Knowledge Management and Organisation Learning - Research Paper Example

Knowledge Management and Organisation Learning Introduction With the onset of Digital Revolution and Information Age the focus of organizations is rapidly shifting from physical to intellectual: information, knowledge, and skills have become the key aspects of new economic environment (Guest, 1987). Effectiveness of the traditional “command-and-control” management is gradually decreasing while knowledge-based human resources continue to reinforce their role as the primary asset of modern organisations (Wright & McMahan, 1992). Consequently, the concept of knowledge management has recently emerged as one of the most essential organisational paradigms in contemporary organisational studies. Knowledge is nowadays increasingly becoming an ultimate competitive advantage either replacing or complementing such traditional sources of success as technologies, marketing mix, and often even financial resources (Malhotra (1998). Modern business history lists a number of instances when knowledge-centred management has helped create competitive advantage of organisations and even countries formerly limited in financial and other resources. For Microsoft, Dell, IBM (which is believed to be one of the founders of the paradigm), Compaq, British Airways, Ryan Air and other major organisations knowledge management has become the cornerstone of success. The same is true for such countries as South Korea, Singapore, Malaysia and Hong Kong which rely on the national knowledge economy. Over the last two decades, organizations have often been described in terms of knowledge and learning with the help of such concepts as “learning organisation”, “intellectual capital”, “people-centred approach” or “knowledge based management”. Cakar and Bititci (2001) perfectly summarise this trend in the following statement: “1980s were all about automation. In the manufacturing industry FMS, FAS, Robots, AGV'S etc. were commonplace. The 1990s have been about people, this is evident in the development of… concepts throughout the 90's focusing on delegation, involvement, ownership cross functional teamwork, self managed works teams and so on… The needs of modern business emphasize the role and importance of people and knowledge” (p.2). Also the idea of knowledge management appeared requested in 1990s the concept itself dates back early 1960s. Its advent is associated with classic works of Peter Drucker w. Drucker found out that on 1960s, He called this new era an informational one (Drucker, 1994). The ideas of Peter Drucker (1994), whom was the first to use term ‘knowledge worker’, became widely recognised in 1980s when a number of followers supported his idea that investments in human resources were increasingly becoming more cost-efficient than investments in machines. In 1986, European knowledge management pioneer Karl-Erik Sveiby described the concept of a “know-how company” (Doz, Santos & Williamson, 2001), and in 1991 the ideas of knowledge management were reconsidered by Ikujiro Nonako whom presented the idea of “knowledge-creating company”. The 1996 could be considered the turning point in history of knowledge management: the influence of this paradigm became overwhelming in absolute majority of the developed countries (Skyrme, 2002). The ideas and concepts related to knowledge managements were successfully applied in the oil, pharmaceutical, high technology, financial, and other industries. Main Body Knowledge management is a new form of management which helps organizational adaptation, survival and competence in face of increasingly discontinuous environmental change. This broader perspective incorporates the processes of knowledge use, knowledge creation, knowledge sharing, knowledge transfer and knowledge renewal (Malhotra, 1998). Therefore, knowledge management is commonly defined as “the explicit and systematic management of vital knowledge and its associated processes of creating, gathering, organizing, diffusion, use and exploitation, in pursuit of organizational objectives” (Skyrme, 2002) Peter Drucker, the founder of knowledge management approach, describes it as the “the key resource, for a nation’s military strength as well as for its economic strength… is fundamentally different from the traditional key resources of the economist – land, labour, and even capital…we need systematic work on the quality of knowledge and the productivity of knowledge… the performance capacity, if not the survival, of any organization in the knowledge society will come increasingly to depend on those two factors” (Drucker 1994: 66–69). Traditionally, knowledge management is viewed as a two-fold concept: the informational resources management (or management of explicit knowledge) and management, which creates the environment in which people could easily develop and share the knowledge (Skyrme, 2002). Another popular conception of knowledge management describes it as the non-traditional vision of the company that highlights the role of employees as knowledge-producers (1), supports development and share of information (2) and promotes rapid transformation of knowledge into commercial products (3). In this sense knowledge management is closely related to the ideas and principles of human resource management and actually may be described as the supreme aim of HRM (Skyrme, 2002). Practical application of the key concepts and ideas related to the knowledge management paradigm has mostly been successful. However, the approaches to knowledge management practices often vary in different organizations. Two major companies have been chosen to illustrate the practical value of KM theory and show the differences between the implementation patterns: Xerox (private) and NASA (public). These companies have been chosen due to their leading positions in the respective fields which they reportedly maintain due to effective knowledge management. Knowledge management system in Xerox Corp. A classic example of organizational knowledge management in a large private business organisation is “Xerox” that permanently searches for new solutions and inventions to maintain and further reinforces its positions in the market. Xerox is one of the leaders on global IT and hardware market and is number one company in producing copying solutions. In 2002 Xerox Corp. was ranked in the list of World Top-20 companies which follow the principles of knowledge management and achieve customer and shareholder satisfaction through innovation and knowledge share. Xerox established its “business identity” in 1980 positioning itself as the “Document Company”. In order to support this strategy Xerox became one of the first companies to employ the principles of knowledge management in the 1990s. Xerox Corp. CEO Rick Thoman stated that “to win in the knowledge economy, we need to unleash the knowledge in our document databases, use and reuse our past knowledge, find ways to create new knowledge and then share it across our enterprise. In the digital, networked age, knowledge is our lifeblood” (McCarthy, 1999). The recognition of the primary value of knowledge resulted in the company conducting several comprehensive surveys in order to identify the needs of the customers, stakeholders and employees. The results formed the basis for the company’s specific approach to knowledge management. In 1996 Xerox interviewed 60 knowledge workers outside the company to evaluate productivity of knowledge work. Results of that study were used as the benchmark for the process of knowledge production within the company. Over the next decade, Xerox has developed a “knowledge library” and identified the following major domains of knowledge management: Sharing knowledge Capturing and reusing past experiences Embedding knowledge in products, services and processes Driving knowledge generation for innovation Mapping networks of experts Building and mining customer knowledge bases Learning intellectual assets (Powers, 1999) In 1997 Xerox employed over 100 knowledge managers whom were responsible for forecasting business and developing trends as well as for the development of knowledge management strategies. This move helped Xerox effectively forecast the strategy of future development, particularly in the field of investments, geography of business and customers’ behaviour. Consequently, starting from the early 2000s and up to now, the company’s managers utilise the complex KM strategy called “Eureka” which helps the company lead the way in technologies. This strategy has several core features. Firstly, the company brings together prominent experts in the field to share their knowledge in multiple ways. The process of sharing occurs in various ways from experts’ polls to brainstorming sessions. Then Xerox executive managers find out the “juste milieu” amidst the whole range of experts’ decisions and implement the solutions practically. Secondly, Xerox promotes knowledge-sharing among the employees. In the company people are free to express their ideas and share own views as for technologies, products, strategies, etc. The company understands the knowledge-seeking as wash-gold process and never rejects any idea. This stage of KM is pivotal in looking for market gaps and developing best-fit technologies and products (Powers, 1999). Thirdly, Xerox employs the principle of “brain-drain” in order to gather best think-tank team. The company lures best specialists from its competitors in order to enlarge own knowledge and innovate own solutions. The process of knowledge sharing is the cornerstone of the company’s success in the market. As it has been mentioned in the previous discussion, the company has been developing its knowledge library – a knowledge sharing system which currently possess over 25.000 records – for eleven years now. The library records summarise the company’s experience (for instance, in repairing appliances) and create knowledge-sharing environment helping employees find the best solutions available. These records are accessible globally which is another highly important advantage as compared to many competitors. For example, an employee in Toronto is able to find an appropriate solution to his problem choosing from a wide pool of solutions developed worldwide. The knowledge sharing system in Xerox is also beneficial as it helps employees to acquaint with each other beyond their intermediate work groups. There are also several ways of its share within the company, namely: think-tanks, workshops, informal groups. However, the most peculiar way of knowledge transfer is video streaming across their Intranet although such conferences can hardly be considered exclusive tools of knowledge management: some experts believe they only reinforce the social aspect of knowledge transfer (Gordon & Edge, 1997). From this perspective IT tool play only a secondary role reinforcing the social transfer of knowledge within a company Xerox Corp. does not perceive knowledge as a “thing in itself”. On the contrary, the company always expresses eagerness to share its unique knowledge with the other concerned parties. Thus, the company developed the Docushare, a Web-based tool to share innovations with other scientists and researchers in order to accelerate data exchange and stimulate further progress in the field. Due to its effective knowledge management strategy (Eureka) Xerox saves from 5 to 10 percents annually. The company keeps encouraging over 90.000 employees around the world. Eureka also serves Xerox competitive advantage in the field of appliances reparation: Xerox technicians intensively utilise the database in order to share the most effective methods of repaire. Admittedly, no other company in the world does this job better than Xerox. Knowledge management system in NASA As a public company financed by the US tax-payers, NASA implements a different approach to knowledge management. Although the strategy developed by NASA has much in common with the one implemented by Xerox – most important both strategies rely on the same set of basic principles – it has some unique features too. Similarly to Xerox NASA is one of the pioneers in the field of knowledge management. It is one of only a few organizations which have been utilising the principles of knowledge management since early 1960s, particularly since 1961 when NASA’s Science and Technology Institute (S&T) was founded (Fries, 1992). In the pre-computer era the only way to produce knowledge and achieve technological advances was to make the research centers and receive knowledge via conversations and disputes. In case of NASA the necessity of S&T institute was moreover vital, as it has to solve the problems concerning space technologies, aerodynamics, rocketry, ballistic, control systems, material science, communications, medicine, biology, etc. What’s more, this knowledge was to be shared between different parties, unaware of the problems of other research groups (Becerra-Fernandez & Sabherwal, 2005). Since 1960s NASA has been developing the HRM program. The core feature of this programme is adequate promotion of skilled employees and establishing effective knowledge sharing within the organisation. These principles help NASA successfully overcome such plagues in as employees’ absenteeism, excess sick time, excess overtime, and other serious challenges. NASA views knowledge management as a human-related process. Consequently, much attention is paid encouragement and stimulation of the employee’s ability to produce new knowledge. Besides, the knowledge management methodologies implemented by NASA are designed in order to represent, reorganize and effectively use every bit of the produced knowledge (Becerra-Fernandez & Sabherwal, 2005). These two features are likely to be the cornerstones of the organisation’s ability to resolve increasingly complex tasks. Being a leader in space projects NASA needs to absorb the global knowledge in order to further advance its technologies, solutions and products. Knowledge for NASA means not only success of its products but also the life of the astronauts and prestige of the US. The knowledge management of NASA best fits the original slogan of the company which is ‘Explore. Discover. Understand.’ Since 1960s, NASA has been implementing a broad set of activities to promote capturing, developing, organizing, and distributing knowledge (Becerra-Fernandez & Sabherwal, 2005). The original idea of NASA’s management was to stimulate innovations and create adequate response to employees’ suggestions. In order to fulfil this task the organisation, similarly to Xerox, created its own database called Verity accessible for all employees who, besides, contribute this library permanently. The database immediately became a highly effective and valuable tool helping NASA solve problems much quicker and better than ever before. In terms of knowledge NASA in obviously the world-leading organizations which employs thousands experts from different states specializing on spacecrafts such as Russia, Japan, China, France, Germany, Ukraine and others. These multinational teams bring global knowledge and latest technologies which are hardly achievable in a team composed of representatives of only one nation (Becerra-Fernandez & Sabherwal, 2005). In May 2000, NASA launched its KM group consisting of directors, experts, consultants, HR specialists specialised in different areas. The group served as a think-tank team creating knowledge and solving actual problems. This KM group effectively helps coordinate the organisation’s branches across the globe and effectively align the variety of projects. Similarly to Xerox NASA uses the Intranet systems to share its knowledge. NASA has launched its Expertseeker web-tool sharing knowledge and assisting employees in problems solving. Expertseeker helps effectively share both structured and unstructured data in order to find optimal solutions for current and potential problems (Becerra-Fernandez & Sabherwal, 2005). Similarly to Xerox NASA has developed the comprehensive library of errors/problems which ever occurred throughout the organisation’s history as well as actual and possible ways of solving them. This measure is not only cost-saving, but also less time-consuming and more advantageous. Such databases as Verity and Expertseeker are exceptionally helpful in coordinating the resources of different branches which contributes significantly to the overall effectiveness of the organisation’s performance. Both tools are described first of all as the resources helping people to work with one another. Besides, NASA’s systems of knowledge sharing are also effective tools for promotion: the most skilled and knowledge employees are always recognized and receive adequate rewards. Since NASA has over 600 global suppliers – a great difference as compared with Xerox – it has to take into consideration the need to protect the suppliers’ intellectual property rights during the process of knowledge sharing. With this aim NASA shares its own knowledge with other companies thus stimulating competition among its suppliers. Such interesting policy allows the organisation not only improve the quality of solutions and products, but also increase intensity of knowledge sharing between NASA and its sub-contractors. NASA also shares its knowledge with partners from EU, Russia, China and Japan in order to achieve compatibility of products: for example, space shuttles designed by NASA are fully compatible with Russian-designed International Space Stations. The knowledge management system implemented by NASA also improves the cost-efficiency of the organisation. Creation of the comprehensive knowledge bases, coupled with increasingly effective knowledge sharing within the organisation resulted in substantial reduction of the number of employees involved in variety of space projects. For example, the number of employees involved in the shuttle programmes has decreased from 6.000 to 4.000 over the recent several years (Becerra-Fernandez & Sabherwal, 2005). Unfortunately, implementation of the knowledge management paradigm in organisational practice is not a simple task: the number of failures of knowledge management in recent organisational practice is impressive (Malhotra, 2004). However, no evidence has been established in the scholarly literature up to now to fully list the factors which determine success or failure of KM programmes in organisations. Some negative factors commonly associated with failure of KM programmes are failure to take a holistic approach to designing the system of knowledge management, and sustainable investment of serious resources required to implement a truly effective KM programme. The issue of cultural change and willingness to share and collaborate with colleagues as well as the risk of technology overuse are also cited as essential factors (Malhotra, 2004). However no negative aspects of Knowledge Management paradigm as such can be found in the literature: success or failure of a KM programme in ensuring the organisation’s competitive advantage entirely depends on the implementer’s ability to consider as many risk factors as possible. As Malhotra (2004) puts it, an effective sustainable knowledge management strategy must “...ensure that adaptation and innovation of business performance outcomes occurs in alignment with changing dynamics of the business environment. Simultaneously, conceiving multiple future trajectories of the information technology and human inputs embedded in the KMS can diminish the risk of rapid obsolescence of such systems” (p. 88). Organisational Learning The dominance of knowledge management paradigm with its emphasis on the importance of human resources has led to serious revision of another important process associated with organisational practices, namely learning. The link between knowledge management and learning is evident: employees who have more knowledge in their field are able to better manage the existing knowledge and produce/share new knowledge more effectively, and the only way to have more knowledge is continuous learning. In the past, learning focused primarily on individuals: people worked in large bureaucracies or assembly lines and, consequently, the goal of learning under such circumstances was training of the skills required for their functioning. However, since approximately three decades ago, the focus of learning in organisations began to shift individuals to groups, and, what was even more important, the meaning underlying the constructs ‘learning’, ‘training’ and ‘development’ transformed dramatically. Modern scholars conceive these constructs as continuous rather than occasional while the purpose and the process of learning has also been also reformulated and recognised as vital for effective organizational performance (Harrison, 2005). The definitions of training found in the existing organisational literature are rather similar reflecting several primary characteristics and objectives formulated also in the mainstream approach to training. Thus, Armstrong (1996: 517) defines training as “the planned and systematic modification of behaviour through learning events, programmes and instruction which enable individuals to achieve the levels of knowledge, skill and competence needed to carry out their work effectively.” Most recent studies in the field of organisational learning and HRM identify five phases of organisational learning: 1. Analysis The first phase of implies full analysis of the organizational needs, identification of the goals which, when reached, will equip employees with knowledge and skills to meet the organization's needs (Buckley & Caple, 2004). The first questions to be asked in the analysis phase are "Is there a need for training?" and "If something is wrong, is it caused by a performance problem that training will fix?” In the analysis phase the responsibilities/duties required at a certain position are identified and listed. The tasks that must be accomplished to effectively fulfil these responsibilities/duties are analyzed and, if necessary, subdivided into smaller subtasks also termed ‘task elements’. On the basis of the identified tasks and task elements knowledge, skills, and attitudes needed to successfully perform them are determined. Tasks are reviewed and characterized by difficulty, importance, and frequency to help determine whether training is required prior to performing the task. Such approach is helpful in selecting tasks on which employees must and will receive continuing training throughout their careers. A more difficult task would have training associated with it. An easy task may not have formal training, but may only have a procedure for the worker to follow. The outcome of the analysis phase is a task analysis that lists the tasks that are performed to accomplish the duties of a position and the knowledge, skills, and attitudes necessary to perform the tasks. These become the basis for the design of the training course and for formulating the learning goals (Armstrong, 1996). 2. Design The design phase implies elaboration of a training programme that learners and trainers can implement to meet the identified learning goals. Normally, this stage includes identification of learning objectives (with reference to the learning goals) and the resources needed for the programme (e.g. funding, facilities, course content, sequence of lessons, etc). These activities can be roughly divided in three major groups: 1. Deciding what the student will learn in the class and how that learning will transfer to the job. 2. What will be taught and the instructional methods to be used to teach. 3. How the student will demonstrate competency to do the required work and we develop an examination plan to test the student's competency (Buckley & Caple, 2004). Learning objectives also fall into two groups, namely: terminal objectives (explain what the student must be able to do after a given cycle of learning) and specific learning or enabling objectives (what knowledge, skills, and attitudes must be displayed during learning). These objectives must be formulated in language fully understandable for the learners and must not imply any unexpected surprises for learners, instructors, or supervisors. The design phase also helps determine what will be taught and how it will be taught. In this phase the instructional technology and the media to be used. The instructional technology usually includes some combination of the following: hands on practice, lecture, overhead transparencies, video tape, training equipment, computer training, pictures, models, student reading, self study, or on the job training. It is important to decide how the student will practice the skill to be learned (Kenney & Reid, 1994). 3. Development At this stage a training package of required materials and resource must be developed, including, e.g., developing appropriate manuals, lesson plans, videotapes, training aids, audio-visuals, graphics, student handouts, instructions, etc. The essence of this stage is transferring the learning design into concrete learning/training materials (Buckley & Caple, 1994). 4. Implementation This phase includes implementation of the developed training package, delivery of the learning/training, support group feedback, adjusting the materials/resources to better fulfil the identified learning objectives, administering tests and conducting the final evaluation. This phase can also include a wide range of administrative activities, such as copying, scheduling facilities, taking attendance data, billing learners, etc. Basically, in the implementation phase the instructor teaches and the student learns. Although this is the phase that most people think of as ‘training’ it is the easiest phase to perform. The material written during the development phase is used to implement the decisions made in the preceding phase of design. The information learned about the job is typically used in the analysis phase during implementation (Kenney & Reid, 1994). 5. Evaluation In the evaluation phase evaluation of learning outcomes must be carried out. Although this phase is listed as the last fifth element, evaluation is carried out before, during and after implementation of training programmes. The evaluations help organisations measure the effectiveness of learning on learners, and thus justify the substantial investments in both time and resources (Armstrong, 1996; Kenney & Reid, 1994; Bee & Bee, 2003). Despite the importance of this phase, too many organisations tended to neglect it in the traditional learning/training models. Traditionally, evaluation is conducted in four levels, namely: Response – Do learners like the course? Learning – Do learners actually learn the material? Behaviour – Do learners change their workplace behaviours? Results – Does the course achieve the company's business goals? (Kirkpatrick, 1959). In the organisational practices, companies gauge response through quick post-course surveys (often called "smile sheets"). These surveys offer a series of simple questions about the course material, and, therefore, they can not measure complex learning or long-term behaviour changes. Post-course assessments to measure how much people have learned before they return to the workplace. In serious organisations, courses with rigorous post-course examination are also known as certification courses: learners need to pass the certification test before they are qualified to perform new tasks. And finally, in order to measure behaviour changes and actual results, training specialists have to wait until learners return to the workplace. Sometimes, these studies take place months after the learners complete the course. That way, training specialists can measure what behaviours actually changed in the workplace and what results have been achieved: this justifies the notion that the best evaluation of learning/training effectiveness is done on the job (Kenney & Reid, 1994). Evidently, such approach to training and development of the personnel implies serious expenditures, which is perceived as the major drawback of continuous systematic organisational learning. However the long-term benefits of this approach seem to fully compensate for any growth in the learning related expenditures. One example of successfully implemented organisational learning approach is provided by IBM Company which spends around 5% of its payroll for these purposes. Company’s personnel is encouraged to develop own professional skills and expertise not only in their specific area but also in a variety of other fields. About one third of IBM’s employees are trained or educated at company’s expenses. The company fully utilises the potential of its knowledge bases by providing the employees with access to the most relevant and up to date information including analysis of cases, specimen of decision making and problem solving. Since 1996 and by 1999 IBM invested more than US $ 300 million in advances of its informational systems (Scoble, 2005). The company has developed its own system of learning assessment that includes the following: skill planning needs assessment, professional skills assessment, and individual education plans, etc. In order to assess professional skills of its employees IBM has developed a complex scheme that includes assessment centres, tactical tanks, 360 degree assessment and other comprehensive methods and tools. However, assessment in IBM is not a punishment; instead, it is rather a source of information necessary for both the employees and the company. It is also noteworthy that no one in IBM is exempted from assessment including CEO and executive managers as assessment is also an essential tool of identification of strong and weak points and looking for the methods of eliminating them (Scoble, 2005). Similarly to knowledge management, the concept of organisational learning does not have any negative sides: at least they have not been described in the literature yet. However, there are several obstacles that may hinder effectiveness of organisational learning. Huber (1991) lists five types of evidence-based factors which may negatively affect organisational learning: The organisation’s members, as sensors of experience, function imperfectly and others depend of the member’s position, background and style. Feedback of the results of organisational action if often distorted or suppressed or arrives after the need for learning as a basis for changing the action has passed. Units capable of learning from the experience of other subunits may not have access to this experience, as a consequence of either routine rule for message routing or organisational politics. Apparent “consequences of organisational action” may be unrelated to organisational actions; “superstitious learning” occurs. As a result of having developed a high level of competence in one process when comparing this process to other processes, an organisation may come to perceive this process as superior to the other processes in which it has less competence. The latter process may actually be superior, and would have been found to be so if the organisation had developed competencies in them equal to its competence in the process that was observed to be more effective (p.112).. Conclusion Knowledge management is one of the most influential developments in the organisational practice over the recent decades and one of the factors that can provide companies with substantial competitive edge. Therefore, the principles of knowledge management are employed by absolute majority of modern organisations both in private and public sectors. Although the basic idea of knowledge management is universal – doing what is needed to get the most out of knowledge resources – its practical implementation may vary in each particular case. However, the variations are not serious: thus, the approaches of two entirely different companies (private (Xerox) and public (NASA)) to knowledge management have much in common which confirms the assumption that the key principles of knowledge managements are universal. The differences in knowledge management strategies are probably associated with different organizational structures and demands of the companies. Although the challenges related to designing/implementation of effective KM strategy are serious the practice continues to demonstrate that they are not compelling. The most essential of these challenges are identified in the professional literature as well as the alternative ways and tools to cope with them. Thus, one of the most effective tools in maintaining sustainability of a knowledge management strategy is organisational learning. The knowledge management paradigm and the concept of organisational learning are mutually dependent. An effective comprehensive system of managing knowledge within the organisation provides abundant learning resources while the effective system of organisational learning will inevitably result in further improvement of the existing knowledge base both qualitatively and quantitatively. References Armstrong, M. 1996. A Handbook for Personnel Management Practice (6th Edition), London: Kogan Page. 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