Effective Integration of Knowledge Management into the
Business Starts with a Top-down Knowledge Strategy
(Siemens AG, Corporate Information and Operations,
Enabling Processes and Knowledge Management, Germany
Abstract: A cornerstone in the integration of Knowledge Management
(KM) in the business is the extension of the business strategy with a knowledge
strategy. The Knowledge Strategy Process (KSP) at Siemens follows a top-down
approach and helps the management to integrate knowledge strategy effectively
in their business strategy. Furthermore, it brings the decision makers
of a business unit on one table to draw up an action plan for their respective
business unit. In six consequent steps, this action plan is generated to
improve the way of working and learning by focusing on knowledge areas
with highest impact on the major business ambitions. With a knowledge strategy,
the pressure on impact measurements for KM is released, since sense and
need for the KM program is understood and it is driven by the management.
Only very reasonable cost-benefit checks will be required for larger investment
plans by the business owner. An overview on diagnostics and mesurements
for knowledge and KM as well as a list of open KM research issues is given
for the full integration of KM into the business.
Key words: knowledge strategy, KM strategy, integration of KM
into business, diagnostics and measurements for KM, cost-benefit check
for KM projects
The importance of knowledge continues to grow owing to the spread of
global networks, accelerated product cycles and changing market conditions.
Since decades, the knowledge intensity in work processes increases compared
to manual work. Knowledge serves as a resource as well as product of knowledge-based
business. As a result, the significance of (systematic) Knowledge Management
(KM) is continuously growing, and due to further improvements in KM the
race for competitive edge through knowledge will become even faster.
Siemens is meeting these challenges through enterprise-wide and systematic
KM to better share existing business and process-related knowledge and
to generate new knowledge even faster. Siemens has initiated and successfully
implemented numerous KM projects driven by the corporate KM Team and KM
organizations in groups and regions. Important for the speed of progress
has always been and still is "KM for KM" provided by the global
Community of Practice Knowledge Management (CoP KM), which started in 1997
and currently, has about 300 members across all Siemens units and regions.
Knowledge and KM have so many different aspects that it is recommended
for each organization to make definitions for a useful joint understanding
and collaboration in that area:
- Knowledge is considered to be the "capability for effective action".
Knowledge manifests itself as the expertise, know-how and professionalism
of the individual, as the distributed and diffusing ability of organizational
entities, teams or communities to act and as codifications of knowledge,
e.g. in a document, process or system. Thus our basic model of a knowledge
space has the three dimensions proficiency, diffusion and codification
(adapted from [Boisot (99)]).
- Knowledge Management covers all systematic activities involved in the
creation and sharing of knowledge across the organization and in relations
with customers, partners and other knowledge stakeholders, and thus contributes
to the achievement of our goals and the creation of value added by Siemens.
In the knowledge space, KM can be described as any systematic action adapting
proficiency, diffusion and codification according to the organization's
objectives. Examples are building the right proficiencies with employees
and business partners, care for appropriate knowledge networking and collaboration
and keep information about knowledge or other manifestations in a useful
and affordable form. Combining such actions often results in the most powerful
Knowledge work has always been supported by a kind of intuitive KM.
Systematic KM on the other hand means a coordinated business transformation
or improvement, which changes the way of working and the way of the learning.
The smooth integration of a KM initiative into the business is therefore
a key success factor. The major issues are to integrate:
- Knowledge communities, which drive knowledge sharing and creation,
with the formal organization, Knowledge marketplaces, which serve to offer,
find/take knowledge, with the existing infrastructure for information and
- Knowledge processes and KM processes, e.g. diffusion or organizational
learning and community facilitation or quality improvements on documented
knowledge, with the existing business processes,
- A knowledge-friendly culture, which gives clear knowledge objectives
and is supporting open knowledge sharing and creation, with the company's
principles and its culture of leadership and collaboration
- Content structures and quality, which support context-driven knowledge
sharing, combination and extension, with the existing approaches to information
and content management,
- A KM organization, which lets all management functions related to a
knowledge issue collaborate jointly and in an orchestrated manner, with
the formal organization, especially the organization of support functions
like HR, IT, Organization/Process/ Quality and Strategy/Planning, and
- Knowledge Strategy, KM Strategy and related metrics, which drive knowledge
improvement actions and KM system building and operation, with the business
strategy and its measurements.
The following section will focus on the integration of the knowledge
perspective into the business strategy, i.e. the generation and execution
of a Knowledge Strategy as an add-on to the business strategy driven top-down
by the business owner and the management team. This leads in eliminating
a major barrier mainly in way of most of the KM initiatives: the missing
understanding, support and backing of the top management which is especially
critical in times of economic turbulences. In section 3
an overview is given on diagnostics and measurements in a business with
a Knowledge Strategy. Conclusions and an outlook on future research areas
are the final part of this paper.
2 The Siemens CIBIT Knowledge Strategy Process
Business owners and their management team have or should have clear
objectives and ambitions on knowledge in their business, e.g. for those
knowledge areas with high impact on the business key performance indicators
today as well in future. The Knowledge Strategy defines the needs, way
and actions to achieve these objectives and ambitions in terms of means
and language of business owner and management team.
The management team should have a knowledge strategy how to drive
knowledge issues, as it has, e.g. a product strategy to drive product decisions.
A knowledge strategy is different to a KM strategy, which is the
strategy or roadmap of the organization(s) responsible for KM and other
knowledge relevant issues, to enable for KM, e.g. to drive the rollout
of instruments, systems or initiatives for KM. This is accordingly to the
fact, that, e.g. product managers drive their plans by a product management
strategy. Both strategies are necessary and have to be aligned continuously.
Without a business-driven knowledge strategy often various staff functions
execute different KM strategies, i.e. drive in many cases different knowledge-related
actions and measurements without a joint goal or coordination resulting
in more organizational friction than business transformation speed. Thus
really powerful interdisciplinary KM solutions are often missed.
The Siemens CIBIT Knowledge Strategy Process (KSP)1,2,3
is a strategic instrument for business owners and their management team
to generate a Knowledge Strategy for the current ambitions in their business
[Hofer-Alfeis and van der Spek (01)]. KSP is jointly
developed by Siemens AG and CIBIT, Utrecht, NL7.
The KSP has to be integrated in the business strategy process and revisited
regularly. A knowledge strategy for any kind of business transformation
is defined in six steps as demonstrated in Figure 1.
details in [Davenport and Probst (02)]
2more details in [Bellmann.
3more details in [Holsapple
7Contacts: Rob van der Spek & Jan Kingma,
CIBIT Consultants/Educators, Arthur van Schendelstraat 570 P.O. box 19210,
3501 DE Utrecht, the Netherlands, tel. +31-30-2308900; fax 31-30-2308999;
e-mail: email@example.com, firstname.lastname@example.org; internet www.cibit.nl.
A business owner starts by focusing on the most relevant business perspective
(s) for the next x months or years followed by defining the related knowledge
areas. The further specification of the key performance indicators leads
in achieving a knowledge portfolio. The resulting action plan leads to
improvements for the way of working in a knowledge-intensive business as
well as the way of learning in many ways. It is a guideline for an interdisciplinary
KM team, which refines the action plan by state-of-the-art KM solutions
according to its KM strategy. The execution of the knowledge strategy is
strengthened by the buy-in of the management team, since it has defined
it based on its profound knowledge about the business itself.
Figure 1: The Siemens - CIBIT Knowledge Strategy Process:
The six steps and the results
2.1 Results and Benefits
The implementation of KSP has the following results and advantages for
- joint portfolio of business impact knowledge (Knowledge Portfolio),
- needs/deficits in fundamental knowledge fitness dimensions proficiency,
diffusion and codification (Knowledge Status Guide), and
- focused and guided KM action plan - jointly derived (KM Action Plan).
- actions are generated from the management team in their own language
as well as perspectives, which are enriched by an interdisciplinary KM
team and its bottom-up experience,
- resources and energy on all knowledge issues are focused by their respective
- initiatives of the various functions acting on the knowledge issues
(HR, IT, Process & Org, ...) are coordinated, and eventually execute
the resulting program from the action plan jointly, and
- knowledge-related measurements are directly linked to the business
- highly increased efficiency of efforts in KM and knowledge-related
- reduced risks and friction arising due to unfocused and low coordinated
- faster business transformation based on joint planning instruments,
- extended strategic thinking leading into the Knowledge Economy.
2.2 Knowledge Strategy and KM Strategy or KM Roadmap
What is sometimes reported as knowledge strategies or KM strategies
is not useful for business owners and management teams: it is for support
function people or KM enabling teams. Those functions drive in some cases
different knowledge-related actions and measurements without a joint goal
or coordination resulting in more organizational friction than business
transformation speed. Thus often really powerful interdisciplinary KM solutions
are missed, e.g. building proficiency by connecting the right experts,
which diffuse their results in appropriate codification, e.g. an e-learning
module, to the right audience in the company, which can direct feedback
to the experts about application success.
A KM strategy or roadmap is addressed to the enablers for KM, e.g. the
KM Team or equivalent functions, and illustrates the planning, implementation,
operation and standardization of KM solutions, thereby, ensuring its smooth
integration and efficient operation within the organization. The KM strategy
gets valuable input from the business' knowledge strategies: it should
anticipate and react to the focused needs from the operational perspective
of the business owners. For example, the Corporate KM Team of Siemens is
providing in co-operation with the Community of Practice KM, a KM roadmap
on corporate level, various KM tools, solutions and standards or recommendations
as well as various instruments for diagnostics and measurements.
2.3 Business Cases
Knowledge Strategy Process (KSP) results and experiences have been drawn
from successful business cases from various business units within Siemens,
e.g. an R&D organization with about 600 developers, an account management
organization for most complex knowledge flows between very large accounts
and several Siemens groups and for a central information and operations
unit with about 200 project and topic managers. To quote the impressions
of a business owner and a participant after the workshop:
Business Owner: "We defined the issues, which should be dealt by
the team in this workshop and worked through them in a structured way-
this would not be possible without KSP... now we should also implement
Participant: "I was skeptical - it seemed to be a tiresome, formal
process but now in the end I have to admit we landed on the right ground
- a very effective process".
In one business case, e.g. a portfolio of 11 key knowledge areas has
been identified by the management team. For each knowledge area a separate
KSP has been run with an according workshop group of subject matter experts
and management team members resulting in over 100 highly prioritized improvement
action proposals to change the way of knowledge-related working and the
way of learning. Some examples without the business-specific details: Define,
install, operate, create or promote ...
- regular Experience Synchronization Meetings across org units with fixed
- Knowledge Transfer Workshops with external Knowledge Stakeholders for
- Best Practice Sharing on ...
- role and career model for certain subject matter experts, e.g. Project
- Expert Networks or Communities of Practice for ...
- a methodology framework for ...
- a Training and Cookbook for ...
- learning from projects with clients on ...
- the Process for ..., e.g. Value Selling in that business The knowledge
action plan is now executed by the cooperation of three players for each
- the knowledge area coach, being part of the management team and related
to the business impact of the knowledge area, who aligns the execution
to current business needs and strategic movements
- the subject matter experts and managers, who are able to execute that
- the KM Team, who takes care that solutions according to state-of-the-art
KM will be built and operated. This team also has to drive actions, which
are common to many knowledge areas, e.g. collaboration platform issues,
joint content structures or a knowledge culture initiative.
3 Diagnostics and Measurements in a Business with
a Knowledge Strategy
Diagnostics and Measurements are hot topics in KM, especially in times
of shrinking economies. The focus today is often on cost-benefit calculation
for KM projects to prove for further invest and care. If an explicit Knowledge
Strategy is defined, the requirements on measurement are quite different.
3.1 Measuring the Impact of KM in Case of a Knowledge Strategy
If a business owner and his management team have a top-down knowledge
strategy derived via the KSP, the whole issue of impact measurements for
KM is put head-over-feet again, since sense and need for the focused KM
actions program is understood and derived from the business ambitions,
the impact of knowledge on key performance drivers and the deficiencies
in the major knowledge dimensions proficiency, knowledge networking and
Therefore only very reasonable cost-benefit checks will be demanded
by management team in case of larger investments and operational long-term
costs. The KSP supports effectively that knowledge-related measurements
are directly linked to business strategy.
Using the KSP also means a long-term engagement of the management for
knowledge programs. Various solutions are available to link KSP with the
Balanced Score Card (BSC) process; the most advanced one is an additional
functional scorecard, the "Knowledge Scorecard" [Deking
3.2 Measuring Quality and Value of Knowledge
Measuring quality and value of knowledge, e.g. for knowledge assets
like a kowledge area, a Community of Practice, a Lesson Learnt, a KM system
content is still not solved completely. But this is basically necessary
to enhance KM processes or knowledge businesses with market forces.
There are many approaches to deal comprehensively with the intellectual
capital of an enterprise [Deking (03)] [Skyrme
(03)], e.g. by a kind of balance sheet comprising all knowledge assets.
Such approaches can give directives for KM planning and in fact, the results
of the first five steps of the KSP are also an intellectual capital overview,
but strongly focused on the major current business ambition of the management
3.3 Cost-Benefit Calculation for KM Projects
There are many approaches to measure and proove the benefits of KM.
In case of operating socio-techical KM systems successful measures are
e.g. the time/cost saving effects of urgent request processes in knowledge
communities or the growth value in additional business by sharing customer
solutions. These numbers are generally only aspects of the comprehensive
effect of a KM initiative and they are not very useful in promoting new
KM projects. In most cases, KM success stories are too specific or too
complex to be easily reused for cost-benefit argumentation. Therefore,
the corporate KM team has started to jointly build a catalog of proven
cost and benefit argumentation modules based on a standardized content
form and a related guideline for business cases of basic cost-benefit calculation
for KM projects.
KM means in its essence a business transformation. KM systems are socio-technical,
holistic or multi-dimensional systems (people and organisation, business
environment, processes, infrastructure and knowledge/content). Therefore,
only equivalent comprehensive metrics (hardly practically afforded) can
comprise cost and benefit effects. Additionaly, since generally several
business transformation initiatives compete in a corporation, the calculation
of ROI is often just a game with artificially restricted perspectives.
In the end anyway the conviction of the business owner is needed, who has
to invest the resources for the KM projects. Therefore, it is better to
help him and his team to fully link knowledge issues to his business ambitions,
e.g. via the KSP, and to take the lead in major knowledge issues.
3.4 Measuring the Status of KM in an Organization
Performance measurements are useful to check the status of each element
of a socio-technical KM system. Sets of measurements are available to assess,
e.g. activites and acceptance in knowledge communities [Schoen
(00)] or knowledge marketplaces. For larger KM systems or landscapes
of KM systems a KM Maturity assessment [Langen and Ehms
(03)] can provide a comprehensive overview on status and deficiencies.
For engaging the business owner and his team to take the lead in knowledge
issues, such assessments can be appropriate in combination with the Knowledge
Strategy Process. They are a profound and comprehensive approach to give
directions in all major KM aspects to the KM team. Thus the team is able
to make the KM strategy accordingly and be better prepared for requirements
from the business owners' knowledge strategies.
3.5 Framework for Diagnostics and Measurements for Knowledge and KM
The Framework for Diagnostics and Measurements for Knowledge and KM
helps knowledge mangers to
- get an overview of the various types of measurements and instruments,
- apply the right measures and identify good practices, and
- position and share approaches and instruments as well as needs for
The framework deals with four types of measurements: value and state
of knowledge and value and state of KM respectively. It is part of the
"Siemens KM Implementation Guide" (only for internal use) which
has been jointly written by over 20 Siemens KM experts from KM initiatives
and KM Consulting, thus giving, for the first time the corporation a joint
set of basic concepts, processes, system models, KM solutions elements
and proven cases to integrate the various KM activities in Siemens.
Figure 2: Framework for Diagnostics and Measurements for
Knowledge and KM
The procedure of measuring by a business owner with a Knowledge Strategy
and by a KM responsible manager planning and operating KM systems (KMS)
can be projected into the framework as shown in Figure 3.
Figure 3: The two KM measuring cycles from business and staff
4 Conclusions and Outlook
A cornerstone in the integration of KM into the business is the extension
of the business strategy by a knowledge strategy, which drives the major
knowledge-related management actions from the KM team and various other
staff functions, e.g. HR, IT and Organization/Process/Quality. It means
that business owner and his management team take the lead in major knowledge
issues (and not just a commitment to let KM happen).
If a business owner and his management team have a knowledge strategy
as derived with the Siemens CIBIT Knowledge Strategy Process, the whole
pressure on impact measurements for KM is released, since sense and need
for the KM program is better understood and it is focused and measured
according to the business ambitions. Only very reasonable cost-benefit
checks then will be required for larger investments or long-term operational
cost by the business owner. Knowledge Strategy measures can be linked into
the business measurement systems, e.g. the Balanced Scorecard to investigate
the execution of the strategy. Cost-benefit calculations for KM projects
are essential but still not appropriately solved according to the fact,
that KM means a business transformation in its essence. A framework for
diagnostics and mesurement is helpful to apply the appropriate metrics
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