The Knowledge Strategy Process - an instrument for business owners

The Knowledge Strategy Process – an instrument for business owners Josef Hofer-Alfeis & Rob van der Spek Abstract The Knowledge Strategy Process (KSP) is a strategic instrument for the business owner and his/her management team, which should be integrated into the business strategy process and revisited regularly. The resulting KM action plan is a guide- line for the KM team and a very valuable contribution to the company’s KM road- map that is strengthened by the buy-in of the management team through the KSP. A knowledge strategy for a business is defined by the business owner and his man- agement team in six steps. These steps lead from the currently most relevant busi- ness perspective for the near future, related key performance indicators and knowledge areas to assessing the “knowledge area state” (as-is and to-be) in pro- ficiency, diffusion and codification, based on a comprehensive understanding of “knowledge” in the business. Finally, KM actions are defined to achieve to-be states for prioritized knowledge areas yielding state-of-the-art KM solutions, with the latter being focused by busi- ness objectives and orchestrated across all knowledge-related management disci- plines. The method as well as experiences from the KSP’s applications in Siemens AG is described in detail. The procedure in a KSP project, lessons learned, integration with measurements and further developments support the application of the meth- od in other organizations. Introduction Siemens AG Corporate Knowledge Management introduced the Knowledge Strategy Process (KSP) into the corporation as a method for business owners and their teams to determine strategy and action plans. The KSP was tested as a pilot project by Siemens AG from January to October 2001 and found to be very useful. Its integration into existing strategic instruments, such as Balanced Scorecards, and into measuring tech- niques for knowledge and Knowledge Management (KM) is well underway, and the company-wide rollout is being prepared. 24 The Knowledge Strategy Process – an instrument for business owners The following findings report begins by describing the reasons why a knowledge strat- egy is an indispensable prerequisite for implementing business-oriented, well-focused and cross-functional knowledge management. It then proceeds to outline the methods and experiences from the pilot project, illustrating both processes and findings. The Knowledge Strategy Process can be used as a direct and structured way to gauge how successful knowledge management is. This is discussed below, followed by a descrip- tion of how the KSP is likely to develop and concluded by a discussion of lessons learnt and success factors. The basic principles of the Knowledge Strategy Process (KSP) method were developed by the Dutch knowledge management company CIBIT in Utrecht [1] and licensed by Siemens. The companies joined forces to refine these basics [2, 3] and are currently working together on their further development. Furthermore the basic method has been applied in various other medium-size and large companies by CIBIT. Knowledge strategy versus knowledge management strategy (KM roadmap) The Knowledge Strategy is a dedicated instrument used by business owners and their management teams to plan, implement and control management actions concerning business-relevant knowledge. The latter, both as a resource and as a product, is having a growing impact on business success. The Knowledge Strategy identifies which knowl- edge areas have an impact on the business, how strong this impact is, which deficits there are in each of the knowledge areas in terms of proficiency, codification and diffu- sion, and determines what the management feels it can do in response to these issues. A knowledge management strategy or roadmap is targeted at knowledge management managers (Chief Knowledge Officers or similar staff functions) and their cross-busi- ness responsibilities to enable KM. The KM roadmap describes the implementation, operation and standardization of basic components of KM solutions and change initia- tives. This ensures that knowledge management systems can be efficiently and swiftly introduced into organizations and thereafter effectively operated. (Our experience is that KM systems are always socio-technological systems with one or more knowledge communities as the driving force of the sharing and creating of knowledge, which are the core processes of knowledge management.) Actions that solve common issues in several knowledge areas, or across different busi- nesses are a major output of a business-specific Knowledge Strategy. These actions, in turn, are a valuable requirement input to the KM roadmap of the Chief Knowledge Officer (CKO). Nevertheless, actions that concern only business-specific knowledge issues have to be implemented by the related managers in this business. The KM roadmap may also contain actions which, from the CKOs perspective, are con- sidered essential to enable KM solutions in the future, but which are not yet required by a knowledge strategy. 25 The Knowledge Strategy Process – an instrument for business owners The difference between a knowledge strategy and a knowledge management roadmap also becomes clear if one recalls similar pairs of planning instruments for other impor- tant business factors, such as products, customers or quality. For example, top manag- ers naturally have a product strategy, but they expect a product management strategy from the relevant product managers. Why have a knowledge strategy and how is it formed? Many KM projects have been and are bottom-up initiatives. Generally speaking, spe- cialists or middle management, human resources managers, I&C managers or process managers are convinced that they will reap benefits if their unit has a knowledge man- agement solution, which they usually create themselves or together with consultants. Experience has shown, however, that whenever considerable resources and investments for KM, or business and organizational transformations become necessary, or when- ever the business situation becomes tougher, business owners usually prove unwilling to truly support the effort. Studies of knowledge management obstacles or success fac- tors demonstrate this again and again. [4, 5]. In most cases, the greatest obstacles dis- appear and crucial success factors are guaranteed if the management (the business owner and his team) is able to design, align and monitor knowledge-related manage- ment activities according to its strategic perspective and business experience. In other words, when the business strategy incorporates the essential features of a knowledge strategy, success is guaranteed. This is precisely what a knowledge strategy process (KSP) does: it guides people in order to define the relationship between business devel- opment, key business indicators and the necessary knowledge areas (for knowledge portfolio, see the pilot example). It furthermore determines the actual and target sta- tuses of these knowledge areas (for Knowledge Status Guide, see the pilot example). Based on their understanding of the business, the management and specialists then use the KSP to draw up an action plan for knowledge-related management actions in their own language. The resulting projects are then drafted and implemented – with the cooperation of an interdisciplinary knowledge management team and a KM consultant, if required. Thus orchestrated and state-of-the-art KM solutions can be achieved. All this serves to secure the management's engagement and leads to a situation where suc- cess can be directly monitored by reviewing the various specified actions, objectives and impact relationships in the knowledge strategy. The above means, firstly, that KM projects will be oriented towards business objectives and that KM resources will be concentrated wherever they will have the greatest impact within the company. For example, people will use the KSP to determine where a knowledge community should be strategically supported, or where knowledge man- agement instruments should be implemented to have the greatest business impact. Sec- ondly, the potential beneficial synergies could be exploited and organizational ineffi- ciencies avoided if KM and the other major knowledge-related management disciplines – e.g., human resources and continued education, I&C technology, organization and 26 The Knowledge Strategy Process – an instrument for business owners process management, but also strategy, research and innovation – cooperate to create KM solutions and solve problems. These benefits are essentially due to the comprehensive knowledge model upon which knowledge management and the KSP at Siemens are based [for basics see 6] and which embodies the guiding principle: “all business-relevant knowledge is distributed”. The basic comprehensive knowledge model The key dimensions of knowledge, which can be used to identify the actual or target status and any potential action needed, are: • Proficiency (abilities, skills and expertise), which are always tied to particular people • Diffusion, which reflects to what degree abilities and expertise are distributed and how the processes for distribution and networking are working • Codification, which conveys to what extent and how knowledge is documented or expressed in some other way. For example, consider the multifaceted knowledge required to run a fine French restau- rant. Although a great deal depends upon the chef and his or her outstanding expertise, the final result is also determined by the knowledge to be found in his or her team of cooks and the networks of the suppliers and customers.