Knowledge Management in Context - Coursework Example

Table contents Introduction 2 Managing knowledge 3 Knowledge management affects business cycles 4 Integrating business and knowledge 5 Knowledge management and human resources management 9 Knowledge management and environmental factors 10 Implementing knowledge in companies 12 Conclusion 13 Information Information may be defined as a message that is gathered after careful study and analysis of any situation or any other statistical data and something that has some relevant meaning that is helpful for its receiver. From the above definition it is clear that information involves some kind of relevant message. The message that is received must also be useful for the person who receives the message. Only then the message can be called as information. It is a message that informs the receiver. Knowledge Knowledge may be defined as a skill that a person has developed through continuous training and education. Knowledge refers to the in-depth understanding of a person about any particular subject. Very little information about cannot be termed as knowledge instead it refers to the understanding of a person about the theoretical as well as the practical knowledge about a particular topic. Knowledge management Knowledge management as the name implies refers to the management of the knowledge in an organisation. Knowledge management is a separate discipline. Knowledge management is the effort by an organisation to spread knowledge in an organisation through different activities. It refers to the processing of knowledge within an organisation. Knowledge management Introduction The world of business has changed a lot with regard to the focus that is being applied on objects that can generate profits. While decades ago, the sole aim of a business was to generate money and profits, today’s businesses are more interested in holistic development of their assets. Modern business managers have a yen to expand their horizons of knowledge to include more areas under the operational outlook of companies that they work for. Management is inclusive of many subjects and topics today. Unlike the yesteryears, management activities have included more subjects and diverse areas that holistically help companies to develop their assets. With the changing business outlook, companies have learned that there are various areas in management that can contribute to the overall stature and value of a company. These days, making money is not the only criteria that companies follow. In fact making money has become a secondary vision of companies and its managers. On the other hand, the focus is on improving the value of the company so that the overall worth of the company in the eyes of shareholders increases. The value-enhancing exercises of companies have helped them to explore new areas to invest and develop in order to increase their own value. The value of a company is not restricted to the tangible assets that it has and manages. On the contrary, intangible asserts also determine the value that can be attributed to a company. Knowledge management is one such area that deals with enhancing the intangible assets that a company has. The term knowledge management is an abstract term that refers to management of knowledge in the company. It follows that companies have to devise means and measures to manage knowledge in a firm. While this seems to be an easy task, the difficult part of the task is to decide and codify as to what amounts as knowledge. Rather, it becomes difficult to identify what does not constitute knowledge. Organisations cannot exist without knowledge and therefore managing knowledge becomes an expansive task in the company. For example, how would the company codify knowledge? How can knowledge be stored and retrieved? How can knowledge be used to develop further knowledge? The questions are endless and it becomes difficult to answer all these questions. In essence, it follows that knowledge management is a difficult process in the company and needs much more effort and management skills than what meets the eye. Managing knowledge Perhaps the biggest issue that crops up when managing knowledge is that it is intangible ad widely distributed within the company. For example, knowledge within the company may be distributed across people who decorate various roles in the company. The overall knowledge of the company to deal with day-to-day activities will be distributed in many people. For example, the generator technician and the electrician will know how to start the power supply to begin operational activities for the day. The administration manager will know how to manage the daily activities properly, while the finance manager will know how to manage the finances properly in the company. It follows that the knowledge areas that these positions manage, is sometimes mutually exclusive of each other but the synergy of these disciplines becomes extremely important to run the firm in a smooth manner. Therefore the task of managing and coordinating these various heads of knowledge becomes an important task for knowledge management experts. In addition, in terms of risk, it is not a good idea to keep the knowledge locked up in the minds of people who are managing the show in companies. The company cannot afford to lose the knowledge once talented employees shift jobs. Similarly, it is also not a good HR practice to concentrate knowledge on one person because such a person would become indispensable for the company to such an extent that he or she could bargain with the company for cornering benefits. Therefore knowledge has to be codified and maintained in a reusable form so that the company may use it without depending on a particular person. Hence it may be seen that knowledge management is a technique that deals with an abstract entity and is a very important activity for the organisation. Knowledge management affects business cycles It would be a worthwhile exercise to analyze the steps that are involved in the business cycle. This is in turn intricately related to the important steps in the product development process. Some of these steps are idea generation, screening of proposals, actual development and commercialization strategies. (Maas 2000). These factors help the business to apply their business strategies more effectively. When we considered business cycles, we can understand that there are also a host of other factors in the market that affect them. The business cycle is characterized by four phases. Expansion phase Peak phase Contraction phase and The trough. The principle phases are the expansion and the contraction phase. The other two phases are the intermediary stages of the two phases. A simpler description of the different phases would be Prosperity phase Liquidation phase Depression phase and Recovery phase Each of these phases is associated with characteristic changes in the market as well as the economy. During the expansion phase, which is characterized by a rise in economic activity, inflation inevitably rises and when there is contraction in the economy, the most significant thing that happens in the market is the loss of jobs. Growing companies need to pass through these phases once in a while and over many years they may have to witness many ups and downs. The knowledge that gained from each experience may be used as a reference for facing new challenges in future. Therefore, knowledge management involves learning from experiences and applying it to the company in order to maximise profits and returns. Integrating knowledge and business When it comes to managing knowledge, it becomes imperative that the knowledge acquired by the company has to be used properly to ultimately benefit the company. It may be seen that knowledge within the company can be considered as processes. A process is a unit of work that helps companies to perform a task. For example, manufacturing is a process that may be made up of smaller processes. Similarly, accounting is a bigger process that is made up of smaller important processes. It follows that a company exists on the strength of its processes and the strength of processes depends on the effective utilisation of knowledge associated with the process. Experts believe that knowledge management and Business Process Reengineering (BPR) are concepts that are intimately related. In fact a Business Process Reengineering initiative is a logical extension and consequence of effective knowledge management. (Teng et al 1995). (Malhotra 1998). With the increasing importance on processes, companies need to use processes to enhance their performances. This is how the concept of knowledge management became popular. Business houses believed that they could change the way that they were doing business by modifying or rebuilding the existing system. In fact, knowledge management paved the way for companies to have a re-look at how they were managing their assets and processes, particularly intellectual processes. With the advent of BPR, business manager changed the way that they looked at the production of the final product. There was a definite shift in focus of the business managers and they were concentrating more on the processes than on the final product. This is because managers soon understood that their approach and the way in which the company carries out its processes, has a great impact on profits that the company could generate. In addition, the steps involved in the implementation of process provide them with many opportunities to improve their operational efficiency. This led to a situation in which companies became process oriented and soon sub-processes within main process were identified. With the passage of time, it was understood that a company operates on many processes that came under the domain of a bigger process. Soon the concept of the company as a group of interrelated processes was evolved, where different sub-processes have great influence on the main process of the company. The definition of a process is very important to find out what exactly and how knowledge management and BPR are interrelated. Davenport & Short (1990, 11-27) describes a process as "a set of logically related tasks performed to achieve a defined business outcome" and that it indicates how work is done within an organization. "Business processes are simply a set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools. We all do them, and at one time or another play the role of customer or supplier.” (Business Process reengineering. 2002). It follows that each player in a business has his own processes. These processes are essentially the manifestation of knowledge that the company or the person would have acquired over so many years of experience and hit-and-trial methods. A supplier will have processes, which deals with his customers and his suppliers. Similarly a customer will have to deal with the processes of buying and the transport of goods that he has bought. Hence, processes are present in any business operation and no business operation is independent of its own processes. This in turn means that knowledge gained from processes contribute to system development. Processes are characterized by inputs, outputs and feedback. This also highlights the importance of information or knowledge management in the processes. The role of information in the form of feedback is important to understand whether a business is moving in the right direction or not and also to improve the existing systems which are in place. Information processing is also important to predict the future of businesses within a certain time period. Decision making is one of the major activities in business processes. “Decision making in organisations is, in several aspects, is different from the taking of decisions by individual persons.” (Menne p2). Davenport and short have given a definition of BPR as "the analysis and design of workflows and processes within and between organizations" (Davenport & Short 1990, 11-27). This statement tries to give a short description of BPR although it does not address the issue completely. A more complete and comprehensive definition was given by Teng et al (1994, 109-144) as "the critical analysis and radical redesign of existing business processes to achieve breakthrough improvements in performance measures." Teng’s (1994) statement helps us to view the definition and range of knowledge management. According to this definition a knowledge management initiative, in the bigger outlook of knowledge management, helps to 1. Analyze the strengths and weaknesses of a process and helps to benchmark process efficiency in organizations 2. Find out the interoperability issues between departments in a company so that the company operations can be maintained like a well oiled machine 3. The stress is on redesigning existing processes so that maximum breakthrough is achieved in performance measures. It follows that BPR is a measure, which is adopted to increase performance, and involves radical redesigning of existing processes to achieve that goal. It may be appreciated that perhaps these concepts were known to earlier business managers. However the need to codify these bits of information and use it for future reference is a new concept that is being spearheaded by a knowledge management initiative. Knowledge management is strategic and is not production oriented. It is radical it insists that knowledge must flow in an organization and that it must not remain stagnant (Hammer 1990). Knowledge management and human resources management “During the last years the importance of skill-management approaches has become more and more visible to companies. Companies have recognised that the knowledge of their employees is a competitive factor.” (Althoff, p 501). It critically evaluates the style of functioning that is currently in progress in a company, and suggests ways in which both processes and people may change their attitudes and operational styles. This approach encourages managers to abandon the processes that are already in place and look for new processes. The process of change is an inevitable managerial challenge within any organization. The change process within an organization happens when there is a genuine effort to change or improve already existing procedures or plans. Since human beings have an inherent quality to resist change, managers in charge of organizational changes have to apply tact and professionalism to affect a suitable change process within the firm. The methodologies involved in managing a change process cannot be strictly defined within the boundaries of management principles. The strategies that may be employed to manage change in an organization, depends on the environment in which the company operates, and managers often learn by experience. Once a strategy is accepted as successful, it may be made the basis on which further changes are effected in the firm. (Clemmer 2001). (Stoddard & Jarvenpaa 1995). The responsibility for effectively managing a change process lies with the managers who are in charge of the process. Successful managers opine that an effective change process does not define the steps, but defines the ultimate direction in which the change process must proceed. Managers have to lead by directing the change process and taking an active role in ensuring the change. Knowledge management and environmental factors “Top management has a legitimate concern regarding the strategy of the firm, as well as wide access to resources and environmental factors.” (Cortada & Woods, 2007). The initiative for process changes in an organization comes from either within the organization or it can be due to external factors. Internal factors that precipitate the need for a change can be due to a variety of reasons such as a need for enhancement of services, a change in management, or even discontent with the existing system. Whatever the reason, it is certain that there will be anger and support for a change that is proposed to be implemented in an organisation. Managing these voices of dissent and approval are also part of knowledge management and involves explaining the finer aspects of how changes will benefit the company. In such a situation, the primary concern of the manager would be to evolve a consensus between opposing parties to reach an amicable solution. This calls for a detailed work plan that identifies those areas that needs to be changed. After making a detailed recommendation, the manager has to make a decision as to which areas of the change processes requires immediate attention and what can be deferred to a later date. Even changes processes are dependent on how well knowledge is managed in the company. It is common knowledge that quality of a change process is determined by many factors and that the success of the change process helps the management to define strategies, which will form the basis for future change, processes (Kotler 1991). This means that the company has to rely on its own experiences from previous situations and inculcate knowledge that were learned to perform new tasks. Since change processes depends on cooperation and active participation of the employees, the strategy for change must be based on consensus and have to incorporate the principles of organizational behaviour to be a success. In short, the management must understand that any process that is designed for the future of the company requires substantial contributions from the employees in terms of knowledge and practical solutions. Knowledge can either be given to customers or taken from them. When knowledge about the product is given to the customer, or is taken from the customer for developing products or service, it becomes a part of the marketing effort [Henderson, 2000]. Hence, the role of knowledge management in product and service development is important. “Domestic companies can no longer ignore foreign competitors, foreign markets and foreign supplies. Companies cannot ignore emerging technologies, materials equipments and new ways of organizing.” (Kotler 1991). While a non-profit organization would not need to study and analyze knowledge that comes from the market, it would need to distribute knowledge about itself to the potential users of its services. Hence most knowledge based activities of such companies concentrate on giving out information rather than taking information from the public. On the contrary, most knowledge management activities of purely business oriented firms concentrate on balancing the level of knowledge input and output. Information within and outside the organization is also important when we consider the firm as an interrelated set of processes. Knowledge management with regard to information exchange with the external and internal environment operates in the following ways: It helps to analyze the strengths and weaknesses of a process and helps to benchmark process efficiency in organizations Find out the interoperability issues between departments in a company so that the processes can operate smoothly Since it stresses on redesigning existing processes, knowledge management may be adopted to increase performance, and involves radical redesigning of existing processes to achieve that goal. It is important to know when a company needs to process information. Factors such as bad performance, poor financial inflow, poor profits, fall in quality, external competition, erosion of market share etc are factors that serve as encouraging factors to initiate a timeframe for knowledge processing. Managing knowledge may also involve futuristic planning because the organization may feel that change management techniques would effectively increase the company’s overall performance. Information is also useful for the company to embark on such unpopular management steps like downsizing, restructuring, reorganization etc. These factors can best be termed as ‘side effects’ of a decision to implement responses to information or knowledge. Implementing knowledge in companies Managing knowledge also involves implementing knowledge in the company. This involves implementing the lessons that have been learned from past experiences to help the future of the company. There are many ways in which companies may implement changes that are encouraged by knowledge management initiatives. Associated with knowledge is the crucial aspect as to how one implements knowledge in the best manner possible. Companies may adopt different measures to implement solutions such as a continuous improvement model. The continuous improvement model worked by recording the current analysis of the processes that were happening in a company and then suggested ways based on this knowledge as to what would be suitable for the company in the future. The continuous model had no definite time frame as far as the improvement plans were concerned. The teams involved in the process were expected to suggest changes in a continuous manner and quality is never a static objective in this initiative. There are also other methodologies such as phased implementation of knowledge and implementation based on risk assessment. Conclusion Knowledge management is an important activity in an organisation because even though it involves managing the intangible assets in a company, it affects many important aspects of the business. Even though some management experts may considering knowledge management as not an important exercise, it pays rich dividends in order to manage knowledge in an institution. Since it covers many operational aspects of the company, it is a fine tool that can help the company to expand itself in many aspects. Another important fact is that since knowledge management covers all aspects of the operational cycles of the company, managing knowledge can in fact manage all aspects of the company in which it is managed. It enhances the overall productivity of the company and helps the company to learn from its processes and apply knowledge to new fields where learnt activities may be beneficial. However, Even though knowledge management has not become much popular because of the cost and process involved it is an initiative that companies must seriously give a thought. Additionally companies to pay more attention to popularising knowledge management and also must see to it that it adheres to such processes in a mandatory manner in order to enhance the quality of the company. Bibliography Althoff, Klaus-Dieter Professional knowledge management: Third Beinnial. p 501. Last accessed 18 December 2007 at: http://books.google.co.in/books?id=PAfxcZGCwtQC&pg=PA499&dq=Knowledge+management+and+human+resources+management&sig=bvt8lK7E0qdhYezLp5TImcte5iE#PPA501,M1 Business process reengineering. (2004). Overview. [online]. PROSCI. Last accessed 22 November 2007 at: http://www.prosci.com/reengineering.htm Cortada, James W., Woods, John A (2007). The knowledge management year book 1999-2002. Strategic considerations in knowledge intensive firms. P 175. Last accessed 18 December 2007 at: http://books.google.co.in/books?id=2iRY4HLtjeIC&pg=PA175&dq=Knowledge+management+and+environmental+factors&sig=rzHJdGFOwkGSkh9Oe97XbakPG_0#PPA175,M1 CLEMMER, Jim (2001). 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