BSBMGT801 Direct the development of a knowledge management strategy for a business
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1. Analyse existing knowledge management systems
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. 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:
1.1 Evaluate existing arrangements for the capture and use of business knowledge from internal and external sources
Knowledge and knowledge management
In today’s economy more and more organisations are realizing that to acquire and maintain their competitive advantage they must explicitly manage their cognitive resources. For this reason, managers need to understand how they can identify and evaluate existing knowledge assets within the organisation and how to manage these assets in order to achieve the competitive advantage. However, many organisations frequently embark on knowledge management initiatives without a clear idea of what business knowledge they should have and what benefit they could expect.
Let’s look at a simple working definition of knowledge.
Knowledge has two basic definitions of interest. The first pertains to a defined body of information. Depending on the definition, the body of information might consist of facts, opinions, ideas, theories, principles, and models (or other frameworks). Clearly, other categories are possible, too. Subject matter, for example, chemistry, mathematics, etc. are few possible examples of knowledge. Knowledge also refers to a person’s state of being with respect to some body of information. These states include ignorance, awareness, familiarity, understanding, facility, and so on.
Knowledge management (KM), on the other hand, is the process of gathering, managing and sharing employees' knowledge capital throughout the organisation. Knowledge sharing throughout the organisation enhances existing organisational business processes, introduces more efficient and effective business processes and removes redundant processes. It is a discipline that promotes a collaborative and integrated approach to the creation, capture, organisation access and use of an enterprise's knowledge assets. KM has now become a mainstream priority for companies of all sizes.
Capturing a company's most valuable knowledge (asset) and distributing it effectively across the enterprise is a critical business issue for many help desk, customer support and IT departments.
In the knowledge economy, if company wants to be successful and gain its competitive advantage, it is necessary to constantly increase its value with the knowledge, which the company possesses. An organisation’s potential in creating the knowledge in the form of added value for its customers, employees, contractors, investors and other stakeholders in the knowledge economy depends on two elements. Frist element is the level of services which company provides and intensity of use of companies’ knowledge and the second element is the level in which company uses that knowledge in product production and services provision. If one organisation wants to be so called “Knowledge Management Company”, it is necessary to have following six basic competencies.
Companies will have to adjust to the employees’ possibilities to require better work conditions and bigger autonomy. Firms will have to develop ways to revitalize and they will achieve that by constant update and regeneration of employees’ knowledge. Knowledge sharing in an organisation is the process of exchanging knowledge (skills, experience, and understanding) among various stakeholders in the organisations. Knowledge sharing is a tool that can be used to promote evidence-based practice and decision making, and also to promote exchange and dialogue among employees, employers, researchers, policymakers, and service providers. However, little is known about knowledge-sharing strategies and their effectiveness.
There are a number of possible reasons for why a coherent, integrated understanding of knowledge-sharing strategies does not yet exist:
The four business focus areas for KM include:
Growth and change
Components of knowledge management
Based on actual experiences of the leading global KM case studies, the components for KM can be broadly categorized into three classes - People, Processes, and Technology, as shown in figure 1. While all three are critical to build a learning organisation and get business results from KM, a majority of organisations worldwide implementing KM have found it relatively easier to put technology and processes in place, whereas the "people" component has posed greater challenges.
The biggest challenge in KM is to ensure participation by the people or employees in the knowledge sharing, collaboration and re-use to achieve business results. In many organisations, this requires changing traditional mindsets and organisational culture from "knowledgehoarding" (to keep hidden or private) to "knowledge-sharing" (share among team members) and creating an atmosphere of trust. This is achieved through a combination of motivation / recognition and rewards, re-alignment of performance appraisal systems, and other measurement systems. A key to success in KM is to provide people visibility, recognition and credit as "experts" in their respective areas of specialization - while leveraging their expertise for business success.
The KM process component include standard processes for knowledge-contribution, content management (accepting content, maintaining quality, keeping content current, deleting or archiving content that is obsolete), retrieval, membership on communities of practice, implementation-projects based on knowledge-reuse, methodology and standard formats to document best-practices and case studies, etc. It is important for processes to be as clear and simple as possible and well understood by employees across the organisation.
Organisations also need to have proper systems in place to support knowledge-sharing, collaboration, workflow, document-management across the enterprise and beyond into the extended enterprise. For this, organisations typically provide a secure central space where employees, customers, partners and suppliers can exchange information, share knowledge and guide each other and the organisation to better decisions.
The most popular form of KM technology enablement is the Knowledge-Portal on the Corporate Intranet (and extranets where customers, partners and/or suppliers are involved). Common technologies used for knowledge portals include standard Microsoft technologies or Lotus Notes databases. A company must choose a technology option that meets its KM objectives and investment plan. While technology is a key enabler to KM, it is important to ensure that the technology solution does not take the focus away from business issues and is user-friendly and simple to use. Many companies have made the mistake of expending a disproportionately high portion of their KM effort and resources on technology – at the cost of people-involvement or strategic commitment - resulting in zero or very limited business results. It is also important to remember that users of the KM system are subject-matter experts in their respective areas of specialization and not necessarily IT experts.
Knowledge management assets and processes
Typically, there are six knowledge assets in an organisation, namely:
Knowledge management processes maximize the value of knowledge assets through collaboration, discussions, and knowledge sharing. It also gives value to people’s contribution through awards and recognitions. Process includes generation, codification (making tacit knowledge explicit in the form of databases, rules and procedures), application, storing, mapping, sharing and transfer. Together these processes can be used to manage and grow an organisation’s intellectual capital.
Knowledge management is essentially about getting the right knowledge to the right person at the right time. This in itself may not seem so complex, but it implies a strong tie to corporate strategy, understanding of where and in what forms knowledge exists, creating processes that span organisational functions, and ensuring that initiatives are accepted and supported by organisational members. Knowledge management may also include new knowledge creation, or it may solely focus on knowledge sharing, storage, and refinement.
It is important to remember that knowledge management is not about managing knowledge for knowledge's sake. The overall objective is to create value and leverage and refine the firm's knowledge assets to meet organisational goals.
Figure 2: Dimensions of Knowledge Management
Implementing knowledge management, as shown in figure 2, thus has several dimensions including:
In the past, failed initiatives were often due to an excessive focus on primitive knowledge management tools and systems, at the expense of other areas. While it is still true that KM is about people and human interaction, KM systems have come a long way and have evolved from being an optional part of KM to a critical component. Today, such systems can allow for the capture of unstructured thoughts and ideas, can create virtual conferencing allowing close contact between people from different parts of the world, and so on.
Knowledge management, if used properly provides many benefits to organisations, as it is responsible for understanding:
So, why is knowledge management useful? It is useful because it places a focus on knowledge as an actual asset, rather than as something intangible. In so doing, it enables the firm to better protect and exploit what it knows, and to improve and focus its knowledge development efforts to match its needs.
In other words:
Unfortunately, KM is an area in which companies are often reluctant to invest because it can be expensive to implement properly, and it is extremely difficult to determine a specific ROI. Moreover KM is a concept the definition of which is not universally accepted, and for example within IT one often sees a much shallower, information-oriented approach. Particularly in the early days, this has led to many "KM" failures and these have tarnished the reputation of the subject as a whole.
1.2 Differentiate between knowledge management and information management systems within the organisation
Information Management vs. Knowledge Management
Most often knowledge and information are used interchangeably by many organisations and people. Therefore, you will often find KM solutions even today which are essentially nothing more than information or document management systems, i.e. which handle data, information, or perhaps even explicit knowledge, but which do not touch the most essential part of KM - tacit knowledge. Figure 3 below shows graphically the main differences between KM and IM with a short explanation below. IM in many ways is a useful tool for KM, in that information can help create and refine knowledge, but as a discipline it is a different one.
Figure 3: Information Management vs. Knowledge Management
The table below give the major differences between the IM and KM:
Information and IM
Knowledge and KM
Focus on data and information
Focus on knowledge, understanding, and wisdom
Deal with unstructured and structured facts and figures.
Deal with both codified and unmodified knowledge. Unmodified knowledge - the most valuable type of knowledge - is found in the minds of practitioners and is unarticulated, context-based, and experience-based.
Benefit greatly from technology, since the information being conveyed is already codified and in an easily transferrable form.
Technology is useful, but KM's focus is on people and processes. The most valuable knowledge cannot effectively be (directly) transferred with technology, it must be passed on directly from person to person.
Focus on organizing, analysing, and retrieving - again due to the codified nature of the information.
Focus on locating, understanding, enabling, and encouraging - by creating environments, cultures, processes, etc. where knowledge is shared and created.
Is largely about know-what, i.e. it offers a fact that you can then use to help create useful knowledge, but in itself that fact does not convey a course of action (e.g. sales of product x are up 25% last quarter).
Is largely about know-how, know-why, and know-who
Is easy to copy - due to its codified and easily transferrable nature.
Is hard to copy - at least regarding the tacit elements. The connection to experience and context makes tacit knowledge extremely difficult to copy.
1.3 Ensure the effectiveness of existing procedures and systems is evaluated in terms of meeting the needs of clients, organisational aims, objectives and standards
Organisational knowledge resources
Business knowledge can exist on several different levels including the following:
In order to enhance organisational knowledge, KM must therefore be involved across the entire knowledge spectrum. It must help knowledge development at all levels and facilitate & promote its diffusion to individuals, groups, and/or across the entire firm, in accordance with the organisation's requirements. KM must manage organisational knowledge storage and retrieval capabilities, and create an environment conducive to learning and knowledge sharing. Similarly it must be involved in tapping external sources of knowledge whenever these are necessary for the development of the organisational knowledge resources.
The SECI Model
Nonaka and Takeuchi introduced the SECI model which has become the cornerstone of knowledge creation and transfer theory. They proposed four ways that knowledge types can be combined and converted, showing how knowledge is shared and created in the organisation. The model is based on the two types of knowledge – tacit and explicit knowledge.
Socialization: Tacit to tacit. Knowledge is passed on through practice, guidance, imitation, and observation.
Socialisation consists in sharing tacit knowledge with others by way of mentoring (sharing internal knowledge, skills and insights). Tacit knowledge can be socialised by mentoring, imitation, observation and practice, all of which result in ‘shared knowledge’.
Externalisation: Tacit to explicit. This is deemed as a particularly difficult and often particularly important conversion mechanism. Tacit knowledge is codified into documents, manuals, etc. so that it can spread more easily through the organisation. Since tacit knowledge can be virtually impossible to codify, the extent of this knowledge conversion mechanism is debatable. The use of metaphor is cited as an important externalization mechanism.
Externalisation creates conceptual knowledge and is the process of converting tacit knowledge into explicit knowledge. Tacit knowledge is conceptualised through images or words; in this case, writing transforms tacit knowledge into an explicit form. This externalised mode of ‘knowledge conversion’ is produced as a result of a dialogue between people who transform tacit knowledge into explicit knowledge.
Combination: Explicit to explicit. This is the simplest form. Codified knowledge sources (e.g. documents) are combined to create new knowledge.
Combination is a mode of knowledge conversion which involves the combining of different types of explicit knowledge. This happens when people exchange knowledge, for instance via documents, telephone and meetings.
Internalization: Explicit to tacit. As explicit sources are used and learned, the knowledge is internalized, modifying the user's existing tacit knowledge.
Internalisation converts explicit knowledge into tacit knowledge. It consists in ‘learning by doing’, which is a process that occurs when the previous modes of knowledge conversion (socialisation, externalisation and combination), are internalised in people’s minds as tacit knowledge, which is represented by mental images or models.
1.4 Identify the need for improvements in the organisation's strategic use of knowledge
Developing a knowledge management strategy
Organisations are facing ever-increasing challenges, brought on by marketplace pressures or the nature of the workplace. Many organisations are now looking to knowledge management (KM) to address these challenges. Such initiatives are often started with the development of a knowledge management strategy. To be successful, a KM strategy must do more than just outline high-level goals such as ‘become a knowledge-enabled organisation’. Instead, the strategy must identify the key needs and issues within the organisation, and provide a framework for addressing these.
Organisations need to have an approach for developing a KM strategy that focuses strongly on an initial needs analysis. Taking this approach ensures that any activities and initiatives are firmly grounded in the real needs and challenges confronting the organisation.
Every organisation has a unique environment, defined by factors such as:
For this reason, each organisation has a unique set of needs and issues to be addressed by knowledge management. It is easy to jump into ‘solutions mode’, recommending approaches such as communities of practice, storytelling, content management systems, and much more. While these approaches may have widespread success in other organisations, they will only succeed in the current environment if they meet actual staff needs.
In practice, organisations are littered with well-meaning but poorly targeted knowledge management activities. In many cases, these failed because they simply didn’t address a clear, concrete and imperative problem within the organisation.
This is now recognised as one of the ‘critical success factors’ for knowledge management:
identify the needs within the organisation, and then design the activities accordingly.
The need for knowledge management
There are a number of common situations that are widely recognised as benefiting from knowledge management approaches. While they are not the only issues that can be tackled with KM techniques, it is useful to explore a number of these situations in order to provide a context for the development of a KM strategy.
These scenarios include:
Beyond these typical situations, each organisation will have unique issues and problems to be overcome. Call centres
Call centres have increasingly become the main ‘public face’ for many organisations. This role is made more challenging by the expectations of customers that they can get the answers they need within minutes of ringing up.
Other challenges confront call centres, including
In this environment, the need for knowledge management is clear and immediate. Failure to address these issues impacts upon sales, public reputation or legal exposure.
Beyond the call centre, many organisations have a wide range of front-line staff who interact with customers or members of the public. They may operate in the field, such as sales staff or maintenance crews; or be located at branches or behind front-desks.
In large organisations, these front-line staff are often very dispersed geographically, with limited communication channels to head office. Typically, there are also few mechanisms for sharing information between staff working in the same business area but different locations.
The challenge in the front-line environment is to ensure consistency, accuracy and repeatability.
The volume of information available to business management has increased greatly. Known as
‘information overload’ or ‘info-glut’, the challenge is now to filter out the key information needed to support business decisions. The pace of organisational change is also increasing, as are the demands on the ‘people skills’ of management staff.
In this environment, there is a need for sound decision making. These decisions are enabled by accurate, complete and relevant information. Knowledge management can play a key role in supporting the information needs of management staff. It can also assist with the mentoring and coaching skills needed by modern managers.
The public sector is particularly confronted by the impacts of an aging workforce. Increasingly, private sector organisations are also recognising that this issue needs to be addressed if the continuity of business operations are to be maintained. Long-serving staff have a depth of knowledge that is relied upon by other staff, particularly in environments where little effort has been put into capturing or managing knowledge at an organisational level.
In this situation, the loss of these key staff can have a major impact upon the level of knowledge within the organisation. Knowledge management can assist by putting in place a structured mechanism for capturing or transferring this knowledge when staff retire.
Many organisations have now recognised the importance of innovation in ensuring long-term growth (and even survival). This is particularly true in fast-moving industry sectors such as IT, consulting, telecommunications and pharmaceuticals. Most organisations, however, are constructed to ensure consistency, repeatability and efficiency of current processes and products. Innovation is does not tend to sit comfortably with this type of focus, and organisations often need to look to unfamiliar techniques to encourage and drive innovation.
Stages in knowledge management
As well as giving consideration to different types of knowledge that need managing, organisations seem to be faced with other choices and dilemmas with regard to their overall knowledge management approach. There are four evolutionary stages in an organisation’s knowledge management approach:
2. Evaluate knowledge management options
Managing knowledge involves the reuse and creation of relevant knowledge. Knowledge management (KM) is linked to the concept of organisational core competencies that can be defined as "the collective learning of the organisation, especially how to coordinate different production skills and integrate multiple streams of technologies". Generally, core competencies refer to the firm's primary expertise, which is a source of sustained competitive advantage. These are key capabilities, which, from the resource-based perspective of the firm, are the primary drivers of innovation and competitive advantage.
Core competencies thus have a large knowledge component, and managing them is, in the very least, a product of corporate strategy working with KM and innovation management. This simplified model has strategy dictating the overall direction, KM managing the knowledge dynamics, and innovation management turning core competencies into profitable core products. To understand the role of KM let us look at a brief overview of how core competencies are managed:
It is important to understand that KM is not just a collection of individual initiatives. The buildup of skills and competencies, involving the coordination of multiple KM disciplines with other organisational functions, must often be managed according to long-term strategic goals and coordinated across the organisation.
2.1 Investigate barriers to capturing knowledge within the organisation
Knowledge management (KM) has become one of the key processes in today’s organisations as the payoff of an effective KM process is huge. When fully implemented, it provides a common KM system that is available to all stages in the product and/or service life cycle, improving decision making, reducing duplication of effort and rediscovery of knowledge, reducing costs, and empowering customers, users, and all of IT.
However, some organisations have not been able to implement KM successfully because of the following “barriers” that stand in their way:
These barriers can be overcome, however, with the right vision, strategies, and tactics. Let’s consider these barriers one by one and how to successfully overcome each to create a KM culture in your organisation.
The barriers in capturing knowledge within an organisation can be divided broadly into following three categories:
The distribution of the right knowledge from the right people to the right people at the right time is one of the biggest challenges in knowledge sharing. Barriers originating from individual behaviour or people’s perceptions and actions can relate to either individuals or groups within or between business functions. At the individual level, barriers are manifold and these barriers include:
One of the key issues of sharing knowledge in an organisational context is related to the right corporate environment and conditions. The most common organisation-based barriers to knowledge sharing are:
Knowledge sharing is as much a people and organisational issue as it is a technology challenge. There has to be necessary interactions between people and technology to facilitate effective knowledge sharing practices in organisations. The list below is of potential technology barriers to knowledge sharing:
For companies to achieve continuous growth in their business, knowledge-management practices need to become an integral part of the day-to-day conversation. All companies face a number of knowledge sharing barriers that need to be dealt with to share knowledge more effectively to enhance companies’ overall market competitiveness and profitability. Ultimately, successful sharing goals and strategies must centre around a knowledge-sharing culture and depend on the synergy of three main factors:
2.2 Review evaluations and recommendations regarding knowledge management software with respect to its usefulness and likeliness to benefit the organisation
Knowledge Management Systems (KMS)
Knowledge management systems refer to any kind of IT system that stores and retrieves knowledge, improves collaboration, locates knowledge sources, mines repositories for hidden knowledge, captures and uses knowledge, or in some other way enhances the KM process. With proper implementation, IT systems have become a critical component of KM today. The most commonly used KM systems are:
Problems and failure factors
Generally, the effects of technology on the organisation are not given enough thought prior to the introduction of a new system. Most of the organisations need to consider the two sets of knowledge necessary for the design and implementation of a knowledge management system:
The problem is that rarely are both these sets of knowledge known by a single person. Moreover, technology is rarely designed by the people who use it. Therefore, firms are faced with the issue of fit between IT systems and organisational practices, as well as with acceptance within organisational culture. It is also important for organisations to understand what knowledge management systems cannot do as introducing knowledge sharing technologies does not mean that experts will share knowledge.
There could be several other failure factors while using knowledge management software. These factors could include:
Promoting acceptance and assimilation
The process of successful implementation of a knowledge management software has three stages: adoption, acceptance, and assimilation.
Step 1: KMS adoption
Some of the key factors organisations need to identify while using KM software are: characteristics, commercial advantage, cultural values, information quality, organisational viability, and system quality. To promote KMS adoption organisations need to: Start with an internal analysis of the firm.
Step 2: KMS acceptance
Some of the factors that need to be considered for KMS acceptance include: anxiety, ease of use, intrinsic motivation, job-fit, results demonstrability, and social factors. Promoting acceptance can be improved by:
Step 3: KMS assimilation
Some of the factors that affect KMS assimilation include: knowledge barrier, management championship, process cost, process quality, and promotion of collaboration. Assimilation can be improved by:
Naturally, these factors do not apply to all KM systems. Some are fairly straightforward and accepted in today's society (e.g. email). However, the strategic implications of implementing knowledge management systems that significantly aim to change the way things are done in the organisation requires proper consideration and careful planning. Moreover, with the evolution of systems to better support different facets of KM, they should be regarded as a critical component in the implementation of the discipline
2.3 Review investigations into incentives and reward systems to support knowledge management
There is no doubt that knowledge sharing has positive effect on organisational success and competitiveness. However, encouraging knowledge sharing is difficult. So, the managers and supervisors need to understand how to motivate employees to share their knowledge with colleagues and how to reward them for active knowledge sharing. This will not only help the managers design the effective reward system for knowledge sharing but also can lead to the understanding how to make the psychological contract between employee and organisation more explicit by underlining what the organisation expects from its employees and what it provides them in exchange for their knowledge sharing.
Reward systems are created in order to encourage employees to achieve organisational goals through proper performance and behaviour. Reward systems are often designed in many organisations to ensure proper knowledge sharing behaviour. Such reward system should be aligned with sharing in order to enhance knowledge sharing in organisations. Thus, it is important to explore what rewards should be used in order to directly or indirectly effect individual’s willingness to share knowledge and encourage his or her knowledge sharing behaviour.
The two main types of rewards that are used for rewarding knowledge sharing are intrinsic reward and extrinsic reward.
Extrinsic rewards are defined as tangible rewards that organisations give to her employees. Extrinsic rewards can take the form of various compensation such as salaries, bonuses, commissions, benefits, as well as other tangible benefits, for example, prizes, improved work environment, the opportunity to take part in the prestigious project, the opportunity to attain certain experts or communities of practice, the educational opportunity and so on.
Intrinsic rewards are psychological or internal rewards that employees get directly from performing the task itself. In the context of knowledge sharing intrinsic reward refers to the pleasure or satisfaction derived from knowledge sharing.
Extrinsic rewards for knowledge sharing can range from monetary or financial rewards such as increased salary and bonuses to non-monetary rewards such as recognition, promotion or job security. In practice, monetary rewards are often used for encouraging knowledge sharing among employees. However, in some cases employees may not be motivated by financial reward to share their knowledge. Also, in other cases non-monetary rewards, such as recognition or training can be more effective compared to financial rewards as employees also want their organisations to be appreciative of good work. Annual organisation awards, giving status for those who demonstrated the willingness to help others and so on may be used for this purpose.
The other aspect of reward system is related to whether the individual or team knowledge sharing behaviour is rewarded. Organisations can apply both individual-based and group-based reward systems. Individual-based reward is based on the individual contribution of valuable knowledge, and group-based reward is based on the contribution of the whole group through knowledge sharing to the firm performance.
Reward systems in the organisations may also differ due to different types of knowledge that is encouraged to be shared. When people were encouraged to share explicit knowledge, reward could be an effective strategy. In order to create the effective reward system for knowledge sharing, the reward system should be aligned both with the common organisational strategy and knowledge strategy.
The main intrinsic rewards which have significant positive effect on knowledge sharing among employees and can form the reward system are as follows:
2.4 Ensure that the required processes for maintaining an integrated knowledge management system are considered
Organisations need to have specific steps, processes and procedure required to reach out to existing sources of knowledge. Also, the knowledge management initiatives supported by the management must have an impact on the economic measures of an organisation’s performance. Processes are also required to answer to the claims that outcomes of knowledge management initiatives are up to the desired standards.
Once the knowledge management practices and processes are in the place, the organisation can then seek to take a holistic view of related knowledge management practices needed to consistently drive benefits at all organisational levels.
Figure 5 shows the key levels of KM process. These levels are discussed below.
Level 1 – The Initial Level
At the Initial Level, the organisation typically does not provide a stable environment for knowledge management. When an organisation lacks an approach to knowledge management, most of the knowledge related events are purely ad-hoc, and rely merely on individual initiatives. Prior knowledge and/or experience of KM is not available to the current domain, even if the problem may have already been encountered in the organisation. There are no formal structures for storage of knowledge in the project and the organisation. This translates to adhoc and variable performance of the team members in problem solving approach. The level of domain knowledge, technology knowledge, and process knowledge is ad-hoc and there are no systematic processes for storage, retrieval, and dissemination for knowledge in the projects. Success depends entirely on having an exceptional talent. The knowledge management capability of Level 1 organisations is unpredictable because the knowledge management process is ad hoc.
Figure 5: The levels of KM process
Level 2 – The Repeatable Level
At the Repeatable Level, the focus is on processes at the project level. The basic knowledge management practices for KM are established. There is a planned effort to define knowledge needs for a particular project and to seek specific knowledge at the beginning of the project. New projects make an attempt to include knowledge that has been created in organisation in other efforts. There is a commitment to apply the knowledge that has been located based on the defined knowledge needs in the project. Created knowledge artifacts are archived at the end of the project. A basic knowledge repository exists that collects all knowledge artifacts for the organisation. One objective in achieving Level 2 is to implement effective knowledge management processes at the project level, which allow organisations to apply successful knowledge derived on earlier projects, although the implementations by the projects may differ. The knowledge management capability of Level 2 organisations can be summarized as disciplined because knowledge need is defined, knowledge fulfilment is attempted, and knowledge is captured at a project level and stored in a knowledge repository for later use.
Level 3 – The Defined Level
At the Defined Level, the standard process for knowledge management practices across the organisation is documented at the project and the organisation level, and these processes are integrated into a coherent whole. Knowledge management practices at the project level are integrated into organisation-wide practices that provide underlying support to the usage of knowledge in projects. There is a group that is responsible for the organisation's knowledge management activities to coordinate organisation wide initiatives in knowledge management.
People practices are implemented to ensure that the staff and managers know how to apply knowledge management practices in different projects. Projects leverage the knowledge created in other parts of the organisation to apply, for solutions in their specific context. There is an assigned group to enrich the knowledge that is created in projects. There is formalism to ensuring that knowledge is periodically reviewed and enriched to maintain currency and reflect applicability. The capability of Level 3 organisations can be summarized as standard and consistent because knowledge management activities are stable and repeatable with a commitment to implement in a standard manner across all projects in the organisation. There is a well- defined support and focus on the organisation's part on the structures needed to implement knowledge management effectively at the project and the organisation level. This capability is based on a common, organisation-wide understanding of the activities, roles, and responsibilities in a defined process.
Level 4 – The Managed Level
At the Managed Level, the organisation sets quantitative goals for knowledge management. This is used to ensure that key measurements are in place to ensure that the business goals are met with the knowledge management practices. There is recognition that knowledge from external key constituents has a role to play. This could include information from customers, partners, and vendors involved in crafting a solution. Knowledge management practices from within the organisation are extended to key partners to ensure that greater knowledge benefits accrue. The organisation recognizes the role of communities of practice as the critical building block for building a knowledge culture and driving the enrichment and transfer of knowledge.
The process capability of Level 4 organisations can be summarized as managed with the communities of practice, external integration, and quantitative approach acting as the foundations for knowledge classification and dissemination.
Level 5 – The Optimising Level
At the Optimizing Level, the entire organisation is focused on continuous process improvement using knowledge management principles. The organisation drives a commitment to foster a knowledge market as the basis of knowledge exchange within an organisation, and derive all the benefits of effective practices. In addition, there is complete capability to manage shifts in innovation, and incorporate the innovations into the organisation in a systematic manner. The knowledge management framework forms the fundamental underpinnings of the organisation, which now has the capability to provide rapid solutions using existing expertise and solutions.
The process capability of Level 5 organisations can be characterized as continuously improving because Level 5 organisations are continuously striving to improve the range of their knowledge management capabilities. Improvement occurs both by consistent focus on creating knowledge markets and by incorporating new innovations.
Organisational roles and structure
It is important to express the practices in the KM systems consistently using terminology related to organisational structure and roles, which may differ from that followed by any specific organisation. A role is a unit of defined responsibilities that may be assumed by one or more individuals. The roles frequently used in the key practices are manager, senior manager, project manager, staff and individuals. The fundamental concepts of organisation, project, and group must be understood to properly interpret the key practices of the KM system.
A group consists of departments, managers, and individuals who have responsibility for a set of tasks or activities. Groups commonly referred to in KM system are described below:
2.5 Facilitate development of a business case to determine the viability of selected options and recommend a way forward for the organisation
Traditional memory is associated with the individual's ability to acquire, retain, and retrieve knowledge. Within business this concept is extended beyond the individual, and organisational memory therefore refers to the collective ability to store and retrieve knowledge and information. This includes the more formal records, as well as tacit and embedded knowledge located in people, organisational culture, and processes. There can be a number of stages in the organisational memory process. These include:
The three stages are essential to the learning process of an organisation so as to determine the viability of selected KM options. This will also help the organisation to move forward utilising the knowledge being acquired. Much like an individual, the firm must be able to access and use past experiences so as to avoid repeating mistakes and to exploit valuable knowledge. Unlike an individual however, organisational knowledge is not centrally stored and resides throughout the firm and even beyond it. The process of retrieving knowledge/information will inevitably vary depending on the retention facility that one is trying to access. For example, written documentation may be accessed through IT while cultural memory is accessed through the understanding and/or application of the norms and procedures of the working environment.
Organisations can utilise knowledge management as a strategy to move forward. For this, organisations need to focus on the following aspects:
3. Develop a knowledge-management strategy
Organisational learning is the way organisations create new knowledge and improve their performance. Botha et al. describe the organisational learning process as follows:
As we can see in figure 6, organisational learning is based on applying knowledge for a purpose and learning from the process and from the outcome. Organisational learning can be seen as "the bridge between working and innovating." This once again links learning to action, but it also implies useful improvement.
The implications to knowledge management are three-fold:
Organisational learning theory: Company perspective
Two of the most noteworthy contributors to the field of organisational learning theory have been Chris Argrys and Donald Schon. Organisational learning (OL), according to Argrys & Schon is a product of organisational inquiry. This means that whenever expected outcome differs from actual outcome, an individual (or group) will engage in inquiry to understand and, if necessary, solve this inconsistency. In the process of organisational inquiry, the individual will interact with other members of the organisation and learning will take place. Learning is therefore a direct product of this interaction.
Argrys and Schon emphasize that this interaction often goes well beyond defined organisational rules and procedures. Their approach to organisational learning theory is based on the understanding of two (often conflicting) modes of operation:
Espoused theory: This refers to the formalized part of the organisation. Every firm will tend to have various instructions regarding the way employees should conduct themselves in order to carry out their jobs (e.g. problem solving). These instructions are often specific and narrow in focus, confining the individual to a set path. An example of espoused theory might be "if the computer does not work, try rebooting it and then contact the IT department."
Theory-in-use: This is the actual way things are done. Individuals will rarely follow espoused theory and will rely on interaction and brainstorming to solve a problem. Theory in use refers to the loose, flowing, and social way that employees solve problems and learn. An example of this might be the way someone actually solves a problem with their computer by troubleshooting solutions, researching on forums, asking co-workers for opinions, etc.
The fact that there is a mismatch between these two approaches is potentially problematic if the company enforces its espoused theory. In order to create an environment conducive to learning, firms are encouraged to accept theory in use, and make it easy for the individual to interact with his working environment in an undefined and unstructured way. Essentially they should provide the right environment for organisational inquiry to take place, unconstrained by formal procedures.
Levitt and March expand further on the dynamics of organisational learning theory. Their view presents the organisation as routine-based, history dependent, and target oriented. While lessons from history are stored in the organisational memory, the event itself is often lost. They note that past lessons are captured by routines "in a way that makes the lessons, but not the history, accessible to organisations and organisational members." The problem most organisations face is that it is usually better to have the event rather than the interpretation. However this is often too costly (both financially and time-wise) to be feasible.
OL is transmitted through socialization, education, imitation and so on, and can change over time as a result of interpretations of history.
Organisational learning theory: The three types of learning
Argrys and Schon identify three levels of learning which may be present in the organisation:
This can be closely linked to Senge's concept of the learning organisation, particularly in regards to improving learning processes and understanding/modifying mental models.
Effective learning must therefore include all three, continuously improving the organisation at all levels. However, while any organisation will employ single loop learning, double loop and particularly deuterolearning are a far greater challenge.
3.1 Develop the knowledge management business strategy in consultation with senior staff for the capture and use of organisational knowledge
Developing a KM strategy
There are many approaches for developing a knowledge management strategy, each supported by a holistic model of KM processes.
Figure 8: Developing a knowledge management strategy
These can be classified into two main approaches:
Each of these approaches has its strengths, and in practice, a success KM programme must encompass both. Basically, a knowledge management model needs to focus strongly on the needs analysis activities with staff, to drive a primarily bottom-up strategy, as follows:
Historically, many knowledge management strategies have focused solely on the top-down approach, identifying high-level objectives such as ‘become a knowledge-enabled organisation’. With little understanding, of the key issues and needs of staff throughout the organisation, these initiatives found it difficult to engage staff in the required cultural and process changes.
As a result, many of these initiatives had little long-term impact on the organisation, despite initial efforts. Recognising these issues, this approach focuses much more strongly on the initial needs analysis activities. The approach to developing a KM strategy provides a number of major benefits:
The focus on needs analysis will identify a wide range of issues and requirements. Some will be organisation-wide, while others will be specific to individual business units or job roles.
The use of a range of needs analysis techniques will identify:
Identifying key staff groups
The first step in the process is to identify the key staff groups in the organisation. The key staff are typically those directly involved in the most important business activities. In general, the key staff groups are more likely to be those at the front-line, rather than managers or administrative staff. This will, of course, depend on the nature and structure of the organisation.
Common staff groups involve:
Each of these groups will have specific needs and issues, as well as those in common with the organisation as a whole. By targeting the key staff groups, the extent to which the needs vary across the organisation can be identified, and the KM strategy developed accordingly. Organisations can develop effective and efficient KM strategies considering the inputs from these key staff members. For this purpose various needs analysis techniques can be used. These techniques are briefly discussed below.
Needs analysis techniques
There are a wide range of need analysis techniques, drawn from fields such as knowledge management, user-centred design, ethnography and anthropology.
In practice, more than one technique should be used with a selected group of staff, to ensure that a complete picture is built up. Each of the techniques are briefly described in the sections below.
There are a wide range of facilitated discussion techniques that can be used to explore issues with targeted staff groups. These are most commonly used with management, consultants, and other staff comfortable with these types of meetings. Techniques such as ‘affinity diagrams’ can be used to provide structure to the discussions, and to capture the issues identified.
In many cases, facilitated discussions are used as the primary mechanism for gaining the strategic input required for the development of the KM strategy.
These are a specific, and widely-used, form of facilitated discussions that focus on exploring a topic within a group setting. Often used as a way of gathering input from larger numbers of stakeholders, focus groups must be run carefully if they are to generate meaningful results. Focus group are best used to explore current issues and problems, rather than to discuss future ‘wish-lists’ of knowledge management approaches. Focus groups should always be used in conjunction with techniques such as staff interviews and contextual inquiry, to ensure that the results are meaningful.
The use of surveys is widespread, and they are a very efficient way of gaining input from a large number of staff throughout an organisation. In practice, surveys are best used to gather staff opinions, rather than specific information on which to base decisions. Survey results must always be supported with the use of other techniques, to provide confidence in the findings.
Care must also be taken when developing the survey questions, and analysing the results.
One-on-one interviews are one of the most effective and often used techniques for identifying staff needs and issues.
This involves going ‘out into the field’ to observe the activities of staff, and the environment in which they work. Workplace observation is particularly effective in environments such as call centres, manufacturing areas, field working, or on-the-road staff. It is a very holistic technique that will identify patterns of work and environment issues that are impossible to gather using techniques such as surveys or focus groups.
This is a combination of staff interviews and workplace observation that involves exploring issues with a staff person, while situated within their normal working environment. By conducting the interview ‘in context’, it becomes possible to see the resources used by staff when conducting work activities. The interviewer can also ask the staff person to show them how they complete specific activities, for example, showing how they find a piece of information on the intranet. This technique is very effective at identifying issues with currentlyavailable information sources and tools.
Not all activities within an organisation are of equal value. Key business tasks should be identified, and investigated to gain an understanding of the steps involved, and the knowledge required at each step. The existing sources of the knowledge can then be identified, along with the key issues and roadblocks impacting upon the effectiveness and efficiency of the task. This type of research will identify mechanisms for both improving the task itself, as well as indicating how to improve the provision of knowledge to those involved in completing the task.
3.2 Ensure that business processes are designed to support knowledge management according to organisational needs and budget
While managing the business process for the knowledge management (KM) purpose, organisations need to have a long term strategy to match the organisational needs and budget. The long-term knowledge management strategy should focus on strategic investments that represent the organisation’s choices/options so as to enable and enhance the KM processes and to offer help define which knowledge is relevant and which is not as per organisational requirements. With an in-depth understanding of the problems and issues within the organisation, it is possible to meaningfully determine appropriate strategies for addressing them according to organisational needs and budgets.
This will undoubtedly include a range of both strategic (long-term) and tactical (short-term) initiatives. Depending on the issues identified, the needs might include:
In practice, each organisation will apply a unique mix of short-term ‘quick wins’ and longerterm projects to meet knowledge management needs.
The next important aspect of designing business processes to support knowledge management in an organisation is to consider the available budget. Some of the activities for which organisations need to manage their budget include:
3.3 Ensure that technology requirements for implementation of the strategy are costed and included in the organisational budget cycle
Knowledge management (KM) requires technologies to support the new strategies, processes, methods and techniques to better create, disseminate, share and apply the best knowledge, anytime and anyplace, across the team, across teams, across the organisation and across several organisations, especially its clients, customers, partners, suppliers and other key stakeholders.
The key technologies are communication and collaboration technologies that are web based for internet and intranet usage, as well as mobile technologies such as PDA’s, PC’s, telephone and videoconferencing. New technologies are rapidly emerging that act as intelligent agents and assistants to search, summarise, conceptualise and recognise patterns of information and knowledge.
Some of the key technologies are shown in the matrix in figure 9.
For an effective KM initiative across the organisation, organisations need to estimate the costs and budgets for the following technology enablers:
There is often confusion between the terms ‘information portal’ and ‘knowledge portal’. An information portal is often described as a gateway to information to enable the user to have one, more simplified way of navigating towards the desired information. However a ‘knowledge portal’ is far more than an information portal because, as well as information navigation and access, it contains within it software technologies to, at least, support the processes of virtual team communication and collaboration and software technologies to support the process of managing knowledge. Furthermore, it contains intelligent agent software to identify and automatically distribute information and knowledge effectively to knowledge workers based on knowledge profiling.
Within the knowledge portal, each knowledge worker can update and maintain a personal ‘knowledge profile’ which identifies his/her specific knowledge needs, areas of interest and frequency of distribution.
Within the knowledge portal, shared work spaces can be set up for each new team or project. These will become knowledge repositories from which new knowledge will be distilled regularly and systematically and shared across other teams in the organisation. Within the shared and collaborative workspace, at least, the following communication and collaboration functions could be performed:
Within the knowledge portal, it is very useful to have a facility and underlying process to enter any ‘Urgent Request’ into the portal and receive back any responses from across the organisation. Rather than needing to know ‘who might know’ the request is entered blindly and responses will be made if it is known in the organisation and people are willing to support and respond to this activity. This is a very effective way of better leveraging the knowledge across the organisation.
The document library is typically the location where all documents are stored. The library should be context relative and allow the ease of control over any document type. Many organisations now employ an Electronic Document and Records Management System (EDRMS) for this requirements but the integration of the EDRMS with all other relevant information and knowledge sources is imperative.
Knowledge server and services
In order to foster knowledge networking across the entire organisation and support knowledge processes for creating, retaining, leveraging, reusing, measuring and optimising the use of the organisational knowledge assets, a centralised knowledge server is required that will:
The centralised knowledge server will manage the processes and knowledge services that generate and disseminate knowledge assets.
The key components of a generic knowledge server are:
Knowledge bases (banks)
For each key knowledge area identified, there needs to be a Knowledge Base. A Knowledge Base contains:
It is vital for organisations to estimate the costs for technology required to implement KM strategy and include them in the organisational budget. The budget needs to consider the time and money necessary to organize, package, store, and retrieve the knowledge. This is particularly true in the cases when tacit knowledge is externalized into explicit knowledge such as documents.
A great deal of cost is associated with capturing context (something that is often impossible) and with preparing the document for retrieval. Even with IT, the latter includes categorization, summarizing, use of data, etc. It is also necessary to consider the cost associated with the reuse of tacit knowledge that involves setting up the right circumstances for it to take place e.g. teams, mentoring, teaching, projects, etc., as well as the systems that support communication and expertise location.
3.4 Ensure that the processes for the periodic review of knowledge management metrics within the business are in place to maintain ongoing effectiveness and continuous improvement
Metrics are a concrete way of defining what a knowledge management (KM) process will achieve, and whether it met those goals. Metrics are more appropriate in an environment of tight budgets and high expectations, for the periodic review of KM process and to maintain and improve ongoing effectiveness and continuous improvement of the KM process. Defining metrics is not easy, however, and much study and further practical experience will be needed before implementing such measures becomes simple or commonplace.
Metrics, also known as ‘measures’ or ‘key performance indicators’ (KPIs), are simply a tool for assessing the impact of a particular project or activity. While these are often numeric in nature (“improve sales by 20%”) they can also be qualitative (“improve staff satisfaction levels”). In either case, metrics provide clear and tangible goals and criteria for the success of a KM process.
In the KM process, using metrics allows:
Targets to be set
Metrics provide clearly defined goals and scope for KM process, allowing for more concrete design, planning and implementation. Metrics state “this is what we plan to do, and this is the benefit it will have”.
Success to be assessed
Metrics provide very specific ‘success criteria’ for KM process, allowing the outcomes to be assessed at the end of implementation.
ROI to be estimated
In the current times of tight IT budgets, there is an expectation that projects will deliver quantifiable benefits. This is often defined in terms of ‘return on investment’ (ROI). Without strong metrics, estimating ROI is little more than guesswork.
Ongoing viability to be tracked
Metrics continue to provide value beyond initial implementation. Appropriate measures will quickly highlight issues, allowing them to be resolved before they grow or spread.
By providing a concrete way of assessing the success (or lack of) various approaches, a greater understanding can be gained. This can then be applied when establishing new initiatives.
In short, metrics can be of tangible benefit both at the early stages and throughout entire KM process.
These metrics relate to measuring the success of implementing the knowledge management system. While these are often easy to measure, and thus the focus of many metrics efforts, they can be very limited in their ability to assess the true impact of the KM process. These metrics include:
A measure of how much the new system is being used is often the starting point for implementing metrics. While it is easy to determine, be aware that it only indirectly measures the impact of the system.
There are a number of ways of measuring system usage including the following
A more direct measure of many KM processes is whether the information is being used in practice. As usage normally happens outside of the system, it must be reported by the staff.
Provide simple mechanism for notifying when information is used, and implement a rewards mechanism to encourage timely reporting. In addition to measuring the broad growth in usage, metrics can be correlated with specific internal marketing or change management activities. This provides measurable feedback on the success of individual initiatives.
The total number of staff accessing the system is related to system usage. This should clearly grow as the system is rolled out across the organisation. Identify the desired number of users, and ensure this is realistic. For example, various types of staff may have no use for the information, or do not have access to PCs. You may also need to implement security login in order to determine accurate staff numbers.
This is an important metric for content management systems, or knowledge sharing initiatives. Unfortunately, it can be quite hard to measure in practice. There are a number of approaches to measuring information quality, including:
This is a measure of how up-to-date the information stored within the system is. The importance of this measure will depend on the nature of the information being published, and how it is used. The best way to track this is using the metadata stored within the CMS, such as publishing and review dates. By using this, automated reports showing a number of specific measures can be generated:
Be aware that not all pages will need to be updated frequently. The CMS should allow variable review periods (or dates) to be specified, depending on the nature of the content. For example, pricing information may need to change daily, while policies often change only yearly.
An easy to use feedback mechanism should be established for any system designed to provide knowledge. Use of such a feedback system is a clear indication that staff are using the knowledge. More importantly, field staff are often the best source of changes and updates, as they are responsible for putting the information into practice.
This can be a difficult to interpret metric. While few feedback messages may indicate the published information is entirely accurate, it is more likely that the system is not being accessed, or that the feedback mechanism is not recognised as useful. Conversely, while many feedback messages may indicate poor quality information, it does indicate strong staff use. It also shows they have sufficient trust in the system to commit the time needed to send in feedback.
Direct cost savings can be realised through the implementation of a KM project. There are only a few quantifiable ways of directly saving money:
The implementation of new information or knowledge systems can generate efficiency gains across a large number of staff. Typically, this is calculated by determining the amount of time that the system saves each person in a day. (Often a few minutes, due to improved navigation or searching.) Multiply this out to a year, and then by the number of users, to get a total time saving. This can then be multiplied by the average staff salary to determine a cost saving.
While this figure can be very impressive (in the millions), it can be hard to realise these paper savings. Estimates have been made for what percentage of time savings is realised, broken down by position. Use these to determine more accurate metrics
Increased efficiency is only of value if it can be realised
Reducing printing costs is a metric commonly associated with intranets, and can be an effective cost-justification for implementing electronic distribution mechanisms. Track the amount of printing of internally- or externally-targeted materials, before and after implementation. Use this to determine costs saved.
Typically, this metric is focused solely on centralised printing, such as brochures, manuals, and other support material. Local printing by individual users often proves too hard to track. Be aware, though, that reducing centralised printing costs may simply redistribute the costs out to individual users, who print out the manuals for themselves (at a greater per-page cost).
This is a key consideration for many service-oriented organisations. KM processes can improve customer satisfaction, particularly in areas where advice or support is being given. Customer satisfaction is best measured using standard market research techniques, such as:
Implementing and tracking metrics can be very burdensome, so it is important to setup only the metrics that will be most valuable. The danger is that an over-emphasis on gathering metrics can negatively impact on business productivity, counteracting the benefits of the KM process itself. There is also a need to analyse the metrics, and make decisions based on them. Too many metrics will simply mean that most will be ignored in practice. Organisations need to collect only those metrics that have an immediate use for.
Use of metrics for continuous improvement
Implementing metrics must be done with care, recognising that the metrics themselves will have an impact on staff. A poorly-chosen metric may be seen as unreasonable, or even draconian. This may impact on staff morale and motivation, undoing all the potential benefits of the system. Gathering metrics has a very real human cost. When used properly, the metrics can help in continuous improvement of the KM process. For this organisations need to consider the following:
Rewards and recognition
In many cases, the metrics used to assess the success of a project are also used as the basis for staff recognition or rewards schemes. In these situations, the metrics are used in a positive way, to highlight the benefits generated by staff. Care must be taken, however, when establishing this link. If staff perceive that there are concrete benefits to be gained if measures are good, there is a strong incentive for the manipulation of the figures. This is particularly true in the case of monetary reward schemes.
Metrics and usability
Implementing sound metrics can also be an effective way of identifying usability problems. That is, problems with the design of the system itself. For example, if measures show that one section of the system is being heavily used, while another is not, this would suggest an investigation of design issues. In this way, metrics can become ‘usability testing in the field’.
Effect of other activities
One of the challenges in establishing and tracking metrics, is determining what effects were due to the KM process, and which came from outside changes or activities. It is rare that the KM project is the only change happening within the organisation. Instead, there is likely to be much occurring, on both small and large scales, all of which may impact on the metrics. In the end, it may not matter what generated the change, as long as the desired outcome was achieved. Re-evaluate metrics
The chosen metrics should be reassessed every six to twelve months, to determine whether they are still effective and appropriate. It will often be necessary to drop some metrics, or establish some new measures. This is not a bad thing, and is often just a reflection of the changing business environment. The goal of metrics is to assess the success of projects, in the best way possible. Achieving an unchanging set of metrics for all time is not a goal in itself. For this reason, while changing metrics makes it harder to compare one year to another, it is more important to have an effective way of assessing whether projects are still meeting business goals.
Setting up metrics for KM projects is not easy, and care must be taken in selecting appropriate measures. To ensure the best outcomes, follow these steps:
By approaching the use of metrics with a clear understanding of the issues and goals, they can be a powerful way of setting targets, measuring success, and identifying problems as they surface to maintain ongoing effectiveness and continuous improvement of KM process.
3.5 Ensure that the knowledge management strategy meets organisational requirements identified in its overall business plan and business strategy
Building KM strategy
A good KM strategy, at the most basic level, consists of the following steps:
KM is closely related or dependant on other disciplines (such as strategy, information management, project management, etc.) and it is enabled by a wide range of processes and systems. It is thus important to note that none of these steps are independent and all of them are affected by countless factors including business plan, strategy, organisational requirements and costs involved.
This is why there is no such thing as an integrated and fully detailed knowledge management strategy framework, i.e. one that captures all relevant aspects with appropriate detail. Each model must choose its focus and origin, as well as its limitations.
There are essentially three questions that a KM strategy framework may choose to answer:
Organisations can use various KM models to ensure that their KM strategy meets organisational requirements as per the business plan and business strategy. Now, let’s see some of the models that help us to understand KM strategy in detail.
The KM Models
The KM Process Framework by Bukowitz and Williams is shown in figure 10. The KM model depicts the process that defines the strategy for management to build, divest, and enhance knowledge assets. It is a model that emphasizes the "why" and "when" aspects. The strengths of this model rest on its strategic focus, which essentially puts knowledge management action into context. It is also worth noting that the notion of "divestment" is included - something which is often missing from KM models. KM initiatives are the result of the response to tactical and strategic changes and needs. The model provides a great overview of the strategy behind KM but it does not include any deeper insight into what initiatives are suitable in a given instance.
Figure 11 shows the next KM model, as given by Botha et al.
This model attempts to offer a more realistic overview of the KM process. The three broad categories overlap and interact with one another. Like Gamble & Blackwell, the focus is on managerial initiatives. Here too the strategic focus (the "when" and the "why" as opposed to the "what") is omitted. It is noteworthy that this model does include the creation of new knowledge as a specific KM initiative.
The model further shows which of the three categories are more people oriented and which are more technology focused. Whether or not knowledge sharing should be largely technology focused is certainly debatable and it is something that I will address in future sections. However, for better or for worse, this is largely how organisations tend to approach the issue i.e. as a technological rather than organisational and social challenge.
We have now looked at three models that take very different approaches to KM. There is one other important aspect relating to KM that has not been directly dealt with by these models. I am referring now to the measurement of effects that lets management know whether the implemented initiatives are achieving the desired results. This is dependent upon data and information management, but is paramount for future KM initiatives.
KM failure factors
It is important for organisations to have KM strategy aligned with organisational requirements and overall business plan and business strategy as improper alignment may result in KM failure. There are various KM failure factors that can be categorised broadly as causal and resultant factors.
Causal factors refer to fundamental problems within the organisation, which lead to conditions that are not suitable for KM. They are not always easily visible and they lead to a number of symptoms that can be called as resultant factors.
Some the causal failure factors include:
Some the resultant failure factors include:
Organisations need to make every effort to reduce or remove KM failure factors so that the KM strategy being used meets organisational requirements as identified in the business plan and business strategy.
Figure 12 shows that KM processes directly improve organizational processes, such as innovation, collaborative decision-making, and individual and collective learning. These improved organizational processes produce intermediate outcomes such as better decisions, organizational behaviors, products, services and relationships. These, in turn, lead to improved organizational performance
Developing a knowledge management strategy for a business provides a unique opportunity to gain a greater understanding of the way the organisation operates, and the challenges that confront it. By focusing on analysing existing knowledge management systems to identify staff needs and issues, activities and initiatives can be recommended with the confidence that these will have a clear and measurable impact upon the organisation. Organisations need to evaluate and research various knowledge management options with a strategic focus so as to ensure that the KM initiative is aligned with broader organisational directions. Taking this approach to the development of a KM strategy allows limited resources to be targeted to the key needs within the organisation, delivering the greatest business benefits while positioning the organisation for long-term growth and stability.
The knowledge-driven economy
A Department of Trade and Industry case study
There are many examples of business organisations which, because they have previously been successful, have continued to follow previous strategies without considering the circumstances they are in. In the short-term they succeed and progress. However, because they do not consider circumstances, and change their direction, they court disaster.
This case study focuses upon the findings of the Department of Trade and Industry which illustrate how the development of a knowledge-driven economy is providing the basis for the UK to close the performance gap on its competitors.
The speed with which electronic communications, information and knowledge cross the world in today’s global market place could not have been envisaged by managers 20 or 30 years ago. It is simply not possible for managers to rely on business strategies used by their predecessors owing to an increasingly complex environment. Today, there is a need for people within organisations to move forward and constantly learn and question their understanding. The development and use of knowledge allows them to adjust to these processes of rapid change.
The Industrial Revolution was built on capital investment in plant and machinery, the use of manual skills and hard labour. Today’s information and knowledge-driven revolution is based on a different foundation in which knowledge has become the predominant element in the creation of wealth.
The growing importance of knowledge is clearly evident. It is perhaps most obvious in the personal computers, mobile phones and sophisticated electronics and communications industry. It can be claimed that two-thirds of the value of a modern motor car is the knowledge that went into designing, engineering and building it, as only one third pays for the raw materials. It is this knowledge that enables a team of people in another part of the world in countries like South Korea, to compete so successfully with many of the huge household names we know so well in this country.
The knowledge-driven economy
A knowledge-driven economy is one in which the generation and use of knowledge will come to play the major part in the creation of wealth. It is not simply about pushing back the frontiers of knowledge; it is also about the effective use and exploitation of different types of knowledge in all manner of economic activity. Types of knowledge
We all have knowledge that we think about in terms of facts and information, as well as the skills such knowledge enables us to acquire. In order to think about how knowledge would be used in a fast-changing and more competitive knowledge-driven environment, it is important to distinguish between the two types of knowledge - ‘codified’ and ‘tacit’:
In a global economy, capital is mobile, technology spreads quickly and goods can be made in low cost countries and then shipped to developed markets. It is important, therefore, for people within business organisations to develop capabilities that are hard to imitate.
Within the UK, the distinctive capabilities of business organisations must, therefore, not be raw materials, land or cheap labour but instead be the intellect and creativity of people.
The importance of knowledge
The four key reasons why knowledge is becoming more important are as follows:
1) Information and Communications Technology (ICT)
Today information spins around the world quicker than ever before with entirely new products and services such as digital TV, laptop computers and global positioning systems. Production methods have also been transformed. Electronic commerce and the information highway have made it easier for organisations to do business with each other, transforming the ways in which customers, suppliers and competitors interact.
2) Science and technology
There has been a faster rate of growth in scientific and technical knowledge in recent years.
Older technologies have been replaced by integrated approaches such as Computer Aided Design and Manufacture (CADCAM) with the electronic transfer of information. Fundamental advances have additionally taken place in areas such as genetics and biology where new generations of products have been created.
Although such developments have expanded the stock of knowledge and increased the pace of innovation, it has also led to imitation. In these situations tacit knowledge is particularly important as organisations monitor their external environment and respond to the challenges created by scientific and technological change.
3) Global competition
Lower communication and international transport costs, the opening up of new markets and expanding market size have increased the number of global competitors. This has enabled businesses across the world to take advantage of economies of scale to improve their competitive advantage. The pace of globalisation in the world economy has increased considerably since the 1980s. The effect of greater competition and the faster pace of innovation has been to advance the movement towards the concept of the knowledge-driven economy.
4) Changing demand
People today have rising incomes and changing tastes. As people purchase more sophisticated goods and services and value their leisure time more highly, a smaller proportion of their income is spent upon essential goods. People also place more emphasis upon the values of the organisations from which they buy, reflecting their approach to the environment as well as the quality of their goods and services.
Business organisations and change
The movement towards a knowledge-driven economy has changed the way in which organisations compete, all of which has accelerated the pace of change for stakeholders:
Improving economic performance
The UK has to make the most of the opportunities offered by a knowledge-driven economy as they occur, despite its strong position in many areas such as media, advertising, entertainment, financial services and pharmaceuticals. Improving performance requires developing a variety of attributes.
Capabilities - In a knowledge driven economy, the economy is only as strong as its capabilities in skills such as science base, technology, enterprise, innovation and effective capital markets.
Selling ice-cream on the worldwide web
Arden Supplies and its sister company, Excelquip - which together offer all the equipment and ingredients necessary to create an entire ice-cream parlour – are now selling products as far afield as New Zealand, India and Tanzania as a result of going online with a new website.
What was previously a highly seasonal business, owned and operated by the father and son partnership Phil and Brian Tomkins, has been transformed into a 24 hour a day, 365 days a year global business.
Collaboration - Successful business organisations need to collaborate both within the firms and the ways in which they organise themselves, as well as between firms in the way they interact. This includes developing strong team work with suppliers, customers, joint-venture partners as well as between managers and employees.
The Society of Motor Manufacturers and Traders (SMMT) Industry Forum
The SMMT Industry Forum is an industry-led partnership involving many of the best-known names in the automotive industry. Led by expert engineers from major vehicle manufacturers, it aims to raise the sector’s competitiveness by delivering improvements based upon world-class best practice.
Seats for commercial vehicles are manufactured by Isringhausen GB in Wrexham. A team from the Industry Forum helped it to identify a number of wasteful activities which enabled it to increase output by 20% and productivity by 45%.
Competition - It is argued that this is the sharpest spur to improve productivity - that is the production or increase in company/product value and wealth by fully applying the competencies of the work force. Competitive pressures from more open markets and the growth in foreign direct investment drive innovation and increase consumer choice.
A key feature of the knowledge-driven economy is the increasing importance of intangible assets such as brands, research and development, contacts and know-how, as well as the value of specialists. The problem is that these assets are difficult to value.
People and skills
The intellect and creativity of people are at the heart of the knowledge-driven revolution with a growth of service sector knowledge intensive businesses. Within all sectors workers have to be more highly educated and more must be able to work with customers as part of their daily work as well as participate in teamwork.
People today are also required to work flexibly across a range of job roles as organisations become flatter with fewer layers of management. As the pace of change quickens individuals will have more independence to manage themselves and their own activities with a growth of opportunities.
Clusters and networks
If organisations locate within a cluster of other firms they are able to share expertise and knowledge. Social interaction and informal links have helped many organisations to be successful in areas such as Silicon Valley and the City of London.
The benefit of such interaction and links is located within the accessing of tacit knowledge which, without these links or interaction, would remain with those who have it. Some organisations may wish to set up networks to draw in the expertise within other organisations through inter-firm co-operation in supply chains, sharing financial risks, mentoring or benchmarking best practice. All of this helps organisations to learn from each other and contribute to improving standards and the way business is undertaken.
The original impetus for the location of the chemicals industry around the Tees was based on access to raw materials and customers and a supportive infrastructure. The industry however recognised it could further exploit the advantages of co-location and formed the Teesside Chemical Initiatives in 1995. This is an industry-led body, but with DTI and other public sector agencies it works closely in partnership to:
Ciba Specialty Chemicals, Water Treatment Limited
Following a successful collaboration in a LINK project with the University of Huddersfield,
Ciba Specialty Chemicals continued its relationship by jointly participating in a Teaching Company Scheme (TCS) Programme. The business employs around 1,700 people in Bradford but recognised the need to gain access to the knowledge and skills of the University if it was to design and construct a prototype production plant. The aim was to produce a pilot scale ammonium acrylate from acrylonitrile or acrylamide, allowing full evaluation of the process and providing data for the design of full-scale production.
Dr Ken Symes, Ciba’s senior representative in the TCS Programme, said, ‘By working with the University we were able to complete a techno-economic feasibility study for full-scale production. The new bioprocess has the potential to result in a cleaner technology for the manufacture of a new intermediate; the quality of the new intermediate is also said to be higher and could be used in a wider range of products. It could also help to improve the competitiveness of the business.’
The knowledge-driven society will create higher expectations amongst consumers, who will be more discerning and expect higher standards of products and services. Consumers will be more likely to buy products and services where traders give clear, accurate and understandable information.
Companies who use knowledge in order to provide consumers with what they want in terms of information and back up services (such as redress if things go wrong), as well as the right quality and choice of goods and services, will develop competitive advantages over their rivals that will enable them to be more successful.
Success in the knowledge-driven economy will depend upon how well organisations and individuals exploit their knowledge, skills and creativity. This revolution is about developing high value goods and services through advanced business practices to better meet the needs of consumers.
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