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April 19, 2009

On knowledge management and the pma


Well this kbam pma has dragged on a bit (suppose to finish weeks ago) but I have myself to blame for spending too much time procrastinating. For the sake of kbam blogging marks, let me talk a bit about a small realisation about how to apply KM to AM. In my previous blog post I said something about "thinking about knowledge on a higher level" but now I think about it there is little value in that idea because it doesn't help with answering the question whatsoever.

An important aspect, I think, is to recognise the difference between "information" and "knowledge". As Nonaka (a guru on knowledge management) stated "information is indifferent to human values, context free, without intentions or commitment." whereas "knowledge is grounded in values, experience, and purposeful action." Well, that is just a wordy way of saying information is "dead" whereas knowledge is "living". Not sure if this metaphor makes more sense or not. The idea, according to me, is that without humans to 'use' or 'interpret' information, information is just information. On it own, information does not lead to better decisions, better actions, or better business performance. Knowledge, on the other hand, needs humans to 'interpret' and 'be understood' based on one's own perception and analytical abilities. In this sense, knowledge is subjective which often exists in a tacit form, like a skilled craftman knows how to make beautiful porcelain but cannot explain how. When such tacit knowing is externalised (distributed, made public, turned into worker's manual), knowledge becomes information in the eyes of others. Unlike knowledge, information in an explicit form is easy to circulate. An English dictionary, for example, exists only as information to an unlearned person unless (he) can use it to solve a translation problem. If he succeeds, information is turned into knowledge. 

So, what is the point of this information/knowledge garbage? What are you getting at you may say. Well, aspiring businesses that have approached KM by installing expensive IT, automated computer systems may be thinking "Yes, We have a knowledge management system, I mean we spent all these money on these technologiee havn't we?" Actually what they have gained is merely an 'information processing' technology. It may help them to collect and distribute key information about customers or suppliers in an unprecedented rate. But when information is not 'sinking' in i.e. not being utilised in a way that helps them to make better decisions, they quickly despair and claim KM is just 'air' and move on to the next initiative. 

Why wouldn't it work? It seems more is needed, but what? Nonaka thinks KM should have three ingredient, working together; the knowledge asset, the Ba, and the SECI process. The knowledge asset is the people, or the infrastures such as IT system. SECI process is a process describing the conversion of knowledge between explicit to tacit forms. But to me, the key ingredient is the Ba which in Nonaka's words is the "platform for the concentration of knowledge assets." We can draw parallels between the concept of Ba and the idea of "creating a learning environment" in organisational learning. 

When thinking about application of KM, it is easy to think "what is difficult about that? Just put in a computer IT sytem and that will solve all your worries. I mean, after all, that is what big companies are doing!" Yes, on a surface level, we see company buyig technologies and naturally we want to imitate their success and the quickest way is just to have whatever they have. Unfortunately, as said before, explicit things such as information can be bought easily with money. Knowledge on the other hand must be fostered and created from within the organisation. Knowledge, unlike information, can not be bought.

April 14, 2009

initiating kbam pma

I have chosen resource utilisation for my KBAM pma. At first answering the question was rather puzzling because I could not see how resource planning, i.e. inventory levels, capacity planning could relate to the idea of knowledge, i.e. how to facilitate sharing of information etc., that seem to dominate literatures on KM and organisational learning. 

After spending some time reading up about inventory management, and some common problems that goes on in scheduling production, managing customers, and raw material orders, I begin to see it is necessary to view knowledge in a more broader sense: as the ¡§thing¡¨ that is necessary to run a business and this may be key information, the way of organising work etc

So in a way resource utilisation tools (or methods or techniques) such as MRP, MRPII, JIT, DRP are, I suppose, knowledge management tools in its own right, designed to help people interpret and make decision based on raw data such as inventory level, delivery time etc.

If above premise are accepted, then the systems mentioned above seem like the formal KM tools- ie what people can see explicitly and followed religiously. However, there is also another level of knowledge not visible from these formal tools, called informal knowledge, which are often the often tried & tested ¡§methods¡¨ or ¡§ways of doing things around here¡¨ .

Sometimes informal and formal knowledge are incompatible with each other, such as when data generated from computer is completely ignored by workers who would rather rely on talking to people or own experience to make own decisions, thereby rendering the formal system essentially worthless. Interestingly, Landvater 1997 explains this by saying whether formal, informal adopted by organisation, it is the one that provide the necessary information to people that reigns all. The abandonment of computer system is due to the fact it doesn¡¦t give the information people wanted, therefore an informal system appears. 

To apply KM to resource planning then, seem to take the questions of resources to a higher level. Instead of asking ¡§what information do I need to make my ordering decision¡¨, we may be asking ¡§what system will best suited to solve this problem?¡¨, and this question would then depend on ¡§what sort of knowledge does this decision requires?¡¨ 

The point I am trying to make here, I suppose, is that KM is about maximising the benefits of formal/informal systems of information transfer to deliver your organisational objectives. This would depend on the organisational structure, cultures, and type of operations that are carried out. Thinking along this line of thought brings KM literatures closer asset management. 

March 14, 2009

Know your audience – KBAM presentation

Note: This entry is not specific to any person or team from MBE

Today's presentation was interesting for a few reasons. First Paul went into a lot of effort to make this 'class presentation' as 'real-life' as possible. Everything from the room layout, assign board of director, company background information added realism. Second, every team responded to this which is apparent from the heightened sense of seriousness, dress code, keeping to time, highly selective on the material presented. 

How have we performed overall?

  • As a class presentation? Quite well I think.
  • As a real consultant presentation? We will get a 'D' at most, for participation

Why such low grade? Well, mostly because our presentation lacked 'persuasion' which is the feeling that we must start now and have some initial steps to work with. No feeling of urgency or practicality was conveyed by many teams, instead we had a lot of 'nice to have' reasons to implement KM or AM. Well, guess what! business executives ain't going to invest in big projects simply because it is 'nice to have'.

"Are you mad? How can you say that? We suggested many real solutions to Waveriders!". Yes, you did, teams tried several ways to be 'real', some made up problems they claimed exists within WR. Some try to match their chosen AM systems to WR's EU expansion strategy and claim it is 'useful' or 'nice' to have this system in place. But I doubt any of the board members was actually thinking "Oh my goodness, look at our company! It's broken, we must do something fast to fix it!". Rather, they were probably more like "Okay... I know these benefits, tell me something I don't know, like where do I start, what is the pay back period, give me something concrete numbers here..."

One thing I learnt from this presentation, and the process of creating it, is the importance of looking at the problem/issue as realistically as possible. Paul can do everything to make this realistic, but at the end of the day it is still up to us - the presenters to think realistic as well. The reason I say this is I noticed many teams (myself included) fell in the trap of doing things the same old way- focus on what the tools are and why they are important - pretty much straight out of any books on KM or AM. 

What our KM team (francisco aykut and smily) did excellently (in my opinion) was to forget about the WHAT, the WHY but focus only on the HOW. Why is that? Because the directors probably are not very interested in hearing about WHAT is Knowledge Management or Facility Management because they probably know it more that we do. They are probably not interested in the 'theoretical' benefits either unless we can back them up with real cases (as Paul repeated pointed out from many teams).  But to do this wold require

  1. Experience and knowledge about what make the executives tick (probably money $$$)
  2. A holistic understanding of the topic in order to apply KM/AM theories into practice.

One possible way to get closer to this goal would be to carry out research on HOW people actually implement it in practice, any real cases, why they have succeeded or failed. So if we get asked "How do you know this works?", we can confidently say " X Inc. implemented this Y years ago, it cost them Z dollars and they started making profit from it after U years".

To be fair, this was problematic from a lot of us because we are not used to this type of presentation. We are used to the 'theory' type of presentation where we learn what is A and why is A important, lectures, books, seminars all follow this format. But to a non-academic business executive, what is more important is how do we do it, how much does it cost, is the benefit immediate, does cost outweigh benefit? Things that depend on situation given, and require substantial industrial experience knowledge in order to say it with confidence.

It is possible had Paul worded the topic differently, we would have come up with a better approach. But I think he left it quite open ended to avoid putting too much constraint on our material and style. Nevertheless, with some deeper thinking, we could have arrived there as well.

This experience illustrate something about any public speaking we already knew but always forget to practice. "Know your audience". What do they really want to know? What are their interest? and most important WHY would they sit there fore 20 min listen to me. If we can think about that deeply before we prepare any presentation, we will bump our presentation quality up several notches.

March 09, 2009

Reward and recognition

An interesting discussion came up in today's seminar about reward and recognition. It seems that the idea that 'recognition' could be a better motivational tool than financial 'reward' is hard to accept by many people. They would ask "How can I expect to receive only a pat on the back after making a huge contribution to my company?". Well, my answer is " No you should expect more!". But not more money, then what?

One of the biggest problem with financial reward is that it is never enough. This idea has popped up many times during MBE classes. You give a child one piece of cake for good behavior, the next time he is going to come back and ask you for two, the next for three and so on ... Does this mean he is behaving well because he is a good kid and listen to his parent? or is he doing so to receive the cake from you? . One immediate concern is the diminished return, the more cake the child receives the less he would desire it. So giving cakes becomes less effective the more you gave. "Give him candy instead", you might say. Well, the same problem persist and you are just changing from one form of reward to another. This is exactly the problem with reward based performance management,companies comes up with ever more inventive creative bonus schemes... 5 day holiday in Hawaii, membership in a prestigious golf club... you focus worker's attention on the reward itself but not on the purpose of rewarding which is the fact that they are doing a good job for you

But imagine this, what if one day you exhaust all your creative reward ideas. Or worse, what if one day you run out of money, and you turn to your employee and say "Sorry mate, we are in a rut and I have nothing more to give you, but can you stay in the company? for old times sake?". Would it be a surprise if your employee, after telling you he's been head-hunted by a competitor firm, wave you 'Sa-yo-nara' and leave your office while leaving a 5 dollar note on your desk?

Imagine another scenario. Suppose you are an average worker. Your boss pays your by the going market rate, no more, no less. But your boss also care about his employees personally. I mean, he cares about your day, your worries in the family, or even goes to the trouble to talk to your about your future, and how you can make progress in your personal and life goals. One day a headhunter comes along , give you this 15% extra base pay and ask you to jump ship. Then you think... " Okay I know nothing about this new company, even though the pay is good, but how about the people? are they friendly? is my contribution going to be appreciated by others? most importantly am I going to be happy there?". You keep thinking and then you realise "But I am happy here! Why should I risk a good job, caring boss and my happiness for a 15% raise? I mean I will only put those extra money in the bank and earn interest" .

Marslow's hierachy of human needs tell us human goes through incremental levels physilogical, safety, love, esteem, and self actualisation needs.... I am guessing in certain countries where basic supplies and resources are extremely deficient ... it might be the physiological/safety needs of food and shelter (satisfied by forms of financial reward) may have larger impact than higher level needs such as respect by colleague, love and caring, pursuit of life goals etc. Nevertheless, in a truly excellent organisation, we want to make sure every worker's needs is cared for. Every individual, poor or not, will eventually grow out of the need to satify its physiological need and seek to fulfil esteem and self actualisation goals. It is important that managers recognise this and is prepared to offer support for these higher level needs when the time comes.

I know all of this sound too "ideal" or "in a perfect world this is what happens". But I know this from experience. In my previous job I often hear about my colleagues talk about a manager that used to run the place. They would tell me "Yeah... he was a good boss, I mean he really cared about us". Although at the time I joined this manager had already left the company, I could often feel his influence on the people he left behind.


So much work to do- PIUSS pma, KBAM mini project, KBAM seminar preparation, ... ... ... keep fightin~

March 08, 2009

Recommend a book on Lean production

Today I came across reading a book on Lean production "The Machine that changed the world" James P. Womack, Daniel T. Jones and Daniel Roos; 1990; Macmillan. I got this book initially to read about supply chain management but realised this is actually a book about Lean production of Toyota.

I recommend this book because

  • I believe it is one of the first texts on lean, according to the book the authors coined the term lean
  • It is easy to read. It begins with a history of automobile manufacturing from craft production to mass production which has ills and inefficiencies that eventually give rise to Japan's lean production. The clear logical flow allow you to see why lean become important. What I find most useful is it clearly contrast the management philosophies between the West and Japan
    Mass Production Lean Production
    Produce everything in mass leads to inventories Produce only what is needed, aim for zero inventory Kanban system
    Market style relationship with supply chain Seek long term relationship with suppliers
    Clear separation of design with production Provide suppliers only with performance specs, but allow supplier to come up with product specs
    Tolerance mentality toward defect, defect is seen as 'inherent' and cannot be eliminated '5 why's' problem solving system (similar to root cause analysis). root cause of defect is eliminated and will never happen again
    Firefighting or 'fix it' mentality toward problems Kaizen gradual improvements invovling small teams and devote time to reflect and solve problems

One of the amazing idea I find is

In Western style assembly line, management promote maximum throughput and allow no stoppage in assembly line. So line managers have no incentive to fix minor problems because his ass is on the line if assembly stops. This result in small problems snow-balling into big problem in end product, and within production process.

Lean production devolve responsibility down to floor worker,  any worker is free to stop assembly line if a problem is discovered, and group of workers will work on solving problem together.

Not surprisingly, when each worker is free to halt the process, the assembly proces actually almost never stops because the process defects has been eliminated. Whereas to impose non-stop assembly always end up stopping the assembly because of various small problems during production. And the end product often has  many defect which needs to be checked and fixed, incurring significant cost on repair and quality checks.

  • Detailed description of lean and how it relate to production, supply chain, customer and so on. Page 55-57 describes lean principles in assembly line which resembles six sigma (teamwork, quality circle, root cause)

Verdict: Even though I have only spent a couple hours reading this book, I can already grasp the keys ideas about lean (compare this to some books you read for hours but still have no idea what the topic is about?). This text is filled with rich examples from Toyota company and is very easy to read. I'd recommend this to people studying lean for PIUSS or for their project, if they havnt already come across it.

    March 04, 2009

    Inventory Management

    After spending sometime reading the content page on KBAM (Knowledge based asset management) homepage. I realise Knowledge management and Asset management is only an umbrella term for a huge number of other management ideas/tools. For example, asset management alone has 7 separate ideas from facilities management, security management to resource utlisation, all of which are important in ensuring that, resources (such as building, knowledge, man power, machines, raw materials etc etc) are used in the most efficient manner. This high level of effciency is important for successful companies because being highly lean, effcient means less wastage, and product and services can be produced/provided at lower cost.

    I am particular interested in one area - inventory management. Inventory exists in companies (esp in manufacturing) because it is often difficult to predict how much demand there will be at a future time. If we do not have some spare stock sitting in our warehouse, we risk losing sales and make disatisfied customers. Inventory, which can be raw material, work in progress, and finished good , provides a buffer that balances the discontinuity between supply and customer demand. I guess the general philosophy is it is better to play safe, to have excess stock sitting in the warehouse rather than not to have enough.

    But there is the JIT (just in time) philosophy which goes against the idea of inventory. It argues inventory makes the job of supplier easier but it adds no value to end customer, plus it ties up working capital which can be better utlised in e.g. investing in new technology, paying off debt. The JIT philosophy, although make good sense, seem to require a very good system of managing supply orders, fulfilling customer orders, inventory levels etc in order to avoid problem with unbalanced supply and demand. I think I would read up more about it to see how it works.

    To achieve JIT philosophy, there seem to be tools that help to gather and organise supply, production , and inventory information so that they can be translated into specific orders, times of orders, times of receipts etc. Right now these tools such as MRP(Material requirement planning), MRP II (master production planning), DRP (distribution requirement planning) are just names to me, but I think they are used to manage inventory.

    Right now I have no idea why this is important to me or how I may use this knowledge. It just seem interesting to me because of two reasons. First I can relate it to my previous work experience as a salesperson. At that time, I remember the many occasions when there were many customers demanding a particular Television or Fridge but we simply did not have the stock sitting in our warehouse. A sales opportunity wasted. It wasn't even our own fault because we have no say in our warehouse. So you can imagine our disappointment after successfully persuaded customer to buy something only to find out we have nothing to sell them. Since this happened so much in our job, we developed the habit to check stock before we sell something (I have a small trick for this :P). But this means we often have to, 1) only sell product that are available but not the one best suited for customer, 2) Go extra effort to convince customer to change their choice of product. I believe if the problem with inadequate supply is addressed we could have increase our turnover significantly.

    The second reason comes from the business simulation we did in FACS module. In that simulation I was the commercial manager responsible for getting the right amount of contract. I remember it was quite tricky determining our production capacity and use that information so that at the end of each year we have no working capital tied up in the inventory. Then there was issue of determining how much raw material to purchase at each quarter so that we don't either have too much raw material (tied up money) or too small raw material (we have nothing to make). The general feeling I had at the time was managing supply chain is quite tricky. It seemed like if every body (production, finance, marketing directors) just try to optimise their own departments, there would be a huge problem with supply chain.

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