and fluid, globalization of business under World Trade Organization and development in information and communication technologies has increased competition for organizations. Traditional competitive advantages available to industry like availability of raw material and cheaper labor costs are diminishing. Emergence of knowledge economy has elevated status of knowledge to that of a strategic advantage. Knowledge is power and will continue to be the only competitive edge to gain advantages for organizations in the future as well. The intellectual capital has replaced tangible assets and knowledge is the most important rather the only precious asset of any organization and especially of R&D organizations. The intangible assets of an organization include brand recognition, industry driving vision, patents and breakthroughs, customer loyalty, their reach, innovative ideas, anticipated future products, past achievements, novel strategies etc. Intangible assets can be divided into two main branches. One may be called formal i.e. patents, licenses, intellectual property rights etc and informal i.e. tacit knowledge held by the human resources of the organization. Organizational learning is a naturally happening process and organizations must continuously enhance their knowledge in order to survive and gain edge over competitors. The ultimate goal is to ensure that organization has accurate and relevant knowledge at the right time i.e. time of need (Kontour, 1997). Shariq (1997) highlighted that as knowledge progressively more becomes the key tactical resource of the future; the need to develop complete understanding of processes for the creation, storage, transfer and employment of this distinctive asset is vital. Primary and secondary schools, universities and businesses organizations in R&D sector which are extensive users of knowledge; are in desperate need of an integrative discipline so as to benefit from this asset. Wiig (1997) concluded that leaders of flourishing organizations persistently search for ways to enhance their organizational performance and intend to secure reliable capability and success. O’Leary ED (1998) stated that organizations are facing increased competitive markets and when these downsize to adjust to such markets, they may be able to reduce costs. But at the same time this step may result in a loss of critical

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knowledge withheld by employees. Similarly, as the employee turnover rate rises, organizations are susceptible to loss valuable information. Also when organizations expand internationally, geographic barriers can affect knowledge exchange and prevent access to information. Therefore such forces are compelling organizations to explore and adapt improved ways for knowledge management to sustain and survive. Ives et al., (1998) stressed that it is important to understand that managing knowledge is not a new concept. In fact it is being viewed in new frame and enabled by new technologies, media, devices and techniques. To remain competitive, organizations must efficiently create, locate, capture, accumulate and share their knowledge (Zack, 1999). Wiig (1999) further concluded that systematic management of knowledge now becomes a key support activity to ensure organizational success and viability. Meso and Smith (2000) narrate that conventional tangible assets are not strategic because they can be purchased or duplicated and in order to acquire strategic competitive position, an organization shall manage its intangible assets. Knowledge Management is about the management of the intangible assets (MaÊrtensson, 2000). Matthews (2003) proposed that organizational learning practices contribute to the management of knowledge innovation. Agndal et al. (2006) narrate that inter organizational and social relationships are much important for business success. Volkov and Garanina (2007) describe that any asset, belonging to an organization or controlled by it, having no physical or financial form, but capable of producing future economic benefits is an Intangible Asset. The recognition of intangible assets has turned conventional organizations into knowledge-based organizations with following characteristics:

a. Knowledge has replaced labor and capital as fundamental resources in production

b. Knowledge content of the products and services are growing rapidly

c. Knowledge resides in the head of employees

d. Management of intangible resources is different from tangible or financial resources.

The prime forces behind this change include globalization, higher degrees of complexity, newer technologies, increasing competition, growing customer demands and changing economic as well as political structures. Organizations now realize that technology based competitive advantage is transient and that the only sustainable competitive advantage they can have is in the form of their employees. Resource-based theory for competitive advantage is now transformed to knowledge based theory. Organizations learn with the passage of time and knowledge management facilitates & accelerates the leaning process further leading to enhanced performance. In order to survive in today’s challenging and uncertain environment, management of knowledge assets is a prerequisite. 1.2 Importance of the Subject The hiring of educated employees and installation of latest equipment does not ensure and enhance the innovativeness of an organization. The users of the equipment has to be

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dealt in proper way for extracting maximum output. Interactions and sharing of knowledge among the employees is a pre requisite for increasing innovative capability, reducing operating costs and raising the market value of an organization. The economy is rapidly becoming a global market characterized by fierce competition; ever increasing customer demands and the need for value added products and services. The only way for organizations to survive in this knowledge based economy is to make a distinction by continuous innovation, improving their processes, products, services, networks and reputation. Innovation involves the generation of knowledge that is new to the world through R&D activities. R&D can be done in house or the results of R&D can also be obtained from specialized R&D organizations or educational institutions. Organizations that pursue the fastest R&D and possess the management capability to integrate and allocate internal and external resources would enjoy success in a global competitive environment. In today’s volatile and changing environment, any R&D program cannot be started from scratch especially in developing countries due to many constraints. R&D is important but it is risky and costly. Although passing through logical steps and doing design iterations help building concrete footings but funding constraints does not allow this luxury. Researchers have to take lead from current practices being adapted in advanced countries. With every passing day the knowledge is getting multiplied and accordingly needs more attention for proper management. Moreover knowledge acquired during past projects has to be well integrated and utilized in current and future projects as well. Knowledge management helps identifying knowledge gaps and requirements, bridging knowledge gaps, creation of new knowledge, managing existing knowledge and sharing of knowledge. In order to make the R&D process a success, one has to realize the importance of knowledge management in the organization. This is because R&D is meant for the generation of new knowledge. Knowledge is considered a principal source of competitive advantage which coincides with the knowledge based view of organizations. To achieve sustainable competitive advantage, organizations must constantly generate, propagate, and utilize new knowledge. 1.3 Motivation for the Current Research Research and Development (R&D) Management is not included in curriculum of any university or institute of Pakistan; furthermore there is scarcity of foreign qualified experts of this field in R&D organizations of Pakistan to ensure proper management. Also, no such research has been conducted in Pakistan so far to utilize knowledge management best practices in R&D organizations. Research and Development organizations of developing countries and especially Pakistan are not performing well and are facing immense pressure for showing significant results. Therefore, there is a need to familiarize the stakeholders with the idea of knowledge management which is already facilitating organizations of advanced countries in harvesting benefits. There is need to create awareness in Pakistan regarding intangible assets i.e. knowledge which is held by humans. Pakistan is facing problems of brain drain. Furthermore the country is unable to retain and utilize the highly skilled

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professionals for some reason or the other and that is the reason that experts prefer to work abroad than in the home country. If the stakeholders of the country and main organizations are convinced with the knowledge management philosophy, retention and utilization of professionals may become possible. The intangible sources of motivation for sharing knowledge, developing new techniques for betterment of the society can be adopted to attract the knowledgeable people. Most of the R&D organizations are also working in collaboration with foreign organizations through Transfer of Technology (ToT) contracts. The techniques of knowledge management will surely help them in acquiring the most valuable deliverable of ToT contracts i.e. knowledge. In order to replicate and advance the products, recipient organizations have to learn the design and development iterations which can be assured by deep involvement and interaction of people i.e. the core of knowledge management approach. 1.4 Objectives The aim of this research is to help R&D Managers in policy formulation, administration and better understanding of the pros and cons related to performance improvement through utilizing knowledge management practices. This exploratory research has been carried out to look into the possibility of implementing knowledge management in R&D organizations of Pakistan. Since, the ultimate users of this research are going to be the R&D Managers, therefore, this research also serves the purpose of feasibility report and will provide basis for decision making by stakeholders. Furthermore, the purpose is to establish the validity of argument i.e. performance of R&D can be optimized by using knowledge management. The ultimate objective is to familiarize the R&D managers with problem solving ability of knowledge management, which will help them in resolving internal and external problems of their organizations and will contribute towards subsequent betterment and prosperity of the country. Finally, in order to determine the benefits of knowledge management initiative for decision making, a mathematical model elaborating the inter relations of various variables will be developed. 1.5 Research Questions In order to meet the objective stated in section 1.4 above, following research questions have been formulated:

1. What are the best practices and benefits of Knowledge Management? 2. What is the awareness level of knowledge management in R&D organizations of

Pakistan? 3. What are the activities and problems of R&D organizations? 4. What is the roadmap for application of Knowledge Management in R&D

organizations of Pakistan?

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5. How Knowledge management practices can be utilized in R&D organizations to overcome the problems and improve the performance?

6. What is the conformance level of professionals regarding problem solving ability of knowledge management?

7. How the effect of knowledge management on the organization’s performance can be measured?

1.6 Research Hypothesis Mostly the domain of knowledge management has been approached by professionals having information technology background but actually this domain has much more to offer for all organizations in many aspects. It is not simply the accumulation of data but meant for solving the problems and generating new knowledge for further growth. There is need for integration of knowledge management with R&D management for improving the performance. Accordingly this research has been carried out from the view point of manager, administrator and planner of R&D organization to identify the need of performance optimization accordingly find the solution and develop framework for its implementation. The research consists of following hypothesis:

a. Knowledge Management best practices resolve internal problems of R&D organizations.

b. Knowledge management system helps R&D organizations in addressing external issues.

c. Knowledge Management initiative optimizes R&D performance. 1.7 Methodology This research is a systematic investigation which employs both qualitative and quantitative techniques. The structured approach was used in developing questions to cater for following:

a. Assess the awareness of knowledge management concept. b. Identification and extent of the problems being faced. c. Verification of the developed model and hypothesis.

There were many direct and indirect questions developed for each point mentioned above to determine the extent of compliance. The said approach was also supported by unstructured interviews approach i.e. qualitative to get insight about the working methodology and activities of R&D organizations. Since the number of engineering sector R&D organizations of Pakistan is limited and few case studies are available so the qualitative approach has been used to supplement the quantitative mode of research. Furthermore, the small and homogenous sample has been selected for validation of the hypothesis. All the respondents were having engineering background and working experience of 5-10 years in respective R&D organizations. The collected data was statistically analyzed to measure the existence level of knowledge management best practices, severity of problems and conformance level with the proposition.

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During the conduct of research work and interactive sessions with employees, it has been learnt that no R&D organization of Pakistan is employing knowledge management at the moment. The fact is also supported by the collected evidence in form of the quantitative data which subsequently turn the nature of research into empirical as well. This fact also lays the ground for further conduct of this research. From application’s point of view the research is applied, because it has been conducted to provide the solution to R&D organizations for practical and specific problems regarding their functioning and performance weakness. In the end concluding the research work and encompassing literature review, a model depicting problem solving perspective of knowledge management and a mathematical model to lie baseline for subsequent measuring the benefits of knowledge management, have been worked out. 1.8 Structure of Thesis Chapter 2 encompasses the literature review regarding the reasons for need of knowledge management, its benefits, factors affecting its implementation, components of knowledge management system, role of knowledge management department, knowledge management strategies, measurement of knowledge management adaptation level, effect on organization’s performance, knowledge management best practices, R&D, R&D process, factors affecting R&D, performance measurement parameters of R&D and application of knowledge management in R&D. Chapter 3 describes the knowledge management status in R&D organizations of Pakistan, activities of R&D organizations, problems being faced, roadmap for implementation of knowledge management, hybrid strategy, knowledge management softwares and proposal for measurement of knowledge management and R&D in Pakistani organizations. Chapter 4 is meant for proposal regarding optimization of R&D performance using knowledge management. This elaborates problem solving perspective of the knowledge management, development of hypothesis and model followed by conducting survey and analyzing the results. Chapter 5 summarizes the research with conclusion, offering recommendations for R&D managers, highlighting the limitations of research and narrating future avenues of research.

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CHAPTER 2 LITERATURE REVIEW

2.1 Introduction As national barriers disappear, managing knowledge is mandatory to adjust with international competitive environments, regional growth rates, economic and cultural issues. The penetration of the Internet is the catalyst which is speeding up this process unlike anything witnessed before. Knowledge has very different economics from what governs the physical world. Irrespective of physical assets, you can sell the same knowledge again and again. Similarly, you can use the same knowledge again and again. This is what economists call the law of increasing returns: The more you use it, the more value it provides thereby creating a self-reinforcing cycle. Knowledge is the only variable that explains the widening gap between a successful organization's market value and asset base. Very unlike the economist's finite resources like land, capital, and labor, knowledge and intellectual capital are infinite resources that can generate increasing returns through their systematic use and application. Knowledge management is a key concept in today’s business world. Evidence of this fact is obvious if one peruses the current business, management, and organizational literature. On the surface, it looks as if knowledge management just appeared toward the end of the 1990’s. But a closer examination of the concept reveals that there has been substantial deliberation and research into it and many of the world’s most successful organizations are investing significantly in this subject. Much of global businesses are conducting knowledge projects. Attendance at knowledge conferences is increasing day by day. There are also many knowledge management newsletters being published now days. Many practices of the organizations can be broadly seen as contributing to the knowledge agenda. These activities range from an intranet or other team oriented software, creating personal development plans, mentoring or sharing information. Increasingly, organizations are implementing specific initiatives with a knowledge focus. The organizations are spending considerable money, time and effort into knowledge management projects in order to survive. Successful organizations are those that constantly create new knowledge, propagate it through entire organization and swiftly embody it in new technologies and products. New business environment is distinguished by drastic and irregular change. The environment requires organizational employees to anticipate changes and conduct a faster cycle of knowledge creation and accordingly actions based on the new knowledge. 2.2 The need for Knowledge Management According to Nonaka (1991) two types of knowledge exist in any organization i.e. tacit and explicit. Tacit knowledge consists of mental models, beliefs and persuasions of employees that are so ingrained as to be taken for granted. It resides within the individuals and is difficult to be expressed in words. Explicit knowledge is the knowledge

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that can be codified. Because it can be easily shared and communicated, most organizations have captured this knowledge in databases, systems or operating technologies thus making it available for all employees of the organization. According to Hibbard (1997), knowledge in the organizations is going to waste because hardly anyone knows about its existence. The dream is to tap not only the information buried in faraway databases, but also the know how trapped inside the brains of the employees. The ultimate objective is to use knowledge as resource for innovation; the only competitive advantage, organizations can sustain indefinitely since the best strategy is to stay ahead of the competition all the time. Corti and Storto (1998) identified the factors during an empirical analysis that influence creation of new knowledge, given below under the three headings:

a. Cognitive factors: Problem complexity, context uncertainty and context ambiguity b. Social factors: Internal, external networking and relations with the customer c. Management Factors: Problem framing, planning, experimentation in solving, problem solving wideness and creativity in problem solving

MaÊrtensson (2000) describes two major resources types of knowledge i.e. tangible and intangible. Tangible resource covers physical, human, and financial resources that are needed for business operations and in tangible type is further divided into internal resources i.e. information based resources, such as management skills, technology, competence and external resources i.e. reputation, loyalty, relations, consumer information, brand name, reputation, and organizational culture. MaÊrtensson (2000) further summarizes following characteristics of knowledge:

a. Cannot easily be stored b. Resides in people's minds c. Can not be audited d. Is scattered e. Self organizing f. Does not grow forever g. A social phenomenon h. Evolves organically i. Multi dimensional

Capturing an organization's collective expertise in databases can help organizations to know what they actually know, and then utilize this knowledge in a systematic way (MaÊrtensson, 2000). Beijerse (2000) define that knowledge is the result of a multitude of factors i.e. experience, skills, culture, character, personality, feelings etc. Knowledge is the capacity to transform data into useful and meaningful information. It is the capacity with which one thinks creatively, interprets and acts. Knowledge exists in many resources. The major resources include customer knowledge, market knowledge, financial knowledge and personal practices knowledge. Knowledge is found in individuals, teams, groups, documents and culture etc (Firestone, 2001). There are many

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definitions of knowledge but for the purpose of this research the “knowledge is defined as human understanding and perception that has been gained through study and experience”. Abbasi and Siddique (2005) suggest four vital reasons for knowledge management i.e. sharing best practices, globalization, rapid change and downsizing. During the 1980s, downsizing was the strategy to reduce overhead costs and increase profits; however, the downsizing strategy resulted in a loss of important knowledge, as employees left and took the knowledge that they had accumulated over the years with them. Nonaka (1991) states that knowledge management is the process of capturing collective expertise and intelligence in an organization followed by further using it to foster innovation through continuous organizational learning. According to Chase (1997) knowledge management in its simplest form is just about encouraging people to share knowledge and ideas to create value adding products and services. However, changes required in individual, organizational behavior and culture to transform a business into a knowledge creating organization can appear almost insurmountable to those people inside the organization. “Knowledge management is the process of capturing a organization's collective expertise wherever it resides-in databases, on paper, or in people's heads-and distributing it to wherever it can help produce the biggest payoff (Hibbard 1997)”. Knowledge management is getting the right knowledge to the right people at the right time so they can make the best decision. People usually have the specifications and the parts lists but what they do not have is the story behind the decisions like what knowledge was drawn upon to choose this design and this part etc. Technology plays a very vital role in success of knowledge management initiative but technology on its own cannot make knowledge management happen. 2.3 Benefits of Knowledge Management The purpose of knowledge management is to enhance organizational performance by explicitly designing and implementing tools, processes, systems, structures, and cultures to improve the creation, sharing, and use of all kinds of knowledge that are critical for business performance. Knowledge management systems get the right information to the right people at the right time, provide them with the tools for analyzing that information, and give them the power to respond to the insight they glean from that information. Armistead (1999) states that knowledge management helps organizations in improving their relationship with suppliers and customers. Harvey and Holdsworth (2005) describe following benefits of knowledge management:

a. Facilitate rapid identification of alternative experts b. Improve the quality, quantity and accessibility of the information c. Increase the likelihood that all relevant information has been considered d. Reduce preparation and review time e. Ensure that key people are able to spend more time in sharing knowledge f. Facilitate retention of knowledge and skills of key employees

Handzic (2006) suggests in her findings that the knowledge management contributes to improved performance of small and medium sized enterprises in many ways like:

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a. Better understanding of customer needs, preferences and pressures b. Facilitate stronger, long term relationships with customers c. Increase organization's capacity to establish and sustain their status as thought

leaders d. Reduce costs of business and production processes and improve speed and quality e. Using lessons learnt from previous jobs, projects and tasks as means of improving

future performance Wong and Aspinwall (2006) also summarize from the literature, that the major benefits of adopting knowledge management are enhanced decision making through just-in-time intelligence, improved work efficiency and productivity, increase in innovation of products, services and operations, improved competency and competitiveness, rapid generation of technical solutions to customer problems and increased responsiveness to customers. Ansari et al., (2009) proposed a model and revealed that knowledge management brings and sustains advantages to fulfill customer demands by creating and supporting beneficial features through launching of appropriate knowledge management processes. Furthermore, Alipour et al., (2010) conclude in an empirical research that knowledge management plays a positive role in gaining the competitive advantage. 2.4 The Scope of Knowledge Management department Knowledge management is meant to undertake following major activities (Kontour, 1997):

a. Determine the organization’s knowledge needs b. Determine the current state of organizational knowledge base c. Determine the gaps in knowledge and barriers to organizational learning d. Develop, implement, and improve proactive “Knowledge management strategies”

Guns (1998) investigated through a survey and state that the Chief knowledge officer’s primary role is to convert knowledge into profit by leveraging the corporation’s intellectual assets. The overall strategic responsibility of a chief knowledge officer is to establish processes for converting knowledge into profit. The more specific responsibilities are:

1. Identification of valued skills, knowledge and expertise 2. Develop and enhance skills and capabilities 3. Use best knowledge with customers 4. Ensure that the right kind of technology is in place 5. Managing of portfolio 6. Maintaining a knowledge inventory 7. Linking employees through appropriate information systems 8. Collect best practices 9. Provide the necessary human support to back up the knowledge management

system

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Moreover, the challenges to be faced by chief knowledge officers are:

1. Setting knowledge management as strategic priority 2. Getting a knowledge (Best Practices) database up and running 3. Gaining commitment of business leaders to support a learning environment 4. Management of intellectual assets 5. Obtaining customer satisfaction information from customers in real time 6. Globalizing knowledge management

Despres and Chauvel (1999) caution that managers working in the field of knowledge management should realize that knowledge management is more than just setting up groupware or an intranet, more than business intelligence and more than a yellow pages database of employee CVs. Knowledge Managers for all the departments shall be nominated, facilitated and held responsible for build, maintain, sustain and uplift of the knowledge management system in respective areas. The major responsibilities of knowledge managers are listed below (Wong and Aspinwall, 2006):

a. Collect ion of documentation in their knowledge area consistently b. Technical development of respective areas c. Entertaining the queries of employees regarding their area d. Ensuring the availability of documentation to employees and concerned parties or

directing them to relevant sources e. Assessing the knowledge requirement of employees f. Documentation of lessons learnt and project closure information g. Apprise the employees on new developments, thoughts and techniques h. Development and promotion of best practices. i. Internal problem solving regarding their knowledge domain j. Participation in relevant seminars and conferences

In order to implement knowledge management initiative successfully in the organization, a KM department shall be established to cater for following main responsibilities (Cervigon and Romero, 2008):

a. Collection of documentation and literature in relevant knowledge areas on regular basis

b. Entertaining queries of employees c. Ensuring the availability of documentation/literature and experts to where

required d. Ensuring that relevant information is available to all teams e. Apprising the employees on new developments, thoughts and techniques f. Development, writing and promotion of best practices g. Identification of areas requiring additional information and knowledge h. Promotion of the communities of practices i. Structuring the information generated by the communities of practices allowing

for search engines to facilitate efficient recovery

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j. Editing and publishing of the news and reports of all the communities of practices.

k. Facilitating the use of tools to share contents and ideas in small, unstructured and dynamic groups

2.5 Knowledge Management Strategies Bots and Bruijn (2002) state two types of perspective on knowledge management i.e. The analytical perspective on knowledge management:

a. The content of knowledge is the point of focus. b. Knowledge management is a goal-driven activity. c. Knowledge management must be a useful and planned activity. d. Knowledge management is focused on formalizing and codifying knowledge.

The actor perspective on knowledge management:

a. The professional as the carrier of knowledge is the point of focus. b. Knowledge management is a goal seeking activity. c. Knowledge management may be a playful, creative activity. d. Information technology plays only a facilitating role.

Wong and Tiainen (2004) give two ways of managing organizational knowledge i.e. Codification and Personalization. These approaches are derived from two fundamentally different views of knowledge. The codification approach sees knowledge being an external object that can exist independent of the human experts while the personalization approach sees knowledge as a quality not detachable from the human experts. Each of these views has a different implication on the various aspects of the knowledge management process. For example, the underlying strategy of the codification approach to knowledge management is to provide a high quality and reliable knowledge collection for reuse. While the personalization approach focuses on facilitating the human experts to better communicate with each other so as to create and exchange brilliant problem solving ideas. This leads to the discussion of the first knowledge management strategy employed in an organization i.e. the codification strategy. 2.5.1 Codification strategy This strategy relies primarily on the reuse of existing knowledge. Here knowledge is externalized, codified and stored in databases. This is particularly suitable for repetitive activities or similar problems. Problems can be solved faster and skills of the employees can be improved. Knowledge Databases, Data Warehouse, and Document Management are the main Information Technologies used in this strategy. Knowledge is codified using a "people to documents" approach i.e. it is extracted from the person who developed it, made independent of that person, and reused for various purposes (Hansen et al. 1999). This means that employees’ thoughts are documented and the documents shared in the organization. Knowledge is taken from that individual and documented to be later

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accessed and reused by other employees in the organization. The characteristics of this strategy are listed below:

a. Invest once in a knowledge asset and reuse it many times b. Generates greater overall revenues c. Develop rudimentary but reliable repository tool d. Requires heavy investment in IT to connect people with reusable codified

knowledge e. Unskilled employees can be swiftly accustomed with the reuse of knowledge and

the implementation of solutions f. Reward people for using and contributing to document databases

The codification strategy carefully codifies knowledge and it is stored in databases where it can be accesses and retrieved. This strategy converts knowledge to a more explicit form where it is stored on paper in the form of processes or in a database. This strategy is also often referred to as decanting the human capital into the structural capital of an organization. The codification strategy views knowledge as objects to be documented, classified, stored, retrieved, analyzed and manipulated for useful applications as a result, supporters of this strategy are new but a fast growing group. Knowledge objects are taken from distributed groups of IT experts, amalgamated and stored in one database to be later accessed by employees. These knowledge objects can be in the form of software reviews, case studies, organizational profiles and request for proposal templates. These represent the databases that are utilized to capture knowledge and the processors that disseminate knowledge throughout the organization. An organization that creates its value by large scale reuse of knowledge applied to similar recurring types of service or product utilizes the codification strategy. This approach extracts key information from the documents and stores in an electronic repository for people to use at a later stage. Employees are then able to access the repository from the varied branches across the world and search for knowledge that they require to complete their assignments and projects. If a critical component is missing in a project and the employee involved does not have the necessary knowledge, they can search for the knowledge on the repository. According to Hansen et al. (1999) this process will save the organization time as well as resources by not reinventing the wheel. The key advantage of the codification strategy entails the employees not to get in touch with the original developer of the knowledge. Time is the one of the factors that is reduced when an organization employs the codification strategy. Employees do not have to spend months researching a process or technique when a certain part of the organizational team has already worked on a similar process. Time to market and project time could significantly be reduced as employees have access to reusable knowledge at a click of a button. An organization that utilizes the codification strategy must offer repetitive services quickly, cheaply and reliably. Databases are essential as well as automation systems that will push the knowledge to the required location and individual.

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2.5.2 Personalization strategy Personalization strategy provides creative and analytically rigorous advice on high level strategic problems by channeling individual expertise (Hansen et al. 1999). The characteristics of this strategy are given below:

a. Costly customized solutions for unique problems b. Smaller teams c. High profit margins d. Develop networks for sharing tacit knowledge among people with moderate

investments in IT e. Employees are highly skilled professionals who like problem solving and can

tolerate ambiguity f. Train people through one-on-one mentoring g. Reward people for directly sharing knowledge with others

The core of the personalization approach to knowledge management is to develop an information system infrastructure that facilitates the communication among individuals in an organization, so that they can easily exchange ideas and share their knowledge. The competitive strategy for organizations that favor the personalization approach can be characterized as an innovative strategy. The organization typically uses small teams of human experts. The value adding philosophy of organizations adopting an innovative approach of KM is to offer their customers with a high cost innovative solution to a unique problem. The personalization strategy is implemented by distributing knowledge amongst its employees in a social environment, thus the knowledge is disseminated throughout the organization in a social manner. The personalization strategy is implemented through networks of people; knowledge is shared through emails, video conferencing, telephonic conversation and face-to-face interaction. Knowledge is shared through one-on-one conversations with colleagues or through brainstorming sessions where knowledge is exchanged. An organization that employs this strategy requires a strong and up-to-date database of contacts in the organization. Electronic document systems are developed where documents are stored in an electronic format, however, they are not as advanced in terms of technology as the electronic document system utilized for the codification strategy. They are only utilized to give a brief over view of the process worked on by a project team. The employee requiring that knowledge is then able to contact the individual directly to glean more knowledge from them. This is because a new approach is required to suit the needs of the customer and a service or product that is utilized for another organization may not necessarily be suitable for a different organization. Personalization strategy allows the organization to familiarize themselves with the customer on a personal level. This will allow the accurate gauging of the needs of a customer and become responsive to their needs. One of the primary drivers that bring about the use of the personalization strategy is the unique and customized solution; organizations are able to give their customers. The depth and richness of a consultants

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experience cannot be captured on paper. When employees sit together and share knowledge more ideas and insights are developed. There are many approaches the personalization strategy can be undertaken in an organization. Some organizations have engineered sessions where employees up and down the hierarchy of the organization meet once a week to discuss a pre-determined topic. This approach allows for lateral thinking and new ideas to be generated by the employees. It also allows employees to be creative while having each other to provide immediate constructive feedback. Personalization strategy can be implemented through online forums, where a discussion group in cyberspace can be created for employees. This strategy can help overcome problems due to employees working shift systems and housed on different buildings. The employees can be allowed to communicate without any intervention from top management. Over time the different channels can be created to house the disparate topics. These networks serve two functions in an organization. In the first instance they create a sense of organizational culture and in the second instance, they identify experts and dig out tacit knowledge, which may be residing in employees but is untapped in their daily working profiles. Jennex et al. (2002) emphasize that consistency of an organizational strategy is more important than a one time strategy and having a knowledge management strategy over an extended period of time results in a higher level of benefit. Greiner et al. (2007) endorse that the selection of a suitable strategy not only depends on the type of knowledge to be shared but also on the organizational environment the organization operates in. Different organizations have different kind of functions, needs and environment so it is very important to choose the right knowledge management strategy and non compliance may result in adverse effects (Liefa et al. 2011 and Griffiths & Remenyi (2008)). Moreover, knowledge management strategy shall be aligned with business strategy to ensure success (Steyn and duToit, 2011). 2.6 Factors affecting KM adoption in organization Skyrme and Amidon (1997) distill seven success factors for knowledge management implementation in an organization:

a. Alignment with business objectives b. Framework for implementation of the initiative c. Management commitment and leadership towards knowledge management

initiative d. Knowledge creating and sharing culture e. Continuous learning f. Technology infrastructure g. Designing and development of knowledge management system and processes

MaÊrtensson (2000) have found nine elements of importance being the support from top management, communication, creativity, culture, incentives, time and evaluation. Storey

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and Barnett (2000) identified six lessons to avoid failure of knowledge management initiative:

1. Needs of all involved parties are to be carefully dealt with. People may appear to be onboard and supporting the program but in fact their understandings and plans may be very different.

2. Continuous top management support shall be provided in a practical and public way.

3. Potential differences among various stake holders regarding control of program shall be eliminated.

4. Ensure that the purpose and reason for expending effort on knowledge sharing is clarified and understood by everyone involved and especially those who are being asked to behave differently.

5. The interrelationship between knowledge sharing, knowledge creation and organizational change needs to be understood and realized.

6. Different expectations regarding knowledge among people of different levels should be clarified.

Cultural barriers are also responsible for failures to share and transfer knowledge in organizations (Firestone, 2001). Parikh (2001) narrates that knowledge management is not a stand-alone process. It has to be embedded throughout all business processes and has to become a part of the organizational culture. Moreover, culture, religion, language, education, and business ethics have effects on knowledge management adoption (Soley and Pandya, 2003). Culture, Leadership and knowledge management Strategy affect success of knowledge management system (Khalifa and Liu, 2003). Yu et al., (2004) identified and validated through an empirical analysis the critical drivers for developing knowledge management system in an organization. The important among them for success of knowledge management initiative are knowledge sharing intention, top management support, rewards and communication. Supyuenyong & Islam (2006) conclude that a conducive and supporting environment in an organization helps to create and retain employee’s knowledge. Organizational culture plays an important role in knowledge generation, organization, sharing and application. Furthermore, human resource management, appropriate organizational culture and structure support knowledge management. Wong & Aspinwall (2006) analyzed during a case study that presence of knowledge management champion, continual support by top management, user driven technological system, systematic way to store knowledge, imitation of knowledge management project on a small and manageable scale, supportive culture and availability of time with employees will determine the success of knowledge management system. Al-Mabrouk (2006) identified twelve critical success factors affecting knowledge management implementation through literature review, which include Management leadership, Culture, Information technology, Strategy, Measurement, Organizational infrastructure, Processes, Motivation, Resources, Training and education, Human Resource Management and Marketing. Santos and Neto (2007) define organizational culture as a collective construction, which includes social codes, meanings and values shared by members of an organization. Most

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of the enablers and barriers to collaboration are rooted in the organizational culture (Cervigon and Romero, 2008), and undertaking a knowledge management program involves influencing the culture of the organization by exploiting all the mechanisms available. Knowledge management requires stable focus over time and incremental deliveries by knowledge management shall be preferred. It will show that the organization values knowledge management over time, and allow employees to participate in the development process. Moreover, it is always said that knowledge management is not about software (Cervigon and Romero, 2008), it is about people. Information technology must be an enabler otherwise it can become a very significant barrier. Malik & Malik (2008) conclude that to move ahead in the knowledge management terrain, organizations will have to provide conducive environment, collaborative management styles, appropriate leadership and supportive organizational configuration making full use of the information technology infrastructure as well. Valmohammadi (2010) discusses that conducive culture is mandatory for launching knowledge management initiative. Sharing culture is developed by providing encouragement, security and incentives to the employees (Bhatti et al. 2010). 2.7 Framework for implementation of KM in an organization Syed (1998) supports that in order to achieve success in implementing knowledge management initiatives following requirements shall be met:

a. Start with a small scale project or a pilot program. b. Assure the active support of upper management. c. Make technology work for the people and not the other way around. d. Manage change in behavior through demonstrating the benefits of using

technology. e. Measure the results of the pilot project through qualitative and quantitative

measures.

Levett and Guenov (2000) provided a pilot program of knowledge management implementation in automotive industry. The Phase 1 of the program represents the activities of undertaking knowledge management feasibility studies. This preliminary research provides information on past problems in creating and sharing knowledge within the organization. The phase 2 i.e. capturing of knowledge management practices represents the activities of training the personnel who will be involved in the knowledge management program and collecting the raw data and information concerning current knowledge management practice. Building a knowledge management strategy is the phase 3 and during this the collected data on current knowledge management practice is analyzed to calculate overall knowledge management metric performance and to identify the main influences on the metric scores. Phase 4 is meant to implement and evaluate the comparison of pre pilot and post pilot knowledge management practice in order to determine if the knowledge management strategies have been successful. If the pilot program has been successful then management may wish to consider expanding the scope of the pilot into other areas of the organization which could benefit from the implementation of knowledge management.

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Figure 2.1. Pilot KM program by Levett and Guenov (2000)

In order that knowledge management initiative is successful, business need must be recognized before launch and organization members must make tangible contribution to it (Lieder, 2001). Bots and Bruijn (2002) proposed following roadmap for application of knowledge management:

Figure 2.2. Road map for application of KM by Bots and Bruijn (2002)

Handzic (2006) propose following broad guidelines for successfully conducting knowledge management:

a. Build knowledge management awareness b. Aligning knowledge management with business strategy c. Audit knowledge - assets and resources d. Right knowledge management solutions - development and implementation

Weber (2007) summarize following reasons of failure made by organizations while adapting knowledge management initiative:

a. Attempt to create a monolithic organizational memory b. Do not integrate humans, processes, and technology c. Designed without input from all stakeholders d. Contributors do not know the ideal specificity of knowledge e. Lack of leadership support

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f. Users are afraid of the consequences of their contributions g. Storage of knowledge in unrestricted textual representations h. Rely on inadequate technology i. Outside the process context j. Ignore impediments to knowledge transfer k. Do not enforce managerial responsibilities l. Do not properly oversee the quality of stored knowledge m. Do not promote collaboration n. Not able to show measurable benefits o. Users do not perceive value in contributing

In order to avoid above mentioned reasons for failure, knowledge management approaches should be designed to:

a. Support communities of practice b. Integrate humans, processes, and technology c. Promote collaboration with different stakeholders d. Identify an adequate level of specificity e. Be strongly supported by the leaders of their target communities f. Be adopted by communities that encourage innovation g. Adopt representations with set of specific fields h. Adopt technology only when it is suitable for a task i. Be integrated into the context of target organizational processes j. Overcome impediments to knowledge transfer k. Incorporate means of enforcing managerial responsibilities l. Include verification methods m. Include measures to promote collaboration n. Demonstrate how contributors can benefit from knowledge management o. Allow for the measurement of their effectiveness

2.8 Knowledge Management Best Practices Abbasi and Siddique (2005) have proposed following knowledge management techniques to facilitate organizations in harvesting benefits:

a. Informal & Self Organizing Group Discussions b. Formal Group Discussion with Industry Experts c. Videoconferencing d. Corporate Intranet e. Web Portal f. Blogs g. Knowledge Banks h. Involvement in Industry Practices

Li (2007) proposed a web based solution for knowledge management in order to solve knowledge sharing and creation problems in the organization. As per the model

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information is collected from data systems, customers, internet etc and uploaded to web based platform for subsequent integration and storage in knowledge warehouse for onward usage and support towards organization goal. Following knowledge management best practices have been identified in literature survey and may be adopted in the organization to achieve the objective: A few of them are illustrated below: 2.8.1 Formal Training: It includes the structured sessions for employees where they are provided with instructional material designed to educate them about a particular subject. The training material is often presented by instructors who are experts on the subject material and may or may not be employees of the organization. Such sessions may also include appraisals of the knowledge retained by the learner and certificates for successful completion of one or more sessions. 2.8.2 Knowledge Repositories: Knowledge repositories are structured collections of documents often written by internal organization experts. These documents attempt to capture their author’s expertise and insight on a subject. Documents in a knowledge repository are often categorized into separate databases by functional area, project or other topic and are indexed to permit easy key word searching and browsing by employees. 2.8.3 Knowledge Fairs: Knowledge fairs are like internal trade shows that are produced by employees and are relatively unstructured gatherings where employees mount displays and talk about their organization’s successful practices and products. Knowledge fairs encourage the spontaneous exchange of knowledge between employees who never get to talk to one another in the course of their daily work. Knowledge Fairs bring people together without preconceptions about who should talk to whom giving people opportunities to wander, mingle and talk. 2.8.4 Communities of Practice: Employees who have a common base of expertise, deal with a common organizational process or who have an interest in solving similar types of problems naturally group together to share ideas. Communities of practice provide a context for the informed discussion of problems, new events and ongoing issues. One of the challenges of a big decentralized organization is to transfer lessons learned from one location to the others and to find opportunities for and encourage synergies between employees that do not have personal contact (Cervigon and Romero, 2008). Each community of practice is devoted to a specific technical specialty which is identified by upper management as being strategic for the business goals. The community of practice is thus created in order to enhance the social networks around that topic, promote innovation and retain knowledge by building a workspace to share experiences, best practices and lessons learnt. Their internal organizations are independent of business organization. 2.8.5 Talk Rooms: Talk rooms are social spaces which employees are expected to visit for twenty minutes or so as a normal part of their workday. Meetings are not held here and there are no organized discussions. The expectation is that the employees will go to

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these talk rooms and chat about their current work with whomever they find and that these more or less random conversations will create value for the organization. 2.8.6 Web Portals: A web portal is a web site that brings together information from diverse sources in a unified way. Usually, each information source gets its dedicated area on the page for displaying information; often, the user can configure which ones to display. Apart from the standard search engine feature, web portals offer other services such as e-mail, news, stock prices, information, databases and entertainment. 2.9 Measurement of KM performance and maturity in an organization Performance Indicators of knowledge management by Gooijer (2000) are also listed below:

a. No. of team rooms and participants in each b. No. of employees trained c. No. of participants in knowledge management team rooms d. Metrics on use of frequently asked questions page e. Knowledge management skills of employees:

1) Extent of use of knowledge management tools or practices 2) Awareness level about knowledge management 3) Personal experimentation with knowledge management tools 4) Personal implementation of knowledge management practices 5) Applying knowledge management skills on new business

opportunities Darroch (2003) has developed scales to measure knowledge management practices i.e. a scale for each of knowledge acquisition, dissemination and responsiveness to knowledge. The said scales are listed below along with descriptive sub indicators: Scales for knowledge acquisition:

a. Organization values employee’s attitudes and opinions b. Well developed financial reporting systems c. Information capturing about changes in the market d. Information capturing about changes in the Science and technology e. Extent of working with international customers

Scales for knowledge dissemination:

a. Market information is freely distributed b. Knowledge is disseminated on the job c. Use of specific techniques to disseminate knowledge d. Organization uses technology to disseminate knowledge e. Extent of communication means

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Scales for responsiveness to knowledge:

a. Responds to customers b. Well developed marketing function c. Responds to technology d. Responds to competitors e. Organization is flexible and opportunistic

Furthermore, there can be various go and no go parameters; like either intranet or similar network is provided or not. Indicators such as knowledge quality and user knowledge satisfaction may also be opted for exploring the effectiveness of knowledge management system (Yu et al., 2004). Hung and Chou (2005) propose knowledge management Maturity model to assess that what capabilities an organization possesses, which maturity level the organization is at with respect to each of the knowledge management capabilities and what improvements the organization should be considering. In addition, the model can be used to assess the differences of knowledge management practices among organizations and serve as the basis for sector analysis and comparison. The three dimensional maturity model helps organizations to identify the weaker areas for subsequent corrective actions and improvement.

Figure 2.3 Three dimensional KM maturity model by Hung and Chou (2005)

Feng (2006) also proposed a maturity model which shows the difference of knowledge management level of different organization. Various management practices have been listed with respective objectives and subsequently determine the maturity level in an organization. The management practices start from preparation for knowledge management practice framework and supported by information technology tools and communities of practice which lead further to audit and decision units for continual improvement. This model also helps to determine difference of knowledge management level in different organizations and shows new ways for improvement. By using this model, managers can not only have a general view of knowledge management implementation in the organization, but also can find out that which part of knowledge management needs to be strengthened. The model describes objectives of each stage which have been taken from literature review and accordingly knowledge management practices that an organization should use.

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Table 2.1 KM maturity model by Feng (2006)


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Knowledge management performance (Zaim et al., 2007) can be evaluated at three different levels i.e. strategic level, functional level and employee level. Knowledge management performance evaluation at the strategic level seeks to measure the contribution of knowledge management solutions to overall performance and also involves gauging the results from a top management point of view according to the strategic objectives of the organization. In contrast, knowledge management performance evaluation at functional level aims to assess the contribution of knowledge management applications on functional departments, working groups, operational processes and daily routines. The evaluation at the performer level focuses on assessing the contribution of knowledge management applications on employees’ decisions, actions and behaviors. Knowledge management practices like official emails, internal discussions, coordination meetings, group meetings, presentations, training sessions, get together, central repository, performance review conferences, annual sales conference, brainstorming sessions, records of lessons learnt and community of practices using the intranet can also be used as indicators of knowledge management performance (Malik and Malik, 2008). Minonne and Turner (2009) state that the key performance indicators of knowledge management performance can be number of communities of practices actively producing new knowledge management initiatives, cumulative percentage of identified redundant work practices successfully eliminated etc. Furthermore, two dimensional knowledge management maturity model to determine effectiveness of knowledge management in five stages is proposed. There are different key performance indicators for each stage accordingly.

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Figure 2.4. Two dimensional KM maturity model by Minonne and Turner (2009)

A lot of cost is incurred on knowledge management system construction, operation, system transformation, culture transformation, induction of employees, training, incentives and technology including hardware, software. Knowledge management performance can be measured in terms of customer order fulfillment rate, customer complaint ratio, R&D speed, Knowledge establishment & renewal and knowledge employee’s degree of satisfaction etc (Hui and Jing, 2009). Key Performance Indicators (KPIs) defined by Yang (2010) are given below:

a. Number of databases b. Financial resources allocated for knowledge sharing c. Contribution of employees in organization’s innovation d. Sharing of lessons learned from past products e. Conduct of post launch meetings

Moffett and Hinds (2010) state following key performance indicators for knowledge management:

a. Problems/errors and solutions are openly discussed b. Team members always clear about team goals c. Teams readily collaborate with other teams d. Approaches to capture customer and employee knowledge adopted/supported e. Management clear about what it wants f. Informal meetings held regularly g. Technology is a means of enhancing collaboration h. Technology designed to aid better decision making i. Connection with customers and suppliers j. Technology available to all employees k. Information hoarding is discouraged l. Information flows easily m. Awareness of database contents

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n. Ease of access to relevant information o. Dedicated time, resources and support given by employees to pursue new ideas

Moreover, Hajihosseini and Shahgholian (2011) have suggested determining knowledge management level of an organization by measuring parameters like knowledge recognition, acquisition, application, sharing, expansion and maintenance. 2.10 Effect of KM on organization’s performance There are two ways suggested by Kontour (1997) to measure impact of knowledge management on organization’s performance:

a. Qualitative Assessment: The aim of the qualitative assessment is to create common understanding of the issues and concerns associated with knowledge management and organizational learning. Specific questions will elicit perspectives on the barriers to the creation, assimilation, dissemination and application of knowledge.

b. Quantitative Assessment: The aim of the quantitative assessment is to determine

the extent of the impact on both decision making and task performance having historical data that is easily available, relevant, accurate and timely.

MaÊrtensson (2000) describes that the impact of knowledge management is a complex field. If knowledge management is used as a strategic tool, its outcome is difficult to estimate. If it had no value the organizations would not use it. This is because knowledge through downsizing is a scarce resource. Kalling (2003) describes that relation between improved performance and knowledge management not only depends on management of knowledge but also on knowledge utilization and capitalization. Knowledge development refers to development of resources, knowledge utilization refers to improvements of activities and capitalization refers to ability to reduce costs. The three instances have been elaborated in table below:

Table 2.4 KM challenges and managerial solutions accordingly by Kalling (2003)

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Halawi et al., (2005) suggest that knowledge management has positive effect on organization’s sustainable competitive advantage. There are different ways to value effect of knowledge management on organization’s activities (Gardoni and Dudezert, 2005):

a. Financial impact b. Strategic impact c. Operational impact

Marque´s and Simo´n (2006) propose and validate a model by empirical study that knowledge management practices are positively related with the organization’s performance.

Figure 2.5 Relation b/w KM & organization’s performance by Marque´s and Simo´n

(2006) Knowledge management practices result in benefits like improved quality, reduced cost, lesser lead time, delivery time, lesser customer complaints and improved decision making (Ibrahim and Reid, 2009). Zack et al., (2009) conclude in an exploratory quantitative study that as long as knowledge management practices enhance intermediate organizational performance, positive financial performance will result. Four key dimensions of knowledge management practice were used that appear to relate to performance:

a. Ability to locate and share existing knowledge b. Ability to experiment and create new knowledge c. A culture that encourages knowledge creation and sharing d. A regard for the strategic value of knowledge and learning

The link between knowledge management and organizational performance is obscure and difficult to be empirically validated due to an extremely large number of internal and external factors affecting organizational performance. Alavi et al., (2010) state in a theoretical model that knowledge management improves organizational learning and in turn positively affects organizational performance. Zheng et al., (2010) conclude that knowledge management relates positively to organizational effectiveness. Measures

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assessing organizational effectiveness were employee’s perceptions of the degree of overall success, market share, profitability, growth rate and innovativeness of the organization in comparison with key competitors. Yang (2010) state in an empirical study that there is positive relationship between knowledge management strategy and strategic performance and it is positively mediated by reward system, process innovation and intra-organizational knowledge sharing. 2.11 Research & Development R&D has become the battle cry for many countries looking for job creation and better living conditions. It is the means for maintaining intellectual leadership. R&D is the implementation of a new solution aiming at enhancing its competitive position, its performance or it’s know how. R&D can be defined as creative work which is undertaken on a systematic basis to increase the stock of knowledge including knowledge of man, culture, society and subsequently using this stock to devise new applications. Yang (2010) states that R&D is the primary source of internal knowledge creation. The faster the knowledge can be created, the more value organizations can deliver to its growth. Integration of R&D knowledge expands the creative potential of the entire organization. The term R&D covers three activities: basic research, applied research and experimental development. Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts without any particular application or use in view. Applied research is also original investigation undertaken in order to acquire new knowledge. It is directed, however, primarily towards a specific practical aim or objective. Experimental development is systematic work drawing on existing knowledge gained from research and/or practical experience, which is directed to produce new materials, products or devices, to install new processes, systems and services or to improve substantially those already produced or installed. The basic criterion for distinguishing R&D activities from non R&D activities is the presence of an appreciable element of novelty and the resolution of scientific and/or technological uncertainty. Competition that is based on differentiation means that you need to look at the way in which knowledge is applied in generation of new products, not simply the creation of new knowledge. While the importance of development is the way in which knowledge is translated into products and services which meet customer needs. R&D is important to all organizations, whatever their size and in whatever sectors they operate. Organizations compete with each other to come up with new and better ways to meet existing and evolving customer needs. Some changes are incremental while some are more radical but organizations that do not invest in the future simply do not survive. Though R&D is not without risk, failure to invest for the future in the long term is even more risky. “Innovate or die” is a phrase which reminds us that, in the context of competition with low cost economies and very little control over the transfer of

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knowledge around the world, we need to focus on the need to invest in the continual improvement. 2.12 R&D Process Yashiro (2005) suggest that R&D process is a time consuming and requires long term effort. Because basic research is a process of trial and error and the success rate has been historically low, fundamental research has been a burden for developed countries. R&D can be speed up through international collaboration. Today, technology development should not be restricted in one country; it must utilize both domestic and foreign intellect. For outsourcing the selection of partner is a key to success depending on what outsourcing tasks you pursue. Successful outsourcing improves the competitiveness of organizations. Out sourcing is the strong differentiation function for organization’s capabilities. Hao et al., (2008) state that R&D process includes many sub processes such as design, production, procurement, marketing, collaboration etc. Author mainly introduces the core process of R&D in five stages i.e. planning stage, Concept design stage, detail design stage, sample production, testing stage and start up of production stage. R&D activities are a process which involves the knowledge transfers, sharing and creation in R&D team, and ultimately converting knowledge to new product (Hongle et al., 2009). Wenyong and Yuan (2009) divide R&D process into following five stages:

Table 2.5 Stages of R&D process by Wenyong and Yuan (2009)

Furthermore, Wenyong and Yuan (2009) concluded four types of knowledge in R&D process:

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Table 2.6 Knowledge types in R&D process by Wenyong and Yuan (2009)

Wenyong and Yuan (2009) state that the essence of R&D activities is knowledge creating, sharing and managing with knowledge creating as its primary task which is be realized by knowledge sharing and managing. Besides R&D is a process of knowledge transformation from human resource, material, financial and related information to new products and technology. 2.13 Sources of R&D Knowledge R&D knowledge exists in many places as discussed by Drongelen et al., (1996):

a. Brain ware: knowledge in the minds of people such as experience, intuition and educational background

b. Hardware: touchable things incorporating knowledge such as solid prototypes, products, R&D equipment, production processes

c. Groupware: unwritten knowledge shared by people such as rules of thumb, procedures, stories

d. Document ware: knowledge documented on paper or in databases, information systems such as computer aided design & manufacturing models, patents, reports, handbooks etc.

Unfortunately, in many R&D organizations the largest part of the knowledge is stored in the least traceable and accessible medium i.e. the brain ware, which makes it difficult to deploy the knowledge optimally. More importantly, it makes the organization very dependent on individual researchers. Output of R&D is in many forms like knowledge, prototypes, documents etc. For organizations whose return on investment is obtained mainly from R&D; the ability to identify, collect, implant, organize, utilize and distribute knowledge is very critical. Knowledge provides the key building blocks for R&D and may arise from day to day activities and experiences, extraordinary events or from experiment and research. It may arise within the organization or from external contacts with customer, suppliers, new employees, universities, special research organizations etc. Parikh (2001) identify following sources of R&D knowledge:

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Table 2.7 Sources of R&D knowledge by Parikh (2001)

Acquisition and combination of external and internal knowledge is necessary to successfully conduct R&D as it takes place in much complex environment. Key sources of external knowledge include universities, suppliers, competitors, customers, trade associations and government agencies. Tacit knowledge consists of the employee’s experience or knowledge gained from their practice and it plays the most vital role as compared with all other R&D resources. To achieve success in R&D, an even interface between tacit knowledge and R&D management is necessary. Tacit knowledge is gained during all processes of the R&D and production of an organization. Tacit knowledge is a source of competitive advantage and the inspiration required for innovation originates mostly from invisible reservoirs of experience. Tacit knowledge is conceived during all functions of an organization’s processes. Moreover, with right tacit knowledge management, future potential problems are solved easily in all R&D activities (from concept generation to product launch and afterwards usage). Adequate sharing of tacit knowledge among the team members is very important for the success of R&D. In R&D organizations knowledge management has a high priority for increasing efficiency of knowledge and creativity processes and their transformation in intellectual assets thus generating economic and social benefits. Solleiro et al., (2009) have identified following sources of intellectual assets (knowledge):

a. Patents b. Proprietary technical information c. People d. R&D equipment and materials e. Special installations f. Software g. Customers h. Suppliers of specialized inputs i. External agreements j. External licenses k. R&D and consulting services

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2.14 Factors affecting R&D There is much discussion about what are the most critical factors which affect R&D. In general, now more than ever, R&D managers have to understand the forces affecting their project portfolios and husband the resources necessary for the projects in their portfolios to maximize both technical and market success. Factors (Rouse, 1998) which affect R&D process are economy, society, political stability, demography, government, HR, stake holder’s need and physical resources. Arai (2002) states that organizational management significantly affects R&D activities. The main factors are:

a. Management attitude b. Information flows c. Financial resources d. Knowledge e. Human capital f. Management competences

Management attitude is crucial to R&D. However long a product takes to bring to the marketplace and however many resources are invested in it, as soon as the product reaches the market, all of the research and the solutions to technical problems are known to the competitors. The opposition thus knows how you have tackled a particular problem and can take advantage of this in their own solution. As a result, the competitor can bring out a similar product in a shorter timescale with far less R&D costs. Therefore management must not become so attached to a new product that it ignores the continuing march of technology. Management also cannot afford to be complacent. A organization that relies on a product that has done very well for the past four years may find that the product is obsolete in its fifth year. The organization must continuously look forward. Often R&D is regarded as an activity that only needs to be undertaken every five years or so, or when a new product is seen to be needed. It can be expensive, but it needs to be continuous to be effective. Organizations that take a short-term view may not be willing to spend on R&D when the payoff appears to be a long time away. This short-term view means that many organizations are reluctant to innovate and gamble on new products—a position that leads to non competitiveness and bankruptcy. Information is the lifeblood of R&D. The better the information flows, the more likely appropriate and timely changes are to be made. If the information flows are inadequate or the response to suggestions is negative, R&D process is likely to be hindered. It is essential that the opportunities for information to move around an organization are maximized. Similarly, it is also essential that the opportunities for information to come into the organization are maximized. It is useful, therefore, for a organization to keep its formal and informal information networks under constant review. Marketing is a form of information flow from the organization outwards. A good product can be destroyed by poor marketing. A product designed and marketed for one purpose that turns out to be used in quite a different way, or for quite a different purpose is known as reinvention or secondary invention. The period of the late 1980s and early 1990s could be called the years of quality and customer service. A great majority of organizations realized that

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profitability was dependent on good customer and supplier links. It is still the case that no matter how innovative and excellent a new product might be, it will unlikely be a success if the organization does not provide a quality service and good links and communication flows with its customers and suppliers. There is the need for high quality in product, customer and supplier links, aftercare, and maintenance if an organization wishes to be successful, which generally means profitable. To begin with, though, someone has to recognize an opportunity. Investing in R&D is risky. The market changes over time and some trends may visibly change or not; the risks and uncertainties associated with investing in R&D are many and varied. Some of these are:

a. Viability of technology b. Profit margins c. Scalability of the product, process etc d. Quality control and standards e. Market demand f. Accessible market g. Level of market opportunity h. Compliance with industry standards i. Business and legislative environment j. Availability of finances

Getting credible answers to above mentioned question is critical and will lead towards the decision to invest. From the organization’s perspective, it is vital to protect the knowledge and competence base (ideas, technologies, etc.) from imitation by competitors. In general, Intellectual Property Rights is the option to protect the intangible competitive base. In addition, first mover advantages or binding customers by offering complementary services are important issues to be taken into account as well. Labor shortage and skill gaps are important factors in hampering R&D activities and economic growth. Skill shortage is a serious obstacle for R&D and in moving towards more complex and higher priced products. Thus, it is obvious that attracting, developing and managing skilled staff is highly important for success of R&D organizations. Finally, the lack of management competences in the fields of innovation, marketing, project management and organizational management is another reason. In this regard, the assessment of market development is especially important before venturing in new products. For the success of R&D there shall be a balanced team that possesses key competencies including following:

a. Subject specialists b. Project Management c. Product Development d. Intellectual property rights management e. Information technology management f. Production and distribution g. Human Resource Management and Development h. Sales and Marketing i. Finance and Performance Management

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j. Risk management k. Contract and supply chain management

The presence of these important skills, competencies and capabilities is key driver of R&D and important enabler when the organization seeks external finance. Jordan et al., (2003) indicate thirty six attributes that foster excellence in R&D:

Table 2.8 Nine attributes that foster excellence in R&D by Jordan et al., (2003)


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Culture of sharing knowledge in R&D organizations is much important which will ultimately determine the success factor of whole effort. Ensign (2004) made significant efforts to evaluate the reasons for sharing knowledge by individuals in R&D organizations:

a. Common business goals b. Courtesy c. Professional attitude d. Team player e. Ethics f. Collaborative approach g. Own area of expertise h. Gives good feelings i. To get assistance in own problems j. For betterment of department / organization / country

Furthermore, Ensign (2004) also described the reasons for NOT sharing knowledge by individuals of R&D organizations:

a. Lack of expertise b. Lack of trust and attitude for team play c. Organizational structure d. Lack of time e. Non conducive organizational culture f. Un friendly attitude g. No concern for team development

The exchange of technical expertise and sharing of resources is unavoidable and vital reason for survival. However, social, geographic, organizational structure and technology aspects have also their impact on sharing of knowledge and should be dealt with appropriately. Fang (2008) gives six factors of knowledge sharing:

a. Love, concern, trust and promise among the team members. b. Narration of professional knowledge. c. Good reward system. d. Comprehensive performance measurement considering job stress. e. Cultivation of informal relationship in community. f. Psychological satisfaction (reciprocal feedback in the future).

R&D activity requires that members shall communicate with each other, either within or outside the team, while undertaking their tasks so as to provide opportunity for exchange of knowledge. R&D teams should establish realistic goals in order to help members in knowing that how their knowledge will be used in achieving said objective. Higher management should also adapt policy of awarding extrinsic / monetary rewards to members for contributing and sharing their knowledge. By considering the above

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mentioned reasons for sharing and not sharing knowledge, the management may opt the right strategies and practices for fostering the R&D process. 2.15 R&D performance measurement parameters The return on investments in R&D is perceived to be unacceptably low and very slow. At the same time, however, there is common agreement that R&D is a key to economic growth. Organizations are increasingly focused on assuring that they secure returns from their R&D investments. All too often, both industry and government organizations continue to pump resources into efforts that will not yield significant returns, primarily because this issue is seldom seriously addressed once investments have begun. Perhaps the most plaguing uncertainty concerns the nature of returns on investments. R&D efforts tend to yield the greatest benefits in unanticipated domains and markets. It is obviously difficult to justify unknown benefits to unknown beneficiaries on purely economic grounds. This argues for multiple investors participating in a portfolio of R&D projects. It is important to note that R&D investments not only serve the purpose of gaining competitive advantage in the marketplace, but they can also serve social purposes—for example, to inform policy makers and influence policy decisions. Despite the much more ambiguous causal chain between investments and social returns, it has been shown that such returns are often much higher than what the private sector experiences. Chiesa and Frattini (2007) explored that R&D performance can be measured in four perspectives i.e. financial, customer, innovation and learning and business process. Type of R&D activity, industry size and objective for measuring R&D performance affect the measurement process. Furthermore, there will be different indicators for input, out put and process related to above mentioned perspectives. The commonly found indicators during the case studies were total cost of R&D project, annual spending, customer satisfaction, number of involved employees etc. Organizations decide to measure the performance of their R&D activities with multiple purposes. Factors like type of R&D activity, size of the organization and the R&D unit and organization’s sector of activity are important in measuring R&D performance (Chiesa et al., 2009). Furthermore, Matsumoto et al., (2010) describe that R&D performance can be measured by its impact on environment, public health, etc. 2.16 Application of knowledge management In R&D Organizations Rouse (1998) elaborates that people who manage R&D organizations are increasingly interested in knowing the best practices for planning, organization, and control of their organizations to assure maximum returns on their R&D investments. Succinctly, the product they are seeking is knowledge, not more data and knowledge management is expected to meet their requirements in a best way. Carneiro (2000) emphasizes that considering the strategic objectives, organizations have to define what kind of knowledge will be more important to take care of. Management has to analyze all the environmental elements because they affect the organization performance. Parikh (2001) argues that cultural differences, variety of processes, organizational structures and the levels of information technology should be catered for while designing a knowledge management

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system. Since, knowledge does not have a specific unit of measure, therefore, integrating knowledge inside and outside the organization is difficult and designing / implementing the knowledge management initiative in R&D environment on global scale is not possible. However, sources of knowledge either tacit or explicit may be similar like wise different phases of knowledge management i.e. acquisition, organization, dissemination and subsequent application. Yasunaga and Yoon (2004) proposed the roadmap for technology development by using technique of structuring knowledge for utility in R&D management. Structuring knowledge means to categorize knowledge and interrelate its various types from economic and scientific aspects. If the objective and aspect or reference is altered, the structure sequence will have to be re-defined along with its inter-relations. Also, when knowledge travels from supply to demand side, the correlation is activated to form a suitable structure and subsequently, when this system achieves self reliance, the knowledge can be made available and utilized for organizational objectives. In the developing countries, universities are the main institutes to conduct R&D and discover new knowledge for innovation. Initial findings by Igel and Numprasertcha (2004) indicate following benefits of knowledge management in R&D:

a. Knowledge identification, acquisition, sharing and integration b. Better tacit knowledge management c. Better planning and reduction in the repetition of mistakes

Knowledge management increases the capability of universities to acquire, share, integrate and use the various knowledge sources to create new knowledge for achieving innovation. Inadequate funding and less access to market like problems have hindered universities to commercialize their knowledge. Knowledge management processes are embedded in the R&D management process and an effective knowledge management will help universities to manage their projects more efficiently in terms of time, cost, and output quality. Similarly information technology, motivation, positive organizational culture, matrix organizational structure and supporting organization are enablers of knowledge management in R&D (Suh et al., 2004). Park (2005) suggests that the knowledge management and R&D management are closely linked, furthermore; discussed the characteristics of R&D i.e. researcher, manager, organization and customer oriented needs of knowledge management and subsequent design of knowledge management system. Goh (2005) has identified nine objectives of knowledge management in R&D which are divided in three categories as listed below: 1. Products:

a. Structuring and mapping knowledge b. Developing knowledge databases c. Embedding knowledge in new products and services

2. Processes: a. Capturing and reusing knowledge b. Sharing of lessons learned c. Effective Management of knowledge assets

3. People: a. Creating knowledge teams

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b. Forming people oriented knowledge centers c. Knowledge sharing among people

The increased degree of competition and accelerated pace of technological change now make the successful management of R&D more important and difficult. Park and Kim (2005) have proposed following generation wise characteristics of R&D system:

Table 2.12 Generation wise characteristics of R&D system by Park and Kim (2005)

The generation wise needs of KM for R&D system have also been identified accordingly in Table 2.13. It clearly depicts that the various knowledge management techniques essentially meet the requirements of R&D systems.

Table 2.13 Generation wise needs of KM system by Park and Kim (2005)

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Kitaygorodskaya (2005) states that R&D activity requires that members shall communicate with each other, either within or outside the team, while undertaking their tasks so as to provide opportunity for exchange of knowledge. Knowledge management helps in research by (Abbasi and Siddique, 2005):

a. Creating an environment to facilitate innovation b. Managing and sharing of novel ideas c. Sharing of experiences and best practices d. Enhancing the employee’s capabilities

Darroch (2005) concludes in an empirical study that the organizations that effectively manage knowledge are likely to be more innovative and perform better. Yashiro (2005) states that technological globalization has accelerated at an increasing rate in recent decades because of various new innovations and technologies. Today, technology development is not limited to any specific country; on the other aspect, multinational collaboration is the latest trend. Organizations working in this new environment must utilize both national and international intellectual resources for fostering innovation through international collaboration / joint ventures. For example; in the case of Russia and Japan, Yashiro explores the option of joint ventures by adapting effective knowledge management techniques, such as knowledge identification, utilization and transfer. Huang and Huang (2007) also endorse that knowledge management effectiveness in R&D refers to whether the R&D personnel receive and understand the needed knowledge in order to execute their duties and achieve their objectives. Knowledge sharing culture enhances knowledge management effectiveness in R&D organizations. Libing and Rong (2007) also conclude that knowledge sharing within R&D has the direct influence on the new knowledge creation and knowledge management stimulates idea generation, expressing and sharing. The ability of organizations to increase the profit on their investment in R&D is necessary; otherwise there will be no further incentives for R&D. Once new knowledge is created, it becomes available to others for use, so knowledge management will benefit all stakeholders (Sawabe and Egashira, 2007). Yang et al., (2007) define R&D organization as a group of professionals aiming at study and development of science and technology. Knowledge management in R&D organization embodies the creation, distribution, storage and sharing of knowledge and stresses on the management and externalization of tacit knowledge. In R&D organizations knowledge management should focus on creation of new knowledge and utilization of existing knowledge in product development phases. Also, R&D activities are mostly on project basis which are future oriented and knowledge management shall help effective knowledge flow in project and address quality management issues. Furthermore highly talented human resource is involved in R&D so knowledge management shall facilitate them in self development also. Knowledge management is meant to meet following objectives in R&D (Plessis, 2007):

a. Sharing and codification of tacit knowledge

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b. Making explicit knowledge available for recombination into new and innovative ideas.

c. Enhancing collaboration with customers, suppliers and employees to form knowledge sharing communities

d. Creation of a culture conducive for knowledge creation and sharing

Chang and Li (2007) propose a five stage knowledge management approach for implementation in R&D organizations i.e. knowledge management auditing, planning, execution, evaluation and reinforcement. In auditing phase needs of knowledge management are analyzed and barriers along with enablers are identified. In planning stage, goals and strategies are formulated along with selection of suitable information technology platform. While in execution phase knowledge management portals are developed and incentive programs are implemented. In evaluation, performance is measured and in reinforcement phase, knowledge management portals etc and structure is modified to improve the performance. Chang and Li (2007) further conclude that bridging people with people enlarges the breadth and depth of new technology development process. Information technology solutions, cultural change, rewards and good execution team are pre requisites for success of knowledge management deployment. Alwis and Hartmann (2008) discuss that tacit knowledge is major product of R&D and it is personal and hard to formalize. It is rooted in actions, procedures, values and emotions etc. Tacit knowledge is the less familiar form of knowledge. It is the knowledge about which we are not conscious. Therefore, R&D organizations have to focus on factors like motivation, commitment, hopes and rewards for sharing of tacit knowledge which is transmitted verbally. Fang et al., (2008) state that knowledge management needs the involvement of all employees of the organization. Organizational culture and reward system significantly affect knowledge sharing in the organization. In an empirical study Linlin and Hui (2008) conclude that ultimate goal of research team (basically a knowledge team) is innovation, creation of new knowledge / technology and cultivating creative talents. The knowledge creation is output of the interaction among team members. Since, the R&D process is the process of integrating knowledge and technology from different disciplines, therefore; effective knowledge management helps the R&D process go on wheels. Following hypothesis has been found supported by the study carried out:

a. Organizational Factor significantly affects the KM activities b. Cultural Factor significantly affects the knowledge management activities c. Resource Factor significantly affects the KM activities d. Knowledge management activities significantly affect the KM output e. KM output significantly affects the Innovation Performance

Yang et al., (2008) stress that different communication means like face to face, speech, group discussion, phone and email play significant roles in knowledge management. So according to different aims selection of rational communication means will contribute to more effective knowledge management in R&D. In an empirical study, Cantner et al.,

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(2009) conclude that continuous R&D and production of high quality knowledge increases the probability of knowledge management usage. As R&D is the uncertain and spontaneous creation of new knowledge, therefore, knowledge management is an important tool to manage R&D activities. Knowledge management activities appear to make the R&D process less uncertain and more targeted. Adachi (2009) examines the requirements of knowledge management in planning section of a public research organization. Author concludes that by accumulating various kinds of knowledge about tasks, the synergy between them creates new knowledge and accelerates knowledge management and a planning section becomes a center of knowledge assets. The online collaborative documentation and knowledge sharing platform provides a way to accelerate the team’s efficiency and research level in R&D (Liu et al., 2009). Dingyong et al., (2009) state that R&D knowledge management process includes the process of knowledge workers making tacit knowledge explicit. Since tacit knowledge exists in the minds of individuals therefore, due to differences in personality and knowledge, each knowledge worker plays a different role in the project, resulting in different results. Wenyong and Yuan (2009) divide knowledge management activities in R&D process into five stages:

Table 2.14 KM activities in R&D process by Wenyong and Yuan (2009)

Wenyong and Yuan (2009) conclude that effective knowledge management should at least possess following characters i.e. people oriented, knowledge communication, knowledge creation and knowledge transformation. In R&D process there are several particularities like highly specialized knowledge, hard to manage, quite implicit, difficult to create and fast updating. Top management risk taking, strategic planning, knowledge sharing culture and knowledge management influence R&D performance (Zaaimuddin et al., 2009). Dingyong (2009) highlights the need of knowledge management in an organization which deals with R&D projects. As compared with conventional projects, measurable of tools & resources are not easy to quantify in R&D projects. Similarly various identified risks are not easy to be mitigated and controlled followed by matrix management style to be adapted in contrary with vertical management. Knowledge management is useful in all phases of project management.

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Hao and Liu (2009) has also guided R&D organizations to implement knowledge management by studying Chinese organizations and prepared a framework for R&D organizations with three major components i.e. employees, environment and platform. The study indicates that nearly two third of the organizations have yet to adapt knowledge management. The major obstacles which organizations have to cross over are the typical organizational structure, culture and problems involved in identification, analysis and extraction of knowledge. According to Hao and Liu (2009), knowledge management framework for R&D organization is shown in figure 2.6 with three key elements i.e. employees, knowledge management platform and knowledge environment.

Figure 2.6 KM framework for R&D organizations by Hao and Liu (2009)

Shankar et al., (2009) give following factors which affect strategic alignment of the knowledge management initiatives with the organizational goals of R&D:

a. Vision/Goal: organization should have clarity on its future and it should percolate down in the organization.

b. Leadership: all employees should feel responsibility and guide the strategic changes so that the organization moves towards the vision.

c. Creative chaos: for the strategic changes the organization should encourage healthy creative chaos.

d. Integration: all the activities/initiatives should be integrated so that group/department/organization works with optimal efficiency.

Also, Shankar et al., (2009) identify following conflict areas between various departments affecting performance of the organization: 1. Organizational (group)-customer interface:

• Market information capturing and processing system. • Voice of customer capturing and transferring into product parameter.

2. Organizational (group)-unit interface:

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• Synchronization in technology focus. • Fund allocation and budget control. • Short-term performance measures. • Organizational policy on Information Technology, Knowledge Management and

R&D. 3. Inter-unit interface:

• Lack of compatibility in knowledge-sharing infrastructure. • Individual performance focused appraisal leading to lack of knowledge sharing

culture. • Lack of knowledge indexing and searching system.

4. Unit-supplier interface: • Late or no involvement of suppliers in the product module design. • Frequent design modification with non-standardization of product modules. • High inventory.

5. Inter-department interface: • Production-engineering departments.

– Poor capturing of production process parameters in product design. – Late or no involvement of production engineering in product development. – Non-standardized of development process.

• Engineering-marketing departments. – Multiple iterations in sample modification due to improper capturing of customer requirements. – Lack of technical product benchmarking capabilities.

• Engineering-human resource development departments. – Lack of detail profiling of technical manpower in new technology field.

Furthermore, Shankar et al., (2009) propose following knowledge sharing methods in R&D organizations:

a. Experience workshop b. Informal events c. Communities of practice d. Expert interviews e. Project briefings f. Experience report

Empirical study by Asakawa et al., (2010) concludes that the organization’s open innovation policies have positive effect on the R&D collaborations with universities and organizations. Authors suggest that R&D managers should promote open innovation practices to enhance the R&D performance. R&D managers should proactively align themselves with the organizational level open innovation policy to enhance R&D performance. Second, the R&D managers should put more emphasis on facilitating external collaborations rather than directly influencing R&D activities for enhancing performance.

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CHAPTER 3 KM IN R&D ORGANIZATIONS OF PAKISTAN 3.1 Introduction It is evident from the literature review that R&D processes are in essence knowledge transformation processes followed by diffusion activities. And knowledge management is based on mechanisms which are aimed at purposes like improving quality, reducing development time and fostering R&D. In R&D process much knowledge is being handled so knowledge management is mandatory to hold and instantly provide required knowledge to users for maximization of benefit. Furthermore, knowledge management increases the capability of R&D organizations to acquire, share, integrate and use the various knowledge sources to generate new knowledge. Inadequate funding and less access to market like problems have hindered organizations to commercialize their knowledge. Knowledge management processes are embedded in the R&D management process and an effective knowledge management will help organizations in managing the projects more efficiently in terms of time, cost and output. R&D consists of many sub activities like idea generation, concept finalization, feasibility assessment, decision on product specifications on the basis of customer requirements, development of prototypes and launch of commercial product after customer acceptance; followed by getting customer feed back for subsequent analysis and improvements in the product. Knowledge management helps organizations in above mentioned activities and plays pivotal role in resource planning, portfolio management and reusability analysis. Knowledge management system enables organizations to develop strategies and goals, which can foster innovation, and enhance R&D. The knowledge can be classified into extrinsic and intrinsic knowledge with respect to the R&D. For example, the in-house technical knowledge is intrinsic while the customer requirements knowledge is extrinsic. The broad knowledge repositories in product development process are customer requirement knowledge (voice of customers), technological development knowledge (new technological development) and in-house competency knowledge including supplier competency. While the criteria system provides the necessary checks in the development system. It defines the screening mechanism for the input and output of the system. For example, the checklist for evaluation of projects is a part of the criteria sub-system. Knowledge management assures maximum utilization of the withheld knowledge, optimal performance of the development process and delivering right product by the first time. 3.2 KM Status in R&D Organizations of Pakistan One professional each from sixteen in number R&D organizations of Pakistan were interviewed to identify existence of awareness about knowledge management and its potential benefits. All the interviewees were a part of middle management and the reason behind approaching middle management slot is their insight about functioning of organization as well as regarding future intentions and commitment of higher

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management towards a certain strategy. Each of the interviews lasted for an hour. After the interviews, the following are questions whose response was obtained according to five point Likert scale with 1 being the lowest and 5 being the highest level of existence of the said practice or awareness level:

1. Awareness about importance of intangible assets. 2. Awareness level regarding Knowledge Management best practices 3. Knowledge sharing culture. 4. Conduct of Joint meetings and sessions 5. Management commitment for knowledge sharing. 6. Reward system against sharing knowledge 7. Sharing of resources 8. Usage of Information Technology tools like Intranet, central database etc 9. Involvement of Customer in R & D activities.

3.2.1 Reliability Test The structured questions were developed to assess the direct or indirect existence of present situation of practices related to knowledge management. In order to determine the reliability of the questionnaire, Cronbach’s Alpha was calculated and its value is 0.905. The said value comes in the “Excellent” range and gives confidence that the same results can be expected from the other similar professionals of R&D organizations. 3.2.2 Results and Analysis The response received to above questions was statistically analyzed to get holistic picture. The mean and standard deviation of response received against each question is given in table 3.1.

Table 3.1 Descriptive statistics of awareness level of knowledge management in R&D organizations of Pakistan

Variables Mean Std. Deviation

Awareness about Intangible Asset 2.56 1.365 Awareness about Knowledge Management Practices 2.13 1.147 Knowledge Sharing Culture 2.75 1.125 Joint Meetings 3.50 1.155 Management Commitment for knowledge sharing 2.75 1.342 Reward System 2.06 1.181 Resource Sharing 2.88 1.258 Information Technology Tools 3.19 1.424 Customer Involvement 2.88 1.500 Valid N (list wise) = 16

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The results clearly depict that R&D organization of Pakistan lack awareness about knowledge management and its benefits. Higher management’s commitment for knowledge sharing is not up to the mark followed by lack of reward system for sharing knowledge and best practices. However, the intranet and joint meetings are in practice, which establishes the required baseline for knowledge management initiative. Mostly, there is no specific parameter for measuring performance of R&D activities. Only, one organization is utilizing the number of published research papers over the period of a year as an indicator to measure R&D performance of the personnel. The comparative overall performance of R&D organizations on the basis of total score obtained against all selected variables of knowledge management is also given in Figure 1. The results reflect that organization ‘C’ lies at highest position and organization ‘J’ falls at the lowest level. Although, no formal knowledge management has been adapted in any organization but the organization ‘C’ has been found with greater inclination and potential for success of launching knowledge management initiative.

Extent of Knowledge management practices in R&D organizations of Pakistan

0 10 20 30 40 50

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Org

aniz

atio

n

Total Score

Figure 3.1. Comparative level of knowledge management practices

3.2.3 Knowledge Management Index The results of the survey have also been transformed into a knowledge management index ranging from 0 to 1, tabulated in Table 3.3, which gives clearer picture of the existence of knowledge management practices in the R&D organizations of Pakistan. The index has been calculated by obtaining the percentage of received score against cumulative ideal score. For example, the sum of response received against all nine questions from organization ‘A’ is 16 against total score of 45, which leads the percentage of 0.35 i.e. index of existence of knowledge management . It is pertinent to

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mention here that this index is based on limited aspects of knowledge management. However, it can be augmented and stretched to more comprehensive index for ratification of the organizations.

Table 3.2 Extent of existence of knowledge management S/N Organization Knowledge Management Index 1 A 0.35 2 B 0.64 3 C 0.95 4 D 0.29 5 E 0.58 6 F 0.75 7 G 0.58 8 H 0.80 9 I 0.55 10 J 0.27 11 K 0.55 12 L 0.31 13 M 0.69 14 N 0.53 15 O 0.42 16 P 0.49

The interaction between author and R&D organization personnel remained fruitful and inspired R&D personnel to implement the knowledge management in their organizations. R&D personnel requested more details which were provided accordingly. 3.3 Activities of R&D Organizations Furthermore, information regarding activities of R&D organizations were identified through interviews each of which lasted for an hour approximately. R&D organizations are involved in various activities as given below:

a. Identification of Concepts / Ideas Generation b. Feasibility studies c. Selection of concept / Idea d. Product / Service Approved for Definition e. Acquisition of relevant knowledge and technology f. Designing g. Prototype Development h. Concept Demonstration to User i. Product / Service Approved for Development j. Finalization of Use requirement document k. Technology Demonstration to the User on the basis of User Requirements l. Preparations / modifications for production m. Final Product Development

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n. Marketing / Commercialization o. Delivery and After Sales Services p. Training q. Customer feedback and Product Improvement r. Generation of new knowledge / technologies s. Development of new materials, processes and services

3.4 Problems of R&D organizations of Pakistan In order to identify the problems being faced by R&D organizations of Pakistan, another survey was conducted in July 2011 in the same organizations and response on following questions was obtained:

1. Lack of funds allocated for R&D within organization 2. Lack of funds from outside sources like government, customer etc 3. Lack of R&D infrastructure e.g. equipment, software, etc. 4. Lack of qualified personnel within the organization 5. Lack of qualified personnel in market 6. Lack of information of market 7. Lack of knowledge sharing culture 8. Lack of rewards 9. R&D costs too high 10. Risk factor is high 11. Rigid organizational structure 12. Poor coordination/communication among the departments within the organization 13. Insufficient Government Support 14. Strong competitors in market 15. Demanding customer 16. Environmental issues 17. Short timelines 18. Unclear objectives 19. Lack of well defined strategy 20. Political instability 21. Marketing/commercialization failures 22. International sanctions / policies etc 23. Law and Order situation 24. Problems in measurement of the performance 25. Low rate of return on investment

3.4.1 Reliability Test The structured questions were developed to assess the extent of problems being faced by R&D organizations of Pakistan. In order to determine the reliability of the questionnaire, Cronbach’s Alpha was calculated and its value is 0.881. The said value comes in the good range from the reliability point of view for the research instrument and gives

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confidence that the same results can be expected from the other professionals of similar R&D organizations. 3.4.2 Results and Analysis The response received against the above enlisted variables was statistically analyzed to get holistic picture. The mean and standard deviation of response received against each variable is given in Table 3.3. Furthermore, the comparative overall problems status of R&D organizations on the basis of total score obtained against all selected variables are also given in Figure 3.2. The results reflect that organization ‘J’ lies at highest position and organization ‘F’ falls at the lowest level.

Table 3.3 Descriptive statistics of problems of R&D organizations of Pakistan


Lack of Funds allocated by the firm 3.19 1.223 Lack of Funds available from outsourcers like government, customer etc 3.56 1.031 Lack of Infrastructure, equipment etc 2.44 .964 Lack of qualified Researchers within the firm 2.31 1.014 Lack of Researchers available in the market 3.50 1.211 Lack of Market Information 3.06 .929 Lack of knowledge Sharing Culture 4.19 .834 Lack of Rewards 4.12 1.088 High R&D Costs 3.81 1.109 High R&D Risk 3.44 1.031 Rigid Organizational Structure 3.50 1.211 Poor Communication / coordination among departments of organization 3.69 .946 Lack of Government Support 3.19 1.223 Strong Competitor in the market 3.75 1.342 Demanding Customer 3.06 1.063 Environment issues 2.75 1.183 Shorter Timelines 3.44 1.153 Unclear Objective 3.00 1.211 Lack of well defined Strategy 3.94 .772 Political Instability 3.81 .834 Commercialization failures 3.69 1.078 International Policies, sanctions etc 4.19 .750 Poor Law and Order situation 4.13 .957 Lack of or improper Performance Measurement of R&D activities 4.06 1.063 Low Return On Investment 3.50 1.265 Valid N (list wise) = 16

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Overall Comparative Problems Status of R&D organizations of Pakistan

0 50 100 150

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Org

aniz

atio

ns

Cumulative score

Figure 3.2. Comparative level of problems for R&D organizations 3.4.3 R&D Problems Index The results of the survey have also been transformed into a R&D Organizations problems index ranging from 0 to 1, which gives clearer picture of the severity of the problems being faced by the R&D organizations of Pakistan. The index has been calculated by obtaining the percentage of received score against cumulative ideal score. For example, the sum of response received against all twenty five variables from organization ‘A’ is 85 against total score of 125, which leads the percentage of 0.68 i.e. index of severity of R&D problems. It is pertinent to mention here that this index is based on specific identified problems of R&D organizations. However, it can be augmented and stretched to more comprehensive index for ratification of the other R&D organizations as well.

Table 3.4 Extent of Problems of R&D organizations S/N Organization R&D Organizations Problems Index 1 A 0.68 2 B 0.73 3 C 0.70 4 D 0.77 5 E 0.74 6 F 0.58 7 G 0.60 8 H 0.61

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9 I 0.60 10 J 0.98 11 K 0.72 12 L 0.87 13 M 0.68 14 N 0.58 15 O 0.70 16 P 0.60

The results clearly show that culture is the worst problem being faced by R&D organizations of Pakistan and has to be addressed first. Higher management may be actively involved in cultivating moral values and inculcate knowledge sharing culture. R&D organizations may focus on enhancing capabilities of its researchers and have to adapt methodologies for training in relevant areas and retaining expert employees. Organizational structure of R&D organizations is also very important and should facilitate flow of information in contrary to conventional organizations. Presently, no uniform or specific organizational structure is defined in R&D organizations of Pakistan. Some organizations have adapted the functional organizational structure i.e. different departments exist as per their functions like design, manufacturing, procurement, etc. While in some cases the divisional structure also exists in the organizations operating in different areas like north wing and south wing of the country. Keeping in view of the problems being faced especially funds and HR constraint, it is recommended that organizations may divide their groups on the basis of technologies like design of mechanical structure, mechanical workshop, testing and calibration facility etc. When ever a project is to be worked out, its different sub systems may be assigned to the group head of a specific technology area followed by its subsequent tasking and implementation. The core team of the project and project manager shall continuously interact with all teams working on sub systems for its correct integration thus leading to successful product. The employees of R&D organizations are also concerned with outcome of new technique being intervened. Researchers also want to see benefits of said initiative and take part actively if this helps them in discharge of their duties more efficiently. Therefore, due consideration may be given in grading of employees and one’s efforts in knowledge sharing be accounted for. Employees think of sharing knowledge & personal experiences when this is properly acknowledged by higher management and it leads by example. Different departments working under different heads are not cooperative with each other, inter departmental rifts exist very often. Duplication of facilities is also attributed due to lack of trust, confidence and mutual cooperation. Therefore, knowledge management may be intended to develop a knowledge sharing culture. Higher management and knowledge management department may provide platform and necessary tools for this objective. The role of knowledge management department if built exclusively may be facilitator and restricted to advisory mode only. Knowledge management department may plan and facilitate platforms for interaction, get together and create conducive environment for open discussions. Implementing knowledge management is basically a change of culture in an organization like in Quality Management System.

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Incentive programs may be planned to reward employees for sharing knowledge. Researchers will be more comfortable with adoption of knowledge management, if they are convinced that knowledge management is ultimately going to help in achieving their objectives and also ensuring their personal growth. Management may clearly indicate benefits of sharing knowledge as this will lead to generate and enhance personal knowledge of employees as well as fruitful to organization in terms of generating new ideas and launching successful products. More over organizational structure should facilitate horizontal communications among employees. In various processes of R&D like Basic Research, Applied Research, Prototyping, modifications / improvements there are different number of working experts. In R&D processes employee involvement is required at every time. R&D is twenty four hours job and total commitment & sincerity of employees is mandatory. Employees may some time fed up, loose concentration & are victim of boredom at some times so this issue has to be accordingly dealt with by providing refreshing activities & providing solution / help to employees in family and other aspects instead of only giving them pays. Investor is a key to progress of R&D, since with out money, nothing can be done. Organization has to give tangible results visible to every stake holder to ensure uninterrupted investment. Today’s markets are very competitive and every day markets are being packed with new products. In response organization has to align its research process accordingly to avoid wastage of efforts. Governments are facing macro and micro economic problems resulting in abruptly changing policies. R&D organizations have to manage and live with this scenario. At last, customer being another external factor is more choosy and difficult to attract and nearly impossible to retain. Customers are hindered by less purchasing power, yet aroused and seduced by a variety of products. Customer feedback on products of competitors helps understanding regarding any problems being faced and customer’s desires. Moreover, customer feedback helps to accurately forecast market demand and design / launch a product with better features to gain competitive edge. Various other stakeholders like government and regulatory authorities are also creating problems for R&D programs. Political instability and frequent changing of government policies, public’s urging for rapid and quick solutions at less cost, funding constraints, interrupted investment and environmental friendly products are also boundary limits for researchers. Since higher management is reluctant to further invest in R&D programs, so it is inevitable to present some concrete evidences that may reflect improved performance. Implementation of knowledge management will yield both tangible and intangible benefits. This century is going to see worst disasters related to environment. R&D processes along with products have to be environment friendly and comply with concerned rules and regulations, which are going to be strict with every passing day. According to Huang and Shih (2010) environmental knowledge is a valuable intangible asset for sustaining competitive advantage and knowledge management helps addressing environmental issues.

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3.5 Proposed Hybrid strategy When an organization embarks on a knowledge management initiative, it is imperative that they establish the manner whereby knowledge will be shared. Information technology assists organizations in the sharing and dissemination of knowledge. The global environment that businesses now operate in requires information technology for knowledge to be shared. Information technology is required in order for knowledge management to be implemented in the organization as it will be used to transfer knowledge to the required areas where it is needed. It therefore plays a crucial and transformational role and is a key part of changing organizational culture to a knowledge sharing one. So far in totality, researchers have discussed two major strategies for managing intangible assets of organizations i.e. codification and personalization. In codification strategy focus is on explicit knowledge. Efforts are made to develop a system for identification, collection, its organizing and distribution to concerned uses. The explicit knowledge is available in many forms like procedures, standards, design documents, manuals and minutes of meetings etc. This strategy emphasizes reuse of explicit knowledge and this is suitable for organizations which are involved in mass production. While the personalization strategy focuses on managing tacit knowledge available in the organization. The tacit knowledge resides in the minds of people, culture and available in the form of unwritten rules of thumb. Under this strategy a platform is provided to employees (experts and non experts both) so as they can discuss / share their experiences and accordingly generate new ideas, solutions and knowledge for future growth. Although organizations adopting one knowledge management strategy also use techniques from the other strategy to supplement their overall knowledge management activities, organizations should not try to excel at both. Organizations straddling on both knowledge management strategies are susceptible to the risk of failing both. The adoption of one knowledge management strategy by an organization should be supported by the suitable human resources, matching organizational culture, structure and nature of work. Tacit knowledge is major pat of knowledge involved in R&D organizations and is vital for success of R&D processes. Generation of tacit knowledge can be facilitated by focusing on human interactions. Keeping in view the ‘Knowledge’ requirements of R&D, it is proposed that hybrid strategy i.e. combination of both approaches with 80 % of personalization and 20 % ratio of codification may be used. Since R&D is meant for generation of new ‘Knowledge’, so 80 % focus may be given on personalization approach and 20 % on codification. More focus on personalization strategy will help generation of new ideas and provide innovative solutions. Furthermore, knowledge management tools may be selected accordingly. Appropriate tools for personalization and codification strategies have been discussed in the section 2.5.1 and 2.5.2 above. However, for R&D organizations it is considered appropriate that under the umbrella of hybrid strategy initially platforms like videoconferencing, intranet for exchange of expertise etc shall be provided.

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3.6 Proposed Roadmap for implementing KM in R&D organizations of Pakistan Most of us, because of the limitations of our very human nature, have a strong knowledge hoarding propensity. Hoarding is symptomatic of old thinking that does not harmonize in the knowledge-based economy and can undermine an organization's ability to move quickly into new markets or compete effectively. But hoarding is a human tendency that can be overcome only by providing an irresistible incentive to share. Bringing in performance measures and incentives that reward knowledge sharing strengthens the benefits of sharing knowledge throughout the organization. Individuals, being task focused, might not have the luxury of available time even if they want to share knowledge that they possess. The solution to this dilemma mandates a culture where knowledge workers are given the time and space needed to enable knowledge sharing, growth and the interaction. Knowledge management when not obsessed with technology alone can provide the cultural enablers that overcome knowledge-sharing propensity and foster a knowledge-sharing environment. Successful knowledge management projects begin with a working definition of knowledge that is accepted equivocally throughout the organization. Initially this shall begin with knowledge that already exists, deliver initial results and then may continue to expand. Therefore, a process focus is required and not a technology focus. Also, it should be kept in mind that there are no perfect measures for knowledge work. However, some measures even if they are vague shall be established to gauge the effectiveness of knowledge management initiative prior it’s launching. A knowledge management system must allow everyone to both contribute and access knowledge. Effective systems for knowledge management respect confidentiality of users by allowing them to choose not to identify themselves. Although anonymity goes contrary to the idea of linking contributions to their originators, this balance is necessary. From the literature review it is evident that the foremost step to be taken towards establishing the knowledge management department is the nomination of Chief Knowledge Officer who is a leader responsible for ensuring that the organization maximizes the value by utilizing withheld knowledge. The chief knowledge officer is responsible for managing intangible assets and the guardian of Knowledge Management practices in an organization. Following roadmap is prepared to facilitate R&D organizations of Pakistan in implementing knowledge management: a. Formulate Business goals for knowledge management b. Nominate Chief Knowledge Officer and define hierarchy of its organization c. Build the knowledge management team strategically and technically d. Identify and manage the expectations of stakeholders like management & end user etc e. Build awareness in the organization about knowledge management f. Identify critical points of failure like unmet requirements, management and end user. g. Knowledge Audit of the organization i.e. Knowledge based strengths, weaknesses,

opportunities, threats and creation of knowledge maps for organization, main competitors, and industry as a whole.

h. Analyze and prioritize knowledge gaps for subsequent filling

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i. Determine the feasible scope of knowledge management system i.e. a pilot KMS. Initially it may be a simply Computer Based Training (CBT) to improve skills of newly inducted employees

j. Development of knowledge management systems framework i.e. how information is to be collected, stored, retrieved and communicated in the organization

k. Defining Parameters for Measurement and Baseline Survey l. Selection of knowledge management tools, IT & infrastructure requirements m. Decide to build in house or buy the tools n. Procurement of tools including hardware, software and employees training o. Integration with existing information systems in the organization p. Implementation of knowledge management techniques q. Monitoring progress r. Survey for measurement of pre define parameters to assess KM contribution s. Data analysis and results t. Calculate the return on investment u. Remedial actions v. Implementation w. Decision regarding future knowledge management investments x. Continuous improvement The knowledge management shall be implemented in true spirit and management shall create a culture where people shall enjoy the initiative. Since the ultimate knowledge is always held, utilized and generated by humans, therefore employees shall be focus of organization while managing intangible assets. The above descriptive roadmap has also been presented in graphical form in figure 3.3 below.

Figure 3.3. Roadmap for implementation of knowledge management

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3.7 Knowledge Management Softwares A variety of knowledge management tools is available in market ranging from simple document management systems to customized software. There are even different and specialized kind of softwares available for different applications like knowledge creation, storage, dissemination and sharing. In order to familiarize with the real time working environment of related softwares, efforts were made to purchase software. Initially software named “PowerKnow” of KLV, Germany was selected and the organization was requested for purchase. But the organization declined the request with the plea that the organization has stopped sale of said software with effect from 31 Dec 2010, however the website i.e. www.powerknow.com, is still operational and offering the software for knowledge retention solution. In continuation to the said efforts, another off the shelf available software i.e. Interspire Knowledge Manager Professional Edition with twenty user’s license was purchased and installed on the website of university. 3.7.1 Overview of Interspire Knowledge Manager Here’s an overview of how Interspire Knowledge Manager works.

Figure 3.4. Overview of Interspire Knowledge Manager

a. Articles: Articles are the knowledge base’s main content vector. They contain the information that users see. Whenever there is need to add new information to knowledge base, an article can be created containing the information or updating an existing article. b. News Items: News items are functionally similar to articles. Each news item occupies its own page in knowledge base, which shares the same characteristics as an article page. However, articles are arranged by category, and their information tends to be fairly static, whereas news items are arranged by their date of creation on knowledge base’s front

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page, and tend to contain time specific information. Articles and news items can be used in conjunction to convey different types of information. For example, if knowledge base deals with aviation, articles (arranged by category) can be used to provide comparatively static airline corporate information, aircraft statistics, and so on, and use news items to provide time specific information on industry developments and changes in the knowledge base itself (new articles, scheduled maintenance, and so on). Users who are interested in receiving an RSS feed from your knowledge base are more likely to choose the news feed than they are to choose other feeds. For this reason, it is a good idea to create a news item each time, the knowledge base is modified. Since users are likely to be reading news items via RSS, it is also good practice to write news items in a persuasive manner that encourages users to return to knowledge base. c. Groups: User groups define the access privileges of the users that belong to them. The types of action can be configured that members of each group can take, as well as the article categories that they can view. Members of the public can also be allowed to view and contact certain user groups. For example, a user group of sales representatives can be set up and members of the public can be allowed to send them messages (from knowledge base’s contact page). d. Template: “Template” is a collective term for a large number of files that control every aspect of knowledge base’s appearance and functionality. Knowledge base’s template is completely configurable. Any one of the basic templates can be selected included with Interspire Knowledge Manager, for editing the code (HTML, CSS and PHP) of each file as required. Users can also use knowledge base’s contact page to send information to members of user groups, and submit articles for inclusion in knowledge base. e. Knowledge Base Server: The knowledge base server is the web server on which Interspire Knowledge Manager is installed. Interspire Knowledge Manager also requires PHP and access to a MySQL or Microsoft SQL database for data management. f. LDAP Server: Interspire Knowledge Manager can use LDAP (Lightweight Directory Access Protocol) to help manage user authentication, if required. This means that Interspire Knowledge Manager can be easily integrated into existing organizational structure, if LDAP is already in use. g. Other File Server: Depending upon installation and configuration, Interspire Knowledge Manager can use files stored elsewhere to build knowledge base. For example, a template can be set up that uses header and footer files from existing website so that knowledge base maintains organizational identity. 3.7.2 Features of Interspire Knowledge Manager a. Content Publishing: Sharing of articles including word documents and PDF files from any web browser. Using the WYSIWYG editor, users can easily add knowledge categorized into many categories, upload images, videos, flash files and documents etc.

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b. LDAP Integration: This software includes complete support for LDAP integration and authentication with following LDAP providers:

a. Microsoft Active Directory b. Novell eDirectory c. Open LDAP d. Posix Account RFC2307 and PFC2307BIS e. Samba

c. Multiple User Accounts: User accounts for different employees members can be created with each person having his or her own login id and password making it easy to disable or reassign user account as required. d. User Groups: Users can be segmented into groups based on permission and access levels. Marketing people can be given access to marketing categories only and similarly restricting technical persons to information of technical categories. e. Workflow: Built in workflow system allows administrators to define and implement their own publishing processes and permissions. By creating workflow rules administrators can receive e mail notifications when an article is added or changed. f. Print: End users can print the required articles g. Document Attachments: Attaches files to articles and allows searching the contents of attachments easily. h. Search: Users can find the knowledge they need by using search to search across knowledge entries, META data, custom fields and attachments. i. Custom fields: Crate, organize and share knowledge with an unlimited number of custom fields allowing customizing knowledge base with business processes. Also includes software version umbers, ISBN numbers, product SKU’s or any other field. j. Publish Dates: Effective and expiry dates showing time sensitive knowledge items without user intervention can be set. k. Export to PDF: Knowledge items into PDF format for printing etc can be achieved in one click. l. Automatic content versioning: Changes to knowledge entries can be compared and rolled back while documenting which user added or changed which document so important information is never lost. m. Import knowledge: Existing knowledge items can be easily imported into Interspire Knowledge Manager.

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n. Backup: Data can be automatically secured at local or remote storage. o. Themes: Included themes can be chosen or integrated into existing website or intranet design to match your organization look and feel. p. Active response system: Any website form can be connected on organization website to knowledge base using AJAX technology to instantly and automatically provide answers to questions before they reach help desk. q. User feedback: Various feedback mechanisms are available which can help to improve quality of knowledge database r. Email: Participation can be encouraged by allowing users to share knowledge with colleagues and customers using the send to friend email feature. s. Statistics: Ten different reports can be generated to get a complete insight into knowledge base including most sought after information and it can help in providing better knowledge in future. 3.7.3 Benefits of Interspire Knowledge Manager a. Location, capturing and sharing information with customers, employees and stake holders: This software allows sharing of information from website or intranet with customers, employees and stake holders thus reducing customer support, improving productivity and eliminating time wasted for searching information across different systems such as files, documents etc. Furthermore, the benefits are listed below:

a. Create, upload, store and search articles and attachments including Microsoft Word, Excel and Adobe PDF documents.

b. Display of popular search terms c. Allows end users to subscribe to your self help system and receive automatic

updates when new entries are added keeping users informed and educated. d. Glossary of terms along with their definitions

b. Reduction in customer and internal employees support: The web based self help interface facilitates customers to find answers instead of submitting e mails or calling customer care department thus saving the organizational fatigue. The organizational knowledge can also be integrated into customer complaint forms available on the web to provide instant answers to customer’s questions as they type. Furthermore, the benefits are listed below:

a. A complete web based self-help system allows access from any web browser, any operating system anywhere in the world.

b. Automatic answer system integrates into any website contact from to provide instant answers before they have reached your help desk.

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c. Categorize information by area, product, product type and any other free form field which can be enabled for easy information lookup

d. Feedback loop helps in improving knowledge based on customer input. c. Sharing of organizational documents and procedures: Whether employees are in one physical location or many, this software makes it easy for them to share, search, rate and print organizational documents, procedures etc of same standard single version and from same location. Furthermore, the benefits are listed below:

a. Create once and share any where. Enable document and procedure sharing through the web for easy access for employees in the office or any where.

b. Restrict categories and content to specific employees and groups keeping sensitive information away from prying eyes.

c. Fast, accurate searching and indexing of documents and their attachments d. Complete workflow and approval system so only approved content gets published

in your knowledge base thus keeping organization procedures accurate. e. Completely customizable with organizational logo, colors and brand etc

d. Elimination of employee training time: This software can help new employees by providing them a list of organization wide policies, procedures, guides so they can be up and running quicker. This reduces employee training time significantly and gives new employees hands on approach to learning. Furthermore, the benefits are listed below:

a. Share documents with new employees to drastically reduce training time b. Feedback loop helps in improve training material c. Required articles can be printed or converted to PDF format d. Limit employees to categories such as Marketing, Accounts and Design etc.

More than 2000 small business, most well known organizations, universities and non profit as well as government organizations are already using this software including Vodafone, XEROX, FUJITSU, SIEMENS, TRW, United Healthcare, Indiana university, South University, Western New England College, Columbus state university, Brown University, Legrand etc. 3.7.4 Utility of Interspire Knowledge Manager The software provides an excellent platform for storage and sharing of knowledge among the students. In order to utilize the software, different categories were developed like mechanical, electrical, industrial etc and lectures were uploaded accordingly for subsequent use. Teachers were provided with the administrative rights for uploading or modifying the lectures presentations or any suitable relevant material. The news regarding schedule of examinations were also circulated through the available options. In initial stages, the said software can also be utilized by R&D organizations of Pakistan for facilitating the employees by providing latest version of documents, procedures, updates regarding changes in schedule and an opportunity to comment upon policies, decisions etc.

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However, since the R&D process is a complex one, the customized software can be developed at later stages. Furthermore, other features like portals etc may be added so as to allow the people for writing their experiences and thus codifying the knowledge. 3.8 Measurement of KM performance In order to validate the decision of investment in an organization or other wise there shall be some defined and mutually agreed measurable parameters to evaluate effectiveness of the knowledge management system according to different domains. The investment made in KMS is generally of two types i.e. human resource and information technology infrastructure. Since, knowledge management system includes organization wide policy, strategy, responsibilities, plans, actions and inspections etc to generate new knowledge and effectively use existing resources to meet organizational objectives and enhance customer satisfaction. Therefore, measurement of effectiveness of knowledge management system is very complex task. Like wise, in Quality Management System, conformance with standard is evaluated through audits and Non Conformance Reports are used as an indicator or outcome to determine compliance of system with standard and success of the initiative. Therefore, there must be some way to assess or ratify that some organization has implemented knowledge management and up to which extent. Furthermore, since three key stake holders are involved in the knowledge management system i.e. user, knowledge management department and higher management which invests in. Therefore, there shall be different indicators to measure and satisfy the concerns of all three major parties. The extent of usage of the knowledge management system and user friendly interface can be indicators for the user i.e. human resource of the organization. While output of knowledge management department can itself be measured by conduct of successful sessions, error free availability of data, building of databases etc. Lastly, the higher management needs output in monetary terms mostly therefore, there shall be a mechanism devised to translate the benefits of knowledge management system in to financial terms, like reduction in number of problems can be interpreted in terms of increasing benefits etc. Once implemented, initially, following few performance measuring parameters are proposed for R&D organizations of Pakistan like:

a. No. of (Duration) meetings or interactive sessions b. No. of Problems encountered and reduction in repetition c. Existence of central database and access to employees d. No. of e mails exchange as knowledge sharing indicator e. No. of communities of practices in the organization f. No. of persons using the web portal

Since the scope of knowledge management comprises of many activities like accumulation of knowledge in various domains as per the organizational strategy, its distribution to required places, provisioning of platforms for sharing expertise, therefore different parameters have to be defined for measuring the effectiveness of each activity. May be in some organization the suitable knowledge has been properly identified and stored in repositories but people are unable to search relevant solutions thus may lead to failure of

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whole system. On the other hand one organization invests a lot in providing platforms like web portals, video conferencing etc but people may not interact due to lack of suitable culture. Therefore, various processes of KM have to be properly understood by the management and monitored accordingly to ensure benefits. Lastly, if all parameters of KM go fine and still improvement is not observed then higher management has to evaluate and augment its capability in terms of equipment, expertise etc. 3.9 Measurement of R&D performance R&D performance measurement is an essential prerequisite for communication with external parties especially when the organization needs to seek finance from banks or equity from investors. Therefore, benefits of R&D must be interpreted into understandable common terms and communicated in a comprehensible way. In contrary with other organizations, R&D organizations have broad range of results for different stakeholders. The outputs and results of the R&D activities are input for further processes in the value chain with the aim of commercializing the knowledge. In the end, the R&D results of organizations are translated into products, increasing, in turn, the revenue and profits of the organization and amortizing the R&D investments. For R&D organizations of Pakistan, initially the number of research papers published by researchers in a year and number of patents registered or number of new products successfully launched may be adapted as indicators. 3.10 Case Studies During the conduct of research, efforts were made to identify the organizations of Pakistan having knowledge management practices in use. None of the R&D organizations has established formal knowledge management department, however knowledge sharing practices like conduct of meetings, intranet etc have been found in practice. Besides the R&D organizations other organizations were also explored and few multinational organizations were found which had a knowledge management department or best practices in application. In ensuing paragraphs brief of each is given. Case Study – 1: This organization is an Oil and Gas exploration company and initially maintained a department named as “Applications and Knowledge Management” which has been recently re-named as “Sub Surface Work Flows and Applications”. It is pertinent to mention here that Information Technology is a separate department in the organization in addition to the said knowledge management department which is meant for Intranet, other office softwares applications etc. The said knowledge management department falls under the umbrella of Exploration department. Huge amount of different types of data like seismic, field, navigational data etc is involved in the exploration department. The said data is acquired by field sensors and processed by specialized firms to obtain meaningful information by filtering noise and irrelevant components. After the processing, data is handed over to knowledge management department which makes it available for the employees across the organization of exploration department. The exploration people utilize the data in other applications like Geofin, Eclipse etc.

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It was learnt that the knowledge management department maintains all sort of electronic information like the repository of maps indicating potential as well as operating wells, capacities, authorized area of exploration, logs, paper documents, books etc. The softwares used in knowledge management department are the same across the globe. Presently, Electronic Document Management System (EDMS) is being employed but in near future organization intends to shift to Microsoft Share Point Power Portal because of its ease of operation, maintenance and user friendly features. The organization have many established and functional Communities of Practices (CoPs) which are formulated on different topics and people from across the globe are members of the same. The said CoPs are playing active role in knowledge sharing and problem solving aspects. In addition the organization also shares the resources by making available the same application at different times to employees which are located remote by virtue of time difference across the globe. The department staff comprises of five persons only but these have relevant background of Information Technology and Applications involved in Exploration process. There is no separate Performance Measurement system or objective for the knowledge management department. The objective of the department is to provide error free access of data round the clock to exploration people and is linked with subsequent objective of exploration department. Performance of knowledge management department will be seen in the context of exploration objective only. The foremost aim of the knowledge management department is to ensure data availability as soon as it is received from the contractor. The timelines become often critical because all the time lags ultimately shift on the final process to be handled by knowledge management people. The span of time required by knowledge management department is also linked with the quantity of data as well. However the individual employee goals are derived from the departmental objective and Personal Development System (PDS) is in place to monitor that. In order to maintain the profiles of employees and for online recruitment process, customized software has been developed through a local company which is in use with Human Resource department. The budget of knowledge management department also comes under the head of exploration while for the IT department it is separate. The major cost of this department is in terms of the licenses of applications while the operational cost is very less. The main applications which are currently in use are industrial standard softwares and no customized solution has been employed. However within the software workflows and other minor features have been customized as per the requirement. The knowledge management department is certainly helping its employees to access the seismic data, locate the latest version of maps, potential fields, wells in operation with their capacities and exploration in process etc. But the objective is limited to serve exploration only and there is need of integrated knowledge management system for bridging the expertise and synchronizing the operation of other departments as well. Case Study – 2: Knowledge management is a formal department of the organization to manage its intellectual assets and ensure their utilization for competitive advantage of the

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company however, every employee has been held responsible for contributing to it in some or other way. In order to facilitate customers, service management system (SMS) is being employed and customers have been given access for online complaints registration. Whenever a problem arises, employees search database under various headings, context for solutions to utilize existing efforts. All technical documentation is also available online the corporate website in various categories under the heading of asset library. It is mandatory for all employees to share knowledge under the heading of “Knowledge Objects” program. The knowledge objects can be any idea, article, presentation, design, movie, procedure, simulation etc highlighting the benefits of its usage like saving of cost and time. Subsequently, people using it will be rating it for its validation and next usage. The compliance against the said objective is linked with the Key Performance Indicators of a person on annual basis. There is a very good reward system in practice. If an employee creates opportunity of customer for the organization, generates revenue, improves procedure etc, then accordingly reward is given to him. In order to speed up the innovation process, a web portal namely idea boxes is also being utilized. Different communities of practices also exist in different fields like operations and support systems etc. In order to train and guide newly inducted employees online academy exists with six monthly or yearly plans thus reducing the costs involved in training at different venues. Similarly in order to remain abreast with current technologies, existing employees are also given trainings on regular basis. Case Study -3: This organization is the world's leading air transport IT and communications specialist since 1949. It serves many organizations around the globe which include airlines, airports, air freight businesses, governments and international organizations. Knowledge management best practices have been embedded into the all activities of organization. These groups also facilitate in resolving administrative issues, services pricing, contracting etc. In this organization all employees and customers are interconnected through corporate intranet. In order to facilitate customers for online lodging of complaints a tool namely trillium is being used. After filing of the complaint by customer, concerned area manager decides the solution which may be the remote / online help or dispatch of field support. Customers are prioritized as per the service level agreement with them and problem is resolved in allocated time frame. In addition to the above, database of various problems and their solutions is also available under the heading of knowledge on corporate website. Activity logs of employees on daily basis is recorded along with time spent on assigned tasks to assess the surplus, under / over utilized human resource under the heading of Activity management Analysis. Different portals are also being practiced by the employees of organization. Open chat rooms are also maintained for discussion of specific topic. In order to enhance skills of the members, there is provision of e-learning which provides different courses, certifications etc. The targets are given to employees for completion of courses followed by their online tests. The results are also automatically recorded and transferred to their performance assessment sections. Employee details, experience, skills etc have also been centralized and available to facilitate management for their efficient utilization.

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CHAPTER 4 OPTIMIZATION

4.1 Introduction Quality Management System and other techniques have improved the performance of organizations in many aspects like customer satisfaction etc. However, the knowledge management has the potential to optimize the performance in all aspects. Since it takes care of the vital asset i.e. knowledge and encircles all domains of an organization so the chances of overlooking any aspect are minimal. So far R&D organizations have been employing different styles of management to control their activities but from now onward the level of conventional R&D management needs to be raised to level of Knowledge management. The processes, people and equipment of R&D organizations may remain same however, the only factor i.e. view on importance of knowledge, has to be weaved in complete fabric of the organization. R&D managers shall use knowledge management practices in discharge of their duties and importance may be given to value addition in terms of knowledge during all activities of R&D process like generating and embedding knowledge into product, processes etc. In fact knowledge management is part of their job and this initiative will help them in achieving the ultimate objective i.e. improved R&D performance. 4.2 Problem Solving Model of KM for R&D Organizations R&D processes are different from typical organizational processes with well defined procedures and instructions. In R&D, knowledge creation, capturing, organizing, storing and its utilization, all are going in parallel and require utmost care for maximizing benefits. However, the ultimate objective of any R&D process is to generate more return on investment. All activities of R&D process are influenced by various internal and external problems; thus affecting ultimate objective i.e. new products, new knowledge and return on investment. Some problems are in control of the organizations called internal problems and some other are beyond control of organization being external problems.

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Figure 4.1 Problem solving model of KM for R&D Organizations

In author’s opinion, all problems affecting R&D process are covered under the scope of knowledge management which is depicted in problem solving model given in Figure 4.1 above. Knowledge management system by virtue of its holistic approach encircles all internal and external problems. There are many pressures on R&D process but KM turns all barriers to useful inputs, further boosting R&D outcomes, which lie at core of the model and ultimate goal. When ever a problem exists, its solution also lies. The key to solution is in proper understanding of the problem, assigning it due weight age and priority followed by take up of solution by relevant person. All problems can be solved, if relevant ‘knowledge’ is available. Knowledge management incorporates ‘knowledge’ of all affecting factors and if properly managed, gives solution to every one’s problems and needs. Various types of knowledge exist in an organization and different people use it according to their tasks. For example customer knowledge and market knowledge is to be obtained by marketing people by adapting suitable means. This will help in decision making about which area to target and with which product so as to generate some revenue. Customer is not fully satisfied because its requirements are not understood, while knowledge management caters for this. Similarly government policies, standards, environmental issues, investor’s desire for performance, cultural issues, suitable information technology infrastructure and selection of right experts for some problems; all are managed if knowledge management initiative functions properly. In knowledge management, customer requirements are also studied and it gives reliability / assurance that product will be as per customer‘s requirement. The argument can be deduced that if knowledge management techniques are implemented in R&D organization, it is strongly believed that it will give due importance to all parties and ultimately generates more return on investment.

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It is pertinent o mention here that R&D organizations of Pakistan especially and nearly every R&D organizations is engaged in R&D activities in collaboration with some partners. It is very important to remember that the success can only be achieved if focus of such collaboration remains consistent on knowledge. R&D organizations of Pakistan often engage in Transfer of Technology contracts with overseas firms but have been never able to replicate the products. The major reason of failure is focus on tangible deliverables and no or little attention is given to obtain knowledge i.e. learn design and manufacturing methodologies etc. In order to excel in the field it is mandatory to go through the design, manufacturing etc iterations the supplier R&D organization has gone through over period of time. Knowledge management approach of the R&D organizations will definitely maximize the outcome of such collaborations. 4.3 Research Hypothesis Following hypothesis has been developed on the problem solving ability of the knowledge management i.e. model proposed in figure 4.1:

a. Knowledge Management best practices resolve internal problems of R&D organizations.

b. Knowledge management system helps R&D organizations in addressing external issues.

c. Knowledge Management initiative optimizes R&D performance. In order to verify the above hypothesis both qualitative and quantitative approaches can be adopted. In quantitative approach a baseline survey needs to be carried out before launching knowledge management initiative and agreed parameters between researchers and investors / monitoring agencies are to be defined like customer satisfaction, reduced cost and time etc. These parameters may cover essential things like reduction in development time and cost, number of published research papers and number of patents etc. Subsequently, after adapting knowledge management, survey on agreed parameters may be again carried out reflecting enhanced performance. Since presently none of the R&D organizations of Pakistan is employing knowledge management therefore, quantitative approach cannot be utilized. However, qualitative approach i.e. perception and conformance level of professionals can be obtained to validate the model and same practice has been carried out in this research. 4.4 Survey Parameters A survey of R&D organizations was conducted seeking response on following questions to validate the hypothesis given in section 4.3: 1. Knowledge management best practices resolve internal problems of R&D organization i.e.:

a. Facilitates in sharing of resources e.g. equipment, infrastructure etc b. Helps in retention, motivation and capability enhancement of researchers c. Reduces R&D expenses

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2. Knowledge management system helps R&D organizations in addressing external issues i.e.:

a. Better understanding of customer and market requirements b. Ensuring acquisition of knowledge through foreign collaborations and proper

liaison with suppliers, subcontractors etc c. Adjustment with volatile economic & political scenario

3. Knowledge management initiative optimizes R&D performance i.e.:

a. Creates new knowledge b. Fosters new product development c. Generates greater return on investment

4.5 Results and Analysis The results for survey conducted to verify the hypothesis have been analyzed for descriptive statistics which is given in Table 4.1.

Table 4.1 Descriptive statistics of hypothesis related to problem solving perspective of knowledge management


Knowledge management facilitates in resource sharing 4.33 .583 Knowledge management enhances expertise of researchers 3.41 .813 Knowledge management reduces R&D expense 3.96 .699 Knowledge management ensures better understanding of customer and market

3.87 .778

Knowledge management maximizes benefits from foreign collaborations

3.65 .805

Knowledge management helps organization in addressing volatile political and economic scenario

3.20 .877

Knowledge management practices generate new knowledge 4.19 .729 Knowledge management fosters new product development 3.89 .664 Knowledge management increases return on investment 3.98 .739 Valid N (list wise) = 54

The results clearly indicate that professionals of R&D organizations of Pakistan strongly believe about the benefits and problem solving ability of knowledge management. The mean obtained for all the questions is around or above four out of five which is approximately eighty percent conformance level. The two aspects where respondents were found to be little uncertain are:

a. Helps in retention, motivation and capability enhancement of researchers b. Adjustment with volatile economic & political scenario

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The reason envisaged behind lesser confidence in argument i.e. knowledge management helps in retention, motivation and capability enhancement of researchers, is due to the fact that in Pakistan monetary / tangible rewards are more attractive than the one’s desire to enhance his capabilities. For a shorter period one may stay in an organization to quench the thirst of knowledge but in longer time people will prefer to serve the organization with better monetary benefits irrespective of the intangible motivators. On the other hand it is predicted that the philosophy behind the adjustment capability of organization with volatile economic and political scenario, has been less understood by the respondents. Since R&D Organizations of Pakistan which are being run in typical old fashion are least concerned with the global economic and political environment, therefore, the employees are also less concerned. However in future R&D organizations will have to adapt / modify the portfolio according to the changing environment in order to survive. The available options can be multiple and not limited to change of the product range and interaction with other potential partners. In view of above, it can be safely concluded that knowledge management helps the organization in overcoming internal problems and addressing external issues thus optimizing R&D performance. 4.6 Reliability Test In order to determine the reliability of the scale, Cronbach’s Alpha was calculated and its value is 0.814. The said value falls in the good range and gives confidence that the same results can be expected from the other similar professionals of R&D organizations. 4.7 Regression Analysis The extent of linear relationship between dependant variable i.e. R&D performance and independent variable i.e. Knowledge management practices, was also determined by using linear regression.

Model Summary

Model R R Square

Adjusted R

Square

Std. Error of the

Estimate

1 .572a .327 .314 .46616

a. Predictors: (Constant), KM

b. Dependent Variable: Performance

ANOVAb

Model Sum of Squares df Mean Square

Regression 5.484 1 5.484

Residual 11.300 52 .217

1

Total 16.784 53

Coefficientsa

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Model Summary

Model R R Square

Adjusted R

Square

Std. Error of the

Estimate

1 .572a .327 .314 .46616

Un standardized Coefficients

Standardized

Coefficients

Model B Std. Error Beta

(Constant) 1.712 .460 1

KM .614 .122 .572

a. Dependent Variable: Performance

Correlations

KM Performance

Pearson Correlation 1 .572**

Sig. (2-tailed) .000

KM

N 54 54

Pearson Correlation .572** 1

Sig. (2-tailed) .000 Performance

N 54 54

**. Correlation is significant at the 0.01 level (2-tailed).

The value of Pearson Correlation between Knowledge management best practices and R&D performance is 0.572 which shows a good positive relationship. The value of R-Square (coefficient of determination) is 0.327 which means that 32.7 % variation in R&D performance i.e. dependant variable can be attributed to the independent variable i.e. knowledge management best practices. ANOVA shows that significance is 100%. Coefficient analysis was carried out which results in the following equation for linear regression: R&D Performance = 0.614 (Knowledge Management) + 1.712 The above linear relationship indicates that if an R&D organization takes initiative to employ or stimulate the knowledge management best practices by 10 % from the existing level then R&D performance is likely to be increased by 4.5 times. 4.8 Validity The result concluded in this research i.e. R&D performance can be enhanced by using knowledge management initiative is also in line with the similar conclusions deduced by Darroch (2005) for various sector organizations of New Zealand , Marques and Simon (2006) for Spanish Biotechnology and Telecommunication industries, Linlin and Hui

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(2008) for Chinese University Teams and Zaaimuddin et al., (2009) for single R&D organization of Malaysia. As knowledge management system in an organization is matured, it will lead to continuous increased performance over the time.

4.9 Mathematical Model The ultimate objective to be optimized is Return on Investment. If R&D process performance is improved, it will lead to creation of new knowledge in greater amounts and development of new products with improved features at accelerated pace and lesser costs. Other indicators like customer satisfaction etc may also be employed to reflect R&D performance. In the end all such indicators can be transformed into financial terms. Optimization of R&D performance means the maximum output of the same organizational resources, structure etc for the same input. Presently, it is considered that an R&D organization is working with routine inputs and delivering outputs accordingly. The only external change whose effect is to be examined is the introduction of knowledge management approach. Once this approach is applied, the various organizational processes will readjust their selves and perform in efficient way to accordingly optimize the output i.e. return on investment. In a more simplified way the optimization of R&D performance is actually optimization of organizational R&D and support processes. A mathematical model is proposed in figure 4.4 which shows the relation of various variables.

Figure 4.2 Mathematical model for optimization of R&D Performance

There can be many sub variables or indicators against each factor but in order to elaborate the concept in simplified way a few sub variables have been defined against each major variable and constraint, which are given below: Knowledge management variables (X):

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a. Conduct of Joint meetings, sessions etc b. Information Technology Tools like central database, intranet, communication etc c. Budget allocated for knowledge sharing activities and accordingly rewards for

sharing knowledge etc Input variables (Y):

a. Materials b. Human resources c. Equipment etc

Output in the form of R&D Performance variables (Z): a. New Knowledge b.New Products c. Return on Investment etc

Internal constraints (IC): a. Funds b. Equipment and infrastructure c. Expertise etc

External Constraints (EC): a. Time b. Customer growing requirements c. Market full of competitors d. Volatile political and economic scenario etc

Organizational Processes (W), Core Processes: a. Design b. Development c. Production etc

Support Processes: a. Human resource management and development b. Finance c. Procurement and inventory management d. After sales services like warranty etc e. Marketing etc

In order to proceed further the above mentioned variables can also be written in the form of matrices as given below along with their suitable units of measurement: Constraints Matrix C = [IC EC] Internal Constraints Matrix IC = [IC0 IC1 IC2………ICM-1] Where ‘M’ is the total number of internal constraints. External Constraints Matrix EC = [EC0 EC1 EC2…….ECN-1] Where ‘N’ is the total number of external constraints. Organizational Processes Matrix W= [W0 W1 W2……..WP-1] Where ‘P’ is the total number of organizational processes. Knowledge Management Matrix X = [X0 X1 X2……..XQ-1] Where ‘Q’ is the total number of knowledge management techniques.

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Outputs in the form of R&D Performance Matrix Z = [Z0 Z1 Z2…………….ZR-1] Where ‘R’ is the total number of R&D performance indicators. Inputs Matrix Y = [Y1 Y2 Y3……………….Ys] Where ‘S’ is the total number of various inputs. The use of proposed mathematical model is illustrated by considering a simplified case in the ensuing paragraphs. The sole objective to be optimized is return on investment of the R&D organization but to achieve that the performance of organizational processes has to be maximized. These processes may have different kind of indicators and accordingly the objectives can be conflicting, having different dimensions and difficult to quantify as well. For example, R&D organization intends to reduce the number of design iterations for a final version and increase the number of successful products launched per year. Similarly, R&D organization may opt of reducing customer complaints during warranty period or generating more profit by enhancing product specifications. Also, reduction in procurement time can be chosen as an indicator etc. Knowledge management variable (X): Budget spent in USD per year R&D Performance variable (Z): Net Profit of the organization in USD per year Input variable (Y): Cost of materials in USD per year Constraint variable (C): Delivery time for the given product is one year Organizational Processes variable (W):

a. Number of design iterations for a product before the final version (W1) b. Number of prototype iterations for a product before the final development (W2) c. Number of products produced in a year (W3)

The objective ‘Z’ can be optimized if number of design iterations ‘W1’ are reduced, number of prototype developments ‘W2’ are reduced and number of products launched in a year ‘W3’ are increased. Mathematically: Maximize ‘Z’ while minimizing W1 and W2 and maximizing W3. Now in order to reduce the number of design iterations, dynamics of design process needs to be understood. Designing process involves input from the customer, marketing, production, specialized design experts etc. When knowledge management is applied and it diverts the requisite knowledge from all concerned sources, certainly the design efficiency will rise. The same applies to other sub objectives as well. There cannot be a linear relation between knowledge management and R&D performance. Because initially with introduction of the technique, performance will rise but later it may become stagnant due to involvement of other factors like the organization’s limitation of held resources and capabilities. The organization may have to enter into collaboration or seek transfer of technology for further research. However, the organization will certainly benefit from investment in knowledge management in a way that it can maximize the outcome of collaboration or technology transfer. Recurring expenses on knowledge management activities will remain for ever in order to survive and capitalize the held resources. Furthermore, investment in knowledge management can be up to a limit like an organization can provide:

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a. Information Technology tools like intranet, databases etc b. Create and maintain platforms for capturing and sharing of knowledge c. Rewards for contributing towards research and sharing / problem solving

attitude In order to validate the decision of implementing the knowledge management, its impact on R&D performance in terms of finance has to be visible. This is also required to justify the initial investment in launching knowledge management initiative and recurring expenses to maintain the system.

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CHAPTER 5 CONCLUSION

5.1 Summary of the Research Knowledge management is a useful tool in the efficient utilization of resources. It enhances customer satisfaction, stimulates elements of R&D process and has potential to improve the organization’s return on investment. Knowledge management helps R&D organizations in managing the key asset i.e. knowledge which serves the purpose of stock for future projects as well. In developing countries and especially in Pakistan, consistent focus on R&D is required to facilitate in country development for subsequent lifting up the social and economic status of people. The concerns in developing countries regarding brain drain, scarcity of resources and lagging behind other nations in technology are driving R&D organizations to adapt knowledge management initiative for fostering performance. In order to excel and cope with future requirements, adaptation of knowledge management practices will be a wise step and worth while investment. Improved performance will certainly attract more investment and result in expansion of R&D organizations. The research investigated the knowledge management situation in nine R&D organizations of Pakistan and this is a limitation. However, the findings of empirical survey, problems and recommendations can be extended and useful for other R&D organizations as well, especially for organizations of developing countries. The research provides comprehensive methodology for success of knowledge management concept in R&D organizations and identifies problems followed by proposing solutions accordingly. In order to meet the ultimate objective i.e. provision of quick and affordable solutions, the knowledge management must be implemented in R&D organizations. The guidelines suggested in this research will certainly help decision makers in launching knowledge management initiative in R&D organizations thus further leading to enhanced performance and adding benefits to national economy. R&D Organization’s personnel can definitely benefit from this research to learn the issues and benefits involved in the application of knowledge management for subsequent decision making and gaining sustainable competitive advantage. Knowledge management, if implemented in the organization in letter and spirit, provides identification and sharing of available information technology tools, equipment, expertise of researchers and provides a platform conducive for knowledge sharing culture resulting in improved performance. 5.2 Recommendations for R&D Managers Following recommendations are offered for success of knowledge management initiative in R&D organizations of Pakistan thus subsequently optimizing R&D performance:

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a. Formulation and approval of knowledge management policy b. Conduct of surveys for existing practices being in use, expertise available,

equipment held and accordingly augment them by acquiring necessary hard ware, software or consultancy (if required) to develop own knowledge management system

c. A guide shall be developed for training of fresh employees d. Documentation of research activities on regular basis in order to build research

history. e. Development of Intranet facility. f. List of equipment and facilities shall be prepared and made available for sharing g. List of researchers along with their expertise, experience and contact addresses h. Incentives shall be given to motivate researchers for their efforts like publishing

of research papers etc. i. Data base of problems encountered and their solutions shall be maintained for

subsequent availability. j. Monetary rewards shall be given for following:

a. Writing and converting of own knowledge by employees to explicit form b. Highlighting potential problems and proposing solutions accordingly

k. Maintain event calendar l. Develop and Empower the Communities of Practice. m. Arrange trainings including facilitation for self study, seminars, exhibitions and

conferences n. Acquisition of relevant journals, patent data, newspaper cuttings and personnel

magazines to get familiarization with latest research o. Indicators shall be defined to measure R&D performance e.g.

a. Number of patents b. Number of contracts successfully executed with national, international

organizations etc c. Customer satisfaction

p. Number of publications and Impact factor of the journal in which research work is published may be used as indicator of individual’s expertise

5.3 Limitations of the Research In Pakistan there are limited numbers of R&D organizations in totality and almost all the engineering organizations engaged in active R&D are under direct control of Ministry of Defense and funded accordingly. A few organizations are working for Public Sector Development Projects under control of ministries of science and technology and industries. The public sector development projects have always been facing administrative and financial constraints thus not performing a significant role. The case studies selected were the defense sector R&D organizations. However, the findings of the research are equally beneficial for the other R&D organizations of Pakistan as well. In Pakistan engineering universities are also promoting R&D but a significant gap is visible between industry and academia. Furthermore, the universities are also not conversant with the commercialization techniques for their research achievements. Many

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efforts were made from the platform of the university to interact with R&D organizations for formal launching knowledge management practices but the request was always declined with the pleas like unavailability of time, finances, administrative issues, confidentiality of information etc. Due to unavailability of case study and data i.e. R&D organization employing knowledge management over the period of time, the hypothesis for optimization of R&D performance using knowledge management cannot be validated in true sense. The unavailability of data regarding R&D performance and extent of utilization of knowledge management practices has also hampered the development of mathematical model which may have been employed for examination and forecasting the improvement. 5.4 Avenues for the Future Research There is need to measure performance of knowledge management on some internationally agreed parameters. This will facilitate comparing knowledge management level among the organizations. Knowledge management has lot of social impacts as well; it turns the thinking of people, silently brings a revolution and develops culture of mutual respect thus uplifting the ethics at work places as well. Therefore, it is envisaged that a standard of knowledge management System may be developed like ISO 9001 in the case of Quality Management for subsequent adaptation by the organizations and assessment for compliance with developed system. The desired standard will also motivate the professionals to excel in the subject of knowledge management. In future once the knowledge management is in practice in an organization, the effectiveness of the intervention can be determined and linked with R&D performance by monitoring the indicators over the time. Initially the baseline of R&D performance can be measured followed by intervening knowledge management and later observing the results. Furthermore, the link between knowledge management performance and performance of R&D organizations may be established for holistic picture. This can be carried out in the organizations already practicing knowledge management techniques.

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APPENDIX-I SCREENSHOTS OF INTERSPIRE KNOWLEDGE MANAGER

1. Below is a screenshot of web based control panel used to add, edit or moderate

content, users, view employees activity and help guide menus.

2. The screenshot below describes advanced options for article expiry /publish, meta words and search engines and uploading of attachments.

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3. The screenshot below tells creating categories, work flow steps and restricting

categories to different user groups.

4. The screenshot below gives features regarding recently published news items, view and subscribe recently added knowledge, automatically generated list of most popular searches and browse knowledge base by category.

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5. The screenshot below outlines search suggestions offering alternative phrases and

key words, additional options to print, email or subscribe, end user rating, related articles and feature of viewing and downloading attachments.

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APPENDIX-II QUESTIONNAIRE TO ASSESS LEVEL OF KM BEST PRACTICES

Please mark your level of conformance against questions given below: 5 = High 4 = Good 3 = Average 2 = Fair 1 = Low

S/N QUESTION RATING

1 2 3 4 5 1 Awareness about importance of intangible assets

2 Awareness level regarding Knowledge Management best practices

3 Knowledge sharing culture

4 Conduct of Joint meetings and sessions

5 Management commitment for knowledge sharing

6 Reward system against sharing knowledge 7 Sharing of resources

8 Usage of Information Technology tools like Intranet, central database etc

9 Involvement of Customer in R & D activities

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APPENDIX-III QUESTIONNAIRE TO ASSESS PROBLEMS OF R&D ORGANIZATIO NS

Please indicate the severity level of following problems in your organization: 5 = High

4 = Good 3 = Average 2 = Fair 1 = Low

S/N QUESTION RATING

1 2 3 4 5 1 Lack of funds allocated for R&D within organization

2 Lack of funds from outside sources like government, customer etc

3 Lack of R&D infrastructure e.g. equipment etc.

4 Lack of qualified personnel within the organization

5 Lack of qualified personnel in market 6 Lack of information of market 7 Lack of knowledge sharing culture 8 Lack of rewards 9 R&D costs too high

10 Risk factor is high 11 Rigid organizational structure 12 Poor coordination/communication among the

departments

13 Insufficient Government Support 14 Strong competitors in market 15 Demanding customer 16 Environmental issues 17 Short timelines 18 Unclear objectives 19 Lack of well defined strategy 20 Political instability 21 Marketing/commercialization failures 22 International sanctions / policies etc 23 Law and Order situation 24 Problems in measurement of the performance 25 Low rate of return on investment

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APPENDIX-IV QUESTIONNAIRE TO VERIFY THE KM PROBLEM SOLVING MODE L

Please mark your level of conformance against each proposed hypothesis given below: 5 = High

4 = Good 3 = Average 2 = Fair 1 = Low

S/N QUESTION RATING

1 2 3 4 5

1

Knowledge management best practices resolve internal problems of R&D organization i.e.:

a. Facilitates in sharing of resources e.g. equipment, infrastructure etc

b. Helps in retention, motivation and capability enhancement of researchers

c. Reduces R&D expenses

2

Knowledge management system helps R&D organizations in addressing external issues i.e.:

a. Better understanding of customer and market requirements

b. Ensuring acquisition of knowledge through foreign collaborations and proper liaison with suppliers, subcontractors etc

c. Adjustment with volatile economic & political scenario

3

Knowledge management initiative optimizes R&D performance i.e.:

d. Creates new knowledge

e. Fosters new product development

f. Generates greater return on investment

OPTIMIZING RESEARCH AND DEVELOPMENT PERFORMANCE … · 3.7.3 Benefits of Interspire Knowledge...

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