Concepts are best defined from how people use them. So let me
try to define Knowledge Management by looking at what people in
this field are doing.
Both among KM-vendors (researchers
and consultants) and KM-users (read short descriptions of what
companies and other practitioners are doing) there seem to be two
tracks of activities - and two levels.
Track KM = Management of Information. Researchers and
practitioners in this field tend to have their education in
computer and/or information science. They are involved in
construction of informatiom management systems, AI,
reengineering, group ware etc. To them Knowledge
= Objects that can be identified and handled in
This track is new and is growing very fast at the moment,
assisted by new developments in IT.
Track KM = Management of People. Researchers and
practitioners in this field tend to have their education in
philosophy, psychology, sociology or business/management. They
are primarily involved in assessing, changing and improving human
individual skills and/or behaviour. To them Knowledge
= Processes, a complex set of dynamic skills, knowhow
etc, that is constantly changing. They are traditionally involved
in learning and in managing these competencies individually -
like psychologists - or on an organisational level - like
philosophers, sociologists or organisational theorists.
This track is very old, and is not growing so fast.
Level: Individual Perspective. The focus in research and
practise is on the individual.
Level: Organisational Perspective.The focus in research
and practice is on the organisation.
A 2x2 grid might look like this:
Knowledge = Object
Knowledge = Process
Even if this grid is to oversimplify things, there are
paradigmatic differences in our understanding of what knowledge
The researchers and practitioners in the "Knowledge =
Object" column tend to rely on concepts from Information
Theory in their understanding of Knowledge.
The researchers and practitioners in the column "Knowledge =
Process" tend to take their concepts from philosophy or
psychology or sociology.
Because of their different origins, the two tracks use different
languages in their dialogues and thus tend to confuse each other
when they meet.
I would label myself as an "Organisation Theorist". My
own managerial experience and research are in how managers of
organisations which produce and sell only knowledge manage
their intangible assets. I call them "Knowledge
Organisations", and I have used epistemology for
understanding what knowledge is. To me Knowledge Management is: The art of creating value from an
organisation's Intangible Assets.
To help managers learn how to create value
I have developed a simulation
for managing Knowledge Organisations and a tool for measuring
and presenting intangible assets, the Intangible Assets Monitor.
After those small detours, you will probably realise that your company is already managing knowledge,
albeit not quite so consciously and not structured in this way.
This is a very important insight. Knowledge has been
"managed" at least since the first human learned to
transfer the skill to make a fire. Many early initiatives to
transfer skills and information can be labeled "Knowledge
Management", libraries being one, schools and apprenticeships
others. Librarians, teachers and master craftsmen can be called
knowledge managers. Later database managers were added to
the list. Today's new professions include Chief Knowledge
Officers, Knowledge Engineers, Intellectual Capital
Directors and Intellectual Capital Controllers.
The fairly recent insight that companies can gain tremendously by
applying a more structured and conscious knowledge management has
given the Knowledge Capital "Movement" a forceful push.
Some examples of what companies are doing are found below.
Knowledge Management Initiatives Round the Globe I have collected some 40 Knowledge
Management Initiatives taken by companies and practitioners world
wide, which reveal how companies create
value from their Intangible Assets. The initiatives are
summarised under the three headings for Intangible Assets, the
same that is used in the Intangible Assets Monitor: the External
structure, the Internal structure ,and the Competence of
the People. Click on the heading
in the table or the company name.
Knowledge Management Initiatives
Gain Knowledge from Customers
Build Knowledge Sharing
Create Careers based on
Offer Customers Additional
Create New Revenues from
Create Micro Environments for
Tacit Knowledge Transfer
Capture Individuals' Tacit
Knowledge, store it, spread it and Re-use it
Learn from Simulations
and Pilot Installations
Measure Knowledge Creating
Processes and Intangible Assets
Electric, National Bicycle,
Carlton, Agro Corp, Frito-Lay, Dow Chemical,
Outokumppu, Skandia Switzerland, Steelcase
3M, Analog Devices,
Labs, Chaparral Steel, Ford Motor Co, Hewlett-Packard,
& Co, Chevron, British Petroleum, PLS-Consult,
Skandia AFS, Telia,
Buckman Labs, IBM, Pfizer, WM-data, Affaersvaerlden,
National Technological University, Matsushita,
External Structure Initiatives
Gain Information and Knowledge from Customers
Benetton, Italy. Produces
"masscustomised" apparel to fit latest trends in
colours and designs. Daily sales data from their own boutiques
are integrated with CAD and CIM.
General Electric's Answer centre USA: GE
has since 1982 collected all customer complaints in a database,
that supports telephone operators in answering customer calls. GE
has programmed 1,5 million potential problems and their solutions
into its system.
National Bicycle Industrial
Company, Japan. Produces "masscustomised" bikes to fit
customers exact height, weight and colour preferences in a day.
Is achieved through computer aided design and computer integrated
manufacturing integrated with customer database.
Netscape USA. Very close links via
Internet to opinion leaders among customers, who are encouraged
to report problems enable it to create new generations of
software at very fast pace.
Ritz Carlton. All staff are required to
fill in cards with information from every personal encounter with
a guest. These data plus all guest requirements are stored and
printed out to all staff when the guest arrives again, so that
each guest receives a personal treatment.
Offer Customers Additional Knowledge
Agro Corp USA. Sells fertilisers and
seed. Data on farmers¥ soils are combined with weather forecasts
and information on crops. Analyses are fed back to the farmer via
sales reps to help farmer select best combinations of crops.
Frito-Lay USA. Sales reps collect
daily on the spot data about shelf space utilisation for all
brands. Data are computed, combined with market information and
re-fed to the sales reps, who use it to give the retailers info
on best shelf utilisation.
Create New Revenues from Existing Knowledge
Dow Chemical USA. Has put all its
25.000 patents into a database, which is used by all divisions to
explore how existing patents can gain more revenues. The
experience from this application is now being transferred into
other intellectual assets, like brands.
Outokumppu Finland. Smelter of
copper and other metals. Knowledge on how to build smelting
plants is used to construct whole plants including education of
personnel and managers to customers all over the world. This
business is now more profitable than the original smelting
Skandia Switzerland. Back
office system developed by Skandia world-wide is sold to Swiss
Steelcase USA. Does basic research
into innovation and learning, best learning environments and new
interfaces (3D and virtual tools). Steelcase sells its knowledge
in this area to other companies.
Build Knowledge Sharing Culture
3M, USA. With 60, 000 products of
their own innovation process, this company has an organisation
that balances between creativity and conservatism. 3M¥s values
encourage learning and risk taking, but managers are required to
link continous learning to revenues.
Analog Devices, USA. CEO Ray Stata
initiated break down of functional barriers and competitive
atmosphere and created a collaborative knowledge sharing culture
from the top. Encourages "community of inquirers"
rather than "community of advocates".
Boeing 777 USA. First
"paperless" development of aircraft. Included customers
in design teams. More than 200 teams with wide range of skills
both designed and constructed sub parts, rather than usual
organization design team, construction team. Suppliers world-wide
used same digital databases as Boeing.
Buckman Labs USA. A biotech firm has
reorganised itself to optimise knowledge sharing. Has created a
Knowledge Transfer Department to co-ordinate efforts. Employees
best at Knowledge sharing gain both financial rewards and
Chaparral Steel USA. Mini
steel mill that has introduced broad range of initiatives like:
Flat hierarchy, broad education, blue collar workers as
responsible for customer contacts and rewarded for personal
initiatives. Egalitarism and trust building. Chaparral uses 1.5
hrs labour per ton compared to the industry standard1.5 - 3.0 hrs
Ford Motor Co. Old company that has
transformed itself by outsourcing and creating virtual networks
of vendors using IT.
Hewlett-Packard. Famous for its overall
culture of collaboration, which encourages knowledge sharing and
risk taking on all levels. H-P even supports people who try out
things that don't work.
Oticon Denmark. Has created a
"spaghetti organisation", a chaotic tangle of
interrelationships and interactions. Knowledge workers have no
fixed job descriptions, but work entirely on project basis.
WM-data. No work unit allowed to
be larger than 50 employees. This creates sense of
"family" and belonging, which in its turn increases
trust and knowledge sharing.
Capture, store and spread Individuals' Tacit Knowledge
McKinsey and Bain & Co.
These two management consulting firms have developed
"knowledge databases" that contain experiences from
every assignment including names of team members and client
reactions. Each team must appoint a "historian" to
document the work.
Chevron. Has created a "best
practice" database. It captures experience of drilling
conditions and innovative solutions to problems on site in a
database for sharing globally with other sites.
British Petroleum. Is using KM as a means
of drawing together talents from all over the organisation. BP
emphasises transfer of tacit knowledge rather than accumulation
and transmission of raw data and has installed a communication
network comprising video-conferencing, multi-media and email,.
Skandia AFS, Sweden. Has created
a formalised procedure to capture experiences while starting new
financial services products has reduced the time from start to
profitability from 2 years to 6 months.
Measure Knowledge Creating Processes and Intangible Assets
Celemi, Sweden. Publishes world€s
first Audit of its Intangible Assets in Annual Report 1995.
PLS-Consult, Denmark. Categorises
customers according to value of knowledge contribution to the
firm. Follows up in management information system.
Skandia, Sweden. Measures
processes using non-financial indicators. Publishes the world¥s
first Annual Report supplement on Intellectual Capital.
Telia, Sweden. Sweden's Telecom
company publishes since 1990 an annual Statement of Human
Resources including a profit & loss account visualising human
resource costs and a balance sheet showing investments in human
WM-data Sweden. One of Europe€s
fastest growing and most profitable IT-companies. A pioneer in
linking non-financial indicators to strategy and publishes an
extensive report on Intangible Assets in its Annual Report.
Considers traditional financial ratios of lttle use for
Create Careers based on Knowledge Management
Buckman Labs, USA.
Employees best at Knowledge sharing gain both financial rewards
and management positions.
IBM, USA and most Japanese large
companies. Dual careers. Employees are encouraged to switch
between professional and managerial jobs, in order to gain more
holistic knowledge about the company.
Pfizer, Switzerland. Has created
competence models for recruiting treasury executives that call
for knowledge building/sharing in addition to basic financial
WM-data, Sweden. Actively seeks to
recruit equal numbers of women and men. Clamis that a wider
diversity of both gender and cultures improves creativity.
Create Micro Environments for Tacit Knowledge Transfer
Affaersvaerlden Sweden. Business
journal uses "piggy-backing" and
"team-writing" to speed up learning among new
journalists. Interviews and larger articles are routinely
assigned as team work, rather than one-man shows. This speeds up
transfer of the seniors€ tacit skills and networks to the
Hewlett - Packard, USA and
Affîrsvîrlden Sweden. Build offices as open spaces with no
partitions or partitions at eye level. This increases sharing of
tacit knowledge and values.
Honda and others. Japanese companies
routinely build "redundancy"; people are given
information that goes beyond their immediate operational
requirements. This facilitates sharing in responsibilities,
creative solutions from unexpected sources and acts a
PLS-Consult, Denmark. Appoints
"mentors" with task to facilitate transfer of tacit
skills between members in large projects. Actively seeks large
projects, so that junior consultants can be added to the teams
Xerox USA. Provides convenient places
where people can get together routinely. Called the
"distributed coffee pot" these environments encourage
Support Education with Communication Technology
National Technological University
USA and Open University UK. New universities sell formal training
as continual learning via satellite to companies like General
Electric, Hewlett-Packard, Texas Instruments. Learners interact
via Internet and via email with each other and with instructors.
Learn from Simulations and Pilot Installations
Japan. Launched a company wide policy in 1993 to reduce yearly
working time to 1800 hours. The policy€s objective was not to
reduce costs but to change the mindset of managers. Many of them
were puzzled about how to implement the policy, which was at
first communicated as explicit knowledge. Matsushita created a
promotion office with the task to facilitate experiments with the
policy for one month by working 150 hours. Through such a bodily
experience, employees got to know what a 1800 hour year would be
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