Knowledge Management: Here to Stay or Management Fad - Essay Example

Knowledge Management: Here to Stay or Management Fad? The American Productivity & Quality Center (APQC) defines knowledge management as “the strategies and processes of identifying, capturing and leveraging knowledge” to enhance competitiveness (Manasco 1996). Knowledge management is concerned with the exploitation and development of the knowledge assets of an organisation with a view to furthering the organisations objectives. It is generally considered that knowledge management has been widely accepted in businesses. However, it is nowhere near as clear whether knowledge management is another transient fad or something that is here to stay. A management fad is a short-lived idea that is important and accepted for a short time, but then fades either because it is not successful or because something else replaces it. Other business ideas last and become an important part of most organisations. The opinions on the status and importance of knowledge management vary widely. Holtham (1997) dismisses knowledge management as just another transient management fad that will soon fade and be forgotten. David J. Skyme (1999) describes a survey that found “over half of European and UK managers thought that knowledge management was a fad.” Senge (1990) goes even further on the negative side and argues that many organisations are unable to function as knowledge-based organisations, suggesting that knowledge management will not only fade, but will cause organisations to fail. Koenig (1996) has a more balanced view and accepts the importance of knowledge management. However, in doing so recognizes that knowledge management is just a new name for information management processes and procedures that have been around for decades. Others are far more positive about knowledge management. Drucker (1993) has described knowledge, rather than capital or labour, as the only meaningful economic resource in modern society. The variety of the views expressed shows that knowledge management is well worth looking into further. The following analysis will focus on describing knowledge management and considering what impact it has had in the business world, while also exploring the reasons why knowledge management has not succeeded in all organisation. This will show that knowledge management is complex and requires effective implementation for it to show the positive results it is capable of achieving. The Emergence of Knowledge Management as a Response to Environmental Change Before assessing knowledge management, it is useful to briefly consider its emergence. Knowledge management as a conscious discipline would appear to be somewhere between five and fifteen years old (Ives, Torray, and Gordon 1998). During that time, economic, social and technological changes were transforming the way that companies worked. Globalisation emerged and brought new opportunities and increased competition. Companies responded by downsizing, merging, acquiring, reengineering, and outsourcing. Many streamlined their workforce and boosted their productivity and their profits by using advances in computer and network technology. However their successes in doing so came with a price. Many lost company knowledge as they grew smaller. And many lost company knowledge as they grew bigger. By the early 1990s a growing body of academics and consultants were talking about knowledge management as the new business practice, and it began to appear in more and more business journals and on conference agendas (Ives, Torray, and Gordon 1998). By the mid-1990s, it became widely acknowledged that the competitive advantage of some of the worlds leading companies was being carved out from those companies knowledge assets such as competencies, customer relationships, and innovations. Managing knowledge suddenly became a mainstream business objective as other companies sought to follow the market leaders. This shows that when it emerged, knowledge management was important with its usefulness closely linked to the challenges in the business environment at the time. This leads to the next question, which is whether knowledge management is still applicable to the modern business environment. Knowledge Management and its Relevance to the Modern Business Environment According to Yogesh Malhotra (1998), knowledge management caters to the critical issues of organisational adaptation, survival, and competence in the face of increasingly discontinuous environmental change. Arthur (1994) suggests that the new world of knowledge-based business is characterized by a continuous redefinition of organisational goals, purposes, and an organisation’s way of doing things. Considering that the current business environment is characterized by radical change, this suggests that knowledge management is an approach that is capable of providing the qualities that modern organisations need to survive and compete. In the modern business environment, organisations are also seeking advantages that other companies cannot easily duplicate. Since knowledge is learned by experience rather than acquired, knowledge is a source of competitive advantage that meets this need. This is another reason that knowledge management appears to link well with what organisations are seeking. Another factor in the modern business environment is that people factors are becoming more important. Talent and experience is seen as a major source of advantage and it is becoming rarer. In some organisations, thirty to forty percent of the workforce will be retiring in the next five years. Suddenly, organisations are discovering the value of communities of practice, mentoring, and knowledge networks for getting new hires up to speed and improving overall competence of the workforce (Nonaka, 1991). We are experiencing another shift in the value proposition as people realize that the workplace is evolving from organisations to networks of more autonomous business units or companies (Hirschheim and Goles, 2002). Relationships are the hot new topic. But what fundamentally builds relationships are exchanges of knowledge and other intangibles, more transparency of information, and more collaboration. Relationships that are based only on business transactions are fragile. Those that are built on genuine knowledge exchanges and helpfulness are stronger and more resilient. This is yet another reason that knowledge management is relevant to the current business environment (Nonaka, 1991). Overall then, it can be said that knowledge management is relevant to the modern business environment. However, like all theories, its real effectiveness lies not in its theoretical value, but in the results it achieves. In turn, this depends on how well organisations are able to utilise it. This is where the issue of knowledge management becomes complex, because as will be shown, there are many factors that make applying knowledge management strategies a complex issue. Implementing a Knowledge Management Culture One of the first major complexities associated with knowledge management is that it is not something that can be implemented only at the higher levels of the organisation. Since every employee is a source of knowledge, knowledge management must be part of the organisation overall (Dearlove, 2001). One of the common problems that occurs in knowledge management implementation is that the organisation ignores the people and cultural issues (Walsham, 2001). In an environment where the individuals knowledge is valued and rewarded, establishing a culture that recognizes tacit knowledge and encourages employees to share is critical. The need to sell the knowledge management concept to employees shouldnt be underestimated. After all, in many cases employees are being asked to surrender their knowledge and experience. An organisation simply cannot expect to implement a knowledge management system and enjoy immediate benefits. Instead, an organisation will need to consider the organisation’s culture and adapt it so that the employers will accept knowledge management (Sun and Scott, 2003). Certainly, this is not an easy task. However, if the benefits are to be achieved, it is a necessary one. The simple fact is that many organisations implement a knowledge management with the naive belief that the organisation will magically transform. When it comes to strategies involving all employees, this simplistic view only leads to disappointment and failure. Implementation Difficulties Many companies took the approach of implementing knowledge management solutions, focusing almost entirely on knowledge management technologies (Bhatt, 2001). However, they met with limited success, and so questions began to be asked about whether knowledge management wasnt simply another fad that looked great on paper, but in reality did not deliver. In fact for a while, it looked as if knowledge management was destined to be confined to the management fad graveyard. However on closer inspection, companies realised that it wasnt the concept of knowledge management that was the problem as such, but rather the way that they had gone about approaching it (Dearlove, 2001). The greatest failing was the mechanistic thinking that pervades a lot of the actual practice. The default business model is the value chain and the most common analysis tool is still the process diagram. These are linear, mechanistic approaches based on the industrial age production line. Business and economic models are also based on old thinking (Bhatt, 2001). Many companies do fine on the technology needs for knowledge sharing but do nothing to support the social innovations of collaboration and communities of practice (Balthazard and Cook, 2004). In other cases, people focus only on communities of practice and don’t budget for the supporting technology and business infrastructure that is required. One recurring theme of much of the literature referred to in this paper is that knowledge and information services can no longer afford to be situated or operated as discrete or autonomous or semi-autonomous units simply servicing the rest of the organisation, but must increasingly participate in and contribute to the wider decision making and strategy-formulation activities of the organisation (Zack, 2001). Other notable themes include the need to encourage and develop the sharing of information in organisations, to emphasise the value of teamwork, groupwork and intranets, and activities related to the elicitation and creation of knowledge within organisations (Soliman and Spooner, 2000). Clearly, knowledge management is not something that can be lumped on top of how the organisation operates. Instead, is has to be carefully integrated with other systems. This requires time, energy, and consideration. Put simply, many companies have not taken this approach and have tried simply to add a knowledge management approach on top of other systems. It is this approach that has led to failures. Linking Knowledge Management to Organisational Goals Every initiative is a response to a particular goal or objective. Sometimes the goals are simply to improve access to knowledge resources around the company. That would probably require an information management approach. In the case of a product development group, however, collaborative tools and processes and knowledge-sharing activities with research partners might be more appropriate. One must always begin with the business question and objectives first. That is what shapes the initiative. Given that there is no generic initiative, there are clearly a lot of elements that come into play when a company decides to get serious about organisational knowledge. The problem is that many organisations do not take into account these factors. Without doing so, knowledge management is not linked effectively to what the organisation is trying to achieve and so cannot result in positive outcomes (Gorelick, Milton, and April, 2004). Knowledge management is one of many components of good management. Sound planning, savvy marketing, high-quality products and services, attention to customers, efficient structuring of work and thoughtful management of an organisations resources are all critical to compete in todays marketplace. Knowledge management may help create the competitive edge in todays global environment, but it is not the only answer (Rao, 2005). Measuring the Success of Knowledge Management Another complexity associated with a knowledge management system is determining success levels. Khoshsima, Lucas, and Mohaghan (2004) note that knowledge is an intangible asset, which makes it difficult to measure the success of knowledge management. The issue is complicated because despite this, knowledge management systems are often sold as a technology solution or a suite of technology tools that will realise a financial or traditional ROI return (McCampbell, Clare, and Gitters, 1999). In other words, the knowledge management initiative is sold as a way to reduce costs, increase revenue or improve productivity, all of which can be calculated in financial terms. But when you think about it, that is an incomplete picture of the value return for something as complex as a knowledge initiative. Financial measures only tell you about past performance - they say nothing about your ability to be successful five years from now. The bigger story about focusing on knowledge is how it can improve the underlying intangibles asset base of the organisation, where you are building capacity for the future. This improves human competence, supports innovation in infrastructure and operations, and builds trusting relationships with stakeholders. However, as long as an organisation is measuring its success based on old models and traditional return on investment measures, it may be completing missing the benefits and successes it is achieving (Bhatt, 2001). Conclusion With this analysis completed, several points have been made. The first important point is that knowledge management does have important benefits and does achieve the kind of outcomes that organisations are seeking in the current business environment. The second important point is that knowledge management is not simple and easy to implement. It is complex and has significant potential for success, but it does require thorough consideration and effective implementation. Whether knowledge management becomes a fad or an effective approach will depend on whether or not organisations are willing to take the time to make the knowledge management work. References Arthur, B., 1994. Increasing returns and path dependence in the economy. 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