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Chapter 5
Knowledge Management

Contents
 Learning Objectives
 Introduction
 knowledge management-an overview
 Critique to knowledge management
 Sources of knowledge
 Types of knowledge
 Knowledge creation
 Features and Functions of knowledge Management Products
 Benefits Knowledge Management
 Knowledge Management application in organizations
 Trends and Challenges in Knowledge Management
 Summary
 Review Questions

5.1. Learning Objectives

After reading and studying this chapter, you should be able to:
 Understand the concept of knowledge management
 Identify the sources and types of knowledge
 Explain the ways of organizational knowledge creation.
 Understand the features and functions of knowledge Management
Products
 Explain the benefits and challenges of knowledge management

5.2. Introduction
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Present day’s organizations, large or small, gather vast amount of knowledge during

the course of their regular operations. This knowledge remains in the ‘minds’ of
organizational members conducting the operations- be it research, design,
development, manufacturing, or services. The effects of losing organizational
knowledge is especially noticeable and can have far reaching implications when
people occupying important positions such as Chief of Designs or Chief Marketing
leave since all the knowledge they gathered over long years of experience is lost
permanently to the organization, along with them. Computers have not played a
significant role in this area, till recently, having mainly concentrated in the data
processing field: obviously due to the faster pay back period for the money invested.

KNOWLEDGE IS LIKE LIGHT. Weightless and intangible, it can easily travel the
world, enlightening the lives of people everywhere. Yet billions of people still live in
poverty unnecessarily. Knowledge about how to treat such a simple ailment as
diarrhea has existed for centuries but millions of children continue to die from it
because their parents do not know how to save them.
Source: Opening statement of the World Bank 1998/99 World Development Report:
Knowledge for Development.

Knowledge informs decisions and actions. Knowledge is intangible, dynamic, and

difficult to measure, but without it no organization can survive.

5.3. Knowledge Management-an overview

Understanding Knowledge Management requires an understanding of knowledge and

the knowing process and how that differs from information and data. Knowledge
Management recognizes that data, information, and knowledge are critical
organizational resources.
 Data – raw facts about people, places, events, and things that are of
importance in an organization.
 Information – data that has been processed or reorganized into a more
meaningful form for someone. It is information that changes something or
somebody-either by becoming grounds for actions or by making an individual
capable of different or takes more effective actions.
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Source: Luan, J & Serban, A. (2002, June). Knowledge management concepts,

models and applications. Paper presented at Annual AIR Forum, Toronto.

What is Knowledge?
Let us see some of the definitions given for the term Knowledge:
1. Knowledge comprises all cognitive expectancies—observations that have been
meaningfully organized, accumulated and embedded in a context through
experience, communication, or inference—that an individual or organizational
actor uses to interpret situations and to generate activities, behavior and
solutions no matter whether these expectancies are rational or used
intentionally.
2. Knowledge – data and information that is further refined based on the facts,
truths, beliefs, judgments, experiences, and expertise of the recipient.
3. Knowledge is justified true belief.
4. Knowledge is a fluid mix of framed experience, values, contextual information
and expert insight that provides a framework for evaluating and incorporating
new experience and information. It originates and is applied in the minds of
knower's. In organizations it often becomes embedded not only in documents
or repositories but also in organizational processes, practices and norms.
5. Knowledge is information in action. Knowledge is viewed as a collection of
facts, ideas, learnings, policies, practices and a lot more.
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The new source of wealth

is knowledge, and not
labor, land, or financial
capital. It is the intangible,
intellectual assets that
must be managed.
Activity A

“How can the organization manage and share knowledge for competitive
advantage?”

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What is Knowledge Management?

Let us see some of the definitions given for Knowledge Management
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1. “Knowledge management is a discipline that promotes an integrated

approach to identifying, managing and sharing all of an enterprise’s
information needs. These information assets may include databases,
documents, policies and procedures as well as previously unarticulated
expertise and experience resident in individual workers.” Source: Gartner
Group Research.

2. Knowledge Management strives to integrate the data and information that

can create and preserve knowledge.

3. Knowledge management is defined as the management function responsible

for the regular selection, implementation and evaluation of goal-oriented
knowledge strategies that aim at improving an organization’s way of handling
knowledge internal and external to the organization in order to improve
organizational performance. The implementation of knowledge strategies
comprises all person-oriented, organizational and technological instruments
suitable to dynamically optimize the organization-wide level of competencies,
education and ability to learn of the members of the organization as well as to
develop collective intelligence.

4. Knowledge Management is the collection of processes that govern the

creation, dissemination and utilization of knowledge.

5. “Knowledge Management is a discipline and framework designed to help

your organization acquire, package and share “what you know” to enable
decision-making, creativity, innovation and communication.”

Knowledge management is still a young field with multidisciplinary roots. Thus,

it is not surprising that there seem to be almost as many definitions to the term
than there are approaches or “schools” of authors contributing to the field. On the
one hand, this situation can be characterized as a positive development because
the lack of clear boundaries has allowed the free influx of ideas, concepts and
approaches.
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Any Knowledge Management project should essentially have the following four
components;
Create knowledge (knowledge Repository)
Improve Knowledge Access
Enhance Knowledge Environment
Manage Knowledge as an Asset

Knowledge management is a constantly evolving business practice. In other

words, there is no 'completion date' for any knowledge management project. Not
all information is knowledge. One of the keys to a successful knowledge
management program is discerning what information and knowledge is
worthwhile to include in the knowledge management process, and what data and
information should be kept out.
5.4. Critique to knowledge management

Is knowledge manageable? Is knowledge management just another passing

management fad? Is it too complex a concept for being researched rigorously? What
are the main research barriers to the utilization of knowledge? What is it about
knowledge management that is distinctly different from older theories and concepts
such as organizational learning, organizational change etc.? These are some of the
questions knowledge managers and researchers face. Moreover, more traditional
software like document management systems, data warehouses and analysis tools and
data bases are marketed increasingly as knowledge management systems.

Thus, as with every emerging discipline or field of research, there is considerable

variety in the perspectives taken and there is no consensus yet what knowledge
management is all about and how to proceed.

Many authors have criticized knowledge management and/or suggested new

directions for research. Most of the authors agree that there are substantial benefits to
be gained from the systematic and conscious treatment of knowledge-related
processes in organizations. The diversity, interdisciplinary nature and dynamics of the
field have resulted in a large variety of KM approaches some of which seem to fail to
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recognize the abundant “lessons learned” in the approaches that form the roots of KM,
namely organizational development, organizational learning and strategic
management. As a consequence, organizations eager to improve their way of handling
knowledge are confronted with several theoretical “schools of thought” on the one
hand (human-oriented versus technology-oriented approaches, but also the intellectual
capital approach, newer forms of organizational learning approaches, HR approaches
etc.) and a vast and not transparent market supply of KMS on the other hand.
Moreover, a theory-driven implementation of ICT to support a strategically relevant
KM initiative not only has to select a KM perspective and often a combination of KM
tools and systems, but also integrate organizational design- and culture-oriented
instruments with the supporting technology.

In other words, even though many authors regularly put emphasis on the (individual
and organizational) human side of KM, it is technology that all too often is employed
as an enabler, a catalyst, a vehicle to complement or implement the concepts that
should change the way organizations handle knowledge. Information and
communication systems are used as enablers because they provide a cost-efficient and
time-efficient way of changing organizational routine or at least managers believe so.
Even though KMS can act as catalysts for KM initiatives, it has to be warned against
an implementation of such systems without considering the human and organizational
side. Instead, a careful coordination with a corresponding strategy, an organizational
design and people-oriented measures is required in order to provide a systematic and
potentially successful intervention into an organization’s way of handling knowledge.

Knowledge Management is not useless

The entire idea sits on the fact that it’s along-term strategy to maintain the existing
knowledge of the person/organization and also to harvest the “new” knowledge,
which a person acquires during his process of learning. People intuitively know
whether they are managing their own knowledge well and whether their organization
helps them to work without stress and inefficiency.

People and technology

People should not have to choose between knowing a little about a lot or about a little.
They should be able to concentrate most on what they need to know most and, when
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needed, find out a lot about related things. People do not want to “use technology” to
solve problems. Technology is a means not an end.

Financial factor
The cost of not managing knowledge greatly exceeds the cost of managing important
knowledge. Organizations have the habit of externalizing the cost of not managing
the knowledge to their customers.
Future trends
Those who want to think and act in integrated, creative ways and solve complex
problems need rich, integrated, up-to-date knowledge management environments to
support them. The gulf between traditional knowledge-driven organizations is
growing as knowledge-driven organizations concentrate not only on present success
but their own evolution so they can better take advantage of the new knowledge
intense environment.

The paradoxical image

Call it the knowledge management paradox: those who are so busy “putting out fires”
that they have no time to tackle knowledge management are those who most need to
manage their knowledge better. While many CEO’s put knowledge Management as
top priority, few companies are still at a stage of implementation: it’s the mind shift of
the organizational heads to add knowledge to the balance sheet.

5.5. Sources of knowledge

“KM [Knowledge Management] involves blending a company’s internal and external

information and turning it into actionable knowledge via a technology platform.”

The two sources of knowledge are:

Internal sources emerging from the operations of the organization-internal
sources include the organizational operations such as design, development,
engineering, sales, marketing, manufacturing, customer contact, etc. This is the
basic source of organizational information, which is controllable and can be easily
canalized to Knowledge Resource.
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External sources such as Industry/Professional Associations, Commercial web

sites etc-there are many professional bodies such as Ethiopia Economic
Association, academic bodies such as universities, research institutions, industry
associations, and commercial organizations. These sources usually make the
knowledge available through web sites and some times through publications.
Some of them could be free services and some could be for a fee.

5.6. Types of knowledge

There are two kinds of knowledge:

EXPLICIT knowledge can be expressed in words and numbers and shared in the
form of data, scientific formulae, specifications, manuals and the like. This kind of
knowledge can be readily transmitted across individuals formally and systematically.

TACIT knowledge is highly personal and hard to formalize, making it difficult to

communicate or share with others. Subjective insights, intuitions and hunches fall into
this category of knowledge – Difficult to verbalize, such tacit knowledge is deeply
rooted in an individual’s actions and experience, as well as in the ideals, values, or
emotions he or she embraces. The following comparison adds clarity about the
difference between explicit knowledge & implicit (Tacit) knowledge.

Documented information Know-how & learning

that can facilitate action. embedded within the minds
people.

Explicit knowledge Implicit (Tacit) knowledge

• Formal or codified • Informal and uncodified
• Documents: reports, policy • Values, perspectives &
manuals, white papers, culture
\
standard procedures • Knowledge in heads
• Databases • Memories of staff, suppliers
• Books, magazines, journals and vendors
(library)
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These two types of knowledge are complementary to each other, and both are crucial
to knowledge creation. They interact with and change into each other in the creative
activities of human beings.

5.7. Knowledge Creation

Knowledge creation is a function of an organization’s absorptive capacity.

Absorptive capacity requires a learning capability and develops problem-solving
skills. Learning capability involves the development of capacity to assimilate existing
knowledge.

Knowledge creation in organizations takes place primarily through the dynamic

process of four different modes of conversion between the two dimensions of
knowledge.

Socialization: Tacit knowledge to conversion takes place when tacit knowledge

within one individual is shared by another through training. The new economy has
given rise to a culture of working in teams.

Today no job in the knowledge industry can be performed in isolation. Since working
in teams is not a passing fad, companies are now designing a compensation structure,
which rewards team performance in addition to individual performance.

Combination: Explicit knowledge to explicit knowledge conversion takes place

when an individual combines discrete pieces of explicit knowledge into a whole new.

Externalization: Tacit knowledge to explicit knowledge conversion can be said to

take place when an individual is able to articulate the foundations of his and her tacit
knowledge.

Internalization: Explicit knowledge to tacit knowledge conversion takes place when

new explicit knowledge is shared throughout the firm and other members begin to use
it to broaden, extend and reframe their own tacit knowledge.
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Knowledge creation, whether for imitation or innovation, takes place at two levels-
individual and organizational. The prime actors in the process of knowledge creation
are individuals within the organization. Knowledge creation in organizations is not,
however, the simple sum of knowledge creation by individuals.

5.8. Features and Functions of knowledge Management Products

It's important to note and understand that knowledge management is not a technology,
or a solution, or a software package, but is rather a business practice. As such, the
implementation of knowledge management should be considered at a strategic level.
Successful knowledge management often requires a cultural change within an
organization, and the most common problem with knowledge management is that
interpersonal and cultural issues have not been adequately addressed. After all,
individuals are being asked to give up unique knowledge and experience on behalf of
the organization- the very qualities that make the individual valuable within the
organization. If the individual 'gives up' their information, the perception is that they
become less valuable and therefore more at risk.

To create an environment in which every individual's knowledge is valued and

rewarded, encouraging the individual to share knowledge is critical and shouldn't be
under estimated. Incentives are often used to encourage the sharing of knowledge, but
care must be exercised so that the quality and relevance of the information remains
consistent. Ideally, contributing to a knowledge management program should be its
own reward and should improve work quality for participating individuals.

The tools available in the knowledge management toolbox include items like
centralized databases, electronic message boards; Web portals-(An electronic gateway
to a comprehensive pool of information and services that is organized and presented
to serve the needs of a defined user population.) , article management, search
functions, statistical reporting, and other collaborative tools. These tools can be used
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either within an organization or with external users to give employees and customers'
quicker access to better information.

Knowledge as a product: Knowledge not only guides organizational actions, but can
also be sold. For example, professional services companies sell knowledge services.
Pharmaceutical companies hold patents and license the production of drugs.

Information and communication technology represents a key enabler for

knowledge management initiatives. Consequently, both, computer scientists and
MIS researchers show substantial interest in the field. This is especially true for both,
researchers and practitioners in the field of AI who have changed their research focus
from expert and knowledge-based systems to knowledge management systems. The
theory most notably used as the underlying basis of socio-technical system research in
general is systems theory. Additionally, the perspective on organizations as
knowledge processing systems provides useful insights for knowledge management.

Examples for information and communication technologies that are related to

knowledge management are:
Intranet infrastructures provide basic functionality for communication—email,
teleconferencing—as well as storing, exchanging, search and retrieval of data and
documents,
Document and content management systems handle electronic documents or
Web content respectively throughout their entire life cycle,
Workflow management systems support well-structured organizational processes
and handle the execution of workflows,
Artificial intelligence technologies support for example search and retrieval, user
profiling and matching of profiles, text and Web mining,
Business intelligence tools support the analytic process which transforms
fragmented organizational and competitive data into goal-oriented “knowledge”
and require an integrated data basis that is usually provided by a data warehouse,
Visualization tools help to organize relationships between knowledge, people and
processes,
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Groupware and collaboration software supports for example the time

management, discussions, meetings or creative workshops of work groups and
teams,
E-learning systems offer specified learning content to employees in an interactive
way and thus support the teaching and/or learning process.

Knowledge Management suites provide solutions for creating centralized repositories

for storing and sharing data as well as providing solutions and tools for searching,
retrieving and managing this data.
Some KM software suit examples:
 Retrieval ware by Convera-www.convera.com: Retrieval ware creates a
complete inventory of all enterprise assets, then enables users to search
more than 200 document types on file servers in groupware systems,
relational databases, document management systems, web servers and
more while respecting access right all from a common user interface.

 Right now Technologies- www.rightnow.com: Knowledge Management

software, the self-learning knowledge base completely integrates all
communication channels resulting in customers and agents accessing
information.

 IBM-lotus-knowledge Discovery Product: A discipline providing the

strategy process, and technology to share and leverage information and
expertise to do just that knowledge discovery products and solutions can
help rapidly achieve Knowledge Management by capturing and organizing
knowledge in the form of content, expertise and communication.
Technologies such as Intranets and advanced collaborative software have
made Knowledge Management possible. So it can be easily managed,
located, evaluated and reused to drive responsiveness, innovation,
efficiency and learning.

Knowledge management systems (KMS) promise significantly enhanced

functionality through an integrated combination of a substantial portion of the above
mentioned information and communication tools and systems from the perspective of
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knowledge management. KMS should not be seen as a voluminous centralized data

base. They can rather be imagined as large networked collections of contextualized
data and documents linked to directories of people and skills and provide intelligence
to analyze these documents, links, employees’ interests and behavior as well as
advanced functions for knowledge sharing and collaboration. Goals of using KMS are
for example to generate, share and apply knowledge, to locate experts and networks,
to actively participate in networks and communities, to create and exchange
knowledge in these networks, to augment the employees’ ability to learn and to
understand relationships between knowledge, people and processes.

5.9. Benefits Knowledge Management

A good knowledge management system should reinforce an organizational culture

that promotes sharing and learning, makes better information more widely available,
reduces duplication of efforts, helps companies develop 'best practices', and allows
forth passing of valuable information as members leave the organization.

An effective Knowledge Management program should help a company leverage the

assets and provide the following benefits:
 Fostering innovation by encouraging free flow of ideas.
 Improving customer service by streamlining response time.
 Boosting revenues by getting products and services to market faster.
 Enhancing employee retention rates by recognizing the value of employees
knowledge and rewarding them for it.
 Streamlining operations and reducing costs by eliminating redundant or
unnecessary processes.
 Enhance customer service and satisfaction by improving the speed and quality
of customer contacts.
 Decrease customer service costs by improving self-service processes.
 Decrease training costs and times for new employees.
 Increase employee retention rates by recognizing and rewarding employee
contributions.
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A creative approach to knowledge management can result in improved efficiency,

higher productivity and increased revenues in practically any business function
Knowledge Management’s role is to connect knowledge owners with knowledge
seekers.

5.10. Knowledge Management application in organizations

Knowledge Management Initiatives at INFOSYS

Infosys provides consultancy and software services worldwide to 500 companies. KM
at Infosys is founded on ‘Learn once and Use anywhere’ concept. Infosys manages
organization-wide knowledge using three centrally operated knowledge Shops (k-
shop); Process Assets Database (PAD) and People Knowledge Map (PKM).

Knowledge Management Initiatives at BAAN

Baan is a world leader in powerful, innovative, easy-to-use business software. Now
they have turned towards knowledge management, in keeping with the demands of
time. Two departments, namely," Knowledge Transfer” and “Knowledge
Development” are projected for this purpose. Their main objectives are to empower
the member with skills necessary to meet the external world. One of the features of
Baan is the encouragement provided to the employees for knowledge management.

Pioneers in Knowledge Management

Anderson Consulting; USAA Insurance firm; GE; RITZ Carlton; Agro Corp USA;
Dow Chemical USA; Boeing 777 USA; Beckman Labs USA; Mckinsey and Bain and
Co.

5.11. Trends and Challenges in Knowledge Management

Presently the emphasis is being focused on Information Technology related KM-

creating tools and techniques that facilitate creating of KR (Knowledge Resource) and
effectively utilizing it. Groupware (IBM-lotus Notes, Microsoft Exchange Servers-
Outlook) has become the more popular tool. Reasons are not hard to guess:-
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 It facilitates Discussion Groups very effectively

 Economical and cost effective
 Familiarity- they are the most popular e-mail tools
 Easy to use for creation of Knowledge Resource and using it
 Robust and reliable tools

Enterprises need to know:

 What their knowledge assets are?
 How to manage and make use of these assets to get maximum return?

Challenges in Knowledge Management

 The market place is increasingly competitive and the rate of innovation is

rising. So that knowledge must evolve and be assimilated at an ever-faster
rate.
 Competitive pressures are reducing the size of the workforce, which holds this
knowledge for this.
 Knowledge takes time to experience and acquire. Employees have less and les
time for this.
 There are trends for employees to retire earlier and for increasing mobility,
leading to loss of knowledge.
 There is a need to manage increasing complexity as small operating
companies are transnational sourcing operations. A change in strategic
direction may result in the loss of knowledge in a specific area. A subsequent
reversal in policy may then lead to a renewed requirement for this knowledge,
but the employees with that knowledge may no longer be there.

Activity A
What would you suggest about the challenges and trends of Knowledge Management in
Ethiopian context?
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5.12. Summary
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Knowledge management (KM) comprises a range of strategies and practices used

in an organization to identify, create, represent, distribute, and enable adoption of
insights and experiences. Such insights and experiences comprise knowledge,
either embodied in individuals or embedded in organizational processes or
practice. “Knowledge management (KM) is an effort to increase useful
knowledge within the organization. Ways to do this include encouraging
communication, offering opportunities to learn, and promoting the sharing of
appropriate knowledge artifacts.”

Knowledge management efforts typically focus on organizational objectives such

as improved performance, competitive advantage, innovation, the sharing of
lessons learned, integration and continuous improvement of the organization. KM
efforts can help individuals and groups to share valuable organizational insights,
to reduce redundant work, to reduce training time for new employees, to retain
intellectual capital as employees’ turnover in an organization, and to adapt to

changing environments and markets. “A focus on the people issues dramatically

increases the potential for success.”

5.13. Review Questions

1. What is knowledge management and how does it enhance the

competiveness of a firm?
2. What are the essential components of knowledge management project?
3. What are the benefits of knowledge management?
4. What are the problems & challenges in the implementation of a knowledge
management system?