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Monday, September 26, 2005

Opening organizational channels for effective knowledge capture

By Kevin Desouza and Yukika Awazu, The Engaged Enterprise, and Sajjad M. Jasimuddin, University of Dhaka

An organization not utilizing knowledge outside the company can’t effectively compete in the marketplace, especially when there is so much to gain – even from competitors. Here, Kevin Desouza, Yukika Awazu and Sajjad M. Jasimuddin detail many valuable sources to tap into in order to maximize knowledge potential and organizational productivity.

Organizations that fail to listen, link and leverage their external sources of knowledge make themselves vulnerable to crises attributed to poor appreciation of signals beyond the company boundaries. Here, we shed light on how organizations can better tap into external sources of knowledge and better prepare themselves for increased competition in the future.

Know your knowledge source
Most organizations need to concern themselves with external sources of knowledge from suppliers, business partners, customers, government and regulatory bodies, academia and competitors. Depending on the industry in which the organization operates, some sources of external knowledge may carry more weight than others. For example, a supplier of automobile parts to Honda has to pay close attention to the customer, Honda. In other cases, such as an R&D lab, paying attention to emerging research might be of more interest. While some organizations may emphasize one source over others, all organizations must be cognizant of each kind of source.

The right people in place
Suppliers are an important ingredient to an organization’s operations. They represent the provider of raw-materials, work-in-progress or finished goods that an organization consumes to attain its goals. Suppliers normally have focused and narrow niches, i.e. they know their slice of the work the best. For example, a supplier of automobile parts is an expert in the calibration of that part. The suppliers can be said to possess deep knowledge in their domains. The organization must then turn to these knowledge sources in their specialized areas.

For a car manufacturer, this will involve listening to suppliers about inventions and innovations in automobile parts such as the brakes or the gear box. Suppliers of products and services are seldom exclusive to one organization; in most cases they serve multiple organizations. In the automobile industry, it’s not uncommon to find a supplier of one product serve two or more organizations who may be competitors. In this case, the organization has an opportunity to gain knowledge about one’s competitors through the supplier. This is not an endorsement for unscrupulous behavior, like industrial espionage. Rather, we’re asserting that organizations must use their suppliers as an avenue to interact with other members of the value chain and competitors.

Suppliers can be valuable interaction spaces. For example, suppliers normally host conferences to showcase their products and services. These are well attended by all clients of the suppliers, are rich avenues for discussion among competitors and are positive forums for seeking ideas about innovations.

Business partners
In addition to suppliers, an organization must interact with other business partners like office equipment manufacturers, technology providers, legal firms, logistics and distribution centers and advertising houses. Each provides goods or service that enables the organization to be more effective in meeting objectives. Like suppliers, business partners have deep knowledge in their areas of focus, as this represents their bread and butter. The organization must look to these partners for knowledge about their better internal operations.
For a hospital, for instance, business partners may have cutting-edge insight on new sanitary products and disinfectants. A manufacturing firm can turn to FedEx or UPS to help them chart out effective distribution and logistic mechanisms. In the same vein, the manufacturing firm can contact Dentsu, Inc., a marketing house, to help with product promotion and advertising materials.

No organization can possibly be self-sufficient in the various activities needed to deliver on customer value. If an organization thinks it is, they’re using their resources sub-optimally due to losses in terms of opportunity costs. An organization must forge the right type of agreement with a business partner depending on the type of knowledge sought.

Remember your base
Businesses exist to serve their customers and unless an organization can understand its customer needs, transform those needs into products and services, and manage the relationship, they won’t survive in the marketplace. Knowledge about the customer is processed demographic, psychographic and behavioral information. Knowledge to support the customer is concerned with improving the user-experience through products and services. Knowledge from customers is the collective insights, ideas, thoughts and information received from them. But knowledge from the customer is not the same as just receiving complaints or queries. As such, an organization must actively seek out knowledge in order to be better prepared to conduct product changes. Customers know the products better than the organizations that produce them, so they’re an invaluable source of knowledge.

Government and regulatory bodies
Most organizations resist interacting with the government and various regulatory bodies like the Food and Drug Administration (FDA) or Internal Revenue Services (IRS). Yet such agencies have knowledge that’s rare and protected due to the nature of their work. For example, if an organization faces issues of electronic fraud or online theft, working with the Electronic Crimes Taskforce of the FBI or other agencies will provide the organization with access to valuable knowledge.

Most organizations make the mistake of working with the government and regulatory agencies after an incident takes place. For example, after a theft occurs or a fire breaks out, the organization may be willing to embrace inspections by the Police department and Fire marshals. But before the incident, these inspections may be viewed as a burden and an unnecessary chore. Rather than being reactive, we suggest being proactive. An organization must have the ability to tap into these external sources for knowledge on the environment, changes in laws, and effects of political conditions on businesses.

Foreign asset
One major Asian organization we know had an excellent relation with the tax authorities and they leveraged this relationship to help them plan for expansions in South America by learning about various taxation rules and regulations. They wanted to know how best to mobilize assets to capture a market share in South America. Lacking knowledge about issues such as currency regulations, culture and trade rules, the organization sought help from the Commerce and Revenue Departments. Surprisingly, all the organization had to do was sign-up on a list for routine lectures and seminars on how to expand to foreign locations given by the two government units. By attending these talks, government officials helped them bridge barriers and make local connections in the foreign countries.

Government organizations routinely conduct research projects on topics of interest. For example, in the US, the Government Accounting Office routinely publishes reports on topical issues. These represent viable knowledge resources; an organization can use these reports to benchmark their practices with that of the industry. It’s also common for a government organization to host forums, where private-sector enterprises are invited to participate. An organization must embrace such opportunities and actively participate in them to tap into a rich knowledge discussion. For example, it’s common to have debates hosted by various law enforcement agencies and topics addressed can help organizations bolster their own disaster and security management practices.

Back to school
Academia, especially business schools and engineering sciences, represents a viable external source of knowledge for business organizations. A computer manufacturer has vested interest in keeping abreast of developments in premier computer engineering departments, in order to get access to new knowledge and discoveries (or failures). Academic researchers generate new knowledge on a constant basis and are sometimes better at knowledge generation than the private sector. Many studies take global perspectives of the problem, and hence knowledge generated is widely applicable to any business belonging to a given industry or facing a similar problem. Some of the classical management texts have been embraced by organizations in a wide assortment of industries.

Academics have the advantage of being neutral in their analyses and can get access to normally private data, by promising non-disclosure of sensitive materials. By getting access to a wide range of data, knowledge generated can be put through greater rigor in calibration, and hopefully be of higher value. Academic knowledge must be tapped by seeking explicit and tacit sources.

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