November 28, 2006 16:53 WSPC/SPI-B434: Knowledge Management and Risk Strategiesp2_ch01 FA Part 2 HOW TO MANAGE KNOWLEDGE SELECTION RISK In Part 2, we will point out tasks that we face as knowledge selec- tion risks emerge, and we will introduce infrastructures that society should be provided with to manage knowledge selection risks, as well as techniques for companies to reduce knowledge selection risks. November 28, 2006 16:53 WSPC/SPI-B434: Knowledge Management and Risk Strategiesp2_ch01 FA This page intentionally left blank November 28, 2006 16:53 WSPC/SPI-B434: Knowledge Management and Risk Strategiesp2_ch01 FA Chapter 1 Tasks of Knowledge Selection Society As we have seen in Part 1, most companies nowadays have to abandon the lifetime employment policy, and employees have to seek opportunities to gain new knowledge independently from their organizations, as the lifespan of knowledge decreases and the profitability of knowledge becomes insecure. This has the potential of overthrowing the national structure of education and employment. Knowledge selection risks consist of the danger of failing in knowledge transfer, and the danger of the knowledge not returning the expected profit.
For the former risk, there are those tasks such as securing the necessary time, paying the fiscal costs and enhancing the efficiency of knowledge transfer, to alleviate the risk. For the latter, the tasks are: expand demand, predict demand accurately, and so on (see Table 16). Table 16: Tasks for Reducing Knowledge Selection Risks Types of Risk Tasks for Reducing the Risk Alleviating knowledge - Secure time cost transfer failure risk - Secure fiscal cost - Improve knowledge transfer efficiency (study efficiency) Alleviating low - Visualize knowledge return risk - Enhance demands - Match demands and supplies - Predict demands accurately - Create knowledge 61 November 28, 2006 16:53 WSPC/SPI-B434: Knowledge Management and Risk Strategiesp2_ch01 FA 62 Knowledge Management and Risk Strategies Social agreement will be necessary to determine how much knowledge transfer cost should be incurred, and by whom and how. Companies cannot bear too much, and individual employees cannot shoulder everything.
But if nothing is done, unprofitable knowledge assets in organizations will be steadily accumulated. This would lead to a demise of even a leading company in time. In Part 2, we will suggest measures to control knowledge selection risks that society should be provided with, and the framework of the new society, through the following four themes: • Visualization of knowledge (construction of supply chain management for knowledge) In order to be justly evaluated according to its purpose, knowledge and its related information need to be disseminated among people. We will discuss the tasks necessary for the visualization of knowledge and give some examples.
• Knowledge demand–supply matching (introduction of person- nel supply derivatives) The estimation of knowledge’s value is sometimes affected by the motives of individuals. This causes an imbalance between the demand and supply of knowledge. We will introduce the idea of personnel supply derivative business as a measure to correct this imbalance. • Securing knowledge transfer costs (work-sharing, knowledge transfer time) A knowledge transfer necessitates the knowledge transfer costs.
How to allocate them (particularly the associated time costs) among society, firms and each individual would be one of the important themes in constructing a new, sustainable society. In addition, a work-sharing endeavor which helps alleviate the elevation of unemployment will be explored as a means of allocating the knowledge transfer costs. November 28, 2006 16:53 WSPC/SPI-B434: Knowledge Management and Risk Strategiesp2_ch01 FA Tasks of Knowledge Selection Society 63 • Efficacy of knowledge transfer systems Efficient knowledge transfer with less time and cost is vital in this climate of shortening knowledge lifecycle. Needless to say, the learner has to have an avid interest in the new knowledge, but there are other important techniques to acquire new knowledge in a limited time frame.
We will discuss the importance of knowledge transfer system efficiency and give some examples. November 28, 2006 16:53 WSPC/SPI-B434: Knowledge Management and Risk Strategiesp2_ch01 FA This page intentionally left blank November 28, 2006 17:7 WSPC/SPI-B434: Knowledge Management and Risk Strategies p2_ch02 FA Chapter 2 Visualization of Knowledge Demand 2.1 The Current Situation It is difficult to analyze if there is demand for a particular piece of knowledge as we do not know which organization needs what kind of knowledge, or where we can source the people with the necessary knowledge. Quite often in job listings, exactly what kind of person- nel are needed is left unclear, except in software and other industries where specific qualifications are a prerequisite. This leads to job list- ings being incorrectly targeted and companies interviewing the wrong candidates.
Sometimes, because of this uncertainty in requirements, those who are planning a new knowledge transfer may be unable to grasp which knowledge is obsolete and which is not, and applicants may join the wrong companies.2 Solutions (Supply Chain Management for Knowledge) In this section, we will propose a system for sharing information on supply/demand data among interested parties, and discuss the importance of advisory institutions that offer interpretation of information to corporate and individual clients. 1) Standardization of knowledge Individual users need to have some idea of what the knowledge is about if they are to obtain new knowledge. For that purpose, 65 November 28, 2006 17:7 WSPC/SPI-B434: Knowledge Management and Risk Strategies p2_ch02 FA 66 Knowledge Management and Risk Strategies knowledge has to be defined and designated. Also, for the acquired knowledge to be used in different organizations, terms and criteria have to be standardized.
When knowledge is standardized, its usage will increase and its demand will expand. In scholarship, knowledge is standardized by the systematic compilation of textbooks. In business, it is conducted by “standardization”, sorting the knowledge necessary to each business. For example, the Ministry of Economy, Trade and Industry in Japan made “IT skill standards” public, as the index for the IT skills necessary for IT related services.
This was an attempt to establish a framework for the training of IT specialists, itemizing the skills neces- sary to offer IT services and sorting them objectively and practically. IT services are divided into several “types of jobs”, each with its “performance index” and “skills”. “Skills” are further itemized into “proficiency level” and “knowledge”. There is also a “skill framework” offering an overall picture of the IT skill index.
Electronic manufacturers, including Hitachi, Toshiba, Mat- sushita and NEC, have set up a job training scheme for their union members.1 The objective of this scheme is to facilitate mid-career job change both within one company and within the industry. Union members can avail themselves of language courses and other courses designed to help them gain specific qualifications, held by those com- panies. By introducing qualifications, the skills of union members who have completed the courses can be seen, facilitating career change within the industry. 2) Visualization of personnel information To enable successful knowledge selection, it is vital to assess the performance of the person who practices the knowledge, as well as the knowledge itself.
Most Japanese companies used to withhold information about their employees’ abilities. This might have worked 1 “Hitachi, Toshiba, and other Electronics Manufacturers Set Up Training Courses,” Nihon Keizai Shimbun, 2 January 2002. November 28, 2006 17:7 WSPC/SPI-B434: Knowledge Management and Risk Strategies p2_ch02 FA Visualization of Knowledge Demand 67 well in the lifetime employment system, where employees competed against each other, playing by their own companies’ rules. However, it is not very rational if employees are to choose knowledge that will be their own personal asset.
NEC has made the duties and responsibilities of management level employees (approximately 12,000 employees) internally public online.2 Since salary is determined by duties, all employees can now grasp how much management is paid. Fuji Xerox has an intriguing scheme.3 It was reported that they would start a new scheme, in which employees’ market value would be calculated by an external institution and reported back to the employees. They would also publish duties, responsibilities and stan- dards for payment, just like NEC. 3) Supply chain management for knowledge A proactive standards agency in the industry would help in the standardization of knowledge, as it is beyond a single individual company’s power to establish industry standards, which requires an intimate knowledge of the needs of interested parties.
A system will be needed to share information among people who use a particu- lar piece of knowledge and to augment its standardization. This is called Supply Chain Management for Knowledge (SCMK). In the manufacturing industry, groups of parties involved in the production and distribution of products are called “supply chains”. Supply chains manage supply/demand information and inventory, so that they can maximize sales and minimize inventory.
This is called Supply Chain Management (SCM), a scheme which builds networks within the chain and manages the data concerning production, inventory, and sales and planning at each level, so that inventory at all levels can be optimized. 2 “NEC Internally Published Management Grade Responsibilities,” Nihon Keizai Shimbun, 28 March 2002. 3 “Fuji Xerox: Assessment of Employee Marketability,” Nikkei Sangyo Shimbun, 1 April 2002. November 28, 2006 17:7 WSPC/SPI-B434: Knowledge Management and Risk Strategies p2_ch02 FA 68 Knowledge Management and Risk Strategies This works well for manufacturing.
However, it might not when it comes to human resources. Knowledge is practiced by human beings. Men cannot be stored in storehouses like product parts. Companies have to be provided with the right number of personnel at the exact moment.
It would improve the visibility of knowledge demand if knowledge demand in companies is analyzed, and if that data are shared among the knowledge supply chains, which consist of recruit- ment companies, educational institutes and interested employees (see Figure 19). Many companies are currently working on the construction of SCM concerning parts and material supply. They only have to in- clude knowledge in their SCM schemes. By using this new scheme, SCMK, companies will be able to convey their knowledge demand to their supply chains.
By sharing supply and demand information, all parties involved can optimize their supply/demand planning. Furthermore, if recruitment companies are involved in other companies’ SCMK, they would also be able to promote the standardization of knowledge using the data on other companies’ needs and convey generalized needs to educational institutions. In the past, when companies hired new graduates as engineers, some companies allocated the numbers of positions to each school and demanded school recommendations. This can be thought as a type of personnel supply chain between companies and schools.
This practice, however, left the standard for personnel assessment and demand information unclear, making it almost impossible to attempt standardization of information on the supply side. The only options applicants had were “companies”, not positions. If knowledge supply chains could be constructed, the supply and demand of knowledge would be visualized, strongly propelling knowledge standardization. There are examples of cooperation between “educational insti- tutions and recruitment agencies” and between “educational institutions and companies”, such as AMS Japan and Temp Staff,4 4 “AMS Japan and Temp Staff Collaborate in IT Personnel Training,” Nihon Keizai Shimbun, 6 January 2002.
November 28, 2006 Visualization of Knowledge Demand Promotion of shared information standardization Applicants Educational 17:7 institutions Educational institutions Educational Recruitment Applicants agencies institutions Applicants Companies WSPC/SPI-B434: Knowledge Management and Risk Strategies p2_ch02 FA Educational Projects Applicants institutions Educational Recruitment Projects institutions Educational agencies Applicants Projects institutions Applicants Shared information Demand: kinds of knowledge, periods, etc. Supply: number of Companies eligible employees Projects Projects Optimization of demand plan Optimization of demand plan Optimization of supply plan Optimization of supply plan Projects Figure 19: The Image of SCMK 69 November 28, 2006 17:7 WSPC/SPI-B434: Knowledge Management and Risk Strategies p2_ch02 FA 70 Knowledge Management and Risk Strategies Digital Hollywood’s consortium,5 and Manpower Japan’s online staffing business.6 AMS Japan, a personnel training company, collaborates with Temp Staff, a recruitment agency, in the area of IT personnel. AMS Japan offers special courses to personnel registered with Temp Staff, and Temp Staff sends members who have gained specialist knowledge through these courses to client companies.