Knowledge Management caters to the critical issues of organisational adaption, survival and competence in face of increasingly discontinuous environmental change. Essentially, it embodies organizational processes that seek synergistic combination of data and information processing capacity of information technologies, and the creative and innovative capacity of human beings.
Lately, Fortune 450 companies and the federal government have turned to knowledge management. The purpose is to turn information into knowledge by tapping the wisdom of workers to spur innovation and better performance in the workplace. Why the sudden emphasis on knowledge? Three reasons stand out. First, the nation's economy is shifting away from the production of tangible products, such as steel, cars and soap, toward such intangibles as services and software. Companies that find knowledge and use it to their advantage compete better in the marketplace.
"If you look at the Standard and Poor Index, you'll find that 70 percent of companies' value is in intangible assets, such as knowledge and intellectual property," said Jane Patterson, North Carolina's senior adviser to the governor for science and technology. "That's how you create wealth today."
Second, the workers who help create that wealth are no longer the loyal employees of yesterday. They switch jobs more frequently than their parents ever did. "During the past 10 years, the private sector has found it can no longer count on people staying for 25 years," said Mark Tucker, senior analyst with Delphi Group, a consulting firm based in Cambridge, Mass. "There's a lot of turmoil and turnover. Companies can no longer rely on their intellectual resources to stay." As a result, companies are turning to knowledge management to capture worker knowledge.
Third, there's been a growing realization that investments in information technology haven't paid off in performance. Something's missing, according to Yogesh Malhotra, founder and chairman of @Brint Institute, a consulting firm based in Fort Lauderdale, Fla. What's absent is worker creativity and innovation fueled by knowledge. "There's been too much emphasis on treating people as passive recipients of technology," he said, "and not enough emphasis on individual enterprise."
An example, according to Malhotra, is California's failed State Automated Welfare System. "SAWS was a good example of too much technology not keeping up with the changes of the welfare program," he said. "The key to success is not the system but what people make of it."
To reverse this syndrome and to keep pace with the rapid change in the world today, organizations are moving from the command-driven approach used by information systems to a more knowledge-based approach of finding, compiling and distributing information, Malhotra said.
Knowledge management has been dismissed by some as a fad, but there's plenty of evidence that companies, organizations and governments are taking it seriously. U.S. businesses paid $1.5 billion for knowledge management advice in 1996 and will spend $5 billion annually by 2001, according to the Gartner Group, a research and consulting firm based in Stamford, Conn.
What they are spending the money on is finding ways to share knowledge among workers. Many organizations don't realize how much time is spent trying to "know what they don't know," according to Tucker. Lower-level workers may spend 10 percent of their time searching for knowledge about their job. But that number rises to as high as 30 percent for some executives. "One organization discovered that its [workers] spend a day per week searching for knowledge," Tucker said. "Organizations want to shorten that seek time through knowledge management."
They want to capture both explicit knowledge, which has been categorized and stored online in databases and electronic documents, and tacit knowledge, which is elusive and held in the minds of experienced workers. Some experts call this structured and unstructured knowledge. The trick is coming up with an effective way to capture the raw materials of knowledge -- data, information and experience -- transforming them into knowledge and passing it on to the workers who need it.
Even trickier is devising a method of giving workers the incentive to share their knowledge with others, turning the process into a self-generating system that doesn't sputter out. If it works, knowledge can spawn creativity, innovation and improved performance within the workplace.
Leadership and technology are two critical factors in the drive for organizational knowledge. Both factors are also considered somewhat controversial. Originally, knowledge officers were considered crucial to the cause of knowledge management. They were executives who could bring a top-down approach to knowledge sharing. As many as 800 firms worldwide have someone designated as a chief knowledge officer, according Stacie Capshaw, a senior analyst at the Delphi Group. But that kind of centralized control of organizational knowledge has not gone over well. "The chief knowledge officer has been perceived as a command-and-control answer to a diffuse problem," she said.
So organizations are turning to knowledge leaders, people at the business-unit level who represent the knowledge for that particular department. This approach to leadership is considered more organic and conducive to nurturing knowledge within an organization. According to Capshaw, leaders fall into two categories: brokers who connect people looking for knowledge to those who have the knowledge, and analysts who set up knowledge systems and requirements for the system so knowledge can be captured and analyzed.
Technology's role in knowledge management is also complex. As Malhotra and others pointed out, technology in business and government has pacified workers and reduced their performance. As a result, technology, when misapplied, has stunted worker performance rather than advancing it.
At the same time, however, organizations cannot compete in today's economy without technology. Knowledge experts emphasize technology as a tool or facilitator, capable of processing explicit and tacit knowledge and presenting them in a format that workers can effectively use.
Unfortunately, software vendors have jumped on the knowledge management bandwagon by offering so-called knowledge management solutions in shrink-wrapped packages. "The key is not the technology but what people make of it," Malhotra cautioned. "In knowledge management, the burden is on the individuals and how they can use technology effectively."
Often, the best tool is the simplest. For example, an electronic yellow pages listing workers by job category or expertise, allows other workers to easily track down the person with the best knowledge in a particular subject.
One technology has done much to make knowledge-sharing more viable: the Internet. Workers who once struggled to find information now can access documents at the click of a mouse. Communications are more dynamic thanks to e-mail. As the Internet has rapidly matured, so have technologies supporting knowledge management: groupware, messaging, Web browsers, document management, search and retrieval, data mining, push technologies and intelligent agents.
Some familiar and not-so-familiar software vendors have taken the lead in providing software technology for knowledge management: Excalibur, Fulcrum, GrapeVine Technologies, Intraspect, KnowledgeX, Lotus, Microsoft and Verity.
Knowledge management has taken hold most strongly in several key industries: automobiles, petrochemicals, health care and consulting. While many firms in these industries sank major investments into knowledge management, it doesn't take a lot of money to get started, according to Delphi's Tucker. "We're not telling organizations to spend millions of dollars on systems they don't really need," he said. "We look for the problems and where the opportunities are in the organization. We try to leverage what they already have."
Besides developing an inexpensive but effective electronic yellow pages, which can run on a local area network or an intranet, Tucker recommended that government agencies build a repository of best practices. "It's always easier to see something that's already going on," he pointed out. "Once you find the practices, they work because there is already an inclination to do those things that already work." Tucker doesn't recommend making radical changes to share knowledge. "It's important to remember that knowledge management is about culture and behavior. An organization is 95 percent people and 5 percent tools and technology."
Despite the growing enthusiasm for knowledge management, some are skeptical of the concept and its benefits. Many have called it a fad, another in a long line of spur-of-the-moment management techniques. One of the most vocal critics of knowledge management is Michael Schrage, a research associate at the MIT Media Lab. Schrage said the knowledge trend won't catch on in corporate America because most managers believe the methodology is something many of them are already practicing. Few will want to invest in something they feel they already have.
On a more fundamental level, Schrage criticized what he sees as the heavy emphasis on turning information gathered by computers into knowledge for workers. "The real value of information technology lies less in knowledge than with the communities it creates. The most important thing in an organization is not knowledge, but the relationships it has with its workers and customers," he said. "Which is better: to invest $1 million in a database system that's supposed to capture knowledge or to invest the million in building better relationships with customers and workers?"
Like it or not, knowledge management has hit a chord with organizations that have invested heavily in information systems, only to find that worker performance has barely budged. Something else is needed besides computers, information and people.
"You can put a computer in front of a worker," Malhotra commented, "but you can't make them learn knowledge from it. We need to develop a greater appreciation for their intangible human assets."
Yogesh Malhotra, founder, chairman and CKO of the @Brint Institute in Fort Lauderdale, Fla., and @Brint LLC, a Web site devoted to knowledge management has identified some myths that surround the murky confluence of information technology and knowledge management.
MYTH: Knowledge management technologies deliver the right information to the right person at the right time. Malhotra says that this idea applies to an outdated business model. Information systems in the old industrial model mirror the notion that businesses will change incrementally in an inherently stable market, and executives can foresee change by examining the past. "The basic premise is that you can predict...how and what you'll need to do and that IS can simplify this and do it efficiently," he says. The new business model of the Information Age, however, is marked by fundamental, not incremental, change. Businesses can't plan long-term; instead, they must shift to a more flexible "anticipation-of-surprise" model. Thus, it's impossible to build a system that predicts who the right person at the right time even is, let alone what constitutes the right information.
MYTH: Information technologies can store human intelligence and experience. Technologies such as databases and groupware applications store bits and pixels of data. "But they can't store the rich schemas that people possess for making sense of data bits," says Malhotra. Moreover, information is context-sensitive. The same assemblage of data can evoke different responses from different people. "The reason this is important is that many information textbooks say that while people come and go their experience can be stored in databases. But unless you can scan a person's mind and store it directly into a database, you cannot put bits into a database and assume that somebody else can get back the experience of the first person."
MYTH: Information technologies can distribute human intelligence. Again, this assumes that companies can predict the right information to distribute and the right people to distribute it to. And bypassing the distribution issue by compiling a central repository of data for people to access doesn't solve the problem either. "The fact of information in a database doesn't ensure that people will see or use the information," Malhotra says. "Most of our knowledge management technology concentrates on efficiency and creating a consensus-oriented view. The data therein is rational, static and without context." And such systems, he adds, do not account for renewal of existing knowledge and creation of new knowledge.
Managers need to develop a greater appreciation for their intangible human assets, captive in the minds and experiences of their knowledge workers. Without these assets, companies are simply not equipped with a vision to foresee or to imagine the future.
As noted by Paul Strassmann, elevating computerization to the level of a magic bullet may diminish what matters the most in any enterprise: educated, committed, and imaginative individuals working for organizations that place a greater emphasis on people than on technologies.