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Innovation in the knowledge-based economy
A process model for knowledge creation and sharingOve R. Hjelmervik
Manager, Faros KM ProjectStatoil a.s
OECD High-Level Forum onKnowledge Management
February 8-9, 2001. Copenhagen
ContentsIntroduction & Introduction &
backgroundbackground
InnovativeInnovativeevolutionevolution
The holistic The holistic KM modelKM model
Faros VisionFaros Visionand creationand creation
Conclusion Conclusion and action and action
Objectives and issues of meeting
• Objectives– Demonstrating KM in
practice– Develop Good Practice– Analyse and compare
solutions
• Key issues– Resources and competencies for
the knowledge-based economy– Internalise external knowledge
and customer need– Organisation/business challenges
when developing corecompetencies or capabilities
– Technology as an enabler foreffective KM practice
– Costs and incentives required forindividual knowledge creationand sharing
IntroductionIntroduction
The human project
• To accomplish all this we need significant:– inventions– innovations and– institutional changes
• The challenges:– The world population has doubled over the last 40 years.– In order to survive and prosper, every human being must have the
following needs satisfied:• Basic physical and security requirement• Social belonging• Recognition and respect• Learning and development• Mastering and control• Relationship and meaning
Issues belonging to KMIssues belonging to KM
BackgroundBackground
The management curses
“In every case growth“In every case growthis threatened … is threatened …
there has been a failure there has been a failure of management” (T.of management” (T.LevittLevitt))
“Less innovating “Less innovating companies are dominated companies are dominated
by tall hierarchies” by tall hierarchies” (R.M.(R.M. Kanter Kanter))
The The time cursetime curse leads to leads toaction paralysis andaction paralysis andopposition to changeopposition to change
•• Time from idea to Time from idea tomarket gets shorter formarket gets shorter foreach swing of theeach swing of thependulumpendulum
BUT:BUT:
•• Network organisations!Network organisations!SOLUTIONSOLUTION::
Management's attention toManagement's attention tochange change diminishesdiminishes
The The attention curseattention curse leads to leads toinformation anorexiainformation anorexia
18501850 19501950 20002000
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100100
200200
300300
400400
500500
600600
Info
rmat
ion
volu
me
Info
rmat
ion
volu
me
VolumeVolume
AssumedAssumed growthgrowth:
Brain's ability to convert Brain's ability to convert information to knowledgeinformation to knowledge
AbsorptionAbsorptiongapgap
IntroductionIntroduction
Give me a fixed point in space….
• The stick was toArchimedes as ...
• The KnowledgeManagement system is tothe modern learningorganisation:
Levering your knowledgeis the essence ofknowledge management.
BackgroundBackground
The knowledge-based economy
• Cardinal capabilities :– Knowledge creation– Innovation
• Knowledge creation leads to:– change
• Change is– knowledge in motion
• The knowledge-based economyrequires of management theability to:
– have empathy– run networks organisations
without meetings– manage people on trust, not on
eye sight.• This means the ability to instil
common value and purpose.
IntroductionIntroduction
Organisational knowledge
• The challenge– How to secure
knowledge creationand sharing, and
– embedding it in theorganisation’scollective memory,resulting in
– life long learning
• Knowledge Management isconcerned with– effectively connecting those
who know with those who needto know
– the ability to convert personalknowledge into organisationalknowledge
IntroductionIntroduction
Team functioning
The energy industry’s challenge• Facts
– Volatile prices for oil– New, economically viable, hydrocarbon resources are increasingly
difficult to find.
• The industry’s business challenges:– Where will the profit be made in the future?
• Up-stream, mid-stream, down-stream– Who will be making the profit?
• The integrated energy companies, such as BP or Statoil• Service providers such as Schlumberger• Will the integrated energy companies follow the NIKE model?
– Require frontier technology development– Focus on core business and processes
BackgroundBackground
Competencies required for knowledge creation and sharing
• The birds• The Macedonians• The Vikings
Innovative Innovativeevolutionevolution
The story of innovative evolution and change
Core competencies and capabilities required for knowledge creation and sharing
• Professor Allen Wilson, UC Berkeley,– Accelerated behavioural evolution took place in species with three particular abilities:
• Innovation– Capacity to invent new behaviours.– Develop skills that allow them to exploit the environment in new ways.
• Social propagation– Being able to transmit a skill from the individual to the community
• Mobility– Ability to move around for learning and exploiting new knowledge– Collective memory
TitmouseRed robin
ResultResult
ProductProductCollective memoryCollective memoryand core competencyand core competency
•• Building community of practice Building community of practice •• Developing new core capabilities Developing new core capabilities•• Innovate from knowledge Innovate from knowledge•• Flocking when exploring Flocking when exploring•• Flat structures - little hierarchy Flat structures - little hierarchy •• Aided by new technology Aided by new technology
• The Vikings
Innovative Innovativeevolutionevolution
Faros Vision Vision
• do our colleaguesworkday– simpler– and with a better
overview
• make work processes– more secure– qualitative better
…. And purpose
• effective workprocesses through JIT-JE information
• secure experiencetransfer
Faros VisionFaros Vision
The Faros navigator structureThe Knowledge roomThe Knowledge room
The value chainThe value chain
The work processesThe work processes
The operational instructionsThe operational instructions
LinksLinksConnectionsConnections
Faros VisionFaros Vision
Faros experiences on innovation• Critical success factors of Faros:
– Participation from users– Multidisciplinary, self-directing, teams– High level management support
Knowledge systemKnowledge system
KnowledgeKnowledge
Data Data
InformationInformation
Good practiseGood practise
Experience
Experience
- External- External- Internal- Internal-- Socio Socio-economic-economic- Cultural- Cultural
Change process drivers:Change process drivers:
CreatingCreatinginventioninvention
ProductProduct
EntrepreneurshipEntrepreneurship
InnovationInnovation
Faros VisionFaros Vision
Users have said ...• Simplifies understanding of work process
• Basis for continual significant improvement ofoperational processes
• Innovation
• A corroborative system
• Utilising stock of intellectual capital
• Building a more effective organisation
Faros VisionFaros Vision
Lessons learned• Creating space for KM• User involvement
– Learning takes place in the workprocess
• The electronic learning environment• RPP: Rapid Prototyping Process• Profitability
– Information and experience is beingcollected and created for developingnew good/best practice
– Assuming 10% reduction in timeused to find, treat and storeinformation for O&M employees
– 10% for 1996 = NOK 300 Mill.
Faros VisionFaros Vision
• KM is the glue which cansecure for the corporation:– Innovation– Rapid organisational change– A learning organisation– Improved profitability– Longevity
Conclusion Conclusion
Conclusion
• The Agenda for the knowledge-based economy:– People: core focus– Innovation: core competency– Organisations: Knowledge creating processes
• The essence of the knowledge economy is change• Develop a knowledge-creating business environment• Learn to manage knowledge
Objectives and issues of meeting• Objectives
✔ Demonstrating KM inpractice
✔ Develop Good Practice
• Key issues✔ Resources and competencies
for the knowledge-basedeconomy
• Develop communities of practicecapable of capture, create, deliverand use information for thepurpose of innovating asustainable future.
Conclusion Conclusion
• Key issues✔ Internalise external knowledge and
customer need• By being value driven and customer
focused.• By creating a learning organisation
✔ Organisation/business challenges:• Integrated team and sharing• This means management’s ability to instil
common value and purpose.
✔ Technology as an enabler for effectiveKM practice
• JIT-JE navigation through work processes
✔ Costs and incentives:• Not so much monetary as empathy for a
job well done.
Innovation in Europe• To what extent is Europe capable of innovation and
entrepreneurship?
1) A joint research initiative by Babson College and LondonBusiness School. Published November 14, 2000
Conclusion Conclusion
• Global Entrepreneurship Monitor 1)
– Entrepreneurship is strongly associated with economic growth– The level of entrepreneurial activity differs significantly between countries
(examples):• USA - 1 in 10 adult is currently starting a business• Australia - 1 in 12• Norway - 1 in 18• Germany - 1 in 25• Sweden - 1 in 50• Ireland - 1 in 100
– As a proportion of the adult population engaged in new firms, most Europeancountries are positioned between 0.5% (Ireland) and 3.5% (Norway). USA: 5%