1. Frank was director of research-development (R&D) for a large pharmaceutical company. The following memorable incident is related to his name: During a research project the mebers of the team worked on developing a new drug. After five years of work the project seemed like a great success. Experiments were nearing completion when one of the technicians in the laboratory detected a strange phenomenon: he observed changes in the liver of experimental animals. He realized that the medicine - besides excellent healing properties - caused irreversible damage to the liver. He reported his discovery" immediately to the head of the research team, whose proposal they promptly stopped the project. The members of the group became discouraged. They waited anxiously for the respond of Frank and the management.

2. They were afraid that the management would look at them like losers. But Frank's reaction was quite different. He realized that the failed project also had a positive result. The members of the team gained new knowledge during the research, and this knowledge added to the intellectual capital of the company. Consequently, he wanted retain this spiritual value against respond to the failure. First of all he congratulated to the team members, for creating such an atmosphere during the research, which allowed even to the simplest subordinate to raise problems that could ruin any large-scale project. By stopping the project, they saved the company from the tremendous incovenience and enormus financial losses it would have faced if the drug were to enter the market. Frank also talked about a breaktrough in the learning process of the team members during the project, that could affect later projects. He made a promise them, that he would give them the opportunity to record what they learned during the incident, and that they will be well rewarded for their excellent work. He will also entrust the members of the group with new projects. Eventually, the participants of the failed project contributed in two important point to increasing the organisation's R&D capital. They introduced a research process that will allow similar threats to be detected earlier in the furutre. The knowledge gained during the project also influenced the work of two other research team, because they were working on materials of a similar nature as the group mentioned in the case.

Questions to Frank's case

2. Which knowledge type is more important for a pharmaceutical company? Why?
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4. Considering Part 1, what do you think, in which stage the project team is in the process of knowledge management? Why?
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