Knowledge management (KM) refers to an organization's strategic efforts to gain a competitive advantage by capturing and using the intellectual assets held by its employees and customers. Efforts to archive best practices and lessons learned, and to make better use of information stored in databases, also fall under the rubric of knowledge management. Advocates of knowledge management believe that capturing, storing, and distributing knowledge will help employees work smarter, reduce duplication, and ultimately produce more innovative products and services that meet the customers' needs and offer a good value.
If a company knows something (e.g., changing tastes of the customers, innovative solutions to international tax issues, or how to use information systems to better monitor production processes) that its competitors do not, then that company has an opportunity to offer a distinguishing product or service. Knowledge management, as a business practice, impacts the entire organization by helping employees, managers, and executives share information and best practices that positively impact collective performance. Unlike downsizing, which emphasizes the reduction and control of costs (often through attrition and layoffs), knowledge management is a value-adding practice that seeks to enhance profits, innovation, and decision making by providing more and better information to every member of the organization.
To better understand why knowledge has become a critical factor in businesses, we need to understand that the United States and many other industrial countries are moving toward a knowledge economy. A knowledge economy is one where a majority of workers spend their day applying know-how to the production of goods and delivery of services. In a knowledge economy, employees work to improve decision-making, design, and delivery processes, while only a limited number of people are involved with the actual manufacturing of goods. Important questions that we might ask about a knowledge economy include:
- How many people now spend their day applying knowledge?
- How did the change to a knowledge economy come about?
- How do organizations go about managing knowledge?
American labor trends indicate that the percentage of people working in an information-intensive capacity is increasing while the number of people working in agriculture, manufacturing, and nonprofessional service industries is decreasing.
The rapid increase in knowledge-intensive work is often attributed to communication technologies, and especially digital technologies, that allow employees to transfer or access large amounts of data in minutes. Since the end of World War II, the world has seen the invention of the first programmable computer, satellite technology, fax machines, microprocessors, floppy disks, portable computers, cellular telephones and pagers, and the World Wide Web. All of these technologies are historically important because they allow great quantities of information to be shared with partners who are geographically separated from us and who, using earlier technologies, might have had to wait hours, days, or even weeks to receive information. Technology has, in effect, brought people closer together by allowing voice, text, and images to be rapidly transmitted across great distances.
Recognizing that knowledge systems are usually based on local area network (LAN) or Internet technology, several critical questions arise when an organization attempts to implement a knowledge management system. First, how do you measure the value of a knowledge management system? Like soft-skills training, many organizations and experts are struggling to measure the value added by a knowledge management system. For example, the value of new technology in a manufacturing plant can be measured with relative accuracy and be said to decrease production costs by a certain amount per unit. Knowledge management systems, however, commonly do not have such a direct impact on operations. How can we accurately measure value of having immediate access to information that improves decision-making or strategy?
Another problem is, how do you create an organizational culture that values sharing? The old adage “Information is power” exemplifies the cultural reasons why knowledge management systems can be challenging to implement. Traditionally in the United States, employees have been recognized and rewarded for individual effort and achievement. Collaborative effort and cooperation have not traditionally been rewarded. Consequently, implementing a knowledge management system may likely require that an organization reassess the values by which business is conducted, the performance evaluation instruments, and the pay/bonus structures so that employees see ample incentive to share knowledge and cooperate throughout the organization.
How much information is too much? Information overload is a concern in organizations that are developing a knowledge management system. What information do we attempt to capture and make available? What information do we overlook? In large organizations, the answers to such questions can have a dramatic impact on the quantity and quality of information available to employees.
TACIT AND EXPLICIT KNOWLEDGE
Many knowledge management activities in business involve finding sources of tacit and explicit knowledge, and changing
tacit knowledge to more useful, explicit forms. Tacit knowledge is static: it consists of ideas, experiences, and data that reside in particular sources and are not often communicated. Usually, tacit knowledge is contained by employees; it is knowledge that workers have but do not share, either because the worker does not think their knowledge is important or because there is not an available communication channel to move that knowledge along to other members of the company. Other forms of tacit information may include unaccessed files or third-party analysis that has not been reviewed. Tacit knowledge is considered especially important in innovation, where latent talents and ideas that employees have can have great impact on new products or processes the company is seeking.
Explicit knowledge is available to other people: this type of knowledge, rather than residing in specific employees, has been integrated into the company as a whole. It can be accessed by anyone who requires the knowledge for their activities, and it is usually vital to the success of the company. Examples of explicit knowledge include manuals, presentations, and company reports. Databases and all data-compounding techniques deal with extracting explicit knowledge from information reservoirs. This type of knowledge is much more useful than tacit knowledge because it is available for application.
How can a company make tacit knowledge into explicit knowledge and gain competitive advantage from it? There are many methods. Some companies, especially prospector-types, willingly ask for employees' knowledge and opinions to better innovate new business techniques. Other companies, more defender based, hold all knowledge in higher management and work to collect and distribute executive knowledge. Most businesses are a combination of the two. However, some types of tacit knowledge cannot be expressed to multiple people. Employees may have a certain know-how or various insights or intuitions that cannot be quantified. For this type of tacit knowledge, the best employers can do is develop strong communication channels and highlight skilled employees who have a wealth of the more intangible knowledge assets.
The most difficult step in transforming tacit knowledge to explicit knowledge is collecting it from employees. Companies can set up collaboration initiatives at regular intervals to give their employees a chance to share their experiences and make collection easier. In service-related businesses, a step can be put into place to gather and submit employee opinions every time a transaction is carried through (this could also be done at timed intervals). Once tacit knowledge is collected, it is categorized, streamlined, and turned into explicit knowledge available to the entire company.
KM AND INTRANETS
One of the most common ways for businesses to distribute explicit information is through the company intranet. The efficiency of the information channels in the intranet depends on how the knowledge is filed and shared. There are two primary schools of thought concerning the management of intranet knowledge. The first, more common belief proposes that the company intranet should be structured with a clear center, a hub of information that employees can access based on need and position. The second school of thought believes that knowledge is healthier and more naturally updated when it is available to everyone. These analysts propose that company intranet systems are more functional when information is available to everyone and freely accessed from any level.
Since employees spend so much time using the intranet system to trade knowledge, companies should be careful in how they categorize and manage intranet information. Is intranet knowledge well-organized, easy to find, and based on employee need? Do employees know about all the sources ofknowledgeontheircompany'sintranet? Is there a training program in place for using all intranet systems? A 2008 study by Chaudhry, Ali, and Abadi in the Journal of Knowledge Management Practice gives several suggestions to improve intranets as a knowledge management tool, including:
- Redesign the user interface. Switching colors, fonts, and font sizes can aid readability for employees and help them absorb information more quickly.
- Conduct spring cleaning initiatives for the company intranet. Studies have shown that many documents are duplicated or refiled unnecessarily. Cleaning exercises also allow companies a chance to be sure that all files are formatted correctly and standardized according to company policy.
- Allow more online transactions. Employees can benefit by exchanging knowledge with each other, and transferring information over the intranet can be a much more efficient tool than using instant messaging or e-mail.
- Consistently update information. Some employees find their intranet systems to be filled with extra information they did not need. Updating information should include not only filing new information but cleaning out outdated information as well.
- Improve search systems. Most employees search the intranet systems by keyword. This can lead to complicated results, and companies can increase efficiency by creating better keyword search engines.
- Appoint a manager to be in charge of the intranet, so that they can implement changes, design regulations, and oversee necessary organizations.
KM strategies have long made use of knowledge maps, or visual representations of the pools of knowledge within
companies, who has access to them, and what other groups they affect. KM workers find knowledge maps useful for giving overviews of explicit knowledge, and finding particular pieces of information faster. There are a number of different types of knowledge maps, used for different purposes. The top four types of maps are:
- Concept maps. The concept map is a simple version of knowledge mapping, dividing the information groups into clear categories and showing relevant connections with circles and lines. These are usually made with a main body of knowledge and several branching groups, and are used in teaching and presentation formats. Unfortunately, it can be difficult to show processes with several related steps in concept mapping.
- Mind maps. These flexible, intuitive-based maps are used to express tacit knowledge for the benefit of other people, or for review. These can be more than one color and consist of interlaced connection with multiple central headings. These connections are often based on semantics or hierarchal structures. Mind maps can be developed into more structured maps further on in development.
- Conceptual diagram. These maps are one of the most complicated, involving many titles with textual definitions. Conceptual diagrams are most often used when there is a predetermined topic that needs extensive explanation.
- Visual metaphor. Visual metaphors use some sort of preexisting structure—a story, graphic, animal, or identifiable object—to communicate meaning in an easy way to understand. Visual metaphors help people remember key connections for certain topics. Visual metaphors should be chosen carefully for their association value.
SEE ALSO Electronic Commerce; Electronic Data Interchange and Electronic Funds Transfer
Chaudhry, Abdus Sattar, Nor Ainah Ali, and Damayanti Iyan Abadi. “Exploiting the Potential of Intranets for Managing Knowledge in Organizations.” Journal of Knowledge Management Practice. 9, no. 2, 2008. Available from: http://www.tlainc.com/articl153.htm
Ed. Cohen, Eli.Setting Knowledge Free: The Journal of Issues in Informing Science and Technology. Informing Science, 2008.
Hamza, Salah Eldin Adam. “Competitive Advantage Via a Culture of Knowledge Management.” Journal of Knowledge Management Practice. 9, no. 2, 2008. Available from: http://www.tlainc.com/articl153.htm.
———.Harvard Business Review on Knowledge Management. Boston: Harvard Business School Press, 1998.
Huotari, M.L., and M. Iivonen. Trust in Knowledge Management and Systems in Organizations. Hershey, PA: Idea Group Publishing, 2003.
‘Lystra, Miltiadis. Knowledge Management Strategies: A Handbook of Applied Technologies. Idea Group Inc., 2008.
Malhotra, Y. “Integrating Knowledge Management Technologies in Organizational Business Processes: Getting Real Time Enterprises to Deliver Real Business Performance.” Journal of Knowledge Management 9, no. 1 (2005): 7–28.
Stewart, Thomas A. Intellectual Capital: The New Wealth of Organizations. New York: Doubleday/Currency, 1997.
Vouros, G.A. “Technological Issues Towards Knowledge-Powered Organizations.” Journal of Knowledge Management 7, no. 2 (2003): 114–127.
"Knowledge Management." Encyclopedia of Management. . Encyclopedia.com. (August 21, 2017). http://www.encyclopedia.com/management/encyclopedias-almanacs-transcripts-and-maps/knowledge-management
"Knowledge Management." Encyclopedia of Management. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/management/encyclopedias-almanacs-transcripts-and-maps/knowledge-management
Due to the wealth of information, the knowledge explosion, and the rapid development of information and communication technologies at the start of the twenty-first century, it is essential to handle complex information and knowledge intelligently and responsibly. Therefore, it is necessary to manage knowledge on an individual as well as on an organizational level. Knowledge management basically encompasses the deliberate and systematic handling of knowledge and the precise use of knowledge in organizations (companies, schools, universities etc.). However, if knowledge management is to be established as a long-term strategy, it must address the following factors simultaneously: individual, organization, and technology.
In most cases an organization's involvement with knowledge management is not the end in itself but connected to specific goals, that can be deduced from the organization's superordinate goals, either directly or indirectly. In other words, to be economically justifiable, knowledge management has to contribute added value to the organization's efforts to meet its overacting goals. This "value added" must be specific and measurable in relationship to organizational goals and their achievement.
Basics of Knowledge Management
The formulation of knowledge goals is the starting point of knowledge management on an individual as well as on an organizational level. The process of knowledge evaluation can be seen as the end of the knowledge management processes. There is a feedback look from evaluation to goals in that the results of the evaluation may lead to changes in the knowledge goals. A wide range of possible tasks and processes are relevant between goal setting and evaluation. These can be grouped into four kinds of processes that are closely connected and interactive: knowledge representation, knowledge communication, use of knowledge, and development of knowledge. These categories describe the knowledge management processes on an individual as well as on an organizational level.
Knowledge goals. The formulation and identification of knowledge goals is necessary to provide the initial direction for the knowledge management activities. Carefully planned knowledge management processes are the basis of knowledge goals on an individual as well as on an organizational level.
Evaluation. Evaluation can be seen as the final stage of the four knowledge management processes. On both an individual as well as on an organizational level it is necessary in evaluation to estimate if the knowledge goals have been reached within this context.
Knowledge representation. Knowledge representation describes the process of knowledge identification, preparation, documentation and actualization. The main goal of this category is to transform knowledge into a format which enhances the distribution and exchange of knowledge.
Knowledge communication. In knowledge communication, processes are combined which concern the distribution of information and knowledge, the mediation of knowledge, knowledge sharing, and the co-construction of knowledge, as well as knowledge-based cooperation. These activities necessitate two or more people communicating directly, indirectly face-to-face, or in a virtual environment.
Development of knowledge. The development of knowledge includes not only processes of external knowledge procurement (i.e. through cooperative efforts, consultants, new contacts, etc.) or the creation of specific knowledge resources like research and development departments. The formation of personal and technical knowledge networks are also part of the development of knowledge.
Use of knowledge. Use of knowledge focuses on the de facto transformation of knowledge to products and services. This category is of special interest because it shows the effectiveness of the preceding actions in the range of the categories such as knowledge representation, knowledge communication and development of knowledge.
Knowledge Management in the Organization
With the goal of knowledge management to develop the potential for learning of individuals and organizations by developing, exchanging, and using knowledge, knowledge management can be seen as a prerequisite for innovations in organizations.
In this context knowledge management is often regarded as a concept and instrument for the realization of the metaphor of the learning organization. Concepts regarding the learning organization emphasize almost the same goals as knowledge management; but in actuality knowledge management can be regarded as a prerequisite for the creation and maintenance of a learning organization. If an organization (company, school, university etc.) is able to handle its knowledge resources well, it can react to shifts in the marketplace faster and more flexibly. Thus it demonstrates its capability to learn. The learning ability of employees provides a major competitive advantage in the framework of the increasing market pressure. In this context, individual and team-based learning are as important as the documentation and distribution of knowledge within an organization.
Knowledge Management and the Individual
The individual as the initial point of knowledge management has been neglected, especially as knowledge management has become a topic important in the business world. Most companies at first relied on technology-based knowledge management, which has mostly led to the implementation of databases.
On the basis of an intensive analysis of the subject of knowledge management, the conclusion can be drawn that most attempts to manage the resource of knowledge have failed. Today it is clear that knowledge management approaches can only be successful if the individual plays a major role in the process. But it is the individual acting as a member of a community that is critical. Etienne Wenger introduced the idea of communities of practice in the workplace as providing added value to companies. According to Wenger, a community of practice is a community in which the members are informally bound by what they do together and by what they have learned through mutual engagement in these activities. Communities are highly self-organized, and it is the responsibility of the members to control the community and distribute the work among its members. Thus self-management, communication skills, the capacity for teamwork and the handling of knowledge are valuable skills for the members of communities. These individual knowledge management competencies are not only important in the range of communities but also for life in a knowledge society. To be able to cope with the new challenges of a knowledge society these skills become core competencies of every individual.
Knowledge Management in Formal Education
It is the task of schools and universities to provide students with basic knowledge management skills needed for life in a rapidly changing society. However, the traditional system of schools and universities does not meet the requirements of a knowledge society. Schools and universities should be transformed into learning organizations where knowledge management comes to life. The core aim should be the mediation of deep understanding of topics and the development of individual knowledge management skills. This new orientation requires a holistic change process in schools. In schools the analog of communities of practice is learning communities. Learning communities offer multifaceted possibilities for the integration of knowledge-management processes in schools and universities. Communities can be developed among the learners within the school. Thus long-term and deep engagement with a topic, inter-disciplinary learning, and the development of social skills can be facilitated. At the same time, the exchange of knowledge between the teachers can be stimulated by implementing communities among teachers. In this context the initiation of a community that reaches out over the school boundaries can further enhance this process of knowledge sharing and mutual learning.
Issues in Implementation
In this context the question arises of how the implementation of knowledge management processes to organizations can be facilitated. Within the field of knowledge management, research activities are still limited primarily to case studies. On the basis of several case studies with focus on small and medium-sized companies, six critical success factors for the implementation of knowledge management processes have been found. These factors can also be applied to different kinds of organizations (companies, schools, universities, etc.).
Corporate culture. Successful implementation of knowledge management is closely related to the corporate culture. However, these cultural changes need time. In the context of the implementation of knowledge management activities, it is important to know how knowledge management initiatives interact with the culture and to determine how the culture should be changed.
Qualification of employees. The competencies and motivation of employees strongly influence the success of knowledge management. Thus human resource development and the design of incentive-systems are highly important.
Learning culture. The implementation of knowledge management can be seen as a step-by-step learning process which has to be nurtured.
Management support. Knowledge management activities only have the opportunity to be successful if they are supported by the executive board.
Integration of knowledge processes to organization's processes. It is important to connect knowledge management closely to the organization's processes in order to gain acceptance and for reasons of economical legitimacy.
New information and communication technologies. The implementation of knowledge management does not necessarily have to be connected to an investment in new information and communication technologies. The potential for such technologies evolves only if the cultural and organizational conditions exist.
To confirm and empirically verify these findings further research–basic as well as applied research–is needed in the field of knowledge management. Basic and applied research should be closely connected. Moreover, research questions should be oriented on authentic and current problems. Research initiatives on knowledge management should be designed to be interdisciplinary and extremely precise. Furthermore they should be based on a wide range of methods.
See also: Learning, subentry on Knowledge Acquisition, Representation, AND Organization; Science Learning, subentry on Knowledge Organization and Understanding; Teaching, subentry on Knowledge Bases of.
Bielaczyc, Katerine, and Collins, Allan M. 1999. "Learning Communities in Classrooms: A Reconceptualization of Educational Practice." In Instructional Design Theories and Models. Volume II: A New Paradigm of Instructional Theory, ed. Charles M. Reigeluth. Mahwah, NJ: Erlbaum.
Davenport, Thomas H., and Prusak, Lawrence. 1998. Working Knowledge: How Organizations Manage What They Know. Boston: Harvard Business School.
Gibbons, Michael; Limoges, Camille; Nowotny, Helga; Schwartzman, Simon; Scott, Peter; and Trow, Martin. 1994. The New Production of Knowledge: The Dynamics of Science and Research in Contemporary Societies. London: Sage.
Goldman, Susan R.; Bray, Melinda H.; Gause-Vega, Cynthia L.; and Zech, Linda K. 1999. "A Learning Communities Model of Professional Development." Paper presented at the 8th Conference of the European Association for Research on Learning and Instruction, Göteborg, Sweden.
Scardamalia, Marlene, and Bereiter, Carl. 1999. "Schools as Knowledge-Building Organizations." In Developmental Health and the Wealth of Nations: Social, Biological, and Educational Dynamics, ed. Daniel P. Keating and Clyde Hertzman. New York: Guilford.
Wenger, Etienne. 1999. Communities of Practice: Learning, Meaning and Identity. Cambridge, Eng.: Cambridge University Press.
"Knowledge Management." Encyclopedia of Education. . Encyclopedia.com. (August 21, 2017). http://www.encyclopedia.com/education/encyclopedias-almanacs-transcripts-and-maps/knowledge-management
"Knowledge Management." Encyclopedia of Education. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/education/encyclopedias-almanacs-transcripts-and-maps/knowledge-management
Although knowledge management assumes a variety of meanings depending on the context, the most basic idea behind knowledge management is the sharing of knowledge and information in an efficient and productive manner. As the Information Age, and particularly the Internet, dramatically expanded the wealth of information available and necessary to companies' operations, the efficiency of information and knowledge flow, through and between firms, in the knowledge-centered economy grew into a paramount concern. Computer and information technology developed in the 1980s and 1990s forced a shift of the field of competition to these grounds, and thus firms hoping to remain competitive needed to take account of how their knowledge is used within their organizations.
Knowledge management emerged as a central concern among businesses in the late 1980s and early 1990s, although the field itself dated back to the 1970s, when researchers at Stanford University and the Massachusetts Institute of Technology collaborated on a study of information transfer within organizations. By the late 1980s, the field had developed to such an extent that industry observers grew increasingly aware that businesses needed to take notice in order to utilize their resources efficiently and remain competitive. The increasingly global nature of major companies, along with corporate downsizing and restructuring, also brought with it a massive turn toward knowledge management as companies strove to eliminate redundancy and coordinate its efforts over a broader area. Knowledge management, by the turn of the 21st century, had emerged as one of the chief concerns of most major companies, with more than half of the Fortune 1000 firms expected to implement knowledge-management systems by 2003, according to the Gartner Group, and with many of these companies devising new positions within their ranks for knowledge managers.
In the field of knowledge management, theorists distinguish between information and knowledge. Information and data are the unprocessed mass of material available to a company for scrutiny, while knowledge has been processed and put to a practical use. Thus, information cannot be used to solve a problem until it has been intelligently processed and converted into knowledge. For example, a company may design a database to extract knowledge from a mass of information; knowledge management then seeks to implement that knowledge in the best possible manner to advance the company, determining how that knowledge can continue to be accessed, used, and manipulated.
Knowledge management aims at the elimination of redundancy in the company, as when two employees in different departments duplicate each other's actions by devising solutions to the same problem. By pooling the company's resources and working to retain knowledge within the company and enhance the flow of information, firms can realize substantial gains in an area to which investors were paying increasing attention.
As knowledge management proved an increasingly central concern among companies and IT managers, it spawned a vibrant industry of software builders and service providers designed to help businesses make the best use of their intellectual capital and capitalize on its promise. At the most basic level, companies install identical, or at least compatible, software on their computers, particularly for communications applications, and install an intranet (sometimes described as a network linking the computers), within a company to a central server.
Companies typically build knowledge management systems around this centralized network, which sorts and makes accessible to its employees all the available repositories of knowledge in searchable and sharable formats. In this way, particular problems require solving only once, after which employees in different departments or divisions need only access the knowledge-management network and search for a particular kind of solution, thereby eliminating the duplication of efforts. Moreover, employees can build on accumulated knowledge bank to devise solutions to new problems, rather than being continually forced to start from scratch. To aid this process, companies may wish to quantify and classify their problem-solving techniques and approaches to various business situations, and take an inventory of the kinds of expertise existing among the employee ranks. In addition, many companies establish an entire digital library to store all vital documents and the available knowledge accumulated through these means.
Knowledge management is not, however, just a series of technological innovations. For a company to truly reap the benefits of knowledge management, it must be an integral part of the corporate culture. That is, the internal practices, communications, structures, habits, and atmosphere of the company must be conducive to the kind of knowledge sharing on which knowledge management depends. Employees must be encouraged to share knowledge between them, either informally or by having them work in teams that continually interact, and employers must remain open to accepting ideas from and continually interacting with their subordinates. In short, the company must feel comfortable with the sharing of knowledge, and individuals must feel that they will be rewarded even if their ideas are disseminated throughout the company.
Birkinshaw, Julian. "Making Sense of Knowledge Management." Ivey Business Journal, March/April, 2001.
Doucet, Kristin. "Know What You Know." CMA Management, March, 2001.
Johne, Marjo. "What Do You Know?" CMA Management, March, 2001.
Krogh, Georg von, and Johan Roos, eds. Managing Knowledge. London: Sage Publications, 1996.
Ruber, Peter. "Keep the Knowledge You're Paying For." Information Week, October 30, 2000.
SEE ALSO: Data Mining; Intellectual Capital
"Knowledge Management." Gale Encyclopedia of E-Commerce. . Encyclopedia.com. (August 21, 2017). http://www.encyclopedia.com/economics/encyclopedias-almanacs-transcripts-and-maps/knowledge-management
"Knowledge Management." Gale Encyclopedia of E-Commerce. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/economics/encyclopedias-almanacs-transcripts-and-maps/knowledge-management