Analysing Knowledge as a Strategic Resources

Study case: Global Management at Danone (Harvard Business School Publishing)

Karl-Erik Sveiby

Professor of Knowledge Management at the Hanken Business School in Helsinki, Finland.

He is often described as one of the "founding fathers" of Knowledge Management ' having pioneered many of the fundamental concepts.
Faithful to his own teachings he does not believe in lectures or information as methods of transferring knowledge so he has founded Sveiby Knowledge Associates (SKA).
SKA clients include large global industrial groups, such as ABB, Ericsson, Siemens, Motorola, Nortel, and Microsoft; financial services companies such as Westpac Australia or Nedcor South Africa; public sector utilities, such as Queensland Rail in Australia and China Light and Power in Hong Kong; local and federal governments such as GippsIand Shire and Department of State and Regional Development in Australia; global professional services firms, such as PricewaterhouseCoopers and Deloitte Touche Tohmatsu.

Introduce: Sveiby's Three Intangible Asset families
Employees use their competence to create value internally (for organisation) and externally (for customers).

Individual Competence: the competence of individual professional staff --> people who plan, produce, process or present the product or solutions.
Indicator of growth: Number of years in the profession, level of education, competence turn-over.
Indicator of renewal: competence-enhancing customers, training and education costs.
Indicator of efficiency: proportion of individual competence, leverage effect, profit per professional.
Indicator of risk: average age, seniority, individual competence turn-over rate.

• Internal Structure: includes support staff, patents, concepts, models, and computer (IT) and administrative systems.
• Indicator of growth: Investment in IT, Investment in internal structure.
• Indicator of renewal: organisation enhancing customers, proportion of new products/services, number of new process implemented.
• Indicator of efficiency: proportion of support staff
• Indicator of risk: age of the organisation, support staff turn-over, "seniority" support staff ratio.
• External Structure: includes brand names, image, and relationships with suppliers and customers.
• Indicator of growth: organic growth.
• Indicator of renewal: image enhancing customers, sales to new customers.
• Indicator of efficiency: profitability per customer, sales per customer, win/loss index.
• Indicator of risk: satisfied customer index, proportion of big customers, age structure.

Example:

• Academic/lecturer reads Knowledge@ASB newsletter to learn about current research on climate change --> KM Strategy: Internal Structure to Individual Competence.
• Marketing academic writes an article for Knowledge@ASB --> KM Strategy: Individual Competence to Internal Structure.
• ASB Academic Counsellor writes an article for ASB Connect Newsletter --> KM Strategy: Between internal structure.
• Accounting academic presenting a research paper at Melbourne Business School --> KM Strategy: Individual Competence to External Structure
• Alumni contribute ab article to Knowledge@ASB --> KM Strategy: External Structure to Internal Structure.

Global Knowledge Management at Danone

"At Danone we don't talk about strategy, we react to the context around us. For me, it's like a Lego box that you buy for your children. They start to play, trying to find a way to build the image on the Lego box. At the end of the day, they give up, throw out the box, and put the pieces away. The next weekend you put all the Lego pieces on the floor and then the strategy starts. They try to imagine something. Not what was on the box, but what they have in their heads. That is strategy at Danone for me: It's Lego. (Frank Riboud, Chairman and Chief Executive Officer, Groupe Danone)

Main Point:

• Groupe Danone implement a concept called Networking Attitude to accelerate knowledge sharing across Country Business Unit (CBU) with employees in 120 countries world-wide.
• "We want our time to market to be shorter than that of our competitors, who are much bigger than us. If we can not be big, at least we can be shrewd."
• In general, they developed knowledge "marketplaces" and "sharing networks" -- to help employees connect with each other and share good practices horizontally and peer-to-peer. Danone employees shared almost 640 good practices with colleagues, making practical information accessible to some 5,000 of Danone's 9,000 managers around the world.
• Programs:
• Co-building events --> employees from different Danone units networked to create new practices and products rather than to share existing ones. Example: Danone's merketing staff sharing problems & solutions with Danone's Operation staff, or Danone's Finland with Danone's French unit --> KM Strategy: between Individual Competence
• Growth Too Program & Acceleration Units --> KM Strategy: Internal Structure to Individual Competence
• Identifying, analysing and formalising good practices and promoting their adoption by all 70 Danone's CBU.
• Sharing brand assets among CBU to develop block bluster brands.
• Identify good practices within a specific area and then formalize and circulate them (simulation on-line, charting).
• Implementing Enterprise Resource Planning (ERP) software.
• Encourage direct discussion between departments about the software.
• Market place and sharing network --> KM Strategy: Between Individual Competence
• Facilitators arranged and ran marketplaces, acting as an intermediaries to organise the exchange of practises. They chose a strategic business topic and act as givers (offering good practices, or solutions, or problems). The rest of participants are act as takers (managers with problems or issues to resolve.
• The Little Book of Good Practices --> KM Strategy: Internal Structure to Individual Competence
• Each page of the book recorded one good practice, summarising the problem, presenting a solution, its tangible advantages, and practical implementation details. 
• Using Powerpoint is banned (not eligible), but encouraged the use of videos, stories and symbolic objects.
• Message-in-a-bottle --> KM Strategy: between individual competence
• brought takers with problems to a smaller audience of potential givers. It's like an Alcoholics Anonymous meeting.

Why is knowledge management important?

Knowledge management facilitates decision making, builds learning decision making, builds learning organisations by making learning routine, and stimulates cultural change and innovations. (Quast, 2012).