Knowledge Markets: More than Providers and Users

Simard, Albert

Similarly, to remain relevant, governments must Abstract— This paper describes a knowledge- be able to create, use, and disseminate market model intended to facilitate transforming information and knowledge in social domains science-based departments to a service such as health care, education, and national perspective. Existing provider / user models mask security [9,10]. Thus, creating and using the true complexity of knowledge services. The proposed model comprises nine stages that knowledge will be central to continuing success embed, advance, or extract value. Model design in the 21st century, in both the private and public criteria include independence from content, an sector. organizational focus, scalability, two drivers, and The Government of Canada attaches a high two levels of resolution. A task group, combining importance to the [11]. 190 years of scientific experience and tacit Further, the amount of science conducted by the knowledge, explored the nature of knowledge Government of Canada is substantial. In 2003– services and discovered patterns to understand underlying processes. The paper concludes that a 2004, the Federal Government spent $4.6 billion cyclic value-chain-based knowledge-market model on its science and technology activities [12]. This is richer than existing models, it supports both sum represents the cost of generating supply and demand approaches to knowledge knowledge. Realizing a return on this markets, and it describes knowledge services considerable investment requires that the adequately to enable eventual measurement and knowledge be used to benefit the government, management. the society, and the citizens it serves. Index Terms— knowledge organization, knowledge services, knowledge markets, knowledge transfer, value chains, providers, users 2. PROBLEM Science and technology departments are being increasingly mandated to create and disseminate 1. INTRODUCTION knowledge within the context of Federal Centuries of knowledge creation by scientists Government priorities. This is reflected in the and science organizations have culminated in a Next Generation Public Services Vision [13], in high present-day standard of living in which the intent is to transform government industrialized societies. When examined at a services from a provider to a user perspective. scale of social and technical progress, it can be Central to our purpose, the vision states that said that knowledge flows from science to there are “no generally accepted definitions or society. When examined at the scale of S&T descriptions of public sector information and organizations, however, the reality is that some knowledge services.” It continues with “To knowledge flows to some people, somehow, identify and act on opportunities...the government somewhere, sometime. must first establish a shared understanding of the The importance of the knowledge economy is attributes of public sector information and well documented. The economic dimensions of knowledge services.” Clearly we must the knowledge industry in the United States have understand the nature of such services in a been described [1] as has the nature of government context if we are to maximize their knowledge work and knowledge workers [2]. efficiency and effectiveness. More recently, the impacts of the emerging digital The central hypothesis of this research is that it economy on business, industry, and society have is possible to develop a qualitative model of been summarized [3]. Finally, attributes of knowledge services by eliciting tacit knowledge knowledge have been described from a market through dialogue among a group of experienced perspective [4]. science managers. The purpose of this paper is In a knowledge economy, long-term success to describe the qualitative model developed depends on an ability to create and use through this process. knowledge faster than competitors [5, 6, 7, 8].

Albert Simard, Director, Knowledge Strategies, Natural Resources Canada 3

3. LITERATURE REVIEW 4. METHODS Simple models for creating and using Natural Resources Canada established a knowledge in a government context have been Knowledge Services Task Group to “Examine the proposed. A national workshop on priorities for nature of the work of science and science-related S&T integration described a knowledge cycle programs in Natural Resources Canada, framework for integrated S&T [14]. The cycle describe appropriate elements in the context of comprised research, value, receptors, and Government of Canada Service Transformation, benefits. It illustrates that science must look and submit a report.” In establishing the task beyond the search for knowledge to how that group, it was assumed that knowledge services knowledge benefits Canada and Canadians. A could be described and defined well enough and knowledge cycle was proposed, comprising measured with sufficient accuracy and resolution research, knowledge synthesis, distribution and to manage the process [22]. The Task Group application, and evaluation of uptake [15]. This Report provides considerable detail on strategy focuses on a complex system of knowledge services and the knowledge services interactions among researchers and users. A system that provides the basis for the public-service value chain, comprising employee knowledge-market model described in this paper. engagement, citizen satisfaction, and trust and From a management perspective, the work confidence in public institutions was used to was explicitly positioned as the first step of the describe the most important priorities of public sequence: sector reform [16]. “Effective strategy = Describe strategy + Although seemingly clear and understandable, Measure strategy + Manage strategy” [23] these approaches conceal more than they reveal In essence, to manage a strategy, it must first about knowledge services and markets. Only by be measured and to measure it, it must first be drilling down into the details of such models can described. we understand how they work, verify the From a knowledge perspective, a framework correctness of our logic, and assure the comprising four orders of knowledge [24] was completeness of our models. used to position the work (Fig. 1). Attributes of information and knowledge Quadrant 1 represents routine knowledge. markets, have been described by a number of This is the world of bureaucrats and authors [4, 8, 17, 18, 19]. The purpose of such administrators, whose primary task is to classify markets was variously described as enabling, work and then use rules and standards to supporting, and facilitating the mobilization, process it. Quadrant 2 represents the sharing, or exchange of information and specialized professional knowledge of experts knowledge among individuals or groups who had and consultants. Here, the objective is to design it and those who needed it. These models and develop systems and processes, using focused on the transactional aspects of such existing technical specifications and explicit markets – that is the processes through which knowledge. content is transferred from providers to users. Quadrant 3 represents complex knowledge, They can be viewed as passive delivery models: where the challenge is to discover patterns and “if you build it, they will come.” understand processes, using experience and Detailed service-oriented architectures have tacit knowledge. Quadrant 4 represents chaos, recently been developed for the private sector where there are no discernable patterns. Here, [20, 21]. The focus of this work was to transform we are limited to sensing, responding, and traditional retail businesses or businesses with adapting to changes. As indicated by the arrows, web-enabled front ends by developing it is possible to move between quadrants, except enterprise-wide platforms that support customer between chaos and routine. The Task Group services. Although these models go beyond worked in quadrants 3 (understanding) and 1 simply transferring content by incorporating (classification), while measurement (quadrant 2) customer wants and needs into content was left for subsequent analysis. development, their primary purpose is to deliver From an analytical perspective, a systems profit-generating services. approach was used to develop a logic model. Existing models are either too simplistic or do The model is less rigorous than one based on not consider the entire process, starting with how scientific proof (which is impossible) or empirical content comes into being, how it becomes data (which does not exist). Conversely, it is available for transfer, how it is transferred, and more rigorous than one based on personal how it is used to achieve sector outcomes or opinion or belief. The model represents a societal benefits. Such proactive processes are consensus among a group with considerable central to S&T agencies, in particular, and experience, lending further credibility to the final government, in general. result. The final test of the model will not be its scientific rigor, but rather its adequacy for managing knowledge services. Collectively, Task Group members combined 4

190 years of science, science-related and clear example of moving up a value chain by science-management experience. Members had communicating directly with those citizens who an ability and willingness to think outside the box, are connected to the Internet. and a capacity to adapt to a complex, unknown, A content value chain (Fig. 2) is defined as the and constantly evolving structure. The challenge flow of content through a sequence of stages in was to discover patterns and understand which its form is changed and its value or utility to processes in a system that has not heretofore users are notably increased at each stage. In been described as an identifiable entity in the the content value chain, objects are measured to real world. To understand knowledge services, yield data, the signal carried by data is the group integrated many processes across the interpreted as information (meaning), which is organization, the sector, and society that synthesized to yield knowledge (understanding), collectively transform the outputs of science into and finally, experience and judgment (wisdom) benefits for Canadians. enable the correct application of knowledge. The objective was not simply to achieve In general, as content moves “downstream” consensus, but also to understand by eliciting along the value chain, its value and utility are tacit knowledge from participants. Thus, when a increased. Moving downstream involves sense of discomfort was expressed with a term, knowledge work and associated costs, which definition, or structure, the dialogue continued, presumably increases the value of the content at even though the individual could not explain the each stage. Thus, the further “upstream” one problem. Ideas built on each another, taking has to move to solve a problem, the greater the twists and turns, exploring new approaches. cost. Science is an exception to this linear flow, Sometimes a solution revealed itself during the in that scientific knowledge arises from analyzing discussion and sometimes it was left as an open data and the knowledge is then transformed into question, with a solution surfacing days or even information, in the form of publications. weeks latter. In many cases, it was found that A knowledge services value chain (Fig. 3) can unexplainable problems resulted from incorrect be defined as the flow of knowledge services or incomplete logic, descriptions, or definitions. through the knowledge services system in which The dialogue took place during a 16-month value is embedded, advanced, or extracted by period in weekly sessions of 1-1/2 hours each. the organization, sectors, and society. The This kept the discussions fresh and incorporated knowledge services value chain includes nine “soak time” which frequently yielded new stages: generate, transform, enable, use insights. Discussions proceeded in a hierarchical internally, transfer, add value, use professionally, sequence from the system and its sub-systems, use personally, and evaluate. As with the through stages and components, to detailed sub- content value chain, downstream services components and individual elements. The next generally have higher embedded value than two sections describe the knowledge-service upstream services. model at its highest level – knowledge markets. The following statements explain each stage of the knowledge services value chain. 5. VALUE CHAINS 1. Generate – Content with intrinsic value and Value chains are well understood in the private potential utility must be generated as the first sector as production or distribution channels. stage of the knowledge services value chain. They describe a sequence of steps in which 2. Transform – Content is transformed into inputs are transformed into increasingly refined products and/or services to increase its utility or and higher-value outputs and eventually sold to value to users. consumers. For example, a tree is cut into logs, 3. Enable – The flow of knowledge services which are transported to a mill, where they are must be enabled to permit their use or transfer to sawn into rough lumber, which is milled into clients or Canadians. finished lumber, which is transported to a 4. Use Internally – Knowledge services are distributor and then to a retailer, where it is sold used internally to accomplish organizational to a consumer. Each step in the chain adds objectives. value through production or distribution, some of 5. Transfer – Knowledge services must be which can be extracted as profit. transferred to clients and Canadians to enable Business strategies often focus on moving up external use. a value chain to be closer to the consumer. For 6. Add Value – Work is done by intermediaries example, a manufacturer may bypass to increase the availability, utility, or value of wholesalers or retailers by selling products knowledge services. directly to consumers on line. For the 7. Use Professionally – Knowledge services government, a value chain represents a series of are used by clients with sector-related knowledge steps in which knowledge services are produced, to benefit an identifiable sector. provided and used, resulting in a sequence of 8. Use Personally – Knowledge services are intermediate changes that ultimately yield results used by Canadians to realize personal benefits. for Canadians. Government-On-Line [25] is a 9. Evaluate – The system is evaluated to 5

improve its performance in supplying or fulfilling between them. Rather, providers and users demands of knowledge markets. interact at multiple points along a knowledge- Transfer (stage 5) primarily involves intellectual service value chain within specific sectors, such rather than physical property (even though it may as energy or forestry. be in the form of a publication or CD-ROM). It is Viewing knowledge services as a higher-order useful to consider how intellectual property rights form of communication allows the use of to organizational outputs (content, products, communication theory to clearly distinguish services, and solutions) are transferred from an between existing models and the knowledge organization to the sector and society. market model described here. Three levels of Three types of work are involved. communication have been identified: 1. Transact: Conduct or carry out business to transmission, semantics, and effectiveness [26]. enable the transfer of rights and limits to use, They are reformatted here in a service context. reuse, or redistribute outputs from the A. How efficiently can services be delivered? organization to intermediaries, clients, or This relates to the engineering problem of Canadians. (e.g., give, license, sell) transmission or dissemination. It is comparable 2. Interact: Enhance the ability, readiness, or to provider / user service models in which the willingness of intermediaries, clients, or objective is simply to deliver information or Canadians to understand and apply outputs to services (stage 5, transfer). solve their problems. (e.g., provide, explain, B. How adequately does the delivered service support). satisfy the wants and needs of recipients? This 3. Transfer: Deliver, distribute, or disseminate relates to the semantic problem of identifying outputs to intermediaries, clients, or Canadians clients and tailoring services to their wants and (e.g., publish, disseminate, send). Transfer may needs (stage 5, interact). be via any or all of several electronic or physical C. How effectively does the received service channels: on-site, off-site, kiosk, mail, on-line, e- affect outcomes? This relates to the mail, or telephony. effectiveness problem of affecting sector A value-chain approach to knowledge services outcomes or societal benefits (stages 7, 8). demonstrates a number of key principles. Rather than “providers supply” and “users 1. Knowledge services are much richer and demand,” three basic market processes are more complex than simply transferring proposed: embedding value into knowledge knowledge from providers to users. services, advancing that value along a value 2. Content flows through a sequence of stages chain, and extracting the embedded value to in which its form is changed and its value or utility eventually yield results for Canadians. It is to users are increased at each stage. further proposed that a knowledge-services 3. A knowledge value chain comprises nine market is circular in nature. There is neither a stages in which value is embedded, advanced beginning nor an end, but rather a continuous or extracted at each stage. cycle, with knowledge services being produced 4. Transfer primarily involves intellectual and used at multiple points. property rights rather than physical property. First, bend Fig. 3 so that it closes upon itself as a circular value chain. Then, add a number of 6. KNOWLEDGE MARKETS related value chains in the form of a “bundle,” similar to a set of wires twisted into a cable (Fig. Information markets are generally described with 4). Related value chains may interact with each a provider / interface / user approach. Such a other, as partners to jointly embed, advance, or model is applicable in situations with autonomous extract value. For the prototype model, we used providers and users. That is, in markets with little sectors of Natural Resources Canada. From or no control or influence over the production and this, a knowledge market is defined as a group of availability of content and little or no interest in related knowledge-services value chains that how or why it is used. Examples include: the function collectively to embed, advance, and Global Disaster Information Network [18], the extract value driven by organizational capacity to Global Forestry Information Service [19] and the supply and user demand for knowledge services. Government (of Canada) ON-Line Initiative [25]. Figure 4 yields a number of insights In these cases, the primary purpose is to develop concerning knowledge markets. First, such an infrastructure that facilitates access to markets have no beginning or end. Rather, content. many “agents” embed, advance, or extract value A provider / user model is inadequate in in a continuous cycle of knowledge, as happens situations where a provider controls the in the real world. Each extraction of value production and distribution of knowledge and is through the transfer and use of intellectual mandated to promote and facilitate sector property rights to organizational outputs outcomes and benefits for citizens. In such represents a “transaction” in a traditional market cases, providers and users are not simply facing sense. each other with connecting infrastructure The shift from a linear view of value chains with 6

a beginning and end, to a cyclic view of and personal use under the rubric of extracting continuously flowing knowledge markets can be value, the model resolves the confusion of partially related to program planning cycles in provider / user models resulting from the fact that that the end of one planning cycle is the those who provide knowledge services also use beginning of the next. However, in knowledge them. markets, different organizations are on different planning cycles. Further, within organizations, IMPLEMENTATION different branches, programs, and projects are at different stages of the knowledge market cycle. As noted previously, this work represents the Thus, although all parts of an organization might first phase of a describe / measure / manage use the same planning cycle, they begin and end approach to knowledge services. Understanding their plans at different stages along the the process enables measurement of system knowledge market cycle. Finally, organizations performance. The Task Group identified those have partners or clients and these, in turn also high-priority interactions in the knowledge have partners or clients. Put differently, one services system that would most likely yield the organization’s knowledge output (stage 5) might greatest return of information from initial be the next organization’s knowledge input measurement. They are listed in order of priority. (stage 1). As with electrons circling the nucleus 1. Add value to enhance outputs. of an atom, a program’s place in the cycle is both 2. Use professionally for societal benefits. relative and difficult to determine precisely. 3. How do users use internally; distribution of Second, the evaluation stage is deliberately output flows; interaction with clients. unnumbered, as befits a “chicken-and-egg” 4. Transform content into services. situation. In a supply-driven market, evaluating A survey project is currently underway to begin performance is the last step of the value chain. measuring these high-priority interactions. Governments tend to emphasize this form of evaluation. Further, the vast majority of CONCLUSIONS government programs have been around for decades, so there is much that can be evaluated This paper describes a knowledge-services from a performance perspective. In a demand- market model developed by Natural Resources driven market, market analysis is the first step of Canada. The purpose of this model is to the value chain. Businesses must understand increase the level of understanding of knowledge their markets to know what to produce in order to services and to facilitate participation of S&T survive. Although evaluation should be a departments in the Government of Canada 2005 continuous, iterative process, the nature of the Service Vision. Although based on Natural evaluation establishes an organization’s Resources Canada, the model is believed to be approach to a knowledge market. Ideally, market applicable to knowledge services provided by a evaluation should involve both post-production broad range of organizations. performance measurement and pre-production The knowledge market model presented here market analysis. provides a high-level strategic framework for Third, this is not a “free” market. Although the understanding the complex relations between a market is influenced by user wants and needs, public-sector knowledge organization and the production and distribution are controlled by the surrounding socioeconomic environment that it organization. The organization’s mandate must interact with. It traces the flow of determines what is produced while its budget and knowledge services from their original creation organizational capacity limit how much is through their final use in providing benefits for produced. Shifting from a supply- to a demand- citizens. driven perspective will not change this. Overall, the qualitative model is an adequate Fourth, the market model can be scaled down framework to support measurement and to an individual sector. For example, in forestry subsequent management of knowledge services we can consider forest ecosystems, forest fire, as a system. It also provides a number of forest inventory, etc. At this level, the market is insights about knowledge markets. approaching the scale of a community of practice 1. Knowledge markets are richer and more and might be managed as such. Looking complex than is described by provider / user upwards, the model should be scalable to models. multiple science and technology departments, 2. Knowledge markets have neither beginning and ultimately, the Government of Canada. The nor end. Many agents embed, advance, or latter could be viewed as a “sphere” of extract value in a continuous cycle of knowledge interrelated cyclic sector-based markets, such as (intellectual property) transactions. Natural Resources, Environment, Agriculture, 3. Knowledge markets comprise groups of Health, Fisheries and Oceans, and other related knowledge-service value chains. departments. 4. Knowledge-service value chains model the Fifth, by incorporating internal, professional, flow of knowledge services through nine stages: 7

generate, transform, enable, use internally, [14] Environment Canada. “Report on the Beyond the Horizon Workshop” Environment Canada, Ottawa, ON. transfer, add value, use professionally, use Unpublished report, Sept. 13-23, 2005, 63 pp + app. personally, and evaluate. [15] Health Canada. “Knowledge Translation & 5. Evaluating both post-production system Communication” Health Canada, Canadian Institutes of Health Research, Ottawa, ON. Unpublished report performance and pre-production market needs is 2004: www.cihr-irsc.gc.ca/e/29529.html necessary for both supply and demand [16] Heintzman, Ralph and Marson, Brian “People, Service, approaches to knowledge markets. and Trust” Canadian Government Executive, 12:5 2006, 6. Organizations that provide knowledge pp. 6-8 [17] Bryant, J. “: The Ethics of the services also use them. Agora or the Mechanisms of the Market” In: proceedings, Hawaii International Conference on Systems Science 39, Jan. 4-7, 2006 ACKNOWLEDGMENTS [18] Simard, Albert J. “Global Disaster Information Network” In: UN World Conference on Disaster Reduction” Kobe This work was not produced by the author Japan, Jan. 18-22, 2005, 18 p. [19] Simard, Albert J. “Global Forestry Information Service alone. It is doubtful that any individual could Business Case” International Union of Forest Research have the breadth and depth of knowledge and Organizations, GFIS Task Group, Unpublished report, experience needed to conceive and construct the Jan. 5, 2002 [20] Kalakota, Ravi and Robinson, Marcia “Services Blueprint model described in this paper. It reflects a - Roadmap for Execution” Addison-Wesley, New York, consensus of the Natural Resources Canada, NY, 2003, 354 p. Knowledge Services Task Group. Other Task [21] Erl, Thomas. “Service-Oriented Architecture” Prentice- Hall, Upper Saddle River, NJ. 2005, 760 p. Group members are: [22] Simard, Albert, Broome, John., Drury, Malcolm, Haddon, Bryan, O’Neil, Robert and Pasho, David “Understanding - John Broome - Earth Sciences Sector, Knowledge Services at Natural Resources Canada,” Natural Resources Canada, Knowledge Services - Malcolm Drury - Energy Technology Sector, Secretariat. (in press) 84p. - Brian Haddon - Canadian Forest Service, [23] Kaplan, Robert S. and Norton, David P. “Strategy Maps - - Bob O’Neil - Earth Sciences Sector, and Converting Intangible Assets into Tangible Outcomes” Harvard Business School Press, Boston, MA, 2004 - Dave Pasho - Metals and Minerals Sector. [24] Kurtz, C.F. and Snowden, David J. “The New Dynamics of Strategy - Sense-Making in a Complex and Complicated World” IBM Systems Journal 42:3, 2003, 24p. 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Specialized Oxford, UK 1993 [6] Amidon, Debra M. “Innovation Strategy for the •Tacit knowledge •Technical documents Knowledge Economy” Butterworth Heinman, Newton, •Scientists, experience •Experts, consultants MA, 1997, p136 [7] Nonaka, Ikujiro. “The Knowledge Creating Company” In: •Explore, understand •Design, develop Knowledge Management. Harvard Business School Press, Boston, MA, 1998, p 21. [8] Davenport, Thomas and Prusak, Lawrence. “Working Knowledge” Harvard Business School Press, Boston, MA. 1998 199 p •Observations •Standards, manuals [9] Holmes, Douglas. “E-Gov - e-business Strategies for •Explorers, innovators •Bureaucrats, administrators Government” Nicholas Brealey Publishing, London, UK. 2001, 330 p. •Sense, respond •Categorize, process [10] Sinclair, Niall. “Stealth KM: Winning Knowledge Management Strategies for the Public Sector” Butterworth Heinman / Elsevier, Oxford, UK, 2006, 219 4. Chaotic 1. Routine p. 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8 Objects Data Information Knowledge Wisdom

Figure 2. Content Value Chain

Legend Organization Sector / Society

Extract Advance Use Use Use Internally Professionally Personally Embed

Enable Transfer Evaluate

Generate Transform Add Value

1. 2. 3. 4. 5. 6. 7. 8. 9.

Figure 3. Knowledge Services Value Chain

(Market / Demand) 1. Generate Evaluate (Performance / Supply) Organization 8. Use Forestry Metals & Personally 2. Transform Minerals Natural Resources 7. Use Professionally

3. Enable Earth Energy Sciences

6. Add Value 4. Use Internally 5. Transfer

Figure 4. A Knowledge Market

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