Information & Knowledge Dynamics in Organisations - Dissertation Example

Information and Knowledge Dynamics in Organisations I. Introduction The retrieval, the use and the storage of information has been traditionally a significant issue for organizations around the world. In this context, it has been noticed by Skyrme (1997, 1) that ‘the interest in knowledge as a strategic lever in business is not new; in the 1970s and 1980s there were great expectations that knowledge based computer systems (expert systems) could harness knowledge to solve many business problems’. In order to face the above challenge, organizations around the world tried to develop a series of systems that could help with the management of information retrieved from various organizational activities. Regarding this issue Steyn (2004, 615) noticed that ‘successful organisations are knowledge-creating organisations, which produce, disseminate and embody new knowledge in new products and services; to this end, knowledge management enables organisations to improve efficiency and effectiveness mainly by decoding tacit knowledge into explicit information’. At a next level, the differentiation between knowledge and information has helped to represent more accurately the data related with the various activities of a particular organization. The retrieval and the use of information is a significant target not only for the entrepreneurs but also for employees. It is this knowledge that differentiates the value of employees and defines their level of competence regarding the realization of specific business aims. For this reason it has been noticed by Allenna (1999, 1) that ‘in Western countries, an increasing proportion of the workforce is employed for their knowledge; that knowledge is for the most part up to individuals to acquire and maintain, and it is largely portable; it may be of content or process, tacit or explicit, general or particular, linear or relational, timeless or up to the minute; It is utilized by individuals working alone and in small groups or large organizations’. Under the above terms, it has been found by Bendler et al. (2001, 8) that ‘knowledge has become the pre-eminent production factor, and it needs as much careful, conscious management as its traditional counterparts; Land, labour and capital each have their own well-established set of structures that help executives to manage them effectively, but knowledge is often treated as a poor relation; but to treat knowledge as a side issue or special project is risky because knowledge has a set of unique characteristics that must be consciously addressed for maximal impact’. However, the retrieval and the use of knowledge remains the main strategic issue for most of organizations around the world. The reason for the application of such policy is that the acquisition and the appropriate use of knowledge can increase the organizational performance enhancing the value of business assets (tangible and intangible). II. Information and Knowledge management – definition and characteristics In order to understand the role of information and knowledge in the development of organizational performance, we should primarily proceed to the presentation and analysis of the definition and the characteristics of these terms. In this context, according to Godbout (1999, 4) the primary form of information is data which ‘consists of recordings of transactions or events which will be used for exchange between humans or even with machines; as such, data does not carry meaning unless one understands the context in which the data was gathered; a word, a number or a symbol can be used do describe a business result, inserted in a marriage contract or a graffiti on the wall; It is the context which gives it meaning, and this meaning makes it informative’. At a next level, information ‘extends the concept of data in a broader context; as such it includes data but it also includes all the information a person comes in contact with as a member of a social organization in a given physical environment; Information like data, is carried through symbols; Information becomes individual knowledge when it is accepted and retained by an individual as being a proper understanding of what is true and a valid interpretation of the reality’(Godbout, 1999, 4). The consequence between the above ‘forms’ of information is noticeable. Because of this consequence, the evaluation and the use of the above data has to be in accordance with specific rules and principles as they are set by the sector where this knowledge involves. On the other hand, Milner (2000, 8) believes that information is closely connected with technology and for this reason he states that ‘it is probably true to say that sufficient and appropriate ‘information’ was deemed to exist because supporting technologies had been put in place over a period of years and had continued to develop in their processing power and sophistication, and that these information holdings and processes were largely considered to be unrelated to the achievement of knowledge management; Knowledge, on the other hand, was, when identified as a concept, usually seen as something separate, removed from the information acquisition and interpretation processes, requiring careful consideration and investment in staff development, as well as in still more sophisticated computer software packages’. In other words, although information and knowledge are closely connected the dependence of the former from technology is greater than this of the latter. In accordance with the above assumptions, the relationship between information and internet can be used by a specific organization in order to enhance its competitive advantage. In his paper published in 2001 in Harvard Business Review Michael Porter highlights the importance of Internet to the enhancement of the organizational performance. More specifically the above researcher states that Internet ‘allows customers to gather extensive information about products easily; because the Internet reduces the importance of location, at least for the initial sale, it widens the geographic market from local to regional or national’ (2001, 66). In other words, information is a crucial element of the organizational performance but it can be used more effectively mostly through the technology and specifically the Internet. On the other hand, knowledge is differentiated as of its acquisition and its use throughout the firm’s operation. In this context, it has been supported by Wilson (2002, 15) that ‘Knowledge is defined as what we know: knowledge involves the mental processes of comprehension, understanding and learning that go on in the mind and only in the mind, however much they involve interaction with the world outside the mind, and interaction with others’. In accordance with a similar definition given by Bollinger et al. (2001, 8) ‘knowledge is a resource valuable to an organizations ability to innovate and compete; it exists within the individual employees, and also in a composite sense within the organization; according to the resource-based view (RBV) of the firm, strategic assets are the critical determinants of an organizations ability to maintain a sustainable competitive advantage’. Because of the above mentioned, knowledge management is regarded to be a strategic asset for any organization. However, knowledge should be examined as of its components in order to be appropriately interpreted. In this context, the study of Anand et al. (2003, 15) showed that ‘the knowledge possessed by an organization and its members can be classified as explicit or tacit; explicit knowledge can be codified and communicated without much difficulty while tacit knowledge--such as the manner of operating sensitive equipment, decision-making judgment in the absence of data, or interpersonal skills--is not so easily articulated’. From another point of view, Fink (2005, 30) noticed that ‘tacit knowledge has often been neglected, as it is hard to be communicated, passed on, and stored; explicit knowledge by contrast is often publicly available and therefore not a source for sustained competitive advantage; it is, at least, more easily copied; the challenge for knowledge management lies in the process of finding, making visible, and using tacit knowledge in order to create value for the company’. In practice, the differentiation between these two types of knowledge can be difficult especially in cases that ‘pieces’ of knowledge can be regarded as belonging to both the above presented categories. For this reason, the management of knowledge has to treat data carefully, trying to restore their primary content without limited their value for the enhancement of the business performance. Towards this direction, Milner (2000, 7) suggested that ‘the process of managing data with a view to transforming it into information is a complex strategic one, which should be informed by an understanding of the way in which the organisation itself works; the role of information management, and by association the information manager (although, importantly, the job title itself can vary enormously and in many instances does not yet exist at all), is to determine what can most usefully and ‘profitably’ be gained from interpreting data which, upon human interface, takes on some meaning or application, either in isolation or in combination’. In any case the role of humans in the interpretation of data included in information is significant. However, because of the complexity related with all types of knowledge, it is sometimes difficult to proceed to accurate descriptions of pieces of knowledge acquired through a series of activities. In this context, it has been suggested that ‘complex knowledge that is tacit and dependent can be protected from imitation and diffusion because highly complex knowledge that is hard to codify and dependent on a specific context or a system of knowledge is difficult to transfer; accordingly, valuable and rare complex knowledge can be an important source of superior performance and sustainable competitive advantage’ (Chowdhury, 2005, 310). However, the difficulties in the ‘transferability’ of knowledge can be limited through the use of appropriate information systems. Such a ‘capability’ cannot lead to the assumption that the value of knowledge is limited, it is just transformed in accordance with the needs and the demands that are going to be ‘covered’ through its use. One of the most important characteristics of knowledge is the uncertainty which is related with all its aspects: from its retrieval, its credibility, its use and its storage. Towards this direction, Buckley et al. (2004, 371) agrees that ‘our view of knowledge is that it is the converse of uncertainty; Uncertainty inhibits the ability of firms to create value by limiting the scope and effectiveness of the activities they undertake; There may be uncertainty about what goals are feasible of valuable, so that firms may fail to conceive of value-creating opportunities, or they may pursue inefficient, wasteful objectives; Firms may be unsure about the actions they must take to reach the outcomes they wish to achieve; They may not know enough about the contextual circumstances in which actions are taken and how these might influence the outcome and the value created’. In accordance with the above views, knowledge is related with the uncertainty but just regarding its use. All other aspects of knowledge are not examined as of the uncertainty involved. Because of the uncertainty that characterizes knowledge, it has been found that ‘firms with more knowledge can engage in superior trading opportunities with greater confidence in the viability of their plans, in their ability to carry them out, and in the value they will achieve in the prevailing conditions’ (Buckley et al., 2004, 371). The value of knowledge and the methods of its use are issues examined in the context of knowledge management which refers to the ‘creation of new knowledge’ (Desenberg, 2000, 52). Under these terms knowledge can be expanded in several social aspects: it can be knowledge for our customers or it can refer simply to ‘new technologies and services, such as distance learning and certification and authentication services, as well as new ideas that come from employees; or developing and maintaining everyones knowledge base; KM is the transfer of knowledge and best practices, which allows everyone in government to cross through stovepipes, geography, and business lines’ (Desenberg, 2000, 52). The above assumptions are also supported by Han (2001, 34) who stated that ‘the value proposition of knowledge management states that there are fundamental business reasons and expected benefits for pursuing this process approach; there are gains the organization can achieve by using knowledge management to measure results, such as creating an Intranet and knowledge repositories’. From another point of view, Chatzkel (2003, 3) supported that ‘knowledge is not detached from the people, processes, or infrastructure of an organization and its network; it is part of all of these things and progressively a more pivotal part; the ability to mobilize knowledge resources has become even more critical than the ability to control and amass physical and financial resources; as physical and financial resources have started to take on the character of commodities, the ability to capitalize on knowledge resources is becoming the creator of uniqueness and the differentiator of value’. The above findings are really important for the identification of the role of knowledge management in the enhancement of business performance especially on a long term basis which is the main target of any organization. The complexity of knowledge – as part of the knowledge management – can be viewed in the following Figure. (Godbout, 1999, 5) III. Knowledge management within the organisational environment Knowledge management as already mentioned above is the sector that deals with all knowledge – related issues (retrieval, use, storage). In this context, knowledge management can lead to the creation of knowledge assets which ‘are created by acquiring knowledge in various forms of information from the environment, making this information meaningful and useful to the employees and actors in such a manner that it can be converted into methods, know how or business rules which will enable the organization to meet its goals; As such it is not the knowledge which gives the competitive edge, but the capacity to transform knowledge into competencies and replicable know-how (Godbout, 1999, 4). In order however to lead to the creation of knowledge assets, knowledge should be accurate. The knowledge assets as acquired above can lead the organization to a significant performance offering the necessary support against the risks related with the organizational activities. On the other hand, lack of appropriate experience on handling knowledge can have severe consequences for the company involved. It is indicatively mentioned by Khalil et al. (2006, 34) that ‘technology companies arent the only ones that rise or fall on their knowledge management abilities; virtually all companies must be able to acquire knowledge, store it efficiently, encourage and share ideas, and apply knowledge to improve processes, performance, and products and services; an examination of knowledge management in a manufacturing company, Acushnet, famous for golf products, sheds light on the kinds of questions managers should ask and the types of improvements that could be made to help knowledge management drive improved company performance; The companys effort to document and transfer knowledge (KD and KT) is evident in the databases and IT-based document management systems that have been implemented throughout the company; These use Lotus Notes as their platform for sending and receiving email. Company programmers work with the other managers and users to develop and maintain databases’. Because of the complexity of knowledge and the emergent need for restructuring, the company should proceed to the provision of detailed information towards its shareholders in order to protect their interests in the particular organization. Apart from the description of the structure and the operation of knowledge management within an organizational environment it is stated that ‘the company should consider taking advantage of the new IT tools, e.g., discussion forums, Web logs, and wikis, to support knowledge creation and transfer; Much of KC and KT is carried out through a process of discussion with questions and answers and storytelling is also a fundamental form of KT; Online conversations among the companys employees should facilitate KC, KAP, and knowledge refinement; These technologies can help establish different types of communities of practice, e.g., communities for help, best practice, knowledge stewarding, and innovation and support daily questions, access to a diverse group experts, and incremental knowledge refinement mechanisms’ (Khalil et al., 2006, 34). Towards this direction, Skyrme (1997, 2) found that ‘the value of knowledge as manifest in an organisations products, its intellectual capital (such as patents and licences), people (human capital) and processes (structural capital) is very evident when the book value of a company, as measured by traditional accounting methods, is compared with its market value, which takes into account the marketplace perception of intangible value not measured by accountants; For many high-tech companies (such as Microsoft) or knowledge intensive companies (such as biotechnology companies) this factor is ten or more to one’. In other words, knowledge can be compared with all other ‘organizational’ assets which are often of less value than knowledge. This assumption is also supported by the findings of a research made by the Ernst & Young Center for Business Innovation in Cambridge, Mass., and Business Intelligence Ltd. in London in 1997 which ‘revealed that 94 percent of 431 organizations surveyed in Europe and the United States have executives who believe "it would be possible, through more deliberate management, to leverage the knowledge existing in [their organizations] to a higher degree"’ (The ING Network, 1999). It is for this reason, that Bendler et al. (2001, 6) supports that ‘in looking at how good knowledge management influences a company’s long-term prospects, we considered success as a firm’s ability to generate sustainable growth and profits but moving a level deeper and trying to define success in terms of knowledge management is more difficult because common metrics for success – profit, market capitalization, market share, and others – are generally indirect results of good knowledge management and are affected by many other factors; this understanding does not diminish the role of knowledge management, but rather shows that it simply requires a greater effort to see the linkages’. Indeed the value of knowledge – and knowledge management – is very difficult to be estimated with accuracy mostly because of its complexity as already explained above. For this reason, it is preferable that knowledge management is considered as a significant strategic tool which has to be used in any case that all other organizational ‘tools’ have failed to achieve the required target. IV. Knowledge management tools In accordance with the main elements of knowledge as already presented above it could be accepted that ‘knowledge, in fact, is a critical strategic element that determines competitive advantage; It isnt something that can be easily bought or outsourced; Yet it has everything to do with the long-term survival of any business; Only by detailed analysis of the many facets of knowledge in a corporation can the true costs be ascertained; the actual cost of knowledge, then, means more than a glance at numbers taken from an annual report or even a more in-depth workout based on attrition forecasts’ (Kamph, 2006, 14) However, because there is always the chance of failure – as in all cases where information systems are being used as means for the completion of complex organizational activities – specific measures should be taken that could ensure the safety of the relevant exchange (exchange of information). These measures are often included within specific organizational procedures the most common of which is the evaluation process. This process includes the following stages: a)Obtaining knowledge--recruiting programs and new-hire qualification; b) Developing knowledge--new employee training programs, costs for developing training, and the creation of standards and procedures; c) Retaining knowledge--costs for knowledge capture from retiring employees, inefficiencies caused by capturing the wrong knowledge, supplemental on-the-job training, and documentation of procedures, practices, and lessons learned; d) Lost knowledge--erosion of the skill base through attrition leading to costs for rediscovering best practices, and increased error rates due to lack of experience and e) Missing knowledge--costs caused by such factors as inefficient processes, human error, low productivity, and an inefficient pace of work’ (Kamph, 2006, 14). However, even if following all the above stages, the chances for failure during the exchange of information within an organizational environment continue to exist. But this issue belongs to the risk management sector of the particular organization. On the other hand, before proceeding to the implementation of a knowledge management process within an organization, there are a few issues that should be considered thoroughly. ‘First of all, there must be an effective leadership support structure in place; There must also be resources committed to enable the technology to meet the new operating model; In addition, the implementation requires an alignment of the needs of knowledge management with the business strategy, a focus on the people in change management rather than on technology, and the recognition of the benefits of knowledge management’ (Han, 2001, 34). The implementation process has also to be followed by the appropriate testing in order to identify any possible failures while the continuous monitoring of business operations after the implementation of the particular knowledge management system will guarantee the validity of results produced – at least at the highest possible level. In this context, Milner (2000 9) stated that ‘knowledge management is not where organisations should be targeting all of their interest and resources; rather, it is something which should be seen as being a natural progression from the foundations of good information management practice; focusing on the nature of data to information transformation in a way which is reflective of the needs of the organisation should be the first key area of concern and activity; by doing this, and putting in place a framework where information is routinely shared and built into the decision-making processes, the first steps towards the creation of a knowledge-based and, ultimately, ‘learning’ organisation are taken’. In accordance with the views of the above researcher knowledge management should be regarded rather as a supplementary strategic management tool. Moreover, Anand et al. (2003, 15) noticed that ‘businesses increasingly use teams as tools for successfully negotiating their knowledge-based environments; such teams perform tasks ranging from localized assignments (e.g., developing a new packaging design) to those with organization-wide impact (e.g., new product development, strategic decision malting); an increased understanding of knowledge processing in teams could improve their ability to meet a wide variety of organizational demands’. However, the criteria for the choice of participants in these teams are not mentioned by Anand et al. It is just highlighted that teams within a business environment could be used as an effective tool towards the achievement of specific target. V. Conclusion Generally, it could be stated that knowledge management could be characterized as ‘an emerging multidisciplinary field associated with the likes of system engineering, organizational learning, and decision support, to mention a few’ (Ponzi et al., 2002, 147). However, in accordance with the above researchers, there are people who claim that ‘knowledge management is just another fad like Total Quality Management or Business Process Reengineering; however, if knowledge management does indeed mature into a permanent new component of managerial attention, it will continue to grow and in the process undergo a tweaking phenomenon -- that is, morphing or transforming into clearer, easier understood concept’ (Ponzi et al., 2002, 147). The above view is supported by Milner (2000, 1) who states that a ‘key challenge for any organisation in the twenty-first century is to seek to maintain and improve its performance in an increasingly complex and competitive global operating environment, where change pressures appear to offer the only certainty; despite the pursuit, over the last two decades, of ‘Total Quality Management’ (TQM), ‘Business Process Reengineering’ (BPR) and more recently ‘Enterprise Resource Planning’ (ERP), to name only three of the more popular management holy grails, there remains, nonetheless, a prevailing sense of failure in fully realising hoped-for levels of improvement’. It seems from these views that the value of knowledge management as a primary strategic management tool has many way ahead in order to be recognized. In any case, it has been accepted that ‘any managerial theory that does not create change is nothing more than an academic exercise; technology has eradicated time and geography as inhibitors to collaborative work, but only an organizations commitment to change based on knowledge management will lead to the kind of learning and innovation that contributes to competitive advantage’ (ING Network, 1999). In other words, knowledge management cannot be considered as having specific value unless proven in practice to be applicable and effective to specific business activities. From a general point of view, Wright (2001, 15) stated that in order ‘to develop truly sustainable competitive advantage in the knowledge economy, companies need to capture, catalog, transfer, and institutionalize knowledge that precludes peoples daily actions; Properly enabled communities foster knowledge sharing, and provide the cultural and organizational context for people to interact so they can create, transfer, and apply knowledge to situations that ultimately determine the success or failure of their businesses’. On the other hand, information and technology can have their influence on the development of business performance within a specific market. However, the achievement of the required target usually it depends from the level of preparation and the quality of information retrieved as well as from the complexity of systems used for the presentation and the evaluation of the relevant information. References Allenna, L. (1999). 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The Role of Affect- and Cognition-Based Trust in Complex Knowledge Sharing. Journal of Managerial Issues, 17(3): 310-316 Desenberg, J. (2000). Moving Past the Information Age: Getting Started with Knowledge Management. The Public Manager, 29(2): 52-53 Godbout, A. (1999). Filtering Knowledge: Changing Information into knowledge assets. Journal of Systemic Knowledge Management, 6(2): 3-11 Fink, G., Meierewert, S. (2005). The Use of Repatriate Knowledge in Organizations. Human Resource Planning, 28(4): 30-37 Kamph, B. (2006). The Cost of Knowledge: Why Business as Usual Costs Millions. Management Quarterly, 47(3): 14-19 Khalil, O., Claudio, A., Seliem, A. (2006). Knowledge Management: The Case of the Acushnet Company. SAM Advanced Management Journal, 71(3): 34-42 Milner, E. (2000). Managing Information and Knowledge in the Public Sector. London: Routledge Ponzi, L., Koenig, M. (2002) Knowledge management: Another management fad? Information Research, 8(1): 145-147 Porter, M. 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