[Knowledge]

In this section we will consider how data and information can be transformed into knowledge and at how that knowledge can be managed to provide improved organisational efficiency and effectiveness, increased competitive edge. To help us in this we shall draw on the words and the wisdom of a number of "gurus" who have been pointing the way towards the new "knowledge revolution" since the mid-late 80s.

We will feature, amongst others, Peter Drucker, Charles Handy, Tim Berners-Lee, and Tom Peters.

We shall also look at some modern day exemplars of Knowledge Management including BP, 3M, Microsoft, and Kuoni.

But first let us take a brief journey back in time to explore some of the origins of modern-day knowledge and knowledge management.

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In the Beginning...
Mini Case Study
The Link between Knowledge and Learning
So How are Organisations Performing with
Knowledge Management?
Obstacles that can impede good Knowledge
Management
More from our Gurus
The Importance of Knowledge to Nations
as well as Organisations
Definitions

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In the Beginning …

We turn first, not to a "guru" but to author H.G.Wells, who having in 1937 advocated the creation of the "Permanent World Encyclopaedia" first recognized (1940) the need for knowledge management :

"An immense and ever-increasing wealth of knowledge is scattered about the world today; knowledge that would probably suffice to solve all the mighty difficulties of our age, but it is dispersed and unorganized. We need a sort of mental clearing house for the mind: a depot where knowledge and ideas are received, sorted, summarized, digested, clarified and compared."
H.G. Wells in 'The Brain: Organization of the Modern World',1940

Then it was Peter Drucker, for us the guru of all gurus, who probably first identified (1954) the trend towards "knowledge workers" and who, in 1988, heralded the "knowledge-based economy" :

"The typical large business 20 years hence will have fewer than half the levels of management of its counterpart today and no more than a third of its managers. The typical business will be knowledge-based, an organisation composed largely of specialists who direct and discipline their own performance through organised feed-back from colleagues, customers and headquarters."
Peter Drucker, Harvard Business Review Jan-Feb 1988

The Knowledge Revolution: Rapid advances in Information Technology are driving a new Knowledge revolution in which powerful, super-fast computers and networks (including the Internet) are increasingly handling data, information and communication. They are doing so in ways and at speeds that require new "knowledge systems" and new "knowledge-workers" - people and systems who can transform the data and information into applied knowledge that will provide organisations with greater efficiency and effectiveness, with new forms of competitive edge. By 2010, Drucker reckons, no more that 1 in 10 workers will be engaged in making or moving things, the rest of us, he says will be knowledge-workers.

"Knowledge is now," says Peter Drucker, "the key to personal and economic success."

In "Post-Capitalist Society", (1993) Drucker reminds us how knowledge has meant different things throughout history and how it has fed four distinct "revolutions" :

"For hundreds of years knowledge was applied to a person's "being" and two theories dominated in the West and the East. One theory, associated with Socrates and Plato in the West and Taoist and Zen monks in the East held that purpose and function of knowledge was to enable self-knowledge through intellectual, moral and spiritual growth. A competing theory, associated with Protagoras in the West and Confucius in the East held that the purpose and function of knowledge was the acquisition of logic, grammar and rhetoric to enable the holder of knowledge to know what to say and how to say it."

"Somewhere around 1700 the meaning of knowledge changed radically. Knowledge applied to "doing" not just "being." says Drucker

That change in the meaning and purpose of knowledge, he writes, initiated the first of three revolutions in the application of knowledge

• The Industrial Revolution (1770-1880)
• The Productivity Revolution (1881 - 1960)
• The Management Revolution (1960 - 2000)

During the 1990s as the twin effects of the Internet and the Digital revolutions began to impact we reached the fourth revolution: The Knowledge Revolution (1995-?)………

As this new revolution gets underway, organisations are increasingly realising how important it is to "know what they know", to be able to maximise the capture, retention and use of the knowledge to the benefit of the organisation, its workers - and, importantly, its customers.

This knowledge resides in many different places within organisations - in filing cabinets, in databases, in reports and review documents, in research and development projects - and also in peoples' heads. Typically this knowledge is distributed right across the organisation.

So, unless it is managed, all too often different parts of an organisation will duplicate overlap or even repeat, work carried out in other parts of the organisation because they find it impossible to keep track of, make use of, the knowledge that exists within the organisation.

And, unless and until an organisation's knowledge is recorded, managed, systemised in some way the organisation will be unable to identify its "knowledge gaps", and will not therefore be able, strategically, to build up its "knowledge base".

It is now generally accepted that success in increasingly competitive marketplaces in the 21st century will depend more and more critically on the quality of knowledge which organisations apply to their key business processes.

Supply chains for example depend on knowledge of a number of very diverse areas e.g. raw materials, manufacturing, procurement, logistics, planning, transportation and distribution.

Provision of ever-more-sophisticated Customer services depends increasingly on the use and application of specialist knowledge that has been captured and formatted by and organisation and is delivered to key knowledge-workers just at the right time to help them meet customer needs (see Kuoni mini case study below).

And new product development similarly requires knowledge of consumer needs, new technologies, new distribution channels, new marketing techniques etc. to ensure that what they offer to their customers fully meets those needs.

Thus the challenge of deploying the knowledge assets of an organisation to create competitive advantage becomes more and more important.

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Mini Case Study:

Let us take a brief look at Swiss Holiday Company Kuoni and how they have harnessed knowledge in their organisation to create competitive advantage, to gain competitive edge in fiercely competitive world-travel markets.

The company's success with their 'Knows' product (Click here to read a summarised Case Study) illustrates how knowledge-based services can open up new market opportunities and help strengthen a company's long-term strategic position:

• Kuoni strategically harnessed existing information and knowledge to firstly provide an enhanced service for organisations regularly buying travel services
• By systemising their service-provision and reports to their customers, they were able to gain vital competitive edge where the benefits of their own knowledge-management were passed on to customers.
• One of the real benefits to Kuoni of an overall planned approach was that they became able to identify gaps in their own knowledge; in filling these gaps they were also able to provide improved services to their customers.

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The Link between Knowledge and Learning

Another dimension of Kuoni's 'Knows' initiative was the company's investment in staff training :

"This shows management recognition of the fact that the skills of individuals are vital to the organization's knowledge base," say authors Probst, Raub and Romhardt.

"The ability to transform data into knowledge and use it for the benefit of the company makes the individual employee the primary agent of company knowledge."

The Kuoni company recognised the vital importance of its work-force in providing these enhanced services to its customers and supported them not just via training but also by purpose-designed computerised systems that ensured in-house knowledge was available at their fingertips just when they needed it to help Kuoni customers.

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So How are Organisations Performing with Knowledge Management ?

In a Korn Ferry International/University of Southern California research Report, published in April 2000 4,500 scientists, engineers and managers in 10 multi-nationals across north America, Europe & Asia were surveyed, together with a further 500 business & technical leaders.

The Survey highlighted that many firms are struggling to implement Knowledge Management initiatives. However BP/Amoco (see panel) and Microsoft are two global corporations that the Korn Ferry Survey indicates are showing the way.

In the UK the well respected Institute of Management found during year 2000 that 80% of 470 of their members surveyed said that their own firms lacked a knowledge management policy.

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Obstacles that can Impede good Knowledge Management

There are a number of obstacles that typically can prevent organisations harnessing and using knowledge effectively:

Firstly much knowledge resides in the heads of individuals, it is not captured and recorded, made available to others. And of course people leave organisations - and often their knowledge leaves with them!

The structure of an organisation can also prevent it properly disseminating and distributing key knowledge. People either wittingly or unwittingly create blockages to smooth knowledge transfer between functions and departments - in many instances they cling to the old adage that "knowledge is power" - power to them, that is, not to the whole organization; they simply refuse to share it!

And even where knowledge is collected, created, stored and distributed it still needs to be positively managed - otherwise in today's fast-changing world that knowledge becomes out-of-date, obsolete and therefore either worthless - or, worse, dangerous!

Key Characteristics of Knowledge

• Knowledge is a human capability, not a file, document or video
• Knowledge is elaborate: it's a web or map of information, comes in large packets, and takes time to acquire
• Knowledge is context-sensitive; it is dangerous when mis-applied
• Knowledge is both explicit and tacit:
  • Explicit knowledge = "objective facts that are readily documented" ; explicit knowledge is "know-what" ·
  • Tacit knowledge is subjective: it includes values, judgments, assumptions and intuition; it is in people's heads and usually only surfaces through interaction; tacit knowledge is "know-why"

Real knowledge - "know-how" - is created from the interaction of explicit and tacit knowledge. An aim of good knowledge management systems is to find effective ways of turning tacit knowledge into explicit knowledge.

"One of the functions of knowledge management is to ensure that the company uses its know-how." Say Probst, Raub and Rohmhardt in Managing Knowledge, 1998.

"Knowledge is of no value if it is not applied."

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More from our Gurus

Both Tom Peters and Charles Handy, gurus with very different styles and approaches, have recognised the rapid rise in importance of knowledge and the mergence of the "knowledge-based economy".

In the "Guru Guide", authors Boyett and Boyett show how despite their very different approaches Peters and Handy share many of the same messages:

• they agree that "knowledge organisations will be forced to decentralize radically"; Handy argues that decentralization will be so radical that the word decentralize doesn't work. Handy suggests that a better word might be federalize.
• both Handy and Peters expect that organizations in the knowledge society will "go beyond federalism and essentially become networks of specialists"
• both see "challenges and opportunities for workers"; in the post-capitalist society every person will need to become a businessperson. "If one is smart, loyalty to oneself will have to take precedence over loyalty to an organization, and the most success" Handy says will flow to those who successfully build what he calls a "portfolio life".

  "Knowledge," conclude Joseph and Jimmie Boyett, "is now the key to personal and economic success. While the traditional factors of production - natural resources, capital, labor - have not disappeared they have become secondary to knowledge."

"The most valued knowledge today is knowledge that can be applied to results, particularly knowledge that can be applied systematically and purposefully to define what new knowledge is needed and to accomplish systematic innovation."

"The purpose of organizations in a knowledge society is to bring people with specialized knowledges together in an atmosphere where they can be productive."

That is exactly what we are doing at theknowledgecollege.net !

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The Importance of Knowledge to Nations as well as Organisations

"Our Competitive Future - Building the Knowledge Driven Economy"
UK Government WHITE PAPER, December 1998:

"In the global economy, capital is mobile, technology spreads quickly and goods can be made in low cost countries and shipped to developed markets. British business therefore has to compete by exploiting capabilities which competitors find hard to imitate."

"The UK's distinctive capabilities are not raw materials, land or cheap labour. They must be our knowledge, skills and creativity. Crucially, this challenge is for all industries, not just new ones."

"To make the most of its capabilities, British business needs to combine its know-how with finance for investment and a flexible skilled workforce"

"The modern world is swept by change. New technologies emerge constantly, new markets are opening up. There are new competitors but also great new opportunities.

Our success depends on how well we exploit our most valuable assets: our knowledge, skills, and creativity. These are the key to designing high-value goods and services and advanced business practices. They are at the heart of a modern, knowledge driven economy."

The Rt Hon Tony Blair MP, Prime Minister

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Definitions :

Knowledge assets are the knowledge regarding markets, products, technologies and organisations, that a business owns or needs to own and which enable its business processes to generate profits, add value, etc.

Knowledge management is not only about managing these knowledge assets but also managing the processes that act upon the assets. These processes include: developing, preserving knowledge, using and sharing knowledge. Increasingly ICT (Information and Communications Technology) is being used to support and expand knowledge management systems.

Our own definition is perhaps incomplete but includes the following

"managing information flows; delivering the right information and knowledge at the right time to a company's workers, enabling them to make quicker, smarter decisions"

Therefore, Knowledge management involves the identification and analysis of available and required knowledge assets and knowledge asset related processes, and the subsequent planning and control of actions to develop both the assets and the processes so as to fulfil organisational objectives.

"Knowledge Management is a business philosophy. It is an emerging set of principles, processes, organisational structures, and technology applications that help people share and leverage their knowledge to meet their business objectives."

Knowledge-workers are people and systems who can transform data and information into applied knowledge

 

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