Knowledge Management

Case Reference: Notes from Knowledge Management Expert.

Following are the notes taken from an Internal Memo generated by a Knowledge Management Expert to improve organizational efficiency. Please read

Why Knowledge Management?

While most managers agree that managing knowledge is important, few of them can articulate what the value is or how to become a learning, teaching, or coaching organization. The majority of companies have their knowledge embedded in people and organizations. It is often intuitive, tacit, rather than explicit, and is rarely detailed enough to be especially valuable. Such knowledge often gets lost when someone leaves the company. "All too often, knowledge exists with multiple points of view instead of the collective best thinking. It is occasional but not integral to the business. And, most important, it is available but not used very much."

Real Value of Knowledge

The value of knowledge is measured in its application. Knowledge has no intrinsic value of its own - it is only relevant when it is used. "The real value of it is only real if you change the way business is done."

Knowledge Management versus Information Management

"Knowledge management" is different from "information management". While the former targets collecting and distributing knowledge - both explicit and tacit - throughout the organization, the latter deals mainly with documented explicit knowledge - or information - only.

Most companies create, have access to, and use plenty of bits of knowledge, but neither efficiently, nor effectively.

The increased emphasis on knowledge management is attributed to recent rapid developments in the following areas:

On a practical level:

1. Shift to the new knowledge-driven economy dominated by knowledge-based enterprises and information-intensive industries

2. Rapid advances in information technology.

On a theoretical level, increased emphasis on knowledge in the strategic management literature, in particular:

1. Popularity of the new resource-based view of the company

2. Postmodern perspectives on organizations

The Dynamic Theory of Knowledge Creation

The current paradigm in which organizations process information efficiently in an "input-process-output" cycle represents a "passive and static view of the organization.13 Organizational learning results from a process in which individual knowledge is transferred, enlarged, and shared upwardly to the organizational level. This process is characterized as a spiral of knowledge conversion from tacit to explicit. In the broadest sense, organizational knowledge creation may be explicated by the interchange between tacit and explicit knowledge.

Tacit knowledge is a subtle conception rooted in cognitive schemata referred to as "mental models" and is rather difficult to articulate.14 It is highly personal and hard to formalize, making it difficult to communicate or to share with others. Subjective insights, intuitions, and hunches fall into this category of knowledge.15

On the other hand, explicit knowledge is more easily transmitted as it is characteristically codified. As such, explicit knowledge is more easily processed and shared with others. Knowledge conversion initiates at the individual level as a "justified true belief" and is expanded through social interactions to include a diversity of perspectives that ultimately represent shared knowledge at the organizational level.

Tacit Knowledge as a Source of Competitive Advantage

Tacit knowledge underlies many competitive capabilities. The experience, stored as tacit knowledge, often reaches consciousness in the form of insights, intuitions, and flashes of inspiration. The marvelous capacity of your mind to make sense of your previous collection of experiences and to connect patterns from the past to the present and future is essential to the innovation process. "The creativity necessary for innovation derives not only from obvious and visible expertise, but from invisible reservoirs of experience."1

Tacit knowledge, or implicit knowledge, as opposite to explicit knowledge, is far less tangible and is deeply embedded into an organization's operating practices. It is often called 'organizational culture'. "Tacit knowledge includes relationships, norms, values, and standard operating procedures. Because tacit knowledge is much harder to detail, copy, and distribute, it can be a sustainable source of competitive advantage. What increasingly differentiates success and failure is how well you locate, leverage, and blend available explicit knowledge with internally generated tacit knowledge." Inaccessible from explicit expositions, tacit knowledge is protected from competitors unless key individuals are hired away.

Innovation Process: Diversion and Conversion of Ideas

"The process of innovation is a rhythm of search and selection, exploration and synthesis, cycles of divergent thinking followed by convergence". Divergence, or creative synthesis, is the interlocking of previously unrelated skills, or matrices of thought. The creation of such intellectual ferment is important to innovation - the more options offered, the more likely that an out-of-the-box perspective will be available for selection. Just hearing a very different perspective challenges the mindset of others sufficiently that they will search beyond what initially appears to be an obvious solution. This is a reason that intellectually heterogeneous cross-functional teams are more innovative than homogenous functional ones.

As soon as a sufficient choice of innovative ideas has been generated, a solution - convergence upon acceptable action - needs to be defined and agreed upon.

Confining the noting here to managing the tacit dimensions of knowledge three types of tacit knowledge - overlapping specific, collective, and guiding - need to be managed.

Managing Tacit Knowledge

Managing tacit knowledge is a significant challenge in the business world - and it requires more than mere awareness of barriers.

During the new idea generation - divergent thinking - phase, people create a wealth of possible solutions to a problem.