Summary knowledge management

Need for Knowledge Management • “Knowledge
has
become
the
key
resource,
for
a nation’s
military
strength
as
well
as
for
its economic
strength…
is
fundamentally
different from
the
traditional
key
resources
of
the economist
–
land,
labor,
and
even
capital…we need
 systematic
 work
 on
 the
 quality
 of knowledge
and
the
productivity
of
knowledge… the
performance
capacity,
if
not
the
survival,
of any
organization
in
the
knowledge
society
will come
increasingly
to
depend
on
those
two factors”
[Drucker,1994] What is Knowledge Management? • Knowledge management (KM) may simply be defined as doing what is needed to get the most out of knowledge resources. • In general, KM focuses on organizing and making available important knowledge, wherever and whenever it is needed. • KM is also related to the concept of intellectual capital. Most vital resource of today’s enterprise = Knowledge • Collective knowledge residing in the minds of the organization’s employees, customers, and vendors • Many benefits to learning how to effectively manage organizational knowledge  Leveraging core business competencies  Accelerating innovation and time to market  Improving cycle times and decision making  Strengthening organizational commitment  Building sustainable competitive advantage [Davenport & Prusak 1998] Valuation of Intellectual Capital • Consider the widening gap between corporate balance sheets versus investors’ estimates of corporate worth • Globally, knowledge-intensive companies are valued at 3x to 8x their financial capital • Case: Microsoft  valued at US$284B (July 2003)  much more than worth of its buildings, computers, physical assets  also represents estimate of its intellectual assets • Case: Microsoft’s bid to acquire Yahoo  bid of approximately US$45B (Feb-May 2008)  still undervalues Yahoo?  value of employee and customer relationship knowledge assets? Intellectual Capital: Human vs. Structural Capital • Human capital  The body of knowledge the company possesses  Knowledge in the minds of Microsoft and Yahoo’s software developers, researchers, academic collaborators, business managers, …  Also, knowledge in the minds of vendors and customers • Structural capital  Everything that remains after the employees go home  Copyrights, customer files, business process software, databases, software manuals, trademarks, organizational structures, …  In other words, organizational capability • Intellectual capital is ubiquitous – but there are still no standard tools to manage it as an asset!