Monday, September 12, 2011
Monday, May 9, 2011
Technology and Innovation Management: Teleflex Canada Case Study
Types of innovation that are carried out at Teleflex Canada
Teleflex Canada mostly practices three types of innovation. These are:
Incremental Product Innovation is the most common product innovation. In this form of innovation, improvements are made in the components to refine and improve the existing design of the product. Only minor changes are considered incremental.
Example from the case study: Under ‘SeaStar Development’ on page 4, forth paragraph says that Teleflex Canada always kept innovating and that their competitors copied their designs. But by the time the competitor launched their product, Teleflex Canada used to launch an even better product to the market, increasing the performance of the product incrementally.
The components and associated design of the product remain unchanged in the case of Architectural Product Innovation. Only the configuration of the system is changed as new linkages are instituted. Some new components are used which have the same function as the previous component. Most architectural innovations change the overall design of the system and the way the components interact.
Example from the case study: Under ‘Innovation, Technology, and Product Development’ on page 3, a Teleflex Canada Executive says that they don’t use technology that is not proven. They take pride in calling themselves ‘product developers’. They take the existing technology and tweak it to make it better and usually they don’t invent anything radically new.
Teleflex Canada also uses Process Innovation. Process innovation can be described as the innovations in the way an organization performs its business. The biggest example of process innovation in Teleflex Canada is where the Energy Product Development (on page 5, paragraph one) is being discussed. The company never builds a product before taking orders for it. They start with selling concepts along with their credibility in the market. Another example is the military cook stove called MBU. The development of ProHeat, the truck and bus heater provided Teleflex the expertise required for combustion technology and this led to the development of MBU. So Teleflex also looks at platform products where possible in order to lower their costs and utilize the already available expertise.
Reasons for success in launching new products
There are several reasons for successful launches of Teleflex products. These are detailed below:
- One of the major reasons for the successful product launches of Teleflex Canada is that they don’t just start building a product and say that the customers will come. They first try to sell their ideas and concepts to their consumers and when the consumer places the order then they start producing. This reduces their risk.
- Another reason is the risk taking appetite of the company. For example, when the SeaStar product was being developed, the CEO was prepared to take certain amounts of risks. The project required substantial amounts of investment and he went ahead. This is also shows the sound decision making skills from the management.
- Understanding the needs of their consumers. Teleflex Canada understands the needs of their consumers and puts in extra effort to make a product which is low maintenance. Their product sells because the end consumer wants it. This can be illustrated by the example of ProHeat, on page 7, under Pull-Through Strategy. An executive explains that the reason why OEMs put ProHeat in their trucks is because the end-consumer demands it.
- As described under SeaStar Development on page 4, another reason for the successful launches of their products is that they continuously keep innovating. By the time their competitor launches a similar product, 6 months have passed and Teleflex Canada launches a new, improved product thus, remaining ahead of the competition. And since their products utilize economies of scale model, their products are cheaper than the competitor’s product.
- The company promotes using the best and latest tools for production and development.
- The company has a culture of admiration for innovative engineering talent. This is one of the reasons why the employees of Teleflex Canada are strongly motivated to excel in their field (Page 2, paragraph 2).
- The company held interesting meetings between divisional and general managers. The meetings helped the managers to know where to go and who to call and the employees used to find an excuse to visit Teleflex offices.
- Teleflex does not believe in re-inventing the wheel. This means that when a technology is available to be used, they do not waste precious time in developing that technology from scratch. This saves them considerable amount of time. Take for example their acquisition of a product line of Cummins Engine (Page 4, last paragraph). Teleflex knew that the Cummins product was not any good but still bought it because the product got them into the market and they thought that Teleflex could serve better with the new products. Similarly when they wanted to enter the US market, they bought a company in Ontario.
Threats to continued innovation and growth
The major threats to the continued innovation and growth at Teleflex Canada are:
Previously, whenever Teleflex Canada needed parts which were not built according to their specifications, they started developing the products themselves. Teleflex Canada didn’t need to develop these parts and they wasted a lot of their time and money on it.
Solution: Buy technology instead of developing it where possible and viable. The company has also divided their process under core and non-core processes. Now that this is done, the company can focus on the core processes and think about outsourcing the non-core processes to cheaper locations like China and India. This might result in substantial savings for the company.
It’s a generally accepted fact that the more a company centralises, the less innovative it will become. Given the fact that Teleflex Canada has been so successful in the past, corporate has been trying to centralize all the Teleflex subsidiaries into one so that Teleflex Canada’s innovative approach can be applied to the other subsidiaries as well. But then, the centralizing Teleflex Canada will mean losing innovation and defeating the whole purpose of the move.
Solution: Centres of Excellence are created in divisional units to maintain autonomy. A certain amount of centralization is important and a mix of centralization and a degree of autonomy will make sure that Teleflex Canada continues to innovate and grow.
- Managing size
Teleflex Canada has grown at a very fast pace and getting too big can serve as a hindrance for the company. The company starts focussing on cutting costs rather than promoting innovation and entrepreneurialism. This may negate the company’s competitive advantage over its competitors. And in all this, the customer might be forgotten and the reaction time of the company will reduce.
Solution: It is of crux that the consumer gets quick and efficient service. The company should focus on assigning the best qualified people to the customer’s problem. And, solve the problems of the customers quickly and efficiently. Another important thing is that whenever a division becomes too big to handle, it must be sub-divided so as to maintain its reaction time and innovativeness.
The case study explains that the biggest problem with new product development is that the existing products get replaced by the new technologies about which the company does not have the required expertise.
Solution: The solution for this problem is to help your customers sell their products to the end-consumers. Another thing that Teleflex Canada could do is to invest in forecasting. They need to know well in advance about any major changes that the industry may go through and will need time to prepare which forecasting can provide.
Can Teleflex Canada’s approach be implemented in other divisions or organizations?
I believe that Teleflex Canada’s approach to innovation can be implemented to other divisions or organizations. Their approach is too good to have and not implement in the other divisions. I can only imagine how much benefit it can bring to the company if implemented in all divisions and subsidiaries.
The company may function in a similar way by having a healthy mix of centralization and autonomy. This mix can not only enable the company to use the model created by Teleflex Canada in other divisions and subsidiaries, but can also help counter the negatives of growing too big too soon.
Although the company will need to take care of some things while incorporating the innovation approach of Teleflex Canada to the other divisions, the end result is too good to ignore. Some of the things to take care of are:
- Be sure to maintain the culture of innovation from Teleflex Canada. The freedoms that the Teleflex Canada employees enjoyed played an important role in their thought process.
- The support of the management is also a vital component in inheriting the Teleflex Canada’s approach. The management needs to keep promoting innovation like it does in Teleflex Canada and keep pushing to use latest and best tools available.
- The combined company’s culture needs to be altered to support the new culture of Teleflex Canada. Without doing this, the combined entity may not be able to synergize.
Operations Management: Custom Molds Case Study
What are the major issues facing Tom and Mason Miller?
Major issues facing the Miller family are:
- The electronics industry to which they supply and their own business is changing. This is due to the fact that the electronics manufacturers have shifted their strategies; they are now developing strategic partnerships with their suppliers. Custom Molds has to adapt to these changes.
- The demand for multiple molds is declining, contrary to the earlier days. Earlier they used to produce custom designed molds for producing plastic parts majorly and limited manufacture of plastic parts. Through the data provided in the case study we can conclude that during the last three years Custom Molds has been consistently getting more work in the mass production of plastic parts and the custom made molds have been decreasing.
- The order sizes for plastic parts were increasing. The reason for this being an issue for Custom Molds is that traditionally they have concentrated on the custom molds. But since they are getting a lot more work to produce plastic parts, they probably need to change the job shop layout to something more suitable for mass production.
- Delivery problems with plastic parts. The customers have been complaining about the late delivery of parts. Bottlenecks are springing during un-predictable production processes. If this goes on for too long, Custom Molds will lose credibility in front of their customers and some customers may decide to part ways. And the fact that they have still not been able to pin-point the cause is even more devastating.
- In-efficient testing and inspection process resulting in orders being returned after delivery. The testing and inspection process has to be carried out as rigorously as possible. Sadly though, Custom Molds’ testing and inspection team has not been doing a good job. Two orders were recently returned to them because of the number of defective parts in the batches. The transportation, packing, shipping etc. costs have to be incurred by the company and could have been avoided if the testing and inspection been rigorous.
Figure 1
Flow diagram for manufacturing of plastic parts
Figure 2
Companies compete in the marketplace by virtue of one or more of the following competitive priorities (Hayes and Wheelwright, 1984):
- Quality
- Lead-time
- Cost
- Flexibility
Competitive Priorities of the fabrication process
- Quality
- Should be of top quality
- Should be consistent
- Lead-time
- Delivery should be on-time
- High development speed
- Cost
- Low cost
- Ability to reduce cost to at least competitor’s cost, if not lower.
- Flexibility
- Customization of the mould
Competitive Priorities of the parts manufacturing process
- Quality
- Should be consistent
- Lead-time
- On-time delivery
- Cost
- Low cost
- Flexibility
- Variable volumes without affecting the cost
As shown by the table provided in the case study, the industry now needs delivery of high quality parts with increased speed and low cost. This can be substantiated by the fact that electronics manufacturers were developing strategic partnerships with suppliers (The Changing Environment, Case Study, page 3). Customers today are increasingly moving towards a strategic supply chain management system, like the one used by Detroit based car companies.
- Hire consultants: Custom Molds needs to figure out the reason behind un-predictable bottlenecks popping up all over the production process and needs to do it quickly else they might lose some of their clients. Consultants have the advantage of looking at the bigger picture from outside and may be able to help Custom Molds figure out the reason behind the bottlenecks. Key factors: Cost of hire, consultants must be specialist in this field.
- Change plant layout: Custom Molds also needs to change the plant layout from job shop to probably assembly line. This is due to the fact that they are getting more business in the plastic parts manufacture than the custom moulds and plastic parts are produced in large volumes. Key factors: Down time of the plant while changing the layout, cost of layout change, proper utilization of available space.
- Invest in a proper supply chain system: The Company needs a proper supply chain system which is agile, adaptable and aligned (Lee, 2004) to the interests of all firms involved. This will help them in managing expectations of the clients by knowing when they will be able to deliver the product. Key factors: Consent of all users/suppliers, cost of the SC system, reliability of the SC system, usage of the SC system.
- Use of Information Technology in testing & inspection, and in calculating delivery times: Information Technology can help the company to automate the testing & inspection process thereby reducing the re-work. IT can also help Custom Molds to determine realistic delivery times. Key factors: Cost of the IT system, time frame of installation, inputs from the potential users of the IT system.
- Prepare for a complete phase-out of custom moulds: It’s a long term alternative but is very much realistic. The company may start losing money producing custom moulds if their quantity reduces too much. The company would be better off in investing the same resources in producing plastic parts instead. Key factors: A proper market analysis of custom moulds, analysis of the return on investment and the minimum number of moulds to remain profitable, other avenues of diversification.
- Invest in Research and Development: The Company would be better off to invest in R&D in order to stay ahead of its competition. R&D can often show ways to reduce costs by maintaining the same quality. Key factors: Cost involved, clear expected milestones
- Start looking at expansion plans: As the company grows and starts taking orders for plastic parts exceeding 5000 order size, they will start feeling the need to expand, both in number of resources and space available. They are thereby advised to start looking at expansion plans, which can consume precious time. Key factors: Cost involved, thorough analysis of future/expected growth, type of growth (organic/inorganic), timeframe of growth, where to expand,
- Hayes, Robert H., and Wheelwright, Steven C., Restoring Our Competitive Edge: Competing Through Manufacturing. New York: John Wiley, 1984
- Lee, Hau L. “The triple-A supply chain.” Harvard Business Review 82.10 (2004) : 102-112, 157.
Business Ethics: What does sustainability mean to you?
My perception of sustainability
Sustainability is everywhere these days. Be it on the website of British Petroleum or on the homepage of a global manufacturing giant like Xerox. But does having a mere webpage for sustainability make these organizations ‘green’? I don’t think so. Sustainability to me is the art of using the natural resources of our beloved mother Earth in such a way so as to not waste any resource and to make sure that our next generations will also be able to benefit from the same resources.
Some organizations have really become ‘sustainable’. They have become efficient in the way they consume energy, in the way they manage their waste, in the way they operate (Example: Wal-Mart, Toyota and IBM). But on the other hand, most other organizations use sustainability just for publicity. But no one can refute the fact that sustainability is here to stay and that it is and will be a force to be reckoned with in the future. This is very easy to prove – just look at any major organization’s website. They all have a sustainability section these days.
Reasons not to have sustainability
My personal opinion is that there can be only two reasons as to why an organization does not have a sound sustainability policy. These are:
1. The company does not fully understand what sustainability is. Or they don’t really understand what affect it has on their business. This is the most common form of problem that I have noticed with some companies. Every company is unique and no matter how small or big a company may be, they can always have a solid sustainability policy. I think the point to be taken note of is that the organization’s leaders feel that they don’t need sustainability. They think it’s a fad like some other things in the recent past and that the hype about sustainability is short-lived. This thinking needs to be changed. Corporations in this time of high competition cannot survive without competing on equal grounds with their competition. If your competitor is practicing sustainability and you are not, you are bound to lose out at some stage in the near future.
2. The company’s implementation of the sustainability policy is incorrect or weak. Some companies do understand the need to go sustainable, but their interpretation of the level of sustainability or their sustainable policy is not correct. They might try to implement their flawed policy but fail or have minimum impact. Another reason could be that the policy may be correct and robust on paper but its implementation may be flawed or incorrect. This happens in organizations all the time is not the first occasion of incorrect implementation. This reason is far less critical to the first one discussed above for the simple reason that the organization at least has the right intent and will to become sustainable – they only need to get better at implementing it. On the other hand, there are a handful of organizations who get overawed by the situation and decide to throw the sustainability policy in the dumper just because they were unable to implement it in the first place. Organizations need to realize that sustainability is here to stay and that it has to be a long term policy. It cannot be used to deliver short term goals only and then forgotten about.
Reasons to support sustainability
There are many reasons to support sustainability, some of which that I could think of are:
1. Better company/brand positioning – Companies who are really sustainable and show it, are benefitting from the fact that the people recognize their effort and the company has a better brand image than before. People want to be associated with such brands.
2. Savings – Being efficient pays off. If the company operates efficiently, they save money by reducing their costs. This means that the company will make more profit than before. This also means that the company will have more money to pay its stakeholders.
3. Create competitive advantage – The companies who use sustainability fabulously have created a competitive advantage for themselves and their peers have been forced to follow in their footsteps half-heartedly.
4. Employee morale – There is no doubt that people like to work for a company that cares for its employees and customers, but also the environment, the society and the future. This is exactly why sustainability can raise the morale of a company’s workforce and cheer them up.
5. First mover’s advantage – A company that deploys the sustainability policy first will get the first mover’s advantage and all others will be followers. This generates awareness in the customer’s and potential customer’s subconscious and benefits the organization and its brands.
The role of government
The government plays a very important role in the formation and implementation of the sustainability policies of companies. Government releases guidelines as to what the sustainability policies should look like and what a company can do to help the cause of sustainability. But I think that mere guidelines are not enough to implement an important policy like sustainability. What we need is some concrete steps by the government to force all organizations into looking at themselves and finding out their most suitable sustainability policy.
The government can also make sustainability look more viable for firms by giving tax breaks or subsidies to companies which have a robust sustainability policy. This will encourage organizations to actually change and become sustainable instead of just pretending.
The role of customer
Even more powerful than the government is the customer. Over the years, customers have forced organizations to change drastically. The cases of IBM and Xerox come to mind when I think of successful change by organizations in order to cater to the changing demand of its customers and consumers.
In today’s high competition environment, customers have so many options. The products are being made to cater to his needs and the customer has become the master. So if the customer warms up to the idea of sustainability, there is very little that organizations can do apart from have a top class sustainability policy and stick to it.
The role of capital markets
The capital markets arguably play one of the most important role in the design and implementation of the sustainability policy. These days capital investors look at things like company’s sustainability, there CO2 emission, etc. before lending them money. Sometimes they even refuse to lend based on the fact that the company does not have a complete or comprehensive sustainability policy and hence, is less likely to survive and pay back.
This fact is not only true for starting new businesses but also existing businesses. Banks like HSBC, Barclays, etc. are shifting towards sustainable businesses and expect their clients to do the same. Banks have added a sustainability criterion to evaluate a company’s suitability for the loan and the risk attached to the loan. Banks are refusing loan requests from corporations which they think are not sustainable or are charging a very high interest. This will ultimately force the companies to turn sustainable.
The role of leaders
One of the most important roles in an organization is that of its leader, the visionary who guides the organization to its desired goal. The role may be called Chairman, CEO, Managing Director and so on but the huge role this leader has to play in the organization’s growth and development cannot be denied.
If the leader of an organization is visionary enough to see the immense role that sustainability has to play in the future of the organization, he or she is sure to work on creating an organization which will have a robust sustainability policy.
On the other hand, if the leader is not sure of the benefits sustainability can bring to the organization or is not convinced of its future, he will use it only as a ‘marketing stint’ to go with the flow till the time the hype about sustainability dies down (He thinks that the hype will die down eventually!). These organizations will eventually end up paying the price for the error in judgment of their supreme commander. Companies in the future cannot survive without sustainability and the sooner the leaders of organizations accept this fact the better it is for them and their organizations.
Conclusion
There is no dodging the fact that sustainability is here to stay. The sooner the organizations understand this simple fact the better it is for them and their organizations. Eastern countries like China and India are growing at a very rapid pace and are competing with the existing players. These countries are very flexible and are already applying the sustainability policies to play to their advantage. Organizations in the west are set up just right to adapt the sustainability policies, the time seems perfect too. It will be fascinating to see companies from different backgrounds and countries applying similar policies but differently.
Monday, April 4, 2011
Knowledge Management
This report discusses about Knowledge Management being considered as a variety of information technologies known as ‘knowledge management systems”. The report shows the knowledge management process describing the different phases of the process. I used a modified version of Nonaka’s model to explain knowledge transformation.
I then move onto discuss some of the challenges involved in creating KM systems. Then I introduce two KM strategies – codification & personalization and which one should a firm choose. Some of the incentives that a firm can offer its employees for actively participating in the knowledge creation phase are discussed next. I conclude by discussing how much IT and support would a firm need depending on which strategy they implemented.
The former CEO of IBM, Thomas Watson, once stated “All the value of this company is in its people. If you burned down all our plants, and we just kept our people and our information files, we should soon be as strong as ever.”
Knowledge can be thought of as a blend of actionable information built over time based on accumulated experiences and understanding of a phenomenon. Take for example the case of creating business reports for a client. When a new joiner in the firm first creates a business report for a client, he may not possess the knowledge to create the best report. But as time passes and he/she gains experience, he/she understands the process of creating the reports and builds his/her knowledge.
Knowledge can be categorized with respect to its type as:
The knowledge available in an organization that is not yet recorded is referred to as Implicit Knowledge. For example, an employee of an organization might have the knowledge to create business reports but till the time his knowledge is not recorded by the organization, the knowledge remains implicit.
Once the implicit knowledge is recorded in any form, it transforms into explicit knowledge. For instance, in the above example, when the employee documents his knowledge about creation of business reports, his knowledge is no longer implicit but explicit.
Tacit Knowledge
There also exists a type of knowledge that we have, and know we have, but cannot capture by language or mathematics. We can only see it by its action.
What is Knowledge Management?
Knowledge Management is a set of activities and processes that an organization enacts to manage the wealth of knowledge it possesses and ensure that it is properly safeguarded and put to use to help the firm achieve its objectives.
What is a Knowledge Management System?
A system of any form (computer based, paper based, etc) involved in managing knowledge effectively can be considered as a knowledge management system. For example, Eureka, Xerox’s knowledge management system, is used by their customer service engineers to share repair tips. The technicians entered their insights into the database and created documents that include the author’s name, the context of the problem and the solution that was developed. These tips were validated by subject matter experts. Once validated, the tips were made available to all the technicians via internet.
In today’s digital world, information technology has played a prominent role in creating knowledge management systems, as shown in Eureka’s example. However, no one software application can enable an organization to successfully implement a knowledge management initiative. So, a number of technologies are used together to help create a successful knowledge management initiative.
The three phases of knowledge management process are (Refer Appendix 1):
Knowledge creation is the first phase of the knowledge management process. Here the organization’s employees generate new information, devise novel solutions to handle existing problems, or identify new explanations for recurrent events. This knowledge is very valuable for the organization because other employees in the organization might be facing the same problems. Such solutions can be used by them and can potentially save the organization a lot of time and money. But what it also does is improve customer satisfaction. For example, if a Xerox technician goes to a customer’s office to fix a problem and finds the solution to the problem on Eureka, he not only saves time and money for the organization but also keeps the customers happy.
Nonaka’s model of knowledge creation is an important matrix describing how knowledge transforms in an organization. I modified the model a little to include the implicit knowledge into the mix.
Figure 1 – Modified Nonaka’s Model
Shown in red in the modified Nonaka’s model is the transformation of knowledge from Tacit to Implicit, Explicit to Implicit and Implicit to Implicit. These three transformations are undesirable in the knowledge creation phase.
Examples of transformations:
Tacit to Tacit – Knowledge Transfer sessions between colleagues
Tacit to Explicit – Write down learning from a KT session
Explicit to Tacit – Learn from an explicit source, like a ‘Meta-data’ or a schema
Explicit to Explicit – Create/modify a document using another already existing
document
Implicit to Explicit – Creating a KT document using your own knowledge
Capturing and storing knowledge
The process of capturing and storing knowledge enables the organization to codify new knowledge and maintain an organizational memory. This step helps fulfil the main objectives of a knowledge management system – compile and use knowledge.
Capturing and storing knowledge can be a very difficult task. This is where the culture of the organization plays a very important role. The firm’s culture should be such that their employees are willing to engage in knowledge management activities like, documenting, sharing their knowledge. We will discuss the culture perspective in detail under ‘Challenges in building Knowledge Management Systems’.
Knowledge repositories and Content Management Systems (CMSs) are the main technologies used in this phase. A knowledge repository is a central location and search point for relevant knowledge. As time passes and as more and more employees of an organization start contributing, the volume of knowledge in these repositories is bound to increase. Also, in such a scenario, finding relevant knowledge becomes difficult and time consuming. This is where a CMS comes in handy. A CMS is a software program designed to organize and facilitate access to digital content of repositories.
Knowledge dissemination is the last stage of this process. This is the stage where knowledge contributed by the organization’s employees is both readily available and usable by other employees facing the same or a new problem. The dissemination of knowledge should ideally result in improving efficiency of the employees and indeed the organization.
Challenges in building KM Systems
Some of the challenges in the implementation of Knowledge Management Systems are:
- Getting the people to share knowledge – Culture of the organization plays a very important role in getting the people to share knowledge. If the culture of the organization is not suitable for sharing, people will not create new knowledge. In this case the failure of the knowledge management system is inevitable. For example, it is particularly difficult to get the employees of a consulting firm to share and document knowledge. The employees feel that if they share their knowledge, the organization will be able to replace them. Also, in the busy world of consulting where “billable hours” are very important, finding time to create knowledge and share it is particularly difficult. The organization needs to gradually change its culture and provide the employees with some incentives to motivate them to contribute.
For example, my previous organization – ACS, A Xerox Company, offered their employees gift vouchers redeemable at retail stores for contributing. Another way is to create an environment where the employees are confident that they will not be replaced by a computer system.
- Evaluation of knowledge – It is particularly difficult to evaluate the worth of knowledge in an organization. Without proper evaluation of knowledge, it is difficult to determine the scope of the KM projects to be undertaken. The organization can ask a consultancy firm to conduct a knowledge audit
- Documenting decision making – An organization can use the latest technology to develop a knowledge management system, throw in a huge amount of money in the process but it still would not be able to document the process of decision making of an employee. This is because everybody uses their own tacit knowledge to make decisions and no two people have the exact same knowledge.
- Knowledge implementation – Knowledge organization and integration with processing strategy is a major technical challenge. This is where knowledge repositories and Content Management Systems come in.
Knowledge Management Strategies
According to Morten T. Hansen, Nitin Nohria and Thomas Tierney (Refer Appendix 2), knowledge is the core asset of management consulting firms, so they were amongst the first businesses to pay attention to – and make heavy investments in – the management of knowledge. These consultants aggressively explored the use of information technologies to capture and disseminate knowledge. They describe two very different knowledge management strategies:
The knowledge management strategy in some companies centres on technology. They store the knowledge in the form of databases, indexed properly to give the most meaningful results to searches. The knowledge can then be easily accessed and used by anyone in the company.
Personalization strategy focuses on sharing knowledge on a person-to-person basis. The primary reason for this is that the company is dealing with tacit knowledge which is hard to put in words. Computers and technology in this case is used to communicate knowledge rather than store it effectively.
Determining which strategy to use
According to T. Hansen, Nitin Nohria and Thomas Tierney (Refer Appendix 2), a company’s KM strategy depends on the way the company serves its clients, the economics of its business and the people it hires.
The way the company serves its clients
Some firms have to deal with similar problems over and over. They offer customer benefits in the form of reliability, high-quality, cheaper than competition. These firms re-use existing solutions and apply their skills to create a new system for the firm. In this scenario, it would be highly beneficial for the firm to use a codification strategy.
Other firms may offer highly customized services to their clients because the client’s problems may be one of a kind or the firm deals with new problems everyday. This kind of a firm would be highly advised to use a personalization strategy.
The economics of its business
Codification allows the company to reuse their knowledge. This in turn means that the service provided by the company will be faster, of high-quality and thoroughly tested. What it also means is that the firm will be able to reduce the unit price of their product because the cost will be split into the number of clients. This is exactly why an off-the-shelf product is cheaper than a customized product. Product based companies have codified their knowledge and are relying on economies of sale while customized product companies have to create everything from scratch for their client and therefore charge more.
The people it hires
Both these strategies call for some specific traits in the people using the knowledge management systems. A firm using the codification strategy firm mostly hires people who can use knowledge repositories to gain knowledge. They implement, not invent. These firms don’t believe in re-inventing the wheel. On the other hand, personalization strategy firms hire people with superb analytical and creative skills on unique business problems. The new joiners are trained by experienced employees.
Incentives for employees to contribute to KM Systems
Incentives to participate and contribute to knowledge management systems are necessary because they motivate the employees. Most of the employees will not contribute to knowledge creation if there are no incentives – I know I won’t. The benefits of incentivising employee contribution are twofold – One, organization gets creates knowledge and two, it motivates the people to find new solutions to old problems. The incentives that an organization gives its employees should ideally depend on the strategy being used by the organization.
For example a firm using the codification strategy where writing everything down is of essence, is advised to assess an employee on the knowledge he created during the appraisal cycle amongst other parameters. This will prove to the employee that creating knowledge is an important part of the company culture and is here to stay.
In organizations employing the personalization strategy where computers are only used as a means of communicating knowledge, the incentive strategy may be different. Here the employee may be offered small gifts like company merchandise or maybe gift coupons like my previous organization (ACS, A Xerox Company) did.
Critical factors for a successful Knowledge Management System
The key factors for a successful Knowledge Management System are:
Culture of the organization
A knowledge management system cannot be successful if the culture of the organization does not promote knowledge sharing.
Clear objectives
A clear understanding of what knowledge means for the organization is very important. Every industry has its own ‘knowledge’. Its important to design the system keeping in mind the industry of the organization.
More flexibility on ways of Knowledge sharing
If the employees don’t like a method of knowledge sharing for some reason, give them options to use some other method. This method, apart from promoting knowledge transfer, also aids innovation – people will start innovating new ways to share knowledge.
The hand of senior management
Every big project in an organization has to have the backing of some one from senior management otherwise it loses to the other projects which have the ‘political clout’ behind them.
Incentives
The employees need to be motivated to share knowledge, at least when the knowledge management system is new (as discussed under ‘Incentives for employees to contribute to Knowledge Management Systems’).
A proper Content Management System (CMS)
As discussed earlier, a CMS is responsible for the organization of knowledge in knowledge repositories and faster searches. Slow response by the system can de-motivate employees from using the knowledge management system.
Technical infrastructure
The existing technical infrastructure of the company should be compatible with the planned knowledge management system. If not, new infrastructure should be laid down. Laying new infrastructure may be expensive and all organizations may not want to do this. So they must optimize their proposed knowledge management system in such a way so as to utilize their existing infrastructure.
According to T. Hansen, Nitin Nohria and Thomas Tierney (Refer Appendix 2), the amount of IT and support needed by a company depends on which knowledge management strategy the company uses.
So if a company like Accenture Consulting uses the codification strategy, they will most probably need a heavy IT infrastructure and support. Managers in these firms should be ready to spend large amounts of money on IT and IT related projects. These companies not only put invest a lot of money on building the KM system but also maintaining the system.
On the contrary, if a company like Pricewaterhouse Coopers uses the personalization strategy, heavy IT infrastructure and support is less important. For these companies communication between the employees is more important. The IT is most probably used just to bring the two individuals in contact, and that’s it.
Information technology has featured prominently in knowledge management initiatives since the beginning, giving rise to the notion of knowledge management systems. However, no single application can enable a firm to successfully implement a knowledge management system. Rather, a number of technologies are used in tandem to enable the various aspects of knowledge management. In today’s digital world, I can safely say knowledge management systems are here to stay and can provide companies competitive advantage over their competitors.
- Piccoli, Gabriele. "Information System Trends." Information Systems for Managers: Text & Cases. Chichester: John Wiley & Sons, 2007. 375-377. Print.
- Hansen, M. T., “What's Your Strategy for Managing Knowledge?” Harvard Business Review, March-April, 1999.
| Company Name | Page No. |
| Accenture Consulting | 9 |
| ACS, A Xerox Company | 6, 8 |
| IBM Computers | 3 |
| Pricewaterhouse Coopers | 9 |
| Xerox Corporation | 4 |
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