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1. Imminent retirement of key personnel.2. Need for innovation to compete in a dynamic, challenging businessenvironment.3. Need for internal efficiencies in order to reduce costs and effort (e.g.,time to market a new product).The resources and skills required to develop a KM strategy depend on thesize and complexity of the organizational unit and on the depth of informationgathering and analysis. The ideal mix of skills on the KM strategy teamwould be a KM expert, access to people who are knowledgeable about theorganization, and a KM advocate who will "sell" the strategy to the seniormember of management who mandated the strategy development.KNOWLEDGE MANAGEMENT STRATEGYA KM strategy is a general, issue-based approach to defining operationalstrategy and objectives with specialized KM principles and approaches (Srikantajahand Koenig, 2000). The result is a way of identifying how the organizationcan best leverage its knowledge resources. Once this fundamental KMstrategy is defined, baselining and technology options may be explored. A KMstrategy helps address the following questions:1. Which KM approach, or set of KM approaches, will bring the mostvalue to the organization?2. How can the organization prioritize alternatives when any one or severalof the alternatives are appealing and resources are limited?Once the KM strategy is defined, the organization will have a road map thatcan be used to identify and prioritize KM initiatives, tools, and approaches insuch a way as to support long-term business objectives. The strategy is usedto define a plan of action by undertaking a gap analysis. The gap analysisinvolves establishing the current and desired states of knowledge resources andKM levers. Specific projects are then defined in order to address specific gapsthat were identified and agreed upon as being high-priority areas.A good KM strategy possesses the following components:KM STRATEGY AND METRICS 2511. An articulated business strategy and objectivesa. Products or services.b. Target customers.c. Preferred distribution or delivery channels.d. Characterization of regulatory environment.e. Mission or vision statement.2. A description of knowledge-based business issuesa. Need for collaboration.b. Need to level performance variance.c. Need for innovation.d. Need to address information overload.3. An inventory of available knowledge resourcesa. Knowledge capital: tacit and explicit knowledge, know-how, expertise,experience in the minds of individuals and in communities orembedded in work routines, processes, procedures, roles, artifactssuch as documents or reports.b. Social capital: culture, trust, context, the informal networks, and reciprocity(e.g., willingness to experiment and take risks, or able to failwithout fear of repercussions).c. Infrastructure capital: physical knowledge resources; e.g., LAN/WAN, file servers, intranets, PCs, applications, physical workspacesand offices, and the organizational structure.4. An analysis of recommended knowledge leverage points that describeswhat can be done with the above-identified knowledge and knowledgeartifacts and that lists KM projects that can be undertaken with theintent to maximize ROI and business value; for example:a. Collect artifacts and exploit them (e.g., best practices database,lessons learned database).b. Store for future use (e.g., data warehouses, intelligence gathering forspecific issue/problem, data mining, text mining).c. Focus on connecting—connect knowers to each other and to aproblem through communities of practice or expertise locationsystems. Hypothesize to carry out scenario planning, informalcross-pollination to produce new insights and breakthroughthinking.The major steps involved in developing a KM strategy are to first understandthe organization in terms of its current state ("as is") and its desiredbusiness objectives ("to be"). The analysis of the difference between the twostates is often referred to as a gap analysis, and the means of getting from the"as is" to the "to be" state is often represented in the form of a KM strategicroad map. The road map typically represents a three-to five-year strategy withclear milestones or targets to be achieved throughout that time.The current or baseline state of the organization is assessed using informationgathering from a variety of sources such as key documents (e.g., annualreport) and interviewing key stakeholders (e.g., senior managers, humanresources, information technology, and major business unit managers). It is at252 KNOWLEDGE MANAGEMENT IN THEORY AND PRACTICEthis point that existing KM initiatives will also be identified in the form of aknowledge audit or inventory.Knowledge AuditA knowledge audit service identifies the core information and knowledgeneeds and uses in an organization. It also identifies gaps, duplications,and flows and how they contribute to business goals. A knowledge inventory(sometimes called an information audit or a knowledge map) is a practicalway of coming to grips with "knowing what you know." This inventory isusually performed by applying the principles of information resources management(IRM). A knowledge audit identifies owners, users, uses, and keyattributes of core knowledge assets. Willard (1993) discusses five key activitiesof IRM:1. Identification: What information is there? How is it identified andcoded?2. Ownership: Who is responsible for different information entities andcoordination?3. Cost and Value: What is a basic model for making judgments on purchaseand use?4. Development: How can we increase the value of information or stimulatedemand?5. Exploitation: What is the best way to proactively maximize the valuefor money?A knowledge audit is often carried out in conjunction with a knowledgemanagement assessment, which provides a baseline on which one can developa knowledge management strategy (Skyrme, 2001). This typically involvestaking stock of current KM capabilities and is often carried out as part of aKM strategy formulation exercise.A knowledge audit can produce the following types of results:_ Identification of core knowledge assets and flows—who creates, whouses._ Identification of gaps in information and knowledge needed to manage thebusiness effectively._ Areas of information policy and ownership that need improving._ Opportunities to reduce information-handling costs._ Opportunities to improve coordination and access to commonly neededinformation._ A clearer understanding of the contribution of knowledge to businessresults.An example from Northrop-Grumman is provided in the accompanyingvignette.KM STRATEGY AND METRICS 253254 KNOWLEDGE MANAGEMENT IN THEORY AND PRACTICENORTHROP-GRUMMANNorthrop-Grumman2 faced consolidation and downsizing during the late1990s. The Air Combat Systems (ACS) group in particular was in dangerof losing the expertise it needed to support and maintain a complex machinethat would be flying—carrying precious lives and cargo—for years to come.So ACS instituted KM procedures designed to capture the so-called tacitknowledge, or know-how and experience, with the B-2, locked in its employees 'heads. But before designing a program, ACS wanted to find out whatbarriers, if any, prevented employees from sharing knowledge with theirpeers. With a good picture of knowledge culture attitudes, ACS would thenhave a better road map for designing a unitwide KM program. It conducteda knowledge audit, surveying employees about their knowledge-sharinghabits, polling nearly 5000 employees with a 97-question survey (KM2) todetermine their knowledge needs, sharing practices, and prejudices. Thesurvey asked questions such as, "From your perspective, to what extent isthe knowledge that you and your team generate reused by other teams? "This not only highlighted ACS's readiness for a formal KM effort but alsopointed out areas where sharing was not happening. The Delphi Group washired to conduct the audit and derive a baseline pulse of the unit'sknowledge-sharing culture. Participation was voluntary—employees weregiven a free lunch for giving 30 minutes of their time. The survey responserate was better than 70% (typically, mail-in surveys return a 10–30%response). Delphi consultants analyzed the preliminary results and targeted125 employees for face-to-face follow-up interviews.ACS had established a 10-person KM team to identify subject matterexperts and capture the content of their expertise. After creating about 100knowledge cells and identifying to subject matter experts within those cells,the KM council turned its attention to knowledge capture. The team createdwebsites for each knowledge cell and logged information about the knowledgeexperts into an expert locator system called Xref, short for crossreference.Using Xref, employees can search for information in any numberof ways, including by employee name, program affiliation, or skill area. If,for example, the B-2 landing gear is locking up, one can find the landinggear expert through Xref. The knowledge audit helped ensure that this centralizeddatabase not only would be useful but would actually be used.The results of the knowledge audit confirmed that employees were eagerto share their knowledge in an automated, centralized system but that challenges,such as integrating the systems across lines of business, remained.The willingness of employees to participate in systems intended to minimizethe impact of their own eventual layoff is, of course, highly dubious. Otherkey findings showed that employees recognized the value of their fellowemployees ' expertise; they spent at least eight frustrating hours each weeklooking for information they needed to do their job (costing $150 millionannually); only 6s of their knowledge was reused by others; and 31%NORTHROP-GRUMMAN—ContinuedA knowledge management program or sys
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