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This report discusses a number of knowledge management frameworks and techniques which are more relevant for CellTech's business and operations. We begin with analyzing the knowledge environment in CellTech case study over various stages of the organizational change and mapping that knowledge toward the KM models and frameworks to understand the practical use of the techniques in real time.
The famous techniques or frameworks which are discussed in this report are "Exploration and exploitation", cultural web, SECI, Garvin's 5 block of learning organization, I-Space and emotional intelligence. Using these techniques or frameworks we will understand the potential contribution and importance of knowledge management in organizational growth.
Finally the review will evaluate the possible issues surrounding the creation and transfer of knowledge in CellTech's knowledge management policy.
Understanding of CellTech case study
CellTech, Europe's one of the oldest biotechnology organization into Biologics and Therapeutics development of drugs. The firm had different management approaches from 1980 - 1996 with its conversional business of contract manufacturing and biologics research in creation of innovative drugs and then toward the collaboration with leading large pharmaceutical companies. From the understanding of the case study I classified the CellTech's era to three periods,
Two areas of business, contract manufacturing and in-research. Contract manufacturing was the prime revenue generating business and the costs involved in researches were covered by the contract manufacturing.
More number of employees were working on biologics research and contract manufacturing
Therapeutics research was done in-house and Biologics was with contractors.
Shareholders were not happy with CellTech's revenue and cash burn for 2 years seems to be an overall concern.
New CEO was appointed to bring new ideas to change CellTech's progress (Dr. Peter Fellner).
Wanted to focus on new drugs development and saw the potential of innovative drugs manufacturing (Therapeutic).
Flat organization structure was created and business was divided into two divisions (Biologic and therapeutic), and Fellner's vision to expand therapeutic division R&D.
Interdisciplinary teams were formed in research to build new capabilities among scientists.
Market penetration through Bayer's collaboration and gain marketing knowledge.
To change the cash burn situation through Bayer's collaboration Milestone payment.
New skills on therapeutics were required so scientists were recruited to replace the "clubs of old".
Biologics division of the company was sold since profit margin was going down.
Change in focus to develop new innovative drugs to advance the human health.
CellTech created strong partnership with world leading pharmaceutical companies for the therapeutic drugs discovery and development.
Senior management gained experience in both pharmaceutical and biotechnology sector.
To monitor the progress on various functions, different review systems were setup.
By the end of 1996, CellTech had a good market position in UK biotech sector.
Balancing between Exploitation and Exploration - CellTech
Exploitation is defined as the use of already existing things like existing product information, organization structure. In other words, it's the firm's core competencies. Exploration means pursuit of new things which may come to be known, otherwise exploring opportunities for building something new (Levinthal and March, 1993).
Exploitation and exploration mainly focus and revolve on the Core competency of the organization i.e. exploitation is the use of currently known core competency and exploration is to pursue new core competency. Core competency is the ability by which organization deploy resources for their activities and process to get competitive advantage over others so that it can't be imitated or obtained.
According to Cohen and Levinthal (1990), for the success, a firm has to maintain balance between exploitation and exploration and March (1991) believe that the primary factor for survival and success in the long run would be a balance between these two.
In the case of CellTech, they wanted to move out of cash burn to become a financially successful organization through exploration such as collaboration. CellTech's core competency during 1980's was contract manufacturing and they developed world class antibodies with contract companies. This can be viewed as Levinthal and March's (1993) exploitation "the use of development of things already known".
Exploration Dilemma The organization wanted a management change to bring new thoughts and culture through the appointment of Dr. Fellner as CEO. When Fellner came into the organization, he brought new ideas to change the current organization style. Following are the some changes came through the new CEO and this supports the view of Levinthal and March's (1993) exploration,
Restructuring the organization with more flat structure (two divisions Biologics and Therapeutics - to have control and monitoring).
More investment on Therapeutics for new drugs development and efforts to bring more interdisciplinary team approach to build multi-skilled scientist.
Recruitment of new scientists in Therapeutic to bring new skills on the drug development.
Collaboration with Bayer on the clinical trials.
The first balancing factor was when Dr.Fellner saw more business opportunities in therapeutic Research and Development, he divided the organization with existing competency (Biologics, exploitation) and new competency (Therapeutics, exploration). In the initial stage, therapeutic business was like a cost centre, more depending on the revenue from contract manufacturing and later emerged as profit centre. New employees were recruited on therapeutic side while "club of old" from biologics moved out.
In the late 1990's when the Therapeutic side was doing well with more clinical trials on pipe line and new collaborations with market leading Biologic companies seemed to be the second balancing factor. CellTech's initial collaboration with Bayer helped them to establish better relationship with each other later. The Bayer collaboration actually bailed them out from cash burn and to invest on therapeutic research.
According to March (1991), balancing factor between exploitation and exploration is difficult and complicated, learning can contribute to imbalance. Levinthal and March (1991) believes competency trap will be the outcome of inappropriate learning i.e. excess exploitation or exploration can lead to imbalance. I do agree that imbalance can rise but in this case study the application toward balancing the horses (Exploitation and Exploration) were well managed by forming interdisciplinary team, flat organizational structure with steady increase in employees in therapeutic research and utilizing the lessons learned from Bayer collaboration to other collaborations.
Culture - Knowledge Sharing in Organization
Culture can be described as how things are done and it is the combination of values, behavior, belief and paradigm (taken for granted assumptions). Organizational culture is the values and beliefs which form an integral part of organization - what is chosen to see and absorb (Davenport and Prusak 2000). It includes opinion on the shared reality, regarding how things are acting now and how it should be in future. In a growing organization, knowledge and knowledge sharing are the inseparable culture. Following are three levels of culture which exist in an organization (Schein 1992),
Artifacts mean the visible elements in the organization such as processes, organization structure, and fixed assets. These elements are understandable only inside the organization and from the outside it not understandable why things are done in such ways.
Espoused values are beneath the artifacts to support the organization's functions such as strategies and goals. These values are created by the leaders or the management in the organization. If these values are not framed correctly then the management is in big trouble.
Assumptions are the actual core value of the culture which largely present at unconscious level of the organization's human resource like thought and feelings.
Davenport and Prusak (2000) believes that knowledge sharing culture plays an important role to enable the transfer and creation of knowledge within the organization. In order to make knowledge management as practice, the employees of the organization much cooperate to share their knowledge with others (Interdisciplinary learning). The leader of the organization also should understand the culture from the overall organization and community level to share knowledge.
New CEO's approach towards organizational culture change
The first change Dr. Fellner brought to the organization is to separate the company into two divisions and to bring more focus on the therapeutic in-house research. Then he changed the organization to a flat structure with more focus towards new drug development. Interdisciplinary teams focus on cross sectional learning within the organization to develop multi skilled scientists. The collaboration with Bayer was the major milestone for CellTech from the financial side but when we see from the knowledge perspective it was the clinical trial phase II knowledge transmission to Bayer.
Mapping to Cultural Web
Johnson and Scholes (2002) explains cultural web as the indentifying factor to describe various factors influencing organizational cultural both for current and future. The below figure 1 shows the culture web mapping towards CellTech (after Dr. Fellner's change),
Figure 1: Cultural Web
Paradigm: The assumptions set by the organization on the whole for the long run.
Rituals and Routines: These represent "the way the things are do around here". The ways that organization's members behave with each other.
Stories and myths: The different stakeholders of the organization pass on common beliefs of the past events and reinforce the people's behavior by telling the importance of the organization.
Symbols: The elements of the organization, including titles, language and dress codes.
Control Systems: The various reviews set by the organization to measure the outcome of policies and to reward people based on the performance.
Organizational Structures: It is the formal structure of the firm, how the chain of command flows from the top to bottom.
Power structures: It is the key element that tells about how the power is distributed in the organization. The paradigm is more decided by the people or the group which has more power.
The knowledge sharing for CellTech is considered more important since the company's focus is not only on the drug development but also on the collaboration. For instance, we take the Bayer initial collaboration where CellTech was responsible for developing the drug up to phase II and then pass it on to Bayer for further development. Here passing it to Bayer means a huge amount of knowledge in terms of test results and the experiences of the scientists at various stages which are documented and shared. As mentioned by Dr.Bloxham "lessons were learned which were applied to the late, post 1992 collaboration", here knowledge is not only shared but being gained.
CellTech not only wanted to share knowledge with other competitor as collaborator but also wanted its own scientists to share knowledge by having an interdisciplinary team approach in the drug development team. Building Biochemist would be a good example of CellTech's initiative on the interdisciplinary skill development on its scientists.
According to Knight and Howes (2003), there are behaviors which are heavily inbuilt in each and every workplace to restrict the effectiveness of the knowledge sharing. To initiate knowledge management it is important to know which of the behaviors can and cannot be changed and Cultural Web model categorize the influencing factors on the people's behavior.
Knight and Howes (2003), believes cultural web can be used as an auditing tool to analyze "what is currently valued in the organization" and to define how best the future culture is required for the organization. To keep competitive advantage in the market to changing circumstances, culture and structures have to be altered by increasing efficiency and effectiveness (Bali, Wickramasinghe, Lehaney (2009). The cultural changes are required when a new strategy is to be implemented and in this changing world it's going to be a cyclic process.
Knowledge generation and transfer - SECI
Social interaction is the means by which the Knowledge generation and transfer happens and it is the generation and transfer of tacit and explicit knowledge between individual and group. Nonaka and Takeuchi (1995) come up with a model called SECI to understand process involved in the nature of knowledge creation and effective management of knowledge in the dynamic environment. The idea of the model to highlight importance of the knowledge possessed by individual is shared with other individual or group.
Explicit Knowledge - CellTech
Explicit knowledge is the knowledge which can be expressed in a systematic formal language and shared in form of specifications, policies and form of data. The knowledge here is captured and documented in a physical form and it is very direct to understand and easy source to be obtained through papers (Nonaka and Takeuchi, 1995). ). From CellTech case study we can see explicit knowledge right from the begin and following are some of them,
Financial status of CellTech especially the cash burn was known by everyone in the organization and should have been known by the balance sheet report.
Restructuring the organization to a flat structure
Contract manufacturing for research and development - redefining the focus of the company by new CEO
The trail phases handed over to collaboration companies - here the CellTech transfers the intellectual knowledge to other company to further development and it should have been done with more documentation and knowledge transfer sessions.
All the review systems setup to monitor the progress of the organization
Tacit knowledge - CellTech
Tacit knowledge is the knowledge which is very hard to formalize or document and it is more deeply rooted on the action and emotion. The most part of the tacit knowledge is acquired by previous experiences and are more internal and this knowledge can be transferred in a verbal formal to another (Nonaka and Takeuchi, 1995). From CellTech case study we can see tacit knowledge right from the begin and following are some of them,
Scientists gaining knowledge in biologic and therapeutic research
Interdisciplinary learning among scientists in therapeutic research
The skills of the new employees in therapeutic research
The lessons learnt from Bayer collaboration for the management to explore more collaboration later with other pharmaceutical companies
According to Nonaka and Takeuchi (1995), creation of knowledge is a spiral process involving explicit and tacit knowledge interactions and this will lead to new knowledge creation. The explicit and tacit knowledge combination in SECI model is been conceptualized into four stages and the figure 2 shows the four stages,
Figure 2: SECI Knowledge Spiral
Socialization in SECI believes that the knowledge creation begins with the tacit acquisition of knowledge by people i.e. from people who know to people who don't know (Nonaka and Takeuchi, 1995: 62-4). From CellTech point of view, it can be the new skills from the new scientists to the "clubs of old" and from the "clubs of old" the organizational process like research and development focus can be shared to the new employees. CellTech also created opportunity for the employee to socialize by having breakout area near the drug development labs.
Externalization is the second stage in knowledge conversion where tacit knowledge is converted to explicit. Here individual tacit knowledge comes out and become explicit group knowledge (Nonaka and Takeuchi, 1995: 66). From the CellTech point of view, the interdisciplinary learning will give opportunity to the team to learn the skills which they don't possess like chemist helping biologist team.
Combination is the next stage where the knowledge is systematized and it happens when group of people synthesis various explicit source of knowledge into plans, documents or reports (Nonaka and Takeuchi, 1995: 67). From the CellTech point of view, all the review systems setup to monitor all the functions of the organization will be the systemizing process for the knowledge management.
Internalization is the fourth stage in SECI and it is described as a process of personifying the explicit knowledge to tacit knowledge. Internalization can also be mentioned as learning explicit knowledge and doing things through tacit knowledge (Nonaka and Takeuchi, 1995: 69). In CellTech case study, we can see internalization when clinical trials move from one phase to another the scientists pass on their experiences in drugs development. CellTech used Bayer collaboration experiences to make more successful collaborations, hence Bayer collaboration was also considered as internalization.
The knowledge conversion is considered as a social process where the knowledge is amplified and crystallized from an individual to a group at different organizational levels as part of the organization knowledge network (Nonaka and Takeuchi, 1995: 73). This model assists the organization to manage the knowledge creation at various levels. The understanding of tacit and explicit knowledge in an organization is important before considering the knowledge capturing and creation. Good understanding of both will help to identify what part of knowledge is important and to be shared. The controlled way of managing knowledge will help the organization to achieve the strategic goals easily. Coming to CellTech like organization where there is plenty of tacit knowledge, the knowledge has to be formalized to a process to make it explicit. Hereby, making it explicit help the organization to develop and create awareness of the knowledge i.e. clinical drug development experience of an individual in a team can be formally documented and circulated to other teams, so everyone will be aware of the particular situation or incident.
Learning Organization - Garvin's 5 Blocks
As commonly said, to be ahead of competition, organization constantly must enhance the way the business is done. To enhance the business, organization must learn things much faster than their competitors. But more such enhancements in business fail because many mangers do not realize the importance of learning (Garvin, 1993).
Garvin (1993) say if an organization wants to become a learning organization then it is recommended to master these five activities,
Systematic problem solving - Don't solve problem on gut instinct but rather use data.
Experimentation with new approaches - Bring small experiments to existing process and gain knowledge.
Learning from their own experience and past history - Review and use of lessons learnt from the past
Learning from the experiences and best practices of others - Use of knowledge from the macro environment like competitor.
Transferring knowledge effectively throughout the organization - Initiating interdisciplinary and cross disciplinary learning environment to exchange and share knowledge.
Social Learning - I Space
I-Space is a social learning conceptual model that relates to data structuring to data sharing within the organization (Boisot, 1995). This framework helps to analysis the dynamic flow of knowledge in two aspects i.e. structure and sharing of information, more you structure information more faster and extensively used. I-Space is otherwise represented as three dimensional model (figure 3) - codification, abstraction and diffusion. Structuring of information will be presented by the codification and abstraction dimension and sharing of information will be presented by diffusion dimension (Boisot, 1995).
Dalkir (2007) feels Boisot model is the integration of theoretical foundation of social learning and provides the link between information and knowledge management in a best way. He also suggests through this I-Space social cycle, organization can manage their knowledge assets well when compared to other KM models.
Figure 3: The Social Learning Cycle [Boisot 1998:60]
Emotional Intelligence and Knowledge Transfer
Emotional intelligence is being well aware of own feelings and of others in an organization, and managing emotions well within our self and in other's relationship (Mortiboys, 2005:7). According to McKenna (2006) it is more concerned with emotional action and social skill of individual.
Nonaka (1994) believes the success and failure of knowledge management in an organization depends on how the individual employee creates and transfer knowledge with others, so the employee is the ultimate responsible person deciding the success. Higgs and Dulewicz (2002) discusses about seven elements like self awareness, emotional motivation and management, managing relationship with others will help individual more intelligent on any situation and also contribute towards team working.
Knowledge Management potential issues and overcome - CellTech
Excess of exploitation or exploration - competency trap
During the 1980's CellTech was more comfortable in doing contract manufacturing and this period refers to Exploitation. When new CEO shifted the focus of the company to product development through R&D collaboration and this period can be referred as exploration. So as of the case study CellTech seems to have managed a balance between exploitation and exploration but considering the period of 10 years in contract manufacturing with very little focus on exploration gives a picture that CellTech prefers to stay on the comfort zone with exploitation. When CellTech got into the cash burn and lost the support of share holders, then only the organization realized to do something different from the usual.
According to March (1991), in the long run organization which prefers to stay either on exploitation or exploration will be lead into competency trap where the organization will have inappropriate learning. To avoid competency trap, CellTech should constantly create core competencies in its business to stay ahead of the competition and since core competencies are the ones which are not easily copied by other competitor.
During the organizational change, culture regularly becomes the focus of attention. Culture has vast impact on output and working environment of an organization (Boonstra, 2004). In the CellTech case study when the organizational change was going on after the appointment of new CEO, organizational cultural elements were not considered for the change but instead top management were pushed to talk short term improvement decision to change current situations.
Davenport and Prusak (2000) believes the leader of the organization should understand the culture from the overall organization and community level to share knowledge. The change management will bring changes in the working culture of the individual and can impact the social learning cycle. Johnson and Scholes (2002) believe cultural web will help the organization to identify the cultural impact using the paradigm. CellTech should definitely use Culture web when going for any change management to audit the current cultural element and define the future culture based on the paradigm. This will help to re-mould value and behavior of the individuals and make them to feel better place to work and share knowledge.
Classification of Knowledge
Goh (2002) says Effectiveness of knowledge transfer depends on Type of knowledge that is being shared so CellTech should always recognize the different types of knowledge available and created in the organization i.e. the tacit and explicit knowledge. CellTech should use SECI model to develop supportive structure that encourage the transfer of knowledge between tacit and explicit. This framework will help CellTech to bring the tacit individual knowledge out to the group and finally make other individual to internalize it. Since the focus of CellTech is in R&D, there will be more tacit knowledge created at the end of each new development like personal experience of certain drug symptoms during the research.
Relationship between source and recipient
For the knowledge transfer to be effective the recipient and source should be in an intention to share and receive knowledge. If the recipient lacks interest to absorb and retain the knowledge then it becomes a barrier to the knowledge transfer (Szulanski, 1996). The "Clubs of old" versus new scientist would be the best instance to take from CellTech, creating emotion intelligence among individuals and teams to make them aware of organization value of sharing and transferring knowledge. By increasing the value through emotional intelligence, awareness will be created at subconscious level to drive everyone for knowledge sharing without drawing any boundaries i.e., creating breakout areas near labs will help people to socialize only to a certain extent but using emotional intelligence to create awareness will motivate them to create opportunities by themselves. This would contribute to share tacit to tacit knowledge transfer in CellTech.
From CellTech we can see the knowledge evolution and existence during different growth stages and it draws the organization to manage the knowledge effectively. At the end of the case study, it is clear that CellTech wanted to learn and monitor the organization by setting-up various review systems. This working document also has reviewed few potential issues in implementing knowledge management policy and the workaround solution to overcome them. Frameworks usages also have been suggested to understand the knowledge cycle.
Gavin's (2002) say that "Learning organizations are not build overnight" and it has to be cultivated, processed steadily over time. In this report, we have discussed various models and frameworks as part of knowledge management which can bring CellTech a great advantage in managing its business and stay competitive in the market. To form a learning organization it is highly reliant on exchange of experience and knowledge with others. As a result, implementation of knowledge management will lead to increase in competitiveness.