Knowledge management

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Knowledge ManagementKnowledge Management

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Knowledge Management:
Introduction to KM
I. KM: When:
1. The globalized world in which we are living
2. Megatrends that are shaping future world
3. Knowledge Society and Knowledge-Based Economy
I. KM: Why:
1. Focus on Knowledge
2. Knowledge Work
3. Collective Knowledge
4. Knowledge workers

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III. KM: What:
1. Knowledge is (Data, Information, knowledge):
2. Explicit knowledge, tacit knowledge;
3. Knowledge management is: definition;
4. Collecting and connecting,
5. People, Process, Technology
6. Historical Perspective

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nowledge Management: Continued
KM: Where:
I. Learning Organization
KM: Who:
I. Knowledge Worker;
KM: How:
1. Knowledge Management Frameworks:
a) Dalkir’s Framework
b) European Framework
c) Holistic KM Framework

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nowledge Management: Continued
2. Approaches to Knowledge Management: Three Schools:
a) The Economic School:
1. Intellectual Capital Accounting
2. Intellectual Capital Management
3. Knowledge Market Framework.
b) The Organizational School:
1. Managing Common Knowledge
2. Nonaka’s Model: SECI Model
3. Managing Knowledge Workers
c) Strategic School :
1. Stock Strategy
2. Flow Strategy
3. Growth Strategy

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Knowledge Management: Continued
3. Critical Success Factors:
- Leadership
- Culture
- Strategy
- Information Technology
- Measurement
VII. Concluding Remarks.

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The core message of the course:
The core message of this course is that the only
sustainable advantage of a firm comes from:
1) What it collectively knows,
2) how efficiently it uses what it knows, and
3) how readily it acquires and uses
new knowledge.

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The globalized world in which
we are living

THREE GREAT ERAS OF
GLOBALIZATION:
•Globalization 1.0: 1492 - 1800
•Globalization 2.0: 1800 - 2000
•Globalization 3.0: 2000 - Present
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GLOBALIZATION I.0
• Columbus, a navigator, colonizer, and explorer, found
that the world is round.
• The main theme: trade. Opening trade between the Old
World and the New World.
• In globalization I.0 the world shrank from
large to medium.
• It was about countries and muscle.
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GLOBALIZATION I.0
• “Your Highnesses, as Catholic Christians, and princes who
love and promote the holy Christian faith, and are enemies
of the doctrine of Mahomet, and of all idolatry and heresy,
determined to send me, Christopher Columbus, to the
above-mentioned countries of India, to see the said princes,
people, and territories, and to learn their disposition and the
proper method of converting them to our holy faith; and
furthermore directed that I should not proceed by land to the
East, as is customary, but by a Westerly route, in which
direction we have hitherto no certain evidence that anyone
has gone.”
Entry from the journal of Christopher Columbus on his voyage of 1492
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GLOBALIZATION 1.0 CONTINUED…..
• The dynamic force driving the process of global
integration was how much muscle, how much
horsepower, wind power, or later steam power your
country had and how creatively you could deploy it.
• Countries and governments inspired by religion and
colonialism joined in breaking down the walls.
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IN GLOBALIZATION 1.0 THE
PRIMARY QUESTIONS WERE:
• Globalization I: Where does my country fit into global
competition and opportunities?
• How can I go global and collaborate with others through
my country?
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GLOBALIZATION 2.0
• Globalization 2.0 that began at the dawn of the 19th
century was interrupted by the Great Depression and
World Wars I and II.
• In this era the world shrank from medium to small.
• The dynamic force driving global integration was
multinational companies.
• The multinationals went global for markets and
labour.
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GLOBALIZATION 2.0
CONTINUED…
• In this era we saw the birth of a global economy by
movement of goods and information from
continent to continent.
• In the first half of this era, global integration was
powered by falling transportation costs, thanks to
the steam engine and the railroad, and in the
second half by falling telecommunication costs
thanks to the diffusion of the telegraph, telephone,
the PC, satellites, fiber-optic cable, and the early
version of the World Wide Web.
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PRIMARY QUESTIONS WERE:
• Where does my company fit into the global economy?
• How does it take advantage of the opportunities?
• How can I go global and collaborate with others
through my company?
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GLOBALIZATION 3.0
• Globalization 3.0 shrank the world from small to tiny.
• Globalization 3.0 is flattening the playing field.
• The dynamic force in globalization 3.0 is the new
power of individuals to collaborate and compete
globally.
• The phenomenon that is enabling, empowering, and
enjoying individuals and small groups to go global so
easily may be called the flat-world platform.
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GLOBALIZATION 3.0 CONTINUED…
• The flat world platform is the product of a
convergence of the personal computer (which
allowed every individual suddenly to become the
author of his or her own content in digital form) with
fiber-optic cable (which allowed all individuals to
digital contents around the world for next to
nothing) with the rise of workflow software (which
enabled individuals all over the world to collaborate
on the same digital content form anywhere).
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GLOBALIZATION 3.0 CONTINUED…
• While Globalization 1.0 and 2.0 were driven by
Europeans and Americans, Globalization 3.0 is
going to be more and more driven not only by
individuals but also by a much more divers non-
Western, non-White group of individuals.
• While the empowerment of individuals to act
globally is the most important new feature of
Globalization 3.0, companies will be newly
empowered in this era as well.
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PRIMARY QUESTIONS ARE:
• Where do I, as an individual, fit into the global competition
and global collaboration?
• How can I, on my own, interact and collaborate with others
globally?
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Megatrends that are shaping the
future world
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FIVE MEGATRENDS
• More from Less: A world of Limited Resources
• A Personal Touch: Personalisation of services
• On the Move: Urbanisation and increased mobility
• Divergent Demographics: Older, hungry and more demanding
• i World: Digital and natural convergence
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MEGATREND: MORE FROM LESS
• More from less. This relates to the world’s depleting natural
resources and increasing demand for those resources through
economic and population growth. Coming decades will see a focus
on resource use efficiency.
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MEGATREND: A PERSONAL TOUCH
• A personal touch. Growth of the services sector of global economy is
being followed by a second wave of innovation aimed at tailoring and
targeting services suited to personal needs and want.
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MEGATREND: DIVERGENT DEMOGRAPHICS
• Divergent demographics. The populations of OECD countries are
ageing and experiencing lifestyle and diet related health problems. At
the same time there are high fertility rates and problems of not
enough food for millions in poor countries.
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MEGATREND: ON THE MOVE
• On the move. People are changing jobs and careers more often,
moving house more often, commuting further to work and travelling
around the world more often.
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MEGATREND: I WORLD
• i World. Everything in the natural world will have a digital counterpart.
Computing power and memory storage are improving rapidly. Many
more devices are getting connected to the internet.
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Freedom of expressionFreedom of expression
This exercise requires strict observance of
rights at two levels:
•Social levelSocial level
•Individual levelIndividual level

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Knowledge Society
and
Knowledge-Based Economy
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Knowledge Society:
A society with freedom at social and individual level.
Knowledge Based Economy:
An economy characterized by the recognition of knowledge as a
source of competitiveness, the increasing importance of science,
research, technology and innovation in knowledge creation, and
the use of computers and the Internet to generate, share and
apply knowledge.
Knowledge-based economies are economies which are
directly based on the production, distribution and use
of knowledge and information. 3131

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Knowledge Assessment Methodology (KAM):
To identify the challenges and opportunities faced by countries
in making the transition to the knowledge-based economy.
(World Bank Institute)
Four Knowledge Economy pillars:
1. Economic incentive and institutional regime,
2. Education,
3. Innovation,
4. Information and Communication Technologies (ICTs) 3232

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Pillar 1: The Economic Incentive and
Institutional Regime
The country’s economic and institutional regime must
provide incentives for the efficient use of existing and new
knowledge and the flourishing of entrepreneurship.
Tariff & Nontariff Barriers
Regulatory Quality
Rule of Law
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Pillar 2: Education and Human
Resources
The country’s people need education and skills
that enable them to create and share, and to use
it well.
Adult Literacy Rate
Secondary Enrollment
Tertiary Enrollment

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Pillar 3: The Innovation System
The country’s innovation system—firms, research centers,
universities, think tanks, consultants, and other organizations—must
be capable of tapping the growing stock of global knowledge,
assimilating and adapting it to local needs, and creating new
technology.
Researchers in R&D
Patent Applications Granted by the US Patent and Trademark Office
Scientific and Technical Journal Articles
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Pillar 4: Information and Communication
Technology (ICT)
A dynamic information infrastructure is needed to
facilitate the effective communication, dissemination,
and processing of information..
Telephones per 1,000 people
Computers per 1,000 people
Internet Users per 10,000 people

WHY IS KM IMPORTANT TODAY
• The major business drivers behind today’s increased interest in and
application of KM lie in four key areas:
• 1. Globalization of business. Organizations today are more global—
multisite, multilingual, and multicultural in nature.
• 2. Leaner organizations. We are doing more and we are doing it faster, but
we also need to work smarter as knowledge workers, adopting an
increased pace and workload.
• 3. “Corporate amnesia.” We are more mobile as a workforce, which
creates problems of knowledge continuity for the organization and places
continuous learning demands on the knowledge worker. ion.
• 4. Technological advances. We are more connected. Advances in
information technology not only have made connectivity ubiquitous but
have radically changed expectations. We are expected to be “on” at all
times.
R. Nasirzadeh - 2012 38

WHY IS KM IMPORTANT TODAY
• Knowledge management represents one response to the challenge
of trying to manage this complex, information-overloaded work
environment.
• One of the largest contributors to the complexity is that information
overload represents only the tip of the iceberg—only that
information that has been rendered explicit. KM also must deal with
the yet to be articulated or tacit knowledge.

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What?

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Knowledge
and
Knowledge Management
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Knowledge in nor data nor information; it is related to both.
Data is a set of discrete, objective facts about events. In an
organizational context, data is most usefully described as
structured records of transactions.
Information is a message, usually in the form of a document
or an audible or visible communication. As with any message,
it has a sender and a receiver. Information is meant to change
the way the receiver perceives something, to have an impact
on his judgment and behaviour. It must inform: it’s data that
makes a difference.
Unlike data, information has meaning, relevance and purpose.4242

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Transforming data into information: 5C methods:
Contextualized: We know for what purpose the data was
gathered;
Categorized: we know the units of analysis or key components of
the data,
Calculated: the data may have been analyzed mathematically or
statistically,
Corrected: errors have been removed from data,
Condensed: the data may have been summarized in a more
concise form.
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Knowledge:
A working and pragmatic definition of knowledge:
Knowledge is a fluid mix of framed experience, values,
contextual information, and expert insight that provides a
framework for evaluating and incorporating new experiences
and information. It originates and is applied in the minds of
knower.
In organizations, it often becomes embedded not only in
documents or repositories but also in organizational routines,
processes, practices, and norms.
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Transformation of information into knowledge: Four C method:
Comparison: How does information about this situation compare to
the other situations we have known?
Consequences: What implications does the information have
for decisions and actions?
Connections: How does this bit of information relate to others?
Conversation: What do other people think about this information?
While data is found in records and transactions, or information
in messages, we obtain knowledge from individuals or group
of knowers, or sometimes in organizational routines. It is
delivered through structured media such as books and
documents, and person to person contacts ranging from
conversation to apprenticeships.
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Some of key components of knowledge:
- Experience: Experience refers to what we have done and
what has happened to us in the past. Experience and expert
are two related words. Experts – people with deep knowledge
of a subject – have been tested and trained by experience.
Experience provides historical perspective from which to view
and understand new situations and events. When firms hire
experts they are buying experience-based insights.
- Truth: Knowledge has ground truth, on the ground, rather
than from the heights of theory or generalization. The
difference between what is taught and what happens in
practice.
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Judgment: Unlike data and information knowledge contains
judgment. When knowledge stops evolving, it turns into
opinion and dogma.
Rules of thumb: Knowledge works through rules of thumb:
flexible guides to action that developed through trial and error
and over long experience and observation.
Values: People’s values and beliefs have a powerful impact
on organizational knowledge.
De-knowleding: Dealing with excess knowledge.
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Types of knowledge: Explicit and Tacit
Knowledge in organizations is often classified into two types:
explicit and tacit.
1.Explicit knowledge is knowledge that can be captured and
written down in documents or databases. Examples of explicit
knowledge include instruction manuals, written procedures,
best practices, lessons learned and research findings. Explicit
knowledge can be categorized as either structured or
unstructured. Documents, databases, and spreadsheets are
examples of structured knowledge, because the data or
information in them is organized in a particular way for future
retrieval. In contrast, e-mails, images, training courses, and
audio and video selections are examples of unstructured
knowledge because the information they contain is not
referenced for retrieval.
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Types of knowledge: Explicit and Tacit
Knowledge in organizations is often classified into two types:
explicit and tacit.
2. Tacit knowledge is the knowledge that people carry in their
heads. It is much less concrete than explicit knowledge. It is
more of an “unspoken understanding” about something,
knowledge that is more difficult to write down in a document
or a database. An example might be, knowing how to ride a
bicycle – you know how to do it, you can do it again and again,
but could you write down instructions for someone to learn to
ride a bicycle? Tacit knowledge can be difficult to access, as it
is often not known to others. In fact, most people are not
aware of the knowledge they themselves possess or of its
value to others. Tacit knowledge is considered more valuable
because it provides context for people, places, ideas and
experiences. It generally requires extensive personal contact and t
effectively.
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Types of knowledge: Old and New
Types of knowledge: old and new
Most knowledge management strategies generally have one (or sometimes
both) of two thrusts.
The first is to make better use of the knowledge that already exists within
the organization, and the second is to create new knowledge.
Making better use of the knowledge that already exists within an organization
(”old” knowledge) often begins with “knowing what you know”. Very often
leading managers comment: “if only we knew what we knew”.
Too frequently, people in one part of the organization reinvent the wheel or
fail to solve a problem because the knowledge they need is elsewhere in
the organization but not known or accessible to them. Hence the first
knowledge management initiative of many companies is that of finding out
what they know, and taking steps to make that knowledge accessible
throughout the organization. Specific approaches might include conducting
a knowledge audit, mapping the organization’s knowledge resources and
flows, making tacit knowledge more explicit. 5050

MANAGING KNOWLEDGE: COLLECTING AND CONNECTING
• Knowledge management tends to have a “collecting” and a
“connecting” dimension.
• The collecting dimension involves linking people with
information.
• It relates to the capturing and disseminating of explicit knowledge
through information and communication technologies aimed at
codifying, storing and retrieving content.
• Through such collections of content, what is learned is made
readily accessible to future users.
• Examples include various intranets, database, library, and many
more.
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MANAGING KNOWLEDGE: COLLECTING AND CONNECTING
• The connecting dimension involves linking people with people and
enhancing tacit knowledge flow through human interaction, so that
knowledge is diffused around the organization.
• Connecting is necessary because knowledge is embodied in people,
and in the relationships within and between organizations.
• Examples of connecting initiatives include skills directories and expert
directories – searchable online staff directories that give much more
detail about who does what and who knows what, collaborative
working, communities of practice – networks of people with a common
interest, and various “socialisation” activities designed to support
knowledge flows.
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MANAGING KNOWLEDGE: PEOPLE, PROCESSES, TECHNOLOGY
• One widely-used approach is to think of knowledge management in
terms of three components, namely people, processes and
technology:
• People: Getting an organization's culture “right” for knowledge
management is typically the most important challenge.
• Knowledge management is first and foremost a people issue.
• Main questions: Does the culture of organization support ongoing
learning and knowledge sharing? Are people motivated and
rewarded for creating, sharing and using knowledge? Is there a
culture of openness and mutual respect and support? Do people
feel inspired to innovate and learn from mistakes, or is there a
strong “blame and shame” culture?
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MANAGING KNOWLEDGE: PEOPLE, PROCESSES, TECHNOLOGY
• Processes: In order to improve knowledge sharing, organizations often
need to make changes to the way their internal processes are structured,
and sometimes even the organizational structure itself.
• For example, if an organization is structured in such a way that different
parts of it are competing for resources, then this will most likely be a
barrier to knowledge sharing.
• Looking at the many aspects of “how things are done around here” in
organization, which processes constitute either barriers to, or enablers of,
knowledge management? How can these processes be adapted, or what
new processes can be introduced, to support people in creating, sharing
and using knowledge?
• >
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WAYS WITH KNOWLEDGE: PEOPLE, PROCESSES, TECHNOLOGY
• Technology : A common misconception is that knowledge
management is mainly about technology – getting an intranet,
linking people by e-mail, compiling information databases etc.
• Technology is often a crucial enabler of knowledge
management – it can help connect people with information,
and people with each other, but it is not the solution.
• And it is vital that any technology used “fits” the organization's
people and processes – otherwise it will simply not be used.
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WAYS WITH KNOWLEDGE: PEOPLE, PROCESSES, TECHNOLOGY
• The three components - people, process and technology -
are often compared to the legs of a three-legged stool – if
one is missing, then the stool will collapse.
• However, one leg is viewed as being more important than
the others – people.
• An organization's primary focus should be on developing a
knowledge-friendly culture and knowledge-friendly
behaviours among its people, which should be supported by
the appropriate processes, and which may be enabled
through technology.
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Historical perspectives
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The Three Stages of Knowledge Management:
Stage I: By the Internet out of intellectual capital:
- Information technology
- Intellectual capital
- The Internet.
Stage II: The human relations stage:
- Communities of practice
- Organizational culture
- The learning organization
- Tacit knowledge.
Stage III: The content and irretrievability stage:
- Content management
- Taxonomies.
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Stage I: By the Internet out of intellectual capital:
- Driven primarily by IT.
- Initiated first in the large international consulting firms.
- Reason for initiation: the left hand had no idea what the right hand
knew.
- Sharing knowledge could avoid reinventing the wheel.
- Intranet as a tool to accomplish knowledge coordination and sharing
- The focus became how to deploy new technology to accomplish
knowledge goals.
- Next step was to share knowledge with customers who had the
same problem.
- The new product was labeled: Knowledge Management.
- If Texas Instrument knew what Texas Instrument knew. 5959

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Stage II: The human relations stage:
- This stage added recognition of the human and cultural dimensions.
- Not recognizing the importance of human actors leads the
organization to a failure.
- Two major themes: learning organization and tacit knowledge.
- Knowledge creation as well as knowledge sharing and communicatio
- Emerging communities of practice.
- In this stage the work extended from information technology people
to people in the human resources departments. 6060

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Stage III: The content and retrieveability stage:
- Awareness of the importance of content.
- Awareness of the importance of retrieveability and therefore of the
importance of the arrangement, description, and structure of that
content.
- It’s no good if they try to use it but cannot find it.
- Enterprise content management.
- Taxonomy.
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Knowledge management:
Where?

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Learning Organization:
A pre-requisite for KM in organizations
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Learning Organization:
The core of learning organizations work is based upon five learning
disciplines:
1. Personal mastery: Learning to expand our personal capacity to create
he results we most desire, and creating an organizational environment
which encourages all its members to develop themselves toward the
goals and purposes they choose.
2. Mental models: Reflecting upon, continually clarifying, and improving
our internal pictures of the world, and seeing how they shape our actions
and decisions.
3. Shared vision: Building a sense of commitment in a group, by
developing shared images of the future we seek to create, and the
principles and guiding practices by which we hope to get there. 6464

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Learning Organization: continued…..
4. Team learning: Transforming conversational and collective thinking
skills, so that groups of people can reliably develop intelligence and
ability greater than the sum of individual members’ talents.
5. Systems thinking: A way of thinking about, and a language for
describing and understanding, the forces and interrelationship that
shape the behaiour of systems. This discipline helps us see how to
change systems more effectively, and to act more in tune with the
larger processes of the natural and economic world.
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MANAGING KNOWLEDGE WORKER
• Knowledge workers have high degree of expertise,
education, or experience, and the primary purpose
of their jobs involve, the creation, distribution, or
application of knowledge.
• Thomas Davenport
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MANAGING KNOWLEDGE WORKERS
 Davenport suggests the following about knowledge work and
knowledge workers: .
 1. Knowledge workers like autonomy.
 2. Knowledge workers don’t like to see their jobs reduced to a
series of boxes and arrows.
 3. Understanding knowledge work is best achieved through
observation.
 4, Mental and emotional commitment to work.
 5. Knowledge workers value their knowledge and don’t share it
easily.
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Integration Model
Systematic, repeatable work.
Highly dependent on formal
processes, methodologies or
standards.
Dependent on tight
integration across functional
boundaries.
Collaboration Model
Improvisional work.
Highly reliant on deep expertise
across multiple functions.
Dependent on fluid deployment
of flexible teams.
Transaction Model
Routine work
Highly reliant on formal rule,
procedures and training.
Dependent on low discretion
workforce or automation.
Expert Modal
Judgment-oriented work.
Highly dependent on individual
expertise and experience.
Dependent on star performers.
Segmentation of Knowledge Workers
Routine Complexity of work Judgment
Collaborative
Groups
Level of
Interdependence
Individual
Actors

Knowledge Management
Frameworks
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AN INTEGRATED KM CYCLE

• On the basis of the study of some major approaches to KM cycles,
Dalkir distills an integrated KM cycle. The three major stages are:
• 1. Knowledge capture and/or creation.
• 2. Knowledge sharing and dissemination.
• 3. Knowledge acquisition and application.
• In the transition from knowledge capture/creation to knowledge
sharing and dissemination, knowledge content is assessed.
Knowledge is then contextualized in order to be understood
(“acquisition”) and used (“application”). This stage then feeds back
into the first one in order to update the knowledge content.

• Knowledge capture refers to the identification and subsequent
codification of existing (usually previously unnoticed) internal
knowledge and know-how within the organization and/or external
knowledge from the environment.
• Knowledge creation is the development of new knowledge and
know-how— innovations that did not have a previous existence
within the company. When
• knowledge is inventoried in this manner, the next critical step is toR. Nasirzadeh - 2012 75

• Once it has been decided that the new identified content is of sufficient
value, the next step is to contextualize this content, by maintaining a link
between the knowledge and those knowledgeable about that content: the
author or originator of the idea and subject matter experts, as well as those
who have garnered experience in making use of this content.
Contextualization also implies identifying the key attributes of the content in
order to better match to a variety of users—for example, personalization to
translate the content into one preferred by the end user or creation of a
short executive summary to better accommodate the time constraints of a
senior manager. Finally, contextualization will often succeed when the new
content is firmly, yet seamlessly, embedded in the business processes of
the organization. The integrated cycle subsumes most of the steps involved
in the KM cycles discussed previously.

DALKIR’S KNOWLEDGE MANAGEMENT
FRAMEWORK
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FRAMEWORK
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FRAMEWORK
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European Knowledge Management Framework
The Framework should be considered as a starting point for developing an
organization-specific framework that serves best the needs of a particular
organization’s KM approach.
The KM Framework considers three layers as most important for KM:
Business Focus
Core Knowledge Activities
Enablers

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Knowledge Management Framework
The business focus should be in the centre of any KM initiative and
represents the value-adding processes of an organization, which may typically
include strategy development, product/service innovation and development,
Manufacturing and service delivery, sales and customer support.
These processes represent the organizational context in which critical
knowledge, such as knowledge about products and services, customers or
technology is created and applied.
Furthermore, these processes are now becoming more and more
inter-organizational, as organizations operate in business networks with
suppliers, partners and clients.

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Five core knowledge activities have been identified as most widely used
by organizations: identify, create, store, share and use.
These represent the second layer of the framework by forming an integrated
process. These activities are typically performed in support of the wider
business processes.
Their integration and performance within an organization have to be
supported by the right KM methods and tools.

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The enablers represent the third layer and comprise two main categories,
called personal and organizational knowledge capabilities, which complement
each other. These capabilities should be seen as the enablers for the knowledge
activities outlined above.
Personal knowledge includes those capabilities such as ambition, skills,
behaviour, experience, tools and time management which have to be
developed at the personal and group level in order to generate
improvements from knowledge handling.
Organizational knowledge capabilities are those that leaders have to
establish in order to facilitate effective knowledge handling within the
value-adding processes, by both internal stakeholders (such as managers
and employees) and external partners (such as suppliers and clients).
These capabilities include the mission, vision and strategy, the design of
processes and organizational structures, measurement, understanding of the
culture, the use of technology and infrastructure, as well as the development of
the collectively available knowledge of an organization – i.e. its so-called
“knowledge assets”.

878787Knowledge Management Framework

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Knowledge Products
Business Processes
Knowledge Processes
Business Processes

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Use Knowledge Create/Capture
Knowledge
Share Knowledge Store Knowledge

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Culture
Technology
StrategyMeasure
Knowledge Management Enablers

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Knowledge Society
Knowledge Economy
Knowledge Management Environment Enablers

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Holistic Knowledge Management Framework
Knowledge Society
Knowledge Economy
Culture
Technology
StrategyMeasure
Create Knowledge
Share Knowledge
Use Knowledge
Store Knowledge
Business Processes

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Approaches to knowledge management
Three Schools of Knowledge
Management

• Earl (2001) developed taxonomy for knowledge management that he
labeled schools of knowledge management. Each school was
proposed as an ideal type. No claims were made that any one school
outperforms others. Each represents a particular orientation or
perspective. The schools are not mutually exclusive.
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APPROACHES TO KNOWLEDGE MANAGEMENT
•Three schools:
1. The Economic School,
2. The Organizational School,
3. The Strategic School
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The Economic School
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THE ECONOMIC SCHOOL
• According to Earl (2001), the economic school is explicitly concerned
with both protecting and exploiting a firm’s knowledge or intellectual
assets to produce revenue streams (or rent).
• It is concerned with managing knowledge as an asset, in which
knowledge or intellectual assets include patents, trademarks,
copyrights and know-how.
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The Economic School
1.Intellectual Capital Accounting
2.Intellectual Capital Management
3.Knowledge Market Framework

Intellectual Capital Accounting
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INTELLECTUAL CAPITAL ACCOUNTING
• Several tools are suggested for measuring intellectual capital.
Value is defined by the buyer, not the seller.
• A company, therefore, is worth what the stock market says:
price per share x total number of shares outstanding = market
value; what the company as a whole is worth.
• One measure of intellectual capital is the difference between its
market value and its book equity. The assumption is that
everything left in the market value after accounting for the fixed
assets must be intangible assets.
• If Microsoft is worth 100 billion dollars, and its book value is 10
billion dollars, then its intellectual capital is 90 billion dollars.
100

INTELLECTUAL CAPITAL
• Three components of intellectual capital can be identified:
• 1. Human Capital
• 2. Relational Capital
• 3. Structural Capital
101

• Human capital is the first component, consisting of the know-
how, capabilities, skills and expertise of human members of an
organization.
• Relational capital is the second component, consisting of any
connection that people outside the organization have with it,
together with customer loyalty, market share, the level of
backorders, and so forth.
• Structural capital embraces the remaining component of
intellectual capital, including both systems and networks, and
cultures and values, together with elements of intellectual
property such as patents, copyrights, trademarks, and so forth.
102

• The market-to-book value ratio is sometimes used to indicate
the value of intellectual capital in an organization.
• Three decades ago, the market-to-book value ratio was close to
one in most businesses. Today, this ratio has grown to four on
average.
• Microsoft is an extreme example. The book value of the
company was 11 billion dollars in 1997, while the market value
was 200 billion. This gives a market-to-book value ratio of 20.
• Afuah and Tucci (2003) argue that this ratio is caused by
intellectual capital.
103

Intellectual Capital Management
104

INTELLECTUAL CAPITAL MANAGEMENT
• Sveiby (2001) developed a knowledge-based theory of the
firm in which he distinguished between three families of
intangible assets:
• 1. The external structure family
• 2. The internal structure family
• 3. The individual competence family
105

THE EXTERNAL STRUCTURE FAMILY
• The external structure family consists of relationships with customers
and suppliers and the reputation (image) of the firm. Some of these
relationships can be converted into legal property such as trademarks
and brand names. The value of such assets is primarily influenced by
how well the company solves its customers’ problems, and there is
always an element of uncertainty here.
106

THE INTERNAL STRUCTURE FAMILY
• The internal structure family consists of patents, concepts, models,
and computer and administrative systems. These are created by the
employees and are thus generally owned by the organization. The
structure is partly independent of individuals and some of it remains
even if a large number of the employees leave.
107

THE INDIVIDUAL COMPETENCE FAMILY
• The individual competence family consists of the competence of
the professional staff, the experts, the research and
development people, the factory workers, sales and marketing -
in short, all those that have a direct contact with customers and
whose work is within the business idea.
• Competence is a term introduced here. Competence can be
defined as the sum of knowledge, skills and abilities at the
individual level. With this definition, we say that knowledge is
part of competence, and competence is part of intellectual
capital.
108

 Given three families of intangible assets, it is possible to identify nine
knowledge transfers. These knowledge transfers can occur within a
family and between families, as below:
 1. Knowledge transfers between individuals concern how to best
enable the communication between employees within the
organization.
 The strategic question is: How can we improve the transfer of
competence between people in the organization?
 Activities for intellectual capital management focus on trust building,
enabling team activities, induction programs, job rotation and
master/apprentice scheme.
109

• 2. Knowledge transfers from individuals to external
structure concern how the organization’s employees
transfer their knowledge to the outer world.
• The strategic question is: How can the organization’s
employees improve the competence of customers,
suppliers and other stakeholders?
• Activities for intellectual capital management focus on
enabling the employees to help customers learn about the
products, enabling job rotation with customers, holding
product seminars and providing customer education.
110

• 3. Knowledge transfers from external structure to individuals
occur when employees learn from customers, suppliers and
community feedback through ideas, new experiences and new
technical knowledge.
customers, suppliers and other stakeholders improve the
competence of the employees?
• Activities for intellectual capital management focus on creating
and maintaining good personal relationships between the
organization’s own people and the people outside the
organization.
111

 4. Knowledge transfers from competence to internal
structure concern the transformation of human capital into
more permanent structural capital through documented
work routines, intranets and data repositories.
 The strategic question is: How can we improve the
conversion from individually held competence to systems,
tools and templates?
 Activities for intellectual capital management focus on tools,
templates, process and systems so they can be shared
more easily and efficiently.
112

 5. Knowledge transfers from internal structure to individual
competence is the counterpart of the above. Once competence
is captured in a system it needs to be made available to other
individuals in such a way that they improve their capacity to act.
 The strategic question is: How can we improve individuals’
competence by using systems, tools and templates?
 Activities for intellectual capital management focus on improving
human computer interface of systems, action-based learning
processes, simulations and interactive e-learning environments.
113

• 6. Knowledge transfers within the external structure concern
what customers and others tell each other about the services of
an organization.
• The strategic question is: How can we enable the conversations
among the customers, suppliers and other stakeholders so they
improve their competence?
partnering and alliances, improving the image of the
organization and the brand equity of its products and services,
improving the quality of the offering, and conducting product
seminars and alumni programs.
114

• 7. Knowledge transfers from external to internal structure
concern what knowledge the organization can gain from the
external world and how the learning can be converted into
action.
• The strategic question is: How can competence from the
customers, suppliers and other stakeholders improve the
organization’s systems, tools, processes and products?
empowering call centers to interpret customer complaints,
creating alliances to generate ideas for new products and
research and development alliances.
115

• 8. Knowledge transfers from internal to external structure is
the counterpart of the above.
systems, tools and processes and products improve the
competence of the customers, suppliers and other
stakeholders?
making the organization’s systems, tools and processes
effective in servicing the customer, extranets, product
tracking, help desks and e-business.
116

• 9. Knowledge transfers within the internal structure in which
the internal structure is the backbone of the organization.
systems, tools, processes and products be effectively
integrated?
streamlining databases, building integrated information
technology systems and improving the office layout.
117

The Economic School
Knowledge market framework
118

119
nowledge Market:
he first step in any knowledge initiative is recognizing that
ere are markets for Knowledge and every market system is
mbedded in and affected by social and political realities.
layers in the knowledge market:
Buyers
Sellers
Brokers
119119

120
layers in the knowledge market:
. Buyers: They look for insights, judgments, and
nderstanding. 15 to 20 percent of managerial time is spent
pecifically in knowledge search or responding to requests for
nowledge.
. Sellers: knowledge sellers in an organization are people
ith an internal reputation for having substantial knowledge
bout a process or a subject. One of the challenges of
nowledge management is to ensure that knowledge sharing is
ewarded more than knowledge hoarding.
. Brokers: also known as knowledge keepers and boundary
panners make connection between buyers and sellers. About
10 percent of managers are those who enjoy looking for
nowledge in their company and facilitating its sharing.
brarian are another example of knowledge brokers. 120120

121
The price system:
Within organizations the medium of exchange is seldom
money. The most important foundation in this regard in an
organization is trust. However, knowledge price normally
takes the form of:
- Reciprocity: A knowledge seller spends time and effort
needed to share knowledge effectively if he expects the
buyers to be willing sellers when he is in need in the market
for their knowledge.
- Repute: A knowledge seller wants others to know and
respect him as a knowledgeable person.
- Altruism: Knowledge sharers who are motivated in part by
a love of their subject and to some degree by altruism,
whether for the good of the firm or based on a natural
impulse to help others. 121121

122
Knowledge market signals:
- Position and education: Title or position and education are
the most common formal signal indicating who has or should
have valuable knowledge,
- Informal networks: A very important signal that has its own
advantages and drawbacks,
- Communities of practice: Co-workers who have contemporary
knowledge form a group called community of practice. It is
often self-organized.
122122

123
Three key factors in knowledge market inefficiencies:
- Incompleteness of information: About where to find the
needed knowledge.
- Asymmetry of knowledge: knowledge is not distributed in
symmetry in the whole organization.
- Localness of knowledge: People normally get knowledge in
face to face interactions which happens in their neighborhood.
123123

124
Knowledge market pathologies:
Distortions that drastically inhibit the flow of knowledge:
- Monopolies: If only one person or one group holds
knowledge that others need, a knowledge monopoly exists.
- Artificial scarcity: A corporate culture in which knowledge is
the norm creates scarcity.
- Downsizing can also create knowledge scarcity by
eliminating employees whose absence shows them to be
owner of essential knowledge. Knowledge often walks out
of the door during downsizing.
- Trade barriers: Individuals and department in organization
establish trade barriers to their knowledge. A CEO could also
create a barrier by banning subjects that threatens it.
124124

125
Developing effective knowledge market:
- Using information technology wisely: Electronic yellow pages.
- Building market place: Talk room, corporate universities.
- Creating and defining knowledge market value: To establish
a consistent culture of knowledge sharing, you have to have money
rewards, salary increases, promotions, and so forth.
125125

126
The benefits of knowledge market:
- Higher workforce morale: Employees see that their knowledge
is valuable,
- Greater corporate coherence: An active exchange of
information and ideas in an atmosphere of openness and trust
enables employees at all levels to understand what is
happening in the company,
- Richer knowledge stock: Knowledge markets are unlike
markets for goods in that every sale increases the total stock
knowledge in the organization. A thriving knowledge market
continuously tests and refines organizational knowledge,
- Stronger meritocracy of ideas: A genuinely open knowledge
market will test official beliefs and expose the flaws of the faulty
ones before they can do much damage.
126126

127
Approaches to Knowledge
The Organizational School

THE ORGANIZATIONAL SCHOOL
• The organizational school describes the use of organizational
structures, or networks, to share or pool knowledge.
• Often described as knowledge communities, the archetypal
arrangement is a group of people with a common interest, or
problem, or experience.
• These communities are designed and maintained for a business
purpose, and they can be intra- or interorganizational.
128

 Three approaches to knowledge management belonging to the
organizational school:
 1. Managing Common Knowledge
 2. Socialization-Externalization-Combination-Internalization Process
 3. Managing Knowledge Workers
129

Managing Common Knowledge
130

MANAGING COMMON KNOWLEDGE
• Dixon (2000) defines common knowledge as the knowledge that
employees learn from doing the organization’s tasks.
• Common knowledge is managed through knowledge transfer
mechanisms.
• Knowledge transfer in an organization can be defined as the process
by which one unit (e.g., a group, department or division) is affected
by experiences.
131

• Dixon’s (2000) introduces five knowledge transfer mechanisms. The
criteria that Dixon used to define these knowledge transfer
mechanisms are the following:
• who is the intended receiver,
• what is the nature of the task, and
• what is the type of knowledge to be transferred.
• The five transfer mechanisms for sharing knowledge in the
organization are serial, explicit, tacit, strategic and expert transfers.
132

• Dixon’s five transfer mechanisms for sharing knowledge in the
organization are:
• serial,
• explicit,
• tacit,
• strategic and
• expert transfers.
133

• 1. Serial transfer takes place when the same group of knowledge
workers performs the same work one more time by applying their
own knowledge.
• The nature of the task is frequent and non-routine, and the type of
knowledge that is transferred can be both tacit and explicit.
• Serial transfer is a process that moves the unique knowledge that
each individual has constructed into a group or public space so that
the knowledge can be integrated and made sense of by the whole
team.
• A team can be defined as a group of people with a shared
commitment and synergy among members.
134

• 2. Explicit transfer takes place when a group of knowledge
workers performs the same work another group has done
before by applying knowledge from the other group.
• The knowledge from the other group is transferred explicitly
as words and numbers and shared in the form of data,
scientific formulae, specifications, manuals and the like.
• The nature of the task performed by the team is frequent
and routine.
135

• 3. Tacit transfer takes place when a group of knowledge
workers performs the same work as another group by applying
knowledge from the other group, but in a different context.
• The knowledge from the other group is transferred through
social activity as tacit knowledge.
• The nature of the task that the group is engaged in is frequent
and non-routine.
• This is also called near transfer, not because of the geography
involved but because of the similarity between the source team
and the receiving team.
136

• 4. Strategic transfer takes place when a team has taken on a
task that happens only infrequently — a one-off project — and
wants to benefit from the experience of others within the same
organization.
• Typical of this transfer mechanism is that the senior-level
managers are often involved and define what kind of
knowledge is needed to solve the task.
• The type of knowledge that is transferred can be both tacit and
explicit.
137

• 5. Expert transfer takes place when generic and explicit
knowledge is transferred from an expert source inside or
outside the organization to enable the team to solve new
problems with new methods and knowledge.
• This knowledge transfer is applicable when the team is
performing a task that is infrequent and routine, and faces an
unusual technical problem beyond the scope of the team’s own
knowledge.
• Typically, the knowledge that is requested is not found in a
manual or in standard documentation.
138

 Management has to emphasize all five mechanisms for successful sharing and
creation of common knowledge:
 For serial transfer, management has to stimulate meetings and contacts between
group members.
 For explicit transfer, documentation of work by the previous group needs to be
stimulated.
 For tacit transfer, management has to stimulate contacts between the two groups.
 For strategic transfer, strategic knowledge and knowledge gaps have to be
identified.
 For expert transfer, management has to create networks in which experts can
transfer their knowledge.
139

Knowledge Creating Company
Socialization-Externalization-Combination-Internalization (SECI)
Process
140

SECI PROCESS
• Nonaka et al. (2000) argue that the most important aspect
of understanding a firm’s capability concerning knowledge
is the dynamic capability to continuously create new
knowledge out of existing firm-specific capabilities, rather
than the stock of knowledge that a firm possesses at any
one point in time.
• With this view of an organization as an entity that creates
knowledge continuously, we need to reexamine our
theories of the firm, in terms of how it is organized and
managed, how it interacts with its environment, and how its
members interact with each other. 141

SECI PROCESS
• To understand how organizations create knowledge dynamically,
Nonaka et al. (2000) proposed a model of knowledge creation,
consisting of these elements:
• (1) the SECI process, the process of knowledge creation through
conversion between tacit and explicit knowledge, in which SECI
captures socialization, externalization, combination, and
internalization
• (2) ba, the shared context for knowledge creation and the place
to create knowledge, and
142

SECI PROCESS
 The first element of the Nonaka et al. (2000) model for
knowledge creation is the SECI process.
 An organization creates knowledge through interactions
between explicit and tacit knowledge.
 This interaction is called knowledge conversion. Through the
conversion process, tacit and explicit knowledge expand in both
quality and quantity.
 There are four steps in knowledge conversion: from tacit to tacit,
from tacit to explicit, from explicit to explicit, and from explicit to
tacit. These four steps are called socialization, externalization,
combination and internalization, and they cover the SECI
process.
143

SECI PROCESS
• The second element is ba, which is the name given the
location or context where knowledge creation takes place.
• Knowledge needs a context to be created. The context is
defined in terms of who participates and how they participate.
• Knowledge needs a physical context to be created; there is
no creation without a place.
• Ba, which can be translated to place, offers such a context.
Ba does not necessarily mean a physical place. The
Japanese word ba means a place at a specific time.
• Ba is the real cultural, social and historic context where
information is understood so that it becomes knowledge. 144

SECI PROCESS
 Ba lets participants share time and space, and yet it transcends time and space.
 In knowledge creation, especially in socialization and externalization, it is important for
participants to share time and space.
 A close physical interaction is important in sharing the context and forming a common
language among participants.
 Also, since knowledge is intangible, unbounded and dynamic and cannot be stocked, ba
works as the platform of knowledge creation by collecting the applied knowledge of the
area into a certain time and space and integrating it.
 However, as ba can be a mental or virtual place as well as a physical place, it does not
have to be bound to a certain space and time.
145

SECI PROCESS
• There are four types of ‘ba’ that correspond to the four stages of the
SECI model.
• Each category describes a ba especially suited to each of the four
knowledge conversion modes. These ba offer platforms for specific
steps in the knowledge spiral process.
• Each ba supports a particular conversion process and there by each
ba speeds up the process of knowledge creation.
• The four Ba's proposed by Ikujiro Nonaka are as below:
• Originating Ba
• Interacting Ba
• Cyber Ba
• Exercising Ba 146

SECI PROCESS
• Originating Ba
• It is the world where individuals share feelings, emotions,
experiences and mental model. An individual sympathizes or further
empathizes with others, removing the barriers between the self and
others. It is the primary ba from which the knowledge creation
process begins and represents the socialization phase. Physical and
face to face experiences are the key to conversion and transfer
of tacit knowledge.
• Nonaka emphasizes that the physical contact is important in
originating Ba to facilitate knowledge creation through Socialization. It
is the beginning of the knowledge creation process in SECI model.
147

SECI PROCESS
• Interacting Ba
• The interacting ba is more consciously constructed, as compared to
originating ba. Selecting people with the right mix of specific knowledge
and capabilities for a project team, taskforce, or cross-functional team is
critical. Through dialogue, individual’s mental models and skills are
converted into common terms and concepts. Two processes operate in
concert: individuals share the mental model of others, but also reflect and
analyze their own.
• This is the place where tacit knowledge is made explicit, thus it
represents the externalization process. Dialogue and the extensive use of
metaphors is one of the conversion skills required. Here, interacting ba
for collective reflection is institutionalized in the company culture.
Interacting ba provide a place for dialogue where people engage jointly in
the creation of meaning and value. 148

SECI PROCESS
• Cyber Ba
• It is a place of interaction in a virtual world instead of real
space and time. It represents the combination phase.
• Here, the combining of new explicit knowledge with existing
information and knowledge generates and systematizes explicit
knowledge throughout the organization. The combination of
explicit knowledge is most efficiently supported in
collaborative environments utilizing information technology.
The use of online networks, group-ware, documentation and
database has been growing rapidly over the last decade,
enhancing this conversion process.
149

SECI PROCESS
• Exercising Ba
• Exercising ba supports the internalisation phase. Exercising ba
facilitate the conversion of explicit knowledge to
tacit knowledge. Focused training with senior mentors and
colleagues consists primarily of continued exercises that stress
certain patterns and working out of such pattern. Rather than
teaching based on analysis, learning by continuous self-
refinement through on job training or peripheral and active
participation is stressed.
• The SECI model that correspond to Exercising Ba is
Internalization.
•
150

151
Four modes of knowledge conversion:
SocializationSocialization ExternalizationExternalization
InternalizationInternalization CombinationCombination
Tacit knowledge to Explicit knowledge
Tacit
from
Explicit
151151

152
Four modes of knowledge creation:
Socialization:
- Socialization is a process of sharing experiences and thereby creating
tacit knowledge such as shared mental models and technical skills.
- Apprentices work with their masters and learn craftsmanship not through
language but through observation, imitation, and practice.
- Examples of socialization: Honda brainstorming camps (informal meetings
for detailed discussions to solve problems in development projects).
Externalization:
- Externalization is a process of articulating tacit knowledge into explicit
concepts. It is a process of concept creation and is triggered by dialogue or
collective reflection.
- Externalization is often driven by metaphor and/or analogy. Honda City:
- Automobile Evolution; the concept of tall and short car (tall boy);
an analogy between the concept of “man-maximum, machine-minimum”. 152152

153
Combination:
- This form of knowledge conversion involves combining different bodies of
explicit knowledge. Individuals combine knowledge through such media as
documents, meeting, telephone conversation, or communication networks.
- Reconfiguration of existing information through sorting, adding, combining,
and categorizing of explicit knowledge (as conducted in computer databases)
can lead to new knowledge.
- Kraft (dairy and processed food manufacturer) data from the POS (point
of sales) system of retailers is utilized not only to find out what does and does
not sell well but also to create new “ways to sell” that is, new sales systems.
Internalization:
- Internalization is a process of employing explicit knowledge into tacit
knowledge. It is closely related to “learning by doing”.
- As an example, GE documents all customer complaints and inquiries in a
database at its Answer Center in Kentucky, which can be used by members of
a new product development team. 153153

154
Enabling conditions for knowledge creation:
. Intention: The knowledge spiral is driven by organizational intention,
hich is defined as an organization’s aspiration to its goals. Commitment to the
oals in Polanyi’s words underlies the human knowledge-creating activity.
. Autonomy: At the individual level all members of an organization
hould be allowed to act autonomously as far as the circumstances
ermit (self-organizing individuals or autopoietic systems).
. Fluctuations and creative chaos: To stimulate the interaction between the
rganization and its environment (different from disorder, breakdown of
outines habits).
. Redundancy: The existence of information that goes beyond the
mmediate operational requirements of organizational members. Sharing
edundant information promotes the sharing of tacit knowledge.
. Requisite variety: Organization’s internal diversity to match the variety
nd complexity of the environment. Organizational members can cope with
many contingencies if they possess requisite variety.
154154

155
Five-phase model of the organizational knowledge creation process:
1. The first phase: Sharing tacit knowledge: Sharing tacit knowledge
among multiple individuals with different backgrounds, perspectives,
and motivations.
2. The second phase: Creating concepts: Continuous dialogue in the
form of collective reflection. The shared tacit mental model is
verbalized into words and phrases and finally crystallized into explicit
concepts.
3. The third phase: Justifying concepts: Knowledge defined as justified
true belief.
4. The fourth phase: Building an archetype: Converting the justified
knowledge into something tangible or concrete, namely, an archetype.
5. The fifth phase: Cross-leveling of knowledge: Knowledge creation as
a never-ending process. The interatice and spiral process, which is
called cross-leveling of knowledge, takes place both
intra-organizationally and inter-organizationally. 155155

156
Five phases model of knowledge creation:
Enabling conditions:
1. Intention
2. Autonomy
3. Creative chaos
4. Redundancy
5. Requisite variety
Creating
concepts
Sharing tacit
knowledge
Justifying
concepts
Building an
archetype
Cross-leveling
knowledge
Tacit knowledge in organization Explicit knowledge in organizations
Socialization Externalization
Combination
Internalization
156156

Managing Knowledge Workers
157

 knowledge worker can be defined as an employee who is able to find, understand
and use knowledge in the organization on his or her own.
 A knowledge worker is qualified to explore relevant scientific information from
corporate as well as national and international sources.
 A knowledge worker is able to use such information in daily knowledge work to
solve problems for customers.
 Typical knowledge workers are lawyers in a law firm, engineers in an engineering
firm, medical doctors in a hospital, product developers in a manufacturing
company, professors in a business school, and planning staff in a government
agency.
158

• Shum (1998) makes distinctions between procedural work
and knowledge work. All work is invariably a mix of the two,
but increasingly, the procedural features are giving way to
knowledge-based features. The distinctions are:
• Knowledge workers are changed by the information in their
environment, and they in turn seek to change others
through information.
• Diversity and ad hoc behavior patterns are common in
knowledge work.
• Communication networks are highly variable, with different
patterns and use of media. 159

 Gartner Group (2001) recommends the following three rules for
management of knowledge workers:
 Rule 1. Knowledge workers need to be energized intellectually:
The most effective workers are those who continuously have new
opportunities to learn, assume experiences and strengthen their
portfolios.
 Rule 2. Shorter employment tenure will be the norm: Tenure in any
one
 position will likely be less than three years as knowledge workers seek new
 ways to develop and market their experiences.
 Rule 3. Knowledge work can be all consuming, so design
workloads appropriately: Vacations and shorter work weeks may
make work schedules more tolerable, but the actions that will best
prevent burnout are the redesign of work, the redefinition of metrics
for collaborative assignments.
160

The strategic school
161

THE STRATEGIC SCHOOL
• The strategic school sees knowledge management as a
dimension of competitive strategy. Indeed, it may be seen
as the essence of a firm’s strategy.
• Approaches to knowledge management are dependent on
management perspective.
• Distinctions can be made between:
• The information-based perspective,
• The technology-based perspective and
• The culture-based perspective:
162

• • Information-based perspective is concerned with access
to information. I have a problem, and I am looking for
someone in the organization who has knowledge that can
solve my problem.
• • Technology-based perspective is concerned with
applications of information technology. We have all this
hardware and software in the firm: how can we use this
technology to systematize, store and distribute information
to knowledge workers?
163

• • Culture-based perspective is concerned with knowledge
sharing. We are an organization because division of labor
makes us more efficient and because we can draw on each
other’s expertise.
• All three perspectives belong in a knowledge management
project to be successful. However, the main focus may vary
depending on corporate situation.
164

 If reinventing the wheel all the time is the big problem, then the information-
based perspective should dominate project focus.
 If the technology in the firm is unable to provide even basic services to
knowledge users, then the technology-based perspective should dominate
project focus.
 If knowledge workers are isolated and reluctant to share knowledge, then
the culture-based perspective should dominate project focus.
165

• Codification Strategy:
• Knowledge is codified using a people-to-documents approach: it is
extracted from the person who developed it, made independent of
that person, and reused for various purposes.
• Knowledge objects are developed by pulling key pieces of knowledge
such as interview guides, work schedules, benchmark data, and
market segmentation analysis out of documents and storing them in
the electronic repository for people to use.
• This approach allows many people to search for and retrieve codified
knowledge without having to contact the person who originally
developed it.
• Hansen et al. (1999) call this the codification strategy for managing
knowledge.
166

 Personalization strategy
 Knowledge that has not been codified is transferred in brainstorming sessions and one-on-one conversations.
 Knowledge workers collectively arrive at deeper insights by going back and forth on problems they need to
solve.
 These companies invest heavily in building networks of people. Knowledge is shared not only face-to-face, but
also over the telephone, by email, and via videoconferences.
 Networks can be fostered in many ways: by transferring people between offices, by supporting a culture in
which knowledge workers are expected to return phone calls from colleagues promptly, by creating directories
of experts, and by using knowledge managers within the firm to assist project teams.
 These firms may also have developed electronic document systems, but the purpose of the systems is not to
provide knowledge objects. Instead, knowledge workers scan documents to get up to speed in a particular area
and to find out who has done work on a topic. They then approach those people directly. Hansen et al. (1999)
call this the personalization strategy for managing knowledge.
167

 Knowledge management strategy will either be people-to-documents for codification or person-to-
person for personalization.
 People-to-documents implies developing an electronic document system that codifies, stores,
disseminates, and allows reuse of knowledge.
 Person-to-person implies developing networks for linking people so that tacit knowledge can be
shared.
 By codification, the company invests heavily in IT, where the goal is to connect people with
reusable codified knowledge.
 By personalization, the company invests moderately in IT, where the goal is to facilitate
conversations and exchange of tacit knowledge.
 By codification, the human resource approach will be concerned with training people in groups
and through computer-based distance learning.
 By personalization, the human resource approach will be concerned with training people through
one-on-one mentoring.
168

 Stock, Flow and Growth Strategy
 Approaches to knowledge management are dependent on knowledge focus in the
organization. Distinctions can be made between expert-driven business, experience-
driven business and efficiency-driven business:
 • Expert-driven business solves large, complex, risky, new and unusual problems for
customers. Competitive advantage is achieved through continuous improvisation and
innovation. Knowledge workers apply general high-level knowledge to understand,
solve and learn. Learning from problem solving is important to be able to solve the next
new and unknown problem for customers. An expert-driven business is characterized
by both new problems and new methods for solution.
169

 • Experience-driven business solves large and complicated problems for customers. The
problems are new, but they can be solved with existing methods in a specific context every time.
Competitive advantage is achieved through effective adaptation of existing problem solving
methodologies and techniques. Continuous improvement in effectiveness is important to be able
to solve the next problem for customers. An experience-based business is characterized by new
problems and existing methods for solution.
 • Efficiency-driven business solves known problems. The quality of the solution is found in fast
and inexpensive application to meet customer needs. Competitive advantage is achieved in the
ability to make small adjustments in existing goods and services at a low price. An efficiency-
driven business is characterized by known problems and known methods for solution.
170

 Knowledge focus will be different in expert-driven, experience-driven and efficiency-
driven businesses.
 In the expert-driven business, learning is important, while previous knowledge becomes
obsolete.
 In the experience-driven business, know-how concerning problem solutions is
important, while knowledge of previous problems becomes obsolete.
 In the efficiency-based business, all knowledge concerning both problems and solutions
is important in an accumulation of knowledge to improve efficiency.
 These differences lead us to make distinctions between the following three knowledge
management strategies of stock strategy, flow strategy and growth strategy:
171

• • Stock strategy is focused on collecting and storing all knowledge in
information bases in the organization.
• Information is stored in databases and made available to knowledge workers in
the organization and in knowledge networks.
• Knowledge workers use databases to keep updated on relevant problems,
relevant methods, news and opinions.
• Information on problems and methods accumulate over time in databases.
• This strategy can also be called person-to-knowledge strategy.
172

• • Flow strategy is focused on collecting and storing knowledge in information
bases in the organization as long as the information is used in knowledge work
processes.
• If certain kinds of knowledge work disappear, then information for those work
processes becomes obsolete and can be deleted from databases.
• This is a yellow-pages strategy in which information on knowledge areas
covered by individuals in the firm is registered.
• The link to knowledge sources in the form of individuals is made specific in the
databases, so that the person source can be identified.
• When a knowledge worker starts on a new project, the person will search
company databases to find colleagues who already have experience in solving
these kinds of problems.
• This strategy can also be called person-to-person strategy.
173

 • Growth strategy is focused on developing new knowledge.
 New knowledge is developed in innovative work processes taking place when
knowledge workers have to solve new problems with new methods for customers.
 Often, several persons are involved in the innovation, and together they have gone
through a learning process.
 When a knowledge worker starts on a new project, the person will use the
intraorganizational and interorganizational network to find information on work
processes and learning environments that colleagues have used successfully in
previous innovation processes.
174

• There is a strong link between these three knowledge management
strategies and the three alternatives of expert-driven, experience-
driven and efficiency-driven business. Typically, efficiency-driven
businesses will apply the stock strategy, while experience-driven
businesses will apply the flow strategy, and expert-driven businesses
will apply the growth strategy.
175

176
Critical success factors of Knowledge
Management implementation

177
Critical success factors of Knowledge Management
implementation:
- Leadership
- Culture
- Structure and roles/ responsibilities
- Information technology
- Measurement
177177

178
Leadership:
- The impact of leadership on KM is more pronounced than other parts of
organization because KM is a relatively new discipline and, therefore, not as
established as other disciplines.
- The leader leading the process of KM should primarily believe in and support
the message.
- Best practices organizations have demonstrated the leadership and
commitment to KM.
- CEO of the World Bank: We are not a funding bank, we are a knowledge
bank.
178178

179
Culture
- Culture factor can be the most important to the success of KM within
organizations.
- Culture is the combination of shared history, expectations, and unwritten
rules that affects the behaviour of everyone, from managers to clerks.
- If your organization naturally has a tendency to share knowledge, the KM
job is easier.
- By designing KM initiatives around your culture, you in fact will be initiating
a cultural change.
- Cultural issues usually arise as a result of the following:
Lack of common perspectives.
Lack of time
Nonaligned reward systems
No formal communication.
179179

180
Information technology
- KM is not about IT, but it is enabled by IT.
- The trap that most organizations fall into is not lack of IT but rather too
much focus on IT only.
- A KM initiative is not a software application.
- Organizations fall short in providing an IT infrastructure for sharing when:
Use of wrong approach
Lack of great content
Lack of common platform
Complicated technology
Inadequate technology and inadequate knowledge.
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181
Taxonomy of KM Software:
- Intranet-based tools;
- Electronic Document Management (EDM);
- Groupware;
- Workflow;
- Knowledge-based systems;
- Business Intelligence (BI);
- Knowledge Map Systems;
- Innovation Support tools;
- Competitive Intelligence (CI) tools;
- Knowledge portals.
181181

182
Intranet-based tools: Intranets, as private networks that emphasize the
organizational internal information, are becoming an important vehicle between
the organizations and their employees. Pull style and as an alternative to the
information overload generated by e-mails.
Electronic Document Management (EDM): EDM systems are repositories of
important corporate documents (Explicit knowledge stores). Content
Management Tool is another name for EDM systems.
Groupware: Groupware technology overcomes the difficulty in the cooperation
between geographically dispersed workgroups. Push style where information is
sent to the user.
Workflow: is a system that supports standard business processes by establishing
the process flow and following its steps and tracking each activity that composes
the process.
Knowledge-Based Systems: Expert systems, CBR (Case Based Reasoning)182182

183
Business Intelligence (BI): is a set of tools to manipulate a mass of operational
data and to find essential business information (Front-end systems – DSS –
and Back-end systems – data warehouses.
Knowledge Map Systems: contains software that clarifies “who knows what”
(Yellow Pages).
Innovation Support Tools: is software that contributes to knowledge generation
along the product design process by creating a virtual environment that stimulates
the proliferation of insights.
Competitive Intelligence Tools: aims at systematically feeding the organizational
decision process with information about organizational environment in order to
make possible to learn about it and to take better decisions. It depends heavily
on the collection and analysis of qualitative information.
Knowledge Portals: function at home pages to integrate heterogeneous
information sources, providing a standard interface to the users. 183183

184
Category Origin of Concepts Examples
Intranet-Based
Systems
Web Technologies Microsoft Internet
Information Server
Electronic Document
Management
Information Science Excalibur RetrievalWare and
File Net
Groupware Computer Supported
Cooperative Work (CSCW)
Notes (Lotus) and Exchange
(Microsoft)
Workflow Organization and Methods ARIS Toolset (IDS Scheer)
Knowledge Base
Systems
Artificial Intelligence Neugents (Computer
Associates)
Business Intelligence Data Base Management Business Objects
Knowledge Map Information Science and HRM Gingo (Trivium) and Lotus
Discovery
Innovation Support
Tools
Innovation and Technology
Management
Invention Machine
Competitive
Intelligence Tools
Strategic Management and
Information Science
Knowledge Works (Cipher
Systems) and Vigipro
(CRIQ/CGI)
Knowledge Portals Computer Networks and
Information Science
Digital Dashboard
(Microsoft), Lotus K-station
and Sopheon
Categories of KM Software
184184

185
Measurement
- Most people fear measurement because they see it as being synonymous
with ROI and they are not sure how to link KM efforts to ROI.
- Although the ultimate goal of measuring effectiveness of a KM initiative is
to determine some type of ROI, many intervening variables also affect the
outcome.
-Two types of measurements:
- Activities
- Outcomes
- Measuring activities is through number of hits on a site, or the number of
registered users.
- Measuring outcomes is focused on finding a change in the numbers reflecting
outcomes, such as sales or margines, hours spend preparing proposals, or
cycle of time to respond to a customer request. 185185

186
Final word:
In the end, the location of the new economy is
not in the technology, be it the microchip
or the global telecommunication network.
It is in the human mind.
Webber
186186

Knowledge management

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