Reviews influential literature Essay

Introduction

There is no generally accepted definition of Knowledge Management, not in academia or applied on an organisational level. The many various conflicting definitions of Knowledge Management often deter organisations from undergoing Knowledge Management projects. There is definitely no one-fit all approach to Knowledge Management within organisations, it is important that organisations choose a Knowledge Management approach that supports their cultural environment. This framework should be comprehensive and concrete.

The first part of this report reviews influential literature on the subject. The second part of the report will attempt to apply my understanding on the subject to answer a number of questions relevant to an organisation who might be interested in Knowledge Management. These include why knowledge management is important, the benefits of knowledge management and the challenges to knowledge management.

Part 1

Literature Review of Knowledge Management

There is an abundance of literature on the topic of Knowledge Management and what it entails. Within the literature there are numerous different definitions of Knowledge Management, many varying significantly. Instead of listing all the different views (this often leaves people more confused and overwhelmed) I have decided to investigate the two most influential texts regarding knowledge management. Nonaka’s and Takeuchi’s ‘The Knowledge Creating Company’ and Davenport and Prusak’s ‘Working Knowledge’, published in 1995 and 1998 respectively.

Nonaka and Takeuchi

Nonaka and Takeuchi (1995) believe that existing knowledge is ‘converted’ into new knowledge.

Nonaka and Takeuchi do not use the western definition of knowledge focused on ‘truthfulness’ rather they define knowledge more loosely as a ‘justified belief’. Nonaka and Takeuchi state “while traditional epistemology emphasize the absolute, static, and nonhuman nature of knowledge, typically expressed in propositions and formal logic, we consider knowledge as a dynamic human process of justifying personal belief toward the ‘truth’ “(1995 p. 58)

Nonaka and Takeuchi distinguish between explicit and tacit knowledge. Explicit knowledge is knowledge that “can be expressed in words and numbers, and easily communicated and shared in the form of hard data, scientific formulae, codified procedures, or universal principles.” (Nonaka and Takeuchi 1995, p. 8). Explicit knowledge may be shared, stored on a computer, codified in language. Examples of explicit knowledge include business plans, marketing research, customer lists or anything else documented that could prove useful to an organisation’s operations.

Tacit Knowledge on the other hand is incommunicable; it is the know-how that is only contained within people’s heads. Nonaka and Takeuchi believe that tacit knowledge forms the background of all knowledge. Tacit knowledge can only be obtained through sharing by collaboration (Learning by doing, face-to-face contact, shadowing and storytelling). There are many issues with tacit knowledge, some of these issues include that it is extremely hard to recognise, generate, share or manage.

Nonaka and Takeuchi (1995) believe that the creation of knowledge in an organisation is when tacit knowledge is transferred into explicit knowledge and back again. Nonaka and Takeuchi (1995) state that the creation of new knowledge involves “a process that ‘organisationally’ amplifies the knowledge created by individuals and crystallizes it as a part of the knowledge network of the organization” (1995, p. 59).

Nonaka and Takeuchi (1995) list four types in which organizational knowledge is created through the interaction and conversion between tacit and explicit knowledge: socialization, externalisation, combination, and internalisation. Refer to figure 1.

Nonaka and Takeuchi (1995) state that there are two ways to expand and strengthen knowledge. The first way an organisation can create knowledge is through the interactions between explicit knowledge and tacit knowledge. The second way is moving knowledge from the individual level, group level, organisational level and inter-organisational level. Increasingly more knowledge is created like a spiral as the exchange of tacit to explicit knowledge is undertaken at higher and higher levels of the organisation. The spiral becomes larger as it moves through the levels. It can expand horizontally and vertically across other organisations. Refer to Figure 2.

Davenport and Prusak

On the other hand Davenport and Prusak (1998) have a greater focus on organisational knowledge. They define knowledge as “a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organizations, it often becomes embedded not only in documents or repositories but also in organizational routines, process, practices, and norms” (p. 5). They hold a hierarchical view of data, information and knowledge (Knowledge that is derived from information, information is derived from data). Refer to Figure 3.

Davenport and Prusak (1998) coin the term ‘knowledge markets’. The knowledge market consists of buyers (people seeking knowledge to resolve as issue), sellers (people with a reputation for having a lot of knowledge about a subject or process) and brokers (those who make connections between buyers and sellers).

Like any other market, the exchange of knowledge in the Knowledge Market is facilitated by payment mechanisms consisting of reciprocity, reputation and altruism. Reciprocity (the seller expects to be paid in equally valuable knowledge), reputation (seller wants to be known as a knowledgeable person) and altruism (seller just likes being helpful). Regardless of the incentive to sharing, the knowledge market must facilitate an environment of trust.

Davenport and Prusak (1998) identify three processes involved in successful knowledge management: generation, codification, and transfer of knowledge. Knowledge generation refers to any activity that increases knowledge. This can be done through acquisition; dedicating resources; fusion; adaptation; and building knowledge networks. Organizations can also gain more knowledge by hiring individuals, buying another organization, or renting/leasing external knowledge. Codification is the process of turning knowledge into a code so that it is accessible to those who need it. However, by doing this you risk changing the knowledge into less vibrant information or data.

Technology should be utilized to access the knowledge directly; this can be done through a ‘knowledge map’ which basically involves identifying important knowledge and then making a map which lists where you can access this knowledge. Davenport and Prasard (1998) believe that since the organisation acts as the knowledge market, the transfer of knowledge should be facilitated by the organisation. They believe that most knowledge transfer occurs through personal conversation, thus the organisation must make spaces available where knowledge can be traded informally e.g. corporate picnics, lunch rooms, events.

The sharing of knowledge between people within the organisation is the biggest obstacle in knowledge management. Davenport and Prusak (1998) identify seven barriers to sharing knowledge. These include lack of trust; different cultures, vocabularies, and frames of reference; lack of time and meeting places; status and rewards going to knowledge owners; lack of absorptive capacity in recipients; belief that knowledge is the prerogative of particular groups; the ‘not-invented-here’ syndrome; and intolerance for mistakes or need for help.

Part 2

Why Knowledge Management?

Many organisations experience problems as a result of bad knowledge management practises. It has become clear that managing knowledge is a primary opportunity for achieving significant improvements in staff performance, cost savings and competitive advantage. Thus many organisations rely on knowledge to create their strategic advantage. There are many reasons why Knowledge Management has become increasingly important.

Globalisation and an increase in Competition: The Market place is increasingly becoming more competitive. As time and space barriers disintegrate, there are more organisations in direct competition with each other.

Inefficiencies: Organisations often fail to have the relevant knowledge needed to respond to changes or evaluate impacts of changes to their environment. This wastes time and resources to recreate already available knowledge and means that the organisation is not responding to it’s threats or it’s opportunities quick enough.

Employee Retention – When an employee leaves an organisation, often enough they also take their knowledge with them. The workforce is becoming increasingly mobile and retiring earlier. Thus a lot of knowledge is lost and has to be re-learned if the organisation does not have effective mechanism in place to capture knowledge of employees. This is a very costly mistake. Competitive pressures is also reducing the size of the workforce.

Knowledge can command premium price in the market – applied know-how can enhance value of products and services. E.g. an organisation that know’s customer’s personal preferences can give more personalised services and retain loyalty. It also allows you to duplicate your best practises by taking knowledge from best performers in an organisation and applying it in similar situations elsewhere.

Benefits and Concerns of Knowledge Management

Process Outcomes Organizational Outcomes

Communication: Financial:

Enhanced communication Increased sales

Faster communication Decreased cost

More visible opinions of staff Higher profitability

Increased staff participation

Efficiency: Marketing:

Reduced problem solving time Better service

Customer focus Proactive Marketing

Shortening proposal times Targeted marketing

Faster results

Faster delivery to market

Greater overall efficiency General:

Consistent proposals to multinational clients

Improved project management

Personnel reduction

Alavi and Leidner (1999) conducted a non-random study of 109 IT professionals from major organisations and asked them about their perceived benefits and concerns about their experiences with knowledge management. Alavi and Leidner’s (1999) findings are summarised in figure 4 and figure 5.

Information

Building vast amounts of data into usable form

Avoiding overloading users with unnecessary data

Eliminating wrong/old data

Ensuring customer confidentiality

Keeping the information current

Management

Change management implications

Getting individuals to volunteer knowledge

Getting business units to share knowledge

Demonstrating business value

Bringing together the many people from various units

Determining responsibility for managing the knowledge

Technology

Determining infrastructure requirements

Keeping up with new technologies

Security of data on Internet

Benefits

Knowledge Management can produce both process and organisational improvements. Alavi and Leidner’s (1999) case study indicated that some of the process improvements involved with the Knowledge Management Project included”shortening the proposal time for client engagements, saving time, improving project management, increasing staff participation, enhancing communication, making the opinions of plant staff more visible, reducing problem-solving time, better serving the clients, and providing better measurement and accountability” (Alavi and Leidner 1999 p.20). These process improvements were related to either communication improvements or efficiency gains.

The IT professionals commented that they believed that the process improvements led to “cost reduction of specific activities, increased sales, personnel reduction, higher profitability, lower inventory levels, ensuring consistent proposal terms for worldwide clients, and marketing related outcomes (i.e., better targeted marketing and locking-in customers” (Alavi and Leidner 1999 p.21).

It is interesting to add that none of the IT professionals valued the Knowledge Management for the sake of having increased knowledge, but only valued the desirable benefits as a result of the Knowledge Management. This is simular to King’s view that the Knowledge Management’s outcome should make changes in the organisation “materially, aesthetically, or spiritually” (King 1993 p.80)

Concerns

The concern’s that the IT professional that Alavi and Leidner (1999) interviewed were primarily over the cultural, managerial and information issues. Such issues included: change management concerns, sharing information barriers between business units and individuals, how to measure Knowledge Management effectiveness and implementation concerns. Courtney et al (1997) suggests that getting rid of old data that is no longer relevant is just as important as figuring out which knowledge is important. The IT professionals interviewed also expressed this concern. Knowledge management requires ongoing maintenance. Content in Knowledge Management system should be constantly updated, amended and deleted. Information overload is a real possibility and issue. Point of Knowledge Management system is to identify and disseminate knowledge gems from sea of information

It has become evident that after reading Alavi and Leidner’s case study and referring back to Part 1 of this report that people and cultural issues within company are definitely a major consideration when implementing Knowledge Management and often results in it’s failure. It is important that when implementing a Knowledge Management System, which the organisational culture is able to support knowledge sharing. This can be done by rewarding individuals for sharing their knowledge. Culture that recognises tacit knowledge and encourages employees to share is critical. Thus it is crucial to get support of employees as they are asked to surrender their knowledge and experience.

Conclusion

The implementation of a knowledge management system can bring lots of benefits to an organisation that is looking to be competitive. However there are many barriers to a successful implementation. The biggest barrier being cultural factors as was evident through looking at the literature, and also the case study. It is also important that an organisation has a concrete framework of knowledge management in mind before they even begin implementation. I recommend basing an organisation’s Knowledge Management plan against that of Nonaka and Takeuchi; and Davenport and Prusak’s models, given that the organisational culture supports such a system.

Bibliography

Alavi, M. And Leidner, D.E., 1999. Knowledge Management Systems: Issues, Challenges and Benefits’ in Communications of AIS Vol 1, No 7

Courtney, J., Croasdell, D., andParadice, D., 1997. ‘Lockean Inquiring Organizations: Guiding Principles and Design Guidelines for Learning Organizations’ in Proceedings of the AIS ’97 America’s Conference on Information Systems, http://hsb.baylor.edu/ramsower/ais.ac.97/papers/courtney.htm

Davenport, T.H., and Prusak, L., 1998. ‘Working Knowledge: How Organizations Manage What They Know’. Cambridge, MA: Harvard Business School Press.

King, J. 1993, ‘Editorial Notes’ in Information Systems Research, Vol 4, No 4, pp. 291-298.

Nonaka, I. andTakeuchi, I., 1995. ‘The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation’. New York, NY: Oxford University Press.