Knowledge Management - Essay Example

KNOWLEDGE MANAGEMENT 2007 Knowledge Management Introduction Knowledge Management (KM) is a very broad discipline that integrates a number of organisational endeavours and practices used by different organisations in a variety of ways in order to identify, create, represent, and distribute knowledge and thus ensure competitive advantage of the competitors. KM represents one of the most recent developments in the long line of organisational tools and techniques such as 'the scientific management', X and Y' theory', 'T-groups', 'total quality management', 'organizational learning' 'systems thinking', 'benchmarking', 'business process re-engineering' and other methods meant to create economic value and competitive advantage. After becoming an independent established discipline in the middle of 1990s, KM is perceived as an essential aspect of HRM and information technology in modern organisations (Davenport & Prusak, 1998). The integrative and rather broad nature of KM contributes to the difficulties associated with defining this paradigm. Generally, KM is viewed as a new form of management which facilitates organizational adaptation, survival and competence in face of increasingly dynamic environmental changes. This broader perspective incorporates the processes of knowledge use, knowledge creation, knowledge sharing, knowledge transfer and knowledge renewal with each of these concepts being defined independently (Malhotra, 1998). Therefore, Skyrme (2002) suggests defining KM as "the explicit and systematic management of vital knowledge and its associated processes of creating, gathering, organizing, diffusion, use and exploitation, in pursuit of organizational objectives" (Skyrme, 2002: 4). However, this definition of KM is far from being unanimous: the views vary substantially by representatives of different theories and approaches. Traditionally, two major views have been presented in the scholarly literature on KM, namely: the informational resources management (or management of explicit knowledge) and management, which creates the environment in which people could easily develop and share the knowledge while the increasingly serious attention to the interactive aspects of organisational processes have resulted in emergence of the third perspective. Thus, contemporary KM theories can roughly be classified into three major categories: 1. Technology-focused: primary focus on the enhancement of technologies that facilitate sharing/growth of knowledge. 2. Organisational: designing and reshaping the organisational environment in a way to facilitate knowledge processes. 3. Ecological: focus on the interaction process within the organisational environment involving people, knowledge and environmental factors (Gordon & Edge, 1997). A similar categorisation of the KM approaches is suggested in perhaps the only formal taxonomy of KM up to date. Michael Earl (2001) based his research on comprehensive empirical data to identify three major schools of KM: Technocratic: emphasis on information or technologies of KM. Economic: knowledge should be managed similarly to other assets (e.g. stock, bonds, etc). Behavioural: focus on knowledge exchange as a fundamentally social process (p. 224). However, modern models and theories of models are often difficult to fit in this taxonomy due to their integrative nature which encompasses elements of each school. The below overview provides some key concepts and theories associated with effective KM system. Main Body One popular KM approach widely used these days is a so-called 'pragmatic management'. Though it is not classified in the Earl's classical taxonomy pragmatic management is recently becoming increasingly popular, especially in the small to middle organisations. This approach seems rather close to Earl's behavioural paradigm that views knowledge management and knowledge exchange as fundamentally social processes. The main difference of this paradigm lies in the fact that it doesn't imply serious investments in the employees and their all-round development. Nevertheless, this solution as Thoben & Weber (1998) believe is in many cases not less effective than other approaches. The general implicit principle of pragmatic knowledge management could be postulated as "A bird in the hand is worth two in the bush" and "To make a mistake is better than to make no experience" (Thoben & Weber, 1998: 18). The other characteristic feature of pragmatic KM that it implies implementation of 90% of solutions in the short term, instead of 100% solutions in the long term. Apologists of pragmatism approach in knowledge management state that no large IT investments in employees are necessary; instead, people and systems are to be exploited as far as their functionality affords. Apparently, most of the methods utilized by the partisans of pragmatic knowledge management are new; instead, some of them had developed even before the very idea of KM emerged. However, the contribution of these methods to the modern KM is tremendous as far as many of the modern middle in size companies utilize pragmatic KM nowadays. This approach is especially popular in Japan where nearly even such industrial giants as "Sony", "Mitsubishi" and "Matsucita" utilize such principles of pragmatic KM as "talking rooms", "brainstorming sessions" etc. The primary asset of pragmatic knowledge management is that it literally "utilizes" the existing social and IT infrastructure of the company and, hence, doesn't require extra wasting of the companies. Secondly, nearly all of these approaches are either planned or implemented by the employees themselves that appears one more reason for extra savings of a company. Finally, the principles of pragmatic KM are relatively easy to implement and they provide quick feedback and acceptable results. Thoben (2000) also identifies the following methods and techniques of pragmatic KM that all share the general principle of IT savings: Personnel coaches who are responsible for introducing the novices to the colleagues, helping them recognize the business process as a whole, promote novels responsibility etc. Round Tables (or brainstorming sessions) targeted to involve the employees to meet regularly during the brakes of after the work in order to discuss current problems and develop optimal solutions. Common directory structure that doesn't allow employees to store their files on local hard disks; instead they are to locate them in a shared directory on a server. This measure helps to challenge personal responsibility, promote employee's creativity and working efficiency. "How Tos" principle of interactive knowledge development that suggest multiple solutions in different situations and promotes knowledge sharing and development among the employees (Thoben et al, 2000). Analysis of these principles allows defining strong and weak points of pragmatic management. The certain advantages of the paradigm is its easiness and inexpensiveness (1); quick response and rapid outcomes (2). At the same time, the approach lacks investments in personnel who appear self-developed and self-motivated within a company. It may by probably also problematic to implement innovations in the companies sharing the principles of pragmatic management. Another popular approach is the organizational knowledge management that some believe to be a sub-part of a more general behavioural paradigm of KM. The approach focuses on knowledge pooling through networking. Knowledge, in this case, is believed to be a dynamic idea that may be easily shared, developed and pooled through personal contacts. The main objective of the manager lies in this case, as Davenport and Prusak (1998) believes, in promotion of people's communication and sharing their knowledge instead of storing it. The theorists of the approach believe that knowledge pooling could occur on two main levels, i.e. IT level, and social level. Different companies subdivide each of two components depending on their business objectives. Groupware and the so-called "online companies" typify the IT component while "traditional" business companies focus on social networking that leads to the exchange of information. In the second case, knowledge sharing takes place rather on the intrapersonal level that helps companies to face the challenges of the market through their primary asset, i.e. knowledge-based personnel. A classic example of organizational KM is "Shell" that permanently looks for the solutions to improve drilling operations. The methodology of Shell's organizational KM is as following. Before all the company brings together prominent experts in the field to share their knowledge in multiple ways. These sharing could vary from experts' polls to brainstorming sessions. Than Shell's executive managers find out the "juste milieu" amidst the whole range of experts' decisions and implement the solutions practically. Another tool of KM utilized by Shell is video streaming across their Intranet. Nevertheless that Intranet conferences aren't themselves pure KM tools, they, as many researchers believe reinforce the social aspect of knowledge transfer (Gordon, 1997). In Shell's case, the IT tool also reinforces the social transfer of knowledge within the organisation. Although the approach is an extremely effective one it is more costly if compared with the pragmatic approach. A cross-disciplinary principle employed by the partisans of the approach is acceptable only for the companies that hold leading positions in their field while the average organisations with small number of personnel and limited resources will likely have problems using this approach. One more drawback of the approach is that it doesn't promote creativity of the middle managers who serve as the foils to the prominent guest specialists. Explicit and Tacit Knowledge Knowledge is an abstract multilateral concept which encompasses a wide range of facts, specific skills, procedural knowledge etc. Although the elements of knowledge seem to be equally important there have been many attempts to arrange the internal structure of knowledge in a sort of order. One of the most popular classifications of knowledge widely applied in the organisational research is based on the distinction between tacit and explicit knowledge (Polanyi, 1966). Nonaka and Takeuchi (1995) define explicit knowledge as follows: "can be expressed in words and numbers and can be easily communicated and shared in the form of hard data, scientific formulae, codified procedures or universal principles" (p. 40). By contrast, tacit knowledge is "highly personal and hard to formalize. Subjective insights, intuitions and hunches fall into this category of knowledge" (p. 40). Explicit knowledge in organizations is commonly stored in databases and other documents; the place of tacit knowledge is in the brains of people. Several knowledge management programmes implemented in the organisational practice paid specific attention to converting tacit knowledge into explicit knowledge believing such approach would result in substantial benefits. However, such attempts mostly proved useless and ineffective because no document, database or other source of explicit knowledge has the potential to adequately replicate the experience accumulated by human being over long years of work. The cognitive mechanisms which determine the process of choice between the alternative actions/solution represent another unique feature that can barely be replicated with the current technologies (Wilson, 2002). Therefore, the only option that demonstrated certain level of effectiveness in transferring tacit knowledge into explicit was to "...provide pointers to the experts who will be able to put such knowledge into context and help those wanting to apply it" (Skyrme, 2002: 5). Data, Information and Knowledge Distinction Much of the confusion associated with KM is due to presence of three interrelated and interwined concepts: data, information and knowledge. It has been repeatedly highlighted in the KM research that they are not the same, but despite the recognition the efforts to strictly distinguish between data, information and knowledge largely failed. As a result, the use of these concepts remains rather casually up to date and often they are used interchangeably. Thus, Kogut and Zander (1996) define information as "knowledge which can be transmitted without loss of integrity" (p. 386). Nonaka, one of the brightest representatives of the KM paradigm, also does little to distinguish between knowledge and information claiming that they are partially similar though information relies primarily on the factual basis while knowledge is more about commitments and beliefs (Baumard, 1999). Apart from the lack of clarity with definitions, the relationship between the three concepts is also surrounded by a fair share of ambiguity with numerous authors holding different opinions about it. This problem has been recently cited (and rightfully so) as one of the most essential drawbacks associated with rigour of research in the field of KM (Wilson, 2002). Knowledge Flows Knowledge flows comprise the set of processes, events and activities through which data, information, knowledge and meta-knowledge are transformed from one state to another. Representatives of the behavioural approach hold an opinion that is impossible to actually manage knowledge, and the only thing that is manageable is knowledge-related behaviours. When individuals examine business processes, events and activities, they also tend to use a behavioural focus as the organizing framework. Accordingly, most people find that behaviours are the most comfortable frame of reference for understanding the relationships between business processes and knowledge flows (Skyrme, 2002). Models and Theories The number of models and theories found in the KM related literature is impressive: almost every researcher working in the field seeks to create his own theory or model of effective KM. However, most often these models are developed specifically for unique organisational environments and often lack broader applicability. By contrast, broader models of KM developed by outstanding theorists on the basis of comprehensive analysis involving many organisations often need to be adjusted to take into consideration the specific environment in which they are to be applied. However, such models are evidently more valuable in terms of understanding the key processes, mechanisms and practices associated with effective KM in an organisation. Knowing and Knowledge The core idea of Earl's (1998) theory of KM is the distinction between data, information and knowledge. Earl identifies four essential functions adherence to which determines whether an organisation can effectively manage its knowledge assets: - Inventorising: mapping individual and organisational knowledge. - Auditing: assessing the nature and extent of planned ignorance and then developing knowledge through learning activities. - Socializing: creating events or applying tools/techniques that enable people to share tacit knowledge. - Experiencing: addressing the problem of unknown ignorance by learning from experience, action and handling unusual situations. Although this model is one of the most widely recognised one within the KM paradigm it is more theoretical than practical in its nature, and its practical application is rather limited. SECI The famous Socialization, Externalization, Combination, Internalization (SECI) model proposed by Ikujurio Nonaka (1991) is recognised as "...a useful and rigorous approach to describing the ways knowledge is generated, transferred and re-created in organizations" (Despres, & Chauvel, 2000: 62). This model also known as the 'knowledge creation' model is based on the following principles: Two forms of knowledge: explicit and tacit. An interaction dynamic: knowledge transfer. Three levels of social aggregation: individual, group, and context. Four processes of knowledge creation: socialization, externalization, combination and internalization. Nonaka (1991) describes the concept of 'knowledge-creating company' the main characteristic of which is promotion of the interplay between the explicit and tacit knowledge with the help of specific systems and structures, and organisational culture. Intensive interaction between the four knowledge-creating processes plays the key role in this mechanism: Socialisation: the sharing of tacit knowledge between individuals. Externalisation: the expression of tacit knowledge in forms that can be easily understood by other members of an organisation. Combination: the conversion of small bits and elements of explicit knowledge into more complex forms via the processes of communication, dissemination, and systematization. Internalisation: the conversion of tacit knowledge which have been externalised into new tacit knowledge with subsequent transformation into practical actions, practices, and initiatives. Nonaka & Konno (1998) also describe the specific concept of Ba which represents a place for the dynamic process of knowledge conversion and emergence of new relationships across different levels of organisation. Nonaka & Konno (1998) identify four types of Ba: Originating Ba: a space where individuals share feelings, emotions, experiences and mental models. Interacting Ba: a space where conversion of tacit knowledge into explicit knowledge occurs. Cyber Ba: a space where new and existing explicit knowledge interacts in a virtual environment to generate new explicit knowledge across all levels of an organization. Exercising Ba: a space where the conversion of explicit knowledge into tacit knowledge occurs. The concept of Ba draws attention to the contextual nature of knowledge: once it is decontextualised is looses its value. Therefore, any process related to creation of knowledge requires a Ba understanding importance of which is the key to success of an organization, and organisations must ".... focus significant attention on the development of its Bas since more is to be gained by developing the environment around knowledge processes than efforts directed at the processes themselves" (Despres & Chauvel, 2000: 63). A similar view of KM is provided by Gunnar Hedlund (1994) in his N-Form theory. The author proposes two basic groups of concepts (tacit and explicit knowledge and four levels of social aggregation) which dynamically interplay during the processes of knowledge creation, transfer, and use. The structure of KM which emerges during the interplay includes three dimensions: Two types of knowledge: tacit and explicit knowledge, each type encompasses three forms of knowledge, namely cognitive, skill, embodied. Four levels of carrier: individuals, small groups, organizations, the inter-organizational domain. The dynamics of knowledge transfer and transformation, which are articulated by the following processes: Articulation and internalization, the interaction of which is reflection, Extension and appropriation, the interaction of which is dialogue, Assimilation and dissemination (Hedlund, 1994: 76). Hedlund believes that the KM processes such as creation, storage, transfer and transformation of knowledge should interact across the whole organisational structure. The OK Net and the OCS The KM model designed by Elias Carayannis (1999) focuses on a "synergistic symbiosis between information technology and managerial and organizational cognition" (p.219). Carayannis views information technology as a specific infrastructure that provides the capability "... for individual and collective reasoning, learning, emoting and envisioning" while KM as "...a socio-technical system of tacit and explicit business policies and practices" (Carayannis, 1999: 219). Carayannis' identifies and describes the systems and tools he considers facilitate the effectiveness of KM processes within an organisation in his model of the Organizational Knowledge Network or OK Net. The model is based on a range of specific concepts such meta-learning meta-cognition, and meta-knowledge and a 2 X 2 matrix developed by Carayannis. This matrix "consists of successive knowledge cycles where an individual or an organization can transition or traverse 4 stages of awareness and ignorance" (1999:224). These states of KM are ignorance of ignorance, ignorance of awareness, awareness of ignorance, and awareness of awareness. Consequently, organizations may plot their situation in one of these cells and a development effort is aimed at managing the transitions from one state to another. The ideal state is awareness, of knowledge or ignorance, and the willingness to move from the latter to the former. The move may be performed either via connectivity or interactivity. Connectivity is enabled by information technology and held to be the efficiency-driven path while interactivity denotes sociotechnical phenomena and stresses the tacit/explicit interplay in human interaction (Despres & Chauvel, 2000: 71). Intellectual Capital Management The Intellectual Capital Management model proposed by Van Buren (1999) seeks to develop a standard set of criteria applicable to evaluation of KM practices in the organisation. Two sets of criteria are identified for this purpose: The criteria related to intellectual capital assets: human capital, innovation capital, process capital and customer capital. The criteria related to financial performance and business effectiveness. The model implies that the organisations' intellectual capital should be identified in the first turn to be used as the initial input for KM related activities, processes and enablers. The most essential KM processes described by Van Buren are definition, creation, capture, sharing and utilisation of knowledge while the enablers reside in "...those corporate functions/systems/structures, which define, leverage and structure the firm's activity: leadership, corporate culture, communication, technology processes, human resources policy and so on. This therefore highlights the interaction of processes and enablers, all of which is placed in the context of a firm's business strategy: Knowledge Management efforts should be driven by strategic intent rather than the reverse" (Despres & Chauvel, 2000: 74). The results are subject to close assessment within the Intellectual Capital Management model via standard measures related to financial performance of the organisation. Van Buren (1999) identifies 50 intellectual capital measures distributed across the four categories including educational levels, time in training, the number of copyrights and trademarks, average age of patents, IT accesses per employee, annual sales per customer and others (Despres & Chauvel, 2000). The Ecology of Knowledge Management The Ecology of Knowledge Management model described by David Snowden (1999) represents an action-oriented system which relies upon four basic elements: Distinction between explicit and tacit knowledge. Knowledge assets. Trust. The certainty/uncertainty of decisions relative to (1) objectives and (2) causal relations These elements systematically interact creating the value of knowledge. Interaction is the key principle of this model because Snowden believes knowledge per se cannot create value. Mapping the existing explicit and tacit knowledge in an organisation is the first step; then the identified explicit knowledge is transferred to the specific knowledge structure or systems such as database and the identified tacit knowledge is turned into explicit and tacit knowledge difficult to make explicit is directed to competence management systems. Snowden (1999) identifies four types of practices meant to transfer knowledge across an organisation, namely: sharing explicit knowledge through systems and structures; sharing tacit knowledge through psychosocial mechanisms; transforming tacit to explicit knowledge through BPR, documentation and related; releasing tacit knowledge through trust and its dynamics. The balanced and adapted management of explicit and tacit knowledge is considered to result in an effective KM ecology within an organisation (Despres & Chauvel, 2000). Constraints of Knowledge Management Systems Unfortunately, implementation of the knowledge management paradigm in organisational practice is not a simple task: the number of failures of knowledge management in modern organisational practice is impressive (Wilson, 2002). There are several major constraints identified in the literature that supposedly contribute to failure of KM strategies and have to be considered in designing and implementation of the next generation of KM systems. Malhotra (2004) classifies these constraints into seven categories: 1. Business and Technology Strategy Challenge: the transformation of business processes and models within an organisation to fit the requirements of modern business environment. Flexibility, ability to adaptive, and scalability of the future KM systems must allow for real time changes in information and data across the system. 2. Organizational Control Challenge: finding the proper balance between the need to ensure consistency of KM-related processes and creativity and innovation of employees. 3. Information Sharing Culture Challenge: competitive nature of business relations and increasing value of information negatively affects the individual's and company's willingness to share valuable information. 4. Knowledge Representation Challenge: this challenge has much to do with the problem of transferring tacit knowledge into the explicit realm without loosing the dynamic action-oriented nature of tacit knowledge as well as ensuring that the right person can access the right information at the right time. 5. Organization Structure Challenge: the need to change the traditional formalised organisational structure in order to adequately reflect the expanding role of partners, suppliers, and customers and thus stimulate and facilitate sharing of existing and creation of new knowledge. 6. Managerial Command and Control Challenge: cultivating commitment of knowledge workers to the long-term goals and objectives, which are becoming increasingly difficult to formulate and predict in the modern highly changeable environment. 7. Economic Returns Challenge: the need to assess the effectiveness of KM practices in an organisation against a set of standard or specially designed criteria which for the large part still have to be developed. The major factors contributing to the failures of knowledge management strategies are highly changeable global environment, coupled with failure to take a holistic approach to designing the system of knowledge management, and substantial resources required to design and implement a truly effective KM programme (Malhotra, 2004). Evidently, the first of these drawbacks has received better recognitions from the theorists whom develop KM models, programmes, and strategies for modern organisations. Thus, every of the above listed models that have been recently described in the literature seek to adopt an integrative holistic approach to KM systems simultaneously emphasising the importance of dynamic and interactive components of the KM systems' functioning. A good portion of criticism has been poured on the concept of knowledge management by Wilson (2002). However, he does not deal with specific models or theories of KM: Wilson puts in question the underlying epistemological validity of the concept of knowledge management in general. A comprehensive survey of British consultancy companies makes Wilson (2002) believe that "...the 'knowledge management' idea is that it is, in large part, a management fad, promulgated mainly by certain consultancy companies, and the probability is that it will fade away like previous fads". The researcher argues that one of the basic elements of KM - the effective management of work practices - is Utopian in its nature because it is requires creation of an organizational culture in which the advantages of knowledge exchange are shared by all, employees enjoy high level of autonomy, and special expert communities determine how the individual expertise accumulated by each employee can be used to its best. As Wilson (2002) puts it "Sadly, we are a long way removed from that Utopia: whatever businesses claim about people being their most important resource, they are never reluctant to rid themselves of that resource (and the knowledge it possesses) when market conditions decline". Although many of Wilson's (2002) arguments seem rather solid the situation with KM does not seem as pessimistic as he claims. In fact, Malhotra (2004) who holds an entirely different opinion on the future perspectives of KM cites similar difficulties, but instead of labelling the identified challenges as impossible to overcome he attempts to provide a set of possible measures to address the challenges, draws attention to importance attention, motivation, commitment, creativity, and other human-related aspects of KM, etc. By contrast, Malhotra (2004) believes that it is possible to create an effective sustainable knowledge management strategy, but the prerequisite is to "...ensure that adaptation and innovation of business performance outcomes occurs in alignment with changing dynamics of the business environment. Simultaneously, conceiving multiple future trajectories of the information technology and human inputs embedded in the KMS can diminish the risk of rapid obsolescence of such systems" (Malhotra, 2004: 88). Granted the variety of ideas, concepts and inventions that had been considered Utopian prior to becoming an unalienable element of our everyday life, Malhotra's prognosis does seem to be feasible. Conclusions Knowledge management can probably be addressed as one of the most controversial and multilateral, but very promising developments in the organisational practice over the recent decades. Although the concept's novelty and highly dynamic nature hampers its definition, the role of knowledge management in the present day organizations is tremendous. Correctly designed and used KM strategy/system provides modern companies with substantial competitive advantage through creation of a knowledge-based personnel, finding out the niches in the tights markets, development of business solutions in multiple areas. Most of the prominent business companies of modernity report of their devotedness to the principles of KM: IBM, Dell, British Airways, and HP belong on this list. Implementation of KM principles in business practice have changed the very fundamentals of traditional business including the way companies do their businesses, how they treat own employees and build their relationships both in the internal (between the employees) and external (customers, suppliers and competitors) contexts. Although the basic idea of knowledge management is universal - doing what is needed to get the most out of knowledge resources - its practical implementation may vary in each particular case. The variations are not too serious and mostly concern the share of attention paid to either technological or human aspect of KM while the key principles remain similar in the modern models of KM: explicit and tacit knowledge, interactive nature of KM processes, increased attention cognitive and motivational aspects of KM. Therefore, the differences in KM systems implemented are mostly associated with different organizational structures and demands of the companies. Although the challenges related to designing/implementation of effective KM strategy are serious the practice continues to demonstrate that they are not compelling. The most essential of these challenges are identified in the professional literature as well as the alternative ways and tools to cope with them. References Baumard, P. 1999. Tacit Knowledge in Organizations, London: SAGE. Carayanis, E. 1999. 'Fostering Synergies between Information Technology and Managerial and Organizational Cognition: the Role of Knowledge Management', Technovation, Vol. 19: 219-231 Davenport, T. H. & Prusak, L. 1998. Working Knowledge, Harvard Business School Press. Despres, C. & Chauvel, D. 2000. 'A Thematic Analysis of the Thinking in Knowledge Management', in Ch. Despres & D. Chauvel (Eds.), Knowledge Horizons: The Present and the Promise of Knowledge Management, Butterworth-Heinemann: 55-86. Earl, M. 2001. 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