Pick up a business magazine and you're likely to find at least one article on knowledge management. Almost every industry conference, seminar and sales pitch will include the "K" word. It's no small wonder that analysts with the Gartner Group list knowledge management as one of the most hyped technology concepts today. Unfortunately, such a level of hype can undermine the true opportunities and benefits of such a concept. The intent of this article is to help separate hype from reality. It will outline the key concepts behind knowledge management (KM), review the objectives of a KM initiative, discuss a business approach to achieving rapid results with KM and identify how various technologies fit into the KM puzzle.

Minding the MIOs

Some common threads emerge when talking with business and information technology managers about opportunities and challenges within their companies. While there are many disparate opportunities for improvement, the primary focus of most initiatives can be distilled to a few "major improvement opportunities" (MIOs):

  • Speeding business processes,
  • Reducing and eliminating non-value-added activities, and
  • Improving the ability to capture and leverage knowledge throughout the enterprise.

Knowledge management practices and technologies address all of these MIOs.

The Knowledge Economy

In Post Capitalist Society, Peter Drucker writes, "The basic economic resource is no longer capital, nor natural resources, nor labor. It is and will be knowledge. Value is now created by 'productivity' and 'innovation,' both applications of knowledge to work."

The value of rapid and accurate decision making increases as the pace of change accelerates. As the information content of products and services grows, so does the value of knowledge within companies producing these products. Yet, in a recent survey, 40 percent of business leaders said that most knowledge within their business resides in their workers' heads. Strategic Technologies' research indicates that the other 60 percent of businesses have the same problem--they just haven't recognized it.

What is Knowledge?

While a multitude of definitions exist (ranging from obvious to arcane), we like to think of knowledge as information in a context that supports proper decisions and actions. Two primary types of knowledge are commonly discussed: explicit and tacit.

Explicit Knowledge

Explicit knowledge includes documents, databases and other types of recorded information, in a context to support proper decision making. To best understand the relationship of data, information and knowledge, consider the process you might go though to pick investment stocks. A novice investor might simply consider the quarterly earnings of a company as an indicator of value. A more seasoned investor, however, might consider earnings growth over a number of consecutive quarters to be a better indicator of business performance. This is an example of information--data in some context. A market analyst is likely to consider much more information--such as market growth, product development expenditures, sales trends, management stability, market share and manufacturing capacity--to develop a more comprehensive perspective on the health of the company. These multiple information components, with this significant context, can be considered explicit knowledge.

The good news about explicit knowledge is that it is documented. Unfortunately, in most cases a number of hurdles limit our ability to gain maximum value from explicit knowledge:

  • Information components exist in a multitude of locations and forms. It's not always apparent where to find the desired information.
  • It's not always obvious how these various information components correlate to form useful knowledge.
  • There is often no way to separate current information from information that is out of date.

Tacit Knowledge

The actions, experiences, ideals, values and emotions of an individual constitute tacit knowledge. Tacit knowledge tends to be highly personal and difficult to communicate. Corporate culture, organizational politics and professional experience are common examples of tacit knowledge.

Conventionally, tacit knowledge is shared via word of mouth and shared experiences. Mentor/protégé relationships are often an effective means of sharing tacit knowledge. Small teams and work groups might also share tacit knowledge effectively. As organizations grow, it becomes unlikely that word of mouth will adequately convey tacit knowledge. To understand why, consider how the complexity of a communication network increases as the number of individuals in that network grows. With two individuals, there is one bi-directional communication channel to maintain. Each person must only consider the information needs of the other individual (hence the effectiveness of the mentor/protégé model). Figure 1 illustrates how the number of communication channels grows geometrically as the organization grows. At some point, it becomes impractical to rely on word of mouth to convey all appropriate tacit knowledge throughout an organization. It's no wonder that small, focused groups frequently outperform large organizations.

To compound this problem, consider the disincentives to knowledge sharing that often exist. In many organizations, individuals perceive their greatest value to be what they know. If this is the case, then sharing tacit knowledge may actually erode an individual's perceived value within the organization. We've all seen examples of individuals hoarding knowledge for this reason.

The Knowledge Audit

Prior to commencing a knowledge management initiative, it is helpful to perform a knowledge audit. Through a series of interviews and corresponding analysis, this audit can identify the key concerns that exist within an organization about the use of knowledge. There are some common threads that appear in nearly every case:

  • Information glut or lack of information,
  • Lack of awareness of information elsewhere in organization,
  • Inability to keep abreast of relevant information,
  • Significant "reinventing the wheel,"
  • Common use of out-of-date information, and
  • Not knowing where to go for expertise in a specific area.

Do these issues sound familiar?

What is Knowledge Management?

Many definitions of knowledge management exist. The Gartner Group clearly expresses a useful definition: "KM is a discipline that promotes an integrated and collaborative approach to the process of information asset creation, capture, organization, access and use. Information assets include databases, documents and, most importantly, the uncaptured, tacit expertise and experience resident in individual workers."

The key to this definition is identifying KM as a discipline, rather than a technology. No KM initiative is likely to succeed without a clear understanding of the necessary cultural and process changes. Yet it is critical to understand the ability of enabling technologies to overcome the barriers to communication and knowledge access that have limited the past return on intellectual capital.

Return on Intellectual Capital

Knowledge management initiatives aim to deliver significant, measurable improvements to an organization's "return on intellectual capital." Specific benefits include:

  • Reducing costs of information gathering and decision support that do not add value to the business;
  • Improving customer support processes so that questions are answered faster and more accurately;
  • Identifying new market opportunities by combining an organization's competencies in new and perhaps less-obvious ways;
  • Radically reducing cycle times (product development, issue resolution, etc.) by reapplying existing knowledge instead of recreating knowledge; and
  • Reducing "intellectual hemorrhage" when key personnel leave the organization--more of their tacit knowledge is retained and can continue to add value to the organization.

Some Common Objectives

The specific objectives of an organization's KM initiative will likely be unique. There are some common objectives, however, that appear in most cases:

Determine what knowledge is valuable to the enterprise. Truly understand what workers need to be effective. This may require some digging.

Create a process to capture knowledge and provide motivation to do so. Remove the cultural barriers to knowledge sharing. This will frequently involve changing compensation and reward systems.

Make knowledge easily available and provide motivation to use it. Not all individuals will choose reuse over re-invention. Provide measurements and incentives to promote reuse.

Concentrate on new or different information, which must be selected by judgment from what becomes available. Typically this new information has great value, but too much manual effort is required to sift through the massive quantities of incoming information to glean the relevant knowledge.

Maintain the currency of knowledge by removing obsolete knowledge. At best, obsolete knowledge inhibits system acceptance by increasing the volume of information that users must wade through to find what they really need. At worst, obsolete knowledge can be dangerous (e.g., consider an out-of-date manufacturing procedure for a medical product).

Assign ownership of bodies of knowledge to those who use it regularly. Make the knowledge base a self-managing entity, controlled by the subject-matter experts who are best able to judge the relevance and value of knowledge.

Continuous and Unrelenting

Since knowledge management is a discipline, KM initiatives are a combination of continuous processes and unrelenting focus. KM is never "done," just as the financial or personnel management of an organization is never "done." All organizations possess some level of KM within their existing structure. A formal KM initiative begins by raising the awareness of what's already being done. As initiatives progress, they will tend to move through some distinct logical phases. These phases are driven by both the level of enabling technology required and, more importantly, by the acceptance of KM within the organizational culture.

Level 1--Knowledge Retrieval: This level of KM focuses on making existing explicit knowledge readily available for reuse. The primary objective of a knowledge retrieval project is ensuring easy access to relevant knowledge. Advanced search engines that can apply semantic, pattern recognition and artificial intelligence technologies are capable of gleaning relevant knowledge from a broad array of existing information sources. An excellent example is the use of retrieval technologies to search competitive information (news feeds, trade press articles, news clipping services, internal competitive reports, Web sites, marketing literature, etc.). Such technologies can equip sales and marketing organizations to more effectively deal with competitive situations. Advanced data warehousing initiatives are also examples of this level of KM.

The primary limitation at this level is the focus on explicit knowledge. At this level there is no focus on capture and reuse of tacit knowledge. The onus is on individuals to document their tacit knowledge, thus making it explicit.

Level 2--Connectivity: At this level, organizations use communication technologies and virtual teams to break down the cultural and geographic barriers to knowledge sharing. Technologies such as groupware, discussion databases, video conferencing, data conferencing and teamware provide opportunities for widely dispersed "strangers" to come together, work on a project activity, share tacit knowledge and disband. Over time, this activity significantly increases the cross pollination of knowledge within an organization.

Although tacit knowledge is shared and "multiplied" more effectively at this level, it is still constrained to the members of the virtual teams. Discussion database technologies capture some of the discussions and decision processes that would otherwise be undocumented and lost. But much of the real knowledge generated during these project activities remains uncaptured.

Level 3--The Intelligent Organization: At this level, technologies are used to minimize the requirement of formally recording tacit knowledge to make it reusable. The combination of discussion databases, task assignments, activity tracking, workflow and document databases builds a rich story of how individuals and groups interact and how decisions are made. By tracking the interactions of individuals within the teams, we can infer which individuals are subject-matter experts with tacit knowledge about specific topics. Significant amounts of tacit knowledge are captured as a byproduct of teams working together in this environment. By identifying the contributors of relevant knowledge in the knowledge base, individuals can locate the "strangers" who are most able to help with new issues. This creates a rich environment for building new relationships among an organization's various disciplines. New applications for existing knowledge will become apparent and new market opportunities will surface.

Best Practices

The following are keys to implementing KM initiatives successfully:

Rapidly implement enabling technologies. This allows early adopters to begin capturing tacit knowledge that is otherwise lost.

Add real-time and post-op information-gathering steps to your projects and all other relevant business processes. This allows users to capture "lessons learned," one of the most valuable forms of knowledge.

Create and maintain a knowledge map. This provides knowledge workers with a means of identifying relevant information sources within the organization.

Identify subject-matter experts to maintain specific areas of the knowledge base. These people will become the custodians of the organization's knowledge.

Integrate this task within these people's job descriptions. Ensure that this is treated as a high priority.

Create incentives for knowledge contributions and reuse. Reward those who contribute and those who innovate by using the knowledge base. This will begin to remove the cultural barriers to tacit knowledge capture. The value of individuals must change from "what they know" to "how much they contribute."

Define metrics and methods to measure the value and success of the KM initiative.

Increase the scope of KM and knowledge retrieval to encompass all relevant information systems and sources within and external to the organization. The ultimate goal is to provide knowledge workers with a "one-stop shop" for any relevant knowledge.

Continuously improve the system and your processes. Knowledge management is an ongoing discipline. Continue to innovate with new ways to capitalize on organizational knowledge. This will be a primary competitive factor in the future.

Beyond the Hype

When you remove the hype surrounding knowledge management, there exists a gem of opportunity for significantly improving the effectiveness, innovation, productivity and competitiveness of organizations. While cultural and technological barriers exist, leading organizations are making considerable investments aimed at maximizing the return on their intellectual capital. By applying the proper mix of process changes, incentives, focus and technologies, any organization can benefit from knowledge management.

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