Knowledge management 5 & 6 (learning organization & competitive intel)

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Information about Knowledge management 5 & 6 (learning organization & competitive intel)

Published on March 7, 2014

Author: davidvallat1



Last parts of a knowledge management course for MBA students. These parts deal with 1) P. Senge's Learning Organization and 2) competitive intelligence

Part 5. A Learning Organization?

From O.L. to the L.O. Peter SENGE and the concept of the ‘learning organization’ in The Fifth Discipline (1990) An ‘idealistic pragmatist’: He wants to transform the workplace, bringing human values in it. He wants to decentralize the role of leadership in organizations (to enhance the capacity of all people to work productively toward common goals) Society for Organizational Learning (SoL) System thinking:

Toward the LO (1) What is a LO? « …organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together. » (P. Senge, The Fifth Discipline: The art and practice of the learning organization, London: Random House. 424 + viii pages, 1990, p.3). Learning organizations are possible because we are all learners: each_themselves.html J. Medina, Brain Rules:

Toward the LO (2) Benefits of a LO: - Maintaining levels of innovation and remaining competitive - Being better placed to respond to external pressures - Having the knowledge to better link resources to customer needs - Improving quality of outputs at all levels - Improving Corporate image by becoming more people oriented - Increasing the pace of change within the organization

Toward the LO (3) A fundamental shif of mind in needed… « When you ask people about what it is like being part of a great team, what is most striking is the meaningfulness of the experience. People talk about being part of something larger than themselves, of being connected, of being generative. It become quite clear that, for many, their experiences as part of truly great teams stand out as singular periods of life lived to the fullest. Some spend the rest of their lives looking for ways to recapture that spirit» (P. Senge, The Fifth Discipline: The art and practice of the learning organization, Doubleday, New York, 1990, p.13). From Survival learning to Generative learning => « learning that enhances our capacity to create » (Senge 1990:14)

Five Disciplines A shift of mind from seeing parts to seeing wholes

The Fifth Discipline Systems thinking – the cornerstone of the learning organization interview with P. Senge: http://www.mutualresponsibilit An famous example of system thinking: M. Porter’s 5 forces FBCvXw

These are not systems… Systems are complexe ≠ complicated This is complicated: Dominos Chain Reaction

Systems thinking (1) What Is Systems Thinking? « Whenever I’m trying to help people understand what this word ‘system’ means, I usually start by asking: ‘Are you a part of a family?’ Everybody is a part of a family. ‘Have you ever seen in a family, people producing consequences in the family, how people act, how people feel, that aren’t what anybody intends?’ Yes. ‘How does that happen?’ Well… then people tell their stories and think about it. But that then grounds people in not the jargon of ‘system’ or ‘systems thinking’ but the reality – that we live in webs of interdependence.”

Systems thinking (2) 3 Characteristics Of A Systems Thinking Approach ” A very deep and persistent commitment to ‘real learning.’ I have to be prepared to be wrong. If it was pretty obvious what we ought to be doing, then we’d be already doing it. So I’m part of the problem, my own way of seeing things, my own sense of where there’s leverage, is probably part of the problem. This is the domain we’ve always called ‘mental models.’ If I’m not prepared to challenge my own mental models, then the likelihood of finding non-obvious areas of leverage are very low. The need to triangulate. You need to get different people, from different points of view, who are seeing different parts of the system to come together and collectively start to see something that individually none of them see.”

Systems thinking (3) A Fundamental Principle Of Systems Thinking: Smart Individuals Are No Longer Needed, Collective Intelligence Is « We all have probably spent too much time thinking about ‘smart individuals.’ That’s one of the problems with schools. They are very individualistic, very much about ‘the smart kids and the dumb kids.’ That’s not the kind of smartness we need. The smartness we need is collective. We need cities that work differently. We need industrial sectors that work differently. We need value change and supply change that are managed from the beginning until the end to purely produce social, ecological and economic well-being. That is the concept of intelligence we need, and it will never be achieved by a handful of smart individuals. It’s not about ‘the smartest guys in the room.’ It’s about what we can do collectively. So the intelligence that matters is collective intelligence, and that’s the concept of ‘smart’ that I think will really tell the tale. »

Systems thinking (4) In management, rather simplistic frameworks are applied to what are complex systems Focus on the parts rather than seeing the whole Fail to see organization as a dynamic process Learning from experience? Delays and the decline in visibility short-term improvements often involve very significant long-term costs. Emergence: From the mutual interaction of the parts of a system there arise characteristics which can not be found as characteristic of any of the individual parts. Systems maps: diagrams that show the key elements of systems and how they connect

Systems maps…

Figure 2: Subtract Relationship How does it work? (1) The alternative is that thing 1 can subtract from thing 2, as indicated by the "-" sign in Figure 2, thus decreasing thing 2. Introduction to Systems Thinking All thisTo practice system thinking: to connect with so let's thingness may a bit difficult consider a couple specific examples. Figure 4: Product Sales and Inventory Figure 3: Sales Increases Revenue Figure 4 indicates that product sales subtracts from finished goods inventory. If product sales increase it will subtract even 07/ 03/ 14 04:27 more from finished goods inventory. On the other hand, if Figure 3 indicates that sales adds to revenue. Evenitif sales subtract from finished goods product sales decrease will still decrease it will still add to revenue, just not quite asso much. as inventory, just not quite rapidly o System s Thinking htm 07/ 03/ 14 04 before. On the other hand, if sales increases it will add even more Figure 4: Product Sales and Inventory Within systems diagrams there are often items that are held readily to revenue. constant within the context of what is being considered. These items will have neither a "+" nor a "-" attached to them. Figure 4 indicates that product sales subtracts from finished The Way of goods inventory. If product sales increase it will subtract even Systems more from finished goods inventory. On the other hand, if Page 1 sur 4 product sales decrease it will still subtract from finished goods inventory, just not quite soFigure 5: Constant Contribution much. Introduction to Systems Thinking Within systems diagrams there are often items that are held Figure 5 indicates what is being interact with productivity in constant within the context ofthat resources considered. These

and adds omplete to form loops. There are only two types of loops, to the interest. Note that interest rate is considere a constant in this example. Interest then adds to the princip einforcing and balancing. This reinforcing action happens every so many months depe on the period over which the institution computes the intere Reinforcing Loop snowball rolling down hill is your signal that the loop is a reinforcing loop. The small graph to the right of principle A reinforcing loop is one in which the interactions are such that the growth of principal is exponential. indicates that How does it work? (2) ach action adds to the other. Any situation where action produces result which practice system thinking:action is Typical examples of reinforcing loops are population growt representative To promotes more of the same f a reinforcing loop. decline, uncontrolled nuclear reactions, snow balls rolling d hill of course, runs on banks, wall street market crashes, etc Balancing Loop Figure 6: Reinforcing Loop A balancing loop is one in which action attempts to bring tw things to agreement. Any situation where one attempts to so problem or achieve a goal or objective is representative of a balancing loop. Page 2 sur 4 Figure 7: Balancing Loop

Figure 6 How does it work? (3) re you let yourself become overwhelmed by the complexity of this ram you had best fasten your seat belt as we're only about half way there. To practice system thinking: rtime has this real nasty habit of costing more than regular time so there ome implications of increasing Overtime. Project System s Figure 7 ncrease in Overtime brings with it an increase in Overtime Cost. As rtime Cost increases there is an increased emphasis on cost which shows s Cost Pressure. The Cost Pressure is interpreted by the management of ect in such a way that it shows up as additional Schedule Pressure. This eased Schedule Pressure then leads to even more Overtime. Here we but one more viscous reinforcing loop in which actions influence the all effect to be just the opposite of what is desired. Figure 8 rtime and Overtime Cost have a couple more influences. Prolonged Overtime has a tendency to lead to Burnout which means H

tems How does it work? (4) 07/ 03/ 14 04:50 To practice system thinking: Figure 12 Schedule Pressure has a couple additional influences that should be

When using system thinking? The following are some of the signs that indicate a systems thinking approach is most likely warranted. There are multiple perspectives on just what the situation is, and how to deal with it A previously applied fix has created problems elsewhere After a fix is applied the problem returns in time The same fix is used repeatedly Growth slows over time Partners for growth become adversaries Limitations experienced are believed to result from insufficient capacity There is more than one limit to growth Limited resources are shared by others Growth leads to decline elsewhere

The four other disciplines The core disciplines are : System thinking Personal mastery Mental models Building shared vision Team learning

Personal mastery « Organizations learn only through individuals who learn. Individual learning does not guarantee organizational learning. But without it no organizational learning occurs » (Senge 1990: 139). « People with a high level of personal mastery live in a continual learning mode. They never ‘arrive’. Sometimes, language, such as the term ‘personal mastery’ creates a misleading sense of definiteness, of black and white. But personal mastery is not something you possess. It is a process. It is a lifelong discipline. People with a high level of personal mastery are acutely aware of their ignorance, their incompetence, their growth areas. And they are deeply self-confident. Paradoxical? Only for those who do not see the ‘journey is the reward » (Senge 1990: 142).

Mental models These are « deeply ingrained assumptions, generalizations, or even pictures and images that influence how we understand the world and how we take action » (Senge 1990: 8). « The discipline of mental models starts with turning the mirror inward; learning to unearth our internal pictures of the world, to bring them to the surface and hold them rigorously to scrutiny. It also includes the ability to carry on ‘learningful’ conversations that balance inquiry and advocacy, where people expose their own thinking effectively and make that thinking open to the influence of others » (Senge 1990: 9).

Building shared vision « When there is a genuine vision (as opposed to the all-tofamiliar ‘vision statement’), people excel and learn, not because they are told to, but because they want to. But many leaders have personal visions that never get translated into shared visions that galvanize an organization… What has been lacking is a discipline for translating vision into shared vision – not a ‘cookbook’ but a set of principles and guiding practices. The practice of shared vision involves the skills of unearthing shared ‘pictures of the future’ that foster genuine commitment and enrolment rather than compliance. In mastering this discipline, leaders learn the counter-productiveness of trying to dictate a vision, no matter how heartfelt » (Senge 1990: 9).

Team learning Such learning is viewed as « the process of aligning and developing the capacities of a team to create the results its members truly desire » (Senge 1990: 236). « The discipline of team learning starts with ‘dialogue’, the capacity of members of a team to suspend assumptions and enter into a genuine ‘thinking together’. To the Greeks dia-logos meant a free-flowing if meaning through a group, allowing the group to discover insights not attainable individually…. [It] also involves learning how to recognize the patterns of interaction in teams that undermine learning » (Senge 1990: 10).

A little experiment (1) The MIT Beer Game What it shows? => the bullwhip effect

A little experiment (2) The Resistance boardgame he-resistance What it shows?

Leading the learning organization (1) A new view of leadership… Traditional leaders: set the direction, make key decisions and energize the troops The traditional view of leadership, « is based on assumptions of people’s powerlessness, their lack of personal vision and inability to master the forces of change, deficits which can be remedied only by a few great leaders » (Senge 1990: 340).

Leading the learning organization (2) In a learning organization, leaders are designers, stewards and teachers. Leader as designer: « the leaders’ task is designing the learning processes whereby people throughout the organization can deal productively with the critical issues they face, and develop their mastery in the learning disciplines » (Senge 1990: 345). Leader as steward: « the leader develops a unique relationship to his or her own personal vision. He or she becomes a steward of the vision » (Senge 1990: 346). (=> Nonaka) Leader as teacher: « much of the leverage leaders can actually exert lies in helping people achieve more accurate, more insightful and more empowering views of reality » (Senge 1990: 353).

Issues Companies’ priorities are overwhelmingly financial BUT: « Productivity and competitiveness are, by and large, a function of knowledge generation and information processing: firms and territories are organized in networks of production, management and distribution; the core economic activities are global – that is they have the capacity to work as a unit in real time, or chosen time, on a planetary scale » - Castells, M. (2001), « Information technology and global capitalism » in W. Hutton and A. Giddens (eds.) On the Edge. Living with global capitalism, London: Vintage, p. 52. Problem of competencies: the approach entails significant effort on the part of the practitioner

To conclude Difference, reciprocity and dialogue More convivial and creative workplaces

To go further To practice system thinking: A rare and yet an indepth interview with author Peter Senge g


Part 6. Competitive Intelligence

A definition of C.I. « Competitive intelligence is the action of defining, gathering, analyzing, and distributing intelligence about products, customers, competitors, and any aspect of the environment needed to support executives and managers making strategic decisions for an organization » e_intelligence

C.I. vs Business Intelligence? « Though the term business intelligence is sometimes a synonym for competitive intelligence (because they both support decision making), BI uses technologies, processes, and applications to analyze mostly internal, structured data and business processes while competitive intelligence gathers, analyzes and disseminates information with a topical focus on company competitors. If understood broadly, business intelligence can include the subset of competitive intelligence » (Wikipedia – Business Intelligence)

Starting point of C.I. (1) “Competitiveness is based on knowledge. The way companies acquire knowledge from their markets and apply it will determine their ability to survive into the 21st century. The competitive learning process is more essential to survival and growth than any other management process.” - Gilad, Benjamin (1998), Business Blindspot,. UK: Infonortics. (First edition, Il: Irwin-Probus, 1994). The basic starting point for competitive intelligence is to define the problem or issue. Competitive intelligence should be a value-added service to managers who are facing critical strategic decisions. What are the Key Intelligence Topics?

Starting point of C.I. (2) What are the Key Intelligence Topics (KIT)? What impact will bitechnology / internet have on our high volume product line? How is our competitor able to retain major government contracts year after year When these contracts come open for bid? What is the timeline for when our competitor will launch their new US service? Should we expand our Saigon facility or build a new facility in Hanoi? Who are the key customers of our competitor? How does this new regulation impact our business? How well does this supplier perform with other companies? Then we have the baseline for our research and analysis

Recommendations (1) Finally, here are a few points identified by Fuld and Company, a leading consulting firm in the field of competitive intelligence: State the facts with little or no dramatization. Support your statements with sources, including transcripts from critical interviews. Avoid flashpoint type words and phrases, such as “we will dominate the market” or “lock-out all our competitor’s.” This could be used in an anti-trust lawsuit.

Recommendations (2) “Strategic intelligence is analytical. It is about what is possible, not what has been. A good strategic intelligence report takes a point of view. It argues, defends, convinces. Doing so effectively requires that data and facts be marshaled in support of analytical conclusions. These conclusions come from one place and one place only – your gray matter. If you are hesitant to commit to writing your own commentary, explanation and predictions, seek work elsewhere.” (« Strategic Intelligence: An Oxymoron » by Ken Sawka, Competitive Intelligence Magazine, Volume 7, No. 1 ).

Don’t forget weak signals

Weak signals - Definition Weak Signals are past or current developments/issues with ambiguous interpretations of their origin, meaning and/or implications. They are unclear observables warning us about the probability of future events.

Some weak signals… A changing value proposition New unmet consumer or customer needs The entry of new competitors and new suppliers The advent of new breakthrough technologies Changes in your organization’s core performance metrics Unfulfilled business and other potential opportunities Broad disruptive events Premonitions, anxieties, and/or intuitions

More weak signals… 1. Current Strengths & Weaknesses can be weak signal 2. Current Drivers, Trends & Challenges can be weak signals 3. Current Strategies & Policies can be weak signals 4. Emerging Issues can be weak signals 5. Future Drivers, Scenarios, Threats & Opportunities can be weak signals 6. Shared Visions Megatrends & Grand Challenges can be weak signals 7. Hidden Issues (Secrets & Unknowns) can be weak signals 8. Past Wild Cards can be weak signals too!

Bad ideas for sorting out weak signals Remember the God complex? Groupthinking “THE ‘GROUPTHINK’ DYNAMIC LED THE INTELLIGENCE COMMUNITY . . . TO BOTH INTERPRET AMBIGUOUS EVIDENCE AS CONCLUSIVELY INDICATIVE OF A WMD (WEAPONS OF MASS DESTRUCTION) PROGRAM AS WELL AS IGNORE OR MINIMIZE EVIDENCE THAT IRAQ DID NOT HAVE ACTIVE AND EXPANDING WEAPONS OF MASS DE STRUCTION PROGRAM.” (Report on the U.S. Intelligence Community’s Prewar Intelligence Assessments on Iraq Conclusions ) Relying (only) on Tools (SWOT Analysis, etc.) Denial (=> Kodak)

What to do then? People + Tools SWOT Analysis => to understand your own competitive advantages in relation to the marketplace. Porter’s Five Forces Model => industry analysis Porter’s Four Corners Analysis => to understand the position of a competitor. System thinking!


SWOT A method used to evaluate the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture. SWOT Online:

PESTEL Analysis Identifying "Big Picture" Opportunities and Threats Objectives PESTEL & SWOT

PEST Analysis Example Porter’s 5 forces

Porter’s 5 forces (2) Threat of New Entrants: an industry with low barriers of entry will have intense competition as opposed to an industry with major barriers of entry. Suppliers tend to have strong influence within an industry when they are few/acting together. Power of Buyers: customers often dictate pricing and they demand certain levels of quality. Substitute Products: new or emerging substitutes for a product will change competitive forces Rivalry: this competitive rivalry may decline when times are good and everyone can grow.

Porter's four corners model « Porter’s four corners model is a predictive tool designed by Michael Porter that helps in determining a competitor’s course of action. Unlike other predictive models which predominantly rely on a firm’s current strategy and capabilities to determine future strategy, Porter’s model additionally calls for an understanding of what motivates the competitor. This added dimension of understanding a competitor's internal culture, value system, mindset, and assumptions helps in determining a much more accurate and realistic reading of a competitor’s possible reactions in a given situation »'s_four_corners_model Porter's four corners model

Blindspots analysis It is a method aimed at uncovering obsolete assumptions in a decision maker’s mental scheme of the environment. Michael Porter used the term "blind spots" to refer to conventional wisdom which no longer holds true, but which still guides business strategy. Step One: Conducting a Porter’s Industry Structure – aka 5 force analysis. Step Two: Collecting competitive intelligence on the target company’s top executives assumptions regarding the same industry structure as in Step One. Step Three: Compare the results of Step Two with the analysis in Step One. Any contradiction with the analysis in Step One is a potential blindspot.

War gaming (1)

War gaming (2) « War Games can be useful for identifying a company’s competitive vulnerabilities, evaluating assumptions about competitors’ strategies, and exploring implications of strategy changes in a “no risk” environment. A business war game typically has the following characteristics: offsite venue; senior managers representing a crossfunctional mix of participants; two to three days’ duration; teams of four or more people, with each team representing either the sponsoring company or one of its competitors; preparation time in which each team receives information describing the company they are representing and its strengths and weaknesses. War games usually comprise several “moves” or decision rounds. A team of facilitators serves as the Board of Directors to ensure strategic plans are acceptable and legal, and conduct a review with participants to examine the merit of each strategy ».

War gaming (3) Human-based simulations. These are intelligence-driven, analytically and behaviorally modeled role-playing exercises Simple - over-sophisticated, long and large scale games cost a lot more but do not produce better results. Transparent - if you don't understand the exotic algorithm, how likely are you to trust the strategy? Empowering - computer games don't understand internal politics, but you have to. Fun - teams that learn how to role-play competitors with real market intelligence and character-building techniques maintain enthusiastic external focus for years. Inexpensive - there is no good reason for games to cost hundred of thousands or even millions of dollars. If you know a good reason, write us. Accessible - to truly improve the bottom line, managers at all levels of the organization should be able to use this amazing tool, not just few senior execs at the top. Realistic - intelligence-based, human games are magnitudes more realistic than even the most sophisticated mathematical modeling.

War gaming (4) s_to_win « As the global downturn kicked in, a high-tech company’s senior executives decided to run a war game to prepare themselves for the uncertainties of the post-crisis landscape. After two days of simulations—when teams representing competitors and stakeholders role-played against a “company” team—the executives understood that a strong competitor on the sidelines was likely to enter the market aggressively. The executives also realized that the low end of the product range would face more price pressure than they had been anticipating. Moreover, while there would probably be industry mergers and acquisitions, as the company had expected, the deals were unlikely to kick off a wave of M&A or to have a material impact on the company’s share of any market. »

War gaming (5) war_games_to_win Ben Gilad’s book:

Business Agility An imperative for survival in a VUCA world. Business agility is the ability of a business to adapt rapidly and cost efficiently in response to changes in the business environment. => LO History:

Business Agility All about people… Theory X and Y: y_X_and_Theory_Y Freedom Inc. -Inc-Employees-BusinessProductivity/dp/0307409384 SEMCO: erick_(book) GORE: _Gore_and_Associates IDEO: O

What is Competitive Intelligence? COMPETITIVE INTELLIGENCE IS COMPETITIVE INTELLIGENCE IS NOT 1) Competitive Intelligence is Information that has been analyzed to the point where you can make a decision. Competitive Intelligence is not spying. Spying implies illegal or unethical activities. While spying does take place, it is a rare activity. Think about it; corporations do not want to find themselves in court, nor do they want to upset shareholders. For the most part, you will find spies in espionage novels, not in the executive suite. 2) Competitive Intelligence is a tool to alert management to early warning of both threats and opportunities. Competitive Intelligence is not a crystal ball. There is no such thing as a true forecasting tool. Intelligence does give corporations good approximations of reality, near- and long-term. It does not predict the future.

What is CI? (2) C.I. IS... C.I. IS NOT… 3) Competitive Intelligence is a means to deliver reasonable assessments. Competitive intelligence offers approximations and best views of the market and the competition. Competitive Intelligence is not database search. Databases offer just that — data. 4) Competitive Intelligence comes in many flavors. Competitive intelligence can mean many things to many people. Competitive Intelligence is not the Internet or rumor chasing. The Net is primarily a communications vehicle, not a deliverer of intelligence. 5) Competitive Intelligence is a way for companies to improve their bottom line. Competitive Intelligence is not paper. Paper is the death of good intelligence. Think face-toface discussion or a quick phone call if you can, rather than paper delivery.

What is CI? (3) C.I. IS... C.I. IS NOT… 6) Competitive Intelligence is a way of life, a process. Competitive Intelligence is not a job for one, smart person. 7) Competitive Intelligence is part of all best-inclass companies. Competitive Intelligence is not an invention of the 20th century. Competitive Intelligence is not software. 8) Competitive Intelligence is directed from the executive suite. 9) Competitive Intelligence is seeing outside yourself. Competitive Intelligence is not a news story. 10) Competitive Intelligence is both short- and long-term. Competitive Intelligence is not a spreadsheet.

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