RJY Company - Knowledge Management - Case Study Example

Developing a Knowledge Management Plan Name: Institution: Executive Summary Research indicates that knowledge management (KM) forms a significant source of sustainable competitive edge for any organization. By knowledge, we mean all explicit knowledge (policies, procedures, rules, etc) and implicit (workers’ skills and experiences) knowledge found within an organization. Since competitors cannot duplicate such organizational resources easily, then effective management of these resources can lead an organization towards achieving sustainable competitive advantage. It is for this reason that this report aims to develop a KM department plan for RJY Company. An effective KM department will help the firm exploit its knowledge resources, which currently remain underutilized, and use them to propel the firm to find its rightful competitive position in the industry. The right position in the organizational chart to place this new KM department has been determined and can be found under the heading ‘creation of the new KM department.” Project duration is estimated to be nine months, during which performance evaluations will be carried out to identify possible bugs that need attention before the department become operational. The earlier the top management implements the initiative, the better because KM is an emerging field that many companies in the industry have not yet embraced, meaning a competitive edge for our company. Table of Contents Developing a Knowledge Management Plan Knowledge Management (KM) emerges from the consensus that perhaps the most significant source of sustainable competitive advantage in an increasingly turbulent international environment is knowledge. KM gives organizations capacity to develop, discover, share widely, and embrace knowledge in new products and technologies when faced with fluctuating market conditions, increased competition, swift product obsolescence, and other economic disorders (Awad & Ghaziri, 2007). It is the process of capturing and making use of a firm’s collective expertise anywhere in the business- on paper, in documents, in databases (called explicit knowledge), or in individuals’ skills and experience (called tacit knowledge). Christensen (2003) defines KM as a method used by firms to identify and leverage their collective knowledge and in turn, assist them to compete. Effective KM leads to more autonomy in space and time for knowledge employees, less work, less errors, improved decisions, less reinvention of the wheel, enhanced customer relations, and financial performance. Therefore, in today’s business environment, companies need to embrace KM through creation of independent KM departments if they need to gain or preserve their competitive advantage. This report explores why it is important for RJY Company to create an independent KM department in its organizational structure. Currently, the Company lacks a KM department implying that it does not recognize significance of managing organizational knowledge and associated benefits. Therefore, this report aims to examine importance and advantages of KM in order to convince CEO and other executive leadership team in RJY Company to create a KM section within the organization, which will have timeline for the implementation of the new department as nine months. Importance of Creating the KM Department KM refers to the recognized, integrated technique of managing an organization’s articulated and tacit knowledge resources. In organizations, knowledge resources comprise of documents, policies, procedures, and systems, as well as unarticulated knowledge and skills of workers. The fact that we are moving from the industrial age to information and knowledge age has made businesses realize the importance and relevance of KM in gaining or enhancing their sustainable competitive advantage. According to Claver-Cortes, Zaragoza-Saez, & Pertusa-Ortega (2007), KM has become important for organizations because it acts as the source of competitive advantage through product differentiation, setting high entry barriers, developing customer-focused products and services, improving supply chain management, sustaining innovations and enhancing organizational responsiveness to changing market conditions. Davenport and Prusak argue that expertise remains the primary source of creating wealth and thus, its protection is critical in generating and preserving competitive edge. Therefore, a sustainable competitive edge arises from what an organization, as a whole knows, how effectively it applies what it understands, and how readily it obtains new expertise. This implies that an organization will only achieve a continuous competitive advantage over its competitors when the organizational resources are “valuable, rare, inimitable, and non-substitutable” (Schwartz, 2006, p.35).Since it is only knowledge that satisfies all these four conditions, it means that management of knowledge presents organizations with strategies to leverage their knowledge in unique ways. According to Bahra (2001), KM ensures innovation and growth of the company, organizational responsiveness, customer focus, supply network, and internal quality benefits. KM ensures improved innovation and growth of the company because its capacity to transform tacit expertise of workers into explicit or articulated knowledge. Distinct tacit expertise of workers remains essential for an organization because is the source of organizational creativity. It leads to organizational capability to develop and implement new products, services, and processes that satisfies expectations of the customers (Yao-Sheng, 2007). However, tacit expertise remains embedded in individuals and cannot be readily disseminated, understood or applied without involving the affected subject. Therefore, an organizations needs to look for a way to share and apply such knowledge. KM provides this way as it converts the tacit knowledge into articulated knowledge, which is easily transferable across the organization. Organizational responsiveness relates to the business benefits that result from reducing geographical barriers, achieving organizational integration and flexibility, sharing ideas, and improving the speed of decision-making (Nonaka, 2005). KM exploits both explicit and tacit expertise to enable an organization to make effective and efficient decisions during turbulent market conditions. Enhanced supply network describes importance of KM in helping firms to drive-in their supply chain management, increase supply chain efficiency, integrate logistics, tighten supplier relationships, and preserve existing markets. Internal quality encapsulates inward-facing business benefits that result from process innovation, developing and sustaining a capability for change, operational efficiency, better project management, effective product/services management, improved staff morale, and quality of decision-making. In addition, O’Dell, Elliot and Hubert (2000) state that KM is important as it is enables an organization to focus on important issues that include customer intimacy, product-to-market excellence, and operational excellence. Based on this, it will be greatly beneficial for RYJ Company to implement a KM department within the organization. This will enable the organization to enjoy most of the benefits that KM offers. First, it will assist the company to preserve its competitive edge over other companies in the industry. This is because KM will exploit both tacit and explicit expertise within the organization and manage it in way that it is difficult to be imitated or duplicated by other competing firms. The department will also help the company to transform tacit knowledge of its employees to explicit knowledge, which can be stored and subsequently transferred to other workers in the organization. This will help the company solve the existing problem of loss of tacit knowledge, which results when employees retire from or leave their job responsibilities in the company. Not only will this enable the company to be innovative, but it will also facilitate development and implementation of customer-focused products and services. Moreover, the department will enhance the company’s response to changes in the market. KM involves continuous collection, communication, and application of knowledge to help an organization develop market-responsive initiatives. Therefore, creation of the department is long over-due and now it’s the time that CEO and other executive leaders should implement it fully enjoys benefits associated with management of knowledge. Main Activities of KM Department In overall, KM involves creating, capturing, storing, sharing, transferring, implementing, exploiting, and measuring knowledge assets to meet the requirements of an organization. On the other hand, knowledge assets involve both tacit knowledge (skills and experience of individual workers, workgroups, and other organizational stakeholders) and explicit knowledge (e.g. systems, policies, procedures, and other important organization’s documents (Jennex, 2007, p.2). Therefore, the main activities of KM department in RYJ Company will involve functions aimed at achieving the aforementioned aspects. The first crucial function of the department will include identifying the most important knowledge resources critical in ensuring the company’s ability to preserve its competitive edge. Such activity is essential because not all resources of expertise in the organization are important. Thus, the department should differentiate important from not important knowledge assets. Secondly, the work of the department will include implementing strategies to capture, exploit, and store the knowledge assets. Holsapple (2003) argues that effective KM departments should develop network infrastructure comprising of methods and tools in order to allow effective collection of all necessary repositories of knowledge. Thus, the KM department within RJY will need to develop and implement a network to gather and store collected knowledge for future use. This function also includes promoting knowledge exchange among workers, workgroups, and departments within the organization. This is important because it remains the only feasible way to collect and store tacit expertise within individuals. The department also will play an advisory role that will involve advising the company’s management about effective KM practices and their contribution to improved performance of the company. It will need to advise the managers on effective knowledge collection methods that will not jeopardize ethical and legal responsibilities of the organization. Lastly, the department will carry out evaluation tests to assess its performance concerning improved organizational performance. This will also provide an avenue for improving the department because the evaluation will point out possible weaknesses that can be improved to ensure department’s efficiency. Advantages of Creating the KM Department KM offers various benefits to organizations that embrace its elements and principles through creating KM department, just like any other organizational department. According to Bahra (2001), some of the benefits associated with KM department include enhanced competitive advantage, production of customer-driven products and services, creation of product-to-market excellence, operational efficiency, and improved workers’ productivity. Therefore, there is an urgent need for RJY Company to implement a KM department if it needs to enjoy these benefits. First, the department will help the company achieve sustainable competitive advantage based on knowledge management. Knowledge is regarded as the only organizational resource that cannot be duplicated or imitated easily by competitors. Therefore, RJY only needs to create a KM department for it to nurture, store, and share knowledge within the organization, and in turn, achieve a continuous competitive benefit. Another benefit of the department regards improved ability of the company to develop product customer-focused products and services. This will arise from the combined effects of increased organizational creativity and customer feedbacks. KM department will implement strategies to tap creativity of workers and therefore, help the company design and create products based on feedbacks, opinions, preferences, and comments from consumers. In this way, RJY Company will not only realize improved profitability due to increased sales volume, but it will also win the loyalty and confidence of both customers and investors. Product-to-market excellence is also developed, and it focuses on three transfer strategies that include: ensuring new ideas and new designs from inside and outside the organization are incorporated into product and service offerings, accelerating product development process by reusing lessons learned from earlier attempts and collecting and disseminating competitive and market information internally, where speed is crucial. By reducing production and distribution lead-time, creating and marketing customer-driven products and preserving its competitive edge, RJY Company will achieve improved financial performance while at the same time increasing its customer base. Operational excellence that aims to boost revenue by reducing the cost of production and increasing productivity-raising performance to new heights will also achieved. This will arise from the fact that the department will provide storage of explicit knowledge, which means that the company can use it for future use. Creation of the New KM Department Department’s Placement in the Organizational Structure Holsapple (2003) observes that there is a great deal of variability in the KM governance. In some organizations, KM department is a superior division that reports openly to the CEO or assistant CEO. In others, it appears to be more subordinate function reporting to human resource managers. Often, KM department is included as a matrix function with multiple tiers reporting to many different parts of the organization as well as within KM itself. This last model presents the best alternative available to help RJY achieve its long over-due completive advantage. Using the current organizational structure of RJY Company, the KM department should have direct link to the general manager and lateral relationship with the other departments. The following diagram shows placement of the KM department on the company’s organizational chart. The KM department manager should report directly to the general manager, but not to any other departmental head. This will prevent other departments from influencing operations of the department. Figure: Organization chart of RJY Company with KM department integrated. The department should have lateral relationship with other departments to ensure the required exchange of knowledge between the department and other departments. Placing the department superior or inferior to other may hinder collection and exchange of knowledge. Resources Required RJY Company will rely on the existing information technology as the core framework to support the KM department. Other resources will include labor and funds. The initial technological out lay will include KM software-supported computers and network interconnections. This will assist the department in internal and external communications. It will be able to receive comments and ideas from customers and the employees of the company via electronic mail or via postings on their website. The communication network infrastructure should also include internet-enabled mobile phones to ensure effective communication between the department and other organization’s section as well as knowledge resources. Such network will also enable easy and timely exchange of knowledge between individual employees, workgroups and other organizational stakeholders (Petrides, 2004). The department will initially consist of six employees, which includes a KM manager, two assistants, two knowledge codification personnel, and one computer and network specialist. The department manager will report directly to the top executives including the CEO and the managers from other departments. His duties will be to provide analyzed timely information that the top management can use when making both short term and long term strategic decisions. The two assistants will be responsible for helping the manager to gather knowledge assets from within the organization and from the external environment. Their work will include analyzing the information and identifying what is useful for the organization and devising best ways to ensure effective communication and collection of knowledge resources. They will directly report to the KM department’s manager. Responsibility of the codification personnel will include converting the collected raw knowledge data into a formalized and storable version. In the conversion process, they will use standards devised by the manager and other executive leaders in the firm. In this way, the stored information will be easily accessible and understandable by all employees within the organization. Lastly, the computer specialist will assist in computer and network management including servicing, installation of genuine and effective KM applications, etc. Initial financial outlay includes hiring the personnel responsible for the duties in the department. It will also include hiring fees for professionals who will help in recruiting of the personnel and their training. Expenses for sourcing the employees through advertising are also included in the initial costs. Technological equipment will also amount to the initial outlay fees. Implementation Timeline The proposed time until the department starts operating is nine months. This includes all the planning and raising of required funds by the company. It also includes time used to sell the idea to the CEO and the top executives, which at maximum should take one month. Also included in the time schedule is the time for sourcing for the departmental staff, which should take one month. The hiring and training period will take 6 months during which the six employees will be recruited, trained, and given full responsibility of the depart. The remaining one month will be used to evaluate the performance of the department against the set goals. Also, during this last period, possible improvements will be made to make the department achieve its set goals. Successful Implementation Holsapple (2003) argues that the strategies for implementing successful KM include motivating people, capturing success stories, acknowledge or reward joining a knowledge community, monitor e-mail, remove hurdles and disincentives, follow a channeled management process, work iteratively on KM architecture, infrastructure, and culture and consider knowledge retention standards. On the other hand, successful implementation stages comprise of getting started, exploring and experimenting, using pilots and KM initiatives, expanding and support and then institutionalize KM. To successfully implement the KM department, RJY executives will need to incorporate organizational culture of knowledge exchange among the employees. This involves making employees responsible for sharing information among themselves and passing it on to the department. As such, the department will be able to collect and store substantially important information that can help the organization reap the full benefits of KM (Donate & Guadamillas, 2010). The hurdles and disincentives that follow sharing information should be eliminated if the department is to be effective in its running. This involves non-discrimination of employees when they offer information from one department to another. The company needs to embrace aspects of inclusion and diversity to enable all subjects to contribute and share their ideas and skills among themselves as well as with the department. The department should be able to retain the information it gathers from different areas. It should also restrict the access of information to public to prevent competitors from accessing their knowledge repositories. This helps in keeping information safe and building the confidence of the management on the reliability of the department. Strengths and Challenges of the Department: Advantages include enhanced communication channels, information analysis by the department, centralized place to seek and update information, increased value of existing products and services, creation of new knowledge-intensive products, processes and services and increased organizational adaptability (Firestone, 2001). Communication channels within the organization will be enhanced. This involves sharing of information among the departments. All the information that the departments require will be available in the KM department. For example, if the human resource department wants to know the result of an audit on human resource performance on all departments, they could get all the information they need from the KM department and the results will have been analyzed. This assists the departments in performing their duties efficiently as they have all the information they require. The value of existing products and services increase as the employees get analyzed data regarding prior best practices that were used in the company successfully. This results to an increase in revenues for the company, which translates into an increase in the profit margins. Disadvantages include initial costs being higher than the company is ready to spend on the department and other departments could resent the KM department. The cost of creating the new department may surpass the budgeted costs meaning that the company may be forced to reduce on some items or resources. This may greatly influence effectiveness of the department. Since a new department, employees may view that the KM department is infringing on their professional or employment rights, a situation that may result to rejection of the department by employees. Performance Measurement Performance evaluation refers to the method of assessing job accomplishments and output, as well as evaluating in-process parameters that affect work output and accomplishments. A performance measurement system is normally a graphical and numerical information system used to achieve desired performance levels (Jenster & Soilen, 2009). Regarding the new KM department in RJY Company, performance measurement will involve evaluating organizational performance prior to and after creation of the department. This will involve both monetary and non-monetary metric indicators. Financial indicators include increase in the revenues of the company and increased profit margins. This is because of reduced costs, increased quality of product and services, and an increase in the customer base of the company. This will be compared with the initial performance of the company before the setting up of the department. Increase in revenue, profits and reduced costs will signify a positive impact of the department to the company. Non-financial indicators involve the response of the staff to the department. They could be delighted that the information offered by the department is of great use and that it helps them to be more efficient in their duties. Others include improved rate of new products development, improved ability of the firm to adapt quickly to rapid changes in the market, and improved and continuous competitive advantage. Selling the Plan to Company’s top Management Since the top management may not be familiar with KM, this report will be presented to CEO and other top executives in the company. The presentation will touch only on the most significant features of the plan such as importance of integrating KM department within the organizational structure, implementation and operating costs, how they will be able to evaluate effectiveness or performance of the new department and potential challenges that may arise during implementation of the plan. Top managers are interested in projects that maximize shareholders’ equity while at the same time helping the company achieve a strategic competitive position. They will need to know nature and extend of asocial costs and challenges to be able to make decision whether or not to implement the report based on well-founded cost-benefic analysis. On the other hand, performance indicators will serve as the standards that the managers will use as the basis of evaluating actual performance of the new department. Making the top managers understand all aspects of the new KM department will make it easier to convince or persuade them to implement the project. Conclusion and Recommendations Creation of a KM department in RJY Company will be important if the company needs to ensure sustainable competitive edge, enhanced innovations, production of customer-driven products and services, and improved organizational responsiveness to fluctuations in market conditions. KM involves creating, capturing, storing, sharing, transferring, implementing, exploiting, and measuring knowledge assets to meet the requirements of an organization. Some of the benefits the company will tap from creation of KM department include enhanced competitive advantage, production of customer-driven products and services, creation of product-to-market excellence, operational efficiency, and improved workers’ productivity. To create the department, the company should rely on the existing information technology as the core framework to support the KM department. In this way, it will facilitate effective and efficient collection, storage, and exchange of both tacit and explicit knowledge within the organization. Therefore, it is important for CEO and other executive leaders in the firm to take top responsibility in ensuring successful implementation of the department. They need to first ensure existence of organization culture that embraces diversity and inclusion because it is the only sure way to ensure exchange of knowledge, especially tacit knowledge residing deep down in minds of individual workers. However, the company should be ready to embrace some of the disadvantages, such as initial costs being higher than the company is ready to spend on the department and other departments could resent the KM department, which may occur during the initial stages of creating the department. References Awad, E. M., & Ghaziri H. M. (2007). Knowledge Management. New Delhi: Dorling Kindersley (India) Pvt. Ltd Bahra, N. (2001). Competitive knowledge management. New York, NY: Palgrave Publishers ltd. Christensen, P.H. (2003). Knowledge management: Perspectives and pitfalls. Copenhagen: Copenhagen Business School Press Claver-Cortes, E., Zaragoza-Saez, P., & Pertusa-Ortega, E. (2007). Organizational structure features supporting knowledge management processes. Journal of Knowledge Management, 11(4), 45-57. Davenport, T.H. & Prusak, L. (2000). Working knowledge: How organizations manage what they know. Boston, MA: Harvard Business Press. Donate, M.J. & Guadamillas, F. (2010). 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Schwartz, D.G. (2006). Encyclopedia of knowledge management. Hershey, PA: Idea Group Inc (IGI). Yao-Sheng, L. (2007, March 1). Effects of knowledge management strategy and organization structure on innovation. International Journal of Management. Retrieved from http://findarticles.com/p/articles/mi_qa5440/is_200703/ai_n21288364/ Read More