Knowledge emerges through interaction of people in clusters

A report from the McMaster World Congress

The headline sums up perfectly what stuck in my mind at the 22nd annual McMaster World Congress. That exactly what was happening at the event, which was hosted by the university’s Management of Innovation and New Technology Research Centre at the Hamilton Convention Centre on Jan. 17 to 19.

Organized and run by the students of McMaster's Michael G. DeGroote School of Business, the conference was a blend of business and academic theories and practice and concentrated on two major themes—The Management of Electronic Commerce and the Management of Intellectual Capital—and this report will focus on some of the KM highlights.

Real-world KM stories Two organizations that have initiated KM projects in the last two years provided some solid tips and lessons they had learned from their experiences. Both started slowly and with manageable projects but have plans for more complex and strenuous activities in the future.

Dofasco, one of Canada's largest steel producers, has a need to keep up with the high pace of change—50% of its current products did not exist 10 years ago. The company maintains close customer relationships and has a culture that reflects it motto: "Our product is steel, our strength is people." The project began with:

• getting an understanding of what KM is from reading and conferences,

• doing an environmental scan and benchmarking, learning from other organizations what they had done and learned;

• identifying the drivers/needs of the organization through employee interviews, surveys, exit interviews, management interviews;

• identifying the host of opportunities;;

• defining the strategies and approach as well as the justification and potential benefits, and;

• creating a roadmap.;

Dofasco’s Victor Tychowsky told the audience that recurring themes surfaced when they looked inward for the key drivers and needs of the organization. He cited the need for:

• accelerated and enhanced problem solving capabilities;;

• elimination of reinvention;;

• identification and adoption of best practices;;

• knowledge capture because the peak of retirements are expected in the next 10 years, leveraging external knowledge.;

The group chose three areas to focus on for easy wins and to get a solid base of KM initiatives underway: repositories, access/flow, and collaborative culture. They wanted their primary activities to be specific and achievable, to address the current issues, to create standardization that could be built upon further.

They created a Knowledge Navigator Web site on their intranet to improve the access to and flow of knowledge. This enabled the other two projects to move ahead and provided a single point where knowledge-based research and activities could be integrated. The site acts as a centralized pointer, not a duplicate of resources. There is a link to the archives of project reports (the repository) that captures about 85% of the organization's efforts. Dofasco found it an easy way to capture and codify knowledge that would be retained after employees depart, to share that knowledge, to gather best practices and lessons learned, and to reduce reinvention.

To foster the collaborative culture of the organization, Dofasco created three communities of practice: surface engineering, annealing furnace technology and creativity and innovation. The company used the onion skin model with a core group at the center of the community (those 20 people who need to know what others are doing, the practitioners, surrounded by the community of interest); followed by a wider group who need to be kept in the loop but are not at the core; and then finally surrounded by the outreach network of suppliers, customers, joint ventures and universities who need to be connected to the community as well.

Agreeing on definations Health Canada's knowledge management group's vision is to analyze, create, share and use knowledge strategically to maintain and improve the health of Canadians. The organization’s Marie Lalonde discussed how the group began by establishing working definitions:

• data—facts, observations that are not organized, don't really make sense on their own;;

• information—data arranged in some meaningful way, needing some interpretation;;

• knowledge—information in the mind, in a context that allows it to be transformed into action like making a decision.;

Health Canada developed a KM database comprised of conference notes and proceedings, books, and later information about the organization itself because employees had difficulty knowing what other branches and departments did know and how to find people and information. They initiated a speakers series that increased awareness of KM issues and concepts as well as an orientation program called Discovering Health Canada, which shares more information about the organization so that employees can share knowledge.

It’s interesting to note that this organization has no intranet but uses lots of databases. Instead of the intranet content model, they use a database of databases as their gateway. Continuing and future projects include: a presentations database, a database that combines a variety of data with tools for analysis, a KM strategy to speed up the new drugs approval process (the agency is using Open Text's LiveLinks to help manage the huge amounts of information received), a knowledge map on the topic of injury prevention and control in the First Nations & Inuit Health Branch.

Although it started down the KM path two years ago, Health Canada is pleased with its progress and credit the many small grassroots initiatives for enabling their progress and support. Next steps include: an information management framework, policy and architecture, infrastructure, more management of electronic records, a KM framework with guiding principles and policies, more awareness and community building, as well as exploration of new technology. Further, explains Lalonde, they are looking for more success stories and lessons learned, are working on communication and collaboration, both inside and outside of the organization.

Intellectual Capital Management Wendy Buckowitz of PriceWaterhouseCoopers discussed the Yin & Yang of Intellectual Capital Management in the context of new U.S. practices, supported by law, of issuing patents for business processes. With respect to ownership of intellectual capital, 1997 to 1999 saw the highest number of business methods software patents issued. She gave some useful definitions:

• intellectual capital (IC)--all forms of knowledge;;

• intellectual assets—a form of IC, knowledge that can be used exclusive of the creator, in other words, organizations can own it;;

• intellectual property—intellectual assets meeting specific legal criteria;;

• patent—grant of a property right to an owner of the invention for 20 years ... something new, novel, useful and not obvious;;

• business method—patents of business processes or ways of conducting business, often embedded in software, often using the Internet.;

Examples of business methods that have had patents issued include the Internet reverse auction technology from Priceline.com, and one click ordering from Amazon.com. There are definitely positive and negative concerns regarding this new practice. Some believe it will reward innovation while others feel that it might reduce innovation, especially if the patented process is embedded in software, and therefore others can't build upon it. Others say the cost of patenting may edge out the most innovative companies in the business methods space, patents increase public access to knowledge and fuel the virtuous cycle where more knowledge helps spur more innovation, the patenting process slows down innovation.

Digital Capital Don Tapscott, chairman of Digital 4Sight and author of “Digital Capital: Harnessing the Power of Business Webs,” spoke about the new infrastructure in the new economy, and how organizations are embracing the Net to change their business. The business web, through its emphasis on inter-networked human capital, is helping to change the models of doing business, and wealth creation. An example, Amazon.com whose authors, reviewers, and associates are all part of the organization's inter-networked human capital, but not owned by Amazon. He talked about different kinds of business webs:

• agora, self-organizing business webs, such as eBay.com, Fastparts.com, e2open.com;

• aggregation, hierarchical business webs, such as etrade.com, eschwab.com, peapod.com, lendingtree.com;

• alliance, where there are products and services available in self-managing alliances like linux.com and mindstorm.com;

• value chain, such Cisco and Nortel, which, like Amazon, rely heavily on inter-networked human capital that they don't own.;

Tapscott says these distributed networks, where distribution is based on the Net, are where the new models will be seen, and they will be using human inter-networked capital. Here, brand will be very important and will become the relationship. He sees advertising and marketing being turned upside down.

So if human capital and an inter-networked world are at the center of business success, knowledge sharing strategies are definitely key for organizations searching for more productive ways to do business.

Jane Dysart is a principal in Dysart & Jones Associates and program manager of the KMWorld 2001 Conference in Santa Clara on Oct. 29 to Nov. 1.