Knowledge management

Introduction

This document gives a definition of the term "knowledge" and explains the phenomenon "knowledge management". It shows why the latter is so important and so difficult at the same time.

Management summary

In the modern world and especially the ICT sector, knowledge is the key factor in discerning oneself among other companies and gain a competitive advantage. Knowledge is of a higher order than information. Information is the carrier, knowledge the ability to act on it. ICT systems can facilitate information sharing, but knowledge sharing is the exclusive domain of humans - at least for the coming decennia.
The most important aspect of knowledge management is facilitating and promoting knowledge sharing, teaching and learning. This is difficult because it is an activity with more long-term than short-term rewards. However, with a good vision and insight the difficulties can be overcome.

The importance of knowledge sharing in the modern economy

Throughout history, workers and companies have focused on different kinds of activities to "earn their pay". There has been a steady evolution, that has accelerated in the last two centuries.

• In the early and middle ages most people worked the land to obtain food.
• With the improvement of agricultural methods and the advent of the industrial revolution the balance shifted in favor of industrial activities: producing non-edible goods.
• When producing methods and mechanization became ever more efficient the focus came to be on providing service.
• At the end of the 20th century we started moving into the fourth phase: producing, filtering and processing information.

Nowadays methods of agricultural and industrial production and providing service in the western world show little difference between companies. Information handling on the other side, has not yet professionalized to a similar high degree and it is here that competitive advantages may be created. Knowing how to optimize logistics, what state a company is in, what the desires of current and even potential customers are, how to combine existing knowledge and resources into new products before the competition does - those are examples of decisive knowledge that can make the difference between loss and profit. Quote from Nonaka & Takeuchi: "In an economy where the only certainty is uncertainty, the sure source of lasting competitive advantage is knowledge."

This is especially true for companies operating in the ICT, which after all has information and communication as its core business. ICT companies need to develop continuously, adapt to constantly changing environments, adopt and integrate emerging technologies, etc. They must be able to absorb a huge stream of information, select what is relevant and spread it around to the right people.
Most readers have realized that the most important assets of an ICT company, especially software vendors and service companies, are not its buildings, machines or stock, but its people. What some are just beginning to realize is that the people themselves are not that important - modern employees tend to do a lot of job hopping - but the knowledge inside their heads is. What a few have really understood is that expert knowledge is all too often tied to the expert and that in order to make it a company asset, it must be shared to other experts in the organization. Geniuses are rare and will stay rare, teams of experts don't have to be - and can be just as ingenious.

What is "knowledge"?

• Symbol-streams are (sets of) coded representations of phenomena from the world around us (the lexical level). Example: a file on a computer disk.
• Data are symbol-streams combined with their underlying code, that defines their structure and inter-relations (syntax). Example: the same file, seen to be a spreadsheet with its rows and columns.
• Information is data with an interpretaation alias a meaning (semantics) assigned to it. Example: the same spreadsheet, knowing that column A shows costs, B turnover, C profit and the rows show the figures for all departments for all four seasons of a year.
• Knowledge is information combined with understanding that allows a person to act on it. Example: the same spreadsheet, studied and concluded that all department show in dip in the summer caused by multiple holidays and department X shows a steady rise in profit due to the gradual introduction of a new production method.

See appendix A for detailed descriptions of these terms. The most important difference is that between information and knowledge, so that will be explained in some more detail below.

Information is a code-stream that can be understood because its syntax and semantics are known, as the definitions above show. It is something that can be written down, put in a course, translated or stored / transmitted in other ways. Information can be shared and copied easily, as the 20th century has shown clearly.
Knowledge on the other hand is personal, i.e. it is different for every person. One can gain knowledge by not only receiving information, but also interpret it. This interpretation depends on previous experience, personal habits and methods, attitude and intelligence. In a formula:
    "knowledge" = "information" multiplied with "personal mindset"
Because of this, two persons will interpret the same piece of information differently and each gains a different insight/understanding/knowledge. A very important deduction of this is that it is easy to copy information, but quite impossible to copy knowledge - how would you copy years of life experience?

By now it is hopefully clear that it is not possible to transfer knowledge from one person to another as such. To "transfer" knowledge, one has to "condense" it into information, transfer the information over to the other party and have them interpret the message. It is obvious that the knowledge gained on the receiving side depends heavily on two factors:

• the ability of the "sending" party to make understandable information out of its knowledge
• the ability of the "receiving" party to interpret the information fully and make use of it

These two factors relate to two well-known but seldom understood processes, called teaching and learning.

Learning

Learning is obtaining knowledge, by gathering, absorbing and interpreting information. There are roughly four methods of learning:

• Learning by absorbing. For instance by reading a book or report, listening to a presentation or watching a movie. This method allows teachers to prepare materials and structure them thoroughly, but does not allow for any interaction, which can limit the learning experience of the audience. It does permit to reach a big audience quickly and easily.
• Learning by discussing. Humans are very good at this, as talking is one of our preferred methods of communicating. The distinction between teachers and audience becomes blurred, as both can act as instructors and students simultaneously. It's often more effective than the first method, but requires teachers and audience to meet, which can be difficult to arrange at times.
• Learning by peeking: Reading and speaking have their limits, especially in the speed at which they transfer information. Viewing a teacher in action at practicing his knowledge "on the job" can transfer information much quicker, and may also allow the students to pick up knowledge that the teacher confers without realizing it (so-called tacit knowledge).
• Learning by doing: The ultimate way of learning is to bring all your knowledge into practice and putting it to the test, to experience for your self what works best. This method is the hardest and the riskiest, but also the most rewarding.

In real life humans don't limit themselves to one method of learning, but practice all four methods in a mix, using the best method available for given circumstances. A person can be teacher on one subject and a student on another. A good knowledge management should therefore embrace all four methods and allow for varying roles.

The most important aspect of knowledge management is knowledge sharing, i.e. condensing knowledge into information and spreading it around so that multiple persons can learn it. Of course the information that is being shared must be relevant to the audience but that is usually of less importance, as people are generally well able to filter the daily stream of information.

The difficulties of knowledge sharing

This is but one obstacle. In older companies, one may still find the "attitude of the invaluable expert". This is adopted by some people who have become the single expert in a certain field of knowledge. They are of immense value to the company, because if they would for some reason stop their work, all activities that make use of their knowledge cease. The experts realize this and anxiously guard their private knowledge, thus ensuring that they can maintain their position of power. By making company knowledge their own knowledge, they have made themselves indispensable. This kind of situation is hard to change on short notice, but easy to turn around in time - all knowledge ages and becomes less relevant through time.

The expert unwilling to share his knowledge is rare in modern companies. Rather there are plenty of experts who are willing to share their knowledge, but are not very good at doing so, just don't have the time or don't see the relevance. All too often one encounters the attitude of "They can always ask me if they want to know something!". However knowing what's available to know becomes rather hard in this case.

Effective knowledge management

A definition: "Knowledge management is managing the process of knowledge sharing among people". The previous sections have shown the difficulties of this process, but all problems can be overcome. To set up a good knowledge management, one must:

• Identify what kind of knowledge is key to the company, or more specifically, to which team. Employees doing routine jobs can probably get along with a few basic procedures, but most modern workers need specialized knowledge.
• Identify sources of important knowledge (the people) and information (documents and such). Knowing where to find knowledge/information is half the job of obtaining it!
• Make people aware of the importance of knowledge sharing in current day company business. As senior management, back this activity up, not in words but deeds and money.
• Train people's skills by using courses by external parties, but also internally, promote project debriefings, etc.
• Train people in knowledge sharing, as a skill in itself. Have them write reports, deliver presentations and participate in forums.
• Allow time (in advance!) for knowledge sharing, among other duties and activities. Allowing 10% of your time purely for spreading knowledge/information around is not excessive in an information-intensive environment.
• Establish platforms (of all kinds!) where experts can exchange knowledge. These include electronic media (bulletin boards, intranet) and "soft" platforms like presentations and brainstorm meetings. Never focus on a single exchange platform, always facilitate multiple platforms of different types.
• Establish storages where experts can store information for others to pick up later (libraries, report directories).
• Allow people to enrich their experience by job-rotating, or on a more humble level, project-rotating.
• Finally, set up reward systems for active knowledge sharing, preferably with hard cash (that's what employees are most sensitive to).

It is a flaw of human nature that we tend to have a short-term view of most things. Knowledge sharing is a long-term activity: you first have to sow and can reap only some time later. Many people want to see rewards quickly and discard anything that does not match that criterion, including knowledge sharing. This is probably the single-most important difficulty to overcome with knowledge management. It takes vision and dedication to overcome, but aren't these values that all companies like to promote among their employees?

Further reading:

• Kennismanagement: inrichting en besturing van kennisintensieve organisaties, Mathieu Weggeman, Scriptum Books, Schiedam, 1997, ISBN 90-5594-087-9
• The Knowledge Creating Company, Ikujiro Nonaka & Hirotaka Takeuchi, Oxford University Press, 1995, ISBN 0-19-509269-4

Appendices