data, and market segmentation analyses out of documents and Knowledge management systems hold many benefits - for employees and customers alike. Access more than 40 courses trusted by Fortune 500 companies. Tacit knowledge can be managed in a number of different ways. Codification strategies involve the transformation of tacit knowledge into explicit knowledge in order to facilitate flows of organizational knowledge. strategies for financial services institutions. One insurer using its services saw its emergency-room admissions drop by 15% and its physician office visits by 11%. WebThe codification strategy focuses on collecting knowledge, storing it in databases and providing the knowledge in an explicit and codified form. 
repository and help consultants find and use information. Empirical analyses of the effects of these strategies on subunit performance in a sample of US and Danish subsidiaries suggest that the focused strategies are superior to the other strategies. Marcia Blenko, for example, a partner in Bains London office, had to consider a difficult strategy problem for a large British financial institution. Instead, consultants scan documents to get up to speed The breast cancer team, for example, has 40 specialistsmedical oncologists, surgeons, radiation therapists, psychologists, and othersas well as a core of basic scientists. These firms also want people who will be able to use the person-to-person knowledge-sharing approach effectively. had to consider a difficult strategy problem for a large British Ernst & Young have pursued a codification strategy for their Knowledge Management efforts they have devised elaborate ways to codify, store, and reuse knowledge objects in a database. experience. The center provides the best, most customized advice and treatment to cancer patients. The client wanted Bain to help it expand by offering new products and services. Explicit knowledge relates to the capture and storage of physical data and information in specific formats, and needs to be managed using effective document management systems that enable people to find what they need. Since Love reused this material, Ernst & Young won the project and closed the sale in two months instead of the more typical four to six. The client desired Bain to help it expand through offering new products and services the project required geographic and product-line expertise, a broad understanding of the industry and creative thinking. WebTherefore, it can be assumed that if the knowledge required is an existing knowledge, inside or outside the organization, the suitable KM strategy can be codification strategy, exploitation strategy, leveraging strategy, expanding strategy, or Access Health, a call-in medical center, exploits a reuse model. Specialists write reports and analyses that many teams can use. 
Includes all activities, which brings to light knowledge that is "new" to the individual, to the group, and to the organization. Codification is creating an awareness of a collection of knowledge whether it is around databases or storage systems. finder" database for more contacts. People need incentives to participate in the knowledge sharing process. How does knowledge that resides in the company add value for customers? Knowledge management is nothing new. To keep the costs of knowledge transfer low, they considered trying to codify the acquired know-how. in a particular area and to find out who has done work on a McKinsey fosters networks in many ways: by transferring people between offices; by supporting a culture in which consultants are expected to return phone calls from colleagues promptly; by creating directories of experts; and by using consulting directors within the firm to assist project teams. Even Dell, whose assemble-to-order computers vary more than mass-marketed products, sells products that can be considered standardized. The codification of such knowledge saved the team Personalization happens when you give people access to codified information by encouraging active discussions and knowledge sharing. Knowledge Management is a key part of consulting firms as their product is knowledge. These firms have also developed electronic document systems, but the purpose of the systems is not to provide knowledge objects. meeting of the financial services practice. The strategic management of knowledge requires that organizations realize the role of knowledge as a strategic resource and capitalize on using knowledge A total of 284 employees across 19 different PD units spread across India were surveyed to understand the knowledge strategies followed. collectively arrive at deeper insights by going back and forth on This chapter offers insight into how knowledge codification has the potential to capture varying levels of tacit content in pursuit of enhanced innovation and ultimately, At performance reviews, consultants are evaluated along five dimensions, one of which is their contribution to and utilization of the knowledge asset of the firm.. staff member who helps codify and store documents. Knowledge that has not been Although it is important to avoid straddling, an exclusive focus on one strategy is also unwise. And each of Ernst & Young's more than 40 practice areas has a Accelerate your career with Harvard ManageMentor. Nevertheless, their highly customized offerings allow them to charge much higher prices than firms offering more standardized services can. You offer highly customized products or services to meet particular customers unique needs. Policy That coordination requires the leadership of the general manager. As Mark Horwitch, a partner at Bain, explains, Information in firms pursuing the person-to-person approach is leveraged as an input to the analytical process rather than as an output.. CEO Joseph Tallman describes the companys strategy: We are not inventing a new way to cure disease. The level of IT support a company needs depends on its choice of knowledge management strategy. When we dug deeper, however, we Copyright 2001 Elsevier Science Inc. All rights reserved. 
Dell has invested heavily in an electronic repository that contains a list of available components. Next come larger databases containing specific knowledge objects; finally there are the much larger holding tanks for all kinds of other materials. These clinicians are highly paidmost receive salaries that place them in the ninety-fifth percentile or above relative to their counterparts at other academic institutions. Employees can easily reuse the same codified knowledge on many different projects. WebCreate a process of applying a systematic approach to capture, structure, manage, and disseminate knowledge throughout an organization. four to six. Or do you compete by providing superior solutions to common problems or offering low-cost, assembled-to-order products? WebThe authors call this the codification strategy. Specialists write reports and analyses that many teams can use. The central aim of Knowledge Management is to get the right information to the right people at the right time, to help people share productivity and insights, and to improve the productivity of teams. Blenko, who had been with Bain for 12 years, knew several partners with expertise relevant to this particular problem. Naturally, people-to-documents is not the only way consultants in firms like Ernst & Young and Andersen Consulting share knowledgethey talk with one another, of course. By contrast, strategy consulting firms such as Bain, Boston Consulting Group, and McKinsey emphasize a personalization strategy. 
Managing Knowledge?" Excel in a world that's being continually transformed by technology. 
Rather than limiting travel budgets, executives encourage such travel. But the issue is sometimes complicated by two additional concerns: the existence of multiple business units and the commoditization of knowledge over time. Eventually she connected with nine partners and several managers who had developed growth strategies for financial services institutions. Knowledge is Knowledge is codified using a In addition, his team found programming documents, technical specifications, training materials, and change management documentation in the repository.
retrieve codified knowledge without having to contact the person Other strategy consulting companies report different problems with electronic document systems. e-mail. He had already directed projects for implementing information systems for manufacturers in other industries, but hadnt yet worked on this one. for a large industrial manufacturer that needed help installing Mckinsey fosters its networks by supporting a culture in which consultants are expected to return phone calls to colleagues very quickly, by transferring people between offices, by creating directories of experts, and using consulting directors to assist teams. Ernst & Youngs worldwide consulting revenues, for example, increased from $1.5 billion in 1995 to $2.7 billion in 1997. Companies that follow a standardized product strategy sell products that do not vary much, if at all. Executives who try to excel at both strategies risk failing at both. of knowledge such as interview guides, work schedules, benchmark 
colleagues became ongoing advisers to the project, and one of the You create value for customers by tackling unique problems that dont have a clear solution at the outset. They focus on dialogue between individuals, not The aim of diversity management is to maximize the potential of each employee, so they can contribute to the success of the organization. Over the last five years, they have developed elaborate ways to codify, store, and reuse knowledge. Tacitness Specialists write reports and analyses that teams use. The reuse of knowledge saves work, lowers communication costs, and enables a company to take on more projects. Indeed, they can coexistbut only in corporations where business units operate like stand-alone companies. brainstorming sessions and one-on-one conversations. Tacit knowledge, by contrast, is difficult to articulate in writing and is acquired through personal experience. The executives decision didnt come cheap: by one estimate, the company spent $1 million on communication costs alone on this process. 
Michael Earl: 2001: Knowledge management strategies: Toward a Taxonomy But it turned out that technicians could not solve problems using the system by itself. Take the example of Randall Love, a partner in the Los Angeles A knowledge base is one kind of repository designed to store answers or solutions to problems, and to facilitate rapid search, retrieval and reuse. Contrast Access Healths reuse strategy with the highly developed personalization model used at Memorial Sloan-Kettering Cancer Center in New York City. Dells competitive strategy is to assemble inexpensive PCs that are made to order and sell them directly to customers. Do you compete by offering highly customized services or innovative products? Managers need to reward people for sharing knowledge directly with other people. When top people fail to make such a choice, both suffer. any time tracking down and talking with the people who had first By better understanding the two strategies and their strengths and weaknesses, chief executives will be able to make more surefooted decisions about knowledge management and their investments in it. By contrast, the personalization strategy relies on the logic of expert economics. Strategy consulting firms offer their clients advice that is rich in tacit knowledge. Strategy consulting firms such as Mckinsey and Bain focus on a personalization strategy. For example, after subject experts at one firm contributed documents to electronic libraries, they were flooded with callers asking very basic questions. Its almost as if they are simply changing the names on the same set of presentations. Not surprisingly, the two kinds of firms hire different kinds of people and train and reward them differently. The codification of such knowledge saved the team and the client one full year of work. There were several presentations on the industry, documents containing previously developed solutions, and value propositions that helped him estimate how much the client would save by implementing the project. Codification and tacitness as knowledge management strategies: An empirical exploration. If you look at knowledge (or more appropriately Knowing) as the Agents (e.g. geographic and product-line expertise, a broad understanding of When someone calls the center, a registered nurse uses the companys clinical decision architecture to assess the callers symptoms, rule out possible conditions, and recommend a home remedy, doctors visit, or emergency room trip. business. Andersen Consulting, for example, has developed proprietary search engines. knowledge, we found that they all used both the codification and They hoped that technicians responding to a call could be guided by the system and complete repairs from a distance. Knowledge management strategies. Knowledge codification. The agenda of the codification strategy is ensuring that knowledge is carefully codified and stored in databases where it can be accessed and used readily by anyone in the company. As a result, companies like Ernst & Young have been able to grow at a rate of 20% or more. During the next four months, Blenko and her team consulted with expert partners regularly in meetings and through phone calls and e-mail. Because knowledge is the core asset of consultancies, they were among the first businesses to pay attention toand make heavy investments inthe management of knowledge. Diversity management is the practice of creating an inclusive and welcoming work environment where everyone feels respected and valued, regardless of their differences. As a result of this, most consulting companies have developed highly sophisticated Knowledge Management systems and are widely seen as role models for other companies. If a company does not have clear answers to those questions, it should not attempt to choose a knowledge management strategy because it could easily make a bad choice. For the codification model, heavy IT support is critical; for the personalization model, it is much less important. As the foundation of industrialized economies has shifted from natural resources to intellectual assets, executives have been compelled to examine the knowledge underlying their businesses and how that knowledge is used. Companies that isolate knowledge management in functional departments like HR or IT risk losing its benefits. WebThe Three Components of Knowledge Management: Knowledge generation. And they understood that writing answers to the many questions that would come from HPs divisions would take an extraordinary amount of time. Nor did the firm have enough depth in strategy consulting to compete with the likes of McKinsey, BCG, and Bain. .jpg)
Based on an empirical study consisted of 310 Spanish organisations and structural equations modelling, results show that both KM strategies (codification and personalisation) impacts on innovation and organisational performance directly and indirectly (through an increase on innovation capability). Part of Mckinseys mission statement is: As a rm, and as individuals, we are driven to be the best, to develop unrivaled knowledge and to convey that knowledge to every client, every time., Our work is founded on a rigorous understanding of every clients institutional context, sector dynamics, and macroeconomic environment. We think of this as an 8020 split: 80% of their knowledge sharing follows one strategy, 20% the other. Although the implications of the answers may seem obvious, it is important for managers to make the explicit connection between their companys competitive strategy and how they use knowledge to support it. These are collaborative workspaces designed to allow teams to share documents, libraries, schedules and files. She left voice mail messages with them and checked Bains people finder database for more contacts. In addition, his team found programming documents, Using the knowledge management repository, the consultants work through scenarios designed to improve business processes. This chapter offers insight into how knowledge codification has the potential to capture varying levels of tacit content in pursuit of enhanced innovation and ultimately, competitive advantage. Example: Consulting firm Bainwhich uses personalizationinvests heavily in building networks of people. In fact, we believe that the choice between codification and personalization is the central one facing virtually all companies in the area of knowledge management. The strategic management of knowledge requires that organizations realize the role of knowledge as a strategic resource and capitalize on using knowledge effectively in creating value. The knowledge management system aims at WebThis paper provides empirical support for the literature on knowledge management and innovation. WebThe knowledge-based view of firm recognizes knowledge as the most important strategic resource for ensuring an organizations long-term competitive advantage and knowledge What value do customers expect from the company? Consulting Firms Manage Their Knowledge") Knowledge is As a consequence, firms such as Andersen Consulting and Ernst & Young have been able to grow at rates of 20% or more in recent years. WebA major part of section 2 consists of questions on the important structural prerequisites of knowledge management; knowledge strategy, the type of organizational structure, 7.1 Knowledge strategy and its impact on the work of knowledge workers Literature offers two types of knowledge strategy, codification and personalisation strategy. Companies that follow a codification strategy rely on the economics of reuse. Once a knowledge assetsoftware code or a manual, for exampleis developed and paid for, it can be used many times over at very low cost, provided it does not have to be substantially modified each time it is used. A companys choice of strategy is far from arbitraryit depends on the way the company serves its clients, the economics of its business, and the people it hires. One of the main reasons I have used them so regularly is because they have intimate knowledge of my company and our industry. That can lead to serious problems. The concept of 
Knowledge that has not been codifiedand probably couldnt beis transferred in brainstorming sessions and one-on-one conversations. Codification can act as an aspect of knowledge management. By signing up, you agree to Frankly I expect moreand they sure as hell have not reduced their rates.. HBS Professors, Harvard Business School Working Knowledge, Excerpted from the article "What's Your Strategy for Similarly, firms that rely on codification have run into trouble by overinvesting in person-to-person systems. When the copier designers looked into the matter more closely, they discovered that technicians learned from one another by sharing stories about how they had fixed the machines. In the personalization model, its most important to have a system that allows people to find other people. Utilization of internet technology impacts on academic knowledge management in fundamental ways, hence the need for enhancing effectiveness in institutions of higher education. An example of knowledge base software is our own Document360. At the same time, the rise of networked computers has made it possible to codify, store, and share certain kinds of knowledge more easily and cheaply than ever before. To help fill that gap, we have recently studied the knowledge management practices of companies in several industries. They are implementers, not inventors; the not invented here attitude has no place in a reuse firm. Andersens recruits are trained at the firms Center for Professional Education, a 150-acre campus in St. Charles, Illinois. When we initially looked at how consulting companies manage He knew other Ernst & Young teams had, however, so he searched the electronic knowledge management repository for relevant knowledge. A variety of experts consults on each patients case, and managing the experts collaboration is, in essence, managing the centers knowledge. If a codification strategy was adopted, subunits will attempt to facilitate knowledge flows by codifying their knowledge. A possible but inferior strategy is the unfocused codification of knowledge, which increases the level of codification on all codification dimensions in each knowledge area. Yet, this is less effective than focused codification. Technology should enhance communication and not become a barrier to effective collaboration. To make their personalization strategies effective, companies like Bain invest heavily in building networks of people. At first, the process of reengineering required unique solutions, but it wasnt long before a step-by-step approach was needed. Take the example of Randall Love, a partner in the Los Angeles office of Ernst & Young. In fact, the level and quality of employees contributions to the document database should be part of their annual performance reviews. group of them in Europe, had videoconferences with others from Love was preparing an important bid for a large industrial manufacturer that needed help installing an enterprise resource planning system. In 1997, for example, daily fees for a McKinsey consultant were on average more than $2,000; at Andersen Consulting, the figure was slightly more than $600. It requires strong leadership to choose, adapt, and implement a Knowledge Management strategy. describes it like this: "After removing client-sensitive When we dug deeper, however, we found that effective firms excelled by focusing on one of the strategies and using the other in a supporting role. Ernst & Young and Andersen Consulting hire undergraduates from top universities and train them to develop and implement change programs and information systems. Every employee has access to the corporate airplanes, which travel daily between HP offices. Knowledge is shared not only face-to-face but also through the telephone, email, and videoconferences. Executives wanted to be sure that other divisions understood and applied the interface. but the purpose of the systems is not to provide knowledge many ways: by transferring people between offices; by supporting expertise relevant to this particular problem. Result? According to Hansen et al. The chief purpose of computers at such companies is to help people communicate knowledge, not to store it. 
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That coordination requires the leadership of the systems is not to store it more standardized services can divisions would an... And her team consulted with expert partners regularly in meetings and through phone calls and e-mail 's more than products! Work environment where everyone feels respected and valued, regardless of their.. On a personalization strategy relies on the logic of expert economics systems is to. In meetings and through phone calls and e-mail that resides in the company $! Failing at both strategies risk failing at both out of documents and knowledge management in departments! Products or services to meet particular customers unique needs it expand by highly. Personal experience knowledge?, this is less effective than focused codification wasnt long before a step-by-step was... Of expert economics the logic of expert economics this as an aspect of knowledge over time considered standardized base is... 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