No. 5: April 1996
Customers - A New Twist on Knowledge Management
Know-Who and Other Knowledge
The Web is not the Internet
News from our Knowledge Network
After Total Quality Management (TQM), Business Process Reengineering (BPR) - what next? The new management idea is Knowledge Management. While some are quick to dismiss it as another fad, the evidence grows that it is more fundamental. It pervades every function, sector and industry. Since writers like Drucker and Prahaled described knowledge as “the only sustainable source of competitive advantage”, we have witnessed a growing community of organisations putting the principles of knowledge management into practice. We see pharmaceutical companies jealously guarding their hard-won patents. We see companies with few tangible assets, commanding high market values (Netscape being a recent example). The common factor in such cases is the added value of practical know-how.
Growth in Practice
Last October the first major conferences in Europe on the topic of Knowledge Management took place in Zurich. In March this year, Business Intelligence ran a conference Leveraging Knowledge for Sustainable Advantage, and every day sees news of more such conferences. The common message that emerges is that unless knowledge is effectively managed, companies will not maximise the return on their investment in people, R&D and other intellectual assets. At the Business Intelligence Conference many cases of good practice were described, in industries as varied as chemical, oil, finance and electronics. Speakers identified the importance of ‘tacit’ knowledge (as defined by Nonaka and Takeuchi in their book The Knowledge Creating Company). Some speakers talked of ways of trying to identify it and capture it through audits or other evaluation tools, though several warned of the “just another Lotus Notes database” syndrome.
Momentum of Practice
One person who has been tracking developments in the state-of-art and state-of-practice in this field for several years is Debra Rogers (now Debra M. Amidon) of ENTOVATION International. She has seen a critical mass of theorists and practitioners emerge, which she links strongly to the need for companies to innovate, not just in their products but also their processes. An important twist that she puts on the subject is that of Customer Connections. When you think about it, the best source of knowledge to help a company develop its products and markets is its own customers. Yet in our experience many places of interacting with the customer, such as service help lines, do not complete the loop back to R&D.
The point is that most enterprises view their customers - both internal and external - as the end point of the value-chain. Rogers (Amidon) articulates the need for a value-system approach in which the insights from customers become integral to new R&D efforts. Rather than being perceived only as a point-of delivery, customers (an the quality of interaction) are viewed as integral to developing new products and services to meet the unarticulated need and unserved markets. Only through this dialogue can a company begin to envision the unleashed business opportunities.
These notions gel with my own experience of successful innovation - in problem solving, or creating new products or services, namely that symbiosis among nodes of a network creates new knowledge and opportunities. Two people sharing ideas generate new ideas that neither of them thought about:
1+ 1= 3
By making customers an integral part of your own enterprise knowledge base, you create a Strategic Business Network (SBN), which Rogers (Amidon) claims as being a more suitable enterprise model for the dynamics of the new millennium, than the fifty year old enterprise models many organisations still cling to today. She brings these powerful concepts together in her model of Innovating with the Customer®. She uses a paper strip to illustrate this in her Knowledge Innovation® workshops. One side of the strip represents your company, the other the customer. Each works through seven well defined stages of an innovation cycle:
1. Discovery of ideas
2. Competitive positioning
3. Strategy Alignment
4. Conversion to products
6. Service delivery
7. Market penetration.
The feedback loop from output to input is complete when you put the top of the strip (the results) alongside the bottom (the strategy) to complete a ‘hoop’. However, it is only when you twist the ends to create a Mobius strip, that you gain the full synergy, with customer results linking to your strategy and vice versa (see diagram).
Think of this simple device and ask yourself - how do we gather insights from our customers? Are there mechanisms to systematically feed those ideas back into our strategy formulation processes? The Mobius strip also indicates that the success of a customer feeds your own success. In fact - depending upon your business, you may actually be dependent upon the success of your customer. Consider therefore how you can align your own competencies to ensure the success of your customers. These perspectives take us well beyond the established paradigms of customer satisfaction and total quality. Work on what makes your customer successful and it will ultimately lead to your own success. Rogers poses the highly relevant question:
"What good are your customers if they are satisfied, but not successful?"
This new customer twist is just one of many tools and techniques can be deployed to manage knowledge for improved business performance, leading to:
- Better understanding of new markets
- Faster time-to-market for new products
- Enhancing the value of products and services
- Realising the value in knowledge assets
- Improved customer service
- Higher quality processes
A thorough understanding of the mechanisms by which individuals, teams and organisations enhance their knowledge processes is the essence of effective knowledge management. Such processes are:
- Creating and gathering
- Assimilating and organising
- Applying and using
- Diffusing and exploiting
- Protecting and licensing.
That will give them the basis for really understanding their knowledge capital and how well it is being developed, nurtured and exploited.
ENTOVATION’s research has identified ten critical success factors, that are the subject of Ten Knowledge Innovation® Modules, by which a company can assess and develop winning Knowledge Innovation® strategies. Some, like appointing Chief Officers (of Knowledge, Intellectual Capital etc.) are happening in only a few cases. Others, like initiating programmes to measure intangible assets, are moving quicker up top management agendas - aided for example by the Hawley Report in the UK. However, most organisations would benefit by being more taking a broader look across all ten factors and how they stack up against best practice.
ENTOVATION International is compiling a series of Profiles of Innovation (e.g. Steelcase, Hoechst-Celanese and Nortel) to illustrate the significant change factors and how this more intimate interaction with customers can lead to product/service success.
David Skyrme Associates is pleased to be a partner in the international ENTOVATION Network, that is developing and validating these new approaches to Knowledge Innovation®. See accompanying Web pages for details of ENTOVATION's services or contact David Skyrme (UK/Europe) or Debra M. Amidon (US/Rest of World).
® - Knowledge Innovation and Innovating with the Customer are trademarks and service marks respectively of ENTOVATION International.
“It’s not what you know but who you know” goes an old adage. This was never truer than today, as downsizing and restructuring take place, and many organisations lose vital knowledge (I’ve lost count of the time clients call me for information I know they already have somewhere in their organisation).
In fact, consultants McKinsey have been paraphrased as reporting “bring back the middle managers” - it is they who have the ‘implicit’ knowledge and depth of experience that companies have lost during restructuring.
Many effective managers, and consultants, know the power of networking - of making connections to others who can provide information or who can help. And technologies like the Internet, or its internal form, the intranet, can help enormously.
Unfortunately much of the Internet hype has been about the World Wide Web, and even then has misconstrued its use (see The Web is not the Internet). However, discussion lists and newsgroups, provide meeting places where people sharing common interest can ask and receive information. Some of the most useful work taking place on the Internet today, in terms of accelerating knowledge development takes place in such forums. “Do you know who...” is a frequent question and one, that usually gets a valuable response.
One such forum which will help you make contact with other people if you are specifically interested in Knowledge Management - which is highly likely if you are reading this - is Bo Newman's Knowledge Management Forum. For details of how to join this email distribution list, email Bo or visit the Knowledge Management Forum web pages. (update 1999 - contact details have changed and the is now inactive so the URLs have been removed). Other useful sources of information and places to network will be found on our Knowledge Management Resources page - we particularly like the Knowledge Garden in the Business Transformation Café.
Knowledge Connections Workshop
To illustrate the power of knowledge connections we have developed a workshop that looks at the role of the Internet in making and developing such connections. Unlike many Internet courses that focus on the technicalities, this workshop focuses on the processes for effective Knowledge Connections - of five different types.
And while you’re at it, don’t forget the importance of know-why, know-what, know-how, know-when, know-where, topics we introduce below, that are not covered in the hard-copy edition of this newsletter.
Types of Knowledge
With knowledge becoming a key work in the management vocabulary many people are wrestling with or confusing the difference between information and knowledge and the different types of knowledge.
The table below provides a simple way of contrasting information and knowledge.
Tangible Intangible - human process
Processing changes representation Processing changes consciousness
Physical objects Mental objects
Context independent Context affects meaning
Physical Entity Mental awareness
Easily transferable Transfer requires learning
Reproducible Not identically reproducible
(originally presented at 12th Strategic Management Conference, London (1992)
Some distinguish factual knowledge from skills. A very simple categorisation that I find useful builds on the well known Why, What, Who, How, Where, When, expounded by Rudyard Kipling* and used by any consultant who does not know the answer (most of us!). I acknowledge the work of Charles Savage, who listed these in his book 5th Generation Management, (pp. 203-4). Update - this book received the Tom Peter's Book of the Year Award in 1993, and a new edition was published in 1996). As well as Know-Who (covered above), the other five types are:
Understanding the wider context and the vision. How many times have you been asked to do something, then later when you finally found out how your outputs were to be used would have gone about it differently?
Examples are seen every day, when employees of companies don't change procedures to suit specific needs of a customer, or understand why they have to collect certain data.
The basic sense of knowing. This is especially true in complex situations. It is an area where experience counts.
A skilled repair person, for example, instinctively knows what is likely to be the cause of a problem. Professional people can immediately “weigh up” situations far quicker than many computer based analyses can. This is especially true when dealing with people, where picking up cues from body language is an important sensing mechanism.
This is the knowledge of how to get things done. Some of this knowledge is made explicit in organisation procedures. Programmes such as TQM (Total Quality Management) and BPR (Business process Reengineering) involves codifying the base level of such knowledge.
However, in practice, a much of this knowledge is still in people's heads. New ways of streamlining processes emerge from practice quicker than they find their way into the procedure manual. For less procedural tasks, and those involving creativity and novelty, this is even more the case. Acquiring know-how depends on skill and practice, that takes time to develop and refine.
We all know the importance of timing. Skilled stock market operators seem to have the knack of buying when everyone else is selling. Some companies have made a virtue of their timing of take-overs and market entry strategies.
Most initiatives have a certain momentum about them. Join the bandwagon too early, and you become the bleeding edge, too late, and you missed the market. Sensing the real “window of opportunity” vs. That which the marketer tells you is an important knowledge.
In our own work, (e.g. of market entry studies) we do a lot of analysis of history and predictions of the past, discerning patterns and turning points, many of which are difficult to see at the time, but with some knowledge of history have a better chance of being correctly predicted.
Knowing where is another vital aspect of knowledge. Where are things best done? Where can I get things to happen? The levers of change are often reinforced or reach critical mass in specific localities. Places like Silicon Valley for high technology, or the City of London or New York for international finance are examples in recent history. However, the explosion of communications technology is fundamentally changing the nature of geography. On the Internet small firms can create new places to interact and trade. The geography of the global village may well be distinctly different from that of today's physical world.
Turning Knowledge into Value
Why have I gone on at some length on these topics? Essentially to get you think about what you know and what you don’t know - about yourself, your team(s) and your organisation. If you are to embark on a more systematic approach to knowledge management, you will need to understand the relative importance of different types of knowledge, to gain knowledge from your context, and to apply the right knowledge effectively - in the right way, with the right people, at the right place, at the right time and for the right reason.
There are other well known categorisations of knowledge. Another is the categorisation of intellectual assets into customer capital, structural capital and human capital. Lief Edvinsson of Skandia AFS has adopted this categorisation. He has estimated the value of different kinds of knowledge within the company, and has produced a supplement to the company's annual report that itemises knowledge in this way.
However, the 5Ws and H, remain a simple powerful perspective that helps determine what knowledge is most important, and how it can be effectively used. It is also something that can be woven in quite easily alongside other activities. For example, when doing a BPR exercise, do you consider the knowledge needed to succeed with each process in this way? Whenever you plan, think of the knowledge dimension. Your own plans could benefit by considering knowledge in this way.
The main benefits come from overlaying knowledge as a dimension against which to consider all key management processes and to look systematically at the value-adding processes through which it enhances your products and services and supports your business objectives.
"I keep six honest serving-men,
They taught me all I knew.
Their names are what and why and when
And how and where and who."
Rudyard Kipling (1865-1936)
The financial director of Argos was recently cited as saying that they had received only 22 orders over the Internet from its 9 months of operation. Was he was expecting more from their site?!
Unfortunately, many media agencies are getting their clients on the Web in a way that creates misleading expectations. The Web is only a part of the Internet - and glitzy images only a fraction of what many customers perceive as useful.The Internet is much much more. Email is still one of its most powerful tools, especially combined with mechanisms like distribution lists. In this age of relationship marketing, you would think that marketers could find more effective ways of using the Internet to help potential customers make buying choices that putting up pages with a high image to noise ratio.
While I am not criticising Argos specifically - they have got many things right - their pages like many others make you click laboriously through a sequence of frames, just to gauge what is there. And as for useful information, there seems to be less than the catalogue (whereas an increasing trend is to put more on the Internet than there is space for on the printed page (as in this newsletter).
So, here is a short summary of our 10 Tips for a good Web site:
- Link it to your business strategy - be clear about its purpose and marekting role.
- Focus on the reader - make it relevant and helpful to the user
- Provide well organised information - develop a clear structure; map it out properly
- Give signposts - make navigation easy
- Use a clear simple design - do not overburden with graphics
- Offer helpful links - develop reinforcing 'webs'; readers will value pointers to other sites with complementary information
- Market it effectively - get search engines to point to it; add URLs to hard-copy material
- Generate 'hooks' - encoruage user interaction
- Do not use it alone - use it in conjunction with other Internet tools
- Sustain it - developing a site is not a once off task; keep it refreshed.
Most of these are straightforward, but many are often not followed in practice, leaving users frustrated. Several times we have conducted a site review and found it wanting in many respects. You will find a more complete description of these guidelines, alongside some common pitfalls on an accompanying page.
Other Internet tools
There are a number of other Internet tools that complement the World Wide Web. Most of them depends on having appropriate software on the user's computer system (as with browsers for the Web). The most common are:
- Electronic mail: an Internet user will have an electronic mail address of the form email@example.com, where 'jsmith' is their user name, ‘anyco’ their host (server) computer name, ‘demon' the domain name (a name ‘registered’ with other Internet users), 'co' identifies a commercial user (rather than 'ac' for academic user), and 'uk' is the country code. According to various surveys email accounts for the majority of Internet use.
- Distribution lists: By sending an e-mail to a what is known as a list server, users can subscribe to lists of interest. There are at least 25,000 such lists on the Internet, on almost all topics under the sun. Some have tens of thousands of subscribers, while others are private closed lists e.g. for a project team. These lists can be ‘moderated’ i.e. someone scans incoming messages for suitability before redistributing them, or ‘unmoderated’ where the system automatically forwards incoming mail to subscribers on the list. Liszt: Searchable Directory of e-Mail Discussion Groups is perhaps the most comprehensive index of what lists are available. It includes independent lists of all sorts.
- File transfer (ftp): Most systems have files in public areas which remote users can access or down line load to their local systems. These files can be documents, applications or even video clips. This is a popular way of distributing software.
- Newsgroups (USENET): These are discussion forums where user can mail a message, but unlike the distribution list above (which is now surpassed newsgroups in popularity) users need to access the newsgroups through a special news reader, since a posting is not automatically mailed to their email address. There are over 10,000 newsgroups in a hierarchy starting with initials such as comp.(computing), biz. (business), rec. (recreation). Because of sheer volume most service providers only have half this number on their system. The List of Lists (MIT) - describes itself as the "definitive" list for newsgroups. It is sorted by hierarchy - .comp, biz. etc. You can click your way down and eread entries directly on your browser (if it is set up to do so).
- Remote log-in (Telnet): Users can log into remote computers (often without prior agreement using a ‘guest’ password) and can use applications on the system. It is also useful when travelling away from your normal host that holds your electronic mail.
There are also other facilities going under unusual names such as Archie, Gopher, WAIS, Veronica. However, the popularity of the World Wide Web has led to a decline in their popularity. A useful Guide to Internet Resources - is provided by the semi-offical body EARN [7 Nov. 2001 update: URL no longer exists; www.earn.net is being overhauled]. It includes basic descriptions on all these tools (and more), what they are and how they work.
Finding your way around
With so many resources accessible on the Internet, one of the problems is to find the information you are seeking. Certainly you can wander serendipitously from hyperlink to hyperlink on the Web - commonly known as “surfing”. Serious users, though, need ‘signposts’. There are three main ways that this happens
- Hard-copy publication of pointers - known as URLs (Universal Resource Locators) in paper form in magazines and reference books, such as Internet.
- On-line directories and resources sites - containing classified sets of pointers. A useful index of these will be found at FEI Helpful Connections.
- Search engines - that contain indexes of Internet resources - some of them with 20 million entries. Users access sophisticated information retrieval software to find information of interest. The FEI pages contains pointers to Ten Helpful Search Engines.
In summary, the Web is a highly useful tool for dissemination of information of various types, but any serious business strategy should consider other Internet tools as appropropriate.
This section connects you to expertise and knowledge on innovation in several important fields. Here are some connections we can help you with. You can either make the contact (where shown) direct or ask for information from us.
The latest newsletter from Phrontis includes insights into the business applications of systems thinking, with two very informative articles by Antonia and Tony Gill. It also include details of Powersim 2.5, a new release of the popular business simulation software that adds multimedia capabilities and links to enterprise modelling. Contact: Phrontis Limited, Tel: +44 (0) 1295 812262 or email: firstname.lastname@example.org.
Global Highways Business Group (GHBG)
The Global Highways Business Group is a forum for those wanting to capitalise on the opportunities presented by the Internet, electronic networking and the Information Society Initiative. It holds regular meetings, distributes bulletins and provides useful information on its Web site at http://www.ghbg.org.uk/.
Learning Individuals in Learning Organisations (LILO)
LILO is an informal group of people, mostly in the UK, who work together to encourage and promote learning in organisations. Members come from industry, commerce, education and training. LILO was formed in 1995 by members of the Network supporting the Tomorrow's Company Inquiry of the RSA - The Royal Society for the Encouragement of Arts, Manufactures and Commerce. Membership is not restricted to Fellows of the RSA.. The group meets regularly in London, sharing resources and new ideas about organisational learning and developing practical approaches to implementing the Learning Organisation.
Members of the LILO group are now working with various organisations in Europe, to establish a European Organisational Learning Network (see below).
European Learning Network
The European Learning Network has support from the Netherlands Foundation for Organisational Learning and promise of collaboration from Peter Senge and the MIT Center for Organizational Learning . Arie de Geus, formerly Shell's Head of Planning, one of the distinguished pioneers of organisational learning, chairs a small team preparing proposals to set up a UK Branch of the European Learning Network. It is to be non-profit making and independent of any single academic institution. Many individuals and organisations including representatives from several large multinational companies (including BT, Ford, IBM & EDS) have contributed to the preparatory work.
We want to hear from more organisation who are considering moving towards becoming a learning organisation - and from consultants, academics and other individuals involved in any aspect of organisational learning. Those interested in the Learning Individuals in Learning Organisations group or those who wish to know more about the proposed formation of the European Learning Network are invited to contact Lilly Evans or John Farago.
Dr Lilly Evans
Expert Communication Systems
Woodlands Road West
Surrey GU25 4PL
Tel: +44 (0)1344 842418
Farago & Associates
121 Church Road
London SW19 5AH
Tel: +44 (0)181-946 8534
Note - For some of the basic concepts of the Learning Organisation, see Insight No. 3 - The Learning Organisation, on these pages.
Editors Note - Nov 1996 - Please see I3 UPDATE No. 6 for news on the launch dinner of the UK branch of ENFOLD.
Help on Telework
European Telework Online (ETO) is a new site managed by Management Technology Associates. It contains useful resources about teleworking - for employers, teleworkers and policy makers. It also includes details of forthcoming telework events, inluding European Telework Week 1996 (9-16 November 1996).
Also announced is a new workshop Teleworking .... a Different Way of Doing Things run by SW2000 and Network Learning Ltd. This workshop can help you and your team identify the issues associated with implementing telework. If you are interesting in attending one of the public presentations of these workshops, or having one run in-house please contact David Skyrme Associates to discuss your requirements. This workshop can be incorporated as part of our wider telework advisory services.
Situation Assessment Advisor.
A new system to accompany Strategies for Innovation from Team Technology International. Helpful to take your bearings prior to embarking on a full strategic planning excercise. From the stable of Search Technologies and Bill Rouse's books on various aspects of planning. Used by major corporations around the world.
The Web - Winners and Losers: A New Management Briefing
This is the first of a new series of management briefings that give critical insights into the emerging business practices of the future organisation, particularly those enhanced by information and communications technology. Written for senior executives and policy makers, they analyse key developments and trends, opportunities and threats, practical issues, and offer guidelines for effective business solutions. They are based on our continuous monitoring of many sources, our own research sources and the results of working with various clients grappling with these developments. Titles in the pipeline include:
The Web - Winners and Losers (May 1996)
Knowledge Management - Fad or Fundamental? (June 1996)
Multimedia at Work - A Business Guide (June 1996)
Learning Organisations - Beyond the Language Trap (July 1996)
[Editors Note - November 1996 - We are now unlikely to be publishing these titles as separate publications in the short term. We have done such reports for specific clients, and will continue to do so on a commissioned basis. We are currently authoring a major new report on Knowledge Management to be published in early 1997 by Business Intelligence. You may like to look at our Good Web Guide which covers some of the ground originally envisaged for Web Winners and Losers]
© Copyright, 1996 David Skyrme Associates Limited and Authors - All rights reserved.
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I3 UPDATE is a publication of David Skyrme Associates Limited - providers of market studies, consultancy and strategic advice in knowledge
management, knowledge networking and collaborative technologies.