Knowledge Management and Its Importance in Modern Organizations
Knowledge Management and Its Importance in Modern Organizations
Knowledge Management and Its Importance in Modern Organizations
Abstract: With the current economic trend, every organization want to successfully implement business
strategies, achieve their business objectives, optimize the use of human resources and gain competitive
advantage. Knowledge management is critical for an organization to properly utilize it resources and create
a sustainable competitive edge. It is against this backdrop that this paper examined the importance of
Knowledge management in modern organizations. This paper relies on secondary data and utilizes the
content analysis for interpretation of collected data. This paper concludes that quality efficiency and
effectiveness in performance cannot happen if employees are not developed. Today organizations compete
on the basis of knowledge since products and services are increasingly complex. This is why the requirement
for a life-long learning has become an unavoidable reality.
Keywords: Knowledge management, competitive advantage, Success factors, performance
Introduction
market share that is sustainable as this will in turn produce excellent performance.
Performance involves a complex series of actions that integrate skills and Ahmad
knowledge to produce valuable results. Examples include designing, selling, production,
playing a sport and other activities involved in solving a problem. In some instances, the
performer could be an individual, a collection of people who are collaborating such as an
academic department, research team and student’s team. Performance is a journey and not
a destination. Different locations in the journey provides for different levels of
performance. Each level defines the efficiency, quality and effectiveness of performance
(Akram & Hilman, 2018; Onyango, 2018). This paper therefore examined the importance
of Knowledge management in modern organizations.
the form of ideas, judgments, talents, root causes, relationships perspective and concepts.
It is stored in the individual brain or encoded in organizational processes, documents,
products, services, facilities and systems (Grey, 2002).
There are of course many ways to slice-up the multi-faceted world of knowledge
management. The approaches vary by author and school. Despite this difference,
knowledge management can be viewed from each of the following perspectives:
- Techno-Centric- A focus on technology, ideally those that enhance knowledge
sharing/growth.
- Organizational - This has to do with "how does the organization need to be designed
in order to facilitate knowledge processes which organizations work best with what
processes."
- Ecological - Seeing the interaction of people, identity, knowledge and
environmental factors as a complex adaptive system.
However, Popov and Vlasov (2014: 813) “identified two broad tracks of knowledge
management and these include management of information and management of people.
Management of information to researchers regard knowledge as being equal to objects that
can be identified and handled in information systems while management of people as seen
by researchers and practitioners in the field consist of processes, a complex set of dynamic
skills, know-how, that is constantly changing. A critical look at this categorization tends to
suggest that its characterization is tilted more on target and did not capture the full flavor
of the important distinction in approaches to organizational knowledge management”. This
led to a three-part categorization of "Knowledge Praxis” as follows:
- Mechanistic approach to knowledge management;
- Cultural/behaviorists approach to knowledge management; and
- The Systematic approach to knowledge management.
on leveraging existing explicit resources or making working knowledge explicit. The basic
assumptions of this approach are:
- Organizational behaviour and cultures need to be changed dramatically. In an
information intensive environment, organizations become dysfunctional relative to
business objectives.
- Organizational behaviours and culture can be changed but traditional technology
and methods of attempting to solve the knowledge problem have reached their
limits of effectiveness. A hostile view is therefore required. In this case, theories of
behavior of large-scale systems are often invoked.
- It is the processes that matter not the technology.
- Nothing happens or changes unless a manager makes it to happen” (Wang, Noe &
Wang, 2016: 978).
"Hawthorne Effect" may come into play and because we still cannot make dependable
predictions about a system as complex as knowledge, positive results achieved by
cultural/behaviorist strategies may not be sustainable, measurable, cumulative or
replicable.
Finally, an assessment of the systematic approach to knowledge management
reveals that unrepentant rationalists in the business world are taking a systematic approach
to solving the knowledge problem. A closer look will also reveal evidence of such
approaches as well as less formal use of the term 'systematic knowledge management’.
Systematic approach is the most promising for positive cumulative impact, measurability
and sustainability (Holsapple & Wu, 2011: 274). Considering the various approaches to
the study of knowledge management, it is evident that the discipline is growing. There is
an increasing presence of academic debates within epistemology, emerging in both theory
and practice. United Kingdom and Australian Standard Bodies have both produced
documents that attempt to bind and scope the field but these have all received limited
acceptance or awareness (Lekhanath & Santosh, 2017: 87). Knowledge management has
always existed in one form or another. Examples include on-the-job peer discussions,
formal apprenticeship, discussion forums, corporate libraries, professional training and
mentoring programmes. However, with computers becoming more widespread from the
second half of the 20th Century, specific adaptations of technology such as knowledge
base, expert systems, and knowledge repositories have been introduced to further enhance
the process.
Ibrahim and Reig (2009) postulated that knowledge management is critical for an
organization to create a sustainable competitive advantage. They added that knowledge
management initiatives help to improve business processes. Organizations can reduce
business processing time simply because they can also provide best practices. Business
processes can also be improved upon through conversations and discussions. These can
generate valuable knowledge forecast saving and cost reduction. In their views they
concluded that “knowledge management activities can improve organization’s operational
activities. This could happen in a variety of ways such as reducing the design cycle time,
lead time and cost reduction time. Others include product to market and product quality
improvement. If information is the currency of knowledge economy, human enterprise
therefore is the bank where it is kept, invested and exchanged to create the right value for
the economy. Factors that drive the need for knowledge management include
organizational survival, competitive differentiation, globalization effects and aging work
force. Considering the management dynamics today, the core of managing knowledge
requiring utmost focus for work activities is information best” (Roy & Sivakumar, 2011:
6). The need for knowledge management is the realization that an organization must
manage its knowledge. The business survives on this in today’s dynamic and competitive
market place. Survival concerns are not limited to profit firms as nonprofit public agencies
have all realized the value of knowledge. Desouza (2011) pointed out that without adequate
care in how knowledge is managed, organizations will not be operating optimally. This
will result in the ineffective and inefficient creation and delivery of products and services.
This can lead to dissatisfaction among customers which may influence the demise of the
With the need for proper knowledge management in an organization, the desire to
create a knowledge management strategy cannot be ignored. In the process of trying to
create a knowledge management strategy for an organization, five major steps are clearly
itemized and explained below:
Workflow Model
Analysis Process
Design Process
Development Process
Source: Odiri (2014).
Okunoye (2002: 20) has provided “knowledge management enablers (or inflowing
factors) as organizational mechanisms for intentionally and consistently fostering
knowledge. These enablers are management leadership and support, information
technology, strategy and purpose measurement, organizational infrastructure processes
activities, motivational aids, training and education human resources management.
Management leadership and support is vital to the success of knowledge management.
They are important in acting as models to exemplify the desired behaviour for knowledge
management. To do this requires a willingness to share and offer their knowledge freely
within others in the organization”. In addition, there has to be a continuous learning and to
search for new knowledge and ideas, they are to model their behaviours and actions. The
supporting factors include:
Organizational Culture
Salman and Sumaiya (2017: 38) defines culture as “the core benefits; values,
normal, and social customs that govern the way individuals act and behave in an
organization. Culture is supportive of knowledge management because it is one that highly
values knowledge and encourages its creation, sharing and application. Knowledge sharing
and transfer requires individuals to come together to interact, exchange ideas and share
knowledge with one another”. Beyond that there is also the need for innovative culture in
which individuals are constantly encouraged to generate new ideas, knowledge and
solution and openness should be demonstrated by the leadership to ensure trust.
Organizational Infrastructure
To develop an appropriate organizational structure requires the establishment of
roles and teams to perform knowledge related task. Among these roles is one of the chief
knowledge officers (CKO) (Valmohammadi & Ahmadi, 2015: 135). He or she is to
coordinate, manage and set the cause for knowledge management.
Measurement
Measurement acts as a data collection system that gives useful information about a
particular situation or activity. Measurement is needed to demonstrate the value and worth
of a knowledge management initiative to management and stakeholders. This is because
without such evidence and confidence from top management to sustain it, it will diminish
(Wong, 2005 cited in Salman and sumaiya, 2017: 40).
Motivation Aids
This has to do with the development of a grassroots desire amongst employees to
tap into their company’s intellectual resources. If individuals are not motivated to practice
knowledge management, no amount of investment, infrastructure and technological
intervention will make it effective. Therefore the right incentive, rewards or motivational
aids are required to encourage people to share and apply knowledge. This will help to
stimulate and reinforce the positive behaviours and culture needed for effective knowledge
management. Linking rewards solely to individual performance on outcomes which can
result in competition will certainly be detrimental to knowledge sharing culture (Hayat &
Riat, 2011: 473).
clear objectives, purposes and goals properly put in place, towards a knowledge
management effort.
Resources
The proper implementation of knowledge management requires resources. This is
because financial support is inevitably needed if an investment in a technological system
is to be made, for example human resources are needed to co-ordinate and manage the
implementation processes as well as to take up knowledge – related roles. Time is needed
by organizations for their employees to perform knowledge management activities such as
knowledge sharing (Hayat & Riat, 2011: 475).
Being a fairly new research area, opinions about the paths, method and even the
objective of knowledge management vary. Many theorists such as Sanchez (1997), Grant
(2006) and Cohen (2008) in their studies agree, however, that knowledge management has
two main objectives. These are Efficiency and Innovation. Efficiency means using
knowledge to improve productivity by increasing speed or reducing cost. Example of this
could be when management consultants to a firm spread its employees' knowledge to others
for use in order to save time and come up with better solution for its clients. Innovation on
the other hand is concerned with using it to generate new products and services, new
businesses and new business processes. Example of this could be when technological firms
want to collect and stimulate the knowledge of its employees in order to create new
products. Using knowledge for efficiency means deepen the knowledge of the organization
to leverage the existing knowledge. While using knowledge for innovation means widen
the knowledge of the organization thereby creating new knowledge. To obtain a true
learning organization, an organization has to use knowledge for both efficiency and
innovation. Knowledge management theorists have however stated that a company has to
focus its knowledge management efforts on either enhancing innovation (knowledge for
innovation) or on increasing efficiency (knowledge for efficiency) (Hankanson, 2010).
Various researches have shown that companies usually adopt two broad thrusts in
applying knowledge management in organizations. These are through the sharing of
existing knowledge better (making implicit knowledge more explicit and putting in place
to move it more rapidly to where such knowledge is needed) and innovation (making the
transition from ideas to commercialization more effective) (Bosua & Venkitachalam,
2013). Hence, knowledge management programmes are seen as having typically one or
more of the following activities identified below:
- Appointment of a knowledge leader to promote the agenda and develop framework.
- Creation of knowledge team by bringing people from various disciplines to develop
the methods and skills.
- Development of knowledge bases through best practices, expertise directories,
market intelligence
- Enterprise intranet portal - a one-stop-shop that gives access to explicit knowledge
as well as connections to experts.
- Knowledge centre as focal points for knowledge skills and facilitating knowledge
flow.
- Knowledge sharing mechanisms such as facilitated events that encourage greater
sharing of knowledge than would normally take place and
- Intellectual asset management which includes methods of identifying and
accounting for intellectual capital.
The proper application of those above mentioned knowledge management activities
in various organizations have helped such organizations to achieve significant benefits
(Seyed, 2015). Some of these organizations that have achieved significant success through
knowledge management are as follows:
- Hoffman La Roche - through its Right First Time Programme had reduced the cost
and time to achieve regulatory approvals for new drugs,
- Dow Chemical - By focusing on the active management of its patent portfolio have
generated over 125 million dollars in revenue from licensing and other ways of
exploiting their intangible assets.
- British Petroleum (BP) -By introducing virtual team working using video
conferencing have speeded up the solution of critical operations problems.
- Texas Instruments - By sharing best practice between its semiconductor fabrication
plants saved the equivalent of investing in a new plant.
- Sandia Assurance - By developing new measures of intellectual capital and goaling
their managers on increasing its value have grown revenues much faster than their
industry average.
- Hewlett Packard (HP) - By sharing expertise already in the company, but not known
to their development teams now bring new products to market much faster than
before.
These successes so far recorded are however hinged on the following guidelines
according to research. These are what Skyrme (2003) classified as "guidelines for success"
and they are as follow:
- There is need to have a knowledge leader or champion. This should be someone
who can actually and actively drive the knowledge agenda forward, create
enthusiasm and commitment.
- There is need to have 'Top Management Support" (Cohen, 2013). This means that
there is need to have a Chief Executive Officer (CEO) who recognizes the value of
knowledge and who actively supports the knowledge team in its workplace.
- There should be a clear value proposition. This means identification of the link
between knowledge and the bottom line business benefits, a new measure of
performance and appropriate rewards to delight the organization and customers.
- There should be a compelling vision and architecture which will act as a framework
that drives the agenda forward.
- There should be the creation of a culture that supports innovation, learning and
knowledge sharing with a reward structure (Cohen, 2013). This is usually supported
by appropriate reward mechanisms.
- There should be a technical infrastructure that supports knowledge work. This
should span from simple knowledge support tools to intranets, and ultimately to
move sophisticated groupware and decision support. Simulation, data mining and
good document management also have a role to play here.
- The presence of systematic knowledge processes supported by specialists in
information management (librarians) with close partnership between users and
providers of information is equally very essential. The biggest and major challenge
to successful knowledge management practice in organization has been that of
changing the culture from "knowledge is power" to "knowledge sharing is power"
Thomas & Bizer (2013).
Other common obstacles identified are:
Finding time - with so many initiatives demanding for attention, it is easy to sideline more
challenging issues like knowledge management. However, those organizations that have
committed resources and have knowledge champions have achieved outcome that far
surpass their level of inputs
Introversion - people are afraid to learn from outsiders or even expose internal operations
to customers.
To be focused on detailed process rather than the big picture and the more chaotic process
of knowledge creation.
Transfer of Knowledge and Best practice: This strategy focuses on “the systematic
approaches to knowledge re-use and transfer of best practices and knowledge to where
organizations can use them to improve on their operation or include them in their product
and services. The design is comprised of systems and priorities to obtain, organize,
repackage and distribute knowledge within the organization. In this strategy, knowledge
sharing and transfer of best practice is seen to have great impact on performance hence the
need to make knowledge available at points of action in order to realize its value. Also, this
strategy emphasizes the importance of team relationship and networks as a basis for
effective transfer of knowledge. Since mere documentation of a practice do not itself
guarantee knowledge transfer, this strategy emphasized the need for the sharing of
knowledge among people informally without capturing it in some-form of "corporate
memory" but through structured mechanisms and team approaches. Informal sharing of
knowledge can be deep, creative and unexpected while establishing long lasting effective
networking” (Shih, Chang & Lin, 2010: 77). Organized knowledge sharing can reach much
broader populations with greater value to the organization but may stifle some of the
spontaneous and creative aspects of the informal sharing modes. The main approaches of
this strategy comprises of:
The Learning Organization Approach: In this approach, the organization learning cycle
encompasses data, information, knowledge intelligence, strategy plans, actions and
assessments. Here, the organization would use all information to assess gaps, feed data and
then make adjustments for the next cycle. It involves transferring the benefits generated by
this process from one part of the organization to other parts of the organization (Cohen,
2013).
Networking Approach: This approach also, enables organizations achieve success with the
help of intellectual assets team. The team comprised of people from various business units
who provide a network for spreading best practices within the organization. This team
could comprise the organization's marketing managers, research managers, and others who
meet regularly to put together an Intellectual Asset Management portfolio with its analysis.
The proper functioning of this team will add credibility to the Intellectual Asset
Management function and this represents a powerful means of getting business
management to accept ideas (Seyed, 2017).
Practice Centers and Communities of Practice Approach: This involves marketing
successful endeavors and encouraging more participation and result. As the practice centers
grow, they become self-sufficient and less dependent on support (Shih, Chang & Lin,
2010).
The Lessons Learned Approach: “The lessons learned approach to the strategy of best
practices and knowledge transfer places lessons learned from past crises into an outline
database which is accessible to all at all times in the worldwide system of the organization
(internet). A good example of this approach is in the National Security Agency (NSA)
internet that contained three categories of lessons learned. These are firstly informal (which
feature lessons such as how to go on temporary duty during an emergency situation,
secondly, success which documents what goes well during a crises or other situations; and
thirdly; problems, which provides a description of an annoying situation with
recommended solutions” (Shih, Chang & Lin, 2010: 75).
Customer Focused Knowledge: This third strategy focuses on capturing knowledge about
customers, developing and transforming knowledge and undertaking the needs of the
customer, his preference and businesses. This is ‘aimed at increasing overall turnover as
well as bringing the organizational knowledge to bear on customer problems. The general
belief here is that if the organization could make their customers successful, their own
success would be secured as well. In order to be able to identify the intellectual capital
associated with their precept, the organization should try to find the stream of logic that
leads to the individual component that affects the customer's success’ (Seyed, 2017).
Personal Responsibility for Knowledge: This strategy stems from the belief that people are
the engine of knowledge and as such should be assisted and supported at all times. It is also
“the belief that individuals are personally responsible for identifying, maintaining and
expanding their own knowledge as well as understanding, renewing and sharing their
knowledge assets. This strategy is in line with the emerging paradigm that employees are
the ultimate source of new knowledge in a firm and that they are responsible for their own
knowledge development. Expecting employees to take personal responsibility for their
own knowledge and the knowledge of such organization entrusted to them is essentially an
example of a pull-strategy initiated by the individual rather than that pushed by the
organization. The practical working of the strategy was found at SKANDIA AFS (USA)
where knowledge management was the responsibility of everyone in the organization and
was manifested in their jobs. For instance, IT employees focused on packaging knowledge
into IT products that support knowledge sharing while accounting people was responsible
for developing the indicators to measure knowledge management activities. There was no
specific percentage of time allotted to these knowledge management activities; instead,
knowledge management was viewed as a philosophy of working. Another factor involved
was the firms' organizational structure. For the simple reason that the firm did not take a
hierarchical approach to culture was one of high thrust that fostered shared learning and
emphasized self-management and support of initiatives” (Seyed, 2017: 534).
Intellectual Asset Management Strategy: This strategy emphasizes enterprise-level
management of specific intellectual assets, such as patents, technologies, operational and
management practices, customer relations, organizational managements, and other
structural knowledge assets. This strategy can be “pursued by focusing on attaching
financial measures to organizational knowledge or assets and then linking them to the
organization's current and future performance. Effectiveness of this strategy is seen in
SKAND1A and AFS. They were one of the early organizations to employ this strategy of
making intellectual asset valuation a part of the supplement to its annual report to
shareholders. They focused on the need to continually renew their intellectual assets to
enhance the future prospects of their organization. Dow chemical company based in USA
provides a good example of this strategy in action by using an Intellectual Asset
Management process to improve management of intellectual assets. With this, the
organization was able to transform accounting clerks to pro-active strategists. When the
initiative started, the organization's intellectual asset managers found significant cost-
saving opportunities by reducing the tax maintenance for patents. This was an era that was
easy to measure as it opened up opportunities and built credibility for future initiatives
within Intellectual Asset Management. This was defined to include patents, copyrights,
trade secrets, trademarks, and know-how. At Dow chemical company, Intellectual Asset
Management was broadly focused and recognized more of the value contribution of all
intellectual assets. The focus was on "value management" rather than on knowledge
management since the company viewed knowledge management as purely a vehicle for
value management” (Cohen, 2013: 8).
Innovation and knowledge Creation: This strategy emphasized innovation and the creation
of new knowledge through basic and applied research and development. This is achieved
through the provision of funds for expenses such as Research and Development (R & D),
contracts, conference fees and travel for other purposes such as field resting or data
collection as well as purchase of both soft and hardware, books and other items that may
be associated with a specific project strategy. This strategy can also be applied through the
use of in-house agency workers to be released from their current duties either on a full-
time or part-time basis to pursue their projects. This strategy was successfully adopted by
the National Security Agency in USA and it yielded positive results. The above strategies
if properly applied could in no small measure help most organizations to overcome the
problem of knowledge management in their organizations. It will help the organizational
process that enhances synergistic combination of data and information-processing capacity
of information technologies and the creative and innovative capacity of the employees
within the organization. They will help the organization to easily identity, collect, analyze,
use and adapt to the various knowledge that exists within the organization (Sayed, 2015).
Conclusion
Knowledge and information have become the medium in which business problems
occur. As a result managing knowledge represents the primary opportunity for achieving
substantial savings, significant improvements in human performance and competitive
advantage. This paper therefore concludes that quality, efficiency and effectiveness in
performance cannot happen if employees are not developed. Organizations compete today
on the basis of knowledge since products and services are increasingly complex. This is
why; the requirement for a life-long learning has become an unavoidable reality.
Knowledge management has become crucial in business operations because the market is
becoming too competitive and the rate of innovation is rising. Downsizing staff for instance
also creates a need to replace informal knowledge with formal methods. Knowledge
management is of importance because early retirements and increasing mobility of the
work force lead to loss of knowledge. Again, the changes in strategic direction can result
in the loss of knowledge in some specific areas of work activities.
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