Managing Knowledge @ Work

KMWG, CIO Council


Many of us simply do not think in terms of managing knowledge. But we all do it. Each of us is a personal store of knowledge with experiences, training and informal networks of friends and business acquaintances whom we seek out when we want to solve a problem or to explore an opportunity. Essentially, we get things done and succeed by knowing an answer or knowing someone who does. Yet until recently, managing knowledge has been exclusively a personal endeavor. Now, organizations are discovering that managing knowledge creates value by increasing productivity and fostering innovation.

What is knowledge? It’s neither data nor information. Knowledge is understanding, and one gains knowledge through experience, reasoning, intuition and learning. Individuals expand their knowledge when others share their knowledge and when one’s knowledge is combined with the knowledge of others to create new knowledge.

Knowledge management (KM) involves systematic approaches to find, understand, and use knowledge to achieve organizational objectives. Managing knowledge creates value by reducing the time and expense of trial and error or the reinvention of the wheel. KM creates value when shared knowledge is put to use and reused.

Not all knowledge takes the form of a best practice. Indeed, the most valuable knowledge is the knowledge people have in their minds. This tacit knowledge is also the most difficult to access, because people are often unaware of the knowledge they have or of its value to others. By making tacit knowledge explicit, it can be shared and used by others.

Some people mistakenly assume that knowledge management is about capturing all the best practices and knowledge that workers possess and storing it in a computer system in hopes that one day it will be useful. “Knowledge is an emergent property of interpersonal relationships, and the only way to manage it is to create an environment in which open collaboration is the norm, not the exception,” emphasizes the president of a knowledge management consultancy.

Knowledge management consists of three fundamental components: people, processes and technology. Knowledge management focuses on people and organizational culture to stimulate and nurture the sharing and use of knowledge; on processes or methods to find, create, capture and share knowledge; and on technology to store and make knowledge accessible and to allow people to work together without being together. People are the most important component, because managing knowledge depends upon people’s willingness to share and reuse knowledge.

Many people see knowledge as power. And their fear is that if they share their knowledge they will lose their importance, their marketability. Organizations can try to overcome this deep-seated concern by providing incentives to workers to share their knowledge. Incentives are not enough however, to overcome a culture that rewards and promotes workers who hoard knowledge or one that fosters competition among employees or business lines.

Trust plays an important role in the sharing and use of knowledge. If people believe they will benefit from sharing their knowledge, either directly or indirectly, they are more likely to share. Whether people use the knowledge of others depends if they know and trust the source of the knowledge. For example, people are more likely to believe and use the equation e=mc2 knowing that it came from a renowned physicist then from the young intern just hired. This is why KM efforts that focus primarily on technology seldom pay off. Studies show that people more frequently than not will contact someone they know before searching the corporate database or data warehouse.2 Technology is an important enabler to the success of KM. But people make or break it.

KM is an amalgam of concepts borrowed from the artificial intelligence/knowledge-based systems, software engineering, business process reengineering, human resource management, and organizational behavior fields.3 Large management consulting firms and other companies began to manage knowledge internally in 1989 and the early 1990s. In 1994, large management consulting firms first offered KM services to clients. KM is evolving and being refined through implementation.

Knowledge management is in large measure a product of the tremendous changes of the 1990’s. Globalization expanded, bringing both new opportunities and increased competition. Organizations responded by downsizing, merging, acquiring, reengineering, and outsourcing their operations. Utilizing advances in computer and network technology, businesses streamlined their workforces and boosted productivity and their profits. Higher profits plus low inflation, cheap capital and new technologies fueled the hottest bull market in US history. Employment levels were at record highs and skilled workers in high demand. Businesses came to understand that by managing their knowledge they could continue to increase profits without expanding the workforce.

Knowledge management attracted the attention of the Federal government, which like the private sector also experienced profound changes during the 1990’s. Payrolls were cut by 600,000 positions; the use of information technology was expanded to improve performance, and management reforms were enacted to improve performance and to increase accountability to the American people. At the beginning of the 21st century, the Federal government faces serious human capital issues as it strives to improve service and be more accountable. It must compete for workers, as its workforce grows older. The average age of a federal worker is 46 years.4 Approximately 71% of federal senior executives will be eligible to retire by 2005.5 And unless the knowledge of those leaving is retained, service to citizens will likely suffer.

Along with tremendous change in the public and private sectors has come the explosive growth of the Internet and the emergence of e-business and e-government. There is so much information available and coming at us that we are at times drowning in a sea of information. Yet, our thirst for knowledge to be able to respond to the rapid changes in the workplace only deepens. For businesses and governments striving to be effective, the clear challenge is to seek better ways to learn and work smarter. KM is a means to address human capital issues and to take e-business and e-government to the next level.

In its “Knowledge Management Report 2000,” KPMG, a management consulting firm, stated that while companies practicing KM were better off than those that did not, actual benefits did not live up to the expectations of 137 companies.6 As a result of this and other findings, KM is sometimes dismissed as “just another management fad” that does not deliver on its promises. The truth is otherwise. KM has demonstrated value, yet measuring its value is a challenge for most organizations.

What does the future hold for knowledge management? Interest in KM is growing according to an online survey published in May 2001. 7 It appears that KM practices are here to stay although they may become embedded in other disciplines, such as customer relationship management or enterprise-resource planning, some experts suggest. Tom Davenport, director of Accenture's Institute for Strategic Change, likens KM to total quality management, which was all the rage in the early 1990s. “Although TQM isn't mentioned much these days, it has become incorporated into the way people think about business,” he observes. "It would actually be a sign of success if knowledge management got embedded into other things."

(Executive Summary)