The Complete Guide to Knowledge Management E-Book

Edna Pasher

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 345

Veröffentlichungsjahr: 2011

Beschreibung

A straightforward guide to leveraging your company's intellectual capital by creating a knowledge management culture The Complete Guide to Knowledge Management offers managers the tools they need to create an organizational culture that improves knowledge sharing, reuse, learning, collaboration, and innovation to ensure mesurable growth. Written by internationally recognized knowledge management pioneers, it addresses all those topics in knowledge management that a manager needs to ensure organizational success. * Provides plenty of real-life examples and case studies * Includes interviews with prominent managers who have successfully implemented knowledge management structures within their organizations * Offers chapters composed of short theoretical explanations and practical methods that you can utilize, based primarily on hands-on author experience Taking an intellectual journey into knowledge management, beginning with an understanding of the concept of intellectual capital and how to establish an appropriate culture, this book looks at the human aspects of managing knowledge workers, promoting interactions for knowledge creation and sharing.

Leseprobe

Table of Contents

Cover

Table of Contents

Additional Praise for The Complete Guide to Knowledge Management

Title page

Copyright page

Dedication

Acknowledgments

Preface

Getting Started on Your Knowledge Management Journey

CHAPTER 1 The Motivation toward Knowledge Management

Combining the Tactical with the Strategic

A Manager Struggling with Key Tactical Problems

A Consultant Struggling with Key Strategic Problems

A Convergence of Paths

Discovering Universal KM Truths

Conclusion

CHAPTER 2 Making the Business Case for Managing Intellectual Capital

Intellectual Capital as the Basic Asset of a Knowledge-Intensive Business

A Quantitative Definition of Intellectual Capital

The Systematic Management of IC

Questions for Believers and Nonbelievers

Conclusion

CHAPTER 3 The Importance of Strategy in Knowledge Management

Developing a Business Strategy Based on Core Competencies

What Is at the Core of Strategic Management?

Successfully Using Employee Knowledge as a Strategic Input

Example: IBM—Ongoing Strategic Renewal

Example: Rafael—A Strategic Transformation

Conclusion

CHAPTER 4 The Role of Culture in a Successful Knowledge-Creating and Knowledge-Sharing Organization

The Definition of Culture

The Moral Aspects of Organizational Culture

The Practical Aspects of the Right Organizational Culture

From Preaching to Practice

Conclusion

CHAPTER 5 The Human Focus

Understanding and Managing Knowledge Workers

Is Every Worker a Knowledge Worker?

Shaking Up the Balance of Power: Lessons from the First Bubble Crisis

Lessons from the Second Bubble Crisis

The Challenge of Retention

Keeping in Touch with Knowledge Workers Who Leave

Rewarding Knowledge Creation and Sharing

Conclusion

CHAPTER 6 Managing Interactions for Knowledge Creation and Sharing

The Social Model for Knowledge Creation and Sharing

Extracting Tacit Knowledge—the Corporate Yellow Pages

Enhancing Interactions in Communities of Practice

Identifying and Enhancing CoPs

Indispensable Knowledge-Creating and Knowledge-Sharing Interactions

Methods and Techniques for Effective Interactions

Making the Most of Information Technology

Conclusion

CHAPTER 7 Capturing and Reusing Existing Knowledge

Motivation and Obstacles

Documenting Knowledge Efficiently

Teaching the Organization What It Knows

Reuse and New Use

Conclusion

CHAPTER 8 The Customer Focus

Harnessing Customer Knowledge through Meaningful Interactions

Customers Are Willing to Share What They Know

The Living Lab Concept

Learning from Internal Customers

Engaging Customers in Defining Strategy

Conclusion

CHAPTER 9 Measuring and Managing the Performance of Proper Knowledge Work

The Challenge: Determining What You Need

Current Practices: Knowing What You Have

The Navigator: A Framework for IC Management

Conclusion

CHAPTER 10 Innovating for a New Beginning

Innovation as the Essence of Knowledge Organizations

Knowledge Management as an Innovation Enabler

Focal Points of Innovation

Methods for Enabling Innovation

Conclusion

CONCLUSION

Implementing Knowledge Management—A Step-by-Step Process

The Basic Principles

How to Do It

Who Should Do It

The Final Goal

APPENDIX

Defining Key Terms

Levels of Knowledge

Conclusion

Index

Additional Praise for The Complete Guide to Knowledge Management

“Whether an expert or neophyte in KM, you will benefit from the trusted insights of Pasher and Ronen. Few have as much practical perspective into the art and science of this new functional discipline. Each chapter is a gem—complete with the Magnificent 7 insights which fuse the tactical and strategic, the theory and the practice, from idea to action. They have captured the kaleidoscopic landscape of intangible value and intellectual wealth into a strategy leading to innovation progress—the true competence of the decade.”

—Debra M. Amidon, Founder of ENTOVATION International Ltd; author of The Innovation Superhighway

“As a member of the community of practice in the field of knowledge management and dissemination, I am pleased to take the tools offered in this book to my colleagues in higher education. The combination of theory and practice presented in the book serves for us as a springboard to real-life leadership positions.”

—Professor Nava Ben-Zvi, PhD, President of Hadassah College, Jerusalem

“This is a deeply innovative and practical book. Pasher and Ronen merge the core competencies of knowledge creation with those of management to deliver competitive advantage for the twenty-first century.”

—Glenda Eoyang, founding Executive Director of the Human Systems Dynamics Institute

“Through learning landscapes, case-tellers, ‘Magnificent 7’ summaries, and the like, Edna and Tuvya’s Complete Guide to Knowledge Management leads you to a richly contextualized universe of knowledge-creation possibilities. Indeed, this book will challenge you personally to step into an assertive, resilient, and empowered knowledge-based lifestyle!”

—Blanca Garcia, Most Admired Knowledge City Awards; Chair of The World Capital Institute

“This book excels by helping managers to understand and practice the social, cultural, and also the dynamic nature of knowledge in enterprises, and of their customers. This approach really defines the mechanisms of a knowledge society!”

—Dr. Otthein Herzog, Professor and CEO of InnovationsKontor Nordwest GmbH

“What I really enjoyed when reading this book were the great many examples that reminded me of situations I have experienced during my occupational career. But it also brought forward new ideas to me for my business. This book should be all-in-one a must read for those at the beginning of their careers.”

—Dr. Michael Lawo, Professor and Managing Director of Mobile-Solution Group GmbH, Bremen, Germany

“Bravo! At last, a practical and down-to-earth approach to KM, rich both in concrete examples and in challenging insights (like the ‘Magnificent 7’ at the end of each chapter).”

—Dr. Charles M. Savage, author of Fifth Generation Management

“I found the book very unique and useful. The fusion of the different perspectives of the authors—a manager and a management consultant—and the fusion of theory with practice make it interesting to read and easy to use. As an Israeli manager, I am of course made very happy and proud by a book full of Israeli examples—especially those from RAFAEL, a leading R&D organization.”

—Major General (Ret.) Amiaz Sagis, Former Head of the Technology and Logistics Division in the Israel Defense Forces (IDF); CEO and Chairman of the Board of large Israeli corporations

Copyright © 2011 by Edna Pasher and Tuvya Ronen. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at [phone], outside the United States at [phone] or fax [phone].

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data

Pasher, Edna.

 The complete guide to knowledge management : a strategic plan to leverage your company’s intellectual capital / Edna Pasher and Tuvya Ronen.

p. cm.

 Includes index.

 ISBN 978-0-470-88129-3 (hardback); ISBN 978-1-118-00140-0 (ebk); ISBN 978-1-118-00139-4 (ebk); ISBN 978-1-118-00138-7 (ebk)

 1. Knowledge management. 2. Intellectual capital–Management. I. Ronen, Tuvya. II. Title.

 HD30.2.P375 2011

 658.4'038–dc22

2010051230

To Margalit, whose love, patience, and wisdom accompanied me in this journey for Knowledge Management as in all our travels on the roads of life.

—Tuvya

To Yossi Pasher, who has been supporting me to grow our intellectual capital and make my dreams come true, with love.

—Edna

Acknowledgments

We thank all of our friends in the Intellectual Capital Pioneers community, who opened our eyes to new possibilities.

—Edna

I would like to thank the people of Rafael, my mentors, colleagues, and personal friends during my professional career. Their friendship, dedication, and knowledge were the inspiration for this book. I began this knowledge management journey to bring us some of the lessons learned in the outside world, to find that we have much of our own to contribute to others.

I especially thank those Rafael’s people, too many to mention by name, who were either the sources of various examples or helped in reviewing parts of the manuscript.

I am grateful to my Ph.D. advisor, Professor Arthur Bryson from Stanford University, for inspiring my engineering work as well as being a role model of knowledge creating and sharing.

—Tuvya

We would like to thank Ruth Blatt, with whom we wrote the first version of this book.

We are grateful to Lynne Rabinoff, our literary agent, who found a home for our manuscript at John Wiley & Sons. In this home, we thank Susan McDermott and Claire Wesley, and we especially appreciate the great contribution of our development editor, Jennifer MacDonald, whose expertise, patience, and dedication transformed the manuscript into a real book.

—Edna and Tuvya

Preface 

Getting Started on Your Knowledge Management Journey

Welcome to the beginning of your knowledge management (KM) journey. On this journey, you will travel with us, Tuvya and Edna, two KM experts searching for successful solutions to various KM issues in all types of markets and situations. This book takes the intangible and abstract topic of KM and makes it concrete and applicable.

Most managers already know something about KM and are curious to learn more, but their initial backgrounds may differ considerably: Many have only heard knowledge management used as a buzzword; some may hold the common misconception that it is only about systematically recording existing knowledge; and still others have already realized its strategic value. All of them, however, share a common goal that renders them prospective experts: to fully understand KM, to know their role in implementing it, and to acquire the necessary skills and tools for doing it successfully.

A Book for Managers

This book is intended to prepare managers to be the leaders of KM in their organizations. The continuous growth of knowledge, the most important core competence of the modern organization, ensures the long-term growth and profit of an organization. Managers at all levels of the organization must be the leaders and catalysts of KM. It is the manager who must comprehend and exploit the strategic significance of knowledge by instilling the processes of knowledge creating and knowledge sharing in an organization’s culture and, in particular, continually fostering innovation.

While managers must learn to be KM leaders, most books on the subject do not address their special needs. This book aims to fill that gap. It addresses all manners of KM topics and takes managers on an intellectual journey into knowledge management.

We begin our journey by establishing the business case to justify KM as a tool to increase the intangible asset of intellectual capital, which in turn ensures the tangible assets of future financial success. We then link strategy and knowledge management, and describe how to establish an appropriate KM culture geared toward constantly creating new knowledge.

We then take the manager along through a variety of focuses that represent the different topics of knowledge management, from the human aspects of managing knowledge workers, promoting interactions for knowledge creating and sharing, to knowledge-capturing processes, exploiting customer knowledge, and measuring the performance of increasing intellectual capital.

The peak of our journey involves knowledge renewal and the role of the manager in fostering innovation (the new use of existing knowledge and the creation of new knowledge).

Introducing the Authors

As authors, our background is particularly suited to understanding and fulfilling the unique needs of managers engaging in knowledge management. Dr. Tuvya Ronen is a vice president at Rafael, a leading aerospace company in Israel, where he gained extensive experience in managing research and development teams in projects and in professional departments. Dr. Edna Pasher is a strategic management consultant, an international pioneer in the intellectual capital community, and a leader in implementing knowledge management in Israeli organizations. We both have extensive experience in practicing knowledge management in organizations and have gained a deep familiarity with cutting-edge developments on the subject. While we have teamed together in writing this book, we represent different but complementing experience and perspectives.

Moreover, throughout the book, we also contribute our unique experience as authors, managers, and consultants living and working in the country of Israel, a small country always struggling to compensate for its lack of physical resources by utilizing successful KM strategies. In recent years Israel has established itself as a knowledge country, with economic success. The land of “the People of the Book” is now commonly referred to as “the Second Silicon Valley” or “the Start-Up Nation.” Israel was one of the first countries to emerge from the 2008–2009 world financial crisis. There is a growing interest in its story of successful KM on a national level, and Edna is often invited to tell this story at international KM conferences. We therefore have many examples to share from the Israeli history of excellence in creating intellectual capital (IC) out of KM.

In particular, Tuvya’s experience at Rafael has proven striking in providing examples for this book. Rafael has intuitively created a legacy of KM practices that began during a time when the term had not even been invented. The stories we present here from Rafael and Israel, combined with the other extensive global examples, create a comprehensive assembly of numerous nonstandard cases that managers can analyze and utilize. These cases include both large and small companies and are likely to be relevant and refreshing for readers (even those who already have some experience in KM).

Each of us experienced, in his own field, the major consequences of the two most recent economic bubbles: the first in early 2000 and the last beginning in 2008. We make a point of discussing KM examples as influenced by these bubbles.

How This Book Is Organized

We have structured this book to help you understand and implement a systematic and comprehensive knowledge management process. The chapters guide you in this journey, and—except when indicated otherwise—are helpful to read in order of appearance.

The KM journey follows a spiral path, as shown in Figure P.1. It does not terminate at the peak, since effective knowledge management is a continuous and never-ending process; rather, the end is a new beginning in a continuous journey, leading an organization to ever-higher peaks. Figure P.1 depicts the four phases of this journey, which we describe as follows.

FIGURE P.1 The Knowledge Management Journey

Phase 1: Hitting the Road

This book begins with Chapter 1, “The Motivation toward Knowledge Management: Combining the Tactical with the Strategic,” which presents the basic managerial catalysts for the journey into knowledge management: the questions, issues, and solutions involved. Most managers acquire their interest in KM while discovering tactical KM problems of knowledge capturing and knowledge sharing. They later realize the strategic importance of knowledge as the basic asset of the modern organization. In this chapter, we discuss both the tactical and strategic aspects of KM by providing easy-to-follow examples.

Chapter 2, “Making the Business Case for Managing Intellectual Capital,” explains how a manager can solidify the business rationale for investing time and money in knowledge management. Knowledge management aims to increase the tangible assets of an organization by increasing its intangible assets (the intellectual capital).

Phase 2: Prerequisites

Prior to starting the journey to successful knowledge management, managers and organizations must consider two essential prerequisites. First, managers must establish a comprehensive business strategy (composed of a vision, a mission, and a strategy to implement it) and knowledge management must serve that strategy. Chapter 3, “The Importance of Strategy in Knowledge Management,” emphasizes the tight coupling between knowledge management and strategy.

Second, knowledge management hinges on developing a system of shared values and a management style that seeks and develops an employee’s knowledge. This management style is based on a culture of trust, innovation, and respect for the knowledge of the workers. Chapter 4, “The Role of Culture in a Successful Knowledge-Creating and Knowledge-Sharing Organization,” explains and advocates these cultural requirements.

Phase 3: Viewpoints of Knowledge

Phase 3 presents critical viewpoints on knowledge management that you should consider for your organization. Chapter 5, “The Human Focus: Understanding and Managing Knowledge Workers,” discusses how the success of a knowledge company is based on the proper management of its knowledge workers. It shows how to make an organization attractive to knowledge workers so that they will be motivated to join the organization and stay with it. It describes tools for enlarging the workers’ knowledge and encouraging them to contribute their knowledge to a management process. This chapter is distinguished from the abundance of literature on human resource management in that it focuses specifically on knowledge issues and knowledge workers. We analyze lessons learned from the two bubble economies on successfully managing, attracting, and retaining knowledge workers and their knowledge.

Chapter 6, “Managing Interactions for Knowledge Creation and Sharing,” discusses how knowledge is created and shared largely by social interactions. This chapter provides readers with methods to promote positive interactions to foster knowledge-creating and knowledge-sharing communities in their organizations. It provides a detailed discussion of formal and informal techniques that provide the cultural and physical environment for these communities to prosper.

Chapter 7, “Capturing and Reusing Knowledge,” presents methods for capturing and codifying existing knowledge in the organization and making it available to any number of potential users.

Chapter 8, “The Customer Focus: Harnessing Customer Knowledge through Meaningful Interactions,” presents opportunities and methods for making customers partners in creating knowledge and in shaping an organization’s future. As the chapter details, customers possess a lot of valuable knowledge and are often willing to share it if an organization has the will and resources to inquire, and to co-create knowledge with them.

Chapter 9, “Measuring and Managing the Performance of Proper Knowledge Work,” provides readers with the appropriate measurement systems required for effective knowledge management of the intangible asset of intellectual capital. These are added to the classical accounting methods indispensable for effective management of tangible resources.

Phase 4: Innovating for a New Beginning

In Chapter 10, “Innovating for a New Beginning,” the journey has one mandatory stop before it can begin anew: knowledge creation through innovation. Constant innovation in all business activities is a must for the continuous survival of an organization. This chapter describes various techniques for fostering a culture that encourages and enables workers to innovate.

And finally, the last chapter, “Conclusion: Implementing Knowledge Management—A Step-by-Step Process,” outlines practical steps for readers to begin to implement proper knowledge management, particularly identifying where and how to begin the process in one’s own organization.

Notes on Style

Before concluding this preface, we would like to draw the readers’ attention to some particular styles used throughout the book:

Referencing the Authors and Sources

Our policy in referring to us, the authors, represents our combined message as well as our different perspectives. We usually refer to ourselves in first person as “we.” However, in many cases we refer to “Tuvya” or “Edna” in the third-person. This is done mainly to emphasize his or her particular experience or point of view, but sometimes even to present disagreements between us.

We have two different policies in referring to people mentioned in the various examples. In cases based on interviews with managers and KM experts, or on written sources, we make every effort to cite them accurately with their name and their title at the time of interview. In other cases based on our personal experience, where people are mentioned without being interviewed, we substitute first names to respect their privacy. In both cases, any interpretation is our responsibility.

Definition of Knowledge and Intellectual Capital

This book is about knowledge and intellectual capital, and we have used these terms freely without asserting exact definitions. While expecting the context and your experience to make them clear, we offer this simplified definition: Knowledge is the experience and expertise that, when combined with basic data and information (which are not discussed here), can solve problems and create value. This value is the intellectual capital.

More thorough definitions of these basic terms (data, information, knowledge, intellectual capital, and wisdom) are quickly described in the Appendix at the back of this book. This appendix may also serve as an alternate approach for introducing the subject.

Conclusion

When you have read all the chapters of this book you will have a complete guide to knowledge management. Next, you are able to start implementing the different methods you learned in your organization (or department, or team—remember that KM can be used at any level!). Our hope is that this book will take you all the way from strategy to implementation and that you will see the very tangible results of success in a number of ways. To that end, each chapter finishes with a list of seven guidelines (which we call “The Magnificent 7”) to help you remember the most important points of the chapter’s subject.

Good luck!

CHAPTER 1

The Motivation toward Knowledge Management

Combining the Tactical with the Strategic

In this chapter you will:

Review examples of typical tactical knowledge management problems.

Discover how knowledge management is actually a strategic tool aiming to increase the intellectual capital essential for long-term success of an organization.

Learn that the manager should lead knowledge management efforts in an organization because of its importance as a procedural tool with both tactical and strategic relevance to success.

Most managers, when they begin this journey into knowledge management (KM), do not even know what knowledge management entails. They are only familiar with some of its problems from their day-to-day experience with the flow of knowledge in their organization. These day-to-day experiences are considered tactical, meaning they interfere with an organization’s efficiency and performance. An example of a tactical issue might be that a manager notices a worker or colleague is not open to sharing his position’s knowledge, so the manager needs to reinvent processes that already exist.

Later, when managers become more involved in learning about successful knowledge management, they realize the tactical problems also have strategic implications and solutions that can further the intellectual capital of their organization overall. For instance, modern high-tech organizations use KM to align their research and development (R&D) efforts. Or traditional industries realize that KM helps them use their current core competencies, or develop new ones, in order to quickly invest in new products, services, and solutions that the market needs. Simply put, effective KM will turn any organization into a fast-learning one, geared toward a sustained, competitive advantage.

Once managers realize how important knowledge management is overall, they begin looking for help but often are not sure how to implement the proper plan.

This chapter begins with an account of some of the challenges that led the authors on their personal KM journeys. The challenges described here use examples of KM problems, all of which are typical of what readers might encounter in their business. The chapter continues with responses to these challenges and ends with some universal truths about KM issues, paving the way to the more detailed discussions found throughout this book.

A Manager Struggling with Key Tactical Problems

Co-author Tuvya Ronen became aware of KM problems in the late 1990s. Tuvya is now a vice president at Rafael Advanced Defense Systems Ltd., where he manages an R&D center of about 1,500 engineers and scientists. Rafael is a leading aerospace company in Israel—with $1.6 billion in annual sales and about 6,000 employees—whose products are based on an intensive use of innovative R&D. Tuvya has spent most of his career at Rafael.

Basically, the goal of an R&D center at Rafael, as in any organization, is to create and disseminate knowledge. Unknowingly, Rafael has established a unique knowledge culture that utilizes several first-class KM methods. However, some changes over the course of Tuvya’s time at Rafael have challenged its ability to increase efficiency and competitiveness. To his dismay, Tuvya found that this was an ongoing process: New knowledge problems were always emerging where none existed before.

The following examples describe some typical problems that Tuvya first encountered in the late 1990s, when he was managing one of the departments of the R&D center at Rafael.

Ben’s Bright Idea Surprisingly Rejected

Ben is a leading member of a team of aerodynamic designers. Their work requires using several different codes for estimating aerodynamic properties, such as lift and drag. Ben made an obvious and simple suggestion: Whenever somebody uses a code, he should write comments detailing the experience. These comments would be useful for others: determining which code suits a specific family of configurations or flight velocity, bug alerts, and so on.

In the old days, this suggestion would have been hailed by workers and managers alike. Surprisingly, objections sprang up like mushrooms after the rain: Why would an employee want to spend time for the benefit of others when tight schedules and deadlines pull him back to his work? When and why would coworkers read the comments? Who would sponsor the extra work? Where would the money come from in light of tight budgets and narrow profit margins?

The main issue presented in this example is: How can employees learn from each other when they don’t have the time, money, or managerial attention? Is Ben’s idea the best solution? Are there other, better solutions?

Nathan, the Irreplaceable Technician

Nathan is a veteran technician but the organization decided to encourage him to seek early retirement. The situation seemed win-win: He would enjoy a generous retirement package and his department could replace a not-so-cutting-edge technician with an aspiring, young engineer.

Unexpectedly, it turned out that Nathan was irreplaceable as he was the sole source of knowledge in his position. Specifically, only he knew how to maintain an old simulator that was essential to the department’s work. Before the decision to ask him to retire, his coworkers had no interest in the old simulator with outdated technology so they did not hasten to acquire his knowledge before encouraging his retirement.

The main issue presented in this example is: How can an organization avoid a situation whereby a single person holds all the knowledge about a key subject?

Ron’s Knowledge Leaving the Organization

Ron is a senior veteran engineer who has held various management positions. Through the years he has become a walking encyclopedia about the design and operation of a family of products. Everybody likes to hear his view. Even younger engineers, who consider him old-fashioned, ask for his advice if only to do the opposite.

In the old days, everybody knew about Ron, and felt he would always be a part of the organization. Nowadays, his fame has declined and many people do not know about his expertise. He may even retire or move to another organization.

The main issues presented in this example are: Can Ron’s knowledge about existing products be documented? Is it possible to create an expert system, using the knowledge of Ron and others, to advise us about new projects? How do we identify important sources like Ron for other workers to use? Are there similar useful sources hidden from the other workers’ experience?

Tuvya assumed that he was not the first person to encounter these types of knowledge issues within an organization. He wanted to find out how other organizations, both in Israel and globally, had solved them. He decided to dedicate a generous amount of time to searching for successful answers and will share many of them with you throughout this book.

A Consultant Struggling with Key Strategic Problems

During Tuvya’s search he was introduced to co-author Edna Pasher, a management consultant. Whereas Tuvya was struggling with KM problems on the tactical level, Edna was grappling with KM issues on the strategic level.

Edna draws from her academic background in organizational communications to guide organizations in strategic renewal processes. Since the 1980s, she has adopted the approach outlined by Hammel and Prahalad,1 whose focus of strategic processes is to identify the core competencies of an organization that will lead to a sustained competitive advantage. Once these competencies are agreed upon, the question becomes how to develop them in the most effective and efficient way. In order to ensure a sustained competitive advantage, the core competencies—or in other words the core knowledge—should be developed, upgraded, and improved in order to generate a higher return.

Since 1994 Edna has tackled the task of exposing executives to the emerging field of knowledge management. She realized that viewing knowledge as the heart of the competitive edge of organizations implied that knowledge management and strategic management must go hand in hand.

A good example of the power of strategy working in concert with proper KM is IBM Corporation. Its success over the years has relied on a unique combination of technological and business management innovation. IBM allocates billions of dollars of R&D investments to create unique products and adapts them to the changing needs of the market. Further, it develops core competencies in business innovation to influence those market needs. We can see this at work when we think about how IBM was first on the market in creating PC hardware, but then got out of it for more profitable activities later on.

We present a more detailed description of IBM in Chapter 3, but we mention it here as a powerful example of knowledge management and strategic management going hand in hand. In spite of such an obvious model, it is still difficult to persuade managers to take a serious look at strategic KM. The following stories further describe Edna’s experiences.

Convincing Managers about the Importance of Strategic KM

When leading strategic processes in organizations, Edna observed that it was very difficult for managers to “think outside the box.” It was hard for them to be creative and innovate faster than their competitors. Sometimes managers were better able to incrementally improve what they’d already done rather than to dare to embark on a full paradigm shift.

Edna found that it was extremely difficult to convince managers that knowledge management is a worthwhile pursuit. It is a difficult business case to make because tangible results can take years to come to fruition. Managers of public companies are particularly pressed to show results on a quarterly basis, so they don’t often see the results of knowledge management overhaul quickly enough to put the initial effort into perspective.

Even though thinking about strategy at the outset of major tactical changes is a difficult case to make, sometimes Edna is successful, as the following examples show.

Arkia: A Strategic KM Transformation

In the early 1990s, the Israeli domestic airline Arkia was a 40-year-old company, which always did more or less the same thing. It operated domestic flights in Israel and flew short-range international charter flights. The company seemed to be sleepwalking through its processes for many years without change. But when the company managers took a look at their business in terms of strategic KM, a transformation came about.

They used the tactical methods of knowledge-creating interactions to gain insight into the experiences of managers and employees. They then arrived at a strategic decision to better exploit existing core competencies. In this particular case, instead of selling vacation packages only on a small scale to accompany flight tickets, they decided to use that capability to make the airline a major tourism company. The result was a major increase in revenues and profits.

The main issues presented in this example are: How to achieve a strategic transformation based on knowledge and core competences (which we detail in Chapter 3)? What are the tactics to produce knowledge creating interactions (which we describe in Chapter 6)?

Danya Cebus: A Construction Company Going Public

Picture this: It is the technology boom of the late 1990s and enthusiastic investors are abandoning the old economy for the lure of high- tech profit. How do you convince potential investors to buy shares in your construction company during a recession in the construction industry?

This was the challenge faced by Danya Cebus, a leading construction company in Israel. Their strategic problem was raising the company’s value in a difficult market in preparation for going public. They needed to convince potential investors that they had the possibility for future growth and were just a high-tech company in an old-tech industry. With this in mind, they asked themselves, how does Danya Cebus present its core competencies and demonstrate that it can ensure a sustained competitive advantage in a fast-changing industry?

Although a construction company technically belongs to the old economy, knowledge management turns out to be a relevant tool for addressing their strategic question. They faced the task of presenting their strategic advantage by tallying their knowledge assets and knowledge management practices. Their solutions to staying competitive are presented in Chapter 9. The changes led to successful results.

Holon, Israel: A City Reborn

Cities need to move to knowledge-based development, too, just as organizations do. The city of Holon in Israel had to reinvent itself as it became less attractive to future generations of Israeli citizens. In 1993, a new mayor and CEO started a well-documented renaissance process in the city and the story has become an example recognized worldwide.

The city managers started with a singular vision: Make Holon “The Children’s City,” thus making it attractive to young families again so they would want to stay there. This strategic focus was then translated into many projects and programs across the area, involving major efforts to turn Holon into an attractive city complete with an intellectual capital (IC) report to visualize all the efforts of the transition.

In 2007, after 15 years of building, the city moved in an Israeli rating2 from number 15 (last in the rankings of the Top 15 Israeli cities) to number 6. In 2010 its mayor was named one of the world’s top 10 mayors by a UK magazine.3 All it took was a strategic approach from a singular vision. The city’s managers followed processes of proper knowledge management toward increasing the city’s human capital, thereby enriching its intellectual capital and, in turn, its long-term growth.

These examples demonstrate the broad spectrum of knowledge-based strategies and tactics that apply not only to corporations, but also to many not-for-profit organizations.

A Convergence of Paths

When we (Tuvya and Edna) first met during the late 1990s, our initial discussions produced three conclusions:

1. Tuvya was not alone in searching for tactical solutions.

2. The search for strategic solutions was an even more important step toward proper knowledge management.

3. The search for answers to proper knowledge management is a common journey.

In the rest of this section we elaborate on these conclusions and their significance to our further common work.

Tuvya’s Questions Are Typical Tactical KM Issues

Not surprisingly, our first conclusion upon meeting was that Tuvya’s knowledge problems were not unique but universal. The problems at Rafael were typical examples of tactical questions in knowledge management:

How can an organization enhance its knowledge creation?How can it preserve its existing knowledge?How can it encourage its knowledge sharing?What are its most efficient methods of knowledge dissemination?

KM Has Important Strategic Implications

Our second conclusion was motivated by Edna’s experience that most managers are initially exposed to KM issues through tactical aspects, but eventually discover that KM has strategic implications that are even more valuable to their long-term goals.

When we met, there were substantial restructurings happening at Rafael. The main change was that Rafael was transitioning from a government organization into a commercial company, in turn emphasizing profitability. Part of the change involved instilling a different system of work contracts. The measures implemented were expected to have positive effects: streamline the organization, decrease operational expenses, and increase efficiency and profits. Then, hopefully, they would lead to better financial results and increase the tangible financial capital of the company.

But the initial expectations should have been further examined from a knowledge management point of view. The changes they were looking for may have led to changes in culture and values, some of which could have influenced worker motivation to create and share knowledge, or even to continue working at the company. In Chapters 4 (regarding culture) and 5 (concerning the human focus), we discuss these kinds of issues and show how Rafael successfully solved them, thus avoiding the need for a second wave of overhaul.

These types of moves for change should raise basic questions regard­ing identifying the existing knowledge assets of an organization and how to effectively exploit them in a new structure. All these considerations are part of what we call the intellectual capital (a term invented in the 1990s—for example, Edvinsson4 or Stewart5—to include all intangible assets that are necessary in the present to assure continuous future success of an organization). Eventually, and fortunately for Rafael, we found that after a decade, the results for Rafael were very successful and carried with them very important lessons. We describe these lessons in Chapter 3 on strategy.

Strategic KM questions that would be helpful for organizations to ask, though, before making sweeping structural changes—questions affecting the intellectual capital of an organization—include the following:

Are the culture and values at an organization right for a properly knowledge-savvy organization?What are the knowledge assets of the organization?How can the organization leverage its assets for better results?How can it increase its assets in the long run?

These strategic questions are always important overall, but they are even more sensitive in times of turnover and restructuring. Actions leading to short-term gains in financial capital may induce major losses in intellectual capital in the long run if questions like these are not considered. These losses will eventually hamper financial results over time if managers do not take them into consideration as early as possible.

We Would Like to Join Forces in Search of Answers

Our third conclusion upon meeting was that KM questions, both tactical and strategic, are vital to the future success and sustainability of any organization. Hence we want to join forces and embark on a common journey to search for answers.

Discovering Universal KM Truths

We began this journey to discover how KM questions are answered around the world. It began as an actual journey of several months, visiting organizations and consultants who were leaders in KM globally at the time. Our journey then continued as a more comprehensive study of what is actually done, both worldwide and in our home of Israel and especially at Rafael. Our travels have lasted more than a decade, covering ups and downs in the economy (including two economic crises, or so-called bubble economies) and in all types of organizations. Now we would like to share with you the lessons of our journey, beginning with some of the basic answers to some of the basic questions.

The Answers Are Important

We have found that knowledge management solutions always have benefits for an organization. With this in mind, the reader should realize that KM has not yet become a mature discipline. While many organizations are doing well with KM initiatives and processes, there are many others that still need to improve. So it is not enough that people, teams, and organizations are aware of KM issues and solutions. We still need to broaden the various methods involving KM and make its practice even more widespread.

As we’ve said, in the years since our research began, we have witnessed two economic crises that put KM to the test. The first was in the early 2000s: the technology bubble crisis (or dot-com crisis) in what is now called the new economy or the knowledge economy. Many high-tech companies collapsed at that time, shattering with them many investor hopes and raising doubts about the validity of claims concerning the worth of knowledge-based organizations. This might have led to a misconception that the knowledge economy was finished, but time has proved the opposite. It is true that in the days of the inflated bubble economy, it was difficult to distinguish which companies had genuine intellectual capital and which ones were just claiming to have it. The ones with real IC and effective knowledge management survived and prospered. (In particular, we looked very closely at our home economy in Israel as a good laboratory in which to review case studies of both of these bubble economies, because of Israel’s small-scale economy but large-scale start-up culture, and found this to be a common thread.6)

The second economic crisis occurred in 2008 and has not yet ended. Unlike in the first crisis, knowledge management practices were not to blame in the second. Instead, most professionals agree, the second crisis was more the result of gross financial blunders combined with greed and fraud. However, of the organizations and regulators that have made a comeback and survived since 2008, it’s obvious the ones with a better understanding of their organization’s knowledge management processes—and better IC—were quicker to rebound than the competition.