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My Crisil Young Thought Leader Dissertation

View the Winning Dissertation here { By Sonia Chawla of XLRI Jamshedpur}

A
Dissertation
on
Public Private Partnership
Has India learnt from its experience of over a decade?
Submitted
By
Anand N Krishnan.
Narsee Monjee Institute of Management Studies.Contents:

What are PPP’s?
Types of PPP’S
Relevance of PPP’s
Evaluation of PPP’s in various sectors in INDIA
Infrastructure
Roads
Ports
Power
Slum Rehabilitation (Mumbai)

Potential new areas for PPP’s
Gas Pipeline
Healthcare
Education


A case study of PPP: Tamil Nadu
Framework
Conclusion
Executive Summary:

"We will surely get to our destination if we join hands."
Aung San Suu Kyi
PPP, a relatively new approach to public welfare, attempts to merge the welfare oriented public sector with the efficiency and profit minded private sector so as to deliver benefits to the society at large. In this dissertation, I have attempted to study the types of PPP’s, the critical success factors for them.
I have also attempted to evaluate some of India’s more prominent adventures into PPP and analyse the reasons for their success or failure. I have also recommended a few sectors which I feel have been neglected as far as PPP’s are concerned but show considerable promise. At the end of the dissertation, I have included a framework for creating more successful PPP’s in India.
What is a Public Private Partnership?
A public private partnership is a partnership between at least one private for profit organization and at least one nonprofit civil service or government and public organization to undertake a venture with a specific output in return for a benefit typically in the form of financial remuneration. The nonprofit civil service or public organization also includes international and regional development groups like the World Bank, the International Monetary Fund, the Asian Development Bank, any arm of the United Nations or the International Society Of The Red Cross.
A Public Private Partnership entails a substantial transfer of all forms of project life cycle risk to the private sector. The public sector retains a significant role in the partnership project either as the main purchaser of the services provided or as the main enabler of the project.
Why use Public-Private Partnership’s?
· Operational Gains – ensuring that one delivers better or more services for the same price; or by making savings, that one releases money for investment elsewhere. Operational gains can be achieved by focusing on outputs rather than processes; by generating economies of scale through more inventive use of assets and better project identification.
.
Strategic Clarity – by focusing departmental resources on strategic management and ensuring that key services are delivered effectively
Reduce project cost by virtue of the synergies and innovative approaches that the private sector can bring to the project.
Using private finance rather than public finance does not mean that more expenditure can be afforded as, in the long run, the cost of private borrowing is normally higher than conventional government borrowing. Since government can normally borrow more cheaply, the gains from the private operator’s efficiency must exceed the difference in borrowing cost if a PPP project is considered. The real benefit of PPPs is the value for money derived from the operational and strategic benefits mentioned above.
Critical success Factors for a PPP:
An operational need for private sector skills to deliver the service
An identifiable market of private sector bidders prepared to compete for the project
The appropriate allocation of risk. Risk should be allocated to the party best suited to manage that risk. Typically the public body undertakes to manage statutory and policy risk while the private body manages operational risk and business risk.

Types of Public Private Partnerships:
Design and Build.
Design, Build and Operate.
Operation and Maintenance.
Design build operate and finance.
Joint ventures.
Relevance of PPP’s
The concept of the PPP’s has become more relevant especially in then emerging world in the last few years because of the following reasons.
Public problems are being pushed into the global arena by civil organizations. When the market fails to deliver essential goods and services to the public who need it the most, a PPP is an innovative way of ensuring that it reaches these people.
Globalization. With globalization, new technologies come quickly to market and spread across rich countries, while the persistent lack of access in poor countries creates a stark and tragic contrast. This gap in access can create dramatic differences in morbidity and mortality, as shown by the unequal access to anti-AIDS drugs in the 1990s.
Larger fiscal troubles have urged governments to reduce spending sometimes curbing essential development work. A PPP allows governments to undertake such development work without public spending.
Forming a PPP would force a certain undertaking under government control to shed its bureaucratic inhibitions and adopt a faster approach to completion because of availability of better managers and/or resources in the private sector.


Evaluation of Public Private Partnerships in India over the last decade

An effort to quantify reforms undertaken by the World Economic Forum shows that roads and ports are the most advanced when it come to number of reforms undertaken. Hence for evaluation of PPP’s, I have considered these two sectors of infrastructure.
Roads
Criteria for evaluation of PPP’s in these areas are:
Ability of project to meet initial expectations regarding traffic.
Ability to complete project on schedule.
Cost overruns
For the roads sector, I have considered two projects and evaluated them on the above criteria. They are the
· Mumbai-Pune Expressway
· Partly completed Golden Quadrangle
Golden Quadrangle Project: the project is an ambitious project attempting to link the north-south-east-west corridors of the country. The Golden Quadrangle project works on the build operate transfer scheme of Public-Private Partnerships. Following are the stages of completion on each phase of the project.

Projects
Quantity
Phases running ahead of Schedule
8
Phases running on schedule
7
Phases running behind schedule
58
*Source: NHAI and news compilations.
As is visible from the table, the golden quadrilateral has significant phases running behind schedule with an average delayed time of approximately a year. The ministry of road and surface transport has estimated that contracts worth over 70 per cent of the total project cost of Rs 172.75 billion are spilling over beyond the December 2003 deadline.
The Mumbai Pune Expressway: The Mumbai Pune Expressway was built to connect the cities of Mumbai and Pune. The project cost was estimated to be 148.8 Bn rupees. As regards to cost overruns and on schedule completion of the expressway, the project was a thumping success because of some very innovative clauses put in by the Maharashtra State Road Development Corporation (MSRDC). While partnering with private contractors for different stretches of the road, it inserted bonus and penalty clauses in the agreements to ensure timely completion. To ensure quick and efficient working, MSRDC provided several facilities to contractors and consultants. These facilities include sops to the project partners. The expenditure on extra services/facilities did not, however, increase production costs – it reduced them by 8-10% as a result of speedy project completion and reduction in delay-induced cost overruns.
However the traffic on the expressway did not match initial forecasts made in 1997, and the expressway ran into cash flow problems. The toll collections were estimated considering that around 40 -50 % of the traffic on the National Highway(NH4) would divert to the expressway. The majority of users were expected to be trucks and Multi axle vehicles and they would contribute a significant amount of revenue. Accordingly the toll rates for the expressway had been designed. These heavy truckers are however highly sensitive to the toll charges and are not interested in using expressways.
More imaginative means of finding the revenues should, therefore, be considered in case the project should really kick-start the economy of the State
Ports: In India, reforms were undertaken in the port sector in 1990 first. For evaluation of the impact of ports, I have considered two factors primarily:
Decrease in turnaround time at port.
Increase in container traffic.
Potential investments in the port.
The following two public private ports have been considered
Mundra Port
Pipavav Port





Mundra Port:
Adani Port Limited formed a joint sector company with Gujarat Port Infrastructure Development Co Ltd. to float Gujarat Adani Port Ltd. the company has a rather ambitious target for expansion. The port is projected to handle 40 mtpa by 2010, 60 mtpa by 2015, 100 mtpa by 2020 and 150 mtpa by 2025 up from 11 million tonnes of cargo per annum (mtpa) in 2003. The turnaround time at Mundra is less than five days (for a Panamax vessel) as compared to more than 9 days for the other major ports. In its first three years, the port has handled over 700 vessels and more than nine Mn tonnes of cargo.
Gujarat Pipavav Port:
GPPL was jointly promoted by Sea King Infrastructure Limited (SKIL) and state owned Gujarat Maritime Board (GMB) in 1995. However GMB divested its stake in the year 1998. The port has handled about 8.5 mtpa per year and plans to add another 6 Mn tonnes in annual capacity. It has also entered into a JV with Indian Railways to convert a 250 km meter gauge to broad gauge to effect faster removal of cargo from its port. An additional 260 crore is to be invested in the port to convert it into one of the most modern ports.
Power:
India it appears to be handicapped by a shortage of power. There is no better example of this than the capital state of Delhi. The state produces about 1400 MW while the demand is 3450 MW. The dismantling of distribution in the state has been mixed with only NDPL meeting the criteria for reducing losses. Again it is only NDPL which has fulfilled obligations on capex spending. Both Rajdhani Power and Yamuna Power have missed these targets. These PPP’s have also resulted in private sector monopolies. The most egregious example of power PPP’s gone bad is Dabhol. However could Dabhol charge such exploitive returns in a competitive market needs to be seen. Even the case of Orissa’s dismantling of SEB’s failed miserably. Overall the PPP’s in the power sector has been dismal.
Slum Rehabilitation Mumbai:
The slum rehabilitation program is a urban infrastructure project aimed at cleaning up the city’s huge slum colonies. India’s tallest skyscrapers, twin sixty storied buildings, were to be erected or this purpose. The project is a PPP with the Pallonji Mistry Group and the MUIP1. However the project is still stuck in a morass of legal and state governmental stays.
Potential new areas for development of PPP’s
Gas Pipelines: India’s gas sector is dominated by the public sector. But private partnership both Indian and foreign is required not only to increase competition but also to provide capital for upstream and downstream network development especially in the area of last mile coverage. The government needs to do a hard re-look into the National Gas Grid policy so as to allow private sector to build up the nation’s pipeline network.
Healthcare: For most of India’s 1 billion population, healthcare remains a luxury. Perhaps a PPP with a specialty heart clinic to provide basic cardio care needs to be looked into. Even the outsourcing of certain functions like radiology at stressed out public hospitals could be worth a look.
Education: India has dismal literacy standards. PPP’s need to be forged in this domain as well. I believe that the concept of Education for Profit is grossly undervalued in India and can be exploited to increase levels of education. It remains to be seen what business models and viable PPP models can be developed.
A Case Study Tamil Nadu
Tamil Nadu one of India's most urbanized states faces the challenge of providing its citizens with adequate and efficient infrastructure. Following are some of the issues faced by the state.
· Only 30% of the state has access to adequate drinking water and less than 40% have house connections.
· Only 16 % of urban local bodies have sewerage systems. Most of the sewerage is collected but there are no adequate disposal facilities.
· Less than 50% of the roads have storm water drains.

To tackle this problem, Tamil Nadu is implementing a string of public private partnerships. These pioneer initiatives will in their own way have established the viability of private participation in developing the urban infrastructure sector. Dynamic institutions have been set up to identify critical market opportunities and private sector partners. Three important umbrella institutions have been set up in partnership with the private sector: Tamil Nadu Water Investment Company, Tamil Nadu Urban Infrastructure Financial Services Ltd. (TNUIFSL), and Tamil Nadu Road Development Company. Each has been innovatively structured, with wide ranging mandates allowing the conception and development of a whole array of projects with private sector participation. Combined the three account for nearly 260 Mn. $ of infrastructure projects. The Tirupur project is likely to have significant impact on health and sanitation. The urban infrastructure deals will bring financial benefits to Tamil Nadu. The East Coast Road will fawn better tourism sector in the state. The projects have also demonstrated
IL&FS
Tamil Nadu Government
TWIC

TNUIFSL

TNRDC

IL&FS
World Bank
Tirupur Sanitation Project:
Cost: 220Mn
First Pvt Sanitation project in country
Assist municipal and local bodies raise capital and structure infrastructure deals
East Coast Road: A 113 km road betn Chennai and Pondicherry.
Benchmark in construction & maintenancethe high level of financial leverage that cash strapped governments can use to promote investments. The following is a map of the bold initiatives undertaken.
A framework for successful PPP in India
PPP’s fail primarily because public and private partners are challenged by fundamentally different incentives. Some of the other issues that need to be addressed are
Tariff/cost recovery: Both the public and the private partners should agree on how the cost revenues would come through and the division of the benefits (to be) accrued.
The issue of regulatory risk and collection risk. For a PPP to succeed, it is imperative that the parties assign risk that might emerge, to the party that it is best suited to handle that risk. In most cases the public undertaking should handle the regulatory risk while the private party should handle the operational risk. A clear allocation of roles that have to be fulfilled by each party must also be made.
Arbitration and Dispute Settlement
The issues of subsidies/concessions and who will finance them.
Service Obligations, for e.g. a minimum number of telephones to be provided by basic telephone operators, quality of dial up Internet.
It is best for a PPP to be subjected to competition. The presence of competition prevents the creation of private sector monopolies like in the case of Delhi’s Discoms. The PPP’s should then be allowed to bid for projects. The government enforces a minimum set of standards that must be adhered to.
It would also be advantageous to have a central PPP effort to coordinate PPP efforts at a central/state/ local body level.
Infrastructure, social, healthcare and educational PPP’s should be especially encouraged.

Private Sector Responsibilities
Provision of services – at least to standards set by the public sector agency/contract
Provision of facilities
Tariff/Revenues collection
Local and operational service planning and coordination
Adjustment of services within parameters set by public sector in response to market demands


Public Sector Responsibilities
A clear legal and regulatory framework
An Authority for planning, regulation, procurement, monitoring and enforcement
A mechanism for realistic tariff setting & periodic revision
A competitive environment for service provision
Contractual arrangements with the private operators for repayment of fare concessions
Contractual arrangements with operators for provision of “social” or other services that are not commercially viable









Road Map for PPP’s:
Stage 1: Project Identification. Relevant sectors are identified which is of critical public importance.
Stage 2: Assessment of project viability: Cash flows, profits and viability of the project as a whole need to be addressed.
Stage 3: Project Appraisal
Stage 4: Assessment of PPP viability: If the project can be undertaken as a PPP is identified.
Stage 5: Procedure Selection: Various procedures like regulation and procurement should be assessed.
Stage 6:Project Management
Stage 7: Stakeholder Consultation. The views of various stakeholders like public (through NGO’s) etc can be solicited.
Stage 8:Tender process should be undertaken
Stage 9:Selection of Public/private partner
Stage 10:The actual contracting of various elements takes place and performance management is undertaken.
Conclusion:
All said and done, India’s PPP performance of the last decade has been dismal with the possible exception of roads and ports. A number of vital sectors have been ignored primarily education, healthcare and urban development. Indian policymakers should give a special emphasis on project management skills as a number of projects are running behind schedule and are causing an increase in interest costs. Also, the spread of economic benefits to the country depend on the quality of infrastructure both physical and more importantly the often neglected social infrastructure. India, it appears has made some progress on the physical front but none on the social front. PPP offers a wonderful opportunity to develop this social infrastructure. If we fail to seize this opportunity the doors of prosperity could forever close on a majority of India’s population.





Bibliography:
www.worldbank.org : A case study on Tamil Nadu.
www.ppp.ie
Frontline magazine
National Highway Authority of India.
www.indiaport.org
Business World India article on Corporate Social Responsibility.
Author’s Profile:
The author is a final year student of the Narsee Monjee Institute of Management Studies with his majors in Finance and minor in Information Systems. He has done his Bachelors in Industrial Engineering from the University of Pune. He has done his summers with IndiaInfoline Pvt Ltd on “A Sectoral Analysis of the Indian Oil and Gas Sector”. He enjoys quizzing and reading about technology.
Ph No: 09820272578
Email: krishnananandn@gmail.com
Kan411@yahoo.com

Introduction:

Data. At first we had too little. We asked for more and we got it. Now we have more than we want. Data led to information, but what we were looking for in the first place was knowledge. As an increasing number of companies now realize that knowledge is their key asset, they want to turn to managing this asset to deliver business results.

But where and how do you begin?
What is behind the buzz?
What is KM’s value proposition?
What types of companies can actually begin KM?
Is it a technology problem or a management problem?
What happens to the millions that a company invests in IT if it is replaced by yet another hyped “fix-it-all” technology?
Can you build upon existing IT investments?
What kinds of people, skills, and organizational structures are necessary to pull it off?
How can KM be aligned with your business’s strategy?
Is there an architecture that you can use?
How can one deploy KM in a company?
Are there any business metrics for it?
How can you maximize your payoff if you implement KM?

What’s knowledge management?

“Knowledge is information that changes something or somebody-either by becoming grounds for actions or by making an individual (or an institution) capable of different or more effective action.”
In the simplest terms knowledge management is “management of knowledge”. In the context of our discussion, it can be extended to “management of organizational knowledge for creating business value and generating a competitive advantage”. It enables the creation, communication, and application of knowledge of all kinds to achieve business goals.

KM’s Value Proposition

The ability of companies to exploit their intangible assets has become far more decisive than their ability to invest and manage their physical assets. As markets shift, uncertainty dominates, technologies proliferate, competitors multiply, and products and services become obsolete rapidly, successful companies are characterized by their ability to consistently create new knowledge, quickly disseminate it, and embody it in their new products and services. In the post industrial era, the success of a corporation lies deeply embedded in its intellectual systems, as knowledge based activities of developing new products, services, and processes become the primary internal function of firms attempting to crate the greatest promise for a long term competitive advantage.

KM can help a company deal with market pressures; avoid the infinite, expensive loop of work duplication; and deal with the threat of job mobility of employees holding critical parts of a firm’s tacit knowledge drivers.

Why all this noise about KM and why now?

1. Companies are becoming knowledge intensive, and not capital intensive
2. Unstable markets necessitate “organized abandonment”
3. Km lets you lead change so change does not lead you
4. Only the knowledgeable survive
5. Cross industry amalgamation is breeding complexity
6. Knowledge can drive decision support like no other
7. Tacit knowledge is mobile
8. Your competitors are no longer just on the west coast

Why now?

Having exhausted all other sources of competitive advantage such as technology and market dominance-none of which have sustained their promises-companies are befittingly placing all hopes in knowledge and its effective management. The value proposition for knowledge management is now stronger than ever, as it is no longer a rare competitor differentiator but the only differentiator.

Who should be pursuing KM?

Two types of companies should be pursuing KM. The first type is one that has realized the need to keep up with its competitors and remain a legitimate player through the process of maintaining knowledge that is core to its line of business. The second type is one step ahead; it already has the core knowledge necessary. This company realizes that what is innovative knowledge today will be commonplace tomorrow.

What KM is not about?

KM is not solely a technology problem; it is partly a management problem. Only by aligning the two can you build KM technology that will truly enable effective KM. A few clarifications:
1. KM is not K engineering.
2. KM is about process, not just digital networks
3. KM is not about building a “smarter” intranet
4. KM is not about a one time investment
5. KM is not about enterprise –wide “infobahns”
6. KM is not about capture



Critical success factors

Before devising a blueprint for a KM system, one must identify the critical success factors that must be supported. The following are the 24 points that if incorporated will most definitely help in creating a sustainable competitive advantage.
1) There is no one right way: there is no silver bullet for KM. In spite of all what the consultants and other research might say there is no one right way to do it. What works for one company may not work for another.
2) Reach a working definition of knowledge: agreeing on a working definition ensures that everyone involved in the initiative is exactly on the same wavelength and understands what is being talked about. The distinction between data, information and knowledge is essential
3) Focus on processes, not just technology: the focus should be on the process of adding, searching, filtering, validating, retrieving and maintaining information and knowledge- both tacit and explicit. The effectuating process of knowledge sharing and transfer is quintessential to the success of a KM system. The systems design must account for the people who will actually use the system, harmonize with their work processes, and be simple and easy to use. Process focus is required and not a technology focus
4) Vague knowledge measures: successful projects begin with the acceptance that there are no perfect measures or metrics for knowledge work. However some metrics, even if vague, are needed to gauge the effectiveness of KM. There is no one good way of measuring the benefits that result from effective management of knowledge within a company. In fact, no correct and complete way exists yet.
5) Demonstration of short term impact essential: continuing support for KM projects in the real world often depends on the demonstration of some tangible and short term results in order to sell KM to both managers and end users.
6) Count in Tacit Knowledge: dubbing mundane databases and object depositories as KM tools, and search engines as human brain-power does little justice to the complexity and completeness of corporate knowledge. This ignores a very critical component of knowledge: knowledge that lies in the heads of employees. To truly support management and reuse of knowledge, tacit components too need to be counted in strongly. Such tacit knowledge includes things like perspectives, perceptions, values, beliefs and experience.
7) Create a shared context: in the absence of a shared context, people coming from different backgrounds, with different values, beliefs, assumptions and views, are most likely to collide and immobilize the possibilities of reaching consensus or making decisions. There is need for some mechanism that allows open, supportive, critical, and reflective conversations between participants to allow them to challenge, align, and establish a shared context. Without this context there would be no difference between the knowledge that flows within a company and its information flows along disjointed points.
8) Begin with what you have: it is essential to know what is out there before you even begin to manage it. Without knowing what the company already knows it will be hard, if not impossible, to identify critical gaps in knowledge and competencies.
9) Accommodate reasoning with assumptions: Managers have some deeply held, extensively shared, often believed, but rarely tested assumptions about the key decisions they make and the basis on which they make them. Like many other things in a dynamic environment the firms operate in, these assumptions can, and often do, change.
10) Think future: knowledge-centric initiatives and projects must look to the future and not the past or present, except to see how past decisions, experience, successes, and failures can help make better decisions in the future.
11) Minimize routing retransmission: as actionable information moves from one recipient to the next, two things get added to it: noise and value. It is often safer to assume that the distortion is more than the value, especially when rerouting is nonessential. The design of a KM system should therefore minimize the number of transmissions of knowledge between individuals to achieve the least distortion of knowledge.
12) Give incentives, not faster computers: what employees need are incentives and not faster computer. Technology provides many enablers, except the biggest one of them all: an incentive to share knowledge.
13) Allow everyone to access and contribute: everyone in an organization should be able to access most, if not all, sources of knowledge that exist within a company. Confidential information can be controlled or restricted within the same system. Also allow everyone to help solve a problem at hand. As pieces of knowledge begin to fit together, the most insightful part might come from the most unexpected source or employee.
14) Allow confidentiality: allow users to contribute to the system without the fear of being reprimanded for their words. As important as it is to be able to trace back to the contributors of knowledge, allowing free expression under anonymity is also essential.
15) Access anytime, anywhere: most successful KM systems to access, to read and to contribute from anywhere and at any time. Remote connectivity therefore becomes necessary.
16) Update automatically: if the system is used extensively, its technical design should be such that its users can see updates and additions in real time without having to manually refresh content. This is a trivial technical problem that is often overlooked-with disastrous results.
17) Supply resource maps to ease navigation: as explicated content and tacit knowledge pointers within a knowledge management system grow, resource maps must be provided to help users navigate through them.
18) Use other databases in addition to corporate best practices databases: processes should be supplemented by implementation of knowledge. The repository should be available but more importantly should be accessed regularly and the culture should be promoted.
19) Provide management support: top managements active support and understanding the role that knowledge has to play are critical for KM’s success. Establish top management sponsorship with ongoing involvement during the design, development, and implementation stages of your knowledge management system.
20) Focus on technology and internal consulting group: effective KM systems must support collaborative work and internal consulting. KM must also focus on product and service development process.
21) Support informality: KM systems need to be informal and communicatively rich. Effective KM systems are easy to use. Extensive features that make the system cumbersome to use or less intuitive can discourage its use.
22) Art of packaging knowledge: packaging knowledge is a goal that must be supported by KM systems right from the outset. Remember that less (volume) is more when it comes to knowledge and its effective management.
23) Provide logical business sense: KM technology should provide a logical extension for business units, and its choice should create a win-win situation primarily for its users, not the company’s technologists.
24) Determine your knowledge delivery Weltanschuung: the design philosophy—Weltanscluung (German term for “world view” or philosophy) of your KM system dictates how actionable information or knowledge is delivered. Different users prefer different delivery mechanisms. This distinction implies that users of a KM system should be able to choose whether they will pull content or it will be pushed to them. Similarly, users must not be bombarded by all-inclusive content.

What a KM must have /must do?

· Needs to support innovation, generation of new ideas, and exploitation of a firm’s intellectual prowess.
· Must support collaboration. Knowledge sharing, learning, and continuous improvement.
· Free, unrestricted, and easy conversation must be supported.
· Must make it easy to find sources of know how and not just know how itself, locate people and expertise, and reuse what exists either in tangible form, or in someone’s head.
· Must build systems around people instead of molding people to work with systems.
· Decision making quality and accuracy should be enhanced.
· It should be flexible enough to change with the business that it supports.
· Must be pragmatic before it aims at being perfectionist.
· It should be user friendly.




The 10 step KM road map

Nothing- no technology, no market share, no product, and no monopoly- can ever provide a competitive advantage that is anything but temporary: they can all be copied, sometimes easily and sometimes with a little effort. K is the only source that cannot be easily copied. K is much like copy protection: even if your competitors get to it, they cannot apply it; for knowledge is protected by context as in copy protected software is protected by encryption.
KM is a complex activity, and like anything else that cannot deliver business impact without a concrete plan, it needs a perfect plan. The 10 step KM road map guides you through the entire process of creating a business-driven KM strategy, designing, developing, and implementing a KM system and effecting the soft changes that are required to make them work. The road map can be looked upon under 4 phases for better understanding

Phase 1: Infrastructural Evaluation

1. Analyzing the existing infrastructure.
· Several steps need to be taken to leverage the existing infrastructure and enabling technology components
· Tie in what already exists, integrate it, and begin there.
· Understand the roles that your existing networks play in KM.
· Examine your needs and determine the processes that most need KM support, and identify existing infrastructure can or cannot meet those needs.
· Identify extant explicit knowledge, take stock of what information and k already exists beginning with explicit k sources.
· The people who will USE km systems, their work practices, and the company culture should govern choice of technology.
· Go beyond the intranet. Provide process support for collaborative synergy, real k, informal conversation, intelligent decision support, and visual team thinking.
· Plan for flexibility and scalability

2. Aligning KM and business strategy.

We can categorize knowledge into 3 classification “buckets”
· Core knowledge: core knowledge is just the basic knowledge required to play the game. This is the type of knowledge that creates a barrier for entry of new competitors.
· Advanced knowledge: advanced knowledge is what makes your company viable. It allows your company to differentiate your product from your competitors, arguably, through the application of superior knowledge.
· Innovative knowledge: it allows a company to lead its entire industry to an extent that clearly differentiates it from competition. It allows the company to completely change the rules of the game.

Knowledge is not static. What is innovative knowledge today will become core knowledge of tomorrow. The company must continually monitor where it stands in comparison to its competitors.
The gap between what a company is doing and what it should be doing represents its strategic gap. Similarly your company’s knowledge gap is represented by what your company should know and what it does know in order to support the competitive position that it has adopted. These two gaps must be aligned and must feed into each other to bridge existing gaps.

The process of creating a well articulated link between business strategy and knowledge strategy:
· Articulate intended business strategy
· Articulate business strategy –knowledge link
· Create an internal k map to identify what you need to know
· Choose either codification/personalization or personalization/codification as your KM focus
· Create a knowledge map for each key competitor
· Create a knowledge map for your industry
· Assess your and your competitors learning capabilities
· Assess your internal/external knowledge gap influences your current and future business strategy
· Determine the balance between exploitation and exploration that you want your knowledge strategy and KMS to support
· Feedback

Phase 2: KM system analysis, design, and development

3. Designing the KM architecture and integrating existing infrastructure.

Most technology needed for knowledge management already exists. The most critical part is determining the best mix of available tools and integrating them in your projects KM architecture. The following points must be kept in mind:
· Choose IT components to find, create, assemble, and apply knowledge. Since content comes from a variety of sources both within a company and from outside, the optimal components must let you create, assemble, find, and apply knowledge in a cost-effective and timely manner.
· Pick one: Web or Notes. Customised implementations of proprietary technology might seem easier to implement than web based intranets with equivalent functionality; using open standards such as intranets holds more long term promise both in terms of cost containment and incremental development. Choosing the web over other options can potentially lead to a tighter integration of commercially available complements such as CBR systems and push delivery mechanisms.
· Identify and understand components of the collaborative intelligence layer. Artificial intelligence, data warehouses, genetic algorithms, neutral networks, expert reasoning systems, rule systems, and case-based reasoning are some of the technologies that provide intelligence to the KM system. Understand how these tools and technologies work and when their use is appropriate.
· Optimize knowledge object granularity. Granularity of knowledge (represented in terms of knowledge objects or elements that are specified in descending order as knowledge domains, regions, sections, segments, elements, fragments and atoms) objects refers to the level of detail in which they are stored in the knowledge management system. Avoid overpopulating your company’s repositories. At the same time, too little detail might make content useless or unactionable. The key lies in striking the right balance between too much and too little detail.
· Create knowledge tags and attributes. Domain, form, type, product/service, time, and location tags allows for uniformity in retrieval and storage of content. Defining such tags up front also helps you determine the right mix of components for searching, indexing, and retrieval.

4. Auditing and analyzing existing knowledge.

The knowledge audit process begins with a clear understanding of its purpose, its short term and long term goals, and identification of its constraints. Knowledge of knowledge assets is critical to the proper planning of a knowledge management system and is a rich source of information about where the strengths of a company lie. In this process it is important to have foresight (hindsight+ insight =foresight). Extrapolation from the past cannot, by itself, predict the future course of events such as project success. However if hindsight is combined with insight into past processes, the combination can provide a robust, partial-indicator for the future.
The knowledge audit consists of six steps as described below:
· Define the goals: the Km audit team agrees upon the reasons for the audit, decides on the goals, and identifies the key financial, organizational, privacy-related, and strategic constraints that influence it. Define specific goals that both the audit process and knowledge management are targeting.
· Determine the ideal state: this need not be all encompassing during the initial stages of the audit process. Begin with a few variables that are equivocally considered critical and that can scope your knowledge management project.
· Select the audit method: use the company specific instantiation of the generic method to perform the audit. So it should account for employee know-how, reputation and market goodwill, and organizational culture as they apply to a company.
· Perform the knowledge audit and document existing knowledge assets: this provides an internal benchmark to evaluate the effects of knowledge management initiatives after they have been put into place.
· Track knowledge growth over time: progression from the initial stage (when the knowledge audit process is performed for the very first time) to later stages allows for easy comparison with the ideal state.
· Determine a company’s strategic position within the technological framework: as cells in the strategic technology framework are populated after the audit, one can decide on the direction in which KM and technology support should focus and where support is least needed.

5. Designing the KM team.

The ultimate goal, after the KM enabling technology and culture are in place, is to encourage every employee to become a manager of knowledge. Employees shouldn’t have to think twice before they contribute, use, validate, update, or apply knowledge explicated within and outside the firm. The following points need to be kept in mind before designing KM team:
· Identify a few key core stakeholders: select a group of people representing IT, management, and the end-user group that will form a core part of the team on a relatively long term basis. Other team members can serve temporarily.
· Identify sources of requisite expertise: sources of expertise representing all divisions or departments that will use the KM system are best drawn from those organizational units. Managerial participants with sufficient knowledge of the company and clear big picture provide strategic direction for the project.
· Select a visionary and experienced project leader: the KM leader helps members of the team understand the projects mission and align their company’s overall goals and objectives.
· Identify critical failure points: there are some high risk areas where the knowledge champion has little control. Its important to keep these areas in mind and give them attention

6. Creating the KM blueprint.

A knowledge management system built without a well-defined architecture will lead only to chaos at later stages. Make sure the architecture is clearly defined, since this part of the infrastructure can be very expensive to fix at a later stage. The following points must be kept in mind:
· Understand the architectural components of the knowledge management system: It’s important to pay close attention to integrate repositories, content centres, knowledge aggregation and mining tools, the collaborative platform, knowledge directories, the user interface options, push delivery mechanisms and integrative elements.
· Design for both interactive and integrative content aggression: Both these needs must be met simultaneously.
· Optimize for performance, scalability and flexibility: Make sure that your KM system works as well for 600 people as it does for 60. Pay close attention to short delays in processing transactions-this will amplify by orders of magnitude as you begin to scale the system upwards
· Plan for interoperability: Plan for higher levels of inter-operability with existing protocols and implementation.
· Decide whether to build or buy: One option is not necessarily better than the other. Examine the pros and cons in each.
· Pay attention to the user interface and its design: The user interface provides an excellent opportunity for ensuring by-in by the user community. A user interface that is built in synchrony with user community helps create a perception that the KM system is an asset and not a liability.
· Position and scope of the KM system: externalise only that tacit knowledge that has the potential for maximising opportunity and returns.
· Future-proof your KM system: Ensure that your KMS does not become obsolete as technologies and business environment evolve.

7. Developing the KM system

Once the blue print has been created for a KM System, the next step is that of actually putting together a working version of the system.
The seven layers within the KMS architecture provides a guideline for the choice of technology components that enable effective sharing of knowledge across a distributed enterprise.
1. Interface Layer: The top layer moves information in and out of the knowledge management system. When this information is relevant, timely and actionable, it represents knowledge. The top layer, the Interface Layer, connects to the people who use this IT infrastructure to create, explicate, use, retrieve, and share knowledge.
2. The Access and Authentication Layer: This is the layer that authenticates valid users. Security and restricted access for the remaining layers are maintained at this level. The strength of security provided by this layer has increased largely because of the penetration of intranets into many companies and vulnerabilities thus arising.
3. The Collaborative Filtering and Intelligence Layer: It constitutes intelligence within a KM system. The process of adding tags and Meta tags to knowledge elements, either through automated mechanisms or manual procedures, is done at this level.
4. The Application Layer: Applications such as skills, directories, yellow pages, collaborative tools and conventional decision support tools are placed at this level.
5. The Transport Layer: Assuming that a company at least has a network in place, the transport layer already exists. This consists of various connectivity modules like TCP/IP, POP3/SMTP or mail server, etc.
6. The Middleware and Legacy Integration Layer: The Legacy Integration Layer provides connections between legacy data and existing and new systems. The Middleware Layer, similarly, provides connectivity between old and new data formats, often through a web front end.
7. The Repositories Layer: This layer consists of operational databases, discussion databases, web forum archives, legacy data, digital or digitised document archives and objective repositories.

Phase 3: Deployment

8. Deploying with RDI methodology.

The deployment stage is the point where the Knowledge Management actually meets the road. Keeping the following key points about the deployment stage in mind:
· Select and test-fire the knowledge management system using the pilot deployment: Select the pilot project that is representative, and that will help identify and isolate failure points in the deployment stages. Select a project that has high visibility and has tangible outcomes. Prevent independent or specialised knowledge “silos” from arising.
· Use prototypes to involve end users: Iteratively improving a system with incremental prototypes lets the system’s potential users see, touch, and feel a system even before a system is completed. Many flawed assumptions in the system’s design can be corrected inexpensively at this stage.
· Focus on results driven incrementalism of the RDI methodology: Use the Results driven Incremental (RDI) methodology to deploy the system. RDI methodology specifies that the project be broken into a series of short, fast-paced development cycles coupled with intensive implementation cycles, each of which delivers a measurable business benefit. Convert factors to processes. Eliminate information packaging methodology, SDLC orientation, and traditional big-bang methodological variants. The RDI methodology lets your team capitalize on insights provided by preceding increments. The methodology works best in the technology component of knowledge management itself is divisible.
· Create effective business releases: Create cumulative results driven business releases. Select and initialise releases with the highest payoffs first. Well-crafted business releases will help you identify and avoid the tarps inherent in the RDI methodology.
· Budget for non technology costs in RDI business releases: Besides training costs and work processes integration, budget for costs related t deployment and implementation of your knowledge management system with business processes.
· Develop a clear communication process with users: Develop a clear communication process that explains the expectation s and the reasoning behind the introduction and integration of the knowledge management system with business processes.
· Strive for iterative perfection: A healthy KM system needs iterative improvements as the business environment and accompanying processes evolve over time. The deployment process should not come to a halt once step 10 of KM “methodology” is completed.

9. Change management, culture, reward structure design, and choice of CKO

For a successful KM System, change management must occur and reward structures must be modified. The following points must be considered :
· You might or might not need a CKO.
· Understand exactly a CKO’s role.
· KM is only about 30% technical. Its success depends on the cultural changes that take place after the technical implementation.
· KM needs strong reward structures.

Phase 4: Performance Evaluation

10. Measuring results of KM, devising ROI metrics, and evaluating system performance.

There are no perfect metrics for knowledge work, but these six approaches mentioned here, the balanced scorecard and the QFD/House of Quality approach seem to be the most promising. To be able to truly understand them and apply them well, measuring the performance of the knowledge management system and its contribution to a company's financial and competence bottom line is absolutely critical. After all, measuring where KM is taking you and demonstrating it well, might be critical for the next round of funding that the project must receive from the CFO. Keep the following tips in mind while devising knowledge management metrics for a company:
· Metrics define knowledge management success: Robust metrics help measure the business impact of knowledge management. Well-chosen metrics serve as the indicators, tools, and guidelines that can help shape both your company's knowledge management system design and its knowledge management strategy. Knowledge work and knowledge management system performance must be one of your core metrics if any knowledge management initiative is to succeed. A few robust metrics with immediate reward ties for knowledge workers are better than many weak ones that cannot be controlled. Focus on knowledge that is valuable, rare, hard to copy, and hard to substitute when you are trying to decide on metric variables. Reward both internal and external knowledge integration through metrics that can be measured today, with impact on future outcomes.
· Benchmarking is a starter, not a strategic metric: Benchmarking is a good comparative tool that lets you judge how high you stand in comparison to other firms both within and outside your industry. Beyond that it provides little to guide knowledge management at a strategic at a micro strategic film level. Select an appropriate company as a role model before you begin the process externally. Remember that benchmarks do tell you what to do next, but not how to do it.
· QFD’s relate high-level goals to discrete actions: QFD’s let you link goals, relationships, perceived significance, and outcomes for each strategic step that you take with your knowledge management system. QFD’s integrate inputs from all stakeholders and provide explicit direction for enhancing your company's knowledge management strategy. QFD’s can be automated to a fairly high degree with readily available soft-ware. You can translate high-level goals to specific tasks, and these tasks can further be decomposed into measurable and manageable actions.
· The balanced scorecard links strategy, technology, competitiveness, and knowledge management: The KM BSC method helps you translate the knowledge management vision into action, communicate the KM strategy bottom up, validate your choice of metrics, and analyze results of knowledge management in the long run. It will provide a robust direct link between knowledge management, the system, your company's clients, markets, people, results, and profitability".
· Do not ignore the soft stuff: Metrics must take both hard and soft results into account to present a true picture of your firm's intellectual health.
· Metrics in the rear view mirror appear more significant than they are: Ask yourself: Do we have metrics that can serve as early warning signals for future problems and those that signal future opportunities?








KNOWLEDGE MANAGEMENT during Mergers and Acquisitions
Over the last twenty years, mergers and acquisitions activity has been one of the chief methods for organizational growth. But some of the all-too-common negative consequences of mergers and acquisitions are:
1. Billions of dollars of shareholder wealth disappear when the integration process fails.
2. Stockholders desert when the claims of 'synergy gains' that used to justify complex mergers fail to materialize.
3. After being told, "Together, we will be stronger," key employees are demoralized when downsizing begins a few months later without a clear strategic rationale.
4. An attractive acquisition becomes a 'spin off,' sold for a fraction of its original cost.
What happens to M&A adventures after the executive ego trip of the deal making? Will the integration period reveal management's folly, or can it reliably produce shareholder value? A model for rapid integration of the merged entities using Knowledge Management may help executives who are engaged in making acquisitions and making them work. Speed is essential to successful M&A integration, but so is strategic planning. Only 25 to 50% of deals create shareholder value, often because those managing the integration process don't know how to make trade-offs between speed and careful planning. To keep the value of a merger from evaporating, leaders need to manage the integration process actively, and steer a course that leads the new organization to its stated strategic goals as swiftly as possible.
A Case on Cisco Systems
When Internet equipment maker Cisco Systems completes an acquisition; it aims to assimilate the technical know-how of the new company under its corporate umbrella within a hundred days. Cisco aggressively seeks to keep the highly skilled people that made the target attractive and to incorporate new products into Cisco's development pipeline. With that strategic goal, Cisco has developed a comprehensive approach to integration that works. And although the company's market value has shrunk in the 2001 technology downturn, its track record for merger integration stands strong. Cisco integrated more than 60 acquisitions from 1996 to 2000. During this period Cisco's stock price rose by an average of more than 50% per year.
Consistent with Cisco's approach, acquirers need to have a clear strategic rationale for a merger in order to set integration priorities. Some companies merge to increase market share and to improve efficiency through increased scale. Others use acquisitions to gain access to customers, products, or markets that complement their existing business. Some companies choose a more strategically complex path, broadening the scope of their business by buying entirely new capabilities-on occasion fundamentally altering the rules of competition in their industries.
In the future, where mergers and acquisitions would be a common phenomenon, not just the CEO but all managers have to ensure a smooth flow of information between their divisions through them. In fact the Chief executives face few challenges more risky than integrating two businesses, and employees face few situations more stressful than mergers. Meeting this challenge requires leaders map a path to integration that aligns with strategic intent. This way, leaders can guide their companies through the inevitable uncertainty of merging as swiftly as possible, and capture the value that prompted the deal.
Thus while mergers-acquisitions take place it is quite necessary for every company to consider sharing of knowledge factor as well as the KNOWLEDGE MANAGEMENT



























KM: A Strategic tool for Competitive Advantage

Organisations are persistently striving to create mechanisms for differentiating themselves from their competitors within given markets. Knowledge of their employees is their most valuable asset. It’s being viewed as their most valuable and strategic resource. Most organizations today have a better understanding of Knowledge Management and its associated benefits. They also view it as the ability of knowledge to focus on problems and opportunities as their most important capability. Thereby many organizations have initiated a range of knowledge management initiatives. It’s about how an organization puts the generic strategies into practice. Effective generation of knowledge to form a part of the database can be formed through MIS Reports, Ability to support problem solving and decision making and Collaboration and Communication within the organisation.

How does a firm gain a sustainable cost advantage? How can it differentiate itself from its competitors?
A broader outlook about KM as a Strategic Resource.

There are three broad types of inter-relationships among business units, which have, important but different impacts on Competitive Advantage. Tangible, Intangible and Competitive are some of the types of Interrelationships that do exist within the organisation
Tangible Interrelationship arises from opportunities to share activities in value chain among related business units, due to the presence of common buyers, channels and other factors. For example, common retailers in the FMCG segment. Thereby if sharing lowers cost or enhances differentiation such that to exceed the cost of sharing, then this relationship leads to Competitive advantage
Intangible Interrelationships involves transference of generic skills or know-how about how to manage a particular type of activity from one business unit to another. The basic advantage is lowering of cost of the activity or makes it more unique and outweighs any cost of transferring of know-how. For example, In software companies you have people who are specialists in solving critical issues
Competitor Interrelationships stems from the existence of rivals who actually or potentially compete with a firm in more than one industry. As Tangible and Intangible interrelationships can provide the base for diversification, the competitor interrelationship often co-exists between them.

Knowledge: A Strategic Resource
Companies possess superior knowledge. A proper coordination, combination of traditional resources and capabilities in new distinctive ways is desired. How to exploit and develop these traditional resources better than competitors in a unique manner is the key to the success story. Thus enhancing the organizations fundamental ability to acquire, integrate, store, share and its application becomes the most important capability for building and sustaining Competitive Advantage. But, building a defensible competitive knowledge position internally is a long-term effort and requires foresight and planning.

Knowledge: Strategic Competence

Competence is the ability of an organization to sustain coordinated deployment of assets and capabilities in ways that help in organization achieve its goals. Competitive strategy aims to establish a profitable and sustainable position against the forces that determine the industry competition.

Competence is a property of an organization that depends on three essential inputs from managers’ i. e. Articulating / Drafting the general goals, defining specific action plan and coordinating the use of resources in an effective and efficient manner.

Knowledge: Managing Knowledge to gain Strategic Competence.
The challenges facing this arena are formidable. Globalisation, Information Technology and Shareholders’ Values are transforming the world. To meet these challenges is to become a knowledge-creating or knowledge-intensive organization. But, how do you create K? What are the sources to it? Some of these include:
· Customer Knowledge: Customer is the most important resource. Ultimately he is being provided the service. Its he who has to be satisfied. Therefore, his knowledge and suggestion forms an integral part for framing strategies and sorting out past difficulties.
· Processes Knowledge: In the course of an activity one always comes across situations which are all alien to him. A record of such situations along with the solution to the problem forms part of the database.
· Knowledge in people: Individuals collectively form a group. Individually one possesses a huge databank. Buy, unless its known to the group it stands redundant. Organisations have therefore to explore this individual knowledge to create the database.
· Organisational Memory: Past experience is a resource for future success. An organisation should learn from its past, analyse the same and use it as a significant tool to manage future.
· Knowledge in Relationships: Organisations relationship with stakeholders taken as a whole forms a large data warehouse. Using each of these resources to produce the best can create knowledge.

Once the knowledge is created its now the different processes to gain knowledge competence both at the individual and group level and ultimately organizational levels.

CASE STUDIES:

I. I-Flex Solutions

II. TISCO

III. McKinsey & Co

IV. The Indian pharma sector-Ranbaxy Labs










I. I-Flex Solutions


















KM is a Business Process in i-flex



Enterprise-Wide Strategic Initiatives

Along with the decision to adopt the CMM as its guiding framework for process improvement, way back in 1994, the organisation recognised the fact that process adherence and improvement becomes easier when it is supported and streamlined by appropriate levels of process knowledge automation. i-flex has internally developed and deployed a suite of process automation tools, which includes QuBase, Promotr and i-CLeaR. These tools enable the organisation to effectively manage and disseminate the process-related knowledge that is generated through the implementation and practice of the defined quality processes.

































QuBase is the ever-growing Intranet-based repository of methodologies, processes, standards, templates, checklists, guides, tutorials and other useful information which practitioners use in their day-to-day work.
Promotr, the other automation component, is designed as an environment that addresses the monitoring and tracking needs of projects along parameters such as size, effort, schedule and quality. It also facilitates the capture and analysis of data generated from the projects executed by the organisation, to assess its process capability at any point of time.
This capability, on parameters such as productivity, defect density, defect leakage, effort slippage and schedule slippage, is published annually in the form of the i-flex Baseline Report. The knowledge that is inherent in this data is then used by the firm to achieve greater levels of accuracy in estimating and planning for future projects, as well as to refine the processes to achieve higher levels of performance.
i-flex also has an institutionalised mechanism of capturing the experiences and learnings of projects that the organisation executes. These are captured at the end of each project, in the form of the Project Closure Document ( PCD ), which is deployed through the organisation’s learning repository, i-CLeaR, which documents management lessons learnt during the project as well as process recommendations. These are used by relevant projects as inputs to enable better planning and management of ongoing projects.

Creating a Centralised Knowledge Repository

As a first step towards the creation of a centralised i-flex knowledge repository, we created a technology platform called i-CLeaR (i-flex Corporate Learning Repository). i-CLeaR is a tool tailored to meet our requirements and is being constantly upgraded based on user feedback and requirements. Using this tool, documents can be categorised using a logical relationship. The actual relationship depends on the specific categorisation scheme that is employed. Documents uploaded into i-CLeaR can be classified under various categories: ownership (e.g. sales, product groups), location (e.g. New York office), type of document ( e.g. confidential). Comprehensive search facilities and reporting, high security control and access rights and strict audit trails are other features of this tool-making it i-flex’s centralised knowledge repository.


Enterprise Performance Initiatives in the Process and Quality Areas

The self-learning process infrastructure described above is supported by organisational initiatives which contribute to greater institutionalisation of processes, as described below:
QPati is a centrally-administered quiz program on processes and related topics that serves the purpose of generating interest in the employees for understanding and appreciating organisational processes. This quiz is conducted on a weekly basis, culminating in quarterly finals that result in individual as well as location winners. The location dimension helps create a healthy competition among the different offices of the company to achieve the objective of the program. Winners are recognised through appropriate awards.
i-Suggest is a theme-based process improvement suggestion scheme that runs on a monthly basis. A theme is announced for the month and suggestions on the theme are invited form employees. A panel of internal experts evaluates the suggestions received, and those that are accepted by the panel are taken up for implementation. Exceptional suggestions are awarded each month. All relevant details pertaining to the suggestions received under i-Suggest are available on the Intranet for the benefit of employees. The teams that run this monitor the progress in implementation of the suggestions and reports back to the organisation.



































K-Champion Role is an institutionalized role mandatory in all development projects undertaken at i-flex. This mandatory role is expected to ensure that every project collects re-usable collateral from the project, codifies it and publishes such information (including tacit information) in the central repository for further reuse.

INITIATIVES ADDING VALUE TO STRATEGIC BUSINESS

Effective leverage of intellectual assets is increasingly important in an enterprise's competitiveness and market value. In today’s dynamic and competitive environment, key business market data are being increasingly considered as mission critical intellectual capital, competitive advantage is gained when these 'knowledge assets' are enriched with employee insight and applied within the context of an enterprise business, past experiences and strategic directions.
To address this requirement, I-flex launched a Business Intelligence program that continuously monitors the business technology and market environment, captures the relevant information with its i-flex's context and creates knowledge alerts on an ongoing basis. By applying employee insights, knowledge alerts are transformed into mission-critical strata inputs to the key i-flex decision-makers, thereby helping i-flex to become a more responsive and innovative organization, giving it a sustainable competitive advantage. This has become an invaluable management tool today.





CREATING A NEW ORGANIZATIONAL CULTURE

Creating a collaborative culture in an organization is critical to the success of any KM program. By allowing a wider range of employees to take advantage of knowledge that had previously been available only to limited groups, I-flex is introducing a culture of collaborative participation and making the knowledge creation process more effective by leveraging multiple skills across projects and geographical locations in I-flex. I-flex introduced several programs that could create a new organizational culture, furthering collaboration, sharing of knowledge and effectively leveraging the intellectual assets of the company. K-Forum is a web-based platform for employees to collaborate and seek solutions on unresolved issues facing them in their day-to-day work environment. The members of K-forum seek solutions from experts outside their project groups and geographical locations. This forum helps in leveraging i-flex's intellectual capital and expertise and applying the right solutions to critical issues in a structured and optimal manner. Mentors are selected for mission-critical technology and business areas, who in turn act as proactive facilitators in their areas of specialization. This initiative has been a great success and has helped in introducing a culture of virtual collaboration and knowledge sharing. The K-Forum today has over 370 registered users with an equal number of unregistered users who visit this forum for published solutions to problems. Since its inception in October 2001, K-Forum has posted over 1,300 queries on various areas of specialization with an average of two responses from experts to each issue posed. The archives are also a popular destination amongst the employees searching for ready solutions to known problems. K-Webcast is another initiative that has been well received by the employees. K-Webcast is a highly informative and inter-active audio conference with I-flex experts through a weekly webcast program of 30 minutes duration consisting of a 20 minute audio presentation followed by a 10 minute Q&A series on popular topics of interest. Many have found this manner of presentation better than classroom sessions. Archived webcasts are also popular amongst the employees. I-Share is I-flex’s knowledge management portal on the intranet (i-Opener) with content columns such as Thought Center, Technology Corner, Ideas at Work and Lessons Learnt, i-share is updated once a month with contributions from employees who would like to share their experience through any of these columns. I-Contribute is another collaborative program (currently undergoing a pilot implementation) that attempts to maximize the utilization of resources across projects. In this initiative, a project manager may decide to auction non-critical tasks using this platform, depending on his requirement and on constraints like overstretch. The task is then open for bid from the participating groups.

METRICS:

Measurement plays a critical role in any Knowledge Management program, and is achieved through periodic organization wide employee surveys. The objectives of the survey are to assess the acceptance and effectiveness of the individual programs, create a benchmark to compare the success of the programs, understand the current environment and identity areas for improvement. The output from the surveys arc analyzed to draw up specific KM initiatives and identify critical business issues that need to be mapped to future KM initiatives Organization-wide knowledge sharing programs require significant investments and entail major management effort as well as behavioral changes across the organization over a period of time. Without measurement, there is an ever-present danger of premature abandonment of successful efforts, or alternatively, of complacent continuation of unsuccessful efforts when course correction is needed.)
Knowledge is a difficult thing to manage. It does not do well in captivity and it does not survive for long outside its natural habitat. It is under these circumstances that I-flex would like to echo the famous words of management guru Peter Drucker, “Leveraging knowledge is not only important, but it may be the most important job management has”. I-flex solutions have taken a major step towards making KM a reality so as to stay ahead of competition as keep churning out better results year after year.



























II. TISCO

Knowledge Management at TATA STEEL

Tata Steel pioneered “Knowledge Management” to shift the basis of growth from natural resources and physical assets to intellectual capital, which has become the source of innovation, growth and value in modern competitive scenario. The essence of knowledge management is to create and capture the abundant knowledge assets available either tacit (experience, thumb rules etc) or explicit (Literature, reports, failures analysis etc) and then share and utilize it again at right place and in right time.

Since there is no accepted standard framework for KM, Tata Steel has evolved a framework in accordance with its needs, to achieve its business vision. Tata Steel has conceived, developed and deployed internally, an elaborate architecture for KM that aims to take the company to a Learn Once, Use Anywhere paradigm. It was initiated with building up of a “Knowledge Repository” with all the officers actively participating in it. There are basically two broad strategies that are being followed


KM strategies at Tata Steel

















1) Codification Strategy (Unsolicited):

Knowledge database includes best practices, learning from failures, improved and new practices adopted, competitive intelligence, customer and supplier knowledge, and benchmarks of different parameters etc. These captured knowledge assets are being deployed and used instantaneously in respective work area to give benefits.
The challenge in knowledge repository process is to keep database updated and useful. With increasing number and size of knowledge database, it will be more challenging to store and offer a range of contents to a variety of users.

The following diagram explains the knowledge repository process that how the knowledge is being captured evaluated by experts and then used by users.

















This year, we have included some new features in this codification strategy.

· Ask Expert (solicited) - In today’s economy, the most challenging job is to initiate conversation especially between knowledge seeker and knowledge provider i.e. expert. The fact that the organization is big, actually makes this more difficult because an individual actually does not know that there may be others in the organization, whom he does not know, who can provide solutions to his problems. We are trying to do it through our “Ask Expert” feature. In our “Ask Expert” system, employees are free to log on their work related problem online and there are more than 100 experts involved in providing instant solution to them. These solutions are stored for future use.

· Integration of different databases and product catalogue- Detailed analysis of the failures of our products at the customer end is also made available on the KM portal. Customer’s knowledge is also available on the KM portal. Indian standard (IS) are also made available on the KM portal.

· Our treasured jewels: Details of our retired employees is also available with complete profile (Name, Phone No., Address, e-mail id, expertise).


2) Personalization Strategy:

To encourage knowledge transfer across divisions and departments, few Knowledge Communities have been formed, which are actually groups of like – minded people who came together to share what they know, and to learn from one another regarding some aspects of their work. They are an investment towards the future of organization and not expected to yield a short-term gain. It is more of a knowledge creating and sharing platform rather than a task force to solve a problem.

The following diagram shows complexity of Knowledge Communities. Four Knowledge Communities are being shown with participation from various divisions.































Communities play a very important role in capturing experts’ tacit knowledge, improving the quality of knowledge repository and encourage usage of the repository. In our company, the knowledge community comprises of distinct roles viz Champions, Convener, Practice Leader, lead experts and practitioners. These communities exist not only on core business but also on functions like HR, Town, Community development.

Beside the responsibility of keeping the knowledge repository current, communities have various Knowledge deliverables as follows:

• Innovation: Plan, Conduct and learn from New Experiments.
• Identify Best Practices, Update regularly.
• Identify new Bench Marks, Update regularly.
























Deployment:

An index called “KM Index” has been also developed to measure the performance of KM system. This KM Index is an item in the Balanced Scorecard of CEO, which has been cascaded down at lower levels. Both the above strategies are in place at almost all the locations of Tata Steel. Almost 80% of our officers are involved in the above-explained KM system.



Rewards and Recognition:

Knowledge Management forms a part of the Performance Management system. Rewards and Recognition are given to those who perform well in the Knowledge Management systems.

Involvement of supervisors and Workmen:

A formal training programme for Supervisors has begun from August and Supervisors and some workmen have actively and voluntarily started participating in the KM systems. At present around 20% of supervisors have started participating in the KM systems.




































III. McKinsey Consultancy

Knowledge Management Model

It takes an enormous effort to create an integrated network of interdependent specialized operations linked by the flows of information and resources. A series of practical changes which maybe less clear is that the organizations ability to link knowledge and embed learning often does not begin until there is a more profound shift in the thought flow of the top management. In many cases these changes occur only after there is a basic re-conceptualization of the company’s business.
McKinsey came to such a major crossroad in the mid 1970’s when it’s unimpeded growth of the previous half century began to slow and it’s reputation as a premium management-consulting firm was challenged .At that time a group of highly focused competitors such as the Boston Consulting Group began to make strong inroads into McKinsey’s markets. On the basis of some simple but powerful tools like the experience curve and the growth-share matrix, BCG developed an approach described as “thought leadership” to win clients and young recruits away from McKinsey which in contrast founded its practice on a commitment to building client relationships. McKinsey’s partners recognized that the firm could no longer succeed simply by building strong relationships and assigning intelligent generalists in increasingly specialized problems. It would have to develop what they referred to as “T- shape consultants” - individuals who supplemented their broad generalist perspective with an in-depth “spike” of specific industry or function expertise.

Despite the fact that knowledge is the stock in trade of this industry, McKinsey had increasingly become compartmentalized into local offices focused on developing deep and enduring relationship clients rather than exploiting the firm’s substantial knowledge assets. Only when a few senior partners recognized that McKinsey had to compete on the basis of thought leadership as well as ‘client relationships’ did the firm launch it’s two decade long efforts to build an integrated and independent organization and be able to develop and diffuse knowledge rapidly and make organizational learning a source for competitive advantage. By the mid 1990’s nearly 20% of the work was performed by consultants on short or long term transfer to another office, moves that were invariably designed to develop or deploy individual consultant’s specialized knowledge or expertise.

McKinsey has created a knowledge organisation based on framework that can be described as an integrated network. This is an organisation model that allows companies to develop distributed capabilities and expertise, link those capabilities through rich horizontal flows of information, knowledge and other resources, and develop the trust that is required as an adhesive to hold together their distributed, integrated firms worldwide. An organisation is built on principles that are vital to the development of an embedded learning capability- a structural configuration based on distributed specialized activities and a set of relationships based more on interdependence than on dependence or independence. This is in contrast to the traditional framework in which the core organization decision are generally based and focused on a few key structural choices, for e.g.: should we structure for efficiency or flexibility, should we be centralized or decentralized. Behind the managerial glamour dilemmas was an organization that has framed by the classic divisionalised hierarchy that required managers to make such either/ or choices. Irrespective of the specific choices a company makes on any of these dimensions, it cannot create the integrated organisational learning capability.

McKinsey views knowledge as a Strategic Asset. Knowledge is got into the organisation in three ways:

a) Through prior learning or experience
b) Through client interaction
c) Through interaction with colleagues.

McKinsey segments itself on the basis of geography, functionality or specialization in a specific industry. The diagram below depicts the same:


Source: Individualized Corporations by Sumantra Ghoshal and Christopher A Bartlet

McKinsey uses the Apprenticeship Model for knowledge management wherein the new recruits acquire knowledge through interaction with their seniors and learn from their past knowledge.
The old model for knowledge management in McKinsey was chaotic and not highly structured. So instead of a big, visible knowledge management department, there was a department in the firm’s New York office that looked after knowledge behind the scenes. They developed sort of internal yellow pages called Knowledge Resource Directory, which is now common in many firms. A call can be made to a central number to get a copy of a specific document that is required within the time frame of an hour. Another thing McKinsey did was to create an enormous cross -reference database on a mainframe in the U.S.A that could be accessed worldwide. A list of a dozen documents could be produced after keying in a word or a topic at the click of a mouse. If an employee worked with a client and the client had some success with the employee’s recommendation then the consultant was encouraged to write a practice bulletin, which was shared with other consultants and a contact was given for further information.

New Model :-

Taxonomy of Different kinds of knowledge used in McKinsey

K0: -Knowledge that is difficult to access because of the cost of gathering it is high. This is explicit knowledge. Today there is an enormous amount of data floating around; for e.g. the government has made a lot of public data available. You can observe the number of windows on house fronts –this is freely available information, but there is a high cost to collect it. Such information is like public goods.

K1: -This is explicit knowledge that you can copyright. For e.g. books


K2: -This knowledge is private because it can be delivered only through people. Certain people who have a particular expertise in a particular area are hired to get access to this knowledge and expertise .One of the problems investment banks face today is that K2 holders sometimes might leave the organization as a result of which even the knowledge and the expertise goes to another organization with them.

K3: -This is tacit knowledge embedded in an organization rather than individual .The individual needs the company to access the knowledge. This knowledge belongs to the firm. It is a part of the culture or the social network, no on can away when they depart from the organization

McKinsey has created a Knowledge Resource Directory, which retains in the organisation most of the important processes and procedures that do not leave the organisation with the human resources. This enhances corporate memory. The aim of this directory is to make more and more tacit knowledge explicit so that people are convinced that they are drawing from a knowledge base of the collective. McKinsey has a robust infrastructure in place which helps the knowledge management system to work efficiently, leading to the effective utilisation of the technical systems. For e.g. when one of the managers of McKinsey in India received a phone call from a team in Singapore whom had used the knowledge directory to source his name. He helped them even though he did not know them and they were able to capitilse on the resources of the organisation. This way the company leverages and disperses the tacit knowledge available within the organisation

CHARACTERISTICS of McKinsey that lay at the heart of their success:

1) They have been investing in very substantial resources to develop the expertise of their people. They have gone to great lengths to recruit the very best, have created structures and mechanisms that allow their employees to continuously enhance, upgrade and broaden their capabilities.
2) They have established tools, processes and relationships necessary to support horizontal flow of information throughout their worldwide organization to link and leverage individual knowledge and embed it in a collective process of shared learning.
3) Finally through supporting lateral sharing of knowledge and also as a product of sharing, each of them has built a strong sense of trust both among colleagues and between superiors and sub-ordinates.

The overall effect of these three characteristics is that their organization was built on a framework that appeared much more like an integrated network rather than a classical divisional hierarchy. It was this network structure that prevented the horizontal flows of information and knowledge from being swamped by the vertical ones thereby saving as the anchor of their organisation learning capability.

McKinsey’s 7-S framework
The diagram below depicts organisation setup has been structure in a manner so as to facilitate the inter-linking and networking of not only the tangible departments but also pervading the geographical territories along with the intangible strategy systems, values, styles and skills. This has enabled McKinsey to leverage and optimally utilize their knowledge resources.
















Source: Competitive Knowledge Management by Nicholas Bahra.



The security for access to the knowledge database in McKinsey is ensured by a good and vigilant control system. The number of documents downloaded by an employee in a single day is restricted. Also before downloading any document or information from the database the employee number and code, firm code, study code and project code etc. have to be entered. The knowledge database is also upgraded in every few years – in which a knowledge audit takes place and also the redundant data is removed from the database regularly.


































IV. THE INDIAN PHARMA SECTOR-RANBAXY LABS










Case Study: Ranbaxy


At Ranbaxy, EIP has brought together structured and unstructured information and knowledge all in a single, easy to- use environment.























Business Profile

Ranbaxy Laboratories Limited,
New Delhi, India

Industry

Pharmaceuticals, Diagnostics

Geographies

New Delhi, India.

Applications

Back-end: SQL Server 2000
Application Languages: ASP, VB
Front-end: Web Browser (IE 5.0)
Architecture: Microsoft DNA

About the Company

Ranbaxy Laboratories Limited is India’s largest pharmaceutical company with a global turnover of US$ 600 million. It is the 9th largest generic drug company worldwide. The Company exports its products to over 100 countries with ground operations in 25 and manufacturing facilities in 7 countries. Ranbaxy kicked-off the EIP project to facilitate e-Business within the organization by providing employees with a single point of access to external and internal information. The mandate for the EIP application is to optimize business processes in the company and greatly increase user productivity by providing easy access to relevant information enabling better and faster decision making.
Company Requirements

To meet its corporate objectives, Ranbaxy required the following from its EIP development and implementation partner
• Strong consulting skills for product conceptualization, design, development, and implementation to meet Ranbaxy users’ needs
• Ability to architect complex, scalable systems.
• Proven expertise in management of software product development.
• Cost effective and rapid high quality implementation to meet challenging time-to-market constraints.


Enterprise Information Portal

An Enterprise Information Portal is a window into the information systems and processes of the enterprise. EIP acts as a single point of access to internal and external information enabling users to access disparate information sources throughout the enterprise. In Ranbaxy, the EIP functions as a unified corporate desktop that provides a personalized view of organizational information. In addition to being intuitive, informative, and compatible with other applications – including SAP, this product is also workflow enabled to automate most of the process flows within the organization. The EIP application features a host of Corporate Communications related functionalities accessible via the Home Page and also the following additional functionalities
• Detailed User profiles
• Workflows – Corporate Travel, CAPEX, Leave, Stationery, Loans, Expenses, Claims, Training, and Office Supplies requests.
• Extensive access rights on each functionality based on Ranbaxy organization hierarchy.
• Interface to Payroll and SAP applications
• Application parameters configuration features.





WWW.RTRAINING.COM

A comprehensive web based online training and knowledge management system that is also capable of measuring skills / performance of all its personnel.
The solution, which has to its credit, many accolades from all Ranbaxians, was based on the following:
· 24 / 7 Accessibility, that provides user-friendly multi-optional referral / refresher system. The system had been designed to provide ease of use to users, who are not at all computer / internet savvy.
· The system is capable of gauging the grasp of users especially for a specific marketing objective, prior to the implementation of that strategy.
· The system, based on its variety of content, is in a position to ensure consistently good knowledge levels in the sales force post-induction. This is because of the large repository of study/ referral material that is available to all the users.
· The system, ensures that there is no feeling of getting penalized on poor performance, but ensures that the users are encouraged to take online tests at their convenience, after thorough preparation, but within the divisions' specified time frame in an easy to understand multiple choice format.
· The system further augments the learning process by providing instant results, as well as correct answers for the wrongly answered questions.
· Cohesiveness and ownership are the key factors of a successful system in any organization, and this system promotes the same in terms of its usage, not only by the users, but also the administrators who run the entire show. At the same time, this system enhances competitiveness amongst all users, to outperform others in a healthy manner.

Porter's Five Forces model :A case study of Tata Motors
The Indian automobile industry is one of the biggest in India and like its counterparts in the rest of the world is rightly termed as the “Industry of Industries”. The success or the condition of the automobile industry is often an indication of the state of the economy. Unlike in the pre-liberalization age, India is now the hot-bed of competition amongst the biggest automakers in the world.
I have attempted to study the case of Tata Motors in its entirety.
Tata Motors is the sixth largest manufacturer of commercial vehicles in the world and plans to export nearly 1 lac Indicas this year. It emerged from one of the biggest losses in 2001 of nearly 500 crores and is probably one of the most profitable automobile company in the country. It has recently bought out the truck division of the bankrupt Korean automobile giant Daewoo.
Telco performed better than the industry average and increased it’s market share in the M/HCV segment by around 360 basis points. The Light commercial vehicles businesses segment reported healthy growth in the first nine months of the current fiscal, after registering a decline of 12.5% in the year 2001-2002. Utility Vehicles Businesses: The multi utility vehicle (MUV) segment reported a declined of 3.2% in 2001-2002 after a 2.8% growth in 2000-2001. The demands for Sumo appears to have saturated in most target segments .New variants have not been able to stop this downfall. A real push would possibly come only with the introduction of a new platform. The overall passenger car segment reported a 5% growth in 2001-2002. Telco’s passenger car segment increased by over 3% in 2001-2002.After Indica Telco launched a model in the C segment of the passenger car industry the “Indigo”. Tata Motors invests around 1.3% of its annual turnover on research & development. Tata Motors also has the biggest private sector Research and Development in the country.

Tata Motors Five Forces Model applied to the Indian Automobile Industry
a) Inter-Industry Competition: The company faces very severe competition in the country in the automobile i.e. car sector. Competitors like Hyundai and Maruti Udyog are well entrenched in the market and have substantial shares in the market. Hyundai came to India in the late 1990’s and within no time managed to garner a significant share of the market. It is also the only Indian car company with major presence in all the segments of the car market. Its Hyundai accent and sonata models rule their respective segments. Maruti Udyog has a very strong presence in the small car segment. Also the Maruti 800 is one of the oldest models today and the model’s equipment is completely depreciated which gives Maruti a definite advantage as it can afford to cut prices on the car considerably without affecting profitability. The Maruti 800 still remains the choice of many families who want to make the jump from a world of two wheelers to the world of four wheelers. In the HCV and LCV market the Tata 407 continues to do very well. Tata has a near monopoly in this market with a near 76% stake in the market. The company's 1210 and 1610 models are still performing very well. Its only competitors are Ashok Leyland and Eicher Motors, which are considerably small players. Ashok Leyland is very strong in the south of the country and holds a very strong grasp on the major public transport services like the BEST in Mumbai.
b) Threat of new entrants: Most of the world’s big names in automobile are already in India. However a considerable threat looms over Tata Motors in the form of Toyota, which already has a very successful model in the Qualis, and Japanese companies like Nissan and Mazda. Mazda’s considerable expertise in the rotary engine technology and the considerable fuel advantage derived from such a technology can create serious challenge to Tata Motors in a price sensitive market like India. Toyota entered the Malaysian market five years late and within a short span of three years became the market leader. The outdated and dreary looking Qualis had a similar kind of experience in India where it has a near 31 % stake in the market. Other competitors could be the GM subsidiary Opel and its alliance partner Fiat. Ford on the other hand seems to be content playing in the C segment. In the HCV and LCV market, GM and the Fiat subsidiary IVECO can pose a threat to Tata motors. Laws restricting usage of cars like those in place in Singapore can also affect demand for cars. Another factor that can affect Tata motors is the size of the vehicle. Tata’s high end HCV’ capacities or sizes are actually lower end vehicles in developed countries. As India's logistics market develops, Tata’s incapability to develop bigger trucks could work against it.
c) Threats of new substitutes. A number of revolutionary car technologies can challenge Tata in this business. The electric car is fast proving to be a good substitute for conventional petrol fired automobiles. Other advantages like hybrid cars, which use a combination of fuel cells, and petrol is overcoming the shortcoming of poor power in the electric car. Maini Motors, Reva electric car has been rather well received and it has a considerable export order. Efficient public transport like the Skybus and the Metro could pose a threat to demand for Tata vehicles.
d) Bargaining Power Of Buyers: Buyers' Price Sensitivity: Car buyers in India are extremely price-sensitive especially in the economy segment. Since the price competition is expected to intensify and consumers are more willing to switch, companies like Tatas will have to make money on volumes. The entry of global players has re-defined the dealer-customer relationship in India. The entry of numerous car companies has brought along with it a massive increase in the availability of cheap finance for the Indian consumer.
e) Bargaining power of suppliers: India’s supplier architecture is very fragmented and a company like Tata motors often has several companies supplying the same component to it. For example like FAG and SKF both supply bearings. The suppliers do little or no research of their own. This is in sharp contrast to global standards where suppliers are clearly segmented into tier 1 and tier 2 companies. Tier 1 companies have considerable research abilities like Delphi Auto components whose sales of 30 billion $ make it extremely powerful wheeler dealer in the automobile sector. India is seeing the emergence of similar auto-components manufacturers like Motor Industries Company, Sona Koyo Steering, Bharat Forge, Anand Group and Sundaram who are investing in R&D and develop their own facilities. So the power of the suppliers will increase. Tata can only join hands with them and work together with them in the development of new automobiles in alliances that are similar to those in existence in developed nations. The tier 1 companies can in turn work closely with tier 2 suppliers to develop and manufacture components that auto manufactures like Tata desire.