Knowledge Management and High Performance Organizations - Essay Example

Knowledge Management and High Performance Organizations 2007 Knowledge Management and High Performance Organizations Introduction Knowledge Management (KM) has been a persistent organizational agenda item for the last two decades. Almost every large organization has implemented KM to support at least one critical business process while many companies have designed comprehensive KM programs covering the whole scope of business-related activities. Rapid development of KM practices in modern organizations suggests many organizational scientists believed that over the next several years, organizations will continue to invest in KM as one of the critical competencies in High Performance Organization (HPO) initiatives (Bogner & Bansal 2007). Although human knowledge may be an organization's most valuable asset, much of this knowledge is never shared. Harnessing critical knowledge and using it to create a common vision and objectives can move a company closer to making an HPO. KM supports the notion of HPO through "organizational values, culture, processes and tools that stimulate and support the organization's employees, partners and customers to create, capture, organize, access, and properly use the organization's knowledge that enables people to personally and collectively become more productive, collaborative and innovative" (Bogner & Bansal 2007: 166). The trend toward serious management changes made by large companies on the way toward making high-performance organizations is stressed in numerous theoretical and empirical studies. These changes revolve around one of the four commonly recognized approaches to organizational performance, namely employee involvement, total quality management, re-engineering, and knowledge management. Although neither of these categories can be addressed as simple knowledge management is "...the least well-defined and articulated of the four organizational improvement concepts" (Lawler 2002). Knowledge Management (KM) is a very broad discipline that integrates a number of organisational endeavours and practices used by different organisations in a variety of ways in order to identify, create, represent, and distribute knowledge and thus ensure competitive advantage of the company. KM represents one of the most recent developments in the long line of organisational tools and techniques such as 'the scientific management', X and Y' theory', 'T-groups', 'total quality management', 'organizational learning' 'systems thinking', 'benchmarking', 'business process re-engineering' and other methods meant to create economic value and competitive advantage. After becoming an independent established discipline in the middle of 1990s, KM is perceived as an essential aspect of HRM and information technology in modern organisations (Davenport & Prusak, 1998). The integrative and rather broad nature of KM contributes to the difficulties associated with defining this paradigm. Generally, KM is viewed as a new form of management which facilitates organizational adaptation, survival and competence in face of increasingly dynamic environmental changes. This broader perspective incorporates the processes of knowledge use, knowledge creation, knowledge sharing, knowledge transfer and knowledge renewal with each of these concepts being defined independently (Malhotra 2000). Therefore, Skyrme (2002) suggests defining KM as "the explicit and systematic management of vital knowledge and its associated processes of creating, gathering, organizing, diffusion, use and exploitation, in pursuit of organizational objectives" (p. 4). However, this definition of KM is far from being unanimous: the views vary substantially by representatives of different theories and approaches. Traditionally, two major views have been presented in the scholarly literature on KM, namely: the informational resources management (or management of explicit knowledge) and management, which creates the environment in which people could easily develop and share the knowledge while the increasingly serious attention to the interactive aspects of organisational processes have resulted in emergence of the third perspective. Thus, contemporary KM theories can roughly be classified into three major categories: 1. Technology-focused: primary focus on the enhancement of technologies that facilitate sharing/growth of knowledge. 2. Organisational: designing and reshaping the organisational environment in a way to facilitate knowledge processes. 3. Ecological: focus on the interaction process within the organisational environment involving people, knowledge and environmental factors (Gordon & Edge, 1997). The below overview provides some core concepts and theories related to effective KM system which is one of the keys to creating an HPO. Main Body One popular KM approach widely used these days is a so-called 'pragmatic management'. The main feature of this paradigm lies in the fact that it doesn't imply serious investments in the employees and their all-round development. Nevertheless, this solution as Thoben & Weber (2002) believe is in many cases not less effective than other approaches. The general implicit principle of pragmatic knowledge management could be postulated as 'A bird in the hand is worth two in the bush" and 'To make a mistake is better than to make no experience' (Thoben & Weber, 2002: 14). The other characteristic feature of pragmatic KM that it implies implementation of 90% of solutions in the short term, instead of 100% solutions in the long term. Apologists of pragmatism approach in knowledge management state that no large IT investments in employees are necessary; instead, people and systems are to be exploited as far as their functionality affords. Apparently, most of the methods utilized by the partisans of pragmatic knowledge management are new; instead, some of them had developed even before the very idea of KM emerged. However, the contribution of these methods to the modern KM is tremendous as far as many of the modern middle in size companies utilize pragmatic KM nowadays. This approach is especially popular in Japan where nearly even such industrial giants as "Sony", "Mitsubishi" and "Matsucita" utilize such principles of pragmatic KM as "talking rooms", "brainstorming sessions" etc. The primary asset of pragmatic knowledge management is that it literally "utilizes" the existing social and IT infrastructure of the company and, hence, doesn't require extra wasting of the companies. Secondly, nearly all of these approaches are either planned or implemented by the employees themselves that appears one more reason for extra savings of a company. Finally, the principles of pragmatic KM are relatively easy to implement and they provide quick feedback and acceptable results. Thoben (2000) also identifies the following methods and techniques of pragmatic KM that all share the general principle of IT savings: Personnel coaches who are responsible for introducing the novices to the colleagues, helping them recognize the business process as a whole, promote novels responsibility etc. Round Tables (or brainstorming sessions) targeted to involve the employees to meet regularly during the brakes of after the work in order to discuss current problems and develop optimal solutions. Common directory structure that doesn't allow employees to store their files on local hard disks; instead they are to locate them in a shared directory on a server. This measure helps to challenge personal responsibility, promote employee's creativity and working efficiency. "How Tos" principle of interactive knowledge development that suggest multiple solutions in different situations and promotes knowledge sharing and development among the employees (Thoben, Weber & Wunram 2000). Another popular approach to achieve organizational improvements in the field of creating and sharing valuable information on the way toward making a HPO is a more general behavioural paradigm of KM. The approach focuses on knowledge pooling through networking. Knowledge, in this case, is believed to be a dynamic idea that may be easily shared, developed and pooled through personal contacts. The main objective of the manager lies in this case, as Davenport and Prusak (1998) believes, in promotion of people's communication and sharing their knowledge instead of storing it. The theorists of the approach believe that knowledge pooling could occur on two main levels, i.e. IT level, and social level. Different companies subdivide each of two components depending on their business objectives. Groupware and the so-called "online companies" typify the IT component while "traditional" business companies focus on social networking that leads to the exchange of information. In the second case, knowledge sharing takes place rather on the intrapersonal level that helps companies to face the challenges of the market through their primary asset, i.e. knowledge-based personnel. A classic example of organizational KM is "Shell" that permanently looks for the solutions to improve drilling operations. The methodology of Shell's organizational KM is as following. Before all the company brings together prominent experts in the field to share their knowledge in multiple ways. These sharing could vary from experts' polls to brainstorming sessions. Than Shell's executive managers find out the "juste milieu" amidst the whole range of experts' decisions and implement the solutions practically (McDermott 2000). Although the approach is highly effective it is more costly if compared with the pragmatic approach. Explicit and Tacit Knowledge The concepts of explicit and tacit knowledge are critical to understanding how effective knowledge management can elevate organizational performance to a new level. Knowledge is an abstract multilateral concept which encompasses a wide range of facts, specific skills, procedural knowledge etc. Although the elements of knowledge seem to be equally important there have been many attempts to arrange the internal structure of knowledge in a sort of order. One of the most popular classifications of knowledge widely applied in the organisational research is based on the distinction between tacit and explicit knowledge (Polanyi, 1966). Nonaka and Takeuchi (1995) define explicit knowledge as follows: "can be expressed in words and numbers and can be easily communicated and shared in the form of hard data, scientific formulae, codified procedures or universal principles" (p. 40). By contrast, tacit knowledge is "highly personal and hard to formalize. Subjective insights, intuitions and hunches fall into this category of knowledge" (p. 40). Explicit knowledge in organizations is commonly stored in databases and other documents; the place of tacit knowledge is in the brains of people. Several knowledge management programmes implemented in the organisational practice paid specific attention to converting tacit knowledge into explicit knowledge believing such approach would result in substantial benefits. However, these attempts mostly proved useless and ineffective because no document, database or other source of explicit knowledge has the potential to adequately replicate the experience accumulated by human being over long years of work. The cognitive mechanisms which determine the process of choice between the alternative actions/solution represent another unique feature that can barely be replicated with the current technologies (Wilson 2002). Therefore, the only option that demonstrated certain level of effectiveness in transferring tacit knowledge into explicit was to "...provide pointers to the experts who will be able to put such knowledge into context and help those wanting to apply it" (Skyrme 2002: 5). Models and Theories The number of models and theories found in the KM related literature is impressive: almost every researcher working in the field seeks to create his own theory or model of effective KM. However, most often these models are developed specifically for unique organisational environments and often lack broader applicability. By contrast, broader models of KM developed by outstanding theorists on the basis of comprehensive analysis involving many organisations often need to be adjusted to take into consideration the specific environment in which they are to be applied. However, such models are evidently more valuable in terms of understanding the key KM processes, mechanisms and practices that can boost organizational performance. Knowing and Knowledge The core idea of Earl's (1998) theory of KM is the distinction between data, information and knowledge. Earl identifies four essential functions adherence to which determines whether an organisation can effectively manage its knowledge assets: - Inventorising: mapping individual and organisational knowledge. - Auditing: assessing the nature and extent of planned ignorance and then developing knowledge through learning activities. - Socializing: creating events or applying tools/techniques that enable people to share tacit knowledge. - Experiencing: addressing the problem of unknown ignorance by learning from experience, action and handling unusual situations. Although this model is one of the most widely recognised one within the KM paradigm it is more theoretical than practical in its nature, and its practical application is rather limited. SECI The famous Socialization, Externalization, Combination, Internalization (SECI) model proposed by Ikujurio Nonaka (1991) is recognised as "...a useful and rigorous approach to describing the ways knowledge is generated, transferred and re-created in organizations" (Despres & Chauvel 2000: 62). This model also known as the 'knowledge creation' model is based on the following principles: Two forms of knowledge: explicit and tacit. An interaction dynamic: knowledge transfer. Three levels of social aggregation: individual, group, and context. Four processes of knowledge creation: socialization, externalization, combination and internalization. Nonaka (1991) describes the concept of 'knowledge-creating company' the main characteristic of which is promotion of the interplay between the explicit and tacit knowledge with the help of specific systems and structures, and organisational culture. Intensive interaction between the four knowledge-creating processes plays the key role in this mechanism: Socialisation: the sharing of tacit knowledge between individuals. Externalisation: the expression of tacit knowledge in forms that can be easily understood by other members of an organisation. Combination: the conversion of small bits and elements of explicit knowledge into more complex forms via the processes of communication, dissemination, and systematization. Internalisation: the conversion of tacit knowledge which have been externalised into new tacit knowledge with subsequent transformation into practical actions, practices, and initiatives. Nonaka & Konno (1998) also describe the specific concept of Ba which represents a place for the dynamic process of knowledge conversion and emergence of new relationships across different levels of organisation. Nonaka & Konno (1998) identify four types of Ba: Originating Ba: a space where individuals share feelings, emotions, experiences and mental models. Interacting Ba: a space where conversion of tacit knowledge into explicit knowledge occurs. Cyber Ba: a space where new and existing explicit knowledge interacts in a virtual environment to generate new explicit knowledge across all levels of an organization. Exercising Ba: a space where the conversion of explicit knowledge into tacit knowledge occurs. The concept of Ba draws attention to the contextual nature of knowledge: once it is decontextualized is looses its value. Therefore, any process related to creation of knowledge requires a Ba understanding importance of which is the key to success of an organization, and organisations must ".... focus significant attention on the development of its Bas since more is to be gained by developing the environment around knowledge processes than efforts directed at the processes themselves" (Despres & Chauvel 2000: 63). A similar view of KM is provided by Gunnar Hedlund (1994) in his N-Form theory. The author proposes two basic groups of concepts (tacit and explicit knowledge and four levels of social aggregation) which dynamically interplay during the processes of knowledge creation, transfer, and use. The structure of KM which emerges during the interplay includes three dimensions: Two types of knowledge: tacit and explicit knowledge, each type encompasses three forms of knowledge, namely cognitive, skill, embodied. Four levels of carrier: individuals, small groups, organizations, the inter-organizational domain. The dynamics of knowledge transfer and transformation, which are articulated by the following processes: Articulation and internalization, the interaction of which is reflection, Extension and appropriation, the interaction of which is dialogue, Assimilation and dissemination (Hedlund 1994: 76). Hedlund believes that the KM processes such as creation, storage, transfer and transformation of knowledge should interact across the whole organisational structure. Intellectual Capital Management The Intellectual Capital Management model proposed by Van Buren (1999) seeks to develop a standard set of criteria applicable to evaluation of KM practices across different organisations. Two sets of criteria are identified for this purpose: The criteria related to intellectual capital assets: human capital, innovation capital, process capital and customer capital. The criteria related to financial performance and business effectiveness. The model implies that the organisations' intellectual capital should be identified in the first turn to be used as the initial input for KM related activities, processes and enablers. The most essential KM processes described by Van Buren are definition, creation, capture, sharing and utilisation of knowledge while the enablers reside in "...those corporate functions/systems/structures, which define, leverage and structure the firm's activity: leadership, corporate culture, communication, technology processes, human resources policy and so on. This therefore highlights the interaction of processes and enablers, all of which is placed in the context of a firm's business strategy: Knowledge Management efforts should be driven by strategic intent rather than the reverse" (Despres & Chauvel 2000: 74). The Ecology of Knowledge Management The Ecology of Knowledge Management model described by David Snowden (1999) represents an action-oriented system which relies upon four basic elements: Distinction between explicit and tacit knowledge. Knowledge assets. Trust. The certainty/uncertainty of decisions relative to (1) objectives and (2) causal relations These elements systematically interact creating the value of knowledge. Interaction is the key principle of this model because Snowden believes knowledge per se cannot create value. Mapping the existing explicit and tacit knowledge in an organisation is the first step; then the identified explicit knowledge is transferred to the specific knowledge structure or systems such as database and the identified tacit knowledge is turned into explicit and tacit knowledge difficult to make explicit is directed to competence management systems. Snowden (1999) identifies four types of practices meant to transfer knowledge across an organisation, namely: sharing explicit knowledge through systems and structures; sharing tacit knowledge through psychosocial mechanisms; transforming tacit to explicit knowledge through BPR, documentation and related; releasing tacit knowledge through trust and its dynamics. The balanced and adapted management of explicit and tacit knowledge is considered to result in an effective KM ecology within an organisation (Despres & Chauvel 2000). Conclusions Knowledge management can probably be addressed as one of the most controversial and multilateral, but very promising developments in the organisational practice over the recent decades. Although the concept's novelty and highly dynamic nature seriously hampers KM related research, the role of KM in management of high performance organizations is tremendous. Correctly designed and used KM strategy/system provides an organization with substantial competitive advantage through creation of a knowledge-based personnel, finding out the niches in the tights markets, development of business solutions in multiple areas. Most of the prominent business companies that are typically mentioned as HPO models report their devotedness to the basic principles of KM: IBM, Dell, British Airways, HP and many other large business and non-business organizations across the world belong on this list. Implementation of KM principles in business practice have changed the very fundamentals of traditional business including the way companies do their businesses, how they treat own employees and build their relationships both in the internal (between the employees) and external (customers, suppliers and competitors) contexts. Although the basic idea of knowledge management is universal - doing what is needed to get the most out of knowledge resources - its practical implementation may vary in each particular case. The variations are not too serious and mostly concern the share of attention paid to either technological or human aspect of KM while the key principles remain similar in the modern models of KM: explicit and tacit knowledge, interactive nature of KM processes, increased attention cognitive and motivational aspects of KM. Even superficial analysis of KM models mentioned above validates this assumption. The differences in KM systems implemented are mostly associated with different organizational structures and demands of the companies and different strategies in boosting their performance. Although the challenges related to designing/implementation of effective KM strategy are serious successful developments of recent years continue to demonstrate that they are not compelling. 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