Spread Knowledge

MGT504 - Organization Theory and Design - Lecture Handout 19

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One primary goal for information technology system today is to support efforts to manage and leverage organizational knowledge. Having greater access to information is useless unless that information is put to use to further the goals and success of the organization. In today’s economy, the basic economic resources are no longer capital, or labor, or natural resources, but knowledge. Peter Drucker coined the term knowledge work in the early 1960s but only in recent year have mangers begun to recognize knowledge as important resource that should be managed, just as they manage cash flow, human resources, or raw materials, Particularly for companies that are striving to be learning organizations, knowledge management is a critical job for organization executives. Learning organizations effectively acquire, create, and transfer knowledge across the company and modify their activities to reflect new knowledge and insight.

Knowledge management is new way to think about organizing and sharing an organization’s intellectual and creative resources, it refers to the efforts to systematically find, organize, and make available a company’s intellectual capital and to foster a culture of continuous learning and knowledge sharing so that organizational activities build on what is already known. The company’s intellectual capital is the sum of its information, experience, understanding, relationships, processes, innovation, and discoveries. Although information technology plays an important role by enabling the storage and dissemination of data and information across the organization, technology is only one part of a longer puzzle. A complete knowledge management system includes not processes for capturing and storing knowledge and organizing it for easy access, but also ways to generate new knowledge through learning and to share knowledge throughout the organization. Information technology alone is not enough to handle this complex problem.


Knowledge is not the same thing as data or information, although it uses both. Data are simple, absolute facts and figures that, in and of them, may be of little use. A company might have data that show 30 percent of a particular product is sold to customers in Florida. To be useful to the organization, the data are processed into finished information by connecting them with other data – for example, nine out of ten of the products sold in Florida are bought by people over the age of sixty. Information is data that have been linked with other data and converted into useful context for specific use. Knowledge goes a step further; it is a conclusion drawn from the information after it is linked to other information and compared to what is already knows. Knowledge, as opposed to information and data, always, has a human factor. Books can contain information, but the information becomes knowledge only when a person absorbs it and puts it to use. Knowledge is based on prior information, hands – on experience, intuition, and understanding – it involves recognizing how to take action on the information to accomplish the organization’s goals. For example, a manager might recognize that targeting people over the age of sixty in Florida will double sales, but targeting the same age group in Maine or Minnesota will do nothing but increase marketing costs. Knowledge is something that is in employees’ collective brains, not something stored in a database or printed out by an executive information system.

Organizations deal with both explicit knowledge and implicit, or tacit, knowledge. Explicit knowledge is formal, systematic knowledge that can be codified, written down, and passed on to others in documents or general instructions. Tacit knowledge is based on personal experience, rules of thumb, intuition, and judgment. It includes professional know-how and expertise, individual insight and experience, and creative solutions that are often difficult to communicate and pass on to others. Explicit knowledge may be equated with knowing about; whereas tacit knowledge is equated with knowing how. For example, recent graduates of an agricultural college may know about the best times and locations for planting soybeans, the best soils and fertilizers to help ensure a healthy crop, and the appropriate time to harvest the crop. They can test soil samples track weather conditions, calculate the growing period, and plan for harvesting. A third-generation soybean farmer may not know about any of those things. However, the seasoned farmer knows how to row a successful soybean crop, based on years of experience. Such farmers know which fields are best for growing soybeans, when to plant, and how to tend the crop, and they use their judgment to know when crops are ready to harvest, which may or may not be the date the first farmers would have calculated.

If asked to explain how to grow soybeans, the ag-school graduate could write a detailed, scientific report, the hirdgeneration farmer might be unable to provide a set of clear, precise instructions, even though he or she knows how
to grow a superb crop. The farmer’s expert knowledge is not easily codified. Similarly, in organizations there are many people who know how to do certain things that they might not be able to put into clear, precise instructions for others. For learning organizations, finding ways to transfer both explicit and tacit knowledge – the knowing about and the knowing how—across the organization is critical. Although explicit knowledge can easily be captured and shared in documents and through information technology systems, as much as 80 percent of an origination’s valuable knowledge may be tacit knowledge that is not easily captured and transferred.


Knowledge management is not new, but only recently have organization executives begun thinking about deliberate, systematic ways to create, capture, organize, and transfer knowledge. There are three driving forces behind the surge of interest in knowledge management. First, a large part of the momentum comes form the rapid advances in information technology that makes it possible to share explicit knowledge more quickly and easily as well as to connect people in networks for the sharing of tacit knowledge. Second, as the economic basis of organizations shifts from natural resources to intellectual capital, top executives have found it imperative to appraise their organizations’ knowledge resources and how to leverage them. Finally, the growing interest in knowledge management is closely related to companies’ effort to become learning organizations, in which managers strive to create a culture and a system for crating new knowledge and for capturing both explicit and tacit knowledge and getting it to the right place at the right time. A survey of CEOs attending the World Economic Forum’s 1999 annual meeting found that 97 percent of senior executives see knowledge management as critical issue for their organizations.

Critical to both approaches is a cultural mindset that encourages collaboration and knowledge sharing, since knowledge give people power within the organization, there is a strong impulse to hoard rather than share it. Thus knowledge management often requires major culture change. For example, Jorma Ollila, CEO of Nokia Telecommunications, introduced a new cultural direction with the statement, “Knowledge in Nokia is power only when it is shared,” Texas Instruments awards the “Not-Invented – Here-But-I-Did-It-Anyway” prize to encourage people to share knowledge.

The first approach to knowledge management deals primarily with the collection and sharing of explicit knowledge, largely through the use of sophisticated information technology systems. Explicit knowledge may include intellectual properties such as patents and licensees, work processes such as policies and procedures, specific information on customers, markets, suppliers or competitor, competitive intelligence reports, benchmark data, and so forth. When an organization uses this approach, the focus is on collecting and codifying knowledge and storing it in databases where it can easily be accessed and reused by anyone in the organization. Knowledge is gathered from the individuals who possess it and is organized into documents that others can access and reuse. This “People-todocument” approach is used by some consulting firms. For example, Ernst & Young collect knowledge such as interview tips, work schedules, benchmark data, and market segmentation analyses and stores them in an electronic database for reuse. The second approach focuses on leveraging individual expertise and knows how – tacit knowledge – by connecting people face-to-face or through interactive media. Tacit Knowledge includes professional know-how, individual insights and creativity, and personal experience and intuition. With this approach,, managers concentrate on developing personal networks that link people together for the sharing of tacit knowledge. Although information technology is used, it primarily supports and facilitates conversion and person – to – person sharing of tacit knowledge. Consider how DPR Construction Inc.., one of the fastest – growing and most successful general contracting businesses in United States, creates and transfers both explicit and tacit knowledge.


Organizations can use a number of mechanisms to support the collection and sharing of knowledge resources. Some mechanisms that are particularly useful for explicit knowledge management are data warehousing, knowledge mapping, and electronic libraries. In addition, intranets or other networks for connecting people throughout the organization are important for sharing both explicit and tacit knowledge.

  1. Data warehousing and data mining. Data warehousing allows companies to combine all their data into huge databases for easy access, and data mining helps users make sense of the data by searching for patterns that can help solve organizational problems or take advantage of new opportunities. Data warehousing and data mining can be particularly useful for building customer relationships or entering new markets. Kimberly –Clark Corp. has expanded its customer base by using its data warehouse in the business-to-business sector to identify individuals that its distributors sell to and then targeting them with promotional mailings about Kimberly – Clark products. At Ernst & Young, each of the more than forty practice areas has a staff member who helps to codify employees’ explicit knowledge and store it in databases, which are linked through a network. An E&Y team preparing a bid to install an ERP system for large industrial manufacturers used the database to search out previously developed
    solutions. By reusing the material, the team saved Ernst & Young, as well as the client, more than a year of work.
  2. Knowledge mapping. Some companies are undertaking knowledge mapping projects that identify where knowledge is located in the organization and how to access it. Although there are varied approaches, the purpose of knowledge mapping is to guide people to knowledge resources within the company. Hughes Space & Communication is building a knowledge expressway using Lotus Notes, Videoconferencing, employees home pages, and numerous other technologies, the map is used to transfer new management practices, track licenses and patents, gather competitive intelligence, and so forth, for example, the engineering group might tap into a “ Lessons learned” database using hypertext links to directories, abstracts, and other documents, Hughes also hopes to use knowledge mapping to support tacit knowledge sharing by guiding people to pockets of expertise and fostering communication and storytelling.
  3. Electronic libraries, Electronic libraries, databases of specific types of information for specific uses, provide another way to store knowledge and make it available throughout the organization. Users may be able to “ check out” and reuse specific pieces of knowledge. For example, Sun Microsystems has crated a shared –code library, a central communication hub from which programmers can check out whole pieces of software code without having to recreate them every time. Sequent Computers Inc. has used an indexed library called Sequent Electronic
    Corporate Library (SECL) since 1995 to hold sales presentations, technical papers, and so forth. In the United Kingdom, Anglian Water Services is developing an “encyclopedia of water” as part of its efforts to become a learning organization. The electronic encyclopedia contain knowledge about all aspects of water, such as treatment technologies or services management, that has previously been stored in separate books, documents, articles, and process descriptions.

Intranets and other networks are critical tools to give people throughout the organization access to explicit knowledge that is stored in databases, electronic libraries, and so forth. San Jose-based Cadence Design System Inc. uses an in house Web sit for new sales representative that provides a step –by – step guide though the sale process, product specifications, and profiles of customer and leads. The system has helped Cadence get sales reps out into the field two to four months faster, which saves the company millions of dollars. Some companies, including US West, Paradyne Co., and Metropolitans Life insurance, use intranets for gathering competitive intelligence, Salespeople, marketing staff, technicians, and others, in addition to competitive intelligence professionals, post information and views on technologies, customers, product, and industry development.


Although tacit knowledge management system also uses information technology, the emphasis is more on human interaction. For tacit knowledge management, effective mechanisms include dialogue, learning histories and storytelling, and communities of practice, also listed in ` 7.6 intranets and networks can also support the sharing of tacit knowledge, particularly in global organizations. For example, Xerox once tried to codify the knowledge of its service technicians and embed it in an expert decision system that was installed in the copiers. The idea was that technicians could be guided by the system and complete repairs more quickly, sometimes even off-site. However, the project failed because it did not take into account the tacit knowledge --- the nuances and details—that could not be codified. After an eighteen-month study by anthropologists, behavioral scientists, and engineers found that service techs shared their knowledge primarily by telling “war stories” Xerox developed a system called “Eureka” to link 25,000 field service representatives, Eureka, which enables technicians to electronically share war stories and tips for repairing copiers, has cut average repair time by 50 percent.

  1. Dialogue: The primary mechanism for tacit knowledge sharing is to connect people in a dialogue – getting people talking face-to-face, or at least through videoconferencing or other interactive media. The goal of dialogue is to crate a collective intelligence – people together arrive at a shared understanding of a problem and a collective solution that blends the ideas of many people. One way to understand dialogue is to compare it with debate. In a debate, people state and advocate their solutions to problem with the intent to convince others to adopt those solutions. A dialogue, on the other hand, assumes that many people have different pieces of the answer to a problem and that together they can craft a solution. Dialogue focuses on exploring assumptions and discovering common ground and shared issues. Participants in a dialogue do not presume to have a “right” answer because the answer emerges from the collective intelligence of the group. As new and deeper solutions are developed, a trusting relationship is built among the participants, which can transforms communication pattern within the organization. Some organizations set up forums on an intranet where people can get together and engaged in dialogue about specific problems. Novartis, a $24 billion life sciences company, holds knowledge fairs about four times a year to give scientists and other employees a chance to engage in dialogue face – to –face; then, when they go back to their respective divisions, they pick up the dialogue in Virtual Forums, as described in Taking the Lead box. Organizations that excel at tacit knowledge management find ways to encourage and facilitate continuous dialogue among employees. For example, a Japanese pharmaceutical company has a tea room where researchers sit down, drink tea, and discuss heir projects with fellow scientists; in this informal, relaxed setting, knowledge that can’t be easily written down in documents or stored in a data base is exchanged among professionals. To help encourage dialogue at Data fusion Inc.., an information technology products and consulting services firm in San Francisco, Bipin Junnarkar, President and chief operating officer, has employees take pictures at the business conferences the y attend and then share them with others as a way to recount what they learned at the conference, much like a family uses vacation slid shows or videotapes to recount their experiences to others.
  2. Learning histories and storytelling. Another approach to tacit knowledge management is to get people to share learning histories, which are designed to get at the history of how critical decisions were made and problems
    were solved (or not solved) so that knowledge is transferred to others. This techniques is based on the ancient tradition of storytelling – in hunting and gathering societies, for example, young men become successful hunters partly by sharing the story of a big hunt, where each person tells his version of what happened and a shaman comments on the narrative and guides the group to understand the story’s significance and why the hunt succeeded or failed. In organization, a learning history is a written narrative of a specific major even or project, based on the recollection and insight of everyone who participated --- managers, line workers, secretaries, even customer and suppliers, each person is quoted directly, and the reminiscences are woven into a compelling story, in addition, a team of learning consultants and organizational employees identifies recurring themes, poses questions about the story’s assumptions and implications, and raises, “ un discussable” issues that don’t’ come through in the narrative.
  3. The completed learning history is used as the basis for discussion groups. The people who were involved reexperience the event and collectively learn its significance. For employees facing similar projects, the learning
    history provides a way to plan their own activities. A similar approach is the after action review, developed by US. Army which means that participants in project or activity take fifteen minutes or so to talk about what was
    supposed to happen, what actually happened, why there is a discrepancy between the two, and what can be learned from the experience. These and other varieties of corporate storytelling are increasingly being used to transfer tacit knowledge. When people share their understanding and expertise in stories, it establishes a context for important pieces of knowledge and key decisions that other in the organization may share. Stories, work because they allow people to subtly raise issues that they might be afraid to openly discuss in a more formal way, leading to grater opportunities for learning and sharing knowledge.
  4. Communities of Practice, Communities of practice from spontaneously in organization as people gravitate toward other who share their interests and face similar problems. Communities of Practice are made up of individuals who are informally bound to one another though exposure to a similar set of problems and a common pursuit of solutions. For example, a community of practice might be copier technician at Xerox who share tips around the water cooler, freelance writers who have coffee once a week and talk about their current projects and problems. A district sales office that has a goal of being the top district office in the country, or people located in various departments of a manufacturing organization who share an interest in computer games. Communities of practice are similar to professional societies --- people join them and stay n them by choice, because they think they have something to learn and something to contribute. Organization cannot manage communities of practice in the traditional sense, but they can encourage and support them to help speed learning and the transfer of knowledge.

Even though true communities of practice cannot be formalized, some organization use the idea to amass and concentrate knowledge and intellectual energy related to specific critical issues. James Euchner, a vice-president in Nynex’s research and development department, hired an anthropologist to find out why some groups were so slow to set up data services for customers. She found that different departments involved never communicated informally so they didn’t understand one another’s roles and needs. Euchner put the workers together in the same room and allowed people to form themselves into informal groups around various tasks and the problem was solved. Similarly, when George Fisher first became CEO of Kodak, he found task forces all over the company trying to find ways to use digital imaging in Kodak’s product line. The problems was, the small groups were all separated by functional and divisional boundaries, so they unable to share their knowledge and expertise. At one time, for example, there were twenty – three separate groups working to develop digital scanners. Fisher dismantled the separate task forces and brought everyone working on digital imaging together, and the company quickly began to see result of their collective knowledge.


What’s the ultimate purpose of all these mechanisms? Why do organization managers encourage and support activities such as dialogue and storytelling? A significant goal of knowledge management system, whether we are talking about electronic libraries or communities of practice, is to leverage professional knowledge and expertise. Rather than having separate pockets of expertise scattered about the organization, knowledge managements systems aim to bring knowledge together and spread it throughout the company. People can use the knowledge that already exist and build on it to create new knowledge. Consulting firms often set up databases of best practices that include detailed descriptions of projects so that consultants around the world can draw on one another’s expertise. Other organization creates electronic libraries so workers can “check out” and reuse previously developed components or solutions. Xerox has estimated that sharing best practices through knowledge management has enabled the company reduce costs by as much as $1 billion.

Mechanisms such as databases, knowledge mapping and electronic libraries are excellent tools for the management and transfer of explicit knowledge that can be codified and written down. However, in order to leverage tacit knowledge --- professional insights and understanding that cannot be stored in a database – organizations use mechanism such as dialogue, storytelling, and communities of practice, when people talk openly about their projects and problems, ideas and solutions often emerge from the collective brain of the group. Technology alone cannot achieve the ambitious goal of leveraging professional knowledge. For example, one large consumer products firm asked all professional staff to document their key work processes in a database. Most employees felt that their jobs were too varied and complex to capture in a set of written procedures, but at the insistence of top management, the task was completed. However, the resulting database was of little use – it simply did not capture the nuances, details, and insights that people needed to improve their work. Although computer technology can be highly useful for leveraging knowledge managers should understand its limitations. In addition, managers should recognize that the ultimate key to leveraging knowledge is changing organizational culture and management practices to encourage and support knowledge sharing.

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