The Navigator has five areas of focus. Aptly focused and directed organizational attention enhances the value of the com- pany’s intellectual capital.
The actual layout of the Navigator is like a house. The triangle at the top being the attic, containing the old balance sheet, which still fundamentally acts as the Holy Grail of accounting measures.
However, the financial measures are an indication of how the company was at a precise moment in the past and are not forward looking. The term ‘focus’ is supposed to allow for a more futuris- tic look into how measures of performance and efficiency can lead to improvements.
The ‘walls’ of the house represent the present environment enclosing the company’s current activities. These are captured generically by two elements: ‘customer focus’ and ‘process focus’.
The first measures a distinct type of external intellectual capital, and the second is a broader measure capturing structural capital.
At the bottom is the foundation of the house: the ‘renewal and developmental focus’, which measures how well an organization is preparing for the future. This is assessed through developmen- tal programmes for employees, research and development for products and services, as well as addressing future scenarios of environmental development.
In the centre of the house is the ‘human focus’, which is the heart and soul of the entire organization. This part of the organi- zation leaves every day at 17.00, and one can never be entirely sure of their return. People represent the ‘vitals’ for running any organization. Thus, monitoring the competence and the abilities of the employees, as well as future plans for development, is a key measurable item in this focus area.
The Navigator is used as a model to drive sustained business development and to ensure that management’s actions support the renewal and development process as well as financial per- formance. The Navigator provides Skandia with a nomenclature for intellectual capital reporting. Looking distinctly similar to the balanced scorecard, the Navigator detracts by providing empha- sis on the human factor. Table 5.1 shows a sample of actual meas- ures used by Skandia (Edvinsson and Malone, 1997).
their internal competencies. This situation is aggravated by cir- cumstances where the organization has many business units, organized as profit centres and working independently. Valuable knowledge is held within these ‘silo centres’ but does not get passed around or made use of by the whole organization.
Technology plays a pivotal role in enabling knowledge man- agement, since it helps to bridge organizational silos and enhance interaction. We provide below a brief review of some key consid- erations that need to be taken into account when using technol- ogy to manage for knowledge.
Table 5.1 Sample of actual measures by Skandia
Focus Measures
Financial Profits resulting from new business operations ($) Lost business revenues compared to market average (%) Value added/employee ($)
Value added/IT employee ($) Investments in IT ($)
Customer Market share (%)
Telephone accessibility (%) Customer rating (%)
Customer visits to the company (no.) Days spent visiting customer (no.) Human Leadership index (%)
Motivation index (%)
Average years of service with the company (no.) Average age of employees (no.)
Time in training (days/year) (no.)
Process Administrative expense/total revenue (no.)
Cost of administrative errors/management revenue (no.) Contracts filed without errors (no.)
Processing times, out payments (no.) IT expense/employee ($)
Renewal and Competence development expense/employee ($) development Marketing expense/customer ($)
Share of training hours (%)
Average age of company patents (no.) Patents pending (no.)
Technology for knowing what organizations know
Every day, organizations large and small create billions of bytes of data about all the different aspects of their business, millions of individual facts about their customers, employees and opera- tional details of products or services rendered. For the most part, this data is kept either in individuals’ heads or in computer data- bases which, as the size of the company increases and its infor- mation hoard grows, becomes larger and more difficult to access.
Experts have estimated that only a small percentage of data cap- tured is actually made use of again to aid the decision-making process. So, while the technologies for manipulation and presen- tation of data has improved by leaps and bounds, the source data still sits divided in individual segments and hidden in a dusty database, whether it is a cupboard or state-of-the-art e-repository.
There is, therefore, a need to address ‘data warehousing’ so that organizations can use a common pool of relevant information or, alternatively, pool the different sources of existing information and enable a search for relevant information when required.
Data warehousing/creating knowledge repositories
As Ruggles (1998) points out, knowledge repositories capture explicit, codified information wrapped in varying levels of con- text. Repositories are used to store and make accessible ‘what we know’ as an organization. Repositories include ‘data ware- houses’, which are useful in knowledge management when the mining and interpretation of their content allows employees to become better informed. However, current warehouse systems tend to be relatively devoid of context, requiring significant inter- pretation by users. It is suggested that more sophisticated reposi- tory systems are developed since they can enable wrapping more context around information. The best repository attempts to add context to information as it is being captured. For example, sim- plifying and organizing the documents stored, into common understandable headings, easily searched by everyone in the organization (based on a common context) and not just limited to the authors of the particular document. Additionally, the system should allow users to comment on the vast assemblage of materi- als (such as text documents, spreadsheets, images and audio recordings) collected within the database. Incorporating these comments and feedback means that each employee is not only able to draw from, but also is able to contribute to a dynamic evolving experience base. Whatever the level of sophistication,
repositories essentially capture data, information and knowledge in forms and through processes that enable access throughout the company. Over time, these repositories will contribute to the maintenance of the organization’s shared intelligence and organi- zational memory.
Perhaps the most important concept that has come out of the data warehouse movement is the recognition that there are two fundamentally different types of information systems in all organizations: operational systems and informational systems (Orr, 1996).
Operational systemsare, just as their names imply, the systems that help us run the day-to-day operations of the organization.
These are the backbone of any organization and, because of their importance to the organization, almost always end up being the first areas to be computerized (e.g. payroll function, inventory control, accounting systems, etc.). Over the years, these opera- tional systems have been overhauled and extremely well inte- grated into the organization. Indeed, most large organizations would not be able to function without their operational systems.
On the other hand, there are other functions that go on within the organization that have to do with strategic planning, forecast- ing and managing. These functions are also critical to the organi- zation especially in the current Internet-speed environment.
Functions like market planning and inventory management also require information systems to support them. However, these functions are different from operational ones and the types of sys- tems and information required are also different. The knowledge- based functions are information-led systems.
Informational systemsare concerned with analysing data and making decisions, often major decisions, about how the organi- zation operates currently and in the future. Hence, not only do informational systems have a different focus from operational ones, they often have a different scope too. Where operational data needs are normally focused upon a single area, informa- tional data needs often span a number of different areas and need large amounts of related operational data.
Using an intranet
Not every intranet project should be considered a knowledge- management effort. Intranets are often used to support knowledge access and exchange within organizations. Unlike technologies such as transmission control protocol/Internet protocol (TCP/IP) and linked hypertext web pages, intranets operate within a firm’s boundaries, which are usually protected by firewalls and pass-
word access. Increasingly, however, these boundaries are drawn to include stakeholders, suppliers and customers in order to allow them to participate in the exchange of knowledge. The intranet can also be used to support a variety of needs, from infor- mation sharing among research teams to equipping frontline staff with service details and account backgrounds. In addition, intranet-based electronic point of sales of the different service provided can be implemented to cut across country barriers.
Also, by allowing customers to access relevant information and interact directly with the organization, customer knowledge is enhanced by a constant flow of information not only within but also across organizational boundaries.
Technology for knowing what employees know
While capturing knowledge is the objective of the data ware- house, there is a need to complement this with systems that pro- vide access to knowledge or facilitate its transfer among individuals, e.g. software to facilitate group discussions and skills directories. These complementary initiatives recognize that to find the person with the needed knowledge and then success- fully transfer it from that person to another are very difficult processes. If a library is a metaphor for conceptualizing data warehouse projects, the Yellow Pages might represent the pur- pose of access to knowing what employees know, with the tech- nology emphasizing connectivity, access and transfer of individuals’ knowledge through the encouragement of face-to- face interactions.
Skills directory
A skills directory acts as the vehicle that moves, retrieves, points to and enhances the information that travels within an organiza- tion. Value is added to this information as it is used, acting as a building block that can later be turned into knowledge by its users. As data can become quickly outdated by the time it is cap- tured and organized, a skills directory should not only take a
‘gather and store’ approach but also act as a pointer to other infor- mation sources (i.e. another individual), encouraging the user to contact relevant people to find out more, for example, how a proj- ect was done and what additional lessons can be shared, since this information may well not have been captured within a writ- ten report.
The skills directory’s dual function of ‘gather and store’ and
‘pointer’ approach, enables for a dramatic increase in overall pro- ductivity. This is largely due to time savings in having to reinvent the wheel and to make use of current knowledge so that it can be improved upon, thereby helping organizations evolve towards being a truly learning organization. In addition, linking people with like minds and interests would promote innovativeness among staff to produce unique solutions. With the skills direc- tory, users can decide for themselves who the best candidate/can- didates is/are to help them add value to their work.
Using groupware
Groupware has long been seen as a way to encourage the sharing of ideas in a much more free-flowing manner than repositories or codified decision-support systems may allow. Collaboration is indeed strongly conducive to knowledge generation and transfer.
Groupware facilitates ‘anytime, anywhere’ collaboration spaces.
However, one should not adopt a ‘build it and they will come’
approach. It is necessary to find the right mix of people, process and technology elements and use groupware systems as the back- bone for the knowledge-sharing infrastructure. Among the pro- fessional services firms, Ernst & Young supports its thousands of knowledge workers with its KnowledgeWeb (KWeb), Arthur Andersen has its Knowledge Xchange and PriceWaterhouse- Cooper its Knowledge View system. Each organization has its own approach, content categories and usage policies, but all rely on the ability to not only represent ideas, but also discuss them.
Implementing knowledge management technology
There is constant bombardment of flyers and e-mails, ‘educating’
us on the various knowledge management tools that are in the market. However, how do we pick the appropriate tools for our organization?
To begin with, implementing a knowledge management system within an organization means analysing its current sources of information and knowledge. This includes not only capturing useful information from wherever it may exist, but also requires analysing e-mails, discussion database logs, as well as sources of customer interactions such as e-mails to customers and minutes of meetings with customers. The phases that a knowledge manage- ment effort goes through when capturing knowledge and the activ- ities related to completing each phase are typically: documenting knowledge, sharing knowledge and applying knowledge.
Therefore in general, knowledge management encompasses the broad range of capabilities needed to logically capture, organize, share and use knowledge elements in order to recognize prob- lems and suggest possible solutions. The following are some functions that are crucial for a successful knowledge manage- ment implementation. Technology vendors of knowledge man- agement tools must provide solutions that are:
1 Able to capture and organize. The system must be able to cap- ture and categorize knowledge in order of relevance, as well as being able to monitor the validity and accuracy of knowledge stored. The system must also allow for new knowledge to be inserted and the categorization able to recognize and prioritize information according to age.
2 Searchable. The system has to have an in-built search engine able to apply the contents of the database to incoming queries, and be able to match and establish whatever connections or relationships may exist between knowledge elements and query contents. The search engine could also be powerful enough to be Internet enabled. Such a system can match a query and pick external sources of information on the World Wide Web, which may have many pages of information perti- nent to the query. The search engine should also be capable of learning with every query, matching future similar queries to past ones, thereby maximizing the reuse of the knowledge ele- ments.
3 Able to recognize the user. Using application specific sources of knowledge within the knowledge management system, indi- vidual departments within the organization can have access to department-relevant information. For example, the IT depart- ment could have access to IT professional web sites while the finance department could have information sites of specific interests to the finance community.
4 Able to facilitate dissemination and learning. The knowledge management system is ideally capable of supporting multiple channel user access, so that the user (be it on e-mail or through the Web, or other forms such as chat rooms) is able to obtain specific information and knowledge from wherever he or she is and from whatever IT access he or she is using. After using a piece of information, the user should be able to add value of any new experiences learnt through use of the information, and also be able to alter the original information and store it back in the knowledge management system for future users.
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Learning knowledge management imperatives: present into future
We can currently observe increased requirements for better knowledge in the workplace to deliver competitive knowledge- intensive work. Demands have increased for customized and more sophisticated products and services. Globalization pres- sures have changed business worldwide. Nations which earlier supplied manual labour have started to compete with Europe, Japan and North America by offering competent intellectually based work. The Internet has given rise to knowledge workers across the globe who have access to the latest information, con- cepts, methodologies and so on. While access is still far from uni- form and large groups of people in Africa, Asia and South America will probably have to wait a long time for it, there has been a noticeable shift in the pattern of work organization. In these changed circumstances, heralded by the Internet era, those that have become accustomed to be leaders will need to build and apply intellectual capital better – they increasingly must manage knowledge systematically. The expectations are that we stay at the tip of the iceberg of change.