Knowledge as an asset in the 21st Century Enterprise

 

“Content becomes information, and information becomes knowledge. Knowledge leads to better decisions and more effective implementation of processes” (Hackos 2002)

Abstract

This discussion approaches the question of knowledge qua enterprise-asset from the standpoint of the integrated worker, and specifically the worker as an integral part of knowledge and as the producer of knowledge. The Knowledge-worker and the knowledge possessed by a firm are presented as entwined (and inseparable), components of a greater asset. In this perspective, the knowledge-worker and knowledge are facets of a single whole.

‘If HP knew what HP knows, we would be three times as profitable”
Lew Platt, former CEO of Hewlett-Packard

 

Introduction

Knowledge workers not only deal in an organization’s “engine of production” (Kakabadse 2003), but may be said to own the “primary means of production” (Newell 2002). The knowledge worker and their product should be seen as representing an investment rather than as just a labour cost (Newell 2002), and in this light the term “Gold Collar” worker (Newell 2002) describes staff that are not only valuable in terms of the investment made in them, but also their value as productive of corporate assets (Davenport 1998).

 

“… what creates longevity and combats turnover in a business is making use of untapped potential within the employees and transferring the training to help each employee work at peak performance” (Awad 2004:256)

Discussion

Production and Community

In its simplest form in a work environment we can usefully regard knowledge as the product of “minds at work” (Davenport 1998) rather than something that pre-existed on its own. It is important to reflect on this plurality, and that we speak of interacting groups of workers forming a “knowledge network” (Barraba 1999), rather than as isolated individual contributors. It is indeed this interconnectedness of knowledge workers that must shape both how they are used, as well as how to keep them productive and satisfied, and how to retain them. In this context, we are to view the network of knowledge-workers and their processes, and the knowledge they are entwined with, as communities.


Corporate survival

“Learning organizations provide a facilitative environment where learning is highly encouraged” (Marquardt 1994:53)

In a research study by the Dutch oil giant, Shell, de Geus showed that an average expected corporate lifespan was less than 40 years, caused in his view by corporate “learning disabilities”. (Fulmer, Gibbs et al. 1998)

Among the common properties he discerned in those companies surviving beyond 40 years, was the ability to tolerate novelty and innovation, and to learn from past experience and vicariously from other institutions. He reflects on the company as a learning-organisation, in which there is organisational memory, and integrated knowledge.

Corporations have always clearly understood that equipment, real-estate, and intellectual property are corporate assets, but they are also increasingly regarding information and knowledge as being vital assets that should be managed effectively by establishing specialized teams responsible for information in a similar fashion as those responsible for financial accounting and personnel. (Evernden & Evernden 2003).

In this sense, intellectual assets are valuable and appreciate rather than depreciate with reuse. Use of intellectual assets is clearly a necessary substrate for innovation, problem-solving, and value creation. (Snowden 1999).

A critical question of the corporate culture and behaviour is then having a “knowledge-focused organization” rather than an organization composed simply of “knowledgeable individuals” (Klein 1998:2)

An illustration of this is the rise of Buckman Laboratories, a supplier of specialty chemicals -whose owner and CEO took steps to create a “climate of continuity and trust” in order to increase staff stability and retention. Buckman makes this claim based on the experience of a turn-around process at Buckman Laboratories in which he used knowledge-management principles to convert the entire organization and putting every employee “at the front line”, and motivating staff to share knowledge (Buckman 1998:363).

Buckman can also be seen to have addressed threats to staff-retention due to volatility, by making connections between knowledge workers, enabling trust, fostering cooperation, and showing a commitment to retention. This reflected a survival strategy based on a commitment to “nurture innovative and creative thinkers” and to “encourage flexible and adaptable behaviour” (Debowski 2006:87).

With sponsorship of teams and knowledge networks in place it becomes possible to identify contributors performing as knowledge sources in specific subject areas. Rather than simply acting as solitary subject-matter experts, they can be grouped into Communities of Practice (CoP) by means of collaborative tools (Schrage 1997). By grouping knowledge communities in this manner, a corporation is able to engage in learning projects which allow them to access and have multiple use of knowledge embedded in the particular contexts and communities involved. (Newell 2002:128)

Since building CoPs requires a bottom-up collaborative approach, it involves trust between workers and between workforce and management, as well as worker involvement and commitment (Newell 2002:120).


Corporate Goals

“… the goal is to link [knowledge management] projects to identifiable corporate objectives that add value to the company’s bottom line” (Awad 2004)

Knowledge-management efforts, like any other activity taking place inside a corporation, should be clearly connected to the core objectives of the organization. (Jansink 2005:3)

To align knowledge efforts within the organisation there are several milestones to be achieved:

 

  • A clear understanding and articulation of corporate goals (Jansink 2005)
  • Needs analysis, information audits, and knowledge audits (Henczel 2001:3)
  • Re-use of best practices  (Gorelick 2005:127) 
  • Realization of reusable knowledge artifacts (Lytras 2003:2)
  • Identification of layers of organizational knowledge (Eccleston & James 2007:60)

 

It should of concern to any CEO that in the absence of integrated policies, things get done or are accomplished in spite of the standing rules and procedures rather than because of them, and that staff are focused on simply “getting things done anyway” (Stacey 2000:80).

Workers may have thus engaged in using what they see as the “ground truth” of matters by “knowing what really works on the ground” (Davenport 1998:8), and employing practices that are different to those encoded in formal directives and organizational objectives.

One salient factor is what the management beliefs are with regards information exchange between individuals, and how this is leading to operant behaviour. Awad & Ghaziri advise us to “take a close look at how managers view knowledge transfer” (Awad 2004 :275)

The chief objective is thus to begin building networks of knowledge workers that are aligned with the corporate goals, and to nurture the resulting communities (De Cagna 2001:41).

Part of this process is to establish stability and continuity, as well as building the social capital (Prusak 2001:86) needed to create an appropriate climate to foster retention and drive interaction and knowledge-sharing.

 

How?

Information is a resource. If it is not treated as an asset, by nurturing it and teaching people how to use it successfully, then it will be under-utilized and wasted. (Evernden and Evernden 2003)

Nonaka splits knowledge into two distinct parts each with its own mode of learning and own mechanisms of transmission (Nonaka 1999). In this view, explicit knowledge is the form easily transferred by simply reading, attending classes, and taking notes. It is the component most easily transmitted via memos, instructions, and manuals.

It is also believed to be the smaller and less informative of the two parts.

The greater segment of knowledge is thought to be the tacit component, which according to Nonaka’s SECI model, is transferred primarily by direct observation and doing.

From an organizational point of view, “Learning by doing” or the process of “Socialization” and “Internalization” in Nonaka’s SECI terminology, involves being immersed in the organization, being mentored and instructed, observing others doing the work, being observed and critiqued, and absorbing the unspoken “ground rules” operant in the organization.

Since this obviously takes time and effort from the learner and also other productive staff members, there is an investment process that has costs and commitment far beyond that of the hiring costs, work tools, and salary package of the individual.

A further dimension is that the interaction between knowledge workers and “minds at work” process of generating knowledge leads to an ongoing learning interaction which results in capacity and production increases in not only the learner, but also in the processes they touch and the people interacting with them in the handling and production of knowledge.

Trust is of particular note, because this is a significant hedge against destructive rumours, gossip, and negativity (DiFonzo 2002), and engenders and promotes the exchange of information (Ford 2001:2) and is itself developed by the sharing of information between people (Ford  2001:23).

Ford further identifies several methods for promotion of trust:

                        – Open communication

                        – Inclusion in decision making

                        – Sharing critical information

                        – Sharing feelings and perception

Of note here is that three of the four points articulate interaction between workers rather than solitary activities, and thus underlines the need to see knowledge workers as nodes in a knowledge network and emphasizes the importance of seeing their contributions as interdependent rather than as individual or solitary actions. This requires that management understands and supports the formation of teams, and provides sponsorship for knowledge work (Awad 2004:59).

A further point can be made that teams of knowledge workers are more than the sum of their parts in the sense of being more productive on average than an equal number of solitary workers. This is borne out by examination of the output and success of teams and individuals in scientific research environments (Wuchty 2007)

 

Long Term – The Learning Organization

Becoming a “knowledge-focused organization” requires many steps – notably retaining staff and motivating them to engage in knowledge producing activities with sharing of information and knowledge forming the core of the Communities of Practice needed to support organizational goals.

It should be apparent from this kind of structure however that management would cease to be in control of information flow, and would become increasingly reliant on the workers to be self-managing in this regard.

An even greater aspect of this phenomenon is that workers, by virtue of being knowledge productive, soon outstrip their managers in terms of understanding of the subject, and fine-grained understanding of knowledge context and content.

In this regard Grant identifies a structural and hierarchical issue:

“When managers know only a fraction of what their subordinates know and tacit knowledge cannot be transferred upwards, then coordination by hierarchy is inefficient” (Grant 1996:118)

Clearly then we need a different kind of leadership model, one in which management is a facilitating and supportive force rather than a driving one, and strictly hierarchical power should be replaced with a more knowledge-ecology based model with collaboration rather than knowledge-hoarding at its basis.

Nonaka identifies the need and function of a “shared space for emerging relationships” in which “knowledge activists” share information and knowledge, and interact in a climate of trust and engagement. (Nonaka 1995:50).

This “shared space” is identified by Nonaka under the term “Ba”, and it is to be understood as both a physical space as well as a mental or virtual space, and which is providing the physical space and materials for knowledge production such as libraries, access to information sources and the like, and also the access needed to acquire and process knowledge. It additionally comprises the mental “space” of time and calm needed to generate ideas and process information, and also the virtual space of electronic or other methods of communication.

Part of Ba is also the workers themselves, and management has a role in acting as matchmaker to bring together people whose projects and interests have a logical affinity, and for whom there should be “mutual attractiveness” (Jansink 2005:4)

The final piece of the puzzle is to evolve and maintain an organizational culture where creation and retention of knowledge is seen as a primary business driver, and sharing of knowledge is seen by all as a core behavioural attribute of all staff and as a standard practice in the organization. In this culture we need to encourage values and institute rewards which drive the creation and sharing of intellectual capital. (Klein 1998:5)

Debowski notes six relevant strategic values in this regard (Debowski 2006:15)

–          Collaboration

–          Communication

–          Flexibility

–          Teamwork

–          Service orientation

–          Quality focus

We might well step back at this point and agree that culture was the “most important component” of all (Pemberton 1998:188)

Conclusion

“Culture, structure and infrastructure of an organization are essential elements that facilitate and nurture learning” (Pemberton 1998:184)

 

Knowledge is a participative and social product, and corporations rely on knowledge to remain competitive and to realise corporate objectives. Knowledge is not simply an archive of facts, but requires the procedures, practices, and activities of knowers in order to be an asset, while un-exercised knowledge disconnected from communities of practices, withers and becomes irrelevant and worthless.
It is the exercise of knowledge that allows a firm to become a learning organisation with an appropriately supportive management structure, and to be able to sense changes in its environment and to adapt and grow into new avenues.

Without knowledge-workers, and without the knowledge that arises as a corporate asset from their activity and interconnection, a firm has a predictably short life expectancy, but learning organisations can  thrive where others petrify and fall away.


References

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  3. Buckman 1998, “Lions and Tigers and Bears; following the road from command and control to knowledge sharing” in Book of Readings Vol 1 for 7672, University of Canberra 2007
  4. Davenport 1998, “Working knowledge: how organizations manage what they know” Davenport, TH & Prusak, L, Harvard Business School Press
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  21. Pemberton 1998, ‘Knowledge management (KM) and the epistemic tradition’, Records Management Quarterly, vol. 32, no. 3,
  22. Prusak 2001, “How to invest in social capital”, Prusak, L. & Cohen, D. Harvard Business Review, vol. 79, no. 6, 2001
  23. Schrage 1990, “Collaborative Tools: a first look”, Schrage, M. in Knowledge management tools: resources for knowledge-based economy, Butterworth 1997
  24. Snowden, D. J. (1999). “Liberating knowledge: understanding the sense-making capabilities of communities in the complex ecology of the modern organization”.
  25. Stacey 2000, “Complexity and Management; fad or radical challenge to systems thinking”, Stacey, R. Griffin, D. Shaw, P. Routledge
  1. Wuchty 2007, “The Increasing Dominance of Teams in Production of Knowledge”, Wuchty, S. Jones, B F. Uzzi1, B. Science Vol 316 18 May 2007 10.1126/science.1136099

 

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Matthew Loxton is the director of Knowledge Management & Change Management at Mincom, and blogs on Knowledge Management. Matthew’s LinkedIn profile is on the web, and has an aggregation website at www.matthewloxton.com
Opinions are the author’s and not necessarily shared by Mincom, but they should be.

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One Response to “Knowledge as an asset in the 21st Century Enterprise”

  1. Coco Says:

    People cannot be expected to learn one expertise and just apply it routinely in a job. Your expertise is in steadily renewing your knowledge base and extending it to new areas. ”The YES Movie” produced by Louis Lautman
    http://www.TheYESmovie.com

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