Knowledge Management Plan for Dell Inc - Case Study Example

 KNOWLEDGE MANAGEMENT PLAN FOR DELL INC Executive Summary Human capital is undoubtedly one of the most valuable and powerful assets in an organization and therefore recruiting, selecting, training and retaining skilled, experienced and knowledgeable employees have become a main focus of Human Resource Management. Knowledge management has recently gained significant attention among top executives and Human Resource experts as they consider it one of the highly useful strategies to ensure High Performance Working and sustainable competitive advantage. Any resource added to the business may not yield the desired positive outcome unless human resource management concentrates on enhancing the competency, efficiency and knowledge of its people in order to make them more competent and productive. Many businesses are rich in information or are able to create sufficient knowledge, but they fail to effectively share it with others or to utilize it for the overall benefits of the organization. Knowledge Management, provides a management framework that helps create knowledge, share it with others and use it for the business to achieve its targeted goals (Christensen, 2003, p. 14). This paper is prepared as a report to be submitted to the CEO and management executives of Dell Inc outlining a Knowledge Management plan and useful KM strategies for the company to achieve greater competency in its business landscape. Dell Inc, a very successful fortune 500 company within few years, has recently implemented its ‘customization’ strategy for computer marketing with an objective of ‘collecting more accurate and reliable information from its customers’. This paper recommends a KM plan to Dell Inc to make use of information and knowledge that it gathers from customers to the overall benefits of the company. Introduction Knowledge is power. When it comes to a company, it is a powerful asset and critical factor to the business success. Many organizations have found effective knowledge management as an extremely useful management strategy that helps it adapt to the changes and modern requirements due to the technological advances and helps gain competitive advantages. The KM is a recent development and new interdisciplinary approach to the Human Resource Management and it involves people, process and technology in an organization. This piece of research work presents a brief explanation of knowledge management and an overview of Dell Inc and its business strategies to find an effective knowledge management plan for the company to help it gain better business outcomes. This paper addresses some of the KM strategies like organizational learning, retaining knowledgeable employees, reward and recognition, motivation and team-work and its applicability to the company will be analyzed in this paper. Knowledge Management Knowledge management is a management system that focuses on fostering business performance by designing, developing and implementing tools, systems, processes and structures so as to improve the creation of knowledge, sharing and using of it for the overall business benefits (Noe, 2002, p. 168). The very basic three elements included in Knowledge management are thus knowledge creation, knowledge share among the people and knowledge use for the organization. As Kumar and Thondikulam (2005) noted, Knowledge management is the process of capturing and utilizing a firm’s collective expertise anywhere in the business within the framework of trading partners- in papers, in documents and in databases that are called explicit knowledge and in people’s minds that are called tacit knowledge (p. 171). Knowledge management ensures effective flow of information and knowledge between people, process and technology. Human Resource Managers in recent years have been giving greater emphasis on modeling and developing an effective KM plan in the organization in order to bridge the gap between organizational change, innovation, learning and strategies. Forster (2005) emphasized that KM encompasses all those processes by which experiences, knowledge, expertise and skills of employees are gathered, shared and used for the organizational purposes and then converted in to a collective organizational learning process that in turn ensures improved organizational performance and employee productivity (p. 397). It is a business strategy aimed at discovering and harnessing an organization’s intellectual resources, by finding, unlocking, sharing and altogether capitalizing on the most precious resources of the organization (Bateman and Snell, 2003, p. 8). Austin, Classen and Vu (2008) found that Knowledge management is more than ‘information management’ or ‘information technology’, because it includes linking individuals to each other through organizational structures and systems that help organizations recognize, create, transform and distribute knowledge among its people (p. 363). As Nonaka (1994) pointed, the management focus has been shifted from information technology to the understanding of interactional process of knowledge creation, share and use. By reviewing various definitions and literatures of knowledge management, Awad, Awad and Ghaziri (2004) found that knowledge management comprises of six common components, as follows: Using accessible knowledge from sources of both inside and outside Embedding and storing knowledge in business processes and products Presenting knowledge in documents and electronic or otherwise databases Fostering knowledge growth through organizational programs Knowledge sharing and transferring , and Assessing the value of knowledge assets and evaluate its impacts on a regular basis (p. 27). Dell Inc: Company Overview Dell Inc, started on 1984, has grown to become the largest PC manufacturer and distributor in the world by 1990 with its most effective marketing strategy of ‘direct marketing’. Dell Inc and its founder Michael Dell have been focusing on giving high quality computers to its customers at competitive prices, mainly through direct-marketing distribution strategy (Holzner, 2005, P. 4- 6) and this has helped it become 34th in fortune 500 companies by 2008 ( Dell’s business Strategies 1- Going direct model and its impacts on flow of information Direct marketing (selling its computers ‘directly to the customers) was Dell’s backbone. Michael Dell has been pursuing direct-marketing model and he was using internet-technology to blur the limitations in the traditional distribution channels (Thomas, 2002, p. 163). The direct-marketing strategy of Dell resulted in a particular Supply Chain system that has helped it maintain just enough inventories so as to reduce costs, eliminate inventory handling risks and satisfy its customers. As far as Dell’s case is concerned, there was not much time lag between the point of demand and supply and this gave more efficiencies in its business operation (Magretta, 1998, p. 119). The Direct-marketing approach of Dell and Just-in-time delivery became differentiating point of its marketing to give it greater marketing advantages (Paley, 1999, p. 374). The direct-marketing strategy implemented by Dell Inc has significant impact on ‘flow of information’ that in turn is a potential for implementing an effective knowledge management. Magretta (1999) emphasized that when there are more intermediary channels and the distance is longer, then the business is less likely to have good information about customers, their demand and their specific requirements (p. 199). Dell has been gaining more accurate and reliable information from its customers as it has been approaching its customers directly through phones, websites, fax and emails. 2- Customization and its impacts on ‘information gathering’ ‘Customization’ is one of the very successful marketing strategies implemented by Dell Inc in recent years. It provides customization option to its customers so that customers are free to access Dell’s website, select computer models they want and design the required computer products. Different customers need computers in different size, capacity, memory, processor and so on. As Dell facilitated ‘customization’ to the customers, it was eventually becoming a ‘customer-focused’ company by collecting very accurate information about customers’ requirements and by designing and developing products accordingly. Bidgoli (2004) found that most computer customers search for information before they buy. Dell’s website is an easy accessing media for customers as they can move immediately to their interested areas and they can decide on purchase (p. 532). Every phone call, website visit and customer feedback that it receives eventually became its assets adding values to its information and knowledge base. Theoretical framework of Knowledge Management Knowledge management is a process or system that encompasses people, process and technology and relies on data, information and knowledge stored either in papers, documents or database in order to create new knowledge, share the knowledge which is created and stored and use the knowledge, which is created, stored and shared among the people, for the benefits of the organization. Based on this, there are basically two typologies to explain Knowledge Management. 1- Explicit and Tacit knowledge Lehaney (2004) argued that one commonly used typology of knowledge management is classifying it by differentiating tacit and explicit knowledge. A manager may find it difficult to analyze and find solutions for the problems from pure data, but structured data is more likely to be effective problem solving and managerial purposes (p. 16). Knowledge created or stored in or shared through papers, documents and database is known as explicit knowledge where as tacit knowledge is created, stored in and shared through human minds. According to this classification, knowledge management can be summarized as a process of obtaining and making use of a firm’s collective expertise in an organization throughout papers, documents and database as described as explicit or people’s minds described as tacit knowledge. It is widely agreed that knowledge is may be tacit or explicit in nature, however, the challenge is in determining how each knowledge type can be codified and transferred in an organization (Torun, 2009, p. 11). The Japanese knowledge management scholars Nonaka and Takeuchi described that an individual or an organization is able to possess tacit and explicit knowledge. Explicit knowledge can be easily articulated, coded, transferred and written or recorded in manuals, papers, documents and databases (Torun, 2009, p. 11). 2- Data, Information, Knowledge and Knowledge Management Discussions of knowledge and knowledge management often describe differences between data, information and knowledge. Small and Sage (2006) described knowledge management as an intersection of information, experience, wisdom and theory. When knowledge is successfully applied, it is known to be wisdom (p. 154). Figure below shows how various elements like data, information, knowledge, wisdom, theory and learning make a way to managing knowledge. The figure above illustrates that experience also contributes to creating knowledge. Employees’ experience thus can play vital roles in creating knowledge and make use such knowledge for the benefits of the organization. Knowledge Management Plan for Dell Inc This part of the research paper attempts to recommend a Knowledge Management plan for Dell Inc, by considering both KM interventions and Dell’s strategies like going-direct and customization. Out of many successful strategies Dell implemented, only two strategies- direct-marketing and customization- are considered because they two result in obtaining more useful and accurate information from customers. These both strategies in fact make Dell rich in information and knowledge. An effective KM plan, based on some of its effective interventions, thus would be a success pathway for Dell to manage its knowledge by sharing and using it for the benefits of the company to make it highly competitive in its marketing landscape. The above depiction illustrates a ‘4-stage’ Knowledge Management plan for Dell Inc, suggesting 4 basic knowledge management sharing interventions as well. This plan shows that by integrating Dell’s direct marketing and customization strategies with four knowledge sharing strategies, namely reward and recognition, teamwork, interpersonal relationship and retaining experienced people, Dell will be able to achieve a number of business results like competitive advantages, high performance working, increased productivity etc. Knowledge Creation Most KM experts found that knowledge is either explicit or tacit. Explicit knowledge is created through data, information or knowledge that are made available from papers, documents and databases. Preparing manuals, papers, documents and designing databases are thus major ways for creating knowledge. As discussed earlier, Dell is rich in information as it gathers numerous data and information directly from its customers via its website or fax etc. These information are either automatically analyzed, recorded and stored in electronic database, or manually analyzed and interpreted. In both these cases, knowledge can be created in an effective way. The ‘direct-marketing’ and ‘customization’ strategies of Dell Inc are thus very effective business strategies to gather more useful, reliable and accurate information about customers, their demand for specific products and their requirements. Tacit knowledge can be created by selective hiring and finding wise, knowledgeable, experienced and qualified people. A knowledgeable employee is an asset and is more likely to be more productive than one who is not knowledgeable or experienced. Recruiting of talented, experienced and knowledgeable human capital is thus an easy approach to create tacit knowledge. Yalabik and Chen (2008) emphasized that knowledge can be created and created knowledge can be empowered through selective hiring and extensive training in a way that knowledge can be shared in the organization as well (p. 1). Pfeffer (2001) found that knowledge creation through selective hiring is closely related to bringing high performance working in the organization. Training, more selective hiring, recruiting and even higher wages, as Pfeffer viewed, are major investments as it will help bring high performance in the organization through knowledge creation (p. 3) When it comes to the case of Dell Inc, it has greater potential to obtain vast information directly from its customers with its strategies of direct-marketing and customization. Dell requires selective hiring and effective recruiting of highly talented, experienced and knowledgeable personnel so that it gains not only physical availability of those people, but rather intellectual power of knowledge they possess as well. Knowledge Share Once knowledge is created, unlocked, uncovered and stored either in papers or database or human minds, the second and most important step is to ensure its free-flow within the organization. Knowledge stored in a paper is nothing useful unless it is transferred to something else, shared with others or studied and evaluated by respective authorities. The explicit knowledge thus can be shared by converting data or information in to more useful forms like data-sheets, customer-feed back summary, customer-segmentation analysis etc. Dell gathers information from customers and this information can be converted in to more useful forms by studying, analyzing and evaluating that information in order to ensure smooth knowledge share. In today’s business environments, these tasks are almost always done automatically by software or electronic devices. The case of sharing of the tacit knowledge is highly critical to the success. When Dell Inc selectively hires or recruits talented, experienced and knowledgeable people, it must ensure a free-flow of knowledge among its people. In order to enhance knowledge share in the company, this paper suggests four basic KM intervention for Dell Company. they are 1) Reward and Recognition, 2) team-work, 3) interpersonal relationship and 4) Retaining experienced/ Older employees. These four strategies are detailed below: 1- Reward and Recognition for enhancing knowledge share Reward and Recognition is an integral part of today’s Human Resource practices. The basic underlying principle behind reward and recognition is that work and efforts of employees must be appreciated which motivates them to work well and become high performers. Reward and recognition can be extended so that those employees who share their knowledge or those who contribute significant information must be rewarded. When there is an effective reward and recognition, Wimmer (2003) argued that there will be more stronger social networks that enhances knowledge share as well (p. 272). According to him, reward and social networks are closely interconnected and both are influencing factors to enhance knowledge share. Figure below illustrates how reward enhances social networking. As shown in the figure, the level of reward directly affects social networking and therefore when there is better reward and recognition along with social networking and better communication channels, the degree of knowledge share also will be relatively high. Small and Sage (2006) argued that intrinsic rewards like saving work time, participating in interesting dialogues, personal pride professional improvement can support knowledge share in the organization (p. 162). Effective knowledge management is more active in organizations that have implemented effective reward and recognition program as well (Austin and Claassen, 2008, 374). Cash payments or incentives are common and more effective ways of motivating and rewarding employees. Knowledge share is largely influenced by cash-payments and incentives (Wolfe and Loraas , 2008, p. 55). Dell Inc thus requires a systematic approach to facilitate reward and recognition program in order to enhance free flow of knowledge share and knowledge transfer from more experienced and knowledgeable people to those who aren’t. For this, Dell requires not only intrinsic rewards and setting-aside an additional budget for incentives, but also designing a program that motivates and promotes those who share or transfers knowledge to their colleagues. 2- Teamwork for Knowledge Share Teamwork is one of the major HR interventions that make employees feel more responsible and self motivated towards bringing positive outcomes. Noe, Hollenbeck and Gerhert (2003) described teamwork as assigning works to groups of employees with various skills who interact to achieve a specific objective (40). Members in the team will be demonstrating commitments to each other and to the end goal (DeJanasz, Dowd and Schneider, 2001, p. 310) and there will be better communication between team-members. Austin and Claassen (2008) found that teamwork is an essential HR component that enhances knowledge share (p. 377). Dell Inc requires assigning tasks to various teams and motivate teamwork with an intention to foster their commitments to the achieving goals and also to motivate effective communication that in turn creates a knowledge sharing and knowledge transferring environment. 3- Interpersonal relationship for knowledge share Knowledge can be easily transferred from more knowledgeable to less knowledgeable when there are better relationship between people. Human Resource management considers mentoring and coaching as approaches to foster interpersonal relationship to help employees develop their abilities, skills and knowledge (Noe, 2002, p. 303). Dell Inc requires assigning mentors and coaches who must be able to evaluate the abilities and skills of its employees and evaluate methods or implement strategies that can help employees develop their interpersonal skills. Mentors are those who are expert, experienced and knowledgeable to motivate others develop their personal and professional skills (DeJanasz and Dowd, 2001, p. 256). 4- Retaining older/experienced employees Often, older employees are more experienced and they are mostly retained in the organization. Knowledge is power and knowledgeable people are assets and thence they are to be retained to ensure knowledge transfer to new employees. Many companies realized that older workers are experienced and they contribute much to sharing knowledge with others and thus to create an organizational learning environment, though there may be increased expenses for keeping older workers like health and insurance costs. Major US companies are retaining older workers over 55 and youngsters often get dismissed (Weber, 2009). As part of the KM plan, Dell Inc should consider retaining its experienced and knowledgeable employees rather than dismissing them from their work. As Shultz and Adams (2007) pointed, older employees are rated lower on the basis of ability to learn quickly. But, they are higher rated than youngsters on academic skill levels, ability to accustom with various environment, salary expectation and work ethics (p. 165). Retaining older or experienced workers will be an advantages to Dell Inc to ensure smooth knowledge transfer and knowledge share among its people. Knowledge Use The third stage of Dell’s KM plan relates using of the knowledge to help it achieve its organizational goals. Dell Inc obtains knowledge either through its business strategies- Direct-marketing, Customization- or through selective hiring or extensive recruiting for creating tacit knowledge. As its second stage, Dell should focus on various strategies to ensure transferring or sharing of the knowledge, may be in the form information, or data or wisdom or knowledge. As next step, Dell should focus on using the created and shared knowledge for the overall benefits of the company. Knowledge is a resource and if its is effectively managed, Dell Inc can bring better outcomes like maintaining competitive advantages, attaining high performance working etc (Boxall and Macky, 2009, p. 10). As and when people become more knowledgeable, they tend to become more aware of organizational goals, committed to work well and more responsible,. That in turn help them become high performers. Dell would be thus able to 1) maintain competitive advantages, 2) increase productivity, 3) attain high performance working, 4) achieve customer focus and 5) increase its profitability as well. Evaluative Conclusion This paper is prepared as a report to be submitted to the CEO of Dell Inc suggesting a Knowledge Management plan for the company. the paper has highlighted basic elements of knowledge management, its underlying principles and business strategies of Dell Inc in relation to aligning them with KM plan. The main finding of the paper are listed below: Finding of the paper Knowledge Management comprises of basic three elements, they are creation, share and use of knowledge. These three elements are reflected in the KM plan Dell’s direct-marketing and customization strategies in fact make Dell an ‘information-rich’ company. So, a better KM plan can help it bring better outcomes. Knowledge created may take various forms like, data, information, knowledge or wisdom. Managing tacit knowledge is more critical to the success than the other, due to that explicit knowledge is mostly shared or managed electronically in these days. So, this paper gave more importance to strategies for managing tacit knowledge. Reward and recognition, teamwork, interpersonal relation and retaining older and experienced employees are highly successful and effective strategies for knowledge share, and these are recommended for Dell Inc. There can be a number of positive outcomes of the proposed KM plan for Dell Inc, including competitive advantages, high performance, increased profitability, increased productivity and customer focus etc. Recommendation for future research Though some companies retain older employees, many companies find them obsolete and they recruit fresh or young candidates. HR literatures argue that retaining older workforce is a more powerful KM strategy, but, it is recommended that the current practices and empirical evidences are to be explored in order to find how far companies find it successful and what are major difficulties for retaining older people in the organization. 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