The Importance of Knowledge Management

ESSAY: THE IMPORTANCE OF KNOWLEDGE MANAGEMENT; SHARE TO LEARN, LEARN TO SHARE.

W R IT T E N B Y : J E R R E L D E P A A U W 1. INTRODUCTION Nowadays, knowledge is an important factor for people to gain distinctive advantages in the present society; through training, coaching and education, people can develop their skills, abilities and attitudes, to gain those distinctive advantages. Through knowledge, people get better jobs, higher compensation and more wealth. Knowledge is a key-driver for people, to survive in this knowledge intensive world; more knowledge means more power.

The importance of knowledge in an organizational-context is growing rapidly as well. The dynamics and complexity of the organization’s environment is hard to understand. Knowledge could be the solution to understand and gain better insights in this complex environment, which helps knowledge-based organizations to accomplish their successes. In general, knowledge is the greatest power source in today’s society, but recent studies have shown that not only the absorption and adoption of knowledge is the key to gain these distinctive advantages.There has been a shift from “knowledge is power” to “knowledge-sharing is power”.

This new phenomenon is the subject of many researchers and recent studies. The effect of this new trend is that knowledge is becoming an organization’s key resource, to gain competitive advantage. Managers strive to transform the traditional organization into a “learning-organization”, success. to realize organizational WHAT IS KNOWLEDGE? 2. 1 THE KNOWLEDGE-BASED ORGANIZATION As stated above, knowledge is the key factor to realize organizational success.

This keyresource has to be managed as professional as possible, inside the knowledge-based firms. A knowledge-based firm is an organization which produces knowledge intensive products. Characteristics of those products: ? ? ? ? Knowledge intensive: only specialists with the right knowhow could create this product. Intangible: the product is highly intangible and hard to observe.

Heterogeneous: every product is adapted to the customer, so the product is always different. Simultaneously: both the producer as well as the consumer, has to be involved in the service process.Examples of knowledge-based organizations are: McKinsey & Baker (lawyers), Boston Consultancy Group (consultants), KPMG (accountants) and Microsoft (ICT developers). 2. 2 DEFINITION OF KNOWLEDGE The definition of knowledge is hard to define, because knowledge is a very broad concept.

One of the most common distinctions in the knowledge literature is between knowledge, information and data: ? ? ? Data can be defined as raw numbers, images, words, sounds which are derived from observation or measurement.Information, in comparison, represent data arranged in a meaningful pattern, data where some intellectual input has been added. Knowledge can be understood to emerge from the application, analysis and productive use of data and/or information. The relationship between data, information and knowledge seems to be simple. Data leads to information which in turn leads to knowledge.

But this relationship is much more dynamic and interactive because knowledge can also lead to information and data. Also the knowledge we possess shapes the type of information and data we collect and how we analyze it (Hislop, 2005). . 3 EXPLICIT & TACIT KNOWLEDGE The vast majority of contemporary knowledge literature distinguish two different types of knowledge, these types are defined as explicit and tacit knowledge. These types of knowledge have very different foundations, based on different epistemologies. These epistemologies will not be discussed in this essay.

Explicit knowledge is synonymous with objective knowledge. The characteristics of explicit knowledge are: ? ? ? ? ? Codifiable: knowledge can be codified into a understandable forms. Objective: knowledge is objective and can be observed.Impersonal: knowledge is not embedded in persons, teams and organizations. Context independent: the knowledge is generally valid, and context independent. Easy to share: explicit knowledge is easy to share between people.

In general, explicit knowledge can be stated as objective, standing above and separate from both individual and social value systems and secondly that it can be codified into a tangible form (Hislop, 2005). An example of explicit knowledge is a textbook for students. According to Hislop, tacit knowledge on the other hand represents knowledge that people possess, but which is inexpressible.This type of knowledge is linked with both physical/cognitive skills (such as the ability to create a successful advertising slogan), and cognitive frameworks (such as the value systems that people possess). The main characteristics of tacit knowledge are: ? ? ? ? ? Inexpressible in a codifiable form: Subjective: Personal: Context specific: Difficult to share: In general, tacit knowledge is personal and difficult, if not impossible to disembody and codify.

This is because tacit knowledge may not only be difficult to articulate, it may even be subconscious. 3. WAT IS KNOWLEDGE MANAGEMENT? 3. 1 KNOWLEDGE MANAGEMENTKnowledge during the management is a new management discipline that came to prominence 1990s. The knowledge management literature suggests that since approximately the mid-1970s, economies and society in general have become more information and knowledge intensive.

The literature suggests also that information and knowledge-intense industries replacing manufacturing industries as the key wealth generators (Hislop, 2005). According to Hislop, the service sector has replaced the manufacturing sector as the biggest source of employment. Knowledge and information plays a much more intensive role than twenty years ago.In general, knowledge is a very complex concept to understand and the management of knowledge in an organizational context is very difficult to realize; because knowledge is a necessary key-resource for knowledge-intensive organizations to be successful, managers have to manage this resource as well as possible. One of the central knowledge management components is that it supports the idea that it is possible for organizations to collect knowledge together into a central repository, of for middle and senior management to fully understand the knowledge of those who work for them.The essence of knowledge management is to transfer tacit and explicit knowledge via inter-personal interaction, through the organization.

This flows of knowledge will stimulate the innovativeness of an organization, which will be discussed later. The managerial role is to encourage and facilitate the type of communication and social interaction processes that will allow effective perspective making an taking to occur. This can be done through an enormously diverse range of ways including: ? ? ? ? Develop a knowledge-sharing culture (through rewarding people for sharing).Facilitating the development of organizational knowledge. Providing communication channels which encourage and support knowledgesharing. Implement a formalized mentoring system to pair experienced and inexperienced workers.

In conclusion, managers have to facilitate interpersonal knowledge-sharing through diverse forms of interaction and communication, such as developing the levels of trust between the members of a new project through allowing them to interact extensively face-to-face at the initial stages of the project (Hislop, 2005). 3. 2 KNOWLEDGE-SHARINGCrucial to the success of knowledge management initiatives is that employees are willing to share their knowledge and expertise. Another crucial factor which leads to the success of knowledge management initiatives is the social and cultural context.

Recent studies have shown, that knowledge sharing has four levels of interaction, in an organizational perspective (Hislop, 2005): 1. Individual level: knowledge-sharing between two individual persons. 2. Group, team or division level: knowledge-sharing between members of a group, team or division. 3.

Organizational level: knowledge-sharing between members inside an particular organization. 4. Inter-organizational organizations. Figure 1: levels of knowledge-sharing level: knowledge-sharing inside a network of 4.

Institutional level 3. Organizational level 2. Internal team level 1. Individual level Figure 1 is a schematic view of the levels of knowledge-sharing. To manage knowledge effectively and efficient, managers have to interact between those levels to stimulate knowledge sharing.

To realize knowledge-sharing, managers have to stimulate the knowledge-flows at all levels as set above. . 3 STRONG -AND WEAK TIES As stated above, there are many levels of knowledge-sharing-levels. Each level has its own unique network, which differences in size, actors and the type of ties between actors.

Researchers acknowledge that there are two types of ties, each with different characteristics, namely strong -and weak ties. Granovetter (1973:1371) defined weak ties as those who interact more than once per year and less than twice per week. He operationalized strong ties as those who interacted at least twice per week.Both kind of types can be schematized in the next figure: Strong Ties: Weak Ties: Actors: individual, Groups, organizations Closed Network FIGUUR 2 STRONG -AND WEAK TIES Open Network Figure 2 illustrates the types of ties between actors and the types of networks.

Depending on the level of knowledge-sharing, an actor could take different forms, for example an individual, groups, organizations or a branches of organizations. Weak ties are useful for new idea generation, strong ties in contrast are very useful for building a in-depth knowledge-base.In a closed network, there are strong connections and interactions between actors, which lead to strong and intense relationships. In this case, those relationships are useful for in-depth specialization. Closed networks have less innovation capacity, because a closed network has no interaction with actors outside the network (less new knowledge absorption), as the “green actor” illustrates. Contrary to closed networks, open networks have weak relationships inside the network and are more capable for the absorption and sharing of new knowledge, as illustrated by the “blue actor”.

The knowledge-sharing literature stated that open networks have a higher innovativeness rate and more knowledge absorption than closed networks, as described above. Depending on the type of organization; networking, absorption of knowledge and organizational learning is a determinant for organizational success. 4. SUSTAINABLE COMPETITIVE ADVANTAGE THROUGH KNOWLEDGE MANAGEMENT 4. 1 ABSORPTIVE CAPACITY (COHEN & LEVINTHAL, 1990) The absorption of new knowledge is of growing importance for organizational success.

According to Cohen & Levinthal, absorptive capacity is almost equally to creative capacity.To develop an effective absorptive capacity, whether it be for general knowledge, problem-solving or learning skills, it is insufficient merely to expose an individual briefly to the relevant prior knowledge. An organization's absorptive capacity will depend on the absorptive capacities of its individual members. To this extent, the development of an organization's absorptive capacity will build on prior investment in the development of its constituent, individual absorptive capacities, and, like individuals' absorptive capacities, organizational absorptive capacity will tend to develop cumulatively.A firm's absorptive capacity is not, however, simply the sum of the absorptive capacities of its employees, and it is therefore useful to consider what aspects of absorptive capacity are distinctly organizational. Absorptive capacity refers not only to the acquisition or assimilation of information by an organization but also to the organization's ability to exploit it.

Therefore, an organization's absorptive capacity does not simply depend on the organization's direct interface with the external environment. It also depends on transfers of knowledge across and within subunits that may be quite removed from the original point of entry. . 2 KNOWLEDGE MANAGEMENT AND INNOVATION Absorptive capacity is a pre-determinant of the capacity of an organization’s innovativeness. The organization’s capacity to innovate is crucial for sustainable competitive advantage.

If an organization innovates quicker, better and cheaper than its competitors, an organization’s competitive advantage is sustainable. In this case, organizations are more successful in achieving organizational-goals, make more profit and have a higher continuity, in contrast to their competitors.Nonaka and Takeuchi (1995), developed a theory of organizational knowledge creation that explains why certain Japanese companies have been successful innovators, and which attempts to blend together the best aspects of Japanese and Western business practices, with focus on the conceptualization of knowledge processes. Interaction inside a network at different knowledge-sharing-levels is required to create new knowledge and innovations. According to Hislop, the importance of tacit knowledge to innovation processes is well recognized. Innovation occurs through interactions between people, as stated in paragraph 3.

. As outlined previously, the importance of effectively developing and utilizing networks in innovation processes has grown considerably. Through the tacit and complex nature of much of the knowledge in innovation processes means that effectively knowledge-sharing requires not only that strong, trust-based social relations exist between individuals, but that an extensive amount of communication and interaction occurs. Hansen (2002) concluded that the quality of knowledge-sharing processes was affected by both the closeness of the relationship between network partners and the relatedness of their nowledge.

Thus effective knowledge-sharing was found to be most likely when there was both a close relationship between collaborators and when a significant amount of common knowledge existed. Accordingly to Hislop (1990), through typically implicit assumption, in the majority of the innovation literature on knowledge and networks, is that the primary purpose for the development of organizational networks, is to gain access to the knowledge that such networks can provide.Knowledge, knowledge-absorption and knowledge creation are all pre-determined criteria for organizational-innovation and thus for organizational success. Without knowledgesharing, which contributes mostly to organizational-innovativeness, organizations never reach sustainable competitive advantages.

5. CONCLUSION Knowledge is an important factor for people to gain distinctive advantages in the present society. The importance of knowledge in an organizational-context is growing rapidly as well.In general, knowledge is the greatest power source in today’s society, but recent studies have shown that not only the absorption and adoption of knowledge is the key to gain these distinctive advantages. This key-resource has to be managed as professional as possible, inside the knowledgebased firms. The definition of knowledge is hard to define, because knowledge is a very broad concept.

The vast majority of contemporary knowledge literature distinguish two different types of knowledge, these types are defined as explicit and tacit knowledge. Knowledge management is a new management discipline that came to prominence during the 1990s.Knowledge is a very complex concept to understand and the management of knowledge in an organizational context is very difficult to realize, because knowledge is a necessary key-resource for knowledge-intensive organizations to be successful, managers have to manage this resource as well as possible. Crucial to the success of knowledge management initiatives is that employees are willing to share their knowledge and expertise.

Another crucial factor which leads to the success of knowledge management initiatives is the social and cultural context. There are four levels of knowledge-sharing.Researchers acknowledge that there are two types of ties, each with different characteristics, namely strong -and weak ties. The absorption of new knowledge is of growing importance for organizational success. An organization's absorptive capacity will depend on the absorptive capacities of its individual members.

To this extent, the development of an organization's absorptive capacity will build on prior investment in the development of its constituent, individual absorptive capacities, and, like individuals' absorptive capacities, organizational absorptive capacity will tend to develop cumulatively, according to Cohen & Levinthal.The organization’s capacity to innovate is crucial for sustainable competitive advantage. Innovation occurs through interactions between people. As outlined previously, the importance of effectively developing and utilizing networks in innovation processes has grown considerably. Without knowledge-sharing, organizations never reach sustainable competitive advantages.

REFERENCES Cohen, W. M. & Levinthal, D. A. March 1990, “Absorptive Capacity: A New Perspective On Learning Organization”, Administrative Science Quarterly, Vol. 5, No.

1, Special Issue: Technology, Organizations, and Innovation, pp. 128-152. Hansen, M. 2002, “Knowledge Networks: Explaining Effective Knowledge Sharing in Multiunit Companies”, Organization Science, 13/3: 232-48. Hislop, D.

2005, “Knowledge management in organizations”, Oxford New York. Granovetter, M. S. 1973, “The Strength of Weak Ties”, American Journal of Sociology 78:1360-1380. Nonaka, I.

& Takeuchi, H. (1995), “The Knowledge Creating Company”, Oxford: Oxford University Press.