CHAPTER TWO

THE FUNDAMENTAL PROCESSES OF KNOWLEDGE MANAGEMENT

Knowledge Acquisition
The process of development and creation of insights, skills and relationship.

Knowledge acquisition refers to the knowledge that a firm can try to obtain from external
sources. External knowledge sources are important and one should therefore take a holistic
view of the value chain (Gamble & Blackwell 2001). Sources include suppliers, competitors,
partners/alliances, customers, and external experts. Communities of practice can extend
well outside the firm.

Knowledge acquisition is the process of absorbing and storing new information in memory,
the success of which is often gauged by how well the information can later be remembered
(retrieved from memory). The process of storing and retrieving information depends heavily
on the representation and organization of the information. Moreover, the utility of
knowledge can also be influenced by how the information is structured. For example, a bus
schedule can be represented in the form of a map or a timetable. On the one hand, a
timetable provides quick and easy access to the arrival time for each bus, but does little for
finding where a particular stop is situated. On the other hand, a map provides a detailed
picture of each bus stop's location, but cannot efficiently communicate bus schedules. Both
forms of representation are useful, but it is important to select the representation most
appropriate for the task at hand. Similarly, knowledge acquisition can be improved by
considering the purpose and function of the desired information.

Knowledge acquisition is an activity of knowledge engineering that is very important in the

initial phase of system shaping for building the fundamental knowledge base, as well as in
the application phase of the system for knowledge base updating.

Knowledge acquisition refers to :

- the knowledge that a firm can try to obtain from external sources.
• External knowledge sources are important, and one should therefore take a
holistic view of the value chain (Gamble & Blackwell 2001).
- Sources include suppliers, competitors, partners/alliances, customers, and external
experts and Communities of practice can extend well outside the firm.

The main sources are of knowledge acquisition are (For, about, from) (example):
 Customer
- Feedback, collecting and processing marketing related information, suggestions,
involvement in development/design
 Supplier
- Production needs, forecast, inventory, quality, financial rise
 Competitor
Partners
- Knowledge transfer, personnel exchanges, regular interaction, technology sharing
etc
Customers
Customer knowledge comes in different forms. Gerbert et al (2002) identify three different
types:
Knowledge for customer: 
The knowledge that the customers can gain in order to satisfy their knowledge needs.. It can
include product, market, and supplier knowledge. It can be sourced from our company or
from other external sources like other customers and competitors (Zanjani 2008).
Knowledge for customers: is mainly developed in processes within the company, for
example, the research and development section or a production department. Collecting this
knowledge is the responsibility of campaign management. It should be refined according to
the customer requirements. It is then disseminated to the other customer relationship
management (CRM) processes, mainly: contract management, offer management, and
service management. CRM manages knowledge, transparency and dissemination of
knowledge for customers. Maintaining the balance between comprehensibility and precision
is the main challenge when managing this kind of knowledge.

Knowledge about customer: 

The kind of knowledge that enables us to know the customer better, to understand their
motivations, and to address them better. Includes requirements, expectations, and
purchasing activities.
knowledge about customers: is gained mainly by service management, offer management,
complaint management and, if available, contract management. The main user processes of
knowledge regarding the customer are campaign management and service management,
because both processes personalize their services based on user criteria. Knowledge about
the customer must be transparent within the company; although its distribution beyond the
border of the company must be controlled, as this type of knowledge can often be directly
transformed into competitive advantages. The development of such knowledge is also
expensive, because knowledge revelation is quite time-consuming.

Knowledge from customer: 

The kind of knowledge that deals with products, suppliers, and markets. It can be used to
improve our products and services.
Knowledge from customers: can be obtained in the same ways as knowledge about
customers. Capturing knowledge from customers is based on the important fact that
customers who obtain their own expertise when utilizing a service or product can be seen as
equal partners. This concept is not regularly understood in the business world and its effects
have been poorly researched in academia (Garcia-Murillo and Annabi, 2002).[3]
These three categories apply to actual knowledge acquisition as well as to data and
information, which can be processed and used to create knowledge (Zanjani 2008); e.g. data
on purchasing habits could be analyzed to create knowledge that could improve marketing
or design decisions. 
Knowledge sharing is thus important, although it may take many different forms depending
on the area of business. KM is particularly important for B2B relationships where the buyers
are usually more prominent (i.e. either buy many products or buy expensive products) and
the products are more likely to be customized to the needs of the customer. This can, and
often should result in a closer relationship with more detailed communication and feedback,
where the customers are involved as partners when discussing modifications and
improvements (Gerbert et al 2002).

Some possible KM initiatives thus include:

- Collecting feedback
- Collecting and processing marketing related information
- Collecting suggestions
- Involvement in development/design
Effective acquisition of customer knowledge is dependent on customer relationship
management. IT can be used in this context both as a means of collecting feedback and
enhancing communication and cooperation between partners (the principles of knowledge
sharing apply here within the confines of the specific relationship). It is also useful as a way
to gather data and information regarding sales, trends, feedback, and so on, which can then
be used to create new knowledge within the organization. 
Suppliers 
Chan (2009) presents a classification for supplier knowledge based on the concepts outlined
by Gerbert et al (2002) regarding customer knowledge. These are:
Knowledge for suppliers: 
This is the knowledge that suppliers require and includes "production needs and forecasts,
inventory, products, customers, and markets" (Chan 2009).
Knowledge about suppliers: 
This is knowledge that is used to understand how the supplier can match the requirements
of the organization; provide insight regarding quality, delivery, defects, financial risks etc.
Knowledge from suppliers: 
This refers to the knowledge that suppliers have gathered from their dealings with the
organization.

The KM initiatives and the role of IT are similar to the ones presented in the customer
segment, with the organization now taking on the role of customer. Knowledge acquisition in
this case also includes data and information which can be processed and used as building
blocks for new knowledge creation.
Gamble and Blackwell (2001) refer to compatible goals, cultural alignment, and leadership
commitment amongst the key factors for sustained, productive, long-term relationships.

Competitors 
This deserves mention but it is a fairly straightforward aspect of KM. It simply involves
collecting, organizing and presenting the data, information, and knowledge that the firm has
acquired in such a way that one can search, retrieve, and analyze it. Some of this falls within
the scope of information management, but it is particularly the process of using these
components to create better decisions and new knowledge that is of interest here. 
IT systems are very useful in this case, since the sources are largely explicit and presumably
require frequent updating and manipulation. Data mining and analysis, document
management systems with suitable search functions, and expert systems are most relevant
here.
Partners/Alliances 
Alliances intended to increase knowledge are a valuable potential resource. However these
must be properly managed. Key success factors include fostering trust, learning from your
partner, and effectively managing the creation of knowledge relevant to both parties.
Knowledge transfer can be facilitated by personnel exchanges, common projects and other
forms of regular interaction, technology sharing, etc. (Gamble & Blackwell 2001). Focusing
on informal communication, collaboration, and socialization is of paramount importance for
valuable tacit knowledge acquisition and for extending communities of practice beyond the
firm's borders.
Chan (2009) once again formulates a set of knowledge types based around the work of
Gerbert et al (2002):
Knowledge for partners: 
Knowledge which satisfies their needs, including "knowledge about products, markets, and
suppliers" (Chan 2009).
Knowledge about partners: 
Knowledge acquisition focused on understanding the ability of partners to perform their role
in the relationship. Includes distribution channels, products, services, etc.
Knowledge from partners: 
The knowledge that partners have accumulated from dealing with the organization. 
IT can be used in this case very similarly to the way it is used inside the organization for
knowledge sharing and knowledge creation (including data/information analysis) - in other
words supporting communication, collaboration, experimentation, expertise location,
analysis tools, etc. The exact system has to fit the nature of the relationship and the business
model.
What is of particular importance in this case is to safeguard the system so that only that
knowledge which the firm is willing to share becomes available. In the 80s, joint ventures
between American and Japanese firms often resulted in a lopsided endeavor favoring the
latter, since the Japanese were far more willing to listen and the Americans were far more
willing to talk. It is important to remember that the goal here is two way learning; that a
relationship will not last forever; and that a partner today may be a competitor tomorrow.
KM must therefore be very aware of what knowledge is being shared, and the IT systems
must reflect this policy.
Merges & Acquisitions
This aspect deserves mention, but as a general discipline it is well beyond the scope of this
paper. Dealing with mergers and acquisitions (M&A) is an extremely complex task that has
led to numerous failures. Within the scope of knowledge acquisition, the area related to KM
is how to pass on the most amount of relevant knowledge from the previous two
organizations to the new, combined firm.
Very broadly speaking there are a couple of roles where KM efforts should feature heavily
once the target has been acquired:
To identify the valuable/redundant knowledge sources in the target organization: 
This is a very difficult process since it involves understanding of the target company's tacit
and embedded knowledge locked within people, communities, processes, networks,
procedures, etc. One of the major causes of failure in M&A is that during the restructuring
process, key people are let go by mistake or key communities are disrupted. The old adage
that the company should be seen more like a living organism than a machine holds very true
here. 
To combine this (relevant) knowledge with the organization's knowledge assets to achieve
synergy: 
This is the essence of many M&A; the notion that the whole should be greater than the sum
of its parts. Integrating acquired companies is a difficult task, heavy on people management
and the creation of a common culture. It is hard to say how much of this falls within KM
specifically, and there certainly are no universal rules on this topic. Fundamentally, the same
principles on knowledge sharing, reuse, and creation apply here, with a particular focus on
culture, networks, and incentives, within a different and potentially hostile environment.
Other expertise
This refers to the other sources of external knowledge available to a firm, and includes hiring
new personel or acquiring the services of consultants.
The role of KM in these cases is to make sure that the right knowledge is acquired.
Essentially the process has two parts, on the one hand the strategic and tactical
requirements of the firm must be taken into account, and on the other these must be
compared to the knowledge assets of the organization. 
If external services are acquired from consultants or other temporary service providers, KM
must work together with strategic management to determine if this knowledge is worth
integrating into the firm by assessing the need to reuse it in the future vs the cost of
transferring it into the organization. If it is deemed as something that should be integrated,
then the right learning situations must be established to transfer the knowledge into the
firm. These could be mentoring relationships, use of project teams that include
organizational members, courses and education, etc.

Knowledge Sharing
- Collaborative transfer of Knowledge
- Collaborative support
- Making the right knowledge or the right sources (including people) available at the
right place at the right time
- Seeking out expert, and collaborating
- Requires the right culture and incentives
- Knowledge sharing process
 Explicit knowledge sharing
 Tacit knowledge sharing
Knowledge sharing is the act of exchanging information or understanding between
individuals, teams, communities or organizations. Knowledge may be explicit (procedures
and documents) or tacit (intuitive and experience-based). Sharing knowledge is an
intentional process that not only bolsters an individual's understanding, but helps create or
enhance an archive of accessible knowledge for others. The concept of knowledge sharing is
important because it helps individuals and businesses be more agile and adaptable in the
face of change, and helps ensure continued growth and survival. Knowledge sharing can be
achieved in a number of ways, from writing a book or manual to delivering a presentation to
having an informal chat during lunch or offering mentoring or job shadowing opportunities.

Knowledge sharing depends on the habit and willingness of the knowledge worker to seek
out and/or be receptive to these knowledge sources. The right culture, incentives, and so on
must therefore be present.

Knowledge sharing refers to not only codified information, like product specifications, but
also beliefs and experiences. Seen from this perspective, knowledge creation, management
and sharing are a question of mastering the renewal and change in all the activities within
an organization and in a network of organizations.

Sharing knowledge with other people, exchanging knowledge. Knowledge sharing can
happen through face-to-face interaction (tacit knowledge) or through codified knowledge
exchange (explicit knowledge). Also systems and tools to facilitate knowledge sharing are
being created.

People share knowledge through many channels such as conversations, meetings, learning
sessions, workshops, videos and other communication media. Organizations have
recognized that knowledge constitutes a valuable intangible asset for creating and
sustaining competitive advantages.[5] Knowledge sharing activities are generally supported
by knowledge management systems.[6] However, technology constitutes only one of the
many factors that affect the sharing of knowledge in organizations, such as organizational
culture, trust, and incentives.[7] The sharing of knowledge constitutes a major challenge in
the field of knowledge management because some employees tend to resist sharing their
knowledge with the rest of the organization.

Explicit knowledge sharing

- Articulation: 
The ability of the user to define what he needs.
The knowledge provider can describe the information.

- Awareness: 
Awareness of the knowledge available.
The recipient must be aware that knowledge is available.
• The provider is encouraged to make use of directories, maps, corporate
yellow pages, etc.
- Access: 
Access to the knowledge. 
 The knowledge recipient can access the knowledge provider.
- Guidance: 
Knowledge managers are often considered key in the build-up of a knowledge
sharing system (Davenport & Prusak 2000, Gamble & Blackwell 2001).
The body of knowledge must be defined and differentiated into different topics or
domains so as to avoid information overload, and to provide easy access to
appropriate material. Knowledge managers are often considered key figures in the
creation of an effective knowledge sharing system.
• They must help define the areas of expertise of the members of the firm,
guide their contributions, assist users, and be responsible for the language
used in publications and other communication material. This is so as to avoid
an information/knowledge overload. 

- Completeness: 
Access to both centrally managed and self-published knowledge.
The holistic approach to knowledge sharing in the form of both centrally managed
and self-published knowledge.
• The former is often more scrutinized but takes longer to publish and is not as
hands-on (and potentially relevant). Self-published information on the other
hand runs the risk of not being as reliable. 
- IT systems have proved extremely useful in aiding or performing many of these
functions.

Tacit knowledge Sharing

- Sharing tacit knowledge requires socialization. This can take many different forms.
- Davenport & Prusak (2000) outline a few relevant factors:
• Informal networks, which involve the day to day interaction between people
within work environments are considered very important

- Management should support these networks by providing the means for

communication.
• Japanese firms have created talk rooms where employees can engage in
unstructured, unmonitored discussions.
• Management must simply provide the means for employees to foster
informal networks and "trade" tacit knowledge.
- Management must also understand the value of chaos.
• This refers to the value of unstructured work practices that encourage
experimentation and social interaction.
• Within a more chaotic environment, individuals are given the freedom to
solve problems creatively and, in so doing, must tap into and evolve their
social networks.

Via sharing of tacit knowledge which is embedded in people, individuals provide their
valuable knowledge and tap into what others know. Tacit knowledge has a crucial role in the
organizational performance improvement (Small and Sage, 2006; Reychav and Weisberg,
2009). Through the process of socialization knowledge can be transferred from one person to
another. Expertise, skills or experience which are difficult to capture and codify can be shared
through creating mentoring programs or various workshops which will create shared mental
modes that would ease the coordination and collaboration process resulting in better
utilization of knowledge and higher team performance (Marks et al., 2000).

Knowledge Utilization
integration of learning
- It connect theory to practice
- when available knowledge is used to make decisions and perform tasks through
direction and routines.
-  the process through which the individual possessing the knowledge directs the
action of another individual without transferring to that individual the knowledge
underlying the direction.
• It is more that an individual who possesses knowledge advises another.
• For example, direction is the process used when a production worker calls an
expert to ask her how to solve a particular problem with a machine and then
proceeds to solve the problem based on the instructions given by the expert. 
- Routines involve the utilization of knowledge embedded in procedures, rules, norms
and processes that guide future behavior.

James Quinn
The Four Levels of Professional Knowledge
The Four Levels of Knowledge

Level 1 – Know-What:
This stage represents cognitive knowledge (basic or foundation) – for instance newly
graduates know what is Microsoft project and the basic of handling it.
the basic mastery of a discipline that professionals achieve through extensive training and
certification. This knowledge is essential, but usually far from sufficient, for commercial
success.

Level 2 – Know-How:
- Represents the ability to translate bookish (know-what) into real world results,
problem-solving in nature,
• e.g. in economics, during inflation (Demand pull) you should take away the
purchasing power thus organization should increase the price
 • the rule: information – oriented environment, exposure to the real problem
(more complex compared to the first level), employees: must have system of
extensive discussion, conversation, and brainstorming

Translate “book learning” into effective execution. The ability to apply the rules of a
discipline to complex real-world problems is the most widespread value-creating
professional skill level.

Level 3 – Know-Why:
- Represents a system’s understanding, being able to compete beyond rules that
might be common knowledge (shift from info-oriented enviro into knowledge
oriented)
- Knowledge nature: enables individual to be more step above know-how and create
extraordinary leverage, have the ability to deal with unknown interactions and
unseen situations
- for example Remiser, Stock Brocker know when to sell and buy stocks, Employees:
responsibilities covered deep knowledge involving cause-and-effect relationships

Deep knowledge of the web of cause-and-effect relationships underlying a discipline. It

permits professionals to move beyond the execution of tasks to solve larger and more
complex problems—and to create extraordinary value. Professionals with know-why can
anticipate subtle interactions and unintended consequences. The ultimate expression of
systems understanding is highly trained intuition—for example, the insight of a seasoned
research director who knows instinctively which projects to fund and exactly when to do so.

Level 4 – Care-Why:
- Represents self-motivated creativity existed in a company KM no longer support
- the care lies in its culture (technology per se cannot sustain competitive advantage),
this is the reason why highly motivated, creative and energetic outperformed
organizations which only rely on money and physical resources.

Consists of will, motivation, and adaptability for success. Highly motivated and creative
groups often outperform groups with greater physical or financial resources. Without self-
motivated creativity, intellectual leaders can lose their knowledge advantage through
complacency. They may fail to adapt aggressively to changing external conditions and
particularly to innovations that obsolesce their earlier skills—just as the techniques of
molecular design are superseding chemical screening in pharmaceuticals today. That is why
the highest level of intellect is now so vital. Organizations that nurture care-why in their
people can simultaneously thrive in the face of today’s rapid changes and renew their
cognitive knowledge, advanced skills, and systems understanding in order to compete in the
next wave of advances.
 KM DRIVERS
24 drivers of KM

Divided into 6 areas :

1. Knowledge centric-drivers
2. Technology drivers
3. Organizational structure-based drivers
4. Personnel drivers
5. Process focused drivers
6. Economic drivers

1. Knowledge-Centric Drivers
1. The failure of companies to know what they already know
2. The emergent need for smart knowledge distribution
3. Knowledge velocity and sluggishness
4. The problem of knowledge walkouts and high dependence on tacit
knowledge
5. The need to deal with knowledge-hoarding propensity among employees
6. A need for systematic unlearning

- Organization are face with lack of proper and organised knowledge

- Effective KM system in organization will help to make right decisions at the right time
- The integration of company knowledge process with its business processes to
substantially enhance business process performance

Organization are faced issues from lack of proper & organised knowledge. • But an effective
KM system in an organisation will help to make right decisions at right time. • The
integration of a company knowledge process with its business processes to substantially
enhance business process performance.

2. Technology drivers
7. The death of technology as viable long-term differentiator
8. Compression of product and process life cycle
9. The need for a perfect link between knowledge, business strategy, and
information technology

- Technology drivers motivated by new opportunities to compete by employing new

technology
- Updating and adapting new technologies in organisation will improve the
performance of the organisation
- IT play and important role and vital in todays business operations.

Technology drivers motivated by new opportunities to compete by employing new

technology. • Updating & adapting new technologies in organisation will improve the
performance of the organisation. • Information technology plays vital role in the todays
business operations.
3. Organization structure-based drivers
 1. Functional convergence
2. The emergence of project centric organizational structures
3. Challenges brought about by deregulation
4. The inability of companies to keep pace with competitive changes due to
globalization.
5. Convergence of products and services.

- Organizational structure and culture undergoes dramatic changes to accommodate

the requirements of effective knowledge management
- Most companies rely of project centred teams for the sole purpose of bringing
together the best talent and expertise
- Strategic innovation begins with the organisatios identification of positioning gaps
the subsequent methods to plug them

Personnel drivers
15. Widespread functional convergence
16. The need to support effective cross-functional collaboration
17. Team mobility and fluidity
18. The need to deal with complex corporate expectations

- Need to improved knowledge transfers, sharing and creating of cross-functional

team of knowledge workers to make proactive respond to competitive challenges
- The cross functional collaboration between different department of the organisation
will help to collective knowledge transfer and enhance flexibility among employees

Process focused drivers

19. The need to avoid repeated and often-expensive mistakes.
20. Need to avoid unnecessary reinvention
21. The need for accurate predictive anticipation
22. The emerging need for competitive responsiveness.

• Process drivers are focused on improving work process through KM related initiatives. •
An organisation need to be proactive & anticipate the forces that will shape the markets in
their field of operation. • Using the right application of knowledge within in the proper
structure and processes in the right time.

6. Economic drivers
23. The potential for creating extraordinary leverage through knowledge; the attractive
economics of increasing returns.
24. The quest for a silver bullet for product and service differentiation.

The potential of creating extra ordinary returns and added value through knowledge and
the resultant attractive economies in increasing returns. • It will make the quest for silver
lining for product and service differentiation.