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MGMT630 Knowledge Management

Lesson TOPICS Page

1 Managing Intangible Resources and Knowledge Workers 02
2 Dynamics and Interconnected Nature of 21
entury !lobe 0"
# $orces s%a&ing t%e future and mega trends of knowledge economy 11
' Managerial onsiderations for Internet ustomers and K()ased Marketing 1*
* $ramework wit% New +tructure, +trategies and -e.ers of +trategy 2#
/ 0istorical +%ifts in World 1conomies and t%e Role of
Knowledge and Intelligence 22
" +trategic or&orate 3ssets of #rd Millennium 4rgani5ation6 Knowledge %aracteristics
2 7ers& of Knowledge Management and t%e $orces KM #"
8 Knowledge 0ierarc%y $rom Data and Information to
Knowledge and Wisdom '*
10 19tracting !old from Data6 :nderstanding on.ersion of
Data into Knowledge **
11 :nderstanding Data for 3nalysis and Decision;7olicy Making /1
12 Knowledge 0ierarc%y Indi.idual .s< 4rgani5ation /*
1# Dimensions of 0uman Knowledge, =ree of Knowledge "#
1' Dimensions of and Multi&le >iews of KM in 4rgani5ations ""
1* 0ow KM Im&acts 4rgani5ations? 2/
1/ =%ree +c%ools of =%oug%t and 3&&roac%es to KM6
1conomic +c%ool and K>3 8#
1" 1conomic +c%ool@ Management and Knowledge Metrics 8"
12 Measures of Intellectual a&ital 88
18 Knowledge Market Model and K>3 ase +tudy 10#
20 +.eibyAs Intelligent a&ital Management 111
21 +trategic 7ers&ecti.e of Knowledge and +trategic +c%ool 3&&roac% in KM 11#
22 +trategic +c%ool@ +tock, $low, and !rowt% +trategy in KM 118
2# =%e 4rgani5ational +c%ool of =%oug%t in KM 12#
2' Im&ortance of =acit and 19&licit Knowledge 12/
2* +1I 7rocess and )3 for K< reation 122
2/ Knowledge +&iral and +ustained 4rgani5ational
3d.antages t%roug% +1I 7rocess 1#2
2" 1nablers of +1I 7rocess 1#8
22 7rocess 3&&roac% to KM and Info(om =ec%nology BI=C in KM +ystems 1'#
28 4rgani5ational Issues in Managing Knowledge Worker 1**
#0 of KM +olutions and 7rocesses 1/2
#1 KM +ystems, +olutions, and Infrastructure 1/8
#2 Knowledge 3rc%itecture, Internet and 1(World 1"#
## or&orate Intranet, 19tranet, and 7ortal 1"2
#' KM +ystems and =ec%nical -ayers 12'
#* KM +ystem and -ife ycle 3&&roac%@ on.entional .s< KM 122
#/ KM +ystem Dustification and $easibility Issues, Im&lementation Issues and Resistance
#" a&turing =acit Knowledge and 19&ertAs 1.aluation 182
#2 Knowledge 1licitation@ Data Mining and Knowledge odification Met%ods 201
#8 Knowledge +%aring and =ransfer +ystems 210
'0 or&orate Memory6 =y&es of Knowledge Re&ositories 212
'1 Knowledge +%aring +tructure and +er.ices,
ulture and Knowledge ommunities 220
'2 Knowledge 3&&lication +ystems and RM 22/
'# Role of ommunities in -earning and 7roduct De.elo&ment 228
'' -earning 4rgani5ation 2#2
'* =%e $uture of Knowledge Management 2#"
Knowing ignorance is strengt%
Ignoring knowledge is sickness
E -<=+:
=%e !rowing Im&ortance of Knowledge and Knowledge Workers =angible resources like ru&ees,
land;buildings, motors;mac%inery and manual;&%ysical labors are no doubt im&ortant to run a
farm or a factory but all of t%ese tangible resources can be boug%t or borrowed< 4n t%e ot%er
%and, brand image, re&utation, information, talent, and knowledge are some of t%e intangible
resources reFuired for a modern organi5ation to sur.i.e and t%ri.e in t%e 21
century global markets
and t%ese intangible resources cannot be boug%t or borrowed< =%e rise of information and
knowledge based work %as been foreseen for many years< 3utomation in $actories and farms in
de.elo&ed economies for more t%an a century ago freed most of t%e workforce from to
&erform &%ysical labor< t%e last %alf(century, t%e ad.ent of com&uters and t%e 7er.asi.e
&resence of information created a demand for workers w%o could &roduce t%e information in
=%e first &lace, e9tracts meaning from it, and takes action on it<
4rgani5ations wit% a %ig% &ro&ortion of knowledge workers E letAs call t%em knowledge
intensi.e 4rgani5ations E are t%e fastest(growing and most successful in t%e :nited +tates,
+inga&ore $inland, +weden and ot%er leading economies, and %a.e generated most of t%ese
economiesA growt% in t%e &ast ou&le of decades< =%e market .alue of many knowledge(intensi.e
com&anies E w%ic% includes t%e MarketAs &erce&tion of t%e .alue of knowledge and knowledge
workers E dwarfs t%eir book .alues, w%ic% includes only tangible assets? 1.en in so(called
GindustrialH com&anies, knowledge is increasingly used to differentiate &%ysical goods and to fuel
di.ersification into &roduct(related< 3s 7rof< Iuinn %as &ointed out, %ig% &ro&ortions of
workers in manufacturing firms Broug%ly 80 &ercent in
+emiconductors, for e9am&leC touc% t%e manufacturing &rocess, but instead &ro.ide
knowledge()ased ser.ices suc% as marketing, distribution, or customer<
ItAs already a&&arent t%at t%e firms wit% t%e %ig%est degree and Fuality of knowledge work tend to
be t%e fastest(growing and most &rofitable< Microsoft, for e9am&le, is one of t%e most
&rofitable 4rgani5ations in t%e %istory of t%e &lanet< 7%armaceutical firms not only &roduce
so&%isticated and life( drug treatments, t%ey also tend to %a.e %ig% &rofit margins< !rowt% industries generally
tend to be t%ose wit% a %ig% &ro&ortion of knowledge workers<
$ollowing categories of work can be &laced into t%e knowledge workers cam&@
J Management
J )usiness and financial o&erations
J +oft;0ard ware and electronic engineer
J 3rc%itecture engineering
J -ife, &%ysical, and social scientists
J -egal &ersonnel
J 0ealt% care &ractitioners
J ommunity and social ser.ices
J 1ducation, training, and library staff
J 3rts, design, entertainment, s&orts, media<
J +ystem Manager;3nalyst, 7roKect Manager
=%e classification abo.e yields about #/ million knowledge workers in t%e :nited +tates alone, or
22 7ercent of t%e labor force< W%ile no classification sc%eme is &erfect Bfor e9am&le, &rofessional
at%letes 3re included in t%e knowledge worker grou&< )ecause t%e :<+ go.ernment data lum&s
t%em in wit% arts, Design, entertainment, and media workersC, itAs clear t%at most &eo&le in t%ese
Kobs t%ink to earn for t%eir<
Wit%in organi5ations, knowledge workers tend to be closely aligned wit% t%e organi5ationAs
growt% 7ros&ects< Knowledge workers in management roles come u& wit% new strategies<
Knowledge workers
In RLD and engineering create new &roducts< Knowledge workers in marketing &ackage &roducts
and +er.ices in ways t%ose a&&eals to customers< Wit%out knowledge workers t%ere would
be no new &roducts and ser.ices, and no growt%<
Knowledge Workers and t%e World 1conomy
7rof< Dr<7eter Drucker, w%o was t%e first &erson to describe knowledge workers to any substantial
degree Bin %is 18*8 book -andmarks of =omorrowC, said as far back as
18/8 t%at@
G=o make knowledge work &roducti.e will be t%e great management task of 21st century, Kust as
to make manual work &roducti.e was t%e great management task of t%e
20t% century<
=%en in 188" Drucker went e.en furt%er out along t%e knowledge worker limb@
G=%e &roducti.ity of knowledge and knowledge workers will not be t%e only
com&etiti.e factor in t%e world economy< It is,, likely to become t%e decisi.e factor, at
least for most industries in t%e de.elo&ed;de.elo&ing countries<
W%y did Drucker E and w%y s%ould we E belie.e t%at knowledge workers and t%eir &roducti.ity
were so im&ortant to t%e world economy? =%ere are a .ariety of reasons<
$irst, t%ey are large and growing category of workers< If we canAt figure out %ow to Make more
t%an a Fuarter of t%e labor force more &roducti.e, weAre going to %a.e &roblems wit% our
economy o.erall< +econd, t%ey are com&arati.ely e9&ensi.e ty&e of worker t%at organi5ations
em&loy, so itAs doubly s%ameful if t%eyAre not as &roducti.e as t%ey could be< =%ird, t%ey are keys to
t%e growt% of many economies< 3gricultural and manufacturing work %as generally become
commoditi5ed, and is to t%e economies w%ere t%ey can be &erformed at t%e lowest
cost< =%e only forms of agricultural or industrial work t%at sur.i.e in so&%isticated
economies are t%ose in w%ic% a %ig% degree of knowledge %as been inKected E for e9am&le, in
biotec%nology manufacturing, or in G&recision farming,H in w%ic% t%e fertili5er and
&esticides administered to a gi.en cro& are carefully monitored using !7+ de.ices in tractors< If
agriculture and manufacturing are to countries wit% low labor costs B%ina is a &articularly
good e9am&leC, t%e Kobs t%at remain in t%e so(called knowledge(based economies are
&articularly critical to t%ese countriesA economic< ItAs not clear e9actly w%at workers in t%e
:nited +tates, Western 1uro&e, and Da&an are going to do for a in t%e future, but it is clear
t%at if t%ese economies are to &ros&er, t%e Kobs of many of t%e workers must be &articularly
knowledge Eintensi.e<
Met des&ite t%e im&ortance of knowledge workers to t%e economic success of countries, com&anies,
and ot%er grou&s, t%ey %a.enAt recei.ed sufficient attention< We know little about %ow
to im&ro.e knowledge workersA &erformance, w%ic% is .ery unfortunate, because no less an
aut%ority t%an 7eter Ducker %as said t%at im& knowledge worker &erformance is t%e most
im&ortant economic issue of t%e age<
What is a Knowledge Worker?
Knowledge workers %a.e %ig% degrees of e9&ertise, education, and;or e9&erience, and t%e &rimary
&ur&ose of t%eir Kobs t%e inno.ation;creation, s%aring;distribution, or
a&&lication of knowledge<
Knowledge workers t%ink for a< =%ey li.e by t%eir wits(and %ea.y lifting on t%e Kob is
intellectual, not &%ysical< =%ey sol.e &roblems6 t%ey understand and meet t%e needs of
customers t%ey make decisions, and t%ey collaborate and communicate wit% ot%er &eo&le in t%e
course of doing t%eir own work<
ItAs easy to &oint to e9am&les of knowledge workers@ &%ysicians and &%ysicists, scientists and
scientific writers, air&lane &ilots and air&lane designers, managers and marketers, and soft;%ard
ware engineers<
We know t%em w%en we see t%em< =%ey donAt necessarily %a.e to work in knowledge(
intensi.e industries E managers of any com&any are knowledge workers, a&&lying knowledge to
make decisions in t%e best interests of t%eir enter&rises< 1.en t%e most industrial com&any %as
engineers, researc%ers, Marketers and &lanners< Knowledge workers work in small start(u&s and
large global cor&orations< W%et%er someone is a knowledge worker or not is admittedly
sometimes a matter of degree and inter&retation< Many &eo&le use knowledge in t%eir
Kobs and %a.e some degree of education or e9&ertise, but for knowledge workers t%e role
of knowledge must be central to t%e Kob, and t%ey must
be educated or e9&ert< Working wit% data or information alone isnAt enoug% E it would be difficult
to be
a knowledge worker, for e9am&le, wit%out a college degree Bcollege dro&outs )ill !ates
Mic%ael Dell notwit%standingC<
ItAs clear t%at organi5ational success de&ends on t%e inno.ati.eness and &roducti.ity of t%ese
workers wit%in t%eir organi5ations<, along wit% adding .alue, knowledge workers also
c%allenges to con.entional management wisdom and organi5ing &rinci&les@ t%ey are
mobile and
concerned t%at t%eir e9&eriences s%ould &osition t%em well for future o&&ortunities6 t%ey are
across t%e organi5ational structure and t%e globe, yet t%e interde&endence and com&le9ity of t%eir
reFuires t%em to collaborate effecti.ely wit% ot%ers in different functions, &%ysical locations, time
and e.en organi5ations6 t%ey must command a body of knowledge t%at needs to be constantly
and t%eir work is in%erently emergent E t%e im&ortant &roblems t%ey sol.e and o&&ortunities
ca&itali5e on are no.el and rarely, if, standard to t%e &oint t%at t%e work can be come routine<
s%ort, knowledge workers are critical to t%e success of almost any organi5ation, but t%ey &resent
c%allenges as well<
Knowledge Workers as a lass
Dust %ow uniFue are t%e c%allenges knowledge workers &resent? +ome mig%t argue t%at
workers and knowledge work s%ould be managed in t%e same way t%at ot%er work is<
+ome one may argue t%at knowledge workers s%ould be treated like any ot%er workers in
&rocesses, and t%at &rocess im&ro.ement a&&roac%es a&&ly Kust as well to knowledge workers
as to
anyone else<
If managers ga.e similar e9&licit instructions to t%eir knowledge workers B+%ar&en your &encil
you start t%at financial &lanHC, as t%ey use to gi.e to &roduction or &rocess workers, itAs unlikely t%at
t%eir em&loyees would stay wit% t%e com&any for long< If by some c%ance t%ey tolerated being
t%is way, itAs unlikely t%at t%eyAd gi.e t%e Kob t%eir full commitment and intellectual %orse&ower<
substantial difference in autonomy is only one of t%e key attributes of knowledge workers, but by
itAs enoug% to Kustify treating t%em as a se&arate class of workers t%e se&arate a&&roac%es
&erformance im&ro.ement and management<
ommitment matters< In t%e industrial economy, one could do a Kob wit% oneAs body e.en w%en t%e
brain and %eart werenAt committed to t%e Kob< )ut t%is isnAt t%e case for knowledge work< ItAs
t%at youAll get great &erformance out of a knowledge worker if %e or s%e isnAt mentally and
committed to t%e Kob< =%e famous #M com&any a&&roac% of researc%ers 1* &ercent of t%eir
to work inde&endently on somet%ing t%ey t%ink is im&ortant to t%e com&any 4b.iously
workers are generally willing to do some t%ings t%at ot%ers ask Bor e.en tellC t%em to do, but a
degree of
.oluntarism %el&s a lot<
3not%er factor affecting commitment is a &erce&tion of Gfair &rocess<H 3s t%e strategy academics
&ointed out, workers E and &articularly knowledge workers(care not only about t%e
fairness of
outcomes, but also about t%e fairness of t%e &rocess used to arri.e at outcomes@
$air &rocess turns out to be a &owerful management tool for com&anies struggling to make t%e
transition from a &roduction(based to a knowledge(based economy, in w%ic% .alue creation
de&ends increasingly on ideas and inno.ation< $air &rocess &rofoundly influences attitudes and
be%a.iors critical to %ig% &erformance< It builds trust and unlocks ideas<
Knowledge workers .alue t%eir knowledge, and donAt s%are it easily< Knowledge is all t%at
workers %a.e E itAs t%e tool of t%eir trade, t%e means of t%eir &roduction< ItAs t%erefore natural t%at
would %a.e difficulty relinFuis%ing or s%aring it in suc% a way t%at t%eir own Kobs mig%t be
In t%e early days of knowledge management, w%en com&anies were beginning to talk about
knowledge wit%in and across organi5ations, &eo&le used to say, G+%aring knowledge is an
act<H G4f course, unnatural acts are committed e.ery day<H om&anies Kust needed to &ut t%e
necessary and assurances in &lace to ensure t%at &eo&le were willing to s%are t%eir knowledge<
G3s t%e BinternetC world is flatH 3lmost e.ery knowledge worker in western countries is
w%et%er %is or %er Kob could be t%e ne9t to mo.e to India or %ina or Korea or 7akistan< ItAs enoug%
gi.e anyone &ause about contributing knowledge to some ot%er worker or a knowledge
3gain, t%is doesnAt mean t%at we canAt design organi5ations and &rocesses in suc% a way t%at
will flow across organi5ations< We Kust %a.e to acknowledge workers will .iew t%eir knowledge
as a
%ig%ly .aluable asset, and t%at t%ey will be reluctant to s%are it wit%out rewards and;or guarantees
continued em&loyment< +mart organi5ations will &ut smart a&&roac%es in &lace for t%e knowledge
of t%eir knowledge workers< 3 knowledge worker in 7akistan can &ro.ide ser.ices c%ea&er t%an one
Nort% 3merica so t%e work will flow to a &lace w%ere it can be done c%ea&er BFuality being sameC<
=%e global economy %as decisi.ely entered a new age< It is .ariously called t%e GInformation 3ge,H
G=%ird Wa.e,H or t%e G1lectronic 1conomy<H Regardless of t%e terminology, t%ese names and ot%ers
refer to t%e transition t%at %as taken &lace in t%e economies of t%e industriali5ed nations,
closely by t%e de.elo&ing nations< 3lt%oug% t%ere are a few economies &rimarily in.ol.ed in
traditional manufacturing industries, t%e future of de.elo&ment and growt% is clearly
centered on
automated manufacturing and information(de&endent ser.ices industries<
W%ile knowledge, embedded in systems, brains, and tec%nology, %as always been t%e key to
de.elo&ment, in recent years its im&ortance %as been steadily increasing< =%e 41D economies
more strongly de&endent on t%e &roduction, distribution, and use of knowledge t%an
4ut&ut and em&loyment are e9&anding fastest in %ig%(tec%nology industries, suc% as
electronics, communications, %ealt%care and edutainment< During t%e &ast decade, t%e %ig%(
s%are of 41D manufacturing &roduction and e9&orts %as more t%an doubled, to reac% 20(2*
Knowledge BIntangibleC a&ital
3ccelerating t%e con.ersion of knowledge into financial gains using Information 3ge alc%emy is
t%e real
c%allenge for contem&orary organi5ations<
=%e key to generating economic growt% and .alue in industrial(based economies was t%e
of fi9ed, tangible assets, measured as ca&ital in.estment< =%e knowledge economy is
one w%ere
intangible assets or knowledge, in its .arious forms, combine wit% information tec%nology and
infrastructure to dri.e growt% and .alue creation< Knowledge assets include information and
stored in &atents, co&yrig%ts, cor&orate data ware%ouses, em&loyeesA brains, &rocesses Be<g<, work
and information systems< =%ese tools and systems %a.e been used to le.erage em&loyee knowledge
&ursuit of im&ro.ements to core &rocesses< Dust as t%e means of &roduction in t%e Industrial 3ge
industrial ca&ital B&lant, eFui&ment, mac%ineryC, in todayAs economy t%e means of
&roduction is
knowledge ca&ital<
=%e information tec%nology industry &lays a central role in t%ese acti.ities< =%e tools
to store,
disseminate, and mange t%ese .ital cor&orate assets are &ro.ided by com&anies in t%is
+&ecifically, t%e network com&anies &ro.ide t%e &latform for knowledge, information, and
data to di.erse locations w%ere it is used to com&lete essential core &rocesses, and to t%e end(users
&ay for ser.ices and &roducts wit%in w%ic% knowledge assets are embedded<
I@ >isit a bank and identify knowledge workers< W%at is uniFue about
knowledge workers? 0ow do you distinguis% t%em from regular
3@ at front end in banks are known as =ellers w%o sim&ly take de&osits, enter t%em in
t%e customerAs account, and issue a recei&t cannot be considered knowledge workers< 4n t%e
N o&yrig%t >irtual :ni.ersity of 7akistan *Knowledge Management EM!M=(/#0 >:
%and, if a teller negotiates a de&osit, w%ere &artial &ayments are made to &ay t%e
lease;mortgage, &lace some of t%e money in a urrent De&osit, and w%ere s%e notices t%at t%e total
.alue of %is urrent De&osits is at a &oint w%ere t%e customer is ad.ised to buy treasury bills or
in funds t%at &ay more di.idends would be more of a knowledge worker< 3 Kob, w%ere analysis and
of %euristics and tec%nology are &art of t%e day(to(day Kob is close to w%at is called knowledge
N o&yrig%t >irtual :ni.ersity of 7akistan /Knowledge Management EM!M=(/#0 >:
-1++4N 2
DMN3MI+ 3ND IN=1R4NN1=1D N3=:R1 4$ 21+= 1N=:RM !-4)1
In a Nuts%ell
Welcome to t%e twenty(first century and t%e knowledge society< =%e business landsca&e is
ra&idly< =%e com&etiti.e en.ironment is no longer linear or &redictable< and success
entirely on t%e organi5ationAs ability to adKust to t%e dynamics of t%e business en.ironment<
%anges in
information;communication tec%nology BI=C %a.e generated ga&s in access and control
information and knowledge< 1.en w%en t%ese ga&s are bridged, se.eral fundamental c%allenges
0ow do we a&&ly knowledge for .alue(added and com&etiti.e ad.antage? 0ow do we
information into knowledge? 0ow do we use tec%nology to con.ert c%allenges into
Knowledge management is t%e solution for realigning t%e firmAs tec%nical ca&abilities to
create t%e
knowledge t%at t%e firm forward<
=%ere is ob.ious room for c%ange in t%e way we work and communicate and in relations%i&s
&rocesses among &eo&le wit%in and across organi5ations< =o be em&owered to face t%ese
means not only accessing tec%nology, but also de.elo&ing t%e ability to manage knowledge< =%e
Fuestions an organi5ation must consider are GDoes your com&any knows w%at you know?H Do you
know w%at you know?H G0ow do you make best use of t%e knowledge you %a.e?H It also
t%inking Gout(of(t%e(bo9,H w%ere Gt%e bo9H is w%at re&resents all t%e tried(and(true &rocedures
%a.e worked in t%e &ast< =%ere is less room for G&ackaged solutionsH to sol.e most of
a firmAs
&roblems< Knowledge management means t%inking outside t%e boundaries of current
&roducts, ser.ices, and organi5ations< =%e new and un&redictable business en.ironment &uts a
on inno.ation and creati.ity muc% more so t%an it %as in t%e &ast<
We %a.e &rogressed from t%e data &rocessing age of t%e 18/0s and 18"0s to t%e information age of
1820s and 1880s to t%e knowledge age of t%e 2000s< =%e latest transformation re&resents t%e
fundamental c%ange since t%e introduction of t%e digital com&uter ' decades ago< Knowledge
intellectual ca&ital B.iewed %ere as accrued knowledgeC re&resent our cor&orate and national
Knowledge workers are found in e.ery organi5ation, and t%ey are t%e backbone of e.ery
business< Knowledge workers use tec%nology to reason t%roug% &roblems and reac%
solutions< om&uterEaided software t%em an edge workers using con.entional met%ods<
$or a com&any to manage knowledge, it must first in.entory its &eo&le, systems, and
7rofessional knowledge workers wit%in t%e com&any must be identified, and t%eir functions must
defined< Knowledge tec%nologies must be incor&orated to reengineer t%e entire business &rocess<
decisions s%ould be re.iewed, and a knowledge system for making eac% decision s%ould be
=%e com&anyAs information system s%ould also be e9amined to determine %ow to
benefit from
emerging knowledge tec%nologies< =%is self(assessment makes a com&any more cogni5ant
of its
strengt%s and weaknesses< It s%ould also lead to c%anges t%at are more in tune wit% t%e com&etiti.e
nature of t%e business en.ironment<
Knowledge %as been t%e sta&le source of com&etiti.e ad.antage for many com&anies for %undreds
years< $or e9am&le, t%e idea of &assing knowledge to an a&&rentice from a master was used
during times< 7assing t%e Gfamily reci&eH t%at makes a certain &roduct uniFue
from one
generation to anot%er also attests to t%e notion of knowledge transfer and knowledge s%aring<
suc% transfer was e9tremely slow, it o&ened t%e door to modern met%ods of knowledge management
t%at can e9&loit faster media of knowledge e9c%ange, suc% as t%e Internet<
=%e recorded %istory of knowledge dates back to 7lato and 3ristotle, but its modern day
is credited to sc%olars like Daniel )ell B18"#C, Mic%ael 7olanyi B18*2, 18"'C, =offler B1820C,
t%e Da&anese guru, IkuKiro Nonaka B188*C< 4t%er writers like +.eiby B188"C and +tewart B2000C
t%e conce&t knowledge as t%e core asset for an organi5ation<
N o&yrig%t >irtual :ni.ersity of 7akistan "Knowledge Management EM!M=(/#0 >:
In t%e early 18"0s, researc%ers at MI= and +tanford were analy5ing ways in w%ic% com&anies
used, and diffused knowledge< =%is was t%e first essential ste& in t%e e.olution of
management, as we know it today<
Wit% t%e %el& of t%e Internet, KM became a feasible conce&t for many com&anies< It &ro.ided more
o&&ortunities for knowledge s%aring and knowledge transfer t%an t%ere %ad been in t%e &ast< In
of met%odology, KM was briefly &resented in total Fuality management B=IMC &%iloso&%y<
Deming e.en asked e.ery manager to de.elo& %is;%er t%eory of knowledge at work and moti.ated
Da&anese to work in teams to &roduce t%e Fuality &roduct< )usiness &rocess reengineering
downsi5ing, and outsourcing were also attem&ts to im&ro.e t%e &erformance of t%e firm, alt%oug%
%ad limited success< =%ey resol.ed t%e &roducti.ity factor, but drained knowledge
from t%e
=%ese attem&ts were more like round one, w%ere com&anies managed t%eir knowledge assets in
same way t%ey managed &%ysical assets< 7%ysical goods were stored in t%e ware%ouse, but
for t%e
intellectual eFui.alent, it was in t%e knowledge re&ository< W%en databases and Gware%ousesH were
Btoo many &%ysical assetsC, t%ey began t%inking about su&&ly c%ain management B+MC, trying to
t%e su&&ly of goods wit% demand and reduce in.entories to w%at was actually ordered for
&roduction< It
was more like rewarding t%e efficiency(dri.en &rediction of t%e future based on &ast trends(doing
In contrast, in round two of KM, com&anies began to reali5e t%at to fit t%e su&&ly of knowledge to
demand for it in &roducts and ser.ice6 t%ey needed to toy wit% %ow knowledge worker did t%eir
=o be effecti.e, KM %as to be Gbaked intoH t%e Kob and be &art of t%e fabric of t%e work to bring in
knowledge w%en needed and e9&ort it anyw%ere in t%e organi5ation w%en it is acFuired
1888C< =%is is w%ere we began to see a s%ift from Gdoing t%ings rig%tH to Gdoing t%e rig%t t%ingH E
working smarter, not %arder<
!i.en t%e &rogress made in automating &rocedures in t%e 18"0s and communications and
Bmostly t%roug% e(mailC in t%e 1820s t%e focus of tec%nology in t%e 1880s was on cogniti.e
to augment t%e knowledge work of %umans< 4f t%ese, t%e Internet and intranets %a.e %ad t%e most
&rofound im&act on s&reading t%e know(%ow< $rom a knowledge &ers&ecti.e, t%e
internet and
accom&anying tec%nologies %a.e demonstrated se.eral c%aracteristics in knowledge management@
J =%e internet is an incredible information source< Internet access is a.ailable
worldwide< It
means a com&anyAs knowledge workers can access information and s%are knowledge anyw%ere,
any&lace, anytime, wit%out delay<
J Wit% t%e World Wide Web, e.ery user can s%are and u&date information at will< =%is is
es&ecially attracti.e wit% t%e decreasing cost of communication<
J =%e internet uses a uni.ersal communication standard &rotocol< =%is &rotocol, =7;I7, makes
information access and e9c%ange accessible from anyw%ere t%ere is a com&uter and an internet &ro.ider<
J =%e internet &ro.ides Fuicker interaction and communication wit% fellow knowledge workers<
=%is interaction can be one(on(one as a grou&<
+etting t%e onte9t@ 3n Interde&endent World
!lobali5ation, intense com&etition Boften from une9&ected FuartersC, demanding customers,
c%anges, t%e relentless &rogress of tec%nology (all are factors t%at recur %ig% on t%e list of key
affecting businesses< 0ow do t%ey res&ond? Many management books, suc% as on %aos
=om 7eters B182"C, om&eting for t%e $uture by !ary 0amel and < K< 7ra%alad B188'C and
World is $lat by =%omas $riedman B 200"C offer &rescri&tions< 3 common t%read in t%ese is t%e
for organi5ations to be fle9ible, ada&ti.e and to continually rein.ent< =%e %ars% message
is ((
if t%ey donOt t%ey wonOt sur.i.e<
=%e single most im&ortant factor t%at is most of t%ese c%anges in t%e business en.ironment,
wit%in organi5ations, is t%at of information and communications tec%nology BI=C< It is often said
information and communications tec%nologies are business enabler, and s%ould su&&ort
strategy< 7rogress in I= and ot%er tec%nologies is so dramatic t%at it is fundamentally transforming
en.ironment, t%e way we li.e, work and t%e business landsca&e and society itself<
t%erefore need to understand and acti.ely embrace new tec%nologies as a core dimension of
N o&yrig%t >irtual :ni.ersity of 7akistan 2Knowledge Management EM!M=(/#0 >:
7er%a&s t%e biggest c%ange during t%e last decade of information tec%nology BI=C is not
im&ro.ement in functionality and &erformance ( incidentally a trend t%at %as been
continuously since t%e 18/0s E but interconnectedness< =oday, communications and com&uter
are &er.asi.e< 4rgani5ations, go.ernments, indi.iduals are becoming more closely
interconnected in
ways not %it%erto &ossible or economic<
Networks,, are relati.ely %ig%ly structured around a su&&ly c%ain and well(defined
need< W%at is %a&&ening today is t%e growt% of more dynamic networks, and a new layer of .alue
to& of information( knowledge< We must also not forget t%e e9istence of many informal
networks, often %ailed as t%e main way t%at t%ings mo.e forward in business, scientific and
communities< We are creating not national utility grids but global knowledge networks or webs<
connect inde&endent dis&arate knowledge t%at w%en combined and aggregated can lead
to new
knowledge and new o&&ortunities<
1.ery few years t%ere is anew strategic focus t%at &romises %it%erto
im&ro.ement in
business &erformance or a means of com&etiti.e ad.antage< +ome are merely
fads t%at
disa&&ear, w%ile ot%ers become more establis%ed as mainstream business acti.ities, &er%a&s after
res%a&ing< =otal Fuality management B=IMC and business &rocess re(engineering B)7RC, for
were two of t%e most significant management of recent years<
Now anot%er is on t%e scene E knowledge management< )ut is t%is somet%ing fundamental to e.ery
business or is it merely anot%er consultantOs fad? =%e fundamentalistsO argument is t%at knowledge
is an
im&ortant contributor to t%e &erformance, .alue and future &ros&erity of an organi5ation< In order to
ma9imi5e t%e benefits it must be &ro&erly managed and e9&loited< =oo freFuently, com&anies do not
know w%at t%ey know, t%ereby rein.enting t%e w%eel, or fail to a&&ly best &ractice
because t%at
knowledge %as not been s%ared<
=%e Networked Knowledge 1conomy
Many terms are used to describe t%e c%anging world in w%ic% we li.e and work ((t%e &ost(industrial
economy, information society, knowledge era, and Onetworked knowledge economyO <
term is
used, t%is new en.ironment %as c%aracteristics Fuite distincti.e from t%e industrial era of t%e last
4ld certainties no longer e9ist
=%roug%out t%e 1880s we %a.e witnessed c%ange as before< =%e demise of t%e former +o.iet
:nion, t%e fragmentation of Mugosla.ia and t%e rise t%en fall and t%en rise of t%e 3sian economies
ty&ical u&%ea.als affecting stability and &redictability in our en.ironment< oincident
wit% closer
integration wit%in t%e 1uro&ean :nion B1:C, indi.idual regions like atalonia and +cotland gain
control t%eir own affairs< %ina is emerging as a new economic &ower and is a big factor itself<
ounter(currents, not Kust in 1uro&e but elsew%ere, are simultaneously strengt%ening t%e need for
autonomy alongside t%at for closer cross(border co(o&eration< W%ere will it all ends? W%at is t%e
of t%e nation state?
3s indi.iduals, we witness c%ange at first %and< -ife in t%e late twentiet% century seems beset
com&le9ity and uncertainty, resulting in a growing incidence of stress< =%e &ros&ect of a secure Kob
&ension(able age no longer e9ists< We li.e longer, but we face concerns about &aying for nursing
care in
our old age as %ealt% ser.ices are stretc%ed of resources<
$or organi5ations, Obusiness as usualO is rarely a sustainable o&tion< 1.en a&&arently
multinationals %a.e %ad to bow to t%e influence of outside forces, suc% as +%ellOs re.ersal of &lans
t%e &ro&osed dum&ing of t%e redundant )rent +&ar oil &latform in t%e lig%t of concerted action
en.ironmentalists< 1.eryw%ere you look, t%e cor&orate landsca&e is c%anging<
=%e c%anging cor&orate landsca&e
In t%e new economy .alue is s%ifting to and knowledge intensi.e industrial
education, finance, information systems, media and telecommunications %a.e been growing
strongly for a decade< 3n analysis s%ows t%at during one year, :+ %ouse%old s&ending on Oold economyO
N o&yrig%t >irtual :ni.ersity of 7akistan 8Knowledge Management EM!M=(/#0 >:
E food, cars, a&&liances and clot%ing (increased less t%an 1 &ercent, w%ile t%at for a cluster of
economy items Etele&%one, entertainment, cable tele.ision, financial ser.ices and %ome
com&uters E
rose 12<* &er cent during t%e same &eriod< 0ow is it in 7akistan?
=%e demise of Kobs
3not%er trend associated wit% dis&ersion of business acti.ity and t%e growt% of small businesses is
of self(em&loyment< Most em&loyees can no longer rely on organi5ations to &ro.ide t%em wit% a
Kob for
life< 3 significant trend is t%e ra&id growt% of self(em&loyment by &rofessionals, &articularly t%ose
%a.e %ad &re.ious large com&any e9&erience< Many draw on t%is e9&erience to create
o&&ortunities, often global in nature< In turn, many large organi5ations contract wit% t%ese
for s&ecialist ser.ices<
1m&loyment in t%e future s%ould be .iewed not in terms of full(time Kobs, but in terms
of work
acti.ities t%at are &arceled out in t%e most cost(effecti.e way to t%ose wit% t%e necessary knowledge
skills< In t%e networked economy we %a.e t%e o&&ortunity to create electronic work markets,
wit%in and beyond firms<
3lt%oug% brands suc% as oca(ola, =oyota and 7%ili&s are globally recogni5ed, many industries
many com&anies are far from global< 1.en if its marketing is global, a com&anyOs manufacturing
may be
centrali5ed< In retail, for e.ery =oys ORO :s t%at %a.e e9&anded successfully o.erseas,
successful retailers like Marks L +&encer %a.e struggled %ard in t%eir o.erseas ambitions, or like
Mart %a.e remained largely in t%eir %ome country<
Ne.ert%eless, globali5ation is steadily increasing< Many large multinational com&anies
design and
manufacture at se.eral locations around t%e world< =%ey c%oose locations based on access to
markets and infrastructure< Many consumer and electronic &roducts formerly manufactured in t%e
and 1uro&e are now manufactured in t%e $ar 1ast< 1.en t%ere manufacturing %as migrated from
wage countries suc% as =aiwan and Malaysia to lower wage countries, suc% as %ina<
!lobal knowledge
In t%e industrial economy two reasons for going global were economies scale and t%e need to
&%ysical trans&ortation costs by manufacturing close to key markets< Now globali5ation is as muc%
res&onse to regional s&eciali5ation and e9&ansion of long(distance relations%i&s and markets<
t%e Internet firms can reac% distant markets at a &rice different from customers in t%eir
$urt%ermore, %ig%er .alue to weig%t ratios and networks like t%at of $ed19 mean
t%at global
distribution is cost(effecti.e<
3 global enter&rise takes ad.antage of uniFue skills and resources, t%ey are located< It
may be
t%e software e9&ertise of India or artistic skills of .illagers in 7akistan, in
3frica or in
)anglades%< =%is o&&ortunity to %arness knowledge on a scale %it%erto unimaginable before t%e
makes globali5ation attracti.e and e9citing and is a &%enomenon of 21st
N o&yrig%t >irtual :ni.ersity of 7akistan 10Knowledge Management EM!M=(/#0 >:
-1++4N #
$4R1+ +037IN! =01 $:=:R1 3ND =01 M1!3 =R1ND+ 4$ KN4W-1D!1
-et us look at t%e networked knowledge economy t%roug% t%e &ers&ecti.e of maKor s%ifts or
trends< =%is is followed by an of res&onses t%at are needed to ada&t and t%ri.e in t%e new
=%e Mega =rends
=%e term mega trend was used by Do%n Naisbitt to describe a fundamental underlying trend s%a&ing
future< In %is 1822 book Mega trends, %e identified ten key s%ifts t%at were res%a&ing t%e world<
t%ese, were
J Industrial society Information society
J National economy World economy
J 0ierarc%ies Networking
Information and knowledge based industry
Information and knowledge are &er.ading all sectors of industry as well as creating new industries
around t%em< =%ere are se.eral distincti.e c%aracteristics of t%is new economy<
1< 1.ery industry is becoming more knowledge intensi.e< 1.en in agriculture, knowledge adds
.alue< )y combining knowledge about t%e effect of a fertili5er, soil condition, t%e state of &lant
growt% Busing information from satellite &%otogra&%sC, and t%e forecast weat%er conditions,
farmers can use '0 &er cent less fertili5er on t%eir cro&s, yet ac%ie.e t%e same results< 3 new
generation of combine %ar.esters automatically measures t%e weig%t and moisture content of
t%e corn and calculates yields &er acre< 1.ery industry %as com&arable e9am&les<
2 +mart &roducts< 3not%er manifestation of knowledge intensity comes in so called
&roductsA< =%ese use information or knowledge to &ro.ide better functionality or t%at
can command &remium &rices< =%ere is a smart tire t%at senses t%e load it %as to carry and
adKusts its &ressure accordingly< =%ink of smart &%ones and smart %omes< I(&ods &ro.ides best
way of carrying your music around< +er.ices can be en%anced t%roug% better
knowledge< Marriott 0otels kee&s track of indi.idual references so t%at it can offer su&erior to t%eir customers w%en t%ey c%eck in<
# 0ig%er information to weig%t ratios< =%e .alue of electronics in cars now e9ceeds t%at of t%e
.alue of t%e metal c%assis, w%ic% itself, t%roug% better knowledge of structures, is significantly
lig%ter t%an t%at of its &redecessors< 3n indication of t%is trend at t%e macroeconomic le.el is
t%e trend in weig%t< 3t t%e start of t%e twentiet% century t%e ratio was roug%ly 1@1< =oday t%e
financial .alue is twenty times %ig%er, w%ile t%e &%ysical weig%t of goods is about t%e same<
' >alue in intangibles< =%e market .alue of most com&anies is se.eral times %ig%er t%an t%e .alue
of t%eir &%ysical assets as recorded in t%eir balance s%eets<
* =rade in intangibles< =%e ultimate information to weig%t ratios is t%e weig%tless &roduct or< =%ere is a growing range of t%ese intangibles t%at are traded in t%eir own
$inancial markets are almost w%olly intangible< $utures o&tions and com&le9 are
&er%a&s t%e ultimate intangible knowledge &roduct, been created t%roug%
New knowledge industries
3 conseFuence of t%ese trends is t%e creation of industries t%at are almost w%olly information
knowledge based< M< Masuda describes a w%ole set of Fuaternary industries, as distinct from
N o&yrig%t >irtual :ni.ersity of 7akistan 11Knowledge Management EM!M=(/#0 >:
BagriculturalC, secondary BmanufacturingC and tertiary Bser.icesC industries B=able belowC< W%ile we
now starting to recogni5e t%ese as distinct and .aluable industries, it must %a.e taken some
foresig%t to
en.isage t%ese in 1820s, w%en MasudaOs book was first &ublis%ed< 0e also described t%e
utilityO, in w%ic% %e en.isaged many of t%e features t%at we now see in t%e Internet and
Iuaternary industries as defined by Masuda B1820C
Information industries 7rinting and &ublis%ing
News and ad.ertising
Information ser.ices E 4n(line analysis
Information &rocessing E software ser.ices
Knowledge industries -egal, accountancy, consultancy, design
Researc% and de.elo&ment
1ducation and =raining
3rts industries reators E aut%ors, com&osers, artists, singers etc<
7erformers E orc%estras, actors, singers
Infrastructure E t%eatres, tele.ision, broadcasting, museums
1t%ics industries or&orate +ocial Res&onsibility
Religion, +&iritual and 0a&&iness
New knowledge(intensi.e industries are being created all t%e time< =%e biotec%nology industry is
fifteen years old but %as more t%an 2000 com&anies and is e9&ected to %a.e annual re.enues in
of P*00 billion by t%e year 2010< 4t%er industries are emerging around t%e trading of information
knowledge using t%e Internet<
Networking (%ard and soft
=%ere are two defining c%aracteristics t%at are fundamental in &ractice@
1< Networked organi5ations are less about organi5ational structure? and more about informal
%uman networking@ &rocesses<
2 =%e tec%nology of com&uter networking bot% under&ins and en%ances %uman networking<
3 key effect of information and communications tec%nologies suc% as t%e internet is an increase
.irtuali5ation in business acti.ities and ways of working< >irtuali5ation o.ercomes constraints of
and distance< =%e term O.irtualO is now a&&earing in many guises< =%us one .iew of a .irtual
is@ Oa tem&orary network of inde&endent com&anies t%at co(ordinate acti.ities to meet a
obKecti.e, suc% as anew &roduct de.elo&ment or to meet a customer need<O =%is .iew relates to
dimension of time<, anot%er .iew relates to an organi5ation not a clear &%ysical
0ere a ty&ical definition is@ Oan organi5ation distributed geogra&%ically and w%ose work is
t%roug% electronic communications<O
>irtual ness can also o&erate at se.eral le.els, from indi.idual to inter organi5ational< =%ese
gi.e rise to many ty&es of .irtuality, ranging from workers communicating wit% colleagues globally
&%one or email, or t%e creation of consortia to work on a s&ecific &roKect<
Making a .irtue of .irtuality
+ome of t%e common ty&es of .irtuality are t%e following<
1< >irtual &roducts and ser.ices< =%e cost of an electronic transaction is ty&ically a tent% of t%at of
t%e corres&onding traditional transaction< Dell generates P* million of business a day t%e
Internet< )ookseller 3ma5on<com sells e9clusi.ely t%is way< 1lectronic markets t%at matc%
buyers and sellers are now emerging in e.eryt%ing from Dutc% flowers to second(%and cars<
N o&yrig%t >irtual :ni.ersity of 7akistan 12Knowledge Management EM!M=(/#0 >:
2 >irtual working or telework< +e.eral million &eo&le in 1uro&e and t%ousands in 7akistan now
telework for some or &art of t%eir working week< =%ey may work from %ome, from client
&remises, or indeed anyw%ere t%at %as tele&%one access, w%ic% wit% cellular &%ones is now
.irtually e.eryw%ereQ Wit% t%e ubiFuitous notebook com&uter, it %as been said t%at Omy office is
w%ere I %ang my modemO<
# >irtual offices< 3 related ty&e of .irtuali5ation is t%e .irtual office, w%ere t%e &%ysical office is
re&laced by office ser.ices< I)M is one of many com&anies t%at %a.e ado&ted O%ot(deskingO< 3t
se.eral of its &remises, em&loyees do not %a.e &ersonal works&aces, but are allocated desks t%ey are in t%e office<
' >irtual teams< =o gi.e fle9ibility and to a.oid relocation, many com&anies sim&ly create .irtual
teams, w%ere em&loyees work at locations more con.enient to t%em< 4t%er e9am&les are w%ere
se.eral teams working in con.entional office settings at different locations co(o&erate .irtually,
suc% as engineering teams at =oyota, $ord or )oeing in locations across 1uro&e and t%e :+3<
* >irtual organi5ations< =%ese can range from a stable su&&ly network t%at works as a single
organi5ation, to a loose federation of inde&endent firms t%at come toget%er tem&orarily for
s&ecific acti.ities<
/ >irtual communities< Instead of a local community a .irtual community is one of s%ared in
terms, t%e location< =%ey are found on Internet newsgrou&s and discussion lists, or
on an organi5ationOs intranet< form .irtuali5ation takes, t%ere are some common features t%at distinguis% it from
J Information and communications tec%nology allows o&erations to be dis&ersed<
J =%e barriers of time and s&ace are reduced Bor e.en disa&&ear com&letelyC<
J 4rgani5ational structures are network(like, and more dynamic<
J =%e interface wit% customers and markets is different(
J 1m&loyees and associates Bbusiness &artners, su&&liers, customers etc<C ado&t new &atterns of
J =%e locus of knowledge is diffused< It is not necessarily in a s&ecific &lace<
=ec%nology E a fundamental force
:nder&inning eac% mega trend is t%e fundamental force of tec%nology< =ec%nology
%uman ca&abilities< In t%e industrial re.olution, t%e core tec%nology was steam &ower t%at ga.e
a 1* times im&ro.ement in &rice(&erformance manual met%ods< In t%e knowledge era it is I=
is boosting our ability to &rocess information<, t%e &ace of im&ro.ement in t%e information
re.olution is muc% faster<
=%e rate of im&ro.ement in microc%i&s, t%e fundamental com&onent of com&uters, %as been
constant se.eral decades< In 18/* IntelOs co(founder, !ordon Moore, &roKected t%at
doubles and costs %al.e roug%ly ,e.ery eig%teen mont%s, an obser.ation now ens%rined as MooreOs
+uc% im&ro.ements are almost un&aralleled in t%e world of science and tec%nology< =%e
Institute of =ec%nologyOs BMI=C landmark study, Management in t%e 1880s indicated t%at a ten(
year &eriod, I= s%owed a 2* times &rice(&erformance im&ro.ement, com&ared to 1<' times for t%e
ot%er most im&ro.e &roduct grou&s< =%is rate of im&ro.ement eFuates to an industrial re.olution
se.en yearsQ
=%e Re.olution ontinues
MooreOs -aw seems set to continue, at least t%roug% to t%e year 2010 , alt%oug% t%ere are likely to
c%anges in t%e s&ecific tec%nology used< =%us R(ray lit%ogra&%y s%ould re&lace o&tical
leading to t%e de.elo&ment of circuits only 0<01 microns Bmilliont%s of an inc%C wide
by 2010,
com&ared to around <2* microns today, and &rocessors t%at are 1000 times more &owerful<
&ro.ided new a&&lications become economic and sustain demand, in.estments in a .ariety of
N o&yrig%t >irtual :ni.ersity of 7akistan 1#Knowledge Management EM!M=(/#0 >:
tec%nologies, suc% as %ologra&%ic memory and molecular com&uters, s%ould maintain t%e
I= =rends@ Decade on Decade Im&ro.ements
1822 1882 2002
7rocessor s&eeds
=ransistors &er c%i&
Memory c%i&s
)asic disk ca&acity
2"* 000
/' Kbits
20 M)
'00 M05
"<* million
/' Mbits
1 !)
10 000 M05
2*0 million
1/ !bit
2*0 !)
7ersonal com&uter
7(#2/ B2 M05C
2*/ K) R3M
/0 M) disk
1'H R=
#2 M) +DR3M
' !) disk
1"H R=
10 !05
' !) memory
*00 !) disk
20H flat &anel
Desk(to& &lus &alm(
%eld integrated 7
and communicators
+oftware and a&&lications )asic 4ffice +uite
Bword &rocessing,
7rofession s&ecific
3dds database,
email< Internet
Integrated .oice and
data messaging<
>isual knowledge
:sers 7rofessionals,
clerical staff %a.e
access in office
Most staff including
7rofessionals %a.e
se.eral Boffice,
%ome, mobileC
om&uters are
consumer a&&liances
Boften for s&ecific
=y&ical functions alculations6
dTcision su&&ort
learning6 symbiotic
N o&yrig%t >irtual :ni.ersity of 7akistan 1'Knowledge Management EM!M=(/#0 >:
-1++4N '
M3N3!1RI3- 4N+ID1R3=I4N+ $4R IN=1RN1= :+=4M1R+ 3ND K( )3+1D
In t%e industrial era, com&anies o&erated on assum&tions rooted in tangible(assets(based
t%at basically tracked t%e &%ysical transformations of atoms into finis%ed goods in order to
wealt%< 3toms re&resent t%e raw material used to create .alued out&uts< In t%is framework t%e
+ultan of
)runei became one of t%e wealt%iest indi.iduals in t%e world by e9tracting &etroleum atoms, or oil,
is e.entually transformed into gasoline<
om&anies com&eting under t%e old model tend to %a.e %ig%ly standardi5ed o&erational &rocedures
relati.ely sim&le &roducts< Design and o&erational com&le9ity, as well as customi5ability, is
sFuee5ed out of t%e &roduction &rocess< 19am&les of com&anies like t%ese can be found
in t%e
commodity industries<
In t%e modern era based on knowledge, t%is a&&roac% can be suicidal because re.erse(
engineering enables com&etitors to &roduce t%e same &rocesses;&roducts easily< 7ersonal
manufacturing is a familiar e9am&le because com&onents are based on defined common standards
com&anies readily &roduce commodity com&onents< 4n t%e ot%er %and, t%e 7 software industry is
.ery different en.ironment w%ere Microsoft, 4racle, and +37 ca&ture and reuse uniFue knowledge
t%e form of lines of code and in t%e met%ods to &roduce t%at code< 3s e.idence of t%e s%ift in &ower
from t%e Industrial to t%e Information 3ge, )ill !ates, 14 of Microsoft, is wealt%ier t%an t%e
of )runei<
Microsoft, for e9am&le, ultimately creates .alue by com&iling bits into &rograms< =%e &rimary
engine of
wealt% is not t%e com&act disc or manual< Wealt% is created by selling new and reused com&ute
)ot% old and new &aradigms &ro.ide assum&tions t%at allow managers to manage cor&orate
ritically, t%e assum&tions go.erning t%e management of knowledge assets differ radically from
go.erning t%e management of industrial(era tangible assets< Managers from bot% &ers&
would see
a grou& of em&loyees and mac%inery, but t%e in&uts, &rocesses, and out&uts are .iewed in
different ways<
Information 3ge manager see a set of knowledge assets distributed among &eo&le,
mac%ines, and
&rocesses coordinated to &roduce desired out&uts< )asic decisions are based on assum&tions about
knowledge reFuired to o&erate a gi.en &rocess and %ow it can be embedded in information
to make it easily reusable< =%ese managers also recogni5e t%at some knowledge assets are better left
t%e brains of em&loyees< =%eir intellectual ca&ital creates t%e le.erage and fle9ibility to ra&idly
new knowledge and create an array of &roducts and ser.ices< In t%is way, t%e
&roblem for management is %ow to best introduce, utili5e, and de&loy knowledge
t%roug%out t%e
com&anyAs core &rocesses<
In contrast, Industrial 3ge managers see a com&anyAs core &rocesses as &iece &arts of a
o&erating in &redetermined ways to yield a more or less consistent set of tangible out&uts< 1nsuring
t%e &arts are interc%angeable is a common goal< 1mbedding knowledge wit%in mac%ines and
tig%tly defined Kob descri&tions are common a&&roac%es< +u&er.ision aims to ensure t%at
be%a.e wit%in t%e well(defined limits, and managers belie.e t%at obtaining enoug% measures of
&rocess will o&timi5e t%e &rocess< =%is seeing t%e Gtrees t%roug% t%e forestH a&&roac% is based on
reductions it assum&tions of t%e industrial(era &aradigm< $ocusing on tangible out&uts rat%er t%an
t%e knowledge assets de&loyed to &roduce t%e out&uts is common &ractice<
3lt%oug% bot% managers focus on t%e same tangible assets, t%e Information 3ge managerAs
leads to e9&licit management of intangible assets< =%e Industrial assets %e literally does not Gsee<H
Information 3ge &aradigm allows managers to GseeH &atterns, and t%e &atterns t%at &ro.ide t%e most
le.erage in todayAs economy are based on knowledge<
N o&yrig%t >irtual :ni.ersity of 7akistan 1*Knowledge Management EM!M=(/#0 >:
Knowledge Management in 7ractice
4rgani5ations around t%e world are ado&ting knowledge management &ractices at an accelerating
=%ey %a.e combined cultural and &rocedural c%anges wit% enabling tec%nology to reali5e bottom(
im&ro.ements< 3 number of com&re%ensi.e sur.eys %a.e indicated t%at organi5ations are engaged
wide(ranging efforts to im&lement and im&ro.e knowledge management &ractices<
7ercei.ed )enefits from Knowledge Management
Im&ro.ed decision making 28U
Im&ro.ed res&onsi.eness to customers 2'U
Im&ro.ed efficiency of &eo&le and o&erations 22U
Im&ro.ed inno.ation "#U
Im&ro.ed &roducts;ser.ices "#U
$ollowing are some of t%e organi5ations w%ere managers took t%e c%allenge and im&lemented
=%e World )ank
=%e World )ank is an organi5ation owned by many of t%e go.ernments of t%e world< It lends
money to
su&&ort economic de.elo&ment and &ro.ides< In 188/, t%e &resident made an
t%at forced t%e rum to make c%anges in %ow knowledge was managed< 0e announced
t%at t%e
organi5ation was going to manage and s%are its knowledge wit% clients around t%e
world.iat%e1nternetandot%er met%ods< =%e goal of t%e initiati.e is to make World )ank
a.ailable in a database to &ro.ide assistance for all &ersonnel<

=%e conce&tual model t%ey are using treats knowledge management as a &rocess of creating,
and a&&lying data< =%e organi5ation as a w%ole %as t%ese se.en goals<
1< 3ssembling a large knowledge base in a knowledge management system<
2< reating a %el& desk t%at can %el& users find t%e t%ings t%ey need<
#< 1stablis%ing an e9&ertAs directory<
'< De.elo&ing data and statistics on c%anges in eac% country<
*< 3rticulating engagement information and links wit%in t%e organi5ation<
/< 7ro.iding dialog s&ace for Fuestions, answers, and con.ersations<
"< $acilitating access to users out side t%e organi5ation<
3t t%is &oint t%e World )ank is still trying to make t%is w%ole &rocess a success and con.ince
t%at an organi5ation known for its static ways can c%ange into an organi5ation of t%e times<
In t%e early 1820s, managers at +kandia found t%at traditional management and accounting t%eories
not accurately reflect .alue found wit%in t%eir com&any< +ince +kandia is a knowledge(intensi.e
com&any, its in.entory was only a fraction of its assets< Re&orts stro.e to define new
met%ods of
.aluation and described ways to attac% im&ortance to a com&anyOs intangible assets<
-eif 1d.isson, t%e director of t%e +wedis% oalition of Industries, was named director of
intellectual ca&ital management function for t%e 3$+ business unit of +kandia in 1881< =%is was
&art of
t%e effort to ca&ture and define t%e .alue of intellectual ca&ital as a com&lement to t%e balance s%eet
14 )Korn Wolrat% and to& e9ecuti.e Dan arendi .iewed intellectual ca&ital BIC re&orting as a
tool to
aid internal decisions and descri&tions of t%e com&anyOs knowledge assets to t%e s%are%olders<
Ra&id growt% occurred in t%e 3$+ di.ision under 1d.isson from 1881 to 188*, and %e stro.e to
a system t%at could make t%e growt% truly a&&reciated< During t%ese years alliances grow from
*0,000 to
/*,000, and t%e em&loyee count increased from 1,100 to 2,000 during t%e same &eriod< In May
188*, t%e
I team released t%e first &ublic I annual re&ort as a su&&lement to t%e financial re&ort, and
cor&orations %a.e contacted 1d.isson for assistance in de.elo&ing t%eir own I re&orts<
N o&yrig%t >irtual :ni.ersity of 7akistan 1/Knowledge Management EM!M=(/#0 >:
effort was not t%e first attem&t to manage knowledge, but it was t%e most concentrated, and by
so &ublicly t%ey set t%e trend for ot%er com&anies to <follow suit<
Knowledge Management 7ractices
om&any ountry Knowledge Management
Knowledge Management 7ractices
#M :+3 )uild knowledge(s%aring
Managers are reFuired to link
continuous learning to re.enues<
:+3 )uild knowledge(s%aring
14 Ray +tat initiated breakdown of
functional barriers and com&etiti.e
atmos&%ere ad created a collaborati.e
knowledge(s%aring culture from t%e to&<
om&any encourages Gcommunity of
inFuirersH rat%er t%an Gcommunity of
)oeing "" :+3 )uild knowledge(s%aring
$irst G&a&erlessH de.elo&ment of
aircraft< Included customers in design
teams< More t%an 200 teams wit% wide
range of skills bot% designed and
constructed sub&arts, rat%er t%an usual
organi5ation design team and
construction team< +u&&liers worldwide
used same digital databases as )oeing<
:+3 1< )uild knowledge(s%aring
2< reate careers based on
knowledge management
3 biotec% firm t%at %as reorgani5ed
itself to o&timi5e knowledge s%aring<
reated knowledge =ransfer
De&artment to coordinate efforts<
1m&loyeesA best at knowledge s%aring
gain bot% financial rewards and
management &ositions<
:+3 )uild knowledge(s%aring
Mini steel mill t%at %as introduced
broad range of suc% as@ flat
%ierarc%y, broad education, blue(collar
workers res&onsible for customer
contacts and rewarded for &ersonal< %a&arral uses 1<* %rs labor
&er ton6 industry standard of 1<*(#<0 %rs<
&er ton
$ord Motor :+3 )uild knowledge(s%aring
om&any t%at %as transformed itself by
outsourcing and creating .irtual
networks of .endors using I=<
4ticon Denmark )uild knowledge(s%aring
0as created a Gs&ag%etti organi5ation<H
3 c%aotic tangle of interrelations%i&s
and interactions< Knowledge workers
%a.e no fi9ed Kob descri&tions but work
entirely on &roKect basis<
:+3 1< )uild knowledge(
s%aring culture<
2< reate micro(
en.ironments for
tacit knowledge
Im&lemented an o.erall culture of
collaboration, w%ic% encourages
knowledge s%aring and risk taking on all
le.els< 0(7 e.en su&&orts &eo&le w%o
try out t%ings t%at donAt work<
+weden reate micro(en.ironments
for tacit knowledge transfer<
)usiness Kournal uses G&iggy(backingH
and Gteam(writingH to s&eed u& learning
among new Kournalists< Inter.iews and
larger articles are routinely assigned as
team work, rat%er t%an one(man s%ows<
=%is s&eeds u& transfer of t%e seniorsA
tacit skills and networks to t%e Kuniors<
N o&yrig%t >irtual :ni.ersity of 7akistan 1"Knowledge Management EM!M=(/#0 >:
0onda Da&an reate micro(en.ironments
for tacit knowledge transfer<
GRedundancyH routinely used6 &eo&le
are gi.en information t%at goes beyond
t%eir immediate o&erational
reFuirements< =%is facilitates s%aring in
res&onsibilities and creati.e solutions
from une9&ected sources and acts as a
self(control mec%anism<
7-+(onsult Denmark 1< Measure knowledge(
creating &rocesses
and intangible assets<
2< reate micro(
en.ironments for
tacit knowledge
ategori5es customers according to
.alue of knowledge contribution to t%e
firm< $ollows u& in management
information system< 3&&oints
GmentorsH wit% task to facilitate transfer
of tacit skills between members in large
&roKects< 3cti.ely seeks large &roKects,
so t%at Kunior consultants can be added
to t%e teams for learning<
3gro :+3 4ffer customers additional
Data on farmers and soils are combined
wit% weat%er forecasts and information
on cro&s< 3nalyses are fed back to t%e
farmer .ia sales re&s to %el& farmer
select best combinations of cro&s
$rito(-ay :+3 4ffer customers additional
+ales re&s collect daily s&ot data about
s%elf s&ace utili5ation for all brands<
Data are com&uted, combined wit%
market information, and refer to t%e
sales re&s, w%ic% use it to gi.e t%e
retailers information on best s%elf
)enetton Italy !ain customer knowledge 7roduces Gmass(customi5edH a&&arel to
fit latest trends in colors and designs<
Daily sales data from t%eir own
boutiFues are integrated wit% com&uter(
aided design and com&uter(integrated
:+3 !ain customer knowledge< +ince 1822, t%e com&any %as collected
all customer com&laints in a database
t%at su&&orts tele&%one o&erators in
answering customer calls< !1 %as
&rogrammed 1<* million &otential
&roblems and t%eir solutions into its
Da&an !ain customer knowledge 7roduces Gmass(customi5edH bikes to
fit customersA e9act %eig%t, weig%t, and
color &references in a day< Is ac%ie.ed
t%roug% com&uter(aided design and
com&uter(integrated manufacturing
integrated wit% customer database<
Netsca&e :+3 !ain customer knowledge >ery close links .ia Internet to o&inion
leaders among customers, w%o are
encouraged to re&ort &roblems to
enable it to create new generations of
software at a .ery fast &ace<
Rit5 arlton Worldwide !ain customer knowledge +taff reFuired to fill out cards wit%
information from e.ery &ersonal
encounter wit% a guest< Data &lus all
Fuest reFuirements are stored and
&rinted out to all staff w%en t%e guest again, so t%at eac% guest
&ersonal treatment<
)ritis% :K a&ture, store, and s&read :sing knowledge management to draw
N o&yrig%t >irtual :ni.ersity of 7akistan 12Knowledge Management EM!M=(/#0 >:
7etroleum indi.idualsA tacit knowledge< toget%er talents from all t%e
organi5ation< )7 em&%asi5es transfer of
tacit knowledge rat%er t%an
accumulation and transmission of raw
data and %as installed a communication
network com&rising .ideoconferencing,
multimedia, and e(mail<
%e.ron :+3 a&ture, store, and s&read
indi.idualsA tacit knowledge<
reated a Gbest &racticeH database t%at
ca&tures e9&erience of drilling
conditions and inno.ati.e solutions to
&roblems on site in a database for
s%aring globally wit% ot%er sites<
and )ain L
:+3 a&ture, store, and s&read
indi.idualsA tacit knowledge<
=%ese two management consulting
firms %a.e de.elo&ed Gknowledge
databasesH t%at contain e9&eriences
from e.ery assignment including names
of team members and client reactions<
1ac% team must a&&oint a G%istorianH
to document t%e work<
:+3 reate new re.enues from
e9isting knowledge<
7uts all its 2*,000V &atents into a
database, w%ic% is used by all di.isions
to e9&lore %ow e9isting &atents can gain
more re.enues< =%e e9&erience from
t%is a&&lication is now being transferred
into ot%er intellectual assets<
:+3 reate new re.enues from
e9isting knowledge<
Knowledge on %ow to build smelting
&lants is used to construct w%ole &lants
including education of &ersonnel and
managers to customer all t%e
world< =%is business is now more
&rofitable t%an its original business base<
+teel case :+3 reate new re.enues from
e9isting knowledge
Does basic researc% into inno.ation and
learning, best learning en.ironments,
and new interfaces B#D and .irtual
toolsC< +teel case sells its knowledge in
t%is area to ot%er com&anies<
I)M :+3 reate careers based on
knowledge management<
1m&loyees are encouraged to switc%
between &rofessional and managerial
Kobs in order to gain more %olistic
knowledge about t%e com&any<
elemi +weden Measure knowledge(creating
&rocesses and intangible
7ublis%ed first audit of its intangible
assets in 3nnual Re&ort 188*<
=elia +weden Measure knowledge(creating
&rocesses and intangible
+wedenAs =elecom com&any &ublis%es
since 1880 an annual +tatement of
0uman Resources including a &rofit
and loss account .isuali5ing %uman
resource costs and a balance s%eet
s%owing in.estments in %uman
It is interesting to note t%e large number of +wedis% com&anies in.ol.ed in knowledge
+wedis% com&anies %a.e been &ioneers in t%is field and were t%e first to monitor and
intelligence acti.ities in large 1uro&ean com&anies< 4bser.ations at 3stra(Draco, 1ricsson
!ambro, elsius =ec%, +kandia, +3+, =elia, and >ol.o identified four common features@
1< )alance between strategy and o&erational<
2< 3 systematic su&&ly(on(demand intelligence for cor&orate management<
#< 3 focus on information(s%aring cultures, including systematic community meetings
business&eo&le, academics, and military officers<
N o&yrig%t >irtual :ni.ersity of 7akistan 18Knowledge Management EM!M=(/#0 >:
'< 1m&%asis on knowledge(s%aring acFuisition &rocesses<
Intellectual a&ital
=racking a com&anyAs &%ysical assets is
straig%tforward enoug%, as long as youAre counting
com&uters, adding salaries, and estimating %eating
bills< )ut managing intellectual ca&ital is a different
ball game, and one in w%ic% few com&anies
consistently %it %ome runs<
Intellectual ca&ital a com&anyAs em&loyee
e9&ertise, uniFue organi5ational systems, and
intellectual &ro&erty< $or e9am&le, if a com&anyAs
book .alue is P10 &er s%are and its stock is selling
for P'0 &er s%are, t%e difference is often attributed
to intellectual ca&ital< GW%en you subtract book
.alue from market .alue, t%e remaining is all t%e
intellectual and knowledge and market ca&ital< It
includes all t%e &atents t%ey mig%t %a.e and all
ot%er intangibles,H says >is% Kris%na, associated
&rofessor of management at t%e Mcombs +c%ool
of )usiness at t%e :ni.ersity of t%e =e9as at
4nce a com&any identifies its intellectual ca&ital,
t%e ne9t ste& is to maintain it< 4ne of t%e
tec%niFues t%at Dollar )ank uses to manage
intellectual ca&ital is to kee& em&loyees in.ol.ed
in decision making and &lanning, says
3bra%am Nader, senior .ice &resident and c%ief
o&erating officer at t%e 7ittsburg%(based bank<
Ron !riffin, I4 at =%e 0ome De&ot, Inc<, says
t%at 3tlanta(based %ome im&ro.ement retailer %as
tried(and(true structures in &lace for measuring,
maintaining, and growing intellectual ca&ital< =%e
com&any uses a nine(bo9 grid system to measure
eac% em&loyeeAs &erformance and &otential, and it
offers de.elo&mental courses to bring em&loyees
u& to s&eed on certain issues< =%e categories
measured include leaders%i& ability, %ow an
em&loyee fits into t%e 0ome De&ot culture,
financial acumen, and &roKect management
$or its &art, 0ome De&ot &osts a bulletin on its
intranet wit% Fuick references on to&ics suc% as
%ow to re&air a leaky toilet or build a deck< =%at
way, knowledge is a.ailable for em&loyees to
remain u& to s&eed and to &ass suc% information
along to customers< GItAs not Kust about selling
&roduct in our business6 itAs a lot of t%e
knowledge, and we train on t%at e9tensi.ely,H
!riffin says<
+4:R1@ 19cer&ted from =aylor, %ristie< GIntellectual a&ital,H om&uterworld< Marc%
3s a result of KM, systems %a.e been de.elo&ed to gat%er, organi5e, refine, and distribute
t%roug%out t%e business< In %is study of +mart )usiness, )otkin B1888C suggests si9 to& attributes of
knowledge &roducts and ser.ices@
J -earn< =%e more you use t%em, t%e smarter t%ey get and t%e smarter you get, too<
J Im&ro.e wit% use< =%ese &roducts and ser.ices are en%anced rat%er t%an de&leted w%en used,
and t%ey grow u& instead of being used u&<
J 3ntici&ate< Knowing w%at you want, t%ey recommend w%at you mig%t want ne9t<
J Interacti.e< =%ere is two(way communication between you and t%em<
J Remember< =%ey record and recall &ast actions to de.elo& a &rofile<
J ustomi5e< =%ey offer uniFue configuration to your indi.idual s&ecifications in real time at no
additional cost<
During t%e 18/0s and 18"0s, tec%nology was focused on automating %ig%(.olume static &rocesses
as claims &rocessing, mortgage loan u&dating, airline reser.ation systems, and t%e like< =%e
of e(commerce in t%e late 1820s and 1880s s%owed %ow information tec%nology could im&lemented
new way of doing business effecti.ely< &rocessing &ower, %ig%
bandwidt% data
transmission, and networking made it &ossible to re(en.ision %ow business gets done< It
%as also
c%anged t%e business en.ironment and introduced new com&etiti.e im&< 3mong t%em are@
J Reacting instantly to new business o&&ortunities, w%ic% led to decentrali5ed decision
making Band com&etencyC at t%e front lines, w%ere t%e action is< Wit% t%at came t%e
desire to build mutual trust between knowledge workers and management and to coo&erate in
%andling time(sensiti.e tasks<
J )uilding better sensiti.ity to Gbrain drain<H It %as been said t%at Ge9&ertise gra.itates
toward t%e %ig%est bidderH B3&&le%ans et al< 1888, 1"C< More and more com&anies reali5e t%e
im&ortance of managing and & e9&ertise< $or t%e %uman resources
N o&yrig%t >irtual :ni.ersity of 7akistan 20Knowledge Management EM!M=(/#0 >:
de&artment, t%e key Fuestion is G0ow does t%e firm re&lace e9&ertise w%en it retires, resigns, or
J 1nsuring successful &artnering and core com&etencies wit% su&&liers, .endors,
customers, and ot%er constituents< =odayAs tec%nology %as enabled com&anies to
reengineer t%e ways to do business< !etting &artners u& to your s&eed reFuires more t%an fast
tec%nology< Knowledge workers and ot%ers wit%in t%e com&any s%ould ensure t%at coo&eration
and coordination of work are &racticed for t%e good of t%e firm<
om&anies and managers t%at fail to embed a .iable KM o&eration &robably suffer from
o.ersig%ts or &itfalls@
J $ailing to modify t%e com&ensation system to reward &eo&le working as a team< =%e
traditional met%od of com&ensating &eo&le based on t%e old(fas%ioned Ginformation(%oardingH
&ractice does not work in a knowledge(s%aring en.ironment< Merit increases and bonuses
s%ould be based on team contribution and team &erformance rat%er t%an Fuantity or .olume<
J )uilding a %uge database t%at is su&&osed to cater to t%e entire com&any< !enerali5ed
systems do not usually work well, because information and knowledge are not stratified to
address s&eciali5ed areas of e9&ertise< Ideally, t%e %uman resources de&artment s%ould first
determine w%o works best wit% w%o based on commonality of Kob ty&e or Kob e9&erience and
t%en t%e knowledge t%at can be s%ared for eac% em&loyee to be more successful<
J >iewing KM as a tec%nology or a %uman resource area< =%is o.ersig%t relates to t%e
earlier one E w%ere %uman resources and information tec%nology efforts are &oorly
coordinated E and defeats t%e &ur&ose be%ind embedding KM into t%e fabric of t%e
organi5ation< =%e two de&artments s%ould work Kointly at introducing KM as &art of t%e
organi5ational &rocesses<
J 7lacing too muc% em&%asis on tec%nology< 3lt%oug% intranets, knowledge(based tools,
data ware%ouses, and ot%er com&uter(based software are &art of t%e way todayAs organi5ation
must ado&t, tec%nology is only t%e enabler of knowledge management< =%e knowledge it makes
a.ailable must be organi5ed and disseminated to %uman decision makers to be of any use<
J Introducing KM into t%e organi5ation .ia a sim&le &roKect to minimi5e &ossible losses<
=%is is t%e wrong way to start KM< 3 com&any s%ould start wit% a strategy and a c%am&ion,
wit% a focus on a wort%w%ile, %ig% &rofile &roKect t%at can set t%e tone for t%e rest of t%e
organi5ation< It is a %ig% risk a&&roac%, but one t%at is most likely to &ay di.idends in t%e long
J 7ursuing KM wit%out being ready< +&urred by t%e &aradigm s%ift in our economy, many
cor&orations &ursue KM wit%out e.aluating w%et%er t%ey are organi5ationally ready 8stewart et
al< 2000, '*C< In ot%er words, cor&orations t%at %a.e been o&erating under classical
management &rinci&les cannot be successful in ado&ting KM wit%out maKor c%anges in culture,
management attitudes, and communication skills<
J &oor leaders%i&< -ike any %ig% &riority &roKect, KM is best im&lemented wit%
determined c%am&ions and to& management commitment< $or e9am&le, !eneral 1lectric B!1C
recogni5es an organi5ational culture o&en to ideas from all le.els of t%e com&any<
encouraging best(&ractice s%aring, t%e com&any can gras& t%e knowledge wit%in t%e em&loyees
and inno.ate t%e organi5ationAs &rocesses< Dack Welc%, former 14, %as establis%ed a
knowledge management uni.ersity and freFuently teac%es t%e classes %imself< 4nly 10 &ercent
of t%e 8/ com&anies sur.eyed by t%e onference )oard s&onsored by 7ricewater%ouseoo&ers
identified t%e 14 as a com&onent of a KM initiati.e< )y integrating t%e 14 of t%e com&any
into t%e KM system, KM acFuires a le.el of im&ortance and res&ect t%at would ot%erwise be
lacking< !1 %as incor&orated all le.els of t%e business and is well designed to s%are knowledge<
=%e com&any is successfully able to use em&loyee in&ut and knowledge to &roduce a strategic
ad.antage BDones 188,#(12C
N o&yrig%t >irtual :ni.ersity of 7akistan 21Knowledge Management EM!M=(/#0 >:
KM is slowly gaining acce&tance across industries< +e.eral factors triggered interest in KM@
J =%e &ace of c%ange %as accelerated dramatically during t%e &ast decade< om&anies are looking
at inno.ati.e says of taking on t%e com&etition< Inno.ation is t%e one core com&etency needed
by all organi5ation BDrucker 18/8C<
J !lobali5ation and geogra&%ic dis&ersion c%ange t%e organi5ationAs sco&e< More and more
organi5ations are trying to lean on years of e9&erience to manage t%eir global commitment in a
timely and &rofitable fas%ion<
J Downsi5ing and reengineering resulted in staff attrition and knowledge drain< =%is &rom&ted
organi5ations to assess t%eir knowledge core and make more effecti.e use of it< Reengineering
assumed a one(time fi9 to a situation< =%is created a .icious cycle, w%ere solutions became new
&roblems< It failed to recogni5ed ra&id c%anges in todayAs market<
J Networking and data communication made it easier and faster to s%are knowledge< Knowledge
s%aring is becoming t%e best way to distribute e9&ertise across and around t%e firm
tec%nology< =ec%nology alone is insufficient<
J =%e increasing dominance of knowledge as a basis for im& efficiency and effecti.eness
triggered many com&anies to find t%e means for utili5ing t%e knowledge t%ey %a.e gained from
&re.ious e9&erience<
Wit% t%ese factors, it is easy to see %ow knowledge management works for t%e of t%e
Knowledge is t%e key< It is t%e core com&etence of any business< It is a function t%at can and s%ould
embedded into e.ery business &rocess E new &roducts and ser.ices, new c%annels of distribution,
marketing strategies, and new industry definitions< =ec%nology is t%e backbone, and
com&onents are necessary to utili5e it<
N o&yrig%t >irtual :ni.ersity of 7akistan 22Knowledge Management EM!M=(/#0 >:
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Knowledge@ =%e +trategic Im&erati.e
1.ery few years a new management &%iloso&%y ca&tures t%e attention of strategists and
leaders< In t%e 1880s, suc% mo.ements %a.e included t%ose of total Fuality management B=IMC
more recently, business &rocess re(engineering< =%e last few years %a.e seen knowledge take
New +trategies, New +tructures
+uccessful strategies will e9&loit t%e de.elo&ments in I tec%nology< =%ey will take ad.antage of
Internet and electronic commerce to create global markets for new &roducts and ser.ices<
>alue to customers will be en%anced t%roug% information and knowledge< Information &roducts,
as database, and knowledge(based ser.ices, suc% as consultancy, will become im&ortant
ways of
generating re.enues< =ec%nology will be used to tailor ser.ices to indi.idual customer
needs and
de.elo& closer customer relations%i&s<
In terms of structure, res&onsi.e organi5ations will be t%ose t%at are more networked< >irtual teams
organi5ations will allow t%em to create .alue t%roug% uniFue combinations of skills t%at are
combined as needed< =%e future organi5ation is most likely to consist of networks of self(
teams t%at reconfigure o ada&t to o&&ortunity and c%ange< =eams, not functions or de&artments, will
become t%e core &roducti.e units wit%in organi5ations<
+trategies based on com&etiti.e ad.antage E con.entional wisdom in t%e 1820s E may %a.e done
organi5ations more %arm t%an good< +ustainable wealt% comes t%roug% creating and
growing new
markets, not com&eting in e9isting ones< =%us com&eting I= manufacturers increasingly co(o&erate
matters of standards, w%ile care(makers collaborate on safety<
=%e inno.ation im&erati.e
4ne of t%e main c%allenges for any organi5ation is< =%e a.erage life e9&ectancy of most
firms is
low, around twenty years< 4ne(t%ird of all businesses in 18"0 %ad disa&&eared t%irteen years
=oday t%e en.ironment is more turbulent and dynamic, so becomes e.en %arder< Met t%ere
com&anies, like +%ell Bfounded 180"C, +iemens B12'"C, Du 7ont B1202C and #M B1802C t%at sur.i.e
t%ri.e< 0ow do t%ey do t%is? =%ey ada&t and inno.ated<
Inno.ati.e #M introduced *00 new &roducts in 188/< 3 188" sur.ey by 3rt%ur D< -ittle of
com&anies in twenty(t%ree countries s%owed t%at 2' &er cent of com&anies belie.ed t%at
was more crucial for t%eir business success t%an it was in a similar sur.ey carried out in 1881< =%ey
inno.ation for gaining new customers and creating new markets wit% inno.ati.e &roducts, ser.ices
4f all t%e res&onses to t%e c%allenges, t%e most im&ortant can be summari5ed in two words
inno.ation< ontinuous im&ro.ement gi.e incremental benefits< W%at is needed in t%e
economy is radical inno.ation< It is not uncommon to find organi5ations succeeding
in creating
im&ro.ements of not Kust a few &er cent but a factor of ten< Remember w%en it took days or weeks
get &rescri&tion s&ectacles< Now you can get t%em in one or two %ourW< It used to take )7 100 days
wit% an e9&ensi.e s%i& to drill anew dee&(sea oil well< Now, by a&&lying learning gained elsew%ere
can be reduced to fi.e days or less< Researc% at Rensselaer 7olytec%nic in New Mork +tate found
t%at a
key c%aracteristic of organi5ations t%at make suc% breakt%roug%s is a free of ideas, in and out< In
case networking &layed a big role@ Ot%e most successful researc%ers %a.e wide(ranging
networks of
&eo&leA< =%ey %a.e disco.ered knowledge networking<
N o&yrig%t >irtual :ni.ersity of 7akistan 2#Knowledge Management EM!M=(/#0 >:
+e.en le.ers of strategy
W%at can be done to secure a strategic ad.antage t%roug% knowledge? 3nalysis of many cases
se.en commonly used le.ers@
1< ustomer knowledge E de.elo&ing dee& knowledge t%roug% customer relations%i&s, and using
it to en%ance customer success t%roug% im&ro.ed &roducts and ser.ices<
2 Knowledge in &roducts and ser.ices E embedding knowledge in &roducts and surrounding
t%em wit% knowledge(intensi.e ser.ices<
# Knowledge in &eo&le E de.elo&ing %uman com&etencies and nurturing an inno.ati.e culture
w%ere learning is .alued and knowledge is s%ared<
' Knowledge in &rocesses E embedding knowledge into business &rocesses, and access to
e9&ertise at critical &oints<
* 4rgani5ational memory E recording e9isting e9&erience for future use, bot% in t%e form of
e9&licit knowledge re&ositories and de.elo&ing &ointers to e9&ertise<
/ Knowledge in relations%i&s E im& knowledge flows across boundaries wit% su&&liers,
customers, em&loyees, etc<
" Knowledge assets E measuring intellectual ca&ital and managing its de.elo&ment and
=%e core le.ers are knowledge in &eo&le, &rocesses and &roducts< In most situations winning
are de.elo&ed by concentrating on Kust two or t%ree of t%e se.en le.ers<
ustomer knowledge
>irtually e.ery sur.ey ranks customer knowledge as an organi5ationOs, most im&ortant knowledge<
trut%, most com&anies know a lot less about t%eir customers and t%eir markets t%an t%ey claim<
&lace too muc% reliance on traditional market researc%< =%ey carry out customer satisfaction
t%at tell t%em little of customersO real wis%es and concerns< ustomers can &ro.ide .ital insig%ts into
a&&lication of your &roducts and ser.ices, but t%is reFuires forging close working relations%i&s
surface t%is dee& knowledge<
De.elo&ing good customer knowledge also needs effecti.e en.ironment scanning and
intelligence systems to gat%er and collate knowledge< +uc% systems s%ould not Kust customers
markets but a w%ole range of e9ternal factors including tec%nology, social, &olitical,
economic and
regulatory de.elo&ments<
Knowledge in &roducts and ser.ices
3lmost e.ery &roduct is knowledge intensi.e, e.en if we donOt reali5e it< W%en we buy a
drug, we are not buying merely a tablet but also t%e knowledge it enca&sulates, t%at of t%e
benefits and side effects gleaned from years of e9tensi.e clinical trials< We can use genetic
knowledge to
create genetically modified foods, suc% as disease resistant &otatoes or sFuare tomatoes t%at are
easier to
om&anies %old .ast amounts of knowledge t%at can be e9&loited as &art of t%eir &roduct or
offering< +uc% knowledge includes a&&lications knowledge, market knowledge, and %ow
to sol.e
&roblems encountered by users< Muc% of t%is is accumulated during t%e &roduct de.elo&ment
testing &rocess, but is t%en o.erlooked< 4nly a fraction is enca&sulated into t%e final &roduct,
under(utili5ed a ric% source of knowledge t%at could create additional re.enues <
=%is knowledge can be e9&loited in se.eral ways< 4ne way is t%roug% additional &aid ser.ices, suc%
consultancy or training ser.ices< 3not%er way is to make t%e &roduct OsmartO or OintelligentO< =%ere is
intelligent oil drill, w%ic% OknowsO t%e s%a&e of t%e reser.oir it is drilling, and so e9tracts more oil<
7roducts and ser.ices can be customi5ed by combining &roduct and customer knowledge< 4ne
is t%e &ersonali5ed daily new bulletin t%at combines information from many dis&arate sources<
is am&bell +ou&sO OIntelligent IuisineO, designed for &eo&le suffering %y&ertension or %ig%
It deli.ers weekly &ackages of nutritionally designed, &ortion(controlled meals based on
N o&yrig%t >irtual :ni.ersity of 7akistan 2'Knowledge Management EM!M=(/#0 >:
Knowledge in &eo&le
O7eo&le are our most .aluable assetO runs t%e line in many com&any annual re&orts< om&anies t%at
belie.e it a&&ly t%is knowledge t%roug% a com&etence or learning lens< 4ne underlying model
in t%is a&&roac% is t%at of a re&eating action(learning cycle@
J 7lan@ t%ink, conce&tuali5e, and de.ise a set of actions<
J 3ct@ do, gain e9&erience ofO t%eory in &racticeO<
J 4bser.e@ record e9&eriences, s%are knowledge wit% ot%ers<
J Reflect@ consider w%at %as been learnt and %ow it can be used to make im&ro.ements<
-earning &rograms ty&ically mes% com&etence de.elo&ment acti.ities at se.eral le.els (indi.idual,
and organi5ation< Indi.idual com&etence and knowledge is de.elo&ed t%roug% &ersonal
&lans t%at meet t%e needs of indi.iduals as well as t%e organi5ation< =eam knowledge is
t%roug% learning &rocesses t%at encourage indi.iduals to s%are t%eir knowledge in teamwork<
3t t%e
organi5ational le.el t%e focus s%ifts to o.erall com&etence measurement, cor&orate
uni.ersities and
%uman resource &olicies t%at reward learning and knowledge s%aring< Moti.ating knowledge
workers +o
t%at t%ey work energetically and are committed to t%e success of t%e organi5ation is anot%er
as&ect of a &eo&le(focused knowledge strategy<
In reality, many organi5ations fail to effecti.ely use t%e knowledge in t%eir &eo&le<
=%ey allow
insufficient time for learning or reflection< =%ey regard &eo&le as %ired %ands, rat%er t%an
brains< =%ey dictate to t%em w%at to do, t%em little discretion in %ow t%ey do it< It is little
t%at t%eir em&loyees feel under.alued, and will indeed OwalkO at t%e first o&&ortunity and
take t%eir
knowledge wit% t%em<
In contrast, +%ell is an organi5ation long acknowledged as an e9cellent e9am&le of
nurturing and
de.elo&ing its &eo&le< It %as an initiati.e wit%in its e9&loration business to O%arness t%is talentO and
Obetter use of t%is intellectual ca&italO <Its focus is t%e de.elo&ment of an infrastructure for learning
le.erage of knowledge< =%ere are o&en learning centers and databases of learning resources on
com&anyOs intranet<, t%e most significant de.elo&ments %a.e been t%e
establis%ment of
knowledge communities and de.elo&ing skills for Fuality &erson(to(&erson dialogue and
-earning is being built into daily work acti.ities<
4ne com&any t%at combines bot% &roduct and &eo&le le.ers is t%at of =eltec% Resources<
=eltec% (&eo&le are t%e &roduct
=eltec% Resources of Minnea&olis manages a knowledge network of some #000 %uman e9&erts
knowledge is %arnessed to tackle difficult &roblems< =%is network includes academics, industry
and recent if retirees w%o %a.e s&ecialist in(de&t% tec%nical knowledge< Knowledge analysts
&ro.ide a
%uman interface between t%e client w%o %as a &roblem, t%e e9&ert network and 1/00
=eltec%Os business is based on a dee& understanding of %ow its clients gat%er and use knowledge< It
de.elo&s close relations%i&s wit% bot% su&&liers and users of t%at knowledge< It also blends e9&licit
tacit knowledge< 19&licit knowledge is structured according to a well(de.elo&ed t%esaurus of
domain classifications< =%is also &ermits many synonyms, cross(referencing and multi&le
3nalysts Oact as guides in defining, clarifying and inter&reting database(searc% resultsO<
In one case, a medical &roducts de.elo&er %ad tried in .ain to make a %eart &um& leak(&roof in a
solution< =%e answer came from an e9&ert in submarine tec%nology, w%ose eFui&ment also o&erates
similar en.ironments<
Knowledge in &rocesses
1.ery business &rocess contains embedded knowledge< 3d %oc acti.ities, &re.iously
&erformed by
&eo&le wit% s&ecialist knowledge, become codified into routine &rocesses< It is t%en more
diffused t%roug%(out an organi5ation< 1.en so, muc% tacit knowledge is freFuently needed to
N o&yrig%t >irtual :ni.ersity of 7akistan 2*Knowledge Management EM!M=(/#0 >:
t%e &rocess effecti.ely and to deal wit% e9ce&tions< 0ence t%e e9&licit &rocess knowledge is
accom&anied by training, &rocedure manuals and access to e9&erts<
4ne way to enric% knowledge in &rocesses is to embed backu& resource material< 3ccess to
e9&ertise is a.ailable on I= systems t%roug% a Oclick %ere for %el&O screen icon< =%is may eit%er
trigger an
email or e.en a com&uter(generated &%one call to a %uman e9&ert< 4t%er organi5ations use
software to blend com&uter %eld knowledge wit% %uman knowledge< =%e software a&&lies rules
determine w%ic% transactions are straig%tforward, and are t%erefore %andled automatically by
and w%ic% reFuire %uman inter.ention<
4rgani5ational memory
=%is strategic %el&s address t%e issue of Oknowing w%at you knowO< It is also used
to a.oid
re&eating t%e mistakes of t%e &ast, and to draw lessons from similar situations or cases from
4rgani5ational memory e9ists in many &laces, most notably t%e brains of its &eo&le< )ut it also
e9ists in
records, filing cabinets, &ersonal com&uter disk files and t%e &%ysical surroundings< 19ternal
s%ould not be o.erlooked< 3fter all, many outsiders follow an organi5ationOs actions, or %a.e e.en
&art of it at one time<
3 common a&&roac% to managing organi5ational memory is to ca&ture in e9&licit form t%e
im&ortant knowledge and enter it into knowledge databases< =%ese databases may be in
management systems, in grou&ware suc% as -otus Notes, or as web &ages on an intranet< 4ften suc%
databases will not contain t%e knowledge &er se, but will &ro.ide &ointers to it< 19am&les of
databases include@
J ustomer %istories< =%ese detail interactions wit% a gi.en customer@ &roducts boug%t, sales .isit
re&orts, etc<
J )est &ractices< %e.ron %as best &ractices databases and a resource ma& organi5ed according to
t%e categories of t%e )aldridge Fuality award<
J 7roducts and tec%nologies< Details of t%e organi5ationOs .arious &roducts and %istory<
19&licit knowledge bases,, ty&ically contain less t%an 10 &er cent of an organi5ationOs
=%erefore ot%er a&&roac%es are used to make it easier to access t%e minds of e9&erts< 3
e9am&le is an on(line directory of e9&ertise, often called Mellow 7ages, because t%ey are structured
skill and disci&line, not by de&artment< No.artis %a.e also added )lue 7ages t%at contain details
e9ternal e9&erts wit% w%om t%ey collaborate< Knowledge(s%aring e.ents &ro.ide anot%er way of
tacit knowledge< =%omas Miller L o<, a mutual insurance com&any, runs Oknowledge in a
e.ents< om&any e9&erts gi.e talks on t%eir areas of e9&ertise and describe t%eir e9&eriences< =%ese
sessions are also recorded on .ideo for furt%er distribution and subseFuent recall< =%e key to
organi5ational memory is to make ongoing e9&erience ca&ture an integral &art of
e.eryday work<
=ec%niFues include decision diaries, learning %istories and &ost(&roKect re.iews<
Knowledge in relations%i&s
Many com&anies %a.e an in.aluable resource of knowledge de.elo&ed t%roug% indi.idual
(wit% customers, su&&liers, business &artners, &rofessional and trade associations< W%en a
sales&erson your com&any, it is not Kust t%eir &roduct or customer knowledge t%at is lost< It may be muc%
t%e customer relations%i&< =%is relations%i& s%ared knowledge and understanding (not Kust
needs and factual information, but of dee&er knowledge suc% as be%a.iors, moti.ations,
c%aracteristics, ambitions and feelings< +uc% de&t% of knowledge is not easily re&laced o.ernig%t<
4rgani5ations can dee&en t%eir relations%i& knowledge by increasing t%eir interaction wit% t%e
world< =%is may take t%e form of regular meetings for knowledge e9c%ange and s%aring of
=os%iba collects com&arati.e data on su&&liers ranking 200 Fuantitati.e and Fualitati.e factors< It
%as an
acti.e su&&lierAs network w%ere knowledge is s%ared and su&&liers are integrated into future
19tranets &ro.ide anot%er way to de.elo& wider linkages< )y increasing t%e number of contacts
key stake%olders, at all le.els and functions, you become less .ulnerable to t%e loss of a single
Relations%i& knowledge can also be dee&ened by taking a w%ole range of inter(com&any
interactions to
dee&er le.els of intimacy, and by strengt%ening knowledge e9c%ange< Relations%i& marketing, t%e
N o&yrig%t >irtual :ni.ersity of 7akistan 2/Knowledge Management EM!M=(/#0 >:
.ogue in consumer marketing, goes far beyond issuing customers loyalty cards< ustomer
knowledge comes t%roug% e9&loring mutual interests, seeking new insig%ts t%roug% e9tensi.e
and Kointly creating new business o&&ortunities< 3cti.ities t%at mig%t &re.iously %a.e been
confidential to t%e com&any are e9tended to in.ol.e stake%olders< =%ese include &roduct
marketing cam&aigns and %uman resource com&etency de.elo&ment< +ocial e.ents also
relations%i& knowledge< or&orate %os&itality does %a.e its benefitsQ
Knowledge as an asset
=%e final is t%at of knowledge as an asset< =%is builds on t%e notion, mentioned
earlier, of
measuring and managing intellectual ca&ital< W%ile many organi5ations %a.e accountants and
track in detail e.ery &iece of &%ysical &lant and mac%inery, few de.ote e.en a fraction of t%is
to intellectual ca&ital< Met t%is is muc% more .aluable, since it includes knowledge and &eo&le<
=%e starting &oint of <any asset(based a&&roac% is t%at of understanding its different com&onents<
Intellectual assets are freFuently categori5ed into t%e following grou&s<
1< 0uman ca&ital E in t%e minds of indi.iduals6 knowledge, com&etencies, e9&erience, know(%ow,
2 +tructural ca&ital E Xt%at w%ic% is left after em&loyees go %ome for t%e nig%tO@ &rocesses,
information systems, databases, etc<
#< ustomer ca&ital E customer relations%i&s, brands, trademarks, etc<
Dow %emical &ro.ides a good e9am&le of t%is knowledge< In 188' it %ad 28000 &atents
force around t%e world<, maintaining t%e .alidity of a &atent can be costly (u& to P2*0000
its lifetime< DowOs Intellectual 3sset Management team de.elo&ed a com&re%ensi.e
framework for
acti.ely measuring and managing its &atent &ortfolio< It found many &atents not being
e9&loited, and ot%ers wit% no ob.ious owners%i&< It took measures to e9&loit &atents, eit%er t%roug%
internal use, licensing or sale, w%ile allowing ot%ers to la&se by not &aying renewal fees< Wit%in
years t%e team %ad generated P12* million in additional re.enues, t%eir original target for t%e year
N o&yrig%t >irtual :ni.ersity of 7akistan 2"Knowledge Management EM!M=(/#0 >:
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0I+=4RI3- +0I$=+ IN W4R-D 14N4MI1+ 3ND =01 R4-1 4$ KN4W-1D!1
3ND IN=1--I!1N1
W%ere is Wisdom?
We know t%at data and information does not con.ey wisdom and we also know t%at knowledge is
not wisdom< More we know, t%e more we know t%at we donAt know< 1ducation itself is a
disco.ery of our own ignorance<
3s your knowledge increases, w%at %a&&ens to your ignorance? It ob.iously becomes larger, or at
your awareness of your ignorance becomes larger< W%en information and knowledge are
wit% wort%y &ur&oses and &rinci&les, you %a.e wisdom<
0istory of Management@
=o understand current management dilemma, we mig%t re.iew t%e demands on management from
3grarian age t%roug% Industrial Re.olution and on into t%e Information;Knowledge age w%ic%
broug%t wit% it t%e Fuickening and flattening &ace &f c%ange<
=%e 3grarian age@
During t%e agrarian age &eo&le worked first as %unters and gat%erers and t%en as farmers< Most
de&end and li.ed on land and t%e r%yt%m and &ace of life were defined by t%e seasons< =%ey &lanted
s&ring, cro&s grew in summer and wasY %ar.ested in t%e autumn and t%en &loug%ed and t%e
remained fallow in t%e winter< +kills were &assed down t%roug% families< =rade skills were learned
t%e a&&rentice;mastery system<
=%e Industrial age@
=%e agrarian way of life was c%anged for some if not for all w%en in 1"/# Dames Watt
t%e steam engine< =%e &ower of steam engine %el&ed in t%e steal &roduction and also increased
ability significantly to &roduce goods and t%us broug%t t%e beginning of industrial re.olution<
%ig%er tensile strengt% of steal beams enabled t%e construction of large factories t%at
%oused t%e
manufacturing mac%ines t%at were dri.en by steam &ower<
=%e mac%ines were designed to &roduce goods but needed &eo&le to o&erate t%em< +o w%ere did t%e
labor come from? =%e labor came from t%e land and .illages< 7eo&le flocked from t%eir farms to
in t%e factories w%ic% were in and around cities and so town and cities grew larger and larger<
t%ese &eo&le coming from farms were farmers< =%e ca&italists w%o owned t%e mac%ines and
reFuired a new ty&e of worker, t%e manager< =%e manager was needed to tell t%e &oorly
workers w%at to do<
In t%e agrarian age, t%e seasons defined t%e &ace of life< 4nce you %a.e t%e steam engine, you can
factory 2' %ours a day, se.en days a week< =%e &ace of t%e game of life and business was c%anged< In early days, labor was e9&loited by ca&italists and t%eir trusted managers and %ence
mo.ement was born to fig%t inKustice< -aborers w%o com&lained for %ars% conditions, it was easy to
rid of t%em as t%ere were &lenty more w%ere t%ey came from t%e .illages< Is it not t%e case going on
in many =e9tile ;-eat%er factories of 7akistan<
=%e fundamental &rinci&le be%ind t%e industrial re.olution was t%at managers needed to be
and trained to direct workers acti.ity< =%ey understood w%at needed to be done in t%e
Managers directed and workers worked< Western education system de.elo&ed to su&&ly workers
basic &rimary and basic tec%nical skills and &ro.ided managers wit% secondary en%anced trade
commerce and accounting skills< entral idea became t%at mangers know w%at to do< =%ey tell
workers and workers do it<
N o&yrig%t >irtual :ni.ersity of 7akistan 22Knowledge Management EM!M=(/#0 >:
=%e Information age@
We %a.e mo.ed from industrial re.olution into information age< We no longer rely only on
&ower and electricity< Muc% of our information is down glass fibers at lig%t s&eed<
=%e &ace of c%ange is also Fuickening< Manufactured goods account for far less t%an t%ey used to in
world economies w%ic% are now more dri.en< =%e endless range of c%oice %as s%ifted t%e
of business to a customer focus, customer .alue, customer loyalty and t%e creati.ity to
yourself from t%e com&etition< In e.ery organi5ation staff is s&ending more time wit% t%e customers
=%ey like to know about t%eir customers on a day to day basis and e.en %our to %our to %our basis<
t%e information age, it is not &ossible for managers alone to satisfy t%e customers
and all t%e
stake%olders of t%e organi5ation<
Knowledge 7ers&ecti.e and 7aradigm +%ift@
It is not only t%e info and knowledge of select few managers w%ic% is reFuired to sustain and grow
t%e 21st
century global market< In fact to deal wit% customer market, you %a.e to take care of t%e
internal em&loyee market< =%ey are t%e one w%o know t%e business &rocess, sales &rocess,
&rocess and o&eration &rocess< If t%ey are %a&&y and com&etent, t%ey will &ro.ide t%e better
&roducts to t%e e9ternal customers and bring %ig%er &rofits< =%e e9&erience, e9&ertise of t%e staff
be continuously en%anced t%roug% learning and u&dation in t%eir formal and informal knowledge<
In t%e twenty(first(century landsca&e, firms must com&ete in a com&le9 and c%allenging conte9t
t%at is being
transformed by many factors, from globali5ation, tec%nological de.elo&ment, and increasingly
diffusion of new tec%nology, to t%e de.elo&ment and use of knowledge< =%is new landsca&e
firms to do t%ings differently in order to sur.i.e and &ros&er< +&ecifically, t%ey must look to new
of com&etiti.e ad.antage and engage in new forms of com&etition< =%is, in turn,
reFuires a clear
understanding of t%e nature of com&etition and com&etiti.e dynamics<
4ne &o&ular a&&roac% to understanding com&etiti.e dynamics is t%e resource(based .iew of t%e
3ccording to t%is .iew, t%e e9&lanation for w%y some firms ultimately succeed and ot%ers fail can
be found
in understanding t%eir resources and ca&abilities< 3 firmAs resources and ca&abilities influence bot%
strategic c%oices t%at managers make and t%e im&lementation of t%ose c%osen strategies<
=o understand w%y certain com&etiti.e strategies are more effecti.e t%an ot%ers, one must consider
distribution of resources in com&eting firms< 3lt%oug% a gi.en firm may &ossess more or less of
&articular resource, only t%ose resources t%at are rare, .aluable, and difficult to imitate &ro.ide a
com&etiti.e ad.antage< W%en t%e strategies em&loyed are successful in le.eraging t%e firmAs rare,
and difficult(to(imitate resources t%at firm is likely to gain an ad.antage its com&etitors
in t%e
market&lace and t%us earn %ig%er returns<
om&etiti.e ad.antages t%at are sustained time lead to %ig%er &erformance< =%ese
arguments are
somew%at clear w%en we consider tangible resources suc% as buildings, mac%inery, or access to
ca&ital< 3nd
in t%e more traditional com&etiti.e landsca&e, t%ese tangible resources were t%e most im&ortant
sources of com&etiti.e ad.antage< =%us, if a firm could moderni5e its &lant, or de.elo& a more
distribution &rocess, or access c%ea&er credit, it could com&ete successfully and &ros&er< )ut firms
bot% tangible and intangible resources in t%e de.elo&ment and im&lementation of strategies, and as
nature of work and com&etition c%anges, intangible resources are becoming more im&ortant<
of intangible resources are re&utation, brand eFuity, andZfor our &ur&oses t%e most im&ortant
t%ese %uman ca&ital< In fact, in any com&etiti.e landsca&e it %as been argued t%at intangible
resources are
more likely to &roduce a com&etiti.e ad.antage because t%ey often are truly rare and can be
difficult for com&etitors to imitate< 3mong a firmAs intangible resources, %uman ca&ital may be t%e
im&ortant and critical for com&etiti.e ad.antage because it is t%e most difficult to imitate<
!enerally s&eaking, %uman ca&ital is more mobile t%an ot%er intangible resources< =%erefore, it
may seem an
unlikely source of sustained com&etiti.e ad.antage< 4nce an organi5ation integrates %uman
ca&ital wit%
ot%er com&lementary resources and uses t%is integration to create organi5ational
ca&abilities Bt%at is,
le.erages t%emC, losing one or a few indi.iduals may not lead to a loss of com&etiti.e ad.antage<
Instead, a
com&etitor would %a.e to gain access to all of t%e resources and t%e system in &lace to le.erage
t%ose resources<
0uman a&ital as a +trategic Resource
0uman ca&ital is a general term t%at refers to all of t%e resources t%at indi.iduals directly contribute
to an
organi5ation@ &%ysical, knowledge, social, and re&utation<, we need to under(stand w%at it
is about
N o&yrig%t >irtual :ni.ersity of 7akistan 28Knowledge Management EM!M=(/#0 >:
%uman ca&ital resources t%at %el&s indi.iduals contribute to gaining and sustaining a com&etiti.e
During t%e industrial age, %uman ca&ital was .alued because of &%ysical resources suc% as
endurance, and de9terityZ t%ese were t%e as&ects of %uman ca&ital t%at were most likely to
lead to
com&etiti.e ad.antage< )ut as new mac%inery and tec%nology were introduced, t%ese c%aracteristics
less im&ortant< In t%e current economic landsca&e, %uman ca&ital is more likely to be .alued for
social skills, and re&utation<
In todayAs com&etiti.e en.ironment, w%ere t%ere is e.en more uncertainty and dynamism, t%ese
based resources are e.en more im&ortant t%an t%ey were in t%e &ast<
=%e term knowledge(based resources refer to skills, abilities, and learning ca&acity< 7eo&le can
de.elo& t%ese
t%roug% e9&erience and formal training< +ocial resources Bnow sometimes referred to as social
ca&italC include
t%e &ersonal relations%i&s t%at bind toget%er members of an organi5ation as well as relations%i&s
t%at link
organi5ational members to ot%er e9ternal sources of %uman ca&ital< =%roug% social ca&ital,
indi.iduals can
gain access bot% to ot%er %uman resources Bt%e &%ysical and intellectual ca&ital, for e9am&leC and to
forms of ca&ital Bfinancial, for e9am&leC<
We must em&%asi5e again,, t%at it is not enoug% to acFuire indi.iduals w%o %a.e suc%
attributes< It is
also necessary to de.elo& structures, systems, and strategies t%at allow t%e organi5ation to e9&loit
t%e resources
and gain com&etiti.e ad.antage<
$or e9am&le, a football team t%at acFuires a strong &assing Fuarter(back only gains a com&etiti.e
w%en it s%ifts its offensi.e strategy to focus on &assing< 7rofessional firms le.erage t%eir
ca&ital by forming &roKect teams led by senior e9&erienced &rofessionals, often &artners in t%e firm<
ot%er members of t%e &roKect teams usually are younger, less e9&erienced associates< In t%is
way, t%ey
le.erage t%eir most .aluable %uman ca&ital to com&lete &roKects for clients< Working toget%er on t%e
also allows t%e associates to gain some of t%e tacit knowledge &ossessed by t%e more senior
&artners6 t%ey
learn by doing
4f course, some sc%olars and &ractitioners %a.e always under(stood t%e role of %uman ca&ital in
creating an
organi5ationAs success< arly $iorina, 14 of 0ewlett(7ackard, em&%asi5ed t%e role of %uman
ca&ital in an
address s%e made to MI= graduates@ G=%e most magical and tangible and ultimately t%e most
ingredient in t%e transformed landsca&e of 21st
century and in knowledge based economy is &eo&le< =%e
greatest strategy, t%e greatest financial &lan, t%e greatest turnaround, is only going to be tem&orary
if it is not
grounded in &eo&leH
Knowledge()ased Resources
Knowledge(based resources include all t%e intellectual abilities and knowledge &ossessed by
em&loyees, as
well as t%eir ca&acity to learn and acFuire more knowledge< =%us, knowledge(based resources
include w%at
em&loyees %a.e mastered as well as t%eir &otential for ada&ting and acFuiring new information< $or
reasons, t%ese resources are seen as being e9tremely im&ortant for sustaining com&etiti.e ad.antage
in todayAs
$irst, t%e nature of work %as been c%anging t%e &ast se.eral decades, so t%at many Kobs reFuire
&eo&le to
t%ink, &lan, or make decisions, rat%er t%an to lift, assemble, or build< =%is kind of work reFuires
bot% tacit
and e9&licit knowledge<
)ut work continues to c%ange, and in un&redictable ways< It is often difficult to state e9actly w%at
kinds of
knowledge a &erson needs to succeed on t%e Kob, and it is almost im&ossible to &redict w%at
ty&es of
knowledge %e or s%e will need in t%e future< %ange and un&redictability in organi5ations
mean t%at
knowledge(based resources suc% as t%e ability to learn and &ersonality traits suc% as ada&tability are
im&ortant, and some organi5ations %a.e begun rewarding em&loyees financially w%en t%ey
demonstrate an
ability to acFuire and master new knowledge<
N o&yrig%t >irtual :ni.ersity of 7akistan #0Knowledge Management EM!M=(/#0 >:
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%aracteristics of Knowledge
Knowledge defies normal economic rules< 0arlan le.eland, writing in %is eminently readable
=%e Knowledge 19ecuti.e, describes si9 s&ecial c%aracteristics of information or e9&licit
knowledge< It
1< 19&andable< :nlike ot%er resources t%at are managed because of t%eir scarcity .alue, t%e more
it is used t%e more is generated<
2 om&ressible< It can be summari5ed for easier %andling and can be &ackaged into small
&%ysical formats<
#< +ubstitutable< In many situations it can re&lace &%ysical and ot%er forms of resource< =%us
telecommunications reduces t%e need for &%ysical trans&ort<
'< =rans&ortable< It can mo.e from &lace to &lace, Fuickly and easily, ready for collecting w%en
t%e reci&ient c%ooses<
*< Diffusi.e< It tends to leak< 3s tec%nology im&, it become more difficult to sto&
re&roduction and transmission<
/ +%areable< If it is gi.en to anot%er &erson, t%e first &erson does not lose it<
=acit knowledge is also e9&andable, diffusi.e and s%areable, but is not as easily transmitted or
diffused< It is intangible and difficult to identify and describe< It is conte9t
de&endent< =%ese
c%aracteristics &resent some interesting management c%allenges< Making knowledge e9&licit means
it can be more readily co&ied, diffused and s%ared< 4n t%e ot%er %and t%is makes it OleakyO, and it
reac% undesirable &arties< =%e increasing rate of knowledge generation means t%at muc%
knowledge %as s%ort O%alf(lifeO and its .alue decays Fuite Fuickly< It needs constant
refres%ing and
re.alidating t%roug% use<
J Knowledge a %uman interaction wit% reality Bor wit% information about reality, or
information about ot%er knowledge or informationC, w%ere t%e %uman is t%e subKect and acts as
t%e acti.e, creati.e element, and modifies t%e latter by way of reconstructing it< Knowledge attribution of meaning and significance by t%e knower as a &erson< In fact,
reconstruction is a reinter&retation as well<
J W%en I know somet%ing, it is relati.e to me< =%ere can be no knowledge wit%out me< It is
always in relation to my e9istence and my knowing it< Wit% my deat% dies my world, and wit% it
my knowledge< In knowing somet%ing, I indi.iduali5e, subKectify, and a&&ro&riate it and make it
my own< W%at I know, in t%e &rocess, becomes my own<
J Knowledge is essentially social in nature< We need uni.ersal categories for
e9&ression, re&resentation, storage,, and e9&ro&riation of knowledge< =%e categories
are uni.ersal in t%e sense t%at BaC t%ey are ca&able of %olding t%e same meanings for all %umans
belonging to t%e same community and BbC t%e categories can be sociali5ed in terms of being
s%ared, reconstructed, and a&&lied by ot%er %umans belonging to t%e concerned uni.erse of
J In knowing somet%ing, I belie.e it to be true< Wit%out t%is belief, it could Kust be
information, wit%out t%at stam& of indi.iduali5ed identity marked on it< =%is belief is a &art of a
system of beliefs, .alues, and rationality, and %ence constitutes a res&onsibility and &otential
J Knowing takes &lace in relation to e9isting knowledge(it is &lacing t%ings in conte9t, in relation to
e9isting constructions of reality, content, and conce&ts,
J Knowledge a Kudgment, a subsum&tion of t%e &articular under t%e uni.ersal< It
a certain amount of synt%esis and integration of discreet information under a category, a
construction, or an attribution of a causality or Kustifiability, relati.e to t%e knowerAs frame of
J Knowledge %as a moment of categorical im&erati.e and can induce a cogniti.e dissonance
belief and &ractice, between t%e &ast and t%e &resent, between t%e &reset and t%e future,
N o&yrig%t >irtual :ni.ersity of 7akistan #1Knowledge Management EM!M=(/#0 >:
between w%at is and w%at oug%t to be, and so on, and t%erefore, can form a s&ringboard for
&otential action< In ot%er words, knowledge by definition is dri.en into &ractice<
J Knowledge is always a &art of a dynamic system< Knowledge %as t%e tendency to go for more of
itself, to by&ass itself, and t constantly de.elo& itself< It is only limited by mental
en.ironmental constraints<
J Knowledge is gregarious by nature and %as a tendency to sociali5e itself< +ociali5ation is
means by w%ic% indi.idual knowledge gets reinforced, c%allenged, modified, im&ro.ed, and
J Knowledge &rocesses are always a &art of an, o&en system< It is like a game w%ere t%e goal&ost
kee&s s%ifting itself< =%e meanings, t%e dictionaries, and e.en t%e rules of t%e language are always
in flu9 E
as .olatile as t%e turns in modern life< Knowledge creation, by definition, is a &rocess of
W%at an 0a&&en =o Knowledge
Knowledge an )e )orn
W%at a&&arently distinguis%es 0omo sa&iens from t%e rest of t%e animal world is our
ability to
concei.e, store, and mani&ulate ideas linguistically a&art form t%e stimuli t%at ga.e rise to t%em< We
t%ink about and name a&&les E make reci&es for t%eir use, use t%eir .isual image for decoration,
name com&uters after t%em (( wit%out being under t%e influence of t%e smell, taste, feel, and
of actual a&&les< We can gi.e birt% to ideas as well as mani&ulate and c%ange t%em<
ertainly e.ery com&any desires suc% intellectual fertility on t%e &art of its em&loyees, &articularly
leaders< )ut w%at are t%e circumstances t%at &ro.e most conduci.e to t%e birt% of new
W%ic% indi.iduals are most fertile in t%eir ability to generate new knowledge? W%y t%ese
indi.iduals and
not ot%ers? 0ow can t%ese indi.iduals be disco.ered and nurtured? =%ese are Fuestions
asked by
organi5ation and %uman enter&rises of all kinds< 4rgani5ations car.e knowledge s&anners
muc% as organisms car.e re&roducti.e o&&ortunities and ca&abilities< In bot% cases, t%e moti.e is t%e
same@ and ma9imi5ation of life e9&erience< =%e latter &%rase, admittedly .ague, may
fulfillment t%roug% growt%, and &erce&tual satisfaction B&leasures of t%e senseC<
Knowledge s&anners eFui& t%eir organi5ations to confront c%ange successfully, for e9am&le,
c%anging global markets can t%reaten t%e .iability of e.en t%e most establis%ed businesses<
com&anies rely u&on new knowledge to maintain and e9tend t%eir markets< =%e com&anies
.alued knowledge s&anners come u& wit% t%e biomedical formula, t%e algorit%m for a faster c%i&,
alloy for a lig%ter auto(body, or t%e economic model for a better de&loyment of resources t%at allow
t%eir organi5ations to t%ri.e w%en ot%ers are failing<
Increasingly, t%e s&anning of knowledge a &artners%i& between %uman cognition and
E based intelligence< W%en a &%armaceutical com&any conducts a com&le9 series of drug tests by
of com&uter analysis6 w%en a &%ysician makes a diagnosis based &rimarily on out&ut from an
system6 w%en an aeronautics cor&oration designs an aircraft form com&uter E based flig%t test data,
Fuestion of w%ere reFuisite knowledge resides for t%ese tasks is not easily answered< 4n one
%uman &roKect designers and data inter&reters are certainly im&ortant knowledge sources< 4n t%e
%and, com&uters or ot%er systems generate substantial and significant knowledge< =raditionally
based on
%uman in&uts, t%is artificial knowledge is increasingly self E generated by artificial
3ny &lan for knowledge management must make &ro.ision for bot% direct %uman knowledge
indirect %uman knowledge, as mediated by mac%ines, w%ic% e9tend and en%ance t%e &owers of
Knowledge an Die
In terms of s%eer Fuantity, t%e .ast maKority of t%ings knows by %uman beings die wit% t%em< $ew
of us
record e.en on E t%ousandt% &art of our knowledge accumulated form life
e9&eriences< 7ut in
organi5ational terms, we are indi.idually Fuite &oor at Gtransition &lanning<H 4ur stores of
go wit% us to t%e gra.e almost entirely w%ole, eac% new generation to rein.ent muc%
t%at could %a.e been its birt%rig%t<
N o&yrig%t >irtual :ni.ersity of 7akistan #2Knowledge Management EM!M=(/#0 >:
It could be argued, of course, t%at most im&ortant knowledge ac%ie.ed during indi.idual %uman
gets &reser.ed in t%e form of books, Kournal an maga5ine articles, &atents, documentaries, oral
and ot%er means< )y t%is logic, t%e loss of s%eer Fuantity of %uman knowledge t%roug% mortality
adeFuately com&ensated fro by &reser.ation of Fuality of knowledge< In effect, we are t%e ti& of
iceberg and t%erefore do not mourn t%e loss of t%e great unformed and une9amined mass of
beneat% t%e surface< $or e9am&le, we cling to t%e works of Mo5art Bt%e ti& of t%e icebergC and
%ardly aware of w%at it means to lose t%e ca&acity Bi<e<, t%e geniusC to &roduce suc% works<
=%e deat% of knowledge for an organi5ation occurs by means ot%er t%an t%e mortality of its
$irms t%at downsi5e wit%out &ro.ision to &reser.e and e9tend necessary intellectual ca&ital can
find brain dead after terminations and layoffs< 3fter all, knowledge resides
&rimarily wit%in
%uman %eads6 w%en G%ead countH is reduced, ine.itably t%e sum of knowledge wit%in t%e
reduced, sometimes critically so< =%is %a&&ens es&ecially w%en a firm looks first to its %ig%est
longest tenured em&loyees as &rime candidates for cor&orate bloodletting< $orm a
management &ers&ecti.e, terminating a few %ig% &aid em&loyees may be less traumatic t%an firing
of t%e rank E and E file< )ut from a knowledgeEmanagement &ers&ecti.e, cutting off t%e
%ead from t%e working body may be foolis% surgery indeed<
Knowledge can also die due to &aradigm s%ifts< 3s&ects of knowledge t%at were im&ortant or sacred
one generation may cease to matter for anot%er generation< Inter&reting %uman c%aracter and %ealt%,
for e9am&le, was for Western men and women a&art form t%e t%eory of
G%umorsH Bbe%a.ior E influencing fluidsC, suc% as &%legm, c%oler, and black bile< =%eir knowledge
t%ese mysterious substances %as become obsolete or anti E intellectual because t%e &aradigms we
use to
understand mental and &%ysical %ealt% %a.e c%ange<
W%en &aradigm s%ifts occur, little intellectual effort is s&ent & t%e &ast wrong< 3ll
resources Fuickly turn to t%e larger and a&&arently more &romising task of & t%e new .ision
In s%ort, w%en t%e &aradigm s%ifts, t%e knowledge of t%e &ast is not GkilledH or &ro.en to be wrong<
Instead, it is allowed to die from inattention, in t%is sense, &aradigm s%ifts are largely r%etorical
arising form t%e ability of new &aradigm t%inkers to &ro.ide &owerful e9&lanations of anomalies in
old &aradigm<
Knowledge management takes t%e deat% of knowledge seriously and acce&ts no &aradigm s%ift on
fait%< Knowledge management takes t%e deat% of knowledge seriously and acce&ts no &aradigm
s%ift on
blind fait%< Knowledge managements seeks to understand causes for t%e failing %ealt% or
deat% of
knowledge< It memoriali5es and &er&etuated w%at can and s%ould be sal.aged from t%e demise of a
Knowledge an )e 4wned
In s&ite of %ig% literacy rates in de.elo&ed countries, most knowledge .aluable for increasing
wealt% is
&ri.ately %eld< Knowledge unrelated to or marginally related to wealt% is freely a.ailable
because it no oneAs s&ecific interest in t%e market&lace< +uc% free knowledge is t%e stuff
of general
education E %istory, literature, music, art, &%iloso&%y, cultural a&&reciation, languages, and so fort%<
ot%er words, t%e works of +%akes&eare are a.ailable to all of us not because +%akes&eare willed it
so E
%e c%arged &er .iew, in fact, as co(owner of t%e globe =%eatre E but because since +%akes&eareAs
no one %as built an industry based on any kind of s&ecial or &ro&rietary knowledge contained wit%in
&lays and &oetry< =%e same cannot be said for t%e knowledge necessary to make &aint, &reser.e
make or re&air com&uters, or remo.e air &ollution< =%ese and countless ot%er
tec%nological and
industrial functions are based on knowledge t%at is not made generally a.ailable< 3
com&etiti.e ad.antage,H in fact, often lies &recisely in its &ri.ately %eld knowledge<
+e.eral im&lications fan out from t%e notion of &ri.ately owned knowledge< $irst, t%e identity of
owner must be clarified< Researc% ad de.elo&ment &ersonnel at com&uter, drug, cosmetic, and
similar com&anies routinely sign e9&licit and binding agreements wit% t%eir em&loyer t%at all
accumulated, disco.ered, or de.elo&ed during and after t%eir em&loyment remains t%e sole
of t%e em&loyer<
No mater %ow careful t%e wording of owners%i& agreements, of course, truly ad.antageous
often %as a way of Ggetting out,H usually wit% de.astating results in t%e market&lace<
N o&yrig%t >irtual :ni.ersity of 7akistan ##Knowledge Management EM!M=(/#0 >:
Gowners%i&H of Internet browsing tec%nologies, for e9am&le was closely imitated Esome
%a.e said
stolen E by Microsoft, wit% substantial market losses to Netsca&e< Knowledge management
ways to determine w%at knowledge s%ould be &ri.ately %eld and %ow it can be
&rotected from
com&etitors and clients<
Modern organi5ation find uniFue ways to &ierce t%e s%ield of &ri.ately %eld knowledge< In t%e
industries, com&anies acFuire &ro&rietary knowledge Bfriendly or %ostile acFuisitions, %iring away
em&loyees, and re.erse engineering &roducts are common tacticsC< =%en t%at knowledge is
imitated, wit% t%e often(cynical strategy t%at legal c%allenges will take years in t%e courts to resol.e
years during w%ic% t%e war for market s%are and &rofitability will be won and t%e issue of
owners%i& will become moot<
)y and large, com&anies %a.e been unsuccessful in attem&ting to &rotect knowledge
sustained com&etiti.e ad.antage< 1.en &roducts and &rocesses t%at are &atented or trademarked
t%e laws of one country are stolen by com&anies not .ulnerable to legal or &olitical sanctions from
country< =%e blatant t%eft of :<+< tele.ision tec%nology in t%e 18/0s by 3sian com&etitors is a
e9am&le< +o de.astating was t%is loss of &ro&rietary knowledge t%at, for all intents and &ur&oses,
:<+< tele.ision manufacturing industry ceased to e9ist by 1820< +imilar GborrowingH %as occurred
recently in t%e c%i& making, disk, and telecommunication industries< :<+<
%a.e largely gi.en u& efforts to sto& knowledge &iracy t%roug% international courts or t%roug%
3merican &olitical system< Instead, :<+< manufacturers %a.e ado&ted a Gfirst;best;leastH &%iloso&%y
%itting t%e market &lace first and %ard wit% new &roducts, maintaining Fuality standards, and
&roducts at le.els t%at discourage start(u& enter&rises from co&ying t%em<
3t best,, t%is a&&ears to be a des&eration strategy t%at and de.elo&s new
only to gi.e t%em e.entually to t%e idea &irates< =%e im&etus falls u&on 3merican com&anies
continually inno.ate E and con.ince t%e market&lace to &urc%ase GnewH E w%ile foreign com&etitors
&lay a waiting game based on mass markets wit% ine9&ensi.e imitations<
1ffecti.e knowledge management assesses w%at knowledge must be &rotected for
ad.antage, %ow t%at knowledge will be &rotected, and to w%at degree legal and &olitical entities
can be
trusted to enforce laws related to owners%i& of intellectual &ro&erties<
Knowledge is Immanent as Well as 19tant
Not all knowledge wort% managing in an organi5ation is e9&licit and .isible< Muc%
knowledge is %eld in creati.e reser.e in t%e form of %uman resources and com&uter e9&ert
=%is immanent and &reformed knowledge %as t%e &otential for becoming e9tant and formed at
moment, Kust as t%e energy wit%in a battery can be ta&&ed w%en needed<
3 brain surgeonAs e9&ertise and ca&acity for action is an e9am&le of immanent knowledge< 3fter
of study and &ractice, few brain surgeons can list t%e items wit%in t%eir knowledge bases< +urgeonsA
com&etencies lie in immanent knowledge E dee& wells of insig%t, reflection, memory, and intuition
can be summoned w%en t%e need arises< =%e .isible, e9tant Gs&arkH of correct decisions and actions
come to t%e fore in life(and(deat% circumstances< +imilar knowledge banks are in t%e minds of
all &ersonnel w%o e9ercise creati.e, t%inking functions wit%in organi5ations<
Immanent knowledge remains a c%allenging but crucially im&ortant as&ect of knowledge
Dust as brain surgeons must create and maintain t%eir immanent knowledge, organi5ations
may use
knowledge management to &reser.e suc% .ital knowledge< =%is &ros&ect forces us to confront
key Fuestions< 0ow does one nurture immanent knowledge wit%out force(feeding it in a disru&ti.e
$urt%er, %ow does one monitor immanent knowledge to ensure t%at its store of
resources is
increasingly .ital and rele.ant to t%e needs of t%e organi5ation? $inally, %ow does an
&re.ent unnecessary redundancy in immanent knowledge? 0o many &eo&le need s&eciali5ed
t%at only a few will &erform? 0asty answers are dangerous because t%e absence of suc%
in%ibits Gs&in(offH insig%ts and may corru&t decision making in related areas< In s%ort, a degree
redundancy in immanent knowledge resources &robably is desirable if it encourages w%oleness of
and broad &ers&ecti.e in decision making<
N o&yrig%t >irtual :ni.ersity of 7akistan #'Knowledge Management EM!M=(/#0 >:
Knowledge an be +tored
It can safely be estimated t%at more knowledge %as been e9ternali5ed Bt%at is, made
&reser.ableC in t%e last 20 years t%an in t%e entire &re.ious %istory of mankind< 4n &a&er, film, ta&e,
abo.e all by electronic storage means we %a.e Glent our minds out< $or e9am&le, 12,000 new sites
week continue to a&&ear on t%e Internet<
)ut now t%at we %a.e so energetically e9ternali5ed knowledge we face an une9&ected
and ironic
&roblem@ %ow to internali5ed knowledge again< !etting knowledge out of our %eads and onto disks
&a&er was a feat of tec%nology6 getting facts back into our %eads for &ractical and creati.e use is a
t%at muc% more t%an tec%nology<
=%e central intellectual work of t%e 21st
century may lie not so muc% in accumulating e9ternali5ed banks
of knowledge as in de.elo&ing time(efficient ways to &rocess selected &ortions of t%at
t%roug% a c%i& w%ose essential circuits %a.e not and will not c%ange@ t%e c%i& between t%e ears<
timeH internali5ation of knowledge may be t%e most im&osing c%allenge< 3 training .ideota&e or,
for e9am&le, cannot be internali5ed by t%e %uman mind using a Gfast(forwardH tec%niFue< =%e
must be &layed in real time for %uman learning to take &lace< =raditional lectures and muc%
software are similarly bound by real(time constraints< )y contrast, still &%otos and, to a lesser
book or maga5ine &ages can be accessed in Gmind time,H wit% t%e intellectual eye free to
and select bits of content wit%out also t%e entire surrounding conte9t< D, .ideodisk,
Gcom&uter searc%H tec%nologies offer similar accessibility wit%out t%e necessity to &lay
t%roug% a
co%esi.e conte9t to ferret out a desired bit of content<
=%e most &oignant e9am&le of t%is dilemma lies in t%e efforts of elementary sc%ools to Gget wiredH
t%e Internet and t%ereby en%ance t%e accessible knowledge and e9&erience base of t%eir students<
w%en well(intentioned teac%ers ad.ise students to searc% for information on to&ics of interest,
teac%ers and students Fuickly confront t%e c%aos of knowledge t%at currently c%aracteri5es t%e
3 second(grader searc%ing for information on Ggoldfis%H using t%e Info(seek searc%
engine was
dumfounded and discouraged to confront more t%an 100,000 G%itsH for %is searc% term E wit% t%e
o&tion, adding insult to inKury, to seeing t%em 10 at a time< BGlick to see t%e ne9t ten<HC W%ere does
one begin to make sense or use out of knowledge base t%at lacks familiar searc% &at%s, or %euristics,
congenial to %uman learning and reflections?
Knowledge an )e ategori5ed
In addition to t%e distinctions already suggested between immanent and e9tant knowledge, t%e
ty&es of knowledge common wit%in an organi5ation can be enumerated<
-abel knowledge is t%e .ast catalog of names t%at we attac% to t%e flora and fauna t%at make u& t%e
Kungle of our &articular organi5ation< 3s a &ractical organi5ational necessity, names for t%ings
matter for
day(to(day o&erations and efficiency< )ut label knowledge too often becomes an obsessi.e(
totem for minds t%at eFuate organi5ational learning wit% mastery of Kargon ad labels< In
suc% an
en.ironment, newcomers to t%e organi5ation are &illoried by old(timers until t%e ingTnues are able
s&eak t%e s&eciali5ed language of terms, tags, and titles correctly< 1ntire cultures wit%in branc%es of
military, academic disci&lines, and t%e &rofessions are built u& in large &art of suc% sensiti.ity to
knowledge< !od %el& t%e GgruntH w%o doesnAt know t%e internal label language of t%e 3rmy E or
sociologist, for t%at matter, w%o accidentally calls a s&ade a s&ade< It goes almost wit%out saying
label knowledge makes u& an e9clusionary wall by w%ic% lawyers se&arate,
e9&ensi.ely, from
t%e world of common sense and fort% brig%t e9&ression<
7rocess knowledge knowing %ow t%ings work, e.en if one cannot name all com&onents
wit%in t%e &rocess Bi<e<, label knowledgeC< )usiness en.ironments .alue &rocess knowledge
on t%e
micro(le.el E engineers w%o know %ow a %eating system o&erates, for e9am&le E but often fail
recogni5e t%e im&ortance of &rocess knowledge at t%e macro(le.el< =%is %as occurred, and still
in s&ite of nearly a decade of )usiness 7rocess Reengineering t%at e9&licitly focused
attention on gaining knowledge about &rocesses< 0ow can one describe t%e core &rocesses at work
in a
large organi5ation suc% as !eneral 1lectric< Indi.idually, eac% em&loyee knows Bor s%ould knowC
&rocesses in w%ic% %e or s%e is in.ol.ed< )ut w%at can be said of larger &rocess &atterns E and w%o
is in
a &osition to obser.e and describe t%ose &rocesses?
N o&yrig%t >irtual :ni.ersity of 7akistan #*Knowledge Management EM!M=(/#0 >:
Knowledge management s%ould &ay attention to bot% t%e micro( and macro(le.els of
knowledge< If t%e macro(le.el &rocess is t%e building of a &yramid, for e9am&le, t%at
influences t%e s&ecific work of stonecutters and laborers at t%e micro(le.el< )ut, beyond a .ague
of increasing s%are%older .alue, too many organi5ations des&air of attaining &rocess knowledge at
a macro(le.el< In effect, t%ey do not know w%et%er t%ey are building a &yramid or a coliseum, but
em&loyees %ad better be Fuick about doing so<
+kill knowledge knows %ow to do somet%ing of .alue to t%e organi5ation< =%is le.el of knowledge
long been managed de.otedly by com&anies t%roug% Kob descri&tions, training &rograms,
e.aluations, and ot%er means< )ut once skill sets %a.e been determined, com&anies tend to look
t%em as unc%anging constellations in t%e nig%t sky E &atterns t%at are Gt%ereH along wit% t%e
furniture at
t%e com&any< =%ese skill sets become t%e basis of most %iring, and %ence define t%e o.erall
com&etencies of t%e organi5ation<
=%e coming era reFuires a muc% more fluid .iew of skill knowledge< om&uter com&anies %a.e
found t%at an em&loyeeAs ability to learn Fuickly and well is an infinitely more .aluable skill in a
c%anging business en.ironment t%an is a more .ocationally oriented, s&ecific skill<
management for t%e new century reFuires t%at skill knowledge be defined and de.elo&ed so t%at
&atterns Bconstellations of skill &ointsC can come toget%er Fuickly to meet emerging market needs<
7eo&le knowledge< =%is diffuse but .irtually im&ortant category of knowledge com&rises
all t%e
insig%ts, intuitions, and relational information we use to work wit% ot%er &eo&le< In t%e iceberg
&re.iously cited, t%is kind of knowledge is truly subsurface but wit%in organi5ations<
:sually it is
managed ineffecti.ely or not at all &reface but .ast wit%in organi5ations< :sually it is
ineffecti.ely or not at all &recisely because of its lack of .isibility< $ew com&anies t%ink about
knowledge t%eir em&loyees s%ould %a.e about one anot%erAs, communication
styles, or
&rofessional goals< Interestingly, t%e same com&anies e9&ect em&loyees to congeal into
co%esi.e work teams but de.ote little t%oug%t to t%e &eo&le knowledge t%at makes suc% tams
Knowledge management brings &eo&le knowledge to .isibility and to a &osition of &rominence in
framework for understanding and using knowledge wit%in t%e cor&oration<
N o&yrig%t >irtual :ni.ersity of 7akistan #/Knowledge Management EM!M=(/#0 >:
-1++4N 2
71R+71=I>1+ 4$ KN4W-1D!1 M3N3!1M1N= 3ND =01 $4R1+ DRI>IN! KM
W%y Knowledge Management?
3 new word for t%e consumer in todayAs market, G&rosumer,H refers to t%e consumer w%o is no
in t%e &assi.e market w%ere goods are offered at t%e e9act face .alue< 7rosumers are more educated
consumers, and t%ey demand more< =%ey &ro.ide feedback to manufacturers regarding t%e design
&roducts and ser.ices from a consumer &ers&ecti.e < =%is %as initiated new and radical c%anges in
business world< 1.en wit% recent tec%nology de.elo&ments suc% as networking, e(mail, and t%e
business %as yet to fully res&ond to t%e societal, cultural, and tec%nical c%allenges<, a
res&onse to knowledge s%aring and knowledge management among growt%(oriented firms is
to a&&ear<
KM %as already demonstrated a number of benefits and %as offered Kustification for
im&lementation< =%e Internet facilitated its de.elo&ment and growt% .ia fast and timely
s%aring of
knowledge< )y s%aring knowledge, an organi5ation creates e9&onential benefits from t%e
knowledge as
&eo&le learn from it< =%is makes business &rocesses faster and more effecti.e and em&owers
in a uniFue way< $or e9am&le, MicrosoftAs 0otmail ad.anced t%e wide use of e(mail t%at
users to e9c%ange information t%roug% any Web browser< =odayAs Web(based interface is t%e norm
most Internet &ro.iders<
)ased on a number of &ublis%ed studies, KM %as %ad a &ositi.e im&act on business &rocesses<
goal is to ca&ture t%e tacit knowledge reFuired by a business &rocess and encourage knowledge
to s%are and communicate knowledge wit% &eers< Wit% suc% knowledge, it is easier to determine
&rocesses are more effecti.e or less effecti.e t%an ot%ers< =%e main constraint in KM,,
initially ca&turing it<, if an organi5ation can succeed in ca&turing and dis&ersing
t%e benefits are endless< 3 com&any can le.erage and more fully utili5e intellectual assets< It can
&osition itself in res&onding Fuickly to customers, creating new markets, ra&idly
de.elo&ing new
&roducts, and dominating emergent tec%nologies<
3not%er benefit of KM is t%e intangible return on knowledge s%aring rat%er t%an knowledge
=oo often, em&loyees in one &art of a business start from Gscratc%H on a &roKect because t%e
needed is somew%ere else but not known to t%em<
3s a result of KM, systems %a.e been de.elo&ed to gat%er, organi5e, refine, and distribute
t%roug%out t%e business< In %is study of +mart )usiness, )otkin B1888C suggests si9 to& attributes of
knowledge &roducts and ser.ices@
J -earn< =%e more you use t%em, t%e smarter t%ey get and t%e smarter you get, too<
J Im&ro.e wit% use< =%ese &roducts and ser.ices are en%anced rat%er t%an de&leted w%en used,
and t%ey grow u& instead of being used u&<
J 3ntici&ate< Knowing w%at you want, t%ey recommend w%at you mig%t want ne9t<
J Interacti.e< =%ere is two(way communication between you and t%em<
J Remember< =%ey record and recall &ast actions to de.elo& a &rofile<
J ustomi5e< =%ey offer uniFue configuration to your indi.idual s&ecifications in real time at no
additional cost<
During t%e 18/0s and 18"0s, tec%nology was focused on automating %ig%(.olume static &rocesses
as claims &rocessing, mortgage loan u&dating, airline reser.ation systems, and t%e like< =%e
of e(commerce in t%e late 1820s and 1880s s%owed %ow information tec%nology could im&lemented
new way of doing business effecti.ely< &rocessing &ower, %ig%
bandwidt% data
transmission, and networking made it &ossible to re(en.ision %ow business gets done< It
%as also
c%anged t%e business en.ironment and introduced new com&etiti.e im&< 3mong t%em are@
N o&yrig%t >irtual :ni.ersity of 7akistan #"Knowledge Management EM!M=(/#0 >:
J Reacting instantly to new business o&&ortunities, w%ic% led to decentrali5ed decision
making Band com&etencyC at t%e front lines, w%ere t%e action is< Wit% t%at came t%e
desire to build mutual trust between knowledge workers and management and to coo&erate in
%andling time(sensiti.e tasks<
J )uilding better sensiti.ity to Gbrain drain<H It %as been said t%at Ge9&ertise gra.itates
toward t%e %ig%est bidderH << More and more com&anies reali5e t%e im&ortance of managing
and & e9&ertise< $or t%e %uman resources de&artment, t%e key Fuestion is
G0ow does t%e firm re&lace e9&ertise w%en it retires, resigns, or sim&ly
J 1nsuring successful &artnering and core com&etencies wit% su&&liers, .endors,
customers, and ot%er constituents< =odayAs tec%nology %as enabled com&anies to
reengineer t%e ways to do business< !etting &artners u& to your s&eed reFuires more t%an fast
tec%nology< Knowledge workers and ot%ers wit%in t%e com&any s%ould ensure t%at coo&eration
and coordination of work are &racticed for t%e good of t%e firm<
3ndersen consulting Bnow 3ccentureC &ro.ides anot%er e9am&le of a well(de.elo&ed knowledge(
system, called 3Net< =%is electronic system connects em&loyees and encourages t%e
s%aring of
knowledge< 3Net allows an em&loyee to use t%e total knowledge of 3ccenture
Bformerly 3rt%ur
3ndersenC to sol.e a customer &roblem anyw%ere in t%e world t%roug% electronic bulletin boards
and to
follow u& wit% .isual and data contacts< In t%eory, 3Net e9&ands t%e ca&abilities and
a.ailable to any customer to t%at of t%e entire organi5ation< It furt%er en%ances em&loyee
&roblem( ca&acity by &ro.iding access to com&iled subKect, customer(reference, and
resource files
a.ailable eit%er directly t%roug% t%e system or from D(R4Ms a.ailable to all offices<
)ased on
e9&erience, 3ccenture re&orted t%at tec%nological c%anges alone could not make 3Net successfully
by em&loyees< MaKor c%anges wit%in t%e organi5ation, suc% as c%anges in and culture,
needed to create &artici&ation<
KM Dustification
J reates e9&onential benefits from t%e knowledge as &eo&le learn from it
J 0as a &ositi.e im&act on business &rocesses
J 1nables t%e organi5ation to &osition itself for res&onding Fuickly to customers, creating new
markets, de.elo&ing new &roducts, and dominating emergent tec%nologies
J )uilds mutual trust between knowledge workers and management and facilitates coo&eration in
%andling time(sensiti.e tasks
J )uilds better sensiti.ity to Gbrain drainH
J 1nsures successful &artnering and core com&etencies wit% su&&liers, .endors, customers, and
ot%er constituents
J +%ortens t%e learning cur.e, facilitates s%aring of knowledge, and Fuickly enables less trained
brokers to ac%ie.e %ig%er &erformance le.els
J 1n%ances em&loyee &roblem( ca&acity by &ro.iding access to com&iled subKect,
customer(reference, and resource files a.ailable eit%er directly t%roug% t%e system or from D(
R4Ms a.ailable to all offices<
om&anies t%at fail to embed a .iable KM o&eration &robably suffer from se.eral o.ersig%ts or
J $ailing to modify t%e com&ensation system to reward &eo&le working as a team< =%e
traditional met%od of com&ensating &eo&le based on t%e old(fas%ioned Ginformation(%oardingH
&ractice does not work in a knowledge(s%aring en.ironment< Merit increases and bonuses
s%ould be based on team contribution and team &erformance rat%er t%an Fuantity or .olume<
J )uilding a %uge database t%at is su&&osed to cater to t%e entire com&any< !enerali5ed
systems do not usually work well, because information and knowledge are not stratified to
address s&eciali5ed areas of e9&ertise< Ideally, t%e %uman resources de&artment s%ould first
determine w%o works best wit% w%o based on commonality of Kob ty&e or Kob e9&erience and
t%en t%e knowledge t%at can be s%ared for eac% em&loyee to be more successful<
N o&yrig%t >irtual :ni.ersity of 7akistan #2Knowledge Management EM!M=(/#0 >:
J >iewing KM as a tec%nology or a %uman resource area< =%is o.ersig%t relates to t%e
earlier one E w%ere %uman resources and information tec%nology efforts are &oorly
coordinated E and defeats t%e &ur&ose be%ind embedding KM into t%e fabric of t%e
organi5ation< =%e two de&artments s%ould work Kointly at introducing KM as &art of t%e
organi5ational &rocesses<
J 7lacing too muc% em&%asis on tec%nology< 3lt%oug% intranets, knowledge(based tools,
data ware%ouses, and ot%er com&uter(based software are &art of t%e way todayAs organi5ation
must ado&t, tec%nology is only t%e enabler of knowledge management< =%e knowledge it makes
a.ailable must be organi5ed and disseminated to %uman decision makers to be of any use<
J Introducing KM into t%e organi5ation .ia a sim&le &roKect to minimi5e &ossible losses<
=%is is t%e wrong way to start KM< 3 com&any s%ould start wit% a strategy and a c%am&ion,
wit% a focus on a wort%w%ile, %ig% &rofile &roKect t%at can set t%e tone for t%e rest of t%e
organi5ation< It is a %ig% risk a&&roac%, but one t%at is most likely to &ay di.idends in t%e long
J 7ursuing KM wit%out being ready< +&urred by t%e &aradigm s%ift in our economy, many
cor&orations &ursue KM wit%out e.aluating w%et%er t%ey are organi5ationally ready 8stewart et
al< 2000, '*C< In ot%er words, cor&orations t%at %a.e been o&erating under classical
management &rinci&les cannot be successful in ado&ting KM wit%out maKor c%anges in culture,
management attitudes, and communication skills<
J &oor leaders%i&< -ike any %ig% &riority &roKect, KM is best im&lemented wit%
determined c%am&ions and to& management commitment< $or e9am&le, !eneral 1lectric B!1C
recogni5es an organi5ational culture o&en to ideas from all le.els of t%e com&any<
encouraging best(&ractice s%aring, t%e com&any can gras& t%e knowledge wit%in t%e em&loyees
and inno.ate t%e organi5ationAs &rocesses< Dack Welc%, former 14, %as establis%ed a
knowledge management uni.ersity and freFuently teac%es t%e classes %imself< !1 %as
incor&orated all le.els of t%e business and is well designed to s%are knowledge< =%e com&any is
successfully able to use em&loyee in&ut and knowledge to &roduce a strategic ad.antage<
=%e $orces KM<
J Increasing Domain om&le9ity< =%e com&le9ity of t%e underlying knowledge domains is
increasing< 3s a direct conseFuence, t%e com&le9ity of t%e knowledge t%at is reFuired
com&lete a s&ecific business &rocess task %as increased as well< !lobali5ation %as increased t%e
domain com&le9ity for many organi5ations, w%ic% need to &ro.ide &roducts and ser.ices t%at
meet t%e needs of customers across t%e globe<
J 3ccelerating Market >olatility< =%e &ace of c%ange, or .olatility, wit%in eac% market domain
%as increased ra&idly in t%e &ast decade< =%e e.ent of +e&tember 11 2001, cri&&led t%e tra.el
industry almost o.ernig%t< In order to stimulate tra.el, com&anies in t%is industry were forced
to reduce &rices to le.els way below t%eir break(e.en &rices< 3s a result, many com&anies in
t%is sector were forced into bankru&tcy<
J Intensified +&eed of Res&onsi.eness< =%e time reFuired to take action based on subtle
c%anges wit%in and across domains is decreasing< =%e ra&id ad.ance in tec%nology continually
c%anges t%e decision(making landsca&e, making it im&erati.e t%at decisions be made
im&lemented Fuickly, lest t%e window of o&&ortunity closes< In order to be able to continue to
su&&ort rele.ant I= education, uni.ersities need to ada&t t%eir curriculum to current industry
trends< In t%e &ast, degree curriculums were more static wit% infreFuent re.isions< In todayAs
en.ironment t%ree(year(old I= curriculums are old E in terms of Internet yearsQ
J Diminis%ing Indi.idual 19&erience< 0ig% em&loyee rates %a.e resulted in
indi.iduals wit% decision(making aut%ority less tenure wit%in t%eir organi5ations t%an before< =%e recent dot(com e9&losion created many new o&&ortunities for I=
&rofessionals t%at lured t%em away from t%eir &ositions< 3s a result, many organi5ations %ad to
N o&yrig%t >irtual :ni.ersity of 7akistan #8Knowledge Management EM!M=(/#0 >:
re%ire new talent to fulfill t%eir I= needs, and are now left wit% I= &rofessionals w%o lack t%e
business e9&erience or understand t%e business culture at t%eir organi5ations< =%is creates a
%uge barrier in terms of adeFuately su&&orting t%e needs of t%e organi5ation<
=%e recent dot(com e9&losion created many new o&&ortunities for I= &rofessionals t%at lured
t%em away from t%eir &ositions< 3s a result, many organi5ations %ad to re%ire new talent to
fulfill t%eir I= needs, and are now left wit% I= &rofessionals w%o lack t%e business e9&erience
or understand t%e business culture at t%eir organi5ations< =%is creates a %uge barrier in terms
of adeFuately su&&orting t%e needs of t%e organi5ation<
=%e Dri.ers
Wit% t%ese Kustifications to consider, se.eral key KM dri.ers are wort% noting< 1ac% makes
com&elling case for KM<
=ec%nology Dri.ers =%e &roliferation of tec%nology, data communications, networking,
wireless transmission %as re.olutioni5ed t%e way em&loyees store, communicate, and e9c%ange data
%ig% s&eed< =%e World wide Web %as c%anged KM from a fad to an e(business reality< Wit% a
com&uter , anyone can access &eo&le and information at any time and from anyw%ere< =oday, t%e
tec%nological infrastructure makes it &ossible to store, communicate, and e9c%ange knowledge<
makes tec%nology as core ca&ability le.eler, knowledge as a com&etiti.e differentiator< It
t%at alt%oug% tec%nology can mo.e information or knowledge from %icago to )ombay to -a%ore
lig%tening s&eed, it is &eo&le w%o turn knowledge into timely and creati.e decisions<
successful com&anies are ones t%at use information tec%nology to le.erage t%eir em&loyeesA
in ways t%at makes knowledge immediately a.ailable and useful< It also im&lies Fuality
ma9imi5ation and
cost minimi5ation t%e long term<
7rocess Dri.ers 4ne of t%e most critical sets of KM dri.ers is designed to im&ro.e work
&rocesses< Im&lied in t%is area is t%e elimination of du&licate mistakes by learning from t%e &ast and
transferring t%e best e9&eriential knowledge from one location or &roKect in t%e firm to anot%er<
from scratc% wit% eac% &roKect makes no sense in terms of efficiency, &roducti.ity, and .alue(
contribution to t%e com&anyAs bottom line<
3not%er area w%ere KM can im&ro.e &rocess is t%e way com&anies react to market c%anges< GDust
timeH is one a&&roac% to minimi5ing in.estment in in.entory and more e9&editiously
meting t%e
demands of t%e consumer< Res&onsi.eness t%at e9ceeds t%e com&etition becomes t%e key
to differentiation< It reFuires knowledge of control &rocesses< KM means allowing com&anies to
uniFue knowledge t%at makes t%em more res&onsi.e to market c%anges by t%e %our<
7ersonnel(+&ecific Dri.ers =%is area of KM dri.ers focuses on t%e need to create
functional teams of knowledge workers to ser.e anyw%ere in t%e organi5ation and minimi5e
&ersonnel as a t%reat to collecti.e knowledge< More and more of w%at was once .iewed as im&endent
firms are now closely cou&led< 7roducts and ser.ices are Kointly %andled from di.erse disci&linary
Bsuc% as &ackaging, manufacturing, engineering, and tec%nical skillsC, w%ere creati.e
coo&eration is
essential for inno.ation< )rainstorming, com&etiti.e res&onse, and &roacti.e &ositioning(all
collaboration and coordination of .arious tasks wit%in and among cor&orations<
3not%er &ersonnel(s&ecific is minimi5ing knowledge walkouts< 0ig%ly marketable
wit% uniFue knowledge can s&ell disaster for t%eir em&loyer< om&etence drain t%at
goes to t%e
com&etition is &robably t%e worst t%at can %a&&en to a com&any struggling t%roug% t%e new
Knowledge(Related Dri.ers +e.eral KM dri.ers relate to t%e .ery conce&t of knowledge s%aring
and knowledge transfer wit%in t%e firm< =%ey include re.isiting o.erlooked em&loyee
making critical knowledge a.ailable at t%e time it is needed, and finding a mec%anism to
a.ailable knowledge for immediate use< om&anies often know w%at t%ey know but %a.e
locating it< =ake t%e case of a customer w%o wanted to return a &roduct t%at was initially &urc%ased
from t%e same outfit in a different city to a local c%ain store< 3 code %ad to be entered into
com&uter to debit t%e initial store by t%e &rice of t%e &roduct and t%en credit t%e local store by t%e
amount< =%ere was only one em&loyee in t%e local store w%o knew t%e code< +%e %a&&ened to be on
N o&yrig%t >irtual :ni.ersity of 7akistan '0Knowledge Management EM!M=(/#0 >:
.acation< =%e customer em&loyee could not find critical e9isting knowledge in time< +o, s%e
to contact t%e ot%er store for instructions on %ow to %andle t%e returned item< ounting wait time
learning t%e &rocedure took close to 1 %our, w%ile t%e customer was waiting<
$inancial Dri.ers 3s an asset, knowledge defies economic t%eory, w%ere assets are subKect to
diminis%ing returns t%e long run< Knowledge assets increase in .alue as more and more &eo&le
t%em< Wit% t%is in mind, knowledge follows t%e law of increasing returns E t%e more knowledge is
t%e more .alue it &ro.ides< KM &ro.ides a wort%w%ile o&&ortunity to integrate knowledge in a way
enric%es t%e Fuality of decision making t%roug%out t%e organi5ation<
In t%e final analysis, t%e goal of KM is to &roduce a &ositi.e return on in.estment in &eo&le,
and tec%nology< It means measurable efficiencies in &roduction<
W%at is Knowledge Management?
Knowledge management BKMC is a newly emerging, interdisci&linary business model t%at %as
wit%in t%e framework of an organi5ation as its focus< It is rooted in many disci&lines, including
economics, &syc%ology, and information management< It is t%e ultimate com&etiti.e
ad.antage for
todayAs firm< Knowledge management &eo&le, tec%nology, and &rocesses in o.erla&&ing
Researc%ers as well as &ractitioners %a.e yet to agree on a definition<, eac% definition of
contains se.eral integral &arts@
J :sing accessible knowledge from outside sources<
J 1mbedding and storing knowledge in business &rocesses, &roducts, and ser.ices<
J Re&resenting knowledge in data bases and documents
J 7romoting knowledge growt% t%roug% t%e organi5ationAs culture and
J =ransferring and s%aring knowledge t%roug%out t%e organi5ation
J 3ssessing t%e .alue of knowledge assets and im&act on a regular basis<
In some ways, KM is about in a new business world E a world of com&etition t%at
increases in
com&le9ity and uncertainly eac% day< It is a world t%at c%allenges t%e traditional ways of doing
=%e focus is not only on finding t%e rig%t answers, but also on asking t%e rig%t Fuestions< W%at
yesterday may or may not work tomorrow< =%e focus is on Gdoing t%e rig%t t%ingH rat%er t%an
t%ings rig%tH so t%at core com&etencies do not become core rigidities in t%e future<
KM is t%e &rocess of ca&turing and making use of a firmAs collecti.e e9&ertise anyw%ere in t%e
E on &a&er, in documents, in databases Bcalled e9&licit knowledgeC, or in &eo&leAs %eads called
knowledgeC< It is im&lied t%at u& to 8* &ercent f information is &reser.ed as tacit knowledge< It is
fuel or raw material for inno.ation E t%e only com&etiti.e ad.antage t%at can sustain a com&any in
un&redictable business en.ironment< It is not intended to fa.or e9&ert systems of t%e early 1880s,
com&uters were &rogrammed to emulate %uman e9&ertsA t%oug%t &rocesses< =%e goal is to &resent
balanced .iew of %ow com&uter tec%nology ca&tures, distributes, and s%ares
knowledge in t%e
organi5ation by linking %uman e9&erts and documented knowledge in an integrated KM system<
=%e goal is for an organi5ation to .iew all its &rocesses as knowledge &rocesses<
=%is includes
knowledge creation, dissemination, u&grade, and a&&lication toward organi5ational<
knowledge organi5ation %as a renewed res&onsibility to %ire knowledgeable em&loyees and
s&ecialists to
manage knowledge as an intangible asset in t%e same way t%at one calls on an in.estor to manage a
financial &ortfolio< 3 firm seeks to add .alue by identifying, a&&lying, and integrating
knowledge in
un&recedented ways, muc% like an in.estor adds .alue by uniFue combinations of stocks and
=%e &rocess is &art science, &art art, and &art luck<
3lternati.e definitions of Knowledge Management
J Knowledge management is t%e &rocess of gat%ering a firmAs collecti.e e9&ertise it
resides E in databases, on &a&er, or in &eo&leAs %eads E and distributing it to w%ere it can %el&
&roduce t%e biggest &ayoff B0ibbard 188"C<
N o&yrig%t >irtual :ni.ersity of 7akistan '1Knowledge Management EM!M=(/#0 >:
J KM is a newly emerging, interdisci&linary business modeling wit% all as&ects of knowledge
wit%in t%e conte9t of t%e firm, including knowledge creation, codification, s%aring, and %ow
t%ese acti.ities &romote learning and inno.ation Bencom&assing tec%nology tools and
organi5ational routines in o.erla&&ing &artsC )erkeley 2001C<
J KM caters to t%e critical issues of organi5ational ada&tation,, and com&etence in t%e
face of increasingly discontinuous en.ironmental c%ange< 1ssentially, it embodies
organi5ational &rocesses t%at seek synergistic combinations of data and information &rocessing
ca&acity of information tec%nology, and t%e creati.e and inno.ati.e ca&acity of %uman beings
BMal%otra 1888C<
J Knowledge management is t%e art of creating .alue from an organi5ationAs intangible assets
B+.eiby 2000C<
J Knowledge management is t%e classification, dissemination, and categori5ation of information
and &eo&le t%roug%out an organi5ation B=aft 2000C<
J Knowledge management is t%e disci&line of ca&turing knowledge(based com&etencies and t%en
storing and diffusing t%at knowledge into business< It is also t%e systematic and organi5ed
attem&t to use knowledge wit%in an organi5ation to im&ro.e &erformance BK7M! 2000C<
J KM is really about recogni5ing t%at regardless of w%at business you are in, you are com&eting
based on t%e knowledge of your em&loyees BDo%nson 2001C<
J KM is a conscious strategy of getting t%e rig%t knowledge to t%e rig%t &eo&le at t%e rig%t time6
it is also %el&ing &eo&le s%are and &ut information into action in ways t%at stri.e to im&ro.e
organi5ational &erformance B4ADell et al< 2000C<
J Knowledge management is a framework, a management mind(set, t%at includes building on
&ast e9&eriences Blibraries, data banks, smart &eo&leC and creating new .e%icles for e9c%anging
knowledge Bknowledge(enabled intranet sites, communities of &ractice, networks B4ADell et al<
J KM is accumulating knowledge assets and using t%em effecti.ely to gain a
ad.antage B)rooking 188/C<
J KM is a framework wit%in w%ic% t%e organi5ation .iews all its &rocesses as
&rocessing, w%ere all business &rocesses in.ol.e creation, dissemination, renewal, and
a&&lication of knowledge toward organi5ational sustenance and BMal%otra 2000C<
J Knowledge management includes a combination of software &roducts and business &ractices
t%at %el& organi5ations ca&ture, analy5e, and distill information Braig 2000C<
J KM is not about tec%nology6 it is about ma&&ing &rocesses and e9&loiting t%e knowledge
database< It is a&&lying tec%nology to &eo&leAs minds BDe.eau 2000C<
J Knowledge management is t%e s%aring of information t%roug%out a com&any or e.en between
business &artners< It creates an en.ironment in w%ic% t%e com&any le.erages all its knowledge
assets B=re&&er 2000C<
J KM can automate t%e classification of documents w%ile using mac%ine logic t%at comes as
close as &ossible to %uman logic B0ersey 2000C<
J Knowledge management is a disci&line of identifying, ca&turing,, s%aring,
e.aluating an enter&riseAs information assets B)air 2001C<
=%e Knowledge 4rgani5ation
3 conce&tual structure of t%e knowledge organi5ation is as follows<< =%e middle layer
addresses t%e KM life cycle E knowledge creation, knowledge collection or ca&ture,
knowledge organi5ation, knowledge refinement, and knowledge dissemination<
=%e ideal knowledge organi5ation is one w%ere &eo&le e9c%ange knowledge across t%e functional
of t%e business by using tec%nology and establis%ed &rocesses< 7eo&le e9c%ange ideas and
for &olicy formulation and strategy< Knowledge is also internali5ed and ado&ted wit%in t%e culture
t%e organi5ation< 3ll knowledge workers B&eo&leC are in an en.ironment w%ere t%ey can freely
and &roduce knowledge assets by using .arious tec%nologies< =%is &rocess influences t%e com&any
as a
w%ole in a &ositi.e way<
N o&yrig%t >irtual :ni.ersity of 7akistan '2Knowledge Management EM!M=(/#0 >:
KM is Not 3bout
J Knowledge management is not reengineering< Reengineering im&lies one(s%ot, drastic
Gelectrical s%ockH c%ange in organi5ational &rocesses to im&ro.e efficiency< It is a mec%anical
s%ift from one stage of o&eration to a more efficient stage, and it usually radical
c%anges of business &rocesses and t%e &eo&le in.ol.ed< In contrast, KM im&lies continuous
c%ange and addresses future t%reats and uniFue o&&ortunities< =%ere is continuous learning,
unlearning, and relearning to ensure smoot% c%ange from to& to bottom< =%e focus is on
c%ange t%at will generate gradual but solid gains in t%e com&etiti.e en.ironment< Knowledge
management is engrained in t%e day(to(day o&erations of t%e business and directed by &eo&le
w%o are directly connected wit% t%e c%anging world of t%eir com&anyAs business<
J Knowledge management is not a disci&line< It is anot%er way of im& Fuality,
&rofitability, and growt%<
J Knowledge management is not a &%iloso&%ic calling< KM goes to t%e core of an
organi5ationAs intangible asset BknowledgeC, re.isits t%e knowledge, and ta&s into it<
J Knowledge management is not intellectual ca&ital, &er se< Intellectual ca&ital BIC
re&resents t%e .alue of a com&anyAs trademarks, &atents, or brand names< Intellectual ca&ital is
a com&anyAs collecti.e brain&ower, or a com&osite of e9&erience, knowledge, information, and
intellectual &ro&erty E all t%e &ro&erty of t%e organi5ation< 3lt%oug% treated in t%e literature t%e
same as knowledge, knowledge, &er se, is t%e conseFuence of actions and interactions of &eo&le
wit% information and knowledge e9c%ange based on e9&erience time<
J Knowledge management is not based on information< Information can become knowledge
after &eo&le use it in ways t%at create .alue< Knowledge %as been .iewed as information in
action< 3s we s%all e9&lain in %a&ter 2, information is conte9t(sensiti.e6 knowledge
J Knowledge management is not about data< Data Bfacts wit%out conte9tC or information
Binter&retation or &atterns of dataC is not knowledge<
J Knowledge .alue c%ain is not information .alue c%ain< In contrast, knowledge .alue c%ains
.iew %umans as t%e key com&onents assessing and reassessing information stored in
tec%nological system< )est &ractices into organi5ational business &rocesses are carried out after
acti.e %uman inFuiry, and suc% &rocesses are continuously u&dated in line wit% t%e c%anging
e9ternal en.ironment<
J Knowledge management is not limited to gat%ering information from t%e com&anyAs
domain e9&erts or retiring em&loyees and creating databases accessible by intranets<
KM is a collecti.e conce&t of t%e organi5ationAs entire core knowledge<
J Knowledge management is not digital networks< KM is about im& business
&rocesses wit% &eo&le and tec%nology in mind< 1ffecti.e tec%nology is t%e enabler of KM, and
&eo&le must be in t%e eFuation from t%e start to use tec%nology effecti.ely<
J Knowledge management is not about Gknowledge ca&ture,H &er se< Knowledge cannot be
ca&tured in its entirety< 7roblems collaboration, coo&eration, and
culture must be addressed before on can be sure or reliable knowledge ca&ture<
Regardless of t%e business, a com&any com&etes based on t%e knowledge of its em&loyees< 3
also %as a management mind(set t%at relies on &ast e9&erience Bsuc% as smart &eo&le, documents, or
databasesC and creates a new way for e9c%anging knowledge by using intranets, t%e Internet, local
networks, and t%e like< onsider t%e case of a )ritis% su&ermarket c%ain t%at used a customer
mining a&&lication to assess buying be%a.ior< 3fter running correlation analyses among
.ariables, it Fuickly disco.ered a clear association between t%e &urc%ases of dia&ers and beer by
N o&yrig%t >irtual :ni.ersity of 7akistan '#Knowledge Management EM!M=(/#0 >:
customers on $riday afternoons< 3rmed wit% t%is knowledge, t%e store began to stack dia&ers and
I@ 19&lain t%e difference wit% res&ect to t%e centrality of decision making between
decision makers today and from &re(1880 and w%y t%is is leading to a greater em&%asis
on effecti.e KM<
In t%e &ast t%e knowledge for making %ig% Fuality decisions lay &rimarily in t%e &ersonal
and e9&erience of t%e decision maker B14C< =%e recent increase in com&le9ity and
decreases in
reFuired res&onse time and business e9&erience of decision leaders reFuires t%at additional sources
knowledge Be<g<, t%e WWW, ot%er grou& membersC be incor&orated into t%e decision(making
to de.elo& t%e %ig%est Fuality, most informed decisions< =%ese trends are some of t%e
forces in
t%e need for more effecti.e KM<
N o&yrig%t >irtual :ni.ersity of 7akistan ''Knowledge Management EM!M=(/#0 >:
-1++4N 8
KN4W-1D!1 0I1R3R0M < $R4M D3=3 3ND IN$4RM3=I4N =4 KN4W-1D!1
KM Myt%s
KM is interwo.en into all of an organi5ationAs &rocesses< 3lt%oug% effecti.e utili5ation of
tec%nology is
essential, KM is not constrained by collecting knowledge from domain e9&erts and building
databases or databases su&&orted by t%e com&anyAs intranet< $inally, KM is not defined in terms of
s&ecific knowledge needs of e.ery em&loyee, t%e rele.ant knowledge needed, or t%e knowledge to
=%ere are se.eral myt%s as well@
Myt% 1@Knowledge management is a fad< 3s mentioned earlier, t%ere are many &essimists in
w%o doubt t%e Ggood fitH &otential of KM< )eing at a crossroads, .endors &us% older software
under t%e KM label< )7R and artificial intelligence %ad t%eir &ositi.e turn, alt%oug% t%ey suffered
raised e9&ectations< :nlike earlier trends,, true KM becomes embedded in t%e way
work in business< +o, knowing w%at you know or w%at you need to know cannot be a fad<
Myt% 2@Knowledge management and data ware%ousing are essentially t%e same< =%e
term data
ware%ousing im&lies a re&ository of data, not knowledge< Knowledge, &er se, is %ow
you take
information and transform it into action< Data ware%ousing is critical for KM< it is w%ere data,
documents, e(mail, and ot%er forms of information are a.ailable for eliciting knowledge at t%e
w%en it is needed< $or e9am&le, +ears, Roebuck L o< %as a customer data
ware%ouse wit%
demogra&%ic information on 100 million %ouse%olds to %el& t%e sales force im&ro.e marketing
and sales Fuality< $or e9am&le, a re&air&erson working on a customerAs refrigerator notices t%roug%
KM system t%at suc% a customer is a likely &ros&ect for a new free5er< Data mining a similar
&ur&ose, in t%at &atterns wit%in a mass of data allow management to better understand trends
directions in a &roduct or consumer &reference E a necessary dimension of KM<
Myt% #@Knowledge management is a new conce&t< 3s a conce&t, KM %as been &racticed by
firms as far back as t%e early 1820s< om&anies like $ord and !eneral Motors or&oration %a.e
e9c%anging design information and collaborating on design &roKects worldwide using tec%nology
along< =odayAs .ersion of KM goes under customer &rofiling, w%ere a su&ermarket clerk scans a
generated customer card to determine &atterns of &urc%ases and consumer &references by data,
&roduct, and by location< =%e idea is t%e same as it %as been for t%e &ast 2 decades, e9ce&t t%at
todayAs KM, tec%nology %as taken on a s&ecial role in t%e way knowledge is s%ared and
Myt% '@Knowledge management is mere tec%nology< =%is is a serious misconce&tion< KM is
about &eo&le, relations%i&s, and a new way of working toget%er as an entity in an organi5ational
It is a uniFue way of t%inking about work and about working< Imagine a knowledge community
em&loyees wit% common interests s%aring information on best &ractice t%at %el& e.eryone do a
efficient Kob< KM will work only if t%ere is trust and confidence among coworkers< 20 &ercent
all tec%nology(centered KM efforts %a.e been known to fail because of a lack of attention to &eo&le
Myt% *@=ec%nology can store and distribute %uman intelligence< Data may be stored in a centrali5ed
database for em&loyee access, but t%at does not ensure t%at em&loyees will use t%e information<
I a
turbulent com&etiti.e en.ironment, one cannot assume t%at com&anies can &redict t%e
information for t%e rig%t em&loyee< +o, it is %ardly t%e case t%at tec%nology
distributes %uman
intelligence< It is im&ossible to build a KM system t%at &redicts w%o t%e rig%t &erson is and at w%at
%e or s%e needs s&ecific information for decision making< =acit knowledge e9ists wit%in a
brain6 information or GknowledgeH stored wit%in t%e database can be .iewed as a .aluable
between &eo&le to make sense of a situation but s%ould not be inter&reted as %uman intelligence< In
ot%er words, knowledge re&ositories stored in com&uter do not allow for renewal of e9isting
N o&yrig%t >irtual :ni.ersity of 7akistan '*Knowledge Management EM!M=(/#0 >:
and creation of new knowledge< KM s%ould be considered as a system to be used wit%
concentration on
t%e %uman as&ect aided by tec%nology for decision making<
Myt% /@Knowledge management is anot%er form of reengineering< Reengineering is efficiency(
one(item attem&t at introducing radical c%ange in organi5ational &rocesses to im&ro.e efficiency<
em&%asis is on cost reduction and making better use of e9isting o&erations< Dum&(starting
suc% a
business,, often results in failure< KIM is an ongoing renewal of organi5ational &rocesses
learn in ad.ance about t%e com&anyAs future o&&ortunities and contingencies< =%e concentration is
.alue added acti.ities t%at demand inno.ation and creati.ity< =%is is ingrained in t%e
&rocesses of t%e business< =ec%nology &lays a critical role in t%e way information becomes
a.ailable at
electronic s&eed<
Myt% "@om&any em&loyees %a.e difficulty s%aring knowledge< =%e answer is yes and no,
on a number of factors@ attitude of t%e knower, w%o t%e reFuester is, com&any culture, sensiti.ity of
knowledge reFuested, a.ailability of attracti.e moti.ators, and trust le.el among com&any
:nder t%e traditional business model, em&loyees wit% uniFue knowledge accumulated
years of
e9&erience tended to &rotect GturfH by not s%aring suc% knowledge< In a KM en.ironment,
knowledge s%aring means great &otential for e.eryone including t%e organi5ation, knowledge
need to be sold on %ow knowledge s%aring will brig t%em mutual benefits< =%e terms s%aring means
Gwilling away a &artH and G%olding in common<H It is a Ggi.e to getH attitude, and
GknowingH is &ersonal, asking someone to s%are is to ask %im or %er to gi.e somet%ing of<
Mature or secure &eo&le in a stable work en.ironment tend to s%are knowledge more t%an ot%ers
e9&erience is to t%e contrary< 3lso, knowledge s%aring can im&ro.e bonds between &eo&le,
&ro.ided t%e
act of s%aring is reci&rocal<
Myt% 2@Knowledge management works only wit%in an organi5ation< 4n t%e surface, t%is may be
but some of t%e most .aluable knowledge comes from t%e outside E su&&liers, brokers,
agencies, and customers< =%e &roblem wit% e9tending KM to outside sources is
tec%nology, security issues, and com&le9ity of t%e design<
Myt% 8@=ec%nology is a better alternati.e t%an face(to(face< We %a.e seen t%e years t%at w%en
comes to real(life e9&erience and use of %uman knowledge, tec%nology does not %old all t%e
=%e emerging mind(set wit%in todayAs forward(looking, creati.e organi5ations is t%at KM must
cultural and organi5ational c%ange as well as tec%nology(based inno.ations< Data ware%ousing and
mining are all contributors to e9tracting and s%aring knowledge, but t%e best knowledge
resides in
%uman minds< =%is make a face(to(face a&&roac% to knowledge acFuisition and knowledge s%aring
better alternati.e<
Myt% 10@ It is a Gno brainierH to s%are w%at you know< In general, secure ad mature &eo&le are
less reluctant to s%are w%at t%ey know wit% ot%ers< :nfortunately, in traditional business, &eo&le
years of e9&erience tended to %oard knowledge rat%er t%an s%are it, because it ga.e t%em
control, and assurance of a Kob< $urt%ermore, GknowingH is &ersonal< =o ask &eo&le to s%are
is tantamount to e9&ecting t%em to gi.e somet%ing of< +%aring knowledge often
de&ends on
w%o t%e reFuester is, %ow sensiti.e is t%e knowledge reFuested, t%e attitude of t%e Gknower,H and
moti.ational forces at &lay< =o s%are knowledge, t%e business %as to undergo s&ecial em&loyee
instill trust wit%in t%e business, and gi.e em&loyees and management a c%ance to cement
based on trust< 3 summary of t%e KM myt%s is s%own in following list<
=%e Myt%s of Knowledge Management
1< Knowledge management is a fad<
2< Knowledge management and data ware%ousing are essentially t%e same<
#< Knowledge management is a new conce&t<
'< Knowledge management is mere tec%nology<
*< =ec%nology distributes %uman intelligence<
/< Knowledge management is anot%er form of reengineering<
"< om&any em&loyees %a.e difficulty s%aring knowledge<
2< Knowledge management works only wit%in an organi5ation<
8< =ec%nology is a better alternati.e t%an face(to(face<
10< It is Gno brainierA to s%are w%at you know<
N o&yrig%t >irtual :ni.ersity of 7akistan '/Knowledge Management EM!M=(/#0 >:
:nderstanding Knowledge
=%e most critical word in t%e KM area is knowledge< :nfortunately, t%ere is a continuing myt%
knowledge resides only in books, re&orts, or documents< =%is cannot be true any more t%an
musical notes on a &age constitutes music< W%at we %a.e %ere are re&resentations of information
music, res&ecti.ely< W%at do we mean w%en we talk about knowledge? =wo key
issues are
distinguis%ing between knowledge and information and determining %ow t%ey are
Knowledge is neit%er data nor information, alt%oug% it is related to bot%< =%e terms
are not
interc%angeable, and knowing w%at is needed often determines organi5ational success or failure<

=%e conce&t of knowledge is at t%e %eart of an organi5ationAs &roducti.ity and growt%<
be%a.iour im&lies t%e ability to understand and use language and to store and access rele.ant
at will< 0umans acFuire e9&ertise( t%at is, t%ey learn .ia e9&erience< 19&ertise incor&orates t%e
to reason and to make deductions6 it also includes t%e conce&t of common sense< =%is makes
intelligence and t%e knowledge t%at %umans amass time t%e &rimary organi5ational asset<
organi5ationAs tec%nology or telecommunications network is only a .e%icle for knowledge transfer
knowledge e9c%ange6 it cannot re&lace %uman knowledge<
3n essential criterion of knowledge and learning is memory< -earning by disco.ery is less
t%an learning by e9&erience or by e9am&le< 3 knowledge base is a critical com&onent of
management< Knowledge de.elo&ers need to understand t%e t%eory and meaning of knowledge
early in
t%e knowledge ca&ture &%ase and become familiar wit% t%e uniFue kinds of knowledge a.ailable in
cor&oration under study< It s%ould be &ointed out t%at an e9&ertAs knowledge is not
limited to
information or com&le9 &rocedures< Knowledge embraces a wider s&%ere t%an information<
a knowledge base is not t%e same as a database< 3 database %as a &redetermined structure6 a
base is a set of facts and inference rules for determining new information and GsmarterH knowledge
decision making< Knowledge as know(%ow may be eit%er s%allow or dee& knowledge< It may also
&rocedural, declarati.e, semantic, or e&isodic knowledge< More recently, Knowledge %as been
as e9&licit or tacit knowledge<
)efore discussing knowledge and its many ramifications, knowledge needs to be defined in relation
intelligence, e9&erience, and common sense<
We define knowledge as Gunderstanding gained t%roug% e9&erience or study<H It is Gknow(%owH or
familiarity wit% %ow to do somet%ing t%at enables a &erson to &erform a s&eciali5ed task< It may
also be
an accumulation of facts, &rocedural rules, or %euristics< =%ese elements are defined as follows@
J 3 fact is a statement of some element of trut% about a subKect matter or a domain< $or
e9am&le, milk is w%ite and t%e sun rises in t%e east and sets in t%e west are facts<
J 3 &rocedural rule is a rule t%at describes a seFuence of relations relati.e to t%e main< $or
e9am&le, always c%eck t%e traffic w%en entering a freeway6 if t%e gas gauge indicates less
t%an a Fuarter of tank of gas, look for a gasoline station<
J 3 %euristic is a rule of t%umb based on years of e9&erience< $or e9am&le, if a &erson
no more t%an * km abo.e t%e s&eed limit, t%en t%at &erson is not likely to be sto&&ed for
3 beneficial as&ect of knowledge is t%at it can com&ensate for some searc% time< 3 %uman e9&ert
knows a set of solutions can get a Kob done wit%out muc% searc%ing for information< on.ersely,
%uman in a .ideo game searc%es a .ast number of alternati.e at eac% Kuncture
because %e
lacks e9&eriential knowledge< :nfortunately, wit%out t%e aid of knowledge t%at allows t%e to
immediately eliminate ina&&ro&riate a&&roac%es, t%is met%ods encom&asses too many
a&&roac%es to

3not%er as&ect of knowledge is s&ecificity6 it cannot be transferred from one &roblem
domain to
anot%er< =%erefore, one must %a.e t%e surgeonAs know(%ow to re&air a %eart .alue,
t%e auto
transmission s&ecialistAs know(%ow to re&lace a re.erse gear, and t%e &ainterAs know(%ow to create
N o&yrig%t >irtual :ni.ersity of 7akistan '"Knowledge Management EM!M=(/#0 >:
accom&lis%ed &ortrait< =%ese kinds of e9tensi.e knowledge are referred to as tacit knowledge and
take many years to acFuire<
$inally, .alues, beliefs, and integrity are related to knowledge< =%is %as a lot to do wit% w%at t%e
&, acce&ts, and concludes from t%e en.ironment< 7eo&le generally organi5e a synt%esi5e
knowledge by t%eir .alues< Nonaka and =akeuc%i suggest t%at Gknowledge, unlike information, is
beliefs and commitmentH BNonaka and =akeuc%i 188*C< More recently, we began to attac%
integrity to
t%e w%ole &rocess of knowledge ca&ture, knowledge s%aring, and knowledge maintenance<
means reliability, trustwort%iness, &ri.acy, and confidentiality< Integrity cuts across t%e
regardless of com&any si5e or resources<
Intelligence refers to t%e ca&acity to acFuire and a&&ly knowledge< It is t%e ability to build or
u&on knowledge, to transform as muc% of oneAs knowledge a &ossible into knowledge t%at can be
to make good decisions< 3n intelligent &erson is one w%o %as t%e ability to t%ink and reason< =%is
distinction se&arates t%e from t%e master in a game like c%ess< Knowledge con.ersion is
res&onsible for muc% of t%e e9&ertAs efficiency in a&&lying knowledge and for t%e difficulty of
making it
onsider t%is e9am&le@ Recent researc% into t%e true meaning of intelligence illustrates .ery well
difficulty of defining t%e term< =%is organi5ation doing t%is researc% decided to get to t%e bottom
t%e Fuestion once and for all and, gi.en its im&ortance, assigned its most senior scientist to it<
esteemed sc%olar s&ent se.eral mont%s conducting t%is researc%< 3t t%e end of t%at &eriod, t%e
gat%ered a number of colleagues toget%er, %eld u& in front t%em t%e artificially intelligent artifact
as t%e subKect of t%e researc%, and said, G-adies and gentlemen, t%is is a t%ermos bottle< It kee&s
stuff %ot, and it kee&s cold stuff cold< My Fuestion is, %ow does it know?H
3bility to understand and use language is anot%er attribute of intelligence< -anguage
understanding is
not easy to acFuire, es&ecially for t%e e9isting tec%nolo0gy< $or e9am&le, consider t%e statement<
city of $airmount is under / feet of water< Does t%is mean t%at t%e city is com&letely underwater,
t%e tallest building below t%e water le.el? 3not%er e9am&le is t%e statement< =%e sub broke
t%roug% t%e
clouds< 0ow literally s%ould one inter&ret t%is statement? 4f course, bot% t%e meaning of t%e
and t%e conte9t of t%e statements determine %ow a reader s%ould understand t%e messages<
knowledge and common sense also enter t%e &icture<
Memory, or t%e ability to store and retrie.e rele.ant e9&erience at will, is &art of intelligence< 0ow
brain stores and information or knowledge is still unclear< -ater, t%e te9t includes a
of knowledge organi5ation and %ow it is e9&loited in t%e KM building life cycle<
-earning is knowledge or skill t%at is acFuired by instruction or study< It is t%e ine.itable
of intelligent &roblem(< Intelligent &eo&le learn Fuickly and make effecti.e use of w%at
learn< Inasmuc% as &roblem( and knowledge organi5ation %a.e been successfully
in t%e business enter&rise, t%e same success %as yet to be s%own in tec%nology or com&uter
7eo&le learn from e9&erience6 to date, com&uters %a.e not<
19&erience relates to w%at we %a.e done and w%at %as %istorically %a&&ened in a s&ecific area of
In -atin, t%e word e9&erience means Gto &ut to t%e test<H 7eo&le wit% dee& knowledge in a
subKect %a.e been tested by e9&erience< 19&erience also leads to e9&ertise< =%ink of +%erlock
in.estigating a murder< =%e goal is to find t%e murderer< 0olmesAs reasoning and deductions relay
all e.idence collected6 %e works backward from t%e goal until t%e sus&ect is caug%t< 19&ertise is
intuition and t%e ability to access oneAs knowledge ra&idly to ac%ie.e an efficient and
19&erience is closely related to knowledge< Knowledge de.elo&s time t%roug%
e9&erience, and e9&erience leads to e9&ertise< 3n e9&ert is someone w%o knows w%at %e or s%e
not know and is t%e first one to tell you so< $irms %ire e9&erts to benefit from t%eir e9&erience and
&ro.en knowledge in com&le9 no.ices from e9&erts< 19ce&tions do occur< )ac%,
N o&yrig%t >irtual :ni.ersity of 7akistan '2Knowledge Management EM!M=(/#0 >:
e9am&le, was e9&ert musician at * years of age< In general, wit%out e9&erience, one would %ardly
considered an e9&ert< 19&erience in using knowledge allows &eo&le to refine t%eir reasoning
in a knowledge management en.ironment<
ommon +ense
ommons sense refers to t%e unreflecti.e o&inions of ordinary %umans, w%ic% comes naturally to a
c%ild as young as # or ' years old< $or e9am&le, mot youngsters know t%at if t%ey touc% a %ot
t%ey will get burned< In contrast, a com&uter could be told all kinds of t%ings about %ot and
effect of %eat on t%e %uman skin, and it still would not &ercei.e w%at would %a&&en if it Gtouc%edH
%ot sto.e@ Mac%ines lack common sense< ommon sense is not easily learned or acFuired<
)asic Knowledge(Related Definitions
3rtificial 1mulating or imitating somet%ing natural or real
ommon sense Innate ability to sense, Kudge, or &ercei.e situations6 grows stronger time
$act 3 statement t%at relates a certain element of trut% about a subKect matter or a
0euristic 3 rule of t%umb based on years of e9&erience
Intelligence =%e ca&acity to acFuire and a&&ly knowledge6 ability to understand and use
language6 ability to store and retrie.e rele.ant e9&erience at will6 learning from
Knowledge :nderstanding gained t%roug% e9&erience6 familiarity wit% t%e way to do
somet%ing to &erform a task6 an accumulation of facts, &rocedural rules, or
7rocedural rule 3 rule t%at describes a seFuence of relations relati.e to t%e domain<
-ack of common sense makes tec%nology GbrittleH6 t%at is, com&uters rarely go beyond t%e sco&e of
t%eir data ware%ouse or knowledge base< Many im&ortant &roKects assumed by %umans in
today reFuired common sense, w%ic% is only &artially understood by todayAs com&uter<
ognition and Knowledge Management

ogniti.e &syc%ology &ro.ides and essential background for understanding knowledge and
=%is goal of cogniti.e &syc%ology is to identify t%e cogniti.e structures and &rocesses t%at
relate to
skilled &erformance wit%in an area of o&eration< ogniti.e science in general is t%e
study of %uman intelligence< Its two main com&onents are e9&erimental &syc%ology, w%ic% studies
cogniti.e &rocesses t%at constitute %uman intelligence, and artificial intelligence, w%ic%
studies t%e
cognition of com&uter(based intelligent systems<
Wit% t%ese relations%i&s in mind, one can see cogniti.e &syc%ologyAs contribution to
:nderstanding t%e limitations and biases &ro.ided by cogniti.e &syc%ology %el&s in
e9&ertise< 0uman limitations(suc% as memory ca&acity and t%e &%ysical limits im&osed by
sensory and motor systems(must be considered w%en attem&ting to understand %ow t%e %uman
carries out a task<
=%e &rocess of eliciting and re&resenting e9&ert knowledge ty&ically a knowledge
and one or more %uman e9&erts< =o ca&ture %uman knowledge, t%e de.elo&er inter.iews t%e
and asks for information regarding a s&ecific area of e9&ertise t%at t%e e9&ert is ade&t at<
e9&ert maybe asked to Gt%ink aloud,H to .erbali5e %is or %er t%oug%t &rocesses, w%ile t%e
&roblem< 7eo&le cannot always gi.e com&lete, accurate re&orts of t%eir mental &rocesses< 19&erts
%a.e greater difficulty in con.eying some kinds of knowledge, suc% as &rocedural knowledge
later in t%e c%a&terC< 7syc%ologists %a.e long been aware of &roblems related to .erbal re&orts,
t%roug% researc%, t%ey %a.e de.elo&ed met%ods for circum.enting t%em<
ogniti.e &syc%ology researc% contributes to a better understanding of w%at constitutes
%ow knowledge is elicited, and %ow it s%ould be re&resented in a cor&orate knowledge base for
to ta&< )ecause knowledge de.elo&ers s%ould take knowledge elicitation Balso called
ca&tureC seriously, t%ey s%ould %a.e a strong educational and &ractical background in
&syc%ology and cogniti.e &rocesses< Knowledge ca&ture tec%niFues are co.ered in %a&ter '<
N o&yrig%t >irtual :ni.ersity of 7akistan '8Knowledge Management EM!M=(/#0 >:
Data, Information, and Knowledge
Data are unorgani5ed and un&rocessed facts< =%ey are static6 t%ey Kust sit t%ere< $or e9am&le, 3li is
feet tall< =%is is data6 it does not necessarily lead one anyw%ere<, t%e meaning one brings
to t%e
e.aluation of t%is data could be im&ortant< +uc% an e.aluation may indicate t%at 3liAs %eig%t
make %im an asset to t%e basketball team< =%is becomes information<
Data is a set of discrete facts about e.ents E structured records of transactions< W%en a customer
to t%e store and buys merc%andise, t%e number of socks and t%e &rice %e or s%e &aid are all data< =%e
data tells not%ing about t%e moti.ation be%ind t%e &urc%ase, t%e Fuality of t%e socks, or t%e
of t%e store< Iuantitati.ely, stores e.aluate &atterns of &urc%ases, number of customers
s&ecific items, and ot%er items t%ose customers &urc%ased< 1.aluation suc% as t%ese can be used
deri.e information about customer be%a.ior, t%e &rice(sensiti.ity of certain merc%andise, and t%e
=%is means t%at data is a &rereFuisite to information<
3ll organi5ations need data, and some com&anies de&end more %ea.ily on data t%an ot%ers<
e9am&le, insurance com&anies, banks, t%e internal re.enue, and t%e social security
are %ea.y number crunc%ers< Millions of transactions are &rocessed daily< =%e &roblem wit% too
data is t%at it offers no Kudgment ad no basis for action< =%is means t%at an organi5ation must decide
t%e nature and .olume of data needed to create information<
=%e word information is deri.ed from t%e word inform, w%ic% means Gto gi.e s%a&e toH
means s%a&ing t%e data to arri.e at meaning in t%e eyes of t%e &<
Information is an aggregation of data t%at makes decision making easier< It is also facts and figures
based on reformatted or &rocessed data< $or e9am&le, a &rofit and loss statement &ro.ides
It is an assembling of facts into a form t%at s%ows an organi5ationAs state of %ealt% a s&ecific
&eriod< 0ere is anot%er e9am&le of information@
$i.e farmers of nort%ern )eirut, w%o %ad switc%ed cro&s from watermelon to sugarcane wit% t%e
%ig% %o&e of a
Fuick &rofit, could not bear t%e anguis% of cro& failures for two consecuti.e seasons< =%ey
committed suicide after to sell t%e farm to &ay t%e bank loan<
:nlike data, information is understanding relations< It %as meaning, &ur&ose, and rele.ance< It
%as a
s%a&e, because it is organi5ed for a &ur&ose< =%e data may %a.e been reorgani5ed, statistically
or %a.e %ad errors remo.ed E all &erformed to add meaning to a message, a re&ort, or a document<
medium is not t%e message, alt%oug% it could affect t%e message< 3n analogy@ a tele&%one
not ensure wort%w%ile con.ersation, alt%oug% certain tele&%ones make t%e message clear and
easily understood< =oday, more information tec%nology is not a guarantee more
understood< =oday, more information tec%nology is not a guarantee for im& t%e state
Information is accessible to em&loyeeAs ad managers t%roug% t%e com&anyAs local area
intranet, e(mail, Internet, satellite infrastructure, snail mail, or %and deli.ery< :nlike
data t%at
em&%asi5es Fuantity and efficiency of &rocessing, t%e focus of information is Fualitati.e@
Does t%e
re&ort tell me somet%ing I donAt know? Is t%ere new meaning in t%e semiannual re&ort? =%e
is t%at data becomes information w%en meaning or .alue is added to im&ro.e t%e Fuality of decision
Knowledge %as always been an essential com&onent of all %uman &rogress< 4ur ancestors must
em&loyed an enormous amount of knowledge to form an a9e(like obKect< $rom know(%ow to use
for &lanting to t%e in.ention of mac%inery, to tra.el to t%e moon E all reFuired an accumulation of
s&ecial knowledge to ac%ie.e t%e task< W%en it comes to basics, &eo&le use t%eir
intelligence and
N o&yrig%t >irtual :ni.ersity of 7akistan *0Knowledge Management EM!M=(/#0 >:
creati.ity to come u& wit% t%e .alue(added &roducts and ser.ices t%at take on t%e
Knowledge ca&ital is essentially a reflection of %ow well an organi5ation le.erages t%e knowledge
of its
workforce, t%e needs of its customers, and t%e knowledge of t%e su&&liers to ensure
outcome< Knowledge ca&ital is t%e way an organi5ation wealt% from its information
on a regular basis<
Knowledge is t%e most c%eris%ed remedy for com&le9ity and uncertainty< It is a
%ig%er le.el of
abstractions t%at resides in &eo&leAs minds< It is broader, ric%er, and muc% %arder to ca&ture t%an
or information< 7eo&le seek knowledge, because it %el&s t%em succeed in t%eir work<
information a.ailable in t%e rig%t format, at t%e rig%t time, and at t%e rig%t &lace for decision
Knowledge %as different meanings, de&ending on t%e disci&line w%ere it is used< In t%is te9t,
is G %uman understanding of a s&eciali5ed field of interest t%at %as been acFuired t%roug% study and
e9&erience<H It is based on learning, t%inking, and familiarity wit% t%e &roblem area in a de&artment,
di.ision, or in t%e com&any as a w%ole< =%e focus is on sustainable com&etiti.e ad.antage<
is not information, and information is not data< Da.en&ort and 7rusake B2000C define knowledge as
fluid mi9 of framed e9&erience, .alues, conte9tual information, and e9&ert insig%t t%at
&ro.ides a
framework for e.aluating and incor&orating new e9&eriences and information<H
Knowledge is deri.ed from information in t%e same way information is deri.ed from data< It may
.iewed as an understanding of information based on its &ercei.ed im&ortance or rele.ance to a
area< It can also be t%oug%t of as a &ersonAs range of information< 1mbracing a wider s&%ere
information, knowledge includes &erce&tion, skills, training, common sense, and e9&erience< It
is t%e
sum total of our &erce&ti.e &rocesses t%at %el&s us to draw meaningful conclusions< $or e9am&le,
in.estor reFuires knowledge to e.aluate two com&aniesA &rofit and loss statements in order to
w%ic% one is t%e %ealt%ier com&any<
N o&yrig%t >irtual :ni.ersity of 7akistan *1Knowledge Management EM!M=(/#0 >:
Data Information Knowledge
+tatement about reality
B3c%arya 2001C
:nsorted bits of fact
BDi9on 200C
3 re&resentation of a fact,
number word, image, &icture,
or sound
B3&&le%ans et al< 1888C
3 discrete, obKecti.e fact
about e.ents
BDa.en&ort and 7rusak 2000C
4rgani5ed, systemati5ed data
B3c%arya 2001C
Data t%at %as been sorted,
analy5ed, and dis&layed
BDi9on 2000C
Data t%at %as been assigned a
meaning B-iebowit5 and
Wilco9 1888C
Data t%at is meaningful or
useful to someone BDickerson
7otential for action6 resides in
t%e user BMal%otra 1882C
3 statement of fact about
measurements B3&&le%ans et
al< 1888C
Descri&ti.e knowledge
B%aracteri5ing t%e state of
some &ast, &resent, future, or
%y&ot%etical solutionC
0olsa&&le and W%inston
Data t%at makes a difference
BDa.en&ort and 7rusak 2000C
0uman interaction wit%
reality B3c%arya 2001C
Meaningful links &eo&le make
in t%eir minds between
information and its
a&&lication in action in a
s&ecific setting BDi9on 2000C
=%e w%ole set of insig%ts,
e9&eriences, and &rocedures
t%at are considered correct
and true and t%at, t%erefore,
guide t%e t%oug%ts, be%a.ior,
and communication of &eo&le
B-iebowit5 and Wilco9 1888C
3n ideational Bi<e<, conce&tual
rat%er t%an &%ysicalC construct
generated .ia t%e agency of
t%e %uman mind B0ousel and
)ell 1888C
3n organi5ational resource
consisting of t%e sum of w%at
is known B0olsea&&le 188/C
3 fluid mi9 of framed
e9&erience, .alues, conte9tual
information, and e9&ert
insig%t t%at &ro.ides a
framework for e.aluating and
incor&orating new
e9&eriences and information
BDa.en&ort ad 7rusak 2000C
+ystemati5ing and structure
information for a s&ecific
&ur&ose BDo%annessen et al<
Information w%ose .alidity
%as been establis%ed t%roug%
tests of &roof B-ibeskind
3s can be seen, information is all around, but only a fraction of it is useful in
Knowledge %as to be built and reFuires regular interaction wit% ot%ers in t%e know in t%e
It is social, time critical, interacti.e,, and created for a &ur&ose but drawing on e9&erience
ot%er times and domains< oo&eration and &roducti.ity are e9&ected as &eo&le work to ac%ie.e, not
control< =eamwork is a &rereFuisite for &eo&le to talk, com&are, and e9c%ange t%oug%ts, leading to a
culture t%at makes it clear t%at GW%at is my Kob?H is les im&ortant t%an GW%at is t%e &ur&ose of
w%at I
am doing?H
In summary,

J Knowledge can be defined as t%e YYunderstanding obtained t%roug% t%e &rocess of e9&erience or
a&&ro&riate study<OO
N o&yrig%t >irtual :ni.ersity of 7akistan *2Knowledge Management EM!M=(/#0 >:
J Knowledge can also be an accumulation of facts, &rocedural rules, or %euristics<
o 3 fact is generally a statement re&resenting trut% about a subKect matter or domain<
o 3 &rocedural rule is a rule t%at describes a seFuence of actions<
o 3 %euristic is a rule of t%umb based on years of e9&erience<
J Intelligence im&lies t%e ca&ability to acFuire and a&&ly a&&ro&riate knowledge<
o Memory indicates t%e ability to store and retrie.e rele.ant e9&erience according to
o -earning re&resents t%e skill of acFuiring knowledge using t%e met%od of
J 19&erience relates to t%e understanding t%at we de.elo& t%roug% our &ast actions<
J Knowledge can de.elo& time t%roug% successful e9&erience, and e9&erience can lead to
J ommon sense refers to t%e natural and mostly unreflecti.e o&inions of %umans<
Data, Information and Knowledge
J Data re&resents unorgani5ed and un&rocessed facts<
o :sually data is static in nature<
o It can re&resent a set of discrete facts about e.ents<
o Data is a &rereFuisite to information<
o 3n organi5ation sometimes %as to decide on t%e nature and .olume of data t%at is
reFuired for creating t%e necessary information<
J Information
o Information can be considered as an aggregation of data B&rocessed dataC w%ic% makes
decision making easier<
o Information %as usually got some meaning and &ur&ose<
J Knowledge
o )y knowledge we mean %uman understanding of a subKect matter t%at %as been acFuired t%roug%
&ro&er study and e9&erience<
o Knowledge is usually based on learning, t%inking, and &ro&er understanding of t%e
&roblem area<
o Knowledge is not information and information is not data<
o Knowledge is deri.ed from information in t%e same way information is deri.ed from
o We can .iew it as an understanding of information based on its &ercei.ed im&ortance
or rele.ance to a &roblem area<
o It can be considered as t%e integration of %uman &erce&ti.e &rocesses t%at %el&s t%em
to draw meaningful conclusions<
Kinds of Knowledge
J Dee& Knowledge@ Knowledge acFuired t%roug% years of &ro&er e9&erience<
J +%allow Knowledge@ Minimal understanding of t%e &roblem area<
J Knowledge as Know(0ow@ 3ccumulated lessons of &ractical e9&erience<
N o&yrig%t >irtual :ni.ersity of 7akistan *#Knowledge Management EM!M=(/#0 >:
J Reasoning and 0euristics@ +ome of t%e ways in w%ic% %umans reason are as follows@
o Reasoning by analogy@ =%is indicates relating one conce&t to anot%er<
o $ormal Reasoning@ =%is indicates reasoning by using deducti.e Be9actC or inducti.e
Deduction uses maKor and minor &remises<
In case of deducti.e reasoning, new knowledge is generated by using
&re.iously s&ecified knowledge<
Inducti.e reasoning im&lies reasoning from a set of facts to a general
Inducti.e reasoning is t%e basis of scientific disco.ery<
3 case is knowledge associated wit% an o&erational le.el<
J ommon +ense@ =%is im&lies a ty&e of knowledge t%at almost e.ery %uman being &ossess in
.arying forms;amounts<
J We can also classify knowledge on t%e basis of w%et%er it is &rocedural, declarati.e, semantic, or
o 7rocedural knowledge re&resents t%e understanding of %ow to carry out a s&ecific
o Declarati.e knowledge is routine knowledge about w%ic% t%e e9&ert is conscious< It is
s%allow knowledge t%at can be readily recalled since it consists of sim&le and
uncom&licated information< =%is ty&e of knowledge often resides in s%ort(term
o +emantic knowledge is %ig%ly organi5ed, YYc%unkedOO knowledge t%at resides mainly in
long(term memory< +emantic knowledge can include maKor conce&ts, .ocabulary, facts,
and relations%i&s<
o 1&isodic knowledge re&resents t%e knowledge based on e&isodes Be9&erimental
informationC< 1ac% e&isode is usually YYc%unkedOO in long(term memory<
J 3not%er way of classifying knowledge is to find w%et%er it is tacit or e9&licit
o =acit knowledge usually gets embedded in %uman mind t%roug% e9&erience<
o 19&licit knowledge is t%at w%ic% is codified and digiti5ed in documents, books, re&orts,
s&reads%eets, memos etc<
N o&yrig%t >irtual :ni.ersity of 7akistan *'Knowledge Management EM!M=(/#0 >:
-1++4N 10
1R=R3=IN! !4-D $R4M D3=36 :ND1R+=3NDIN! 4N>1R+I4N 4$ D3=3
IN=4 KN4W-1D!1<
I\1 0ow do t%e terms GdataH and GknowledgeH differ? Describe eac% term wit% t%e %el& of
a similar e9am&le, elucidating t%e difference between t%e two<
=o e9amine t%e differences between t%e terms data and knowledge, we need to understand t%e
meaning of t%ese terms<
Data com&rises facts, obser.ations, or &erce&tions t%at by re&resent raw numbers
or assertions, and may t%erefore be de.oid of conte9t, meaning, or intent<
+ome e9am&les of data could be@
a< =%e age and gender of eac% s&ectator in a cricket matc% during a game<
b< =%e &rice of eac% model of &ersonal com&uter from e.ery &ossible .endor at a &articular
&oint in time<
4n t%e ot%er %and, Knowledge %as been distinguis%ed from data in two different ways< 3
more sim&listic .iew considers knowledge as being at t%e %ig%est le.el in a %ierarc%y wit%
information at t%e middle le.el and data at t%e lowest le.el< $or e9am&le, an e(mail address is a
&iece of data, t%e fact t%at it belongs to a customer is information, and t%e fact t%at
customer needs to be e(mailed reminders e.ery week to &ay last mont%As dues is knowledge<
=%e second way would be to define knowledge in an area as Kustified beliefs about relations%i&s
among conce&ts rele.ant to t%at &articular area<
If we consider t%e e9am&les mentioned abo.e@
a< W%ile t%e age and gender of eac% s&ectator attending a game is only data, w%en used in
conKunction wit% ot%er information like t%e buying &references of different consumers,
stadium &lanners could forecast t%e kind of &rducts t%at will be sold during a &articular
b< +imilarly, t%e &rice of eac% model of &ersonal com&uter from e.ery &ossible .endor, along
wit% ot%er information like t%e s%i&&ing cost for eac% .endor and t%e mail(in rebates
a.ailable for eac% .endor and for eac% com&uter model, &ro.ides a &otential buyer t%e
knowledge as to %ow muc% %e is likely to s&end on eac% com&uter model %e is considering<
=o sum u&, Knowledge differs from Data in t%e sense t%at it %el&s &roduce information from
data or more .aluable information from less .aluable information w%ic% in turn results in t%e
facilitation of an action<
I\ 2 GInformationH contains GdataH but not all GdataH is Ginformation<H Dustify t%is
Data is de.oid of conte9t, meaning, or intent< Information is, in fact, a subset of
Information only includes t%ose data t%at &ossess conte9t, rele.ance, and &ur&ose<
Information ty&ically t%e mani&ulation of raw data to obtain a more meaningful
indication of trends or &atterns in t%e data<
-et us consider some e9am&les@
a< =%e total number of tele.ision .iewers w%o watc%ed t%e +u&er )owl is mere data<, w%en t%e data says t%at t%e ma9imum numbers of .iewers are found during t%e
N o&yrig%t >irtual :ni.ersity of 7akistan **Knowledge Management EM!M=(/#0 >:
t%ird and fourt% Fuarters of t%e game, t%is is information for com&anies w%o want to
decide w%en to &lace a tele.ision commercial<
b< =%e &rice of a large bag of &o&corn at a t%eatre is data< w%en t%e t%eatre
management wis%es to stay com&etiti.e, it is im&erati.e t%at %e finds out t%e &rice of
&o&corn in all %is com&eting t%eatres, and a.erages it out< =%is is also an e9am&le of raw
data w%ic% becomes useful information<
=%us we see from t%e e9am&les abo.e t%at information is in fact deri.ed from data by way of
some mani&ulation &erformed on t%e data< 3ll information is %ence data, but not all data can
be considered information<
I\ # 19&lain w%y t%e same set of data can be considered as useful information by some and
useless data by ot%ers< $urt%er, could t%is useful information be termed as
GknowledgeH? W%y?
Data is de.oid of conte9t, meaning, or intent< Information is in fact, a subset of
Information ty&ically t%e mani&ulation of raw data to obtain a more meaningful
indication of trends or &atterns in t%e data< Information only includes t%ose data t%at &ossess
conte9t, rele.ance, and &ur&ose< +o one could say t%at Information is &rocessed Data<, irres&ecti.e of w%et%er data is &rocessed or not, w%et%er certain facts are
information or only data de&ends on t%e indi.idual w%o is using t%ose facts<
:seful information can be termed as knowledge, only if it enables action and decisions, or
&ro.ides information wit% direction< Knowledge is intrinsically similar to information and data<
It is t%e ric%est and dee&est of t%e t%ree, and is conseFuently also t%e most .aluable<
I\ ' Describe t%e ways in w%ic% GknowledgeH differs from GdataH and Ginformation<H Dustify
your answer wit% a rele.ant diagram<
Knowledge can be distinguis%ed from data and information in two ways<
=%e basic .iew considers knowledge as being at t%e %ig%est le.el in a %ierarc%y
information at t%e middle le.el and data at t%e lowest le.el< 3ccording to t%is .iew, knowledge
refers to information t%at enables action and decisions, or information wit% direction< 0ence,
knowledge is intrinsically similar to information and data, alt%oug% it is t%e ric%est and dee&est
of t%e t%ree, and is conseFuently also t%e most .aluable<
=%e more ad.anced .iew of knowledge is based on t%e fact t%at t%e basic .iew doesnAt fully
e9&lain t%e c%aracteristics of knowledge< =%e ad.anced .iew considers knowledge as
intrinsically different from information< It defines knowledge in an area as Kustified beliefs
about relations%i&s among conce&ts rele.ant to t%at &articular area<
=o sum u&, knowledge %el&s &roduce information from data or more .aluable information
from less .aluable information, and t%is information facilitates action< )ased on t%e new ly
generated information, as well as t%e relations%i& wit% ot%er conce&ts, knowledge enables t%e
be%older to make decisions<
I\ * 19&lain t%e im&ortance of knowledge in creation and utili5ation of information<
Knowledge %el&s &roduce information from data or more .aluable information from less
.aluable information, resulting in t%e facilitation of an action or decision<
3s discussed abo.e, knowledge %el&s con.ert data into information< =%e use of information to
make t%e decision reFuires knowledge as well< =%e decisions, as well as certain
factors, lead to e.ents, w%ic% cause generation of furt%er data< =%e e.ents, t%e use
information, and t%e information system mig%t cause modifications in t%e knowledge itself<
Knowledge is .ital in t%e ongoing cycle of creation of data, information, and decision making,
N o&yrig%t >irtual :ni.ersity of 7akistan */Knowledge Management EM!M=(/#0 >:
w%ic% in turn leads to e.ents w%ic% generate furt%er data and information< Knowledge is bot%
t%e catalyst and t%e end &roduct of t%is continuous cycle of e.ents<
I\ / 0ow does t%e subKecti.e .iew of knowledge differ from t%e obKecti.e .iew? 19&lain %ow
knowledge can be .iewed as a state of mind, as a &ractice, as obKects, as access to
information and as ca&ability<
Knowledge can be .iewed subKecti.ely or obKecti.ely<
=%e +ubKecti.e .iew of knowledge refers to it as an ongoing accom&lis%ment, w%ic%
continuously affects and is influenced by social &ractices< It cannot be &laced at a
location, as it %as no e9istence inde&endent of social &ractices and %uman e9&eriences<
=%e +ubKecti.e .iew re&resents knowledge as using two &ossible &ers&
aC 3s a state of mind E t%is .iew considers knowledge as being a state of an indi.idualAs
mind and organi5ational knowledge is .iewed as t%e beliefs of t%e indi.iduals wit%in t%e
bC 3s a &ractice (( t%is &ers&ecti.e, also knowledge is .iewed as being %eld by a grou& and
cannot be broken down into se&arate elements &ossessed by indi.iduals<, t%is
knowledge resides not in anyoneAs %ead but in &ractice< Knowledge is reflected in
organi5ational acti.ities rat%er t%an in t%e minds of t%e organi5ationAs indi.iduals<
3ccording to t%e 4bKecti.e .iew, reality is inde&endent of %uman &erce&tions and can be
structured in terms of categories and conce&ts< In t%is way knowledge can be located in t%e
form of an obKect or a ca&ability t%at can be disco.ered or im&ro.ed by %uman agents< =%e
obKecti.e .iew considers knowledge from t%ree &ossible &ers&<
W%en looked at obKecti.ely, knowledge is re&resented in t%ree &ossible &ers& as an
obKect, as access to information, or as a ca&ability@
aC Knowledge as 4bKects E .iews knowledge as an item t%at can be stored, transferred,
mani&ulated, and can e9ist in a .ariety of locations<
bC Knowledge as 3ccess to Information (( considers knowledge as somet%ing t%at enables
access and utili5ation of information< =%is &ers&ecti.e e9tends t%e .iew of knowledge as
obKects, em&%asi5ing t%e accessibility of t%e knowledge obKects<
cC Knowledge as a&ability (( t%is &ers&ecti.e differs from t%e last two &ers& on
Knowledge as 4bKects in terms of t%e way in w%ic% knowledge can be a&&lied to influence
an action< =%is &ers&ecti.e &laces em&%asis on knowledge as a strategic ca&ability t%at can
&otentially be a&&lied to seek a com&etiti.e ad.antage<
I\" W%at is t%e difference between knowledge c%aracteri5ed as Gknow w%atH and Gknow
%owH? In t%ese situations, %ow would you classify t%e knowledge a com&uter
&rogrammer %as?
4ne of t%e ways in w%ic% knowledge can be classified is into Declarati.e Knowledge and
7rocedural Knowledge<
aC Declarati.e Knowledge B+ubstanti.e KnowledgeC E w%ic% focuses on beliefs about
relations%i&s among .ariables< Declarati.e knowledge can be stated in t%e form of
&ro&ositions, e9&ected correlations, or formulas relating conce&ts re&resented as .ariables<
It is for t%is reason t%at Declarati.e knowledge is often c%aracteri5ed as Gknow w%at<H
19am&le@ =%e a.erage fuel consum&tion of a &articular car is declarati.e knowledge<
bC 7rocedural Knowledge ( focuses on beliefs relating seFuences of ste&s or actions to ac%ie.e
a certain outcome< It is for t%is reason t%at &rocedural knowledge is often c%aracteri5ed as
Gknow %ow<H
N o&yrig%t >irtual :ni.ersity of 7akistan *"Knowledge Management EM!M=(/#0 >:
19am&le@ $ollowing ste&s to fi9 a car to im&ro.e its &etrol mileage,
&rocedural knowledge<
=%e knowledge a com&uter &rogrammer %as can be termed as bot% declarati.e as well as
&rocedural knowledge< =%e &rogrammer needs to know t%e synta9 of t%e language w%ic% is
declarati.e knowledge< %e also needs to know t%e logic ste&s to take to de.elo& %is
com&uter &rogram, w%ic% is w%ere %is &rocedural knowledge is used<
19&licit knowledge is used at a .ery basic le.el< =%is was &robably used by t%e &layer
to learn t%e rules of t%e game, but once t%e &layer is familiar wit% t%e rules, t%is knowledge is
con.erted to tacit knowledge in %is brain<
I\ 2 W%at is general knowledge? 0ow does it differ from s&ecific knowledge? Describe t%e
ty&es of s&ecific knowledge wit% suitable e9am&les<
4ne form of classifying knowledge is w%et%er it is &ossessed widely or narrowly< =%is is usually
in t%e form of !eneral Knowledge or +&ecific Knowledge<
!eneral Knowledge is &ossessed by a large number of &eo&le and is easily transferred from one
&erson to anot%er< $or e9am&le, it is general knowledge t%at t%e eart% around t%e sun<
=%is knowledge is easily &assed on from %ig% sc%ool teac%er to students<
+&ecific Knowledge, on t%e ot%er %and, is often referred to as Idiosyncratic Knowledge due to
t%e fact t%at it is &ossessed by a .ery limited number of indi.iduals, and is difficult to transfer
among indi.iduals< In t%e e9am&le abo.e, w%ile it is general knowledge t%at t%e eart%
around t%e sun, it is s&ecific knowledge of scientists w%o know t%e e9act distance between t%e
eart% and t%e sun based on its orbit<
$urt%er, s&ecific knowledge can be of two ty&es@ tec%nically(s&ecific knowledge and
conte9tually(s&ecific knowledge<
aC =ec%nically(s&ecific knowledge is dee& knowledge about a s&ecific area and
knowledge about t%e tools and tec%niFues t%at may be used to address &roblems in t%at
area< =%is kind of knowledge is often acFuired as a &art of some formal training and is t%en
augmented t%roug% e9&erience in t%e field< $or e9am&le, t%e e9act distance between t%e
eart% and t%e sun, as mentioned in t%e e9am&le abo.e<
bC onte9tually(s&ecific knowledge refers to t%e knowledge of &articular circumstances of
time and &lace in w%ic% work is to be &erformed< onte9tually(s&ecific knowledge &ertains
to t%e organi5ation and t%e organi5ational subunit wit%in w%ic% tasks are &erformed< =%is
ty&e of knowledge cannot be acFuired t%roug% formal training, but instead must be
obtained from wit%in t%e s&ecific conte9t< $or e9am&le, an astro(&%ysicist is able to
calculate based on %is e9&erience and knowledge t%e e9act duration and time an ecli&se is
likely to occur<
I\ 8 W%at is Ge9&ertiseH? Distinguis% among t%e t%ree ty&es of e9&ertise<
19&ertise is defined as knowledge of %ig%er Fuality, w%ic% addresses t%e degree of knowledge<
=%is term refers to .ery s&ecific knowledge, and one w%o &ossesses e9&ertise is able to &erform
a task muc% better t%at t%ose w%o do not< 3 &erson can be an e9&ert at a &articular task
irres&ecti.e of %ow so&%isticated t%at area of e9&ertise is<
=o truly understand t%e meaning of an e9&ert, and e9&ertise, t%e skill le.els of e9&erts from
different domains s%ould not be com&ared to eac% ot%er and t%e conce&t of e9&ertise must be
furt%er classified for different ty&es of domains< 3ll e9&erts reFuire more or less t%e same
cogniti.e skills< =%e difference lies in t%e de&t% of t%eir e9&ertise w%en com&ared to
ot%ers from t%eir own domains< $or e9am&le, a race car %as more skill t%an t%e a.erage
N o&yrig%t >irtual :ni.ersity of 7akistan *2Knowledge Management EM!M=(/#0 >:
I< \ 10 ontrast t%e differences between knowledge in &eo&le and knowledge in artifacts<
Describe t%e .arious re&ositories of knowledge wit%in organi5ational entities<
Knowledge resides in se.eral different locations or reser.oirs< =%ese can be classified into
Knowledge in 7eo&le, Knowledge in 3rtifacts, and Knowledge in 4rgani5ational 1ntities<
1< Knowledge in 7eo&le (( 3 considerable com&onent of knowledge is stored in &eo&le, often
in indi.iduals wit%in organi5ations< onsiderable knowledge also resides wit%in grou&s due
to t%e relations%i&s among t%e members of t%e grou&< !rou&s also form beliefs about w%at
works well and w%at does not, and t%is knowledge is and abo.e t%e knowledge
residing in eac% indi.idual member< ommunities of &ractice, w%ic% de.elo& as indi.iduals
interact freFuently wit% eac% ot%er to discuss to&ics of mutual interest, are a good e9am&le
of t%is<
2< Knowledge in 3rtifacts (( +ignificant amount of knowledge is stored in organi5ational
artifacts< It could be stored in &ractices, organi5ational routines, or seFuential &atterns of
interaction< Knowledge in artifacts are often embedded in &rocedures, rules, and norms
t%at is de.elo&ed t%roug% e9&erience time and guide future be%a.ior< onsiderable
knowledge is also often stored in tec%nologies and systems< Knowledge re&ositories
re&resent a t%ird way of storing knowledge in artifacts< $or e9am&le, a log of customer calls
forms a good re&ository of information to de.elo& a freFuently asked Fuestions section of
an organi5ationAs Website<
#< Knowledge in 4rgani5ational 1ntities (( Knowledge in t%ese entities can be considered at
t%ree le.els@
aC 4rgani5ational units;7arts of t%e 4rgani5ation (( re&resents a formal grou&ing of
indi.iduals, w%o come toget%er not because of common interests but rat%er, because of
organi5ational structuring< W%en indi.iduals occu&ying certain roles in an organi5ational
unit de&art and are re&laced by ot%ers, t%e incumbents in%erit some, but not all, of t%e
knowledge de.elo&ed by t%eir &redecessors, .ia t%e systems, &ractices, and relations%i&s
wit%in t%at unit<
bC 3n 1ntire 4rgani5ation (( suc% as a business unit or a cor&oration, also stores certain
knowledge, es&ecially conte9tually s&ecific knowledge< Its norms, .alues, &ractices, and
culture wit%in t%e organi5ation, and across its organi5ational units, contain knowledge t%at
is not stored wit%in t%e mind of any one indi.idual< =%e way in w%ic% t%e organi5ation
res&onds to en.ironmental e.ents is de&endent on t%e knowledge stored in indi.iduals and
organi5ational units as well as in t%e o.erall organi5ational knowledge t%at %as de.elo&ed
t%roug% &ositi.e and negati.e e9&eriences time<
cC Interorgani5ational relations%i&s (( 3s organi5ations establis% and consolidate relations%i&s
wit% customers and su&&liers, t%ey draw u&on knowledge embedded in t%ose relations%i&s<
4rgani5ations often learn from t%eir customersA e9&erience wit% &roducts about %ow t%ese
can be im&ro.ed< =%ey can also learn about new &roducts t%at mig%t be a&&ealing to
I\ 11 Determine t%e .arious ty&es of knowledge you are used to< Mou s%ould be able to state
at least one of eac% ty&e<
Knowledge %as been classified and c%aracteri5ed in se.eral different ways< In reading t%is
c%a&ter, we see e9am&les of t%e .arious ty&es of knowledge being used<
Declarati.e Knowledge E %as been used in terms of t%e meanings of 1nglis% words Bsuc% as
G&%ysical,H Gcogniti.e,H etc<, and t%e meanings of .arious &unctuation marks, suc% as G,H and
7rocedural Knowledge E was used in t%e actual reading of t%is book< W%en you reac%ed t%e
end of a &age, you knew t%at you now needed to mo.e on to t%e ne9t &age or turn to t%e ne9t
&age, until youA.e reac%ed t%e end of t%e book<
N o&yrig%t >irtual :ni.ersity of 7akistan *8Knowledge Management EM!M=(/#0 >:
=acit Knowledge E gained from reading t%e &reface of t%is book, w%ic% tells you about t%e
book and its contents, %el&s understand t%is c%a&ter<
19&licit Knowledge E contained in t%e te9t of t%e c%a&ter %el&s understand t%e tables and
figures in t%e c%a&ter<
!eneral Knowledge E about to&ics suc% as restaurant, coins, and %urricanes , was used to
understand t%e conce&ts e9&lained in t%e c%a&ter<
+&ecific Knowledge E was used to a&&ly t%e conce&ts t%e student read about in t%e c%a&ter to
real (world situations s%e may %a.e encountered at %er work &lace<

N o&yrig%t >irtual :ni.ersity of 7akistan /0Knowledge Management EM!M=(/#0 >:
-1++4N 11
:ND1R+=3NDIN! D3=3 $4R 3N3-M+I+ 3ND D1I+I4N;74-IM M3KIN!
1< onsider fi.e decisions you mig%t %a.e made today< B=%ey could be sim&le suc% as,
taking a turn w%ile or e.en c%oosing a soft drink at a store<C In eac% case
e9am&le below notice t%e data, information, or knowledge t%at were in.ol.ed in t%e
aC 3ction@ +ending an e(mail message to a friend
Data@ 1(mail addresses of all indi.iduals at t%e uni.ersity at w%ic% your friend is a
Information@ 1(mail address of t%e friend to be contacted
Knowledge@ 0ow to send an 1(mail
bC 3ction@ Watc%ing your fa.orite tele.ision &rogram
Data@ 4&ening t%e => guide
Information@ Referring to t%e => guide to find out w%en t%e &rogram airs<
Knowledge@ =urning on t%e => and setting it to t%e correct c%annel
cC 3ction@ to work
Data@ Details about t%e car functions like brakes, steering w%eel, etc<
Information@ Directions from %ome to work
Knowledge@ 0ow to dri.e and a car
dC 3ction@ 3nswering a ringing tele&%one
Data@ 0earing t%e &%one ring
Information@ W%ere t%e &%one is located
Knowledge@ 0ow to &ick u& t%e and answer t%e &%one
eC 3ction@ +etting a clock for Daylig%t =ime
Data@ Dates wit% and wit%out Daylig%t =ime
Information@ =%e date and time w%en to make t%e time c%ange
Knowledge@ In w%ic% direction and by %ow muc% to adKust t%e clock
2< Now consider %ow t%ose decisions would %a.e been influenced by t%e lack of &re(
e9isting data, information, or knowledge<
3s we see from t%e discussion below, eac% of t%e abo.e actions would be eit%er %indered to some
e9tent, or e.en com&letely im&ossible in some cases in t%e absence of &re(e9isting data,
information, or
+ending an e(mail to a friend would be im&ossible wit%out information of t%e e(mail address of t%e
friend to be contacted< -ack of data on t%e e(mail addresses of all students at t%e uni.ersity would
be a &roblem if t%e information about t%e s&ecific friendAs e(mail address is a.ailable< )asic
of %ow to o&en a &rogram to send an e(mail is necessary<
Watc%ing your fa.orite tele.ision &rogram would be &ossible wit%out to use t%e => guide or
referring to t%e &rogram sc%edule< it would be a %indrance if one did not know w%at time
s%ow airs< to work absolutely reFuires t%e knowledge of %ow to dri.e and t%e directions to work< It
not reFuire detailed data about t%e car functions like brakes, steering w%eel, etc<
In answering a ringing tele&%one, %earing t%e &%one ringing is .ital in t%e decision to answer t%e
Information about t%e location of t%e &%one may not,, be as im&ortant as one could
t%is by towards t%e ringing sound<
+etting a clock for Daylig%t =ime reFuires t%e information on w%en and %ow to make t%e
c%ange and knowledge about t%e direction and e9tent of clock adKustment<
N o&yrig%t >irtual :ni.ersity of 7akistan /1Knowledge Management EM!M=(/#0 >:
#< Mou %a.e recently in.ented a new &roduct< ollect demogra&%ic data from a sam&le
&o&ulation, determine %ow you would use t%is data, and con.ert it into information and
&ossibly knowledge for marketing t%e &roduct<
=%is answer would focus on identifying t%e s&ecific kinds of data Be<g<, age, gender, education,
income, etc<C and mani&ulating t%is data based on c%aracteristics of t%e in.ented &roduct Be<g<, if
t%e new &roduct is one targeted at older men, t%e a.erage education le.el and income of men in
%ig%er age grou&s would %el& identify t%e &ricing and t%e target audience for ad.ertisingC<
'< Inter.iew a manager in a manufacturing organi5ation, and one in a ser.ices(based
organi5ation< Determine t%e contrasting .iews of knowledge between t%e two due to t%e
nature of t%eir businesses<
7ossible differences t%at mig%t be surfaced t%roug% t%is analysis are@
aC =%e manager in t%e manufacturing organi5ation mig%t identify greater e9am&les of
&rocedural knowledge, w%ereas t%e manager in t%e ser.icing organi5ation mig%t identify
greater e9am&les of declarati.e knowledge<
bC =%e manager in t%e manufacturing organi5ation mig%t identify greater e9am&les of tacit
knowledge, w%ereas t%e manager in t%e ser.icing organi5ation mig%t identify greater
e9am&les of e9&licit knowledge<
I 1 Describe t%e two ways &resented in t%e te9t for distinguis%ing knowledge from
information and data<
=%e sim&ler .iew merely distinguis%es between t%e .alue of t%e corres&onding information,
w%ere data %as little .alue, information %as more .alue, and knowledge %as t%e greatest .alue<
In t%is .iew, knowledge is at t%e to& of an information %ierarc%y wit% information .alue being
t%e .ertical a9is<
=%e second .iew states t%at knowledge is w%at enables us to &roduce more .aluable
information from less .aluable information, wit% t%e im&ortance being on t%e transformation
&rocess< It is more about relations%i&s between &ieces of information<
I 2 !i.e e9am&les of data, information, and knowledge from t%e &ers&ecti.e of t%e fast
food restaurant and restaurant manager<
Data@ t%e number of burgers ordered, number of burgers ser.ed Balso true for all ot%er menu
items including s%akes and friesC, and c%ef salaries, burgers in stock, sales &rice of an
order, cost of a burger<
Information@ daily sales numbers Bru&ees, Fuantity, or &ercent of daily salesC for eac% item, t%e
daily reduction in in.entory for eac% item, total number of customers for t%e day, &ercentage of
customers ordering burgers;s%akes;ot%er, reorder Fuantities for restaurant food items, t%e
a.erage time s&ent by a on eac% customer<
Knowledge@ =%e trend of customer numbers indicating future customers and ordering &atterns,
t%e relations%i& between &roKected burger sales and bread in.entory Bor any ot%er menu item
and corres&onding material, e<g<, s%akes and milkC, t%e relations%i& between &roKected
customers and a.erage time and desired times to determine staffing needs<
I # )riefly describe t%e .arious &ers& on knowledge<
Knowledge may be e9amined eit%er subKecti.ely or obKecti.ely<
=%e subKecti.e .iew ties knowledge to an indi.idualAs e9&erience in social interactions wit%
ot%ers and is classified as eit%er a state of mind or as a &ractice<
N o&yrig%t >irtual :ni.ersity of 7akistan /2Knowledge Management EM!M=(/#0 >:
=%e obKecti.e .iew claims t%at knowledge e9ists in a &riori categories or conce&ts inde&endent
of any indi.idual< =%is a &riori knowledge may e9ist as an obKect, a ca&ability, or sim&ly as
access to information
I ' -ist and briefly define t%e t%ree ty&es of obKecti.e knowledge<
1< Knowledge as an obKect, w%ere an obKect is somet%ing t%at can be stored, transferred, and
2< Knowledge as access to information< 1nable access and utili5ation of information<
#< Knowledge as ca&ability< 1m&%asis on knowledge as a strategic ca&ability, %ow knowledge
may be a&&lied to influence action<
I * W%at are t%e t%ree classifications of knowledge %ig%lig%ted<?
7rocedural or declarati.e, indicating t%at knowledge may be classified as eit%er data(oriented or
task(oriented< =acit or e9&licit, indicating knowledge t%at is %eld in t%e %eads of indi.iduals or
grou&s or alternately encoded in some ot%er storage medium< !eneral or s&ecific, indicating t%e
breadt% of owners%i& of t%e knowledge wit% general knowledge %eld by many and s&ecific
knowledge %eld by few<
I / 0ow can e9&licit knowledge be transferred to tacit knowledge?
19&licit knowledge is knowledge t%at is articulated Band freFuently encodedC and may be easily
transferred to anot%er indi.idual or grou&< W%en an indi.idual acFuires knowledge from an
e9&licit form Bt%roug% reading;%earing;feeling;obser.ingC, t%en t%e knowledge must be
remembered to become tacit and as suc% is transformed to conform to or modify t%e
indi.idualAs e9isting belief system< 3n e9am&le would be w%en an em&loyee looks into a
manual to determine %ow to install a new &iece of %ardware in %is;%er com&uter< =%e manual
is e9&licit &rocedural information< 3fter &erforming a few installs, t%e em&loyee will learn t%e
s&ecified &rocedures and &ossibly some im&ro.ements to t%e documented &rocedures, t%us
transforming t%e e9&licit knowledge into tacit knowledge<
I " -ist and define t%e t%ree ty&es of e9&ertise discussed in t%e te9t<
3ssociational e9&ertise comes from years of e9&erience and recogni5ing &atterns in data< 3n
e9am&le would be a mec%anic w%o can diagnose t%e &otential &roblems in a car Kust from
listening to t%e sounds made by t%e car<
Motor skill e9&ertise is &redominantly &%ysical instead of cogniti.e and results from a .ery large
number of &ractice sessions to de.elo& a &articular &%ysical skill suc% as s%ooting a basketball<
=%eoretical or dee& e9&ertise is knowledge of a &articular to&ic far beyond t%e a.erage
indi.idual< =%e ability to go beyond su&erficial understanding and create no.el solutions to
&roblems based on t%e t%eoretical foundations of t%e domain<
=est Mour :nderstanding
1< +elect one definition of KM and e9&lain t%e reasonBsC for your c%oice<
3ny definition is a candidate, because of one or more as&ects of w%at KM %as, is, or s%ould be<
J :sing accessible knowledge from outside sources
J 1mbedding and storing knowledge in business &rocesses, &roducts, and ser.ices
J Re&resenting knowledge in databases and documents
J 7romoting knowledge growt% t%roug% t%e organi5ationAs culture and
J =ransferring and s%aring knowledge t%roug%out t%e organi5ation
N o&yrig%t >irtual :ni.ersity of 7akistan /#Knowledge Management EM!M=(/#0 >:
J 3ssessing t%e .alue of knowledge assets and im&act on a regular basis
+tudents s%ould be encouraged to come u& wit% a creati.e su&&ort of t%eir c%oice of a KM
2< KM &eo&le, tec%nology, and &rocesses in o.erla&&ing &arts<
19&lain t%e KM conce&t<
=%e ideal organi5ation is one w%ere &eo&le e9c%ange knowledge across functional areas of t%e
business by using tec%nology and establis%ed &rocesses< =%e e9c%ange may be for &olicy
formulation and strategy, for training and de.elo&ment, or for &roblem in teams< None
of t%e t%ree areas can function inde&endently of one anot%er<
#< 4ne uniFue indicator of KM in action is seeing &eo&le t%ink a%ead, not be%ind< Do
you agree wit% t%is statement? 19&lain w%y you agree or disagree<
7rogress, ad.ancement, and growt% are future(oriented< =%ey reFuire &eo&le to t%ink a%ead<
'< In w%at way is KM not about@
a< reengineering
b< a disci&line
c< data
d< knowledge ca&ture
a< KM is a mec%anical s%ift from one stage of o&eration to a more efficient stageZnot a one(
s%ot drastic c%ange in organi5ational &rocesses to im&ro.e efficiency<
b< KM is anot%er way to im&ro.e Fuality, &rofitability, and growt%
c< Data is facts wit%out conte9t< KM is actionable information to create .alue<
d< Knowledge cannot be ca&tured in its entirety, because of t%e im&lied %uman maturation time t%at u&grades t%e Fuality and .alue of knowledgeZes&ecially tacit knowledge<
N o&yrig%t >irtual :ni.ersity of 7akistan /'Knowledge Management EM!M=(/#0 >:
-1++4N 12
KN4W-1D!1 0I1R3R0M INDI>ID:3- >+ 4R!3NI[3=I4N
0uman =%inking and -earning
)ecause knowledge is t%e focus of knowledge management, knowledge de.elo&ers need to
%ow %umans t%ink and learn< +cientists %a.e long tried to under stand t%e %uman brain as &art of
&rocess of building com&uters t%at may someday du&licate t%e %uman e9&ertAs t%oug%t
&rocess in
&roblem(< Imagine a c%ild using blocks to build a tower< 3s soon as t%e tower is com&leted,
c%ild takes a w%ack at t%e tower, destroying it< Ne9t, t%e c%ild builds a %ig%er tower and t%en
destroys it
as well, and so on< 1.entually, t%e c%ild becomes %ungry, and t%e &attern of ):I-D and
begins to degenerate< =%e c%ild t%e tower one final swi&e, destroying it one t%e way
to t%e
kitc%en< =%ese s&ontaneous acti.ities %a.e &ro.ed to be difficult for com&uters, mainly because no
knows w%y &eo&le do t%em and, t%erefore, knows %ow to instruct t%e com&uter to do t%em<
3ccording to Minsky B1881C, t%e %uman mind is a Gsociety of mindsH t%at is
structured and interconnected so t%at t%e ):I-D, D1+=R4M, and 0:N!1R agents of t%e c%ild are
minds t%at re&resent t%e self, &romote intelligence, and &ro.ide t%e basis for acFuiring knowledge<
study of artificial intelligence %as introduced more structure into %uman t%inking about t%inking<
many acti.ities of t%e com&uter resemble %uman cogniti.e &rocesses t%at %uman and
Gt%inkingH are con.erging in many a&&lications, des&ite t%e differences between t%e brainAs
and t%e com&uterAs< $or e9am&le, bot% mind and mac%ine acce&t data and information,
symbols, store items in memory, and retrie.e items on command<
4b.iously, %umans do not recei.e and &rocess information in t%e same way t%at mac%ines do<
instance, %umans recei.e information .ia sensing(seeing, smelling, tasting, touc%ing, and %earing<
system of e9ternal stimuli &romotes a kind of t%inking and learning t%at is uniFue to
4n a macro le.el, com&uters and %uman recei.e in&uts from a .ariety of sources< om&uters
information from keyboards, s&eec%, touc% screens, and ot%er e9ternal sensors< 4n a micro le.el,
t%e central &rocessing unit of a com&uter and t%e %uman brain recei.e all information as
im&ulses< =%e difference is t%at com&uters must be &rogrammed to do s&ecific tasks< 7erforming
Kob does not transcend onto ot%er Kobs as it does wit% %uman<
0uman -earning
Memory is an essential com&onent of learning, because it accommodates learning< 4ne
as&ect of %ealt%y %uman memory is t%at it seems to run out of s&ace< 3lso, as %umans
more and more knowledge, t%ey generally e9&erience title interference wit% t%e recall ability or
Fuality of t%e information n memory< In ot%er words, as &eo&le learn new facts, t%ey integrate t%em
some way wit% w%at t%ey t%ink is rele.ant and organi5e t%e resulting mi9 to &roduce .aluable
solutions, or< +uc% learning ability is t%e basis of accumulating knowledge,
e9&erience, and
$or %umans, learning occurs in one of t%ree ways@ learning by e9&erience, learning by e9am&le,
learning by disco.ery< =%e ne9t section e9&lores t%ese ty&es in an effort to see %ow t%ey contribute
%uman knowledge<
-earning )y 19&erience
=%e ability to learn by e9&erience is a mark of intelligence< W%en an e9&ert is selected w%ose
someone wants to acFuire, t%e e9&ert is e9&ected to %a.e years of e9&erience reworking &roblems
looking into different angles for difficult
N o&yrig%t >irtual :ni.ersity of 7akistan /*Knowledge Management EM!M=(/#0 >:
=%ree ty&es of 0uman -earning
-earning by e9&erience =rial and error or reworking &roblems is used to acFuire e9&erience
in &roblem(< 3n e9&ert uses e9&erience to e9&lain %ow a
&roblem is sol.ed<
-earning by e9am&le +&ecially constructed e9am&les or scenarios are used to de.elo& t%e
conce&tBsC t%e student is e9&ected to learn< In knowledge ca&ture,
t%e %uman e9&ert uses a scenario to e9&lain %ow a &roblem is sol.ed<
-earning by disco.ery =%is is an undirected a&&roac%, w%ere %umans e9&lore a &roblem
area wit% no ad.ance knowledge of w%at t%eir obKect is<
7roblems< 4ne way of testing &otential e9&erts is to obser.e t%eir recall ability< 19&erts, w%o know
lot about a &articular &roblem, %a.e been found to remember facts in t%at &roblem area muc% more
easily and more Fuickly t%an non(e9&erts, w%o &resumably %a.e fewer facts to recall< =%is ty&e
information would be im&ortant for t%e knowledge de.elo&er to kee& in mind w%en understanding a
%uman e9&ertAs range of knowledge<
-earning )y 19am&le
-ike learning by e9&erience, learning by e9am&le is a good contributor to accumulating knowledge
time< In learning by e9am&le, s&ecially constructed e9am&les are used instead of a broad range
e9&erience< Muc% classroom instruction is com&osed of teac%ing by e9am&le E &ro.iding
cases, or scenarios t%at de.elo& t%e conce&ts students are e9&ected to learn< )ecause t%is
allows students to learn wit%out reFuiring t%em to accumulate e9&erience, it is more
efficient t%an
learning by e9&erience<
-earning )y Disco.ery
-earning by disco.ery is less understood t%an learning by e9am&le or by e9&erience< It is an
a&&roac% in w%ic% %umans e9&lore a &roblem area wit%out ad.anced knowledge of t%e obKecti.e<
one understands w%y %uman are so good at t%is< It is difficult to teac%, and it will be years before
can benefit from t%is a&&roac% commercially<
In summary6
=%inking and -earning in 0umans
J Researc% in t%e area of artificial intelligence %as introduced more structure into %uman t%inking
about t%inking<
J 0umans do not necessarily recei.e and &rocess information in e9actly t%e same way as t%e
mac%ines do<
J 0umans can recei.e information .ia seeing, smelling, touc%ing, %earing BsensingC etc<, w%ic%
&romotes a way of t%inking and learning t%at is uniFue to %umans<
J 4n macro le.el, %umans and com&uters can recei.e in&uts from a multitude of sources<
J om&uters can recei.e in&uts from keyboards, touc% screens etc<
J 4n micro le.el, bot% %uman brain and 7: of a com&uter recei.e information as electrical
J =%e &oint to note %ere is t%at t%e com&uters must be &rogrammed to do s&ecific tasks<
7erforming one task does not necessarily transcend onto ot%er tasks as it may do wit% %umans<
J 0uman learning@ 0umans learn new facts, integrate t%em in some way w%ic% t%ey t%ink is
rele.ant and organi5e t%e result to &roduce necessary solution, and decision< 0uman
learning can occur in t%e following ways@
o -earning t%roug% 19&erience<
o -earning by 19am&le<
o -earning by Disco.ery<
Im&lications for knowledge management at 4rgani5ation
Knowledge awareness benefits entire organi5ations< Wit% todayAs em&%ases on sustainable
ad.antage, added .alue, and im&ro.ed &roducti.ity, a firmAs management needs to create,
monitor, and &rotect its knowledge in.entory< More s&ecifically, a KM en.ironment means a focus
N o&yrig%t >irtual :ni.ersity of 7akistan //Knowledge Management EM!M=(/#0 >:
generating new knowledge6 transferring e9isting knowledge6 embedding knowledge in
ser.ices, and &rocesses6 de.elo&ing an en.ironment for facilitating knowledge growt%6 and
.aluable knowledge from inside and outside t%e firm< W%en t%is %a&&ens, it is beyond< In
it is beyond intranets and databases(t%e tec%nology t%at su&&orts KM<
+ome sources claim t%at 20 &ercent of an organi5ationAs knowledgeable &ersonnel can
o&erate 20
&ercent of t%e organi5ationAs day(to(day business< =%e %uman resources manager can &lay an
role in identifying t%e knowledge core of t%e organi5ation, recommending ways to &reser.e t%is
core, and building a robust, long(range &lan to ensure to&(Fuality o&eration< Wit%out suc%
cor&orate talent could &otentially erode t%roug% a brain drain t%at s&ells disaster for any business<
t%e same time, &rofessionals wit% e9&ertise are naturally drawn to organi5ations t%at recogni5e
reward e9&ertise es&ecially w%en t%at e9&ertise directly contributes to t%e firmAs &roducti.ity<
matc%es e9&lain t%e stability and growt% of many successful GlearningH com&anies<
)ased on t%e discussion %ere, se.eral ideas s%ould be considered for %ow a com&any s%ould
&erform in
order to create and maintain sustainable com&etiti.e ad.antage< $irst, t%ere s%ould be more
on ta&&ing, s%aring and & tacit knowledge and t%e total knowledge base of t%e com&any<
com&anyAs knowledge base includes e9&licit and tacit knowledge and e9ists internally in t%e
business as
well as wit%in t%e firmAs e9ternal connections< +econd, com&anies s%ould focus on inno.ation and
&rocesses t%at con.ert inno.ation to new &roducts and ser.ices< Knowledge s%aring and an
on t%e total knowledge base &romote inno.ation<
W%at good is knowledge if it cannot be s%are? If knowledge is &ower, s%aring it will multi&ly
across t%e business< :nfortunately, s%aring knowledge is an unnatural t%ing< 4ne &ersonAs
is an added .alue to t%at &ersonAs career &at%< Knowledge management is designed to
sol.e t%e
&roblem of un(recycled knowledge< +ystems %a.e been de.elo&ed to gat%er, organi5e, refine,
distribute knowledge t%roug%out t%e business< >irtually all suc% systems s%ould %a.e si9 key
learning ca&ability, im& wit% use, knowing w%at you want, two(way communication between
system and you, recalling &ast actions to de.elo8& a &rofile, and uniFue configuration to your
s&ecification in real time<
In t%e final analysis, communication and connection make knowledge s%aring an ongoing
=ec%nology can only do so muc% to create a formal system< +uccess wit% KM e9ists w%en t%e
culture is
ready to communicate and connect< =%e end result is Gcommunity,H built around knowledge and
on .ision<
J Intelligent be%a.iour %as se.eral attributes@
o =%e ability to understand and use language
o =%e ability to store and retrie.e rele.ant e9&erience at will
o -earning by e9am&le, from e9&erience, or by disco.ery<
J +e.eral key terms are wort% noting@
o Knowledge(:nderstanding gained t%roug% e9&erience
o Intelligence( t%e ca&acity to a&&ly knowledge
o 0euristics( rules of t%umb bases on years of e9&erience
o ommon sense E innate ability to sense, Kudge, or &ercei.e situations t%at grows stronger time<
o 19&erience(c%anging facts into knowledge to refine a reasoning &rocess
J 3 distinguis%ing feature of %uman learning is t%at as &eo&le learn new facts, t%ey integrate t%em
in some way and use t%e resulting mi9 to generate .alue(added decisions, solutions, or<
J 0umans learn by e9&erience, by e9am&le, and by disco.ery< -earning by disco.ery is less
understood t%an learning by e9am&le and by e9&erience< -earning continues to be a maKor
concern in knowledge management<
J Knowledge de.elo&ers, w%ose Kob is to ca&ture e9&ertAs knowledge, need to be well &re&ared
and to %a.e a clear understanding of t%e distinctions among knowledge, information, and data<
=%ey must focus on knowledge as it relates to t%e &roblem area<
J =%e relati.e im&ortance of data, information, and knowledge is a function of t%e im&ortance of
t%e &roblem, t%e decision a&&roac%, t%e nature of t%e &roblem, and t%e number of &erson
N o&yrig%t >irtual :ni.ersity of 7akistan /"Knowledge Management EM!M=(/#0 >:
affected< W%ereas data &lays a relati.ely tri.ial role in &roblem(, knowledge occu&ies a
maKor role< =%e decision a&&roac% is ad.isory and relates to a difficult &roblem affecting many
&eo&le in t%e organi5ation<
J 19&ert knowledge is clustered, or G%unked,H in long(range memory< %unking &romotes
e9&ert &erformance, but can also make it difficult for e9&erts to be aware of t%eir
knowledge in a way t%at allows t%em to describe it to ot%ers<
J 0umans %a.e common(sense knowledge, a collection of &ersonal e9&eriences and
acFuired time< =%e fact t%at common(sense reasoning is so strong in e9&erts makes it
difficult for knowledge de.elo&ers to ca&ture t%eir dee& knowledge<
J Knowledge can be classified by &rocedural, declarati.e, semantic, or e&isodic means<
o 7rocedural knowledge is knowledge t%at is used and again<
o Declarati.e knowledge is knowledge t%at t%e e9&ert is aware or conscious of< It is s%allow
o +emantic knowledge is c%unked knowledge t%at resides in t%e e9&ertAs long(range memory<
o 1&isodic knowledge is knowledge based on e9&eriential information< 1ac% e&isode is
c%unked in long(range memory<
J ommon sense is inferences made from knowledge about t%e world< Reasoning is t%e &rocess
of a&&lying knowledge to arri.e at solutions< It works t%roug% t%e interaction of rules and data<
J Deducti.e reasoning deals wit% e9act facts and conclusions< =%e idea be%ind
reasoning is to generate new knowledge from &re.iously s&ecified knowledge< In contrast,
inducti.e reasoning is reasoning from a set of facts to general &rinci&les< Induction usually
&roduces results wit%out e9&lanation<
J Knowledge %as also been classified as tacit and e9&licit knowledge< =acit knowledge, or Gknow(
%ow,H is stored in &eo&leAs minds and is not so easy to ca&ture or s%are< )y contrast, e9&licit
knowledge is codified and digiti5ed in t%e form of records, re&orts, or documents and is
reusable for decision making<
J ase(based reasoning is reasoning by analogy< 0uman e9&ertAs reason about a &roblem by
recalling similar cases encountered in t%e &ast<
N o&yrig%t >irtual :ni.ersity of 7akistan /2Knowledge Management EM!M=(/#0 >:
=erms to Know
ase@ Knowledge at an o&erational le.el6
e&isodic descri&tion of a &roblem and its
associated solution<
ase(based reasoning@ 3 met%odology t%at
records and documents &re.ious cases and
t%en searc%es t%e rele.ant caseBsC to determine
t%eir usefulness in a current &roblem6
&roblem( a case by analogy wit%%old
%unking@ !rou&ing ideas or details t%at are
stored and recalled toget%er as a unit<
ommon sense@ 7ossessing common
knowledge about t%e world and making
ob.ious inferences from t%is knowledge<
om&ilation@ =%e way a %uman translates
instructions into meaning language or
Decision su&&ort systems BD++C@
om&uter(based information systems t%at
combine models and data for com&le9
&roblems wit% e9tensi.e user in.ol.ement<
Declarati.e knowledge@ +urface information
t%at e9&erts .erbali5e easily<
Deducti.e reasoning@ 3lso called e9act
reasoning6 takes know &rinci&les Be9act factsC
and a&&lies t%em to instances to infer an e9act
Dee& knowledge@ Knowledge based on t%e
fundamental structure, function, and be%a.ior
of obKects<
1&isodic knowledge@ Knowledge based on
e9&eriential information c%unked as an entity
and retrie.ed from long(term memory on
19&erience@ =%e factor t%at c%anges
unrelated facts into e9&ert knowledge<
19&ert@ 3 &erson w%ose knowledge and skills
are based on years of s&eciali5ed e9&erience<
19&ertise@ =%e skill and knowledge
&ossessed by some %umans t%at result in
&erformance t%at is far abo.e t%e norm<
19&licit knowledge@ Knowledge codified in
documents, books, or ot%er re&ositories<
$act@ 3 statement of a certain element of
trut% about a subKect matter or a &roblem area<
0euristic@ 3 rule of t%umb based on years of
Inducti.e reasoning@ Reasoning from a gi.en
set of facts or s&ecific e9am&les to general
&rinci&les or rules<
Inferencing@ a conclusion based on
statements t%at only im&ly t%at conclusion<
Intelligence@ =%e ca&acity to acFuire and a&&ly
knowledge t%roug% t%e ability to t%ink and reason<
Knowledge@ :nderstanding, awareness, or familiarity
acFuired t%roug% education or e9&erience<
-earning@ Knowledge or skill acFuired by instruction
or study<
-earning by disco.ery@ 3cFuiring new ideas by
e9&loring a &roblem area wit% no ad.ance knowledge
of w%at is being soug%t<
-earning by e9am&le@ 3cFuiring new ideas based on
s&ecially constructed e9am&les or scenarios<
-earning by e9&erience@ 3cFuiring new ideas based
on %undreds of &re.iously stored conce&ts<
-ogic@ =%e scientific study of t%e &rocess of
reasoning and t%e set of rules and &rocedures used in
t%e reasoning &rocess<
Memory@ =%e ability to store and retrie.e rele.ant
e9&erience at will<
7remise@ 7ro.ides t%e e.idence from w%ic% t%e
conclusion must necessarily follow6 e.aluates t%e trust
of false%ood wit% some degree of certainty<
7rocedural rule@ 3 rule t%at describes a seFuence of
relations relati.e to t%e &roblem area<
Reasoning@ =%e &rocess of a&&lying knowledge to
arri.e at solutions based on t%e interactions between
rules and data<
+cenario@ =%e formal descri&tion of %ow a &roblem
situation o&erates<
+emantic knowledge@ %ig%ly organi5ed, G%unkedH
knowledge t%at resides in t%e e9&ertAs long(term
memory and re&resents conce&ts, facts, and
relations%i&s among facts<
+%allow knowledge@ Readily recalled knowledge t%at
resides in s%ort(term memory<
+%ort(term memory@ Readily recalled knowledge t%at
resides in s%ort(term memory<
+%ort term memory@ =%e &art of t%e %uman brain
t%at retains information for a s%ort &eriod of time<
=acit knowledge@ Knowledge used to create e9&licit
knowledge6 t%e mind(set of indi.iduals t%at includes
intuitions, .alues, and beliefs t%at stem from
=est Mour :nderstanding
1< If intelligence is t%e ca&acity to acFuire and a&&ly knowledge, w%at is knowledge?
Knowledge is oneAs ca&acity to acFuire and a&&ly knowledge< Knowledge is familiari5ing,
understanding, or awareness acFuired t%roug% e9&erience< 3n intelligent &erson %as t%e
ability to t%ink and reason<
N o&yrig%t >irtual :ni.ersity of 7akistan /8Knowledge Management EM!M=(/#0 >:
2< )riefly e9&lain t%e key attributes of intelligent be%a.ior
=%e key attributes of intelligent be%a.ior are@
a< 3bility to understand and use language< +uc% language understanding is not so easy for
t%e com&uter< 7rior knowledge and common sense also enter t%e &icture<
b< Memory or storing and rele.ant e9&erience at will< 0ow t%is is all done is
c< -earning is knowledge or skill acFuired by instruction or study< We %a.e yet to see
some success in Gmac%ine learning<H 7eo&le learn from e9&erienceZnot com&uters
2< Distinguis% between@
a< fact and rule
b< knowledge and common sense
c< e9&erience and %euristics
d< learning by e9am&le and learning by disco.ery
a< 3 fact is a statement t%at relates a certain element of trut% about a subKect matter or
domain< 3 rule describes a seFuence of relations relati.e to t%e domain or subKect
b< Knowledge is a &ersonAs range of information, embracing a wider s&%ere t%an
information< Knowledge includes common sense, &erce&tion, and e9&erience<
ommon sense is unreflecti.e o&inions of ordinary &eo&le< It comes to t%em
naturally< -ack of it makes knowledge based systems brittle<
c< 19&erience is closely related to knowledge< We use e9&erience to c%ange facts into
knowledge, w%ic% se&arates no.ices from e9&erts< 19&erience is t%e factor t%at
c%anges unrelated facts into e9&ert knowledge< 0euristics is a rule of t%umb based on
e9&erience< +o, %euristics takes e9&erience as t%e bases for rules of t%umb<
d< -earning by e9am&le incor&orates s&ecially constructed e9am&les rat%er t%an a broad
range of e9&erience< Muc% classroom learning is learning by e9ce&tion< In contrast,
learning by disco.ery is an undirected a&&roac% w%ere %umans or mac%ines e9&lore a
domain wit% no ad.ance knowledge of w%at t%eir obKect is< It is difficult to teac% and
will be years before we can benefit from t%is a&&roac%<
#< Define e&isodic knowledge and semantic knowledge< !i.e an e9am&le of eac%<
1&isodic knowledge is knowledge based on e9&eriential information c%unked as an entity
and retrie.ed from long(term memory on recall< It is synonymous wit% dee& knowledge<
$or e9am&le, a &rofessor wit% years of consulting e9&erience tends to teac% by scenarios or
by e9am&les< +uc% a &erson doesnAt %a.e to t%ink long about citing an e&isode to illustrate
a &oint<
+emantic knowledge is %ig%ly organi5ed, Gc%unkedH knowledge t%at resides in t%e e9&ertAs
long(term memory and re&resents conce&ts, facts, and relations%i&s among facts< $or
e9am&le, a &rofessor teac%ing networking would e9&lain o&enly and clearly t%e network
conce&ts, ty&es of cables and t%eir functions, %ow 7s are connected to a, etc<
=%ese are all facts, relations%i&s, and realities based on e9&erience<
'< Illustrate by e9am&le t%e &ossible relations%i& between BaC knowledge and
information and BbC knowledge and data<
a< Knowledge is understanding of information based on its &ercei.ed im&ortance or
rele.ance to a &roblem domain< It is a &ersonAs range of information< It includes
&erce&tion, skills, training, common sense, and e9&erience< It is t%e sum total of our
&erce&ti.e &rocesses t%at %el&s us draw meaningful conclusions< In contrast,
information is an aggregation of data t%at makes decision making easier< It is
reformatted or &rocessed data< 3 ste& %ig%er in abstraction t%an information is
b< om&ared to knowledge, data are un&rocessed facts<, t%e meaning one
brings to t%e e.aluation of data becomes information w%ic%, in turn, could add to
oneAs knowledge
N o&yrig%t >irtual :ni.ersity of 7akistan "0Knowledge Management EM!M=(/#0 >:
*< W%y is knowledge com&iled? Discuss its relations%i& to long(range memory
Knowledge is com&iled in t%e e9&ertAs long(range memory as c%unks< Knowledge
com&ilation or c%unking, enables e9&erts to o&timi5e t%eir memory ca&acity and &rocess
information Fuickly< %unking &romotes e9&ert &erformance< =%e more c%unking a
&erson does, t%e more efficient is %is or %er recall< +o, as a &erson becomes an e9&ert,
more and more of t%e knowledge and e9&erience is com&ressed in oneAs long(range
memory< It is tantamount to storing files on t%e %ard disk w%en not in use<
Knowledge 19ercises
1< 7eo&le do not t%ink in t%e same way as mac%ines, because t%ey are biological<H Do
you agree? 19&lain
a< 0umanlike be%a.ior im&lies t%inking< +ince com&uters can only dis&lay suc% be%a.ior,
t%ey are not t%inking t%ings
b< 0umans are ali.e and reason wit% reality< om&uters %a.e neit%er attribute6 t%erefore,
t%ey cannot t%ink as suc%
c< 0umans %a.e consciousness< =%ey look at o&tions and are conscious of subtle
constraints or t%e immediate en.ironment before t%ey c%oose to mo.e one way or t%e
ot%er< om&uters donAt %a.e suc% freedom, because t%ey are not conscious of t%e
&ossibilities< =%erefore, t%ey donAt t%ink<
d< 0umans rely on commonsense knowledge or intuiti.ely follow a &at% t%at lead to a
solution or a decision< om&uters do not %a.e suc% intelligence< =%erefore, t%ey
cannot t%ink< $or e9am&le@
3 baseball &layer is ready to bat< 3s %e waits, %e looks at t%e &itc%erAs face, re.iews %is
&eers at t%e bases, and t%e layout of t%e ot%er &layers in t%e field< +omet%ing tells %im
t%at t%e &itc%er is going to &itc% a ball t%at will force %im to walk< 4r %e senses t%at
t%e ne9t &itc% will be for real6 so, %eAd better bat< =%is assessment is done in a matter
of seconds< om&uters are now%ere close to t%is le.el of intelligent decision making<
=%erefore, t%ey cannot t%ink<
MouAre on a busy %ig%way< =%ere is a car in front of you tra.eling at t%e same
s&eed< Mou look a%ead and see a slow truck going u& a %ill< +omet%ing tells you t%at
t%e car in front of you is going to &ass t%e truck soon< Mou look at t%e icy conditions
in t%e left lane and t%e last accident you %ad two weeks ago< +omet%ing tells you to
&ass after t%e front car does< om&uters cannot be t%at intuiti.e< =%erefore, t%ey
cannot t%ink<
Mou enroll in &rofessor Dr< 3< Ras%id KausarAs knowledge management course< Mou
%a.e already scanned t%e notes t%e nig%t before< Mou listen to %er re.iew of t%e
syllabus and course reFuirements< 0e %as a re&utation for being a good teac%er, but
toug% w%en it comes to t%e final grade< +omet%ing about t%e tone of %is .oice and t%e
way %eAs setting u& t%e course tells you t%at youAd better enroll in a different electi.e<
om&uters are not t%at intuiti.e< =%erefore, t%ey cannot t%ink<
2< W%at ty&e of knowledge is used in eac% of t%ese acti.ities@
a< tying a s%oelace
b< debugging a com&uter &rogram
c< baking a &ie
d< re&lacing a carAs flat tire
e< negotiating &eace wit% a %ostile country
f< in congested traffic
19&lain eac% classification
a< =y&ing a s%oelace is automatic after a &erson &erforms t%e task a number of times< It
is &rocedural knowledge, in t%at it an understanding of %ow to do a task or a
&rocedure< It is essentially motor in nature
b< Debugging a com&uter &rogram is &retty muc% semantic knowledge, de&ending on t%e
&rogramming language and t%e le.el of com&le9ity of t%e &rogram< !enerally, in
N o&yrig%t >irtual :ni.ersity of 7akistan "1Knowledge Management EM!M=(/#0 >:
&rogramming, debugging knowledge is %ierarc%ically organi5ed knowledge of
relations%i&s among facts< It could also be e&isodic knowledge, in t%at looking at
segments of t%e &rogram, t%e &rogrammer uses &ast e9&erience wit% similar &rogram
segments to determine t%e likely solution to a bug or logical error< In t%is case, it is
e9&eriential information t%at is c%unked by e&isodes
c< )aking a &ie is &rocedural knowledge, if all t%ere is to do is to measure t%e ingredients,
and follow a &rocedure based on a reci&e< If a &ie is de.ised from memory and is
baked using &ast e9&erience wit% similar &ies and constraints suc% as t%ickness,
ingredients Bnumber, consistency, te9ture, etc<C, and t%e si5e of t%e &ie, t%en it is
e&isodic knowledge
d< Re&lacing a carAs flat tire is &rocedural knowledge< It is knowledge of %ow to do a task
t%at is essentially motor in nature< =%e same knowledge is used and again<
e< Negotiating &eace wit% a %ostile country is definitely e&isodic knowledge< =%ink of
former +ecretary of +tate 0enry KissingerAs e9&erience and knowledge in %is s%uttle
di&lomacy to negotiate t%e end of war in >ietnam and &eace in t%e Middle 1ast
between Israel and 1gy&t<
f< in congested traffic is declarati.e, semantic, or e&isodic knowledge, de&ending
on t%e years of e9&erience of t%e< 3 young, ine9&erienced during
t%e rus% %our in a large city would &robably stick to one lane and stay in it all t%e way
%ome< It is safe and &rudent< =%e knowledge used is declarati.e, in t%at it is easily
.erbali5ed and is t%e building block toward semantic knowledge, w%ic% uses e9&erience
to %ierarc%ically organi5e knowledge of facts, &rocedures, and relations%i&s among
facts for im&ro.ed efficiency of na.igating t%roug% congested traffic in t%e future< In
contrast, a seasoned maneu.ers around automobiles across different lanes, si5ing
u& t%e traffic, t%e carBsC a%ead, and accordingly< =%is is referred to as
e&isodic knowledge<
N o&yrig%t >irtual :ni.ersity of 7akistan "2Knowledge Management EM!M=(/#0 >:
-1++4N 1#
DIM1N+I4N+ 4$ 0:M3N KN4W-1D!1, =R11 4$ KN4W-1D!1
ore >s Inno.ati.e Knowledge
0ow do Da&anese com&anies bring about continuous inno.ation? 4ne way is to look outside and
t%e future, antici&ating c%anges in t%e market, tec%nology, com&etition, or &roduct< =%us far t%e
in a world of uncertainty worked in fa.or of Da&anese com&anies, since t%ey were constantly forced
make t%eir e9isting ad.antages obsolete< In fact, t%is trait E t%e willingness to abandon w%at %as
been successful E is found in all successful com&anies, not only t%ose in Da&an< =o t%ese com&anies,
c%ange is an e.eryday e.ent and a &ositi.e force< ontrast t%is mindset, w%ic% became &reoccu&ied
defending t%eir ad.antages and treated c%ange wit% t%e fear t%at t%ere was muc% to lose< =%ey
insular, seeking &redictability and stability<
=imes of uncertainty often force com&anies to seek knowledge %eld by t%ose outside t%e
Da&anese com&anies %a.e continually turned to t%eir su&&liers, customers, distributors,
agencies, and e.en com&etitors for any new insig%ts or clues t%ey may %a.e to offer<
Dust as t%e
&ro.erbial Gdrowning man will catc% at a straw<H =%ese com&anies accumulate knowledge from
outside almost in des&eration during times of uncertainty< W%at is uniFue about t%e way
com&anies bring about continuous inno.ation is t%e linkage between t%e outside is s%ared widely
t%e organi5ation, stored as &art of t%e com&anyAs knowledge base, and utili5ed by t%ose engaged
de.elo&ing new tec%nologies and &roducts< 3 con.ersion of some sort takes &lace6 it is t%is
&rocess E from outside to inside and back outside again in t%e form of new &roducts, ser.ices,
systems E t%at is t%e key to understanding w%y Da&anese com&anies %a.e become successful<
It is
&recisely t%is dual internal and e9ternal acti.ity t%at fuels continuous inno.ation
wit%in Da&anese
com&anies< ontinuous inno.ation, in turn, leads to com&etiti.e ad.antage, as s%own below<

Da&anese com&anies,, %a.e a .ery different understanding of knowledge< =%ey recogni5e
t%e knowledge e9&ressed in words and numbers re&resents only t%e ti& of t%e iceberg< =%ey
knowledge as being &rimarily GtacitH E somet%ing not easily .isible and e9&ressible< =acit
knowledge is
%ig%ly &ersonal and %ard to formali5e, making it difficult to communicate or to s%are wit%
+ubKecti.e insig%ts, intuitions, and %unc%es fall into t%is category of knowledge<
$urt%ermore, tacit
knowledge is dee&ly rooted in an indi.idualAs action and e9&erience, as well as in t%e ideals, .alues,
emotions %e or s%e embraces<
=o be more &recise, tacit knowledge can be segmented into two dimensions< =%e first is t%e
dimension, w%ic% encom&asses t%e kind of informal and %ard(to(down skills or crafts ca&tured in
term Gknow(%ow<H 3 master craftsman, for e9am&le, de.elo&s a wealt% of e9&ertise Gat %is
N o&yrig%t >irtual :ni.ersity of 7akistan "#
Knowledge creation
ontinuous inno.ation
om&etiti.e ad.antageKnowledge Management EM!M=(/#0 >:
after years of e9&erience< )ut %e is often unable to articulate t%e scientific or tec%nical &rinci&les
w%at %e knows<
3t t%e same time, tacit knowledge contains an im&ortant cogniti.e dimension< It consists of
mental models, beliefs, and &erce&tions so ingrained t%at we take t%em for granted< =%e
dimension of tacit knowledge reflects our image of reality Bw%at isC and our .ision for t%e future
oug%t to beC< =%oug% t%ey cannot be articulated .ery easily, t%ese im&licit models s%a&e t%e way
&ercei.e t%e world around us<
=%e distinction between e9&licit knowledge and tacit knowledge is t%e key to
understanding t%e
differences between t%e Western a&&roac% to knowledge and t%e Da&anese a&&roac% to
19&licit knowledge can easily be G&rocessedH by a com&uter, transmitted electronically, or
stored I
databases< )ut t%e subKecti.e and intuiti.e nature of tacit knowledge makes it difficult to &rocess
transmit t%e acFuired knowledge in any systematic or logical manner< $or tacit
knowledge to be
communicated and s%ared wit%in t%e organi5ation, it %as to be con.erted into words or numbers t%at
anyone can understand< It is &recisely during t%e time t%is con.ersion takes &lace E from
tacit to
e9&licit, and, as we s%all see, back again into tacit E t%at organi5ational knowledge is created<
3lt%oug% Western managers %a.e been more accustomed to dealing wit% e9&licit knowledge,
recognition of tacit knowledge and its im&ortance %as a number of crucially rele.ant im&lications<
it rise to a w%ole different .iew of t%e organi5ation E not as mac%ine for &rocessing
but as a organism< Wit%in t%is conte9t, s%aring an understanding of w%at t%e com&any stands
w%ere it is going, w%at kind of a world it wants to li.e in, and %ow to make t%at world a reality
muc% more crucial t%an &rocessing obKecti.e information< 0ig%ly subKecti.e insig%ts,
intuitions, and
%unc%es are an integral &art of knowledge< Knowledge also embraces ideals, .alues, and emotion as
as images and symbols< =%ese soft and Fualitati.e elements are crucial to an understanding of
Da&anese .iew of knowledge<
=%e Da&anese %a.e come to reali5e t%at tacit knowledge cannot be easily communicated to
1.eryone in Da&an would agree t%at +%igeo Nagas%ima, nicknamed GMr< )aseballH in Da&an, is one
t%e greatest baseball &layers of all time< %ad t%e o&&ortunity of meeting %im in &erson, we
%im w%y %e was so successful in rising to t%e occasion and %itting so many game(winning runs in
moments< 0e used a lot of figurati.e language and body mo.ement, but couldnAt e9&lain e9actly
%e meant< 0is words were not .ery logical or systematic< In t%e end, Nagas%ima sim&ly said, GMou
to feel it<H
In fact, t%e most &owerful learning comes from direct e9&erience< 3 c%ild learns to eat, walk, and
t%roug% trial and error6 s%e or %e learns wit% t%e body, not only wit% t%e mind<
+imilarly, managers in Da&an em&%asi5e t%e im&ortance of learning from direct e9&erience as
well as
t%roug% trial and error< -ike a c%ild learning to eat, walk, and talk, t%ey learn wit% t%eir
minds and
bodies< =%is tradition of em&%asi5ing t%e oneness of body and mind %as been a uniFue feature of
Da&anese t%inking since t%e establis%ment of [en )udd%ism< It stands in s%ar& contrast to t%e
be%ind t%e Glearning organi5ation,H in &%rase t%at %as become a conce&tual catc% all of
t%e new
business organi5ation< 7eter +enge B1880C, t%e a&ostle of t%e learning organi5ation, utili5es
t%inkingH to s%ift t%e mind from seeing t%e &arts to seeing t%e w%ole< +ystems t%inking, according
+enge, is a conce&tual framework, a body of knowledge and tools t%at %as been de.elo&ed t%e
*0 years in t%e West to %el& &eo&le see t%e full &attern more clearly< =%e focus of t%e
organi5ation is clearly on learning wit% t%e mind, not wit% t%e body< +enge goes a ste& furt%er and
t%at trial(and(error learning is a delusion, since t%e most critical decisions made in an organi5ation
system wide conseFuences stretc%ing years and decades, a time frame t%at makes learning
direct e9&erience im&ossibility<
=%e second im&lication of tacit knowledge follows naturally from t%e first< 4nce t%e im&ortance of
tacit knowledge is reali5ed, t%en on begins to t%ink about inno.ation in a w%ole new way< It is not
about &utting to et%er di.erse bits of data and information< It is a %ig%ly indi.idual &rocess of
and organi5ational self(renewal< =%e &ersonal commitment of t%e em&loyees and t%eir identity wit%
com&any and its mission become indis&ensable< In t%is res&ect, t%e creation of new knowledge is
muc% about ideals as it is about ideas< 3nd t%at fact fuels inno.ation< =%e essence of inno.ation is
recreate t%e world according to a &articular ideal or .ision< =o create new knowledge means
N o&yrig%t >irtual :ni.ersity of 7akistan "'Knowledge Management EM!M=(/#0 >:
literally to re(create t%e com&any and e.eryone in it in an ongoing &rocess of
&ersonal and
organi5ational self renewal< It is not t%e res&onsibility of t%e selected few(a s&ecialist in researc%
de.elo&ment, strategic &lanning, or marketing E but t%at of e.eryone in t%e organi5ation<
reating new knowledge is also not sim&ly a matter of learning from ot%ers or acFuiring
from t%e outside< Knowledge %as to be built on its own, freFuently reFuiring intensi.e and laborious
interaction among members of t%e organi5ation< New(&roduct de.elo&ment team members at
for e9am&le, %old Gcam& sessionsH at a local %otel a weekend to brainstorm t%roug% a
&roblem or issue< In t%is res&ect, t%e Da&anese a&&roac% is at .ariance wit% t%e
GbestH and
Gbenc%markingH &ractices carried out at com&anies like !1, 3=L=, and Rero9 t%at are
bent on
learning from ot%ers<
=wo Dimensions of Knowledge reation
3lt%oug% muc% %as been written about t%e im&ortance of knowledge in management, little
%as been &aid to %ow knowledge is created and %ow t%e knowledge(creation &rocess is managed< In
section we will de.elo& a framework in w%ic% traditional and nontraditional .iews of knowledge
integrated into t%e t%eory of organi5ational knowledge creation< 4ur basic framework
of %uman
knowledge contains two dimensions(e&istemological and ontological
-et us start wit% t%e ontological dimension< In a strict sense, knowledge is created only by
3n organi5ation cannot create knowledge wit%out indi.iduals< =%e organi5ation su&&orts
indi.iduals or &ro.ides conte9ts for t%em to create knowledge< 4rgani5ational knowledge
t%erefore, s%ould be understood as a &rocess t%at ]organi5ationally] am&lifies t%e knowledge
created by
indi.iduals and crystalli5es it as a&art of t%e knowledge network of t%e organi5ation< =%is &rocess
&lace wit%in an e9&anding ]community of interaction,] w%ic% crosses intra( and inter(
le.els and boundaries<
3s for t%e e&istemological dimension, we draw on Mic%ael 7olanyiOs B18//C distinction between
knowledge and e9&licit knowledge< =acit knowledge is &ersonal, conte9t(s&ecific, and t%erefore
%ard to
formali5e and communicate< 19&licit or ]codified] knowledge, on t%e ot%er %and, refers to
t%at is transmittable in formal, systematic language 7olanyiOs argument on t%e
im&ortance of tacit
knowledge in %uman cognition may corres&ond to t%e central argument of !estalt &syc%ology ,
%as asserted t%at &erce&tion is determined in terms of t%e way it is integrated into t%e o.erall &attern
!estalt<, w%ile !estalt &syc%ology stresses t%at all images are intrinsically integrated,
contends t%at %uman beings acFuire knowledge by acti.ely creating and organi5ing
t%eir own
e9&eriences< =%us, knowledge t%at can be e9&ressed in words and numbers re&resents only t%e ti&
t%e iceberg of t%e entire body of knowledge< 3s 7olanyi B18//C &uts it, ]We can know more t%an we
tell] <
In traditional e&istemology, knowledge from t%e se&aration of t%e subKect and t%e obKect
&erce&tion6 %uman beings as t%e subKect of &erce&tion acFuire knowledge by analy5ing e9ternal
In contrast, 7olanyi contends t%at %uman beings create knowledge by wit%
obKects, t%at is, t%roug% self(in.ol.ement and commitment, or w%at 7olanyi called
]indwelling<] =o
know somet%ing is to create its image or &attern by tacitly integrating &articulars< In order to
t%e &attern as a meaningful w%ole, it is necessary to integrate oneOs body wit% t%e &articulars<
indwelling breaks t%e traditional dic%otomies between mind and body, reason Oand emotion, subKect
obKect, and knower and known< =%erefore, scientific obKecti.ity is not a sole source of knowledge<
of our knowledge is t%e fruit of our own &ur&oseful endea.ors in dealing wit% t%e world<
W%ile 7olanyi argues t%e contents of tacit knowledge furt%er in a &%iloso&%ical conte9t,
it is also
&ossible to e9&and %is idea in a more &ractical direction< =acit knowledge includes
cogniti.e and
tec%nical elements< =%e cogniti.e elements center on w%at Do%nson(-aird B182#C calls ]mental
in w%ic% %uman beings create working models of t%e world by making and mani&ulating analogies
t%eir minds< Mental models, suc% as sc%emata, &aradigms, &ers&, beliefs, and, .iew&oints,
indi.iduals to &ercei.e and define t%eir world< 4n t%e ot%er %and, t%e tec%nical element
of tacit
knowledge includes concrete know(%ow, crafts, and skills< It is im&ortant to note %ere t%at t%e
elements of tacit knowledge refer to an indi.idualOs images of reality and .isions for t%e future, t%at
]w%at is] and ]w%at oug%t to be<] 3s will be discussed later, t%e articulation of tacit mental models,
in a
kind of ]mobili5ation] &rocess, is a key factor in creating new knowledge<
N o&yrig%t >irtual :ni.ersity of 7akistan "*Knowledge Management EM!M=(/#0 >:
Knowledge of e9&erience tends to be tacit, &%ysical, and subKecti.e, w%ile knowledge of rationality
to be e9&licit, meta&%ysical, and obKecti.e< =acit knowledge is created ]%ere and now] in a
&ractical conte9t and entails w%at )ateson B18"#C referred to as ]analog] Fuality<
+%aring tacit
knowledge between indi.iduals t%roug% communication is an analog &rocess t%at reFuires a kind
]simultaneous &rocessing] of t%e com&le9ities of issues s%ared by t%e indi.iduals< 4n t%e ot%er
e9&licit knowledge is about &ast e.ents or obKects ]t%ere and t%en] and is oriented toward a conte9t(
t%eory< It is seFuentially created by w%at )ateson calls ]digital] acti.ity<
Knowledge on.ersion;reation@ Interaction )etween =acit and 19&licit Knowledge
Westerners tend to em&%asi5e e9&licit knowledge, t%e Da&anese tend to stress tacit knowledge< In
.iew,, tacit knowledge and e9&licit knowledge are not totally se&arate but
com&lementary entities< =%ey interact wit% and interc%ange into eac% ot%er in t%e creati.e acti.ities
%uman beings< 4ur dynamic +1I model of knowledge creation is anc%ored to a critical
t%at %uman knowledge is created and e9&anded t%roug% social, interaction between tacit knowledge
e9&licit knowledge< We call t%is interaction ]knowledge con.ersion<] It s%ould be noted
t%at t%is
con.ersion is a ]social] &rocess between indi.iduals and not confined wit%in an indi.idual<
to t%e rationalist .iew, %uman cognition is a deducti.e &rocess of indi.iduals, but an indi.idual is
isolated from social interaction w%en %e or s%e & t%ings< =%us, t%roug% t%is ]social
&rocess, tacit and e9&licit knowledge e9&and in terms of bot% Fuality and Fuantity BNonaka, 1880bC<
N o&yrig%t >irtual :ni.ersity of 7akistan "/Knowledge Management EM!M=(/#0 >:
-1++4N 1'
DIM1N+I4N+ 4$ 3ND M:-=I7-1 >I1W+ 4$ KM IN 4R!3NI[3=I4N+
Knowledge %as become t%e &reeminent economic resource(more im&ortant <t%an raw material6
more im&ortant, often, t%an money, onsidered as an economic out&ut, Information and
knowledge are more im&ortant t%an automobiles, oil, steel, or any of t%e &roducts of t%e
industrial 3ge<,
In todayOs Information 3ge economy, knowledge is increasingly regarded as t%e &reeminent
to .alue creation across industrial and landsca&es< =%e collection of information %as always
of interest and .alue <to com&anies<, it is t%e emergence of tools t%at enable com&anies to
manage and le.erage t%eir information and knowledge in meaningful ways t%at %as
re.olutionary c%ange in t%e way knowledge is regarded< :nfortunately, t%e ability to
manage and
le.erage knowledge %as led to a &roliferation of knowledge management a&&roac%es,
tools,, definitions, and &rocedures< =%is &roliferation %as created confusion and
com&anies from reac%ing t%eir desired destination<
Knowledge Management
om&anies in a wide .ariety of industries %a.e launc%ed knowledge management<
to leading &ractitioner in t%e field t%e &otential im&act of knowledge management on t%e national
global economy is immense< International Data or&oration ^IDC t%at t%e market im&act
knowledge management will be analogous to t%at of t%e Internet< =%e firm makes t%e following
J Knowledge management will be a catalyst for many il1formationtec%nology BI=C &roduct and markets<
J Knowledge management will allow com&anies to establis% e9clusi.e market nic%es<
J Knowledge management will be an integral en%ancement for many e9isting offerings<
=%ere is agreement on some of t%e &rinci&al difficulties associated wit% designing and
knowledge management &ractices@
J ulture c%ange can be &ainful and e9ce&tionally slow<
J In.estment in necessary tools can be tenuous, incremental<
J Knowledge management is a %ig%(le.el solution sell<
J 3 wall of confusion about knowledge measurement in%ibits growt%<
=%is last &oint is &er%a&s t%e most daunting< Most &ractitioners of knowledge management
%a.e focused on Fualitati.e issues6 few %a.e em&loyed reliable measure merit tools or a&&lied
Fuantitati.e analysis to t%e clientsO &rocesses<
Regardless of t%e difficulties, com&anies are beginning to reali5e t%e e9traordinary benefits t%at can
gained from t%e im&lementation of knowledge management &ro( grams< $or e9am&le,
%rysler, $ord, and !eneral Motors all %a.e aggressi.e knowledge management under
7etroleum and c%emical com&anies 3moco, Dow, and Monsanto are im&lementing
management &ractices< om&anies as di.erse as %ealt% care com&any olumbia;03 0ealt%care
and clot%ing maker $ruit of t%e -oom, -td<, %a.e embraced t%e mo.ement<
Knowledge management offers o&&ortunities for com&anies to@
J a&ture and analy5e cor&orate information and a&&ly it strategically in t%e form of
ware%ousing and data mining, decision su&&ort systems, and e9ecuti.e information systems<
N o&yrig%t >irtual :ni.ersity of 7akistan ""Knowledge Management EM!M=(/#0 >:
J reate &rocesses for worldwide access to information, enabling em&loyees to make faster, more
informed, and better decisions t%roug% intranets, grou&ware, and grou& decision
J -e.erage t%e accumulated knowledge of &ast e9&eriences across t%e com&any< <De.elo& and
com&lete &roKects wit% im&ro.ed s&eed, agility, and safety<
Knowledge Management 3nd >alue reation
om&anies making t%e in.estment in knowledge management can reali5e %uge bottom line
=%ose neglecting to do so can suffer tremendous costs in terms of lost re.enues,
customers, and
markets< onsider t%e significant tangible benefits reali5ed by t%e following com&anies@
J %e.ron reali5ed a P1"0 million annual sa.ings by &ooling and s%aring knowledge t%at %ad
been scattered and locali5ed in .arious offices around t%e world< 4ne team sa.ed P<1*0 million
by s%aring ways to reduce t%e use of electric &ower and fuel< 3not%er team sa.ed
P20mi<11ionbycom&aringdata on gas com&ressors<
J Dow %emical increased its annual<1icensing re.enues by P100 million by
managing its &atents arid licenses<
Knowledge Management
19ternal structure Internal structure om&etency
!ain knowledge from
)uild knowledge(s%aring
reate careers based on
knowledge management
4ffer customers additional
reate new re.enues from
e9isting knowledge
a&ture indi.idualsA tacit
knowledge, store it, s&read it,
and reuse it<
Measure knowledge(creating
&rocesses and intangible assets<
reate microen.ironments for
tacit knowledge transfer<
om&anies@ )enetton, !eneral
1lectric, National )icycle,
Netsca&e, Rit5 arlton, 3gro
or&<, $rito(lay, Dow %emical,
+kandia, +teelcase
om&anies6 #M, 3nalog
De.ices, )oeing, )uckman
-abs, %a&arral +teel, $ord
Motor o<, 0ewlett(7ackard,
%e.ron, )ritis% 7etroleum,
=elia, elemi, +kandia
om&anies@ )uckman -abs,
I)M, 7fi5er, 0ewlett(7ackard,
0onda, Rero9, National
=ec%nological :ni.ersity,
It is clear t%at knowledge management is emerging as t%e critical strategic acti.ity< :nfortunately, it
also clear t%at a consolidated a&&roac% to inter&reting, im&lementing, and a&&lying
management &rinci&les %as yet to emerge< Knowledge management s%ould be seen as a remedy
earlier attem&ts at ]reengineering] rat%er t%an its latest .ersion< Knowledge managementOs
focus on
identifying and ma9imi5ing knowledge .alue creation stands in s%ar& contrast to t%e ]slas%(and(
tec%niFues associated wit% many reengineering strategies< Indeed, many of t%e reengineering efforts
com&anies %a.e led to downsi5ing efforts t%at %a.e actually cut %uge swat%s out of t%e knowledge
of t%ese com&anies< Many are now struggling to re&air t%e damage t%at resulted<

=%e +tate 4f Knowledge Management
Researc% into knowledge management re.eals interesting anecdotal e.idence and .aried
literature on
current met%odologies, tec%niFues, tools, and case studies<
J Numerous and conflicting definitions of knowledge management
J Wide di.ersity of im&lementation strategies wit% many com&anies in dis&arate
engaged in knowledge management<
J No com&re%ensi.e understanding of t%e best tec%niFues for designing and launc%ing
knowledge management<
N o&yrig%t >irtual :ni.ersity of 7akistan "2Knowledge Management EM!M=(/#0 >:
J >ery few detailed case studies of cor&orate e9&eriences Wit% knowledge management
know ledge ga&s<
J Restricted access toinforn1ation on %ow com&anies %a.e resol.ed s&ecific &roblems6 t%is is
&rimarily a.ailable at industry conferences on knowledge management<
J 3d %oc and non(com&re%ensi.e discussion of t%e tec%niFues for measuring t%e .alue of
knowledge management
J :nclear links between knowledge asset utili5ation and financial results< !eneral
about t%e difference between information and knowledge management<
W%y is Knowledge Management Im&ortant?

Knowledge management is crucial because it &oints t%e way to com&re%ensi.e and
understandable management and &rocedures< W%en com&anies fail to utili5e tangible
t%ey suffer t%e economic conseFuences, and t%is failure is clearly to markets and
alike< 3lt%oug% knowledge assets are %arder to Fuantify, t%ey are Kust as critical for t%e
long(term and growt% of t%e com&any<
We belie.e t%at success in todayOs com&etiti.e market&lace de&ends on t%e Fuality of knowledge
knowledge &rocesses t%ose organi5ations a&&ly to key business acti.ities< $or e9am&le, ma9imi5ing
efficiency of t%e su&&ly c%ain de&ends on a&&lying knowledge of di.erse areas suc% as raw
sources, &lanning, manufacturing, and distribution< -ikewise, &roduct de.elo&ment reFuires
of consumer reFuirements, recent scientific de.elo&ments and new tec%nologies, and marketing<
De&loyment of t%e knowledge assets to create com&etiti.e ad.antage becomes e.en more crucial
J =%e market&lace becomes increasingly com&etiti.e and t%e rate of inno.ation continues to rise6
knowledge must e.ol.e and be assimilated at an faster rate<
J or&orations BreCorgani5es business units to create customer .alue, and staff and management
functions are redirected< 3s a result, t%ere is a strong &us% to re&lace inforn1alstaff&olicies wit%
formali5ed met%ods to align &rocesses wit% customers<
J om&etiti.e &ressures reduce t%e si5e of t%e workforce t%at %olds cor&orate knowledge< =%ese
&ressures include increased em&loyee mobility and early retirement, and t%ey all lead to a loss of
cor&orate knowledge<
J 1m&loyees %a.e less and less unstructured time in w%ic% to acFuire knowledge<
J =ec%nologies increase com&le9ity by allowing small o&erating com&anies to link wit% su&&liers
into transnational sourcing o&erations<
Restructuring often results in c%anges in strategic direction and in t%e loss of knowledge in
functional areas< +ubseFuent re.ersals may create demand for t%e lost knowledge, but t%e
em&loyees wit% t%at knowledge maybe long gone< 1ffecti.e knowledge management can
eliminate t%e need for drastic restructurings as t%ey %el& com&anies e.ol.e wit% t%e c%anging
en.ironment< =%ey can also %el& ca&ture knowledge assets t%at would ot%erwise be
lost due to
necessary restructurings, retirement, and de&arting em&loyees< =%is in turn can result in
re.enues, increased customer satisfaction and loyalty, en%anced com&etiti.e standing, and t%e
ability to
res&ond easily to c%anging market conditions< In t%is sense, knowledge management is as critical
com&anies in t%e Information 3ge as t%e assembly line and &roduction management were
in t%e
Industrial 3ge<
7ractical 7rinci&les for Managing Knowledge
=%eorists and &ractitioners alike are struggling to find a common set of &rinci&les
to a&&ly in
successfully managing knowledge< 7rinci&les %a.e been categori5ed according to %ow to
collaborate, disseminate, reuse, embed, store, monitor, and measure knowledge to meet a
.ariety of
organi5ational goals< =%e &rinci&les %a.e been deri.ed from &ractice, t%eory, and .arious
of t%e two<
=%e following list is by no means e9%austi.e or generally agreed u&on<, t%e &rinci&les
basic guidance for t%ose attem&ting to de.elo& new ways of managing knowledge assets<
N o&yrig%t >irtual :ni.ersity of 7akistan "8Knowledge Management EM!M=(/#0 >:
knowledge, de&loying knowledge in information tec%nology, and monitoring and measuring
assets are t%e &laces w%ere knowledge management &rinci&les can be &ractically a&&lied<
ustomer Knowledge
=%e first set of &rinci&les aims to lower transaction costs, increase t%e .olume of
transactions, and
im&ro.e customer satisfac1ion< =%ese outcomes are accom&lis%ed by embedding customer
and fail(safeing t%e transaction &rocess<
1< Identify t%e knowledge t%at customers really .alue and make sure it is de&loyed in &roducts,
and self( o&&ortunities<
$ollowing t%is &rinci&le would lead t%e manager to ask %ow muc% knowledge a customer em&loys
com&leting a transaction wit% t%e com&any< $or e9am&le, an ]e(tailer] suc% as e=oys %as created
transaction &rocess w%ere t%e customer .isits t%eir web site and uses t%e com&any Web interface
a desired toy, seek suggestions, find out w%at ot%ers %a.e &urc%ased, or to re.iew t%e com&anyOs toy
)y .isiting t%e com&any website, t%e customer becomes a&art of t%e transaction &rocess by
t%e knowledge embedded ill com&any sales, order, &ro.isioning, and &roduction software<
=%e customer(acti.ated knowledge costs t%e com&any ne9t to not%ing, as1ongas t%e
site is well
designed< osts are incurred only if t%e site interface is so bad t%at customers make errors reFuiring
%uman inter.ention in t%e form of call center su&&ort, rework wit% su&&liers, system failures, or bad
debt collection< 3 site wit% a robust tec%nology &lat form also allows a .ery large number of
to com&lete transactions at t%e same time< =%e benefits of customers acti.ate
&rocess knowledge, cost sa.ings, and <.irtually unlimited transaction ca&acity are &ossible only
w%en t%e
customer interlace &re.ents t%em from making errors and is so a&&ealing to t%e
customer t%at
customers will return time and time again<
=o &re.ent customer induced errors, com&any interfaces must facilitate customersO self(
generating errors< 4ne met%od is to use t%e notion of ]e(7oke( Moke<] =%e conce&t of
&roofing or 7oke( Moke originated in Da&anese manufacturing &ractice, and Dick %ase ada&ted
&rinci&les and &ractices for t%e sector< ]Mistake(&roofing is a &owerful and
met%od for eliminating mistakes and defects, ensuring Fuality &roducts and ser.ices6]
Many e(tailer com&any interfaces are neit%er knowledge intensi.e nor customer enticing< =%ey
force t%e
customer to use t%e same amount of knowledge reFuired for a standard transaction wit% a brick(
mortar retailer<, su&erior interfaces t%at embed customer knowledge wit%in t%e
&rocess on a &ersonali5ed basis can 1ead to faster and more satisfying transactions< !i.e t%e sad(
state of
sales and customer su&&ort at many traditional retailers, t%e e(tailers %a.e an o&&ortunity to
3&&lying t%e customer(knowledge(embedding &rinci&le reFuires interfaces t%at make ma9imum
use of
customer knowledge in com&leting t%e transaction &rocess< +e.eral &oints to consider in
designing a
su&erior customer interface include@
J =%e time an a.erage customer is willing to s&end acti.ating transaction knowledge<
J =%e amount of knowledge a customer will em&loy before losing interest<
J 0ow muc% .alue is added eac% time t%ey e9ecute knowledge<
=%e goal %ere is to find t%e o&timal u&&er and lower limits wit%in t%ese constraints and de.elo&
interface t%at@
J Reduces t%e time a customer needs to com&lete t%e transaction &rocess<
J Reuses a customerOs knowledge by embedding it in t%e transaction &rocess<
J 1nsures t%at .alued <is added for t%e customer eac% time t%ey e9ecute knowledge in
transaction &rocess<
N o&yrig%t >irtual :ni.ersity of 7akistan 20Knowledge Management EM!M=(/#0 >:
+uccessful embedding of customer knowledge in more &ersonali5ed interfaces will reduce t%e
reFuired to com&lete t%e transaction &rocess< =%e ongoing acFuisition and embedding of
knowledge will also create a ]learning] interface1%atwill continually be &ersonali5ed for eac%
3 furt%er ste& ill &ro.iding customer .alue occurs w%en customers can com&are t%eir
be%a.ior to t%at of ot%ers< =%ese o&&ortunities for social com&arison meet customersO
needs for
re.iewing t%eir decisions, gaining su&&ort for t%eir decisions, seeking, and maintaining
in t%eir &ercei.ed social grou&s<
=%e social com&arison is facilitated by t%e use of collaborati.e filters, w%ic% com( &are user in&ut
t%at of ot%er users< $or e9am&le, ratings and D &urc%ases can be tabulated to
com&osite scores and recommend &urc%ases of &o&ular items@ suc% decision(su&&ort ca&abilities
into com&any interfaces increases t%eir &ercei.ed .alue for customers<

7ersonali5ed knowledge may be obtained from customers during t%eir introductions to t%e interface
J 7ro.iding some ty&e of financial, suc% as lower &rices or discounts<
J :sing Web(based client( tec%nologies to track browser be%a.ior<
=%e benefits of incor&orating customer knowledge .ia t%e com&any interface are many@
J ustomer &erce&tion of more control t%e transaction &rocess<
J loser bonding wit% customers<
J -ower com&any transaction costs<
J !reater .olume of transactions &er time &eriod<
3&&ealing interfaces em&ower customers to do as muc% self( as &ossible< =%e key to success
building interfaces, electronic and %uman, t%at de&loy as muc% knowledge as customers need and
to make t%e transaction &rocess satisfying<
2< Make sure t%e customer &roduct descri&tion and com&any descri&tion are as close as &ossible<
ustomers e9&ect t%at &roducts and ser.ices will matc% t%eir descri&tions< Know based descri&tions
be used to ensure t%at t%ey are deli.ered as s&ecified< =%e knowledge reFuired to &roduce t%e
or can be used to ensure t%at customer &ro.iders %a.e t%e same &roduct descri&tion<
=%is is es&ecially true for business(to(business transactions@ 4utsourcing decisions are common,
decisions are &redicated on t%e belief t%at t%e outsourced li.ered as s&ecified<
+imilarly, customers use lists of ingredients, fat content, and calories &er, certifications, and
fort% as guides for t%at t%ey are getting a food &roduct as s&ecified< )rand names often
as a surrogate for &roducts and ser.ices t%at %e customerOs e9&ectations and t%e knowledge reFuired
make t%em< time, customers %a.e become more discerning and look for more t%an brand names< $or
&roducts and ser.ices t%at are assumed to be of %ig% Fuality customer e9&ectations for &erformance time< !i.en t%at it takes more edge to build a %ig%(Fuality t%an a low(Fuality &roduct or,
t%ere s%ould be a difference in t%e descri&tion of eac%< om&anies can use t%is &rinci&le to guide
ad.ertising, reFuirements for outsourcers, and &roduction &rocesses to ensure t%e knowledge
to &roduce a %ig%(Fuality &roduct; %as actually been a&&lied<
!etting tec%nology to do t%e work of %umans %as been t%e 0oly !rail of t%e Information
Deciding w%at %uman work to mo.e to information tec%nology %as been debated
since t%e
introduction of com&uters in t%e early 18*0s< We belie.e t%e essence of t%e &roblem is deciding
%uman knowledge to de&loy in information tec%nology BI=C< In general t%e more
com&le9 t%e
knowledge is, t%e %arder it is to de&loy in I=< knowledge assets to I= offers a %ost of ad.antages if two basic &rinci&les are followed<
1< Mo.e sim&le, &rocedural knowledge t%at is em&loyed freFuently to I=<
N o&yrig%t >irtual :ni.ersity of 7akistan 21Knowledge Management EM!M=(/#0 >:
=%e focus of early automation efforts followed t%is &rinci&le as com&anies de.elo&ed file(
systems to do muc% of t%e tedious work in accounting, billing, and basic manufacturing< +ince
knowledge is em&loyed freFuently and follows .ery s&ecific, well(defined rules, it to I=
com&anies to dramatically lower t%e cost &eruse of t%e know ledge<
I= systems %a.e ad.anced time, making it easier to embed &rocedural knowledge t%at is
freFuently< =%e latest attem&t to follow t%is &rinci&le can be found in enter&rise resource
B1R7C software from com&anies suc% as +37, 7eo&le( +oft, )aan, DD 1dwards, and 4racle<
systems %a.e succeeded largely w%ere t%ey %a.e stuck to t%is &rinci&le< =%ey %a.e fallen down
t%ey %a.e attem&ted1o tackle more com&le9 knowledge or knowledge t%at is used infreFuently<
e9am&le, attem&ts to use an 1R7 system at 0ewlett(7ackard -abs failed largely because t%e
attem&ted to embed engineering knowledge<2 +e.eral studies on No.a or&oration and )74
t%at attem&ts to automate sim&le knowledge t%at was used infreFuently resulted in costs
t%at far
e9ceeded t%ose of t%e knowledge in%uman o&eratorsO %eads and %ands<
2< a&ture and embed knowledge in I= t%at is .olatile and mig%t be lost w%en em&loyees lea.e
t%e com&any<
W%en em&loyees lea.e a com&any, t%ey often take wit% t%em knowledge t%at is critical to
smoot% o&erations< It may not be &ossible to always ca&ture com&le9 are at t%e mercy of t%eir
em&loyees w%ose %eads contain t%e kind of com&le9 knowledge necessary to build and grow a
&latform t%at will allow t%e com&any to ra&idly e9&and<
In one case, <t%e business de.elo&ment e9ecuti.e of an Internet start(u& com&any described %is
for dealing wit% t%is issue as ]a knowledge redundancy strategy@ <two key1ec%nical em&loyees for
key tec%nical Kob<] 0is com&any %ired two em&loyees for e.ery area w%ere critical tec%nical
was reFuired, !i.en .enture ca&italistsO demands for nearly immediate and continued growt%,
failure was not allowable< =%is is a rational a&&roac% because suc% com&le9 knowledge is not ill
su&&ly in t%e em&loyment market&lace and is nearly im&ossible to embed in I=<, t%e
management reali5ed t%at its long(term sustainability de&ends on ca&turing and embedding
tec%nical knowledge in less .olatile forms suc% as I= and is currently to do so<
=%e field of artificial intelligence su&&orts t%is general &rinci&le and %as s&awned e9&ert systems
neural networks< Many of t%e earliest commercial attem&ts to embed com&le9 knowledge in I=
were based on w%at would be lost w%en ]e9&erts] in well(defined areas retired or left t%e
Neural networks use an inducti.e a&&roac%, learning from t%e &atterns t%at e.ol.e from t%e
of Fuasi( animate obKects suc% as electronic ant colonies<
!rou&ware systems %a.e attem&ted to ca&ture critical com&le9 knowledge assets so t%at t%ey can
inde9ed and reused by ot%ers in a com&any<< Many of t%e large consulting firms suc%
as 3rt%ur
3ndersen and 1rnst L Moung use grou&ware systems like -otus Notes for Kust t%is &ur&ose< 1rnst
LMoung %as a system named 1rnie t%at allows clients to ]ask 1rnie] w%en t%ey confront &roblems relati.ely com&le9 consulting knowledge, be used for a .ariety of s&ecific tasks< 3
.ariety of
suc% agents embed knowledge used to meet s&ecific goals and are re.iewed in %a&ter
3s information tec%nology ad.ances allow for greater embedding oBcom&le9 %uman knowledge,
will &ro.ide a way to ca&ture and reuse critical em&loyee knowledge<, until someone
t%e algorit%m for creati.ity, it is unlikely t%at all em&loyee knowledge will be amenable to
embedding in
Monitoring and Measuring Knowledge
=%e basic goal for monitoring knowledge is to determine6 %ow well it is &roducing .alue in
&rocesses< =%is reFuires following t%e use of knowledge t%roug%out an 4rgani5ationOs core
and its interactions wit% t%e market&lace< 3s an organi5ation interacts wit% its
customers and
com&etitors, it can learn w%at works and doesnOt work< It learns from its customers w%at &roducts
ser.ices are .alued because customers are willing to &ay for t%em< It also learns t%at its com&etitors
not far be%ind< =%is learning must be transformed into actionable acti.ities wit%in core &rocesses to
de.elo& and &roduce e.ermore a&&ealing &roducts and ser.ices< =%e rate at w%ic% t%is knowledge
N o&yrig%t >irtual :ni.ersity of 7akistan 22Knowledge Management EM!M=(/#0 >:
be transformed into cor&orate core &rocess knowledge will determine %ow Fuickly .alue is
t%roug% t%e offering of new &roducts and ser.ices<

1< 3ccelerate t%e learning(knowledge(.alue cycle t%roug% monitoring of t%e
+elf(organi5ing a&&roac%, w%ic% differs from Industrial 3ge command(and(control
Interfaces can be used to elicit direct comment from customers about com&any &roducts and
Running tallies of sales and customer comments can be mined to inter&ret res&onses
from t%e
market&lace< =%ese acti.ities usually su&&ort e.olutionary de.elo&ments< Researc% and
efforts to create ]truly new] &roducts and ser.ices reFuire more com&le9 analysis and synt%esis
market res&onses to com&any offerings<
=ransforming t%ese learnings into core &rocess knowledge must also be monitored< $ortunately,
t%ere is
software a.ailable to monitor an enter&rise and %ow well it transforms learnings into core
&erformance Bsee, for e9am&le, 1nter&rise +trategist and t%e monitoring(learning tool
suite from
Intelligent +ystems =ec%nology, Inc<C< =%ese software suites allow management to determine %ow
.alue new knowledge &roduces w%en embedded in core &rocesses<
=%is knowledge monitoring &rinci&le reFuires cor&orate management to go beyond t%e traditional
of ]build it and t%ey will come<] Management must accelerate t%e &ace at w%ic% t%ey embed
market&lace learnings wit%in t%eir core &rocesses< 3nd, t%ey must go a ste& furt%er and determine
.alue t%e introduction of t%is new knowledge &roduces< If embedding does not &roduce good return
t%e new knowledge, t%en management %as done a &oor Kob of synt%esi5ing learnings
from <t%e
market&lace or t%e market&lace %as c%anged, making t%e new embedded knowledge less .aluable<]
onducting acknowledge(ga& assessment aids management in determining t%e ga&s in
know ledge
necessary for current o&erations< =%e assessment can identify know ledge assets t%at will be
reFuired to
&roduce future .alue< ombining t%e conce&ts of sense, monitor and res&ond wit% a knowledge(
assessment will %el& management identify t%e most &romising knowledge for embedding
in core
2< Identify e9isting and future knowledge ga&s<
Monitoring t%e learning(knowledge(.alue cycle will re.eal ga&s ]in current &erformance< 7lanning
future &roducts and ser.ices will re.eal ga&s in knowledge reFuired to &roduce t%ese future
and ser.ices<
or&orations must draw on t%e ]knowledge market &lace] to fill its current and future ga&s< =%e
ste& is to identify t%ese ga&s in t%e cor&orate knowledge &ortfolio, and t%e knowledge(ga&
assessment is
a &owerful met%od for identifying t%e ga&s<
J )egin wit% a definition or ma&&ing of core &rocesses interns of t%e knowledge reFuired to
conduct normal o&erations<
J Make a list of t%e knowledge &otential not currently in use wit%in t%e core &rocesses<
J Make a list of t%e knowledge no longer necessary to successfully generate t%e out&uts<
J -ist t%e kinds of knowledge t%e com&any will need in t%e future to meet its long(and s%ort(
term goals<
J om&are t%e current knowledge assets de&loyed in t%e &rocesses and identify t%e ga&s between
t%is and t%e unta&&ed knowledge &otential currently a.ailable and future knowledge reFuired to
meet new market demands<
=%is sim&le ga& analysis moti.ates managers to recogni5e t%e unta&&ed intellectual ca&ital residing
t%eir em&loyees as well as t%e contributions of e9isting information tec%nology< =%e results &ro.ide
framework for de.elo&ing t%e reFuirements for u&grades or re&1acements<
1n%ancing, maintaining, and acFuiring knowledge assets to fill knowledge ga&s is one of
most significant duties< =%e basic ste&s to follow in filling and maintaining knowledge assets are@
N o&yrig%t >irtual :ni.ersity of 7akistan 2#Knowledge Management EM!M=(/#0 >:
J -ist t%e met%ods to maintain t%e current le.el of knowledge assets de&loyed< <
J -ist t%e met%ods to remo.e t%e know ledge t%at is no longer needed<
J -ist t%e met%ods to narrow or remo.e t%e ga&s in knowledge needed and knowledge assets
currently a.ailable<
J -ist current strategies for knowledge maintenance and acFuisition t%roug% %iring,
outsourcing, information systems, and work rules<
$illing knowledge ga&s and maintaining current .aluable knowledge assets can in.ol.e t%e
information systems, %uman resources, and strategy areas, as well as t%e s&ecific core &rocess
affected< 3s wit% any &ortfolio decision, t%ere are multi&le interde&endent outcomes< $or
embedding critical knowledge in I= in an u&stream &rocess may &roduce bottlenecks in
&rocesses t%at %a.e not been u&graded< =%ese interde&endencies can be e9amined wit% work(
software before making final decisions reFuiring significant in.estment<
#< Identify t%e best &ractices for embedding knowledge in I=, &eo&le, and &rocesses<
)est &ractices ill knowledge management %a.e been benc%marked by t%e 3merican 7roducti.ity
Iuality enter and at 3rt%ur 3ndersen and are a.ailable in .arious forms from bot% organi5ations<
'< Measure t%e .alue(added by knowledge to create an internal market&lace<
=%is &rinci&le can be followed best by creating a sim&le accounting system to monitor
utili5ation< =%e knowledge accounting system s%ould allow managers to establis% a &rice and cost
unit of knowledge< =%e &rice and cost must be tied directly to com&aniesO normal financial
measures suc% as R4I, cas% flow, and earnings &er s%are< =%is &rinci&le &ro.ides management
feedback about %ow well t%ey are managing t%e learning knowledge(.alue cycle< 7ro.iding &rice
cost &er unit of knowledge will lead to new &erformance ratios suc% as
J Knowledge in use com&ared to knowledge in in.entory<
J =otal knowledge com&ared to amount reused<
J Knowledge in &eo&le com&ared to knowledge in I=<
+uc% measurement systems, w%en ado&ted by t%e accounting community, will lead to better
for in.estors in com&anies wit% large market ca&itali5ation based on intangible assets
contained in
intellectual ca&ital<
Iuestions $or Re.iew
1< W%y is knowledge management e9&ected to %a.e suc% a significant im&act on business? Do
you agree or disagree wit% t%e book on t%is issue? W%y?
2< W%at is missing from t%e knowledge management to make t%em successful in t%e
Internet market&lace?
#< W%at are some of t%e general guidelines for de.elo&ing a knowledge management strategy?
'< W%at is t%e need for suc% a strategy?
*< 0ow s%ould t%e relations%i& between customer and transaction knowledge guide t%e
de.elo&ment of a knowledge management strategy?
/< W%at are some general &rinci&les for knowledge into information tec%nology?
"< 0ow can you Kustify t%e knowledge to information tec%nology?
2< W%at are t%e benefits of monitoring and measuring knowledge usage?
+=:DM@ =%e Distance -earning ase
=aken toget%er, &ublic and &ri.ate colleges and uni.ersities in t%e :nited +tates com&rise a P200
industry w%ere knowledge is for sale< =%roug%out t%e 20t% century, t%ese institutions %ad
difficulty economies of scale< =%e number of students ser.ed by an indi.idual faculty member
sc%ool a.eraged 20(to(1 &er class taug%t, a ratio enforced by si5e limitations of classrooms,
resistance to grading larger numbers of tests and &a&ers, and t%e desire for smaller
classes and
indi.iduation of learning on t%e &art of students and &arents<
N o&yrig%t >irtual :ni.ersity of 7akistan 2'Knowledge Management EM!M=(/#0 >:
=o ac%ie.e com&etiti.e ad.antage, institutions &ursued .arious strategies, including
%iring famous
faculty as an inducement for student enrollment, &ouring resources into %ig%(interest
fields Be<g<,
com&uter scienceC and canceling low(interest &rograms Be<g<, -atinC, sc%eduling classes at
times and
&laces conduci.e to student life, farming(alumni resources more assiduously, and ma9imi5ing
name recognition and re&utation t%roug% nationally ranked s&orts teams<
Due to t%e &er.asi.e tenure system, most colleges and uni.ersities do not %a.e t%e o&tion of ]rig%t(
si5ing] by firing e9&ensi.e senior faculty to %ire ine9&ensi.e Kunior faculty, e.en t%oug% t%is
would yield e9traordinary sa.ings in institutional ! &er student educated< It %as occurred
10 suc%
sc%ools t%at t%e only &ractical way to significantly increase t%e &er student load of eac% faculty]
Band t%ereby increase system &roducti.ityC was to broad cast t%e image, .oice, and learning
materials of
t%e instructor to a broader audience<
1nter distance learning< Wit% t%e combined tec%nologies of t%e Internet, e(mail, and
teleconferencing, educational institutions are able to enroll e9&onentially more students at %ome or
remote sites wit%out increasing t%e number of faculty members em&loyed or t%eir salaries<
grading res&onsibilities in.ol.ed in distance learning can be delegated to graduate teac%ing
working at not muc% abo.e minimum wage< $amous and &o&ular faculty members can be gi.en
electronic audiences, t%ereby ma9imi5ing t%eir influence on be%alf of t%e institution< -ess
teac%ers could be confined to traditional face(to(face instruction, t%ereby minimi5ing t%eir im&act
t%e re&utation and welfare of t%e institution<
=%is case asks you to e9tra&olate t%e im&lications of distance learning for t%e design and workings
colleges and uni.ersities of t%e future< 3s knowledge is managed in %ew ways, dramatic c%anges
may be
in store for t%ese institutions< In your s&eculations, consider t%e following6
J 7%ysical reFuirements of t%e new ]cam&us<]
J Instructor Fualifications, including &re&aration for distance learning<
J >iability of traditional ]courses,] ]maKors,] and ]degrees<]
J Interacti.e .ersus ]canned] instruction< BWould you &refer to learn from 7rofessor R
interacti.ely or from 1instein .ia .ideota&e?C
J =%e loss of un(measurable w%en t%e traditional face(to(face classroom is su&erseded
J om&ensation and career &at%s for faculty< BWill researc% be of less im&ortance as a faculty
member more and more &lays1%e role of anc%or &erson or mout%&iece in distance learning?C
J -inks wit% or mergers wit% cor&orations< BWill;s%ould cor&orate uni.ersities swallow u& &ublic
and &ri.ate institutions?C
J Is distance learning more a&&ro&riate for some subKects t%an ot%ers? $or some ty&es
3ttem&t to draw toget%er your s&eculations into a design for future knowledge management useful
&resent institutions of %ig%er learning<
N o&yrig%t >irtual :ni.ersity of 7akistan 2*Knowledge Management EM!M=(/#0 >:
-1++4N 1*
04W KM IM73=+ 4R!3NI[3=I4N+?
1< )riefly enumerate t%e ways in w%ic% KM can im&act an organi5ation<
Knowledge management can im&act organi5ations in .arious ways and at se.eral le.els by way of
&eo&le, &rocesses, &roducts and o.erall organi5ational &erformance< 3t all of t%ese
Knowledge management affects organi5ations in two ways@
1< Knowledge management can %el& create knowledge, w%ic% can t%en contribute to im&ro.ed
&erformance of organi5ations along t%ese four le.els<
2< Knowledge management can directly cause im&ro.ements along t%ese four le.els<
-et us now briefly consider eac% of t%e le.els discussed abo.e@
Im&act on 7eo&le@ KM can facilitate learning t%roug%out t%e organi5ation, w%ic% allows
organi5ation to be constantly growing and c%anging in res&onse to t%e market and t%e tec%nology,
and causes t%e em&loyees to become more fle9ible, and en%ances t%eir Kob satisfaction<
Im&act on 7rocesses@ Knowledge management also enables im&ro.ements in
&rocesses suc% as marketing, manufacturing, accounting, engineering, &ublic relations, etc<
im&acts can be seen along t%ree maKor dimensions@ effecti.eness, efficiency, and
degree of
inno.ation of t%e &rocesses<
Im&act on 7roducts@ Knowledge management also im&acts t%e organi5ationAs &roducts<
im&acts can be seen in two res&ects@ .alue(added &roducts and knowledge(based &roducts<
Im&act on 4rgani5ational 7erformance@ In addition to &otentially im&acting &eo&le, &roducts, and
&rocesses, KM may also affect t%e o.erall &erformance of t%e organi5ation, eit%er directly
2< +tate t%e im&ortance of KM wit% s&ecific reference to its im&act on em&loyee ada&tability
and Kob satisfaction<
Knowledge management &lays an im&ortant role in em&loyee ada&tability and Kob satisfaction< -et
us see %ow@
4n 1m&loyee 3da&tability@ Knowledge management &rocess at an organi5ation encourages
em&loyees to continually learn from eac% ot%er, and t%ey are likely to &ossess t%e information and
knowledge needed to ada&t organi5ational circumstances so reFuire< W%en em&loyees are
aware of ongoing and &otential future c%anges, t%ey are less likely to be caug%t by
3wareness of new ideas and in.ol.ement in free flowing discussions not only &re&are t%em to
res&ond to c%anges, but also make t%em more likely to acce&t c%ange< =%us, KM tends to facilitate
greater ada&tability among em&loyees<
4n Dob +atisfaction@ =wo benefits of KM t%at accrue directly to indi.idual em&loyees are BaC t%ey
are able to learn better t%an em&loyees in firms t%at are lacking in KM, and BbC t%ey are better
&re&ared for c%ange< =%ese im&acts cause t%e em&loyees to feel better because of t%e knowledge
acFuisition and skill en%ancement, and also en%ance t%eir market .alue relati.e to
organi5ationsA em&loyees< Knowledge management also &ro.ides em&loyees wit% solutions
&roblems t%ey face in case t%ose same &roblems %a.e been encountered earlier, and effecti.ely
addressed< =%is %el&s to kee& em&loyees moti.ated, for a successful em&loyee would be %ig%ly
moti.ated, w%ile an em&loyee facing &roblems in &erforming %is Kob is likely to be demoti.ated< In
conclusion, as a result of t%eir increased knowledge, im&ro.ed market .alue, and greater on(t%e(Kob
&erformance, KM facilitates em&loyeesA Kob satisfaction<
N o&yrig%t >irtual :ni.ersity of 7akistan 2/Knowledge Management EM!M=(/#0 >:
#< 19&lain w%y &oor KM reduces t%e effecti.eness of organi5ational &rocesses<
1ffecti.eness is &erforming t%e most suitable &rocesses and making t%e best &ossible decisions<
7oor KM can result in mistakes by t%e organi5ation because t%ey risk re&eating &ast mistakes or not
foreseeing ot%erwise ob.ious &roblems< 4rgani5ations lacking in KM find it difficult to maintain
&rocess effecti.eness w%en faced wit% of e9&erienced and new em&loyees< In contrast, a
good knowledge management system can enable organi5ations to become more effecti.e by %el&ing
t%em to select and &erform t%e most a&&ro&riate &rocesses< 1ffecti.e KM enables t%e
organi5ationAs members to collect information needed to monitor e9ternal e.ents< =%is results in
fewer sur&rises for t%e leaders of t%e organi5ation, and conseFuently reduces t%e need to modify
&lans and settle for less effecti.e a&&roac%es< $urt%er, knowledge management enables
organi5ations to Fuickly ada&t t%eir &rocesses according to t%e current circumstances,
maintaining &rocess effecti.eness in c%anging times<
'< W%at t%ree dimensions are rele.ant for e9amining t%e im&act of KM on business
Knowledge management is an im&ortant factor to t%e effecti.eness of organi5ational
suc% as marketing, manufacturing, accounting, engineering, &ublic relations, etc<
=%e im&act of KM can be seen along t%ree maKor dimensions@ effecti.eness, efficiency, and degree
of inno.ation of t%e &rocesses< 1ffecti.eness is &erforming t%e most suitable &rocesses and making
t%e best &ossible decisions< 1fficiency is &erforming t%e &rocesses Fuickly and in a low(cost
Inno.ation is &erforming t%e &rocesses in a creati.e and no.el fas%ion t%at im& effecti.eness
and efficiency<
*< +tate reasons %ow KM %el&s im&ro.e &rocess effecti.eness, efficiency, and inno.ation<
7rocess 1ffecti.eness@ 7oor KM can result in mistakes by t%e organi5ation because t%ey
re&eating &ast mistakes or not foreseeing ot%erwise ob.ious &roblems< 4rgani5ations lacking in KM
find it difficult to maintain &rocess effecti.eness w%en faced wit% of e9&erienced and new
em&loyees< In contrast, a good knowledge management system can enable organi5ations to become
more effecti.e by %el&ing t%em to select and &erform t%e most a&&ro&riate &rocesses< 1ffecti.e
KM enables t%e organi5ationAs members to collect information needed to monitor e9ternal e.ents<
=%is results in fewer sur&rises for t%e leaders of t%e organi5ation, and conseFuently reduces t%e
need to modify &lans and settle for less effecti.e a&&roac%es< $urt%er, knowledge management
enables organi5ations to Fuickly ada&t t%eir &rocesses according to t%e current
t%ereby maintaining &rocess effecti.eness in c%anging times<
7rocess 1fficiency@ KM can also enable organi5ations to be more &roducti.e and efficient< =%e
ability to effecti.ely create and manage network(le.el knowledge s%aring
&rocesses,results in
&roducti.ity ad.antages enKoyed by t%e organi5ation<
7rocess Inno.ation@ 4rgani5ations increasingly rely on knowledge s%ared across
indi.iduals to
&roduce inno.ati.e solutions to &roblems as well as to de.elo& more inno.ati.e organi5ational
&rocesses< Knowledge management %as been found to enable riskier brainstorming and t%ereby
en%ance &rocess inno.ation<
/< Describe %ow KM can contribute to an organi5ationAs &roducts<
Knowledge management can im&act t%e organi5ationAs &roducts in two res&ects@ .alue(
&roducts and knowledge(based &roducts<
Im&act on >alue(3dded 7roducts@ Wit% t%e aid of KM &rocesses, organi5ations can offer new
&roducts or im&ro.ed &roducts t%at &ro.ide a significant additional .alue as com&ared to earlier
&roducts< $urt%er, .alue(added &roducts also benefit from KM due to t%e effect t%e latter %as on
organi5ational &rocess inno.ation<
Im&act on Knowledge()ased 7roducts@ Knowledge(based &roducts, suc% as in consulting
software de.elo&ment industries, can also benefit from knowledge management< :sing
N o&yrig%t >irtual :ni.ersity of 7akistan 2"Knowledge Management EM!M=(/#0 >:
consulting firms can Fuickly access and combine t%e best a.ailable knowledge and bid on &ro&osals
t%at would ot%erwise be too costly or too time consuming to &ut toget%er< In suc% industries, KM
is necessary for mere<, knowledge(based &roducts can also sometimes &lay an
im&ortant role in traditional manufacturing firms< $or e9am&le, in order to design an automated
mac%ine to s&in yarn, t%e organi5ation will %a.e to obser.e an e9&ert %and(s&inner to learn %ow t%e
&rocess takes &lace in order to gi.e t%e mac%ine &ro&er functionality<
"< 0ow can we assess t%e direct im&act of KM on organi5ational &erformance?
Knowledge management affects t%e o.erall &erformance of t%e organi5ation< Knowledge
management can im&act o.erall organi5ational &erformance eit%er directly or indirectly@
Direct im&act on organi5ational &erformance occurs w%en knowledge is used to create inno.ati.e
&roducts t%at generate re.enue and &rofit, or w%en t%e KM strategy is aligned wit%
strategy< +uc% a direct im&act concerns re.enues and;or costs, and can be e9&licitly linked to t%e
organi5ationAs .ision or strategy< onseFuently, measuring direct im&act is relati.ely
It can be obser.ed in terms of im&ro.ements in return on in.estment<
:nlike indirect im&acts on organi5ational &erformance, direct im&acts can be associated
transactions and, t%erefore, are easily measured<

2< Describe t%e ways in w%ic% t%e indirect im&acts of KM in an organi5ation may be
Indirect Im&act on 4rgani5ational 7erformance ( comes about t%roug% acti.ities t%at are
directly linked to t%e organi5ationAs .ision, strategy, re.enues, or costs< +uc% effects occur((t%roug%
t%e use of KM to demonstrate intellectual leaders%i& wit%in t%e industry, w%ic%, in turn,
en%ance customer loyalty< 3lternati.ely, it could occur t%roug% t%e use of knowledge to gain an
ad.antageous negotiating &osition wit% res&ect to com&etitors or &artner organi5ations< Indirect
im&act cannot be associated wit% transactions and, t%erefore, cannot be easily measured<
$urt%er, a com&anyAs out&ut is said to e9%ibit economy of scale if t%e a.erage cost of &roduction
&er unit decreases wit% increase in out&ut< 3 com&anyAs out&ut is said to e9%ibit economy of sco&e
w%en t%e total cost of t%at same com&any &roducing two or more different &roducts is less t%an t%e
sum of t%e costs t%at would be incurred if eac% &roduct was &roduced se&arately by a different
com&any< Knowledge management can contribute to economies of scale and sco&e by im&
t%e organi5ationAs ability to create and le.erage knowledge related to &roducts, customers,
managerial resources across businesses< 7roduct designs, com&onents, manufacturing
and e9&ertise can be s%ared across businesses, t%ereby reducing de.elo&ment and manufacturing
costs, accelerating new &roduct de.elo&ment, and su&&orting Fuick res&onse to new
o&&ortunities< 1conomies of sco&e also result from t%e de&loyment of general marketing skills and
sales forces across businesses<
3not%er indirect im&act of KM is to &ro.ide a sustainable com&etiti.e ad.antage< Knowledge can
enable t%e organi5ation to de.elo& and e9&loit ot%er tangible and intangible resources better t%an
t%e com&etitors can< Knowledge, es&ecially conte9t(s&ecific tacit knowledge, tends to be uniFue
t%erefore difficult to imitate, and it cannot easily be &urc%ased in a ready(to(use form< =o obtain
similar knowledge, t%e com&anyAs com&etitors %a.e to engage in similar e9&eriences, but t%is takes
time< =%erefore, com&etitors are limited in t%e e9tent to w%ic% t%ey can accelerate t%eir learning
t%roug% greater in.estment<
8< Knowledge management is an in.aluable tool to t%e oil and gas industry< Dustify t%is
statement wit% suitable e9am&les<
4il e9&loration often e9tra&olating from sketc%y data and com&aring e9&loration sites to
known ones< =%is allows geoscientists to decide if enoug% e9ist on a site
to make
de.elo&ing it wort%w%ile<
$or e9am&le, one site contained layers of oil(bearing sand t%at were less t%an an inc% t%ick< =o
decide if t%in sand beds could e9tend a large enoug% area for t%e oil in t%em to be efficiently
N o&yrig%t >irtual :ni.ersity of 7akistan 22Knowledge Management EM!M=(/#0 >:
&um&ed out, a +%ell e9&loration team asked one of +%ellAs communities of &ractice,
geoscientists from se.eral disci&lines, for %el&< )y com&aring t%is site to ot%ers, t%e community
%el&ed in t%e teamAs analysis of w%ere to drill more accurately, resulting in fewer
e9&loratory wells<
)y in.esting in knowledge management and consulting t%e community of &ractice, t%e +%ell team
estimated t%at t%e discussions of suc% com&arisons enabled t%em to drill and test t%ree fewer wells
a year, :+P20M in drilling and an additional :+P20M in testing costs for eac% well, i<e<, an
annual of :+P120M< It is,, &ossible t%at t%ey mig%t %a.e reac%ed t%e
conclusions on w%ere to drill, but t%e leader estimated t%at t%e community could claim 2* &ercent
of t%e sa.ings and was 20 &ercent sure of t%is estimate< +o t%e community may be argued to %a.e
sa.ed 2* &ercent of 20 &ercent of :+P120M, i<e<, :+P2'M annually< +ince it costs
:+P#00K and :+P'00K annually to run t%e community, t%is re&resented an annual return of '0
times t%e in.estment< =%is was not t%e only benefit, but it was sufficient to address t%e
e9ecuti.esA need to know w%et%er t%e community was wort% t%e in.estment<
10< Describe t%e im&act of internali5ation, e9ternali5ation, sociali5ation, and communities of
&ractice on em&loyee learning<
Knowledge management can %el& en%ance t%e em&loyeesA learning and e9&osure to t%e
knowledge in t%eir fields< =%is can be accom&lis%ed in a .ariety of ways, including e9ternali5ation
and internali5ation, sociali5ation, and communities of &ractice< -et us now look at eac% in detail<
Internali5ation E is t%e con.ersion of e9&licit knowledge into tacit knowledge< It
works in
conKunction wit% e9ternali5ation to %el& indi.iduals learn< If an em&loyee in an accounting firm
reads a book on well(establis%ed accounting &ractices, %e can use t%is e9ternali5ed knowledge to
acFuire tacit knowledge and im&ro.e %is daily work<
19ternali5ation E is t%e &rocess of con.erting tacit knowledge into e9&licit forms< It works
conKunction wit% internali5ation to %el& indi.iduals learn< 19ternali5ation could be demonstrated by
means of a re&ort made at t%e end of a &roKect, indicating t%e &rocedures followed and t%e lessons
+ociali5ation E also %el&s indi.iduals acFuire knowledge by means of Koint acti.ities,
suc% as
meetings, informal con.ersations, etc< )y &artici&ating in t%ese meetings or acti.ities,
obtain bot% e9&licit and im&licit knowledge<
ommunities of 7ractice E are an e9tension of sociali5ation< =%ey are an organic and self(organi5ed
grou& of indi.iduals w%o are dis&ersed geogra&%ically or organi5ationally but
regularly to discuss issues of mutual interest< =%ey result in increased learning among
all t%e
3&&lication 19ercises
1< Identify t%e &ossible ways in w%ic% KM Bor t%e lack t%ereofC in your organi5ation Bit could
be your academic institution or your work&laceC affects your learning and Kob satisfaction<
If we consider an academic institution, we can see t%e e9tent to w%ic% knowledge management
affects t%e functioning of t%e institution as well as its faculty and students<
Knowledge management can im&act organi5ations and organi5ational &erformance at se.eral le.els@
&eo&le, &rocesses, &roducts, and t%e o.erall organi5ational &erformance< It is im&ortant to note t%at
KM &rocesses can im&act organi5ations at t%ese four le.els in two main ways< $irst, KM can %el&
create knowledge, w%ic% can t%en contribute to im&ro.ed &erformance of organi5ations along t%ese
four dimensions< +econd, KM can directly cause im&ro.ements along t%ese four dimensions< We
ne9t a&&ly t%is in t%e conte9t to an educational institution@
7eo&le E =%e faculty and staff at t%e institution can facilitate t%eir learning Bfrom eac% ot%er as well
as from e9ternal sourcesC due to knowledge management tec%niFues< =%is learning allows
institution to grow constantly and c%ange in res&onse to t%e market and t%e tec%nology, w%ic% is
N o&yrig%t >irtual :ni.ersity of 7akistan 28Knowledge Management EM!M=(/#0 >:
.ital to its success< It also causes its em&loyees to be more fle9ible, and en%ances
t%eir Kob
7rocesses (( Knowledge management can im&ro.e t%e abo.e interrelated as&ects of organi5ational
&rocesses t%roug% se.eral means, including better knowledge being im&arted to indi.iduals at t%e
institution Bt%roug% e9c%ange and sociali5ationC, and t%e &ro.ision of workable solutions Bt%roug%
directions and routinesC for students to sol.e t%e &roblems faced in t%eir tasks<
7roducts E In t%e case of an academic institution, t%e im&act of KM on its &roducts are seen in two
res&ects, .alue(added education, and knowledge(based education< =%e first refers to an im&ro.ed
system of education t%at &ro.ides a significant additional .alue as com&ared to t%e earlier system,
&rior to t%e im&lementation of KM< In t%e case of t%e latter, knowledge based education
studying t%e e9&ert Bin t%is case t%e &rofessorC and t%en learning from %is teac%ings and tec%niFues<
4rgani5ational 7erformance (( KM also affects t%e o.erall &erformance of t%e institution, eit%er
directly or indirectly< 3n e9am&le of a direct im&act is w%en a &rofessor learns of a new effecti.e
teac%ing met%od, w%ic% %e t%en s%ares wit% %is colleagues so as to better educate all t%e students of
t%e institution< 3n e9am&le of an indirect effect is t%e use of KM in t%e
organi5ation to
demonstrate intellectual leaders%i& wit%in t%e industry, w%ic%, in turn, mig%t en%ance
loyalty and raise t%e institutionAs ranking in t%e industry<
2< )7(3moco B%tt&@;;www<b&amoco<comC introduced onnect as t%eir KM system<
12,000 staffs use onnect for s%aring and disseminating t%eir knowledge and e9&ertise<
$ind information on onnect at )7(3moco and com&are t%e KM of )7(3moco and t%at of
+%ell, w%ic% was discussed in t%e &re.ious c%a&ter of t%is book<
=%e )7(3moco onnect system is a searc%able intranet re&ository, w%ic% as internal Mellow
7ages for finding )7 e9&erts< 1m&loyees &resent on t%eir &ersonal Web &age, dis&laying
t%eir &rofessional skills, rele.ant e9&eriences, interests, and ot%er &ersonal background< =%e
contains items like name, Kob title, team business unit, structures ta9onomy of Xareas of e9&ertise,
languages s&oken, internal and e9ternal contacts, fa.orite web links, u&loaded &%otogra&%s, resume,
audio cli&, network members%i&s, and contact information< 1m&loyees also %a.e a free te9t area
and t%e listed categories of e9&ertise are<
onnect was started u& wit% a &ilot of *00 u&stream tec%nology staff< During its initial &%ase, t%e
design was ke&t o&en enoug% to easily encom&ass t%e entire organi5ations< 3fter t%is &ilot, focus
grou&s were %eld to en%ance t%e interface< =%e number of users grew ra&idly to 10,000 em&loyees
in t%e first year< 3n awareness cam&aign was set u&, mounted by a grou& of %ea.y users< 3lready in
t%e first year B1882C about 10,000 staff used onnect as t%eir key to t%e .ast knowledge re&ository
)7(3moco< 3fter four years t%e number of users is #2,000 BMay 2002C, one( t%ird of t%e w%ole
=%e basic &%iloso&%y be%ind t%is met%od is t%at t%e best medium for knowledge is t%e %uman
brain and t%e best networking &rotocol is con.ersation< =%erefore t%e em&%asis s%ould lie
creating t%e connection and building t%e relations%i&< 4n content and structure of t%e re&ository, a
balance needs to be found between anarc%y and structure<
+ome general lessons on knowledge management at )7(3moco are@
1< =%e difficult t%ing of KM is t%at you canAt manage knowledge< =%e ideal outcome is t%at
em&loyees manage knowledge as &art of t%eir daily business wit%out t%inking of it
as an e9tra task<
2< Knowledge management is more about connecting to t%ose w%o know t%e reci&e
ca&turing an encyclo&aedia of knowledge<
#< If de&artments are set to com&ete wit% one anot%er, free knowledge e9c%ange will not take
'< 3 common res&onse to knowledge management is@ GWe donAt %a.e t%e time rig%t
N o&yrig%t >irtual :ni.ersity of 7akistan 80Knowledge Management EM!M=(/#0 >:
now on to& of e.eryt%ing else we %a.e to do<H =%en t%e res&onse s%ould be@ GW%at if we told
you someone else %as already done t%e .ery task you are about to do< We Kust need to find out
w%o and w%at t%ey learned<H
*< 1ssential to KM is a good communicator, a central &erson and also a &erson in eac% team w%o
%as boug%t in to t%e &rocess< )est is someone w%o talks a lot< 0e or s%e %as to get out t%ere,
find information, and feed it back again<
#< Dow %emical B%tt&@;;www<dow<comC introduced Intellectual 3sset Management Model
BI3MC for managing its intellectual assets< It si9 &%ases@ strategy6 com&etiti.e
assessment6 classification6 .aluation6 in.estment6 and &ortfolio of its managing intellectual
assets< om&ared to $ordAs best &ractice re&lication &rocess system, w%at are t%e similarity
and difference of I3M in terms of im&act on em&loyee, business &rocess, and
organi5ational &erformance?
=%e Dow %emical Intellectual 3sset Management Model si9 &%ases@ strategy6
assessment6 classification6 .aluation6 in.estment6 and &ortfolio< onsidering t%at t%e
already %ad &atents t%at were underutili5ed, t%e grou& initially started wit% t%e &ortfolio &%ase< It
reFuired t%em to identify eac% &atent, determine w%et%er it was still acti.e, and find a business t%at
would take financial res&onsibility for it<
Ne9t came t%e classification &%ase< 1ac% business classified its &atents in t%ree categories Z stating
w%et%er t%e business is Gusing,H Gwill use,H or G will not useH t%e &atent< =%e businesses furt%er
stated ot%er designations suc% as w%et%er t%e &atents were to be licensed or abandoned<
In t%e strategy &%ase, t%e grou& focused on integrating t%e &atent &ortfolio wit% business
in order to ma9imi5e its .alue< It also identified ga&s in t%e &ortfolio t%at needed to be addressed<
=%is &%ase is connected to t%e .aluation and com&etiti.e assessment &%ases<
In t%e .aluation &%ase, .alue was &laced on t%e asset for licensing, o&&ortunity &rioriti5ation, or ta9
&ur&oses< Dow %as also de.elo&ed a com&re%ensi.e intellectual &ro&erty;asset .aluation
known as t%e G=ec% $actor Met%od<H =%e =ec% $actor, w%ic% relies on se.eral industry(acce&ted
met%odologies, facilitates a Fuick and ine9&ensi.e financial .aluation of intangible assets wit%in a
&articular business unit< It enables Dow to .alue t%e monetary contribution of eac% &ro&erty or
asset as a &ercentage of t%e business enter&riseAs total net &resent .alue<
In t%e com&etiti.e assessment &%ase, t%e knowledge, ca&abilities and intellectual assets
com&etitors are determined< =%e com&any accom&lis%es t%is using w%at it calls a G&atent treeH Z a
ma& of o&&ortunities t%at incor&orates t%e &atents of bot% Dow and its com&etitors< =%e 1*(year(
old tool e.aluates suc% factors as dominance, breadt% of co.erage, and o&&ortunity o&enings<
$inally, t%e grou& entered t%e in.estment &%ase@ Dudging w%et%er to &ut more money in
enter a Koint .enture, or license a tec%nology from outside in order to meet business Z
basing t%e decision on a &rior assessment of t%e com&anyAs knowledge ga&s< If t%e
successfully obtains a needed tec%nology or secures an a&&ro&riate &atent, t%e intellectual asset is
incor&orated into t%e &ortfolio and t%e &rocess re&eats itself<
In contrast, $ordOs best &ractice re&lication &rocess is a tool to collect, s%are, and track t%e .alue of
re&licating better ways of doing business across t%e enter&rise< +tarted in 188*, t%e &rocess %as
identified P1<# billion in &roKected .alue at $ord across twenty(fi.e collaborati.e communities
of &ractice<
=%is &ro&rietary tec%nology is a worldwide KM &rocess, dri.en by t%e $ord Motor om&any
o&eration grou&s, and focused on t%ree maKor &rinci&les of Knowledge Management@ collecting
knowledge, in t%is case gat%ering6 .aluable &ro.en &ractices6 communicating knowledge about t%e
&ractices to communities of &ractice;networks6 and le.eraging knowledge by acti.ely managing t%e
=%e best &ractice re&lication system at $ord Motor om&anyAs .e%icle o&erations di.ision was
re&orted to %a.e sa.ed t%e com&any P#' million in one year<
N o&yrig%t >irtual :ni.ersity of 7akistan 81Knowledge Management EM!M=(/#0 >:
1ac% week, t%e #" &lants recei.e t%roug% t%e intranet between fi.e and eig%t best &ractices t%at
a&&ly only to t%e di.ision< 1ac% &lant manager a&&oints &roduction engineers as Xfocal &ointsA
res&onsible for best &ractice, w%o retrie.e information &assed to t%em and enter t%eir own &lantAs
best &ractice into t%e system<
'< Mou are a 14 w%o considers im&lementing KM system to your com&any< Mou %a.e to
decide one o&tion out of two@ 1C our KM system can be accessed by customers6 2C our KM
system cannot be accessed by customers< Describe your decision and &ro.ide t%e reason in
terms of organi5ational &erformance<
3s a 14 considering im&lementation of a KM system for t%e com&any, based on t%e nature of
t%e com&any and its business, I would more t%an likely c%oose to %a.e t%e KM system accessible to
customers< 4ften customers can &oint out information, w%ic% em&loyees would not %a.e normally
considered< 3 good e9am&le of t%is is t%e Microsoft Knowledge )ase< If t%e knowledge base was
a.ailable to t%e &ublic, t%e tec%nical su&&ort teams at Microsoft would more t%an
likely be
inundated wit% calls for answers t%at could easily be looked u& on a Website< t%e nature
of t%e s&ecific business orgai5ation would %a.e to be considered as well<
N o&yrig%t >irtual :ni.ersity of 7akistan 82Knowledge Management EM!M=(/#0 >:
-1++4N 1/
=0R11 +044-+ 4$ =04:!0= 3ND 377R4301+ =4 KM< 14N4MI +044-
3ND K>3
3&&roac%es to KM@
=%ere is a growing recognition in t%e business community about t%e im&ortance of knowledge as
critical resource for organi5ations< =raditionally, t%is resource %as not been treated wit% t%e degree
systematic, deliberate, or e9&licit effort de.oted to managing %uman, material, and financial
)ut in t%e coming years, t%e firm t%at knowledge to its own de.ices may be &utting itself in
Keo&ardy< More and more &ractitioners and researc%ers belie.e t%at knowledge resources matter
t%an t%e con.entionally tended resources Bmaterial, labor, ca&italC and must be managed e9&licitly,
left to fend for itself<
Knowledge management can be defined as a met%od to sim&lify and im&ro.e t%e &rocess of
distributing, creating, ca&turing and understanding knowledge in a com&any< Knowledge
management is
descri&tion, organi5ation, s%aring and de.elo&ment of knowledge in a firm< Knowledge
management is
managing knowledge(intensi.e acti.ities in a com&any< Knowledge management refers to
and le.eraging t%e collecti.e knowledge in a com&any to %el& t%e com&any com&ete<
management is a met%od for cor&orate goals, by collecting, creating and synt%esi5ing
s%aring information, insig%ts, reflections, t%oug%ts and e9&erience< Knowledge
management is a
disci&line focused on systematic and inno.ati.e met%ods, &ractices, and tools for
managing t%e
generation, acFuisition, e9c%ange, &rotection, distribution, and utili5ation of knowledge,
ca&ital and intangible assets<
=%e &ur&ose of knowledge management is to %el& com&anies create, s%are and use knowledge
effecti.ely< 1ffecti.e knowledge management causes fewer errors, less work, more inde&endence in
and s&ace for knowledge workers, fewer Fuestions, and better decisions, less rein.enting of
im&ro.ed customer relations, im&ro.ed and im&ro.ed &rofitability< Knowledge management
&ur&orted to increase bot% inno.ation and res&onsi.eness< =%e recent interest in
knowledge %as &rom&ted t%e issue of managing knowledge to t%e organi5ationAs benefit<
1arl B2001C de.elo&ed ta9onomy for knowledge management t%at %e labeled sc%ools of
management< 1ac% sc%ool was &ro&osed as an ideal ty&e< No claims were made t%at any new sc%ool
out&erforms ot%ers< 1ac% re&resents a &articular orientation r &ers&ecti.e< =%e sc%ools are not
1arlAs B2001C ta9onomy is a&&lied to classify a number of a&&roac%es to knowledge management<
classification of a&&roac%es is based on an o.erall matc% to eac% ideal ty&e in terms of
sc%ool of
knowledge management< =%ree rele.ant sc%ools are labeled t%e economic sc%ool, t%e
sc%ool and t%e strategic sc%ool< =%e economic sc%ool %as a focus of income, in w%ic% t%e aim is to
e9&loit knowledge assets< =%e organi5ational sc%ool %as a focus of networks, in w%ic%
t%e aim is
knowledge &ooling< =%e strategic sc%ool %as a focus of com&etiti.e ad.antage, in w%ic% t%e aim is
identify, e9&loit and e9&lore knowledge ca&abilities<
=%e 1conomic +c%ool
3ccording to 1arl B2001C, t%e economics sc%ool is e9&licitly concerned wit% bot%
&rotecting and
e9&loiting a firmAs knowledge or intellectual assets to &roduce re.enue streams Bor rentC< It is
wit% managing knowledge as an asset, in w%ic% knowledge or intellectual assets
include &atents,
trademarks, co&yrig%ts and know(%ow< Intellectual &ro&erty could be anot%er means of describing
obKect being managed< =%is sc%ool is more concerned wit% e9&loitation of knowledge
and less
concerned wit% e9&loration< 4ne critical success factor in t%is sc%ool a&&ears to be t%e de.elo&ment
a s&ecialist team or function to aggressi.ely manage knowledge &ro&erty t%roug% intellectual
N o&yrig%t >irtual :ni.ersity of 7akistan 8#Knowledge Management EM!M=(/#0 >:
accounting, intellectual ca&ital management and creation of effecti.e and efficient
market&lace< 4t%erwise it is too easily forgotten<
Intellectual a&ital 3ccounting
3ccording to Roslender and $inc%am B2001C< Intellectual ca&ital is currently t%e focus of
discussion and enFuiry across t%e management disci&lines and beyond< =%is reflects t%e recognition
intellectual ca&ital &ro.ides a crucial source of .alue for t%e contem&orary business enter&rise< It is
source t%at reFuires careful management if it is to fulfill its ma9imum &otential<
In t%e case of t%ose businesses w%ose s%ares are &ublicly Fuoted, t%e success wit% w%ic%
manage t%eir intellectual ca&ital is increasingly mirrored in t%eir market .alues, .alues t%at
are often
many times t%e book .alues of enter&rises< )ridging t%e ga& between t%ese two .alues &ro.ides
moti.ation for seeking to account for intellectual ca&ital<
3not%er moti.ation for seeking to account for intellectual ca&ital is t%e need to manage
ca&ital successfully< !i.en t%e im&ortance of managing intellectual ca&ital successfully,
accounting is
being c%allenged to de.elo& new a&&roac%es to &erformance measurement t%at ca&ture t%e Fuality
management e.ident in t%e conte9t of intellectual ca&ital<
+tewart B188"C %as suggested se.eral tools for measuring intellectual ca&ital< >alue is defined
by t%e
buyer, not t%e seller< 3 com&any, t%erefore, is wort% w%at t%e stock market says@ &rice &er s%are 9
number of s%ares outstanding _ market .alue6 w%at t%e com&any as a w%ole is wort%< 4ne measure
intellectual ca&ital is t%e difference between its market .alue and its book eFuity< =%e assum&tions
t%at e.eryt%ing left in t%e market .alue after accounting for t%e fi9ed assets must be intangible
assets< If
Microsoft is wort% 100 billion dollars, and its book .alue is 10 billion dollars, t%en its intellectual
is 80 billion dollars<
=%ree com&onents of intellectual ca&ital can be identified< 0uman ca&ital is t%e first
consisting of t%e know(%ow, ca&abilities, skills and e9&ertise of %uman members of an
Relational ca&ital is t%e second com&onent, consisting of any connection t%at &eo&le
outside t%e
organi5ation %a.e wit% it, toget%er wit% customer loyalty, market s%are, t%e le.el of backorders, and
fort%< +tructural ca&ital embraces t%e remaining com&onent of intellectual ca&ital,
including bot%
systems and networks, and cultures and .alues, toget%er wit% elements of intellectual &ro&erty suc%
&atents, co&yrig%ts, trademarks, and so fort%<
=o begin intellectual ca&ital accounting necessitates an acce&tance t%at it is &ossible to include
t%e same financial statement obKecti.e measures of .alue, as in t%e case of tangible assets for
t%ere are %istorical e9&enditures< Intangible assets suc% as goodwill are already
&roblematic in
accounting< $or e9am&le, in t%e :K, only &urc%ased goodwill can be re&orted in t%e accounts of t%e
business t%at acFuires it<
If goodwill continues to &ro.e &roblematic for financial accounting and re&orting, intellectual
ca&ital as
t%e new goodwill to multi&ly t%e difficulties in.ol.ed< Intellectual ca&ital assumes many
forms t%an does goodwill, and w%ile bot% conce&ts are ultimately o&en(ended, se.eral years of
about intellectual ca&ital %a.e confirmed its greater breadt% and de&t%< 4ne conseFuence
of t%is,
according to Roslender and $inc%am B2001C, is t%at we mig%t now t%ink in terms of
degrees of
intangibility, so t%at w%ile brands, &atents and know(%ow still count as intangible assets, customer
distribution c%annels and em&loyee Fualification &rofiles are more intangible< 4ff t%e scale are
assets as em&loyee commitment, organi5ational culture and cor&orate .alues, yet it is Kust suc%
t%at ensure t%at some businesses e9%ibit im&ressi.e market(to(book .alue rations<
=%e market(to(book .alue ratio is sometimes used to indicate t%e .alue of intellectual ca&ital
in an
organi5ation< =%ree decades ago, t%e market(to(book .alue ratio was close to one in most
=oday, t%is ratio %as grown to four on a.erage< Microsoft is an e9treme e9am&le< =%e book .alue of
com&any was 11 billion dollars in 188", w%ile t%e market .alue was 200 billion< =%is gi.e a
book .alue ration of 20< 3fua% and =ucci B200#C argue t%at t%is ratio is caused by intellectual
3 number of a&&roac%es to .aluing knowledge assets e9ist< Reliable a&&roac%es reFuire a
language to discuss t%e underlying .alue of an organi5ationAs knowledge assets< =%e knowledge(
N o&yrig%t >irtual :ni.ersity of 7akistan 8'Knowledge Management EM!M=(/#0 >:
added met%odology seems to conform to t%is reinforcement as one of t%e more robust a&&roac%es<
knowledge(.alue(added BK>3C met%odology as described by 0ousel and )ell B2001C addresses a
long recogni5ed by and managers by s%owing %ow to le.erage and measure t%e
resident I em&loyees, information tec%nology, and core &rocesses< K>3 analysis &roduces a return(
knowledge BR4KC ratio to estimate t%e .alue added by gi.en knowledge assets, regardless of w%ere
are located<
=%e essence of K>3 is t%at knowledge utili5ed incor&orate core &rocesses is translated into
form< =%is translation allows allocation of re.enue in &ro&ortion to t%e .alue added by t%e
as well as t%e cost to use t%at knowledge<
)alance Including Intellectual a&ital in a )usiness 4rgani5ation Bt%is e9am&le de.elo&ed
by 1gil
+and.ik using In.isible )alance +%eet in +.eibyAs toolkit@ www<s.eiby<comC
)alance +%eet
=angible assets 2*,000,000
0uman ca&ital 20,000,000 Material .alues 1*,000,000
Relational ca&ital 2*,000,000 Immaterial .alues "*,000,000
+tructural ca&ital #0,000,000 Debt 10,000,000
3ssets 100,000,000 -iabilities 100,000,000
=racking t%e con.ersion of knowledge into .alue w%ile measuring its bottom(line im&acts
managers to increase t%e &roducti.ity of t%ese critical assets< 0ousel and )ell B2001C
&resent t%e
following e9am&le<
=%e e9am&le begins wit% an a.erage &erson w%o needs to learn %ow to &roduce all t%e out&uts of a
gi.en com&any< In a .ery real sense, t%en, %er adding &rocesses including selling, marketing,
accounting for, financing, ser.icing, and maintaining< It is t%ese core &rocesses t%at add .alue
con.erting in&uts into out&uts t%at generate t%e com&anyAs re.enue<
Knowledge >alue 3dded BK>3C@
K>3 &ro.ides a met%odology for allocating re.enue and cost to a com&anyAs core &rocesses based
t%e amount of c%ange eac% &roduces< +ignificantly, t%e knowledge reFuired to make t%ese c%anges
is a
con.enient way to describe t%e con.ersion &rocess<
We define knowledge in a &articular way %ere@ It is t%e know(%ow reFuired to &roduce &rocess
=%is kind of knowledge is &ro&ortionate to t%e time it takes to learn it< -earning time %as been
found to
be a Fuick and con.enient way to measure t%e amount of knowledge contained in any gi.en
=%is understanding can be &ut to test wit% t%e e9am&le< In a widget com&any, t%ere is one &erson,
owner, w%o makes and sells widgets< =%is &erson knows all t%ere is to know in order to make and
widgets for P1< =%e ownerAs sales &roduction knowledge can be used as a surrogate for t%e dollar of
re.enue generated by t%e ownerAs a&&lication of t%e core &rocess knowledge< 3nd we can
%ow long it would take t%e widget com&any owner to transfer all t%e necessary sales and &roduction
knowledge to a new owner< $urt%er, we can use t%ese learning times to allocate to dollar of re.enue
between t%e sales and &roduction &rocesses<
In 0ousel and )ellAs B2001C e9am&le, it is assumed t%at it takes 100 %ours for t%e new owner to
learn t%e
&rocesses, wit% "0 %ours s&ent learning %ow to make t%e widget and #0 %ours learning %ow to sell
=%is would indicate t%at "0 &ercent of t%e knowledge and .alue added was contained in t%e
&rocess and #0 &ercent in t%e sales &rocess< It would follow t%at \0<"0 of t%e re.enue
would be
allocated to &roduction knowledge and P0<#0 to sales knowledge<
3ll t%at would be left to do in t%is e9am&le would be to determine %ow muc% it costs to use t%e
and &roduction knowledge, and t%en we would %a.e a ratio of knowledge .alue added to
utili5ation cost< In ot%er words, we can measure return on knowledge BR4KC< $or t%e sake of
it is assumed t%at t%e total cost to sell and &roduce a widget was P0<*0 @ P0<2* for sales and P0<2*
&roduction< =%e basic a&&roac% %ere is to find out %ow muc% it costs to use t%e sales and &roduction
knowledge< In t%is case t%e cost is directly tied to %ow long t%e new owner s&ends &erforming eac%
N o&yrig%t >irtual :ni.ersity of 7akistan 8*Knowledge Management EM!M=(/#0 >:
&rocess< 3s it turns out, in t%is case, t%e new owner s&ends t%e same amount of time to do bot% and,
t%erefore, t%e cost to use t%e knowledge of eac% &rocess is t%e same<
)ased on our estimates for distribution of re.enue and cost, we would generate an estimate of
We would conclude t%at t%e &roduction &rocess is a more &roducti.e use of t%e knowledge asset
_ 0<"0;0<2* _ 220UC t%an t%e sales &rocess BR4K _ 0<#0;0<2* _ 120UC<

N o&yrig%t >irtual :ni.ersity of 7akistan 8/Knowledge Management EM!M=(/#0 >:
-1++4N 1"
14N4MI +044-@ M3N3!1M1N= 3ND KN4W-1D!1 M1=RI+
Management and Knowledge Metrics@ =ransforming Knowledge into >alue
=o remain com&etiti.e, an organi5ationOs core &rocesses must &roduce a bottom(line &rofitability
will attract in.estors, maintain t%e organi5ationOs market ca&itali5ation, and en%ance cor&orate
&roduction w%ile ensuring t%at customers get t%e .alue t%ey want in t%e &roducts and ser.ices
Managers must constantly analy5e and design &rocesses t%at meet t%ese reFuirements< In
w%ose growt% and .iability increasingly de&end on rigorous, de&loyment of knowledge
management needs measures t%at Fuantify t%e &erformance of core &rocess knowledge assets and
t%em directly to t%e bottom line< urrently, management design o&tions are based on %euristics,
of(t%umb] t%at &ro.ide semi(em&irical su&&ort for t%eir creati.e strategies<, t%ese
cannot &roduce modifiable insig%ts as to w%et%er actual or &ro&osed c%anges to core &rocesses %a.e
%ad or will %a.e t%e desired im&act on t%e firmOs bottom line<
=%e use of creati.e knowledge re&resents a s&ecial case for knowledge measurement<
knowledge is by definition not modifiable< =rying to manage and measure t%is ty&e of knowledge
&roblematic< $or e9am&le, t%e( .alue of t%e creati.e knowledge used in t%e researc% and
area of a com&any can only be determined after t%e out&uts of t%is knowledge %a.e been translated
core &rocesses t%at &roduce final &roducts< Knowledge metrics become useful for managers of
knowledge because, using knowledge metrics, t%ey can track t%e s&eed wit% w%ic% t%is
kind of
knowledge results in c%anges in core &rocesses and t%e amount of new or c%anged
knowledge in core &rocesses< In t%is manner, knowledge metrics also will re.eal t%e embedding of
creati.e know ledge in t%e com&anyOs ot%er core &rocesses< =%is &ro.ides a means to identify,
and %el& manage t%e transformation of knowledge into .alue<
3dditional >aluation Met%odologies >is(`(>is Knowledge Metrics
It is critical for t%e successful and wides&read use of knowledge metrics t%at t%ey be intero&erable
traditional accounting and finance .aluation a&&roac%es &ossible< Dust as t%e
t%eory of
relati.ity dro.e &%ysics into t%e ne9t millennium, so knowledge metrics will be t%e of
and finance <.aluation met%odologies<
ost, Income, Market, 3nd Real 4&tions 3&&roac%es
=%e cost, income, and market a&&roac%es are t%e t%ree fundamental a&&roac%es used by t%e
.aluation &rofession to .alue s&ecified owners%i& interests in &ri.ately %eld com&anies< =%e real
a&&roac% was de.elo&ed to .alue stock o&tions but also can be a&&lied to t%e &roblem of
intangible assets< 3 re.iew of t%ese a&&roac%es will &ro.e useful ill framing a discussion of t%e
&rinci&les and &ractices of .aluing assets, including intangibles suc% as knowledge<
=%e cost a&&roac% is based on t%e conce&t t%at a com&any is wort% t%e market .alue of all its assets
minus t%e market .alue of all its <liabilities< $or t%is reason, not only eac% balance s%eet
bur also eac% off (balance(s%eet asset;liability Btangible and intangibleC is identified, .alued, and
on <t%e balance s%eet< )ringing t%e %istorical cost of eac% and e.ery asset and liability to its
market .alue is time(consuming and difficult and may in.ol.e t%e use of additional e9&erts to
s&ecific categories of assets Bi<e<, real estate of mac%inery and eFui&mentC<
>ariations of t%e cost a&&roac% are generally used to .alue %olding and in.estment com&anies
asset(intensi.e com&anies suc% as t%ose in natural resources and utilities< 3sset(based met%ods are
reliable in early(stage com&anies w%ere book .alues can be used as a reasonable &ro9y for fair
.alue, 3 &articular form of t%e cost a&&roac%, t%e e9cess earnings a&&roac%, is regularly used to
&rofessional &ractices and com&anies<
N o&yrig%t >irtual :ni.ersity of 7akistan 8"Knowledge Management EM!M=(/#0 >:
=%e income a&&roac% is based on t%e conce&t t%at a com&any is wort% t%e &resent .alue of its future
earning &ower< $uture economic income is &roKected out from t%e .aluation date using %istorical
and managementOs, &rofessional Kudgment as to t%e future growt% of t%e com&any< If t%e recent
of t%e com&anyOs cas% flows is stable and its future growt% is incremental and sustainable, a
&roKection will be made into &er&etuity< If t%e recent %istory of t%e com&anyOs cas% flows %as &eaks
.alleys and;or its future will in.ol.e %ig% or une.en rates of growt%, &roKections will be made for
year of fi.e years Bone business cycle C, and t%en a single &roKection will be made from t%e fift%
year our
into &er&etuity< 1it%er way, t%e &roKected cas% flows will be con.erted back to &resent .alue using a
total rate of return on in.estment t%at is com&arable to t%e rate of return a.ailable in t%e market on
in.estments of similar risk and ot%er c%aracteristics< =%e resulting estimate of .alue is
adKusted for
w%et%er a controlling or minority owners%i& interest is being .alued and for t%e marketability or
lack of
marketability of t%at owners%i& interest< =%e income a&&roac% is generally used to .alue
com&anies and;or s&ecific &roKects t%at are being &ro&osed by management wit%in an
=%e market a&&roac% is based on t%e conce&t t%at t%e .alue of a &ri.ately %eld com&any
can be
reasonably estimated by e9amining, adKust in, and using t%e market multi&les Bsuc% as t%e
ratiosC of ]guideline] &ublicly %eld com&anies t%at bear enoug% similarity to t%e ]subKect] &ri.ately
com&any to make t%eir multi&les rele.ant<
$irst, t%e fundamental financial .ariables bot% t%e subKect com&any and its guide(line com&anies
adKusted to make t%em more com&arable to eac% ot%er and enable t%e .aluation &rofessional to
assess t%eir relati.e strengt%s and weaknesses< $inancial ratios for t%e subKect and guideline
are calculated and com&ared< 4ne or se.eral guideline com&any market multi&les are
selected and
adKusted to reflect t%e relati.e growt% &ros&ects and risks Bstrengt%s and weaknessesC of t%e
com&any< $inally, t%ese adKusted multi&les are weig%ted by degree of im&ortance and a&&lied to
fundamental financial .ariable of t%e subKect com&any< =%e resulting estimate of .alue is adKusted
w%et%er a controlling or minority owners%i& interest is being .alued and for t%e marketability of
lack oft
marketability of t%at owners%i& interest< >ariations of t%e market a&&roac% are used in conKunction
t%e cost and;or income a&&roac%es for .aluing all kinds of com&anies<
=%e real o&tions a&&roac% %as grown out of o&tions t%eory< =%e .alue of an o&tion increases as t%e
.ariability in t%e .alue of t%e underlying asset Bcas% flow &er unitC increases< =%ere
are si9 key
&arameters t%at affecti.e .alue of a real o&tion@ t%e market .alue of t%e asset, t%e e9ercise &rice of
o&tion, t%e time remaining until t%e o&tion matures, t%e .olatility of t%e underlying asset, t%e risk(
rate of t%e asset, and t%e amount of di.idends &aid by t%e underlying risky asset< =%is measure not
.alues a &roKectOs immediate return but allows inclusion of t%e &otential .alue generated in
in.estment outcomes< =%e real o&tions a&&roac% is a basic ca&ital budgeting tec%niFue t%at focuses
measuring t%e .alue of an indi.idual &roKect, in conditions of uncertainly, before t%e &roKect begins<
=%e real o&tions a&&roac% is not used to .alue s&ecified owners%i& interests in &ri.ately %eld
but to .alue internal and e9ternal in.estment o&&ortunities for an indi.idual com&any, &ublic or
3s suc%, it is a strategic business .aluation tool< It is widely used by t%e Internet
.enture ca&ital
community for determining t%e &otential future .alue of com&anies wit% no economic %istory< It
%as been a&&lied to t%e .aluation of &atents and licenses<
N o&yrig%t >irtual :ni.ersity of 7akistan 82Knowledge Management EM!M=(/#0 >:
-1++4N 12
M13+:R1+ 4$ IN=1--1=:3- 37I=3-
Measuring Return on Knowledge
We %a.e &ro.ided a broad brus%(stroke re.iew of some of t%e most &romising a&&roac%es to
knowledge assets as well as t%e more traditional a&&roac%es to .aluing com&any assets< 3s we
noted in
t%e last c%a&ter, reliable a&&roac%es reFuire a common language to discuss t%e underlying .alue of
organi5ationAs knowledge assets< =%e knowledge(.alue(added met%odology conforms to
reinforcement and is one of t%e most robust a&&roac%es< Really understanding %ow t%e
works reFuires a fairly com&lete re.iew< !oing into more detail %ere will &ro.ide an o&&ortunity
work t%roug% some of t%e more &ractical issues in.ol.ed in actually trying to measure knowledge at
granular le.el< :ltimately, it will be at t%e granular le.el t%at new knowledge measures will &ro.ide
raw data for Information 3ge financial and accounting &rofessionals< In.estors, managers, and
customers can rely on suc% &rofessionals for basic analysis and insig%t u&on w%ic% to base
Knowledge(>alue(3dded Met%odology
=%e knowledge(.alue(added BK>3C met%odology addresses a need long recogni5ed by
managers by s%owing %ow to le.erage and measure t%e knowledge resident in em&loyees,
tec%nology, and core &rocesses< K>3 analysis &roduces a return(on(knowledge BR4KC ratio to
t%e .alue added by gi.en knowledge assets regardless of w%ere t%ey are located<
=%e essence of K>3 is t%at knowledge utili5ed in cor&orate core &rocesses is translated into
form< =%is translation allows allocation of re.enue in &ro&ortion to t%e .alue added by t%e
as well as t%e cost to use t%at knowledge< =racking t%e con.ersion of knowledge into .alue
measuring its bottom(line im&acts enables managers to increase t%e &roducti.ity of t%ese critical
K>3, t%oug% based on so&%isticated conce&ts from t%ermodynamics, is relati.ely straig%tforward
K>3 19am&le
-etAs begin wit% an Ga.erageH &erson w%o needs to learn %ow to &roduce all t%e out&uts of a gi.en
com&any< In a .ery real sense, t%en, %er knowledge of t%e com&any would be t%e embodiment of
com&anyAs .alue(adding &rocesses including selling, marketing, &roducing, accounting for,
ser.icing, and maintaining< It is t%ese core &rocesses t%at add .alue w%ile con.erting in&uts into
t%at generate t%e com&anyAs re.enue<
K>3 &ro.ides a met%odology for allocating re.enue and cost to a com&anyAs core &rocesses based
t%e amount of c%ange eac% &roduces< +ignificantly, t%e knowledge reFuired to make t%ese c%anges
is a
con.enient way to describe t%e con.ersion &rocess<
We define knowledge in a &articularly way %ere@ It is t%e know(%ow reFuired to &roduce
out&uts< =%is kind of knowledge is &ro&ortionate to t%e time it takes to learn it< We %a.e found
time to be a Fuick and con.enient way to measure t%e amount of knowledge contained in any gi.en
&rocess< We can &ut t%is understanding to t%e test wit% a sim&le e9am&le< In t%e widget com&any,
is one &erson, t%e owner, w%o makes and sells widgets< =%is &erson knows all t%ere is one &erson,
owner, w%o makes and sells widgets< =%is &erson knows all t%ere is to know in order to make and
widgets for P1< =%e ownerAs sales(&roduction knowledge can be used as a surrogate for t%e dollar of
re.enue generated by %is a&&lication of t%e core &rocess knowledge< 3nd we can determine %ow
long it
would take t%e widget com&any owner to transfer all t%e necessary sales and &roduction knowledge
to a
new owner< $urt%er, we can use t%ese learning times to allocate t%e dollar of re.enue between t%e
and &roduction &rocesses<
N o&yrig%t >irtual :ni.ersity of 7akistan 88Knowledge Management EM!M=(/#0 >:
$or sim&licityAs make, letAs assume t%at it takes 100 %ours for t%e new owner to learn t%e &rocesses,
"0 %ours s&ent learning %ow to make t%e widget and #0 %ours learning %ow to sell it< =%is
indicate t%at "0 &ercent of t%e knowledge and .alue added was contained in t%e &roduction &rocess
#0 &ercent of t%e knowledge and .alue added was contained in t%e &roduction &rocess and #0
in t%e sales &rocess< It would follow t%at P0<"0 of t%e re.enue would be allocated to
knowledge and P0<#0 to sales knowledge<
3ll t%at would be left to do in t%is e9am&le would be to determine %ow muc% it costs to use t%e
and &roduction knowledge and t%en we would %a.e a ration of knowledge .alue added to
utili5ation cost< In ot%er words, we can measure return on knowledge BR4KC< $or t%e sake of
letAs assume t%at t%e total cost to sell and &roduce a widget was P0<*0@ P0<2* for sales and P0<2*
&roduction< =%e basic a&&roac% %ere is to find out %ow muc% it costs to use t%e sales and &roduction
knowledge< In t%is case, t%e cost is directly tied to %ow long t%e new owner s&ends &erforming eac%
&rocess< 3s it turns out, in t%is case, t%e new owner s&ends t%e same amount of time to do bot% and,
t%erefore, t%e cost to use t%e knowledge of eac% &rocess is t%e same<
)ased on our estimates for t%e distribution of re.enue and cost, we would generate an estimate of
R4K< We would conclude t%at t%e &roduction &rocess is a more &roducti.e use of t%e knowledge
B=4K _ 0<"0;<2* _ 220 &ercentC t%an t%e sales &rocess BR4K _ 0<#;0<2* _ 120 &ercentC<
=%e K>3 met%odology can be a&&lied at any le.el in a com&any< We can conduct roug%(cut
of t%e relati.e return on knowledge of a com&anyAs core &rocesses and information tec%nology
t%e same general a&&roac%< -etAs say t%at we want to conduct a Fuick(and(dirty K>3 of t%e
or&oration< We could gat%er toget%er re&resenting t%e core &rocesses, including sales(
&ro.isioning, a marketing, network &ro.isioning, maintenance, and so fort%< 1ac% would estimate
long it takes t%e a.erage &erson to learn %ow to &roduce t%e out&uts of t%e core areas< $or reasons
e9&lained below, weAll add one boundary condition@ We only %a.e a total of 100 mont%s for
&erson to learn e.eryt%ing necessary to generate t%e annual re.enue at +)< It is normal in suc%
cases to
lum& su&&ort and administrati.e &rocesses toget%er in one large category or to ignore suc%
de&ending on t%e goals of t%e K>3 and for t%e sake of con.enience<
We would not ask t%e to make estimates of t%e .alue of t%eir core &rocesses, since
could degenerate into a no(win dogfig%t< Rat%er, t%ey would be asked to ac%ie.e consensus
estimates of
a&&ro9imately w%at &ortion of t%e total allotted 100 mont%s our a.erage &erson s%ould use to learn
eac% core &rocess =%ese estimates would be weig%ted by t%e number of em&loyees in eac% core
to estimate %ow freFuently t%e knowledge in a gi.en &rocess is em&loyed in a ty&ical year<
=o make a back(of(t%e(en.elo&e estimate of t%e knowledge embedded in t%e information
tec%nology of
core &rocesses, we could ask for t%e &ercentage of t%e &rocess t%at is automated< =%en t%e
of knowledge for eac% &rocess, including its su&&orting information tec%nology, can be calculated
di.iding &rocess knowledge by t%e total amount of knowledge< Re.enue is t%en
If we wanted to understand t%e contribution of information tec%nology, t%e re.enue for eac% &rocess
could be furt%er &artitioned into t%e amount attributable to information tec%nology< =%e annual
for eac% area can be used to estimate t%e cost to use t%e gi.en core &rocess knowledge< In most
tec% firms, %is is usually t%e cost for em&loyee salaries and information tec%nology costs< =%e final
would be to di.ide t%e allocated re.enue by t%e cost &er core &rocess to determine t%e relati.e
=%e re.enue attributable s&ecifically to t%e knowledge embedded in information tec%nology and
cost to use it would &ro.ide t%e R4K for I= wit%in and among &rocesses< =%is can be Fuite
re.ealing in
t%at Gall I= is not created eFual<H +ome %ig%ly automated &rocesses &ro.ide muc% lower R4Ks t%an
ot%ers in w%ic% t%ere is a lower &ercentage of automation, but I= &ro.ides muc% more Gbang for t%e
!i.en a common &oint of reference, learning(time c%eating is infreFuent because t%e
t%eir estimates can be .erified by ot%er knowledge measure suc% as actual training times and
number of
&rocess instructions for eac% &rocess< More im&ortantly, t%e common reference &oint for
&ro.ides a meaningful framework for discussion< 3nd, once t%e R4Ks are calculated, t%e can
mo.e forward to &rioriti5e efforts to im&ro.e o.erall com&any &erformance<
N o&yrig%t >irtual :ni.ersity of 7akistan 1007 M R
4ut&ut 7rocess In&ut
Knowledge Management EM!M=(/#0 >:
K>3 =%eory
K>3 is firmly rooted in t%e Information 3ge< It allows managers and in.estors to
analy5e t%e
&erformance of cor&orate knowledge assets in core &rocesses in terms of t%e returns t%ey generate<
is true w%et%er knowledge is embedded in information tec%nology or em&loyeesA
%eads< =%is is
accom&lis%ed by &ostulating a common unit of knowledge t%at can be obser.ed in core &rocess and
counted in terms of its &rice and cost< =%e results of a K>3 analysis are ratios t%at com&are t%e
and cost for t%ese common units of knowledge< 1conomics com&onents for t%ese ratios are deri.ed
from t%e cas% flow from ongoing o&erations and can be deri.ed contem&oraneously
wit% t%e
generation of t%e case flow<
=%e fundamental assum&tions can be summari5ed as below
$undamental 3ssum&tions of K>3
:nderlying Model@ %ange, Knowledge, and >alue are 7ro&ortionate
7BRC _ M
$undamental assum&tions@
1< If R_M, no .alue %as been added<
2< G.alueH 9 Gc%angeH
#< Gc%angeH can be measured by t%e amount of
knowledge reFuired to make t%e c%ange<
+o G.alueH 9 Gc%angeH 9 Gamount of knowledge
reFuired to make t%e c%angeH
=%e &rinci&le of re&lication states t%at gi.en t%at we %a.e t%e knowledge necessary to &roduce
c%ange, t%en we %a.e t%e amount of c%ange introduced by t%e knowledge< )e definition, if we %a.e
ca&tured t%e knowledge reFuired to make t%e c%anges necessary, we will not be able to &roduce t%e
out&ut as determined by t%e &rocess< =%ese tests to determine if t%e amount of knowledge reFuired
&roduce an out&ut %as been accurately estimated<
$or t%e &ur&oses of sim&lification, t%e knowledge audit of K>3 met%odology can be delineated
se.en ste&s for t%ose w%o need a more concrete guide< =able "<1 summari5es t%ree different ways to
generate estimates of t%e .alue of t%e knowledge embedded in t%e core &rocesses of a firm< =%e
case study t%at follows will &ro.ided detailed e9am&les of %ow K>3 mig%t be a&&lied to
manage t%e knowledge in an Internet infrastructure com&any<
=%e K>3 a&&roac% is currently being embedded in t%e G7rocess 1dgeH =M2 &rocess modeling tool
suite from Intelligent +ystems =ec%nology Incor&orated< =%is software will allow analysts to gat%er
re&resent K>3 data wit%in a &rocess work(flow model as well as monitor t%e ongoing
return on
knowledge BR4KC and return on &rocess BR47C<
N o&yrig%t >irtual :ni.ersity of 7akistan 101Knowledge Management EM!M=(/#0 >:
=%ree 3&&roac%es to K>3
+te&s -earning time 7rocess descri&tion )inary Fuery met%od
1< Identify core &rocess and its sub &rocesses
2< 1stablis% common units to
measure learning time<
Describe t%e &roducts in
terms of t%e instructions
reFuired to re&roduce t%em
and select unit of &rocess
reate a set a binary yes;no
Fuestions suc% t%at all
&ossible out&uts are
re&resented as a seFuence of
yes;no answers<
#< alculate learning time to
e9ecute eac% sub &rocess
alculate number of &rocess
instructions &ertaining to
eac% sub &rocess<
alculate lengt% of seFuence
of yes;no answers for eac%
sub &rocess<
'< Designate sam&ling time &eriod long enoug% o ca&ture a re&resentati.e sam&le of t%e core
&rocessAs final &roduct; out&ut<
*< Multi&ly t%e learning time for
eac% sub &rocess by t%e
number of times t%e sub
&rocess e9ecutes during
sam&le &eriod<
Multi&ly t%e number of
&rocess instructions used to
describe eac% sub &rocess by
t%e number of times t%e sub
&rocess e9ecutes during
sam&le &eriod<
Multi&ly t%e lengt% of t%e
yes;no string for eac% sub
&rocess by t%e number of
times t%is sub &rocess
e9ecutes during sam&le
/< 3llocate re.enue to sub &rocesses in &ro&ortion to t%e Fuantities generated by ste& * and
calculate costs for eac% sub &rocess
=%e knowledge wit%in a &rocess can be re&resented as learning time, &rocess instructions, or bits< In
fact, any a&&roac% t%at satisfies t%e basic K>3 assum&tions will work< )ased on t%e
assum&tion of K>3, t%e correlation between any two or more estimates s%ould be at a %ig% le.el to
ensure an accurate estimate< =%is sim&le matc%ed correlation measures t%e reliability of an estimate<
N o&yrig%t >irtual :ni.ersity of 7akistan 102Knowledge Management EM!M=(/#0 >:
-1++4N 18
KN4W-1D!1 M3RK1= M4D1- 3ND K>3 3+1 +=:DM
Knowledge Market $ramework
Wit%in t%e economic sc%ool, knowledge transfers occur in knowledge markets< =%is is a
&ers&ecti.e, in w%ic% knowledge e9c%anges occur in a market&lace< In defining any market, one
must be
clear as to w%om t%e buyers and sellers are, and w%at &ricing system e9ists to determine w%at
consumer &ays for a &roduct or< Knowledge markets e9ist wit%in e.ery organi5ation<
markets include not only knowledge t%at %as been codified or synt%esi5ed Breali5edC into a
&rocesses, structure, tec%nology or strategy, but also include all dynamic e9c%anges of
between buyers and su&&liers<
3ccording to ! and Da.en&ort B2001C, organi5ation can be .iewed to %a.e two categories
buyers of knowledge, local buyers and global buyers< =%e local buyers are &eo&le w%o are
searc%ing for
knowledge assets to address an issue t%at t%ey need to resol.e< =%e reFuire more t%an
19&ertise, e9&erience, insig%t, and Kudgment are needed to bring to bear on t%e issue< =%ey could
for knowledge in %ard currency .ia for e9am&le a consultant from outside t%e firm, or
buy t%e
knowledge from internal su&&liers< =%e global knowledge buyer is t%e firm, w%ic% %as a .ested
in reali5ing knowledge assets into .aluable &roducts and ser.ices< =%e global
knowledge buyer,
re&resented by organi5ational stake%olders w%ose benefits are tied to organi5ational le.el outcomes,
a strong interest in transferring local knowledge to global knowledge< Doing so reduces de&endency
knowledge sellers E in case t%ey c%oose to lea.e t%e firm< Knowledge sellers are &eo&le w%o
knowledge Busually tacitC to sell< =%e Fuality of t%is knowledge mig%t be %ig% or low de&ending on
credibility of t%e source<
Da.en&ort and 7rusakAs B1882C a&&roac% to knowledge management is concerned wit%
markets< 3 knowledge market can be defined as a system in w%ic% &artici&ants e9c%ange a scarce
for &resent or future .alue< )uyers, sellers and brokers are t%e role on knowledge markets<
buyers or seekers are usually &eo&le trying to resol.e an issue w%ose com&le9ity and uncertainty
knowledge< =%ey seek knowledge because it %as distinct .alue to t%em< Knowledge sellers are
&eo&le in an organi5ation wit% an internal market re&utation for substantial knowledge about
&rocess of organi5ation<

K>3@ ase +tudy of 19odus ommunications Inc<
=%e following is an e9am&le of %ow K>3 can be a&&lied to a com&any in t%e Internet infrastructure
market&lace< =%e same general a&&roac% can be e9tended to any com&any< =%e K>3 met%odology
generic and robust enoug% to be a&&licable to com&anies and core &rocesses in any industry<
19odus ommunications Inc< $inancial +ummary
7rice *2(week
7;1 Market
\#' P1*(P28 '12<' PB0<#/C PB0</C NM
NM _ not meaningful<
19odus is leading &ro.ider of web %osting ser.ices< =%e com&any offers a suite of ser.ices
data center, Internet access, and managed ser.ices<
1< 19odus is a ty&ical Internet infrastructure com&any t%at cannot be meaningfully e.aluated
by t%e traditional financial ratios and multi&les met%od6 for e9am&le, t%e 7;1 ratio is not because t%e com&any %as no &ositi.e net income<
2< =%e &rice(to(book .alue of 19odus is ''<*8 w%ile t%e industry a.erage for t%is ration is
only 1/</8 and t%e +L7 *00 is 8<//< t%e &rice(to(tangible .alue of 19odus is /"<88 w%ile t%e
N o&yrig%t >irtual :ni.ersity of 7akistan 10#Knowledge Management EM!M=(/#0 >:
industry a.erage is only 20<*1 and t%e +L7 *00 is 12<""< =%is means t%at 19odus stock is
being .alued more ric%ly relati.e to t%e .alue of its assets t%an is t%e case for t%e +L7 *00<
ItAs a good e9am&le to illustrate t%at most of t%e .alue of t%e com&any is deri.ed from t%e
underlying knowledge assets embedded in t%e com&any structure and culture, w%ic% is not
reflected o t%e traditional accounting statement<
om&any Descri&tion
$ounded in 188', 19odus ommunications
=M %as been a &ioneer in t%e Internet data center market<
=%e com&any offers system and network management solutions, along wit% tec%nology
ser.ices for customersA websites< 19odus deli.ers its ser.ices from geogra&%ically distributed
data centers t%at are connected t%roug% a %ig%(&erformance dedicated and redundant
network< =%e com&anyAs tailored solutions are designed to integrate wit% e9isting enter&rise
arc%itectures and to enable customers to outsource t%e monitoring, administration, and o&timi5ation
t%eir eFui&ment, a&&lications and o.erall Internet o&erations, 19odus is &ublicly trade on t%e
National market under t%e ticker symbol 1RD+<
3s of December #1, 1888, t%e com&any %ad 2,200 customers under contract and managed
2",000 customer ser.ers worldwide< =%e com&anyAs customers re&resent a .ariety of industries,
from Internet leaders to maKor enter&rise customers< Ma%ooQ, :+3 =4D3M<com,
&ricleine<com, )ritis% 3irways, and Nordstrom are Kust a few of t%e com&anies selecting 19odus as
com&le9 Web %osting &ro.ider<
19odus currently o&erates Internet data centers located in nine metro&olitan areas in t%e :nited
3tlanta, 3ustin, )oston, %icago, -os 3ngeles, New Mork, +eattle, +ilicon >alley, and Was%ington,
In addition, t%e com&any o&ened its first Internet data center outside of t%e :nited +tates I t%e
metro&olitan area in Dune 1888 and t%e second in =okyo, Da&an, in December 1888<
19odus offers t%ree ty&es of ser.ices@
1< Internet %osting<
2< Network solutions<
#< +ystem management and monitoring ser.ices<
urrent Issues
19odus ommunications currently %as t%ree areas of concern@
1< Decreasing &rofit margin@ )andwidt% of t%e Network solutions and t%e co(location of
Internet 0osting are ra&idly becoming commodities wit% smaller and smaller
margins as a result of increased com&etition and t%e maturation of t%e industry<
2< 19&ansion o&&ortunity@ 19odusAs core customers are mostly Gblue c%i&H $ortune *00
com&anies due to t%e limited amount of time and sales staff resources< =%ere are
o&&ortunities for small customers t%at reFuire sim&le and standardi5ed solutions< =%e
current &rocess of selection and network arc%itecture and design BN3DC is .ery
labor intensi.e and takes u& lots of resources, w%ic% makes furt%er e9&ansion difficult<
#< 1merging com&etition@ =%e emerging com&etition in t%e industry will lower t%e a.erage
re.enue &er user of 19odusAs customers<
=%e goal of t%e e9ercise is to identify t%e area for focus on increasing re.enue from e9isting
assets, rat%er t%an Kust cutting cost< =%e following is an e9am&le of %ow K>3 could be a&&lied
19odus on bot% t%e aggregate and t%e o&eration le.els to measure t%e .alue of knowledge created in
core and sub &rocesses<
3ggregate(-e.el K>3
3 roug%(cut estimate K>3 on 19odus ommunications Inc< is targeted at t%e aggregate
le.el of
analysis< 4n one %and, t%e to& can benc%mark t%e com&anyAs us of knowledge assets
ot%er industries< 4n t%e ot%er %and, management can look at t%e le.el of &erformance in t%e
core &rocesses before deciding %ow to im&ro.e &erformance<
N o&yrig%t >irtual :ni.ersity of 7akistan 10'Knowledge Management EM!M=(/#0 >:
3ssum&tions and Met%odology =%e K>3 team would inter.iew &rocess subKect matter e9&erts
B+M1sC, make obser.ations, and talk wit &rocess em&loyees and managers to obtain a.erage
time estimates and t%e number of roug%ly eFui.alent &rocess instructions reFuired to com&lete eac%
&rocess< +ome of t%e numbers for t%e aggregated(le.el analysis, suc% as number of
em&loyees and
e9&enses, were annuali5ed figures deri.ed from t%e 18881 financial statements<
1< Determine t%e core areas E We would gat%er toget%er t%e .arious of t%e core
&rocesses in 19odus< =%en t%ey would be asked to categori5e t%e com&anyAs functions at
t%e aggregate le.el@ Management, +ales and !eneral 3dministration B+L!3C, and
4&eration< =%ese t%ree functions would be t%e aggregate of all core &rocesses in t%e
a< Management includes finance and strategic management<
b< +L!3 includes all su&&orting functions suc% as %uman resources, &ublic relations, and
c< 4&erations includes sales su&&ort and design, selection and network
arc%itecture design BN3DC, &rocurement, integration, troubles%ooting, and final
2< !at%er t%e data on t%e amount of knowledge embedded in eac% core area using t%e
learning time a&&roac%<
a< Ranking< from t%e com&any would be asked to rank t%e t%ree
abo.ementioned areas in terms of %ardest to easiest to learn or most to least com&le9
to learn< =%is ranking met%od creates a framework to guide t%e to make a
first(cut analysis of t%e underlying amount of knowledge created in eac% area< It also
offers a knowledge estimate t%at, a &riori, is assumed to correlate wit% t%e 100(mont%
learning time estimate< =%e le.el of t%e correlation is an indication of t%e accuracy of
t%e estimate<
b< -earning time estimation< would t%en be asked to estimate %ow long it
would take t%e a.erage &erson to learn %ow to &roduce t%e out&uts of eac% core area
using t%e 100(mont% a&&roac%< =%ere is a total of only 100 mont%s for an a.erage
&erson to learn e.eryt%ing in t%e abo.e areas necessary to generate t%e annual re.enue
at 19odus< =%e %a.e to estimate t%e time an a.erage &erson would use, of
t%e total allotted 100 mont%s, to learn eac% core &rocess<
#< Weig%t t%e amount of knowledge e9ecuted in t%e &rocess<
a< Determine t%e number of em&loyees wit%in eac% core area<
b< 3sk for t%e &ercentage of t%e &rocess t%at is automated< =o truly understand t%e
knowledge embedded in t%e &rocess, we %a.e to talk to t%e &rocess subKect matter
e9&erts to tell us &recisely w%at we need to know to &roduce t%e information
tec%nologyAs out&ut wit%in t%e sub &rocess under re.iew<
c< alculate t%e &ercentage of knowledge contained in eac% &rocess, including its
su&&orting tec%nology< =%e amount of knowledge in eac% &rocess is eFual to relati.e
learning time multi&lied by t%e number of em&loyees V automation< =%en re.enue can
be allocated &ro&ortionately based on t%is &ercentage<
d< Determine t%e annual budget for eac% core &rocess or area used in t%e analysis to
generate t%e cost estimates<
e< alculate t%e R4K ratio to estimate t%e .alue added by gi.en knowledge assets in eac%
=able "<2 re&resents our annuali5ed %ig%(le.el aggregate .iew of 19odusAs 1888 &erformance<
entry of t%e table is described in t%e following &aragra&%s<
In column 1 we identify t%e core areas of 19odus ommunications< =%e t%ree %ig% le.el core areas
categori5ed as +L!3, 4&erations, and Management<
Inc column 2 we rank t%e areas in terms of t%e most difficult to t%e easiest to learn, 1 being t%e
and # t%e %ardest< In t%e table below, +L!3 is t%e easiest area to learn and 4&erations is t%e
In column # we assume t%at it takes 100 mont%s for an a.erage &erson to learn t%e t%ree areas based
an a.erage &erson< $or e9am&le, +L!3 is t%e easiest area to learn and takes an a.erage
&erson 20
mont%s out of 100 mont%s to learn all &rocesses in t%e +L!3 area< =%is a&&roac% can
kee& t%e wit%in t%e conce&tual framework of Fuantifying t%e amount of knowledge contained in
N o&yrig%t >irtual :ni.ersity of 7akistan 10*Knowledge Management EM!M=(/#0 >:
function< =%is figure s%ould correlate wit% t%e ranking in column 2< If t%e two figures donAt
%ig%ly, we will ask t%e to reconsider and re(estimate< =%e t%eory &redicts t%at
figures in
column 2 and column # s%ould be 100 &ercent correlated<, gi.en t%e fact t%at no estimate
will be &erfect, t%ere will always be some measurement error< We %a.e found t%at t%e
le.el of
correlation s%ould reac% a minimum of 2* &ercent to be acce&table by most for t%e
cut, aggregated estimation and 8* &ercent for t%e more detailed core &rocess analyses<
=able "<2 0ig%(-e.el 3ggregate K>3 3nalysis
ol<1 ol<2 ol<# ol<' ol<* ol</ ol<" ol<2 ol<8 ol<10 ol<11
ore areas
Rank in
terms of
difficult to
amount of
e of
allocation Bin
millions of
:<+< dollarsC
e9&ense Bin
millions of
In column ' t%e number of em&loyees is a roug%(cut way to Gweig%ingH knowledge in t%e core
areas for
t%e annuali5ed &eriod< =%e actual number of e9ecutions of knowledge may .ary and t%is issue
s%ould be
addressed w%en discussing t%e reasonableness of t%e em&loyee(weig%ting met%od wit%
familiar wit% t%e core areas< In 19odus, t%ere are a total of 2** &eo&le in t%e Management area,
re&resents t%e number of times t%e knowledge embedded in t%e management function area is
If we donAt %a.e t%e e9act figures of total em&loyees in eac% area, &ercentage of em&loyees
in eac% area can be used<
In column * t%e &ercentage of automation is t%e estimated amount of knowledge contained in
information tec%nology systems t%at su&&ort t%ese core functions< =%e &ercentage is
based on an
estimation of %ow long it would take t%e a.erage &erson to learn %ow to &erform t%e
manually t%at are currently &erformed by t%e I=< If we remo.e t%e automation, it is t%e amount
knowledge used to &roduce t%e same out&ut as is &roduced wit% t%e automation<
Remember, we need t%e amount of knowledge embedded in t%e I= but not t%e time and cost it takes
e9ecute t%e knowledge to obtain t%e out&ut< =%e time used to &roduce t%e same out&ut is an
estimate of
t%e cost of using t%e knowledge embedded in t%e automation<
In column / we calculate t%e amount of knowledge embedded in automation, w%ic% is t%e learning
Bcolumn #C multi&lied by t%e number of em&loyees 8column 'C multi&lied by t%e
&ercentage of
automation Bcolumn *C<
+L!3 20 9 2** V 20U _ 1#,/20
4&erations '* 9 /00 V /0U _ 1/,200
Management #* 9 2** V 20U _ ",1'0
In column " we calculate t%e total amount of knowledge, w%ic% is t%e learning time
Bcolumn #C
multi&lied by t%e number of em&loyees Bcolumn 'C &lus t%e automation Bcolumn /C<
+L!3 20 9 2** V 1#,/20 _ #0,"20
4&erations '* 9 /00 V 1/,200 _ '#,200
Management #* 9 2** V ",1'0 _ 1/,0/*
In column 2 we calculate t%e amount of knowledge allocated to eac% functional area@
+L!3 B#0,"20;80,0'*C 9 100U _ #'<12U
4&erations B'#,200;80,0'*C 9 100U _ '"<82U
Management B1/,0/*;80,0'*C 9 100U _ 1"<2'U
=%e amount of knowledge is t%e total .alue surrogate of t%e annual re.enue BP2'2 millionC< In
column 8
annual re.enue is allocated based on t%e &ercentage of t%e amount of knowledge embedded in eac%
stage in terms of total knowledge<
+L!3 P2'2 9 #'<12U _ P22<" million
N o&yrig%t >irtual :ni.ersity of 7akistan 10/Knowledge Management EM!M=(/#0 >:
4&erations P2'2 9 '"<82U _ P11/<1 million
Management P2'2 9 1"<2'U _ P'#<2 million
olumn 10 ca&tures t%e cost used to generate t%e out&uts of t%e &rocess<
+L!3 P112<2 million includes t%e general administrati.e costs and marketing e9&enses
4&erations P18"<2 million
Management P*1 million
In column 11 we calculate return on knowledge BR4KC, w%ic% is t%e allocated re.enue Bcolumn
di.ided by t%e cost to use t%is knowledge Bcolumn 10C<
+L!3 P 22<";P112<2 _ "0U
4&erations P11/<1;P18"<2 _ *8U
Management P'#<2;P *1 _ 2*U
R4K is t%e ratio of re.enue allocated to eac% core area com&ared to its corres&onding e9&enses< )y
com&aring t%e e9&enses and re.enues associated wit% t%e knowledge asset, an internal %urdle rate
be com&uted to com&are efficiency in &erformance of t%e core areas< In t%e abo.e e9am&le,
R4K in t%e t%ree core function areas are less t%an one because it %as not generated &ositi.e net
Management Im&lication
3mong t%e t%ree core function areas, t%e &erformance of 4&erations B*8 &ercentC is relati.ely low
com&ared to +L!3 B"0 &ercentC and Management B2* &ercentC< =o take constructi.e actions to
t%e com&any &rofitable, t%e K>3 analysis can identify t%e areaBsC w%ere t%e com&any can be
effecti.e in e9&loiting its knowledge resources to generate out&uts more effecti.ely and efficiently<
=o in.estigate w%ic% area in 4&erations needs im&ro.ement, we must go into t%e core &rocesses to
analy5e t%e distribution and contribution of knowledge< urrently, t%e sales &ro.isioning &rocess is
of t%e core &rocesses in 19odusA 4&erations< It &resents a maKor o&&ortunity for furt%er
e9&ansion wit% t%e e9&losi.e growt% in demand for data storage<, it is also t%e area
customer turnaround is t%e slowest due to lack of automation< =%e costs of e9&ansion in terms of
sales &ro.isioning &rocess are accelerating< $i.e out of t%e si9 sub &rocesses of sales &ro.isioning
wit%in t%e 4&erations area< =%e lower R4K in t%e 4&erations area %as confirmed managementAs
and intuition t%at t%e sales &ro.isioning &rocess is one of t%e areas needing im&ro.ement<
=o reassure in.estors t%at management is tackling t%e biggest &roblem area, t%e sales &ro.isioning
was selected for furt%er K>3 analysis< =%e sales &ro.ision &rocess includes si9 sub &rocesses@
su&&ort and design, selection and N3D, &rocurement, integration, troubles%ooting, and
testing< 3ll of t%ese sub &rocesses fall into t%e 4&erations area, e9ce&t t%e sales su&&ort functions<
K>3@ +ales 7ro.isioning 7rocess
3ssum&tions and Met%odology
1< Data center@ 19odus %as a total of 22 Internet data centers worldwide< =%e o&erations cost
and &rocess structure are based on t%e 11 +egundo center located in -os 3ngeles< We
assume t%at all centers are staffed and o&erated more or less t%e same way<
2< -earning time and &rocess instruction a&&roac%@ In addition to learning time, t%e &rocess
instruction a&&roac% is anot%er way to measure t%e amount of knowledge reFuired to
&roduce &rocess out&uts< =%e amount of knowledge reFuired is &ro&ortionate to t%e
number of &rocess instructions &ertaining to eac% &rocess<
=%e learning time as well as t%e &rocess instructions, will ser.e as an estimate for t%e
amount of
knowledge contained in eac% sub &rocess and s%ould be defined in terms of rig%tly eFual
$or e9am&le, instructing a &erson to &aint t%e door green may be less com&le9 t%an instructing a
to make t%e customer %a&&y< !enerating two inde&endent estimates of knowledge is use full in t%at
allows an estimate of t%e accuracy and t%e reliability of knowledge estimates by making a
correlation test among t%e two< =%e %ig%er t%e correlation, t%e better t%e estimates<
N o&yrig%t >irtual :ni.ersity of 7akistan 10"Knowledge Management EM!M=(/#0 >:
+e.en +te&s of K>3 on +ales 7ro.isioning 7rocess +te& one is to identify t%e core and sub
=%e 19odus core sales &ro.isioning &rocess in.ol.ed si9 &rocesses@ sales su&&ort and design,
selection and N3D, &rocurement, integration, troubles%ooting, and final testing< B+ee =able "<#,
In ste& two we establis% a common definition of learning time for t%e si9 &rocesses under re.iew<
would ask t%e subKect matter e9&erts B+M1sC to describe t%e &rocess instructions for &roducing
out&uts of t%e si9 sub &rocesses< We also would ask t%e +M1s to estimate %ow long it would take to
teac% an Ga.erageH &erson to learn to &roduce t%e out&uts< =%e learning time estimate indicated t%at
total of a&&ro9imately 2,000 weeks were reFuired to learn t%e w%ole seFuence of %ow to e9ecute
sub &rocess<
In ste& t%ree we calculate t%e total time to learn %ow to e9ecute eac% sub &rocess<
1< -earning time a&&roac%@ we calculate t%e total time to learn %ow to e9ecute eac% sub
&rocess< !i.en t%at t%ere were a total of 2,000 weeks to learn %ow to e9ecute t%e si9
&rocesses, t%e distribution of learning time was as follows@ sales reFuired 2'0 weeks,
selection and N3D reFuired '00 weeks, &rocurement reFuired /0 weeks, integration
reFuired *00 weeks, troubles%ooting reFuired *00 weeks, and final testing reFuired #00
weeks B=able "<#, column 2C<
2< 7rocess instruction a&&roac%@ We need to identify a common language to describe t%e sub
&rocesses in terms of t%e &rocess instructions reFuired to &roduce t%e out&uts< $or
e9am&le, t%e sale su&&ort and design function reFuired 2'0 learning weeks or 220 &rocess
instructions to &roduce t%e out&ut<
=able "<# K>3 on t%e +ales 7ro.isioning 7rocess
ol<1 ol<2 ol<# ol<' ol<* ol</ ol<" ol<2 ol<8 ol<10
-earning time BweeksC
Number of em&loyees
3mount of knowledge embedded in I=
=otal amount of knowledge
7ercentage of knowledge allocation
3nnual re.enue allocation Bin millionC
7rocess costs Bin millionC
R4K on industry a.erage
selection and
$inal testing
=otal 2,000 #2 1",1"2 100U P81<# P2*<2 10"U
=%e &rocess instruction estimates for t%e si9 sub &rocesses correlated abo.e 28 &ercent
wit% t%e
corres&onding learning time estimates B=able "<'C< !i.en t%e %ig% le.el of correlation, t%ere would
be a
fair degree of confidence t%at bot% learning times and &rocess task estimates were a reasonably
measure of t%e same underlying amounts of knowledge embedded in eac sub &rocess< )ecause of
%ig% correlation we decided to use only t%e learning times for t%e R4K estimates<
N o&yrig%t >irtual :ni.ersity of 7akistan 102Knowledge Management EM!M=(/#0 >:
In ste& four we designate a sam&ling time &eriod long enoug% to ca&ture a re&resentati.e sam&le of
com&ound &rocessesA final &roduct; out&ut< In t%is case, t%e annuali5ed &eriod was used,
number of em&loyees was t%e weig%ting factor<
In ste& fi.e we multi&ly t%e learning time for eac% sub &rocess by t%e number of times t%e sub
e9ecutes during t%e sam&le &eriod< In t%is case, we multi&lied t%e number of em&loyees B=able
column #C by t%e learning time Bolumn 2C< =%en we added t%e amount of automation Bcolumn 'C to
deri.e t%e total amount of knowledge used in t%e sub &rocess Bcolumn *C< =%e total
&ercentage of
knowledge is &ro&ortionately allocated to eac% sub &rocess in column / and t%e total
amount of
re.enue for eac% sub &rocess is also allocated in column "<
In ste& si9 Bsee =able "<*C we calculate t%e cost to e9ecute eac% sub &rocess based on t%e
t%at t%e total of 22 worldwide data centers s%ares t%e same cost structure as a ty&ical
one in 11
+egundo< =%is assum&tion can be c%ecked for accuracy in furt%er discussions wit% t%e
+M1s and< =%e annual cost for eac% sub &rocess is re&resented in column 2< In t%is
case, t%e
&rimary determinant of cost was t%e number o em&loyees working in eac%
=able "<' -earning =ime 3nd 7rocess Instructions 3&&roac% orrelation
+ub &rocess -earning time BweeksC 7rocess instructions
+ales 2'0 220 selection and N3D '00 '00
7rocurement /0 200
Integration *00 */0
=roubles%ooting *00 '00
$inal testing #00 220
=otal 2,000 2,120
orrelation -earning time 7rocess instructions
-earning time
7rocess Instructions
3nd t%is was used to allocate cost wit% ot%er general e9&enses Breal estate, eFui&ment, &ower,
eFually di.ided among t%e sub &rocesses<
In ste& se.en we com&ute t%e R4Ks for eac% sub &rocess using re.enue allocated for eac% sub
B=able "<#, column "C as t%e numerator and cost for eac% sub &rocess Bcolumn 2C for t%e
=%e resulting returns on knowledge are re&resented in column 8, wit% %y&ot%etical a.erage
com&arisons from ot%er com&anies in t%e industry re&resented in column 10<
=%e following is a &artial list of t%e beneficial ways t%at K>3 analyses %a.e been used in a wide
of com&anies< reati.e managers and will find new ways ada&ted to t%eir &articular
J =ool to control o&erations@ Management needs current and dynamic feedback to steer t%e
com&any to &rofitability< =raditional financial tools &ro.ide a set of figures wit% no indication
to management w%at kinds of returns eac% core area or &rocess is &ro.iding< =%e results of a
K>3 analysis are ratios t%at com&are t%e &rice and t%e cost for t%ese common units
knowledge across core areas and &rocesses< =%e economic data for t%ese ratios are deri.ed
from cas% flow from ongoing o&erations and can be deri.ed contem&oraneously wit% t%e
generation of cas% flow< K>3 t%erefore &ro.ides contem&oraneous feedback to t%e com&anyAs
&erformance about %ow well t%e com&any is self(organi5ing and ada&ting to t%e dynamic
market en.ironment to en%ance .alue for bot% s%are%olders and customers< It is a tool to direct
allocation of knowledge assets and ca&ital resources<
J New set of raw data@ K>3 uses a new set of raw data t%at can be .alidated and reliably used to
measure t%e &erformance of cor&orate knowledge assets< =%e calculation of R47 and R4K
will %el& a.oid subKecti.e mani&ulation<, it s%ould be remembered t%at all calculations
are subKect to mani&ulation, but w%en bot% .alue and cost are matc%ed for gi.en core areas and
&rocesses, mani&ulation becomes more difficult<
=able "<2 0ig%(-e.el 3ggregate K>3 3nalysis
N o&yrig%t >irtual :ni.ersity of 7akistan 108Knowledge Management EM!M=(/#0 >:
olumn<1 olumn<2 olumn<# olumn<' olumn<* olumn</
ost for
e9ecuting t%e
19ecution time
7rocess cost
7rocess cost of
eac% data
center on an
annual basis
7rocess cost of
t%e w%ole
com&any Btotal
of 22 data
centersC Bin
and N3D
$inal testing
P **','00
=otal P#,2"2,1/0 P2*<2
J Increase in em&loyeeAs understanding of t%e .alue of t%e &roduction &rocess@ K>3 is easy to
understand< It %el&s em&loyees, e.en &ersons not familiar wit% finance and accounting, to
understand t%e .alue t%ey are contributing to t%e core &rocesses and t%e com&any bottom line<
+uc% a conce&t %el&s to con.ert t%e com&anyAs strategy into tangible obKecti.e for em&loyees
suc% as setting a return(based %urdle rate for t%eir &erformance<
J 1n%ancement of em&loyeesA &roducti.ity@ K>3 %el&s to create a framework t%roug%out t%e
com&any t%at encourages managers and em&loyees t t%ink and be%a.e like owners< I addition, it
&ro.ides a framework for t%e Information 3ge managers to more e9&licitly understand %ow to
mange knowledge assets<
J 1fficient resource allocation@ 3t t%e o&erational le.el, t%is a&&roac% %el&s to increase
s%are%olderAs .alue t%roug% increased efficiency in allocation of knowledge assets and ca&ital
resources< In many com&anies, all effort is di.erted to cut cost w%ile ignoring re.enue6 .alue at
all le.els %as been ignored because, in t%e &ast, t%ere %as been no e9&licit way to allocate
re.enue to core &rocess acti.ities<
J =ool to measure managerAs &erformance@ K>3 makes to managers res&onsible for t%e
o&erations w%ic% t%ey %a.e control< >alue is created by knowledge t%at is affected by t%eir
decisions rat%er t%an by e9ternal market factors t%at t%ey feel t%ey cannot control, for e9am&le,
t%e market &rice of t%e com&anyAs s%are or &roduct<
J )enc%mark of t%e com&any wit% industry or com&etitors@ K>3 offers a .alue based met%od
for com&aring com&aniesA knowledge asset &erformance wit%in an industry<
J 3 starting &oint to im&ro.e financial and business &olicy@ W%en com&anies e9amine
as a set of knowledge assets and knowledge out&uts, com&anies can identify and in.est in t%e
&rocesses, tec%nologies, and &eo&le t%at &ro.ide t%e greatest return<
N o&yrig%t >irtual :ni.ersity of 7akistan 110Knowledge Management EM!M=(/#0 >:
-1++4N 20
+>1I)MA+ IN=1--I!1N= 3++1= M4NI=4R
Intellectual a&ital Management
4ne of t%e key aut%ors in t%e area of intellectual ca&ital is +.eiby B2001C, w%o %as
de.elo&ed a
knowledge(based t%eory of t%e firm to guide in strategy formulation< 0e distinguis%ed between
families of intangible assets< =%e e9ternal structure family consists of relations%i&s wit% customers
su&&liers and t%e re&utation BimageC of t%e firm< +ome of t%ese relations%i&s can be con.erted into
&ro&erty suc% as trademarks and brand names< =%e .alue of suc% assets is &rimarily influenced by
well t%e com&any its customersA &roblems, and t%ere is always and element of uncertainty
=%e internal structure family consists of &atents, conce&ts, models, and com&uter and
systems< =%ese are created by t%e em&loyees and are t%us generally owned by t%e organi5ation<
structure is &artly inde&endent of indi.iduals and some of it remains e.en if a large number of
em&loyees lea.e< =%e indi.idual com&etence family consists of t%e com&etence of t%e &rofessional
t%e e9&erts, t%e researc% and de.elo&ment &eo&le, t%e factory workers, sales ad marketing E in
s%ort, all
t%ose t%at %a.e a direct contact wit% customers and w%ose work is wit%in t%e business idea<
om&etence is a term introduced %ere< om&etence can be defined as t%e sum of knowledge, skills
abilities at t%e indi.idual le.el< Wit% t%is definition, we say t%at knowledge is &art of com&etence,
com&etence is &art of intellectual ca&ital<
=%ese t%ree families of intangible resources %a.e slig%tly different definitions w%en com&ared to
ca&ital elements< =%e e9ternal structure seems similar to relational ca&ital, t%e internal structure
similar to structural ca&ital, w%ile t%e indi.idual com&etence seems similar to %uman ca&ital<
=o a&&reciate w%y a knowledge(based t%eory of t%e firm can be useful for strategy formulation,
B2001C considers some of t%e features t%at differentiate knowledge transfers from
tangible goods
transfers< In contrast to tangible goods, w%ic% tend to de&reciate in .alue w%en t%ey
are used,
knowledge grows w%en used and de&reciates w%en not used< om&etence in a language or a
reFuires %uge in.estments in training to build u&6 managerial com&etence takes a long time on(t%e(
to learn< If one sto&s s&eaking t%e language it gradually dissi&ates<
Knowledge =ransfer Wit%in and )etween $amilies of Intangible 3ssets B+.eiby, 2001C
!i.en t%ree families of intangible assets, it is &ossible to identify nine knowledge
transfers< =%ese
knowledge transfers can occur wit%in a family and between families, as illustrated in $igure 2<
N o&yrig%t >irtual :ni.ersity of 7akistan 111
"Knowledge Management EM!M=(/#0 >:
1ac% of t%e nine knowledge transfers in $igure 2 can be e9&lained as follows B+.eiby, 2001C@
1< Knowledge transfers between indi.iduals concern %ow to best enable t%e communication
between em&loyees wit%in t%e organi5ation< =%e strategic Fuestion is@ 0ow can we im&ro.e
t%e transfer of com&etence between &eo&le in t%e organi5ation? 3cti.ities for intellectual
ca&ital management focus on trust building, enabling team acti.ities, induction &rograms,
Kob rotation and master;a&&rentice sc%eme<
2< Knowledge transfers from indi.iduals to e9ternal structure concern %ow t%e organi5ationAs
em&loyees transfer t%eir knowledge to t%e outer world< =%e strategic Fuestion is@ 0ow can
t%e organi5ationAs em&loyees im&ro.e t%e com&etence of customers, su&&liers and ot%er
stake%olders? 3cti.ities for intellectual ca&ital a management focus on enabling t%e
em&loyees to %el& customers learn about t%e &roducts, getting rid of red ta&e, enabling Kob
rotation wit% customers, %olding &roduct seminars and &ro.iding customer education<
#< Knowledge transfers from e9ternal structure to indi.iduals occur w%en em&loyees learn
from customers, su&&liers and community feedback t%roug% ideas, new e9&eriences and
new tec%nical knowledge< =%e strategic Fuestion is@ 0ow can t%e organi5ationAs customers,
su&&liers and ot%er stake%olders im&ro.e t%e com&etence of t%e em&loyees? 3cti.ities for
intellectual ca&ital management focus on creating and maintaining good &ersonal
relations%i&s between t%e organi5ationAs own &eo&le and t%e &eo&le outside t%e
'< Knowledge transfers from com&etence to internal structure concern t%e transformation of
%uman ca&ital into more &ermanent structural ca&ital t%roug% documented work routines,
intranets and data re&ositories< =%e strategic Fuestion is@ 0ow can we im&ro.e t%e
con.ersion from indi.idually %eld com&etence to systems, tools and tem&lates? 3cti.ities
for intellectual ca&ital management focus on tools, tem&lates, &rocess and systems so t%ey
can be s%ard more easily and efficiently<
*< Knowledge transfers from internal structure to indi.idual com&etence is t%e counter&art of
t%e abo.e< 4nce com&etence is ca&tured in a system it needs to be made a.ailable to ot%er
indi.iduals in suc% a way t%at t%ey im&ro.e t%eir ca&acity to act< =%e strategic Fuestion is@
0ow we im&ro.e indi.idualsA com&etence by using systems, tools and tem&lates? 3cti.ities
for intellectual ca&ital management focus on im& %uman com&uter interface of
systems, action(based learning &rocesses, simulations and interacti.e e(learning
/< Knowledge transfers wit%in t%e e9ternal structure concern w%at customers and ot%ers tell
eac% ot%er about t%e of an organi5ation< =%e strategic Fuestion is@ 0ow can we
enable t%e con.ersations among t%e customers, su&&liers and ot%er stake%olders so t%ey
im&ro.e t%eir com&etence? 3cti.ities for intellectual ca&ital management focus on
&artnering and alliances, im& t%e image of t%e organi5ation and t%e brand eFuity of
its &roducts and, im& t%e Fuality of t%e offering, and conducting &roduct
seminars and alumni &rograms<
"< Knowledge transfers from e9ternal to internal structure concern w%at knowledge t%e
organi5ation can gain from t%e e9ternal world and %ow t%e learning can be con.erted into
action< =%e strategic Fuestion is@ 0ow can com&etence from t%e customers, su&&liers and
ot%er stake%olders im&ro.e t%e organi5ationAs systems, tools, &rocesses and &roducts?
3cti.ities for intellectual ca&ital management focus on em&owering call centers to inter&ret
customer com&laints, creating alliances to generate ideas for new &roducts and researc%
and de.elo&ment alliances<
2< Knowledge transfers from internal to e9ternal structure is t%e counter&art of t%e abo.e<
=%e strategic Fuestion is@ 0ow can t%e organi5ationAs systems, tools and &rocesses and
&roducts im&ro.e t%e com&etence of t%e customers, su&&liers and ot%er stake%olders?
3cti.ities for intellectual ca&ital management focus on making t%e organi5ationAs systems,
tools and &rocesses effecti.e in ser.icing t%e customer, e9tranets, &roduct tracking, %el&
desks and e(business<
8< Knowledge transfers wit%in t%e internal structure in w%ic% t%e internal structure is t%e
backbone of t%e organi5ation< =%e strategic Fuestion is@ 0ow can t%e organi5ationAs
systems, tools, &rocesses and &roducts be effecti.ely integrated? 3cti.ities for intellectual
ca&ital management focus on streamlining databases, building integrated information
tec%nology systems and im& t%e office layout<

N o&yrig%t >irtual :ni.ersity of 7akistan 112Knowledge Management EM!M=(/#0 >:
-1++4N 21
+=R3=1!I 71R+71=I>1 4$ KN4W-1D!1 3ND +=R3=1!I +044-
377R430 IN KM
+trategic >iew of knowledge
)usiness strategy %as traditionally focused on &roduces and ser.ices to gain com&etiti.e
Recent work in t%e area of strategic management and economic t%eory %as begun to focus on
internal side of t%e eFuation E t%e firmAs resources and ca&abilities< =%is new &ers&ecti.e is referred
as t%e resource(based t%eory of t%e firm< 3ccording to t%e resource(based t%eory of
t%e firm,
&erformance differences across firms can be attributed to t%e .ariance in t%e firmsA
resources and
ca&abilities< Resources t%at are .aluable, uniFue, and difficult to imitate can &ro.ide t%e basis for
com&etiti.e ad.antages< In turn, t%ese com&etiti.e ad.antages &roduce &ositi.e returns< =%e essence
t%e resource(based t%eory of t%e firm lies in its em&%asis on t%e internal resources a.ailable to t%e
rat%er t%an on t%e e9ternal o&&ortunities and t%reats dictated by industry conditions<
$irms are
considered to be %ig%ly %eterogeneous, and t%e bundles of resources a.ailable to eac% firm are
=%is is bot% because firms %a.e different initial resource endowments and because managerial
affect resource accumulation and t%e direction of firm growt% as well as resource utili5ation<
=%e resource(based t%eory is a useful &ers&ecti.e in strategic management< =%e resource(based
of t%e firm %olds t%at, in order to generate sustainable com&etiti.e ad.antage, a resource must
economic .alue and must be &resently scarce, difficult to imitate, non(substitutable, and not
obtainable in factor markets< =%is t%eory rests on two key &oints@ first, t%at resource
are t%e
determinants of firm &erformance, and second, t%at resources must be rare, .aluable, difficult to
and non(substitutable by ot%er rare resources< W%en t%e latter occurs, a com&etiti.e ad.antage %as
created< Researc% on t%e com&etiti.e im&lications of suc% firm resources as knowledge,
culture, teamwork, and %uman ca&ital was gi.en a significant boost by resource(based t%eory E a
t%at indicated it was t%ese kinds of resources t%at were most likely to be source of
com&etiti.e ad.antage for firms< $irmsA resource endowments, &articularly intangible
resources, are
difficult to c%ange e9ce&t t%e long term< $or e9am&le, alt%oug% %uman resources may be
mobile to
some e9tent, ca&abilities may not be .aluable for all firms or e.en for t%eir
com&etitors< +ome
ca&abilities are based on firm(s&ecific knowledge, and ot%ers are .aluable w%en
integrated wit%
additional indi.idual ca&abilities and s&ecific firm resources< =%erefore, intangible resources are
likely t%an tangible resources to &roduce a com&etiti.e ad.antage< In &articular, intangible firm(
resources suc% as knowledge allow firms to add .alue to incoming factors of &roduction<
Knowledge 3s 3 +trategic Resource
=%e knowledge(based .iew of t%e firm argues t%at t%e &roducts and ser.ices &roduced by
resources de&end on %ow t%ey are combined and a&&lied, w%ic% is a function of t%e firmAs know(
=%is knowledge is embedded in and carried t%roug% indi.idual em&loyees as well as entities
suc% as
organi5ation culture and identity, routines, &olicies, systems, and documents< =%e knowledge(based
of t%e firm &osits t%at t%ese knowledge assets may &roduce long(term sustainable com&etiti.e
for t%e organi5ation because knowledge(based resources are socially com&le9 to
understand and
difficult to imitate by anot%er organi5ation<
om&anies su&erior knowledge,, are able to coordinate and combine t%eir
resources and ca&abilities in new and distincti.e ways, &ro.iding more .alue for t%eir customers
can t%eir com&etitors< =%at is, by su&erior intellectual resources, an organi5ation can
%ow to e9&loit and de.elo& t%eir traditional resources better t%an com&etitors, e.en if some or all of
t%ose traditional resources are not uniFue< =%erefore, knowledge can be considered t%e most
strategic resource, and t%e ability to acFuire, integrate, store, s%are and a&&ly it t%e most
ca&ability for building and sustaining com&etiti.e ad.antage< =%e broadest .alue &ro&osition, t%en,
engaging in knowledge management is t%at it can en%ance t%e organi5ationAs fundamental
ability to
com&ete< -ong(term sustainable com&etiti.e ad.antage comes from t%e firmAs ability to effecti.ely
t%e e9isting knowledge to create new knowledge and to take action t%at forms t%e basis for
N o&yrig%t >irtual :ni.ersity of 7akistan 11#Knowledge Management EM!M=(/#0 >:
com&etiti.e ad.antage from knowledge(based assets< =%e knowledge e9isting at any gi.en time &er
se is
not sufficient to form suc% a basis for long term sustainable com&etiti.e ad.antage<
Knowledge(based com&etiti.e ad.antage is also sustainable because t%e more a firm already
knows, t%e
more it can learn< -earning o&&ortunities for an organi5ation t%at already %as a knowledge
may be more .aluable t%an for com&etitors similar learning o&&ortunities but
starting off
knowledge less< +ustainability may also come from an organi5ation already knowing somet%ing
uniFuely com&lements newly acFuired knowledge, w%ic% &ro.ides an o&&ortunity for
synergy not a.ailable to its com&etitors< New knowledge is integrated wit% e9isting
knowledge to
de.elo& uniFue insig%ts and crate e.en more .aluable knowledge< 4rgani5ations s%ould t%erefore
areas of learning and e9&erimentation t%at can &otentially and .alue to t%eir e9isting knowledge
synergistic combination<
+ustainability of knowledge ad.antage, t%en, comes from knowing more about some
t%ings t%an
com&etitors, combined wit% t%e time constraints faced by com&etitors in acFuiring similar
regardless of %ow muc% t%ey in.est to catc% u&< =%is re&resents w%at economists call increasing
:nlike traditional &%ysical goods t%at are consumed as t%ey are used B&ro.iding decreasing returns
timeC, knowledge &ro.ides increasing returns as it is used< =%e more it is used, t%e more
.aluable it
becomes creating a self reinforcing cycle< If an organi5ation can identify areas w%ere its knowledge
t%e com&etition, and if t%at uniFue knowledge can be a&&lied &rofitably in t%e market&lace, it
re&resent a &owerful and sustainable com&etiti.e ad.antage<
4rgani5ations s%ould stri.e to us t%eir learning e9&eriences to build on or com&lement
&ositions t%at &ro.ide a current or future com&etiti.e ad.antage< +ystematically ma&&ing,
and benc%marking organi5ational knowledge not only can %el& make knowledge more
t%roug%out an organi5ation, but by using a knowledge ma& to &rioriti5e and focus its
e9&eriences, an organi5ation can create greater le.erage for its learning efforts< It can
combine its
learning e9&eriences into a critical learning mass around &articular strategic areas of knowledge<
W%ile a
knowledge ad.antage may be sustainable, building a defensible com&etiti.e knowledge
internally is a long(term effort, reFuiring foresig%t and &lanning as well as luck< -ong lead(time
t%e attraction of strategic alliances and ot%er forms of e9ternal .entures as &otentially Fuicker
means for
gaining access to knowledge< It also e9&lains w%y t%e strategic t%reat from tec%nological
tends to come from firms outside of or &eri&%eral to an industry< New entrants often enKoy a
base different t%an t%at of incumbents, one t%at can be a&&lied to t%e &roducts and ser.ices of t%e
industry under attack< =%is %as been es&ecially e.ident in industries in w%ic% analog &roducts are
way to digital eFui.alents<
Knowledge %as a strategic role if uniFue firm knowledge can successfully be a&&lied to .alue(
tasks and if it can be used to ca&itali5e on e9isting business o&&ortunities< +ince
com&etitors in
de.elo&ing t%eir own strategies, are likely to benc%mark against t%e industry
to le.el out &erformance, knowledge must be difficult to imitate<
-ooking strategically, let us make distinctions once again between data, information, knowledge

J Data are letters and numbers wit%out meaning< Data are inde&endent, isolated measurements,
c%aracters, numerical c%aracters and symbols<
J Information is data t%at are included in a conte9t t%at makes sense< $or e9am&le, '0 degrees
can %a.e different meanings de&ending on t%e conte9t< =%ere can be a medical geogra&%ical or
tec%nical conte9t< If a &erson %as '0 degrees elsius in, t%at is Fuite serious< If a city is
located '0 degrees nort%, we know t%at it is far sout% of Norway< If an angle is '0 degrees, we
know w%at it looks like< Information is data t%at make sense, because is can be understood
correctly< 7eo&le turn data into information by organi5ing it into some unit of analysis, for
e9am&le, dollars, dates, or customers< Information is data endowed wit% rele.ance and &ur&ose<
J Knowledge is information combined wit% e9&erience, conte9t, inter&retation and reflection<
Knowledge is a renewable resource t%at can be used and, and t%at accumulates in an
organi5ation t%roug% use and combination wit% em&loyeesO e9&erience< 0umans %a.e
knowledge6 knowledge cannot e9ist outside t%e %eads of indi.iduals in t%e com&any<
Information becomes knowledge w%en it enters t%e %uman brain< =%is knowledge transforms
N o&yrig%t >irtual :ni.ersity of 7akistan 11'Knowledge Management EM!M=(/#0 >:
into information again w%en it is articulated and communicated to ot%ers< Information is an
e9&licit re&resentation of knowledge6 it is in itself not knowledge< Knowledge can be trut%s and
lies, &ers& and conce&ts, Kudgments and e9&ectations< Knowledge is used to recei.e
information by combining, &rioriti5ing and decision making6 and by &lanning, im&lementing
and controlling<
J Wisdom is knowledge combined wit% learning insig%ts and Kudgmental abilities< Wisdom is
more difficult to e9&lain t%an knowledge, since t%e le.els of conte9t become e.en more
&ersonal, and t%us t%e %ig%er(le.el nature of wisdom renders it more obscure t%an knowledge<
W%ile knowledge is mainly sufficiently generali5ed solutions, wisdom is best t%oug%t of as
sufficiently generali5ed a&&roac%es and .alues t%at can be a&&lied in numerous and .aried
situations< Wisdom cannot be created like data and information, and cannot be s%ared wit%
ot%ers like knowledge< )ecause t%e conte9t is so &ersonal, it becomes almost e9clusi.e to our
own minds and incom&atible wit% t%e minds of ot%ers wit%out e9tensi.e transaction< =%is
transaction reFuires not only a base of knowledge and o&&ortunities for e9&eriences t%at %el&
create wisdom, but also t%e &rocesses of intros&ection, retros&ection, inter&retation and
contem&lation< We can .alue wisdom in ot%ers, but we can only create it<
In our resource(based &ers&ecti.e of knowledge, data are raw numbers and facts,
information is
&rocessed data, and knowledge is information combined wit% %uman t%oug%ts< Knowledge is t%e
of cogniti.e &rocessing triggered by t%e inflow of new stimuli< Information is con.erted to
once it is &rocessed in t%e mind of indi.iduals, and t%e knowledge becomes information once
it is
articulated and &resented to ot%ers< 3 significant im&lication of t%is .iew of knowledge is t%at
indi.iduals to arri.e at t%e same understanding of information, t%ey must s%are t%e same
=%e Knowledge(+trategy -ink
=%e traditional +W4= framework, u&dated to reflect todayOs knowledge( intensi.e
&ro.ides a basis for describing a knowledge strategy< In essence, firms need to &erform a
based +W4= analysis, ma&&ing t%eir knowledge resources and ca&abilities against t%eir
o&&ortunities and t%reats to better understand t%eir &oints of ad.antage and weakness< =%ey can use
t%is ma& to strategically guide t%eir knowledge management efforts, bolstering t%eir
ad.antages and reducing t%eir knowledge weak(nesses< Knowledge strategy, t%en, can be t%oug%t of
balancing knowledge(based resources and ca&abilities wit% t%e knowledge reFuired for
&roducts or ser.ices in ways su&erior to t%ose of com&etitors< Identifying w%ic%
resources and ca&abilities are .aluable, uniFue, and inimitable as well as %ow t%ose
resources and
ca&abilities su&&ort t%e firmOs &roduct and market &ositions are essential elements of a
strategy B[ack, 1<888C<
=o e9&licate t%e link between strategy and knowledge, an organi5ation must articulate its
intent, identify t%e knowledge reFuired to e9ecute its intended strategy, and com&are t%at to its
knowledge, t%us re.ealing its strategic knowledge ga&s B[ack, 1888C<
1.ery firm com&etes in a &articular way(o&erating wit%in some industry and ado&ting
&osition wit%in t%at industry <om&etiti.e strategy may result from an e9&licit grand
decision (t%e
traditional &ers&ecti.e on strategy (or from an accumulation of smaller incremental decisions< It
e.en be re.ealed in %indsig%t, by looking back on actual be%a.iors and e.ents time<<
Regardless of
t%e strategy formation &rocess, organi5ations %a.e a de facto strategy t%at must first be
B[ack, 1888C<
1.ery strategic &osition is linked to some set of intellectual resources and ca&abilities< =%at is,
w%at t%e firm it must do to com&ete, t%ere are some t%ings it must know and know %ow to
=%e strategic c%oices t%at com&anies make (regarding tec%nologies, &roducts, ser.ices, markets,
&rocesses (%a.e a &rofound influence on t%e knowledge, skills, and core com&etencies
reFuired to
com&ete and e9cel in an industry B[ack, 1888C<
4n t%e ot%er %and, w%at a firm does know and knows %ow to do limits t%e ways it can
com&ete< =%e firm, gi.en w%at it knows, must identify t%e best &roduct and market o&&ortunities
e9&loiting t%at knowledge< =%e firm Os e9isting knowledge creates an o&&ortunity and a constraint
N o&yrig%t >irtual :ni.ersity of 7akistan 11*Knowledge Management EM!M=(/#0 >:
selecting .iable com&etiti.e &ositions, w%ile t%e firm O s selected com&etiti.e &osition
creates a
knowledge reFuirement< +uccess reFuires dynamically aligning knowledge(based
reFuirements and
ca&abilities B[ack, 1888C<
3ssessing an organi5ationOs knowledge &osition reFuires cataloging its e9isting intellectual
resources by
creating w%at is commonly called a knowledge ma&< Knowledge can be c%aracteri5ed in many
7o&ular ta9onomies distinguis% between tacit and e9&licit knowledge, general and situated
s&ecific knowledge, and indi.idual and collecti.e knowledge< Knowledge can also be
categori5ed by
ty&e, including declarati.e Bknowledge aboutC, &rocedural Bknow(%owC, and causal
conditional Bknow w%enC, and relational Bknow(wit%C< W%ile t%ese distinctions are useful for
and managing I knowledge at t%e &rocess le.el once a knowledge strategy %as been formulated,
&ur&ose reFuires knowledge ta9onomy oriented towards strategy and w%ic% reflects t%e
uniFueness of eac% organi5ation B[ack, 1888C<
ategori5ing or describing w%at a business firm knows and must know about its industry or
&osition is not easy< 3lt%oug% firms wit%in &articular industries, firms maintaining similar
&ositions, or t%ose em&loying similar tec%nologies and ot%er resources often s%are some
knowledge, t%ere are no sim&le answers regarding w%at a firm must know to be com&etiti.e if
were, t%e t%ere would be no sustainable ad.antage B[ack, 1888C<
3 ty&ical com&any de.elo&s an a&&roac% to describing and classifying its strategic or
knowledge t%at is in some ways uniFue< In fact, eac% firmOs general awareness of and orientation to
link between knowledge and strategy tends to be somew%at uniFue and may, itself,
re&resent an
ad.antage< Regardless of %ow knowledge is categori5ed based on content, e.ery firmOs
knowledge can be categori5ed by its ability to su&&ort a com&etiti.e &osition< +&ecifically,
can be classified according to w%et%er it is core, ad.anced, or inno.ati.e B[ack, 1888C< Knowledge
not static and w%at is inno.ati.e knowledge today will ultimately become t%e core
knowledge of
tomorrow< =%us defending and growing a com&etiti.e &osition reFuires continual
learning and
knowledge acFuisition< =%e ability of an organi5ation to learn, accumulate knowledge
from its
e9&eriences, and rea&&ly t%at knowledge is itself a skill or com&etence t%at(beyond
t%e core
com&etencies directly related to deli.ering its &roduct or (may &ro.ide strategic ad.antage
3lt%oug% knowledge is dynamic, t%e strategic knowledge framework in $igure below offers t%e
ability to
take a sna&s%ot of w%ere t%e firm is today .is(a(.is its desired strategic knowledge &rofile Bto assess
e9ternal knowledge ga&sC< 3dditionally, it can be used to &lot t%e %istorical &at% and future
traKectory of
t%e firmOs knowledge< =%e framework may be a&&lied by area of com&etency or,
taking a more
traditional strategic &ers&ecti.e, by strategic business unit, di.ision, &roduct line, function, or
&osition< Regardless of t%e &articular way ea<c% firm categori5es its knowledge, eac% category can
furt%er broken down into elements t%at are core, com&etiti.e, or inno.ati.e to &roduce a
knowledge ma& B[ack, 1888C< ma&&ed t%e firmAs com&etiti.e knowledge &osition, an organi5ation can &erform a ga&
=%e ga& between w%at a firm must do to com&ete and w%at it actually is doing re&resents a strategic
ga&< 3ddressing t%is ga& is t%e stuff of traditional strategic management< 3s suggested by t%e
frame(work, strengt%s and weaknesses re&resent w%at t%e firm can do6 o&&ortunities and t%reats
w%at it must do< +trategy, t%en, re&resents %ow t%e firm balances its com&etiti.e cans and musts
de.elo& and &rotect its strategic nic%e B[ack, 1888C<
N o&yrig%t >irtual :ni.ersity of 7akistan 11/Knowledge Management EM!M=(/#0 >:
+trategic Knowledge $ramework
3t t%e same time, underlying a firmOs strategic ga& is a &otential knowledge ga&< =%at is, gi.en a
between w%at a firm must do to com&ete and w%at it can do, t%ere may also be a ga& between w%at
firm must know to e9ecute its strategy and w%at it does know< )ased on a strategic knowledge
ca&abilities ma&, an organi5ation can identify t%e e9tent to w%ic% its .arious categories of
knowledge are in alignment wit% its strategic reFuirements< =%e result is a set of &otential
ga&s< In some cases, an organi5ation mig%t e.en know more t%an needed to su&&ort its com&etiti.e
&osition< Ne.ert%eless, a knowledge strategy must address any &ossible misalignments< =%e greater
number, .ariety, or si5e of t%e current and future knowledge ga&s, and t%e more .olatile t%e
base because of a dynamic or uncertain com&etiti.e en.ironment, t%e more aggressi.e t%e
strategy reFuired< 3 firm not ca&able of e9ecuting its intended or reFuired strategy must eit%er align
strategy wit% its ca&abilities or acFuire t%e ca&abilities to e9ecute its strategy B[ack, 1888C<
Knowledge !a& Deri.ed $rom and 3ligned wit% +trategic )usiness !a& &erformed a strategic e.aluation of its knowledge(based resources and
ca&abilities, an
organi5ation can determine w%ic% knowledge s%ould be de.elo&ed or acFuired< =o gi.e
management a strategic focus, t%e firmAs knowledge management s%ould be directed
closing t%is strategic knowledge ga&< =%e im&ortant issue is t%at t%e knowledge ga& is directly
from and aligned wit% t%e strategic ga&, as illustrated abo.e< =%is simultaneous alignment of
and knowledge management efforts are di.orced from strategic &lanning and e9ecution<, an a&&ro&riate knowledge strategy in &lace is essential for assuring t%at knowledge
efforts are being dri.en by and are su&&orting t%e firmAs com&etiti.e strategy B[ack, 1888C<

N o&yrig%t >irtual :ni.ersity of 7akistan 11"
W%at t%e firm must
know W%at t%e firm must do
W%at t%e firm does W%at t%e firm knows
Knowledge !a& )usiness !a&
urrent Knowledge()usiness -ink
$uture Knowledge()usiness -ink
Inno.ator -eader om&etitor
om&etitor Imitator -oser
om&etitorsA le.el of knowledgeKnowledge Management EM!M=(/#0 >:
=%e +trategic +c%ool 7ers&ecti.e
=%e strategic sc%ool sees knowledge management as a dimension of com&etiti.e strategy< Indeed, it
be seen as t%e essence of a firmAs strategy< 3&&roac%es to knowledge management are de&endent on
management &ers&ecti.e<
N o&yrig%t >irtual :ni.ersity of 7akistan 112Knowledge Management EM!M=(/#0 >:
-1++4N 22
+=R3=1!I +044-@ +=4K, $-4W, 3ND !R4W=0 +=R3=1!M IN KM
=%e +trategic +c%ool
=%e strategic sc%ool sees knowledge management as a dimension of com&etiti.e strategy< Indeed, it
be seen as t%e essence of a firmAs strategy< 3&&roac%es to knowledge management are de&endent on
management &ers&ecti.e< Distinctions can be made between t%e information(based &ers&ecti.e,
tec%nology(based &ers&ecti.e and t%e culture(based &ers&ecti.e@
J Information(based &ers&ecti.e is concerned wit% access to information< I %a.e a &roblem, and I
looking for someone in t%e organi5ation w%o %as knowledge t%at can sol.e my &roblem<
J =ec%nology(based &ers&ecti.e is concerned wit% a&&lications of information tec%nology< We %a.e
t%is %ardware and software in t%e firm@ %ow can we use t%is tec%nology to systemati5e, store
and distribute information to knowledge workers?
J ulture(based &ers&ecti.e is concerned wit% knowledge s%aring< We are an organi5ation because
di.ision of labor makes us more efficient and because we can draw on eac% ot%erAs e9&ertise<
3ll t%ree &ers& belong in a knowledge management &roKect to be successful<, t%e
focus may .ary de&ending on cor&orate situation< If rein.enting t%e w%eel all t%e time
is t%e big
&roblem, t%en t%e information(based &ers&ecti.e s%ould dominate &roKect focus< If t%e tec%nology
t%e firm is unable to &ro.ide e.en basic ser.ices to knowledge users, t%en t%e
&ers&ecti.e s%ould dominate &roKect focus< If knowledge workers are isolated and reluctant to
knowledge, t%en t%e culture(based &ers&ecti.e s%ould dominate &roKect focus<
odification and 7ersonali5ation +trategy
+ome com&anies automate knowledge management, w%ile ot%er rely on t%eir &eo&le to
knowledge t%roug% more traditional means< In some com&anies, t%e strategy centers on t%e
Knowledge is carefully codified and stored in databases, w%ere it can be accessed and used easily
anyone in t%e com&any< =%ese com&anies %a.e de.elo&ed elaborate ways to codify, store and
knowledge< Knowledge is codified using a &eo&le(to(documents a&&roac%@ it is e9tracted
from t%e
&erson w%o de.elo&ed it, made inde&endent of t%at &erson, and reused for .arious
Knowledge obKects are de.elo&ed by &ulling key &ieces of knowledge suc% as inter.iew guides,
sc%edules, benc%mark data, and market segmentation analysis out of documents and storing t%em in
electronic re&ository for &eo&le to use< =%is a&&roac% allows many &eo&le to searc% for and retrie.e
codified knowledge wit%out to contact t%e &erson w%o originally de.elo&ed it< =%at o&ens
t%e &ossibility of scale in knowledge reuse and t%us of growing t%e business< 0ansen et
B1888C call t%is t%e codification strategy for managing knowledge<
In ot%er com&anies, knowledge is closely tied to t%e &erson w%o de.elo&ed it and is s%ared
t%roug% direct &erson(to(&erson contacts< =%e c%ief &ur&ose of com&uters at suc% com&anies is to
&eo&le communicate knowledge, not to store it< =%ese com&anies focus on dialogue
indi.iduals, not knowledge obKects in a database< Knowledge t%at %as not been codified is
transferred in
barnstorming sessions and one(on(one con.ersations< Knowledge workers collecti.ely arri.e at
insig%ts by going back and fort% on &roblems t%ey need to sol.e< =%ese com&anies in.est %ea.ily in
building networks of &eo&le< Knowledge is s%ared not only face(to(face, but also t%e
tele&%one, by
email, and .ia .ideo conferences< Networks can be fostered in many ways@ by transferring
between offices, by su&&orting a culture in w%ic% knowledge workers are e9&ected to return &%one
from colleagues &rom&tly, by creating directories of e9&erts, and by using knowledge managers
t%e firm to assist &roKect teams< =%ese firms may also %a.e de.elo&ed electronic document systems,
t%e &ur&ose of t%e systems is not to &ro.ide knowledge obKects< Instead, knowledge workers
documents to get u& to s&eed in a &articular area and to find out w%o %as done work on a to&ic<
t%en a&&roac% t%ose directly< 0ansen et al< B1888C call t%is t%e &ersonali5ation strategy for
N o&yrig%t >irtual :ni.ersity of 7akistan 118Knowledge Management EM!M=(/#0 >:
odification and &ersonali5ation strategy can be contrasted wit% eac% ot%er using criteria
suc% as
com&etiti.e strategy, economic model, knowledge management strategy, information
tec%nology and
%uman resources< =%e com&etiti.e strategy by codification is to &ro.ide %ig% Fuality, reliable, and
information(systems im&lementation by reusing codified knowledge< =%e com&etiti.e
strategy by
&ersonali5ation is to &ro.ide creati.e, analytically rigorous on %ig%(le.el strategic
&roblems by
c%anneling indi.idual e9&ertise< =%e economic model for codification strategy can be labeled
economics, w%ile t%e economic model for &ersonali5ation can be labeled e9&ert economics<
economics im&lies in.esting once in a knowledge asset, and t%en reusing it many
times< 19&ert
economics im&lies c%arging %ig% fees for %ig%ly customi5ed solutions to uniFue &roblems<
Knowledge management strategy will eit%er be &eo&le(to(documents for codification or
&erson for &ersonali5ation< 7eo&le(to(documents im&lies de.elo&ing an electronic document
t%at codifies, stores, disseminates, and allows reuse of knowledge< 7erson(to(&erson im&lies
networks for linking &eo&le so t%at tacit knowledge can be s%ared< )y codification, t%e com&any
%ea.ily in I=, w%ere t%e goal is to connect &eo&le wit% reusable codified knowledge< )y
t%e com&any in.ests moderately in I=, w%ere t%e goal is to facilitate con.ersations and e9c%ange of
knowledge< )y codification, t%e %uman resource a&&roac% will be concerned wit% training &eo&le
grou&s and t%roug% com&uter(based distance learning< )y &ersonali5ation, t%e %uman
a&&roac% will be concerned wit% training &eo&le t%roug% one(on(one mentoring<
0ow do com&anies c%oose t%e rig%t strategy for managing knowledge? om&etiti.e strategy must
knowledge management strategy< must be able to articulate w%y customers buy a
&roducts or ser.ices rat%er t%an t%ose of its com&etitors< W%at .alue do customers
e9&ect from
com&any? 0ow does knowledge t%at resides in t%e com&any add .alue for customers? 3ssuming
com&etiti.e strategy is clear, managers will want to consider t%ree furt%er Fuestions t%at can %el&
c%oose a &rimary knowledge management strategy< =%e t%ree Fuestions de.elo&ed by 0ansen et
B1888C are concerned wit% standardi5ed .ersus customi5ed &roducts, mature or inno.ati.e &roducts,
e9&licit .ersus tacit knowledge<
=%e first Fuestion is@ Do you offer standardi5ed or customi5ed &roducts? om&anies
t%at offer
standardi5ed &roducts will fit t%e codification strategy, w%ile com&anies t%at offer customi5ed
will fit t%e &ersonali5ation strategy< =%e second Fuestion is@ Do you %a.e mature or
&roducts? om&anies t%at offer mature &roducts will fit t%e codification strategy, w%ile com&anies
offer inno.ati.e &roducts will fit t%e &ersonali5ation strategy<
=%e final Fuestion is@ Do your &eo&le rely on e9&licit or tacit knowledge to sol.e &roblems?
knowledge is knowledge t%at can be codified, suc% as sim&le software code and market data< W%en
com&anyAs em&loyees rely on e9&licit knowledge to do t%eir work, t%e &eo&le(to(documents
makes t%e most sense< =acit knowledge, by contrast, is difficult to articulate in writing and is
t%roug% &ersonal e9&erience< It includes scientific e9&ertise, o&erational know(%ow, and insig%ts
an industry, business Kudgment, and tec%nological e9&ertise< W%en &eo&le use tacit knowledge
often to sol.e &roblems, t%e &erson(to(&erson a&&roac% works best<
0ansen et al< B1888C stress t%at &eo&le need to &artici&ate in t%e knowledge s%aring
=%e two knowledge management strategies call for different incenti.e systems< In t%e
model, managers need to de.elo& a system t%at encourages &eo&le to write down w%at t%ey know
to get t%ose documents into t%e electronic re&ository< 3nd real E not small enticements E
reFuired to get &eo&le to take t%ose ste&s< =%e le.el and Fuality of em&loyeesA contributions to
document database s%ould be &art of t%eir annual &erformance re.iew< to
knowledge s%aring s%ould be .ery different at com&anies t%at are following t%e
a&&roac%< Managers need to reward &eo&le for s%aring knowledge directly wit% ot%er &eo&le<
+tock, flow and !rowt% +trategy
3&&roac%es to knowledge management are de&endent on knowledge focus in t%e
Distinctions can be made between e9&ert(dri.en business, e9&erience(dri.en business and
dri.en business@
J 19&ert(dri.en business large, com&le9, risky, new and unusual &roblems for customers<
om&etiti.e ad.antage is ac%ie.ed t%roug% continuous im&ro.isation and inno.ation<
N o&yrig%t >irtual :ni.ersity of 7akistan 120Knowledge Management EM!M=(/#0 >:
Knowledge workers a&&ly general %ig%(le.el knowledge to understand, sol.e and
-earning from &roblem is im&ortant to be able to sol.e t%e ne9t new and unknown
&roblem for customers< 3n e9&ert(dri.en business is c%aracteri5ed by bot% new &roblems and
new met%ods for solution<
J 19&erience(dri.en business large and com&licated &roblems for customers< =%e
&roblems are new, but t%ey can be sol.ed wit% e9isting met%ods in a s&ecific conte9t e.ery
time< om&etiti.e ad.antage is ac%ie.ed t%roug% effecti.e ada&tation of e9isting
&roblem met%odologies and tec%niFues< ontinuous im&ro.ement in effecti.eness is im&ortant
to be able to sol.e t%e ne9t &roblem for customers< 3n e9&erience(based business is
c%aracteri5ed by new &roblems and e9isting met%ods for solution<
J 1fficiency(dri.en business known &roblems< =%e Fuality of t%e solution is found in fast
and ine9&ensi.e a&&lication to meet customer needs< om&etiti.e ad.antage is ac%ie.ed in t%e
ability to make small adKustments in e9isting goods and ser.ices at a low &rice< 3n efficiency(
dri.en business is c%aracteri5ed by known &roblems and known met%ods for solution<
$ew knowledge(intensi.e firms are only acti.e in one of t%ese businesses< Most firms are
acti.e in
se.eral of t%ese businesses< $or e9am&le, medical doctors in a %os&ital are mainly in t%e
dri.en business of new &roblems wit% known met%ods< +ometimes, t%ey are in t%e
dri.en business of new &roblems wit% new met%ods< +imilarly, lawyers in a law firm are
often in
t%e e9&ert(dri.en business, but most of t%e time in t%e e9&erience(dri.en business< In some
firms, engineers are often in t%e efficiency(dri.en business, but most of t%e time in t%e e9&erience(
Knowledge focus will be different in e9&ert(dri.en, e9&erience(dri.en and efficiency(dri.en
In t%e e9&ert(dri.en business, learning is im&ortant, w%ile &re.ious knowledge becomes obsolete<
In t%e
efficiency(based business, all knowledge concerning bot% &roblems and solutions is im&ortant
in an
accumulation of knowledge to im&ro.e efficiency< =%ese differences lead us to make
between t%e following t%ree knowledge management strategies of stock strategy, flow
strategy and
growt% strategy@
J +tock strategy is focused on collecting and storing all knowledge in information bases in t%e
organi5ation< Information is stored in databases and made a.ailable to knowledge workers in
t%e organi5ation and in knowledge networks< Knowledge workers use databases to
u&dated on rele.ant &roblems, rele.ant met%ods, news and o&inions< Information on &roblems
and met%ods accumulate time in databases< =%is strategy can also be called &erson(to(
knowledge strategy<
J $low strategy is focused on collecting and storing knowledge in information bases in t%e
organi5ation as long as t%e information is used in knowledge work &rocesses< If certain kinds of
knowledge work disa&&ear, t%en information for t%ose work &rocesses becomes obsolete and
can be deleted from databases< =%is is a yellow(&ages strategy in w%ic% information
knowledge areas co.ered by indi.iduals in t%e firm is registered< =%e link to knowledge sources
in t%e form of indi.iduals is made s&ecific in t%e databases, so t%at t%e &erson source can be
identified< W%en a knowledge worker starts on a new &roKect, t%e &erson will searc% com&any
databases to find colleagues w%o already %a.e e9&erience in t%ese kinds of &roblems<
=%is strategy can also be called &erson(to(&er strategy<
J !rowt% strategy is focused on de.elo&ing new knowledge< New knowledge is de.elo&ed in
inno.ati.e work &rocesses taking &lace w%en knowledge workers %a.e to sol.e new &roblems
wit% new met%ods for customers< 4ften, se.eral &ersons are in.ol.ed in t%e inno.ation, and
toget%er t%ey %a.e gone t%roug% a learning &rocess< W%en a knowledge worker starts on a new
&roKect, t%e &erson will use t%e intra(organi5ational and inter(organi5ational network to find
information on work &rocesses and learning en.ironments t%at colleagues %a.e used
successfully in &re.ious inno.ation &rocesses<
=%ere is a strong link between t%ese t%ree knowledge management strategies and t%e t%ree
of e9&ert(dri.en, e9&erience(dri.en and efficiency(dri.e business< In $igure below, c%aracteristics
of t%e
t%ree strategies are &resented< =y&ically, efficiency(dri.en businesses will a&&ly t%e stock strategy,
e9&erience(dri.en businesses will a&&ly t%e flow strategy, and e9&ert(dri.en business will
a&&ly t%e
growt% strategy<
N o&yrig%t >irtual :ni.ersity of 7akistan 121Knowledge Management EM!M=(/#0 >:
%aracteristics of Knowledge Management +trategies
%aracteristics +tock strategy $low strategy !rowt% strategy
Knowledge focus 1fficiency(dri.en
19&ert(dri.en business
Im&ortant &ersons %ief knowledge
%ief information
Database engineers
%ief knowledge officer
19&erienced knowledge
Management e9&erts
Knowledge base Databases and
information systems
Information networks Networks of e9&erts,
work &rocesses and
learning en.ironments
Im&ortant elements 3ccess to databases
and information
3ccess to knowledge
3ccess to networks of
e9&erts and learning
Management task ollecting information
and making it a.ailable
onnecting &ersons to
e9&erienced knowledge
7ro.iding access to
-earning 1fficiency training
a&&lying e9isting
accumulation a&&lying
e9isting knowledge
!rowt% training
de.elo&ing new
N o&yrig%t >irtual :ni.ersity of 7akistan 122Knowledge Management EM!M=(/#0 >:
-1++4N 2#
=01 4R!3NI[3=I4N3- +044- 4$ =04:!0= IN KM
=%e 4rgani5ational +c%ool
3ccording to 1arl B2001C, t%e organi5ational sc%ool describes t%e use of organi5ational structures,
networks, to s%are or &ool knowledge< 4ften described as knowledge communities, t%e
arrangement is a grou& of &eo&le wit% a common interest, or &roblem, or
e9&erience< =%ese
communities are designed and maintained for a business &ur&ose, and t%ey can be intra(
or inter
In t%e following, a number of a&&roac%es to knowledge management belonging to t%e
sc%ool are &resented< =%e first a&&roac% is managing common knowledge6 t%e second a&&roac% is
sociali5ation e9ternali5ation combination internali5ation B+1IC &rocess<
Managing ommon Knowledge
Di9on B2000C defines common knowledge as t%e knowledge t%at em&loyees learn from
doing t%e
organi5ationAs tasks< ommon knowledge is managed t%roug% knowledge transfer
Knowledge transfer in an organi5ation can be defined as t%e &rocess by w%ic% one unit Be<g<, a
de&artment or di.ision0is affected by e9&eriences< 3not%er definition suggests t%at knowledge
at t%e indi.idual le.els is %ow knowledge acFuired in one situation a&&lies
Knowledge 3rc%itecture for communication in organi5ations
J Knowledge arc%itecture can be regarded as a &rereFuisite to knowledge s%aring<
J =%e infrastructure can be .iewed as a combination of &eo&le, content, and tec%nology<
J =%ese com&onents are inse&arable and interde&endent<
=%e 7eo&le ore
J )y &eo&le, %ere we mean knowledge workers, managers, customers, and su&&liers<
J 3s t%e first ste& in knowledge arc%itecture, our goal is to e.aluate t%e e9isting information;
documents w%ic% are used by &eo&le, t%e a&&lications needed by t%em, t%e &eo&le t%ey usually
contact for solutions, t%e associates t%ey collaborate wit%, t%e official emails t%ey send;recei.e,
and t%e databaseBsC t%ey usually access<
J 3ll t%e abo.e stated resources %el& to create an em&loyee &rofile, w%ic% can later be used as t%e
basis for designing a knowledge management system<
J =%e idea be%ind assessing t%e &eo&le core is to do a &ro&er Kob in case of assigning Kob content
to t%e rig%t &erson and to make sure t%at t%e flow of information t%at once was obstructed by
de&artments now flows to rig%t &eo&le at rig%t time<
J In order to e9&edite knowledge s%aring, a knowledge network %as to be designed in suc% a way
as to assign &eo&le aut%ority and res&onsibility for s&ecific kinds of knowledge content, w%ic%
N o&yrig%t >irtual :ni.ersity of 7akistan 12#Knowledge Management EM!M=(/#0 >:
o Identifying knowledge centers@
3fter determining t%e knowledge t%at &eo&le need, t%e ne9t ste& is to find out
w%ere t%e reFuired knowledge resides, and t%e way to ca&ture it successfully<
0ere, t%e term knowledge center means areas in t%e organi5ation w%ere
knowledge is a.ailable for ca&turing<
=%ese centers su&&orts to identify e9&ertBsC or e9&ert teams in eac% center
w%o can collaborate in t%e necessary knowledge ca&ture &rocess<
o 3cti.ating knowledge content satellites
=%is ste& breaks down eac% knowledge center into some more manageable
le.els, satellites, or areas<
o 3ssigning e9&erts for eac% knowledge center@
3fter t%e final framework %as been decided, one manager s%ould be assigned
for eac% knowledge satellite t%at will ensure integrity of information content,
access, and u&date<
4wners%i& is a crucial factor in case of knowledge ca&ture, knowledge
transfer, and knowledge im&lementation<
In a ty&ical organi5ation, de&artments usually tend to be territorial<
4ften, fig%t can occur t%e budget or t%e control of sensiti.e
&rocesses Bt%is includes t%e kind of knowledge a de&artment ownsC<
=%ese reasons Kustify t%e &rocess of assigning de&artment owners%i& to
knowledge content and knowledge &rocess<
adKacent;interde&endent de&artments s%ould be coo&erati.e and ready to
s%are knowledge<
=%e =ec%nical ore
J =%e obKecti.e of t%e tec%nical core is to en%ance communication as well as ensure effecti.e
knowledge s%aring<
J =ec%nology &ro.ides a lot of o&&ortunities for managing tacit knowledge in t%e area of
J ommunication networks create links between necessary databases<
J 0ere t%e term tec%nical core is meant to refer to t%e totality of t%e reFuired %ardware, software,
and t%e s&eciali5ed %uman resources<
J 19&ected attributes of tec%nology under t%e tec%nical core@ 3ccuracy, s&eed, reliability, security,
and integrity<
J +ince an organi5ation can be t%oug%t of as a knowledge network, t%e goal of knowledge
economy is to &us% em&loyees towards greater efficiency; &roducti.ity by making best &ossible
use of t%e knowledge t%ey &osses<
J 3 knowledge core usually becomes a network of tec%nologies designed to work on to& of t%e
organi5ationOs e9isting network<
Knowledge reation in 4rgani5ations
J Knowledge u&date can mean creating new knowledge based on ongoing e9&erience in a
s&ecific domain and t%en using t%e new knowledge in combination wit% t%e e9isting knowledge
to come u& wit% u&dated knowledge for knowledge s%aring<
J Knowledge in organi5ations can be created t%roug% teamwork
J 3 team can commit to &erform a Kob a s&ecific &eriod of time<
J 3 Kob can be regarded as a series of s&ecific tasks carried out in a s&ecific order<
J W%en t%e Kob is com&leted, t%en t%e team com&ares t%e e9&erience it %ad initially Bw%ile
starting t%e KobC to t%e outcome Bsuccessful;disa&&ointingC<
J =%is com&arison translates e9&erience into knowledge<
J W%ile &erforming t%e same Kob in future, t%e team can take correcti.e ste&s and;or modify t%e
actions based on t%e new knowledge t%ey %a.e acFuired<
J time, e9&erience usually leads to e9&ertise w%ere one team Bor indi.idualC can be known
for %andling a com&le9 &roblem .ery well<
J =%is knowledge can be transferred to ot%ers in a reusable format<
N o&yrig%t >irtual :ni.ersity of 7akistan 12'Knowledge Management EM!M=(/#0 >:
=%ere e9ists factors t%at encourage Bor retardC knowledge transfer<
J 7ersonality is one factor in case of knowledge s%aring<
J $or e9am&le, e9tro.ert &eo&le usually &osses self(confidence, feel secure, and tend to s%are
e9&eriences more readily t%an t%e intro.ert, self(centered, and security(conscious &eo&le<
J 7eo&le wit% &ositi.e attitudes, w%o usually trust ot%ers and w%o work in en.ironments
conducti.e to knowledge s%aring tends to be better in s%aring knowledge<
J >ocational rein forcers are t%e key to knowledge s%aring<
J 7eo&le w%ose .ocational needs are sufficiently met by Kob rein forcers are usually found to be
more likely to fa.our knowledge s%aring t%an t%e &eo&le w%o are de&ri.ed of one or more rein
N o&yrig%t >irtual :ni.ersity of 7akistan 12*Knowledge Management EM!M=(/#0 >:
-1++4N 2'
IM74R=3N1 4$ =3I= 3ND 1R7-II= KN4W-1D!1
Knowledge reation 3nd Knowledge 3rc%itecture
=est Mour :nderstanding
1< W%at is knowledge creation?
Is using t%e new knowledge acFuired from ongoing e9&eriences in a &articular &roblem area, in
combination wit% t%e initial knowledge, to come u& wit% e9tended knowledge t%at s%ould im&ro.e
t%e Fuality and effecti.eness of &erforming t%e same Kob t%e ne9t time around<
2< 3 Kob is more t%an a task< Do you agree? !i.e an e9am&le<
=rue< It is a series of s&ecific tasks carried out in a s&ecific order, format, or seFuence<
19am&le@ =%e Kob of &rocurement coordination reFuires se.eral tasks suc% as
B7lanning s%ort(term &urc%ases, creating &rofiles for su&&liers, selecting t%e best su&&lier, tracking
orders &rogress, <<<etcC<

#< 0ow is knowledge created and transferred .ia teams?
J 1ssentially, a team commits to &erforming a Kob wit% an initial knowledge
J =%e team &erforms t%e Kob
J Reali5es outcome
J om&ares outcome to action Gbefore and afterH
J New e9&erience; knowledge is gained
J Knowledge ca&tured and re&resented in a form usable by ot%ers
J =%is new knowledge is reusable by same team on ne9t Kob
'< 19&lain t%e main im&ediments in knowledge s%aring<
J 7ersonality
J 3ttitude
J >ocational rein forcers
J Work norms
*< 19&lain t%e main ste&s in knowledge transfer<
J 3 team gets toget%er wit% initial knowledge< It &erforms a s&ecific Kob
J =%e Kob outcome is reali5ed and is com&ared to action
J 3 new e9&erience or knowledge is gained
J =%e new e9&erience is ca&tured and codified in a form usable by ot%ers
J =%e new knowledge is reusable by t%e same team on t%e ne9t Kob<
/< In your own words, define tacit knowledge ca&ture< W%at makes it uniFue?
Knowledge ca&ture is t%e &rocess of e9tracting t%e knowledge of %ow an e9&ert at a solution
a &articular &roblem< =%is includes t%e actual ste&s and reasoning in.ol.ed in at t%e
solution as
well as t%e subKecti.e logic t%at an e9&ert uses in addressing t%e &roblem<
Knowledge ca&ture is uniFue, in t%at t%e &rocedure does not follow an algorit%mic flow or a
synta9 to sol.e a &roblem<
N o&yrig%t >irtual :ni.ersity of 7akistan 12/Knowledge Management EM!M=(/#0 >:
"< 3re t%ere any &articular ste&s in.ol.ed in knowledge ca&ture? 19&lain briefly<
Knowledge ca&ture t%ree ste&s@
:sing an a&&ro&riate tool to elicit t%e information from t%e e9&ert< 19tensi.e inter.iew wit% t%e
usually accom&lis%es t%is ste&<
Inter&reting t%e .erbal information and inferring t%e e9&ertAs underlying knowledge and
&rocess< In t%is ste&, t%e knowledge de.elo&er decides w%ere t%e information gat%ered fits into
de.elo&ment &rocess of t%e knowledge(based system< =%roug%out t%e inter.iewing
&rocess, t%e
knowledge de.elo&er gat%ers information on t%e e9&ertAs rationale for at a decision<
It is
im&ortant t%at t%e knowledge de.elo&er t%oroug%ly Fuestions t%e e9&ert on all angles of t%e
=aking t%e results from ste& two and using it to build t%e rules t%at re&resent t%e e9&ertAs
&rocess or solutions< =%is ste& may reFuire se.eral c%ecks to ensure t%e resulting system meets
needs of t%e user and %as ca&tured Gt%e e9&ertH as closely as &ossible< $lowc%arts, flow
decision trees, decision tables, and ot%er gra&%ic re&resentation can be used to de&ict t%e rules for
e9&ertAs solution<
2< 0ow would one identify e9&ertise?
=%e collection of t%e se.eral indicators of e9&ertise would %el& t%e knowledge de.elo&er identify
would be an a&&ro&riate e9&ert for a &roblem domain< =%ese include@
a< !enuine res&ect from &eers wit% regard to t%e e9&ertAs decisions as good decisions
b< 7eo&le consult t%e e9&ert w%en a &roblem arises
c< 3dmitting to not knowing e.eryt%ing about a &roblem w%ic% demonstrates %is or %er
d< confidence and &ro.ides a realistic .iew of limitations, a.oiding irrele.ant information and
focusing on t%e facts<
e< Working wit% a clear focus
f< )eing able to e9&lain t%e information to different audience le.els<
g< De&t% of detail and e9ce&tional Fuality in e9&lanations
%< Demonstrating no arrogance regarding &ersonal credentials
i< Mears of e9&erience
K< +trong ties wit% &eo&le in &ower
8< Working wit% e9&erts reFuires certain skills and e9&erience< W%at suggestions or would you gi.e to an ine9&erienced knowledge de.elo&er concerning@
a< working wit% or a&&roac%ing an e9&ert
b< &re&aring for t%e first session
3 and b are interrelated in t%e o.erall effort and interactions wit% t%e e9&ertBsC< 3ny knowledge
de.elo&er, no matter %ow well e9&erienced, must educate %imself or %erself in t%e e9&ertAs area and
fully &re&ared for t%e knowledge acFuisition &%ase< 7erce&tions are e9tremely im&ortant in
ca&ture< If t%e
10< Working wit% multi&le e9&erts %as definite benefits and limitations< ite an e9am&le in
w%ic% t%e use of multi&le e9&erts is a must< 19&lain your c%oice<
3n e9am&le in w%ic% t%e user of multi&le e9&erts is a must could be for de.elo&ment of a
based system to &redict t%e ne9t direction of a gi.en stock on t%e New Mork +tock 19c%ange< =%e
reasons you would need multi&le e9&erts are t%e com&le9ity of t%e &roblem domain, listening
to a
.ariety of .iews on stock e9c%ange t%eory and be%a.ior before attem&ting an a&&roac% or a
Wit% t%is e9am&le, t%ere is no single indi.idual w%o is an e9&ert in all as&ects of t%e com&any
stocks or
t%e stock e9c%ange or e.en t%e economy<
N o&yrig%t >irtual :ni.ersity of 7akistan 12"Knowledge Management EM!M=(/#0 >:
-1++4N 2*
+1I 7R41++ 3ND )3 $4R K< R13=I4N
NonakaOs Model of Knowledge reation L =ransformation
In 188*, Nonaka coined t%e terms tacit knowledge and e9&licit knowledge as t%e two main ty&es of
knowledge< =%e key to knowledge creation lies in t%e way it is mobili5ed and con.erted t%roug%
J =acit to tacit communication B+ociali5ationC@ =akes &lace between &eo&le in meetings or in
team discussions<
J =acit to e9&licit communication B19ternali5ationC@ 3rticulation among &eo&le troug% dialog
Be<g<, brainstormingC<
J 19&licit to e9&licit communication BommunicationC@ =%is transformation &%ase can be
best su&&orted by tec%nology< 19&licit knowledge can be easily ca&tured and t%en
distributed;transmitted to worldwide audience<
19&licit to tacit communication BInternali5ationC@ =%is im&lies taking e9&licit knowledge
Be<g<, a
re&ortC and deducing new ideas or taking constructi.e action< 4ne significant goal of
management is to create tec%nology to %el& t%e users to deri.e tacit knowledge from e9&licit
+ociali5ation(19ternali5ation(ombination(Internali5ation 7rocess
4rgani5ations create and define &roblems, de.elo& and a&&ly knowledge to sol.e t%e &roblems,
t%en furt%er de.elo& new knowledge t%roug% t%e action of &roblem< In many organi5ations,
de.elo&ing new knowledge is e.en more im&ortant t%an kee&ing track of e9isting knowledge<
organi5ation is not merely an information &rocessing mac%ine, but an entity t%at creates
t%roug% action and interaction< It interacts wit% its en.ironment, and res%a&es t%e en.ironment
e.en itself t%roug% t%e &rocess of knowledge creation<
0ence, Nonaka et al< B2000C argue t%at t%e most im&ortant as&ect of understanding a firmAs
concerning knowledge is t%e dynamic ca&ability to continuously create new knowledge out of
firm(s&ecific ca&abilities, rat%er t%an t%e stock of knowledge t%at a firm &ossesses at any one &oint
time< Wit% t%is .iew of an organi5ation as an entity t%at creates knowledge continuously, we need
ree9amine our t%eories of t%e firm, in terms of %ow it is organi5ed and managed, %ow it interacts
its en.ironment, and %ow its members interact wit% eac% ot%er< =%is is t%e to&ic in a later c%a&ter on
resource(based strategy<
Knowledge creation is a continuous, self(transcending &rocess t%roug% w%ic% one
transcends t%e
boundary of t%e old self into a new self by acFuiring new conte9t, a new .iew of t%e world, and
knowledge 4ne also transcends t%e boundary between self and ot%er, as knowledge is created
t%e interactions among indi.iduals or between indi.iduals and t%eir en.ironment<
=o understand %ow organi5ations create knowledge dynamically, Nonaka et al< B2000C &ro&osed a
of knowledge creation, consisting of t%ree elements@ B1C t%e +1I &rocess, t%e &rocess of
creation t%roug% con.ersion between tacit and e9&licit knowledge, in w%ic% +1I ca&tures
e9ternali5ation, combination, and internali5ation B2C ba, t%e s%ared conte9t for knowledge creation
t%e &lace to create knowledge, and B#C knowledge assets, t%e resources reFuired to enable
creation, suc% as in&uts, out&uts, and moderator of t%e knowledge creating &rocess<
=%e t%ree elements of knowledge creation %a.e to interact wit% eac% ot%er to form t%e knowledge
t%at creates knowledge< 3n organi5ation creates knowledge t%roug% interactions between e9&licit
tacit knowledge< =%is interaction is a called knowledge con.ersion< =%roug% t%e con.ersion
tacit and e9&licit knowledge e9&and in bot% Fuality and Fuantity< =%ere are four ste&s in
con.ersion@ from tacit to tacit, from tacit to e9&licit, from e9&licit to e9&licit, and from e9&licit to
=%ese four ste&s are called sociali5ation, e9ternali5ation, combination and internali5ation,
and t%ey t%e +1I &rocess<
N o&yrig%t >irtual :ni.ersity of 7akistan 122Knowledge Management EM!M=(/#0 >:
J +ociali5ation is t%e con.ersion of tacit knowledge to tacit knowledge< New tacit knowledge is
con.erted t%roug% s%ared e9&eriences< New tacit knowledge is acFuired t%roug% s%ared
e9&erience, suc% as s&ending time toget%er or in t%e same en.ironment< +ociali5ation
takes &lace w%en new skills are acFuired by s&ending time wit% ot%ers w%o %a.e t%ose skills<
+ociali5ation does also occur outside t%e ty&ical work&lace, w%en mental models and o&inions
are s%ard among &ersons w%o are &resent< +ociali5ation is t%e s%aring of tacit knowledge
between indi.iduals, usually t%roug% Koint acti.ities rat%er t%an written or .erbal instructions<
$or e9am&le, by transferring ideas and images, a&&rentices%i&s allow newcomers to see t%e way
ot%er t%ink< Knowledge is &roduced in a grou& setting not only t%roug% mere acFuisition of t%e
indi.idualsA knowledge, but also t%roug% t%e s%aring of common understanding< +ocial
&rocesses &lay an im&ortant role in t%e transition of knowledge across indi.iduals or grou&s<
J 19ternali5ation is t%e con.ersion of tacit knowledge to e9&licit knowledge< =acit knowledge is
articulated into e9&licit knowledge< 19&licit knowledge can be e9&ressed in words and numbers
and s%ared in t%e form of data, scientific formulae, s&ecifications manuals and t%e like< =%is
kind of knowledge can be readily transmitted between indi.iduals bot% formally and
systematically< =%e successful con.ersion of tacit knowledge into e9&licit knowledge de&ends
on t%e common knowledge s&ace as well as use of means suc% as meta&%ors, analogy and
mental models< 19ternali5ation t%e e9&ression of tacit knowledge and its con.ersion
into com&re%ensible forms t%at are easier to understand< on.entional learning met%odologies
reFuire t%e e9ternali5ation of t%e &rofessorAs knowledge as t%e initial ste& in t%e studentsA
learning &rocess< 19ternali5ation tec%niFues t%at %el& to e9&ress ideas or images as
words, conce&ts, .isuals, or figurati.e language Be<g<, meta&%ors, analogies, and narrati.esC, and
deducti.e;inducti.e reasoning or creati.e inference<
J ombination is t%e con.ersion of e9&licit knowledge to e9&licit knowledge< 19&licit knowledge
is con.erted into more com&le9 and systematic sets of e9&licit knowledge< 19&licit knowledge
is collected from inside and outside t%e organi5ation and t%en combined, edited and &rocessed
to from new e9&licit knowledge< =%e new knowledge is t%en disseminated among t%e members
of t%e organi5ation< W%en t%e financial controller collects information from all &arts of t%e
organi5ation and &uts it toget%er to s%ow t%e financial %ealt% of t%e organi5ation, t%at re&ort is
new knowledge in t%e sense t%at it synt%esi5es e9&licit knowledge from a many
sources in one conte9t< ombination t%e con.ersion of e9&licit knowledge into more
com&le9 sets of e9&licit knowledge< $ocusing on communication, diffusion, integration, and
systemi5ation of knowledge, combination contributes to knowledge at t%e grou& le.el as well as
tat t%e organi5ational le.el< Inno.ati.e organi5ations seek to de.elo& new conce&ts t%at are
created, Kustified, and modeled at t%e organi5ational, and sometimes inter organi5ational, le.el<
om&le9 organi5ational &rocesses reFuire t%e coo&eration of .arious grou&s wit%in t%e
organi5ation, and combination su&&orts t%ese &rocesses by aggregating tec%nologies and
+1I 7rocess of Knowledge reation
J Internali5ation is t%e con.ersion of e9&licit knowledge to tacit knowledge< Indi.iduals con.ert
e9&licit knowledge into tacit knowledge< )y reading documents or manuals about t%eir Kobs and
t%e organi5ation, new em&loyees can internali5e t%is e9&licit knowledge in suc% documents to
start doing t%eir Kobs< W%en internali5ation %as occurred, t%e new knowledge becomes &art of
e9isting mental models and know(%ow< =%is tacit knowledge accumulated at t%e indi.idual le.el
N o&yrig%t >irtual :ni.ersity of 7akistan 128

=o 19&licit
=o =acit
$rom =acit
$rom 19&licitKnowledge Management EM!M=(/#0 >:
can stimulate a new s&iral of knowledge creation w%en it is s%ared wit% ot%ers t%roug%
sociali5ation< Internali5ation reFuires t%e indi.idual to identify t%e knowledge rele.ant
oneself wit%in t%e organi5ationAs e9&licit knowledge< In internali5ation &rocesses, t%e e9&licit
acFuiring t%e knowledge can re(e9&erience w%at ot%ers go t%roug%< 3lternati.ely, indi.iduals
could acFuire tacit knowledge in .irtual situations, eit%er .icariously be reading or listening to
ot%ersA stories, or e9&erientially t%roug% simulations or e9&eriments< -earning by doing, on(t%e(
Kob training, learning by obser.ation, and face(to(face meetings are some of t%e internali5ation
&rocesses by w%ic% indi.iduals acFuire knowledge
Knowledge creation is a continuous &rocess of dynamic interactions between tacit and
knowledge< +uc% interactions are s%a&ed by s%ifts between different modes of knowledge
not Kust t%roug% one mode of interaction< Knowledge created t%roug% eac% of t%e four
modes of
knowledge con.ersion interacts in t%e s&iral of knowledge creation< Nonaka et al< B2000C em&%asi5e
it is im&ortant to note t%at t%e mo.ement t%roug% t%e four modes of knowledge con.ersion forms a
s&iral, not a circle<
=%e first element of t%e Nonaka et al< B20000 model for knowledge creation is t%e +1I &rocess<
second element is ba, w%ic% is t%e name gi.en t%e location or conte9t w%ere knowledge creation
&lace< Knowledge needs a conte9t to be created< =%e conte9t is defined in terms of w%o &artici&ates
%ow t%ey &artici&ate< Knowledge needs a &%ysical conte9t to be created6 t%ere is no creation
wit%out a
&lace< )a, w%ic% can be translated to &lace, offers suc% a conte9t< )a does not necessarily mea a
&lace< =%e Da&anese word ba means a &lace at a s&ecific time< )a is t%e real cultural, social and
conte9t w%ic% is of im&ortance to eac% knowledge worker, and w%ic% enables eac% knowledge
to understand and a&&reciate information< )a is t%e &lace w%ere information is understood so t%at it
becomes knowledge<
=%e key conce&t in understanding ba is interaction< Knowledge creation is a dynamic %uman
t%at transcends e9isting boundaries< Knowledge is created t%roug% t%e interactions among
indi.iduals or
between indi.iduals and t%eir en.ironments, rat%er t%an by an indi.idual o&erating alone< )a
is t%e
conte9t s%ared by t%ose w%o interact wit% eac% ot%er, and t%roug% suc% interactions,
t%ose w%o
&artici&ate in ba and t%e conte9t itself e.ol.e t%roug% self(transcendence to create
7artici&ants of ba cannot be mere onlookers< Instead, t%ey are committed to ba t%roug% action and
)a lets &artici&ants s%are time and s&ace, and yet it transcends time and s&ace< In knowledge
es&ecially in sociali5ation and e9ternali5ation, it is im&ortant for &artici&ants to s%are time and
s&ace< 3
close &%ysical interaction is im&ortant in s%aring t%e conte9t and forming a common language
&artici&ants< 3lso, since knowledge is intangible, unbounded and dynamic and cannot be stocked,
works as t%e &latform of knowledge creation by collecting t%e a&&lied knowledge of t%e area into a
certain time and s&aces and integrating it<, as ba can be a mental or .irtual &lace as well as
&%ysical &lace, it does not %a.e to be bound to a certain s&ace and time<
=%e t%ird and final element of t%e knowledge creation model is knowledge assets< 3ssets are
s&ecific resources t%at are used to create .alue for t%e firm< Knowledge assets are resources
reFuired to
su&&ort t%e knowledge creating &rocess< Im&ortant knowledge assets are trust, roles and routines<
is reFuired to stimulate knowledge workers to s%are knowledge and to enter into a social
creation &rocess< Roles %a.e to be defined so t%at knowledge workers are familiar wit%
%ow t%e
knowledge creation &rocess is to take &lace< Routines are im&ortant to know, so t%at
knowledge workers in different roles %andle time and &lace and freFuencies for knowledge
eFually< Knowledge assets must be built and used internally in order to be .aluable to t%e firm, as
cannot be acFuired e9ternally<
=o understand %ow knowledge assets are created, acFuired and e9&loited, Nonaka et
al< B2000C
&ro&osed to categori5e knowledge assets into four ty&es@ e9&eriential knowledge assets,
knowledge assets, systemic knowledge assets and routine knowledge assets< 19&eriential
assets consist of t%e s%ared tacit knowledge t%at is built t%roug% s%ared %ands(on e9&erience
t%e members of t%e organi5ation, and between t%e members of t%e organi5ation and its
su&&liers and affiliated firms< +kills and know(%ow t%at area acFuired and accumulated by
t%roug% e9&eriences at work are e9am&les of e9&eriential knowledge assets<
N o&yrig%t >irtual :ni.ersity of 7akistan 1#0Knowledge Management EM!M=(/#0 >:
once&tual knowledge assets consist of e9&licit knowledge articulated t%roug% mages,
symbols and
language< =%ey are t%e assets based on t%e conce&ts %eld by customers and members
of t%e
organi5ation< +ystemic knowledge assets consist of systemati5ed and &ackaged e9&licit knowledge,
as e9&licitly stated tec%nologies, &roduct s&ecifications, manuals, and documented and
information about customers and su&&liers< Routine knowledge assets consist of t%e tacit
t%at is routini5ed and embedded in t%e actions and &ractices of t%e organi5ation<
organi5ational culture and organi5ational routines for carrying out t%e day(to(day
business of t%e
organi5ation are e9am&les of routine knowledge assets<
=%ese four ty&es of knowledge assets form t%e basis of t%e knowledge creating &rocess< =o manage
knowledge creation and e9&loitation effecti.ely, a com&any %as to ma& its stocks of knowledge
assets<, cataloguing t%e e9isting knowledge is not enoug%< 3s stated abo.e, knowledge assets
dynamic, and new knowledge assets can be created from e9isting knowledge assets<
=%e t%ree elements of t%e knowledge creation model E +1I, ba and assets E re&resent reFuirements
w%ic% all %a.e to be taken care of by management to ac%ie.e successful knowledge creation< =%e
&rocess takes care of t%e interaction between tacit and e9&licit knowledge, w%ile ba is t%e &lace for
interaction, and knowledge assets are t%e resources for t%is interaction< W%en t%roug% t%e
&rocess in a s&iral, t%e organi5ation de.elo&s new knowledge< =%is s&iral is de&endent on ba
and is
stimulated by conditions of growt% based on a.ailable knowledge assets<
Management is im&ortant in all t%ree elements< 19ecuti.e management is res&onsible for
cor&orate knowledge ambitions< Middle management is res&onsible for creating and sustaining ba<
e9ecuti.e and middle management are res&onsible for t%e a.ailability of knowledge
assets< =%e
knowledge(creating &rocess cannot be managed in t%e traditional sense of management, w%ic%
on controlling t%e flow of information< Managers ca,, lead t%e organi5ation to acti.ely
dynamically create knowledge by &ro.iding certain conditions<
Researc%ers and &ractitioners argue t%at most of t%e knowledge a&&lied by indi.iduals in
organi5ation is
tacit knowledge< =raditionally, organi5ations %a.e been concerned wit% management of
knowledge, w%ic% is of less im&ortance to t%e business at any &oint in time<, tacit and
knowledge are de&endent on eac% ot%er to be com&lete sources of knowledge< W%en we a&&ly
+1I &rocess, we see t%at t%ere is an interaction between e9&licit and tacit knowledge, w%ic%
new knowledge< In t%e e9ternali5ation stage, tacit knowledge is concerted into e9&licit knowledge<
successful con.ersion of tacit knowledge into e9&licit knowledge de&ends on t%e common
s&ace as well as use of means suc% as meta&%ors, analogy and mental models< +uc%
means %el&
indi.iduals e9&ress knowledge in words and numbers and s%are it in t%e form of data,
formulae, s&ecification, manuals and t%e like =%is kind of knowledge can be readily transmitted
indi.iduals bot% formally and systematically<
Nonaka et al< B2000C argue t%at fostering lo.e, care, trust and commitment amongst
members is im&ortant, as it forms t%e foundation of knowledge creation< $or knowledge Bes&ecially
knowledgeC to be s%ared and for t%e self(transcending &rocess of knowledge creation to occur, t%ere
s%ould be strong lo.e, caring and trust among organi5ation members< 3s information creates &ower,
indi.idual mig%t be moti.ated to mono&oli5e it, %iding it e.en from %is or %er colleagues<,
knowledge needs to be s%ared to be created and e9&loited, it is im&ortant for leaders to
create an
atmos&%ere in w%ic% organi5ation members feel safe s%aring t%eir knowledge< It is also im&ortant
leaders to culti.ate commitment amongst organi5ation members to moti.ate t%e s%aring and
creation of
knowledge, &referably based on a cor&orate knowledge .ision<
Nonaka et al< B2000C defined knowledge assets as firm(s&ecific resources t%at are indis&ensable to
.alue for t%e firm6 knowledge assets are in&uts, out&uts and moderating factors of t%e
creating &rocess< $or e9am&le, trust amongst organi5ational members is &roduced as an out&ut of
knowledge(creating &rocess, and at t%e same time trust moderates %ow ba functions as a &latform
t%e knowledge(creating &rocess< =%is definition of knowledge assets focuses on
resources for
knowledge creation<
N o&yrig%t >irtual :ni.ersity of 7akistan 1#1Knowledge Management EM!M=(/#0 >:
-1++4N 2/
KN4W-1D!1 +7IR3- 3ND +:+=3IN1D 4R!3NI[3=I4N3- 3D>3N=3!1+
=0R4:!0 +1I 7R41++
Knowledge on.ersion@ Interaction between =acit and 19&licit Knowledge
=%e %istory of Western e&istemology can be seen as a continuous contro.ersy about w%ic% ty&e of
knowledge is more trut%ful< W%ile Westerners tend to em&%asi5e e9&licit knowledge, t%e Da&anese
to stress tacit knowledge< In our .iew,, tacit knowledge and e9&licit knowledge are not
se&arate but mutually com&lementary entities< =%ey interact wit% and interc%ange into eac% ot%er in
creati.e acti.ities of %uman beings< 4ur dynamic model of knowledge creation is anc%ored to a
assum&tion t%at %uman knowledge is created and e9&anded t%roug% social, interaction between
knowledge and e9&licit knowledge< We call t%is interaction ]knowledge con.ersion<] It s%ould be
t%at t%is con.ersion is a ]social] &rocess between indi.iduals and not confined wit%in an
3ccording to t%e rationalist .iew, %uman cognition is a deducti.e &rocess of
indi.iduals, but an
indi.idual is isolated from social interaction w%en %e or s%e & t%ings< =%us, t%roug%
]social con.ersion] &rocess, tacit and e9&licit knowledge e9&and in terms of bot% Fuality and
BNonaka, 1880bC<
=%e idea of ]knowledge con.ersion] may be &artially consonant wit% t%e 3= model de.elo&ed
cogniti.e &syc%ology <=%is model %y&ot%esi5es t%at for cogniti.e skills to de.elo&, all
knowledge, w%ic% corres&onds to e9&licit knowledge in our t%eory, %as to be
transformed into
&rocedural knowledge, w%ic% corres&onds to tacit knowledge, used in suc% acti.ities as riding a
or &laying t%e &iano< =%e 3= model %as one limitation< It .iews t%e transformation as a s&ecial
because t%is modelOs researc% interest is focused on t%e acFuisition and transfer of &rocedural
knowledge, not declarati.e Be9&licitC knowledge< In ot%er words, &ro&onents of t%is model
knowledge transformation as mainly unidirectional from declarati.e Be9&licitC to &rocedural
w%ereas we argue t%at t%e transformation is interacti.e and s&iral<
$our Modes of Knowledge on.ersion
=%e assum&tion t%at knowledge is created t%roug% t%e interaction between tacit and e9&licit
allows us to &ostulate four different modes of knowledge con.ersion< =%ey are as follows@ B1C from
knowledge to tacit knowledge, w%ic% we call sociali5ation6 B2C from tacit knowledge
to e9&licit
knowledge, or e9ternali5ation6 B#C from e9&licit knowledge to e9&licit knowledge, or combination6
B'C from e9&licit knowledge to tacit knowledge, or internali5ation< =%ree of t%e four ty&es of
con.ersion(sociali5ation, combination, and internali5ation(%a.e been discussed from
&ers& in organi5ational t%eory< $or e9am&le, sociali5ation is connected wit% t%e t%eories of
&rocesses and organi5ational culture6 combination %as its roots in information
&rocessing6 and
internali5ation is closely related to organi5ational learning<, e9ternali5ation %as been
neglected< 1ac% of t%ese four modes of knowledge con.ersion will be discussed in detail below,
wit% actual e9am&les<
+ociali5ation@ $rom =acit to =acit
+ociali5ation is a &rocess of s%aring e9&eriences and t%ereby creating tacit knowledge suc% as
mental models and tec%nical skills< 3n indi.idual can acFuire tacit knowledge directly
from ot%ers
wit%out using language< 3&&rentices work wit% t%eir masters and learn craftsmans%i& not
language but t%roug% obser.ation, imitation, and &ractice< In t%e business setting, on(t%e(Kob
uses basically t%e same &rinci&le< =%e key to acFuiring tacit knowledge is e9&erience< Wit%out
form of s%ared e9&erience, it is e9tremely difficult for one &erson to &roKect %er( or %imself into
indi.idualOs t%inking &rocess< =%e mere transfer of information will often make little sense,
if it is
abstracted from associated emotions and s&ecific conte9ts in w%ic% s%ared e9&eriences are
=%e following t%ree e9am&les illustrate %ow sociali5ation is em&loyed by Da&anese com&anies
wit%in t%e
&roduct de.elo&ment conte9t<
N o&yrig%t >irtual :ni.ersity of 7akistan 1#2Knowledge Management EM!M=(/#0 >:
=%e first e9am&le of sociali5ation comes from Ronda, w%ic% set u& ]brainstorming cam&s] Btama
kaiC(informal meetings for detailed discussions to sol.e difficult &roblems in de.elo&ment &roKects<
meetings are %eld outside t%e work&lace, often at a resort inn w%ere &artici&ants discuss
&roblems w%ile drinking sake, s%aring meals, and taking a bat% toget%er in a %ot s&ring< =%e
are not limited to &roKect team members but are o&en to any em&loyees w%o are interested in
de.elo&ment &roKect under way< In t%ese discussions, t%e Fualifications or status of t%e discussants
are Fuestioned, but t%ere is one taboo@ criticism wit%out constructi.e suggestions< Discussions
%eld wit% t%e understanding t%at ]making criticism is ten times easier t%an coming
u& wit% a
constructi.e alternati.e<] =%is kind of brainstorming cam& is not uniFue to Ronda but %as been used
many ot%er Da&anese firms< It is also not uniFue to de.elo&ing new &roducts and ser.ices but is also
used to de.elo& managerial systems or cor&orate strategies< +uc% a cam& is not only a forum for
dialogue but also a medium for s%aring e9&erience and en%ancing mutual trust among &artici&ants<
It is
&articularly effecti.e in s%aring tacit knowledge and creating anew &ers&ecti.e< It reorients t%e
models of all indi.iduals in t%e same direction, but not in a forceful way< Instead, brainstorming
re&resent a mec%anism t%roug% w%ic% indi.iduals searc% for %armony by engaging in
as well as mental e9&eriences<
=%e second e9am&le, w%ic% s%ows %ow a tacit tec%nical skill was sociali5ed, comes from t%e
1lectric Industrial om&any< 3 maKor &roblem at t%e 4saka(based com&any in de.elo&ing an
%ome bread(making mac%ine in t%e late 1820s centered on %ow to mec%ani5e t%e doug%(
&rocess, w%ic% is essentially tacit knowledge &ossessed by master bakers< Doug% kneaded by a
baker and by a mac%ine were 9(rayed and com&ared, but no meaningful insig%ts were obtained<
=anaka, %ead of software de.elo&ment, knew t%at t%e areaOs best bread came from
t%e 4saka
International 0otel< =o ca&ture t%e tacit knowledge of kneading skill, s%e and se.eral
.olunteered to a&&rentice to t%e %otelOs %ead baker< Making t%e same delicious bread as
%ead bakerOs was, not easy< No one could e9&lain w%y< 4ne day,, s%e noticed t%at t%e baker
was not only stretc%ing but also ]twisting] t%e doug%, w%ic% turned out to be t%e secret for making
tasty bread< =%us s%e sociali5ed t%e %ead bakerOs tacit knowledge t%roug% obser.ation, imitation,
+ociali5ation also occurs between &roduct de.elo&ers and customers< Interactions wit%
before &roduct de.elo&ment and after market introduction are, in fact, a
&rocess of
s%aring tacit knowledge and creating ideas for im&ro.ement< =%e way N1 de.elo&ed its first
com&uter is a case in &oint< =%e new(&roduct de.elo&ment &rocess began w%en a grou& from
+emiconductor and I +ales Di.ision concei.ed of an idea to sell Da&anOs first microcom&uter kit,
=K(20, to &romote t%e sales of semiconductor de.ices< +elling t%e =K(20 to t%e &ublic at large was
radical de&arture from N1Os %istory of res&onding to routine orders from Ni&&on =elegra&%
=ele&%one BN==C< :ne9&ectedly, a wide .ariety of customers, ranging from %ig% sc%ool students
&rofessional com&uter ent%usiasts, came to N1Os )I=(INN, a dis&lay center in t%e
district of =okyo, w%ic% is famous for its %ig% concentration of electronic goods retailers<
e9&eriences and continuing dialogues wit% t%ese customers at t%e )I=(INN resulted in t%e
of N1Os best(selling &ersonal com&uter, t%e 7(2000, a few years later<
19ternali5ation@ $rom =acit to 19&licit
19ternali5ation is a &rocess of articulating tacit knowledge into e9&licit conce&ts< It is a
knowledge(creation &rocess in t%at tacit knowledge becomes e9&licit, taking t%e s%a&es of
analogies, conce&ts, %y&ot%eses, or models< W%en we attem&t to conce&tuali5e an image, we
e9&ress its
essence mostly in language(writing is an act of con.erting tacit knowledge into articulable
knowledge <
Met e9&ressions are often inadeFuate, inconsistent, and insufficient< +uc% discre&ancies
and ga&s
between images and e9&ressions,, %el& &romote ]reflection] and interaction
=%e e9ternali5ation mode of knowledge con.ersion is ty&ically seen in t%e &rocess of conce&t
and is triggered by dialogue or collecti.e reflection<1# 3 freFuently used met%od to create a conce&t
to combine deduction and induction< Ma5da, for e9am&le, combined t%ese two reasoning
w%en it de.elo&ed t%e new RR(" conce&t, w%ic% is described as ]an aut%entic s&orts car t%at
an e9citing and comfortable dri.e<] =%e conce&t was deduced from t%e car makerOs cor&orate
]create new .alues and &resent Koyful &leasures] as well as t%e &ositioning of t%e new car as
strategic car for t%e :<+< market and an image of inno.ation<] 3t t%e same time, t%e new conce&t
N o&yrig%t >irtual :ni.ersity of 7akistan 1##Knowledge Management EM!M=(/#0 >:
induced from ]conce&t] tri&s,] w%ic% were e9&eriences by de.elo&ment team members in
:nited +tates as well as from ]conce&t clinics,] w%ic% gat%ered o&inions from customers
and car
e9&erts< W%en we cannot find an adeFuate e9&ression for an image t%roug% analytical met%ods
deduction or induction, we %a.e to use a non analytical met%od< 19ternali5ation is, t%erefore,
dri.en by meta&%or and;or analogy< :sing an attracti.e meta&%or and;or analogy is %ig%ly effecti.e
fostering direct commitment to t%e creati.e &rocess< Recall t%e Ronda ity e9am&le< In de.elo&ing
car, Riroo
Watanabe and %is team used a meta&%or of ]3utomobile 1.olution<] 0is team .iewed t%e
as an organism and soug%t its ultimate form< In essence, Watanabe was asking, ]W%at
will t%e
automobile e.entually e.ol.e into?]
I insisted on allocating t%e minimum s&ace for mec%anics and t%e ma9imum s&ace for
&assengers< =%is seemed to be t%e ideal car, into w%ic% t%e automobile s%ould e.ol.e<
<<<=%e first ste& toward t%is goal was to c%allenge t%e ]reasoning of Detroit,] w%ic% %ad
sacrificed comfort for a&&earance< 4ur c%oice was a s%ort but tall car<<<s&%erical,
t%erefore lig%ter, less e9&ensi.e, more comfortable, and solid<
=%e conce&t of a tall and s%ort car(]=all )oy](emerged t%roug% an analogy between t%e conce&t
]man(ma9imum, mac%ine(minimum] and an image of a s&%ere t%at contains t%e ma9imum
wit%in t%e minimum area of surface, w%ic% ultimately resulted in t%e 0onda ity<
=%e case of anonOs Mini(o&ier is a good e9am&le of %ow an analogy was used effecti.ely for
de.elo&ment< 4ne of t%e most difficult &roblems faced by t%e de.elo&ment team was &roducing at
cost a dis&osable cartridge, w%ic% would eliminate t%e necessity for maintenance
reFuired in
con.entional mac%ines< Wit%out a dis&osable cartridge, maintenance staff would %a.e to be
stationed t%e country, since t%e co&ier was intended for family or &ersonal use< If t%e usage freFuency
were %ig%, maintenance costs could be negligible< )ut t%at was not t%e case wit% a &ersonal co&ier<
fact t%at a large number of customers would be using t%e mac%ine only occasionally meant t%at t%e
&roduct %ad to %a.e %ig% reliability and no or minimum maintenance< 3 maintenance study s%owed
more t%an 80 &ercent of t%e &roblems came from t%e drum or its surrounding &arts< 3imed at
maintenance costs w%ile maintaining t%e %ig%est reliability, t%e team de.elo&ed t%e
conce&t of a
dis&osable cartridge system in w%ic% t%e drum or t%e %eart of t%e co&ier is re&laced after a
amount of usage<
=%e ne9t &roblem was w%et%er t%e drum could be &roduced at a cost low enoug% to be consistent
t%e targeted low selling &rice of t%e co&ier< 3 task force assigned to sol.e t%is cost &roblem %ad
%eated discussions about t%e &roduction of con.entional &%otosensiti.e drum cylinders wit% a
material of aluminum(drawn tube at a 1ow cost< 4ne day Riros%i =anaka, leader of t%e task force,
out for some cans of beer< 4nce t%e beer was consumed, %e asked, ]0ow muc% does it
cost to
manufacture t%is can?] =%e team t%en e9&lored t%e &ossibility of a&&lying t%e &rocess of
t%e beer can to manufacturing t%e drum cylinder, using t%e same material< )y clarifying similarities
differences, t%ey disco.ered a &rocess tec%nology to manufacture t%e aluminum drum at a low
t%us rise to t%e dis&osable drum<
=%ese e9am&les wit%in Da&anese firms clearly s%ow t%e effecti.eness of t%e use of
meta&%or and
analogy in creating and elaborating a conce&t < 3s 0ondaOs Watanabe commented, ]We are more
%alfway t%ere, once a &roduct conce&t %as been created<] In t%is sense, t%e leadersO wealt% of
language and imagination is an essential factor in eliciting tacit knowledge from &roKect members<
3mong t%e four modes of knowledge con.ersion, e9ternali5ation %olds t%e key to knowledge
because it creates new, e9&licit conce&ts from tacit knowledge< 0ow can we con.ert tacit
into e9&licit knowledge effecti.ely and efficiently? =%e answer lies in a seFuential use of
analogy, and model< 3s Nisbet B18/8C noted, ]muc% of w%at Mic%ael 7olanyi %as called Otacit
is e9&ressible(in so far as it is e9&ressible at all(in meta&%or] < Meta&%or is away of
& or
intuiti.ely understanding one t%ing by imaging anot%er t%ing symbolically<
N o&yrig%t >irtual :ni.ersity of 7akistan 1#'Knowledge Management EM!M=(/#0 >:
=%eory of 4rgani5ational Knowledge reation in 7roduct De.elo&ment
7roduct Bom&anyC Meta&%or;3nalogy Influence on once&t reation
G3utomobile 1.olutionH
=%e s&%re
0int of ma9imi5ing &assenger
s&ace as ultimate auto
de.elo&ment GMan(ma9imum,
mac%ine(minimumH conce&t
0int of ma9imum
&assenger s&ace t%roug%
minimi5ing surface area G=all
and s%ort car B=all )oyCH
conce&t created
3luminum beer can
0in of similarities between
ine9&ensi.e aluminum beer can
and &%otosensiti.e drum
G-ow(cost manufacturing
&rocessH conce&t created
0ome )akery BMat%sus%itaC 0otel bread Bmeta&%orC 4saka
International 0otel %ead baker
0int of more delicious bread
G=wist doug%H conce&t created
Meta&%ors are one communication mec%anism t%at can function to reconcile discre&ancies in
meaning<, meta&%or is an im&ortant tool for creating a network of new conce&ts< )ecause a
is ]two t%oug%ts of different t%ings<<<su&&orted by a single word, or &%rase, w%ose
meaning is a
resultant of t%eir interaction]<C, we can continuously relate conce&ts t%at are far a&art in our mind,
relate abstract conce&ts to concrete ones< =%is creati.e, cogniti.e &rocess continues as we t%ink of
similarities among conce&ts and feel an imbalance, inconsistency, or contradiction in t%eir
t%us often leading to t%e disco.ery of new meaning or e.en to t%e formation of a new &aradigm<
ontradictions in%erent in a meta&%or are t%en %armoni5ed by analogy , w%ic% reduces t%e
unknown by
%ig%lig%ting t%e ]commonness] of two different t%ings< Meta&%or and analogy are often
3ssociation of two t%ings t%roug% meta&%or is dri.en mostly by intuition and %olistic imagery and
not aim to find differences between t%em< 4n t%e ot%er %and, association t%roug% analogy is carried
by rational t%inking and focuses on structural;functional similarities between two t%ings, and
t%eir differences< =%us analogy %el&s us understand t%e unknown t%roug% t%e known and bridges
ga& between an image and a logical model<
4nce e9&licit conce&ts are created, t%ey can t%en be modeled< In a logical model, no
s%ould e9ist and all conce&ts and &ro&ositions must be e9&ressed in systematic language and
logic< )ut in business terms, models are often only roug% descri&tions or drawings, far from being
s&ecific< Models are usually generated from meta&%ors w%en new conce&ts are created in t%e
con te9t<
ombination@ $rom 19&licit to 19&licit
ombination is a &rocess of systemi5ing conce&ts into a knowledge system< =%is mode of
con.ersion combining different bodies of e9&licit knowledge< Indi.iduals
e9c%ange and
combine knowledge t%roug% suc% media as documents, meetings, tele&%one
con.ersations, or
com&uteri5ed communication networks< Reconfiguration of e9isting information t%roug%
adding, combining, and categori5ing of e9&licit knowledge Bas conducted in com&uter databasesC
lead to new knowledge< Knowledge creation carried out in formal education and training at
usually takes t%is form< 3n M)3 education is one of t%e best e9am&les of t%is kind<
In t%e business conte9t, t%e combination mode of knowledge con.ersion is most often seen
middle managers break down and o&erationali5e cor&orate .isions, business conce&ts, or
conce&ts< Middle management &lays a critical role in creating new conce&ts t%roug%
networking of
codified information and knowledge< reati.e uses of com&uteri5ed communication networks
large(scale databases facilitate t%is mode of knowledge con.ersion<
N o&yrig%t >irtual :ni.ersity of 7akistan 1#*Knowledge Management EM!M=(/#0 >:
3t Kraft !eneral $oods, a manufacturer of dairy and &rocessed foods, data from t%e 74+ B&oint(of(
salesC system of retailers is utili5ed not only to find out w%at does and does not sell well but also to
create new ]ways to sell,] t%at is, new sales systems and met%ods< =%e com&any %as de.elo&ed
information(intensi.e marketing &rogram called ]micro(merc%andi5ing,] w%ic% &ro.ides
wit% timely and &recise recommendations on t%e o&timal merc%andise mi9 and wit% sales
based on t%e analysis of data from its micro(merc%andising system< :tili5ing KraftOs indi.idual
of data analysis, including its uniFue classification of stores and s%o&&ers into si9 categories, t%e
is ca&able of &in&ointing w%o s%o&s w%ere and %ow< Kraft successfully manages its &roduct
t%roug% su&er(markets by controlling four elements of t%e ]category management]
consumer and category dynamics, s&ace management, merc%andi5ing management, and
3t t%e to& management le.el of an organi5ation, t%e combination mode is reali5ed w%en mid(
conce&ts ^suc% as &roduct conce&tsC are combined wit% and integrated into grand conce&ts ^suc% as
cor&orate .isionC to generate anew meaning of t%e latter< Introducing anew cor&orate image in
182/, for
e9am&le, 3sa%i )reweries ado&ted a grand conce&t dubbed ]li.e 3sa%i for li.e &eo&le<] =%e
stood for t%e message t%at ]3sa%i will &ro.ide natural and aut%entic &roducts and ser.ices for t%ose
w%o seek acti.e minds and acti.e<]
3long wit% t%is grand conce&t, 3sa%i inFuired into t%e essence of w%at makes beer a&&ealing,
de.elo&ed 3sa%i +u&er Dry beer based on t%e new(&roduct conce&t of ]ric%ness and s%ar&ness<]
new(&roduct conce&t is a mid(range conce&t t%at made t%e grand conce&t of 3sa%i more
recogni5able, w%ic% in turn altered t%e com&anyOs &roduct de.elo&ment system< =%e taste of beer
%it%erto decided by engineers in t%e &roduction de&artment wit%out any &artici&ation by t%e
de&artment< =%e ]ric%ness and s%ar&ness] conce&t was reali5ed t%roug% coo&erati.e
de.elo&ment by bot% de&artments<
4t%er e9am&les of interaction between grand conce&ts and midrange conce&ts abound< $or
N1Os ]L] Bcom&uters and communicationsC conce&t induced t%e de.elo&ment of t%e
making 7(2000 &ersonal com&uter, w%ic% was based on t%e mid(range conce&t of
&rocessing<] anonOs cor&orate &olicy, ]reation of an e9cellent com&any by transcending t%e
business,] led to t%e de.elo&ment of t%e Mini(o&ier, w%ic% was de.elo&ed wit% t%e mid(range
conce&t of ]easy maintenance<] Ma5daOs grand .ision, ]reate new .alues and &resent Koyful,]
was reali5ed in t%e new RR(", ]an aut%entic s&orts car t%at &ro.ides an e9citing and comfortable
Internali5ation@ $rom 19&licit to =acit
Internali5ation is a &rocess of embodying e9&licit knowledge into tacit knowledge< It is closely
related to
]learning by doing<] W%en e9&eriences t%roug% sociali5ation, e9ternali5ation, and
combination are
internali5ed into indi.idualsO tacit knowledge bases in t%e form of s%ared mental models or
know(%ow, t%ey become .aluable assets<
3ll t%e members of t%e Ronda ity &roKect team, for e9am&le, internali5ed t%eir e9&eriences of t%e
18"0s and are now making use of t%at know(%ow and leading RLD &roKects in t%e com&any<
organi5ational knowledge creation to take &lace,, t%e tacit knowledge
accumulated at t%e
indi.idual le.el needs to be sociali5ed wit% ot%er organi5ational members, t%ereby starting anew
of knowledge creation<
$or e9&licit knowledge to become tacit, it %el&s if t%e knowledge is .erbali5ed or
diagrammed into
documents, manuals, or oral stories< Documentation %el&s indi.iduals internali5e w%at t%ey
t%us enric%ing t%eir tacit knowledge< In addition, documents or manuals facilitate t%e transfer of
knowledge to ot%er &eo&le, t%ereby %el&ing t%em e9&erience t%e e9&eriences of ot%ers indirectly
]re(e9&erience] t%emC< !1, for e9am&le, documents all customer com&laints and inFuiries in a
at its 3nswer enter in -ouis.ille, Kentucky, w%ic% can be used, for e9am&le, by members of a
&roduct de.elo&ment team to ]re(e9&erience] w%at t%e tele&%one o&erators e9&erienced<
establis%ed t%e 3nswer enter in 1822 to &rocess Fuestions, reFuests for %el&, and com&laints
customers on any &roduct 2' %ours a day, #/* days a year< 200 tele&%one o&erators res&ond to
many as 1',000 calls a day< !1 %as &rogrammed 1<* million &otential &roblems and t%eir solutions
its com&uteri5ed database system< =%e system is eFui&&ed wit% an on(line diagnosis function
t%e latest artificial intelligence tec%nology for Fuick answers to inFuiries6 any &roblem(solution
N o&yrig%t >irtual :ni.ersity of 7akistan 1#/Knowledge Management EM!M=(/#0 >:
can be retrie.ed by t%e tele&%one o&erator in two seconds< In case a solution is not a.ailable,
s&ecialists wit% at least four years of re&air e9&erience t%ink out solutions on site< $our
&rogrammers &ut t%e solutions into t%e database, so t%at t%e %ew information is usually installed
t%e system by t%e following day< =%is information is sent to t%e res&ecti.e &roduct di.isions
mont%< Met, t%e &roduct di.isions also freFuently send t%eir new(&roduct de.elo&ment &eo&le to t%e
3nswer enter to c%at wit% t%e tele&%one o&erators or t%e 12 s&ecialists, t%ereby ]re(
t%eir e9&eriences<
Internali5ation can also occur e.en wit%out actually to ]re(e9&erience] ot%er
e9&eriences< $or e9am&le, if reading or listening to a success story makes some
members of t%e
organi5ation feel t%e realism and essence of t%e story, t%e e9&erience t%at took &lace in t%e &ast may
c%ange into a tacit mental model< W%en suc% a mental model is s%ared by most members
of t%e
organi5ation, tacit knowledge becomes &art of t%e organi5ational culture< =%is &ractice is &re.alent
Da&an, w%ere books and articles on com&anies or t%eir leaders abound< $reelance writers or
em&loyees &ublis% t%em, some(times at t%e reFuest of t%e com&anies< 4ne can find about two do5en
books on Ronda or +oic%iro Ronda in maKor bookstores today, all of w%ic% %el& instill a
cor&orate culture for 0onda<
3n e9am&le of internali5ation t%roug% ]learning by doing] can be seen at Matsus%ita w%en it
launc%ed a
com&anywide &olicy in 188# to reduce yearly working time to 1,200 %ours< alled MI=O8# for
and Management Inno.ation =oward 188#,] t%e &olicyOs obKecti.e was not to reduce costs
but to
inno.ate t%e mindset and management by reducing working %ours and increasing indi.idual
Many de&artments were &u55led about %ow to im&lement t%e &olicy, w%ic% was clearly
as e9&licit knowledge< =%e MI=O8# &romotion office ad.ised eac% de&artment to e9&eriment wit%
&olicy for one mont% by working 1*0 %ours< =%roug% suc% a bodily e9&erience, em&loyees got to
w%at working 1,200 %ours a year would be like< 3n e9&licit conce&t, reducing working time to
%ours, was internali5ed t%roug% t%e one(mont% e9&erience< 19&anding t%e sco&e of bodily
e9&erience is
critical to internali5ation< $or e9am&le, Ronda ity &roKect leader Riroo Watanabe ke&t saying
gi.e it a try] to encourage t%e team membersO e9&erimental s&irit< =%e fact t%at t%e de.elo&ment
was cross(functional enabled its members to learn and internali5e a breadt% of de.elo&ment
beyond t%eir own functional s&eciali5ation< Ra&id &rototy&ing also accelerated t%e
accumulation of
de.elo&mental e9&eriences, w%ic% can lead to internali5ation<
ontents of Knowledge and t%e Knowledge +&iral
3s already e9&lained, sociali5ation aims at t%e s%aring of tacit knowledge< 4n its own,, it
is a
limited form of knowledge creation< :nless s%ared knowledge becomes e9&licit, it cannot be
le.eraged by t%e organi5ation as a w%ole< 3lso, a mere combination of discrete &ieces of
information into anew w%ole(for e9am&le, a com&troller of a com&any collects
information from
t%roug%out t%e com&any and &uts it toget%er in a financial re&ort(does not really
e9tend t%e
organi5ationOs e9isting knowledge base< )ut w%en tacit and e9&licit knowledge interact,
as in t%e
Matsus%ita e9am&le, an inno.ation emerges< 4rgani5ational knowledge creation is a continuous
dynamic interaction between tacit and e9&licit knowledge< =%is interaction is s%a&ed by s%ifts
different modes of knowledge con.ersion, w%ic% are in turn induced by se.eral triggers Bsee $igure
$irst, t%e sociali5ation mode usually starts wit% building a ]field] of interaction< =%is field
facilitates t%e
s%aring of membersO e9&eriences and mental models< +econd, t%e e9ternali5ation mode is triggered
meaningful ]dialogue or collecti.e reflection,] in w%ic% using a&&ro&riate meta&%or or analogy
team members to articulate %idden tacit knowledge t%at is ot%erwise %ard to communicate< =%ird,
combination mode is triggered by ]networking] newly created knowledge and e9isting knowledge
ot%er sections of t%e organi5ation, t%ereby crystalli5ing t%em into anew &roduct,, or
system< $inally, ]learning by doing] triggers internali5ation<
=%e content of t%e knowledge created by eac% mode of knowledge con.ersion is naturally different
$igure #('C< +ociali5ation yields w%at can be called ]sym&at%i5ed knowledge,] suc% as s%ared
models and tec%nical skills< =%e tacit skill of kneading doug% in t%e Matsus%ita
e9am&le is a
sym&at%i5ed knowledge< 19ternali5ation out(&uts ]conce&tual knowledge<] =%e conce&t of ]=all
in t%e 0onda e9am&le is a conce&tual knowledge created t%roug% t%e meta&%or of
1.olution] and t%e analogy between a s&%ere and t%e conce&t of ]man(ma9imum, mac%ine(
ombination rise to ]systemic knowledge,] suc% as a &rototy&e and new com&onent
N o&yrig%t >irtual :ni.ersity of 7akistan 1#"Knowledge Management EM!M=(/#0 >:
=%e micro(merc%andi5ing &rogram in t%e Kraft !eneral $oods e9am&le is a systemic knowledge,
includes retail management met%ods as its com&onents< Internali5ation &roduces
knowledge] about &roKect management, &roduction &rocess, new(&roduct usage, and
im&lementation< =%e bodily e9&erience of working 1*0 %ours a mont% in t%e Matsus%ita case is
o&erational knowledge of &olicy im&lementation<
=%ese contents of knowledge interact wit% eac% ot%er in t%e s&iral f knowledge creation< $or
sym&at%i5ed knowledge about consumersO wants may become e9&licit conce&tual knowledge
about a
new(&roduct conce&t t%roug% sociali5ation and e9ternali5ation< +uc% conce&tual knowledge
becomes a
guideline for creating systemic knowledge t%roug% combination< $or e9am&le, a new(&roduct
steers t%e combination &%ase, in w%ic% newly de.elo&ed and e9isting com&onent
tec%nologies are
combined to build a &rototy&e< +ystemic knowledge Be<g<, a simulated &roduction &rocess for t%e
&roductC turns into o&erational knowledge for mass &roduction of t%e &roduct t%roug%
In addition, e9&erience(based o&erational knowledge often triggers anew cycle of knowledge
$or e9am&le, t%e usersO tacit o&erational knowledge about a &roduct is often
sociali5ed, t%ereby
initiating im&ro.ement of an e9isting &roduct or de.elo&ment of an inno.ation<
=%us far, we %a.e focused our discussion on t%e e&istemological dimension of
knowledge creation< 3s noted before, %ow(, an organi5ation cannot create knowledge by
=acit knowledge of indi.iduals is t%e basis of organi5ational knowledge creation<
=%e organi5ation %as to mobili5e tacit knowledge created and accumulated at t%e indi.idual le.el<
mobili5ed tacit knowledge is ]organi5ationally] am&lified t%roug% four modes of knowledge
and crystalli5ed at %ig%er ontological le.els< We call t%is t%e ]knowledge s&iral,] in w%ic% t%e
between tacit knowledge and e9&licit knowledge will become larger in scale as it u& t%e
ontological le.els< =%us, organi5ational knowledge creation is a s&iral &rocess, starting at t%e
le.el and u& t%roug% e9&anding communities of interaction t%at crosses sectional,
di.isional, and organi5ational boundaries<
=%is &rocess is e9em&lified by &roduct de.elo&ment< reating a &roduct conce&t a
of interacting indi.iduals wit% different backgrounds and mental models< W%ile t%e members from
RLD de&artment focus on tec%nological &otential, t%ose from t%e &roduction and
de&artments are interested in ot%er issues< 4nly some of t%ose different e9&eriences, mental models,
moti.ations, and intentions can be e9&ressed in e9&licit language< =%us, t%e sociali5ation
&rocess of
s%aring tacit knowledge is reFuired<, bot% sociali5ation and e9ternali5ation are necessary
linking indi.idualsO tacit and e9&licit knowledge< Many Da&anese com&anies %a.e ado&ted
cam&s as a tool for t%at &ur&ose<
=%e &roduct created by t%is collecti.e and coo&erati.e &rocess will t%en be re.iewed for its
wit% mid(range and grand conce&ts< 1.en if t%e newly created &roduct %as su&erior Fuality, it
conflict wit% t%e di.isional or organi5ational goals e9&ressed by t%e mid(range and grand
W%at is reFuired is anot%er &rocess at a %ig%er le.el to maintain t%e integrity of t%e w%ole, w%ic%
lead to anot%er cycle of knowledge creation in a larger conte9t<
N o&yrig%t >irtual :ni.ersity of 7akistan 1#2Knowledge Management EM!M=(/#0 >:
-1++4N 2"
1N3)-1R+ 4$ +1I 7R41++
1nabling onditions for 4rgani5ational Knowledge reation
=%e role of t%e organi5ation in t%e organi5ational knowledge(creation &rocess is to &ro.ide t%e
conte9t for facilitating grou& acti.ities

$i.e(7%ase Model of t%e 4rgani5ational Knowledge ( reation 7rocess
=%us far we %a.e looked at eac% of t%e four modes of knowledge con.ersion and t%e fi.e enabling
conditions t%at &romote organi5ational knowledge creation< In t%is section we &resent an
fi.e(&%ase model of t%e organi5ational knowledge(creation &rocess, using t%e basic
de.elo&ed wit%in t%e t%eoretical framework and incor&orating t%e time dimension into our t%eory<
model, w%ic% s%ould be inter&reted as an ideal e9am&le of t%e &rocess, consists of fi.e &%ases@
s%aring tacit knowledge6 B2C creating conce&ts6 B#C Kustifying conce&ts6 B'C building an arc%ety&e6
and B*C
cross(le.eling knowledge <
=%e organi5ational knowledge(creation &rocess starts wit% t%e s%aring of tacit
knowledge, w%ic%
corres&onds roug%ly to sociali5ation, since t%e ric% and unta&&ed knowledge t%at resides in
must first be am&lified wit%in t%e organi5ation< In t%e second &%ase, tacit knowledge s%ared by,
e9am&le, a self(organi5ing team is con.erted to e9&licit knowledge in t%e form of anew
conce&t, a
&rocess similar to e9ternali5ation< =%e created conce&t %as to be Kustified in t%e t%ird &%ase, in
t%e organi5ation determines if t%e new conce&t is truly wort%y of &ursuit< t%e go(a%ead,
conce&ts are con.erted in t%e fourt% &%ase into an arc%ety&e, w%ic% can take t%e form of a &rototy&e
t%e case of ]%ard] &roduct de.elo&ment or an o&erating mec%anism in t%e case of ]soft]
suc% as anew cor&orate .alue, a no.el managerial system, or an inno.ati.e organi5ational structure<
last &%ase e9tends t%e knowledge created in, for e9am&le, a di.ision to ot%ers in t%e di.ision, across
ot%er di.isions, or e.en to outside constituents in w%at we term cross(le.eling of knowledge<
outside constituents include consumers, affiliated com&anies, uni.ersities, and
distributors< 3
knowledge(creating com&any does not o&erate in a closed system but in an o&en system in
knowledge is constantly e9c%anged wit% t%e outside en.ironment< We s%all describe eac% of t%e
&%ases in more detail below<
=%e $irst 7%ase@ +%aring =acit Knowledge
3s we %a.e mentioned re&eatedly, an organi5ation cannot create knowledge by itself<
+ince tacit
knowledge %eld by indi.iduals is t%e basis of organi5ational knowledge creation, it seems natural to
t%e &rocess by focusing on tacit knowledge, w%ic% is t%e ric%, unta&&ed source of new knowledge<
tacit knowledge cannot be communicated or &assed onto ot%ers easily, since it is acFuired
t%roug% e9&erience and not easily e9&ressible in words< =%us, t%e s%aring of tacit knowledge
multi&le indi.iduals wit% different back(grounds, &ers&, and moti.ations becomes t%e critical
for organi5ational knowledge creation to take &lace< =%e indi.idualsO emotions, feelings, and
models %a.e to be s%ared to build mutual trust<
=o effect t%at s%aring, we need a ]field] in w%ic% indi.iduals can interact wit% eac% ot%er t%roug%
to(face dialogues< It is %ere t%at t%ey s%are e9&eriences and sync%roni5e t%eir bodily
and mental
r%yt%ms< =%e ty&ical field of interaction is a self(organi5ing team, in w%ic% members from
functional de&artments work toget%er to ac%ie.e a common goal< 19am&les of a self(organi5ing
include Matsus%itaOs 0ome )akery team and t%e Ronda ity team< 3t Matsus%ita, team
a&&renticed to t%e %ead baker at t%e 4saka International 0otel to ca&ture t%e essence of
kneading skill t%roug% bodily e9&erience< 3t Ronda, team members s%ared t%eir mental models
tec%nical skills in discussing w%at an ideal car s%ould e.ol.e into, often sake and away from
office< =%ese e9am&les s%ow t%at t%e first &%ase of t%e organi5ational knowledge(creation
corres&onds to sociali5ation<
N o&yrig%t >irtual :ni.ersity of 7akistan 1#8Knowledge Management EM!M=(/#0 >:
3 self(organi5ing team facilitates organi5ational knowledge creation t%roug% t%e reFuisite .ariety of
team members, w%o e9&erience redundancy of information and s%are t%eir
inter&retations of
organi5ational intention< Management inKects creati.e c%aos by setting c%allenging goals and
team members wit% a %ig% degree of autonomy< 3n autonomous team starts to set its own
boundaries and, as a ]boundary(s&anning unit,] begins to interact wit% t%e e9ternal
accumulating bot% tacit and e9&licit knowledge<
=%e +econd 7%ase@ reating once&ts
=%e most intensi.e interaction between tacit and e9&licit knowledge occurs in t%e second &%ase<
4nce a
s%ared mental model is formed in t%e field of interaction, t%e self(organi5ing team t%en articulates
t%roug% furt%er continuous dialogue, in t%e form of collecti.e reflection< =%e s%ared tacit mental
is .erbali5ed into words and &%rases, and finally crystalli5ed into e9&licit conce&ts< In t%is sense,
&%ase corres&onds to e9ternali5ation<
=%is &rocess of con.erting tacit knowledge into e9&licit knowledge is facilitated by t%e use of
reasoning met%ods suc% as deduction, induction, and abduction< 7articularly useful for t%is
&%ase is
abduction, w%ic% em&loys figurati.e language suc% as meta&%ors and analogies< In de.elo&ing ity,
e9am&le, t%e Ronda de.elo&ment team made am&le use of figurati.e language suc% as
1.olution,] ]man(ma9imum, mac%ine(minimum,] and ]=all )oy<] =%e Fuality of dialogue among
members can also be raised t%roug% t%e use of dialectics, w%ic% instills a creati.e way of t%inking
t%e organi5ation< It is an iterati.e and s&iral &rocess in w%ic% contradictions and &arado9es are
to synt%esi5e new knowledge<
once&ts are created coo&erati.ely in t%is &%ase t%roug% dialogue< 3utonomy %el&s team members
di.erge t%eir t%inking freely, wit% intention as a tool to con.erge t%eir t%inking in one
=o create conce&ts, team members %a.e to ret%ink t%eir e9isting &remises fundamentally<
.ariety %el&s t%e team in t%is regard by &ro.iding different angles or &ers& for
looking at a
&roblem< $luctuation and c%aos, eit%er from t%e outside or inside, also %el& members to c%ange
way of t%inking fundamentally< Redundancy of information enables team members to
figurati.e language better and to crystalli5e t%eir s%ared mental model<
=%e =%ird 7%ase@ Dustifying once&ts
In our t%eory of organi5ational knowledge creation, knowledge is defined as Kustified
true belief<
=%erefore, new conce&ts created by indi.iduals or t%e team need to be Kustified at some &oint in t%e
&rocedure< Dustification t%e &rocess of determining if t%e newly created conce&ts are
wort%w%ile for t%e organi5ation and society< It is similar to a screening &rocess< Indi.iduals seem to
Kustifying or screening information, conce&ts, or knowledge continuously and unconsciously
t%e entire &rocess< =%e organi5ation,, must conduct t%is Kustification in a more e9&licit way
c%eck if t%e organi5ational intention is still intact and to ascertain if t%e conce&ts being generated
t%e needs of society at large< =%e most a&&ro&riate time for t%e organi5ation to conduct t%is
&rocess is rig%t after t%e conce&ts %a.e been created<
$or business organi5ations, t%e normal Kustification criteria include cost, &rofit margin, and t%e
to w%ic% a &roduct can contribute to t%e firmOs growt%< )ut Kustification criteria can be bot%
and Fualitati.e< $or e9am&le, in t%e Ronda ity case, t%e ]=all )oy] conce&t %ad to be Kustified
t%e .ision establis%ed by to& management(to come u& wit% a &roduct conce&t fundamentally
from anyt%ing t%e com&any %ad done before and to make a car t%at was ine9&ensi.e but not c%ea&<
also %ad to be Kustified against t%e &roduct(line conce&t articulated by middle management(to make
car ]man(ma9imum, mac%ine(minimum<] More abstract criteria may include .alue &remises suc%
ad.enture, romanticism, and aest%etics< =%us Kustification criteria need not be strictly
obKecti.e and
factual6 t%ey can also be Kudgmental and .alue(laden<
In a knowledge(creating com&any, it is &rimarily t%e role of to& management to
formulate t%e
Kustification criteria in t%e form of organi5ational intention, w%ic% is e9&ressed in terms of strategy
.ision< Middle management can also formulate t%e Kustification criteria in t%e form of
conce&ts< 3lt%oug% t%e key Kustification criteria are set by to& management, and to some e9tent
middle management, t%is does not &reclude ot%er organi5ational units from some autonomy
deciding t%eir own sub criteria< $or e9am&le, a committee com&rised of 200 young em&loyees
N o&yrig%t >irtual :ni.ersity of 7akistan 1'0Knowledge Management EM!M=(/#0 >:
Matsus%ita determined t%at Matsus%ita em&loyees in t%e twenty(first century s%ould become
indi.iduals] to ada&t to e9&ected social c%anges, as will be discussed in more detail in t%e ne9t
=o t%is e9tent, a com&anyOs Kustification criteria s%ould be consistent wit% .alue systems or needs of
society at large, w%ic% s%ould ideally be reflected in organi5ational intention< =o
a.oid any
misunderstanding about t%e com&anyOs intention, redundancy of information %el&s
facilitate t%e
Kustification &rocess<
=%e $ourt% 7%ase@ )uilding an 3rc%ety&e
In t%is fourt% &%ase, t%e Kustified conce&t is con.erted into somet%ing tangible or concrete, namely,
arc%ety&e< 3n arc%ety&e can be t%oug%t of as a &rototy&e in t%e case of a new(&roduct de.elo&ment
&rocess< In t%e case of or organi5ational inno.ation, an arc%ety&e could be t%oug%t of
as a
model o&erating mec%anism< In eit%er case, it is built by combining newly created e9&licit
wit% e9isting e9&licit knowledge< In building a &rototy&e, for e9am&le, t%e e9&licit knowledge
to be
combined could take t%e form of tec%nologies or com&onents< )ecause Kustified conce&ts, w%ic%
e9&licit, are con.erted into arc%ety&es, w%ic% are also e9&licit, t%is &%ase is akin to combination<
Dust as an arc%itect builds a mock(u& before starting t%e actual construction, organi5ational
engage in building a &rototy&e of t%e real &roduct or a model of t%e actual system< =o build a
t%ey &ull toget%er &eo&le wit% differing e9&ertise Be<g<, RLD, &roduction, marketing, Fuality
de.elo& s&ecifications t%at meet e.eryoneOs a&&, and actually manufacture t%e first full(scale
of a newly created &roduct conce&t< =o build a model, say, of anew organi5ational structure,
from t%e affected sections wit%in t%e organi5ation, as well as e9&erts in different fields Be<g<, %uman
sources management, legal, strategic &lanningC, are assembled to draw u& a new organi5ational
c%art, Kob
descri&tion, re&orting system, or o&erating &rocedure< In a way, t%eir role is similar to t%at
of t%e
arc%itect(t%ey are res&onsible for de.elo&ing t%e blue&rint as well as actually building t%e new form
an organi5ational conce&t< 3ttention to detail is t%e key to managing t%is com&le9 &rocess<
)ecause t%is &%ase is com&le9, dynamic coo&eration of .arious de&artments wit%in t%e organi5ation
indis&ensable< )ot% reFuisite .ariety and redundancy of information facilitate t%is
4rgani5ational intention also as a useful tool for con.erging t%e .arious kinds of know(%ow
tec%nologies t%at reside wit%in t%e organi5ation, as well as for &romoting
inter&ersonal and
interde&artmental coo&eration< 4n t%e ot%er %and, autonomy and fluctuation are generally not
rele.ant at t%is stage of t%e organi5ational knowledge(creation &rocess<
=%e $ift% 7%ase@ ross(-e.eling of Knowledge
4rgani5ational knowledge creation is a &rocess t%at u&(grades itself continuously< It
not end once an arc%ety&e %as been de.elo&ed< =%e new conce&t, w%ic% %as been created, Kustified,
modeled, on to anew cycle of knowledge creation at a different ontological le.el< =%is
and s&iral &rocess, w%ic% we call cross(le.eling of knowledge, takes &lace bot% intra(
and inter(organi5ationally<
Intra(organi5ationally, knowledge t%at is made real or t%at takes form as an arc%ety&e can trigger
cycle of knowledge creation, e9&anding %ori5ontally and .ertically across t%e organi5ation< 3n
of %ori5ontal cross(fertili5ation can be seen wit%in Matsus%ita, w%ere 0ome )akery
induced t%e
creation of ot%er ]1asy L Ric%] &roduct conce&ts, suc% as a fully automatic coffee maker wit%in t%e
same di.ision and anew generation of large(screen => sets from anot%er di.ision< In t%ese cases,
fertili5ation took &lace across different sections wit%in a di.ision as well as across different
di.isions< 3n
e9am&le of .ertical cross(fertili5ation also comes from Matsus%ita< =%e de.elo&ment of 0ome
ins&ired Matsus%ita to ado&t ]0uman 1lectronics] as t%e umbrella conce&t at t%e cor&orate le.el<
umbrella conce&t o&ened u& a series of soul(searc%ing acti.ities wit%in t%e com&any to address
kind of com&any Matsus%ita s%ould be in t%e twenty(first century and %ow ]%uman]
em&loyees can be<
=%ese acti.ities culminated in t%e de.elo&ment of MI=O8# BMind and Management Inno.ation
O8#C, w%ic% was instrumental in reducing t%e number of annual working %ours at t%e front line to
%ours, t%ereby freeing u& time for &eo&le at t%e front line< In t%is case, knowledge created
in one
di.ision led to t%e ado&tion of an umbrella conce&t at t%e cor&orate le.el, w%ic% in turn affected t%e of em&loyees at t%e front line<
N o&yrig%t >irtual :ni.ersity of 7akistan 1'1Knowledge Management EM!M=(/#0 >:
Inter(organi5ationally, knowledge created by t%e organi5ation can mobili5e knowledge of
com&anies, customers, su&&liers, com&etitors, and ot%ers outside t%e com&any t%roug%
interaction< $or e9am&le, an inno.ati.e new a&&roac% to budgetary control de.elo&ed by one
could bring about c%anges in an affiliated com&anyOs financial control system, w%ic% in turn may
a new round of inno.ation< 4r a customerOs reaction or feedback to a new(&roduct conce&t may
a new cycle of &roduct de.elo&ment< 3t 3&&le om&uter, for e9am&le, w%en &roduct
engineers come u& wit% ideas for new &roducts, t%ey build a &rototy&e t%at embodies t%ose ideas
bring it directly to customers to seek t%eir reaction< De&ending on t%e reaction or feedback, a
round of de.elo&ment may be initiated<
$or t%is &%ase to function effecti.ely, it is essential t%at eac% organi5ational unit %a.e t%e autonomy
take t%e knowledge de.elo&ed somew%ere else and a&&ly it freely across different le.els and
Internal fluctuation, suc% as t%e freFuent rotation of &ersonnel, will facilitate knowledge transfer< +o
redundancy of information and reFuisite .ariety< 3nd in intra(organi5ational cross(
organi5ational intention will act as a control mec%anism on w%et%er or not knowledge s%ould be
fertili5ed wit%in t%e com&any<
N o&yrig%t >irtual :ni.ersity of 7akistan 1'2Knowledge Management EM!M=(/#0 >:
-1++4N 22
7R41++ 377R430 =4 KM 3ND IN$4(4M =10N4-4!M BI=C IN KM
KM 7rocesses
KM &rocesses are t%e broad &rocesses t%at aid in disco.ering, ca&turing, s%aring, and
knowledge< =%ese include combination, sociali5ation, e9ternali5ation, internali5ation,
directions, and routines< $or e9am&le, internali5ation &rocesses benefit from simulations
e9&eriments, w%ic% enable indi.iduals to learn t%roug% e9&erience, as well as from
meetings, on(t%e(Kob training, and demos<
KM 7rocesses
1< Knowledge disco.ery may be defined as t%e de.elo&ment of new tacit or e9&licit knowledge
from data and information or from t%e synt%esis of &rior knowledge< ombination and
t%e two im&ortant ways of managing knowledge disco.ery, are discussed below<
=%e disco.ery of new e9&licit knowledge relies most directly on combination, w%erein t%e
bodies of e9&licit knowledge, data, or information are synt%esi5ed to create new, more com&le9 sets
e9&licit knowledge< 19isting e9&licit knowledge, data, and information are reconfigured,
and reconte9tuali5ed to &roduce new e9&licit knowledge< $or e9am&le, data mining tec%niFues may
used to new relations%i&s amongst e9&licit data t%at may be lead to create
&redicti.e or
categori5ation models t%at create new knowledge<
=%e disco.ery of new tacit knowledge, on t%e ot%er %and, relies most directly on sociali5ation,
w%ic% t%e integration of multi&le streams for t%e creation of new knowledge< It is t%e synt%esis
tacit knowledge across indi.iduals, usually t%roug% Koint acti.ities rat%er t%an written
or .erbal
instructions< $or e9am&le, a sim&le discussion among an organi5ationAs em&loyees during a coffee
can %el& in grou&(wise knowledge s%aring<
=%e disco.ery of new e9&licit knowledge relies most directly on combination, w%ereas t%e
disco.ery of
new tacit knowledge relies most directly on sociali5ation< ombination leads to t%e disco.ery of
e9&licit knowledge w%erein t%e multi&le bodies of e9&licit knowledge are synt%esi5ed to create
more com&le9 sets of e9&licit knowledge< +ociali5ation t%e integration of multi&le streams
t%e creation of new knowledge<
2< Knowledge a&ture E can be defined as t%e &rocess of eit%er e9&licit or tacit
knowledge t%at resides wit%in &eo&le, artifacts, or organi5ational entities< =%e
knowledge ca&ture
&rocess benefits most directly from two KM sub &rocesses, e9ternali5ation and
19ternali5ation and Internali5ation %el& ca&ture t%e tacit knowledge and e9&licit
#< Knowledge +%aring E refers to t%e &rocess t%roug% w%ic% e9&licit or tacit knowledge is
communicated to ot%er indi.iduals< Knowledge s%aring effecti.e transfer, so t%at t%e
of knowledge can understand it well enoug% to act on it< W%at is s%ared is knowledge rat%er
recommendations based on t%e knowledge< Knowledge s%aring may take &lace across indi.iduals as
as across grou&s, de&artments, or organi5ations< De&ending on w%et%er e9&licit or tacit knowledge
being s%ared, e9c%ange or sociali5ation &rocesses are used<
'< Knowledge 3&&lication E refers to t%e use of knowledge to make decisions and &erform
tasks, t%ereby contributing to organi5ational &erformance< Knowledge a&&lication de&ends
on t%e
a.ailable knowledge, w%ic% in turn de&ends on t%e &rocesses of knowledge disco.ery, ca&ture,
storage< 3&&lying knowledge does not necessarily mean t%at t%e &arty t%at uses it also understands
3ll t%at is needed is t%at some%ow t%e knowledge be used to guide decisions and actions<
N o&yrig%t >irtual :ni.ersity of 7akistan 1'#Knowledge Management EM!M=(/#0 >:
a&&lication benefits from two &rocesses t%at do not in.ol.e t%e actual transfer or
e9c%ange of
knowledge between t%e concerned indi.iduals, routines and direction<
In knowledge a&&lication, t%e &arty t%at makes use of t%e knowledge, does not necessarily
need to
understand it, but s%ould be able to use t%e knowledge to guide decisions and actions
a&&lication benefits from two &rocesses t%at do not in.ol.e t%e actual transfer or
e9c%ange of
knowledge between t%e concerned indi.iduals, routines and direction<
Direction refers to t%e &rocess t%roug% w%ic% t%e indi.idual &ossessing t%e knowledge
directs t%e
action of anot%er indi.idual wit%out transferring to %im t%e knowledge underlying t%e direction<
& t%e ad.antages of s&eciali5ation and a.oids t%e difficulties in%erent in t%e transfer of
knowledge< 3n e9am&le of Direction would be w%en a com&uter &rogrammer calls %is software
manager to ask %ow to sol.e a &articular &roblem wit% a &iece of code, and t%en &roceeds to sol.e
&roblem based on t%e instructions gi.en by t%e &roKect manager< 0e does t%is wit%out acFuiring t%e
knowledge %imself, so t%at if a similar &roblem reoccurs in t%e future, %e would be unable to
identify it
as suc% and would t%erefore be unable to sol.e it %imself wit%out calling an e9&ert<
Routines in.ol.e t%e utili5ation of knowledge embedded in &rocedures, rules, and norms t%at
future be%a.ior< Routines economi5e on communication more t%an directions as t%ey are embedded
&rocedures or tec%nologies<, since t%ey reFuire constant re&etition, t%ey take time to
$or e9am&le, a com&uteri5ed in.entory management system utili5es considerable knowledge about
relations%i& between demand and su&&ly, but neit%er t%e knowledge nor t%e directions
communicated t%roug% indi.iduals<
om&arison of internali5ation and e9ternali5ation &rocesses for managing knowledge<
Internali5ation is t%e con.ersion of e9&licit knowledge into tacit knowledge< =%e e9&licit
may be in t%e form of action and &ractice, so t%at t%e indi.idual acFuiring t%e knowledge
can re(
e9&erience w%at ot%ers %a.e gone t%roug%< 3lternati.ely, indi.iduals could acFuire tacit knowledge
.irtual situations, eit%er .icariously by reading manuals or ot%ersO stories, or e9&erientially
simulations or e9&eriments< 3n e9am&le of internali5ation would be a doctor, fres% out of
sc%ool, reading a book on new surgery tec%niFues, and learning from it< =%is learning %el&s t%e
and t%e %os&ital %e works for, ca&ture t%e knowledge contained in t%e book<
19ternali5ation con.erting tacit knowledge into e9&licit forms suc% as words, conce&ts,
or figurati.e language< It %el&s translate indi.idualsA tacit knowledge into e9&licit forms t%at can be
easily understood by t%e rest of t%eir grou&< It is a com&le9 &rocess because tacit knowledge is
difficult to articulate< 3n e9am&le of e9ternali5ation is a doctor transcribing and
documenting %is
t%oug%ts and obser.ations w%ile e9amining a &atient so as to sa.e it in t%e &atientAs medical file for
future reference< =%is ca&tures t%e tacit knowledge acFuired by t%e doctor and makes it a.ailable
future use by t%e %os&ital<
=%us, internali5ation and e9ternali5ation bot% add .alue to t%e knowledge ca&ture &rocess<,
e9ternali5ation %el&s ca&ture tacit knowledge w%ile internali5ation %el&s ca&ture e9&licit
W%at is Xknowledge s%aringH as o&&osed to Gknowledge a&&licationH?
Knowledge s%aring and knowledge a&&lication are two different ste&s in t%e KM &rocess< =%ey
described below@
Knowledge s%aring is t%e &rocess t%roug% w%ic% e9&licit or tacit knowledge is communicated to
indi.iduals< Knowledge s%aring t%e reci&ient acFuiring t%e s%ared knowledge as well as
able to take action based on it, as o&&osed to recommendations based on t%e knowledge being
w%ic% only results in t%e utili5ation of knowledge wit%out t%e reci&ient internali5ing
t%e s%ared
knowledge< Knowledge s%aring can occur across indi.iduals as well as across grou&s, de&artments,
organi5ations< If knowledge e9ists at a location t%at is different from w%ere it is
needed, eit%er
knowledge s%aring or knowledge utili5ation wit%out s%aring is necessary<, s%aring
is clearly an im&ortant &rocess in en%ancing organi5ational inno.ati.eness and &erformance<
on w%et%er e9&licit or tacit knowledge is being s%ared, e9c%ange or sociali5ation &rocesses are
+ociali5ation facilitates t%e s%aring of tacit knowledge in cases in w%ic% new tacit knowledge is
N o&yrig%t >irtual :ni.ersity of 7akistan 1''Knowledge Management EM!M=(/#0 >:
created, as well as w%en new tacit knowledge is not being created< 19c%ange, on t%e ot%er %and,
on t%e s%aring of e9&licit knowledge< It is used to communicate or transfer e9&licit knowledge
indi.iduals, grou&s, and organi5ations< In its basic nature, t%e &rocess of e9c%ange of e9&licit
does not differ from t%e &rocess t%roug% w%ic% information is communicated<
Knowledge a&&lication de&ends on t%e a.ailable knowledge, w%ic% in turn de&ends on t%e
&rocesses of
knowledge disco.ery, ca&ture, and storage< =%e better t%e &rocesses of knowledge disco.ery,
and storage, t%e greater t%e likeli%ood t%at t%e knowledge needed for effecti.e decision
making is
a.ailable< In knowledge a&&lication, t%e &arty t%at makes use of t%e knowledge does not
need to understand it, but s%ould be able to use t%e knowledge to guide decisions
and actions<
Knowledge a&&lication t%us benefits from two &rocesses t%at do not in.ol.e t%e actual
transfer or
e9c%ange of knowledge between t%e concerned indi.iduals E routines and direction< Routines
t%e utili5ation of knowledge embedded in &rocedures, rules, and norms t%at guide future
Routines economi5e on communication more t%an directions as t%ey are embedded in &rocedures or
tec%nologies<, t%ey take time to de.elo& and rely on constant re&etition< Direction, in
refers to t%e &rocess t%roug% w%ic% t%e indi.idual &ossessing t%e knowledge directs t%e
action of
anot%er indi.idual wit%out transferring to %im t%e knowledge underlying t%e direction< =%is
t%e ad.antages of s&eciali5ation and a.oids t%e difficulties in%erent in t%e transfer of tacit
I= in Knowledge Management
3s we trace t%e e.olution of com&uting tec%nologies in business, we can obser.e t%eir c%anging
of organi5ational im&act< =%e first le.el of im&act was at t%e &oint w%ere work got
done and
transactions Be<g<, orders, de&osits, reser.ationsC took &lace< =%e infle9ible, centrali5ed
allowed for little more t%an massi.e number crunc%ing, commonly known as electronic
&rocessing< 4rgani5ations became data %ea.y at t%e bottom and data management systems were
used to kee& t%e data in c%eck< -ater, t%e management information systems were used to
aggregate data into useful information re&orts, often &resc%eduled, for t%e control le.el of
organi5ation ( &eo&le w%o were making sure t%at organi5ational resources like &ersonnel, money,
and &%ysical goods were being de&loyed efficiently< 3s information tec%nology BI=C and
systems BI+C started to facilitate data and information o.erflow, and cor&orate attention became
scarce resource, t%e conce&t of knowledge emerged as a &articularly %ig%(.alue form of

Information and communication tec%nology can &lay an im&ortant role in successful
management<, t%e conce&t of coding and transmitting knowledge in
organi5ations is not new@ training and em&loyee de.elo&ment &rograms, organi5ational
routines, &rocedures, re&orts, and manuals %a.e ser.ed t%is function for many years< W%at is new
and e9citing in t%e knowledge management area is t%e &otential for using modern information
tec%nology Be<g<, t%e Internet, intranets, e9tranets, browsers, data ware%ouses, data filters,
agents, e9&ert systemsC to su&&ort knowledge creation, s%aring and e9c%ange in an organi5ation
and between organi5ations< Modern information tec%nology can collect, systemati5e, structure,
store, combine, distribute and &resent information of .alue to knowledge workers<

=%e low cost of com&uters and networks %as created a &otential infrastructure for knowledge
and o&ened u& im&ortant knowledge management o&&ortunities< =%e com&utational &ower as suc%
%as little rele.ance to knowledge work, but t%e communication and storage ca&abilities
networked com&uters make it an im&ortant enabler of effecti.e knowledge work< =%roug%
grou&ware, t%e Internet, and intranets, com&uters and networks can &oint to &eo&le wit% knowledge
and connect &eo&le w%o need to s%are knowledge inde&endent of time and &lace<
Regardless of definition of knowledge as t%e %ig%est .alue of content in a continuum starting at
encom&assing information, and ending at knowledge, knowledge managers often take a %ig%ly
a&&roac% to t%e content wit% w%ic% t%ey deal< In &ractice, w%at com&anies actually manage under
banner of knowledge management is a mi9 of knowledge, information, and unrefined data Z
s%ort, anyone finds t%at is useful and easy to store in an electronic re&ository< In t%e case
of data and information,, t%ere are often attem&ts to add more .alue and
knowledge< =%is transformation mig%t in.ol.e t%e addition of insig%t, e9&erience,
N o&yrig%t >irtual :ni.ersity of 7akistan 1'*Knowledge Management EM!M=(/#0 >:
inter&retation, or t%e myriad of ot%er acti.ities in w%ic% %uman brains s&eciali5e<

Identifying, nurturing and %ar.esting knowledge is a &rinci&al concern in t%e information society
t%e knowledge age< 1ffecti.e use of knowledge(facilitating tools and tec%niFues is critical, and a
number of com&utational tools %a.e been de.elo&ed< W%ile numerous tec%niFues are a.ailable, it
remains difficult to analy5e or com&are t%e s&ecific tools< In &art, t%is is because knowledge
management is a young disci&line< =%e arena is ra&idly as more &eo&le enter t%e fray
encounter new &roblems<
In addition, new tec%nologies su&&ort a&&lications t%at were im&ossible before<,
multidisci&linary c%aracter of knowledge management combines se.eral disci&line,
business and management, com&uter science, cybernetics, and &%iloso&%y< 1ac% of t%ese fields
lay claim to t%e study of knowledge management, and t%e field is freFuently defined so broadly
anyt%ing can be incor&orated< $inally, it is difficult to make sense of t%e many tools a.ailable< It is
difficult to &erform a searc% to &roduce a list of more t%an one %undred software &ro.iders< 1ac% of
software &ackages em&loys uniFue .isions and aims to ca&ture its s%are of t%e market<

4ne of t%e .iews is t%at knowledge is a social &rocess< 3s suc%, it asserts t%at knowledge resides
in &eo&leAs %eads and t%at it is tacit< 3s suc%, it cannot be easily codified and is only re.ealed
its a&&lication< 3s tacit knowledge cannot be directly transferred from &erson to &erson, its
occurs only t%roug% &ractice< onseFuently, its transfer between &eo&le is slow, costly and
=ec%nology, wit%in t%is &ers&ecti.e, can only su&&ort t%e conte9t of knowledge work< It %as
argued t%at I=(based systems used to su&&ort knowledge management can only be of benefit if used
to su&&ort t%e de.elo&ment and communication of %uman meaning< 4ne reason for t%e failure of I=
in some knowledge management is t%at t%e designers of t%e knowledge management
systems fail to understand t%e situation and work &ractices of t%e users and t%e com&le9 %uman
&rocesses in.ol.ed in work<
W%ile tec%nology can be used wit% knowledge management, Ward and 7e&&ard B2002C
argue t%at it s%ould be t%e first ste&< Knowledge management is to t%em &rimarily a %uman
&rocess issue< 4nce t%ese two as&ects %a.e been addressed, t%en t%e created &rocesses are
usually .ery amenable to being su&&orted and en%anced by t%e use of tec%nology<

4ur focus %ere,, is on tec%nology t%at ca&tures, stores, and distributes
knowledge for use by &eo&le< =%e goal of t%ese tec%nologies is to take knowledge t%at e9ists in
%uman %eads and &artly in &a&er documents, and make it widely a.ailable t%roug%out
Knowledge Management 7rocesses and I=
3la.i and -eidner B2001C %a.e de.elo&ed a systematic framework t%at will be used to analy5e
discuss t%e &otential role of information tec%nology in knowledge management< 3ccording to
framework, organi5ations consist of four sets of socially enacted knowledge &rocesses@ B1C creation
referred to as constructionC, B2C storage and, B#C transfer, and B'C a&&lication< =%e
based .iew of t%e firm re&resents %ere bot% t%e cogniti.e and social nature of
knowledge and its embodiment in t%e indi.idualAs cognition and &ractices as well as t%e collecti.e
Bi<e<, organi5ationalC &ractices and culture< =%ese &rocesses do not re&resent a monolit%ic
set of
acti.ities, but an interconnected and intertwined set of acti.ities<
Knowledge reation
4rgani5ational knowledge creation de.elo&ing new content or re&lacing e9isting
wit%in t%e organi5ationAs tacit and e9&licit knowledge< =%roug% social and collaborati.e &rocesses
well as indi.idualsA cogniti.e &rocesses Be<g<, reflectionC, knowledge is created< =%e
de.elo&ed by Nonaka et al< B2001C +1I, ba and knowledge assets, .iews
knowledge creation as a continual inter&lay between t%e tacit and e9&licit
dimensions of
N o&yrig%t >irtual :ni.ersity of 7akistan 1'/Knowledge Management EM!M=(/#0 >:
knowledge and a growing s&iral flow as knowledge t%roug% indi.idual, grou&, and
le.els< $our modes of knowledge creation %a.e been identified@ sociali5ation,
internali5ation and combination<
Nonaka et al< B2001C suggest t%at t%e essential Fuestion of knowledge creation is establis%ing an
organi5ationAs ba, defined as a common &lace or s&ace for creating knowledge< $our ty&es of
corres&onding to t%e four modes of knowledge creation are identified@ B1C originating ba, B2C
ba, B#C cyber ba, and B'C e9ercising ba< 4riginating ba entails t%e sociali5ation mode of knowledge
creation and is t%e ba from w%ic% t%e organi5ational knowledge creation &rocess begins<
ba is a common &lace in w%ic% indi.iduals s%are e9&eriences &rimarily t%roug% face(to(face
and by being at t%e same &lace at t%e same time< Interacting ba is associated wit% t%e e9ternali5ation
mode of knowledge creation and refers to a s&ace w%ere tacit knowledge is con.erted to e9&licit
knowledge and s%ared among indi.iduals t%roug% t%e &rocess of dialogue and
yber ba refers to a .irtual s&ace of interaction and corres&onds to t%e combination mode of
knowledge creation< $inally, e9ercising ba t%e con.ersion of e9&licit to tacit knowledge
t%roug% t%e internali5ation &rocess< :nderstanding t%e c%aracteristics of .arious ba and
relations%i& wit% t%e modes of knowledge creation is im&ortant to en%ancing
knowledge creation< $or e9am&le, t%e use of I= ca&abilities in cyber ba is ad.ocated to en%ance t%e
efficiency of t%e combination mode of knowledge creation< Data ware%ousing and data
document management systems, software agents and intranets may be of great .alue in cyber ba<
onsidering t%e fle9ibility of modern I=, ot%er forms of organi5ational ba and t%e corres&onding
of knowledge creation can be en%anced t%roug% t%e use of .arious forms of information systems<
$or e9am&le, information systems designed for su&&ort or collaboration, coordination,
communication &rocesses, as a com&onent of t%e interacting ba, can facilitate teamwork and
increase an indi.idualAs contact wit% ot%er indi.iduals<
1lectronic mail and grou& su&&ort systems %a.e t%e &otential of increasing t%e number of weak ties
organi5ations< =%is in turn can accelerate t%e growt% of knowledge creation< Intranets enable
to greater amounts of online organi5ational information, bot% %ori5ontally and .ertically, t%an
&re.iously %a.e been t%e case< 3s t%e le.el of information e9&osure increases, t%e
internali5ation mode of knowledge creation, w%erein indi.iduals make obser.ations and
inter&retations of information t%at result in new indi.idual tacit knowledge, may increase< In t%is
role, an intranet can su&&ort indi.idual learning Bcon.ersion of e9&licit knowledge to
&ersonal tacit
knowledgeC t%roug% &ro.ision of ca&abilities suc% as com&uter simulation Bto su&&ort
doingC and smart software tutors<
om&uter(mediated communication may increase t%e Fuality of knowledge creation by enabling a
for constructing and s%aring beliefs, for confirming consensual inter&retation, and for
e9&ression of new ideas< )y &ro.iding an e9tended field of interaction among organi5ational
for s%aring ideas and &ers&, and for establis%ing dialog, information systems may
indi.iduals to arri.e at new insig%ts and;or more accurate inter&retations t%an if left to
information on t%eir own<
3lt%oug% most information re&ositories ser.e a single function, it is increasingly common for
to construct an internal G&ortalH so t%at em&loyees can access multi&le different
re&ositories and
sources from one screen< It is also &ossible and increasingly &o&ular for re&ositories to contain not
information, but also &ointers to e9&erts wit%in t%e organi5ation on key knowledge to&ics< It is
feasible to combine stored information wit% lists of t%e indi.iduals w%o contributed t%e knowledge
w%o could &ro.ide more detail or background on it<
$or knowledge creation, t%ere is currently idea(generation software emerging< Idea(
software is designed to %el& stimulate a single user or a grou& to &roduce new ideas, o&tions,
c%oices< =%e user does all t%e work, but t%e software encourages and &us%es, somet%ing like
&ersonal trainer< 3lt%oug% idea(generation software is relati.ely new, t%ere are se.eral &ackages on
market< Idea $is%er, for e9am&le, %as an associati.e le9icon of t%e 1nglis% language
t%at cross(
references words and &%rases< =%ese associati.e links, based on analogies and meta&%ors, make it
N o&yrig%t >irtual :ni.ersity of 7akistan 1'"Knowledge Management EM!M=(/#0 >:
easy for t%e user to be fed words related to a gi.en t%eme< +ome software &ackages use Fuestions to
&rom&t t%e user toward new, une9&lored &atterns of t%oug%t< =%is %el&s users to break out of
t%inking &atterns and conFuer mental blocks<
Knowledge +torage and
3ccording to 3la.i and -eidner B2001C, em&irical studies %a.e s%own t%at w%ile organi5ations
knowledge and learn, t%ey also forget Bi<e<, do not remember or lose track of t%e
knowledgeC< =%us, t%e storage, organi5ation, and of organi5ational knowledge, also
referred to
as organi5ational memory, constitute an im&ortant as&ect of effecti.e organi5ational
management< 4rgani5ational memory includes knowledge residing in .arious com&onent
including written documentation, structured information stored in electronic databases, codified
knowledge stored in e9&ert systems, documented organi5ational &rocedures and &rocesses and
knowledge acFuired by indi.iduals and networks of indi.iduals<
3d.anced com&uter storage tec%nology and so&%isticated tec%niFues, suc% as
languages, multimedia databases, and database management systems, can be effecti.e
tools in
en%ancing organi5ational memory< =%ese tools increase t%e s&eed at w%ic% organi5ational
can be accessed<
!rou&ware enables organi5ations to create intraorgani5ational memory in t%e form of
structured and unstructured information and to s%are t%is memory across time and s&ace< I= can
&lay an im&ortant role in t%e en%ancement and e9&ansion of bot% semantic and e&isodic
memory< +emantic memory refers to general, e9&licit and articulated knowledge, w%ereas
memory refers to conte9t(s&ecific and situated knowledge< Document management tec%nology
knowledge of an organi5ationAs &ast, often dis&ersed among a .ariety of retention facilities, to be
effecti.ely stored and made accessible< Drawing on t%ese tec%nologies, most consulting firms
created semantic memories by de.elo&ing .ast re&ositories of knowledge about customers,
com&etition, and t%e industries t%ey ser.e<
! and Da.en&ort B2001C found t%at in Western organi5ations, by far t%e most
obKecti.e of knowledge management &roKects some sort of knowledge
re&ository< =%e
obKecti.e of t%is ty&e of &roKect is to ca&ture knowledge for later and broader access by ot%ers
t%e same organi5ation< ommon re&ository tec%nologies include -otus Notes, Web(based intranets,
MicrosoftAs 19c%ange, su&&lemented by searc% engines, document management tools, and ot%er
t%at allow editing and access< =%e re&ositories ty&ically contain a s&ecific ty&e of information
re&resent knowledge for a &articular business function or &rocess, suc% as@
J G)est &racticesH information wit%in a Fuality or business &rocess management function6
J Information for sales &ur&oses &roducts, markets, and customers6
J -essons learned in &roKects or &roduct de.elo&ment efforts6
J Information around im&lementation of information systems6
J om&etiti.e intelligence for strategy and &lanning functions6
J G-earning %istoriesH or records of e9&erience wit% a new cor&orate direction or a&&roac%<

Knowledge can find su&&ort in content management and information e9traction
w%ic% re&resent a grou& of tec%niFues for managing and e9tracting information from
ultimately deli.ering a semantic meaning for decision makers or learners alike< =%is ty&e of
a&&lications is targeted at ca&turing and e9tracting t%e content of free(te9t documents<
=%ere are
se.eral tasks t%at fall wit%in t%e sco&e of content management and information e9traction<
J 3bstracting and summari5ing< =%is task aims at deli.ering s%orter, informati.e
re&resentations of larger Bsets ofC documents<
J >isuali5ation< Documents can often be .isuali5ed according to t%e conce&ts and
relations%i&s t%at &lay a role< >isuali5ation can be eit%er in an intros&ecti.e manner, or using
some reference model;.iew of a s&ecific to&ic<
N o&yrig%t >irtual :ni.ersity of 7akistan 1'2Knowledge Management EM!M=(/#0 >:
J om&arison and searc%< =%is task finds semantically similar &ieces of information<
J Inde9ing and classification< =%is considers B&artialC te9ts, usually according to certain
J =ranslation< onte9t(dri.en translation of te9ts from one language into anot%er< -anguage
translation %as &ro.en to be %ig%ly conte9t s&ecific, e.en among closely related languages<
+ome kind of semantic re&resentation of meaning is needed in order to be able to make good
J Iuestion formulation and Fuery answering< =%is is a task in %uman(com&uter interaction
J 19traction of information< =%is refers to t%e generation of additional information t%at is
not e9&licit in t%e original te9t< =%is information can be more or less elaborate<
Knowledge =ransfer
Knowledge transfer occurs at .arious le.els in an organi5ation@ transfer of knowledge
indi.iduals, from indi.iduals to e9&licit sources, from indi.iduals to grou&s, between grou&s, across
grou&s, and from t%e grou& to t%e organi5ation< onsidering t%e distributed nature of
cognition, an im&ortant &rocess of knowledge management in organi5ational settings is t%e
of knowledge to locations w%ere it is needed and can be used<, t%is is not a sim&le &rocess
t%at organi5ations often do not know w%at t%ey know and %a.e weak systems for locating
and knowledge t%at resides in t%em< ommunication &rocesses and information flows dri.e
knowledge transfer in organi5ations<
Knowledge transfer c%annels can be informal or formal, &ersonal or im&ersonal< I= can su&&ort
all four forms of knowledge transfer, but %as mostly been a&&lied to informal, im&ersonal means
as discussion databasesC and formal, im&ersonal means Bsuc% as cor&orate directoriesC< 3n
use of tec%nology for transfer is use of intelligent agent software to de.elo& interest
&rofiles of
organi5ational members in order to determine w%ic% members mig%t be interested reci&ients of
to(&oint electronic messages e9c%anged among ot%er members< 1m&loying .ideo tec%nologies can
en%ance transfer<
I= can increase knowledge transfer by e9tending t%e indi.idualAs reac% beyond t%e
communication lines< =%e searc% for knowledge sources is usually limited to immediate coworkers
regular and routine contact wit% t%e indi.idual<, indi.iduals are unlikely to encounter new
knowledge t%roug% t%eir close(knit work networks because indi.iduals in t%e same cliFue tend
&ossess similar information<, indi.iduals are often unaware of w%at t%eir co%orts are
=%us, e9&anding t%e indi.idualAs network to more e9tended, alt%oug% &er%a&s weaker, connections
central to t%e knowledge diffusion &rocess because suc% networks e9&ose indi.iduals to more new
om&uter networks and electronic bulletin boards and discussion grou&s create a
forum t%at
facilitates contact between t%e &erson seeking knowledge and t%ose w%o may %a.e access to t%e
knowledge< or&orate directories may enable indi.iduals to ra&idly locate t%e indi.idual w%o %as
knowledge t%at mig%t %el& t%em sol.e a current &roblem< $or e9am&le, t%e &rimary content of suc%
system can be a set of e9&ert &rofiles containing information about t%e backgrounds, skills
e9&ertise of indi.iduals w%o are knowledgeable on .arious to&ics< 4ften suc% metadata
about w%ere knowledge residesC &ro.e to be as im&ortant as t%e original knowledge
7ro.iding ta9onomies or organi5ational knowledge ma&s enables indi.iduals to ra&idly locate eit%er
t%e knowledge or t%e indi.idual w%o %as t%e needed knowledge, more ra&idly t%an would be
wit%out suc% I=(based su&&ort<
=%e term I= for information tec%nology is used in t%is book< +ome use I= for information
communication tec%nology to stress t%e im&ortance of communication in knowledge
management< ommunication is im&ortant in knowledge management because tec%nology
&ro.ides su&&ort for bot% intraorgani5ational as well as interorgani5ational knowledge
Knowledge networks need tec%nology in t%e form of tec%nical infrastructure, communication
and a set of information ser.ices< Knowledge networks enable knowledge workers to s%are
N o&yrig%t >irtual :ni.ersity of 7akistan 1'8Knowledge Management EM!M=(/#0 >:
from .arious sources<
=raditional information systems %a.e been of im&ortance to .ertical integration for a long time<
customers and su&&liers %a.e been linked to t%e com&any t%roug% information systems<
recently %as %ori5ontal integration occurred< Knowledge workers in similar businesses coo&erate
find o&timal solutions for customers< I= %as become an im&ortant .ertical and
interorgani5ational coordination mec%anism< =%is is not only because of t%e a.ailability
broadband and standardi5ed &rotocols< It is also caused by falling &rices for communication
and by software &rogramsA ability to coordinate functions between firms<
Knowledge 3&&lication
3n im&ortant as&ect of t%e knowledge(based .iew of t%e firm is t%at t%e source of com&etiti.e
ad.antage resides in t%e a&&lication of t%e knowledge rat%er t%an in t%e knowledge
Information tec%nology can su&&ort knowledge a&&lication by embedding knowledge
organi5ational routines< 7rocedures t%at are culture(bound can be embedded into I= so t%at t%e
systems become e9am&les of organi5ational norms<
=ec%nology(enforced knowledge a&&lication raises a concern t%at knowledge will
continue to be
a&&lied after its real usefulness %as declined< W%ile t%e institutionali5ation of best
&ractices by
embedding t%em into I= mig%t facilitate efficient %andling of routine, linear, and &redictable
during stable or incrementally c%anging en.ironments, w%en c%ange is radical and discontinuous,
t%ere is
a &ersistent need for continual renewal of t%e basic &remises underlying t%e &ractices arc%i.ed in
knowledge re&ositories< =%is underscores t%e need for organi5ational members to remain attuned
conte9tual factors and e9&licitly consider t%e s&ecific circumstances of t%e current en.ironment<
3lt%oug% t%ere are c%allenges wit% a&&lying e9isting knowledge, I= can %a.e a &ositi.e influence
knowledge a&&lication< I= can en%ance knowledge integration and a&&lication by facilitating t%e
u&dating, and accessibility of organi5ational< $or e9am&le, many organi5ations are
t%e ease of access and maintenance of t%eir Bre&air manuals, &olicies, and
standardsC by
making t%em a.ailable on cor&orate intranets< =%is increases t%e s&eed at w%ic% c%anges
can be
a&&lied< 3lso, organi5ational units can follow a faster learning cur.e by accessing t%e knowledge
ot%er units gone t%roug% similar e9&eriences<, by increasing t%e si5e of
internal social networks and by increasing t%e amount of organi5ational memory a.ailable,
tec%nologies allow for organi5ational knowledge to be a&&lied across time and s&ace<
I= can also en%ance t%e s&eed of knowledge integration and a&&lication by codifying and
organi5ational routines< Workflow automation systems are e9am&les of I= a&&lications t%at reduce
need for communication and coordination and enable more efficient use of organi5ational routines
t%roug% timely and automatic routing of work(related documents, information, rules, and
Rule(based e9&ert systems are anot%er means of ca&turing and enforcing well(s&ecified
organi5ational &rocedures<
In summary6
Knowledge creation@ 19am&les of su&&orting information tec%nologies are data mining and
tools, w%ic% enable combining new sources of knowledge and Kust in time learning<
Knowledge storage and 19am&les of su&&orting information tec%nologies are electronic
bulletin boards, knowledge re&ositories, and databases, w%ic% &ro.ide su&&ort of
indi.idual and
organi5ational memory as well as inter(grou& knowledge access<
Knowledge transfer@ 19am&les of su&&orting information tec%nologies are electronic
boards, discussion forums, and knowledge directories, w%ic% enable more e9tensi.e
networks, more a.ailable communication c%annels, and faster access to knowledge
Knowledge a&&lication@ 19am&les of su&&orting information tec%nologies are e9&ert systems
N o&yrig%t >irtual :ni.ersity of 7akistan 1*0Knowledge Management EM!M=(/#0 >:
workflow systems, w%ic% enable knowledge a&&lication in many locations and more ra&id
a&&lication of
new knowledge t%roug% workflow automation<
Knowledge Management +ystems
=%ere is no single information system t%at is able to all knowledge management needs in a
=%is is e.ident from t%e wides&read &otential of I= in knowledge management &rocesses<
knowledge management systems BKM+C refer to a class of information systems a&&lied to
organi5ational knowledge< =%ese systems are I= a&&lications to su&&ort and en%ance
organi5ational &rocesses of knowledge creation, storage and, transfer, and a&&lication
B3la.i L
-eidner, 2001C<
ReFuirements from Knowledge Management
=%e critical role of information tec%nology and information systems lies in t%e ability to
communication, collaboration, and t%ose searc%ing for knowledge, and t%e ability to
collaborati.e learning< We %a.e already touc%ed on im&ortant im&lications for information systems
&re.ious c%a&ters of t%is book@
1< Interaction between information and knowledge< Information becomes knowledge w%en it
is combined wit% e9&erience, inter&retation and reflection< Knowledge becomes information
w%en assigned an e9&licit re&resentation< +ometimes information e9ists before
sometimes knowledge e9ists before information< 4ne im&ortant im&lication of t%is two(way
direction between knowledge and information is t%at information systems designed to
su&&ort knowledge in organi5ations may not a&&ear to be radically different from ot%er
forms of I= su&&ort, but will be geared toward enabling users to assign meaning to information
and to ca&ture some of t%eir knowledge in information B3la.i L -eidner, 2001C<
2< Interaction between tacit and e9&licit knowledge< =acit and e9&licit knowledge de&end on
eac% ot%er, and t%ey influence eac% ot%er< =%e linkage of tacit and e9&licit knowledge
suggests t%at only indi.iduals wit% a reFuisite le.el of s%ared knowledge are able to e9c%ange
knowledge< =%ey suggest t%e e9istence of a s%ared knowledge s&ace t%at is reFuired in order
for indi.idual 3 to understand indi.idual )As knowledge< =%e knowledge s&ace is t%e
underlying o.erla& in t%e knowledge base of 3 and )< =%is o.erla& is ty&ically tacit
knowledge< It may be argued t%at t%e greater t%e s%ared knowledge s&ace, t%e less t%e
conte9t needed for indi.iduals to s%are knowledge wit%in t%e grou& and, %ence, t%e %ig%er t%e
.alue of e9&licit knowledge< I= is bot% de&endent on t%e s%ared knowledge s&ace and an
im&ortant &art of t%e s%ared knowledge s&ace< I= is de&endent on t%e s%ared
knowledge s&ace because knowledge workers need to %a.e a common understanding of
a.ailable information in information systems in t%e organi5ation< If common understanding is
missing, t%en knowledge workers are unable to make use of information< I= is an
im&ortant &art of t%e s%ared knowledge s&ace because information systems make common
information a.ailable to all knowledge workers in t%e organi5ation< 4ne im&ortant
im&lication of t%is two(way relations%i& between knowledge s&ace and information
systems is t%at a minimum knowledge s&ace %as to be &resent so t%at I= can contribute to
growt% in t%e knowledge s&ace B3la.i L -eidner, 2001C<
#< Knowledge management strategy< 1fficiency(dri.en businesses may a&&ly t%e stock
strategy, in w%ic% databases and information systems are im&ortant< 1ffecti.eness(dri.en
businesses may a&&ly t%e flow strategy, in w%ic% information networks are im&ortant< 19&ert(
dri.en businesses may a&&ly t%e growt% strategy, in w%ic% networks of e9&erts, work
&rocesses and learning en.ironments are im&ortant B0ansen et al<, 1888C<
'< ombination in +1I &rocess< =%e +1I &rocess consists of four knowledge
con.ersion modes< =%ese modes are not eFually suited for I= su&&ort< +ociali5ation is t%e
&rocess of con.erting new tacit knowledge to tacit knowledge< =%is takes &lace in t%e %uman
brain< 19ternali5ation is t%e &rocess of con.erting tacit knowledge to e9&licit knowledge< =%e
successful con.ersion of tacit knowledge into e9&licit knowledge de&ends on t%e seFuential
N o&yrig%t >irtual :ni.ersity of 7akistan 1*1Knowledge Management EM!M=(/#0 >:
use of meta&%ors, analogy and model< ombination is t%e &rocess of con.erting e9&licit
knowledge into more com&le9 and systematic sets of e9&licit knowledge< 19&licit knowledge is
collected from inside and outside t%e organi5ation and t%en combined, edited and &rocessed to
form new knowledge< =%e new e9&licit knowledge is t%en disseminated among t%e members
of t%e organi5ation< 3ccording to Nonaka et al< B2000C, creati.e use of com&uteri5ed
communication networks and large(scale databases can facilitate t%is mode of knowledge
con.ersion< W%en t%e financial controller collects information from all &arts of t%e
organi5ation and &uts it toget%er to s%ow t%e financial %ealt% of t%e organi5ation, t%at re&ort
is new knowledge in t%e sense t%at it synt%esi5es e9&licit knowledge from many different
sources in one conte9t< $inally, internali5ation in t%e +1I &rocess con.erts e9&licit knowledge
into tacit knowledge< =%roug% internali5ation, e9&licit knowledge created is s%ared t%roug%out
an organi5ation and con.erted into tacit knowledge by indi.iduals<
*< 19&licit transfer of common knowledge< If management decides to focus on
knowledge as defined by Di9on B2000C, knowledge management s%ould focus on t%e s%aring of
common knowledge< ommon knowledge is s%ared in t%e organi5ation using fi.e
mec%anisms@ serial transfer, e9&licit transfer, tacit transfer, strategic transfer and e9&ert
transfer< Management %as to em&%asi5e all fi.e mec%anisms for successful s%aring and creation
of common knowledge< $or serial transfer, management %as to stimulate meetings and
contacts between grou& members< $or e9&licit transfer, management %as to stimulate
documentation of work by t%e &re.ious grou&< $or tacit transfer, management %as to
stimulate contacts between t%e two grou&s< $or strategic transfer, management %as to identify
strategic knowledge and knowledge ga&s< $or e9&ert transfer, management %as to create
networks in w%ic% e9&erts can transfer t%eir knowledge< =%ese fi.e mec%anisms are not
eFually suited for I= su&&ort< 19&licit transfer seems .ery well suited for I= su&&ort, as t%e
knowledge from t%e ot%er grou& is transferred e9&licitly as e9&licit knowledge in words and
numbers and s%ared in t%e form of data, scientific formulae, s&ecifications, manuals and t%e
like< 19&ert transfer also seems suited for I= su&&ort w%en generic knowledge is transferred
from one indi.idual to anot%er &erson to enable t%e &erson to sol.e new &roblems wit% new
/< -ink knowledge to its uses< 4ne of t%e mistakes in knowledge management &resented by
$a%ey and 7rusak B1882C was disentangling knowledge from its uses< 3 maKor manifestation
of t%is error is t%at knowledge management become ends in< $or
e9am&le, data ware%ousing can easily degenerate into tec%nological c%allenges< =%e
rele.ance of a data ware%ouse for decisions and actions gets lost in t%e turmoil s&awned by
debates about a&&ro&riate data structures<
"< =reat knowledge as an intellectual asset in t%e economic sc%ool< If management decides
to follow t%e economic sc%ool of knowledge management, t%en intellectual ca&ital accounting
s%ould be &art of t%e knowledge management system< =%e knowledge management system
s%ould su&&ort knowledge markets in w%ic% knowledge buyers, knowledge sellers and
knowledge brokers can use t%e system<
2< =reat knowledge as a mutual resource in t%e organi5ational sc%ool< =%e &otential
contribution of I= is linked to t%e combination of intranets and grou&ware to connect members
and &ool t%eir knowledge, bot% e9&licit and tacit<
8< =reat knowledge as a strategy in t%e strategy sc%ool< =%e &otential contributions of I=
are manifold once knowledge as a strategy is t%e im&etus be%ind knowledge management< 4ne can e9&ect Fuite an eclectic mi9 of networks, systems, tools, and knowledge
10< >alue configuration determines knowledge needs in &rimary acti.ities< Knowledge needs
can be structured according to &rimary and secondary acti.ities in t%e .alue configuration<
De&ending on t%e firm being a .alue c%ain, a .alue s%o& or a .alue network, t%e knowledge
management system must su&&ort more efficient &roduction in t%e .alue c%ain, adding .alue
to t%e knowledge work in t%e .alue s%o&, and more .alue by use of I= infrastructure in t%e
.alue network<
11< Incenti.e 3lignment< =%e first dimension of information systems design is concerned wit%
software engineering Berror(free software, documentation, &ortability, modularity L arc%itecture,
de.elo&ment cost, maintenance cost, s&eed, and robustnessC< =%e second dimension is
concerned wit% tec%nology acce&tance Buser friendliness, user acce&tance, &ercei.ed ease(
N o&yrig%t >irtual :ni.ersity of 7akistan 1*2Knowledge Management EM!M=(/#0 >:
of(use, &ercei.ed usefulness, cogniti.e fit, and task(tec%nology fitC< =%e t%ird dimension t%at is
&articularly im&ortant to knowledge management systems is concerned wit% incenti.e
alignment< Incenti.e alignment includes influencing user be%a.ior and t%e usersA
interaction wit% t%e system, deterrence of use for &ersonal gain, use consistent wit%
organi5ational goals, and robustness against information misre&resentation B)a et al<,
)enefits from Knowledge Management +ystems I= are a&&lied in knowledge management for
im&ortant reasons@
J I= is an enabler of im&ro.ed indi.idual &erformance among knowledge workers<
J I= is an enabler of im&ro.ed organi5ational &erformance by new business &rocesses<
J I= is an enabler of im&ro.ed interorgani5ational &erformance by effecti.e knowledge networks<
Knowledge management a&&lying information tec%nology occur for many different
reasons< 3
sur.ey in t%e :<+< &roduced t%e following ranking of reasons for I= in knowledge management
1< Im&ro.e &rofitability and income B/"UC6
2< +ecure talent and e9&ertise B*'UC6
#< Im&ro.e customer and customer satisfaction B*2UC6
'< +ecure com&any market s%are against new com&etitors B''UC6
*< +%orten time to market of new &roducts B#8UC6
/< 1nter new market segments B#8UC6
"< Reduce costs B#2UC6
2< De.elo& new goods and ser.ices B#*UC<
=%e sur.ey researc% did also include Fuestions concerning knowledge management
Res&onding com&anies ranked software based on dollar amount to be s&ent BI4, 2001C@
1< Infrastructure for knowledge management B/1UC6
2< Intelligent systems for knowledge searc% B#8UC6
#< Data ware%ouse B21UC6
'< Document %andling B1"UC6
*< om&any &ortals B1/UC6
/< !rou&ware B1#UC6
"< Mail deli.ery B11UC6
2< Intelligent agents for knowledge searc% B8UC6
8< Workflow systems B2UC6
10< 1(learning B"UC<
!eneral 1lectricAs 14 %as suggested t%at knowledge s%aring is im&ortant for organi5ations,
W%y ?
Knowledge s%aring is t%e &rocess t%roug% w%ic% e9&licit or tacit knowledge is communicated to
indi.iduals< Knowledge s%aring t%e reci&ient acFuiring t%e s%ared knowledge as well as
able to take action based on it, as o&&osed to recommendations based on t%e knowledge being
w%ic% only results in utili5ation of knowledge wit%out t%e reci&ient internali5ing t%e s%ared
Knowledge s%aring can occur across indi.iduals as well as across grou&s, de&artments, or
If knowledge e9ists at a location t%at is different from w%ere it is needed, eit%er knowledge s%aring
knowledge utili5ation wit%out s%aring is necessary<
De&ending on w%et%er e9&licit or tacit knowledge is being s%ared, e9c%ange or sociali5ation
are used< +ociali5ation facilitates t%e s%aring of tacit knowledge in cases in w%ic% new tacit
knowledge is
being created, as well as w%en new tacit knowledge is not being created< 19c%ange, on t%e ot%er
focuses on t%e s%aring of e9&licit knowledge< It is used to communicate or transfer e9&licit
among indi.iduals, grou&s, and organi5ations< In its basic nature, t%e &rocess of e9c%ange of
knowledge does not differ from t%e &rocess t%roug% w%ic% information is communicated<
N o&yrig%t >irtual :ni.ersity of 7akistan 1*#Knowledge Management EM!M=(/#0 >:
If knowledge e9ists at a location t%at is different from w%ere it is needed, eit%er knowledge s%aring
knowledge utili5ation wit%out s%aring is necessary< +%aring knowledge is clearly an im&ortant
&rocess in
en%ancing organi5ational inno.ati.eness and &erformance< Its im&ortance is elucidated by t%e fact
it was one of t%e t%ree business &rocesses for w%ic% !eneral 1lectricAs 14 Dack Welc% took
res&onsibility, besides t%e allocation of resources and de.elo&ment of &eo&le<
N o&yrig%t >irtual :ni.ersity of 7akistan 1*'Knowledge Management EM!M=(/#0 >:
-1++4N 28
4R!3NI[3=I4N3- I++:1+ IN M3N3!IN! KN4W-1D!1 W4RK1R
Knowledge Workers
=%e ty&ical knowledge worker in cor&orate sector works in marketing, intellectual &ro&erty,
&rogramming, and ot%er occu&ations t%at in.ol.e more t%oug%t t%an &%ysical labor< $or
artists in t%e marketing di.ision w%o &roduce t%e media files are ty&ically considered
workers, as media can constitute t%e intellectual ca&ital of a com&any, w%et%er t%e
com&any is a
knowledge organi5ation or not< Knowledge workers ty&ically add to t%e .alue of t%e cor&oration by
contributing to t%e cor&orate knowledge assets, by documenting &roblems
acti.ities, by
re&orting best &ractices, and by disseminating information in newsletters, online, and
in ot%er
&ublications< In eac% case, t%e knowledge worker is eit%er t%e conduit for or t%e
source of t%e
ustomer su&&ort re& are commonly considered knowledge workers because t%ey
wit% information from customers t%roug% direct contact6 t%roug% interactions t%roug% t%e &%one,
mail, or traditional mail6 or t%roug% directly customer acti.ity in a retail setting<
Managers at
all le.els can be considered knowledge workers if t%ey are in.ol.ed in creating new re.enues
e9isting knowledge by reformatting and re&ackaging information in e9isting markets or
e9isting &roducts into new markets<
Most KM re.ol.e around knowledge workers, w%et%er t%eyAre interacting wit%
directly, indirectly t%roug% com&uter systems, or wit% ot%er knowledge workers and managers<
Knowledge Workers
J 3 knowledge worker is a &erson w%o transforms business and &ersonal e9&erience into
J :sually a knowledge worker is found to be inno.ati.e, creati.e and %e;s%e is fully aware of t%e
organi5ational culture<
J 3 knowledge worker can be t%oug%t of as a &roduct of .alues, e9&eriences, &rocesses, education,
and training<
7ersonality;7rofessional 3ttributes
J :nderstands and ado&ts t%e organi5ational culture<
J 3ligns &ersonal;&rofessional growt% wit% cor&orate .ision<
J 7ossesses t%e attitude of collaboration;s%aring<
J 7ossesses inno.ati.e ca&acity;creati.e mind<
J 0as got t%e clear understanding of t%e business Bin w%ic% %e;s%e is in.ol.ed<
J 3lways willing to learn, and willing to ado&t new met%odologies<
J 7ossesses self(control and can learn by %imself;%erself<
J Willing to accommodate uncertainties
J ore com&etencies@
o =%inking skills
o Inno.ati.e teams;teamwork
o ontinuous learning
o Inno.ation;reati.ity
o Risk taking;7otential success
o 3 culture of res&onsibility towards knowledge
o Decisi.e action taking
Knowledge WorkerAs )usiness Roles in -earning 4rgani5ation
J 3 -earning organi5ation is an organi5ation of &eo&le wit% total commitment to im&ro.e t%eir
to create and to &roduce< It can res&ond to uncertainty, to c%allenges, and to t%e c%ange in general<
N o&yrig%t >irtual :ni.ersity of 7akistan 1**Knowledge Management EM!M=(/#0 >:
J =%e rate of learning of an organi5ation can turn out to be t%e most critical source of com&etiti.e
Management and -eaders%i&
J In KM, we distinguis% between managers and leaders<
J =raditional managers usually focus on t%e &resent< =%ey are usually action(oriented and s&end
of t%e time su&er.ising, delegating, controlling, and ensuring com&liance wit% set &rocedures<
J =raditional managers were once workers and were &romoted to managers< W%en t%ey manage
subordinates, t%ey are aware of eac% as&ect of t%e business since t%ey were once t%ere<
J +mart managers usually focus on organi5ational learning in order to ensure o&erational
J +mart managers can not be e9&ected to %a.e mastered t%e work of t%e subordinates< =%ey can take
on t%e role of leaders w%ere c%ange is t%e &rimary goal<
J =%e c%allenge is to get t%e organi5ation towards goals Bin line wit% t%e rate of
J =%e leaderOs role in a learning organi5ation is more of a facilitator t%an a su&er.isor<
J 0e acts more like a teac%er t%an like an order<
J In case of teac%ing, t%e focus is on t%e transfer of knowledge from t%e instructor to t%e learner<
=%e instructor is su&&osed to be t%e e9&ert and %is;%er role is to Fuality content and to
communicate t%e content wit% &otential<
J -earning s%ould essentially &romote a way of t%inking, not Kust con.ey facts<
J In a learning organi5ation, t%e smart manager can &lay t%e role of t%e instructor, and t%e
workers can &lay t%e role of learners<
J =%e smart manager &ro.ides o&&ortunities for knowledge workers to brainstorm ideas, e9c%ange
knowledge, and come u& wit% new and better ways of doing business<
Work Management =asks
Work management tasks include t%e following@
J, creating, s%aring, and using knowledge in e.eryday acti.ities<
J Managing knowledge workers and nurturing t%eir knowledge(oriented acti.ities<
J 1nsuring readiness to work<
J Maintaining work moti.ation among knowledge workers<
J 3llocating effort and switc%ing control among tasks<
J Managing collaboration and concurrent acti.ities among knowledge workers<
J +%aring information and integrating work among knowledge workers<
J Recruiting knowledge(seeking and brig%t indi.iduals factors to be considered by t%e managers@
J =ime constraint<
J Knowledge workers doing work t%at t%e organi5ation did not %ire t%em to do<
J Working smarter;%arder<
J Work +c%edule<
=ec%nology and Knowledge Worker
J =%e &rimary acti.ities of knowledge work@
o 3ssessment
o Decision Making
o Monitoring
o +c%eduling
J 3 knowledge worker can act as a manager, a su&er.isor, or a clerk w%o is acti.ely engaged in
t%inking, information &rocessing, analy5ing, creating, or recommending &rocedures based on
e9&erience and cumulati.e knowledge<
J I= &lays a key role in t%e learning organi5ation in t%e following &rocesses@
o Knowledge ca&ture
o Information distribution
o Information inter&retation
J =%ere e9ists a multitude of eFui&ment and software su&&orting knowledge workerOs tasks< =%ey
N o&yrig%t >irtual :ni.ersity of 7akistan 1*/Knowledge Management EM!M=(/#0 >:
o 1(mail
o -3N
o Intelligent Workstations
J Intelligent workstations automate re&etiti.e, and tedious tasks< =%ey s%ould &erform t%e following
o 3dministrati.e su&&ort functions
o 7ersonal com&uting functions
o Managing intelligent databases
Knowledge Worker -oyalty
4ne of t%e cor&orationAs maKor intangible assets, and one t%at can be en%anced t%roug% knowledge
worker management, is knowledge worker loyalty< 3lt%oug% loyalty is difficult to Fuantify
knowledge worker be%a.ior t%at is consistent wit% loyalty can be Fuantified< =%is be%a.ior
can be
modeled by considering factors t%at &ositi.ely and negati.ely affect be%a.iors associated wit%
suc% as a worker continuing in a relations%i& wit% t%e cor&oration e.en w%en com&eting com&anies
offer greater com&ensation for com&arable work<
=%e issue of knowledge worker loyalty to t%e cor&oration ty&ically arises w%en
management is
considering w%et%er to in.est additional resources in a &articular knowledge worker or
grou& of
knowledge workers< In t%e com&uteri5ed knowledge economy, w%ere someone wit% knowledge
skills in demand can work from .irtually anyw%ere wit% a com&uter and an Internet connection, t%e
issue of loyalty is an im&ortant one<
Knowledge worker loyalty can be assessed by modeling loyalty based on t%e &ositi.e and
contributors to be%a.iors< 7ositi.e contributors to knowledge worker loyalty include difficulty
alternati.e em&loyment, t%e emotional bond between t%e knowledge worker and t%e com&any,
knowledge workerAs in.estment of time in t%e com&any, and com&ensation< $or e9am&le, t%e
t%e difficulty locating alternati.e em&loyment, t%e greater t%e loyalty effect< +imilarly, t%e more
time and
energy a knowledge worker in.ests in a relations%i& wit% a com&any, t%e more likely t%e
will continue< In addition, t%e greater t%e com&ensation, t%e more likely a knowledge
worker will
continue working wit% t%e com&any< =%e greatest contributor to knowledge worker loyalty,, is
a &ersonal, emotional bond wit% ot%er &eo&le in t%e com&any<
=%e negati.e contributors to loyalty be%a.ior are numerous em&loyment and a
le.el of frustration wit% t%e com&any< =%e more em&loyment t%at are a.ailable, t%e
knowledge workers are likely to stay wit% t%e com&any< $inally, not%ing s&oils an
ot%erwise ideal
relations%i& faster t%an a knowledge workerAs frustration wit% management or &ersonal &roblems
ot%er knowledge workers<
Modeling loyalty be%a.ior s%ows %ow knowledge worker be%a.ior can be influenced, de&ending
w%ic% elements in t%e model are stressed< $or e9am&le, a generous com&ensation
&ackage and a
friendly, su&&orti.e work en.ironment contribute to a continued relations%i& wit% t%e
on.ersely, offering knowledge workers little or no increase in com&ensation at an annual re.iew
ignoring t%eir com&laints and suggestions sends a clear message t%at t%ey s%ould look<
=est Mour :nderstanding
1< W%at is a knowledge worker? Do you agree wit% any of t%e definitions in t%e c%a&ter? W%y
or w%y not?
3 knowledge worker is a &erson w%o transforms business and &ersonal e9&erience into
knowledge t%roug% ca&turing, assessing, a&&lying, s%aring, and disseminating it wit%in
organi5ation to sol.e s&ecific &roblems or to create .alue< +tudents may select any definition
and comment on it<
2< -ist and briefly e9&lain &ersonality and &rofessional attributes of knowledge workers<
J 0olds uniFue .alues and understands and ado&ts t%e culture of t%e organi5ation
J 3ligns &ersonal and &rofessional growt% wit% cor&orate .ision and ac%ie.ement of strategic
N o&yrig%t >irtual :ni.ersity of 7akistan 1*"Knowledge Management EM!M=(/#0 >:
J 3do&ts an attitude of collaboration and s%aring
J 0a.e inno.ati.e ca&acity and a creati.e mind
J 0as a clear understanding of t%e business %e is a &art
J Willing to learn, unlearn, and ado&t new ways t%at result in better ways of doing a Kob
J In command of self(control and self(learning
J Willing to grow wit% t%e com&any
#< =%e self(directed knowledge worker must consider se.eral core com&etencies< 19&lain
t%ree core com&etencies of your c%oice< W%y are t%ey called core com&etencies?
J =%inking skills@ a .ision %ow t%e &roduct or t%e com&any can be better
J ontinuous learning@ unlearning and relearning in tune wit% fast(c%anging conditions
J Inno.ati.e teams@ .ia collaboration, coo&eration, and coordination
=%ey are called core because eac% one of t%em is a tool t%at t%e knowledge worker would
definitely need to use in action<
'< 1laborate on t%e business roles in t%e learning organi5ation<
W%en discussing business roles in t%e learning organi5ations, management and leaders%i&
become more im&ortant< +mart managers focus on organi5ational learning to ensure
o&erational e9cellence< In contrast, t%e leaderAs role is more of a facilitator, a teac%er, a steward
of t%e collecti.e knowledge of t%e staff, and a designer<
*< In w%at ways are data and information considered as gi.ens?
=%e &eriod between t%e 18/0As and 1820As %as witnessed success in data &rocessing
information &rocessing< =%e focus t%en was on efficiency, w%ere com&uters re&laced %uman
redundant arit%metic work< =%ere were Fuantitati.e sa.ings and e.eryone benefited< In t%e
1880As information was collected, &rocessed, and con.erted into rele.ant knowledge for t%e
decision maker< 3t t%is le.el, t%e focus s%ifted from Fuantitati.e to Fualitati.e &erformance(
oriented .alue(added decision(making<
/< W%at is t%e difference between management and leaders%i&? =raditional managers and
smart managers?
=%e goal of management is stability on t%e Kob and meeting deadlines< W%ile, =%e &rimary goal
of leaders%i& is c%ange< =%e c%allenge is to get t%e de&artment or organi5ation in t%e
direction of t%e goalBsC in line wit% t%e rate of c%ange<
=raditional managers are action oriented, t%ey s&end most of t%e time delegating, su&er.ising,
controlling, and ensuring com&liance wit% set &rocedures< W%en t%ey manage subordinates,
t%ey know all as&ects of t%e business because t%ey were once t%ere<
In contrast, smart managers focus on organi5ational learning to ensure o&erational e9cellence<
)ecause of continuing c%ange and im&ro.ement in work&lace, t%ey cannot be e9&ected to %a.e
mastered t%e work of subordinates<
"< 0ow are learning and teac%ing related?
-earning and teac%ing are two faces for t%e same coin< In teac%ing, t%e focus is on knowledge
transfer from t%e instructor to t%e learner< =%e instructor is su&&osed to be t%e e9&ert< =%e role
is to Fuality content and to communicate t%e content wit% &otential< =%e interaction
s%ould instill serendi&ity and t%inking about better ways of %andling &roblems< -earning s%ould
&romote a new way of t%inking not Kust facts< =%e key is not listening and retaining ideas or
knowledge, but raising Fuestions t%at mig%t trigger new ways of decision(making or &roblem<
2< W%at do work management tasks focus on?
N o&yrig%t >irtual :ni.ersity of 7akistan 1*2Knowledge Management EM!M=(/#0 >:
J Managing knowledge workers
J +earc%ing out, creating, s%aring, and using knowledge regularly
J Maintaining work moti.ation among knowledge workers
J 1nsuring readiness to work, es&ecially during an emergency
J 3llocating effort and switc%ing control among tasks
J +%aring information and integrating work among knowledge workers
J 0iring or recruiting brig%t, knowledge(seeking indi.iduals
J Managing collaboration, coordination, and concurrent acti.ities among knowledge workers
8< 19&lain t%e main factors t%at limit t%e knowledge worker &roducti.ity and ways to get
around t%em<
J =ime constraint@ time is t%e enemy of successful knowledge workers< =%ere is always
more work to do< 3s a result, eit%er Fuality suffers or com&letion time lags< 4b.iously,
suc% stress can work against ones moti.ation to contribute<
J Working smarter and %arder and accom&lis%ing little@ t%is constrained is often
triggered by limited time, limited staff su&&ort, or financial constraints< Management can do
a lot to alle.iate t%is ty&e of &roducti.ity &roblem<
J Knowledge workers doing work t%at t%e firm did not %ire t%em to do@ t%e way to get
around t%is is for t%e smart manager to e9&lore t%e s&ecificity of t%e task or t%e Kob, matc%
t%e task to t%e knowledge of t%e worker, and eliminate nonessentials<
J Work sc%edule@ t%e manager s%ould be careful in &lanning work sc%edules and work
rotation to assure coo&eration and successful ac%ie.ement of t%e Kob on sc%edule<
J Moti.ation against knowledge work &roducti.ity@ Knowledge workers
3re not all &rogrammed to follow t%e ideals &ro&osed by t%e management< 3.oiding task
uncertainty or Kob com&le9ity can &ose &roducti.ity &roblems and affect t%e &roducti.ity of
ot%er knowledge workers< Moti.ation is also affected in situations w%ere urgency
su&ercedes moti.ation< If &roducti.ity takes a nosedi.e, t%e knowledge worker can always
blame it on t%e time constraint, lack of adeFuate in&ut, and t%e like
10< )riefly list t%e .ocational needs and reinforces of knowledge workers<
a< 3c%ie.ement
b< :se of t%eir abilities on matters related to &roblem and solutions rat%er t%an
&roblem im&lementation based on &redetermined, mec%anistic tasks
c< 3ut%ority
d< 0ig% &ay and &restige
e< =%e congenial atmos&%ere
f< Recognition for work done
g< =%e c%ance of e9ercising res&onsibility
%< =%e dri.e to do different t%ings wit%in t%e Kob sco&e from time to time
i< =%e social status Bim&ortance in t%e eye of t%e ot%ersC
K< reati.ity

11< 0ow does creati.ity relate to ac%ie.ement?
3n ac%ie.ement is a result of creati.ity< )ecause creati.ity is trying out new ideas in &erforming
com&le9 tasks t%at lead to accom&lis%ments<
12< 1laborate on smart leaders%i& reFuirements<
J 3ssessing core com&etency of t%e firm
J Res&onse to t%e firmAs internal s%ortcomings
J > knowledge of t%e e9ternal market and t%e tricky nature of t%e com&etition in t%e
J 4nline res&onse to t%e com&anyAs e9ternal en.ironment
J Measuring t%e return on time
N o&yrig%t >irtual :ni.ersity of 7akistan 1*8Knowledge Management EM!M=(/#0 >:
1#< W%at is meant by return on time? 0ow does it relate to t%e knowledge c%ain?
W%en time and timing are t%e critical elements in a com&etiti.e en.ironment, creati.ity in t%e
way &roducts are im&ro.ed and en%ancements in e9isting &roducts are su&&osed to &ro.ide
financial and strategic returns w%en t%ey are introduced a%ead of t%e com&etition< +o, return
on time addresses t%e benefits deri.ed from time in early and timely introduction of a
&roduct< =%e intellectual ca&ital of t%e firm is t%e backbone for return on time< It is t%e brain
t%at generates creati.e &roducts t%at can be offered in a com&etiti.e market in a timely manner<
1'< )riefly e9&lain t%e key ste&s in t%e knowledge c%ain<
=%e key ste&s in t%e knowledge c%ain are@
a< 3ssessment of t%e core com&etency of t%e organi5ation
b< Res&onse to t%e organi5ationAs internal s%ortcomings
c< > knowledge of t%e e9ternal market and t%e tricky nature of com&etition in t%e
d< 4nline res&onse to t%e com&anyAs e9ternal en.ironment
e< Measure t%e return on time
1*< 0ow does tec%nology assist t%e knowledge worker?
J I= contributes to knowledge ca&ture, information distribution, and information
J :ltimate goal of tec%nology is to ser.e organi5ational memory and create a working
en.ironment t%at &ro.ides t%ese conditions
J Knowledge worker e9&ect to %a.e tec%nical know(%ow to access, u&date, and disseminate
information from databases and knowledge bases
1/< -ist t%e knowledge worker key skills< Do you agree wit% t%em?
J =ec%nical skills and abilities
J 7rofessional e9&erience
J +oft traits suc% as a sense of cultural, &olitical, and &ersonal as&ects of knowledge in t%e
J 7ersonal attributes
J ommunication skills
J 1ducational background and college degree
Knowledge 19ercises
1< Discuss t%e similarities and differences between t%e traditional manager and t%e
knowledge manager<
=%e term manager refers to anyone &erforming managerial work< =%e main role is to maintain
and en%ance %is de&artment or di.ision standards of com&etence< =%e classical Kob includes
&lanning, organi5ing, su&er.ising, and controlling &eo&le, &rocedures, and tec%nology< W%en
&roblems arise, t%ey stay in to t%eir area of o&eration and sim&ly focus on maintaining t%e
status Fuo<
In contrast, a knowledge manager &lans, de.elo&s, and articulate knowledge
&olicy< 0e or s%e understands t%e relations%i& between knowledge s%aring and business
com&etiti.eness< +uc% a manager writes articles and books on knowledge management<
3not%er function is articulating results to senior management officials wit%in and outside t%e
firm and e9&ands KM com&any(wide<
2< =ry to .erify t%e &ersonality and work attributes of t%e knowledge manager by doing
researc% on t%e Internet< Re&ort your findings to t%e class<
N o&yrig%t >irtual :ni.ersity of 7akistan 1/0Knowledge Management EM!M=(/#0 >:
=%is is a relati.ely new area on t%e managementAs end of knowledge management< +tudents
s%ould be encouraged to try out .arious searc% engines, es&ecially google<com and &ut toget%er
a &ersonality &rofile and work attributes of t%e knowledge manager< =%e aut%ors arenAt sure
t%ere is muc% on t%is to&ic on t%e Internet<
#< Is a college degree im&ortant for knowledge work? Discuss your beliefs wit% t%e class<
3 college degree is normally considered t%e foundation of a career, w%et%er it is in
medicine, or business< W%en dealing wit% knowledge and knowledge work, academic
&re&aration is a &re(reFuisite to gaining &ractical e9&erience in t%is s&eciali5ed work< 4f course,
one needs certain a&titude and skill set for certain Kobs, but t%e combination of
education and &ractical e9&erience is t%e combination t%at often leads to building a successful
career< Met, t%ere are e9ce&tions< +uc% e9ce&tions are unusual and rare<

'< ite t%ree com&anies t%at Fualify as learning organi5ations< W%at makes t%em uniFue?
!eneral electric, Du&ont, and I)M are leading learning organi5ations< =%ere are many ot%ers,
w%ic% students s%ould be able identify and e9&ound on t%eir res&ecti.e uniFue features< =%e
ones mentioned %ere are generally known for coming out wit% creati.e &roducts and ser.ices
on a regular basis<
*< Does a leaderAs Kob include management? If so, w%y do we need managers?
-eaders%i& is t%e basis for successful management< 3s s%own abo.e, it is &art of management<
im&lies &ersonality, &oise, warmt%, decisi.eness, and trust by ot%ers to follow and
com&ly wit%
N o&yrig%t >irtual :ni.ersity of 7akistan 1/1Knowledge Management EM!M=(/#0 >:
-1++4N #0
4>1R>I1W 4$ KM +4-:=I4N+ 3ND 7R41++1+
KM +ystem Dustification
It answers to t%e following Fuestions@
J Is e9isting knowledge going to be lost t%roug% retirement, transfer, or de&arture to ot%er
J Is t%e &ro&osed KM system needed in multi&le locations?
J 3re e9&erts a.ailable and willing to su&&ort t%e building of t%e &ro&osed KM system?
J Does t%e concerned &roblem needs years of &ro&er e9&erience and cogniti.e reasoning to sol.e?
J W%ile undergoing knowledge ca&ture, would it be &ossible for t%e e9&ert to articulate %ow t%e
&roblem will be sol.ed?
J 0ow critical is t%e knowledge t%at is to be ca&tured?
J 3re t%e in.ol.ed tasks non algorit%mic in nature?
J Would it &ossible to find a c%am&ion wit%in t%e organi5ation?
%allenges in KM +ystems De.elo&ment
J %anging 4rgani5ational ulture@
o c%anging &eo&leOs attitudes and be%a.iors<
J Knowledge 1.aluation@
o assessing t%e wort% of information<
J Knowledge 7rocessing@
o t%e identification of tec%niFues to acFuire, store, &rocess and distribute
o +ometimes it is necessary to document %ow certain decisions were reac%ed<
J Knowledge Im&lementation@
o 3n organi5ation s%ould commit to c%ange, learn, and inno.ate<
o It is im&ortant to e9tract meaning from information t%at may %a.e an im&act on s&ecific
o -essons learned from feedback can be stored for future to %el& ot%ers facing t%e similar
J Key Differences
o =%e systems analyst gat%ers data and information from t%e users and t%e users de&end on
analysts for t%e solution<
o =%e knowledge de.elo&er gat%ers knowledge from &eo&le wit% known knowledge and t%e
de.elo&er de&ends on t%em for t%e solution<
o =%e main interface for t%e systems analyst is associated wit% users w%o know t%e
&roblem but not t%e solution<
o =%e main interface for t%e knowledge de.elo&er is associated wit% t%e knowledgeable
&erson w%o knows t%e &roblem and t%e solution<
J on.entional systems de.elo&ment is &rimarily seFuential, w%ereas KM+- is incremental and
J In case of con.entional systems, testing is usually done towards t%e end of t%e cycle Bafter t%e
system %as been builtC, w%ereas in KM+-, t%e system is .erified and .alidated from t%e
beginning of t%e cycle<
J +ystems de.elo&ment and systems management is muc% more e9tensi.e for con.entional
information systems t%an it is for KM+-<
J =%e con.entional systems life cycle is usually &rocess(dri.en and documentation(oriented
KM+- is result(oriented<
o =%e con.entional systems de.elo&ment does not su&&ort tools suc% as ra&id &rototy&ing
since it follows a &redefined seFuence of ste&s
o KM+- can use ra&id &rototy&ing incor&orating c%anges on t%e s&ot<
Role of +trategic 7lanning in KM +olutions
N o&yrig%t >irtual :ni.ersity of 7akistan 1/2Knowledge Management EM!M=(/#0 >:
J 3s a conseFuence of e.aluating t%e e9isting infrastructure, t%e concerned organi5ation
de.elo& a strategic &lan w%ic% s%ould aim at ad.ancing t%e of t%e organi5ation wit% t%e
&ro&osed KM system in mind<
J 3reas to be considered@
o >ision
o Resources
o ulture
$orming a KM team
$orming a KM team usually means
J Identifying t%e key units, branc%es, di.isions etc< as t%e key stake%olders in t%e &ros&ecti.e KM
J +trategically, tec%nically, and organi5ationally balancing t%e team si5e and com&etency<
$actors im&acting team success
J Iuality and ca&ability of team members Bin terms of &ersonality, e9&erience, and communication
J +i5e of t%e team<
J om&le9ity of t%e &roKect<
J =eam moti.ation and leaders%i&
J 7romising only w%at t%at can be actually deli.ered<
a&turing Knowledge
J a&turing Knowledge e9tracting, analy5ing and inter&reting t%e concerned knowledge
a %uman e9&ert uses to sol.e a s&ecific &roblem<
J 19&licit knowledge is usually ca&tured in re&ositories from a&&ro&riate documentation, files etc<
J =acit knowledge is usually ca&tured from e9&erts, and from organi5ationOs stored databaseBsC<
J Inter.iewing is one of t%e most &o&ular met%ods used to ca&ture knowledge<
N o&yrig%t >irtual :ni.ersity of 7akistan 1/#Knowledge Management EM!M=(/#0 >:
J Data mining is also useful in terms of using intelligent agents t%at may analy5e t%e data
ware%ouse and
come u& wit% new findings<
J In KM systems de.elo&ment, t%e knowledge de.elo&er acFuires t%e necessary %euristic
from t%e e9&erts for building t%e a&&ro&riate knowledge base<
J Knowledge ca&ture and knowledge transfer are often carried out t%roug% teams<
J Knowledge ca&ture includes determining feasibility, c%oosing t%e a&&ro&riate e9&ert, ta&&ing t%e
e9&ertAs knowledge, reta&&ing knowledge to &lug t%e ga&s in t%e system, and .erify;.alidate t%e
knowledge base<
=%e Role of Ra&id 7rototy&ing
J In most of t%e cases, knowledge de.elo&ers use iterati.e a&&roac% for ca&turing knowledge<
J $oe e9am&le, t%e knowledge de.elo&er may start wit% a &rototy&e Bbased on t%e some%ow
knowledge ca&tured from t%e e9&ert during t%e first few sessionsC<
J =%e following can turn t%e a&&roac% into ra&id &rototy&ing@
o Knowledge de.elo&er e9&lains t%e &reliminary;fundamental &rocedure based on
rudimentary knowledge e9tracted from t%e e9&ert during t%e few &ast sessions<
o =%e e9&ert reacts by saying certain remarks<
o W%ile t%e e9&ert watc%es, t%e knowledge de.elo&er enters t%e additional knowledge into
t%e com&uter(based system Bt%at re&resents t%e &rototy&eC<
o =%e knowledge de.elo&er again runs t%e modified &rototy&e and continues adding
additional knowledge as suggested by t%e e9&ert till t%e e9&ert is satisfied<
J =%e s&ontaneous, and iterati.e &rocess of building a knowledge base is referred to
as ra&id
19&ert +election
=%e e9&ert must %a.e e9cellent communication skill to be able to communicate information
understandably and in sufficient detail<
+ome common Fuestions t%at may arise in case of e9&ert selection@
J 0ow to know t%at t%e so(called e9&ert is in fact an e9&ert?
J Will %e;s%e stay wit% t%e &roKect till its com&letion?
J W%at backu& would be a.ailable in case t%e e9&ert loses interest or Fuits?
J 0ow are t%e knowledge de.elo&er going to know w%at does and w%at does not lie wit%in t%e
e9&ertOs area of e9&ertise?
=%e Role of t%e Knowledge De.elo&er
J =%e knowledge de.elo&er can be considered as t%e arc%itect of t%e system<
J 0e;s%e identifies t%e &roblem domain, ca&tures knowledge, writes;tests t%e %euristics t%at
re&resent knowledge, and co(ordinates t%e entire &roKect<
J +ome necessary attributes of knowledge de.elo&er@
o ommunication skills<
N o&yrig%t >irtual :ni.ersity of 7akistan 1/'Knowledge Management EM!M=(/#0 >:
o Knowledge of knowledge ca&ture tools;tec%nology<
o 3bility to work in a team wit% &rofessional;e9&erts<
o =olerance for ambiguity<
o =o be able it t%ink conce&tually<
o 3bility to freFuently interact wit% t%e c%am&ion, knowledge workers and knower in t%e
Designing t%e KM )lue&rint
=%is &%ase indicates t%e beginning of designing t%e I= infrastructure; Knowledge Management
infrastructure< =%e KM )lue&rint BKM system designC addresses a number of issues<
J 3iming for system intero&erability;scalability wit% e9isting I= infrastructure of t%e organi5ation<
J $inali5ing t%e sco&e of t%e &ro&osed KM system<
J Deciding about t%e necessary system com&onents<
J De.elo&ing t%e key layers of t%e KM arc%itecture to meet organi5ationOs reFuirements< =%ese
o :ser interface
o 3ut%entication;security layer
o ollaborati.e agents and filtering
o 3&&lication layer
o =rans&ort internet layer
o 7%ysical layer
o Re&ositories
=esting t%e KM +ystem
N o&yrig%t >irtual :ni.ersity of 7akistan 1/*Knowledge Management EM!M=(/#0 >:
=%is &%ase t%e following two ste&s@
J >erification 7rocedure@ 1nsures t%at t%e system is rig%t, i<e<, t%e &rograms do t%e task t%at t%ey
are designed to do<
J >alidation 7rocedure@ 1nsures t%at t%e system is t%e rig%t system ( it meets t%e userOs
e9&ectations, and will be usable on demand<
Im&lementing t%e KM +ystem
J 3fter ca&turing t%e a&&ro&riate knowledge, encoding in t%e knowledge base, .erifying and
.alidating6 t%e ne9t task of t%e knowledge de.elo&er is to im&lement t%e &ro&osed system on a<
J Im&lementation means con.erting t%e new KM system into actual o&eration<
J on.ersion is a maKor ste& in case of im&lementation<
J +ome ot%er ste&s are &ost im&lementation re.iew and system maintenance<
Iuality 3ssurance
It indicates t%e de.elo&ment of controls to ensure a Fuality KM system< =%e ty&es of errors to look
J Reasoning errors
J 3mbiguity
J Incom&leteness
J $alse re&resentation
7ost system 1.aluation
Key Fuestions to be asked in t%e &ost im&lementation stage@
J 0ow t%e new system im&ro.ed t%e accuracy;timeliness of concerned decision making tasks?
J 0as t%e new system caused organi5ational c%anges? If so, %ow constructi.e are t%e c%anges?
J 0as t%e new system affected t%e attitudes of t%e end users? If so, in w%at way?
J 0ow t%e new system c%anged t%e cost of business o&eration? 0ow significant %as it been?
J In w%at ways t%e new system affected t%e relations%i&s between end users in t%e organi5ation?
J Do t%e benefit obtained from t%e new system Kustify t%e cost of in.estment?
Im&lications for KM
=%e managerial factors to be considered@
J =%e organi5ation must make a commitment to user training;education &rior to building t%e system<
J =o& Management s%ould be informed wit% cost;benefit analysis of t%e &ro&osed system<
J =%e knowledge de.elo&ers and t%e &eo&le wit% &otential to do knowledge engineering s%ould be
&ro&erly trained<
J Domain e9&erts must be recogni5ed and rewarded<
J =%e organi5ation needs to do long(range strategic &lanning<
+ome Fuestions to be addressed by t%e management regarding systems maintenance@
J W%o will be t%e in c%arge of maintenance?
J W%at skills t%e maintenance s&ecialist needs to %a.e?
J W%at would be t%e best way to train t%e maintenance s&ecialist?
J W%at s%ould be &ro.ided to ensure Fuality maintenance?
J W%at ty&es of su&&ort;funding will be reFuired?
J W%at relations%i& s%ould be establis%ed between t%e maintenance of t%e KM system and t%e I=
staff of t%e organi5ation?
=est Mour :nderstanding
N o&yrig%t >irtual :ni.ersity of 7akistan 1//Knowledge Management EM!M=(/#0 >:
1 W%y is it %el&ful to .iew t%e building of a KM system as a life cycle?
It is im&ortant to %a.e a life cycle in building knowledge management systems, because t%e life
cycle &ro.ides structure and order to t%e &rocess< 3dditionally, t%e life cycle &ro.ides
breakdown of t%e acti.ities into manageable ste&s, good documentation for &ossible c%anges in
t%e future, coordination of t%e &roKect for a timely com&letion, and regular management re.iew
at eac% &%ase of t%e cycle<
2< In w%at ways do con.entional and KM systemsA de.elo&ment life cycles differ? 0ow
are t%ey similar?
=%ere are many differences between t%e con.entional and knowledge management
systemsA de.elo&ment life cycle@
a< 3 con.entional system is seFuential Bcertain ste&s are carried out in seFuenceC, w%ile t%e
management system life cycle is incremental and interacti.e
b< In t%e con.entional system, testing generally occurs at t%e end of &rogramming, w%ile t%e
management de.elo&ment life cycle &ro.ides for testing t%roug%out .arious &%ases of system
as t%e system
c< =%e con.entional system is &rocess(dri.en and documentation(oriented, wit% em&%asis on t%e
flow of
data, w%ile t%e knowledge management de.elo&ment life cycle is result(oriented
d< =%e con.entional system does not su&&ort ra&id &rototy&ing or ad.anced languages, w%ile t%e
knowledge management de.elo&ment life cycle &romotes ra&id &rototy&ing and incor&orates
c%anges on
t%e s&ot
3long wit% t%ese differences,, are many similarities as well@
a< )ot% cycles begin wit% a &roblem and end wit% a solution<
b< )ot% cycles reFuire t%e initial gat%ering of information Bcon.entionalC or knowledge BKM+D-C
for t%e &rocess to begin and ending u& wit% a tested system ready for use
c< )ot% t%e knowledge de.elo&er and t%e systems analyst need to c%oose a tool to design t%e system
#< +uccessful KM system im&lementation de&ends on se.eral factors< )riefly, e9&lain eac%
a< -e.el of moti.ation of t%e user< !ood documentation cannot com&ensate for low moti.ation or
attitude toward t%e system< 7romoting moti.ation and commitment takes time and must be
&lanned in
b< om&uter literacy and tec%nical background of t%e user< 3 com&uter literate user can be easier
to work wit% t%an someone w%o %as no background at all< $irst(time users often reFuire education
training before t%ey are able to su&&ort de.elo&ment and use of knowledge(based system<
c< ommunication skills of t%e trainer< +elling &eo&le on c%ange is sometimes considered more an
t%an a science< ommunication skills can make t%e difference between a userAs acce&tance or
reKection of t%e
d< =ime a.ailability and funding for training< 3 training &rogram run on a s%oestring is usually a
loser< 3lso, sFuee5ing training time to t%e bare minimum often results in trainee im&atience,
resistance to
learning, or nonuse of t%e system< =raining s%ould be &art of t%e im&lementation &%ase offered
around t%e
sc%edule of t%e user<
e< 7lace of training< =%e location of training can make a difference< 4n(site .ersus off(
site training
continues to be an issue wit% &lusses and minuses for eac% alternati.e< 4ff(site training
is generally
dedicated uninterru&ted learning< Its &ositi.e benefits include &ri.acy and focus on t%e
&roKects< =%e
feasibility of off(site training de&ends on distance, location, and funding< In contrast,
on(site training
reFuires no out(of(town trans&ortation or room and board e9&enses<
f< 1ase and duration of training< =%is as&ect de&ends on t%e caliber of t%e trainer and t%e attitude
moti.ation of t%e trainees< G%emistryH often affects %ow well all &arties work wit% eac% ot%er<
3lso, t%e
training &eriod s%ould be reasonable and able to meet measurable goals< 3 long, drawn(out t%ree(
training &eriod does not &romote t%e same e9citement and moti.ation as a one(week session<
g< 1ase of access and e9&lanatory facilities of t%e knowledge management system< Knowledge
management systems s%ould be easy to access and work wit%< 3 software &ackage t%at &ro.ides
N o&yrig%t >irtual :ni.ersity of 7akistan 1/"Knowledge Management EM!M=(/#0 >:
e9&lanations is bound to satisfy most users< =%e e9&lanatory facility of t%e &ackage &romotes ease
of use
and &ro.ides con.incing e.idence of t%e integrity of t%e solutions &ro.ided by t%e system
%< 1ase of maintenance and system u&date< 3t t%is stage, good documentation and easy(to(
&rocedures in a module(oriented knowledge management system can make t%e difference
between easy
maintenance and a Gnig%tmare<H In t%is case, maintenance im&lies u&date, alt%oug% u&date is more
considered en%ancement<
i< 7ayoff to t%e organi5ation< 3 systemAs benefit to t%e organi5ation is usually measured in terms of
reduction, im&ro.ement in sales or o.erall &erformance, and so on< Measurable
&ayoff early in t%e
de.elo&ment life cycle &romotes successful im&lementation<
K< Role of t%e c%am&ion< +olid to& management su&&ort and a c%am&ion &us%ing for system
ado&tion can
make a difference between a successful and a lukewarm installation
'< 0ow im&ortant are organi5ational factors in system im&lementation?
=%e &rimary organi5ational factor is to& management commitment to t%e &ro&osed
knowledge management
system< =%is is e.ident by t%e way it &romotes t%e de.elo&ment effort t%roug% adeFuate funding,
ensuring t%e
a.ailability of %ardware and &ersonnel, and allowing t%e c%am&ion to function wit%in t%e
de.elo&ment &rocess<
=%e second organi5ational factor is user &artici&ation in t%e building &rocess< Doing so
tends to increase
commitment and foster a sense of owners%i& of t%e system< 4t%er organi5ational factors include
&olitics and organi5ational climate< 7olitics is Kockeying for le.erage to influence oneAs
domain and control
&rocedures, tec%nology, or t%e direction of an area of o&eration< :ser readiness can also influence
t%e success of
N o&yrig%t >irtual :ni.ersity of 7akistan 1/2Knowledge Management EM!M=(/#0 >:
-1++4N #1
KM +M+=1M+, +4-:=I4N+, 3ND IN$R3+=R:=:R1
1< Describe t%e ways to facilitate KM, along wit% suitable e9am&les<
KM is facilitated in a number of ways by means of KM solutions< =%ese may be di.ided into
four broad le.els, @ B1C KM 7rocesses6 B2C KM +ystems6 B#C KM Mec%anisms and =ec%nologies6
and B'C KM infrastructure<
a< KM 7rocesses (( are t%e broad &rocesses t%at aid in disco.ering, ca&turing, s%aring, and
a&&lying knowledge< =%ese include combination, sociali5ation, e9ternali5ation,
internali5ation, e9c%ange, directions, and routines<< $or e9am&le, internali5ation &rocesses
benefit from simulations or e9&eriments, w%ic% enable indi.iduals to learn t%roug%
e9&erience, as well as from face(to(face meetings, on(t%e(Kob training, and demos<
b< KM +ystems (( are t%e integration of tec%nologies and mec%anisms, de.elo&ed to su&&ort
t%e abo.e four KM &rocesses< KM systems include e9&ert(seeker systems, w%ic% %el&
locate indi.iduals &ossessing knowledge in a &articular area, and rely on a combination of
information tec%nologies and mec%anisms for classifying knowledge areas<
c< KM Mec%anisms and =ec%nologies (( are used in KM systems, eac% of w%ic% utili5e a
combination of multi&le mec%anisms and multi&le tec%nologies, w%ic% again in turn could,
under differing circumstances, su&&ort multi&le KM systems< 19am&les of KM
mec%anisms include on( t%e( Kob training and a&&rentices%i&, w%ile e9am&les of KM
tec%nologies include databases and Internet<
d< KM Infrastructure (( reflects t%e long(term foundation for KM< KM mec%anisms and
tec%nologies rely on t%e KM infrastructure for t%eir success< 19am&les of KM
infrastructure include t%e data contained in an organi5ationAs databases and t%e Fuality
of t%e organi5ationAs em&loyees Bin terms of t%eir tacit knowledgeC<
2< 19&lain t%e im&ortance of KM mec%anisms and KM tec%nologies to KM systems< !i.e
e9am&les of eac%<
)ot% KM mec%anisms and KM tec%nologies su&&ort KM systems< =%eir differences
are e9&lained below@
KM mec%anisms are organi5ational or structural means used to &romote KM< =%ey enable KM
systems, and are su&&orted by KM infrastructure< KM mec%anisms may or may not utili5e
tec%nology< =%ey in.ol.e some kind of organi5ational arrangement or social or structural
means of facilitating KM< 19am&les of KM Mec%anisms include learning by doing, on(t%e(Kob
training, learning by obser.ation, and face(to(face meetings< More long(term KM mec%anisms
include t%e %iring of a c%ief knowledge officer, interde&artmental &roKects, traditional
%ierarc%ical relations%i&s, organi5ational &olicies, standards, initiation, and training &rocess for
new em&loyees, and em&loyee rotation across de&artments<
KM tec%nologies su&&ort KM systems and also benefit from t%e KM infrastructure, es&ecially
t%e information tec%nology infrastructure< KM tec%nologies are a .ital com&onent of KM
systems< =ec%nologies t%at su&&ort KM include artificial intelligence B3IC tec%nologies
including case(based reasoning systems, electronic discussion grou&s, com&uter(based
simulations, databases, decision su&&ort systems, enter&rise resource &lanning systems, e9&ert
systems, management information systems, e9&ertise locator systems, .ideo(conferencing, and
information re&ositories including best &ractices databases and lessons learned systems<
19am&les of t%e use of KM tec%nologies include World )ankAs use of a combination of .ideo
inter.iews and %y&erlinks to documents and re&orts to systematically record t%e knowledge of
em&loyees t%at are close to retirement< +imilarly, at )7, deskto& .ideo(conferencing
im&ro.ed communication and enabled many &roblems at offs%ore oil fields to be sol.ed
wit%out e9tensi.e tra.eling<
N o&yrig%t >irtual :ni.ersity of 7akistan 1/8Knowledge Management EM!M=(/#0 >:
#< )riefly e9&lain t%e four kinds of classifications for KM systems based on t%e &rocess
De&ending on t%e KM &rocess most directly su&&orted, KM systems can be classified into four
1C Knowledge Disco.ery +ystems su&&ort t%e &rocess of de.elo&ing new tacit or e9&licit
knowledge from data and information or from t%e synt%esis of &rior knowledge< =%ese
systems su&&ort two KM sub &rocesses associated wit% knowledge disco.ery@
combination, enabling t%e disco.ery of new e9&licit knowledge, and sociali5ation,
enabling t%e disco.ery of new tacit knowledge< Mec%anisms and tec%nologies can
su&&ort knowledge disco.ery systems by facilitating combination and;or sociali5ation<
Mec%anisms t%at facilitate combination include collaborati.e &roblem, Koint
decision making, and collaborati.e creation of documents< =ec%nologies facilitating
combination include knowledge disco.ery systems, databases, and Web(based access to
data< Re&ositories of information, best &ractices, and lessons learned also facilitate
combination< =ec%nologies can also facilitate sociali5ation, but to a smaller e9tent t%an
t%ey can facilitate combination<
2C Knowledge a&ture +ystems su&&ort t%e &rocess of eit%er e9&licit or tacit
knowledge t%at resides wit%in &eo&le, artifacts, or organi5ational entities< =%ese
systems can aid in t%e ca&ture of knowledge t%at resides wit%in or outside
organi5ational boundaries, including wit%in consultants, com&etitors, customers,
su&&liers, and &rior em&loyers of t%e organi5ationAs new em&loyees< Knowledge
ca&ture systems rely on mec%anisms and tec%nologies t%at su&&ort e9ternali5ation and
internali5ation< KM mec%anisms can enable knowledge ca&ture by facilitating
e9ternali5ation, or internali5ation<
#C Knowledge +%aring +ystems su&&ort t%e &rocess t%roug% w%ic% e9&licit or im&licit
knowledge is communicated to ot%er indi.iduals< =%ey do so by su&&orting e9c%ange
and sociali5ation< Discussion grou&s or c%at grou&s facilitate knowledge s%aring by
enabling an indi.idual to e9&lain %er knowledge to t%e rest of t%e grou&< In addition,
knowledge(s%aring systems also utili5e mec%anisms and tec%nologies t%at facilitate
e9c%ange< +ome of t%e mec%anisms t%at facilitate e9c%ange are memos, manuals,
&rogress re&orts, letters, and &resentations< =ec%nologies facilitating e9c%ange include
grou&ware and ot%er team collaboration mec%anisms, Web(based access to data, and
databases, and re&ositories of information, including best &ractice databases, lessons
learned systems, and e9&ertise(locator systems<
'C Knowledge 3&&lication +ystems su&&ort t%e &rocess t%roug% w%ic% some indi.iduals
utili5e knowledge &ossessed by ot%er indi.iduals wit%out actually acFuiring, or learning,
t%at knowledge< Mec%anisms and tec%nologies su&&ort knowledge a&&lication systems
by facilitating routines and direction<
'< +tate t%e roles of BaC organi5ational culture and BbC organi5ational structure for t%e
de.elo&ment of a good KM infrastructure<
KM infrastructure is t%e foundation on w%ic% KM resides< 4rgani5ation culture and
organi5ation structure are two of its main com&onents<
4rgani5ational ulture reflects t%e norms and beliefs t%at guide t%e be%a.ior of t%e
organi5ationAs members< It is an im&ortant enabler of KM in organi5ations< 3 su&&orting
organi5ation culture %el&s moti.ate em&loyees to understand t%e im&ortance and benefits from
KM and to find time for it< !etting &eo&le to &artici&ate in knowledge s%aring is considered t%e
%ardest &art of KM, and a .ital &art of im&lementing KM is in making it a &art of t%e
organi5ationAs culture< 3 KM enabling culture is one t%at understands t%e .alue of KM
&ractices, %as su&&ort for KM at all managerial le.els, &ro.ides t%at reward
knowledge s%aring, and encourages organi5ational interaction for t%e creation and s%aring of
knowledge< In contrast, cultures t%at stress indi.idual &erformance and %oarding of information
wit%in units encourage limited em&loyee interaction, and lack of an in.ol.ed to& management
creates in%ibited knowledge s%aring and retention<
N o&yrig%t >irtual :ni.ersity of 7akistan 1"0Knowledge Management EM!M=(/#0 >:
4rgani5ational +tructure is anot%er .ital as&ect on w%ic% KM de&ends on< +e.eral as&ects of
organi5ation structure are rele.ant< $irst, t%e %ierarc%ical structure of t%e organi5ation affects
t%e &eo&le wit% w%om eac% indi.idual freFuently interacts, and to or from w%om %e is
conseFuently likely to transfer knowledge< =raditional re&orting relations%i&s influence t%e flow
of data and information, t%e nature of grou&s w%o make decisions toget%er, and conseFuently
affect t%e s%aring and creation of knowledge< )y decentrali5ing or flattening t%eir organi5ation
structures, com&anies aim to increase knowledge s%aring wit% a larger grou& of indi.iduals<
4rgani5ation structures can facilitate KM t%roug% communities of &ractice, w%ic% is an organic
and self(organi5ed grou& of indi.iduals w%o are dis&ersed geogra&%ically or organi5ationally but
communicate regularly to discuss issues of mutual interest< =%ey &ro.ide access to a larger
grou& of indi.iduals t%an &ossible wit%in traditional de&artmental boundaries< onseFuently,
t%ere are more numerous &otential %el&ers, and t%is increases t%e &robability t%at at least one of
t%em will &ro.ide useful knowledge< $urt%er, t%ey also &ro.ide access to e9ternal knowledge
*< In w%at way does information tec%nology infrastructure contribute to KM wit%in an
3n organi5ationAs information tec%nology infrastructure greatly contributes to KM< W%ile
organi5ations could de.elo& s&eciali5ed I= infrastructure to &ursue KM, usually t%e e9isting I=
infrastructure, de.elo&ed to su&&ort t%e organi5ationAs information systems needs, also
facilitates KM<
Information tec%nology infrastructure includes data &rocessing, storage, and communication
tec%nologies and systems< It com&rises t%e entire s&ectrum of an organi5ationAs information
systems, including transaction &rocessing systems and management information systems< It
includes databases and data ware%ouses, as well as enter&rise resource &lanning systems<
I= infrastructure &ro.ides ca&abilities in four im&ortant as&ects@ reac%, de&t%, ric%ness, and
Reac% &ertains to access and connection, and t%e efficiency of suc% access< De&t%, in contrast,
focuses on t%e detail and amount of information t%at can be effecti.ely communicated a
medium< =%e ric%ness of a medium is based on its ability to &ro.ide multi&le cues, Fuick
feedback, &ersonali5e messages, and use natural language to con.ey subtleties< $inally,
aggregation t%e collection of large .olumes of information from multi&le sources for
Knowledge 19ercises
1< 0ow would you de.elo& a KM system? W%at are t%e &ossible mec%anisms and
tec%nologies you could utili5e?
In de.elo&ing KM systems to su&&ort KM &rocesses, I would utili5e a .ariety of KM
mec%anisms and tec%nologies<
KM mec%anisms in.ol.e some kind of organi5ational arrangement or social or structural means
of facilitating KM< =%e &ossible KM mec%anisms t%at could be utili5ed are learning by doing,
on(t%e(Kob training, learning by obser.ation, and face(to(face meetings< More long(term KM
mec%anisms include t%e %iring of a c%ief knowledge officer, co(o&erati.e &roKects
de&artments, traditional %ierarc%ical relations%i&s, organi5ational &olicies, standards, initiation
&rocess for new em&loyees, and em&loyee rotation across de&artment
KM tec%nologies benefit from t%e KM infrastructure, es&ecially t%e information tec%nology
infrastructure< 19am&les of KM tec%nologies are t%e use of a combination of .ideo inter.iews
and %y&erlinks to documents and re&orts to systematically record t%e knowledge of em&loyees
close to retirement, deskto& .ideo(conferencing for communication and enabling &roblem at offs%ore locations wit%out t%e need for e9tensi.e tra.eling<
N o&yrig%t >irtual :ni.ersity of 7akistan 1"1Knowledge Management EM!M=(/#0 >:
2< 0ow would you utili5e knowledge disco.ery systems and knowledge ca&ture systems in
an organi5ation t%at is s&read across t%e globe? Does geogra&%ic distance %am&er t%e
utili5ation of t%ese systems?
In an organi5ation s&read across t%e globe, t%e use of knowledge disco.ery systems
knowledge ca&ture systems do tend to get %am&ered to some e9tent due to
distances, but due to t%e increasing use of tec%nology, t%ese &roblems are getting smaller and
Knowledge disco.ery systems su&&ort t%e &rocess of de.elo&ing new tacit or e9&licit
knowledge from data and information or from t%e synt%esis of &rior knowledge< Mec%anisms
and tec%nologies can su&&ort knowledge disco.ery systems by facilitating combination and;or
J Mec%anisms t%at facilitate combination include collaborati.e &roblem, Koint
decision making, and collaborati.e creation of documents< In a global organi5ation s%aring
documents among senior management results in t%e creation of new e9&licit knowledge,
resulting in a better understanding of &roducts and a cor&orate .ision< Mec%anisms t%at
facilitate sociali5ation include a&&rentices%i&s, em&loyee rotation across areas, conferences,
brainstorming retreats, coo&erati.e &roKects across de&artments, and initiation &rocess for
new em&loyees< In a global organi5ation, t%is could become e9&ensi.e,, as it
would in.ol.e t%e &%ysical transfer of em&loyees from one location to anot%er<
J =ec%nologies facilitating combination include knowledge disco.ery systems, databases, and
Web(based access to data< Re&ositories of information, best &ractices and lessons learned
would also facilitate combination in global organi5ations< =ec%nologies can also facilitate
sociali5ation, but to a smaller e9tent t%an t%ey can facilitate combination< +ome of t%e
tec%nologies for facilitating sociali5ation in a global organi5ation include .ideo(
conferencing and electronic su&&ort for communities of &ractice<
Knowledge ca&ture systems su&&ort t%e &rocess of eit%er e9&licit or tacit
knowledge t%at resides wit%in &eo&le, artifacts, or organi5ational entities< Knowledge
ca&ture systems rely on mec%anisms and tec%nologies t%at su&&ort e9ternali5ation and
J Mec%anisms can enable knowledge ca&ture by facilitating e9ternali5ation, i<e<, t%e
con.ersion of tacit knowledge into e9&licit form, or internali5ation, i<e<, t%e con.ersion of
e9&licit knowledge into tacit form< =%e de.elo&ment of models or &rototy&es, and t%e
articulation of best &ractices or lessons learned are some e9am&les of mec%anisms t%at
mig%t enable e9ternali5ation in a global organi5ation< -earning by doing, on(t%e(Kob
training, learning by obser.ation, and face(to(face meetings are some of t%e mec%anisms
t%at mig%t facilitate internali5ation in a global organi5ation<
J =ec%nologies can also su&&ort knowledge ca&ture systems by facilitating e9ternali5ation
and internali5ation< 19ternali5ation t%roug% knowledge engineering is necessary for t%e
im&lementation of intelligent tec%nologies suc% as e9&ert systems, case(based reasoning
systems, and knowledge acFuisition systems< =ec%nologies t%at facilitate internali5ation
include com&uter(based training and communication tec%nologies<
N o&yrig%t >irtual :ni.ersity of 7akistan 1"2Knowledge Management EM!M=(/#0 >:
-1++4N #2
KN4W-1D!1 3R0I=1=:R1, IN=1RN1= 3ND 1(W4R-D
Knowledge 3rc%itecture
J Knowledge arc%itecture can be regarded as a &rereFuisite to knowledge s%aring<
J =%e infrastructure can be .iewed as a combination of &eo&le, content, and tec%nology<
J =%ese com&onents are inse&arable and interde&endent

=%e 7eo&le ore
J )y &eo&le, %ere we mean knowledge workers, managers, customers, and su&&liers<
J 3s t%e first ste& in knowledge arc%itecture, our goal is to e.aluate t%e e9isting information;
documents w%ic% are used by &eo&le, t%e a&&lications needed by t%em, t%e &eo&le t%ey usually
contact for solutions, t%e associates t%ey collaborate wit%, t%e official emails t%ey send;recei.e, and
t%e databaseBsC t%ey usually access<
J 3ll t%e abo.e stated resources %el& to create an em&loyee &rofile, w%ic% can later be used as t%e
for designing a knowledge management system<
J =%e idea be%ind assessing t%e &eo&le core is to do a &ro&er Kob in case of assigning Kob content to
t%e rig%t &erson and to make sure t%at t%e flow of information t%at once was obstructed by
de&artments now flows to rig%t &eo&le at rig%t time<
J In order to e9&edite knowledge s%aring, a knowledge network %as to be designed in suc% a way as
to assign &eo&le aut%ority and res&onsibility for s&ecific kinds of knowledge content, w%ic% means@
o Identifying knowledge centers@
3fter determining t%e knowledge t%at &eo&le need, t%e ne9t ste& is to find out w%ere t%e reFuired
knowledge resides, and t%e way to ca&ture it successfully<
0ere, t%e term knowledge center means areas in t%e organi5ation w%ere knowledge is a.ailable
=%ese centers su&&orts to identify e9&ertBsC or e9&ert teams in eac% center w%o can collaborate in
t%e necessary knowledge ca&ture &rocess<
o 3cti.ating knowledge content satellites
=%is ste& breaks down eac% knowledge center into some more manageable le.els, satellites, or
o 3ssigning e9&erts for eac% knowledge center@
3fter t%e final framework %as been decided, one manager s%ould be assigned for eac%
satellite t%at will ensure integrity of information content, access, and u&date<
4wners%i& is a crucial factor in case of knowledge ca&ture, knowledge transfer, and knowledge
In a ty&ical organi5ation, de&artments usually tend to be territorial<
4ften, fig%t can occur t%e budget or t%e control of sensiti.e &rocesses Bt%is includes
kind of knowledge a de&artment ownsC<
N o&yrig%t >irtual :ni.ersity of 7akistan 1"#Knowledge Management EM!M=(/#0 >:
=%ese reasons Kustify t%e &rocess of assigning de&artment owners%i& to knowledge content and
knowledge &rocess<
adKacent;interde&endent de&artments s%ould be coo&erati.e and ready to s%are knowledge<
=%e =ec%nical ore
J =%e obKecti.e of t%e tec%nical core is to en%ance communication as well as ensure effecti.e
knowledge s%aring<
J =ec%nology &ro.ides a lot of o&&ortunities for managing tacit knowledge in t%e area of
J ommunication networks create links between necessary databases<
J 0ere t%e term tec%nical core is meant to refer to t%e totality of t%e reFuired %ardware, software,
t%e s&eciali5ed %uman resources<
J 19&ected attributes of tec%nology under t%e tec%nical core@ 3ccuracy, s&eed, reliability, security,
J +ince an organi5ation can be t%oug%t of as a knowledge network, t%e goal of knowledge economy
to &us% em&loyees towards greater efficiency; &roducti.ity by making best &ossible use of t%e
knowledge t%ey &osses<
J 3 knowledge core usually becomes a network of tec%nologies designed to work on to& of t%e
organi5ationOs e9isting network<
Knowledge =ransfer in 1(World
J t%e internal needs of an organi5ation<
J -inks knowledge workers and managers around t%e clock and automates intraorgani5ational
J 3n organi5ation needs intranet if@
o 3 large &ool of information is to be s%ared among large number of em&loyees<
o Knowledge transfer needs to be done in %urry<
J -inks limited and controlled trading &artners and allows t%em to interact for different kinds of
knowledge s%aring<
J Intranets, e9tranets, and e(commerce do s%are common features<
J Internet &rotocols are used to connect business users6 on t%e intranet administrators &rescribe
access and &olicy for a s&ecific grou& of users6 on a )usiness(to()usiness B)2)C e9tranet, system
designers at eac% &artici&ating com&any collaborates to make sure t%ere is a common interface wit%
t%e com&any t%ey are dealing wit%<
J 19tranets can be considered as t%e backbone of e(business<
J =%e benefits are faster time to market, increased &artner interaction, customer loyalty, and
im&ro.ed &rocesses<
J +ecurity .aries wit% ty&e of user, t%e sensiti.ity ty&e of t%e transferred knowledge and t%e ty&e of
communication lines used<
J 3ccess control deals wit% w%at t%e users can and w%at t%ey can not access<
J =%e issue of t%e le.el of aut%entication for eac% user s%ould be considered<
J 19tranet %el&s t%e organi5ation in ensuring accountability in t%e way it does business and
knowledge wit% its &artners<
J It &romotes collaboration wit% &artners and im& t%e &otential for increased re.enue<
J 3 software %el&ing &eo&le to collaborate Bes&ecially for geogra&%ically distributed organi5ationsC<
J +u&&orts to communicate ideas, coo&erate in &roblem, coordinate work flow and negotiate
J ategori5ed according to@
N o&yrig%t >irtual :ni.ersity of 7akistan 1"'Knowledge Management EM!M=(/#0 >:
o :sers working in t%e same &lace or in different locations<
o :sers working toget%er at t%e same time or different times<
J =o consider@
o !rou& conce&ts
o 0ow grou& members be%a.e in a grou& setting<
J Reasons for using@
o Works well wit% grou&s common interests and w%ere it is not &ossible for t%e
indi.iduals to meet face to face<
o +ome &roblems are better sol.ed by grou& t%an by indi.iduals<
o !rou&s bring multitude of o&inions;e9&ertise to a work setting<
o $acilitates telecommuting Btime sa.erC
o 4ften faster and more effecti.e t%an face to face meetings<
J ritical &rereFuisites for system success@
o om&atibility of software<
o 7ercei.ed benefit to e.ery grou& member<
J $or a face(to face session, t%e &rotocol is standard and t%e communication is %ig%ly structured< If
t%e communication structure is known, t%en a grou&ware can take ad.antage of it to s&eed u& t%e
communication and im&ro.e t%e &erformance of t%e e9c%ange< =%is communication en.ironment
is called tec%nologically mediated communication structure<
J 3n alternati.e communication structure is known as a socially mediated communication structure
t%e indi.iduals send a reFuest Be(mailC t%roug% tec%nology wit%out any control %ow soon or
w%et%er t%e reci&ient will res&ond<
J 3 session re&resents a situation w%ere a grou& of indi.iduals agrees to get toget%er to conduct a
meeting in &erson, t%e tele&%one, or by .ideoconferencing etc<
J !rou&ware systems reFuire t%at t%e sessions be conducted wit%in t%e framework of &rotocols
designed to ensure integrity, &ri.acy and successful com&letion of eac% session<
J +ession control determines w%o can enter and e9it t%e session, w%en t%ey can enter and %ow<
rules used in case of session control@
o Making sure t%at users do not im&ose a session on ot%ers<
o Identifying con.ersational grou& members before allowing t%em into a session<
o ontrolling unnecessary interru&tions or simultaneous transmissions Bt%at mig%t result in
o 3llowing grou& members to enter and e9it at any time<
o Determining t%e ma9imum number of &artici&ants and t%e lengt% of t%e sessionBsC<
o 1nsuring accountability, anonymity and &ri.acy during t%e sessionBsC<
J 3&&lications@
N o&yrig%t >irtual :ni.ersity of 7akistan 1"*Knowledge Management EM!M=(/#0 >:
o 1(mail;Knowledge transfer
o Newsgrou&s;Work($low +ystems
o %at Rooms
o >ideo ommunication
o !rou& alendaring;+c%eduling
o Knowledge +%aring
J )rings t%e worldwide access of t%e internet to t%e core business &rocess of e9c%anging
between businesses, between &eo&le wit%in a businesses, and between a business and its clients<
J =%e focus is on knowledge transfer;s%aring<
J It connects critical business systems to critical constituencies Bcustomers, su&&liers, .endors etcC
t%e internet, intranets, and e9tranets<
J 1()usiness %el&s to attain t%e following goals@
o De.elo&ing new &roducts;ser.ices
o !aining recent market knowledge
o )uilding customer loyalty
o 1nric%ing %uman ca&ital by direct and instant knowledge transfer
o Making use of e9isting tec%nologies for researc% and de.elo&ment
o !aining com&etiti.e edge and market leaders%i&<
>alue %ain
J It is a way of organi5ing t%e &rimary and secondary acti.ities of a business in a way t%at eac%
acti.ity &ro.ides &roducti.ity to t%e total business o&eration<
J om&etiti.e ad.antage is gained w%en t%e organi5ation links t%e acti.ities in its .alue c%ain more
c%ea&ly;effecti.ely t%an its com&etitors do<
J =%e knowledge(based .alue c%ain &ro.ides away of looking at t%e knowledge acti.ities of t%e
organi5ation and %ow .arious knowledge e9c%ange adds .alue to adKacent acti.ities and to t%e
organi5ation in general<
J 1.eryw%ere .alue is added is w%ere knowledge is created, s%ared or transferred<
J )y t%e &rocess of e9amining t%e elements of t%e .alue c%ain, can find t%e ways to
incor&orate I= and telecommunications to im&ro.e t%e o.erall &roducti.ity of t%e firm<
J In case of 1()usiness, we integrate t%e KM life cycle from knowledge creation to knowledge
distribution .ia
o )usiness to onsumer
o )usiness to )usiness
o )usiness wit%in )usiness
+u&&ly %ain Management B+MC
J Incor&orates t%e idea of t%e rig%t &roduct in t%e rig%t &lace, at t%e rig%t time, in t%e rig%t
condition and at t%e rig%t &rice<
J =%is is an integral &art of )usiness to )usiness framework<
J =%is em&loys tools t%at allows t%e organi5ation to e9c%ange and u&date information in order to
reduce cycle times, to %a.e Fuicker deli.ery of orders, to minimi5e e9cess in.entory and to im&ro.e
ustomer Relations%i& Management BRMC
J 0el&s t%e organi5ation to im&ro.e t%e Fuality of its relations%i& management wit% customers<
J It is a business strategy used to learn more about customer needs and customer be.a.iour &atterns
in order to de.elo& better and stronger relations%i& wit% t%em<
J It can im&ro.e;c%ange an organi5ationOs business &rocesses for su&&orting new customer focus
a&&ly emerging tec%nologies to automate t%ese new &rocesses<
J =%e tec%nologies can allow multi&le c%annels of communication wit% customers Band su&&ly
&artnersC and can use customer information stored in cor&orate databases and knowledge(bases to
construct &redicti.e models for customer &urc%ase be%a.iour<
N o&yrig%t >irtual :ni.ersity of 7akistan 1"/Knowledge Management EM!M=(/#0 >:
J )enefits@
o Increased customer satisfaction<
o 1n%ancing efficiency of call centers<
o ross selling &roducts efficiently<
o +im&lifying sales &rocesses<
o +im&lifying marketing &rocesses<
o 0el&ing sales staff to close deals faster<
o $inding new customers
J ritical elements of RM software@
o 4&erational tec%nology@
:ses &ortals t%at facilitate communication between customers, em&loyees, and su&&ly c%ain
)asic features included in &ortal &roducts@
7ersonali5ation ser.ices
+ecure ser.ices
7ublis%ing ser.ices
3ccess ser.ices
+ubscri&tion ser.ices
o 3nalytical tec%nology@
:ses data(mining tec%nologies to &redict customer &urc%ase &atterns<
J 3rc%itectural im&erati.e for RM is to do@
o 3llowing t%e ca&ture of a .ery large .olume of data and transforming it into analysis
formats to su&&ort enter&rise(wide analytical reFuirements<
o De&loying knowledge<
o alculating metrics by t%e de&loyed business rules<
I@ 1< W%at is t%e main difference between intranet and e9tranet? W%ere does t%e Internet fit
=%e Intranet is used for s%aring information wit%in an organi5ation< W%ile, =%e 19tranet connects
se&arate com&anies wit% s%ared databases t%roug% t%e Internet< 0ence, intranets are more
locali5ed wit%in a firm and mo.e data Fuicker t%an t%e more distributed e9tranets< =%e use of
Internet B&rimarily WebC is to connect &ublic at large, mostly business users and branc%es<
I@ 2< 19&lain in your own words t%e functions of middleware< 0ow does it differ from t%e
user interface?
=%e middleware &ro.ides connections between legacy a&&lications and e9isting and new
systems i<e< Bold and new data formatsC<W%ile, =%e user interface standardi5es e9c%anges
between t%e ultimate user and t%e system<
I@ #< W%at does it mean to le.erage tec%nology?
It means le.eraging an organi5ationAs tec%nological infrastructure to meet t%e data reFuirements
of users and customers<
I@ '< W%y is it a critical reFuirement t%at a successful knowledge management system be
tagged to collaboration?
)ecause it would be su&erfluous to t%ink of knowledge s%aring, knowledge transfer, or
continued creati.ity wit%out collaborati.e success<
N o&yrig%t >irtual :ni.ersity of 7akistan 1""Knowledge Management EM!M=(/#0 >:
-1++4N ##
4R74R3=1 IN=R3N1=, 1R=R3N1=, 3ND 74R=3-
KM =ools and Knowledge 7ortals
7ortals are Web(based a&&lications w%ic% &ro.ide a single &oint of access to online information<
can be regarded as .irtual work&laces w%ic%
J &romotes knowledge s%aring among end(users Be<g<, customers, em&loyees etcC<
J &ro.ides access to data BstructuredC stored in databases, data ware%ouses etc<
J %el&s to organi5e unstructured data<
J Initially &ortals were merely searc% engines<
J In t%e ne9t &%ase t%ey were transformed to na.igation sites<
J In order to facilitate access to large amount of information, &ortals %a.e e.ol.ed to
ad.anced searc% ca&abilities and ta9onomies<
J =%ey are also called Information &ortals because t%ey deal wit% information<
J 4rgani5ations are becoming increasingly aware of t%e o&&ortunities obtained by using and adding
.alue to t%e information lying dormant in scattered information systems<
J 7ortals can integrate a&&lications by t%e way of combining, analy5ing, and standardi5ing
J Knowledge &ortals &ro.ides information about all business acti.ities and t%ey are ca&able of
metadata to su&&ort decision making<
J In case of knowledge &ortal, we do not focus on t%e content of t%e information, but we focus on
%ow it will be used by t%e knowledge workers<
J Knowledge &ortals %a.e two kinds of interface@
o Knowledge consumer interface
o Knowledge &roducer interface
J 1nter&rise Knowledge 7ortals B1K7C can distinguis% knowledge from information and can
knowledge from raw data and information<
)usiness %allenge
J In case of most of t%e businesses, usually t%ere e9ists an in%erent &ressure to
o&timi5e t%e
&erformance of o&erational &rocesses in order to reduce cost and en%ance Fuality<
J ustomer(oriented systems allow organi5ations to understand t%e customer be%a.iour &atternBsC
and %el&s t%em to offer t%e rig%t &roduct at t%e rig%t time<
J 4ften, organi5ations need to commerciali5e t%eir &roducts at t%e lowest &ossible &rice<
7ortals and )usiness =ransformation
J :sually &roblems arise from t%e following two fundamental as&ects underlying t%e
com&uting tec%nology@
o =%e e9&losion in t%e Fuantity of business information already ca&tured in electronic
documents leads many organi5ations to lose t%eir gri& on t%e information as t%ey u&grade
t%eir &rocesses and transform to new systems<
o =%e fast s&eed wit% w%ic% t%e Fuantity Band kindsC of information content is growing,
indicates t%at w%at is needed to meet t%e c%allenges is a strict internal disci&line w%ic% can
%el& to e9&ose and integrate t%e sources of enter&rise knowledge<
J =y&es of &ressures faced by most organi5ations@
o +%orter time to market
o More demanding in.estors;customers
o Knowledge worker
N o&yrig%t >irtual :ni.ersity of 7akistan 1"2Knowledge Management EM!M=(/#0 >:
Market 7otential
J Knowledge &ortals are emerging as key tools for su&&orting t%e knowledge work&lace<
J =%e infrastructure com&onents of t%e 1nter&rise Information 7ortal B1I7C market@
o )usiness intelligence
o ontent management
o Data management
o Data ware%ouses;data marts
Knowledge 7ortal =ec%nologies $unctionality
J !at%ering
J ategori5ation
J ollaboration
J Distribution
J 7ersonali5ation
J 7ublis%ing
J +earc%ing;Na.igation
J =%e aim for using t%e collaboration tools is to create a collaborati.e KM system w%ic% su&&orts
s%aring and reusing information<
J In t%e conte9t of KM, collaboration im&lies t%e ability for more t%an one &eo&le to work toget%er
in a coordinated fas%ion time Band s&aceC using electronic de.ices<
J =y&es of collaboration@
o 3sync%ronous collaboration@ 0uman(to(%uman interactions .ia com&uter systems
no time;s&ace constraints<
o +ync%ronous collaboration@ 0uman(to(%uman interactions B.ia com&uter systemsC t%at
occurs instantly<
J 7us% =ec%nology@
7laces information in a &lace w%ere is it easily .isible<
J 7ull =ec%nology@
ReFuires to take s&ecific actions in order to retrie.e information<
ontent Management
J ReFuires directory;inde9ing ca&abilities to automatically mange t%e growing ware%ouses of
enter&rise data<
J 3ddresses t%e &roblem of searc%ing for knowledge in all information sources of t%e enter&rise<
knowledge can include structured as well as unstructured internal information obKects like office
documents, collaborati.e data, MI+, e9&erts, and also e9ternal information<
J Metadata is reFuired to define t%e ty&es of information<
J ontent management com&onent needs to &ublis% information in t%e knowledge(base<
J ontent management can %andle t%e way t%e documents are analy5ed, categori5ed, and stored<
J ategori5ing@ 3s t%e .olume of documents Bunder managementC grows, it becomes rat%er
to organi5e similar documents into smaller grou&s and to name t%e grou&s<
J +ince document collections are not static, %ence &ortals must &ro.ide some form of ta9onomy
maintenance< 3s new documents are added, t%ey must be added to t%e ta9onomy at &ro&er &laces
Busing a classification tec%nologyC< 3s t%e clusters grow and as t%e conce&tual content of t%e new
documents c%ange time, it can become necessary to subdi.ide clusters or to mo.e documents
from one clustered to anot%er<
Intelligent 3gents
J 3gents are software w%ic% are able to e9ecute a wide range of functional tasks Be<g, com&aring,
learning, searc%ing etcC<
J Intelligent agents are tools t%at can be a&&lied in t%e conte9t of 1K7Os<
N o&yrig%t >irtual :ni.ersity of 7akistan 1"8Knowledge Management EM!M=(/#0 >:
J =%ey are still in t%eir infancy, most a&&lications are yet e9&erimental and %a.e not reac%ed t%e
actual commercial stage<
J 3s t%e relations%i&s between t%e organi5ations and t%eir customers become more com&le9, t%e
organi5ation needs more information regarding w%at t%ese relations%i&s mean and t%e way to
e9&loit t%em< Intelligent agent tec%nology can %el& to address t%ese needs<
J ustomers usually set certain &riorities w%ile &urc%asing &roducts Bor using ser.icesC< Intelligent
agents can master t%e indi.idual customersO demand &riorities by learning from e9&erience wit%
t%em, and most of all t%ey can Fualitati.ely and Fuantitati.ely analy5e t%ese &riorities<
J +ome of t%e customer ser.ices t%at can be benefited by intelligent agents@
o ustomer assistance Bcustomi5edC wit% online ser.ices<
o ustomer &rofiling and integrating &rofiles of customers into a grou& of marketing
o $orecasting customer reFuirements<
o 19ecuting transactions BfinancialC on t%e be%alf of customers<
o Negotiating &rices;&ayment sc%edules<
=1+= M4:R :ND1R+=3NDIN!
1< W%y is t%ere a need for &ortals? 0ow are &ortals similar to t%e conce&t of data ware%ouses
and data marts?
3lmost all organi5ations are facing c%allenges t%at im&ose t%e need for integrated and e9&osed
knowledge< =%ese &ressures are as follows@
J +%orter time to market< New &roducts and ser.ices %a.e to be concei.ed, de.elo&ed, and deli.ered
mont%s, or e.en weeks<
J Knowledge worker< W%en a &i.otal &erson, t%e &ain is widely and Fuickly
felt< GItAs
becoming increasingly difficult to acFuire and retain em&loyees, and a com&anyAs strongest asset is
its &eo&le,H says %ris Moore, c%ief tec%nology officer at =raining, Inc< G4rgani5ations t%at
do not ta& into t%eir mind s%are and take ad.antage of t%e knowledge wit%in will Fuickly fall
J More demanding customers and in.estors< $or .irtually e.ery organi5ation, t%e sFuee5e is on
wanting to &ay less w%ile in.estors want more .alue from t%eir &ortfolios< =%is means t%at all t%e
resources to w%ic% an organi5ation can lay claim, including its intellectual resources,
must be
managed for t%e best result<
Data ware%ouses and data marts gi.e access to data collected from different databases< 7ortals
&ro.ide t%e interface to reac%, and mani&ulate data in data ware%ouses in addition to ot%er
collaboration ser.ices<
2< W%at are t%e ad.antages and disad.antages of your &ortal on t%e Internet instead of
an intranet?
3n enter&rise &ortal is designed to &ro.ide t%e same interface for em&loyees, managers,
customers, and su&&liers< It allows anybody in.ol.ed in t%e enter&rise to %a.e access to t%e
&ortal from anyw%ere from t%e world< It is not restricted to local use< =%erefore, it is better to
de&loy &ortals t%e Internet rat%er t%an t%e Intranet<
N o&yrig%t >irtual :ni.ersity of 7akistan 120Knowledge Management EM!M=(/#0 >:
#< -ist t%e differences between knowledge and information &ortals< Discuss t%e benefits of
1nter&rise Information 7ortals 1nter&rise Knowledge 7ortals
J :se bot% G&us%H and G&ullH tec%nologies
to transmit information to users t%roug%
a standardi5ed Web(based interface
J Integrate dis&arate a&&lications including
content management, business
intelligence, data ware%ouse;data mart,
data management, and ot%er data e9ternal
to t%ese a&&lications into a single system
t%at can Gs%are, manage, and maintain
information from one central user
J 0a.e t%e ability to access bot% e9ternal
and internal sources of data and
information6 and t%e ability to su&&ort a
bi(directional e9c%ange of
information wit% t%ese sources
J 3re goal(directed toward knowledge
&roduction, knowledge acFuisition,
knowledge transmission, and
knowledge management
J 3re focused on enter&rise business
&rocesses suc% as sales, marketing, and
risk management
J 7ro.ide, &roduce, and manage
information about t%e .alidity of t%e
information t%ey su&&lies
J Include all 1I7s functionalities
=%e main benefits of eac%@
Knowledge &ortals
J 7ro.ide information on .arious to&ics, and can be customi5ed to meet a userAs indi.idual needs<
J 7ortals make it easy to access knowledge because of t%eir uni.ersal interfaceZa Web browser<
J 4nline &ortal systems let I= organi5ations access a .ariety of back(end systems Bsuc% as &rocess
management soft(ware and met%odology databasesC<
J Knowledge &ortals &ro.ide two kinds of interfaces@
J =%e knowledge &roducer interface< It facilitates t%e knowledge workerAs Kob of
gat%ering and
analy5ing information, collaborating wit% &eers or colleagues, and finally generating
J =%e knowledge consumer interface< It facilitates t%e dissemination of knowledge across t%e
3 key feature of knowledge &ortals is a so&%isticated &ersonali5ation facility t%at takes into
account t%e consumer &rofile<
Information 7ortals
J )enefits for com&anies include -owered costs, increased sales, and better de&loyment of
J 7ortals integrate a&&lications by combining, standardi5ing, analy5ing, and distributing
information and knowledge to end users, w%et%er t%ey are customers, em&loyees, or &artners<
'< Discuss t%e strategic and tec%nological fit reFuired for an organi5ation to im&lement a
om&anies must de.elo& strategies and &rocesses designed to best utili5e intellectual resources
at bot% t%e strategic and o&erational le.els< om&anies already began using grou&ware Bsuc% as
e(mail, discussion forums, and document librariesC for coordinating acti.ities< Now, de&loying
ne9t(generation information, a&&lication &latforms Bsuc% as enter&rise &ortalsC, and real(time
tools Bsuc% as instant messaging, Web conferencing, and streaming audio;.ideoC are reFuired<
*< Discuss t%e differences between static and dynamic &ortals< W%en would you use eac%?
3 +tatic &ortal is a unified interface &ro.iding access to enter&rise a&&lications< 3 dynamic
&ortal %as collaboration and interacti.ity features<
N o&yrig%t >irtual :ni.ersity of 7akistan 121Knowledge Management EM!M=(/#0 >:
/< Discuss %ow you can use content management to sort knowledge from e9ternal and
internal sources< Illustrate wit% e9am&les<
ontent management in t%e 1K7 conte9t reFuires directory and inde9ing ca&abilities to
automatically manage t%e store of structured and unstructured data residing in
data ware%ouses, Web sites, 1R7 systems, legacy a&&lications, and so fort%< :sing metadata to
define ty&es of information, good content management can ser.e as t%e backbone for a system
of cor&orate decision(making w%ere business intelligence tools mine data and re&ort findings
back to key &layers in t%e enter&rise< ontent management may also in.ol.e going outside t%e
enter&rise, em&loying crawlers t%at find &ertinent data .ia t%e Internet, incor&orating it into
e9isting systems, inde9ing it, and deli.ering it to a&&ro&riate analysts, knowledge workers, or
decision makers<
"< Discuss t%e issues t%at can arise w%en im&lementing a &ortal< $ocus on tec%nology,
management, cor&orate strategy, and end users<
$or globally distributed organi5ations Bt%at is, most international de.elo&ment organi5ationsC
t%at rely on t%e Internet as a medium for t%e s%aring of knowledge, t%e issue of bandwidt% is
fundamental< 3t t%is &oint in t%e e.olution of t%e Internet, bandwidt% is a c%ief constraining
factor for many a&&lications<
2< !i.e e9am&les and uses of &ortals for )2), )2, )2!, 2, and 2!<
J 3ma5on<com is an e9am&le of )2 &ortals
J 7lastice9c%anc%e<com, %emonnect<com, 7a&erloo&<com are e9am&les of )2) &ortals for
&lastics c%emical and &a&er industries
J www<e(go.ernment<go.t<n5; is a 2! &ortal allowing &eo&le to find and use New
go.ernment information and ser.ices
J www<firstgo.<go. is t%e official :<+< gateway to all go.ernment information< $irst
!o. is a
com&re%ensi.e &ortal connecting citi5ens, businesses, and agencies to t%e go.ernment<
8< -ist a number of &ossible ways a &ortal can be made accessible, gi.en current
tec%nological trends< $ocus on fi.e of t%ese tec%nologies and discuss t%eir strengt%s and
J Internet
J Intranet
J 19tranet
J Mobility &ortals
J -earned -essons
11< 3n audit firm needs to de.elo& a system t%at allows auditors and &ublic accountants to
searc% accounting standards, s%are knowledge, communicate, and s%are Word and
19cel files between t%e %ead office and clientsA sites< 3s a consultant, you %a.e been
asked to recommend suc% a system< W%at would you suggest?
=%e suggested system is an enter&rise knowledge &ortal B1K7C wit% t%e following functionalities@
J !at%ering@ =%is function ca&tures all accounting standard in a common re&ository<
J ategori5ation@ =%is function &rofiles information and organi5es it in an
understandable and
&resentable way suc% as Word and 19cel files< =%is categori5ation is su&&orted at all
Bem&loyees, managers, and clientsC
J Distribution@ =%is facility su&&orts t%e distribution of structured and unstructured information in
form of electronic documents<
J ollaboration@ =%is function is used to s%are t%e knowledge between t%e %ead office and clientAs
t%roug% async%ronous collaboration suc% as e(mails, discussion forum, etc<
J +earc%;Na.igate@ W%ic% will %el& clients and em&loyees to reac% reFuired information?
N o&yrig%t >irtual :ni.ersity of 7akistan 122Knowledge Management EM!M=(/#0 >:
12< 3 %ardware retailer wis%es to offer real(time su&&ort to customers .ia t%e Internet<
+uggest %ow a knowledge &ortal, eFui&&ed wit% c%at and RM, can be used to
accom&lis% t%is< W%at additional su&&ort can t%e %ardware retailer offer? W%at
information can %e gi.e to t%e manufacturer?
)y using a knowledge &ortal eFui&&ed wit% a sync%ronous collaboration tools, t%e retailer can
accom&lis% t%e following customer su&&ort, %e will im&ro.e costumer retention and
satisfaction by t%eir &roblems online and immediately<
0e will be able to reduce costs t%roug% decreasing &%one calls and site .isiting< 3lso, %e will be
able to &enetrate new market segments by attracting new customers w%o will find t%e an
attracti.e and easy to ada&t to one<
=%e retailer can add an $3I section t%at enlists t%e most common defects t%at encounter
%ardware, wit% t%e ability of u&dating it regularly using in&ut from customers< =%is will add
.alue to t%e costumer as s%e can find w%at s%e is looking for wit%out t%e need to ty&e a
massage also it will be beneficial for t%e manufacturer w%o will use t%e costumersA feedback to
im&ro.e Fuality of %is &roducts<
1#< Discuss %ow synergy between different strategic business units can be %arnessed and
utili5ed by knowledge &ortals<
)y using a knowledge &ortal, different business units can interact and collaborate to reac% t%e
best results< It enables t%e em&loyees to use a web(based work&lace for drag and dro& file
s%aring, multit%readed discussions, real time messaging, and &olling< 3lso, &roducti.ity can be
increased because users of t%e &ortals from different business units know w%at is %a&&ening
across t%e enter&rise and can stay on to& of t%ere costumers, &roducts and markets,
sales< 3dditionally, em&loyees can communicate wit% one anot%er and discuss .arious issues
wit%out consuming muc% resources and time<
N o&yrig%t >irtual :ni.ersity of 7akistan 12#Knowledge Management EM!M=(/#0 >:
-1++4N #'
KM +M+=1M+ 3ND =10NI3- -3M1R+
Knowledge =ransfer in 1(World
=%e =ec%nical ore
=%e obKecti.e of t%e tec%nical core is to en%ance communication as well as ensure effecti.e
J =ec%nology &ro.ides a lot of o&&ortunities for managing tacit knowledge in t%e area of
J ommunication networks create links between necessary databases<
J 0ere t%e term tec%nical core is meant to refer to t%e totality of t%e reFuired %ardware, software,
t%e s&eciali5ed %uman resources<
J 19&ected attributes of tec%nology under t%e tec%nical core@ 3ccuracy, s&eed, reliability, security,
J +ince an organi5ation can be t%oug%t of as a knowledge network, t%e goal of knowledge economy
to &us% em&loyees towards greater efficiency; &roducti.ity by making best &ossible use of t%e
knowledge t%ey &osses<
J 3 knowledge core usually becomes a network of tec%nologies designed to work on to& of t%e
organi5ationOs e9isting network<
:ser Interface -ayer
J :sually a web browser re&resents t%e interface between t%e user and t%e KM system<
J It is t%e to& layer in t%e KM system arc%itecture<
J =%e way t%e te9t, gra&%ics, tables etc are dis&layed on t%e screen tends to sim&lify t%e tec%nology
for t%e user<
J =%e user interface layer s%ould &ro.ide a way for t%e &ro&er flow of tacit and e9&licit knowledge<
J =%e necessary knowledge transfer between &eo&le and tec%nology ca&turing tacit
knowledge from e9&erts, storing it in knowledge base, and making it a.ailable to &eo&le for
com&le9 &roblems<
J $eatures to be considered in case of user interface design@
o onsistency
o Rele.ancy
o >isual clarity
o :sability
o 1ase of Na.igation
3ut%ori5ed 3ccess -ayer
N o&yrig%t >irtual :ni.ersity of 7akistan 12'Knowledge Management EM!M=(/#0 >:
J =%is layer maintains security as well as ensures aut%ori5ed access to t%e knowledge ca&tured and
stored in t%e organi5ationOs re&ositories<
J =%e knowledge is usually ca&tured by using internet, intranet of e9tranet<
J 3n organi5ationOs intranet re&resents t%e internal network of communication systems<
J 19tranet is a ty&e of intranet wit% e9tensions allowing s&ecified &eo&le Bcustomers, su&&liers, etc<C
to access some organi5ational information<
J Issues related to t%e access layer@ access &ri.ileges, backu&s<
J =%e access layer is mostly focused on security, use of &rotocols Blike &asswordsC, and software
like firewalls<
J $irewalls can &rotect against@
o 1(mails t%at can cause &roblems<
o :naut%ori5ed access from t%e outside world<
o :ndesirable material Bmo.ies, images, music etcC<
o :naut%ori5ed sensiti.e information t%e organi5ation<
J $irewalls can not &rotect against@
o 3ttacks not going t%roug% t%e firewall<
o >iruses on flo&&y disks<
o Weak security &olicies<
ollaborati.e Intelligence and $iltering -ayer
J =%is layer &ro.ides customi5ed .iews based on stored knowledge<
J 3ut%ori5ed users can find information Bt%roug% a searc% mec%anismC tailored to t%eir needs<
J Intelligent agents Bacti.e obKects w%ic% can &ercei.e, reason, and act in a situation to %el& &roblem
sol.ingC are found to be e9tremely useful in some situations<
J In case of client; com&uting, t%ere %a&&ens to be freFuent and direct interaction between t%e
client and t%e<
J In case of mobile agent com&uting, t%e interaction %a&&ens between t%e agent and t%e<
J 3 mobile agent roams around t%e internet across multi&le ser.ers looking for t%e correct
information< +ome benefits can be found in t%e areas of@
o $ault tolerance<
o Reduced o.erall network load<
o 0eterogeneous o&eration<
J Key com&onents of t%is layer@
o =%e registration directory t%at de.elo&s tailored information based on user &rofile<
o Members%i& in s&ecific ser.ices, suc% as sales &romotion, news etc<
o =%e searc% facility suc% as a searc% engine<
J In terms of t%e &rereFuisites for t%is layer, t%e following criteria can be considered@
o +ecurity<
o 7ortability<
o $le9ibility