Empowering Knowledge in Organizations - Assignment Example

RUNNING HEAD: Knowledge is Power Empowering Knowledge in Organizations Table of Contents Introduction 3 Empowering the Knowledge Management in Organizations 9 Conclusion 14 References 16 Empowering Knowledge in Organizations Introduction As we surge towards the Information Age, the importance of knowledge is increasingly magnified. As people become more educated, they ask for more involvement in the decisions that will affect their lives. As Cleveland (1985) has explained, "Knowledge is power, as Francis Bacon wrote. So the wider the spread of knowledge, the more power gets diffused. For the most part individuals and corporations and governments don't have a choice about this; it is the ineluctable consequence of creating-through education-societies with millions of knowledgeable people" (p. 192). That is why we cannot deny the fact that the process of spreading knowledge is facilitated by the development and diffusion of new information technologies. The growth of telecommunications and the multiplication of computers had accelerated the spread of information, giving more people access to more information sooner. That broader access undermines the centralized control of information that was a principal basis for centralized decision making. In the end, as Cleveland (1985) noted, "More and more work gets done by horizontal process-or it doesn't get done. More and more decisions are made with wider and wider consultation-or they don't 'stick'" (p. 192). This is why a new aspect on how knowledge is harnessed was formed. The term knowledge management (KM) has been defined as doing what is needed to get the most out of knowledge resources. Although KM can be applied to individuals, it has recently attracted the attention of organizations. KM is viewed as an increasingly important discipline that promotes the creation, sharing, and leveraging of the organization's knowledge. Peter Drucker (1994), whom many consider as the father of KM, best defines the need for KM: Knowledge has become the key resource, for a nation's military strength as well as for its economic strength is fundamentally different from the traditional key resources of the economist-land, labor, and even capital we need systematic work on the quality of knowledge and the productivity of knowledge the performance capacity, if not the survival, of any organization in the knowledge society will come increasingly to depend on those two factors (pp. 66-69). Thus, it can be argued that the most vital in empowering the businesses today is the collective knowledge residing in the minds of an organization's employees, customers, and suppliers. Learning how to manage organizational knowledge has many benefits, some of which are readily apparent; others are not. These benefits may include leveraging core business competencies, accelerating innovation and time to market, improving cycle times and decision making, strengthening organizational commitment, and building sustainable competitive advantage (Davenport and Prusak, 1998). In short, they make the organization better suited to compete successfully in a much more demanding environment. This is why organizations are increasingly valued for their intellectual capital. An example of this fact is the widening gap between corporate balance sheets and investors' estimation of corporate worth. It is said that knowledge-intensive companies around the world are valued at three to eight times their financial capital. Consider, for example, Microsoft, the highest valued company in the world, with a market capitalization that was estimated at around $284 billion as of July 2003. Clearly, this figure represents more than Microsoft's net worth in buildings, computers, and other physical assets. Microsoft's valuation also represents an estimation of its intellectual assets. This includes structural capital in the form of copyrights, customer databases, and business process software. It also includes human capital in the form of the knowledge that resides in the minds of all of Microsoft's software developers, researchers, academic collaborators, and business managers. In general, KM focuses on organizing and making available important knowledge, wherever and whenever it is needed. The traditional emphasis in KM has been on knowledge that is recognized and already articulated in some form. This includes knowledge about processes, procedures, intellectual property, documented best practices, forecasts, lessons learned, and solutions to recurring problems. Increasingly, KM has also focused on managing important knowledge that may reside solely in the minds of an organization's experts. The Concept of "Knowledge is Power" Van Ginkel (1999) explained that based on Bacon's principle that "knowledge is power", it signified that cognitive power is the power of discovery and invention by means of systematically conducted science and technology. This is neutral and objective knowledge of the true facts, made and meant for all human minds, fit for any human hand. Van Ginkel (1999) compared an animal's knowledge to human knowledge. Both are classified as powers, but human knowledge is the power only if within the individual scientist's thought special knowledge interacts with general knowledge that within the same mind interacts with more-than advanced concepts of man and world. Where generalist concepts are deficient while specialist science keeps multiplying, information outruns understanding, scientists become irrational, and science and society lose the power to control their own discoveries and inventions. Such incompetence marked the Sorcerer's Apprentice in the ancient Roman fable. Van Kinkel (1999) cited that British physicist Stephen Hawking predicted that the human body and mind will in the future have to be genetically adapted to give humans power to use and control their own self-made devices, such as supersmart computers and spacecraft. There is much research that had purported that knowledge is a potent predictor of success. For example, Chase and Simon (1973) found that an expert chess player recalled more information from game positions than less skilled players. By contrast, there was no effect of chess skill on recall of random configurations of chess positions. Chase and Simon concluded that expertise in chess is predicated largely on a vast store of information about chessboard positions. The finding that domain knowledge facilitates memory for task-relevant information has since been replicated in numerous domains, including bridge, computer programming, music, dance, and map reading. Of course, the facilitative effect of knowledge on cognitive performance is not limited to tasks involving episodic memory. For example, in a study by Voss, Greene, Post, and Penner (1983), three groups of participants (political scientists with expertise in Soviet affairs, chemists, and undergraduate students) were given a problem in which the goal was to increase crop productivity in the Soviet Union. The political scientists began by creating a representation of the problem using their knowledge about the history of low crop productivity in the Soviet Union. By contrast, the chemists and the undergraduate students proposed solutions without clear specification of the possible causes, and their solutions were both judged ineffective. Thus, what was important in problem-solving success was not general scientific training, but rather specialized knowledge. But what about the joint effects of knowledge and memory on problem-solving performance One possibility is suggested by a viewpoint often referred to as the knowledge-is-power hypothesis. The major idea of this viewpoint is that domain knowledge is the primary determinant of proficiency in cognitive domains, whereas capacity-limited aspects of the system play a less important role. Minsky and Papert (1974) alluded to this idea in the following passage: It is by no means obvious that very smart people are that way directly because of the superior power of their general methods - as compared with average people. Indirectly, perhaps, but that is another matter: a very intelligent person might be that way because of the specific local features of his knowledge-organizing knowledge rather than because of global qualities of his "thinking" which . . . might be little different from a child's. (p. 59) In a similar vein, Feigenbaum (1989) articulated the basic argument of the knowledge-is-power hypothesis in a principle: The Knowledge Principle states that a system exhibits intelligent understanding and action at a high level of competence primarily because of the specific knowledge that it can bring to bear.... A corollary of the KP is that reasoning processes of intelligent systems are generally weak and not the primary source of power. (p. 179) Most people would agree that knowledge is "power." Clearly, within the domain of expertise, people with high levels of domain knowledge tend to outperform people with lower levels of knowledge. However, it is less clear what the knowledge-is-power hypothesis implies about the interplay between cognitive ability characteristics such as working memory capacity and domain knowledge. This is why KM has been attached to the concept of intellectual capital. Composed of both human and structural capital, intellectual capital is considered by many as the most valuable enterprise resource. Human capital refers to the body of knowledge the company possesses. Human capital may reside not only in the minds of the company's employees, but also in its vendors and customers. Structural capital, on the other hand, is everything that remains when the employees go home: databases, customer files, software, manuals, trademarks, and organizational structures: in other words, organizational capability. Intellectual capital is ubiquitous, yet there are no standard tools to manage it as an asset. The challenges and opportunities emerging from a rapidly changing global environment demand that we go beyond these conceptions. Knowledge, and the processes of its acquisition, generation, distribution and utilization, has become the main source of value creation. But science, as a knowledge creation enterprise, is itself evolving and transcending reductionistic and mechanistic conceptions. For this reason, it is important that contemporary knowledge management be grounded in the scientific thought - in particular, the sciences of complexity (such as systems theory, chaos theory, and dynamical systems theory) that provide the foundations for a new understanding of how complex dynamic systems evolve. As a result, "business knowledge of the third kind" goes beyond the two previous types of knowledge by involving a systemic understanding of the socio-cultural and bio-physical dynamics of the global environment, thereby seeking to give rise to the evolutionary corporations of the twenty-first century (Nattrass and Altomare, 1999). Empowering the Knowledge Management in Organizations Today, organizations rely on their decision makers to make "mission-critical" decisions based on inputs from multiple domains. Empowerment and knowledge require ideal decision makers that possess a profound understanding of specific domains that influence the decision-making process, coupled with the experience that allows them to act quickly and decisively on the information. This profile of the ideal decision maker usually corresponds to someone who has lengthy experience and insights gained from years of observation. Although this profile does not mark a significant departure from the past, Becerra-Fernandez et al. (2004) drafted four underlying trends that increase the stakes in the decision-making scenario in KM: 1. Increasing domain complexity. The complexity of the underlying knowledge domains is increasing. As a direct consequence, the complexity of the knowledge that is required to complete a specific business process task has increased as well. Intricacy of internal and external processes, increased competition, and rapid advancement of technology all contribute to increasing domain complexity. For example, new product development no longer requires only brainstorming sessions by the freethinking product designers of the organization, but instead it requires the partnership of interorganizational teams representing various functional subunits-from finance to marketing to engineering. Thus, we see an increased emphasis from professional recruiters around the world seeking new job applicants who not only possess excellent educational and professional qualifications, but also have outstanding communication and team collaboration skills. These skills can enable them to share their knowledge for the benefit of the organization. 2. Accelerating market volatility. The pace of change, or volatility, within each market domain has increased rapidly in the past decade. For example, market and environmental influences can result in overnight changes in an organization. Corporate announcements of a missed financial quarterly target could send a company's capitalization, and perhaps that of a whole industry, in a downward spiral. Stock prices on Wall Street have become increasingly volatile in the past few years, resulting in the phenomenon of day trading where many nonfinancial professionals make a living from taking advantage of the steep market fluctuations. 3. Intensified speed of responsiveness. The time required to take action based on subtle changes within and across domains is decreasing. The rapid advance in technology continually changes the decision-making landscape, making it imperative that decisions be made and implemented quickly, lest the window of opportunity closes. For example, in the past, the sales process incorporated ample processing time, thus allowing the stakeholders a "comfort zone" in the decision-making process. Typically in response to a customer request, individual sales representatives would return to the office, discuss the opportunity with their manager, draft a proposal, and mail the proposal to the client, who would then accept or reject the offer. The time required by the process would essentially provide the stakeholders sufficient time to ponder the most adequate solution at each of the decision points. Contrast the sale process of yesterday with that of today, for example, the process required by many online bidding marketplaces thriving on the Web. Consider the dilemma faced by a hotel manager that participates in an Internet auctioning market of hotel rooms: "Should I book a $200 room for the bid offer of $80 and fill the room, or risk not accepting the bid hoping to get a walk-in customer that will pay the $200" Confronted with a decision to fill a room at a lower rate than what the hotel typically advertises poses an important decision that the hotel manager must make within minutes of a bid offer. 4. Diminishing individual experience. High employee turnover rates have resulted in individuals with decision-making authority having less tenure within their organizations than ever before. Consider, for example, the average age of a chief executive officer (CEO) in the new millennium. The number of CEOs below the age of 50 in Fortune 300 companies in the year 2000 was about 15%, an increase from about 5% in 1980. Furthermore, the median tenure of CEOs in office in 1980 was 7 years, down to about 5 years in 2000 [Neff and Ogden, 2000]. Because trends change so rapidly, even when a decision maker has been with a company for several years, that individual's experience may not be relevant to the decision that needs to be made. This creates a great disadvantage when making mission-critical decisions. One principal effect of these trends is immature intuition, where decision makers are less likely to understand the nuances of domain inputs due to the complexity in specific domains and their own tenure within an organization. Another such effect is the responsiveness of the decision maker. When facing external pressures, the need to respond is more urgent due to competitive pressures such as shortening product development cycles. Finally, the decision must be made clearly and correctly. This is because the need for swiftness in implementing an action after a decision has been made allows little market tolerance for wrong or unclear decision responses. So, what does this mean Faced with increased complexity, market volatility, and accelerated responsiveness, today's younger manager feels less adequate to make the difficult decisions faced each day. In the decision-making scenario described above, it is evident that knowledge can greatly assist the decision maker. In the past, this knowledge resided mostly in the decision maker. These previously discussed complications indicate that in modern organizations, the knowledge necessary to make good decisions cannot possibly all reside with the individual decision makers, hence the need to provide them with the requisite knowledge for making correct, timely decisions. Perhaps nothing has made more evident the need for KM than the corporate downsizing trend at public and private organizations that marked the reengineering era of the 1990s, a well-known feature of the economic landscape of the late 20th century. The dominant driver of downsizing in most organizations is well understood: rapidly reduce costs to survive against competitors. Clearly, a negative side effect of downsizing is the dissipation of the knowledge resources of the organization, resulting in devitalized organizations. Some of the symptoms of such organizations are decreased morale, reduced commitment, inferior quality, lack of teamwork, lower productivity, and lost of innovative ability [Eisenberg, 1997]. The fact is many of the individuals who were laid off as a result of downsizing had performed significant tasks and had acquired considerable and valuable skills over the years. Many companies are typically not prepared for downsizing, and few take any steps to prevent the escape of knowledge that usually follows. To minimize the impact of downsizing, organizations should first identify what skills and information resources are needed to meet mission-critical objectives. Therefore, effective methodologies, including tools and techniques to capture vital knowledge, are essential for an organization to maintain its competitive edge. In short, KM is important for organizations that continually face downsizing or a high turnover percentage due to the nature of the industry. KM is important for all organizations because today's decision makers face the pressure to make better and faster decisions in an environment characterized by a high domain complexity and market volatility, even though they may in fact lack the experience typically expected from the decision maker, and even though the outcome of those decisions could have such a considerable impact on the organization. Conclusion Knowledge is indeed power. This is because having the right information will enable one's business to succeed. As there are rapid changes in the field of KM, organizations should be adapting KM strategies that will lead them to progress. Moreover, Information Technology has catalyzed the further development of organizations because IT facilitates sharing as well as accelerated growth of knowledge. IT allows the movement of information at increasing speeds and efficiencies. For example, computers capture data from measurements of natural phenomena, and then quickly manipulate the data to better understand the phenomena they represent. Increased computer power at lower prices enables the measurement of increasingly complex processes, which we possibly could only imagine before. According to Bradley (1996): Today, knowledge is accumulating at an ever increasing rate. It is estimated that knowledge is currently doubling every 18 months and, of course, the pace is increasing Technology facilitates the speed at which knowledge and ideas proliferate. Not only is knowledge management awareness is increasing, the rate of knowledge production is itself increasing and accelerating. However, questions of what kind of knowledge is appropriate for socio-ecological well-being, who should be involved in its creation, and how it should be created, managed and positioned to evolve are as yet infrequently considered in development strategies. If knowledge is to be put to good use for human betterment, we need to democratize the processes through which knowledge is created, stored, shared, and used. Carrillo (1999) has recently outlined some of the current trends and future scenarios of the KM movement. He believes that once those engaged in the field of KM become aware of the knowledge base on "metaknowledge" (knowledge about knowledge and its management) it will enable the field of KM to "multiply its options for designing its own future" (Carrillo, 1999, p. 8). Knowledge is a process; a means more than an end in itself. The question that needs to be asked is: But a means for what For increasing the gap between rich and poor For exploiting natural resources in more efficient ways For unleashing the creative potential of every human being For creating just and sustainable societies Without intentional directionality, the evolution of KM could go in many directions - not all of which are in our greater collective best interest. Thus, it is safe to say that embracing knowledge management means creating a new corporate mindset while still being able to make trade-off decisions. The challenge is to engender a new way of thinking about all aspects of your company's operations that includes weighing knowledge into the decisions. For example, in a traditional environment one way to cut costs is to cut staff. But if you approach the problem from a knowledge management perspective, you see that knowledge is walking out of the door for the last time along with those departing employees. This could be the brilliant idea needed to solve next week's problem on the production line or the know-how needed to handle a tricky but important customer. But if that knowledge was never extricated, it is lost for your company forever. Job cuts are often a corporate reality, but, with the right management, companies can minimize the loss of knowledge that accompanies the loss of employees. In the same way, by thinking about knowledge management as part of the day-to-day operations throughout your business, you can maximize the returns garnered from the available knowledge. However, creating and sustaining a successful corporate environment is not solely a matter of knowledge management, but there are some critical knowledge management components. To draw the greatest benefits from a knowledge management program and to match best practice, leaders must also empower subordinates to have a desire for knowledge. If a knowledge management measure is to fall on fertile ground within an organization, every individual needs to be thirsty for knowledge. They should see knowledge management - that is, the active application, distribution and cultivation of knowledge within the company as a whole - as a fundamental part of their personal success and satisfaction. References Becerra-Fernandez, I, Gonzalez, A., & Sabherwal, R. (2004). Knowledge Management: Challenges, Solutions, and Technologies, NJ: Prentice-Hall. Bradley, K. (1996). Excerpts from his lecture at the Royal Society of Arts: "Intellectual Capital and the New Wealth of Nations," Stockholm, Sweden. Carrillo, F.J. (1999). The Knowledge Management Movement: Current Drives and Future Scenarios, Global Knowledge Partnerships: Creating Value for the 21st Century, University of Texas at Austin, Austin, TX, paper presented at the 3rd International Conference on Technology, Policy and Innovation. Chase, W. G., & Simon, H. A. (1973). The Mind's Eye in Chess. In W. G. Chase (ed.), Visual information processing. New York: Academic Press. Cleveland, H. (1985). The Twilight of Hierarchy: Speculations on the Global Information Society. Public Administration Review, 45: 185-195. Davenport, T. H., & Prusak, L. (1998). Working Knowledge: How Organizations Manage What They Know. Boston: Harvard Business School Press. Drucker, P. (1994). The Age of Social Transformation. The Atlantic Monthly, 274(5): 53-70. Feigenbaum, E. A. (1989). What Hath Simon Wrought In D. Klahr & K. Kotovsky (eds.), Complex information processing: The impact of Herbert A. Simon (pp. 165-180). Hillsdale, NJ: Lawrence Erlbaum. Minsky, M. L., & Papert, S. (1974). Artificial Intelligence. Eugene, OR: State System of Higher Education. Nattrass, B., Altomare, M. (1999). The Natural Step for Business. Wealth, Ecology, and the Evolutionary Corporation, Gabriola Island: New Society Publishers. Voss, J., Perkins, D. & Segal J. (eds.). (1991). Informal Reasoning and Education. Hillsdale, NJ: Erlbaum. Read More