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Knowledge Management

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 structurea story, graphic, animal, or identifiable objectto 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): 728.

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): 114127.

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Knowledge Management

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 researchbasic as well as applied researchis 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.

bibliography

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.

Heinz Mandl

Katrin Winkler

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Knowledge Management

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.

FURTHER READING:

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

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Knowledge Management

KNOWLEDGE MANAGEMENT

The basic challenge in knowledge management is learning how to design an organization's strategy, structure, and systems so that the organization can use what it knows to innovate and adapt. Although the field of knowledge management is still evolving, its terrain may be surveyed by focusing on two themes: the structure of organizational knowledge (i.e., the nature of knowledge in organizations and what makes it distinct from other forms of knowledge) and the processes by which organizations turn knowledge into action and results (i.e., how organizations create, share, and use knowledge).

Data, Information, Knowledge

Information and knowledge are the outcomes of human action and cognition that engage signs, signals, and artifacts in social and physical settings. Knowledge builds on an accumulation of experience. Information depends on an aggregation of data. Consider a document that contains a table of numbers that indicate product sales for the quarter. As they stand, these numbers are data. An employee reads these numbers, recognizes the name and nature of the product, and notices that the numbers are below last year's figures, indicating a downward trend. The data has become information. The employee considers possible explanations for the product decline (perhaps using additional information and personal judgment) and comes to the conclusion that the product is no longer attractive to its customers. This new belief, derived from reasoning and reflection, is knowledge. Thus, information is data that is given context and vested with meaning and significance. Knowledge is information that is transformed through reasoning and reflection into beliefs, concepts, and mental models.

Types of Organizational Knowledge

Knowledge in organizations is not monolithic, nor is it homogenous; knowledge evolves from different origins and is engaged in different ways. Research suggests that organizational knowledge may be divided into tacit knowledge, explicit knowledge, and cultural knowledge.

Tacit Knowledge

In organizations, tacit knowledge is the personal knowledge used by members to perform their work and to make sense of their worlds. It is learned through extended periods of experiencing and doing a task, during which time the individual develops a feel for and a capacity to make intuitive judgments about the successful execution of the activity. Examples of tacit knowledge at work would be the technician who can tell the health of a machine from the hum it generates, or the bank manager who develops a gut feeling that a client would be a bad credit risk after a short conversation with the customer. Because tacit knowledge is experiential and contextualized, it cannot be easily codified, written down, or reduced to rules and recipes.

Despite its being difficult to articulate, tacit knowledge can be and is regularly transferred and shared. Tacit knowledge can be learned through observation and imitation. Thus, apprentices learn their craft by following and copying their masters, professionals acquire expertise and norms through periods of internship, and new employees are immersed in on-the-job training. According to Donald Scĥn (1983), professionals reflect on what they know during the practice itself (e.g., when they encounter an unusual case) as well as afterward (e.g., in a postmortem) and, in doing so, test and refine their own tacit knowledge. Tacit knowledge can also be shared. Although not completely expressible in words or symbols, tacit knowledge may be alluded to or revealed through rich modes of discourse that include the use of analogies, metaphors, or models and through the communal sharing of stories. Storytelling provides channels for tacit learning because narratives dramatize and contextualize knowledge-rich episodes, allowing the listener to replay and relive as much of the original experience as possible.

Ikujiro Nonaka and Hirotaka Takeuchi (1995) emphasize that tacit knowledge is vital to organizations because it is an important source of new knowledge. New knowledge in the form of discoveries and innovations is often the outcome of creative individuals applying their tacit insights and intuitions to confront novel or difficult problems. Because tacit knowledge resides in people's minds, it is lost when employees leave the organization.

Explicit Knowledge

Explicit knowledge is knowledge that is expressed formally using a system of symbols and can therefore be easily communicated or diffused. Explicit knowledge may be object based or rule based. Object-based knowledge may be found in artifacts such as products, patents, software code, computer databases, technical drawings, tools, prototypes, photographs, voice recordings, films, and so on. Knowledge is object based when it is represented using strings of symbols (e.g., words, numbers, formulas) or is embodied in physical entities (e.g., equipment, models, substances). In the first case, the symbols directly represent or codify the explicit knowledge. In the second case, explicit knowledge may be extracted from the physical object by, for example, disassembling equipment, inspecting software code, or analyzing the composition of a substance. Explicit knowledge is rule based when the knowledge is codified into rules, routines, or operating procedures. A substantial part of an organization's operational knowledge about how to do things is contained in its rules, routines, and procedures. Although all organizations operate with standard procedures, each organization will develop its own repertoire of routines, based on its experience and the specific environment in which it functions.

Patrick Sullivan (1998, p. 23) discusses an organization's explicit knowledge that takes the form of "intellectual assets," which he defines as "the codified, tangible, or physical descriptions of specific knowledge to which the company can assert ownership rights." Examples of intellectual assets may include plans, procedures, drawings, blueprints, and computer programs. Intellectual assets that receive legal protection are intellectual property. Five forms of intellectual property are entitled to legal protection in the United States: patents, copyrights, trade secrets, trademarks, and semiconductor masks.

Explicit knowledge codified as intellectual assets is valuable to the organization because it adds to the organization's observable and tradable stocks of knowledge. Moreover, because they have been committed to media, ideas may be communicated more easily. Explicit knowledge serves a number of important purposes in an organization. It encodes past learning in rules, coordinates disparate organizational functions, and signifies competence and rationality. Because explicit knowledge has been codified, it remains with the organization even after its inventors or authors leave the organization.

Cultural Knowledge

An organization's cultural knowledge consists of the beliefs it holds to be true based on experience, observation, and reflection about itself and its environment. Over time, an organization develops shared beliefs about the nature of its main business, core capabilities, markets, competitors, and so on. These beliefs then form the criteria for judging and selecting alternatives and new ideas, and for evaluating projects and proposals. In this way, an organization uses its cultural knowledge to answer questions such as "What kind of an organization are we?" "What knowledge would be valuable to the organization?" and "What knowledge would be worth pursuing?"

Cultural knowledge includes the assumptions and beliefs that are used to describe and explain reality, as well as the criteria and expectations that are used to assign value and significance to new information. These shared beliefs, norms, and values form the sense-making framework in which organizational members recognize the saliency of new information. Although cultural knowledge is not written down (but is conveyed in stories, histories, and reward or evaluation systems), it remains with the organization even after employee changes and staff turnover.

There are well-known accounts of organizations in which cultural knowledge is misaligned with its efforts to exploit tacit and explicit knowledge. For example, Xerox PARC (Palo Alto Research Center) in the 1970s pioneered many innovations that later defined the personal computer industry but which Xerox itself did not commercialize. PARC had invented or developed the bit-mapped display technology that was required for rendering graphical user interfaces, software for on-screen windows and windows management, the mouse as a pointing device, the first personal computer (Alto), and an early word-processing software (Bravo) for the Alto. Xerox was not willing to realize the application potential of these inventions because its identity and business strategy was still focused on the photocopier market. Many of the researchers working on these projects subsequently left PARC, taking their knowledge with them.

Knowledge Creation

Nonaka and Takeuchi (1995, p. 59) suggest that the production of new knowledge involves "a process that 'organizationally' amplifies the knowledge created by individuals and crystallizes it as a part of the knowledge network of the organization." Two sets of activities drive the process of knowledge amplification: (1) converting tacit knowledge into explicit knowledge and (2) moving knowledge from the individual level to the group, organizational, and interorganizational levels. An organization creates knowledge through four modes: socialization, externalization, combination, and internalization.

Socialization is a process of acquiring tacit knowledge through sharing experiences. As apprentices learn the craft of their masters through observation and imitation, so do employees of a firm learn new skills through shared activities such as on-the-job training. Externalization is a process of converting tacit knowledge into explicit concepts through the use of abstractions, metaphors, analogies, or models. Combination is a process of creating explicit knowledge by bringing together explicit knowledge from a number of sources. For example, individuals exchange and combine their explicit knowledge through conversations, meetings, and memos. Computerized databases may be "mined" to uncover new explicit knowledge. Finally, internalization is a process of embodying explicit knowledge into tacit knowledge, internalizing the experiences that are gained through the other modes of knowledge creation in the form of shared mental models or work practices.

Knowledge Sharing

Promoting the effective sharing and transfer of knowledge is often the centerpiece of knowledge management initiatives. Unfortunately, there are significant cognitive, affective, and organizational barriers to knowledge sharing. Cognitively, the individual who is transferring knowledge must put in mental effort to explain new concepts, demonstrate techniques, answer questions, and so on. Affectively, the individual may experience regret or reluctance about losing ownership of hard-earned expertise. Organizationally, individuals are not rewarded for solving another person's problems, nor are they usually given the time or support needed to share information. There are also cultural factors in most organizations that inhibit knowledge sharing. Thomas Davenport and Laurence Prusak (1998) consider the most common inhibitors to be lack of trust, different frames of reference, lack of time and opportunity, rewards going to those who own knowledge, lack of capacity in recipients to absorb new knowledge, the not-invented-here syndrome, and intolerance for mistakes.

Max Boisot (1998) points out that diffusion of organizational knowledge is increased and accelerated by the codification and abstraction of personal knowledge. Codification is the process that creates perceptual and conceptual categories that facilitate the classification of phenomena. Whereas codification groups the data of experience into categories, abstraction is accomplished by revealing the structure and cause-and-effect relationships that underlie phenomena. It leads to knowledge that is based on abstract thought and is mainly conceptual and broadly applicable. The more codified and abstract an item of knowledge becomes, the larger the percentage of a given population it will be able to reach in a given period of time.

Knowledge Use

The use of knowledge is a social activity. Whenever organizational knowledge is put in use, its tacit, explicit, and cultural facets bind together in a flow of practice and social interaction. Work groups form around these practices, creating communities of practice. Communities of practice emerge of their own accord and tend to self-organize; people join and stay because they have something to learn and to contribute. By sharing and jointly developing practice, communities of practice evolve patterns of relating and interacting with one another. Over time, they develop a common understanding of the meaning and value of their work, as well as a shared repertory of resources that include both the tacit (e.g., "war stories," workarounds, heuristics) and the explicit (e.g., notebooks, tools, communication devices). Communities of practice therefore constitute historical and social settings that embrace all three categories of organizational knowledge.

Knowledge Management in Practice

A thorough understanding of knowledge management can best be obtained by examining specific examples of the process being put into practice. Two good examples are the Xerox Eureka project and the consulting firm of Pricewaterhouse Coopers.

Xerox Eureka

The Eureka project at Xerox is an example of how an organization can tap into the tacit knowledge of its employees, codify that knowledge, and facilitate its diffusion and use. Eureka is also an illustration of how an organization can balance the need for looseness and improvisation with the need for structure and control when managing its knowledge.

In the early 1990s, Xerox was employing approximately twenty-three thousand technicians around the world to repair copiers at client sites. Some of the repair solutions existed only in the heads of the experienced technicians, who had found ways of dealing with tough machine-repair problems. Xerox developed Eureka as a system of practices, procedures, and tools that would allow the personal knowledge of technicians to be validated and shared. Eureka was initially developed by Xerox PARC and deployed in 1992 for service representatives in Xerox France. By the end of 1999, more than five thousand tips had been entered, and they were available to Xerox service representatives worldwide via their laptop computers.

The following is how Eureka works. Customer service representatives who are on site visits discover solutions to difficult repair problems. They submit these tentative solutions into a "pending tips" database. Pending tips are voted and commented on by other technicians when they try these tips to solve customer problems. Tips that are validated by product leaders or specialists are then edited and entered into the "validated tips knowledge base." Service representatives are motivated to use Eureka because of its problem-solving benefits. They are motivated to contribute to it by personal recognition (e.g., their names are attached to the tips they submit) and by prizes for frequently used tips.

Priscilla Douglas (1999, pp. 217-218) of Xerox described the effect of Eureka as follows:

Technically, Eureka is a relational database of hypertext documents available online via the Intranet. It can also be viewed as the distributed publishing of local community know-how. In practice, Eureka is an electronic version of war stories told around the water cooler—with the added benefits of a user-friendly search engine, institutional memory, expert validation, and corporate-wide availability. It is a way to simultaneously grow both intellectual capital and social capital.

Eureka saves Xerox about 5 percent on labor and another 5 percent in parts costs in field customer service. It is being used by 15,000 Xerox technicians worldwide. Tom Ruddy, Xerox's director of knowledge management for worldwide customer services, estimates that Xerox will eliminate approximately 150,000 calls per year with Eureka—worth $6 million to $8 million. Savings should actually be higher, since Xerox has implemented the system in its call centers, increasing the expected number of users to more than 25,000.

Price water house Coopers

Consulting firms recognize that their products and services are based almost exclusively on knowledge, and many are active in implementing strategies that leverage their internal knowledge. Organizationally, the approach of PricewaterhouseCoopers (PwC) is based on a four-level structure for managing knowledge:

  1. The Global KM Management Team coordinates the overall PwC approach to knowledge management and implements specific, key enterprise-wide initiatives.
  2. The KM Council (composed of the Global KM Core Team, lines of service chief knowledge officers, and representatives from stake-holders throughout the firm) coordinates global efforts with those of lines of business and industry clusters.
  3. The KM Action Committees are responsible for areas such as content architecture, best practices, knowledge management technologies, professionalism, and people information.
  4. The KM Communities of Interest (which comprise approximately one thousand professionals, knowledge managers, researchers/analysts, information specialists, and extranet owners) share innovative thinking in the knowledge management area.

To promote knowledge management as a professional career, the firm has developed a competencies framework and a set of professional principles. Thus, the primary mission of a knowledge management professional is to harvest, share, and build PwC's intellectual capital. Bonuses, promotions, and partner admissions are linked to knowledge sharing. For example, partners are formally assessed on their ability to foster knowledge sharing, and everyone from new hires to partners are encouraged and recognized for their knowledge creation and sharing activities. The firm encourages knowledge sharing by including the names of contributors on documents in knowledge stores, by providing publicity on individuals who make the extra effort to share knowledge, by sending thank-you notes from partners and peers to personnel files, and by awarding "Knowledge Bucks" prizes and spot bonuses (Hackett, 2000).

PwC sees its investment in knowledge management as highly strategic; knowledge sharing increases customer satisfaction and revenues while providing the firm with a competitive advantage. Brian Hackett (2000, p. 66) relates the following example:

In one instance, PwC was providing auditing work to a global client. PwC became aware that the client was dissatisfied with an electronic commerce project that was being conducted by another consulting company. Asked to develop a proposal in one week, this auditing team had to quickly locate PwC's expertise in another area, find expertise pertinent to the client's industry, and develop a responsive proposal. Using PwC's vast network of internal databases, Knowledge Curve, and other sources, the team located a partner who specialized in e-commerce, another partner with the appropriate industry expertise, database experts, and a change management expert. In less than a week, PwC effectively maximized its internal talent and produced a winning proposal.

Both Xerox and PwC are finding ways to use tacit, explicit, and cultural knowledge to improve corporate performance. In each case, knowledge management is a formal activity.

See also:Chief Information Officers; Knowledge Management, Careers in; Management Information Systems.

Bibliography

Boisot, Max. (1998). Knowledge Assets: Securing Competitive Advantage in the Information Economy. New York: Oxford University Press.

Brown, John Seely, and Duguid, Paul. (1998). "Organizing Knowledge." California Management Review 40(3):90-111.

Bukowitz, Wendi, and Williams, Ruth. (1999). Knowledge Management Fieldbook. New York: Prentice-Hall.

Choo, Chun Wei. (1998). The Knowing Organization: How Organizations Use Information to Construct Meaning, Create Knowledge, and Make Decisions. New York: Oxford University Press.

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Douglas, Priscilla. (1999). "Xerox: Documents Convey Knowledge." In Smart Business: How Knowledge Communities Can Revolutionize Your Company, by Jim Botkin. New York: Free Press.

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Roos, Johan; Roos, Goran; and Dragonetti, Nicola Carlo. (1998). Intellectual Capital: Navigating in the New Business Landscape. New York: New York University Press.

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Von Krogh, Georg; Ichijo, Kazuo; and Nonaka, Ikujiro.(2000). Enabling Knowledge Creation: How to Unlock the Mystery of Tacit Knowledge and Release the Power of Innovation. New York: Oxford University Press.

Zack, Michael H. (1999). Knowledge and Strategy. Boston: Butterworth-Heinemann.

Chun Wei Choo

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