Strategic Management

Knowledge Base Economy:

The 21st century has several challenges. It has seen new trends on National and International
levels due to globalization. The dynamic direction in todays world is Knowledge Based
Economy. A knowledge-based economy relies on the use of ideas rather than physical abilities
and on the application of technology rather than the exploitation of cheap labor. It is an economy
in which knowledge is created, acquired, transmitted, and used more effectively by individuals,
companies, and communities to promote economic and social development.
Today in industrial countries, knowledge-based industries are expanding rapidly where new
technologies have been introduced, demand for high-skilled workers, particularly in information
technology workers has increased significantly but at the same time, demand for lower-skilled
workers has declined and this put a lot of pressure on the current education system of industrial
countries to produce more high skilled people. In these days knowledge is very important from
top to the bottom level.
Knowledge base can help to in developing excellent strategies which can in turn results in
improving business and can lay foundation for good governance in general and excellent
corporate governance in particular.
A confident march towards Knowledge Base Economy (KBE) requires the implementation of
some model. First model in this context is KASH model and second is SAVE model. Both are
self development models. Firms use this model for employees development which in return
enables organizations to walk towards KBE.
KASH Model
K

Knowledge

Attitude

Skills

Habits

KASH model states that there are four things which have to be right if human performance is
going to be most favorable. In order to understand this model each alphabet is needed to study
independently because each word has significant importance.

Knowledge
Knowledge is a familiarity with someone or something, which can include facts, information,
descriptions, or skills acquired through experience or education. Knowledge is what you know. It
can be found in two places. First it in the mind and second more important aspect in todays
world is Where it is? Anyone can access knowledge from internet, files, dictionaries, books
etc.
In order to strengthen the memory of mind, one should concentrate on three Rs (1) Receipt
(Deposit of knowledge in the mind). (2) Retention (Retaining knowledge in the mind). (3)
Retrieval (Call for the knowledge when there is a need to use it).
Traditionally there are three sources of knowledge that are:
(1) Hereditary:
This knowledge is God gifted at the time of birth. It is generally believed that with the
exception of a very few under-privileged children, all other persons are gifted with good
knowledge by God.
(2) Revealed:
God has revealed four books namely: Torah, Bible, Psalms and Al-Quran. All these books
contain excellent knowledge which can decorate all readers. The last book is Al-Quran.
(3) Acquired:
Knowledge is also required through education and training. The greater the investment in
the education, the higher would be the knowledge base. Developing countries have
invested huge money in the education. Enlighten corporate sector has invested a
significant amount in order to train their employees through management training
programs. Consequently human resource development is assuming high importance.

However it is generally believed that fourth dimension of the knowledge is crying need of today
namely: Innovative Knowledge. Several inventions have taken place now and several great
initiatives have been under taken. However enterprise in this world will be great beneficiaries. It
is important to not only invest in developing people but also in R&D institutions.

In order to get benefit from knowledge, knowledge management should be operationalized in the
real world. Knowledge Management ('KM') comprises a range of practices used by

organizations to identify, create, represent, and distribute an organization's knowledge to enhance

its performance, continuous improvement and competitiveness. The process of knowledge
management is:

Acquire

Manage

Apply

Knowledge management is applied at three levels. These are individual level, organizational
level and national level. Well accepted approach of the knowledge management includes changes
in the mindset of the people and delivering better than the best. Target of the knowledge is to
create world class organizations in productivity and standards. KM scope extends to high tech,
agriculture and traditional jobs. Its basic is to shift from Business as usual to Knowledge Base
Economy (KBE).
Strategically speaking, KBE has shifting paradigms in the world. These changing paradigms
have taken place in three dimensions:
(1) Earlier growth was resources base namely: Land, labor, capital and enterprise. There was
emphasis on growth of agriculture.
(2) Later the paradigms shifted to industry with emphasis on innovations and inventions.
(3) Now the emphasis on intellectual capital ( Collective knowledge (whether or not documented)
of the individuals in an organization or society. It includes customer capital, human capital,
intellectual property, and structural capital ). Now a days 70% results are achieved by the use

of intellectual property, knowledge and innovation. And remaining 30% results are
achieved by labor and other factors.
Three types of technologies are used in developing knowledge management systems these
include:
a) Communication Technologies:
Emails, Internet, Corporate Intranets and other web base tools provide communication
capabilities.
b) Collaboration Technologies:
Electronic brainstorming enhances group workers especially for knowledge contribution.
Experts can also work with individuals for trying to apply knowledge.
c) Search and Retrieval Technologies:

Database Management Systems are used to store and manage knowledge.

Knowledge Base:
The term knowledge base refers to a database in which information is collected, organized,
shared, searched and used. Knowledge bases are intended to act as a resource for the reader, such
as a customer or a customer service representative. A sound knowledge base for the enterprise is
cry need of the hour. Knowledge should be developed in a comprehensive manner. Some of the
important component in this respect may include the following:

Information ( About industry and technology)

Companys policies and practices

Companys goals and plans

Company culture

The personality of key organization members

Important suppliers and customers

Attitudes
An attitude is an expression of favor or disfavor toward a person, place, thing, or event.
Generally three types of attitude exist in the society namely: Pessimistic (expecting the worst
possible outcome, feeling negative for everything), Optimistic (Hopeful and confident about the
future, positive thinking) and realistic (showing awareness and acceptance of reality). Attitude is
the most important aspect of an individual personality. Attitude should be:

Constructive

Positive

Future Oriented

Skills
Skills are the abilities or expertise of doing work. As the technology change skills also change
paradigms. Internet economy and fast changing world has to be cushioned with continuous
improvement of skills if we fail obsolescence will occur. The law of obsolescence is not

restricted to the machines but also applicable to the persons. In spite of obtaining Ph.D. or M.Phil
or Master degree or other profession qualifications like engineering, medicines, architecture,
business etc there is a continuous need for updating skills. There is a long list of skills which are
needed to be acquired and continuously updated. Effective business executives needed these
skills for effective business strategies. These include:
1. Analytical skills (Ability to identify and analyze complex problems and concepts and
make decisions that make sense)
2. Communication skills (Ability to convey information to another effectively and
efficiently)
3. Finance skills (Ability to acquire and manage the finance of the company)
4. Business skills (Ability for doing general business and knowledge of economic
Principles )
5. Technological skills (Ability to apply the practical science to the industry and
commerce)
6. Sociological skills (Ability to monitor social environment and their impact on the
business operation )

Habits
Habits are pattern of behavior that often occurs automatically. It is generally the outcome of the
attitudes. Their contributions will increase the productivity of the enterprise and KBE can be
very helpful. These are cultivated at home, learnt through interaction with the society and
embedded as part of the corporate culture through organizational efforts.
Second model which we need to follow for marching toward KBE is SAVE model. It is second
self development Model.
SAVE Model
S

Skills

Attitude

Values

Ethics

Skills and attitude have been discussed earlier. Values and Ethics are here under.

Values
Each human being possesses his own unique set of values. Values are what people consider
important. They are the basic beliefs that an individual thinks to be true. A bridge by which an
individual makes a decision regarding good and bad, right or wrong, and most important or less
important. Values are very much personal. There are two types of values. Western Values and
Islamic Values. In Pakistan, Islamic Values are followed. Islamic values are based on revelation
(Wahi) by God in Al-Quran. These values are summed up below
Acts to be performed:
1. Allah commands justice
2. Doing of good
3. Liberty to Kith and Kin (Dost, Ahbab, Risht-e-Dar)

Acts not to be performed:

God Forbids:
1. Shameful deeds
2. Injustice
3. Rebellions

Ethics
Ethics generally refers principles that govern a persons behavior. When ethic is applied on
business it is called business ethics which are principles or code of conduct within the
organization that guides decision making and behavior. It is important to follow ethics in
business by trade bodies. Managers should implement ethical standards to ensure fairness in the
business. Developing code of ethics and adhering to it is the prerequisite for ensuring social
responsibility. In recent times, it has been generally felt that over and above the focus on
profitability and social viewpoint, developing attitude for discharging responsibilities honestly by
a manager is very important.
Code of ethics is generally issued by organizations and professional institutions. These need to
be carefully read and implemented. Institutional arrangements are contained in the code of ethics
for punishing those who do not follow the spirit of code of ethics

Forecasting:
Forecasts are educated assumptions about future trends and events. Forecasting is a complex
activity because of factors such as technological innovation, cultural changes, new products, and
improved services, stronger competitors, changing social values, unstable economic conditions,
and unforeseen events. Environmental scanning provides reasonably hard data on the present
situation and current trends, but intuition and luck are needed to accurately predict whether these
trends will continue. The resulting forecasts are, however, usually based on a set of assumptions
that may or may not be valid. Faulty underlying assumptions are the most frequent cause of
forecasting errors.
Forecasting Techniques:
Various quantitative and statistical techniques are used to forecast future situations. They do not
tell the future; they merely state what can be, not what will be. Some of these include following:
(1) Judgmental Forecasting:
Judgmental forecasting relies mainly on individual judgments or committee
agreements regarding future conditions. An enterprise may use its own suppliers,
customers, employees, business executives as the major source of qualitative
information regarding future trends affecting the business. Business executives of
various management functions may be consulted to form the judgment. Since the
emphasis is on judgment, its components are here under:

Common Sense

Maturity

Qualitative Experience

Ability to reason out the suggestion

(2) Statistical Time Series:

Time series method used historical data to develop forecasts of the future. The underlying
assumption is that patterns exist and that the future will resemble the past. Various trends
e.g. purchasing power, changing number of the customers, population growth, innovation
etc and their impact on the past data for developing future forecasts may be carefully
considered. The basic problem with time series is that a historical trend is based on a
series of patterns or relationships among so many different variables that a change in any
one can drastically alter the future direction of the trend.

(3) Composite Scenario:

Scenario is a method of thinking rigorously about the future. Scenarios are a way of
developing alternative futures based on different combinations of assumptions. It is
focused descriptions of different likely futures presented in a narrative fashion. A scenario
thus may be merely a written description of some future state.
(4) Delphi Technique:
The Delphi technique is a structured approach for reaching a consensus judgment among
experts about future developments in any area that might affect a business. It is method of
collecting opinions about the future and judging how likely a future event or situation is.
Experts answer a list of questions without discussing them with each other, look at each
others' answers, and change them until a consensus is reached (a situation where they all
agree).
(5) Brain Storming:
It is a group problem-solving technique that involves the spontaneous contribution of
ideas from all members of the group. Every participant is encouraged to think aloud and
suggest as many ideas as possible Analysis, discussion, or criticism of the given ideas is
allowed only when the brainstorming session is over and evaluation session begins.