CHAPTER 5

KNOWLEDGE MANAGEMENT (KM)

 5.1 Introduction to Knowledge
Management
» The ability to manage knowledge is crucial in
today’s knowledge economy. The creation and
diffusion of knowledge have become increasingly
important factors in competitiveness.
» More and more, knowledge is being thought of as
a valuable commodity that is embedded in products
(especially high-technology products) and
embedded in the tacit knowledge of highly mobile
employees.
Characteristics of Knowledge Management
 While knowledge is increasingly being viewed as a
commodity or intellectual asset, there are some
paradoxical characteristics of knowledge that are
radically different from other valuable commodities.
 These knowledge characteristics include the following:
Using knowledge does not consume it.
Transferring knowledge does not result in losing it.
Knowledge is abundant, but the ability to use it is
scarce.
Much of an organization’s valuable knowledge walks out
the door at the end of the day.
 Concept of Knowledge Management
 Knowledge Management ('KM') comprises a range of
practices used by organizations to identify, create,
represent, and distribute knowledge.

 Knowledge Management programs are typically tied to

organizational objectives such as improved performance,
competitive advantage, innovation, lessons learnt
transfer (for example between projects) and the
general development of collaborative practices.

 Knowledge Management is frequently linked to the idea

of the learning organization although neither practice
encompasses the other.
» Knowledge management is a concept in which an
enterprise consciously and comprehensively gathers,
organizes, shares and analyses its knowledge in
terms of resources, documents, and people skills.
» A good definition of knowledge management
would incorporate both the capturing and storing of
knowledge perspective, together with the valuing of
intellectual assets.
 Definitions of Knowledge Management
» Knowledge management is a collaborative and integrated
approach to the creation, capture, organization, access, and use
of an enterprise’s intellectual assets.
--- Grey 1996
» Knowledge management is the process by which we manage
human centered assets. The function of knowledge management is
to guard and grow knowledge owned by individuals, and where
possible, transfer the asset into a form where it can be more readily
shared by other employees in the company.
--- Brooking (1999)
» Knowledge management consists of leveraging intellectual
assets to enhance organizational performance.
---Stankosky (2008)
 Objectives of Knowledge Management
Typical knowledge management objectives are:
 Facilitate a smooth transition from those retiring to their
successors who are recruited to fill their positions
 Minimize loss of corporate memory due to attrition and
retirement
 Identify critical resources and critical areas of knowledge
so that the firm knows what it knows and does well —
and why .
 Build up a toolkit of methods that can be used with
individuals, with groups, and with the organization to
stem the potential loss of intellectual capital
 Attributes of Knowledge Management
Ruggles and Holtshouse (1999) identified the following
key attributes of knowledge management:
 Generating new knowledge
 Accessing valuable knowledge from outside sources
 Using accessible knowledge in decision making
 Embedding knowledge in processes, products and/or services
 Representing knowledge in documents, databases, and software
 Facilitating knowledge growth through culture and incentives
 Transferring existing knowledge into other parts of the organization
 Measuring the value of knowledge assets and/or impact of knowledge
management
 Organizational Perspectives on Knowledge
Management
Wiig (1993) considers knowledge management in organizations from
three perspectives, each with different horizons and purposes:

• Business perspective: Focusing on why, where, and to what extent

the organization must invest in or exploit knowledge. Strategies,
products and services, alliances, acquisitions, or divestments should
be considered from knowledge-related points of view.

• Management perspective: Focusing on determining, organizing,

directing, facilitating, and monitoring knowledge-related practices
and activities required to achieve the desired business strategies and
objectives.

• Hands-on perspective: Focusing on applying the expertise to conduct

explicit knowledge-related work and tasks.
 5.2 Theory of Knowledge Management
Intellectual Capital
 This legal concept embodies a theory that emphasizes the value of knowledge within
the organization. The physical capital of an organization, particularly in the rising service
sector, is of less relative importance for competitive advantage than intangible assets
like know-how and personal sales networks.

Intellectual Property
 The rationale determined by intellectual capital theory drives the need to account for
knowledge, and the need for 'due care' in managing it. Intellectual property theory
encompasses the legal and ethical issues of intellectual capital, such as copyrights,
patents, trade secrets, and other proprietary rights.

Knowledge Economy
 This theoretical concept is developing out of concern for knowledge management, and
is an important extension to information economics. It essentially regards the 'product life
cycle' of knowledge, applying this to either an internal market within an organization or to
the external (consulting) marketplace, a commercial market for professional knowledge.
Knowledge Assets
 Knowledge assets are 'firm-specific resources that are indispensable to create
values for the firm. Knowledge assets therefore develop as the evolving inputs and
outputs of knowledge activities and when used by someone other than their original
creator.

Knowledge Clusters and Networks

 Clusters and networks emerge among organizations partnering to develop a
competitive concentration of resources. Knowledge networks occur in multiunit
companies and partnerships for the purpose of knowledge sharing and such sharing
declines with increasing network length.

Knowledge spillovers
 Knowledge 'spillovers', the absorption of knowledge by people other than the
originators, occur because knowledge is an inexhaustible, cumulative good that is
difficult to control.

Continuity Management
 Continuity management regards the preservation of corporate knowledge so as to
endure employee turnover with minimal or limited organizational knowledge loss.
Continuity management is the intellectual capital basis that motivates knowledge
managers to facilitate knowledge transfer among organizational members and to
diversify organizational memory beyond single individuals as retainers.
Strategic Management
 This view regards knowledge as a fundamental resource that enables organizations to
compete more effectively in their markets.

Core Competencies
 Competence-based competition sees organizational competencies as a key resource under
established resource -based theories of the firm. These theories of modern competition
emphasize the importance of organizational 'core competencies’.

Dynamic Capabilities
 Drawing upon a diversity of research areas such as research and development (R&D)
management, technology transfer, intellectual property, new product development, human
resources, and organizational learning, the theory of dynamic capabilities refers to the source
of competitive advantage that companies use in situations of rapid and unpredictable
change. In such dynamic and demanding markets, it is hard to quickly and continuously
transform organizational processes.

Dumb-sizing
 Dumb-sizing is an extension to strategic theory that is well explained by knowledge management.
It refers to the damage done to organizational knowledge assets through careless re-
engineering. Corporate re-engineering implies rapid, non-linear change, sometimes
disregarding critical factors like knowledge management.

Knowledge Alliances
 In knowledge alliances the focus is on knowledge rather than resources. These alliances
motivate management to enter into strategic alliances with other firms in order to balance
knowledge deficiencies, obtain necessary competencies, or create new knowledge.
 5.3 Knowledge Management Sharing
 Knowledge sharing is an activity through which
knowledge namely, information, skills, or expertise is
exchanged among people, friends, families, communities
or organizations.
Definition
 ‘Knowledge sharing is the exchange of knowledge between and among individuals,
and within and among teams, organizational units and organizations. This
exchange may be focused or unfocused, but it usually does not have a clear or priori
objective.’

 “Knowledge sharing is an exchange of knowledge between two individuals one

who communicates knowledge and one who assimilates it. In knowledge sharing,
the focus is on human capital and the interaction of individuals. Strictly speaking,
knowledge can never be shared. Because it exists in a context; the receiver
interprets it in the light of his or her own background.”
 Organizations have recognized that knowledge
constitutes a valuable intangible asset for creating and
sustaining competitive advantages. Knowledge sharing
activities are generally supported by knowledge
management systems.
 Knowledge sharing includes:
 Organizational Culture
 Trust
 Technology
 Ideas
 Intellect
 Wisdom
5.4 Technologies to Support Knowledge Management
 Knowledge Management (KM) technology can be
divided into the following general categories:
• Groupware
• Workflow
• Content/Document Management
• Enterprise Portals
• eLearning
• Scheduling and Planning
• Tele-presence
 Groupware refers to technologies that facilitate collaboration
and sharing of organizational information. One of the earliest very
successful products in this category was Lotus Notes. Notes
provided tools for threaded discussions, sharing of documents,
organization wide uniform email, etc.
 Workflow Tools allow the representation of processes
associated with the creation, use, and maintenance of
organizational knowledge. For example the process to create
and utilize forms and documents within an organization.
 Content/Document Management Systems are systems
designed to automate the process of creating web content and/or
documents within an organization. The various roles required
such as editors, graphic designers, writers, and producers can
be explicitly modeled along with the various tasks in the
process and validation criteria for moving from one step to
another.
 Enterprise Portals are web sites that aggregate
information across the entire organization or for
groups within the organization such as project teams.
 e-Learning technology enables organizations to
create customized training and education software.
This can include lesson plans, monitoring progress
against learning goals, online classes, etc.
 Scheduling and planning tools automate the creation
and maintenance of an organization's schedule:
scheduling meetings, notifying people of a meeting, etc.
 Tele-presence technology enables individuals to have
virtual meetings rather than having to be in the
same place. Videoconferencing is the most obvious
example.
5.5 Knowledge Management Application in Organizations
Implementing a knowledge management program has to
go through many challenges:
 Inability to recognize or articulate knowledge; turning tacit knowledge into
explicit knowledge
 Geographical distance and/or language barriers in an international
company
 Limitations of information and communication technologies
 Loosely defined areas of expertise
 Internal conflicts (e.g. professional territoriality)
 Lack of incentives or performance management goals
 Poor training or mentoring programs
 Cultural barriers (e.g. “this is how we've always done it” mentality)
o The following eight-step approach will enable us to
identify these challenges thus minimizing the risks and
maximizing the rewards by planning for them
Step 1: Establish Knowledge Management Program Objectives.
Step 2: Prepare for Change.
Step 3: Define High-Level Process.
Step 4: Determine and Prioritize Technology Needs.
Step 5: Assess Current State.
Step 6: Build a Knowledge Management Implementation Roadmap.
Step 7: Implementation
Step 8: Measure and Improve the Knowledge Management Program

o The early steps involve strategy, planning, and

requirements gathering while the later steps focus on
execution and continual improvement.
Step 1: Establish Knowledge Management Program Objectives

 The end state should be envisioned and articulated before

selecting a tool, defining a process, and developing workflows.
 In order to establish the appropriate program objectives, identify
and document the business problems that need resolution and the
business drivers that will provide momentum and justification for
the endeavor.
 Provide both short-term and long-term objectives that address
the business problems and support the business drivers.

 Short-term objectives should seek to provide validation that the

program is on the right path while long-term objectives will help to
create and communicate the big picture.
Step 2: Prepare for Change
 Knowledge management is more than just an application of technology. It
involves cultural changes in the way employees perceive and share
knowledge they develop or possess.

 One common cultural hurdle to increasing the sharing of knowledge is that

companies primarily reward individual performance. This practice
promotes a "knowledge is power" behavior that contradicts the desired
knowledge-sharing, knowledge-driven culture end state you are after.

 Successfully implementing a new knowledge management program may

require changes within the organization's norms and s hared values;
changes that some people might resist or even attempt to quash.

 To minimize the negative impact of such changes, it's wise to follow an

established approach for managing cultural change.
 Step 3: Define High-Level Process
 To facilitate the effective management of your organization's knowledge assets, you
should begin by laying out a high-level knowledge management process. The
process can be progressively developed with detailed procedures and work
instructions throughout steps four, five, and six.

 However, it should be finalized and approved prior to step seven (implementation).

Organizations that overlook or loosely define the knowledge management
process will not realize the full potential of their knowledge management
objectives. How knowledge is identified, captured, categorized, and disseminated
will be ad hoc at best.

 There are a number of knowledge management best practices, all of which

comprise similar activities. In general, these activities include knowledge strategy,
creation, identification, classification, capture, validation, transfer, maintenance,
archival, measurement, and reporting.
Step 4: Determine and Prioritize Technology Needs
o Depending on the program objectives established in step
one and the process controls and criteria defined in step
three, you can begin to determine and prioritize your
knowledge management technology needs.
o With such a variety of knowledge management solutions, it is
imperative to understand the cost and benefit of each type
of technology and the primary technology providers in the
marketplace.
o Don't be too quick to purchase a new technology without first
determining if your existing technologies can meet your
needs.
o You can also wait to make costly technology decisions after
the knowledge management program is well underway if
there is broad support and a need for enhanced computing
and automation.
 Step 5: Assess Current State
 The knowledge management assessment should cover
all five core knowledge management components:
people, processes, technology, structure, and culture.

 A typical assessment should provide an overview of the

assessment, the gaps between current and desired
states, and the recommendations for attenuating
identified gaps.

 The recommendations will become the foundation for

the roadmap in step six.
 Step 6: Build a Knowledge Management
Implementation Roadmap
₪ With the current-state assessment in hand, it is time to build the implementation
roadmap for your knowledge management program.
₪ But before going too far, you should re-confirm senior leadership's support and
commitment, as well as the funding to implement and maintain the knowledge management
program. Without these prerequisites, our efforts will be futile.
₪ Having solid evidence of your organization’s shortcomings, via the assessment, should
drive the urgency rate up. Having a strategy on how to overcome the shortcomings will be
critical in gaining leadership's support and getting the funding you will need.

₪ This strategy can be presented as a roadmap of related projects, each addressing

specific gaps identified by the assessment. The roadmap can span months and years and
illustrate key milestones and dependencies. A good roadmap will yield some short-
term wins in the first step of projects, which will bolster support for subsequent steps.

₪ As time progresses, continue to review and evolve the roadmap based upon the
changing economic conditions and business drivers. We will undoubtedly gain
additional insight through the lessons learned from earlier projects that can be applied
to future projects as well.
 Step 7: Implementation
 Implementing a knowledge management program and
maturing the overall effectiveness of your organization will
require significant personnel resources and funding.

 Be prepared for the long haul, but at the same time, ensure
that incremental advances are made and publicized. As long
as there are recognized value and benefits, especially in
light of ongoing successes, there should be little resistance
to continued knowledge management investments.

 As we advance through each step of the roadmap, make

sure we are realizing our short-term wins. Without them,
our program may lose momentum and the support of key
stakeholders.
 A successful knowledge management program will consider
more than just technology. An organization should also consider:
 People: They represent how we increase the ability of individuals
within the organization to influence others with their knowledge.
 Processes: They involve how we establish best practices and
governance for the efficient and accurate identification,
management, and dissemination of knowledge.
 Technology: It addresses how we choose, configure, and
utilize tools and automation to enable knowledge management.
 Structure: It directs how we transform organizational structures to
facilitate and encourage cross-discipline awareness and expertise.
 Culture: It embodies how we establish and cultivate a knowledge
-sharing, knowledge-driven culture.
 Step 8: Measure and Improve the Knowledge Management
Program
 We need a way of measuring our actual effectiveness and
comparing that to anticipated results. If possible, establish some
baseline measurements in order to capture the before shot of the
organization’s performance prior to implementing the knowledge
management program.
 Then, after implementation, trend and compare the new results to the
old results to see how performance has improved.
 When deciding upon the appropriate metrics to measure your
organization’s progress, establish a balanced scorecard that pro vides
metrics in the areas of performance, quality, compliance, and value.
 The key point behind establishing a knowledge management
balanced scorecard is that it provides valuable insight into what's
working and what's not. We can then take the necessary actions to
mitigate compliance, performance, quality, and value gaps, thus
improving overall efficacy of the knowledge management program.
 Importance of Successful Knowledge
Management Program
 Implementing a complete knowledge management takes time and
money, however, the results can be impressive and risks can be
minimized by taking a phased approach that gives beneficial
returns at each step. Organizations that have made this kind of
investment in knowledge management realize tangible results
quickly. They add to their top and bottom lines through faster cycle
times, enhanced efficiency, better decision making and greater use
of tested solutions across the enterprise.

 A winning knowledge management program increases staff

productivity, product and service quality, and deliverable
consistency by capitalizing on intellectual and knowledge-based
assets.