Knowledge Management

Prof. Adrian CURAJ

Knowledge Perspectives
Knowledge is defined as information organized to solve a problem (Webster, 1990). Karl Wiig enriches this definition by adding skills and experience (Wiig, 1997). Thomas Beckman mentions achieving performance by effective utilization of information and data (Beckman, 1997) Jan Duffy contributes by adding analysis and interpretation of information (Duffy,2000). Based on Ercans information-knowledge relation defined in 1980, Beijerse accepted knowledge as information, effectively used for an activity (Beijerse, 1999).

Peter Drucker summarises a variety of definitions as follows (Drucker, 1999): Knowledge is to exploit entire advantages of data and information enriched by individual experiences, ideas,

talent, skills, interpretation potential and intuition with the

aim of gaining aptitude to create solutions, to succeed judgements and to take the right decisions.

It is obvious that there is a pathway to follow from data to wisdom by the help of learning and valuing knowledge. Neil Flemming, an organisational learning expert summarises this pathway in a few lines (Bellinger, 1999):

A collection of data is not information. A collection of information is not knowledge. A collection of knowledge is not wisdom (intelepciune). A collection of wisdom is not truth. Rather, the whole represents more than the sum of its parts and has a synergy of its own.

To comprehend the importance of knowledge, these will be defined based on Management Information Science concepts (Laudon and Laudon, 2003):

Data is a raw fact without meaning, which represents an event, a letter, or a word out of context; hence, it has to be related to an entity to have a meaning.
If you see a figure like 5, it can be related to cardinal numbers and may be thought as bigger than 4 and smaller than 6. A word like time can be read as on time or out of time or even time never stops depending on the context where it is used.

Information is processed data related to a description, definition, classification and perspective answering questions like what, who, when, where. There is a pattern defined in relating data which allows repeatability and predictability. Flight time or bank account balances are information retrieved from data.

Knowledge is processed information when a pattern and its implications are realised. So it answers the question how, and comprises strategy, experience, method or approach. Flight time and place from Atatrk airport can be taken from any information resource; however, time to get to the airport is knowledge about traffic in Istanbul that depends on experience. Knowledge contains patterns (model) in itself and these should be defined for codification.

Wisdom arises when foundational principles for knowledge patterns (models) are understood. Although these principles are universal, they are context and knowledge owner dependent. It embodies principles, insight, moral or archetype. Using thermo-dynamics principles in daily life constitutes acquired wisdom.

Data, information, knowledge and wisdom represent an emergent continuum as shown in Figure 0.2 In this Figure 0.2 it is clear that intelligence is created by gathering knowledge through learning.

This is the reason organisational learning experts even preceded philosophers in knowledge classification. Chandler in 1962 (Blackler, 2002) and Polanyi in 1969 (Bykzkan, 2004) wrote about coded and hidden knowledge.

Nonaka and Takeuchi defined organisational knowledge as tacit and explicit knowledge (Nonaka, 1991), (Nonaka and Takeuchi, 1995). Explicit Knowledge is the coded knowledge which can be expressed in symbols and easily shared. It can be summarised as knowledge of rationality created by the mind; sequential knowledge, organised by automation; digital knowledge in theory (Takeuchi, Nonaka, 2000) as long as brain is not hundred percent discovered.

Nonaka and Takeuchi defined organisational knowledge as tacit and explicit knowledge (Nonaka, 1991), (Nonaka and Takeuchi, 1995). Explicit knowledge is accepted to have declarative, procedural and descriptive forms. The first serves for explaining and clarifying a concept or entity, The second is about an event and answers how it happened, The last one explains reasons.

Engineers can express their theories in formulas. Painters reflect their ideas in drawings. Teachers prepare courses or tutorials to share their knowledge. Companies have an electronic archive of documents.

Nonaka and Takeuchi defined organisational knowledge as tacit and explicit knowledge (Nonaka, 1991), (Nonaka and Takeuchi, 1995). Tacit Knowledge is not easy to express since it is context based and depends on individual experience, beliefs and vision.

Tacit knowledge is created in the present situation and at a particular time, depending on the environment and events. Accumulation of this knowledge results in experience gained through practice. Knowledge of experience is stored in the body.
If it is sports it is in the muscles; If it is a feeling it is in the brain and nerves. As it is sometimes said, individual stories are woven into the created product like a high precision watch. Though (even if) components are easy to list, the assembly can never be as good as one made by an expert.

Explicit and tacit knowledge are mutually complementary entities. They interact with each other and into each other in the creative activities of human beings. This interaction is called knowledge conversion (Takeuchi, Nonaka, 2000) and this is the basis of creating organisational knowledge.

Organisational Knowledge is knowledge accumulated through know-how, licences, expertise and all skills and capabilities of personnel to run functional activities successfully.
This kind of knowledge is mainly stored in the organisational structure (body), electronic storage media (mind), business processes (theory), and in the minds of workers (practice). Obviously improvements in information and communication technologies have contributed a lot in the creation and sharing of organisational knowledge. With the help of artificial intelligence new knowledge based software can even be aware of behaviours. Organised behaviours present the opportunity of reusability. Recognition and reusability of organisational knowledge assists in effective management and leads the company towards innovation. What is research? What is innovation?

Organisational knowledge is part of intellectual capital; therefore, it will be important to overview the features of knowledge as summarised by Krogh, Ichijo and Nonaka (Krogh, Ichijo, Nonaka, 2000):
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Knowledge is individual and social; Knowledge is both explicit and tacit; Knowledge is created based on sharing; Organisational knowledge creation involves different processes.

Knowledge is individual and social.

An individual generates his beliefs based on observation of the world. These observations depend on a unique view point, personal sensibility and individual experience.
Individual knowledge creation is a totally human action.

Individuals team up in an organisation to form a company. Customer caring, suppliers trust, influencing pro-company industry rules and legislation depend on how these teams use the collection of individual knowledge.
Company culture plays an important role in shaping the group knowledge. Social knowledge is both coded and communicated.

Knowledge is both explicit and tacit. Each individual has two kinds of knowledge interactions;

those that he can formulate in sentences or drawings; those that are tied to skills, physical abilities, intuition and beliefs.

This is one of the reasons behind the most important problem in organisations: COMMUNICATION.
Managers grab the concept of tacit knowledge but come to grips with it in practice.

Recognising the value of tacit knowledge and figuring out how to use it is the key challenge for knowledge based enterprises.

Knowledge is created based on sharing. Benefiting from tacit knowledge is only possible by creating a shared space in the company that fosters emerging relationships. Knowledge is dynamic, relational and based on human action. Therefore, physical, virtual and mental sharing spaces should be used altogether. It is to be remembered that unlike information, knowledge depends on its context.

Organisational knowledge creation involves different processes.

In accordance with the definition of knowledge, its creation should be considered in different activities. Sharing is only the starting point, success of communication depends on organisation specific language.

These culture based concepts are only justified by outside participants.

Market studies, benchmarking, customer focus groups, trend studies and strategic values are used for justification.

The validated knowledge is shared in all levels of the organisation.

Nonaka introduced four steps of convergence in the knowledge creation process: 1. Socialisation is the first step which is a transfer from tacit knowledge to other tacit knowledge; realised by experience sharing with the aim of common field building through dialogues. 2. Externalisation is converting tacit knowledge to explicit knowledge by expressing it in hypotheses, models, and concepts. 3. Combination is the step where explicit knowledge obtained as a result of externalisation is integrated to existing explicit knowledge. 4. Internalisation is the last step where explicit knowledge is again converted into tacit, based on learning by doing.

Hiroyuki Itami was the first to draw attention to knowledge resources and Karl Wiig contributed by separating knowledge resources and knowledge processes (Itami, 1987; Wiig, 1997). David J. Skyrme summarises internal and external resources of organisational knowledge in seven groups (Skyrme, 2000b): 1. Customer knowledge. 2. Knowledge in people. 3. Knowledge in products. 4. Knowledge in processes. 5. Knowledge in organisational memory. 6. Knowledge in relationship. 7. Knowledge assets.

1. Customer knowledge is the customer feedback for products, services and relationships. Understanding not only the needs of your customer but also the customers customer. 2. Knowledge in people represents the skills and experience of employees that are to be continually tapped either through creating a learning organisation or communities of practice. 3. Knowledge in products is mainly observed in intelligent products collecting information that can be more benefitial than its original target.

4. Knowledge in processes is defined by customer service and organisational experience hidden in processes. Reengineering for current needs captures the knowledge of the best experts in the company.

5. Knowledge in organisational memory is expressed by explicit knowledge stored in databases or embedded in procedures, business systems and peoples minds. These can be accessed by indexing or cataloguing.

6. Knowledge in relationship is hidden in the minds of people who worked together for a while, who know the needs and way of thinking of each other.
7. Knowledge assets are tacit knowledge embedded in internal and external relations of a company that can be converted into value to achieve competitive uniqueness.

Knowledge Management

Knowledge in organisations has been considered by many, defined by some, understood by few, and formally valued by practically no one. That's why knowledge management is one of the greatest challenges facing business leaders today and tomorrow. (Bontis, 1997)

Knowledge Management
When Karl Wiig defined knowledge management as systematic creation, renewal and utilisation of knowledge to retrieve the best benefits to increase revenue (Wiig, 1993) or Petrash put a simple statement as providing the right knowledge to the right person at the right time to support the best decisions (Petrash, 1996) or Carla ODell summarised knowledge management as value creation by using organisational knowledge (ODell, 1996)
it was perceived as ambiguous by business managers.

Knowledge Management

To clarify the concepts, knowledge management is compared with most recent management methods like Total Quality Management and Business Process Reengineering. Yogesh Malhotra presented knowledge management as an alternative to those methods by stating being focused on doing the right thing instead of doing things right (Malhotra, 1998).

Knowledge Management

Knowledge Management is no longer a mystery yet different approaches result in variations of definitions. Gartner Group gives a definition which appears in several knowledge management books (Rosser, 1999): Knowledge Management is a discipline that promotes an integrated approach to identifying, managing, and sharing all of enterprises information assets, including databases, documents, policies and procedures as well as unarticulated expertise and experience resident in individual workers.

Knowledge Management

Jay Liebowitz concludes after analysing a variety of definitions (Liebowitz, 1999):

Knowledge management deals with the process of creating value from an organisations intangible assets. It is an amalgamation of concepts borrowed from the artificial intelligence/knowledge based systems, software engineering, business process reengineering, human resource management, and organisational behaviour fields.

Knowledge Management
The term Knowledge Management (KM) is used to describe everything from the application of new technology to the harnessing of the intellectual capital of an organisation (Sallis and Jones, 2002).
It is not one single discipline; rather, it is an integration of numerous endeavours and fields of study. Rowley (2000) describes the term KM as follows:

Knowledge Management
Knowledge management is concerned with the exploitation and development of the knowledge assets of an organisation with a view to furthering the organisations objectives. The knowledge to be managed includes both explicit, documented knowledge, and tacit, subjective knowledge. Management entails all of those processes associated with the identification, sharing, and creation of knowledge. This requires systems for the creation and maintenance of knowledge repositories, and to cultivate and facilitate the sharing of knowledge and organisational learning. Organisations that succeed in knowledge management are likely to view knowledge as an asset and to develop organisational norms and values, which support the creation, and sharing of knowledge (Rowley, 2000).

Knowledge Management

In brief, KM is the management of processes that govern the creation, dissemination, and utilisation of knowledge by merging technologies, organisational structures and people to create the most effective learning, problem solving, and decision-making in an organisation.

Knowledge Management
These definitions lead us to the existence of different perspectives in knowledge management, which can be summarised as (Baran, 2002):
Technology perspective; Application perspective; Organisational perspective; Management perspective.

Knowledge Management

Technology perspective: Gartner group and International Data Corporation have become leaders in this view, concentrating on the information technology infrastructure and knowledge tools like patterns, taxonomies, learning software, knowledge maps and knowledge repositories. Application perspective: (Process and implementation) Explains different phases of knowledge creation, sharing and dissemination and are lead by Wiig and ODell. Success factors and strategies are also handled by this group.

Knowledge Management
Organisational perspective: Liebowitz, Davenport and Prusak pioneered studies on characteristics of knowledge organisations, mentioning organisational structures, centres of expertise, chief knowledge officer and corporate culture. Management perspective: Leadership, strategies, measuring and valuing knowledge assets have been experimented with by Sveiby, Edvinsson and Bontis. Knowledge management is an integration of all perspectives as seen in Figure.

Integration of Different Knowledge Management Perspectives (Based on Earl, 1997)

Knowledge Management
Knowledge management has a strategic influence on enterprise adaptation to new market conditions. Edna Pasher states that: The best way to adapt to a fast-changing business environment is by linking the islands of knowledge that exist throughout the organisation. She describes this ability as an outcome of collaborative wisdom (Pasher, 1998). Yet, each company has to choose its own knowledge management strategy based on company culture, mission, competition and performance without making the mistake of giving the responsibility to information technology, human resources or financial management departments (Hansen, Nohria, Tierney, 1999).

Knowledge Management
Stephen Drew suggests applications differ in four areas where success depends on the level of knowledge awareness and amount of knowledge content (Drew, 1999).
1.What 2.What 3.What 4.What

we know we know we know we do not know we do not know we know we do not know we do not know

Knowledge Management
1. What we know we know: It is a company with high awareness but insufficient knowledge content where emphasis is given to knowledge sharing, knowledge access and knowledge repositories. Benchmarking and or communities of practice are the tools supporting the applications. 2. What we know we do not know: When the company has high awareness and a big volume of knowledge, emphasis is given to knowledge seeking and creation by the help of R&D, market research and intelligence.

Knowledge Management
3. What we do not know we know: When the company has low awareness and low volume of knowledge, focus is on externalizing tacit knowledge by using knowledge maps, training and networks. 4. What we do not know we do not know: If volume of knowledge is high but the awareness is not obvious then, emphasis is given to discovering key risks and opportunities through audits and creative tension.

Knowledge Management
Despite the perspective or level of awareness, the goal of knowledge management is to create value from common knowledge of the company. Knowledge has to be created or generated. Knowledge should be organised so that it can be shared in the company. Then it should be used to support development and conversion into innovation so that it can be commercialised. Knowledge can only be valued if it is put into action.

Knowledge Management
Debra Amidon defines putting knowledge into action in ten steps (Amidon, 2003): Collaborative process 2. Performance measures 3. Education and Training 4. Distributed Networks 5. Competitive intelligence 6. New products and services 7. Strategic alliance 8. Market and customer interaction 9. Leadership 10. Information and communication technology
1.

Knowledge Management
Debra Amidon defines putting knowledge into action in ten steps (Amidon, 2003):
1.Collaborative

process is to create value through collective competencies. It can be accomplished by converting company to community, having cohesive relations, share meaning of events in communities of practice and prefer trust to security. 2.Performance measures are to be redefined to allow value realisation instead of value creation. More than one measurement method must be used to measure the value of knowledge assets. As quality improvements caused a revolution in customer satisfaction, or tough competition forced benchmarking, information technologies and knowledge management efforts introduced intellectual capital as new measures. 3.Education and Training are encouraged implementing the learning culture with practical methods like story telling. Global networks present richer learning resources than local possibilities.

Knowledge Management
Debra Amidon defines putting knowledge into action in ten steps (Amidon, 2003):
4.Distributed

Networks cause the reorganisation which will allow a systems approach to the business relations. Information exchange creates initiating and inspiring attitudes after a clear understanding of business issues. 5.Competitive intelligence must be given more importance in order to locate the capacity for innovation and convert it into new products and services. 6.New products and services are the result of innovation. Focus should be given to intelligent products and richness of customer service.

Knowledge Management
Debra Amidon defines putting knowledge into action in ten steps (Amidon, 2003):
7.Strategic

alliance in interest groups will allow the increase of external knowledge resulting in a clearer future view. 8.Market and customer interaction enforces the proactive use of new technologies and channels. 9.Leadership should replace control and cost based management. People need to led by a common future vision allowing a shared understanding to evolve. 10.Information and communication technology must be used as a learning tool to avoid passive workers and increase productivity.

Knowledge Management
Knowledge management can only be successful if certain conditions are satisfied in the company culture. Davenports suggestions are (Davenport, Prusak, 1998): Executive management must understand and support knowledge activities.

Commitment of management is a necessity for any knowledge based change. Managers of various functions at different levels have to accept that not adopting is more expensive than investing in knowledge management. Knowledge activities can only be realised on the basis of a stable organisational and technical infrastructure.

Knowledge Management
Knowledge management can only be successful if certain conditions are satisfied in the company culture. Davenports suggestions are (Davenport, Prusak, 1998): Knowledge sharing can not be realised by top-down approaches but requires application of motivational aids.

Knowledge related strategies can not be kept at the top management level they have to be transparent and communicated with the work force Knowledge accumulation is only possible with multiple channels of knowledge being opened. Too much concentration on structure or precision disallows regular knowledge flow.

Knowledge Management

Business processes are to be overviewed to initiate a knowledge-oriented culture. Increased knowledge improves competitive position despite the difficulties in adoption. Difficulties can be solved by pilot projects.

These grounds for success lead us to measure the current business performance and develop future opportunities by using measurement methods based on the most important component of knowledge management, Intellectual Capital.

Knowledge Management

Business processes are to be overviewed to initiate a knowledge-oriented culture. Increased knowledge improves competitive position despite the difficulties in adoption. Difficulties can be solved by pilot projects.

These grounds for success lead us to measure the current business performance and develop future opportunities by using measurement methods based on the most important component of knowledge management, Intellectual Capital.

Va multumesc!
Adrian Curaj adrian.curaj@acuraj.ro

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