Why Knowledge Management?
In a globalized economy, companies are facing stiff competition as consumers are enjoying an unprecedented array of choices for goods and services across the globe. It is the agile responsiveness with which businesses can deliver services to customers that has become the key determinant of survival. Research reveals that intelligence gathering and market intelligence have enabled many Japanese companies to succeed. That is how knowledge management has taken center stage in collecting bits and pieces of information relating to customers and competition in the market and synthesizing it into a ready-to-use information to face the competition.
Knowledge management essentially aims at value addition to users. It leads not only to improvement and innovations in the existing operations but also value addition to the existing pool of organizational knowledge by filtering, synthesizing and interpreting the knowledge through making use of feedback from the users. Unless it goes beyond mere search and acquisition of knowledge, it cannot play a significant role in achieving organizational efficiency. In this context, it is ‘collaborative technology’ rather than the information management tools that are found to be competent to deal with knowledge management.
There is yet another fear among the organizations: a fat lot of tacit knowledge that exists only in the minds of people is often found walking away from the organizations as people leave them for one reason or the other. Similarly, ‘downsizing’ which is resorted to by companies as a cost reduction exercise has also resulted in ‘knowledge scarcity’. It is to capture and retain such critical knowledge within the organization, that knowledge management has become a must. The importance of knowledge management in organizations has been well captured by Stewart in his statement: knowledge has become the primary ingredient of what we make, do, buy and sell. As a result, managing it – finding and growing intellectual capital, storing it, selling it, sharing it – has become the most important economic task of individuals, businesses and nations.
2. Knowledge Management: What is Important?
Knowledge Management is essentially concerned with both explicit and tacit knowledge. Explicit knowledge is however of low strategic value for creating sustainable competitive advantage for the organization, since it is commonly available to everyone. But the ability to apply explicit knowledge to a given process or a product or a service development can make it valuable, for it effectively converts it into tacit knowledge of the organization, which, over a period of time, becomes exclusive knowledge of the organizational members.
Tacit knowledge, on the other hand, is really subjective and intuitive, highly personal, highly specialized, and organizationspecific. Therefore, it is hard to codify and distribute among the people. It can only be shared with other members of the team/organization in the form of shared habits and intuitions as its owners demonstrate it through action. It thus remains within the organization as a potential source of sustainable advantage for the company. Tacit knowledge, according to Nonoka and Konno (1998), can be split into two elements: one, technical – skill or abilities that are creative out of experience or knowledge, and two, cognitive – creation of models of different business views expressed as hunches, insights or intuitions. It is by making and manipulating analogies or images in their minds that employees create new experiences and thus acquire new knowledge. It is through “the process of transforming and enriching information and tacitly integrating the details”, that individuals acquire new knowledge. It is essential to remember here that new knowledge does not automatically come to an individual, for it is the interactions with others and their contributions that stimulate joint production of knowledge and the synergy emerging thereof will be more than the sum of the individual contributions.
It is this possession of tacit knowledge by individuals in the organization that poses a question: How to release that tacit knowledge and make it explicit for the use of others in the organization? This raises a supplementary question: Do employees expect any return for such sharing and if so, what is that? It is commonsensical that knowledge is ‘power’ for employees. Therefore, they do not normally share it with others, for it lessens their bargaining power in the organization. It means that they expect rewards to share their tacit knowledge with other employees to make it explicit. Researchers indicate that “commitment” and “trust” are the two most important things that employees look for in the organization, besides scope for professional development. So, what importantly emerges now is that organizations must create opportunities and such reward structures which encourage employees to make their private knowledge public – convert tacit into explicit knowledge for the good of the organization.
3. Knowledge Management
In its simplest form, knowledge management can be described as “connecting people to people and people to information to create competitive advantage.” It is about applying knowledge assets owned by a company for creating a competitive advantage. According to Stephen Denning (2000), it might be seen as comprising multiple dimensions, including knowledge strategy, communities of practice, help desks, knowledge bases, knowledge capture, knowledge storage, knowledge dissemination, knowledge taxonomies, quality assurance, authentication procedures, budget incentives and knowledge measures.
Essentially, it is concerned with two main functions: one, creation of knowledge and two, storage, use and reuse of knowledge. Knowledge creation is a process of value addition to the existing knowledge. It means that the more the organization has of it, the more it is likely to generate. Simply put, knowledge creates knowledge and, in the process, bestows competitive advantage on its owners.
3.1 Knowledge Creation
Rob Sharkie (2004) developed a cyclical model of knowledge creation, in which he showed an employee in the knowledge creation process moving through four phases and, then, into a spiral that represented an improved level of knowledge, skills and attitudes which enabled him to contribute more in the knowledge exchange forums.
The critical component of the model is the “knowledge-sharing filter”, which can function positively, reflecting a favorable climate of the organization for creating knowledge or negatively stalling such conversion of tacit knowledge into explicit knowledge. Let us now move into the details of the model:
Phase – I: Knowledge Presage
As a first step in knowledge creation, the organization has to study the background of the individual participant in the knowledge sharing process. It shall look for the forces that enabled the employee to acquire knowledge and predisposed him to contribute to the knowledge creation process. The presage factors are again of two types: intrinsic and extrinsic. Cumulatively, they influence the willingness of the employee to participate in the knowledge creation process.
Phase – II: Knowledge Sharing Filter
It is the organizational culture, which represents its policies and practices, traditions, philosophical beliefs and ways of doing things that encourage or discourage employees to share their knowledge with others. If participants perceive the culture as favorable, they would be more willing to share and thus move through the filter into the next phase of knowledge creation and vice-versa.
Therefore, maximization of knowledge creation requires a trusting, caring and non-threatening culture in the organization. The organization must also create a knowledge-centered vision and provide support systems that continually challenge the fundamental values of the organization, calling for continuous adjustments from the employees. It is the organizational intent that ultimately fosters the employee’s commitment for knowledge creation and acquisition. Secondly, it is the vision which encourages managers to create such an atmosphere in which employees enjoy autonomy, and in which their individual opinions are encouraged. This, in turn, facilitates cultivation of a questioning attitude at workplaces which is sure to result in knowledge creation.
Phase – III: Knowledge Exchange Forum
In this phase, through interaction, people, groups, and teams share their knowledge and personal beliefs. This phase crystallizes knowledge through interaction at the group level. This phase may come across the usage of metaphors and analogies as a means to convey individual experiences. It is possible that during discussions under this phase, conflicts and disagreement may arise, but with discussion and argument, group members tend to absorb new ideas. Absorption of new deas means giving a new sense to one’s own experiences leading to fresh ways of thinking. Thus, new conceptual knowledge is generated.
Phase – IV: Internal Interaction with Existing Ideas
In this phase, individual employee draws out ideas from discussions in the group and internalizes them. Such internalization, in turn, creates new conceptual knowledge. This happens, only when the individual subjects the new ideas so acquired to an internal interaction with his own insights, intuitions, experiences and hunches. It is only with the individual integrating the new information with his existing knowledge, that the creation of new knowledge starts. Cumulatively, it develops a sustainable competitive advantage for the organization.
3.2 Storage, Use and Reuse of Knowledge
To make every employee use the new knowledge so converted from tacit to explicit, it must be captured, stored and made available for everyone. The capturing process is no doubt difficult as seen in the preceding paras, but, when successfully executed, it ensures retention. And technology facilitates its storage. Tools such as database management systems, text retrieval systems, document management systems, data warehousing, intranets, knowledge portals, etc., help organizations store and retrieve knowledge. Knowledge portals are today fast growing as integrated sets of knowledge management enabling tools. A knowledge portal enables companies to access internally and externally stored knowledge and provides users with a single gateway to required information for making informed decisions.
Making knowledge available for usage doesn’t mean that the employees would access it for their use. It is only the ‘intrinsic motivation’ of employees to learn new things that propels them to access new knowledge. It means that organizations have to create knowledge communities, that have a shared interest in executing a given task, so that they can voluntarily access new knowledge and generate interactions leading to internalization of new knowledge. The other way of making employees use stored knowledge is through external intervention. And that is where HRM function becomes critical: it provides necessary incentives/rewards to users, depending on value addition noticed and thereby ensures their seeking new knowledge.
One such best example for distribution of knowledge among the workforce is the Yokoten System – a method of documenting and distributing knowledge – put in operation at Toyota. Under this model, every team or workgroup contributed to a library of problem reports, that was made accessible to every employee. Yokoten acted as a simple, yet useful knowledge management device which transferred knowledge from the individual to the organization.
Toyota has also developed another mechanism – suggestionscreening system. It has helped prioritize the best practices depending on potential impact, advantages and complexity of implementation. Appreciating the system, Larry Prusak, Director, IBM Institute for Knowledge Management, remarked, “Knowledge sharing means the freedom to ask questions. At Toyota anyone on an assembly line can ask a question. They type it into a terminal whereupon it is flashed on to a large display visible to the whole floor. Anyone can answer the question.”
Toyota has also used a Web-based software tool called Analytical Problem Solving (APS) to help employees collect problem data, find the root cause of the problem, and develop countermeasures. This tool helps employees ascertain if the same problem had happened before, and, if so, solve it rapidly by adopting the earlier used solution. This has improved the efficiency levels in problem solving, besides enabling the users to get coaching throughout the process of problem solving. Secondly, the “library” function and the “reporting” function of the software help the management review the process used to solve a problem and identify trends. This system uses a question-based model to trace the root cause of the problem. Once the problem is identified, it is entered into the database for future reference.
The system bifurcates problems reported into two groups: one, open problems – that have not occurred earlier, and two, problemst hat have earlier been solved. It thus reduces problem-solving time, retains problem-solving knowledge and reinforces the company’s Sensei system, by optimizing the productive time of its expert consultants. Toyota, thus, leverages excellently “Web-based as well as conventional techniques to link and exploit the distributed knowledge found in the company’s various communities of practice.”
-- to be continued
 Stewart, T A (1997), Intellectual Capital, London, Nicholas Brealey Publishing.
 Denning, S (2000), The Springboard: How Storytelling Ignites Action in Knowledge-Era Organizations, Butterworth-Heinemann.
 Rob Sharkie, “A Knowledge Creation Model: Harnessing, Managing and Utilizing Knowledge for Competitive Advantage”, Int. J. Learning and Intellectual Capital, Vol. 1, No. 4, 2004.
 Adapted from the Case Study – “Knowledge Management Practices at Toyota Motors” by Shirisha Regani, Former Faculty Associate, The Icfai Center for Management Research and Sanjib Dutta, Senior Faculty Member, The Icfai Center for Management Research, Case Folio, May 2006.
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