BIT 4401: Knowledge Management

COURSE PURPOSE

• Knowledge has been recognized as a powerful

resource for today’s knowledge-based global
economy.
• In this course, the student will appreciate how to
manage knowledge for the good of the
organization.
• The purpose of this course is to enable the
learner with skills for the knowledge economy
particularly the systems and technology for
managing knowledge.
 C0URSE OBJECTIVES

• Define knowledge and explain its importance to

the global organization.
• Describe the tools and techniques of knowledge
capture, protection and communication.
• Knowledge management infrastructure and
design
 INTRODUCTION TO KNOWLEDGE
MANAGEMENT
• By the end of this lesson you should be able to:
– Explain the need for knowledge
– Define knowledge and explain its importance
– Distinguish types of knowledge
– Distinguish between data, information, knowledge,
expertise and wisdom
– Define Knowledge management
– Explain what is driving knowledge management in the
21st century
– Explain benefits of investing in knowledge
management
 Introduction

• Peter Drucker reported in 1960 that we are entering “the

knowledge society” in which “the basic economic
resource” is no longer capital, or natural resources, or
labor, but “is and will be knowledge” and where
“knowledge workers” will play a central role.
• Toffler (1990) believes that knowledge is the ultimate
replacement of other resources.
• The loss of organizational memory and capability when
long-serving staff leave is just one consequence of the
general difficulty of sharing knowledge, and particularly
the practical know-how that accumulates with experience.
 The Need for knowledge

• Political scientist Friedrich List declared that national

wealth is created by intellectual capital: the power of
people with ideas. In 1890, the British economist Alfred
Marshal noted that knowledge is the most powerful
engine of production available to economies (Dodgson &
Gann,2010). They further argued that “new knowledge is
the most important factor in economic growth” (p.20).
• Knowledge is just as important, or even more important,
than food and water. Often the obtaining of food and
water actually depends on it. We always need some form
of knowledge to get hold of food and water.
• The more complicated the situation, the more, and better,
the knowledge needed.
 The Need for knowledge (cont’)

• To prosper in the 21st century, organizations of all kinds

will need to become much better both at creating new
intellectual capital and at using what they already have.
• This will require two things:
1. Understanding what knowledge is and how it flows
around
2. Active management of the processes of learning,
sharing and the accumulation of corporate knowledge
– in other words, knowledge management.
 The Need for knowledge (con’)

• When knowledge is locked up in individual brains and local

teams, unshared - as most of it is, in most organizations –
wheels are reinvented, old mistakes are repeated,
misunderstandings create new ones, and good practice
stubbornly fails to spread.
• The growing awareness of the value of sharing knowledge
is the main reason for the proliferation of corporate
knowledge bases, skills directories, communities of
practice and other tools and techniques designed to make
it flow around more freely.
• No one possesses all knowledge, but everyone does
possess a unique knowledge. People are knowledgeable in
diverse subjects. They have different areas of expertise.
 The Need for knowledge (con’)

• Knowledge is the only critical asset in an

organization that walks out your door every day.
What are you doing to make sure it is retained
and leveraged within your organization? ( Jennifer
Smith)
• Without effective and well- proven KM strategies
and processes in place, corporate memory is at
risk of being lost which has grave business
implications.
Nature of Knowledge/The knowledge pyramid

• The hierarchical view of knowledge which

includes data, information and knowledge in
the ascending order of complexity is widely
accepted.
• What is data?
– Data represents raw numbers
– Data comprises facts, observations, or
perceptions
– Data is just bits: lots of zeros and ones.
 Definition of information

• Reitz (2004) defines information as follows:

“Data presented in readily comprehensible form
to which meaning has been attributed within
the context of its use. In a more dynamic sense,
information is the message conveyed by the use
of a medium of communication or expression.
Whether a specific message is informative or
not depends in part on the subjective perception
of the person receiving it.”
• Information refers also to “communicated
knowledge”.
• Data + Meaning = Information
 What is wisdom?

• Wisdom can be described as the best use of

knowledge. Knowledge processes can always be
improved but wisdom is necessary to determine
which processes to focus on in order to achieve
organizational objectives.
• Wisdom refers to the ability and skill of knowing
how to use knowledge (Onyancha, 2008).
 What is an expert?

• Expertise can be defined as knowledge of higher quality.

• An “expert” is one who is able to perform a task much
better than others.
• An expert is an individual who possesses valuable
knowledge that is of interest to an organization.
• Often, an expert possesses many different types and levels
of knowledge
• Expertise is within a domain
– Domains can be of various degrees of sophistication
• expert brain surgeon > medical intern
• expert mathematician > secondary school math
student
• expert bus driver > novice driver
 The Knowledge Pyramid

• Mchombu (2007) describes the knowledge pyramid as

follows:
The conceptual relationship (data, information and
knowledge) can be visualized as a pyramid of
interdependent layers on top of each other, sometimes
called the information pyramid. The bottom layer of the
pyramid is data defined as symbols, facts, and figures
which are the raw materials to be processed to
information. When data has been processed into a
meaningful form it becomes information. It has also
been noted that knowledge is information which has
been evaluated and organized in the human mind so
that it can be used purposefully. (p.16)
 Definition of Knowledge

• Davenport and Prusak (1998) 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”.
• O’Dell and Hubert (2011), Knowledge is “what employees
know about their customers, one another, products,
processes, mistakes and successes”(p.2).
• Awad and Ghaziri (2007) define knowledge as
“understanding gained through experience or study”.
• Knowledge is is also defined as “a justified true belief”
(Nonaka & Takeuchi 1995)
 Types of Knowledge:
Tacit and Explicit
• According to Nonaka (1998), there are two types of
knowledge: Tacit and Explicit Knowledge.
• Polanyi(1962)describes tacit knowledge as that knowledge
which cannot be explained fully even by an expert and is
transferrable from one person to another only through
apprenticeship.
• Knowledge that can be expressed in words and numbers
represents only the tip of iceberg of the entire body of
knowledge. As Polanyi argue that “we can know more than
we can tell” (p.4).
• Tacit knowledge is knowledge that resides in the mind of the
knower.
• Explicit knowledge is codified, recorded and available, and is
held in books, journal articles, databases, in corporate
intranets and intellectual property portfolios.
 Types of Knowledge (cont’)

• Teece (1981), for example, argued as follows, citing

Polanyi(1966):
Know-how cannot always be codified, since it often has
an important tacit dimension. Individuals may know
more than they are able to articulate. When knowledge
has a high tacit component, it is extremely difficult to
transfer without intimate personal contact,
demonstration, and involvement. Indeed, in the
absence of intimate human contact, technology
transfer is sometimes impossible. (p.86)
Thus, Teece recognized the tacit dimension of knowledge
and the need of socialization.
 Tacit vs. Explicit
• Explicit knowledge refers to knowledge that has
been expressed into words and numbers
– e.g., basic principles for stock market analysis
as in a textbook
– Such knowledge can be used by investors to
make buy/sell decisions
– Can be shared formally and systematically in
the form of data, specifications, manuals,
drawings, audio or videotapes, computer
programs, patents, etc.
 Tacit vs. Explicit (cont’)
• Tacit knowledge includes insights, intuitions, and
hunches, that are not verbalized or documented
– e.g., stock market analysts who make
recommendations to investors concerning likely
short-term and long-term market trends within
some industry, based on years of observation
– Difficult to express and formalize
– therefore often difficult to share (can’t tell
somehow how to do it!)
 Tacit vs. Explicit (cont’)
• We often convert explicit knowledge to tacit
knowledge
– e.g., when an individual reads a book and learns
from it (but not by rote memorization, which
would still be explicit knowledge)
• We can sometimes convert tacit knowledge to
explicit knowledge
– e.g., when an individual with lots of tacit
knowledge writes a book, formalizing that
knowledge
– Often a difficult conversion that requires hard
efforts!
 Tacit vs. Explicit (cont’)
• Tacit knowledge is difficult to formalize and
communicate (Nonaka & Takeuchi, 1995). It is
transferred through personal interaction, mental
models, technical skills, and experience.
• Explicit knowledge is easily formalized and
expressed (Hippel, 1994; Nonaka & Takeuchi,
1995). It can be facilitated by traditional
information processing technologies (Liebowitz &
Wilcox, 1997).
 Tacit vs. Explicit (cont’)
• Tacit knowledge includes insights,
intuitions, and hunches
• Explicit knowledge refers to knowledge that
has been expressed into words and numbers
• We can convert explicit knowledge to tacit
knowledge
 General and Specific Knowledge
• General knowledge is possessed by a large
number of individuals and can be
transferred easily across individuals
• Specific knowledge, or “idiosyncratic
knowledge,” is possessed by a very limited
number of individuals, and is expensive to
transfer
 Technically and Contextually Specific
Knowledge
• Technically specific knowledge is deep
knowledge about a specific area
• Contextually specific knowledge refers to
the knowledge of particular circumstances
of time and place in which work is to be
performed
 Definition of Knowledge Management

• The processes developed in an organization to

create, gather, store, maintain, and disseminate the
firm’s knowledge (Laudon & Laudon, 2012).
• An integrated, systematic approach to identifying,
managing and sharing an organization’s
knowledge and enabling groups of people to create
new knowledge collectively to help in achieving
the organization’s objectives.
• Knowledge management is really about
recognizing that regardless of what business you
are in, you are competing based on the knowledge
of your employees.
 Definition of Knowledge Management (cont’)

• APQC defines KM as a collection of systematic

approaches to help information and knowledge
flow to and between the right people at the right
time (in the right format at the right cost) so they
can act more efficiently and effectively to create
value for the organization.
 Definition of Knowledge Management (cont’)

• Knowledge management is the process of capturing a

company’s collective expertise wherever it resides-in
databases, on paper, or in people’s heads and distributing it
to wherever it can produce the biggest payoff
(Hibbard,1998).
• KM is about creating and managing the processes to get
the right knowledge to the right people at the right time
and help people share and act on information in order to
improve organizational performance.
• KM is getting the right knowledge to the right people at
the right time so they can make the best decision says
Gordon Petrash,Global Director at Dow Chemical Co.
 Definition of Knowledge Management (cont’)

• Knowledge management is essentially about people- how

they create, share and use knowledge.
• KM programs should:
– Connect employees to one another to help them excel at
their jobs
– Connect employees to knowledge assets(just enough,
just in time and just for them)
– Connect those with experience or know-how with those
who need it.
• These actions will accelerate rate of learning, reduce risk
of not knowing and repeating mistakes, retain knowledge
when people move, leave or retire.
• The five major KM activities: share, create, apply, store
and identify.
 What is driving KM. Why is it important today?

• Globalization of business: organizations today are more

global
• Corporate amnesia: Employees are more mobile today.
The “one employer for life” is not the future reality.
• The exponential growth in technological advancement,
which has created global connectedness and
competitiveness never seen before- “ Act locally, think
globally” is the new reality. Physical location is no longer a
barrier.
• The aging population, any organization facing a large
number of exiting workers faces the challenge of “brain
drain” where years of accumulated knowledge exit the
organization. Loss of critical tacit knowledge.
 What is driving KM. Why is it important today?

• Sustainable innovation: develop, implement and support

innovation programs. A culture that values innovation/
process improvement.
• The democratization of knowledge: At no time in human
history has the individual been more empowered to effect
change, influence policy and participate in
private/government decision making at all levels
• Attraction and retention: How do we protect against
critical knowledge loss? How do we ensure knowledge,
wisdom and know how is transferred to new recruits while
minimizing the impact on productivity
• Growth: Long-term growth and reinvestment strategies
• Effective knowledge translation and transfer, and
discovery and commercialization of value added products
 What is driving KM. Why is it important today?
(cont’)
• Improved relationship with key stakeholders leveraging
knowledge from outside the organization to improve
productivity and profitability within. A focus on meeting
customer needs.
• Increased need of operational efficiency and
effectiveness – increased response and delivery times
along with time to engage in collaboration activities,
which support continual improvement of best practices. A
desire to reduce costs while maintaining or enhancing
quality.
• Learning: Faster learning and making better use of existing
knowledge are rapidly becoming universal imperatives.
 Benefits of investing in knowledge management

• Greater innovation
• Improved productivity
• Greater market and financial performance
• Access to the person who has the required expertise
• Reduced search time for information and data
• Operational excellence through use of best practices
• Increased understanding of customers’ needs
• Retention of corporate memory and intellectual assets
• Structured and systematic access to documents and
knowledge across the organization
• KM solutions facilitate collaboration and information
sharing
• Risk reduction
 Most vital resource of today’s enterprise =
Knowledge
• Collective knowledge residing in the minds of the
organization’s employees, customers, and vendors
• Many benefits to learning how to effectively
manage organizational knowledge
– Leveraging core business competencies
– Accelerating innovation and time to market
– Improving cycle times and decision making
– Strengthening organizational commitment
– Building sustainable competitive advantage
(Davenport & Prusak 1998]
 Intellectual Capital:
Human vs. Structural Capital
• Human capital
– The body of knowledge the company possesses
– Knowledge in the minds of Microsoft and Yahoo’s
software developers, researchers, academic
collaborators, marketers, analysts, business managers,
frontline employees …
– Also, knowledge in the minds of vendors and
customers
 Intellectual Capital:
Human vs. Structural Capital
• Structural capital
– Everything that remains after the employees go home
– Copyrights, customer files, business process software,
– databases, software manuals, trademarks,
organizational structures, …
– In other words, organizational capability
– Knowledge that is explicit and common to
organizational members is called structural knowledge
or capital.
– It can further be broken into technical and
organizational knowledge.
Knowledge for Sustainable Competitive Advantage
• Students should research and present in class why knowledge is a
source of sustainable competitive advantage? Discuss how
knowledge gives companies the edge to compete successfully, i.e.
identify key points.