1. Chapter 11 Knowledge Management
Managing and Using Information Systems: A Strategic Approach, 2nd ed.
by Keri Pearlson and Carol Saunders
Copyright © 2003 John Wiley & Sons, Inc.

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3. Introduction
Knowledge management is defined as the processes needed to generate, capture, codify and transfer knowledge across the organization to achieve competitive advantage
This chapter provides an overview of knowledge management, describes its infrastructure and key elements, functions, and strategies, and briefly examines the role played by technology in managing knowledge
In this chapter, we focus on knowledge management as infrastructure for business applications, not as an application itself.

4. Defining Knowledge Management
Intellectual capital is a synonym of KM
KM is related to IS in three ways:
IT makes up the infrastructure for KM systems
KM systems make up the data infrastructure for many IS applications
KM is often referred to as an application of IS

5. DATA, INFORMATION , AND KNOWLEDGE

6. Data, Knowledge & Information (cf. Davenport, 1997)
Simple observations of the world:
Easily captured
Easily structured
Easily transferred
Compact, quantifiable
Data with relevance and purpose:
Requires unit of analysis
Needs consensus on meaning
Human mediation necessary
Often garbled in transmission
Valuable information from the human mind: includes reflection, synthesis, context
Hard to capture electronically
Hard to structure
Often tacit
Hard to transfer
Highly personal to the source

7. Figure 11. 2 Taxonomy of Knowledge From H-W Kim and S. M
Figure 11.2 Taxonomy of Knowledge From H-W Kim and S. M. Kwak, Linkage of Knowledge Management to Decision Support: A System Dynamics Approach

8. Tacit vs. Explicit Knowledge
Tacit knowledge is personal, context-specific and hard to formalize and communicate
Explicit knowledge can be easily collected, organized and transferred through digital means.

9. Figure 11.3 Examples of explicit and tacit knowledge
Knowing how to identify the key issues necessary to solve a problem
Applying similar experiences from past situations
Estimating work required based on intuition & experience
Deciding on an appropriate course of action
Explicit Knowledge
Procedures listed in a manual
Books and articles
News reports and financial statements
Information left over from past projects

10. AN EVOLVING CONCEPT

11. Applying Knowledge Management
KM is not a new concept, but one reinvigorated by IT such as collaborative systems, the Internet and intranets.
KM is still an emerging discipline
Ultimately, an organization’s only sustainable competitive advantage lies how its employees apply knowledge to business problems
KM is not a magic bullet and can not solve all business problems.

12. WHY MANAGE KNOWLEDGE?

13. Factors to consider in Knowledge Management
Information and knowledge have become the fields in which businesses compete.
Several important factors include:
Sharing Best Practice
Globalization
Rapid Change
Downsizing
Managing Information and Communication Demand
Knowledge Embedded in Products
Sustainable Competitive Advantage

14. Sharing Best Practice
Sharing best practice means leveraging the knowledge gained by a subset of the organization.
Increasingly important in organizations who depend on applying their expertise such as accounting, consulting and training firms.
KM systems capture best practices to disseminate their experience within the firm.
Problems often arise from employees who may be reluctant to share their knowledge.

15. Globalization: Knowledge is the new Strategic Factor
Historically three factors, land, labor and capital were the key to economic success
Knowledge has become a fourth factor.
Low international labor costs are driving globalization (as is telecom) and pushing companies that fail to take part out of business.

17. Other factors
Rapid change: firms must be nimble and adaptive to compete
Downsizing: sometimes the wrong people get fired when creating a leaner organization
Managing Info Overload: data must be categorized in some manner if it is to be useful rather than overwhelming
Knowledge Embedded in Products: the intangibles that add the most value to goods and services are becoming increasingly knowledge-based
Sustainable Competitive Advantage: KM is the way to do this. Shorter innovation life cycles keep companies ahead of the competition.

18. Figure 11.5 Reasons for Managing Knowledge. ©IBM Global Services

19. KNOWLEDGE MANAGEMENT PROCESSES

20. Knowledge management KM involves four main processes:
Knowledge generation
Knowledge capture
Knowledge codification
Knowledge transfer

21. 1. Knowledge generation
Knowledge generation concerns the efforts by an organization to acquire or create new knowledge.
This can be done in several ways (Figure 11.6):
Research and Development (develop knowledge internally)
Adaptation (use existing knowledge in new ways)
Buy or Rent (obtaining knowledge from another source)
Shared Problem Solving (knowledge generation through “fusion” of different approaches)
Communities of Practice (obtain knowledge through an informal network)

23. Research and Development
Knowledge generated by R&D efforts frequently arises from synthesis
Synthesis brings disparate pieces of knowledge together, often from extremely diverse sources, then seeks interesting and useful relationships among them
Realizing value from R&D depends largely on how effectively new knowledge is communicated and applied across the rest of the firm

24. Adaptation
Adaptation is the ability to apply existing resources in new ways when external changes make old ways of doing business prohibitive
A firm’s ability to adapt is based on two factors: having sufficient internal resources to accomplish change and being open and willing to change

25. Buy or Rent
Knowledge may be acquired by purchasing it or by hiring individuals, either as employees or consultants, who possess the desired knowledge.
Another technique is to support outside research in exchange for rights to the first commercial use of the results

26. Shared Problem Solving
Also called “fusion,” shared problem solving brings together people with different backgrounds and cognitive styles to work on the same problem
The creative energy generated by problem-solving groups with diverse backgrounds has been termed “creative abrasion”

27. Helping Fusion Work Ideas that help fusion work effectively include:
(1) fostering awareness of the value of the knowledge sought and a willingness to invest in it;
(2) emphasizing the creative potential inherent in different styles of thinking and viewing the differences as positive;
(3) clearly specifying the parameters of the problem to focus the group on a common goal

28. Communities of Practice
Achieved by groups of workers with common interests and objectives, but not necessarily employed in the same department or location, and who occupy different roles on the organization chart.
Workers communicate in person, by telephone or by to solve problems together.
Communities of practice are held together by a common sense of purpose and a need to know what other members of the network know

29. Knowledge Codification
Codification puts the knowledge in a form that makes it possible to easily find and use
The boundaries of knowledge are difficult to identify because of context sensitivity; one person’s crucial fact is another person’s irrelevant trivia
Knowledge is unavailable across the firm until it has been codified in a manner that will allow those who need it to find it

30. Davenport and Prusak’s (1998) 4 basic principles of knowledge codification:
Decide what business goals the codified knowledge will serve (define strategic intent).
Identify existing knowledge necessary to achieve strategic intent.
Evaluate existing knowledge for usefulness and the ability to be codified.
Determine the appropriate medium for codification and distribution.

31. Knowledge Capture
Knowledge capture takes into account the media to be used in the codification process.
The 3 main knowledge capture activities are:
Scanning (gather “raw” information)
Organizing (move it into an acceptable form)
Designing knowledge maps (providing a guide for navigating the knowledge base)

32. Ruggles (1997) knowledge categorization scheme:
Ruggles provided four categorize knowledge:
Process knowledge
Factual knowledge
Catalog knowledge
Cultural knowledge

33. Other examples of categorization schemes
The American Productivity & Quality Center’s (APQC) Process Classification Framework – an organizational thesaurus developed to allow organizations to communicate across industry boundaries and overcome proprietary vocabularies
Encyclopedia Britannica’s “Propædia,” – the search engine developed from the Propædia is now being used at a website called eBLAST those web navigator uses the Propædia categorization scheme to classify websites indexed in the system.

34. Designing Knowledge Maps
A knowledge map (see next slide) serves as both a guide to where knowledge exists in an organization and an inventory of the knowledge assets available.
Although it may be graphically represented, a knowledge map can consist of nothing more than a list of people, documents, and databases telling employees where to go when they need help.
A good knowledge map gives access to resources that would otherwise be difficult or impossible to find

35. Capturing and Codifying Tacit Knowledge with Narratives
If the expert is unavailable or leaves the firm, the value of his or her knowledge will be lost. Capturing tacit knowledge through narratives prevents this.
Research has shown that knowledge is communicated most effectively through a good story, told with feeling, that resonates with other people.
More firms are beginning to circulate videotapes that tell stories, for example, about how an important sale was closed. These narratives “codify” the expert’s tacit knowledge of how to close a sale in a way that conveys much of its underlying meaning.

36. Nonaka and Takeuchi’s Knowledge Transfer
Socialization: from tacit knowledge to tacit knowledge
Externalization:from tacit knowledge to explicit knowledge
Combination:from explicit knowledge to explicit knowledge
Internalization: from explicit knowledge to tacit knowledge

38. TYPES OF KNOWLEDGE MANAGEMENT PROJECTS

39. Figure 11.9 Contrast between KM and IT Projects
KM Projects
Emphasis on value added information
Supports org. improvement and innovation
Adds value to content
Requires on-going user contributions
Balanced focus on both technology and culture
Variety of inputs often precludes automated capture of knowledge
IT Projects
Emphasis on accessing information
Supports existing ops
Delivers content only
Emphasis on one-way transfer of info
Primary focus on tech
Assumes all info inputs can be automated

40. Knowledge management initiatives
Knowledge management can have either an internal or external focus, and has thus far been built around the following four themes:
Developing knowledge repositories
Providing knowledge access
Improving the knowledge environment
Evaluating knowledge assets.

41. Knowledge Repositories
Three fundamental types of repositories have been identified:
Externally focused knowledge, sometimes called competitive intelligence
Structured internal knowledge such as research reports, marketing materials, and production processes
Informal internal knowledge such as discussion databases for “lessons learned” and internal best practices
Data warehouses sometimes serve as repositories of organizational knowledge

42. Other Repositories of Knowledge
Knowledge Access: projects sometimes referred to as corporate “Yellow Pages,” which map and categorize knowledge and expertise in an organization, allowing identification of expert knowledge sources.
Knowledge Environment: aimed strictly at culture, seeking to establish an environment conducive to knowledge creation, transfer, and use
Knowledge Assets: sometimes referred to as “intellectual capital”, these initiatives attempt to treat knowledge as a balance-sheet asset, to direct attention towards the effective or ineffective use of intellectual capital over time.

43. MEASURING THE VALUE OF KNOWLEDGE MANAGEMENT

44. Project-Based Measures
Measuring the success of KM projects is often done by measuring the specific benefits of the project examples include:
Enhanced effectiveness
Revenue generated from extant knowledge assets
Increased value of extant products and services
Increased organizational adaptability
More efficient re-use of knowledge assets
Reduced costs
Reduced cycle time

45. Organizational Capital
Figure 9.10 Skandia Intellectual Capital Framework (cf. Edvinson & Malone, 1997)
Market Value
Shareholder’s Equity
Intellectual Capital
Human Capital
Structural Capital
Organizational Capital
Customer Capital

46. Valuation of Knowledge Capital
Strassmann: “Knowledge capital” is the value a customer places on goods or services over the cost of sales and cost of capital
It is the amount an investor is willing to pay for intangible assets, in excess of the cost of capital, for a risk-adjusted interest in the future earnings of the company

47. CAVEATS FOR MANAGING KNOWLEDGE

48. Caveats for Managing Knowledge
Knowledge management is an emerging discipline
Competitive advantage increasingly depends on knowledge assets that are hard to reproduce, so it is sometimes in the best interests of the firm to keep knowledge tacit, hidden, and nontransferable
Knowledge can create a shared context for thinking about the future, not to know the future, but rather to know what projections influence long-term strategy and short-term tactics
The success of knowledge management ultimately depends on a personal and organizational willingness to learn

49. FOOD FOR THOUGHT: DIGITAL MILLENNIUM COPYRIGHT ACT

50. The Digital Millennium Copyright Act
The DCMA, passed in 1998, makes it a crime to circumvent copy protection, even if that impairs rights established by the earlier Audio Home Recording Act
2001: Dmitry Sklyarov, of the Russian firm ElcomSoft, was charged in the U.S. for selling ‘cracked’ software
DCMA Critics argue that fair use of digital products includes rights to make back-ups, translate files into other formats, “time-shift” audio or video for later playback, or “space-shift” audios, videos or software by copying to blank CDs, other PCs or portable players

51. END OF CHAPTER 11