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Innovation Management – Knowledge Management Univ.-Prof. Dr.-Ing. Wolfgang Maass Chair in Economics – Information and Service Systems (ISS) Saarland University, Saarbrücken, Germany SS 2012 Wednesdays, 10:00 – 12:00 a.m. Room 0.21, B4 1
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 2
Lecture Agenda
Innovation Management 1. Introduction 2. Knowledge Management 3. Strategic Innovation Management 4. Guest Lecture 5. New Product Development 6. Creativity Techniques 7. Planning Product Features 8. Experimentation Strategies 9. Open Innovation 10. Diffusion and Adoption of Innovation 11. Guest Lecture 12. Diffusion and Adoption of Information Systems 13. Guest Lecture 14. Business Planning and Writing
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 3
Knowledge = Justified True Belief (Plato)
“Knowledge is the perception of the a g r e e m e n t o r disagreement of two ideas.” (Locke, 1689)
“Knowledge is information that changes something or somebody — either by becoming grounds for actions, or by making an individual (or an institution) capable of d i f f e r e n t o r m o r e e f f e c t i v e action.” (Drucker, 2003)
“Knowledge is a justified personal belief that increases an individual’s capacity to take effective action.” (Alavi & Leidner, 1999)
Personification of knowledge (Greek Επιστηµη, Episteme) in Celsus Library in Ephesus, Turkey
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 4
Brainteaser
• Do you know how to tie a tie? • Please, write it down.
5 Minutes
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 5
Pragmatic Classification of Knowledge
Tacit Knowledge Implicit Knowledge Explicit Knowledge
Genes, feelings, subconscious knowledge „we can know more than we can tell“ (Polanyi, 1966)
Rational knowledge that can be explicated in principle, dogmas, social knowledge, technical knowledge etc.
Knowledge that can be coded by information into (socially constructed) symbol systems, e.g., • Process descriptions • Consulting expertise • Regulations and procedures • Clinical study design
explication
learning
Realm of individual knowledge
Realm of shared knowledge
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 7
Brainteaser
• Imagine, you are working in a students consulting project. The task of your project team of three people is the creation of a social media strategy for the Daimler AG.
10 Minutes
• After four weeks of working in the project, you get a new team member.
• What does she has to learn about the project for getting „on board“? How do you transfer your knowledge to her?
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 8
In-house Problems in Handling Knowledge
• Redundant research activities and project work
• Low information quality in reports and analyses
• Intransparency on knowledge resources
• Limited documentation of project insights
• Isolated knowledge domains
Example Despite of network character of company consisting of app. 650 branches in Germany, Fielmann has no joint network and storage of customer data
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 9
What is Knowledge Management?
“Beginning in the mid 1990s, individuals and organizations began to think seriously about managing what they know. This movement came to be known as ‘knowledge management’.” (Davenport & Völpel, 2001, p. 212)
Knowledge management takes care that resource knowledge is … • Delivered at the right time • Available at the right place • Present in the right shape • Satisfying the quality requirements • Obtained at lowest possible costs
Information • Building vast amounts of
data into usable form • Avoiding overloading
users with unnecessary data • Eliminating wrong/old data • Keeping information up to
date
Management • Change management implications --
getting individuals to volunteer knowledge; getting business units to share knowledge
• Demonstrating business value • Bringing together people from various
units • Determining responsibility for managing
knowledge
Technology • Determining infrastructure
requirements • Keeping up with new
technologies • Security of data on Internet
(Alavi & Leidner, 1999)
Key concerns of knowledge management
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 10
Key Concepts in Knowledge Management
Tacit vs. explicit knowledge Both types are important; Western firms focus largely on managing explicit knowledge
When is knowledge irrelevant? • No need to exploit knowledge • No production factor available for combining with knowledge
for creating products/processes • No combination procedures known for specific production
factor • Combination of knowledge and production factor not cost-
effective (Brockhoff, 2011)
Codification vs. personalization • Codification approaches – repositories
of explicit knowledge to transfer knowledge
• Personalization approaches – direct interaction between people for transferring knowledge
Knowledge markets • Each organization = knowledge
market; knowledge is exchanged for things of value; e.g., money, respect, other knowledge
Intangible assets • Translation of value of
knowledge into monetary value
• Knowledge = intangible asset; never seen on balance sheets
(Davenport & Völpel, 2001)
Communities of Practice • Idea developed in “organizational learning”
movement • Knowledge flows best through networks of
people who have same work interests but are not in the same part of the organization
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 11
Example of Knowledge Management
Chrysler – „Tech Clubs“ • Motivation: Chrysler seriously addressed knowledge management on mid-1990s –
Quality problems in vehicle design previously been solved re-appeared • Reason: Engineering experts spent most of their time on cross-functional teams
with people from other business functions – they were not able to pass along problems solved and lessons learned to each other
• Solution: Chrylser formed collection of „Tech Clubs“ (knowledge-based communities) for technical specialists in many different areas, e.g., experts in car bumper technology got together to share knowledge; each club supported by facilitator and a Lotus Notes „book of knowledge“
• Quality problems decreases • After merging of Daimler Benz and Chrysler: adoption of „Tech Club“ approach
througout company
(Davenport & Völpel, 2001)
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 12
Knowledge Management Process
Feedback
R E F L E C T
identify improvementsplan changes
AC T
implement changesmonitor improvements
C ONC E P TUAL IZE
identify knowledgeanalyz e s trength/
weaknes s es
(Davenport & Völpel, 2001)
(Schreiber et al., 1999)
• Inventarization of knowledge and organizational context
• Analysis of strong and weak points – value of knowledge
• Opportunity analysis concerning knowledge
• e.g., form or quality of knowledge
• Interventions concerning management, human resources and culture, e.g., recruitment
• Organizational structure, e.g., teams with overlapping knowledge areas
• (Technological) tools, e.g., intranet with knowledge profiling
CommonKADS knowledge management cycle
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 13
Components of Knowledge Management
Knowledge Acquisition
Knowledge Identification
Knowledge Preservation
Knowledge Usage
Knowledge Distribution
Knowledge Development
(Probst et al., 1997)
Knowledge Goals
Knowledge Evaluation
Feedback
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 14
Intellectual Capital Statement
• Intellectual capital statement = strategic perspective on knowledge as intangible asset in company (knowledge management = operative perspective; execution of strategies of intellectual capital statement)
• Classification of knowledge in intellectual capital statement • Human capital – knowledge and skills of employees, e.g., chemical knowledge • Structural capital – organization, technology and communication structure of
company, e.g., internal business processes • Relational capital – relations to national and international customers and
partner, e.g., cooperation
• Example: Skandia Navigator = intellectual capital navigator by Skandia insurance (Edvinsson,1997)
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 15
Sources of Knowledge
Combination of internal and external knowledge • Traditional approach: in-house R&D develops
internal relevant knowledge • But, relevant knowledge also developed
externally – internal knowledge important as: o Means for estimating relevance of external
knowledge o Entrance card to knowledge network
(Rosenberg, 1990)
• Optimal combination of internal and external knowledge enables o High external knowledge absorption and in-
house R&D = attractive for creative employees – war for talents
o Low knowledge transfer costs
Example: Toolkits for user innovation • Manufacturers abandon attempt to
understand user needs in detail in favor of transferring need-related aspects of product and service development to users (von Hippel, 2002)
(Brockhoff, 2011)
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 16
Sources of Knowledge
Combination of internal and external knowledge
Part of external knowledge regarding intellectual capital of company Amount of acquired external knowledge Effort in creating internal knowledge Size of internal knowledge base Amount of both knowledge types
External knowledge more cost-effective, but internally created knowledge lowers transfer costs for gaining external knowledge
(Brockhoff, 2011)
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 17
Sources of Knowledge
Combination of internal and competitor knowledge • Legal competitor knowledge, e.g., technological
competitor analysis (e.g., TNS TRI*M competitor analysis), patent analysis
• Sharing knowledge with competitors for generating market success
Combination of technological and marketing knowledge • Marginal productivity of technological knowledge 2-3
times higher as marketing knowledge (based on Cobb-Douglas production function) – i.e. higher effort for generating technological knowledge justified
• Uncertainties concerning technological knowledge easier to reduce as uncertainties concerning target markets
• Example: combining knowledge of integrating NFC technology into smart phone with knowledge about intended customers and their usage behavior
(Brockhoff, 2011)
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 18
Brainteaser
• Imagine, you are working in an IT Consultancy. Currently, your task is the development of a financial software.
• To reduce costs, you decide to outsource this task to an Indian software company.
• What are the challenges upcoming with your decision?
5 Minutes
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 20
Costs of Transferring Knowledge in Knowledge Networks
• New knowledge has to be gained and integrated into existing knowledge areas before using it – transfer costs depend on five factors (Teece, 1977)
1. Codification of knowledge 2. Opportunity to teach somebody on this knowledge 3. Complexity of knowledge (the more complex the knowledge the more effort is needed to
transfer knowledge) 4. Generality of knowledge (age of knowledge when transferring) 5. Experience of involved actors (number of executed transfers)
• “Technology transfer costs are therefore defined as the costs of transmitting and absorbing all of the relevant unembodied knowledge. The costs of performing the various activities which have to be conducted to ensure the transfer of the necessary technological know-how will represent the cost of technology transfer.” (Teece, 1977, p. 245)
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 21
Costs of Transferring Knowledge in Knowledge Networks
• Four groups of transfer costs: 1) Costs of pre-engineering (basic characteristics of technology are revealed to transferee) 2) Engineering costs while transferring process/product design and process/product
engineering 3) Costs of R&D personnel during whole transfer 4) Pre-start-up training costs and learning/debugging costs while start-up
• Study concerning transferring manufacturing knowledge from one country to firms in another country (Teece, 1977); 26 multinational projects considered
• Implications: o Transfer costs average 19% of total project costs o Success of more experienced enterprises (indicated by lower transfer costs) o Transfer costs are decreasing cost activities (decline with each application of given
innovation) o Manufacturing experience is important aspect, but not size of company or R&D to sales ratio
– super giant firms seem to have no advantage over moderately sized firms
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 22
How to Organize?
• “A key aspect of the management of knowledge in organizations is the development of an organizational structure to perform knowledge-oriented tasks.” (Davenport & Völpel, 2001, p. 215)
• Organizational structure has at least three levels: ① Chief Knowledge Officer (CKO) at senior, and visible, level ② Cadre of knowledge project managers (middle management) ③ Knowledge managers doing day-to-day work of knowledge, e.g.,
creating and editing knowledge objects in a repository
• Technologies for knowledge management • Repository and access technologies, e.g., intranets, search engines • Structured knowledge representation tools for using knowledge in real-
time applications; e.g., rule-based/case-based systems, semantic representations
• Knowledge management e-commerce tools for distributing knowledge in knowledge networks
(Davenport & Völpel, 2001)
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 23
Types of Knowledge Management Projects
① Repositories • Objective: implementing knowledge repository for capturing knowledge for later and broader
access by others in the same organization, e.g. best practices, sales knowledge ② Asset Management
• Objective: better management of knowledge assets, either measuring their level or value within an organization
(Davenport & Völpel, 2001)
③ Transfer • Objective: knowledge transfer through technological means or direct contact between people
④ Environment • Objective: improving overall environment for managing knowledge in projects, e.g., increasing
awareness of knowledge and its role in business
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 24
Improving Effectiveness of Knowledge Management
• Incentive systems and mentoring programs • Appointing “process champions” enabling comprehensive
knowledge sharing processes • Executive management declarations on expectations of trust and
openness in knowledge creation and management
• Transfer of tacit knowledge by debriefing after significant events; e.g., conferences, seminars; meeting with important clients or vendors meetings
• Using a variety of communication formats for both tacit and explicit knowledge
• Providing systems specifically for project knowledge management
• Seeding component organizations in networks with highly regarded and knowledgeable members from other organizations
(Von Krogh, 1998; Geisler, 1999)
Intra-Organizational
Structures
Codification of Knowledge
Inter-Organizational
Structures
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 25
Lecture Agenda
Innovation Management 1. Introduction 2. Knowledge Management 3. Strategic Innovation Management 4. Guest Lecture 5. New Product Development 6. Creativity Techniques 7. Planning Product Features 8. Experimentation Strategies 9. Open Innovation 10. Diffusion and Adoption of Innovation 11. Guest Lecture 12. Diffusion and Adoption of Information Systems 13. Guest Lecture 14. Business Planning and Writing
Univ.-Prof. Dr.-Ing. Wolfgang Maass
25.04.12 Slide 26
Literature
Books: • Albers, S. & Gassmann, O. (2011), Handbuch Technologie- und Innovationsmanagement, Gabler Verlag. • Drucker, P. (2003), The New Realities, Transaction Publishers. • Locke, J. (1690), An Essay Concerning Human Understanding - Book IV Of Knowledge and Probability, Hayes & Zell. • Polanyi, M. (1966), The tacit dimension, Garden City, Doubleday. • Schreiber, G.; Akkermans, H.; Anjewierden, A.; de Hoog, R.; Shadbolt, N.; de Velde, W. V. & Wielinga, B. (1999), Knowledge
Engineering and Management - The CommonKADS methodology, The MIT Press.
Papers: • Alavi, M. & Leidner, D. E. (1999), 'KNOWLEDGE MANAGEMENT SYSTEMS: ISSUES, CHALLENGES, AND BENEFITS',
Communications of AIS 1, 1-37. • Brockhoff, K. (2011), Management des Wissens als Hauptaufgabe des Technologie- und Innovationsmanagements, in Sönke
Albers & Oliver Gassmann, ed., 'Handbuch Technologie- und Innovationsmanagement', Gabler. • Davenport, T. H. & Völpel, S. C. (2001), 'The rise of knowledge towards attention management', Journal of Knowledge
Management 5(3), 212-221. • Edvinsson, L. (1997), 'Developing intellectual capital at Skandia', Long Range Planning 30(3), 366-373. • von Hippel, E. & Katz, R. (2002), 'Shifting Innovation to Users via Toolkits', Management Science 48(7), 821-833. • Maass, W. (2009), 'Elektronische Wissensmärkte: Handel von Information und Wissen über digitale Netze (Habilitationsschrift
Universität St. Gallen)’. • Probst, G.; Raub, S.; Romhardt, K.: Wissen managen. FAZ/Gabler, Wiesbaden und NZZ/Gabler, Zürich, 1997. • Rosenberg, N. (1990), 'Why do firms do basic research (with their own money)?', Research Policy 19, 165-174. • Teece, D. J. (1977), 'Technology Transfer by Multinational Firms: The Resource Cost of Transferring Technological Know-How',
The Economic Journal 87(346), 242-261.