Knowledge Management 101…Welcome to the Information Age!
In 1994, Peter Drucker described a new world of economic order in which knowledge, not labor or raw materials or capital, would be the key resource. That day has arrived! The work in today’s organizations is centered on knowledge. In this type of environment, because managers no longer understand the work of their subordinates, the chain of command mentality is no longer effective. The professional model of organizational design begins to supersede the bureaucratic style of management. This article will address the following question: How can today’s organizations encourage its members to share their ideas and knowledge to leverage this valuable resource to meet their business goals? The first step to introducing the reader to the world of Knowledge Management is to simply define how the term and related jargon are used in today’s organizations. Information can be defined as data that is “in formation”. In contrast to information, Knowledge is defined as the meaningful links that people make in their minds between information and its application to a specific setting.
On a macro level, Knowledge Management (KM) is developing, capturing, sharing and applying the collective knowledge of the people in your organization. On a micro level, KM is a conscious strategy of getting the right information to the right people at the right time and helping people share and put information into action in ways that strive to improve organizational performance.
Intellectual Capital is simply the sum of everything that everyone in a company knows. This collective knowledge then contributes to give the company a competitive edge. Unlike our more common capital assets, such as land, it is intangible.
Knowledge Worker The knowledge worker requires a good deal of formal education and the ability to apply theoretical and analytical knowledge which requires a different approach to work and a different mind-set. Above all, knowledge workers require a habit of continuous learning. They must be hungry for knowledge just for the sake of satisfying their own curiosity.
Explicit vs Tacit Knowledge It is very critical to understand what the differences are between tacit and explicit knowledge. Tacit knowledge was described over 50 years ago by Polanyi, the famous philosopher, as “we know more than we can tell”. A more complete definition of tacit knowledge is the unknown know-how, craft knowledge, developed individually, held in mental models and beliefs and exchanged informally. Explicit knowledge, on the other hand, is known know-how and know-about, developed through scientific inquiry, and exchanged formally. It is important to understand that there is sometimes a requirement for tacit knowledge before a person has a use for explicit knowledge. For example, a student studying management who has worked for several years in different organizations would be much more receptive to a class in management than someone who has never been employed outside of the home. One last tip to remember the differences between the two terms, is that tacit knowledge is best shared through people, where explicit knowledge can be shared through machines.
How has the business world changed in response to the explosion of information available to organizations today? As Thomas Stewart, a well-known expert on the topic of Intellectual Knowledge states, “In the age of knowledge, companies must configure themselves that they can deliver innovation to their customers so fast that they rarely build fancy structures like departments at all. They just act.”
Stewart defines ten principles for managing Intellectual Capital in today’s organizations:
- Organizations must realize they do not own or control their human or customer capital. Ownership is shared with employees first, then suppliers and customers.
- To create usable human capital, a company must focus on providing opportunities for teamwork, the creation of Communities of Practice, and other social forms of learning.
- Companies must unemotionally separate their most valuable employees from the rest. The key employees, who create organizational wealth, have skills that are proprietary and of a strategic nature.
- A company’s structural capital (or infrastructure) is an intangible asset that organizations own and can most easily control; Regrettably, it is the least type of capital customers care about.
- Structural capital exists for two reasons: to collect the warehouse of knowledge that customers value and to deliver the information to the user in the shortest possible time.
- Information and knowledge can and should replace the need for costly physical and financial assets.
- Work based on knowledge is customized for the customer.
- Every organization should review its industry’s value chain to determine the most critical information that is required.
- Carefully map the flow of information rather than the flow of materials.
- Human, structural and customer capital must work together.
Another view from Thomas O. Davenport, author of Human Capital , challenges the common, and somewhat hollow, cliché that states our employee is our greatest asset. His view, in agreement with the #1 statement above, supports that employees are NOT owned but are investors of their own human capital in their organizations. The metaphor of investment is used to describe the knowledge worker’s choices. He supports the idea that human capital is as fluid as other forms of capital. In his view, today’s knowledge worker is looking for the organization which will be the best investment of their abilities and skills seeking the greatest return for their own personal investment. This view demonstrates why organizations today must recognize the special skills of today’s knowledge workers and the importance of retention of this valuable resource
Today’s organizations are searching for answers to create the right environment to encourage active information sharing. Nancy Dixon, another KM expert, shares three myths that have emerged surrounding the idea of knowledge sharing in organizations. The first myth is “Build it they will come”. Many companies have built huge databases that they envision as a warehouse to contain all knowledge submitted by employees. Many of these investments in new information systems to capture knowledge have resulted in disappointing outcomes. The common next step is to try some type of incentive program to encourage contributions which has also failed miserably. The second myth is Technology can replace face-to-face. As discussed earlier, tacit knowledge is very difficult to communicate formally. The face to face interactions are essential to share this information. As an example, when someone asks a person how they would handle a problem, the person must draw upon their knowledge base and their personal experiences with this type of problem. This type of response is crucial information but is not something a person will often be willing or able to document. The third myth is First you have to build a learning culture. This is a myth largely because organizational cultures are not easily changed or built. This can be compared to the age-old argument of the chicken and the egg. If the organization is able to enlist learners and teachers to be a part of your knowledge management program, the culture will be created by them instead of for them. The good news is it has been proposed that even a small percentage of people sharing knowledge, 10-15%, can build a knowledge-sharing culture.
As ideas in the area of KM mature, it is very evident that there are many more questions to be answered. As organizations progress deeper into the Information Age where the flow of information becomes essentially important, will new ways of managing intellectual capital emerge? Where are the great ideas for businesses going to come from? Could an organization’s hiring practices affect the quality and quantity of new business ideas? Please contact me with any questions or comments at email@example.com AND let me know if you are interested in me facilitating a session on this important topic to your leadership team or to a larger group of your employees as part of your Plan for Employee Development.