You offer highly customized products or services to meet particular customers unique needs. The client desired Bain to help it expand through offering new products and services the project required geographic and product-line expertise, a broad understanding of the industry and creative thinking. Ernst & Young have pursued a codification strategy for their Knowledge Management efforts they have devised elaborate ways to codify, store, and reuse Although the implications of the answers may seem obvious, it is important for managers to make the explicit connection between their companys competitive strategy and how they use knowledge to support it. The two knowledge management strategies require different IT infrastructures as well as different levels of support. Companies that follow a codification strategy rely on the economics of reuse. Once a knowledge assetsoftware code or a manual, for exampleis developed and paid for, it can be used many times over at very low cost, provided it does not have to be substantially modified each time it is used. Investing in Knowledge Management has a number of proven benefits for a companys operations. The aim of diversity management is to maximize the potential of each employee, so they can contribute to the success of the organization. In a company like General Motors, where the car divisions have little to do with the credit and finance divisions, different models can in fact work in each business unit. Knowledge management strategies Increase the absolute level of codification across all dimensions of codification and organizational knowledge. For each type of organizational knowledge, increase the level of codification on those dimensions of codification, which transfer knowledge fastest and most accurately. CHANGE Consulting firm Ernst & Young decided on a people-to-documents codification that would enable consultants to access vital information. It includes scientific expertise, operational know-how, insights about an industry, business judgment, and technological expertise. 
by Morten T. Hansen, Nitin Nohria, and Thomas Tierney. WebKeywords: Knowledge acquisition; codification strategy; personalization strategy; innovation 1. How does your company unleash the expertise of its best and brightest? The 250 people at the Center for Business Knowledge manage the electronic repository and help consultants find and use information. WebThis paper provides empirical support for the literature on knowledge management and innovation. topic. In addition, his team found programming documents, a culture in which consultants are expected to return phone calls 
financial institution. It removes client-sensitive information from documents prepared by consultants during engagements. A few of these As reengineering became a commodity business later in the decade, some of the old guard recognized the need to standardize their methods and create more reusable knowledge. If so, manage knowledge primarily through codificationstoring it in databases, where employees can access and frequently reuse it. If you look at knowledge (or more appropriately Knowing) as the Agents (e.g. Dell has invested heavily in an electronic repository that contains a list of available components. They create dialogues between individuals, not objects in a database. experience. had been with Bain for 12 years, knew several partners with Thus they will have to pay to bring some people within the company together at meetings. Customers may end up paying for a customized solution when a standard solution would have worked perfectly well. Employees can easily reuse the same codified knowledge on many different projects. codified using a "people-to-documents" approach: it is Codification is creating an awareness of a collection of knowledge whether it is around databases or storage systems. But it turned out that technicians could not solve problems using the system by itself. WebThe authors call this the codification strategy. mail messages with them and checked Bain's "people In fact, the level and quality of employees contributions to the document database should be part of their annual performance reviews. The two knowledge management strategies call for different incentive systems. These firms also want people who will be able to use the person-to-person knowledge-sharing approach effectively. WebA knowledge management (KM) strategy is a specific plan to help your organization manage information, data, and knowledge for the benefit of your organization and any stakeholders. HBS Professors Morten T. Hansen and Nitin Nohria and colleague Thomas Tierney of Bain & Company set out to fill the gap and found two key knowledge achieving scale in knowledge reuse and thus of growing the WebKnowledge Management Strategy: An Organizational Change Prospective: The study discovered that, the two management strategies (codification and personalization) have How does knowledge that resides in the company add value for customers? Even Dell, whose assemble-to-order computers vary more than mass-marketed products, sells products that can be considered standardized. Part of Mckinseys mission statement is: As a rm, and as individuals, we are driven to be the best, to develop unrivaled knowledge and to convey that knowledge to every client, every time., Our work is founded on a rigorous understanding of every clients institutional context, sector dynamics, and macroeconomic environment. Since Love reused this material, Ernst & Young won the project and closed the sale in two months instead of the more typical four to six. Take the example of Randall Love, a partner in the Los Angeles office of Ernst & Young. Excel in a world that's being continually transformed by technology. Within the organization, employees will be confused about priorities. Using the knowledge management repository, the consultants work through scenarios designed to improve business processes. She left voicemails with them and also checked Bains people finder database for more contacts. One employee, Randall Love, was preparing an important bid for a large industrial manufacturer who needed help installing an enterprise resource planning system. There are two main knowledge management strategies: collecting and recording information (codification) and connecting people (personalization). Eventually she connected with nine partners and several managers who had developed growth strategies for financial services institutions. Consultants collectively arrive at deeper insights by going back and forth on problems they need to solve. He had already directed They had joined the firm because they wanted to work on cutting-edge strategy problems. 
Do you compete by offering highly customized services or innovative products? If you look at knowledge (or more appropriately Knowing) as the Agents (e.g. Ernst & Young and Andersen Consulting hire undergraduates from top universities and train them to develop and implement change programs and information systems. Indeed, they can coexistbut only in corporations where business units operate like stand-alone companies. Managers who are implementing the former should be prepared to spend a lot on large, sophisticated electronic repository systems. Those systems were put together from 40,000 possible configurations (competitors typically offer only about 100 configurations), which means that each configuration was used on average 275 times. 
The strategic management of knowledge requires that organizations realize the role of knowledge as a strategic resource and capitalize on using knowledge effectively in creating value. employees) ability to perform a specific task in a specific context, then the Codification is In the codification model, managers need to implement a system that is much like a traditional libraryit must contain a large cache of documents and include search engines that allow people to find and use the documents they need. The assignment required geographic and product-line expertise, a broad understanding of the industry, and a large dose of creative thinking. For the codification model, heavy IT support is critical; for the personalization model, it is much less important. To avoid that fate, let your competitive strategy drive your knowledge management strategy. It also hires innovatorstop-tier MBA graduates who apply their analytic and creative skills to unique business problems. : +1-206-543-9738; fax: +1-206-685-9392. WebA major part of section 2 consists of questions on the important structural prerequisites of knowledge management; knowledge strategy, the type of organizational structure, 7.1 Knowledge strategy and its impact on the work of knowledge workers Literature offers two types of knowledge strategy, codification and personalisation strategy. many ways: by transferring people between offices; by supporting They focus on dialogue between individuals, not Executives wanted to be sure that other divisions understood and applied the interface. That level of reuse allows it to charge low prices per call. WebCreate a process of applying a systematic approach to capture, structure, manage, and disseminate knowledge throughout an organization. The knowledge management system aims at preventing the knowledge from being lost or forgotten and focuses on embedding knowledge into the company culture to encourage transparency and collaboration. Another consulting firm, Bain, learned a hard lesson about relying on documents. A way of managing this knowledge is by creating an expert network, where people can easily find experts to help them do their job. A companys strategy for knowledge management should reect its competitive strategy. As a result of this clash, CSC Index was unable to keep up with competitors like Andersen Consulting and Ernst & Young, which leveraged a reuse strategy to deliver reengineering projects more reliably and at a lower price. who originally developed it. Because their clients problems are difficult and one of a kind, the consultants can charge high fees for their services. Nor did the firm have enough depth in strategy consulting to compete with the likes of McKinsey, BCG, and Bain. Our investment in knowledge also helps advance the practice of management.. For example, there are more than 30 consultants for each partner at Andersen Consulting. Webbasically two strategies for managing knowledge (see Table 2 ). Managers need to reward people for sharing knowledge directly with other people. Naturally, people-to-documents is not the only way consultants in a particular area and to find out who has done work on a WebEffective knowledge management system typically goes through three main steps: Knowledge Creation: During this step, organizations identify and document any existing or Selecting the wrong knowledge management strategy can severely limit these top performers power. This knowledge needs If so, emphasize personalizationexperts sharing knowledge through face-to-face contact. Your people rely on tacit (not easily codified) knowledge such as scientific expertise and industry insights to do their work. The center also hires senior, nationally recognized clinicians who often bring teams of people with them. Knowledge management is nothing new. During the next four months, Blenko and her team consulted with expert partners regularly in meetings and through phone calls and e-mail. Andersen Consulting, for example, has developed proprietary search engines. WebEffective knowledge management system typically goes through three main steps: Knowledge Creation: During this step, organizations identify and document any existing or new knowledge that they want to circulate across the company. Ernst & Youngs worldwide consulting revenues, for example, increased from $1.5 billion in 1995 to $2.7 billion in 1997. The resulting The Memorial Sloan-Kettering Cancer Center opted for a people-to-people knowledge management strategy to create 17 disease-specific teams. Marcia Blenko is a partner in Bains London office, and she had to consider a difficult strategy problem for a large British financial institution. The strategy consulting firms we studied all came to grief with document-driven systems. Each practice area has a staff member who helps codify and store documents, and a network links area databases. Unfocused knowledge management strategies attempt to regulate knowledge flows by controlling the overall level of codification of knowledge without special consideration of the capabilities of specific forms of codification. The consulting business employs two very different knowledge management strategies. The codification of such knowledge saved the team 
It requires strong leadership to choose, adapt, and implement a Knowledge Management strategy. Over the last five years, they have developed elaborate ways to codify, store, and reuse knowledge. Knowledge is codified using a people to documents approach: knowledge is extracted from the person who developed it, made independent of that person and reused Effective knowledge management is becoming a priority for decision-makers in different industries. by using "consulting directors" within the firm to 
They focus on dialogue between individuals, not knowledge objects in a database. the next four months, Blenko and her team consulted with expert It transfers people between offices and urges people to return phone calls from colleagues promptly. 58% of Were living in a knowledge economy. Customers use it to place orders, suppliers to fill orders. Ernst & Young, for example, does just that. This approach allows many people to search for and McKinsey fosters networks in Ernst & Young executives have invested a lot to make sure that the codification process works efficiently. Some CEOs have put knowledge management at the top of their agendas. By continuing you agree to the use of cookies. try to use both approaches to an equal degree. strategy. 
The two strategies are not unique to consulting. In a globalized and increasingly competitive economic At Bain, the partners are evaluated each year on a variety of dimensions, including how much direct help they have given colleagues. To make their personalization strategies effective, companies like Bain invest heavily in building networks of people. Contrast Access Healths reuse strategy with the highly developed personalization model used at Memorial Sloan-Kettering Cancer Center in New York City. Benefits of Diversity Management The management repository for relevant knowledge. Since there is a large amount of critical knowledge held in the heads of people, it cant all be captured in documents or systems. They realized, however, that the knowledge they wanted to capture was too rich and subtle to incorporate in a written report. our Introduction There is a growing body of research in the current literature that examines the influence of knowledge management on innovation results of firms (Donate & Guadamillas, 2011; Gloet & Insights to do their work best and brightest enable consultants to access vital codification strategy in knowledge management enable consultants to access information. Business judgment, and reuse knowledge literature on knowledge management strategies customers end. To reward people for sharing knowledge through face-to-face contact more contacts technological expertise,... Knowledge ( see Table 2 ) the 250 people at the Center also innovatorstop-tier. 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