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Robin.Teiglandhhs.se Knowledge management in a global knowledge-based firm Dr. Robin Teigland Stockholm School of Economics September 2007 robin.teiglandhhs.se 1 Robin.Teiglandhhs.se Growth Time Output of information and knowledge Human absorptive capacity A world of increasing knowledge flows. Cohen, WM och Levinthal, D A, Absorptive Capacity: A new Perspective on Learning and Innovation, Working paper, Carnegie Mellon University and University of Pennsylvania, October 1989 2 Robin.Teiglandhhs.se that is increasingly connected.Nodes are individuals and colors represent organizations Casper & Murray 20023 Robin.Teiglandhhs.se What is globalization? The extent to which networks of individuals and organizations, markets, and technologies are interconnected across geographic and cultural boundaries Beech and Chadwick 2004, Friedman 2002 4 Robin.Teiglandhhs.se What is your companys global strategy? 5 Robin.Teiglandhhs.se From a multi-domestic company to a successful global firm Multi- domestic Global Sub7 HQSub10 Sub9 Sub8 Sub13 Sub11 Sub3 Sub5 Sub4 Sub1 Sub2 Sub6 Sub14 Sub14 Integrated 6 Robin.Teiglandhhs.se Global strategy Aligning operations increases success Competence Management Motivation Management 7 Robin.Teiglandhhs.se Profitable growth through higher efficiency and innovation Preventing the waste of valuable resources - avoid reinventing the wheel Ensuring the use of leading-edge technology and thinking across the firm Increasing customer satisfaction through shorter lead-times and consistent behavior Creating a competitive cost structure Facilitating breakthrough and incremental innovations through combination of technologies and ideas from across and outside the firm An attractive workplace that encourages cross-functional co-operation across the globe Attracting and retaining key individuals What are the benefits of knowledge management? 8 Robin.Teiglandhhs.se What is knowledge? 9 Robin.Teiglandhhs.se From tacit to articulate knowledge “We know more than we can tell.” Michael Polanyi, 1966 TacitArticulated HighLow MANUAL How to play soccer Codifiability 10 Robin.Teiglandhhs.se The majority of a companys valuable knowledge is tacit and resists being articulated The knowledge management challenge 11 Robin.Teiglandhhs.se An organizations structures, systems, and practices that facilitate with the goal of enhancing the organizations competitiveness What is knowledge management? Creating knowledge Embedding knowledge Disseminating knowledge Organizing knowledge C KM 12 Robin.Teiglandhhs.se Who does your company target as customers? What products or services does your company offer these targeted customers? How does your company do this efficiently? KM must be aligned with strategy Global strategy KM What knowledge supports this strategy? Do we have this knowledge? (Create) How should we organize this knowledge? (Organize) Who needs this knowledge, when, and how? (Disseminate) How do we ensure we get value from this knowledge? (Embed) 13 Robin.Teiglandhhs.se Information technology for KM Stocks of knowledge: Database and database management systems to collect and hold information Flows of knowledge: Communication channels to connect individuals independent of location IT is an enabler! 14 Robin.Teiglandhhs.se Challenges to knowledge databases Time consuming and difficult Takes times for writer to document experiences Takes time for reader to search through databases, information overload Often weak incentives to contribute golden nuggets Difficult to understand Difficult for writer to explain context, tacit - explicit Difficult for reader to interpret experience and use in own situation Data becomes out-of-date very quickly Difficult to maintain, especially in fast moving industries 15 Robin.Teiglandhhs.se Avoid creating information junkyards Building knowledge repositories Information junkyards or Empty libraries 16 Robin.Teiglandhhs.se Physical layout Appropriate KM functions and units Cross-functional and cross-location teams Centers of excellence Institutionalized, recognized areas of expertise Socialization measures Job rotation, cross-office training programs, etc. Organizational structure for KM 17 Robin.Teiglandhhs.se Physical layout An organizations office layout reflects a companys knowledge flows 18 Robin.Teiglandhhs.se Creating centers of excellence COE HQ 19 Robin.Teiglandhhs.se San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Improving knowledge transfer through job rotation Rotated from Stockholm 20 Robin.Teiglandhhs.se Where do individuals go for help in solving problems? Co-located colleagues Intranet Non-electronic documents Internal electronic networks Contacts in other offices Firm boundary External electronic networks Internet Non-electronic documents Other contacts 21 Robin.Teiglandhhs.se Knowledge networking through communities of practice Connecting people so that they collaborate, share ideas, and create knowledge 22 Robin.Teiglandhhs.se One of the things that were struggling with is moving towards a more consistent way of doing business around the world. I think the knowledge communities are a vehicle to speed up that process. President, Montgomery Watson Harza Americas 23 Robin.Teiglandhhs.se What are communities of practice? Groups of people who come together to share and to learn from one another face-to-face and/or virtually. They are held together by a common interest in a body of knowledge and are driven by a desire and need to share problems, experiences, insights, templates, tools, and best practices. Members deepen their knowledge by interacting on an ongoing basis. This interaction leads to continuous learning and innovation 24 Robin.Teiglandhhs.se CPs are not teams or personal networks -Obligation -Job requirement -Value -Commitment - Friendship GlueGlue -Planned-Actively discovered-Serendipitously discovered Value Value CreationCreation -Organize tasks-Meetings -Informal communications -One-on-one ActivityActivity -Assigned -Defined boundary -Mostly volunteers -Permeable boundary -Friends & acquaintances -No boundary MembersMembers -Accomplish goal-Solve problems -Share info. & ideas -Expand knowledge -Share information -Friendship PurposePurpose TeamTeamCommunityCommunity of Practiceof Practice Personal Personal NetworkNetwork McDermott 2001 25 Robin.Teiglandhhs.se Communities are the grease in the KM wheel Creating knowledge Embedding knowledge Disseminating knowledge Organizing knowledge C KM 26 Robin.Teiglandhhs.se Role of communities of practice Create: Own & develop knowledge Develop & manage good practice Build organizational competence Organize: Develop & manage materials Develop tools, guidelines, templates Manage databases Disseminate: Connect people across boundaries Who knows what Home in changing organization & an uprooted society Embed: Share ideas & insights Share tacit, complex ideas & insights Help each other solve problems & find innovations 27 Robin.Teiglandhhs.se Helping Best-practice Innovation Knowledge stewarding Communities can have a different primary purpose 28 Robin.Teiglandhhs.se Community membership and roles CoordinatorCoordinator PeripheralPeripheral Core GroupCore Group ActiveActive 29 Robin.Teiglandhhs.se Two extreme communities of practice Face-to-face Virtual 30 Robin.Teiglandhhs.se Communities cross all boundaries CompanyCompany SuppliersSuppliers CustomersCustomers CompetitorsCompetitors 31 Robin.Teiglandhhs.se Organization Dont forget to support informal external networks at the individual level! Electronic communities Partners Customers and suppliers Previous work and school colleagues External Large portion of new ideas and formal collaboration relationships come from personal external contacts 32 Robin.Teiglandhhs.se Encourage an open innovation attitude Not all the smart people work for us. We need to work with smart people inside and outside the company. The smart people in our field work for us. If you create the most and the best ideas in the industry, you will win. If you make the best use of internal and external ideas, you will win. Closed attitudeOpen attitude Chesborough 200333 Robin.Teiglandhhs.se Examples of communities of practice at Ericsson CommunityType and Members ObjectivesCommunication channel eRelationship Vodafone -Inter-organizational -1400 members in 10 countries -Use internet to design joint e-business platform -Virtual Competence Groups -Intra-organizational -200 members in 14 countries -Ensure sharing of best practices and commonality - Primarily face- to-face Ericsson Foresight - Inter-organizational including universities, experts, & institutions - 600 with core of 40 - Think tank on emerging trends in society, technology, & consumers - Virtual and face -to-face Ericsson System Architect Program, ESAP - Intra-organizational - 20 members from 14 countries -Facilitate inter-project learning and innovation -Retain key individuals Primarily face-to -face Magnusson & Davidsson 200434 Robin.Teiglandhhs.se Ericsson Competence Groups Background and objective To improve knowledge sharing between Flow Control centers worldwide that responsible for order fulfillment and complete order flow Organization 14 Competence Groups focused on one Flow Control function each, e.g., forecasting, invoicing, consisting of one member from each of 14 Flow Control Centers worldwide Each CG headed by one leader who devotes 30% of time to CG Activities 14 CG leaders meet once a month and all CG members meet 3-4 times a year at 2 day seminar Develop common terminology and processes Discuss process improvements and how can be implemented Monthly phone conferences to discuss ongoing work Critical success factors Well designed organization All allowed to contribute and suggest improvements Magnusson & Davidsson 2004 35 Robin.Teiglandhhs.se Country 1 Country 2 Country 14 1. Process & IT 2. Order mgt 14. Customer care Function Countries Ericsson Competence Groups for worldwide Flow Control Centers 3. Forecasting CG Function Leaders 14 leaders meet monthly Work 30% on CG CG Function Members 2 day seminar 3-4 xs/year Monthly phone conference Work 3-5 days/mth on CG Program Manager Coordinator Web Assistant Magnusson & Davidsson 200436 Robin.Teiglandhhs.se Cap Gemini NCN MS Electronic Community Background and objective To provide programmers working with Microsoft products a forum to help each other solve problems Organization 345 programmers across Nordic countries Activities Helping each other through posting questions and responses on listserv nicknamed “L2A2L” (Learn to ask to learn) Critical success factors “Eldsjl” one who burned for community and walked the talk High level of reciprocity 37 Robin.Teiglandhhs.se An organizations structures, systems, and practices that facilitate with the goal of enhancing the organizations competitiveness Global strategy What is knowledge management? Creating knowledge Embedding knowledge Disseminating knowledge Organizing knowledge C KM 38 Robin.Teiglandhhs.se What is your organizations KM vision? British Petroleums KM Vision BP knows what it knows, learns what it needs to learn, and uses knowledge to create overwhelming sustainable advantage. 39 Robin.Teiglandhhs.se In global organizations KM is increasingly complicated Three types of boundaries Internal Geographical (physical & cultural) Organizational (horizontal & vertical) External Organizational (formal & informal relationships) Robin.Teiglandhhs.se and difficult to achieve. Gupta & Govindarajan 2000 Number of subsidiaries providing and receiving knowledge and skills 41 Robin.Teiglandhhs.se Challenges to successful KM processes Individual level Subsidiary level 42 Robin.Teiglandhhs.se Two departments within the same firm Department 1Department 2 Higher degree of learning & knowledge sharing Poorer degree of learning & knowledge sharing 43 Robin.Teiglandhhs.se Unawareness and power games Surprise!Bottleneck Icon programmers Stockholm 44 Robin.Teiglandhhs.se San Francisco Stockholm London Brussels Helsinki Madrid Copenhagen Islands of competence despite intensive KM efforts Icon programmers Worldwide 45 Robin.Teiglandhhs.se Biggest difficulties to successfully managing knowledge in organizations Culture Top managements failure to signal importance Lack of shared understanding of strategy Organizational structure IT / Communication restraints Incentive system Lack of problem ownership Ruggles 199846 Robin.Teiglandhhs.se Biggest difficulties to knowledge transfer Changing peoples behavior Measuring value/performance of knowledge assets Determining what knowledge should be managed Justifying use of scarce resources for KM initiatives Making knowledge available Attracting and retaining talented people Mapping organizations existing knowledge Ruggles 199847 Robin.Teiglandhhs.se So, why should I share? You gotta remember that were hired to be stars here and not team players. - Researcher at one high technology firm with poor knowledge flow Sometimes I get calls from other offices. It feels weird if I dont know the person. I like to help them only if I know them. - Programmer at software multinational 48 Robin.Teiglandhhs.se Lack of awareness Not-invented-here Lack of incentive Time constraint Knowledge is power Lack of understanding Lack of incentive Time constraint What are some barriers to successful knowledge management? 49 Robin.Teiglandhhs.se Challenges with external networks Everybody knows that if you recruit one talented programmer, youll get twenty for free - Support manager with a larger Swedish Telecom company Lundkvist 2003 50 Robin.Teiglandhhs.se Loyalty Loyalty Individuals often have conflicting loyalties Organization Profession Firm boundary 51 Robin.Teiglandhhs.se Is knowledge trading good or bad for a firm? We pass over the nondisclosure agreements of different companies and trade company secrets all the time. 52 Robin.Teiglandhhs.se Who owns the knowledge? Organizational information vs. Personal expertise 53 Robin.Teiglandhhs.se What about individual performance? A high degree of participation in local communities of practice + On-time performance Creative performance 54 Robin.Teiglandhhs.se But here we see the reverse A high degree of participation in dispersed electronic communities - On-time performance + Creative performance 55 Robin.Teiglandhhs.se In summary, individuals have choices about how they use their knowledge Knowledge resides in the minds of individuals Individuals make own choices about knowledge Share openly for the benefit of the organization Protect and use only in work practice Perception that an individuals value is diminished if share knowledge Knowledge is power Protect and use only in external relationships for own benefit Knowledge leakage Leave the firm and take knowledge with them 56 Robin.Teiglandhhs.se and most importantly, management cannot mandate social relationships Jan LarsPia Anna Nils Bill Erik Mike Al Alex John Eva Hans Miguel Paul 57 Robin.Teiglandhhs.se Challenges to successful KM processes Individual level Subsidiary level 58 Robin.Teiglandhhs.se A constant local vs global tension We do not want to be managed in our choice of competence elements. We would want to select those elements that we need. Line Manager, Ericsson Norway Spontaneity and creativity could be the losers in some areas by implementing global solutions. However, the “Best Practice” policy in Ericsson concerns capturing good ideas, which of course may come from other areas in the organization. HR Manager, Ericsson Norway Hustad & Munkvold 200559 Robin.Teiglandhhs.se Conflicting demands on subsidiaries lead to resistance to global KM processes Sub7 HQSub10 Sub9 Sub8 Sub11 Sub3 Sub5 Sub4 Sub1 Sub2 Sub6 Sub14 Sub14 Sub13 Opportunity cost of time Opportunity cost of resources Not-invented-here Knowledge is power 60 Robin.Teiglandhhs.se Internal turf wars It would have been much easier for me to transfer from the New York office to the California office if I had just quit the organization in New York and then reapplied for a job in the California one. Researcher, Xerox California 61 Robin.Teiglandhhs.se The challenge of knowing what is best practice Evaluation of Market Practices Firm A Subsidiaries self-evaluations 3210-1-2-3 Corporate managements evaluations 3 2 1 0 -1 -2 -3 Evaluation of Market Practices Firm B Subsidiaries self-evaluations 210-1-2-3-4 Corporate managements evaluations 3 2 1 0 -1 -2 -3 Here one knows Here one does not know Arvidsson 2002 62 Robin.Teiglandhhs.se Global strategy Aligning operations increases success Competence Management Motivation Management 63 Robin.Teiglandhhs.se Supporting global KM processes Competence Management Motivation Management Providing the organization with the right mix of talent to meet existing and future needs Creating an open, knowledge sharing culture with a high degree of company loyalty 64 Robin.Teiglandhhs.se A variety of tools Competence system Recruiting Incentives Networks A visionary organization Competence Management Motivation Management 65 Robin.Teiglandhhs.se Creating a competence management system Standardization Create common structure and terminology Define professional, business, and human competencies related to global strategy and KM goals Dont underestimate this task!Dont underestimate this task! Analysis Personal development discussions Mapping of present and future target competence levels for individuals and then for business units Defining competence gap at both levels Planning and implementation Prepare competence development plan Implement and
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