Growing Micro, Small and Medium-Sized Enterprises in Africa: A Knowledge Management Approach By Ugwushi Bellema Ihua

Introduction There is absolutely no doubt in the fact that all over the world, the micro, small and medium-sized enterprises (SMEs) sector have been acknowledged for playing major roles in the economic development of many countries, especially in the socalled first-world nations. SMEs constitute the largest proportion of businesses and play tremendous roles in employment generation, provision of goods and services, creating a better standard of living, as well as contributing significantly to the gross domestic products (GDPs) of all developed countries (OECD 2000). In this article, our aim is to simplify the concept of Knowledge Management (KM) to entrepreneurs, promoters, managers and other stakeholders in the small and medium-sized enterprises (SMEs) sector in Africa. Although the concept of KM has been around for over a decade, nevertheless, it is still relatively new, still growing and has gained significant recognition all over the world. Our focus here is to demystify the “myth” beclouding the general understanding of the concept of knowledge management and to discuss the enormous potential benefits awaiting African SMEs who choose to adopt a ‘deliberate’ KM initiative into their overall organizational strategy. We would also examine the symptoms and crucial need for a KM project, the building blocks of KM, the modes of knowledge transfer, and provide hands-on tips for SMEs interested in designing and implementing an effective KM programme within their organisations. Why the Focus on African SMEs? Over the last few decades, it has been observed that despite the enormous potentials of the SMEs sector and its immense contribution to the economic development of the developed countries, the performance of the sector still falls short of expectation in many developing countries especially in Africa (Arinaitwe,

2006). This has obviously contributed to further widening the gap between the developed and developing countries, resulting into requests for more aids, grants and policy formulations in support of developing countries. The Africa Growth and Opportunity Act (AGOA) project of America, Millennium Development goals (MDGs) and other international trade policies of the World Trade Organisation (WTO) such as the policy against trade dumping are all targeted towards supporting the sustainable economic development of African countries and stimulating their export potentials. However, whether or not African businesses and SMEs choose to take advantage of such policies and opportunities is entirely up to Africans and not the developed countries. There is an old adage which says “knowledge is power”, and not just knowledge, but “the application of knowledge.” Nevertheless, many of managers still wonder why some businesses tend to succeed and others fail, or why some businesses make huge profits and others make abysmal losses. It is neither an issue of size nor an issue of capital; it’s more often about how knowledge is being managed within organizations. The question that then comes readily to mind is: what really is knowledge? provides any Although there appears to be no single definition for the term sort of advantage/benefit over the lack of such knowledge, nonetheless, it simply refers to the consciousness/awareness that consciousness/awareness. What is Knowledge Management? Having looked at a simple definition of knowledge, what then is Knowledge Management (KM)? On the first sight or hearing of KM, people readily think it is one big fad that has to do with the introduction of massive computer systems, very high volumes of data, too much grammar, and requires the help of external consultants, gurus and so on. This first-timer perception towards KM is further worsened by the fact that, just as there is no universally accepted definition on what is ‘knowledge’; there is also no single definition for KM. This does not mean that some KM initiatives do not involve the use of computer systems or the aid of experts and external consultants (especially within large organisations), but our

focus here is to understand the central meaning of

the concept of KM, its

fundamental principles and how it can be applied to SMEs. In this light and for the purpose of this article, we prefer to adopt a simplistic perspective of the concept of KM in order to aid our understanding for SMEs. Simply put, the concept of KM refers to how businesses can leverage on the experiences of their managers, employees, customers, competitors and other stakeholders; and the understanding of their product and service offerings, markets/business environment to their best advantage; thus generating greater value.

Putting Knowledge Management to Work The concept of KM can be better understood with the aid of analogies, stories and case studies. To give us a better picture and understanding into how the concept can be put to work in a small to medium-sized enterprise in the African context, let us examine two case studies. The first case is that of a small-sized hairdressing salon with the madam (owner) and six other hair stylists (employees) in Ahoada, Nigeria. The second case is that of an experienced baker in a medium-sized bakery in Bukoba, Tanzania. Consider the case of a professional hair stylist in Ahoada Nigeria, as a knowledge worker. She does more than ordinary plaiting, braiding, washing and styling customers hairs. In the process of washing, braiding and beautifying clients’ hair and when asked, the professional stylist will provide some useful advice and tips to clients such as “make sure you use pink oil/conditioner on your hair each time you re-touch or don’t carry your braids for too long in order to prevent your hair from breaking-off and so on.” Accurate advice may lead to a handsome financial tip at the end of the hair-do session for such a stylist. On the other hand, the client who has derived immense benefits from the stylist’s tips is more likely to use the services of the Salon again. If the professional stylist is willing to share what she knows with other stylists, then all the other stylists could eventually become more professional and earn bigger tips.

How would a KM initiative make this happen? The owner of the Salon can decide to reward stylists for sharing their professional tips with others, by offering them incentives. Once the best tips are gathered, the manager/owner would discuss the tips with all her stylists. She can also type-set and distribute hard copies of the tips to all of them. The end result of a well designed KM initiative is that everybody benefits- bigger tips, more hair dressing deals and better professional out-look for stylists; clients are made to look more beautiful with better maintained hairs, due to the collective knowledge of stylists; the Salon owner also wins because there would be several repeat sales from satisfied clients, who could even act as a medium of advertisement to friends and relatives in Ahoada and surrounding towns. In addition, consider the case of an experienced baker who started working in a bakery at the age of eleven due to financial constrains in his family and possesses very little formal education. Over the past thirty-five years he has worked in all sections of the bakery and is highly skilled at every stage in the production process. Mtembe Foods Ltd recently took-over a medium-sized bakery in Bukoba Tanzania, for the production of bread and has engaged the services of this experienced baker. The new manager of the bakery is finding it difficult to plan the work schedules for the experienced baker, thereby overloading him with all sorts of unnecessary work. Also, the manager plans to introduce new varieties into the production line, however, because the experienced baker has little formal education it is difficult for him to conduct lessons for the other less experienced employees. How can KM solve this problem? The manager needs to understand that he can still get the experienced baker to transfer his knowledge through other means. If the baker is willing to share his experience and if the manager decides to reward the baker for sharing, four other apprentice bakers can be placed to shadow the operations of the experienced baker. Thereby gaining knowledge through The manager repeated practice of what they see from the experienced baker.

should allow for a flexible work environment that allows for free flow of discussion

and chats in the process of working at the bakery. This is known as socialisation and it is a mode of transferring tacit knowledge, to be discussed below. At the end of the day, the bakery would have improved its production quality and turnover, introduced new varieties, trained its employees; the experienced baker would have been rewarded, and the residents of Bukoba and its surrounding towns would derive more satisfaction from the new bread varieties; everybody would be happy. A well designed and implemented KM programme always produces win-win outcomes to all its stakeholders. The two above case studies are practical examples of how KM can be put to works in SMEs. In a nutshell, two basic lessons can be learnt from the above cases: firstly, that KM initiatives have to do with people i.e. it involves the use of human resources/capital; secondly, management plays a very crucial leadership role towards ensuring the success of the programme. Benefits of Adopting a Knowledge Management Initiative There are vast potential benefits awaiting African SMEs who choose to adopt a KM initiative as part of their overall strategy. These benefits include: • it enhances improvement in turnover rate and increases profitability by facilitating the production of new appropriate products and services suited to meet the needs of the market; • • • • • it can brings about management; it enhances a higher employee retention rates by recognising the value or employees’ knowledge and sharing ability; it streamlines company operations and leads to reduction in costs by eliminating redundant or unnecessary processes; it enhances organisational learning and improves the creative abilities within the organisation; it fosters the free flow of ideas, thereby stimulating timely product/service development and innovation; improvement in an organisation’s customer service

It creates a sense of identity, security, loyalty, responsibility and commitment in employees since they know the company values them and their contribution towards its success;

• •

it strategically positions a company and offers readiness for penetrating into new markets; and it results into improved organisational efficiency and effectiveness etc.

Symptoms of a Knowledge Management Need In most organisations today, especially in SMEs, it isn’t very difficult to identify when a KM initiative is highly needed. This because there are certain symptoms and pointers that can be evidently noticed from how organisations undertake their operations. These symptoms are: 1. A company where decisions cannot be taken in the absence of one or a few key persons. This is seen in many SMEs, where they absence of the entrepreneur or manager tends to cripple the operations of the firm; 2. A company where tasks in their ordinary cause of operation gets frequently duplicated due to communication gaps; 3. A company where employees say costly mistakes tend to be repeated every now and then; 4. Where employees are not willing to share their knowledge and good ideas are rarely generated and shared; 5. Where employees are restricted from being creative and trying new ideas, and all ideas for innovation and development come from the top; 6. Where consumer relations have become strained and customers tend to complain frequently as a result of being dissatisfied with a product or service offering; 7. Where a company competes on only price and cannot keep up with the market leader in the industry; 8. Where employees do not feel any sense of loyalty or commitment to the company; 9. Where a company’s rate of launching new products and services is very slow; and

10. Where the customers, processes or technologies of a company are only understood by a few key employees. The Crucial Need for a Knowledge Management Initiative: Forms of Knowledge Generally speaking, the concept of KM is still a growing field of management, and it has been suggested that many managers irrespective of the varying sizes of their firms, still do not understand the principal essence of the concept due of its broadness and its subjectivity to a range of interpretations by speakers, consultants and writers; making KM uneasy to be purchased as a service or completed within a year (Orlov, 2004). Nevertheless, the fundamental need for KM within organisations is underpinned by two key factors. Firstly, it is no news that more and more companies are losing their staff members due to resignations, retirements and so on, after spending huge amounts of money training and developing them. Delong (2004) noted that in far too many organisations, knowledge is in the danger of disappearing along with the employees who acquired it. SMEs are the worst hit in these cases because they lack enough money to pay high salaries, thus limiting their capacity to retain their staff members for long because most of them are often seeking greener pastures within the larger organisations. It would appear to be a waste of scarce resources for an SME, if an employee the company has spent money to train and develop suddenly decides to leave for a bigger/blue chip company without sharing his or her knowledge with other staff members. Secondly, the need for KM is underscored by the two broadly identified forms of knowledge, vis-à-vis the explicit knowledge i.e. the codified or hard knowledge as it is sometimes referred to, which remains within the four walls of an organisation at the end of a normal work-day in the form of manuals, regulations, handbooks, information on databases etc; and the tacit or soft knowledge, which leaves the organisation at the end of the work-day, i.e. knowledge gained from experience leading to certain intuitions, insights and hunches comfortably seated in the heads and minds of employees and other stakeholders. As such, the crucial need

for a KM initiative and the challenge for every company is to ensure that as tacit knowledge goes home to sleep or out of the organisation due to retirements, resignations and in search for greener pastures; there are spare copies stored in organisational databases, handbooks, manuals and in the heads and minds of other staff members. Building Blocks of Knowledge Management: A Basic Framework for SMEs For a KM initiative to be effective and for any organisation to benefit from an effective KM programme, there needs to be strict adherence to at least one basic framework. Some authors have described this as the streams of knowledge or the stages of KM. Whatever it is termed, SMEs need to understand the basic model for designing an effective “tailor-made” KM programme. below: • Needed Knowledge: irrespective of the size of any company, the very first stage in designing a KM initiative is in identifying what knowledge is needed for the organisation to meet its goals, aims and objectives. This would require an SME to undertake a strategic analysis of its industry, and it would involve some form of environmental scanning, interviews with customers, suppliers and other stakeholders. It would also involve some brainstorming and the development of a number of scenarios of the emerging trends and likely future occurrences within the industry. • Available Knowledge: after identifying the needed knowledge, the next step is to determine what knowledge is presently available within the organisation. This would require carrying out an analysis of the organisation’s strengths, weaknesses, opportunities and threats (SWOT), core competence and business position. These analyses would consider issues such as the organisation’s personnel profiles and experience, understanding of the relevant laws and regulations, its industry, organisational culture, corporate image, products and services, customers and other stakeholders. • Knowledge Gap: this is basically the difference between the “Needed Knowledge” and the “Available Knowledge”. This is a very salient aspect in the design of a KM programme because a sound insight into the knowledge gap They are discussed

would help the organisation understand how best to strategically close up the gap in order to gain competitive advantage. • Knowledge Creation: at this stage, knowledge is created and developed based on the gap identified from the difference between the needed knowledge and the available knowledge. patterns and satisfaction. • Knowledge Base: after knowledge have been created and developed, there needs to be a systematic and structured manner through which the knowledge is stored/locked i.e. kept on board. This involves the creation of a “knowledge base” whereby knowledge can be determined and made available for everyone to access. Knowledge bases could include setting up computer databases, installing internal communication networks and keeping project files and other hard or physically accessible documents. • Knowledge Sharing and Transfer: this is another core aspect of the KM process because after knowledge have been created and stored, it should be communicated, transferred and shared amongst employees, between managers and employees, as well as between departments. This heavily Here, several techniques of knowledge creation would be used such as researching, training, and studies into customers buying

depends on the structure and culture of the organisation, because it requires a flat structure and culture that encourages free flow of communication, mutual knowledge sharing and ensures that the appropriate knowledge gets to the appropriate person at the appropriate time. Knowledge can be communicated, shared and transferred in several ways which would be discussed below. • Knowledge Application: it is at this stage that “knowledge” is usually referred as “power”. Here, insights from the knowledge created, locked and shared can now be strategically utilised to give the organisation a particular leverage in order to gain a competitive edge within the industry. This stage forms a principal element in the knowledge management process and should prominently be driven by the management of the organisation. • Evaluation of Applied Knowledge: this stage is also very important in finetuning and streamlining the KM process. Here, an assessment is carried out on the effectiveness of the KM programme and the result generated from the

applied knowledge.

This assessment can be carried out using several This evaluation forms a

techniques such as internal and external audit, project evaluation, customer and employees’ satisfaction and benchmarking. critical part of identifying the new knowledge gap for further improvements; and the strengths of the KM initiative that can be further maximised and horned for better competitive advantage. From the building blocks of KM discussed above i.e. the Needed Knowledge stage through to the final Evaluation stage, it can be seen that the KM process is an unending process because it drives continuous improvements within the organisation. This process can be broadly categorised into three phases which can simply be termed as the “Circular Trilogy of Knowledge Management” as represented below: Fig. I Circular Trilogy of Knowledge Management

Knowledge Creation &

Organisation al Knowledge

Embody Knowledge in New

Modes of Knowledge Transfer, Sharing and Communication In every organisation, it is the responsibility of managers to ensure that knowledge created within the organisation is properly disseminated and utilised. According to Nonaka and Takeuchi (1995), the emphasis here is not on individual knowledge but organisational knowledge, because if individual knowledge is not shared, it will have very little effect on the organisational knowledge base. The onus on managers is therefore to facilitate the sharing, transfer and

communication of knowledge and its movement from one part of the organisation to another. As mentioned earlier, there needs to be a knowledge base or lock, where explicit knowledge is collected and allowed to interact with tacit knowledge. Again, Nonaka and Takeuchi (1995) termed the interaction between the two forms of knowledge as “knowledge conversion” and their model known as the SECI 4-mode process remains one of the most acceptable models of knowledge conversion: A. Socialisation: this refers to the conversion from tacit to tacit knowledge i.e. converting new tacit knowledge through shared experiences. Individuals can use new experiences to recount old ones. This interaction can be one-to-one, one-tomany, many-to-many e.g. oral reports, meetings between employees and customers, mentoring of younger employees, training sessions and getting less experienced employees to shadow more experienced ones. The case of the experienced baker in the Bukoba bakery above is a good example of socialisation. B. Externalisation: this conversion is from tacit to explicit knowledge through emails, books and manuals, tapes etc. This can involve the presenting of practical experiences of employees that can be codified and put into a book form or computer database for easy access. A good example of this is the case of the hair stylist in Ahoada discussed above. C. Combination: this conversion is from explicit to explicit knowledge through more structured, complex and systematic arrangements such as the use of computers, intranets, internets and websites which are mainly found in large organisations. It can also be through workshops, seminars and trainings too for both large companies and SMEs. D. Internalisation: this is conversion from explicit to tacit knowledge and it depends on an individual’s ability to make sense out of the explicit information. Organisational libraries and computer applications can help people recognise patterns and aid their understanding. Tips for African SMEs on Designing and Implementing an Effective KM Initiative 1. Entrepreneurs and SME-managers should firstly understand that every KM programme needs their full and concerted support to be effective.

2. Leadership is very crucial to the success of any KM initiative. The role of the entrepreneur or SME manager must shift from being the sole source of knowledge to managing and networking its flow and how people use it. Leadership should no longer perch at the top of the organisation, but at the centre. This is because true leadership hinges on the ability to grasp the value-creating potentials within the firm as opposed to having an “I know all” mentality and handling the whole work load alone (Bukowitz and Williams, 1999). 3. SMEs should imbibe a culture that encourages the continuous learning and development of all employees and engenders the ability of “learning to learn” from their experiences and experiences of others. Periodic training and development needs to be incorporated into their operational system so that employees can learn new skills, update their professional knowledge and have the freedom to creatively play around with new ideas. 4. SME managers should learn to structure a base within the firm where knowledge can be collected; and then encourage transfers and sharing of the stored knowledge. Managers should beware of barriers of knowledge transfers such as insecurity that brews among employees. 5. Entrepreneurs and managers must have the sense of duty to reward employees who choose to share their knowledge with others. This is because when employees feel they are giving more than what they are getting, it gives them the opportunity to seek greener pastures where their contributions will be better appreciated. 6. Since KM is about people and ideas, entrepreneurs should give employees a sense of identity within the SMEs, their mission and vision; and also allowing them to learn from mistakes. 7. SMEs should learn to leverage on social networks in order to expand their customer base. They should also create strategic alliances that can help improve their market position. 8. Entrepreneurs and SMEs need to understand that knowledge management is not a one-off project in the life of a firm, but a continuous project that helps an organisation to re-invent itself towards better performance.

It is no longer news that we presently live in a knowledge-driven world, and it has become clearer that the so-called ‘thin line’ that differentiates business successes from failures is “knowledge”. The central point is in understanding the knowledge gap, create and store the appropriate knowledge and embody the knowledge in their products and services. This is because the slogan for businesses today is gradually becoming “manage-your-knowledge or die.” Finally, for African SMEs to take advantage of the available opportunities and compete with their counterparts in other parts of the world, they need to deliberately install an effective KM initiative within their organisations. I hope you have been able to derive a better understanding into the world of KM from this article. You too can begin to think of your own small or medium-sized business in the light of the above analogies, building blocks and tips; and see what you can put into perspective. Furthermore, it is salient to mention that the concept of KM is relevant and practicable to every field of human endeavour and to every strata of the society, from public to private sector, profit making to nonprofit making, religious bodies, and large to medium, small and micro-sized organisations. Until next time, keep managing your knowledge effectively. References • Bukowitz, W. R. and Williams, R. L. (1999). Looking Through the Knowledge Glass. 2006] • • Delong, D. W. (2004). Lost Knowledge: Confronting the Threat of an Aging Workforce, USA: Oxford University Press. Nonaka, I. and Takeuchi, H. (1995). The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. Oxford: Oxford University Press. • Organisation for Economic Co-operation and Development (OECD) (2000), “Small and Medium-sized Enterprises: local Strength, global reach”, OECD Policy Review, June, pp.1-8. CIO Enterprise Magazine [online] Available from: http://www.cio.com/archive/enterprise/101599-book.html [Accessed: 02 Feb.

Orlov, L. M. (2004). When You Say ‘KM’, What Do You Mean? CIO Enterprise Magazine [online] Available from: http://www2.cio.com/analyst/report2931.html. [Accessed: 02 Feb. 2006]

This piece is a modified version of two articles published by the author in the Business Connect Newsletter of the Abuja Enterprise Agency. This article was updated in January 2008. Bell’ Ihua, a Nigerian born researcher and consultant writes from Canterbury, United Kingdom.

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