J Syst Sci Syst Eng DOI: 10.1007/s11518-015-5280-2

ISSN: 1004-3756 (Paper) 1861-9576 (Online) CN11-2983/N

A HYBRID MODEL OF KNOWLEDGE MANAGEMENT FOR NEW SERVICE DEVELOPMENT August Tsai Department of Industrial Management, College of Management, Chien Hsin University of Science and Technology, Taoyuan32097, Taiwan, China [email protected] ()

Abstract Although many theories regarding the implementation of knowledge management (KM) in organizations have been proposed and studied, most applications tend to stand alone without incorporating the business processes. Different categories of knowledge provide different benefits and how to integrate various categories of KM into a hybrid approach as an effective KM manner remains strategically important, and yet is still understudied. Therefore, in this paper a hybrid model that integrates principal KM applications for new service development (NSD) and the measurement of the resulting financial benefits have been developed. The proposed KM model incorporates newsgroups, knowledge forums, knowledge asset management and knowledge application processes as a hybrid means for sharing organizational knowledge along two axes, explicit vs. implicit and individual vs. collective. One of the largest management consulting companies in Taiwan, China, whose process model of NSD was standing alone with KM applications, was selected for the case study. A set of hybrid KM processes was developed to implement the proposed KM model, and it illustrates an application with greater financial benefits for integrating hybrid KM practices into the business process. Based on knowledge value added (KVA) validation, the proposed KM model provides a new operating system for sharing NSD knowledge within an organization. Through the case study by measuring the achieved financial results, the proposed KM model is found to provide an exclusive hybrid platform with an empirical process model to address innovative approaches and practical values of KM within an organization. Keywords: Knowledge management, new service development (NSD), newsgroup, knowledge forum, knowledge asset, knowledge application process, knowledge value added (KVA)

1. Introduction To improve business performance and create new mechanisms for knowledge sharing, varied knowledge management (KM) approaches have been adopted by organizations (Ng and Jee 2012).

Despite various theories regarding KM (Hou and Li 2011, Mason 2005, Soon et al. 2010), only a few practical research studies have focused on the application and implementation of a hybrid model incorporating different KM principles

 Systems Engineering Society of China and Springer-Verlag Berlin Heidelberg 2015

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Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

(Dixon 2000, Housel and Bell 2001). Thus, comprehensive guidance for integrating KM practices within an organization for business benefits may be lacking. A common goal of KM is to transfer knowledge among members in an organization; some recent methodologies such as “knowledge community” and “knowledge map” have been proven effective (Bautista-Frias et al. 2012, Krishnaveni and Sujatha 2012). However, the overall benefits of KM can hardly be achieved if KM applications are not integrated along the business processes into an application model; furthermore, there are limited studies on how different types of KM applications could be blended to fit the business context of new service development (NSD). For this purpose, the selected case company for study is a large management-consulting firm in Taiwan, China, whose process model for NSD was both knowledge-intensive and process-oriented, but not yet incorporated with its KM applications. The nature of such a NSD process is led by a group of consultants to develop a collective set of management model description, competence trainings, management procedures and performance measurements, etc. for a new management method or model to consult industrial clients. Similar to other organizations, the case company had employed “knowledge community” and “knowledge map” to facilitate his NSD, but did not think of further integrating these KM applications in depth with the NSD process for greater financial benefits of KM. In this context, it is imperative that researchers investigate an application model to integrate KM principles, theories and practices in resolving KM bottlenecks in industry, as reflected by the

case company. The proposed research background, questions and aims are shown in Figure 1. As various KM theories and industrial practices stand apart and present no help to typical KM bottlenecks in the industry reflected by the case company, this research addresses the integration problems of KM and aims to develop a hybrid model capable of incorporating all modern KM principles and applications with novel process approaches and financial validation. The research methods targeted on four types of internal knowledge (Andreu and Sieber 2005) to be shared in an organization, and the author designed a hybrid model incorporating four electronic platforms for sharing organizational knowledge: (1) Newsgroups, an online newsgroup likes existing “knowledge community” is used to manage self-study knowledge continuously generated from work experiences of employees within the organization, (2) Knowledge forums, an online knowledge forum reformed from the existing “knowledge community” is used to manage strategic knowledge within the organization such as deciding best set of business goals in a business plan, (3) Knowledge asset management, an electronic archive system likes existing “knowledge map” is used to manage the structured body of various corporate resources of organizational knowledge; and (4) Knowledge application processes, a documentary process-oriented “knowledge map” reformed from the existing KM is used to record experts’ exclusive and implicit knowledge in preparing and conducting a subject-mattered task

Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

(Tsai 2014). A hybrid infrastructure was designed and employed to implement the proposed model. Based on knowledge value added (KVA) validation, the contributions of this research lie in the novel hybrid KM application which provides a set of new operating systems for sharing organizational knowledge of NSD. This paper is organized as follows. In the next section, a discussion of the reviewed literature is provided so the necessity for KM applications to be incorporated with business process and

1. 2. 3. 4. 5.

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integrated into a hybrid model is identified to justify the research purpose. Section 3 is devoted to the research design for developing and validating the proposed hybrid KM model. The flow-down methodology for studying the resulting benefits of implemented hybrid KM model from the one before implementation is also illustrated in this section. Finally, while some resulting KM applications and validation data are discussed in Section 4, the last section presents the conclusions and suggestions.

Existing KM problems in the industry reflected by the case company Lack of integrated IT platforms in supporting KM KM processes not in line with business processes Not knowing the KM financial benefits Too many theories, too little practices The effectiveness of NSD is not satisfied

Question: Question: How should those How could those KM KM principles be applications be integrated into a Purpose： incorporated into systematic Developing the hybrid process-oriented resolution? KM model to integrate practices? and incorporate these modern KM principles, practices and IT KM principles and theories applications 1. KM performance Industrial KM practices and assessment applications Question: 2. Knowledge sharing Is there a hybrid model 1. Knowledge management processes processes to incorporate those 3. Practices in community theories and practices 2. Knowledge map and assets 4. Tacit knowledge 3. Organizational learning into a KM model? management 4. Knowledge repository

Figure 1 The research background, questions and purpose

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Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

2. Literature Review Given the nature of KM, a hybrid or blended approach should be imperative. Different categories of knowledge provide benefits that vary according to the relevant task units (Haas and Hansen 2007). For instance, Tsai et al. (2011) surveyed 600 large firms in Taiwan, China, and found that the moderating effect of KM strengthens the relationship between ERP data maintenance and business performance. Ng and Jee (2012) surveyed 200 Malaysian firms and found KM has a positive and significant influence on manufacturing performance. Thus, it is evident that how to integrate different categories of KM within organizational context should not be neglected. Sharing knowledge by many KM methods among employees may create various competitive advantages in responding problems more timely, developing new knowledge or concept, avoiding the same investment or mistakes, etc. (Cyr and Choo 2010). Dixon (2000) was the first one to propose five heterogeneous categories of organizational knowledge to be integrated into a KM approach: expert knowledge, strategic knowledge, serial knowledge, near knowledge and far knowledge. He described a blended concept to be the most effective in transferring organizational knowledge. The author employs the vocabulary “hybrid” to well phrase this blended approach for integrated KM applications (Olapiriyakul and Scher 2006). Andreu and Sieber (2005) proposed different possibilities for integrating knowledge based on differences in personal relationships: explicit-individual knowledge by self-study, explicit-collective knowledge by a structured team, implicit-individual knowledge

by master/apprentice, and implicit-collective knowledge by a team. In the light of KM strategy, their model may be a suitable candidate for further study regarding the incorporation of hybrid KM into business processes. This research, therefore, is based on the four possibilities of knowledge integration to develop a hybrid model for sharing organizational knowledge. The KM application has to be in line with business processes. Most of knowledge is naturally implicit and difficult to be shared if the application is not in line with business context (McDonnell et al. 2007, Whelan and Carcary 2011). A human resource view point, Whelan and Carcary (2011) identify five concerns of KM in applying talent management processes for key knowledge workers, knowledge creation, knowledge sharing, developing knowledge competencies, and knowledge retention － to enhance the efforts of KM. Skyrme and Amidon (1999) identified systematic organizational KM processes as one of seven critical success factors (CSFs) for successful KM implementation; a critical issue in implementing KM is preparing an organization to accept, adopt and utilize new KM processes (Alsadhan et al. 2008). Mas-Machuca and Costa (2012) identified CSFs of KM projects that have been initiated in consulting firms; they measured the strategic, technological and cultural factors in relation to the success of each project. The findings of their research show that technology is a primary factor for the success of a KM project, and that integrating KM with business objectives and choosing a proper technological infrastructure play important roles. Based on most of the empirical researches, KM activities that include

Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

knowledge maps (Hussein et al. 2010, Liu et al. 2009), knowledge communities engaged in organizational practices (Gammelgaard 2010, Shen et al. 2010), and e-knowledge (Kankanhalli et al. 2005, Warkentin et al. 2001), all have to be linked to successful business processes. However, greater clarity is needed in regard to what these KM processes look like within the organizational context; as NSD processes have become important in modern business context, this study provides relevant illustrations by analyzing the NSD processes of a case company . The NSD demands for intensive KM. The service development process involves the planning of systems and processes, the allocation of resources, the process of quality design, the creation of prerequisites, and the ultimate realization of the original idea (Yang 2007). Bullinger and Schreiner (2006) proposed the NSD process model with development phases including start with idea generation, analysis of requirements and idea evaluation, design of specifications, preparation as resource allocation, testing of specifications, and concept implementation. A formalized service development process consists of four key steps: design, analysis, development, and full launch (Johnson et al. 2000). However, Zwikael and Globerson (2007) proposed that managers in the service sector lack the knowledge as of tools, and experience required for efficient management. The process of service development involves the creation of component knowledge (referring to changes in people, service offerings, and infrastructure) and architectural knowledge (indicating how design components are linked together without

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changing the core service) (Bitran and Pedrosa 1998, Metters et al. 2006). A hybrid KM should include knowledge exchange through on-and-off line communities. A main task in KM is to construct communities that engage workers in acquiring and applying knowledge through learning, working and collaboration (Sharpton and Jhaveri 2006). Despite various definitions of online communities, a major distinction in this study is that newsgroups offer informational and social support (Muncer et al. 2000), while forums offer a mix of problem-solving knowledge via mentoring support (Wei and Chen 2006). Soon et al. (2010) established an online forum to reuse knowledge in a learning organization. Hou and Li (2011) successfully conducted a newsgroup discussion among programmers to share knowledge in software development. Thus, sharing knowledge occurs via forums and newsgroups, but integrating knowledge community with business processes has not been addressed. Therefore, this research aims to develop business processes in which organizational knowledge can be stored and used through on-and-off line communities. A hybrid KM should include a knowledge map providing the index for knowledge assets. A starting point of KM is the identification of business knowledge that is critical to organizational success (Studer et al.1998). Valuable organizational knowledge can be divided into the following categories: systemic assets, routine assets, information assets, data documents, software assets, visible assets, human resource assets and service assets (Smith 2001). Chen (2012) further integrated human resource assets, complementary assets, technical

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Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

assets and relationship assets into a teach-and-learn process of knowledge transfer. However, beyond the categorization of knowledge assets, KM practitioners will need an integrated process that includes a platform for sharing assets. In the proposed hybrid model, the author has incorporated various knowledge assets deemed as essential for sharing knowledge within an organization. A hybrid KM should include process for managing explicit knowledge. Bautista-Frias et al. (2012) identified tacit knowledge of workers by mapping the conversion of knowledge and to explicit knowledge. Chen et al. (2006) successfully analyzed and retrieved tacit knowledge from an international group’s emails. Martz and Shepherd (2003) verified that an active teach-and-learn process is ideal for transferring tacit knowledge. Matsumoto et al. (2009) successfully derived expert implicit knowledge in problem-solving processes associated with production systems. Many past studies have established technological resolutions for managing tacit knowledge, but they have not emphasized the management process. In this study, implicit knowledge was preserved via audio and video files to record the entire problem-solving process in which targeted expert knowledge was applied. For validating KM performance, the financial benefit resulted by KM application is preferred by the management. Regarding the financial benefits from KM, the idea was based on top management expectations and, originally, from one of these processes of KM “assessment” (Macintosh 1999, Belardo 2001, Andersen 1996). This indicates that assessing financial performance resulting from KM is

feasible and meaningful to management in an organization. By measuring KM performance, firms cannot only know what the benefits are, but also understand the gaps by comparisons with expectations or competitors (Yasin 2002), as well as provide directions in decision-making (Lee et al. 2005). Researchers have proposed both financial and non-financial KM assessment. In the study of Stein et al. (2001), the net present value (NPV) was adopted to analyze the cost-benefit of the knowledge-based system and to compare the effect of pre- and post-implementation. Another study dealt with customer knowledge to create CVA-map; it evaluated KM performance by the return on sale (ROS) and return on investment (ROI) (Laitamäki and Kordupleski 1997). In addition to financial assessment, some researchers provided non-financial ways to assess KM performance. For example, Smits and de Moor (2004) established non-financial indicators to measure KM efforts in communities of practice (CoP), while Holt et al. (2007) summarized four aspects to measure readiness for KM. Other KM assessment methods, such as Balanced Scorecards (BSC), include ‘user orientation’, ‘business value’, ‘internal processes’ and ‘future readiness’ (Martinsons et al. 1999). Benchmarking provides guidelines in making decisions, searching for best practices and identifying performance gaps (Marr 2004, Yasin 2002), including KM performance. Some other KM performance assessment models, include: (1) Othman et al. (2011) establishing a KMSP framework to assess self-performance of KM; (2) Lee et al. (2005) building a KMPI to evaluate a firm’s KM performance; and (3) Tseng (2008) exploring the KMS performance indicators, such

Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

as determining KM strategy, KM planning and implementing KM to assess KM

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accomplishments.

Table 1 Case company perspective in assessing KM performance Methods

Factors to be measured

Financial

ROI; ROK and KVA; NPV

Case-company

Study

perspectives Applicable more

time

but

taking

Laitamaki and Kordupleski

to

collect

(1997); Wu et al. (2007);

financial data Non-

No. of knowledge categories,

Too

financial

items,

applied; not accepted by

frequency

use,

etc.;

individual, context, content and

technical

Stein et al. (2001) to

be

Smits and de Moor (2004); Holt et al. (2007)

top management.

process BSC

User orientation, business value,

Too

internal

management

processes,

future

complicated

for

Martinsons et al. (1999)

readiness Bench-

The best practices

marking

Not applicable in regard

Marr (2004); Asoh, Belardo

to the case context

and Neilson

(2002)

KM

KM activities planning, KMI

Not applicable in regard

Othman et al. (2011); Lee et

performance

decision-making,

to the case context

al. (2005); Tseng (2008)

knowledge

creation, KM strategy, etc.

Knowledge value adding (KVA) is qualified for validating KM performance. This research analyzed several KM assessment approaches with case company perspectives, as shown in Table 1, and adopted a financial KM assessment approach for realizing the achieved financial benefits. Among those financial measurements on KM, KVA was used originally for evaluating the reengineering process within organizations, as organizations often emphasize cost reduction rather than the evaluation of returns (Housel and Nelson 2005). Yu et al. (2009) proposed an Internet-based web service system, namely, a KVA system, to implement the proposed knowledge value-adding model

(KVAM). A case study of a local consulting firm was conducted to demonstrate the proposed KVAM and to test the applicability of the KM system. While past studies provide illustrations for measuring KM benefits, more case studies are required to promote KM as a means of achieving business excellence. Tsai (2014) did apply KVA method to validate an empirical model of four KM processes, but without analyzing the theoretical grounds and lacking of external validity to his selected case study. In this study, the author extends Tsai's (2014) four KM processes into a hybrid KM model to one larger consulting firm, which represent better generalization for technical service providers.

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We selected three core processes, which are more knowledge-intensive, out of four NSD core processes in order to implement the proposed KM model and to observe performance differences among various processes in KVA.

3. Methodology In this section, a matrix depicting the types of organizational knowledge is firstly provided. The structural design of the empirical KM model and the context with focal process of the case company are then presented, and finally followed by a description of KVA validation that was adopted.

3.1 Matrix of Organizational Knowledge The

dimensions

of

relationship

types

(collective vs. individual) and knowledge categories (explicit vs. implicit) are useful for defining the integration approaches based on categories of knowledge to be shared in an organization. The proposed matrix of organizational knowledge is shown in Figure 2. A refined application of newsgroups could fit the need for sharing organizational knowledge by self-study (Andreu and Sieber 2005); likewise, the form of knowledge asset management is suitable for capturing organizational knowledge in a structured team. A process-oriented database for describing the application of organizational knowledge is appropriate for conveying master-apprentice knowledge, and a knowledge forum is suitable for sharing organizational knowledge by expert teams.

Individual Knowledge

Self-study knowledge using Newsgroups

Collective Knowledge

Structured team knowledge using Knowledge Asset Management

Master /Apprentice knowledge using Knowledge Application Processes Unstructured team knowledge using Knowledge Forums

Explicit Knowledge

Implicit Knowledge

Figure 2 The dimensions of relationship types and knowledge categories among the four electronic platforms

3.2 Proposed System Model for Sharing People’s Knowledge in an Organization Based on the abovementioned concepts, a hybrid model for structured knowledge sharing is depicted in Figure 3. The four possibilities of knowledge integration lead to the identification of four target knowledge types to be managed. Four designated IT applications are employed to position the target knowledge within the

business process. Finally, the technological infrastructure is provided with a first layer of workflow, groupware and AV-publications in receiving knowledge; a second layer of knowledge base in storing knowledge; and the third layer of hybrid e-learning (Tsai 2012) and knowledge search engines in retrieving knowledge. As resulted in the model, there are four typical benefits as the expected outcomes in sharing NSD knowledge in the case company.

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Individual implicit knowledge

Collective implicit knowledge

Individual explicit knowledge

Collective explicit knowledge

Expert knowledge

Strategic knowledge

Knowledge by self-study

Knowledge in structured team

Knowledge Forums

Newsgroups

Knowledge Asset Management

Knowledge Application Processes

Workflow

Groupware

AV publication

Knowledge base

Hybrid e-learning (Tsai 2012)

Integrated intellectual capital

Enhanced personal competence

Knowledge search engines

Reinforced cognition communication

Improved processes and costs

Figure 3 The hybrid KM model for sharing NSD knowledge in an organization (Tsai 2014)

3.3 The Context and the Focal Process of Case Company The company selected for this study is one of the largest management-consulting firms in Taiwan, China, who provides various consultancy and training services for business entities in industry for improving management ; their process model of NSD is both knowledge-intensive and process-oriented that

gives competitive advantages for the company to obtain new clients as well as keeping existing clients. The full NSD process before this research project is illustrated in Figure 4. As the company’s main revenue comes from providing consultancy and training services to the industry, to develop new consultancy services with training courses based on the latest industrial expertise is therefore critical in maintaining the

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Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

company’s revenue growth. The NSD staff members have accumulated many knowledge assets classified, synthesized and deployed into “knowledge map” to be accessed by NSD-related persons. However, the way of KM in the case company was only for NSD staffs to store and retrieve knowledge rather than embedding the KM into the NSD process. Likewise, a web-based “knowledge community” was also employed for exchanging information and knowledge of specific NSD projects, but again this sort of KM was only to support NSD process in loose structure without incorporating knowledge community into developing new services. It was observed the company lacks an integrated system to incorporate various KM principles in practices into the routine flow of the NSD processes. Based on Andreu and Sieber’s strategy for sharing organizational knowledge (2005), the author has developed a reformed “knowledge community”, the knowledge forum and a reformed “knowledge map”, the knowledge application process to reinforce the KM benefits for the NSD process. The proposed KM model was introduced initially for three selected processes among four candidate core NSD processes. The first process, Hybrid Training Course Development, was selected as it requires the most learning time to enable new staff to complete the structured training content of a new service. The second process, Consulting Methods Development, was selected as it requires a great deal of learning time to enable consultants to complete the standardized consulting steps and worksheets. The third process, Promotion and Sales Kits Development was selected as it still required some learning time for enabling staff to

complete the professional attracting contents to be used for promoting new services. The last process, Consultant and Staff Training was not selected as the process was simply administrative in nature and the learning time required for new staffs to conduct the jobs was not significant. Immediately prior to personnel training and KM implementation, a KVA survey on a NSD project was conducted. One year after the KM implementation, another KVA survey on a recent NSD project was conducted to gauge differences in ROK.

3.4 Design of the KVA Survey The KVA survey was based on process analysis and cost accounting of four core NSD processes indicated in the Figure 4: 1) Hybrid training course development for designing all training agenda, methods and materials for the competency of industrial delegates, 2) Consulting methods development for designing the management structure, working procedures and implementation methods for industrial organizations, 3) Promotion and sales kits development for completing all promotion flyers, presentations and brochures, 4) Consultant and staff training to prepare all the staffs for launching the new service. A partial approach was adopted to implement the proposed hybrid KM model for selected processes, and the following steps were based on the learning time method (Housel and Bell 2001). 1.

Evaluate core processes and select processes to be studied. Hold a

Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

2.

management review meeting to identify the level of difficulty for learning each process, categorized from the most to the least challenging to learn. Estimate learning time; for example, managers in the case company allocate average person-months for new staff to master core processes. In this step, we

decided to preclude the 4th process “ consultant and staff training “because of that very little learning time assigned by managers, and that means new staffs could master this process really quick without relying on heavy transfer of knowledge. Thus, the effects by implementing the hybrid KM will not be any significant.

Customer Inquiries

Internal Initiations for Innovation

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New Body Knowledge

New Product Opportunity Identified and Assessed

** Training the Trainer

* Preliminary Consulting Service Planning

Consulting Service Project Planning

* Hybrid Training

** Consulting Methods

* Promotion & Sales

Consultant & Staff

Course Development

Development

Kits Development

Training

New Service Induction and Promotion Performance Review and Generalization for the New Service Note: “*” process step facilitated by “knowledge map” “**” process step facilitated by “knowledge community”

Figure 4 The full NSD processes in the case company before implementing the hybrid KM model

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Table 2 Pre-implementation KVA analysis

Analysis steps

Hybrid training course development

Core Process Consulting Promotion and Consultant methods and staff sales kits development development training

1 Level of difficulty for learning (hardest = 1, easiest = 4)

1

2

3

4

2 Relative learning time (Total = 5 months)

2.4

1.5

0.8

0.2

3 Number of staff

Total

10

12

10

8

4 Percentage of knowledge provision

35%

40%

55%

60%

40

5 Quantity of knowledge used within the information system by the

8.40

7.20

4.40

0.96

20.96

11.90

12.00

9.90

5.76

39.56

7 Distributed knowledge (%)

30.08%

30.33%

25.03%

15.56%

100%

8 Value generated from knowledge (the 1st yr. of Thousand NT$)

228.61

230.54

190.19

110.66

760

9 Annual expense of knowledge usage (Thousand NT$)

124

215

89

64

492

184%

107%

214%

173%

154%

products of steps 2, 3 and 4 6 Total usage of knowledge by adding products of steps 3 and 4 to step 5

10 Return on knowledge (ROK)

3.

4.

5.

Estimate the number of staff members participating in each core process. Include both part-time and full-time staffs. Assign the degree and extent for knowledge provision (i.e. 0–100%). In the case study, subject-matter experts (SMEs) were consulted to explain the amount of process knowledge associated with the current processes; thus, we were able to identify the actual extent of working knowledge embedded within each process. Calculate the total quantity of knowledge used. The amount of knowledge used within each process is equal to “relative learning time” (step 2) multiplied by number of staff (step 3), and the

6.

7.

percentage of knowledge provision (step 4). Obtain the total knowledge usage by adding the products of steps 3 and 4 to step 5. The purpose of this step is obtain the total figure of knowledge used in the whole NSD process, so the knowledge distribution among different core processes can then be determined in the next step. Obtain the distributed use of knowledge among these three processes in a percentage, and adopt this percentage to allocate monetary value of knowledge in step 8.

Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

8.

9.

Estimate the monetary value of knowledge for each core process. For this study, a focus group discussion on annual revenue and the percentage of knowledge use in step 7 were utilized to identify contributions to revenue from the use of knowledge. In this case of pre-implementation, about 760 k N.T. was assigned out of 4,250 k N.T. annual revenue generated by the associated new services. Derive the KM cost for each core process. To measure the costs consumed for generating process knowledge, a focus group discussion on relative annual expenses for collecting, storing, providing

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and using knowledge was used in this study. This step is completed by intensive coordination between SMEs and accounting staffs for the assignment and distribution of all expense vouchers. 10. Calculate the return on knowledge (ROK). This measurement identifies the return generated by the knowledge assets associated with each core process. Details of the calculations for the full NSD process before implementing the hybrid KM (Figure 4) are shown in Table 2. All four processes and their corresponding KVA attributes of the company are identified and compared.

Identify expert knowledge demanded by NSD project

Describe the expert problem- solving process flow Interview the expert for identifying applicable knowledge Derive the applicable knowledge in NSD problem resolutions

File all applicable worksheets & SOPs

Provide Q & A guidelines based on specific scenario for complicated problem-solving

Record video and audio using expert’s worksheets and SOPs

Reorganize the problem-solving process with respective knowledge files that facilitate a knowledge-rich, self- explanatory process

Illustrate such a computer-aided program of knowledge application processes to train the NSD staffs

Figure 5 Knowledge application processes for individual-implicit NSD knowledge

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4. Results and Discussion

1.

The resulted application of the proposed system model as shown in Figure 3 is presented in this section, followed by the results of the KVA analysis that was conducted after introducing the proposed KM application to the case study company. Finally, the findings from applying the hybrid model and comparing preand post-implementation KVA analyses are addressed.

4.1 Results of the KM Applications Results regarding the implementation of the proposed model for sharing NSD knowledge are presented below.

2.

As illustrated in Figure 5, an electronic knowledge application process was established to manage expert knowledge within the NSD processes. For example, an NSD manager’s exclusive and implicit knowledge on how to develop and conduct a hybrid-training course was fully recorded during a documentary process. As illustrated in Figure 6, an online knowledge forum was used to manage strategic knowledge within the organization. The best set of consulting methods in resolving clients’ problems was formed primarily from shared conclusions resulting from an online forum comprising consultants from each different domain.

Identify a need for resolving strategic problems with multidiscipline in NSD

Identify a need for resolving strategic problems with multi- discipline in NSD

Provide sample discussion and template format of discussion notes

Build up the members, objectives, and cyberspace for the forum

Develop the hierarchical structure of problem list with classes of problems to be resolved

Schedule online forums for motivation and coordination

Derive the essential knowledge for problem- solving Validate the application of knowledge in resolving NSD problems

Apply the collective knowledge in the retrievable database of NSD knowledge forums

Figure 6 Knowledge forums for collective-implicit NSD knowledge

Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

3.

As illustrated in Figure 7, an online newsgroup was used to manage continuously self-study knowledge generated from the work experiences of employees within the organization. Online

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cyberspace was provided for all employees to exchange knowledge and experiences in identifying and assessing new service opportunities.

Identify subjects of newsgroups to reflect company’s routine NSD process

Develop the news group classes based on departmental and subjective differences

Top-down assignment and bottom-up application to group all related NSD members into different news group

Initiate discussion and

Monitor online news

Encourage the sharing by

exchanges by announcing

discussion and

attaching personal sources

news in daily operation

elaboration

of knowledge

Motivate the knowledge sharing by benchmarking someone’s focal knowledge

Apply individual-explicit knowledge in the database of NSD newsgroups

Figure 7 Newsgroups for individual-explicit NSD knowledge 4.

As illustrated in Figure 8, an electronic system of knowledge asset management was established to manage the structured body of knowledge within the full NSD processes. Various corporate resources of NSD knowledge were categorized, and their

storage forms were indexed efficiently by a database system that included a knowledge distribution roadmap. This system was expanded to incorporate a keyword search system for employees to retrieve specific NSD information (knowledge).

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NSD knowledge assets to be indexed

Describe the hierarchical classifications for corporate-wide knowledge assets

Determine the index methods

Determine the repository formats

Determine the methods for knowledge inventory

Checking knowledge inventory to identify the whole list of knowledge assets Codify the complete index of corporate-wide knowledge assets Conduct periodical audit to validate the existence and the use of knowledge

Serve the use of NSD knowledge by searching key subjects or key words through the Index of knowledge assets

Figure 8 Knowledge asset management with knowledge search for collective-explicit NSD knowledge

4.2 Results of KM Process for NSD The resulting hybrid KM applications in full NSD processes are illustrated in Figure 9. Each non-core process is reinforced by a specific KM application. While the first three core processes are equipped with all four KM applications in the hybrid model, the fourth process does not apply any KM application. This designated arrangement is due to unjustifiable cost/benefit for the fourth process and the light of understanding what difference would result in later KVA analysis.

4.3 Results of Post-Implementation of the KVA Survey As shown in the post-implementation KVA analysis (Table 3), the total usage of knowledge for Hybrid Training Course Development is highest when ‘Sales and Promotion Kits’ is

much lower and the fourth process remains unchanged. For an easier comparison, the proposed hybrid KM model was applied to the first three processes. One year after implementation, the results of the KVA survey on a new NSD project, shown in the following table, revealed an increase in knowledge provision for the three processes, from 35%– 40%–55% to 65%–70%–65%. Based on the knowledge value of 980 k N.T. assigned out of 3,870 k N.T. annual revenue generated by the associated new services, the overall ROK rose from 154% to 281%. The first process contributed the most improvement on knowledge return, and the third process made little contribution. Moreover, the ROK of the fourth process even decreased due to its ROK, without the hybrid KM model being way below

Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

the overall improvement in the other three

Internal Initiations for Innovation

17

processes.

Customer Inquiries

New Body Knowledge

New Service Opportunity Identified and Assessed by Knowledge newsgroups

Training the Trainer by Knowledge asset management

Preliminary Consulting Service Planning by Knowledge forums

Consulting Service Project Planning by Knowledge newsgroups

Hybrid Training Course Development with all applications in the hybrid model

Consulting Methods Development with all applications in the hybrid model

Promotion & Sales Kits Development with all applications in the hybrid model

Consultant & Staff Training without any application in the hybrid model

New Service Induction and Promotion with Knowledge application processes and Knowledge newsgroups Performance Review and Generalization for the New Service

Figure 9 Result of KM process for NSD

4.4 Discussion Despite the existing theories, a practical application of a hybrid KM model has not been implemented. The KM applications with financial performance measurement presented in this study incorporate various KM theories and principles into a valid application system. The resulting application extends the research by Mas-Machuca and Costa (2012) as well as Du et al. (2011) by addressing the need to integrate KM into the business process and to choose a

proper technological infrastructure for KM for achieving financial benefits. The current research interest, which is limited to NSD knowledge within an organization, not only meets the prioritized goal of implementing KM in the case company, but also reflects the fact that most companies run into difficulties in the transfer of internal organizational knowledge (Andreu and Sieber 2005). As a result, the proposed KM model has been effective and efficient in managing significant amounts of

Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

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Table 3 Post-implementation KVA analysis Core Process Hybrid training Consulting

Analysis steps

course development

1 Level of difficulty for learning (hardest = 1, easiest = 4) 2 Relative learning time (Total = 5months) 3 Number of staff 4 Percentage of knowledge provision

methods development

Promotion and

Consultant

sales kits

and staff

development

training

1

2

3

4

2.4

1.5

0.8

0.2

Total

10

12

10

8

65%

70%

65%

60%

40

15.60

12.60

5.20

0.96

34.36

22.10

21.00

11.70

5.76

60.56

36.49%

34.68%

19.32%

9.51%

100%

357.6

339.86

189.33

93.21

980

86

125

74

64

349

416%

272%

256%

146%

281%

5 Quantity of knowledge used within information system by

adding

products of steps 2, 3 and 4 6 Total usage of knowledge by adding the products of steps 3 and 4 to step 5 7 Distributed knowledge (%) 8 Value generated from knowledge (the 1st yr. of Thousand NT$) 9 Annual expense of knowledge usage (Thousand NT$) 10 Return on knowledge (ROK)

knowledge within the subject company. The benefits of empirical KM application were validated further by preand post-implementation KVA surveys (Table 2 and Table 3). First, we observed a significantly increased percentage for knowledge provision for the first core processes of Hybrid Training Course Development because of the intensive implicit knowledge involved in the process. We noted that KM makes organizational implicit knowledge more transparent and accessible, generating the most knowledge provision and usage as well as excellent financial benefits. Second, the second core process of Consulting

Method Development with the highest knowledge provision provides good ROK improvement like the first process because the second process involves knowledgeable consultants who tend to have shorter learning time. Accordingly, when planning a KM project, the financial benefits should be forecasted by the number of staff members together with the learning time, i.e. more staff members and longer learning time in the KM process will generate greater financial benefit in proportion. Third, the process of Sales and Promotion Kits Development had higher knowledge provision before introducing the KM model; therefore, it

Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

generated less financial benefit. A good finding, empirically, from this observation is that for those processes, which already have good knowledge provision and usage, the proposed hybrid KM model could still improve the financial benefits by 142%. Lastly, the fourth process without adopting the proposed KM actually reduces its ROK, i.e. when other KM processes improve their financial benefits, the non-KM process will then reduce the cost/benefits in comparison. A good illustration to note is that, for any organization that does not apply KM, its advantage will be lost in the competition with those that do adopt KM.

5.

Conclusion Implications

and

Managerial

This research has focused on the integration of KM applications and principles within an organization, and the objective of helping the organization to gain knowledge assets during NSD operations. It has targeted intra-organizational knowledge, which has been categorized into explicit-collective, explicit-individual, implicit-collective and implicit-individual knowledge. It has employed a hybrid IT platform to accommodate various applications. The proposed model, which integrates newsgroups, knowledge forums, knowledge asset management and knowledge application processes, is capable of collecting and retrieving organizational NSD knowledge in different forms. Furthermore, it is able to achieve significant financial benefits via the measurement by KVA methods. There are some conclusions are summarized as follows. First, a hybrid automated KM platform could better suit the nature of organizational

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diversity. In addition to overcoming typical organizational barriers, such as employees’ unwillingness to share their knowledge, complicated documentation associated with collecting knowledge, etc., a hybrid KM model is also able to incorporate KM practices in business processes in an effective way. Nevertheless, the real financial benefits of KM could never be achieved or seen, unless the KM system is in line with a set of process planning and measurements. Therefore, a KM system consisting of various platforms, tools, applications, processes and measurements, as illustrated in this study, is highly recommended for an organization to achieve the financial benefits by KM. This study reveals that a hybrid KM model could effectively accommodate various IT applications, categorize organizational knowledge, and provide automation for collecting and retrieving knowledge during business processes for achieving financial benefit. Second, in achieving better and better financial results about organizational NSD investments, the illustrated plan and configuration of a KM project for NSD processes have significant impacts. According to the KVA survey in this study, many factors, including the subject learning time, the number of staff members involved in knowledge usage, the extent of knowledge provision, etc., could all contribute to the resulting financial benefits. Better alignment of those factors will achieve better financial benefits by KM for NSD. Third, the implicit-individual knowledge that exists within the organization is a key to leveraging organizational competitive advantages in today’s knowledge economy.

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Tsai: A Hybrid Model of Knowledge Management for New Service Development J Syst Sci Syst Eng

However, expert knowledge usually exists tacitly, posing a challenge to the promotion of KM. This research proposes a process-oriented multimedia platform that serves to store and manage tacit knowledge in a more explicit form, thus helping the organization to achieve the most significant financial benefits Fourth, these KM processes in line with business processes of NSD depicted in figure 4 to Figure 7 in specific and figure 8 in general provides insightful illustrations for guiding KM and NSD professionals for the implementation and management of hybrid KM model. They also serve for researchers with interests in KM and NSD by an empirical model for exploring better cost/benefit in applying KM through business processes of NSD, new product development and organizational innovation. Moreover, as KM assessment has been widely adopted for evaluating the sustainable organizational benefits, the validation methodology employed in this study shows that the financial assessment of KM performance could be better attained by employing SMEs in focus group discussions. The time and costs in collecting and assigning those financial data can be saved with better qualitative results, while trading-off some tolerable quantitative precision. Finally, the current research is limited to a single case study that represents the organizational NSD context of KM for consulting service providers in Taiwan, China. For implementation in the future, a larger scale of inter-company correlations should be addressed in subsequent studies. On the other hand, the proposed hybrid model proves that implicit-individual knowledge is of great interest

for those KM researchers, and some principles in aligning the proposed hybrid model in achieving better financial benefits by managing implicit-individual knowledge should be covered in future articles.

Acknowledgments Thanks to the JSSSE referees’ professional and instructive guidance that helped the author to greatly improve the manuscript.

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Benchmarking: An International Journal, 9(3): 217-243. [58]Yu, W.D., Chang, P.L., Yao, S.H. & Liu, S.J. (2009). KVAM: model for measuring knowledge management performance of engineering community of practice. Construction Management and Economics, 27(8): 733-747. [59]Zwikael, O. & Globerson, S. (2007). Quality management: a key process in the service industries. The Service Industries Journal, 27(8): 1007-1020. August Tsai holds a PhD degree in engineering management from University of Missouri-Rolla in Missouri, USA. He is a certified Lead Auditor for many ISO standards, and is currently registered Project Management Professional and Knowledge Management Professional. He has worked at the Chien Hsin University of Science and Technology in Taiwan, China, as an associate professor teaching e-commerce, project management and knowledge management. His main research interests include e-business, knowledge management and process-oriented system management. He was elected the president in the Association of Taiwanese Businesses for Internationalization and is currently the honorary president. In recent years, he has participated in many research projects funded by the academy jointly with the industry, and has published many significant papers in international conferences and some SSCI journals.