Knowledge-Management Action Result

Cin-Made, manufacturers of cardboard and Productivity has more than

metal containers, adopted open-book management doubled
and involved workers in problem solving.
Mid-States Technical Staffing, an engineering Company expenses were
company in Davenport, Iowa, decided to allow running 15 percent below
employees to share in budget decision making. their previous levels
Chaparral Steel, the tenth largest U.S. steel producer, Chaparral has an absentee
changed its pay structure to reward rate one-quarter of the
accumulation of skills as well as performance. industry average.
Hewlett-Packard brings new products to market Sales have risen to $4 billion
quickly because of its ongoing, team-based a year, and profits have
innovation grown by 30 percent.
BSG Alliance/IT spends 5 percent of its revenues The company has doubled its
on training its consultant employees, revenues almost each year.
who, in turn, focus intensely on customers.
Figure 26.2. ​Examples of Knowledgement-Management Success.

innovation in Mid-States Technical Staffing and Hewlett Packard, compensation structure in

Chaparral Steel, or training in BSG Alliance/IT. KM overlaps and is linked with other
initiatives because it takes place in the context of an organization and shares the same
organizational aspects or components: personnel, processes, structure, technology, and so on.
In the Figure 26.2 examples, KM was accomplished partially through shared decision
making, team innovation, compensation structure, and training. What these organizational
actions are termed is not as important as the results. KM is based in the open communication
of ideas, observations, and creativity. It supports new ways of doing business. It is adaptable
to different types of organizations, with different goals and constraints. One style or approach
to KM does not fit all organizations.

Symptoms of Problems
Knowledge management is an intervention that provides, in most cases, incremental
improvement in organizational processes. Although all organizations potentially could benefit
from it, in the reality of budget planning and resource allocations, not all organizations will
choose to implement a KM system. Justifying the need for it to a company’s executives
requires evidence. Evidence of KM problems falls into three categories: hoarding knowledge,
reinventing the wheel, and making poor or slow decisions. Here are some examples that I
personally have witnessed.
- Hoarding knowledge: ​A senior claims processor retires, and then immediately starts
working for the same company as a consultant because nobody knows how to do the job
as well as he.
- Reinventing the wheel: ​Two training departments in the same company and in the same
building, each supporting a different client group, independently design almost identical
templates.
- Making poor or slow decisions: ​A business opportunity is lost to a competitor because the
proposal writers could not find the documentation they needed even though it existed on a
company database.
These three categories of problems—hoarding, reinventing, and poor decisions—exist in
every organization. The issues are to what extent the problems exist and to what extent they
have been institutionalized, either formally through procedures or informally through culture.
Even after a KM system has been implemented, the problems will not necessarily go away.
According to a survey by Wah (1999), in organizations that had implemented KM, the most
important obstacles to effective KM were reported as measuring results, getting people to
seek best practices, and getting people to share what they knew: better ways to do the job, the
names of coworkers who knew those best practices, and what worked and did not work in
previous projects. People, their motivations, decisions, and behavior, are key to knowledge
management in both success and failure.

ORGANIZATIONAL LEARNING, COMMUNITIES OF PRACTICE,

AND INTELLECTUAL CAPITAL
KM is linked to organizational learning, communities of practice, and intellectual capital.
Although the terminology has changed over time, these terms refer to processes,
relationships, and concepts that are basic to organizational life. Think of this scenario: an
employee returns from a seminar and enthusiastically wants to share what he has learned with
other in the department. At this point, what he has learned is individual knowledge. Then, if
he shares what he has learned with others throughout the department, which is his community
of practice, his individual knowledge becomes organizational knowledge at the department
level.
A community of practice is a group with a single common interest, some shared
understanding and assumptions, and collective knowledge of strategic importance to the
members. Those members pool their knowledge and information; they learn from each other;
and, together, they invent, discover, and learn more than they could individually. A
community of practice often is the conduit between individual knowledge and organizational
knowledge. A department of HPT practitioners is an example of a community of practice. An
individual can belong to more than one community of practice at a time. Many performance
technologists belong to the communities of instructional design, information technology, and
organizational development. The boundaries of a community and questions of who belongs
and who does not are debatable points (Brown and Duguid, 1998; Lave and Wenger, 1992).
Some authors think that a community can only exist within a single employing
company—Xerox, for example. Others think that a community can exist with members from
different companies—the International Society for Performance Improvement (ISPI), for
example. From a practical perspective, we individually should decide which communities we
belong to and who our fellow members are. For example, I view myself as belonging to the
ISPI community, among others. An inclusive perspective on membership is more useful than
an exclusive perspective, because it allows us to be members of more communities in which
we can contribute and learn.
If an employee learns something that can be communicated without great difficulty to
coworkers, it is explicit knowledge. If, however, it is difficult to communicate, then the
knowledge is tacit. If, later on, as a result of department members having learned the new
technique, the department processes have changed, then organizational learning has occurred.
Organizational learning is a process of changing processes, routines, and procedures based on
knowledge contributed by a member or community in order to improve them. This process is
a prime contributor of explicit knowledge to organizational KM. Organizational knowledge is
the sum of knowledge that is
- Owned by the organization, for example, a patented, explicitly documented process
- Rented by the organization from the individual who owns it, for example, a senior
accountant’s expertise
It resides in people, processes, structures, and communities as well as in patents, files,
company records, and databases. In theory, all members of the organization have access to
the organizational knowledge. In reality, all members do not have access. However, KM
helps give more members greater access to organizational knowledge.
Another term for organizational knowledge is ​intellectual capital ​(Sveiby, 1997). Intellectual
capital is the sum of an organization’s intangible, nonphysical assets. These intangible assets
are linked. According to Sveiby, human assets lead to structural assets internal to the
company, which in turn can lead to intellectual property, which can lead to external structural
assets. In other words, employees invent something that can be patented, marketed, and sold
to clients (see Figure 26.3).