Modern Knowledge Management Practices - Essay Example

Knowledge is nowadays increasingly becoming an ultimate competitive advantage either replacing or complementing such traditional sources of success as technologies, marketing mix, and often even financial resources (Malhotra, 1998). Modern business history lists a number of instances when knowledge-centred management has helped create competitive advantage of organisations and even countries formerly limited in financial and other resources. For Microsoft, Dell, IBM (which is believed to be one of the founders of the paradigm), Compaq, British Airways, Ryan Air and other major organisations knowledge management has become the cornerstone of success.

The same is true for such countries as South Korea, Singapore, Malaysia and Hong Kong which rely on the national knowledge economy. Over the last two decades, organizations have often been described in terms of knowledge and learning with the help of such concepts as "learning organisation", "intellectual capital", "people-centred approach" or "knowledge based management". Cakar and Bititci (2001) perfectly summarise this trend in the following statement: "1980s were all about automation. In the manufacturing industry FMS, FAS, Robots, AGV'S etc.

were commonplace. The 1990s have been about people, this is evident in the development of concepts throughout the 90's focusing on delegation, involvement, ownership cross functional teamwork, self managed works teams and so on The needs of modern business emphasize the role and importance of people and knowledge" (p.2). The ideas of Peter Drucker (1994), whom was the first to use term 'knowledge worker', became widely recognised in 1980s, particularly the idea that investments in human resources were increasingly becoming more cost-efficient than investments in machines.

In 1986, European knowledge management pioneer Karl-Erik Sveiby described the concept of a "know-how company" (Doz, Santos & Williamson, 2001), and in 1991 the ideas of knowledge management were reconsidered by Ikujiro Nonako (1991) whom presented the idea of "knowledge-creating company". The 1996 could be considered the turning point in history of knowledge management: the influence of this paradigm became overwhelming in the developed countries (Skyrme, 2002). While earlier on knowledge used to produce goods, these days it is used to produce other knowledge and information: "what is specific to the informational mode of development is the action of knowledge upon knowledge itself as the main source of productivity" (Mishel & Bernstein, 1996: 17).

In other words, the process of creation and sharing knowledge has become the key for strengthening the competitive and successful outcomes of modern organisations. Probably the main reason for such shift is the improved understanding of the importance of knowledge created and shared within organisation. At the same time, the changed patterns of managing human resources made the businesses pay more attention to tacit knowledge the employees possess. Main discussionOriginally emerged in 1960s, the paradigm of HRM relied on the broad range of findings revealed by several outstanding organisational researchers. As Alan