What is Second Life?

1.         Second Life (SL) is a three-dimensional virtual world, wherein we enter via our computer with the aid of an internet connection. Much like in role-playing computer games, the similarity ends there because, unlike computer games, SL is completely user generated. (Hobson, 2006). SL was launched is 2003, but had exponential growth in the number of subscribers from 2006 onwards.[1] As of January 2009, it has grown into a 600-square-kilometer world with 6.9 million registered users and between 30,000 and 40,000 online “residents” who explore the space in the form of avatars, buying and selling goods, clothing, avatar attributes, and property, and participating in individual and group activities. The SL simulated environment contains woodlands, shopping malls, private residences, and a wide range of special-purpose “SIMs,” or simulations, sometimes called islands or states. (Waters, 2009).

2.         SL is the brainchild of Linden Lab, founded in 1999 by Chairman of the Board Philip Rosedale and headquartered in San Francisco, develops revolutionary, immersive technologies that change the way people communicate, interact, learn and create. Privately held and profitable, Linden Lab is led by CEO Mark Kingdon, and has more than 300 employees across the U.S., Europe, and Asia.

3.         SL presents some unique opportunities for knowledge sharing and collaboration. Educators are one of the active users of SL – used either as a professional knowledge sharing and collaboration platform; or used as a new teaching tool to enhance the learning experience of students. A number of literature in this matter has been published, and they are helpful if explaining the knowledge sharing and collaboration aspect of SL use.

4          Of particular interest too are the participation of companies like Dell, BBC, Nissan, Adidas, IBM, Reuters, Sony BMG, General Motors, Toyota, ABN Amro – all internationally recognised names, that have established a presence of some kind in SL in 2006. Their presence in SL is attributed to different reasons. Nevertheless, the common thread for their SL presence is that the desire to create a connection with their customers in a place where there are no real-world manufacturing or service costs and few barriers to what’s possible. (Hobson, 2006) The most significant use of SL by a commercial organization is IBM where it is used as a crucial tool to connect its globally (real world) scattered employees to enable them to share knowledge and collaborate.

Objective of paper

5          This paper will attempt to summarise how educators, learning institutions and corporations have used SL as knowledge sharing and collaboration tools. In doing so, we will discuss the aspects of SL which enable and foster knowledge sharing and collaboration in groups of individuals; and how SL enhances the social experience of knowledge sharing and collaboration. Finally, we would like to propose guidelines as to how to ensure success in the use of SL in knowledge sharing and collaboration systems in organizations.

B         Use of Second Life in education and training

6          A study of the literature involving the use of second life in education and training has presented itself with two levels in the way in which SL has been used by educators. The first is as a knowledge sharing and collaboration tool among fellow educators; the second as a teaching tool to enhance student learning experience. The paragraphs below explain these two uses and extracts from them certain guidelines for the successful use of SL. It is hoped these guidelines will be useful to other types of organisations that intend to use SL as part of their knowledge sharing and collaboration system.

Knowledge sharing and collaboration platform for educators

7          Second Life is a bifurcated environment, with an adults-only Main Grid and a Teen Grid for users ages 13 to 18. This was purposely created by Linden Lab, the people behind SL, to ensure the safety of younger users. As students in universities are over 18, universities have taken full advantage of all the resources of the Main Grid. However, SL’s environment is still of limited use for K-12 learning. Nevertheless, this does not stop K-12 educators from flocking to SL.

8          The reason for this is because they (the educators) believe in its pedagogical potential despite the limitations of the Teen Grid. Another reason is that, in the short run, this virtual world can provide a rich and productive environment for teacher education, professional development, and networking. (Waters, 2009).

9          According to John Lester who leads the education and healthcare market development group at Linden Lab, one of the strengths of the growing education community in SL is its “fundamental predisposition to collaborate … [with] teachers, you have this built-in culture of collaboration.”(Waters, 2009). Teachers (educators), succeed by working with other people on projects and learning from them and leveraging on each other’s work. It is, therefore, not surprising that Second Life has proven to be such a useful platform for their professional development.

10        The collaborative environment in SL, in the opinion of John Lester, is on two levels – one is that you will find other faculty to work with on projects and figure out best practices for common goals; on another level, educators can also leverage on all the content, tools and material already created and presented in SL. For example, the American Chemical Society has an interactive museum in SL users can freely visit. John Lester sums it up stating that SL “is a rich ecosystem of learning experiences that are open to the public. Teachers don’t have to create everything from scratch.” (Waters, 2009). Here we note a crucial principle in knowledge management initiatives – knowledge reuse. Hence, in a way, SL is not only a potential knowledge sharing and collaboration tool – it is also a knowledge reuse system.

11        Another important factor for SL use by educators is the networking opportunities facilitated by the connections made in SL. According to Chris Collins, project manager for the University of Cincinnati’s Second Life Project, “It’s easier than ever to become isolated … [it’s] a side effect of the technology so many of us work with today. I work in a large public urban university in a great city with lots of stuff to do and see, but I still find myself stuck in my department silo. When I go into a place like Second Life, suddenly I can find people in my field from all over the world.” (Waters, 2006). Collins adds that its the “serendipitous professional interactions” that make virtual worlds uniquely valuable to K-12 educators. “It’s that chance encounter with people who share your interests or research.”

No grazing — jump in and find a community

12        A recommendation was made by Jonathon Richter, research associate at the Center for Advanced Technology in Education at the University of Oregon, for educators who wish to get the most out of the professional development opportunities in SL. He advised that they should “jump in and find a community that [they] have some connection to” and hence, no grazing. He said: “If you just wander around, looking for content to consume, flying through empty space, trying to figure out why people do this, you’ll miss the point. If you miss the social aspect — the water-cooler discussions — you miss the essential value of the environment. It’s not until you become part of a community that it all makes sense.” (Waters, 2006).

Teaching tool to enhance student learning experience

13        Wang and Hsu (2009) summarizes the merits of adopting SL in teaching and learning. They listed the following as the reasons:

a. enriched learning experience;[2]

b. strengthening a sense of social presence

c. multi-level interaction;

d. promotion of constructivism; and

e. enriched multimedia resources.

Enriched learning experience

14        Wang and Hsu (2009) states that SL provides a near-real life environment and gives users access to objects or phenomena impossible to observe or examine in real life. They give the following examples:

a. The International Spaceflight Museum which had designed a series of simulation modules enabling users to play with scientific objects such as a lunar landing and a solar system.

b. The National Oceanic and Atmospheric Administration which had built the Earth System Research Laboratory featuring a simulator with which users could experience tsunami waves and observe the process of glacier retreat.

Strengthening a sense of social presence

15        SL encourages and strengthens a sense of social presence. According to Short, Williams and Christie (1976) “social presence” refers to the “sense of being together with someone”. Social presence has been an important element in the online learning environment because the sense of this presence has usually been missing or weak in the asynchronous learning environment in comparison to the face-to-face learning environment (Garrison, Cleveland- Innes, & Fung, 2004; Ocker & Yaverbaum, 1999). In SL, users interact with each other using their avatars – their virtual self. Users can either create an avatar similar to themselves or something totally different from their own real-life appearance. A study by Jung (2008) revealed that social presence has a direct relationship with the users’ intention to participate in SL. Establishing social presence by interacting with one another (via their avatars) and these interactions give SL great potential in enhancing online learners’ sense of community. So, for an online class, perhaps the instructor could consider meeting on SL once in a while to give a sense of the social presence of all participants in this class.

Multi-level interaction

16        Interactions that occur in a web-based learning environment can fall into one of three categories:

a. relationships between students and content;

b. relationships between instructors and students; and

c. relationships among students. (Wang & Hsu, 2009).

17        According to Wang and Hsu (2009), SL can better support and enrich the last two types of social interactions (i.e. relationships between instructors and students and relationships among students) because participants in SL can interact with each other through its synchronous communication tools (text chat and voice chat. Social interaction occurs through verbal as well as non-verbal forms in SL. The verbal and non-verbal forms of interaction are the forms that characterize people’s real-life communication — speech, writing, and body language. Here, nonverbal forms would include the avatars’ posturing, appearance, movement, proximity to other avatars, and sound effects. The verbal forms, on the other hand, include both text chat and voice chat.

Promoting constructivism

18        Constructivists believe that learners construct knowledge through their own prior knowledge and unique personal experiences of the world. Thus, educators should provide a learning environment that allows users to explore and construct their own meaning. Dalgarno (2001) summarized three broad principles to define the constructivist view of learning:

a. Each person forms their own representation of knowledge.

b. Learning occurs when the learner’s exploration uncovers an inconsistency between their current knowledge representation and their experience.

c. Learning occurs within a social context, and interaction between learners and their peers is a necessary part of the learning process.

19        In relation to this, Wang and Hsu (2009) believed that SL can support computer-mediated communication and facilitate the exchange of social experiences. The SL environment closely resembles the real world, allowing SL instructors to “design authentic tasks whereby learners can explore the world, solve problems, construct and negotiate meaning, and collaborate with other learners”.

Enriched multimedia resources

20        SL supports text, images, and 3D objects; as well as the playback of audio and video files, enables two-way voice chat, and connects with hyperlinked materials on the web. Users can capture 2D-image SL snapshots or record video clips to document activities and interactions. The legitimate members of an island can create and build 3D models and can design interaction through the SL programming scripts. (Wang & Hsu, 2009).

Second Life for action learning

21        What is action learning, and why is it a preferred alternative to teacher-centred approaches to learning? Action learning is based on the relationship between reflection and action. Action learning has been widely used in organizational training, mainly for leadership and executive development (Horan, 2007; Kramer, 2007). Many organizations had adopted action learning in training their managers and executives, such as Dow Chemical (Marquardt, 2004), LG Electronics (Marquardt, 2004), Walt Disney Company (Asia Pacific) Ltd. (Horan, 2007), and university teaching such as at Ohio University or Case Western Reserve (Kramer, 2007).

22        Action learning has been defined as a continuous process of learning and reflection, most of the time with the intention of “getting things done” (McGill and Beaty, 1992). It is also a means developing intellectual, emotional, or physical techniques to handle real and complex business issues (Marquardt, 1999). It focuses on achieving changes in the behaviour of the individuals involved through these practices (Marquardt, 1999). It is, therefore, a valuable learning process linked with and even embedded in the business (Horan, 2007). Action learning is envisioned to help students to apply what they have learned in the process of solving current problems to solve other more complex problems in the future (Kramer, 2007).

23        Wagner and Ip (2009) tested the usefulness of SL as an action learning environment in a senior course for management information systems students. Their findings were that SL enabled students in the study to carry out assignments that were otherwise difficult to undertake. Students in the study could complete real-world tasks, such as building a business or parts thereof, in an environment where failure costs little, but success can be very rewarding. The learning that occurs, from planning to understanding, is perceived as valuable by the students, despite the considerable effort required to develop meaningful structures and activities in a virtual world.

24        Particularly, the students recognized the value of action learning, associating the learning process of planning, action, experience, and understanding with overall learning benefits. However, the effort students had to put into completing the assignment seemed to not matter in their value assessment. (Wagner and Ip, 2009). The study found that effort reduced overall value assessments insignificantly, and improved the model only minimally. This, however, did not mean that students did not care about the workload — high workload was a frequent criticism and this was reflected in student evaluations of the course. However, effort as a determinant of overall value of the learning experience was not significant.

25        However, Wagner and Ip (2009) recognised that whether or not student perceptions of learning are good indicators of their actual learning remained to be seen. The study measured perceptions, not actual learning outcomes.

26        Apart from the above findings, Wagner and Ip (2009) also stated that their study revealed new applications and re-use opportunities in SL. They gave the example of students studying customer relationship management who are explore real systems or real customer relationship interfaces. Businesses created in Second Life offer an attractive environment for students to explore real customer interfaces and experiment with them — opportunities which are severely limited in the real-life world.

27        In another study, (Wang & Braman, 2009) found that the immersive nature of Second Life not only gives students a sense of real world experience but also enables them to actively pursue the understanding of the materials rather than simply listening to the lectures or watching videos. Wang and Braman (2009) discovered that important verbal and nonverbal visual cues observed by students in a traditional classroom setting (Richmond and McCroskey, 2004) were still present through the immersive visual and audio components of SL. Activities which were well designed to let SL fit into classroom discussion, helped to engage and motivate students to learn.

C         Second Life in the corporate world

28        In the introduction section, we alluded several large corporation — Dell, BBC, Nissan, Adidas, IBM, Reuters, Sony BMG, General Motors, Toyota, ABN Amro – having their presence on SL. In this section we discuss how corporations have used SL.

29        In this section we shall discuss how some of these corporations have leveraged on SL to increase efficiency and productivity. From holding meetings, to actually carrying out e-Commerce via SL, corporations have exploited the virtual environments and tools in SL to create value to their own shareholders.

IBM

30        Top on our list of companies who have exploited SL well is IBM. The company provides us with an exciting look at the potential of this virtual world. IBM uses it to stimulate and foster collaboration and information sharing among its employees who scattered across the globe. It is also using SL, apart from holding employee meetings there, as a means of training new employers in its “cultural values, decision-making processes and technical skill sets”. (Hobson, 2006).

31        The use of SL in IBM has been spearheaded by its prestigious IBM Academy of Technology (AoT). The AoT has always been on the look out for emerging technology trends. Virtual worlds had already entered their radar for quite some time. In 2007, the group was clear that virtual worlds held more potential than just a gaming platform or a social networking tool. The AoT understood that virtual environments could potentially revolutionise the way in which businesses could be carried out globally. (Linden Lab, 2009).

32        IBM held a Virtual World Conference and an Annual Meeting in late 2008. Both were hosted in a secure SL environment with space specially designed by IBM for keynotes, breakout sessions, a Green data centre, a library and areas for community gathering. The idea of the conference on virtual worlds was posed by Neil Katz, an AoT member and IBM distinguished engineer. The Vice-President Chairman Emeritus of the AoT, Irving Wlasawsky agreed and went a step further. He suggested holding a conference on virtual worlds in a virtual world. The idea was approved and in late 2008, the conference was held in a secure environment in SL.

Getting ready for virtual conference

33        Neil Katz gathered a team with members taken from across IBM. This team would be responsible for the planning, schedules and design of the conference. There were two major tasks that had to be done to prepare the conference — preparation of the regions in SL to create secure locations for conference attendees; and the actual running of the conference and training of attendees who were unfamiliar with SL.

34        One team worked closely with Linden Lab for a few months designing and establishing 16 regions in SL, behind IBM’s corporate firewall, creating a secure location for conference attendees while maintaining access to IBM and other islands within the wider SL environment.

35        Another team, populated by volunteers from IBM’s Virtual Universe Community (VUC), helped run the event and trained new SL users. Training included sessions on basic tips for “getting started”, e.g. how to register for SL, enable voice, use the viewer, and navigation within SL. The aim was to make everyone comfortable their avatars and with the conference space before the event itself. (Linden Lab, 2009). This idea of getting participants at ease with using their avatars and navigating within the virtual environment seems to be critical to the success of initiatives involving socialisation in virtual worlds. This will be discussed further in a later section of this paper.

Virtual World Conference in Second Life

36        The three day conference attracted 200 members globally. There were three keynote addresses and 37 breakout sessions. The conference utilised greeters to ensure it was easy for attendees to find the sessions. There were kiosks set up at the reception plaza. These enabled attendees to click and teleport directly to their session of interest.

37        The virtual environment enabled presenters to try more creative and interactive approaches. For example, some slides were displayed on viewers placed in the gardens. Another presenter used a 3-D model of a server to show attendees in more detail how to service the machine. (Linden Lab, 2009)

Success of the virtual conference

38        Attendees gave the conference the thumbs up and feedbacked that they thoroughly enjoyed the experience. IBM has saved a huge amount of money by taking the conference on virtually. The initial investment for the conference was estimated to be US$80,000. The following were the savings reaped:

a. over US$250,000 in travel and venue costs; and

b. over US$150,000 in additional productivity gains (as attendees were already at their computers, they could dive back straight to work after attending the sessions).

39        What was even more crucial was the use of the space by the attendees to network and socialize, which lacked in conference calls and teleconferences (the other electronically mediated communications). The virtual conference sessions usually ran long as attendees continued to chat about break out topics. It was found that at the end of each day, participants would gather in various places for conversations over virtual cocktails.

Annual general meeting held virtually

40        So impressed was Joanne Martin, President of the IBM AoT, with the virtual conference, that she cancelled the AoT’s physical AGM at two weeks’ notice and scheduled it as a virtual meeting. A portion of the meeting was held on SL, while the rest, owing to the complexity of the agenda, was done via webcasting and video conferencing.

41        Although other technologies were used, SL became a persistent hang out for attendees. There were participants gathering and networking in the AoT reception area even though there were no poster sessions scheduled  there. SL created a spontaneous gathering of people.

42        This led to the decision to officially schedule in networking breaks or cocktails hours — just as in traditional conferences — in the daily timetable.

Participants discover that virtual events are real

43        Many participants of the two events felt that they had attended a real-time meeting, interacting with others and bringing home with them practical information. Joanne Martin said:

“The immersion [in Second Life] resulted in a very strange, yet compelling psychological effect, where part of me really felt like I was physically there. And I would watch myself walk around and talk to people. Colleagues would wander over to talk to me. So there was that serendipitous meeting.”

Even avowed sceptics of SL were converted after attending the above virtual meetings. (Linden Lab, 2009).

Future of virtual worlds at IBM

44        After holding the above two events virtually, the AoT believes that virtual worlds will impact on business and IBM’s clients. The best way to learn about virtual worlds, in the opinion of AoT is to use them: which is what IBM is presently committed to.

INTEL

Second Life to the rescue of Intel’s Embedded Channel Conference

45        When Intel, as a cost-saving measure, cancelled its bi-annual 2009 Embedded Channel Conference (ECC) to be held at Monte Carlo, Elaine Cook, Intel’s Event Manager, had to get creative. Before the Global Economic Crisis, the ECC was held twice a year. It enabled Intel employees to network and access the latest information from Intel leadership. Cook and team had to find a suitable alternative to deliver the same content and level of interaction to 150 employees and business partners. Cook and team weighed various electronically mediated platform. Intel’s internal platform normally used for online meetings could not be used because that would mean excluding non-employee participants. After walking through the Intel campus in SL, and being impressed with it, Cook and team made a unanimous decision to conference will be conducted in SL. (Linden Lab, 2009a).

46        The budget for the virtual conference was US$35,000 as opposed to the US$300,000 it would cost if it had been face to face in Monte Carlo. Apart from the obvious dollar savings, there was also the savings made from not travelling.

The virtual conference was attended by 35 Intel employees and 122 distributors and members of Intel’s Embedded Communications Alliance from 20 different companies attended the vECC. Altogether, it was an increase of 120 to 147 registered participants. [3]

Immersive workspaces

47        For this project Linden Lab worked with their strategic partner, Rivers Run Red (RRR), which had developed Immersive Workspaces exclusively for SL. Using this platform for the conference, Intel was able to increase conference reach while reducing its carbon footprint. According to Justin Bovington, CEO of RRR:

“Immersive Workspaces is not a replacement for conferences but an evolutionary enhancement. Communities can build momentum prior to the event, add value to the proceedings and continue the dialogue after the actual conference.”

48        The web-based Immersive Workspaces did not only bridge the gap with seamless control and media sharing, it also enabled the enterprise to produce feedback and detailed reports on activity time, duration, cost analysis and travel savings (and to build carbon footprint emission models) in real time.

Outcomes and reactions of the vECC

49        Did the virtual conference really engage the participants as would a face-to-face conference? The vECC organizers discovered that the SL environment offered a degree of flexibility over the creation of about just any activity that they could imagine to foster social interaction. (Linden Lab, 2009a).

50        How did the organizers achieve strong participant engagement? They accomplished this by conducting walkabout training, game activities and interactive information stations; and Intel product experts were present to answer queries from the participants. There were the “wow” and “fun” factor gained: participants reported having fun at the vECC. (Linden Lab, 2009a).

51        Even though there were glitches like network connectivity and firewall issues, and some minor confusion as to navigation within SL, and lack of time for participants to take part in pre-conferencing training and orientation on SL and Immersive Workspaces. Nevertheless, these were not major going forward, as work with the IT department could start earlier with future events to iron out firewalls, connectivity and software issues. It was interesting that the Intel team and RRR had only three short weeks to pull the entire vECC together, and that most of the teething problems could be caused by the extremely short deadline.

52        Going forward, Intel see the virtual as a complement to real world activities as it is an additional tool for communication, collaboration and community building. They believe that mixing and matching real world meetings and conferences with virtual world events will keep their employees, partners and vendors connected at a fraction of the cost. (Linden Lab, 2009a).

CIGNA-vie: Engaging and interactive health and lifestyle training for global workforce

53        In this subsection, we discuss the use of SL for employee training in matters which are not directly connected to work but remain a very important factor in costs to a corporation — employee health. Here we see how CIGNA vielife uses SL to engage employees of their clients to educate them on health issues.

Background of CIGNA vielife

54        Vielife provides focussed and measureable health and well being solution: health risk assessments and lifestyle management programs to companies/clients like Blue Cross/Blue Shield, Unilever, KPMG and GlaxoSmithKline. In 2006 vielife was bought over by CIGNA. In 2008, CIGNA and vielife launched a pilot nutrition program in SL.[4] The program was successful and plans have been made to explore a wider range of training programs on SL that addresses other health issues like sleep, stress and fitness.

55        Vielife chose SL as it was inspired by the positive impact the immersive environment in SL provided. Jason Race, Project Manager on the SL program in vielife explained that participants in the virtual world participated in more active conversation than they would in a real world face-to-face conversation. He added that, normally, a person would rarely tell a colleague about his/her health concerns; but when some level of anonymity is present, such as like that afforded in the SL environment, people open up.

56        Participants from all ages reacted positively to SL; and it was not true that SL would appeal only to the 18 to 25 age bracket — evidence that the element of fun cannot be ignored when choosing a knowledge sharing and socialization platform. Needs and information-seeking behaviour alone cannot by themselves sustain the system.

57        vielife’s GET island was designed to include a wide variety of learning spaces — areas for group seminars, educational games, socialising, and individual counselling. Even though the spaces look like the traditional real world, more impactful messages were delivered with the use of the rich opportunities afforded by the virtual world environment, e.g. three-dimensional visuals and giant menus at each table allow participants to be seated with their peers like they are sitting for a real meal and discussing the menu options together. (Linden Lab, 2009b).

58        As with globalization now, and multinationals truly have a globally distributed workforce, there is need to communicate with employees to effectively manage their health risks. With costs increasing, there is no reason why a virtual environment cannot provide an excellent platform on which to deliver relevant content. With the success of GET, interests of executives across the board at CIGNA were piqued and groups are now investigating ways to roll out the development of a broader range of health services on SL.

D. SL as a Platform For K Sharing and Collaboration

What is knowledge sharing?

59        According to Becerra-Fernandez, Gonzalez and Sabherwal (2004):

“[knowledge] sharing is the process through which explicit or tacit knowledge is communicated to other individuals. Three important clarifications are in order. First, knowledge sharing means effective transfer, so that the recipient of knowledge can understand it well enough to act on it [Jensen and Meckling, 1996]. Second, what is shared is knowledge instead of recommendations based on the knowledge; the former involves the recipient acquiring the shared knowledge as well, as having the ability to take action based on it, whereas the later (which is direction…..) simply involves utilization of knowledge without the recipient internalizing the shared knowledge. Third, knowledge sharing may take place across individuals as well as across groups, departments, or organizations [Alavi and Leidner, 2001].”

60        Can SL fulfil the three clarifications that will qualify it as a knowledge sharing instrument? The following questions have to be borne in mind:

a. Can SL be used to effectively transfer knowledge so that the recipient of that transfer can understand that knowledge well enough to act on it?

b. Can SL be used to share the knowledge itself and not recommendations based on the knowledge?

c. Can SL enable knowledge sharing to take place across individuals as well as across groups, departments or organizations?

61        Before we answer these three questions let us take a step back. Our discussion so far has been focussed on the successful use of SL by educators and organizations; perceptions of the users were generally positive. In the next few paragraphs we will examine the shortfall in SL — problems experienced by users and issues that may impact greatly on individuals and organizations. By examining those issues, we can understand more fully if or not SL is truly a suitable system for knowledge sharing.

Problems encountered with Second Life

Assault and harassment in the virtual world

62        Linden Lab has acknowledged in it newsletter, Second Opinion, that assault and harassment were the two most common violations in SL. The motives for these, according to Linden Lab, are not different from real world assessment. Harassing behaviour includes continuous instant messaging and other unwanted contact, sexual harassment, verbal abuse and impeding the movement of avatars. Linden Lab also acknowledged that there is present a “creep factor” when the harasser is anonymous. The crucial problem is that anonymity rules SL. (Bujega, 2007).

Extended liability problem

63        Bujega (2007) articulated the problem the following manner (he refers to a professor who has assigned his students an exercise on SL): Did you have appropriate warnings in the syllabus for such scenarios (as described in point a, above)? Will you, as the professor, have to pay legal fees to defend himself when something goes wrong in SL? We took the liberty of calling this problem the extended liability problem. The school administration, or the individual professors, may now be liable, or at least, not protected against, legal actions for incidents affecting its students in SL. Linden Lab considers itself distributor of content and  has, not surprisingly, stated that it “has limited control over the quality, safety, morality, legality, truthfulness, or accuracy of various aspects of the Service.” In other words, Linden Lab disclaims any responsibility for misuse of its services by rogue individuals or groups.

Griefing

64        Griefing is where one player harasses another simply for the sake of doing so. In a study by Wang and Braman (2009), they found that the respondents rated griefing/abuse as being the second worst experience in SL. Wang and Braman also stated that some students who had experienced a “griefing attack” may have found it too upsetting and this discourages them from returning to SL.

Hardware/software requirements

65        Sanchez (2009) stated that the software required to run SL was very computer-processor intensive and it required a persistent and fast Internet connection. Sanchez highlighted this thus:

“Exemplifying the intensive processing required to use the Second Life software, a student recalled, “I couldn’t run any other programs while Second Life was running.” Another student said, “Second Life took up all the RAM on my personal computer.”

He went on to illustrate other technical problems such as avatars appearing without their clothes on and objects disappearing while they were in a building. Other reported problems by students were inconsistencies of how buildings appeared when looking at them from different distances.

Virtual ghost towns

66        The phenomena of corporate ghost towns on SL was highlighted in an article in The Age. (Moses, 2008). The article highlighted that SL corporate bases of big brands like Dell, Toyota, Coca-Cola, BMW, AOL and Vodafone were like ghost towns with users who appeared to be staff members. There was a distinctive lack of the consumers (customers and potential customers) that these SL bases were meant to attract and interact with. In terms of brand engagement, SL did not seem to be the appropriate platform for many companies. In fact, a number of SL corporate bases established mainly for brand engagement have closed.

Can SL be used to effectively transfer knowledge so that the recipient of that transfer can understand that knowledge well enough to act on it?

67        As said in para 20 above, SL supports text, images, and 3D objects; as well as the playback of audio and video files, enables two-way voice chat, and connects with hyperlinked materials on the web. Users can capture 2D-image SL snapshots or record video clips to document activities and interactions.

68        This is illustrated in the vielife GET example given above, we see that this is possible. As the environments established on SL, even if they mimic real life, enable the delivery of rich media content to the users, enabling both explicit as well as some tacit knowledge to be transferred. The success of that project lays testament as to the effectiveness of the knowledge transfer by the content provider and the internalization of that knowledge by the recipient.

Can SL be used to share the knowledge itself and not recommendations based on the knowledge?

69        In para 14 above, we highlighted the principle of an enriched learning experience afforded by SL. The depth and width of possibilities in relation to content that can be made available in SL,  makes the sharing of knowledge possible and not merely recommendation or directives based on that knowledge.

70        This is better illustrated in para 37 above where in the IBM virtual conference, the virtual environment enabled presenters to try more creative and interactive approaches, e.g. using slides displayed on viewers or using a 3-D model of a server to show attendees of the conference in more detail how to service the machine. It is possible to show the why, how and why in more depth in SL.

Can SL enable knowledge sharing to take place across individuals as well as across groups, departments or organizations?

71        The use of SL by Intel’s vECC, wherein the participants were not only employees of Intel but also supporting organizations, customers and suppliers show that SL does enable knowledge sharing to take place across individuals as well as departments and organizations.

72        For IBM and Intel, it was clear that secured and connected environments were designed specifically for their events. For the Intel vECC, it was even possible to allow individuals and organizations outside Intel to participate.

Socialization and internalization effect

73        As a knowledge sharing and collaboration system, SL provides an more enhanced socialization experience as compared to other electronically mediated communications means like email, instant imaging or teleconference. For example, in para 37, that for IBM’s experience, what was even more crucial for it as an organization was the use of the SL space by the conference attendees to network and socialize, and these were lacking in conference calls and teleconferences.

74        In para 21 to 27 above, we highlighted the issue of action learning and how SL is an appropriate tool for it. Action learning, a continuous process of learning and reflection, most of the time with the intention of “getting things done”, is a process of internalization of knowledge, whereby the recipient of the knowledge is able to acquire the shared knowledge and is able to take action based on that knowledge.

E. Guidelines for use and design of second life in knowledge sharing and collaboration systems

We would offer the following as guidelines for the successful use of SL in knowledge sharing and collaboration:

a. Provide a secure environment for your participants. This is to prohibit users from the public SL environments to trespass and cause problems. Organizations can do this either by working together with strategic partners of Linden Lab, or have their own internal team of SL developers to collaborate with Linden Lab.

b. In designing the environments, ensure that there are sufficient “fun” spaces. The element of “fun” is crucial to the socialization effect of SL. (For example in para 41, we highlighted the fact that here were participants gathering and networking in the AoT reception area even though there were no poster sessions scheduled there. SL created a spontaneous gathering of people.) This also extends to scheduling “fun” time, i.e. “cocktail” time, when preparing for a virtual conference.

c. Ensure sufficient time has been set aside to familiarise the participants with the venues and, more importantly, the basics of using SL — how to move avatars, how to teleport or fly. Above, in para 15, we highlighted that a study by Jung (2008) which revealed that social presence has a direct relationship with the users, intention to participate in SL. Establishing social presence by interacting with one another (via their avatars) and these interactions give SL great potential in enhancing online learners’ sense of community. Therefore, it is important that the participants feel a certain degree of competency in handling their avatars. If not, their feeling of ineptness will discourage further participation in SL.

d. Be aware of network effects. A network effect is the effect that one use of a service, in this case SL, has on the value of that service. Where network effect is present, the value of a service increases as more people use it. (Bansler & Havn, 2004). This can be seen in IBM’s case where 15,000 employees use SL to collaborate, inspire and teach (Internal Coms Hub, 2008). Once you have decided to use SL, ensure that you keep traffic from your participants up, maintain the numbers by ensuring that sufficient environments have been designed; ensure that sufficient bandwith is available; and ensure that just a sufficient amount of moderation (in terms of overseeing that everyone behaves) is present in your SL environments.

e. For companies (B2C) who have attempted to use their SL corporate database as a means of engaging customers, many have failed. SL has a high learning curve. Not many customers are willing to spend much time learning to use SL, just to engage with you organization. There are other much simpler methods of engaging with customers — via your corporate website, Twitter and other social media. Companies who have been successful in using SL, are those that use SL for knowledge sharing and collaboration (as illustrated by IBM’s case and the health education success of vielife GET project).

F. Conclusion

SL is but one of the virtual worlds available currently. There are around 200 virtual worlds available, and some are more adapted virtual worlds. (Internal Coms Hub, 2008.)

Nevertheless, the use of virtual worlds for knowledge sharing and collaboration provides exciting avenues for employees who work in a globally dispersed environment. It enable people to get together in an environment which is as close as you can get in a real world, without leaving the carbon footprint that goes with long distance travel, and also financial savings to the organization. For the employee too, it enhances his/her productivity and, perhaps, leaving him/her with a more equally distributed work-life balance.

References:

Bansler, Jorgn P & Havn, Erling. 2004. Exploring the role of networks in IT implementation: The case of knowledge reuse. Information Technology & People; 2004; 17, 3.

Becerra-Fernandez, I., Gonzalez, A. and Sabherwal, R., (2004). Knowledge Management, Pearson/Prentice Hall.

Bugeja, Michael J. 2007. Second Thoughts about Second Life. The Chronicle of Higher Education, 53 (September 14, 2007), Cl, 4.

Dalgarno, B. (2001). Interpretations of constructivism and consequences for computer assisted learning, British Journal of Educational Technology, 32(2), 183-194.

Garrison, D. R., Cleveland-Innes, M., & Fung, T. (2004). Student role adjustment in online communities of inquiry: Model and instrument validation. Journal of Asynchronous Learning Networks, 8(2), 61-74.

Moses, Asher. 2008. Few lives left for Second Life. The Age. 21 August 2008. Available at http://www.theage.com.au/technology/few-lives-left-for-second-life-20090616-cerp.html

Hobson, N. 2006. Is it Time You Got a Second Life? Strategic Communication Management; Dec 2006/Jan 2007; 11, 1; pg. 3

Horan, J. (2007), “Business driven action learning: a powerful tool for building world-class entrepreneurial business leaders.” Organization Development Journal, Vol. 25, No. 3, pp. 75-80.

Jung, Y. (2008). Influence of sense of presence on intention to participate in a virtual community. Proceedings of the 41st Hawaii International Conference on System Science, 325-325.

Internal Coms Hub. 2008. Some Corporate Virtual Worlds have Become Ghost Towns. Technology Update. Melcrum. Volume 12, Issue 6, p. 9.

Linden Lab. 2009. How Meeting In Second Life Transformed IBM’s Technology Elite Into Virtual World Believers

Linden Lab. 2009. Intel Saves Budget and Goes Green with a Virtual World Conference: Rivers Run Red’s Immersive Workspaces™ in Second Life

Linden Lab. 2009. CIGNA-vielife in Second Life: Engaging and Interactive Health & Lifestyle Training for the Global Workforce

Ocker, R.J. & Yaverbaum, G.J. (1999). Asynchronous Computer-mediated Communication versus Face-to-Face Collaboration: Results on Student Learning Quality and Satisfaction. Group Decision and Negotiation, 8, 427 – 440.

Sanchez, J. 2009. Barriers to Student Learning in Second Life. Implementing Second Life: Ideas, Challenges, and Innovations Library Technology Reports. February/March 2009. pp 29-34.

Short, J.A., Williams, E., & Christie, B. (1976). The social psychology of telecommunications. New York: John Wiley & Sons.

Wang, Yuanqiong & Braman, James. 2009. Extending the Classroom through Second Life. Journal of Information Systems Education, Vol. 20(2) 235

Waters, John K. 2009. A ‘Second Life’ For Educators. T H E Journal, 0192592X, Jan2009, pdf_vol36, pdf_issue1.

What is data mining?

The amount of data on collected by organizations grows by leaps and bounds. The amount of data is increasing year after year and there may be pay offs in uncovering hidden information behind these data. Data mining is a way to gain market intelligence from this huge amount of data. The problem today is not the lack of data, but how to learn from it. In data mining, the data tells the story; it is up to you how you wish to use that information.

Data mining mainly deals with structured data organized in a database. It uncovers anomalies, exceptions, patterns, irregularities or trends that may otherwise remain undetected under the immense volumes of data.

What is data warehousing?

A data warehouse is a database designed to support decision making in an organization. Data from the production databases are copied to the data warehouse so that queries can be performed without disturbing the performance or the stability of the production systems.

For data mining to occur, it is crucial that data warehousing is present.

An example of how well data warehousing and data mining has been utilized is Walmart. WalMart maintains a 7.5 TB data warehouse. Retailers capture Point of Sale (POS) transaction data from over 2,900 stores across 6 countries and transmit them to Walmart’s data warehouse. WalMart, then allows their suppliers to access the data to collect information on their products to analyse how they can improve their sales.

These suppliers will then better understand customer buying patterns and manage local store inventory, etc.

Data mining techniques: What is it and how is it used?

Data mining is not a method of attacking the data; on the contrary, it is a way of teaming from the data and then using that information. For that reason, we need a new mindset in data mining. We must be open to finding relationships and patterns that we never imagined existed. We let data tell us the story rather than impose a model on the data that we feel will replicate the actual patterns.

There are four categories of data mining techniques/tools (Keating, 2008):

1. Prediction
2. Classification
3. Clustering Analysis
4. Association Rules Discovery

Prediction Tools: They are the methods derived from traditional statistical forecasting for predicting a variable’s value. The most common and important applications in data mining involves prediction. This technique involves traditional statistics such as regression analysis, multiple discriminant analysis, etc. Non-traditional methods used in prediction tools are Artificial Intelligence and Machine Learning.

Classification Tools: Most commonly used in data mining., classification tools attempt to distinguish different classes of objects or actions. For example, in a case of a credit card transaction, these tools could classify it as one or the other. This will save the credit card company a considerable amount of money.

Clustering Analysis Tools: These are very powerful tools for clustering products into groups that naturally fall together. These groups are identified by the program and not by the researchers. Most of the clusters discovered may not have little use in business decision. However, one or two that are discovered may be extremely important and can be taken advantage of to give the business an edge over its competitors. The most common use for clustering tools is probably in what economists refer to as “market segmentation.”

Association Rules Discovery: Here the data mining tools discover associations; e.g., what kinds of books certain groups of people read, what products certain groups of people purchase, what movies certain groups of people watch, etc. Businesses can use this information to target their markets. Online retailers like Netflix and Amazon use these tools quite intensively. For example, Netflix recommends movies based on movies people have watched and rated in the past. Amazon does something similar in recommending books when you re-visit their website.

The two major pieces of software used at the moment for data mining are PASW Modeler (formerly known as SPSS Clementine) and SAS Enterprise Miner. Both software packages include an array of  capabilities that enables data mining tools/ mentioned above. Newbies in data mining can use an Excel add-in called XLMiner available from Resampling Stats, Inc. This Excel add-in lets potential data miners not only examine the usefulness of such a program but also get familiar with some of the data mining techniques. Although Excel is quite limited in the number of observations it can handle, it can give the use a taste of how valuable data mining can be – without expensing too much cost first.

Examples of use of information extracted from data mining exercises

Data mining has been used to help in credit scoring of customers in the financial industry (Peng, 2004). Credit scoring can be defined as a technique that helps credit providers decide whether to grant credit to customers. It’s most common use is in making credit decisions for loan applications. Credit scoring is also applied in decisions on personal loan applications – the setting of credit limits, manage existing accounts and forecast the profitability of consumers and customers (Punch, 2000).

Data mining and data warehousing has been particularly successful in the realm of customer relationship management. By utilizing a data warehouse, retailers can embark on   customer-specific strategies like customer profiling, customer segmentation, and cross-selling. By using the information in the data warehouse, the business can divide its customers into four quadrants of customer segmentation: (1) customers that should be eliminated (i.e., they cost more than what they generate in revenues); (2) customers with whom the relationship should be re-engineered (i.e., those that have the potential to be valuable, but may require the company’s encouragement, cooperation, and/ or management); (3) customers that the company should engage; and (4) customers in which the company should in est (Buttle, 1999; Verhoef & Donkers, 2001). The company then could use the corresponding strategies, to manage the customer relationships (Cunningham et al, 2006)

Data mining can also help in the detection of spam in electronic mail (email) (Shih et al, 2008).

Data mining has also been used healthcare and acute care. A medical center in the US used data mining technology to help its physicians work more efficiently and reduce mistakes (Veluswamy, 2008).

There are other examples which we will not deal with here that have been flagship success stories of data mining – the beer and diaper association; Harrah; Amazon and Netflix.

Essentials before you data mine

Apart from management buy in and financial backing, there are certain basics before you embark on a data mining project. As data mining can only uncover patterns already present in the data, the target dataset – you must already have the data and the data resides in a data warehouse or a data mart — which must be large enough to contain these patterns while remaining concise enough to be mined in an acceptable timeframe. The target set then needs to be “cleaned”.  This process removes the observations with noise and missing data. The cleaned data is then reduced into feature vectors, one vector per observation. A feature vector is a summarised version of the raw data observation.

Limitations of data mining

The quality of data mining applications depends on the quality and availability of data. As the data set that needs to be mined should be of a certain quality, time and expense may be needed to “clean” the data that need to be mined.

Not to mention that the amount of data to be mined should be sufficiently large for the software to extract meaningful patterns and association.

Also, as data mining requires huge amounts of resources – man hours, and financially — the user must be a domain specialist and must understand business problems and be familiar with data mining tools and techniques, so that resources are not wasted on a data mining project that will fail at the start.

Also, once data have been mined, it is up to the management and decision makers to use the information that has been extracted. Data mining is not the end all and the magic wand that points the organization to what it should do. Human intellect and business acumen of the decision makers is still very much required to make any sense out of the information that is extracted from a data mining exercise.

Some issues surrounding data mining and data warehousing

1. You’ve data mined – do you think that the bosses will take the proper and appropriate action – the dichotomy between use of sophisticated data mining software and techniques and the conventionality of how organizations make decisions

Brydon and Gemino (2008) highlighted the dichotomy between the use of sophisticated data mining software and techniques as opposed to the conventionality of how organisations make decisions. They believed, rightly so, that “tools and techniques for data mining and decision making integration are still in their infancy. Firms must be willing to reconsider the ways in which they make decisions if they are to realize a pay off from their investments in data mining technology.”

2. One size fits all data mining packages for industry. Does this fit the purpose of data mining at all?

There are now available “one size fits all” vertical applications for certain industries/ industry segments developed by consultants. The consultants market these packages to all competitors within that segment. This poses a potential risk for companies who are new to data mining as when they explore the technique and these vertical “off the shelf” solutions that their competitors can also easily obtain.

Nevertheless, having said that the application of this technology is limited only by our imagination, so that it is up to the companies to show and why they wish to use the technology. They should also be aware of the fact that data mining is a long and resource intensive exercise which an “off the shelf” solution deceptively presents as easy and affordable. Only companies that learn to be comfortable in utilising these tools on all varieties of company data will benefit.

3. The use of data mining for prediction – use in non-commercial and “problematic” areas. E.g. prediction of terrorist acts

In 2002, the US government embarked on a massive data mining effort. Called the Total Information Awareness The basic idea to collect as much data on everyone and sift this through massive computers and investigate patterns that might indicate terrorist plots (Schneier, 2006). However, a backlash of public opinion drove the US Congress to stop funding the programme. Nevertheless, there is belief that the programme just changed its name and moved inside the walls of the US Defense Department (Harris, 2006)

According to Scheier (2006), why data mining for use in such a situation will fail because Terrorist plots are different from credit card fraud. Terrorist acts have no well-defined profile and attacks are very rare. “Taken together, these facts mean that data-mining systems won’t uncover any terrorist plots until they are very accurate, and that even very accurate systems would be so flooded with false alarms that they will be useless.”

This highlights the principle pointed earlier on in this paper – data mining is not a panacea of all information problems and is not a magic wand to guide anyone out of the wildnerness.

4. Ethical concerns over data warehousing and data mining – do you have any? Should companies be concerned?

Data mining produces results only if it works with higher volumes of information at its disposal. With the higher amounts of data that needs to be gathered, should we  also be concerned with the ethics behind the collection and use of that data.

As highlighted by Linstedt (2004), the implementers of the technology are simply told to integrate data and the project manager builds a project to make it happen – these people simply do not have the time to ponder whether the data had been handled ethically. Linstedt proposes a checklist for project managers and techonology implementers to address ethical concerns over data:

• Develop SLA’s with end users that define who has access to what levels of information
• Have end-users involved in defining the ethical standards of use for the data that will be delivered.
• Define the bounds around the integration efforts of public data, where it will be integrated and where it will not – so as to avoid conflicts of interest.
• Do not use “live” or real data for testing purposes – or lock down the test environment; too often test environments are left wide-open and accessible to too many individuals.
• Define where, how, and who will be using Data Mining – restrict the mining efforts to specific sets of information. Build a notification system to monitor data mining usage.
• Allow customers to “block” the integration of their own information (this one is questionable) depending on if the customer information after integration will be made available on the web.
• Remember that any efforts made are still subject to governmental laws.
• Nothing is sacred. If a government wants access to the information, they will get it.

Conclusion

Data warehousing and data mining is only one of the tools or technique an organization can use discover knowledge. It is also an expensive, time consuming and not fool proof. There are other ways of discovering knowledge which may be more easily digestible by an organization. For example, information about customer preferences can easily be extracted from customers from customer feedback avenues – a web page, social networking sites, etc.

Just because an organization does not data mine, does not mean that it is not utilising its data well – it can also mean that it is managing its resources to the best of its abilities.

References

Brydon, M. & Gemino, A. 2008.You’ve Data Mined. Now What? Communications of the Association for Information Systems. June 2008. Volume 22, Article 33. pp.603- 616.

Buttle, F. (1999). The S.C.O.P.E. of customer relationship management. International Journal of Customer Relationship Management, 1(4), 327-337.

Cunningham, C., Song, I. & Chen, Peter P. 2006 Data Warehouse Design to Support Customer Relationship Management Analyses. Journal of Database Management. Apr-Jun 2006. Vol. 17, Iss. 2; pp. 62, 23 pgs.

Harris, S. 2006. TIA Lives On. Retrieved from National Journal website <http://www.nationaljournal.com/scripts/printpage.cgi?/about/njweekly/stories/2006/0223nj1.htm> on 8 February 2010.

Keating, B. 2008. Data Mining: What is it and how is it used? The Journal of Business Forecasting. Fall 2008.p 33-35.

Linstedt, Dan E. 2004. Data Warehousing Ethical Concerns: Security, Access and Control. Retrieved from TDan website <http://www.tdan.com/view-articles/5186> on 8 February 2010.

Peng, Goh Chwee. 2004. Credit scoring using data mining techniques. Singapore Management Review. July 2004.

Punch L, 2000. “Shedding light on credit scores”. Credit Card Management, August: 78-80.

Shih, Chiang, Lin and Shih. 2008. Data Mining Methods in the Detection of Spam. Journal of Business and Management – Vol. 14, No. 2, 2008. pp. 117-129.

Veluswamy, R. 2008. Golden Nuggets: Clinical Quality Data Mining in Acute Care. The Physician Executive. May/June 2008. pp 48-53.

Verhoef, P. C., & Donkers, B. (2001). Predicting customer potential value: An application in the insurance industry. Decision Support Systems, 32(2), 189-199.

Schneier, B. 2006. Why Data Mining Won’t Stop Terror. Retrieved from Wired website <http://www.wired.com/politics/security/commentary/securitymatters/2006/03/7037> on 8 February 2010.

Coffee Bean & Tea Leaf – Specialty Coffee House

INTRODUCTION

International Coffee & Tea is the parent company of Coffee Bean & Tea Leaf. Founded in 1963, The Coffee Bean & Tea Leaf is a chain of specialty coffee and tea stores. Through its more than 315 stores in California, Arizona, Nevada, Singapore, Malaysia, Korea, Brunei, Indonesia, the United Arab Emirates, Israel, Australia, China, Kuwait, Egypt, Qatar and the Philippines, the company serves more than 100 million coffee and tea beverages throughout the world annually, with annual sales of US$73.6.

The company’s products include coffees, teas, powders and extracts, brewing equipment and grinders, tea accessories, mugs and tumblers, cookies and sweets and the Ice Blended brand of drinks and drink-making kits. International Coffee & Tea is headquartered in Los Angeles.

Over the past five years, The Coffee Bean & Tea Leaf® has grown internationally (in 22 countries) from 217 stores to over 750 at the end of 2008, serving more than 100 million beverages each year, including over 20,000 Ice Blended® drinks each day. Outside of the United States, The Coffee Bean & Tea Leaf has presence (outside USA) in Brunei (4 outlets), Malaysia (10 outlets in East Malaysia; 40 outlets in Peninsula Malaysia), China (23 outlets), India (5 outlets), Indonesia (30 outlets), South Korea (163 outlets), Philippines (25 outlets), Singapore (45 outlets), Sri Lanka (3 outlets), Vietnam (3 outlets), Bahrain (3 outlets), Egypt (11 outlets), Kuwait (11 outlets), Oman (1 outlet), Qatar (5 outlets), Saudi Arabia (7 outlets), United Arab Emirates (16 outlets), Israel (14 outlets) and Mexico (5 outlets). Stores in Peninsula Malaysia and Singapore are company owned and operated. Stores in other territories are run by franchise operators. Our international expansion out of USA has been done via franchising and the opening of company-operated stores. For growth in number of stores annually, see Appendix A.

The Coffee Bean & Tea Leaf® can be found in neighborhood locations and other nontraditional locations such as – grocery stores, shopping malls, military bases, airports and university campuses. Potential for expansion still available for franchising opportunities in Europe, parts of Middle East, parts of Asia, Australia, New Zealand, South America, Central America (other than Mexico) and Canada.

With the global financial crisis impacting our business in 2008, how can we at Coffee Bean & Tea Leaf, maintain our markets, increase our revenues and expand our markets?

CURRENT STATE OF THE SPECIALIST COFFEE SHOP INDUSTRY

Although accounting for only 7.5% of sales in the US$395 billion cafés/bars sector, specialist coffee shops have been the growth leader over the year 2008, as consumers demand a caffeine jolt in a relaxed, up market “third place” between home and work/school. Although value sales growth in specialist coffee shops has outrun unit expansion in most years, it trended downwards in 2007, amid slowing consumer spending in many major markets, as well as further expansion into lower-income emerging markets. In 2008, it dropped further, brought down by a severe slowdown at Starbucks, by far the largest chained operator, which closed hundreds of outlets due to falling sales and consumer traffic.

In Singapore, chained specialist coffee shops was the fastest growing subsector in 2008 with value sales rising 15%, due mainly to major chains proliferating in both city and suburban areas. Coffee Bean & Tea Leaf and its closest rival, Starbucks, expanded aggressively into heartland malls to compete against each other. See Appendix B for more details of the industry in Singapore.

Western Europe and Asia Pacific continue to be the primary sales drivers in cafés/bars, owing to well-entrenched café and drinking cultures, with just five markets (Spain, Japan, Italy, the UK and South Korea) accounting for half of 2008 global sales, while together the two regions combined for well over half the world’s outlets. Growth collapsed in North America in 2008, with the US housing meltdown and its subsequent effect on consumer spending having a hugely negative impact on discretionary cafés/bar purchases. Starbucks saw sales fall by US$470 million compared with 2007, a far cry from the double-digit annual growth the chain has enjoyed over the last 10 years. As they have elsewhere, consumers in the US and Canada have cut back on visits to cafés and bars, spending less when they choose to indulge, and purchasing more from supermarkets and other retailers. The strong push into coffee led by fast food retailers such as McDonald’s and Dunkin’ Donuts has siphoned traffic away from the previously booming specialist coffee shops sector. With the lackluster results posted by the industry, Starbucks’ posting of it latest financials were eagerly awaited.

On 5 November 2009, Starbucks announced strong 4th quarter 2009 results. Although net revenues were $1.7 billion in Q409 compared to $1.8 billion in Q408, with the decline due to decreased revenues from fewer company-operated retail stores; non-GAAP U.S. operating income for Q409 was $206.8 million compared to $79.5 million for the same period a year ago. Non-GAAP operating margin expanded to 12.0% in Q409 compared to 4.4% in the corresponding period of fiscal 2008. As illustrated by the Starbucks’ results, survival in the industry will depend on higher productivity (lower costs, increased labour efficiency and reducing product waste); brand differentiation; an increased focus on food is key as more operators look to drive traffic at all times of day; and the continuation of the “third place” principle as experience will remain all-important, even in a time of economic difficulty, consumers will still demand a “third place” for relaxation and socializing.

COMPETITORS: INDUSTRY RIVALRY

Within the territories in which the Coffee Bean & Tea Leaf operates, the competitive landscape is summarized below.

US

Despite its recent decline, Starbucks Corp is still the leader in the US chained coffee specialists subsector, with an 88% value share in 2008. Next on the list is Caribou Coffee with 3% share of total outlets in 2008 (about 60% of its outlets are located in places posing little threat to Starbucks – Minnesota or Illinois). Market saturation and maturity will affect this sector over 2009. Although some chained and independent coffee shops, cafés and bars will close, there is still an overabundance of specialty coffee outlets, and currently demand does not equal supply. More outlets are expected to close in the coming years, with the number predicted to decline by 3% over the forecast period.

Singapore

In Singapore, the three largest chain specialist coffee shops are Starbucks, The Coffee Bean & Tea Leaf, The Coffee Connoisseur (owned by Sarika Coffee Co (S) Pte Ltd. Other smaller competitors are Coffee Club, Spinelli’s, Pacific Coffee, Gloria Jeans, Trung Nguyen Cafe Chain, San Francisco Coffee and Coffee Connection. See Appendix B for more of their brand shares in Singapore. Competition is high between the players. Leading companies are Starbucks Coffee Singapore Pte Ltd and Coffee Bean & Tea Leaf (Singapore) Pte Ltd, both of which compete against emerging cafés/bars which have started offering similar ranges of premium quality roasted coffee along with a wide menu of desirable food choices.

 The latest newcomer to the scene is Trung Nguyen Coffee, a Vietnamese coffee chain with over 1,000 retail establishments in Vietnam is an emerging franchise brand that focuses solely on brewing Vietnamese coffee. At the end of 2008, it had three outlets in Singapore and is slated to open another four more in 2009. Competition between specialist coffee operators is expected to intensify over 2009 as each will drive for high-traffic locations in upcoming malls and integrated resort projects.

Malaysia

Smaller international as well as local chains such as San Francisco Coffee Co, Gloria Jean’s and Hoca Coffee registered weaker performance than large international chains such as Starbucks and The Coffee Bean & Tea Leaf. In 2008, we, Coffee Bean & Tea Leaf advertised aggressively through print media as well as in-store advertisements during its launch of The Coffee Bean Card in January 2008. Both Starbucks and The Coffee Bean & Tea Leaf invested sizeable resources in advertising and promotions to boost their businesses and enhance their brand names. Over the forecast period, chained specialist coffee shops are likely to expand to office buildings so as to target the working class, who are more willing to splurge on high-end coffee to indulge, comfort and energise themselves while being hard at work.

Rivalry is high but scope for expansion for the brands is high as theyare likely to expand to East Malaysia in line with the rapid development of retailing landscape in this second-tier region of the country. In keeping with the high rivalry, prices of items at cafés/bars are likely to drop gradually over the forecast period with competition intensifying, with players likely to offer more promotions or even value set meals to attract consumers.

Philippines

In 2008, Starbucks saw the largest leap in shares in terms of value sales from 45% in 2007 to 49% in 2008, and remains at the top. Other competitors are Seattle’s Best, Gloria Jeans, Coffee Bean and Tea Leaf, local outfits Figaro Coffee Co and Bo’s Coffee. Emerging local brands like Café de Lipa are keen to diversify away from the Western coffee shop image in terms of pricing and product line (using local coffee brews). Prospect for the next few years is this: specialty coffee shops will continue to improve their performance in the market by pushing strategies aimed at younger age groups, focusing more on the young professional, mid rank employees and private school students, besides their typical market of accomplished professionals and executives. The aggressive expansion strategy of players breeds greater competition among domestic and local players.

South Korea

In South Korea, the biggest competitor remains Starbucks as it continued to dominate the specialist coffee shop segment during 2008. In recent years, we have seen new competitors in local chained brands like Holly’s and Angel-in-us. Starbucks has 271 outlets, while we, Coffee Bean & Tea Leaf have 163 outlets . Prospects for this sector for period 2008 to 2009: Demand for espresso coffee will increase over the forecast period at an annual average rate of 2%. However, owing to increasing maturity of this sector, the growth in the number of new specialty coffee stores will be lower over the forecast. Local specialty coffee chains are expected to continue to increase their value shares at the expense of leading international chains.

India

Domestic brands, Café Coffee Day, Coffee Day Express, Barista and Java Green, dominate the specialist coffee shop sector in India. Multinational player, Costa Coffee (sixth largest in brand share) , Gloria Jeans and Coffee Bean & Tea Leaf will provide strong competition in the period 2008 to 2009. The rivalry will be intensifying as Gloria Jean’s Coffee and The Coffee Bean & Tea Leaf are expected to give tough competition to brands such as Barista and Café Coffee Day which have lost their novelty factor in the big cities. As such, the competition in this category is expected to intensify over 2008 to 2009. International brands like Starbucks and Aroma Café are set to enter into the Indian market in the period 2008 to 2009. As the specialist coffee shops landscape gets more saturated, outlet expansion is expected to slow over the next few years. The brands will find it increasingly difficult to differentiate themselves and find it increasingly difficult to compete head-on for lucrative locations and the same urban youth consumer base.

Indonesia

Global brands Starbucks and The Coffee Bean & Tea Leaf, occupied the first and third positions in chained specialist coffee shops, respectively, in 2008, while a local brand Excelso Café managed to rank second. Starbucks and The Coffee Bean & Tea Leaf are found mainly in major cities, Excelso Café (operated by Excelso Multirasa PT), on the other hand is also found in smaller cities like Bogor, Yogyakarta and Malang,. Prices of products offered by Excelso Café are more affordable compared to Starbucks and The Coffee Bean & Tea Leaf. Therefore, it is able to reach a wider consumer base. Specialist coffee shops will be expected to continue to show the fastest CAGR within café/bars in terms of outlets, volume transactions and constant value sales over in 2008 to 2009. As it is emerging from a smaller base, companies are expected to be more aggressive in terms of promotions and expansion. One area international chained coffee shops could attract market share is in ‘localizing’ a few of their menu items to suit local palates. Apart from this, these outlets could attract middle- and upper-income consumers to meet communally in their outlets.

China/Hong Kong

Chained specialist coffee shops continued to be led by Starbucks, which opened its 100th outlet in April 2008. Behind it is Pacific Coffee. As the coffee consumption market reaches maturity, both Starbucks and Pacific Coffee are digging deep into their traditional market of coffee drinkers. This is evidenced by the location of their stores: across Hong Kong Island and Kowloon, targeting the working class and those willing to pay a premium price for coffee.

Israel

All of the specialist coffee shops in Israel carry local brands, with the exception of Coffee Bean & Tea Leaf (who seem to be the only foreign multinational player); with Starbucks clearly missing in the lineup of specialist coffee brand names. Local specialist coffee set ups are, to name a few: Aroma Espresso Bar, Café Café, Café Joe and Arcafe. Chained specialist coffee shops are expected to continue to expand over the forecast period despite the recession. Nevertheless, Aroma Israel and Cafe Cafe claim that in 2009 they will need to be more careful in location choice and amount of outlet expansion. Smaller chain Café Joe prefers to focus and improve on its existing facilities. The need for company differentiation will continue to be a strong company driver, as the focus on health and healthy lifestyles will continue to play a strong roll in company differentiation. Consumers are becoming more concerned with issues such as fair trade, recycling, organic and social responsibility.

In summary, for the territories within which Coffee Bean and Tea Leaf operates, the rivalry among competitors in the industry is high. The global economic crisis has raised the level of competition between the competitors even more. Companies are required to compete on all fronts – price, selection of products (which includes not only espresso items, but also teas, pastries and other food items), brand differentiation (e.g. in terms of promotion of a healthy lifestyle or social responsibility), and location.

For territories within which Coffee Bean & Tea Leaf does not operate, the situation is more diverse. The paragraphs below summarise the competition between companies in a selection of those territories. Four have been chosen, UK and France as a representative sampling of Europe; Brazil and Argentina as a representative sampling of South America.

UK

The rivalry between specialist coffee houses is high. With a few chains competing against eachc other for a share of the market. Starbucks had increased the number of outlets by 40 locations in 2008 (rising to 650 stores) but had performed poorly over the year. Increased competition from brands such as Costa Coffee and Caffè Nero, and poor macroeconomic conditions overall lowered the Starbuck’s average sales per outlet. Costa Coffee brand achieved the strongest growth in 2008, and is now the leader in chained coffee shops in UK. Rivalry within the sector is high with branded players, such as Costa Coffee, The Wild Bean Café and Caffè Nero, continuing to increase the numbers of their locations over 2008 to 2013 period.Starbucks is likely to see many of its UK outlets continuing to close into 2009 and 2010.

France

Starbucks Coffee France SA has a massive 41% share and McDonald’s France SA with 16%. There is strong competition between Starbucks Coffee and McCafé. [For more on McCafe, see section on New Entrants below.] Chained specialist coffee outlets are likely to expand their network in all major French cities. As the concept of coffee shops is particularly well-known by tourists and young adults due to their travels, chained coffee shops are likely to open new outlets in cities such as Bordeaux and Strasbourg which attracts both tourists and students; and will increase their presence in semi-captive environments such as airports and rail stations. The outlook for specialist coffee shops here is that as the category is still at an early development stage, it should still enjoy healthy growth, at a projected 16% CAGR in constant value terms.

Brazil

The top four leading companies are Rei do Mate, Água Doce, Café Pelé and Fran’s Café, together accounted for more than 55% of value sales in 2008. Other companies include Starbucks , Suplicy Café, Octavio Café, In Bocca al Lupo, Café Ritazza and McCafe. Newcomers such as Havanna Café, Vanilla Caffé and Pelé Arena & Futebol have plans to continue to expand despite the economic slowdown. The outlook is that specialist coffee shops, especially those with a franchise system and able to reach states in which they are not yet present, will show the fastest growth in terms of outlets, transactions and value sales over 2008 to 2009. McCafé, Grão Espresso, Rei do Mate, Vanilla Caffé and new Pelé Café Arena & Futebol are likely to outperform in 2008 and 2009.

Argentina

There are many major players, nearly all local, in the specialist coffee shops sector here: including, Havana Café, Bonafide, Café Martinez, The Coffee Store, McCafe, Aroma Café and Starbucks. There is low penetration of international chains in this market – they represent a 0.5% share of the total sales in cafés/bars, and 7% of chains. This is mainly due to the fact that their global concept is not adapted to the tastes of demanding Argentinean consumers. Although the international chains have a small presence, there is still margin for growth in this sector. Particularly, there is still room for growth of outlets in high income areas and shopping centres.

Potential new markets for Coffee Bean & Tea Leaf

Of the four territories set out above, Coffee Bean & Tea Leaf has most potential of penetrating into France, Argentina and Brazil. The reasons are:

1. For France, the outlook for specialist coffee shops here is that as the category is still at an early development stage, it should still enjoy healthy growth.
2. For Brazil, specialist coffee shops, especially those with a franchise system and able to reach states in which they are not yet present, will show the fastest growth in terms of outlets.
3. For Argentina, there is still room for growth of outlets in high income areas and shopping centres.
4. There is already in place in the 3 territories a coffee drinking culture.

Industry rivalry in the form of fast food operators

Since 2008, Euromonitor has included McCafe as a chained specialist coffee shop. McCafe, owned by McDonald’s, has been making inroads into the coffee drinking culture using current resources provided by its McDonald’s outlets. In Europe, McCafe has yet to penetrate UK. However, McCafé outlets have been growing in number in Italy where it has 65. In Argentina and Brazil, McCafe is positioned ahead of Starbucks in brand shares rankings. In the US, towards the latter half of 2008, Dunkin Donuts and McCafe pirated the premium coffee culture trend started by Starbucks, and both players started making inroads into Starbuck’s customer base with increased offering in the premium coffee category.

According to the 2009 Brand Keys Customer Loyalty Engagement Index, Dunkin Donuts and McDonald’s were placed first and second, respectively, and Starbucks, third in the coffee category. This indicates that customers preferred the two fast-food brands rather than the “pure” specialist coffee shops. Coffee Bean & Tea Leaf should, therefore, consider fast food brands like Dunkin Donuts and McCafe as competitors within the industry, and strategise with these players in mind. The impact of the industry rivalry force created by the competition between specialty coffee retailers is high.

The growth of the industry has slowed while the number of competitors within the industry has increased. Both of these factors, in addition to Dunkin’ Donuts and McDonald’s high strategic stakes in the specialty coffee industry and continued focus on selling high-quality specialty coffee beverages at a low cost have caused strong industry rivalry.

POTENTIAL NEW ENTRANTS

The economies of scale within the specialty coffee industry have increased as the size of the top players has increased.

1. Increased economies of scale within the specialty coffee sector.
2. Companies such as Dunkin’ Donuts and McCafe have national distribution channels through which they can transport their specialty coffee at a relatively low cost compared to potential new entrants who have no such developed distribution systems.
3. These larger companies are able to reap economies of scale through their purchasing by negotiating long term contracts with coffee farmers and purchasing coffee beans in bulk quantities at discount prices.
4. Most of the favorable store locations within the larger metropolitan areas have already been occupied by current competitors within the specialty coffee industry.
5. Many companies now have proprietary product technology involved in the production of their specialty coffee as well as lower per unit costs due to an experience curve.
6. The industry has progressed toward more subjective traits such as the ambience of the store, the social responsibility of the company and brand identification.
7. Many companies have gained very loyal customer bases stemming from their past advertisements, customer service, objective product differentiations and early entry into the industry.

From the observations made above, we concluded that the barriers to entry in the specialty coffee industry are very high.

SUBSTITUTES

The global financial crisis in 2008 has made cheaper substitutes to specialist coffee products more desirable, as they are cheaper and, hence, more accessible. As specialist coffee is highly dependent on the high level of disposable income available, the financial crisis has reduced this disposable income causing a fraction of customers to choose cheaper alternatives for their daily caffeine fix. Cheaper local brews are dominating the market in several territories.

In Singapore, e.g. traditional coffee houses such as Ya Kun Kaya Toast and Ah Mei Café are expected to blossom over the short term. These modernised coffee houses provide a sense of familiarity in a comfortable setting. In Malaysia, local coffee shops known as kopitiams, are found spread widely across the rural landscape of Malaysia. These outlets serve breakfast as well as other local fare. In South America, the local specialist coffee chains have been offering brews for lesser than those offered by international chains.

Apart from the cheap local brews, other substitutes for caffeine fix are:

1. The caffeinated soft drinks offered by Pepsi and Coca-Cola. However, these substitute products pose little threat to the premium coffee industry.
2. Coffee has gradually gained preference over carbonated soft drinks. This is mostly attributed to the health concerns associated with carbonated soft drinks and the new evidence showing coffee as a relatively healthy alternative. (Harding, 2000)
3. Tea. Although tea products have become part and parcel of the menu for chained specialist coffee houses, there are companies which concentrate on just serving tea. However, tea houses pose little threat to the specialist coffee houses.

The threat from substitutes is low to medium, with the players serving the local cheaper brews ranking higher than the others. To minimize this threat, Coffee Bean & Tea Leaf should remain on its present course in providing quality products (beverages and food items) in a pleasant ambience (the third place).

For territories where there are strong local tastes in certain foods or beverages, we should allow the franchise operators flexibility in adapting to those tastes.

CUSTOMERS

1. The primary customers are individual consumers who are middle to high income earners, with a fair amount of disposable income.
2. Customers of specialist coffee houses face no switching costs and have an enormous selection of retailers from whom they can buy.
3. The threat of backward integration (in terms of the losing the customers as they could provide the service themselves) is minimized by specialist coffee houses themselves offering for sale premium coffee beans and coffee brewing equipment.

The bargaining power of customers has increased: With the global financial crisis hurting the main group of customers the most, this group has modified their consumption patterns. This is evidenced by the drastic closure of stores by the largest chained specialist coffee houses, Starbucks. This group of customers, with less disposable income looks for cheaper substitutes, or reduces their number of visits – cutting back and trading down.

For trading down, customers can either opt for cheaper substitutes or brew their own cuppa. For the latter, Coffee Bean & Tea Leaf have for sale, premium coffee beans and coffee brewing equipment. In line with this, Starbuck’s strategy of offering instant coffee for sale in the form of VIA needs to be watched closely.

We can also watch carefully how we price our products – seeking possible ways to provide value for money to our customers via meal offerings (beverage plus food item at discounted prices) and customer loyalty programs. Apart from the above, to maintain customer levels we must aggressively promoted themselves as necessary parts of the day — not merely as places to have morning coffee or coffee after work — with emphasis on food and ambience, and promoting our outlets as places to enjoy good-quality food and coffee in a pleasant environment.

SUPPLIERS

Coffee is a tropical plant which grows between the latitudes of 25°N and 25°S (see Appendix C). It requires very specific environmental conditions for commercial cultivation. The coffee plant is easily damaged by frost, a danger either in southern Brazil or, closer to the Equator, at altitudes around 2000 metres. Prices of coffee also fluctuate as the weather dictates. Nevertheless, any price increase in the raw material is not directly benefited by the growers, to a large extent – the increases benefit only the middlemen. We, at Coffee Bean are cushioned from price increases as we source our beans direct from the growers. Inadvertently, this process allows our suppliers much more bargaining power. However, we also view our relationship with the growers as long-lasting, and nurture it as such. Nevertheless, our selection guidelines for coffee beans soften the impact of higher supplier bargaining power.

Note: A development to monitor is the trend for coffee producing countries to take over the direct selling of coffee beans they produce.

A substantial cost for our business is property leasing costs. With the financial crisis still not showing significant improvements and the overall subdued sentiment of the property markets worldwide, we are confident that there will be no significant upward trend in property rents.

SUMMARY OF ANALYSIS

After applying Michael Porter’s five forces model to Coffee Bean & Tea Leaf environment, it can be inferred that the force created by industry rivalry has resulted an extremely competitive environment where differentiation is increasingly difficult and price wars are looming. The strength of the force imposed by the potential for new entrants is lower as a result of more formidable barriers to entry. The bargaining power of both suppliers and buyers are high as a result of increased unity among the suppliers and the accessibility of information among buyers. The threat of substitutes is significant given the cheaper substitutes available in the market.

OUR RECOMMENDATIONS

1. Maintain our current prices: The global financial crisis has not recovered. Any shifts upward in our pricing could result in backlash from our current customers.

2. Increase our value-for-money offerings: We can do so in packaging meals so that customers pay lower for paired items; and through our store loyalty programs. We should increase publicity in our store loyalty programmes.

3. Expand our selection of foods: This is to ensure we attract customers all day long – not only in the early mornings and before dinner. With regard to this, it is also wise for us to consider the local tastes of the customers and allow our stores to design products that are suitable to these tastes and preferences.

4. Enhance our product development efforts: As our customers cut back and trade down, we should consider these as opportunities to develop products that will fulfill their needs. An possibility is to develop our own brand of instant coffee. Additionally, as we are also offering for sale equipment for coffee brewing, we may enhance our customers experience by conducting workshops to help them brew a better cup of coffee.

5. Expand into territories which offer potential, like France, Brazil and Argentina. These territories offer opportunities for growth, and they are suitable in that there is present a coffee drinking culture. Moreover, in Brazil and Argentina, we have the added benefit of reduction in cost of transportation for our coffee beans.

6. Increase productivity and reduce waste: We need to discover ways in which our in-store productivity increases through better management of our supply chain management, and work processes.

Appendix A

Annual growth in number of stores

Year  Company owned Frachise

2002: 177 / 46

2003: 191 / 63

2004: 217 / 87

2005:  241 / 137

2006:  270 / 230

2007:  288 / 377

2008 : 278 / 444

Source: Coffee Bean & Tea Leaf. 2009. Company Growth. Retrieved from http://www.coffebean.com.

Appendix B

Singapore: Specialty Coffee Shops – brand shares

Brand Shares of Chained Cafés/Bars 2005-2008 % value Brand Global Brand Owner 2005 2006 2007 2008

Starbucks 17.4 19.1 18.7 18.0

Coffee Bean & Tea Leaf 21.9 20.5 18.7 17.2

Coffee Connoisseur, Sarika Coffee Co (S) 11.6 13.8 15.3 15.9

Bakerzin Baker’s Inn Holdings 5.6 4.4 4.1 5.8

Coffee Club Coffee Club Pte Ltd 4.3 4.6 4.7 4.6

Ya Kun Kaya Toast Ya Kun International 4.3 4.2 4.7 4.3

Harry’s Bar Harry’s International 2.1 2.1 4.6 4.2

Spinelli Spinelli Coffee Co Pte Ltd 3.5 3.4 3.2 3.3

Dôme Dôme Coffees Australia 3.2 2.6 3.1 3.1

Pacific Coffee Pacific Coffee Co 2.4 2.8 3.0 3.0

Killiney Kopitiam Killiney Kopitiam Pte Ltd 1.8 1.8 3.0 2.6

Gloria Jean’s Jireh International Pty – - 0.9 1.8 Ltd

McCafé McDonald’s Corp 0.5 0.7 1.2 1.2

Trung Nguyen Trung Nguyen Cafe Chain – - – 1.0

San Francisco Coffee Co – - – 1.0

Caffè Ritazza SSP Group Ltd – 0.5 0.5 0.4

Europa Pubs & Bars ABR Holdings Ltd 2.6 – - -

Caffè Ritazza Compass Group Plc 0.5 – - -

Others 18.4 19.6 14.3 12.5

Total 100.0 100.0 100.0 100.0

Source: Trade associations, trade press, company research, trade interviews, Euromonitor International estimates

Appendix C

Map showing areas of coffee cultivation

r:Coffea canephora m:Coffea canephora and Coffea arabica a:Coffea arabica

Source: http://upload.wikimedia.org/wikipedia/commons/9/96/Carte_Coffea_robusta_arabic.png This map is from Wikimedia Commons. Commons is a freely licensed media file repository.

The use of communities of practice as tools for organizational learning, knowledge sharing and knowledge transfer has widely been accepted. Communities of practice are now widely used, not only in business organizational learning but also in social and professional environments. From small communities of six to seven individuals, there are now communities of practice that span the globe, some with a few hundreds or thousands of members. There has been no recent serious attempts at categorizing these communities of practice. Are there any variants apart from the eight sets identified by Wenger et al (2002)? Is it possible to identify major categories of communities of practice, so that designing for their cultivation can  be made less difficult? This paper attempts to identify at least two of these categories under which all communities of practice can fall, and provide design guidelines (or at least suggestions) for one category for which current literature has been disparate.

A             Introduction

Communities of practice (COPs) have been recognized as one of the tools by which corporations can manage their knowledge. Nevertheless, communities of practice have also been “formed” for objectives which are outside the realm of business and profit generation activities. There is a sizeable literature on COPs. From a scan of the literature, there are different variants of COPs that can be identified. Here, we seek to examine two variants under which most or all of COPs can be categorised and recommend design guidelines which would aid leaders of COPs in cultivating successful COPs.

B             Definition of COP

The most popular definition of a COP is:

“…. a COP is a group of people who share a concern, a set of problems, or a passion about a topic, and who deepen their knowledge and expertise in this area by interacting on an ongoing basis.”

(Wenger et al, 2002)

COPs are also defined along three structural elements (Wenger, 1998):

1. domain – what it is about
2. community – how it functions
3. practice – what capability it has produced

Apart from the above three elements, a healthy COP is also characterized by a balance of the four following pairs of dimensions (Wenger et al, 2002):

1. participation and reification – negotiation of meaning (reification means the crystallisation and realization of ideas)
2. local and global – interaction among and with members of the community and interaction with elements outside the community
3. identification and negotiation – differing forms of memberships in the COP which gives members ownership and meaning to their participation in the COP
4. design and emergence – the constant negotiation of meaning implies that COPs cannot be designed but is rather a response to design.

The key characteristics of a community of practice (Wenger, 1998) are:

1         sustained mutual relationships

2         shared ways of engaging and doing things together

3         the rapid flow of information and propagation of innovation

4         absence of introductory preambles, as if conversations and interactions were merely the continuation of an ongoing process

5         very quick setup of a problem to be discussed

6         substantial overlap in members’ descriptions of who belongs

7         knowing what others know, what they can do, and how they can contribute to an enterprise

8         mutually defining identities

9         the ability to assess the appropriateness of actions and products

10     specific tools, representations, and other artifacts

11     local lore, shared stories, inside jokes, knowing laughter

12     jargon and shortcuts to communication as well as the ease of producing new ones

13     certain styles recognized as displaying membership

14     a shared discourse reflecting a certain perspective on the world.

C             Variants of COPs

Wenger et al (2002) acknowledged the different variants of COPs as follows:

1. small or big
2. long-lived or short-lived
3. collocated or distributed
4. homogenous or heterogenous
5. inside or across boundaries
6. within business, across business units or across organizational boundaries
7. spontaneous or intentional
8. unrecognized or institutionalized.

Wenger et al (2002) did not include online/virtual and face-to-face/physical COPs as variants of COPs.[1] The reason for this was perhaps the situation at the time of that study. At that relevant time, the capabilities of the web was still rudimentary and acceptance of communicating via web technologies was not widespread. The situation now has changed tremendously. The situation since Wenger et al (2002) has changed dramatically. Members of COPs, as well as organizations, are now more at ease with transacting and communicating online and via telecommunication devices.

D             Research methodology

Using the set of variants set out by Wenger et al (2002) as a reference, we sought to locate their presence in the current available literature on COPs. A simple search of online databases of scholarly journals for the phrase “communities of practice” in the titles and abstract of articles, revealed about 180 articles. After, deleting articles which were not relevant, I selected 60 articles which I could scan for variants. A more thorough approach would have been to search also for alternative terms, like “tech clubs” or “learning communities”. However, the time afforded and scope of this paper do not permit such a venture. 

A quick survey of the 60 articles identified the following variants :

• top down (deliberate formation by management; this would be considered “intentionally” formed by management according to Wenger et al (2002))
• bottom up (deliberate formation by members of COPs; this would be considered “intentionally” formed by members according to Wenger et al (2002))
• naturally occurring (COPs which were not deliberately formed but developed from other structures, like a social network, work team or work group; this would be considered as “spontaneous” by Wenger et al (2002))
• deliberately formed (“intentionally” formed as COPs according to Wenger et al (2002))
• global (where COP members are not located in only one geographical location; this would be considered as “ distributed” or “across boundaries” by Wenger et al (2002))
• local (where COP members are located in the same office location, or within same country; this would be considered “collocated” or “within businesses” according to Wenger et al (2002))
• organizational (COP members are within the organization)
• across organizations (COP members belong to different organizations; this would be considered )
• social (where the purpose of the COP is socially motivated and not professional or organizational-wise)[2]
• professional (where the purpose of the COP is motivated by the professional pursuits of the members)[3]
• online/virtual (where the COP members interact online via the web or other telecommunication devices)[4]
• face-to-face/physical (where the COP members interact face-to-face).

For purposes of discussion here, we ventured to locate two variants by which we could generally categorize all COPs. After the scan of the articles a pattern emerged – members of COPs either interacted face-to-face in physical meetings or virtually, online. Hence, we made a general conclusion for purposes of this paper that:

1. All COPs can be categorized by the primary mode of interaction between the members  ‑  either online/virtual or face-to-face/physical.
2. The presence of the other variants in the literature reviewed is not as pervasive as the face-to-face; virtual/online variants. As the objective of this paper is to present a workable set of guidelines to managers of COPs, the selection of the most common variants is suitable.[5]

There is sizeable literature regarding the design of COPs where members meet face-to-face or are “collocated”. However, despite the popularity of online/virtual COPs, literature regarding the design of online/virtual COPs is disparate, with more concentrating on proof of existence of online COPs rather than recommendations for designs of online/virtual COPs. We shall attempt to set out certain helpful guidelines by looking at several case studies of online/virtual COPs and the existing seven principles developed by Wenger et al (2002) (see below)

E             Literature Review

COPs are not stable or static entities (Roberts, 2006), not all CoPs are the same and may experience a different status within an organisation. There is widespread support that communities of practice exist in nearly every organizations – whether they are recognized or not by the organization. Nevertheless, when organizations do try to direct the activities of these COPs, they invariably fail. (Kerno, 2008). Lave and Wenger (1991) argued that COPs cannot be “formed” and therefore the management of organizations cannot establish a COPs (nevertheless, there may be suggestion that even if management cannot form COPs, they can encourage and cultivate COPs). On the other hand, Saint-Onge and Wallace (2003) and Wenger et al. (2002) suggest that COPs can be cultivated and utilised for strategic advantage.

Seven principles for cultivating COPs

According to Wenger et al (2002), the seven principles for cultivating COPs are: 

1. design for evolution
2. open a dialogue between inside and outside perspectives
3. invite different levels of participation
4. develop both private and public community spaces
5. focus on value
6. combine familiarity and excitement
7. create a rhythm for the community.

These principles can be used for either face-to-face or online COPs. Nevertheless, for online COPs there may be several areas of difficulties that may not be present in face-to-face COPs.

Design for evolution

As COPs are organic, according to Wenger et al (2002), “designing them is more a matter of shepherding their evolution than creating them from scratch”. The key for this is to combine design elements in a way that encourages community development. For example, social and organization structures like community coordinator or problem solving meetings can hasten the evolution of a community.

Open a dialogue between inside and outside perspectives

Wenger et al (2002) acknowledges that good community design requires an insider’s perspective to lead in the discovery as to what the community is about. Nevertheless, Wenger et al (2002) concedes that it takes an outsider’s perspective to help the members to see possibilities which are outside the insider’s normal experience. Good community design allows dialogue with outsiders about what the community can achieve. As a result of this dialogue, members of the community who understand the issues are able to see the possibilities and can effectively act as agents of change.

Invite different levels of participation

Members in COPs participate for several reasons. According to Wenger et al (2002), some people participate because they care about the domain and wish to see it developed. Others wish to interact with peers, yet others wish to make a contribution and be genuinely appreciated for it. Yet, others simply wish to learn about the practice.  A COP provides members an opportunity to learn new techniques and approaches in their personal goal to perfect their craft.  Not all members will participate equally.  An “alive community” usually has a coordinator  who organizes events and connects community members;  while others take on other leadership roles. According to Wenger et al (2002), there are three levels of participation:

1. core group (made up of about 10 to 15 percent of the whole community)[Core members the heart of the community and provides its pulse. As the COP grows, core group members take on much of the leadership role.]
2. active group (made up of about 15 to 20 percent of the whole community) [Active members attend meetings regularly and participate occasionally in discussion forums without the intensity of core group members.]
3. peripheral group (the remaining percentage of the whole community, after deleting percentages for 1. and 2.) [Peripheral group members stay on the sidelines, participating rarely, and are satisfied observing the interaction between the core and active members. On online communities, these members are called “lurkers”.]

Develop both private and public community spaces

According to Wenger et al (2002) dynamic communities are rich in connections that occur in public places (like meetings and events) as well as in private places (one-to-one networking of members). The heart of a community is the web of relationships between the members and much of the day-to-day issues occurs in one-to-one exchanges. These one-to-one exchanges actually help orchestrate the public space, hence ensuring the success of meetings.

Focus on value

It is difficult to see the value of a COP when it is first formed. According to Wenger et al (2002) early value comes in the form of solution to current problems and needs of members. As the COP grows, the systematic development of a body of knowledge easily accessible from the COP becomes more important.

Combine familiarity with excitement

As COPs mature, they settle into a routine, making it comfortable and inviting to members to discuss matters candidly. Unlike members of work teams, COP members feel more free to volunteer advice without the fear of being entangled with the project in question.

Create a rhythm for the community

Vibrant COPs have rhythm (Wenger et al, 2002): “Regular meetings, teleconferences, Web site activity, and informal lunches ebb and flow along with the heartbeat of the community. When that beat is strong and rhythmic, the community has a sense of movement and liveliness. If the beat is too fast, the community feels breathless; people stop participating because they are overwhelmed.” Keeping this beat alive requires constant monitoring and tweaking by the leaders/managers of the COP.

Difficulties of online/virtual COPs

Some of these difficulties were summarized by Wenger et al, 2002:

1. Teleconferences and web sites do not offer easy opportunities for informal networking.
2. Online COPs are also likely to cross cultures.
3. Difficulty in access to technology can be a barrier to communication. As communities depend on the connections between members, if members find it difficult to get connected, they are less likely to make the effort, at least not regularly.
4. Distributed communities usually have a greater diversity of viewpoints, needs, interests, priorities, and expectations than local groups. At the same time, distance provides fewer opportunities to negotiate those issues. 
5. As members of large distributed communities have less contact, it is more difficult to build trust and personal relationships.
6. Cultural differences often make trust and deep personal relationships more difficult.

Captured in the above list is the understanding that online/virtual COPs usually have a greater diversity of viewpoints, needs, interests, priorities, and expectations than collocated COPs. Enhancing the problem is that distance ensures fewer opportunities for members to meet, hence fewer opportunities to negotiate those issues. As a result of having less contact, it is more difficult to build trust and personal relationships. Wenger et al highlights that trust-building occurs in private spaces of a COP. For purposes of online/virtual COPs, can design guidelines based on the latest web technology be established to create more of these virtual private spaces for trust-building?

Apart from difficulties in trust-building within online/virtual COPs, there is also the problem of developing commonality required for craft intimacy across different cultures.[6] The commonality required for craft intimacy can be more difficult to develop across cultures.  

Case studies of online/virtual COPs

Case study 1

Ardichvili, A., Maurer, M., Wei Li, Wenthing, T. & Stuedemann, R. 2006. Cultural Influences on Knowledge Sharing through Online Communities of Practice. Journal of Knowledge Management. 2006: 10(1). p. 94.

The authors wanted to explore cultural factors influencing knowledge sharing strategies in virtual COPS. The authors set out to see whether the following factors would explain differences in knowledge sharing patterns in Brazil, China and Russia:

1. degree of collectivism
2. competitiveness
3. importance of saving face
4. in-group orientation
5. attention paid to power and hierarchy
6. culture-specific preferences for communication modes.

The findings of Case Study 1 were:

1. The issue of saving face was less important than expected in China. In Russia “face” was not perceived as an important factor at all.
2. Modesty was an important influence on online participation and knowledge sharing in China. (In Chinese culture, it is no acceptable to speak a lot in public and to stand out.) In Russia or Brazil, the issue of modesty was not as important.
3. Competitiveness and job-security related fears were more prevalent in China. In Brazil & Russia, members felt that knowledge sharing would enhance their prospects and potential for promotions.
4. When selecting and appointing online community managers, in all 3 countries, seniority, rank or age were not major factors. As for participation in online discussion, members from all 3 countries said that both top managers and middle-level managers are less likely to participate.
5. In Russia, members were very comfortable with email communication, with no particular preference for face-to-face or telephone communications. In China, members preferred, in order of preference: face-to-face communication, phone calls and emails. For members in Brazil, they were comfortable with emails, although face-to-face interaction was strongly valued, especially by members who were dealership employees.
6. In Russia, there was evident “us vs them” distinction when members discussed the issue of knowledge sharing with local dealers and other partners. Similarly, in China, there was strong suggestion of this in-group orientation. Likewise in Brazil, members did not support the idea of US expatriates or local dealers to manage their knowledge sharing.

Case Study 2

Zucchermaglio, C. & Talamo, A. 2003 The development of a virtual community of practices using electronic mail and communicative genres. Journal of Business and Technical Communication. July 2003; 17 (3). p. 259.

In this study, the authors explored the ways that technological mediation of community development interact by examining email communication within an inter-organization community of software developers. Generally, the authors found that within the community, there was a prevalence of note messages, as opposed to types of more formal business communications (like proposals and business letters). This indicates a prevalence of an informal communicative and work style. More interestingly, when members of this community communicated with outsiders, they used a more formal communicative style. This indicated the fact that the community recognized itself as a community and recognized those who were not part of the community as different.

Case Study 3

Kimble, C. & Hildreth, P. 2005. Dualities, distributed communities of practice and knowledge management. Journal of Knowledge Management; 2005; 9 (4). p. 102.

The authors explored the relationship between knowledge management and COPS using theoretical constructs, the notion of a duality and data from a case study on a virtual COP. The COP was based in 3 geographically separate locations (UK, USA and Japan). The 2 most important results from the case study were:

1. The role of shares artefacts in the process of creating, sharing and sustaining knowledge and the role such artefacts played in facilitating participation.
2. The importance of building and sustaining personal relationships between members, the group and the role of face-to-face meetings.

In this case, the shared artifact in question was the use of a planning document. This document could be seen as reification; an indication of the importance of process; as a stimulus for innovation and a catalyst for participation.

Members felt that face-to-face interaction was vital for developing personal relationships; and as a way of turbo-boosting existing relationships.
From the above the authors concluded with the following “guidelines” for cultivating virtual COPs:

1. regular and frequent interaction
2. the setting of task focus and deadlines
3. the presence of a shared interest, desire and motivation
4. maintenance of a balance between regular interaction, a task focus and shared motivation.

Case Study 4

Masoud Hemmasi, M. & Csanda, CM. 2009 The Effectiveness of Communities of Practice: An Empirical Study. Journal of Managerial Issues; Summer 2009; 21 (2). p. 262.

The aim of the authors here was to study the effectiveness of COPs using empirical data from State Farm Insurance Companies. State Farm had formed a network of COPs with a focus on inducing a greater quantity and quality of intentional collaboration and transfer of best practices throughout the organization. COPs were self-directed and led by members and not by managers or representatives from the corporate office. COP members used electronic shared folders for sharing documents, web conferencing and email to conduct COP activities.

The authors found that perceived COP leadership strength, member’s commitment to the COP and its goals, the feeling of connectedness to COP – all had positive relationship with the perceived impact on the job. The authors explained that when members felt more connected to one another and experienced a more positive impact on their own jobs as a result of COP participation, they also develop a stronger sense of satisfaction regarding their association with the COP. The strength of the COP leadership had positive antecedent effects on both perceived community impact on member’s jobs as COP’s overall effectiveness.

The author highlighted the following insights from the study:

1. Virtually all the characteristics of the COPs were viewed favourably. This reassures the organization as to the worthiness of effort put into these COPs.
2. For role based COPs, the opportunities that allow members to improve their job performance and productivity that lead to perception of greater COP effectiveness and a more enjoyable and satisfactory experience.
3. Committed, engaged and well-connected members are the heart of successful COPs, and as long as their involvement can be made relevant to their productivity and performance, they would view it as a worthwhile cause.
4. If increases in member connectivity lead to greater job impact and enhanced community effectiveness, it is important that the COP sponsors and leaders identify and undertake the kind of measures that are helpful in cultivating the member’s sense of connectivity to their peers in the COP network.

Case Study 5

Dubé, L., Bourhis, A. & Jacob, R. 2005. The impact of structuring characteristics on the launching of virtual communities. Journal of Organizational Change Management,  2005; 18 (2). p. 145.

The authors investigate an attempt by 14 organizations to implement 18 virtual COPs. The study concludes that the environment, the relevance of the virtual COP’s objectives to its members’ daily work, and  the degree to which the virtual COP is embedded in the organizational structure are 3 structuring characteristics most likely to explain the success or failure of a virtual COP at the launching state.

The authors found that a facilitating and neutral environment allows virtual COPs to be launched successfully. Obstructive environments will work to resist launch. However, in one case, despite an obstructive environment, one virtual COP managed to succeed because of the inclusion of a coach to guide the COP leader. This is logical since COPs are new modes of collaboration and the COP leader would have had no role model to follow, offering this person some coaching is a way to strengthen his leadership abilities and increase the likelihood of the COP’s success.

The author also found that the COP will not succeed if the concept of COPs is too far removed from the organization’s culture. Also, adopting a top-down approach to form virtual COPs also raises the issue of relevance. These intentionally created virtual COPs may lack context and purpose amongst its members, making it difficult to succeed. In one case, the sponsor of the COP stated that members were to hold discussions according to the current rules and procedures and that no request for changing of those rules and procedures would not be considered. Members were disappointed and decided that the COP would not be an agent of change.

The authors highlighted a very surprising find. It has always been though that COPs should be formed around already existing informal networks (Wenger et al, 2002). However, the authors stated that although that principle may be true for traditional face-to-face COPs, it was not true for virtual COPs. In 3 of the cases, there were already the informal networks before the launch of the virtual COPs. The members felt that they did not need their network to be expanded and they though interacting via email and phone were already sufficient. They felt that the implementation of the virtual COP ended their community. The authors thus recommended that the face-to-face element was necessary at the launch state to stimulate the socialization process.

Another interesting finding was relating to member’s enrolment. It had been thought that voluntary membership would guarantee the success of a COP. However, the finding here showed otherwise. Out of 10 COPs with voluntary membership, half failed and half succeeded. The authors reasoned that a new member can learn from passively reading from forums and responses online, he can learn while his non-participation goes unnoticed.

Case Study 6

Tarmizi, H., Vreede, GJ de, Zigurs, I. 2007.  Leadership Challenges in Communities of Practice: Supporting Facilitators Via Design and Technology. International Journal of e-Collaboration, 2007, 3 (1).

Although the concept of facilitation has been acknowledged to be applicable to communities of practice (Johnson, 2001), the authors of this case study felt that the role of the facilitator in COPs was still under-researched, in contrast to research on facilitation in other fields. The objective of the study was to answer the following questions:

1. What are the most challenging facilitation tasks in COPs?
2. How can facilitators be supported in addressing the most important challenges?

The authors recommended that the work of facilitation be aided by design and technology. Increasing participation in an online COP, e.g. increasing the number of quality postings, should be one of the facilitator’s main goals. Design that can evoke aliveness (Wenger et al., 2002) and technology that is able to extend human capability (Satchwell & Dugger, 1996) are two factors that could have a high impact on participation. The authors also stated that having a clear policy within an organization as to how information is to be shared digitally or within an online community would also have a positive impact on the sharing activity (Staples & Jarvenpaa, 2000). More sharing would in turn increase members’ participation. A regression analysis by Millen and Patterson (2002) found that prior experience with other communication applications, e.g. e-mail lists and chat services, predicted increased participation in an online community. The authors set out the following table to address participation in COPs.

The authors recommended the following as design strategies for increasing participation in a COP

Table 1: Design strategies for increasing participation

Source: Tarmizi et al (2007)

Case study 7

Wei Zhang & Watts, S. 2008. Online communities as communities of practice: a case study. Journal of Knowledge Management, 2008; 12 (4). p. 55-71.

The authors of studied one of the best Chinese online communities for backpacking. The selected community was a moderated online travel forum hosted by a major internet portal company in China. The company provided the necessary hardware and software, but was not involved in its daily businesses. Instead, a small group of moderators kept the community running. All moderators were volunteers; they were not associated with the company in any other way. Technically, the travel forum utilized a web-based bulletin board system where text-based messages were displayed in a threaded format.

The authors identified the online community as a COP because the three structural elements of COP were present:

Domain – joint enterprise.  Although there was no written statement on the joint enterprise of the travel forum, there seemed an implicit agreement between community members that the forum serves to promote backpacking in China and to facilitate knowledge exchanging between backpackers.

Community – engagement. The large average thread size suggested a fairly high level of engagement between community members.

Practice – Shared repertoire. Over time, the travel forum had developed a rich shared repertoire. It had its own languages. For example, The members call the forum donkey pot because the two phrases are pronounced similarly in Chinese. Word big-shrimp was borrowed from other online communities to refer to members who were experienced backpackers.

The authors highlighted the following findings:

1. Through exchanging text-based messages the members of the travel forum were able to maintain a high level of engagement online. The forum clearly manifested a joint enterprise. The concern that the large size of online communities might threaten engagement and joint enterprise seemed unwarranted. that an online COP can survive large number of light participants is encouraging to organizations that are interested in nurturing global online COPs but are concerned with the low participation levels from some or even most organizational members.
2. By developing a rich repertoire that included local vocabularies, FAQs, help files, the best article selection, and the gonglue message format, which suggested that the members were able to not only adapt to the online environment but also take advantage of it, the online community facilitated knowledge sharing between the members.
3. Consistent with the notion that the theory of COPs was first introduced as a theory of learning (Duguid, 2005), the travel forum presented an environment conducive for learning in the community, especially for newcomers. Newcomers could learn about the practice by observing how other members engaged with each other, by reading articles from the best collection, by studying the FAQs and the manuals, and eventually, by interacting with other members and contributing to the community.
4. The online community also provided space for knowledge creation. Homework messages and gonglue messages were highly valued and encouraged. In fact, the best article collection was consisted mostly of such messages. These messages recorded the authors’ personal backpacking experience and incorporated what the authors had learned first-hand from their trips. They enlarged what the community knew collectively. Knowledge creation also took the form of heated discussions on more abstract topics.

F             Discussion

The seven design principles introduced by Wenger et al (2002), as set out earlier (and repeated here for sake of easier reading):

1. design for evolution
2. open a dialogue between inside and outside perspectives
3. invite different levels of participation
4. develop both private and public community spaces
5. focus on value
6. combine familiarity and excitement
7. create a rhythm for the community

would also invariably apply to online/virtual COPs. In fact, a reading of the case studies above show that the authors of the case studies agree with the above 7 design principles. However, they also highlight certain idiosyncracies of online COPs to warrant additional design principles when cultivating online COPs.

The following are additional design guidelines that are particularly suitable for online/virtual COPs as distilled from the case studies presented above:

1. When selecting and appointing online community managers, seniority, rank or age are not major factors. [Case Study 1]
2. Participation in online discussion ‑ top managers and middle-level managers are less likely to participate. Target participation of rank and file members. [Case Study 1]
3. Members of COPs interact within themselves informally [Case Study 2] and when management orders it to interact according to rules and procedures, the COP will not receive member support [Case 5].
4. Regular and frequent interaction [Case Study 3]
5. The setting of task focus and deadlines [Case Study 3]
6. The presence of a shared interest, desire and motivation [Case Study 3]
7. Maintenance of a balance between regular interaction, a task focus and shared motivation [Case Study 3]
8. For role based COPs, it is important that the opportunities that allow members to improve their job performance and productivity are present [Case Study 4]
9. Committed, engaged and well-connected members are the heart of successful COPs, and as long as their involvement can be made relevant to their productivity and performance, they would view it as a worthwhile cause [Case Study 4]
10. It is important that the COP sponsors and leaders identify and undertake the kind of measures that are helpful in cultivating the member’s sense of connectivity to their peers in the COP network. [Case Study 4] [This seem to address the concern about cultivation of trust in distributed COPs as highlighted by Wenger et al (2002).]
11. A facilitating and neutral environment allows virtual COPs to be launched successfully [Case Study 5] [This also seem to address the concern about trust as highlighted by Wenger et al (2002).]
12. The concept of COPs should not be far removed from the organization’s culture [Case Study 5]
13. The face-to-face element is necessary at the launch state to stimulate the socialization process [Case Study 5] [This face-to-face element also aids in the cultivation of trust.]
14. The work of facilitation of a virtual COP can be aided by design and technology; and the main goal of the facilitator is to increase online participation [Case Study 6] (see also Table 1 for Design Strategies for increasing participation in online COP).
15. Online COPs can survive large numbers of light participants [Case Study 7]

The 6 concerns listed by Wenger et al (2002) with regard to distributed COPs, seems to have been addressed by the case studies and the information and telecommunication situation that the world is in today.

1. With regard to the concern that teleconferences and web sites do not offer easy opportunities for informal networking, the advent of web 2.0 technologies and social networking, seem to have neutralized the feared effect.
2. The fear that online COPs are also likely to cross cultures, is also somewhat neutralized with the proliferation of social networking, blogging, web 2.0 technologies, etc.
3. The fear that difficulty in access to technology can be a barrier to communication still remains, but it is not so looming and does not affect communication in a crucial manner. With huge developments in recent years in information and communication technology, virtual communication is not only limited to PC’s and notebooks, but also hand held devices like mobile phones and the new smart phones.  
4. The concern that distributed communities usually have a greater diversity of viewpoints, needs, interests, priorities, and expectations than local groups have also been addressed with the latest net technologies. For example, company-wide instant messaging tools are used by multinational corporation and this enables members of COPs in these organizations to communicate in real time over the internet, without ever meeting face-to-face. Web and video conferencing have also reduced the need for employees to travel to face-to-face meetings, thus saving costs in travel expenses.
5. The concern about members of large distributed communities having less contact has been addressed by instant messaging tools over the internet and the use of web and video conferencing.
6. The fear that cultural differences often make trust and deep personal relationships more difficult has also been somewhat reduced with the current state of internet and web technologies.

G    Conclusion

All COPs can either be categorized as face-to-face or virtual/online, based on the main platform of COP interaction. Categorising a COP as online/virtual, does not mean that there is no face-to-face element. In fact for the socialization factor in the earlier part of an COP’s life, face-to-face factor is important (Ardichvili et al, 2006; and Dubé et al, 2005).

The guidelines set out above are suggestions collated from case studies presented in current literature. Studies of online/virtual COPs are still in their infancy, if compared to studies of traditional COPs. With the advent of Web 2.0 and social networking, there online/virtual COPs will find that they will have more and more avenues by which their members can socialize and build both private as well as public spaces for COP interaction. This will provide more opportunities for research on the impact of these tools on COPs, knowledge sharing and organizational learning. The identification of  a number of variants earlier in this essay also provides more opportunities for further studies on design guidelines for those variants.

References:

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Cosley, D., Frankowski, D., Kiesler, S., Terveen, L., & Riedl, J. (2005). How oversight improves member-maintained communities. G. v.d. Veer & C. Gale, (Eds.), Proceeding of the SIGCHI 2005 Conference on Human factors in Computing Systems, 11-20. New York: ACM Press.

Duguid, P. (2005). The art of knowing: Social and tacit dimensions of knowledge and the limits of the community of practice. Information Society,  2005 ; 21 (2). p. 109-18.

Girgensohn, A., & Lee, A. (2002). Making Web Sites be places for social interaction. Proceedings of ACM 2002 Conference on Computer Supported Cooperative Work, 136-145. New York: ACM Press.

Johnson, C. M. (2001). A survey of current research on online communities of practice. Internet and Higher Education, 4(1), 45-60.

Kapoor, N., Konstan, J. A., & Terveen, L. G. (2005). How peer photos influence member participation in online communities. G. C. v.d. Veer & C. Gale, (Eds.). Extended Abstracts Proceedings of the 2005 Conference on Human Factors in Computing Systems, 1525-1528, New York: ACM Press.

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Kimble, C. & Hildreth, P. 2005. Dualities, distributed communities of practice and knowledge management. Journal of Knowledge Management; 2005; 9 (4). p. 102.

Lave, J., & Wenger, E. (1991). Situated learning: Legitimate peripheral participation. Cambridge, England: Cambridge University Press.

Masoud Hemmasi, M. & Csanda, CM. 2009 The Effectiveness of Communities of Practice: An Empirical Study. Journal of Managerial Issues; Summer 2009; 21 (2). p. 262.

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Staples, D.S. & Jarvenpaa, S.L. (2000). Using Electronic Media for Information Sharing Activities: A Replication and Extension. W.J. Orlikowski, P. Weill, S. Ang, H.C. Krcmar and J.I. DeGross, eds. Proceedings of the 21st International Conference on Information Systems, 117-133. New York: ACM Press.

Tarmizi, H., Vreede, GJ de, Zigurs, I. 2007.  Leadership Challenges in Communities of Practice: Supporting Facilitators Via Design and Technology. International Journal of e-Collaboration, 2007, 3 (1).

Wei Zhang & Watts, S. 2008. Online communities as communities of practice: a case study. Journal of Knowledge Management, 2008; 12 (4). p. 55-71.

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[2] Wenger et al (2002) had not mentioned this variant as their study was approached in terms of organizational learning; and socially-motivated purposes were, perhaps, not within the confines of their study. The two articles located were in relation to travel (Wei (2004) and Wei & Watts (2008)).

[3] This variant is a logical opposite of “social”, the previous variant in the list.

[4] Being “virtual” does not preclude face-to-face meetings but using ICT becomes more convenient because of busy schedules and geographic locations. So too, face-to-face COPs does not preclude the use ICT to interact. Nevertheless, the primary mode of interaction for face-to-face COPS is the face-to-face, physical meetings.

[5] As the primary objective of COPs is knowledge sharing — language, communication and mode of communication is crucial. Hence, variants relating to platforms of communications should be logically present in all COPs.

[6] Wenger et al 2002 illustrated thus:  In planning Shell’s global communities, it was found that many Europeans were skeptical of a U.S.-initiated community. There was concern that the Americans would try to impose their model of interaction on the Europeans. A further example is that even when the same role description was used for community leader, two different interpretation the role surfaced.

Introduction

The holy trinity of knowledge management processes – knowledge sharing; knowledge transfer and knowledge reuse—is the backbone of knowledge management systems in organizations. Many studies on knowledge management done prior to2004 concentrated on knowledge reuse for replication (especially the transfer of best practices), and not many explored knowledge reuse for innovation. Here, we present a set of case studies done on JPL on knowledge reuse for innovation and show how frameworks of knowledge transfer and reuse as postulated by Inkpen & Dinur, Szulanski and Markus are insufficient to explain factors on how knowledge is reused in radical innovation situations.

Literature Review

Markus (2001) describes the process of “knowledge reuse” in terms of the following: capturing or documenting knowledge; packaging knowledge for reuse; distributing or disseminating knowledge; and reusing it.

Inkpen & Dinur (1998) postulated the importance of context in the transfer of best practices. According to Inkpen & Dinur, when engaging in a knowledge transfer, firms attempt to take a knowledge pocket and replant it in a new and different context in the knowledge recipient. Their model suggests that difficulties in transfer stem from an absence of some or all of the critical contextual variables at the recipient. The more similar contextual variables present at the recipient relative to those at the source, the more successful the transfer will be.

Szulanski (2001) identified four major elements in knowledge reuse: the source, content, context and recipient. The source refers to the creator of the knowledge, the content refers to the knowledge which is intended for reuse, the context refers to the environment in which the knowledge is transferred; and recipient refers to the knowledge consumer (the one who reuses the knowledge). There are two roles in Szulanski’s model – the source and the recipient. Lack of motivation at the recipient location, and its lack of absorptive capacity were found to be positively correlated with stickiness of knowledge transferred.

In Markus’ theory of knowledge reuse (2001), (wherein she defines knowledge reuse the process that involves sharing best practices or helping others to solve common technical problems) she sets out four types of knowledge reuse situations. These were arranged according to the knowledge reuse and the purpose of knowledge reuse. The types involved shared work producers, shared work practitioners, expertise-seeking novices and secondary knowledge miners. Each of these situations have different requirements for repositories. Repositories can play a role in almost all knowledge reuse situations – the crucial step is to specify the knowledge reuse needs in each situation and the implications for repository design and related interventions.

Roles of intermediaries in Markus’ theory are to prepare knowledge for reuse; disseminate knowledge and facilitate knowledge reuse. According to Markus, to ensure knowledge reuse, we must pay close attention to the following 3 factors:

1. the cost of creating good repositories
2. The incentives knowledge producers have to contribute to repositories for use by others
3. The need for, and the roles of human and technical intermediaries in the “repurposing” of repositories developed by knowledge producers to make them appropriate for others.

Research problem

Can we use any of the above explanations above to help us understand knowledge reuse for innovation?  Inkpen & Dinur (1998), Szulanski (2000) and Markus (2001) were mainly concerned with the transfer of best practices or the solution to common technical problems. Knowledge reuse for innovation does not concern itself with these – it is  more on concerned with radical and innovative knowledge. Markus’ theory of knowledge reuse explains the roles of intermediaries in developing and repurposing repositories, making them appropriate for others – but it does not explain nor examine reuse of radical and innovative knowledge.

At this point, after considering the above readings, we observe that there are 4 factors/roles in the knowledge reuse process:

1. the source—the creator of knowledge [Problems relating to incentives of the source to contribute to repositories for use by others (Markus, 2001)]
2. the recipient – the knowledge consumer [Problem of lack of motivation at the recipient location, and its lack of absorptive capacity were found to be positively correlated with stickiness of knowledge transferred (Szulanski, 2000).]
3. the intermediary—the person (or a technical intermediary) who/which repurposes the knowledge so that it is appropriate for others.
4. the incentives for knowledge reuse – Markus (2001) highlights incentives which relate only to contributions into the repository. Incentives on the part of reuse is limited to the repurposing of repositories to suit the requirements of the reusers.

Regardless of differences in how Inkpen & Dinur, Szulanski and Marcus, frame the factors or elements, it can be seen that the knowledge reuse process in all three results simply in the following process in a linear pattern:

knowledge distribution/transfer à knowledge reuse.

Of the three works, only Szulanski (2001) offered a model of the operationalization stages of the knowledge transfer/reuse process. According to Szulanski, the process of knowledge transfer and reuse is as follows:

Formation of the transfer seed à Decision to transfer à First day of use à Achievement of satisfactory performance.

Is the above sufficient to explain the process of  knowledge reuse for innovation? Innovation means the use of knowledge in unknown future contexts and, therefore, simple searches of any repository are unlikely to yield innovative outcomes. Innovation involves the questioning of implicit assumptions, constraints, and principles of the knowledge as it was used in one context to determine the extent to which the knowledge can be applied (or recontextualized) to an alternative context (Burdett, 1993; Coopey, Keegan, & Emler, 1998; Garud, Nayyar, & Shapira, 1997). Hence, a simple repository and search engine, would be insufficient to organize knowledge transfer an reuse. The system has to organize, represent, and query knowledge to elicit implicit assumptions and recontextualized knowledge. According to Majchrzak, Cooper & Neece (2001a), this process of organizing and querying knowledge for innovation is typically performed exclusively by humans (sometimes with the aid of a coordination tool) in hallway discussions, phone meetings, or formal brainstorming sessions, with little formal aid of knowledge management systems (Davenport et al., 1996; Markus, 2001). Can a knowledge management system for reuse in innovation be developed?

It is in our opinion that the frameworks illustrated by Inkpen & Dinur, Szulanski and Markus, do not explain all the factors that enable knowledge reuse in innovation situations and, hence, provides little aid to the design of  a system of knowledge reuse for innovation.

The authors of the case study that we will be highlighting here understood that before any knowledge management system for innovation can be developed, there must be a clearer understanding of how knowledge is transferred within an innovation context so that suggestions for the design of such knowledge management systems and their use can be better targeted (Majchrzak, Cooper & Neece (2001b). They focused on six knowledge reuse for innovation cases in JPL.

Case Study

Description of Case Study

We now focus on the study done on knowledge reuse for innovation across two space projects at Jet Propulsion Laboratory (JPL). JPL was involved in research into radical innovation to prepare for human exploration of Mars. These projects were chosen by the authors because each contained several examples of reuse for innovation and the participant-observer (one of the authors) had a significant role on each of them. Because the authors were interested in reuse for innovation, and the areas of innovation focused on the development of new technical innovation, the cases were limited to examples of the reuse of technical knowledge, rather than managerial (e.g., cost, schedule, planning) or administrative knowledge (e.g., documentation). Documents from projects were reviewed and the authors finally identified and focused their study on 6 cases of knowledge reuse for innovation. These ranged from adoptive reuse (adoption of knowledge contributor’s knowledge into the knowledge reuser’s project proposal) to adaptive reuse (significant adaptation of one or more pieces of knowledge from a knowledge contributor to create an innovation described in the reuser’s proposal).

Discussion of case study

From the interviews conducted of the key informants, the authors identified 7 factors that enabled knowledge reuse for innovation (Majchrzak, Cooper & Neece (2001b)):

1. Motivation to reuse the knowledge of others. (Majchrzak, Cooper & Neece (2004) found that reusers would be more motivated to reuse others’ ideas if:
   1. they are confronted with an insurmountable problem with their current knowledge and resources;
   2. they reconceptualized the problem and approach to require an ambitious new perspective; and
   3. they believed that they can find useful existing ideas elsewhere.
   4. Work processes that optimize exposure to diverse knowledge sources.
   5. Use of extensive personal knowledgebases (with both weak and strong ties).
   6. Culture within the project which encourages reuse.
   7. Availability of flexible ways to assess credibility of potentially reusable knowledge.
   8. Ability to scan for fit.
   9. Ability to quickly determine malleability of reusable knowledge.

Throughout the six case studies, the authors identified the following six stages of knowledge reuse for innovation process:

1. reconceptualization of the problem and approach for innovation [This diverged from Szulanski’s (2001) first stage – which was “formation of the transfer seed”].
2. decision to search for reusable ideas [Unlike Szulanski’s second stage, “decision to transfer”, the second stage here involved the inviduals considering whether to invent their own solutions or search for a reusable idea. Before engaging in a search for a reusable idea, the individuals concerned had to experience an “insurmountable performance gap” resulting from severe time and cost constraints.]
3. search for reusable ideas
4. brief evaluation of reusable ideas
5. in-depth analysis of reusable ideas and selection of one
6. full development of the reused idea.

The authors also found that there were three criteria used to decide to reuse knowledge for innovation: relevance, credibility and adaptability.The first two – relevance and credibility have been examined by Szulanski (2000); while the criterion of adaptability had not been mentioned in the existing literature of that time. (Majchrzak, Cooper & Neece (2004)). In stages 3 to 6 above , the individuals scanned for adaptability of the ideas to their current research.

Findings by the case study which raises propositions for future research:

1. An individual who proceeds through all six stages (described above) is more likely to reuse other’s ideas in ways that foster innovation than individuals who skip any of the stages or perform the stages differently.
2. Reusers who are interested in knowledge reuse for innovation have a greater need to proceed through the layers of scanning, brief evaluation and in-depth analysis than reusers interested in replication.
3. An innovator who considers how an idea will be adapted and who will do the adaptation is more likely to reuse ideas to facilitate innovation than reusers who ignore these issues during the reuse process. [This involves stages 3 to 6 of the knowledge reuse for innovation process as described above. The main idea of adaptability and evaluation of reusable ideas, as mentioned earlier, had not been examined by literature available at the time of study.]
4. Ideas which are structured to indicate the presence of metaknowledge will be more readily considered by reusers during the knowledge reuse for innovation process than ideas that are not so structured. [This corroborates Markus (2001) idea that metaknowledge (i.e. describing context and credibility of source) about a potentially reusable idea was important to the reusers in the cases studied.]
5. Innovators who are encouraged to pursue innovation through reuse by opportunity recognizers are more likely to reuse others’ ideas than innovators without that encouragement. [Opportunity recognizers are individuals who recognize the business potential of the innovator’s idea and motivates the innovator to pursue the ideas, including sharing them with others. Opportunity recognizers are different from technology gatekeepers or brokers because they are focused on aiding sources to pursue their interests. (Majchrzak, Cooper & Neece (2004)).]
6. A key determinant for knowledge reuse for innovation in any one case will be the degree of innovation incurred in other cases within the same project or organizational unit. [Majchrzak, Cooper & Neece (2004) found that the decision to use other’s ideas to resolve a particular problem needs to be examined in the context of other decisions made about other problems encountered in the same project or organizational unit. The broadening of focus should take into account the web of decisions being made by individuals, project colleagues and project managers.]

Reconciling the findings of this case study with the existing literature of that time

Majchrzak, Cooper & Neece (2004) reconciled their findings with the research of Szulanski (2000) by stringing together the two models into one – with the new knowledge reuse for innovation process model describing the early stages of knowledge reuse process and Suzlanki’s model describing the later stages of the knowledge reuse process. Early on in the reuse process when innovation is desired, the reusers devote their attention to defining the problem and searching activities – the knowledge reuse for innovation model. Later on, when the routinization of the idea is required, the best practices of the idea can be transferred according to Szulanski’s model.

It is our opinion that the study shows that previous descriptions on knowledge reuse by Inkpen & Dinur, Szulanski and Markus cannot explain the process of knowledge reuse in radical innovation. The process of knowledge reuse in innovation, we believe begins with the identification of a problem, as opposed to the “formation of the transfer seed”.  It could be possible that in organizations doing radical innovation, there are two types of knowledge reuse processes that take place: where teams are participating in radical innovation projects (where there were more “insurmountable problems” that had to be resolved, the process of knowledge reuse is a hybrid of the knowledge reuse process described by  Majchrzak, Cooper & Neece (2004) and the process described by Szulanski; when teams are participating in more routine projects, then their knowledge reuse process follows Szulanski’s model.

Impact of case study and conclusion

Even though the authors of the case study  reconciled their findings to Szulanski’s model, we have another contention. The frameworks for knowledge transfer and reuse formulated by Inkpen & Dinur, Szulanski and Markus, basically features the top-down approach. Management decides that these are the knowledge needed to be transferred, hence a system is built around that decision.  Because the reuser has little say in the choice and selection of the reusable knowledge, we get the  resulting problems of  acceptance on the part  of the reuser, the problem of stickiness of knowledge, the problem of context, etc. On the other hand, the findings of the authors in this case study highlights knowledge reuse which has been initiated by the reusers themselves – illustrating a bottom-up approach. The reusers reconceptualized their knowledge problem/gap and initiated the search for the reusable knowledge.

In our opinion, this process of knowledge reuse is more representative of knowledge reuse in  real life scenarios (see Orr (1996)) – and not only for knowledge reuse in innovation situations. We can see it being used in situations of service companies like law firms (where each problem is unique and lawyers search for knowledge from a vast menu of knowledge sources). Can the six-stage knowledge reuse framework highlighted by the authors of the case study be sufficient so as to do away with all previously conceived models and frameworks  for knowledge reuse? We do not think so. In organizations, we think there are  situations that warrant the use of different knowledge reuse approaches – for innovative or radical  knowledge, we use the six-stage framework; for routine tasks, we use the more traditional top-down approach .

References

Burdett, J. O. 1993. Managin in the age of discontinuity. Management Decision, 31(1). pp 10-18.

Coopey, J., Keegan, O., & Emler, N. 1998. Managers’ innovations and the structuration of organizations. Journal of Management Studies. 35(3). pp 263-284.

Davenport, T. H., Jarvenpaa, S. L., & Beers, M. C. 1996. Improving Knowledge Work Processes. Sloan management Review. Summer: 53-65.

Garud, R., Nayyar, P. R., & Shapira, Z. B. 1997.  Technological Innovation: Oversights and Foresights. New York: Cambridge University Press.

Inkpen, A.; Dinur, A. (1998): The Transfer and Management of Knowledge in the Multinational Corporation: Considering Context, Working Paper 98-16, Carnegie Bosch Institute.

Szulanski, G. 2000. The Process of Knowledge Transfer: A Diachronic Analysis of Stickiness. Organizational Behavior and Human Decision Processes. 82(1). pp 9-27.

Markus, Lynne M. 2001. Toward a Theory of Knowledge Reuse Situations and Factors in Reuse Success. Journal of Management Information Systems. 18(1). pp 57-93.)

Majchrzak, A, Cooper, Lyne P., Neece, Olivia E. 2001a.Knowledge Ruse for Innovation – the missing focus in knowledge management: Result of a case analysis at the jet propulsion laboratory. [Accessed 4 October 2009. <http:www-rcf.usc.edu/~majchrza>.]

Majchrzak, A, Cooper, Lyne P., Neece, Olivia E. 2001b.Knowledge Ruse for Innovation – the missing focus in knowledge management: Result fo a case analysis at the jet propulsion laboratory. Academy of Management Proceedings 2001 OCTS:A1.

Majchrzak, A, Cooper, Lyne P., Neece, Olivia E. 2004. Knowledge Reuse for Innovation. Management Science. 50(2). pp 174-188.

Orr, Julian. 1996. Talking About Machines – An Ethnography of a Modern Job. London: Cornell University Press.

The internet is a great tool. But more and more, people are not giving it the respect it should have. Matters which you do not wish to be discussed in public are freely discussed on the internet — we forget that the public in real life is much more limited in number than the public on the internet. Facebook is a social networking tool. It is not a place for us to discuss everything under the moon. People form opinions, just as they do in real life, from things said and discussed on the internet. The same rules that apply to the real world applies to the cyber world too. Ms Chok forgot that.  As a volunteer she may have the passion. But being a volunteer is not just passion — there is a responsibility and a professionalism that comes with it. What she had done is not in the true spirit of volunteerism. She has put her emotions first and did not think of the repurcussions. I hope she does not cause more trouble.

As an aside, looking at the receipt. It cannot be denied that it was written in foul English language — but is it racist or discriminatory? I would say a definite no.

How can one manage one which cannot be defined, calculated, KPIed?? That is why some people use terms like information management, document management systems, customer relationship management system — to connote knowledge management. All these concepts distance KM  from the human element. The closest to anything human — the customer relationship management system– is only half human actually as customers are a large percentage other corporations.

Why don’t people share, why do some people share, why don’t some people make the effort to reuse the knowledge that has already been codified? The root to any KM problem is actually human; and yet corporations treat KM as an IT or IS problem?

In any successful KM initiative — you find that there is a huge deal being done on the people aspect first. Finding out what staff find lacking; discovering what staff think will benefit them; ensuring management understand staff problems… all these require great human interaction. To begin a KM initiative by asking what systems can be put up in place without finding out for whom the systems should serve is a recipe for disaster — a waste of resources — money and time-wise.