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					          Double-Loop Knowledge Management
                                  A White Paper
                                                     ,
                          By Mark W. McElroy President
                           Macroinnovation Associates, LLC
                                  August, 1999 (v.6)

Introduction                                         nurtured and cared for if healthy
                                                     organizational learning is to occur;
     Knowledge management has now                •   Lastly, SGKM convincingly makes
evolved into two distinct, if not                    the powerful connection between
competing, schools of thought. I, and                KM and organizational learning
many others, have begun to differentiate             (OL), out of which comes
between the two as first- and second-                recognition of the role that KM can
generation KM, respectively. In                      play in helping organizations, not
summing up the major new themes of                   just individuals, learn faster and
second-generation KM (SGKM), I                       more effectively than their
recently made the following remarks in               competitors. The value-proposition
another paper of mine entitled, Second-              implications, here, are extremely
Generation KM (Knowledge                             important.
Management Magazine, September,
1999):                                                 While first-generation KM
                                                 schemes are decidedly technology-
•   Second-generation KM schemes                 centric—perhaps even obsessively so—
    emphasize knowledge production               second-generation thinking gives
    (demand-side thinking) without               priority to process-based organizational
    discounting the importance of first-         learning, with or without the use of
    generation KM codification and               technology. The advent of second-
    sharing (supply-side thinking)—a             generation KM, then, can be seen as a
    new more balanced view has                   convergence in thinking between the
    emerged;                                     organizational learning and knowledge
•   This emergent emphasis on                    management communities. In effect,
    knowledge production points to a             second-generation KM has emerged as
    much higher-value proposition for            an implementation strategy for
    KM than has been proffered to date:          organizational learning —a
    the prospect of increasing an                practitioner’s model for how to help
    organization’s rate of learning, and         organizations increase their capacity to
    hence, its rate of innovation;               learn, innovate, and adapt in their own
•   SGKM has identified both the form            operating environments.
    of organizational knowledge                        While the preceding paper of mine
    (declarative and procedural rule sets        did a sufficient job (I hope) of describing
    in knowledge structures), as well as a       the differences between first- and
    process-based life cycle that must be        second-generation KM, it made no
                                                 attempt to convert SGKM theory into



                            Copyright  1999 By Mark W. McElroy
                                              2


practice. That, then, is the purpose of           procedural knowledge—that is, business
this paper—a what-to-do-about-it-on-              rules that inform workers of what to do
Monday guide to second-generation                 in defined situations. As workers
knowledge management.                             experience elements of these scenarios
                                                  (i.e., as they “learn” of these events in
Two Levels of Learning                            the single-loop, sensory-perception sense
                                                  of the term), they choose their responses
      The title of this paper is taken from       in accordance with what their business
the concept of single-loop versus                 rules tell them to do.
double-loop learning, an idea hatched by                 By contrast, double-loop learning
Harvard Business School professor,                not only references the rules,
Chris Argyris, several years ago. In an           themselves, but constructively
article of his entitled, Teaching Smart           challenges the single-loop reflex to
People How to Learn (Harvard Business             invoke rote responses. In the Argyris
Review, May/June 1991), Argyris                   example above, the double-loop
explained the difference between the two          response to the below-68-degrees
in the following way:                             condition was to first reflect on the value
                                                  of the prescribed single-loop response by
   “To give a simple analogy: a                   considering whether or not an alternative
   thermostat that automatically                  to simply turning the heat on might fetch
   turns on the heat whenever the                 better results.
   temperature in the room drops                         In the human mind, this kind of
   below 68 degrees is a good                     double-loop thinking would lead to
   example of single-loop learning.               active constructions of alternative
   A thermostat that could ask,                   scenarios in which the learner would
   ‘Why am I set at 68 degrees?’                  play out likely outcomes in a lookahead
   and then explore whether or not                fashion. Promising ideas could then be
   some other temperature might                   tested, in which case learners might
   more economically achieve the                  actually override the prescribed response
   goal of heating the room would                 and temporarily replace it with a new
   be engaging in double-loop                     one. Depending on how well the new
   learning.”                                     rule fares in practice, the old one would
                                                  either be reinstated for reuse again or
      Argyris, therefore, makes the               would be replaced.
important distinction between two levels                 The point here is that living
of learning. The first, single-loop               “agents” (e.g., people, animals, insects,
learning, can be thought of as part of the        communities, markets, economies, etc.)
process one goes through when                     maintain active rule sets that are
attempting to function successfully in            variously invoked from one moment to
the real world. As people encounter               the next, as warranted, by conditions or
discrete conditions, or events, during the        events encountered in the outside world.
course of normal experience, internally-          Here again, the use of the terms rules
maintained rules are invoked in                   and rule sets is meant to refer to an
response. Rules, in this context, means           agent’s knowledge. In the lexicon of
knowledge. Business processes, for                second-generation knowledge
example, are nothing more than codified           management, rules and knowledge are



                             Copyright  1999 By Mark W. McElroy
                                              3


synonymous terms. Moreover, the                   important early step in appreciating the
composition of rules is constantly                fundamental differences between first-
changing—evolving in response to the              and second-generation KM. It’s not just
creation of new rules and the loss of old         the relative difference in the extent to
ones. As organisms innovate by                    which technology is used in either case.
experimenting with new rules in                   Indeed, the distinctions go much deeper
practice, older, less effective rules             than that. Only first-generation KM
(knowledge) give way to newer, more               schemes, for example, begin, and end,
successful habits. Knowledge evolves              with the assumption that current
accordingly.                                      knowledge in practice is valid! Their
      The extent to which an organism             goal, then, is to optimize the delivery of
engages in healthy rule-making and                currently-held organizational rules, or
knowledge innovation will, to a large             knowledge, to workers so that they can
degree, determine its success in life. An         function successfully in their normal,
agent whose rules are rarely tested will          operating environments.
tend to perform more poorly in practice                  This is why technology has played
than one whose rules are constantly               such a conspicuous role in the
being challenged, upgraded and                    complexion of knowledge management
refreshed. The same thing is true for             schemes to date. After all, computers
human organizations. A business whose             and telecommunications are unparalleled
approach to the marketplace, or whose             in their ability to deliver more
operating processes are rarely revised,           information to more people, where it’s
will tend towards ossification and                needed and when it’s needed, compared
atrophy. On the other hand, companies             to any other medium we know of.
that engage in healthy levels of rule-            Conventional knowledge management
making and rule-revising are inherently           practice, then, boils down to little more
more adaptive and capable of adjusting            than getting the right information to the
to spontaneous changes in the                     right people at the right time. Think,
marketplace. Indeed, organizational               “single-loop learning.”
agility depends, to a very large extent,                 This conclusion is further
on just how well an organization’s                supported by the analysis of other
learning system is working.                       conventional KM practices, including
      That, then, is the principal aim of         contemporary attempts to build
second-generation KM—to take                      communities of practice. After all,
whatever steps are required to enhance            human communities are the sociological
an organization’s ability to engage in            equivalent of computer networks. Bring
constructive levels of double-loop                people together in groups of defined
learning. In a sense, what we’re talking          interests, first-generation practitioners
about here is double-loop KM, an OL               tells us, and better knowledge sharing
practitioner’s framework for helping              will follow. Once again, the target of
organizations, not just individuals, learn.       this kind of intervention is enhanced
                                                  day-to-day operations, or single-loop
Double-Loop KM                                    learning. The purpose of sharing
                                                  knowledge is to distribute organizational
      Understanding Argyris’ notion of            rule sets as widely as possible so that
single- versus double-loop learning is an



                             Copyright  1999 By Mark W. McElroy
                                              4


“best practices” can be employed                     wrestle with in knowledge
pervasively on the job front.                        management—it’s all about
                                                     getting the right information to the
       First-generation KM schemes,                  right people at the right time so
therefore, are solely devoted to                     they can do their jobs more
improving knowledge operations with                  effectively.
the performance of day-to-day business
processes in mind. This is why so many                  This is vintage first-generation KM
contemporary KM methodologies begin               thinking in action. It’s all about single-
with a business-process orientation.              loop learning. And it’s all about
They start by asking two very telling             individual performance in the field. The
questions: What knowledge do people               target of all investments in first-
need to do their work? And how can we             generation KM is the individual worker
help them get it? Both questions reveal           and the extent to which he or she has
first-generation KM’s narrow                      access to, and can leverage, information
preoccupation with business operations            needed to get the job done—where and
and the role of knowledge in supporting           when it occurs. Nowhere in this
them—hence, the term knowledge                    proposition is organizational learning
operations. While this focus is in no             mentioned, and not once is there any
way inappropriate or of little value to the       discussion of knowledge creation or
organization, it completely side-steps the        rule-making. Only with the arrival of
question of where organizational                  second-generation thinking do we see an
knowledge comes from to begin with—               application of knowledge management
in other words, how is organizational             to these issues. What second-generation
knowledge created?                                knowledge management offers, then, is
       If a first-generation KM                   an implementation strategy for
practitioner were asked to explain the            organizational double-loop learning.
role of knowledge management in
business, an example of the following             Knowledge Structures
sort might be used:
                                                       One of the fundamentals of
  A knowledge worker is sitting at                second-generation KM is the concept of
  her desk performing a task, then                knowledge structures. This is one of the
  suddenly develops a need for                    more important ideas in the new field of
  information to complete her work.               second-generation KM, and so a brief
  Where does she turn? Is the                     review of what we mean by the term
  knowledge readily available?                    would be useful (see Figure 1).
  How long does it take to get it?                     Knowledge structures in human
  Does she tap her relationships                  organizations are codified expressions of
  with other workers? Has                         organizational knowledge. Business
  technology been effectively                     processes, for example, are codified
  placed at her disposal? Is her                  expressions of procedural knowledge
  knowledge source current? Is it                 (know-how), while business strategies
  complete? Was the task                          can be seen as codified expressions of
  successfully carried out? These                 declarative knowledge (know-what).
  are the kinds of questions we                   Most of an organization’s shared



                             Copyright  1999 By Mark W. McElroy
                                                             5


knowledge is expressed by being                                     ways of making commonly-held rules
embedded in its behavior (i.e., in its                              more explicit—ways, that is, of making
practices). Propagating this knowledge                              what a few of us know more available to
from one generation to the next is                                  the rest of us. The vast majority of what
accomplished either through explicit                                any organization knows (i.e., its
training or by the creation of knowledge                            knowledge, or rule sets) can be
artifacts such as data bases,                                       expressed in a formalized way, such that
documentation, and stories.                                         it can not only be shared with others, but
      But none of this new. Human                                   can also be carefully managed as well
civilizations have been codifying                                   (as in, periodically updated and
knowledge for millennia in the form of                              refreshed). Let’s take a quick look at the
myths, rituals, dance, and other cultural                           processes by which these evolutions in
artifacts. This gives new meaning to                                knowledge occur.
phrases like, “etched in stone” or “cast in
concrete.” Both refer to the codification

                   Figure 1: Organizational Knowledge Structures
                                        Declarative Knowledge                    Procedural Knowledge

         •Business Strategies                          X

         •Products and Services                        X

         •Business Processes                                                                     X

         •Organizational Structures                    X

         •Policies and Procedures                      X                                         X

         •Culture and Values                           X                                         X

         •Information Systems*                         X                                         X
                                *(Note: Includes automated, hard-copy and other knowledge artifacts)




of organizational knowledge. We might                               Knowledge Processes
have thought knowledge management
was new, but with the advent of second-                                   Since first-generation KM schemes
generation KM, we now know it is not.                               are not at all concerned with knowledge
Anthropologists have been studying the                              creation at the organizational level, there
subject for years, now. It turns out that                           are no knowledge production processes
knowledge management is as old as the                               to be found in the prevailing style of KM
hills.                                                              practiced to date. Rather, first-
       Thanks to anthropology, then,                                generation initiatives have tended to
human organizations not only have a                                 concentrate only on knowledge sharing
better appreciation now for the role that                           and transfer. This is usually attended by
knowledge plays in guiding collective                               technology-centric solutions, a good
behavior, but we’ve also discovered                                 portion of which invariably entail


                                  Copyright  1999 By Mark W. McElroy
                                                                           6


codification and indexing. Indeed, most                                              considerably more evolved. As
so-called knowledge management                                                       discussed in my earlier paper on this
systems amount to little more than                                                   subject, the knowledge management
yesterday’s technologies re-cast in                                                  community (especially the Knowledge
today’s more fashionable clothes. These                                              Management Consortium) has developed
include document management, imaging,                                                a three-phase model for second-
data warehousing, data mining and                                                    generation KM. The three phases are,
information retrieval.                                                               Knowledge Production, Knowledge
      These technologies are all designed                                            Validation, and Knowledge Integration
to support job performance in the field—                                             (see Figure 2).
knowledge delivery systems for                                                             So as not to spend too much time
knowledge workers in their day-to-day                                                here on the life-cycle view of
operations. Even corporate Intranets,                                                knowledge, suffice it to say that


                       Figure 2: The Knowledge Life Cycle



               Knowledge                    Knowledge               Knowledge                                            Knowledge
                                                                                             Organizational
               Production1                  Claims2                 Validation1                                          Integration1
                                                                                             Knowledge2




                                                             • Knowledge                                            • Knowledge
            • Individual
                                                               Claim Peer                                             Sharing and
              and Group
                                                               Review                                                 Transfer
              Interaction
                                                             • Validation                                           • Teaching and
            • Data/Info
                                                               Criteria                                               Training
              Acquisition
                                                             • Weighting of                                         • Operationalizing
            • Formulating
              New Knowledge                                    Value in Practice                                      New Knowledge
                                                               if New Knowledge                                     • Production of
              Claims
                                                               is Applied                                             Knowledge
            • Initial
              Codification                                   • Formal Codification                                    Artifacts (IT, etc.)

                                                        Experiential Feedback Loop
     1 → Knowledge Processes
     2 → Codified Knowledge

    Note: This graphic is based on the Knowledge Management Life Cycle as developed by the Knowledge Management Consortium’s KM Modeling Committee.




including the new, KM-spun variety of                                                organizations literally create new
“knowledge portals,” are nothing but                                                 knowledge through a process of
first-generation KM/single-loop learning                                             nonlinear interactions between
tools—very useful in the performance of                                              individuals and groups, during which
day-to-day tasks, but of little value when                                           new “knowledge claims” are formed
it comes to real organizational double-                                              (Knowledge Production). Once they
loop learning.                                                                       have been defined, these claims can be
       By contrast, since second-                                                    escalated for formal and informal
generation KM is concerned with                                                      validation (Knowledge Validation). The
organizational knowledge production, its                                             satisfaction of validation criteria often
perspective on knowledge processes is                                                then leads to the formal adoption of new


                                             Copyright  1999 By Mark W. McElroy
                                                         7


knowledge at the organizational level.                          structures) and the knowledge processes
Operationalizing new knowledge,                                 by which they come about (see Figure
including first-generation style                                3). Working to formalize and maintain
codification and indexing, is what the                          these cognitive systems, then, should be
third phase, Knowledge Integration, is                          the primary goal of the Chief Knowledge
all about (i.e., integrating organizational                     and/or Learning Officer in today’s
knowledge into an organization’s day-to-                        knowledge-based organizations. Let’s
day operations).                                                explore this further.



        Figure 3: Organizational Knowledge Production

              Knowledge         Knowledge         Knowledge                           Knowledge
                                                                     Organizational
              Production        Claims            Validation                          Integration
                                                                     Knowledge




                                                                                      Information
           Business                                                                     Systems
           Strategies                                                                 (Knowledge
                                               Declarative and                         Artifacts)
                                            Procedural Knowledge



              Products &                                                              Culture &
               Services                                                                Values




                           Business                                    Policies &
                                               Organizational
                           Processes                                   Procedures
                                                 Structures




Practice Implications                                                 Tools and techniques for
                                                                expressing human knowledge in
      The emergence of second-                                  syntactic terms have been out there for
generation KM and its vision of double-                         some time now, but only recently have
loop organizational learning have                               attracted serious attention from the KM
significant implications for practitioners                      and OL communities. One such tool, the
of both KM and OL. Chief among them                             Knowledge Harvester, from LearnerFirst
is the assertion that an organization’s                         in Birmingham, AL, provides a
knowledge and learning environments                             systematic way of reducing both
can both be made explicit, and can be                           declarative and procedural knowledge
managed explicitly. The basic                                   into a form that can be converted to
components of a well-managed                                    multiple expressions, or simply kept as a
knowledge/learning environment,                                 record of knowledge in practice. The
therefore, consist of expressed                                 value of these tools is easy to understand
organizational knowledge (knowledge                             when faced with, say, the impending


                                Copyright  1999 By Mark W. McElroy
                                             8


departure of a valuable employee whose           time, however, the total complexion of
knowledge is either tacitly held or has          an organization’s knowledge can be
never been captured for organizational           accumulated, thereby rendering the
diffusion. The one-time conversion and           maintenance of existing rule sets, and
codification of an expert’s tacit                the production of new ones, manageable
knowledge not only makes it easier to            propositions.
share that knowledge with others in the                 In addition to the codification and
future, but also helps prevent the total         maintenance of organizational
loss of knowledge to the organization as         knowledge, the corporate K/L function
a whole, should the expert choose to             must also take whatever steps are
leave.                                           required to ensure that all three
       Organizational knowledge must be          knowledge processes are active
codified at the level of the organization,       wherever they should be. More
whether it be embedded in culture,               specifically, every knowledge structure,
procedures or information technology, if         or knowledge domain, should be
it is to have any chance of surviving the        accompanied by a well-defined, well-
test of time. It is therefore in an              running, explicitly visible knowledge
organization’s best interests to at least        life cycle that makes it possible to not
create knowledge artifacts that capture          only see the rules in use, but to challenge
the sum total of an organization’s               them as well. This points to the need for
knowledge in a formalized way. This,             a standard approach to the
then, leads to a first principle for the         implementation of knowledge life cycles
practice of second-generation KM:                in all organizations—a way that we
                                                 produce knowledge, a way that we
  Organizational knowledge can                   validate knowledge, and a way that we
  be found in the various                        operationalize it.
  knowledge structures of an                            How many organizations can claim
  organization.        The     rules             that such a standard approach exists in
  embedded in these structures                   their own domain? Very few, I think.
  (i.e., knowledge in practice) can,             And yet all knowledge is born of these
  and should, be deciphered and                  processes, whether we formalize them or
  managed, accordingly.                          not. They’re utterly natural and can be
                                                 found in all living systems, human
      It therefore falls to the knowledge,       organizations included. I say it’s better
or learning, function (K/L function)             to embrace and exploit them to our
within an organization to systematically         advantage. This, then, leads to the
capture, in a formalized way, the essence        second principle in the practice of
of an organization’s collectively-held           second-generation KM:
knowledge. But this is for baselining
purposes only. On the assumption that               Organizational knowledge is the
most companies have historically done               product of natural knowledge
no such thing, the initial codification of          learning processes in all human
existing organizational knowledge will              organizations. These processes
be a very time-consuming, slow, and                 should be formalized and
priority-driven process—one that will               managed, accordingly.
likely take years to complete. Over



                            Copyright  1999 By Mark W. McElroy
                                               9


      Here again, it arguably falls to the         stresses the importance of Knowledge
corporate K/L function to ensure that the          Production and Validation (typically not
knowledge processes that lie behind the            stressed in first-generation models), the
formation of business processes and                kinds of activities found in the third
other knowledge structures are fully up            phase, Knowledge Integration, including
and running. After all, knowledge in               those that first-generation schemes have
practice is only as good, or as current, as        addressed, are no less important.
the last time its content was reviewed or          Second-generation schemes, then, call
refreshed.                                         for a more balanced view, one that the
      This, then, leads to a third principle       following mantra is intended to convey:
in the practice of second-generation KM:
                                                       Innovate, Validate, and Integrate
   Know what you know and why
   you know it!                                           This phrase captures the essence of
                                                   all three phases in one simple
      Only by having the chance to                 expression. By actively maintaining
scrutinize the basis of why we know what           knowledge processes that make all three
we think we know can real understanding            functions possible, and by clearly
and confidence unfold in our work.                 expressing organizational knowledge—
Organizations that reserve all of their            that is, knowledge held both in fact and
rule-making processes for senior-level             in practice—the K/L function of an
management, or committees on high, are             organization can go a long way in
only asking for trouble downstream.                ensuring that true double-loop
Subject to legal and competitive                   [organizational] learning occurs. This is
constraints, then, all organizational              the essence of double-loop KM, a what-
knowledge should be open to scrutiny by            to-do-about-it-on-Monday practitioner’s
workers whose organizational lives are             guide to second-generation knowledge
affected by such knowledge. After all,             management.
knowledge held by most organizations is
ephemeral. One need only look at the               Measuring ROI
frequency of corporate reorganizations,
or business process redesigns, to clearly                No self-respecting practitioner’s
see that our best laid plans are usually           guide would be complete without taking
short-lived.                                       on the obligatory question of how to
      The last principle of interest is one        measure, let alone express, returns on
that speaks to the balance of emphasis             investments in KM. In short, there are
needed in second-generation knowledge              two ways to do this. I will attempt to
management programs. It is critically              summarize both without going into too
important that second-generation                   much detail.
schemes avoid falling prey to the myopic
obsession with activity at only one or                   The first way to measure ROI from
two of the three stages in the KM life             investments in KM is a traditional one.
cycle. All three are essential, and all            Proposed expenditures in people,
three are necessary, but insufficient,             processes and technology investments
elements of the larger whole life cycle.           are accompanied by a forecast of what
Moreover, while second-generation KM               the business benefits will be based on



                             Copyright  1999 By Mark W. McElroy
                                                  10


the effect that KM will purportedly have                had their intended effects would consist
on either lowering costs, improving                     of measuring their impact, not on
productivity, or increasing revenue.                    business events, but on knowledge
This leads to a fairly straightforward                  events, instead.
business case using conventional                              By following the principles set
performance metrics, which then lends                   forth above, a practitioner, for example,
itself to easy measurement at the end of                could literally measure the number of
the day. KM initiatives that successfully               new knowledge claims (innovations)
lead to their intended effects (i.e.,                   produced by an organization both before
lowered costs, higher productivity, or                  and after an investment in KM has
increased revenue) are declared                         occurred. Further, similar measurements
victorious, and the numbers are tallied                 could be made on the number of
up accordingly.                                         validation events experienced in the
       The second way to measure ROI                    same time frames. Of even greater
from investments in KM has nothing                      interest would be the number of
directly to do with business results, per               innovations actually created, validated,
se. This, in my humble opinion, is                      and put into practice after investments in
actually the more useful way to express                 KM have been made, compared to the
ROI from investments in KM. Having                      same measures beforehand. After all,
said that, I admit that I hold the minority             one of the strongest propositions to
view in this ongoing debate.                            emerge in the field of KM, to date, is the
       Strictly speaking, investments in                assertion that KM—in ONLY its
knowledge management can only                           second-generation form—can actually
directly affect the production, validation,             help an organization increase its rate of
or integration of knowledge in an                       innovation.
organization (i.e., the three knowledge                       That’s the kind of claim that leads
processes). Related business events                     me to favor the second style of
including lowered costs, improved                       measuring ROI from investments in KM,
productivity, or increased revenue can                  since the first approach could lead one to
only indirectly be attributed to the                    completely overlook evolutions in
effects of investments in KM. A better                  knowledge events, like innovations,
measure of success, then, in judging                    altogether. Perhaps a combination of the
whether or not KM investments have                      two makes the most sense.

                                         *    *    *    *    *


About the Author
Mark W. McElroy is the founder of Macroinnovation Associates, LLC. In addition, he is an active member
of the New England Complex Systems Institute (NECSI), and serves as Chairman of the Knowledge
Management Consortium’s KM Modeling Standards Committee. Mr. McElroy is also the board chair of
the Sustainability Institute, a think-tank in Vermont that applies system dynamics tools to the study of
social, economic and environmental issues. He can be reached at mark@macroinnovation.com.




                                Copyright  1999 By Mark W. McElroy

				
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Description: Knowledge management has now evolved into two distinct, if not competing, schools of thought. I, and many others, have begun to differentiate between the two as first- and secondgeneration KM, respectively. In summing up the major new themes of second-generation KM (SGKM), I recently made the following remarks in another paper of mine entitled, Second- Generation KM (Knowledge Management Magazine, September, 1999)