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[ba-ohs-talk] How to Choose KM Solutions

John,    (01)

Received the thing below from Ed Swanstrom advertising a seminar on
identifying effective KM solutions based on "knowledge economics."    (02)

I draw from Ed's letter that the seminar will explain how to calculate
economic benefits, e.g., cost savings and income models, from using
"knowledge" rather than something else, presumably information. 
However, Ed does not offer a hint of how such a calculation occurs,
nor that a useful distinction between information and knowledge has
been identified that yields calculable results.    (03)

Based on the discussion with Ed on 000113 he was unsure about how to
calculate savings, nor how to explain KM....    (04)

http://www.welchco.com/sd/08/00101/02/00/01/13/115201.HTM#L091146    (05)

At that time Ed discussed a "black box" technology.      (06)

You may recall that a few weeks earlier Dave Coleman asked about
procedures to calculate economics of KM at a seminar you hosted on
991217, so this issue is of fairly strong interest.     (07)

Has there has been any improvement since the telecon with Ed on 000113
on calculating economic benefits of KM that support the offer in Ed's
letter?      (08)

USACE published information about this on 971007....    (09)

http://www.welchco.com/sd/08/00101/02/97/10/08/131428.HTM#L271479    (010)

There is also a calculation in NWO....    (011)

http://www.welchco.com/03/00050/01/09/03/02/03/0309.HTM#0110    (012)

...that explains a way to correlate adding intelligence to management
with income and cost savings.  So far as I am know from research these
are the only two calculations showing economics of converting the
"straw" of information into the "gold" of knowledge.    (013)

Has KMCI or the KM community published anything substantial on this,
showing KM work product and showing corresponding economic benefits?     (014)

Thanks.    (015)

Rod    (016)

*************    (017)
--- Begin Message ---
Using Knowledge Economics to Help Decide on the Right Knowledge
Management Tool or Intervention to Maximize Success    (01)

Date:          March 21st, 2002
Time:         1:00-4:00pm or 5:00-8:00pm
1725 Jefferson Davis Highway
Suite 200
Crystal Square II
Arlington, VA 22202
Phone 703-414-8100 x264
Contact:   Jim Rodriguez    (02)

Presenter: Edward Swanstrom, Secretary-General of the Global Knowledge
Economics Council (GKEC) [ANSI accredited American Standards Developer for
Knowledge Management Standards, including KM Standards for Homeland
Security and Emergency Management] and Director of the Knowledge Science
and Technology Institute. Swanstrom has been analyzing, designing, and
implementing interventions for knowledge systems since 1979. See
http://www.edwardswanstrom.com for biography.    (03)

Seminar attendees will receive a free copy of “Knowledge Economics: New
Economic Focus for the 21st Century” by Edward Swanstrom to be published
and distributed November 2002.    (04)

Case Study: KM Applied to Homeland Defense and Emergency Management    (05)

Cost: $100.00    (06)

Register at:
https://www.metainnovation.com/reg_pages/massemreg.asp    (07)

Contact Joseph-Scarpignato@gkec.org for a list of other locations
throughout the year. Full day seminars are scheduled for India, China,
Japan, Australia, Malaysia, Korea, Germany, and the United Kingdom.    (08)

*Seminar Description*
If you are like most knowledge management consumers you are overwhelmed
with conflicting claims of theories, tools, and techniques. You hear about
communities of practice, narrative management, storytelling, knowledge
ecology, second generation KM, new knowledge management, knowledge
discovery databases, data mining, document management, help desk, portals,
groupware, eLearning systems, and so on.    (09)

With your limited resources, how do you know if these inventions work or
are wishful thinking? How do you distinguish sales hype from fact? If you
want to design your own intervention, how do you know if it has a chance
of working? Most KM projects are doomed to failure due to lack of economic
analysis. Do not make the same mistake.    (010)

This seminar is designed to help put consumers back in the driver seat
when leading the creation or purchase of a KM tool or solution. You will
be introduced to the use of economic-based analysis tools and intervention
design techniques to help you decide the best fit for your situation.    (011)

You will learn why knowledge economics is the most powerful instrument to
help consumers (countries or private and public organizations) determine
which KM interventions are likely to help improve their bottom line,
regardless of their bottom line measure: time, manpower, cost avoidance,
market share, winning wars, or money.    (012)

To adopt a new solution requires a shift in behavior. People will not
shift behavior unless they are convinced of a perceived relative advantage
over older practices, compatibility to their current practices, simple to
learn and apply, ability to be piloted or tested, and can experience
observable results.
How do you apply knowledge economics to analyze and work with your opinion
leaders? How can you design your KM intervention for the least resistance
for cultural change?    (013)

Many KM advisors suggest increased knowledge sharing approaches. Why would
people spend extra time per day to share knowledge through communities of
practice, for example, when they could be investing time in something
else? What about the other costs of knowledge management such as time,
social, attention, and cognitive costs of producing, testing, sharing,
storing, and using knowledge?
You will learn how knowledge economics is used to design inventions to
reduce these costs.    (014)

You will also learn that economics is not about money, but about
understanding and improving how to make the best choice based on
individual and organizational preferences and the resources at hand.
Knowledge economics is about improving the effectiveness and efficiency of
natural knowledge systems that all individuals and organizations have by
improving the volume and quality of knowledge flows and quality of
knowledge stocks.    (015)

Other knowledge economic topics include:    (016)

-Production Functions and Knowledge Production Functions;
-Technology as Know-How;
-Innovation and Diffusion of Production Techniques (know-how);
-Government, Military, Non-Profit, and Commercial Payoffs;
-Tacit to Explicit: The Increasing Cost of Knowledge Transfer;
-Knowledge Markets;
-Cost/Benefit Analysis;
-Knowledge Supply, Consumption, and Opportunity Costs;
-Measuring Knowledge Supply and Demand;
-Learning Curves, Diffusion Curves, and Innovation Curves;
-Business Process Improvements;
-Knowledge Stocks and Flow;
-Path Dependency;
-The Curse of Knowledge;
-Information Contagion;
-Volume and Quality of Knowledge Sharing;
-Systems Dynamics and Systems Thinking - Applied Economics;
-Avoiding the Hawthorne Effect/ Group Placebo Effect (Solutions that seem
to work initially but have no real impact);
-Using Knowledge Economics to Change a Culture; and
-"Organization Learning" coined by Economist Herbert Simon 1957    (017)

*More about Knowledge Economics*    (018)

Among other things, economics is the study of human knowledge behavior –
the application of knowledge to transformation scarce resources into
products and services and the use of knowledge for decisions individuals
and organizations make to maximize satisfaction. In a competitive
environment individuals and organizations seek new knowledge (new
techniques or practices) to reduce those transformation costs, improve
decision making, or innovate new products and services. As economist
Thomas Sowell said in *Knowledge and Decisions*, “Since an economy
functions with scarce resources which have alternative uses, there must be
some method of coordinating the rationing process and getting the most
output from the available input. There are many different ways of doing
this as there are different economic systems. All of these involve the use
of knowledge, and how effectively that knowledge is used is crucial.”
Knowledge Management designs interventions to improve the effectiveness of
economic systems.    (019)

Over the last 20 years, economics has grown to play the dominate role in
the social sciences and has become the standard international language and
technique for decision makers. This growth was foreseen by Nobel laureate
Gary Becker when he stated in 1976 that: “the economic approach provides a
valuable unified framework for the understanding of all human behavior…”
“a comprehensive framework is provided by the economic approach, [and]
many important concepts and techniques are provided … by other
 disciplines” such as sociology, psychology, anthropology, political
science, law, history, sociobiology, and others.    (020)

Knowledge economics is the combination of the contributions of other
social sciences with managerial economics, technological change economics,
growth economics, innovation economics, social economics (social
networks), evolutionary theory of economic change, information economics,
and the application of complexity science and complex adaptive systems
theory.  Knowledge economics can be traced back to Francis Bacon when he
argued for funding science to accelerate the production of technological
knowledge to help grow the economy.    (021)

In the 1960s, Robert Solow won a Nobel Prize for demonstrating the
critical importance of new knowledge for the dynamic growth of a country
and an organization. Though the role of knowledge for economic growth has
never been disputed, it has only recently been heavily researched due to
the new importance of understanding and learning how to manage
knowledge-based economies of countries and organizations. The management
of that knowledge is becoming more critical as the rate of technological
change accelerates. The challenge has been to develop dynamic models to
replace the static models taught in school. This lack of dynamic models
does not make mean that we cannot apply the dynamic economic-approach to
current system.  This seminar will introduce you to many of those
successful dynamic analysis and intervention techniques.    (022)

As Peter Drucker has stated - Knowledge economics is the new economic
focus for the 21st century.    (023)

Further readings:
For a layman’s introduction to economics, read Friedman, David 1996.
*Hidden Order: The Economics of Everyday Life.*
OECD 1996 *Knowledge-Based Economy*
Drucker, Peter. 1993. "Chapter 10 - Knowledge: Its Economics and Its
Productivity" in *Post Industrial Society.*
Neef, Dale; Siesfeld, G. Anthony; and Cefola, Jacquelyn. 1998. *The
Economic Impact of Knowledge.*
Rogers, Everett. 1995. Diffusion of Innovations.
Sowell, Thomas. 1980 revised 1996. *Knowledge and Decisions*
Nelson, Richard and Winters, Sidney. 1982. *Evolutionary Theory of
Economic Change*
Stoneman, Paul eds. 1996. *Handbook of the Economics of Innovation and
Technological Change*
Advanced Reading: Arthur, Brian W. el al. 1997 *The Economy as an Evolving
Complex System II* Santa Fe Institute Studies in the Sciences of
Anderson, P.W., Arrow, Kenneth, and Pines, D. 1988. *The Economy as an
Evolving Complex System* Santa Fe Institute Studies in the Sciences of
Complexity.    (024)

To be removed from the KM Standards mailing list, visit
http://www.nationalknowledge.com/remove.asp?code=2736858733    (025)
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