Linking Knowledge Management and Innovation: Shifting · PDF fileImplications 1. We have...

Linking Knowledge Management and Innovation: Shifting the Paradigm from Scientific Management

to Intelligence Amplification

V.K. Narayanan, Ph.D. Deloitte-Touche Jones Stubbs Professor of Strategy and Entrepreneurship

Associate Dean for Research

Lebow College of Business

Drexel University

Copyright V.K. Narayanan

Plan of Presentation

1. Changing economy

2. Maturation of the Knowledge Management (KM) field

3. Tailoring KM to innovation

4. Implications


CHANGING ECONOMY


Changing Economy

• Characteristics of knowledge economy

• Shifting demographics and the rise of Millennials

• Decline of the nation-state

• Role of non-governmental institutions


Shift to a Knowledge Economy: US Employment

0

5000

10000

15000

20000

25000

30000

1970 1975 1980 1985 1990 1995 2000 2005 2010

Manufacturing

Knowledge

Source: US Bureau of Labor Statistics Knowledge = Information, Professional, and Financial


Manufacturing Companies


Knowledge Economy Firms


Year of Founding

Firm Year of Founding

GM 1908

GE 1892

Unilever 1930

Royal Dutch Shell 1907

Firm Year of Founding

Microsoft 1975

Apple 1976

Cisco 1984

Amazon 1994

Yahoo! 1994

Google 1998

Facebook 2004

Twitter 2007


Market Capitalization

Firm Market Cap ($B)

GM 53.9

GE 275.2

Unilever 113.5

Royal Dutch Shell 212.1

Firm Market Cap ($B)

Microsoft 316.1

Apple 474.7

Cisco 112.9

Amazon 167.5

Yahoo! 35.9

Google 345.9

Facebook 117.7

Twitter 24.0


Employees

Knowledge economy demands

innovation.

Firm Employees (000s)

Market Cap/Employee

($M)

GM 212 0.25

GE 305 0.90

Unilever 171 0.66

Royal Dutch Shell

87 2.44

Firm Employees (000s)

Market Cap/Employee

($M)

Microsoft 99.1 3.19

Apple 50.3 9.44

Cisco 75.0 1.51

Amazon 97.0 1.73

Yahoo! 12.3 2.92

Google 53.9 6.42

Facebook 5.8 20.29

Twitter 2.3 10.43


Rise of the Millennials

• Who are they?

– Born: early 1980s-early 2000s

– “Digital natives” – grew up with technology

– Described as both civic-minded and narcissistic

• What are their expectations for the workplace?

– Unconventional path

– Jobs demanding innovation

– Lack of company loyalty

– Work-life balance

Millennials demand

innovation. Copyright V.K. Narayanan

Decline of the Nation-State

• From a single polar world to a multipolar world

• Strong and weak institutional infrastructures

• Weak global institutions and strengthening corporations

• Key implications:

– Innovation is increasingly likely to be globally distributed

– ‘Intellectual property rights’ has emerged as an area of national policy


Role of NGOs

• Bill and Melinda Gates Foundation

• Alfred P. Sloan Foundation

• David and Lucille Packard Foundation

• Robert Wood Johnson Foundation

• XPRIZE Foundation

These foundations are all significant funders

of innovation. Only foundations located in the US listed above Copyright V.K. Narayanan

The Shift in Actors in the Global Economy

Before

• Government

• Universities

• Industry

After

• Government

• Universities

• Industry

• Non-governmental institutions


MATURATION OF KNOWLEDGE MANAGEMENT (KM)


Developmental Trajectory of KM

• Tasks

• Types of knowledge

• Impacts of KM

• Expectations


Expectations of KM

1. KM yields its benefits only in the long run

2. KM has to be integrated with other organizational functions

3. To be successful, KM requires interfacing both technical and social/human aspects

4. One shoe does not fit all organizations

5. Has been reasonably useful in knowledge-lean domains


Knowledge-Lean Domains

Knowledge-Lean

Content Know what Know how

Search Content & Speed

Interpretation Fast

Technology Drives/Enables

Modes Codification Personalization Social network

Paradigm Scientific management


Migration of KM Technology

Knowledge-Rich

Knowledge-Lean

Kn

ow

led

ge

Maturity

Lessons/Technology


Migration of KM Technology

Knowledge-Rich

Knowledge-Lean

Kn

ow

led

ge

Maturity

Lessons/Technology

Innovation


Knowledge-Lean and Knowledge-Rich Domains

Knowledge-Lean Knowledge-Rich

Content Know what Know how

Discover what Discover how

Search Content & Speed Speed

Interpretation Fast Difficult & Slow Iterative

Technology Drives/Enables Enables

Modes Codification Personalization Social network

Information arbitrage Visualization Fail fast

Paradigm Scientific management Intelligence amplification


TAILORING KM TO INNOVATION


R&D Spending and Innovation

Top 10 R&D Spending

• Volkswagen

• Samsung

• Roche Holdings

• Intel

• Microsoft

• Toyota

• Novartis

• Merck

• Pfizer

• Johnson & Johnson

Most Innovative Companies

• Apple

• Google

• Samsung

• Amazon

• 3M

• GE

• Microsoft

• IBM

• Tesla Motors

• Facebook

Source: Strategy and Business Copyright V.K. Narayanan

Innovation Success B

reak

thro

ugh

In

crem

enta

l

Ch

arac

teri

stic

s o

f In

no

vati

on

Process Product Type of Innovation

High Risk – High Return New product success = one in eight New business startup = one in twenty

Persistent Application of Routines


Breaking Down Innovation Over Its Lifecycle

Sourcing & Screening of

Ideas

Design

Produce & Commercialize

After Sales

Knowledge-Lean

Knowledge-Rich


Sourcing And Screening of Ideas Te

chn

olo

gy

Incr

emen

tal

Bre

akth

rou

gh

Met Unmet Market Needs

The key challenge is to match unmet market

needs with a technological solution to earn returns greater than the cost of capital.


So What Is the Challenge?

• Many technology developers are not really aware of the market needs

• The market for which a specific technology is targeted is often not the “best” market for the technology

– Post-it Notes

– Kevlar

• First designs are usually not customer-friendly


Innovation

KM’s role in innovation is to enable performing three key tasks:

1. Information arbitrage

2. Visualization

3. Fail fast


Task 1: Information Arbitrage

• Linking solutions and market needs

• Migrate technologies to their most profitable uses

– For technologies, find “right” markets

– For market needs, find “right” solutions

Easier said than done!


Task 1: Information Arbitrage Requirements

Elements

• Knowledge Depositories

• Innovation Ecosystem

• Knowledge Brokers

• Arbitrage Routines

• Supportive Culture

Illustration

• Chemical Biology Platform

• Intel

• CVC Managers, Consulting Firms

• Netflix

• Crowdsourcing – Chatter Communities

Incubators and National Policy Makers are slow to wake up to the Information Arbitrage Requirements Copyright V.K. Narayanan

“In a move that recalls the early days of computers, when collaboration trumped competition, Motorola announced it was teaming with Hakkens on the project”

Cristina Lindblad, Bloomberg News November 4-10, 2013

Motorola and Dave Hakkens


Task 2: Visualization

• Electrolux Story: Bagless Vacuum, and Innovation Triangle (Design, R&D, and Manufacturing)

• Visualization has been enabled by various tools: e.g. CAD, 3D Digital Modeling, Rapid Prototyping

• Deeper engagement of the Customers


Visualization: Bringing the Voice of the Customer into the Design Process

• Obsolete Approach

• Needed Approach

Idea Design Process

Prototype

(Design, R&D, Manufacturing)

Deeper Understanding of Customer’s Needs

Engage Customers in Design

Monitor Use


KM’s Role in Visualization

1. Build Voice of the Customer

– e.g. Customer Immersion Laboratories

• Engaging Lead Users

2. Critical Analysis of Product Feasibility

– e.g. Boot Camps

• Google’s bootcamp for design


Task 3: Failing Fast

• Innovation is riddled with failures

• This necessitates three activities:

1. Learn from failure (Uniquely KM)

2. Rapid abandoning of unworthy projects (Enabled by KM)

3. Tolerate failure (Cultural shift)


KM’s Role in Stimulating Failing Fast

1. Project Execution

– Linking of KM and Human Resource Management (HRM) in Project Management Practices

2. Strategic Experimentation


Strategic Experimentation (SE)

SE involves a number of low-investment, strategic initiatives, some of which will be weeded out quickly

• Components of SE

1. Rapid decision making

2. Learning from experiments

3. Rapid diffusion of learning

4. Maintaining a portfolio of initiatives


SOME KEY IMPLICATIONS


Implications

1. We have shifted into a knowledge economy where innovation is the central productivity task

2. Corporations must view innovation as central to their competitive advantage, and orient KM to stimulate and enable innovation

3. Incubators have to enable information arbitrage, visualization, and fail fast mechanisms in addition to their traditional role


1. Switzerland 2. Singapore 3. Finland 4. Germany 5. US

6. Sweden 7. Hong Kong SAR 8. Netherlands 9. Japan 10. UK

35. Spain 49. Italy 51. Portugal


Implications

1. We have shifted into a knowledge economy where innovation is the central productivity task

2. Corporations must view innovation as central to their competitive advantage, and orient KM to stimulate and enable innovation

3. Incubators have to enable information arbitrage, visualization, and fail fast mechanisms in addition to their traditional role

4. For the nation-state, institutionalized structures for innovation must be developed for both reducing unemployment and enhancing national wealth


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