KNOWLEDGE MANAGEMENT KM Session 21 Balanced Scorecard Kaplan

KNOWLEDGE MANAGEMENT (KM) Session # 21

Balanced Scorecard (Kaplan & Norton) Purpose Provide non-financial measures to complement financial measures in accounts Provide a visual representation of IC within an organisation Greater emphasis on information economy priorities - such as long term capabilities, customer relationships - than traditional financial perspective, thus provides a balanced, broader view Help company clarify vision => Tool for Strategic Planning, Performance Measurement

Balanced Scorecards FINANCIAL EXTERNAL/ CUSTOMERS INTERNAL/ PROCESSES INNOVATION/ LEARNING r Adds non-financials r Focuses on drivers r Adds future orientation r Alignment r Helps communication r Management tool A step in the right direction but. . . Are We ready ?

BSC Internal business processes perspective Customer perspective How well is the business running? Do products and services meet customer requirements? What are our customer needs? Are we meeting them? What do customers value? Balanced Scorecard - 4 perspectives Learning and growth perspective Financial perspective How can we add value through staff learning? How can we instil positive corporate attitudes? How do we add value for our shareholders?

Balanced Scorecard builds on: • TQM – customer defined quality – continuous improvement – employee empowerment – measurement based management and feedback • Double Loop Feedback – identification of problems – changes so that problems are eradicated at source

Skyrme’s 10 steps to Intellectual Capital Measurement 1. Root the language of knowledge and intellectual capital in the business strategy. 2. Review existing performance measurement systems to see how well they address the intangibles of intellectual capital and knowledge. 3. Develop an appropriate model of intellectual capital that reflect the needs of the organization. 4. Within each unit or team, develop measures linked to team goals. 5. Good measures are understandable, practical and predictive.

Skyrme’s 10 steps to Intellectual Capital Measurement. 6. Integrate these indicators into management goal setting and reporting. 7. Look for some common measures that can be used for comparison across business units. 8. As experience is gained, introduce measures to help conversion of human capital into structural capital. 9. Regularly review the measures so that they become part of the learning process of how knowledge supports business strategies. 10. When confidence is gained, start reporting these to external bodies.

Approaches to KM Three Schools of Thoughts! 1. The Economic School 2. The Strategic School 3. The Organizational School

Approaches to KM The Strategic School: This school looks to KM as a dimension of Competitive Strategy!

Approaches to KM The Strategic School: Approach to KM will depend upon the top management’s (one of 3) perspective, how they want to gain Competitive Advantage?

Approaches to KM The Strategic School: IT Based Perspective: Concerns with development, application, storage, and distribution of information to K. Workers using IT’s ( Hard/Software systems)

Approaches to KM The Strategic School: Information Based Perspective: Concerns with access to information! Looking for someone in the company who has K to solve my problem?

Approaches to KM The Strategic School: Culture Based Perspective: Concerns with knowledge sharing! We can compete by drawing collective strength based on each other’s expertise.

Approaches to KM The Strategic School: Depending on situation, one can choose a strategy for KM If reinventing wheel all the time is the big problem, then Information based perspective will be better for KM project

Approaches to KM The Strategic School: If technology in the firm is unable to provide even basic services to K. workers and K. users, then IT based perspective will be better for KM project

Approaches to KM The Strategic School: If K. workers are isolated and are reluctant to share Knowledge, then the culture based perspective for KM project should dominate!

Approaches to KM The Strategic School: Codification vs Personalization Strategy: Codification is People to Document approach, calls for automation, centers on the computers and K. reuse approach!

Approaches to KM The Strategic School: Codification vs Personalization Strategy: Personalization is People to People approach, shared by face to face dialogue, email, phone and video conferences. Networks (soft) are important!

Approaches to KM The Strategic School: Codification vs Personalization Strategy: Competitive strategy by codification is to provide high quality, reliable, and fast information systems implementation by re-using codified knowledge. Comp. Startegy by personalization is to provide creative, analytically rigorous advice on high level strategic problems by channeling individual expertise. Codification is Re-use Economics and Personalization is Expert Economics