Knowledge Management Paradoxes - Electronic Journal of ...

Knowledge Management Paradoxes Jan Aidemark Växjö University [email protected] Abstract: Knowledge management, as an academic area, is maturing; however, there are still problems connected with both the diversity of the theoretical base and the gap between theory and its practical application. In this paper we tackle these problems by reviewing a number of basic knowledge management theories with the intention of formulating a more integrated and at the same time practical planning framework. The focus guiding the literature selection is on basic theories about the nature of knowledge management, theories that expose the complex nature of knowledge in organizations. We examine these theories and try to understand what could be perceived as the paradoxical nature of these theories. Here we understand a paradox as something seemingly self-contradictory though perhaps actually wellfounded statement. We focus on four areas or themes: 1) knowledge as the key resource of a business, 2) knowledge as a competitive force and source of growth, 3) the nature of the management of a knowledge resource, and 4) the management of knowledge workers. From a practical point of view, the conflicting arguments of these theories can be seen as possible strategic options. Based on these discussions we then formulate a framework, or what might be called a strategic option generator. As a concluding discussion we focus on the contribution of IS/IT to the realization of the different possible strategic options. This is done on a rather general level, where we examine the possibilities of IS/IT in relation to the paradoxes. Keywords: knowledge management, theoretical paradoxes, planning framework

1. Introduction Knowledge management, as an academic area, is maturing; however, there are still problems connected with both the diversity of the theoretical base and the gap between theory and its practical application. In this paper we tackle these problems by reviewing a number of basic knowledge management theories with the intention of formulating a more integrated and at the same time practical planning framework. Knowledge management projects that do not bring full satisfaction are reported frequently (Rigby, 2001; Rigby and Bilodeau, 2005). The main reason seems to be connected with the personal and situated nature of knowledge (for example, Blackler, 1995; Swan et al., 1999), which makes it hard to use IT support for KM (Mcdermott, 1999). There seems to be a general idea that if we incorporate the human dimension into our KM projects, things will get better. In this paper we investigate this idea more closely by following the basic assumption of the human-oriented KM track.

2. Background theory and research approach 2.1 Background theory Different views in an organisation on knowledge management can be a source of problems and failed knowledge management projects (De Long and Seemann, 2000). It can be a question of deliberate political strategies in the organisation or in actual problems connected to the nature of knowledge as a resource and to the management techniques that are used. However, what is central to failed knowledge management projects are that there are both a great many ways of conducting knowledge management and even more ways of describing them. The KM area contains numerous contradictions, Schultze (1998). In this article it is argued that the tacit/explicit dimension of knowledge is central to understanding problems built into the KM area. The paradox explored by Schultze could be summarized as "the attempt to manage knowledge could destroy an organisation's knowledge advantage" (Schultze 1998, p 155). Some approaches to knowledge management focus more on how knowledge work can be controlled while others focus more on how individual people or groups of interest can be creative and solve problems. The study shows that most approaches have built-in contradictions that must be handled if applied. There have been several attempts to bring some order into the different possibilities. In Earl (2001) three general types of strategic approaches to knowledge management are examined. These include technocratic, economic and behavioural approaches, which are in turn subdivided further. This framework aims at helping managers to understand the broad span of possibilities offered by knowledge management. In Truch and ISSN 1479-4411 1 ©Academic Conferences Ltd Reference this paper as: Aidemark, J. “Knowledge Management Paradoxes.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 1 - 10, available online at www.ejkm.com

Electronic Journal of Knowledge Management Volume 7 Issue 1 2009 (1-10)

Bridger (2002) we find arguments for a need of a strategic fit between the company’s business strategy and the approach to knowledge management. A knowledge management strategy should be defined on the basis of the business environment, knowledge resources and business strategy Efforts to integrate the area have also been made, for example by Holsapple and Joshi (2003) who present an architecture for knowledge management. The central idea is expressed as follows: a knowledge resource is manipulated by knowledge activities under the government of knowledge management influences in a process initiated by the recognition of a knowledge need that ends in learning. The model does capture the complexity of knowledge management, and also includes a number of different aspects of knowledge management. However, the different parts are not really examined as to how they are interconnected or interdependent. To illustrate this, two examples can be examined from the “knowledge episode framework”. First the view of “knowledge resources”, where six distinct types of resources are defined. Each of them is detailed with definitions and examples. However, these resources are also interrelated or might refer to different ways of understanding the same phenomena. The second example comes from the “knowledge management influences” aspect. Here three major influences are interconnected in a triangular model. The main part of this aspect of the managerial component is defined as leadership, control, coordination and measurement. However, when it comes to relations to the other two components the discussion becomes much vaguer. Hansen et al. (1999) argue that the company must make a choice between a codification and a personalization strategy. The first is focused on coding knowledge into databases, supporting the re-use of knowledge and growth. The codification strategy, based on an objective knowledge view, is a way of using a database system to save the knowledge of the organization, for example that of the employees. The knowledge of the organization’s operations will then, it is hoped, not disappear when employees disappear, which thus help new employees to take on will work faster. Standard products could be supported by cognitive processes and a codification knowledge management strategy. The personalization strategy focuses on the communication of knowledge on a personal level, supporting creativity and the customization of products. An example of this is found in Nonaka and Takeuchi (1995) with the theory of organizational knowledge creation (OKC). Here knowledge is seen as something basically human, and it is by the presence and actions of individuals that knowledge is created and distributed. Unique products developed for individual customers are associated with social knowledge processes and a personalization strategy towards knowledge management. The contribution of the OKC theory is concerned with how a personal skill is transformed into customer value and a profit for the company. Snowden (2002) argues that to resolve these difficulties we must work with both approaches simultaneously. Snowden sees knowledge as something paradoxical and suggests that it should be seen as both a thing and a flow of actions, and that these need different management approaches.

2.2 Research approach The aim of the paper is to investigate the foundations of this either-or approach to knowledge management. We choose to focus on the personalization approach, mostly because of its role as an alternative and because of what is lacking in the traditional (codification) approach. The focus guiding the literature selection is on basic theories about the nature of knowledge management, theories that expose the complex nature of knowledge in organizations. We examine these theories and try to understand what could be perceived as the paradoxical nature of these theories. Here we understand a paradox as something seemingly selfcontradictory though perhaps actually well-founded statement. We focus on four areas or themes: 1) knowledge as the key resource of a business, 2) knowledge as a competitive force and source of growth, 3) the nature of the management of a knowledge resource, and 4) the management of knowledge workers. From a practical point of view the conflicting or double-edged arguments of these theories can be seen as possible strategic options. Based on these discussions we then formulate a framework, or what might be called a strategic option generator.

3. Knowledge as the key business resource There are many reasons why a business is successful, and it is safe to assume that it is always due to a combination of the factors involved. Nevertheless, the idea of one factor being the decisive one, such as knowledge, might be true in the individual case. So here we are looking at potential factors for success, the knowledge resource being an obvious candidate.

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3.1 What firms do The first investigation is based on the theories presented in the paper “What firms do” (Kogut & Zander 1996). The argument of the paper starts from a “traditional” view which concludes that firms exist because they are better information processors than markets. If this were not true, all transactions would take place on a market. When coordination and communication are cheaper within a firm than transactions on a market, the firm will have a reason of existence. While this is of course a very simplified and much debated explanation, it is a good starting-point. It is a good backdrop to the discussion of one alternative, i.e. the knowledge resource view. One of the problems of the traditional theory, as pointed out by Kogut and Zander (1996), is its view of ownership and self-interest as driving forces. These are the motivations for action for everyone on the market and within the company. Kogut and Zander describe this “market view” as an unsocial society view of the company. In contrast to this view, Kogut and Zander (1996) claim that there are three reasons why a company is successful: ̇ The way the company coordinates its activities ̇ The way the company facilitates communication ̇ The way the company supports learning, learning here implying knowledge creation or the combination into new knowledge. All these items might be seen to fall within the information view of the firm. However, the key difference lies in the driving-forces behind all these three, as argued by Kogut and Zander. Coordination, communication and learning work because people have a need of belonging to a society. When it comes to the knowledge/learning part, these processes depend on the existence of social knowledge. Knowledge and learning are situated, both in location and in identity.

3.2 Identities, moral order and the division of labour Identities contain moral systems and rules of exclusion, that is rules for what to do or not to do. A company coordinates various kinds of expertise, using different principles of division of labour. Each person specializes in performing a small part of the value creation of a product. This division of labour is the basis of the formation of personal identities, social knowledge and the creation of shared identities. Kogut and Zander (1996) argue that in order for the division of labour to work effectively a moral order is required. The moral order is based on organic solidarity in which the individual identifies with society, i.e. the need of belonging. Shared identities create a set of preconditions (established rules for communication and coordination) that make co-ordination and communication cheaper and thus enable learning.

3.3 Paradox 1: Identities as a key to company success? The basic argument is that the success of the three driving-forces for enterprized can be sought in well working shared identities. Shared identity in particular is the key to effective organizational learning. However, this picture has its reverse side. There are problems connected with strong identities. Kogut and Zander argue further that a strong moral order and rules of exclusion, controlling learning, might be a hinder for innovation. We can formulate a paradox based on this: “Identity creates lower costs for learning but makes it harder to innovate”. One might argue here that the business lifecycle consists of different parts, i.e. that the company starts out as a diverse organization that creates new ideas and changes frequently and then matures into a productive company with a strong identity. It is the double-edged nature of the common identity and the shared social knowledge that carries the paradox. The problem is: Where would the new ideas (that are to be shared and used) come from, if everyone sees the world in the same way, thinks the same or comes from the same background? Do we buy new knowledge on the market, hire new people, or hope that someone shows signs of rebellion, or what would the driving force be? If we do any of these things, how do they become part of the shared identities of the company that makes it work well? In a stable and unchanging world this might be less of a problem; however, today’s business reality is far from stable.

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To expand on this aspect, one might think in terms of the phrase “diversity is a companion of creativity”. Some work has been done on this theme, as reported by Florida (2005). The book Cities and the Creative Class (Florida, 2005) presents a number of studies which focus on the relationship between diversity and the success of regions or cities. One study presented in Florida (2005) tracks the relationship between “Bohemia” and creativity. The Bohemian concept implies that there exist in the city a number of subcultures that have a clear place in the broad schema of the city. The basic outcome of this study shows that the higher the Bohemian index for a city, the higher the number of high technology companies in that city.

4. Knowledge and the growth of firms In Kogut and Zander (1992) the problem of how a company grows in size is discussed. The source of the problem is connected with learning processes and the way knowledge is spread throughout the organization. The basis for growth is assumed to be that of more people in the organization learning and making practical use of the core knowledge of the organization.

4.1 Knowledge as information or know-how The key to the discussion is based on distinguishing how to understand the concept of knowledge. The first perspective is “knowledge as information”, i.e. knowledge as a declarative statement/description of a current state, a fact. The alternative view, “knowledge as know-how”, focuses on the procedural nature of knowledge, i.e. knowledge that describes a process of how to perform actions. “Two further dimensions of knowledge are discussed: codifiability and complexity. The first is about the possibility of expressing knowledge as a number of instructions that stand by themselves without the help of the source, whereas the latter concerns the number of components that knowledge consists of. There is also a question of where there exists knowledge, on a personal or on an organizational level.

4.2 Replication and imitation Kogut and Zander argue that there is a connection between the nature of knowledge and the way a company can grow. From a knowledge perspective it will grow when the same knowledge can be used over and over again. In practice this means knowledge transfer between people in the organization. That is, knowledge can be replicated again and again by new people. The problem is that knowledge which is easy to replicate within the company is also easy for other companies to replicate; however, when another company does this, it is imitation, according to Kogut and Zander. Here we find a difference in the nature of knowledge as discussed above. In short: knowledge as information is easier to replicate than knowledge as know-how. The argument is that know-how is personal, complex and hard to codify; this could be labelled “the inertia of knowledge”. It is the inertia or stability of social relationships, the social knowledge of the organization that makes the organization successful.

4.3 Paradox 2: The inertia of know-how The second paradox builds on this insight: the easier a piece of knowledge is to replicate, the easier it is for competitors to imitate that knowledge. This entails some consequences for the organization, for example: the more codifiable knowledge, the less strategic advantage it holds, i.e. any other company can get hold of it. It is the uncodifiable, personal, situated and complex knowledge which is hard to imitate that is of high strategic value. At the same time we have a fast-changing business reality, where staying the same is no option. We might therefore extend the paradox into: “The inertia of know-how makes it hard for a company to use their most valuable resource when the company tries to become larger”. Scrutinizing the strategies suggested above, the general direction is to look outside the organization when it comes to change or renewal. It seems that strategies that focus on the personal, tacit and social aspects of knowledge-based competition also encounter problems in creation or growth, as the first two paradoxes indicate.

5. Management of knowledge resources A great deal of the discussion in the two first paradoxes trails back to the nature of the resource. What is important about these discussions is that they bring out the basic assumptions. For example: “learning based

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on social interaction is the key to a company’s success”. This leads to the question: How can this resource be managed?

5.1 Is knowledge manageable? Management implies a control over something. If this “something” is hard to describe or measure, it becomes harder to manage. As argued above, knowledge represented as information could be managed. However, if we follow the know-how track, the situation becomes more complicated. Tsoukas (1996) discusses the management of knowledge in terms of social and situated phenomena. His basic argument is that there is no single person or agent that controls or has a complete view of the company’s knowledge resource and how it is to be used. A company’s knowledge system is distributed among a group of agents. Tsoukas pins down the nature of this distributed knowledge system to three characteristics: role-related normative expectations, dispositions as the result of past socializations, and local circumstances of time and place. A company might be able to have some influence on norms, but it is hard to control or even know about the particulars of socializing and the where and when of people using knowledge. In this view, knowledge in an organization is an emergent phenomenon. This means that the knowledge system does not exist but evolves over time as a result of the actions of individuals. To make detailed instructions in advance is thus impossible, since knowledge does not exist in advance.

5.2 Paradox 3 Based on the discussion we can conclude a third paradox: Paradox 3: The more personal knowledge is, the harder it is to manage. The more manageable, i.e. the more like information it is made, the less valuable it becomes. Following the arguments above, we can again conclude that the more manageable we make knowledge the less strategic value it will have. The management of knowledge (of strategic importance) is a paradox. Instead, Tsoukas argues, we should see knowledge management as the management of a number of distributed knowledge processes. We manage the environment of the knowledge workers, not knowledge as such. The central instrument for this is forming organizational norms and facilitating the interaction of individuals. In the end the concern is how individuals exercise their judgment about how to use norms or rules. In practice this means to hire the right people and to construct work routines and incentive structures. And, as Tsoukas mentions, to develop organization norms that lead these knowledge activities in the right direction. However, these solutions have been studied closely, as is investigated in the next section.

6. Management in knowledge- intensive firms 6.1 The nature of a knowledge-intensive firm A number of articles (Alvesson, 2000; Alvesson, 2001; Alvesson and Kärreman, 2001; Kärreman and Alvesson, 2004) examine how knowledge-intensive firms handle their central resources, i.e. their knowledge. Knowledge-intensive firms include, for example, consultancies /the business service industry, and they all have their knowledge resource embodied in their consultants. However, there is no clear criterion of when a company begins or stops being “knowledge-intensive” (Alvesson, 2000; Alvesson, 1993). Most firms have their share of these problems. Knowledge management in firms of this type tends to become a way of management, that is a way of controlling members of the organization rather than supporting knowledge processes (Alvesson and Kärreman, 2001). The knowledge processes are far from any administrative of managerial control whatsoever, as argued by Alvesson and Kärreman (2001). Knowledge management becomes an oxymoron if it tries to manage the unmanageable. On the other hand, if it is a management strategy, it should be more candid about that or it will be conceptually misleading. Here we are refocusing on the managing part of knowledge management. There are a number of issues when it comes to managing knowledge workers. The central issue that these firms are confronted with is if a consultant leaves the organization (Alvesson and Kärreman 2001). Consultants may defect, taking tacit knowledge and clients with them. To manage a situation like this is complicated. Alvesson (2001) points out three types of problems or problem areas: ̇ The consultant/client bond is strong, the consultant identifying with the client

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̇ ̇

It is hard to monitor consultant work Consultants have a strong professional identity

To deal with these problems, a number of approaches are possible (Alvesson 2001), including: ̇ The legal employment contract could be used, stating, for example, that no competing employment for 6 months or working with old clients will be allowed. ̇ Suing old employees if they break the contract. ̇ Using defection stories to scare the consultant. ̇ Managers creating myths and a negative aura around quitting. This is an amalgamation of different classes of responses, to which the consultant might respond in an emotional or rational way. It might be rational to avoid these outcomes. However, the greater emotional response might be to find the company to be a hostile and unpleasant place to work in, which in turn might hasten a departure from the company. All these approaches are connected with a problem: they are at odds with the consultant’s loyalty to the firm. The problem is that the firm’s goal should be to prevent the problem from occurring, not to punish anyone after the fact. The aim should be to build mutual loyalty between the manager and consultant. None of these rather harsh measures will build any confidence or trust between management and consultant. Kärreman and Alvesson (2004) use the concept of “structural iron-cage” to illustrate the repressive approach. The ironcage is seen as problematic and possibly counter-productive for relation-building, which makes Kärreman and Alvesson (2004) draw the conclusion that loyalty management should be central to handling the relationship with the consultant.

6.2 Loyalty as an approach to management In this way we can see the management of group-building as the central approach to managing the knowledge resource of the firm. For working with and handling group-building Alvesson (2000) argues for the use of concepts like social identification and loyalty. The central process is how to create communities within the company that retain the consultants’ loyalty to the firm’s management. A number of approaches are possible (Alvesson, 2001), including: ̇ Creating a shared language. ̇ Rhetoric: Creating a clear message that is convincing, especially if the situation is confusing. ̇ Giving the right impression through tacit communication (clothing). ̇ Social interaction: getting along, clarifying expectations, obtaining acceptance, relationship management. ̇ Image production, positive ways of understanding the company and the relationship with the company. However, there is a drawback to these approaches. Knowledge work is ambiguous; the processes are hard to describe and to measure. This leaves room for identity-building outside the formalized division of labour structures. These local groups of experts form their own identity, often in close relationship with their customers. These constellations might become autonomous, which may make the consultants migrate, taking customers and tacit knowledge with them whenever they wish (Alvesson, 2000).

6.3 Paradox 4: Loyalty and community-building, but with whom? A fourth paradox involves the way in which firms based on highly skilled knowledge workers can be managed. The theory as presented in Section 5 suggests norm-building. This community-building effort is investigated in the studies cited above. What is revealed is the double edge of this management strategy, which we can formulate as a fourth paradox. Paradox 4: The stronger the community of professionals and customers that a knowledge worker builds, the better the product of the firm; however, the stronger these relationships get, the less possible it is for managers to manage these resources by means of loyalty and the management/worker community. In contrast to this, we can see that if the management tries to pry into these communities, the unhappier the consultants may become (i.e. the iron-cage argument), and the product (based on cooperation with customer) might become of less value to the customer.

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In this paradox we can see connections with the previous ones, but here the focus is more on the solution aspect. The main argument stands fast: the greater the strategic importance, the harder it is to manage. Even more: the more manageable, the less value, even if we try to manage indirectly, focusing on the processes surrounding the knowledge process and resources.

7. Synthesizing a strategic analysis framework In this research we have followed the know-how-based knowledge management approach. The conclusion of it is that it is riddled with contradictions. The long and short of these paradoxes of the know-how-based strategy is that the cure for its shortcomings resides in an information-base approach. This distinction falls well in line with the KM strategies presented by Hansen et al. (1999), i.e. the codification and personalization strategies. Mainstream KM has more or less openly advocated a codification or “information” approach, using computers to facilitate collection, storage distribution or the use of knowledge. Knowledge as a socially constructed and local situation has trailed behind as a somewhat more academic side-track. The Hanson et al. (1999) contingency approach advocates that both ways might be successful, but that the company should choose one before the other. Hansen et al. indicate that there is a relationship between the two strategies in arguing that one approach should be an 80%/20% relationship. This investigation points more to the interdependency existing between the know-how and informational aspects of knowledge resource management. We can summarize these double-edged phenomena more succinctly in a list of pros and cons based on some of the central aspects of the know-how-based approach. We have fit the four main points of our investigation into Hansen et al’s (1999) personalization strategy. Table 1: Option generation: Know-how/personalization approach - pros and cons Aspect of KM

Pros

Cons

View of organization: Contracts vs. identities

Strong identities create an effective learning environment

Strong identities make the organization more rigid and inflexible

Nature of knowledge resource: codification vs. tacit Management of know-how: direct or indirect

Tacit knowledge is hard to copy keeping the strategic value high

Tacit knowledge is hard to replicate, making growth harder

Personal knowledge is situated in a history of social relation and in time and space – which makes it hard or impossible to manage Knowledge workers should be managed using loyalty programmes and community-building.

Personal knowledge is hard to manage. The more manageable, i.e. the more like information it is made, the less unique and easier to imitate it becomes (and potentially less valuable). Customer relationship-building is essential for the value of products but these weaken the connection with company management.

Management of knowledge workers: loyalty or rules

Hansen et al. Personalization Develop networks for linking people so that tacit knowledge can be shared. Invest moderately in IT, focus on conversation support Expert economy, high fees for unique solutions

Do not suggest any direct management of knowledge

Hire skilled personnel, who like problem-solving and tolerate ambiguity Train people by mentoring Reward knowledge-sharing

What this table shows is that the Hansen et al. strategy fits into the theoretical model of the know-how approach. It is of course good news that the advice of Hansen et al. can be supported, as can be argued for on a very fundamental level. However, the double-edged nature of these fundamental principles of the know-how approach should be just as problematic in the Hansen et al. model. Thus, the reverse side should be incorporated into the strategic model. The problems of the know-how strategy seem to be related to the lack of ability of codification (turning into information) of knowledge. This is the very problem we try to tackle by following the know-how approach. So, basically we cannot escape from the information approach, the two approaches being interdependent. We can illustrate this in Table 2.

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Table 2: Option generation: The Information/codification approach – pros and cons KM aspect View of organization: Contracts vs. identities Nature of knowledge resource: codification vs. tacit Management of know-how: direct vs. indirect

Management of knowledge workers: loyalty vs. rules

The paradoxes of know-how approach Effective learning environment or hard climate for innovation

Codification approach Pros Short formalized contracts make it easier to switch to new competences when needed

Codification approach Cons The “self-interest” motivation creates higher transaction costs within the organization Risk of imitation, and loss of value of the resource

Tacit knowledge is valuable but is harder to use when growing

A formalized view of knowledge makes it replicable

Knowledge management is an oxymoron, the indirect management being right for knowledge work, but creates little or no control of the processes Strong communities with customers make a better product and at the same time make it easier to leave the company

Knowledge as information is accessible for direct management, even by the use of computers

Highly formalized knowledge work might be a hinder for creativity

Communities and loyalty are not part of management, leaving people to use these instruments for better products and customer satisfaction.

Self-interest and short contracts might make loyalty and long-term communities less important

To better understand these paradoxes the basic ideas of tacit/explicit knowledge as discussed by Polanyi (1958, 1966) should be reviewed. Polanyi (1958, 1966) outlines the concept of personal knowledge. It includes two types of awareness, focal and subsidiary awareness. From these two types Polanyi shows that two kinds of knowing are possible, subsidiary/tacit and focal/explicit (Polanyi, 1966, p. 17). Focal/explicit knowledge is knowledge that we can express explicitly in some form and subsequently transfer to other people. Explicit knowledge is only part of the total knowledge of a person. Subsidiary knowledge is everything we know but cannot really express; this is the tacit dimension of knowledge. The problem is that explicit knowledge is created as a whole when we focus on a number of subsidiary pieces of knowledge. The tacit dimension is all the knowledge that is in our mind, and the explicit knowledge is just timely construction based on the tacit knowledge. Explicit knowledge is what is in focus of our current attention. What we attend to is directed from our current interest or problem. The tacit dimension of human knowledge is a complex web of memories that we use in order to produce explicit knowledge. Explicit knowledge is nothing more than the existing subsidiary/tacit knowledge, just a configuration of the tacit dimension of knowing. This from-to structure of tacit and explicit knowledge indicates the complexity of the problem area. It also gives a good background to the troubles of the information vs. know-how approach to knowledge management. If the basic idea of knowledge cannot be divided into separate entities, how then could the strategies be separated? Even without easy answers, it may at least be hoped that the models presented above will create a higher awareness, which might help out in the strategy-making processes.

8. Summary of results Knowledge management is a broad church of schools. There have been arguments for choosing a best fit approach for the company, either by selecting one distinct strategy or by combining complementary approaches. What this paper has tried to lay out is a planning approach that recognizes the “other side” of a strategy and argues that these should be an interdependent part in the planning process. This paper took a starting-point in the contradictory nature of knowledge management. Through a close examination of some of the central points of the area it has been investigated what seems as paradoxes of KM in order to gain a strategic planning framework for it. The outcome is a framework that highlights the interdependencies of KM perspectives.

9. References Alvesson, M (1993) “Organization as rhetoric, Knowledge intensive firms and the struggle with ambiguity”, Journal of Management Studies, 30:6, 997-1015. Alvesson, M. (2001) “Knowledge work: Ambiguity, image and identity”, Human Relations, 54:7, 863-886. Alvesson, M. and Kärreman, D. (2001) “Odd couple: making sense of the curious concept of knowledge management”, Journal of Management Studies, Vol. 38, No. 7, pp. 995-1018.

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Alvesson, M., (2000) “Social identity and the problem of loyalty in knowledge-intensive companies”, Journal of Management Studies, 37:8, December, pp. 1101- 1123. Blackler, F. (1995) “Knowledge, knowledge work and organizations: an overview and interpretations”, Organization Studies, Vol.16, No. 6, pp. 1021-1046. De Long, D. and Seemann, P. (2000) “Confronting conceptual confusion and conflict in knowledge management”, Organizational Dynamics, Vol. 29, No. 1, pp. 33-44. Earl, M.J. (2001) “Knowledge management strategies: Toward a taxonomy”, Journal of Management Information Systems, Vol. 18, No. 1, Summer, pp. 215-233. Florida, R. (2005) “Cities and the Creative Class”, Routledge. Hansen, M.T., Nohria, N. and Tierney, T. (1999), “What’s your strategy for managing knowledge”, Harvard Business Review, Vol. 77, No.2, March - April, pp. 109-122. Holsapple, C.W. and Joshi, K.D. (2003) “A knowledge management ontology”, In: Handbook on Knowledge Management 1: Knowledge Matter, Editor: C.W. Holsapple, Springer-Verlag. Kärreman, D. and Alvesson, M. (2004) “Cages in tandem: management control, social Identity, and identification in a Knowledge-intensive firm”, Organization, Vol 11(1), pp. 149-175. Kogut, B. and Zander, U. (1992) “Knowledge of the firm, combinative capabilities, and the replication of technology”, Organization Science, Vol 3, No. 3 August. Kogut, B. and Zander, U. (1996) “What firms do? Coordination, identity, and learning”, Organization Science, Vol. 7, No. 5, September-October. McDermott, R. (1999) “Why information technology inspired but cannot deliver knowledge management?” California Management Review, Vol. 41, No. 4., Summer, pp. 103-117. Nonaka, I. and Takeuchi, H. (1995), The Knowledge-creating Company, Oxford University press. Polanyi, M. (1958) Personal Knowledge, Chicago: Routledge & K. Paul. Polanyi, M. (1966) The Tacit Dimension, Gloucester, Mass.: Peter Smith. Rigby, D.K. (2001), “Putting tools to the test: Senior executives rate 25 top management tools”, Strategy and Leadership, 29.3, pp. 4-12. Rigby, D.K. and Bilodeau, B. (2005), “The Bain 2005 Management Tool Survey”, Strategy and Leadership, Vol. 33, No. 4, pp. 4-12. Schultze, U.A. and Cox, E.L. (1998) “Investigating the contradictions in Knowledge Management”, Proceedings of IFIP Working groups 8.2 and 8.6 joint Working Conference on Information Systems: Current Issues and Future Changes, Helsinki, Finland, December 10-13. Snowden, D. (2002) “Complex acts of knowing: Paradox and descriptive self-awareness, Journal of Knowledge Management, Vol. 6, No. 2, May.” Swan, J., Scarbrough, H. and Preston, J. (1999) “Knowledge Management - The next fad to forget people?” in Proceedings of the Seventh Annual European Conference on Information Systems, (ECIS'99), Copenhagen, Denmark: Copenhagen Business School, pp. 668-678. Truch, E. and Bridger, D. (2002) “The importance of strategic fit in Knowledge Management”, in Wrycza, S, (Editor), The Proceedings of the 10th European Conference on Information Systems: Information Systems and the Future of the Digital Economy, Gdansk, Poland, June. Tsoukas, H. (1996) “The firm as a distributed knowledge system: a constructionist approach”, Strategic Management Journal, Vol. 17, Winter, pp.11-25.

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Firms as Connected, Temporary Coalitions: Organisational Forms and the Exploitation of Intellectual Capital Sandra Begley, Michael Taylor and John Bryson University of Birmingham, Edgbaston, UK [email protected] [email protected] [email protected] Abstract: The paper presents the case for conceptualising firms as ‘connected temporary coalitions’ that are able to respond to the challenges of and adapt to, changing environments: in particular, to build, exploit and determine the value of Intellectual Capital (human, structural and relational) enabling different trajectories of renewal and growth in the long term. The paper adopts the perspectives of theoretical pluralism to identify distinctive viewpoints regarding the theory of the firm and the dynamic nature of knowledge. The study draws on four areas of theory: (a) the institutionalist ideas of New Regionalism in economic geography – in particular the conceptualisation of firms as temporary, dynamic, placebased coalitions; (b) the structural contingency model of organisation theory coupled with ideas from the knowledge based theory of the firm in exploring changes over time in business activity; (c) evolutionary economics and the perspective it offers on emergent developments, change and time; and (d) knowledge management thinking, and the perspective it provides on intellectual capital and its contribution to firm dynamics, drawing on ideas on social interaction, social practices, social contexts, and the impacts of power and control. The paper extends our understanding of the processes and dynamics operating in and around temporary coalitions, the shifting and reconfiguring of knowledge assets and the role of dynamic capabilities. In addition, the paper challenges earlier concepts of intellectual capital as being embedded in business clusters. The paper argues that, collectively, the coalitions of people that comprise firms deploy their knowledge assets through different forms of organisational arrangement to achieve temporary equilibrium in order to commercialise knowledge, achieve renewal and generate growth. This perspective on the firm has significant policy implications. Keywords: temporary coalitions, intellectual capital, organisational form, enterprise renewal

1. Introduction Intellectual Capital (IC) represents the capabilities that are required by organisations to establish, maintain or increase competitive advantage (Marr et al 2001). Building dynamic capabilities relates to the choice of organisational form and learning mechanisms which, in turn, shape firms’ competencies and facilitate the development and reconfiguring of knowledge assets to achieve future growth (Ashok, 2004; Hong, et al, 2006; Sudarsanam et al, 2006; Zollo & Winter 2002). Successful organisations will, therefore, be those that create environments, when and where they are required, and where knowledge can flourish and become productive. The aim of the paper is to present the case for conceptualising firms as connected temporary coalitions, collections of both closely coupled and loosely coupled systems that configure, dissolve and reconfigure over time, forming a distinct capability in leveraging knowledge assets. The paper argues that coalitions of people and organisations, deploy the knowledge assets of the coalition collectively, creating organisational arrangements and temporary states of equilibrium to generate growth. This argument suggests that it is the fluidity of relationships and business activities over time and space that creates growth, raising serious questions about the nature and direction of current economic policies that have been adopted at the European, national and regional levels. In England, the Regional Development Agencies (RDAs) have been given the flexibility and the responsibility for “exploiting the indigenous strengths” of their regions (DTI, 2006: 10) by reinforcing the five drivers of productivity identified by the Government in 2001; investment in physical capital, skills (human capital), innovation, competition and enterprise. One of the UK Government’s main spending priorities for 2007-2013, continues to be the promotion of innovation and knowledge transfer through the development of business clusters. This policy approach assumes that regional economies are bounded spatial entities, and neglects to take into consideration the dynamics of the connected temporary coalitions that comprise them. The ‘temporary coalitions’ perspective (Taylor, 1999; 2006) is an interactive model of the firm, containing diverse types of relationships, collections of both closely coupled and loosely coupled systems that configure, dissolve and reconfigure over time, forming a distinct capability in leveraging collective knowledge assets. We suggest that it is more appropriate to view regional economies as “open, discontinuous spaces of flows” (Bristow, 2005: 294) that are fluid and plastic, rather than being defined rigidly as bounded clusters. ISSN 1479-4411 11 ©Academic Conferences Ltd Reference this paper as: Begley, S., Taylor, M. J. and Bryson, J. R. “Firms as Connected, Temporary Coalitions: Organisational Forms and the Exploitation of Intellectual Capital.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 11 20, available online at www.ejkm.com


The paper is structured as follows: Section 2 outlines the methodology adopted for the review. The theoretical foundations of the study are discussed in Section 3 to explore and extend our understanding of the firm as a connected temporary coalition. Section 4 identifies the implications for building and exploiting IC from the perspective of the organisational form of these coalitions. The key limitations and challenges surrounding the theory on temporary coalitions and the implications for IC and policy development are identified in Section 5, and Section 6 presents the conclusions.

2. Methodology A substantial body of literature is used to frame the review developed in this paper. To ensure rigour in the review, a transparent process has been adopted, the ‘systematic review’ (Tranfield et al, 2003). The systematic approach ensures a synthesis is achieved in accordance with scientific principles. In particular, relevance criteria are specified and an audit trail of abstracts, papers and review decisions is maintained. However, a wide range of research designs have been included and only peer-reviewed material has been used. So-called ‘fugitive literature’ (Slavin 1995:10) has been excluded, following Foster & Hammersley (1998) who argue that if “reviews are seen as presenting conclusions which have been validated by the relevant research community, then work that has not been submitted to public scrutiny should not be included” (Hammersley, 2001: 552). An exhaustive ‘inclusion strategy’ has not been adopted. Therefore, the research design establishes priori criteria and exclusions for filtering for, methodological adequacy, applicability, development of concepts and credibility and viability. Typically, qualitative, quantitative and mixed/multiple research methods are included to reflect a range of methodological studies. Studies where the research design and process is not described adequately, concepts that are not conceptualised, clearly formulated and validated are excluded. Keyword strings, based on the experience and knowledge of the authors, were used to examine academic papers published in English from a range of databases including; JSTOR (an archive of key scholarly journals), EBSCO – Business Source Premier, ProQuest, Wiley Interscience and INTUTE resources. Challenges specific to the review of the literature in this work include the multiple levels of analysis that requires categorisation of general concepts and the further identification of their variables or properties and dimensions and decisions over which levels of units should be maximised at the expense of others. During the initial analysis open and axial coding was adopted. However, due to the complexity involved, a semiotic approach was introduced and supported by the use of qualitative data analysis software to assist in clarifying the various levels, properties and dimensions. This will assist in validating generalisations extracted from the literature, and in developing strong theoretical inferences (Gomm et al, 2000), providing an opportunity to deepen understanding of the phenomenon of firm dynamics, in particular the role of coalitions in building and exploiting intellectual capital.

3. Theoretical foundations and discussion A multi-disciplinary approach, which emanates from the academic and industrial experiences of the authors, underpins this study. The scope of the review developed in this paper reflects a range of domains of study; the two mature fields of Industrial and Economic Geography, and Organisation Theory and two emerging fields Evolutionary Economics and Intellectual Capital.

3.1 Coalition theory Coalition theory has its origins in diverse literatures: typically in Social Anthropology and the analysis of social collectivities (Ginsberg, 1934); Sociology and the examination of coalitions in triads (Caplow 1956); Social psychology and work on configurations of social relations and payoffs (Heider, 1946); political science coalitions (Riker, 1962); and the Human and Social Ecological approach of Astley & Fombun (1983) who argue for the role of organisations as “constituent members of an overarching interorganisational collectivity” (p.577). The development of coalition theory in the management literature is rooted in Classical Management Theory and the Theory of Bureaucracy, (Merton, 1940; Fayol, 1949), theories of power, as the underlying impetus of social dynamics (Weber, 1947) and the Contingency theorists Thompson (1967) and Lawrence and Lorsch (1967) who presented an organisational structural strategy grounded in direct linkages and cohesiveness. Theoretical linkages appear in the management and organisational design literatures as Thompson (1967) adopted the behavioural conceptualisation of the firm of Cyert and March (1963), who were the first to focus on coalitions within organisations as a “collectivity with an interest or stake in some organisational setting” (p.27). In the 1970s there is a return to the anthropological literature (Boissevain, 1971) and an examination

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Sandra Begley, Michael J Taylor and John R Bryson

of coalitions as “a temporary alliance of distinct parties for a limited purpose” (p.470). This work explicitly refers to the temporal nature of coalitions. Pfeffer and Salancik, (1978) extend the behavioural theory of the firm by introducing issues of resource dependence, based on exchange theory concepts. By this interpretation, the key to maximising power and avoiding resource dependence is maintaining autonomy. In addition, they identified a particular feature of coalitions as the flexibility of contract: “participants enter and leave the organisation depending upon both their assessment of the relative value to be gained by continuing the exchange” (p.25). A variety of socio-economic perspectives have been developed since the 1980s, linking economic and organisation theory: social construction, the firms within networks perspective, including social network analysis and the implications of power and relationships; the learning firm; the competencies perspective; the discursive view; and, more recently, the conceptualisation of the firm as a temporary coalition, an agency of groups, rather than individuals (Taylor 2005; Taylor and Oinas, 2006). In this range of perspectives, there is no explicit link to the firm’s capabilities to integrate, build, re-configure and exploit IC from the perspective of the firm as a temporary connected coalition, in and over time. Extending insights on the permeability of organisational boundaries and the conceptualisation of the firm, Taylor (1999) defines the small firm as a “social artefact of collective agency… as a networked temporary coalition” (p.1) and as a “temporary expression of the processes of enterprise” (p.7). Taylor (1999) draws on his study of city based service enterprises, to the firm’s capabilities to integrate, build, re-configure and exploit expertise (knowledge assets), from the perspective of the firm as a “shifting, temporary coalitions of expertise (with expertise, divorced from ownership) that develop, extend and elaborate service niches to generate income and profits.” (p.13). Therefore, a duality exists between formal networked structures and social relationship networks. Intertwined both have permanence and temporality, depending on the conditions existing at that time, the perceived payoffs and risks, in the short and long term, from the individual and organisational perspectives. Over time structures may appear fluid. However, in time the coalition structures are grounded in organisational and social norms, rules and behaviour. More recently a number of studies have examined the conceptualisation of the firm as a temporary coalition, an agency of groups, rather than individuals, who deploy bundles of assets to the best of their collective ability (Taylor and Asheim, 2001; Taylor 2005, 2006; Taylor and Oinas, 2006; Begley, et al, 2008a). It is evident that a partial understanding of the processes operating in, on and around temporary coalitions exists. Temporary forms, (coalitions) do not reflect the traditional forms of organising, they may lack formal structures and often have a high degree of complexity, being comprised of individuals with specialised competencies (Meyerson, et al, 1996). It is precisely the distinct nature of their specialised competencies and experiences, which provide the base for a new shared understanding, an increase in the knowledge base. Here we would argue that to understand firms as temporary coalitions it is important to disentangle processes of enterprise (of people being enterprising to create personal wealth) from the operations of the enterprise (the firm as a disconnected, legally defined object). To understand how IC is created and exploited we need to better understand the processes of collective agency that operate within the temporary coalitions that comprise firms – how people come together in the purposive situation of the firm to make decisions on the deployment of resources and assets (including IC). As yet these processes are poorly understood. They refer to the collective actions of owner and managers who wield their technical and positional power to generate wealth creation. They wield that power internally, to generate cost-effective products and services to market, and externally, to secure resources and markets in any way possible.

3.2 Coalitions and clusters: The industrial and economic geography perspectives During the past two decades New Regionalist ideas have impacted upon the competitiveness of firms through the implementation of regional policies that have focused on ‘clustering’ (Porter, 1998, 1990) and which assume firms are embedded within place-based, socially constructed, local knowledge networks (Bristow 2005). Clusters are defined as a “system of interconnected firms” (Porter, 1998: 213). The development and functioning of clusters is dependent upon value-added exchanges within relationships and networks. Clustering policy has been reinforced through several recent initiatives in the UK, for example, regional innovation systems and learning regions that rely on co-operation and collaborative equality between firms within an industrial district. These place-based environments are supported by local institutions, for example, Regional Development Agencies (RDAs) in England, to facilitate knowledge exchange and promote innovation. It is perceived that a social structure of network relationships within the

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geographic location of a cluster is important in producing social capital from which firms benefit. This view has fostered the growth of policy to enhance regional institutional thickness, with the region becoming the focus of policy development (Lovering, 1999). The Evolutionary Economics perspective (complementary to the resource based view of the firm) recognises firms as repositories of competencies and resources, with the potential of emergent developments. By examining interdependencies and relationships for growth, renewal and transitions over time researchers adopting this perspective seek to identify the catalyst for long-term competitiveness and to identify implications for policy makers in stimulating innovation (Boschma & Sotarauta, 2007). This should facilitate a move away from the rigidities of regions to the flexibility of knowledge-based growth and development, increasing firms’ capabilities to acquire and develop IC. But, the competitiveness and growth of firms is not necessarily place-based and place dependent. For some firms competitiveness may be unconnected with the regional economy within which they are located. In the early 1980s, Taylor and Thrift (1982b) showed that West Midlands foundry firms (at the core of the metals and engineering complex of the region) that survived and grew were those that disengaged from local transaction networks, seeking wider and more diversified markets and sources of supplies. This contention is further supported by recent empirical evidence on the West Midlands manufacturing sector in the UK (Bryson & Taylor 2006) which highlights the continued restructuring of this sector, involving closure and the relocation of manufacturing plants. This restructuring has seen a shift towards niche-based, high-added value goods and changes in the spatial configuration of the region towards an increasingly polycentric structure (the central district becomes less influential through processes of inversion), previously recognised in the 1980s by Taylor & Thrift (1982a, 1982b). The resultant changes in territorial patterns, implies that some surviving firms are disengaging from the local economy, adapting to the changing environment, transferring knowledge and exploiting IC through the development of temporary coalitions to enable long term growth (Begley et al, 2008a, 2008b).

3.3 Coalitions: The organisation theory perspective Early theories of the institutionalist school focused on the resource based view of the firm and its internal structure (Barney 2001; Penrose, 1959) in achieving and sustaining competitive advantage. From this perspective, the firm utilises resources and capabilities to create isolating mechanisms, for example patents, and by switching costs through combinations of resources that cannot easily be substituted (Hoopes et al, 2003). The knowledge based view (KBV) of the firm, in which competition is based on exploiting a firm’s capabilities and competencies, developed from the work of Ryle (1949) and Polanyi (1967) on individual knowledge, of Levitt and March (1988) on organisational learning, and of Nonaka and Takeuchi (1995) on the capabilities of firms in using and developing knowledge. From this perspective, it is the exploitation of resource combinations in conjunction with the people who access, exchange and deploy these resources that creates value. Moran and Ghoshall (1999) imply that managerial competence emanating from entrepreneurial judgement and organisational capabilities developed and retained within their organisational boundaries, makes firms agents of discovery and progress. This reinforces Porter’s perspective of competitive advantage and neglects the role of firms as agents within potentially multiple coalitions, harnessing capabilities external to the organisation, outside their organisational boundaries which would suggest a more adaptable structure. Through these approaches, the organisation came to be viewed as a dynamic socio-technical and selfregulating system. The role of the firm focused on integrating and coordinating the process of knowledge sharing as a potential source of competitive advantage (Spender 1996), and it was realised that organisations may configure and re-configure over time until a coherent form is established (Zilber, 2002). Poyhonen and Blomqvist (2006) identified the discontinuities of the institutionalist perspective of organisation theory in forming opportunities for self renewal, innovation and the diversification of capabilities based on the assumptions of constructionsim. Principally, the intangible resources of the firm are the competence of its people. Firms are social communities that create and transform knowledge. The focus is on internal processes and learning. The external contingencies of demand and market pressures figure weakly in these theories. The fundamental premise of the Structural Contingency model from Organisation Theory (derived from systems theory) is that firms will perform better when their structure matches the contingencies of a number of external variables, as different industry environments present organisations with different sources of critical uncertainty, which include forming coalitions and the co-opting of external elements (Lawrence &

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Lorsch 1967; Thompson, 1967; McDermott & Taylor, 1982). The more sources of uncertainty or contingency generated, the more the number of power bases and levels of dependence that exist (Pfeffer, 1981; Pfeffer & Salancik, 1978). The relational network perspective places emphasis on the external environment of the firm, its social relations involving competing, controlling and complementary organisations, and shifting power relations that may offer opportunities and impose constraints in the development of IC. This development has been complemented by the linkages between organisation theory, complexity theory and systems theory since the 1960s, typically the ‘Open Systems’ view of organisations. Organisations exchange resources with the environment in the sense that they consist of interconnected components that work together. This is reminiscent of General Systems Theory and Cybernetics and later the Complex Adaptive System (CAS) models of organisations (Anderson, 1999). The characteristics and processes of temporary coalitions are exhibited in the CAS model. Anderson (1999) identified coalitions as ‘agents’ in self-organising networks that adapt to their environment (co-evolve) through the entry, exit and transformation of previously successful agents. In this perspective internal and external coalitions are explicit and the notion of the historical sequence of coalitions is implied. This later element of historical sequence is important in harnessing and determining the value of knowledge assets (IC), the temporal changes in business activities over time and the contribution of learning and uncertainty to growth and renewal. This leads towards the effective use of knowledge (intellectual assets) in the long term to complement short term performance measures (that are typical of the IC literature), for long term firm survival.

4. Building and exploiting intellectual capital: Organisational form One of the key focuses of the literature in the intellectual capital (IC) field is the recognition of the value of intangible assets, their evaluation and financial measurement (Edvinsson and Malone, 1997; Kaplan and Norton, 1996; Sudarsanam et al, 2006). IC is dynamic and is a consequence of elements of collectivity. Typically, the IC assets which contribute to the firm’s capabilities to handle situations, consist of “Human Capital (employee attitude, employee capabilities, management experience and innovativeness), Structural Capital (Hardware, software, processes, intellectual property, management style, organisational structure) and Relationship Capital (Customer relationships, supplier relationships, stakeholder relationships and image)” (White and Begley, 2006: 14). From a dynamic perspective, the IC assets are important in understanding the capabilities the firm has and will have in meeting and addressing the challenges and changes in its environment. Firms rely on structural reference models, for example repeating best practice, culturally embedded practices and stories and its own structural intellectual capital (practices, systems, procedures, norms, policies). Building dynamic capabilities also relates to the choice of organisational form. Wiig (2004) views the firm as a “collection of closely coupled systems” and numerous nano (individual) actions and micro (functional or departmental) actions consolidated as enterprise behaviour that overcome challenges and create opportunities despite the range of internal dilemmas that may exist. Successful performance is achieved through management that is systematic, deliberate and co-ordinated, of knowledge and other Intellectual Capital (IC) assets, by seeking collaborations. Wigg (2004) and de Geus (1997) highlight that durable successful performance depends on consistent and competitive behaviour that relies on the firms ability to learn and adapt, building and exploiting IC assets by seeking collaborations, building upon their own ideas or the ideas of others. This moves the firm in the required direction, towards efficiency or innovation, responding to market conditions over time. Firms in their view are tolerant of new ideas, are prepared to experiment and adapt. This is conducted typically through the deliberate management of IC assets and a conservative approach to managing capital. This view is in contrast to perspectives on firms as: loosely-coupled (Astley & Zajac, 1991; Glassman, 1973; Orrok and Weick, 1990); self-organising networks and complex adaptive systems with emergent properties (Anderson, 1999); and interactive systems as proposed by Molina-Morales, and Martinez-Fernando (2008). These are evolutionary perspectives that propose adaptation to shifting patterns of connections that are created or recombined over time. They allow for the diffusion of knowledge assets through varied contexts and over broader boundaries, typically through socialisation activities (Tomer, 1998), that generate the capability to cope with potentially conflicting states that may arise when a firm is engaged in a highly turbulent environment. This has implications for spillovers, examining the density and hierarchy of networks

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and interactions, the value of exploratory investments on the value of IC and how a firm is managed in terms of its strategic development. In between the two perspectives, closely-coupled and loosely coupled, Peled (2001) and Taylor (1999, 2001, 2005) view coalitions as transforming work into new dominant, but temporary organisational designs to meet and deliver the needs of the members, who align their interests into a dominant design. The connected temporary coalition approach reflects elements of both the closely and loosely coupled forms of organisation. Over time, knowledge becomes codified, eroding its uniqueness. In the long term, it is the ability to create uniqueness and variety, coping with the process of creative destruction (Schumpeter, 1950) through coalition development, collectively, creating organisational arrangements and temporary equilibrium states, when and where they are required, that will provide the continuous development of knowledge assets.

5. Limitations and challenges The key limitations and challenges identified from this review of the theories and conceptualisations that lie behind the ideas on firms and temporary coalitions are highlighted in Table 1. As with many concepts, including ‘Intellectual Capital’ and ‘the firm’ there is no commonly agreed definition of coalitions in the context of the theory of the firm, with numerous fragments of perspectives presented and a lack of empirical evidence, specifically linking historical and contemporary factors. Table 1: Firms as temporary coalitions: Theoretical limitations and challenges Theoretical Perspective Coalition Theory

Relational/Institutionalist Theory

Limitations Inequalities of powerfulness and powerlessness in binding coalitions together. No explicit link to the firm’s capabilities to integrate, build, reconfigure and exploit knowledge assets over time. Levels of embeddedness within networks of relationships are poorly defined.

Continued Focus on clustering policy “one size fits all” and the view of regions as bounded spatial entities.

Organisation Theory

Conceptualisations of the boundaries of the firm are variable: fuzzy, distinct, multiple, co-opted, self-organising… Lack of empirical evidence into changing organisational forms. The external contingencies of demand and market pressures figure weakly

Challenges and Implications for Intellectual Capital Examine how firms use power within the contexts of co-operation and collaboration within temporary coalitions versus the opportunities to exclude and exploit relationships in developing and exploiting IC. Examine to what extent successful enterprises, use temporary coalitions of people and organisations to provide the required mix of human, structural and relational assets when and where they are required. Explore the proximity of alliances, to identify how knowledge assets are diffused over varied contexts and broader boundaries. The embedded nature of knowledge assets has implications for dynamic models in measuring the value of IC over and in time. In particular exploratory investments. Explore the feasibility of support for a differentiated policy framework to respond to: (a) Changing territorial patterns due to disengagement from local economies; (b) Facilitating coalitional development for knowledge based growth, increasing opportunities to acquire, build and exploit IC at the local, regional and interregional levels. Identify to what extent temporary coalitions form a distinct capability in leveraging collective knowledge assets. Historical sequence of coalition behaviour will provide insights into harnessing the value of knowledge assets (IC) in the long term. Examine to what extent connected temporary coalitions enable the co-evolution of firms/markets/boundary dynamics and the coordination and allocation of dynamic capabilities.

With regard to coalition theory, specifically the inequalities of powerfulness and powerlessness, how firms use power in the context of collaboration and co-operation within coalitions, versus the opportunity to exclude and exploit relationships requires further exploration, particularly in the development and exploitation of knowledge assets for long term firm survival and innovation. This highlights a further weakness, there is no explicit link to the firm’s capabilities to integrate, build, reconfigure and exploit knowledge assets over time. Therefore, the challenge is to examine to what extent successful enterprises use temporary coalitions

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of people and organisations to provide the required mix of human, structural and relational assets when and where they are required. The external contingencies of demand and market pressures figure weakly across the organisation and knowledge management literature in particular. The challenge would be to explore to what extent connected temporary coalitions enable the co-evolution of firms, market and boundary dynamics and the co-ordination and allocation of dynamic capabilities. This highlights a fundamental issue, the variable conceptualisation of the boundaries of the firm and organisational forms, within the range of perspectives analysed. This ranged from boundaries being defined as fuzzy, multiple, self-organising and so on and was coupled with the lack of empirical evidence into changing organisational forms. In organisations, business relationships and business activities over time and space are fluid and this aspect is neglected in the literature. There is little empirical insight into historical sequences of changing organisational forms and the building of knowledge assets. These limitations run through into the regional policy prescriptions that draw on sections of the same literatures. In particular, and most significantly, the strategy models of competition, especially Porter’s (1998) cluster approach, exhibit several weaknesses, including a very limited appreciation and understanding of the workings of knowledge networks and the impact of power inequalities on business relationships that may generate uneven spatial development, create lock-ins and restrict opportunities (Taylor, 2005). What is needed to overcome these problems is a more nuanced examination of how firms use power within the contexts of co-operation and collaboration within temporary coalitions to foster the growth of IC compared with the opportunities power offers to exclude and exploit personal and commercial relationships (also see the debate in Christopherson and Clark, 2007). The resultant implications are for local economic development policies to be differentiated, rather than the ‘one size fits all’ approach of cluster policy that is currently adopted in this arena of policy making. This has significant implications for the development of local, regional and inter-regional knowledge capacities.

6. Conclusions This paper presents an overview of the theory of the firm, from the alignment of disciplinary conventions in relation to temporary coalitions. Theories of the firm and research that addresses firm behaviour and local economic development, need to recognise the role of temporary coalitions within the processes of identifying and exploiting new resource combinations through the abilities of people working within and outside firms to access, deploy, exchange, combine, re-combine and exploit IC. The phenomenon of connected temporary coalitions suggests that an alternative exists in defining the firm and that this alterative poses new opportunities to explore the ways in which firms are formed and reformed to create wealth at different times and in different places. Whilst aspects of IC and collective knowledge (routines and shared values) are culturally embedded within organisations, business relationships and business activities over time and space are fluid. It is this temporal aspect of business relationships and activities that is neglected in the literature on the firm. There is little empirical insight into historical sequences of changing organizational forms and the building of knowledge assets for long term firm survival. IC generates value that is unique to the firm and connected temporary coalitions are the form best suited to harness this unique value. At the same time understanding of the workings of power and its impacts on IC and collective knowledge are equally neglected in research on the theory of the firm. In particular, thinking on the use of power to both include and exclude in coalitions, as in networks, needs to be further and more fully refined. This is an urgent task if appropriate and realistic regional economic policies that target firms are to be developed to counter the anticipated problems of looming economic recession.

Acknowledgements This research is funded by the Scholarship Fund of the School of Geography, Earth and Environmental Sciences, University of Birmingham, UK. This paper is a revision of the conference paper ‘Building and Exploiting Intellectual Capital: The Firm as a Connected, Temporary Coalition’ (Begley, et al, 2008b), presented at the 9th European Conference on Knowledge Management, Southampton Solent University, UK, 4-5 September 2008.

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Intellectual Capital and IFRS3: A New Disclosure Opportunity Daniel Brännström1 and Marco Giuliani2 1 Department of Business Studies, Uppsala University, Sweden 2 Department of Management, University of the Marche, Italy [email protected] [email protected] Abstract: As a response to the absence of an exhaustive generally accepted accounting principle handling the issue of intangibles, academics and practitioners have developed a plethora of models, methods and tools for identifying, measuring and valuing intangibles. Conscious of this situation, some authors have started asking for empirical studies of how these models make the IC issue clearer to stakeholders in general and specifically to the capital market (Guthrie, et al., 2001; Marr and Chatzkel, 2004). The introduction of International Financial Reporting Standard (IFRS) 3 (a regulation demanding the identification and valuation of intangible assets in business combinations) may be considered as the opportunity for a practical application of the methods and tools proposed by the Intellectual Capital (IC) community, i.e. to make intangible assets such as customer capital, know how, etc. visible in the financial statement. IFRS3 is a possibility to disentangle the “black-box” of goodwill and for the financial accounting issue to adhere to some of the critique emanating from the IC debate. As a result, IFRS3 can be seen as an opportunity to test the relevance of the IC models and to reduce the gap between IC Accounting and Financial Accounting (Petty and Guthrie, 2000; Roslender and Fincham, 2001). Drawing on the debate of how to frame intangibles (Chaminade and Catasús, 2007), the aim of the paper is to analyze the distance, from an empirical perspective, between IC accounting and financial accounting in order to understand if a gap exists. Thus we will investigate how firms have applied IFRS3 by studying what the relevance of intangibles is, which intangible assets have been identified and valued and what goodwill is disclosed as in the purchase analyses. The empirical corpus consists of financial statements of Swedish and Italian listed firms. The methodology adopted is based on an empirical analysis of the purchase analyses supplied by the firms in the financial statements, referring to the first year mandatory adoption of IFRS3 (fiscal year 2006). The disclosed information is analyzed through both quantitative and qualitative analyses. The study finds that the analytical methods are still at a very first stage and consequently there is the trend to appreciate, at least in the financial statement, the majority of the IC as goodwill. The second finding is that even if they represent the minority part of the invisible value of the company, IFRS3 has really allowed for several intangible assets usually not disclosed in the financial statements such as customer relationships, contract portfolio, etc to be made visible. A third finding is the lack of explanations for this amount of goodwill. All in all, the paper highlights that, from an empirical perspective, both financial and IC accounting models are not able to adequately grasp IC “at work”. Keywords: intellectual capital, valuation, financial accounting, goodwill, purchase analysis

1. IC accounting: The value creation and value realization perspectives As response to the increasing relevance of Intellectual Capital (IC) accounting changes have been introduced (Marr and Chatzkel, 2004; Petty and Guthrie, 2000; Roslender and Fincham, 2001). In particular, with reference to the external reporting, IC poses complex information asymmetry challenges which governments, regulators and researchers aim to reduce in promoting greater corporate IC disclosure in mandatory and voluntary statements (Kaufmann and Schneider, 2004). The scientific and practical responses to this request of transparency can be divided into two main broad streams. The first one, with focus on the value creation process, is characterized by the presence of many IC concepts, taxonomies, methods and tools. The reporting models proposed by this literature have some common aspects (Van der Meer-Kooistra and Zijlstra, 2001). First, in these models a strategic perspective is stressed putting the accent on the value creation process; second, they highlight the interaction between resources; third, they adopt different measures (quantitative, qualitative, financial, non financial) and include narrative. Thus, these models are not intended for supplying data to be incorporated into the financial statements but mainly for supporting the voluntary disclosure. In this context, even if not in a unanimous way, IC is generally considered to be composed of all the intangible resources and activities. That is to say non-monetary sources of probable future economic profits, lacking physical substance and open to influence of the firm, strategically relevant for a company (Meritum, 2002). Hence, in abstract terms IC becomes a wide area of items where the firm specificities are emphasized.

ISSN 1479-4411 21 ©Academic Conferences Ltd Reference this paper as: Brännström, D. and Giuliani, M. “Intellectual Capital Valuation and IFRS3: A New Disclosure Opportunity.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 21 - 30, available online at www.ejkm.com


The other approach, centred on value realization, is to improve information about IC by making it easier to treat its components (intangibles) as assets in financial statements (defined “intangible assets”), thereby increasing their visibility in financial accounting and reporting. The International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) define an intangible asset as an identifiable nonmonetary resource, without physical substance, controlled by an entity, expected to provide future economic benefits (see IAS 38). Albeit the principle proposed has been heavily criticized for recognizing only a fraction of what are considered to be intangibles by the IC-community and consequently referring to a very narrow IC concept (Lev and Zarowin, 1999), it has the merit to supply one single definition of what is and what is not an intangible. The latest relevant step in developing the analysis on intangible assets has been done by the International Accounting Standard Board in 2004 with the approval of IFRS3. This principle has stimulated the identification of intangibles in business combinations: it means that an acquirer has to recognize separately, at the acquisition date and in a specific prospectus, intangible assets regardless of whether they have previously been recognized or not. This consequently concerns the gap between market value, purchase price, and book value earlier only referred to as goodwill and becomes a possibility to identify IC in the financial statement. The two aforementioned streams are usually presented as separated instead as complementary (Chaminade and Roberts, 2003; Petty and Guthrie, 2000; Roslender and Fincham, 2001). When trying to bridge the gap between them it appears interesting to analyze if and how firms have considered the IC scientific contributions when applying IFRS3. Thus, drawing on the debate of how to frame IC (Chaminade and Catasús, 2007), the aim of the paper is to analyze the distance, from an empirical perspective, between IC accounting and financial accounting to understand if the gap exists in practice and not only in theory. To achieve the aim, three research questions have been developed observing how firms have applied IFRS3: RQ1: how much of the purchase price has been recognized as IC? RQ2: which intangible assets have been identified? RQ3: how is goodwill presented from an IC perspective?

2. IFRS under the IC lens IFRS3 concerns accounting for business combinations and with the introduction of this accounting principle several changes were made on how to account for a business combination. One area is that pooling of interests as an accounting method is not allowed anymore. Another change is that goodwill is no longer amortized but should be tested for impairment at least once a year. A third area, that as well concerns the core of this research, is the recognition of intangible assets even if they previously have not been recognized when they are significant to the acquirer. The process of recognition executed by the buyer concerns an analysis of the gap between the purchase price, that is the amount of money paid to buy a company, and the book value of the acquire. The analysis is an allocation of the gap between the revaluation of already existing items and the identification of new assets or liabilities, of which intangible assets are one category of items possible to recognize. Thus, IFRS3 can be seen for the financial accounting issue as a possibility to disentangle the “black-box” of purchased goodwill and to adhere to some of the critique emanating from the IC debate. The result of the analysis is then presented in a purchase analysis found in the notes to the financial statement. Albeit IFRS3 belongs to a value realization perspective, it is possible to observe the accounting information produced in relation to its application for value creation. Especially as it is related to new or different elements such as intangibles, it becomes linked to the value creation perspective. In other words, it is possible to observe financial data with an IC lens or from a value creation point of view. As a representation for the value creation perspective the MERITUM Guidelines (2002) is used in this research. There are one of a number of models built on the tri-part classification where the MERITUM Guidelines is one model representing this classification. A suitable feature with this classification type for research is that it comprises a lot of items that could be argued for being IC and consequently the definition of IC becomes broad. The classes used are: ̇ Human Capital: the knowledge, skills, experiences and abilities that employees take with them when they leave the firm. ̇ Structural Capital: the pool of knowledge that stays with the firm at the end of the working day. It comprises the organizational routines, procedures, systems, cultures, databases and so on. ̇ Relational Capital: all the resources linked to the external relationships of the firm such as customers, suppliers or R&D partners, plus the perceptions that they hold about the company.

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Daniel Brännström and Marco Giuliani

Moving to the definition of IC used for this research we looked for a definition which can synthesize the value creation and the value realization perspectives. Thus, we have examined the section of the note containing the purchase analyses presented in the financial statements searching for items that could be seen as IC. A problem with many studies within IC is the lack of a clear definition of IC (Beattie and Thomson, 2007). In a purchase analysis the adjustments disclosed could be seen as the recognition of something that has not been disclosed previously and/or the re-valuation of intangible assets already disclosed as they all relate to the gap between market value and book value. The residual left after this procedure is (purchased) goodwill. Consequently, in order to investigate the gap between IC accounting and financial accounting we observed the adjustments disclosed in the purchase analyses and based our investigation on the following equivalence: IC = identified intangible assets + purchased goodwill Using this approach IC becomes the difference between market value and book value (after a re-valuation of tangible assets) (Lev, 2001). A definition of IC as the difference between market value and book value has as well been used by (Brennan, 2001) when studying IC found in annual reports from a value creation perspective. Obviously the underlying assumption is that the purchase price is a fair expression of the market value. In this way IC identified will originate from what is found in the financial accounting but it will not be restricted by any other tool used in our analysis.

3. Design of the study In order to have a large sample which is a way of testing models and mitigating context and cultural factors (Marr and Chatzkel, 2004, p. 227) we looked for two European contexts which can be aggregated. The two countries selected were Sweden and Italy. These countries are deemed appropriate for this aggregation and exploration because the listed firms and the markets are quite similar in several aspects such as dimension and characteristics of the markets, law system, ownership structure of the firms and macro-based accounting system applied (Nobes, 1983). Moreover, considering that the researchers represented native speakers of these two nations allows for a better and more complete understanding of the information disclosed that is collected and studied. We used the firms listed on the Stockholm (SSE) and the Milano Stock Exchanges (MTA/MTAX) on June 19th, 2007 with fiscal year ending before December 31, 2006 as our empirical corpus. June 19th has been adopted because all the financial statements investigated were available at that time. The reason for our fiscal year approach is that a complete coverage of the stock exchanges of mandatory disclosure by firms was only available for one year at the date of the study and became consequently the cut off point at which our sample was sufficient. Consequently is our analysis a descriptive one and does therefore not aim to analyze trends. Table 1 gives descriptive statistics of the sample. The empirical unit of our investigation is the purchase analysis: thus we have a total of 308 observations. We have to highlight that albeit the average is of about 2 purchase analyses per company (308/161) in reality we have extreme situation such as 1 purchase analysis referred to 38 acquisitions or 11 analyses presented by one firm. Table 1: Sample statistics Sweden

Italy

Total

No. of listed companies

264

265

529

No. of listed companies with business combinations

98

63

161

No. purchase operations declared

215

222

437

No. purchase analysis disclosed

170

138

308

The statistics confirm the similarities between the two contexts: numbers of listed companies and of purchases declared and disclosed are close. To guarantee a higher data readability we have excluded negative goodwill from the analyses. Negative goodwill can be considered as future underperformance if the firm. Reasons for causes driving this negative goodwill are out of scoop for this investigation and the observations were as well few and could be understood as outliers. Moreover, considering that we want to analyze the identified intangible assets we have also ignored the negative adjustments indicated in the purchase analyses.

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Data has been collected consulting the English edition of the financial statements and if it was not available, the Swedish or Italian ones were considered and translated. This translation activity represents the main limitation for our qualitative analysis. With our aim to contain the subjectivity naturally present when doing the translation, we adopted a literal translation instead of considering a translation of the underlying meaning. Considering that our research questions demand different interpretation models, the data have been analyzed both qualitatively and quantitatively. Content analysis is an empirically oriented method (Krippendorff, 1980) that includes disclosure index (Beattie, et al., 2004) and is the method used here for collecting data, i.e. the examination of the annual report narratives. It has been selected as an overall method since it potentially serves to understand and capture the IC concept and for measuring the extent to which different categories of IC information are disclosed. It can also depict how a possible still existing residual is presented which would describe what IFRS3 does not make visible. In performing content analysis common units used in content analysis is sentence, paragraphs or proportions (Guthrie, et al., 2004). Here the overall study unit is the purchase analysis but when we are recording adjustments we have to use words as the recorded unit as it is the only unit available. In relation to goodwill words has been used as well as recorded unit and the reason for this is that in some situations the explanation given is only presented in one sentence. In the situation with goodwill IC has been defined in relation to the MERITUM Guidelines’ classes and an occurrence of a class has only been recorded maximum once for each firm even if it could have been possible to do several registrations in some situations. A possible critique against the use of a word unit is that it lacks context (Beattie and Thomson, 2007) but as the context of a business combination is clear when the overall study unit is the purchase analysis this will not be of any, at least major, problem. In the situation with goodwill this is a reason for not registering a class several times because of the risk of over emphasizing the content of a single sentence. The quantitative analysis is based on the assumption that companies quantify the value of their intangibles wherever possible. The ratios have been calculated to understand the relevance of the IC evaluation in comparison to the purchase price and if any of the MERITUM’s IC categories tends to be more disclosed and evaluated than the others. To guarantee the usefulness of the ratio we have excluded from the quantitative analysis the purchase analyses in which the purchase price or the IC value are equal to zero.

4. Results and discussion 4.1 RQ1: how much of the purchase price has been recognized as IC? Our first focus is to produce ratios that are useful for understanding the relevance of the IC phenomenon. Table 2: The relevance of IC Average

Std Dev

Intellectual Capital/Purchase Price

93,49%

2,58

Material fixed assets/Purchase Price

6,04%

0,23

Identified Intangible assets/Intellectual Capital

12,52%

0,27

From table 2 it is evident that IC makes up a substantial part of the price, on average 93% even if with a high variability (std. dev. 2,58). This is in line with the gap between market value (purchase price) and book value highlighted by Lev (2001), mainly attributable to the presence of valuable intangibles not represented in the financial statement. The values of intangible assets identified and evaluated represent a minor part of the IC complex value (12%). For this discrepancy there are at least two different explanations. The first concerns the actual accounting principles which seem to not provide adequate guidelines for identifying and disclosing intangible assets. The second explanation is the desire of the firms for continuing the use of the goodwill as “black box” in which they can include the items they do not want to disclose or value for analytical purposes (Van der Meer-Kooistra and Zijlstra, 2001). Observing the data it seems possible to highlight that IC stands for a large part of the purchase price. Considering that we have focused our analysis on the adjustments, items existing previously but visualized only after the combination, the evidences underline the relevance lost of the financial statement because the criteria used for the identification, measurement and valuation of intangible assets are based on premises no

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longer responding to the characteristics of the present economy. This means that despite the several accounting changes that has occurred the critique argued by Lev and Zarowin (1999) ten years ago about the need to extend the boundaries of financial reporting are still valid and maybe more pressing today.

4.2 RQ2: Which intangible assets have been identified? In table 3a the labels used by the firms to disclose the IC components are presented and classified in the MERITUM classes. However, in some cases it was not possible to fit the label into the mentioned model and, as a consequence, we introduced a fourth category labeled “Intersectional Capital” which included a mix of the other classes. This pinpoints that the MERITUM classification (a probable result for the other classifications proposed based on a clear tri-partition of IC as well) is not followed and applied in practice. Moreover we have to underline that the class “Human Capital” was not considered because no evidences have been found, in consistency with the IAS/IFRS do not allowed to account specifically for it (see the reference to IAS38 done by IFRS3) unless it is contractualized. No support for such behaviour by firms is found. The labels are listed according to ranking where the numbers within brackets shows how many times the label was mentioned. This will not match the sample size since not all of the purchase schemes give useful information of adjustments. For example, in approximately 60 cases the adjustments referred only to “unspecified” intangible assets (typically “Other intangible assets” or “Intangible assets”). Table 3a: Qualitative analysis Relational capital

Structural capital

Customer/Client relations/ships (22)

Distribution rights (2)

Trademarks/Brands (17)

Concession right (2)

Contracts (6)

Licenses/Licence rights (2)

Customer contracts (3)

Developed software (1)

Customer contracts, trademarks and similar (3)

HUMIRA royalty system (1)

Customer list (3)

Intellectual property rights (1)

Contract portfolio (2)

Intersectional capital Agencies, trademarks, customer lists, licences, etc. (1) Airline concession and terminal catering for customer list value (1) Customer relations and production technologies (1) Development cost and other intangible assets (1) Supplier relationships, customer relationships & technology (1) Technology, productive know how and customer relations (1)

Know how (1)** Patents and un-patented know-how (1) Products rights (1) Product technology (1) Products, technology & software (1) Software licences and similar rights (1) Technology (1)

Insurance portfolio (2)* Customer agreements (2) Customer benefits (1) Customer contracts and customer relations (1) Franchise relations (1) In force business (1) Magazine titles (1) Voice portal (1) Assurance contracts acquired (1)* 1 Deferred charges arising from the fair value measurement of 42 leases for stores at rents that are lower than current market rates (1) Expense for taking over the rental contracts for the two mega-stores (1) Service and support contracts (1) Non-competition clause (1)

* The items are reported by insurance companies thus they have to be interpreted as contracts with customers. ** The item is referred to codified know how so it was classified as Structural capital instead as Human Capital.

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In accounting terms it is obvious that Relational Capital, in term both of number of labels and of number of times its item are mentioned, has a primary role. In particular, analyzing which relations are identified and valued we discover that Relational Capital is mostly related to Customer Capital driven assets. This could be explained by Customer Capital being the most relevant part of the Relational Capital (Edvinsson, 1997; Stewart, 1997) or because the sell-side analysts pay the most attention to such information (Flöstrand, 2006). The relationships with suppliers exclusively can be seen in only two cases (“Deferred charges…” and “Expenses for taking over…”) while the other categories of traditional stakeholders (community, government, etc.) are only once highlighted (“Non competition clause”), indicating that the concept of Relational Capital in the accounting practice is considered almost coincident with the one of Customer Capital even if in theory the first includes the latter. There are also some labels which are difficult to refer to a specific stakeholder (e.g. “Contracts”, “Contract portfolio”, etc.) and some of these could as well refer to Human Capital. For Structural Capital, the total number of uses of labels is far behind Relational Capital. The different items in this category are to some extent related since the labels in fact mainly refer to rights, licenses and technologies. Finally, Intersectional Capital gives a picture of assets that are identified but seems to a certain degree to be hard to separate from each other. This could mean that different parts of the IC are dependent on each other in order to generate value (Marr, et al., 2004) which is not at all any new idea especially within the value creation stream. The counting of labels, however, does not indicate how important the labels are in relation to value (measured by capitalization). Such an analysis, seen in table 3b, highlights that goodwill is still the most valued part. In consistency with the previous table Relational Capital continues to be the most relevant part of the identified assets while Structural Capital and the Intersectional Capital play a minor role. The low value of especially these two last categories and the high number of labels used point out the risk of label overuse and the consequent loss of understandability (a lot of labels referred to a very little value). As support of the notion that not all intangible assets are possible to be clearly identified or that firms do not want to disclose them, it is interesting to notice that in addition to the black box of goodwill firms attribute an interesting part of the gap price/book value to the intangible assets not specified. Table 3b: Value of classes of Intellectual Capital / Intellectual Capital Average

Std Dev

Relational Capital

9,37%

0,23

Structural Capital

2,29%

0,12

Intersectional Capital

0,86%

0,08

Unspecified immaterial assets

7,56%

0,20

Goodwill

79,93%

0,31

From the two analyses here discussed it emerges that the MERITUM Guidelines are not applied in practice even if the aim of the proponents was to support the firms in identifying, measuring and reporting of intangibles. At the same time firms adopting the IFRS3 visualize intangibles previously not disclosed in the financial statements and it is done without following any distinct classification. This is demonstrated by the existence of “Intersectional Capital” and goodwill which in a “good classification” should not be present (Gröjer, 2001). With “good classification” Gröjer is referring to the idea of an exhaustive classification where a residual class is not present. Even if the IC movement is grounded in practice (Petty and Guthrie, 2000), these evidences clarify not only the gap between financial accounting and IC accounting but also the one between IC theory and practice (Roslender and Fincham, 2001): the MERITUM model, probably as well as the other models proposed by the IC literature (for a review of the models see (Kaufmann and Schneider, 2004)), are distant from both from financial accounting and from the empirical world. In fact, the firms have not used the opportunity represented by the IFRS3 to practically apply the suggestions of the IC community. This can be explained by that companies do not consider the IC models applicable in the mandatory disclosure, by the fact they do not want to identify and disclose intangibles considering their strategic nature or by the problems related to their measurement and evaluation (Van der Meer-Kooistra and Zijlstra, 2001)

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or, finally, by the fact that the gap observed and partially nourished by the IC community between the two accounting systems here examined is too wide to be bridged.

4.3 RQ3: How is goodwill presented from an IC perspective? In our sample the purchase price consists of IC to more than 90%. Out of this IC, close to 80% is still in the “black-box” of goodwill (see table 3b). Having the transparency issue in mind, the next part of our study is dedicated to analyzing how firms present what their goodwill consists of. The MERITUM classification is used once more and did again not suffice since one specific concept recoiled: Synergies. Table 4 describes the goodwill findings. The total number of purchase analyses in which goodwill is explained is 106, which is in less than 50% of the cases investigated in which goodwill is present (251). This means that the main component of the IC is not clearly explained and so, from an external point of view, is not identifiable and consequently it is still appreciable as a black box. Table 4: Classifications of explanations given for goodwill Human Capital

28

Relational Capital

36

Structural Capital

28

Synergies

73

Other unspecified intangibles

5

Total items mentioned

170

Moving the focus to the disclosed origin of the goodwill, the IC categories are not so relevant in order to understand what the item under analysis is formed of. In fact, on average, each of them is mentioned only in about 18% of the cases (28/36 on 170), supporting our previous finding that the tripartition of the intangibles suggested by the MERITUM is not used or acknowledged in practice. Goodwill is not either seen as an account for Human Capital not possible to account for separately. This verifies the notion that using goodwill is a possibility of keeping the intangibles black boxed. Confirming the results of Brännström et al. (2007), this wider investigation finds that a primary role is played by Synergies but these are never explained. From an IC perspective Synergies can be due to that goodwill is mainly the financial accounting representation of the interaction between the three categories of IC and/or between the resources of the acquirer and the one who acquires (Gupta and Roos, 2001).

5. Conclusions From the analysis it emerges that IC represents a large part of the purchase price, the IC components identified are many but with low value and that goodwill is mainly referred to the interaction between IC components (Synergies). Moving from these results we can discuss them in relation to the aim of this paper. The dynamicity of IC creates problem when applying the classification and measurement models proposed by the literature (Mouritsen, 2006). Both financial and IC accounting models have the ambition to represent the reality. When facing the IC issue, these accounting models seem to assume the hypothesis that a clear definition of the boundaries of each IC component is possible in order to classify and measure them. Observing the reality, boundaries are not so clear thus classifying and measuring becomes difficult especially considering the interaction between IC components (Mouritsen, 2006). Consequently, following an accounting perspective in general, it appears not possible to achieve a complete explanation of what IC is or what it does. There is still lacking a process of how to identify IC components as single items. Alas, these tools have practical problems in case of classification of values or of IC “at work” were, inevitably, the interactions between the categories have to be considered. In this context the financial accounting approach seems to solve this interaction problem inside the residual class of goodwill under the label of “Synergies” (Gupta and Roos, 2001) which are never explained.

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This finding has bearing points with the fact that IC is formed of resources bundled one to another (Roberts, 2000). Intersectional Capital can be considered the main evidence of the practical and consequent difficulty of identifying, classifying and valuating all the IC components as single units. This class is not present in any classification model because what could be considered to be a “good” or “ultimate” framework should provide only exhaustive and mutually exclusive classes (Gröjer, 2001), alas no intersectional classes. This theoretical assumption appears to not be completely compatible with the character of IC examined here and thus the IC models appear to have a weakness in approaching IC “at work”. For the financial accounting framework the result is a creation of the class Intersectional Capital which can be considered as goodwill (sum of values not analytically identified) but with a different label. Thus the willingness of the IASB to increase the firms’ disclosure of IC through a more analytical identification of the intangibles purchased is a start but needs improvement. The final aspect is related to the label creativity which can be considered a consequence of the firm-specific nature of IC (Marr, et al., 2004). Analyzing the labels used it emerges that they are very close to each other and consequently on the one hand there can be the risk of labelling the same item with different names while, on the other hand, items labelled the same can be deeply different in nature or contribution to the value creation process. These results can be due to the specificity of IC which makes impossible to propose an exhaustive inventory list of intangible assets but rather only give examples of what could be an asset. At the same time the solution adopted to allow for an high degree of freedom seems that it could imply a reduction of the understandability (of the single statement), comparability (inter-firm comparisons) and, not least, usefulness of the information. Future research opportunities can be twofold. Moving from the same sample, the first research path is represented by the investigation of the diversities between Sweden and Italy, instead of on the whole, to understand if a best practice can be find and if the problems we highlighted exist also at a sub-level. The second research path is a more in depth study of the possible evolution of the accounting principles to make them able to represent adequately the specificity of IC and its components, that is to say its dynamicity, connectivity and specificity.

References Beattie, V., McInnes, B. and Fearnley, S. (2004), "A methodology for analysing and evaluating narratives in annual reports: a comprehensive descriptive profile and metrics for disclosure quality attributes", Accounting Forum (Elsevier), Vol. 28, No. 3, pp. 205-236. Beattie, V. and Thomson, S.J. (2007), "Lifting the lid on the use of content analysis to investigate intellectual capital disclosures", Accounting Forum, Vol. 31, No. 2, pp. 129-163. Brennan, N. (2001), "Reporting intellectual capital in annual reports: evidence from Ireland", Accounting, Auditing & Accountability Journal, Vol. 14, No. 4, pp. 423-436. Brännström, D., Catasús, B., Gröjer, J.-E., Giuliani, M., Karlsson, C. and Widegren, A. (2007), "Construction of IC – the case of purchase analysis", 3rd workshop on visualising, measuring, and managing intangibles & intellectual capital, Ferrara (Italy). Chaminade, C. and Catasús, B. (2007), Intellectual capital revisited: paradoxes in the knowledge intensive organization, Edward Elgar, Northampton. Chaminade, C. and Roberts, H. (2003), "What it means is what it does: a comparative analysis of implementing intellectual capital in Norway and Spain", European Accounting Review, Vol. 12, No. 4, pp. 733-751. Edvinsson, L. (1997), "Developing intellectual capital at Skandia", Long Range Planning, Vol. 30, No. 3, pp. 366-373. Flöstrand, P. (2006), "The sell side – observations on intellectual capital indicators", Journal of Intellectual Capital, Vol. 7, No. 4, pp. 457-473. Gröjer, J.E. (2001), "Intangibles and accounting classifications: in search of a classification strategy", Accounting, Organizations and Society, Vol. 26, No. 7, pp. 695-713. Gupta, O. and Roos, G. (2001), "Mergers and acquisitions through an intellectual capital perspective", Journal of Intellectual Capital, Vol. 2, No. 3, pp. 297-309. Guthrie, J., Petty, R. and Johanson, U. (2001), "Sunrise in the knowledge economy: managing, measuring, and reporting intellectual capital", Accounting, Auditing & Accountability Journal, Vol. 14, No. 4, pp. 365-384. Guthrie, J., Petty, R., Yongvanich, K. and Ricceri, F. (2004), "Using content analysis as a research method to inquire into intellectual capital reporting", Journal of Intellectual Capital, Vol. 5, No. 2, pp. 282-293. Kaufmann, L. and Schneider, Y. (2004), "Intangibles. A synthesis of current research", Journal of Intellectual Capital, Vol. 5, No. 3, pp. 366-388. Krippendorff, K. (1980), Content analysis. An introduction to Its Methodology, Sage Publications, Lev, B. (2001), Intangibles: Management, Measurement and Reporting, Washington D.C. Lev, B. and Zarowin, P. (1999), "The boundaries of financial reporting and how to extend them", Journal of Accounting Research, Vol. 37, No. 2, pp. 353-385.

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Marr, B. and Chatzkel, J. (2004), "Intellectual capital at the crossroads", Journal of Intellectual Capital, Vol. 5, No. 2, pp. 224-229. Marr, B., Schiuma, G. and Neely, A. (2004), "The dynamics of value creation: mapping your intellectual performance drivers", Journal of Intellectual Capital, Vol. 5, No. 2, pp. 224-229. Meritum (2002), Proyecto Meritum: guidelines for managing and reporting intangibles, Madrid. Mouritsen, J. (2006), "Problematising intellectual capital research: ostensive versus performative IC", Journal of Intellectual Capital, Vol. 19, No. 6, pp. 820-841. Nobes, C.W. (1983), "A judgmental international classification of financial reporting practices", Journal of Business Finance and Accounting, Vol. No. Spring, pp. 1-19. Petty, R. and Guthrie, J. (2000), "Intellectual capital literature review, measuring, reporting and management", Journal of Intellectual Capital, Vol. 1, No. 2, pp. 155-176. Roberts, H. (2000), "Classification of intellectual capital", in G. HEC, Classification of Intangibles, Jouy-en-Josas, 197205. Roslender, R. and Fincham, R. (2001), "Thinking critically about intellectual capital accounting", Accounting, Auditing & Accountability Journal, Vol. 14, No. 4, pp. 383-398. Stewart, T.A. (1997), Intellectual Capital, Bantam Doubleday Dell Publishing Group, New York, NY. Van der Meer-Kooistra, J. and Zijlstra, S.M. (2001), "Reporting on intellectual capital", Accounting, Auditing & Accountability Journal, Vol. 14, No. 4, pp. 456-476.

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Business Benefits of Non-Managed Knowledge Sinead Devane1 and Julian Wilson2 ¹Bournemouth University, UK ²James Wilson (Engravers) Ltd, Poole, UK [email protected] [email protected] Abstract: This paper proposes that knowledge cannot be effectively managed, rather that people are so complex and the knowledge they acquire so varied and, even in a room where everyone is being taught the same knowledge, uptake is so disparate that to truly manage what an individual knows is impossible. An effective alternative which allows people to maximise their knowledge (even the bits we might not know they know) is to measure the outputs of an individual: what they achieve. The case study in this paper illustrates one innovative company’s design to maximise the knowledge of their employees and how the management-less structure they recently adopted has had a profound effect on the engagement of their workforce - in their work and on their profitability. The argument will critique the theory of knowledge transfer as the movement of a body of knowledge from one place to another. Additionally it confronts the misuse of the work of Polanyi where theorists have crudely bunched together notions of understanding and the hidden aspects of our knowledge under the title ‘tacit’ knowledge and juxtaposed these with ‘explicit’ knowledge, which refers to documented and shared knowledge within an organisation. This paper promotes an approach that follows Coverdale’s (psychologist) idea that getting things done by developing skills as opposed to focusing on traditional knowledge management is the premise of the company’s success. The anthropological notion of cultural memes is explored, and the idea of agency will be introduced as a useful concept in acknowledging the potential of individuals to unleash their knowledge. The case study presented here is from empirical ethnographic research within a company in the South West. The company has transitioned from a traditionally managed SME with a hierarchical structure, to a de-centred model for workplace where each individual within the company is responsible for what is essentially like their own mini company within the larger one. The company data (quantitative) from before these changes were introduced compared to the data now (on aspects such as Quality, Delivery and Profitability) tell a remarkable story about the effects of management and organisational structure on individual performance and commercial profitability. It would seem that the best results commercially and in individual competency so far point to a counter-intuitive, hands-off approach to KM within an organisation. They point to what is in fact the non-management of knowledge in the sense that knowledge will not be prescribed or transferred from one person to another, but rather drawn out of the individual. Keywords: knowledge management, outcomes and application, reification, cultural memes, agency, innovation

1. Introduction This paper will be presented in three sections; following the introduction, the second section is a theoretical discussion surrounding the nature of knowledge and its management, while the third section will detail our observations in the workplace as a case study, the final concluding section will recommend an approach to knowledge management, or non-management, for organisations that is extremely cost effective, counterintuitive as it may seem. Our arguments come with two basic assumptions. The first is our understanding of knowledge: knowledge to us is something infinite and intangible, something unique to each individual. Knowledge itself cannot be measured at a specific time or place. It is only recognised by its implications; that is we only know of its existence through the outcomes it produces. The second is our use of the term ‘conventional management’. By this we refer to top-down hierarchically organised systems, with separate specialised functions for different aspects of the organisation’s needs that are prevalent in our business world. We acknowledge there is a diversity of management systems, even within the top-down model, but for the purposes of this paper ‘conventional management’ refers to a system whereby some individuals have positions of authority over others, and responsibility resides primarily with those in the positions of authority.

2. Theories of knowledge management Let us first define our understanding of the meaning of the terms ‘knowledge’, ‘management’ and ‘knowledge management’. Theories of knowledge are extensive, but two of the most quoted and influential theorists are Michael Polanyi and Ikujiro Nonaka. Polanyi separates knowledge into two distinct types: the explicit ISSN 1479-4411 31 ©Academic Conferences Ltd Reference this paper as: Devane, S. and Wilson, J. “Business Benefits of Non-Managed Knowledge.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 31 - 40, available online at www.ejkm.com


knowledge as codified and written down, that can be passed on from one person to another; and the tacit knowledge that an individual draws on subconsciously or unconsciously from a range of conceptual and sensory information and images that can be brought to bear in an attempt to make sense of something’ (Smith 2003). For Polanyi, 'tacit knowing achieves comprehension by indwelling, and ... all knowledge consists of or is rooted in such acts of comprehension' (Polanyi, 1958). Nonaka (1991) takes this position further to say that tacit knowledge can be made explicit (as expressed by Wilson 2002) and corporations who tap into tacit knowledge of the individuals working for them are more successful. Within such literature (on systems of management that can capture the knowledge of individuals and share it throughout the organisation), many contributors have lost sight of the value of tacit knowledge and the very fact that it cannot be codified. Management is usefully defined by Henri Foyal (1967) as comprising of five functions: planning, organising, leading, co-ordinating and controlling. But management can be more effectively defined to avoid the assumption that it must be directed from an individual/group in a position of authority unto an individuals or groups in lower positions. Mary Parker Follett (1868-1933), who wrote on the topic of management in the early twentieth century, defined management as ‘the art of getting things done through people’. This definition does not imply didactic management from persons in authoritarian positions, but allows for the selforganisation of individuals or groups. One definition of knowledge management (KM) from the corporate perspective is that ‘KM is the practice of harnessing and exploiting intellectual capital to gain competitive advantage and customer commitment through efficiency, innovation and faster more effective decision-making’ (Barth 2000). The International Journal of Management Science, OMEGA, recently ran a special edition on knowledge management. In a review of this edition, King et al. (2006) outlined a broad perspective to take when examining the different contributions to the issue: that knowledge management can be described in terms of a life cycle. Knowledge is generated in different ways, and stored within organisations, who then transfer or ‘share’ this knowledge with others (employees), where it is used or applied in problem solving. King et al. claim that all contributions to the debate fall somewhere along the cycle. Our paper critiques the notion that knowledge can be collected and stored in the organisation, extrinsic to the individuals who form the organisation. And then disseminated whole and complete to others. Some studies (Kjaergaard and Kautz 2008; Orzano et al. 2008) show that, even with the best intentions and optimum conditions, KM implementation programs simply do not work. Kjaergaard and Kautz concluded that the failure of a KM implementation programme lay in the ideological misfit that employees experienced between what they imagined working with KM in their company would be like and the reality of working with KM in the company, thus the process of KM installation was abandoned. Orzano et al. showed how expensive formal technological KM sharing practices that were installed within a medical practice were not efficient (as promised), and in fact lost knowledge in some instances. They juxtaposed these observations with instances where more traditional face to face knowledge sharing practices which were proving to be worth-while. All of the above treats knowledge as if it is something real and tangible like an asset. Are we guilty of the reification of knowledge? To reify is to regard or treat (an abstraction) as if it had a concrete or material existence (Wikipedia.com). When knowledge is reified for the purpose of corporate KM, it becomes fixed and tangible. This does not allow for the individual’s internal landscape into which any new knowledge must be accommodated. Either the knowledge must be modified to fit an individual’s internal landscape, or the individual’s internal landscape must be modified to fit the knowledge, or the knowledge is lost (through lack of understanding). Then the process of recall and practice of this knowledge is itself subject to problems during reconstruction. If the knowledge is no longer valid, or circumstances do not support it, then it quickly will be extinguished. The transfer of knowledge is not reliable, repeatable and dependable. The “knowledge” presented to individuals must be interpreted (or not), assimilated (or not), stored (or not), recalled (or not) and applied (or not) in achievement of a goal (or not). This provides ample opportunities for knowledge management to go awry, even given the best intentions of all concerned.

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Sinead Devane and Julian Wilson

If knowledge is an abstraction, truly knowing what knowledge someone possesses is impossible. And thus it is impossible to manage what someone knows. As one keynote speaker for the Delphi Group's Collaborative Commerce Summit once scoffed: 'You can't manage knowledge… Knowledge is between two ears, and only between two ears.' (Drucker, cited by Kontzer 2001). And Kontzer goes on to make the point that what is important for organisations is ‘what individual workers do with the knowledge they have’. When employees leave a company, he says, ‘their knowledge goes with them, no matter how much they've shared’ (Kontzer 2001). We cannot package it and put it on a shelf, ready to hand to the next person who walks in. Wilson (2002) reiterates this point in his argument for the personalised nature of knowledge when he says that “whenever we wish to express what we know, we can only do so by uttering messages of one kind or another - oral, written, graphic, gestural or even through 'body language'.” He argues that these latter communications do not carry 'knowledge', but constitute 'information'. When we communicate information, we rely on our listener assimilating our shared information into their own schema of knowledge. Each individual’s schema of knowledge is different, because it is, as Schutz (1967) would say, ‘biographically determined’, therefore a piece of ‘knowledge’ (derived from a set of information) is never the same for any two individuals. This brings us to the issue of deliberate misapplication of knowledge by employees in a business. In their book ‘Organisational Misbehaviour’ Ackroyd and Thompson (1999) show that misbehaviour is endemic in organisations. Though management frequently tries to control and eliminate misbehaviour, such practices are deeply rooted in the formation of employee interests and identities, and in the informal organisation developed to promote and protect them. Could it be that in conventional KM we find ourselves on a path that is ultimately impossible? The goals of KM, as defined previously by Barth (exploiting intellectual capital to gain competitive advantage) however are as pertinent as ever. So perhaps there is an alternative that is effective and efficient. Our case study focuses on an organisation that has concentrates on measuring achievement (outcomes). When we talk about outcomes we are talking about implied and applied knowledge, as knowledge must be drawn upon in order to create an outcome. Our case study examines what outcomes one organisation has chosen to measure and how those measures change the behaviours of the individuals who work there.

3. Case study The data used for this case study is the ethnographic data from research conducted within a small engineering company on the south coast of England. This company has recently changed its management structure from a traditional top-down hierarchical organisation (dendritic, functional, command and control model) to a flat-structured enterprise with self-managing, autonomous individuals managing their own projects from start to finish. The individuals are responsible for everything from securing future work flow, through design, manufacture and despatch of goods, to final invoicing and archiving. All departments and functions within the business were disbanded so each individual is now responsible for all aspects of the job and its management. The point must be emphasised that the organisation has not created self managing autonomous work teams, but rather deconstructed the business down to the level of multi-skilled individuals. Their desire for autonomy and self-organisation is exploited within a systemic framework of measures that identifies and measures customer satisfaction and economic value-add. Whilst this is at odds with conventional leadership wisdom and the division of labour, this approach has provided benefits (customer satisfaction and economic value-add). In a paradigm where specialisation is promoted from an early stage (in the UK it begins while we are still at school), it seems strange to outsiders that this company requires its employees to multi-skill and be competent sales-men while also excellent design engineers, project managers and accountants. One comment has been ‘isn’t that the job of ten people?’ illustrating that in our wider culture we expect not to be multi-skilled at work. However, the individuals who work in this company now are, on the whole, managing their work more successfully – and that success is measured by higher customer satisfaction due to better

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quality, delivery records and competitive prices – than when the business ran a conventional management system. The model underpinning the organisation’s new system is best understood from the perspective that businesses demand dynamic compromises to best respond to circumstances that present themselves; a multi-skilled person is better able to make cost effective compromises than a group or team effort (who have only static prescriptive solutions at their disposal). The essential characteristic of the company’s new model is that the nature of individual responsibility has changed from a model where responsibility is distributed to one where it is focussed. Consider the range of people who contribute to the production of a part. In a conventional model, many people contribute their competencies to the completed part, they are co-ordinated by managers, foremen and IT (and all of these are a cost). In this business approach very few people, perhaps only one individual contributes to the part, and there is only ever one individual who is responsible for the part. The benefits of the division of labour are lost, but the costs of the co-ordination are saved and customer satisfaction has improved (as has employee satisfaction, but that is beyond the scope of this work). The changes to this organisation were introduced step by step, and here we will outline some of the most prominent. ̇ Removal of overtime. ̇ Distribution of centralised stores to stock kept where it is used by an individual ̇ Personal stock management ̇ Personal purchasing and reduction in purchasing costs ̇ Personal goods inward approval ̇ Removal of clocking-in machine and time cards ̇ Tracking of customer returns back to individual ̇ Personal commitment of delivery to customer, and tracking of performance. ̇ Introduction of an internal market ̇ Personal creation of inspection criteria ̇ Personal packaging and dispatch of goods ̇ Personal order processing ̇ Personal Profit and Loss account plus balance sheet. ̇ Attribution of product sales income to an individual ̇ Introduction of profit related bonus (20% of profit achieved by an individual pcm) With the removal of management, the cost of running the organisation reduced. Simultaneously the productivity of the workforce increased. Where before individuals managed their work in such a way that it would warrant overtime, so that they could earn more money, the new system rewards good quality and delivery performance (these are measured on each individual every month). There is now the situation where each individual can take home 20% of any profit he or she makes in a month. So by measuring the profit they make, profit making behaviour is indirectly improved. Similarly with ‘knowledge’: there are a variety of skills and knowledge that each individual needs in order to successfully manage a project. In order to improve the skills and knowledge of an individual, their outputs must be measured. This leads us to the issue of engagement. To engage someone is to hold fast a persons attention (OED). Restructuring the organisation on an individual basis has indirectly increased the level of engagement demonstrated by the employees. It is impossible to function successfully within the business without a high degree of genuine engagement, because to produce successful outcomes an individual must use their skills and knowledge. Within this engagement a person brings their knowledge to bear. We observe that individuals will search out answers to problems when in doubt; they choose to fill holes in their knowledge when these holes become apparent. They test, experiment, research and enquire. Informal

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communication provides for the cross pollination of best practice within the business and the personal interpretation of this best practice provides for constant reaffirmation of its validity. As the individuals who work in this company have acclimated to their positions of multi-skilled managers of their own projects, the company results for the measurement of Quality and Delivery have improved. (see figures 1 and 2.) The directors of the company had to take the risk of letting go of their control over what the individuals did to achieve their goals, even though it seemed counter-intuitive. Yet the results tell their own story. The individuals now do a better job:

Figure 1: Quality perfomance, as measured by the % of unreturned parts

Figure 2: Delivery performance, as measured by % of deliveries on time, in full. Both these graphs illustrate the improvement in performance over time of the employees. This case study shows that the change of focus from the micro-management of people and what they know and do, to the management of their performance in terms of outcomes has improved their business performance and the change of approach has proved to be a worthwhile investment.

4. A different approach to KM The technique used in this organisation has been to create systems and a culture in which people need knowledge to prosper. The organisation is one in which personal interdependence is such that the sharing of

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knowledge provides a tangible benefit, then knowledge management is precipitated; and demonstrably so within the outcomes of the business. Conventional KM recognises this need in organisations, but many try to artificially induce extra knowledge as some extrinsic dimension that can be added on. If we examine closely Polanyi’s theories of knowledge, he states that ‘certain cognitive processes and/or behaviors are undergirded by operations inaccessible to consciousness' (Barbiero, n.d., cited by Wilson 2002). Thus the point here is that what he refers to as 'tacit' knowledge means something that is 'hidden', hidden even from the consciousness of the knower (Wilson 2002). Polanyi (1958) used the phrase 'We know more than we can tell' precisely to communicate the inaccessible nature of personal knowledge, inaccessible even to the consciousness of the knower. That tacit knowledge can somehow be 'captured', as is the claim of Nonaka (1991) and Nonaka and Takeuchi (1995), is a puzzle. As Wilson asserts, ‘tacit knowledge is an inexpressible process that enables an assessment of phenomena in the course of becoming knowledgeable about the world… it cannot be captured – it can only be demonstrated through our expressible knowledge and through our acts’ (Wilson 2002). Thus this organisation uses an alternative approach which is to work in alignment with Coverdale’s (1977) values, and to focus upon the ‘doing’ skills and knowledge of an individual rather than knowledge as an extrinsic entity, as these kinds of skills are the tangible outcome of knowledge use. Coverdale links difficulties, knowledge, actions, outcomes and risk together: he shows us that when we meet a difficulty we must bring our knowledge to bear on the problem (he calls these synthesis and analysis) and act (do something, use skills) and take risks (we don’t know if it will work out) to produce an outcome which is a resolution to the problem. Risk is present at both personal and corporate levels, the purpose of KM is to ameliorate the risk from the corporate perspective. It is assumed that to develop a KM strategy is to protect this intellectual capital by making it tangible and to preserve it once the individual who carried it leaves. Companies, especially in the service industry, rely upon the knowledge of their individual’s for their income. As Barth (2002) points out, 90% of their assets (intellectual capital) are carried around in the heads of the workforce. This is a paradox, because at the heart of conventional KM is the assumption that knowledge can exist separately from the individual who carries it, and through separation risk is reduced. But the act of separation demotes the knowledge to the level of information and actually increases risk. This may be the reason that outcomes in KM programs are inconsistent. Here then is the heart of our difference in approache. Where conventional KM has tried to separate knowledge from the individual systemically, our approach promotes knowledge as an inextricable part of the individual and provides both responsibility and risk at the level of the individual. During our practical exploration from within a real business environment, we believe we have determined that knowledge can not be transferred explicitly and completely (identified, transferred, collected, stored, retrieved and applied) in a cost effective manner. We are not suggesting knowledge cannot be managed, but rather that doing so is not cost effective; it may even be cost prohibitive and culturally damaging. We believe that KM follows the law of unintended consequences; it is always incomplete, and the work required to complete it introduces more problems. And whilst more effort is put into completing it, completion is never reached. There are always more instructions or hints and tips one could add. Furthermore, the cost of this effort applied to all the knowledge put into storage is not repaid by the successful application of the subset of knowledge which is actually retrieved. We explored many alternative ideas whilst developing this work, including the idea that managing even highly incomplete knowledge can provide value and an investment return. But whilst this looked promising, we predicted a significant problem with getting operators to use a “library” with knowingly incomplete knowledge in it; uptake being crucial to the return on the investment.

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For the KM process to be complete it has to include the following: the development of new knowledge (hypothesis, experimentation, application and affirmation), its capture (condensation) and transformation (communication), collection (accumulation) and categorisation (to make it searchable), its storage (secure and accessible), retrieval, then comparison of the original context to today’s circumstances, the prioritization of all the knowledge revealed in the search, and the application of knowledge in pursuit of a commercial purpose (quality, delivery, profit or conformity), and the final realization of the commercial goal. The more useful and explicit one makes knowledge in preparation for storage, the more expensive is its management. Expensive KM is not in itself a problem, however the investment return on that expense is. How much is the knowledge worth? Each bit of explicit knowledge has only a finite value, and that value is determined by the circumstances of the future, and the successful application of this knowledge in those circumstances. The organisation started to search for a more useful way of viewing knowledge. In hindsight, the shift was made to view knowledge as a dynamic and infinite abstraction, and therefore not treat it as a “real” thing; not to reify it. Returning to the practical exploration of the KM problem, it remained the organisation’s goal to achieve the commercial benefits of KM; they were struggling to engineer an investment return on their KM program, yet it remained central to the commercial success of the business. It was a barrier that had to be successfully overcome. The solution is to pioneer an alternative approach that provides the commercial benefits of KM, but without the explicit management of knowledge. The experience of the business has been that the secret to commercial success of KM is its IMPLICT management, in contrast to explicit management. And that explicit KM does not provide a net investment return, it is unreliable and culturally counter productive. In pursuit of communicating this approach, knowledge (K) can be viewed as an abstraction, or a first order derivative. It is something that cannot be directly observed, rather its effects can be observed. Having found this derivative (K) very difficult to manage explicitly, a consequence of the knowledge was sought, that might provide something real to manage. Thus their attention was turned to the “outcome” of K, specifically, to find something that would imply the use of managing K (like a shadow implies a solid object). It is reasoned that if the organisation can reliably precipitate that outcome, then the KM it implies must be occurring as well. The organisation focuses on identifying and rewarding the individuals within the organisation who overcome the commercial barriers of the present day. Those who can satisfy their customers profitably, even in tricky circumstances, are rewarded each month. When this second order derivative (commercial outcome) is managed, it precipitates KM. Furthermore it tends to elicit very unconventional KM techniques by its operators. Slick, fuzzy (logic), innovative, even at times counter intuitive, these techniques are providing commercial outcomes and clearly implied knowledge management, but are not fixed and deterministic in nature. Through managing the consequences of achieving commercial outcomes, the organisation is implicitly inducing a fluid KM strategy. And the KM that is elicited this way is diverse, yet successful. For example, can you get your competitor to unknowingly, yet securely store knowledge for you at their expense? It may seem like a strange thing to do, but it is a successful KM strategy. Knowledge can be usefully viewed as a collection of cultural memes. This idea goes some way to address further complications in KM that were encountered, for example the context and nature of the stored knowledge was constantly moving, not just during retrieval but also within the “static” storage phase. Rather than knowledge repositories being a dusty storage of bits of data and facts, every new piece of knowledge was re-writing the old previously stored knowledge and making it obsolete or newly applicable. Knowledge, it was found, is not fixed, it is dynamic. It is advantageous to treat knowledge as changeable of the pursuit of commercial success in the current circumstances, rather than the replaying of previous knowledge schema. There is a tendency to reify it; and when we tend to treat the abstract as real in error, and we suffer accordingly. This idea of knowledge as a cultural meme provides the opportunity to think about the diversity of solutions that may be applicable to a particular problem. That is to say, presented with a particular problem there are a number of approaches that could be taken to reach a solution, based upon different knowledge routes. This diversity of knowledge provides a richness of choice to the solution set, it is not about identifying the

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knowledge to solve the problem, but about which solution gives you competitive advantage. As promoted by Ashby’s Law of Requisite Variety, a range of solutions is only available through diversity. We believe that there is cultural risk in turning knowledge management into a process where knowledge is reified, because this destroys the ability of the future user of that knowledge to overcome the unique barriers of their circumstances. There may be short term benefits of neatly packaged KM, but there is a clear danger of creating a knowledge ‘mono culture’. The aim must be to have both the short term gains of effective KM, plus the long term gain of a diverse knowledge culture. If knowledge is viewed as a collection of cultural memes, destroying cultural meme diversity is a high risk strategy. For example, distil the genetic diversity of a crop and yields improve, but the long term risk is high because a day will come when the entire crop is decimated by some hidden vulnerability. It is genetic diversity, and subsequent exponential growth of the surviving strains that provide your only hedge against complete crop failure and subsequent famine. The diversity of cultural memes is key to ensuring a business is capable of tackling the unique commercial barriers that exist in its future. Rather than treating knowledge as something to fix and distil, it must be nurtured and diversified. Thus we believe this approach to KM uniquely satisfies both short term goals and longer term risk amelioration. Returning to our idea that knowledge lies within the individual, and to Follett’s definition of management as ‘the art of getting things done through people’ (Barrett 2003:51), the anthropological concept of agency further informs the philosophy behind our argument that the focus of knowledge must lie within the individual. The concept of agency is developed by Nigel Rapport (2003) as indicative of an individual’s capacity for action in the world. Rapport illustrates his argument with case studies of four individuals whose lives were characterised by taking unusual paths, trajectories he called them; ones that seemed at odds with the hegemonic ideals, and took strength of character to uphold. In this instance we would advocate agency as something each person possesses that allows them to act independently of instruction to meet their needs. When the individual is made responsible for their own risks in an effort to achieve outcomes, they will, through their own agency, bring their own dynamic knowledge set to bear on the situation. Through their engagement with the problem, knowledge is used, skills are drawn upon and solutions found from wherever they need to come from. There are many more possible solutions to a problem when an individual has the freedom to find them than when management prescribes a process for problem solving. Our argument is that when conventional management is applied to knowledge, knowledge becomes reified as something extrinsic to individuals. This is not the true solution to managing knowledge for ‘exploiting intellectual capital to gain competitive advantage’, as our case study and argument shows. Therefore knowledge needs to be approached as something non-manageable. Something that is inextricable from the individuals within the business, and that the best way to ‘manage it’ (that is, get the best use out of it) is to allow the individual to manage it themselves. This paper does not recommend the outright replacement of conventional KM, but rather serves as a reminder that KM can only be cost effective when in the context of systems, measures and a culture that is not dysfunctional.

References Ackroyd, S. and Thompson, P. (1999) Organizational Misbehaviour London:Sage. Barrett, R. (2003) Vocational Business: Training, Developing and Motivating People. Cheltenham: Nelson Thornes. Barth, S. (2000) Defining Knowledge Management, definingCRM online magazine [http://www.destinationcrm.com/articles/default.asp?ArticleID=1400 accesed 3/4/08] Drucker, P.F. (1969) The age of discontinuity: guidelines to our changing society. New York, NY: Harper and Row Foyal, H. (1967) General and Industrial Management. (trans. from the French ed. Dunod) by Constnace Storrs, with a forward by Urwick.L. London: Pitman King, W.R; Chung, R; Haney,M. (2008) Knowledge Management and Organizational Learning OMEGA; 36(2): 167-172. Kjaeraard, A; Kautz, K. (2008) Process Model of Establishing Knowledge Management: Insights from a Longitudinal Field Study, OMEGA; 36(2): 282-297 Kontzer, T. (2001) Management legend: trust never goes out of style. Call Center Magazine. http://www.callcentermagazine.com/article/IWK20010604S0011 [accessed 3/4/08]

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Nonaka, I. & Takeuchi, H. (1995) The knowledge creating company: how Japanese companies create the dynasties of innovation. Oxford: Oxford University Press. Orzano, A. John; McInerney, Claire R.; Tallia, Alfred F.; Scharf, Davida; Crabtree, Benjamin F. (2008) Family medicine practice performance and knowledge management. Health Care Management Review 33(1):21-28. Polanyi, M. (1958) Personal knowledge: towards a post-critical philosophy. Chicago, IL: University of Chicago Press. Schneble, John (2003, August). The Need to Know. Informationweek. [www.informationweek.com/story/showarticle.jhtml?articleid=13100330 accessed 2/4/08] Schutz, A. (1967) The phenomenology of the social world. Evanston, IL: Northwestern University Press. Smith, M. K. (2003) 'Michael Polanyi and tacit knowledge', the encyclopedia of informal education, [www.infed.org/thinkers/polanyi.htm accessed 2/4/08] Wilson, T. D (2002) the nonsense of ‘knowledge management’ Information Research: an electronic journal, 8(1) [http://informationr.net/ir/8-1/paper144.html, accessed 3/4/08]

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Predicting the Influence of Network Structure on Trust in Knowledge Communities: Addressing the Interconnectedness of Four Network Principles and Trust M. Max Evans and Anthony K.P. Wensley University of Toronto Canada [email protected] [email protected] Abstract: The goal of this paper is to explore the emergence of trusting relationships within Communities of Practice. It has been argued that trust can be viewed as an organizing principle (McEvily, Perrone, and Zaheer, 2003). However, the focus of this paper is on the view that trust is an essential pre-condition for the sharing of knowledge. The goal of the paper is to discuss possible connections between social networking principles, network structure, and trust within Communities of Practice. This paper will define and subsequently analyze the concept of trust and develop arguments relating to the existence and strength of trusting relationships within Communities of Practice. The theoretical arguments propose relationships between the characteristics of trusting relationships and four network characteristics: homophily; closure; brokerage; and the small-world problem. The general research question that underpins this paper is: To what extent do network principles determine the level of trust among members within a social network (i.e. a Community of Practice)? The analysis focuses on a specific type of social network which has been termed a Community of Practice. Communities of Practice have been argued to be critical elements in the creation, refinement and sharing of knowledge (Dugid, 2005; Wenger, 1998; Wenger, McDermott, and Snyder, 2002). Keywords: network structure, trust, knowledge communities, knowledge sharing, homophily, closure, small worlds, brokerage

1. Introduction The goal of this paper is to develop theoretical arguments addressing possible relationships between social networking principles, network structure, and trust within a special type of social network. This paper will consider trust to be an emergent property, which is likely to be contingent on a social network’s structure and management. The paper defines and examines the concept of trust and develops arguments concerning the development of trusting relationships within a specific type of social network called a Community of Practice. Arguments addressing the interconnectedness of trust and Communities of Practice will be derived from four network principles: homophily, closure, brokerage and the small world problem (commonly known as six degrees of separation). Using these network principles, this paper will propose that the strength of trusting relationships can be predicted by looking at network structure and agent characteristics. The principal research question posed by this paper is: Can network structure or network principles be used to determine levels of trust among members within and around a knowledge community (i.e. Community of Practice)?

2. Social network Following Wasserman and Faust’s (1995) definition, a social network consists of “a finite set or sets of actors and the relation or relations defined on them” (p.20). The target or sample social network used to develop the arguments in this paper is called a Community of Practice. Relationships examined within this social network will span Community of Practice members as well as their respective organizational units (for a network representation see Figure 5). The paper maintains a structural network view as opposed to a dyadic view, which exclusively examines networks from a dual actor/node perspective.

3. Communities of practice Wenger, McDermott, and Snyder (2002), define a Community of Practice (COP) as ”groups of people who share a concern, a set of problems, or a passion about a topic, and who deepen their knowledge and expertise in this area by interacting on an ongoing basis” (p.4). COPs are based on a social theory of learning where social practices and group interaction results in collective learning. These social practices reflect the pursuit of the community’s enterprises and the attendant social relations (Wenger, 1998). ISSN 1479-4411 41 ©Academic Conferences Ltd Reference this paper as: Evans, M. M. and Wensley, A. K. P. “Predicting the Influence of Network Structure on Trust in Knowledge Communities: Addressing the Interconnectedness of Four Network Principles and Trust.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 41 - 54, available online at www.ejkm.com


A Community of Practice is initiated through the collective development of a mutually negotiated shared practice (Wenger, 1998). For example, this might be a set of employees gathering to share information, giving and receiving advice, or trying to solve a job or industry related problem (Wenger, McDermott, and Snyder, 2002; Wenger 1998, Orr, 1996). Through continuous interactions the COP develops its own practices, routines, rituals, artifacts, symbols, conventions, stories and histories (Wenger, 1998). The community also acts as, “a context in which the meaning of objects, problems, events and artifacts gets constructed and negotiated, and in which people live, work, communicate, and understand the environment and themselves” (Choo, 2006, p. 166). Through these interactions, developed practices and created artifacts, a COP represents a true knowledge creating and sharing community. 1 COPs will usually self organize and tend to originate on their own (Choo, 2006). A person might be inclined to join because they might have something valuable to contribute, have something to learn, or both. As opposed to other ‘project teams’ or workgroups, COPs do not work together on a daily basis. Instead, they meet only when they find value in doing so (Wenger, McDermott, and Snyder, 2002). COPs are not self contained entities (Choo, 2006) and are not static.

Communities of Practice are valuable to their participants and their corresponding organizations because over time a common meaning and shared repository for their work is developed (Choo, 2006; Gherardi, 2001). An example of this may be seen by reviewing Orr’s work with copier technicians (Orr, 1996). This socially developed ‘common meaning’ represents, “a unique perspective of their topic, common knowledge, practices, and approaches” (Wenger, McDermott, and Snyder, 2002, p. 5). Membership in the COP provides form, content, and context to this knowledge. Many times this is referred to as collective, accumulated or situated knowledge. It is this type of knowledge which is said to be produced, and resides in the group community. Therefore, the first stated benefit of studying a COP is that they create and facilitate the dissemination of knowledge (Duguid, 2005; Seely Brown and Duguid, 1998; Nonaka, 2002; Tsoukas, 2005a; Van De Ven and Johnson, 2006; Boer, van Baalen, and Kumar, 2002; Gherardi, 2001; Wenger, McDermott, and Snyder, 2002; Wenger, 1998; Choo, 2006). Another similar benefit to acquiring or sharing new knowledge associated with COPs is the creation of a learning environment. Some organizational theorists (Blackler, 2002; Leonard and Sensiper, 2002; Wenger, McDermott, and Snyder 2002; Wenger, 1998) have argued that COPs are conducive of learning and the acquisition of new skills. Wenger (1998) refers to Communities of Practice as “shared histories of learning” (p. 73). The learning that takes place within the COP is closely related to actually becoming a practitioner; this includes associating contextual meaning, understanding the social structure of the practice, negotiating power relations, as well as finding implicit ways of working together. In return, the community becomes informally bounded by the value participants create through learning from each other (Wenger, McDermott, and Snyder 2002). From an organizational perspective, facilitating and sustaining such communities “creates a learning environment which raises the effectiveness and value of the organization (Wenger, 1998 p.45). Other benefits of Communities of Practice include the development of personal relationships, a common sense of identity, and accepted ways of interacting (Wenger, McDermott, and Snyder 2002). What makes COPs unique and interesting to study is that the relationships and work practices are not reflected by nor are reflected in formal policies, methodologies, organizational charts, and job descriptions; instead the actual practice and learning is informal, socially constructed, and quite impromptu (Wenger, 1998; Choo, 2006). Unlike organizationally structured project teams, COPs have no formal authoritative control measures. Instead, members of the community govern their interactions through self constructed and agreed upon norms and sanctions. Acts relating to information hoarding, falsification of data, or any other malicious actions toward the community are primarily dealt with within the community. Sanctions for such actions may include the development of a bad reputation, exclusion from accessing information, or even expulsion from the community. For this reason, trust is formative to the success of a COP, especially when knowledge is created and disseminated.

4. Trust The emergence of self-directed teams and a reliance on empowered workers greatly increase the importance of the concept of trust (Golembiewski and McConkie, 1975; Larson and LaFasto, 1989) as control mechanisms are reduced or removed and interaction increases. 1

Without the intervention of a governing or authoritative body such as an organization

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M. Max Evans and Anthony K.P. Wensley

In the use of self-directed teams, trust must take the place of supervision because direct observation of employees becomes impractical. (Mayer, Davis, and Schoorman, 1998 p.709) Having trust in any workgroup, especially one without authoritative control, is vital to the groups’ success. When trust exists among members in a Community of Practice, efforts needed for information search and processing are minimized since the receiving party does not have to scrutinize the quality or veracity of the information (Zaheer, McEvily and Perrone, 1998). In turn, the existence of trusting relationships reassures the sender that the receiver will not misappropriate the information entrusted to them (Zaheer, McEvily and Perrone, 1998). In this example, trust reduces monitoring and safeguarding behaviors (or transaction costs) and conserves cognitive resources (Uzzi, 1997), leading to more ‘openness’ in the exchange (Zaheer, McEvily and Perrone, 1998). Additional benefits of trust include timely access to information and referrals (Burt, 1992) as well as an enhanced ability to draw distinctions and come to decisions which are essential activities in constructing knowledge (Tsoukas 2005a, 2005b). A group within which there is extensive trustworthiness and extensive trust is able to accomplish more than a comparable group without the trustworthiness and trust. (Coleman, 1988 p. S101) To explore the above relationships further it is important to understand the factors underlying why a trustor would trust a trustee. To do this Mayer, Davis, and Schoorman’s (1995) model of organizational trust will be used (See Figure 1). Mayer et al. (1995) define trust as, 2 the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party. (p. 712) Mayer et al. (1995) further argue that it is individual traits or characteristics of the trusting parties which determine the level of trust that may be achieved between them. For instance, in order for a trustor to exhibit trust toward a trustee, the trustor must first have the ‘propensity to trust 3 ’ (p.715) that particular trustee. In return the trustee must have ability 4 , benevolence 5 , and integrity 6 which together help the trustor determine the trustee’s trustworthiness. Ability, benevolence, and integrity are all important factors for trust, yet each can vary independently. If all three are perceived as high by the trustor then the trustee is deemed trustworthy. It is also important to note that trustworthiness is a continuous variable. As the three characteristics vary, the level of trustworthiness can be said to move along a continuum. The extent to which one person is willing to trust another is determined by both the trustor’s ‘propensity to trust’ as well as the trustor’s overall judgment of the trustee’s ability, benevolence, and integrity.

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Making oneself vulnerable implies something important may be lost. Trust is the willingness to take a risk. The level of trust directly relates to the level of perceived risk (Mayer, Davis and Schoorman, 1995; Zaheer, McEvily and Perrone, 1998) 3 Propensity is defined as “the general willingness to trust others” (Mayer, Davis and Schoorman, 1995, p. 715) 4 Ability is defined as the skills, competencies, and characteristics necessary to have influence in a specific domain. (Mayer, Davis and Schoorman, 1995, p. 717) 5 Benevolence is defined as the extent to which a trustor believes the trustee wants to do good to the trustor. Act in a way that is not egocentric. (Mayer, Davis and Schoorman, 1995, p. 718) 6 Integrity is determined by the trustor by making an assessment as to whether or not the trustee will adhere to an acceptable (to the trustor) set of principles. (Mayer, Davis and Schoorman, 1995, p. 719)

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Figure 1: Mayer, Davis and Schoorman (1995) proposed model of trust Mayer et al.’s (1995) model is appropriate for use in this paper because it is specifically formulated for use within an organizational setting. The only significant concern with this model is that it only considers an interpersonal dyadic (trustor/trustee) relationship and does not allow for an actor to treat a collective entity such as an organization as an object of trust 7 . To correct for this, a secondary model developed by Zaheer, McEvily and Perrone (1998) will be added (See Figure 2). The latter model allows for an actor to have interpersonal trust for another actor and inter-organizational trust for a collective entity (the supplier organization in Figure 2). In the case of inter-organizational trust, trust created by the actor is unidirectional since the collective entity may not exhibit trusting behavior. In the case of two agents (interpersonal trust), the perceived trust of one agent on the other may be reciprocated.

Figure 2: McEvily, Perrone and Zaheer’s (1998) Inter-organizational and Interpersonal Trust Model

5. Predicting trust The most relevant benefit of trust to any organization is the enhancement of knowledge sharing and innovation. Faced with a reduction in its ability to share knowledge and innovate an organization loses its competitive advantage and becomes vulnerable to competitors. Since trust can act as both a motivating and inhibiting factor for knowledge sharing, organizations should work toward building a better understanding of the levels of trust between their workgroup members. One method by which to determine these trust levels is by using one of many empirical instruments to measure trust relationships. In their intensive review, McEvily and Tortoriello (2007) identify a total of 156 such measures and subsequently narrow them down to five

7 Though a collective entity may be an object of trust it may not be the source of trust (McEvily, Perrone and Zaheer, 1998; McEvily, 2007)

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based on an extensive review of their construct validity. McEvily and Tortoriello (2007) provide an explanation for their approach: The five measures share a common emphasis on confirmatory factor analysis involving the testing of a theoretically derived measurement model and the estimation and evaluation of competing measurement models (p.20) Of the five (See Figure 3) only three (McAllister, 1995; Cummings and Bromiley, 1996; and Mayer and Davis, 1999) were found to be replicated by other researchers/studies.

Figure 3: Noteworthy measures of trust (McEvily and Tortoriello, 2007 p.20) From the organization’s perspective, administering these instruments and conducting such studies is quite tedious and expensive. Organizational research can assist firms in trying to determine if there are more effective ways to predict levels of trust among group members without the use of such complicated and costly instruments. One possible method of gaining insight into these trusting relationships is by looking at agent characteristics, group composition and network structure. These types of data are readily available to the organization or at the very least, relatively inexpensive to attain. In an approach to discover a method for predicting trust in organizations, the following sections summarize four network principles; constructing arguments linking network structure and agent characteristics to trust among members within and around a Community of Practice. The network principles discussed in relation to trust are summarized in Table 1: Network Principles Homophily * Similarity Principle

Closure * Obligations and Expectations * Norms and Sanctions

Brokerage * Information and Referral Benefits * Control Benefits * Uniting Benefits / Tertius Iungens

The Small World Problem * Six Degrees of Separation

Table 1: Summary of network principles discussed in the paper

6. Homophily/similarity principle McPherson, Smith-Lovin and Cook, (2001, p.416) define homophily as, “the principle that contact between similar people occurs at a higher rate than among dissimilar people. ([i.e.] …cultural, behavioral, genetic, or material information that flows through networks will tend to be localized).” According to the authors, there are two distinct types of homophily: status homophily 8 and value homophily 9 . Noted causes of homophily include geography 10 , family ties 11 , organizational foci 12 , isomorphic sources 13 , and cognitive processes 14 (McPherson, Smith-Lovin and Cook, 2001). The authors found that race creates the largest divide though sex, age, religion, and education also ‘strongly’ structure relationships.

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Status Homophily is based on informal, formal and ascribed status. Includes ascribed characteristics (race, ethnicity, sex, age) and acquired characteristics (religion, education, occupation, behavior patterns) 9 Value Homophily is based on values, attitudes, and beliefs 10 Geography relates to geographic distance. More likely to have contact with those that are closer 11 Family Ties refers to a family relation (biological tie). Likely to be the same race, ethnicity, and religion 12 Organizational Foci relates to a focused activity which fosters the relationship (ex. school, work or voluntary organizations) 13 Isomorphic Sources relates to occupied positions or roles (ex. workplace roles (status, seniority, functional division), family roles (wives), or political roles (senators)) 14 Cognitive Processes refers to perceived similarity (e.g. people who share similar knowledge domains)

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In network terms, homophily implies that there is a positive relationship between the degree of similarity of two nodes and the strength of the tie between them. In other words, social characteristics determine network distance. Research also found that patterns of homophily get stronger as more types of relationships exist between two agents and that ties of one characteristic may influence homophily on other characteristics (McPherson, Smith-Lovin and Cook, 2001). Another notable network effect of homophily is ‘selective tie dissolution’ which argues for a negative correlation between homophily and the likelihood a tie will dissolve or decay. For example, low homophily within a group will result in a high probability for the group dissolving or decaying over time. Though strength of attachment does not directly relate to trust or trustworthiness it can be argued that there is a connection between homophily and a trustor’s ‘propensity to trust’ a trustee. Another possible connection exists between homophily and perceived trustworthiness of a trustee by a trustor. In his work, Burt (1992) 15 establishes a direct connection between homophily and trust, arguing that similar agents are more likely to trust each other than those that are dissimilar. In Burt’s (1992, p. 16) words, “the operational guide to the formation of close, trusting relations seems to be that a person more like me is less likely to betray me.” Using the previous findings on homophily, network structure, and trust, certain arguments may be made in relation to Communities of Practice. First, it may be argued that higher levels of trust will be exhibited between 16 members of a Community of Practice if they share status and/or value homophily. Since higher levels of trust within the Communities benefits the organization (knowledge dissemination, learning environment, etc) it is in their best interest to asses it. To make this assessment an organization would need to identify the members of the Community and gather certain information on them through observation, archival records, and short surveys. Identifying and gathering ascribed and acquired characteristics for status homophily should be quick and inexpensive. Value homophily is more challenging, requiring a judgment to be made on perceived vs. actual values, attitudes, and beliefs. From a structural network view it may be argued that Communities of Practice whose members share status and perceived value homophily will have a higher measure of overall trust 17 then Communities of Practice whose members do not. This argument is different from the previous because it focuses on a measure of overall trust within a subgroup as opposed to interpersonal trust between two members. Nevertheless, assessments of status and perceived homophily may be gathered in similar fashion. Previously, this paper argued that trust is necessary for effective information seeking/retrieving behaviors. Assuming the former is true the principle of homophily may also be extended to information and knowledge dissemination. From this perspective, it may be argued that Communities of Practice whose members share status homophily or perceived value homophily will be more effective in their information seeking/retrieving behavior than Communities of Practice whose members do not share such characteristics. If these members are more effective in their information seeking and retrieving behavior than it may be further argued that Communities of Practice whose members share status homophily or perceived value homophily will be more effective at knowledge dissemination than Communities of Practice whose members do not share such characteristics. If this is true then there is a direct connection between homophily and knowledge dissemination. Before completing the discussion on homophily, it is worthwhile to note two complications that arise with the homophily principle. First, homophily varies in transparency, meaning that certain types of characteristics are easier to spot than others. For example, it is much easier to determine someone’s sex than their religion. Even more difficult to determine are value homophily items; that require one to guess at values and beliefs. A second notable difficulty with the homophily principle is that similarity is often associated with redundant information (Burt, 1992; Granovetter, 1973); Groupthink; and lack of creative abrasion and hence creativity (Leonard, 1995; Leonard and Swap, 1999).

7. Social network closure The second network principle discussed in this paper was introduced by James Coleman (1988) at the University of Chicago and is based on observations of activity within a closed network structure. Network closure may be viewed as the degree to which everyone knows everyone else in a network. In a closed 15

Similar agents is defined as two agents who display high homophily Where the modeling unit is a dyad 17 Assumes a non-dyadic view where the modeling unit is a subgroup (i.e. one COP vs. another) 16

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network all the agents will know each other. A simplistic example of a network with and without closure is presented in Figure 4:

Figure 4: Coleman’s (1988) network without (a) and with (b) closure (p.S106) Coleman (1988) argued that agents in a closed network structure were more likely to trust one another than agents in an open structure. He also claimed that in cases where trust is violated, a closed network structure provides the ideal environment for instituting sanctions and having effective norms. Coleman (1988) believed that trustworthiness could be judged by whether or not obligations were reciprocated. He argued that in a closed structure, obligations and expectations would be repaid because a high number of outstanding obligations by one member could easily be transparent to the rest of the group. If the rest of the group felt as if that member was not reciprocating they would become less likely to trust them or continue to extend favors. The closed network structure creates an environment where reciprocity is encouraged and to some extent enforced. Since all the actors in a closed network can see and judge the actions of their colleagues, members can develop reputations and accounts of trustworthiness over time. “Closure of a social structure…is important [for] the trustworthiness of social structures that allows the proliferation of obligations and expectations” (Coleman, 1988 p. S107) Another network benefit of a closed structure discussed by Coleman (1988) is the ability to institute effective norms and sanctions. Norms are set in place as an attempt to encourage positive behavior and/or limit negative behavior. Sanctions are implemented to monitor or guide behavior or actions. Effective norms can only exist because agents know that sanctions may be instituted if the norms are violated (consequences). Therefore, effective norms may not exist in anything but a closed structure because in a closed structure group members can combine to enforce a collective sanction against the violating member (Coleman, 1988). “The consequence of closure is…a set of effective sanctions that can monitor and guide behavior.” (Coleman, 1988, p. S107) Extending Coleman’s (1988) theoretical framework and findings on network closure and trust onto Communities of Practice adds a number of other interesting arguments. First of all, from a structural network 18 perspective one could argue that overall levels of trust will be greater in a closed social structure than in an open one, since obligations and expectations may be created and enforced. Looking at the Community of Practice example network (see Figure 5) this means that the sum of the overall trust of (A,B,C,D) should greater than the overall sum trust of (F,B,A,G). With respect to sanctions it may be argued that there is an inverse relationship between trust and the number of sanctions imposed; whereas the trustworthiness of a member decreases as the number of sanctions imposed on that member increases. This would seem logical as trusted members of a Community would not be exposed to consequential behaviors (sanctions) unless they violated the trust of the group by breaking effective norms. In addition to an inverse relationship between trust and the number of sanctions imposed there is also an inverse relationship between network closure and the number of sanctions imposed. As discussed earlier, sanctions and effective norms may not be maintained effectively in an open network because they can only be effectively imposed in closed networks since members’ actions are transparent to the whole group. If one member takes advantage of the group (hoards information, doesn’t reciprocate, etc.) it would not take too long before the group becomes aware of the member’s actions and, as a result, takes appropriate negative actions (in the form of sanctions) against the member. 18

Where the modeling unit is a subgroup not a dyad

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An additional argument may be made with regards to reciprocity in a closed network. Reciprocity is one of the key ways to build human capital within a closed network. A closed network both encourages and enforces reciprocity since members can see and judge the action of their colleagues. Since these actions, over time, result in the development of reputations it may be argued that low levels of perceived or actual reciprocity by members of a closed network will correspond with low levels of trust between those members and the non-reciprocating member(s). Extended periods of low level perceived or actual reciprocity in a closed network may even lead to its destruction or ‘opening’. Expanding on Coleman’s (1988) idea of network closure to information and knowledge sharing allows for the argument of a couple more interesting points. If, as mentioned earlier, low levels of reciprocity lead to low levels of trust, which is necessary for information and knowledge sharing than it would follow that low levels of perceived or actual reciprocity will correspond to high levels of information hoarding. Additionally, if the number of sanctions imposed on a group is high, then it would follow that levels of trust within the group are low. If trust is low than knowledge dissemination is unlikely, therefore a high number of sanctions would correspond with a low amount of knowledge sharing. In other words, the number of sanctions imposed on a group and knowledge sharing within the group are inversely related.

Figure 5: Community of practice example network Prior to completing the discussion on closure it is noteworthy to mention that information within a closed structure tends to be redundant (Burt, 1992; Granovetter, 1973). Using redundant information can lead to the same types of problems as those mentioned in the closing section of homophily (i.e. lack of innovation, lack of knowledge creation, lack of exposure to opportunities, and lack of exposure to referrals).

8. Brokerage The concepts of closure and brokerage seem as if they are in diametric contradiction to each other, though if a social network is structured effectively both principles may be utilized in order to gain a competitive advantage. Interestingly enough, members in Communities of Practice are positioned well to potentially draw advantages from both principles. First, the Community of Practice and its members reap the previously discussed benefits of a closed structure (A, B, C, D in Figure 5). Additionally, each member brokers a relationship between the collective entity (COP) and their other organizationally determined functional unit (A-G, B-F, C-H, and D-E in Figure 5). As a broker, each member fills what Burt (1992) calls a structural hole 19 . Being in a situation to fill these structural holes puts the broker in a position of power and provides him/her with three distinct types of benefits: Information and Referral Benefits (Burt, 1992); Control Benefits/Tertius Gaudens (Burt, 1992); and Uniting Benefits/Tertius Iungens (Obstfeld, 2005). Which benefit or strategy the broker chooses ultimately is likely to determine the level of trust within the COP and across

19 Burt (1992) defines a structural hole as a “separation between non-redundant contacts [or a] relationship of nonredundancy between two contacts”( p.18)

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the functional units. The choice for strategy likely also has an impact on the groups’ productivity and greater the overall performance of the organization of which the group is a part.

8.1 Information and referral benefits It has been previously argued that homophily and closed structures can lead to redundancy 20 since these characteristics are likely to result in people having the same access to the same types of information. Conversely, non-redundant contacts offer a higher exposure to diverse sources of information (Burt, 1992; Granovetter, 1973). Following this logic reveals the first benefit of brokerage, where potential access to a larger more diverse network provides opportunities for greater access to valuable non-redundant information and referrals (Burt, 1992). Players with a network optimally structured to provide these [information] benefits enjoy higher rates of return to their investments, because such players know about, and have a hand in, more rewarding opportunities. (Burt, 1992 p.13) The information and referral benefits achieved by each broker and their respective Community(ies) of Practice are high because each individual member (A, B, C, or D in Figure 5) has outside contacts that are non-redundant to the group (E, F, G, H in Figure 5) who posses timely new information and referrals 21 . Given that all the members truthfully share this information, the collective entity (A-B-C-D) is then able to harness the information benefits of the greater sparse network (A through Z). The information benefits achieved by the entire community (access to 26 sources) greatly outweigh the cost of maintaining the limited number of relationships (4 for each COP member). In network terms, yield per primary contact is high, while still taking advantage of the total number of contacts in the network (high total yield). In order to be a source of these information and referral benefits, trust must exist between the sender and receiver. Trust or a sense of trustworthiness is much harder to access in this type of network structure because there is not social closure. There are fewer direct consequences (sanctions) against an actor who hoards or distorts information and there is very little opportunity for any individual to develop a reputation over time (Coleman, 1988). This creates additional difficulties because for information to be useable, it must, at least, be deemed to be credible to some extent. In a non-redundant network information is much harder to confirm. Information can be considered credible only if the source (sender) is considered credible by the receiver. For this to occur, the receiver must deem the source (sender) as trustworthy (Burt, 1992). The same is true from the sender’s perspective where they must trust the receiver or deem them as trustworthy (in that they will not misuse the information given) for the receiver to gain timely access to the information or referral (Burt, 1992). For the receiver, this trust translates into a reduced effort with respect to finding nonredundant referrals and information; two essential elements in knowledge creation and innovation. With a trustworthy primary contact, there is little loss in information benefits from the cluster and a gain in the reduced effort needed to maintain the cluster in the network (Burt, 1992, p.21) Extending the former arguments and findings on the information and referral benefits of brokerage and trust onto Communities of Practice adds a number of other interesting arguments. First, Communities of Practice will be more effective in their information seeking/retrieving behavior when their members exhibit high levels of trust with their respective functional units. If members of the COP exhibit high levels of trust with their respective functional units, than they should have increased access to the information and referrals from that information source. If each Community member shares the new information they acquired with the Community, the Community as a whole and all of its members benefit from the increased yield. Looking at the example provided in Figure 5 network trust can therefore make the difference between access to information and referrals from 4 people (closed or distrusting network) to 26 people (where each COP member has full access to all members in their respective functional unit). In the previous example, trust is used to predict information benefits, but the same principle should be true if one were to look at it from the reverse perspective (at predicting trust through information benefits or number of referrals). In other words, high information benefits achieved by members of the Community of Practice (or a high number of referrals) will correspond to high levels of trust between the benefiting member and their corresponding external functional unit. To rephrase using the example network (Figure 5): high information

20 Redundancy is described in terms of network benefits. For example: similar contacts for referrals and information for decision making 21 Each cluster in the example network (i.e. Marketing Dept., Logistics Dept., etc.) should be considered as one source of information and referrals since the information and referrals the members are likely to have (within each cluster) is the same (with few exceptions)

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benefits (or referrals) achieved by A, B, C, or D will correspond to high levels of trust between A-G, B-F, D-E, or C-H.

8.2 Control benefits/tertius gaudens A second class of benefit (control 22 ) identified by Burt is based on the work of Georg Simmel who identified the tertius (third) role in relationships. Specifically, Burt (1992) discusses being in the position of a tertius gaudens or ‘the third who benefits’. Tertius gaudens “describes an individual who profits from the disunion of others” (Burt, 1992 p. 31) and is traditionally based on a ‘divide and conquer’ mentality. In his work, Burt (1992) presents two tertius strategies, both of which create control benefits for the broker. The first control (tertius gaudens) strategy is being the third agent between two or more actors after the same relationship (Burt, 1992). This view is similar to a standard economic view of competition or two people bargaining for the same thing. This type of control strategy can best be framed by Porter’s (1979) supplier power 23 where two or more buyers bid against each other, benefiting the seller. The second control strategy involves being the third agent between actors in two or more relationships with conflicting or opposing demands (Burt, 1992). In this type of brokerage, the tertius agent looks to create tension and conflict between the other actors in the relationship, in order to gain an advantage. This tension is brought upon by the broker creating uncertainty. Where there is any uncertainty about whose preferences should dominate a relationship, there is an opportunity for the tertius to broker the negotiation for control by playing demands against one another. (Burt, 1992, p. 33) Community of Practice relationships are naturally structured in a way where members are given an opportunity to exploit these strategies for control benefits and personal gain (i.e. creating conflict between COP member requests and those from their own organizationally assigned functional unit). The problem is that these control benefits potentially enrich the tertius member more than the COP or the organization as a whole. To reap the benefits the tertius broker might play parties against each other or exploit the network for control through the monitoring, filtering or hoarding of information. The situation may end badly for the tertius broker if the disunited agents, who are being played off of each other, become aware of their predicament. If this becomes the case, the jaded agents can combine efforts to force the tertius broker to agree to their demands. The discovery of the tertius gaudens behavior by the two disunited or exploited agents will also lead to a decrease in the trust between these agents and the tertius broker. Control benefits exhibited by a member of the COP should be frowned upon by the organization since the types of benefits achieved do not benefit the communities’ members or the organization as a whole. With respect to predicting trust in Communities of practice it may be argued that high control benefits achieved by members of the COP will correspond with low levels or decreasing levels of trust between the benefiting member and their corresponding external functional unit. To rephrase using the example network (Figure 5): high control benefits achieved by A, B, C, or D will correspond to low levels of trust between A-G, B-F, D-E, or C-H.

8.3 Uniting benefits/tertius Iungens The last benefit of brokerage discussed in this paper was argued by Obstfeld (2005) and is called tertius iungens (YUNG-gains); meaning “to unite” or “to form”. “The tertius iungens orientation is a strategic, behavioral orientation toward connecting people in one’s social network by either introducing disconnected individuals or facilitating new coordination between connected individuals” (Obstfeld, 2005, p.102). The best way to explain tertius iungens (or uniting benefit) is to describe it as a strategy that directly contradicts or opposes Burt’s arguments for tertius gaudens (control benefit). To illustrate this point, control benefits encourage a buyer to play sellers against one another for the best price. Uniting benefits, on the other hand, enable buyers and sellers to find each other to create a mutually 22 Control benefits and information benefits are closely related. For example, screening information exhibits control of that information. Also, having more control puts one in a position where they can access and yield more information (Burt, 1992). 23 Porter’s (1979) buyer power can represent a similar relationship where two or more sellers bid against each other benefiting the buyer.

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beneficial exchange. In a tertius iungens situation the non-partisan broker creating the connection only produces an agreement between the two new parties and then withdraws. The broker acts as only an arbitrator or a referral mediator. Unlike control benefits, which tend to benefit only the tertius, uniting benefits can be advantageous for the entire social network. From a broker’s perspective, the uniting behavior creates an opportunity for delayed reciprocity on the part of the benefiting parties. An act of arbitration, mediation or referral on the part of the tertius may create an outstanding obligation on the part of the benefiting participants. Also, actors with high tertius iungens orientations were found to be more likely involved in innovation (Obstfeld, 2005), an activity often conducted in COPs. For the Community of Practice and the organization, uniting behavior creates new ties and fills structural holes (Obstfeld, 2005) which open information channels and create opportunities for knowledge exchange, innovation, and other determinants of competitive advantage. Obstfeld’s arguments on the uniting benefits (tertius iungens) of brokerage produces two last brokerage related arguments with respect to trust. First, those agents with high terius iungens orientations will be rated as more trustworthy by their network peers than those with a terius gaudens orientation and second that high levels of overall trust must be present (both among members in the COP and their external contacts) for terius iungens activities to take place.

9. The small-world problem: Six degrees of separation The final network principle discussed in this paper is based on Milgram’s (1967) small world experiment conducted at Harvard, which looked to examine the interconnectedness of humans in the world. In the study, Milgram sought out to answer the question of what the probability was that any two people, selected at random, would know each other. Even though the study (Milgram, 1967) suffered from both selection and non-response bias, Milgram did present two interesting viewpoints on what he called the “small-world problem” (also known as six degrees of separation). The first says that: Any two people in the world, no matter how remote from each other, can be linked in terms of intermediate acquaintances, and that the number of such intermediate links is relatively small [about six degrees of separation] The second view holds that there are unbridgeable gaps between various groups and that therefore, given any two people in the world, they will never link up because people have circles of acquaintances which do not necessarily intersect. (Milgram, 1967, p.63) In a similar follow-up study conducted by Dodds, Muhamad and Watts (2003) of 60,000 email users, the authors concluded that even though it may be true that a connection exists between targets there is little guarantee that the information finds its intended source. This is true because remote agents do not have sufficient incentive or motivation to continue on the chain. In order to be motivated they must trust the person making the request. Trusting a person becomes increasingly more difficult when degrees of separation increase, especially after the third degree (Dodds, Muhamad and Watts, 2003). Therefore, even though you can reach the person there is no guarantee they will fulfill your request. In cases where there is incentive or motivation the remote agent may also not be able to continue the chain because they simply do not have the ability (i.e. do not know anyone that can come closer to the target). Extending the findings of Milgram (1967) and Dodds, Muhamad and Watts (2003) toward predicting trust produces the papers final arguments. First, that there will be an inverse relationship between levels of trust and degrees of separation. And second, after the third degree of separation trust between two contacts in a network will decline significantly.

10. Conclusion This paper has applied four network principles (homophily, closure, brokerage, and six degrees) in an effort to make theoretic connections between trust relationships in and across a particular type of social network called a Community of Practice. With respect to trust, Communities of Practice are particularly interesting because their lack of authoritative control (from the organization) creates an environment that is heavily dependent on trust to survive. From a network perspective, Communities of Practice are ideal case studies because their members fill structural holes and operate in both closed (within the COP) and open (across the COP to the functional unit) social structures. This allows for a high benefits per contact as well as high total network benefits. This type of network is also an ideal environment to test the arguments proposed in a single case study/setting.

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Testing the arguments discussed in this paper can create feasible 24 ways for organizations to reach conclusions about the trust relationships of their employees. If, for example, looking at network structure and individual actor characteristics can shed some light on the level of trust within and across the network, then organizations can use this information to make sure their employees trust each other, share information and knowledge and better position themselves for the organization to have a competitive advantage.

References Blackler, F. (2002). Knowledge, knowledge work, and organization. In C. W. Choo & N. Bontis (Eds.), The Strategic Management of Intellectual Capital and Organizational Knowledge (pp. 47-64). New York: Oxford University Press. Boer, N.-I., van Baalen, P. J., & Kumar, K. (2002). An activity theory approach for studying the situatedness of knowledge sharing. Paper presented at the 35th Hawaii International Conference on System Sciences Hilton Waikoloa Village, Big Island, Hawaii. Burt, R. (1992). The social structure of competition. In Structural Holes (pp. 8-49). Cambridge, MA: Harvard University Press. Choo, C. W. (2006). The Knowing Organization: How Organizations Use Information to Construct Meaning, Create Knowledge, and Make Decisions (2nd ed.). New York: Oxford University Press. Coleman, J. S. (1988). Social Capital in the Creation of Human Capital. American Journal of Sociology, 94 (supplement), S95-S120. Cummings, L. L., & Bromiley, P. (1996). The Organizational Trust Inventory (OTI): Development and validation. In R. M. Kramer & T. R. Tyler (Eds.), Trust in Organizations: Frontiers of theory and research (pp. 261-287). Thousand Oaks, CA: Sage. Dodds, P. S., Muhamad, R., & Watts, D. J. (2003). An Experimental Study of Search in Global Social Networks. Science, 301, 827-829. Duguid, P. (2005). "The art of knowing": Social and tacit dimensions of knowledge and the limits of the community of practice. The Information Society, 21(2), 109-118. Gherardi, S. (2001). From organizational learning to practice-based knowing. Human Relations, 54(1), 131-139. Granovetter, M. S. (1973). The Strength of Weak Ties. The American Journal of Sociology, 78(6), 1360-1380. Leonard, D. (1995). Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation. Boston, MA: Harvard Business School Press. Leonard, D., & Sensiper, S. (2002). The role of tacit knowledge in group innovation. In C. W. Choo & N. Bontis (Eds.), The Strategic Management of Intellectual Capital and Organizational Knowledge (pp. 485-499). New York: Oxford University Press. Leonard, D., & Swap, W. (1999). When Sparks Fly: Igniting Creativity in Groups. Boston, MA: Harvard Business School Press. Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. The Academy of Management Review, 20(3), 709-734. Mayer, R., & Davis, J. H. (1999). The effect of the performance appraisal system on trust for management: A field quasiexperiment. Journal of Applied Psychology 84(1), 123-136. McAllister, D. J. (1995). Affect and Cognition-Based Trust as Foundations for Interpersonal Cooperation in Organizations The Academy of Management Journal, 38(1), 24-59. McEvily, B., & Tortoriello, M. (2007). Measuring trust in organizational research: Review and recommendations (pp. 168): Rotman School of Management - University of Toronto. McEvily, B., Perrone, V., & Zaheer, A. (2003). Trust as an organizing principle. Organization Science, 14(1), 91-103. McPherson, M., Smith-Lovin, L., & Cook, J. M. (2001). Birds of a Feather: Homophily in Social Networks. Annual Review of Sociology, 27, 415-444. Milgram, S. (1967). The Small-World Problem. Psychology Today, 2, 60-67. Nonaka, I. (2002). A dynamic theory of organizational knowledge creation. In C. W. Choo & N. Bontis (Eds.), The Strategic Management of Intellectual Capital and Organizational Knowledge (pp. 437-462). New York: Oxford University Press. Obstfeld, D. (2005). Social Networks, the Tertius Iungens Orientation, and Involvement in Innovation. Administrative Science Quarterly, 50, 100-130. Orr, J. (1996). Talking about Machines: An Ethnography of a Modern Job. Ithaca, NY: ILR Press. Porter, M. E. (1979). How competitive forces shape strategy. Harvard business Review, March-April, 2-57. Seely Brown, J., & Duguid, P. (1998). Organizing knowledge. California Management Review, 40(3), 90-111. Tsoukas, H. (2005). Do we really understand tacit knowledge? In H. Tsoukas (Ed.), Complex knowledge: Studies in organizational epistemology (pp. 141-161). New York: Oxford University Press. Tsoukas, H. (2005). What is organizational knowledge? In H. Tsoukas (Ed.), Complex knowledge: Studies in organizational epistemology (pp. 117-140). New York: Oxford University Press. Uzzi, B. (1997). Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness. Administrative Science Quarterly, 42, 35-67. Van De Ven, A., & Johnson, P. E. (2006). Knowledge for theory and practice. Academy of Management Review, 31(4), 802-821. 24

Feasibility is determined in comparison to conducting trust measurement surveys on all network members

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Wasserman, S., & Faust, K. (1994). Social Network Analysis: Methods and Applications. New York: Cambridge University Press. Wenger, E. (1998). Communities of Practice: Learning, Meaning, and Identity. Cambridge, Mass.: Cambridge University Press. Wenger, E., McDermott, R., & Snyder, W. (2002). Cultivating Communities of Practice: A Guide to Managing Knowledge Boston, Mass.: Harvard Business School Press Zaheer, A., McEvily, B., & Perrone, V. (1998). Does trust matter? Exploring the effects of interorganizational and interpersonal trust on performance. Organization Science, 9(2), 141-159.

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Collaborative Development of Knowledge Representations – a Novel Approach to Knowledge Elicitation and Transfer Alexeis Garcia-Perez and Robert Ayres Department of Information Systems, Cranfield University, UK [email protected] [email protected] Abstract: Knowledge Management (KM) initiatives are driven by the need to preserve and share knowledge, in particular tacit knowledge that experts have built up in the course of doing their jobs. Such initiatives require key experts to be identified and their knowledge elicited. However, knowledge elicitation generally runs into a number of communication and motivational problems. These are well known in domains such as expert systems but it is only more recently that KM practitioners have become aware of them. Standard KM approaches separate the elicitation and, possibly, encoding of knowledge from its subsequent sharing. This paper outlines an approach where elicitation and transfer, and possibly also creation, are carried out in one process. This involves identifying key experts and stakeholders. These two groups then work together to develop a representation of the experts' domain knowledge. The role of the KM specialist thus becomes one of facilitation rather than elicitation. This approach has a number of advantages. It is more likely to engage the interest of experts and so avoid some of the motivational problems that are commonly encountered in knowledge elicitation. It does not rely on knowledge management specialists who do not share the experts’ language, to capture and record their expertise. In particular the approach helps overcome the perceptual biases of domain experts. It is well known that perception is often selective and that judgements can be anchored on false premises. Experts are not immune from these biases but they are more likely to be eliminated as a result of the critical dialogue that occurs between experts and stakeholders using our approach. Our approach has been developed in the course of an action research project with a major engineering company. Staff who worked on a help desk had particular expertise which was of interest to other departments, such as design and production. The research data gathered was necessarily qualitative since the focus of concern was on the richness of transfer achieved. Early results suggest that communication or motivation problems encountered by conventional approaches are avoided and that a richer transfer of knowledge results. In particular it helps to identify and capture relevant tacit knowledge. The resulting representation may also form the starting point for a knowledge base which will be available to a wider community. Keywords: knowledge elicitation, knowledge creation, knowledge sharing, knowledge transfer, action research

1. Introduction The ability to create and share knowledge is seen as a key factor contributing towards organisational competitiveness (Holsapple and Joshi, 2002). Most organisations which hope to improve their ability to create and exploit knowledge undertake some kind of KM initiative. In doing so, one of the problems they will encounter is how to improve the transfer of knowledge between different parts of the company. A number of approaches to facilitating knowledge transfer can be found in the KM literature. Although wellestablished they do suffer from weaknesses. These approaches include: ̇ Directly capturing experts’ knowledge and recording it in a repository which is made available to other staff. This approach is not new - its origins can be traced back to the 1980s with the development of expert systems and the need to elicit knowledge to provide a rule-base for the system.

̇

The weakness of this approach is that it has generally been applied on the assumption that expertise could simply be extracted from an expert - “Mining the jewels of knowledge one by one out of experts’ heads” as it is described by Feigenbaum and McCorduck (1983). However, this does not take account of the nature of expertise (Hart 1989). For example experts are often not able to explain the reasons for their actions. Facilitating links and conversations between experts and other employees (Davenport and Prusak 1998). The intention is that this will allow staff to discover what they know and share it with others. Davenport and Prusak (1998) acknowledge that such ad hoc approaches may not always work. They can be affected by cognitive, psychological and communicational issues as well as practical problems such as the location of employees, or the existence of different vocabularies and frames of reference.

ISSN 1479-4411 55 ©Academic Conferences Ltd Reference this paper as: Garcia-Perez, A. and Ayres, R. “Collaborative Development of Knowledge Representations – a Novel Approach to Knowledge Elicitation and Transfer.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 55 62, available online at www.ejkm.com


̇

The

use

of

computer-based

systems

as

a

knowledge

transfer

strategy

(Goh

2002).

Computer-based systems provide a channel for knowledge transfer. However, this is not enough to guarantee that their potential for supporting transfer is exploited. Issues of motivation, trust or willingness to share can undermine technology-based strategies. An illustration of this is provided by the work of Garcia-Perez and Mitra (2007). They interviewed employees in a research organisation and found that computer-based systems could help with knowledge transfer. A knowledge-based system was developed following recommendations of the interviewees. Most employees used the system but only a fraction made significant contributions. After nine months virtually no new contributions were being made to the knowledge base. This paper presents an approach to knowledge elicitation and transfer where domain experts and stakeholders work together to develop a representation of the experts’ knowledge. We discuss how knowledge elicitation and transfer are understood within different fields. A new method of knowledge elicitation through modelling is introduced. The application of the method in a company that designs, manufactures and services gas turbines is finally described as a mechanism to assess the validity of our approach and the areas where further work is required.

2. Knowledge elicitation and transfer in different fields The need for some kind of knowledge elicitation in support of knowledge transfer initiatives is generally recognised. Different implementations of existing approaches to facilitating knowledge transfer have attempted to meet such a need, particularly by using computer-based systems or facilitating links between employees and experts. While these approaches may produce benefits for certain organisations, there is little evidence to suggest that they are effective. They rely either on the ability and willingness of experts to contribute to a knowledge base or ad-hoc discussions about the knowledge domain. To address these limitations of knowledge elicitation and transfer, researchers in other fields have designed and implemented more controlled approaches, even before they came to be a concern in knowledge management. We can argue that: ̇ Knowledge elicitation was seen as a process performed by a knowledge engineer designing an expert system. The knowledge engineer would focus on transferring experts’ knowledge into a computer-based system that could perform certain tasks in a similar way to that of human expert (Burton et al. 1988). ̇ Requirements analysis for systems development is another domain which involves what is essentially a knowledge elicitation task. This task is performed by an analyst, who elicits and analyses user needs to translate them into system requirements (Avison and Wood-Harper 1986). However, methods for knowledge elicitation and transfer have had to deal with significant problems that have affected their outcomes. These include: ̇ Motivation: Huber (2001) highlighted motivation as the most important issue hindering knowledge transfer. Similarly, King et al. (2002) identified individuals’ motivation to share their knowledge as one of the ten most important issues in knowledge management. Davis (1981) refers to motivation as one of the many behavioural limitations of the individual expert that affect their ability to share knowledge. ̇ Communication: Problems that occur between an expert and the knowledge specialist due to the lack of a common understanding of the knowledge domain, including both communication obstacles and psychological limitations such as human bias in selecting and using data, or human behaviour in problem-solving situations (Davis 1981). ̇ Disagreement between experts: Problems that emerge from differences in experts’ views (e.g. when two or more users come up with conflicting views or priorities) and therefore complicate transfer. One approach to dealing with this is the use of a "referee" (Davis 1981, Valusek and Fryback 1985, Browne and Ramesh 2002). Researchers have pointed out that these problems do not appear to have been a focus for research within the KM domain. This in spite of knowledge transfer being regarded as key to organisational survival and success (Holsapple and Joshi, 2002).

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Alexeis Garcia-Perez and Robert Ayres

3. A new approach to knowledge elicitation and transfer in organisations When knowledge elicitation is carried out in the context of a KM initiative the main purpose is to facilitate the transfer of knowledge. Consequently any resulting representation of experts’ knowledge, although useful, is not central to the exercise. This has led the authors to develop a new approach to knowledge elicitation for knowledge transfer. In this approach experts and key employees for whom experts’ knowledge might be relevant (referred to as stakeholders) are identified. They are then brought together to discuss and agree key concepts in the domain and develop some representation or model which links these concepts in a meaningful way. There are few constraints on what is used as a representation scheme provided it is useful in helping experts and stakeholders develop and refine a common understanding. It might be a concept map, spreadsheet or complex dependency diagram showing relationships between faults. The role of the Knowledge Transfer (KT) facilitator becomes one of facilitating the process of developing a common understanding among project participants through modelling the knowledge domain. There are a number of advantages to this approach when it is applied in the KM domain: ̇ It has the potential to engage the interest of experts since, in developing a representation of their expertise, they will develop and refine their own knowledge. This is important since many KM initiatives fail because experts have no motivation to participate. ̇ It reduces communication problems due to different vocabularies - the process will expose differences of language and understanding. It will reduce the impact of any cognitive biases on the part of experts since stakeholders may have different perspectives on the domain and challenge the experts to justify their assertions. ̇ It ensures that the knowledge which is most useful to stakeholders will be transferred since they are directly involved in the process.

3.1 Applying the collaborative transfer approach The way we have applied this collaborative transfer approach involves three stages as outlined below and shown in Figure 1.

Figure 1: Key stages of the knowledge transfer mechanism.

3.1.1 Project initiation The knowledge domain to be analysed is agreed with the project sponsors. It is important that this is specified as precisely as possible and that clear objectives are set that provide a boundary to the knowledge

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transfer project. Examples of objectives might be to understand how a particular kind of fault is diagnosed or to develop a model of the phases of a contract negotiation. Project participants are selected so that there are between one and three stakeholders for every expert. This ratio guarantees that the transfer exercise does not fail due to a lack of expertise or insufficient stakeholders to challenge and question experts. There are no particular restrictions regarding the background of experts they may have similar, complementary or even contradictory views of the domain. Indeed differences in their perspective should help to expose differences in understanding of concepts. It is important for sufficient time to be allocated to the project which may entail their attending a sequence of perhaps five or more meetings over a period of weeks.

3.1.2 Preparation The KT facilitator will interview experts and stakeholders on a one-to-one basis about the issues that are relevant to them and which need analysis. These interviews will produce questions, or suggestions for key concepts that relate to the area of interest. The KT facilitator may extract the main questions and concepts so that they can be fed back to the participants when they meet as a group. The concepts that are relevant will vary depending on the domain. For instance if the domain of interest was that of project management then relevant concepts might be identified as project phases, completion criteria, project categories, staff roles and so on. In another domain, such as fault diagnosis, a completely different set of concepts – such as subsystem, machine status, fault category and so on – might be identified. The KT facilitator may also select one or more knowledge representation schemes that may be appropriate to the domain. In doing this the facilitator takes into account the background of the participants. The KM specialist may also produce rough outlines of how some of the concepts could be arranged given the representation schemes selected. These outlines will become the input to the first of the series of collaborative modelling meetings. Note that the preparation phase is intended to set a clear focus for the rest of the project in terms of its scope and participants. Although the knowledge sharing requirements of the organisation are analysed, this phase is different from what is understood as requirement analysis for systems development.

3.1.3 Collaborative modelling When the project preparation is completed, a series of structured meetings are carried out, in which collaborative modelling of the knowledge domain takes place. Each one of these meetings usually lasts between one and two hours. The KT facilitator will run these meetings and ensure that they are divided into the following phases: ̇ Introduction – the current state of the project and its objectives are briefly reviewed and the structure for the meeting set out. ̇ Discussion of concepts – participants discuss whether the concepts are viewed in the same way and whether any concepts or questions should be modified. ̇ Modelling – the participants select a representation scheme and use it to model the relationships between key concepts. ̇ Assessment – a brief review is carried out at the end of the meeting in which participants can decide whether they have yet achieved the objectives originally set for the transfer project. After each meeting the KT facilitator will document the outcomes (the current set of concepts and representation) to be circulated before the next meeting. This record will then provide the starting point for the next collaborative modelling meeting. The first time a meeting takes place the KT facilitator will use the results from the preparation step to provide an initial set of concepts and questions to be discussed. If participants have trouble suggesting an appropriate representation scheme then the facilitator may step in with specific suggestions based on the background preparation carried out for the first meeting. The discussion meetings will occur at regular intervals until the participants feel that the overall objectives have been met. Of course it is quite possible that new questions and issues will arise in the course of the

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meetings. These may lead to further transfer exercises being carried out. It is preferable to keep each knowledge transfer exercise focussed on its objectives since different experts or stakeholders may become appropriate should the objectives be modified. This stage of the method benefits from experience of specific data collection tools such as group interviews or focus groups. However, it is different to these approaches. While group interviews are tools designed for a researcher to collect data (Stewart and Shamdasani, 1990), our method aims at facilitating interaction between participants and, as a side effect, relevant knowledge can be captured.

4. Methodology The method for knowledge elicitation and transfer outlined in this paper has been developed as part of an action research project concerned with looking at knowledge-related processes. This project was carried out in a gas turbine manufacturer where: ̇ knowledge was considered a key resource; ̇ there was no formal mechanism in place for the transfer of knowledge between employees or units; and ̇ there was an awareness of the problems arising from the lack of knowledge transfer. An action research project involves a cyclical process of identifying or defining a problem, considering alternative courses of action for solving the problem, selecting the best course of action, studying the consequences of such actions and identifying general findings (Susman and Evered 1978). These five stages were fully implemented in a project that ran between April 2007 and October 2007. During those six months we collected data through different means and in different formats. Data collection mechanisms included: ̇ Observing existing mechanisms to transfer knowledge between experts, customers and other employees; ̇ E-mail communication between the researchers and the project teams; ̇ Working notes taken during the process and in project meetings; ̇ Interviews with project participants at different stages of the development of the project. Recordings were made of those meetings and interviews where participants agreed.

5. Knowledge elicitation and transfer at a gas turbine manufacturer Gas Turbines Ltd. (GTL) is a supplier of gas turbines with expertise that has been built up over decades. It has many thousand staff including professionals from a range of engineering disciplines. Although GTL has a range of standard turbines, most of those that are installed have been customised in some way. It generally takes about 10 months from receipt of order until a turbine is installed in the field. During this time the turbine will be designed, built, tested on a special test-bed and, finally, installed and commissioned. A maintenance department provides a support service, including a help desk, for installed turbines. Once installed a turbine may run for many years – some gas turbines that were originally installed in the 1950s are still in operation. Those employees who work on the help desk providing customer support, accumulate the largest amount of expertise about machine operation. The help desk has about 20 staff some with as much as 20 years experience in diagnosing faults and fixing turbines. Their expertise is an extremely valuable resource, not just for helping to keep customers’ machines operating but also as a source of advice and information to other GTL departments.

5.1 The knowledge elicitation and transfer project After initial meetings between one of the researchers and GTL staff it was agreed that the knowledge of the help desk was not only superior to that of any other department, but it was also unique by its nature and was needed throughout the organisation. The analysis highlighted the absence of an established knowledge sharing mechanism that included the help desk. Both parties understood that such a mechanism could improve organisational performance and competitiveness. The project is described in terms of the three main phases of initiation, preparation, and modelling outlined previously. These phases had not been formally defined when the project began but the work carried out naturally fits into this framework.

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5.1.1 Initiation It was agreed that the focus of knowledge transfer for the project would be fault diagnosis in gas turbines. Given the time constraints, the project focussed on one particular fault which occurs when there is insufficient lubricating oil being supplied to the moving parts of the turbine. This was a topic of interest to all the technical departments in GTL. Three help desk staff were selected as experts and a further six staff from other departments as stakeholders to participate in the project team. One of the researchers acted as the facilitator to help with the knowledge transfer process.

5.1.2 Preparation Prior to the first collaborative meeting of the project team some of the key concepts relating to the diagnosis of turbine faults were extracted from documentation. This was done with the assistance of a member of GTL staff who was able to explain concepts and direct the researcher to useful documents. A set of concepts was produced relating to the workings and modes of failure of a gas turbine. Messages from operating and error logs were also extracted to provide data relating to certain faults and associated sequences of messages. (The turbines generate status and error messages during operation and these are automatically transmitted to a GTL computer.) The researcher used the data collected to produce a tabular representation showing how certain faults appeared to be associated with particular modes of failure and operating messages which were indicative of these failures.

5.1.3 Collaborative modelling meetings A series of four meetings, lasting between forty minutes and slightly more than two hours was held over the course of several days. The objective of these meetings was to discuss and agree the patterns of error messages which were associated with particular faults. This would help to understand how those faults could be diagnosed. Participants agreed about the concepts that were relevant in describing turbine faults and their causes and little time was spent on these. The patterns of messages, and the origins of some faults, on the other hand gave rise to considerable discussion. It became clear that staff from other departments often had little idea of the relative frequency of faults nor of the ways in which help desk staff generally resolved these faults. The sequence of meetings ended when the participants agreed that the essential information on faults and how to diagnose them from message logs had been captured. The representation scheme used for fault information which had been proposed by one of the researchers was not changed as a result of these meetings. However, the information on the faults and how they could be diagnosed was substantially revised. Comments made to the researcher when the meetings ended, and at other times by those involved, suggested that the participants found the experience interesting and engaging. Several of them said, without prompting, that they found the meetings very useful and that such elicitation exercises should be carried out more often. Once the collaborative modelling meetings had ended work carried on to produce a knowledge based system using the results. Information gathered from the meetings was used to produce a Bayesian network which related error messages to failure modes and observed faults. Further work was carried out with some of the help desk staff to assign appropriate probabilities to the links in the Bayesian network. Once the network was complete it was used to implement a system which diagnosed faults on the basis of messages received. This further work was carried out as part of the original agreement with GTL but was distinct from the knowledge transfer which had been achieved through the collaborative modelling meetings.

5.2 Evaluation from applying the method at GTL The project at GTL was expected to produce two main outcomes – a knowledge base of turbine faults and a transfer of knowledge between staff in different departments. The knowledge base was used as the basis for an automatic fault detection system which was assessed on the proportion of faults that it diagnosed. This system was considered to be successful but is not discussed further here.

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Evaluation of the knowledge transfer was harder since there were no objective tests that could be applied. The approach which was adopted was to visit GTL some time after the original meetings of the project team and interview participants about the impact that the exercise had had on their way of working. Interviews were carried out on a one-to-one basis with those who had participated in the original exercise and were structured – there was a predetermined set of questions that were asked though the interviewer allowed participants to expand on other points that the interviewee felt were relevant. Considerable care was taken to design these questions so that they did not suggest particular answers. The interviewees were not told that knowledge transfer was a focus of interest; they were asked questions like “What recollection do you now have of the project which you participated in?” and “Can you think of any change that has resulted from this project?” The original project meetings were held in June 2007. One of the researchers returned just over 6 months later, in early 2008, to carry out the interviews. It turned out to be possible to interview only one of the help desk staff who had participated. This expert was very positive about the project. He said that his participation had given others access to his “first-hand experience about gas turbine operation”. Furthermore the project gave him the chance to “express what is in his mind” and had helped him to structure his understanding of the failure modes discussed. Of the six staff from other departments who had participated it was possible to interview four. Three of them gave very positive feedback. Although their participation in the project did not change the way they worked, it improved the outcomes of their everyday job. They mentioned that it had given them the only chance they had had to get extensive access to the knowledge of experts. They asserted that they learned by participating in the project. Finally, they would encourage the organisation to have someone responsible for “knowledge transfer” through a similar project on a permanent basis and would participate in any similar initiative. The fourth person interviewed did not report any benefits from the project. However, this person had changed his role shortly after the completion of the project and this may have made it less relevant to his work. One further stakeholder who had left the company was contacted by e-mail. He acknowledged that being part of the knowledge transfer project was “the best experience” he had had during his time at GTL because of the amount he learned during the process. The experience from applying this approach to knowledge elicitation and transfer at GTL showed that: ̇ Experts were highly motivated and found the project engaging. ̇ The direct communication between experts and stakeholders helped both sides to develop their understanding of the domain. ̇ The project focussed on issues which were of importance to all the participants. These factors clearly contributed to the perception of GTL staff that the project was a success. There had been an initial concern at GTL with regard to the amount of time that experts would need to spend in the project meetings. However, only two days were needed for the collaborative modelling of the knowledge domain, where knowledge elicitation and transfer took place. Thus, by having only a small number of meetings the method avoided two common problems that affect KM initiatives: limited availability of experts and using too much of their time. Having realised the advantages of applying this method, the project sponsor now hopes to go through a similar process on a regular basis.

6. Conclusions and further work Knowledge elicitation has not been a major focus of research in knowledge management even though transferring knowledge is a key issue. Existing approaches to knowledge elicitation and transfer within organisations depend on either ad-hoc or technology-based mechanisms for sharing knowledge and personal experience. Research in other fields has identified a number of difficulties of such approaches that include communication and motivational issues. Our research has been concerned with addressing these problems when facilitating the transfer of knowledge within organisations. This has led to an approach to knowledge transfer which involves bringing experts and key stakeholders together to collaborate in modelling important features of the domain. Using this approach many of the motivational and communications problems that have previously been identified in research on knowledge elicitation were avoided or reduced. A KM expert that may not be fully

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aware of the language related to the knowledge domain will facilitate the application of the method. Communicational problems are minimised because the main interaction will take place between domain experts and their stakeholders. Also, discussion of their own experience with colleagues through a process of modelling their expertise significantly increases experts’ motivation to share knowledge. The method also benefits from its focus on transfer of knowledge rather than the construction of a knowledge base. Although the authors are confident that the general approach to knowledge transfer outlined in this paper is effective, further work is required to refine the method for applying it. One issue relates to the appropriate timing and spacing of meetings. Meetings should be long enough to be useful but not so long as to cause some participants to lose interest. Meetings also need to be sufficiently far apart to give people some time to reflect on the issues discussed. The nature of expertise is another area which needs investigation. Traditionally knowledge elicitation research has been concerned with eliciting knowledge from people with a high level of expertise. In the context of knowledge management it is likely that many of the “experts” that may participate in a knowledge transfer exercise may not have highly developed expertise. They may have experience in work which is highly relevant to other departments in the organisation but this does not mean that they will have developed a deep understanding of what they do. This implies the need for some framework to classify the kinds and levels of expertise. It may be that different approaches are required for dealing with different groups in terms of the nature or level of their expertise.

References Avison, D.E. and Wood-Harper, A.T. (1986) “Multiview—an exploration in information systems development”, Australian Computer Journal, Vol. 18, No. 4, pp 174-179. Browne, G. and Ramesh, V. (2002) “Improving information requirements determination: a cognitive perspective”, Information and Management, Vol. 39, No. 8, pp 625-645. Burton, A.M., Shadbolt, N.R., Hedgecock, A.P. and Rugg, G. (1988) “A formal evaluation of knowledge elicitation techniques for expert systems: Domain 1”, Proceedings of Expert Systems '87 on Research and Development in Expert Systems IV: Annual Technical Conference of the British Computer Society Specialist Group on Expert Systems, Brighton, UK, 14-17 Dec 1987, pp 136-145. Byrd , T.A., Cossick, K.L. and Zmud, R.W. (1992) “A synthesis of research on requirements analysis and knowledge acquisition techniques”, MIS Quarterly, Vol. 16, No.1,, pp 117-138 Choy, S. Y., Lee, W. B., and Cheung, C. F. 2004. “A systematic approach for knowledge audit analysis: Integration of knowledge inventory, mapping and knowledge flow analysis”, Journal of Universal Computer Science, Vol. 10, No. 6, pp 674-682. Davenport, T. and Prusak, L. (1998) Working knowledge: How organizations manage what they know, Harvard Business School Press, Boston, MA. Davis, G. (1981) Strategies for Information Requirements Determination, Management Information Systems Research Center - Graduate School of Business Administration, University of Minnesota, USA. Feigenbaum, E. and McCorduck, P. (1983) The fifth generation: artificial intelligence and Japan's computer challenge to the world, Addison-Wesley Longman Publishing Co., Inc, Boston, MA. Garcia-Perez, A. and Mitra, A. (2007) “Tacit knowledge elicitation and measurement in research organisations: a methodological approach”, The Electronic Journal of Knowledge Management, Vol. 5, No. 4, pp 373-386. Goh, S.C. (2002) “Managing effective knowledge transfer: an integrative framework and some practice implications”, Journal of Knowledge Management, Vol 6, No 1, pp 23-30. Hart, A. (1986) Knowledge acquisition for expert systems, McGraw-Hill, Inc., New York. Holsapple, C.W. and Joshi, K.D. (2002) “Knowledge Management: A threefold framework”, The Information Society, Vol 18, pp 47-64. Huber, G.P. (2001) “Transfer of knowledge in knowledge management systems: unexplored issues and suggested studies”, European Journal of Information Systems, Vol. 10, No. 2, pp 72-79. Kidd, A.L. (1987) “Knowledge acquisition: An introductory framework”, In: Knowledge Acquisition for Expert System - A Practical Handbook, Plenum, New York, pp. 2-3. King, W.R., Marks Jr, P.V. and McCoy, S. (2002) “The most important issues in knowledge management”, Communications of the ACM, Vol. 45, No. 9, pp 93-97. Stewart, DW and Shamdasani PN (1990) Focus groups: Theory and practice. Sage Publications, Newbury Park, CA. Susman, G.I. and Evered, R.D. (1978) “An assessment of the scientific merits of action research”, Administrative Science Quarterly, Vol. 23, No. 4, pp 582-603. Valusek, J. and Fryback, D. (1985) “Information requirements determination: obstacles within, among and between participants”, Proceedings of the twenty-first annual conference on Computer personnel research, pp 103-111.

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The Gatekeepers’ Intervention in Innovation and Technological Transfer Deogratias Harorimana Southampton Business School, Solent University, UK [email protected] Abstract: This work discusses how knowledge gatekeepers’ intervention in the process of innovations and technology transfer was developed and applied in the manufacturing, financial and R&D firms in Rwanda and Uganda. The study was based on 150 questionnaires distributed, and used to collect empirical data. Furthermore, 25 interviews were conducted within ten organizations and fifteen well known opinion leaders and recognised experts in the fields concerned by this study. In an examination of the role of gatekeeper of knowledge in knowledge transfer processes the study has found that knowledge gatekeepers maybe individual, a firm, or a department within an organization. Furthermore, individuals working as knowledge gatekeepers must adapt to the recipient culture and knowledge sharing practice if they are to effect change. For technological innovations and knowledge transfer, the study found that the role of gatekeepers can be a multidimensional one, ranging from being trust and relationship builders, ambassadors within and from originating firms to receiving firms, and flag bearers. On the basis of the evidences obtained, the study has found no evidence to suggest that, in a gatekeeper’s intervention within the knowledge creation process, there are no evidences that, in case of a firm acting as a knowledge gatekeeper, may necessarily develop asymmetries as well as put in place destructive mechanisms to restrain potential competitors within the sector from developing similar products or that they would necessarily incorporate innovative SMEs in their network who may provide related products to the leading firm. Keywords: knowledge gatekeeper, innovation, leading firms, knowledge creation, knowledge sharing, culture, Rwanda, Uganda

1. Theoretical background In this paper the author continues to revisit the concept of “Knowledge Gatekeeper” (Allen, 1977:145) and seeks to build up evidence based argument made elsewhere in Harorimana (2007, 2008a,b), where, the author argued that the concept of knowledge gatekeeper has been under-researched and yet firms are increasingly looking at ways they can access knowledge located far away and in the same time firms need to be aware of the potential of exposure to potential competitors . Further, the elements of cultural implications where firms are operating at a global scale have not been touched upon. We need to know how firms would adapt to the new realities of a Borderless World and where employing international consultant has become an integral part of the business practice. Vale (2004) shows that some firms among others may include individuals who liaise between firms, or some small firms contracted to provide specialized services to larger firms. In the latter case however, Morrison’s (2004:30) findings in Southern Italian firms indicated that firms may “incorporate within their networks the best providers and subcontractors a creative-destruction mechanism then favors the survival of the most efficient ones. On the other side they could produce perverse effects. They may strengthen internal asymmetries and in turn exasperate conflicts, in particular between large and medium firms”. Following Morrison’s (2004) claim that (1) leading firms incorporate subcontractors, and create sub-networks of suppliers as well as an end-user-supplier relationship, Von Hippel (2005) claimed that (2) firms are able to collect information they need from their customers including from within their business networks which are a coalition of sub-contractors and suppliers. The advantage of this form of relationships is that firms can, in return, (3) be able to develop products that meet customers’ aspirations and standards, and the ownership of the acquired (both old and new) knowledge remains the property of the firm. This paper also considers (Porter 1990, Harorimana, 2008b) the claim that firms may prevent their knowledge from freely circulating, particularly if they believe that this is the source of their competitiveness and that firms may not want to share knowledge because of the costs and risks involved. The aim of this paper is therefore to evidence the role of knowledge gatekeeper in this process of knowledge creation and sharing within and inter-firm networks. The paper seeks to evidence how firms do respond to the gatekeeper’s role in respect of these two opposing theories (views)- namely Morrison (2004), Vale (2004) and Von Hippel (2005), Harorimana (2007, 2008a,b) who are advocating for democratized innovation and knowledge sharing. The research question continues as-“what is the role of gatekeepers in the knowledge transfer Process?”

2. Methodology There were ten case study organizations spread across two countries. The research the usage of multiple sources of evidence adds breadth and depth to data collection and assist in bringing a richness of data together in an apex of understanding through triangulation which contribute to the validity of the research ISSN 1479-4411 63 ©Academic Conferences Ltd Reference this paper as: Harorimana, D. “The Gatekeepers’ Intervention in Innovation and Technological Transfer.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 63 - 76, available online at www.ejkm.com


(Yin, 2003). Among many other strengths, this research relies on its ability to combine a variety of information sources including documentation, interviews, questionnaires and using technology SPSS to analyse study findings.

2.1 Company profile and background information Table 1: Rwandan companies FIRM

1

Size /Number of Fulltime Employees (Equivalent) 425

2

282

2

250

3

222

4

89

Description

Part of Heineken Group. As a beverage industry BRALIRWA’S Coca Cola, Pepsi and many of the other well-known international brands of soft drinks are bottled locally under licence. Mutzig, BRALIRWA’s second best brand was developed from traditional indigenous practice of sorghum beer fermentation in which local people used indigenous knowledge to make own beers. One of the pioneer manufacturing companies in Rwanda. SULFO is engaged in manufacturing, Marketing, Importation and Trading. It manufactures 150 products items, some of which are manufactured under licences such as ‘Bigen’ which is manufactured under licence of Hoyu, Japan and ‘Nivea’ under licence of BDF Germany. Unique manufacturer of clothes and cotton wools based products. They produce various types of fabrics BCR was founded in 1963 and is now under the ownership of ACTIS. It is second biggest bank in Rwanda with a market share of 28%. ACTIS own 80% of BCR against 20% government shares. It is private equity investor in emerging markets based in the UK with a major focus on Africa. Coffee processing, packaging and export. OCIR CAFÉ was created in 1964 with a mission of supervising coffee related activities in the country, from production to commercialization. Its mission has recently been reviewed to concentrate mainly on policy formulation and implementation, with particular emphasis on developing professionalism within the coffee industry, as well as marketing and promotion.

Table 2: Ugandan companies Firm

Profile/ description

5

Size /Number of Full time Employees (Equivalent) 500

6

400

7

600

8

520

Manufacturers of a range of commercial and house hold plastic ware

9

480

Manufacturers of hard-boiled candy and lollipops assorted fruit flavours. Also the manufacture of chocolate based and centre filled confectionery.

10

69

Three incubation centres under one roof. Uiri does researches into food processing and the development of ceramics and other products, as well as several pilot plants for production, engineering and manufacturing workshops metalwork). UIRI is engaged in activities that lead to rapid industrialization of Uganda by identifying appropriate and affordable technologies that will enhance adding value to local products so they can be processed for national, regional and international markets.

The company has been in the service of the east and sub Saharan African household for the last 2 decade. Mukwano Industries is the holding company of other companies in the Mukwano group. Manufacturer of more than 15 products. It is one of the largest companies within East African Community Manufacturer with a fully automated detergent plant manufacturing and a full range of quality detergent and hygiene products in both liquid and powder form.

Because of the nature of case study approach that allows each case to be treated individually (Yin and Stake, 1991, Yin, 1994, Yin 2003), the study was able to accommodate special features of these cases that

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could not otherwise fit into a standardised approach in their own circumstances. For example, organisations number 4 and 10 acts as regulators, processors, marketers and supporters of businesses on behalf of the state. With multiple functions, it was important that the role of these organisations be studied. However the rest of the firms are engaged in manufacturing and R&D business with the exception of BCR who provide investments and advice to manufacturing firms.

3. Findings and analysis and discussions Using a questionnaire instrument, the researcher asked respondents to make a judgment based on the minimum requirements to qualify as knowledge gatekeepers. The benchmark characteristics were: ̇ Having a minimum of Education at the Degree level, or experience in the sector of that amount to warrant such knowledge and level. This is to satisfy ourselves that the person is informed and knowledgeable on the subject. ̇ Being exposed to outside knowledge (ability to read journals, newspapers, reviews, and have access to internet or other Media) ̇ The person is recognized by at least three other people who name him/her anonymously during the research process ̇ The person is willing and able to engage in learning and sharing knowledge with others. Respondent were thereafter invited to confirm on whether they would see themselves as knowledge gatekeepers, and if so, how far did they agree or disagree. This question was semi open to allow respondent to back up their answers by providing descriptive answers and examples of their experiences that can amount to them being qualified as indeed knowledge gatekeepers (see question 1, table1 findings). Among those who responded to this question positively, the researcher invited them to confirm if they would be interested to talk about their role in the following questionnaire survey. From overall number of 50 respondents on this question, (N=50) 29 respondents were disqualified from being possible knowledge gatekeepers, and 9 were rated as actively involved in the knowledge gatekeeper’s role and 9 were believed to be doing some participation into such activities. This gives the research a total of at least 40% of the total respondent rate played knowledge gatekeeper’s role on individual basis inside organisation or outside organizations. Table 3: Gatekeeper’s role

Valid

N/A Strongly Agree Agree Disagree Strongly Disagree

Frequenc y 29 9

Percent 58.0 18.0

Cumulative Percent 58.0 76.0

6 3 3

12.0 6.0 6.0

88.0 94.0 100.0

Figure 1: Gatekeeper’s role Answers to this question are reflection of the limitation of people who are regularly engaged in knowledge transfer activities outside their firm’s boundaries. The majority (29/50) see themselves as not engaged-they do not think they met the threshold characteristics of being a knowledge gatekeeper. The possible reasons

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that were given were that they do not have an opportunity to do so and that they already have an overwhelming job to do. As this question was seeking to find out if there maybe requirements to become a knowledge gatekeeper or if it was purely perceived to be a voluntarily and self accomplishment endeavour. The answers seemed to be, at organisational level that knowledge gatekeepers brings in novel knowledge and open up possible knowledge renewal or recombination’s that those organisations and their stakeholders required. …Gatekeepers give us expert’s contribution- the novel knowledge that otherwise we could not get within our available resources… UIRI Even then, those who strongly agreed were rarely rewarded for what they have done.

3.1 Knowledge gatekeepers as an important asset to organizations ..These individuals have brought extensive experiences and skills that we needed to expand. As you may be aware, we are now part of HG and that means that we are pressed to deliver results. BRW These individuals are very good at setting out higher standards… BCR Managers who responded to questionnaires do agree with employee’s view onto the role of knowledge gatekeeper- and they do agree that knowledge gatekeeper constitute an easy way to improve organisational knowledge base. Further evidences support the view that many firms do employ gatekeepers, although managers do not think that knowledge gatekeepers should be rewarded for such a role. An exception to this view is only when the gatekeeper was hired from external sources. Below are findings relating to knowledge gatekeepers, the way they are perceived by employing firms:

Figure 2: Perceptions of a gatekeeper

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Further interviews with “experts” and MDs of concerned organisations reveal several aspects of knowledge gatekeepers. Among other findings there is an emerging aspect in this research. For example, the role of knowledge gatekeeper seems to be fulfilled in different ways. As individuals, gatekeepers can be significant source of knowledge. However, there is an increasing view among respondents that knowledge gatekeepers who provide the best source of reliable, informative knowledge is that played by institutions or communities of practice as a collective entity. The theme of the community of practice was not studied in this paper; hence, further empirical evidence will focus on organisations as well as people’s role as knowledge gatekeepers. In that regards, below we provide further evidence to study their role:

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Figure 3: Gatekeepers interviews: Qualitative findings From both the interviews and the quantitative data which have been presented in descriptive tables, the study finds that:

3.2 Some respondents from various firms are actively acting as knowledge gatekeepers Organisations are employing knowledge gatekeepers on part time basis. More interestingly these people are external contacts who are called in by senior managers, friends, and industry standing experts .This is because for the organisation, these people represent a resource, an “extra –eye” on understanding and objectivity. The word “extra-eye” was frequently used to mean that knowledge gatekeeper was trusted by employers as well as employees to provide an objective judgement. They can craft a buy-in and support; Respondent BRW These people help us in identifying internal senior-level Champions. Respondent UTX When the same question was put to external stakeholders into two private companies, they were described as “advocates” and “trusted” people to upholding organisational values. Similar findings to these were also recorded in Cranefield and Yoong (2007) into research in the key factors impacting on inter-organisational knowledge transfer in a collaborative project involving a group of New Zealand State Sector organisations where they found that the “gatekeeper performed the role of advocate, using enthusiasm to secure buy-in from colleagues, the CEOs and senior managers” (Ibid.124). In this study, gatekeepers in BCR and ICR, helped identify appropriate project areas-particularly those requiring government buy-ins before a decision on investments can be reached, they provided an independent assessments on investments on areas such as housing, stock markets, opening up new corporate business portfolios, as well as on issues that requires buy-ins by relevant bodies or external funding. With regards to external stakeholders, knowledge gatekeepers are trusted to be in a better position to secure “deals” requiring long term commitment of business stakeholders. Also consistent with Cranefield and Yoong (2007) findings indicates several factors were identified as moderating the effectiveness of the role of a gatekeeper among others include the perception of the work value, trust, fit with expectations, cultural understanding and fits within organisational learning, the impact of workplace issues and power, reflected in the gatekeeper’s level of seniority. With regards to this study, the context mediating effect of the role of a gatekeeper can be described in the following table

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Table 4: Mediating effect of the role of a gatekeeper’ role Trust Work Value

High

Cultural fits with organisational learning Medium

Experience

Who

High

employees Stakeholder

Seniority

Low

N/A

Low

Gatekeeper

Fit with Expectations

High

High

High

Company directors, Stakeholders

Relationship with existing workplace culture

Low

High

High

Employees, Directors

One of interesting findings from Companies investigated is that if the work to be done is highly valued by employers and stakeholders, then a gatekeeper is highly required and is trusted to deliver results more than would be the case for local managers. …For us, these we need from these people is forging and introducing us to the new world, to create internal and external networks of important decision makers and possible business partners. Respondent BCR ..Even if things aren’t working well or unlikely to deliver results, a manager will not necessarily inform us until we find out ourselves. At that stage, it may well be too late to save the business...Respondent BRW Within the context of UIRI it was possible to investigate possible existing differences that may exist based on their regional, tribal origins, and how these may impact on knowledge sharing and transfer. The majority of cases, employees did not recognise such differences exist. Whilst Williams et al. (1998) argued that organizations may be unable to see beyond their routines and customary practices, respondents point to the fact that their organisations recognise the need to have a consistent team work. They achieve this by developing internal mechanism that shapes learning and knowledge sharing based on intended outcomes. In some cases, the company relies on external knowledge by calling in consultants to offer focussed training on organisational systems. The key to success, they insist-is similarities in processes across organisational department. These processes are supported by openness and a culture of mutual support and knowledge sharing. Some of the findings 4.2 have ramifications that have been expressed in the sense of power-struggle and the balance of personal interests with corporate interest. In the study, those who are seen as seniors are perceived to be less trusted by their colleagues and actually there is a strong sense that these people are not necessarily equipt to do the most demanding job for organisations. For that not to happen, a knowledge gatekeeper is thought to deliver services in areas that are likely to be a source of conflicting interest. When this question is oriented to a gatekeeper however, the result becomes more positive- the more demanding the job is, the more they needed an experienced gatekeeper. More interestingly, there is a proportional increase in job expectations for the job to be done and the level of trust and experience needed. More importantly, we need someone special. Someone who has ability to create a small room for them to excel in translating the knowledge back into the organisational culture; Respondent MD UIRI When we have to deal with highly specialised areas, we need someone who is capable to use (own) unique expertise to initiate processes, to influence and educate internal and external stakeholders; The role of knowledge gatekeeper was also associated with being a knowledge translator-converting written knowledge into accessible literature for the public: ̇ For UTX and UIIR however, knowledge gatekeeper’s role involves translating latest technological development, into accessible literatures, training tools and public presentations that can stimulate and engage in debate with knowledge users. ̇ In particular, UIIRI has specific role for a gatekeeper-that of relating IK to other sciences and knowledge systems. Knowledge gatekeeper reads journals on knowledge user, holds consultations, and develops a path under which indigenous knowledge can be translated into industrial usage.

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̇

In BRW however, the role of the gatekeeper involves translating organizational strategy for R&D, marketing, production systems, and improving supply chain through creation and support of related industries (SMEs)

3.3 Knowledge gatekeepers as organisations: The case of UIRI As an institution we [UIRI] were given this mission of not just identify indigenous knowledge (IK) and make it relevant to our people’s development, but also to conduct research in various other areas that may contribute to the development of our industries. Respondent UIRI Knowledge base created at UIRI comes from small businesses in rural Uganda, SMEs, as well as some indigenous communities in farming associations. Specific areas of interventions include entrepreneurship training, monitoring, marketing, networking, mentoring, as well as to provide shared services and infrastructure to small businesses who wish to develop their ideas but are lacking appropriate infrastructure. In order to understand the role of the knowledge gatekeeper under study, it was required to take into considerations its ultimate aim within business volatile climate. More than half of SMEs in Uganda do not see through their first year of operations, and the majority of farmers are poorly able to save up to 40% of their harvest (Uganda Institute of Statistics, 2007). According to the Uganda Ministry of Economy, despite that Uganda has a good standard of education in the region comparably to its counterpart within EAC, higher level of literacy and higher education degrees among its people do not translate into economic gains (absorptive capacity of information). Since post independence, Uganda industries suffered and continued to experience challenges in integrating its aspirations of becoming industrial hub through a rapid industrialisation of Uganda. UIRI was therefore targeting to be a knowledge gatekeeper in most areas that concerned the economy of Uganda. The following is a diagram of activities as was anticipated by the central government. The chart has been deliberately clustered according the areas of focus.

Figure 4: Sector of activities. Source: Uganda Institute of Industrial Research The above diagram reflects sets of areas of UIRI. Further, it reflects areas of focus by respondents in this research. Each department had at least four respondents to the research questionnaire along with other interviews with four selected officials including the MD, divisional heads and employees. The departments complement one another and they are involved in knowledge creation, transfer and dissemination process. Among responses obtained, there is evidence based consensus that UIRI has been involved in

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1. Knowledge identification (with particular focus on IK and how this can feed into further advanced research) 2. Knowledge documentation : Here the staff are required to document which type of innovation and innovative ideas, what processes were involved, how often the processes were repeated and produced or did not produce similar results, what if any, are recommendations they can make for further investigations 3. Knowledge testing and confirmation in laboratories: Intensive testing is conducted and product can be rejected or confirmed. 4. developing prototypes and automation: 5. Knowledge dissemination: Their activities include finding relevant customers, organising workshops to raise awareness particularly with indigenous communities, develop tools and put in support mechanisms to support third parties who may buy their technologies. Within UIRI, knowledge creation process takes on a form of social process first before it reaches a stage of intense activity in laboratories. The enabling process is said to be a mix of identification and documentation of the indigenous knowledge at first place, a mechanism which is enabled by social interactions with IK owners. This process within the organisation at hand is handled by appointed full time staffs that travel around the countries rural, taking and sharing experiences with those people who hold potential areas of knowledge needed to develop in the laboratory and automation. This research held discussions with staff members who revealed the following process followed in knowledge transfer: Below is the knowledge creation process from start

Figure 5: Process of knowledge identification throughout to knowledge dissemination stage The above figure shows that the process of knowledge identification starts from basic level of inquiries. Inquiries are conducted from local indigenous communities and from experiences of application elsewhere in the World. Each of this stage feeds into one another, leading to an advanced stage whereby documentation of processes takes place. The documentation is followed by intensive work in laboratories (R&D) where first attempt to automation is made. At this stage the record of innovation can be either confirmed or rejected. Moreover, if the R&D stage becomes successful, a prototype is placed into an incubation centre where the product can be enhanced then marketed to either local firms or abroad. In this process knowledge transfer activities can be enhanced by close relationship with companies who are able to buy the innovation for business purposes. This is the most vulnerable stage (according to engineer C) as it entails total trust and commitment to one another through mutual engagement and support.

3.4 The third party views on the benefits from UIRI’s role The research project used interviews to find out people’s perceptions on the role played not just by them- but by their colleagues as well as those who benefited from knowledge identification, knowledge documentation, and training and through product development. Below are examples of experiences told by respondents: These individuals have brought extensive experiences and skills that we needed to expand. These individuals are Very good at setting out higher standards. These responses were obtained within a context of individuals fulfilling the role of gatekeepers. The question was addressed specifically to seek clarifications about differences that may exist between people fulfilling the role. From these personal views however it is not clear how an employee could separate between those

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tasks carried out within his/her contractual obligations and that those voluntary tasks which would not normally attract employer’s pay and appreciation. The challenge that is further noted here is that the majority of staff work according to job needed to be done including out of hours and week ends visits to communities or businesses far away from the site. These sorts of visits away from the site of the workplace are common and they intend to maximise the benefits of networking and establishing linkages. Given that the successes depends on creating long lasting and trustworthy relationships with communities, it can be almost impossible to quantify the intensity inputs of efforts and length of time spent on the job related tasks. The process of building relationships and identity formation means that in some cases staffs are required to advise those they visit in areas which do not necessarily fall within they line of responsibility. However, rewards and acknowledgement by employer’s contributions to their employees may not be commensurate with the jobs they do even though those who benefited from gatekeeper’s job are satisfied with the service they received. For example, from the interviews with people who benefited from UIRI project, the following findings were recorded: Gatekeepers give us expert’s contribution- the novel knowledge that otherwise we could not get within our available resources. They provide a linkage with international partners and sometimes they help us determine appropriate customers for our products. From the institutional point of view, knowledge transfer involves not only those tasks which can be monitored at all times. They argue that for knowledge transfer to be successful they require spontaneous involvements, initiative driven and outwards looking set of activities. The C.E.O (an expatriate National) in particular expresses the view that staff recruitment at this particular company should aim at targeting people not just with high level of qualifications but also with relevant experiences or capacity to network, create sustainable relationships to support learning and, access a knowledge base through which change can be introduced.

3.5 BRW as a knowledge gatekeeper BRW is a multinational branch that operated in the country for many decades. This company has resources and exposure acquired in doing businesses not just locally but regionally and internationally. Moreover, local macro-economic circumstances did not permit the 500 employee company to satisfy its manufacturing needs. The company senior management say that the cost of doing business is high and they attribute this to lack of related industries that would provide them with specialised services they need. They work with the RPI who supplies to BRW with packaging material. BRW initiated and supported the creation of this highly specialised firm to operate under supplier’s arrangement with full access to BRW internal resources such as knowledge base, interim funding and training. Below is the support shares given by each of these firms: Table 5: Share (%) for funded activities by BRW Support given Share BRW (%)

Product specificatio ns 98

RPI

2

R&D Support

In-house and internship

Products support

100

Funded external training 85.2

72

75

0

14.8

28

25

There is significant amount of knowledge transfer taking place between BRW and RPI and this increases as knowledge intensive activities are required. Respondents explain this phenomenon as because R&D activities involve significant amount of time spent together discussing options available and reaching an agreement on products specifications. This study findings suggest that that there is a positive association between tie strength which increase with the tacitness and decreases with the codifiability of the knowledge being transferred. Furthermore, respondents add that knowledge involved in product development is a difficult and complex process that requires really twisting and turning one another’s argument until you have reached a consensus...Engineer X10. RPI and BRW R&D teams express views about the use of manuals as inappropriate and in some cases are just too long that they cannot read many pages (of the manual) and then get to do the job on time…it is just not possible! Y7.

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RPI

Product support

In-house Training

Funded External Training

BRW

R&D

Help with Product specifications

100 90 80 70 60 50 40 30 20 10 0

Figure 6: Share of support BRW to RPI R&D team members find it necessary to meet in a face to face interaction as many times as needed to ensure consistency and shared understanding. They have found that higher level of confidence of staff involved is strongly related to the amount of time spent in face to face interaction, shared understanding and knowledge of the products being discussed. In addition of these respondents add that…trust is absolute necessity and it not possible to pretend that it is there when it is not Y10. In some cases, less complex tasks and specifications are exchanged through emails and telephone conversations can be used to reinforce the message. According to respondents, each stage plays an equally important role in a business relationship and BRW manages this by treating their business partner’s mutual respect, equal empowerment and mutual support. Below is the R&D process between BRW and RPI.

Figure 7: Process of knowledge transfer: BRW and RPI interaction These findings together with those from interviews recorded in Figure 3: Gatekeepers INTERVIEWS: QUALITATIVE FINDINGS show that BRW played the role the role of gatekeeper in different ways. The above findings show that they have created strong linkages with RPI in areas of knowledge sharing that resulted in long term business association. Further they are sharing resources, train RPI staff and provide financial support. Both companies express satisfaction in the nature of the relationships by indicating that

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they are based on mutual support and driving innovation through continuous assessment and learning based on one another’s needs. Although the relationship has been embedded within both company structures, there was no evidence available on organisation chart. BRW and RPI are still independent companies, with each one managing the relationship under what they call “special arrangement based on business need and mutual support” Manager BRW. BRW’s activities are not limited to RPI network and support. As a major company with significant influences on local market, BRW is also the largest private sector employer in the country. Further activities are expanded in areas of PR and marketing; the company support farmers who produce the products they use in some of their leading brands, and support local consumers through friendly suppliers relationships. Below were the findings from employee respondents to this research about company’s role as a knowledge gatekeeper: Most SMEs come to us to seek for advice and support and this include knowledge and leadership. ̇ We decided to encourage the creation of synergies with local companies and other potential people… We brought them together and integrated them into our supply chain and the network. The result was therefore a birth of an independent manufacturing company: RPI ̇ We assist Cooperatives through projects planning, implementation, and identify appropriate funding for them. Although there were issues between suppliers’ power relations with BRW, there were no significant indicators that BRW had any intentions to incorporate those innovative SMEs who were supplying specilialised services as suggested in Morrison (2004) ...if we really wanted we could. But this is a large market, and our mission statement is not targeting exactly that area of business. BRW ..We can only do what we, as a company have chosen to do and then help locals to set up other companies to help us to meet our needs.KWN, …The greater we open and share our knowledge, the greater our risk and the greater is our opportunities to innovate and learning…here we imbue employees that every risk is an opportunity and not a hindrance .DGM Finally, Knowledge sharing between BRW and RPI was governed by trust and closeness to BRW in the suppliers’ hierarchy. The BRW argue that they do not intend to give up on supporting specialised services delivered by RPI, but they do not intend to incorporate them. The core argument to this is that are not relevant to their core mission (Senior Manager BRW). Subject to further study, our indication of possible reasons for this maybe that possibly the market conditions are so loose that competition is weaker (referenced to embedding the case studies in the firth chapter of this thesis for further analysis of economic conditions) compared with current Italian based firms where Morrisson (2004) based the study on the role of the gatekeepers in knowledge transfer process.

4. Conclusions The study of knowledge gatekeepers continues to evolve towards probably one of comprehensive directions: whilst previous studies concluded that the gatekeeper’s role was informal and individually centred, it is becoming clear that this is not always the case. This paper evidences that beyond people, organizations such as UIRI and BRW play the role of knowledge identification, evidence gathering, developing new knowledge and further disseminating and supporting other companies/or people who may need it. Whilst knowledge gatekeepers contributed to the benefits of firm’s internal capabilities, people acting as knowledge gatekeepers were not paid for their role. However, organizations were recognised and in some cases are funded for that specific role. Where it has been clear that people were considered as gatekeepers, their role became more informal than has been in the case of firms carrying out the same role. The informal nature of people’s role as gatekeepers makes their job difficult to recognize when the person is acting as part of the contractual obligations and when this falls outside normal contract-and therefore requiring some form of rewards. Further the paper demonstrate that in the process, firms as knowledge gatekeeper may not incorporate innovative SMEs as this has been argued in previous studies. Future lines of study should seek to explore the reasons and in particular, the study should study the link between market competitiveness and the desire for incorporation of innovative SMEs.

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References Allen, T. J., (1977). Managing the flow of technology; technology transfer and the dissemination of technological information within the Research and Development organization. Cambridge, Massachusetts. MIT Press. Cranefield, J. and Yoong, P. (2007) ‘Interorganisational knowledge transfer: the role of the gatekeeper’, Int. J. Knowledge and Learning, Vol. 3( 1)121–138. Cummings J.L. and Teng B.S. (2003), Transferring R&D knowledge: The key factors affecting knowledge transfer success, Journal of Engineering and Technology Management, 20(1) 39-68. Harorimana D (2008a) “Boundary spanners: a Necessity or a Threat to Knowledge sharing for Innovation?” The International Journal of Learning and Intellectual Capital (IJLIC), Special issue "Innovation and Knowledge Management: Challenges for the Firm. (Accepted for publication November 2007, Forthcoming), Inderscience Inc. Harorimana D. (2007) Boundary Spanners and Networks of Knowledge: Developing a Knowledge Creation and Transfer Model, In Remenyi D. (2007) Academic Conferences International, Reading Harorimana D.(2008b). Leading Firms As Knowledge Gatekeepers In A Networked Environment in Bollisani E. Building The Knowledge Society On the Internet: Sharing and Exchanging Knowledge in Networked Environments, Idea Group Inc. New York. Morisson A. (2004), « Gatekeepers of Knowledge within industrial districts: who they are, how they interact », contribution to the 4th Proximity Conference, Proximity, Networks and Coordination, Marseille June 2004. Rychen F. and Zymmermann J.B (2007).Industrial Clusters and the Knowledge Based Economy: from open to distributed structures? Ecole des Hautes Etudes en Sciences Sociales Universités d'Aix-Marseille II et III, working paper n°2007-07 Vale M. (2004) Innovation and Knowledge driven by a Focal Corporation: The case of the AutoEuropa Supply Chain. European Urban and Regional Studies, 11(2)124-140 Von Hippel, E. (2005).Democratizing Innovation, MIT press.

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How to Improve Your Knowledge Intensive Organisation: Implementing a Knowledge Management Scan Within Public and Private Sector Organisations Hans Koolmees, Henk Smeijsters and Sylvia Schoenmakers Knowledge Management Centre of Research, Zuyd University, The Netherlands. [email protected] [email protected] [email protected] Abstract: The Centre of Research in Knowledge Organisations and Knowledge Management of Zuyd University has developed a knowledge management scan The scan initiates from two models. The first model is based on the Value Based Knowledge Management approach (Tissen, Andriessen & Lekanne Deprez, 1998) and includes 6 basic abilities of a knowledge-intensive organisation that will enable the organisation to operate successfully in a knowledge based economy (.The second model, developed by Wierdsma and Swieringa (2002), categorises organisations according to their level of learning that is to say, how it develops a specific learning ability. Both models are briefly reviewed within this paper. This knowledge management scan is a tool that enables an organisation to assess the development of its six basic abilities. Once the organisation has a clear insight into its own abilities, it will be able to strengthen its overall learning ability and improve the organisations’ competitive position. Additionally we take a close look at our research approach for developing and implementing the knowledge management scan. The scan encompasses 15 statements per ability (90 statements in total). The complete scan will be assessed on a five-point scale by a representative group of selected employees and managers of an organization, supervised by a researcher/consultant. During the analysis of the results and the presentation of recommendations, specific attention is paid to those statements that achieve high and low scores respectively (invitation to implement improvement actions) and statements that have a relatively high spread across a broad range (differences of opinion or the statement is open to different interpretations). In particular we have examined how the knowledge management scan was put into practice in one of the departments of Zuyd University. After a short summary of the organisation's initial situation, we discuss subsequent steps taken during the assessment, analysis and the advisory process. This paragraph is followed by a concise summary of the results generated by the scan. Finally we offer the recommendations and subsequent steps to be taken to implement these advices in the near future. Keywords: knowledge management scan, assessment, learning organisation

1. General introduction One of the key tasks of the Centre of Research in Knowledge Organisations and Knowledge Management of Zuyd University is to support and nurture local organisations to become a knowledge-intensive organisation. To determine the progress made so far in this endeavour, it is essential to gain an insight into the organisation's progress to date with respect to the critical success factors, i.e. those factors that determine the success of knowledge-intensive organisations. On the basis of this analysis, it is then possible to identify the follow-up steps to be taken to facilitate further growth.

2. The learning ability of organisations In order to analyse knowledge-intensive organisations, the Centre of Research in Knowledge Organisations and Knowledge Management developed a scan. This scan is based on two models. The first model represents the abilities of a knowledge-intensive organisation. The second model presents a stratification of the different learning types that can be distinguished within organisations.

2.1 Abilities of the learning organisation To integrate the four key areas – Market & Strategy, Structure & Processes, People and Motivation, Knowledge & Systems - an organization needs to develop six abilities (Tissen, Andriessen & Lekanne Deprez, 1998). The level of development of each ability reveals whether or not it has reached its learning ISSN 1479-4411 77 ©Academic Conferences Ltd Reference this paper as: Koolmees, H., Smeijsters, H. and Schoenmakers, S. “How to Improve Your Knowledge Intensive Organisation: Implementing a Knowledge Management Scan Within Public and Private Sector Organisations.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 77 - 86, available online at www.ejkm.com


level. Figure 1 provides a graphical representation of the model and its six abilities Furthermore it shows how the abilities interrelate, and relate to the four key areas of an organisation...

Figure 1: The six abilities of a ‘learning’ organisation. (Source: Tissen, Andriessen & Lekanne Deprez, 1998) The six abilities are defined as follows: ̇ Ability to anticipate: the organisation is able to anticipate (market) developments and discontinuities and respond pro-actively. ̇ Ability to respond: the organisation is able to respond swiftly to sudden external changes by entering into new partnerships and collaborations. ̇ Ability to produce: the organisation is able to manage complex processes efficiently and effectively to generate successful products or services. ̇ Ability to learn: employees within the organisation reflect on their own (work) experiences and those of others, conceptualise these experiences, discuss them, improve their plan of action, put this improvement into practice and reflect upon it. ̇ Ability to create: employees within the organisation are able to redefine internal and external reality, ask inventive questions and devise new solutions, create new designs and add value to the organisation. ̇ Ability to last: the organisation is able to bind and captivate people.

2.2 Types of organisations based on their learning ability On the basis of the type of learning prevalent within an organisation, Wierdsma and Swieringa (2002) distinguish different types of organisations. A summary of their typology is provided in Table 1.

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Hans Koolmees, Henk Smeijsters and Sylvia Schoenmakers

Table 1: Types of organisations according to their learning ability. (Smeijsters and Schoenmakers (2005) based on: Wierdsma and Swieringa (2002)). Entrepreneurial ̇ learning by imitating organisation ̇ subconscious learning at operational level ̇ rewarding and punishing single-loop learning (improve; rules, insight and principles are not discussable). Prescriptive organisation ̇ organisation regulates the behaviour of staff and customers (machine bureaucracy) ̇ focus on error prevention ̇ learning via supply-driven training, not workplace-specific even single-loop learning is difficult Unlearning organisation ̇ continuously produces new models for work processes (blueprints) ̇ addicted to reorganisation ̇ enforced learning process and cultural change ̇ double- or treble-loop learning (change is necessary) Professional organisation ̇ knowledge acquisition is driven by own expertise area (specialist) ̇ knowledge is person-specific (expertise) ̇ learn to prove that you are right (self-willed) ̇ supply-driven (arrogant) service provision ̇ focus on single-loop learning (within own ‘school’) Learning organisation ̇ problem-driven learning from workplace situations (demand-driven) ̇ focus on collaboration in knowledge creation ̇ cyclical deepening or broadening of insights ̇ triple-loop learning (why are certain issues tackled in a certain way). According to Wierdsma and Swieringa, ‘single-loop learning’ focuses on ‘how’ questions: how to do things better than the organisation used to do. Rules may change, but the underlying insights, theories, discourse and assumptions are not discussed. ‘Double-loop learning’, meanwhile, is concerned with ‘why’-questions, addressing why people do things in a certain way. This is often characterised by conflicting issues and insights. ‘Triple-loop learning’ challenges the fundamental building blocks of an organisation, and opposes the ‘presuppositions’ and the dominant logic of the organisation.

3. The development process of the knowledge management scan 3.1 Problem formulation Over the past decades, a whole raft of so-called knowledge management scans have been developed to map out an organisation's progress towards knowledge management. These briefly comprise first generation knowledge management scans (brain drain: collate, record/capture and distribute knowledge), second generation knowledge management scans (brain chain: interactive way in which employees utilise knowledge) and third generation knowledge management scans (brain gain: promoting collaborative/joint learning) (Lekanne Deprez, 2003). The aim of the Centre of Research in Knowledge Organisations and Knowledge Management is to develop an integrated vision and a practical approach of knowledge management that assembles the different organisational learning types and the abilities of the learning organisation. The problem formulation is based on the six abilities as defined by Tissen, Andriessen and Lekanne Deprez (1998) and the organisation types as described by Wierdsma and Swieringa (2002). In particular, we aim to bring together both points of view, in other words to describe the organisation on the basis of a set of competencies. The organisations in question concern both profit and non-profit organisations, drawn from the business community as well as educational and care institutions. The assumption is that it is possible to adopt a universal approach to map out the learning ability of these diverse organisations.

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3.2 Aims and objectives The aim of this research project is to enable organisations to gain a clear understanding of their own overall learning ability on the basis of an integrated knowledge management scan... Once the organisation has a clear insight into its own abilities, it will be able to strengthen its overall learning ability and improve the organisations’ competitive position.

3.3 Research problem 3.3.1 Main research question Is it possible to develop a knowledge management scan that enables an organisation to perform an integrated measurement of its overall learning ability and derive improvement actions to enhance its learning ability?

3.3.2 Sub-questions The following sub-questions can be asked: ̇ Are the individual scan items recognised? ̇ Are the individual items unequivocal and not open to misinterpretation? ̇ Are the individual items sufficiently concrete? ̇ Is there a danger that the items might generate overly measured scores due to the inclusion of pros and cons? ̇ Are the individual items understandable to all employees at all levels of the organisation? ̇ In the opinion of the respondents, do the outcomes of the total scan paint a credible picture of the learning ability at the time of assessment? ̇ Are the respondents taking part in the scan able to differentiate between IST and SOLL situations? ̇ Does the scan confirm the core themes of the organisation in terms of its learning ability? ̇ Does the scan provide an integrated view of the overall learning ability of the organisation? ̇ Does the scan confirm established views, or does the scan enable new insights? ̇ Is it possible to determine the role of ICT in the learning organisation? ̇ Does the scan offer sufficient keystones to identify and select improvement actions? ̇ Is the scan usable in everyday practice?

3.4 Research process and steps The members of the research centre devised “items” for each ability relating to their area(s) of expertise. These items are based on the abilities identified in the Tissen-model and the organisational typologies identified by Wierdsma & Swieringa. The items were presented to the full group of researchers during various plenary sessions and were adjusted by researchers throughout the process. These consultations also took into account the consistency of the items, such as the different abilities identified in the Tissen-model. Any duplication was omitted and gaps were supplemented. The final step involved converting the items into statements that are readily understandable to a range of employees. For each of the 6 abilities, 15 statements were devised, producing a total of 90 statements. In addition, a digital version of the knowledge management scan was produced in Excel. The completed knowledge management scan was piloted by three departments in Zuyd University. All answers were represented graphically for each ability, and the average result of all respondents calculated. The end results were presented within each department. The knowledge management scan was subsequently improved on the basis of the feedback provided by the respondents, advisory council of the research centre and provisional statistical analyses.

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3.5 Research method The knowledge management scan was developed using a mixture of qualitative and quantitative research methods. A qualitative approach was adopted to develop consensus-based items. Quantitative research methods related to the practical application of the knowledge management scan. Employees were asked to score each item, and the scores were subjected to a statistical analysis (Berger (2001), Denzin (2000), Imbos (2001), Lincoln (1985) and Migchelbrink (2003).

3.5.1 Research types ̇ ̇

Development research: developing a knowledge management scan to measure the learning ability within an organisation Descriptive research: with the aid of the knowledge management scan, map out the learning ability of an organisation

3.5.2 Research methods ̇ ̇

Qualitative (survey-based questionnaire construction) Quantitative (survey-based questionnaire and descriptive questionnaire construction)

3.5.3 Data collection techniques ̇ ̇ ̇

Desk study by researchers of the Centre to identify the key issues to be addressed within the survey Peer reviews within the research centre. Each member of the Centre is responsible for developing and maintain the relevant issues related to an ability Performing a knowledge management scan among employees

3.5.4 Data processing techniques ̇

̇

Qualitative: ̇ Processing comments from research centre members ̇ Substantive analysis of respondents' comments ̇ Processing comments of the advisory council Quantitative: ̇ Descriptive statistics for representing the results in tables, graphs and centre sizes ̇ Statistical analysis of the quality of the measurement tool

3.5.5 Quality criteria ̇

̇

Qualitative: ̇ Credibility (are the items recognised and seen as relevant?) ̇ Dependability (have all important issues been taken into consideration?) ̇ Transferability (is the scan usable in different settings?) ̇ Triangulation (does the scan comprise a combination of knowledge management, abilities of learning organisations and types of organisations?) Quantitative: ̇ Test-retest reliability ̇ Inter assessment reliability ̇ Internal consistency ̇ Criterion validity ̇ Factor analysis

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3.5.6 Respondents A total of 30 representatives from three departments of Zuyd University participated as respondents in the scan tests. The respondents represented a broad cross-section of department, from top management and middle management to lecturers, project managers and mentors.

3.6 Results 3.6.1 Qualitative After completing the entire scan, each respondent was asked to comment on the quality of the scan. The qualitative substantive analysis produced the following conclusions: In general, the respondents believe that the scan paints a representative, comprehensive and integrated picture of the organisation. Important competencies relating to the external environment, internal organisation, facilities, the learning experience, innovative qualities and organisational culture are clearly present. The items cover the scope of the six abilities reasonably well. The respondents believe that the scan represents the department accurately and confronts the respondents with relevant facts. The scan clearly reveals weaknesses, knowledge gaps and shortcomings. Some respondents (primarily those with a higher professional education and some experience and understanding of knowledge management) reported that the majority of statements were clear and easy to answer. They are not entirely convinced however that these sentiments are echoed by other respondents, i.e. respondents from different backgrounds. Some statements require additional information and explanation. Criticism was expressed at the statements relating to ICT. The relevance of these statements in terms of focus and aims-means discussion was not entirely clear. In general, the respondents understand what action is required to develop into a learning organisation. The scan was regarded as more workable and usable than other analysis instruments. The items in the scan are recognisable and relate to everyday practice. Feedback of results to the organisation and further discussion is recommended. On the basis of scan results, key aims can be identified and put into practice. The respondents are aware of the fact that the scan offers a snapshot of a change process. By conducting the scan on a regular basis, it is possible to accurately gauge the extent to which the organisation is facilitating change. Some respondents also suggested adopting the scan as a benchmark in their own sector or region.

3.6.2 Quantitative The number of respondents was too small to perform a statistical analysis on reliability and validity and draw relevant conclusions. Nevertheless, an analysis was performed to obtain some indication of the development trajectory. The test-retest reliability score was r = .80 while the inter assessment reliability score was r = .65. The criterion of validity also had a comparatively high score. Subsequent comparison of the quantitative and qualitative analyses revealed general consensus, enabling us to tentatively conclude that the degree of reliability and validity provide an adequate platform to enter the second phase of the development process: performing the scan at external companies and internally within Zuyd University departments.

4. Knowledge management scan in practice Using the experiences gleaned during the development of the knowledge management scan, the scan was performed in three various departments of Zuyd University and in the Research & Development Department of an international chemical company. In this paragraph, we examine the analysis and advisory process for one of the Zuyd University departments.

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4.1 Initial situation The department has undergone tremendous change and development in recent years. Far-reaching policy ideas have been implemented to increase the external orientation of the department, enhance involvement and facilitate decisiveness. These policy ideas have already borne fruit. Explorative discussions with members of staff and managers reveal a general consensus that the changes implemented in recent years have been for the benefit of the department... In addition, there is an overall willingness to maintain the momentum to drive through the current policy. The respondents are rightly proud of the results achieved so far. They feel strongly engaged and committed to their work and have developed good self-critical ability to assess strengths and weaknesses. Interviews with the respondents reveal a readiness to improve even further. The interviews additionally revealed the importance that respondents attach to knowledge as a production factor for the further development of the department. The employees were willing to go the proverbial extra mile to push through improvement actions. The will to improve is clearly present, although there is less certainty as to which areas deserve priority and which improvement actions are required.

4.2 The analysis and advisory process The analysis and advisory process was preceded by an interview between research centre researchers and senior managers to discuss the analysis method to be adopted on the basis of the knowledge management scan. During these consultations, the positive and potentially negative implications of such an analysis were discussed. After carefully weighing up the pros and cons, the senior managers decided to embrace the analysis and advisory route. The first step involved informing employees of the nature of the scan and the method to be adopted. In consultation with a senior member of staff, it was then determined which echelons of the organisation to involve in the scan to paint the most representative picture of the department. Appointments were then made with all selected members of staff. On the basis of experiences gained during the development phase, it was decided to ask the employees to complete the scan with the researcher, rather than independently. Although this proved a rather time-consuming exercise for the researcher, it enabled him/her to explain each statement and place it in the right context. Moreover, it enabled the researcher to ask in-depth questions in key areas and to examine practical examples, context-based evidence and spontaneous responses that lend a three-dimensional quality to the analysis and advisory process. The results of the completed digital scan were processed and subjected to quantitative analysis. On the basis of this analysis, a qualitative analysis was performed, followed by recommendations for each ability. The analysis and advisory/consultancy report was concluded with a number of general (non-competency related) conclusions and recommendations. Once completed, the analysis and advisory report was discussed with senior management. This was followed by a staff meeting to discuss the report in more detail. The discussion focussed mainly on the points for improvement, and dedicated extra time to those items that revealed a spread across a broad score range. These mainly concerned issues that are rarely if ever discussed within the team or issues where opinions vary widely. The team as a whole handled the discussion well. Participants adopted an open approach and were interested in each other's respective points of view, and were prepared for the consequences. The group of respondents was able to relate to the conclusions and agreed to discuss implementation of the proposed improvements in more detail. Unfortunately, the process was considerably delayed due to a change of management.

4.3 Results Per ability, the analysis and advisory report drew particular attention to statements that scored the highest (most favourably), statements that scored the lowest (least favourably, and where improvement is possible) and statements that showed the highest spread across a broad score range (where statements are subject to different interpretations or differences of opinion). The limited length of this paper does not allow us to provide a detailed account of analysis results and recommendations per ability. Nevertheless, a summarising overview offers some insight into key points and recommendations uncovered by the analysis.

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It is interesting to note for instance that the organisation's directors harbour more positive feelings about the organisation than its employees. Equally, staff members who are closely associated with or work directly in the professional field have a less positive opinion of the organisation's external orientation than other members of staff.

4.3.1 Ability to anticipate The department is relatively aware of the importance of monitoring the external environment. There is however a lack of clarity as to whether this is the responsibility of management or the professional organisation as a whole. The vast majority of employees are sufficiently active in external networks. However, their ability to systematically search and consult external (documentary) information and data is underdeveloped. The department therefore has insufficient insight into the cause of discontinuities in the external environment. Available ICT resources are insufficiently utilised to collate data systematically. The trends revealed by the external orientation process are neither discussed systematically within the group of professionals, nor assessed according to their relevance and importance. Annual consultations with employees (and external parties, if required) are recommended, to discuss external trends and to discuss whether and, if so, how to translate these trends into the policy of the department.

4.3.2 Ability to respond Employees unanimously agree that they should be in a position to respond rapidly and adequately to market changes and enter into collaborations. Opinions differ as to the extent to which this aim is currently being fulfilled. Employees engaged in secondary activities outside Zuyd University have a markedly less positive view of these achievements than employees who work predominantly within the organisation. More specifically, the first group identified more collaboration opportunities with external parties through cocreation channels to reach out to the outside world through curriculum innovation and service provision. Although a substantial number of employees is actively engaged in external networks, relatively few employees have confidence in their abilities to operate successfully in these networks. They would welcome more support. External activities are highly employee-specific; heightening the risk that knowledge acquired within the networks is not shared with colleagues, resulting in knowledge loss. A number of employees additionally commented on the fact that entrepreneurial spirit is still very much in its infancy. Adequate staff knowledge and greater delegation of authorities should enable more (manageable) risk-bearing activities. The recommendations therefore focus primarily on providing more support in developing and maintaining external networks, and on promoting knowledge exchange through the establishment of communities of practice.

4.3.3 Ability to produce The department offers ample scope to design and structure production and service processes individually. A minority of respondents believe that greater standardisation is desirable when implementing routine activities, to free up more time for activities and work that require a higher degree of creativity. On the whole, employees are comfortable with the level of academic innovation, but are less sure about how to approach unpredictable questions and questions from the professional field. Although external parties are involved in facilitating innovations, this collaboration is limited to assessing internally developed products. Co-creation, it is felt, could be more actively stimulated, again in accordance with the communities of practice model. Once again, ICT appears to be the proverbial poor relation. According to respondents, (auxiliary) technology is insufficiently utilised. Respondents believe that management information generated by some ICT products is insufficiently used for policy-generating purposes. Furthermore, barely any ICT support is provided during internal or external collaborations.

4.3.4 Ability to learn The analysis of this ability provides a clear illustration. The respondents unanimously agree that the department can be positioned as an organisation that has mastered double-loop learning and is well underway to becoming a treble-loop learning organisation. Although respondents generally agree about the learning intentions, some doubts exist as to the level of intention and form that these intentions currently take. For example, there is some disagreement among respondents as to the manner in which plans are

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actually implemented. Knowledge development is predominantly a matter for each individual member of staff. Procedures to nurture knowledge within a group context are underdeveloped. Working in communities of practice would again offer a feasible solution in this respect. Respondents indicated that they assess their competency levels regularly to assess whether these continue to reflect the changing environment. This is a positive development. Needless to say of course, the relevance of this self-reflection is hugely dependent on whether these external changes are accurately perceived. Once again, ICT scores poorly for this ability. Although the respondents generally feel that the deployment of ICT is dedicated to improving the quality of products and services, they are less flattering about the extent to which ICT applications contribute to nurturing an individual's expertise and facilitating closer collaboration between employees and with external parties (collaborative working tools). There is a lot of territory left to explore in this respect.

4.3.5 Ability to create The respondents virtually unanimously agree that innovations are scheduled adequately. Employees clearly feel encouraged by senior management to embrace innovation. As with the situations described above, there is some disagreement among respondents as to the extent to which external parties are involved in innovation processes. There is also lack of clarity concerning the desire to structure innovation processes according to predefined principles. The majority of employees would welcome complete freedom to implement these processes; a minority would prefer to operate according to set standards, for instance to enable validation. Interestingly, the need for innovation is driven mostly by external changes rather than by professional developments. Again ICT is the poor relation, and can be viewed from two distinct angles: 1) ICT facilitates the provision of new products and services, or 2) ICT supports (collaborative) processes.

4.3.6 Ability to last This ability generally scores high. Management attaches considerable importance to personal development and employability. Employees feel empowered to self-direct. They appreciate being part of a team, and are enthused by the pioneering mentality that has been nurtured in recent years. The wheels have been put in motion, and this is widely appreciated. Employees do not feel restricted by their job description and generally feel that personal development is in line with the organisation's expectations of its employees. Equally, employees feel that they are not forced into a procedural straightjacket. The respondents sense that professional change necessitates far-reaching behavioural changes. These changes mainly constitute increased interaction with the external environment. The respondents attach considerable importance to this interaction. Unfortunately, this appears however to be at the expense of developing professional competence. ICT, once again, scores poorly in this ability. ICT is being insufficiently utilised to further the employee's professionalisation and could be deployed more intensively to promote greater internal collaboration.

4.3.7 Summary The recommendations, fleshed out in more detail in the advisory report, briefly comprise the following: ̇ External orientation must be embraced more systematically and the results of this orientation must be discussed within the team of professionals. ̇ Employees must be supervised more intensively to build and maintain networks. ̇ Interdisciplinary collaboration must be promoted among internal members of staff. ̇ Deliberate whether to introduce the "communities of practice" concept and, once this proceeds smoothly, whether to replace the current primary organisational classification (into academic years) with a primarily classification into knowledge areas.

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̇ ̇ ̇

Involve the outside world more readily in the development and execution of academic programmes and the delivery of external services (co-creation). Greater standardisation of generic processes The deployment of ICT resources requires further exploration in virtually all areas.

4.4 Evaluation After completing the list of statements, the respondents briefly reviewed the value of the scan. In general, the opinions described in section 3.6 were confirmed. Nevertheless, some critical notes can be added from the researcher's point of view: ̇ The statements offer sufficient scope to perform an analysis based on the model of Tissen et al. The researcher had more difficulty drawing unequivocal conclusions with regard to the learning level of the organisation using the stratification method of Wierdsma and Swieringa. ̇ Supervising the respondents to score each statement proved a time-consuming though useful exercise. It enabled the researcher to place the statements in the right context, and to ask for relevant background information to facilitate the advisory process. ̇ Comparison of the score analyses with other organisations (and individuals) proved difficult due to the individual norms and standards adopted by groups and individuals. For instance, individuals with high expectations of the deployment of ICT resources will not be easily satisfied with the resources provided within the organisation. Conversely, individuals with low expectations will assign a relatively high satisfaction score to the same level of resources. The researcher could absorb these differences in interpretation by providing a context description, or by highlighting the differences to reveal the broad spread of answers, enabling the organisation to discuss the different levels of perception and strive to achieve and formulate a more equal and reasoned ambition level. ̇ The knowledge management scan has been used on several occasions as an aid to draw up advisory reports. Experience shows that there is a growing demand to classify statements within each ability. Possible classifications could for instance include clusters of questions relating to the issues of results, preconditions and practices. ̇ Lastly, the scan indicates a significant demand for a ‘toolbox’ to draw up advisory reports. At present, the research centre has too few concrete methods and techniques at its disposal to solve knowledge management problems. The research centre has committed itself to revising the knowledge management scan in the near future to reflect the abovementioned points. The revised scan will be performed in several organisations, and a statistical analysis will be performed to determine the validity. The research centre will additionally start putting together a ‘toolbox’.

References Berger, M.P.F., Imbos, T. & Janssen, M.P.E. (2001). Methodologie en statistiek. Deel 2, Datawyse/Universitaire Pers Maastricht, Maastricht. Denzin, N.K. & Lincoln, Y.S. (2000). Handbook of qualitative research, Sage Publications, London. Imbos, T, Janssen, M.P.E. & Berger, M.P.F. (2001). Methodologie en statistiek. Deel 1, Datawyse/Universitaire Pers Maastricht, Maastricht. Koolmees, H. (2006) De faculteit als lerende organisatie, Hogeschool Zuyd, Heerlen. Lekanne Deprez, F. (2003) Van elementaal belang: kennismanagement als waardeversneller (inaugurale rede), Hogeschool Zuyd, Heerlen. Lincoln, Y.S. & Guba, E.G. (1985). Naturalistic inquiry, Sage Publications, Newbury Park. Migchelbrink, F. (2003). Praktijkgericht onderzoek in zorg en welzijn, Uitgeverij SWP, Amsterdam. Smeijsters, H., Schoenmakers, S., Wilbers, M. en Van Rooij, G. (2005) Het lerend vermogen van de faculteit ICT, Hogeschool Zuyd, Heerlen. Tissen, R., Andriessen, D. and Lekanne Deprez, F. (1998) Value-based Knowledge Management: Creating the 21st century company: knowledge intensive, people rich, Addison Wesley Longman, Amsterdam. Wenger, E. (2004) Communities of practice: learning, meaning and identity, Cambridge University Press, Cambridge. Wierdsma, A.F.M. en Swieringa, J. (2002) Lerend Organiseren: Als Meer van Hetzelfde Niet Helpt, Stenfert Kroese, Groningen.

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Model to Support Patent Retrieval in the Context of InnovationProcesses by Means of Dialogue and Information Visualisation Paul Landwich, Tobias Vogel, Claus-Peter Klas and Matthias Hemmje Distance University of Hagen, Germany [email protected] [email protected] [email protected] [email protected] Abstract: Innovations are an essential factor of competition for manufacturing companies in technical industries. Patent information plays an important role within innovation-processes and for human innovators working on innovations. Innovation-processes support the combination of cross-organisational spread information and resources from patent databases and digital libraries is necessary in order to gain profit for innovation experts. The central challenge is to overcome the current information deficit and to fulfil the information need of the experts in the innovation-process. Classical information retrieval (IR) research has been dominated by the system-oriented view in the past. A user formulates a query and then evaluates the elements found through the query according to their relevance. But this rather static setting does not always correspond to the communication and interaction needs of humans. IR systems should explicitly support also the cognitive abilities of the users in order to realize a dynamic dialogue between the user and the system. An information dialogue which does not only support an individual query but also the complete search process is necessary. Only in this way is it possible to satisfy an information need and support the innovation-process. In this paper we present in detail three innovation scenarios to highlight the challenges of advanced information systems, query reusability and result visualisation. By defining the essential activities and conditions of a search task, it is possible to develop user interfaces which offer assistance in the form of a connection of dialogues. From this we derive the elementary information sets and activities in the next step. An example illustrates the applicability and utility of the innovation scenarios described and shows how the activities satisfy the user’s information dialogue context. As part of the example we apply a cognitive walkthrough on a patent database. Aiming for an implementation of Daffodil-System we will benefit from these results. Keywords: information retrieval, innovation-process, interactive systems, patent retrieval, result visualisation, information visualisation

1. Introduction and problem description Innovation seeking enterprises can no longer rely on products created by accidental creativity or by isolated ingenious inventors hunting for ideas. Novel technical solutions are a competition factor and essential for entrepreneurial success (Grabowski & Paral 2004).Therefore companies want to create new products systematically (Grabowski & Paral 2004) considering restrictions of time and costs, while increasing product quality ((Bullinger 2006), (Völker et al. 2007)). Systematic development of unique products demands innovation-processes providing all available and relevant information. A current information deficit in patent retrieval as apart of innovation-processes is emphasised here as a significant challenge. Innovation-processes: Are defined sequences of activities with the goal to development new products (Vogel & Hemmje 2007). Innovation-processes help to structure activities systematically, e.g. in a chronological order of work. Advantages of innovation-processes - for human experts - are reproducibility of single activities, sequences and the whole innovation-process. ((Vogel & Hemmje 2006a), (Vogel & Hemmje 2006b)) introduced the concept of master innovation-process and related innovation-process instances as part of the research field Knowledge-Based and Process-Oriented Innovation Management (WPIM). Thereby, in a first step the master innovation-process is defined and enriched with available and useful documents as patents, check-lists and templates In a second step the Expert will instantiate the master innovation-process for each new process cycle especially used for incremental and follow-up innovations. Documents can be reused and also templates and check-lists can be filled and filed. To profit from ideas and unique solutions, patents are used to claim and protect intellectual property rights (Bullinger 2006). Applications for patents are the closing activities in an innovation-process. When innovators (generally, a large number of experts across different domains, e.g. engineers, scientists, developers and patent attorneys) work on innovation-process activities (patent research or analysis of available products, etc.), they need to extract valuable information within their company from distributed databases of different file types ISSN 1479-4411 87 ©Academic Conferences Ltd Reference this paper as: Landwich, P. et al. “Model to Support Patent Retrieval in the Context of Innovation-Processes by Means of Dialogue and Information Visualisation.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 87 - 98, available online at www.ejkm.com


and formats. Innovation-processes become more and more cross-organisational, often with suppliers´ and customers´ experts as corporate partners supporting collaborative development and creation of novel products (Meixner 2003). (Völker et al. 2007) provide an overview of knowledge sources for innovationprocesses and state, that next to company internal knowledge, external knowledge sources adopt a significant role, e.g. knowledge of patent agencies, research facilities, federations and associations. Classical information retrieval: Innovating experts have to retrieve information from external information sources, e.g. external data memories and digital libraries, which are often only accessible by proprietary textdriven search services. Many times, the difficulty for experts in technical industries is due to a lack of information caused by impenetrable information, difficult search mechanisms and insufficient result visualisation. Information that is unavailable or not utilizable may cause prolongation of development time lines and time-to-market. Information as a result of information retrieval and patent research is a keyresource and also a determining factor of successful innovations. After this Introduction, in the second section innovation scenarios are used to point out information needs of experts working on innovations. These scenarios have been identified in high-tech manufacturing industries where process stability and reliability is a must, not only for production but also for innovation. From these needs, challenges to advanced information systems like query reusability and result visualisation are derived. Section three gives an overview of innovative search with related work in the fields of information and patent retrieval. In section four we present our understanding of an information dialogue and retrieval mechanism (with elementary information sets and activities) and offer a cognitive walkthrough. In the final section, we provide an outlook on future information retrieval systems.

2. Innovation scenarios and resulting challenges for patent retrieval Innovation experts who are involved in structured innovation-processes complain about information deficits. They know which activity or process-phase has to be done next, but the required information and documents are not obvious or available in a simple step to them.

Figure 1: Phases-driven innovation-process with certain patent information needs Following scenarios within innovation-processes point out information needs of experts inside companies, but also cross-organisational. Each scenario description explains goals to be fulfilled by process-oriented approaches and is used to derive challenges on information retrieval, especially challenges in patent retrieval, retrieval mechanisms, query entering, information access and information visualisation.

2.1 Interfaces for information need description and query reusability Experts working on innovations will start to analyse existing patents to figure out, which claims already exist and which solutions are available, free of charge or even under license. On one hand, there is patent information available in patent databases; on the other hand there is a need of information by experts. ̇ How to make experts´ lack of information and patent information overloads match? The goal is to combine information supply and information demand. Experts seeking information have to externalise and formulate questions or keywords.

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Figure 2: Conventional text-based patent search dialogue (http://depatisnet.dpma.de) They have to describe their informational needs. Furthermore they have to formalise and construct a syntactically correct query to feed text-based user interfaces of patent search engines. ̇ What happens if the search results are neither matching nor satisfying? Usually experts enter complete new queries or combinations of last tried keywords. How about using similar keywords with different syntax or abbreviations? How about synonyms and keywords in different languages? Incremental innovation-processes ((Meixner 2003), (Grabowski & Paral 2004)) are used to force innovations in discrete time steps. These processes are for example used to enforce continuous development and improvement of technical products, e.g. (next generation) electronic control units for vehicles (Vogel & Hemmje 2006a). So in discrete time, engineers will restart text-based search by using same or similar queries. ̇ Would it make sense to save, provide and reuse search queries for the next search? For advanced informational retrieval systems it is a challenge to setup simple, interactive and self-describing user interfaces to reuse query.

2.2 Collaboration on innovation due to combination of external information In inter-organisational innovation-processes different companies can collaborate on innovations. Manufacturing companies in technical industries demand their business partners, e.g. customers and suppliers to contribute initial ideas to innovative products. But also cooperation and collaboration with research organisations, patent agencies and scientific communities are common. ̇ The goal is to combine external knowledge with ones own business model aiming for unique innovations. In such a collaborating environment, so called innovation-network (Queitsch & Baier 2004) experts believe an information deficit and an information need to understand the field of work their cooperating partners are specialised in. If necessary, manufacturing companies are willing to pay a license fee to cooperation partners or patent owners. An example is the CAN-Bus (http://www.semiconductors.bosch.de/en/20/can/index.asp) technology, a patent hold by Robert Bosch GmbH. Most car manufacturers pay for using CAN-Bus. A further example for collaborating on innovations is the Night-Vision (http://www.bosch-nightvision.com) project, developed in cooperation between Robert Bosch GmbH and Daimler AG ((Vogel & Hemmje 2006a), (Vogel

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& Hemmje 2006b)). Future solutions in automotive bus technologies will be under FlexRay (http://www.FlexRay.de) licensing. Collaborating partners share their ideas, documents and patents. Thereby it is challenging to access and retrieve information from external databases of cooperating organisations. ̇ How to fetch information, e.g. FlexRay patents from a patent agency database and FlexRay specification documents from FlexRay webpage in a single step? Information seeking experts want to receive a single, combined result set of one query, containing information retrieved from spread external information sources as digital libraries, distributed patent collections and the web.

2.3 Innovation experts expect advanced result visualisation An activity within innovation-processes can be research inside a patent database before applying and claiming an own patent (Vogel & Hemmje 2006b). Intention is to figure out related fields of innovation and existing claims. Today’s patent retrieval services as DEPATISnet (http://depatisnet.dpma.de) present retrieved results text-driven, as an index or a list. Text-based representations confuse experts, because even in unstructured lists, results at the top line are interpreted as results of higher match or value. Also too many matches and a flood of results make humans feel lost in information. ̇ Innovating experts and engineers need a self-explaining presentation or visualisation of retrieved search results. Also retrieval experts receive patent text based results while using conventional expert search engines.

Figure 3: Search results conventional text-based (http://depatisnet.dpma.de) When patent officers receive a new patent application they check if demanded claims are already reserved. In order to find patents from same applicants it can be helpful to search the patent database by (sets of) inventors’ names. Retrieval experts should be supported in storing, integrating and combining different retrieval sets by result visualisation. These three scenarios exemplify the central challenges in patent retrieval within innovation-processes. To support experts on innovations advanced retrieval mechanisms, query reusability, interactive interfaces and result visualisations are demanded.

3. Innovative search The challenges to patent retrieval are incentive to investigate possible innovations of information retrieval systems. The goal is a conceptual framework for interactive patent retrieval that goes beyond the text-based Boolean retrieval. The design of the user interface has to satisfy the communication and interaction needs of the users. Therefore interactive functions that allow the user to describe information needs and transfer these needs into a query must be offered. Using appropriate visualisation tools, the perception and analysis

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of the information-objects and the context can then be supported in order to advance the iterative process of the search further. It is on this occasion important to capture the entire search-process with its elaborated context and to represent it if necessary. On this basis, strategic support can then be offered to the user.

3.1 Related work Cooper (Cooper 1971) has already established specific measures for the quality of information systems based on relevance and usefulness. The aim of increasing not only the relevance but also the usefulness of results was presented in the information behaviour model by Wilson (Wilson 2000), which opened two related fields of research. The first went in the direction of user interfaces of information systems and the second in the direction of information visualisation. Visual presentation, perception and cognitive interpretation of information were considered for a long time (Larkin & Simon 1987) as an efficient communication method for informational situations. For this purpose tools were developed which visualise the exploration by means of query construction and (re)formulation (Schaefer et al. 2005) and the result presentation ((Komlodi et al. 2006), (Davis 2006), (Harper & Kelly 2006)). In consequence visualisation is not only representation but also stimulation for interaction and dialogue. First approaches in this direction were implemented and studied e.g. by the LyberWorld (Hemmje et al. 1994), VisMeB (Müller et al. 2003) and prefuse (Heer et al. 2005) systems. Hemmje (Hemmje et al. 1996) was motivated by the leading thought for the support of dialogue when he introduced a cognitive model of the information dialogue and a model of an interactive information visualisation cycle supporting an IR dialogue (Hemmje 1999). Landwich (Landwich et al. 2007) took up this approach and introduced a cognitive enhanced model of IR which led to a model for visually directmanipulative information retrieval dialogues In order to optimise information systems, models in which the human users are not only a part of the system (e.g. providing only input) but also become an important component of the system and even its centre respectively were developed. Kuhlthau (Kuhlthau 1988) investigated how information seeking and corresponding access can be understood. In consequence cognitively oriented models and approaches to support the concept of information seeking were introduced. Information need often changes during a seeking process due to changes in user awareness, the understanding of the concept of information access was extended and with Belkin (Belkin et al. 1994) the first so called information strategies were identified and investigated. Many other works ((Pharo 2004), (Rose 2006), (Xu 2007)) showed the complexity of the information search and their activities. All introduced research areas flow into the design of user interfaces. Different works ((Klas et al. 2005), (Resnick & Vaughan 2006), (Davis 2006)) investigate this problem and examine the challenges for the optimisation of the human being-computer-interface.

4. Formal description of the information dialogue in order to develop a framework Results of existing research have been used to design user interfaces. This has resulted in user interfaces not being practicable. As Thimbleby (Thimbleby 2007) wrote: "Most user interfaces are unknown, in that they have grown from adding features.... Instead, build simple, explicit interaction frameworks to lay the foundation for clear interaction structures." Keeping this basic principle in mind allows us to focus on the core element of interfaces the dialogue. Landwich (Landwich et al. 2007) showed that the dialogue is extracted from the information dialogue context, as the basis for managing and coupling the states of e.g. the database management system or the retrieval engine in their consecutive operations. It supports users in reducing their expressed uncertain state of information need. In order to receive a first simple, explicit interaction framework we analyze the basic elements of the dialogue of IR-systems. In doing so, we have to ask ourselves the following questions: ̇ What are the possible activities? ̇ How do activities affect our information dialogue context? To answer these questions, we have to describe the different sets of information objects which are present, as well as those that could be created in sequence of activities. Furthermore we provide a formal description of the activities.

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4.1 Scenario and possible sets of information objects In order to clarify the definitions, we outline a scenario within a virtual patent database. In this database we find a large amount of patents. So we define: Content set: Let O be an information object, e.g. digital patent. Then the content set C of a data source a user has access to, is the set of all contained information objects. On the other hand a certain number of patents exist, that would help us to solve our information problem. But these do not have to be contained within the database. Interest set: The interest set I exists as a set of concrete information objects which are able to reduce an information deficit. For the simplification we assume I is constant. So the set of available and relevant articles is defined as Relevance set: The relevance set R derives itself from the intersection of the contents set C and the interest set I. In search for relevant articles, we access the database and a result set is returned as an answer. Result set: For a query q onto the data source we receive the result set rq which is a subset of the contents set C. Figure 4 illustrates the targets of our formal definitions by means of a single query so far.

Figure 4: Dialogue state after a first explorative query

4.2 Cognitive walkthrough and possible activities We employ the cognitive walkthrough method for a first usability inspection. Aiming for an implementation of Daffodil-System we will benefit from these results. Beginning with the defined sets (see 5.1) we start our seeking process. The user has to find a specific article to satisfy his information need. With the walkthrough we want to introduce the activities EXPLORATION, FOCUS, NAVIGATION, INSPECTION, EVALUATION and STORE. In our simulated search the user is looking for a specific patent, but he is also interested in patents which deal with the same research field. He starts a first query with some keywords. With this starting point the first activity EXPLORATION is started. 1. EXPLORATION: The access to the content set C in the form of a query q and the visualisation and realisation of the produced result set rq defines the EXPLORATION. A change (e.g. an enlargement) of the informal context is caused by this EXPLORATION. For this first query, the result set rq contains many information objects. But only a certain part of rq will be a part of the interest set I and is defined as the

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Explored recall set: The intersection of the result set rq of a query q and the interest set I defines the explored recall set ke,q Due to the size of the visualised result set, only a part of the articles can always be captured cognitively. For this we define: 2. FOCUS: The focus set fn,q represents the subset of information objects Oi of a result set rq which reach the field of vision of the user through a visualisation and is the result of the activity FOCUS. If there are relevant information objects within the focus set we can define: Focused recall set: The intersection of the relevance set R and the focus set fn,q defines the focused recall set kf,q In order to identify elements of the explored recall set ke,q, the user will scroll through the result list and consider single articles in detail. These activities are defined as: 3. NAVIGATION: The movement within a set of information objects (information room) or between different information rooms. This causes a change of the focus fn,q. Our user remembers, that he is looking for patents which are published in the year 2006. For this he resorts to the result set, which also causes a change of the focus. This is also a NAVIGATION activity. When the user finds information objects of interest, he will try to get more detailed information about these articles. This activity is called: 4. INSPECTION: INSPECTION is used for the cognitive determination of the state of an information object. In the database the user can open the summery of an patent and also open the full text. Following the INSPECTION the user himself classifies the information object referring to his assessment of relevance. This activity is defined as: 5. EVALUATION: EVALUATION gives the system a feedback of the user's understanding of relevance and appoints the verified recall set. Verified recall set: Within different INSPECTIONs the user identifies relevant information objects. This set of information objects is defined as the verified recall set kv for this query. 6. STORE: This activity allows the user to store found documents. It either happens logically in form of a storage box on the user interface or physically when a document is downloaded or printed. Stored recall set: The stored recall set ks,q represents the subset of information objects Oi of the focused recall set kf,q. Even if the user can browse in a result list, the user will not always find a result due to a potentially large quantity of found patents. The user will be forced to rephrase and run more queries to narrow the search.

Figure 5: Sequence of separate queries Within figure 5 the result of three separate queries for the moment’s t1, t2 and t3 is displayed. It becomes clear, that every query causes a change of the explored recall set. If we display each query onto the projection plane the union sets becomes visible.

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Context: Context rtotal is defined as the union of all result sets rq and stretches the information room in which the user moves So as the context rtotal increases, also the explored, the focused and the verified recall set (ke,total, kf,total, kv,total) will grow with every new exploration. This constant extension of the context however cannot be used by most information retrieval systems. So, with every new query, the information is eliminated from the user’s field of vision. But with the presented definitions we are now able to analyze existing systems. This makes it possible for us, to improve existing systems or to define goals for new systems.

4.3 Analysis and challenge By the use of the cognitive walkthrough method we gained experience. This gathered information is the initial point for the following analysis. In figure 4 and 5 three interactive modes can be identified: 1. The mode of Access, that causes a change of the informational context set of through access the database by means of a query. 2. The mode of Orientation which changes the view onto the informational context set and represents a movement bet 3. The mode of Assessment, which identifies information objects of the interest set. Every mode is totally enclosed and has its own activities. The first mode is Access. Within this mode there is only one activity, EXPLORATION. After the first EXPLORATION the user changes into the second mode Orientation. Activities for this mode are NAVIGATION, FOCUS and INSPECTION. The user has now the ability to change the visual as well as the informational focal point in an information visualisation of the dialogue context. The mode Assessment is reached, if the user finds objects of interest during his inspection. For this mode the activities EVALUATION and STORE are available. They help to express the user’s appreciation of relevance and to define the identified recall set. The projection displays the weak points of traditional information retrieval systems very well. Every exploration produces only a snapshot of the complete seeking process and navigation is only possible within a single exploration step. However, through such a sequence of interactions the users are only able to identify and manage the sum of all relevant information objects. Therefore, tools supporting this demand in the user interface as well as utilising it within the underlying retrieval engine are of great potential. To support all these types of activities the IR system has to provide appropriate interaction tools. In order to navigate within a single exploration step also in the projection plane. If an optimal intersection between focus and recall set is achieved through such interactions, further tools become necessary to support the narrowing down of the focus (up to the single objects again) to be able to support a more detailed inspection, analysis and assessment of the information objects. Also, it has to be investigated in which way an optimised focus of an information dialogue step can be transferred to the next step, e.g. speed up the focusing process in the next step. Furthermore, the sequence of dialogue can also provide insight in the type of information behaviour that users are performing and, in the ideal case, an information strategy can be identified and utilized to derive successive dialogue steps from a given starting point. By applying corresponding visualisation and interaction tools, the users are enabled to strategically optimise their information behaviour and reach the satisfaction of their information need faster. To be able to actually support and evaluate our framework we need a system which meets the following demands: The system should: ̇ fundamentally support the interaction model, ̇ map the described activities to support the user, ̇ enable the quantitative and qualitative evaluation of the model, ̇ be highly flexible and extensible to integrate new visualisation techniques.

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Figure 6: Screenshot of DAFFODIL Following the formal description of the information dialogue and given the demands we will use the DAFFODIL-system as an experimental system for further development and evaluation of the above described framework. DAFFODIL is a virtual digital library system targeted at strategic support of users during the information seeking and retrieval process (Fuhr et al. 2002, Klas et al. 2005). It provides not only basic and but also sophisticated search functions for exploring and managing digital library objects including meta-data annotations over a federation of heterogeneous digital libraries. It already matches the above named demands to a high degree and can be instantly used to verify the new framework.

5. Summary The idea of this paper is to support innovators searching for patent information within innovation-processes through an advanced information retrieval system. With the presented formal description of sets and activities -- EXPLORATION, FOCUS, NAVIGATION, INSPECTION, EVALUATION and STORE -- we are now in the position to illustrate, store and exploit the search process in a series of finite steps. Over the set-oriented description and the derivation of definite sets it becomes clear, how the search process for one or more queries satisfies the innovation experts’ need for information. An added value has been created by the appliance of the advanced retrieval system in the domain of innovation processes. As showed by the cognitive walkthrough experts on innovation can be supported when searching patent databases and digital libraries. By the visualisation of result sets and query reuse a benefit is created for the patent seeking expert. Innovations are inspired by a systematic information retrieval. Patent information can deploy it’s full potential. With an analysis of the DAFFODIL-system on the basis of the presented activities it was shown that it already implemented major parts of the requirements, but also leaves enough challenges for further research. Every development of the challenges improves the DAFFODIL-system under the points of view dialogue and search process.

6. Outlook We see different aspects to extend DAFFODIL.

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The first step is to integrate a task manager. This manager will be the entry point for the user. He will be able to create a new task for his problem or information need. Or he can choose an existing task to continue his search process. These tasks are important because they are the container of our information context. We see a special importance, however, in the implementation of relevance-feedback. And here in particular the question how activities express relevance feedback explicitly as well as implicitly. Furthermore we want to develop a tool to visualize our derived sets of information objects. We want to do this with venn diagrams (Figure 7).

Figure 7: Venn diagram These diagrams can figure out the logical relations between the sets. For that we can illustrate for example the relative complement of the verified recall set in the inspected set. This is useful to fade out all information objects which are already in my mind as objects of my interest. A next step is to arrange the interface in views depending on the mode in which the user is situated (Figure 7). Therefore we will have a view for the mode access collecting all tools to formulate a query or to express the information need. We will have a view for the mode navigation which will collect tools to navigate and to visualize. At last we have a view for the mode assessment which will help the user to express his assessment of relevance.

Figure 8: Mode-oriented assistance We must have the ability to apply this tool for every exploration but also for the whole search-process. On the theoretical side we will deepen the new framework and relate it to existing models on the information seeking process.

Acknowledgements This work is funded via the German Science Foundation (DFG) through project LACOSTIR.

References Belkin, N. J., Cool, C., Stein, A. and Thiel, U. (1994) Cases, Scripts, and Information-Seeking Strategies: On the Design of Interactive Information Retrieval Systems. Arbeitspapiere der GMD. Sankt Augustin: GMD. Bullinger, H.-J. (2006) Focus Innovation – Pool Strengths, Accelerate Processes. (Bullinger Hans-Jörg, Ed.): Carl Hanser Verlag.

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Cooper, W. S. (1971) A definition of relevance for information retrieval. Information Storage and Retrieval, 7(1), 19–37. Daniel E. Rose. (2006) Reconciling information-seeking behavior with search user interfaces for the Web. J. Am. Soc. Inf. Sci. Technol., 57(6), 797–799. Davis, L. (2006) Designing a search user interface for a digital library. J. Am. Soc. Inf. Sci. Technol., 57(6), 788–791. Fuhr, N., Klas, C.-P., Schaefer, A. and Mutschke, P. (2002) Daffodil: An Integrated Desktop for Supporting High-Level Search Activities in Federated Digital Libraries. ECDL 2002 (pp. 597–612). Heidelberg et al.: Springer. Grabowski, H. and Paral, T. (2004) Successful Development of Products. Methods. Processes. Knowledge. (Paral, T., Ed.): LOG_X Verlag GmbH. Harper, D. J. and Kelly, D. (2006) Contextual relevance feedback. IIiX: Proceedings of the 1st international conference on Information interaction in context (pp. 129–137). New York, NY, USA: ACM Press. Heer, J., Card, S.K. and Landay, J.A. (2005) prefuse: a toolkit for interactive information visualization. Proceedings of the 2005 Conference on Human Factors in Computing Systems, CHI (pp. 421–430). Portland, Oregon, USA: ACM Press. Hemmje, M. (1999) Support of information-retrieval-dialogs with information systems through interactive information visualization. Technischen Universität Darmstadt. Darmstadt. Hemmje, M., Kunkel, C. and Willett, A. (1994) LyberWorld a visualization user interface supporting fulltext retrieval. Proceedings of SIGIR ’94 (pp. 249–259). New York, NY, USA: Springer-Verlag New York, Inc.. Hemmje, M., Stein, A. and Böcker, H.-D. (1996) A multidimensional Categorization of Information Activities for Differential Design and Evaluation of Information Systems. Arbeitspapiere der GMD:. GMD-Studien. Sankt Augustin: GMD - Forschungszentrum Informationstechnik. Klas, C.-P., Kriewel, S., Schaefer, A. and Fischer, G. (2004) Evaluating Strategic Support for Information Access in the DAFFODIL System. 4.ter HIER Workshop. UVK. Komlodi, A., Soergel, D. and Marchionini, G. (2006) Search histories for user support in user interfaces. J. Am. Soc. Inf. Sci. Technol., 57(6), 803–807. Kuhlthau, C. C. (1988) Longitudinal case studies of the information search process of users in libraries. Library & Information Science Research, 10, 257–304. Landwich, P., Hemmje, M. and Fuhr,N. (2007) A Conceptual Model for the Integrated Design of Interactive Information Retrieval Systems with Dialogue and Information Visualization Support. Proceedings ISI (pp. 327–332). Larkin, J. H. and Simon, H. A. (1987) Why a Diagram is (Sometimes) Worth Ten Thousand Words. Cognitive Science, 11, 65–100. Meixner, O. (2003) Decision Support and Knowledge-Management for new Product Development; NPD-X: An ExpertSystem for Innovation-Management: WiKu-Verlag. Müller, F., Klein, P., Limbach, T. and Reiterer, H. (2003) Visualization and Interaction Techniques of the Visual Metadata Browser VisMeB. I-Know. Pharo, N. (2004) A new model of information behaviour based on the Search Situation Transition schema. Inf. Res., 10(1). Queitsch, M. and Baier, D. (2004) Computer-Aided Innovation-Management in Added Value Networks. Forum der Forschung. Resnick, M. L. and Vaughan, M. W. (2006) Best practices and future visions for search user interfaces. J. Am. Soc. Inf. Sci. Technol., 57(6), 781–787. Schaefer, A., Jordan, M., Klas C.-P. and Fuhr, N. (2005) Active Support for Query Formulation in Virtual Digital Libraries: A case study with DAFFODIL, ECDL 2005. Vienna, Austria: Springer. Thimbleby, H. (2007) Press On: The principles of interaction programming. Cambridge, Massachusetts: The MIT Press. Völker, R., Sauer, S. and Simon, M. (2007) Knowledge-Management in Innovation-Processes: Physica-Verlag. Vogel, T. and Hemmje, M. (2006a) Towards a "Knowledge-Based and Process-Oriented Innovation-Management" (WPIM) – Innovations Scenarios, Requirements and Modelling. Mit Wissensmanagement besser im Wettbewerb (pp. 287–294). Vogel, T. and Hemmje, M. (2006b) Introduction to "Knowledge-Based and Process-Oriented Innovation-Management" (WPIM) by Challenges in Dynamic Innovation-Processes. Wissen wirkt! Aber wie?! AV+Astoria Druckzentrum. Vogel, T. and Hemmje, M (Eds.). (2007) "Knowledge-Based and Process-Oriented Innovation-Management" (WPIM) – Introduction and Assignment in the Automotive Domain,. Wilson, T. (2000) Human information behavior, from citeseer.ist.psu.edu/wilson00human.html. Xu, Y. (2007) The dynamics of interactive information retrieval behavior, Part I: An activity theory perspective. J. Am. Soc. Inf. Sci. Technol., 58(7), 958–970.

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Dynamic Knowledge and Healthcare Knowledge Ecosystems Virginia Maracine and Emil Scarlat Academy of Economic Studies, Bucharest, Romania [email protected] [email protected] Abstract: The concept of Knowledge Ecosystem (KE) is used to define a community of practice that builds knowledge in a bottom-up, networked and dynamic fashion. These features define a new kind of digital ecosystem that is domain specific and operate in an open (virtual or real) world. The openness is an ideal situation that needs to apply the unified standards, for instance the Semantic Web Standards and Rules and Web 3.0 that help the building, growth, sharing and forgetting of knowledge across the Knowledge Ecosystems. What makes the KE different from the “classic” view upon the digital ecosystem is an active and dynamic process that involves: ̇ ̇ ̇ ̇

the creation of knowledge; the intentional elicitation of knowledge; the ability of share knowledge across the entities; and the possibility to depreciate and forget knowledge.

How does the dynamic nature of knowledge influence the nature of knowledge ecosystems? What are the general principles that can be applied to design the sound and enduring knowledge ecosystems? These are some of the questions will try to get answers in our paper work. First of all, we will show that the dynamic evolution of knowledge and the dynamic character of the flows of knowledge are essential for the transition from digital ecosystems to knowledge ecosystems. Having a static collection of pieces of knowledge, processing them and placing them in a digital ecosystem are not really enough for this one to becomes a knowledge ecosystem. Continuous knowledge creation is responsible for transforming the digital ecosystem in a knowledge one. The process of dynamic knowledge building occurs when internal (tacit) knowledge becomes external (explicit). The continuously feedbacks that operate between internal and external knowledge are producing new knowledge among entities and create the energy and permanent innovation that characterizes a knowledge ecosystem. In the second part of the paper we have draw some general principles of accelerating the appearance of new knowledge ecosystems, while in the third section we define the main features of the knowledge healthcare ecosystem design for the home rehabilitation of people with motor disabilities. In order to do so, we are going to extract from these general principles the specific in-rules that make the agents involved in home health rehabilitation act as a knowledge ecosystem. Alongside the theoretical approach to our paper (that refers to the principles’ establishing), there is also the practical one. We conclude the paper work with some remarks on the KE’s role and importance in healthcare, and in particular in home rehabilitation field. Keywords: digital ecosystem, healthcare knowledge ecosystem, dynamic knowledge, flows of knowledge, home health rehabilitation, virtual network for home health rehabilitation.

1. The “journey” to Knowledge Ecosystems In general terms, an Ecosystem is a system whose members benefit from each other's participation through symbiotic relationships. Within an ecosystem, there are thousands of organisms that live in a constant relationship with their environment, in the same time, relationships also developing among them. These relationships can be positive or negative depending on the type of objective/need assumed by each member of the ecosystem. A negative relationship (predation of parasitism) happens when one of the organisms gets the bigger share of the benefit in the relationship, that is to say, the association is destructive for one of its members. Among the positive relationships we find symbiosis (or mutualism) that is a positive association between two or more organisms which results in a mutual benefit and sometimes, even fusion. According to biology experts, symbiosis has been the key in the natural evolution, since cooperation is fundamental to achieve integral participation, good results and ultimately, species’ survival. Similar with nature's ecosystem, the Business Ecosystem (BE) is a network of co-existing elements that depend on each other in order to survive. Today, every company is part of this BE working together with many other elements into a very complex system. In order to carry out its day-to-day business, a company ISSN 1479-4411 99 ©Academic Conferences Ltd Reference this paper as: Maracine, V. and Scarlat, E. “Dynamic Knowledge and Healthcare Knowledge Ecosystems.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 99 - 110, available online at www.ejkm.com


supplies its particular products and services, and relies on various products and services from other companies within the BE. In this way it builds the complex maze of interlinked elements of the BE. The success of a company in the BE depends on its ability to find the right partners, manage these relationships, and ultimately extend the reach of its particular products and services. But, to operate effective across the BE, companies are increasingly adopting Internet technologies. Business communication are supported by e-mails, companies are recognizing the opportunities offered by eCommerce and use it to offer their products and services online, and they are carrying out e-Business more and more, transacting with partners via the Internet. The companies positioned at the leading edge are using today the Digital Business Ecosystem (DBE). So what is a DBE? Let us first to observe that we talk about a combination between Digital Ecosystems (DE) and the business world. The DE it is a digital environment populated by digital species (software components, applications, online services, information, business models, etc.). Applying this concept in the economic field we obtain the DBE paradigm, i.e. a special Internet-based environment in which businesses can interact with each other in effective and efficient ways. Being part of the DBE means that a company is aware of the range of products and services available from all of the other partners and can easily match them with its business requirements. An the same time, its products and services are also being showcased to other companies so they can identify it as a potential business partner. The DBE brings together the best of all of the Internet technologies, tools and applications as well as legal, business and revenue information that the companies need to have the competitive edge in the market. The main benefits of the DBE for the companies are (http://www.digital-ecosystem.org/): ̇ They can manage their business more efficiently. The company can manage business processes and communicate with other companies, as well as keep abreast of the latest opportunities, in an environment that is customized specifically for their particularities. ̇ With the DBE every business can enjoy greater choice, matching its requirements with a broader range of suppliers than it would otherwise have been aware of. ̇ The DBE enables the automatic extend of the market reach, one company’s products and services being visible to a larger audience. ̇ The DBE enables the easy combination of the services with those of other companies, so they can build new products and services and fill additional market niches. ̇ Companies can easily and effectively expand their own business. As their range of products and services expands, it is constantly being showcased to all of the other partners across the DBE, so they, in turn, attract new clients. ̇ The DBE enables companies to access information that they need in order to operate successfully. It offers accurate and reliable, legal, financial and administrative information needed to operate on a dayto-day basis and maximize the business opportunities. ̇ As an online environment, the DBE is always up-to-date. As it expands, the latest information, software, tools, products and services made available by partners are constantly being added and shared to each company via the latest technology. These advantages depict the DBE as an all-encompassing environment. With the latest technology, information and business tools, the companies can leverage the best possible solutions from Internet technology to expand their business. The DBE is based on the concept of communities. These communities are built around different factors such as, geographical regions, languages and industry sectors. As the DBE expands and proliferates, and so do the communities. The latest list of communities is managed on the Web site and will bring a business to what is known as a “knowledge platform”. From this knowledge platform, a company can also access the latest news, forums, contact details and knowledge for its community. From the organizational perspective, a DE is based on self-organization and biological evolution. The selforganization implies intelligent behaviour and the ability to learn on a short time scale, whereas evolution implies the system’s ability to optimize itself through differentiation and selection of its components on a long

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time scale. These characteristics can be realized only if the ecosystem, as a whole, is able to learn over time and adapt to the knowledge produced by it as well as to the knowledge that it is derived from its environment. Both types of knowledge flow dynamically among the entities within the ecosystem, leading to a new type of DE, the Knowledge Ecosystem. The KE definition in Wikipedia (an ecosystem that “fosters the dynamic evolution of knowledge interactions between entities”) emphasizes on dynamic character of knowledge into the ecosystems. Processing a static collection of pieces of knowledge and placing them in a DE are far insufficient for this DE to become a KE. Continuous knowledge creation is what transforms the DE into a knowledge one. The process of dynamic knowledge creation occurs when internal knowledge is made external. The feedback that operates between internal and external knowledge, continually effecting new knowledge among entities, creates the energy and permanent innovation that characterizes a KE. What makes the knowledge ecosystem different from the classic DE is an active and general process involving (1) the creation of knowledge, (2) the intentional elicitation of knowledge, (3) the ability of share knowledge across the entities and (4) the possibility to depreciate and forget knowledge.

2. Designing a KE – general principles The existence of knowledge ecosystem is related with a Community of Practice (CoP) that builds knowledge in a bottom-up, networked and dynamic fashion. These features define a new kind of digital ecosystem that is domain specific and operate in an open (virtual or real) world. "CoP" is a term that refers to the ways in which people naturally work together. It acknowledges and celebrates the power of informal communities of peers, their creativity and resourcefulness in solving problems, and inventing better, easier ways to meet their commitments. In the real world of organizations, core competences do not reside in the abstractions of management theories; they reside and grow in CoPs. These communities can help organizations to: ̇ organize work in ways that makes people grow and be happy; ̇ accelerate business cycles; ̇ learn faster than the competition. The CoPs deliver their value proposition by (http://www.co-i-l.com/coil/knowledgegarden/dkescop/kmo.shtml): ̇ Developing and spreading best practices faster; ̇ Connecting "islands of knowledge" into self-organizing, knowledge sharing networks of professional communities; ̇ Feeding and being fed by web-based repositories of proven solutions and new approaches; ̇ Fostering cross-functional and cross-divisional collaboration; ̇ Increasing companies’ members' ability to initiate and contribute to projects across organizational boundaries. In order to extract and understand the principles which the designing of the KE relies on, we will first discuss this concept from few different angles. 1. From a dual perspective, a KE consists in a) a network of conversations, face-to-face and electronic meetings, facilitated by results, richly hyperlinked with, feeding, and fed by b) knowledge repositories of what, who, why, how, where, and when. CoPs co-evolve with their shared knowledge basis (a relatively static component), and the protocols and tools for upgrading it. But the dynamic force of this co-evolution is the network of conversations, in which critical perspectives, new needs and circumstances, and better solutions and practices to meet them, are introduced (see Figure 1).

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Figure 1: Duality knowledge – conversation (adaptation yin/yang diagram (Pór 2000)) 2. From another perspective, KE can be seen as an interaction of people, knowledge and technology (Figure 2). Facilitated by this interaction, the dynamic and continue action of the KE’s members (augmented by the intelligence of the whole ecosystem) generates social and business value.

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Figure 2: KE as a people, knowledge, and technology union 3. Finally, a KE is also a complex adaptive system of human communities co-located in the same physical and/or virtual space, in which they develop relationships, tools, and practices for creating, integrating, sharing, and using (also depreciating and forgetting) knowledge. Although they are an extension of KM ideas, the design of KE is based on some principles that could seem contradictory with the theory and practice of KM. As an example, from the KE perspective, knowledge cannot and should not be managed. Knowledge is a capacity of people and communities, continuously generated and renewed in their conversation, to meet new challenges and opportunities. It is not a „thing” that can be „managed”. Therefore, people responsible for knowledge value creation can only be inspired and supported, but they cannot be "managed" as people were managed in the industrial era. In this context, in order to support the valuable knowledge creation, organizations obsessed with extracting and measuring knowledge must shift the focus of their knowledge initiatives to developing an open culture of communication and collaboration that is supportive to the sharing of innovative work and business practices. This is the very essence and also the prerequisite of the existence of a Knowledge Ecosystem. Another condition for the existence of KEs is to prepare the ground for these systems to emerge. This means to facilitate the dynamic mixing of the Knowledge Ecology’s “ingredients”: CoPs, Management Strategy (including KM), Complex Adaptive Systems, and Digital Technology. Only then, the organizations could take the learning journey from data to knowledge, and possibly to wisdom (Figure 3).

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Figure 3: The “Data to Wisdom” Curve (Pór 2000) As we have shown in the previous section, what turns a DE into a KE is the continue dynamic feedback process of knowledge creation and transformation, generated when internal (tacit) knowledge becomes external (explicit) knowledge and the latter augments and enriches the former. In fact, the dynamic nature of knowledge (flows) generates the principles that can be applied to design KEs. We summarize below some of these principles: 1. A KE exists within a supportive and stimulative learning environment that allows and encourages innovation and discovery, open communication and knowledge sharing as cultural norms. If the KM provides actionable information and opportunity, the KEs add the synergy and trust necessary to use information, recognize opportunity, and turn them into knowledge and action. 2. The KEs evolve and flow as knowledge itself does. The KEs are dynamic and energetic just as knowledge itself is a dynamic force for innovation and creativity. Within a KE the emphasis is not on knowledge objects, intellectual asset protection and leveraging; it is on culture, knowledge gardening, soft systems, pattern recognition, prototyping, continuous knowledge creation, sharing and use. 3. Within a KE, to benefit from the opportunities for assessing, organizing, and portraying knowledge is not enough anymore. A KE is community-oriented; it allows to its members to see what it takes to grow and sustain networks of relationships, from which knowledge will emerge. It focuses on dialog about the policy so as to ensure all organization members agree on the interpretations, developing alignment but do not insist on control. 4. The KEs’ role is fulfilled if knowledge stores have quality criteria. Knowledge repositories must be kept up-to-date, accessible and coded in such a manner as to allow seamless and intuitive accessibility. Knowledge is dynamic, constantly changing, evolving and perishable; therefore KEs must be robust and flexible enough to take frequent updates, and also to allow the mechanism to “forget” the perishable knowledge. 5. Sometimes the technology has limitations that can thwart frequent change and reduce flexibility of knowledge ecosystems. A viable and useful knowledge ecosystem will reflect the understanding that knowledge is not static, and permanently new information will need to be codified and added to the KE repositories. In this respect, the entire “life” of the KE must be supported by the appropriate technology. 6. KE’s existence is based on processes (conversations, tacit – explicit knowledge transformation, knowledge creation and use), and things / agents (people, knowledge repositories, technology). Although technological platforms can assist with communication and knowledge storage and transfer, knowledge is created and used by the people. Therefore, the active side of the KE has to do with intellectual energy; it is "relationships" focused: knowledge creation, meaning, belief, trust, dialogue, opinion, innovation, creativity. The human component of a KE must then be able and skilled to: ̇

work together and share a mutual understanding;

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̇ ̇

grow intellectually through knowledge exchange; put mutual benefits above the individual benefit, and understand that everyone will be better off if they act in this way.

Are these principles valid regardless the particular domain where the KE exists or need to be created? Are they exhaustive? Could they be applied as they were stated or do necessary transformations have to be made in order to adapt to the specific domains? One thing is for sure: we do not have answers to all these questions. But we will try to get some for the healthcare sector in the following section.

3. Knowledge ecosystems in healthcare In order to understand how the concept of KE can be used in healthcare, we think that it is useful to introduce first the concept of Healthcare Ecosystem (HE). Let’s start by observing that the healthcare market is one of the most complex ones, a huge diversity of „agents” co-existing here: ̇ organizations (hospitals, medical equipment suppliers, drugs suppliers, food and linen suppliers, specialized cleaning and sterilizing suppliers, logistics and IT companies); ̇ people (doctors, nurses, administrative personnel, patients and their family, pharmacists, IT specialists); ̇ medical practices, protocols and rules, (medical, IT&C) technologies, standards, regulations. This multitude of agents activates within two functional structures: the healthcare supply chain and the clinical chain (Rivard-Royer et al. 2003). The healthcare supply chain consists in the interaction of: ̇ vendors for the main row materials used in medical equipment and products manufacturing; ̇ manufacturers of various products (some of them may wish to interact directly with healthcare facilities in order to be aware of their specific needs); ̇ distributors that can play different roles within the supply chain: delivering a wide variety of products to each healthcare facility and even detain exclusive rights for a line of products from a particular manufacturer; ̇ group purchasing organizations, which are present on some markets (in the US, for example, where 70% of all major hospitals use such organizations (Rivard-Royer et al. 2003)), having the role to consolidate the purchasing power of their customers; ̇ hospital internal chain that process (receiving, storage, replenishment) the supplies before they reach the final destination (healthcare professional or patients); ̇ IT tools and logistical practices in a wide variety. Alongside with all these components, the most distinctive characteristic of the healthcare supply chain is its dependency on the point of care (POC), which is the consumption driver in the clinical chain. In essence, the clinical chain is a collection of medical and clinically related activities supporting the healthcare continuum (prevention – diagnosis – treatment - recovery)”. These activities can occur in what we call the point of care, i.e. the place where the patient and the healthcare professional interact (operating rooms, hospital wards, outpatient clinics, doctors’ offices, and lately patients’ home or workplaces). The integration of the supply chain and clinical chain, especially nowadays when homecare practices extract the POC and move it in non-conventional places, exceeds by far the possibility of current managerial and organizational practices to adequately support the POC in order to deliver a proper treatment. A lot of specific information regarding clinical needs and feedback following the consumption of supplies has to be added: lists of medical procedures (including surgery), patient admissions, discharge/transfers and planned patient care such as dialysis or homecare services (Rickles 1999). On the other hand, the continuity of care requires up-to-date information regarding the patient’s past and current diagnosis and treatment (including laboratory results), pharmaceutical and administrative profile (insurance coverage). Technologies and practices are emerging to facilitate (under the legal frame) the efficient exchange of clinical and administrative information. Integrating this type of relevant information will enable supply chain cycles to be better synchronized with the real-time needs of the clinical chain in an economically feasible context. The „structure” aroused from the integration of the supply and clinical chains, in which the driving role belongs to the clinical component, is a Healthcare Ecosystem (HE). Probably more so than any other market, healthcare operates in a true ecosystem. As long as these ecosystems are established on protected

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information sharing to ensure that a patient receives the best treatment possible in the most efficient and timely manner, they are the true solution for the actual stage of the healthcare evolution. In a HE, the conflicts between the objectives and agendas of distinct entities within the system (that at times cause delays, inefficiencies and even errors in delivering healthcare services to patients) tends to be solved. Virtually, creating an effective HE requires the stakeholders to design an environment where all of the participants in the healthcare process benefit from each other’s efforts, including the patients (or especially them). What does it take to a HE to become a Healthcare Knowledge Ecosystem (HKE)? First of all, it has to be organized as a digital system, i.e. to benefit utmost from the advantages that virtual communications via Internet has to offer. Secondly, it has to be designed as an environment that augments the dynamic process of knowledge’ creation, sharing, use, depreciation and forgetting. These characteristics are obviously necessary when we talk about home healthcare. In this particular medical area, the continuous flow of knowledge between medical staff, patients (including their family members), suppliers of medical equipments and products, and IT specialists is the core of the entire “construction”. We will particularize some of the principles of the KE design for home rehabilitation after we introduce a few examples of KE in healthcare.

3.1 Examples of ecosystems in healthcare These examples of KEs represent instances where web technologies help facilitate the flows of insights and knowledge, with unprecedented levels of volume, speed, and accessibility. However, we have to remark that the technology is not the main aspect within a KE; the process of knowledge creation is human-centric, and even with technology, there is so much we humans can know, learn, mentally absorb, and incorporate into a broader vision about our world and life. An example of HE is Continua, an interoperable Personal Healthcare Ecosystem developed by an international alliance of more than 133 companies, Continua Health Alliance. Continua aims to enable the alignment of different vendors and domains, focusing on (Carroll 2007): ̇ disease management: managing a chronic disease outside of a clinical setting; ̇ aging independently: using technology and services to live in own homes longer, and ̇ health and fitness: expanding personal health and wellness to where people live. Continua develops its interoperability guidelines using the industry standards. It starts by evaluating member-submitted use cases about interoperability problems and including them into a generalized list of use cases. This list is used to prioritize capabilities, interfaces, and devices and then derives the desired functionality and requirements for the next version of guidelines. An interesting example of HKE includes Sermo.com (Figure 4). Sermo represents an authenticated community of physicians who contribute and filter professional knowledge. Community members of Sermo can post questions to other physicians within the network, and provide answers to questions posed by other members. Sermo is open to physicians across the US, but those who wish to join the network must provide information that enables Sermo to authenticate the fact that they are registered physicians. Registration for the Sermo website is voluntary and open to any licensed physician in the US. By default, Sermo encourages community members to participate anonymously as a mean of protecting the confidentiality of the symptoms or details of patients they may discuss online (Bray 2008).

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Figure 4: Example of a Healthcare Knowledge Ecosystem, Sermo.com (www.sermo.com) The problem emphasis of the Sermo model is focused on cultivating a community-centric network that can collectively answer emergent concerns and questions relevant to its members. Network members must help each other by filtering through the exchanged insights of the community to produce stronger signals regarding important knowledge, while ignoring non-relevant noise (Rivkin 2001; Siggelkow 2005). Sermo seeks to facilitate valuable conversations (the sharing of observations and knowledge) about healthcare and medical practices, while as social aim, Sermo seeks to foster a distributed group feeling that physicians are in a community of peers. The characteristics of its model prove that Sermo operates as a knowledge ecosystem, i.e. as a dynamic network that both fosters knowledge transfer opportunities among members and allows knowledge transfer processes to occur and evolve, as environmental circumstances require (Clippinger 1999; Hansen 2005).

3.2 HKEs in home health rehabilitation Home Health Rehabilitation (HHR) services delivers professional and supportive services at home to recover disabled or chronically ill patients in need of nursing, therapeutic treatment and/or assistance with the essential activities of daily living. These services are appropriate for individuals who are homebound and need rehabilitation or skilled nursing services. Working in conjunction with the patient, family, and the attending physicians, a personalized plan of care need to be developed in order to help patients reach their maximum level of functioning as quickly as possible. A solution to this particular area in healthcare is given by a Virtual Network for Home Rehabilitation (VNHR) (Scarlat 2008). Designing such a VN is equivalent with creating a real HKE where a wide diversity of real and virtual species interrelates: ̇ people: patients and their families, healthcare professionals, occupational therapists, ICT specialists; ̇ organizations: hospitals, medical products suppliers, IT companies; ̇ technology: medical equipment, computers, broadband, software components, applications, online services. Virtual based home rehabilitation displaces areas from both supply and clinical chain to the patient own home: a VNHR is patient-centric instead of hospital-centric. From this perspective, we face an increasing role

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of technology dedicated to information elicitation, storage, processing and transmission. But the most important feature within a VNHR consists in the unprecedented diversity and intensity of the knowledge flows among its members (Figure 5).

Figure 5: A knowledge ecosystem for home health rehabilitation within a VN Healthcare practitioners having various medical competences exchange knowledge (also through systems such as Sermo) with each other, with patients, occupational therapists, social workers, medical equipment manufacturers, pharmacists, lab professionals. In this process, every member of the ecosystem learns continuously from the others and in the same time offers his own knowledge and expertise to the others. A multitude of dynamic knowledge creation processes occur when KE’s members transform their tacit knowledge into explicit knowledge and vice-versa. During this permanent communication process, people within the ecosystem find out how to: ̇ understand each other using same language, ontology, tools, practices, medical and industrial standards; ̇ use the medical and IC technologies, discover its limitations and work together to improve them. We have to remark that, in order to be a useful and effective environment, such a HKE for home rehabilitation must be driven permanently by its ultimate goal - the improvement of health and life quality of the disabled people. Let’s take a deeper look inside this particular HKE for home rehabilitation, in order to identify the main characteristics of the key actors within - “medical staff” and “patients” - and the specific knowledge flows among them. The so-called “medical staff” (Healthcare Practitioners) category includes: doctors, professional nurses, physiotherapists, occupational therapists, social workers. On the other hand the actor named “patient” is in fact a group which includes: the disabled patient, his/her family, friends, and colleagues. These two categories of actors are characterized by three different types of interactions that generate specific knowledge flows (see Table 1): ̇ Type I – Interactions inside the group (red frames); ̇ Type II – Interactions with the other key actor’s group (green frames); ̇ Type III - Interactions with other agents from the HKE’ environment (blue frames): medical products suppliers, laboratories, pharmacy, IT specialists, and other people interacting with the disabled patient (except the ones listed in the “patients” group).

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Table 1: Knowledge Flows among the HKE’s key actors and agents “Medical Staff”

“Medical Staff” Knowledge shared refers to: - The current symptoms and clinical parameters of the patient; - Observations and diagnosis by the physicians; - The previous known diseases or health problems of the patient; - Procedures and protocols set up in order to solve the rehabilitation problems of the patient included in his own rehabilitation chain; - MD’s own experiences in similar cases.

“Patients”

“Patients” Knowledge shared refers to: - The history of the patient’s diseases; - The current symptoms of the patient; - The dynamics of the clinical parameters during the rehabilitation process. All these pieces of knowledge are stored in the patient’ electronic record. The patient interacts with the medical staff both on a regular (virtual and real) consultation schedule, as well as in the emergency situations. Knowledge shared refers to: - Observed symptomatology related to different stages of the rehabilitation process; - Personal experiences shared with other patients having similar impairments and being connected with the VNHR (using a dedicated blog for example); - Progresses made on different stages of the rehabilitation chain (what augmented and what slowed down the process).

Other Agents

Other Agents Knowledge shared refers to: - The new observed requirements for the medical equipments; - Adverse reactions on different medications which were not registered before; - Relevant tests needed to be added to a specific rehabilitation chain; - Necessary adjustments to the communication technology currently used within the HKE.

Knowledge shared refers to: - Possible obstructions in using a particular medical equipment; - Side effects of certain drugs, sensors, virtual reality programs and so on; - Particular difficulties in accessing or understanding different information stored in the VN repositories; - Possible interruption in the communications with the medical staff or other agents within the HKE. Knowledge shared refers to: - The new technologies that can be use in order to improve the medical equipment, and to offer new solutions for the newly occurred problems; - New achievements in the researches for new and/or better remedies for the particular problems of the disabled people; - Progresses of the IT&C technologies, protocols and procedures.

Two interesting aspects we have to notice here: 1. The knowledge flows in the red frames form real smaller ecosystems inside the HKE. Thereby, we can talk about a Medical CoP, a Patient CoP, and about the “Other Specialists” CoP; 2. The dynamic flows of knowledge among the actors are both ways oriented; this allows each actor or agent within the HKE to learn from the other actors/agents, and to evolve together faster for the benefit of the patient, as well as of the entire community of the HKE. As a result, doctors will better understand the symptoms, the reactions, and the messages coming from the patients, while the patients will understand and apply the medical procedures included in their rehabilitation chain more efficiently. Both actors’ efforts will be augmented by the qualified support of all the other involved agents.

4. Conclusions Besides the benefits of the DE, knowledge ecosystems help communities to evolve faster together by mutual sharing of knowledge and competences, leading them to a deeper understanding and a quick and better solution to the problems they are faced with. As we have seen in the third section, all the general principles introduced in the section 2 apply for a HKE as well:

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1. Open communication and knowledge sharing are indeed cultural norms of the HKE; 2. Due to the knowledge dynamism the entire ecosystem evolves in time; 3. All the processes within a VNHR are based on dialog and facilitated by a complex network of relationships among members; 4. In order to prevent doctors’ and patients’ reticence in using it, the knowledge repositories must be permanently updated, and easy accessible when needed; 5. To stimulate the dialog between the ecosystem members, the entire technology that supports the network has to be user-friendly and fit the healthcare process requirements. The only difference we have remarked between the HKE for home rehabilitation and other KEs consists in the particular role and importance of the patient among the ecosystem members. Practically, the entire “life” of the ecosystem gravitates around the patient and his personal rehabilitation chain. Perhaps more than in other domains, in healthcare the dynamic process of knowledge creation, sharing and use is crucial. It stimulates human creativity regarding medical acts, procedures and practices, and also creates strong relationships between all the involved “actors”, with a major benefit in saving lives through ontime qualified medical services. Also it is important to mention that HKEs for HHR are time and cost savings relative to the classic in-patient system (Scarlat 2008).

References Baumard, P. (2001) Tacit knowledge in organizations, London: SAGE Publications. Clippinger, J. (ed.) (1999) The Biology of Business: Decoding the Natural Laws of Enterprise, San Francisco, CA: Jossey-Bass. Bray, D. A. (2008) Knowledge Ecosystems: Technology, Motivations, Processes, and Performance, [online], Dissertation, Emory University, http://papers.ssm.com/sol3/papers.cfm?abstract_id=1016486#PaperDownload.. DeLisa, J. (2005) Rehabilitation Medicine, Principles and Practice, Cap.1, Past, Present and Future, Lippincott-Raven Publisher, USA. Dieng-Kuntz, R., Minier, D., Ružicka, M., Corby, F., Corby, O., Alamarguy, L. (2006) “Building and using a medical ontology for knowledge management and cooperative work in a health care network”, Computers in Biology and Medicine, 36, pp. 871–892. Hansen, M., Mors M., and Løvås, B. (2005) “Knowledge Sharing in Organizations: Multiple Networks, Multiple Phases”, Academy of Management Journal (48:5), pp. 776-793. Rivard-Royer, H., Beaulieu, M., Friel, T. (2003) “Healthcare Ecosystem: Linking Logistical Flows and Clinical Flows”, Cahier de recherche no 03-04, Mars. Polanyi, M. (1983) The tacit dimension, Gloucester, MA: Peter Smith. Carroll, R., Cnossen, R., Schnell, M., Simons, D. (2007) “Continua: An Interoperable Personal Healthcare Ecosystem”, IEEE Pervasive Computing, Vol. 6, No. 4. Moore, J.F. (2003), “Digital Business Ecosystems in Developing Countries: An Introduction”, [online], Berkman Center for Internet and Society, Harvard Law School, http://cyber.law.harvard.edu/bold/devel03/modules/episodeII.html. Pór, G. (2000) “Designing knowledge ecosystems for communities of practice”, [online], www.co-i-

l.com/coil/knowledge-garden/dkescop/kmo.shtml Rickles, H.V. (1999) “The Mysterious Case of Healthcare Logistics”, ARHMM Annual Conference, Setting the Standard. Rivkin, J., Siggelkow, N. (2001) “Balancing Search and Stability: Interdependencies Among Elements of Organizational Design”, Management Science (49:3), pp. 290-311. Scarlat E., M r cine V., Nica A. S. (2008) “The Knowledge Management for the Virtual Reality Applications in a Home Rehabilitation Virtual Network”, [online], Electronic Journal of Knowledge Management, Volume 5, Issue 3, http://www.ejkm.com/issue-current.htm. Siggelkow, N., Rivkin, J. (2005) “Speed and Search: Designing Organizations for Turbulence and Complexity”, Organization Science (16:2), pp. 101-122.

www.ximbiotix.com www.digital-ecosystem.org/ www.co-i-l.com/coil/knowledge-garden/dkescop/dwcurve.shtml www.continuaalliance.org

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InCaS: Intellectual Capital Management in European SME - Its Strategic Relevance and the Importance of its Certification Kai Mertins, Wen-Huan Wang and Markus Will Fraunhofer IPK Berlin, Germany [email protected] [email protected] [email protected] Abstract: As the Lisbon Agenda declares the aim for the European Union to become the most dynamic and competitive knowledge-based market in the world by 2010, management instruments are needed to support companies achieving this ambitious goal. Small and medium-sized companies (SMEs) are especially affected by this plan being the driving force of Europe’s economy. To obtain their competitive advantage, it is crucial for SMEs to utilise knowledge efficiently and to enhance their innovation potential. Thus, managing their specific Intellectual Capital (IC) becomes more and more important for future-oriented organisations. A practical way to tackle the challenge is the methodology developed by the German pilot project ‘Wissensbilanz – Made in Germany’ and the European pilot project ‘InCaS: Intellectual Capital Statement – Made in Europe’. The Intellectual Capital Statement (ICS) is an instrument to assess, develop and report the IC of an organisation and to monitor critical success factors systematically. By applying this method in more than 50 German and 25 European small and mediumsized enterprises, it was possible to support the participating companies in identifying, evaluating and developing their strategically relevant knowledge. Resulting from increased interests in managing and reporting of IC, stakeholders such as creditors or investors receive ICS in completely different qualities - from very reliable to implausible. To ensure the quality of ICS in a sustainable way, we have developed an approach of ICS certification based on the methods of quality management system certification, financial audit and the assessment for European Excellence Award. In the end, only the ICS fulfilling the quality requirements will be awarded a certificate. A catalogue with requirements shall serve as the certification basis and has to be in place beforehand. This catalogue evolved as an essence of both above mentioned projects and includes the experiences of ICS implementations. The challenge is to determine the smallest possible amount of requirements that will enable the ICS to meet the acknowledged quality criteria. Furthermore, this paper summarises how the InCaS method supports companies developing a knowledge-based strategy. We describe research results gained from the German and European project about the strategic relevance of particular IC factors in general and their relevance depending on the business sector. Keywords: intellectual capital statement audit, knowledge management, innovation, SME, quality requirements, certification

1. Introduction The methodology ‘Wissensbilanz – Made in Germany’ was developed by the project consortium ‘Arbeitskreis Wissensbilanz’ lead by Berlin-based Fraunhofer IPK. The consortium conducted a pilot project to adjust the preparation of Intellectual Capital Statements (ICS) to the German SME situation and to test it practically. The results and the experiences of the project led to the first German Guideline for implementing ICS in SMEs (Alwert, Bornemann, Kivikas 2004). By the end of 2007, more than 50 ICS have been implemented in the course of the project. The German ICS guideline and the supporting software have been retrieved 60.000 times. The intention of InCaS, a project under the European Union's Sixth Framework, is to harmonise the different national ICS approaches and to develop and test this European ICS methodology in 25 SMEs in 5 core countries. National SME associations in those countries act as dissemination partners and aim at the target of 1,000 EU SME’s to be using InCaS model and tools by the end of the project (Dec 2008). At present the statements about IC vary in structure and content. The ICS guideline by the Danish Ministry of Science, Technology and Innovation underscores that external verification is an additional opportunity to check the systematic approach of the process and the credibility of external ICS (DMSTI 2003). The European Commission PRISM report notes that the field of audit still far away from a consensus on how to audit innovative forms of reporting such as ICS (EC 2003). Since there is no audit standard available for ICS (DATI 2000), the financial auditors usually check figures and texts that are in accordance with the auditing firm’s guidelines when an audit is required (cf. DMSTI 2003). The RICARDIS report (EC 2006) states that audit for IC reporting can be particularly useful in measuring compliance with mandatory rules and ISSN 1479-4411 111 ©Academic Conferences Ltd Reference this paper as: Mertins, K. Wang, W., and Will, M. “InCaS: Intellectual Capital Management in European SME - Its Strategic Relevance and the Importance of its Certification.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 111 - 122, available online at www.ejkm.com


regulations, identifying problems to solve and opportunities to seize, reducing risk, avoiding the cost of mistakes, providing reassurance to both financial and non-financial stakeholders. In response to the needs for quality requirements as the foundation for ICS audits, a document called ‘Intellectual Capital Statement Quality Requirements - European ICS Guideline’ for ICS certification has been developed (EC 2008b). This paper will present the outcome of the research work within the InCaS project and at Fraunhofer IPK with objectives, such as exploring identifying the crucial factors with the most significant effect on ICS implementation success and defining the minimum quality requirements for an ICS audit. Despite supporting SMEs in managing their Intellectual Capital (IC) effectively both projects allowed collecting valuable data about the perceived strategic importance of different IC factors in European SMEs. The second part of the paper aims to present the results from analysing the obtained data. The main research question was how far companies differ regarding the perceived importance of particular IC factors and if these differences could be explained by the characteristics of the sector they are belonging to.

2. Quality assurance of ICS To develop a requirement catalogue for certifying ICS, we analysed numerous ICS guidelines for companies in Europe and the accompanying audit activities based on a comparative analysis of non-financial reporting frameworks by the OECD. Table 1 shows the guidelines for specific reporting about intellectual assets for companies in Europe (OECD 2006) and their accompanying audit activities. Table 1: Selected ICS guidelines and accompanying audit activities (cf. OECD 2006) Specific reporting about intellectual assets for companies in Europe (e.g. stand-alone reports on intellectual assets) Institution / country

Reference

Scope

Year*

Audit related notes or activities

European Union

Intellectual Capital Statements – Made in Europe, European ICS Guideline, DG Research (EC 2008a)

SME

2008

European ICS Guideline - ICS Quality Requirements as certification basis. An audit procedure was developed by Fraunhofer IPK (Mertins, Wang, Will 2007). ICS audits will be carried out in 5 European countries within InCaS project by Fraunhofer Technology Academy.

European Union

RICARDIS report, DG Research (EC 2006)

SME

2006

The report mentioned the importance of ICS audits.

European Union

Guidelines for Managing and Reporting on Intangibles, MERITUM Project (MERITUM 2002)

All companies

2002

There are companies offering certification services for this guideline.

Germany

Intellectual Capital Statements – Made in Germany, Federal Ministry of Economics and Labour (BMWA 2004)

SME

2004

Audit related activities are in progress.

Denmark

Intellectual Capital Statements – The new Guideline, Ministry of Science, Technology and Innovation (DMSTI 2003)

All companies

2003

External verification is an additional opportunity to check the systematic approach of the process and credibility of the external ICS (DMSTI 2003). There are companies offering certification services for this guideline.

* Year of the latest version

The ICS guidelines, e.g. from Denmark or Germany, are useful for companies to implement an ICS, whereas for audit purposes it is difficult to use them as the certification basis, since the guidelines include an overview

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of general ICS information, many explanations, mandatory and non-mandatory activities for the company. The company as the auditee is not aware of which requirements the auditor will examine and how to prepare for the audit. Bearing this in mind, we compiled the ICS quality requirements with only must-have requirements and definitions. Non-compliance to the catalogue will lead to a denial of the certificate. In the next sections, we refer to the document ‘European ICS Guideline - ICS Quality Requirements’ as the ‘requirement catalogue’. The InCaS project uses an approach based on the German ICS methodology (cf. BMWA 2004; Mertins, Alwert, Heisig 2005) and its guideline describes the structure and basic content of the ICS as well as the general model and the creation procedure of the ICS. Within the creation process, the organisation analyses, assesses and documents three dimensions of IC: human capital, structural capital and relational capital (EC 2008a).

2.1 ICS certification process For the development of the ICS certification methodology (figure 1) customized to the InCaS / German approach, three common auditing approaches are partially applicable and are considered in detail (Mertins, Wang, Will 2007): ̇ for quality management systems the ‘ISO 19011 - Guidelines for quality and/or environmental management systems auditing’ (cf. ISO 2002), ̇ for EFQM application for European Excellence Award the ‘Guidelines for the Excellence Award Applicants’ (cf. EFQM 2007), ̇ for financial auditing the German guideline ‘Rechnungslegungs- und Prüfungsgrundsätze für die Abschlussprüfung’ (cf. IDW 2006).

Figure 1: ICS certification process

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The recommended time for carrying out an ICS audit is approximately one month after the ICS completion. The duration of the audit depends on the size, complexity and number of locations of the organisation to be audited (auditee). In general, on-site audit should last approximately one day, but the duration increases with the number of locations.

2.2 Five ICS quality criteria In the last years a number of recognised quality assessment criteria have been developed for financial statements. They are also relevant for the ICS and can be used to increase the coherence and quality of ICS (DATI 2000). More important, these quality criteria shall support the fundamental purposes of ICS. Therefore a verified ICS will be more credible and more effective for IC management. Since we apply audit as the valuation method, the defined quality criteria have to be easily auditable. Considering these preconditions, we classified five basic quality assessment criteria for auditing ICS in accordance to InCaS / German procedure: ̇ completeness according to the requirement catalogue, ̇ plausibility, ̇ verifiability, ̇ representative for the organisation and ̇ sustainable regarding the impact on IC management of the organization. Compared to the nine quality criteria for the financial statement of Danish Agency for Trade and Industry, all nine criteria are included in the defined five ICS quality criteria. Furthermore, we added the criterion ‘sustainability’ to highlight the importance for ICS in having sustainable impact on IC management. Regarding to the ‘Principles for Effective Communication of Intellectual Capital’ by European Federation of Financial Analysts Society Commission on Intellectual Capital (EFFAS CIC 2008), figure 2 displays how the ICS quality criteria relate to the ten principles.

Figure 2: ICS quality criteria and ICS principles of EFFAS CIC Following the ICS quality criteria, we questioned the ICS implementation process and the ICS content thoroughly in order to reveal the crucial factors for a successful ICS implementation. Specifically, we employed two quality techniques for further analysis, the cause-and-effect diagram and the failure modes and effects analysis (FMEA). The cause-and-effect diagram analyzes potential causes of a defect, error or problem of a process under identification (cf. Pfeifer 2002). There are a number of standards suitable for performing FMEA (cf. Prefi 2007). For our application we selected the proceeding of EN 60812 (DIN 2006) with significant modification to its FMEA templates. The information about which failure modes are most likely to affect the ICS implementation gave us guidance in defining quality requirements. In addition, it assisted us in defining checking methods and desired audit

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evidences within the ICS audit. For the development of the requirement catalogue, the aim was to minimize the requirements for the ICS implementation to allow great latitude for the companies in creating their ICS. We decided only on process requirements when it was impossible to specify adequately the product without doing so (cf. ISO 1994). The catalogue is an essence of the guidelines from the German project (BMWA 2004) and from the EU InCaS project (EC 2008a).

2.3 Quality requirements for ICS The requirement catalogue specifies quality requirements for ICS that can be used for internal application within organizations and/or for certification. It focuses on the quality of the ICS for external reporting, the ICS creation process and the sustainable impact of the ICS (cf. figure 3). We present a selection of the requirements as follows (cf. EC 2008b). The documentation required for ICS audits are: the ICS itself and records providing evidence of conformity to the quality requirements.

Figure 3: ICS procedure model of InCaS All participants in the ICS implementation process and their respective roles are documented in every step of the implementation.

2.3.1 Step 0 – Pre-arrangement In small and medium sized organizations, the project team consists of members from all organizational units and hierarchy levels concerning the main business processes. These members have an overview of the colleagues’ perception and speak on their behalf. Furthermore, ICS project leader, moderator and keeper of the minutes are competent on the basis of appropriate education, training, skills and experience.

2.3.2 Step 1 – Business model Together with the top management, the organization defines the system boundaries and its created value (what is offered to customers), and it identifies the related value adding business processes. Furthermore, the organization defines the main strategic objectives including external business environment and main business success factors. All participants in the ICS implementation process and their respective roles are documented in every step of the implementation process.

2.3.3 Step 2 – IC analysis The IC analysis shall be carried out in a workshop and will be divided into three major parts: IC factor definition, QQS-Assessment and Weighting (Impact Scoring). The participants determine the most important IC factors (3-5 factors per IC category) and adjust the definitions to the company’s specific needs. The definitions of IC factors are representative for the organization and do not conflict with the definitions of the common IC factors (cf. table 3). The participants assess all IC factors regarding quality/quantity and systematic management (QQS). The reasons and evidences for the QQS assessment results are documented. In addition, the reasons and evidences for the impact scoring results are documented. At the workshop, each participant represents a specific organizational unit and speaks on its behalf. Each statement has the same weight regardless of the position of the person. The participants score the impacts of all IC factors relating to their impact on business success. The simplified version of Impact Analysis is sufficient and reasons and evidences for the Impact Analysis results are documented. If there are significant differences between the participants, the reasons shall be assessed and documented.

2.3.4 Step 3 – Measurement The organization determines IC indicators for at least 50 per cent of the most important IC factors according to the impact analysis. The reasons for the IC indicator selection are documented. The determined IC indicators have definitions which are consistent with the definitions of standard IC indicators and cover the basic indicators stated in the requirement catalogue (cf. table 2). The IC factors are:

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̇ ̇

useful concerning the business model, strategy and their specific measures for IC development, appropriate to measure particular IC factors and verifiable.

Table 2: List of standard IC Indicators – excerpt Human Capital IC Factor

Name of Indicator

Unit

Definition and Calculation

Professional Competence

Employees with university degree

Number

Number of employees with university degree the SME had in the last accounting year

Days used for further qualification

Number

Total number of days used for further qualification (e.g. additional university courses, off-the-job training) in the last accounting year

2.3.5 Step 4 – Strategy refinement & measures The participants interpret the results of the IC analysis in a way which represents the perception of the employees. The result interpretations (causes for strengths and weaknesses) are documented. If there are major differences between the workshop participants, the reasons shall be assessed and documented. The evaluation of the status quo concerning strengths and weaknesses ̇ is plausible and verifiable ̇ is representative for the organization ̇ includes areas of strengths and weaknesses The participants adjust the IC strategy based on the results and analyse the major potentials for improvement and related measures plausibly. The organization derives major potentials for improvement and at least 3 numbers of measures (1 for each term). ̇ Short term: due date less than 3 months ̇ Medium term: due date less than 1 year and ̇ Long term: due date longer than 1 year The planning of measures includes objective of the measure, responsibility, due date and value of IC indicators to be achieved.

2.3.6 Step 5 – Final ICS document The results of the ICS implementation are presented in the final ICS document following the given structure. The information stated in the ICS is: ̇ relevant, actual, ̇ in reasonable detail, ̇ presented in a clear way and ̇ plausible and representative The top management affirms the representative character of the ICS by signing it.

2.3.7 Post activities The organization communicates and explains the ICS content internally so that it is understood by the employees. Defined short and midterm measures are planned or/and in realisation. Defined measures are to be implemented within deadline. The development of the IC indicators relevant for the measures is monitored in a reasonable interval. The organization assesses the effectiveness of implemented measures. In case of irregularity, further suitable measures shall follow.

2.4 Conclusions on ICS quality assurance The certification of ICS in compliance with the requirement catalogue has the following objectives as benefits for the companies:

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̇

̇ ̇

The company undergoes a quality check by a neutral external ICS auditor assuring that the ICS is of high-quality level, in other words, the assessment outcomes and the measures are ‘right’ and based on verifiable sources. The company receives further improvement suggestions after a detailed on-site audit by an expert who knows the IC performance of other companies. A certified ICS is not solely a self-assessment result and has a higher credibility for external stakeholders such as investor, creditor and customer.

Furthermore, if ICS fulfils several requirements in structure, content and length (cf. Wuscher, Will, Alwert, Bornemann 2006), it contributes to a more homogeneous rating of SMEs than analysts’ assessment based solely on information from annual financial reporting. Therefore, it reduces risks for both banks and SMEs (cf. Alwert, Bornemann, Will 2007). According to Hermann, an audit is a special form of an examination at which an auditor can determine to what extent the audited object meets the requirements. The audited object can be a product, a process or a system. The basic prerequisite is: the auditors must not be organizationally attached to the audited organisation and have to be independent. In this case, the audit is a well-proved and effective management instrument (cf. Herrmann 2007). However, following the experiences of auditing for quality management systems, Lobinger indicates the difficulties of auditing. The auditor is supposed to both examine and identify improvement potentials by the employees’ collaboration. The employees often only see the examination character and are afraid of talking about weaknesses to avoid risking a non-conformance (cf. Lobinger 2002). During the ICS audits, the employees should not feel intimidated. The objective of an ICS is to find out the real status quo of the IC of the organisation for an effective IC management. The employees are supposed to be honest and to tell their perceptions. In the worst case the ICS audit comes to the conclusion that the written ICS does not reflect the company’s IC performance giving the company the opportunity to correct the ICS with the help of the audit report. Therefore, prior to the audit the executives shall broadly communicate the purpose and character of the audit. In case of a denial of the ICS certificate even after correction, the company can redo the ICS and apply for the next audit. The earliest date is one month after completion since the new defined short-term measures shall be implemented at the audit.

3. Study on sectoral differences of IC In recent years different national approaches on the management of IC have been developed and tested, but there is no European-wide standard regarding the measurement and management of IC so far. The emerging need for a consistent – non-monetary - method was the starting-point for the German and European project. Keeping the context-sensitive nature of knowledge in mind these projects aimed to develop a method to support companies in managing their IC. Whereas former papers presented the projects’ practical benefits for SMEs (Will, Wuscher, Bodderas 2006) and described the method in detail (Mertins, Alwert, Will 2006; Mertins, Will 2007) this study intends to analyse the results in terms of how far companies differ regarding the perceived importance of IC factors. In order to accomplish this goal the participating companies have been categorised by sectors and the existing company specific results regarding the evaluation of their IC have been analysed on an aggregated level. The actual data collection process within the two pilot-projects has been standardised by obliging the companies to follow the same method and to use a tool-box for data collection which provides templates and automated visualisations of the ICS results in the respective company and allowed later aggregations.

3.1 Basis Based on the results of phase I of the German pilot project, fifteen IC factors have been delineated. This set of harmonised IC factors has been used and continuously reviewed during later stages of the German project and in the course of the European project. The set covers about 80-90 per cent of the factors SMEs mention as relevant for business success (Mertins, Will, Wuscher 2007) which is sufficient considering the highly context-sensitive nature of IC.

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Table 3: Harmonised IC factors Type of IC Human Capital

Structural Capital

Relational Capital

IC Factor

Definition

Professional Competence

The expertise gained within the organisation or in the employee’s career: professional training, higher education, training courses and seminars, as well as practical work experiences gained on-the-job.

Social Competence

The ability to get on well with people, communicate and discuss in a constructive manner, nurturing trust-enhancing behaviour in order to enable a comfortable cooperation. Furthermore the learning ability, the self-conscious handling of critique and risks as well as the creativity and flexibility of individual employees.

Employee Motivation

The motivation to play a part within the organisation, to take on responsibility, committed to the fulfilment of tasks and the willingness for an open knowledge exchange. Typical sub areas are for example satisfaction with the labour situation, identification with the organisation, sense and participation of achievement.

Leadership Ability

The ability to administrate and motivate people and to develop and communicate strategies and visions and their empathic implementation. Negotiation skills, assertiveness, consequence and credibility as well as the ability to create a scope of self dependant development belong to this IC factor.

Internal Cooperation and Knowledge Transfer

The manner how employees, organisational units and different hierarchy levels exchange information and co-operate together (e.g. conjoint projects). The focused knowledge transfer among employees and between generations.

Management Instruments

Tools and instruments supporting the efforts of leadership and therefore have an impact on the way how decisions are made and what information paths are incorporated in the decision-making process.

IT and Explicit Knowledge

The computer assisted working environment including all elements of explicit knowledge. Among these are for example specific technical operating principles, networks, fileserver, intra- and extranet, databases, internet and software applications including the content.

Product Innovation

Innovations of great importance for the future of the organisation. Characterised by the fact, that they will bring new products into being or fundamentally change existing products and eventually result in a patent application

Process Optimisation and Innovation

Optimisation and improvement of internal procedures and processes, e.g. continuous improvement of all business processes as well as idea management in order to gather suggestions of improvement

Corporate Culture

The corporate culture comprises all values and norms, influencing joint interaction, knowledge transfer and the working manner. Compliance to rules, good manners, ‘Do's and Don'ts’ and the handling of failures are important aspects of this factor.

Customer Relationships

Relationships to former, current and potential customers. The management of these relations comprises activities like sales and marketing, CRM and face-toface customer cultivation by employees.

Supplier Relationships

Relationships to former, current and potential suppliers. The management of these relations comprises activities concerning purchases and the cultivation of suppliers.

Public Relationships

Relationships to the public. Including the relationships to former and potential employees and the public in general, all activities of public relationship management as well as corporate citizenship, e.g. supporting regional activities.

Investor Relationships

All relations to investors - external and internal investors - i.e. banks, owners, stockholders. The management of these relations comprises all activities providing specific information to the faction, e.g. accountability.

Relationships to Cooperation Partners

All relations to professional associations, bodies, and societies. The management of these relationships comprises activities like joint acquisition of customers, suppliers, investors as well as an active knowledge transfer on R&D partnerships, best-practice transfer and networking activities.

Within each project the data was collected by applying basically the same method. But as the German and the European project’s method and categorisation slightly differ, the results were examined separately. Within the German project 42 valid data sets could be collected, and 25 within the InCaS project. The results allow drawing quantitative and qualitative conclusions about the strategic relevance of particular IC factors and how this relevance differs depending on the main business sector.

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3.2 Analysis results Table 4 summarises the major differences between the sectors Industry and Services within the German pilot-project, showing the three most important IC factors for achieving strategic business success: Table 4: Strategically most important IC factors (German pilot project) Rank Sector

1.

2.

3.

Industry

Professional Competence (HC)

Employee Motivation (HC)

Internal Co-operation and Knowledge Transfer (SC)

Services



Leadership Ability (HC)

As already illustrated it has become obvious that Human Capital plays the major role within the analysed SMEs’ business activity overall. Nevertheless, whereas all three most important factors in the surveyed service companies are HC factors, there is one SC factor among the three most important factors in Industry, giving a hint to the higher importance of (formal) structures in this sector. This observation may be verified by the differences in the HC factor Leadership Ability and the SC factor Management Instruments. Possibly, Leadership Ability is perceived within Services as highly important as this business activity requires reacting to new situations which do not allow complete standardisation of processes. It requires highly skilled management personnel in order to manage these unexpected situations adequately. Supporting instruments for this explicit management process may help the responsible management staff. The greater formalisation and standardisation of value-adding processes in the Industry sector may result in the lower impact of single managers and leaders. Accordingly, the predominance of Professional Competence within Industry could be caused by the highly specialised tasks and processes within this sector which require specific expert knowledge. In contrast to this, service companies seem to rely on motivated employees even more than on their expertise, as the order of the HC factors in this sector shows. Trying to derive strategic recommendations for knowledge management activities in those two main sectors, it has to be emphasised that these results are not yet statistically representative. Nevertheless, some basic learnings may be retained: Depending on the formalisation and standardisation of the business model and the business processes, the Industry sector should focus on elaborating knowledge management activities based on formal structures and explicit knowledge (codification strategy). Service companies, on the other hand, really have to focus on the recruitment and development of their individual employees if they want to ensure long-term and strategic business success (personalisation strategy). What seems to be true internally can consistently be observed externally, i.e. in the Relational Capital factors: Whereas it seems to be strategically crucial to build up partner networks in the Services sector, the Industry sector still relies much more on Supplier Relationships, optimising the supply chain as a linear input-output process. Table 5: Strategically most important IC factors (European pilot-project InCaS) Rank

1.

2.

3.

Business Services & IT

Customer Relationships (RC)



Machinery & Equipment



Product Innovation (SC)

Leadership Ability (HC)

Process Optimisation and Innovation (SC)


Electronics



Co-operation & Knowledge Transfer (SC)

Retail trade & other services



Corporate Culture (SC)

Sector

Construction

Table 5 summarises the ranking of IC factors regarding their perceived importance within each sector within the European project InCaS. First of all it is remarkable that similarities across the typical differentiation of

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sectors between Industry and Services occur. Business Services & IT – belonging to Services – and Machinery & Equipment – belonging to Industry – both perceive Customer Relationships as most important and Professional Competence as second most important for business success. This could possibly indicate that the traditional distinction between Industry and Services is improper for researching the strategic impact of IC. Rather companies should be classified by comparing the actual business models. In this case Business Services & IT and Machinery & Equipment show similar IC configuration possibly because they having similar business models. Both sectors have to deal with often very specified and varying customer needs – that explains the importance of Customer Relationships – and have to apply state-of-the-art technological expertise – which explains the importance of Professional Competence.

3.3 Conclusion of study on sectoral differences of IC The objective of the Study on Sectoral Differences of IC is to find out, if there are any significant differences between sectors regarding the perceived importance of IC factors and delineate some basic strategic recommendations. The German SMEs have been grouped according the major sectors Industry and Services which resulted in n=15 for Industry and n=27 for Services. The group ‘Industry’ includes branches such as producers of machinery and equipment, electronics, tools, steel, etc. The ‘Service’ sectors represents branches such as business services and IT services, multimedia services, medical care, consumer services etc. Table 2 shows the totals by group (Industry vs. Service) and variable (IC factor). Figure 4 shows the IC factors’ Strategic Importance Index for the two sectors Industry and Services, combining the frequency (how many companies named the factor?) and the relative influence (how strong does the factor affect the company’s strategic objectives?) of each IC factor. 10

Human Capital

Structural Capital

Relational Capital

9 8

Importance

7 6 5 4 3 2 1

Pr o

fe ss io na lC om pe So te ci nc al e C o In m E te pe m rn te pl al nc oy C e ee oop M ot er iv at Le at io ad io n n er an s d h ip Kn Ab ow ilit le M y dg an e ag Tr em an sf en er IT tI ns an tru d Ex m en pl ic ts it Pr Kn oc ow es Pr le s od dg O pt uc e im tI is nn at o io va n tio an n d In no va C or tio po n ra C us te to C m ul er tu re R el Su at i on pp sh lie ip rR s el at io Pu ns bl hi ic R ps R el e at l a I nv io t i on ns es sh hi to ps ip rR s to el at C oio ns op hi er ps at io n Pa rt n er s

0

Industry (n=15)

Services (n=27)

Figure 4: Strategic importance of IC factors within the sectors Industry and Services Comparing the two sectors the differing importance of two Human Capital factors is remarkable. Whereas Professional Competence (comprising formal qualification as well as experiences gained in practice) plays the major role for Industry, it is Employee Motivation which has been perceived as the most important IC factor for Services. Another Human Capital factor – Leadership Ability – has been perceived by Services as considerably more important regarding business success than by SMEs belonging to Industry. Major differences between the sectors occurred regarding Structural Capital factors, too. Whereas IT and Explicit Knowledge (summarising all electronic information and data bases) has a much higher impact on the strategic business success in Industry, the difference for Internal Co-operation and Knowledge Transfer (including all structures for face-to-face knowledge sharing, e.g. in project teams, communities of practice etc.) is still visible, but less significant. On the contrary, Management Instruments (e.g. management by

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objectives, reporting structures, controlling systems etc.) are perceived as having a much higher impact on business success in Services than in Industry. Whereas there seems to be no difference in Product Innovation based on the combined index shown here, more service companies have named the factor, but its relative influence on business success is higher in Industry (those differences are balanced out in the combined index). The two major differences in the Relational Capital lie in Supplier Relationships (higher strategic relevance in Industry) and Relationships to Co-operation Partners (higher strategic relevance in Services).

4. Outlook Further standardisation is necessary to fulfil several needs. One area of application is the communication of a SMEs IC to stakeholders in for example, the financial market. Field reports and surveys have shown that complementing financial data with information on intangible resources can sharpen the view on SMEs’ creditworthiness and valuation (Botosan, Plumlee 2000; Thomas 2003; Will, Alwert, Bornemann, Wuscher 2007). If some requirements about structure, content and length of an IC report are fulfilled (Wuscher, Will, Alwert, Bornemann 2006), it contributes to a more homogeneous rating of SMEs, than analysts’ assessment based solely on information from annual financial reporting. Therefore it reduces risks for both banks and SMEs (Alwert, Bornemann, Will 2007). Including quality assurance activities early in the implementation is an efficient way to enhance the quality of the outcome. For this reason, we recommend companies use the requirement catalogue internally for preparation and quality checks during the ICS creation. The effects of the ICS certification in the long run stimulate the proper application of the European ICS guidelines and encourage sustainable usage of ICS as an internal management tool by checking the progress of realisation measures. They ensure the reliability of ICS so that for example creditors will consider this information as an important input for their rating decisions, thus establishing the reputation of ICS as a trustworthy document and consolidating the ICS as a valuable management tool. Greater acceptance by stakeholders will trigger the further use of this method. This paper presented the results of a study on sectoral differences of IC using the data from the German and European pilot-project, but it has to be stated that the sample size was too small to allow drawing representative conclusions. Having achieved the desired level of harmonisation and quality standards within the project InCaS (Mertins, Wang, Will 2007), the future challenge is to trigger the development of an IC benchmarking concept in order to make ICSs more comparable between organisations which will generate an additional benefit for practical application and for researching IC within organisations. This IC benchmarking concept based on minimal reporting requirements would ensure quality and comparability of ICS as a management and reporting instrument as well as an instrument for scientific data collection and analysis. In order to go deeper in the process of understanding the problems of SMEs it could be helpful to analyse this set of data according to other groupings, such as the company’s maturity level or lifecycle stage or the company’s type of strategy. According to other studies (Pawlowsky et al. 2006) the way companies handle knowledge and the focus of IC management depends on their type of strategy. This could also be a suitable approach for the IC benchmarking concept with relevant practical implications: bringing together companies that are based on the same type of strategy and show a similar configuration of IC factors in order to share best practices and work on solutions for common IC challenges together.

References Alwert, K.; Bornemann, M.; Kivikas, M. (2004) ‘Intellectual Capital Statement – Made in Germany. Guideline’ Published by the Federal Ministry for Economics and Technology, Berlin, [online], http://www.bmwi.de/BMWi/Redaktion/PDF/W/wissensbilanz-made-in-germanyleitfaden,property=pdf,bereich=bmwi,sprache=de,rwb=true.pdf Alwert, K.; Bornemann, M.; Will, M. (2007) ‘Does Intellectual Capital Reporting Matter to Financial Analysts?’, Paper read at the 8th European Conference on Knowledge Management, Barcelona, Spain BMWA (Federal Ministry of Economics and Labour) (eds) (2004) ‘Intellectual Capital Statement – Made in Germany. Guideline’, [online], Berlin, http://www.bmwi.de/Navigation/Technologie-und-Energie/Informationsgesellschaft/tagung-wissensbilanz,did=41128.html Botosan, C. A.; Plumlee, M. A. (2000) ‘Disclosure Level and Expected Cost of Equity Capital: An Examination of Analysts' Rankings of Corporate Disclosure and Alternative Methods of Estimating Expected Cost of Equity Capital’, [online] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=224385#PaperDownload DATI (Danish Agency for Trade and Industry) (2000) A Guideline for Intellectual Capital Statements: A Key to Knowledge Management, Copenhagen

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DIN (2006) DIN EN 60812:2006 - Analysis techniques for system reliability – Procedure for failure mode and effects analysis (FMEA), Beuth, Berlin DMSTI (Danish Ministry of Science, Technology and Innovation) (2003) ‘Intellectual Capital Statements – The new Guideline’, [online], Copenhagen, http://videnskabsministeriet.dk/site/forside/publikationer/2003/intellectual-capitalstatements---the-new-guideline/guideline_uk.pdf EC (European Commission) (2003) THE PRISM REPORT 2003, Report Series No. 2, October 2003, [online] http://www.euintangibles.net/research_results/FinalReport.pdf EC (European Commission) (2006) Reporting Intellectual Capital to Augment Research, Development and Innovation in SMEs (RICARDIS), [online] http://ec.europa.eu/invest-in-research/pdf/download_en/2006-2977_web1.pdf EC (European Commission) (2008a) ‘InCaS: Intellectual Capital Statement – Made in Europe, European Intellectual Capital Statement Guideline’ developed by the InCaS Consortium EC (European Commission) (2008b) ‘Intellectual Capital Statement Quality Requirements’, developed by the Fraunhofer Institute for Production Systems and Design Technology (IPK), Berlin EFFAS CIC (European Federation of Financial Analysts Society Commission on Intellectual Capital) (2008). Principles for Effective Communication of Intellectual Capital. [online] www.effas.com/pdf/EFFAS_CIC_web.pdf EFQM (2007) ‘Guidelines for the Excellence Award Applicants’ Herrmann, J. (2007) ‘Audit’, in: Pfeifer, T.; Schmitt, R., Masing, W. (eds) Masing Handbuch Qualitätsmanagement, 5th edition, Hanser, Munich, pp 331-341 IDW PS 201 (2006) Rechnungslegungs- und Prüfungsgrundsätze für die Abschlussprüfung, in: WPg 2006, pp. 850 ff., No. 13/2006, 18.05.2006 ISO (1994) ISO/IEC Guide 7: Guidelines for drafting of standards suitable for use for conformity assessment, Beuth, Berlin ISO (2002), ISO 19011:2002 Guidelines for quality and/or environmental management systems auditing, Beuth, Berlin Lobinger, W. (2002) ‘Auditprozess im Wandel: Die neuen Managementsysteme erfordern neue Ansätze im Auditwesen’, in: Qualität und Zuverlässigkeit, Vol 47, No. 8, pp. 780-781 MERITUM (2002) Guidelines for Managing and Reporting on Intangibles (Intellectual Capital Report), Vodafone Foundation, Madrid, [online] http://www.uam.es/proyectosinv/meritum/Link%20Guidelines%20Meritum/version%20inglesa%20completa.pdf Mertins, K., Alwert, K., Heisig, P. (eds.) (2005) Wissensbilanzen – Intellektuelles Kapital erfolgreich nutzen und entwickeln, Springer, Berlin Mertins, K.; Alwert, K.; Will, M. (2006) ‘Measuring Intellectual Capital in European SME’, Proceedings of I-KNOW '06, 6th International Conference on Knowledge Management, published by Tochtermann, K.; Maurer, H., Graz, Austria, pp 21-25 Mertins, K.; Wang, W.-H.; Will, M. (2007) ‘How to ensure the quality and credibility of Intellectual Capital Statements’, Paper read at the 8th European Conference on Knowledge Management, Barcelona, Spain Mertins, K.; Will, M. (2007) ‘A consistent assessment of Intellectual Capital in SMEs’, Paper read at the 8th European Conference on Knowledge Management, Barcelona, Spain. Mertins, K.; Will, M.; Wuscher, S. (2007) ‘Erfolgsfaktoren des Intellektuellen Kapitals in mittelständischen Unternehmen’, Paper read at the KnowTech 2007, Frankfurt am Main, Germany, November. OECD (2006) ‘Intellectual assets and value creation: implications for corporate reporting’, Paris Pawlowsky, P; Gerlach, L; Hauptmann, S; Puggel, A. (2006) Wissen als Wettbewerbsvorteil in kleinen und mittelständischen Unternehmen. Fokus, TU Chemnitz. Pfeifer, T. (2002) Quality Management – Strategies, Methods, Techniques, Hanser, Munich Prefi, T. (2007) ‘Qualitätsmanagement in der Produktentwicklung’, in: Pfeifer, T.; Schmitt, R., Masing, W. (eds) Masing Handbuch Qualitätsmanagement, 5. edition, Hanser, Munich, pp 405-433 Thomas, Alison (2003) A Tale of Two Reports, in European Business Forum, Issue 16, No. 4, pp. 79-81. Retrieved November, 2006, [online], http://www.ebr360.org/downloads/ebf_issue16.pdf Will, M.; Alwert, K.; Bornemann, M.; Wuscher, S. (2007): ‘Wissensbilanz – Made in Germany – Auswirkungen eines Berichts über Intellektuelles Kapital auf die Unternehmensbewertung’, Recent study by Fraunhofer IPK, Berlin. [online] http://www.akwissensbilanz.org/Projekte/070201_Finanzmarkt_Wirkungstest_Teil2_V17.pdf Will, M.; Wuscher, S.; Bodderas, M. (2006): ‘Wissensbilanz – Made in Germany – Nutzung und Bewertung der Wissensbilanz durch die Pilotunternehmen’, Recent study by Fraunhofer IPK, Berlin. [online] http://www.akwissensbilanz.org/Projekte/KMU Wirkungstest Teil 2.pdf Wuscher, S.; Will, M.; Alwert, K.; Bornemann, M. (2006): ‘Wissensbilanz – Made in Germany - Projektstudie über weiche Faktoren als Teil der Unternehmenseinschätzung durch Kapitalgeber’, Recent study by Fraunhofer IPK, Berlin. [online] http://www.akwissensbilanz.org/Infoservice/Infomaterial/061214_Finanzmarkt_Wirkungstest_Teil1_V16.pdf

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Uncovering a KMSD Approach from Practice Aboubakr A. Moteleb and Mark Woodman Middlesex University e-Centre, London, UK [email protected] [email protected] Abstract: There is no credible methodology for knowledge management systems development (KMSD). We report on a KMSD approach that has emerged from an investigation based on action research and grounded theory into a number of business problems experienced by organizations. The KMSD approach is highly participatory, requiring full involvement of members of an organization. It has three interacting aspects: envisioning knowledge work behaviour, design of knowledge management system (KMS), and exploring technology options for supporting the KMS. In the first of these aspects, challenges and opportunities in an organization’s current situation are analysed and an improved situation is envisioned to expose knowledge concepts and their properties. In the second, a logical design of a KMS is produced using knowledge entities, knowledge flows and knowledge interfaces; the design is guided and constrained by an organization’s structure, culture, and resources. The third aspect is to do with introducing appropriate IT into KMS design, integrating organizational, social and technological aspects of the system. The paper describes this KMSD approach and how it emerged from both practical and theoretical investigation. Keywords: knowledge management, knowledge management systems, knowledge management systems development, social network technologies, organizational improvement, action research, grounded theory, small and medium enterprises (SMEs).

1. Introduction We begin by outlining our research position for addressing problems with KMS and outlining the research framework, particularly the combined approach of Action Research and Grounded Theory. Then, in Section 2, follows a brief characterisation of how organizations instigate work that leads to the type of KMS we believe can help them, and a summary of the KMSD approach uncovered by the research detailed later in Sections 3–5. These sections explain the application of the research framework that uncovered the reported KMSD approach, concentrating on the main points of the research that lead to it. The paper concludes with a reflection on the contribution this KMSD approach brings to both KM research and practice.

1.1 KM Research Position Organizations lack insight into how to develop KMS, while researchers are yet to find consensus on what constitute KMS. Approaches to developing KMS in organizations remain proprietary and ad hoc with no prospect of philosophical unity (Hahn & Subramani, 2000; Rubenstein-Montano, 2000), which often leads to poor control, management and integration. KM theory itself lacks sufficient cross-pollination of ideas from various influences and adopted philosophies (Moteleb & Woodman, 2007b), covering wide range of phenomena from different perspectives and “missing the opportunity to build synergistically on the work of colleagues in related disciplines” (Subramani et al., 2003). Furthermore, approaches for developing KMS are often predicated on IS development methodologies, which are arguably not adequate for KMSD because of the unique context of KM in organizations (Hahn & Subramani, 2000). As a result, implementation of successful KMS in organizations is deterred by (i) divergence and fragmentation in KM theory and models (Gray & Meister, 2003; Subramani et al., 2003); (ii) lack of insight into how organizations can develop KMS in a broader sense (Rubenstein-Montano, 2000) and (iii) lack of understanding into what role can IT play in supporting KMS (Alavi & Leidner, 1999, 2001; Malhotra, 2005). Understanding of these issues is hindered by a paucity of empirical research that addresses the relationship among organizational, social and technological aspects of KMS. Thus, the research question addressed here is twofold: what is a KMS for a particular organization, and how should it be developed in a manner that is generally useful and justifiable. The overall aim of our work is to uncover from practice a methodology (philosophical principles plus practical procedures) for KMSD. The research reported here was carried out with SMEs. In the context of KM, SMEs are not so different to larger organizations: they suffer from poor knowledge communication, they fear losing knowledge, staff who do not share knowledge are a problem, and understanding how to innovate is a permanent challenge. However, SMEs have attributes that help researchers in KM and KMSD: the susceptibility of small organizations to KM-related difficulties resulting from changes in their environment is matched by responsiveness to change and greater agility than is obvious in other types of organization. Having acknowledged differences from and similarities to other ISSN 1479-4411 123 ©Academic Conferences Ltd Reference this paper as: Moteleb, A. A. and Woodman, M. “Uncovering a KMSD Approach from Practice.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 123 - 134, available online at www.ejkm.com


categories of organization, the research therefore involves investigating (a) What is KM in the context of organizations? (b) How can organizations develop KMS? (c) How can IT support KMS in organizations?

1.2 Overview of research framework Concerns about repeatable processes for effective KMSD stimulated our goal to provide insight into KMSD for both KM researchers and practitioners. Much detail of our research is described elsewhere (e.g. Moteleb & Woodman, 2006; 2007a). Although originally the research methodology for the work reported herein was conventionally based on the study of the literature and observations of practice, the inconsistencies in the former and the variations in the latter let us to a strictly empirical approach. The strategy of our inquiry is committed to (1) assisting organizations to address actual challenges/opportunities, for which a KMS is a candidate solution, and in so doing (2) advancing research by capturing, evaluating and refining emerging concepts, procedures and techniques for KMSD. The method of the inquiry is, therefore, based on implementing a pair of intertwined Action Research (AR) iterations (see McKay and Marshall, 2001), representing (i) the organization’s problem-solving interest and (ii) our research interest; this pairing explicitly separates the roles of practitioner-consultant and researcher, which AR aggregates. Our AR research strand was refined by the use of Grounded Theory (GT) (Glaser & Strauss, 1967) so as to uncover notions that were present in organizations of knowledge, KM and KMS. Furthermore, GT ensures validation is inherent in the theory – and in our case – the practice that is developed. The application of the AR pairing reported here was on two SMEs, denoted here as Org1 and Org2. Org1 is a Marketing Consultancy based in the UK, and Org2 is a Franco-British HR and Recruitment consultancy. A team of four researcher–consultants was involved with Org1, which included three in fact finding and one on IT design and implementation. In both organizations only two researcher–consultants were involved on the work reported here. Rather than postpone a description of the KMSD approach resulting from out AR based enquiry, and for the sake of brevity and clarity, we proceed, in Section 2, by giving an overview of the KMSD approach that emerged and was validated by using GT within an AR framework. Thus, with a clear statement of the KMSD approach articulated, Sections 3 and 4 are able to concentrate on the detail of how the research was conducted and how emergence and validation took place of the first two aspects of the KMSD approach. Section 5 provides an overview of the IT-based design aspect of the KMSD approach.

2. A KMSD approach for organizations In this section we outline how challenges and opportunities that organizations face may be recognised as relevant to KM and outline the uncovered KMSD approach (justified later) that can be utilised to help organizations.

2.1 KM Discourse in Practice It is rare that organizations articulate problems that they have identified as KM problems, or for them to state an intention to develop a KMS to solve some business problems. Large organizations that know some KM ideas and think that intranets or document repositories constitute a KMS, sometimes do this, but are now more likely to say they tried and failed with a KMS. Typically, an organization will express some problems in their own terms and/or some need to improve its lot. They will talk about the need to grow, improve some aspect of performance, improve financial stability, etc. An initial consideration of the organization’s situation and where it wants to be some time in the future will indicate if there is a KM aspect in what it needs to achieve, and whether our any KMSD approach could be useful. Such an ‘analysis’ is often carried out in an unstructured conversation carried out over a period of weeks or months, primarily for primary fact-finding. Typically, what transpires are concerns the organization has about many topics, e.g. loss of skills/knowledge, failures in outsourcing, etc. Challenges/opportunities in organizations are revealed for growth in supply chain management, project performance, sustaining competitive advantage and CRM, for which KMS are candidate solutions. Having determined that problems could be addressed by KM in two organizations, AR-based projects were agreed to develop a KMS in conjunction with carrying out research. The broad KM issues initially set were: (a) What are KM problems in the context of the organization? (b) What KMS model can help overcome

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Aboubakr A. Moteleb and Mark Woodman

these? (c) What technologies can support a suitable KMS? Our initial AR plan was to work together with staff (1) diagnosing KM situation, (2) designing KMS and (3) assessing candidate technologies. KM situation diagnosis revealed problems with locating, communicating and interacting with knowledge. This led us to work with the organization on an exploration of challenges and opportunities in its situation to gain insight into what it wanted in the future improved situation.

2.2 Overview of Participatory KMSD Approach The fully participative KMSD approach is carried out by a team consisting of members of an organization usually aided by external, impartial practitioners. The resulting KMS belongs to the organization which designed and which originated it: unless an organization changes dramatically, its KMS is never completed or terminated, and its behaviour can never precisely be predicted by the organization. It is carried out either in phases or an iterative, possibly agile style. It can be described in terms of three interacting aspects: 1. Envisioning Knowledge Work Behaviour: a collective exploration of an improved situation that clearly addresses challenges in an organization’s current situation. The exploration is conducted through extended conversations using agreed means appropriate to the organization. The outcome is an explicit, continuously emerging vision of the improved situation to which an organization aspires. This vision consists of knowledge concepts and their properties with dimensions that articulate ranges of values for properties. The vision maps back to the original improvement needs of the organization and so is unique to it. Therefore, the vision is owned and maintained by the organization, not by consultants whose roles include assisting exploration (e.g. via probing and mapping) and suggesting avenues for progress. 2. Designing the KMS: this aspect is where the team proposes how the knowledge concepts and properties envisioned as part of the improved organizational situation can be represented by knowledge entities, knowledge flows and knowledge interfaces in a KMS. This design is intended to be flexible and to accommodate different and changing perspectives. Although IT options may be considered in highlevel terms, this KMS design is not about IT but on how an organization can work with envisioned KM concepts for improvement. Choices made in designing KMS are guided and constrained by an organization’s structure, culture, resources etc. 3. Exploring Technology Options for the KMS: here the team considers potential technologies to support the KMS design that has been expressed in terms of knowledge entities, flows and interfaces. Potential technical implementations are considered according to degree to which they are likely to integrate organizational, social and technological aspects of the KMS and according to cost, complexity, availability, etc. Although we occasionally use terms like ‘analysis’ or ‘design’ in describing our approach, it must be emphasised that the role of external practitioners is to assist and guide processes carried out by, and fully owned by, the organization developing a KMS. The team aspect is important, because multiple perspectives are a crucial facet of KM and are needed to achieve validation through the techniques of grounded theory. (And, the impartiality and process knowledge of external practitioners is more important than domain knowledge or expertise.) Hence, an ‘analysis’ takes place in order to envision a future situation; it is carried out by members of the organization in an exploratory fashion. Because choices will subsequently be made, we can explain the development of a setting for knowledge entities, flows and interfaces as a ‘design’.

3. Envisioning Knowledge Work Behaviour In this section we discuss how the KMSD outlined above emerged from research into the practice of facilitating an organization’s improved situation through developing a KMS. Using an AR/GT-based approach (Moteleb & Woodman, 2007b) we identified different themes of concepts from organizations’ discourses and practices. We found that concepts were understood in terms of constituent properties, each potentially having a dimension – of range of ‘values’ describing properties. We use the notions of THEME, concept, property and dimension from GT (shown in corresponding typographic styles). GT open coding was used to uncover various concepts related to KM from our investigation of KM challenges/opportunities in orgs. These knowledge work concepts were then aggregated into three themes based on common properties found in the concepts using GT axial coding. As described in detail below these themes of concepts were: (1) LOCATING KNOWLEDGE; (2) COMMUNICATING KNOWLEDGE and (3) INTERACTING WITH KNOWLEDGE. Note that different fonts and typographic styles are used here to distinguish these different elements.

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3.1 Uncovering the LOCATING KNOWLEDGE Theme A set of emergent concepts in Org1 uncovered this first theme. Concepts such as: «what knowledge is with others?» and «who is working on what?» emerged in envisioning an improved situation, where knowledge workers would be able to locate others’ knowledge and understand what they are working on. For example, knowing what knowledge is with others is perceived to be essential for improving project management: “He might have more information that could be valuable for the job but I don’t know that he has it”, while knowing who is working on what is important for avoiding redundant work, hence improving performance: “One job may be carried out by more than one person without knowing”. This theme was confirmed in Org2 through a different set of emergent concepts such as: «what expertise does a candidate applicant possess?»; e.g. understanding what expertise does the candidate applicant have would increase efficiency of matching candidates to vacancies. Concepts revolving around the LOCATING KNOWLEDGE theme share the following emergent properties from both organizations: (1) knowledge mapping – indicators to knowledge and expertise with others: “I don’t know what kind of information [he needs], this is the first time I come in contact with the graphic designer”, and (2) knowledge openness – the availability of knowledge to others: “I will not know anything about what is going in the meeting, what is going between [the owner-manager] and designer, I will not be involved in communication with tester …”. Another property that emerged from analysing how different concepts led to uncover the same theme is purpose of knowledge – the reason why locating knowledge is important. This property emerged as it was noticed that different concepts led to the same theme despite having different purposes for locating knowledge. One dimension that emerged in association to the property knowledge mapping is degree of similarity. Conversations revealed that knowledge can be mapped to each other according to degree of similarity. Similarities are important for instance among projects: “Projects are very similar because we have been doing a lot of work for public sector” and among documents “I remember which proposal is nearly similar but it would be a problem if somebody else is joining me to do the same thing; they would not have historical knowledge that I do”. The degree of accessibility emerged as a dimension related to the property knowledge openness. The degree of accessibility defines for instance the extent to which knowledge is available to different team members. Whereas conversations with staff revealed that knowledge about projects should be accessible for instance to all team members: “I need to know exactly what they want because I need to take my notes”, conversations with owner-manager revealed that other knowledge, such as knowledge about clients, might need to be kept exclusive. Purpose of knowledge can be represented by a range of various reasons for which locating this knowledge is important. For example, although the concepts «who has which expertise?» and «what expertise does a person possess?», emerging from Org1 and Org2 respectively, led to the same theme; the former concept is due to a need to know who to refer to in specific areas of expertise, which is different from the latter, which is due to a need to match a job vacancy to suitable candidates based on their expertise. Understanding of properties and dimensions in LOCATING KNOWLEDGE is critical in developing KMS. Different degrees of accessibility and various reasons for locating knowledge should be taken into consideration when designing KMS. For example, the degree of accessibility is set by a knowledge owner, yet negotiable between the knowledge owner and requester. Thus, knowledge holders keep ownership of their knowledge; maintaining ownership of knowledge was a concern that emerged from conversations. Also, to emerge was the requirement that KMS should allow for users to determine the extent of knowledge similarity.

3.2 Uncovering the COMMUNICATING KNOWLEDGE theme Another set of emerging concepts in Org1 uncovered this second theme. In Org1 concepts such as: «communicating knowledge among individuals», «communicating knowledge about clients», and «communicating knowledge of expertise» emerged. For example, «communicating knowledge among individuals» is perceived as important for collaboration and innovation, and hence for improving performance and competitiveness: “There should be clear understanding between me and the designer, me and the client …”. The concept of «communicating knowledge about clients» was perceived to be important for understanding clients’ requirements, hence for improving client satisfaction: “There is miscommunication in finalising what the creative brief is”. This theme of

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COMMUNICATING KNOWLEDGE was confirmed through a different set of concepts in Org2 such as: «communicating knowledge among consultants», «communicating knowledge about candidates», and «communicating knowledge about missions». Concepts under COMMUNICATING KNOWLEDGE share the following emergent properties: (1) nature of knowledge – the kind of knowledge communicated: “Questions to define project and direction” and (2) knowledge value – the usefulness of knowledge: “It is not just about where [the clients] are now, it is about where they want to be”. The dimension of nature of knowledge can be an unordered set of various types determined by the knowledge holder or requester. Conversations in Org1 and Org2 uncovered that type of knowledge required about projects or missions for instance: “understand job description, work flow of the job from start to finish” is different from type of knowledge required about expertise: “What should I expect from people and what people should expect from me?”. Degree of suitability and timing of knowledge are emergent dimensions associated with the property knowledge value. Staff underlined the criticality of being able to communicate appropriate knowledge to relevant stakeholders: “Even though I have to manage everything and all expectations of the project are connected to me, I am the last person who would be informed of what is going on” at a suitable time: “I probably would not even know it until it is too late!”. Whereas some knowledge need to be communicated at the start: “If I have this information at the start!” stakeholders need to understand that other knowledge can only be communicated gradually: “At the time of proposal, the client is not going to give you that much detailed information, plus – not always – that they don’t want to put something they do not know themselves neither”. Both the degree of suitability and timing of knowledge communicated therefore affect the workflow. Understanding properties and dimensions in the theme of COMMUNICATING KNOWLEDGE is critical for developing KMS. A KMS design should cater for various types of knowledge: this is essential for the KMS to be able to communicate knowledge of value to a requester. Also, a KMS design should allow for users to determine the degree of suitability and timing of knowledge in relation to what users are doing: it is important for knowledge to reach relevant people at a suitable time. How this knowledge is communicated in terms of type and time is negotiable between knowledge holder and requester. From Org2 this was expected to motivate knowledge holders to communicate their knowledge with others, to be able to receive knowledge from others when needed.

3.3 Uncovering the INTERACTING WITH KNOWLEDGE theme A third group of emerging concepts uncovered this third theme. In Org1 concepts such as «linking to individuals’ knowledge», «linking to projects’ knowledge», and «linking to each others’ expertise» emerged. For example, it is perceived to be important to meet a client to understand their requirements: “There are things that I could just get from meeting the client”. This theme was confirmed through concepts that emerged in Org2, such as «linking to candidates’/consultants’ knowledge», «linking to missions’ knowledge», and «linking to others’ expertise». Concepts under the theme INTERACTING WITH KNOWLEDGE share the emergent property of knowledge connectivity – the ability to link knowledge together: “For me the owner-manager is the link”. This property emerged from Org1 and was confirmed by the work with Org2. Another property only from Org2 was knowledge perspective – the ability to represent different views on knowledge in the system. Conversations in Org2 made clear that knowledge is perceived differently by different users. One dimension that emerged for knowledge connectivity was the degree of closeness (or degree of separation) to certain knowledge. Conversations in both organizations revealed that the degree of separation influences interaction with knowledge. For example more than one degree of separation to critical knowledge (e.g. knowledge about clients and their requirements) might make it harder to get relevant knowledge at a suitable time: “I am not involved in anything with the client, so sometimes I might miss some important information”. However, sometimes it is imperative to keep more than one degree of separation for reasons such as privacy or security especially with external staff. The degree of separation doesn’t have to remain static, but can be dynamic – changing in different situations.

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The dimension that emerged in association to the property knowledge perspective was the range of views in interacting with certain knowledge. Org2 showed that there is a range of views related to the same knowledge. For example, while knowledge about a certain candidate can be viewed in relation to fulfilling a mission by a consultant in Org2, it can be viewed in relation to knowledge sharing by a candidate. Understanding properties and dimensions in INTERACTING WITH KNOWLEDGE is critical in developing KMS. A KMS design must represent the degree of separation for users interacting with knowledge. Also, a KMS design should accommodate the range of views to be represented and changed by users, because not every user views their relation to certain knowledge in the same way.

4. Designing the KMS In this section we discuss how the KMSD design elements emerged from research into the practice of designing the organizations’ KMS to support their envisioned improved situations. Envisioning an improved organizational situation in terms of KM, uncovered three KMS design themes for improving the situation in relation to locating, communicating and interacting with knowledge. These themes were termed KNOWLEDGE ENTITIES, KNOWLEDGE FLOWS and KNOWLEDGE INTERFACES. The purpose of identifying KNOWLEDGE ENTITIES is to enable staff to see the big picture by mapping themselves and their work in relation to individuals, artefacts and activities. Identifying KNOWLEDGE FLOWS aims at facilitating dissemination of relevant knowledge to staff when they need it and how they need it. Part of this was about adopting best practice; in Org1 it was to give added value to its existing and new customers. For this appropriate INTERFACES – points of interaction – among KNOWLEDGE ENTITIES needed to be determined. This section explains how these ideas emerged.

4.1 Uncovering design with KNOWLEDGE ENTITIES This first KMS design theme was uncovered through a set of emergent concepts such as «who can pass this knowledge to me?» and «to whom can I pass this knowledge?» This theme was collectively explored in a workshop with staff at Org1. Locating, communicating and interacting with knowledge is hindered by increasing dependence on changing freelancers and by staff frequently switching from one role to another. High staff turnover creates a gap in time between the current staff and staff who had left: “There was no information for me or anyone after me”; and this situation was likely to remain unchanged for staff who would join in the future: “I haven’t really had anybody to pass that knowledge on to”. This had caused over-reliance on the owner-manager, who was the sole link to internal and external individuals, companies and activities. During the action research (in the workshop with Org1) a KMS was envisaged that would improve this worker situation by having some representation of the knowledge of stakeholders so as to facilitate the theme of LOCATING KNOWLEDGE, and in particular to support the properties of knowledge mapping and knowledge openness. Furthermore, it emerged that the particular KMS for Org1 should maintain flexibility in roles and jobs. Exploring how Org1 thought its business could be improved by LOCATING KNOWLEDGE, showed for a variety of reasons that it would be impractical to share knowledge solely among people. Because of the flexibility of roles/jobs it was realised that no one person could know all knowledge related to a project. Moreover, high staff turnover meant that knowledge about ongoing projects would leave with the people and new staff would not be able to access knowledge related to projects or jobs. To this end, all constituents of a KMS should be represented as KNOWLEDGE ENTITIES. Accordingly, a KNOWLEDGE ENTITY can be defined as an essential constituent of an envisioned KMS that must be capable of locating knowledge, communicating knowledge and interacting with knowledge. KNOWLEDGE ENTITIES could be individuals or companies, who can actually communicate knowledge via different means, or could be artefacts and activities such as projects, jobs, expertise and documents. KNOWLEDGE ENTITIES can be within an organization or external, in its environment; e.g. Org1 needed knowledge entities for internal staff and expertise, and for freelancers, external expertise. Org1 staff also helped refine the notion of KNOWLEDGE ENTITY, which need not hold particular knowledge but can point to holders of relevant knowledge. Figure 1 illustrates an individual knowledge entity mapped to other knowledge entities, including other individuals.

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Figure 1: Individual knowledge relationships In addition, as discussed in section 3.2 KNOWLEDGE ENTITIES are required to identify the nature of knowledge that they need from each other (knowledge type) and in turn are expected to feedback on received knowledge value, for example, in terms of degree of suitability and timing.

4.2 Uncovering design with KNOWLEDGE FLOW This second KMS design theme, KNOWLEDGE FLOW, was uncovered through a set of emergent concepts such as «relevant knowledge reaching relevant persons at suitable time». This theme was further explored with staff during the workshop at Org1, where each participant was asked to assume the role of one KNOWLEDGE ENTITY and articulate: (a) what knowledge they need from others and (b) what knowledge can they give to others, based on their understanding of each other’s functions. Staff emphasised the importance for “knowledge to flow” between relevant knowledge entities at a suitable time. Once Org1 had adopted the design theme of KNOWLEDGE ENTITIES, it expressed needs for knowledge to flow not just among individuals and companies, but among projects, jobs and expertise. KNOWLEDGE FLOW was KNOWLEDGE ENTITIES at a

perceived by staff as the communication of relevant knowledge to relevant suitable time. This contrasts with a general argument in literature that KM is about delivering the right knowledge to the right person at the right time. The latter implies that we can pre-specify (a) what is the right knowledge? (b) who is the right person? and (c) where and when are the right place and time? The former implies an on-demand ability to identify (a) relevant knowledge, (b) relevant stakeholders and (c) suitable place and time. The emergent requirements thus suggest that a KMS must incorporate a flexible and unfixed design, not knowing how it may evolve. When designing the KMS to meet the needs of KNOWLEDGE COMMUNICATION as knowledge flows, Org1’s staff saw the need for a special type of KNOWLEDGE ENTITY, that they named an “oracle”. Because of the issues of staff flexibility and turnover, and the potential danger of “knowledge overload”, Org1’s staff argued for an oracle entity concerned with knowledge about, for example, “all projects ever taken place in the company” and “all expertise ever known in the company”. For example, the oracle representing projects was proposed as knowing about knowledge needed by people for the following: “the planning of my project”, “to understand who I am working with”, “to understand requirement and deliverables”, “the resources that I might need”, “the client contacts, the organization contacts”, and, “what is the status of the job at anytime”. In addition, the oracle representing projects can provide other KNOWLEDGE ENTITIES with the following: “roles in relation to others”, “similar projects and best practices”, “the big picture”, “project documentation”. The KNOWLEDGE ENTITIES interacting with oracles thus became crucial in determining knowledge flows in a KMS. A knowledge communication matrix was devised to map KNOWLEDGE FLOW arising from workshop activities (omitted here for brevity). Figure 2 shows the knowledge flows among knowledge entities for Org1.

4.3 Uncovering design with KNOWLEDGE INTERFACES Once KNOWLEDGE ENTITIES are identified and KNOWLEDGE FLOWS are represented in a KMS design, KNOWLEDGE INTERFACES among entities must be defined to facilitate knowledge flow. This last emerging KMS design theme was revealed from Org1 in the workshop when each participant was asked to continue with their roles and think of what are the current and potential points of interaction with each other’s knowledge. It was emphasised that current points of knowledge interaction are almost non-existent. Interaction with knowledge entities is mainly through the owner-manager. They envisioned knowledge interaction to happen

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between any KNOWLEDGE ENTITY and another at anytime. For example, they emphasised the need for interaction with individuals working on the same project to coordinate milestones and terms of work: “it wastes lots of time because I spend 3 or 4 days putting it in the right format ... this is work he should be doing”. They also emphasised the need for interaction with the client to meet their expectations: “sometimes I might miss some important information that will lose the client ... I hardly get the time to ask [the owner-manager] these questions because he is busy out [of the office] attending meetings.” From practice we understand that knowledge workers envisage a KMS as creating a milieu that enables knowledge interaction – by knowledge flowing via some kind of controlling mechanism among knowledge entities. In Org1 it was indicated that some knowledge entities require direct knowledge connectivity between each other while others underlined the importance of managing the control of knowledge connectivity – depending on situation and time. For example, staff see that maintaining direct interface (one degree of separation) with external contractors facilitates the exchange of information and sharing of knowledge, and establishing direct interface with clients (one degree of separation) ensures mutual understanding of requirements. However, the owner-manager stressed that interfaces with some clients and freelancers should be kept through him (two degrees of separation) at least temporarily. Figure 2 shows the KMS’s potential knowledge interfaces among knowledge entities in Org1.

Figure 2: Knowledge Interaction Domain at Org1 (key: ‘e’=knowledge entity; ‘f’ = knowledge flow; ‘i’= knowledge interface)

5. Exploring technology options As shown above a KMS is an envisioned setting to improve the situation of an organization by allowing it to locate, communicate and interact with the knowledge that is inherent/embedded in its work and behaviours. This is achieved by designing a KMS that allows the organization to enumerate and represent its knowledge entities, knowledge flows and knowledge interfaces. For IT to support the KMS means therefore that there must be some way in the IT design to enumerate and represent the organization knowledge entities, knowledge flows and knowledge interfaces. In this section we provide a description of practical considerations rather than give another detailed account of the GT analysis carried out of practice that uncovered the third aspect of the proposed KMSD. Instead in this section we report on and evaluate technology options that were considered in the two organizations.

5.1 Off-the-shelf Software Applications In Org1 off-the-shelf software applications appeared as a first choice because it would allow the organization to immediately start on implementing the KMS design. Microsoft’s SharePoint® and 37 Signals’s Basecamp™ were specifically considered as they are associated with offering tools for knowledge-workers’ collaboration besides project management, which dominated Org1’s KM needs. As a result of the first AR cycle at Org1, it started using Microsoft’s Windows SharePoint® Services 2.0 (WSS 2.0), together with

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Microsoft’s SharePoint® Portal Server 2003 (MSPS 2003) to support the design of its envisioned KMS. In parallel to this, the company was exploring the ‘Software as a Service’ (SaaS) project management tool Basecamp™ available online at the time. Although neither application directly supported the KMS design, with some effort the Microsoft’s SharePoint® and 37 Signals’s Basecamp™ available versions at the time could have been configured to simulate knowledge entities, knowledge flows and knowledge interfaces. For example, WSS 2.0 was configured to represent knowledge entities by adding new users on the MSPS 2003 and configuring their attributes and access rights. Like Microsoft’s SharePoint®, Basecamp™ was configured to represent knowledge entities by adding new ‘users’. Both options were seen as expensive because licensing prices were based on users, so representing multiple instances knowledge entities such as Expertise as a ‘user’ added directly to costs. When considering both applications for knowledge flows representation, they were both perceived to be able to support some basic recording of knowledge flows using log files. Likewise, when it came to representing knowledge interfaces, the available versions of both SharePoint® and Basecamp™ could support some recording of the different interactions. However, neither application catered for all the properties and dimensions for locating, communicating and interacting with knowledge. For example, for locating knowledge neither SharePoint® nor Basecamp™ allowed for mapping relationships among knowledge entities. Also, neither application at the time allowed for even basic representation of the nature or value of knowledge communicated. Furthermore, neither application allowed for any representation of knowledge connectivity, let alone allowing for multiple perspectives required for different knowledge interfaces. On the other hand, the versions of both application at the time had limited visual representation of flow among knowledge entities is useful in showing who is communicating with whom about what at any time. Although Microsoft’s SharePoint® and 37 Signals’s Basecamp™ continued to improve and add many features in versions that appeared after the first action research cycle with Org1, evaluation by the team at the time concluded that they still did not fully support adequate enumeration and representation of knowledge entities, knowledge flows and knowledge interfaces. For example, for facilitating knowledge flows and interactions the newer Microsoft’s Windows SharePoint® Services 3.0 (WSS 3.0), together with Microsoft’s Office SharePoint® Server 2007 (MOSS 2007) as well as newer updates of the 37 Signals’s Basecamp™ SaaS incorporated social technologies such as blogs, wikis and RSS to facilitate and motivate communication and collaboration among project members. Although such improvements and additions fell short of providing for essential requirements of Org1’s KMS design, these were welcomed because they overcame criticisms by Org1 of earlier versions of SharePoint® and Basecamp™ to do with their inflexibility and hierarchy – as will be explained in the next section. Consequently, it was considered that a bespoke KMS software application would be more beneficial to allow for adequate representation of knowledge entities, knowledge flows and knowledge interfaces.

5.2 Bespoke KMS Software Application – A Proof of Concept Participatory evaluation of commercial, third-party systems in the context of their potential support to Org1’s KMS design led to the belief that off-the-shelf software applications were not suitable, in spite of their many customisable features. Therefore, it was decided to develop a prototype software application to support the KMS design that had emerged. In our workshops the Org1 members explained that they needed a software application, or rather a “space” that would be more “social”, “unofficial” and “flexible” and that would become part of their daily work. To this end, Keco (for ‘knowledge ecosystem’), was developed as a proof of concept. Keco was based on integrating social technologies and tools to provide for the emerging concepts in exploring KMS technology options: social, unofficial, flexibility and that is part of their daily work. Keco used blogs to represent knowledge entities including those shown in Figure 2: individual, company, project, job, expertise and document. For example, as depicted in Figure 3, each project knowledge entity is listed connecting it to the corresponding company knowledge entity next to it. Each knowledge entity could publish articles and link them to other knowledge entities using simple HTML tags. Moreover, Keco allowed for conversations, and hence communicating and interacting with knowledge, through wikis, which could also represent some knowledge entities and be linked to other entities.

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Figure 3: Keco projects user interface Clicking on any of these knowledge entities would link to a blog space, where articles can be added or edited as shown in Figure 4. Each article is linked to a specific knowledge entity through identifying a topic. Furthermore, RSS was used to communicate changes and updates, basically any activities, of interest to the knowledge entities whenever a new article is created or updated.

Figure 4: Keco adding/editing entry user interface Although Keco provided technical support for the envisioned KMS of Org1 and later of Org2, it did not work for either organization for different reasons. The one reason that is related to KMS design is that Keco was no more than another application that tried to control the entities and their knowledge. The practice of envisaging improved future knowledge-work behaviour, and designing an appropriate KMS had concentrated

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on enabling functions and not constraining them. Conversations with knowledge workers in both organizations regarding the use of Keco revealed that it was essential for them to keep “ownership” of their knowledge. They welcomed sharing their knowledge with other individuals and the company, but they wanted to know that they could access this knowledge and any interactions with others’ knowledge even if they were no longer part of the company. In other words, they perceived this knowledge as their own personal intellectual capital. This post-employment behaviour had not emerged in the action research study and so the knowledge workers considering Keco saw it as being inflexible and supporting the hierarchy of the organization – a hierarchy of no relevance to them once they would have moved on.

6. Conclusion This paper has described a formalised approach to KMSD and the research inquiry that uncovered it. The KMSD approach has three interacting aspects: (1) envisioning knowledge work behaviour, (2) designing the KMS, and (3) exploring technology options for the KMS. The KMSD approach is highly participatory; it must be carried out by a team consisting of members of an organization usually aided by external, impartial practitioners (who act as guides rather than experts). The resulting KMS belongs to the organization which originated it. In the context of an overall aim to uncover from practice a methodology for KMSD, the research question addressed here is twofold: what is a KMS for an organization, and how should it be developed in a way that is generally useful and justifiable. The research inquiry was carried out with two SMEs, typical of organizations that suffer from KM problems. It was carried out using action research, and so was committed to addressing the organizations’ challenges and opportunities. The detail of the KMSD approach was uncovered using grounded theory. The paper described how grounded theory analysis was used to uncover the KMSD approach, particularly the themes in the first KMSD aspect of knowledge work behaviour and the design elements for a KMS in the second KMSD aspect. By way of contrast, the third aspect of the KMSD approach, exploring IT options, was discussed in practical terms. In preference to commercial off-the-shelf software, a bespoke proof-of-concept application, Keco, was built using social network technologies to support the KMS needs of both organizations. Ultimately, Keco was rejected by knowledge workers who expected it to provide for their personal knowledge needs after leaving their organization – a factor that had not emerged during the action research. The inquiry’s contribution to practitioners is to introduce the validated KMSD approach and a validated KM model grounded in organizational practice. This model – locating, communicating and interacting with knowledge – offers organizations, KM practitioners and IT designers an insight into developing KMS, a standard approach for integrating KMS across departments and organizations, and a common basis for communication among practitioners. This inquiry’s contribution to KM researchers is the research framework that uncovered a grounded, validated approach to KMSD that emerged from practical concepts, procedures and techniques. This approach includes a KMS architecture – knowledge entities, flows and interfaces – that captures emergent concepts that appear to be common for KMSD in organizations. By creating the situation in which procedures and techniques for developing KMS emerge from practice, our KMSD approach is provably grounded. However, it could be further refined by using for different KMS in different types of organizations. The first action research cycle for designing KMS uncovered a model consisting of knowledge entities, knowledge flows and knowledge interfaces. The second cycle confirmed the model, and refined and extended it. Knowledge entities were determined to be essential system constituents that hold and both send and receive knowledge. Knowledge entities identified in first iteration of an Action Research cycle were individual, company, project, job, expertise and document. The second cycle uncovered product as a knowledge entity. Knowledge flow was refined to be a representation of knowledge communicated among entities and staff from organizations uncovered a matrix of knowledge flows and interfaces among knowledge entities. The second organization further extended and refined the knowledge matrix, especially knowledge interfaces.

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An assessment of technology options for the designed KMS in the first AR cycle highlighted some customizable, off-the-shelf software that could potentially support the KMS design. Eventually we developed bespoke software based on social technologies. The work reported here was on how the approach emerged from work with two organizations – two SMEs. These are an important category of organization because of their vital role in economic growth and their susceptibility to changes in the knowledge-based economy. In fact KMS are particularly critical to SMEs because they rely on external expertise – often dispersed in time and place to be able to compete with larger organizations offering integrated services. However the number of organizations and types may be seen as limitations to the scope of our practical approach. Although the Grounded Theory methods do not require numerical strength for conclusion-validity, as trained sceptics we recognise the urge of practitioners and researchers to see more examples of the model in practice and to see a variety of types of organization. Work is underway that addresses such assumed concerns. Until this is completed, a perception of limited applicability must be accepted, even though Grounded Theory justifies our confidence. Our research is concerned with the theory and practice of KMSD. Through a rigorous action research-based process, augmented by Grounded Theory, we have been developing a KMSD methodology from which a light-weight practical approach is apparent. This paper has described this approach, which is itself is a significant contribution to the discipline as its detail is validated by empirical work and explicit and defensible concepts. Further work will consider how personal knowledge needs might be accommodated in an organizational KMS, especially when an individual’s KM needs no longer coincide with that of the organization that owns the KMS.

References Alavi, M. & Leidner, D.E. (1999) “Knowledge Management Systems: Issues, Challenges, and Benefits”, Communications of the Assoc. for Information Systems, l.1(7):1-37. Alavi, M. and Leidner, D. (2001), ‘‘Knowledge management and knowledge management systems: conceptual foundations and research issues’’, Management Information Systems Quarterly, pp. 107-36 Glaser B. & Strauss A. (1967), “The Discovery of Grounded Theory: strategies for qualitative research”, Aldine De Gruyter, NY: USA Gray, P. & Meister, D. (2003), “Introduction: fragmentation and integration in knowledge management research”, Information Technology & People, vol.16, pp. 259-265 Hahn, J. & Subramani, M. (2000) “A Framework of Knowledge Management Systems: Issues and Challenges for Theory and Practice”, 21st International Conference on Information Systems (ICIS 2000), Brisbane, Australia. Malhotra (2005) “Integrating Knowledge Management Technologies in Organizational Business Processes: getting real time enterprises to deliver real business performance”, Journal of Knowledge Management, 9(1):7-28. McKay, J. & Marshall, P. (2001) “The dual imperatives of action research”, Information Technology and People, 14(1):4660. Moteleb, A., Woodman, M., Galal, G. & Bakry, W. (2005) “Ontology of Knowledge Management Systems Entities”, Proceedings of the European and Mediterranean Conference on Information Systems (EMCIS2005). Moteleb, A. & Woodman, M. (2006a), ‘Relevant theories and methodologies for Knowledge Management Systems Development’, Proceedings of the 3rd International Conference on Knowledge Management (ICKM2006) Moteleb, A. & Woodman, M. (2006b) “Identifying the Knowledge Gap in Knowledge Management Systems Development”, Procs. of the 7th European Conference on Knowledge Management (ECKM2006), Budapest, Hungary, September 2006. Moteleb, A. & Woodman, M. (2007a) “Notions of Knowledge Management Systems: A Gap Analysis”, Electronic Journal of Knowledge Management (eJKM), 5(1):55-62 Moteleb, A. & Woodman, M. (2007b), ‘Extending Emergent Procedures, Techniques, and Concepts for Knowledge Management Systems Analysis’, Proceedings of the 8th European Conference on Knowledge Management (ECKM2007) Rubenstein-Montano, R., Liebowitz, J., Buchwalter, J., & Mcgraw, D., (2000) “A Systems Thinking Framework for Knowledge Management”, Decision Support Systems, 31(1):pp.5-6. Subramani M., Nerur S. & Mahapatra R. (2003), “Examining the Intellectual Structure of Knowledge Management, 19902002 – An Author Co-citation Analysis”, Management Information Systems Research Center, Carlson School of Management, U. Minnesota.

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Value, Kaizen and Knowledge Management: Developing a Knowledge Management Strategy for Southampton Solent University S J Rees1 and H Protheroe2 1 Southampton Solent University, UK 2 WiT Systems Ltd, Southampton, UK [email protected] [email protected] Abstract: The process of development of the strategic plan for Southampton Solent University offered a vehicle for the development of kaizen and knowledge management (KM) activities within the institution. The essential overlap between the methods offers clear benefits in the HE environment. In consideration of the aspects of KM and kaizen, various potential opportunities were identified as targets for improvement, and clarified by knowledge audit as to value and viability. The derived outcomes are listed along with some of the principal factors and perceived barriers in the practical implementation of the outcomes. Knowledge audit applied here focused on the identification of where value arises within the business. Resource constraints and the practicalities of a people-centred system limit the permissible rate of innovation, so precise focus on the areas of business activity of most significance to the mission and client base is crucial. The fundamental question of whether such a strategy should be developed as a separate strand or embedded into existing strategies is discussed. In practice, Solent has chosen to embed, principally for reasons of maintenance of ownership and commitment. Confidence in the process has been built through prior success with trialled activities around retention, where an activitybased pedagogic framework was adopted to address issues with an access course. Other areas of early intervention include the development and reengineering of recruitment and admissions processes, and the development of activities and pedagogy based on the virtual learning environment as exemplars of the importance of cyclical feedback in continuous improvement. The inherent complexity of processes running across the university as an organisation offers opportunities for benefits from the through-process approach implicit in kaizen. The business value of the institution is in the skills of its employees and its deployed intellectual property, and thus the importance of the enhancement of both tangible assets and intangible processes is critical to future success Keywords: knowledge management, kaizen, knowledge audit, knowledge strategy, knowledge management in higher education, strategy development

1. Introduction The essential overlap between total quality improvement and kaizen methods (Masaaki Imai 1986) and knowledge management, arising from measurement tools, process mapping, and business process development, are well understood (O’Neill-Cooper 2001). In the UK university context, formal adoption of lean management as a practice and kaizen as a doctrine is relatively recent. The processes enshrined within lean management and kaizen are, however, widely practiced by managers. The benefits of the implementation of knowledge management in HE are those of any business: understanding the university and its activities, leveraging knowledge assets, management of increased speed of innovation, focus on student received value, dealing with changing rules and business picture, improved operation with strictly limited (and often shrinking) resource bases, avoidance of information loss because of high workforce mobility, and improved sustainability and succession planning in every aspect of the business. In developing a strategy to take this forward, the balance of activities and the selection of applied methods and tools needs careful cognisance of the nature of the particular institution. The concept of identification of knowledge value in a business is a precursor to the effective leveraging of knowledge assets and the generation of competitive advantage. Relatively simple techniques can solicit clarity in the identification of knowledge assets. The ability to focus on high value activities offers the opportunity to apply principal component analysis to business improvement. As such, it will guide the early uses of kaizen and thereby generate motivationally significant early wins and high impact outcomes. Furthermore, as kaizen drives the organisation to do well what is necessary and to discontinue what is not, the alternative lens of knowledge value gives essential perspective in the highly complex and loosely associative HE environment. ISSN 1479-4411 135 ©Academic Conferences Ltd Reference this paper as: Rees, S. J. and Protheroe, H. “Value, Kaizen and Knowledge Management: Developing a Knowledge Management Strategy for Southampton Solent University.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 135 - 144, available online at www.ejkm.com


The tools of kaizen dovetail well into the suite of activities making up knowledge management in higher education. The natural tendency is to tie these aspects together in deriving strategy. The knowledge intensive business is not necessarily well served by such an approach, although they co-exist without difficulty and deliver mutual support where properly applied. The difficulty is in the range of “useful” activities, and the universities’ reliance on resilience through diversity (an almost ubiquitous strategy and perhaps implicit in the “uni-varsity” derivation). Without precision in product, kaizen offers constraints to academic practice. Where precision is discernable, and it is a reasonable question as to the level of operating units within an university at which it is exhibited, lean practices have demonstrated merit. In derivation of a strategy, these principles offer guidance as to the blend and loci of application of lean and KM methods for best advantage. The paper considers the range and scope of activities in lean, TQM and KM methods in the context of Southampton Solent University’s business model.

2. The baseline situation Southampton Solent University is a successful, medium sized educational institution. Its most recent strategic plan is now finished, the key deliverable having been achieved during 2005 with the achievement of degree awarding powers and university title. The University has a number of long-standing and wellestablished strategic plan documents. Some of these are fully necessary to forward development; others have, perhaps, reached the end of their useful presence in the strategy mix. The core strategy set is supported by a number of underpinning strategy documents focused on particular aspects of the institution’s work. In form and style, these very much implement Andrews’ definition of corporate strategy: “Corporate strategy is the pattern of major objectives, purposes and goals and essential policies or plans for achieving those goals, stated in such a way as to define what business the company is in and the kind of company it is or is to be.” (Andrews 1971) The Information and Communication Strategy is largely focused on the core IT offer, its use, and its development. There is no separate top-line business systems development strategy. Furthermore, there is little in any of the existing strategy mix that might be categorised as dealing with the culture of the organisation, other than as an implicit artefact. Three inevitable questions formed the backdrop to all the strategy discussions: where are we now; where do we want to be; and how do we get there? If analysed through Whittington’s strategic purpose/process framework (Whittington 2000), the university views its approach as deliberate and systemic. The degree to which this is actually true is questionable. Core Strategy Set ̇ University Plan ̇ Teaching and Learning Strategy ̇ Information and Communication Strategy ̇ Advanced Scholarship and Professional Practice Strategy ̇ Partnership Strategy ̇ Internationalisation Strategy In terms of quality improvement, targets are often stated as qualitative numerical goals: “reduce administration costs year on year”; or “improve retention by 5%”; as opposed to direct numerical or categorical strategy statements. (Schein 1993) argued that people will question their existing knowledge only under stress and when they have become uncomfortable with their current understanding. The recent spate of government studies of UK HE, particularly the recent Leitch review of skills (Leitch 2006) with its focus on employer engagement, have placed considerations of mission, purpose, and alignment into the system which are not answered in previous strategic thinking. As with every university, the biggest asset is the skills of Southampton Solent’s staff. These are measurable in tangible terms of obtained qualifications, received training, and recorded experience. Other derived tangible assets include the activities and materials prepared for each unit and course, the timetables and course structures leading to degrees and other qualifications, and the use of staff time. The staff relationships, formal management and communications processes of the university, its faculties and services, complete the picture. In intangible terms, these staff assets include the informal communications across the organisation, its performance culture, the attitudes and willingness of staff to deal with students and their problems, the embedded knowledge of “how the university works” (which is typically at significant variance to the recorded,

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official image in most organisations), and the network of professional contacts both internal and external to the organisation. The real crux is the understanding of “what works”: in student education and learning, in delivering all kinds of work using the university’s systems, and in managing our external relationships with funders, government, employers, and partner colleges. From this consideration came the first practical objective: the capture, proliferation and enhancement of good practice. This is the minimum outcome from the strategic implementation of knowledge management practices, but by no means the least in terms of anticipated impact. It is also the easiest to achieve partially, although substantially more difficult to deliver on fully. The University culture is fairly typical – generally management processes are loose, very much based on the McGregor “Theory Y” view of people’s approach to work, and successful initiatives are often instigated by individual enthusiasm as well as strategic direction. The university is reasonably efficient in its use of resources, a habit of mind driven by the long-term increase in student numbers with no concomitant increase in funding levels. Systematic development customarily takes place at the point of change, where the introduction of a new process or IT investment drives the need for evaluation and investigation of existing processes with a view to optimising the effectiveness of the investment. There is a background level of continuous improvement alongside this, and individual managers with responsibility for processes undoubtedly maintain a level of performance culture. However, it has been neither systematic nor ubiquitous. In strategy terms, the opportunity to build performance culture through total quality improvement and knowledge management techniques offers radical benefits additional to the evident basic requirement to revitalise the overall plan.

3. The opportunity The job of knowledge management is to optimise the effective use of both the assets (tangible and intangible) and processes of the business; to capture both such that sustainability is achieved and succession is simplified. Ultimately its objective is better employment of the value drivers for the university, its clients and partners. This leads to improved employment in every sense for the staff: more rewarding, more successful, better recognised, and more purposeful. In order to deliver this, understanding of where value lies is essential. Kaizen is continuous improvement. For Solent, as with many universities, it can provide a viable vehicle for achieving the objective of doing what needs to be done superlatively well, by iterative analysis, change and evaluation. The UK higher education (HE) environment is conditioned by the wider economy, and there remains a strong likelihood of future Treasury-driven limitation on growth in investment. Precision in targeting and efficiency in delivery will determine the ability to realise its advertised services within the available resource envelope. Created through a detailed review of the institution, the vision derived from this is expressed in a series of strategic aims. Those with broad, general applicability are listed below: Aims 1. To leverage the value inherent in the business’s processes and people, and build an effective knowledge base capable of providing answers the problems tomorrow will set. 2. To strengthen Southampton Solent University through “knowing what we know”, by driving the value chain. 3. To manage the corporate culture and develop the formal and informal communication processes to improve institutional performance. 4. To facilitate an exponential increase in the application of evidence-based leadership and knowledgebased practice. 5. To achieve the highest performance in terms of business process effectiveness and efficiency, both in managing the business and in student learning 6. To bind our students into the knowledge web as full partners, in learning, advanced scholarship/research, and employer engagement The required activities to deliver these are evident. In practical terms, the base techniques are the sequential identification of the various forms of value nexus within the organisation, process and value chain mapping, business process enhancement, improved effectiveness of management information generation and use, and the adoption of lean methods for improvement. In cultural terms, the need is for authentic leadership

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from academic and other managers, inculcation of the value set that prizes personal contribution and treats time as an asset jealously to be guarded and effectively to be spent, and a real acceptance of the continuous change, quality driven agenda. Some of these are evolutionary, others transformational. Educational knowledge audit (see 3.1 below) is one vehicle for capturing perceived knowledge value by analysis of the outcomes of iterative questioning across the hierarchy of the organisation. The ability to locate value (the nature of which is defined in the question set) gives an understanding of the asset base, from which it is possible to define how best to develop its use and encourage its growth, and promote dissemination where appropriate.

3.1 The knowledge audit question set The knowledge audit poses to the university seven questions, the same set to a sample of each tier in the organisation from Vice Chancellor to junior academic (or, if the analysts have real courage, to receptionist): 1. Where does the university’s main profit come from? 2. Where does the university’s main turnover come from? 3. What are the distinctive aspects of your product/service/operations base? 4. How do those distinctive aspects arise from within the university? 5. What aspects of the products/services are protected/protectable in IP/copyright/brand terms, or are just difficult to do without the university’s levels of experience/skills? 6. Who or what within the university are the key assets with respect to 3 and 4 above? 7. What specialist knowledge, equipment, assets and skills does the organisation possess that it actually controls that could be leveraged for external profit? The answers enable the identification of those elements of the business value offering which are knowledge sourced. In the basic interpretation (looking at the what rather than the how of the respondents’ answers: If managers disagree as to the answers to the questions, there is the potential for growth within your current practices; If the same responses keep coming back, then the answers to questions 5, 6, and 7 give the necessary insight as to how to increase the returned value on investment; If the main costs don’t relate to the answers to questions 3 and 4, the university is not leveraging its investment to its best advantage; If the principal growth doesn’t relate to the answers to 3, 4, and 5, the university is likely to face increasing competition for market share.

3.2 What do we seek to achieve? This list is very much the basics of knowledge management practice, with the embedded kaizen goals of doing less, but doing it superlatively well. Missing from the list is a real desire to reduce expenditure on current administration costs by 10% per year throughout the planning period (note that this is very different from reducing administration costs as a whole by 10% per year).

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Table 1: Outcomes 1 2 3 4 5 6 7 8 9

Definition of Outcomes Capture, proliferation and enhancement of good practice Knowledge is the product. So productise knowledge, and use it to improve performance or sell it to generate income. Elimination of unnecessary work; masterful delivery of essential activities Risk reduction in management decisions. Leadership through knowledge and skills applied to evidence. Designing and embracing Solent culture to deliver Solent Life (the local vernacular for the rounded student experience) A knowledgeable staff able to apply their skills to support the institution’s values and goals. Staff and students actively partnered in the learning process. Southampton Solent University as the best for employability, the partner of choice for employee training, and the centre of dissemination of modern business practice. Sustainable excellence in the student experience.

These colour the design of every facet of the institutional plan, from the obvious information and communications work through to consideration of the student experience. The latter is a good example of where process consideration has impact, which has led to the simplified conceptual approach illustrated through the mind map of the student experience of figure 1 below. Identification of the necessary features gives a usable measurement tool for the degree to which the delivery mechanisms are successful for managers and a simple visual explanation of the process for staff.

3.3 Reasons for confidence in the approach: an example of previous success The kaizen principles of teamwork and elimination of waste (muda) very much underpinned the university’s development of a revised approach to the delivery of the foundation year Technology programme. Targeted at students with qualifications bases beneath that required for admission to honours degree programmes as an access programme, the course exhibited a high drop out rate nearing fifty percent. This is by no means uncommon in widening participation courses recruiting non-standard student cohorts. The course team undertook to improve the situation. The adoption of an activity-based pedagogical approach, with development of early engagement through project work and early deliverables to permit appropriate engagement monitoring, gave the necessary insight into the students’ commitment and values that permitted effective early intervention (Robinson 2006). Where problems were identified, a team-based approach, combining precision academic support from the course tutors with specific skills interventions and personal problem solving from Student Support Network staff, offered the high impact support needed by the students. Significant elimination of waste was realised, both in the form of often inexpert pastoral care from academics serving as personal tutors and in effort deployed on students who later withdraw. After the initial impact of the pedagogical change, the cyclical small improvements have continued to bring real success. Effective team reflection on each year’s performance, with ongoing changes to the shape of the support package and incremental development of the activity set, has continued.

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Figure 1: Mind map of student learning experience Ultimately, the change programme beneficiaries have been the students. Retention rates are now in excess of seventy five percent.

4. The aspects of KM and kaizen in the strategy development process 4.1 Knowledge capture “Knowing what we know” seems an odd ambition for a university. It is the greatest aspiration and most valuable potential asset of any corporation. By recording tangible knowledge and processes, and designing support mechanisms for intangible processes whilst attempting their capture, the university will form a baseline knowledge map of the organisation and, most importantly, its people. Identification of embedded knowledge assets, then design of systems and products to utilise them, will multiply and diversify the income streams of the university. Proliferation of good practice and leveraging of knowledge offers a practical route to high performance culture. Target outcome 1: Capture, proliferation and enhancement of good practice Target outcome 2: Knowledge is the product. So productise knowledge, and use it to improve performance or sell it to generate income.

4.2 Business processes The application of modern analytical practices and quality methods will be used to provide opportunities to enhance performance. Value stream mapping, lean methods and standard quality management procedures, widely used in other sectors, have much to offer in terms of the forward shape of the education business. Existing resources will be used formally to map the full range of university processes, and apply business optimisation techniques to their improvement. Target outcome 3: Elimination of unnecessary work; masterful delivery of essential activities

4.3 Evidence-based leadership and knowledge-based practice Excellent information for management is the essential basis for good judgement. Without it, one might claim at best to have “insight”, or to be “lucky”. Whilst in conditions of uncertainty complete knowledge is always unachievable, risk is minimised where the available evidential base is at its most complete and accurate. The

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supporting vector for this is information collection, achieved by information systems design for effectiveness, and the basic value set of intolerance of inaccuracy. Knowledge management provides exact tools for this design. The business of managing teaching performance is an area of international interest. The establishment and use of meaningful key performance indicators and reinforcement of reflection upon practice can have genuine impact on the student experience (Leadership Foundation, 2008). Target outcome 4: Risk reduction in management decisions. Leadership through knowledge and skills applied to evidence.

4.4 Corporate culture and performance culture Building further the basic culture of personal responsibility into the academic sphere is the essential goal in staff relationships. Specific embellishments appropriate to the mission - collegiality, consultation, respect for the values and others, tolerance of different opinions, decision making with a solid evidential basis, valuing diversity – will be promoted actively and developed throughout the proposed actions. The analytical tools and cultural methods required to do this form a basis of tried and established practice which will be adopted and embedded. Performance culture starts with the simple metrics of implementation and evaluation: we say what we do, do what we say, and always follow up on work we require of others (or is required of us). The “authentic leadership” approach (George 2003), with appraisal of effectiveness and the creation of the can-do culture and the learning organisation, in which risk is evaluated and accepted, and occasional failure is taken as part of corporate learning, is the intended operational norm. Target outcome 5: The designing and embracing of Solent culture to deliver Solent Life

4.5 Communications processes The informal communications structures of the university are partially effective at present, largely because of a relative lack of opportunities for colleagues to meet and get to know one another across the work silos of schools and faculties. Designing in opportunities for constructive dialogue and familiarisation is a short term goal. The physical aspects of a city centre campus, and particularly the mediocre socialisation enforced by modern civic travel, will make this more difficult to engender. Formal communications design will lay out how the organisation communicates with its workforce and vice versa, with the absolute commitment that staff know what is expected of them in their role, know where the university is going, and understand how they can play a part in the achievement of the institution’s goals. Equally, formal design of communications with the student population and dedicated attention to its delivery is essential. Poor training of representatives and the lack of closed loop dialogue plays a major part in the perception of many universities’ performance, reflected in aspects of the National Student Survey. Target outcome 6: A knowledgeable staff able to apply their skills to support the institution’s values and goals Target outcome 7: Staff and students actively partnered in the learning process

4.6 Knowledge business The present student population will move into a very different employment situation to that experienced by cohorts a decade ago. International mobility means that employers have alternatives for sourcing the workforce. Southampton Solent University is committed to providing its students with a serious competitive advantage in employability terms. Reducing adverse hygiene factors by exposing them more to expectations and existing practice, as detailed in current employability thinking, is insufficient. The mission must be to equip them with the tools to “create the sunrise”. This means seeking out, using and providing best practice in new and disruptive technology as an everyday part of its courses. The added value so engendered is a necessary component for preferential supplier status into the business base. At the same time, such skills will offer the ideal opportunity to build the partnership base – shared benefit and mutual need. Phase four media, and the businesses of entertaining education and informative entertainment, are the natural ground for academic staff, and these offer the opportunity to enhance reputational impact. The development of flexible learning techniques and skills places the institution at the top of the engagement ladder. Social networking, virtuality, sensory scenescapes, serious games, which will be the lifeblood of

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market communications and design development for universities and their business clients, are housed in the same intellectual space. Here is the opportunity to position the institution to lead a decade of transition and success. This also offers the prospect of removing the perceived barriers between the university and its client base, implementing fully the knowledge exchange and seamless partnership which is the student – university – employer engagement ideal. Target outcome 8: Southampton Solent University as the best centre for student employability, the partner of choice for employee training, and the centre of dissemination of modern business practice.

4.7 Staff, continuity and succession The loss of staff at crucial times can have significant adverse effect. When people leave their experiences and knowledge will go with them. In some disciplines 60% and more of university academic staff are within five years of being able to take retirement benefits. The time taken to redress the skills balance and embed the new incumbent into the rituals and rules of any post is lost productivity. The availability of a real map of what is actually going on in a role, its significance, partners, contacts, sources of information and the uses of its outputs, will reduce the costs of pick up, facilitate early embedding and reduce the lag to productivity recovery. The university needs employees who not only bring knowledge to the job, but also share what they know with others; employees who continue the process of knowledge, growth and learning throughout their careers; indeed, that we do to ourselves what we preach to others. This at the very least indicates a need to recognise employees for what they know, and in particular for what they do with that knowledge rather than just on job title and longevity. Target outcome 9: Sustainable excellence in the student experience.

5. Embedding or differentiation? The question remains as to whether a differentiated knowledge management strategy is the correct implementation, as opposed to embedding the various elements as permeation throughout the established plan set. Clarity of focus and the establishment of an “organisational champion” to drive forward the implementation are easier with a separate strategy. Yet the separation allows a gap, potentially makes this issue “somebody else’s problem”. Embedding dissipates the message and, unless focus is maintained, potentially the impact. If the cultural acceptance is sufficiently strong, either will succeed. Following extensive discussion, the university has chosen to implement an embedded model, with the primary elements contained within the Information and Communications Strategy and others distributed according to primary responsibility for delivery (e.g. succession planning within the Human Resources Strategy). Single sheet monitoring, gathering an appropriate set of associated key performance indicators (KPIs) to review the overall progress and implementation success, has been developed. The principal reasoning was based on the need for wide acceptance of responsibility for change and the desire to maintain the existing strong ownership of process aspects within the department-led operational model. A multifunctional team approach has been adopted to manage identified programmes of development which run across the organisation. This has been successfully trialled with work on the revision of the university’s approach to learning spaces in the light of changing pedagogy, technology underpinning, and student acceptance of social networking and Web 2.0 communications approaches.

6. Key aspects of kaizen There are natural strengths in the university system in approaching continuous improvement. In particular, the critical processes are well developed, often turned as a lens on staff work as academics but less frequently applied to the systems of organisation. Reflection is an art both taught and practiced. The skills base for the required analysis is established in any modern business school, and practical experience of using kaizen methods is commonplace amongst engineering and technology staff. The need to view the university as a business is sometimes shrouded by sentiment and the mythology of the academy, but we do exist to deliver a public good as well as to turn a profit. The ability to apply kaizen techniques successfully to this somewhat unique type of business depends upon development of its existing performance culture rather than substitution of a pure production mentality. However, where necessary such development may be radical. The key requirements are:

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Precision of purpose: The identification of the smaller set of activities essential to the delivery of the university mission is a precursor to improvement actions. Given the range of interests - administrative, academic, technical, managerial, learner - distillation of the array of perspectives into a consistent understanding which all will use is an essential initiation stage. Application of process thinking, not simply focused on results and outcomes: To all practical purposes, this requires bringing the same level of discrimination and analysis applied to discipline pedagogy to the other work of the university. Application of systemic thinking about the process as a whole: A range of tools applied here will offer benefits. Process mapping, optimisation and business process reengineering, the systematic learning process, the cyclical approaches of DMAIC and DMADV (Deming 2000): the development of the necessary skills in managers and support through practical implementation are essential. Development of a learning culture which permits the effective re-evaluation and change of current processes A preponderance of iconic activities, and “things we’ve always done this way” burdens university thinking. There are barriers to the development of a learning organisation culture in institutions often featuring long-serving academics, where the dual loyalty to discipline and employer is a significant factor. That such staff are themselves learning facilitators, and see such activities as things they deliver rather than practice, limits the quality of institutional learning. As with any cultural barriers, expectation, sustained practice, visible benefits, and strong, consistent leadership are the keys to progress. Suitability of span of application

The application of kaizen practices necessarily spans business units, following the path of processes which commonly extend between central and faculty-based administrative functions. This will require staff managed separately and with different primary loyalties to work together on activity elimination and efficiency improvement processes.

6.1 Identified areas for application Although the strategy work is ongoing, there are immediate areas for the application of kaizen. The student recruitment and admissions process is multifaceted and complex, has arisen through evolutionary processes rather than strictured design, crosses departmental boundaries and is subject to external pressures of government change. Its crucial importance to the success of the university, the time-critical aspects of student communication and the need to establish a relationship with potential students require a mix of information provision, marketing and practical administration functions in which simplification provides real benefits. The establishment of a single point of authority managing the relationship from first contact through to admissions processing might be considered an ideal; limiting the number of processes and individuals concerned will certainly help to reduce the likelihood of miscommunication. The growing presence of virtual learning environment-based materials and activities, because they are fully documented and substantial in a way that the stream-of-consciousness lecture is not, allows the application of proper reflective incremental development. This is particularly the case where the evidentiary base combines rich student feedback and objective evaluation of formative and summative assessment outcomes as inputs to the lecturer’s forward development of the unit. This is certainly one argument for driving forward the development of well-founded learning materials. Personnel management, academic quality and registry functions, finance, purchasing, and estates management are equally well positioned for kaizen application, particularly given the innate complexity of their interactions. In reality, continuous improvement is pervasive and naturally extensive once adopted as an approach. Staff development is needed to embed the skills, and early successes reinforce the message of effectiveness and positive transformation.

7. Conclusion In strategy terms, the joint development of KM and kaizen practices, embedded into the redevelopment of an existing strategy set and chosen to facilitate the development of knowledge value, has much to recommend it in the higher education sector. The foreseeable situational factors are appropriate to drive the need for change, and the key aspects of task reduction by doing only those things that need to be done but doing them consummately well and managing knowledge to support the organisational goals are opportune. The

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problems of change management and the need to modify significantly institutional culture are evident. Consideration of the associated methods has already given clarity to elements of the strategy set. Process improvement, based on redefined priorities and using total quality management principles, offers the opportunity of a step change in performance within the available resource envelope.

References Andrews, K. (1971): The Concept of Corporate Strategy, Homeward Il., Irwin.

Deming W. (2000): The New Economics for Industry, Government, Education - 2nd Edition., MIT Press. ISBN 0-262-54116-5 George B. (2003): Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value, Pfeiffer Wiley, ISBN 0787795281 Leadership Foundation (2008): Managing Teaching Performance, Queen Mary, University of London, Leitch S. (2006): Prosperity for all in the global economy – world class skills, HMSO, ISBN: 978-0-11-840486 -0 Masaaki Imai (1986): Kaizen: The Key to Japanese Competitive Success, O’Neill-Cooper (2001): The Principal Synergist: Combating Confusion in Knowledge Management, “Information Systems Development: Theory, Methods and Practice”, Proceedings of the Tenth Annual Conference on Information Systems Development, Kluwer Academic, New York, August 16-19, 2001, ISBN 0-306-47251-1, pp619 – 631 Rees, S. (2007): Knowledge Assets and Process Value, Viewpoint, MURG, September 2007, available from http://www.murg.ac.uk/educationalknowledgeaudit3.doc (link viewed 28th March, 2008) Robinson, A. (2006): Using formative assessment to improve student learning through critical reflection, Innovative Assessment in Higher Education, Bryan C and Clegg K (eds), Taylor and Francis Group Ltd, London (2006) Whittington, R. (2000): What Is Strategy? Does It Matter?, London, Thompson Learning, 2000

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The Concept of Knowledge in KM: a Relational Model Colin Reilly University of Melbourne, Parkville, Australia [email protected] Abstract: This paper reports progress in research into the applicability of the knowledge management (KM) paradigm to third sector organizations. Case studies and an action research project are described. Although KM techniques are in use, resource priorities, program funding, and dispersed authority inhibit KM in these organizations. There is little intentional consideration of the relationships between the values held by these organizations and the data gathered from experience. A relational knowledge domain model is proposed that shows how knowledge is derived from observing real or imagined universes, is stored in knowledge artifacts, and is operated on by natural and designed processes to realise future states of the universe being observed. This model is intended to promote a more holistic approach to knowledge and its management in values driven organizations but can be applied in any organization or community of practice. Keywords: knowledge, organizational knowledge, knowledge management frameworks, nonprofit organizations, third sector organizations, case study, action research

1. Introduction This paper reports on a research project investigating the suitability of the knowledge management (KM) paradigm for shaping information systems strategy in third sector organizations. These nonprofit, values driven organizations constitute some 10% of economic activity in monetary terms, but little is known about their management and whether strategies adopted in the commercial and governmental sectors are valid for use in the third sector. Case studies and action research within one group of organizations has found that the KM concept is not overtly in use, but many KM issues are in fact being addressed. The chief barrier to KM adoption is resource constraints, but there is also a failure to understand the relationship between the values that drive the organizations and the data and information they accumulate in their operational activities. A relational knowledge domain model is outlined to illuminate these relationships. Adoption of this model could assist these organizations to recognize their KM activities and embed them within their operational processes and activities. An overview is given of knowledge concepts and knowledge in an organizational context. The third sector is introduced and the case studies and action research being undertaken are described. A summary of findings from these studies demonstrates that KM is being undertaken in these organizations. The proposed knowledge domain model is explained.

2. Knowledge in KM In Barbara Blackman’s (2008) phrase, ‘Everything in nature and in the universe is an infinity of uniquenesses’ – knowledge is a means of taking stock and making sense of this infinity. Information systems and databases generally store data that describe facts about instances of this ‘infinity of uniquenesses’ in an objective, structured way without comment (Firestone and McElroy 2003; Mekhilef et al 2003). This low level information does not necessarily constitute knowledge and a failure to recognise this will undermine any attempt to introduce the concept of KM in an organization (Fahey and Prusak 1998). However, Moteleb and Woodman (2007) suggest that the distinction often drawn between data, information, and knowledge is distracting and irrelevant because ‘They are labels for essentially the same thing’. Leading KM frameworks rated by Lehaney et al. (2004) adopt differing approaches to the question of identifying knowledge. Lee and Kim (2001) adopt a knowledge-based view of the organization and tabulate knowledge creation, integration, combination, absorption, leveraging, and linking capabilities as sources of competitive advantage. Organizations may already have knowledge typologies to classify and structure their knowledge content. Building on the concept of knowledge as a sustainable, strategic resource, Achterbergh and Vriens (2002) propose two background functions for knowledge: assessing (perceiving, interpreting and evaluating) signals and determining appropriate responses by articulating possible courses of action, exercising judgment to select from them, and implementing them. For organizations, the important question becomes ‘About what domains does knowledge need to be produced and processed [for the organization] to remain viable?’ Holsapple and Joshi (2002) discuss knowledge manipulation activities and propose a generic ISSN 1479-4411 145 ©Academic Conferences Ltd Reference this paper as: Reilly, C. “The Concept of Knowledge in KM: a Relational Model.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 145 - 154, available online at www.ejkm.com


framework for them which they claim ‘can be applied to multiple concepts of knowledge’, but these knowledge concepts are not examined. Recognising knowledge as the key to organizational success (Lehaney et al 2004) requires the organization to have a coherent view of its knowledge concepts in use in order to assess the suitability of prospective KM frameworks.

3. Knowledge concepts Plato’s definition of knowledge as ‘justified true belief’ has been predominant in Western philosophy (Kakabadse et al 2003), but limitations of language and the variety of discourse or practices that frame knowledge suggests universal knowledge spoken with a singular voice is unattainable (Agger 1991). Pragmatically, knowledge can be considered as understanding based on experience that can be shared or communicated (Firestone and McElroy 2003; Hirschheim 1985) and provides ‘capacity for effective action’ (Argyris 1993). Putting aside Kant’s contention that reality is forever unknowable, knowledge can represent reality (Spender 1996). Observations from reality can be labelled, measured and codified systematically. A classification scheme or taxonomy can group and categorise such explicit knowledge consistently and meaningfully (Mekhilef et al 2003). Quantification and analysis of these observations and measurements can be generalized to undergird theory, but the more complex the system being observed the blunter these tools of analysis become (Holland 1995) as more variables come into play. Knowledge may be recorded in an artifact such as a book or information system, but must be assimilated and interpreted by a person to become known (Boulding 1956); it cannot by itself enable knowing (Cook and Brown 1999). The individual possessing knowledge personalizes it in a subjective manner and such knowledge therefore ‘may or may not be unique, useful, accurate, or structurable’ (Alavi and Leidner 2001). Recordable knowledge is referred to as explicit, can be transferred systematically, is seen to be objective (Nonaka and Takeuchi 1995; Polanyi 1966) and can subsist, awaiting discovery, without being known. But the greater part of knowledge is tacit, embedded in the minds and bodies of human individuals, perhaps semi-consciously (e.g. the knowledge of how to walk) and often not easily transferred to others (e.g. the knowledge of how to play the violin). Once embedded, however, tacit knowledge may appear to be effortless. (Grayson and O'Dell 1998; Leonard-Barton and Sensiper 1998; Polanyi 1966) Tacit knowledge can be labelled as skills or capabilities and is generally considered to be personal (Nonaka 1998). However, machines and systems may also be considered to possess tacit knowledge (e.g. the musical instruments from one instrument maker that have a persistently distinctive tone or feel compared to those from another firm (Cook and Brown 1999) or the undocumented feature in an information system that imposes an unformulated business rule on its users). Sensemaking within organizations occurs at an individual level and collectively through social interaction with others by sharing ideas to explore and resolve problems, utilizing organizational structures, processes, rules, and roles within the overarching culture of the organization (Cecez-Kecmanovic 2004; Weick 1990). Such collective understandings evolve historically, tested and evaluated in changing contexts, to become organizational knowledge sustaining success (Firestone and McElroy 2003; Handzic and Hasan 2003; Tsoukas and Vladimirou 2001). Particularly within an organizational context, the vehicle, form or genre selected for the recording and transmission of knowledge will itself convey information about how the knowledge is to be interpreted or used (a formal directive will be treated differently to a discussion paper; in one organization a budget may set general directions, in another it may impose strict limits) (Cook and Brown 1999). While the KM literature pays much attention to characteristics of the knowledge being managed – e.g. explicit vs tacit (Polanyi 1966) and the dimensional model proposed by Meyer and Sugiyama (2007) – the word is often used as though it is a tangible, measurable commodity and, in an organizational context, as though there is one, agreed piece of knowledge to fit a collection of data or a set of information. If we accept that the scientific method can at best produce explanatory theories but cannot attest to their truth (although it can sometimes justify the claim that a theory is false), it follows that the knowledge being managed is tentative (Popper 1979). Furthermore, it is possible for alternative perceptions of what is true knowledge to co-exist within an organization because knowledge, as distinct from data or information, is what is known by an individual person and different persons will interpret or know the same thing in different ways.

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4. KM in third sector organizations The third (or nonprofit) sector completes a view of society that also includes the public (or governmental) and for profit (or commercial) sectors. Investigation of the third sector relates primarily to its functions and governance. Information systems researchers have largely neglected this sector, being preoccupied with large firms and public sector organisations and technology use at the individual level. In turn, the third sector has been a tentative and late adopter of information systems and advanced management techniques, in part because of a lack of resources or knowledge of appropriate models and technologies. Another contributing factor to the low adoption of information systems in many third sector organisations is the absence of large scale transaction processing that was the chief precursor of information systems development and adoption in large commercial and government organisations. Hansmann (1980:898) viewed ‘the non-profit organization as a reasonable response to a relatively welldefined set of social needs that can be described in economic terms’. Third sector employment is variously estimated to be from 9 to 15% of the workforce in developed economies (Benz 2005). It follows that consideration should be given to the suitability of mainstream technologies and management paradigms for such a significant part of society, if only to encourage worker mobility between sectors. Benz cautions that for-profit sector management policies may not always be ‘best practice’ in the third sector – evidence is needed to warrant their introduction. The relatively new field of knowledge management presents a different, more encompassing approach to information systems as it attempts to enable organisations to both produce knowledge from their information resources and link that knowledge to the knowledge held by their staff and embedded in their processes and records so as to improve organisational performance and effectiveness. This research seeks to investigate the applicability of knowledge management concepts to the third sector. Two complementary research approaches have been taken within the one umbrella third sector faith community in one first world country so as to minimize cultural differences.

5. Research studies A small number of case study organizations have been investigated by the author. ChildCare is an organization accommodating and fostering children in need in a medium sized metropolitan city. WelfareOne is a statewide organization delivering a variety of welfare services in widely dispersed locations, many as an agent for government bodies. WelfareTwo is similar to WelfareOne but is about twice the size and operates in a different state. Both WelfareOne and WelfareTwo are among the largest social welfare agencies operating in their respective states. Interviews have been conducted with CEOs, board members, and operational managers in these organizations. The researcher is also a participant in a knowledge-related project being implemented by FaithFed. FaithFed is a metropolitan-based church with many local operating outlets or parishes grouped in regions. The project is seeking to collect demographic data and urban planning information in order to develop strategies for future growth and alignment of its property resources with operational requirements. FaithFed has a complex structure, with remunerated leadership supported by decentralized local voluntary management groups. While the organizational structure appears to be hierarchical, there is in fact an emphasis on consensual decision making, although the roles and responsibilities of participants are fluid and subject to often conflicting interpretation.

6. Findings ‘Knowledge’ is not a prime focus of the movers and shakers in the welfare organizations under investigation. Managing relations with stakeholders, delivering services, and recruiting and developing staff within tight resource constraints are the key issues. Also of importance is influencing policy and seeking to change society, but these take second place to meeting the needs of clients and staff. While none of the interviewees claimed to be focused on ‘knowledge management’ (a new concept to most), all spoke in terms of strategy, personnel, information systems, infrastructure and research. Several themes emerged that relate to the concept of knowledge management. Information to come from professional and operational staff may give further insights.

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6.1 Governance and strategy All agencies investigated believed they have adequate systems for recording and reporting on the delivery of services. This is the main focus of their information systems, which are often mandated by the government body funding the service. The systems are reporting and compliance focused, used principally for operational purposes. Little use is made of the data for trend analysis or research purposes, and in some cases ownership of the data may be with the sponsoring funder, not with the agency delivering the service. Funders are provided with ‘the data they ask for’, which may not be the data they need. The CEO of WelfareTwo commented that there is ‘much more knowledge that we collect than we use, [there is a] lack of time to interpret it; a strong tradition within the community sector that emphasizes service delivery, rather than research and evaluation and review [and] probably a lack of skill on the part of some staff’. The chair of WelfareTwo noted that although many aspects of their services were highly regulated, the agency was not subject to the same level of corporate regulation as taxpaying entities. This may be a factor in the difficulty in discovering knowledge about the third sector generally, e.g. for benchmarking purposes. The agencies attempt to influence public policy and have funded research to help argue the case on behalf of their clients. They also do this through their membership of peak advocacy organizations. Some knowledge is gained through pooling information with other agencies, ‘although there are some agencies that won’t share at all’.

6.2 Stakeholder relationships The main focus is on clients (customers). While the agencies have good knowledge of their individual clients in relation to particular services, they lack the ability to understand natural collections of clients such as families as well as they might. Because different services are funded from different programs there is little infrastructure to enable a holistic approach to client needs. The agencies have differing levels of knowledge about their donor and volunteer stakeholders. They generally hold the view that the relationship with the parent church is patchy, with a lack of appreciation and knowledge on both sides. There is a reluctance to rely too heavily on technology for communications and knowledge sharing – in the words of the CEO of WelfareTwo ‘Because, what that does is actually disassociate you with the faces, with the people you are trying to engage. In this work, principally, you want to engage people in the tasks that you are trying to do.’ WelfareOne’s CEO said ‘my role is to have a relationship with the premier, ministers, the directors-general at the top level’ and this process and its outcomes could not readily be documented. When his successor is appointed, the organization would be acquiring ‘either their skills and/or their network’.

6.3 Personnel WelfareTwo is ‘passionately committed to the professional development of its staff’ according to its chair. Training and development programs, with regular performance reviews, is probably the principal KM activity of all the agencies. There is an expectation that knowledge gained in professional development will flow to peers and colleagues. WelfareOne uses the performance appraisal process to encourage staff to document their knowledge for wider use and has adopted a matrix management system to diminish silos within the organization. On the issue of succession planning and the retention of knowledge, WelfareTwo’s CEO commented ‘that there should be some things, some approaches, some ways of thinking that when I go, ought to go’. His agency is also attempting to transfer experience by introducing a mentoring system. The agencies are particularly vulnerable to the loss of knowledge when staff leave: ‘You can’t replace the knowledge and experience that someone has, who has been there for years and years. No matter what they put down on paper, you can’t replace that, because it’s intuitive, most of the time.’ WelfareOne is undertaking a skills audit of staff. The skills/capabilities component is the most relevant aspect of the model for the agencies at this time.

6.4 Processes ChildCare is documenting its policies and procedures. A relatively small agency, it has been heavily reliant on the tacit knowledge of its staff. The other agencies have developed substantial policy and procedure resources and are looking for ways to make them more readily accessible by using intranets with search engines etc.

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Every quarter clinical teams in ChildCare examine a random sample of behavioural, emotional, or injury incidents to learn from them and assess whether systemic changes could prevent their recurrence.

6.5 Infrastructure The three agencies all now have a PC network supporting their staff, with most workers having adequate access to this infrastructure, although there are differing levels of sophistication of staff in their ability to use available technology. All the agencies are geographically dispersed and rely heavily on the computer network for communications, complemented by opportunities for staff to meet for both operational and ‘community of practice’ purposes. WelfareOne attempts to leverage the features of standard programs rather than implement special purpose knowledge applications (e.g. public folders and contacts in Outlook for knowledge sharing and mimicking their physical file structure in their server directory structure). A common dilemma is the contracting system for service delivery, which the agencies believe undermines their ability to fund infrastructure. Unless knowledge management initiatives are embedded within the particular service, it is unlikely that they will be resourced. In the words of WelfareOne’s CEO ‘you get bugger all really to deliver highly complex services, and the capacity for us to grow corporate infrastructure is really limited’.

6.6 Property strategy project This project was presented to FaithFed’s central governance body for approval and to regional bodies for information. The opportunity was taken to survey the participants on their support and attitude towards the project at this point. There were 112 attendees at five meetings and 56 responses (50%) were received. This found a positive response to the project, albeit with some critical comments. Respondents acknowledge that FaithFed’s property decision making has suffered due to lack of knowledge or inadequately known processes. The perceived greatest barriers to using knowledge efficiently are: ̇ Resistance to greater information-sharing ̇ Inadequate understanding of the information and knowledge that already exist ̇ Inadequate understanding of the types of information and knowledge that IT is capable of generating. The major information needs are: ̇ Consolidated information and consistent indicators ̇ More accurate reports ̇ Availability of information for the broadest base of users ̇ Powerful tools for data analysis. Respondents believe strongly that this project will improve the decision making capacity of FaithFed’s governance bodies, and almost as strongly that it will improve their capacity to contribute to such decision making. They also believe that the project should help FaithFed leaders to develop strategies and identify underlying trends and issues at the macro level, and that it can help local leaders to understand their demographic environment and respond to it more effectively. Major challenges facing this project include the organisational culture, lack of ownership of the problem, and maintaining a focus on the project in the face of competing operational demands. Additional comments strongly support the project, but also warn that it will require considerable commitment and resources, with a need to reach agreement on valid indicators. Workshops have since developed some key performance indicators, principally based on available data collections, supplemented by some additional items to cover perceived gaps. The most interesting observation of the feedback sessions is how different participants interpret the data presented according to their own mindsets of how FaithFed should operate. No clear evaluation process has been put in place and there is some concern that there may not be sufficient provision for ongoing maintenance of the information once the initiating consultants have completed their work.

7. Knowledge domain model The knowledge domain model in Figure 1 depicts the knowledge concepts described in section 3. It was initially developed because the subjects in the study described in sections 5 and 6 appeared to have a

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limited understanding of the scope of the ‘knowledge’ that might be included in a knowledge management system as distinct from a database or particular information system or application. As organizations are relational by nature the proposed model is also relational, showing how knowledge derived using the scientific method can be related to more speculative forms of knowledge. The model describes what is often left unexplained as an undifferentiated ‘black box’ as in, for example, Duncan and Weiss’ (1979) organizational knowledge base. At the foot of the model a timeline indicates a potentially infinite number of past, present, and future states of whatever universe is being examined – this could be a real industry, organization, or country or a realm of literature or the imagination. Data can be collected, extracted, or observed from past or present states of this universe and once recorded become explicit knowledge artifacts (Kolb 1976). The large box of knowledge artifacts represents explicit (or potentially explicit) knowledge that can be recorded in some way. The first level of generalization is descriptive – data are classified and measured. Then theories explain the data and may have predictive power. Descriptive knowledge and theories are given meaning and understood through stories of various kinds and these enable the knower to imagine and plan for a changed future state. Constraints may limit the use of knowledge and they themselves also constitute knowledge. All these explicit knowledge artifacts may be interpreted through the prism of a genre. Genre can refer to the literary form that provides us with a frame of reference for interpreting the artifact (a novel is read differently to a textbook) and also to the physical characteristics of the artifact (the position of a newspaper story implies different levels of importance). In an organizational context, the genre used may have implications for how an item of communication is interpreted or acted upon (for example, e-mails compared to formal memos). (Cook and Brown 1999) There is also knowledge of processes that operate within the observed world – natural processes can be described and utilized, but designed processes (technology) can build on these to create new knowledge. Knowledge about processes is used to develop machines and systems that are capable of producing outcomes from inputs, some of which may also constitute knowledge. All this knowledge may be recorded in some form of knowledge artifact (a document, a machine, a DVD, an information system), which in turn can be possessed by persons or organizations and can be known or interpreted by persons. The ability to carry out a process is a skill or capability (tacit knowledge) developed through experience by persons who may exercise them in the interests of organizations (firms, associations, public bodies …) or communities (families, neighbourhoods, communities of practice, nations …). Communities/organizations, persons, and skills/capabilities held by persons (as distinct from capabilities embedded within machines and systems) are shown outside the explicit knowledge box, although knowledge about them might be observed, collected, and extracted as explicit knowledge artifacts. Although the presentation of the model suggests a hierarchy of knowledge (from data to ontologies to theories to stories), it should be read rather as descriptive of the kinds of knowledge possessed by an organization or individual that encompass both the social side of knowledge construction as well as that derived scientifically (McAdam and McCreedy 1999). The model is generic, and could be used by any organization. However, recognition of the ‘story’ dimension of knowledge that gives historical, political, sociological, etc. context makes it particularly suited for use by third sector organizations, where ‘goal definition and performance measurement is far more complex than in profit oriented firms’ (Helmig et al 2004:103). Nevertheless, all organisations need to take account of their context and the constraints that apply to them (if only to identify strategies to change or overcome such constraints), so this model may have universal utility.

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Figure 1: Knowledge domain model

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This knowledge domain model does not attest to truth or validity nor does it attribute values to the various types of knowledge, but it can help an organization to embed the use of them all within its operations. A simple example would be the observation that disruptive behaviour in children is associated with poor nutrition. This could lead to the development of a theory explaining a causal relationship and proposing an appropriate diet for adolescents. The adoption of such a diet might depend on the development of stories that personify the issue to motivate carers to promote it and provide strategies for teenagers to persuade them to consume it.

7.1 Reflection The organizations under investigation can be said to be values based. Their raison d’être is to fulfil a mission – to promote a faith in the case of FaithFed, to help those in need in the case of the welfare organizations – not to earn a profit for shareholders or govern in the interests of citizens. Although profit and good governance are not the prime motivations for these organizations they find it difficult to articulate other meaningful measurable outcomes to assess their performance. As a faith organization, FaithFed claims to promote the highest form of knowledge; the welfare organizations claim to be motivated by that faith. In this context the word knowledge may be ambiguous and the concept knowledge management can be perceived by organizational members as somehow containing or diminishing the truths these organizations espouse. Yet it is clear from these case studies that these organizations do manage knowledge. A means of connecting the observed world to the faith world is needed to enable KM techniques and practices to be used with integrity. An earlier draft of the model was presented by the author to a national conference of welfare agencies in late 2007 using a series of slides to explain the various components of the model and how they interact. It was well received, but constraints of time precluded any discussion or formal evaluation. Feedback from one interviewee responsible for information systems suggested that the model helped him to think of his data in a th wider context. The model as presented at the 9 European Conference on Knowledge Management in September 2008 has been modified to recognise the capabilities of machines and systems as knowledge artifacts. While all the organizations under investigation have reasonably robust budget planning and monitoring processes, none have more than a cursory information strategy. They are conscious of the need to catalogue the skills and capabilities held within their organizations and to identify gaps. If this were done in the context of the knowledge domain model it may lead to a wider review of their knowledge holdings, needs, and processes.

8. Conclusion Knowledge management occurs in third sector organizations regardless of whether the concept is formally recognized and adopted. Third sector organizations are constrained by resource limitations and rely largely on staff recruitment and development strategies to acquire the skills they need. Policy and procedural documentation record explicit knowledge and communications technologies and opportunities for personal interchange are used to disseminate knowledge. There is widespread support for the discovery of knowledge, but it is subject to diverse interpretation and consensus on how to apply it is difficult to achieve. The knowledge domain model proposed in this paper attempts to explain the relationships between different types of knowledge. It shows how knowledge objects or artifacts relate to the ‘real (or imagined) world’ being observed and recognises that knowledgeable people are needed to utilise knowledge within communities and organizations. It is suggested that this model will assist organizations to take a holistic approach to knowledge issues, enabling them to relate objective data to their values. This model can be tested in the context of the continuing case studies and action research being undertaken by the author.

References Achterbergh J, Vriens D J, 2002 "Managing viable knowledge" Systems Research and Behavioral Science 19 223-241 Agger B, 1991 "Critical theory, poststructuralism, postmodernism: their sociological relevance" Annual Review of Sociology 17 105-131 Alavi M, Leidner D E, 2001 "Review: Knowledge management and knowledge management systems: Conceptual foundations and research issues" MIS Quarterly 25 107-136 Argyris C, 1993 Knowledge for action (San Francisco) Benz M, 2005 "Not for the profit, but for the satisfaction? – Evidence on worker well-being in non-profit firms" Kyklos 58 155-176

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Blackman B, 2008 "Uniquely Barbara", in Compass Boulding K E, 1956 "General systems theory - the skeleton of science" Management Science 2 197-208 Cecez-Kecmanovic D, 2004 "A sensemaking model of knowledge in organisations: a way of understanding knowledge management and the role of information technologies" Knowledge Management Research & Practice 2 155Cook S D N, Brown J S, 1999 "Bridging epistemologies: The generative dance between organizational knowledge and organizational knowing" Organization Science 10 381 Duncan R, Weiss A, 1979 "Organizational learning: implications for organizational design", in Research in Organizational Behavior Ed B M Staw pp 75-123 Fahey L, Prusak L, 1998 "The eleven deadliest sins of knowledge management" California Management Review 40 265276 Firestone J M, McElroy M W, 2003 Key issues in the new knowledge management (Boston, MA: ButterworthHeinemann) Grayson C J, O'Dell C S, 1998 "Mining your hidden resources" Across the Board 35 23-28 Handzic M, Hasan H, 2003 "The search for an integrated KM framework", in Australian studies in knowledge management Eds H Hasan and M Handzic (Wollongong, N.S.W.: Wollongong, N.S.W.) pp 3-34 Hansmann H B, 1980 "The role of nonprofit enterprise" The Yale Law Journal 89 835-901 Helmig B, Jegers M, Lapsley I, 2004 "Challenges in managing nonprofit organizations: a research overview" Voluntas: International Journal of Voluntary and Nonprofit Organizations 15 101-116 Hirschheim R A, 1985 "Information systems epistemology: An historical perspective", in Information systems research: Issues, methods and practical guidelines Ed R Galliers (Oxford: Oxford) pp 28-60 Holland J H, 1995 Hidden order: how adaptation builds complexity (Reading, Mass.: Addison-Wesley) Holsapple C W, Joshi K D, 2002 "Knowledge manipulation activities: results of a Delphi study" Information & Management 39 477-490 Kakabadse N K, Kakabadse A, Kouzmin A, 2003 "Reviewing the knowledge management literature: towards a taxonomy" Journal of Knowledge Management 7 75-91 Kolb D A, 1976 "Management and the learning process" California Management Review 18 21-31 Lee J-H, Kim Y-G, 2001 "A stage model of organizational knowledge management: a latent content analysis" Expert Systems with Applications 20 299-311 Lehaney B, Clarke S, Coakes E, Jack G, 2004 Beyond knowledge management (Hershey, PA: Idea Group Publishing) Leonard-Barton D, Sensiper S, 1998 "The role of tacit knowledge in group innovation" California Management Review 40 112-132 McAdam R, McCreedy S, 1999 "A critical review of knowledge management models" The Learning Organization 6 91101 Mekhilef M, Kelleher D, Olesen A, 2003 "Terminology", in European Guide to Good Practice in Knowledge Management pp 1-16 Meyer B, Sugiyama K, 2007 "The concept of knowledge in KM: a dimensional model" Journal of Knowledge Management 11 17-35 Moteleb A A, Woodman M, 2007 "Notions of knowledge management systems: a gap analysis" Electronic Journal of Knowledge Management 5 55-62 Nonaka I, 1998 "The concept of 'ba': building a foundation for knowledge creation" California Management Review 40 40-54 Nonaka I, Takeuchi H, 1995 The knowledge-creating company (Oxford: Oxford University Press) Polanyi M, 1966 The tacit dimension (Garden City, NY: Doubleday) Popper K R, 1979 Objective knowledge: an evolutionary approach (Oxford: Clarendon Press) Spender J-C, 1996 "Making knowledge the basis of a dynamic theory of the firm" Strategic Management Journal 17 4562 Tsoukas H, Vladimirou E, 2001 "What is organisational knowledge?" Journal of Management Studies 38 973–994 Weick K E, 1990 "Technology as equivoque: sensemaking in new technologies", in Technology and organizations Eds P S Goodman, L S Sproull and Associates (San Francisco: San Francisco) pp 1-44

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The Socratic Dialogue in the Work Place: Theory and Practice Dan Remenyi1 and Paul Griffiths2,3 1 Trinity College Dublin, Ireland 2 Birchman Group, Latin America 3 Pontifica Universidad Catolica, Peru [email protected] [email protected] Abstract: From recent research it emerges that addressing questions such as: How can an organisation harness collective intelligence to improve business performance? and What data is required to build efficient and effective knowledge based systems? are critical for organizations to succeed in the knowledge society (EIU, 2007). Organizations are aware that knowledge is essential for their survival in dynamic markets, and that intellectual capital is a valuable asset. But what most organizations´ leaderships are not clear on is how to create and manage this intangible asset. It is known that investment in training is essential, but it is often unclear how this investment may be converted into improved performance? It is well established that effective knowledge management requires a culture of sharing ideas, but how do organizations foster this type of exchange? Davenport & Prusak (1998) pointed out that if as the aphorism says, Knowledge is power, why should anyone want to share it? This paper proposes the Socratic Dialogue (Remenyi, 2007) as one of the tools organizations can use to facilitate organizational knowledge building and exchange. The Socratic Dialogue may also be used to promote communities of practice. It facilitates the construction of knowledge through discourse based on personal experience and this can create a culture of knowledge sharing. It also promotes people being critical of prevailing ideas. The paper explores the Socratic Dialogue and its process; it illustrates its application through the analysis of two cases; and finally articulates some reflections on how to make it work effectively. Keywords: Socratic dialogue; knowledge management; community of practice; organisational learning.

1. Learning too passive It is now being thought that too much learning is passive. Too frequently learners and even researchers accept the authority of the written word, or the opinion of teachers or university professors. Furthermore the availability of substantial amounts of data on the web has led to a relatively unquestioning acceptance of the content of electronic media, whether it is right or wrong. Although it is difficult to generalise, this type of learning can be superficial and of limited duration. In contrast to this superficial approach to learning what is actually required is a more intellectual activity on the part of the learner which encourages a greater degree of discovery and reflection, and self learning. Learning through discovery or self learning normally has much more meaning for the learner and has a greater chance of becoming internalised by the learner in a more enduring way. When this is accompanied by reflection then the importance of the experience is often brought home in a way that it will not be quickly forgotten. Learning though discovery can be facilitated by dialogue or conversation, especially if it is well focused and directed at suitable issues. The dialectic which, according to Plato was first employed by Socrates is generally regarded as a useful model or prescription for this type of learning. The traditional dialectic was originally conceived as a conversation between two people. Socrates is reputed to have engaged individuals in the market place in Athens in controversial conversation and arguing with them one at a time. He is said to have been a past master at this and was always able to point out the weakness and the fallacies in other people’s argument. He most surely must have been a difficult man to encounter as he was the original prototype of what Charles Handy described in this book, The Age of Unreason1. In the 21st century this one-to-one dialectic approach would take too long to make any real impact. In any event it is now felt that perhaps more depth as well as breath can be achieved when a larger group of 1

It is only reasonable that the original source of the use of the word “unreasonable” in this context. Bernard Shaw the Nobel laureate is credited as saying, only unreasonable men can change the world and therefore progress. http://sohodojo.com/ribs/age-of-

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individuals are involved in these dialogues as this provides for a wider range of different insights. The original Socratic model relied on one ‘master’ who dialogued with the learners. The new approach allows multiple learners to benefit from multiple experiences. There is quite intentionally no ‘master’. Everyone’s experience is equally valid and the facilitator who is required for the dialogue simply plays a background role. The Socratic Dialogue is specifically not a debate or an argument. Learning will come from participants hearing themselves speak as well as engaging in listening. Most of the benefits come from active listening. Thus to be a member of a Socratic Dialogue and to get full benefit from it, an individual needs to be enthusiastic about hearing the thoughts of others2 and about listening to themselves as they explain their own thoughts.3

2. Learning through discovery Thus as described above the notion of learning through discovery is at the heart of the Socratic Dialogue which operates by creating an opportunity for reflection and interchange in a conversational setting. The objective of the Socratic Dialogue is to enhance understanding by discussing the actual experiences of the group. The group needs to be open, non-adversarial and to treat all opinions as equally valid and important. The group should be relatively small. Members of the group may come from diverse backgrounds and status levels. All members of the group should be highly competent in the language which is being used by the group. Socratic Dialogues are normally used to: 1. Engage in the co-operative activity of seeking answers to questions and to understand each other through the exploration of concrete experiences. 2. Encourages participants to think independently and critically and reflect on that thinking 3. Build self-confidence in the individual’s own thinking 4. Answer a philosophically orientated question and to endeavour to reach consensus,- i.e. to reach an outcome. But not any philosophically oriented question: only those in which the participants have relevant personal experiences to draw from. 5. Deepen individual insights and understandings and, ideally, arrive at a shared postulate on the problem at hand, built up from personal experiences. Although one of the aims of a Socratic Dialogue is to reach a consensus participants may not always reach a definitive outcome in the form of a totally agreed answer to the question. This should not necessarily be seen as a failure as the Socratic Dialogue experience itself has the potential to create reflective learning, which is a desired outcome of the exercise. The process of a Socratic Dialogue requires the use of a set of guidelines or rules which although not inflexible need to be kept consciously in the mind of the Facilitator. These rules will be explained later.

3. The process of a Socratic Dialogue 4 At the outset it needs to be said that no philosophical training5 is needed to be part of a Socratic Dialogue. An interest in learning from others is perhaps the only qualification required to derive benefit from a Socratic Dialogue. A sensitive facilitator is required who can ensure that the group does not stray too far off the subject and that no one person dominates the discourse. Before the group assembles an appropriate question needs to be established. This question needs to be well-formulated and general in nature. It should not be a long and complex question. Each member of the group needs to be made aware of the question in advance and be asked to reflect on their experience regarding the issue in the question. The only qualification for being a participant of a group is that each individual has some direct experience of the subject matter being discussed. 2

http://www.philodialogue.com/Authenticity.htm A few years ago a CNN reporter asked the US Congressman he was interviewing what drove his tendency to monopolise the microphone while in sessions. The interviewee responded, quite frankly, that he found it far more interesting when he spoke than when he listened. Clearly, this Congressman would not benefit from, or contribute to, a Socratic Dialogue! 4 or ) are prose A Socratic Dialogue is not to be confused with the Socratic Dialogues (Greek literary works developed in Greece at the turn of the fourth century BCE, preserved today in the dialogues of Plato and the Socratic works of Xenophon - either dramatic or narrative - in which characters discuss moral and philosophical problems, illustrating the socratic method. Socrates is often the main character. http://en.wikipedia.org/wiki/Socratic_Dialogue 5 See website http://www.sfcp.org.uk/socratic_dialogue.htm 3

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4. A discourse in three parts When the group assembles the first step is to ask each participant to recall a real life experience which is directly related to the question. This will be in the form of a story. A set amount of time needs to be allocated to this, perhaps two minutes per group member. A list of all these different stories should be compiled by the facilitator. When this activity is complete the group chooses one of these experiences to examine in detail. It may take a while for consensus to be reached as to which experience is the most relevant or the most effective to closely examine and the member of the group who has provided this story, and who is referred to as the example giver, needs to be prepared to recount the story in as much detail as he or she can recall and also be prepared to be questioned by the other members of the group. The retelling of the story with the additional details should take between 5 and 10 minutes. Members are encouraged to ask any question related to the example which comes into their mind. These questions may seek background information or details of the actions, attitudes and values of the individuals involved in the example. The retelling of the story of the real life experience needs to be transcribed as do the significant comments made by the other members of the group. This will become the overview of the first discourse and will be used for subsequent discussion and analysis. The retelling of the story, the discussion arising there from and the transcription may take from 60 to 120 minutes.

5. Drawing out the lessons and seeking out shared insights Once the overview has been established the participants will then draw together the lessons which have been learnt from the detailed discussion of the real life experience. This might be the raw material for a new definition or a set of rules about a process or some such outcome. In effect the group abstracts from the details discussed in the in-depth example some general rules or principles. This second discourse needs to be done slowly and carefully with as much consensus as possible being established on a step by step basis. Here any conflicts should be resolved if possible and a genuine attempt made to formulate shared insights and knowledge. This part of the exercise can take from 30 to 90 minutes. Once the content of the overview have been summarised in this way the group returns to examining the other stories which were recounted by all the members of the group in order to see if the learning points which are now established can be generalised beyond the one experience which has been examined in detail. This is an attempt to map the anecdotes told by all the group members on to the general principles established during the previous part of the dialogue. This is the third level of the discourse and may take up to 60 or 90 minutes. The final outcome is reached when the individual stories have been mapped onto the general principles now established.

6. Alpha Consulting case study 6.1.1 The firm Alpha Consulting is a young firm, barely 3 years old at the time that this research was launched. It was founded in the UK by several experienced consultants who left one of the large ERP implementation firms, with an aim at offering IT Value Management services 6 . At the time of its founding its leaders thought that “independence from IT vendors” was an essential value of the firm. In its second year the firm expanded into continental Europe through the acquisition of a mid-sized technology solutions implementation consultancy, with some niche products for the retail and fashion industries based on integrating SAP, Siebel and other industry-specific solutions. This move brought into question the feasibility of simultaneously being independent from vendors and implementing their solutions. The partners of the firm were struggling with this question at the time of the meeting where the fieldwork of this research took place.

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IT Value Management services refers to helping organisations realise the benefits of their IT investments, and comprises actions from evaluating whether its IT investments are aligned with its business strategy, to implementing training programmes to enable better use of its information systems.

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In the months before the mentioned meeting, the firm also expanded into Asia Pacific and into America by incorporating local partners and starting operations from scratch based on those partners’ local connections and intellectual capital provided by the centre. One of the lessons from this growth process is that the background of the local partners influences the particular slant of the firm. In this vein, the Americas practice was founded and developed as an IT Value Management firm similar to the UK model, but the Asia Pacific one is closer to a strategy and process improvement practice. For the Asia Pacific partners the stress on “IT” in “IT Value Management” is a hindrance, and they would rather the service of the firm be described simply as “Value Management” or “Business Value Management”. This again was one of the discussions taking place at the time of the meeting. The governance, organization and equity ownership schemes of the firm are probably closer to a franchise than to a traditional professional services partnership. The acquisition of the continental Europe implementation services took the consultant-to-partner ratio from 1:12 to 1:15, which falls in between the ratios for traditional strategy firms (1:5 to 1:7) and IT integration and implementation firms (in excess of 1:20).

6.1.2 The question and process The objective of this case study was to address the following questions: How do professional services firms approach knowledge management? How does their approach to knowledge management relate to their competitive strategy? After collecting background information on the firm, a Socratic Dialogue session with the 12 leading partners was held within the scope of their annual global planning meeting held in an off-site location near Barcelona, Spain. The participants had a corporate objective of participating in this session, which was to establish the guidelines for their firm’s knowledge management strategy. The researchers facilitating the session also had an agenda, which was to validate a strategy-knowledge management alignment framework they had previously derived (Griffiths & Remenyi, 2007). This framework is summarized in table 1. Table 1: Linking knowledge management approach to strategy (Griffiths & Remenyi, 2007) BUSINESS STRATEGY

APROACH TO KNOWLEDGE MANAGEMENT

Low on Technology-based networks Trust or Narrow Expertise Based

Quadrant I Low on People-based networks

Low on Technology-based networks Thought Leadership/Personalisation

Quadrant II High on People-based networks

High on Technology-based networks Hybrid/Utopia

Quadrant III High on People-based networks

High on Technology-based networks Productivity/Re-usability

Quadrant IV Low on People-based networks

The dynamics of the session was initiated by first agreeing on a definition of knowledge and presenting the framework for strategy-knowledge management alignment in professional services firm, developed by Griffiths & Remenyi (2007, pp. 173-6), and then using the Socratic Dialogue as a process of learning through discovery that draws on the experience of the participants. In this particular case, each participant was asked to think of a personal experience in knowledge management. Because Alpha Consulting is a relatively young firm, and the 12 participants had rich experience at other firms before joining Alpha Consulting, some of the cases brought forward were not Alpha Consulting experiences. The participants took turns to explain their example in detail while the remaining 11 listened carefully and asked for clarifications when necessary. After each of these sessions discussion was held with an aim at extracting concepts of general application that were used to corroborate or improve the framework presented at the opening of the session. The first experience to be analysed was that of one of the UK partners, followed by one of the Australian ones, then one of the continental European experiences, and in fourth place one from the Americas.

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When the continental European case was being discussed a vivid discussion emerged around the issue of whether the firm should be in the business of implementing solutions; how that affects independence; and whether it would be possible to grow at the expected rate on purely IT Value management consulting services. When the fourth experience was being discussed, the group decided it agreed with the framework presented, and that it was not worth continuing down that line but that they would find the session more productive if they now focused on using the framework for developing some principles for knowledge management at Alpha Consulting. Agreement was reached to move in this new direction. However, before moving on the group was asked to place Alpha Consulting on the 2X2 framework and, after brief discussions, consensus was reached that it sits deep in quadrant 1.

6.1.3 The outcome The group finally agreed on nine KM development principles. 1. Alpha Co will favour People Networks over Technology Networks in its approach to Knowledge Management 2. Staff will have access to all knowledge, directly or indirectly 3. Knowledge will be organised along a 2-dimension matrix, comprising industries and competences. Each industry and competence will have an expert lead reference. 4. There will be a repository with the latest Methodologies; it will have an owner and will be updated regularly 5. There will be a people repository with the CVs of all consulting staff; responsibility for keeping the CVs updated will be placed upon the individual 6. There will be a Client repository with a brief description of each Client and what work Alpha Co. has done with them. The Partner responsible for the Client is given responsibility for its updating 7. There will be a rudimentary but reliable repository tool for all re-usable material 8. Each geography will define who has access to the re-useable material knowledge system 9. Only Alpha Co.-developed, Alpha Co.-licensed and public domain documents will be uploaded onto the re-usable knowledge repository The implementation of these principles was broken down into activities which were distributed among the partners who were given responsibility for executing them.

6.1.4 Reflections Launching the Socratic Dialogue by presenting a framework of the concepts to be discussed, as in this case the strategy-knowledge management alignment framework, provides a useful spring board with which to commence an in-depth conversation among the participants. It also gave a conceptual foundation to the discussion that enabled it to arrive at a useful result: A set of guidelines for managing knowledge in the organization. From an evidence analysis and narrative creation perspective the Socratic Dialogue offers the case study researcher a way of overcoming the problem posed by polyvocal narratives of organizational change that typically emerge from individual interviews. This does not mean that the Socratic Dialogue substitutes interviews; it means that it is a complement to interviews. An interesting question is what the facilitator should do if the group decides to cut short the exercise after four cycles instead of completing the twelve cycles initially planned. There is little that a facilitator can do when there is a group of senior executives who are usually highly time conscious and goal driven – if they believe they have come close enough to saturation, where each cycle adds little, if any, new knowledge. In this particular case the researchers´ agenda, which was having a group of experienced practitioners validate the strategy-knowledge management alignment framework being proposed, had been accomplished. So it made little sense to stubbornly insist on continuing as originally planned. Moving from method to content, the Socratic Dialogue led the participants to understand the dynamics of the competitive value of knowledge: The value of knowledge bases is debatable – they are static and by the time

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knowledge components have been uploaded, they may have lost some value. It can be theorised that knowledge objects, as competitive tools, have two dimensions of value. An absolute value (intrinsic value, derived from their verisimilitude) and a relative value (derived from few people knowing them). It follows that knowledge objects loose value gradually, at the rate that other people get to grips with them (erosion of relative value); but at a certain point in time they will lose value abruptly (as they are falsified and thus lack verisimilitude). Knowledge connotes understanding, both of a set of evidence and of the ideas that have been inferred from that evidence. The essence of knowledge is structure, so part of the process in the creation of useful knowledge is to take fragments of information that are specific to a person or thing and generalize them so that they apply broadly, thereby turning private information into knowledge that many use. (Warsh, 2006, p.296). This is exactly what the group of people participating in this Socratic Dialogue have done. The method obliged them to reflect on a personal experience, thus converting this experience from tacit knowledge to explicit one that they could narrate to others. By narrating their experience the individuals presented evidence that the group used to improve their theory, while simultaneously sharing the theory within the group. The Socratic Dialogue thus proved to be a useful tool to generate a theory (explicit knowledge) grounded in empirical evidence, that was socialized and thus enabled to be used by all the members of the group. Most would agree that this is the essence of knowledge management in any organisation. Adam Smith said that what is pursued in an explanation is a “connecting principle” between apparently unrelated events, and that science is a search for the “invisible chains” that link these things and events. That is precisely what the participants in this Socratic Dialogue were doing. They were analyzing each individual experience and relating it to the previous ones through the evolving strategy-knowledge management framework.

“As a developing individual you see the world in terms of what has gone on before, in your unique trajectory, and slowly transform from an undiscriminating data-sponge to an information cherry-picker. The process of assimilating information may not now occur with the same unconditional and effortless facility as when we were young, but understanding – seeing one thing in terms of another will be increasingly possible” (Greenfield, 2003, pp. 154-5). Another lesson from this experience is that the Socratic Dialogue enables a mature process of learning, one in which the participants are pushed to discriminate evidence, helping them focus on those aspects of the personal experiences being narrated that relate to the problem they are trying to solve.

6.2 Beta-Telco case study 6.2.1 The Company Beta-Telco is one of the largest telecom companies in Chile. The country fully privatised and opened the telecommunications services in the late 1980s and early 1990s, in what is generally known as one of the most successful cases of its kind. Success here is used in the sense that it resulted in a much improved quality of service and reduced cost of service for the population, and established the telecommunications service as part of the platform that enabled the radical transformation to efficiency and growth of the Chilean economy. Chile has for many years had one of the most competitive telecom sectors in the world. BetaTelco, previously a state-owned land-line telecom service provider, has specialized in serving the corporate sector in its voice and data communications needs. Beta-Telco has also set up a successful mobiletelephony service but that is managed through a separate business unit, not included in this case study. Beta-Telco has a high degree of penetration in the corporate market, where it masters close to 60 percent market share in its traditional telecom products. Its leadership team thus realized that in order to grow it would need to have new products to offer its client base and decided to incorporate IT Outsourcing Services to its product offering.

6.2.2 The Engagement Responding to the strategy implied in the previous point, some three years ago Beta-Telco entered the IT Outsourcing Services market and won several projects, some of them large and highly visible. It created its Corporate Services Division (unit of analysis of this case study) with its sales and delivery capabilities by recruiting individuals with experience in the service, and by setting up ad-hoc partnerships to tackle each

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opportunity, but without making the structural and organizational changes that entering this new product market required. So in 2007 it decided to engage consultants to design the required changes. In the diagnostic stage it quickly emerged that one area that needed attention was knowledge management and the leadership of Beta-Telco agreed to apply the strategy-knowledge management alignment framework proposed in Griffiths & Remenyi (2007, 2008). It emerged that Beta-Telco should favour people-driven knowledge networks approach, rather than technology-based ones. It was thus decided to set up six Communities of Practice (CoP) on key knowledge areas for the company, one of which would be taken as a pilot, and the other five would follow incorporating lessons learned from the pilot. It was decided to give the pilot CoP a 5 month period for design and implementation, and that the 6 CoPs would be operating in a year. It was also decided that all 140 professionals in the Division would be encouraged to belong to at least one CoP, and that membership of a CoP would be voluntary. The next section will describe how the pilot CoP was implemented, and the role that the Socratic Dialogue played as a tool for getting the community to work.

6.2.3 Implementing Communities of Practice It was decided that the pilot CoP would be the one titled “Technological Convergence at Beta-Telco”. This had been a particularly popular one at the time of calling for volunteers to become part of a CoP. There were close to 40 volunteers that put this as a first choice, and they came from diverse backgrounds (i.e., sales, product development, pre-sales support, engineering, marketing). The number of participants accepted was finally A CoP leader was selected, on the basis of best fit with a previously designed generic CoP Leader profile. The appointee was one of the Sales Directors of the Corporate business. It was decided that the CoP would be launched with a series of face-to-face meetings in order for people to meet with each other and to start develop a sense of identity within the CoP. In future, the CoP will operate largely as a virtual community, but this requires a minimum social networking infrastructure, so it was decided to set it up in parallel with the operation of the pilot. The selected technological platform for social networking is MS SharePoint, and it was estimated that deployment of this would take some 5 months. It was specified that face-to-face meetings would happen every third Thursday of the month, in an off-site location close to corporate head-office. Meetings would have a duration of not more than 2.5 hours, and they would have one of three possible formats: (a) Presentation and Discussion, particularly suited to those issues where there is one or several experts in the CoP who could then prepare a presentation to kick-off the meeting. (b) Knowledge café, particularly suited to highly ambiguous issues, such as “What is the meaning of Convergence in Beta-Telco?” for which there were, initially, as many individual answers as the number of people attending. And (c) Socratic Dialogue, for discussing those issues in which many of the participants had personal experiences to draw from.

6.2.4 Application of Socratic Dialogue in a CoP context The third meeting of the pilot CoP was held on October 13th 2008, and took the form of a Socratic Dialogue, The question put to the participants was “Having agreed on what Technological Convergence means in Beta-Telco, what positive and negative experiences have we had in delivering this service to Clients?” Because it is a large group, it was agreed that 4 to 6 experiences would be analysed. After some 11 proposals, five of them were agreed on by the CoP members. Two were presented and analysed in the first session, and it was agreed that the remainder would be dealt with in a separate session (which was to be held on December 11th.) Interestingly, four of the cases selected were actual Beta-Telco projects, but the fifth one was a personal experience of one of the members in a prior company. Finally, only four of the cases were actually analysed because one of the example givers planned for the December 11th session left the company during the intervening period. Because in that session it was also planned to have a self-criticism instance on the way the CoP was working (so as to improve the design for the remaining CoPs) the moderator proposed and the group accepted that it was not necessary to go back to selecting another example. The proceedings of the Socratic dialogue followed closely the guidelines given in this paper, and the group arrived at a useful set of “DOs” and “DON’Ts” in technology convergence projects, organized into five quite detailed statements that range from precautions that should be taken in accepting a contract, through the way to set up a proposal team, to considerations on the cultural aspects of the Client and the need to think on change management in IT projects. When these findings were shared with senior management, the feedback was that they expect more depth in the outcomes of the CoP activity. This is a good symptom in the sense that it indicates that senior management has great expectations from the knowledge management initiative. But it also indicates that members of the CoP are expected to be more inquisitive and deeper at the time of questioning the example giver (they need to break away from excessive shyness or politeness

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towards the example giver; rarely where there more than three questions on a given example) and need to be more critical at the time of mapping each example on to the emerging theory so as to get down to more granularity.

6.2.5 Reflections After the Socratic dialogue session came to a close with all participants quite satisfied that they had reached at a useful result, a critical review session on the operation of the pilot CoP was held. People arrived at four or five areas where they believe the operation of the CoP should be changed. The first was that the members found that the CoP was not sufficiently concrete; that there are risks that there would be no specific action as a result of the CoP. This could be revealing that the members are still not fully aware of the purpose of a CoP as a means of creating knowledge and sharing it by cutting across hierarchical structures. There is a misconception among many people in the pilot CoP that a CoP is a task force to solve problems within its field of activities. This critique could also be revealing that the culture of the organization is such that its members have a low resistance to ambiguity. Another concern is that the CoP was not inclusive of members of other highly relevant units within the organization, such as Infrastructure Operations Division (IO - the people who manage the telecommunications infrastructure to serve Clients) and the Business Process Outsourcing unit (BPO - the people that actually deliver the day to day service to Clients once the solutions have been implemented). In other words, that the CoP is too closely circumscribed to the Corporate Services Division. This is a valid point and responds to an implementation design decision, that the CoP would start operating within Corporate Services and once successfully operating it will reach out to other Divisions. This was a risk management decision; the reaction is positive and indicates that there should not be cultural clashes when tackling the next phase of expansion into other areas. There were also suggestions that there should be a representative of the CoP to go out and communicate with the other CoPs and Divisions, the “findings” of this CoP. Again, this could be revealing a relatively low level of understanding of the concept and purpose of a CoP, and conditioned by the lack of the social networking infrastructure that will, in due course, serve as a natural channel for inter- and intra-CoP communications. Finally, the group arrived at the need to have a list of 5 to 10 important issues to be tackled by the CoP over the year. Again, this could respond to a lack of resistance to ambiguity on the part of the CoP members. With respect to the Socratic dialogue itself, there was no criticism and the group found it a useful and productive tool (as also the other two kinds of group dynamics applied – presentation & discussion, and knowledge café.) However, there is ample room for improvement on how it should work. The members will need to become more critical, and avoid arriving at a consensus too quickly. Discussion on each givenexample need to be more detailed, and the group needs to be more critical of the models that emerge from the Socratic dialogue. These reflection reinforces the case that for a CoP to perform its objectives, and the Socratic dialogue an instrumental tool to assist in reaching those objectives, the culture of the organization needs to facilitate both a willingness to share, and the discipline to be critical of oneself and others. This is not a commonly found combination. This Socratic dialogue was facilitated by an experienced external consultant; for the CoP initiative to develop and be sustainable in time, the company must develop its own internal people for that job.

7. Making the Socratic Dialogue work This is an exercise in learning through exchanging knowledge that leads to discovery by reflecting on the experiences described and thus the members of the group need to be able to focus on their own and others’ experiences. The group members need to be honest in the recounting of their experiences and their personal reactions to the experiences of other members. The Socratic Dialogue should be as judgement free as possible. Any suggestion that a member of the group is being judged by the other or by the facilitator will reduce the value of the event.

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Members’ thoughts need to be expressed as clearly and simply as possible. If something is not clear then it should be discussed until everyone understands the point being made. This requires at all times careful attention to the discussion. If members of the dialogue become tired then they should advise the facilitator who may call for a break for refreshments. In general, running a Socratic Dialogue for more than an hour and a half without a break is not advised. It is important that no one individual or group of individuals dominate the Socratic Dialogue. If this occurs then a member of the dialogue may ask the facilitator for a break for the purposes of having a metadiscussion. A meta-discussion involves talking about how the Socratic Dialogue is proceeding. Normally there is very little need to have these meta-discussions. When they do arise they should be concluded as quickly as possible so that the group may return to the main purpose of the event.

8. The Facilitator and the Socratic Dialogue A skilled, energetic and hard working facilitator greatly enhances the Socratic Dialogue. The function of the facilitator is to ensure the smooth running of the meeting and to bring all the members of the group into the discussion. The facilitator will normally keep the record of the different experiences and will also act as scribe for the overview of the detailed study on the chosen experience. It is important that the facilitator does not attempt to influence the direction of the discourse. The discussion may stray off the subject and provided these lapses are not too long or too far from the question, they may be tolerated. However in the end the facilitator should bring the discussion back to the issue for which the Socratic Dialogue was brought together. It must be remembered that either the facilitator or a member of the group may at any time call for a metadialogue where there is an opportunity to reflect on the course of the Socratic Dialogue itself. The metadialogue provides an opportunity for the group to reflect on itself and to ask how it is doing and possibly influence its direction if it has strayed away from the original point. As the Alpha Consulting case shows, the method is not written in stone; at the end of the day the facilitator must have the sensibility to capture the state of mind of the participants; the judgement to understand when the goal of the exercise has been sufficiently achieved; and the flexibility to alter the course of the exercise as required to keep the participants engaged.

9. Timing and the Socratic Dialogue A Socratic Dialogue may be structured in several different ways. Firstly, a Socratic Dialogue may be run as one continuous event. In such a case using a large group, say a group of one dozen people, then a whole day of eight to ten hours could be required to complete an event. Some events may require a little longer, perhaps twelve hours. Smaller groups may require less time say five or six hours. It is important not to run a Socratic dialogue if the members are tired as this will produce inferior results. If a large group is involved rest breaks are needed which of course extends the total time required. In some circumstances it may not be possible for individuals to make such a long period available. In that case there are two possible courses of action. The first is to get the participants to select a subset of polar cases amongst all the experiences proposed, and develop only the selected cases. The other is that the Socratic Dialogue be conducted in a number of parts or a number of sessions. The first session might run until the group has listed its experiences and perhaps chosen the one which they wish to study in detail. Then two or three sessions could be put aside to elaborating on the one chosen example. In this way the Socratic Dialogue experience could be obtained over an extended period.

10. Conclusions The Socratic Dialogue facilitates learning through discovery by reflecting on actual experiences. Therefore the conversation needs to be based on real experiences. These need to be discussed actively by all the members of the group who need to say what they really think and in an ideal situation the discussion needs to proceed until a high degree of consensus is reached. Thus in a Socratic Dialogue there is a need to start with the concrete and remaining in contact with concrete experience through the entire event: Proper insight

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Electronic Journal of Knowledge Management Volume 7 Issue 1 2009 (155-164) is gained only when the link between any statement made and personal experience is explicit 7 . This means that a Socratic Dialogue is a process which concerns the whole person. The members of the Socratic Dialogue should attempt a full understanding of each other. This involves much more than a simple verbal agreement. Participants should try to be clear about the meaning of what has just been said by testing it against their own experiences. In ideal circumstances the limitations of individual personal experience which stand in the way of a clear understanding should be made conscious and thereby it is hoped that this limitation will be transcended. Beware of being distracted by lesser important questions. Following a subsidiary question until a satisfactory answere is found may be useful but again it may not be. Groups often bring great commitment to their work and gain self-confidence in the power of their intellect or reason. This may mean not giving up when the work is difficult. Sometimes the discussion has to move on but it may return to the problematic issue again. An honest examination of one’s thoughts and the thoughts of others is essential. This honesty may help with the striving for consensus although consensus itself may not necessarily arise. The two case studies presented are radically different in the purpose they give to the Socratic dialogue. At Alpha-Consulting the technique is used as a one-time event to solve a specific problem (i.e., how to organise knowledge management in the firm) while at Beta-Telco it is used as a tool for an ongoing CoP to build and improve concepts. This speaks for the versatility of the Socratic dialogue, Finally, this paper stresses the usefulness of the Socratic Dialogue as a tool for organisational learning due to its characteristic of learning through connecting each individual experience with those of others, which normally has much more meaning for the learner and has a greater chance of becoming internalised by the learner in a more enduring way. It also stresses its usefulness in case study research by helping to overcome one of the notorious limitations of interviews as evidence collection tools, due to the need to deal with the polyvocal narratives of organizational change that typically emerge from individual interviews. Robert Lucas, the noted economist, once said that in arts and sciences, and particularly in the creative professions, knowledge is something that can be accumulated essentially for free, just from being around dense clouds of educated people (Warsh, 2006, p.258). In essence, the Socratic Dialogue is a tool for making this happen in the more disciplined and process oriented form expected in a business organization environment.

References Davenport, T.H. & Prusak, L. (1998) Working Knowledge: How Organisations Manage What They Know, Boston, MA: Harvard Business School Press EIU (2007) Serious Business: Web 2.0 goes corporate, A report from the EIU sponsored by FAST, p.12. st Greenfield, S. (2003) Tomorrow’s People: How 21 Technology is Changing the We Think and Feel, Penguin Books: London Griffiths, P.D.R. & Remenyi, D. (2007) Using Knowledge for Competitive Advantage in Professional Services: A Case Study, Proceedings of the 4th International Conference on Intellectual Capital, Knowledge Management & Organisational Learning, University of Stellenbosch Business School, South Africa, 15-16 October, Edited by Dan Remenyi, pp.169-178. Remenyi, D. (2007) A Note on the Socratic Dialogue,ECEG, Trinity College Dublin 2006. Saran R & Neisser B (2004) Enquiring Minds, Trentham Books, Stoke-on-Trent, 2004 Warsh, D. (2006) Knowledge and the Wealth of Nations: A Story of Economic Discovery, W.W.Norton & Company: New York

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See http://www.sfcp.org.uk/socratic_dialogue.htm

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Social Networking and the Transfer of Knowledge Graeme Smith Ordnance Survey, UK [email protected] Abstract: For the purpose of this paper, supply chain management is the process of planning, implementing, and controlling the operations as efficiently as possible within the sales and marketing environment. The supply chain spans the tracking of all transactions from the identification of prospective customers; through quote to order conversion; fulfilment; and on to post sales support. As an intense human activity customer supply chains are wholly dependent on knowledge and require social network activity to transfer that knowledge to the point of need in order to reduce process variation. This paper builds upon work undertaken previously by the author, which developed an organisational model of the social interactions affecting knowledge transfer within organisations (Smith et al 2003). This paper also discusses the problems of knowledge location, the ability to share (as well as willingness); the prevention of knowledge attrition through a programme of knowledge definition (codification); knowledge retention; and knowledge transfer across the customer interface. The argument is made that whilst much information is being shared, the knowledge that makes such information useful must also be transferred or new desired outcomes will not emerge. In order to share such knowledge, lessons were learned from three major studies that were carried out in 2004, 2006 and 2007; to determine the extent of failure to transfer knowledge within the sales and marketing supply chain at Ordnance Survey. As a result of these studies, a programme of work was put in place to identify knowledge silos, acting as centres of excellence in the supply chain putting in place a project to preserve and transfer knowledge from these silos, to facilitate learning and reduce knowledge attrition. This paper focuses on empirical evidence from these studies and the impact that this knowledge management project has had on the efficacy of the supply chain to deliver the desired outcomes. Keywords: knowledge management; knowledge transfer; social networks; supply chain; business process management

1. Background As Great Britain’s national mapping agency, Ordnance Survey is responsible for the maintenance of Great Britain’s national map archive. It is widely regarded as a world leader in the production, maintenance and marketing of a wide range of maps and topographic data products for commercial business, leisure, education and public sector administration. Ordnance Survey gained trading fund status in 1999; this allows it greater commercial freedom than would otherwise be possible for a public sector organisation.

2. Introduction For the purposes of this paper, the focus concentrates on customer orientation; the interface across the customer / supplier dyad; and the transfer of knowledge through people, process and systems. The methods of business process improvement as a means of changing culture is also reviewed. The overall aim of this paper is to discuss the role of social networks in the successful sharing of knowledge within organisations.

3. What was the problem? Sales and marketing management knew for some time that account managers and order processing staff were being distracted from the real focus of their roles and responsibilities, towards dealing with growing customer demand that was the result of process non-conformance within the customer supply chain. At the same time there were a number of widely held assumptions regarding the nature of non- conformance and what was needed to reduce it. However, senior management were persuaded that a new way of thinking was needed to address the complexity of the problem. This new approach would consider the application of systemic thinking for human systems and processes; the methods of creating, organising, and using information; and the transfer and application of knowledge. Internalising this systems view and the consequential impact on social networks should, it was felt, lead to practical and effective systemic action and process improvement.

ISSN 1479-4411 165 ©Academic Conferences Ltd Reference this paper as: Smith, G. “Social Networking and the Transfer of Knowledge.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 165 - 178, available online at www.ejkm.com


3.1 Silos There was growing anecdotal evidence that each iteration of management restructuring was driving knowledge into silos throughout the customer interface. There was also evidence that individual "experts" were acting as knowledge hubs and exerting undue influence on the efficacy of the supply chain. Enterprise wide technical and management systems are needed for the efficient sharing and dissemination of information. However, creating these processes is not in itself enough to set the process in motion, since there are a number of individual and cultural barriers to sharing information. These barriers may coincide with functional or hierarchical barriers that can lead to the splintering of organisational information; and its acquisition, and dissemination; and management structures sometimes do not facilitate the collection and dissemination of information. Management and organisational culture has a large part to play in eliminating these barriers, the difficulty in reversing this process should not be underestimated (Probst, Roub and Ramhardt, 1999).

3.2 Assumptions 3.2.1 Assumption 1: System implementation changes processes and behaviour From discussions within sales and marketing it was clear that senior management felt, that by changing the work processes within the organisation, as part of an IT solution, in order to facilitate a sharing of knowledge, then new behaviours would emerge as a direct result. Thus the new knowledge that was accessible to all would encourage learning and new behaviour.

3.2.2 Assumption 2: Systems are mechanistic in nature In discussions with employees (especially managers), there was a mechanistic view of the organisation as a machine, with the employees as cogs working within it. The focus within the company upon business process reengineering and the way it is described supports this view of the organisation as a machine that can be rebuilt, fixed and have new parts fitted. McAdam and McCreedy (1999) indicate that many knowledge management models reflect this old managerial paradigm and does not recognise the importance of the individual within the system (see Figure 1 below, black arrows are expected behaviour, and white arrows represent actual behaviour).

Knowledge Construction

Knowledge Embodiment

Knowledge Dissemination

Use Demerest 1997

Figure 1: Demerest's knowledge management model

3.2.3 Assumption 3: That the organisational systems will be rational Operational managers within the Ordnance Survey knew that there were key processes within the system that were increasingly reliant on "experts" in the back office, and that they were being used by front office staff such as account managers to help them resolve customer issues. This flow from the front to back office was increasing beginning to impact on the workload of these experts and their immediate workplace colleagues. This raised a number of concerns for senior managers such as; where was this demand coming from; the root cause; and what knowledge in the back office was being valued and exploited by the front office. McAdam and McCreedy (1999) go on to show that to ignore the social nature of knowledge

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development is to oversimplify the behaviour and to underestimate what needs to be done to develop knowledge management systems. Figure 2 below shows this increased level of complexity. Scientific Paradigm

Social Paradigm

Knowledge Construction

Knowledge Embodiment

Knowledge Dissemination

Use McAdam and McCreedy 1999

Business Benefits

Employee Emancipation

Figure 2: McAdam and McCreedy's knowledge management model It was logical, therefore, that if there is to be the requisite organisational learning, required to develop new behaviours, there must be recognition of the constructed nature of knowledge within the new system.

4. Methodology 4.1 Determining knowledge transfer within the process There was a growing realisation within the business that in order to change culture from rigid command and control to a more customer orientated culture required a completely new approach. To determine this system view of the customer interface, Ordnance Survey set up a small team of business analysts (Service Improvement Team) who specialised on systems thinking and process engineering. The objective of the team was to define the sales pipeline (supply chain) that provided value to the customer.

Figure 3: Process map showing handoffs between teams and individuals The Service Improvement Team facilitated a series of workshops over a three month period; with staff; to codify processes (see Figure 3 above), business rules and local work instructions. To provide structure and

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to prioritise work and feedback outputs from the workshops through to the systems architects; the Service Improvement Team defined the sales pipeline as a logical series of steps through which customers travel in order to obtain data products or licenses. This new end to end view helped staff to understand better the activities they were responsible for and the part they played in adding customer value. The sales pipeline was then defined as seven key stages that would help to define particular process problems. Demand Generation

Demand generation through planned and sustained market segmentation, research and communication; leading to product and service development to meet changing market needs. Defined within the scope of the overall Corporate Strategy.

Pre-sales activity forecasting and researching specific requirements for markets and customers identified as potential targets from our demand generation processes.

Service

Specific product and licensing quotes defined by current business rules; pricing model; and contractual T&C’s.

Signed T&C’s and valid orders for processing.

Support

Order processing and packaging, bill too; and ship too customer details; and courier details.

Complete invoice details of licence; product details; customer holdings; and bill too details.

Provision of technical support to help customers’ develop added value from our products and services. Identifying sales leads and opportunities and passing them back into the sales pipeline.

Figure 4: The sales pipeline The identification stage of the pipeline includes the identification of new markets; new prospects within existing markets; and the production of marketing collateral aimed at stimulating market growth. New leads are then qualified by sales managers and pre sales technical consultants; and for those that passed as genuine opportunities, proposals would be presented through negotiations with the clients. Once acceptance of these proposals had been reached an order would be raised, fulfilled, and invoiced. The final stage of the process involved post sales activity ranging from dealing with enquiries and complaints through to post sales technical consultancy.

4.2 Demand audit Having defined the people, process and IT systems extant within the sales pipeline, the next objective was to audit volume within the pipeline in terms of customer demand and the amount of human resource required to manage this demand. The scope of the audits was the whole of sales and marketing and included teams outside of sales and marketing such as Credit Control (Finance) and Data Supply (Product Management) who managed key stages in the end to end process. To date there has been three audits, 2004, 2006 and 2007 covering some 200 staff. Staff were asked to record time for a calendar month against a list of activities within the sales pipeline. Resource was measured in terms of hours spent serving the customer and getting it right first time (value add); and the amount of effort required to rework activity for the customer as non- conformance (process failure), in other words process variation from the process standards set. The hours recorded by each member of staff was converted to salary cost plus expenditure and then annualised to provide the total annual costs of all staff involved in the audits.

5. Findings – 2004 audit The study population included some 200 staff responsible for delivering marketing collateral; account management; customer service; pre and post sales activity. The response rate was 90%.

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5.1 Demand audit output At the end of the audit the data was aggregated, analysed and profiled against the sales pipeline. This method of statistical analysis was delivered back to the teams involved, and assumptions on the results clearly stated. Staff were then asked to participate in workshops to verify the data results and challenge the assumptions made. Initial workshops were process based including staff from various teams across the supply chain. A second series of workshops were conducted on a team by team basis. The reason for this was to try and capture the root cause of non-conformance from the process perspective and the business (team) perspective. This resulted in a more balanced view of the root cause of failure and each workshop acted as a "sanity check" on the quantitative and qualitative data collected so far. The data analysis and workshop output was then presented to the Senior Management Board to gain buy in on the findings, conclusions, recommendations, and the action plan required to prioritise and address process nonconformance. The first audit took place in July 2004; results were analysed through August and September, with staff, and the results and recommendations presented to the senior management board in October. The 2004 audit presented a number of challenges to the Senior Management and Service Improvement Teams. Firstly, the volume of data and its' comprehensive nature required an agreed structure to analyse and report the audit findings – the sales pipeline. Secondly, there was the scale and complexity of nonconformance; nobody had hitherto been able to present such a comprehensive picture regarding failure in both social network activity and IT systems. And thirdly, the need to gain consensus and agreement on the data findings and agree a programme to prioritise work to improve the customer experience. To address these challenges the audit data was rigorously analysed and the findings aligned to the sales pipeline framework. This view made it easier to communicate the findings back to participants, in a process view that they could easily recognise and understand. The results confirmed managements' view that account managers were spending too much time on post sales activity rather than stimulating sales and new business. The audit results also gave management a great deal of detail on this resource imbalance as the construct of the audit and subsequent data analysis brought into sharp relief the process activity that lay at the root cause of generating process nonconformance. The 2004 audit identified £1.05 million of process non- conformance, which equated to 21% of the total salary bill for sales and marketing activity. As a result of the 2004 audit, a programme of process and service improvement was recommended and accepted by the senior management team.

5.2 Implementation The consensus view was that a lot of the issues raised by the audit were widely known; what had not been appreciated was the nature and extent to which these issues had an impact all the way up and down the sales pipeline, and the attendant cost. It was this new perspective that galvanised management and staff alike to clearly articulate the root cause and put forward business cases for process and IT improvements, underpinned by the costs of non- conformance derived from the demand audit data.

5.3 Knowledge experts One of the more surprising results was the high levels of failure demand that some members of staff were having to deal with, some were dealing with levels of non-conformance that were as high as 80% of their total effort employed. Closer inspection of the data and workplace analysis of activities measured, revealed the nature and extent of the role these individuals were playing within the social network. The most revealing aspect of their role was the fact that the rest of the organisation was using them as knowledge experts. They were being exploited for their knowledge; the position they held in the value chain; their propensity to help others solve customer problems; and, to a certain extent, by their own management who left them alone simply because they "got things done" and helped the team achieve their key performance indicators. As a result of staff movements and retirements these individuals were having to deal with increased demand and conversely were becoming a scarce resource and a growing risk to the business. Their own lack of capacity to create and innovate change in the process, due to volume pressures was reducing their ability to transfer knowledge to others. Of immediate concern to management was the high degree of risk that this built into the process. Individuals leaving their role would see a collapse of the social network previously dependent upon their knowledge.

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5.4 Knowledge transfer To address the known risk of knowledge hubs the Service Improvement Team identified the key role players within the various processes. A series of workshops were conducted to establish the extent of the expertise that these individuals had in order to define exactly the range of skills and competencies employed. At the same time social network analysis was used to map the knowledge "foot print" of each knowledge hub and their area of influence across the business; as well as the input to and output from each knowledge hub (knowledge flow and volume). The human system was dealt with as a matter of priority in order to substantially reduce this risk. The business analysts completely re- mapped the processes around the knowledge hubs and identified the knowledge requirement at activity level as they went along. The process mapping was used to codify tacit knowledge for future transfer; and define roles and responsibilities.

5.5 Process definition Apart from the work previously done on a pricing and licensing model there was almost a complete absence of any clearly defined end to end process. The most that existed within the sales pipeline were local work instructions at team and an individual level. The lack of clearly defined process maps showing process handoffs between teams and individuals had a huge impact on the amount of resource that was not aligned to the sales pipeline; leading to high levels of failure demand. This lack of definition was a major source of discussion at subsequent workshops. This absence of process maps led to job creep, as individual responsibilities were allowed to grow at the expense of neighbouring roles and responsibilities. In some instances this led to job overlaps. This overlap caused severe problems as staff transferred on promotion, personal development or exited the business; as managers recruited to backfill these vacancies discovered, often too late that the job description bore no relationship to the scope of the role the previous incumbent actually fulfilled. Additionally, subsequent recruitment created gaps in the process handoff that took some time to fill through unplanned training and job role reconciliation with neighbouring staff in the process. Once the process mapping stage was complete the knowledge gathered was rolled up into a knowledge and learning programme (see Figure 5 below) to transfer knowledge skills and competencies. Skills matrices were defined for each member of staff to firstly, measure individual capacity to fulfil the requirements of the role; and secondly, to monitor personal performance as a basis for establishing future training needs. What Do I Need To Know?

Implementation

Knowledge

How Will I Know I’ve Succeeded?

Criteria

Footprint

Skills

How Will I Deliver It Technically?

Attitude My Attitude When I Deliver It?

Figure 5: Knowledge learning cycle: Communication to staff on the structure of the Knowledge and Learning Pack

5.6 IT systems The root cause of sales managers spending too much effort on post sales activity rather than generating sales was finally identified. The audit identified the problem as one related to order processing and the clarity of invoicing. The quote to order conversion process was not as smooth as it should have been due to a

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number of previous IT improvements being de-scoped. The result was that manual workarounds in the order processing areas were allowing order errors to creep into the IT system. Subsequent invoices sent to customers with information based upon these orders were increasingly being queried by customers, and sales managers were spending increasing amounts of time trying to resolve these queries; and at the same time call volumes in the contact centre were beginning to overwhelm service desk agents. Prior to the audit there were a number of stalled IT improvements and requests for change (RFC), that had been scheduled to resolve quote to order problems and invoice accuracy. These IT improvements attempted to automate the business rules that govern pricing and licensing. As a licensing authority these business rules are complex and not easily replicated in IT systems. The demand audit identified process and knowledge gaps where changing business rules had not been replicated through RFCs in the IT systems as they were waiting for IT system architect resource. This meant staff having to create manual workarounds without necessarily codifying what these were. Additionally, RFCs had no cost metrics to help prioritise the work required to implement these changes. Process nonconformance costs from the demand audit were aligned to the RFC schedule to prioritise this work and implement them.

6. Findings – 2006 audit As a consequence of the work done after the 2004 audit it was decided to benchmark improvements with a second audit in 2006. The 2006 audit was structured along the same lines as the 2004 audit with some improvements to clarify activity and to align results from both audits. The 2006 audit showed that failure demand had fallen from 21% of total cost in 2004 to 14% in 2006. This was the equivalent of stripping out £0.4 million worth of process non-conformance on an annual basis. This released process capacity (£3.3 million, 46% of total cost) to transfer resource to selling activity in the pre- sales part of the pipeline. £10,000,000

£0.5m £0.9m

£1.9m

£1,000,000

£100,000

£10,000 Identification

Qualification

Total 2004

Proposal

Acceptance

Fulfilment

Invoice

Post sales

General admin

Total 2006

Figure 6: Total sales pipeline resource 2004 – 2006. Note: The Y axis is on a logarithmic scale to help clarify the data; the data shows the annualised costs to serve through the sales pipeline.

6.1 Total demand profile The 2006 audit highlighted some significant movements in the demand profile. Further detailed analysis of the data at a team and individual level told us the direction and total value of this movement. Some of this movement was partly due to the elimination of non-conformance in the sales pipeline. It was this reduction that allowed senior management to realign resource towards demand generation in the pre sales part of the pipeline. This movement could take place as a result of process improvements on proposal, invoice and post sales activity; leading to a corresponding increase in identification, qualification and fulfilment (see figure 6 above).

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6.2 Total non-conformance profile The cost of non-conformance fell by £0.4 million over an 18 month period between the two audits; the most significant reductions were in the proposal to post sales parts of the sales pipeline (see figure 7 below). These savings were largely due to facilitating the transfer of knowledge through the knowledge and learning programme (see figure 5 above). £1,000,000

£100,000

£04m


Qualification

Failure 2004

Proposal

Acceptance

Fulfilment

Invoice

Post sales

General admin

Failure 2006

Figure 7: Total non-conformance 2004 – 2006

6.3 Team non-conformance The impact of this reduction in non-conformance at a team level is illustrated in Figure 8. The Data Supply Team is responsible for quote to order conversion of data requests and dispatching them to customers. The 2004 level of non-conformance was particularly high in the pre sales part of the pipeline up to acceptance and in the post sales part of the pipeline after fulfilment. The drop in non-conformance recorded in 2006 was due to process automation brought about by the results of the 2004 audit and increasing the accuracy of order processing increasing the accuracy of invoices leading too reducing volumes of customer enquiries.

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£100,000

£10,000


Qualification

Failure 2004

Proposal

Acceptance

Fulfilment

Invoice

Post sales

General admin

Failure 2006

Figure 8: Total non-conformance Data Supply Team 2004 – 2006 The impact of this process improvement can be seen in Figure 9 below. This shows the total cost of resource employed by the Data Supply Team along the sales pipeline and the realignment of team resource (worth £424 000) between the two audits. £400,000

£300,000

£200,000

£100,000

$Identification

Qualification

Total 2004

Proposal

Acceptance

Fulfilment

Invoice

Post sales

General admin

Total 2006

Figure 9: Total sales pipeline resource Data Supply Team 2004 – 2006

7. Findings – 2007 audit Concomitant to the realignment of the cost to serve in Data Supply shown in 2006 (see figure 9 above); an additional £130 000 worth of resource was redeployed (figure 10 below) to other parts of the business due to an overall drop in demand, driven by increased process efficiencies.

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£400,000

£300,000

£200,000

£100,000

$Identification Total 2004

Qualification

Proposal

Total 2006

Acceptance

Fulfilment

Invoice

Post sales

General admin

Total 2007

Figure 10: Total sales pipeline resource Data Supply Team 2004 – 2007

7.1 Overall findings of the 2007 audit The total number of respondents in 2007 was the same as that for 2006. 89% of the population completed the 2007 audit. Over the three audits, non-conformance in 2006 fell by 35% against the benchmark of 2004; and fell again by 34% in 2007 against the previous audit in 2006. Figure 11 below shows a sustainable realignment of total resource in the sales pipeline. The effort in fulfilment dropped as a result of continuing introduction of automation in order processing. Costs to serve are continuing to be maximised as resource in general administration continues to show an audit by audit rise over the three audits. This has had the effect of reducing overall cost to serve on account support activity as support effort moves from high value resource (sales mangers) in terms of cost, to low level resource cost in administration. This is highlighted by the rise in demand generation activity (see figure 4) between the 2006 and 2007 audits as sales staff start to increase activity in demand generation and post sales support parts of the pipeline.

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£10,000,000

£1,000,000

£100,000


Qualification

Total 2004

Proposal

Total 2006

Acceptance

Fulfilment

Invoice

Post sales

General admin

Total 2007

Figure 11: Total sales pipeline resource 2004 – 2007

8. Was the problem due to ignoring Social Architecture? It was the idea of social architecture affecting interpersonal relationships, structures, leadership, communication and, therefore, the successful passing on (or not) of knowledge that led to the publication of a series of papers from 2001 – 2003; and was of particular interest to the Service Improvement Team. The work of the Service Improvement Team established that the real challenge to knowledge transfer was one of communication. All communications models show filtering and ‘background noise’ as key elements in the success (or not) of the message and understanding transfer. By rethinking learning as being framed by the social architecture, it was seen that this background noise was acting as a filtering system. For example, emotions at work have always been acknowledged to have an impact but, increasingly, it is seen that they will seriously affect the effectiveness of the outputs of any system (Clutterbuck and Megginson, 1999; Weisinger, 2000). They will always affect the potential receiver and will change over time.

8.1 Personal character traits The degree with which staff, are prepared to transfer knowledge depends on their dominant character trait at the time. The dominant character trait will depend upon the emotional condition of the individual governed by current stimuli and /or past experience. The Service Improvement Team did find evidence of the rate and quality of knowledge transfer being conditioned by personality and the environment that prevailed leading up too and between the first two audits. Between the first two demand audits of 2004 and 2006, the organisation conducted a staff opinion survey on a wide range of issues. Detailed workshops with a focus group from the Customer Service Centre (some 35% of the 2004 demand audit population) suggested staff were unwilling to participate in process creativity and innovation to improve service delivery. The main issues were management and leadership; lack of trust due to “a blame culture”; and the lack of defined boundaries between roles and responsibilities. Once these issues were seen by staff as being addressed, there was a noticeable improvement in the rate of creativity and innovation. Basically staff were simply “keeping their heads down” until such times as a more enlightened management was in place and that they trusted the new regime.

8.2 Knowledge transfer As the Service Improvement Team began to close off remedial actions identified through demand audits, knowledge experts in the system, and the lack of knowledge transfer; levels of non-conformance began to fall (see figure 12).

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£1,000,000

£100,000

£10,000 Identification Qualification Failure 2004 Failure 2007

Proposal Acceptance Failure 2006

Fulfilment

Invoice

Post sales

General admin

Figure 12: Total non-conformance 2004 – 2007 The introduction of the knowledge and learning pack in 2006 (figure 5) was designed to capture the tacit knowledge of the experts in the system; and through a programme of codifying and retraining, knowledge transfer could take place. Figure 13 below highlights the impact that this programme had on the number of staff dealing with levels of non-conformance greater than 15% of their total effort. In 2004 the total number of staff was 60, by 2006 53 were dealing with less non-conformance; a drop of 88%; and in 2006 the number of staff was 69 and by 2007, 58 were dealing with reduced levels of non-conformance; a drop of 84%. Pipeline

MU

Identification

Marcomms

Quote to order

PSU Sales

2004 >=15% -

Commercial Sales Consumer Sales Invoice and fulfilment

1 -

2007

6

5

6

6

5 3

1 -

-

5 3

5

5

1

1

CSC

28

22

30

18

Digital Supply

11

11

6

6

5

5

2

2

Finance Post sales support

11

3

Pricing & Licensing

2006 >=15%

-

12

Partner Sales

2006

PPSS

-

Total

60

53

8

7

69

58

Figure 13: Reduction in non-conformance with knowledge experts 2004 – 2007

8.3 Space Creativity is not an event, it is a process. During the workshops between the first two audits it was an often expressed perception that staff did not have the time to change the way they do things. Some processes mapped were running to near capacity in relation to the number of people employed on it. There was a lack of thinking space that negated staffs ability to be creative, and initiate change, through successive approximations of the desired end result. It was soon realised that the Service Improvement Team were in fact fulfilling this requirement. Creativity involves a shift in the focus of attention and mode of thinking as we attend to what is working and not working. It can be individual or shared, involve instant judgement or long term testing. In most cases there are many shifts between these two modes of thought. Robinson (2003). People don’t have enough time to learn when process are running too or just above capacity. An exclusive focus on efficiency can discourage learning; managers who overemphasize results can subtly discourage technologies, skills or

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practices that make new approaches viable (Edmondson 2008). In a customer service environment staff have to have space to encourage the sharing of analysing insights, questions and problems.

8.4 Reward systems Currently, the organisation is implementing a new performance related pay system related to behaviours, skills and competencies, which are hoped, will act as a major incentive within the organisation. However, unless the employees see process key performance indicators directly relating to the new performance related pay system, such a reward scheme will fail to support the successful implementation of new behaviour. At present there is no evidence that the new reward scheme will encourage process creativity and innovation. In fact, should reward be received without processes working as hoped, this will reconfirm old behaviours and make successful implementation of changes to process innovation even less likely.

8.5 Power By definition intentional networks have at their centre a knowledge hub actor who is a gatekeeper to the creation and transfer of knowledge. The focus of process demand on these players is predicated on their ability to expedite the creation, acquisition and transfer of knowledge required. This can create positions of power within the network where the player may exercise a dominion over others in the network according to social conditions and personal character traits exerted at the time of exchange. Intentional networks are "egocentric" networks that arise from individuals and their communication and workplace activity Nardi et al (2000). These networks are personal; in contrast to communities of practice where workers inhabit a shared cultural space, intentional networks are the creation of individuals. Joint activity is accomplished by the assembling of sets of individuals derived from overlapping constellations of personal networks. These individuals have to create sufficient shared understanding to get work done, but such understanding must be collectively constructed rather than existing historically in an ongoing community or organization. An intentional network is often much more distributed than a community of practice. Workers are not thrown together in situationdependent ways or assembled through outside forces. Instead, work activities are accomplished through the deliberate activation of workers' personal networks.

9. Conclusion This paper has shown that many knowledge management implementation problems are about the way the processes and systems for knowledge creation are being developed in isolation from the social systems of the organisation. Rather than being a process problem, poor knowledge emergence from a new system is more likely to be a communication and learning problem where there is a failure to engage with the individuals who are within the system. However, at present many of these issues do not seem to be taken as seriously as they need to be within the organisations themselves. Organisations do not spend enough time diagnosing the root cause of failure to transfer knowledge within the process. Social networks exist for a reason, either to make an existing process work or, alternatively, to by-pass the codified process due to failure in people who may be wedded to the security of known relationships and wont change; or IT systems incapable of automating process requirements. Merely codifying the process as maps and local work instructions is vital but is nowhere near enough to anticipating entropy in the process as customer demand begins to drift away from the capability of a process to deliver the need of that demand. In many businesses it is this gap that increases in size due to management nescience as they focus on process output, by which time it is too late, rather than process input (knowledge transfer through social networks). It is this unconscious focus on outputs that cost organisations so much. By spending more time on organisational diagnosis of knowledge, how it is created and ultimately transferred (or not as the case may be) that benefit will accrue sooner, money will be saved and the pain outlined in this case study avoided. Knowledge management caters to the critical issues of organisational adaptation, survival, and competence in an increasingly discontinuous environment. Essentially, it embodies organisational processes that seek to maximise the combination of data and information processing capacity of information technologies, and the creativity and innovation of the people who work in it. Up until now the maxim seems to have been that investments in new technology somehow results in improved business performance; well, managers should ask themselves whether success gained so far was due to an era of competitive advantage based upon the management of information as opposed to one based upon knowledge creation in a learning organisation.

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Enterprise wide knowledge management systems are not a panacea for solving the problems of sharing knowledge in a company that aspires to be a learning organisation. Important though such systems are, it is the successful management of business processes as well as the cultural issues that relate to the way people are prepared, and have an ability, to share information that are of fundamental importance. The best practitioners have long realised that its people that matter, and that it is the human aspects of knowledge creation that are critical for facilitating an enquiring mind and sustaining the learning organisation.

References Clutterbuck, D. and Megginson, D., 1999, ‘Emotional Intelligence in Executive Mentoring’, Plenary Paper at 6th European th th Mentoring Conference, November 25 - 26 , Cambridge University. Edmondson, A., 2008, the Competitive Imperative of Learning, July/August Harvard Business Review. Goleman, Daniel, 2006, Social Intelligence, London, Hutchison. McAdam, R. and McCreedy, S., 1999, ‘A Critical Review of Knowledge Management Methods’, The Learning Organization, 6.3;91-100. Nardi, Whittaker, and Schwarz - It's Not What You Know, It's Who You Know: Work in the Information Age: First Monday, volume 5, number 5 (May 2000) http://firstmonday.org/issues/issue5_5/nardi/index.html. Probst, G. and Raub, S. and Ramhardt, K. (1999): Managing Knowledge, Building Blocks for Success, Chichester: Wiley. Robinson, Sir Ken,. 2003, Out of Our Minds – Learning to be Creative, Oxford: Capstone. Russell, B., 1961, History of Western Philosophy, London: Routledge. Smith, G., Blackman, D. and Good, B. “Knowledge Sharing and Organisational Learning Facilitation through Social Architecture Modeling”. Journal of Knowledge Management Practice, 4 (2003): http://www.tlainc.com/jkmpv4.htm. Weisinger, H., 2000, Emotional Intelligence at Work, San Francisco, Ca: Jossey Bass.

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Balancing Learning and Efficiency Crossing Practices and Projects in Project-based Organisations: Organisational Issues. The Case History of “Practice Groups” in a Consulting Firm Saverino Verteramo and Monica De Carolis University of Calabria, Rende, Italy [email protected] [email protected] Abstract: Project-based organizations have received increasing attention in recent years as an emerging organizational form to integrate diverse and specialized intellectual resources and expertise. A typical problem of these structures is the difficulty in sharing knowledge in and across projects. Besides, project teams are temporary and therefore much learning may be lost when they disband. Very often the storage of lessons learned is not effective; the databases are not widely used and the people are too engaged in their projects to share knowledge or help other people cope with similar problems. The inherent contradiction between organizing for meeting short-term, project task objectives, and the longerterm developmental nature of organizational learning processes asks for innovative organizational solutions. How can a project-based organization be simultaneously oriented to project-outputs and learning? The processes of knowledge capture, transfer and learning in project settings rely heavily upon social patterns and processes. This situation emphasizes the value of considering a community-based approach to managing knowledge. Several authors suggest adding a new “dimension” (a “home” for learning, integration and development of specialized/technical competencies) following a “Crossing-approach” that leads to design organizational solutions in which project teams (focused on their strengths: outputs, processes or market segments) and learning groups, like CoPs, coexist. The aim of the paper is to investigate the critical points in designing and implementing these innovative organizational solutions (e.g. group design, reward system, participation modes, support mechanisms, formalization degree) that are difficult to manage and little investigated in the literature. We conducted an in depth case study research of an Italian IT Consulting firm: VP Tech. This analyzed firm introduced a particular kind of CoPs called “Practice Groups” (PGs) in a typical project-based organizational structure. The Practices are knowledge domains (expertises) transversal to the projects or market areas. VP senior executives chose the main strategic practices to be developed and decided to aggregate the main internal experts (PGs) around these knowledge domains. The goals of PGs are to strengthen and diffuse the knowledge developed during previous projects, to monitor the state of the art, and to support professional training and problem solving for people involved in the projects. In VP Tech, PGs represent a: ̇ network in which specifically useful information can be found; ̇ learning locus in which professional competencies can be improved; ̇ social network in which both knowledge exploitation and exploration take place. The conducted case study shows: ̇ the different phases and “crisis” in implementing this organizational solution; ̇ the specific and innovative mix between formal and informal organizational levers adopted; ̇ the circular and virtuous relation between projects and practices. Keywords: project-based organization, communities of practice, knowledge sharing, groups design

1. The issue of Knowledge Management in project-based organizations According to Newell et al. (2006), there are several and “dichotomous” views of knowledge and Knowledge Management (KM). Following the perspective defined “knowledge as possession”, knowledge can be made explicit and shared among persons and groups. Examples of codified knowledge can be “artifacts” such as intranets, documents, databases, manuals, guidelines and reports. Critics of this view instead emphasize that knowledge is situated in social and organizational practice and relationships. Knowledge (or rather knowing) is not so much possessed as social and embedded in practice (Lave and Wenger, 1991). According to Brown and Duguid (2001), it is the shared know-how (that develops from shared experience within communities or networks of practice) that enables the sharing and circulating of explicit knowledge. ISSN 1479-4411 179 ©Academic Conferences Ltd Reference this paper as: Verteramo, S. and De Carolis, M. “Balancing Learning and Efficiency Crossing Practices and Projects in Project-based Organisations: Organisational Issues. The Case History of “Practice Groups” in a Consulting Firm.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 179 - 190, available online at www.ejkm.com


In a similar way, Swan et al. (1999) distinguish between cognitive and community approaches to KM. According the cognitive view, knowledge is referable to objectively defined concepts. On the other hand, the Community view sees knowledge as embedded and constructed in social networks and groups. Rather than study knowledge as something that people have, as an object that could be generated, codified and transferred, this approach focuses on the process of knowing regarded as something that people do (Bellini and Canonico, 2008). At a strategic level, Hansen et al. (1999) describe KM strategy as “codification” and “personalization”. “Codification” focuses on making knowledge explicit and spreading information. In contrast “personalization” is based on the concept of network within people can learn though dialogue (Hansen et al., 1999). Personalization approaches require space and time to enable the “getting together” of people to develop interpersonal networks. At the level of KM Systems, Alavi (2000) distinguishes between “repository” and “network” approaches. The former is based on building and implementing knowledge repositories and retrieval technologies. In the second approach, technology is used to connect people and to identify the location of different kinds of competencies. The previous introduced “dichotomies” can be compatible rather than mutually exclusive. This is a theoretical key point for the project-based organization that: ̇ generally has the tendency to follow the “Knowledge as possession” view and the “codification” approach. At the level of the project, much more often the “product knowledge” (“what” was done) rather than the “process knowledge” (“how and why” it was done) is captured. The community model or personalization strategy of KM can support the solution of these problems; ̇ has to face the inherent contradiction between organizing meeting short-term, project task objectives and the longer-term developmental nature of organizational learning processes (i.e. Bresnen et al., 2004). The following are the main problems of managing knowledge and improving learning processes in projectbased organization (Keegan et al., 2001): ̇ lack of time and reflection at the level of the project team. The project-time pressures can inhibit learning processes. Besides project teams are temporary and therefore much learning may be lost when they disband (tendency to “reinvent the wheel”, rather than learning from the experiences of previous projects); ̇ the trade-off between centralized vs decentralized approaches in knowledge creation, validation and dissemination processes. There is, in fact, the tendency to centralize learning (senior managers or specialized departments collect and validate the “lessons learned” elaborated by the team members) and to defer learning to future points in time (significant time passes among the identification of the possible improvements, their explicitation, their dissemination to the organization, the effective emergence of a similar problem, the idea of someone to reuse this knowledge); ̇ the reduced interactions with colleagues with similar competencies to exploit specialized knowledge domains. Besides, people are too engaged in their projects to share knowledge or help other people cope with similar problems. These problems are manifested in attempts to reduce the learning of project teams to simple summaries and poorly maintained databases that few people have the time to use. From an ICT point of view the main challenge is to design KMS that make knowledge re-use in and across projects easier. From an organizational point of view the problems of managing connections among people with the same area of expertise and people with different area of expertise (generally collected around a project) are crucial (Migliarese and Verteramo, 2005). According to McDermott (1999), this goal can be gained by adding a new “dimension” related to Communities of Practice (CoP) to the project-based organization. In the “Double-Knit Organizations” (DKO) Project Teams (focused on outputs) and CoPs (focused on learning) coexist. The aim of the paper is to investigate the critical points (from both a theoretical point of view and by an indepth empirical case study) in designing these innovative organizational solutions (e.g. group design, support mechanisms, formalization degree) that are difficult to manage and little investigated in the literature.

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Saverino Verteramo and Monica De Carolis

The paper has the following structure: in section 2 and 3 we underline the potential effectiveness of organizational solutions based on the crossing-approach and we present the open questions in regards to their design and management. In Section 4 we describe the analyzed case study (VP Tech) and the methodological approach used. The case study shows how a successful Italian consulting firm has crossed practices and projects (that is learning and efficiency). This organizational solution is considered a critical success factor. In the last section we draw the conclusion of the empirical research and the related lessons learned.

2. Crossing CoPs and project teams: An organizational solution for improving KM in project-based organization Organizations are increasingly using project teams to accomplish specific tasks and to increase flexibility (Newell et al., 2006). Depending on size and complexity, projects can be organized differently (Meredith and Mantel, 1995). A project, for instance, may be accommodated in a pure project organization, a self-contained section that is devoted exclusively to the project and will be disbanded when the project is completed. This solution can show some limits. In particular, a pure project organizational structure can “lose” knowledge and learning opportunities: there is no “repository” or defined sub-structure aimed at collecting and developing functional and specialized knowledge. When team’s members lose touch with their peers, they can have trouble keeping up with developments in their field (McDermott, 1999). In addition to this, knowledge related to project output is captured, but there are several difficulties in acquiring knowledge related to process (how the project has been conducted and the knowledge generated during the project). In this sense projects and project organizations require exceptionally efficient knowledge management, if they want to learn from their experiences (Kasvi et al., 2003). A first solution to support learning processes and knowledge management is to enlarge existing specific jobs by knowledge related tasks (generally in the HRM function or Information System area) or to design new ad hoc roles. A second solution is to adopt two formal axes: projects and the functions (matrix organization). In both cases: ̇ there is the problem in balancing the formal power of the new or enlarged roles or functional departments with the formal power of project managers; ̇ the potentialities of informal professional social network are ignored along with the social dynamics that can be developed and turn out useful for competitive and strategic goals. In this framework, the DKO (McDermott, 1999) that links project teams with CoPs seems to be an innovative organizational solution. Communities of Practice have been described as a “privileged locus” for learning, creation and transferring knowledge – internally as well as externally – outside traditionally known organizational networks. The focus of the research about CoPs has moved, over time, from the study of small groups and of the learning processes which take place within them, to other subjects: organizational aspects (e.g. organizational mechanisms and managerial systems to support CoPs) and the innovative potential of CoPs (with special reference to the role of ICTs) (De Carolis and Corvello, 2006). The common element of these three subjects is the view of CoP as (1) a collection of people that engage in activities that encompass a common interest and ongoing learning through practice (a CoP is bound together by shared interest in a knowledge domain) and (2) a self-organizing system based on two elements: practice and identity (Lave and Wenger, 1991). Members share interests, specific competencies, routines, formal and informal rules (Garrety et al., 2004). Generally, purpose and goals are formed around knowledge needs, are hazy (CoPs rarely have a specific result to deliver to the organization), and are medium-term. Although they are typically self-organizing, CoPs benefit from organizational supports. They need “intentional” cultivation (Wenger et al., 2002), and people should have time and encouragement to participate. Managing a community means making and developing connections between members. Some

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coordination is needed. The community coordinator helps the community to focus on the knowledge domain, maintain relationships and develop its practice; he acts as a “contact maker” (Ruuska et al., 2005). Even if size and membership are less defined and more dynamic if compared to project team, the community social structure represents a “home” for professional identity of members. It is a social network which allows members to interact regularly with a selected professional environment and to learn through the dialogues, and, in case of geographically dispersed workers, without the support of a shared physical work space. In this sense, ICT systems play a relevant role to support distance interactions and discussions, norms and ground rules. CoPs, operating within a project-based organization, allow for concentration of expertise (Garrety et al, 2004). They have flexible boundaries, no reporting relationships and are essentially self-managed and selforganizing. These are the main differences with the traditional “functions” in the matrix organization. In the same way as “functions”, they represent a form of integration and development of specialized/technical competencies. In an original way they exploit the potentialities of informal professional social networks and are often the preferred way members can get feedback from knowledgeable peers. Combining project teams and CoPs seems to be an effective way to make an organization simultaneously oriented to output and learning.

3. The open questions in crossing CoPs and project teams From a theoretical point of view, the crossing-approach seem to be an effective solution for supporting knowledge and learning processes in a project-based organization. How to implement this approach from a practical point of view seems less clear. This paper goes more deeply into emerging theoretical and practical issues in designing and managing a DKO, where CoPs and Project Teams are crossed. For example, it is difficult to balance the emergent and informal nature of CoPs with the managerial necessity for design and control. This problem can be related to the literature about “intentional cultivation” of CoPs, that is, their intentional promotion and support, and to the literature on groups design and effectiveness (Gladstein, 1984; Hackman, 1987). In order to identify the main open questions in implementing a DKO and considering CoPs as units of analysis, we have connected the two literature streams and identified the main design variables and factors that affect the effectiveness of CoPs. Moreover we have divided these elements in three classes: ̇ input variables: what organization “gives” to group; ̇ processes: how this group operates; ̇ output: what group gives to organization. For each of the classes we have identified the following main open questions (summarized in table 1). Table 1: Organizational variables and factors that affect the effectiveness of CoPs Input (what organization “gives” to group)

Process (how this group operates)

Output (what group gives to organization)

Structure design: size, membership, competences needed, roles, hierarchy Design and formalization degree of tasks Resources: time, work space (physical or virtual) and financial resources HRM mechanisms

Coordination systems used Emerging roles Communication systems adopted Group culture Identity degree

Contribution to: Strategic goals – medium term Operational goals – short term

3.1 Input variable. The main variables that organization can define to design and support CoPs are: ̇ Structure design: size, membership, competences needed, roles, hierarchy; ̇ Design and formalization degree of tasks; ̇ Resources: time devoted to group activities, work space (physical or virtual) and financial resources;

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̇

HRM mechanisms (in particular evaluation system, reward system, career development).

The “emergent” nature of CoPs and how to manage them is the first open question. Liedtka (1999) rejects the top-down approaches and the related traditional formal control systems. They would be inconsistent to the informal and voluntary dynamics that support knowledge sharing processes. Wenger et al. (2002) have a more barycentric position. They underline the possibility (1) to turn to informal control systems and a management that support the “natural” interactions performing a passive and external role (absence of interferences) or, on the other hand, (2) to turn to a strong sponsorship and to support the birth of what would arise spontaneously (identity as community member and natural knowledge flows). In this framework, it could be very useful to use planned meetings, social events, learning projects and/or the design of specific roles to carry out the knowledge management project. Scholars (McDermott 1999; Wenger et al., 2002) underline that it is possible to create “intentional” CoPs: these are intentional in their focus, start-up activities and support but, in order to develop the trust, connection and knowledge sharing it is necessary to support the natural process of Community development rather than impose an artificial one. In all cases, the management should make explicit/visible the practices and single out the Communities. This means to partially define the main tasks of CoPs and to give time and suitable spaces (physical or virtual) to employees in order to encourage and support trust based relationships and knowledge processes. Even when team members intend to share insight and information with other teams, team goals often pull so strongly on people’s time that they simply cannot find the time to do it. CoPs inevitably compete with teams for people’s time (McDermott, 1999). The technological systems to support the remote interactions are different (synchronous communication systems, resource sharing systems, group processes support systems) and can have more or less effective results depending their real use in the community. The level of involvement and the time spent in community activities should have an “organizational value”, in terms of evaluation and reward systems and carrier plans. Deci and Ryan (1985), however, argue that extrinsic rewards (e.g. monetary rewards, tangible gifts) will have a negative impact on intrinsic motivation and hence performance. Another open question is, therefore, if and how to reward. The main problems are (1) to balance formal organizational needs (control and supervision) and the natural organization of practice (knowledge developing processes) and (2) to give the adequate degree of organizational support. It seems to crop up the critical balance between formal and informal structure (Crozier and Friedberg, 1978). The level of organizational support is critical in two ways: on one hand Communities require recognition and support, but on the other hand, voluntary and informal aspects may lose their value if there is too much interference.

3.2 Processes To describe the real life of CoPs (how CoPs evolve, emerging dynamics etc.), we can observe the following elements: ̇ Coordination systems used (i.e. rules, planes, procedures, meetings); ̇ Emerging roles (coordinators, leaders); ̇ Communication systems adopted (face to face and/or virtual); ̇ Group culture (competitive/collaborative); ̇ Identity degree (awareness to be a member and level of real involvement). It is a shared opinion that groups aimed at managing knowledge are self-organized and that members choose time and modalities of participation in the group life, respecting the boundaries outlined by formal design. Several studies show that sometimes it is ineffective (or counterproductive) to define, for example, roles and coordination systems that members of CoPs only partially accept or use. More often in CoPs some role is emergent (e.g. leader, coordinator) and, in time, tacit and social behavior rules are established (e.g. when and who to contact, tools used). A first risk is that the management designs formal roles superabounded or inconsistent with the modalities spontaneously activated by the members of a CoP. More generally, organizations have to refine their ability to perceive “organizational noise” (Ciborra et al, 1984) that is the low signals about the real dynamics among members. It could be necessary to identify the emerging roles, rules and systems adopted: sometimes it is better to “follow the crowd” rather than to persist in ex-ante designed solutions.

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Typically CoP is a fragile structure that can quickly disappear when conflicts and disengagement undermine the mutual trust. These pathologies can depend both on contingent problems among members and on collaborative/competitive culture. It could be necessary (1) to pay attention to low signals of conflicts (2) to develop adequate conflict resolution mechanisms and (3) to promote a collaborative culture.

3.3 Output We can value the contributions of CoPs to the organization in terms of: ̇ strategic goals –medium term (learning path, development of core competencies, innovation processes); ̇ operational goals – short term (training systems and solution of daily working problems). When the activities/problems are ambiguous and not well defined it is difficult to define output levels, to plan activities and to define effective management control and evaluation systems. Moreover, an overly structured formal control and evaluation system can be seen as an “intrusion” and, therefore, negatively affect knowledge dynamics that are at the basis of CoPs. CoPs are created in order to face poorly defined problems of learning and knowledge creation and sharing, where classic organizational forms can be weak. In these situations, it seems to be more effective to value “contributions” of CoPs to solve new, contingent and unexpected strategic matters or operational problems, rather than to strive to design an effective ex-ante set of control variables. A CoP works well (it is vital) if it is effective in “case of emergency”.

4. The case history of VP Tech 4.1 Methodological approach This paper has been developed within a FIRB research project regarding the role of KM for the competitive advantage of SME, started in 2005 in Italy and involving several important Italian Universities. Following the case-study methodology of research (Yin, 1994) the empirical work has been conducted during the last three years: three sessions of in-depth interviews have been conducted with VP Tech top management, some “Practice Group” (PG) leaders and members of PGs. Document acquisition was also carried out (Table 2). Table 2: Plan of the conducted interviews Number of interviews 2x3 1x4

Phase Organizational Analysis and study of the KM solutions adopted Analysis of Practice Group dynamics

Timing 2006 2007

2x2

PGs effectiveness analysis

2008

The interviews, concerning the same key-points, were aimed at analysing the organizational and technological solutions adopted for KM, with particular reference to the PG’s dynamics (questions about creation and development, emergent problems, reward systems effectiveness, communications tools used etc.) and their contribution to organizational performance. The findings of this analysis have been read and confirmed by the informants themselves.

4.2 IT security: the core business of VP Tech VP Tech, established in Cosenza (South of Italy) at the beginning of 2001, operates in the IT consultancy sector. Its principal activities relate to the planning and integrated management of all that concerns IT security. VP Tech is a global partner for IT security, covering both the consultancy aspects of security organization and strategy and the realization and integration of technologies for the supply of turnkey solutions. In the following table (Tab.3) the basic facts are given.

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Table 3: Basic information on VP Tech Objective Sectors catered for Clients Certifications Staff Turnover Market Share Principal collaborations

To offer the market a group of Security services capable of combining the consultancy, technological and economic aspects in order to create value for its clients Telecommunications, manufacturing, health and public administration, and presence in the financial market Telecom Italia and TIM (telecommunications), San Paolo IMI and Intesa Sistemi e Servizi, Unicredito, Capitalia (financial institutions), Regione Lombardia – Progetto SISS (public administration), Pirelli (manufacturing) Certified in accordance with ISO 9001:2000 since 2003 Approximately 200 professionals distributed across the offices of Cosenza, Milan and Rome Approximately €20m (year 2006); €24m (year 2007); 28,5 €m (year 2008). Approximately 10% in “Italian Information Security Services” (2007 IDC data). It was 5% in 2003. Close relations with universities and R&D centres and technological organizations at national and international level and access to European funding

Currently, VP Tech has a staff of 200 professionals distributed across the offices of Cosenza, Milan and Rome and a turnover principally deriving from the realization of projects for medium-large firms. Its turnover of €24m (2007) represents the 10% of the Italian market in IT security services (2007 ICD Data). In this sector (ICT Security) the ability to innovate is a critical success factor. In fact technological development represents a driver for new forms of business in markets such as banking, telecommunications, health and public administration. These new forms of business (ICT based) require new ICT Security policies, both at the strategic and operational level. VP Tech top management thinks that an effective knowledge management policy has a central role, both at the strategic level (support of innovation) and at the operational level (efficiency in projects and in solving customers problems). The rapid dimensional growth of the firm increased this need (from 20 practitioners in 2002 to 200 in 2008). VP Tech in fact works by projects and it deals with the typical problems of projectbased organizations. To face these problems, the VP Tech KM solution currently uses: ̇ technological levers based on a centralized information management system. This system collects the lessons learned and the contributions of the individuals. Access is managed via multiple levels differentiated by role; ̇ organizational levers based on the introduction of the Practice Groups (PG) in the organizational structure: this configuration (acknowledged by top management as a critical success factor) can be seen as a particular form of DKO.

4.3 Supporting KM in VP Tech: the introduction of practice groups The design and implementation of a KM solution based on a centralized Information Management System was not a problem for an IT consulting firm used to producing and managing project documentation. Nevertheless, VP senior executives were conscious of the intrinsic limits of these solutions used to support learning and innovation. The main idea in VP has been to support the creation of groups specialized on topics relevant for the firm from a strategic point of view, where typical learning processes and dynamics of CoP develop. To this end, VP senior executives decided to select the “practices”, that is the main strategic expertise of the firms to be strengthened. Practices are topics transversal to the projects or market area: currently there are five workgroups (the Practice Groups, PG) covering different topics (three of them are explained in table 4).

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Table 4: The practice groups in VP Tech (2008) Practice Group

Focus

Members

Identity & User Management

Methodologies and Tools for IT users authentication and permission management.

40

Data privacy

Regulations and standards analysis, policy and procedures definition for secure personal data management.

15

Business Continuity

Methodologies and Tools for business continuity and for adverse events impact reduction.

15

Web application Security

Methodologies and Tools for IT security improvement in web-based applications.

15

Project Management

Methodologies and Tools for efficiency and efficacy improvement in project management.

15

The goals of these PGs are to consolidate and diffuse the knowledge developed during previous projects, to monitor the state of the art and to support the problem solving of people involved in the projects. Each employee can join a practice, depending on his competencies or will to grow professionally. PG activities are mainly voluntary and they are developed as extra-time during the work within the projects. People in PGs meet both physically (workshops, training courses) and virtually by means of forums, newsletters, and other collaborative ICT tools supporting dispersed workers (VP has three distinct offices and people often work at the customers). The nature of practice groups has been partially modified during recent years following an interesting learning path. At the beginning, these activities were absolutely informal and deliberately self-determined by the PG members: a practice leader was chosen by top management among the acknowledged experts in the practice theme, but its coordination role was soft and informal. Nevertheless, very soon this voluntary approach was not enough, due to the limited time people can spend. VP executives decided to make the PG activities more visible and formalized. Therefore, a few years later they decided to enlarge and enrich the tasks of PGs. In particular, it was decided: ̇ to design a “coordination team” supporting the practice leader: owing to the high level of their competences, practice leaders are nearly always busy and, so, they can spend little time in PG activities; ̇ to assign some formal tasks to the “PG coordination team” (for example they help the Human Resource Manager in evaluating the personal plan of technical training proposed by the employees, in supporting the professional entry in the organization, in organizing internal courses, or external learning experiences, and they can manage a training budget); ̇ to reward the efforts and the results reached by the coordination team, also linked to overall performance of the firm.

4.4 The crossing-approach in VP Tech The organizational structure in VP Tech can be considered as a form of “Double-Knit” Organization (McDermott,1999): the project-based structure has been enriched by the introduction of the internal Practice Groups. From an organizational point of view PGs are discontinuous (due to the periodicity of the work), permanent (due to the composition of the people involved) and homogeneous (due to the shared competencies of the members) groups of experts, specialized by themes and lines of service. The initial idea was to stimulate the creation of internal CoPs supporting learning and innovation. Nevertheless the real implementation has transformed the nature of PGs into something partially different from typical CoPs. Using the schema proposed in section 3, we can describe the organizational variables and factors characterizing the implementation of PG.

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4.4.1 Input We can observe a medium level of formalization for each variable: the boundaries of the PG are defined by the top management: each member since the engagement is assigned to a specific PG, even if during his carrier, the employee can choose to become a member of other PG. The top management has chosen to limit the size of PG. At the same time each PG is composed by members working on different projects (market areas) and different offices. This heterogeneous membership enables the enrichment of the problem solving processes thanks to the multiple points of view around the PG topics. New roles (the “practice leaders”) aimed to coordinate the PG activities have been introduced. During the time the coordination has been reinforced with the “coordination team”, previously described. It is important to underline that a new hierarchical relationship has not been introduced. The VP structure is not a matrix, but a project-based organization integrated by transversal groups with knowledge related tasks. These tasks are established by top-management and range from operational support in training activities to exploration of new business opportunities. The PG coordination team has a budget at its disposal to carry out its activities (150.000 Euros in 2007). With regard to HRM mechanisms, the evaluation system includes the assessment of the level and the quality of participation in PG and extrinsic rewards are provided. Recently the company portal has been enriched with tools like discussion forum, blog and so on. Each PG has now a dedicated and organized virtual space that supports the knowledge flows. A large editorialcommittee (the practice leaders are members too) manage the contents and participation levels are high.

4.4.2 Processes The PGs processes are self-determined in terms of modalities of participation, communications systems used, and emerging roles. The management has adopted a medium formalization degree of the input variables (structure, tasks, etc) and several mechanisms to support PGs (reward systems, ICT tools, financial resources etc). At the same time VP tries to respect the informal and voluntary nature of these groups and it avoids affecting group processes. The VP Tech management has demonstrated the capacity to be able “to perceive low signals”. For example, the practice leaders are primarily chosen starting from their technical competencies, but due to the voluntary nature of activities their charisma and relational abilities are carefully considered in order to make the involvement of people easier. Modalities of participation and activities are various and different among the PGs, but typically people feel free to propose new themes and to point out interesting news. Looking at the practices each employee has a map of what are the most valuable areas of interest, who and where are the experts, and how it is possible to contact them to ask for help in daily work or to improve their own competences. In the ICT sector the innovation rate is high, and the technical competences risk to be “perishable”: the active participation in the practice group life is perceived as an opportunity to keep itself abreast of the technical developments rather than a top-down additional task.

4.4.3 Output Over time PGs and their activities have taken on a central role for the firm’s overall competitiveness. Virtuous dynamics have been produced: people actively and freely are participating in PG life, offering personal availability, and pointing out news useful for the community. PGs have been able to both support the operational exigencies (in daily problem solving and in training needs) and to prove proactive and creative in exploring new technical solutions or business ideas. One of the most interesting results is that some order has been born from the new ideas that have emerged during the discussions inside the practice activities. In these cases VP, on its own initiative, has been able to propose solutions for emerging problems, anticipating client’s requests. PGs are seen as a strong element of identity both at the company and professional level. Practice leaders are often acknowledged as experts in their field outside the firm: they actively give some contribution in professional meetings, public conferences and professional or academic journals. Several common research projects are conducted with important Italian universities and research centers. In doing so, VP Tech is able to monitor the external state of the art and to strengthen its internal knowledge.

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More generally, VP Tech considers PGs as their own way towards innovation and development of core competencies. It is possible to state that PGs contribute: ̇ to the development of market insight capability: PGs represent the place in which to point out and to discuss innovation possibilities; this is a widespread and bottom-up process; ̇ to the evaluation of the gap between one’s own competencies and the competitive needs. When a new competence has to be explored, a new practice group (or a sub-group) can be created by the top-level; ̇ to the acquisition of new technical competencies. The PGs manage the training programs in their own knowledge domain; ̇ to the development of the problem solving capabilities. Thanks to PGs it is possible to know “who knows what” (Cohen and Levinthal, 1990), where to search for information about how past and similar problems have been solved (best practice). All this following a faster process than into the past. Through the Practice Groups in VP Tech a circular relation between projects and practices has been developed: the projects nourish the practices and vice versa. In the projects people acquire competencies, improving the practices through knowledge store and sharing (exploitation). In the practices new ideas are recognized and technical innovations are able to generate new projects (exploration).

5. Lessons learned and conclusions Crossing Project Teams and CoPs (Double-Knit Organization, McDermott 1999) seems to be an effective way to make an organization simultaneously oriented to output and learning. Referring both to group design literature and CoPs intentional cultivation literature, this paper analyzes the main open questions in implementing a DKO. We have identified three classes of variables/factors that affect CoPs effectiveness and are crucial in implementing DKO (see table 1). Following this scheme of analysis we have conducted an in depth case study in a successful Italian IT consulting firm. The introduction of PGs has transformed this project-based organization into a DKO. VP Tech executives acknowledge PGs as a critical key success factor. We have followed the implementation process during 3 years and we have analyzed the emerging problems and the adopted solutions. Referring to the proposed scheme, the implementing choices (previously described) have been the following: ̇ a medium level of formalization in input (what organization gives to PGs); ̇ self-determined group processes (how PGs work); ̇ operational and strategic contributions (what PGs give to organization). Over time the PGs have became something partially different from traditional CoPs. These differences are summarized in table 5. Table 5: PGs compared to CoPs Characteristics

CoPs

PGs

Support/design

Emerging from interactions. It can be internal or inter-organizational. It can be identified and supported (intentional cultivation)

Internal groups Medium level of formalization High level of support

Goals

Less defined, generic, longer term goals formed around knowledge needs

Strategic and operational goals (exploitation and exploration processes)

Size (numbers of members)

Not well defined

Small groups

Membership

Less stable, partially defined by top-management

Stable and partially defined by top-management (in starting steps)

The choice to assign operational tasks (in addition to strategic medium term goals) stimulates the community to interact frequently and on actual problems, therefore, PG is constantly active. The groups’ small size and their heterogeneous membership have been a relevant design solution. In small groups, the community dynamics (collaboration, control of disengagement, problem solving processes) are more simple and

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effective. Heterogeneous membership (members work on different projects and in different sites) supports knowledge sharing processes among projects. At the same time small groups make the design formal systems to evaluate groups’ effectiveness less necessary. PGs are considered effective if they are able to work well in “case of emergency” and if they are proactive in developing and exploring knowledge. Therefore, this paper shows how: ̇ crossing “learning locus” and Project Teams can be an innovative solution in order to solve some typical problem of KM in project-based organizations; ̇ CoPs are an effective learning locus in project settings. Communities support knowledge exploration and exploitation processes from, across and between projects. They are a network in which specifically useful information can be found, in which professional competencies can be improved and a home for professional identity; ̇ CoPs need to be “cultivated”: design efforts and various supports to CoPs are necessary particularly in the starting phases in order to comprehend the dynamics and to introduce some correction. The case study shows that the organizational top-down initiatives can partially change the informal nature of CoPs. PGs are, in fact, more structured, stable and formalized than traditional CoPs; ̇ PGs are an effective organizational solution for managing knowledge in project based organizations: the projects nourish the practices and vice versa. In the projects people acquire competencies, improving the practices through knowledge storage and sharing. In the practices new ideas and technical innovations able to generate new projects are recognized.

References Alavi, M. (2000) “Managing organizational knowledge” in R. Zmud (ed.), Framing the domains of IT management: Projecting the future through the past, Cincinnati Ohio: Pinnaflex Educational Resources. Bellini, E. and Canonico, P. (2008) “Knowing Communities in Project Driven Organizations: Analysing the Strategic Impact of Socially Constructed HRM Practices”, International Journal of Project Management No.26, pp. 44–50. Bresnen, M., Goussevskaia, A. and Swan, J. (2004) “Embedding new management knowledge in project-based organizations”, Organization Studies, Vol. 25, No. 9, pp. 1535-1555. Brown, J. and Duguid, P. (2001) “Knowledge and Organization: A Social-Practice Perspective” Organization Science, Vol. 12, No. 2, March-April, pp. 198-213. Ciborra, C., Migliarese, P. and Romano, P. (1984) “A methodological inquiry of Organizational Noise in Socio-technical Systems”, Human Relations, Vol. 37, No. 8. Cohen, W.M. and Levinthal, D.A. (1990) "Absorptive capacity: a new perspective on learning and innovation", Administrative Science Quarterly, Vol. 35, No. 1, pp. 128-152. Crozier, M. and Friedberg, E. (1978), Actors and Systems, University of Chicago Press, Chicago, IL. De Carolis, M. and Corvello, V. (2006) “Multiple competences in distributed Communities of Practice: the case of a Community of financial advisors” in Fehér P. (eds) Proceedings of 7th European Conference on Knowledge Management (ECKM), Budapest, Hungary, 4-5 September 2006 pp.116-125. Deci, E. L. and Ryan, R. M. (1985). Intrinsic motivation and self-determination in human behavior. New York: Plenum. Garrety, K., Robertson, P.L. and Badham, R. (2004) “Integrating Communities of Practice in Technology Development Projects”, International Journal of Project Management, Vol. 22, No. 5, pp. 351-358. Gladstein, D. L. (1984) “Groups in context: a model of task group effectiveness” Administrative Science Quarterly, No. 29, pp. 499-517. Hackman, J.R. (1987) The design of work teams. In J. Lorsch (Ed.). Handbook of organizational behavior. Englewood Cliffs, NJ: Prentice-Hall, pp. 315-342. Hansen, M.T., Nohria N. and Tierney T. (1999), “What’s your strategy for knowledge management?”, Harvard Business Review, Vol. 77, No 2, pp 106-116. Kasvi, J.J.J., Vartiainen, M. and Hailikari, M. (2003) Managing knowledge and knowledge competences in projects and project organisations. International Journal Project Management. Vol. 21, No. 8, pp. 571–582. Keegan, A. and Turner, J.R. (2001) “Quantity versus Quality in Project-Based Learning Practices” Management Learning, Vol. 32, No. 1, pp. 77-98 Lave, J. and Wenger, E. (1991) Situated Learning: Legitimate Peripheral Participation, Cambridge University Press. Liedtka, J. (1999) “Linking competitive advantage with communities of practice” Journal of Management Inquiry, Vol. 8, No. 1, pp. 5-16. McDermott, R. (1999) “Learning across teams: how to build communities of practice in team organizations”, Knowledge Management Journal, No.8, May-June. Meredith, J.R. and Mantel, S.J. (1995) Project management–a managerial approach. New York: John Wiley & Sons. Migliarese, P. and Verteramo, S. (2005) “Knowledge Creation and Sharing in a Project Team: An Organizational Analysis Based on the Concept of Organizational Relation”, Electronic Journal of Knowledge Management, Vol. 3, No. 2, pp. 97 - 106

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Newell, S., Bresnen, M., Edelman, L., Scabrough, H. and Swan, J. (2006), “Sharing Knowledge Across Project”, Management Learning, Vol. 37, No. 2, pp. 167-185. Swan, J.A., Newell, S., Scarbrough, H. and Hislop D. (1999) “Knowledge management and innovation: networks and networking” Journal of Knowledge Management; No. 3, pp. 262–75. Wenger. E., McDermott R. and Snyder, W. (2002) Cultivating Communities of Practice, Harvard Business School Press, Cambridge, Mass. Yin, R.K. (1994) “Case study Research: Design and Methods”, Thousands Oacks, CA, SAGE.

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Dear Diary: Recommendations for Researching Knowledge Transfer of the Complex Carol Webb Sheffield Hallam University, Sheffield, UK [email protected] Abstract: A rich-picture can unfold itself to the researcher who engages management practitioners as research participants in the task of qualitative, open-ended diary-writing while also ‘feeding’ the participant with reading material to consider and reflect on in the diary itself. The particular work referred to in this paper is the result of a three year long research project, from 2002-2005, where 13 research participants were, in such a vein, asked to write a weekly workbased diary over the course of a year – a goal which some met and others did not. The three year study sought to find out how individual managers demonstrated making sense and learning using complexity science principles in workfocussed diaries. A key insight derived offers a way forward for future research on the topic of knowledge transfer of the complex by means of diaries as a qualitative research data collection tool in conjunction with ongoing, qualitatively rich interactions between researcher and research participant. The use of diaries by researchers shows their versatility as a research tool. Diaries have been used by researchers in the evaluation and interpretation of the practice of teaching, training and learning, in the study of meaning and emotions over time, in investigations into workers’ and management’s responses to change and uncertainty, to conduct research into personal relationships, in addition to the subject of personal identity and life transition, health, and the study of diaries themselves. The domain of complexity science provides thought-provoking material that both challenges and complements perspectives of day-to-day work, thinking, and life. The ways in which people contextualise complexity science principles and other complexity science material in their work differs from case to case. While the extant literature conveyed value in making sense of experiences in working life with complexity science, there was a lack of grass-roots practical evidence from the field provided in the literature. The use of the diary as a research tool was considered invaluable in the study undertaken and insights suggest the value of the diary in researching knowledge transfer of the complex in general. The underpinning literature, the method followed, highlights of the findings, and an overview of conclusions and implications for practice and future research are provided. Keywords: qualitative diaries; knowledge transfer; complexity; research.

1. Background The research underpinning this paper was concerned with the ways in which people integrate complexity science principles into the rubric of their work-related reflection, learning and sensemaking and how that was brought to the foreground by the means of qualitative diaries. The domain of complexity science provides thought-provoking material that both challenges and complements perspectives of day-to-day work, thinking, and life. Complexity science principles such as self-organisation and emergence, for instance, question fundamental issues such as leadership, organisational behaviour, and hierarchical structures, while unpredictability, history and time set the scene for debates concerning certainty, strategy, and task management. Principles such as the edge of chaos, diversity, and pattern recognition also provide additional perspectives from which to consider and understand problems, in addition to providing stimulus for creative activities and opportunity recognition. The ways in which people contextualise these principles and other complexity science material in their work differs from case to case. Yet similarities between cases indicate that overall, as suggested by the literature, there is intrinsic value in the process in varying modes of application. The literature conveys value in making sense of experiences in working life with complexity science, as found for example in the work of Lissack (1999; 1997), and Stacey (2000; 2001; 2003a; 2003b). In light of this work, the research study embarked on a consideration of data collected around a method of research that facilitated individuals to reflect on complexity science to greater and lesser degrees in the context of their own working lives, by means of a work-focussed diary. The need for this research to be carried out in this manner, while being inspired through many early discussions with practitioners and academics alike in the context of seminars and workshops, was identified through a review of the literature. Literature reviewed encompassed the domains of complexity science, sense-making and learning (including organisational learning, the learning organisation, and individual learning), and, diaries. A critical consideration of this literature identified highly relevant issues that needed to be addressed, including a lack of: Research conducted over a longer period of time, for example, approximating a year or more; Data collection methods aiming to capture the personal reflections, narrative musings or theoretical ISSN 1479-4411 191 ©Academic Conferences Ltd Reference this paper as: Webb, C. “Dear Diary: Recommendations for Researching Knowledge Transfer of the Complex.” The Electronic Journal of Knowledge Management Volume 7 Issue 1 2009, pp. 191 - 198, available online at www.ejkm.com


abstractions on such issues as lived experiences in local situations which pay attention to the diversity of relationships in an ongoing way; Depth beyond the first person anecdotal level in presentation of research; Research that supports the data collection of many first person accounts, where the many research participants involved can be seen to be using complexity science (or not) in order to make sense of their dayto-day working lives; Data collection enabling multiple research participants to tell stories from their own perspective, in order to explore the extent to which complexity science can be integrated in the way these participants make sense and learn in the context of their working experiences; A more detailed research path which would link the data collection methods with the current state of the art in sense-making and learning relevant to working-life; Research that adds empirical value to the current domain, in order to broaden our understanding further and both question and support the theories propounded, and to suggest points of integration with sense-making and learning activities. A critical reflection on the literature pertaining to sense-making and learning and diaries was also undertaken. While the literature as a whole asserted value in making sense of day-to-day working experiences by means of complexity science, little empirical, qualitative research had been carried out to explore the different ways in which individuals may do this and how. It was judged that, in spite of the inherent limitations of the tool used in a research context, a work-focussed diary would be a good way to investigate this. It was from this starting point that the precise aim and objectives of the research, along with the chief research question, were derived. The overall aim of the research was thus defined to explore the ways in which individuals made sense of their working lives and activities by means of complexity science, as evidenced in work-focussed diaries.

2. Method followed Having defined the aim of the research, a pilot study was initiated with two research participants to trial the use of a diary in the context described above. Following this, eleven further research participants were recruited to take part in the full study. The arch research objectives being: To initiate and maintain a process by which to conduct research that would facilitate data collection on the ways people make sense of their working lives by means of complexity science; To explore how people relate complexity science to their working lives in order to articulate more fully the value perceived in this area; From the data collected, and in the context of the study, to conceptualise the way people make sense of their working lives by means of complexity science. The overarching research question the study focussed on therefore became: How do individuals make sense of their working lives and activities by means of complexity science, as evidenced in work-focussed diaries? In order to meet the research aim, objectives, and answer the research question, the research strategy followed was exploratory. A qualitative, hybrid approach was adopted that suited the research situation in terms of its participants, the researcher, the topic in question, and the grounded theory and constructivist grounded theory approaches aspired to. The interpretive paradigm guiding the action undertaken within the context of this research assumed epistemological premises of subjective, postmodern, humanist perspectives, and an ontological position of relativist, constructivist co-creation. A path of inductive, qualitative research was undertaken in this study, which was predominantly exploratory in nature, with an element of description. In the first instance, the pilot study was embarked upon to trial the diary method, and initial ideas concerning research methods were tested and refined. This stage of the research focused on the use of diaries by research participants as a tool by which to record and capture relevant data pertaining to their making sense of their working lives and in tandem considering and integrating comments on complexity science. This then led to the roll-out of the research method and recruitment of eleven more research participants. Throughout these stages of the research, the emerging findings helped to refine subsequent stages and iterations of the literature review. The exploratory nature of the research enabled the derivation of themes grounded in the emerging data. The research was loosely inspired by the survey approach and utilised data collection methods commonly associated with surveys, i.e. interviews and diaries. A hybrid interview style was adopted in which elements of the different styles of semi-structured, unstructured, ethnographic, depth, intensive, and creative interviews were applied. Diaries were utilised in an open-ended format and an interactive style of ongoing research. Thirteen individuals volunteered to write weekly, work-focussed diaries, with the intention of continuing for one year: a goal which some met, but some did not. In this period, participants were also

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emailed text-based extracts on management theory relating to the use of diaries and on the subject of complexity science (see table below) and were asked to make comments relating to these in their diary. Table 1: List of reading materials sent to diarists Item 1 2 3a 3b 4 5 6 7 8 9 10 11

General Theme Qualitative research diaries, style and format Introductory notes on complexity science Notes on a professional diary journey The termite mound; complex adaptive systems theory and key principles Further detail on complex adaptive systems (CAS) theory and how CAS are studied An image of a man looking into his own reflection in a glass ball Self-organisation and emergence The edge of chaos Diversity Historicity and time Unpredictability and the future Pattern recognition

Source Symon, G. (1998), pp. 94-117. Lewin, R. (1999). Page, T. (1996). Pascale, R. T., Millemann, M., and Gioja, L. (2000). Stacey, R. D. (2003), pp237-240 Escher

Webb, C., Wohlfart, L., Wunram, M., and Ziv, A. (Eds.) (2004),

Prior to embarking on the diary-writing exercise, participants were asked to take part in an interview, to establish the context of their own personal background in addition to their interests and motivations for taking part. Interviews were mostly face-to-face and mainly included the use of general, broad, and open-ended questions, in addition to closed-ended question probes in order to seek clarification. These interviews were held on different occasions, at the convenience of the research participant, in the period between Sept03 and Jul04. Once the diaries had been started they were sent and communicated about with participants, by email on a regular basis during the period May03 - Dec04. It was agreed that a diary reminder would be sent by email to participants on Fridays – if and when possible, and that written or graphic material would be sent by email on an irregular basis, giving the possibility for writers to reflect and comment on this material in their diary somehow, or not. The material chosen to send to diarists was selected based on my own learning ‘journey’ into complexity science and while some were extracts from books and papers I considered for early stages of the literature review, 6 pieces of writing were also written and used as introductory material to complexity science in the context of the European project I was working on at the time. This material has since been incorporated into the development and delivery of an EPSRC funded PhD research student short course on complexity science for beginners in addition to a further set of training materials on another EU funded project. Although participants were asked to send their diary on a weekly basis, they were given the freedom to choose the length, style and content of their diary, and the frequency at which they made entries in it over the course of any given week. The scope they were given to write about was 'anything they felt significant about their daily working lives and activities, the people and processes they interacted with'. The table below provides an overview of the background of the diary study research participants

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Table 2: Overview of diary study research participants’ backgrounds Diarist

Age

M/F

Nationality

Occupation

Location

A

33

F

Irish

Artist

B

36

F

British

Civil Servant

C

45

M

Irish

Consultant

London UK London UK UK (North)

D

28

F

British

Artist

E

38

M

Dutch

Consultant

F

22

F

British

Artist

G

34

M

Swiss

H

26

F

Portuguese

I

24

F

British

Network Manager Innovation Consultant Artist

J

32

F

British

Artist

K

21

M

British

Artist

L

43

M

American

M

36

M

Austrian

MD (software company) Network Facilitator

Bristol UK UK (SEast) Glasgow UK Switzerland Barcelona Spain E Yorkshire UK Sheffield UK Warwick UK Hong Kong Vienna Austria

Native Language English

English

Edu. Level Attained Masters Degree Postgrad’ Qual. Masters Degree Undergrad’ Degree Masters Degree Undergrad’ Degree Masters Degree Masters Degree Undergrad’ Degree Masters Degree Undergrad’ Degree Doctorate

German

Doctorate

English English English Dutch English French Portuguese English English English

Data generated by the pre-diary interviews as well as the diary study were handled in the same way. Guidelines for carrying out research based on a grounded theory and constructivist grounded theory approach were adopted. For interview data analysis units of text were not assigned a code because of their relevance to pre-identified themes from pre-existing literature or models. Coding was instead done in an inductive way, where the data was used to generate themes. Emergent themes of analysis were derived from the diary data generally and in relation to themes pertinent to complexity science.

3. Highlights of the findings Findings pertain to the pre-diary interviews and extracts from diaries relating to sense-making, learning and reflecting, complexity science themes and work topics. The pre-diary interviews showed that participants each had their own reservations and assumptions about how they were personally going to approach their involvement in the process. This, as desired from these interviews, established a sufficient context for communicating with the diarists and created mutual expectations about how the process would ensue. This also meant that the content of the diaries came as no big surprise. The key finding here, however, related to the use of open-ended diaries, and that upon embarking on such a diary study, research participants have their own ideas regarding the style and content of the forthcoming diary, which is then largely beyond the control of the researcher and sets the scene for the embedded-ness and rich context specificity of the ensuing knowledge transfer. Interviews revealed four main routes in which research participants had been introduced to the subject of complexity science. These included: education, learning and academia; the natural sciences; emotional triggers; and, via social interconnectivity – i.e. other people. In reference to emotional triggers, the findings support the view that the opportunity to engage in debate and conversation with a view to making a personal and emotional connection with learning material on the subject is valuable and can serve to stimulate the attention of would-be learners further. The aspect of social interconnectivity, or, the ‘people route’, acknowledges the importance of belonging to networks of people and engaging in communication with them by a variety of means in order to learn and discuss new ideas, i.e. in a knowledge sharing style. Of relevance

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here is work from the knowledge management domain and the learning tools and learning modes such as those facilitated by means of technology or in social contexts. Interviews revealed that potential areas of application of complexity science of relevance to focus on include: communication; learning and growth; seeing and understanding; and, more practical application. These findings could be used as ‘selling points’ of learning about complexity science, or in terms of what ‘added value’ it brings. This builds on the work of Lissack (1997), which suggests that complexity science metaphors fit well in organisational activities where investment in knowledge is required. Investment in knowledge, he said, referred to the ability of an organisation to effectively deal with new knowledge which could give rise to the potential for increasing returns. This would take place through improved ability to absorb and leverage new information. This knowledge represented the ‘ephemeral world, the world of ideas, of processes and change’ (Lissack 1997:297). Data collected by means of the diary study was presented according to three broad topics of relevance: 1) sense-making, learning, and reflecting; 2) complexity science themes; and 3) work topics. Sense-making, learning, and reflecting generated the common themes, i.e. where one or more diarist wrote on the theme in their diary, of: emotion; experience; intuition and instinct; the intangible, mysterious, and unexplainable; identifying paradox; sense-making and reflection; learning; conversation; debating theory; thinking; metaphors, analogies, perspective; and, observations. Unique themes, i.e. where only one diarist wrote on the theme, included: ideas and intellectual beliefs; developing a vision; finding resonance; simplification; finding meaning; obsessing; confusion; personal awareness; encountering turning points; and, visualisation. In relation to sense-making, learning and reflecting, this research revealed, by means of unearthing the themes presented above, that making sense and learning articulated in a diary is not just a one dimensional matter of analogising. It is a much more thickly, descriptive and colourful affair, deploying subtleties and nuances of thought and articulation. It is interesting to ‘hear the voices’ on non-experts speaking authoritatively from their very own experiences and points of view, often quite strongly. Individual research participants were very much in charge of their own interpretations, not following a specific formula. These interpretations and ways of articulating themselves were often vivid, imbued with personal meaning. Participants most definitely ‘did what they wanted’ in the diaries and with complexity science ideas. For example, Diarist E often articulated a very specific set of ideas that he had in mind, speaking to a potential audience he seemed to want to show his support of key ideas to. Diarists found interesting ways to discuss and mention aspects of a broad range of complexity science ideas, not just those prescribed through interaction with me as a researcher and also not fitting a specific theoretical perspective as prescribed for example by Stacey. The key point which seems to shout out here is that this perspective sees the diarist very much as an ‘artist’, where the diary is a tool for creating a ‘collage’ – a metaphor which fits Hatch’s (1997) description of the postmodern view, and at the same time therefore resonates with the relativist and multiple voice enabling mode of research this study followed. Diaries often communicated the essence of cathartic ranting in this context, coupled with personal messages – sometimes playful and humorous, tongue in cheek – to me as the researcher and audience, by turns reminding me that research participants wouldn’t be writing or trying to write in this way if it were not for me and this research. Diarists ‘talked to’ me through the diaries as if in conversation with me, or another non-existent audience. In this way the making of sense, learning and reflecting articulated upon in the diaries resonated with Stacey’s (2001) view of continual social interaction described by conversations between people, where time in the present has a circular structure, and with Weick’s position that action is tempered by reflection. Complexity science generated the common themes: understanding and reporting complexity; use, application and relevance; systems, processes and evolution; interconnectivity; ants and termites; selforganisation; emergence; chaos, and the edge of chaos; diversity; patterns; history and time; unpredictability; and, rules. Unique themes included: machines and humans; attractors; prominent figures and authors; complex responsive processes of relating; and, conversations. More so than the themes relating to sense-making, learning and reflecting, the themes that were discovered in the diary data relating to complexity science were more specifically of a context specific nature. For

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instance, in commenting in their diary on complexity science, diarists A and E in particular worked hard to either apply complexity science to talk about their own work, or in order to develop their own ideas further as to what they could do with it. Diarists expressed individually unique ways of ‘using’ complexity science ideas, for example diarist L articulated a family tragedy. There was some difficulty expressed by some diarists in relating to and communicating complexity science at some level though (e.g. diarist F, G, H, I, and D). Some diarists referred to and brought previous learning into their diary (e.g. diarist M and F). With regard to ants, termites, birds and bees, analogies and ideas associated with these by diarists were used in diaries as inspirational stepping stones of thought, showing that analogies relating to ants, termites, bees and birds are of value in the early stages of learning about complexity science and can be highly stimulating, generating much interest in the subject, but that further along the learning curve more direct analogies relating more specifically to humans are needed. Diarists could make leaps of application from principles such as self-organisation and emergence themselves to their own working lives or other experiences (e.g. diarist A, C, E, H, L, and M). In relation to the theme of ‘patterns’, diarist A applied it directly to her work, while diarist C discussed patterns in terms of the psychodynamics in his own working groups. Diarist E related patterns to Stacey’s ideas that resonated with the diarist personally, and again diarist H related the theme to problems in her own company and then proceeded to develop her own ideas and theories in a conceptualising way that resonated with Kolb’s learning cycle. Diarist I explored patterns in reference to how she would like to understand and apply such ideas and diarist L treated the idea like a problem by doing something with it and developing his own ideas further, almost creating a formula for himself by which to understand it. Diarist H, again, related the theme to problems at work and developed her own theory from this to understand it. And, diarist L used the principle in his own way of developing a formulaic type theory. In reference to unpredictability, there was a sense that where diarists mentioned or referred to it, either directly or indirectly, unpredictability was seen as a positive thing and that the diarists liked it (e.g. diarist C, G and H), and that it was seen as a more humanistic way of interpreting and accepting the world than that assumed by planning and control type management approaches (diarist L). Work topics generated the common themes: emotion, well-being and stress; time management, planning and flexibility; collaboration and psychodynamics; hierarchy, power, politics and management; work events, activities and meaning; change and transformation; creativity, play, innovation and novelty; managing complexity; tools and methods; and, organisations, humans and machines. Unique themes include: remuneration value; research and exploration; conventionality; art; identity; sustainability; and, linearity. The context specificity of the background of the diarists came through in the area of work topic themes more strongly than either of the previous themes relating to sensemaking, learning and reflecting, or complexity science. This was obviously due to the unique relationship held between each research participant and their working lives in addition to what that work constituted. However, over and above this context specificity, the domains of application implied can be generalised and therefore substantive application made. Diarist A saw work as an emotional experience and related trying to improve her time management skills, while diarist D reported encountering little stress due to her ability to plan and structure. Diarist H reported her then current ambitions to manage her life/work balance better and articulated the problems with this in the context of unpredictability and having to react to change. Diarist I also commented on her time management and planning abilities and related her experiences to edge of chaos situations that had to be negotiated around the working styles and demands of others and their differing degrees of flexibility and rigidity, dependent she said on the type of job held and the need to manage being ‘put upon’ by others. Diarist M’s view was of the balance between planning, and planning not to plan, in order to enjoy an experience more, such as, for example, a holiday. Collaboration, psychodynamics and human nature were related to in order to comment on how a diarist made decisions in that context (diarist A), in articulating their understanding of the interactions of others in the working context (diarist C), and also in postulating personal ideas contrary to mainstream ideas that might work to better describe reality (diarist L).

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Issues to do with hierarchy, power, politics, management and leadership were discussed in a speculative, ‘what if’ way inspired by complexity science by diarist A, and in a descriptive mode of articulating the events in his working environments by diarist C. Diarist E discussed his views on this topic in terms of the difference between old fashioned ways of thinking and ways of thinking based on self-organising leadership with enabling constraints. Diarist H made reference to problems in her own company and spoke of the difficulty of the role of manager. Diarist L related the entire issue to the manager’s paradox, and diarist M to political movements and regimes. Change and transformation was important to diarist A in terms of ‘changing the system’ and the struggle to survive and make things better. Diarist E questioned his role as ‘change manager’ within one organisation and suggested in complexity science terms that change was messy and could not be managed, and instead was a matter of changing things informally through conversations and influence. Diarist H found it useful to talk of change in systemic terms where lots of things were always being influenced by other things. Diarist L went through some life changing experiences whilst being engaged in the study and reported these in his diary. Diarist D reported change as it was happening in her organisation and its wider network and articulated this by means of the butterfly effect. Managing complexity and the tools and methods derived from complexity science was a topic of relevance to those with a more advanced understanding of complexity science (diarists E, L and M). It can be seen that although backgrounds were different and unique, complexity science inspired debate on some general issues. The implications of this is that making sense of and learning about work in the context of complexity science conversations is likely to generate conversation on these issues, which could serve to form part of a knowledge transfer process, initiate knowledge transfer and be useful in certain contexts and domains of application, such as the development of bespoke training materials and understanding key issues of a specific knowledge transfer objective.

4. Conclusions, implications for practice and future research This work provided multiple first person accounts and opened up new avenues of exploration and suggested some tangible ways in which learning and making sense in a work-focussed diary by means of complexity science can be improved and enhanced and utilised for other purposes – one of which it is proposed here could be the stimulation, initiation and development of knowledge transfer activities on particular themes. This applies at the level of self-directed endeavours, in the context of work, or as part of an organisational programme. This work has shown that work-focussed, personal journal-like diaries, as a vehicle for knowledge transfer in conjunction within a wider research process, can be used to reflect on and integrate personal commentary on complexity science and other complex issues in context specific ways - sometimes in personal ways in which habits were formed (e.g. in applying an idea directly to work, relating it to problems in the company, or contesting and developing an idea further in a formulaic way). The study showed that a diary can be used to make sense and learn about complexity science by: providing a space for descriptive articulation of thoughts in a richly nuanced way; allowing non-experts to firmly voice their opinion and develop their views; facilitating the exploration of new and familiar ideas from the complexity science domain in individual ways not necessarily conforming to academic theory; interpreting meaning in individual ways, not following someone else’s formula; and, articulating thought in vivid ways, imbued with personal meaning – all of which provide the meat on the bones of an embedded knowledge transfer endeavour where context and complexity are acknowledged as important. The use of a diary as a research tool has therefore been extended in the context of this study, which contributes to earlier work on the use of diaries for teaching, training, learning, the study of meaning and emotions, exploring worker/manager responses to change and uncertainty, personal relationship studies, observation of technological implementation programmes, time and measurement of daily events and experiences, personal identity studies, life transition, health, and the study of diaries (Foote, 1961; Jepsen, Mathianssen, et al, 1989; Symon, 1998; Stone, Kessler, et al, 1991; Verbrugge, 1980; Zimmerman & Wieder, 1977). The study revealed that diaries are one method which could be further developed and integrated in this context within current organisational knowledge transfer activities, or learning programmes, strategies and management systems.

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In spite of differing completion and attrition rates among research participants, this research showed that the generally intended, year-long, diary method used was a suitable tool for facilitating person to person knowledge transfer through the stimulation of thinking, reflecting, learning and subsequently capturing the personal reflections, narrative musings and theoretical abstractions on the issues of lived experiences in local situations which pay attention to the diversity of relationships in an ongoing way. Lissack (1997) said that complexity metaphors could add value in decision making and articulation of organisational processes and problems where investment in new knowledge was required, as investment in knowledge referred to the ability of an organisation to effectively deal with new knowledge which could give rise to the potential for increasing returns. This would take place through improved ability to absorb and leverage new information. This knowledge represented the ‘ephemeral world, the world of ideas, of processes and change’ (Lissack 1997:297). This research has added to Lissack’s work and validated his assertions in this context, but has shown also that the use of complexity science metaphors can, while not always changing the way managers think about the problems they face, definitely provide a language for articulating them, and thus begin to provide the vehicles and processes for knowledge transfer of the complex.

Acknowledgements I wish to thank and acknowledge Dr Fiona Lettice for her PhD supversion of the study that underpins this paper, undertaken at Cranfield University (Sept 2002 to Aug 2005).

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