HR AS STRATEGIC

CAPABILITIES
• Organization’s new bottleneck is capabilities
• Capabilities must now move to the centre of the
organization’s strategic planning framework
• Speed of organization’s growth depends on its
ability to generate and reconfigure capabilities
• Failure will build a “competitive advantage
deficit”.
• HR’s key role is leveraging the knowledge of
the organization and building an environment
where learning is the norm.
HR New Mandate
HR as Strategic Capabilities cont’d
• Accelerated development of capabilities is a pre-
condition to lead and shape the market place in
line with organizational strengths
• Customers needs and aspirations determine
what solutions and services are offered
• Organizations must have the ability to generate
new solutions and introduce them to the market
at a pace that both meets the quickly evolving
needs of customers and outdistances the
offerings of competitors
 STRATEGIC CAPABILITIES
• The “pace of learning” becomes the determining
factor in the introduction of new solutions to
customers
• This requires the exchange of knowledge
inside the organization, with partners
involved in the value chain, and with
customers
• Capabilities of those at the customer interface
must constantly be renewed and enhanced to
meet the ever-increasing customer requirements
 KNOWLEDGE CAPITAL
• Managing the knowledge capital of the
organization consists of systematically
developing, leveraging, and renewing its
intangible assets.
• Intangible assets comprise three elements:
Human capital; Customer capital; & Structural
capital (Saint-Onge, 2000).
• Human Resources Management in the
knowledge era must be based on an
understanding of intangible assets.
 TYPES OF CAPITAL
• HUMAN capital describes the capabilities in an organization that are
required to provide solutions to customers. Individual capabilities
are composed of attributes, competences, and mindsets.

• STRUCTURAL capital represents the organizational capabilities of

the firm necessary to meet market requirements. Organizational
capabilities are composed of the strategies, structures, processes
and culture of the organization and how these in turn translate into
specific core competences of the organization.

• CUSTOMER capital is the sum of all customer relationships. These

relationships are defined as depth (penetration), width (coverage),
length (durability) and profitability of the organization’s relationships
with all customers.
HR - VALUE CREATION
Return of Capital Employed

Customer
Loyalty

On-time
Delivery

Process Quality Process Cycle Time

Employee Skills

(Robert S. Kaplan & David P. Norton, 1996)

 DEFINITION
• DATA are raw facts
• INFORMATION is an organized set of data
• KNOWLEDGE is meaningful information. It is an
individual’s interpretation of information based
on personal experiences, skills and
competences.
• WISDOM is new knowledge gained through the
transformation of collective experiences and
expertise.
 DEFINITION
• Knowledge management is concerned
with the exploitation and development
of the knowledge assets of an
organization with a view to furthering the
organization’s objectives. The knowledge
to be managed includes both explicit,
documented knowledge, and tacit,
subjective knowledge.
 DEFINITION cont’d
• Management entails all of those processes
associated with the identification, sharing,
and creation of knowledge. This requires
systems for the creation and maintenance of
knowledge repositories, and to cultivate and
facilitate the sharing of knowledge and
organizational learning.

KNOWLEDGE REPOSITORIES
KNOWLEDGE REPOSITORIES
• Structured repositories are databases
and expert systems. These use indexes &
key words to give easy searchability
• Unstructured repositories include
projects reports, and sale-call notes.
These are free text searches.
• People are the third repository. They are
searched through phone directories,
company yellow pages and other people.
KNOWLEDGE REPOSITORIES
• The firm is a repository for knowledge –
knowledge being embedded in business
routines and processes. It includes its
technological competences and knowledge of
customer needs and supplier capabilities.
• The essence of the firm is its ability to create,
transfer, assemble, integrate and exploit
knowledge assets. Knowledge assets underpin
competences, which underpin the firm’s product
and services offerings to the market
 DEFINITION cont’d
• Organizations that succeed in knowledge
management are likely to view
knowledge as an asset and to develop
organizational norms and values, which
support the creation, and sharing of
knowledge (Rowley, 1999).

STRATEGIC ASSET
 STRATEGIC ASSET
• It is a set of difficult to trade and imitate, scarce,
appropriable, and specialized resources and
capabilities that bestow the firm’s competitive
advantage.
• Think about the difference between the ability to
align every employee’s efforts with the
company’s overall vision, and an innovative
policy such as 360-degree performance
appraisals.

DYNAMIC CAPABILITIES
 MANAGING KNOWLEDGE
ASSETS
• Dynamic capabilities is the firm’s
capacity to sense and seize opportunities,
to reconfigure its knowledge assets,
competences, and complementary assets,
to select appropriate organization forms,
and to allocate resources astutely and
price strategically to achieve competitive
advantage.
KNOWLEDGE MANAGEMENT
• KNOWLEDGE MANAGEMENT is the way
organizations capture, create and reuse
knowledge to achieve organizational objectives.
• Knowledge management is how an organization
develops, implements, and maintains its
leadership, process, culture, technology, and
measurement systems to create, collect,
organize, disseminate and use its
organizational knowledge for competitive
advantage.
KNOWLEDGE MANAGEMENT
• There are two basic types of knowledge:
explicit and tacit.
• Explicit knowledge is what is normally
seen and thought important. It drives
efficiency.
• It comprises data, descriptions, policies,
procedures, formulas, and processes.
KNOWLEDGE MANAGEMENT
• Explicit knowledge:
1. Contributes to efficiency
2. Leads to competency
3. Easy to replicate by others.
• Tacit knowledge is hidden and not
easily seen as being important. It drives
competitive advantage.
KNOWLEDGE MANAGEMENT
• Tacit knowledge includes personal
knowledge, experience, know-how,
know-why and know-what.
• Tacit knowledge:
1. Is hard to articulate
2. Is hard to transfer
3. Is hard to copy elsewhere
4. Provides high competitive advantage
 KNOWLEDGE CREATION
Tacit knowledge To Explicit knowledge

Tacit SOCIALIZATION EXTERNALIZATION

knowledge

gExplicit
hknowledge INTERNALIZATION COMBINATION
 MODES OF KNOWLEDGE
CONVERSION
• SOCIALIZATION: TACIT TO TACIT
• EXTERNALIZATION: TACIT TO
EXPLICIT
• COMBINATION: EXPLICIT TO EXPLICIT
• INTERNALIZATION: EXPLICIT TO TACIT
 SOCIALIZATION
• Sharing experiences creates tacit
knowledge
 Apprenticeship programmes where
learning occurs thru. observation, imitation
and practice
 On- the –job training
 Honda’s brainstorming camps.
 Product developers interact with
customers.
 EXTERNALIZATION
• Quintessential knowledge-creation
process. Holds the key to knowledge
conversion.
 Uses metaphors, analogies, concepts,
hypotheses, or models
 Writing is an act of converting tacit
knowledge into articulable knowledge
 Seen in concept creation and combined
the methods of deduction and induction
 COMBINATION
• Combines different bodies of explicit
knowledge. Uses media such as
documents, meetings, telephone
conversations, and computerized
communication networks.
Computer databases
An MBA education
Wal-mart’s inventory mgt. system
 INTERNALIZATION
• Closely related to “learning by doing.”
Documentation helps individuals internalize what
they experienced. It helps people to experience
the experiences of others.
 verbalized or diagrammed into documents,
manuals, or oral stories.
 Results from shared mental models or technical
know-how.
 U.S army’s A.A.R: after action reviews
 KNOWLEDGE SPIRAL
• Organizational knowledge creation is a
continuous and dynamic interaction
between tacit and explicit knowledge.
• The modes of knowledge conversion are
induced by several triggers.
• They include: intention, autonomy,
fluctuation and creative chaos,
redundancy, & requisite variety.
KNOWLEDGE MANAGEMENT
• Nonaka (1998) suggests that an
organization’ capacity to process
information needs to be coupled with
knowledge creation. Nonaka’s (1991)
concept of a knowledge creating company
is concerned with making individual
insight available for testing and use by
the company as a whole.
 HUMAN RESOURCE
MANAGEMENT
• HRD/M has a key role to play in leveraging
the knowledge of the organization.
• The key strategic issues that now face
organizations resolve around escaping
their limits, applying their knowledge in
different ways, and building an
environment where learning is the norm.
KNOWLEDGE MANAGEMENT
• Knowledge is a critical commodity, and the
knowledge strategy of the organization
must be at the heart of the new mandate
for Human Resource Management.
• HRD/M must develop strategic capabilities
which are most effectively achieved
through the learning that results from
the exchange of knowledge.
KNOWLEDGE MANAGEMENT
• HRD/M must be redefined to include a
comprehensive knowledge strategy.
• Capabilities must now move to the centre
of the organization’s strategic planning
framework.
 KNOWLEDGE STRATEGY
• In companies that sell relatively
standardized products that fill common
needs, knowledge is carefully codified and
stored in databases, where it can be
accessed and used – over and over again
– by anyone in the organization.
CODIFICATION STRATEGY
 KNOWLEDGE STRATEGY
• In companies that provide highly
customized solutions to unique problems,
knowledge is shared mainly through
person-to-person contacts; the chief
purpose of computers is to help people
communicate.
PERSONALIZATION
 KNOWLEDGE STRATEGY
EXAMPLES
• CODIFICATION: Dell; Ernst &Young;
Access Health
• PERSONALIZATION: Hewlett-Packard;
BCG; Memorial Sloan-Kettering Cancer
Center in New York City.
 KNOWLEDGE STRATEGY
• ERNST & YOUNG
 Electronic repository- creating knowledge
objects in a database: “people to
documents” approach.
 Scale in knowledge reuse
 Emphasize codified knowledge
 Centre for Business Knowledge
 Networked databases
 KNOWLEDGE STRATEGY
• BAIN/McKINSEY
 Building networks of people – dialogue
between individuals
 Scale in expert knowledge
 Emphasize personal knowledge.
 Culture of returning phone calls
 Consulting directors
 KNOWLEDGE STRATEGY
• ACCESS HEALTH
Electronic repository: clinical decision
architecture with software algorithms –
300 algorithms used 8000 times a year.
This level of reuse: charge low prices per
call so company’s customers save money
thru. preventing expensive emergency
room trips.
 KNOWLEDGE STRAEGY
• MEMORIAL SLOAN-KETTERING
CANCER CENTER
Customized advice and treatment:
experts’ collaboration – employees work
together in 17 disease-specific teams
located in the same area of the hospital.
No.1 ranking top cancer research and
treatment institution in U.S.A
 SUCCESS OR FAILURE
1. Do not straddle: Use an 80-20 spilt.
2. Standardized solutions when customers
require customized solutions
3. Having inventors rub shoulders with
implementers can be deadly
4. Understand the service/ product life cycle
5. Top management fails to make a choice
of knowledge management strategy.
VARIED METHODS, SAME GOAL
• BP applied Virtual Teamwork Program
where video cameras, e-mail and desktop
viewers were used to connect
geographically dispersed teams.
• Sears uses “after action reviews” in its
distribution facilities where employees
discuss and learn from the previous day’s
activities.
VARIED METHODS, SAME GOAL
• Chrysler stores ideas and lessons learned for a
new car development in its “Engineering Books
of Knowledge” which are actually computer files
that store knowledge gained by automobile
platform teams.
• 3M holds regular meetings and fairs for its
researchers to meet and exchange ideas.
VARIED METHODS, SAME GOAL
• Chaparral Steel has a formal
apprenticeship program for new workers
that lasts up to 3.5 years.
• GOAL: to enable the people in the
organization to create and share
knowledge for competitive advantage.
FINALLY

KNOW
WHAT
YOU
KNOW