Knowledge is not a fresh concept, from very early times people have communicated knowledge from one generation to next, in the form of songs, stories, narrations, skills, and so on. Knowledge enriches as we share; it never gets depleted like other resources. Knowledge is playing a key differentiator role in today’s scenario, which is embarking a new era as compared to a period where labor and capital ruled.
Even though the knowledge is derived from information, it represents a more meaningful and accurate piece of information. It includes acquaintanceship, prudence, and cognizance gained through professional study, making comparisons, identifying relevance and making associations with other activities. Organizations think knowledge is an applied action.
Evolution of human has always accompanied by knowledge growth; there are many significant witnesses available to prove knowledge development. Therefore, the knowledge growth and concept is not new, but the new thing is the quantity and its impact on current economic, social and cultural rights, and to the modern man’s life. Information and knowledge have become an important resource for economic resources. These have become the new strategic resource in the economic life which adds the natural resources and the appearance of what is called as the “knowledge economy.”
In a traditional economy, the resources are limited and are depleted, whereas in a knowledge economy the resources are not confined but in higher quantity. In a traditional economy, more than fifty percent of the workers were involved in the physical movements, who were known as regular workers. The workers in the traditional economy have now given way to knowledge workers, who have a distinct approach towards their work. The knowledge workers require collaboration, sharing of knowledge and proficient than their predecessors.
Managing knowledge has become one of the crucial factors in the global economy, which effectively has become a source of competitive advantage. Companies follow approaches that integrate various processes of knowledge management, such as identification, management, sharing and capitalization on the know-how, experience and intellectual capital of organizational employees. Much of the knowledge is available in tacit form; as a result, knowledge is lost when the employees leave an organization.
The knowledge hierarchy system model is shown in figure 1. Knowledge is commonly renowned from data and the information. Data includes observations or facts. Information is classified, cleaned, processed and verified data. Knowledge leads to plans for decision making, achieved by meaningfully combining information with practice. Knowledge capture minimizes the duplication of work, enables problem-solving, promotes teamwork, brings innovation and ideas, increased client satisfaction, and high employee motivation. The wisdom is an extension of knowledge which results in effective actions and skill set generation (Nonaka I., 1994).
The twelve important principles of Knowledge are: Knowledge is connected by nature; Knowledge is self-organizing; Knowledge is a group driven entity; Knowledge requires language to transfer; Knowledge could be made available in multiple forms; Knowledge is casual; Knowledge is dynamic; Knowledge has a lifespan; Knowledge is not proprietary; Knowledge would not grow in conducive environment; No single best practice for Knowledge; and Knowledge is a vital link to management.
To put it more simply: Knowledge is simply actionable information. Actionable refers to the notion of relevant, and nothing but the relevant information being available in the right place at the right time, in the right context, and in the right way so anyone can bring it to bear on decision making all the time. Knowledge is the key resource in intelligent decision-making, forecasting, design, planning, diagnosis, analysis, evaluation, and intuitive judgment making. It is formed in and shared between the individual and collective minds. It does not grow out of databases but evolves with experience, successes, failures, and learning over time.
From a management perspective, there are clear distinctions between two types of knowledge. The common practice now refers to them as explicit and tacit knowledge. They can be described as follows:
■ Explicit knowledge is precisely and clearly expressed, with nothing left to implication. Generally, in business situations, it is fully stated and openly expressed without reservation.
■ Tacit knowledge is understood but not clearly expressed. It is often personal knowledge embedded in individual experience and involves intangible factors, such as personal belief, perspective, and values.
We need to develop the characteristics of these categories of knowledge to understand how they can be managed.
Companies hold substantial documented knowledge in patents, technical specifications, and procedures. Additionally, information is routinely collected, stored and distributed as management information. Financial, marketing, production, and customer service/ support information is usually codified and is ready for different distribution channels. This information makes up the majority of explicit knowledge.
All of this information has value in its own right and in most organizations could be used more effectively. There is also a need to seek even more explicit knowledge in the daily conduct of business. Explicit knowledge is normally available readily in all communications with customers, suppliers, distributors, competitors, government agencies and the community at large.
By definition, tacit knowledge is more difficult to recognize and collect; let alone codify, store and distribute. Yet this is the key component of knowledge management. Releasing the true potential of this asset on a continuous basis poses the sheer challenge for consulting companies and forms an important component for an effective performance measure for knowledge management.
The most valuable asset of every organization — particularly a consulting firm — is the hidden or tacit knowledge buried in the minds of employees and other people in regular contact with the organization. This includes experience, learning from doing as well as study, observation, and informal information or even gossip.
Components of Knowledge:
Apart from the explicit knowledge available in various company documents and codified in computers, KM strategy and a KM system in any company must support the following key components of knowledge:
i. Judgment: Very unlike data and information based on data association, knowledge has a component of judgment attached to it. A colorful and precise stock ticker and a real-time graph on the web site can be excellent information for a share broker, however, in real value, it means nothing if he can’t act upon it or make a decision based on the data they provide. Unactionable information is not knowledge. However, if the share broker recognizes that he needs to sell the shares when the trend chart looks like a particular pattern or need to hold when it looks like another pattern, he is making judgment based on it. The judgment allows knowledge to rise above and beyond an opinion when it reexamines itself and refines every time it is applied and acted upon.
Experience Knowledge is largely derived from experience. Being able to transfer knowledge implies that a part of experiential knowledge also gets transferred to the recipient. The benefit of experience lies in the fact that it provides a historical perspective that helps better understand present situations. Experienced people are usually valued in a company and are often paid more because they possess this historical perspective from which they can view current situations — something that a typical newcomer will almost never have. This perspective allows them to make connections with what is happening now with what might have happened earlier, and evaluate decisions in that light.
As people’s experience in their jobs increases, they begin to figure out shortcut solutions to problems they have seen before. When they see a new situation, they match it to compare patterns that they are aware of. An experienced car driver, for example, recognizes that excessive rattle in the car could mean a flat tyre. Similarly a computer hardware technician can diagnose the fault for a computer that fails to boot up, with help from his earlier experience of having diagnosed a failed power supply or a bad hard drive for computers with similar fault symptoms. With experience, these scripts guide our thinking and help avoid useless decision paths that we might have followed earlier. Such rules of thumb or heuristics provide a single option out of a limited set of specific, often approximate approaches to solving a problem or analyzing a situation accurately, quickly and efficiently.
Not only in the simplistic situations like above, even in the complex business environment, but it is also the subconscious repertoire of scripts and rules of thumb that make experienced managers more valuable than experienced new hires. Many such rules of thumb are in people’s heads as tacit knowledge, providing the power that decades of machine learning research have been unable to give to business.
ii. Values, Assumptions, and Beliefs: Business processes are very often, based on a set of assumptions. These are so natural and so deeply ingrained within the minds of people who hold them that they find their way into most of the decisions that people make, but they are never expressed. For example engineers, by their training, assume that anything that is behaving strangely has to have an underlying rationale. Managers often assume that their ordinate goal is to maximize their profit center’s financial profits. One level above this, people might assume that companies are rational and neutral. And for a good reason, after the widespread influence of Herbert Simon’s research on the concept of bounded rationality.
Companies are often shaped by the beliefs of a few key people working there. In some companies – particularly the visual media and dotcom companies – the culture of having fun is ingrained in their work environments; while creating innovative and aesthetically great products (like iMac or iBook) is done as a matter of conviction and belief in other companies like Apple. The belief on profits and market dominance by Microsoft’s founder Bill Gates has been brought into the very character of the firm.
Such values, beliefs, and assumptions are integral and key components of knowledge. These values and beliefs explain the varying reactions of different companies to the same development and often differentiate a risk-taking competitor from a risk-averse one. And knowing, capturing and sharing this component of knowledge can make all the difference between complete knowledge and incomplete, unactionable information. It is mentioned here that not all beliefs can be captured or codified explicitly and this is still a separate area of ongoing research in the field of KM.
iii. Intelligence: When knowledge can be applied, acted upon when and where needed, and brought to bear on present decisions, and when these lead to better performance and results, that knowledge often qualifies as intelligence. When it flows freely throughout the company, is exchanged and developed further, it transforms the company to an intelligent enterprise.
Original Reference Article:
Bhanumathi, P. (2015). Knowledge management enablers processes and organizational performance a case study of select SMEs in Bangalore.
Arora, C. S. (2004). Emerging knowledge management performance measures for consulting firms
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