Reflective Journal for Seminar Making innovation work

Reflective Journal for Seminar

Making innovation work: knowledge creation at the intersection of technology and business models

The presentation slides available here and the Webiner is available here. Don’t miss it!

The seminar arranged by KMIRC on 10 July 2014 is mind blooming! Thanks Professor Rivadávia C. Drummond de Alvarenga Neto for bringing us the insight of knowledge management (or innovation) and business model. It brings my back to where I started KM study and review many of the lectures I have been through. And I come up with a tagline about knowledge management: to create value and Innovate.

To begin with this journal, the first thing to do is to define what INNOVATION is. Here I take the definition from the Coursea MOOC, What Managers Can Lean From Great Philosophers1). Below is a table captured from the lecture, it provides a framework to classify creativity and innovation under the tree of CHANGE.

 

Fig 1: CHANGING

[source: Lecture 1 of What Managers Can Lean From Great Philosophers (2014)]

There are 2 types of change – change in perception and change in reality (Luc 2014). Where perception is what we have in our mind (or mental model), reality is what we face in the real world. A change in perception happens at personal level and conceptual. A change in reality happens at group level, it happens slowly and bit by bit. Luc has a book about change which titled as The forgotten half of change2).

Creativity is change in perception, it requires thinking, for example, a new idea to deal with a problem, or compose a song. Creativity can be copyrighted. Innovation is to change the reality, it requires action, for example, the invention of iPod and post-it. Innovation can be patented. We have to be able to distinguish the difference between creativity and innovation.

In my opinion, both creativity and innovation can be supported by information management and knowledge management. As asked by Prof Riva during the seminar, what do we want to achieve with KM? I agree with his answer, “to innovate”, and I would like to add on top as a sum of the above, “to be creative.”

Apart from the presentation slides, below is written on the white board when knowledge management was under discussion.

KM strategy à

Execute  à

Tools  à

Measurement

Sensemaking /

Knowledge creation à product, service, process

Social behavior unchanged

Cop / network / storytelling

Tangible /

Intangible / Matrix result

I made some research and reformed the raw idea into the table below, following with explanation from left to right (KM to Innovation management).

Knowledge management

Innovation management

Vision à

KM strategy à

Execute  à

Measurement

 

 

Formulation of KM strategy which supports/aligns with company vision

Sensemaking

 

change management / cultural change

Tangible /

Intangible / Matrix result

Knowledge creation à product, service, process

Tools at different stages

Knowledge audit / Knowledge Diagnostics / Knowledge map / Gap analysis

 

Benefit analysis / Systems thinking

 

Cop / network / storytelling / Follow through / Dialogue / Coaching / social operating mechanisms

Balanced score card / Intangible asset monitor

Idea banks / Value-chain management / Lead User Method / Competitive Intelligence

Deliverables

KM strategy / Knowledge inventory

KM initiatives and implementation / Action plan to fill knowledge gap

KMS: Knowledge-supportive mentality, organizational architecture and technical architecture

Knowledge assets: employee’s brainpower (HC)/ customer insight (CC) / knowledge database (SC)

Innovation resources: Employee’s idea (HC)/ Networked idea (CC)/ business processes (SC)  

Table 1: KM supported innovation (William@KMP2P 2014)

General

There is no strict formula for establishing KM 3). The exact approach will vary depending on the organization. However, the critical considerations around which to develop a program are described in chapter 4 of PD 7503:2003, How should organizations tackle KM, as follow:

  • decide what is required form the KM program
  • draw up a strategy
  • understand the organization’s current knowledge
  • enable a knowledge sharing culture
  • manage the knowledge content
  • use enabling technology
  • measure and review the results

Although there is not strict formula, knowledge audit and knowledge diagnostics should carry out before implementing any KM strategies, the reason is that many KM programs fail because the companies themselves lack knowledge about KM and do not know what knowledge they possess in the organization 4). Interested parties can find out more about KM failure factors just published by knowledge-management.net in the reference list 5). It is risky for a company to implement KM strategies without knowing the current knowledge-related status.

From Vision to KM Strategy

A KM Strategy is simply a plan that describes how an organization will manage its knowledge for the benefit of that organization and its stakeholders. To do this, KM needs to be closely aligned with the overall organizational strategy and objective 6). Organizations must strategically assess their knowledge resources and capabilities, and they need to broadly conceptualize their knowledge strategy to address any gaps. An organization’s knowledge strategy must then be translated into an organizational and technical architecture to support knowledge creation, management and utilization processes for closing those gaps 7).

There are some generic KM strategies such as best practices, CoP, Codification, Personalization, etc, which are not covered in this article because the application for those strategies is case by case, and the conditions for adoption are tremendously various. Rather, the 6 knowledge processes, namely knowledge creation, knowledge acquisition, knowledge sharing, knowledge retention, knowledge validation, and knowledge transfer, are referred as basic KM strategies in order to make it easier to digest. Except for knowledge sharing which should be embedded in the organization culture for all cases, other 5 knowledge processes can be chosen as a KM strategy depending on the actual needs of the organization. Please note that the knowledge processes are not mutually exclusive, the ideal for most companies is to maintain a balance between the chosen mixes for their own goods.

Benefit analysis can be used to assist formulation of KM strategy, it is an integral part of conceptualizing what needs to be done, and in particular what needs to be performed collaboratively4). It helps to visualize the value preposition of knowledge in an organization. Attention should be drawn to the fact that benefit analysis would lost its comprehensiveness without the ability to see the organization (system) as a whole and therefore systems thinking8) is essential for benefit analysis.

Last but not least, let’s revisit below interaction between knowledge audit, knowledge goals (strategy), and different knowledge processes suggested by Professor Uwe Wilkesmann which provides flexibility to establish KM.



 

Fig 2: knowledge management life cycle

[source: Lecture of Organizational, motivational & intercultural aspects of knowledge management (2009)]

Execution

Putting execution as one of the main steps for KM is inspired by the book Execution, the discipline of getting things done, coauthored by Larry Bossidy and Ram Charan (2002), who described execution as a discipline, and it is integral to strategy. Don’t confuse execution with tactics. Execution is a systematic process of rigorously discussing hows and whats, questioning, tenaciously following through, and ensuring accountability 9).

There are many literatures about CoP, coaching and storytelling which will not be discussed in detail. Rather, some very important ideas are taken from Larry & Ram to support execution is worth to visit as follow:

Follow Through

Follow-through is the cornerstone of execution, and every leader who’s good at executing follows through religiously. Never finish a meeting without clarifying what the follow-through will be, who will do it, when and how they will do it, what resources they will use, and how and when the next review will take place and with whom. And never launch an initiative unless you’re personally committed to it and prepared to see it through until it’s embedded in the DNA of an organization.

Social operating mechanisms  

Most efforts at cultural change fail because they are not linked to improving the outcomes of the business. To change a company's culture, you need a set of social operating mechanisms that will change the beliefs and behaviors of people in ways that are directly linked to bottom-line results. Social operating mechanisms are where the beliefs and behaviors of the social software are practiced consistently and relentlessly (it fosters an environment for knowledge sharing and build shared vision 8)).There are four keys to creating the type of behavior that supports an execution-driven culture: link rewards to performance, develop the social software of execution, recognize the importance of robust dialogue, understand that leaders get the behavior they exhibit and tolerate.

Dialogue

Robust dialogue makes an organization effective in gathering information, understanding the information, and reshaping it to produce decisions. It fosters creativity. Ultimately, it creates more competitive advantage and shareholder value.

Measurement

According to chapter 3 of CWS 14924-4:2004, How to measure KM: Strategies and tactics, the following steps were outlined 10):

  1. define your goals
  2. identify the stakeholders for your measures
  3. define the measures
  4. decide what data will be collected and how it will be collected
  5. analyzing and communicating the measures
  6. review your combination of measures

And some additional tips 10):

  1. be sure that you are measuring for a specific purpose
  2. be sure that follow up actions will be taken as a result of your measure
  3. focus on what is important, don’t try to measure everything
  4. try not to create something new, use existing KPI

After practicing KM through the 4 steps, knowledge is now in the form of knowledge assets at the final stage. Measurement helps to determine the knowledge status after implementation of KM. It should be noted that KM cycle starts over again with periodic knowledge audit as a subsequent procedure after measurement; this is the KM life cycle shown in Fig 2.

A knowledge asset is an asset that is generated from an organization's experiences or innovation that can be turned into actual physical assets like wealth in the future. In many cases, a knowledge asset is an intangible piece of information. That information can come from the company's past experience in any numbers of areas. On certain occasions, the asset may come not from experience but from some sort of innovation created by someone on the company's workforce.

 

Fig 3 Knowledge Asset

S=Socialization; E=Externalization; C=Combination; I=Internalization

[source: http://alistair.cockburn.us/Nonakas+knowledge+assets+categories]

Supporters and sponsors will be happy to see their return on investment in the form of knowledge assets although it is still yet to be commercialized, it is ready to move on to the stage for innovation. KM provides the right environment and culture for employees to facilitate knowledge sharing and eventually activate the natural process of knowledge and value creation. Innovation Management (IM) transforms knowledge assets into applied knowledge, that is, a product, process, or solution that can be commercialized. Hence, the value created from KM is extracted and materialized 12).  

It should be noted that KM, IM, together with Intellectual Capital Management (ICM) are the 3 main steps of the comprehensive intellectual capital management (CICM) composed by Nermien Al-Ali (2003). This essay will not cover ICM and only talks a little bit about IM. We will go back to innovation in the next section.

Now that we are convinced KM supported innovation is one of the major knowledge goals, and it worth to spend efforts to achieve. So what’s next? How to commercialize value created from KM? Business model innovation may be an answer.

 

Fig 4 Strategic Innovation13)

Business Model: how do they make money?

A business model describes the rationale of how an organization creates, delivers, and captures value 13). A business model can be best described through nine building blocks that show the logic of how a company intends to make money. The nine blocks cover the four main areas of a business: customers, offer, infrastructure, and financial viability. The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.

 

Fig 5 The Business Model Canvas illustrated with café as an example

The Business Model Canvas describe how an organization cerates, delivers, and captures value. Embedding value proposition in a viable business model can capture value for the organization. Values Propositions are based on a bundle of products and services that create value for a customer segment.

Products and Services

This is simply

A list of what you offer.

Think of it as all the items your customers can see in your shop window

metaphorically  speaking.

 

Gain Creators

Describe how your products and services create customer gains. They explicitly outline how you intend to produce value for your customer

 

Pain relievers

Describe how exactly your products and services alleviate specific customer pains. They explicitly outline how you intend to eliminate the things that annoy your customer

Fig 6 Value proposition

I better not go too deep into business model and value proposition because the topic is still new for me, therefore the above just simply put the definition and references available. Luckily, the Coursea MOOC, What Managers Can Lean From Great Philosophers1) provided a fairly easy way to practice business model innovation and value proposition.

 

Fig 7: value preposition and business model innovation

[source: Lecture 6 of What Managers Can Lean From Great Philosophers (2014)]

Same as Fig 5, this example takes COFFEE SHOP as an example. The Product in value preposition is LATTE, MACCHIATO, etc; the Service in value preposition is SPACE (further converted as OFFICE). To leverage with the existing infrastructure, the new business model is CHARGE BY THE HOUR, provide POST-IT & PRINTER, or internet CONNCETION, etc.

This practice cuts all definitions, theories, time for training, etc. down to zero. Isn’t wonderful? The MOOC is coming again in Nov 2014, interested parties please check this out. Last but not least, the seminar covers design thinking which supports value preposition and is also a very interesting topic to be discovered. Rather not making this essay too long, I put some links and captured figure at the end of the reference list so that you can have further reading for your interest.

Thanks for your time and look forward for the next sharing!

 

William

13 Oct 2014

PS. I would be more than happy to get your feedback and comment via lim912@yahoo.com, cheers!

Please visit us at www.kmp2p.org or https://www.facebook.com/groups/kmp2p/ KMP2P (Knowledge Management from Practitioners to Professionals) is initiated and currently operated by MScKM graduates. We encourage interaction among members under an open and fair environment with no discrimination: sharing updated news in the area of KM, offering opportunities for KM practices, creating chances to meet with like-minded KM graduates and promoting KM in the society. Last but not least, we provide platform to practice KM and groom for professionals. MScKM undergraduates and graduates’ participation are entirely optional. Even though we might gain support from PolyU, which will not be liable to any responsibilities nor obligations in this community.

LIST OF REFERENCES

1) Luc de Brabandere (2014), What Managers can learn from great philosophers? Lecture 1: The forgotten half of change

https://www.coursera.org/course/businessandphilo

2) Luc de Brabandere (2007), The forgotten half of change

http://www.lucdebrabandere.com/en/bibliography

3) Technical Committee KMS/1 (2003), PD 7503:2003 Introduction of Knowledge Monument in Construction

http://shop.bsigroup.com/ProductDetail/?pid=000000000030068098

4) MscKM ISE542 Managing Knowledge (2008), Lecture 6 & 7 Knowledge Auditing

5) Alan Frost (2014), A Synthesis of Knowledge Management Failure Factors  

http://www.knowledge-management-tools.net/A%20Synthesis%20of%20Knowledge%20Management%20Failure%20Factors.pdf

6)www.4imprint.co.uk (2014), Managing Knowledge

http://www.itu.dk/people/kristianskriver/b9/Developing%20a%20knowledge%20strategy.pdf

7) Michael H.Zack (1999), Developing a Knowledge Strategy,

http://www.itu.dk/people/kristianskriver/b9/Developing%20a%20knowledge%20strategy.pdf

8) Peter Senge (1990), The Fifth Discipline: The Art and Practice of the Learning Organization  

http://en.wikipedia.org/wiki/The_Fifth_Discipline

9) Larry Bossidy & Ram Charan (2002), Execution, the discipline of getting things done

http://www.amazon.com/Execution-Discipline-Getting-Things-Done/dp/0609610570

10) CEN Workshop Agreement (2004), CWS 14924-4:2004 European Guide to good practice in knowledge management – Part 4: Guidelines for measuring KM

11) wiseGEEK.com, What is a Knowledge Asset?

http://www.wisegeek.com/what-is-a-knowledge-asset.htm

12) Nermien Al-Ali (2003), The Comprehensive Intellectual Capital Management (CICM) Approach, Comprehensive Intellectual Capital Management (pp. 65-73)

13) Derrick Palmer & Soren Kaplan, A Framework for Strategic Innovation. Blending strategy and creative exploration to discover future business opportunities

http://www.innovation-point.com/Strategic%20Innovation%20White%20Paper.pdf

14) Alexander Osterwalder & Yves Pigneur (2009), Business Model Generation

http://www.businessmodelgeneration.com/downloads/businessmodelgeneration_preview.pdf

Alexander Osterwalder (2004), The Business Model Ontology, A proposition in a Design Science Approach

http://www.softwarepublico.gov.br/file/16725408/Ontologia-de-Modelo-de-Neg%C3%B3cio.pdf

X) Paradigms on innovation, Design in teams.com

http://designinteams.com/2013/06/15/the-unbearable-lightness-of-design-thinking/

X) Toolkit to support design thinking practice.

http://dschool.stanford.edu/wp-content/uploads/2011/03/BootcampBootleg2010v2SLIM.pdf

The Business Model Canvas

http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf

 

Expiry Date: 

2017-02-09

File for download: