Knowledge Management Plan for Ford Motor Company - Case Study Example

 Knowledge Management Plan, for Ford Motor Company Executive Summary The knowledge management system of Ford Motors Company has been carefully reviewed. The following weaknesses have been identified: a) the criteria used for the allocation of tasks to employees are not clearly defined; b) employees are not given the necessary training; in fact, in the firm’s existing HR polices – as described in the corporate website – there is no reference to training programs aiming to prepare the employees for each specific organizational department, c) the firm’s existing infrastructure is not regularly updated- a problem that needs to be addressed through an appropriately customized strategic framework. The research on the firm’s reports has led to the assumption that the firm’s existing knowledge management system needs to be updated. The CommonKADS Methodology (a scheme proposed by Martins et al. (2003) is used – appropriately customized - in order to support the growth of the firm’s performance. Through the suggested system – as described analytically below – a series of benefits will be achieved: a) increase of firm’s competitiveness in its industry, b) improvement of communication and cooperation in the internal organization environment, c) stabilization of the firm’s growth – referring to the potential of the firm to face the market turbulences. The implementation of the suggested knowledge management plan in the particular organization has revealed a series of organizational weaknesses - a fact that could threaten the performance of the plan; however, the plan’s policies have been appropriately customized in order to face the relevant challenges. The existence of a mechanism that will closely monitor the progress of a plan helps to eliminate the risks regarding the specific initiative. 1. Introduction Current study focuses on the presentation and the explanation of a knowledge management plan that could help Ford Motors Company to increase its competitiveness. The various phases of this plan are critically analyzed by referring to the company’s characteristics and needs. At the same time existing knowledge management system is evaluated – at the level that it can be used simultaneously with the suggested knowledge management plan. The period of the suggested project has been set to 3 years; however, it could be extended if necessary – after careful examination of the potential implications of such initiative. Ford Motor Company is a global competitor in the automotive industry. The position of the firm towards its competitors can be characterized as satisfactory (see Table 1, Appendix); however, it could be further improved, even in the long term. The weaknesses of the firm’s existing knowledge management system are responsible for the low performance of the firm – compared to its rivals. The suggested knowledge management plan will help towards the increase of the firm’s position within the global automotive industry. However, it will be necessary for certain requirements to be met – as described analytically below. The major advantage of the suggested knowledge management plan is the fact that it is quite flexible; changes can be made on the plan’s policies under the terms that the relevant points are carefully reviewed; moreover, it is necessary that the changes made on the plan’s existing policies do not lead to the alteration of the plan’s priorities. 2. Knowledge Management – description and characteristics Knowledge management is a term used in order to describe a series of actions related to the knowledge available across the organization. In this context, knowledge management includes: the acquisition, the transfer and the process of data. Knowledge, as an element of knowledge management, is further categorized to tacit and explicit. Tacit knowledge refers to the knowledge acquired through a series of specific activities, including the research on the literature, the communication – through the phone or the Internet and so on. In the above context, the transfer of tacit knowledge is likely to be physical, i.e. verbal (Jennex, 2005, p.97). Tacit knowledge is an indispensable part of organizational activities. Any knowledge management plan, the implementation of which is attempted within a particular organization, needs to include methods for the acquisition, sharing and processing of tacit knowledge. On the other hand, explicit knowledge is characterized as ‘formal and systematic’ (Drucker, 1998, p.27). Joia (2003) uses different criteria regarding the categorization of knowledge management. In accordance with the above researcher, knowledge management can be divided into two major categories: the macro-scale knowledge management – used for expressing the flow of knowledge across the entire organization and the micro-scale knowledge management – used for describing the knowledge required in specific organizational departments (Joia, 2003, p.91). The methods used by each organization for the management of tacit and explicit knowledge may be differentiated; however, they need to address key aspects of knowledge management, as explained above. The importance of knowledge management for modern organizations is also highlighted in the study of Hawamdeh (2008, p.86); in the above study, it is explained that knowledge management is the only tool for developing a firm’s competitiveness towards its rivals. It should be noted that knowledge is not used only for developing organizational performance; it can be also used for addressing specific organizational issues. Yamaguchi (2008, p.1) refers to the use of knowledge for resolving crucial organizational problems. It is assumed though that the knowledge used in the context of the above task needs to be appropriately processed ensuring that the solution provided will be aligned with the business goals and objectives. The use of knowledge management by modern organizations has a series of benefits: the increase of the organizational efficiency – due to the increase of the knowledge available to employees of all levels – is the most common benefit of knowledge management. Another common advantage of knowledge management is the provision to the organization of the potential to increase its customer base: the specific issue is highlighted in the study of Stapleton (1003, p.197) where it is made clear that through an innovative knowledge management plan, a firm can expect to attract new customers who will find the firm more well prepared in order to respond to their demands. In other words, a carefully customized and monitored knowledge management plan can become a factor for significant organizational growth. Mertins et al. (2003) emphasized on the importance of knowledge management for the development of business activity. In accordance with the above researchers, knowledge management should be an indispensable part of Business Process Re-engineering (BPR), i.e. the methodology used for organizing and monitoring the business processes, information and resources (Mertins et al., 2003, p.18). 3. Knowledge Management in practice – implementation of Knowledge Management plans Each project that refers to the knowledge management within the organization needs to provide methods for all aspects of the specific activity, including knowledge acquisition, knowledge sharing and knowledge improvement – in cases that the knowledge acquired through a source mentioned in the relevant plan is expected to need processing (Jennex, 2005, p.97). This is usually the case in information acquired through online transactions, for instance the address or the phone number of customers, which may needs to be checked using a common method of verification. In accordance with Harrington et al (2006) in order for the implementation of knowledge management strategies to be successful within modern organizations efforts need to be made so that a ‘knowledge-spiral’ (Harrington et al., 2006, p.7) is created. The term ‘knowledge – spiral’ describes a process of planning a knowledge management strategy and then expanding this knowledge management strategy in order to cover all organizational activities. Regarding the effectiveness of knowledge management plans it is noted by Frid (2000, p.159) that this is not guaranteed. More specifically, the fact that the appropriate knowledge management plan has been identified cannot lead to the assumption that this plan will be successful. It is necessary to retrieve the policies that are important for the achievement of corporate goals – as these are described in the firm’s mission statement. Then, a viable knowledge management plan can be suggested. Roy (2001) characterizes the top-design knowledge management plan as more effective – being able to meet gradually all organizational needs. Moreover, the specific plan has the following advantage: each phase of the plan is distinguished and can be easier monitored. For this reason, such design has been chosen for the knowledge management plan suggested for Ford Motor Company. 4. Knowledge Management Plan for Ford Motor Company 4.1 Criteria The knowledge management plan developed for Ford Motor Company is based on specific criteria. These criteria have been set in order to ensure the feasibility of the plan but also its success – either in the short or the long term. Under these terms, the knowledge management plan suggested for Ford Motor Company will meet the following requirements: a. It will be aligned with the firm’s existing resources. This means that 4.2 Phases of implementation The implementation of the knowledge management plan (KMP) in the particular organization has to be developed gradually. The phases of the implementation are analytically described below. The successful completion of each phase – meaning its completion within the time and in the way suggested in the KMP – is a necessary prerequisite in order for the next phase to begin. Otherwise, alterations will be made on KMP – extension of time or increase of budget accordingly – trying to keep the project within the borders described in the previous section. The knowledge management plan suggested for Ford Motors Company is based on the CommonKADS Methodology, an approach through which the firm’s processes will be organized in such way that knowledge is appropriately transmitted across the organization. In the context of the above methodology, the following activities have to be developed within the organization: a) locate the organization’s needs, b) design an appropriate strategy, c) develop existing resources and policies, d) distribute the tasks among the participants/ employees (Bahra, 2001, p.217), e) support the plan, f) monitor the plan’s performance, g) reject all tasks that are proved inefficient regarding the targets set (Mertins et al., 2003, p.19). In accordance with the above, the implementation of the suggested KMP in Ford Motors Company requires the following activities: a. The firm’s environment will be evaluated b. The needs of the firm – in financial and non-financial terms – will be identified c. The resources available for the realization of the relevant plans will be located and evaluated; at this point, the update of the firm’s infrastructure may be ordered in case that existing infrastructure is not considered as appropriate for supporting the plan attempted d. The firm’s employees will be informed on the initiative undertaken e. The plan will be designed; emphasis will be given on the appropriate allocation/ distribution of tasks among the employees. Effort will be made so that each task is delegated to an employee who is appropriate skilled f. The implementation of each phase of the plan will start; the successful completion of each phase is the prerequisite for the beginning of the next phase; at this time point a series of activities will be developed – as presented in the diagram below. g. A mechanism shall be established for the monitoring of the plan’s phases; in the context of this mechanism a management team will be created – having as exclusive role the monitoring of the plan’s development. A report will be periodically submitted to the firm’s CEO regarding the progress of the plan. h. The duration of the plan has been set to 3 years; at the end of each year, the progress of the plan will be evaluated. The firm’s CEO may decide to order the cancellation of the plan – in case that its performance is lower than expected. Knowledge management plan for Ford Motors Company – based on commonKADS Methodology Examination/ evaluation of the firm’s resources/ needs/ environment Provision of necessary information To the firm’s employees Update of the firm’s Infrastructure/ tuning of the firm’s IT systems/ implementation of Knowledge-management software Introduction of training Programs for employees/ training on knowledge management system Align the firm’s overall Strategies with the KM plan Distribution of Tasks among employees Delegate the support of the plan to a group of appropriately skilled individuals Establish a mechanism For the monitoring of the plan 4.3 Time-schedule The duration of the project has been set to 3 years. At the end of each year, the progress of the project will be reviewed and evaluated - in order for its continuation to be decided. 6 months 6 months 6 months 6 months 6 months 6 months Examination/ evaluation of the firm’s resources/ needs/ environment Provision of necessary information to the firm’s employees Update of the firm’s Infrastructure Establishment of training programs Align the firm’s overall programs with the KM plan’s provisions Distribution of tasks among employees Delegate the support of the plan to a group of appropriately skilled individuals Establish a mechanism for the monitoring of the plan 4.4 Budget analysis The cost of the suggested KM plan has been estimated using current prices of services/products necessary for the realization of the specific project is described analytically below: a fix amount of 56,500$ is required for the plan’s implementation. An additional cost of 116,000$ will be required for the compensation of the staff engaged in the project. Knowledge management plan for Ford Motors Company – based on commonKADS Methodology – Budget Analysis – 3 years - plan Examination/ evaluation of the 5,000$ firm’s resources/ needs/ environment Provision of necessary information 2,000$ to the firm’s employees Update of the firm’s Infrastructure/ tuning of the firm’s IT systems/ implementation of 40,000$ Knowledge-management software Introduction of training Programs for employees/ training on knowledge management system Align the firm’s overall 8,000$ Strategies with the KM plan Distribution of 1,500$ Tasks among employees Delegate the support of the plan to a group of 80,000$ appropriately skilled annually individuals Establish a mechanism 36,000$ For the monitoring of the plan annually 4.5 Measurement of performance The performance of the suggested knowledge management plan will be tested using a series of criteria, also entitled as ‘critical success factors; these factors will be used for measuring the performance of the knowledge management plan within the time framework defined in the specific plan. The critical success factors used in the evaluation of the plan’s performance are the following ones: a) structure of the plan, b) progress of its processes, c) response of participants/ employees, d) response of the customers, e) effects of the plan on organizational performance, f) resources engaged in the plan’s realization and g) knowledge acquired through the application of the plan for the time period defined/ period of plan’s duration (as these factors have been aligned with the suggestions made by Mertins et al., 2003, p.19). 5. Conclusion The development and the implementation of the knowledge management plan for Ford Motor Company revealed a series of important facts: a) the firm’s existing knowledge management plan is not adequate in order to support the potential increase of the firm’s profits; the above fact was made clear through the examination of the firm’s current knowledge management policies. It is probably for this reason that the performance of the firm compared to its rivals is rather low. Of course, for current business processes, the existing KM plan may be efficient – as assumed by the fact that the firm’s performance is standardized through the years. However, if there would be need for improving the firm’s position towards its competitors, then the update of the existing KM plan would be necessary. The suggested KM scheme would be an appropriate solution, both regarding its duration and regarding its cost, b) The response of employees to the suggested KM plan cannot be clearly identified in advance. In accordance with the reports published by the firm on its KM plans, employees support the organizational policies on knowledge management but their participation in these plans is not clearly described. On the other hand, the suggested KM plan requires the active participation of employees – meaning their willingness to support the proposed plan. In this context, the progress of the suggested KMP could face delays if appropriate measures are not taken in advance for getting the consent of employees in the suggested initiatives. In fact, the beginning of the relevant processes without having acquired the consent of employees could set the whole project in risk, c) The suggested KM plan could not be developed for a longer period of time. The reason is that existing organizational resources are not adequate in order to support such effort. For this reason, the update of the firm’s infrastructure is proposed through the suggested plan. In this way, not only the chances for success of the specific plan will be increased but also future initiatives of similar nature could be supported. The firm’s existing infrastructure can respond to the current organizational needs. The growth of the firm’s profitability cannot be achieved without investing on the improvement/ update or even the replacement (as judged by those involved in the implementation of the plan) of the firm’s existing infrastructure. In any case, the amount invested would not be lost; it could support similar projects in the future – even if the specific plan would not be completed, d) the success of the suggested KM plan is highly depended on the firm’s overall strategies. In other words, it is necessary that the firm’s managers align the current strategic policies with the strategies included in the suggested KM plan. Otherwise, the chances for the success of the specific plan are minimized. In fact, the suggested KM plan needs to be adopted by the firm’s strategic framework so that the initiatives developed across the organization to be integrated, e) the performance of the suggested KM plan may not be identified in the short term. Ford Motor Company is a multinational firm. This means that its activities are developed simultaneously in different countries worldwide. In this context, the implementation and especially the monitoring of the suggested KM plan has to face the following problem: the branches of the organization worldwide may not be able to respond at the same level to the plan’s needs. In other words, the success of the suggested KM plan requires a high level of cooperation among employees in different branches – being considered partially as external organizational environment if considering the distance factor. In the internal organizational environment also, proactive cooperation would be required for the success of the suggested plan. 6. Issues for further consideration The suggested plan has been planned for a period of 3 years. Moreover, it has been estimated to have a certain cost – as analyzed above. However, the level of payback of the investment made cannot be precisely estimated. On the other hand, the success of the suggested plans is depended on a series of factors – as explained above. Despite the problems mentioned above, the chances for the appearance of failures (during the development of the project) can be eliminated. This requires that the activities included in each phase of the plan are carefully developed and monitored. From another point of view, the success of the suggested plan could verify the firm’s ability to react effectively to the market’s challenges – showing its potential to alternate its policies in accordance with the market trends. References Bahra, N. (2001) Competitive Knowledge Management. Hampshire, UK: Palgrave Macmillan Coakes, E. (2003) Knowledge management: current issues and challenges. London: Idea Group Despres, C., Chauvel, D. (2000) Knowledge horizons: the present and the promise of knowledge management. Newton: Butterworth-Heinemann Drucker, P. (1998) Harvard business review on knowledge management. Harvard College: Harvard Business Press Frid, R. (2000) Infrastructure for Knowledge Management. Lincoln: iUniverse Harrington, J., Voehl, F. (2006) Knowledge management excellence: the art of excelling in knowledge management. Cico, US: Paton Professional Hawamdeh, S. (2008) Knowledge management: competencies and professionalism. London: World Scientific Jennex, M. (2005). Case studies in knowledge management. London: Idea Group Joia, L. (2003) IT-based management: challenges and solutions. London: Idea Group Inc Mertins, K., Heisig, P., Vorbeck, J. (2003) Knowledge management: concepts and best practices. London: Springer Myers, P. (1996) Knowledge management and organizational design. Newton: Butterworth-Heinemann Schwalbe, K. (2009) Information Technology Project Management. Boston: Cengage Learning Reimer, U., Karagiannis, D. (2006) Practical aspects of knowledge management: 6th international conference, PAKM 2006, Vienna, Austria, November 30 - December 1, 2006; proceedings. London: Springer Roy, R. (2001) Industrial knowledge management: a micro-level approach. London: Springer Ruggles, R. (1997) Knowledge management tools. Resources for the knowledge-based economy. Newton: Butterworth-Heinemann OECD (2003) Measuring knowledge management in the business sector: first steps Knowledge management. OECD Publishing Stapleton, J. (2003) Executive's guide to knowledge management: the last competitive advantage. New Jersey: John Wiley and Sons Yamaguchi, T. (2008) Practical Aspects of Knowledge Management: 7th International Conference, PAKM 2008, Yokohama, Japan, November 22-23, 2008, Proceedings. Berlin: Springer Online Sources Ford Motor Company, 2010, available from http://corporate.ford.com/ Appendix Company Symbol Price Change Market Cap P/E General Motors Corporation GM 33.80 0.00% 50.70B 142.62 Daimler AG Private - View Profile Toyota Motor Corp. TM 78.25 0.00% 122.70B 18.60 Ford Motor Co. F 16.06 0.00% 55.77B 8.50 Volkswagen AG Private - View Profile Nissan Motor Co. Ltd. NSANY.PK 18.90 0.00% 39.54B 13.56 Honda Motor Co., Ltd. HMC 36.74 0.00% 66.22B 9.10 PSA Peugeot Citroen PEUGY.PK 39.00 0.00% 8.85B 13.89 Fiat S.p.A. Private - View Profile Renault Private - View Profile Table 1- Global competitors of Ford Motor Co. (Source: http://finance.yahoo.com/q/co?s=F+Competitors Read More