DBA 1735 Knowledge Management

MBA (DISTANCE MODE)

DBA 1735 KNO WLEDGE MAN AGEMENT KNOWLEDGE MANA

IV SEMESTER COURSE MATERIAL

Centre for Distance Education Anna University Chennai Chennai – 600 025

Author Dr AP ATHI Dr.. R. SEN SENAP APA Professor and Head Department of Management Studies Adhiparasakthi Engineering College Melmaruvathur – 603 319

Reviewer DR.T .V .GEETHA DR.T.V .V.GEETHA Professor Department of Computer Science and Engineering Anna University Chennai Chennai – 600 025

Editorial Board Dr .T .V .Geetha Dr.T .T.V .V.Geetha

Dr .H.P eer u Mohamed Dr.H.P .H.Peer eeru

Professor Department of Computer Science and Engineering Anna University Chennai Chennai - 600 025

Professor Department of Management Studies Anna University Chennai Chennai - 600 025

Dr .C ppan Dr.C .C.. Chella Chellappan

Dr .A.K annan Dr.A.K .A.Kannan

Professor Department of Computer Science and Engineering Anna University Chennai Chennai - 600 025

Professor Department of Computer Science and Engineering Anna University Chennai Chennai - 600 025

Copyrights Reserved (For Private Circulation only) ii

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ACKNOWLEDGEMENT

The author has drawn inputs from several sources for the preparation of this course material, to meet the requirements of the syllabus. The author gratefully acknowledges the following sources: 1. Knowledge Management-Classic and Contemporary Works, Edited by Daryl Morey, Mark Maybury and Bhavani Thuraisingham, Universities Press, Hyderabad, Reprint Edition, 2007. 2. Knowledge Management for Competitive Advantage by Harish Chandra Chaudhary, Excel Books, First Edition, 2005. 3. Knowledge Management Tools and Techniques, edited by Madanmohan Rao, Butterworth-Heinemann, An imprint of Elsevier, Oxford, UK, 2005. 4. Unleashing the Knowledge Force, by Ganesh Natarajn and Uma Ganesh, Tata McGraw-Hill, First Reprint, New Delhi, 2007. 5. Knowledge Management by Sudhir Warier, Vikas Publishing House Pvt Ltd, Second Reprint Edition, Noida, 2007. 6. Knowledge Management-Design and Implementation Edited by Tapas Mahapatra and Shalini Khandelwal, The ICFAI University Press, Hyderabad, First Edition, 2005. 7. Knowledge Management by Shelda Debowski, John Wiley & Sons Australia Ltd, First Edition, 2006. 8. Knowledge Management for Business Strategy Edited by N.M.Shanthi, The ICFAI University Press, Hyderabad, First Edition, 2006. 9. The Knowledge Management Toolkit by Amrit Tiwana, Pearson Education, Second Edition, New Delhi, 2006. 10. Knowledge Management Edited by Nasreen Taher, The ICFAI University Press, Hyderabad, First Edition, 2005. 11. Knowledge Management by Elias M. Awad and Hassan M. Ghaziri, Pearson Education, Delhi, Second Impression, 2008. Inspite of at most care taken to prepare the list of references any omission in the list is only accidental and not purposeful. Dr. R. SENAPATHI Author

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DBA 1735 KNOWLEDGE MANAGEMENT

UNIT I INTRODUCTION Knowledge Economy – Technology and Knowledge Management – Knowledge Management Matrix – Knowledge Management Strategy – Prioritizing knowledge strategies – knowledge as a strategic asset. UNIT II KNOWLEDGE ACQUISITION AND PROCESSING Knowledge Attributes – Fundamentals of knowledge formation – Tacit and Explicit knowledge – Knowledge sourcing, abstraction, conversion and diffusion. UNIT III KNOWLEDGE MANAGEMENT SYSTEMS Knowledge Management and organizational learning, architecture – important considerations – collection and codification of knowledge – Repositories, structure and life cycle – Knowledge Management infrastructure – Knowledge Management applications – Collaborative platforms. UNIT IV KNOWLEDGE CULTURE IN ORGANISATIONS Developing and sustaining knowledge culture – Knowledge culture enablers – implementing knowledge culture enhancement programs – Communities of practice – Developing organizational memory. UNIT V KNOWLEDGE MANAGEMENT – LOOKING AHEAD Knowledge Management tools, techniques – Knowledge Management and measurements – Knowledge audit – Knowledge careers – Practical implementation of Knowledge management systems – Case studies. REFERENCES 1. Key issues in the New Knowledge Management –Joseph M. Firestone and Mark W. McElroy, Butterworth – Hienemann. 2. Knowledge Management – Classic and contemporary works Edited by Daryl Morey & others Universities Press India Private Limited. 3. Knowledge Management, Shelda Debowski, John Wiley & Sons. 4. Knowledge Management, Sudhir Warier,Vikas Publishing House Private Limited. 5. Knowledge Management System Theory and practice,Edited by Stwart Barnes Thomson Learning. 6. Handbook on knowledge management,Edited by CW. Hol Sapple Springer. vii

CONTENTS UNIT I OVERVIEW OF KNOWLEDGE MANAGEMENT 1.1. 1.2. 1.3.

INTRODUCTION LEARNING OBJECTIVES THE CONCEPT OF KNOWLEDGE MANAGEMENT 1.3.1 Definitions of knowledge management 1.3.2 Objectives of knowledge management 1.3.3 Motivation for knowledge management 1.3.4 Knowledge management cycle 1.3.5 Domains of knowledge management 1.3.6 Uses of knowledge management 1.3.7 Nature of knowledge management 1.4. DICIPLINES OF KNOWLEDGE MANAGEMENT 1.5. EVOLUTIONS OF KNOWLEDGE MANGEMENT 1.6. SHORT HISTORY OF KNOWLEDGE MANGEMENT 1.7. AREAS FOR RESEARCH IN KNOWLEDGE MANAGEMENT 1.8. KNOWLEDGE ECONOMY 1.8.1 Background of knowledge management 1.8.2 What is knowledge economy? 1.8.3 Impact of knowledge in the knowledge economy 1.8.4 Characteristics of knowledge economy 1.8.5 Key drivers of knowledge economy 1.8.6 Growth of IT industry in knowledge economy 1.8.7 Implications of knowledge economy 1.9. INDIA AS A KNOWLWEDGE ECONOMY 1.10. TECHNOLOGY AND KNOWLEDGE MANAGEMENT 1.10.1 Electronic technology for knowledge management 1.10.2 Information technology for knowledge management 1.10.3 Knowledge management technology 1.11. KNOWLEDGE MANAGEMENT MATRIX ix

1 2 2 3 5 6 8 9 11 12 13 14 15 16 19 21 21 22 23 23 25 26 27 28 29 31 32 37

1.12.

1.13. 1.14.

KNOWLEDGE MANAGEMENT STRATEGY 1.12.1 The need for knowledge management strategy 1.12.2 Development of organizational KM strategy PRIORITISING KNOWLEDGE STRATEGIES KNOWLEDGE AS A STRATEGIC ASSET 1.14.1. Asset value of knowledge

38 38 39 40 41 43

UNIT II KNOWLEDGE ACQUISITION AND PROCESSING 2.1 2.2 2.3

2.4 2.5

2.6 2.7

2.8

INTRODUCTION LEARNING OBJECTIVES PERSPECTIVES ON KNOWLEDGE 2.3.1 Data, Information and knowledge 2.3.2. Defining knowledge KNOWLEDGE ATTRIBUTES FUNDAMENTALS OF KNOWLEDGE FORMATION 2.5.1 Knowledge formation 2.5.2 Flows of knowledge ORGANISATIONAL KNOWLEDGE TACIT AND EXPLICIT KNOWLEDGE 2.7.1 What is tacit knowledge? 2.7.2. What is explicit knowledge? 2.7.3 Typical application of tacit and explicit knowledge 2.7.4 Basic beliefs between tacit and explicit knowledge approaches 2.7.5 Comparison of properties of tacit Vs explicit knowledge 2.7.6 Advantages and disadvantages of tacit Vs explicit knowledge approaches 2.7.7 Four modes of knowledge conversion ORGANISATIONAL KNOWLEDGE CREATION 2.8.1 Knowledge sourcing 2.8.2 Knowledge abstraction 2.8.3 Knowledge conversion 2.8.4 Knowledge diffusion 2.8.5 Knowledge development and refinement

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47 47 47 48 51 51 53 53 53 54 56 56 59 62 62 62 63 64 65 66 68 69 69 69

UNIT III KNOWLEDGE MANAGEMENT SYSTEMS 3.1 3.2 3.3 3.4

3.5 3.6.

3.7

3.8 3.9

3.10 3.11

3.12

INTRODUCTION LEARNING OBJECTIVES KNOWLEDGE MANAGEMENT AND ORGANISATIONAL LEARNING HE CONCEPT OF ORGANISATIONAL LEARNING 3.4.1 Definitions of organizational learning 3.4.2 Benefits of organizational learning 3.4.3. What is learning organizations? 3.4.4 Orientation for effective knowledge dissemination 3.4.5 Characteristics of learning organization 3.4.6 Characteristics of the traditional Vs learning organization 3.4.7 Facilitators of organizational learning 3.4.8 The five learning disciplines ARCHITECTURE FOR ORGANISATIONAL LEARNING CATURING AND CODIFICATION OF KNOWLEDGE 3.6.1 Capturing tacit knowledge 3.6.2 Other knowledge capture techniques KNOWLEDGE CODIFICATION 3.7.1 Codifying knowledge 3.7.2 Codification tools and procedures KNOWLEDGE MANGEMENT INFRASTRUCTURE REPOSITORIES 3.9.1 Content of knowledge repository 3.9.2 Features of knowledge repository 3.9.3 The design of knowledge repository 3.9.4 The knowledge refinery 3.9.5 Repository life cycle 3.9.6 Repository structure KNOWLEDE MANAGEMENT APPLICATIONS COLLABORATIVE PLATFORMS 3.11.1 Features of platforms 3.11.2 Tools for collaborative platform 3.11.3 Collaborative knowledge applications CASE STUDY xi

73 73 73 74 76 77 77 78 81 81 82 82 84 87 88 94 99 100 100 104 110 111 111 112 113 113 114 114 117 118 119 122 123

UNIT IV KNOWLEDGE CULTURE IN ORGANISATION 4.1 4.2 4.3

4.4 4.5 4.6. 4.7.

4.8

INTRODUCTION LEARNING OBJECTIVES ORGANISATIONAL CULTURE 4.3.1 Knowledge cultures 4.3.2 Improving knowledge culture KNOWLEDGE CULTURE ENABLERS IMPLEMENTING KNOWLEDGE CULTURE ENHANCEMENT PROGRAMS MAINTANING THE KNOWLEDGE CULTURE COMMUNITIES OF PRACTICE 4.7.1. Defining communities of practice 4.7.2. Communities of practice in organizations 4.7.3. Importance of communities to organizations 4.7.4. Developing and nurturing communities of practice DEVELOPING ORGANISATIONAL MEMORY

127 129 129 130 131 133 137 139 141 141 142 145 146 149

UNIT V KNOWLEDGE MANAGEMENT - LOOKING AHEAD 5.1 5.2. 5.3.

5.4. 5.5.

INTRODUCTION LEARNING OBJECTIVES KNOWLEDGE MANGEMENT TOOLS AND TECHNIQUES 5.3.1. Knowledge capture and creation tools 5.3.2. Knowledge sharing and dissemination tools 5.3.3. Knowledge acquisition and application tools 5.3.4. Strategic implications of KM tools KNOWLEDGE MANAGENMENT AND MEASUREMENT KNOWLEDGE MEASUREMENT TECHNIQUES 5.5.1. Intangible asset measurement 5.5.2. Intangible asset monitor 5.5.3. IC Rating 5.5.4. Balanced scorecard 5.5.5. Implementation barriers xii

153 154 154 154 159 166 170 171 179 179 181 183 183 187

5.6.

5.7. 5.8.

5.9

KNOWLEDGE AUDIT 5.6.1. Aims and objectives of knowledge audit 5.6.2. Key tasks of K-audit 5.6.3. Process mapping 5.6.4. Outcomes of knowledge audit 5.6.5. Components of knowledge audit KNOWLEDGE CAREERS 5.7.1. Organisational knowledge role classification CLASSIFICATION OF KNOWLEDGE MANAGEMENT CAREERS 5.8.1 The qualities and attributes of CKO 5.8.2 Knowledge management analyst 5.8.3 Knowledge architect 5.8.4. Knowledge strategist 5.8.5. Knowledge manager 5.8.6. Research analyst 5.8.7. KM consultant 5.8.8. Media specialist 5.8.9. Senior market intelligence librarian 5.8.10 Knowledge engineer 5.8.11 KM specialist 5.8.12 Intranet developer 5.8.13 KM director 5.8.14 Director of ontologies 5.8.15 Ontologist 5.8.16 NLP specialist 5.8.17 Knowledge development manager CASE STUDIES

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187 188 189 190 191 191 194 195 196 197 198 198 199 200 201 202 202 203 203 204 204 205 205 206 207 207 208

KNOWLEDGE MANAGEMENT

NOTES

UNIT I

INTRODUCTION 1.1 INTRODUCTION Today’s organizations are fundamentally different as compared to organisations that existed two decades ago in terms of their functions, structures and style of management. The new organisations put more premium on understanding, adapting and managing changes and competing on the basis of capturing and utilizing knowledge to better serve customers, improve the operations or to speed up the delivery of their products to markets. The emergence of these new organizations calls for a new way of management, which is generally known as ‘Knowledge Management’ (KM). To begin any topic, it is useful to have a perspective and background to understand what is going on with respect to that topic. Now knowledge management is widely known and practiced in many large organizations, it might be useful to get an overview on this subject before we discuss the details of it. Knowledge management is the hottest subject of the day. The question is: what is this activity called knowledge management, and why it is so important to each and every one of us? Why is it important to adopt this new methodology of management? How to successfully implement KM in organizations? The following section offers some emerging perspectives in response to these questions. This chapter provides an introduction to the study of KM by looking at the overview of KM with regard to its meaning, usefulness, history, future, limitations, etc, and also briefly examines the nature and types of knowledge. The multidisciplinary roots of KM are enumerated, together with their contributions to the discipline. The importance of KM today is described together with the emerging roles and responsibilities needed to examine KM implementation. The emergence of economic system with knowledge as its basic ingredient is enumerated and the need to develop knowledge management strategies to stay competitive in today’s environment were pointed out and finally the need to prioritize the knowledge strategy is justified.

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1.2 LEARNING OBJECTIVES After studying this Unit, you should be able to understand the following: • • • • • • • • •

The definition, meaning and evolution of knowledge management Describe how KM helps organizations Outline the history of KM Identify the key process of KM Know the nature, characteristics and key drivers of knowledge economy Identify and compare the technology components of KM The impact of KM matrix and its parts Describe the KM strategy and its need in the context of KM Analyse knowledge as a strategic asset and its value

1.3 THE CONCEPT OF KNOWLEDGE MANAGEMENT Knowledge management, as it is practiced today, is a system of technologies focused upon the delivery of strategically useful knowledge and expertise, the availability of which facilitates effective collaboration and timely decision-making. The strategically literate employee, armed with the best and most up-to-date knowledge, delivered in a timely manner, will produce work that results in more satisfied customers, increased success and corporate value. Knowledge management, before the term was coined, used to be simply the transfer of knowledge from one person to another, the result of which enabled the recipient to benefit from the collected wisdom of the more experienced members of an organization or group. For instance, knowledge transfer happens when the founder of the family business trains his sons and daughters to run the business. It also takes place when a young person goes to college to learn from a renowned professor and when an apprentice welder trains under a master welder. Yet, today, companies have learned that there is much more to knowledge transfer than what took place in the past. They have seen their competitors leap ahead by using technology and sound knowledge transfer principles (newly rediscovered) to create dynamic collaborative environments that deliver knowledge strategically—when and where it is needed and to the people who need it—at the front line where the client solution is being invented. This is knowledge management today. We must not confuse knowledge with information. The two are distinct concepts that function in completely different ways. Information is tangible, hard numbers, facts. Knowledge is intangible, mental awareness, a part of the process of learning, a “habit” burned into the mind. Information represents the working and monitoring of physical objects. Knowledge represents mental objects, intellectual units that have a practical component. Information is independent of context. With knowledge the context affects the meaning and value of the knowledge. Information is easily transferable by means of recording and recitation. Knowledge requires learning and habituation for effective transfer. 2

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Information is easily reproducible by means of copying. Knowledge is seldom reproduced in a consistent fashion because it is filtered according to the perspective of each individual, his context and understanding.

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Information is not knowledge. That was realized clearly during the Information Age when organizations found themselves drowning in huge in-house stores of unusable data. The fundamental difference between knowledge management as it was practiced in the past and how it has evolved today is that corporations are now using network technologies to enable employees to find and use knowledge and, in the process, contribute to a more direct impact on customer satisfaction and corporate value. Companies that effectively use knowledge break it down into its basic components. Knowing why represents having a basic understanding of the reasons for facts, conditions, job responsibilities, client requirements, etc. Knowing what means knowing the cause of a problem or condition. Knowing where provides a spatial reference to understanding. Knowing how provides the critical element for problem solving, the knowledge of how to get something done. Knowing when provides a temporal reference and is closely tied to timing and opportunity development. The major shift brought about by current perspectives on knowledge management is the shift in the value proposition between employer and employee. Employees have become more valuable assets because the knowledge they possess and use on behalf of customers is now recognized as vital to the success of the organization. Yet, if knowledge is an asset, it has to be managed in the same way as financial and physical assets. Estimates indicate that 70 - 80 percent of what employees know is hidden. Many organizations today don’t know what they know and who knows it. KM Viewpoint 1.1 In 1996, teams of leading heart surgeons from five New England medical centers observed one another’s operating room practices and exchanged ideas about their most effective techniques in collaborative learning experiments. The result was a 24% drop in their overall mortality rate for coronary bypass surgery. The concept of Knowledge Management proves to be a life-saver here! 1.3.1 Definitions of knowledge management Knowledge Management refers to the processes and/or tools an organization uses to collect, analyze, store, and disseminate its intellectual capital. This intellectual capital can include training materials, processes, procedures, documents, ideas, skills, experiences, and much more. Besides deployment of appropriate technology and processes by a business enterprise in order to maintain and retain it’s intellectual capital, an effective knowledge management also refers to making optimum use of experience and understanding of human resource in an organization as well as of the information artifacts, such as inherent knowledge 3

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based documents (reports) available internally within the organization, and also, the related information procured from the external resources. A logical extension of this concept is into the entire organization, in the form of Enterprise Knowledge Management (EKM). Among the areas of greatest concern for the modern knowledge worker (from CIO down to the Content Manager), is identifying, collecting, securing and maintaining the information (aka knowledge base) of the organization. Without a process to ensure this system’s usefulness, there are invariably holes which are only found when a user tries to obtain that (missing) information. Let us see the other useful definitions of KM to have a still broader outlook of KM. Arun O. Gupta, Senior Director Business Technology, Pfizer Ltd describes “KM as a practice that addresses the need for information that is required for making effective decisions”. If this information is structured, the same can be translated into knowledge by applying a set of predefined rules. For example, comments on discussion boards can be converted into useful FAQs. The perception of KM differs from one industry vertical to another. In software service companies, knowledge management can be a highly effective practice as it helps capture knowledge across different skill sets. For instance, information regarding common queries about specific technologies (if captured on the Intranet) can help solve common problems. This, in turn, boosts productivity. As Indian software service organisations employ software professionals in thousands, employee inputs can be extremely useful for organisational growth. Satish Joshi, Senior VP, Patni Computer Systems Limited says “For us, “KM is a set of processes and tools which give us the ability to leverage and combine the collective abilities of our knowledge workers.” Simply put, a KM practice should let an organisation provide relevant information to each and every user. As Sunil Kapoor, Head IT, Fortis Healthcare says, “KM is nothing but having customised information tailored to the needs of each user”. As KM practice provides a structured way of capturing knowledge that exists within the organisation, it gives an organisation the ability to improve the productivity and knowledge of its employees by means of knowledge sharing. “A KM practice that encompasses end-to-end processes owned by a department can go a long way toward boosting productivity,” says M D Agrawal, GM IS Refinery Systems, BPCL. According to the American Productivity & Quality Center, “KM refers to the strategies and processes of identifying, capturing, and leveraging knowledge to enhance competitiveness”.

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According to Yogesh Malhota of www.brint.com “KM refers to the critical issues of organizational adaptation, survival and competence against discontinuous environmental change. Essentially it embodies organizational processes that seek synergistic combination of data and information processing capacity of information technologies, and the creative and innovative capacity of human beings”.

NOTES

According to Gartner Group, KM is defined as a discipline that promotes an integrated approach to identifying, managing and sharing all of an enterprise’s information assets. These information assets may include databases, documents, policies and procedures, as well as previously unarticulated expertise and experience resident in individual workers. Gartner defines Knowledge management as an integrated and collaborative approach to the Creation, Capture, Organization, Access and Use of Information Assets. The Knowledge cycle is depicted in the Figure 1.1 below

The various steps involved are described as follows: •

Knowledge is created. This happens in the heads of people.

•

Knowledge is captured. It is put on paper in a report, entered into a computer system of some kind, or simply remembered.

•

Knowledge is organized, where it is classified and modified. The classification can be the addition of keywords which could be indexed. Modification can add context, background or other things that make it easier to reuse later. The test of this step’s success is to determine how easily people in the organization will be able to access and use the knowledge when they need it.

•

“Knowledge is shared and used. When knowledge is shared and used, it’s modified by the resources that use it. This takes us back to knowledge creation.

1.3.2 Objectives of knowledge management The following are the major objectives of KM 1. Create knowledge repositories a) External knowledge (competitive intelligence, market data, surveys, etc.) 5

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b) Structured internal knowledge (reports, marketing materials, etc.) c) Informal internal knowledge (discussion databases of ‘know how’) 2. Improve knowledge access through a) Technical expert referral b) Expert networks used for staffing based on individual competencies c) Turnkey video conferencing to foster easy access to distributed experts. 3. .Enhance the knowledge environment a) Change organizational norms and values related to knowledge in order to encourage knowledge use and knowledge sharing b) Customer’s rating of organisation’s expertise 4. Manage knowledge as an asset a) Attempt to measure the contribution of knowledge to bottom line success 1.3.3 Motivation for Knowledge Management Internal and external pressures and rapid inflows of information make effective operation of organizations extremely difficult (see Figure 1.2). The Internet and ECommerce have generated competitors that are on the other side of the world but only a mouse click away. Employees are moving from organization to organization at alarming rates, taking with them important knowledge of company operations that must be relearned by new employees. The pace of technology, particularly information technology (IT) continues to force management to consider organizational change associated with the implementations of electronic commerce store-fronts, automated inventory procurement and enterprise resource planning (ERP) systems. Changes in government legislation and regulatory practices provide a steady flow of new threats and opportunities. Customers are demanding new products and services that are bundled to their preference. Subsequently, companies are being forced to move faster and at new levels of personalized interaction. Filtering through this barrage of information for relevant data or combinations of information is a formidable undertaking. To address these challenges, organizations must develop management methods that accept information as a valued resource, convert information into organizational knowledge and generate value-added information from that knowledge.

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4

Competition Global Opportunities

Employee Turn-over Organization

Customer Demands

Technological Change Regulatory Change

Figure 1.2 Internal and external pressures on an organization. Dealing with these pressures requires methods of managing organization knowledge that are rarely found in today’s companies and institutions. Figure 1.3 shows the major entities that act as sources and sinks of information for organizations. Leading companies are able to filter information in from these entities, build on their organizational knowledge and synthesise valuable information for return. Fundamental to the success of these methods is the realization that information technology does not, on its own, equal knowledge management. Since 1998, books such as “The Information Paradox” by John Thorp have asked serious questions about the role of information systems within organizations, how they are managed and the methods used to measure their benefit. Managing knowledge within an organization involves a composite of people and information technology. We see the ultimate goal for an organization as communicating information and managing knowledge with the same efficiency and effectiveness as an individual.

Employees Gov’t Reg. Management of Organizational Knowledge

Products Services

Customers Channels

Competitors Partners Suppliers

Figure 1.3 Organizational knowledge environments.

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1.3.4. Knowledge Management Cycle For humans the process of transforming data and information into knowledge and then back into value-added information is a cycle that is natural and on going. The following figure depicts this knowledge management cycle as consisting of four fundamental steps that involves the storage, processing and communication of information. We begin the discussion of this cycle as it applies to the individual and move on to discussing the cycle as it applies to small and then large organizations. In each case the methods of storing, processing and communication information are described and followed by a description of the progression through the four steps of the knowledge management cycle. 7

Environmental data Observation and Analysis Problems Opportunities

Information

Knowledge Consolidation

INFORMATION Storage Processing Communication

Theory Generation

Approach Methods

Results Testing and Application

An individual makes his or her way through the world being inundated with data and information from the environment. To deal with this, an individual uses personal memory as well as notes and paper files for storing information. The individual’s brain processes the information with possibly the aid of a calculator or a small computer. Communication of information is primarily internal from a knowledge management perspective. As individuals we pride ourselves on our ability to learn from our triumphs and defeats through the effective consolidation of knowledge. As the figure depicts, knowledge consolidated at the end of one iteration through the knowledge management cycle provides new information that can be used in yet another iteration. Small organizations of 2 to 20 persons are able to emulate the knowledge management cycle of an individual with some degree of success. Information and requests received from customers, partners, and the government is stored within individual memories, in documents and in simple database systems. Information processing takes place in individual brains as well as at productive meetings where the strengths and weakness of the individuals are well understood, accepted and utilized. Various small computer systems and possibly a network server are shared by all. Communication is primarily via ad-hoc meetings augmented by telephone, fax and email messages when a person is traveling or at home. 8

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Knowledge consolidation by each individual is facilitated by a collective effort to ensure that failure does not recur for the same reasons and that success can be repeated as often as possible. Consequently, small organizations are said to be well-oiled, creative and able to move quickly to meet a changing environment with a high degree of synergy where the value derived from a project can often be greater than the sum of the individual efforts.

NOTES

Larger organizations have a difficult time emulating the knowledge management cycle of an individual. Large companies and institutions receive proposals, queries and other forms of information from a multitude of customers, channels, partners, government and regulatory bodies. Information is stored in various formats and locations that include policy documents, filing cabinets, internal process and product databases as well as external customer and distribution databases, microfiche, audio tape and video tape. Portions of the information in-flow are processed by individual brains only to be confounded by a multitude of meetings in which the persons assigned to various roles change from quarter to quarter. Various computer systems developed over the last ten years process portions of information in silos that have a difficult time talking to one another for technical and political reasons. Communication is achieved via a cornucopia of local area network, Internet, mobile devices. Meetings must be scheduled several weeks in advance for executives and many events must be cancelled and rescheduled due to conflicts. Knowledge gained at the end of a product cycle is often lost and for this reason failure can recur and success is not repeated as often as possible. Subsequently, large organizations are said to be lethargic, lacking creativity and slow to react to meet a changing environment. The chaos that results is largely due to the ineffective management of organizational knowledge. 1.3.5 Domains for Knowledge Management The diagram (Figure 1.4) is organized in four parts to indicate four technical domains for Knowledge Management. And the tools listed in the four technical domains can be used to help institutions share, distribute, capture and create knowledge better.

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Figure 1.4 Technical domains of KM Knowledge Sharing: Group Collaboration Systems (GCS) foster the creation and sharing of knowledge among people working in groups. Improved group coordination and collaboration is enabled through e-mail, teleconferencing, data-conferencing, videoconferencing, groupware, and Internet-based applications. Groupware and Intranets represent the most prevalent examples. Distribute Knowledge: Office Automation Systems (OAS) helps disseminate and coordinate the flow of information throughout the institutions. An OAS can be any application of information technology that intends to increase the productivity of information workers. Common examples include word processing, desktop publishing, imaging, electronic calendars, and desktop databases. Capture Knowledge: Artificial Intelligence Systems (AIS) provides institutions and administrators with codified knowledge that can be reused by others in the institution to expand the knowledge base. Examples include expert systems, neural networks, fuzzy logic, and genetic algorithms. Create Knowledge: Knowledge Work Systems (KWS) support the activities of highly skilled knowledge workers and professionals as they create new knowledge and try to integrate it into the institutions. KWS have special characteristics that support the unique needs of knowledge workers. Examples of knowledge work applications include computeraided design (CAD) systems and virtual reality (VR) systems for simulation and modeling.

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KM Viewpoint 1.2 Pfizer India has embarked on two initiatives that will gradually evolve into a KM framework. The first one involves capturing documents and creating a context sensitive repository. The second initiative focuses on converting unstructured data into structured data and warehousing the same. Together, these initiatives will provide Pfizer with key metrics and information that will assist decision making.

1.3.6. Uses of Knowledge Management The Knowledge Management principles are being used for: •

Reducing cycle times

•

Reducing overheads

•

Boosting revenues by getting products and services to market faster

•

Improving customer service by streamlining response time

•

Empowering employees

•

Creating innovative and high quality products

•

Creating knowledge-sharing platform for the geographically dispersed teams

•

Enhancing employee retention rates by recognizing the value of employees’knowledge and rewarding them for it

•

Fostering innovation by encouraging the free flow of ideas

•

Streamlining operations and reducing costs by eliminating redundant or unnecessary processes

•

Enhancing supply chain management

•

Enhancing web publishing

•

Managing legal, intellectual property

•

Providing project workspace

•

Delivering competitive intelligence

•

Managing customer relationships

•

Providing training, corporate learning

•

Capturing and sharing best practices

•

Fostering cross-departmental effectiveness

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•

Making available increased knowledge content in the development and provision of products and services

•

Achieving shorter new product development cycles

•

Facilitating and managing organizational innovation and learning

•

Leveraging the expertise of people across the organization

•

Increasing network connectivity between employees and external groups with the objective of improving information flow

•

Managing the proliferation of data and information in complex business environments and allowing employees to access appropriate information sources

•

Managing intellectual capital and intellectual assets in the workforce (such as the expertise and know-how possessed by key individuals) as individuals retire and new workers are hired

Ultimately making the business more adept at change, with the aim of improving competitiveness and profitability. To facilitate this vision, not only does the business have structured data available in its strategic applications, it also has network drives and databases, may be an Intranet, the information on individuals’ hard drives, external sources and, most importantly, the knowledge, skills and experiences of its employees. 1.3.7 Nature of Knowledge Management 1. Knowledge Management is about people. It is directly linked to what people know, and how what they know can support business and organizational objectives. It draws on human competency, intuition, ideas, and motivations. It is not a technology-based concept. Although technology can support a Knowledge Management effort, it shouldn’t begin there. 2. Knowledge Management is orderly and goal-directed. It is inextricably tied to the strategic objectives of the organization. It uses only the information that is the most meaningful, practical, and purposeful. 3. Knowledge Management is ever-changing. There is no such thing as an immutable law in Knowledge Management. Knowledge is constantly tested, updated, revised, and sometimes even”obsoleted”when it is no longer practicable. It is a fluid, ongoing process. 4. Knowledge Management is value-added. It draws upon pooled expertise, relationships, and alliances. Organizations can further the two-way exchange of ideas by bringing in experts from the field to advise or educate managers on recent trends and developments. Forums, councils, and boards can be instrumental in creating common ground and organizational cohesiveness. 5. Knowledge Management is visionary. This vision is expressed in strategic business terms rather than technical terms, and in a manner that generates enthusiasm, buy-in, and motivates managers to work together toward reaching common goals. 12

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6. Knowledge Management is complementary. It can be integrated with other organizational learning initiatives such as Total Quality Management (TQM). It is important for knowledge managers to show interim successes along with progress made on more protracted efforts such as multiyear systems developments infrastructure, or enterprise architecture projects.

NOTES

1.4 DISCIPLINES OF KNOWLEDGE MANAGEMENT Knowledge management draws upon a vast number of diverse disciplines such as: •

Religion and Philosophy to understand the role and nature of knowledge and the permission of individuals ‘to think for themselves’

•

Psychology to understand the role of knowledge in human behavior. Psychology too is concerned about different kinds of knowing as well as about how and why people learn, forgets, ignore, act, or fail to act. It looks at natural cognitive processes and raises questions of will and motivation that make it impossible to think of knowledge in terms of mechanical transfer from donors to recipients.

•

Business Theory & Economics to create strategies, determine priorities, evaluate progress and to understand work, and its organization. KM Viewpoint 1.3 When BP (now BP Amoco) decided to analyze, using a knowledge perspective, why they had such differing performance levels in their deep-water drilling rigs, they found wide differences in local knowledge and practices, knowledge that was mostly tacit and undocumented. As a result of their efforts to have this local knowledge more globally practiced, BP achieved very significant savings and subsequently achieved legendary status within knowledge management circles.

•

Cognitive Sciences to understand how best to support knowledge workers’ mental functioning required by their work settings

•

Ergonomics to create effective and acceptable work environment

•

Information Sciences to build supporting infrastructure and special knowledgerelated capabilities

•

Knowledge Engineering to elicit and codify knowledge

•

Artificial Intelligence to automate routine and assist knowledge-intensive work with reasoning and other high-level functions

•

Management Sciences to optimize operations and integrate KM efforts with other enterprise efforts

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•

Social Sciences to provide KM-related motivations, people processes, and cultural environments. Sociology has contributed both macro and micro perspectives to knowledge management. The first rigorous attempts to define a postindustrial, knowledge-based society were made by sociologist Daniel Bell and sociologically oriented economist Fritz Machlip, among others. Their documentation of this momentous change—the underlying principles for working with knowledge— crystallized and validated a dawning sense that something quite different was happening globally in the world of work. At the micro level, sociology’s strong research interest in the complex structures of internal networks and communities has obvious relevance to knowledge management. Knowledge management has inherited the concern for social facts. Rather than build from theory, it looks at what people actually do—the circumstances in which they share knowledge or do not share it; the ways they use, change, or ignore what they learn from others. Those social facts guide (or should guide) the development of knowledge management tools and techniques.

1.5 EVOLUTION OF KNOWLEDGE MANAGEMENT The following table provides a bird’s eye view of the important phases of evolution of Knowledge Management: Table 1. Evolution of Knowledge Management PERIOD

AUTHOUR/ORGANISATION CONTRIBUTION

BRIEF DESCRIPTION OF EVOLUTION

1938

H.G.WELLS

1960 1986

PETER DRUCKER Dr.K.WIIG

1989

McGRAW & HARRISONBRIGGS

1990

SENGE

1991 1995

NONAKA & TAKEUCHI

1994

BROWN

1996

STEWART

1997 2000 2003

KAPLAN & NORTON

Coined the word ’World Brain’ which depicts an intellectual organization the sum total of collective knowledge Coined the term ‘knowledge worker’ Coined KM concept at UN Described ‘knowledge engineering’ as involving information gathering, domain familiarization, analysis & design efforts and accumulated knowledge must be translated into code, tested and refined Focused on the ‘learning organisation’ as one tha can learn from past experiences stored in corporate memory systems Studied how knowledge is produced, used, and diffused within organizations and how much knowledge contributed to the diffusion of innovation Described what is ‘Community of Practices’ Introduced the concept called ‘Intellectual Capital’ Concept of Balanced Scorecard

ACADEMIA

KM courses in Universities with KM texts

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1.6 SHORT HISTORY OF KNOWLEDGE MANAGEMENT

NOTES

In past eras, most employees had to fit into their organizational structures by means of performance standards based upon strictly defined job descriptions. Employment was secure as long as they performed assigned tasks and minded their own business. Out-ofthe-box thinking was not likely and knowledge hoarding was the order of the day. During the era of business process reengineering, cost accountants saw the most knowledgeable workers as an unnecessary expense, a liability to be eliminated through down sizing or early retirement. Many organizations made the strategic mistake of pushing their intellectual assets out the door. Knowledge hoarding was then replaced by a culture of knowledge hiding. In the past, consultancies practiced knowledge management on the fly. International networks of consultants communicated through computer networks by sharing their own problem-solving expertise with other consultants whose clients had the same problems. But consultants are in the business of selling their own knowledge and had little inclination to share it, especially with their colleagues and peers. During the 1990s chief executives in the consulting trades realized that the foundation of our economy had been shifting from natural resources toward intellectual assets. They began evaluating how knowledge was being used in their organizations. The biggest shock came with the discovery that 80 percent of corporate knowledge assets were not owned by the companies. They went home every night with the employees. As a result, questions such as how knowledge is acquired, used and delivered became paramount. These early pioneers knew that their organizations had to adapt quickly. They spent their time rethinking what they were doing, how they were doing it and why. They tore down barriers and ancient processes and replaced them with a systematic approach to knowledge sharing based on the fluid dynamics of a networked economy. As CEOs evaluated their knowledge management dynamics, it became apparent that the people who drove their enterprises were those who were creating and accumulating knowledge. And as time went on, the value of these people and what they knew was exerting an increasing influence on the success of their organizations. The challenge then became how to create the information, organizational intelligence, business models, communication tools and learning systems around these extremely important people. This goal had to become a central mission, a basic purpose for the existence of these consulting organizations – if they were to be successful. The lessons learned by these early adopters of knowledge management indicated that though they knew what knowledge was, finding out who has it, reorganizing operations to nourish and manage it, changing the work culture to support it and building knowledge networks around it were the real challenges of the future. 15

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With the advent of networked resources, new ways to codify, share, store and deliver knowledge enabled organizations to strategically use critical knowledge more easily and cheaply. The challenge, however, became how to develop a successful knowledge management model—there were too few examples from which to work. The result was a new knowledge management industry that was born out of the few models that were developed in those early days. Today, a group of leading edge companies like Lotus, Open Text, Documentum and others have developed knowledge management tools that enable corporations to manage and deliver strategic knowledge. It is no longer necessary to reinvent the wheel, and since many of the tools available were created for management consulting firms, it is possible to select and integrate a full-featured Knowledge Management System that includes and integrates key components like document management and collaborative software. 1.7 AREAS FOR RESEARCH IN KNOWLEDGE MANAGEMENT Based on differences between how individuals and organizations manage knowledge, let us see several important areas of research in knowledge management for organizations, particularly large organizations. The following table presents the major research topics by each of the four steps of the knowledge management cycle described in the sub section 1.3.4. Table 1.2 Areas of research within each step of the knowledge management cycle. Observation and Analysis

1. 2. 3.

Retrieval and filtering of data/information Enabling access to salient environmental data Sharing organizational goals and objectives

Theory Generation

4. 5. 6.

Elimination of “silo” processing and reinvention Fostering knowledge creation through small teams Reduction of bureaucracy and formal meetings

Testing and Application

7.

Knowledge Consolidation

10. Methods of collective reflection 11. Building trust for the dissemination of knowledge 12. Retaining knowledge when employees leave

Enabling “start to finish” development and deployment 8. Effective measurement of business processes and knowledge assets 9. Management of changing requirements

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Retrieval and filtering of data / information. The rate of data and information in-flow to organizations by way of card-readers, automated telemetry, telephone calls and most notably the Internet is overwhelming. Most company wrestle every day with effective and efficient methods of retrieve data and filtering out the salient information. This is an area where both people skills and technology require improvement. Studies of the relative strengths and weaknesses of systematic approaches to information retrieval and filtering in the workplace would be of benefit. The education of knowledge workers in library science research skills is needed. Intelligent user interfaces that can learn the profile of a user’s interest and filter information based on that profile would greatly facilitate Internet searches. Research into advanced methods of Knowledge Query and Manipulation (KQML) will also facilitate the retrieval of information. Integrated with content management systems and the Internet, these technologies will provide very powerful observation tools.

NOTES

Enabling access to salient environmental data. Although there is much organizational data that is encoded into electronic form for ease of communications and analysis, there is other important information that is not. For example, in hospitals much of the important information on a patient is recorded with pencil on paper; on the manufacturing floor, important data is communicated verbally; and information surrounding important interactions with customers is rarely communicated beyond the sales staff and their managers. Internet, groupware and portal technologies can be used to assist with these problems, however there is a fundament need for cultural change in most organizations that encourages the capture of salient environmental data. Research is required into methods of cultivating cultural change. Sharing organizational goals / objectives. Large organizations suffer greatly from a lack of sharing and caring about organization goals. Clear and repeated communication of company objectives to all employees provides an environment in which knowledge can be better managed. Methods of sharing organizational goals and objectives and bringing them in-line with individual goals are important areas of research. Elimination of “silo” processing and reinvention. Large organizations have traditionally developed “silos” of endeavour because departmental and professional barriers make knowledge management difficult. This leads to competing analysis of environmental data and the generation of tactical business strategies that often conflict when they are executed. The best organizations are composed of “organic” networked teams where knowledge is able to flow freely across disciplines and departmental boundaries. The major problems that must be addressed are dynamic management methods and career development approaches that consider individual and organizational objectives and reward trusting relationships at every opportunity. Fostering knowledge creation through small teams. Work-teams of small numbers of people that share common goals are highly innovative environments. Having 17

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members of an organization move between these groups passing along best-practice methods is very important, yet often disruptive. Sharing knowledge takes time and can cause short-term delays in group performance. Creating an organizational culture that is receptive to personnel movement and knowledge exchange is a challenge. Technologies such as electronic mail, corporate intranets, portals and collaborative software (such as Lotus Notes) can be very helpful in creating and enabling small teams. Research and application of new management methods and technologies is needed. Reduction of bureaucracy and formal meetings. Moving from four levels of management bureaucracy to delegated authority and responsibility has been one of the most difficult transitions for modern organizations. The traditional hierarchy fosters a climate of presentations, proposals and meetings versus strong analysis and decisive action. A healthy knowledge management environment is one in which people wish to share information for the common good and not one in which they must share information in order to proceed with projects or business plans. This having been said, legal and fiscal responsibility requires a formal chain of command within organizations. Resolving this conflict continues to be an important area of research in business administration. Technologies such as message passing, groupware and document management systems can facilitate a more efficiently and effective movement of “paper-work” within the office and across the globe. Standard protocols and languages, such as the eXtensible Markup Language (XML), for interoperation between systems is an active area of research Enabling “start to finish” development and deployment. Too often in large organizations, design engineers or business strategists are not involved in the testing of the final product or the implementation of the tactical operations. This can lead to a false sense of accomplishment on the part of the engineer or strategist and a poor opinion of upper management and technical authority on the part of front-line employees. Methods of feedback between designer and user need to be created that ensure better communication of success and failure with a minimum investment of both parties’ time. Solutions can include people-centered approaches such as education of front line workers, practical job shadowing by designer engineers and the involvement of designers, testers and front-line workers from the start of design to implementation and deployment. Effective measurement of business processes and knowledge assets. Marketing through data mining and customer relationship management is really the first area of business administration outside of finance to widely employ rigorous mathematical methods. This has many management researchers excited about the use of measures and mathematics in other areas. Further work is needed in measuring the quality and value of business processes and intangible knowledge assets. In particular, methods of measuring success due to knowledge creation and knowledge transfer are needed.

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Management of changing requirements. The pressures affecting modern organizations ensure that change will always occur. Tried and proven methods of managing change within projects and product cycles are needed. Project management research has turned to engineering methodologies that have established methods of change management. Innovative new methods of managing projects, products and services have also been developed that take iterative, incremental approaches that can more easily incorporate change (e.g. the Unified Software Development Process used in Software Engineering).

NOTES

Methods of collective reflection. An organization unlike an individual, rarely takes the time to reflect on successes and failures. Surprisingly, when an organization does do so, it is often recognized as a hallmark event; a defining moment in the life of the business. Most typically these events take place off-site, in seclusion and happen at best annually and often only at points of crisis. Why? There must be better ways to regularly reflect on successes and failures and share in the consolidation of new knowledge. Building trust for the dissemination of knowledge. Success factors within most organizations are closely guarded secrets. From an intellectual property perspective this makes a great deal of sense. However, secrets between departments, work-units or project teams within the same organization are counter-productive. Without trust between people there cannot be a productive sharing of information that results in knowledge transfer. The generation of a trusting environment is one that must extend from the top of the organization to the grass roots. Trust building activities such as team social activities, induction programs, job rotation, milestone celebrations, impromptu lunches and face-to-face communications need to be encouraged. Retaining knowledge when employees leave. The loss of organizational knowledge when an employee leaves is a very serious problem. Methods of retaining knowledge can be divided into proactive and reactive categories. Proactive methods include personnel rotation programs, master/apprentice schemes and recording information from internal experts (such as salesmanship techniques). Reactive methods include exit interviews and aftermath peer discussion sessions. Further research is required to find better methods of retaining organizational knowledge. 1.8. KNOWLEDGE ECONOMY For countries in the vanguard of the world economy, the balance between knowledge and resources has shifted so far towards the former that knowledge has become perhaps the most important factor determining the standard of living - more than land, tools and labour. Today’s most technologically advanced economies are truly knowledge-based. For the last two hundred years, neo-classical economics has recognised only two factors of production: labour and capital. Knowledge, productivity, education, and intellectual capital were all regarded as exogenous factors that are, falling outside the system. 19

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New Growth Theory is based on work by Stanford economist Paul Romer and others who have attempted to deal with the causes of long-term growth, something that traditional economic models have had difficulty with. Following from the work of economists such as Joseph Schumpeter, Robert Solow and others, Romer has proposed a change to the neoclassical model by seeing technology (and the knowledge on which it is based) as an intrinsic part of the economic system. Knowledge has become the third factor of production in leading economies. Technology and knowledge are now the key factors of production. Romer’s theory differs from neo-classical economic theory in several important ways: •

Knowledge is the basic form of capital. Economic growth is driven by the accumulation of knowledge.

•

While any given technological breakthrough may seem to be random, Romer considers that new technological developments, rather than having one-off impact, can create technical platforms for further innovations, and that this technical platform effect is a key driver of economic growth.

•

Technology can raise the return on investment, which explains why developed countries can sustain growth and why developing economies, even those with unlimited labour and ample capital, cannot attain growth. Traditional economics predicts that there are diminishing returns on investment. New Growth theorists argue that the non-rivalry and technical platform effects of new technology can lead to increasing rather than diminishing returns on technological investment.

•

Investment can make technology more valuable and vice versa. According to Romer, the virtuous circle that results can raise a country’s growth rate permanently. This goes against traditional economics.

•

Romer argues that earning monopoly rents on discoveries is important in providing an incentive for companies to invest in R&D for technological innovation. Traditional economics sees “perfect competition” as the ideal.

Enhancing human capital is critical for GDP growth. But sustained GDP growth doesn’t just happen. In order to make investments in technology, a country must have sufficient human capital. Human capital is the formal education, training and on-the-job learning embodied in the workforce. Various observers describe today’s global economy as one in transition to a ‘knowledge economy’, or an ‘information society’. But the rules and practices that determined success in the industrial economy of the 20th century need rewriting in an interconnected world where resources such as know-how are more critical than other economic resources. Various management writers have for several years highlighted the role of knowledge or intellectual capital in business. The value of high-tech companies such as software and

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biotechnology companies is not in physical assets as measured by accountants, but in their intangibles such as knowledge and patents. The last few years have a growing recognition by accounting bodies and international agencies that knowledge is a crucial factor of production.

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1.8.1 Background of knowledge economy We are now living in a knowledge economy where the principal economic resource businesses have to offer their customer is knowledge. The nature of work in an organization has changed enormously with the shift from an industrial economy where the focus is production of commercial products to a knowledge economy where the main outcomes are service and expertise. The shift to a knowledge economy has increased the complexity of work activities. Employers have recognized the value of identifying and accessing a diversity of expertise and knowledge from different sources to work on common goals. People increasingly work closely with others to accomplish common goals, particularly if they are working in service areas or are used as sources of expertise by others. The shift to a knowledge economy has also led to increasing concern for building strong interpersonal relationships with others. Many employees spend considerable time interacting with others: collaborating with work colleagues, customers or people in other organizations through face-to-face meetings, online network, emails and many other mechanisms. 1.8.2 What is knowledge economy? The World Bank Institute offers a formal definition of a knowledge economy as one that creates, disseminates, and uses knowledge to enhance its growth and development. The knowledge economy is often taken to mean only high-technology industries or information and communication technologies (ICTs). It would be more appropriate, however, to use the concept more broadly to cover how any economy harness and uses new and existing knowledge to improve the productivity of agriculture, industry, and services and increase overall welfare. A knowledge economy uses data as it raw material and transforms it using technology, analysis tools, and human intelligence into knowledge and expertise. Fig. 1.5 illustrates the main phases of this transformation process.

Fig.1.5 Steps in the Knowledge Creation Process A knowledge-driven economy is one in which the generation and exploitation of knowledge play the predominant part in the creation of wealth. In the industrial era, wealth was created by using machines to replace human labour. Many people associate the 21

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knowledge economy with high-technology industries such as telecommunications and financial services. The term knowledge economy is a relatively new one, commonly used to refer to aspects of the service sector of the economy. This, however, is a restricted view of the term. To a significant extent, the linkages of the operations in the service sector lie in the hardware part. Thus, chips, integrated circuitry, and technology used in biosciences, for instance, are important aspects of knowledge economy. The space occupied by the Information Technology (IT) industry within the content of the term knowledge economy is significantly large, probably due to its being an early starter. However, a certain extent of grayness is associated with the term knowledge economy, primarily because, so far, it has not been adequately defined; nor have its boundaries been drawn with clarity. According to Housel and Bell a knowledge based economy is the one where knowledge is the main source of wealth, growth and employment, with a strong reliance on information technology. In knowledge economy citizens would be working in service industries rather than in manufacturing or agriculture. In knowledge-based economy there is a need to develop a national focus on innovation, research, education and information communication technologies. Further in the knowledge-based economy the shift in focus is from products to services where the greater recognition of the importance of the knowledge held within an organisation is responsible. 1.8.3 Impact of knowledge in the knowledge economy 1. Unlike capital and labour, knowledge strives to be a public good (or what economists call “non-rivalrous”). Once knowledge is discovered and made public, there is zero marginal cost to sharing it with more users. Secondly, the creator of knowledge finds it hard to prevent others from using it. Instruments such as trade secrets protection and patents, copyright, and trademarks provide the creator with some protection. 2. The implication of the knowledge economy is that there is no alternative way to prosperity than to make learning and knowledge-creation of prime importance. There are different kinds of knowledge. “Tacit knowledge” is knowledge gained from experience, rather than that instilled by formal education and training. In the knowledge economy tacit knowledge is as important as formal, codified, structured and explicit knowledge. 3. According to New Growth economics a country’s capacity to take advantage of the knowledge economy depends on how quickly it can become a “learning economy’. Learning means not only using new technologies to access global knowledge, it also means using them to communicate with other people about innovation. In the “learning economy” individuals, firms, and countries will be able to create wealth in proportion to their capacity to learn and share innovation. 22

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1.8.4 Characteristics of knowledge economy The knowledge economy differs from the traditional economy in several key respects:

NOTES

1. The traditional economy is that of scarcity. The economics of knowledge economy is that of abundance. Knowledge is the resource which unlike other resources will not deplete when used. It can be shared and grow through its application. 2. In the knowledge economy the distances will be meaningless and the world will be considered as a global village where using appropriate technology virtual organisations, virtual teams and market places are possible in which operations will be faster than in the traditional economy. 3. In the knowledge economy, it is difficult to apply controls in terms of laws, taxes and barriers in the national level as the businesses become global in nature. 4. In the knowledge economy, the knowledge and information leak may be inevitable where the demand is highest and the barriers are lowest. 5. In the knowledge economy the products which are developed based on knowledge will attract premium price compared to the products with low embedded knowledge or knowledge intensity. 6. Price and value of knowledge depends heavily on context. The same knowledge can have different value to different people at different times. 7. Knowledge when locked into systems or processes has higher inherent value than when it can ‘walk out of the door’ in people’s heads. 8. Human capitals - competencies - are a key component of value in a knowledgebased company, yet few companies report competency levels in annual reports. In contrast, downsizing is often seen as a positive ‘cost cutting’ measure. These characteristics, so different from those of the physical economy, require new thinking and approaches by policy makers, senior executives and knowledge workers alike. To do so, though, requires leadership and risk taking, against the prevailing and slow changing attitudes and practices of existing institutions and business practice. 1.8.5 Key drivers of knowledge economy (a) The Importance of Intellectual Capital Intellectual capital is a firm’s source of competitive advantage. To become knowledge driven, companies must learn how to recognise changes in intellectual capital in the worth of their business and ultimately in their balance sheets. A firm’s intellectual capital employees’ knowledge, brainpower, know-how, and processes, as well as their ability to continuously improve those processes - is a source of competitive advantage. But there is now considerable evidence that the intangible component of the value of high technology and service firms far outweighs the tangible values of its physical assets, such as buildings or equipment. The physical assets of a firm such as Microsoft, for example, are a tiny proportion of its market capitalisation. The difference is its intellectual capital. 23

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(b) The Importance of ICT ICT (Information Communication Technology) releases people’s creative potential and knowledge and are the enablers of change. They do not by themselves create transformations in society. ICT are best regarded as the facilitators of knowledge creation in innovative societies. The new economics looks at ICT not as drivers of change but as tools for releasing the creative potential and knowledge embodied in people. However, the ICT sector has a powerful multiplier effect in the overall economy compared with manufacturing. A 1995 study of the effect of software producer Microsoft on the local economy revealed that each job at Microsoft created 6.7 new jobs in Washington State, whereas a job at Boeing created 3.8 jobs. Wealth-generation is becoming more closely tied to the capacity to add value using ICT products and services. (c) The New Economics of Information The rate of technological change has greatly increased over the past thirty years. Three laws have combined to explain the economics of information. Moore’s Law holds that the maximum processing power of a microchip at a given price doubles roughly every 18 months. In other words, computers become faster, but the price of a given level of computing power halves. Gilder’s Law - the total bandwidth of communication systems will triple every 12 months - describes a similar decline in the unit cost of the net. Metcalfe’s Law holds that the value of a network is proportional to the square of the number of nodes. So, as a network grows, the value of being connected to it grows exponentially, while the cost per user remains the same or even reduces. While Metcalfe’s Law has been applied to the Internet, it is also true of telephone systems. Gordon Moore first formulated Moore’s Law in the early 1970s. There can be no doubt that the cycle of technology development and implementation is accelerating and that we are moving inexorably onward, out of the Industrial Age and into the Information Age. (d) Globalisation ICT open up global markets and foster competition. With the advent of information and communication technologies, the vision of perfect competition is becoming a reality. Consumers can now find out the prices offered by all vendors for any product. New markets have opened up, and prices have dropped. When businesses can deliver their products down a phone line anywhere in the world, twenty-four hours a day, the advantage goes to the firm that has the greatest value-addition, the best-known brand, and the lowest “weight’. Software provides the best example: huge added value through computer code, light “weight” so that it can be delivered anywhere at any time.

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Competition is fostered by the increasing size of the market opened up by these technologies. Products with a high knowledge component generate higher returns and a greater growth potential. Competition and innovation go hand in hand. Products and processes can be swiftly imitated and competitive advantage can be swiftly eroded. Knowledge spreads more quickly, but a firm must be able to innovate more quickly than its competitors in order to compete in the knowledge economy.

NOTES

(e) Brands are critical. Brands strengthen consumers’ trust in nations and their products. In a global marketplace where consumers are overwhelmed by choice, brand recognition assures their trust in both the tangibles and intangibles that a product will deliver. Like intellectual capital, brand equity can be hard to measure yet it may account for a significant proportion of a company’s value. It is intangible in the sense that it often consists of customers’ perceptions of the value they gain from using a product or service rather than any measurable benefit. A nation’s brand can be as important (or more) as the firm’s, and provide extra leverage for whichever firm’s brand is attached to the actual product – Indian tea, Swiss watches, Scotch whisky, German cars, Japanese appliances, New Zealand butter. 1.8.6 Growth of IT industry in the knowledge economy IT industry in India has grown, and has had an impact on various segments of the economy. In addition to being a sunrise revenue-generating industrial sector, the IT industry has established linkages with hardware manufacturing industries thereby giving a fillip to that sector. The IT industry has also made its presence felt on the education sector from where it draws one of its main resources. Further, this industry has helped generate employment potentialities in the economy. The Business Process Outsourcing units are further expected to play a major role in the generation of additional employment. This by no means is a simple contribution. And yet these and other attributes have been emphasised to the extent that the industry has acquired a larger than life image. It is only a short step from here to attribute this industry with pan-economic relevance. As a proxy for the knowledge economy, this industry is often identified as a solution provider for shortcomings in the economy, which is quite far-fetched in the current scenario. The impact of IT is best understood when the differences between industrial and knowledge-intensive ventures are recognised. Industrial growth derives from investments in large-scale infrastructure (such as railways, roadways, power grids and dams). Such infrastructure supports the growth of physical-asset intensive industries (such as the steel and transportation industries) that create and move physical entities (such as goods, water and people). These ventures employ numerous workers with limited education and skills, and can uplift large sections of society.

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In contrast, ventures in the knowledge economy usually involve the production of knowledge-intensive goods (like software), and the large-scale capture, movement and utilisation of information using sophisticated network infrastructure (such as computers, cable, fiber and routers). Beyond the physical labour required for initial construction, building and maintaining such infrastructure requires specialised knowledge. 1.8.7 Implications of knowledge economy The evolving knowledge economy provides critical implications for policy makers of local and national government as well as international agencies and institutions concerned with the growth and development of an economy as well as the businesses concerned with creating knowledge based organization. Following are some of the important implications of knowledge economy. Implications for policy makers 1. Traditional measures of economic success must be supplemented by new ones such as encouraging knowledge based industries with incentives and rewards. 2. Economic development policy should focus not on creation of jobs, but rather on infrastructure for sustainable ‘knowledge enhancement’ that act as an attraction to knowledge-based industries. 3. Development of policies for efficient regulation and taxation for information and knowledge trading at international level as well as looking to future knowledgebased industries rather than traditional industries. 4. Policies to promote collaboration to stimulate market development. 5. Strict policy measures to check information and knowledge frauds and thefts. 6. Wider policy support to knowledge based industries to remove regional imbalances. 7. Recognition and support of local talents to get into knowledge based industries and to prevent brain drain. 8. Policy support to promote education and training to take the challenges of knowledge economy and to promote R&D activities. Implications for business 1. Recognition of the importance of knowledge to the organisational business bottom line. 2. Design and develop new measures of enhancing corporate performance based on knowledge. 3. Systematically enhance learning and knowledge, through new organisational structure and processes that is in tune with the changing global environment. 4. Building a technology infrastructure to enhance knowledge creation and sharing. Example: Hewlett-Packard’s uses an intranet for knowledge sharing throughout the company on a global basis. 26

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5. To foster organisational wide dissemination of knowledge through effective Internet / Intranet technologies and business practices.

NOTES

6. Recognising human contribution to knowledge such research and development, discovery, patents,etc., 7. Many businesses are now realizing the role of knowledge and are creating knowledge management programmes and appointing CKOs (Chief Knowledge Officers). Such responses should be part of a coordinated effort that: a) Recognizes the importance of knowledge to their business bottom line. Example: Buckman Laboratories recognizes the value of solving customer problems by enhancing knowledge flows from their chemical experts direct to the customer interface. b) Develops new measures of corporate performance based on knowledge: Example: Skandia’s supplements annual reports with intellectual capital reports using measures from the Skandia Navigator. c) Encourages the sharing of knowledge through effective Internet settings and business practices: Example: Steelcase designs ‘smart’ working environments and has developed a culture of knowledge sharing. 1.9 INDIA AS A KNOWLEDGE ECONOMY The various experts’ vision is that India will become a leader in the global knowledge economy by 2010. This will be the result of a highly focused effort to achieve global thought leadership in a few select fields that offer the highest potential for Knowledge Process Outsourcing (KPO). Here are some reasons for the optimism: 1. India enjoys unique advantages in having a large pool of English-speaking professionals with degrees in engineering, science or mathematics, who are capable and flexible to learn new skills fast given the right opportunity and reward structure. 2. The Indian Diaspora (diaspora-a dispersion of people originally belonging to one nation) in the United States and the United Kingdom has several among them who have achieved thought leadership in knowledge intensive fields. They are a rich source of domain expertise and can be motivated to help transfer knowledge and expertise to India and nurture a new generation of India-based thought leaders. 3. The entrepreneurial and energetic business community in India has the capacity to step up to this challenge and is capable of working closely with a supportive government to remove barriers that stand in the way of achieving of this vision. 4. Indians are able and willing to learn the necessary analytic and interpersonal skills needed to achieve thought leadership in the knowledge economy. A small minority of the scientists and engineers, primarily those who graduate from the IITs, IIMs and other elite institutes in India, have figured out on their own how to become world-class knowledge workers and thought leaders.

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5. India also has many of the other key ingredients for making itself as knowledge economy such as macroeconomic stability, a dynamic private sector, institutions of a free market economy, a well-developed financial sector, broad & diversified science and technology infrastructure, a well-developed ICT sector, and global provider of software services. KM Viewpoint 1.1 National Knowledge Commission India’s growing population of young people will give the country a demographic advantage over many western countries and possibly even China in the decades to come. As a result, India’s Prime Minister has said India must position itself to “leapfrog in the race for social and economic development” through the formulation of knowledge-oriented focus of development. As a result of this initiative, the National Knowledge Commission (NKC) was established in June 2005. The main objective of the commission will be to take appropriate actions to give India a knowledge advantage to create, apply and disseminate knowledge. This objective is expected to be implemented through the following strategies: • • •

Creation of Knowledge: strengthen education systems, promote research and development in a variety of fields, and partner with foreign sources to expand learning. Application of Knowledge: target health, agriculture, government and industry sectors to balance traditional knowledge, innovation encouragement and revise governance through technology. Dissemination of Knowledge: focus on widespread basic education for all citizens, especially those marginalized groups, create a culture of learning, foster improved literacy, create lifelong opportunities for skill acquirement, improve information and communication technology (ICT) and enhance standards of education through public awareness.

1.10. TECHNOLOGY AND KNOWLEDGE MANAGEMENT Effective knowledge management typically requires an appropriate combination of organisational, social, and managerial along with the deployment of appropriate technology. Technology is a facilitator of knowledge management, a tool to assist individuals and groups in creation, capturing and distribution of knowledge. IT brings in a new revolution in knowledge management, by acting as a catalyst to the organizations knowledge management practices. Technology advances have greatly contributed for the growth of knowledge management although the field has not yet reached full maturity. The capacity to link the many systems and processes in an electronic system has opened up many different possibilities of businesses. Many companies have embraced electronic processing to conduct their basic work activities through newer technologies such as e-workplace, e-commerce 28

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and e-community. These reflect a shift in orientation from working with papers to the use of an electronic interface to perform organizational activities. Knowledge management has flourished as the technological systems have increased in robustness, reliability and costeffectiveness.

NOTES

Historically, there have been a number of technologies ‘enabling’ or facilitating knowledge management practices in the organization, including expert systems, knowledge bases, various types of Information Management, intranets, groupware, search and retrieval engines, software help desk tools, document management systems and other IT systems supporting organizational knowledge flows. The advent of the Internet brought with it further enabling technologies, including elearning, web conferencing, collaborative software, content management systems, corporate ‘Yellow pages’ directories, email lists, wikis, blogs, and other technologies. Each enabling technology can expand the level of inquiry available to an employee, while providing a platform to achieve specific goals or actions. The practice of KM will continue to evolve with the growth of collaboration applications, visual tools and other technologies. Since its adoption by the mainstream population and business community, the Internet has led to an increase in creative collaboration, learning and research, e-commerce, and instant information. Knowledge management does have a very strong technology components attached to it. Knowledge management is strategic management and hence it requires that the top management fully exploit the opportunities given by information technology for business purposes. 1.10.1. Electronic technology for transferring knowledge The availability of the World Wide Web has been instrumental in catalyzing the knowledge management movement. Information technology may, if well resourced and implemented, provide a comprehensive knowledge base that is speedily accessed, interactive, and of immediate value to the user. However there are also many examples of systems that are neither quick, easy-to-use, problem free in operation, or easy to maintain. The Web, for example, frequently creates information overload. The development of tools that support knowledge sharing in an appropriate and user-friendly way, particularly in organization-wide knowledge sharing programs, is not a trivial task. Most of the technological tools now available tend to help dissemination of knowhow, but offer less assistance for knowledge use. Tools that assist in knowledge creation are even less well developed, although collaborative workspaces offer promising opportunities, by enabling participation, across time and distance, in project design or knowledge-base development, so that those most knowledgeable about development problems — the people living them on a day-to-day basis – can actively contribute to their 29

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solution. Some of the more user-friendly technologies are the traditional ones — face-toface discussions, the telephone, electronic mail, and paper-based tools such as flip charts. Among the issues that need to be considered in providing information technology for knowledge sharing programs are: 1. Responsiveness to user needs: continuous efforts must be made to ensure that the information technology in use meets the varied and changing needs of users. 2. Content structure: in large systems, classification and cataloguing become important so that items can be easily found and quickly retrieved. 3. Content quality requirements: standards for admitting new content into the system need to be established and met to ensure operational relevance and high value. 4. Integration with existing systems: since most knowledge sharing programs aim at embedding knowledge sharing in the work of staff as seamlessly as possible, it is key to integrate knowledge-related technology with preexisting technology choices. 5. Scalability: solutions that seem to work well in small groups (e.g. HTML web sites) may not be appropriate for extrapolation organization-wide or on a global basis. 6. Hardware-software compatibility is important to ensure that choices are made that are compatible with the bandwidth and computing capacity available to users. 7. Synchronization of technology with the capabilities of users is important so as to take full advantage of the potential of the tools, particularly where the technology skills of users differ widely. Knowledge sharing programs that focus on the simultaneous improvement of the whole system, both technology tools and human practices, are likely to be more successful than programs that focus on one or the other. One of the major risks in knowledge management programs is the tendency for organizations to confuse knowledge management with some form of technology, whether it is Lotus Notes, the World Wide Web, or one of the off-the-shelf technology tools that are now proliferating. In the process, the essentially ecological concept of knowledge management becomes degraded into a simple information system that can be engineered without affecting the way the work is done. It is not that information systems are bad. Rather, it is important to recognize that knowledge management is a different and better way of working which affects people, and requires social arrangements like communities to enable it to happen on any consistent and sustained basis.

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KM Viewpoint 1.4 KA Technology for KM at Rolls-Royce Rolls-Royce plc is one of the world’s leading organisations in the design, development and manufacture of jet engines and also a leading industrial partner in SPEDE. The company identified the relevance of early findings from SPEDE to its own KM programme and embarked upon a bilateral programme with the University of Nottingham to exploit KA techniques for the rapid development of components of the Rolls-Royce Capability Intranet. Rolls-Royce’s Capability Intranet is intended to become the company’s quality system, providing quick and easy access to all the latest information needed by staff in order to complete tasks accurately and reliably including the capture of lessons learned and evolving best practices. The scope of the Capability Intranet spans business processes, manufacturing processes, product definitions, technical skills and training. It includes quality manuals, working practices, information about technologies and capabilities and specific examples of good (and bad) practice based on real case examples. A technology transfer programme was conceived in early 1998 whereby established KA tools and techniques could be applied and evaluated within the context of developing knowledge-rich web sites for the Rolls-Royce Capability Intranet. The programme has involved a series of coached projects, typically comprising two company employees on secondment to a special facility based at the University of Nottingham for a period of twelve weeks. Sixteen groups have passed through the facility over the past year amounting to thirty-eight Rolls-Royce employees. At the moment, a total of twelve Rolls-Royce employees are on the programme, though this is expected to rise significantly over the next year as personnel and facilities are expanded.

1.10.2. Information Technology for Knowledge Management There is an ongoing lively debate about the role that information technology can play for knowledge management. On the one hand, information technology is used pervasively in organizations, and thus qualifies as a natural medium for the flow of knowledge. A recent study from the American Productivity and Quality Center shows that organizations embarking in knowledge management efforts generally rely, for accomplishing their goals, on the setting up of a suitable IT infrastructure. At the other end of the spectrum, leading knowledge management theorists have warned about the attitude that drives management towards strong investments in IT, possibly at the expense of investments in human capital. The danger that this viewpoint sees is that IT-driven knowledge management strategies may end up objectifying and calcifying knowledge into static, inert information, thus disregarding altogether the role of tacit knowledge. Knowledge management strategies of this type would bring back the ghost of the infamous, and none too far in time, re-engineering days, when the corporate motto was “More IT, less people!”; they conjure grim scenarios of organizations with enough memory to remember everything and not enough intelligence to do anything with it.

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Part of the problem here derives from a linguistic ambiguity: nowadays information technologies are as much about creating direct connections among people through such applications as electronic mail, chat-rooms, video-conferencing and other types of groupware as they are about storing information in databases and other types of repositories. As for information databases, they can also be fruitfully re-thought, in a knowledge management perspective, as resources for the sharing of best practices and for preserving the intellectual capital of organizations. Generally speaking, investments in IT seem to be unavoidable in order to scale up knowledge management projects. The best way of applying information technology to knowledge management is probably a combination of two factors: on the one hand, the awareness of the limits of information technology, and of the fact that any IT deployment will not achieve much, if it is not accompanied by a global cultural change toward knowledge values; on the other hand, the availability of information technologies that have been expressly designed with knowledge management in view. 1.10.3. Knowledge Management Technologies The early Knowledge Management technologies were online corporate yellow pages (expertise locators) and document management systems. Combined with the early development of collaborative technologies (in particular Lotus Notes), KM technologies expanded in the mid 1990s. Subsequently it followed developments in technology in use in Information Management. In particular the use of semantic technologies for search and retrieval and the development of knowledge management specific tools such as those for communities of practice. More recently social computing tools (such as blogs and wikis) have developed to provide a more unstructured, self-governing approach to the transfer, capture and creation of knowledge through the development of new forms of community, network or matrix. However, such tools for the most part are still based on text and code, and thus represent explicit knowledge transfer. These tools face challenges in distilling meaningful re-usable knowledge and intelligible information and ensuring that their content is transmissible through diverse channels, platforms and forums. Let us briefly understand the some of the technologies that are currently associated with the field of knowledge management: Some Key Technologies are as follows: The impact of each technology varies enormously from situation to situation. Several technologies recur in many knowledge management programs, partly because they are generic and pervade many core activities and processes. Let us briefly review some of the main technologies used in KM programs. (a) Intranet, Internet The ubiquitous Internet protocols make it easy for users to access “any information, any where, at any time”. Further, browsers and client software can act as front-ends to 32

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information in many formats and many of the other knowledge tools such as document management or decision support. Remember too, that the basic functions of email, discussion lists and private newsgroups often have the biggest short term impact.

NOTES

KM Viewpoint 1.5 Booz Allen & Hamilton’s Knowledge Online is an Intranet that provides a wealth of information (e.g. best practice, industry trends, database of experts) to their consultants world-wide. Through active information management by knowledge editors (subject experts and librarians) the information remains well structured and relevant. (b) Groupware - Lotus Notes What groupware products like Lotus Notes add over and above Intranets are discussion databases. Users such as Thomas Miller, a London based manager of insurance mutuals, access their ‘organizational memory’, as well as current news feeds in areas of interest, through one of Lotus’s key features, its multiple ‘views’. When writing new insurance proposals, existing explicit knowledge can be assembled from the archive, guided by expert systems front-end, while tacit knowledge is added through discussion databases. (c) Intelligent Agents The problem of information overload is becoming acute for many professionals. Intelligent agents can be trained to roam networks to select and alert users of new relevant information. Additionally they can be used to filter out less relevant information from information feeds. However, in practice it seems that a well run knowledge center, such as those at Price Waterhouse, the best intelligent agent is still a human being! A related technology is that of text summarizing, which British Telecom have found can summarize large documents, retaining over 90 per cent of the relevant meaning with less than a quarter of the original text. (d) Mapping Tools There are an increasing number of tools, such as COPE and IDONS, that help individuals and teams develop cognitive maps or ‘shared mental models’. These have been used by companies such as Shell to develop future scenarios and resolve conflicting stakeholder requirements. In addition, other mapping tools, such as those found in Knowledge X, can represent conceptual linkages between different source documents. (e) Document Management Documents, and especially structured documents, are the form in which much explicit knowledge is shared. With annotation and redlining facilities, they can become active

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knowledge repositories, where the latest version and thinking is readily shared amongst project eams. KM Viewpoint 1.6 By using a document management system for the construction of the Thelma North Sea oil platform, AGIP reduced construction time by 9 months and reduced document handling costs by 60 per cent. Suppliers like Dataware are repositioning their products as knowledge management products and are also adding ‘knowledge enriching’ functionality.

(f) Expert systems Knowledge-based expert systems, or simply expert systems, use human knowledge to solve problems that normally would require human intelligence. These expert systems represent the expertise knowledge as data or rules within the computer. These rules and data can be called upon when needed to solve problems. Books and manuals have a tremendous amount of knowledge but a human has to read and interpret the knowledge for it to be used. Conventional computer programs perform tasks using conventional decision-making logic — containing little knowledge other than the basic algorithm for solving that specific problem and the necessary boundary conditions. This program knowledge is often embedded as part of the programming code, so that as the knowledge changes, the program has to be changed and then rebuilt. Knowledge-based systems collect the small fragments of human know-how into a knowledge-base which is used to reason through a problem, using the knowledge that is appropriate. A different problem, within the domain of the knowledge-base, can be solved using the same program without reprogramming. The ability of these systems to explain the reasoning process through back-traces and to handle levels of confidence and uncertainty provides an additional feature that conventional programming doesn’t handle. KM Viewpoint 1.7 Most expert systems are developed via specialized software tools called shells. These shells come equipped with an inference mechanism (backward chaining, forward chaining, or both), and require knowledge to be entered according to a specified format. They typically come with a number of other features, such as tools for writing hypertext, for constructing friendly user interfaces, for manipulating lists, strings, and objects, and for interfacing with external programs and databases. These shells qualify as languages, although certainly with a narrower range of application than most programming languages.

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(g) Knowledge base A knowledge base is a centralized repository for information: a public library, and a database of related information about a particular subject. In relation to information technology a knowledge base is a machine-readable resource for the dissemination of information, generally online or with the capacity to be put online. An integral component of knowledge management systems, a knowledge base is used to optimize information collection, organization, and retrieval for an organization, or for the general public.

NOTES

A well-organized knowledge base can save enterprise money by decreasing the amount of employee time spent trying to find information about - among myriad possibilities - tax laws or company policies and procedures. As a customer relationship management (CRM) tool, a knowledge base can give customers easy access to information that would otherwise require contact with an organization’s staff; as a rule, this capacity should make the interaction simpler for both the customer and the organization. A number of software applications are available that allow users to create their own knowledge bases, either separately (these are usually called knowledge management software) or as part of another application, such as a CRM package. In general, a knowledge base is not a static collection of information, but a dynamic resource that may itself have the capacity to learn, as part of an artificial intelligence (AI) expert system, for example. According to the World Wide Web Consortium (W3C), in the future the Internet may become a vast and complex global knowledge base known as the Semantic Web. (h) Artificial intelligence technology. AI is providing key components in a variety of KM applications. Closely related domains include informatics, applied informatics, knowledgebase management systems, and qualitative analysis. (i) Case-based reasoning systems. CBR systems solve new problems by adapting previously successful solutions to similar problems. Meeting customer-support requirements is just one of the applications. (j) Competitive intelligence applications. Collecting, analyzing, and communicating the best available information about technological trends and developments outside a company’s walls is the purpose of competitive technical intelligence. It is sometimes referred to as competitive analysis or competitive intelligence. (k) Corporate portals and knowledge portals. It is concerned with gathering the information resources of an organization into a centralized resource. Full-text retrieval and various kinds of taxonomies are applied to provide access to the information. Related terms: corporate portals, knowledge portals, business intelligence, digital dashboards. (l) Data mining. Many large companies — for example, pharmaceutical and chemical corporations — have major intellectual assets buried in their paper and electronic files. Extracting them isn’t easy. Related terms: knowledge discovery and automatic discovery. 35

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(m) Groupware and artifact-based collaboration. The term artifact-based collaboration is often used to describe products like Lotus Notes, because the collaborative activity centers on an artifact — for example, a document authored by many people. See also, Computer-supported collaborative work. Groupware also includes computer applications for organizing meetings and supporting interactions and group decision-making processes-without a substantial shared artifact. (n) Decision-support systems. Decision-support systems incorporate insights from cognitive science, management science, computer science, operations research, and systems engineering both in order to produce computerized artifacts for helping knowledge workers in their performance of cognitive tasks, and to integrate such artifacts within the decisionmaking processes of modern organisations.” (o) Content management and document management. Although document management systems have been with us for many years, many original DM products have been recast as content management systems, whose primary function is to manage the data that goes into corporate Internet and intranet (and extranet) sites. (p) Customer relationship management. Customer Relationship Management (CRM) strategies have been around since the first bazaar, but products designed to automate CRM efforts are among today’s hottest new computer applications. Companies are rushing to automate and better manage all the ways they deal with customers, including people who might not consider themselves customers yet. (q) Customer-support technology. Help desk systems and customer-support systems are designed to reduce the heavy labor costs imposed by demands for information from users of increasingly complex products and improve timeliness and quality of support. “Customers” may be internal or external clients. (r)Performance-support systems and distance-learning technology. Performancesupport systems (PSS) and “eLearning” are designed to reduce the skyrocketing costs of classroom training in specific skills while addressing the problems caused by the rapid pace of change. By the time a classroom training program is designed, it is usually out of date. (s) Hypertext technology. A more recent development or, perhaps more accurately, a return to interest in “hypertext” as a method of representing and providing access to critical organizational knowledge is reflected in the Topic Map standard (ISO/IEC 13250) and in Tim Berners-Lee’s Semantic Web effort. Both are XML-based and are seeking common ground. (This is not the simple Web hypertext model, but the richer, often proprietary hypertext models that preceded the World Wide Web. The HyTime standard on which the Topic Map standard is based grew in part out of a need for creating a common ground among the hundreds of unique hypertext systems.) 36

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(t) Semantic networks. A semantic network is a method of representing knowledge often used for critical analysis of literary texts. Similar to hypertext technologies in some ways, but with emphasis on typed links among concepts.

NOTES

1.11 KNOWLEDGE MANAGEMENT MATRIX Knowledge Matrix helps in identifying different islands of knowledge to create a Knowledge Management database/data warehouse. The author has referred the following Knowledge Matrix to enable organizations to uncover various sources of knowledge in order to provide knowledge services to both internal and external customers. Please see next page for the Knowledge Matrix External Customers Feedback reports Questionnaires on quality & service Customer profiling Payment history Customer meetings and visits Annual reports & Financial analysis Contact Analysis Customer Newsletter Suppliers Performance history Product catalog Vendor meetings/seminars Annual reports & Financial analysis Internal Employees Knowledge on products/services Technical expertise & Reusable components Best practices from previous projects Learning from previous assignments Vertical industry experience

External Sales and marketing processes Lead-time Information Billing procedures Internal Logistics - Procurement & Inventory Quality processes HR processes Financial processes Lead time information for all the processes Six-sigma processes Project Execution Methodologies Security policies: Network, data and personnel Manufacturing processes

KM Database External Customer feedback reports Product successes Product failures Competitive forces Customer meetings Internal Tools information - various tools developed for different purposes Best things and worst things Postmortem reports

External Demographics Legal policies: Customs & Tax information Competitor analysis Road shows/Meetings/Conferences Research Publications Customers care policies Customer promotions Corporate Vision and Culture Articles/quotes on the organization appeared in trade magazines Internal R&D - Research Publications Learning from projects execution Brand equity information Organization structure & Who's who of the organization? Quality: SEI,ISO, PCMM Project Postmortem reports Induction programs Networking with professional organizations Idea generation/sharing session

Figure 1.6 Knowledge Matrix

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1.12 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. Knowledge management strategy is termed as an approach undertaken by an organization to use its information and knowledge resources for building competitive strength and sustainable growth for realizing that pursuing KM strategy can enable it to dramatically reduce cycle time and costs, increase sales, and to meet the customer needs. However, KM as business strategy will only succeed when certain fundamental requirements are employed. The human resource elements, information technology and information incorporated into the strategic business processes, must all be tightly incorporated into the management and working culture of the organization. It is only by this kind of synthesis of the knowledge management components that creates the organizational ability to exploit the total information and knowledge potentials of the organization. 1.12.1 The Need for KM strategy 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. Beyond these typical situations, each organisation will have unique issues and problems to be overcome. (a) Call Centers Call centers 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 centers, including high-pressure, closely-monitored environment, high staff turnover, costly and lengthy training for new staff. 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. (b) Front-line staff Beyond the call center, many organisations have a wide range of front-line staff who interacts 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, this front-line staffs 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

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challenge in the front-line environment is to ensure consistency, accuracy and repeatability. KM facilitates this function.

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(c) Business managers The volume of information available to business management has increased greatly. Known as ‘information overload’, 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. (d) Aging workforce 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 is to be maintained. Long-serving staff has 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 retires. (e) Supporting innovations 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, biotechnology 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. There has been considerable work in the knowledge management field regarding the process of innovation, and how to nurture it in a business environment. 1.12.2 Development of organisational KM strategies The commonly employed strategy is to design and develop systems and practices to obtain, organize, restructure, warehouse or memorize and distribute knowledge. This strategy enables organizations to dramatically reduce cycle time and costs, increases sales and effectively brings the knowledge of the organization to bear on customer needs. An approach, based on this strategy, results in improvement operations or to develop and

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deliver products and services tailored to the market requirements. Building of teams, relationships and networks forms the basis for effective transfer, besides approaches of encouraging collaborative knowledge transfer. Many organizations especially those in the service industry adopt a strategy with strong focus on their customer. This customer-focused knowledge strategy is directed towards capturing, developing and transferring knowledge and understanding of customers’ diverse needs, preferences, and businesses. These efforts bring about a significant improvement in sales and use the collective knowledge of the organisation to solve customer problems. This strategy recognizes and facilitates learning from customers and understand their needs better and development of effective solutions to take them. By establishing personal responsibility for knowledge, organizations are recognizing that individuals must be supported and made accountable for identifying, maintaining, and expanding their own knowledge as well as renewing and sharing their knowledge assets. Companies are now realizing the value of each knowledgeable and capable employee and recognize the key fact that the development of their skills lay with employee themselves and not with the organization. Some firms building incentives into their appraisal system and offering other motivators to encourage the development of a knowledge-intensive culture. Another important strategy revolves around leveraging assets such as patents, technologies, operational and management practices, customer relations, organizational arrangements, and other structural knowledge assets and concentrates on renewing, organizing, valuing, safekeeping, increasing availability of, and marketing these assets. The final strategy, innovation and knowledge creation emphasizes the creation of new knowledge through basic and applied research and development. Organisations adopting these strategies need to ascend the knowledge spiral and continually discover new and better ways of functioning and innovating. They recognize that innovation is central to growth and that unique knowledge and expertise enhances their competitive value in the marketplace. 1.13 PRIORITIZING KNOWLEDGE STRATEGIES Effective knowledge management is of vital importance for any enterprise with a quest to ensure viability and survival. Enterprises need to develop a KM strategy which impinges on all areas of the organization and requires a corporate approach to make it work. Knowledge strategy designs an organisation’s future based on using knowledge effectively. Knowledge strategy starts with the notion that an organisation’s business strategy should guide its planning for knowledge management. Therefore, knowledge strategy

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follows business strategy. The first activity in knowledge strategy is understanding the current business strategy then progressing that strategy as the basis for organizational analysis.

NOTES

The knowledge strategy should clearly articulate why the organization should share its know-how, what the organization will share, with whom the organization will share and how the organization will share. A knowledge strategy should start from existing strategies, plans and modus operandi of an organization. It should explicitly identify specific areas of inefficiency – lost opportunities, or costly mistakes – where a good KM practice would improve productivity and minimize risks. It should seek to support people throughout the organization in performing their daily tasks efficiently and effectively. It should identify how knowledge can create new opportunities – in innovative customer solutions, in business processes or in new product and services. A four-phased approach for prioritizing the knowledge strategy and moving projects forward are as follows: 1. Envisioning business strategy: Identifying and developing a business strategy and linking initial knowledge needs to the strategy. This phase uses strategy workshops, SWOT analyses and scenario planning sessions to develop the initial strategy. 2. Knowledge valuation: Analysing the current state of the organization, diagnosing strategic gaps, evaluating the learning rate and assessing cultural issues. This phase delivers an organizational assessment and gap analysis. 3. Creating knowledge strategy: This phase analyses impacts and develops strategies for addressing gaps and redesigning processes. Strategic gaps are prioritized and action plan developed and knowledge resources and practices are aligned to the strategy. 4. Knowledge path building: This phase establishes plans and designs for building a knowledge architecture to support full organizational participation. This phase coordinates plans, people and information resources to integrate the knowledge strategy into organizations, systems, product lines and business processes. 1.14 KNOWLEDGE AS A STRATEGIC ASSET Business organizations are coming to view knowledge as their most valuable and strategic asset, and bringing that knowledge to bear on problems and opportunities as their most important capability. They are realizing that to remain competitive they must explicitly manage their intellectual assets and capabilities. Today, knowledge is considered as the most strategically important asset for every business organizations. Having unique access to valuable assets in an organisation is one way to create competitive advantage, in some cases either this may not be possible, or competitors may imitate or develop substitutes for those assets. Companies having superior knowledge, however, are able to coordinate and 41

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combine their traditional assets and capabilities in new and distinctive ways, providing more value for their customers than can their competitors. That is, by having superior intellectual assets, an organization can understand how to exploit and develop their traditional assets better than competitors, even if some or all of those traditional assets are not unique. Therefore, knowledge can be considered as the most important strategic asset, and the ability to acquire, integrate, store, share and apply it has become the most important capability for building and sustaining competitive advantage by any organisation. The broadest value proposition, then, for engaging in knowledge management is that it can enhance the organization’s fundamental ability to compete. What is it about knowledge that makes the advantage sustainable? Knowledge, especially context-specific, tacit knowledge embedded in complex organizational routines and developed from experience, tends to be unique and difficult to imitate. And unlike many traditional assets, it is not easily purchased in the marketplace in a ready-to-use form. To acquire similar knowledge, competitors have to engage in similar experiences. However, acquiring knowledge through experience takes time, and competitors are limited in how much they can accelerate their learning merely through greater investment. Knowledge-based competitive advantage is also sustainable because the more a firm already knows, the more it can learn. Learning opportunities for an organization that already has a knowledge advantage may be more valuable than for competitors having similar learning opportunities but starting off knowing less. Sustainability may also come from an organization already knowing something that uniquely complements newly acquired knowledge, providing an opportunity for knowledge synergy not available to its competitors. New knowledge is integrated with existing knowledge to develop unique insights and create even more valuable knowledge. Organizations should therefore seek areas of learning and experimentation that can potentially add value to their existing knowledge via synergistic combination. Sustainability of a knowledge advantage, then, comes from knowing more about some things than competitors, combined with the time constraints faced by competitors in acquiring similar knowledge, regardless of how much they invest to catch up. This represents what economists call increasing returns. Unlike traditional physical goods that are consumed as they are used, providing decreasing returns over time, knowledge provides increasing returns as it is used. The more it is used, the more valuable it becomes, creating a self-reinforcing cycle. If an organization can identify areas where its knowledge leads the competition, and if that unique knowledge can be applied profitably in the marketplace, it can represent a powerful and sustainable competitive advantage. Organizations should strive to use their learning experiences to build on or complement knowledge positions that provide a current or future competitive advantage. Systematically mapping, categorizing and benchmarking organizational knowledge not only can help make 42

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knowledge more accessible throughout an organization, but by using a knowledge map to prioritize and focus its learning experiences, an organization can create greater leverage for its learning efforts. It can combine its learning experiences into a “critical learning mass” around particular strategic areas of knowledge.

NOTES

While a knowledge advantage may be sustainable, building a defensible competitive knowledge position internally is a long-term effort requiring foresight and planning as well as luck. Longer lead time explains the attraction of strategic alliances and other forms of external ventures as potentially quicker means for gaining access to knowledge. It also explains why the strategic threat from technological discontinuity tends to come from firms outside of or peripheral to an industry. New entrants often enjoy a knowledge base different than that of incumbents, and which can be applied to the products and services of the industry under attack. This has been especially evident in industries where analog products are giving way to digital equivalents. The strategic challenge is to develop sufficient knowledge to support a shift to those new technologies and markets before non-traditional competitors make significant inroads in those markets, while not abandoning its years of experience and knowledge about physical imaging that is supporting its core business. This long learning lead-time or “knowledge friction” highlights the importance of benchmarking and evaluating the strengths, weaknesses, opportunities and threats of an organization’s current knowledge platform and position, as this knowledge provides the primary opportunity from which to compete and grow over the near-to-intermediate term. This must, in turn, be balanced against the organization’s long term plans for developing its knowledge platform. Knowledge is not static and what is innovative knowledge today will ultimately become the core knowledge of tomorrow. Thus defending and growing a competitive position based on strategic knowledge asset requires continual learning and knowledge acquisition. The ability of an organization to learn, accumulate knowledge from its experiences, and reapply that knowledge is itself a skill or competence that, beyond the core competencies directly related to delivering its product or service, may provide strategic advantage. 1.14.1 Asset Value of Knowledge How valuable is knowledge? The value is in the eyes of the beholder - opinions vary widely. However, there are several directions you can approach this from: Market value: what is specific knowledge assets worth on the open market e.g. a team of experts, a customer database, and a license for a patent? Cost: how much does it cost to train a new hire? How many person-days went into developing your intranet content? 43

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Replacement cost: if you had a disaster (a team leaving, your computer records destroyed), what would it cost today to get back to where you started? Liability cost: how exposed are you to legal liability e.g. for product traceability, for long overlooked terms in extant contracts? Many organizations do not have a handle on the value of their assets. They spend a fortune monitoring and accounting for physical assets; yet ignore those assets - that according to most surveys - are worth 5-10 time more than the assets recorded on the company’s balance sheet. Knowledge aware organizations consider human capital as an asset. It is one several components of intellectual capital - others are customer capital, structural capital and intellectual property. Benefits Potential For most organizations the real value of knowledge management is in the benefits it brings to the bottom line. These benefits range from increased knowledge worker productivity, to faster time-to-market for new products, to better customer service. Typically the benefits fall into the following categories: Information and knowledge benefits - retrieving vital information faster, gaining access to expertise, having all the required information accessible in one pace (e.g. through a portal) Intermediate benefits - minimizing duplication, sharing knowledge across organizational boundaries, getting new hire up to speed faster Organizational benefits - reducing costs, increasing productivity, growing asset valuation, innovation Customer and stakeholder benefits - better products and services, higher quality, better value. SUMMARY Knowledge management, as it is practiced today, is a system of technologies focused upon the delivery of strategically useful knowledge and expertise, the availability of which facilitates effective collaboration and timely decision-making. The major objectives of KM are creating knowledge repositories, improving knowledge access, enhancing the knowledge environment and managing knowledge as an asset. Effective knowledge management typically requires an appropriate combination of organisational, social, and managerial along with the deployment of appropriate technology. Technology is a facilitator of knowledge management, a tool to assist individuals and groups in creation, capturing and distribution of knowledge.

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Technology and knowledge are now the key factors of production. Various observers describe today’s global economy as one in transition to a ‘knowledge economy’, or an ‘information society’. The knowledge economy usually involve the production of knowledge-intensive goods (like software), and the large-scale capture, movement and utilisation of information using sophisticated network infrastructure (such as computers, cable, fiber and routers).

NOTES

The various experts’ vision is that India will become a leader in the global knowledge economy by 2010. This will be the result of a highly focused effort to achieve global thought leadership in a few select fields that offer the highest potential for Knowledge Process Outsourcing (KPO). Effective knowledge management typically requires an appropriate combination of organisational, social, and managerial along with the deployment of appropriate technology. Technology is a facilitator of knowledge management, a tool to assist individuals and groups in creation, capturing and distribution of knowledge. Knowledge management strategy is termed as an approach undertaken by an organization to use its information and knowledge resources for building competitive strength and sustainable growth for realizing that pursuing KM strategy can enable it to dramatically reduce cycle time and costs, increase sales, and to meet the customer needs. Effective knowledge management is of vital importance for any enterprise with a quest to ensure viability and survival. Enterprises need to develop a KM strategy which impinges on all areas of the organization and requires a corporate approach to make it work. Knowledge strategy designs an organisation’s future based on using knowledge effectively. Knowledge strategy starts with the notion that an organisation’s business strategy should guide its planning for knowledge management. Therefore, knowledge strategy follows business strategy. The first activity in knowledge strategy is understanding the current business strategy then progressing that strategy as the basis for organizational analysis. Business organizations are coming to view knowledge as their most valuable and strategic asset, and bringing that knowledge to bear on problems and opportunities as their most important capability. They are realizing that to remain competitive they must explicitly manage their intellectual assets and capabilities. SHORT QUESTIONS 1. 2. 3. 4.

Define ‘knowledge management’. What is intellectual capital? What are the components of knowledge cycle? List down the domains of knowledge management. 45

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5. Define ‘knowledge economy’. 6. What is groupware? 7. Distinguish between knowledge management and expert system. 8. Mention the difference between knowledge portal and corporate portal? 9. What is semantic network? 10. What do you understand by the word knowledge management matrix? LONG QUESTIONS 1. List down and explain the various objectives of knowledge management. 2. What is the need for KM initiation in today’s context in an organization? 3. Explain the KM cycle with an example. 4. List out the uses of KM for an organization. 5. Trace the history and evolution of knowledge management. 6. Compare ‘industrial economy’ with ‘knowledge economy’. 7. What are the characteristics of knowledge economy? 8. What are the implications of knowledge economy to business and policy makers? 9. Analyse the chances of India becoming world’s leading knowledge economy. 10. Explain the various key technologies needed for the KM programs? 11. Why KM strategy is the need of the hour in today’s competitive environment? 12. Explain the four-phased approach for prioritizing the knowledge strategy. 13. “Knowledge is considered as the most important strategic assets” Do you agree? Why?

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UNIT II

KNOWLEDGE ACQUISITION AND PROCESSING 2.1 INTRODUCTION The ability to manage knowledge is becoming increasingly more crucial in today’s knowledge economy. Knowledge is regarded as valuable commodity that is embedded in products, and in the tacit knowledge of highly mobile employees. The acquisition, creation, processing and dissemination of knowledge have become important for competitiveness in an organization. This chapter deals with the various facets of knowledge by elaborating its meaning, attributes, formation, types as well as its sources, conversion and diffusion. 2.2 LEARNING OBJECTIVES After studying this Unit, you should be able to understand the following: • • • • • •

Outline the meaning and forms of knowledge and its attributes Overview the knowledge formation in an organization What is organizational knowledge? Compare the differences between tacit and explicit knowledge Identify the various sources of knowledge Describe the different phases of knowledge development

2.3 PERSPECTIVES ON KNOWLEDGE Unlike capital and labour, knowledge strives to be a public good. Once knowledge is discovered and made public, there is zero marginal cost to sharing it with others. Secondly, the creator of knowledge finds it hard to prevent others from using it. Instruments such as trade secrets protection and patents, copyright, and trademarks provide the creator with some protection. There are different kinds of knowledge that can usefully be distinguished. Knowwhat, or knowledge about facts, is nowadays diminishing in relevance. Know-why is knowledge about the natural world, society, and the human mind. Know-who refers to the world of social relations and is knowledge of who knows what and who can do what. 47

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Knowing key people is sometimes more important to innovation than knowing scientific principles. Know-where and know-when are becoming increasingly important in a flexible and dynamic economy. Know-how refers to skills, the ability to do things on a practical level. The implication of the knowledge economy is that there is no alternative way to prosperity than to make learning and knowledge-creation of prime importance. There are different kinds of knowledge. “Tacit knowledge” is knowledge gained from experience, rather than that instilled by formal education and training. In the knowledge economy tacit knowledge is as important as formal, codified, structured and explicit knowledge. A country’s capacity to take advantage of the knowledge economy depends on how quickly it can become a “learning economy’. Learning means not only using new technologies to access global knowledge, it also means using them to communicate with other people about innovation. In the “learning economy” individuals, firms, and countries will be able to create wealth in proportion to their capacity to learn and share innovation. At the level of the organisation learning must be continuous. Organisational learning is the process by which organisations acquire tacit knowledge and experience. Such knowledge is unlikely to be available in codified form, so it cannot be acquired by formal education and training. Instead it requires a continuous cycle of discovery, dissemination, and the emergence of shared understandings. Successful firms are giving priority to the need to build a “learning capacity” within the organisation. 2.3.1 Data, Information and Knowledge Before we understand what knowledge means, let us understand the knowledge hierarchy. In common parlance, it is often referred to as DIKW hierarchy. The four levels that we deal with are data, information, knowledge, and wisdom. Data may be regarded as a commodity, value is added to data when they are processed into information and in turn information gains further value when it is applied in new contexts becoming transformed into enterprise specific knowledge. Knowledge is also defined as information to which experience, context, interpretation and reflection are added by individuals so that it becomes a high value form of information. In these circumstances knowledge can be utilized in novel ways - making predictions, for example – thereafter being retained within the organization as organizational knowledge. Contextualized knowledge is regarded as the outcome, or product, of a learning process, because it becomes owned as organizational, such knowledge is sticky in the sense that it is both localized and contextualized. And thus it is argued that organizational knowledge is socially constructed because its added value derives from an intra-organizational social process – the process of sharing. Information gains further value when it is used in new contexts and is transformed into enterprise specific knowledge in the process. 48

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Figure 1.1 The Continuum of Understanding One gains knowledge through context (experiences) and understanding. When one has context, one can weave the various relationships of the experiences. The greater the context, the greater the variety of experiences that one is able to pull from. The greater one understands the subject matter, the more one is able to weave past experiences (context) into new knowledge by absorbing, doing, interacting, and reflecting. Thus, understanding is a continuum: Data comes about through research, creation, gathering, and discovery. Information has context. Data is turned into information by organizing it so that we can easily draw conclusions. Data is also turned into information by “presenting” it, such as making it visual or auditory. Knowledge has the complexity of experience, which come about by seeing it from different perspectives. This is why training and education is difficult - one cannot count on one person’s knowledge transferring to another. Knowledge is built from scratch by the learner through experience. Information is static, but knowledge is dynamic as it lives within us. Wisdom is the ultimate level of understanding. As with knowledge, wisdom operates within us. We can share our experiences that create the building blocks for wisdom, however, it need to be communicated with even more understanding of the personal contexts of our audience than with knowledge sharing. Often, the distinctions between data, information, knowledge, and wisdom continuum are not very discrete, thus the distinctions between each term often seem more like shades of gray, rather than black and white. Data and information deal with the past. They are based on the gathering of facts and adding context. Knowledge deals with the present. It becomes a part of us and enables to

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perform. However, when we gain wisdom, we start dealing with the future as we are now able to vision and design for what will be, rather than for what is or was. KM Viewpoint 1.1 An Example This example uses a bank savings account to show how data, information, knowledge, and wisdom relate to principal, interest rate, and interest. Data: The numbers 100 or 5%, completely out of context, are just pieces of data. Interest, principal, and interest rate, out of context, are not much more than data as each has multiple meanings which are context dependent. Information: If I establish a bank savings account as the basis for context, then interest, principal, and interest rate become meaningful in that context with specific interpretations. • •

Principal is the amount of money, Rs.100, in the savings account. Interest rate, 5%, is the factor used by the bank to compute interest on the principal.

Knowledge: If I put Rs.100 in my savings account, and the bank pays 5% interest yearly, then at the end of one year the bank will compute the interest of Rs.5 and add it to my principal and I will have Rs.105 in the bank. This pattern represents knowledge, which, when I understand it, allows me to understand how the pattern will evolve over time and the results it will produce. In understanding the pattern, I know, and what I know is knowledge. If I deposit more money in my account, I will earn more interest, while if I withdraw money from my account, I will earn less interest. Wisdom: Getting wisdom out of this is a bit tricky, and is, in fact, founded in systems principles. The principle is that any action which produces a result which encourages more of the same action produces an emergent characteristic called growth. And, nothing grows forever for sooner or later growth runs into limits. If one studied all the individual components of this pattern, which represents knowledge, they would never discover the emergent characteristic of growth. Only when the pattern connects, interacts, and evolves over time, does the principle exhibit the characteristic of growth. Now, if this knowledge is valid, why doesn't everyone simply become rich by putting money in a savings account and letting it grow? The answer has to do with the fact that the pattern described above is only a small part of a more elaborate pattern which operates over time. People don't get rich because they either don't put money in a savings account in the first place, or when they do, in time, they find things they need or want more than being rich, so they withdraw money. Withdrawing money depletes the principal and subsequently the interest they earn on that principal. Getting into this any deeper is more of a systems thinking exercise than is appropriate to pursue here.

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2.3.2 Defining knowledge

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Knowledge is the process of translating information (such as data) and past experience into a meaningful set of relationships which are understood and applied by an individual. Knowledge is the perception of the agreement or disagreement of two ideas - John Locke Locke gave us the first hint of what knowledge is all about. Since that time, others have tried to refine it. Davenport and Prusak define knowledge as, “a fluid mix of framed experience, contextual information, values and expert insight that provides a framework for evaluating and incorporating new experiences and information.” Notice that there are two parts to this definition: •

First, there is content: “a fluid mix of framed experience, contextual information, values and expert insight.” This includes a number of things that we have within us, such as experiences, beliefs, values, how we feel, motivation, and information.

•

The second part defines the function or purpose of knowledge, “that provides a framework for evaluating and incorporating new experiences and information.” Notice how this relates back to Locke’s definition — we have within us a framework (one idea) that we use for evaluating new experiences (the second idea).

“Knowledge is information that changes something or somebody — either by becoming grounds for actions, or by making an individual (or an institution) capable of different or more effective action.” - Peter F. Drucker 2.4. KNOWLEDGE ATTRIBUTES Knowledge is commonly distinguished from data and information. Data represent observations or facts out of context, and therefore not directly meaningful. Information results from placing data within some meaningful context, often in the form of a message. Knowledge is that which we come to believe and value based on the meaningfully organized accumulation of information (messages) through experience, communication or inference. Knowledge can be viewed both as a thing to be stored and manipulated and as a process of simultaneously knowing and acting - that is, applying expertise. As a practical matter, organizations need to manage knowledge both as object and process. Although knowledge is increasingly being viewed as a commodity or an intellectual asset, it possesses some attributes that are radically different from those of other valuable commodities. These knowledge attributes includes the following: 1. Knowledge exists everywhere. Even in an organization where strong KM practices don’t exist, there are islands of knowledge. Knowledge about products, customers, markets, and operational issues, the existence is haphazard or unorganized.

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2. Knowledge is perishable. What knowledge is used today would become outdated tomorrow. Sustained efforts need to be put to imbibe new information and unlearn old and outdated knowledge. 3. Knowledge is an asset. The brands, patents, special skills, and customer relations of an organization are treated as assets. Treating knowledge as a tangible asset allows for a value to be imputed to knowledge repositories. For example companies can publish a set of Intellectual Capital Account annually so that investors and other stakeholders can value the business for its intellectual worth. 4. Use of knowledge does not consume it. 5. Transfer of knowledge does not result in losing it. 6. Knowledge is abundant, but the ability to use it is scarce. 7. Much of the organization’s knowledge goes out of the organization. 8. Knowledge can be tacit or explicit. Tacit knowledge is subconsciously understood and applied, difficult to articulate, developed from direct experience and action, and usually shared through highly interactive conversation, story-telling and shared experience. Explicit knowledge, in contrast, can be more precisely and formally articulated. Therefore, although more abstract, it can be more easily codified, documented, transferred or shared. Explicit knowledge is playing an increasingly large role in organizations, and it is considered by some to be the most important factor of production in the knowledge economy. Imagine an organization without procedure manuals, product literature, or computer software. 9. Knowledge may be of several types, each of which may be made explicit. Knowledge about something is called declarative knowledge. A shared, explicit understanding of concepts, categories, and descriptors lays the foundation for effective communication and knowledge sharing in organizations. Knowledge of how something occurs or is performed is called procedural knowledge. Shared explicit procedural knowledge lays a foundation for efficiently coordinated action in organizations. Knowledge why something occurs is called causal knowledge. Shared explicit causal knowledge, often in the form of organizational stories, enables organizations to coordinate strategy for achieving goals or outcomes. 10. Knowledge also may range from general to specific. General knowledge is broad, often publicly available, and independent of particular events. Specific knowledge, in contrast, is context-specific. General knowledge, its context commonly shared, can be more easily and meaningfully codified and exchanged, especially among different knowledge or practice communities. Codifying specific knowledge so as to be meaningful across an organization requires its context to be described along with the focal knowledge. This, in turn, requires explicitly defining contextual categories and relationships that are meaningful across knowledge communities. To see how difficult (and important) this may be, ask people from different parts of your organization to define a customer, an order, or even your major lines of business, and see how much the responses vary.

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11. Knowledge relates to place and context. For example, your father’s knowledge about farming is specific to a particular place and a particular time from say 1920 to the 1990s. Some of what he knows about farming could be adapted to other circumstances, but most of his knowledge pertains directly to paddy and cattle production in that particular place. My knowledge and yours also is related intimately to the areas where we grew up and where we live.

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12. All information is not knowledge, and all knowledge is not valuable. The key is to find the worthwhile knowledge within a vast sea of information. 2.5 FUNDAMENTALS OF KNOWLEDGE FORMATION “Knowledge is power”, knowledge management helps us to share, learn and regenerate the new knowledge. Knowledge is the most important asset and greatest competitive advantage of many organizations today. Simultaneously, it can be observed that many organizations realize it is highly problematic and complicated to collect, store, retrieve, find, disseminate and reuse knowledge in modern fast changing organization. Knowledge and information is expressed in commonly accepted idea, information arguably becomes knowledge. Knowledge is intuitive, hard to communicate and difficult to express in words and chunk of it’s not stored in database but in the minds of people who work in formation of new knowledge. It is supported by formal process and structures for its acquisition, sharing and utilization. The role of information, knowledge and digital technologies that manipulate them, have become the crucial factors in the economy. Hence, in the plan and policies, activities of every organization require familiarity with basics of information and knowledge. 2.5.1 Knowledge Formation One of the basic problems is understanding the characteristics of “Knowledge formation”. From ancient times the senses have been thought to have the role of channels through which knowledge arrives in to the organism from the environment. The concept of the senses as “Windows to Knowledge” seemed so strong and irrefutable that attempts to treat organism and environment as one system. The traditional concept of the senses as transmitters of knowledge is based explicitly on the idea of two systems (organism and environment) between which the transfer of knowledge occurs. This relationship has been formulated in recent decades with the help of information theory. Knowledge formation is based on information transmission carried out through signals (Stimuli), in which the information is stored with help of a code. Knowledge becomes obsolete as soon as it is formed or created. New knowledge has to be created continuously in order for a company to survive in this competitive business environment. In practical sense, knowledge management is the process of continuously creating new knowledge, disseminating it widely through the organization, and embodying it quickly in new products/services, technologies and systems. 53

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2.5.2 Flows of knowledge Knowledge and information have a long tradition in research. Notions of information became prominent in the middle years of the 20th century, more recently, with the advent of powerful information technologies, information processing has lost its role as a key bottleneck in organizations, and instead, the main challenge to organizations is now seen as producing and processing knowledge. The focus on knowledge is shared by quite a few recent approaches, including organizational, resource-based and knowledge-based views. Knowledge is what has been learned from experience or study. It is a broad concept that usually includes insights, interpretations, and information. Knowledge can be distinguished from information by its inclusion of interpretations, from beliefs by its higher degree of validity, and from wisdom by its more transient veridical, knowledge consists of assumptions about problems and their solutions. Notions of knowledge flows vary somewhat in the literature; some authors have seen knowledge flows as transfer of skills and technology between organizations. Some even understand knowledge flows as a multistage process that might involve initiation, implementation, and integration or search and transfer. Knowledge flows as the aggregate volume of know-how and information transmitted per unit of time, including via telephone, e-mail, regular mail, policy revisions, meetings, shared technologies, and reviews of prototypes. Knowledge is involving three processes viz., first process is encoding—organizations learn by encoding inferences from experiences in organizational routines that guide behaviour. The second and third processes are the twin processes of exploration and exploitation. Exploration captures “search, variation, risk taking, experimentation, play, flexibility, discovery, innovation”. Exploitation captures “refinement, choice, production, efficiency, selection, implementation, execution”. Codification, exploration, and exploitation describe different modes of organizational knowledge production. Codification generates knowledge encoded in forms that facilitate its transmission to others. Exploration generates new, unsettled knowledge with potentially high but uncertain returns. Exploitation generates incremental knowledge with moderate but certain and immediate returns. These differences suggest that the three modes of learning generate knowledge that varies in fluidity and relevance to others and thereby can stimulate or constrain knowledge flows from originating units to other parts of the organization. 2.6 ORGANISATIONAL KNOWLEDGE What is organizational knowledge? In the organizational context, knowledge can be looked at as information that is tested against the business rules of the organization and found to be valid by knowledgeable individuals and is therefore elevated to a level of validated information or knowledge.

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Organizational knowledge is the collective sum of human-centered assets, intellectual property assets, infrastructure assets, and market assets. It is processed information embedded in routines and processes that enable action. It is also knowledge captured by the organization system’s processes, products, rules and culture.

NOTES

Organizational knowledge consists of five different types of knowledge: •

Knowing which information is needed (Know what);

•

Knowing how information must be processed (Know how);

•

Knowing why information is needed (Know why);

•

Knowing where information can be found to achieve a specific result (Know where);

•

Knowing when which information is needed (Know when).

•

Individual construct organizational knowledge by sharing the above five types of knowledge with other employees.

Similarly, individual knowledge in an organization consists of four different types of knowledge: •

“Know-what” is the basic knowledge that individuals can acquire through extensive Training;

•

“Know-how” is the ability to apply “know-what” knowledge to complex realworld problems;

•

“Know-why” is deep knowledge of cause-and-effect relationships; and

•

“Self-motivated creativity” is the highest level of knowledge and it consists of will, motivation and adaptability.

The value of organizational knowledge can increase markedly as an organization helps its employee develop self-motivated creativity, and leverage this type of knowledge throughout the organization. Characteristics of organizational knowledge Key characteristics of organizational knowledge are as follows: •

Organizational knowledge is knowledge that is shared among organizational members;

•

Organizational knowledge, which is created via individual knowledge, is more than the sum of individual knowledge;

•

Complete organizational knowledge is achieved only when individuals keep modifying their knowledge through interactions with other organizational members;

•

Organizational knowledge is distributed;

•

Organizational knowledge is created and managed by individuals who act autonomously within a decision domain. 55

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Thus, from an organizational perspective knowledge can be defined as an entity that can be generated, acquired, modified, transferred and applied for the creation of value. 2.7 TACIT AND EXPLICIT KNOWLEDGE In a global economy, it is important to create and sustain an organization as a knowledge creating company and develop the knowledge management system to manage it. Tacit and explicit knowledge are the two components of organizational knowledge and let us note the important differences between what is called tacit and explicit knowledge which appears to be in widespread use. 2.7.1 What is tacit knowledge? Tacit knowledge refers to the personal knowledge embedded in individual experience and involves intangible factors, such as personal beliefs, perspective, and the value system. Tacit knowledge is hard to articulate with formal language (hard, but not impossible). It contains subjective insights, intuitions, and hunches. Before tacit knowledge can be communicated, it must be converted into words, models, or numbers that can be understand. In addition, there are two dimensions to tacit knowledge: Technical Dimension (procedural): This encompasses the kind of informal and skills often captured in the term know-how. For example, a craftsperson develops a wealth of expertise after years of experience. But a craftsperson often has difficulty articulating the technical or scientific principles of his or her craft. Highly subjective and personal insights, intuitions, hunches and inspirations derived from bodily experience fall into this dimension. Cognitive Dimension: This consists of beliefs, perceptions, ideals, values, emotions and mental models so ingrained in us that we take them for granted. Though they cannot be articulated very easily, this dimension of tacit knowledge shapes the way we perceive the world around us. Tacit knowledge is generally described as: • • • •

subconsciously understood or applied difficult to articulate developed from direct action and experience shared through conversation, story-telling etc

Polanyi defines that “tacit knowledge is personal, context-specific and therefore difficult to articulate”. It may be compared to skill acquisition for example swimming. It may be possible to read the ‘how-to’ manual but such manuals do not embody the full reality of the experience in context. For instance swimming in a pool is very different from swimming in the sea.

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According to Pan and Scarbrough, “Tacit knowledge is not available as a text. . . .It involves intangible factors embedded in personal beliefs, experiences, and values.”

NOTES

Nonaka and Takeuchi refer to tacit knowledge “as knowledge that comprises experience and work knowledge that resides only with the individual. Platts and Yeung considers tacit knowledge as “knowledge-in-action” which presumes that this is knowledge that has not been articulated as opposed to explicit knowledge that is readily accessible within the organizational domain. Blumentitt et al contend that information can be captured and stored in digital form whereas tacit knowledge repositories reside only in intelligent systems that are within individuals. The knowledge management literature recognises the growing importance of knowledge-based activities as being important for innovation, especially in knowledge intensive business services and for impact on strategy development and implementation. The literature recognises the potential value of tacit knowledge and the general inability of organizations to gather an individual’s experiences although there are views emerging on how attempts at capturing tacit knowledge might be effected. Whatever the difficulties the argument for finding an effective means of capturing the experiences and skills of any workforce is compelling and it may be that there will never be more than guidelines since any successful knowledge management system will be essentially unique to the organization in which it is operated. What is essential is that whatever any organization takes from the literature an organizational concept of knowledge management is developed alongside an understanding of how it can be used within that organization to gain competitive advantage. To make wider use of the tacit knowledge of individuals, managers are urged to identify the knowledge possessed by various individuals in an organization and then to arrange the kinds of interactions between knowledgeable individuals that will help the organization perform its current tasks, transfer knowledge from one part of the organization to another, and/or create new knowledge that may be useful to the organization. Let us consider an example (See Box of KM – Viewpoint) of current practice in each of these activities that are typical of the tacit knowledge approach. Most managers of organizations today do not know what specific kinds of knowledge the individuals in their organization know. As firms become larger, more knowledge intensive, and more globally dispersed, the need for their managers to “know what we know” is becoming acute. Thus, a common initiative within the tacit knowledge approach is usually some effort to improve understanding of who knows about what in an organization - an effort that is sometimes described as an effort to create “know who” forms of knowledge.

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KM Viewpoint 1.1 An example of such an effort is the creation within Philips, the global electronics company, of a “yellow pages” listing experts with different kinds of knowledge within Philips’ many business units. Today on the Philips intranet one can type in the key words for a specific knowledge domain - say, for example, knowledge about the design of optical pickup units for CD/DVD players and recorders - and the yellow pages will retrieve a listing of the people within Philips worldwide who have stated that they have such knowledge. Contact information is also provided for each person listed, so that anyone in Philips who wants to know more about that kind of knowledge can get in touch with listed individuals. Case examples of tacit knowledge in practice An example of the tacit knowledge approach to transferring knowledge within a global organization is provided by Toyota. When Toyota wants to transfer knowledge of its production system to new employees in a new assembly factory, such as the factory recently opened in Valenciennes, France, Toyota typically selects a core group of two to three hundred new employees and sends them for several months training and work on the assembly line in one of Toyota’s existing factories. After several months of studying the production system and working alongside experienced Toyota assembly line workers, the new workers are sent back to the new factory site. These repatriated workers are accompanied by one or two hundred long-term, highly experienced Toyota workers, who will then work alongside all the new employees in the new factory to assure that knowledge of Toyota’s finely tuned production process is fully implanted in the new factory. Toyota’s use of Quality Circles also provides an example of the tacit knowledge approach to creating new knowledge. At the end of each work week, groups of Toyota production workers spend one to two hours analyzing the performance of their part of the production system to identify actual or potential problems in quality or productivity. Each group proposes “countermeasures” to correct identified problems, and discusses the results of countermeasures taken during the week to address problems identified the week before. Through personal interactions in such Quality Circle group settings, Toyota employees share their ideas for improvement, devise steps to test new ideas for improvement, and assess the results of their tests. This knowledge management practice, which is repeated weekly as an integral part of the Toyota production system, progressively identifies, eliminates, and even prevents errors. As improvements developed by Quality Circles are accumulated over many years, Toyota’s production system has become one of the highest quality production processes in the world.

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Tacit Knowledge Contextual Mental Processes Difficult to Transfer

Tangible Systematic Ease of Transfer

Explicit Knowledge

Figure 1.2 Two Types of Knowledge 2.7.2 What is explicit knowledge? Explicit knowledge refers to the contents that has been captured in some tangible form and can be articulated into formal language, including grammatical statements (words and numbers), mathematical expressions, specifications, manuals, etc. Explicit knowledge can be readily transmitted to others. Also, it can easily be processed by a computer, transmitted electronically, or stored in databases. An example of explicit knowledge with which we are all familiar is the formula for finding the area of a rectangle (i.e., length times width). Other examples of explicit knowledge include documented best practices, the formalized standards by which an insurance claim is adjudicated and the official expectations for performance set forth in written work objectives Explicit knowledge is increasingly being emphasised in both practice and literature, as a management tool to be exploited for the manipulation of organizational knowledge. Groupware, intranets, list servers, knowledge repositories, database management and knowledge action networks allow the sharing of organizational knowledge. Tools such as co-coordinated databases, groupware systems, intranets and internets are seen as the ultimate knowledge management systems for initiating and supporting discussion forums and communities of practice. Managers hope that these tools will retain knowledge within the company when employees have left and also that this will encourage learning and the flourishing of communities of interest across functional boundaries. Working from the premise that important forms of knowledge can be made explicit, the explicit knowledge approach also believes that formal organizational processes can be used to help individuals articulate the knowledge they have to create knowledge assets. The explicit knowledge approach also believes that explicit knowledge assets can then be 59

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disseminated within an organization through documents, drawings, standard operating procedures, manuals of best practice, and the like. Information systems are usually seen as playing a central role in facilitating the dissemination of explicit knowledge assets over company intranets or between organizations via the internet. Usually accompanying the views that knowledge can be made explicit and managed explicitly is the belief that new knowledge can be created through a structured, managed, scientific learning process. Experiments and other forms of structured learning processes can be designed to remedy important knowledge deficiencies or market transactions or strategic partnering may be used to obtain specific forms of needed knowledge or to improve an organization’s existing knowledge assets. The recommendations for knowledge management practice usually proposed by researchers and consultants working within the explicit knowledge approach focus on initiating and sustaining organizational processes for generating, articulating, categorizing, and systematically leveraging explicit knowledge assets. Some examples of cases of knowledge management practice in this mode help to illustrate this approach. Case examples of explicit knowledge in practice In the 1990s, Motorola was the global leader in the market for pagers. To maintain this leadership position, Motorola introduced new generations of pager designs every 1215 months. Each new pager generation was designed to offer more advanced features and options for customization than the preceding generation. Using modular product architectures to create increasingly configurable product designs, Motorola was able to increase the number of customizable product variations it could offer from a few thousand variations in the late 1980s to more than 120 million variations by the late 1990s. In addition, a new factory with higher-speed, more flexible assembly lines was designed and built to produce each new generation of pager. To sustain this high rate of product and process development, Motorola formed teams of product and factory designers to design each new generation of pager and factory. At the beginning of their project, each new team of designers received a manual of design methods and techniques from the team that had developed the previous generation of pager and factory. The new team would then have three deliverables at the end of their project: (i) an improved and more configurable nextgeneration pager design, (ii) the design of a more efficient and flexible assembly line for the factory that would produce the new pager, and (iii) an improved design manual that incorporated the design knowledge provided to the team in the manual it received - plus the new and improved design methods that the team had developed to meet the product and production goals for its project. This manual would then be passed on to the next design team given the task of developing the next generation of pager and its factory. In this way, Motorola sought to make explicit and capture the knowledge developed by its engineers during each project and to systematically leverage that knowledge in launching the work of 60

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the next project team. In addition to its tacit knowledge management practice of moving new employees around to transfer knowledge of its production system, Toyota also follows a highly disciplined explicit knowledge management practice of documenting the tasks that each team of workers and each individual worker is asked to perform on its assembly lines. These documents provide a detailed description of how each task is to be performed, how long each task should take, the sequence of steps to be followed in performing each task, and the steps to be taken by each worker in checking his or her own work. When improvements are suggested by solving problems on the assembly line as they occur or in the weekly Quality Circle meetings of Toyota’s teams of assembly line workers, those suggestions are evaluated by Toyota’s production engineers and then formally incorporated in revised task description documents. In addition to developing well-defined and documented process descriptions for routine, repetitive production tasks, some organizations have also created explicit knowledge management approaches to supporting more creative tasks like developing new products.

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In the Chrysler unit of DaimlerChrysler Corporation, for example, several “platform teams” of 300-600 development engineers have responsibility for creating the next generation platforms (A platform includes a system of standard component types and standardized interfaces between component types that enable “plugging and playing” different component variations in the platform design to configure different product variations) on which Chrysler’s future automobiles will be based. Each platform team is free to actively explore and evaluate alternative design solutions for the many different technical aspects of their vehicle platform. However, each platform team is also required to place the design solution it has selected for each aspect of their vehicle platform in a “Book of Knowledge” on Chrysler’s intranet. This catalog of developed design solutions is then made available to all platform teams to consult in their development processes, so that good design solutions developed by one platform team can also be located and used by other platform teams. Other firms have taken this explicit knowledge management approach to managing knowledge in product development processes even further. Fanuc Automation, one of the world’s leading industrial automation firms, develops design methodologies that are applied in the design of new kinds of components for their factory automation systems. In effect, instead of leaving it up to each engineer in the firm to devise a design solution for each new component needed, GE Fanuc’s engineers work together to create detailed design methodologies for each type of component the firm uses. These design methodologies are then encoded in software and computerized so that the design of new component variations can be automated. Desired performance parameters for each new component variation are entered into the automated design program, and GE Fanuc’s computer system automatically generates a design solution for the component. In this way, GE Fanuc tries to make explicit and capture the design knowledge of its engineers and then to systematically re-use that knowledge by automating most new component design tasks. 61

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2.7.3. Typical applications of tacit and explicit knowledge Knowledge databases and repositories (explicit knowledge) - storing information and documents that can be shared and re-used, for example, client presentations, competitor intelligence, customer data, marketing materials, meeting minutes, policy documents, price lists, product specifications, project proposals, research reports, training packs; Knowledge route maps and directories (tacit and explicit knowledge) - pointing to people, document collections and datasets that can be consulted, for example, ‘yellow pages’/’expert locators’ containing CVs, competency profiles, research interests; Knowledge networks and discussions (tacit knowledge) - providing opportunities for face-to-face contacts and electronic interaction, for example, establishing chat facilities/ ’talk rooms’, fostering learning groups and holding ‘best practice’ sessions. 2.7.4. Basic beliefs between tacit and explicit knowledge approaches Table 1.1 Basic beliefs between tacit and explicit KM approaches

2.7.5 Comparison of properties of Tacit Vs Explicit Knowledge Table 1.2 Comparison of properties of tacit Vs explicit knowledge

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2.7.6 Advantages and Disadvantages of Tacit versus Explicit Knowledge Approaches

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Like most alternative approaches to managing, each of the two knowledge management approaches we have discussed has both advantages and disadvantages. Let us now briefly summarize the main advantages and disadvantages of the two approaches. Advantages and Disadvantages of the Tacit Knowledge Approach Advantages 1. 2. 3. 4.

Relatively easy and inexpensive to begin. Employees may respond well to recognition of the (claimed) knowledge. Likely to create interest in further knowledge management processes. Important knowledge kept in tacit form may be less likely to “leak” to competitors.

Disadvantages 1. Individuals may not have the knowledge they claim to have. 2. Knowledge profiles of individuals need frequent updating. 3. Ability to transfer knowledge constrained to moving people, which is costly and limits the reach and speed of knowledge dissemination within the organization. 4. Organization may lose key knowledge if key people leave the organization. Advantages and Disadvantages of the Explicit Knowledge Approach Advantages 1. Articulated knowledge (explicit knowledge assets) may be moved instantaneously anytime anywhere by information technologies. 2. Codified knowledge may be proactively disseminated to people who can use specific forms of knowledge. 3. Knowledge that has been made explicit can be discussed, debated, and improved. 4. Making knowledge explicit makes it possible to discover knowledge deficiencies in the organization. Disadvantages 1. Considerable time and effort may be required to help people articulate their knowledge. 2. Employment relationship with key knowledge workers may have to be redefined to motivate knowledge articulation. 3. Expert committees must be formed to evaluate explicit knowledge assets. 4. Application of explicit knowledge throughout organization must be assured by adoption of best practices.

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2.7.7 Four modes of knowledge creation or conversion - Nonaka’s Knowledge Creation Framework According to Professor Ikujiro Nonaka, knowledge creation is a spiraling process of interactions between explicit and tacit knowledge. The interactions between the explicit and tacit knowledge lead to the creation of new knowledge. The combination of these two kinds of knowledge makes it possible to conceptualize four modes of conversion patterns. The four conversion patterns of knowledge are illustrated in Figure 1.2 below:

From tacit knowledge From explicit knowledge

To tacit knowledge Socialisation

To explicit knowledge Externalization

Internalization

Combination

Figure 1.3 onaka’s SECI Model •

Socialization: from tacit to tacit - Sharing experiences to create tacit knowledge, such as shared mental models and technical skills. This also includes observation, imitation, and practice. However, “experience” is the key, which his why the mere “transfer of information” often makes little sense to the receiver. Takes place between people in meetings or in team discussions.

•

Internalization: from explicit to tacit - Embodying explicit knowledge into tacit knowledge. Closely related to “learning by doing.” Normally, knowledge is verbalized or diagrammed into documents or oral stories. This implies taking explicit knowledge (e.g., a report) and deducing new ideas or taking constructive action. One significant goal of knowledge management is to create technology to help the users to derive tacit knowledge from explicit knowledge.

•

Externalization: from tacit to explicit - The quintessential process of articulating tacit knowledge into explicit concepts through metaphors, analogies, concepts, hypothesis, or models. Note that when we conceptualize an image, we express its essence mostly in language. Articulation among people through dialog (e.g., brainstorming).

•

Combination, from explicit to explicit - A process of systemizing concepts into a knowledge system. Individuals exchange and combine knowledge through media, such as documents, meetings, and conversations. Information is reconfigured by such means as sorting, combining, and categorizing. Formal education and many training programs work this way. This transformation phase can be best supported by technology. Explicit knowledge can be easily captured and then distributed/ transmitted to worldwide audience. 64

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2.8 ORGANISATIONAL KNOWLEDGE CREATION

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Knowledge is an important element in the world of business and the ability to distribute and duplicate knowledge across a range of people is the key to its value in organizations. It can reduce time taken to learn new competencies and insights, and save significant costs in lost opportunities. People develop knowledge as an ongoing process through their work. Knowledge evolves as it is reshaped through encounters with new events, information or other people. It may reside within an individual as personalized knowledge, be accessible through others, or stored as a retrievable artifact. Artifacts derived from knowledge creation are facts, concepts, processes, procedures, and principles. These, in turn, are used to help create knowledge in others and are valuable mechanisms for sharing the outcome of knowledge creation. Organizational knowledge relies on collective and individual contributions. It evolves as others review, use and learn from the original knowledge sources. Organizations are increasingly regarding knowledge creation and innovation as core business, as more people spend most of their work time creating and innovating. In projects, meetings and thinktanks, their individual knowledge becomes a part of a collective activity that seeks to build a bank of knowledge for use by the organization. Figure 1.4 illustrates the five stages of organizational knowledge development: knowledge sourcing, knowledge abstraction, knowledge conversion, knowledge diffusion, and knowledge development and refinement. The process of knowledge development is dynamic and responsive, drawing cues and feedback from a range of sources throughout the stages. This feedback may influence subsequent knowledge construction as it provides further cues and information which are considered and evaluated. Let us see the detailed account of the phases of knowledge creation.

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Figure 1.4 Phases of organizational knowledge creation 2.8.1 Knowledge sourcing The identification of knowledge gap between what is known and what needs to be known is often the stimulus for the knowledge creation process. In response to the identification of a knowledge gap, the organization commonly reviews existing sources of guidance held by individuals or other organizational resources. This process of drawing together as many informed knowledge sources as possible is called knowledge sourcing. Sources to be tapped might include specialized and prior knowledge held by individuals within the organization, expert guidance from people such as consultants, organizational record or the firm’s intranet. Learning from previous experience is a significant source of guidance, particularly where the problem under investigation has significant resourcing implications. 66

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Knowledge sourcing is an important stage of knowledge creation. The richness and accessibility of the available and known sources greatly influence the outcomes. For example, if an organization wanted to introduce a new customer promotional scheme, it might seek the appropriate sources of guidance from the following: • • • • • •

NOTES

Customer feedback Marketing expert’s opinion Previous promo schemes data and their success and failures Available secondary data ]Lessons from competitors similar schemes Contributions from employees concerned with such schemes

Sources of organizational knowledge Following are the few sources of knowledge which are crucial for any organization gain strategic competence. Customer knowledge In virtually every survey, customer knowledge tops the list as an organization’s most vital knowledge. Yet most organizations do not know as much about their customers as they think they do, nor do they integrate their various sources of customer knowledge that the organization already has. Appropriate feedback system may be created to get this valuable source of knowledge. Knowledge in process Normally in an organization an ad hoc activity gradually evolves into a process, that in many cases is automated and hence knowledge is embedded in a procedure or computer program. Generally, the generic high-level activities involve gathering and processing of information which is communicated with other people. This is a vital meta-knowledge that can help an organization to be more effective. Knowledge in people It is said that 90% organizational knowledge is in its people who is valuable and when it is shared, it becomes even more valuable to the organization as a whole. An important part of KM is therefore about creating an environment and culture in which this knowledge is facilitated to be accumulated and people are encouraged to share their knowledge with each other. Organizational memory Many organizations do not know what they already know. Knowledge gained is not recorded for use at another time or place. Effective knowledge programs will therefore put

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significant emphasis on capturing knowledge from every day work and from assignments. Decision diaries, reflection time at meetings and After Action Reviews (ARRs) are commonly adapted tools for this purpose. An ARR, for example, is a technique first developed in the US Army to capture lessons from battle field engagements, while they are still fresh in people’s minds which may be used for future. In this way, an organization can also conduct formal post-assignment reviews to derive lessons and put the knowledge gained into an accessible form for future assignments. Another useful technique is that of ‘knowledge refining’ with which a series of memos, e-mails or meeting minutes are collected for their relevant and reusable content, which is put into an evolving and structured knowledge base. Knowledge relationships This is concerned with depth of personal knowledge arising out of relationship of two people who worked together for a long time and know one another’s approach with regard to what to do and what not to do in situations. When firms reorganize, this knowledge is lost. With the growing need for collaboration with external partners and agencies, organizations need to do more to capture this knowledge and provide forums where these relationships cab be strengthened. 2.8.2 Knowledge abstraction After analyzing the sources of knowledge, the general principles and concepts are generated to guide the construction of the new knowledge. This process is called knowledge abstraction. Knowledge abstraction helps to frame the insights gained from knowledge sourcing and to extrapolate new knowledge from the basic guidelines and issues that have emerged. Where the knowledge seekers are highly expert, they will rely heavily on their own knowledge, with other sources simply validating or enriching that knowledge. Less experienced seekers will rely more heavily on external sources. Think back to the customer promo schemes mentioned before. The target population might be clarified, some approaches ruled out, and some broad principles confirmed. The abstraction of the various sources reduces the complexity of the factors to be considered, and enables the ideas to be converted into outcomes using a sound framework. The process of abstraction can take a long time – particularly if the knowledge involved is politically sensitive, complex or involves working through group consensus (committees). Unfortunately, many organizations do not provide sufficient to reflect and weigh the various sources before abstraction. Failure to carefully build some clear frameworks to guide the knowledge creation process can lead to faulty reasoning and poor outcomes. Knowledge workers need to recognize the importance of reflection and consideration in the knowledge creation process.

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2.8.3 Knowledge conversion

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From abstract foundations, knowledge converts into various forms of useful applications that can be tested and shared with others. Knowledge conversion describes the phase during which the various ideas and principles are refined into specific outcomes. Knowledge can be either codified or embodied. Codified knowledge is knowledge that can be recorded and accessed by others as required. It can be developed into artifacts, such as models, equations and guidelines. Embodied knowledge is the tacit knowledge of individuals. It can be shared through stories, metaphors or personal advice as required. Embodied knowledge is more difficult to access without ongoing engagement with the knowledge creators. Codified knowledge relating to the customer marketing scheme might be in the form of a marketing plan and implementation guidelines, whereas the embodied knowledge would be drawn from the guidelines and insights of the project leaders and experts. Many organizations typically rely on both the forms of knowledge conversion when creating new knowledge. 2.8.4 Knowledge diffusion Knowledge diffusion is the spread of knowledge once it is codified or embodied. In organizational settings, diffusion can occur through communication media such as newsletters, the Intranet, meetings, seminars etc., modeling of new practices, and demonstrations or coaching in specialized procedures. The success of knowledge diffusion depends on the level of previous knowledge held by the audience and the effectiveness of the channels available to share the knowledge. Diffusion occurs best when the recipients can understand and integrate the insights into their own mental constructs. Embodied knowledge, which draws on significant expertise, learning and experience, may be harder to transfer to others. Using the same example, the promotion of new promotional scheme might be disseminated in various ways via the Intranet, published guidelines and presentations relating to the scheme, and so on. The main goal is to share the knowledge with those who will most benefit. A forum of all employees in an organization, for example, is of little value to those who are not directly involved in the new scheme. 2.8.5 Knowledge development and refinement Knowledge is regularly reshaped and further tested through additional experience and feedback. This revolutionary process of knowledge development and refinement is one of the key features of knowledge management, ensuring the knowledge remains current and useful. However, this also place more challenges on organizations that seek to capture and hold knowledge for use by others; such organizations need to ensure that the created knowledge is constantly reviewed and updated to reflect any new understanding that has 69

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been acquired. Consider the promotional scheme again. A pilot study of the scheme may reveal some significant issues relating to the created process. The pilot study thus generates new knowledge to be converted and diffused. SUMMARY Knowledge is regarded as valuable commodity that is embedded in products, and in the tacit knowledge of highly mobile employees. The acquisition, creation, processing and dissemination of knowledge have become important for competitiveness in an organization. There are different kinds of knowledge that can usefully be distinguished. Knowwhat, or knowledge about facts, is nowadays diminishing in relevance. Know-why is knowledge about the natural world, society, and the human mind. Know-who refers to the world of social relations and is knowledge of who knows what and who can do what. Knowing key people is sometimes more important to innovation than knowing scientific principles. Know-where and know-when are becoming increasingly important in a flexible and dynamic economy. Know-how refers to skills, the ability to do things on a practical level. Organizational knowledge is the collective sum of human-centered assets, intellectual property assets, infrastructure assets, and market assets. It is processed information embedded in routines and processes that enable action. It is also knowledge captured by the organization system’s processes, products, rules and culture. Tacit and explicit knowledge are the two components of organizational knowledge. Tacit knowledge refers to the personal knowledge embedded in individual experience and involves intangible factors, such as personal beliefs, perspective, and the value system. Explicit knowledge refers to the contents that has been captured in some tangible form and can be articulated into formal language, including grammatical statements (words and numbers), mathematical expressions, specifications, manuals, etc. Knowledge creation is a spiraling process of interactions between explicit and tacit knowledge. Knowledge is an important element in the world of business and the ability to distribute and duplicate knowledge across a range of people is the key to its value in organizations. There is a need to understand the different phases of organizational knowledge creation and to recognize that each phase is influenced by the access to sources of guidance, and the encouragement to disseminate knowledge to others

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SHORT QUESTIONS 1. 2. 3. 4. 5. 6. 7.

NOTES

Define knowledge. Illustrate by example the possible relationship between knowledge and data. What is meant by organizational knowledge? What is tacit knowledge? What is explicit knowledge? Compare the properties of tacit ant explicit knowledge. What are the sources for knowledge?

LONG QUESTIONS 1. What are the differences between tacit knowledge and explicit knowledge? Give an example of each. 2. List down the various attributes of knowledge and support each with an example. 3. Describe how knowledge is formed in an organization? 4. Enumerate different application areas of tacit and explicit knowledge. 5. What are the advantages and disadvantages of tacit ant explicit knowledge? 6. Explain Nonaka’s knowledge creation framework. 7. Write a detailed account on knowledge abstraction, conversion and diffusion.

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UNIT III

KNOWLEDGE MANAGEMENT SYSTEMS 3.1 INTRODUCTION Today’s business environment witnesses decline in many of the well established organization, diminishing competitive power in the global economy coupled with and the need for organizational renewal and transformation forced many organization to feel the importance of organizational learning. Many senior managers are also convinced of importance in improving organizational learning. Knowledge management must enable organizational learning, not just by giving it direction, but also by permitting, encouraging and facilitating it. Through organizational learning knowledge management can be made into a day-to-day reality in the organization. 3.2 LEARNING OBJECTIVES After studying this Unit, you should be able to understand the following: • • • • • • • • •

Define organizational learning and skillets required for individuals Describe the characteristics of learning organization Outline the five learning disciplines Construct an architecture for organizational learning How to capture and codify knowledge Analyse how tacit knowledge is captured How knowledge repositories functions Know the KM application domains Define collaborative platforms and outline its features

3.3 KNOWLEDGE MANAGEMENT AND ORGANISATIONAL LEARNING Companies that build competitive advantage through effective information and knowledge management must continually refresh and update their intellectual capital. This is the process of organizational learning. Learning is primarily a process of acquiring, assimilating and internalizing inputs for effective and varied uses when required. Learning is the acquisition of useful new knowledge, ideas, skills and/or behaviour patterns. Learning 73

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can be from one’s own experience, from each other, and from customers, suppliers and business patterns. Applying the concept of learning to organizations, organizational learning can be described as the collective learning of the organization. While it does involve learning of individual employees, it is more than just the sum of learning of its individual members. Organizational learning is the process by which the organization acquires, retains and uses information and ideas for its development and for strengthening its self-learning and selfrenewing capacity. Organizational learning thus has the crucial and continuing responsibility for capitalizing on knowledge as the source and base of a leading competitive edge. Organizational learning as the means of acquiring and generating knowledge and skills (i.e., operational knowledge), hence, becomes a key internal driver of the externally focused enterprise strategy. Hence, each organization must build capabilities for managing knowledge and strengthening learning. It is the connection between knowledge and learning which establishes organizational focus and strategy. 3.4 THE CONCEPT OF ORGANISATIONAL LEARNING The term organizational learning refers to continuous improvement of existing approaches and processes and adaptation to change, leading to new goals and/or approaches. Learning needs have to be embedded in the way the organization works. The term embedded means that learning: • • • • •

Is a regular part of the daily work? Is practiced at personal, work unit, and organizational levels Results in solving problems at source Is focused on sharing knowledge throughout the organization Is driven by opportunities to affect significant c change and do better

Organizational learning is the capacity or processes within an organization to maintain or improve performance based on experience. Learning is a systems-level phenomenon, because it stays within the organization even if individuals change. Learning is as much a task as the production and delivery of goods and services. While companies do not usually regard learning as function of production, research on successful firms indicates that three learning-related factors are important for their success: (a) Well-developed core competencies that serve as launch point for new products and services, (b) An attitude that supports continuous improvement in the business’s value-added chain, (c) The ability to fundamentally renew or revitalize business function based on need.

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(d) These factors identify some of the qualities of an effective learning organization that diligently pursues a constantly enhances knowledge base. This knowledge allows for the development of competencies and lead to incremental or transformational change. In these instances, there is assimilation and utilization of knowledge and some kind of integrated learning system to support such “actionable learning”. Indeed, an organization’s ability to survive and grow is based on advantages that stem from core competencies that represent collective learning. These can be generalized as follows:

NOTES

Knowledge acquisition. This stage deals with the development or creation of skills, insights and relationships. Knowledge sharing. This stage involves the dissemination of the learning throughout the organization. Knowledge utilization. This stage provides the integration of learning so that it is broadly available and can be generalized to new situations. Sources for learning include learning at the individual level of an employee, employee ideas, research and development (R&D), customer input, best practice sharing and benchmarking. Learning at individual level Learning at the individual level can be conceptualized as the process of obtaining and retaining skills and information with relevant aptitude that leads to changes and improvements in action and decision making. The process of organizational learning is, however, less well understood than individual learning. All learning can be characterised as occurring at the individual level. The focus of an organization should be on improving the learning, skills and hence competitive advantage of individuals. However, to ensure their effectiveness, individuals have to be able to fully integrate with and be able to maximise the benefits of learning at the organizational level. In this way, the effective organization ensures that an individual’s actions and learning are both supported by, and providing support to, the organization as a whole. Acting together, the individuals that make up the organization are able to learn, work and compete better than they could on their own. Skill sets needed by individuals for organizational learning 1. Ability to understand the culture of the organization 2. Ability to let go of old myths 3. Ability to notice new patterns- language as an indicator • Multitasking • Miniaturization • Short-term memory overload • Low level depression and increasingly angry culture • Changes of speed 75

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4. Ability to develop a clear perspective/ open perspective • Ability to relax • Sense of humor - ability to laugh • Knowing your hishhtory • Insulate hot buttons and fears • Ability to scan for information • Pretend you are an anthropologist and examine what leaders reward, evaluate, and control; what they are paying attention to; and what are they measuring 5. Ability to generate energy with coaching and building self-esteem; ability to bring energy into a room. 6. Ability to learn forever 7. Ability to own your own career 8. Ability to create “safe” environment for others 9. Ability to see what’s coming and what’s leaving so you can make choices faster; faster response time 3.4.1 Definitions for organizational learning (a) “Organizational Learning occurs when the mental models, schemes or cognitive maps that guide behaviour are modified through recognition of a change in information concerning an organization’s environment”. (b) “Organizational Learning occurs through shared insights, knowledge and mental models”. (c) “Organizational learning occurring when individuals, acting from their own images and maps, detect a mismatch of outcomes to expectation which confirms or disconfirms organization theory-in-use” (d) “The transformation process that translates individual learning into organizational domain is termed organizational learning”. It is a process by which individuals share their insights, knowledge and ideas to develop a common understanding. Through this process of learning, organizations enrich their knowledge base, which helps them in knowledge generation and in the long run to face external challenges. An innovative or a product organization would strive to be a learning organization ‘skilled at creating, acquiring and transferring knowledge and modifying its behaviour to reflect new knowledge and insights’. Organizational learning is the development of new knowledge and insights that have the potential to influence behavior. Organizational learning occurs when members of an organization share associations, cognitive systems, and memories. Learning by organizations relies on the people and groups to serve as agents for the transfer of knowledge. Over time, what is learned is built into the structure, culture, and memory of the organization. Lessons (i.e., knowledge) remain within the organization even though individuals may change. The phrases organizational learning and learning organizations are used interchangeably. 76

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3.4.2 Benefits of organizational learning

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Organizational learning can result in: 1. Enhancing value to customers through new and improved products and services; 2. Developing new business opportunities; 3. Reducing errors, defects, waste, and related costs; 4. Improving responsiveness and cycle time performance; 5. Increasing productivity and effectiveness in the use of all resources throughout the Organization; and 6. Enhancing the organization’s performance in fulfilling its public responsibilities and service as a good citizen 3.4.3 What is a ‘learning organization’? A learning organization is an organization which has in place systems, mechanisms and processes that are used to continually enhance its capabilities and those who work with it or for it, to achieve sustainable objectives - for them and the communities in which they participate. Learning – both individual and organizational – is the process by which knowledge assets are increased over time. Every organization learns. But, to be successful, managers must seek to align both individual and collective learning with the strategic intent of the firm. This means that as executive design their business strategies, they need to determine what, specifically – and when – their firms need to learn, and create mechanism to do so. For example, if an insurance firm is trying to make inroads into the investment management business, its executives will have to make sure that their firm learns the new business while continuing to advance its knowledge of the insurance business. A knowledge management strategy, therefore, may include hiring new talent, designing new projects, implementing job rotations, and altering organizational structures to facilitate the flow of the new knowledge between existing and new business. Key characteristics of learning organization 1. Team work and team learning. 2. Systemic thinking and mental models. 3. Free vertical and horizontal flow of information. 4. Education and training of the whole workforce. 5. Learning reward system for employees. 6. Continuous improvement of work. 7. Flexibility of employees and company strategies. 8. Decentralized hierarchies and participative management. 9. Constant experimentation. 10. Supportive corporate cultures. 77

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3.4.4 Orientation for effective knowledge dissemination Organizational learning does not always occur in the linear fashions implied by typical learning models. Learning may take place in planned or informal ways. Moreover, knowledge and skill acquisition takes place in the sharing and utilization stages. It is not something that occurs simply by organizing an ‘acquisition effort’. The following are some of the commonly employed orientation by organizations in their quest for effective knowledge dissemination. (a) Knowledge sources Organization needs to carefully assess their source of knowledge, i.e. they need to finalise the extent whether new knowledge is to be developed internally or seek inspiration in external ideas. This distinction is seen as the difference between innovation and adaptation or imitation. Both of these approaches have great merit as opposing styles rather than as normative or negative behaviors. (b) Learning at the individual level Learning at the individual level can be conceptualized as the process of obtaining and retaining skills and information with relevant aptitude that leads to changes and improvements in action and decision making. The process of organizational learning is, however, less well understood than individual learning. All learning can be characterised as occurring at the individual level. The focus of an organization should be on improving the learning, skills and hence competitive advantage of individuals. However, to ensure their effectiveness, individuals have to be able to fully integrate with and be able to maximise the benefits of learning at the organizational level. In this way, the effective organization ensures that an individual’s actions and learning are both supported by, and providing support to, the organization as a whole. This is described as the “creation of shared understandings”. Acting together, the individuals that make up the organization are able to learn, work and compete better than they could on their own. (c) Focus on products and processes Organizations need to decide whether they would prefer to accumulate knowledge about product and service outcomes or about the basic processes underlying various products. (d) Documentation Knowledge is viewed in personal terms as something an individual possesses by virtue of education or experience. This kind of knowledge is lost when a longtime employee leave an organization; processes and insights evaporate because they were not shared or made a part of collective memory. On the other hand, knowledge is defined in more objective, social terms, as being a consensually supported result of information processing. This calls for the development of organizational memory or a publicly documented body of knowledge. 78

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(e) Knowledge dissemination

NOTES

An organization need to establish an atmosphere in which learning evolves or in which a more structured, controlled approach induces learning. In the more structured approach, the company decides that valuable insights or methods should be shared and used by others across the organization. It uses written communication and formal education methods or certifies learning through writing the procedure down. In the more informal approach, learning is spread through encounters between role models and gatekeepers who compellingly reinforce learning. In another approach, learning occurs when members of an occupational group or work team share their experiences in ongoing dialogue. (f) Organizational learning Organizational learning needs to encounter on methods and tools, to improve what is already being done or on testing the assumptions underling what is being done. Organizational performance problems are more likely due to a lack of awareness or inability to articulate and check underlying assumptions than to a function of poor efficiency. Generally, these learning capabilities reinforce each other. (g) Value-chaining Organization need to build an index of their core competencies and learning investments that need to be valued and supported. Learning investments include allocation of personnel and money to develop knowledge and skill over time, including training and education, pilot projects, developmental assignments, available resources, and so on. If a particular organization is heavily focused on heavy engineering, it would have a natural bias in favor of substantial learning investments in related areas. The value chain can be classified into two categories: internally directed activities of a ‘design and make’ nature, and those more externally focused of a ‘sell and deliver’ nature. The former include R&D, engineering, and manufacturing. The latter are sales, distribution, and service activities. (h) Skill development An organization need to develop both individual and group skills. In this way, an organization can assess how it is doing and improve either one of those skills. It can also develop better ways of integrating individual learning programs with team needs by taking a harder look at the value of group development.

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KM Viewpoint 1.1 EIU Study Survey: The Economic Intelligence Unit (EIU) in co-operation with IBM Consulting Group had conducted an intensive study of emerging Organizational Learning (OL) and Knowledge Management (KM) practices around the globe. Responses were received from 345 companies in 26 countries (1999). Typical OL activities undertaken are: • behavioral changes to improve teamwork; • changing individual and corporate behaviour, • facilitating ongoing, team based and collaborative management , • leading individual or team training activities, • assembly of multi-disciplinary teams to solve business problems. Learning Organizations are considered masters of managing change for financial gains OL, in its broadest sense, refers to a variety of practices and values that enable a company to explore continually new directions and anticipate or even lead change in the marke place and society at large. Benefits 1. Learning enhances a company’s speed, innovative-ness and adaptability Technological change, shorter product life cycle, market shifts and global competition affect some industries more than others, but all companies need to synthesiz information and generate knowledge faster. Learning addresses a company’s desire to better anticipate and adapt to changing market conditions, reach the market with mor innovative products faster than competitors and maximize responsiveness to customers needs. Learning organizations are effective not only at creating and/o acquiring new knowledge; buy also in applying that knowledge to continually improve their tasks and activities. 2. Learning builds shareholder value for the long term. Managerial accounting system that currently guide investment and strategy offer little insight into the value tha human know-how, creativity and experience add to products and services. Skandi and other companies now report intangible assets in their balance sheet. They recognize that learning is the key contributor to value addition, in the long run. Enabling factors 1. Formal business procedures must be balanced with the freedom to create Business organizations discourage people from learning all the time. Every tim someone tells you to do something a certain way because that is the standard way they are telling you not to learn. This type of over-prescription undermine learning. A Company’s official chain of command and formal busines procedures must co-exist with informal personal networks. Best leadership create a balance in the organization between reaping and sowing; production on on hand and building capacity, competence and personal relations on the other. 2. Every company has a different approach. There is no roadmap to becoming learning organization. 3. Culture is the key. A spirit of openness and enthusiasm for continues learning occurs, when leaders actively and continuously promote that values.4. Individual

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NOTES Element Organization Structure Availability of information Trust culture Communication Innovation Managers style Learning systems

Characteristics of a learning Organization Flat hierarchy, decentralized, Dynamic networks Systems in place to make information freely available High level of trust, Self mastery practiced Decentralized communication processes Innovation and risk taking encouraged Facilitator, Coaching style Continual learning and double loop learning

3.4.5 Characteristics of learning organization • • • • • •

They provide continuous learning opportunities. They use learning to reach their goals. They link individual performance with organizational performance. They foster inquiry and dialogue, making it safe for people to share openly. They embrace creative tension as a source of energy and renewal. They are continuously aware of and interact with their environment.

3.4.6 Characteristics of the Traditional organization Vs Learning organization Element

Traditional Organization Efficiency Effectiveness Control

Learning Organization

Distinctive Staff Skills

Excellence Organizational Renewal Facilitator Coach Top down approach Everyone is consulted Road map Learning map Hierarchy Flat structure Dynamic networks People who know People who learn (experts) Mistakes tolerated as par Knowledge is power of learning Adaptive learning Generative learning

Measurement System

Financial measures

Teams

Working groups Departmental boundaries

Both financial and non financial measures Cross functional teams

Shared Values Management Style Strategy/Action Plan Structure Staff Characteristics

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3.4.7 Facilitators for organizational learning The following are some of the key facilitators for organizational learning: 1. The presence of strong marketing research functions for effective environmental scanning. 2. Measures to ensure that feedback regarding organizational functions and processes are adequate. 3. Development of metrics to gauge the effectiveness of organizational learning systems. 4. Process of encouraging pilot testing and experimentation. 5. Availability of core subject matter, experts to provide leadership to learning activities. 6. Free flow of information within the organization. 7. Continuous learning within the organization. 8. Continuous process and system improvement and re-engineering. 9. Proper management support. 3.4.8 The five learning disciplines of Peter Senge In his book The Fifth Discipline, Peter Senge (1990) defined a learning organization as “… a place where people continually expand their capacity to create results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free and where people are continually learning how to learn”. Peter Senge, in particular, posits the radically humanist idea that organizations should become places where people can begin to realize their highest aspirations. He talks of developing worker commitment not compliance; of building shared visions, not imposing a mission statement from above; of effectively reconciling individual and organizational objectives. Senge described the core of a learning organization’s work as based upon five learning disciplines, which represented lifelong programs of both personal and organizational learning and practice. These include: (1) Personal Mastery — Personal mastery is what Peter Senge describes as one of the core disciplines needed to build a learning organization. Personal mastery applies to individual learning, and Senge says that organizations cannot learn until their members begin to learn. Personal Mastery has two components. First, one must define what one is trying to achieve (a goal). Second, one must have a true measure of how close one is to the goal. Individuals who practice personal mastery experience other changes in their thinking. They learn to use both reason and intuition to create. They become systems thinkers who see the interconnectedness of everything around them and, as a result, they feel more connected to the whole. It is exactly this type of individual that one needs at every level of an organization for the organization to learn. Traditional managers have always thought that they had to have all the answers for their organization. The managers of the learning organization know that their staff has the answers. The job of the manager in the learning organization is to be the teacher or coach who helps unleash the creative energy in each individual. Organizations learn through the synergy of the individual learners. 82

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(2) Mental Models — a mental model is one’s way of looking at the world. It involves each individual reflecting upon, continually clarifying, and improving his or her internal pictures of the world, and seeing how they shape personal actions and decisions. It is a framework for the cognitive processes of our mind. In other words, it determines how we think and act. A simple example of a mental model comes from an exercise described in The Fifth Discipline Fieldbook. Learning only comes from seeing the world the way it really is.

NOTES

(3) Shared Vision — what does it mean to have a shared vision? A shared vision begins with the individual, and an individual vision is something that one person holds as a truth. It means individuals building a sense of commitment within particular workgroups, developing shared images of common and desirable futures, and the principles and guiding practices to support the journey to such futures. The shared vision of an organization must be built of the individual visions of its members. What this means for the leader in the Learning Organization is that the organizational vision must not be created by the leader, rather, the vision must be created through interaction with the individuals in the organization. Only by compromising between the individual visions and the development of these visions in a common direction can the shared vision be created. The leader’s role in creating a shared vision is to share an own vision with the employees. This should not be done to force that vision on others, but rather to encourage others to share their vision too. Based on these visions, the organization’s vision should evolve. It would be naive to expect that the organization can change overnight from having a vision that is communicated from the top to an organization where the vision evolves from the visions of all the people in the organization. The organization will have to go through major change for this to happen, and this is where OD can play a role. In the development of a learning organization, the OD-consultant would use the same tools as before, just on a much broader scale. (4) Team Learning — this involves relevant thinking skills that enable groups of people to develop intelligence and an ability that is greater than the sum of individual members’ talents. It is a discipline that starts with “dialogue,” the capacity of members of a team to suspend assumptions and enter into a genuine “thinking together.” Team learning is vital because teams, not individuals, are the fundamental learning unit in modern organizations. (5) Systems thinking — this involves a way of thinking about, and a language for describing and understanding forces and interrelationships that shape the behavior of systems. It is a paradigm premised upon the primacy of the whole —the antithesis of the traditional evolution of the concept of learning in western cultures. This discipline helps managers and employees alike to see how to change systems more effectively, and to act more in tune with the larger processes of the natural and economic world. 83

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Once we embrace the idea that systems thinking can improve individual learning by inducing people to focus on the whole system, and by providing individuals with skills and tools to enable them to derive observable patterns of behavior from the systems they see at work, the next step is to justify why systems thinking is even more important to organizations of people. Here, the discipline of systems thinking is most clearly interrelated with the other disciplines, especially with mental models, shared vision, and team learning. 3.5 RCHITECTURE FOR ORGANISATIONAL LEARNING Learning Organisation is an organisation that purposefully takes steps to create architecture to enhance and maximize the potential for explorative and exploitative organizational learning to take place. Team-Based Structure - Teams are the best way of mixing energy with experience and for any organisation teams are good sources of attaining targets effectively and efficiently. Team based structures support continuous learning and pooling of experience and sharing knowledge. Looking at these benefits, a team-based structure is necessary for any organization aiming to become a learning organisation. Empowered Employees - Employee empowerment will make sure that employee take full responsibility for their actions and they work in an open environment this will also facilitate growth of employees and encourage innovation as well as instills the ability to think out of the box. Empowered employees will take more initiative & they will try to solve the problem where and when it will arise; this makes organizational climate more conducive to learning. Open Information - Information should be provided to everyone. Transparency in decision-making must be maintained. Open information builds trust and confidence of employees in the management and reduces the employee-management conflict. It also leads to pooling & sharing of experience and mutual learning. Even information considered obsolete or rudimentary may turn out to be of importance and may result into organizational growth. The Linkages Team based structure, empowered employees and open information all coexist and they are linked with each other as essentials. The team structure will facilitate sharing of common resources and objectives. Overall performance of the team or group will depend upon total of performances of each individual as well as team will make a coordinated effort to attain its targets or to perform effectively and efficiently. No organization can empower its employees with out sharing information with them so to empower employees the organization has to share information with employees and this connects open information with empowered employees. Employees who have information and who also posses the power to act and decide will definitely try their level best to improve the performance of the organization also they will be open towards learning & information 84

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sharing. Over and above these elements, the most important ingredient for a learning organization is Knowledge Management- being able to capitalize on the knowledge members of the organization. The knowledge or enriched experience that might not be written down or codified in formal documents. As employees do their jobs, they gain knowledge about the tasks they perform and learn the best ways to get certain things done and solve specific problems. Through knowledge management, this information can be shared and used by other employees working in the same organization. Certainly, the people performing a certain job are likely to learn the most about it. Knowledge management seeks to share this learning and knowledge throughout an organization.

NOTES

Middle-Down-Up Management An integrative architectural framework that unites the concepts of learning organization and knowledge management is presented for the readers to get a meaningful view. The model, depicted in Figure 3.1, is based on Senge’s five “disciplines” of learning organizations: 1. Systems Thinking. A conceptual framework, a body of knowledge and tools that has been developed over the past fifty years, to make the full patterns clearer, and to help us see how to change them effectively. 2. Personal Mastery. The discipline of continually clarifying and deepening our personal vision, of focusing our energies, of developing patience, and of seeing reality objectively. 3. Mental Models. Deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action. 4. Building Shared Vision. The practice of shared vision involves the skills of unearthing shared “pictures of the future” that foster genuine commitment and enrollment rather than compliance. 5. Team Learning. The discipline of team learning starts with “dialogue,” the capacity of members of a team to suspend assumptions and enter into a genuine “thinking together”.

Figure 3.1 Middle-Down-Up Management.

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Learning occurs at three levels: individual (personal mastery), group (team learning), and organizational (building shared vision). Mental models underlie all learning. They can either impede it by going unnoticed or accelerate it by being reflected, surfaced and examined. On the other, learning may change mental models. The fifth discipline, Systems Thinking, integrates the other four by enhancing each of them. Adapting the middle-up-down management process of Nonaka and Takeuchi, let us propose middle-down-up approach. In this framework, middle managers play an important role by working as a “bridge” between the broad visions of the top management and the concrete realities of business that front-line employees confront. They figure out the strategic intentions of the top management and translate them into a conceptual framework comprehensible to their subordinates. By signaling their own priorities, assumptions, and ways of thinking and acting, leaders manifest espoused values. These conscious and explicitly articulated values, however, are not necessarily internalized by the organization but remain to be questioned, debated, and challenged in dialogue, until the team has a shared perception of the success based on these values, and the value goes through a process of cognitive transformation into a belief and, ultimately, and assumption. In this leadership process, the images and maps of the conceptual framework are then incorporated into organizational theory-in-use, and explicit knowledge is internalized into tacit knowledge. When people share common mental models congruent with the shared vision, they can be empowered: they will know how to operate in various business settings as long as the overall business reality remains invariant. On the contrary, “to empower people in an unaligned organization can be counterproductive”. Shared vision emerges from the personal visions of individuals in the management process, in which the mental models are manifested on the surface of the organizational culture, and the tacit knowledge is externalized into explicit knowledge. Revisiting this model, Figure 3.2 depicts how the levels of enterprise architecture correspond to the model.

Figure 3.2 Organizational Learning and Enterprise Architecture 86

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On the strategic level, business activity is monitored (BAM) through the management process, exposing organizational theory-in-use, or actual behavior, in the form of real-time management dashboards facilitating strategic decision-making. The shared vision of the organization is built as a steering process of external adaptation and internal integration. The output of this process is the new and revised models describing the business processes on the highest level. Simulation capabilities are also employed as the means of optimizing the processes.

NOTES

The tactical level is about coordination and associated with team learning. The strategic intent of the top management is translated to unique end-to-end core business processes. These processes can be configured by composing underlying contextindependent services and coordinating the interplay of executable processes. Choreography is the prevalent means to describe relatively static collaborative processes; new concepts are emerging to address more dynamic collaborations. This is where the team learning occurs: the coordination of the collaborative effort requires a significant amount of dialogue between the process participants. Team learning also has an effect on tacit knowledge within the organization through the leadership process. The operational level embraces the operational and information model of the organization in the form of services. The services are context-independent, idempotent faculties optimized to perform their predefined function. Typically, orchestration describes the sequence and conditions in which the service accesses underlying resources, binding them to its execution context. Thus this level corresponds to personal mastery: the purpose of orchestration is to optimize resource utilization and streamline service efficiency against some performance measure defined by the management process. The model reflects the reality as perceived by the organization. It is the vast repository of “sources of truth” dispersed in enterprise information systems and databases, the knowledge of the organization. Thereby, it can be equated to mental models in the MiddleDown-Up model. 3.6 CAPTURING AND CODIFICATION OF KNOWLEDGE Knowledge capture is a process by which the expert’s thoughts and experiences are captured. In a broader view, knowledge capture may also include capturing knowledge from other sources such as books, technical manuscripts, and drawings. Knowledge has to be captured and codified in such a way that it can become a part of the existing knowledge base of the organization. Knowledge capture is a demanding mental process in which a knowledge developer collaborates with the expert to convert expertise into a coded program. Three important steps are involved: 1. Using an appropriate tool to elicit information from the expert 2. Interpreting the information and inferring the expert’s underlying knowledge and reasoning process 87

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3. Using the interpretation to build the rules that represent the expert’s thought processes or solutions.

NOTES

We need to capture both types of knowledge – explicit and tacit. Tacit knowledge management is the process of capturing the experience and expertise of the individual in an organization and making it available to anyone who needs it. The capture of explicit knowledge is the systematic approach of capturing, organizing, and refining information in a way that makes information easy to find, and facilitates learning and problem solving. The approach used to capture, describe, and subsequently code knowledge depends on the type of knowledge: explicit knowledge is already well described, but we may need to abstract and summarize this content. Tacit knowledge, on the other hand, may require much more significant up-front analysis and organization before it can be suitably described and represented. A wide variety of techniques may be used to capture and codify knowledge which is described here. 3.6.1 Capturing tacit knowledge Tacit knowledge capture requires free access to a cooperative and articulate expert. In most cases, the knowledge developer does not have the luxury of deciding on the expert. However, the developer must be able to identify real expertise and how well a particular expert’s know-how suits the project. (a) Expert Evaluation There are several indicators of expertise: •

Indicators of expertise o The expert commands genuine respect. o The expert is found to be consulted by people in the organization, when some problem arises. o The expert possesses self confidence and he/she has a realistic view of the limitations. o The expert avoids irrelevant information, uses facts and figures. o The expert is able to explain properly and he/she can customize his/her presentation according to the level of the audience. o The expert exhibits his/her depth of the detailed knowledge and his/her quality of explanation is exceptional. o The expert is not arrogant regarding his/her personal information.

•

Experts qualifications o The expert should know when to follow hunches, and when to make exceptions. o The expert should be able to see the big picture. o The expert should posse’s good communication skills. 88

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o The expert should be able to tolerate stress.

NOTES

o The expert should be able to think creatively. o The expert should be able to exhibit self-confidence in his/her thought and actions. o The expert should maintain credibility. o The expert should operate within a schema-driven/structured orientation. o The expert should use chunked knowledge. o The expert should be able to generate enthusiasm as well as motivation. o The expert should share his/her expertise willingly and without hesitation. o The expert should emulate an ideal teacher’s habits. Experts levels of expertise Highly expert persons. Moderately expert problem solvers. New experts. Capturing single versus multiple experts’ tacit knowledge: To ensure the reliability and quality of the KM system, a prime consideration is whether to tap one expert or a panel of experts and this decision is based on several factor such as the complexity of the problem, the criticality of the project to the organization, the types of expert available, and the funds allocated for building the KM system. Each alternative has advantages and limitations. Advantages of working with a single expert: • Ideal for building a simple KM system with only few rules. • Ideal when the problem lies within a restricted domain. • The single expert can facilitate the logistics aspects of coordination arrangements for knowledge capture. • Problem related/personal conflicts are easier to resolve. • The single expert tends to share more confidentiality. Disadvantages of working with a single expert: • • • •

Often, the experts’ knowledge is found to be not easy to capture. The single expert usually provides a single line of reasoning. They are more likely to change meeting schedules. The knowledge is often found to be dispersed.

Advantages of working with multiple (team) experts: • Complex problem domains are usually benefited. 89

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• Stimulates interaction. • Listening to a multitude of views allows the developer to consider alternative ways of representing knowledge. • Formal meetings are sometimes better environment for generating thoughtful contributions. Disadvantages of working with multiple (team) experts: • • • • •

Disagreements can frequently occur. Coordinating meeting schedules are more complicated. Harder to retain confidentiality. Overlapping mental processes of multiple experts can result in a process loss. Often requires more than one knowledge developer.

(b) Developing Relationship with Experts Creating the right impression: The knowledge developer must learn to use psychology, common sense, and technical as well as marketing skills to attract the experts respect and attention. Understanding of the expert’s style of expression: Experts are usually found to use one of the following styles of expression: Procedure type:

These types of experts are found to be logical, verbal and always procedural.

Storyteller type:

These types of experts are found to be focused on the content of the domain at the expense of the solution.

Godfather type:

These types of experts are found to be compulsive to take over.

Salesperson type:

These types of experts are found to spend most of the time dancing around the topic, explaining why his/her solution is the best.

Preparation for the session: •

Before making the first appointment, the knowledge developer must acquire some knowledge about the problem and the expert.

•

Initial sessions can be most challenging/critical.

•

The knowledge developer must build the trust.

•

The knowledge developer must be familiar with project terminology d he/she must review the existing documents.

•

The knowledge developer should be able to make a quick rapport with the expert.

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Deciding the location for the session:

NOTES

•

Protocol calls for the expert to decide the location.

•

The expert is usually more comfortable in having his/her necessary tools and information available close to him/her.

•

The meeting place should be quiet and free of interruptions.

Approaching multiple experts: •

Individual approach: The knowledge developer holds sessions with one expert at a time.

•

Approach using primary and secondary experts: o

The knowledge developer hold sessions with the senior expert early in the knowledge capture program for the clarification of the plan.

o

For a detailed probing, he/she may ask for other experts’ knowledge.

• Small groups approach: o

Experts gather together in one place, discuss the problem domain, and usually provide a pool of information.

o

Experts’ responses are monitored, and the functionality of each expert is tested against the expertise of the others.

o

This approach requires experience in assessing tapped knowledge, as well as cognition skills.

o

The knowledge developer must deal with the issue of power and its effect on expert’s opinion.

(c) Fuzzy Reasoning & Quality of Knowledge Capture •

Sometimes, the information gathered from the experts via interviewing is not precise and it involves fuzziness and uncertainty.

•

The fuzziness may increase the difficulty of translating the expert’s notions into applicable rules.

Analogies/Uncertainties: •

In the course of explaining events, experts can use analogies (comparing a problem with a similar problem which has been encountered in possibly different settings, months or years ago).

•

An expert’s knowledge or expertise represents the ability to gather uncertain information as input and to use a plausible line of reasoning to clarify the fuzzy details.

•

Belief, an aspect of uncertainty, tends to describe the level of credibility.

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•

People may use different kinds of words in order to express belief.

•

These words are often paired with qualifiers such as highly, extremely.

Understanding experience: •

Knowledge developers can benefit from their understanding/knowledge of cognitive psychology.

•

When a question is asked, then an expert operates on certain stored information through deductive, inductive, or other kinds of problem-solving methods.

•

The resulting answer is often found to be the culmination of the processing of stored information.

•

The right question usually evokes the memory of experiences that produced good and appropriate solutions in the past.

Sometimes, how quickly an expert responds to a question depends on the clarity of content, whether the content has been recently used, and how well the expert has understood the question. Problem with the language: How well the expert can represent internal processes can vary with their command of the language they are using and the knowledge developer’s interviewing skills. The language may be unclear in the following number of ways: • • • •

Comparative words (e.g., better, faster) are sometimes left hanging. Specific words or components may be left out of an explanation. Absolute words and phrases may be used loosely. Some words always seem to have a built-in ambiguity.

(d) Interviewing as a Tacit Knowledge Capture Tool Advantages of using interviewing as a tacit knowledge capture tool: • • • •

It is a flexible tool. It is excellent for evaluating the validity of information. It is very effective in case of eliciting information regarding complex matters. Often people enjoy being interviewed.

Interviews can range from the highly unstructured type to highly structured type. • The unstructured types are difficult to conduct, and they are used in the case when the knowledge developer really needs to explore an issue. • The structured types are found to be goal-oriented, and they are used in the case when the knowledge developer needs specific information.

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• Structured questions can be of the following types:

NOTES

o Multiple-choice questions. o Dichotomous questions. o Ranking scale questions. • In semi structured types, the knowledge developer asks predefined questions, but he/she allows the expert some freedom in expressing his/her answer. Guidelines for successful interviewing: • • • •

Setting the stage and establishing rapport. Phrasing questions. Listening closely/avoiding arguments. Evaluating the session outcomes.

Reliability of the information gathered from experts: Some uncontrolled sources of error that can reduce the information’s reliability: • • • • •

Expert’s perceptual slant. The failure in expert’s part to exactly remember what has happened. Fear of unknown in the part of expert. Problems with communication. Role bias.

o Errors in part of the knowledge developer: validity problems are often caused by the interviewer effect (something about the knowledge developer colours the response of the expert). Some of the effects can be as follows • Gender effect • Age effect • Race effect o

Problems encountered during interviewing • Response bias. • Inconsistency. • Problem with communication. • Hostile attitude. • Standardizing the questions. • Setting the length of the interview.

o

Process of ending the interview: • The end of the session should be carefully planned. • One procedure calls for the knowledge developer to halt the questioning a few minutes before the scheduled ending time, and to summarize the key points of the session. 93

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• This allows the expert to comment a schedule a future session.

NOTES

• Many verbal/nonverbal cues can be used for ending the interview. o

Issues: Many issues may arise during the interview, and to be prepared for the most important ones, the knowledge developer can consider the following questions: • How would it be possible to elicit knowledge from the experts who can not say what they mean or can not mean what they say? • How to set up the problem domain. • How to deal with uncertain reasoning processes. • How to deal with the situation of difficult relationships with expert(s). • How to deal with the situation when the expert does not like the knowledge developer for some reason.

(e) Rapid Prototyping in interviews: • Rapid prototyping is an approach to building KM systems, in which knowledge is added with each knowledge capture session. • This is an iterative approach which allows the expert to verify the rules as they are built during the session. • This approach can open up communication through its demonstration of the KM system. • Due to the process of instant feedback and modification, it reduces the risk of failure. • It allows the knowledge developer to learn each time a change is incorporated in the prototype. • This approach is highly interactive. • The prototype can create user expectations which in turn can become obstacles to further development effort. 3.6.2 Other knowledge capture techniques Like any other professional, the knowledge developer must be well versed in the use of specialized knowledge capture tools. Each tool has a unique purpose, depending on whether the capture process revolves around a single expert or multiple experts. Let us examine other tools used in knowledge capture. (a) On-Site Observation (Action Protocol) •

It is a process which involves observing, recording, and interpreting the expert’s problem-solving process while it takes place.

•

The knowledge developer does more listening than talking; avoids giving advice and usually does not pass his/her own judgment on what is being observed, even

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if it seems incorrect; and most of all, does not argue with the expert while the expert is performing the task. •

Compared to the process of interviewing, on-site observation brings the knowledge developer closer to the actual steps, techniques, and procedures used by the expert.

•

One disadvantage is that sometimes some experts to not like the idea of being observed.

•

The reaction of other people (in the observation setting) can also be a problem causing distraction.

•

Another disadvantage is the accuracy/completeness of the captured knowledge.

NOTES

(b) Brainstorming •

It is an unstructured approach towards generating ideas about creative solution of a problem which involves multiple experts in a session.

•

In this case, questions can be raised for clarification, but no evaluations are done at the spot.

•

Similarities (that emerge through opinions) are usually grouped together logically and evaluated by asking some questions like: o What benefits are to be gained if a particular idea is followed? o What specific problems that idea can possibly solve. o What new problems can arise through this?

The general procedure for conducting a brainstorming session: o o o o

Introducing the session. Presenting the problem to the experts. Prompting the experts to generate ideas. Looking for signs of possible convergence.

• If the experts are unable to agree on a specific solution, they knowledge developer may call for a vote/consensus. Electronic Brainstorming •

Is a computer-aided approach for dealing with multiple experts?

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It usually begins with a pre-session plan which identifies objectives and structures the agenda, which is then presented to the experts for approval.

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During the session, each expert sits on a PC and gets themselves engaged in a predefined approach towards resolving an issue, and then generates ideas.

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This allows experts to present their opinions through their PC’s without having to wait for their turn.

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Usually the comments/suggestions are displayed electronically on a large screen without identifying the source. 95

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This approach protects the introvert experts and prevents tagging comments to individuals.

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The benefit includes improved communication, effective discussion regarding sensitive issues, and closes the meeting with concise recommendations for necessary action.

•

This eventually leads to convergence of ideas and helps to set final specifications.

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The result is usually the joint ownership of the solution.

Figure 3.3 The process of brainstorming (c) Protocol Analysis (Think-Aloud Method) •

In this case, protocols (scenarios) are collected by asking experts to solve the specific problem and verbalize their decision process by stating directly what they think.

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Knowledge developers do not interrupt in the interim.

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The elicited information is structured later when the knowledge developer analyzes the protocol.

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Here the term scenario refers to a detailed and somehow complex sequence of events or more precisely, an episode.

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A scenario can involve individuals and objects.

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A scenario provides a concrete vision of how some specific human activity can be supported by information technology.

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(d) Consensus Decision Making •

Consensus decision making usually follows brainstorming.

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It is effective if and only if each expert has been provided with equal and adequate opportunity to present their views.

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In order to arrive at a consensus, the knowledge developer conducting the exercise tries to rally the experts towards one or two alternatives.

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The knowledge developer follows a procedure designed to ensure fairness and standardization.

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This method is democratic in nature.

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This method can be sometimes tedious and can take hours.

(e) Repertory Grid •

This is a tool used for knowledge capture.

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The domain expert classifies and categorizes a problem domain using his/her own model.

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The grid is used for capturing and evaluating the expert’s model.

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Two experts (in the same problem domain) may produce distinct sets of personal and subjective results.

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The grid is a scale (or a bipolar construct) on which elements can be placed within gradations.

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The knowledge developer usually elicits the constructs and then asks the domain expert to provide a set of examples called elements.

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Each element is rated according to the constructs which have been provided.

(f) Nominal Group Technique (NGT) •

This provides an interface between consensus and brainstorming.

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Here the panel of experts becomes a Nominal Group whose meetings are structured in order to effectively pool individual judgment.

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Idea writing is a structured group approach used for developing ideas as well as exploring their meaning and the net result is usually a written report.

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NGT is an idea writing technique.

(g) Delphi Method • It is a survey of experts where a series of questionnaires are used to pool the experts’ responses for solving a specific problem. 97

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• Each expert’s contributions are shared with the rest of the experts by using the results from each questionnaire to construct the next questionnaire.

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Concept Mapping •

It is a network of concepts consisting of nodes and links.

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A node represents a concept, and a link represents the relationship between concepts.

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Concept mapping is designed to transform new concepts/propositions into the existing cognitive structures related to knowledge capture.

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It is a structured conceptualization.

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It is an effective way for a group to function without losing their individuality.

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Concept mapping can be done for several reasons: o To design complex structures. o To generate ideas. o To communicate ideas. o To diagnose misunderstanding. • Six-step procedure for using a concept map as a tool: o Preparation. o Idea generation. o Statement structuring. o Representation. o Interpretation o Utilization. • Similar to concept mapping, a semantic net is a collection of nodes linked together to form a net. o A knowledge developer can graphically represent descriptive/declarative knowledge through a net. o Each idea of interest is usually represented by a node linked by lines (called arcs) which shows relationships between nodes. o Fundamentally it is a network of concepts and relationships.

(i) Blackboarding •

In this case, the experts work together to solve a specific problem using the blackboard as their workspace.

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Each expert gets equal opportunity to contribute to the solution via the blackboard.

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It is assumed that all participants are experts, but they might have acquired their individual expertise in situations different from those of the other experts in the group.

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The process of blackboarding continues till the solution has been reached. 98

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•

Characteristics of blackboard system:

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1. Diverse approaches to problem-solving. 2. Common language for interaction. 3. Efficient storage of information 4. Flexible representation of information. 5. Iterative approach to problem-solving. 6. Organized participation. 7. Components of blackboard system: 8. The Knowledge Source (KS): Each KS is an independent expert observing the status of the blackboard and trying to contribute a higher level partial solution based on the knowledge it has and how well such knowledge applies to the current blackboard state. 9. The Blackboard : It is a global memory structure, a database, or a repository that can store all partial solutions and other necessary data that are presently in various stages of completion. 10. A Control Mechanism: It coordinates the pattern and flow of the problem solution. 11. The inference engine and the knowledge base are part of the blackboard system. 3.7 KNOWLEDGE CODIFICATION After knowledge is captured, it is organized and codified in a manner amenable for transfer and effective use. Knowledge codification is organizing and representing knowledge before it is accessed by authorized personnel. The organizing part is usually in the form of a decision tree, a decision table, a frame, etc; Codification must be in a form and a structure that will build the knowledge base which must make it accessible, explicit, and easy to access. From a knowledge management perspective, codification means converting tacit knowledge to explicit knowledge in a usable form for the organizational members. From an information system view, codification is converting undocumented to documented information. Regardless of view, codification is making corporate-specific knowledge (tacit and explicit) visible, accessible, and usable for value-added decision making. The knowledge developer should note the following points before initiating knowledge codification: 12. Recorded knowledge is often difficult to access (because it is either fragmented or poorly organized). 13. Diffusion of new knowledge is too slow. 14. Knowledge is nor shared, but hoarded (this can involve political implications). 15. Often knowledge is not found in the proper form. 16. Often knowledge is not available at the correct time when it is needed.

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17. Often knowledge is not present in the proper location where it should be present. 18. Often the knowledge is found to be incomplete. 3.7.1 Codifying Knowledge • An organization must focus on the following before codification: o What organizational goals will the codified knowledge serve? o What knowledge exists in the organization that can address these goals? o How useful is the existing knowledge for codification? o How would someone codify knowledge? • Codifying tacit knowledge (in its entirety) in a knowledge base or repository is often difficult because it is usually developed and internalized in the minds of the human 3.7.2 Codification Tools and Procedures (a) Knowledge Maps •

Knowledge maps originated from the belief that people act on things that they understand and accept.

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It indicates that self-determined change is sustainable.

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Knowledge map is a visual representation of knowledge.

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They can represent explicit/tacit, formal/informal, documented / undocumented, internal / external knowledge.

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It is not a knowledge repository.

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It is a sort of directory that points towards people, documents, and repositories.

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It may identify strengths to exploit and missing knowledge gaps to fill.

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Knowledge Mapping is very useful when it is required to visualize and explore complex systems.

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Examples of complex systems are ecosystems, the internet, telecommunications systems, and customer-supplier chains in the stock market.

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Knowledge Mapping is a multi-step process.

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Key can be extracted from database or literature and placed in tabular form as lists of facts.

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These tabled relationships can then be connected in networks to form the required knowledge maps.

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Figure 3.4 Knowledge Map A popular knowledge map used in human resources is a skills planner in which employees are matched to jobs. Steps to build the map:

(b

•

A structure of the knowledge requirements should be developed.

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Knowledge required of specific jobs must be defined.

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You should rate employee performance by knowledge competency.

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You should link the knowledge map to some training program for career development and job advancement

Decision Table • •

It is another technique used for knowledge codification. It consists of some conditions, rules, and actions.

A phonecard company sends out monthly invoices to permanent customers and gives them discount if payments are made within two weeks. Their discounting policy is as follows: ‘If the amount of the order of phonecards is greater than Rs.35, subtract 5% of the order; if the amount is greater than or equal to Rs.20 and less than or equal to Rs.35, subtract a 4% discount; if the amount is less than Rs.20, do not apply any discount.” 101

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We shall develop a decision table for their discounting decisions, where the condition alternatives are ‘Yes’ and ‘No’. CONDITIONS AND ACTIONS

Paid within 2 weeks Order > Rs.35 Rs.20