I3 UPDATE / ENTOVATION International News
No. 41: June 2000
Innovation in Intangible Performance Measures - Debra M. Amidon
More Perspectives on Measurement - Debra. M. Amidon
Dot.com Winners and Loser - David J. Skyrme
MAKE (Most Admired Knowledge Enterprise) 2000 Winners Announced
A Reader Replies - Knowledge Outsourcing, Ross Armbrecht
Welcome to the June edition of I3 UPDATE / ENTOVATION International News, a free electronic briefing giving insights into the evolving knowledge economy and its implications for executives, policy makers and professionals. We start this edition with Debra's report on a very interesting conference on intellectual capital measurement, followed by related perspectives on the topic of measurement. As trailered last month, there follows an analysis of dot.com winners and losers. The announcement of this year's MAKE (Most Admired Knowledge Enterpise Awards) shows consistent leadership by a select group of companies.
As usual, we look forward to your comments and feedback.
I3 UPDATE is also available by email. See the administrative information page for how to join or leave the mail list.
David J. Skyrme
Debra M. Amidon
It was the Third Conference on Intangible Assets sponsored by the Vincent C. Ross Institute of Accounting Research at the Stern School of Business, New York University (USA). Under the leadership of Professor Baruch Lev - now an icon in the field of performance measures an overflow crowd of 200+ enjoyed a diverse set of presentations from university faculty, authors and industry practitioners. They articulated progressive concepts of knowledge strategy, Internet value-drivers, corporate IQ, and intellectual property protection and leverage.
The conference was sponsored by PriceWaterhouse Coopers and brought together several other icons, such as Gordon Petrash (formerly from Dow Chemical). Several representatives on ENTOVATION's Global Knowledge Leadership Map - http://www.entovation.com/kleadmap/index.htm - joined the dialogue. This included Leif Edvinsson (Sweden), Ante Pulic (Austria), Edna Pasher (Israel), Teboho Moja (former advisor to the Prime Minister of South and now a visiting scholar at NYU) and Karl-Erik Sveiby (Australia) - notably one of the first to write about managing intellectual capital in the 1980's. This was the same time in the United States (1987) that we wrote about 'harnessing the intellectual capital of a nation'.
The closing panel, moderated by Robert H. Herz (PwC) in a Phil Donahue style, catalyzed a conversation between David Norton (architect of the Balanced Scorecard), Tom Stewart (Fortune), Larry Prusak and David Perry Green (IBM), Jean Mayhew (United Technologies), Yochai Benkler (NYU), Susan O’Neill (PwC) and yours truly.
Where are We heading?
Although we all came from significantly different vantage points, there were some agreements about where the field might be going:
- Knowledge Management (KM as we know it) may have been a fad; but it did help elevate the awareness of the importance of a knowledge (intangible) focus as a way to manage the company forward. (Note: Knowledge Strategy is NOT a fad!)
- Successful knowledge management (or knowledge strategy as I prefer to call it) is a function of strategic conversations; and there are ways to stimulate (even architect) and incentivize the positive impact of such internal and external interactions.
- The Business Case - something we have defined as the new 'Knowledge Value Proposition' - can and must be made. It may have something to do with the relationship between financial capital, social capital and technological capital.
There were a few other insights that were not necessarily the consensus of the group but provide considerable fodder for future dialogue on the topic:
- This is an international phenomenon and opportunity for developing and industrialized nations alike to begin to shift the management agenda from one of managing tangible to intangible assets.
- The agenda is operating on all economic levels simultaneously - the prosperity of an enterprise, the viability of a nation economy and society-as-a-whole.
- Customer and Stakeholder Knowledge will become an increasingly integral part of the innovation value system (not value chain).
- Our future may be one of building sustainable collaborative (not competitive) advantage.
- The answers may lie within the Knowledge Millennium Generation. Youth of the world will transform our economy in ways we may not have previously imagined. They are highly educated, technologically astute and internationally networked. Stay tuned…
Don't Just measure. Innovate.
And so, what was so special about this particular conference? It was a conference on “Knowledge: Management, Measurement and Organization.” It focused on Intangible Performance Measures; but so have others. It featured a variety of tools, methodologies and examples of best practice; but so have others. What were significant and rather unique were the continual, consistent references to the innovation process regardless of how it may have been labeled. Remember Peter F. Drucker said that "Innovation is the one competence needed for the future and the ability to measure the performance thereof ". (HBR 1994).
Michael Zach (Northeastern University) in a presentation on Knowledge Strategy described how a strategic resource (i.e., knowledge) must be context specific, embedded in organization systems, and the scope of impact can "enable major innovation" and "enable new business" (which we consider also innovation.) Finally others are seeing that the knowledge focus is integral to business strategy!
David C. Mowrey (U of C/Berkeley) described alliances as vehicles for acquiring new knowledge or capabilities via acquisition or specialization. Citing the relationship between patent citation in one anothers' portfolios is an indication of 'stakeholder innovation' that may be virgin territory for researchers.
Wesley Cohen (CMU) cited that patents might not be the central mode of Intellectual Property (IP) protection. Instead, secrecy is the dominant means, which seems to be contradictory to the apparent values in a knowledge economy, such as knowledge-sharing. Further, he suggested that this research finding casts doubt on the supposed role of patents in stimulating innovation. In the end, the focus on IP protection might actually 'add' to the cost of innovation!
Ashish Arara (CMU) provided an examination of the 'markets for knowledge'. In describing the interdependence of knowledge and technology, he outlined how knowledge is becoming an 'economic commodity'. He sized the market according to (1) the 'annual royalty flow estimates' and (2) 'annual value deals'. Limiting factors include the Not-Invented-Here (NIH) Syndrome usually the topic of innovation discussions. He challenged the group: "Does research productivity decline as innovative firms become large and lose their 'creative edge'?"
Rashi Glazer (U of C/Berkeley) led a discussion on Customer Knowledge Management describing the 'creation, measurement, deployment and maximization' of customer assets. What else might I ask are the phases of the process of innovation?! Identifying a new methodology for tracking customer, he described InfoValue a systematic process designed to measure the economic value of customer information and associate transactions between the customer and the firm. His research cites a dramatic increase in the degree to which customers participate in product design and creation that results in the breakdown between 'producer' and 'consumer'.
Baruch Lev (NYU) and his associate, Elizabeth Demers (University of Rochester) have performed analyses of Internet companies and their economic performance, especially book/market ratios. However, their in-depth analysis of 284 Internet companies that are publicly-traded on U.S. stock exchanges suggests that there are intangible variables that play a significant role, namely the 'cash burn rate' and 'alliances'. Citing Amazon.com as an example, they indicate that there may be innovation variables that can impact business performance with as little as a 6-month window. They are just beginning to extend these results to more Internet companies and other strategic and managerial issues. Again, stay tuned…
Johan de Kleer (Xerox PARC) suggested that we view organizations as 'ecologies', not machines. Citing EUREKA as an example, he described the potential value of technician knowledge in the overall strategy of the firm. Of course, the system is not the 'expert'; it helps technicians to be (better) experts. He articulated the 'invent, submit, validate and use' spiral that, in essence, represents the innovation process. Further, he described the learning loop cycles for Field Service, Engineering and Manufacturing all functions in the innovation value-system. He suggested further that sales, service and call centers (Note: again, parts of the innovation value-system) "provide well over 50 per cent of customer contact where most knowledge lies".
Martha Amram (Navigant Consulting) has been building an IP-sustainable model by balancing the complexity factors together with the need for a rigor in valuation. This will lead to a form of "IP insurance". By assessing considerations for the business implications of IP, she described the terms and conditions of IP transfer necessary throughout the (innovation} system. With a series of best/worse case scenarios, one might determine the technical performance needed to guarantee sustainable margins. The, capital outlays can be determined.
Eric von Hipple (MIT) well known for his ground-breaking research on the role of lead-users in the innovation process - provided his recent research findings on the variables affecting sources of innovation (e.g., profitability, cost of "sticky" information, agency costs, coordination cost). His recent analysis of the use of APACHE system indicates that both information seekers and information providers are using USEnet to learn. However, early results indicate that people asking the questions and those who are supplying responses are NOT the same communities. Bottom line: user-to-user innovation systems can be efficient. People are willing to share when certain conditions exist.
Arie Y. Lewin (Duke University) described the co-evolution of a firm, its industry and the environment. Conventional wisdom suggests that managers are challenged to match their internal rate of rejuvenation and self-renewal to the external environmental rate of change something Jack Welch (GE) noted in 1982. Today, we call it managing the simultaneous rates of exploitation (innovation) and exploration (self-renewal). Lewin's model for wealthy-creation includes a balance of a passion for efficiency, a passion for innovation and renewal together with something called the legacy (i.e., reflecting the returns on reputation, market position, scale and historical adaptability to change).
All roads lead to innovation
My own conclusion of this conference was that it was one of the better conferences on innovation with which I have been affiliated. Although the theme was definitely targeting the value of the intangibles, the quality and scope of the presentations indicated that Drucker is right. If we can determine a way to manage the innovation process and measure the performance thereof we will reach the sustainable prosperity sought in enterprises around the world.
Debra M. Amidon
Lee Bloomquist was one of several ENTOVATION colleagues who attended the NYU conference, but did not speak. Neverthessless he has provided us with an insightful contribution to the dialogue on knowledge measurement, an extract of which is reprinted below. We also point to additional work by Baruch Lev (one of the conference hosts) and his colleagues.
The Idea Of Measuring Knowledge - Lee Bloomquist (Steelcase)
"One way to measure knowledge assumes that the stock market implicitly performs the valuation. In its simplest form, this method accepts the market to be invariably accurate in its valuations, and that any excess valuation of a company over its book value will be the correct valuation of the company's intangible assets. On the other hand, an operational approach must necessarily begin with the costs and benefits of any element or any system of knowledge that can be linked to a company's cash flows. In the end, the two approaches will most likely turn out to be complimentary.
In the academic field called Cognitive Science there is a discussion of 'the knowledge level'. This is the principle that any cognitive system can be understood by acquiring information about three of its basic aspects: its action, its goals, and its knowledge. For any cognitive system, having information about any two also conveys information about the third. For example, "If I have information about your goals and about what you know, then I also have information about how you will act." And so on. During the early 1900s Frederick Taylor applied a scientifically inspired approach to assess and manage ACTION, particularly in a manufacturing context. Then in the late 1920s and 1930s, the human relations model began to emerge. In retrospect it could be said that, by the use of questionnaires, social science was applied to assist in the assessment and management of GOALS. Ultimately this focus on goals resulted in Peter Drucker's "Management by Objectives" and similar approaches. Today KNOWLEDGE MANAGEMENT is the growing idea. To survive and thrive during the next evolutionary change in the economy will require that a firm effectively measure and manage KNOWLEDGE, as well as goals and action.
Principles can uncover important patterns. One set of principles suggests that two stages in the economy have occurred, and that a third stage is on its way. In each previous stage, (1) a scientific approach was applied, (2) new capabilities emerged for applying the approach, and (3) new organizational forms emerged, which exploited these capabilities. Another set of principles suggests that, for testing the existence of the associated tangible assets, (4) methods of representing these tangible assets and (5) methods to test their existence against these representations also emerged in the economy. Further, (6) these methods were developed by a coordinated development of markets and institutions, fostered by governmental policy."
(Note: A paper expounding these principles together with additional discussion has been contributed by Lee Bloomquist to the Brookings Institute project on Intellectual Captial.
The Second Knowledge Capital Scorecard
The work of Bruch Lev and colleagues is featured in CFO magazine's Knowledge Captial Scorecard at http://www.cfomagazine.com/html/knowledgecap00.html. Since the first scorecard was published (http://www.cfonet.com/html/Articles/CFO/1999/99FEseei.html), CFO readers have shown much interest in valuing knowledge assets. Together with CFO's S.L. Mintz, Baruch Lev has developed more tools for measuring the value of such assets. This latest work provides clear evidence that knowledge capital, which includes R&D, enjoys higher correlation with market returns than either net earnings or operating cash flow.
The scorecard plots market to book value, knowledge earnings, knowledge capital and similar indicators for a broad spectrum of industries. Lev and Mintz conclude that growth in knowledge earnings tends to be more strongly associated with market returns than are either cash flow or net earnings. They describe the Scoreboard's measures as "superior measures of value creation".
David J. Skyrme
With the demise of boo.com (covered in last month's issue) and the continuing or volatility of high tech stocks, many people are questioning the viability of dot.com companies. Many analysts predict a large shake out, with perhaps three quarters of companies floated it in the last two to three years not surviving long term. What we are witnessing is an irrational stampede into new unproven and ventures, with the tantalizing prospect of walking away with untold riches. Of course, there is risk in any new venture, but a little clearer thinking and observation of customer behaviour will help you sort out the winners and losers.
The obvious losers have been investors and venture capitalists who have ploughed money into ventures that have already failed or may do so in the future. Others are professionals and managers who have until recently enjoyed a solid, though perhaps unexciting, career in blue-chip companies, but which they deserted for the lure and buzz associated of a dot.com start-ups, and now find themselves jobless but a lot wiser - perhaps they have learnt enough to create a successful dot.com of the future. Suppliers, employers, and occasionally consumers (for those dot.coms that got that far) have also lost out. Other losers will be traditional companies that do not adapt quickly enough to the net. The online success of Amazon.com, for example, has acted as a wake-up call to traditional booksellers like Barnes and Noble or W.H.Smith (who made up for lost time by buying The Internet Bookshop - http://www.bookshop.co.uk).
What Causes Failure?
The general youthfulness of many dot.com companies means that their management teams lack the years of solid business experience of their elders (hence the value of mentoring). On the other hand, they don't necessarily want a head of finance, who was formerly a Chief Financial Officer of a large multinational. Some corporate CFOs can adapt to such a career change, but, as several dot.coms have discovered, others can't. Another lesson evident to those who have built up large and successful business is that you don't treat yourself and your friends to riches and junkets that the new business cannot afford. Companies like HP and Yahoo! started very modestly in low-cost premises. In contrast, those dot.coms that host lavish launch parties, have prestigious premises, and pay high basic salaries (rather than emphasizing stock options) need to be investigated closely to see if such expenditure really is needed for 'marketing' as claimed.
Usually, however, most dot.com founders have a good idea, are committed to making it work, and put in a tremendous amount of energy and enthusiasm into their new venture. Even so, as any student of innovation will tell you, only a fraction of new ideas translate into commercial success. This is why venture capitalists, to some degree, have been willing to pour money into a string of dot com ventures, on the basis that they only need one success like Yahoo.com to compensate for all their write-offs. This does suggest that dot.coms developed around a single idea, do need to expand their portfolio using proven ideas and business models, to minimize risk. How2.com, for example, found that its original idea of consumer how-to guides was too broad and has recently reinvented itself as www.parago.com, an application service provider focusing on customer management systems, retaining only a few niche product-care guides, rebate processing and sale of warranties from its original stable. Another long-term survival strategy is to partner with a complementary supplier or more established company. Thus infoseek.com, one of the early search engines, is now part of Disney Corporation's go.com.
Some of the fundamental reasons for failure are:
- Not really understanding your consumers' behaviour, and to what extent you can modify it. One analyst reckons that even if boo.com had managed its cash flow better, got its technology right first time, that it still might not have succeeded. Observation of young consumers buying fashion goods - boo's target market - suggests that they like trying clothes on in front of friends, and that they relish the physical and social experience. Do they really want to buy these goods in the privacy and isolation of their homes? Many professionals find using the Internet irritating and slow, and difficult to find quickly what they want. Therefore sites aimed at busy business people must let them quickly find relevant material.
- The myth of advertising - although the first mover advantage is important in many markets, too many dot.coms put undue faith in the belief that advertising will get them market share fast. Certainly it has helped Amazon.com on its way, but as any marketer will tell you, sometimes the best advertising is free. One of the founders of clicklocum.com (a service to provide locums to doctor's practices and pharmacists) writes in this month's Internet magazine that venture capitalists laughed him and his colleagues out of the door, since its well researched business plan did not have at least a UKP 10 million advertising budget. Naturally, he got free publicity through his 'letter of the month', but it wasn't really necessary since this site is already a market leader through carefully targetted promotion costing a fraction of advertising. I don't ever recall seeing advertisements for M3.com or Napster.com. But there's probably hardly a music loving student anywhere that has not heard about these web sites.
- Mesmerized by big numbers - "reach over 100 million customers" claim advertisements enticing small businesses to have a presence on the web. This overlooks the fact that there are probably over 10 million suppliers also vying for their attention, and that only a small proportion of them anyway might potentially interested in your products and service. Likely losers will be going for mass markets without the pull, reputation and service of established brands. In contrast, the net is a great market place for specialist suppliers selling into niche markets on a global scale.
- Inappropriate business models - I was going to say unproven, but there are obviously some innovative yet unproven models that will become the winners of tomorrow. Inappropriate may mean relying on subscriptions, where there is growing evidence that consumers expect information for free; or anticipating high advertising revenues, when the general price per click-through is declining rapidly. Again, you must understand what your customers value and will pay for. A model appropriate for Yahoo! or CBS Sportsline is likely to be totally inappropriate for the business to business equipment supplier. One model currently attracting much attention is that business-to-business exchanges (B2X). The challenge here is to get a critical mass of both buyers and suppliers (some of whom will not want to participate in the same business exchange with competitors), and take a commission from one side or (if aggressive enough) both.
- Selling at a loss - this may sound rather trite. It is one thing to be showing an accounting loss due to high startup costs. It is quite another when your gross margin on the variable costs of sales is negative. The premise behind such a model is that low prices gain market share, and that over time a strong market position and economies of scale will allow you the to have a healthy profit margin. This of course assumes that your high margin does not attract other market entrants, and that the cost of entry is high - dubious assumptions in the fast moving Internet market place.
- Incoherent systems and processes - unlike established businesses, one of the potential advantages of start-up ventures is that business processes and systems can be developed from scratch. This means that you could have integrated customer service (merging requests from phone, email and web) and customer facing systems that integrate well with back office systems including order processing, finance and order fulfilment. Yet several dot.coms have not thought about scalability and integration up-front.
The main winners are the dot.coms who aren't dot.coms! IBM, for example, sold $15 billion worth of goods and services on-line last year, and is very profitable! Many software and service providers in the dot com supply chain are also very profitable e.g. HP, Sun, Dell, Cisco. Other winners are established companies who have created dot.com ventures, but while funding them have let them operate autonomously so that they remain innovative and entrepreneurial. Two very good examples in the UK are Freeserve (a spin-off from retailer Dixons, and now the country's largest Internet Service Provider) and Egg.com (an online bank off-shoot of Prudential insurance; it went public last week, its IPO 9 times over-subscribed).
Of the new dot.coms, several features stand out in those which have had a large web following in their chosen markets (that does not necessarily mean they are profitable, but number of unique visitors is an important interim metric):
- Compelling content - they provide unique information or information that is aggregated and formatted in an easy to use way. They become a first port of call for those interested in researching or updating on a specific topic. That's how Yahoo! got started and how more recent specialist sites like soccernet.com attracts audiences.
- Interest and flair - it is often remarked that the most interesting tourist and sports club sides, are not be official sites, but those of quirky individuals or fan clubs. Turning them from a hobby into a commercial proposition is the challenge that they face. Formula 1 racing fans will find www.f1grandprixracing.com interesting, with its circuit details, 3D car models, news and technical details. It was built by someone who gave up his job - dedicated his time and £ 30,000 - but already has a site that attracted 86,000 hits in its second month.
- Know their customer's needs and interests - this is where gaining customer knowledge and using it to personalize pages or offers comes into its own. Amazon.com are renowned at doing this well, as well as providing reliable service (which is why it has a loyal customer following and gains sales even when newer competitors are cheaper).
- Exploit the special characteristics of the Internet. This might be selling virtual goods and services. eBay, for example, is profitable since it offers virtual auctions without itself having to handle the goods. It might be exploiting the global market reach of the Internet, to address overseas markets without associated market entry costs. It might be bringing together geographically dispersed participants into a cohesive community. Verticalnet, for example, now hosts over 50 vertical market communities (from dentistry to photonics), and analysts expect it to break even within about a year. It generates revenues from transaction commissions, advertising and ecommerce software and services.
- Have reliable and responsive technology - the days of gimmicky frames and glitzy graphics are receding in favour of content rich sites that work well and fast, and with transaction and payment systems that are straightforward and robust. The most popular sites make sure that they provide mirror sites around the world to ensure good response. Sausage.com is one company that has built a thriving web-based software business that way.
- Have a lean and mean business model - many of the success stories started with small teams, they outsource specialized activities (e.g. many of the financial outgoings for f1grandprixracing.com were for graphics, press pictures and ecommerce development of its online shop), and as they grow, they stay lean and mean. It is possible to run a successful world-wide online business with only a handful of key people.
Many of these characteristics represent commercial common sense, interlaced with a dose of entrepreneurial spirit and enthusiasm. With the right combination of established business wisdom, and youthful exuberance, there is no reason why there should not be many more winners. Unfortunately, in the short term, misplaced investor enthusiasm has outweighed Internet commerce reality. There are lessons to be learned, and they are there for the taking (see recommended reading). As in the real world, there are mass markets and niche markets. All the indications are that companies that address niche markets are likely to show earlier profits while those addressing mass markets, where newcomers are fighting tooth and nail for market share alongside established companies with deep pockets.
Despite recent stock market corrections, many analysts still feel that many popular dot com shares are overvalued. Several articles, both academic and business analyst, have appeared about the valuation of Amazon.com, (e.g. Fortune, 1 May 2000). They suggest that not only must Amazon grow its business to over US 30 billion annually within five years, but that it must sustain a relatively high gross margin (20 per cent vs. a loss now). Amazon, like many other companies, needs to grow at 70 per cent annually for five years or more to justify their valuation - a difficult feat, when it is recalled that yesterday's start-ups and today's highly profitable companies like Dell and Microsoft only achieved 60 per cent in their best five year periods. On the other hand, perhaps it has hidden value in the form of innovation variables (see Baruch Lev's contribution to the NYU conference in the first article). It may well be that a dot.com company is sought out by a well established large corporation for millions of dollars to gain access to intellectual and innovation capital, such as your customer base, Internet business methods (for which it may have patents), and smart people. That alone may justify the optimism reflected in many Internet stock values. Or is there some other hidden value. Or is it even more basic than that - too many cash rich investors chasing too few good dot.com opportunities?
eCompany.now - A Fortune site for net entreprenurs - Fortune (magazine) itself has good regular features and analysis.
EBiz - Business Week's daily news and ongoing analysis of ecommerce
Electronic Commerce Guide (Internet.com) - Categorized sections with updates
Ebusinessforum - EIU's forum with thought papers and email alerts.
There are so many, but many are more hype than substance. Here are some with substance, although generally more geared to large organizations moving into Internet commerce, rather than dot.com start-ups:
Blown to Bits: How the New Economics of Information transforms Strategy, Philip Evans and Thomas S. Wurster, HBS Press (1999). Details at Amazon.com or
Electronic Commerce: Strategies and Models for Business-to-Business Trading, Paul Timmers, John Wiley & Sons (2000). Details at Amazon.com or
E-Business: Roadmap for Success, Ravi Kalakota, Marica Robinson, Addison-Wesley (1999). Details at Amazon.com or
Note: Don Tapscott has many fans, and while I once found his books forward looking, I find his recent books very much run-of-the-mill. If you like his style, then his latest book - Digital Capital - which draws on the intellectual capital concepts of human and structural capital will be of interest. Amazon.com's reviewer praises it for its "smart ideas", but deplores "think tank jargon" and "self-important MBA-ese". You can judge for yourself. For me, the others are a better bet, with Trimmer's the best, since it gives a thoughtful and global slant, with some good European cases. Paul Trimmers is head of the European Commission's electronic commerce business pilot programme and was formerly a software product development manager. He's an MBA, but uses plain English!.
MAKE 2000 Winners Announced
Now in its third year, the winners of this year's Most Admired Knowledge Enterprise (MAKE) were announced earlier this month. They are:
1. Buckman Laboratories
2. General Electric
4. Arthur Andersen
5. Cisco Systems
7. Ernst & Young
10. World Bank
The study, conducted by Teleos in association with The KNOW Network, are recognized for their world-class efforts in managing knowledge, leading to superior performance. 139 organizations were nominated and a short list rated by a panel of chief knowledge officers and leading knowledge management practitioners in eight categories including success in establishing an enterprise knowledge culture, effectiveness of managing customer knowledge to increase loyalty/value and ability to manage knowledge to generate shareholder value.
Comparison with previous rankings shows several companies, notably Xerox, Ernst & Young and Hewlett-Packard, consistently near the top. Fallen stars include Lucent (the 1998 winner), Intel (this year's no. 12) and Monsanto (not in the top 20), while the World Bank makes its first entry into the top club, based on its strong enterprise culture.
An executive summary of the 2000 MAKE study, including comparisons with the 1998 and 1999 MAKE winners, is available by contacting Teleos at E-mail: email@example.com.
"David....Enjoyed your article on this topic (and the whole 13 UPDATE issue from you and Debra). Two thoughts on KM outsourcing:
(1) What you wrote is equally applicable to outsourcing any knowledge-based endeavor. We face this in R&D continuously as we try to manage head-count, reduce costs, shrink time-to-market, etc. There is real danger in outsourcing any work or work process which is or could become a core competency or technology for the parent company. The parent may receive information back with respect to the outsourced project but much knowledge stays with the person/group that actually does the work. If information is all you need (what is the percentage of silicon in this formulation?), there is no concern. If the question involves learning processes in the outside organization (How do we best make this material?), transfer of the "answer" inside is often easy but transfer of the knowledge behind it is much more difficult. (42 ways not to make it; 27 ways the "best process" can fail;
how to recognize early when such failure is possible and when it is inevitable.)
(2) In the case of Knowledge Management teams, my belief is that they are the necessary "force" to jump-start KM in an organization. But an honorable goal is eventually, with an appropriate genuine culture/process change, to so imbed KM thinking/behavior in the organization that it becomes self-sustaining. (Noble goal, he says, but what about inevitable entropic decay of all natural processes?)
One answer may be second and third goals of (2) demonstrating high added value to the bottom line by the better KM processes
and (3) creating dedicated disciples in every business organization within the company. The former creates a high energy barrier because decay then makes obvious negative contributions to the bottom line. Attainment of the latter provides informal watchdogs who will point out to management how their lack of diligence with respect to KM is the reason for an incipient or well-developed slide in performance.
I believe a steady state, with dissolution of the shock team, is attainable, particularly if the team is assimilated back into the organization with honor--instead of being outplaced. After all, if this is such an important business thrust (espoused message to the troops), should the reward for success be 'good-bye?'
Thanks Again and Regards....Ross Armbrecht"
Just a few hand-picked ones from some of the less widely publicized events.
11-12 Sept. Advanced Knowledge Solutions, London. Case Studies, Tools and techniques and a Masterclass on Intellectual Cpatial Managment. David Skyrme is speaking on Knowledge Portals. ICM Conferences. Tel: +1 20 7436 5735.
18-22 Sept. International Knowledge Management Master class, Utrecht."theories, methods, instruments and business cases that help you to become a successful knowledge management practitioner." Kenniscentrum CIBIT. Email: firstname.lastname@example.org (Simone Molenaar)
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