Knowledge Management

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.

KNOWLEDGE MAPS

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

BIBLIOGRAPHY

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.