Understanding Knowledge Management: Prospects & Predicaments

Dr. Anjali Kalse, Prof. Mona Sinha, Dr. Henry Babu & Prof. Ritesh Kumar

Abstract:
This paper is an attempt to dwell into the area of knowledge management by way of
mapping out the concepts, definitions and history that surrounds the subject as controversial as
KM. The business case presented here clearly brings out how organization’s can realize tangible
and intangible benefits by practicing and internalizing knowledge management. The research
intentionally has not focused on technology-based KM, neither there is any inclusion of
academic dissonances and oppositions, rather a general perspective on what constitutes KM? ,
and how does KM helps in improving business outcomes, especially in a world that is
increasingly globalizing and where questions of integrating people and processes is becoming
even more challenging and intriguing.

Introduction to Knowledge Management: Concepts and Definitions

Executives in large organizations know that they must develop better techniques to
manage knowledge, which is increasingly becoming the greatest asset. Organizations currently
create and maintain knowledge in isolated systems targeted at specific workgroups. For users
outside of the workgroup, that knowledge is virtually visible. Their only options are to spend
time looking for it, recreate it, or do their job without it. Each of these options has a price: time,
energy and bad decisions. Innovative organizations are examining how they can better manage
their intellectual capital. This emerging field called, called knowledge management, addresses
the broad process of locating, organizing, transferring and more efficiently using the information
and expertise within an organization.

While defined in many different ways, knowledge management generally refers to how
organizations create, retain, and share knowledge (Argote, 1999; Huber 1991). While there are
many organizations undertaking knowledge management projects, there is dispute over what
exactly knowledge management is. Some in the field define knowledge management simply as
information that has value for action, but others, like Snowden (1999), maintain that knowledge
management is not that simple. He writes that it is the “identification, optimization, and active
management of intellectual assets, either in the form of explicit knowledge held in artifacts or as
trait knowledge possessed by individuals or communities.” Swan et al. (1999) explain that
knowledge management is about harnessing the “intellectual and social capital of individuals in
order to improve organizational learning capabilities, recognizing that knowledge, and not
simply information, is the primary source of an organization’s innovative potential.”
Knowledge management brings to mind many things to many people. But in a business setting, a
practical definition prevails.
Knowledge management is a process that helps organization identify, select, organize,
disseminate, and transfer important information and expertise that are part of the organization’s
memory and that typically reside within the organization in an unstructured manner. This
structuring of knowledge enables effective and efficient problem solving, dynamic learning,
strategic planning and decision making. Knowledge management initiatives focus on identifying
knowledge, explicating it in such a way that it can be shared in a formal manner, and leveraging
its value through reuse.
Processed

INFORMATION
DATA Relevant and KNOWLEDGE
actionable
Relevant and actionable data

Distinguishing Knowledge from Information:

Much of the confusion that surrounds knowledge management is due to scholars’ varied
opinions on distinguishing knowledge from information. The misconception that the two terms
are interchangeable can have disastrous effects in the business world. Snowden (1999) claims
that it is not necessary to define knowledge, but points out that it is important to distinguish it
from information. Other researchers find it necessary to have a thorough understanding of all
elements that make up knowledge management. Davenport, De Long, and Beers (1999) claim
that knowledge “is information combined with experience, context, interpretation, and
reflection.” Prusak (1999) describes knowledge as a human trait or attribute distinguishing it
from information in that only a human can obtain knowledge. For example, a bookshelf can
contain many volumes of books on a particular subject. It can be said that the bookshelf contains
a lot of information, but one cannot claim that the bookshelf is knowledgeable. Sveiby (1999)
carries the definition a little farther by describing it as an activity and a “process of knowing.”
The term activity brings up the notion of action, which Nurmi (1999) mentions in his definition
of knowledge:
Knowledge is something that is acted upon, that has an effect on the way things
are. We are not interested in information that lies passive on shelves, in files, or
in archives. A knowledge business is created when the know-how inside the firm
and the needs of customers outside the firm meet.
Nonaka (1994) writes that information is a “flow of messages, while knowledge is created and
organized by the very flow of information, anchored on the commitment and beliefs of its
holder.” He also maintains the most important element in knowledge is action.
Put succinctly, Knowledge management is the leveraging of collective wisdom to
increase responsiveness and innovation. This definition implies that three criteria must be met
before information can be considered knowledge:
Knowledge is connected. It exists in a collection (collective wisdom) of multiple
experiences and perspectives. Knowledge management is a catalyst. It is an action –leveraging.
Knowledge is always relevant to environmental conditions, and stimulates action in response to
those conditions. Information that does not precipitate action of some kind is not knowledge. In
the words of Peter Drucker, “Knowledge for the most part exists only in application.”
Knowledge is applicable in unencountered environments. Information becomes knowledge when
it is used to address novel situations for which no direct precedent exits. Information that is
merely plugged in to a previously encountered model is not knowledge and lacks innovation.

Basics of Knowledge Management: Organizational Knowledge Transfer

Polyani (1958) first conceptualized and distinguished between an organization’s tacit and
explicit knowledge. Explicit knowledge deals with more objective, rational, and technical
knowledge (data, policies, procedures, software, documents, etc). Tacit knowledge is usually in
the domain of subjective, cognitive, and experiential learning; it is highly personal and difficult
to formalize (Nonaka and Takeuchi, 1995).
Explicit knowledge is the policies, procedural guides, white papers, reports, designs,
products, strategies, goals, mission, and core competencies of the enterprise and the IT
infrastructure. It is the knowledge that has been codified (documented) in a form that can be
distributed to others or transformed into a process. For example, a description of how to process
a job application would be documented in a firm’s human resources policy manual. Moreover,
there is a simple relationship between the codification of knowledge and the costs of its transfer:
the more that knowledge is made explicit, the more economically it can be transferred (Tecce,
2003).
Tacit knowledge is the cumulative store of the experiences, mental maps, insights,
acumen, expertise, know-how, trade secrets, skill sets, understanding, and learning that an
organization has, as well as the organizational culture that has embedded in it in the past and
present experiences of the organization’s people, processes, and values. Tacit knowledge, also
referred to as embedded knowledge (Madhaven and Grover, 1998), is usually either localized
within the brain of an individual or embedded in the group interactions within a department.
Nonaka and Takeuchi (1995) claim that intangibles like insights, intuitions, hunches, gut
feelings, values, images, metaphors, and analogies are the often-overlooked assets of
organizations. Harvesting this intangible asset can be critical to a firm’s bottom line and its
ability to meet its goals.
Knowledge conversion: The organization gains only limited benefit from knowledge
isolated within an individual; to realize the full value of a knowledge asset it must be transferred
from one individual to another. Ikujiro Nonaka and Hirotaka Takeuchi describe four different
modes of knowledge conversion in The Knowledge Creating Company.11 Although the four
processes have been widely referred to, their names have varied in different representations of
Nonaka and Takeuchi.s work. They will be referred to here as: socialization, capture,
dissemination and internalization.
Socialization is the process of sharing experiences and is often done through observation,
imitation and practice. It occurs in apprenticeships and at conferences, as well as at the water
cooler. Capture is concerned with articulating tacit knowledge and turning it into an explicit
form, for example, writing a report on what you learned at a workshop. When you copy and
distribute the report, you convert knowledge from one explicit form to another, and
dissemination takes place. Internalization is the process of experiencing knowledge through an
explicit source. For example, you read a report about the workshop, mentally put yourself in the
situation and combine that experience with previous experiences.
A thorough understanding of these knowledge transfer processes is essential for discerning an
organization’s strengths and weaknesses. Organizations that have successfully implemented
knowledge management principles have used this as a guide to help them design new processes
for increasing knowledge capture and sharing.

History of Knowledge Management:

The study of knowledge dates back to ancient Greece. Even before that, knowledge was
at least implicitly managed as people performed work. Early hunters, for example learned the
best skills and practices for a successful hunt. These skills and techniques transferred from one
generation to the next. This illustrates the transfer of knowledge, a knowledge management
activity (Wiig, 1997).
The actual study of knowledge management is much more recent. Like the study of
communication, it has roots in many other areas of study—business, management, sociology,
and economics to name just a few. Drucker (1999) argues that knowledge management is based
largely on the work of Frederick Winslow Taylor, who studied manual workers. During the 19th
Century, economists argued about differences in the skill level of workers. When considering
productivity, they categorized workers as either hard workers or lazy workers. Taylor did not
agree with this line of thought and examined the inefficiencies in how workers performed their
jobs. He did this by recording motions necessary to accomplish the task and then eliminating
unnecessary steps and then designing or redesigning tools, if necessary, to assist the worker in
accomplishing his task. Taylor found that the traditional tools were not always the best tools for
the job, and he received input from the workers on what might work better. Taylor pointed out
that very little skill is involved in production. He claimed that what makes workers productive is
knowledge. (Drucker, 1999). While the names for this emerging discipline have changed and the
concepts and theories have evolved over the years from Taylor-Task Analysis to Task
Management to Scientific Management to Industrial Engineering, Drucker argues that Taylor’s
work is the foundation of knowledge management.
The Knowledge Chain
Fundamental to the practical definition of knowledge management is the concept of the
knowledge chain. The knowledge chain was first recognized by Koulopoulos. There are four
links in the knowledge chain that determine the uniqueness and longevity of any organization.
These four links are:
 Internal awareness
 Internal responsiveness
 External responsiveness
 External awareness
The knowledge chain (K-chain) is a series of interactions that constitute an organization’s cycle
of innovation. Knowledge management creates permeability between the four cells of the K-
chain and accelerates the speed of innovation.

The Need for Knowledge Management Systems:

The goal of KM is for an organization to be aware of individual and collective knowledge
so that it may make the most effective use of the knowledge it has (Bennet and Bennet, 2003).
KMSs are intended to help an organization cope with turnover, rapid change, and downsizing by
making the expertise of the organization’s human capital widely accessible. They are being built
in part from increased pressure to maintain a well-informed, productive workforce. Moreover,
they are built to help organizations provide a consistent level of customer service.

Create
Knowledge
Capture

Disseminate
Refine

Manage

Store
A functioning knowledge management system follows six steps in a cycle. The cycle works as
follows:
1. Create Knowledge: Knowledge is created as people determine ways of doing things or
develop know-how. Sometimes external knowledge is brought in.
2. Capture Knowledge: New knowledge must be identified as valuable and be represented
in a reasonable way.
3. Refine Knowledge: New knowledge must be placed in context so that it is actionable.
This is where human insights must be captured.
4. Store knowledge: Useful knowledge must then be stored in a reasonable format in a
knowledge repository so that others in the organization can access it.
5. Manage knowledge: Like a library, the knowledge must be kept current. It must be
reviewed to verify that it is relevant and accurate.
6. Disseminate knowledge: Knowledge must be made available in a useful format to anyone
in the organization who needs it, anywhere and anytime.

The Nature of KM as a Type of Activity or a set of Process

Knowledge Management is the set of processes that seeks to change the organization’s
present pattern of knowledge processing to enhance both it and its outcomes.
There are two knowledge processes: knowledge production, the process an organization
executes that produces new general knowledge and other knowledge whose creation is non-
routine; and knowledge integration, the process that presents this new knowledge to individuals
and groups comprising the organization.
 The Three-Tier Framework

Benefits of Knowledge Management Systems

Creating an enterprise-wide knowledge management system is not a simple task. However, the
benefits of a well-designed system are immense:
Awareness- Everyone knows where to go to find the organization’s knowledge, saving people
time and effort.
Accessibility- All individuals can use the organization’s combined knowledge and experience in
the context of their own roles.
Availability- Knowledge is usable wherever it is needed whether from the home office, on the
road or at the customer’s side. This enables increased responsiveness to customers, partners and
coworkers.
Timeliness- Knowledge is available whenever it is needed, eliminating time-wasting distribution
of information “just in case” people are interested.

Knowledge Management Practices

Knowledge management is a concept rooted in practicality and chiefly used in the
business world. According to Wiig (1997), people and organizations practice knowledge
management to achieve two main objectives. The first is to make the enterprise act as
intelligently as possible to secure its viability and overall success. The second objective is to
gain understanding of the best value of knowledge assets. While the primary users of
knowledge management reside in the corporate community, other organizations can benefit
greatly from the practice.

Case Study: KM PORTAL AT FRITO-LAY ASSISTS DISPERSED SALES TEAMS

The Problem
Frito-Lay, a $8.6 billion division of PepsiCo, Texas, had information scattered in
disparate systems around the country with no simple way for geographically dispersed sales
forces to access the same information. The vice president of customer development described the
situation as akin to having “knowledge trapped in files everywhere.” Different salespeople would
be requesting the same information, but there was no means of keeping track of frequently
requested information and data. For example, the corporate sales, marketing, and operations
staffs were often asked for information concerning private-label trends within snack categories.
These support staff found themselves gathering the same data again and again for different sales
people. In addition, each individual salesperson often had valuable knowledge stored on his or
her own laptop, which was not accessible to others. Not only that, but the ability to coordinate
with other salespersons was missing.

The Solution
Frito-Lay decided to implement a knowledge management (KM) portal on the corporate
intranet. The KM portal would enable a central point of entry for all sales-related customer and
corporate information. The portal would contain information such as sales, analysis, and news.
The portal would help reduce the time to locate information on products, sales, promotions, and
research.

The Results
The knowledge portal had both tangible and intangible results. For one, the portal has
enabled sales teams to achieve a faster growth rate. The sales team was able to share documents
concurrently online rather than having to fax documents to members dispersed around the
country. The KM also contributed to a sense of camaraderie. The portal provides a personal
touch for the teams, with information on team members’ birthdays, best practices, and a
messaging system that displays who is currently online. In addition, the portal helped reduce
turnover (Source; Adapted from Shein, 2001).
The case illustrates the importance of realizing value from centralizing access to
organization wide knowledge resources. The organization realized benefits in terms of growth
rate, retention, and morale.

Conclusion
Given the pace of globalization, increasing competition, increasing focus on customers,
Knowledge management holds the prospects for future to be more promising, nonetheless there
are obvious predicaments as whether knowledge management could be sustained for a future that
is not predictable and the present is in flux. Discounting the tensions hovering over the future,
Knowledge management has enabled organizations to become more resilient and robust even
during the most turbulent times like the recent recession.
Bibliography:
Allee, V. (2003), The Future of Knowledge, Burlington, MA: Butterworth-Hienemann, 2003.
Argyris, C. (1993). Knowledge for Action, San Francisco, CA: Jossey-Bass.
Davenport, T. and Nohria, N. (1999), “What’s your strategy for managing knowledge?”, Harvard
Business Review, March-April, pp. 106-16.
Koenig, M.D. and Srikantaiah, T.K. (2000a), “The evolution of knowledge management”,
Information Today Inc., Medford, NJ, pp. 37-61.
Malhotra, Y. (1998c), “knowledge management, knowledge organizations and knowledge
workers: a view from the front lines”, Maeli Business Newspaper, February 19, 1998.
Nonaka, I. and Takeuchi, H. (1995), The Knowledge-Creating Company, Oxford University
Press, New York, NY.
Popper, K.R. (1972), Objective Knowledge, London, England: Oxford University Press.
Senge, P. (1990). The Fifth Discipline, New York, NY: Currency Doubleday.