KM 20 Years Later

Knowledge Management 20 years
after ... The evolution and increasing

significance of Knowledge Management
2004
Karl M. Wiig
Knowledge Research Institute, Inc.
Arlington, TX 76016-3517
phone: (817) 572-6254 fax: (817) 478-1048
e-mail: kmwiig@krii.com –– website: www.krii.com
KM Past & Future 2004/ 1 Copyright © 2004 Knowledge Research Institute, Inc.
KM’s Role Is Changing
The Early Focus:
Strengthen Operations by Improving
Knowledge and Its Availability
The Emerging Focus:
Make the Enterprise More Competitive from
Strategic Perspectives
“To Survive and Prosper You Need to
Innovate Faster Than Your Competitors
– It is Not Enough to Learn Faster!”
KM – The Stage Is Set
WWII changed the World economy
War ravaged nations built new, efficient industrial capabilities
Global competition shifted to higher quality and lower prices
Knowledge content increased in complex products and services
Computers began to provide “Knowledge Amplifiers”
1950s Deming & Durant: Quality requires knowledge and understanding
1956 Kenneth Boulding: “The Image: Knowledge in Life and Society”
1966 Peter Drucker: Knowledge Worker in “The Effective Executive”
1966 Kenneth Boulding: “The Economics of Knowledge and the Knowledge
of Economics”
1969 Peter Drucker: Knowledge Worker in “The Age of Discontinuity”
1970s AI Promises: Expert Systems to automate knowledge processes
1978 Peter Keen: “Decision Support Systems: An Organizational
Perspective”
KM – The Early Days – 1980s+
AI- based Expert Systems
Knowledge Sharing
Beginning Focus on Intellectual Capital
1980s IBM & Others Personal Computer for business
1981 DEC, ADL, etc. Knowledge-Based System Applications
1985 Arthur D. Little “Knowledge Management and Applied AI”
1986 Böhme & Stehr: “The Knowledge Society”
1987 Sveiby & Lloyd: “Managing Knowhow”
1990 Senge “The Fifth Discipline” (Learning Organization)
1991 Thomas Stewart: “Brainpower” article in Fortune
1993 Prusak & alia: Boston KM Conference (150 participants)
1993 Wiig “Knowledge Management Foundations”
Intellectual Capital Management (ICM)
Hall
St. Onge
Value
Sveiby Creation
Skandia/Edvinsson
Stewart
Teece
Sullivan
Petrash Value
ICM Gathering Extraction
Lev
1980 1985 1990 1995 2000 2005
From <http://www.sveiby.com/articles/icmmovement.htm>
The Field Is Dynamic!
We continue to learn about people and knowledge with
profound consequences for KM
 Successful KM requires understanding of underlying
knowledge-related mechanisms in people and organizations
 Much more than realized, decisions are made by tacit activation
of mental reference models
 Mental models are often encoded stories of static scenes,
dynamic episodes, procedures for work, and complex situations
 People learn / remember stories and concepts better than facts
 Expertise is a tacit and abstract personal capability to innovate,
learn, blend mental models, see implications, and to act
Situation Handling Requires Knowledge
Knowledge
Mental Reference Models – Concepts – Understandings – Judgments – Principles – Facts
Decision-Making/
Sensemaking Implementation
Problem-Solving Effective
Information Understanding Action
of
Initial Situational Situation Action Space Decision
Execution
Situation Awareness and Innovation Capability
Feedback Feedback Feedback

Corrective Corrective
Actions
Adjustment Monitoring Adjustment
Actions
to Change to Change
Situation
Governance Competence Situation
New New New

Information Information Information
Ongoing Situation
KM Past & Future 2004/ 7 Copyright

Copyright ©
© 2004
2003 Knowledge
Knowledge Research
Research Institute,
Institute, Inc.
KM – Its Basic Nature
KM Ideally, KM governs knowledge-related
activities and processes in all parts of society to:
 Improve effectiveness of personal actions –
at work and at home
 Strengthen enterprise behavior to:
Increase value to customers
Provide strong competitive position
Improve stakeholder relations
Capability to be responsible societal citizen
Effective Actions Are Needed at All Levels
Apply Knowledge Enterprise Strategy
Level
Make Decide &
Execute
Sense Innovate
Monitor
Apply Knowledge Division Business Plan

Level
Make Decide &
Execute
Sense Innovate
Monitor
Apply Knowledge
Make Decide &

Execute
Sense Innovate
Monitor
Personal Operations Apply Knowledge

Level
Make Decide &
Execute
Sense Innovate
Monitor
An Important Change
Within the Knowledge-Vigilant enterprise
most people possess an
“Asset Management Mentality”
to create, maintain, exchange, and utilize
Intangible Capital
to be as effective as possible in all their pursuits
KM is cornerstone of Integral Management
Remember – KM Covers Five Domains!
CONTEXT
Business Purpose &
Environment of
Enterprise KM
UNDERLYING "What We DO" ORGANIZING

MECHANISMS Knowledge Management PRINCIPLES
Associated Disciplines Activities & Actions "Meta KM"
Cognitive, Technical, ... (KM Work)
RESOURCES
"1001" Choices of
KM Methods, People
& Technologies
Knowledge Management Counts!
Progress and viability are driven by human capital
Most studies have been inconclusive . . .
However,
long-term effects of improved knowledge indicate:
1 % literacy score increase leads to
2.5 % personal productivity increase
1.5 % increase in GDP
Source:
International Adult Literacy Survey: Literacy scores, human capital
and growth across fourteen OECD countries
Serge Coulombe, Jean-François Tremblay, and Sylvie Marchand - Statistics Canada - Human Resources and Skills Development
Few Are Knowledge Vigilant!
Relative
Frequency
US Organizations
Weighted by Number
US Organizations of Employees
Regardless of
Size
KM
Sophistication
Qualitative Estimates
Unconcerned Aware Reactive Literate Proactive Vigilant

Knowledge importance Some employees and executives Many employees understand KM's Many employees understand Most employees and managers All pursue knowledge-effective
is generally not considered are generally aware of value and how knowledge is created, KM's value for durable success have good understanding of and intelligent-acting behavior as
Knowledge is managed knowledge importance transferred, and used and how knowledge is how to manage knowledge assets Integrative Management cornerstone
sporadically and intuitively. They can't make KM a priority KM initiatives are pursued piecemeal created, transferred, and used to achieve enterprise KM practices and capabilities
Culture is knowledge ignorant and don't know how to pursue KM Culture does not support KM They know KM is needed and and personal goals. are everywhere.
Culture and incentives are not issues only act with outside assistance KM initiatives shape a broad vision Culture and incentives fully support
Culture and incentives changes Culture and incentives are changing KM and are “Knowledge-Aware” .
are not yet supportive of KM.
Within the enterprise, KM often pursue separate and disjointed efforts like:
KM/IT Applications
Learning Organization
Intellectual Capital Management
Advanced enterprises pursue KM as part of Integrative Management
KM – Its Significance
Personal:
Improved earnings potentials
More effective personal decision making
Raised quality of life
Industrial:
Greater competitive effectiveness
Better products and services
Beneficial for customers and consumers
Societal:
Increased progress from better educated citizenry
Improved social and economic environments
More desirable society
KM Scope Shifts to Wider Focus
Relative
Frequency
Future
1990s KM Distributions
KM Distributions
1980s
KM Distributions
Knowledge
Scope
Task Operational Tactical Strategic Long-Term

Oriented Focus Focus Focus Purpose
Focus Focus
Qualitative Estimates
KM – Its Real Significance
Being Informed IS NOT
Being Knowledgeable!
KM provides opportunities for people and
organizations to make more effective and
knowledgeable decisions
You must be knowledgeable to see the implications of
situations described by information
Success in today’s global society requires being
Knowledgeable and Informed – Both!
KM – Societal Significance
Strategic goal for 2010 set for Europe

at the Lisbon European Council – March 2000:
"to become the most competitive and dynamic

knowledge-based economy in the world,
capable of sustainable economic growth with
more and better jobs and greater social
cohesion."
KM and Innovation Are Key
“A Focus on Cost-Cutting and Efficiency
Has Helped Many Organizations Weather
the Downturn, But This Approach Will
Ultimately Render Them Obsolete.
Only the Constant Pursuit of Innovation
Can Ensure Long-Term Success.”
DF Muzyka, FT Sep 17, 2004
Knowledge Management Is the

Innovation Enabler by Providing the
Driving Intellectual Capital Resources!
Extra Slides
Added for Reference
Our Work Is Becoming More Complex
Frequency of Past Future
Occurrences Work Work
Required Some Abstract Workers Need Considerable
Knowledge Knowledge Additional New Knowledge
Can Be Is Needed Knowledge Is Required
Explicated
(Some Can Be
Automated) Potentials for
Delivering Work
Requiring
Greater Knowledge
Candidates
for
Intelligent
Automation
1. Routine tasks 2. Logical or less 3. Complex, yet 4. Unexpected 5. Totally 6. Unusual

(simple, common expected challenges unexpected challenges Complexity
repetitive, and variations extensions of (conditions), situations and outside of Work
well understood) (transformations) routines but with a mix non-routine job scope
of integrated with of routines and challenges,
Routine Situations external factors external factors yet within the
larger job scope
Small Actions Lead to Broad Behavior
Innumerable
Nano Actions
R&D-Marketing
Micro
"Action"
Effects Effects Costs Realized
of of Service Quality Performance
Actions Actions Product Quality
Customer Support
Micro etc.
"Action"
Market
Consolidated and
Engineering Enterprise Stakeholder
Behavior Response
Micro
"Action"
Manufacturing
Micro
"Action"
Delivery & Start-Up
Most Decisions Are Nonconscious
and Result from Activating Mental Reference Models!
Situation Facts-Objectives Reasoning

Strategies
Options for
decision Decision
and
innovation
Covert activation of
biases related to Reference Model
Representation previous emotional Library
of future [or meaningful] Personal Mental
outcomes experiences of Models of
comparable Wellknown Cases
situations
Adapted from Bechara et alia, Science 28 Feb, 1997 When Needed, New Situation-Specific
Mental Reference Models
Are Created by Conceptual Blending
Some Inter-Domain Functions
Guide Tactical & CONTEXT Provide Understanding
Strategic Directions for KM Governance
Business Purpose &
Business Context Shapes Which & How Environment of
Presents Needs for
Underlying Mechanisms Are Activated Enterprise KM Organizing Principles
Provide Understanding of
Provides Determines Relations between Other
Business Value KM Direction Entities & Mechanisms
Provide by Effective from Business
Information on KM Practices Requirements
Mechanisms
Determine KM
UNDERLYING Implementation
Options
"What We DO" Provide Understanding
for Effective KM Work ORGANIZING
MECHANISMS Knowledge Management
PRINCIPLES
Associated Disciplines Activities & Actions
Methods & Actions Presents Needs for "Meta KM"
Cognitive, Technical, ... Activate Mechanisms
(KM Work) Organizing Principles
Presents Needs Provide

to Create New Applicable
Solutions & Methods &
Methods Other Resources
Provide
Information on RESOURCES Present Needs for
New Mechanisms Organizing Principles
"1001" Choices of
Underlying Mechanisms KM Methods, People Provide Understanding
Shape Methodologies & Technologies for Creating Resources
Examples of KM Domain Areas
Examples Examples
Enterprise Work Environment Markets & Customers Stakeholders Axiomatic Basis
• Strategy & Direction • Products & Services • Competitive Situation • Objectives • Systems Perspective
• Structure • Infrastructure • Customer Requirements • Requirements • Holistic Natural History
• Financial Situation • Culture & Practices • Economy
Examples • TOWS Axiological, Theoretical,
Behavioral Systems Epistemological Foundations
• Learning
• Decision Making CONTEXT • Integrated Value Theory
• Natural Philosophy of Knowledge
• Innovative Behavior
• Constraints
Business Purpose & • Measurement Theory
Environment of
Sciences of Knowledge
Motivational Systems Enterprise KM • Biology of Knowledge
• Understanding Benefits • Psychology of Knowledge
of Supporting Enterprise • Economy of Knowledge
• Enterprise Incentives, • Sociology of Knowledge
Practices & Culture • Semiotics
• Computation Theory & AI
Social Systems UNDERLYING "What We DO" ORGANIZING • Anthropology of Knowledge
Knowledge Management • History of Knowledge
• Societies MECHANISMS PRINCIPLES
• Governments Activities & Actions
• Enterprises Associated Disciplines "Meta KM" Structural Foundations
• Family Units Cognitive, Technical, ... (KM Work) Knowledge Governance of Knowledge Systems
• Economy & Culture of Knowledge
Economic Systems • Knowledge-Based Value Systems
• Systems of Capital
• Global, National
& Local Economies
Knowledge Systems Design for
• Market Mechanisms RESOURCES
Holistic Social Development
Physical & Technical "1001" Choices of (Political KM Processes)
Systems KM Methods, People • Theory of Holistic Social Development
• Endogenous Growth Theory
• Production Facilities & Technologies • Theory of (Social) Human Capital
• Transportation Systems
• Informatics Systems
Knowledge Systems Design
KM Professional KM Capabilities Management AI & Advanced IT for Organizational KM Processes
Education Develoment • Knowledge-Leveraging Applications • Value-Based KM Strategy
Mentality • (Organizational) Human Capital Developm
• Practical KM Work • KM Methods • Active KM Capabilities
• Managing from • Instrumental Capital Development
• KM-Related Theory • KM "Systems" • Passive KM Support
Knowledge Perspectives
• Business Science (OR) • KM Practices (Infrastructure) Adapted from F.J.Carrillo, "Meta-KM: A Program and a Plea,"
Journal of the KMCI, Vol. 1, No. 2, Jan 2001.
Examples
Knowledge-Based Business Diagnostics
Understanding
Diagnostics
Methodologies
Understanding Understanding
the Nature of the Applicability
Knowledge
Intellectual of Different
Work under Diagnostics Knowledge-Related
Varying Initiatives and
Conditions Solutions
Understanding
Business Processes,
Operations, Practices,
and Strategies
Maybe – Just Maybe –
We Need to Understand
Financial
Times
March 6
2004

KM 20 Years Later

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KM 20 Years Later

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Verfügbare Formate

Knowledge Management 20 years

after ... The evolution and increasing

1980 1985 1990 1995 2000 2005

Feedback Feedback Feedback

New New New

KM Past & Future 2004/ 7 Copyright

Apply Knowledge Division Business Plan

Make Decide &

Personal Operations Apply Knowledge

KM is cornerstone of Integral Management

UNDERLYING "What We DO" ORGANIZING

Unconcerned Aware Reactive Literate Proactive Vigilant

Task Operational Tactical Strategic Long-Term

Strategic goal for 2010 set for Europe

"to become the most competitive and dynamic

Knowledge Management Is the

1. Routine tasks 2. Logical or less 3. Complex, yet 4. Unexpected 5. Totally 6. Unusual

Delivery & Start-Up

Situation Facts-Objectives Reasoning

Presents Needs Provide

the Nature of the Applicability

Work under Diagnostics Knowledge-Related

Varying Initiatives and

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