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Knowledge Management

Ernst & Young

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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What is Knowledge Management?

• KM: Set of inter-linked business processes to capture and provide access to an organization’s collective knowledge (Knowledge Management: Philosophy, Processes and Pitfalls, Soo, Devinney, Midgley & Deering, CMR 2002).

– Organizational learning– Knowledge storage/creation – Knowledge distribution

• Knowledge Management System: the infrastructure– IT (databases, networks, yellow pages..)– Organizational infrastructure

• processes, • contracts, • incentives, • corporate culture, etc.

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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A Production Analogy

• Professional Services – knowledge is the “core product”

• Knowledge Management– the production technology of a firm– same role as machines/factories for an automaker

• Questions: How to– improve output?– improve quality?– generate competitive advantage?

• Critical distinctions– knowledge is a credence good– knowledge can be re-used

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Disentangling the Issues

• Break-up into two related conceptual categories– Knowledge Exchange– how an organization goes about enabling exchange

of the existing knowledge within an organization• What’s your strategy for managing knowledge?

(Hansen at al, HBR ’99)• Codification, or• Personalization

– Challenges• improve efficiency

– easier location– adaptation of earlier solutions

• improve contribution (incentives, culture, etc.)

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Disentangling the Issues (contd.)

•The other complementary issue–Knowledge Creation

•leveraging the diverse experience of agents to create–conceptual knowledge– frameworks–proprietary intellectual property

•Challenges–how do you manage the talent?–Aligning the Stars, Lorsch & Tierney 2002, HBS Press

–The Dean’s Lament»I Lead, But I have no Control!

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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What to Emphasize at the Margin – Exchange or Creation?

• Knowledge Exchange– Supply-side scale economies

• lower a firm’s marginal costs of production through easier location, access, usability, etc.

• Knowledge Creation– Demand-side economies

• network externalities– the larger the pool of assignments, the more

diverse the set of engagements, the higher is the quality of a firm’s intellectual database

– increases a firm’s differentiation, consumer’s willingness to pay, and hence a firm’s competitive position

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Ability to Leverage the Customer Base

Intensity of Competition

Low

High

Low:

Highly Differentiated Firms

Knowledge Exchange Knowledge Exchange

High:

Undifferentiated Firms

Knowledge Exchange Knowledge Creation

Optimal Choice of KM System Emphasis as a Function of Competition Intensity and KM-technology Performance

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Appendix:

INFORMATION AND KNOWLEDGE MARKETS:

Can knowledge be sold as a product?

Can new talk about an emerging industry?