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}\viewkind1\viewscale100\margl0\margr0\margt0\margb0\deftab80\dntblnsbdb\expshrt
n\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg1}{\bkmkend Pg1}\par\pard
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pndtw0\charscalex97 \ul0\nosupersub\cf1\f2\fs72 Knowledge Capital: \par\pard\ql
\li1800\sb294\sl-414\slmult0 \up0 \expndtw0\charscalex95 \ul0\nosupersub\cf3\f4\
fs36 How Knowledge-Based Enterprises Really Get Built \par\pard\ql \li1800\sb0\s
l-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl322\slmult0 \par\pard\ql\li1800\sb296\sl-322\slmult0 \up0 \expndtw-4\charscalex1
00 \ul0\nosupersub\cf6\f7\fs28 Jay L. Chatzkel \par\pard\ql \li5559\sb0\sl-230\s
lmult0 \par\pard\ql\li5559\sb0\sl-230\slmult0 \par\pard\ql\li5559\sb0\sl-230\slm
ult0 \par\pard\ql\li5559\sb0\sl-230\slmult0 \par\pard\ql\li5559\sb0\sl-230\slmul
t0 \par\pard\ql\li5559\sb0\sl-230\slmult0 \par\pard\ql\li5559\sb0\sl-230\slmult0
\par\pard\ql\li5559\sb0\sl-230\slmult0 \par\pard\ql\li5559\sb0\sl-230\slmult0 \

par\pard\ql\li5559\sb0\sl-230\slmult0 \par\pard\ql\li5559\sb114\sl-230\slmult0 \
up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf8\f9\fs20 First Printing \par\par
d\ql \li3763\sb0\sl-230\slmult0 \par\pard\ql\li3763\sb0\sl-230\slmult0 \par\pard
\ql\li3763\sb10\sl-230\slmult0 \up0 \expndtw-2\charscalex100 2003 Jay Chatzkel {\
field{\*\fldinst {HYPERLINK "http://www.progressivepractices.com/" }}{\fldrslt {
\ul0\nosupersub\cf8\f9\fs20 www.progressivepractices.com}}} \par\pard\sect\sectd
\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg2}{\bkmkend Pg2}\par\
pard\ql \li10340\sb0\sl-230\slmult0 \par\pard\ql\li10340\sb0\sl-230\slmult0 \par
\pard\ql\li10340\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersu
b\cf9\f10\fs20 2 \par\pard\ql \li8120\sb0\sl-322\slmult0 \par\pard\ql\li8120\sb0
\sl-322\slmult0 \par\pard\ql\li8120\sb0\sl-322\slmult0 \par\pard\ql\li8120\sb0\s
l-322\slmult0 \par\pard\ql\li8120\sb286\sl-322\slmult0 \up0 \expndtw-4\charscale
x100 \ul0\nosupersub\cf11\f12\fs28 To my wife\ul0\nosupersub\cf12\f13\fs28 \ul0
\nosupersub\cf11\f12\fs28 Barbara, \par\pard\ql \li6821\ri1569\sb76\sl-640\slmul
t0\tx7380 \up0 \expndtw-4\charscalex100 the partner who makes me know \line\tab
\up0 \expndtw-4\charscalex100 that all things are possible. \par\pard\sect\sectd
\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg3}{\bkmkend Pg3}\par\
pard\ql \li10340\sb0\sl-230\slmult0 \par\pard\ql\li10340\sb0\sl-230\slmult0 \par
\pard\ql\li10340\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersu
b\cf9\f10\fs20 3 \par\pard\ql \li1800\sb0\sl-414\slmult0 \par\pard\ql\li1800\sb3
24\sl-414\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf13\f14\fs36 Pref
ace \par\pard\ql \li1800\sb0\sl-277\slmult0 \par\pard\ql\li1800\sb0\sl-277\slmul
t0 \par\pard\ql\li1800\sb0\sl-277\slmult0 \par\pard\ql\li1800\sb0\sl-277\slmult0
\par\pard\ql\li1800\sb0\sl-277\slmult0 \par\pard\ql\li1800\ri1684\sb195\sl-277\
slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 This idea fo
r this book began with a conversational interview with one of the foremost \line
\up0 \expndtw-2\charscalex100 theoreticians and practitioners of the knowledge
movement. The goal was to quickly and \line \up0 \expndtw-4\charscalex100 easily
get a sense of his understandings, practices, and ideas. In short, the aim was
to get \line \up0 \expndtw-4\charscalex100 a working sense of his world, how he
developed his views, and the directions that he saw \line \up0 \expndtw-2\charsc
alex100 the field taking. I was taken by the wealth and richness of understandin
g that emerged in \line \up0 \expndtw-2\charscalex100 that session. I felt that
by holding similar sessions with others that have shaped and led \line \up0 \exp
ndtw-2\charscalex100 the fields of intellectual capital and knowledge management
, a body of knowledge and \line \up0 \expndtw-2\charscalex100 experience would b
e become available that would be remarkably accessible, extremely \line \up0 \ex
pndtw-3\charscalex100 powerful, and highly useful. \par\pard\ql \li1800\ri1657\s
b264\sl-276\slmult0\fi720 \up0 \expndtw-4\charscalex100 This has been exactly th
e kind of hard-won knowledge that anyone interested in \line \up0 \expndtw-2\cha
rscalex100 the fields of intellectual capital and knowledge management could sor
ely use. People at \line \up0 \expndtw-2\charscalex100 conferences and those sea
rching through books want to know how things really work and \line \up0 \expndtw
-4\charscalex100 how those ideas and approaches came into being. The conversatio
ns in this book provide \line \up0 \expndtw-2\charscalex100 precisely that kind
of knowledge capital. It is authentic, broadly embracing, clear and \line \up0 \
expndtw-3\charscalex100 dynamic. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pa
rd\ql\li2520\sb8\sl-276\slmult0 \up0 \expndtw-2\charscalex100 These systemically
linked sessions reflect the major learning principles of the \par\pard\ql \li18
00\ri1617\sb7\sl-273\slmult0 \up0 \expndtw-2\charscalex100 field, most centrally
that knowledge is not separate from people. The contributors to these \line \up
0 \expndtw-4\charscalex100 chapters are remarkably candid in sharing with reader
s how they developed their \line \up0 \expndtw-4\charscalex100 knowledge strateg
ies and initiatives. They are outspoken in articulating their tacit \line \up0 \
expndtw-4\charscalex100 knowledge about what is important to them concerning how
to craft and implement \line \up0 \expndtw-2\charscalex100 strategies, as well
as their views on the role that values, learning, performance, \line \up0 \expnd
tw-2\charscalex100 relationships, innovation, and change play in the development
of usable knowledge \line \up0 \expndtw-3\charscalex100 environment. \par\pard\
ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb9\sl-276\slmult0 \up0 \expnd

tw-2\charscalex100 One of the remarkable aspects of this book is that while all
contributors begin \par\pard\ql \li1800\ri1731\sb4\sl-276\slmult0 \up0 \expndtw2\charscalex100 from their own unique perspective and background, as they work t
heir way through their \up0 \expndtw-2\charscalex100 experience and practices, t
hey each began to move towards a convergence of \line \up0 \expndtw-2\charscalex
100 understanding. As they pushed the limits of what their understandings allowe
d them to \up0 \expndtw-2\charscalex100 accomplish, they began to reexamine thei
r premises, crossed boundaries, and forged the \up0 \expndtw-2\charscalex100 nex
t stage of responses. Reaching the edge of what is currently possible has then l
ed to \up0 \expndtw-3\charscalex100 the marking out a new generation of the fiel
d. \par\pard\ql \li1800\ri1735\sb261\sl-280\slmult0\fi720 \up0 \expndtw-2\charsc
alex100 Engineers, like Karl Wiig, are turning their mental model on its head an
d saying \line \up0 \expndtw-4\charscalex100 that learning and education are wha
t we need to focus on. Hubert Saint-Onge, who is \line \up0 \expndtw-2\charscale
x100 rooted in a human resources background, sees that the traditional human res
ource \line \up0 \expndtw-2\charscalex100 perspective has become too balkanized
and obsolete and views that we must reframe our \par\pard\sect\sectd\fs24\paperw
12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg4}{\bkmkend Pg4}\par\pard\ql \li1
0340\sb0\sl-230\slmult0 \par\pard\ql\li10340\sb0\sl-230\slmult0 \par\pard\ql\li1
0340\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs
20 4 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb196\sl-276\sl
mult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 efforts to foc
us on developing strategic capabilities. Stephen Denning, a lawyer with a \par\p
ard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 strong analytic
and administrative background, has discovered that storytelling, \par\pard\ql \l
i1800\ri1611\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 something that is
experiential, often anecdotal, and highly emotional, provides exactly the \line
\up0 \expndtw-2\charscalex100 springboard for knowledge sharing that people and
their institutions need. These are fresh \line \up0 \expndtw-2\charscalex100 and
new understandings. The value of this book is that all of these dynamic perspec
tives \line \up0 \expndtw-4\charscalex100 are brought directly to the reader for
review. All of these views are, in a sense, works in \line \up0 \expndtw-2\char
scalex100 progress. With the benefit feedback ever broadening experience and the
incorporation of \line \up0 \expndtw-2\charscalex100 new ideas these perspectiv
e will go through additional iterations, and at an ever-rapid \par\pard\ql \li18
00\ri1654\sb5\sl-275\slmult0 \up0 \expndtw-2\charscalex100 pace. This means that
all of these conversations will be significantly different three or \line \up0
\expndtw-2\charscalex100 five years from now, as people continue to experiment i
n continuously changing \line \up0 \expndtw-2\charscalex100 conditions. Yet, at
the same time, these conversations are some of the best collections of \up0 \exp
ndtw-4\charscalex100 insights and experience available to readers and they are,
simultaneously, the seeds of the \up0 \expndtw-5\charscalex100 new era in the kn
owledge field. \par\pard\ql \li1800\ri1734\sb261\sl-280\slmult0\fi720 \up0 \expn
dtw-2\charscalex100 One of the opportunities afforded by this collection of know
ledge perspectives is \line \up0 \expndtw-2\charscalex100 that the reader can tr
y them all out individually in their own lives and in their \line \up0 \expndtw4\charscalex100 organizational work. A second opportunity is that readers can ta
ke elements of any or all \line \up0 \expndtw-2\charscalex100 of these perspecti
ves and fuse them together to create their own new and unique \line \up0 \expndt
w-3\charscalex100 approach. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expn
dtw-2\charscalex100 Readers are encouraged use to bring this material into a new
focus and to \par\pard\ql \li1800\ri1692\sb5\sl-275\slmult0 \up0 \expndtw-2\cha
rscalex100 synthesize it to meet their needs. This book is designed as a beginni
ng of a conversation \line \up0 \expndtw-2\charscalex100 on creating knowledge c
apital, rather than a set of pre-packaged prescriptions, where one \line \up0 \e
xpndtw-2\charscalex100 size fits all and the world does not change. Please forwa
rd your questions, issues and \line \up0 \expndtw-2\charscalex100 outcomes to th
e Progressive Practices website, {\field{\*\fldinst {HYPERLINK "http://www.progr
essivepractices.com/" }}{\fldrslt {\ul0\nosupersub\cf81\f82\fs24\ul www.progress
ivepractices.com}}}\ul0\nosupersub\cf14\f15\fs24 , where \line \up0 \expndtw-2\c

harscalex100 you can participate in a forum for your reactions, experiments, ins
ights and questions. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800
\ri1740\sb9\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 As in any complex
, novel, and fruitful effort, this book is an outcome of many \line \up0 \expndt
w-4\charscalex100 people\u8217?s contributions. I would like to firstly acknowle
dge each of the contributors that \line \up0 \expndtw-2\charscalex100 have parti
cipated in these conversations. All have devoted extensive amounts of their \lin
e \up0 \expndtw-2\charscalex100 time in making sure that these materials as full
y as possible reflect their experience and \line \up0 \expndtw-2\charscalex100 p
erspectives. They have shared their insights, experience, and perspectives, cont
ributed \line \up0 \expndtw-2\charscalex100 their graphics, given critical and v
alued feedback, and in all cases inspired me by their \line \up0 \expndtw-4\char
scalex100 courage, authenticity, ability to articulate their ideas, willingness
to get their hands dirty, \par\pard\ql \li1800\ri1644\sb0\sl-280\slmult0 \up0 \e
xpndtw-2\charscalex100 intelligence and devotion to their disciplines. The debt
I owe them is immeasurable. They \line \up0 \expndtw-2\charscalex100 are: Vince
Barabba, Alex Bennet, Jim Botkin, Thomas O. Davenport, Stephen Denning, \line \u
p0 \expndtw-2\charscalex100 Leif Edvinsson, Jac Fitz-enz, Kent Greenes, Jonathan
Low, Dorothy Leonard, Brook \line \up0 \expndtw-2\charscalex100 Manville, Sharo
n Oriel, Gran Roos, Don Tyler, Hubert Saint-Onge, Steven Wallman, \line \up0 \exp
ndtw-3\charscalex100 and Karl Wiig. \par\pard\ql \li1800\ri1721\sb241\sl-280\slm
ult0\fi720 \up0 \expndtw-4\charscalex100 I would like to thank Rory Chase, my ed
itor at the \ul0\nosupersub\cf16\f17\fs24 Journal of Intellectual Capital \line
\up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 and the \ul0\nosuper
sub\cf16\f17\fs24 Journal of Knowledge Management\ul0\nosupersub\cf14\f15\fs24 ,
for encouraging and supporting these \line \up0 \expndtw-4\charscalex100 explor
ations. Excerpts of several of these chapters have appeared in both journals. \p
ar\pard\qj \li1800\ri1737\sb260\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex1
00 I would also like to acknowledge Martha Cooley of Oxford University Press for
\line \up0 \expndtw-2\charscalex100 her enthusiasm about the value of this book
to readers and for shepherding it through the \par\pard\sect\sectd\fs24\paperw1
2240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg5}{\bkmkend Pg5}\par\pard\ql \li10
340\sb0\sl-230\slmult0 \par\pard\ql\li10340\sb0\sl-230\slmult0 \par\pard\ql\li10
340\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs2
0 5 \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1831\sb189\sl280\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 publicat
ion process. The value of a good editor cannot be understated in moving a book \
up0 \expndtw-3\charscalex100 from stage to stage and into publication. \par\pard
\qj \li1800\sb0\sl-270\slmult0 \par\pard\qj\li1800\ri1817\sb19\sl-270\slmult0\fi
720 \up0 \expndtw-4\charscalex100 Finally, I need to express boundless appreciat
ion to my wife, Barbara Chatzkel, \up0 \expndtw-2\charscalex100 for her unwaveri
ng support, patience, editing, focus, and just good company throughout \up0 \exp
ndtw-3\charscalex100 this extensive process. \par\pard\sect\sectd\fs24\paperw122
40\paperh15840\pard\sb0\sl-240{\bkmkstart Pg6}{\bkmkend Pg6}\par\pard\ql \li1034
0\sb0\sl-230\slmult0 \par\pard\ql\li10340\sb0\sl-230\slmult0 \par\pard\ql\li1034
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6 \par\pard\ql \li6449\sb0\sl-552\slmult0 \par\pard\ql\li6449\sb172\sl-552\slmul
t0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf17\f18\fs48 Knowledge Capital \
par\pard\ql \li1800\sb0\sl-414\slmult0 \par\pard\ql\li1800\sb0\sl-414\slmult0 \p
ar\pard\ql\li1800\sb0\sl-414\slmult0 \par\pard\ql\li1800\sb260\sl-414\slmult0 \u
p0 \expndtw0\charscalex95 \ul0\nosupersub\cf18\f19\fs36 Table of Contents \par\p
ard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb0\sl-276\slmult0 \par\pa
rd\ql\li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb0\sl-276\slmult0 \par\pard
\ql\li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb240\sl-276\slmult0 \up0 \exp
ndtw-3\charscalex100 \ul0\nosupersub\cf20\f21\fs24 Preface \par\pard\ql \li2520\
sb144\sl-276\slmult0 \up0 \expndtw-3\charscalex100 Introduction: \ul0\nosupersu
b\cf21\f22\fs24 Why Knowledge Capital? \par\pard\ql \li1800\sb0\sl-322\slmult0 \
par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \pa
r\pard\ql\li1800\sb300\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosuper
sub\cf24\f25\fs28 Knowledge \ul0\nosupersub\cf25\f26\fs28 Cluster I: Starting Po

ints \par\pard\qj \li2520\ri4089\sb21\sl-440\slmult0 \up0 \expndtw-3\charscalex1


00 \ul0\nosupersub\cf21\f22\fs24 Dorothy Leonard:\ul0\nosupersub\cf14\f15\fs24
\ul0\nosupersub\cf16\f17\fs24 Operating as a Knowledge System \up0 \expndtw-3\c
harscalex100 \ul0\nosupersub\cf21\f22\fs24 Jim Botkin:\ul0\nosupersub\cf14\f15\f
s24 \ul0\nosupersub\cf16\f17\fs24 The Knowledge Business \par\pard\ql \li2520\
sb116\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24
Karl Wiig:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24 The Kno
wledge Movement Emerges from its Infancy \par\pard\ql \li1800\sb0\sl-322\slmult0
\par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb22\sl-322\slmult0
\up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Knowledge \ul0\nosup
ersub\cf25\f26\fs28 Cluster II: Strategic Issues \par\pard\ql \li2520\ri3529\sb5
8\sl-420\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Gran
Roos:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24 Recipes for
Knowledge-Based Value Creation \line \up0 \expndtw-5\charscalex100 \ul0\nosupers
ub\cf21\f22\fs24 Leif Edvinsson: \ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\
cf16\f17\fs24 The Intelligent Organization \line \up0 \expndtw-5\charscalex100 \
ul0\nosupersub\cf21\f22\fs24 Vince Barabba:\ul0\nosupersub\cf14\f15\fs24 \ul0\
nosupersub\cf16\f17\fs24 Understanding the Enterprise as a System \par\pard\ql \
li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb319\sl-322\slmult0 \up0 \expndtw
-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Knowledge \ul0\nosupersub\cf25\f2
6\fs28 Cluster III: Human Capital, Values, and Learning \par\pard\ql \li2520\sb1
76\sl-276\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Ja
c Fitz-enz:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24 Human C
apital is the Only Active Asset \par\pard\ql \li2520\ri3269\sb26\sl-420\slmult0\
tx3300 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Thomas O. Dav
enport:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24 People are
the Owners and Investors \line\tab \up0 \expndtw-5\charscalex100 of Human Capita
l \par\pard\ql \li2520\sb119\sl-276\slmult0 \up0 \expndtw-4\charscalex100 \ul0\n
osupersub\cf21\f22\fs24 Don Tyler:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersu
b\cf16\f17\fs24 Shared Values - The Prerequisite for Knowledge Sharing \par\pard
\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg7}{\bkmken
d Pg7}\par\pard\ql \li10340\sb0\sl-230\slmult0 \par\pard\ql\li10340\sb0\sl-230\s
lmult0 \par\pard\ql\li10340\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul
0\nosupersub\cf9\f10\fs20 7 \par\pard\ql \li3300\sb0\sl-276\slmult0 \par\pard\ql
\li3300\sb196\sl-276\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf16\
f17\fs24 and Creation \par\pard\ql \li2520\sb144\sl-276\slmult0 \up0 \expndtw-5\
charscalex100 \ul0\nosupersub\cf21\f22\fs24 Brook Manville:\ul0\nosupersub\cf14\
f15\fs24 \ul0\nosupersub\cf16\f17\fs24 Wars of Capabilities \par\pard\qj \li18
00\sb0\sl-500\slmult0 \par\pard\qj\li1800\ri2135\sb19\sl-500\slmult0 \up0 \expnd
tw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Knowledge \ul0\nosupersub\cf25\
f26\fs28 Cluster IV: Drivers and Accounting for Intangible \up0 \expndtw-4\chars
calex100 Wealth \par\pard\ql \li2520\sb146\sl-276\slmult0 \up0 \expndtw-3\charsc
alex100 \ul0\nosupersub\cf21\f22\fs24 Jonathan Low:\ul0\nosupersub\cf14\f15\fs24
\ul0\nosupersub\cf16\f17\fs24 Value Drivers for Intangibles \par\pard\ql \li2
520\sb144\sl-276\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf21\f22\
fs24 Steven Wallman: \ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs2
4 A Level Playing Field for Intangibles \par\pard\ql \li1800\sb0\sl-322\slmult0
\par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb22\sl-322\slmult0 \
up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Knowledge \ul0\nosupe
rsub\cf25\f26\fs28 Cluster V: Bringing It All Together \par\pard\ql \li2520\ri24
35\sb49\sl-430\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs
24 Hubert Saint-Onge:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs2
4 Creating and Implementing a Knowledge Strategy \up0 \expndtw-3\charscalex100 \
ul0\nosupersub\cf21\f22\fs24 Kent Greenes:\ul0\nosupersub\cf14\f15\fs24 \ul0\no
supersub\cf16\f17\fs24 Knowledge Management is About Change \line \up0 \expndtw5\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Sharon Oriel:\ul0\nosupersub\cf14\
f15\fs24 \ul0\nosupersub\cf16\f17\fs24 Finding \u8220?The Hook\u8221? \par\pard
\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb262\sl-276\slmult0 \up0 \ex
pndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Stephen Denning:\ul0\nosuper
sub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24 The Springboard Story \par\pard

\ql \li2520\sb144\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\c


f21\f22\fs24 Alex Bennet:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17
\fs24 The Knowledge-Centric Organization \par\pard\ql \li2520\sb0\sl-276\slmult0
\par\pard\ql\li2520\sb228\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nos
upersub\cf21\f22\fs24 Epilogue \par\pard\ql \li2520\ri2413\sb46\sl-420\slmult0\t
x3240 \up0 \expndtw-3\charscalex100 Ten Questions for Leading Your Organization
into Becoming\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf21\f22\fs24 a \lin
e\tab \up0 \expndtw-3\charscalex100 Knowledge-Based Enterprise \par\pard\qj \li2
520\ri3287\sb20\sl-420\slmult0 \up0 \expndtw-3\charscalex100 Resources:\ul0\nosu
persub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24 Books for Building a Knowled
ge-Based Enterprise \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22
\fs24 Index \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\b
kmkstart Pg8}{\bkmkend Pg8}\par\pard\ql \li10340\sb0\sl-230\slmult0 \par\pard\ql
\li10340\sb0\sl-230\slmult0 \par\pard\ql\li10340\sb9\sl-230\slmult0 \up0 \expndt
w-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 8 \par\pard\ql \li1800\sb0\sl-414
\slmult0 \par\pard\ql\li1800\sb84\sl-414\slmult0 \up0 \expndtw0\charscalex95 \ul
0\nosupersub\cf13\f14\fs36 Introduction:\ul0\nosupersub\cf27\f28\fs36 \ul0\nos
upersub\cf28\f29\fs36 Why Knowledge Capital? \par\pard\ql \li1800\sb824\sl-828\s
lmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf30\f31\fs72 1 \par\pard\ql
\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\l
i1800\sb46\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25
\fs28 Knowledge for What? \par\pard\ql \li1800\ri1657\sb256\sl-277\slmult0 \up0
\expndtw-4\charscalex100 \ul0\nosupersub\cf14\f15\fs24 In 1939, Robert S. Lynd,
in \ul0\nosupersub\cf16\f17\fs24 Knowledge For What?\ul0\super\cf31\f32\fs24 1\u
l0\nosupersub\cf16\f17\fs24 ,\ul0\nosupersub\cf14\f15\fs24 wrote that people ne
ed to rebuild \line \up0 \expndtw-2\charscalex100 their organizations so that kn
owledge flows freely to create opportunities and solve \line \up0 \expndtw-4\cha
rscalex100 problems. This view of knowledge as key for significant change is as
relevant for those \line \up0 \expndtw-2\charscalex100 leading and operating ent
erprises today as it was then. Knowledge inputs are increasingly \line \up0 \exp
ndtw-4\charscalex100 valuable not only in all goods and services offered by any
kind of organization, but also \line \up0 \expndtw-4\charscalex100 for how that
enterprise does its business day-to-day. The ability of an organization to \line
\up0 \expndtw-2\charscalex100 effectively nurture, capture, leverage, and share
its knowledge resources can be the key \line \up0 \expndtw-2\charscalex100 that
provides an enterprise with its strategic power advantage in the world. \par\pa
rd\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1778\sb8\sl-276\slmult0\f
i720 \up0 \expndtw-2\charscalex100 Knowledge is not detached from the people, pr
ocesses, or infrastructure of an \line \up0 \expndtw-2\charscalex100 organizatio
n and its network. It is part of all of these things, and progressively a more \
line \up0 \expndtw-2\charscalex100 pivotal part. The ability to mobilize knowled
ge resources has become even more critical \line \up0 \expndtw-2\charscalex100 t
han the ability to control and amass physical and financial resources. As physic
al and \line \up0 \expndtw-2\charscalex100 financial resources have started to t
ake on the character of commodities, the ability to \line \up0 \expndtw-2\charsc
alex100 capitalize on knowledge resources is becoming the creator of uniqueness
and the \par\pard\ql \li1800\sb1\sl-256\slmult0 \up0 \expndtw-3\charscalex100 di
fferentiator of value. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li25
20\sb12\sl-276\slmult0 \up0 \expndtw-2\charscalex100 When an organization develo
ps its ability to build, access and leverage its \par\pard\ql \li1800\ri1904\sb4
\sl-276\slmult0 \up0 \expndtw-4\charscalex100 knowledge resources it is creating
its knowledge advantage. It is learning how to most \up0 \expndtw-2\charscalex1
00 effectively bring to bear its \u8220?know-how\u8221? and \u8220?know-what\u82
21? to yield substantial gains in \up0 \expndtw-2\charscalex100 performance so t
hat it can achieve its strategic outcomes. By understanding the role of \up0 \ex
pndtw-2\charscalex100 knowledge in the enterprise and enabling itself to use its
knowledge resources for \line \up0 \expndtw-2\charscalex100 advantage, it is in
the process of becoming a knowledge-based enterprise, able to \line \up0 \expnd
tw-3\charscalex100 transform its knowledge capabilities into wealth. \par\pard\q
j \li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj

\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\l


i1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1
800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li180
0\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\
ri2210\sb94\sl-240\slmult0\fi719 \up0 \expndtw-3\charscalex100 \ul0\super\cf32\f
33\fs20\ul0\super\cf32\f33\fs19 1\ul0\nosupersub\cf9\f10\fs20 Robert S. Lynd, \
ul0\nosupersub\cf33\f34\fs20 Knowledge For What?: The Place Of Social Science In
American Culture \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf9\f10\fs20 (Pr
inceton, Princeton University Press, 1967).
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g9}{\bkmkend Pg9}\par\pard\ql \li10340\sb0\sl-230\slmult0 \par\pard\ql\li10340\s
b0\sl-230\slmult0 \par\pard\ql\li10340\sb9\sl-230\slmult0 \up0 \expndtw-2\charsc
alex100 \ul0\nosupersub\cf9\f10\fs20 9 \par\pard\ql \li1800\sb0\sl-322\slmult0 \
par\pard\ql\li1800\sb172\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosup
ersub\cf24\f25\fs28 Creating Knowledge Capital \par\pard\ql \li1800\sb0\sl-276\s
lmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1663\sb264\s
l-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 The ab
ility to leverage knowledge to create value has grown significantly over the pas
t \line \up0 \expndtw-2\charscalex100 two decades, with much of this enhanced ca
pability tied to the rise of the disciplines of \line \up0 \expndtw-2\charscalex
100 knowledge management and intellectual capital. While each started out from m
arkedly \line \up0 \expndtw-2\charscalex100 different backgrounds, both have gon
e through several stages of development of maturity \line \up0 \expndtw-2\charsc
alex100 to the point that they have major areas of overlap. Enterprises can now
weave together \line \up0 \expndtw-2\charscalex100 powerful strands of both inte
llectual capital and knowledge management to yield \par\pard\qj \li1800\ri1772\s
b0\sl-280\slmult0 \up0 \expndtw-2\charscalex100 substantial increases in day-today performance \ul0\nosupersub\cf16\f17\fs24 and\ul0\nosupersub\cf14\f15\fs24
the related achievement of strategic \up0 \expndtw-3\charscalex100 outcomes. \pa
r\pard\ql \li1800\sb0\sl-280\slmult0 \par\pard\ql\li1800\ri2362\sb1\sl-280\slmul
t0\fi720 \up0 \expndtw-4\charscalex100 The term \ul0\nosupersub\cf16\f17\fs24 kn
owledge capital\ul0\nosupersub\cf14\f15\fs24 is used here as a way to bridge th
e differences \up0 \expndtw-4\charscalex100 between these two disciplines. \ul0\
nosupersub\cf16\f17\fs24 Knowledge\ul0\nosupersub\cf14\f15\fs24 is the resource
and \ul0\nosupersub\cf16\f17\fs24 capital\ul0\nosupersub\cf14\f15\fs24 speaks
to \up0 \expndtw-2\charscalex100 generating wealth. The central question is: Ho
w can enterprises mobilize their \up0 \expndtw-3\charscalex100 knowledge resourc
es to produce wealth? \par\pard\ql \li1800\sb0\sl-274\slmult0 \par\pard\ql\li180
0\ri1631\sb11\sl-274\slmult0\fi720 \up0 \expndtw-2\charscalex100 A way of lookin
g at the knowledge capital equation is to say that intellectual \line \up0 \expn
dtw-2\charscalex100 capital is the \u8220?stock\u8221? or content of knowledge,
and knowledge management deals with \line \up0 \expndtw-2\charscalex100 the \u82
20?flow\u8221? of knowledge. Each play a critical role, and neither is complete
by itself. \line \up0 \expndtw-2\charscalex100 Amassing sizable amounts of intel
lectual capital without being able to access, share, or \line \up0 \expndtw-2\ch
arscalex100 capture value from that resource can be costly and wasteful. For exa
mple, the expense of \line \up0 \expndtw-4\charscalex100 maintaining the best kn
ow-how, or keeping the richest patent portfolio, can exceed the \line \up0 \expn
dtw-2\charscalex100 ongoing return on the value of those resources. Similarly, n

ot developing and bringing \line \up0 \expndtw-2\charscalex100 into play the kno
wledge resources of any staff person, whether leader or frontline, \line \up0 \e
xpndtw-2\charscalex100 marginalizes their value to the enterprise, sub-optimizin
g knowledge capital. On the other \line \up0 \expndtw-2\charscalex100 side of th
e coin, focusing on investing in technologies and approaches to enable the flow
\line \up0 \expndtw-4\charscalex100 of knowledge resources when their quality an
d relevance are of barely usable to \line \up0 \expndtw-5\charscalex100 enterpri
se networkers is just as questionable. \par\pard\ql \li2520\sb0\sl-276\slmult0 \
par\pard\ql\li2520\sb9\sl-276\slmult0 \up0 \expndtw-2\charscalex100 As an organi
zation remakes itself as a nurturing, leveraging and knowledge \par\pard\ql \li1
800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 sharing enterprise it start
s to base its understandings, strategies and actions on its \par\pard\ql \li1800
\sb4\sl-276\slmult0 \up0 \expndtw-4\charscalex100 knowledge capital, and begins
to be a \ul0\nosupersub\cf16\f17\fs24 knowledge-based enterprise\ul0\nosupersub\
cf14\f15\fs24 . It cultivates usable \par\pard\qj \li1800\ri1650\sb0\sl-280\slmu
lt0 \up0 \expndtw-2\charscalex100 knowledge resources and makes them readily acc
essible and actionable, putting itself and \up0 \expndtw-3\charscalex100 its peo
ple in the best position to create and capture value. \par\pard\ql \li1800\sb0\s
l-322\slmult0 \par\pard\ql\li1800\sb285\sl-322\slmult0 \up0 \expndtw-4\charscale
x100 \ul0\nosupersub\cf24\f25\fs28 Conversations and the Building of Knowledge C
apital \par\pard\ql \li1800\sb216\sl-276\slmult0 \up0 \expndtw-4\charscalex100 \
ul0\nosupersub\cf14\f15\fs24 This volume is an integrated and structured set of
interactive sessions with thought \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \
expndtw-2\charscalex100 leaders and key practitioners in the fields of intellect
ual capital and knowledge \par\pard\ql \li1800\ri1819\sb9\sl-270\slmult0 \up0 \e
xpndtw-2\charscalex100 management that map out how knowledge organizations reall
y get built. These sessions \line \up0 \expndtw-2\charscalex100 are in the form
of conversations that explore the multiple dimensions necessary for \line \up0 \
expndtw-4\charscalex100 creating and implementing a knowledge-based enterprise.
Each of these dimensions \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\
sb0\sl-240{\bkmkstart Pg10}{\bkmkend Pg10}\par\pard\ql \li10239\sb0\sl-230\slmul
t0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmul
t0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf9\f10\fs20 10 \par\pard\qj \l
i1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1844\sb189\sl-280\slmult0 \up0 \e
xpndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 needs to be effectively add
ressed for the enterprise to make a successful transition from \up0 \expndtw-2\c
harscalex100 an activity-based organization to a knowledge-based, intelligent en
terprise. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb8\sl-276
\slmult0 \up0 \expndtw-2\charscalex100 The real work of organizations is in conv
ersations such as these. Listen to \par\pard\ql \li1800\sb1\sl-256\slmult0 \up0
\expndtw-2\charscalex100 conversations in any organization and you will find out
what the enterprise takes \par\pard\ql \li1800\ri1856\sb5\sl-280\slmult0 \up0 \
expndtw-2\charscalex100 seriously, what its strategy is, how well it is executin
g, what works for it and what does \up0 \expndtw-4\charscalex100 not. It is in t
hese conversations that the enterprise recreates itself everyday. This is true \
up0 \expndtw-2\charscalex100 for any type or size of enterprise, whether it is a
for-profit, a not for-profit, or a \line \up0 \expndtw-5\charscalex100 governme
nt organization. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw-2\chars
calex100 As participants engage in these conversations they reflect on their exp
erience, \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 s
hare understandings, and in that process create knowledge capital. The questions
are \par\pard\ql \li1800\ri1610\sb5\sl-275\slmult0 \up0 \expndtw-2\charscalex10
0 starting points. In the back-and-forth, the conversations start to take on a l
ife of their own, \up0 \expndtw-2\charscalex100 taking on directions that the pa
rticipants are most concerned about. In doing so they \line \up0 \expndtw-2\char
scalex100 reveal how participants are continuously reexamining their own views i
n light of \line \up0 \expndtw-2\charscalex100 accumulated experiences and emerg
ing conditions. As owners of their knowledge capital, \up0 \expndtw-2\charscalex
100 they feel free to review new inputs and rework them as they see necessary. T
hey are \line \up0 \expndtw-2\charscalex100 driven by their own curiosity and th

e need to respond to the challenges in front of them, \line \up0 \expndtw-2\char


scalex100 as well as the ones that are well beyond the next hill. The conversati
ons demonstrate the \line \up0 \expndtw-2\charscalex100 major elements of what i
nnovative knowledge capital is about: reflecting on the past, \line \up0 \expndt
w-2\charscalex100 incorporating what will make a difference in the present, and
remaking oneself and the \line \up0 \expndtw-3\charscalex100 enterprise, without
hesitation, for the future. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\q
l\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb163\sl-322\slmult0 \up0 \expnd
tw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Activity-Based versus Knowledge
-Based \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1757\sb60\s
l-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24 Activi
ty-based\ul0\nosupersub\cf14\f15\fs24 organizations focus on particular activit
ies people carry out in the course \up0 \expndtw-2\charscalex100 of doing their
work. These activities can be any mixture of large or small, simple or \line \up
0 \expndtw-2\charscalex100 complex. The important thing is that in an activity-b
ased organization there is an \line \up0 \expndtw-2\charscalex100 unending strea
m of \u8220?things to do.\u8221? The execution of these activities may require h
aving \up0 \expndtw-2\charscalex100 the skills, processes, and the resources for
a mission, but there is little acknowledgement \up0 \expndtw-2\charscalex100 th
at knowledge and know-how may be the essential, and even critical inputs for a \
line \up0 \expndtw-2\charscalex100 successful outcome. When the goods and servic
es are fairly standard and practices are \line \up0 \expndtw-2\charscalex100 ess
entially repeatable, this might not be a significant problem. However, in our ra
pidly \up0 \expndtw-4\charscalex100 changing world, standardized outcomes are le
ss and less valuable as conditions, \line \up0 \expndtw-2\charscalex100 requirem
ents, technologies, and partners are in constant flux and customer requirements
\up0 \expndtw-3\charscalex100 are dynamically growing in complexity and variety.
\par\pard\ql \li1800\ri1689\sb264\sl-276\slmult0\fi720 \up0 \expndtw-4\charscal
ex100 The new conditions, highlighted by the advent of the Internet and globaliz
ation, \line \up0 \expndtw-2\charscalex100 have spawned the demand for rapid res
ponse, knowledge-based enterprises. The creators \line \up0 \expndtw-2\charscale
x100 of knowledge-based enterprises understand that the intangibles of knowledge
and know-\line \up0 \expndtw-4\charscalex100 how are at the core of all process
es. They are aware that their main role is to frame an \line \up0 \expndtw-2\cha
rscalex100 environment that supports the access, flow, and use of knowledge. The
y know that rather \line \up0 \expndtw-2\charscalex100 than controlling resource
s, they need to facilitate the appropriate flow of the necessary \line \up0 \exp
ndtw-2\charscalex100 knowledge resources to the right place at the right time to
the right people for the right \par\pard\sect\sectd\fs24\paperw12240\paperh1584
0\pard\sb0\sl-240{\bkmkstart Pg11}{\bkmkend Pg11}\par\pard\ql \li10239\sb0\sl-23
0\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-23
0\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 11 \par\par
d\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb196\sl-276\slmult0 \up0 \e
xpndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 outcomes, and many of these
resources are intangible. They have to have trusting \par\pard\qj \li1800\ri184
4\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 relationships since employees
now own the most important capital in the enterprise, the \up0 \expndtw-3\chars
calex100 human capital. \par\pard\ql \li1800\ri1608\sb263\sl-277\slmult0\fi720 \
up0 \expndtw-2\charscalex100 Part and parcel of their responsibility is the buil
ding of strategic competencies that \line \up0 \expndtw-2\charscalex100 can leve
rage knowledge throughout the extended enterprise. The extended enterprise \line
\up0 \expndtw-2\charscalex100 includes everyone inside the organization, along
the supply chain and the entire customer \line \up0 \expndtw-2\charscalex100 net
work, as well. The knowledge-based enterprise is uniquely suited to take advanta
ge of \line \up0 \expndtw-2\charscalex100 know-how that is scattered in the nook
s and crannies of the organization to reach any \line \up0 \expndtw-2\charscalex
100 where in the world, twenty-four hours a day. It can instantly and interactiv
ely link \line \up0 \expndtw-2\charscalex100 computer programmers in India with
a project team in South Africa, a branding group in \line \up0 \expndtw-2\charsc
alex100 New York, and a customer in Japan, in a venue where each party takes on

the role of \line \up0 \expndtw-3\charscalex100 being a co-creator of the outcom


e. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw-2\charscalex100 In es
sence, then, the knowledge-based enterprise is a sense-and-respond, \par\pard\ql
\li1800\ri1857\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 intelligent org
anization and its work is ongoing conversation, characterized by building \up0 \
expndtw-2\charscalex100 new knowledge capital with new players, new information,
new perspectives, new \up0 \expndtw-5\charscalex100 possibilities, and response
s to new customer needs. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li
1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb142\sl-322\slmult0 \up0 \expndtw-4
\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Dimensions of a Knowledge Capital S
trategy \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\sb0\sl-280\s
lmult0 \par\pard\qj\li1800\ri2058\sb53\sl-280\slmult0 \up0 \expndtw-2\charscalex
100 \ul0\nosupersub\cf14\f15\fs24 Conversations involving an enterprise knowledg
e capital strategy need to incorporate \up0 \expndtw-5\charscalex100 these dimen
sions: \par\pard\ql \li2520\sb4\sl-276\slmult0 \up0 \expndtw0\charscalex105 \u82
26? human \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw0\charscalex10
4 \u8226? financial \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw-2\c
harscalex100 \u8226? research and development \par\pard\ql \li2520\sb4\sl-276\
slmult0 \up0 \expndtw0\charscalex105 \u8226? process \par\pard\ql \li2520\sb24
\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \u8226? physical and technologic
al infrastructure \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw0\charsc
alex108 \u8226? legal \par\pard\ql \li2520\sb4\sl-276\slmult0 \up0 \expndtw0\c
harscalex101 \u8226? measurement \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0
\expndtw-3\charscalex100 \u8226? relationship to customers and suppliers \par
\pard\qj \li1800\sb0\sl-270\slmult0 \par\pard\qj\li1800\ri1714\sb19\sl-270\slmul
t0\fi720 \up0 \expndtw-2\charscalex100 Each of these dimensions is addressed in
the sessions that compose this book in a \up0 \expndtw-2\charscalex100 first-han
d manner since the participants in the conversations have had to effectively dea
l \up0 \expndtw-4\charscalex100 with them in order to create viable, successful
knowledge-based organizations. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard
\ql\li1800\sb146\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf
24\f25\fs28 Knowledge Management as a Practice Field \par\pard\ql \li1800\ri1665
\sb239\sl-273\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs2
4 The advantage of carrying out these explorations using the conversations appro
ach is that \line \up0 \expndtw-2\charscalex100 the thought leaders and practiti
oners are fully engaged in what matters most to them. \line \up0 \expndtw-4\char
scalex100 They have experimented and often created the basic ideas and practices
of their fields. \line \up0 \expndtw-4\charscalex100 They know what works and w
hat does not, what is essential and what is hype. With them \par\pard\sect\sectd
\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg12}{\bkmkend Pg12}\pa
r\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \p
ar\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosuper
sub\cf9\f10\fs20 12 \par\pard\ql \li1800\sb0\sl-277\slmult0 \par\pard\ql\li1800\
ri1604\sb195\sl-277\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f
15\fs24 as guides, the reader gets a unique set of understandings, not only of p
articular points of \line \up0 \expndtw-2\charscalex100 theory and lessons learn
ed, but also gets to know the people who are creating these fields. \line \up0 \
expndtw-2\charscalex100 The knowledge and know-how in these sessions comes from
their lifelong experience and \line \up0 \expndtw-2\charscalex100 learning. By b
ringing the whole person into the equation the reader gets a strong sense of \li
ne \up0 \expndtw-2\charscalex100 their whole worldview. The reader has the oppor
tunity to directly experience the main \line \up0 \expndtw-2\charscalex100 point
s in these conversations, as well as to learn about the context, learning proces
s, and \line \up0 \expndtw-2\charscalex100 values of the participant. The result
is not only a knowledge transfer but a context transfer \line \up0 \expndtw-3\c
harscalex100 as well. \par\pard\ql \li2520\sb224\sl-276\slmult0 \up0 \expndtw-2\
charscalex100 There is often a fine line between the theory and its practice, si
nce the \par\pard\ql \li1800\ri1817\sb5\sl-275\slmult0 \up0 \expndtw-2\charscale
x100 development of both is such an interconnected, evolutionary process. The re
ality is that \up0 \expndtw-2\charscalex100 thought leaders partner with practit

ioners, who use their organizations as practice zones \up0 \expndtw-2\charscalex


100 to build their knowledge-based enterprises. Their informed practices and lea
rnings \line \up0 \expndtw-2\charscalex100 provide the immediate feedback that c
ontributes so strongly the continuous shaping and \up0 \expndtw-3\charscalex100
reshaping of the field. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1
800\ri1619\sb10\sl-275\slmult0\fi720 \up0 \expndtw-2\charscalex100 These session
s are with many of the most outstanding creators and practitioners in \line \up0
\expndtw-2\charscalex100 the fields of knowledge management and intellectual ca
pital. Participants were extremely \line \up0 \expndtw-2\charscalex100 candid an
d broad ranging in their comments. As a result, the reader will get a clear and
\line \up0 \expndtw-2\charscalex100 unvarnished set of insights into what is inv
olved in developing a knowledge-based \line \up0 \expndtw-3\charscalex100 organi
zation. \par\pard\ql \li1800\ri1797\sb7\sl-273\slmult0\fi720 \up0 \expndtw-2\cha
rscalex100 One core lesson to be learned from these conversations is that there
is no right, \line \up0 \expndtw-2\charscalex100 mechanistic cookbook way of bui
lding a knowledge-based enterprise. Rather there is an \up0 \expndtw-2\charscale
x100 evolving way, but one that is grounded in principles, and illuminated and e
xpanded \line \up0 \expndtw-3\charscalex100 through practice. \par\pard\ql \li25
20\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb9\sl-276\slmult0 \up0 \expndtw-2\cha
rscalex100 While each of the participants started with their own unique purview,
as the \par\pard\ql \li1800\ri1944\sb7\sl-273\slmult0 \up0 \expndtw-2\charscale
x100 conversations evolved, all began to show a much more common perspective and
set of \up0 \expndtw-2\charscalex100 concerns. This led to the most remarkable
outcomes of the sessions -- a group of \line \up0 \expndtw-2\charscalex100 indic
ators that, when clustered together, form the next stage of the common field of
\up0 \expndtw-3\charscalex100 intellectual capital and knowledge management. \pa
r\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb285\sl-322\slmult0 \u
p0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Who Can Use Knowledge
Capital Conversations \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li180
0\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb4\sl-276\slmult0 \up0 \expndtw-3\char
scalex100 \ul0\nosupersub\cf16\f17\fs24 Knowledge Capital \ul0\nosupersub\cf14\f
15\fs24 has several purposes: \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0 \exp
ndtw-3\charscalex100 \u8226? \ul0\nosupersub\cf16\f17\fs24 Enterprise CEO\u821
7?s and senior leaders\ul0\nosupersub\cf14\f15\fs24 will have an easily accessi
ble set of \par\pard\ql \li2880\ri1626\sb4\sl-276\slmult0 \up0 \expndtw-2\charsc
alex100 perspectives for them to learn what a knowledge-based enterprise is and
what \line \up0 \expndtw-2\charscalex100 is involved in creating and sustaining
such an organization in the twenty-first \line \up0 \expndtw-2\charscalex100 cen
tury. This understanding is critical to decisions-makers in any type of \line \u
p0 \expndtw-2\charscalex100 organization. Just as organizational leaders had to
learn how to create an \line \up0 \expndtw-2\charscalex100 efficient bureaucracy
in the early twentieth century, they will have to learn \line \up0 \expndtw-2\c
harscalex100 how to become skillful in creating and managing knowledge-based ent
erprises \line \up0 \expndtw-3\charscalex100 in the twenty-first century. \par\p
ard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg13}{\bk
mkend Pg13}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex10
0 \ul0\nosupersub\cf9\f10\fs20 13 \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\p
ard\ql\li2520\sb216\sl-276\slmult0\tx2880 \up0 \expndtw-3\charscalex100 \ul0\nos
upersub\cf14\f15\fs24 \u8226? \tab \up0 \expndtw-2\charscalex100 \ul0\nosupersub
\cf16\f17\fs24 Middle managers and front line staff\ul0\nosupersub\cf14\f15\fs24
will find an important set of reference \par\pard\ql \li2880\ri1608\sb4\sl-276
\slmult0 \up0 \expndtw-2\charscalex100 points and guidelines for action. In the
knowledge-based enterprise, everyone \line \up0 \expndtw-2\charscalex100 is a le
ader and everyone is a decision-maker. Autonomy replaces dependency \line \up0 \
expndtw-2\charscalex100 in the knowledge-based organization. In the electronic a
nd Internet era there is \line \up0 \expndtw-2\charscalex100 immediate interface
and feedback with customers, as well as all along the \line \up0 \expndtw-3\cha
rscalex100 supply chain. Middle managers and front line staff are increasingly i
n \line \up0 \expndtw-2\charscalex100 situations where they do not have time to

move up and down the hierarchy \line \up0 \expndtw-2\charscalex100 when rapid de
cisions and actions need to take place. They need a model where \line \up0 \expn
dtw-2\charscalex100 the glue that holds the knowledge-based enterprise together
is made up of \line \up0 \expndtw-4\charscalex100 knowledge, communications, and
values, supported by technology. They can \line \up0 \expndtw-2\charscalex100 u
se these sessions to understand the behaviors, relationships and knowledge \line
\up0 \expndtw-2\charscalex100 capabilities they need to master in order to have
a future in a knowledge-\line \up0 \expndtw-3\charscalex100 based environment.
\par\pard\ql \li2520\sb4\sl-276\slmult0\tx2880 \dn2 \expndtw-3\charscalex100 \u8
226? \tab \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24 Students\u
l0\nosupersub\cf14\f15\fs24 are the next generation of organizational leaders a
nd need to build \par\pard\ql \li2520\ri1669\sb4\sl-277\slmult0\fi360\tx2880\tx2
880\tx2880\tx2880\tx2880\tx2880\tx2880\tx2880\tx2880\tx2880\tx2880\tx2880\tx2880
\tx2880\tx2880\tx2880 \up0 \expndtw-2\charscalex100 their ground on next generat
ion ideas and practices. The sessions give a very \line\tab \up0 \expndtw-3\char
scalex100 full range of perspectives, and while several of them are academically
\line \tab \up0 \expndtw-2\charscalex100 rigorous, they are unvarnished and not
at all pedantic. Rather, they are very \line\tab \up0 \expndtw-2\charscalex100
much common sense, and, in most cases, materials that can be easily shared. \lin
e\tab \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24 Knowledge Capi
tal\ul0\nosupersub\cf14\f15\fs24 will give students a head start in alternative
ways of \line \tab \up0 \expndtw-2\charscalex100 thinking about organizations a
s they embark on their professional careers. \up0 \expndtw-3\charscalex100 \u82
26? \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24 Practitioners\ul
0\nosupersub\cf14\f15\fs24 will gain direct access to many of the founders and
shapers of \line\tab \up0 \expndtw-2\charscalex100 the knowledge-based enterpris
e. These conversations provide a concentrated \line\tab \up0 \expndtw-2\charscal
ex100 experience of the participants and a systematic exploration of the major i
ssues \line\tab \up0 \expndtw-2\charscalex100 they are working through. Any prac
titioner who is developing a knowledge \line\tab \up0 \expndtw-2\charscalex100 s
trategy for his or her organization needs this kind of unfiltered, concentrated
\line\tab \up0 \expndtw-2\charscalex100 information. One of the most valuable as
pects of \ul0\nosupersub\cf16\f17\fs24 Knowledge Capital\ul0\nosupersub\cf14\f15
\fs24 is that \line\tab \up0 \expndtw-2\charscalex100 practitioners can clearly
see the pathways that an array of thought leaders and \line\tab \up0 \expndtw-2
\charscalex100 advanced practitioners have taken, how they have reconsidered som
e of their \line\tab \up0 \expndtw-2\charscalex100 earlier stances, what they se
e as the essentials for effectiveness, and their \line \tab \up0 \expndtw-2\char
scalex100 views on the evolution of the field. The broader and fuller perspectiv
es found \line\tab \up0 \expndtw-4\charscalex100 in these sessions can save enor
mous amounts of time, and money and put an \line\tab \up0 \expndtw-5\charscalex1
00 organization on a sound footing as a knowledge-based enterprise. \par\pard\ql
\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\
li1800\sb102\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f
25\fs28 A Little History \par\pard\qj \li1800\sb0\sl-270\slmult0 \par\pard\qj\li
1800\ri1968\sb31\sl-270\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf
14\f15\fs24 We all use knowledge every day to make a difference. It might be to
leverage power, \up0 \expndtw-2\charscalex100 generate wealth, or simply to get
the job done. The core question is: Are we using that \up0 \expndtw-3\charscalex
100 knowledge well or poorly? \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\
ql\li2520\sb10\sl-276\slmult0 \up0 \expndtw-2\charscalex100 While the question o
f whether we are effectively using our knowledge has \par\pard\ql \li1800\sb4\sl
-276\slmult0 \up0 \expndtw-2\charscalex100 become increasingly important over th
e last fifty years, it has been vital throughout \par\pard\ql \li1800\ri1884\sb9
\sl-270\slmult0 \up0 \expndtw-2\charscalex100 human history. Every culture and s
ociety from our cave dwelling ancestors onward has \line \up0 \expndtw-2\charsca
lex100 carried out its version of knowledge capture, sharing, and leveraging to
survive and \line \up0 \expndtw-3\charscalex100 prosper. \par\pard\sect\sectd\fs
24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg14}{\bkmkend Pg14}\par\p
ard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\

pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub


\cf9\f10\fs20 14 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0
\sl-276\slmult0 \par\pard\ql\li1800\ri1771\sb180\sl-276\slmult0\fi720 \up0 \expn
dtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 One of the greatest achievemen
ts in the strategic use of knowledge took place in \line \up0 \expndtw-2\charsca
lex100 the fifteenth century when the Portuguese Prince Henry the Navigator bega
n the process \line \up0 \expndtw-2\charscalex100 that enabled Portugal to move
from being a small, unremarkable kingdom on the fringe \line \up0 \expndtw-2\cha
rscalex100 of Europe to becoming the wealthiest trading empire in the world. At
the time, Portugal \line \up0 \expndtw-2\charscalex100 was far from the centers
of trade in the Mediterranean and Near East. It did not have \line \up0 \expndtw
-2\charscalex100 access to the land and sea routes that would let it compete in
the traditional ways. The \line \up0 \expndtw-2\charscalex100 way for it to crea
te power and wealth was to find other, unknown pathways. \par\pard\ql \li2520\sb
264\sl-276\slmult0 \up0 \expndtw-2\charscalex100 Prince Henry saw that the oppor
tunity lay in the sea route around Africa. He \par\pard\ql \li1800\ri1677\sb5\sl
-275\slmult0 \up0 \expndtw-2\charscalex100 began a step-by-step, collaborative n
ational program for advancing into the unknown, a \up0 \expndtw-2\charscalex100
program that turned out to be a century and a half long enterprise. Being on the
outside \up0 \expndtw-2\charscalex100 edge of Europe, the Portuguese were less
captive of the entrenched prejudices against the \up0 \expndtw-2\charscalex100 n
ew ways or new knowledge that they needed for their breakthrough. Rather, their
way \up0 \expndtw-3\charscalex100 was to test their own limits and over time for
ge new understandings. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li18
00\ri1916\sb9\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 To accomplish t
his Prince Henry built an early version of a center for research \up0 \expndtw-2
\charscalex100 and development. He assembled the most experienced mapmakers, sea
farers, \line \up0 \expndtw-2\charscalex100 shipbuilders, and instrument makers
at Sagres, in the isolated, southwest corner of \line \up0 \expndtw-2\charscalex
100 Portugal. It was at Sagres that Henry began his \u8220?conversation\u8221? t
o build his knowledge\up0 \expndtw-4\charscalex100 based enterprise. His premise
was that the unknown could only be discovered by \line \up0 \expndtw-5\charscal
ex100 extending the boundaries of the known. \par\pard\ql \li1800\ri1693\sb244\s
l-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 His experiments in shipbuildin
g produced a new ship design, the caravel, which \line \up0 \expndtw-2\charscale
x100 could sail against the wind. This design gave the caravel the unique abilit
y to not only go \line \up0 \expndtw-4\charscalex100 out on voyages of discovery
, but be able to return as well. Caravels were not designed to \line \up0 \expnd
tw-2\charscalex100 bring back a vast physical wealth, but rather the more valuab
le, intangible wealth of \line \up0 \expndtw-2\charscalex100 \u8220?news\u8221?.
This new knowledge was continuously synthesized in Sagres, and eventually \line
\up0 \expndtw-2\charscalex100 became the congealed wealth that produced the cap
acity to sail further and further down \line \up0 \expndtw-2\charscalex100 and a
round the African coast. The outcome of the leadership, strategic thinking, cour
age, \line \up0 \expndtw-2\charscalex100 skills and innovation at Sagres was the
discovery of the sea route to India and then \line \up0 \expndtw-2\charscalex10
0 southeast Asia, which led to a trading empire and the generation of enormous w
ealth for \line \up0 \expndtw-2\charscalex100 Portugal. For almost two hundred y
ears this small, but archetypical, knowledge-based \line \up0 \expndtw-2\charsca
lex100 enterprise, with little physical resources and limited numbers of people,
became the \line \up0 \expndtw-3\charscalex100 dominant, richest trading power
in the world. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1652
\sb10\sl-275\slmult0\fi720 \up0 \expndtw-4\charscalex100 Prince Henry\u8217?s ex
periment demonstrates that in any era, in almost any conditions, \up0 \expndtw-2
\charscalex100 the strategic power of a knowledge-based enterprise has the capac
ity to yield a huge \line \up0 \expndtw-4\charscalex100 difference. Our challeng
e is to harness our advanced technology and newly possible \line \up0 \expndtw-2
\charscalex100 networked enterprises to use those same principles familiar to Pr
ince Henry for outcomes \up0 \expndtw-3\charscalex100 that go far beyond our own
expectations. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240

{\bkmkstart Pg15}{\bkmkend Pg15}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pa


rd\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \e
xpndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 15 \par\pard\ql \li1800\sb0\
sl-322\slmult0 \par\pard\ql\li1800\sb172\sl-322\slmult0 \up0 \expndtw-4\charscal
ex100 \ul0\nosupersub\cf24\f25\fs28 How to use this book \par\pard\ql \li1800\sb
0\sl-275\slmult0 \par\pard\ql\li1800\ri1729\sb62\sl-275\slmult0 \up0 \expndtw-2\
charscalex100 \ul0\nosupersub\cf16\f17\fs24 Knowledge Capital\ul0\nosupersub\cf1
4\f15\fs24 is designed from the reader\u8217?s point of view. Pick the perspect
ive that \line \up0 \expndtw-2\charscalex100 best meets your needs. You can read
\ul0\nosupersub\cf16\f17\fs24 Knowledge Capital\ul0\nosupersub\cf14\f15\fs24 f
rom cover-to-cover to get an \line \up0 \expndtw-2\charscalex100 overview of the
field. You can seek out a section that emphasizes particular set of \line \up0
\expndtw-2\charscalex100 themes. Or simply, you can turn to the end of each chap
ter for a summary of Key \line \up0 \expndtw-2\charscalex100 Learning Points. Ea
ch Key Learning Points is more fully explored in that chapter. \par\pard\qj \li1
800\ri1659\sb261\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 The conversa
tions are clustered by major theme or practice area, and are followed \up0 \expn
dtw-2\charscalex100 by an Epilogue, which anticipates what the next stage of the
field will look and feel like. \up0 \expndtw-3\charscalex100 The major themes a
re: \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw0\charscalex101 \u8226
? Starting Points \par\pard\ql \li2520\sb4\sl-276\slmult0 \up0 \expndtw0\chars
calex100 \u8226? Strategic Issues \par\pard\ql \li2520\sb24\sl-276\slmult0 \up
0 \expndtw-3\charscalex100 \u8226? Human Capital, Values, and Learning \par\pa
rd\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \u8226? Driver
s and Accounting for Intangibles \par\pard\ql \li2520\sb4\sl-276\slmult0 \up0 \e
xpndtw-2\charscalex100 \u8226? Putting It All Together in Practice \par\pard\q
l \li1800\sb0\sl-270\slmult0 \par\pard\ql\li1800\ri1745\sb19\sl-270\slmult0\fi72
0 \up0 \expndtw-2\charscalex100 Return to the chapters often. The different pers
pectives will provide ever broader \line \up0 \expndtw-2\charscalex100 and incre
asingly rich insights into what is necessary for building knowledge-based \line
\up0 \expndtw-2\charscalex100 enterprises to become the interactive, multi-dimen
sional entities that they need to be. \par\pard\ql \li1800\sb0\sl-322\slmult0 \p
ar\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb164\sl-322\slmult0 \u
p0 \expndtw-3\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Knowledge \ul0\nosuper
sub\cf38\f39\fs28 Cluster I: Starting Points \par\pard\qj \li1800\sb0\sl-280\sl
mult0 \par\pard\qj\li1800\ri2391\sb53\sl-280\slmult0 \up0 \expndtw-2\charscalex1
00 \ul0\nosupersub\cf14\f15\fs24 This cluster outlines the transition to knowled
ge-based enterprises, the changes of \up0 \expndtw-2\charscalex100 perception, r
elationships, and behaviors required for an organization to become a \up0 \expnd
tw-3\charscalex100 knowledge-based enterprise. \par\pard\ql \li1800\sb264\sl-276
\slmult0\tx2520 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf39\f40\fs24 2. \
tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Dorothy Leonard:
\ul0\nosupersub\cf39\f40\fs24 Operating as a Knowledge System \par\pard\ql \li
1800\ri1691\sb47\sl-273\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf
14\f15\fs24 The foundation for looking at the way we operate as a knowledge syst
em enables readers \up0 \expndtw-2\charscalex100 can begin to see what kinds of
knowledge are being brought in, what are the channels \line \up0 \expndtw-2\char
scalex100 through which knowledge flows, and where we are arbitrarily closing ou
t various kinds \up0 \expndtw-3\charscalex100 of knowledge assets. \par\pard\li1
800\sb0\sl-276\slmult0\par\pard\li1800\sb5\sl-276\slmult0\fi0\tx2520 \up0 \expnd
tw-3\charscalex100 \ul0\nosupersub\cf39\f40\fs24 3.\tab \up0 \expndtw-3\charscal
ex100 \ul0\nosupersub\cf21\f22\fs24 Jim Botkin:\ul0\nosupersub\cf39\f40\fs24 Th
e Knowledge Business\par\pard\ql \li1800\ri1797\sb25\sl-280\slmult0 \up0 \expndt
w-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 A new business is emerging - the
knowledge business. And, there is a new organization \up0 \expndtw-2\charscalex
100 emerging, the knowledge community. These two require a new communications or
\line \up0 \expndtw-2\charscalex100 management model called knowledge managemen
t. All of these elements need to be in \up0 \expndtw-3\charscalex100 place for a
knowledge business to work. \par\pard\ql \li1800\sb264\sl-276\slmult0\tx2520 \u
p0 \expndtw-3\charscalex100 \ul0\nosupersub\cf39\f40\fs24 4. \tab \up0 \expndtw-

3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Karl Wiig:\ul0\nosupersub\cf39\f40


\fs24 The Knowledge Movement Emerges from its Infancy \par\pard\qj \li1800\ri1
698\sb49\sl-270\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\f
s24 The amount of knowledge that people are able to capture is minimal compared
to what is \line \up0 \expndtw-2\charscalex100 required to run a business. The b
alance resides in people\u8217?s heads. The challenge is to set \line \up0 \expn
dtw-2\charscalex100 up the environment in which there is an understanding of kno
wledge needs, availability \par\pard\sect\sectd\fs24\paperw12240\paperh15840\par
d\sb0\sl-240{\bkmkstart Pg16}{\bkmkend Pg16}\par\pard\ql \li10239\sb0\sl-230\slm
ult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slm
ult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 16 \par\pard\qj
\li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1688\sb189\sl-280\slmult0 \up0
\expndtw-4\charscalex100 \ul0\nosupersub\cf14\f15\fs24 of relevant knowledge, an
d new ways in which people can collaborate. If you get people \line \up0 \expndt
w-2\charscalex100 together and give them the understanding and freedom to act, t
hey will actually act are in \line \up0 \expndtw-2\charscalex100 their own inter
ests as they see it, and certainly in the in the organization\u8217?s best inter
ests. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb204\sl-322\s
lmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf25\f26\fs28 Knowledge \u
l0\nosupersub\cf38\f39\fs28 Cluster II: Strategic Issues \par\pard\ql \li1800\r
i1830\sb256\sl-277\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f1
5\fs24 The goal of a knowledge initiative is to make a strategic difference. Kno
wledge capital \line \up0 \expndtw-2\charscalex100 strategies have a set concept
s, key reference points and processes that an enterprise can \line \up0 \expndtw
-2\charscalex100 use to navigate its knowledge efforts. An effective knowledge c
apital strategy will have \line \up0 \expndtw-2\charscalex100 an appropriate ret
urn on investment, align throughout the organization, be supported by \line \up0
\expndtw-2\charscalex100 staff and suppliers, and improve the value offered to
customers. The chapters in this \line \up0 \expndtw-2\charscalex100 session exam
ine the role of strategy in knowledge-based enterprises, suggesting \line \up0 \
expndtw-2\charscalex100 methodologies, as well as raising questions that must be
answered by leaders in any \line \up0 \expndtw-3\charscalex100 serious knowledg
e endeavor. \par\pard\ql \li1800\sb264\sl-276\slmult0\tx2520 \up0 \expndtw-3\cha
rscalex100 \ul0\nosupersub\cf39\f40\fs24 5. \tab \up0 \expndtw-3\charscalex100 \
ul0\nosupersub\cf21\f22\fs24 Gran Roos:\ul0\nosupersub\cf39\f40\fs24 Recipes fo
r Knowledge-based Value Creation \par\pard\ql \li1800\ri1669\sb45\sl-275\slmult0
\up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Intellectual capita
l is the science and art for dealing with how to extract maximum value \line \up
0 \expndtw-4\charscalex100 from an enterprise\u8217?s resources and the way it c
hooses to deploy them. Business recipes \line \up0 \expndtw-2\charscalex100 comb
ine those different resources to transform them into new and more valuable outpu
ts. \line \up0 \expndtw-4\charscalex100 Both resource stock and flow need to be
fully taken into account in the transformation \line \up0 \expndtw-5\charscalex1
00 process. \par\pard\ql \li1800\sb265\sl-276\slmult0\tx2520 \up0 \expndtw-3\cha
rscalex100 \ul0\nosupersub\cf39\f40\fs24 6. \tab \up0 \expndtw-3\charscalex100 \
ul0\nosupersub\cf21\f22\fs24 Leif Edvinsson:\ul0\nosupersub\cf39\f40\fs24 The
Intelligent Organization \par\pard\ql \li1800\ri1977\sb41\sl-280\slmult0 \up0 \e
xpndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Intelligent organizations a
re about global intelligence, the courage to move to the next \up0 \expndtw-2\ch
arscalex100 plane, the accounting for intangibles, and how to leverage knowledge
recipes for \line \up0 \expndtw-3\charscalex100 effective outcomes. \par\pard\q
l \li1800\sb264\sl-276\slmult0\tx2520 \up0 \expndtw-3\charscalex100 \ul0\nosuper
sub\cf39\f40\fs24 7. \tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22
\fs24 Vince Barabba:\ul0\nosupersub\cf39\f40\fs24 Understanding the Enterprise
as a System \par\pard\ql \li1800\ri1641\sb44\sl-276\slmult0 \up0 \expndtw-2\cha
rscalex100 \ul0\nosupersub\cf14\f15\fs24 The first task in a knowledge strategy
is to understand that enterprises are interactive \line \up0 \expndtw-2\charscal
ex100 systems with different parts that interface outward with customers and int
eract among \line \up0 \expndtw-2\charscalex100 themselves. That is where the op
portunities are. It is corporate strategy\u8217?s job to forge a \line \up0 \exp

ndtw-2\charscalex100 process to assist management in creating a strategy to impl


ement. This involves surfacing \line \up0 \expndtw-2\charscalex100 ideas, specul
ating how they will interact with the enterprise, involving management in \line
\up0 \expndtw-2\charscalex100 dialogue on them, and providing the analytic tools
and resources to support \line \up0 \expndtw-5\charscalex100 implementation. \p
ar\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \pa
r\pard\ql\li1800\sb2\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersu
b\cf38\f39\fs28 Knowledge \ul0\nosupersub\cf11\f12\fs28 Cluster III: Human Capi
tal, Values and Learning \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li
1800\ri1731\sb42\sl-275\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf
14\f15\fs24 Organizations are increasingly realizing that it is their human capi
tal that is the source of \line \up0 \expndtw-2\charscalex100 renewal and innova
tion. Yet, the rules of engagement for human capital are changing. \line \up0 \e
xpndtw-2\charscalex100 Human capital was thought to be something that an enterpr
ise could control, acquire, \line \up0 \expndtw-2\charscalex100 directly manage,
and come very close to owning. However, those in successful \line \up0 \expndtw
-4\charscalex100 knowledge enterprises know that human capital can only be broug
ht into full play in a \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb
0\sl-240{\bkmkstart Pg17}{\bkmkend Pg17}\par\pard\ql \li10239\sb0\sl-230\slmult0
\par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0
\up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 17 \par\pard\ql \li1
800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb196\sl-276\slmult0 \up0 \expndtw-2\
charscalex100 \ul0\nosupersub\cf14\f15\fs24 negotiation, where the enterprise an
d the individual determine mutually satisfying \par\pard\qj \li1800\ri1611\sb1\s
l-280\slmult0 \up0 \expndtw-2\charscalex100 conditions and outcomes. At the same
time the knowledge-based enterprise must redesign \up0 \expndtw-3\charscalex100
itself as an extended learning enterprise. \par\pard\ql \li1800\ri1795\sb260\sl
-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 These are not simple changes, b
ut they are doable changes. The conversations in \up0 \expndtw-2\charscalex100 t
his section delve into what the elements of a new framework for human capital ar
e, the \up0 \expndtw-2\charscalex100 values that support that framework, and the
learning structure that enables value to be \up0 \expndtw-3\charscalex100 both
created and captured by the enterprise. \par\pard\ql \li1800\sb0\sl-276\slmult0
\par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb12\sl-276\slmult0\t
x2520 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf16\f17\fs24 8. \tab \up0 \
expndtw-5\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Jac Fitz-enz:\ul0\nosupers
ub\cf16\f17\fs24 Human Capital is the Only Active Asset \par\pard\ql \li1800\r
i1688\sb0\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1
4\f15\fs24 People are the differentiating factor for an enterprise, and human ef
fort and \line \up0 \expndtw-2\charscalex100 knowledge efforts are the real leve
rs for achieving markedly higher performance and \line \up0 \expndtw-2\charscale
x100 desired outcomes. Enterprises need to recognize that people are grabbing in
formation, \line \up0 \expndtw-2\charscalex100 mobility, and connectivity (via t
he world wide web and Internet) and often moving faster \line \up0 \expndtw-2\ch
arscalex100 than management. Management needs to stay up with them or else it wi
ll be dragged \line \up0 \expndtw-3\charscalex100 along behind them. \par\pard\l
i1800\sb268\sl-276\slmult0\fi0\tx2520 \up0 \expndtw-3\charscalex100 \ul0\nosuper
sub\cf16\f17\fs24 9.\tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\
fs24 Thomas O. Davenport:\ul0\nosupersub\cf16\f17\fs24 People are the Owners a
nd Investors of Human\par\pard\li1800\sb1\sl-273\slmult0\fi0 \up0 \expndtw-3\cha
rscalex100 Capital\par\pard\ql \li1800\ri1662\sb0\sl-276\slmult0\fi720 \up0 \exp
ndtw-4\charscalex100 \ul0\nosupersub\cf14\f15\fs24 People have taken charge of t
heir human capital and how they want to invest it. \line \up0 \expndtw-2\charsca
lex100 Enterprises and managers need to have a strategy to optimize the return o
n their \line \up0 \expndtw-2\charscalex100 investment for human capital both to
their employees and to the organization. At the \line \up0 \expndtw-2\charscale
x100 center of this strategy is the multiparty \u8220?deal\u8221? that forms the
new social contract among \line \up0 \expndtw-2\charscalex100 the individual, m
anagers, the organization, and co-workers. The new framework involves \line \up0
\expndtw-2\charscalex100 understanding the \u8220?deal\u8221?, acceptance by al

l parties, strategic alignment, competence \line \up0 \expndtw-3\charscalex100 b


uilding, and reinforcement. \par\pard\li1800\sb0\sl-276\slmult0\par\pard\li1800\
sb9\sl-276\slmult0\fi0\tx2520 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf16
\f17\fs24 10.\tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Do
n Tyler:\ul0\nosupersub\cf16\f17\fs24 Shared Values - The Prerequisite for Kno
wledge Sharing and\par\pard\li1800\sb1\sl-273\slmult0\fi0 \up0 \expndtw-3\charsc
alex100 Creation\par\pard\ql \li1800\ri1703\sb0\sl-273\slmult0 \up0 \expndtw-2\c
harscalex100 \ul0\nosupersub\cf14\f15\fs24 Values plus skills equal capabilities
for people and their enterprises. Values provide the \line \up0 \expndtw-2\char
scalex100 meaning and motivation to learn new skills. Organizational values need
to be first \line \up0 \expndtw-4\charscalex100 identified and then, consistent
ly nurtured. High levels of knowledge sharing and creation \line \up0 \expndtw-2
\charscalex100 can only be sustained after meaningful relationships are establis
hed and constantly \line \up0 \expndtw-2\charscalex100 nourished. Ultimately, th
e challenge resides in evolving sets of values that extend across \line \up0 \ex
pndtw-2\charscalex100 the newly networked organizations and that honor a diversi
ty of values as part of the \line \up0 \expndtw-3\charscalex100 organization\u82
17?s core ethic. \par\pard\ql \li1800\sb265\sl-276\slmult0\tx2520 \up0 \expndtw3\charscalex100 \ul0\nosupersub\cf39\f40\fs24 11. \tab \up0 \expndtw-3\charscale
x100 \ul0\nosupersub\cf21\f22\fs24 Brook Manville:\ul0\nosupersub\cf39\f40\fs24
Wars of Capabilities \par\pard\ql \li1800\ri1651\sb65\sl-275\slmult0 \up0 \exp
ndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Knowledge management is part
of a broader and more integrated effort to manage and \up0 \expndtw-2\charscalex
100 develop human capability for business performance. Managers will assess the
gaps in \up0 \expndtw-2\charscalex100 their workforce and direct interventions.
At the same time, individual workers will have \up0 \expndtw-2\charscalex100 the
opportunity to take control of their learning that, in turn, moves the organiza
tion to be \up0 \expndtw-3\charscalex100 able to achieve its goals and objective
s. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart
Pg18}{\bkmkend Pg18}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li1023
9\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\cha
rscalex100 \ul0\nosupersub\cf9\f10\fs20 18 \par\pard\qj \li1800\sb0\sl-320\slmul
t0 \par\pard\qj\li1800\ri2491\sb176\sl-320\slmult0 \up0 \expndtw-4\charscalex100
\ul0\nosupersub\cf24\f25\fs28 Knowledge\ul0\nosupersub\cf25\f26\fs28 \ul0\nos
upersub\cf38\f39\fs28 Cluster IV: Drivers and Accounting for Intangible \up0 \e
xpndtw-4\charscalex100 Wealth \par\pard\ql \li1800\sb0\sl-277\slmult0 \par\pard\
ql\li1800\ri1765\sb59\sl-277\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupers
ub\cf14\f15\fs24 There has been a continuing decline in the relevance of tangibl
e assets and earnings as \line \up0 \expndtw-2\charscalex100 predictors of stock
market performance. Yet there is no decline in the needs of decision \line \up0
\expndtw-2\charscalex100 makers for transparency and understanding of market dr
ivers in an environment where \line \up0 \expndtw-2\charscalex100 the intangible
s of an enterprise are more significant than the traditional tangible ones for \
line \up0 \expndtw-2\charscalex100 the operations and valuation of enterprises.
These conversations delve into efforts to \line \up0 \expndtw-2\charscalex100 na
vigate in an environment where biases and distortions are just being sorted out
and \line \up0 \expndtw-2\charscalex100 alternative methodologies for measuring
intangible wealth are beginning to be \line \up0 \expndtw-3\charscalex100 formul
ated. \par\pard\ql \li1800\sb244\sl-276\slmult0\tx2520 \up0 \expndtw-3\charscale
x100 \ul0\nosupersub\cf39\f40\fs24 12. \tab \up0 \expndtw-3\charscalex100 \ul0\n
osupersub\cf21\f22\fs24 Jonathan Low:\ul0\nosupersub\cf39\f40\fs24 Value Drive
rs for Intangibles \par\pard\ql \li1800\sb64\sl-276\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf14\f15\fs24 Traditional measures do not provide enou
gh detail or texture to give managers or \par\pard\qj \li1800\ri1830\sb0\sl-280\
slmult0 \up0 \expndtw-2\charscalex100 investors the information they need. With
some insight and effort, we can begin to put \up0 \expndtw-2\charscalex100 toget
her a clearer picture of what is going wrong in an organization, what is going w
ell, \up0 \expndtw-3\charscalex100 what could go better, and how to improve it.
\par\pard\ql \li1800\sb245\sl-276\slmult0\tx2520 \up0 \expndtw-3\charscalex100 \
ul0\nosupersub\cf39\f40\fs24 13. \tab \up0 \expndtw-3\charscalex100 \ul0\nosuper

sub\cf21\f22\fs24 Steven Wallman:\ul0\nosupersub\cf39\f40\fs24 A Level Playing


Field for Intangibles \par\pard\ql \li1800\ri1864\sb47\sl-273\slmult0 \up0 \exp
ndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Financial reporting and discl
osure systems are increasingly susceptible to not capturing \up0 \expndtw-2\char
scalex100 important drivers of wealth production, and specifically knowledge-bas
ed assets. \line \up0 \expndtw-2\charscalex100 Recognition of intangibles is cen
tral in decisions involving capital allocation, financial \up0 \expndtw-2\charsc
alex100 reporting, appropriate disclosure, and volatility of the financial marke
tplace. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb265\sl-322
\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Knowledge\u
l0\nosupersub\cf43\f44\fs28 \ul0\nosupersub\cf38\f39\fs28 Cluster V: Bringing
It All Together in Practice \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\q
l\li1800\sb40\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\
f15\fs24 Practitioners are the ones that lead the transformation from being acti
vity-based \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100
enterprises into becoming knowledge-based enterprises. They are at the lead in
\par\pard\ql \li1800\ri1744\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 det
ermining how the concepts and practices are introduced into enterprise. They exp
lore \line \up0 \expndtw-2\charscalex100 with leadership, middle management and
frontline staff how each will benefit by \line \up0 \expndtw-2\charscalex100 ide
ntifying and using knowledge inputs to guide their work. They navigate for align
ing \line \up0 \expndtw-2\charscalex100 the values, the technology, the strategi
es, the structure and processes, and the measures. \line \up0 \expndtw-2\charsca
lex100 The sessions that follow illustrate a number of different approaches that
practitioners are \line \up0 \expndtw-3\charscalex100 using. \par\pard\qj \li18
00\ri1667\sb261\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Think about y
our organization and envision how you could use these approaches \up0 \expndtw-2
\charscalex100 to evolve it into more of knowledge-based enterprise. Do not feel
the need to copy any of \up0 \expndtw-2\charscalex100 their efforts in a cookie
-cutter manner. They created their methodologies through a great \up0 \expndtw-2
\charscalex100 deal of trial and error. Learn from their experiences, try out th
eir ideas and practices and \up0 \expndtw-3\charscalex100 see what will make the
difference for your enterprise. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pa
rd\ql\li1800\sb8\sl-276\slmult0\tx2520 \up0 \expndtw-5\charscalex100 \ul0\nosupe
rsub\cf16\f17\fs24 14. \tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f
22\fs24 Hubert Saint-Onge:\ul0\nosupersub\cf16\f17\fs24 Creating and Implement
ing a Knowledge Strategy \par\pard\qj \li1800\ri1892\sb0\sl-280\slmult0 \up0 \ex
pndtw-4\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Hubert Saint-Onge understand
s that the knowledge strategy of an organization must be \line \up0 \expndtw-4\c
harscalex100 geared to build the capabilities and relationships that form the in
tangible assets of the \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb
0\sl-240{\bkmkstart Pg19}{\bkmkend Pg19}\par\pard\ql \li10239\sb0\sl-230\slmult0
\par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0
\up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 19 \par\pard\qj \li1
800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2058\sb189\sl-280\slmult0 \up0 \exp
ndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 firm. The strategy needs to t
ake into account that intangible assets are quite different \up0 \expndtw-2\char
scalex100 from tangible assets and need to be managed quite differently. The str
ategy must link \up0 \expndtw-2\charscalex100 supporting values that align and r
enew the tacit knowledge of the organization and a \up0 \expndtw-3\charscalex100
compatible technological infrastructure. \par\pard\ql \li1800\sb264\sl-276\slmu
lt0\tx2520 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf39\f40\fs24 15. \tab
\up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Kent Greenes:\ul0\no
supersub\cf39\f40\fs24 Knowledge Management is About Change \par\pard\ql \li18
00\ri1760\sb47\sl-273\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14
\f15\fs24 Kent Greenes lays out the process for creating a knowledge initiative,
starting with \line \up0 \expndtw-2\charscalex100 building a business case for
the knowledge initiative to get the attention of a business \line \up0 \expndtw2\charscalex100 leader and staff, and the finding out how the knowledge effort w
ill make a very real and \line \up0 \expndtw-2\charscalex100 personal difference

in the day-to-day areas that matter most. It is their buy-in that will \line \u
p0 \expndtw-2\charscalex100 allow the knowledge process to have a chance to live
. Greenes clearly frames key points \line \up0 \expndtw-2\charscalex100 that any
practitioner must take into account to cultivate a successful knowledge \line \
up0 \expndtw-3\charscalex100 enterprise. \par\pard\ql \li1800\sb265\sl-276\slmul
t0\tx2520 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf39\f40\fs24 16. \tab \
up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Sharon Oriel:\ul0\nos
upersub\cf39\f40\fs24 Finding \u8220?The Hook\u8221? \par\pard\ql \li1800\sb64
\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Shar
on Oriel sees that leaders in enterprises need to think in terms of managing \pa
r\pard\ql \li1800\ri1641\sb0\sl-280\slmult0 \up0 \expndtw-4\charscalex100 intell
ectual capital assets as structural resources. The extension of this view is to
align the \line \up0 \expndtw-2\charscalex100 intellectual capital effort with t
he enterprise business strategy. The key is to, then, find \line \up0 \expndtw-2
\charscalex100 \u8220?the hook\u8221? that shows the value of managing intellect
ual capital to help solve a critical \line \up0 \expndtw-2\charscalex100 issue i
n an organization. Once that happens the practitioner has the license to operate
. \par\pard\ql \li1800\sb245\sl-276\slmult0\tx2520 \up0 \expndtw-3\charscalex100
\ul0\nosupersub\cf39\f40\fs24 17. \tab \up0 \expndtw-5\charscalex100 \ul0\nosup
ersub\cf21\f22\fs24 Stephen Denning:\ul0\nosupersub\cf39\f40\fs24 The Springboa
rd Story \par\pard\ql \li1800\ri1611\sb46\sl-274\slmult0 \up0 \expndtw-2\charsca
lex100 \ul0\nosupersub\cf14\f15\fs24 Stephen Denning tried everything at the Wor
ld Bank to engage people in its knowledge \line \up0 \expndtw-2\charscalex100 in
itiative. Nothing worked effectively until he found that through storytelling pe
ople \line \up0 \expndtw-2\charscalex100 could identify with and co-create a vis
ion, in their own words, of what their organization \line \up0 \expndtw-2\charsc
alex100 could become. Stories became the springboard for sharing knowledge acros
s the \line \up0 \expndtw-2\charscalex100 organization and eventually with the b
roader community of users across the world. \line \up0 \expndtw-2\charscalex100
Storytelling made the knowledge movement alive at the World Bank and, in conjunc
tion \line \up0 \expndtw-2\charscalex100 with the putting in place seven key str
uctural elements, are the basis for the it to become a \line \up0 \expndtw-5\cha
rscalex100 knowledge-based enterprise. \par\pard\ql \li1800\sb0\sl-276\slmult0 \
par\pard\ql\li1800\sb29\sl-276\slmult0\tx2520 \up0 \expndtw-5\charscalex100 \ul0
\nosupersub\cf16\f17\fs24 18. \tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub
\cf21\f22\fs24 Alex Bennet:\ul0\nosupersub\cf16\f17\fs24 The Knowledge Centric
Organization \par\pard\ql \li1800\sb1\sl-256\slmult0 \up0 \expndtw-2\charscalex
100 \ul0\nosupersub\cf14\f15\fs24 Alex Bennet was in the lead position in the de
velopment of a knowledge-centric US \par\pard\ql \li1800\ri1696\sb7\sl-277\slmul
t0 \up0 \expndtw-2\charscalex100 Department of the Navy. She demonstrates the ro
le of knowledge in a 21\ul0\super\cf31\f32\fs24 st\ul0\nosupersub\cf14\f15\fs24
century public \up0 \expndtw-2\charscalex100 sector organization. A key to succ
ess for the Navy is knowledge superiority. To \line \up0 \expndtw-2\charscalex10
0 accomplish this meant that the Navy needed to build its basic capacities of ha
rdware, \line \up0 \expndtw-2\charscalex100 software, and wetware. The chapter
examines how knowledge is linked to and supports \up0 \expndtw-2\charscalex100 o
rganizational goals. It also explores how the building blocks of a strategic vis
ion, \line \up0 \expndtw-4\charscalex100 knowledge sharing, knowledge capture, c
onnectivity, alignment, and metrics have been \up0 \expndtw-2\charscalex100 desi
gned into the Navy\u8217?s approach so that knowledge management supports the \l
ine \up0 \expndtw-3\charscalex100 achievement of its strategic goals. \par\pard\
sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg20}{\bkmken
d Pg20}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\
slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \u
l0\nosupersub\cf9\f10\fs20 20 \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\
ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql
\li1800\sb168\sl-322\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf24\
f25\fs28 Epilogue:\ul0\nosupersub\cf43\f44\fs28 \ul0\nosupersub\cf38\f39\fs28
Convergence - Towards the next stage \par\pard\ql \li1800\sb0\sl-276\slmult0 \pa
r\pard\ql\li1800\ri1670\sb60\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\n

osupersub\cf14\f15\fs24 As the series of conversations took place, a group of th


emes started to emerge that will \up0 \expndtw-2\charscalex100 shape of the fram
ework for the next stage of the knowledge field. The people involved in \up0 \ex
pndtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24 Knowledge Capital\ul0\nosupe
rsub\cf14\f15\fs24 are experimentalists and continuous learners. While they car
ried out \up0 \expndtw-2\charscalex100 their work on knowledge initiatives they
reflected on their experience and began to better \up0 \expndtw-2\charscalex100
grasp both the underlying dilemmas and the new sets of issues and perspectives t
hat they \up0 \expndtw-3\charscalex100 saw were in need of being addressed. \par
\pard\ql \li1800\ri1613\sb264\sl-277\slmult0\fi720 \up0 \expndtw-2\charscalex100
Some participants, whose roots were in the computer sciences have seen the limi
ts \line \up0 \expndtw-2\charscalex100 of information technology at this stage,
and now see human learning as they key. Others, \line \up0 \expndtw-2\charscalex
100 who emphasized either knowledge creation or knowledge capture, found that bo
th are \line \up0 \expndtw-2\charscalex100 equally important in any enterprise,
with the need to create a framework in which they \line \up0 \expndtw-2\charscal
ex100 can be holistically integrated and form a new knowledge value chain. In ad
dition to that, \line \up0 \expndtw-2\charscalex100 many expressed that we are i
n just the initial phases of learning how to nurture and use \line \up0 \expndtw
-2\charscalex100 communities of practice, metrics, and how to account for intang
ible value in \line \up0 \expndtw-2\charscalex100 organizations. These are among
the strands of issues that are synthesized in the Epilogue \line \up0 \expndtw2\charscalex100 and become the whole cloth that will compose the next, richer, a
nd more reality-based \line \up0 \expndtw-3\charscalex100 phase of the knowledge
movement. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb204\sl322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Growing
the Seeds \par\pard\ql \li1800\sb276\sl-276\slmult0 \up0 \expndtw-2\charscalex10
0 \ul0\nosupersub\cf14\f15\fs24 Every enterprise has within it the seeds of beco
ming a knowledge-based enterprise. \par\pard\ql \li1800\ri1634\sb5\sl-275\slmult
0 \up0 \expndtw-2\charscalex100 Organizations already have extensive amounts of
information, data, and measures in their \up0 \expndtw-2\charscalex100 various r
epositories. However, probably ninety percent of their knowledge is tacit, \line
\up0 \expndtw-2\charscalex100 residing in the know-how of their staff, supplier
s, and customers. The conversations that \up0 \expndtw-2\charscalex100 follow pr
ovide a framework and benchmarks to evaluate to what extent an enterprise is \li
ne \up0 \expndtw-2\charscalex100 knowledge-based, what strategic capabilities it
needs to cultivate to further its \line \up0 \expndtw-2\charscalex100 transform
ation, and how to go about doing that. The different sessions map out how to \li
ne \up0 \expndtw-2\charscalex100 create strategies and build the vehicles, relat
ionships and supporting environment so that \up0 \expndtw-2\charscalex100 knowle
dge capital is easily accessed, comes freely into play, is nurtured, and leverag
ed to \up0 \expndtw-3\charscalex100 achieve gains that exceed expectations. \par
\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb9\sl-276\slmult0 \up0
\expndtw-2\charscalex100 The currency of an enterprise is increasingly based upo
n its knowledge capital \par\pard\ql \li1800\ri1623\sb5\sl-275\slmult0 \up0 \exp
ndtw-2\charscalex100 and its ability to mobilize its knowledge resources to resp
ond to changing conditions. The \line \up0 \expndtw-2\charscalex100 advantage of
a knowledge-based enterprise comes from it being better able to \line \up0 \exp
ndtw-2\charscalex100 understanding its resources (both intangible and tangible),
its opportunities and risks, and \line \up0 \expndtw-2\charscalex100 its abilit
y to mobilize those knowledge resources in ways that make for a distinct \line \
up0 \expndtw-3\charscalex100 difference. \par\pard\ql \li1800\sb0\sl-270\slmult0
\par\pard\ql\li1800\ri1825\sb20\sl-270\slmult0\fi720 \up0 \expndtw-2\charscalex
100 The future will be won by enterprises that have the capabilities to out thin
k, out \line \up0 \expndtw-2\charscalex100 organize, out maneuver, and out perfo
rm their rivals. This means enterprises must \line \up0 \expndtw-2\charscalex100
prepare themselves for continual renewal so they can go beyond the edge of what
exists \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmks
tart Pg21}{\bkmkend Pg21}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\l
i10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-

2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 21 \par\pard\qj \li1800\sb0\sl-280\


slmult0 \par\pard\qj\li1800\ri1862\sb189\sl-280\slmult0 \up0 \expndtw-2\charscal
ex100 \ul0\nosupersub\cf14\f15\fs24 and create new passageways, just as Prince H
enry the Navigator did five hundred years \line \up0 \expndtw-3\charscalex100 ag
o. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri2117\sb8\sl-276
\slmult0\fi720 \up0 \expndtw-3\charscalex100 The convergence of networked enterp
rise, increasingly autonomous human \up0 \expndtw-2\charscalex100 capital, and a
dvances in electronic collaboration technologies provides a unique, and \up0 \ex
pndtw-2\charscalex100 perhaps historic, opportunity for knowledge-based enterpri
ses to leverage their \line \up0 \expndtw-2\charscalex100 knowledge capital in w
ays that were never possible before. With these mentoring \up0 \expndtw-2\charsc
alex100 conversations as a stimulus and guide, embark on a voyage of discovery t
o find and \up0 \expndtw-3\charscalex100 capitalize on whole new fields of possi
bilities. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkm
kstart Pg22}{\bkmkend Pg22}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql
\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndt
w-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 22 \par\pard\ql \li1800\sb0\sl-41
4\slmult0 \par\pard\ql\li1800\sb324\sl-414\slmult0 \up0 \expndtw0\charscalex97 \
ul0\nosupersub\cf46\f47\fs36 Knowledge\ul0\nosupersub\cf47\f48\fs36 \ul0\nosupe
rsub\cf48\f49\fs36 Cluster I: Starting Points \par\pard\ql \li1800\sb0\sl-273\sl
mult0 \par\pard\ql\li1800\sb0\sl-273\slmult0 \par\pard\ql\li1800\sb0\sl-273\slmu
lt0 \par\pard\ql\li1800\ri1664\sb64\sl-273\slmult0 \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf14\f15\fs24 This cluster sets out the parameters for what a k
nowledge-based enterprise is. It explores: \up0 \expndtw-2\charscalex100 the ele
ments of a knowledge-based enterprise, what difference it will make to become \l
ine \up0 \expndtw-2\charscalex100 one, where and how to begin, as well as the ro
le of innovation and continuous renewal in \up0 \expndtw-3\charscalex100 such an
enterprise. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1603\
sb11\sl-275\slmult0\fi720 \up0 \expndtw-2\charscalex100 Dorothy Leonard, Jim Bot
kin and Karl Wiig map out how being knowledge-based \line \up0 \expndtw-2\charsc
alex100 is an outlook or a perspective, as much as it is a certain kind of struc
ture. They share their \line \up0 \expndtw-2\charscalex100 understandings that w
e can look at a knowledge-based enterprise as a system with \line \up0 \expndtw2\charscalex100 various kinds of knowledge being brought in. They chart out the
channels through which \line \up0 \expndtw-2\charscalex100 knowledge flows, and
note where and how knowledge is converted into goods or service \line \up0 \expn
dtw-2\charscalex100 outcomes. The knowledge that is brought in and cultivated is
the knowledge that is \line \up0 \expndtw-2\charscalex100 necessary for buildin
g the core capabilities of the enterprise, and, at the same time \line \up0 \exp
ndtw-2\charscalex100 knowledge-based enterprises are aware of the hazard, that,
if not regularly reevaluated, \line \up0 \expndtw-2\charscalex100 core capabilit
ies can change into becoming inflexible, core rigidities that constraining the \
line \up0 \expndtw-3\charscalex100 organization\ul0\nosupersub\cf9\f10\fs20 . \p
ar\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb165\sl-322\slmult0 \
up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 The Continually Renew
ing Enterprise \par\pard\ql \li1800\sb216\sl-276\slmult0 \up0 \expndtw-2\charsca
lex100 \ul0\nosupersub\cf16\f17\fs24 Dorothy Leonard\ul0\nosupersub\cf14\f15\fs2
4 points out that that a knowledge-based enterprise is in a process of \par\par
d\qj \li1800\ri1778\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 constant re
newal. It starts with a stock of knowledge resources that the enterprise is able
\up0 \expndtw-2\charscalex100 to be renew by recombining and fusing with other
existing knowledge assets, as well as \up0 \expndtw-3\charscalex100 with novel a
pproaches to create new outcomes. \par\pard\ql \li1800\ri1623\sb263\sl-277\slmul
t0\fi720 \up0 \expndtw-2\charscalex100 Leonard asserts that since the world is c
hanging so rapidly we cannot really see \line \up0 \expndtw-2\charscalex100 far
enough into the future to know what is in store for our enterprises. This dynami
c \line \up0 \expndtw-2\charscalex100 requires that a knowledge-based enterprise
and its people to have a high degree of \line \up0 \expndtw-2\charscalex100 fle
xibility, the ability to leverage what it knows, and the capacity to redeploy as
sets \line \up0 \expndtw-2\charscalex100 rapidly and in new directions. The ente

rprise needs to nurture its people so that they feel \line \up0 \expndtw-2\chars
calex100 free to move about in their organizations, to group and regroup in diff
erent configurations \line \up0 \expndtw-2\charscalex100 as needed, and to rewor
k themselves and their resources in concert with their new \line \up0 \expndtw-3
\charscalex100 conditions. \par\pard\qj \li1800\sb0\sl-340\slmult0 \par\pard\qj\
li1800\ri2992\sb111\sl-340\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub
\cf24\f25\fs28 Knowledge Businesses, Knowledge Communities and \up0 \expndtw-4\c
harscalex100 Knowledge Networking \par\pard\ql \li1800\ri1658\sb210\sl-280\slmul
t0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24 Jim Botkin\ul0\no
supersub\cf14\f15\fs24 focuses on how knowledge is changing the ways organizati
ons create value as \line \up0 \expndtw-2\charscalex100 they become increasingly
knowledge-based enterprises. This transition is tied to the \line \up0 \expndtw
-2\charscalex100 growing reality that knowledge has become the new factor of pro
duction, one that is \line \up0 \expndtw-2\charscalex100 emerging as an even mor
e significant to the enterprise than the traditional factors of \par\pard\sect\s
ectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg23}{\bkmkend Pg23
}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult
0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nos
upersub\cf9\f10\fs20 23 \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1
800\ri1852\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf
14\f15\fs24 production of land, labor, and financial capital. A powerful indicat
or of this shift is that \line \up0 \expndtw-2\charscalex100 the use of knowledg
e as a factor of production is creating such a competitive advantage \line \up0
\expndtw-2\charscalex100 that its dominance allows an enterprise to redefine and
transform not only itself, but its \line \up0 \expndtw-3\charscalex100 entire i
ndustry. \par\pard\ql \li1800\ri1638\sb264\sl-276\slmult0\fi720 \up0 \expndtw-4\
charscalex100 According to Botkin, we first have to understand that "knowledge p
roducts and \line \up0 \expndtw-2\charscalex100 smart services" are those offeri
ngs that embody learning and the capacity to create new \line \up0 \expndtw-2\ch
arscalex100 knowledge in them. The next step is to grasp that we are dealing wit
h creating knowledge \line \up0 \expndtw-2\charscalex100 businesses and new form
s of organization, which he calls \u8220?networked knowledge \line \up0 \expndtw
-2\charscalex100 communities.\u8221? Keeping the knowledge offerings and knowled
ge communities ecology \line \up0 \expndtw-4\charscalex100 healthy and performin
g at the highest levels then requires a new communications or \line \up0 \expndt
w-4\charscalex100 management model that we call, in its broadest meaning, knowle
dge management. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb8\
sl-276\slmult0 \up0 \expndtw-2\charscalex100 In Bodkin\u8217?s view, in order to
understand the role of knowledge in business we \par\pard\ql \li1800\ri1683\sb0
\sl-276\slmult0 \up0 \expndtw-2\charscalex100 have to consider that the business
, the organization, and the management model are parts \up0 \expndtw-4\charscale
x100 of a whole cloth - and look at them in the new light of being knowledge bus
inesses, \line \up0 \expndtw-2\charscalex100 knowledge communities, and knowledg
e networking. This requires a shift in perception, \up0 \expndtw-2\charscalex100
but it also means that enterprises have to build the infrastructure that suppor
ts the flow of \up0 \expndtw-2\charscalex100 knowledge, and educates staff, supp
liers and customers on how to operate in this \line \up0 \expndtw-5\charscalex10
0 knowledge grounded environment. \par\pard\ql \li1800\ri1712\sb268\sl-276\slmul
t0\fi720 \up0 \expndtw-4\charscalex100 Part of this change involves knowledge-ba
sed enterprises redesigning themselves \line \up0 \expndtw-2\charscalex100 using
the format of communities and networks of communities. Community allows the \li
ne \up0 \expndtw-4\charscalex100 kind of governance that enables a company to be
both centralized and decentralized as \line \up0 \expndtw-2\charscalex100 the s
ame time. Word of new conditions and requirements can be quickly dispersed \line
\up0 \expndtw-4\charscalex100 throughout the communities, with necessary respon
ses generated to provide feedback to \line \up0 \expndtw-2\charscalex100 develop
informed, strategies, that are executed locally. In this model, individual \lin
e \up0 \expndtw-2\charscalex100 communities are the nodes and the numbers of com
munities, together, form the network. \par\pard\ql \li1800\ri1668\sb261\sl-280\s
lmult0\fi720 \up0 \expndtw-2\charscalex100 An important element of this model is

that the individuals that make up these \up0 \expndtw-2\charscalex100 communiti


es each understand that they have to take responsibility for developing their \u
p0 \expndtw-2\charscalex100 personal knowledge and skill sets for their own pers
onal success as well as the success of \up0 \expndtw-2\charscalex100 the enterpr
ise. This shift in responsibility pragmatically means that each person comes to
\up0 \expndtw-3\charscalex100 act as his or her own chief knowledge officer. \pa
r\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb224\sl-322\slmult0 \u
p0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Different Kinds of Kno
wledge \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1642\sb220\
sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24 Karl
Wiig\ul0\nosupersub\cf14\f15\fs24 looks at the different kinds of knowledge tha
t are necessary for a knowledge-\line \up0 \expndtw-2\charscalex100 based enterp
rise. One is the array of the various types of personal knowledge, a second is \
line \up0 \expndtw-2\charscalex100 shared knowledge, but all strands must come t
ogether to form the structural, or \line \up0 \expndtw-2\charscalex100 instituti
onal knowledge of the enterprise. This is a living knowledge that clusters toget
her \line \up0 \expndtw-2\charscalex100 as people build a \u8221?synergistic orc
hestration environment\u8221?. If the enterprise is \line \up0 \expndtw-2\charsc
alex100 transforming itself, people find it natural to share, collaborate, and d
o that as a matter of \line \up0 \expndtw-2\charscalex100 course and culture. Th
e shared knowledge becomes part of the culture and owned by the \par\pard\sect\s
ectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg24}{\bkmkend Pg24
}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult
0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nos
upersub\cf9\f10\fs20 24 \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1
800\ri1620\sb198\sl-275\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf
14\f15\fs24 organization. In that sense, the shared knowledge takes on a life of
its own amongst the \line \up0 \expndtw-2\charscalex100 staff, the people they
hire, and is not based on any one individual\u8217?s knowledge. But the \line \u
p0 \expndtw-2\charscalex100 challenge to the organization is that only eight to
ten percent of the knowledge that is \line \up0 \expndtw-4\charscalex100 needed
to operate the enterprise can be captured. The balance lies in people\u8217?s he
ads. That \line \up0 \expndtw-4\charscalex100 means that the enterprise must rec
ognize the value of its human capital, and then \line \up0 \expndtw-2\charscalex
100 understand how to cultivate it to build the knowledge ecology where knowledg
e creation \line \up0 \expndtw-2\charscalex100 and sharing become the way it doe
s its business. The enterprise must facilitate knowledge \line \up0 \expndtw-2\c
harscalex100 flows, knowledge migration, and the creation of knowledge pathways.
Technology is an \line \up0 \expndtw-2\charscalex100 enabler here for knowledge
flows and migration, but it is only part of a necessary \line \up0 \expndtw-3\c
harscalex100 response. \par\pard\qj \li1800\ri2023\sb121\sl-280\slmult0\fi720 \u
p0 \expndtw-4\charscalex100 Working with knowledge is as ongoing process within
the organization that is \up0 \expndtw-2\charscalex100 supported by a number of
tools and systems and procedures, but it is also stimulates a \up0 \expndtw-3\ch
arscalex100 different way of life in the organization. \par\pard\qj \li1800\ri16
92\sb124\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 A major role for lea
dership in the knowledge-based enterprise is looking to bring \line \up0 \expndt
w-2\charscalex100 to bear all the best resources and knowledge as part of daily
life. This is a leadership that \line \up0 \expndtw-4\charscalex100 understands
that if you get people together and give them the understanding and freedom \lin
e \up0 \expndtw-2\charscalex100 to act, they will actually act in the directions
that are in their own interests as they see it, \line \up0 \expndtw-2\charscale
x100 and certainly in the organization\u8217?s best interest. An implication for
the enterprise is that \line \up0 \expndtw-2\charscalex100 its knowledge effort
will be built around a very small, very energetic, and visionary \par\pard\ql \
li1800\sb1\sl-256\slmult0 \up0 \expndtw-2\charscalex100 office, in contrast to t
he building of another new bureaucracy. This is a proselytizing \par\pard\ql \li
1800\ri1622\sb9\sl-275\slmult0 \up0 \expndtw-2\charscalex100 office, as well as
one that can secure the resources needed for sharing across departments. \up0 \e
xpndtw-2\charscalex100 It has a flexible vision of how the knowledge management

practice should be undertaken \up0 \expndtw-2\charscalex100 and identifying the


business reasons for pursuing it. The next step for the knowledge \line \up0 \ex
pndtw-2\charscalex100 office is to align its projects with what is on management
's hotplate and to the evolution \up0 \expndtw-5\charscalex100 of its knowledge
strategy. \par\pard\ql \li2520\sb125\sl-276\slmult0 \up0 \expndtw-2\charscalex10
0 While projects may be catalysts for transforming an organization into a \par\p
ard\ql \li1800\ri1682\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 knowledge
enterprise, the more embracing object of concern is to be able to identify how
\up0 \expndtw-2\charscalex100 an effective enterprise needs to behave intelligen
tly, what that entails, and why \line \up0 \expndtw-5\charscalex100 knowledge ma
nagement is important in this regard. \par\pard\ql \li1800\sb0\sl-276\slmult0 \p
ar\pard\ql\li1800\sb128\sl-276\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupe
rsub\cf21\f22\fs24 An Active Knowledge Network \par\pard\ql \li1800\ri1720\sb228
\sl-272\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Thes
e three chapters frame knowledge-based enterprises as open, but structured syste
ms \up0 \expndtw-2\charscalex100 that makes usable the knowledge capacity of the
enterprise. The active nurturing and \line \up0 \expndtw-2\charscalex100 deploy
ment of this knowledge capability creates innovation and the strategic advantage
. \up0 \expndtw-2\charscalex100 Only part of this capability is the knowledge th
at is captured intelligence, stored for later \up0 \expndtw-2\charscalex100 reus
e. It is also the \u8220?know-how\u8221? and \u8220?know-what\u8221? that runs t
hrough the fabric and being \up0 \expndtw-5\charscalex100 of the entire enterpri
se network. \par\pard\ql \li1800\ri1707\sb125\sl-276\slmult0\fi720 \up0 \expndtw
-2\charscalex100 Contributors to this cluster realize that becoming a knowledgebased enterprise \line \up0 \expndtw-4\charscalex100 involves a continuous trans
formation of the people \ul0\nosupersub\cf16\f17\fs24 and\ul0\nosupersub\cf14\f1
5\fs24 the enterprise. Innovation, \line \up0 \expndtw-2\charscalex100 learning
, and change need to be built into all phases and processes of the enterprise \l
ine \up0 \expndtw-2\charscalex100 network. A knowledge management or intellectua
l capital group can initiate and assist in \line \up0 \expndtw-2\charscalex100 t
he transformation, but enterprise\u8217?s leadership, workforce, strategic partn
ers and even \line \up0 \expndtw-4\charscalex100 customers each need to take on
their counterpart roles as the network\u8217?s co-creators. \par\pard\sect\sectd
\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg25}{\bkmkend Pg25}\pa
r\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \p
ar\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosuper
sub\cf9\f10\fs20 25 \par\pard\ql \li1800\sb0\sl-414\slmult0 \par\pard\ql\li1800\
sb84\sl-414\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf46\f47\fs36 Do
rothy Leonard:\ul0\nosupersub\cf2\f3\fs36 \ul0\nosupersub\cf49\f50\fs36 Operati
ng a Knowledge System \par\pard\ql \li1800\sb824\sl-828\slmult0 \up0 \expndtw0\c
harscalex97 \ul0\nosupersub\cf30\f31\fs72 2 \par\pard\ql \li1800\sb0\sl-274\slmu
lt0 \par\pard\ql\li1800\sb0\sl-274\slmult0 \par\pard\ql\li1800\sb0\sl-274\slmult
0 \par\pard\ql\li1800\sb0\sl-274\slmult0 \par\pard\ql\li1800\ri1753\sb14\sl-274\
slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Dorothy Leon
ard explores how organizations effectively build and manage knowledge. \up0 \exp
ndtw-2\charscalex100 She has found that some organizations have developed a capa
city for constant renewal. \up0 \expndtw-2\charscalex100 By fostering values and
managerial systems that support key knowledge-building \line \up0 \expndtw-4\ch
arscalex100 activities, managers in such companies continuously enhance their co
mpetitively critical \up0 \expndtw-4\charscalex100 core capabilities. Other orga
nizations have not made knowledge and development \line \up0 \expndtw-2\charscal
ex100 important, and in fact, are structured to undermine the creation of knowle
dge assets. In \up0 \expndtw-2\charscalex100 this conversation, Dr. Leonard disc
usses these perspectives, mental attitudes, and \line \up0 \expndtw-3\charscalex
100 behaviors that are characteristic of each type. \par\pard\qj \li1800\sb0\sl270\slmult0 \par\pard\qj\li1800\ri1809\sb20\sl-270\slmult0\fi719 \up0 \expndtw-4
\charscalex100 Dorothy Leonard is the author of \ul0\nosupersub\cf16\f17\fs24 We
llsprings of Knowledge\ul0\super\cf50\f51\fs24 2\ul0\nosupersub\cf14\f15\fs24 a
nd co-author with \up0 \expndtw-2\charscalex100 Walter Swap of \ul0\nosupersub\c
f16\f17\fs24 When Sparks Fly\ul0\super\cf50\f51\fs24 3\ul0\nosupersub\cf16\f17\f

s24 .\ul0\nosupersub\cf45\f46\fs24 \ul0\nosupersub\cf14\f15\fs24 Both are basi


c books for understanding the role of \up0 \expndtw-3\charscalex100 how knowledg
e works in enterprises. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2
520\sb10\sl-276\slmult0 \up0 \expndtw-3\charscalex100 Dorothy Leonard is the Wil
liam J. Abernathy Professor of Business \par\pard\ql \li1800\sb4\sl-276\slmult0
\up0 \expndtw-2\charscalex100 Administration and Director of Research at the Har
vard Business School. Her major \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \ex
pndtw-2\charscalex100 research interests and consulting expertise are in organiz
ational innovation and \par\pard\qj \li1800\ri1711\sb0\sl-280\slmult0 \up0 \expn
dtw-2\charscalex100 technology strategy and commercialization. She has worked wi
th a wide range of private \up0 \expndtw-2\charscalex100 and public sector organ
izations around the world in innovation related areas. \par\pard\qj \li1800\sb0\
sl-220\slmult0 \par\pard\qj\li1800\sb0\sl-220\slmult0 \par\pard\qj\li1800\sb0\sl
-220\slmult0 \par\pard\qj\li1800\sb0\sl-220\slmult0 \par\pard\qj\li1800\sb0\sl-2
20\slmult0 \par\pard\qj\li1800\sb0\sl-220\slmult0 \par\pard\qj\li1800\sb0\sl-220
\slmult0 \par\pard\qj\li1800\sb0\sl-220\slmult0 \par\pard\qj\li1800\sb0\sl-220\s
lmult0 \par\pard\qj\li1800\sb0\sl-220\slmult0 \par\pard\qj\li1800\sb0\sl-220\slm
ult0 \par\pard\qj\li1800\sb0\sl-220\slmult0 \par\pard\qj\li1800\sb0\sl-220\slmul
t0 \par\pard\qj\li1800\sb0\sl-220\slmult0 \par\pard\qj\li1800\sb0\sl-220\slmult0
\par\pard\qj\li1800\sb0\sl-220\slmult0 \par\pard\qj\li1800\sb0\sl-220\slmult0 \
par\pard\qj\li1800\ri2009\sb151\sl-220\slmult0\fi719 \up0 \expndtw-3\charscalex1
00 \ul0\super\cf32\f33\fs20\ul0\super\cf32\f33\fs19 2\ul0\nosupersub\cf9\f10\fs2
0 Dorothy Leonard-Barton, \ul0\nosupersub\cf33\f34\fs20 Wellsprings of Knowledg
e: Building and Sustaining the Sources of \up0 \expndtw-4\charscalex100 Innovati
on,\ul0\nosupersub\cf9\f10\fs20 (Boston: Harvard Business School Press, 1995).
\par\pard\qj \li1800\ri1679\sb0\sl-240\slmult0\fi720 \up0 \expndtw-3\charscalex1
00 \ul0\super\cf32\f33\fs19 3\ul0\nosupersub\cf9\f10\fs20 Dorothy A. Leonard an
d Walter Swap, \ul0\nosupersub\cf33\f34\fs20 When Sparks Fly: Igniting Creativit
y in Groups\ul0\nosupersub\cf9\f10\fs20 , (Boston: \up0 \expndtw-4\charscalex100
Harvard Business School Press, 1999).
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g26}{\bkmkend Pg26}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
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persub\cf10\f11\fs32 The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \p
ar\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb246\sl-322\slmult0 \u

p0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Wellsprings of Knowled


ge \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\sb0\sl-280\slmult
0 \par\pard\qj\li1800\ri1942\sb13\sl-280\slmult0 \up0 \expndtw-3\charscalex100 \
ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\c
f16\f17\fs24
What do you mean by \u8220?wellsprings of knowledge\u8221? and w
hat are the conditions \up0 \expndtw-5\charscalex100 for wellspring renewal? \pa
r\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\li1800\ri1758\sb57\sl-260\slmu
lt0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 DL:\ul0\nosupers
ub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Wellsprings of knowledge\ul0\
nosupersub\cf14\f15\fs24 refers to a constant process of renewal. That is, havi
ng \up0 \expndtw-4\charscalex100 enough knowledge assets that you can constantly
renew them. \par\pard\ql \li2520\sb7\sl-276\slmult0 \up0 \expndtw-4\charscalex1
00 One of the first requirements of renewal is that managers understand what the
\par\pard\qj \li1800\ri1729\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 kn
owledge assets of their particular organization are. Then, they have to understa
nd how \up0 \expndtw-3\charscalex100 to expand and leverage those assets. \par\p
ard\ql \li1800\ri1648\sb264\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 L
et me give you some examples. Knowledge assets can be technological. For \up0 \e
xpndtw-4\charscalex100 instance, 3M has deep knowledge about great abrasives, ad
hesives and coatings. We \up0 \expndtw-2\charscalex100 would not have a product
such as masking tape, were the engineers at 3M not able some \up0 \expndtw-2\ch
arscalex100 time ago to be able to combine what they knew about putting paper on
the back of things, \up0 \expndtw-2\charscalex100 (for example, in sandpaper) w
ith their knowledge of adhesives. Combining those basic \up0 \expndtw-3\charscal
ex100 knowledge assets gave them a new product. \par\pard\ql \li1800\sb0\sl-276\
slmult0 \par\pard\ql\li1800\ri1656\sb8\sl-276\slmult0\fi360 \up0 \expndtw-2\char
scalex100 Recently I was asked by a reporter whether a Kodak foray into using th
eir software \line \up0 \expndtw-2\charscalex100 capability to improve underwate
r photography using traditional film, was an unwise use \line \up0 \expndtw-4\ch
arscalex100 of resources, because after all this was merely enhancing---using di
gital means to \line \up0 \expndtw-4\charscalex100 enhance analog technology. My
feeling was \u8220?No. That was extremely wise.\u8221? What we do \line \up0 \e
xpndtw-2\charscalex100 is take what we know best and combine that with what is n
ew and exciting in the market, \line \up0 \expndtw-2\charscalex100 and often tha
t synergy gives us a boost. So renewal can come from the fusion of existing \lin
e \up0 \expndtw-2\charscalex100 technological knowledge assets. Or it may come f
rom simply looking at what we do best. \line \up0 \expndtw-2\charscalex100 One l
ast example. At Harvard Business School, the core capabilities are its ability t
o \line \up0 \expndtw-2\charscalex100 deliver experiential learning and provide
top-notch classroom experiences. Now, we \line \up0 \expndtw-2\charscalex100 hap
pen to be the first business school that ever delivered that experiential learni
ng \line \up0 \expndtw-3\charscalex100 through case studies. \par\pard\ql \li252
0\sb264\sl-276\slmult0 \up0 \expndtw-4\charscalex100 If we were to say that is a
ll we know how to do is case studies, we would be \par\pard\ql \li1800\sb4\sl-27
6\slmult0 \up0 \expndtw-2\charscalex100 selling short the more important basic c
apability of delivering experiential learning, \par\pard\qj \li1800\ri1871\sb1\s
l-280\slmult0 \up0 \expndtw-4\charscalex100 which we now need to interpret in ne
w ways. We need to think in terms of multimedia, \up0 \expndtw-2\charscalex100 e
lectronic simulations, and distance learning. We need to incorporate new technol
ogies \up0 \expndtw-3\charscalex100 into the delivery of our core capability. \p
ar\pard\ql \li1800\ri1717\sb265\sl-275\slmult0\fi720 \up0 \expndtw-2\charscalex1
00 We do not want to confine our definition of our knowledge assets to written c
ase \up0 \expndtw-2\charscalex100 studies. We want to think about the core capab
ility of experiential learning. If you define \up0 \expndtw-2\charscalex100 your
competitive advantage narrowly by describing exactly how you operationalize you
r \up0 \expndtw-2\charscalex100 core capabilities today, then you will not have
room for renewal. If you define them \line \up0 \expndtw-3\charscalex100 generic
ally then you have more room to morph, to change and adapt. \par\pard\sect\sectd
\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg27}{\bkmkend Pg27}\pa
r\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \p

ar\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosuper


sub\cf9\f10\fs20 27 \par\pard\ql \li1800\sb0\sl-368\slmult0 \par\pard\ql\li1800\
sb0\sl-368\slmult0 \par\pard\ql\li1800\sb0\sl-368\slmult0 \par\pard\ql\li1800\sb
92\sl-368\slmult0 \up0 \expndtw0\charscalex96 \ul0\nosupersub\cf23\f24\fs32 Pers
pectives That Make the Difference \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\p
ard\qj\li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2086\sb65\sl-280\slmult0
\up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC: \ul0\nosupersub\
cf16\f17\fs24
What difference does it make that managers view everyday activi
ties from the \up0 \expndtw-3\charscalex100 perspective of knowledge management
and growth? \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1645\s
b8\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 DL
:\ul0\nosupersub\cf14\f15\fs24
It makes as much difference as any other pers
pective or screen through which you \line \up0 \expndtw-2\charscalex100 habitual
ly look at your activities. Let\u8217?s consider the Toyota production system, w
hich is \line \up0 \expndtw-2\charscalex100 viewed as one of the most interestin
g, efficient, and effective learning processes in \line \up0 \expndtw-2\charscal
ex100 manufacturing today. It is a very complex system that people have tried to
imitate \line \up0 \expndtw-2\charscalex100 piecemeal without understanding the
philosophy and viewpoint behind it. Yet, \line \up0 \expndtw-2\charscalex100 co
nsidering the manufacturing process through the lens of the Toyota production sy
stem \line \up0 \expndtw-2\charscalex100 philosophy fundamentally affects everyt
hing that a manager at Toyota does. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par
\pard\ql\li1800\ri1620\sb8\sl-276\slmult0\fi720 \up0 \expndtw-4\charscalex100 Le
t me give you an example. The purchasing manager of a particular Toyota plant \u
p0 \expndtw-4\charscalex100 set up in the United States came out of traditional
U.S. manufacturing. He was \line \up0 \expndtw-4\charscalex100 accustomed to sel
ecting suppliers on the basis of lowest \ul0\nosupersub\cf16\f17\fs24 price\ul0\
nosupersub\cf14\f15\fs24 . Toyota taught him to look \up0 \expndtw-2\charscalex1
00 for the lowest \ul0\nosupersub\cf16\f17\fs24 cost\ul0\nosupersub\cf14\f15\fs2
4 supplier and to work with that supplier to increase their knowledge \line \up
0 \expndtw-4\charscalex100 about how to hold costs down. Now, consider the diffe
rence in investment and long term \up0 \expndtw-2\charscalex100 payoff in terms
of partnership and cost advantage you get if you partner with a supplier \line \
up0 \expndtw-2\charscalex100 with the idea in mind that you are going to transfe
r some knowledge assets to them about \up0 \expndtw-2\charscalex100 holding thei
r costs down so that they can, in turn, reliably deliver components to you at \l
ine \up0 \expndtw-2\charscalex100 the lowest cost. There is a big difference in
mental attitude as to whether one seeks low \line \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf16\f17\fs24 cost\ul0\nosupersub\cf14\f15\fs24 versus low \ul0
\nosupersub\cf16\f17\fs24 price\ul0\nosupersub\cf14\f15\fs24 . Your relationship
with your suppliers is based on how much they \line \up0 \expndtw-3\charscalex1
00 know and how much you can help them learn. \par\pard\ql \li1800\ri1641\sb261\
sl-280\slmult0\fi360 \up0 \expndtw-2\charscalex100 Every little decision can be
viewed from the perspective of whether it helps us learn, \line \up0 \expndtw-2\
charscalex100 helps increase the knowledge assets of the expanded enterprise, wh
ich is what Toyota \line \up0 \expndtw-2\charscalex100 was doing--or, whether it
simply represents an expedient way to get something done for \line \up0 \expndt
w-2\charscalex100 the moment, which is the way the purchasing manager had been e
ducated in his prior job. \par\pard\ql \li1880\sb0\sl-322\slmult0 \par\pard\ql\l
i1880\sb0\sl-322\slmult0 \par\pard\ql\li1880\sb0\sl-322\slmult0 \par\pard\ql\li1
880\sb200\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\
fs28 Key Learning Points \par\pard\ql \li2160\ri1638\sb233\sl-280\slmult0\tx2520
\tx2520 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf14\f15\fs24 \u8226? Fi
rst, managers need to understand what the knowledge assets of their particular \
line\tab \up0 \expndtw-2\charscalex100 organization are. Then, they have to unde
rstand how to expand and leverage those \line\tab \up0 \expndtw-3\charscalex100
assets. \par\pard\ql \li2160\sb24\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \
u8226? Renewal can come from the fusion of existing technological knowledge as
sets. \par\pard\qj \li2160\ri1631\sb1\sl-280\slmult0\tx2520 \up0 \expndtw-3\char
scalex100 \u8226? If you define your competitive advantage narrowly by describ

ing exactly how you \line\tab \up0 \expndtw-3\charscalex100 operationalize your


core capabilities today, you will not have room for renewal. If
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{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{
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{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s
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p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g28}{\bkmkend Pg28}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 28 \par\pard\qj \li2520\sb0\sl-280\slmult
0 \par\pard\qj\li2520\ri1869\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf14\f15\fs24 you define them generically, then you have more ro
om to morph, to change and \line \up0 \expndtw-3\charscalex100 adapt. \par\pard\
ql \li2160\sb24\sl-276\slmult0\tx2520 \up0 \expndtw-3\charscalex100 \u8226? \tab
\up0 \expndtw-2\charscalex100 Every little decision can be viewed from the pers
pective of whether it helps us \par\pard\ql \li2520\sb1\sl-256\slmult0 \up0 \exp
ndtw-3\charscalex100 learn, helps increase the knowledge assets of the expanded
enterprise. \par\pard\ql \li2160\sb28\sl-276\slmult0\tx2520 \up0 \expndtw-3\char
scalex100 \u8226? \tab \up0 \expndtw-2\charscalex100 Measurement is tremendously
important. People are smart they respond to the \par\pard\ql \li2520\ri2062\sb9
\sl-270\slmult0 \up0 \expndtw-2\charscalex100 incentive systems and the rewards
systems that we put in place. If you reward \up0 \expndtw-2\charscalex100 people
for creating knowledge and developing other people, transferring \line \up0 \ex
pndtw-3\charscalex100 knowledge to other people, you will get a certain outcome.
\par\pard\ql \li2160\sb26\sl-276\slmult0\tx2520 \up0 \expndtw-3\charscalex100 \
u8226? \tab \up0 \expndtw-2\charscalex100 Looking at the way that we operate as
a knowledge system, will allow us to see \par\pard\ql \li2520\ri2111\sb1\sl-280\
slmult0 \up0 \expndtw-2\charscalex100 what kinds of knowledge are being brought
in, what are the channels through \up0 \expndtw-3\charscalex100 which knowledge
flows, and where we are closing out various kinds of \line \up0 \expndtw-3\chars
calex100 knowledge assets. \par\pard\ql \li2160\sb4\sl-276\slmult0\tx2520 \up0 \
expndtw-3\charscalex100 \u8226? \tab \up0 \expndtw-2\charscalex100 The only way
we can tell whether we are initiating the right knowledge creation \par\pard\qj
\li2520\ri2248\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 activities is to
measure our progress along some dimensions and one way to \line \up0 \expndtw-2
\charscalex100 measure your progress is to hold extremely high standards for a p
articular \line \up0 \expndtw-3\charscalex100 function. \par\pard\ql \li2160\sb4
\sl-276\slmult0\tx2520 \dn2 \expndtw-3\charscalex100 \u8226? \tab \up0 \expndtw2\charscalex100 If you are really interested in the right knowledge creation act
ivities, you\u8217?ll \par\pard\qj \li2520\ri2504\sb1\sl-280\slmult0 \up0 \expnd
tw-2\charscalex100 always be looking for the root causes of problems rather than
treating the \up0 \expndtw-3\charscalex100 symptoms. \par\pard\ql \li2160\sb24\
sl-276\slmult0\tx2520 \up0 \expndtw-3\charscalex100 \u8226? \tab \up0 \expndtw-2
\charscalex100 Managers function as gatekeepers because they become extremely aw
are of the \par\pard\ql \li2520\sb1\sl-256\slmult0 \up0 \expndtw-3\charscalex100
knowledge building or destroying implications of anything they do. \par\pard\ql
\li2160\sb28\sl-276\slmult0\tx2520 \up0 \expndtw-3\charscalex100 \u8226? \tab \
up0 \expndtw-2\charscalex100 The upper management is not the only gatekeeper of
how an organization learns, \par\pard\ql \li2160\ri1842\sb1\sl-280\slmult0\fi360
\tx2520 \up0 \expndtw-4\charscalex100 but, in fact, that ability to learn and ac
crue knowledge, especially from mistakes \line\tab \up0 \expndtw-3\charscalex100
or failures is also controlled by people at the supervisory level. \line \up0
\expndtw-3\charscalex100 \u8226? \up0 \expndtw-3\charscalex100 The most importan

t things to focus on are: \par\pard\ql \li2880\sb4\sl-276\slmult0 \up0 \expndtw3\charscalex100 \ul0\nosupersub\cf53\f54\fs24 o \ul0\nosupersub\cf14\f15\fs24


Valuing knowledge assets at least as much as we do financial assets, \par\pard\q
l \li2880\ri1836\sb1\sl-280\slmult0\tx3240 \up0 \expndtw-3\charscalex100 \ul0\no
supersub\cf53\f54\fs24 o \ul0\nosupersub\cf14\f15\fs24 Understanding the impor
tance of unstructured learning and encouraging \line\tab \up0 \expndtw-4\charsca
lex100 learning, and \par\pard\ql \li2880\ri1963\sb17\sl-260\slmult0\tx3240 \up0
\expndtw-3\charscalex100 \ul0\nosupersub\cf53\f54\fs24 o \ul0\nosupersub\cf14\f
15\fs24 Having a value system that supports a certain degree of risk taking an
d \line\tab \up0 \expndtw-4\charscalex100 innovation. \par\pard\sect\sectd\fs24\
paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg29}{\bkmkend Pg29}\par\pard
\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\par
d\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf
9\f10\fs20 29 \par\pard\ql \li1800\sb0\sl-414\slmult0 \par\pard\ql\li1800\sb84\s
l-414\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf46\f47\fs36 Jim Botk
in:\ul0\nosupersub\cf27\f28\fs36 \ul0\nosupersub\cf28\f29\fs36 The Knowledge B
usiness \par\pard\ql \li1800\sb544\sl-828\slmult0 \up0 \expndtw0\charscalex97 \u
l0\nosupersub\cf30\f31\fs72 3 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\
ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1623\sb276\sl-276\slmult0 \up
0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 This conversation with
Jim Botkin explores a variety of issues on how knowledge is \line \up0 \expndtw2\charscalex100 changing how organizations create value as knowledge-based enter
prises. Jim Botkin \line \up0 \expndtw-2\charscalex100 argues that the knowledge
framework is actually the larger context for organizations and \line \up0 \expn
dtw-2\charscalex100 that e-business is actually a subset of its operations. Bot
kin also shares how knowledge \line \up0 \expndtw-2\charscalex100 has come to be
a new factor of production in organizations. This is become true for both \line
\up0 \expndtw-2\charscalex100 "new economy" organizations and "old economy" leg
acy organizations. Even so, the \line \up0 \expndtw-2\charscalex100 acceptance o
f the \ul0\nosupersub\cf16\f17\fs24 knowledge movement\ul0\nosupersub\cf14\f15\f
s24 is still tentative. The very name "knowledge \line \up0 \expndtw-2\charscal
ex100 management" is still often implies information technology "applications" t
o key \line \up0 \expndtw-2\charscalex100 organizational visionaries and is not
always well received. The controversies over \line \up0 \expndtw-2\charscalex100
nurturing knowledge communities within the framework of knowledge initiatives a
re also \line \up0 \expndtw-3\charscalex100 examined in the dialogue. \par\pard\
ql \li1800\sb0\sl-274\slmult0 \par\pard\ql\li1800\ri1641\sb12\sl-274\slmult0\fi7
20 \up0 \expndtw-2\charscalex100 Jim Botkin has an excellent perspective for del
ving into these issues as cofounder \line \up0 \expndtw-2\charscalex100 and pres
ident of InterClass, the International Corporate Learning Association. InterClas
s \line \up0 \expndtw-2\charscalex100 is a knowledge community of Fortune 500 co
mpanies seeking to improve its members' \line \up0 \expndtw-2\charscalex100 orga
nizational learning and enhances their knowledge assets. For the last decade Bot
kin \line \up0 \expndtw-2\charscalex100 has led InterClass as it has grappled wi
th the future of work, organizational learning, \line \up0 \expndtw-2\charscalex
100 intellectual capital, virtual organizations, managing change, knowledge mana
gement, and \line \up0 \expndtw-2\charscalex100 new leadership styles. While st
ill a Senior Advisor to InterClass, he now devotes most of \line \up0 \expndtw-2
\charscalex100 his time to launching a personal and professional coaching servic
e called NaturalVOICE-\par\pard\qj \li1800\ri1649\sb2\sl-280\slmult0 \up0 \expnd
tw-2\charscalex100 -Venture Out: Innovative Coaching for Executives. Natural VOI
CE seeks to link learning \up0 \expndtw-3\charscalex100 and coaching with Nature
experiences. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw-5\charscal
ex100 Botkin is the author of \ul0\nosupersub\cf16\f17\fs24 Smart Business: How
Knowledge Communities Can \par\pard\ql \li1800\ri1756\sb1\sl-280\slmult0 \up0 \e
xpndtw-2\charscalex100 Revolutionize Your Organization\ul0\nosupersub\cf14\f15\f
s24 . He is an expert on corporate learning and knowledge \line \up0 \expndtw-4\
charscalex100 and a student of the ideas and practices involved in successful in
novations in legacy \line \up0 \expndtw-2\charscalex100 companies. He is also co
-author of \ul0\nosupersub\cf16\f17\fs24 No Limits to Learning\ul0\nosupersub\cf

14\f15\fs24 and of \ul0\nosupersub\cf16\f17\fs24 The Monster Under the \line \u


p0 \expndtw-3\charscalex100 Bed\ul0\nosupersub\cf14\f15\fs24 . \par\pard\ql \li1
800\ri1663\sb260\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Botkin is an
IC2 Fellow of the University of Texas in Austin and has taught at the \line \up
0 \expndtw-2\charscalex100 Harvard Graduate School of Education. His Doctorate i
s from the Harvard Business \line \up0 \expndtw-5\charscalex100 School.
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
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\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 30 \par\pard\ql \li4834\sb0\sl-414\slmult
0 \par\pard\ql\li4834\sb64\sl-414\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosup
ersub\cf28\f29\fs36 The Conversation \par\pard\ql \li1800\sb0\sl-368\slmult0 \pa
r\pard\ql\li1800\sb0\sl-368\slmult0 \par\pard\ql\li1800\sb0\sl-368\slmult0 \par\
pard\ql\li1800\sb120\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\
cf23\f24\fs32 The Knowledge Organization and E-Business \par\pard\qj \li1800\sb0
\sl-260\slmult0 \par\pard\qj\li1800\ri2014\sb42\sl-260\slmult0 \up0 \expndtw-3\c
harscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf42\f43\fs24 \ul
0\nosupersub\cf33\f34\fs20
\ul0\nosupersub\cf16\f17\fs24 Can you comment on
how the knowledge organization or k-organization goes \up0 \expndtw-4\charscalex
100 beyond e-business? \par\pard\ql \li1800\ri1622\sb27\sl-276\slmult0 \up0 \exp
ndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JB:\ul0\nosupersub\cf14\f15\f
s24
In a way e-business, e-commerce, and the dot.com companies have become s
uch \line \up0 \expndtw-2\charscalex100 a big deal that it obscures the fact tha
t they are only part of the picture. Some would say \line \up0 \expndtw-2\charsc
alex100 e-business is basically a new business and a new business model, but I a
m skeptical about \line \up0 \expndtw-2\charscalex100 that. To understand the ro
le of knowledge in business, you have to consider the business, \line \up0 \expn
dtw-4\charscalex100 the organization, and the management model - or the knowledg
e business, knowledge \line \up0 \expndtw-4\charscalex100 communities, and knowl
edge networking - which are, respectively, the New Economy \line \up0 \expndtw-5
\charscalex100 companies\u8217? basic business, organizational mode, and managem
ent models. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw-3\charscalex
100 The knowledge business can go beyond dot.coms - for example, consulting \par
\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 companies are
knowledge businesses. The larger question is "What are knowledge \par\pard\ql \l
i1800\sb4\sl-276\slmult0 \up0 \expndtw-4\charscalex100 products and smart servic
es?" They are those offerings that embody learning and the \par\pard\ql \li1800\
sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 capacity to create new knowledg
e in them. They can be Internet based on not. My \par\pard\ql \li1800\ri1621\sb0
\sl-277\slmult0 \up0 \expndtw-2\charscalex100 favorite example is the company in
Boulder, Colorado called Outlast Technologies. It has \line \up0 \expndtw-2\cha
rscalex100 the patent rights to develop materials (cloth, fabric, clothing, car
seats). They can weave \line \up0 \expndtw-2\charscalex100 micro phase-change ma
terials (PCM's) into the fabric. The PCM is genetically \line \up0 \expndtw-2\ch
arscalex100 engineered to sense cold, which makes it turn hot. When it senses ho
t, it starts to turn \line \up0 \expndtw-2\charscalex100 cold. That is a great e
xample of a non-computer based, non-electronic, non-internet \line \up0 \expndtw
-2\charscalex100 knowledge business. Your shirt literally knows better than you
do what the temperature is \line \up0 \expndtw-4\charscalex100 outside and it ad

justs itself, unknowing to you, to a more comfortable temperature. Here's \line


\up0 \expndtw-2\charscalex100 a new a bio-chemical process knowledge product tha
t goes far beyond the Internet. And \line \up0 \expndtw-4\charscalex100 there ar
e other examples of those. Some are internet-based and some are not. \par\pard\q
l \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb272\sl-276\slmult0 \up0 \expn
dtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs
24 \ul0\nosupersub\cf16\f17\fs24 The main thrust is that there is a larger p
erspective beyond e-business? \par\pard\ql \li1800\sb0\sl-280\slmult0 \par\pard\
ql\li1800\ri1624\sb1\sl-280\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersu
b\cf21\f22\fs24 JB:\ul0\nosupersub\cf14\f15\fs24
Yes. The more a product is
interactive, self-customizing, capable of remembering \up0 \expndtw-2\charscalex
100 and improving your use of it, the more it is a knowledge product. When it ha
s these \line \up0 \expndtw-2\charscalex100 characteristics \ul0\nosupersub\cf16
\f17\fs24 and\ul0\nosupersub\cf14\f15\fs24 is web-based, you\u8217?ve got doubl
e-strength knowledge. But just because \up0 \expndtw-4\charscalex100 it\u8217?s
internet-based does not necessarily mean it\u8217?s a knowledge product. \par\pa
rd\qj \li1800\ri1761\sb265\sl-275\slmult0\fi720 \up0 \expndtw-4\charscalex100 Ta
ke Nike sneakers: "The new Nike sneaker that has special material in the sole \l
ine \up0 \expndtw-2\charscalex100 that when it feels I am running it starts to s
tiffen up and when I slow down it gets softer. \line \up0 \expndtw-2\charscalex1
00 It is interacting with me in real time.\u8221? I could imagine the step furth
er being that as soon \line \up0 \expndtw-2\charscalex100 as they get a little m
icroprocessor in there and I could communicate to it, I could control \line \up0
\expndtw-2\charscalex100 the stiffness or looseness of the shoe as I am running
. This is the basis of a knowledge \par\pard\sect\sectd\fs24\paperw12240\paperh1
5840\pard\sb0\sl-240{\bkmkstart Pg31}{\bkmkend Pg31}\par\pard\ql \li10239\sb0\sl
-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl
-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 31 \par\
pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2371\sb189\sl-280\slmul
t0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 business when you
are talking about products that have the ability to learn and the \up0 \expndtw
-3\charscalex100 capacity to create new knowledge built into them. \par\pard\qj
\li1800\sb0\sl-270\slmult0 \par\pard\qj\li1800\ri1931\sb19\sl-270\slmult0\fi720
\up0 \expndtw-2\charscalex100 So, as big as the whole dot.com economy movement i
s, it is just the tip of the \up0 \expndtw-2\charscalex100 iceberg. Eventually w
e will realize the scope of the whole knowledge business and see \up0 \expndtw-3
\charscalex100 that the Internet part is just a subset. \par\pard\ql \li1800\sb0
\sl-368\slmult0 \par\pard\ql\li1800\sb262\sl-368\slmult0 \up0 \expndtw0\charscal
ex97 \ul0\nosupersub\cf23\f24\fs32 New Business Models \par\pard\ql \li1800\sb26
8\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:
\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24
\ul0\nosupersub
\cf16\f17\fs24 What will the new business model(s) look like? \par\pard\qj \li18
00\ri1837\sb27\sl-273\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf21
\f22\fs24 JB:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24
The
re are two aspects implicit in your question. One concerns KM - knowledge \up0 \
expndtw-2\charscalex100 management, or what I prefer to call knowledge networkin
g. Another is community. I \up0 \expndtw-2\charscalex100 was amazed at a recent
knowledge management summit that it was not just me talking \up0 \expndtw-5\char
scalex100 about community. A lot of people were into that field. \par\pard\ql \l
i1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1694\sb11\sl-275\slmult0\fi720 \u
p0 \expndtw-2\charscalex100 There is a whole new movement around the word commun
ity, which generates a \up0 \expndtw-4\charscalex100 lot of emotions. Different
people feel very differently about it. We are in a situation just \up0 \expndtw2\charscalex100 like ten or twenty years ago when teams were seen as the next bi
g thing or when quality \up0 \expndtw-4\charscalex100 was accepted as necessary
to all companies. The next big organizational thing is going to \up0 \expndtw-2\
charscalex100 be the community. Community allows a company to be both centralize
d and \line \up0 \expndtw-2\charscalex100 decentralized as the same time. Using
community as your basic building block can be \line \up0 \expndtw-2\charscalex10
0 thought of as the new network model of organization where the nodes are commun

ities \line \up0 \expndtw-2\charscalex100 and numbers of communities together fo


rm a network. You do not see this very many \line \up0 \expndtw-2\charscalex100
places yet. But once you tune into the concept, you will be amazed at the number
of \line \up0 \expndtw-3\charscalex100 companies that describe themselves this
way. \par\pard\ql \li1800\ri1612\sb261\sl-280\slmult0\fi720 \up0 \expndtw-4\char
scalex100 So there is a new business emerging - the knowledge business. And ther
e is a new \up0 \expndtw-3\charscalex100 organization emerging - the knowledge c
ommunity. These two require a new \line \up0 \expndtw-4\charscalex100 communicat
ions or management model that we call knowledge management. So I do not \up0 \ex
pndtw-2\charscalex100 see KM as the be all and end all, in the sense that if you
do not have the other two things, \up0 \expndtw-3\charscalex100 you are missing
part of the bigger picture. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\p
ard\sb0\sl-240{\bkmkstart Pg32}{\bkmkend Pg32}\par\pard\ql \li10239\sb0\sl-230\s
lmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\s
lmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 32 \par\pard\q
j \li1800\sb0\sl-420\slmult0 \par\pard\qj\li1800\ri1768\sb194\sl-420\slmult0\tx2
520 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf54\f55\fs36 Karl Wiig: \ul0\n
osupersub\cf49\f50\fs36 The Knowledge Movement Emerges from \line\tab \up0 \expn
dtw0\charscalex98 its Infancy \par\pard\ql \li1800\sb0\sl-828\slmult0 \par\pard\
ql\li1800\sb355\sl-828\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf55\
f56\fs72 4 \par\pard\ql \li1800\sb0\sl-413\slmult0 \par\pard\ql\li1800\sb0\sl-41
3\slmult0 \par\pard\ql\li1800\ri1624\sb229\sl-413\slmult0 \up0 \expndtw-2\charsc
alex100 \ul0\nosupersub\cf14\f15\fs24 Karl Wiig is one of the key developers of
knowledge management theory and practice. \line \up0 \expndtw-2\charscalex100 He
is Chairman and CEO of the Knowledge Research Institute, Inc. and the author of
\line \up0 \expndtw-2\charscalex100 four books\ul0\super\cf31\f32\fs24 4\ul0\no
supersub\cf14\f15\fs24 and numerous articles that have helped define the field.
He works extensively \up0 \expndtw-2\charscalex100 with client organizations to
build internal knowledge management capabilities by \line \up0 \expndtw-2\chars
calex100 focusing on business-related issues with senior management; tactical ap
proaches and \line \up0 \expndtw-4\charscalex100 solutions with middle managemen
t; and hands-on methods and techniques with \line \up0 \expndtw-5\charscalex100
professional knowledge practitioners. \par\pard\ql \li1800\ri1778\sb126\sl-415\s
lmult0\fi720 \up0 \expndtw-4\charscalex100 Karl Wiig sees himself as a reformed
"techie". He actively integrates learning, \line \up0 \expndtw-4\charscalex100 k
nowledge management, intellectual capital, strategy, and process into an approac
h that \line \up0 \expndtw-2\charscalex100 allows for the complexity that actual
ly reflect how people and organizations operate. He \line \up0 \expndtw-2\charsc
alex100 explores deeply and broadly, as well as with a curiosity that is infecti
ous. He is \line \up0 \expndtw-2\charscalex100 continuously looking to discover
what the field is and what it could be about. \par\pard\ql \li1800\ri2179\sb125\
sl-415\slmult0\fi720 \up0 \expndtw-2\charscalex100 Karl Wiig holds undergraduate
and graduate degrees from Case Institute of \up0 \expndtw-4\charscalex100 Techn
ology, and was Director of Applied Artificial Intelligence and of Systems and \u
p0 \expndtw-2\charscalex100 Policy Analysis at Arthur D. Little, Inc. He also se
rved as a management consulting \up0 \expndtw-2\charscalex100 partner at Coopers
and Lybrand. He is co-founder of the International Knowledge \line \up0 \expndt
w-3\charscalex100 Management Network. \par\pard\ql \li1800\sb0\sl-230\slmult0 \p
ar\pard\ql\li1800\sb0\sl-230\slmult0 \par\pard\ql\li1800\ri1670\sb18\sl-230\slmu
lt0\fi720 \up0 \expndtw-3\charscalex100 \ul0\super\cf32\f33\fs20\ul0\super\cf32\
f33\fs19 4\ul0\nosupersub\cf33\f34\fs20 Expert Systems: A Manager\u8217?s Guide
, (\ul0\nosupersub\cf9\f10\fs20 Arlington, TX: Schema\ul0\nosupersub\cf33\f34\fs
20 , \ul0\nosupersub\cf9\f10\fs20 1990); \ul0\nosupersub\cf33\f34\fs20 Knowledg
e Management \up0 \expndtw-3\charscalex100 Foundations: Thinking about Thinking
-How People and Organizations Create, Represent, and Use \line \up0 \expndtw-3\c
harscalex100 Knowledge, \ul0\nosupersub\cf9\f10\fs20 (Arlington, TX: Schema, 199
3); \ul0\nosupersub\cf33\f34\fs20 Knowledge Management: The Central Management F
ocus for \up0 \expndtw-3\charscalex100 Intelligent-Acting Organizations\ul0\nosu
persub\cf9\f10\fs20 (Arlington, TX: Schema,1994); \ul0\nosupersub\cf33\f34\fs20
Knowledge Management Methods: \line \up0 \expndtw-3\charscalex100 Practical App

roaches to Managing Knowledge\ul0\nosupersub\cf9\f10\fs20 (Arlington, TX: Schem


a, 1995).
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g33}{\bkmkend Pg33}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 33 \par\pard\ql \li4858\sb0\sl-368\slmult
0 \par\pard\ql\li4858\sb348\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosu
persub\cf56\f57\fs32 The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \p
ar\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par
\pard\ql\li1800\sb24\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersu
b\cf24\f25\fs28 Learning and Knowledge \par\pard\qj \li1800\sb0\sl-280\slmult0 \
par\pard\qj\li1800\ri1854\sb233\sl-280\slmult0 \up0 \expndtw-1\charscalex100 \ul
0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24
\ul0\nosupersub
\cf16\f17\fs24 What is the learning challenge that knowledge workers and their o
rganizations \up0 \expndtw-3\charscalex100 face as far as you see it? \par\pard\
ql \li1800\ri1651\sb125\sl-275\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupe
rsub\cf21\f22\fs24 KW:\ul0\nosupersub\cf14\f15\fs24
This is a very comprehens
ive question because what we are really talking about is \line \up0 \expndtw-2\c
harscalex100 the learning of individuals on one end, and the organizational lear
ning that might take \line \up0 \expndtw-2\charscalex100 place on the other end.
Knowledge is different from information and is difficult to \line \up0 \expndtw
-2\charscalex100 communicate. For example, on the personal level, the learner mu
st internalize what he or \line \up0 \expndtw-2\charscalex100 she understands is
being communicated. After that, learners try to make sense of the \line \up0 \e
xpndtw-2\charscalex100 received information within the context in which they fin

d themselves. When we start \line \up0 \expndtw-2\charscalex100 looking at the w


hole issue of the learning challenge, we realize that we mainly have \line \up0
\expndtw-1\charscalex100 focused on the provision part of it - on communicating
knowledge - but not on the \line \up0 \expndtw-2\charscalex100 reception part of
it. We have been talking about sharing knowledge, about telling others \line \u
p0 \expndtw-2\charscalex100 what we know, but we have not really focused very mu
ch on making effective learners. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pa
rd\qj\li1800\ri2554\sb241\sl-280\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosu
persub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\
fs24
Yes, that has not really been brought up in most knowledge management \u
p0 \expndtw-3\charscalex100 conversations so far. \par\pard\ql \li1800\sb124\sl276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 KW:\ul0\
nosupersub\cf14\f15\fs24
I guess it is not surprising because, initially, we
are so focused on getting the \par\pard\ql \li1800\ri1689\sb4\sl-276\slmult0 \up
0 \expndtw-2\charscalex100 process started. If we are in the supply-push mode, t
o put it that way, instead of being in \up0 \expndtw-2\charscalex100 the demandpull mode, we are very concerned about how we get people to participate in \up0
\expndtw-2\charscalex100 knowledge sharing and how we initiate capturing knowled
ge from the organizational \up0 \expndtw-2\charscalex100 perspective to make it
into structural knowledge. The real learning challenge is that there \up0 \expnd
tw-2\charscalex100 are a number of culture barriers to sharing knowledge. For ex
ample: to help others, or to \up0 \expndtw-2\charscalex100 ask for help. In addi
tion, many people think they are conducting knowledge management \up0 \expndtw-3
\charscalex100 but have not yet discovered what knowledge is. \par\pard\ql \li18
00\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb248\sl-276\slmult0 \up0 \expndtw0\ch
arscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0
\nosupersub\cf16\f17\fs24
That would make it hard. \par\pard\ql \li1800\sb124
\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf21\f22\fs24 KW:\
ul0\nosupersub\cf14\f15\fs24
It does make it hard. It does make it very hard.
\par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb248\sl-276\slmult
0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub
\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
What are the implications of th
at? \par\pard\ql \li1800\sb144\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0
\nosupersub\cf21\f22\fs24 KW:\ul0\nosupersub\cf14\f15\fs24
The implications a
re that we are making very slick information distribution \par\pard\ql \li1800\r
i1702\sb0\sl-280\slmult0 \up0 \expndtw-2\charscalex100 systems - computer-based
and otherwise, which are available for people to access when \line \up0 \expndtw
-2\charscalex100 they know they have a problem. But, of course, most people do n
ot know they have a \line \up0 \expndtw-2\charscalex100 problem unless they have
sufficient knowledge to discover that a problem exists. \line \up0 \expndtw-2\c
harscalex100 Providing people with knowledge or information about knowledge thro
ugh the fingertips \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl
-240{\bkmkstart Pg34}{\bkmkend Pg34}\par\pard\ql \li10239\sb0\sl-230\slmult0 \pa
r\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up
0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 34 \par\pard\ql \li1800\
sb0\sl-280\slmult0 \par\pard\ql\li1800\ri1677\sb189\sl-280\slmult0 \up0 \expndtw
-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 is fine, once you know which know
ledge is needed and once you know what the problem \line \up0 \expndtw-2\charsca
lex100 is. But often you do not know what the problem is unless you are knowledg
eable in \line \up0 \expndtw-3\charscalex100 advance. \par\pard\ql \li1800\sb0\s
l-368\slmult0 \par\pard\ql\li1800\sb0\sl-368\slmult0 \par\pard\ql\li1800\sb192\s
l-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf23\f24\fs32 Is All K
nowledge the Same? \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\s
b0\sl-280\slmult0 \par\pard\qj\li1800\ri1720\sb25\sl-280\slmult0 \up0 \expndtw-1
\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24
\ul0\nosupersub\cf16\f17\fs24 Is all knowledge the same? Or, does it need to
be cultivated, shared, or accessed \up0 \expndtw-3\charscalex100 differently bot
h inside and outside an organization? \par\pard\ql \li1800\sb124\sl-276\slmult0
\up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 KW:\ul0\nosupersub\c
f42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24 From my perspective, there\u8217?s

a great difference between "know-what" and \par\pard\ql \li1800\ri1680\sb5\sl-2


75\slmult0\fi0 \up0 \expndtw-2\charscalex100 "know-how\u8221?, or in other words
, between theoretical knowledge and practical knowledge. \up0 \expndtw-2\charsca
lex100 We need to look at several levels of knowledge the same way that James Br
ian Quinn \up0 \expndtw-4\charscalex100 does it, in his book \ul0\nosupersub\cf1
6\f17\fs24 Intelligent Enterprise\ul0\super\cf31\f32\fs24 5\ul0\nosupersub\cf14\
f15\fs24 . He has four categories. I have five. I look at \up0 \expndtw-4\charsc
alex100 vision and paradigm knowledge as the knowledge that motivates us and lea
ds us. \line \up0 \expndtw-5\charscalex100 Through it we see the opportunities.\
par\pard\sect\sectd\sbknone\cols2\colno1\colw6179\colsr160\colno2\colw5761\colsr
160\ql \li5000\sb0\sl-276\slmult0 \par\pard\ql \li5000\sb0\sl-276\slmult0 \par\p
ard\ql \li5000\sb0\sl-276\slmult0 \par\pard\ql \li5000\sb102\sl-276\slmult0 \up0
\expndtw-3\charscalex100 \ul0\nosupersub\cf42\f43\fs24 Tacit,\par\pard\qj \li47
00\ri224\sb0\sl-237\slmult0 \up0 \expndtw-3\charscalex100 Subliminal \line \up0
\expndtw-3\charscalex100 Knowledge\par\pard\qj \li4280\sb0\sl-242\slmult0 \par\p
ard\qj \li4280\sb0\sl-242\slmult0 \par\pard\qj \li4299\ri715\sb55\sl-242\slmult0
\tx4438 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf57\f58\fs24 Automatic \l
ine\tab \up0 \expndtw-3\charscalex100 Routine\par\pard\qj \li4280\ri663\sb0\sl-2
40\slmult0\fi98 \up0 \expndtw-3\charscalex100 Working \line \up0 \expndtw-3\char
scalex100 Knowledge\par\pard\column \qj \li6440\sb0\sl-239\slmult0 \par\pard\qj
\li6440\sb0\sl-239\slmult0 \par\pard\qj \li6440\sb0\sl-239\slmult0 \par\pard\qj
\li20\ri4558\sb145\sl-239\slmult0\fi100 \up0 \expndtw-3\charscalex100 \ul0\nosup
ersub\cf42\f43\fs24 Idealistic \line \up0 \expndtw-3\charscalex100 Vision and\pa
r\pard\qj \li20\ri4515\sb1\sl-240\slmult0\fi60 \up0 \expndtw-3\charscalex100 Par
adigm \line \up0 \expndtw-3\charscalex100 Knowledge\par\pard\qj \li6699\sb0\sl-2
40\slmult0 \par\pard\qj \li380\ri3955\sb158\sl-240\slmult0\fi120\tx490 \up0 \exp
ndtw-3\charscalex100 Systematic \line \up0 \expndtw-3\charscalex100 Schema and \
line \up0 \expndtw-3\charscalex100 Methodology \line\tab \up0 \expndtw-3\charsca
lex100 Knowledge \par\pard\sect\sectd\sbknone \qj \li5578\ri5404\sb12\sl-240\slm
ult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf57\f58\fs24 Pragmatic \line
\up0 \expndtw-4\charscalex100 Decision \par\pard\ql \li5480\ri5316\sb0\sl-240\s
lmult0 \up0 \expndtw-5\charscalex100 Making and \line \up0 \expndtw-5\charscalex
100 Factual \par\pard\ql \li5540\sb6\sl-233\slmult0 \up0 \expndtw-3\charscalex10
0 Knowledge \par\pard\ql \li4594\sb0\sl-230\slmult0 \par\pard\ql\li4594\sb220\sl
-230\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf9\f10\fs20 Figure 4
.1 Levels of Knowledge Flow \par\pard\ql \li1800\ri2069\sb109\sl-280\slmult0\fi7
20 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Below that we hav
e what Quinn calls "knowledge-why\u8221?. This level is more \line \up0 \expndtw
-4\charscalex100 systematic schema and\ul0\nosupersub\cf16\f17\fs24 \ul0\nosupe
rsub\cf14\f15\fs24 methodology knowledge that we may have learned in the \line \
up0 \expndtw-4\charscalex100 university and learn fairly procedurally. It is kno
wledge of ''what", how to be, how to \line \up0 \expndtw-4\charscalex100 machine
s work, and what the systematic part of this process\ul0\nosupersub\cf16\f17\fs2
4 \ul0\nosupersub\cf14\f15\fs24 that we encounter is. \par\pard\qj \li1800\sb0\
sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl
-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\ri2179\s
b174\sl-240\slmult0\fi719 \up0 \expndtw-3\charscalex100 \ul0\super\cf32\f33\fs20
\ul0\super\cf32\f33\fs19 5\ul0\nosupersub\cf9\f10\fs20 James Brian Quinn, \ul0\
nosupersub\cf33\f34\fs20 Intelligent Enterprise: A Knowledge and Service Based P
aradigm For \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf9\f10\fs20 Industry,
(Free Press: New York, 1992).
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g35}{\bkmkend Pg35}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 35 \par\pard\ql \li1800\sb0\sl-280\slmult
0 \par\pard\ql\li1800\ri1751\sb189\sl-280\slmult0\fi720 \up0 \expndtw-4\charscal
ex100 \ul0\nosupersub\cf14\f15\fs24 On the third level we have pragmatic decisio
n-making and factual knowledge: \line \up0 \expndtw-4\charscalex100 "know-how\u8
221?. That, to some extent, is automated, yet it is also available for\ul0\nosup
ersub\cf9\f10\fs20 \ul0\nosupersub\cf14\f15\fs24 us to reason \line \up0 \expnd
tw-4\charscalex100 with in a conscious way. To some extent, we are now talking a
bout personal knowledge. \par\pard\qj \li1800\ri1764\sb129\sl-270\slmult0\fi720
\up0 \expndtw-4\charscalex100 The fourth level is tacit knowledge, the real work

ing knowledge. We know it so \up0 \expndtw-2\charscalex100 well that it has beco


me non-conscious and unavailable to us. That knowledge is the bulk \up0 \expndtw
-4\charscalex100 of what we know and is the part of the iceberg that is below oc
ean level. \par\pard\ql \li1800\ri1737\sb126\sl-276\slmult0\fi720 \up0 \expndtw4\charscalex100 We have a fifth level, the tacit subliminal knowledge, which is
established when \up0 \expndtw-2\charscalex100 we are first introduced to a new
notion or concept and start forming a beginning \line \up0 \expndtw-2\charscalex
100 understanding. You might say that the tacit subliminal knowledge is what sta
rted out in \up0 \expndtw-2\charscalex100 episodic memory. As we internalize it
in our REM (Rapid Eye Movement)\ul0\nosupersub\cf9\f10\fs20 \ul0\nosupersub\cf1
4\f15\fs24 sleep, at 3:00 \up0 \expndtw-2\charscalex100 in the morning, it is be
ing built into these other areas and we also develop association \up0 \expndtw-5
\charscalex100 bridges between concepts and other mental models. \par\pard\qj \l
i1800\ri1810\sb129\sl-270\slmult0\fi720 \up0 \expndtw-4\charscalex100 These know
ledge levels are motivated by cognitive sciences research about how \up0 \expndt
w-4\charscalex100 we learn and by experiences over several decades of working wi
th knowledge workers \up0 \expndtw-5\charscalex100 ranging from novices to exper
ts and grand masters. \par\pard\ql \li1800\ri1724\sb5\sl-277\slmult0\fi720 \up0
\expndtw-2\charscalex100 Is all knowledge the same? No, all of this knowledge is
not the same. That is just \line \up0 \expndtw-2\charscalex100 one dimension. T
here are other dimensions of knowledge. For example, when we think \line \up0 \e
xpndtw-2\charscalex100 about knowledge that we use in business, we might have pr
ofessional and craft \line \up0 \expndtw-4\charscalex100 knowledge, in contrast
to enterprise navigational knowledge. People now tell me that \line \up0 \expndt
w-2\charscalex100 they have found that the body of the enterprise navigational k
nowledge that is associated \line \up0 \expndtw-2\charscalex100 with delivering
\u8220?work\u8221? is bigger than professional knowledge in most areas. That is,
the \line \up0 \expndtw-2\charscalex100 larger body is enterprise navigational
knowledge that consists of knowing how we work \line \up0 \expndtw-2\charscalex1
00 around here, who you consult with, what the systems and procedures are, etc.
\par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb248\sl-276\slmult0
\up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\
cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Is that the environmental, cultu
ral knowledge? \par\pard\ql \li1800\sb124\sl-276\slmult0 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf21\f22\fs24 KW:\ul0\nosupersub\cf14\f15\fs24
It is k
nowledge of\ul0\nosupersub\cf58\f59\fs20 \ul0\nosupersub\cf14\f15\fs24 what our
customers require, who the customers are\ul0\nosupersub\cf59\f60\fs24 ,\ul0\nos
upersub\cf14\f15\fs24 and a \par\pard\qj \li1800\ri1958\sb1\sl-280\slmult0 \up0
\expndtw-2\charscalex100 myriad of practical things that might take a year or t
wo to build up before you become \up0 \expndtw-3\charscalex100 fully functional.
\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg
36}{\bkmkend Pg36}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\
sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\chars
calex100 \ul0\nosupersub\cf9\f10\fs20 36 \par\pard\qj \li5403\sb0\sl-320\slmult0
\par\pard\qj\li5403\sb0\sl-320\slmult0 \par\pard\qj\li5403\sb0\sl-320\slmult0 \
par\pard\qj\li5403\ri5786\sb236\sl-320\slmult0\fi57 \up0 \expndtw0\charscalex63
\ul0\nosupersub\cf60\f61\fs24 Enterprise \line \up0 \expndtw0\charscalex62 Navig
ation \line \up0 \expndtw0\charscalex60 Knowledge \par\pard\ql \li7164\sb0\sl-2
76\slmult0 \par\pard\ql\li7164\sb0\sl-276\slmult0 \par\pard\ql\li7164\sb45\sl-27
6\slmult0 \up0 \expndtw0\charscalex53 \ul0\nosupersub\cf61\f62\fs24 Visions \par
\pard\ql \li4587\sb64\sl-276\slmult0 \up0 \expndtw0\charscalex64 Professional \p
ar\pard\li4783\sb67\sl-276\slmult0\fi0\tx7011 \up0 \expndtw-11\charscalex70 and
Craft\tab \up0 \expndtw-11\charscalex70 Memory\par\pard\ql \li4635\sb41\sl-276\s
lmult0 \up0 \expndtw0\charscalex60 Knowledge \par\pard\ql \li4846\sb0\sl-230\slm
ult0 \par\pard\ql\li4846\sb0\sl-230\slmult0 \par\pard\ql\li4846\sb0\sl-230\slmul
t0 \par\pard\ql\li4846\sb0\sl-230\slmult0 \par\pard\ql\li4846\sb182\sl-230\slmul
t0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 Figure 4.2 Types o
f Knowledge \par\pard\ql \li1800\ri1683\sb134\sl-274\slmult0\fi720 \up0 \expndtw
-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 All of this might be on the perso
nal side. We also\ul0\nosupersub\cf9\f10\fs20 \ul0\nosupersub\cf14\f15\fs24 hav

e the need for the \line \up0 \expndtw-2\charscalex100 organization to build as


much as possible of personal knowledge into structural \line \up0 \expndtw-2\cha
rscalex100 knowledge. It is very important to share knowledge amongst the people
to build a \line \up0 \expndtw-2\charscalex100 \u8221?synergistic orchestration
environment\u8221?, where people find it natural to share, to \line \up0 \expnd
tw-2\charscalex100 collaborate, and do that as a matter of course and culture. T
he shared knowledge then \line \up0 \expndtw-2\charscalex100 becomes part of the
culture and becomes owned by the organization - in the sense that it \line \up0
\expndtw-2\charscalex100 lives amongst the present staff, people they hire, and
is not based on any one individual\u8217?s \line \up0 \expndtw-2\charscalex100
knowledge. This knowledge is on the road to becoming institutional knowledge. \p
ar\pard\ql \li2520\sb125\sl-276\slmult0 \up0 \expndtw-3\charscalex100 These days
we have a strong movement to make personal knowledge become \par\pard\ql \li180
0\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 structural knowledge, in the
sense that it has been captured. I think that is a very \par\pard\ql \li1800\ri1
739\sb5\sl-275\slmult0 \up0 \expndtw-2\charscalex100 appropriate and very worthw
hile set of efforts. But the amount of knowledge that people \line \up0 \expndtw
-2\charscalex100 are able to capture, from what I have seen, is minimal compared
to what is required to \line \up0 \expndtw-3\charscalex100 run the organization
. You can obtain only a small portion - call it 8-10% - of the \line \up0 \expnd
tw-4\charscalex100 knowledge that required to run the organization flawlessly knowledge that resides in \line \up0 \expndtw-5\charscalex100 people's heads. \p
ar\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1723\sb241\sl-280\sl
mult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupe
rsub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Is that the documented know
ledge that you are referring to, or is there more than \line \up0 \expndtw-4\cha
rscalex100 that? \par\pard\ql \li1800\ri1607\sb125\sl-275\slmult0 \up0 \expndtw3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 KW:\ul0\nosupersub\cf14\f15\fs24
More than that, because, for example, engineers that design technology embed a
\line \up0 \expndtw-2\charscalex100 fair bit of what they know in the technolog
y solutions that they create. That part of \line \up0 \expndtw-2\charscalex100 k
nowledge is crucial for the competitiveness of the organization. What has been m
issing \line \up0 \expndtw-2\charscalex100 quite frequently in that area is that
although we find explicitly what the decisions were \line \up0 \expndtw-2\chars
calex100 and what the knowledge resulted in, we frequently have no idea, after t
he fact, about what \line \up0 \expndtw-2\charscalex100 led people to make those
decisions. We have a number of situations where people have \line \up0 \expndtw
-2\charscalex100 modified decisions of previous experts and ended up in hot wate
r, because their \line \up0 \expndtw-2\charscalex100 modifications clashed with
the principles that had led to the solutions in the first place. \line \up0 \exp
ndtw-4\charscalex100 We see this in heat exchanger designs on one end, and very
sophisticated designs of
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g37}{\bkmkend Pg37}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 37 \par\pard\ql \li1800\sb0\sl-280\slmult
0 \par\pard\ql\li1800\ri1810\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf14\f15\fs24 advanced computer programs on the other end. We no
w see efforts to capture reasoning \up0 \expndtw-2\charscalex100 behind many dec
isions, particularly design decisions, to allow future workers to \line \up0 \ex
pndtw-2\charscalex100 understand the context in which decisions were made, the o
ptions that were discarded, \up0 \expndtw-3\charscalex100 and information about
blind alleys. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb248\
sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\u
l0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
And the ground the
y derived, their outcomes are different? \par\pard\ql \li1800\ri1904\sb127\sl-27
3\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 KW:\ul0\no
supersub\cf14\f15\fs24
That is correct. The new solutions that were thought t
o be improvements on the \up0 \expndtw-2\charscalex100 old actually clashed with
the old and became non-workable. In software, we know this \up0 \expndtw-2\char
scalex100 very well. It has been an eye opener to me to see it also is the case
in what I consider \up0 \expndtw-3\charscalex100 relatively crude equipment - in
a heat exchanger. \par\pard\ql \li1800\ri1622\sb124\sl-277\slmult0\fi720 \up0 \
expndtw-2\charscalex100 All of this is done within the organization. Then we ask
, what about sharing and \line \up0 \expndtw-2\charscalex100 accessing knowledge
outside the organization? That is a very interesting area, because \line \up0 \
expndtw-2\charscalex100 when we start looking at what John Seely Brown and Paul
Duguid call "networks of \line \up0 \expndtw-2\charscalex100 practices" that are
between organizations in contrast to "communities of practice\u8221?, which \li
ne \up0 \expndtw-2\charscalex100 are usually internal in the organization. These
networks of practices have enabled, for \line \up0 \expndtw-2\charscalex100 exa
mple, the emergence of the Route128 corridor in Boston and also the Silicon Vall
ey. \line \up0 \expndtw-2\charscalex100 They are the result of sharing of knowle
dge between organizations and building up a total \line \up0 \expndtw-2\charscal
ex100 regional capability. From that perspective, it has elevated the capability
of many places in \line \up0 \expndtw-3\charscalex100 this country and abroad.
\par\pard\ql \li2520\sb104\sl-276\slmult0 \up0 \expndtw-2\charscalex100 Look at
Israel, for example, which is a gleaming jewel because people are \par\pard\ql \
li1800\ri1725\sb5\sl-275\slmult0 \up0 \expndtw-2\charscalex100 working between o
rganizations as well as within organizations, right? We have the same \line \up0
\expndtw-2\charscalex100 thing in some of the Scandinavian countries, such as D
enmark, which started out with \line \up0 \expndtw-2\charscalex100 hearing aids
then went into the other areas of sound systems. We have an important \line \up0
\expndtw-2\charscalex100 societal phenomenon that is very powerful for wealth c
reation in many areas. And, of \line \up0 \expndtw-2\charscalex100 course, it is
also very beneficial to the firms who find themselves in those locations. \par\
pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg38}{\b
kmkend Pg38}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl
-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex1
00 \ul0\nosupersub\cf9\f10\fs20 38 \par\pard\qj \li1800\sb0\sl-400\slmult0 \par\
pard\qj\li1800\ri2420\sb110\sl-400\slmult0\fi100 \up0 \expndtw0\charscalex97 \ul
0\nosupersub\cf46\f47\fs36 Gran Roos:\ul0\nosupersub\cf27\f28\fs36 \ul0\nosuper

sub\cf28\f29\fs36 Recipes for Knowledge-Based Value \up0 \expndtw0\charscalex98


Creation \par\pard\ql \li1800\sb0\sl-828\slmult0 \par\pard\ql\li1800\sb19\sl-828
\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf30\f31\fs72 5 \par\pard\q
l \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\sb0\sl-275\slmult0 \par\pard\ql
\li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\sb0\sl-275\slmult0 \par\pard\ql\l
i1800\ri1715\sb269\sl-275\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\
cf14\f15\fs24 Gran Roos is continually developing some of the most advanced, and
yet readily usable \up0 \expndtw-2\charscalex100 approaches to leveraging the in
terrelated roles of intellectual capital and strategy in \line \up0 \expndtw-2\c
harscalex100 contemporary organizations. As both a thought leader and practition
er, he has made \line \up0 \expndtw-2\charscalex100 seminal contributions to the
field of intellectual capital through his writings and his \line \up0 \expndtw5\charscalex100 implementation of practical solutions. \par\pard\ql \li1800\sb0\
sl-276\slmult0 \par\pard\ql\li1800\ri1645\sb9\sl-276\slmult0\fi720 \up0 \expndtw
-2\charscalex100 He has created frameworks, which enable making the intangible o
f intellectual \up0 \expndtw-2\charscalex100 capital understood as a very real a
sset to be cultivated, measured and appropriately \line \up0 \expndtw-2\charscal
ex100 exploited for competitive advantage. He works with managements to rethink
how their \up0 \expndtw-2\charscalex100 strategies and practices to determine an
d utilize the drivers for intellectual capital growth, \up0 \expndtw-2\charscale
x100 as well as how to rigorously valuate and effectively use their intellectual
resources \line \up0 \expndtw-3\charscalex100 throughout their enterprises to m
ake significant differences. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\q
l\li1800\ri1642\sb10\sl-275\slmult0\fi720 \up0 \expndtw-2\charscalex100 He is th
e founder of Intellectual Capital Services Ltd. (ICS), developer of its main \li
ne \up0 \expndtw-2\charscalex100 concepts, and manager of its day-to-day operati
ons. As a practitioner, he delivers the \line \up0 \expndtw-4\charscalex100 serv
ices of ICS to a wide variety of both private and public sector organizations ar
ound \line \up0 \expndtw-4\charscalex100 the world in a broad range of market se
gments. Roos holds several academic positions \line \up0 \expndtw-2\charscalex10
0 and he and his team are the authors and co-authors of numerous books and artic
les in the \line \up0 \expndtw-2\charscalex100 field of intellectual capital and
strategy, and he serves on the editorial board of the \line \up0 \expndtw-4\cha
rscalex100 \ul0\nosupersub\cf16\f17\fs24 Journal of Intellectual Capital\ul0\nos
upersub\cf14\f15\fs24 . Mr. Roos was also named one of the thirteen most \line \
up0 \expndtw-2\charscalex100 influential thinkers for the 21\ul0\super\cf31\f32\
fs24 st\ul0\nosupersub\cf14\f15\fs24 century by the Spanish business magazine \
ul0\nosupersub\cf16\f17\fs24 Direccion y \line \up0 \expndtw-3\charscalex100 Pro
greso\ul0\nosupersub\cf14\f15\fs24 No 167.
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rsub\cf21\f22\fs24 JC:\ul0\nosupersub\cf11\f12\fs28 \ul0\nosupersub\cf16\f17\fs


24 What do you mean by saying that Intellectual Capital is any stock or flow u
nder \up0 \expndtw-2\charscalex100 the control of the firm that contributes to t
he value creation of the firm? \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard
\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21
\f22\fs24 GR:\ul0\nosupersub\cf16\f17\fs24 \ul0\nosupersub\cf14\f15\fs24 The
reason we use that statement is that we do not want to limit ourselves to \par\p
ard\ql \li1800\ri1650\sb0\sl-280\slmult0 \up0 \expndtw-2\charscalex100 predeterm
ined structures. A given firm or organization, it can be government department,
\up0 \expndtw-2\charscalex100 or other not-for-profit organizations, is actually
a system made up of a set of resources \line \up0 \expndtw-2\charscalex100 that
are deployed in a given structure. Intellectual capital is the science and art
dealing \line \up0 \expndtw-2\charscalex100 with how to extract maximum value fr
om the resources you have and the way you have \line \up0 \expndtw-3\charscalex1
00 chosen to deploy them. \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\l
i1800\sb0\sl-260\slmult0 \par\pard\qj\li1800\ri1637\sb38\sl-260\slmult0 \up0 \ex
pndtw-4\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\
fs24
\ul0\nosupersub\cf16\f17\fs24 What is the Intellectual Capital Process
(IC) and how does that relate to \u8220?business \up0 \expndtw-5\charscalex100 r
ecipes?\u8221? \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri162
9\sb13\sl-275\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf20\f21\fs2
4 GR:\ul0\nosupersub\cf14\f15\fs24 You can use many terms. Business models, bu
siness recipes, value creation models, \up0 \expndtw-2\charscalex100 and strateg
ic models are common terms coined in strategy literature. You can contrast \up0
\expndtw-2\charscalex100 two logics in this area, one is the financial logic and
one is the strategic logic. \line \up0 \expndtw-2\charscalex100 The strategic l
ogic basically says, \u8220?All right, take the strategy of a firm as a given. W
ithin \up0 \expndtw-5\charscalex100 that framework, how can you ensure that you
can create maximum value?\u8221? \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pa
rd\ql\li1800\ri1775\sb9\sl-276\slmult0\fi720 \up0 \expndtw-4\charscalex100 You c
an do so by developing the best possible effectiveness and efficiency as \line \
up0 \expndtw-2\charscalex100 relates to the deployment of the resources you have
at your disposal. These resources \line \up0 \expndtw-2\charscalex100 include f
or example the competence or the people, the processes of the organization, the
\up0 \expndtw-2\charscalex100 brands, the intellectual property, the customer re
lationships, supplier relationships, plant \up0 \expndtw-2\charscalex100 and equ
ipment, and the working capital needed to actually generate cash, the cash that
\line \up0 \expndtw-3\charscalex100 converts into market value. \par\pard\ql \li
2520\sb264\sl-276\slmult0 \up0 \expndtw-4\charscalex100 The Intellectual Capital
(IC) process is about identifying relevant dimensions \par\pard\ql \li1800\ri16
40\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 along which the strategy of
the firm can be discussed. Identify what the firm means when \up0 \expndtw-4\cha
rscalex100 it says that it creates value. Identify the resources that the firm c
onsiders it is necessary \up0 \expndtw-4\charscalex100 for it to have, the ways
these resources are being deployed, and compare and contrast that \up0 \expndtw5\charscalex100 with the logical conclusions from the strategy. \par\pard\ql \li
1800\ri1829\sb260\sl-280\slmult0\fi900 \up0 \expndtw-2\charscalex100 In other wo
rds, you are talking about classic strategy theory with key success \line \up0 \
expndtw-2\charscalex100 factors and key performance indicators compared, contras
ted and synthesized with a \line \up0 \expndtw-2\charscalex100 resource based vi
ew, in the widest sense, of the firm. One of the things we need to do is \line \
up0 \expndtw-2\charscalex100 to align key performance indicators that are extrac
ted from the strategy, with the key \par\pard\sect\sectd\fs24\paperw12240\paperh
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28a2800a28a2800a28a2800a28a2800a28a2800a28a2803fffd9}}}}}
\pard\sb0\sl-240{\bkmkstart Pg40}{\bkmkend Pg40}\par\pard\ql \li10239\sb0\sl-230
\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230
\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 40 \par\pard
\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb196\sl-276\slmult0 \up0 \ex
pndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 performance indicators measu
ring the relevant resource transformations, thereby \par\pard\ql \li1800\sb4\sl276\slmult0 \up0 \expndtw-2\charscalex100 allowing us to create a tracking syste
m to predict changes in our ability to create value. \par\pard\ql \li5052\sb0\sl
-345\slmult0 \par\pard\ql\li5052\sb22\sl-345\slmult0 \up0 \expndtw0\charscalex96
\ul0\nosupersub\cf62\f63\fs30 Operationalise \par\pard\ql \li5019\sb15\sl-345\s
lmult0 \up0 \expndtw0\charscalex96 Value Creation \par\pard\ql \li5513\sb0\sl-34
5\slmult0 \par\pard\ql\li5513\sb10\sl-345\slmult0 \up0 \expndtw0\charscalex97 Ou

tline \par\pard\ql \li4985\sb15\sl-345\slmult0 \up0 \expndtw0\charscalex96 Strat


egic Intent \par\pard\li1925\sb0\sl-345\slmult0\par\pard\li1925\sb28\sl-345\slmu
lt0\fi1406\tx8134 \up0 \expndtw0\charscalex96 Define\tab \up0 \expndtw0\charscal
ex96 Articulate\par\pard\li1925\sb15\sl-345\slmult0\fi528\tx7764 \up0 \expndtw0\
charscalex96 Key Success Factors\tab \up0 \expndtw0\charscalex96 Business Recipe
\par\pard\li1925\sb0\sl-345\slmult0\par\pard\li1925\sb30\sl-345\slmult0\fi1315\t
x8201 \up0 \expndtw0\charscalex96 Identify\tab \up0 \expndtw0\charscalex96 Visua
lise\par\pard\li1925\sb15\sl-345\slmult0\fi0\tx8134 \up0 \expndtw0\charscalex96
Key Performance Indicators\tab \up0 \expndtw0\charscalex96 Navigator\par\pard\qj
\li4580\ri4542\sb345\sl-360\slmult0 \up0 \expndtw0\charscalex96 Alignment of St
rategy \line \up0 \expndtw0\charscalex97 with Business Recipe \par\pard\ql \li47
93\ri4769\sb340\sl-360\slmult0\tx5412 \up0 \expndtw0\charscalex96 Develop & Disp
lay \line\tab \up0 \expndtw0\charscalex97 IC-Index \par\pard\ql \li5232\sb0\sl-3
45\slmult0 \par\pard\ql\li5232\sb28\sl-345\slmult0 \up0 \expndtw0\charscalex96 T
ake Better \par\pard\ql \li4793\sb15\sl-345\slmult0 \up0 \expndtw0\charscalex96
Managerial Action \par\pard\ql \li3963\sb0\sl-276\slmult0 \par\pard\ql\li3963\sb
116\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 F
igure 5.1\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24 The Intel
lectual Capital Process \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1
800\ri1697\sb270\sl-275\slmult0\fi720 \up0 \expndtw-2\charscalex100 The IC proce
ss (see figure 1) is about developing an understanding for how value \up0 \expnd
tw-2\charscalex100 is created, thereby providing an opportunity to improve the p
otential of creating value as \up0 \expndtw-2\charscalex100 well as the actual v
alue created. For this the IC process offers the tools necessary to \line \up0 \
expndtw-2\charscalex100 actually track the value creation, and, if we wish, it c
an provide us with tools that allow \up0 \expndtw-2\charscalex100 us to value wh
atever it is that we do from a given beholder's point of view. \par\pard\sect\se
ctd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg41}{\bkmkend Pg41}
\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0
\par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosu
persub\cf9\f10\fs20 41 \par\pard\ql \li1800\sb0\sl-414\slmult0 \par\pard\ql\li18
00\sb84\sl-414\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf46\f47\fs36
Leif Edvinsson: \ul0\nosupersub\cf28\f29\fs36 The Intelligent Organization \pa
r\pard\ql \li1800\sb824\sl-828\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupers
ub\cf30\f31\fs72 6 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\s
b0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0
\sl-276\slmult0 \par\pard\ql\li1800\ri1678\sb4\sl-276\slmult0 \up0 \expndtw-2\ch
arscalex100 \ul0\nosupersub\cf14\f15\fs24 Leif Edvinsson is a key contributor to
the theory and practice of Intellectual Capital. In \line \up0 \expndtw-2\chars
calex100 this conversation he explores the basis for Intellectual Capital and th
e Intellectual Capital \line \up0 \expndtw-2\charscalex100 growth model. Edvinss
on examines what creates value in the world of knowledge-based \line \up0 \expnd
tw-2\charscalex100 organizations and the various ways in which we will be upgrad
ing our own knowledge \line \up0 \expndtw-2\charscalex100 base. Since understand
ing and focusing on intellectual capital requires a significant \line \up0 \expn
dtw-2\charscalex100 rethinking of what really drives value, he looks at the chal
lenge of intellectual capital \line \up0 \expndtw-2\charscalex100 leadership has
in changing its mindset so it can use the structural capital of organizations \
line \up0 \expndtw-2\charscalex100 to turbo charge the capabilities our human ca
pital. The outcome of this is the \line \up0 \expndtw-2\charscalex100 developmen
t of truly intelligent organizations, but organizations of a very different \lin
e \up0 \expndtw-2\charscalex100 nature. These new organizations may well evolve
into becoming communities, and \line \up0 \expndtw-3\charscalex100 instead of em
ployees, we will become citizens of those communities. \par\pard\ql \li1800\ri16
42\sb264\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 Edvinsson is the fou
nder and CEO of UNIC (Universal Networking Intellectual \line \up0 \expndtw-4\ch
arscalex100 Capital AB, at {\field{\*\fldinst {HYPERLINK "http://www.unic.net/"
}}{\fldrslt {\ul0\nosupersub\cf14\f15\fs24 www.unic.net}}}\ul0\nosupersub\cf14\f
15\fs24 ) whose mission is to generate new insights as to what an \line \up0 \ex
pndtw-4\charscalex100 organization\u8217?s intellectual capital is, as well as h

ow to grow, appraise and better \line \up0 \expndtw-2\charscalex100 understand h


ow to commercialize it. He is a catalyst for the possibilities inherent in the \
up0 \expndtw-2\charscalex100 new era of intangible wealth. He is active in proto
typing board of directors on intellectual \up0 \expndtw-2\charscalex100 capital
in several countries. In addition, in 2001 he was appointed to the world\u8217?s
first \up0 \expndtw-3\charscalex100 professorship chair on intellectual capital
at Lund University. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520
\sb8\sl-276\slmult0 \up0 \expndtw-4\charscalex100 Edvinsson was formerly the Cor
porate Director of Intellectual Capital at the \par\pard\ql \li1800\ri1915\sb0\s
l-280\slmult0 \up0 \expndtw-2\charscalex100 Skandia Group, where many of the fun
damental ideas of intellectual capital as a whole \up0 \expndtw-4\charscalex100
organizational framework were developed and put into operation. He held the firs
t \line \up0 \expndtw-2\charscalex100 position of its type in the world of Direc
tor of Intellectual Capital at Skandia, AFS in \up0 \expndtw-2\charscalex100 199
1. During his tenure at Skandia, he oversaw the creation of the first Intellectu
al \line \up0 \expndtw-5\charscalex100 Capital Annual Report. \par\pard\ql \li18
00\ri1608\sb241\sl-280\slmult0\fi720 \up0 \expndtw-4\charscalex100 Edvinsson is
a foremost a visionary of Intellectual Capital. He says, \u8220?The future is \l
ine \up0 \expndtw-2\charscalex100 our home.\u8221? A sense of the future is unde
rlies the in building a number of Future Centers \line \up0 \expndtw-2\charscale
x100 throughout the world, which are experimental stations to prototype how to c
reate the \line \up0 \expndtw-4\charscalex100 organizational capital that will b
e the basis for creating the wealth of the new millennium. \par\pard\ql \li2520\
sb264\sl-276\slmult0 \up0 \expndtw-2\charscalex100 He is co-author of a defining
work in the field, \ul0\nosupersub\cf16\f17\fs24 Intellectual Capital: Realizin
g \par\pard\qj \li1800\ri1636\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 Y
our Company\u8217?s True Value by Finding Its Hidden Brainpower\ul0\nosupersub\c
f14\f15\fs24 , as well as contributor to \line \up0 \expndtw-2\charscalex100 num
erous other books and journals. His most recent book is \ul0\nosupersub\cf16\f17
\fs24 Corporate Longitude\ul0\nosupersub\cf14\f15\fs24 (2002), \par\pard\sect\s
ectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg42}{\bkmkend Pg42
}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult
0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nos
upersub\cf9\f10\fs20 42 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1
800\sb196\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\
fs24 which is discussed on his website, {\field{\*\fldinst {HYPERLINK "http://ww
w.corporatelongitude.com/" }}{\fldrslt {\ul0\nosupersub\cf81\f82\fs24\ul www.cor
poratelongitude.com\ul0\nosupersub\cf14\f15\fs24 .}}}\ul0\nosupersub\cf14\f15\fs
24 . Edvinsson was \par\pard\qj \li1800\ri2132\sb1\sl-280\slmult0 \up0 \expndtw2\charscalex100 recognized for his achievements with the awarding of the Brain o
f the Year from the \up0 \expndtw-3\charscalex100 Brain Trust of the U.K. in 199
8. \par\pard\ql \li1800\ri1720\sb264\sl-276\slmult0\fi720 \up0 \expndtw-2\charsc
alex100 In light of his work in both training and intellectual capital, Edvinsso
n has been a \up0 \expndtw-2\charscalex100 special advisor on service trade to t
he Swedish Ministry of Foreign Affairs. He is also \up0 \expndtw-2\charscalex100
special adviser to the Swedish Cabinet on the effects of the new digital econom
y, a \line \up0 \expndtw-2\charscalex100 special advisor to the United Nations I
nternational Trade Center and is a co-founder of \up0 \expndtw-2\charscalex100 t
he Swedish Coalition of Service Industries. Mr. Edvinsson holds an MBA from the
\line \up0 \expndtw-3\charscalex100 University of California, Berkeley. \par\par
d\ql \li4834\sb0\sl-414\slmult0 \par\pard\ql\li4834\sb0\sl-414\slmult0 \par\pard
\ql\li4834\sb0\sl-414\slmult0 \par\pard\ql\li4834\sb188\sl-414\slmult0 \up0 \exp
ndtw0\charscalex97 \ul0\nosupersub\cf28\f29\fs36 The Conversation \par\pard\ql \
li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li
1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb16\sl-322\slmult0 \up0 \expndtw-4\
charscalex100 \ul0\nosupersub\cf24\f25\fs28 Value Creation \par\pard\ql \li1800\
sb0\sl-276\slmult0 \par\pard\ql\li1800\sb60\sl-276\slmult0 \up0 \expndtw-2\chars
calex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\no
supersub\cf16\f17\fs24
How does value get created in organizations and networ
ks? \par\pard\ql \li1800\sb0\sl-273\slmult0 \par\pard\ql\li1800\ri1685\sb34\sl-2

73\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 LE:\ul0\n


osupersub\cf14\f15\fs24
Value is created if there is a buyer or customer to
the organization: i.e., a buyer to \up0 \expndtw-2\charscalex100 the shares, or
customer to the product. Actually, the value of knowledge organizations is \up0
\expndtw-2\charscalex100 created mainly outside the organization. The fundamenta
l observation is that value is not \up0 \expndtw-2\charscalex100 created within
the organization. It is created on the edge: between the context, the \line \up0
\expndtw-2\charscalex100 business community, and the organization. This means t
hat the networks are becoming \up0 \expndtw-2\charscalex100 extremely important,
as is the sensitivity to the surrounding world. That is also why most \up0 \exp
ndtw-3\charscalex100 organizations of today are perhaps not as efficient as they
could be. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-27
6\slmult0 \par\pard\ql\li1800\sb13\sl-276\slmult0 \up0 \expndtw-1\charscalex100
\ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\
cf16\f17\fs24
When you say they are not as efficient as they could, what does
that mean? \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1762\s
b28\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 L
E:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24
It is that pro
ductivity is rather low. According to Paul Straussman, most of the \line \up0 \e
xpndtw-2\charscalex100 organizations on the New York Stock Exchange are having a
negative return on their \line \up0 \expndtw-2\charscalex100 knowledge capital,
as he sees it. The intellectual capital (IC) growth model is a model to \line \
up0 \expndtw-2\charscalex100 start to focus on the enablers and drivers for futu
re earnings potential, whether they are \line \up0 \expndtw-2\charscalex100 netw
orks, knowledge, processes, or innovations. There are a lot of different dimensi
ons \line \up0 \expndtw-3\charscalex100 and perspectives. \par\pard\qj \li1800\r
i1657\sb261\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Market capital gr
owth is related to the investor relationship dimensions, while the \up0 \expndtw
-2\charscalex100 intellectual capital growth dimensions are related to the phase
s of the balanced scorecard, \up0 \expndtw-2\charscalex100 or rather the IC Navi
gator, with the phases and focuses of the ones we developed for the \up0 \expndt
w-3\charscalex100 IC process with Skandia.
{\shp {\*\shpinst\shpleft1772\shptop4773\shpright10470\shpbottom4802\shpfhdr0\sh
pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz72\shplid0
{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{
\sn geoRight}{\sv 8698}}{\sp{\sn geoBottom}{\sv 29}}
{\sp{\sn pVerticies}{\sv 8;5;(0,29);(8697,29);(8697,0);(0,0);(0,29)}}
{\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276
8}}
{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s
p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s
p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g43}{\bkmkend Pg43}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 43 \par\pard\ql \li2520\sb0\sl-276\slmult
0 \par\pard\ql\li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb200\sl-276\slmult
0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Here are the major
IC process phases: The first is the missionary; the second is \par\pard\qj \li1
800\ri1618\sb9\sl-270\slmult0 \up0 \expndtw-2\charscalex100 the measurement and
visualization; the third is the leadership; the fourth is the knowledge \up0 \ex
pndtw-2\charscalex100 technology; the fifth is innovation, and the sixth is capi
talization. All those are described \up0 \expndtw-3\charscalex100 very much in t
he book I wrote called \ul0\nosupersub\cf16\f17\fs24 Intellectual Capital.\ul0\s
uper\cf50\f51\fs24 6 \par\pard\li1800\sb0\sl-276\slmult0\par\pard\li1800\sb19\sl
-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 M
arket capital is the external dimension, and intellectual capital is the interna
l\par\pard\li1800\sb0\sl-276\slmult0\fi0 \up0 \expndtw-3\charscalex100 one.\par\
pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\p

ard\ql\li1800\sb7\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\c


f21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
And they all form the growth model? \par\pard\ql \li1800\sb0\sl-276\slmult0 \par
\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub
\cf21\f22\fs24 LE:\ul0\nosupersub\cf14\f15\fs24
Combined, they do. But, you
should also remember that there are some \par\pard\qj \li1800\ri1815\sb1\sl-280\
slmult0 \up0 \expndtw-2\charscalex100 organizations that do not have a market ca
p, like public institutions, hospitals, etc. They \up0 \expndtw-3\charscalex100
could still grow their intellectual capital. \par\pard\ql \li1800\sb0\sl-276\slm
ult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb12\sl-276\slmu
lt0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupers
ub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
How can an old economy organi
zation use the IC growth model to transform \par\pard\qj \li1800\ri1636\sb18\sl260\slmult0 \up0 \expndtw-2\charscalex100 itself into being a new economy organi
zation? This is what you did with Skandia. Are you \up0 \expndtw-3\charscalex100
doing it with other organizations now? \par\pard\ql \li1800\sb0\sl-276\slmult0
\par\pard\ql\li1800\ri1638\sb31\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul
0\nosupersub\cf21\f22\fs24 LE:\ul0\nosupersub\cf14\f15\fs24
Yes, but I am ma
inly trying to add value by being a professional board member to \up0 \expndtw-2
\charscalex100 organizations, rather than a consultant. First of all, we need to
see the economics \line \up0 \expndtw-2\charscalex100 dimension rather than old
economy versus new economy. It is more the same economy \line \up0 \expndtw-2\c
harscalex100 but the economics has changed. In the old economy, the economics wa
s based more on \line \up0 \expndtw-2\charscalex100 having the product as the re
venue carrier. In the new economy, the intangibles or the \line \up0 \expndtw-2\
charscalex100 knowledgeable person are very much the value carrier. Most of the
intangibles have other \up0 \expndtw-2\charscalex100 logics than the tangibles.
For example, the value of a computer is decreasing over time, \line \up0 \expndt
w-2\charscalex100 while the value of software is increasing over time. In the sa
me way, the value of \line \up0 \expndtw-2\charscalex100 knowledge sharing is in
creasing, as is the value of knowledge application, etc. We are \line \up0 \expn
dtw-2\charscalex100 starting to see that the combined perspective of the new eco
nomy, as a new economics, is \up0 \expndtw-3\charscalex100 about the logic of va
lue creation of intangibles. \par\pard\ql \li1800\ri1767\sb261\sl-280\slmult0 \u
p0 \expndtw-2\charscalex100 That is what we were starting to refine in Skandia.
The old economy was represented by \up0 \expndtw-2\charscalex100 the insurance,
where we were selling insurance products per se. The new dimension of \up0 \expn
dtw-2\charscalex100 Skandia was that we were launching innovative financial serv
ices contracts, with a long \up0 \expndtw-2\charscalex100 sustainable revenue ch
ain. That led to Skandia\u8217?s growing market cap, and it was the \up0 \expndt
w-3\charscalex100 application of the IC growth model that cultivated this. \par\
pard\qj \li1800\ri2223\sb313\sl-580\slmult0 \up0 \expndtw-3\charscalex100 \ul0\n
osupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f
17\fs24
Can you do that with any organization, if you find the right strategi
c intent? \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf21\f22\fs24 LE:\ul0\no
supersub\cf14\f15\fs24 \ul0\nosupersub\cf42\f43\fs24
\ul0\nosupersub\cf14\f1
5\fs24 Yes. \par\pard\qj \li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\ri2073\s
b221\sl-240\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf32\f33\fs20\ul0\s
uper\cf32\f33\fs19 6\ul0\nosupersub\cf9\f10\fs20 Leif Edvinsson and Michael S.
Malone, \ul0\nosupersub\cf33\f34\fs20 Intellectual Capital: Realizing your compa
ny\u8217?s true value by \up0 \expndtw-4\charscalex100 finding its hidden brainp
ower\ul0\nosupersub\cf9\f10\fs20 , (New York: HarperBusiness, 1997).
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x95 \ul0\nosupersub\cf63\f64\fs36 Vincent Barabba:\ul0\nosupersub\cf64\f65\fs36
Understanding the Enterprise as a \line\tab \up0 \expndtw0\charscalex96 System
\par\pard\ql \li1800\sb0\sl-828\slmult0 \par\pard\ql\li1800\sb455\sl-828\slmult
0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf65\f66\fs72 7 \par\pard\qj \li18
00\sb0\sl-270\slmult0 \par\pard\qj\li1800\sb0\sl-270\slmult0 \par\pard\qj\li1800
\sb0\sl-270\slmult0 \par\pard\qj\li1800\sb0\sl-270\slmult0 \par\pard\qj\li1800\r
i2611\sb33\sl-270\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15
\fs24 Vincent Barabba is the General Manager of General Motors Corporate Strateg
y \up0 \expndtw-2\charscalex100 and Knowledge Development and is also responsibl
e for overseeing GM's New \up0 \expndtw-5\charscalex100 Business Development Net
work. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb10\sl-276\sl
mult0 \up0 \expndtw-2\charscalex100 Barabba has been a part of an extensive, lon
g-term effort to infuse a systems \par\pard\ql \li1800\ri1671\sb5\sl-275\slmult0
\up0 \expndtw-2\charscalex100 thinking approach into how problems are perceived
and dealt with at General Motors. He \line \up0 \expndtw-4\charscalex100 sees t
hat not embracing this approach has been the cause of endemic problems in \line
\up0 \expndtw-2\charscalex100 organizations, and that recognizing the systems ph
enomena permits us to reconceptualize \line \up0 \expndtw-2\charscalex100 the co
mplex, significant and unprecedented issues we face in ways that can be \line \u
p0 \expndtw-4\charscalex100 successfully dealt with. Barabba draws upon the work
of Peter Drucker, Russell Ackoff, \par\pard\ql \li1800\sb5\sl-276\slmult0 \up0
\expndtw-3\charscalex100 C. West Churchman, and W. Edwards Deming to frame his s
ystems view. \par\pard\ql \li1800\ri1624\sb264\sl-276\slmult0\fi720 \up0 \expndt
w-4\charscalex100 The contribution that Barabba makes is that he has come to und
erstand the role of \up0 \expndtw-2\charscalex100 knowledge in an organization f
rom that system\u8217?s perspective. Knowledge of the system \line \up0 \expndtw
-2\charscalex100 and how it operates is even more critical than knowledge of the
particular parts of the \line \up0 \expndtw-2\charscalex100 system. In developi
ng this view, Barabba offers a balance between the whole and its parts \up0 \exp
ndtw-4\charscalex100 that is still very nascent in knowledge management and inte
llectual capital thus far. In a \line \up0 \expndtw-2\charscalex100 related way,
Barabba see the values of knowledge in its use rather than valuing the \line \u
p0 \expndtw-3\charscalex100 collection of knowledge, \ul0\nosupersub\cf16\f17\fs
24 per se\ul0\nosupersub\cf14\f15\fs24 . \par\pard\ql \li1800\sb0\sl-276\slmult0
\par\pard\ql\li1800\ri1611\sb8\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex1
00 Prior to coming to GM he held positions at Eastman Kodak and Xerox and twice
\line \up0 \expndtw-4\charscalex100 served as Director of the U. S. Bureau of th
e Census, and is the only person to be \line \up0 \expndtw-2\charscalex100 appoi
nted to that position by Presidents from different political parties. He served
as \line \up0 \expndtw-4\charscalex100 president of the American Statistical Ass
ociation, U.S. representative to the Population \line \up0 \expndtw-2\charscalex
100 Commission of the United Nations and chaired the National Research Council P
anel to \line \up0 \expndtw-2\charscalex100 review the statistical program of th
e National Center for Education Statistics. He has \line \up0 \expndtw-2\charsca
lex100 served on the Board of Trustees for the American Institutes for Research
and the National \line \up0 \expndtw-2\charscalex100 Opinion Research Center. He
is the author of \ul0\nosupersub\cf16\f17\fs24 Meeting of the Minds\ul0\nosuper
sub\cf14\f15\fs24 (1995, Harvard \line \up0 \expndtw-2\charscalex100 Business S
chool Press), and co-author of\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf1
6\f17\fs24 Hearing the Voice of the Market\ul0\nosupersub\cf14\f15\fs24 (1991,
Harvard \line \up0 \expndtw-2\charscalex100 Business School Press) and \ul0\nosu
persub\cf16\f17\fs24 The 1980 Census: Policy Making Amid Turbulence\ul0\nosupers

ub\cf14\f15\fs24 (1983 \line \up0 \expndtw-3\charscalex100 Lexington Books).


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\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
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0 \par\pard\ql\li4976\sb108\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosu
persub\cf10\f11\fs32 The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \p
ar\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par
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\expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Market-Based Adaptive En
terprise \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\sb0\sl-280\
slmult0 \par\pard\qj\li1800\ri1989\sb53\sl-280\slmult0 \up0 \expndtw-1\charscale
x100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupe
rsub\cf16\f17\fs24
What are the characteristics of a market-based adaptive en
terprise and how is \line \up0 \expndtw-2\charscalex100 General Motors moving to
achieve the vision of a market-based adaptive enterprise? \par\pard\ql \li1800\
sb0\sl-273\slmult0 \par\pard\ql\li1800\ri1622\sb13\sl-273\slmult0 \up0 \expndtw1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 VB:\ul0\nosupersub\cf14\f15\fs24
A market-based adaptive enterprise is an organization that understands its pur
pose \line \up0 \expndtw-2\charscalex100 in the broader system within which it f
unctions. It continually challenges the assumptions \line \up0 \expndtw-2\charsc
alex100 that underlie that role and adapts or changes that role, as conditions i
n the environment \line \up0 \expndtw-3\charscalex100 require. \par\pard\ql \li1
800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1929\sb9\sl-276\slmult0\fi720 \up0
\expndtw-2\charscalex100 This approach requires intensive internal education of
our workforce - helping \line \up0 \expndtw-2\charscalex100 them see more clearl
y the overall role GM plays in the marketplace and in society. \line \up0 \expnd
tw-2\charscalex100 During our recent Global Leadership Conference, our CEO, Rick
Wagoner, led a \line \up0 \expndtw-2\charscalex100 dialogue with over 3500 exec
utives based on the Root Learning Maps process. This \line \up0 \expndtw-2\chars
calex100 process involves developing a visual representation of 1) the environme
nt in which we \line \up0 \expndtw-2\charscalex100 are working; and 2) how our d
eveloping strategy positions us to be a leader. \par\pard\qj \li1800\ri1651\sb26
1\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 A market-based adaptive ent
erprise must also effectively use technical, business \up0 \expndtw-2\charscalex
100 and market intelligence. This is accomplished by designing intelligence syst
ems based on \up0 \expndtw-3\charscalex100 what we need to know in our decisionmaking processes. \par\pard\ql \li1800\ri1616\sb263\sl-277\slmult0\fi720 \up0 \e
xpndtw-2\charscalex100 The use of market or customer intelligence has been at th
e heart of significant \line \up0 \expndtw-2\charscalex100 discussions at Genera
l Motors going back to the early 1930s. The basic question hasn\u8217?t \line \
up0 \expndtw-4\charscalex100 changed: \u8220?Is the market capable of articulati
ng what it really wants, or must the \line \up0 \expndtw-2\charscalex100 enterpr
ise bring forward things that it knows it can do that the market is not capable
of \line \up0 \expndtw-2\charscalex100 articulating?\u8221? The problem has been
, both in the past and to some degree today, that \line \up0 \expndtw-2\charscal
ex100 people address the issue as if the answer must go one way or the other. We
call this the \line \up0 \expndtw-4\charscalex100 \u8220?tyranny of or.\u8221?
The question is framed in such a way as to suggest that you must either \line \u

p0 \expndtw-2\charscalex100 rely on consumer input \ul0\nosupersub\cf16\f17\fs24


or\ul0\nosupersub\cf14\f15\fs24 move forward with company-initiated innovation
. In truth, it is \line \up0 \expndtw-2\charscalex100 possible to effectively do
one \ul0\nosupersub\cf16\f17\fs24 and\ul0\nosupersub\cf14\f15\fs24 the other.
Conducted properly the opportunity provided \line \up0 \expndtw-4\charscalex100
by the \u8220?and\ul0\nosupersub\cf16\f17\fs24 \u8221?\ul0\nosupersub\cf14\f15\f
s24 approach has resulted in greater benefits for GM and its customers. \par\pa
rd\ql \li1800\ri1721\sb261\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Th
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s \line \up0 \expndtw-2\charscalex100 to believe that we must get ahead of custo
mer preferences and then convince them that \line \up0 \expndtw-2\charscalex100
we know what they really want. There is, as some might expect, evidence that sup
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\sb264\sl-276\slmult0 \up0 \expndtw-4\charscalex100 There is, however, also evid
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\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 46 \par\pard
\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb196\sl-276\slmult0 \up0 \ex
pndtw-3\charscalex100 \ul0\nosupersub\cf14\f15\fs24 capable of telling us what t
hey want. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb8\sl-276
\slmult0 \up0 \expndtw-2\charscalex100 In fact, as early as the 1930s, Buck Weav
er, GM\u8217?s first director of consumer \par\pard\ql \li1800\ri1723\sb4\sl-276
\slmult0 \up0 \expndtw-2\charscalex100 research, set about finding out what cust
omers really wanted. I have a chart in my office \line \up0 \expndtw-2\charscale
x100 that shows all the features GM added to vehicles, as well as things that we
re changed or \line \up0 \expndtw-2\charscalex100 improved, based on customer fe
edback. These were features like air conditioning, \line \up0 \expndtw-4\charsca
lex100 automatic transmissions, longer bumpers, rubber pads on pedals, and a gre
ater emphasis \line \up0 \expndtw-2\charscalex100 on safety. In the years from 1
932 to 1937, Weaver identified 170 such improvements, all \line \up0 \expndtw-2\
charscalex100 in the name of serving the customer in ways in which the customer
wanted to be served. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw-2\c
harscalex100 In my book, \ul0\nosupersub\cf16\f17\fs24 Meeting of the Minds\ul0\
nosupersub\cf14\f15\fs24 , I describe some of this research from the \par\pard\q
j \li1800\ri1824\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 1930s, in whic
h customers fairly well articulated the needs for a minivan, and had ideas \up0
\expndtw-2\charscalex100 for things such as sunroofs and pneumatic bumpers. Thes
e were all things that were not \up0 \expndtw-3\charscalex100 on the market unti
l many years later. \par\pard\ql \li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\
sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb
0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\
sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl
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76\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276
\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\s
lmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\slm
ult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmul
t0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0
\par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \
par\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \pa
r\pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb0\sl-276\slmult0 \par\

pard\ql\li3101\sb0\sl-276\slmult0 \par\pard\ql\li3101\sb12\sl-276\slmult0 \up0 \


expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 Figures 7.1\ul0\nosupersub
\cf14\f15\fs24 Customer Ideas for Car Features from the 1930\u8217?s \par\pard\
ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw-2\charscalex100 For possibly the f
irst time in automotive history, Weaver recognized the \par\pard\ql \li1800\sb4\
sl-276\slmult0 \up0 \expndtw-2\charscalex100 importance of looking beyond what t
he company\u8217?s engineers were already working on. \par\pard\ql \li1800\sb4\s
l-276\slmult0 \up0 \expndtw-2\charscalex100 Rather than simply relying on existi
ng market conditions, he used market research to gain \par\pard\sect\sectd\fs24\
paperw12240\paperh15840{\shp{\*\shpinst\shpleft1822\shptop3371\shpright9179\shpb
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\pard\sb0\sl-240{\bkmkstart Pg47}{\bkmkend Pg47}\par\pard\ql \li10239\sb0\sl-230
\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230
\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 47 \par\pard
\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1944\sb189\sl-280\slmult0 \
up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 insight into what mig
ht occur. In this way, GM\u8217?s engineers could be better prepared to \up0 \ex
pndtw-3\charscalex100 respond, if and when the possible changes came to be. \par
\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb8\sl-276\slmult0 \up0

\expndtw-2\charscalex100 One of Weaver\u8217?s techniques for helping people ima


gine future vehicles is \par\pard\ql \li1800\sb1\sl-256\slmult0 \up0 \expndtw-4\
charscalex100 particularly interesting. He would provide a simple worksheet, and
ask individuals to \par\pard\qj \li1800\ri1771\sb5\sl-280\slmult0 \up0 \expndtw
-2\charscalex100 sketch suggestions for design changes. He was generally looking
for ideas to enhance or \up0 \expndtw-3\charscalex100 change current design, bu
t what he got often went far beyond that. \par\pard\ql \li3202\sb0\sl-276\slmult
0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0
\par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \p
ar\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par
\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\p
ard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\par
d\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\
ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql
\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\l
i3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3
202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li320
2\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\
sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb
0\sl-276\slmult0 \par\pard\ql\li3202\sb0\sl-276\slmult0 \par\pard\ql\li3202\sb0\
sl-276\slmult0 \par\pard\ql\li3202\sb276\sl-276\slmult0 \up0 \expndtw-4\charscal
ex100 \ul0\nosupersub\cf21\f22\fs24 Figures 7.2\ul0\nosupersub\cf14\f15\fs24 C
ustomer Ideas from the 1930\u8217?s for Minivans \par\pard\ql \li1800\ri1684\sb2
64\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 My favorite is the first d
rawing we\u8217?ve found of the concept of the minivan, from \up0 \expndtw-4\cha
rscalex100 back in 1932. There\u8217?s no reason to believe that the person who
drew this was telling us \line \up0 \expndtw-2\charscalex100 \u8220?Design this
car\u8221?. More likely, he was describing needs. First, better vision (see how
the \up0 \expndtw-2\charscalex100 driver\u8217?s position is far forward?) Secon
d, a rear engine, because in those days, the engine \up0 \expndtw-4\charscalex10
0 produced a great deal of heat and odor. And finally, \u8220?French doors\u8221
?, which would \line \up0 \expndtw-5\charscalex100 improve entry and access. \pa
r\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb8\sl-276\slmult0 \up0
\expndtw-3\charscalex100 So this is one approach - asking customers what they w
ant. It is equally important \par\pard\sect\sectd\fs24\paperw12240\paperh15840\p
ard\sb0\sl-240{\bkmkstart Pg48}{\bkmkend Pg48}\par\pard\ql \li10239\sb0\sl-230\s
lmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\s
lmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 48 \par\pard\q
l \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1666\sb198\sl-275\slmult0 \up
0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 to remember that many a
vailable concepts and technologies are not easy to understand. \line \up0 \expnd
tw-4\charscalex100 Technology is moving at such a rate that we must take some ri
sk and ask, \u8220?What is the \line \up0 \expndtw-2\charscalex100 underlying ne
ed out there? Can we offer solutions that are not yet clear in the customer's \u
p0 \expndtw-3\charscalex100 mind? Solutions that - if customers were aware of th
em - would allow us to provide \line \up0 \expndtw-2\charscalex100 better produc
ts and services?\u8221? For example, we know that customers care about privacy,
\up0 \expndtw-2\charscalex100 individual choice and saving time and energy. If y
ou ask them how well these needs are \up0 \expndtw-2\charscalex100 being address
ed, they would say, \u8220?not very\u8221?. These customers are not directly ask
ing for \up0 \expndtw-2\charscalex100 mobile communications, but mobile communic
ations, when properly administered, could \up0 \expndtw-4\charscalex100 address
those needs for privacy, individual choice, and saving time and money - needs \l
ine \up0 \expndtw-5\charscalex100 that are not easily articulated by customers.
\par\pard\qj \li1800\ri1844\sb1\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex1
00 This balance between customer requests and company offerings is why we call \
up0 \expndtw-2\charscalex100 this the market-\ul0\nosupersub\cf16\f17\fs24 based
\ul0\nosupersub\cf14\f15\fs24 adaptive enterprise. We use the term \ul0\nosuper
sub\cf16\f17\fs24 based\ul0\nosupersub\cf14\f15\fs24 , rather than \ul0\nosupers
ub\cf16\f17\fs24 driven\ul0\nosupersub\cf14\f15\fs24 or \up0 \expndtw-2\charsca

lex100 \ul0\nosupersub\cf16\f17\fs24 focused\ul0\nosupersub\cf14\f15\fs24 , beca


use it is not one or the other. Rather, we are interested in a combination of \u
p0 \expndtw-2\charscalex100 what the market asks for directly and what we are ca
pable of delivering. \par\pard\ql \li1800\ri1719\sb265\sl-275\slmult0\fi720 \up0
\expndtw-4\charscalex100 We are seeking decisions based on what the market is t
alking about. We could, \up0 \expndtw-2\charscalex100 for example, have a situa
tion where there is something the market wants, but we are not \up0 \expndtw-2\c
harscalex100 capable of delivering it. It is also possible that we have a better
solution in our mind and, \up0 \expndtw-4\charscalex100 therefore, we are going
to take the risk that our solution, even though it may meet with \up0 \expndtw4\charscalex100 some resistance, will eventually win out over more easily accept
ed ideas. \par\pard\qj \li1800\sb0\sl-275\slmult0 \par\pard\qj\li1800\ri1911\sb1
0\sl-275\slmult0\fi720 \up0 \expndtw-2\charscalex100 The term \ul0\nosupersub\cf
16\f17\fs24 adaptive\ul0\nosupersub\cf14\f15\fs24 is equally important. It refl
ects the realization that things are \up0 \expndtw-2\charscalex100 moving so fas
t today that we can no longer operate as we did in the old days, when we \up0 \e
xpndtw-2\charscalex100 said, \u8220?Let's go find out what the market wants. Let
\u8217?s look at that closely. Let's find out \up0 \expndtw-2\charscalex100 what
we can deliver, and then deliver it. And then, customers will come.\u8221? By t
he time \up0 \expndtw-3\charscalex100 you have gone through that process, someth
ing else has happened. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li18
00\ri1858\sb1\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Instead, you ne
ed a product development processes that can respond quickly to \line \up0 \expnd
tw-2\charscalex100 changing conditions. We must learn how to adapt to change a l
ot faster than we have in \line \up0 \expndtw-3\charscalex100 the past. \par\par
d\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg49}{\bkmk
end Pg49}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-23
0\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf9\f10\fs20 49 \par\pard\ql \li1901\sb0\sl-414\slmult0 \par\par
d\ql\li1901\sb64\sl-414\slmult0 \up0 \expndtw0\charscalex95 \ul0\nosupersub\cf54
\f55\fs36 Jac Fitz-enz\ul0\nosupersub\cf67\f68\fs36 :\ul0\nosupersub\cf68\f69\fs
36 Human Capital is the Only Active Asset \par\pard\ql \li1800\sb824\sl-828\sl
mult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf30\f31\fs72 8 \par\pard\ql \
li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li
1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li18
00\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs2
4 In this conversation, Jac Fitz-enz examines the leveraging role of human capit
al in \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-4\charscalex100 orga
nizations. He views that human capital is the only capital that is active. Witho
ut \par\pard\ql \li1800\ri1616\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100
human capital nothing can happen in organizations. He demonstrates that we can m
easure \up0 \expndtw-4\charscalex100 the value of human capital and the return o
n investment of human capital. This is \line \up0 \expndtw-2\charscalex100 impor
tant to develop the set of measures that balance human and financial factors. Th
is \up0 \expndtw-2\charscalex100 balance is the hallmark of effective organizati
ons. Fitz-enz also warns that human capital, \up0 \expndtw-2\charscalex100 intel
lectual capital and knowledge management are in danger of failing unless they \l
ine \up0 \expndtw-3\charscalex100 become integrated into the way organizations d
o their business. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw-2\char
scalex100 Jac Fitz-enz is an internationally recognized authority on human resou
rce \par\pard\ql \li1800\ri1690\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100
management. He pioneered human capital benchmarking and performance measurement
. \up0 \expndtw-2\charscalex100 Among his accomplishments is a landmark study of
the connection between service, \up0 \expndtw-3\charscalex100 quality and produ
ctivity. \par\pard\ql \li1800\ri1963\sb265\sl-275\slmult0\fi720 \up0 \expndtw-2\
charscalex100 Dr. Fitz-enz founded Saratoga Institute in 1977 and is its Chairma
n. Saratoga \line \up0 \expndtw-4\charscalex100 Institute publishes the world's
largest database of human capital \ul0\super\cf31\f32\fs24 7\ul0\nosupersub\cf14
\f15\fs24 measurements, the \line \up0 \expndtw-2\charscalex100 Human Capital Be
nchmarking Report covering over 900 companies. He has authored \line \up0 \expnd

tw-2\charscalex100 five books on human capital management. His most recent book
is \ul0\nosupersub\cf16\f17\fs24 The ROI of Human \line \up0 \expndtw-5\charscal
ex100 Capital\ul0\nosupersub\cf14\f15\fs24 . \par\pard\qj \li1800\sb0\sl-280\slm
ult0 \par\pard\qj\li1800\ri1609\sb1\sl-280\slmult0\fi720 \up0 \expndtw0\charscal
ex105 Dr. Fitz-enz received a doctorate in communications from the University of
\up0 \expndtw-3\charscalex100 Southern California. \par\pard\qj \li1800\sb0\sl240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-24
0\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\
slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\sl
mult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmu
lt0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult
0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0
\par\pard\qj\li1800\ri1655\sb114\sl-240\slmult0 \up0 \expndtw-3\charscalex100 \u
l0\super\cf32\f33\fs20\ul0\super\cf32\f33\fs19 7\ul0\nosupersub\cf9\f10\fs20 Ja
c Fitz-enz, \ul0\nosupersub\cf33\f34\fs20 The ROI of Human Capital: Measuring th
e Economic Value of Employee Performance\ul0\nosupersub\cf9\f10\fs20 (New \up0
\expndtw-4\charscalex100 York: AMACOM, 2000).
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g50}{\bkmkend Pg50}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 50 \par\pard\ql \li4976\sb0\sl-368\slmult
0 \par\pard\ql\li4976\sb108\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosu
persub\cf10\f11\fs32 The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \p
ar\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb206\sl-322\slmult0 \u
p0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Fundamental Factors \p
ar\pard\qj \li1800\ri2408\sb273\sl-280\slmult0 \up0 \expndtw-1\charscalex100 \ul
0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf1
6\f17\fs24
Why is a balanced focus on the interaction of human capital and fi
nancial \up0 \expndtw-3\charscalex100 outcomes the leading reason for long-term
financial success? \par\pard\ql \li1800\sb0\sl-272\slmult0 \par\pard\ql\li1800\r
i1651\sb35\sl-272\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22
\fs24 JF:\ul0\nosupersub\cf14\f15\fs24
My view is that balance is a\ul0\nosu
persub\cf16\f17\fs24 \ul0\nosupersub\cf14\f15\fs24 fundamental issue of nature.
Remember from high \up0 \expndtw-2\charscalex100 school biology the process of
homeostasis, wherein every living organism strives to stay \up0 \expndtw-2\chars
calex100 in balance. Since organizations are nothing more than an extension of h
uman thought and \up0 \expndtw-2\charscalex100 action, it makes sense that an or

ganization should be in balance also. I was not thinking \up0 \expndtw-2\charsca


lex100 about this when we first did the research, but it turns out that top perf
orming companies \up0 \expndtw-3\charscalex100 always focus on balancing human a
nd financial issues. \par\pard\ql \li2520\sb5\sl-276\slmult0 \up0 \expndtw-2\cha
rscalex100 Homeostasis in organizations is a fundamental truism of top performer
s as I \par\pard\ql \li1800\ri1805\sb5\sl-275\slmult0 \up0 \expndtw-2\charscalex
100 originally reported in \ul0\nosupersub\cf16\f17\fs24 The Eight Practices of
Exceptional Organizations\ul0\nosupersub\cf14\f15\fs24 . But there is a \up0 \e
xpndtw-2\charscalex100 down side potential to homeostasis, as well. That is, we
can spend so much time on \up0 \expndtw-2\charscalex100 analyzing and balancing,
etc., that we stagnate an organization, putting it into analysis\up0 \expndtw-2
\charscalex100 paralysis. Like anything else, we can overdue it. Given that as t
he potential downside, it \up0 \expndtw-3\charscalex100 is still an absolute fun
damental for long-term success. \par\pard\ql \li1800\sb0\sl-273\slmult0 \par\par
d\ql\li1800\ri1655\sb14\sl-273\slmult0\fi720 \up0 \expndtw-2\charscalex100 In th
e short-term you can do anything, practically speaking, including unethical \lin
e \up0 \expndtw-2\charscalex100 acts such as breaking the law, and make money. T
hat is not what I am talking about. I am \line \up0 \expndtw-4\charscalex100 foc
using on how do we build an institution that we can proud of, that can be succes
sful, \line \up0 \expndtw-2\charscalex100 can be a contributor to the community,
can make money for the stockholders, and so \line \up0 \expndtw-2\charscalex100
forth, for the next hundred years. If that\u8217?s what we are looking for \u82
30? if we want to build \line \up0 \expndtw-2\charscalex100 that kind of institu
tion, then balance is absolutely fundamental. I do not think we can \line \up0 \
expndtw-5\charscalex100 achieve our goals without it. \par\pard\qj \li1800\sb0\s
l-260\slmult0 \par\pard\qj\li1800\sb0\sl-260\slmult0 \par\pard\qj\li1800\ri2589\
sb78\sl-260\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24
JC:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf16\f17\fs24
What are some
companies that you think achieve that? Or use it as their \up0 \expndtw-4\chars
calex100 principle? \par\pard\ql \li1800\sb0\sl-280\slmult0 \par\pard\ql\li1800\
ri1610\sb4\sl-280\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22
\fs24 JF:\ul0\nosupersub\cf14\f15\fs24
Hewlett Packard, Federal Express and
Motorola did it well for a long time, as well \up0 \expndtw-4\charscalex100 as a
lot of smaller companies you\u8217?ve never heard of. We researched a thousand
\line \up0 \expndtw-5\charscalex100 companies over five years, and came up with
this finding. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2083
\sb280\sl-280\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs2
4 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Was this an
intentional effort at balancing or did it just accidentally work out \up0 \expn
dtw-5\charscalex100 based on the people\u8217?s intuition? \par\pard\qj \li1800\
sb0\sl-270\slmult0 \par\pard\qj\li1800\ri1627\sb39\sl-270\slmult0 \up0 \expndtw3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JF:\ul0\nosupersub\cf14\f15\fs24
We studied these companies in both their human and financial performance over
a \line \up0 \expndtw-2\charscalex100 five-year period. We pulled out the top t
en percent of those and in doing our report found \line \up0 \expndtw-2\charscal
ex100 by accident, that there were eight factors that were typical of these comp
anies that were \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-24
0{\bkmkstart Pg51}{\bkmkend Pg51}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\p
ard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \
expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 51 \par\pard\qj \li1800\sb0
\sl-280\slmult0 \par\pard\qj\li1800\ri2789\sb189\sl-280\slmult0 \up0 \expndtw-2\
charscalex100 \ul0\nosupersub\cf14\f15\fs24 not typical of the other ninety perc
ent. Now, it is not a total exclusivity. It is a \up0 \expndtw-3\charscalex100 p
redominance, or a general lack of performance. \par\pard\ql \li1800\sb0\sl-276\s
lmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb32\sl-276\sl
mult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupe
rsub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
And balance is one of these
eight factors? \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb8\
sl-276\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JF:\ul
0\nosupersub\cf14\f15\fs24
Balance is one of the three fundamentals. The oth

er two are long-term \par\pard\qj \li1800\ri1670\sb9\sl-270\slmult0 \up0 \expndt


w-2\charscalex100 commitment to a basic strategy, a positioning in the market if
you will and a positioning \up0 \expndtw-2\charscalex100 in the community and a
lignment of culture and systems. This was an intentional effort on \up0 \expndtw
-3\charscalex100 the part of the companies to do this. \par\pard\ql \li1800\sb0\
sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb284\
sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Human
Capital Value Added \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800
\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2137\sb53\sl-280\slmult0 \up0 \expndtw
-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf42\f43\fs24
\ul0\nosupersub\cf16\f17\fs24
What is Saratoga Institute, and what is the se
t of macro human and financial \line \up0 \expndtw-2\charscalex100 metrics that
Saratoga Institute is using? What have you learned by using them? \par\pard\ql \
li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1611\sb30\sl-275\slmult0 \up0 \e
xpndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JF:\ul0\nosupersub\cf14\f15
\fs24
As founder of Saratoga Institute I have been involved in the issue of
measuring \line \up0 \expndtw-2\charscalex100 the effectiveness of people, quant
itatively, for over 20 years. Since 1985 we\u8217?ve been \line \up0 \expndtw-2\
charscalex100 publishing an annual report that tracks over a hundred different v
ariables. Those go from \line \up0 \expndtw-2\charscalex100 macros like revenue
per full time employee (FTE), down to micros such as time to fill \line \up0 \ex
pndtw-2\charscalex100 jobs. The objective of all this is to provide benchmark da
ta by industry, company size, \line \up0 \expndtw-2\charscalex100 geographic reg
ion and growth rate, so that on any particular measure you could compare \line \
up0 \expndtw-4\charscalex100 yourself to somebody else in one of those categorie
s. We will do this in the U.S. with \line \up0 \expndtw-4\charscalex100 over 900
companies this year. We also work with another 1000 companies in about dozen \l
ine \up0 \expndtw-4\charscalex100 countries in Europe, South America, Australia,
South Africa, and Mexico. \par\pard\qj \li1800\ri2097\sb261\sl-280\slmult0\fi72
0 \up0 \expndtw-2\charscalex100 The core of our business is doing this kind of r
esearch, publishing principally \up0 \expndtw-5\charscalex100 benchmark data. We
also do some publication of best practices. \par\pard\ql \li1800\sb0\sl-274\slm
ult0 \par\pard\ql\li1800\ri1672\sb11\sl-274\slmult0\fi720 \up0 \expndtw-2\charsc
alex100 The more important macro measures include some that we have coined ourse
lves \up0 \expndtw-2\charscalex100 and some that are fairly traditional. We call
the new ones human capital value added. \up0 \expndtw-2\charscalex100 That is a
function of teasing out of the profit of the company that which is attributable
to \up0 \expndtw-2\charscalex100 people. The formula very simply is Revenue min
us All Expenses, except for human \line \up0 \expndtw-2\charscalex100 expense, w
hich is pay and benefits, divided by FTE\u8217?s. That gives an adjusted profit
for \up0 \expndtw-4\charscalex100 human effort, per employee. That is better tha
n revenue per employee because that is just \up0 \expndtw-4\charscalex100 a gros
s measure and we do not know what caused it. By using our new formula we can \up
0 \expndtw-5\charscalex100 tell that how much value added came from human effort
. \par\pard\qj \li1800\sb0\sl-273\slmult0 \par\pard\qj\li1800\ri1731\sb14\sl-273
\slmult0\fi720 \up0 \expndtw-4\charscalex100 There\u8217?s a corollary measure c
alled human capital ROI, or return on investment, \line \up0 \expndtw-2\charscal
ex100 where we use the same formula. In this case, though, the divisor is pay an
d benefit cost\ul0\nosupersub\cf16\f17\fs24 s\ul0\nosupersub\cf14\f15\fs24 . \li
ne \up0 \expndtw-2\charscalex100 The result here is a ratio that for every dolla
r spent on pay and benefits there is a certain \line \up0 \expndtw-4\charscalex1
00 amount of profitability. To illustrate: we can get a ratio of $1.00 to $2.00
or $1.00 to \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\b
kmkstart Pg52}{\bkmkend Pg52}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\
ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expn
dtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 52 \par\pard\qj \li1800\sb0\sl280\slmult0 \par\pard\qj\li1800\ri1763\sb189\sl-280\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf14\f15\fs24 $1.40, or whatever it might be. Those ar
e two fundamentals that we have used now for a \up0 \expndtw-3\charscalex100 hal
f dozen years. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb8\s

l-276\slmult0 \up0 \expndtw-2\charscalex100 Another more common measure is compe


nsation as a percent of revenue. That \par\pard\ql \li1800\ri1629\sb0\sl-276\slm
ult0 \up0 \expndtw-2\charscalex100 tells us what our cost is for people to gener
ate that amount of money. If we extend that by \up0 \expndtw-2\charscalex100 add
ing in contingent labor we call it TLC, or Total Labor Cost. We can divide that
into \up0 \expndtw-2\charscalex100 revenue and it give ourselves another figure
which now accounts for the money spent on \up0 \expndtw-2\charscalex100 continge
nts. Since contingent labor is somewhere in the high teens and twenty percent of
\up0 \expndtw-2\charscalex100 total labor, it is certainly a significant factor
that we cannot ignore. We cannot just talk \line \up0 \expndtw-3\charscalex100
about people on payroll anymore. \par\pard\ql \li1800\ri1720\sb269\sl-275\slmult
0\fi720 \up0 \expndtw-2\charscalex100 This is true everywhere, but more or less
in some places of course. We are facing \up0 \expndtw-2\charscalex100 a shortage
of labor everywhere. Because of that, organizations are having to be more \up0
\expndtw-2\charscalex100 flexible in the way that they employ people, part-time
people, temporary workers of all \up0 \expndtw-2\charscalex100 type, and contrac
t workers. The reality is that the contingent factor is getting more and \up0 \e
xpndtw-3\charscalex100 more significant. We cannot ignore it. \par\pard\qj \li18
00\sb0\sl-260\slmult0 \par\pard\qj\li1800\sb0\sl-260\slmult0 \par\pard\qj\li1800
\ri2058\sb78\sl-260\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f
22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Is th
e change in organization structure also increasing that, in addition to the \up0
\expndtw-3\charscalex100 labor shortage? \par\pard\qj \li1800\sb0\sl-280\slmult
0 \par\pard\qj\li1800\ri1879\sb24\sl-280\slmult0 \up0 \expndtw-1\charscalex100 \
ul0\nosupersub\cf21\f22\fs24 JF:\ul0\nosupersub\cf14\f15\fs24
Absolutely. Ma
nagement is also trying to be more flexible, trying to keep down \up0 \expndtw-2
\charscalex100 the core labor force and use contingent contractors more, so that
they can be in and out \up0 \expndtw-3\charscalex100 much faster and reduce cos
ts. \par\pard\qj \li1800\ri1622\sb0\sl-280\slmult0\fi720 \up0 \expndtw-4\charsca
lex100 But there is another measure that can be used that is atypical, which is
turnover by \up0 \expndtw-2\charscalex100 length of service. This tells an organ
ization at what point in someone\u8217?s career it is prone \up0 \expndtw-3\char
scalex100 to losing that individual. \par\pard\ql \li1800\ri1694\sb266\sl-273\sl
mult0\fi720 \up0 \expndtw-2\charscalex100 Everybody thinks that organizations te
nd to lose people mostly in the first year or \line \up0 \expndtw-2\charscalex10
0 two, and on average that is correct. It is true that more people leave or are
terminated in \line \up0 \expndtw-4\charscalex100 their first year of employment
than at any other point for a variety of reasons, both \line \up0 \expndtw-2\ch
arscalex100 individual and organizational. Beyond that, we have learned is there
are points in a \line \up0 \expndtw-4\charscalex100 person\u8217?s career when
they are what we would call more vulnerable or susceptible to \line \up0 \expndt
w-2\charscalex100 leaving the organization. Those points tend to come at somewhe
re around two to three \line \up0 \expndtw-2\charscalex100 years, again around t
he five year time frame, and again around eight to nine years. \par\pard\ql \li1
800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1635\sb9\sl-276\slmult0\fi720 \up0
\expndtw-2\charscalex100 We believe that the underlying reason for this is that
people begin a job and for a \line \up0 \expndtw-2\charscalex100 while they get
a certain amount of reward and satisfaction as well as frustration from the \lin
e \up0 \expndtw-2\charscalex100 organization they are working in. When a call co
mes, they see an ad, or a neighbor talks \line \up0 \expndtw-2\charscalex100 abo
ut a new job, there are specific points where they begin to wonder if they have
made a \line \up0 \expndtw-2\charscalex100 good decision to stay where they are.
They may start to become frustrated because they \line \up0 \expndtw-2\charscal
ex100 didn\u8217?t get the promotion that they had anticipated getting when they
came eighteen \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscale
x100 months ago or two years ago. These natural points are when a call from the
headhunter \par\pard\qj \li1800\ri1637\sb18\sl-260\slmult0 \up0 \expndtw-2\chars
calex100 comes or by some other stimulus, resulting in people being more likely
to consider it than \line \up0 \expndtw-2\charscalex100 they would otherwise. It
is useful to have that kind of information to know what percent \par\pard\sect\

sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg53}{\bkmkend Pg5


3}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmul
t0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\no
supersub\cf9\f10\fs20 53 \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li
1800\ri2011\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\c
f14\f15\fs24 of your people or which individuals are reaching those points, and
then you can go do \up0 \expndtw-3\charscalex100 something preventative about it
. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1610\sb8\sl-276\
slmult0\fi720 \up0 \expndtw-2\charscalex100 If I know that you\u8217?ve been her
e now four years and you are reaching this zone, I \line \up0 \expndtw-2\charsca
lex100 can sit down with you and assure you that we really value you and want yo
u here. I can \line \up0 \expndtw-4\charscalex100 say let\u8217?s talk about you
r career, etc., so that you understand that you are an important \line \up0 \exp
ndtw-2\charscalex100 person to us and not just a cipher sitting in a corner some
where. Then, if you get the call \line \up0 \expndtw-2\charscalex100 from the re
cruiter you are less likely to take that call, or consider the first offer that
comes \line \up0 \expndtw-4\charscalex100 along, than if, after you have been he
re for four or five years and nobody has talked to \line \up0 \expndtw-2\charsca
lex100 you. It happens in organizations all the time that people do not even get
a performance \line \up0 \expndtw-2\charscalex100 review, even professional peo
ple. Several times in my career I have been in an \line \up0 \expndtw-2\charscal
ex100 organization for a couple of years and did not get a performance review. I
just got a \line \up0 \expndtw-2\charscalex100 salary increase, or whatever. It
became clear to me that I was not an important individual. \line \up0 \expndtw2\charscalex100 That is why something like turnover by length of services is use
ful to know. \par\pard\qj \li1800\sb0\sl-270\slmult0 \par\pard\qj\li1800\sb0\sl270\slmult0 \par\pard\qj\li1800\ri1985\sb29\sl-270\slmult0 \up0 \expndtw-3\chars
calex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf42\f43\fs24 \ul0\no
supersub\cf14\f15\fs24
Is this even more significant In our era where the val
ue equation is changing, \up0 \expndtw-2\charscalex100 from the value in an orga
nization being its physical capital to one where an increasing \up0 \expndtw-3\c
harscalex100 percentage of it is human capital and intangibles? \par\pard\ql \li
1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1697\sb30\sl-276\slmult0 \up0 \exp
ndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JF:\ul0\nosupersub\cf14\f15\f
s24
Of course. People are clearly the key issue these days. I think almost e
verybody \up0 \expndtw-2\charscalex100 agrees with that. There are still some ha
rdheaded manufacturing people who think that \line \up0 \expndtw-2\charscalex100
the\ul0\nosupersub\cf82\f83\fs24\ul y\ul0\nosupersub\cf14\f15\fs24 way you sol
ve everything is by another turret lathe or stamping mill, and you do not \up0 \
expndtw-2\charscalex100 worry too much about training people beyond just basics
of how to do that. But those \line \up0 \expndtw-2\charscalex100 people are clea
rly the dinosaurs that are going away - not as fast as they ought to, but \line
\up0 \expndtw-5\charscalex100 they are going away faster. \par\pard\qj \li1800\r
i1832\sb0\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 People, particularl
y in the service industries and the so-called \u8220?new economy\u8221? \up0 \ex
pndtw-2\charscalex100 companies, are clearly recognizing that people are the dif
ferentiating factor, that human \up0 \expndtw-3\charscalex100 effort is the real
lever, that knowledge effort is the lever. \par\pard\sect\sectd\fs24\paperw1224
0\paperh15840\pard\sb0\sl-240{\bkmkstart Pg54}{\bkmkend Pg54}\par\pard\ql \li102
39\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li102
39\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20
54 \par\pard\qj \li1800\sb0\sl-420\slmult0 \par\pard\qj\li1800\ri1704\sb74\sl-4
20\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf46\f47\fs36 Thomas O. D
avenport:\ul0\nosupersub\cf49\f50\fs36 People are the Owners and \up0 \expndtw
0\charscalex98 Investors of Human Capital \par\pard\ql \li1800\sb0\sl-828\slmult
0 \par\pard\ql\li1800\sb15\sl-828\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosup
ersub\cf55\f56\fs72 9 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li180
0\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\
sb240\sl-276\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf14\f15\fs24
Thomas Davenport is a Principal in Towers Perrin\u8217?s Organization and Emplo

yee \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-4\charscalex100 Resear


ch Practice in San Francisco. He provides counsel on human capital strategy, \pa
r\pard\ql \li1800\ri1958\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 change
management, organization effectiveness, and business strategy to clients in the
\up0 \expndtw-2\charscalex100 service, financial, retail, and manufacturing sec
tors, as well as to public sector \line \up0 \expndtw-5\charscalex100 organizati
ons. \par\pard\qj \li1800\ri1672\sb265\sl-275\slmult0\fi720 \up0 \expndtw-2\char
scalex100 He has made a major contribution to the field by recognizing that the
evolution of \line \up0 \expndtw-2\charscalex100 the New Economy requires manage
rs to think of people as owners and investors of their \line \up0 \expndtw-2\cha
rscalex100 human capital, an asset they invest in the organizations where they w
ork. This metaphor \line \up0 \expndtw-2\charscalex100 extends beyond the conven
tional thinking that people themselves are assets controlled by \line \up0 \expn
dtw-5\charscalex100 organizations. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\
pard\ql\li1800\ri1783\sb10\sl-275\slmult0\fi720 \up0 \expndtw-2\charscalex100 Da
venport focuses much of his attention on helping clients improve the people\up0
\expndtw-2\charscalex100 focused elements of business strategy implementation. H
e is the author of the book \line \up0 \expndtw-2\charscalex100 \ul0\nosupersub\
cf16\f17\fs24 Human Capital: What It Is and Why People Invest It\ul0\nosupersub\
cf14\f15\fs24 , published by Jossey-Bass in 1999. \up0 \expndtw-2\charscalex100
Among the topics he covers is the challenge of attracting, retaining, and engagi
ng \line \up0 \expndtw-3\charscalex100 workers in a fast-paced, turbulent enviro
nment. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1797\sb10\s
l-275\slmult0\fi720 \up0 \expndtw-2\charscalex100 Davenport asserts that people
must update and upgrade the way they negotiate \line \up0 \expndtw-4\charscalex1
00 their investment of personal, intangible equity with institutions. People mus
t think of \line \up0 \expndtw-2\charscalex100 themselves using the \u8220?worke
r-as-investor\u8221? metaphor and recognize that realities of their \line \up0 \
expndtw-2\charscalex100 human capital ownership and what the return on their inv
estment of their human capital \line \up0 \expndtw-3\charscalex100 needs to be.
\par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1971\sb10\sl-275\s
lmult0\fi720 \up0 \expndtw-2\charscalex100 Organizations that perceive this chan
ge can seize an opportunity to collaborate \up0 \expndtw-2\charscalex100 with th
eir workforce to improve individual and organizational performance. Doing so \up
0 \expndtw-2\charscalex100 requires, however, that these organizations produce a
return on the human capital \up0 \expndtw-2\charscalex100 invested by employees
. Return on human capital investment is the foundation of the \up0 \expndtw-3\ch
arscalex100 relationship between individual and organization. \par\pard\qj \li18
00\ri2038\sb261\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Can managers
make this leap? Some already have, in organizations like Cisco \up0 \expndtw-3\c
harscalex100 Systems and Charles Schwab. \par\pard\sect\sectd\fs24\paperw12240\p
aperh15840\pard\sb0\sl-240{\bkmkstart Pg55}{\bkmkend Pg55}\par\pard\ql \li10239\
sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\
sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 55
\par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1684\sb196\sl-276
\slmult0\fi720 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Daven
port\u8217?s comments on human capital management have been quoted in such \up0
\expndtw-4\charscalex100 publications as \ul0\nosupersub\cf16\f17\fs24 Fortune M
agazine,\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24 Harvard Man
agement Update, and Human Capital \up0 \expndtw-2\charscalex100 Strategies & New
s\ul0\nosupersub\cf14\f15\fs24 . He has appeared on CNN and made presentations t
o such groups as \up0 \expndtw-2\charscalex100 The Conference Board, the Wharton
School Center for Human Resources, and the \line \up0 \expndtw-2\charscalex100
American Gas Association. His articles have appeared in \ul0\nosupersub\cf16\f17
\fs24 Across the Board\ul0\nosupersub\cf14\f15\fs24 , \ul0\nosupersub\cf16\f17\f
s24 Management \up0 \expndtw-3\charscalex100 Review\ul0\nosupersub\cf14\f15\fs24
, and other general management and strategy publications. \par\pard\ql \li5156\
sb0\sl-368\slmult0 \par\pard\ql\li5156\sb0\sl-368\slmult0 \par\pard\ql\li5156\sb
0\sl-368\slmult0 \par\pard\ql\li5156\sb304\sl-368\slmult0 \up0 \expndtw0\charsca
lex95 \ul0\nosupersub\cf10\f11\fs32 The Conversation \par\pard\ql \li1800\sb0\sl

-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-3


22\slmult0 \par\pard\ql\li1800\sb164\sl-322\slmult0 \up0 \expndtw-4\charscalex10
0 \ul0\nosupersub\cf25\f26\fs28 Workers as Capital Owners and Investors \par\par
d\ql \li1800\sb0\sl-270\slmult0 \par\pard\ql\li1800\ri1847\sb71\sl-270\slmult0 \
up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf
14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Why do we need to start thinking o
f workers not as human capital, but rather as \up0 \expndtw-2\charscalex100 huma
n capital owners and investors? What are the major implications of this shift in
\up0 \expndtw-3\charscalex100 understanding? \par\pard\qj \li1800\sb0\sl-275\sl
mult0 \par\pard\qj\li1800\ri1914\sb11\sl-275\slmult0 \up0 \expndtw-3\charscalex1
00 \ul0\nosupersub\cf21\f22\fs24 TD:\ul0\nosupersub\cf14\f15\fs24
What we ar
e really talking about here is a change in our thinking, a change that \up0 \exp
ndtw-2\charscalex100 reflects itself in a new metaphor. If we think back to the
big downsizing events of the \up0 \expndtw-2\charscalex100 early 90\u8217?s, we
remember that CEOs talked about people as costs. When organizations \up0 \expndt
w-2\charscalex100 were downsizing, what we read about in the business press was:
\u8220?We\u8217?re cutting costs, \up0 \expndtw-5\charscalex100 and that means
we\u8217?re cutting staff. Therefore, people must be costs.\u8221? \par\pard\ql
\li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb9\sl-276\slmult0 \up0 \expndtw2\charscalex100 It\u8217?s almost as though the transformation of people from co
st to asset occurred \par\pard\qj \li1800\ri1640\sb5\sl-275\slmult0 \up0 \expndt
w-2\charscalex100 overnight in the mid-1990s. Unemployment had dropped dramatica
lly. The economy was \up0 \expndtw-2\charscalex100 in an upswing. Consumers were
generally confident. Prices were under control. Inflation \up0 \expndtw-2\chars
calex100 was down. It seemed as though CEOs all over North America got out of be
d one morning \up0 \expndtw-2\charscalex100 and said, \u8220?Holy Toledo, people
aren\u8217?t costs anymore. We need them to survive. By golly, \up0 \expndtw-3\
charscalex100 they must be assets.\u8221? \par\pard\ql \li1800\ri1877\sb261\sl-2
80\slmult0\fi720 \up0 \expndtw-2\charscalex100 For insightful senior managers, t
he thinking has evolved yet another step. They \line \up0 \expndtw-2\charscalex1
00 recognize that employees aren\u8217?t assets. Assets are passive. Assets depr
eciate over time. \line \up0 \expndtw-2\charscalex100 Assets are under the full
control of the organization. People have none of these \line \up0 \expndtw-3\cha
rscalex100 characteristics. \par\pard\ql \li1800\ri1685\sb264\sl-276\slmult0\fi7
20 \up0 \expndtw-2\charscalex100 To recognize that people are human capital owne
rs and investors is to recognize \line \up0 \expndtw-2\charscalex100 that much o
f the control over the employment relationship has shifted from the \line \up0 \
expndtw-2\charscalex100 organization to the individual. Employees come to work e
very Monday morning and \line \up0 \expndtw-2\charscalex100 decide how much of t
heir intellectual, emotional, and physical resources to invest in a \line \up0 \
expndtw-2\charscalex100 business. They can withdraw all or part of that investme
nt at almost any time. They can \line \up0 \expndtw-2\charscalex100 move it to a
different organization, or change the employment relationship, or change the
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g56}{\bkmkend Pg56}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 56 \par\pard\ql \li1800\sb0\sl-280\slmult
0 \par\pard\ql\li1800\ri1831\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf14\f15\fs24 terms of their implicit contract with much greater

flexibility than we saw a decade or so \line \up0 \expndtw-1\charscalex100 ago.


Human capital is a moveable asset, and people - not organizations - control its
\line \up0 \expndtw-3\charscalex100 movement. \par\pard\ql \li5806\sb0\sl-287\s
lmult0 \par\pard\ql\li5806\sb28\sl-287\slmult0 \up0 \expndtw-3\charscalex100 \ul
0\nosupersub\cf38\f39\fs28 ROI\ul0\sub\cf69\f70\fs27 w \par\pard\ql \li1800\sb0\
sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb11\s
l-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul
0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
What are the implic
ations of that? \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb8\
sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 TD:\u
l0\nosupersub\cf14\f15\fs24
From the standpoint of the individual, the impl
ication is that, \u8220?I have to do a \par\pard\qj \li1800\ri1810\sb1\sl-280\sl
mult0 \up0 \expndtw-2\charscalex100 much better job than I use to do of looking
out for myself. I own my human capital, and \line \up0 \expndtw-2\charscalex100
nobody else is going to see to it that I\u8217?ve done a good job of building an
d investing that \line \up0 \expndtw-3\charscalex100 asset.\u8221? \par\pard\ql
\li1800\ri1727\sb0\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 I define h
uman capital broadly as ability, which I put into several subcategories. \up0 \e
xpndtw-2\charscalex100 Knowledge, skill, and talent are the terms I use most. Th
ings people can learn constitute \up0 \expndtw-2\charscalex100 \ul0\nosupersub\c
f16\f17\fs24 knowledge\ul0\nosupersub\cf14\f15\fs24 , which are bits of informat
ion and insight one can gather. \ul0\nosupersub\cf16\f17\fs24 Skill \ul0\nosuper
sub\cf14\f15\fs24 is what people \up0 \expndtw-2\charscalex100 have when they de
velop the refined ability to apply what they know. \ul0\nosupersub\cf16\f17\fs24
Talent\ul0\nosupersub\cf14\f15\fs24 comprises \up0 \expndtw-2\charscalex100 in
born or intrinsic abilities. Take the total of those elements and multiply it by
effort and \up0 \expndtw-3\charscalex100 you have invested human capital. \par\
pard\ql \li1800\ri1774\sb268\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100
Viewing people as human capital investors also requires us to understand that \l
ine \up0 \expndtw-3\charscalex100 human capital investors - like financial inves
tors - require a return on their investment. \line \up0 \expndtw-2\charscalex100
We might refer to the return on human capital investment as ROI\ul0\sub\cf31\f3
2\fs24 w\ul0\nosupersub\cf14\f15\fs24 , the return on \line \up0 \expndtw-2\char
scalex100 investment in work. You can categorize the return on investment in wor
k in any number \line \up0 \expndtw-2\charscalex100 of ways, but I favor four sp
ecific categories: intrinsic job fulfillment, opportunity for \line \up0 \expndt
w-2\charscalex100 growth and advancement, recognition for accomplishments, and f
inancial rewards. \par\pard\qj \li1800\sb0\sl-273\slmult0 \par\pard\qj\li1800\ri
1651\sb14\sl-273\slmult0\fi720 \up0 \expndtw-2\charscalex100 When people receive
a high return on their investment, they are likely to continue \up0 \expndtw-2\
charscalex100 investing and to build their investable human capital. Companies t
hat provide a rich array \up0 \expndtw-2\charscalex100 of returns on human capit
al investment can expect employees to contribute generously of \up0 \expndtw-3\c
harscalex100 their human capital to the success of the business. \par\pard\qj \l
i1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\sb0\sl-280\slmult0 \par\pard\qj\li1
800\ri2436\sb2\sl-280\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf21
\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24
\ul0\nosupersub\cf16\f17\fs24 Who
has the main responsibility for building human capital - employees or \up0 \expn
dtw-5\charscalex100 companies? \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard
\ql\li1800\ri2088\sb10\sl-275\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosuper
sub\cf21\f22\fs24 TD:\ul0\nosupersub\cf14\f15\fs24
When it comes to building
their human capital, employees have heard a single \up0 \expndtw-4\charscalex100
message for the better part of the last decade. Companies are fond of telling p
eople, \up0 \expndtw-4\charscalex100 \u8220?You\u8217?re in charge of your caree
r. You\u8217?re in charge of your learning. It\u8217?s your \line \up0 \expndtw2\charscalex100 responsibility to take the initiative. We as an organization wil
l help you by providing \up0 \expndtw-3\charscalex100 some pathways and resource
s, but we want you to take the initiative.\u8221? \par\pard\ql \li1800\ri1803\sb
261\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Many companies create a d
ilemma for themselves in the way they try to manage \line \up0 \expndtw-2\charsc

alex100 their expenditures on training. They try to focus their training investm
ents on a few key \line \up0 \expndtw-2\charscalex100 areas that contribute dire
ctly to employees\u8217? ability to do narrowly defined jobs better. \line \up0
\expndtw-2\charscalex100 Indeed, classic human capital theory says organizations
should pay for training only \par\pard\sect\sectd\fs24\paperw12240\paperh15840\
pard\sb0\sl-240{\bkmkstart Pg57}{\bkmkend Pg57}\par\pard\ql \li10239\sb0\sl-230\
slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\
slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 57 \par\pard\
qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2009\sb189\sl-280\slmult0 \u
p0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 when it helps an indiv
idual build some element of knowledge or skill that benefits the \up0 \expndtw-3
\charscalex100 company directly. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pa
rd\ql\li1800\ri1718\sb10\sl-275\slmult0\fi720 \up0 \expndtw-2\charscalex100 But
this theory rests too much on a narrow view of the benefits of learning. The \li
ne \up0 \expndtw-2\charscalex100 reason is that the training, or more broadly le
arning opportunities, conveys a triple \line \up0 \expndtw-2\charscalex100 benef
it. First, learning certainly helps the organization by building elements of hum
an \line \up0 \expndtw-2\charscalex100 capital that help people do their jobs be
tter. Better qualified employees produce more for \line \up0 \expndtw-2\charscal
ex100 their companies. Second, by helping people increase knowledge and skills,
learning \line \up0 \expndtw-2\charscalex100 enhances the human capital that emp
loyees have to invest in generating ROI\ul0\sub\cf31\f32\fs24 w \ul0\nosupersub\
cf14\f15\fs24 for \line \up0 \expndtw-2\charscalex100 themselves. As the individ
ual endowment of human capital grows, so does the potential \line \up0 \expndtw2\charscalex100 for earning a high return. Third, learning opportunities are enj
oyable and gratifying in \line \up0 \expndtw-2\charscalex100 their own right. Je
an Piaget, the famous child psychologist, was one of the first to point \line \u
p0 \expndtw-2\charscalex100 out that people simply enjoy learning. Thus, the cha
nce to learn brings a kind of intrinsic \line \up0 \expndtw-2\charscalex100 fulf
illment that is, merely of itself, a form of return on human capital investment.
\line \up0 \expndtw-2\charscalex100 Companies that scrimp on training or focus
learning opportunities too much on specific \line \up0 \expndtw-4\charscalex100
tasks required by today\u8217?s jobs might miss some or even all of these benefi
ts. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb245\sl-322\slm
ult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Everyone a Mana
ger \par\pard\ql \li1800\sb0\sl-270\slmult0 \par\pard\ql\li1800\ri1938\sb71\sl-2
70\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\n
osupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
What difference does i
t make that we are moving to a situation where everyone \up0 \expndtw-4\charscal
ex100 will manage something, but nobody will only manage, and that we all need t
o know \up0 \expndtw-5\charscalex100 things to succeed? \par\pard\ql \li1800\sb0
\sl-276\slmult0 \par\pard\ql\li1800\sb10\sl-276\slmult0 \up0 \expndtw-2\charscal
ex100 \ul0\nosupersub\cf42\f43\fs24 TD:\ul0\nosupersub\cf14\f15\fs24
One of t
he main implications of this notion of widespread management \par\pard\ql \li180
0\ri1688\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 responsibility is that
the necessity to make decisions about resource allocation, service \up0 \expndt
w-2\charscalex100 delivery, and even competitive strategy no longer rests solely
with people who have \line \up0 \expndtw-2\charscalex100 \u8220?manager\u8221?
in their titles. For one thing, the world simply moves too fast for a few people
\up0 \expndtw-2\charscalex100 to make all the decisions quickly enough. Plus, a
s a legacy of the downsizing of the early \up0 \expndtw-4\charscalex100 90s, we
simply have fewer managers per employee than we otherwise might. The \line \up0
\expndtw-5\charscalex100 remaining managers can\u8217?t do all of the managerial
tasks required. \par\pard\ql \li1800\ri1684\sb261\sl-280\slmult0\fi720 \up0 \ex
pndtw-2\charscalex100 Another issue is that technology and more sophisticated in
formation management \up0 \expndtw-2\charscalex100 and knowledge management mean
that people know things and get information that was \up0 \expndtw-2\charscalex
100 previously in the hands of managers only. All this produces a situation in w
hich non\up0 \expndtw-4\charscalex100 management employees have the information
required to make decisions, and \line \up0 \expndtw-5\charscalex100 organization

s need them to do so. \par\pard\qj \li1800\ri1795\sb265\sl-275\slmult0\fi720 \up


0 \expndtw-2\charscalex100 It is remarkable how freely people communicate betwee
n the top and the bottom \line \up0 \expndtw-2\charscalex100 of the organization
through e-mail these days. Prior to e-mail, an individual\u8217?s chance of \li
ne \up0 \expndtw-2\charscalex100 getting a message directly to the chief executi
ve of a company was close to nil. Now, in \line \up0 \expndtw-2\charscalex100 ma
ny organizations, people have a pretty high probability of knowing that the CEO
will \line \up0 \expndtw-4\charscalex100 look at their messages message and may
even generate a personal response. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\
pard\qj\li1800\ri1636\sb1\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Som
e CEOs have taken it on themselves to keep open that line of communication. \lin
e \up0 \expndtw-2\charscalex100 Dave Pottruck (co-CEO of Charles Schwab) is one
that I know of. If you send Dave an e-\par\pard\sect\sectd\fs24\paperw12240\pape
rh15840\pard\sb0\sl-240{\bkmkstart Pg58}{\bkmkend Pg58}\par\pard\ql \li10239\sb0
\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9
\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 58 \p
ar\pard\ql \li1800\sb0\sl-280\slmult0 \par\pard\ql\li1800\ri1802\sb189\sl-280\sl
mult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 mail, you will
get a response. There are other CEOs who act the same way. People have \up0 \ex
pndtw-2\charscalex100 the kind of access to top management leaders that used to
be restricted to formally \line \up0 \expndtw-3\charscalex100 designated manager
s. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1802\sb280\sl-2
80\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\n
osupersub\cf14\f15\fs24
\ul0\nosupersub\cf16\f17\fs24 Pottruck has made a v
ery extensive, special effort to cultivate leadership across \up0 \expndtw-2\cha
rscalex100 the organization. He is quite impressive in his collaborating among h
is peers. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1777\sb1
0\sl-275\slmult0\fi60 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs2
4 TD:\ul0\nosupersub\cf14\f15\fs24
He definitely has a collaborative style w
ith other senior executives. He believes \line \up0 \expndtw-2\charscalex100 tha
t whether his organization succeeds or fails depends on how individual people wi
thin \line \up0 \expndtw-2\charscalex100 the company either are, or are not, com
mitted to the organization and engaged in their \line \up0 \expndtw-2\charscalex
100 work. Granted, Charles Schwab has had its share of financial challenges in t
he last 18 \line \up0 \expndtw-2\charscalex100 months or so, but I believe the b
asic philosophy of valuing people still pertains. \par\pard\ql \li1800\sb0\sl-27
5\slmult0 \par\pard\ql\li1800\ri1618\sb10\sl-275\slmult0\fi720 \up0 \expndtw-4\c
harscalex100 I know CEOs who would say in their private moments, \u8220?You know
, it\u8217?s really just \up0 \expndtw-2\charscalex100 five guys that run this c
ompany. As far as all the employees are concerned, I hope they \up0 \expndtw-2\c
harscalex100 do a good job, I hope they care. But, at the end of the day, howeve
r irksome turnover is, \up0 \expndtw-2\charscalex100 it\u8217?s these five guys
that make all the decisions that matter around here.\u8221? Broad scale \line \u
p0 \expndtw-3\charscalex100 employee commitment and engagement are to them just
hollow words. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1731
\sb9\sl-276\slmult0\fi720 \up0 \expndtw-4\charscalex100 Enlightened CEOs not onl
y don\u8217?t think that way, they don\u8217?t act that way, don\u8217?t \line \
up0 \expndtw-2\charscalex100 measure that way, and don\u8217?t behave in ways th
at deny the importance of line employees. \up0 \expndtw-4\charscalex100 Pottruck
is acting in a way that bespeaks a different metaphor. Whether he realizes it o
r \up0 \expndtw-4\charscalex100 not, he treats people as owners and investors of
the human capital that is his \line \up0 \expndtw-3\charscalex100 organization\
u8217?s most valuable asset. And this is key - human capital is the asset; the \
line \up0 \expndtw-4\charscalex100 people who own it are not. \par\pard\sect\sec
td\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg59}{\bkmkend Pg59}\
par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0
\par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosup
ersub\cf9\f10\fs20 59 \par\pard\qj \li1800\sb0\sl-400\slmult0 \par\pard\qj\li180
0\ri2821\sb110\sl-400\slmult0\tx2520 \up0 \expndtw0\charscalex98 \ul0\nosupersub
\cf46\f47\fs36 Don Tyler:\ul0\nosupersub\cf64\f65\fs36 \ul0\nosupersub\cf28\f2

9\fs36 Shared Values - The Prerequisite for \line\tab \up0 \expndtw0\charscalex9


9 Knowledge Sharing and Creation \par\pard\ql \li1800\sb0\sl-828\slmult0 \par\pa
rd\ql\li1800\sb19\sl-828\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf3
0\f31\fs72 10 \par\pard\ql \li1800\sb0\sl-277\slmult0 \par\pard\ql\li1800\sb0\sl
-277\slmult0 \par\pard\ql\li1800\sb0\sl-277\slmult0 \par\pard\ql\li1800\ri1673\s
b257\sl-277\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24
The role of values in knowledge generation and transfer is often overlooked and
under \line \up0 \expndtw-4\charscalex100 appreciated. An organization\u8217?s u
nderlying values will either support or disrupt its \line \up0 \expndtw-4\charsc
alex100 effectiveness in achieving its goals. If the leadership acts from one se
t of values, the \line \up0 \expndtw-2\charscalex100 middle management from anot
her, and the line workers from a third set of values the \line \up0 \expndtw-4\c
harscalex100 dissonance in values will undermine the best intentioned and financ
ed effort. While \line \up0 \expndtw-2\charscalex100 technology and methodology
are enablers as well, it is how the values align in an \line \up0 \expndtw-4\cha
rscalex100 enterprise that will determine if knowledge is shared and used for de
sired outcomes. This \line \up0 \expndtw-4\charscalex100 is as true in a small s
ingle site organization as it is in global, extended enterprises. \par\pard\ql \
li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1617\sb8\sl-276\slmult0\fi720 \u
p0 \expndtw-2\charscalex100 Don Tyler is an outstanding practitioner in values a
lignment. He works with client \up0 \expndtw-2\charscalex100 organizations to in
tegrate their culture and values into their leadership and business \line \up0 \
expndtw-2\charscalex100 strategy. He is well versed in both the instruments for
discerning the actual values at \up0 \expndtw-2\charscalex100 work in an organi
zation, versus the stated ones, and in developing and implementing \line \up0 \e
xpndtw-2\charscalex100 strategies for organizational transformation. He knows th
at one size does not fit all. The \up0 \expndtw-3\charscalex100 values have to f
it the purpose of the organization. \par\pard\ql \li1800\ri1613\sb264\sl-276\slm
ult0\fi720 \up0 \expndtw-2\charscalex100 Despite the accelerated movement toward
s global collaboration, the values of one \up0 \expndtw-4\charscalex100 culture
cannot readily supercede another. People in one part of an organization or \line
\up0 \expndtw-2\charscalex100 location may not feel that the values framework o
f the larger enterprise is significant or \up0 \expndtw-4\charscalex100 appropri
ate to their local domain. The loss of effectiveness, creativity, and efficiency
may \up0 \expndtw-2\charscalex100 be great in these cases but the cause may be
little noticed. The value statements may be \up0 \expndtw-3\charscalex100 on th
e office walls, but may not embraced by relevant stakeholders. \par\pard\qj \li1
800\sb0\sl-275\slmult0 \par\pard\qj\li1800\ri1732\sb10\sl-275\slmult0\fi720 \up0
\expndtw-2\charscalex100 Tyler discusses how the array of values can be identif
ied, and the path of change \up0 \expndtw-2\charscalex100 to bring about alignme
nt. This may involve the reality that different sets of values may \up0 \expndtw
-2\charscalex100 need to be recognized and respected in the same enterprise. Thi
s recognition can provide \up0 \expndtw-2\charscalex100 a new perspective for ge
tting beyond the either/or dominant model to one where diverse \up0 \expndtw-2\c
harscalex100 value sets can be the basis for innovation and even greater opportu
nity. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb9\sl-276\slm
ult0 \up0 \expndtw-4\charscalex100 Tyler is a consultant with the Catalyst Consu
lting Team, where he works with \par\pard\ql \li1800\sb1\sl-256\slmult0 \up0 \ex
pndtw-4\charscalex100 organizations to create cultures that build around a core
set of values. Based on his \par\pard\ql \li1800\sb8\sl-276\slmult0 \up0 \expndt
w-4\charscalex100 approach he assists high tech companies attract and retain emp
loyees, provides executive \par\pard\sect\sectd\fs24\paperw12240\paperh15840\par
d\sb0\sl-240{\bkmkstart Pg60}{\bkmkend Pg60}\par\pard\ql \li10239\sb0\sl-230\slm
ult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slm
ult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 60 \par\pard\qj
\li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1777\sb189\sl-280\slmult0 \up0
\expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 coaching, and conducts or
ganization-wide values audits that aid in redefining leadership \up0 \expndtw-3\
charscalex100 competencies and organizational processes that sustain customer va
lue. \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\li1800\ri1864\sb37\sl-

260\slmult0\fi720 \up0 \expndtw-2\charscalex100 Tyler works internationally to i


mplement dispersed teams effectiveness training \up0 \expndtw-3\charscalex100 an
d global best practices. \par\pard\ql \li4976\sb0\sl-368\slmult0 \par\pard\ql\li
4976\sb0\sl-368\slmult0 \par\pard\ql\li4976\sb0\sl-368\slmult0 \par\pard\ql\li49
76\sb0\sl-368\slmult0 \par\pard\ql\li4976\sb0\sl-368\slmult0 \par\pard\ql\li4976
\sb251\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf10\f11\fs32
The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0
\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb4\s
l-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Knowle
dge as a Social Construct \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\l
i1800\ri2710\sb50\sl-260\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\c
f21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
How do you see that knowledge is a social construct emerging through \up0 \expnd
tw-3\charscalex100 interaction? \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\par
d\ql\li1800\sb31\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf
21\f22\fs24 DT:\ul0\nosupersub\cf14\f15\fs24
The power of information and th
e power to create new knowledge come from \par\pard\ql \li1800\ri1739\sb0\sl-277
\slmult0 \up0 \expndtw-2\charscalex100 being able to leverage it and move it aro
und between people. The magical part of it all is \line \up0 \expndtw-2\charscal
ex100 that it is not like the other commodities where if I have it and I give it
to you I lose it. \line \up0 \expndtw-2\charscalex100 Many different authors ha
ve talked about the notion that if I have it and I give it to you, \line \up0 \e
xpndtw-2\charscalex100 then we both have it and we can both work with it. The on
ly way to make that happen is \line \up0 \expndtw-2\charscalex100 through intera
ction. That does not have to be face-to-face, but it means you have got \line \u
p0 \expndtw-2\charscalex100 people sharing with people at some level. Without th
at social context the need for \line \up0 \expndtw-2\charscalex100 knowledge man
agement is not there because it is all within your head and only you can \line \
up0 \expndtw-2\charscalex100 work with it. Knowledge management comes to the for
e when you have to relate it to \line \up0 \expndtw-3\charscalex100 other people
. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb272\sl-276\slmul
t0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersu
b\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Are you saying that sharing wi
th other people makes it a meaningful dimension? \par\pard\ql \li1800\sb0\sl-276
\slmult0 \par\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \u
l0\nosupersub\cf21\f22\fs24 DT:\ul0\nosupersub\cf14\f15\fs24
Without that th
ere is no opportunity for the sharing of ideas that creates new \par\pard\ql \li
1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 knowledge and new applicat
ions for existing knowledge. I tend not to think about it so \par\pard\ql \li180
0\ri1636\sb6\sl-274\slmult0 \up0 \expndtw-2\charscalex100 much as sharing knowle
dge but more as creating meaning as we are interacting. Powerful \line \up0 \exp
ndtw-2\charscalex100 conversations are created when people ask questions. Inquir
y is far more important to \line \up0 \expndtw-4\charscalex100 creating knowledg
e than advocacy. We can both advocate positions as well as put them \line \up0 \
expndtw-2\charscalex100 in a knowledge repository, and that is interesting and u
seful. But when we get into a \line \up0 \expndtw-2\charscalex100 dialogue, we i
nquire more deeply into \u8220?what did you mean\u8221?. By that we rapidly cre
ate \line \up0 \expndtw-2\charscalex100 new connections and insights. In that se
nse, knowledge management is usefully explored \line \up0 \expndtw-2\charscalex1
00 from the perspective of relationships rather than from the viewpoint of stock
s of static \line \up0 \expndtw-3\charscalex100 information alone.
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p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g61}{\bkmkend Pg61}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 61 \par\pard\ql \li1800\sb0\sl-322\slmult
0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0
\par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb26\sl-322\slmult0 \
up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 The Role of Shared Va
lues in Knowledge \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb
20\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC
: \ul0\nosupersub\cf16\f17\fs24
Why are values key to relationships in knowle
dge transfer? \par\pard\qj \li1800\sb0\sl-275\slmult0 \par\pard\qj\li1800\ri1692
\sb10\sl-275\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24
DT:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24
I use a simp
le formula which is: values + skills = capabilities. By that I mean the \line \
up0 \expndtw-2\charscalex100 values provide the meaning and the motivation (the
willingness) to learn new skills (new \line \up0 \expndtw-2\charscalex100 abilit
ies). Without both of those in play, values and skills, people rarely sustain th
e new \line \up0 \expndtw-2\charscalex100 skills in stressful situations because
the inner motivation to do so (the values component) \line \up0 \expndtw-3\char
scalex100 is missing or weak. \par\pard\ql \li1800\ri1688\sb5\sl-276\slmult0\fi7
20 \up0 \expndtw-2\charscalex100 An example may help to make the point. Think ab
out a time when you were most \line \up0 \expndtw-2\charscalex100 motivated to l
earn something new. No one likely had to tell you to do it or to practice \line
\up0 \expndtw-2\charscalex100 hard. The reason was likely that you highly valued
the new capability and were self \line \up0 \expndtw-2\charscalex100 motivated
to learn. Alternatively think about a time when you were required to learn a \li
ne \up0 \expndtw-2\charscalex100 new skill and didn\u8217?t see the value of it.
Learning probably occurred but required an \line \up0 \expndtw-2\charscalex100
external source of motivation (likely a parent or teacher standing nearby and pr
oviding \line \up0 \expndtw-3\charscalex100 the encouragement. \par\pard\ql \li1
800\sb0\sl-270\slmult0 \par\pard\ql\li1800\sb0\sl-270\slmult0 \par\pard\ql\li180
0\ri1668\sb29\sl-270\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\
f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Does
that work in the same ways with different cultures in other countries around \u
p0 \expndtw-2\charscalex100 the world and how would that affect how knowledge is
used, in reference to the \line \up0 \expndtw-5\charscalex100 impediments or th
e opportunities for knowledge sharing? \par\pard\ql \li1800\sb0\sl-276\slmult0 \
par\pard\ql\li1800\sb30\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupe
rsub\cf21\f22\fs24 DT:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\f
s24 Yes and no. Values create meaning for all of us but the interpretation of
what \par\pard\qj \li1800\ri1678\sb0\sl-280\slmult0 \up0 \expndtw-2\charscalex10
0 people mean by a given value and how they prioritize them can be very differen
t, leading \up0 \expndtw-2\charscalex100 to the opportunity to misunderstand eac
h other and mistakes in sharing knowledge. \par\pard\ql \li1800\ri1676\sb267\sl273\slmult0 \up0 \expndtw-2\charscalex100 Asian cultures for example are built o
n values of duty and western society, especially the \line \up0 \expndtw-2\chars
calex100 US is a culture built on individual rights. These are opposite sides of
the same coin. \line \up0 \expndtw-2\charscalex100 Western society is very prou
d of our tradition about individual rights. The flipside of that \line \up0 \exp
ndtw-2\charscalex100 coin is duty and responsibility to the whole, to the commun
ity, or to the society. \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\li1
800\ri2630\sb38\sl-260\slmult0\fi720 \up0 \expndtw-2\charscalex100 When you put
that into context in an organization, the whole concept of \up0 \expndtw-5\chars
calex100 responsibility and loyalty starts to take on a very different frame. \p
ar\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\sb0\sl-280\slmult0 \pa
r\pard\qj\li1800\ri2221\sb24\sl-280\slmult0 \up0 \expndtw-3\charscalex100 \ul0\n
osupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f
17\fs24
To what extent do shared values have to be embraced to ensure success

in a \up0 \expndtw-4\charscalex100 knowledge management initiative? \par\pard\q


l \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1616\sb10\sl-275\slmult0 \up0
\expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 DT:\ul0\nosupersub\cf42\
f43\fs24 \ul0\nosupersub\cf14\f15\fs24
I believe that high levels of knowled
ge sharing and creation will only sustain after \line \up0 \expndtw-2\charscalex
100 meaningful relationships are established and constantly nourished. The link
here for me is \line \up0 \expndtw-2\charscalex100 that relationships are built
most effectively on shared values. Working interdependently \line \up0 \expndtw2\charscalex100 for example requires that we develop trust in our relationships
before we can truly engage \line \up0 \expndtw-4\charscalex100 in sharing the mo
st important parts of ourselves and our unique knowledge. Without \par\pard\sect
\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg62}{\bkmkend Pg
62}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmu
lt0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\n
osupersub\cf9\f10\fs20 62 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\l
i1800\sb196\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf14\f1
5\fs24 deeper relationships we will likely only share superficial knowledge. \pa
r\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par
\pard\ql\li1800\sb12\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersu
b\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Would shared values make the difference in that communication? \par\pard\ql \
li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-1
\charscalex100 \ul0\nosupersub\cf21\f22\fs24 DT:\ul0\nosupersub\cf14\f15\fs24
Yes, shared values or shared meaning. So often when we talk about values, we \
par\pard\ql \li1800\ri1614\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 talk
about very big constructs. I think it is important to break values down into th
eir finest \line \up0 \expndtw-2\charscalex100 element before you can understand
and say, \u8220?Ah, I see the difference between what you \line \up0 \expndtw-2
\charscalex100 mean by trust, or what I mean by teamwork, or what somebody else
means by \line \up0 \expndtw-2\charscalex100 collaboration,\u8221? for example.
Until you get to some shared definitions, you really have not \line \up0 \expndt
w-2\charscalex100 got very much and can actually be fooled by it. Getting to com
monly agreed on behaviors \line \up0 \expndtw-4\charscalex100 to express the val
ues is also important so that we can hold each other accountable to \line \up0 \
expndtw-5\charscalex100 walking the talk. \par\pard\ql \li1800\sb0\sl-322\slmult
0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb202\sl-322\slmult
0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Value Choices and
Effective Knowledge Transfer \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\q
j\li1800\ri2391\sb50\sl-260\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersu
b\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
How do people's value choices enable or disable knowledge transfer in an \up0
\expndtw-4\charscalex100 organization? \par\pard\ql \li1800\sb0\sl-273\slmult0
\par\pard\ql\li1800\ri1884\sb37\sl-273\slmult0 \up0 \expndtw-3\charscalex100 \ul
0\nosupersub\cf21\f22\fs24 DT:\ul0\nosupersub\cf14\f15\fs24
I will try to e
xplain how people\u8217?s value choices enable or disable knowledge \up0 \expndt
w-2\charscalex100 transfer in the organization. In most organizations I consult
with people are stressed or \up0 \expndtw-2\charscalex100 worried about their s
ecurity. When we are threatened it is a common reaction to be \up0 \expndtw-2\ch
arscalex100 cautious, withhold information and protect ourselves from embarrassm
ent. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb9\sl-276\slmu
lt0 \up0 \expndtw-4\charscalex100 If we try to understand why people do not shar
e in the real knowledge we find \par\pard\ql \li1800\ri1618\sb4\sl-276\slmult0 \
up0 \expndtw-2\charscalex100 that most commonly they are in a fairly defensive m
ode and pretending to co-operate but \line \up0 \expndtw-2\charscalex100 really
holding back, being fear driven etc. In these instances we are likely operating
from \line \up0 \expndtw-2\charscalex100 values of competition, self-preservatio
n or self-worth. At the same time we may espouse \line \up0 \expndtw-2\charscal
ex100 values of self-actualization, synergy and collaboration. To be ready to en
gage in real \line \up0 \expndtw-4\charscalex100 knowledge sharing we need value
s underpinning our behavior such as trust, empathy, and \line \up0 \expndtw-5\ch

arscalex100 collaboration. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expnd


tw-2\charscalex100 In our consulting practice we have done a lot of measurement
of numerous \par\pard\qj \li1800\ri1737\sb1\sl-280\slmult0 \up0 \expndtw-2\chars
calex100 organizations. We find that an organization might display a set of valu
es on the wall, but \up0 \expndtw-5\charscalex100 the employees have very differ
ent values when measured in our audit. \par\pard\ql \li1800\ri1885\sb260\sl-280\
slmult0\fi720 \up0 \expndtw-2\charscalex100 How the employees prioritize values
can be radically different. Depending on \up0 \expndtw-2\charscalex100 whether t
heir value priorities are at all close, we will have real gaps when they come to
\up0 \expndtw-3\charscalex100 share really powerful knowledge. \par\pard\qj \li
1800\ri1654\sb260\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Our values
create the frame on how we see ourselves, on what we value most. If \up0 \expndt
w-2\charscalex100 we can get to understanding that most of the time the values o
f people are holding behind \up0 \expndtw-2\charscalex100 the scenes in their co
nversations are different and we can surface those and move them to \up0 \expndt
w-5\charscalex100 be common, we will have a much richer conversation. \par\pard\
sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg63}{\bkmken
d Pg63}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\
slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \u
l0\nosupersub\cf9\f10\fs20 63 \par\pard\ql \li1800\sb0\sl-414\slmult0 \par\pard\
ql\li1800\sb84\sl-414\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf46\f
47\fs36 Brook Manville:\ul0\nosupersub\cf28\f29\fs36 Learning in the Knowledge
Era \par\pard\ql \li1800\sb0\sl-828\slmult0 \par\pard\ql\li1800\sb816\sl-828\sl
mult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf30\f31\fs72 11 \par\pard\ql
\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\l
i1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1
800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs
24 Brook Manville is chief learning officer and customer evangelist of Saba Soft
ware, a \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 le
ading provider of human capital development and management solutions. Saba \par\
pard\ql \li1800\ri1609\sb5\sl-275\slmult0 \up0 \expndtw-2\charscalex100 provides
a platform of internet-enabled tools and applications for managing learning, sk
ill \up0 \expndtw-2\charscalex100 development, and human capital development mor
e generally. At Saba, Manville is \line \up0 \expndtw-2\charscalex100 responsibl
e for Saba\u8217?s research programs, its own learning programs and processes, a
nd a \up0 \expndtw-2\charscalex100 variety of external programs related to the d
evelopment of Saba\u8217?s knowledge and \line \up0 \expndtw-3\charscalex100 cus
tomer relationships. \par\pard\ql \li1800\ri1842\sb265\sl-276\slmult0\fi720 \up0
\expndtw-2\charscalex100 In this session, Manville discusses the evolution of k
nowledge management and \up0 \expndtw-2\charscalex100 the trends emerging beyond
what he sees as our current plateau. One such trend is the \up0 \expndtw-2\char
scalex100 convergence of knowledge management and learning. Another is the expan
sion of the \up0 \expndtw-2\charscalex100 traditional domain of knowledge manage
ment to encompass a broader management of \up0 \expndtw-2\charscalex100 \u8220?h
uman capital\u8221? and also the embrace of the \u8220?extended enterprise\u8221
?, which includes \line \up0 \expndtw-5\charscalex100 partners, suppliers, and c
ustomers. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1635\sb1
0\sl-275\slmult0\fi720 \up0 \expndtw-2\charscalex100 Manville stresses that link
ing learning to performance will be central to success in \line \up0 \expndtw-2\
charscalex100 the next era of knowledge-based enterprises. He also touches on ot
her convergences, the \line \up0 \expndtw-2\charscalex100 application of complex
adaptive systems thinking, and the balance between so-called \line \up0 \expndt
w-2\charscalex100 \u8220?top-down\u8221? and \u8220?bottoms-up\u8221? approaches
to knowledge processes in the new \line \up0 \expndtw-5\charscalex100 organizat
ion. \par\pard\ql \li2580\sb0\sl-276\slmult0 \par\pard\ql\li2580\sb9\sl-276\slmu
lt0 \up0 \expndtw-2\charscalex100 Brook Manville was trained as a historian, and
began his career as a college \par\pard\ql \li1800\ri1769\sb7\sl-273\slmult0 \u
p0 \expndtw-2\charscalex100 professor. He later became a business technology ana
lyst for CBS, Inc. Through a series \line \up0 \expndtw-2\charscalex100 of posit
ions and projects over the last twenty-some years, he has linked technology, \li

ne \up0 \expndtw-2\charscalex100 communications, and education to offer what has


become a unique and sought-after \line \up0 \expndtw-3\charscalex100 perspectiv
e. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1716\sb11\sl-27
5\slmult0\fi720 \up0 \expndtw-2\charscalex100 Prior to coming to Saba, Manville
was a partner at McKinsey & Co., specializing \up0 \expndtw-2\charscalex100 in o
rganizational development and knowledge-related strategy, and consulted to Fortu
ne \up0 \expndtw-2\charscalex100 500 companies in these areas. He helped lead Mc
Kinsey's original knowledge \line \up0 \expndtw-3\charscalex100 management progr
am, and became McKinsey's first Director of Knowledge \line \up0 \expndtw-5\char
scalex100 Management, as well as their CIO between 1991 and 1994. \par\pard\sect
\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg64}{\bkmkend Pg
64}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmu
lt0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\n
osupersub\cf9\f10\fs20 64 \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\l
i1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1660\sb203\sl-275\slmult0\fi720 \
up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf14\f15\fs24 He is the author of n
umerous pioneering articles on organizational learning and \up0 \expndtw-2\chars
calex100 knowledge management, and has been frequently profiled for his work in
these domains. \up0 \expndtw-4\charscalex100 He has also co-authored (with Josia
h Ober) the forthcoming book from Harvard Business \up0 \expndtw-2\charscalex100
School Press, \ul0\nosupersub\cf16\f17\fs24 A Company of Citizens: What the Wor
ld\u8217?s First Democracy Can Teach \up0 \expndtw-5\charscalex100 Leaders About
Building Great Organizations\ul0\nosupersub\cf14\f15\fs24 (2003). \par\pard\ql
\li4975\sb0\sl-368\slmult0 \par\pard\ql\li4975\sb0\sl-368\slmult0 \par\pard\ql\
li4975\sb0\sl-368\slmult0 \par\pard\ql\li4975\sb325\sl-368\slmult0 \up0 \expndtw
0\charscalex95 \ul0\nosupersub\cf10\f11\fs32 The Conversation \par\pard\ql \li18
00\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800
\sb306\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs2
8 The Evolution of Knowledge Management \par\pard\ql \li1800\sb0\sl-276\slmult0
\par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb4\sl-276\slmult0 \u
p0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf1
4\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
You have worked as a practitioner a
nd written a lot about knowledge \par\pard\qj \li1800\ri2109\sb18\sl-260\slmult0
\up0 \expndtw-2\charscalex100 management for almost a decade. As you think abou
t the evolution of that discipline, \up0 \expndtw-3\charscalex100 what stage wou
ld you say we are now in? \par\pard\ql \li1800\sb0\sl-274\slmult0 \par\pard\ql\l
i1800\ri1622\sb35\sl-274\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\c
f21\f22\fs24 BM:\ul0\nosupersub\cf14\f15\fs24
I think knowledge management ha
s come to a sort of plateau; and in many ways, I \line \up0 \expndtw-2\charscale
x100 think the \u8220?S-curve\u8221? of innovation that it represents is coming
to an end. It\u8217?s timely for \line \up0 \expndtw-2\charscalex100 you to be p
ublishing this book, because it is a good moment to reflect on what it\u8217?s b
een \line \up0 \expndtw-2\charscalex100 and where it\u8217?s going. I see knowle
dge management (KM), on the one hand, becoming \line \up0 \expndtw-2\charscalex1
00 institutionalized as a sort of process-driven function in companies, but on t
he other hand, \line \up0 \expndtw-2\charscalex100 evolving into something bigge
r and different\u8212?which I\u8217?ll call \ul0\nosupersub\cf16\f17\fs24 human
capital management \line \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\
fs24 or similar. Its strategic trajectory is really towards the latter. The new
S-curve will be \line \up0 \expndtw-2\charscalex100 about \u8220?knowledge manag
ement\u8221? as part of a broader and more integrated effort to \line \up0 \expn
dtw-2\charscalex100 manage and develop human capability for business performance
. I don\u8217?t mean to say \line \up0 \expndtw-2\charscalex100 knowledge manage
ment is a fad that is dying away\u8212?rather that its core ideas and \line \up0
\expndtw-4\charscalex100 innovations will increasingly make sense in a larger c
ontext, and it may well lose its \line \up0 \expndtw-5\charscalex100 identity, a
t least in name. But I don\u8217?t see that as a problem. \par\pard\qj \li1800\s
b0\sl-280\slmult0 \par\pard\qj\li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2
784\sb2\sl-280\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs
24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Let me unp

ack this a little. What would you say are the most workable \up0 \expndtw-4\char
scalex100 approaches to knowledge management in today\u8217?s workplace? \par\pa
rd\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1758\sb8\sl-276\slmult0 \
up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 BM:\ul0\nosupersub\cf
14\f15\fs24
Here again, given the evolution going on, you have to begin with
the definitional \line \up0 \expndtw-2\charscalex100 problem. What exactly do we
want to mean when we say \u8220?knowledge management\u8221?? \line \up0 \expndt
w-2\charscalex100 There are lots of good things going on in any company called K
M, and then there are \line \up0 \expndtw-2\charscalex100 some unproductive thin
gs, perhaps wrongly named as \u8220?knowledge management\u8221?. And \line \up0
\expndtw-2\charscalex100 then there are other strategies, processes, programs th
at are not called KM but probably \line \up0 \expndtw-3\charscalex100 should be.
{\shp {\*\shpinst\shpleft1772\shptop3669\shpright10470\shpbottom3698\shpfhdr0\sh
pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz52\shplid0
{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{
\sn geoRight}{\sv 8698}}{\sp{\sn geoBottom}{\sv 29}}
{\sp{\sn pVerticies}{\sv 8;5;(0,29);(8697,29);(8697,0);(0,0);(0,29)}}
{\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276
8}}
{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s
p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s
p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g65}{\bkmkend Pg65}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 65 \par\pard\ql \li2520\sb0\sl-276\slmult
0 \par\pard\ql\li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb200\sl-276\slmult
0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 I take a relativel
y holistic point of view, and tend to include lots of different \par\pard\qj \li
1800\ri1618\sb1\sl-280\slmult0 \up0 \expndtw-2\charscalex100 aspects of human an
d organizational development and management under the umbrella of \line \up0 \ex
pndtw-3\charscalex100 KM. \par\pard\ql \li1800\ri1608\sb0\sl-280\slmult0 \up0 \e
xpndtw-2\charscalex100 One area that early on became identified with KM is measu
ring intellectual capital and \line \up0 \expndtw-2\charscalex100 intellectual a
ssets\u8212?the economic and/or financial dimension. It is an important part of
\line \up0 \expndtw-4\charscalex100 the mix, and will continue to be so\u8212?me
asuring is a big part of managing. Without tools, \line \up0 \expndtw-2\charscal
ex100 metrics, and processes to do so, a lot of this just remains in the realm o
f theory. I think we \line \up0 \expndtw-2\charscalex100 are still early in the
game about how to do this, and a lot more work needs to be done. \par\pard\ql \l
i2520\sb244\sl-276\slmult0 \up0 \expndtw-2\charscalex100 Another classic dimensi
on that became identified early on with knowledge \par\pard\ql \li1800\ri1759\sb
5\sl-275\slmult0 \up0 \expndtw-2\charscalex100 management was the organizational
process of capturing, storing, and sharing codified \up0 \expndtw-2\charscalex1
00 knowledge. Most people today still understand this as the heartland of KM\u82
12?collecting \up0 \expndtw-2\charscalex100 and structuring valuable pieces of i
nformation in a centralized database\u8212?along with \line \up0 \expndtw-2\char
scalex100 customer information, research reports, engineering specs, patent desc
riptions, etc, and \up0 \expndtw-2\charscalex100 making it easy for other people
to access and leverage it. Along with this process comes \up0 \expndtw-2\charsc
alex100 all the related processes and activities of search and retrieval technol
ogies, converting \up0 \expndtw-2\charscalex100 tacit knowledge into explicit, r
ewards and systems for sharing, etc. It tends to be heavily \up0 \expndtw-2\char
scalex100 technological in its manifestation for most people, though I think it
is really about much \up0 \expndtw-3\charscalex100 more than technology, even in
the so-called classic form. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\q
l\li2520\sb9\sl-276\slmult0 \up0 \expndtw-2\charscalex100 Once we get beyond the
se two realms, we start to get more interpretative\u8212? \par\pard\ql \li1800\s

b4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 meaning not everybody would cons


ider some of the other things I\u8217?ll mention as \par\pard\ql \li1800\sb4\sl276\slmult0 \up0 \expndtw-2\charscalex100 knowledge management-- but that is onl
y because the term has come to mean for most \par\pard\qj \li1800\ri1651\sb0\sl280\slmult0 \up0 \expndtw-4\charscalex100 people the more narrow type of process
es of intellectual capital measurement and sharing \line \up0 \expndtw-4\charsca
lex100 via databases. But increasingly there are other domains that are part of
the discipline. \par\pard\ql \li2520\sb265\sl-276\slmult0 \up0 \expndtw-2\charsc
alex100 First is the whole domain of people networks and communities, particular
ly \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 communi
ties of practice --the development of communities of practitioners who work \par
\pard\ql \li1800\ri1683\sb0\sl-277\slmult0 \up0 \expndtw-2\charscalex100 togethe
r and feel some obligation to one another to help develop a domain of knowledge.
\up0 \expndtw-2\charscalex100 This could be, for example Java engineers at a so
ftware company or the guys who build \up0 \expndtw-2\charscalex100 brakes in the
so-called tech clubs at Chrysler. Probably in this category we ought to \line \
up0 \expndtw-2\charscalex100 include storytelling, developmental change programs
, and rituals, the kind of \line \up0 \expndtw-2\charscalex100 organizational an
thropology that learning organization practitioners pursue, like Peter \up0 \exp
ndtw-2\charscalex100 Senge. There is such a bias in the discipline historically
towards technology and \line \up0 \expndtw-2\charscalex100 measurement, that the
se \u8220?softer\u8221? dimensions are often seen as unrelated, or at least \lin
e \up0 \expndtw-3\charscalex100 separate disciplines. In my view that\u8217?s a
mistake. \par\pard\ql \li1800\ri1796\sb268\sl-276\slmult0\fi720 \up0 \expndtw-2\
charscalex100 There are also all the other kinds of learning, whether it is trad
itional training, as \up0 \expndtw-2\charscalex100 well as individual or group d
evelopment. Here we can include coaching, mentoring, \up0 \expndtw-4\charscalex1
00 leadership development, team dynamics, performance management, etc. Finally,
we \up0 \expndtw-2\charscalex100 should arguably also include staffing and other
forms of people development\u8212?moving \up0 \expndtw-2\charscalex100 people a
round to build their capability and transfer their expertise. Even recruiting an
d \up0 \expndtw-2\charscalex100 collaboration with suppliers, partners, and cust
omers might be included. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw
-2\charscalex100 If we are talking about how we develop and deploy knowledge and
people in the \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240
{\bkmkstart Pg66}{\bkmkend Pg66}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pa
rd\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \e
xpndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 66 \par\pard\ql \li1800\sb0\
sl-280\slmult0 \par\pard\ql\li1800\ri1738\sb189\sl-280\slmult0 \up0 \expndtw-2\c
harscalex100 \ul0\nosupersub\cf14\f15\fs24 most effective way, as well as facili
tate knowledge flows across the organization, we are \line \up0 \expndtw-2\chars
calex100 going to touch technology, strategy, leadership development, organizati
on structure, \line \up0 \expndtw-2\charscalex100 organization design, informal
organization, as well as all the processes and structures, \line \up0 \expndtw-2
\charscalex100 including the financial accounting, management processes and qual
ity processes \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw-3\charscal
ex100 So at the outer limit, one might ask, \u8220?How is knowledge management a
ny \par\pard\ql \li1800\ri1678\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100
different than management itself in a modern organization?\u8221? As a broad int
erpreter and \line \up0 \expndtw-2\charscalex100 generalist, I think it\u8217?s
a fair question. In the knowledge-based organization\u8212?increasingly \line \u
p0 \expndtw-2\charscalex100 every organization today\u8212?all management must t
ake account of and be informed by a \line \up0 \expndtw-2\charscalex100 knowledg
e perspective. But I do think knowledge management is a subset of \line \up0 \ex
pndtw-2\charscalex100 management more generally. For example, corporate faciliti
es, cash management, and \line \up0 \expndtw-2\charscalex100 looking after serve
rs and routers are \ul0\nosupersub\cf16\f17\fs24 not \ul0\nosupersub\cf14\f15\fs
24 knowledge management; and knowledge \line \up0 \expndtw-2\charscalex100 manag
ement is clearly different than\u8212?though it is increasingly a component of-overall \line \up0 \expndtw-2\charscalex100 business unit or corporate strategy

and its implementation. But KM broadly defined is a \line \up0 \expndtw-2\chars


calex100 sizable subset of all management in that its focus is anything that bui
lds the \line \up0 \expndtw-2\charscalex100 organizational capability of an enti
ty through the development of individual people and \line \up0 \expndtw-3\charsc
alex100 their skills, experience and knowledge. \par\pard\ql \li1800\sb0\sl-275\
slmult0 \par\pard\ql\li1800\ri1741\sb10\sl-275\slmult0\fi720 \up0 \expndtw-2\cha
rscalex100 Each of the several domains I have mentioned has developed their own
workable \line \up0 \expndtw-4\charscalex100 approaches and practices for improv
ing capability. The trick is to think about how to \line \up0 \expndtw-2\charsca
lex100 orchestrate them and make them all work together-- and not see them in is
olation as \line \up0 \expndtw-2\charscalex100 management processes that have li
ttle to do with one another, as traditionally has been \line \up0 \expndtw-3\cha
rscalex100 the case. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800
\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb183\sl-322\slmult0 \up0 \expndtw-4\cha
rscalex100 \ul0\nosupersub\cf43\f44\fs28 Stages of Knowledge Management \par\par
d\qj \li1800\sb0\sl-270\slmult0 \par\pard\qj\li1800\sb0\sl-270\slmult0 \par\pard
\qj\li1800\ri1617\sb41\sl-270\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosuper
sub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs2
4
You\u8217?ve included a lot under the umbrella of \u8220?knowledge manageme
nt\u8221?. How did \line \up0 \expndtw-2\charscalex100 you come to define it tha
t way? Can you talk about the evolution of the discipline in terms \line \up0 \e
xpndtw-4\charscalex100 of the stages it has passed through, and how it\u8217?s c
ome to be what you describe it as? \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\
pard\qj\li1800\ri1688\sb2\sl-280\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosu
persub\cf21\f22\fs24 BM:\ul0\nosupersub\cf14\f15\fs24
My perspective is built
on a synthesis looking back on lots of different trends that \up0 \expndtw-2\ch
arscalex100 I see as interrelated. Thinking about stages of development of KM is
helpful in framing \up0 \expndtw-3\charscalex100 the day-to-day choices we must
make in the field. \par\pard\ql \li1800\sb264\sl-276\slmult0 \up0 \expndtw-2\ch
arscalex100 The first stage, which we could call it the \ul0\nosupersub\cf16\f17
\fs24 zero stage\ul0\nosupersub\cf14\f15\fs24 , was probably in the 1980's, when
\par\pard\ql \li1800\ri1624\sb6\sl-274\slmult0 \up0 \expndtw-2\charscalex100 th
ere was tremendous investment in technology and, particularly, in network and ne
twork \line \up0 \expndtw-2\charscalex100 infrastructure. Everybody began to rea
lize that by connecting parts of the organization \line \up0 \expndtw-2\charscal
ex100 through computers and network technology, there would be opportunities for
information \line \up0 \expndtw-2\charscalex100 management, as it was called, a
nd thus improved management of knowledge. I don\u8217?t \line \up0 \expndtw-2\ch
arscalex100 think a lot of people were talking about knowledge management in tho
se days, but the \line \up0 \expndtw-2\charscalex100 infrastructure for what tha
t came to be KM was being established during that time. \line \up0 \expndtw-2\ch
arscalex100 Putting in the roads and the bridges was part of the zero phase. Als
o, during the 1980s \line \up0 \expndtw-2\charscalex100 academic economists star
ting working on intangible assets and value creation in the \par\pard\sect\sectd
\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg67}{\bkmkend Pg67}\pa
r\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \p
ar\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosuper
sub\cf9\f10\fs20 67 \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\
ri2190\sb189\sl-280\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf14\f
15\fs24 theory of the firm\u8212?but nobody in business was really doing anythin
g about it. So \line \up0 \expndtw-2\charscalex100 perhaps we should also call
that part of the zero phase, that is, laying the conceptual \line \up0 \expndtw3\charscalex100 framework. \par\pard\ql \li1800\ri1659\sb264\sl-276\slmult0\fi72
0 \up0 \expndtw-4\charscalex100 Next, towards the end of the 1980s, we saw the b
irth of things like information \line \up0 \expndtw-2\charscalex100 engineering
and the less inflated, simpler notion that any organization can manage the \line
\up0 \expndtw-2\charscalex100 information of its people and processes in a more
strategic way, thanks to technology. By \up0 \expndtw-2\charscalex100 the late
1980\u8217?s there was a lot of emphasis on setting up repositories of codified
\line \up0 \expndtw-2\charscalex100 knowledge, directories of experts, databases

of documents, databases of knowledge \line \up0 \expndtw-2\charscalex100 assets


, etc. It was also the period of simple expert systems that, in the extreme, wer
e \line \up0 \expndtw-3\charscalex100 called \u8220?artificial intelligence\u822
1?. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1656\sb8\sl-27
6\slmult0\fi720 \up0 \expndtw-4\charscalex100 In the end, however, it was always
about codified information; there was little \line \up0 \expndtw-2\charscalex10
0 realization and little or no effort made to tap into the dynamic and tacit kno
wledge of \line \up0 \expndtw-2\charscalex100 people, or to make the connection
between human development and knowledge \line \up0 \expndtw-2\charscalex100 mana
gement. Still, in its time, it was a very radical idea that within an organizati
on we \line \up0 \expndtw-2\charscalex100 could go to one place, a virtual place
perhaps, a database, or just a well-run library and \line \up0 \expndtw-2\chars
calex100 find all the kinds of things that we would want to know about our custo
mers, the research \line \up0 \expndtw-2\charscalex100 of our organization, or a
bout the past work that we had done for customers. As \line \up0 \expndtw-2\char
scalex100 globalization accelerated, and companies became larger and more distri
buted they were \line \up0 \expndtw-2\charscalex100 challenged to keep up with w
hat they \u8220?collectively knew\u8221?\u8212?and basic knowledge \line \up0 \e
xpndtw-4\charscalex100 management processes, using the new network and database
technologies, were invented \line \up0 \expndtw-5\charscalex100 to address the c
hallenges. \par\pard\ql \li1800\ri1621\sb264\sl-277\slmult0\fi720 \up0 \expndtw2\charscalex100 At about the same time, people started to realize the value of b
est practices and \line \up0 \expndtw-4\charscalex100 best practice benchmarking
. This was partly driven by the quality movement\u8212?with all \line \up0 \expn
dtw-2\charscalex100 the competitive challenge from places like Japan\u8212?and p
artly by reengineering, which \line \up0 \expndtw-2\charscalex100 was another co
mpetitive response to the major cost, time, and productivity efficiencies in \li
ne \up0 \expndtw-2\charscalex100 globalizing markets. Best practices required so
me process of codification, a sustained \line \up0 \expndtw-2\charscalex100 proc
ess of understanding as to what was a best practice, and what was the metric of
a best \line \up0 \expndtw-4\charscalex100 practice. It involved collection, str
ucturing, metrics, and measurement and helped build \line \up0 \expndtw-4\charsc
alex100 awareness that the organization could learn from itself, as well as lear
n from other \line \up0 \expndtw-2\charscalex100 organizations. Not surprisingly
, it was during this time one started to hear the phrase \ul0\nosupersub\cf16\f1
7\fs24 the \line \up0 \expndtw-5\charscalex100 learning organization\ul0\nosuper
sub\cf14\f15\fs24 . \par\pard\ql \li1800\ri1707\sb264\sl-276\slmult0\fi720 \up0
\expndtw-2\charscalex100 The next phase of evolution should probably be dated in
the middle 1990's. By \line \up0 \expndtw-2\charscalex100 then, there was a gro
wing realization that all of this codified information, information \line \up0 \
expndtw-2\charscalex100 management, technology enhanced databases, search softwa
re and that kind of thing was \line \up0 \expndtw-2\charscalex100 fine, but ther
e was another whole world of so-called \ul0\nosupersub\cf16\f17\fs24 tacit knowl
edge\ul0\nosupersub\cf14\f15\fs24 , as it came to be \line \up0 \expndtw-2\chars
calex100 labeled. This was the knowledge in people that was not easily codified
or captured by a \line \up0 \expndtw-2\charscalex100 computer network, and was n
ot easy to document for best practice or benchmarking. \par\pard\ql \li1800\sb0\
sl-273\slmult0 \par\pard\ql\li1800\ri1955\sb14\sl-273\slmult0\fi720 \up0 \expndt
w-2\charscalex100 At about the same time, and consistent with the whole notion o
f unseen and \line \up0 \expndtw-2\charscalex100 difficult-to-codify knowledge,
we start to witness the rise of intellectual capital \line \up0 \expndtw-2\chars
calex100 accounting. The question was: \u8220?How do we in some way take account
of all these \line \up0 \expndtw-2\charscalex100 intangible assets?\u8221? Peop
le such as Leif Edvinsson at Skandia and others started to say, \par\pard\sect\s
ectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg68}{\bkmkend Pg68
}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult
0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nos
upersub\cf9\f10\fs20 68 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1
800\sb196\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\
fs24 "We should track things, like the age of our people, their years of educati

on, and the \par\pard\ql \li1800\ri1636\sb7\sl-273\slmult0 \up0 \expndtw-2\chars


calex100 amount of customer relationships they each have. These are all intangib
le assets that need \up0 \expndtw-4\charscalex100 to be part of an accounting sy
stem.\u8221? As I mentioned before, academic economists had \up0 \expndtw-2\char
scalex100 been thinking about this for some time, but it was not until the mid-1
990s that companies \up0 \expndtw-3\charscalex100 really tried to translate the
theory into practice. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li252
0\sb9\sl-276\slmult0 \up0 \expndtw-4\charscalex100 In the same general period, t
here were certain organization development \par\pard\ql \li1800\sb4\sl-276\slmul
t0 \up0 \expndtw-2\charscalex100 approaches that also came to the fore, focusing
on how to unlock the knowledge in \par\pard\ql \li1800\ri1646\sb5\sl-275\slmult
0 \up0 \expndtw-2\charscalex100 people. There was a lot of research into change
and change processes, learning processes, \up0 \expndtw-2\charscalex100 and comm
unities of practice. The communities of practice approach holds that it is \line
\up0 \expndtw-2\charscalex100 through communities of practitioners, whose work
together creates learning, meaning in \up0 \expndtw-2\charscalex100 the workplac
e for the practicing members, that tacit knowledge is developed, shared, and \up
0 \expndtw-2\charscalex100 reinforced\u8212?and translated into competencies for
organizational capability. \par\pard\ql \li1800\ri1690\sb265\sl-276\slmult0\fi7
20 \up0 \expndtw-2\charscalex100 The community practice practitioners and theori
sts -- John Seely Brown, Ikujiro \line \up0 \expndtw-2\charscalex100 Nonaka, Bil
l Snyder of Social Capital Group, Etienne Wenger of Institute for Research \line
\up0 \expndtw-2\charscalex100 on Learning, and many others\u8212?were complemen
ted by an expanding population of \line \up0 \expndtw-2\charscalex100 consultant
s, team-builders and organizational development people who made a lot of \line \
up0 \expndtw-4\charscalex100 progress in transforming organizations through stru
ctured learning and empowerment \line \up0 \expndtw-2\charscalex100 processes\u8
212?tapping into the knowledge and experience of people in the workplace to \lin
e \up0 \expndtw-2\charscalex100 improve their own and collective performance. Du
ring the late 1990s, more radical \line \up0 \expndtw-2\charscalex100 extensions
of this kind of thinking and practice evolved with organizational development \
line \up0 \expndtw-2\charscalex100 approaches based on biological metaphors, cha
os theory, scenario planning, theatrical \line \up0 \expndtw-2\charscalex100 rol
e-playing and the like. And meanwhile technology continued to evolve with the bo
om \line \up0 \expndtw-2\charscalex100 of the Internet, the development of intra
nets, and the cross-boundary management of \line \up0 \expndtw-2\charscalex100 k
nowledge and information integrating intranets, extranets, and the Worldwide Web
. \line \up0 \expndtw-2\charscalex100 Sophisticated technology solutions also ev
olved with development of supply chain \line \up0 \expndtw-4\charscalex100 manag
ement, customer relationship management (CRM) systems and e-HR applications \lin
e \up0 \expndtw-2\charscalex100 such as talent markets, recruiting/staffing syst
ems, and now integrated human capital \line \up0 \expndtw-2\charscalex100 manage
ment systems (like that of my company, Saba) that track skills, competencies and
\line \up0 \expndtw-3\charscalex100 experience, help assess gaps, and link lear
ning and performance. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li252
0\sb8\sl-276\slmult0 \up0 \expndtw-4\charscalex100 Again, much of this may not b
e considered \u8220?knowledge management\u8221?. Rather, \par\pard\qj \li1800\ri
1635\sb7\sl-273\slmult0 \up0 \expndtw-2\charscalex100 what has been going on is
a steady evolution of different approaches to leveraging human \line \up0 \expnd
tw-2\charscalex100 knowledge and capabilities as the \u8220?knowledge revolution
\u8221? advances. It\u8217?s not very neat to \line \up0 \expndtw-2\charscalex10
0 have to think about all these different things but unless you embrace the comp
lexity and \line \up0 \expndtw-2\charscalex100 evolution, you end up talking abo
ut KM as a sort of museum piece of the 1990s. \par\pard\sect\sectd\fs24\paperw12
240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg69}{\bkmkend Pg69}\par\pard\ql \li1
0239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li1
0239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs
20 69 \par\pard\ql \li1901\sb0\sl-414\slmult0 \par\pard\ql\li1901\sb84\sl-414\sl
mult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf46\f47\fs36 Jonathan Low:\ul
0\nosupersub\cf63\f64\fs36 \ul0\nosupersub\cf28\f29\fs36 Value Drivers for Int

angibles \par\pard\ql \li1800\sb0\sl-828\slmult0 \par\pard\ql\li1800\sb296\sl-82


8\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf55\f56\fs72 12 \par\pard
\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\
ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1857\sb240\sl-276\slmult0 \up
0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 In this conversation, J
onathan Low explores an array of issues that form a perspective \line \up0 \expn
dtw-4\charscalex100 and a set of principles for operating in our intangible asse
t, knowledge-based economy. \line \up0 \expndtw-2\charscalex100 His research has
given him cutting-edge insights as well as a basis for assessing \line \up0 \ex
pndtw-2\charscalex100 intangibles that make up the bulk of wealth in the new eco
nomy. He discusses how \line \up0 \expndtw-2\charscalex100 decisions are based o
n non-financial information, the major and recent change in the \line \up0 \expn
dtw-4\charscalex100 world\u8217?s wealth, the nine factors of value and how they
work in different types of \line \up0 \expndtw-4\charscalex100 organizations, a
nd trends that will be shaping the next phase of our era. \par\pard\ql \li2520\s
b0\sl-276\slmult0 \par\pard\ql\li2520\sb8\sl-276\slmult0 \up0 \expndtw-3\charsca
lex100 Jonathan Low is Senior Fellow at Cap Gemini Ernst & Young\u8217?s Center
for \par\pard\ql \li1800\ri1663\sb5\sl-275\slmult0 \up0 \expndtw-4\charscalex100
Business Innovation (CBI), a research and development business focused on ident
ifying \up0 \expndtw-2\charscalex100 emerging trends and creating related soluti
ons. He is the leader of the CBI\u8217?s Performance \up0 \expndtw-2\charscalex1
00 Management initiative. The work of this initiative is concentrated primarily
on valuation \up0 \expndtw-2\charscalex100 of intangibles including intellectual
capital, organizational transitions, inter-enterprise \up0 \expndtw-3\charscale
x100 collaborations, and other sources of value in the new economy. \par\pard\ql
\li2520\sb265\sl-276\slmult0 \up0 \expndtw-3\charscalex100 Under Low\u8217?s le
adership, the CBI Performance Measurement initiative has \par\pard\ql \li1800\sb
4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 produced four major reports and s
everal ancillary documents. The major studies include \par\pard\ql \li1800\ri191
3\sb7\sl-273\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24
Measures That Matter, Success Factors in the IPO Transformation Process, Decisi
ons \up0 \expndtw-2\charscalex100 That Matter \ul0\nosupersub\cf14\f15\fs24 and
\ul0\nosupersub\cf16\f17\fs24 The Value Creation Index.\ul0\nosupersub\cf14\f15\
fs24 He and his colleagues have worked with \up0 \expndtw-2\charscalex100 clien
ts, ranging from the largest Global 500 corporations to start-ups in the US and
\up0 \expndtw-2\charscalex100 Europe to assist them in realizing the potential b
enefits of this research. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\l
i1800\ri1760\sb9\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 Low has also
organized and hosted an annual conference entitled \ul0\nosupersub\cf16\f17\fs2
4 Measuring The \up0 \expndtw-2\charscalex100 Future.
\ul0\nosupersub\cf14\f1
5\fs24 He co-published, with the Organization for Economic Cooperation and \line
\up0 \expndtw-2\charscalex100 Development (OECD), \ul0\nosupersub\cf16\f17\fs24
Enterprise Value in the Knowledge Economy: Measuring \line \up0 \expndtw-4\char
scalex100 Performance in the Age of Intangibles. \ul0\nosupersub\cf14\f15\fs24 J
onathan Low is the co-author, with Pam Cohen \up0 \expndtw-4\charscalex100 Kalaf
ut, of a book entitled \ul0\nosupersub\cf16\f17\fs24 Invisible Advantage:\ul0\no
supersub\cf39\f40\fs24 \ul0\nosupersub\cf16\f17\fs24 How Intangibles are Drivin
g Business \up0 \expndtw-5\charscalex100 Performance\ul0\nosupersub\cf14\f15\fs2
4 , published by Perseus Press.
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g70}{\bkmkend Pg70}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 70 \par\pard\ql \li5336\sb0\sl-368\slmult
0 \par\pard\ql\li5336\sb108\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosu
persub\cf10\f11\fs32 The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \p
ar\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb206\sl-322\slmult0 \u
p0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 How to Assess Intangib
les \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb20\sl-276\slmu
lt0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupers
ub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
What is the changing understa
nding of the role of intangibles in organizations? \par\pard\ql \li1800\sb0\sl-2
73\slmult0 \par\pard\ql\li1800\ri1644\sb14\sl-273\slmult0 \up0 \expndtw-3\charsc
alex100 \ul0\nosupersub\cf21\f22\fs24 JL:\ul0\nosupersub\cf14\f15\fs24
We te
nd to refer to intangibles not as assets or liabilities but simply as intangible
s \line \up0 \expndtw-2\charscalex100 because we don\u8217?t think that the bala
nce sheet reference is particularly helpful. You can \line \up0 \expndtw-2\chars
calex100 probably get into a month long debate about whether brand is an asset o
r a liability \line \up0 \expndtw-2\charscalex100 because brand is in effect a p
romise to a consumer that technically makes it a liability. \line \up0 \expndtw2\charscalex100 But rather than saying that, the important underlying issues are
that there has been an \line \up0 \expndtw-2\charscalex100 approximately twenty
year decline in the relevance of assets and earnings as predictors of \line \up
0 \expndtw-3\charscalex100 stock market performance. \par\pard\ql \li1800\sb0\sl
-276\slmult0 \par\pard\ql\li1800\ri1712\sb9\sl-276\slmult0\fi720 \up0 \expndtw-2
\charscalex100 We are in a global economy in which equities are the currency. To
the extent that \line \up0 \expndtw-2\charscalex100 market value or stock marke
t performance is an increasingly important measure of value \line \up0 \expndtw2\charscalex100 by which companies are able to both expand and operate globally,
we need to do a better \line \up0 \expndtw-2\charscalex100 job of understanding
what drives equity prices. If traditional balance sheet and income \line \up0 \
expndtw-2\charscalex100 statement measures are not doing it, we need to understa
nd what is. What we have done, \line \up0 \expndtw-2\charscalex100 and what a la
rge number of people around the globe are doing both in academia and in \line \u
p0 \expndtw-2\charscalex100 the business world, is trying to do a better job of
determining both quantitatively and \par\pard\ql \li1800\sb1\sl-256\slmult0 \up0
\expndtw-3\charscalex100 qualitatively what is driving value in organizations.
\par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb12\sl-276\slmult0
\up0 \expndtw-5\charscalex100 Rather than audit, what we need to talk about is:
How does one assess \par\pard\ql \li1800\ri1678\sb7\sl-273\slmult0 \up0 \expndtw
-2\charscalex100 intangibles? There are two things that have to be done. First o
f all, we have to look at the \line \up0 \expndtw-4\charscalex100 gaps between w
hat executives believe are the factors that are driving value in their \line \up
0 \expndtw-2\charscalex100 organizations and, then we have to look at what organ
izations are actually measuring and \line \up0 \expndtw-3\charscalex100 disclosi
ng. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmul
t0 \par\pard\ql\li1800\sb223\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\n
osupersub\cf24\f25\fs28 Decisions are Based on Non-financial Information \par\pa
rd\ql \li1800\sb276\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub
\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Is there a gap between perception and reality? \par\pard\ql \li1800\sb0\sl-276
\slmult0 \par\pard\ql\li1800\ri1705\sb8\sl-276\slmult0 \up0 \expndtw-3\charscale
x100 \ul0\nosupersub\cf21\f22\fs24 JL:\ul0\nosupersub\cf14\f15\fs24
Right. W
e also need to look at some very hard numbers, which fortunately, many \line \up
0 \expndtw-2\charscalex100 people are doing primarily in Europe and the U.S., bu
t also to some degree in Asia and \line \up0 \expndtw-2\charscalex100 South Amer
ica. Then, we need to try to get a grip on what the underlying nature of these \
line \up0 \expndtw-2\charscalex100 relationships is. When I am referring to we,
here, I am speaking of \ul0\nosupersub\cf16\f17\fs24 Cap Gemini Ernst & \line \u
p0 \expndtw-2\charscalex100 Young\u8217?s Center for Business Innovation\ul0\nos

upersub\cf14\f15\fs24 in Cambridge, Massachusetts, where I am \line \up0 \expnd


tw-4\charscalex100 leading our effort. We have through a series of four studies
now, tried to address both of \line \up0 \expndtw-5\charscalex100 those approac
hes. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstar
t Pg71}{\bkmkend Pg71}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10
239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\c
harscalex100 \ul0\nosupersub\cf9\f10\fs20 71 \par\pard\ql \li1800\sb0\sl-276\slm
ult0 \par\pard\ql\li1800\ri1912\sb196\sl-276\slmult0\fi720 \up0 \expndtw-2\chars
calex100 \ul0\nosupersub\cf14\f15\fs24 In our \ul0\nosupersub\cf16\f17\fs24 Meas
ures That Matter\ul0\nosupersub\cf14\f15\fs24 and IPO research, we first survey
ed institutional \up0 \expndtw-2\charscalex100 investors to understand what they
felt were the important factors in determining value. \up0 \expndtw-2\charscale
x100 The most surprising thing we learned from that analysis was that the degree
to which \up0 \expndtw-2\charscalex100 securities analysts refer to non-financi
al measures, or non-financial factors, determines \up0 \expndtw-2\charscalex100
the accuracy or correlates with the accuracy of their quarterly and annual finan
cial \up0 \expndtw-3\charscalex100 projections. That was a very interesting find
ing. \par\pard\ql \li1800\sb0\sl-274\slmult0 \par\pard\ql\li1800\ri1652\sb12\sl274\slmult0\fi720 \up0 \expndtw-4\charscalex100 Secondly, portfolio managers tol
d us, in no uncertain terms, that at a minimum of \line \up0 \expndtw-2\charscal
ex100 35% -40% of their portfolio allocation decision was based on non-financial
information. \line \up0 \expndtw-2\charscalex100 In other words, this was infor
mation that was not formally measured and disclosed by the \line \up0 \expndtw-2
\charscalex100 subject company. We determined from that was that there is a huge
market for this \line \up0 \expndtw-2\charscalex100 information. Further this i
nformation is helping to determine market value since the \line \up0 \expndtw-2\
charscalex100 people who, in most of the Western industrialized world, control a
bout 70-80% a typical \line \up0 \expndtw-2\charscalex100 corporation\u8217?s eq
uity are basing their decisions to a large measure, on non-financial \line \up0
\expndtw-3\charscalex100 information. \par\pard\ql \li1800\sb0\sl-276\slmult0 \p
ar\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb33\sl-276\slmult0 \up
0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14
\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Was that a kind of a shock when it a
ctually came out in black and white? \par\pard\ql \li1800\sb0\sl-273\slmult0 \pa
r\pard\ql\li1800\ri1661\sb14\sl-273\slmult0 \up0 \expndtw-3\charscalex100 \ul0\n
osupersub\cf21\f22\fs24 JL:\ul0\nosupersub\cf14\f15\fs24
Absolutely. Then, w
e decided as a second step to focus in on a specific aspect of \up0 \expndtw-4\c
harscalex100 the financial universe to see how this might affect that market. We
focused on the initial \up0 \expndtw-2\charscalex100 public offering market in
the United States. We looked at every company that had gone \up0 \expndtw-4\char
scalex100 public between 1986 and 1997. By eliminating penny stocks, real estate
investment trusts \up0 \expndtw-2\charscalex100 and other outliers, we came up
with a universe of about five hundred companies. We \line \up0 \expndtw-2\charsc
alex100 surveyed those firms and we got an astonishing twenty percent response r
ate from the \line \up0 \expndtw-5\charscalex100 CEO\u8217?s and CFO\u8217?s of
those companies. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1
645\sb9\sl-276\slmult0\fi720 \up0 \expndtw-4\charscalex100 We asked them to tell
us whether they thought their IPO had been successful, \up0 \expndtw-2\charscal
ex100 highly successful or unsuccessful. Then, to get into greater detail, we as
ked about why \up0 \expndtw-2\charscalex100 that was the case. We took their sel
f-reported performance and looked at how their stocks \up0 \expndtw-2\charscalex
100 had done. We found that they had been very honest and accurate. We discovere
d that \up0 \expndtw-2\charscalex100 there was an extremely tight correlation be
tween how they felt they\u8217?d done and how the \up0 \expndtw-3\charscalex100
market might have determined how they\u8217?d done. \par\pard\ql \li1800\ri1852\
sb264\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 We derived a couple of
really interesting learnings from that. About 50% of the \line \up0 \expndtw-2\c
harscalex100 companies that went public in that period failed to ever maintain o
r exceed the price at \line \up0 \expndtw-2\charscalex100 which they went public
. More broadly speaking, we could argue that they failed to add \line \up0 \expn

dtw-2\charscalex100 value for their shareholders after they went public. We then
looked at what were the \line \up0 \expndtw-2\charscalex100 statistically signi
ficant differentiating factors between the fifty percent that added value \line
\up0 \expndtw-2\charscalex100 and the fifty percent that failed to add value. We
found that the only statistically \par\pard\qj \li1800\ri2105\sb1\sl-280\slmult
0 \up0 \expndtw-2\charscalex100 significant factors that could be uncovered were
, in fact, non-financial. These factors \up0 \expndtw-4\charscalex100 were ones
that were not mandatorally disclosed in any financial reports. \par\pard\ql \li1
800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li180
0\sb12\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs2
4 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Would not t
hat have substantial implications? \par\pard\sect\sectd\fs24\paperw12240\paperh1
5840\pard\sb0\sl-240{\bkmkstart Pg72}{\bkmkend Pg72}\par\pard\ql \li10239\sb0\sl
-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl
-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 72 \par\
pard\ql \li1800\sb0\sl-273\slmult0 \par\pard\ql\li1800\ri1697\sb222\sl-273\slmul
t0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JL:\ul0\nosupersu
b\cf20\f21\fs24 \ul0\nosupersub\cf14\f15\fs24
Exactly. We found that the sin
gle most significant factor in determining addition \up0 \expndtw-2\charscalex10
0 of value or subtraction of value for shareholders in an IPO situation was the
alignment of \up0 \expndtw-2\charscalex100 employee interests with corporate str
ategy. That, in simplest terms, frequently means -\line \up0 \expndtw-3\charscal
ex100 "to what degree do your employees have stock options? \par\pard\sect\sectd
\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg73}{\bkmkend Pg73}\pa
r\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \p
ar\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosuper
sub\cf9\f10\fs20 73 \par\pard\qj \li1800\sb0\sl-420\slmult0 \par\pard\qj\li1800\
sb0\sl-420\slmult0 \par\pard\qj\li1800\ri2663\sb54\sl-420\slmult0\tx2520 \up0 \e
xpndtw0\charscalex97 \ul0\nosupersub\cf46\f47\fs36 Steven M.H Wallman:\ul0\nosup
ersub\cf73\f74\fs36 \ul0\nosupersub\cf28\f29\fs36 A Level Playing Field for \l
ine\tab \up0 \expndtw0\charscalex98 Intangibles \par\pard\ql \li1800\sb0\sl-828\
slmult0 \par\pard\ql\li1800\sb275\sl-828\slmult0 \up0 \expndtw0\charscalex97 \ul
0\nosupersub\cf30\f31\fs72 13 \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\
ql\li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\sb0\sl-275\slmult0 \par\pard\ql
\li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1878\sb9\sl-275\slmult0 \up0 \e
xpndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Steven Wallman is a recogni
zed authority on securities markets and the challenge of \up0 \expndtw-2\charsca
lex100 revising financial reporting to account for new drivers of wealth product
ion. He is the \up0 \expndtw-2\charscalex100 founder and Chief Executive Officer
of FOLIO\ul0\nosupersub\cf16\f17\fs24 fn\ul0\nosupersub\cf14\f15\fs24 , Inc., a
n innovative financial services \up0 \expndtw-2\charscalex100 and brokerage firm
, a senior fellow of the Brookings Institution, and former \line \up0 \expndtw-3
\charscalex100 Commissioner of the U.S. Securities and Exchange Commission (SEC)
. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb9\sl-276\slmult0
\up0 \expndtw-3\charscalex100 As an SEC Commissioner from 1994 to 1997,Wallman
organized the first \par\pard\ql \li1800\ri1760\sb0\sl-276\slmult0 \up0 \expndtw
-2\charscalex100 symposium addressing the increasing role of intangible assets i
n the changing economy \line \up0 \expndtw-2\charscalex100 and the related need
to make financial statements reflect this significant shift in business \line \u
p0 \expndtw-2\charscalex100 and financial activities. After leaving the SEC, he
co-chaired the Brookings Institution \line \up0 \expndtw-2\charscalex100 study o
n intangibles that resulted in the report, \ul0\nosupersub\cf16\f17\fs24 Unseen
Wealth. \ul0\nosupersub\cf14\f15\fs24 The report serves as a \line \up0 \expndtw
-2\charscalex100 foundation piece for legitimitizing intangible assets as a vita
l issue worthy of study and \line \up0 \expndtw-2\charscalex100 resolution. The
report explored the public policy implications of the growing level of \line \up
0 \expndtw-2\charscalex100 intangible assets in the U.S. economy, and made a num
ber of recommendations in a \par\pard\ql \li1800\sb1\sl-261\slmult0 \up0 \expndt
w-3\charscalex100 number of specific issue areas. \par\pard\ql \li1800\sb0\sl-27
4\slmult0 \par\pard\ql\li1800\ri1619\sb15\sl-274\slmult0\fi720 \up0 \expndtw-2\c

harscalex100 Intangibles, such as intellectual capital, research and development


, brand names, \up0 \expndtw-2\charscalex100 and human capital have not recogniz
ed as having value, but are traditionally seen as \line \up0 \expndtw-2\charscal
ex100 expenses. Wallman advocates a core change in understanding and treatment o
f intangible \up0 \expndtw-2\charscalex100 resources to resolve the disparities
that have resulted from the existing framework of \line \up0 \expndtw-2\charscal
ex100 valuation. He sees this as essential for the efficient and effective valua
tion of companies, \up0 \expndtw-4\charscalex100 and even whole sectors of an ec
onomy. Without this change, he feels it will be difficult to \up0 \expndtw-2\cha
rscalex100 realistically appraise the value of a business\u8217?s activities and
assets, and make the \line \up0 \expndtw-3\charscalex100 appropriately informed
resource allocation decisions. \par\pard\ql \li1800\sb0\sl-270\slmult0 \par\par
d\ql\li1800\ri1612\sb20\sl-270\slmult0\fi720 \up0 \expndtw-2\charscalex100 Trans
parency and inter-comparability are two essential tests of a reliable reporting
\up0 \expndtw-2\charscalex100 system. Such a transformed system will satisfactor
ily acknowledge the value of \line \up0 \expndtw-3\charscalex100 intangible, as
well as physical and financial resources. \par\pard\ql \li2520\sb0\sl-276\slmult
0 \par\pard\ql\li2520\sb10\sl-276\slmult0 \up0 \expndtw-3\charscalex100 The conv
ersation with Mr. Wallman explores how an understanding of \par\pard\ql \li1800\
sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 intangibles is critical to inve
stors, institutions, and governments. He gives a number of \par\pard\sect\sectd\
fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg74}{\bkmkend Pg74}\par
\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \pa
r\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupers
ub\cf9\f10\fs20 74 \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\r
i1638\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f1
5\fs24 examples of circumstances in which current accounting practices do not ta
ke into account \up0 \expndtw-2\charscalex100 the how intangible wealth is creat
ed, and demonstrates the need for a continuing review, \up0 \expndtw-3\charscale
x100 study, and reconcile of the changing economic value landscape. \par\pard\ql
\li4858\sb0\sl-368\slmult0 \par\pard\ql\li4858\sb0\sl-368\slmult0 \par\pard\ql\
li4858\sb0\sl-368\slmult0 \par\pard\ql\li4858\sb0\sl-368\slmult0 \par\pard\ql\li
4858\sb16\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf22\f23\fs
32 The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\
sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb
244\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 F
inancial Reporting, Intangibles and a Changing Economy \par\pard\ql \li1800\sb0\
sl-280\slmult0 \par\pard\ql\li1800\ri1762\sb53\sl-280\slmult0 \up0 \expndtw-1\ch
arscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf42\f43\fs24
\ul0\nosupersub\cf16\f17\fs24 You co-directed the Brookings Institution study, U
nseen Wealth: Report of the \up0 \expndtw-2\charscalex100 Brookings Task Force o
n Intangibles. What was the rationale establishing the study and \up0 \expndtw-3
\charscalex100 what do you hope to accomplish with it? \par\pard\ql \li1800\sb0\
sl-276\slmult0 \par\pard\ql\li1800\ri1726\sb8\sl-276\slmult0 \up0 \expndtw-3\cha
rscalex100 \ul0\nosupersub\cf21\f22\fs24 SW:\ul0\nosupersub\cf42\f43\fs24 \ul0\
nosupersub\cf14\f15\fs24 The genesis for the Brookings study came from several
sources. One was the \line \up0 \expndtw-2\charscalex100 effort I commenced in
1995-1996 while I was at the U.S. Security and Exchange \line \up0 \expndtw-2\ch
arscalex100 Commission (SEC) to study the source, value, and impact of intangibl
es with regard to \line \up0 \expndtw-2\charscalex100 financial reporting and ch
anges in the economy. The genesis for that came from my \line \up0 \expndtw-2\ch
arscalex100 increasingly firm belief (back then only a hunch and a suspicion) th
at the U.S. financial \line \up0 \expndtw-2\charscalex100 reporting and disclosu
re system was increasingly susceptible to not capturing certain \line \up0 \expn
dtw-2\charscalex100 important drivers of wealth production, basically knowledgebased assets or intangible \line \up0 \expndtw-2\charscalex100 assets. Moreover,
these assets are increasingly important as the drivers of wealth \line \up0 \ex
pndtw-2\charscalex100 production in both traditional economy companies, as well
as what is now referred to as \line \up0 \expndtw-4\charscalex100 \u8220?new eco
nomy\u8221? companies. Any such potential deficiency, of course, requires study

and \line \up0 \expndtw-4\charscalex100 correction as our system of financial re


porting and disclosure is the foundation for \line \up0 \expndtw-2\charscalex100
providing information to investors and others that results in an efficient allo
cation of \line \up0 \expndtw-2\charscalex100 capital resources in this country.
To the extent that system is still premised on general \line \up0 \expndtw-2\ch
arscalex100 accepted accounting principles derived from the standpoint of a bric
ks and mortar \line \up0 \expndtw-2\charscalex100 economy, it needs to be update
d to reflect changes in the economy and the way \line \up0 \expndtw-3\charscalex
100 businesses operate. \par\pard\ql \li1800\ri1729\sb264\sl-277\slmult0\fi720 \
up0 \expndtw-2\charscalex100 Just look at the juxtaposition of new economy compa
nies with older companies. \line \up0 \expndtw-2\charscalex100 An easy example i
s Amazon versus a more bricks and mortar oriented bookstore seller \line \up0 \e
xpndtw-2\charscalex100 like Barnes & Noble. In Amazon\u8217?s financial stateme
nts, all of its efforts aimed at \line \up0 \expndtw-2\charscalex100 creating a
brand by building a Web site and engaging in a significant amount of \line \up0
\expndtw-2\charscalex100 marketing and (by contrast, not spending money on brick
s and mortar, big stores and big \line \up0 \expndtw-2\charscalex100 buildings a
nd other more tangible and permanent kinds of things) is, under current \line \u
p0 \expndtw-2\charscalex100 accounting, an expense. But, if Amazon\u8217?s adver
tising and brand-building efforts were \line \up0 \expndtw-2\charscalex100 focus
ed on building bricks and mortar stores then most of those costs would be \line
\up0 \expndtw-4\charscalex100 capitalized and amortized instead. So, Barnes and
Noble\u8217?s store building efforts result in
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g75}{\bkmkend Pg75}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 75 \par\pard\ql \li1800\sb0\sl-276\slmult
0 \par\pard\ql\li1800\sb196\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\no
supersub\cf14\f15\fs24 assets on its balance sheet and lower upfront expenses as
compared to Amazon, which \par\pard\ql \li1800\ri1679\sb5\sl-275\slmult0 \up0 \
expndtw-2\charscalex100 instead shows no assets on its balance sheet but high ex
penses during this brand building \line \up0 \expndtw-4\charscalex100 period. Co
nsequently, if you were to take traditional measures of Price/Earnings, or book
\line \up0 \expndtw-2\charscalex100 to earnings or almost any other traditional
measure, Amazon at least at the initial stages \line \up0 \expndtw-2\charscalex1
00 while it\u8217?s growing and building, looks horrible relative to companies e
ngaged in more \line \up0 \expndtw-3\charscalex100 traditional activities. \par\
pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1682\sb10\sl-275\slmult
0\fi720 \up0 \expndtw-2\charscalex100 On the other hand, Amazon will receive a g
reat gift and advantage as it switches \line \up0 \expndtw-2\charscalex100 its s
trategy and operates on the other side of the cusp, if you will. It will have ex
pensed a \line \up0 \expndtw-2\charscalex100 lot of the things already that its
bricks and mortar competitors will have to continue to \line \up0 \expndtw-2\cha
rscalex100 take a charge against income as a periodic amortization expense. In t
he future, Amazon\u8217?s \line \up0 \expndtw-2\charscalex100 numbers, all thing
s otherwise being equal, will look better than those of a company \line \up0 \ex
pndtw-4\charscalex100 engaged in a more traditional bricks and mortar strategy.
With the current rise and fall of \line \up0 \expndtw-2\charscalex100 the \u8220
?new economy\u8221? sector, it is important to recognize that this is not now an

d never was \line \up0 \expndtw-2\charscalex100 a debate about whose business mo


del is better. It was and is a concern that the \line \up0 \expndtw-3\charscalex
100 information needed to evaluate those business models - both old and new - on
a relative \line \up0 \expndtw-4\charscalex100 basis to each other and to their
peers, is increasingly hard to find. \par\pard\ql \li2520\sb0\sl-276\slmult0 \p
ar\pard\ql\li2520\sb9\sl-276\slmult0 \up0 \expndtw-2\charscalex100 The disparity
in how we account for things, based on whether the underlying \par\pard\ql \li1
800\ri1656\sb0\sl-277\slmult0 \up0 \expndtw-2\charscalex100 drivers of wealth pr
oduction are tangible or intangible, struck me as increasingly obvious \up0 \exp
ndtw-4\charscalex100 and increasingly creating a problem as to the transparency
of financial statements. \line \up0 \expndtw-2\charscalex100 Transparency of fin
ancial statements is important so people can both understand the \line \up0 \exp
ndtw-2\charscalex100 financial statement presentation of a company, and be able
to compare across companies \up0 \expndtw-2\charscalex100 and sectors. Financial
statements, simply put, need to make sense and they need to reflect \up0 \expnd
tw-3\charscalex100 business and financial activities - not artificial constructs
. The simple truth is that \line \up0 \expndtw-2\charscalex100 increasingly they
are not making as much sense as we wish they would. It is harder and \up0 \expn
dtw-3\charscalex100 harder to compare company-to-company and sector-to-sector. \
par\pard\ql \li2520\sb268\sl-276\slmult0 \up0 \expndtw-4\charscalex100 In 1995-1
996 we studied these issues at the SEC and held the first ever SEC \par\pard\ql
\li1800\ri1663\sb0\sl-276\slmult0 \up0 \expndtw-4\charscalex100 symposium on the
se kinds of questions. That symposium was controversial at the time, \line \up0
\expndtw-2\charscalex100 both inside and outside the commission. There were som
e who believed that there were \line \up0 \expndtw-2\charscalex100 no real issue
s worthy of study, and others who believed that simply studying the issue \line
\up0 \expndtw-2\charscalex100 may exacerbate the problem because any solutions w
ould contribute to, not resolve, the \line \up0 \expndtw-2\charscalex100 issue,
and raising the problem would simultaneously erode public confidence in the \lin
e \up0 \expndtw-2\charscalex100 current system. Still others were concerned that
any changes would be mandated, involve \line \up0 \expndtw-2\charscalex100 sign
ificant additional costs imposed on preparers, and would not add much to solving
the \line \up0 \expndtw-2\charscalex100 stated concerns. And finally, some thou
ght the current system with its opaqueness was \line \up0 \expndtw-2\charscalex1
00 fine as it encouraged or forced investors to rely more on analysts who were p
resumably \line \up0 \expndtw-2\charscalex100 in a better position to discern th
e true financial position of a company with more tools \line \up0 \expndtw-2\cha
rscalex100 and time than the ordinary investor could deploy. But the dominant vi
ew, again both \line \up0 \expndtw-2\charscalex100 within and outside the Commis
sion, was that this is a very important issue that has to be \line \up0 \expndtw
-3\charscalex100 discussed and studied, and over time solutions need to be found
. \par\pard\ql \li1800\sb0\sl-270\slmult0 \par\pard\ql\li1800\ri1625\sb3\sl-270\
slmult0\fi720 \up0 \expndtw-2\charscalex100 We held a day and a half symposium,
which was quite well attended. Joe Stiglitz, \line \up0 \expndtw-2\charscalex100
the Chairman of the President\u8217?s Council of Economic Advisors, spoke, as d
id Secretary \line \up0 \expndtw-2\charscalex100 Reich from the Department of La
bor, as did a number of other stellar scholars and leaders
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g76}{\bkmkend Pg76}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239

\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char


scalex100 \ul0\nosupersub\cf9\f10\fs20 76 \par\pard\ql \li1800\sb0\sl-276\slmult
0 \par\pard\ql\li1800\ri1620\sb196\sl-276\slmult0 \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf14\f15\fs24 in the field and surrounding fields. The symposium
created a lot of thought and interest in \line \up0 \expndtw-2\charscalex100 th
e academic community and elsewhere as to these issues. Professor Baruch Lev, one
of \line \up0 \expndtw-2\charscalex100 the best known academic accounting resea
rchers with a global reputation, created a \line \up0 \expndtw-2\charscalex100 c
enter at the Sterns School at New York University devoted to the study of intang
ibles, \line \up0 \expndtw-2\charscalex100 based in part on being able to indica
te that there is continuing interest at high levels of \line \up0 \expndtw-2\cha
rscalex100 government on these issues. I personally was able to continue to prom
ote this from my \line \up0 \expndtw-2\charscalex100 position at the Commission,
and encouraged additional study of these matters. \par\pard\sect\sectd\fs24\pap
erw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg77}{\bkmkend Pg77}\par\pard\ql
\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\q
l\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f
10\fs20 77 \par\pard\qj \li1800\sb0\sl-400\slmult0 \par\pard\qj\li1800\ri2320\sb
110\sl-400\slmult0\fi100 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf46\f47\fs
36 Hubert Saint-Onge:\ul0\nosupersub\cf28\f29\fs36 Creating and Implementing a
\up0 \expndtw0\charscalex98 Knowledge Strategy \par\pard\ql \li2520\sb0\sl-644\
slmult0 \par\pard\ql\li2520\sb195\sl-644\slmult0 \up0 \expndtw0\charscalex97 \ul
0\nosupersub\cf74\f75\fs56 14 \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\
qj\li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1684\sb257\sl-280\slmult0 \up
0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 In this conversation Hu
bert Saint-Onge delves into the perspectives, experience, policies, \up0 \expndt
w-2\charscalex100 and practices of one of the shapers of emerging knowledge-base
d enterprises. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb8\s
l-276\slmult0 \up0 \expndtw-3\charscalex100 For over a decade, Saint-Onge has be
en refining a model known as the \par\pard\ql \li1800\ri1735\sb0\sl-280\slmult0
\up0 \expndtw-2\charscalex100 Knowledge Assets Framework for the strategic integ
ration of business plans with people \up0 \expndtw-2\charscalex100 management sy
stems, using technology architecture and organizational infrastructure. \line \u
p0 \expndtw-2\charscalex100 Saint-Onge was formerly Senior Vice President for St
rategic Capabilities at Clarica Life \up0 \expndtw-3\charscalex100 Insurance Com
pany. \par\pard\ql \li1800\ri1608\sb241\sl-280\slmult0\fi720 \up0 \expndtw-2\cha
rscalex100 Clarica is a Canadian-based financial services firm offering a wide r
ange of life \up0 \expndtw-2\charscalex100 and health insurance, saving and reti
rement products and other financial services. One of \up0 \expndtw-2\charscalex1
00 the key elements of Saint-Onge's mandate at Clarica was to facilitate the lev
eraging of the \up0 \expndtw-2\charscalex100 firm's business through the systema
tic application of knowledge management and \line \up0 \expndtw-3\charscalex100
learning organization principles. \par\pard\ql \li2520\sb264\sl-276\slmult0 \up0
\expndtw-2\charscalex100 With his team, Saint-Onge developed a comprehensive st
rategy for building \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\char
scalex100 capability through knowledge. This lead to the implementation of a soc
io-technical \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex1
00 approach where people and technology were been brought together in a new \par
\pard\qj \li1800\ri1658\sb9\sl-270\slmult0 \up0 \expndtw-2\charscalex100 organiz
ational configuration. In addition, he led an in-depth exercise to define the va
lues \up0 \expndtw-2\charscalex100 and vision of Clarica to renew the developmen
t of the organizational culture in alignment \up0 \expndtw-3\charscalex100 with
the strategic framework of the firm. \par\pard\ql \li2520\sb0\sl-276\slmult0 \pa
r\pard\ql\li2520\sb10\sl-276\slmult0 \up0 \expndtw-2\charscalex100 Mr. Saint-Ong
e is currently Executive in Residence in the Centre for Business, \par\pard\qj \
li1800\ri1691\sb9\sl-270\slmult0 \up0 \expndtw-2\charscalex100 Entrepreneurship
and Technology (CBET) at the University of Waterloo. He also serves \line \up0
\expndtw-2\charscalex100 as the Chief Executive Officer of Konverge and Know, a
firm that implements integrated \line \up0 \expndtw-2\charscalex100 knowledge st
rategies based on optimizing business processes and technology solutions. \par\p

ard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1610\sb2\sl-280\slmult0\


fi720 \up0 \expndtw-2\charscalex100 Saint-Onge was previously Vice-President, Le
arning Organization and Leadership \up0 \expndtw-3\charscalex100 Development for
the Canadian Imperial Bank of Commerce (CIBC). \par\pard\qj \li1800\ri2123\sb26
0\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 He is a member of the edito
rial advisory board of the \ul0\nosupersub\cf16\f17\fs24 Journal of Intellectual
\up0 \expndtw-2\charscalex100 Capital\ul0\nosupersub\cf14\f15\fs24 and co-auth
or of the book \ul0\nosupersub\cf16\f17\fs24 Leveraging Communities of Practice
for Strategic \up0 \expndtw-3\charscalex100 Advantage\ul0\nosupersub\cf14\f15\fs
24 , published by Butterworth-Heinemann.
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\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 78 \par\pard\ql \li4976\sb0\sl-368\slmult
0 \par\pard\ql\li4976\sb108\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosu
persub\cf10\f11\fs32 The Conversation \par\pard\ql \li1868\sb0\sl-322\slmult0 \p
ar\pard\ql\li1868\sb0\sl-322\slmult0 \par\pard\ql\li1868\sb286\sl-322\slmult0 \u
p0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Ingredients of a Knowl
edge Strategy \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\li1800\ri1868
\sb50\sl-260\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24
JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
What do you
see as similarities and differences between intellectual capital and \up0 \expnd
tw-3\charscalex100 knowledge management? \par\pard\ql \li1800\sb0\sl-275\slmult0
\par\pard\ql\li1800\ri1611\sb33\sl-275\slmult0 \up0 \expndtw-2\charscalex100 \u
l0\nosupersub\cf21\f22\fs24 HS-O:\ul0\nosupersub\cf14\f15\fs24 Intellectual cap
ital, to me, is about the management of intangible assets. We know \line \up0 \e
xpndtw-2\charscalex100 that these assets now represent the largest share of the
value of most firms and that we \line \up0 \expndtw-2\charscalex100 need to mana
ge those assets actively in order to optimize the performance of \line \up0 \exp
ndtw-2\charscalex100 organizations in their respective market place. The stocks
that comprise these assets are \line \up0 \expndtw-2\charscalex100 made up of th
e individual capabilities of the members of the firm (we call that human \line \
up0 \expndtw-2\charscalex100 capital), the organizational capabilities (we call
that structural capital), and customer \line \up0 \expndtw-2\charscalex100 relat
ionships (customer capital). These three stocks are connected and grow based on
the \line \up0 \expndtw-2\charscalex100 exchange of knowledge between the indivi
duals, the organization, and the customer. The \line \up0 \expndtw-2\charscalex1
00 knowledge strategy of an organization is geared to build the capabilities and
the \line \up0 \expndtw-2\charscalex100 relationships that form the intangible
assets of the firm. The growth of the intangible \line \up0 \expndtw-2\charscale
x100 assets in turn determines the economic performance of the firm. As such, th
e intellectual \line \up0 \expndtw-2\charscalex100 capital framework is a repres
entation of the stocks of intangible assets, while knowledge \line \up0 \expndtw
-2\charscalex100 is the electrical current that runs between these assets to gro
w the human, structural and \line \up0 \expndtw-2\charscalex100 customer capital
. So there is a clear distinction in my mind between intellectual capital \line
\up0 \expndtw-3\charscalex100 and what we mean by knowledge, or knowledge strate
gy. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\sb0\sl-280\slmul
t0 \par\pard\qj\li1800\ri2947\sb1\sl-280\slmult0 \up0 \expndtw-1\charscalex100 \

ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\c


f16\f17\fs24
Do you see any overlaps in different roles of both in your knowl
edge \up0 \expndtw-3\charscalex100 organization? \par\pard\ql \li1800\sb0\sl-273
\slmult0 \par\pard\ql\li1800\ri1827\sb13\sl-273\slmult0 \up0 \expndtw-2\charscal
ex100 \ul0\nosupersub\cf21\f22\fs24 HS-O:\ul0\nosupersub\cf42\f43\fs24 \ul0\nos
upersub\cf14\f15\fs24 As we evolve towards knowledge-driven organizations, I for
esee very different \up0 \expndtw-2\charscalex100 roles emerging. For one thing,
I question the typical configuration where we have \line \up0 \expndtw-2\charsc
alex100 separate mandates for IT, human resources, marketing, and strategic plan
ning. I believe \up0 \expndtw-3\charscalex100 that this traditional organization
al structure no longer works. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\
ql\li1800\ri1696\sb9\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 For inst
ance, segregating the customer and the member of the organization into \line \up
0 \expndtw-2\charscalex100 marketing and human resources is a rather ineffective
way of defining accountability. In \line \up0 \expndtw-2\charscalex100 the know
ledge era, we have found there is increasing evidence of a very high correlation
\line \up0 \expndtw-2\charscalex100 between the quality of customer relationshi
ps and the extent to which members of the \line \up0 \expndtw-2\charscalex100 or
ganization have a sense of ownership for the value created as a result of intera
cting \line \up0 \expndtw-2\charscalex100 with that customer. So, these are two
groups of\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24 people, th
e customer and the member, \line \up0 \expndtw-2\charscalex100 who exchange know
ledge and transact together with the commitment to create value for \line \up0 \
expndtw-2\charscalex100 one another. There should be convergence in the way we u
nderstand and manage people, \line \up0 \expndtw-2\charscalex100 both members an
d customers. And yet, we ask two different organizational structures to \line \u
p0 \expndtw-2\charscalex100 ensure that their needs are met. These separate orga
nizational pockets, with different \line \up0 \expndtw-2\charscalex100 mandates
and preoccupations, cause the organization to lose the level of coherence \par\p
ard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg79}{\bk
mkend Pg79}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex10
0 \ul0\nosupersub\cf9\f10\fs20 79 \par\pard\qj \li1800\sb0\sl-275\slmult0 \par\p
ard\qj\li1800\ri1738\sb198\sl-275\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nos
upersub\cf14\f15\fs24 required to optimize both the human and customer capital i
nvolved. In the industrial era, \line \up0 \expndtw-2\charscalex100 when the val
ue created by intangible assets counted for a lot less, this lack of coherence \
line \up0 \expndtw-2\charscalex100 was not as costly. As we entered the knowledg
e era, with the key competitive advantage \line \up0 \expndtw-2\charscalex100 co
ming in large part from intangible assets, we can no longer afford these organiz
ational \line \up0 \expndtw-3\charscalex100 disconnects. \par\pard\ql \li1800\sb
0\sl-275\slmult0 \par\pard\ql\li1800\ri1751\sb10\sl-275\slmult0\fi720 \up0 \expn
dtw-2\charscalex100 The same problem exists, for instance, with human resources
and IT. A more \line \up0 \expndtw-2\charscalex100 significant part of the IT ma
ndate now is about increasing our information technology \up0 \expndtw-2\charsca
lex100 which will be required to bring forward a knowledge yield from transactio
ns. This \line \up0 \expndtw-2\charscalex100 knowledge yield depends a great dea
l on the way the technology infrastructure is shaped \up0 \expndtw-2\charscalex1
00 to enhance the performance of people and the organization as a whole. This ca
nnot be \up0 \expndtw-2\charscalex100 achieved without people management process
es designed to access the levels of \line \up0 \expndtw-2\charscalex100 interdep
endence and collaboration required for people to exchange knowledge. \line \up0
\expndtw-2\charscalex100 Increasingly people management will play a key role in
leveraging the technology \line \up0 \expndtw-2\charscalex100 infrastructure to
its full potential. This is why splitting the IT and HR mandates will \line \up0
\expndtw-3\charscalex100 become more and more problematic for organizations. \p
ar\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1908\sb9\sl-276\slmu
lt0\fi720 \up0 \expndtw-2\charscalex100 Now that 80 percent of the value of most
firms is in their intangible assets, this \line \up0 \expndtw-2\charscalex100 b
alkanized configuration also makes it much more difficult to strategically plan

for the \line \up0 \expndtw-2\charscalex100 development of the capabilities and


relationship that form these assets. This is why I \line \up0 \expndtw-2\charsca
lex100 believe that we will continue to see the emergence of new structures and
roles to shape \line \up0 \expndtw-2\charscalex100 organizational configuration
that will bring greater convergence of between individual \line \up0 \expndtw-2\
charscalex100 and organizational capabilities and the need to build customer rel
ationships. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\sb0\sl-2
80\slmult0 \par\pard\qj\li1800\ri1815\sb1\sl-280\slmult0 \up0 \expndtw-1\charsca
lex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosu
persub\cf16\f17\fs24
A lot of people are asking whether knowledge just a supe
rficial fad consisting of \up0 \expndtw-2\charscalex100 placing old wine in new
bottles or whether it is a genuinely new way of looking at how \up0 \expndtw-3\c
harscalex100 the organization creates value? \par\pard\ql \li1800\sb0\sl-273\slm
ult0 \par\pard\ql\li1800\ri1631\sb33\sl-273\slmult0 \up0 \expndtw-2\charscalex10
0 \ul0\nosupersub\cf21\f22\fs24 HS-O:\ul0\nosupersub\cf14\f15\fs24 I believe th
at the knowledge approach offers a new window on the organization, a \line \up0
\expndtw-2\charscalex100 new perspective from which to look at the organization.
It is a perspective that is made \line \up0 \expndtw-2\charscalex100 that much
more relevant by the knowledge intensive business environment that \line \up0 \e
xpndtw-2\charscalex100 transforms the rules of the game. Intangible assets are q
uite different in nature from \line \up0 \expndtw-2\charscalex100 tangible asset
s and need to be managed quite differently. The real big difference is that \lin
e \up0 \expndtw-2\charscalex100 tangible assets are by definition scarce, wherea
s intangible assets are by definition \line \up0 \expndtw-3\charscalex100 abunda
nt. \par\pard\ql \li1800\sb0\sl-273\slmult0 \par\pard\ql\li1800\ri1613\sb14\sl-2
73\slmult0\fi720 \up0 \expndtw-2\charscalex100 Accordingly, when it comes to the
management of intangible assets, we will need \line \up0 \expndtw-2\charscalex1
00 to adopt an approach that is less controlling in nature and takes more of a s
ystems view of \line \up0 \expndtw-2\charscalex100 the organization. This is als
o why the knowledge capital framework places such \line \up0 \expndtw-2\charscal
ex100 importance on the interdependence between individual, structural and custo
mer capital. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1793\
sb2\sl-280\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 J
C:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Why did you mo
ve away from the term intellectual capital and move towards the \up0 \expndtw-3\
charscalex100 term knowledge capital? \par\pard\sect\sectd\fs24\paperw12240\pape
rh15840\pard\sb0\sl-240{\bkmkstart Pg80}{\bkmkend Pg80}\par\pard\ql \li10239\sb0
\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9
\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 80 \p
ar\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1657\sb218\sl-275\sl
mult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf21\f22\fs24 HS-O: \ul0\nos
upersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24 I am first and foremost an
internal practitioner. I'm entrenched in the day-to-day \line \up0 \expndtw-2\ch
arscalex100 work of my organization. Once you have understood the perspective of
fered by the \line \up0 \expndtw-2\charscalex100 knowledge capital model, it off
ers a wonderful way of explaining how we are trying to \line \up0 \expndtw-2\cha
rscalex100 create value in the organization. So, I tend to refer to the model qu
ite often. What I found \line \up0 \expndtw-2\charscalex100 quite fast was that
many people in my organization had a negative reaction the term \line \up0 \expn
dtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24 intellectual capita\ul0\nosupe
rsub\cf14\f15\fs24 . They tend to reject the term \ul0\nosupersub\cf16\f17\fs24
intellectual\ul0\nosupersub\cf14\f15\fs24 in my view because they see \line \up
0 \expndtw-2\charscalex100 it as either elitist or beyond their understanding. I
have found that people naturally value \line \up0 \expndtw-2\charscalex100 \ul0
\nosupersub\cf16\f17\fs24 knowledge\ul0\nosupersub\cf14\f15\fs24 and are more r
eceptive to the term \ul0\nosupersub\cf16\f17\fs24 knowledge capital\ul0\nosuper
sub\cf14\f15\fs24 to represent intangible \line \up0 \expndtw-3\charscalex100 a
ssets. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkst
art Pg81}{\bkmkend Pg81}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li
10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2

\charscalex100 \ul0\nosupersub\cf9\f10\fs20 81 \par\pard\ql \li1800\sb0\sl-460\s


lmult0 \par\pard\ql\li1800\ri1859\sb40\sl-460\slmult0\tx2520 \up0 \expndtw0\char
scalex97 \ul0\nosupersub\cf76\f77\fs40 Kent Greenes:\ul0\nosupersub\cf77\f78\fs4
0 \ul0\nosupersub\cf52\f53\fs40 Knowledge Management is About \line\tab \up0 \e
xpndtw0\charscalex98 Change \par\pard\ql \li1800\sb0\sl-598\slmult0 \par\pard\ql
\li1800\sb0\sl-598\slmult0 \par\pard\ql\li1800\sb10\sl-598\slmult0 \up0 \expndtw
0\charscalex97 \ul0\nosupersub\cf78\f79\fs52 15 \par\pard\ql \li1800\sb0\sl-276\
slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\sl
mult0 \par\pard\ql\li1800\ri1843\sb80\sl-276\slmult0 \up0 \expndtw-2\charscalex1
00 \ul0\nosupersub\cf14\f15\fs24 Kent Greenes has made knowledge management work
to achieve significant outcomes \up0 \expndtw-2\charscalex100 both as chief kno
wledge officer and senior vice president at SAIC, a diverse, scientific \up0 \ex
pndtw-2\charscalex100 research and engineering company, and formerly at BP Amoco
, where he was head of \up0 \expndtw-2\charscalex100 knowledge management and wh
ere he created an internationally recognized knowledge \up0 \expndtw-2\charscale
x100 management practice. His role at SAIC is to harness the power of learning a
cross the \line \up0 \expndtw-2\charscalex100 organization and its subsidiaries,
and develop new business opportunities based in the \up0 \expndtw-3\charscalex1
00 emerging knowledge economy. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard
\ql\li2520\sb8\sl-276\slmult0 \up0 \expndtw-3\charscalex100 This conversation is
an opportunity to see how a context for knowledge \par\pard\ql \li1800\ri1756\s
b0\sl-277\slmult0 \up0 \expndtw-2\charscalex100 management and an effective appr
oach can be successfully introduced and implemented \up0 \expndtw-2\charscalex10
0 in organizations. Knowledge management is a process and an understanding as we
ll as a \up0 \expndtw-2\charscalex100 set of tools and a strategy. Greenes says
that, at root, knowledge management is about \up0 \expndtw-2\charscalex100 chang
e, which in turn, requires organizational leadership to have a sense of where it
\line \up0 \expndtw-2\charscalex100 wants to go and to be ready to commit to th
e resources and support to enable the \line \up0 \expndtw-2\charscalex100 organi
zation to get there. At the same time, it is the people throughout the organizat
ion \up0 \expndtw-2\charscalex100 that will carry out the knowledge management i
nitiatives. The trick is to weave a top\up0 \expndtw-2\charscalex100 down and bo
ttoms-up approach that aligns, and creates the process and performance \line \up
0 \expndtw-3\charscalex100 improvements that will take the organization into its
future. \par\pard\ql \li2520\sb248\sl-276\slmult0 \up0 \expndtw-2\charscalex100
Greenes sees that we are in the second wave of the knowledge era, at a point \p
ar\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 where people
have learned that merely relabelling document management and other \par\pard\ql
\li1800\ri1716\sb9\sl-270\slmult0 \up0 \expndtw-2\charscalex100 information tec
hnologies as knowledge management is not the answer. Greenes says this \up0 \exp
ndtw-2\charscalex100 wave is characterized by a growing demand for practitioners
with an experience-based \line \up0 \expndtw-3\charscalex100 track record. \par
\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1659\sb10\sl-276\slmul
t0\fi720 \up0 \expndtw-2\charscalex100 Greenes is a hands-on knowledge managemen
t practitioner. He concentrates on \line \up0 \expndtw-2\charscalex100 how knowl
edge management will yield a greatly improved performance difference for an \lin
e \up0 \expndtw-2\charscalex100 organization. He works to have all stakeholders
see direct outcomes that benefit \line \up0 \expndtw-2\charscalex100 themselves
and, by doing so, come to benefit the organization. Since he views that \line \u
p0 \expndtw-2\charscalex100 knowledge is personal, he works to have people invol
ved on an intimate basis, building \line \up0 \expndtw-2\charscalex100 relations
hips that are based on trust, and become as important as the actual knowledge \l
ine \up0 \expndtw-3\charscalex100 that is generated and shared. \par\pard\sect\s
ectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg82}{\bkmkend Pg82
}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult
0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nos
upersub\cf9\f10\fs20 82 \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li1
800\ri1659\sb198\sl-275\slmult0\fi720 \up0 \expndtw-4\charscalex100 \ul0\nosuper
sub\cf14\f15\fs24 As a result of his work at BP, Greenes was acknowledged by Tom
Stewart of \line \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf16\f17\fs24 Fo

rtune\ul0\nosupersub\cf14\f15\fs24 as the world\u8217?s leading moneymaker in k


nowledge management for delivering \line \up0 \expndtw-2\charscalex100 $260 mill
ion to BP\u8217?s bottom line. Greenes says most of the benefit came from workin
g \line \up0 \expndtw-2\charscalex100 with people to apply three simple learning
processes to do things better, faster, and \line \up0 \expndtw-2\charscalex100
cheaper. The gains were not due to fancy technology, but rather from helping peo
ple to \line \up0 \expndtw-4\charscalex100 learn before, during, and after and a
pply their learning on the job. He points out that \line \up0 \expndtw-2\charsca
lex100 along the way people created wealth of know-how that the company was able
to capture \line \up0 \expndtw-2\charscalex100 and harvest, and make available
to other businesses via Web-based knowledge assets. \line \up0 \expndtw-2\charsc
alex100 However, as Greenes notes, knowledge capture came second, and added even
more value \line \up0 \expndtw-2\charscalex100 as that knowledge was re-used an
d adapted by others across the company. \par\pard\ql \li1800\sb0\sl-273\slmult0
\par\pard\ql\li1800\ri1715\sb14\sl-273\slmult0\fi720 \up0 \expndtw-2\charscalex1
00 Greenes has worked internationally in a variety of engineering, management, a
nd \up0 \expndtw-2\charscalex100 technology roles in the science and energy indu
stries. He holds a B.S. Degree in \line \up0 \expndtw-4\charscalex100 Geoscience
from Kent State University and a M.S. Degree in Geophysics from the \line \up0
\expndtw-5\charscalex100 University of Arizona. \par\pard\ql \li5256\sb0\sl-368\
slmult0 \par\pard\ql\li5256\sb0\sl-368\slmult0 \par\pard\ql\li5256\sb0\sl-368\sl
mult0 \par\pard\ql\li5256\sb0\sl-368\slmult0 \par\pard\ql\li5256\sb0\sl-368\slmu
lt0 \par\pard\ql\li5256\sb0\sl-368\slmult0 \par\pard\ql\li5256\sb61\sl-368\slmul
t0 \up0 \expndtw0\charscalex95 \ul0\nosupersub\cf10\f11\fs32 Conversation \par\p
ard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pa
rd\ql\li1800\sb206\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\
cf24\f25\fs28 Project Focused Knowledge Management \par\pard\ql \li1800\sb276\sl
-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0
\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
As a practitioner, h
ow do you look at knowledge management? \par\pard\ql \li1800\sb0\sl-276\slmult0
\par\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupe
rsub\cf21\f22\fs24 KG:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs
24 What I would like to share with you is based on my actual experience in \pa
r\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 delivering kn
owledge management solutions over the last 5 years. In every case, this \par\par
d\ql \li1800\ri1729\sb7\sl-273\slmult0 \up0 \expndtw-2\charscalex100 work focuse
d on delivering projects aimed at bottom line business impact, or targeted at \u
p0 \expndtw-2\charscalex100 strategic growth opportunities. The common theme has
been on business performance \up0 \expndtw-2\charscalex100 improvement and lear
ning how to make KM work in the specific culture of the company \up0 \expndtw-3\
charscalex100 where it\u8217?s being applied. \par\pard\ql \li1800\sb0\sl-274\sl
mult0 \par\pard\ql\li1800\ri1652\sb13\sl-274\slmult0\fi720 \up0 \expndtw-2\chars
calex100 Most of my insights are based on the work originating at British Petrol
eum in the \line \up0 \expndtw-2\charscalex100 mid-1990\u8217?s and augmented by
work in about ten other companies since then. I would say \line \up0 \expndtw-2
\charscalex100 I\u8217?m more of a practitioner in KM, as opposed to a theorist.
What I hope people take away \line \up0 \expndtw-2\charscalex100 is this is \u8
220?real stuff\u8221?. These are things people can do today. You don\u8217?t hav
e to have a \line \up0 \expndtw-4\charscalex100 Ph.D. in epistemology, or be an
organizational development expert to get it. In fact, those \line \up0 \expndtw2\charscalex100 things can get in the way if you try and apply KM without a heal
thy dose of reality under \line \up0 \expndtw-2\charscalex100 your belt. People
and organizations are all very different, so what you learn in a \line \up0 \exp
ndtw-4\charscalex100 classroom or apply through some logical thought processes w
ill probably not work first
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g83}{\bkmkend Pg83}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 83 \par\pard\qj \li1800\sb0\sl-280\slmult
0 \par\pard\qj\li1800\ri1929\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf14\f15\fs24 time on the job. My point is that you do not have
to be a rocket scientist to do this. But \up0 \expndtw-2\charscalex100 that does
not mean it is easy. In fact, because KM is so dependent on relationships and \
up0 \expndtw-3\charscalex100 trust it can be really hard to make explicit progre
ss. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmul
t0 \par\pard\ql\li1800\sb202\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\n
osupersub\cf24\f25\fs28 Challenges in a Flattened Organization \par\pard\qj \li1
800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2000\sb33\sl-280\slmult0 \up0 \expn
dtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs
24 \ul0\nosupersub\cf16\f17\fs24
What were the challenges of heading the Kno
wledge Management Program at \up0 \expndtw-2\charscalex100 BP? What are your new
challenges as the Chief Knowledge Officer at SAIC? \par\pard\ql \li1800\sb0\sl276\slmult0 \par\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-1\charscalex100
\ul0\nosupersub\cf21\f22\fs24 KG:\ul0\nosupersub\cf14\f15\fs24
It turns out
the challenges are very similar, although I did not realize that at the \par\par
d\ql \li1800\ri1642\sb5\sl-275\slmult0\fi0 \up0 \expndtw-2\charscalex100 beginni
ng. There were really two challenges at BP. The first challenge came from BP re
\up0 \expndtw-2\charscalex100 organizing into a very flat organization when I to
ok on the knowledge management \line \up0 \expndtw-2\charscalex100 effort. We ha
d decentralized to the point where in an organization of 100,000 people, \line \
up0 \expndtw-2\charscalex100 there were only 300 people in the corporate center
and everyone else was part of one \line \up0 \expndtw-2\charscalex100 hundred an
d thirty business units that made their own decisions and became accountable \up
0 \expndtw-2\charscalex100 for their own profit and loss. Each business unit dev
eloped a performance contract with \up0 \expndtw-2\charscalex100 the corporation
. The challenge came in dealing with an organization of the future - a \line \up
0 \expndtw-3\charscalex100 federal model - one that no longer had\ul0\nosupersub
\cf12\f13\fs28 \ul0\nosupersub\cf14\f15\fs24 the traditional hierarchical struc
tures or \line \up0 \expndtw-4\charscalex100 \u8220?organizational\u8221? glue t
o keep people connected. \par\pard\ql \li1800\sb0\sl-275\slmult0 \par\pard\ql\li
1800\ri1705\sb10\sl-275\slmult0\fi720 \up0 \expndtw-4\charscalex100 We all know
that hierarchies get in the way, but one good thing a hierarchical \line \up0 \e
xpndtw-4\charscalex100 organizational structure does is connect the people above
and below you in an explicit \line \up0 \expndtw-2\charscalex100 manner. These
connections are channels for information and knowledge flow. Of course, \line \u
p0 \expndtw-2\charscalex100 in many organizations this flow only occurred on a \
u8220?need to know\u8221? basis, which meant \line \up0 \expndtw-4\charscalex100
the open sharing of knowledge did not really occur as freely as the structure i
mplies. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb9\sl-276\s
lmult0 \up0 \expndtw-4\charscalex100 When we flatten an organization, we get rid
of those required, or obvious \par\pard\qj \li1800\ri1674\sb7\sl-273\slmult0 \u
p0 \expndtw-2\charscalex100 linkages. The result is that explicit gaps are creat
ed between businesses and people from \up0 \expndtw-4\charscalex100 different bu
siness units or teams. Many organizations are just now realizing the need to \up
0 \expndtw-2\charscalex100 put formal or informal processes in place to facilita
te the sharing and flow of information \up0 \expndtw-2\charscalex100 of know-how
to offset these barriers. We often refer to these as peer processes. \par\pard\
ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb9\sl-276\slmult0 \up0 \expnd
tw-2\charscalex100 It is a pretty strange turn of events. Companies flatten to f

ocus performance in \par\pard\ql \li1800\ri1613\sb0\sl-276\slmult0 \up0 \expndtw


-4\charscalex100 profit and loss centers, often to create agility at the local l
evel. This agility is supposed to \up0 \expndtw-2\charscalex100 allow these P&L
centers to be more proactive and leverage local market conditions and \line \up0
\expndtw-2\charscalex100 business opportunities in a way they could not when pr
eviously encumbered in their more \up0 \expndtw-2\charscalex100 centralized mode
l. Without realizing the consequences, they sacrifice connectivity and \line \up
0 \expndtw-2\charscalex100 continuity with the collective organizational resourc
e to gain focus and short-term \line \up0 \expndtw-4\charscalex100 business perf
ormance. I actually think this makes a lot of sense, as long as they then put \u
p0 \expndtw-2\charscalex100 the effort in to build back the missing connectivity
. They now have the ability to tap the \up0 \expndtw-2\charscalex100 collective
intellect of their organization and bring it to bear in their focused business \
line \up0 \expndtw-4\charscalex100 performance. I believe this is why the need
for KM has really taken off - it puts the glue \up0 \expndtw-2\charscalex100 bac
k in federal structures and enables these modern organizations to harness the \l
ine \up0 \expndtw-3\charscalex100 collective power of learning in a very focused
manner. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmk
start Pg84}{\bkmkend Pg84}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\
li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw
-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 84 \par\pard\ql \li2520\sb0\sl-276
\slmult0 \par\pard\ql\li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb200\sl-276
\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf14\f15\fs24 The second
challenge was that BP was already a very high performing \par\pard\ql \li1800\ri
1787\sb5\sl-275\slmult0 \up0 \expndtw-2\charscalex100 organization. They were al
ready very successful. They were doing a lot of good things. \line \up0 \expndtw
-2\charscalex100 Most of the business leaders were where they were because they
learned how to create \line \up0 \expndtw-2\charscalex100 radical change. I had
a very big challenge in that people were saying, "Why do I need to \line \up0 \e
xpndtw-2\charscalex100 do anything different?" It turns out when people become s
uccessful they become very \line \up0 \expndtw-3\charscalex100 tough to change.
\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg8
5}{\bkmkend Pg85}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\s
b0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charsc
alex100 \ul0\nosupersub\cf9\f10\fs20 85 \par\pard\ql \li1800\sb0\sl-414\slmult0
\par\pard\ql\li1800\sb64\sl-414\slmult0 \up0 \expndtw0\charscalex95 \ul0\nosuper
sub\cf54\f55\fs36 Sharon L. Oriel:\ul0\nosupersub\cf2\f3\fs36 \ul0\nosupersub\c
f68\f69\fs36 \ul0\nosupersub\cf28\f29\fs36 Finding \u8220?the Hook\u8221? \par\
pard\ql \li1800\sb0\sl-828\slmult0 \par\pard\ql\li1800\sb96\sl-828\slmult0 \up0
\expndtw0\charscalex97 \ul0\nosupersub\cf30\f31\fs72 16 \par\pard\ql \li1800\sb0
\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\s
l-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb4\sl276\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Sharon L
. Oriel is the\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24 Direc
tor of the Global Intellectual Capital Management \par\pard\ql \li1800\sb1\sl-25
6\slmult0 \up0 \expndtw-2\charscalex100 Technology Center of The Dow Chemical Co
mpany. She has been with The Dow \par\pard\ql \li1800\ri1856\sb9\sl-275\slmult0
\up0 \expndtw-2\charscalex100 Chemical Company for 29 years since receiving unde
rgraduate and graduate degrees in \up0 \expndtw-2\charscalex100 biology. Her car
eer with Dow has included experience in central research, plastics \line \up0 \e
xpndtw-2\charscalex100 technical service and development, plastics marketing, an
d for the last 11 years, \line \up0 \expndtw-2\charscalex100 intellectual capita
l management. Her focus is on aligning, leveraging, and creating \up0 \expndtw-3
\charscalex100 intellectual assets and capital for value growth \par\pard\ql \li
1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1796\sb9\sl-276\slmult0\fi720 \up0
\expndtw-4\charscalex100 Oriel is one of the company co-founders of the Intelle
ctual Capital Managers \line \up0 \expndtw-4\charscalex100 Gathering. She serves
on the editorial board of the \ul0\nosupersub\cf16\f17\fs24 Journal of Intellec
tual Capital\ul0\nosupersub\cf14\f15\fs24 . In \line \up0 \expndtw-2\charscalex1
00 addition, Oriel served on the research and development task force supporting

the \line \up0 \expndtw-4\charscalex100 Brookings IC project; has been featured


in CFO Magazine, Business Finance and \line \up0 \expndtw-2\charscalex100 contri
buted chapters to numerous books. According to Oriel, the future is truly fille
d \line \up0 \expndtw-4\charscalex100 with intangible opportunities. Those who n
avigate these opportunities with wisdom will \line \up0 \expndtw-4\charscalex100
create a sustainable future. Oriel considers herself a tempered IC radical. \pa
r\pard\ql \li4976\sb0\sl-368\slmult0 \par\pard\ql\li4976\sb0\sl-368\slmult0 \par
\pard\ql\li4976\sb0\sl-368\slmult0 \par\pard\ql\li4976\sb0\sl-368\slmult0 \par\p
ard\ql\li4976\sb56\sl-368\slmult0 \up0 \expndtw0\charscalex95 \ul0\nosupersub\cf
10\f11\fs32 The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\q
l\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb266\sl-322\slmult0 \up0 \expnd
tw-4\charscalex100 \ul0\nosupersub\cf43\f44\fs28 An Evolutionary Journey \par\pa
rd\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\par
d\ql\li1800\sb24\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf
21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24
\ul0\nosupersub\cf16\f17\fs24
How do you as a corporate practitioner apply IC theory? \par\pard\ql \li1800\sb0
\sl-276\slmult0 \par\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-3\charscale
x100 \ul0\nosupersub\cf21\f22\fs24 SO:\ul0\nosupersub\cf14\f15\fs24
One of th
e things that I really like to point out about Dow is that intellectual \par\par
d\ql \li1800\ri1767\sb0\sl-280\slmult0 \up0 \expndtw-2\charscalex100 capital man
agement, for us, has not been a great "Ah-ha!" It has been very evolutionary. \l
ine \up0 \expndtw-4\charscalex100 It has been a journey. This is because back in
the mid-50\u8217?s, when we formed our first \line \up0 \expndtw-4\charscalex10
0 strategic business units, the president of the company, created a function cal
led patent
{\shp {\*\shpinst\shpleft1772\shptop9422\shpright10470\shpbottom9451\shpfhdr0\sh
pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz148\shplid0
{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{
\sn geoRight}{\sv 8698}}{\sp{\sn geoBottom}{\sv 29}}
{\sp{\sn pVerticies}{\sv 8;5;(0,29);(8697,29);(8697,0);(0,0);(0,29)}}
{\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276
8}}
{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s
p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s
p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g86}{\bkmkend Pg86}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 86 \par\pard\qj \li1800\sb0\sl-280\slmult
0 \par\pard\qj\li1800\ri2040\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf14\f15\fs24 administration. This hasn\u8217?t been a fad of th
e week for us, or a "Gee, we need to go do \up0 \expndtw-2\charscalex100 this."
Since we are a science- and technology-based company, we\u8217?ve always said we
\up0 \expndtw-5\charscalex100 needed to manage our inventions. \par\pard\ql \li
1800\ri1684\sb264\sl-276\slmult0\fi720 \up0 \expndtw-4\charscalex100 What has ch
anged is that we\u8217?ve gone from managing inventions for R&D, to \line \up0 \
expndtw-2\charscalex100 managing and thinking of patents as intangible assets wi
th the potential to create value \up0 \expndtw-2\charscalex100 for the Dow Chemi
cal Company, and really getting the businesses taking ownership. \line \up0 \exp
ndtw-2\charscalex100 Now we are journeying towards the next generation of broade
ning the practice to include \up0 \expndtw-2\charscalex100 all dimensions of int
ellectual capital: the people, the processes, our customers, our \line \up0 \exp
ndtw-3\charscalex100 suppliers, and our external relationships. \par\pard\ql \li
2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb8\sl-276\slmult0 \up0 \expndtw-2\c
harscalex100 From a practitioner\u8217?s standpoint, we understand the theory, w
e go to the \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex10
0 conferences, and we build on the foundation we have. But a key point in applyi
ng \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-4\charscalex100 intelle
ctual capital theory at Dow has been to find what I call "the hook". I say this

to \par\pard\ql \li1800\ri1609\sb0\sl-277\slmult0 \up0 \expndtw-2\charscalex100


anybody I speak to because, regardless of whether you are in a service company o
r a very \line \up0 \expndtw-4\charscalex100 bricks and mortar company, you need
to find out what your business or your business \line \up0 \expndtw-2\charscale
x100 unit is struggling with. Ask where you can show value if they manage their
intellectual \line \up0 \expndtw-2\charscalex100 capital. Our hook was cost savi
ngs. We made it very clear that the way we were operating \line \up0 \expndtw-2\
charscalex100 was costing us money, and we were not getting the best returns on
our intangible assets. \line \up0 \expndtw-2\charscalex100 That was our hook. A
services company can look at employee turnover or training issues, \line \up0 \e
xpndtw-2\charscalex100 but always find the hook. The hook enables the practition
er to apply the theory. Only \line \up0 \expndtw-2\charscalex100 now at Dow Chem
ical, are we using the term \ul0\nosupersub\cf16\f17\fs24 intellectual capital\u
l0\nosupersub\cf14\f15\fs24 inside the company. \line \up0 \expndtw-2\charscale
x100 That is because only now is the company ready to grapple with its broader m
eaning. \par\pard\ql \li2520\sb248\sl-276\slmult0 \up0 \expndtw-5\charscalex100
If we walked in and threw out some of the terminology that we hear at \par\pard\
ql \li1800\ri1657\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 conferences a
nd that we read in books, people would either throw us out of their office or \l
ine \up0 \expndtw-2\charscalex100 be very polite and then go about their old way
s. So, again, find the hook, translate it into \line \up0 \expndtw-2\charscalex1
00 corporate terms, and then pick up the third key: senior management support. W
e had that \line \up0 \expndtw-2\charscalex100 initially in the form of Fred Cor
son. Fred was the corporate vice president for R&D and a \line \up0 \expndtw-4\c
harscalex100 member of the board of directors. We had Fred\u8217?s support to do
this. That was key. This \line \up0 \expndtw-4\charscalex100 support continues
today with Rick Gross as the corporate vice president for R&D. \par\pard\ql \li1
800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li180
0\sb12\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf21\f22\fs2
4 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
When did yo
u actually start? \par\pard\ql \li1800\sb0\sl-270\slmult0 \par\pard\ql\li1800\ri
1823\sb39\sl-270\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\
fs24 SO:\ul0\nosupersub\cf14\f15\fs24
In terms of intellectual asset manageme
nt and intellectual capital management, I \up0 \expndtw-2\charscalex100 would pu
t the start date at 1990-91. The antecedents for that actually go back to the \u
p0 \expndtw-3\charscalex100 1950\u8217?s, as I mentioned. \par\pard\qj \li1800\s
b0\sl-280\slmult0 \par\pard\qj\li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1
828\sb2\sl-280\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs
24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Did a ligh
t bulb go on or was there a convergence of factors prompting the shift \up0 \exp
ndtw-5\charscalex100 from one kind of effort to another? \par\pard\ql \li1800\sb
0\sl-276\slmult0 \par\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-3\charscal
ex100 \ul0\nosupersub\cf21\f22\fs24 SO:\ul0\nosupersub\cf14\f15\fs24
Fred Cor
son was really the light bulb. I will tell you a personal story. I was a \par\pa
rd\qj \li1800\ri1783\sb0\sl-280\slmult0 \up0 \expndtw-4\charscalex100 marketing
manager in our plastics business. Fred came to me in 1989 and said, "I would \li
ne \up0 \expndtw-4\charscalex100 like you to consider taking this position in wh
at was called inventions management." I \par\pard\sect\sectd\fs24\paperw12240\pa
perh15840\pard\sb0\sl-240{\bkmkstart Pg87}{\bkmkend Pg87}\par\pard\ql \li10239\s
b0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\s
b9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 87
\par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb196\sl-276\slmult0
\up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 looked at him and s
aid, "Fred, that\u8217?s where people go to die.\u8221? He responded, "No, you \
par\pard\ql \li1800\ri1619\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 don\
u8217?t understand, Sharon. We need to change this. You\u8217?ve been in basic r
esearch, you\u8217?ve \up0 \expndtw-4\charscalex100 been in technical service an
d development, and you\u8217?re now in marketing. You understand \up0 \expndtw-2
\charscalex100 how the company works. You\u8217?re the kind of person I want to
start populating this \line \up0 \expndtw-4\charscalex100 function.\u8221? Gordo

n Petrash was also brought in to run the group. Gordon came from our \up0 \expnd
tw-2\charscalex100 corporate product department, which managed Dow products on a
global basis. Fred \line \up0 \expndtw-2\charscalex100 started populating this
invention management function with people with a different skill\up0 \expndtw-3\
charscalex100 base and a more business-driven outlook. \par\pard\ql \li1800\sb0\
sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb12\s
l-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul
0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
It shifted from tec
hnician, technology perspective to a business perspective? \par\pard\ql \li1800\
sb0\sl-276\slmult0 \par\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-3\charsc
alex100 \ul0\nosupersub\cf21\f22\fs24 SO:\ul0\nosupersub\cf14\f15\fs24
Exactl
y. That was the real key. We had to be able to then translate the value of \par\
pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 intangibles int
o business terms. At about that same time another factor came into play \par\par
d\ql \li1800\ri1606\sb0\sl-280\slmult0 \up0 \expndtw-2\charscalex100 with the fo
rmation of the U.S. Court of Appeals for the First Circuit for enforcing patents
. \up0 \expndtw-2\charscalex100 A third factor in the mix was that patent fees w
ent up. There\u8217?s usually a monetary driver. \up0 \expndtw-2\charscalex100 S
ince we were a company with a very large patent portfolio, we also had a large \
line \up0 \expndtw-5\charscalex100 maintenance tax liability over the life of th
at portfolio. \par\pard\qj \li1800\ri1624\sb241\sl-280\slmult0\fi720 \up0 \expnd
tw-2\charscalex100 The fourth thing was that internally, we started shifting the
costs for obtaining and \up0 \expndtw-2\charscalex100 maintaining patents direc
tly to the businesses. Previously, patent cost had been hidden in \up0 \expndtw3\charscalex100 corporate overhead. That provided us the hook. \par\pard\ql \li1
800\sb0\sl-274\slmult0 \par\pard\ql\li1800\ri1754\sb11\sl-274\slmult0\fi720 \up0
\expndtw-2\charscalex100 A story I like to tell is about a new business directo
r. I went to that new business \line \up0 \expndtw-2\charscalex100 director and
said, "How would you like to save $3 million?" He looked at me said "Is it \line
\up0 \expndtw-2\charscalex100 legal?" I said, "Yes\u8221?. And he said. "Make i
t happen." Then he said, "Just what did I just \line \up0 \expndtw-4\charscalex1
00 authorize you to do?" We had technology we acquired from Upjohn\u8217?s chemi
cal division \line \up0 \expndtw-4\charscalex100 several years before, some of w
hich we were never going to use. But this person\u8217?s \line \up0 \expndtw-2\c
harscalex100 predecessor had the attitude, "Oh, I\u8217?m going to keep it just
in case.\u8221? It was obvious the \line \up0 \expndtw-2\charscalex100 business
was never going to leverage it. The new business director understood that, and \
line \up0 \expndtw-2\charscalex100 he also understood there was a cost involved
with keeping it on the shelf. That\u8217?s a very \line \up0 \expndtw-2\charscal
ex100 tangible example of what I mean by \u8220?the hook\u8221?. That business d
irector didn\u8217?t have to go \line \up0 \expndtw-2\charscalex100 read 200 pat
ents and 15 agreements. He knew that I\u8217?d done the homework for him, and \l
ine \up0 \expndtw-2\charscalex100 said, "Make it happen.\u8221? That established
the basis with that business director to start \line \up0 \expndtw-3\charscalex
100 managing their intangible asset portfolio. \par\pard\qj \li1800\sb0\sl-280\s
lmult0 \par\pard\qj\li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2055\sb2\sl280\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\
nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
So you had to have so
me idea before you walked into his office that you could \up0 \expndtw-4\charsca
lex100 save him $3 million. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql
\li1800\sb8\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f2
2\fs24 SO:\ul0\nosupersub\cf20\f21\fs24 \ul0\nosupersub\cf14\f15\fs24 Absolut
ely. Another important advantage that Dow has had in managing our \par\pard\qj \
li1800\ri1778\sb7\sl-273\slmult0 \up0 \expndtw-2\charscalex100 intangibles is no
t only the legacy organization, but we have an in-house database, which \line \u
p0 \expndtw-4\charscalex100 is more than twenty years old. We have had this data
base electronically, with all of our \line \up0 \expndtw-4\charscalex100 disclos
ures of inventions, all of our filed patents, all of our issued patents, and all
of our \line \up0 \expndtw-4\charscalex100 agreements dealing with intellectual
property. Many, large corporations are only now \par\pard\sect\sectd\fs24\paper

w12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg88}{\bkmkend Pg88}\par\pard\ql \


li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\
li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10
\fs20 88 \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1738\sb18
9\sl-280\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 get
ting there and establishing such databases. In contrast, we\u8217?ve had a very
valuable tool \up0 \expndtw-3\charscalex100 for many years. \par\pard\ql \li1800
\sb0\sl-270\slmult0 \par\pard\ql\li1800\ri1624\sb19\sl-270\slmult0\fi720 \up0 \e
xpndtw-2\charscalex100 A further advantage is that all of our intellectual asset
s are tied to a business. With \up0 \expndtw-2\charscalex100 a few keystrokes we
can identify what assets belong to what businesses and what \line \up0 \expndtw
-3\charscalex100 products are protected. \par\pard\qj \li1800\ri6160\sb331\sl-56
0\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\no
supersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Is that all across the
organization? \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 SO:\ul
0\nosupersub\cf14\f15\fs24
Yes. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\
pard\ql\li1800\sb239\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersu
b\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Do people know that they have to do that kind of thing? \par\pard\ql \li1800\
sb0\sl-276\slmult0 \par\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-3\charsc
alex100 \ul0\nosupersub\cf21\f22\fs24 SO:\ul0\nosupersub\cf20\f21\fs24 \ul0\nos
upersub\cf14\f15\fs24 Yes. Dow's intellectual capital initiatives today are re
ally the key to our \par\pard\qj \li1800\ri1663\sb7\sl-273\slmult0 \up0 \expndtw
-2\charscalex100 sustainable competitive advantage. They are absolutely essentia
l. I am finding that when \up0 \expndtw-2\charscalex100 a new business platform
is established, the person leading that platform asks for someone \up0 \expndtw2\charscalex100 to manage their intellectual capital\u8230?because in many cases
, starting out - that is all they \up0 \expndtw-3\charscalex100 have. That\u8217
?s a real change. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb
245\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 S
uccess is Making Intangible Value Visible \par\pard\ql \li1800\sb0\sl-276\slmult
0 \par\pard\ql\li1800\sb20\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nos
upersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17
\fs24
What prompted that change? \par\pard\ql \li1800\sb0\sl-276\slmult0 \par
\pard\ql\li1800\sb8\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub
\cf20\f21\fs24 SO:\ul0\nosupersub\cf14\f15\fs24
We have shown the value of ma
naging intangibles. We formed Dupont Dow \par\pard\ql \li1800\ri1724\sb0\sl-280\
slmult0 \up0 \expndtw-2\charscalex100 Elastomers because of the intellectual cap
ital that was involved. This is one case that has \line \up0 \expndtw-2\charscal
ex100 shown the value of intellectual capital management and made it visible thr
oughout the \line \up0 \expndtw-3\charscalex100 company. \par\pard\ql \li1800\ri
1643\sb241\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 Dupont had the mar
ket franchise in elastomers. They owned that marketplace, \line \up0 \expndtw-2\
charscalex100 they had the manufacturing, they had the sales, but their technolo
gy was aging. We had \line \up0 \expndtw-2\charscalex100 new technology, and a v
ery small elastomers business. We brought the new technology --\line \up0 \expnd
tw-2\charscalex100 Dupont had the infrastructure. Instantly we created a billion
-dollar company. It is 50/50 \line \up0 \expndtw-4\charscalex100 partnership. We
brought no bricks and mortar to that. It was all intellectual capital. \par\par
d\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard
\ql\li1800\sb12\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf2
1\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
Th
at is impressive. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb
8\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf21\f22\fs24 SO:
\ul0\nosupersub\cf14\f15\fs24
It\u8217?s stories of those kinds of successes
that make the difference. We have \par\pard\ql \li1800\ri1722\sb0\sl-280\slmult0
\up0 \expndtw-2\charscalex100 successfully used our intellectual capital in som
e major litigation. We have created some \line \up0 \expndtw-4\charscalex100 sig
nificant new sales, using our intellectual capital. We have found the hook\u8230
? and it\u8217?s \line \up0 \expndtw-4\charscalex100 money. It\u8217?s that simp

le. We actually have T-shirts that say, \u8220?\ul0\nosupersub\cf16\f17\fs24 We


show the money\ul0\nosupersub\cf14\f15\fs24 .\u8221? \par\pard\sect\sectd\fs24\p
aperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg89}{\bkmkend Pg89}\par\pard\
ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard
\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9
\f10\fs20 89 \par\pard\ql \li1800\sb0\sl-414\slmult0 \par\pard\ql\li1800\sb84\sl
-414\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf46\f47\fs36 Stephen D
enning:\ul0\nosupersub\cf63\f64\fs36 \ul0\nosupersub\cf64\f65\fs36 \ul0\nosupe
rsub\cf28\f29\fs36 The Springboard Story \par\pard\ql \li1800\sb0\sl-828\slmult0
\par\pard\ql\li1800\sb616\sl-828\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosup
ersub\cf65\f66\fs72 17 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li18
00\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800
\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\s
b268\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24
Stephen Denning was a key player in the strategic shift of the World Bank toward
s \par\pard\ql \li1800\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 becoming
a knowledge-based organizational. As the lead person for instituting \par\pard\
ql \li1800\ri1761\sb0\sl-277\slmult0 \up0 \expndtw-2\charscalex100 knowledge man
agement at the World Bank, trying the generally accepted approaches to \line \up
0 \expndtw-2\charscalex100 communicating the complex idea of knowledge managemen
t with marginal success, he \line \up0 \expndtw-4\charscalex100 discovered that
storytelling was the most effective vehicle for about \u8220?knowledge \line \up
0 \expndtw-2\charscalex100 management\u8221?. This is not storytelling in the en
tertainment sense, but storytelling in the \line \up0 \expndtw-4\charscalex100 s
ense of conveying the kernel of a significant change experience. He has found th
at \line \up0 \expndtw-2\charscalex100 storytelling is a vital element for devel
oping a knowledge sharing culture and a \line \up0 \expndtw-2\charscalex100 know
ledge-based organization. Without it, he feels that the World Bank would not hav
e \line \up0 \expndtw-2\charscalex100 achieved the change in emphasis to knowled
ge as a central pillar and resource that it has \line \up0 \expndtw-3\charscalex
100 become today. \par\pard\ql \li1800\ri1723\sb245\sl-280\slmult0\fi720 \up0 \e
xpndtw-2\charscalex100 Denning has written about the evolution of storytelling i
nto becoming a powerful \up0 \expndtw-4\charscalex100 tool for organizational ch
ange and knowledge management in his book, \ul0\nosupersub\cf16\f17\fs24 The \li
ne \up0 \expndtw-2\charscalex100 Springboard: How Storytelling Ignites Action in
Knowledge-Era Organizations\ul0\nosupersub\cf14\f15\fs24 . In \line \up0 \expnd
tw-2\charscalex100 recognition of his knowledge management accomplishments at th
e World Bank, he was \up0 \expndtw-3\charscalex100 selected as one of the world\
u8217?s Most Admired Knowledge Leaders. \par\pard\ql \li1800\ri1619\sb260\sl-280
\slmult0 \up0 \expndtw-2\charscalex100 From 1996 to 2000, Denning was program di
rector, knowledge management at the World \up0 \expndtw-2\charscalex100 Bank. A
lawyer by training, Denning held various management positions at the Work \up0 \
expndtw-2\charscalex100 Bank. He is consulting and giving workshops with other o
rganizations in the US, Europe, \up0 \expndtw-2\charscalex100 Asia and Australia
on knowledge management and organizational storytelling.
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\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
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0 \par\pard\ql\li4976\sb348\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosu


persub\cf10\f11\fs32 The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \p
ar\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par
\pard\ql\li1800\sb284\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupers
ub\cf24\f25\fs28 Beginning a Knowledge Initiative \par\pard\qj \li1800\sb0\sl-28
0\slmult0 \par\pard\qj\li1800\ri1939\sb233\sl-280\slmult0 \up0 \expndtw-3\charsc
alex100 \ul0\nosupersub\cf42\f43\fs24 JC: \ul0\nosupersub\cf16\f17\fs24
What
prompted the World Bank to begin its knowledge management initiative? \up0 \expn
dtw-3\charscalex100 Have the leadership\u8217?s expectations changed since you b
egan the initiative? \par\pard\ql \li1800\sb0\sl-273\slmult0 \par\pard\ql\li1800
\ri1653\sb13\sl-273\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f
22\fs24 SD:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24 We beg
an in 1996 to consider what the future of the World Bank was going to be. \up0 \
expndtw-2\charscalex100 There was a lot of public discussion as to what the futu
re of the World Bank. It had been \up0 \expndtw-2\charscalex100 for most of its
55 year life a money-based lending organization. It was becoming \line \up0 \exp
ndtw-2\charscalex100 apparent by the mid-1990s that the lending function was to
some extent being met by the \up0 \expndtw-4\charscalex100 private sector, which
was now providing financial flows that were a large multiple of \line \up0 \exp
ndtw-2\charscalex100 what the World Bank was providing. When the World Bank was
founded, this alternative \up0 \expndtw-3\charscalex100 did not exist for most o
f the countries. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1
822\sb2\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 The Bank\u8217?s futu
re as a purely financial organization was unclear. The Cold War \up0 \expndtw-4\
charscalex100 was over, and a lot of political events had occurred that also rai
sed questions about why \up0 \expndtw-5\charscalex100 the World Bank continued t
o exist and what was to be its future. \par\pard\ql \li1800\ri1622\sb264\sl-276\
slmult0\fi720 \up0 \expndtw-4\charscalex100 We started considering information a
s one of the things that was troubling to us. \line \up0 \expndtw-4\charscalex10
0 We were drowning in information. But, even more important was our idea that \l
ine \up0 \expndtw-2\charscalex100 knowledge lay at the heart of the whole develo
pment process. We had acquired a \line \up0 \expndtw-4\charscalex100 tremendous
amount of know-how as to what works and what does not work in trying to \line \u
p0 \expndtw-2\charscalex100 reduce global poverty. So we started to think: Suppo
se we could share that know-how, \line \up0 \expndtw-2\charscalex100 not only am
ong the staff, making it easily accessible, but also sharing it with everyone \l
ine \up0 \expndtw-2\charscalex100 around the world who could make a difference i
n the fight against poverty. This would be \line \up0 \expndtw-2\charscalex100 n
ot only the direct clients who were borrowing from the World Bank, but also all
the \line \up0 \expndtw-2\charscalex100 other millions of people who were involv
ed in taking decisions affecting poverty, so that \line \up0 \expndtw-2\charscal
ex100 they had better know-how, and could have more of an impact. Then we could
become a \line \up0 \expndtw-2\charscalex100 really useful kind of organization
for the future. We began talking about this as an idea in \line \up0 \expndtw-3\
charscalex100 early 1996. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\l
i1800\ri1638\sb8\sl-276\slmult0\fi720 \up0 \expndtw-4\charscalex100 I had been a
sked to look into information but it seemed to me that if we dealt with \line \u
p0 \expndtw-2\charscalex100 this huge volume of information, we would, at best,
become a more efficient \line \up0 \expndtw-2\charscalex100 organization. We wou
ld save money but we would still be basically the same \line \up0 \expndtw-2\cha
rscalex100 organization. But, if we started to share our know-how in a systemati
c fashion we could \line \up0 \expndtw-2\charscalex100 become a very different a
nd more relevant and exciting kind of organization for the \line \up0 \expndtw-3
\charscalex100 future. \par\pard\qj \li1800\ri1616\sb261\sl-280\slmult0\fi720 \u
p0 \expndtw-2\charscalex100 That was the vision, and I would say it is still. As
implementation has gone on, we \line \up0 \expndtw-2\charscalex100 have learned
a great deal. Some things have worked much better than others. And, some \par\p
ard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg91}{\bk
mkend Pg91}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex10

0 \ul0\nosupersub\cf9\f10\fs20 91 \par\pard\ql \li1800\sb0\sl-280\slmult0 \par\p


ard\ql\li1800\ri1657\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nos
upersub\cf14\f15\fs24 things that we had not thought of doing, we have ended up
doing a lot of. We have had to \up0 \expndtw-2\charscalex100 innovate as we have
proceeded in order to make the vision work. But, I would say that \up0 \expndtw
-3\charscalex100 the vision is still essentially, in very broad terms, the same
vision. \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\li1800\sb0\sl-260\s
lmult0 \par\pard\qj\li1800\ri1842\sb57\sl-260\slmult0 \up0 \expndtw-1\charscalex
100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosuper
sub\cf16\f17\fs24
What did knowledge management mean to the leadership at the
beginning? Has \up0 \expndtw-3\charscalex100 that shifted? \par\pard\ql \li1800
\sb0\sl-275\slmult0 \par\pard\ql\li1800\ri1613\sb33\sl-275\slmult0 \up0 \expndtw
0\charscalex100 \ul0\nosupersub\cf21\f22\fs24 SD:\ul0\nosupersub\cf42\f43\fs24
\ul0\nosupersub\cf14\f15\fs24 It did not mean anything. In fact, one did not r
eally explain it by explaining the \line \up0 \expndtw-2\charscalex100 term, \ul
0\nosupersub\cf16\f17\fs24 knowledge management\ul0\nosupersub\cf14\f15\fs24 . M
y experience was that when I started trying to define \line \up0 \expndtw-2\char
scalex100 this phrase, it was very difficult to explain. When I tried charts, th
e way the consultants \line \up0 \expndtw-2\charscalex100 use charts, I found th
at they did not really work. People found the charts as puzzling as \line \up0 \
expndtw-2\charscalex100 the term knowledge management. When I tried prose, peopl
e did not read it and that did \line \up0 \expndtw-2\charscalex100 not work. If
I could turn to a dialogue with someone and spend a week with them, I could \lin
e \up0 \expndtw-2\charscalex100 then get to understand their problems and show h
ow this would respond to their concerns. \line \up0 \expndtw-2\charscalex100 But
this took a week and typically I did not have a week. I would usually have some
thing \line \up0 \expndtw-2\charscalex100 like fifteen seconds, or five minutes,
and so one had to move more quickly. \par\pard\ql \li1800\sb0\sl-280\slmult0 \p
ar\pard\ql\li1800\ri1656\sb1\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100
The only thing that worked for us was telling stories or giving examples of how
\up0 \expndtw-2\charscalex100 this phenomenon had worked, either inside our orga
nization, or elsewhere. And, enabling \up0 \expndtw-2\charscalex100 people, then
, to co-create the vision of what the organization could become. \par\pard\ql \l
i1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1
800\sb12\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\f
s24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24
That gave
the leadership an idea? \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\li
1800\ri1864\sb38\sl-260\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf2
1\f22\fs24 SD:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24 Tho
se examples enabled them to imagine the vision for themselves in their own \up0
\expndtw-3\charscalex100 words, and in their own context, what it meant. \par\pa
rd\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1636\sb4\sl-280\slmult0\f
i720 \up0 \expndtw-2\charscalex100 I would tell them, for instance, a story abou
t Zambia, which was one of the stories \up0 \expndtw-2\charscalex100 I told in 1
996. I said that, \u8220?The future is going to be different. How? What will the
future \up0 \expndtw-3\charscalex100 look like? It will look like today. \par\p
ard\ql \li2520\sb264\sl-276\slmult0 \up0 \expndtw-4\charscalex100 \u8220?Let me
tell you about something that happened in Zambia just a few months \par\pard\ql
\li1800\ri1680\sb7\sl-273\slmult0 \up0 \expndtw-2\charscalex100 back in June 199
5. A health worker in Kamana, Zambia, logged on to the website for the \up0 \exp
ndtw-4\charscalex100 Centers for Disease Control in Atlanta, Georgia, and got th
e answer to a question on how \up0 \expndtw-4\charscalex100 to treat malaria. An
d, that was June 1995, not June 2015. This was Kamana, 600 \line \up0 \expndtw-5
\charscalex100 kilometers from the capital. \par\pard\ql \li1800\sb0\sl-276\slmu
lt0 \par\pard\ql\li1800\ri1637\sb9\sl-276\slmult0\fi720 \up0 \expndtw-2\charscal
ex100 \u8220?And, this was Zambia, one of the very poorest countries in the worl
d. The most \up0 \expndtw-2\charscalex100 important part of the picture was that
the World Bank was not in it. We didn't have our \up0 \expndtw-2\charscalex100
know-how organized so that we could make it available to all of the people insid
e and \up0 \expndtw-2\charscalex100 outside the organization so that they could

use it in the fight against poverty. Just imagine \up0 \expndtw-4\charscalex100


if they could use that know-how. Just imagine if we had our know-how organized i
n this \up0 \expndtw-5\charscalex100 way, what an organization we could become.\
u8221? \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkst
art Pg92}{\bkmkend Pg92}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li
10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2
\charscalex100 \ul0\nosupersub\cf9\f10\fs20 92 \par\pard\ql \li1800\sb0\sl-275\s
lmult0 \par\pard\ql\li1800\ri1715\sb198\sl-275\slmult0\fi720 \up0 \expndtw-2\cha
rscalex100 \ul0\nosupersub\cf14\f15\fs24 Telling that kind of a story enabled a
number of senior managers and many front \up0 \expndtw-2\charscalex100 line staf
f not to think so much about Zambia, or health, or Kamana, but to think about \u
p0 \expndtw-2\charscalex100 their own context. They started to think, \u8220?I'm
in finance, and we could do that in finance. \up0 \expndtw-2\charscalex100 Yes,
why not?\u8221? Or, \u8220?I'm in highways in Latin America. Yes, we could star
t to get \line \up0 \expndtw-3\charscalex100 organized. Yes, that might be inter
esting.\u8220? \par\pard\ql \li1800\sb0\sl-273\slmult0 \par\pard\ql\li1800\ri199
7\sb14\sl-273\slmult0\fi720 \up0 \expndtw-4\charscalex100 As a result of that pr
ocess they started to imagine what the World Bank could \up0 \expndtw-2\charscal
ex100 become and what their lives in the World Bank could become. In the process
, they \up0 \expndtw-2\charscalex100 became very excited about this as an idea.
In due course, they persuaded the president \up0 \expndtw-2\charscalex100 that t
his was an exciting idea and he snapped it up, to his great credit. \par\pard\ql
\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\
li1800\sb33\sl-276\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf21\f2
2\fs24 JC:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf16\f17\fs24
Is tha
t how it moved from the background to the foreground? \par\pard\ql \li1800\sb0\s
l-273\slmult0 \par\pard\ql\li1800\ri1625\sb14\sl-273\slmult0 \up0 \expndtw-2\cha
rscalex100 \ul0\nosupersub\cf21\f22\fs24 SD:\ul0\nosupersub\cf42\f43\fs24 \ul0\
nosupersub\cf14\f15\fs24 Right. The president was interested in information. H
e had been talking about the \up0 \expndtw-2\charscalex100 idea that we should b
e doing something in information, so he was quite interested in this \up0 \expnd
tw-4\charscalex100 general area. He was a strong and effective leader in encoura
ging the idea, in picking it \line \up0 \expndtw-2\charscalex100 up and dramatic
ally announcing it at the annual meeting in 1996. He has stayed the \line \up0 \
expndtw-2\charscalex100 course, and has continued since then to champion it in t
he organization. This shows how \up0 \expndtw-2\charscalex100 important it is to
have a leader in an organization that can understand an exciting idea and \up0
\expndtw-3\charscalex100 can support it consistently over time. \par\pard\ql \li
1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li18
00\sb303\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\f
s28 Strategic Intent \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\li1800
\ri1967\sb230\sl-260\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\
f22\fs24 JC:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf16\f17\fs24
What
is the relationship between the World Bank's knowledge initiative and its \up0
\expndtw-4\charscalex100 ability to accomplish its strategic intent? \par\pard\q
l \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb31\sl-276\slmult0 \up0 \expnd
tw-2\charscalex100 \ul0\nosupersub\cf21\f22\fs24 SD:\ul0\nosupersub\cf42\f43\fs2
4 \ul0\nosupersub\cf14\f15\fs24 It has become a central pillar. We have been
a lending organization. Now the \par\pard\qj \li1800\ri1870\sb9\sl-270\slmult0 \
up0 \expndtw-2\charscalex100 official strategy is that knowledge is on a par wit
h money. I would say over the coming \up0 \expndtw-2\charscalex100 period we wil
l see knowledge as more important than money. It will become the more \up0 \expn
dtw-3\charscalex100 important pillar. \par\pard\ql \li1800\sb0\sl-276\slmult0 \p
ar\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb14\sl-276\slmult0 \up
0 \expndtw-3\charscalex100 \ul0\nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf42
\f43\fs24 \ul0\nosupersub\cf16\f17\fs24
Will knowledge become the currency o
f the Bank? \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\pard\qj\li1800\ri1812\s
b58\sl-260\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf21\f22\fs24 S
D:\ul0\nosupersub\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24 In a sense, yes
. When we started in 1996 the World Bank did not have a mission \up0 \expndtw-4\

charscalex100 statement. We had been in business fifty years and had no mission
statement. \par\pard\qj \li1800\sb0\sl-273\slmult0 \par\pard\qj\li1800\ri1678\sb
17\sl-273\slmult0\fi720 \up0 \expndtw-2\charscalex100 When we were trying to get
the knowledge initiative launched, we could not refer \line \up0 \expndtw-4\cha
rscalex100 to a mission statement and say this would be a better way of achievin
g the mission. We \line \up0 \expndtw-2\charscalex100 had to say, \u8220?Imagine
if we had a mission statement, what would it be like, if knowledge \line \up0 \
expndtw-4\charscalex100 was a big part of it.\u8221? And, that is what happened.
The mission statement was finalized in
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}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g93}{\bkmkend Pg93}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 93 \par\pard\qj \li1800\sb0\sl-280\slmult
0 \par\pard\qj\li1800\ri1863\sb189\sl-280\slmult0 \up0 \expndtw-2\charscalex100
\ul0\nosupersub\cf14\f15\fs24 January 1999. One of the reasons why it could be f
inalized was that by then knowledge \up0 \expndtw-3\charscalex100 had become a b
ig part of our activities. \par\pard\ql \li1800\sb0\sl-270\slmult0 \par\pard\ql\
li1800\ri1864\sb19\sl-270\slmult0\fi720 \up0 \expndtw-2\charscalex100 The dilemm
a that the management had been struggling to resolve for fifty years \up0 \expnd
tw-2\charscalex100 was: We are a lending organization, but we have also somethin
g to do with poverty. \up0 \expndtw-3\charscalex100 What is the relationship? \p
ar\pard\ql \li1800\sb0\sl-273\slmult0 \par\pard\ql\li1800\ri1638\sb15\sl-273\slm
ult0\fi720 \up0 \expndtw-2\charscalex100 Obviously, if we are just a lending org
anization, we could never hope to achieve a \line \up0 \expndtw-2\charscalex100
great reduction in global poverty, so there was a significant disconnect. The di
sconnect \line \up0 \expndtw-2\charscalex100 was solved when we said, \u8220?Tha
t's right. Our mission is to fight poverty. And, we have \line \up0 \expndtw-2\c
harscalex100 two main arms to do that. One is money, that is, lending, and the o
ther is knowledge.\u8221? \par\pard\qj \li1800\sb0\sl-270\slmult0 \par\pard\qj\l
i1800\ri1829\sb20\sl-270\slmult0\fi720 \up0 \expndtw-2\charscalex100 Once that w
as in place we could come to closure on the mission statement. Our \up0 \expndtw
-2\charscalex100 mission statement is: Fighting poverty through lending and thro
ugh sharing knowledge. \up0 \expndtw-2\charscalex100 There are other means, but
essentially, those are the two main pillars. \par\pard\sect\sectd\fs24\paperw122
40\paperh15840\pard\sb0\sl-240{\bkmkstart Pg94}{\bkmkend Pg94}\par\pard\ql \li10
239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10
239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs2
0 94 \par\pard\ql \li1800\sb0\sl-414\slmult0 \par\pard\ql\li1800\sb84\sl-414\slm
ult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf46\f47\fs36 Alex Bennet:\ul0\
nosupersub\cf73\f74\fs36 \ul0\nosupersub\cf27\f28\fs36 \ul0\nosupersub\cf28\f2
9\fs36 The Knowledge-Centric Organization \par\pard\ql \li1800\sb0\sl-828\slmult
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persub\cf30\f31\fs72 18 \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1
800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li180
0\ri1776\sb100\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14
\f15\fs24 Alex Bennet is co-founder of the Mountain Quest Institute, a research
and retreat center \up0 \expndtw-2\charscalex100 focused on achieving growth and
understanding through quests for knowledge. She \line \up0 \expndtw-2\charscale
x100 served as the chief knowledge officer for the U.S. Department of the Navy f

rom 1998 to \up0 \expndtw-2\charscalex100 2002, where she pioneered and lead the
development of the Navy\u8217?s enterprise-wide \line \up0 \expndtw-2\charscale
x100 knowledge-centric organization (KCO) effort. She also was Co-Chair of the F
ederal \up0 \expndtw-3\charscalex100 Knowledge Management Working Group. \par\pa
rd\ql \li1800\sb0\sl-273\slmult0 \par\pard\ql\li1800\ri2011\sb14\sl-273\slmult0\
fi720 \up0 \expndtw-2\charscalex100 In addition to her extensive and diverse car
eer with the U.S. Navy, Bennet has \up0 \expndtw-2\charscalex100 published over
500 articles, edited several books on knowledge management and e-\line \up0 \exp
ndtw-4\charscalex100 government, and is co-author of a book on the Department of
the Navy CIO \line \up0 \expndtw-5\charscalex100 implementation strategy.\ul0\s
uper\cf31\f32\fs24 8 \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520
\sb9\sl-276\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf14\f15\fs24
Alex Bennet sees that we are moving from the information age into an age of \par
\pard\ql \li1800\sb1\sl-256\slmult0 \up0 \expndtw-2\charscalex100 complexity, an
d knowledge is the best and perhaps the only answer to this complexity \par\pard
\ql \li1800\ri1622\sb5\sl-280\slmult0 \up0 \expndtw-2\charscalex100 age. She bel
ieves that knowledge, when used in conjunction with strong values, can make \up0
\expndtw-2\charscalex100 a positive difference, can move us forward and promote
growth in our chaotic and, \line \up0 \expndtw-3\charscalex100 complex, and unc
ertain world\ul0\nosupersub\cf42\f43\fs24 . \par\pard\qj \li1800\sb0\sl-240\slmu
lt0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult
0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0
\par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \p
ar\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par
\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\p
ard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\par
d\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\
qj\li1800\sb0\sl-240\slmult0 \par\pard\qj\li1800\sb0\sl-240\slmult0 \par\pard\qj
\li1800\ri1844\sb154\sl-240\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf3
2\f33\fs20\ul0\super\cf32\f33\fs19 8\ul0\nosupersub\cf9\f10\fs20 Dan Porter, Al
ex Bennet, Ronald Turner, and David Wennergren, \ul0\nosupersub\cf33\f34\fs20 Th
e Power of Team: The Making of a \up0 \expndtw-4\charscalex100 CIO\ul0\nosupersu
b\cf9\f10\fs20 (Washington, D.C.: U.S. Department of the Navy, 2002)
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p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g95}{\bkmkend Pg95}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\char
scalex100 \ul0\nosupersub\cf9\f10\fs20 95 \par\pard\ql \li4256\sb0\sl-368\slmult

0 \par\pard\ql\li4256\sb0\sl-368\slmult0 \par\pard\ql\li4256\sb0\sl-368\slmult0
\par\pard\ql\li4256\sb12\sl-368\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosuper
sub\cf10\f11\fs32 The Conversation \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\
pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb206\sl-322\slmult0 \up0
\expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 The Role of the Chief Kno
wledge Officer \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri185
2\sb273\sl-280\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs
24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16\f17\fs24 What is th
e role of the Chief Information Officer in the Department of the Navy, \up0 \exp
ndtw-3\charscalex100 and where is that role situated in the infrastructure? \par
\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1861\sb8\sl-276\slmult
0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf21\f22\fs24 AB:\ul0\nosupersub
\cf42\f43\fs24 \ul0\nosupersub\cf14\f15\fs24 The role of the chief knowledge
officer for the Department is situated with the \line \up0 \expndtw-2\charscalex
100 chief information officer (a direct report to the Undersecretary of the Navy
) and is the \line \up0 \expndtw-2\charscalex100 responsibility of the deputy ch
ief information officer (DCIO) for enterprise integration. \line \up0 \expndtw-2
\charscalex100 While I was in that position, I also had overall responsibility f
or policy and guidance in \line \up0 \expndtw-2\charscalex100 the areas of infor
mation management/information technology strategic planning and \line \up0 \expn
dtw-2\charscalex100 workforce issues, as well as enterprise licensing and the co
mmunications and outreach \line \up0 \expndtw-2\charscalex100 program. Situated
at the highest level of the secretariat infrastructure, the role was \par\pard\q
l \li1800\sb1\sl-256\slmult0 \up0 \expndtw-3\charscalex100 primarily that of a l
eader and champion, integrator, and change agent. \par\pard\ql \li1800\sb0\sl-32
2\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb206\sl-32
2\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 The Enviro
nment \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slm
ult0 \par\pard\ql\li1800\sb24\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\
nosupersub\cf21\f22\fs24 JC:\ul0\nosupersub\cf14\f15\fs24 \ul0\nosupersub\cf16
\f17\fs24 What kind of model(s) for knowledge management do you see is effecti
ve for \par\pard\qj \li1800\ri1898\sb0\sl-280\slmult0 \up0 \expndtw-2\charscalex
100 creating an environmental that's conducive to knowledge creation, knowledge
sharing, \up0 \expndtw-3\charscalex100 knowledge value capture for the Navy? \pa
r\pard\ql \li1800\sb265\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupe
rsub\cf21\f22\fs24 AB:\ul0\nosupersub\cf14\f15\fs24
Knowledge creation, knowl
edge sharing, and value capture are very different \par\pard\ql \li1800\ri1709\s
b4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 things, even though they are all
inter-related. We are going to focus on the environment. \up0 \expndtw-2\charsc
alex100 The Department of the Navy includes the Navy Department and the Marine C
orps, as \up0 \expndtw-2\charscalex100 well as the Secretariat. It is a large fr
ame of reference. We are the largest navy in the \up0 \expndtw-2\charscalex100 w
orld, with nearly a million people directly connected, and an even larger suppor
t \line \up0 \expndtw-2\charscalex100 framework of interconnected people both in
side and outside of government. The result is \up0 \expndtw-3\charscalex100 that
there is not one specific environment in which we operate. \par\pard\ql \li2520
\sb264\sl-276\slmult0 \up0 \expndtw-1\charscalex100 Imagine the differences that
occur across such a large - and geographically \par\pard\qj \li1800\ri1651\sb5\
sl-275\slmult0 \up0 \expndtw-2\charscalex100 dispersed - organization. There is
a different environment in undersea warfare than there \line \up0 \expndtw-2\cha
rscalex100 is in surface warfare, than there is in the Marines who are on the la
nd, than there is in our \line \up0 \expndtw-2\charscalex100 air community. And,
that is just one way of dividing it. Then, you have the environments \line \up0
\expndtw-2\charscalex100 that are differentiated by uniform, civilian, and cont
ractor, and we are all part of the same \line \up0 \expndtw-3\charscalex100 team
. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart P
g96}{\bkmkend Pg96}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239
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scalex100 \ul0\nosupersub\cf9\f10\fs20 96 \par\pard\ql \li1800\sb0\sl-276\slmult
0 \par\pard\ql\li1800\ri1660\sb196\sl-276\slmult0\fi720 \up0 \expndtw-2\charscal

ex100 \ul0\nosupersub\cf14\f15\fs24 Yet, there is an integration even among thos


e kind of things because most of the \up0 \expndtw-2\charscalex100 people who ar
e in our contractor realm actually come out of the service. And, most of the \up
0 \expndtw-2\charscalex100 people that are civilians go on to become contractors
. There is a trade there. There is a \up0 \expndtw-2\charscalex100 loop. There a
re a lot of young people that are starting in contracting and then go into the \
up0 \expndtw-2\charscalex100 service, and into a uniform. We have an incredibly
fluid movement of people even \line \up0 \expndtw-3\charscalex100 though we have
a differentiation in the segments of our population. \par\pard\ql \li1800\sb0\s
l-273\slmult0 \par\pard\ql\li1800\ri1920\sb14\sl-273\slmult0\fi720 \up0 \expndtw
-2\charscalex100 We also have incredible geographical dispersion. We are positio
ned around the \up0 \expndtw-2\charscalex100 world. At the same time, our points
are not static. They are continuously moving and \up0 \expndtw-2\charscalex100
fluid. When someone is out there on a ship, he or she is part of a community tha
t is \up0 \expndtw-3\charscalex100 literally moving and changing its location co
ntinuously. \par\pard\qj \li1800\sb0\sl-270\slmult0 \par\pard\qj\li1800\ri1892\s
b20\sl-270\slmult0\fi720 \up0 \expndtw-2\charscalex100 We have a very different
environment than any other organization that I know \up0 \expndtw-2\charscalex10
0 around the world. We are not the same as the other services either, because we
have all \up0 \expndtw-3\charscalex100 four types of activities as part of our
department. \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri2256\s
b2\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 I would like to discuss th
ose values that are in the environment that perhaps \up0 \expndtw-3\charscalex10
0 facilitate the creation of knowledge and the sharing of knowledge. \par\pard\q
l \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb284\sl-322\slmult0 \up0 \expn
dtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 The Importance of Knowledge \p
ar\pard\ql \li1800\ri1723\sb276\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul
0\nosupersub\cf14\f15\fs24 First of all, warfare and technology are inextricably
related. If we go back and look at \up0 \expndtw-2\charscalex100 who has won wa
rs in the past, we discover that the outcome was very dependent on the \up0 \exp
ndtw-2\charscalex100 technology that was known and used in the process of warfar
e. Let's go back to the very \up0 \expndtw-2\charscalex100 beginning with the ca
vemen. When the spear was first developed, a technological \line \up0 \expndtw-2
\charscalex100 development, it gave its possessors a definite advantage over the
club. We can go on and \up0 \expndtw-3\charscalex100 on throughout the history
of warfare with that same analogy. \par\pard\qj \li1800\sb0\sl-260\slmult0 \par\
pard\qj\li1800\ri1791\sb38\sl-260\slmult0\fi720 \up0 \expndtw-2\charscalex100 Th
erefore, we recognize the value of technology related to what our mission and \u
p0 \expndtw-2\charscalex100 vision here. That has direct connectivity to the adv
ancement of technology. \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1
800\ri1622\sb11\sl-276\slmult0\fi720 \up0 \expndtw-2\charscalex100 Secondly, we
highly value the importance of knowledge because it relates directly \line \up0
\expndtw-2\charscalex100 to our success in warfare. If we are in the mode to def
end we must have high situational \line \up0 \expndtw-2\charscalex100 awareness.
We must have knowledge of both ourselves and of our opponent. We must \line \up
0 \expndtw-2\charscalex100 have knowledge of the battlespace, knowledge of ourse
lves, and knowledge of the \line \up0 \expndtw-2\charscalex100 opponent. That is
quite easily put, but very difficult to do. Further, it is dependent on the \li
ne \up0 \expndtw-2\charscalex100 information that we get fed in and how we conne
ct it up. We have in that business since \line \up0 \expndtw-2\charscalex100 the
very beginning of warfare -- since the very beginning of the Department. \par\p
ard\ql \li1800\ri1771\sb261\sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 W
hat is different today is that via the Internet everyone has access to everythin
g, \line \up0 \expndtw-2\charscalex100 and there is almost an exponential increa
se in the amount of data and information. \line \up0 \expndtw-2\charscalex100 Be
cause everyone is creative and everyone has access to all of this information no
w, we \line \up0 \expndtw-2\charscalex100 seem to see more creativity happening
in our people, more growth, both internally and \line \up0 \expndtw-3\charscalex
100 externally. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb0\sl-24
0{\bkmkstart Pg97}{\bkmkend Pg97}\par\pard\ql \li10239\sb0\sl-230\slmult0 \par\p

ard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb9\sl-230\slmult0 \up0 \


expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 97 \par\pard\ql \li1800\sb0
\sl-276\slmult0 \par\pard\ql\li1800\ri1769\sb196\sl-276\slmult0\fi720 \up0 \expn
dtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Our environment has the requir
ement and the demand for what Dow Chemical\u8217?s \line \up0 \expndtw-2\charsca
lex100 definition of the \u8220?right stuff, right place, and right time.\u8221?
To be successful in our \line \up0 \expndtw-4\charscalex100 responsibility, we
must ensure that we have the best knowledge and we use it in the best \line \up0
\expndtw-2\charscalex100 way possible. That means focusing and developing our p
eople. Particularly on the \line \up0 \expndtw-2\charscalex100 military side tha
t means we have to have outstanding training programs in which we try \line \up0
\expndtw-2\charscalex100 to grow our people into decision-makers so that they h
ave the ability to use all of this \line \up0 \expndtw-2\charscalex100 newly ava
ilable information. You will also find that we have cutting edge information \li
ne \up0 \expndtw-2\charscalex100 systems. We are at a different place than most
other government organizations because \line \up0 \expndtw-2\charscalex100 our v
ery success of our business is dependent on all of the things that are part of \
line \up0 \expndtw-2\charscalex100 knowledge management, that are also part of k
nowledge creation, and knowledge \line \up0 \expndtw-3\charscalex100 sharing. \p
ar\pard\qj \li1800\sb0\sl-270\slmult0 \par\pard\qj\li1800\ri1764\sb19\sl-270\slm
ult0\fi720 \up0 \expndtw-4\charscalex100 We highly value innovation. We highly v
alue new ideas. We want to stay on the \up0 \expndtw-2\charscalex100 cutting edg
e of technology, of processes, of decision-making in order to succeed at what \u
p0 \expndtw-3\charscalex100 our vision mission in life is. That is number one. \
par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb266\sl-322\slmult0
\up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Knowledge Sharing \p
ar\pard\ql \li1800\ri1620\sb276\sl-276\slmult0\fi720 \up0 \expndtw-4\charscalex1
00 \ul0\nosupersub\cf14\f15\fs24 Let us discuss the sharing piece. We have the s
ame barriers that other government \line \up0 \expndtw-2\charscalex100 organizat
ions have to sharing, and perhaps external organizations have as well. These \li
ne \up0 \expndtw-2\charscalex100 include the \u8220?not created here\u8221? synd
rome, the \u8220?knowledge is power\u8221? issues, and on and \line \up0 \expndt
w-2\charscalex100 on. All of those things are embedded here. What is different a
bout the Department of \line \up0 \expndtw-2\charscalex100 Navy is that, side-by
-side with those other things, we have a very high degree of social \line \up0 \
expndtw-2\charscalex100 capital. Our people, particularly in uniform, rotate eve
ry two to three years. They move in \line \up0 \expndtw-2\charscalex100 and out
and around the system. We have a flow of people in, out, and around. In addition
, \line \up0 \expndtw-4\charscalex100 once they have been in a situation that ca
n be life threatening, whether it is a warfare \line \up0 \expndtw-2\charscalex1
00 situation or simply being on a ship when there is a problem with the ship, ou
r teams must \line \up0 \expndtw-2\charscalex100 work together. We have a sense
of team that even the other Department of Defense \line \up0 \expndtw-2\charscal
ex100 organizations do not have. We have ships out at sea that are a group of pe
ople that are \line \up0 \expndtw-2\charscalex100 truly a community in the great
sense of the word, and that have to be dependent on each \line \up0 \expndtw-2\
charscalex100 other. There is not one individual on that team that can run that
small community or city \line \up0 \expndtw-3\charscalex100 by itself. \par\pard
\ql \li1800\ri1738\sb264\sl-276\slmult0\fi720 \up0 \expndtw-4\charscalex100 We h
ave learned the value of teams when we are at sea on our ships. That does \line
\up0 \expndtw-2\charscalex100 not always come into the offices, but we do have t
hose learnings there. As a result, we \line \up0 \expndtw-2\charscalex100 value
teams. We recognize that importance, and when we have an emotional experience, \
line \up0 \expndtw-2\charscalex100 when anything that goes wrong (and that happe
ns all the time), when we have been \line \up0 \expndtw-4\charscalex100 through
a conflict situation anyone that is connected with that team or with that unit,
\line \up0 \expndtw-2\charscalex100 before, during, or after becomes a friend, b
ecomes a part of your network \ul0\nosupersub\cf16\f17\fs24 for life\ul0\nosuper
sub\cf14\f15\fs24 , for the \line \up0 \expndtw-2\charscalex100 twenty years of
active duty service and beyond that, as a retiree in the naval reserves. \par\pa

rd\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li2520\sb8\sl-276\slmult0 \up0 \ex


pndtw-2\charscalex100 We build relationships and networks that stay in place for
the lifetime of an \par\pard\qj \li1800\ri1704\sb0\sl-280\slmult0 \up0 \expndtw
-2\charscalex100 individual that are built on a shared understanding, a shared c
onflict that was overcome. \line \up0 \expndtw-2\charscalex100 We have built tru
st. We have built relationships in a way that is very, very difficult to do \lin
e \up0 \expndtw-2\charscalex100 for people who are not in those kinds of situati
ons that have the potential of affecting life \par\pard\sect\sectd\fs24\paperw12
240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg98}{\bkmkend Pg98}\par\pard\ql \li1
0239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\pard\ql\li1
0239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs
20 98 \par\pard\qj \li1800\sb0\sl-280\slmult0 \par\pard\qj\li1800\ri1758\sb189\s
l-280\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 or lim
b in some way. As a result we have a very high social capital and a very fluid h
igh \up0 \expndtw-3\charscalex100 movement in and out, around and about our orga
nizations. \par\pard\ql \li1800\sb0\sl-274\slmult0 \par\pard\ql\li1800\ri1620\sb
11\sl-274\slmult0\fi720 \up0 \expndtw-2\charscalex100 Yes, we have some stovepip
es within those communities. Yet, because people go \line \up0 \expndtw-2\charsc
alex100 in and out and among those communities and because those communities are
reliant on \line \up0 \expndtw-2\charscalex100 each other, they are very relian
t. The planes are right on the ships and the subs are there \line \up0 \expndtw2\charscalex100 protecting both, and we have Marines that ride on all of our bat
tle groups. Because of that \line \up0 \expndtw-2\charscalex100 intertwining and
reliance on each other, we gain a fluid cross exchange across lines. \line \up0
\expndtw-2\charscalex100 When people are in like situations they become closer,
which has helped us move fluidly \line \up0 \expndtw-2\charscalex100 across som
e of those very natural stovepipes when people are focused very much on one \lin
e \up0 \expndtw-3\charscalex100 area and not the other. \par\pard\sect\sectd\fs2
4\paperw12240\paperh15840\pard\sb0\sl-240{\bkmkstart Pg99}{\bkmkend Pg99}\par\pa
rd\ql \li10239\sb0\sl-230\slmult0 \par\pard\ql\li10239\sb0\sl-230\slmult0 \par\p
ard\ql\li10239\sb9\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\
cf9\f10\fs20 99 \par\pard\ql \li1800\sb0\sl-414\slmult0 \par\pard\ql\li1800\sb84
\sl-414\slmult0 \up0 \expndtw0\charscalex98 \ul0\nosupersub\cf46\f47\fs36 Epilog
ue:\ul0\nosupersub\cf49\f50\fs36 Convergence - Toward the Next Stage \par\pard
\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\
ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql
\li1800\sb254\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf24\
f25\fs28 Synthesis \par\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\s
b0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb2
8\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 Whi
le all the contributors to \ul0\nosupersub\cf16\f17\fs24 Knowledge Capital\ul0\n
osupersub\cf14\f15\fs24 start out from their own unique \par\pard\ql \li1800\ri
1674\sb0\sl-276\slmult0 \up0 \expndtw-2\charscalex100 perspectives, clusters of
ideas, experiences, and capabilities emerged across the sessions \line \up0 \exp
ndtw-2\charscalex100 that pointed the way to a framework of the next generation
of the knowledge field. While \line \up0 \expndtw-2\charscalex100 a number of th
ese capabilities already exist in various stages of development in different \li
ne \up0 \expndtw-2\charscalex100 organizations today, their power will become re
inforced and magnified as they mature \line \up0 \expndtw-2\charscalex100 and li
nk together to become the basis for how the knowledge-based enterprise does its
\line \up0 \expndtw-3\charscalex100 business. \par\pard\qj \li1800\ri1781\sb265\
sl-280\slmult0\fi720 \up0 \expndtw-2\charscalex100 This epilogue is a synthesis
of these areas of convergence\ul0\nosupersub\cf16\f17\fs24 . \ul0\nosupersub\cf1
4\f15\fs24 Look at these clusters \line \up0 \expndtw-2\charscalex100 as element
s of a roadmap that guides you to the next generation of the knowledge-based \li
ne \up0 \expndtw-3\charscalex100 enterprise. \par\pard\ql \li2520\sb264\sl-276\s
lmult0 \up0 \expndtw-3\charscalex100 The areas of convergence explored are \par\
pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \u8226? fulf
illing the promise, \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw-2\cha
rscalex100 \u8226? knowledge as a factor of production, \par\pard\ql \li2520\s

b4\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \u8226? diverse in form but wi


th common principles \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw-2\ch
arscalex100 \u8226? knowledge as a valued asset, \par\pard\ql \li2520\sb24\sl276\slmult0 \up0 \expndtw-3\charscalex100 \u8226? market-based adaptive/spring
board enterprises, \par\pard\ql \li2520\sb4\sl-276\slmult0 \up0 \expndtw-2\chars
calex100 \u8226? knowledge capital strategy, \par\pard\ql \li2520\sb24\sl-276\
slmult0 \up0 \expndtw0\charscalex100 \u8226? values alignment, \par\pard\ql \l
i2520\sb24\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \u8226? core component
s in place, \par\pard\ql \li2520\sb4\sl-276\slmult0 \up0 \expndtw0\charscalex104
\u8226? learning, \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw-3\ch
arscalex100 \u8226? getting the knowledge enterprise off the ground, \par\pard
\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw-1\charscalex100 \u8226? from aud
it to assessment, \par\pard\ql \li2520\sb4\sl-276\slmult0 \up0 \expndtw0\charsca
lex103 \u8226? alliances, \par\pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expnd
tw-3\charscalex100 \u8226? intellectual assets and intellectual property \par\
pard\ql \li2520\sb24\sl-276\slmult0 \up0 \expndtw0\charscalex101 \u8226? futur
e centers \par\pard\ql \li1800\ri1628\sb265\sl-275\slmult0\fi720 \up0 \expndtw-2
\charscalex100 You can start your journey to create a knowledge-base enterprise
by mapping the \line \up0 \expndtw-2\charscalex100 points of convergence to the
kinds of practices in your own organization. Gauge how \line \up0 \expndtw-2\cha
rscalex100 your organization is structured, aligned and its recipes for its oper
ations. Note where your \line \up0 \expndtw-2\charscalex100 obstacles and opport
unities are. Then begin, step-by-step, to build the capabilities that \line \up0
\expndtw-2\charscalex100 will transform your organization over time into a winn
ing, knowledge-based enterprise. \par\pard\sect\sectd\fs24\paperw12240\paperh158
40\pard\sb0\sl-240{\bkmkstart Pg100}{\bkmkend Pg100}\par\pard\ql \li10140\sb0\sl
-230\slmult0 \par\pard\ql\li10140\sb0\sl-230\slmult0 \par\pard\ql\li10140\sb9\sl
-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 100 \par
\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\
pard\ql\li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb0\sl-322\slmult0 \par\pa
rd\ql\li1800\sb46\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\c
f24\f25\fs28 The Wars of Capabilities \par\pard\ql \li1800\sb0\sl-276\slmult0 \p
ar\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1609\sb4\sl-276\slmul
t0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 The upcoming ente
rprise wars will be wars of capabilities, not wars of position. They will \line
\up0 \expndtw-2\charscalex100 be won by knowledge-based enterprises that underst
and that the future is theirs if they \line \up0 \expndtw-2\charscalex100 build
for it. While financial and physical resources capital will always be important
\line \up0 \expndtw-2\charscalex100 ingredients in any successful business recip
e, it will be the ability to leverage usable \line \up0 \expndtw-2\charscalex100
knowledge capital that will give the knowledge-based enterprise its edge. Enter
prises able \line \up0 \expndtw-2\charscalex100 to engage their network workforc
e, strategic allies, and customers and can execute will \line \up0 \expndtw-2\ch
arscalex100 have the advantage. Absolute size and vast amounts of resources will
not be the core \line \up0 \expndtw-2\charscalex100 factors that determine succ
ess. In fact, massive size and immense, but immobile, \line \up0 \expndtw-2\char
scalex100 resources may be detrimental. Instead, it will be the ability to culti
vate and mobilize \line \up0 \expndtw-2\charscalex100 resources in imaginative,
intelligent, and unpredictable ways that will make the \line \up0 \expndtw-3\cha
rscalex100 difference. \par\pard\ql \li1800\sb0\sl-322\slmult0 \par\pard\ql\li18
00\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb142\sl-322\slmult0 \up0 \expndtw-4\c
harscalex100 \ul0\nosupersub\cf24\f25\fs28 Fulfilling the Promise \par\pard\ql \
li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb0\sl-276\slmult0 \par\pard\ql\li
1800\sb64\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\
fs24 The next generation of the knowledge movement moves from the edge of its cu
rrent \par\pard\ql \li1800\ri1681\sb5\sl-275\slmult0 \up0 \expndtw-2\charscalex1
00 practices and insights to fulfill the promise of the knowledge movement. Next
generation \up0 \expndtw-2\charscalex100 knowledge initiatives are more rigorou
sly defined, measured, and have clear sets of \line \up0 \expndtw-2\charscalex10
0 benefits. They integrate knowledge value creation, value capture, and the abil

ity to \line \up0 \expndtw-2\charscalex100 realize that value into a holistic kn


owledge framework. They also fuse knowledge \line \up0 \expndtw-2\charscalex100
capabilities together with other capacities to produce strategic outcomes. \par\
pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\ri1612\sb9\sl-276\slmult0
\fi720 \up0 \expndtw-2\charscalex100 These enterprises complete the shift from t
he dominance of \u8220?congealed resources\u8221? \line \up0 \expndtw-4\charscal
ex100 of the industrial era, where goods and services were characterized by a hi
gh proportion of \line \up0 \expndtw-4\charscalex100 physical resources and a lo
w proportion of knowledge resources, to one emphasizing \line \up0 \expndtw-2\ch
arscalex100 \u8220?congealed knowledge\u8221? offerings, where the primary ingre
dient is intellectual content, \line \up0 \expndtw-2\charscalex100 either embedd
ed in a physical package or standing alone. In short, the knowledge input of \li
ne \up0 \expndtw-2\charscalex100 the goods and services will be what differentia
tes the offerings and provide the prime \line \up0 \expndtw-2\charscalex100 degr
ee of value to customers. To support the knowledge deployment and incorporation,
\line \up0 \expndtw-2\charscalex100 the enterprise itself will use technologies
that provide an increasingly frictionless basis \line \up0 \expndtw-2\charscale
x100 for the exchange of knowledge, allowing knowledge resources to readily flow
throughout \line \up0 \expndtw-2\charscalex100 the extended enterprise and beco
me the lifeblood for renewing the enterprise\u8217?s network \line \up0 \expndtw
-3\charscalex100 and its offerings. \par\pard\ql \li2520\sb264\sl-276\slmult0 \u
p0 \expndtw-5\charscalex100 To support that flow, a next generation knowledge-ba
sed enterprise is \par\pard\ql \li1800\ri1786\sb1\sl-280\slmult0 \up0 \expndtw-2
\charscalex100 characterized by a sound foundation of values, a knowledge strate
gy, a clear vision with \line \up0 \expndtw-2\charscalex100 strenuous goals, and
the requirement that all people in the extended enterprise are \line \up0 \expn
dtw-2\charscalex100 autonomous owners of the human capital, but freely share it
with their colleagues. \par\pard\sect\sectd\fs24\paperw12240\paperh15840\pard\sb
0\sl-240{\bkmkstart Pg101}{\bkmkend Pg101}\par\pard\ql \li10140\sb0\sl-230\slmul
t0 \par\pard\ql\li10140\sb0\sl-230\slmult0 \par\pard\ql\li10140\sb9\sl-230\slmul
t0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf9\f10\fs20 101 \par\pard\ql \
li1800\sb0\sl-322\slmult0 \par\pard\ql\li1800\sb172\sl-322\slmult0 \up0 \expndtw
-4\charscalex100 \ul0\nosupersub\cf24\f25\fs28 Moving to the Next Generation \pa
r\pard\ql \li1800\sb0\sl-276\slmult0 \par\pard\ql\li1800\sb260\sl-276\slmult0 \u
p0 \expndtw-2\charscalex100 \ul0\nosupersub\cf14\f15\fs24 The elements discussed
here are a number of the dimensions of a next generation \par\pard\ql \li1800\r
i1640\sb4\sl-276\slmult0 \up0 \expndtw-2\charscalex100 knowledge framework. Whil
e there will be new developments and perspectives emerging \up0 \expndtw-2\chars
calex100 every year, this group of dimensions provides a baseline opportunity to
take a good look \up0 \expndtw-2\charscalex100 at an organization and benchmark
its readiness to operate as a knowledge-based \line \up0 \expndtw-2\charscalex1
00 enterprise. Anyone in the enterprise, from the leadership to the front line,
can today map \up0 \expndtw-2\charscalex100 out how the enterprise looks at know
ledge as a factor of production, as an engine for \line \up0 \expndtw-2\charscal
ex100 change, and as the basis for building the future. That is an exciting and
valuable \line \up0 \expndtw-3\charscalex100 perspective. It is also a highly pa
rticipatory perspective. \par\pard\ql \li1800\sb0\sl-273\slmult0 \par\pard\ql\li
1800\ri1633\sb14\sl-273\slmult0\fi720 \up0 \expndtw-2\charscalex100 Be part of e
ngaging in the conversation involved in creating the next generation \up0 \expnd
tw-4\charscalex100 of knowledge-based enterprises. Look at your organization and
see how well it is \line \up0 \expndtw-2\charscalex100 embedding knowledge into
its processes, practices, perspectives, and actions. Begin the \up0 \expndtw-2\
charscalex100 process by sharing the materials in \ul0\nosupersub\cf16\f17\fs24
Knowledge Capital\ul0\nosupersub\cf14\f15\fs24 with your colleagues. Try out th
e \up0 \expndtw-2\charscalex100 ideas and practices discussed in one of the chap
ters. Your new experience will stimulate \up0 \expndtw-4\charscalex100 you and y
our organization to rethink the \u8220?business recipes\u8221? you use. In the c
ourse of your \up0 \expndtw-5\charscalex100 conversations you will build the kno
wledge-based enterprise. \par\pard\ql \li2520\sb0\sl-276\slmult0 \par\pard\ql\li
2520\sb9\sl-276\slmult0 \up0 \expndtw-2\charscalex100 The message is that no one

owns the future, or the next generation of the \par\pard\ql \li1800\ri1785\sb7\


sl-273\slmult0 \up0 \expndtw-2\charscalex100 knowledge movement. There are also
no predetermined winners in the upcoming \u8220?Wars \line \up0 \expndtw-4\chars
calex100 of Capabilities\u8221?. Those wars wills be won by those who perceive t
hat the world is \line \up0 \expndtw-2\charscalex100 continually changing, that
knowledge is a central ingredient in any business recipe, and \line \up0 \expndt
w-2\charscalex100 that a knowledge-based enterprise will be the best opportunity
zone in which to be. \par\pard\sect\sectd\fs24}

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