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© 2003 Dr. Nick Bontis www.Bontis.com
All Aboard!Take a Knowledge Journey
Dr. Nick Bontis, Ph.D.
Assistant Professor of Strategic Management, McMaster UniversityDirector, Institute for Intellectual Capital Research
Associate Editor, Journal of Intellectual Capital Chief Knowledge Officer, Knexa Solutions
Hamilton, Ontario, [email protected]
© 2003 Dr. Nick Bontis www.Bontis.com
Entering a New Era?
• Agricultural Era– Land as a scarce resource
• Industrial Era– Natural resources and factory production
• Knowledge Era– Knowledge as an abundant resource– Cumulative codification knowledge base– Industry displacement
© 2003 Dr. Nick Bontis www.Bontis.com
Internet Research
• Internet users: 30 to 650 million in 2003
• Internet traffic: doubling every 70 days
• Canadian usage: 75% by year 2003
• PCs surpass TVs in # of units sold in 1997
• 50% current storefronts closed in next 6 years
© 2003 Dr. Nick Bontis www.Bontis.com
KM Research Highlights• Canada: StatsCanada (348 organizations surveyed)
– 93% have KM initiatives, 25% dedicated budget– Why have KM? – competitive advantage, human capital, IC retention
• U.S.: Conference Board (surveyed Fortune 500)– 80% have KM initiatives in place– 25% have CKOs, 53% have KM staff– 6% have KM initiatives company-wide, 60% < 5 years– KM owned 32% Sr. Mng, 25% HR, 16% IT
• Government at all levels• Institute for Intellectual Capital Research Inc.
– CKOs from 40% HR, 40% IT, plus other
© 2003 Dr. Nick Bontis www.Bontis.com
KM Research Highlights II• IDC reports Fortune 500 wasted $12 billion in duplicating work
• Ford reports $914 million savings due to KM from 1997 - 2000• Chevron saved $650 million since 1991 due to KM• Texas Instruments saves $1 billion cumulatively since KM program
launched in mid 1990s
• Gartner Group reports– 90% of FORTUNE 500 working on KM– 33% of FORTUNE 1000 had begun KM programs by 1999– will rise to over 50% by 2003
• World Economic Forum– 95% of CEOs feel that KM is critical to success
© 2003 Dr. Nick Bontis www.Bontis.com
The Perspectives
• Human Resources – absorptive capacity, balance• Economics – the multiplicative effect of flow• Accounting – disclosure of intangibles• Training and Development – ROI & collateral• Technology – evasiveness of codification• Finance – Tobin’s q• Organizational Behaviour – telecommuting + free agents• Strategy – CKO, business process and economic value
© 2003 Dr. Nick Bontis www.Bontis.com
Importance of Phenomenon
• Bontis (2002)• Fitz-enz (2000), Choo and Bontis (2002)• Max Boisot (1998), Choo (1998)
– Knowledge Assets, Knowing in Organizations
• Sveiby (1997), Stewart (1997), Roos et al. (1997)– Organizational Wealth and Intellectual Capital
• Nonaka and Takeuchi (1995)– The Knowledge Creating Company
• Druker (1993), Toffler (1990), Handy (1989)
© 2003 Dr. Nick Bontis www.Bontis.com
Tracing KM’s History
• Egyptians, Greeks, Monks, Knights• Taylor (1911)
– Evidence of codification of knowledge
• Simon (1945)– Cognitive capacity “bounded rationality”
• Schumpeter (1952)– Innovation from new combinations of knowledge
• Penrose (1959)– Organization is a knowledge repository
© 2003 Dr. Nick Bontis www.Bontis.com
Distinguishing the Terms
• Intellectual Capital– Stock of knowledge at one point in time
• Knowledge Management– Flow of knowledge from stock to stock
• Organizational Learning– Stock and flow system– Action to convert knowledge into behavioural
changes
© 2003 Dr. Nick Bontis www.Bontis.com
Danger of KM
• Devil’s advocate says we are too busy
• Attention is still the scarce resource
• Balance between achievement oriented and paternalistic organizations
• Institutionalize organizational slack– Must send message from above that knowledge
codification is important and necessary
© 2003 Dr. Nick Bontis www.Bontis.com
Level of Analysis: Individual
• Recruitment• Building competencies• Assessing weaknesses• Retention• Compensation• Satisfaction
– Level of individual knowledge organizations actually leverage is too low
© 2003 Dr. Nick Bontis www.Bontis.com
Level of Analysis: Group
• Sports analogies
• Concerted team action
• Collectively aligned mind sets
• Individual feedback loops
• Shared perception of the business environment
© 2003 Dr. Nick Bontis www.Bontis.com
Level of Analysis: Organization
• Strategy, Continuous Improvement, Systems, Technology, Leadership, Structure
• Culture – collective values
• Trust – knowledge sharing versus hoarding
• Spiritual Soul of an organization– WE versus I
© 2003 Dr. Nick Bontis www.Bontis.com
IC Conceptualization
• 2nd order construct, multi-dimensional
• 3 sub-domains– human capital, structural capital, relational
capital
• Drivers– Trust, culture, leadership
© 2003 Dr. Nick Bontis www.Bontis.com
Nonaka (SECI)
Tacit to Tacit – Socialization
Tacit to Explicit – Externalization
Explicit to Explicit – Combination
Explicit to Tacit - Internalization
FROM
TO
Tacit
Explicit
Tacit Explicit
Socialization Externalization
CombinationInternalization
© 2003 Dr. Nick Bontis www.Bontis.com
Metaphors and Analogies
• Stocks and flows– Production system– Manufacturing process– Capacity utilization, Throughput time, Bottlenecks
• Bathtub analogy– Tap and leak (knowledge flow)– Water level (knowledge stock)– Water system (organizational learning)
© 2003 Dr. Nick Bontis www.Bontis.com
Measure, Test and EvaluateKM Diagnostic
• Multi-method approach (qualitative and quantitative)IICR Knowledge Audit: survey design (Likert-type)
• Objective proxies (www.Saratoga-Institute.com)– E-mail direction (IICR eFlow Audit)– Knowledge sweeping (dynamic corporate yellow pages)
• Other tools to check out …– SmartShadow.com, BrassRingSystems.com, Chrontech.com
OpenText.comIntraKnexa at Knexa.com
• www.bontis.com/knexa/aboutintraknexa.pdf
– Talent websites
• Tango Simulation … www.Celemi.se
© 2003 Dr. Nick Bontis www.Bontis.com
Conceptual Model
ManagerialLeadership
ValueAlignment
Retention of Key People
Human CapitalDepletion
BusinessPerformance
EmployeeSatisfaction
EmployeeCommitment
EmployeeMotivation
EducationHumanCapital
RelationalCapital
Human CapitalEffectiveness
StructuralCapital
ProcessExecution
KnowledgeIntegration
KnowledgeGeneration
KnowledgeSharing
0.751
0.506
0.475
0.530 0.326 0.360
0.358
0.734
0.456 0.429
0.430
0.285 - 0.233
- 0.372
- 0.337
0.327
0.439
0.543
0.491
0.3940.262
0.307
0.442
R2 = 28.5%
R2 = 28.5%
R2 = 68.2%
R2 = 44.1%
© 2003 Dr. Nick Bontis www.Bontis.com
KM Continuum
D. Cotey
IICR KM Diagnostic
IntraKnexa Technology
KM Seminars
© 2003 Dr. Nick Bontis www.Bontis.com
Elements of KM Programs
D. Cotey
© 2003 Dr. Nick Bontis www.Bontis.com
KM Applications Matrix
D. Cotey
© 2003 Dr. Nick Bontis www.Bontis.com
Arsenal of KM Tools
D. Cotey
DiagnoseAwareness / storytelling
KM audit / survey Values assessment
Customer focus groups
GatherData warehousing
Information navigationCompetitive IntelligenceEnvironmental scanning
HypothesizeMathematical models
Neural networksKnowledge discovery
Longitudinal forecasting
ContextualizeExpertise locators
Intranet yellow pagesDocument managementVideo teleconferencing
Categorize Taxonomy development
Intranet groupwareText mining
Organizational libraries
MapWorkflow analysisKnowledge maps
Statistical flow timing eFlow Audits
Communicate Apprenticeships
Job rotationOrganizational slack
Ba design/implementation
Disseminate Distributed e-learning
Communities of practiceKnowledge portals
IC reporting / disclosure
Simulate Scenario planning
Expert systemsVirtual organization KM Laboratories
TACIT EXPLICIT EMBEDDED
© 2003 Dr. Nick Bontis www.Bontis.com
What can you do tomorrow?
• Conduct a knowledge audit / diagnostic (IICR)
• Tie KM into HR and performance evaluation
• Recruit and hire a leader responsible for intellectual capital & knowledge management
• Classify your intellectual portfolio with a knowledge map (e.g., corporate yellow pages)
• Reduce “don’t know what I don’t know”
© 2003 Dr. Nick Bontis www.Bontis.com
What else can you do tomorrow?• Use information technology tools for externalization,
transfer and generation• Increase the ROI on training and development
expenditures (spy and new reimbursement process)• Publish intellectual capital addendum• Education: McMaster, U of T, Queens, Royal Roads• World Congress: http://worldcongress.mcmaster.ca• Research: www.bontis.com/research.htm• Journal of IC: www.emeraldinsight.com/jic.htm• Develop internal markets for knowledge exchange
© 2003 Dr. Nick Bontis www.Bontis.com
Knexa.com Enterprises• World’s first knowledge exchange and auction
Canadian technology company rated Top 100 inWorld (Stock symbol: KNX on CDNX)
• An eBay for knowledge assetsA NASDAQ for intellectual capital
• IntraKnexa (ties in HR with IT)– An internal knowledge exchange for corporate intranets that
provides incentive and rewards for employees to share knowledge
• International partners: Europe and Australia• Knowledge Agents and Vortals• IntraKnexa - corporate knowledge exchange
© 2003 Dr. Nick Bontis www.Bontis.com
Other Interesting Projects• IICR KM Diagnostic Tool (business and government)
– Contact IICR for further information regarding causal mapping and KM audit• IICR KM Seminars (business and government)
– Special customized presentations to managers and employees• National KM Certification Program (Canadian Centre for Management Development)
– See: http://www.ccmd-ccg.gc.ca/events/workshops/KM/across_e.html• KM Education (McMaster, Royal Roads, Tangonow, KMCI)
– See: www.bontis.com/p727.htm www.royalroads.ca www.tangonow.net www.kmci.org• eFlow Audit (codified proxy of e-mail flow)• kFactory Assessment (capacity utilization, throughput, bottlenecks)• Ba best practices (office design, Steelcase), organizational slack• World Congress on Intellectual Capital and Innovation Hamilton Jan 14-16, 2004
– See: http://worldcongress.mcmaster.ca• Get 30 day free trial of the Journal of IC (http://www.emeraldinsight.com/jic.htm)• Books: 1 text Oxford U. Press with Choo, 2 compilations with BH KMCI Press
– See: www.bontis.com/research.htm• Knexa.com (IntraKnexa - incentive methodology for ICUs and knowledge sharing)
– See: www.bontis.com/knexa/AboutIntraKnexa.pdf
© 2003 Dr. Nick Bontis www.Bontis.com
Thank you!
Dr. Nick Bontis, Ph.D.
Assistant Professor of Strategic ManagementDeGroote Business School, McMaster University
1280 Main Street West, MGD #207Hamilton, Ontario, Canada L8S 4M4
Tel: (905) 525-9140 x23918 Fax: (905) 521-8995
Director, Institute for Intellectual Capital Research Inc.CKO (Chief Knowledge Officer), www.Knexa.com
Associate Editor, Journal of Intellectual Capital
[email protected] www.Bontis.com