The report mainly will talk about how the SECI model can be applied before launch of Microsoft Xbox game and how it can be applied after the product launch. The purpose of this report is to enhance the ability to critically analyze knowledge management theory and to implement KM theory to the large scale organizations.

The first part of this report will give introduction on knowledge management and overview of Microsoft covering KM principles, KM objectives and introduction of Xbox game.

The second part will talk about the Concept of Knowledge and Learning in Microsoft covering types of knowledge, type of learning and characteristics, learning strategies, transfer modes, different levels, strategic importance, the existing knowledge management process and SECI model application to Xbox 360.

The third part will give an evaluation covering organizational leaning types, change management, change management process, SECI model evolution and the Strategic Purposes.

The fourth part will summarize this report. The final part will talk about the weaknesses of SECI model, recommended two KM models and other recommendations to improve the knowledge management in this company.

2.0 Introduction

The global economy is moving towards intellectual assets hence knowledge is becoming a competitive advantage for the business organizations. Knowledge is becoming one of the key factors of production rather than land, labor and capital for the businesses in various industries. The customers are expecting high quality products to fulfill their needs and wants. As a result of this today’s business environments is becoming more competitive. Many companies such as Microsoft have started to initiate knowledge management (KM) activities to survive in these competitive markets.

An organization’s knowledge is professional intellect such as know-what, know-how, know- why, self-motivated creativity, experience, concepts, values, beliefs and a way of working that can be shared and communicated (Davenport, 1996). And it has been observed that the major competitive advantage for a corporation lies in the corporation’s knowledge (Nonaka & Takeuchi, 1995). Therefore, knowledge is a resource which is very difficult to replicate.

This paper mainly will talk about the how the SECI model would have been applied before Microsoft Xbox is launched and how this model evolved along with change management after this product was launched. Hence the purpose of this report is to enhance the ability to critically analyze KM theory and implement it in large scale companies.

2.1 Knowledge Management

Knowledge management is managing the corporation’s knowledge through the processes of creating, sustaining, applying, sharing and renewing knowledge to enhance organizational performance and create value (Davenport, 1996). There are several knowledge management models such as Wiig’s model, Leonard-Barton model, Choo’s model and Arthur Andersen’s APQC model and SECI model (Holsapple, & Joshi, 1999). The SECI model is used to understand the dynamic nature of knowledge creation and to manage the process effectively within the organization. It has four processes which are socialization, externalization, combination and internalization (Nonaka & Takeuchi, 1995).

Socialization refers to sharing and creating tacit knowledge through direct experience. In this stage the person will collect the knowledge with direct interaction with other people. Externalization refers to articulating the tacit knowledge through dialogue. In this stage the tacit knowledge of the person is converted into explicit knowledge during the communication. Combination refers to applying the explicit knowledge and information. In this stage the collected explicit knowledge from outside the organization are combined systematically and applied to the organization which means the explicit knowledge is converted into explicit knowledge. Internalization refers to learning the new tacit knowledge in practice. In this stage the explicit knowledge gathered in different forms like reading, listening, observing is then converted into tacit knowledge (Nonaka & Takeuchi, 1995).

2.2 Microsoft Overview

Microsoft is one of the world’s leading IT companies in software, services, and solutions. It was established in 1975 by Bill Gates and Paul Allen. Their main competitive advantage is the quality of its people. Its key strategy is to find smart people who know the technology and the business because the competence in this industry is changing very fast. Bill Gates and other Microsoft executives decided that the company’s objective to stay on top by providing quality products and services. Its Internal Information Technology group tries to produce software to adapt to the rapid industry change and thus they are focusing heavily on the issue of identifying and maintaining knowledge competencies. The company’s SPUD (Skills Planning und Development) project tries to create an online competency profile for jobs and employees within the company (Davenport, 1997).

There are various knowledge management principles in Microsoft. They recruit and hire the world’s top talent employees and seek to foster greater levels of diversity in their workforce. They have various trainings and strategies for managing global diversity and inclusion best practices. Offering a comprehensive diversity and inclusion leadership program to ensure employees have the skills and knowledge to excel in their responsibilities (Microsoft, 2013).

Currently the company is applying different knowledge management strategies to all their products. The product that is selected for this assignment is Xbox game. Xbox game has various features. Xbox 360 S consoles have dedicated ports for the motion accessory and do not require an additional power supply. It has integrated Wireless N networking and it has number of USB ports. The physical power and eject buttons are touch-sensitive buttons. Xbox Live allows players to compete online and offers access to various third-party media streaming applications. Xbox Kinect enables users to control and interact with the Xbox 360 without touching a game controller, through a natural user interface using gestures and spoken commands (Kersey, 2012).

Microsoft Studios is the video game production wing for Microsoft, responsible for the development and publishing of games for the Xbox, Xbox 360 and Games for Windows and Windows Phone platforms. When Xbox 360 introduced in various markets, Microsoft was unable to supply enough systems to meet initial consumer demand in Europe or North America (Kersey, 2012). However, the Xbox and Xbox 360 failed in the Japanese gaming market.

The main issues include the perception of the console. Japanese gamers believed it was designed purely for Western-style games. Microsoft had difficulties in adapting to the unfamiliar customs in Japan. The main competitors were the PlayStation 3 and the Nintendo Wii. The PlayStation 2 cannot be beaten because it is a product of Japan (Kersey, 2012).

3.0 Concept of Knowledge and Learning in Microsoft

3.1 Types of Knowledge

The three types of knowledge found in Microsoft are explicit, implicit and cultural knowledge. Explicit involved knowledge of and experience with specific tools or methods such as Excel or SQ 6.0. Implicit competencies involved more abstract thinking and reasoning skills. In Microsoft, the implicit competencies were expected to stay relatively stable over time, while the explicit competencies change frequently in line with development and changes. Within all competency types, there are 137 implicit competencies and 200 explicit ones. Within each type, there are also four defined skill levels: basic, working, leadership, and expert (Davenport, 1997). In cultural type, people are not worried about sharing knowledge because of internal competition. People enjoy giving information to others (Hultkvist, 2010).

3.2 Type of Learning and Characteristics

Learning initiatives for employees in Microsoft can be divided into three dimensions. Courses and training specialized for the work-role. These are mainly online courses but also can be external courses and conferences. They have Face-to-face learning on the job. The employees learn by experience, interaction with colleagues, Friday lunch presentations and learn by seeking information when needed through SharePoint libraries with product presentations, auto-groups, wikis, and blogs. The various types of courses are e-learning, live video meeting, podcasts and videos of presentations, traditional classroom learning (Hultkvist, 2010).

Every Friday, employees and managers meet for breakfast and receive the latest information about business, activities, products, and customers. The occasion is used for knowledge sharing and learning that concerns the whole organization. Once a month, the breakfast meeting is followed by a learning session where different Microsoft products are examined (Hultkvist, 2010). Therefore the characteristics of learning which they have include systems thinking, personal mastery, mental models, a shared vision, and team learning.

3.3 Learning strategies

Microsoft’s vision is to increase organizational effectiveness by enabling users to intuitively find, share and connect to relevant information, processes and people. Meantime it enables information workers to work together to solve business problems more effectively and rapidly through software and services (Filemon, 2008). Meantime, they have SPUD (Skills Planning und Development) model for knowledge management in the organization. They are practicing KM in individual, local, global and universal levels (Davenport, 1997). Therefore it is understood that they have declared learning strategy and are manifest openly in all their company initiatives.

3.4 Transfer modes

Microsoft has a very good model for knowledge transfer which is SPUD (Skills Planning und Development) started in 1995. The project involved building an online system that contained a competency structure, job rating systems and ratings database, and competency levels for employees. The goal for the project was to create an online competency profile for jobs and employees within Microsoft IS. This competency model is using to transfer and build knowledge. There were five major components to the SPUD project:

1. Development of a structure of competency types and levels,

2. Defining the competencies required for particular jobs,

3. Rating the performance of individual employees in particular jobs based on the competencies,

4. Implementing the knowledge competencies in an online system,

5. Linkage of the competency model to learning offerings

In addition to this, the various trainings which are mentioned under types of learning are the existing knowledge transfer modes (Davenport, 1997).

3.5 Different levels

They have four different levels for knowledge management. The foundation level, knowledge is applied for the individual job purposes. In local or unique level, advanced skills are applied to particular job type. In global level would be present in all employees within a particular function in the organization. In universal level, knowledge is applied to overall business, the products they sell and the drivers of the industry. In each of the four levels, there are also four defined skill levels. They are basic, working, leadership and expert which are required by a worker or a job in the company (Davenport, 1997).

3.6 Strategic Importance

One of the main reason is their products have been used within knowledge management applications for a long time. Microsoft applications are going to be increasingly significant within KM solutions because the capabilities of their Office and Exchange products allow customers to easily build applications to meet their KM needs (Hultkvist, 2010).

Currently they are facing high competition in the market and customers’ perceptions and life style are changing. Therefore, knowledge management is essential for them to compete in this market and to satisfy the customers in future (Hultkvist, 2010).

Since they have good workface in terms of skills and knowledge, they need to have various knowledge management models and strategies to get maximum benefits of the employees (Hultkvist, 2010).

3.7 Microsoft’s existing knowledge management process

In the initial phase, knowledge transfer is the key performance factor. The success of the pilot project extends the KM process to other groups. The successful completion of the project in one or two functions further opens the gate for broader use including all the functions geographically. This expansion gives more accessibility to the organizational members. As a result there is more involvement and innovation in the organization which pushes development of products and finally enhances the knowledge transfer (Akhavan et al., 2006).

3.8 SECI Model Application

In this part the SECI model is applied to the Xbox 360 in order to innovate and to satisfy all the customer groups.

1. Socialization: In this stage the company needs to identify the needs and wants of various customer groups. The employees can have face-to-face interaction, brainstorming sessions and meetings with the customer to identify the customers’ requirements. The employee needs to identify the cultural, religious, values, perception etc. of the customer groups. The customers will share their experiences with Xbox 360 and other competitors’ products like PlayStation 3 and the Nintendo Wii. So, this will be a kind of market research.

2. Externalization: In this stage, the collected information will be transformed into concepts, images and written documents. These documents can be shared among other team members working on similar projects. This will help to identify the relationship between various data collected and which will help to categories various customer needs in different markets.

3. Combination: In this stage, they will be comparing the information collected with other competitors’ products like PlayStation 3 and the Nintendo Wii. They can use different tools like PESTEL analysis and Porters five forces analysis. This will help them to know the competitors’ products and can bring the required enhancements to the product. Meantime, their communication networks and databases can also support this knowledge conversion.

4. Internalization: In this stage, they can build prototypes of the Xbox 360. After building prototypes, they can test the game by using various customer groups in different markets. If the majority of the selected customers are happy with the game, they can introduce it to the market. If the customers the majority of the customers are not satisfied with the game, they can improve it based on these customers feedback. This process should be continued until most of the customers are happy about the qualities of the game.

4.0 Evaluation

4.1 Organizational leaning types

Microsoft has single loop and double loop solutions for issues with its Xbox game. They have provided required information about the problems with Xbox and have provided technical steps to follow to fix the problems through their website. This is considered as single loop solution. Meantime, there were problems with the console of Xbox 360. They have repaired the Xbox consoles which are under warranty by bringing them to their service center. The warranty period for the E74 error is three years from the original purchase date of the console. If the console is not covered by the three year warranty the customer can get console repaired for a fee. They have recently introduced the Xbox one after improving. These are double loop solutions. However, there is no triple loop solution for the Xbox issues in this company (Xbox, 2013).

4.2 Change Management

The change management here refers the process and methods that will be used to enhance the Xbox game due to the failure in Japan’s market. The Xbox game can be improved and innovated by following the below change management processes.

4.3 Change management process

Immobilization (Shock): In this stage the stakeholders like customers and employees will be shocked and confused about the official change news that is coming to the Xbox 360. The organization should provide all necessary information about the change to the stakeholders (Ross, n.d.).

Denial of Change: In this stage some stakeholders probably the theory X people will deny the change that is going to be done to the Xbox 360. The company should provide more information and need to make understand the stakeholders like employees (Ross, n.d.).

Incompetence (Guilt): In this stage the stakeholders like employees will be incompetent and feel guilty. They will find it very difficult to perform well with new changes brought to the Xbox 360. The company needs to motivate the employees specially theory X employees by using various motivational strategies (Ross, n.d.).

Acceptance of Reality: In this stage the employees know the change rationally and there is no more rebellion but they are still unhappy about the change. The company can have more motivational activities to improve the moral of the employees (Ross, n.d.).

Trying: In this stage employees will try to participate more in the organization’s activities. They will try to follow the guidelines given for the changes to Xbox 360 by higher authority (Ross, n.d.).

Understanding: In this stage the employees will fully understand the change brought to the Xbox 360. They will understand the reasons for change, the benefits of the change and outcome if no change has brought to Xbox 360 (Ross, n.d.).

Integration: In this stage, the employees will be highly motivated. They will have confidence on themselves and they will suggest the ways to compete the change process successfully (Ross, n.d.).

4.4 SECI Model Evolution

Since the Xbox 360 is not successful in Japans Market, the SECI model is applied to this product in the previous section. After the application of SECI model, Xbox One is introduced to the market with various improvements to the Xbox game. Although the newly introduced Xbox One game does not have issues, the company needs to apply SECI model continuously to avoid unexpected failure in future.

1. Socialization: In this stage, the Company needs to identify barriers that can harm personal knowledge exchanges and should remove these barriers. They need to find new strategies and market opportunities by wandering inside and outside the company to improve Xbox One. They should interact with external experts and should have informal meetings with their competitors. They need to have good customer relation and should get feedback to provide solutions (Nonaka, Toyama, & Konno, 2000).

2. Externalization: In addition to the verbal communication, they need to encourage non-verbal communication in order to generate a shared understanding. They can create development systems to assist the transfer of newly categorized knowledge in a form that will be used by the people involved in the Microsoft Studios. They can use metaphors in dialogue for concept creation. They can involve the industrial designers in Xbox game production teams (Nonaka, Toyama, & Konno, 2000).

3. Combination: They can have collaborative environment to share information through bulletin boards, databases and other networks. They need to allow flow of information in vertically, horizontally and in all directions. The can develop routines for organizational projects and can promote shared commitments and mental models. The employees should engage in planning strategies, operations, assembling internal and external data by computer simulation and forecasting. They need to build and create manuals, documents and databases on Xbox One and build up material by gathering management figures or technical information from all over the company (Nonaka, Toyama, & Konno, 2000).

4. Internalization: In this stage, the managers need to provide more training to the employees. They need to create shared routines by mentoring in the company. The employees can use available knowledge to learn and bring new features to the Xbox one. The new knowledge should be shared among individuals continuously. Managers need to form teams to conduct experiments and share results with the entire department (Nonaka, Toyama, & Konno, 2000).

4.5 Strategic Purposes

The main purposes of the change management are the company can respond faster to customer demands. The time needed to implement change can be reduced. Employee performance can be increased when staff feel supported and understand the change process. It creates an opportunity for the development of “best practices”, leadership development, and team development (Faucheux, 2009).

The purpose of continuous application of SECI model to the Xbox One is to avoid the unexpected failure in future. Mealtime, this product can be improved and differentiated. It will help to compete other competitors’ products specially PlayStation 3 and the Nintendo Wii. As a result of this, the company can retain its customers and can steal customers from other competitors (Nonaka, Toyama, & Konno, 2000).

5.0 Conclusion

Microsoft is one of the leading IT companies in the world and the knowledge management is one of the main factors for their success. Its main competitive advantage is their high quality employees. Its main objective is to stay at the top by providing high quality products. It has a knowledge management model called Skills Planning und Development. It’s one of the main KM principles is to hire the world’s top talent employees to have greater level of diversity in their workforce. Xbox game was successful in different markets except the Japanese market.

Knowledge management is managing of the company’s knowledge through a systematic process. There are various models for knowledge management such as SECI model. The SECI model includes socialization, externalization, combination and internalization. The three types of knowledge in Microsoft are the explicit, implicit and cultural knowledge. The three types of learning in the company are courses, training and Friday breakfast meeting. It has declared learning strategy. The Skills Planning und Development project and other trainings in the company are the various knowledge transfer modes. The four different levels of knowledge management are foundation, local and universal levels. Its knowledge management process includes knowledge transfer, extended to all groups, starts applying in functions and people involvement.

In this part the SECI model is applied to the Xbox 360 in order to innovate and to satisfy all the customer groups. In this model the customers’ requirements are identified, the collected information is transformed into documents, the information is compared with other competitors, a prototype is developed and the Xbox One is introduced.

Microsoft has single loop and double loop solutions for issues with its Xbox game. The change that has brought to the Xbox 360 is managed in a systematic way. This process has seven different stages. The change is managed by giving information to the employees and motivating them. The SECI model is also applied to the new product (Xbox One) introduced in order to improve it continuously to avoid unexpected failure in future. In each stage of this model various strategies are suggested to follow to compete in the markets.

The application of SECI model before introducing and after introducing the Xbox game and the systematic change management process will provide many advantages to the company. This will help the company to compete its competitors and can satisfy all their customer groups such as Japanese gaming market.

6.0 Recommendation

6.1 Criticisms of SECI model

Although there are various advantages of SECI model, the knowledge of an organization is not allowed to transform into all processes of SECI model. Socialization is limited to certain extent. Some leading companies do not share their knowledge with the other companies due to competition hence externalization is restricted. Patent of an invention by a company restricts the transformation of knowledge from a company to another. This model is discussed mainly based on Japanese working environment and other countries employment culture is not considered. Therefore, SECI model is partly applicable (Gowry, 2009). Hence, the company can use the following models along with SECI model.

6.2 Wiig KM Model

Wiig model states that, knowledge can be useful if it is well organized. The dimensions in this model are Completeness, Connectedness, Congruency and Perspective and purpose. Completeness refers to check how much relevant knowledge is available from given source. Connectedness refers to well defined relation between different knowledge objects. Congruency refers all facts, concepts, values and relational links between the objects are consistent. Perspective and purpose is a phenomenon through we know something but from a particular point of view for a specific purpose. This model helps the practitioners to adopt a refined approach to managing knowledge based on the type of knowledge (Mangipudi, 2009).

To apply this model, the employee needs to identify and analyze the relevant information such as potential customer’s feedback for the development of Xbox game. After analyzing the feedbacks, they will be able to categorize the customers’ requirements. After categorizing the collected information, they will be able to identify the relationship between the various customer requirements. Hence they will be able to produce Xbox games in accordance with the customer requirements. Therefore they will be able to satisfy the Japanese market hence will increase the sales and profit.

6.3 Boisot I-Space KM Model

It says the more easily data is converted to information the more easily it is diffused. The less the data is structured requires a shared context for its diffusion, the more diffusible it becomes. The dimensions are Codified-Uncodified, Abstract-Concrete and Diffused-Undiffused. This model links the content, information and knowledge management in an effective way. It also maps the organizational knowledge assets to social learning cycle which other KM models do not directly address (Mangipudi, 2009).

This model can be applied by following five different phases. Firstly they need to identify threats (competitors) and opportunities (available resources) to the Xbox game. Secondly they need to categorize the threats and opportunities. Thirdly they need to identify the most essential features. Fourthly they can share this newly created information to a potential target customer group in Japanese market. Fifthly they can apply the new information collected (based on feedback of the target customer group) to develop Xbox game. This will help to satisfy the specific customer market such as Japanese market. As a result of this, they will be able to sell more products in Japan.

56.4 Other recommendations

Meantime, it is recommended to have various types of learning other than courses, training and Friday breakfast meeting for instance auditory-musical, kinesthetic and solitary learning. Also the company can encourage the employees to fit physically because most of them spend so much time on the job and commuting. This will help them to be more active in their jobs (Kelly, 1999).

In my opinion, Microsoft can enhance its Xbox games and other products if it applies the SECI and other recommended models. Also, they can satisfy the Japanese gaming market and other markets in future.

7.0 References

Akhavan P., Jafari M. and Fathian M. (2006) Critical Success Factors of Knowledge Management Systems: A Multi-Case Analysis. European Business Review. 18 (2), 97-113.

Atwater J.B. and Pittman P.H. (2006). Facilitating Systemic Thinking in Business Classes. Decission Sciences Journal of Innovative Education, 4 (2), 273-292.

Davenport, T., H. (1996). Improving Knowledge Work Processes. Sloan Management Review, 53-65.

Davenport, T., H. (1997). Knowledge Management Case Study, Knowledge Management at Microsoft 1997. Retrieved May 30, 2013 from http://lms.oum.edu.my/

Dr. Filemon, A., U, Jr. (2008). Introduction to Knowledge Management. Jakarta, Indonesia: ASEAN Foundation.

Faucheux, M. (2009). Negotiating the Advantages and Disadvantages of Change Management. Retrieved May 30, 2013, from http://www.brighthubpm.com/change-management/18477-negotiating-the-advantages-and-disadvantages-of-change-management/

Gowry. (2009). Gowry’s View of Knowledge Management. Retrieved May 29, 2013, from http://arulnanthi.blogspot.com/2009/02/nonakas-seci-model.html

Holsapple, C., W. & Joshi, K., D. (1999). Description and Analysis of Existing Knowledge Management Frameworks. Proceedings of the 32nd Hawaii International Conference on System Sciences.

Hultkvist, E. (2010). A case study of knowledge management in a large software company: How knowledge workers cope with large amounts of information (Master's thesis, University of Oslo, Norway). Retrieved May 29, 2013, from https://www.duo.uio.no/bitstream/handle/10852/8769/Hultkvist.pdf?sequence=4

Kelly, F. (1999). Guidelines on Improving the Physical Fitness of Employees. WHO European Centre for Environment and Health, Bilthoven.

Kersey, B. (2012). An in-depth look at Microsoft's failed Xbox attempts in Japan. Retrieved May 30, 2013 from http://www.theverge.com/2012/12/14/3765958/xbox-japan-failure

Mangipudi, N. (2009). Knowledge Management: Classification of KM Models. Retrieved May 30, 2013, from http://nandita-msn.blogspot.com/2009/02/classification-of-km-models.html

Microsoft. (2013). Key Growth Strategies. Retrieved May 30, 2013, from http://www.microsoft.com/en-us/diversity/vision/visionKey.aspx

Nonaka, I., & Takeuchi, H. (1995). The knowledge creating company: How Japanese companies create the dynamics of innovation. Oxford University Press: Cambridge.

Nonaka, I., Toyama, R. & Konno, N. (2000). SECI, Ba and Leadership: a Unified Model of Dynamic Knowledge Creation. Long Range Planning, 33, 5-34.

Ross, K. (n.d.). The Kübler-Ross Grief Cycle. Retrieved May 30, 2013, from http://changingminds.org/disciplines/change_management/kubler_ross/kubler_ross.htm

Xbox. (2013). Error code E74 occurs when you’re using an Xbox 360. Retrieved May 29, 2013, from http://support.xbox.com/en-US/xbox-360/errors/error-code-e74

Adam Khaleel

Wednesday, December 23, 2015

Module Name: Knowledge Management

1.0 Executive Summary