Feature

posted 13 Apr 2004 in Volume 6 Issue 10

Time to re-think knowledge management?

With many experts dismissing the term ‘knowledge management’ as confusing and inadequate, Matthew Parsons, former director of know how and online products at Australian firm Mallesons Stephen Jaques, and author of Effective Knowledge Management offers an alternative approach to the discipline. He introduces ‘knowledge science’ and offers a conceptual framework for knowledge within organisations.

When does a management concept not mean what it says? Simple, when the concept is knowledge management. Knowledge management became part of the management dictionary in the 1990s and has lured many managers into an incorrect mindset about organisational knowledge that has resulted in billions of dollars of wasted investment. It is now time for a rethink.

One would think that knowledge management should mean what it says. We should be able to understand the word ‘knowledge’ and the word ‘management’, and then understand the compound term they make up. It is not as if the words are unusual or beyond the vocabulary of business managers. Further, there is nothing warning us that the term knowledge management does not mean what it says.

To a business manager, knowledge is the sum or range of what has been perceived, discovered or learnt, and management means to control or to organise. Both are familiar and unremarkable.

It follows that to a competent business manager, knowledge management means to control or organise that which is known in their organisation. A competent business manager is confident in this meaning, has no reason to doubt it or not to act on it. And therein lies the error and the danger, and the reason that the term has outlived its usefulness to describe the discipline.

For our rational business manager, the implications of knowledge management, gleaned from the plain meanings of the words are:

It is possible and desirable to manage all knowledge within the organisation (otherwise why call it knowledge management in the first place?);
An effective knowledge-management solution in an organisation results in all knowledge being managed and controlled. If any knowledge is not managed then the initiative has failed;
When organisational knowledge is managed properly, all employees will have the right information at the right time, using the collective knowledge of all people within the organisation;
Knowledge can be managed as an organisational function without the involvement of the rest of the company, just like fixed-asset management;
Managing knowledge efficiently involves capturing and storing knowledge in some form of electronic repository. This follows from the manager’s experience of information management and technology in their own business, applied to the obvious scale of the knowledge to be managed;
Not to have all knowledge managed is to lose an opportunity for organisational efficiency in the same way as not managing other asset classes generates waste and inefficiency.

These natural implications are all wrong and can even be dangerous. And knowledge-management practitioners know it.

The founders of knowledge management and the most authoritative writers in the field, regard the term as confusing, misleading and unhelpful: these include Drucker, Sveiby, Allee, Davenport, Denning, Nonaka and Snowden. They all clearly state that the notion that knowledge can be organised and controlled is myth. Sveiby, regarded as the father of knowledge management, laments the term as poor, but concedes we are stuck with it.

Practitioners persisted with the term not because it was an accurate description, but because it provided a convenient shorthand and rallying cry for practitioners and consultants to use. When they heard or used the term knowledge management, they knew that it did not really mean knowledge management. Their minds translated it, substituting an understanding of the emerging discipline rather than the standard English meanings of the words knowledge and management.

Unsuspecting managers who climbed aboard the knowledge-management train did not know they were stuck with a confusing term, and that knowledge management did not mean what it said. So they tried to manage knowledge with technology or solutions. They bought consulting services to manage their knowledge. They created databases and bought software to manage knowledge. They read articles suggesting knowledge strategy was a simple choice between codification and personalisation. And they failed. Sveiby believes that the confusion between knowledge and information has been responsible for billions of dollars invested in knowledge-management projects that have yielded marginal results.

It is time to stop the confusion and to start creating a coherent conceptual framework that works for knowledge practitioners and business managers alike.

Renaming knowledge management

First, let’s rename the discipline formerly known as knowledge management. What should we call it to avoid the confusion and the dangerous myths that launched a thousand projects? Well, what did knowledge-management practitioners think they were doing? They were building knowledge about knowledge, they were establishing frameworks and understandings, searching for truth, observing processes, and observing cause and effect relationships. In other words, they were building the science of knowledge.

It follows that the discipline could be called knowledge science – it is a body of knowledge about knowledge. Specifically, it is a body of knowledge about how knowledge is acquired, transferred, created, destroyed, shared, sold and traded in the context of organisations.

Having christened the discipline, it is now time to turn our attention to identifying some general principles of knowledge science – to outline a conceptual framework. Such a framework for knowledge science is a key tool to promote common understandings, establish a common language and provide a systematic approach for investment in knowledge.

A conceptual framework

The knowledge science conceptual framework for knowledge in organisations has 11 concepts. These are stated in plain language that means what it says, no translation is necessary. The language is meaningful both to knowledge professionals and novices, to the executives who fund knowledge programmes and to the people upon whose behaviour those programmes depend for their success. The 11 knowledge concepts are:

Every firm has a knowledge strategy;
A knowledge strategy has three components: personal, interpersonal, and impersonal (or digital);
Technology has an enabling role in each of the three components of a knowledge strategy;
Every firm has a stock of intellectual capital;
Every firm has a knowledge culture;
Every firm has social capital;
Every firm has a knowledge ecology from the implementation of its knowledge strategy, the operation of its knowledge culture and its social capital;
A firm’s knowledge ecology impacts organisational performance;
A firm’s knowledge ecology has distinct attributes;
Perfect knowledge is a dangerous and unachievable myth;
Improving a firm’s knowledge ecology to improve organisational performance is difficult and cannot be done without sustained cultural change, and changes to behaviours and processes.

Every firm has a knowledge strategy

Every organisation has a knowledge strategy that it implements. Note that while most organisations do not have a volume labelled ‘knowledge strategy’ on the bookshelf beside other organisational strategies, a knowledge strategy can be inferred through observation.

A knowledge strategy encompasses a firm’s behaviour and processes by which employees increase and maintain their personal and collective actionable knowledge to increase performance and manage risk.

It includes strategies for the acquisition, creation, dissemination, application, commercialisation and maintenance of knowledge. Even organisations that have not launched a KM project have hiring policies, employee competencies, e-mail systems, induction programmes, mentoring practices, water coolers and talk to each other.

There are behaviours and processes that the people in the firm follow in relation to knowledge – that is their strategy. A knowledge strategy has three components:

Personal knowledge;
Interpersonal knowledge;
Impersonal or digital knowledge.

The personal-knowledge strategy is how a firm acquires individuals and assists them in the acquisition, creation, dissemination, application, commercialisation and maintenance of their knowledge while at the firm. This strategy develops the in-brain resources of people at the firm, and assists the development of their personal physical and electronic-knowledge resources.

This component of knowledge strategy is traditionally either ignored or crushed by institutional knowledge initiatives that seek to control and organise knowledge for collective use. Yet personal knowledge is the most important asset to a knowledge worker.

An interpersonal-knowledge strategy is how the firm enables knowledge acquisition, creation, dissemination, application and maintenance through the interaction of human players within the organisation, and the interaction of human players within and outside the organisation. This component of knowledge strategy has seen significant developments in recent years, including work in relation to story telling and communities of practice – both of which are efficient techniques to build intellectual capital.

An impersonal or digital knowledge strategy is the firm’s approach to creating, disseminating, applying and maintaining institutional knowledge resources, in digital or other tangible forms. This component has dominated managers’ implementations of knowledge management in the last decade, often at the expense of personal-knowledge development. But it is personal knowledge that is the key to increasing the productivity and effectiveness of knowledge work, not impersonal knowledge stores. The database does not do the work, create the ideas or apply knowledge – people do.

Note that there is no fourth component to knowledge strategy labelled technology. As explored in the next concept, technology is a humble enabler not a lead strategy, and should never be clothed with greater importance.

The enabling role of technology

It is an unremarkable truth that technology will play an enabling or supporting role in an organisation’s personal-knowledge strategy, interpersonal-knowledge strategy, and impersonal or digital-knowledge strategy.

However, that is not to say that there will be a technology dimension to all the initiatives in the strategies – indeed there will be several areas where technology has no role to play. There is little technology in notice boards, books, signs and physical files. There is little technology in reading, listening and face-to-face communications.

It is also not to say that the appropriate enablement of those parts of the knowledge strategies for personal, interpersonal and impersonal must necessarily integrate or be a one-system solution to provide value. Efficient information management, that is information in only one place, should never be a religion that is worshipped irrespective of cost or impact on knowledge workers.

The focus must be on organisational performance, not systems or data-model nirvana.

Every firm has a stock of intellectual capital

Organisations have a stock of intellectual capital representing valuable, actionable knowledge in intangible and tangible forms. This intellectual capital is contained in its people and in tangible knowledge artifacts. At any time, the stock is measurable. Changes in the stock occur over time, such that the rate of growth of the stock of intellectual capital is measurable.

The stock of an organisation’s intellectual capital, and its rate of growth, is impacted by the implementation of its knowledge strategy. For example, a knowledge strategy that does not provide for the acquisition of enquiring minds will yield a lower rate of growth in its intellectual capital than an organisation that specifically hires the intellectually capable and curious.

The stock of an organisation’s intellectual capital also has a measurable degree of stability that is a function of the level of the organisation’s social capital (to retain, train and integrate) and the quality of its impersonal and digital intellectual capital. A firm with a high turnover rate and poor impersonal knowledge artifacts will have a lower degree of stability of its intellectual capital than a firm with a low turnover rate (as a result of high social capital) and highly developed impersonal knowledge artifacts.

Every firm has a knowledge culture

Every organisation has a knowledge culture, which reflects the firm’s values and beliefs in relation to the acquisition, creation, dissemination, application and maintenance of knowledge.

Like other aspects of an organisation’s culture, the knowledge culture is rarely documented but can be inferred from the way things are done. The knowledge culture significantly impacts the outcomes, impacts and chances of success of the firm’s knowledge strategy. A knowledge unfriendly culture will generally preclude organisational value creation in the implementation of even the best knowledge strategy.

Knowledge culture is the metaphorical horse taken to water by the knowledge strategy. If the horse does not want to drink, the strategy is useless, and no intellectual capital will be created.

Every firm has social capital

Organisations have social capital, which includes its networks, norms and social trust that facilitate co-ordination and co-operation within the organisation for mutual benefit. Just like the firm’s knowledge culture, the social capital significantly impacts the outcomes, impacts and chances of success of the firm’s knowledge strategy. For example, a more dense network of high trust relationships will move knowledge, and create new knowledge, faster than an organisation with a network of lower density of low trust relationships. Even if these organisations share the same knowledge strategy and have the same quality of knowledge culture, the one with superior social capital will see a greater development of intellectual capital by virtue of its social and trust network.

In other words, high social capital is an accelerant of knowledge strategy. Conversely, low social capital can severely impede the quality, quantity, spread and speed of knowledge transference among people within the firm.

Every firm has a knowledge ecology

Organisations have a knowledge ecology, which is an ecosystem of knowledge within the firm that allows it to function. A firm’s knowledge ecology comprises many inter-related processes, actions and activities that impact on each other in a continually adapting, living system. In the same way that rain, soil types and species diversity are influences on a physical ecosystem, there are also key influences on knowledge ecologies. These influences on the firm’s knowledge ecology make up its knowledge strategy, knowledge culture and social capital. These influences shape the ecology, the organisation’s people and networks, and its actual behaviours, processes, values, artifacts and technologies in relation to knowledge.

Further, being an ecology, a change never occurs in isolation. As global warming has a series of impacts at a range of levels in our ecology, so too a change in the organisational knowledge ecology will have intended, and unintended consequences as the ecology adapts to the new situation. Of course, the better you understand the ecology the greater opportunity you have to minimise the impact of unintended consequences.

The impact of the knowledge ecology on organisational performance

Knowledge is a key ingredient to individual and collective worker performance. It follows then that an organisation’s knowledge ecology impacts its performance, specifically its productivity and quality levels, its speed and quality of innovation and its ability to adapt and respond to a changing competitive marketplace.

The ability of the knowledge ecology to move knowledge around the organisation, acquire external knowledge, and enable and speed the formation of new knowledge directly impacts financial performance. That is not to say that any or all knowledge has this relationship to performance. Clearly, the science of making car tires is not knowledge that will increase the economic performance of a bakery. The point is that within each business there is a distinct class of knowledge – the secret of making great bread – that will have a direct relationship to economic performance for that business.

A firm’s knowledge ecology has distinct attributes

There are several distinct attributes of an organisation’s knowledge ecology that can be identified and modified, including the:

Rate of growth of personal and collective knowledge (intellectual capital);
Degree of currency, accuracy and depth of personal and collective knowledge;
Value of the personal and collective knowledge;
Degree of comparative advantage of the organisation’s intellectual capital;
Historic stability of the intellectual capital;
Ability of the organisation to recover, re-train and integrate when people leave;
Speed and quality at which new people are integrated into the ecology;
Degree and quality of innovation produced by the knowledge ecology;
Quality of interpersonal knowledge transfers;
Quality of the organisation’s social capital;
Strength of the organisation’s knowledge culture;
Rate at which valuable knowledge moves within the organisation.

The relative importance of and relationship between these attributes in their contribution to increasing organisational performance in a particular case will depend upon the industry, the firm’s competitive position and the quality of its people. In other words, the appropriate strategy focus on modifying these attributes will depend upon the particular circumstances of the organisation.

There is no simple prescription for increasing organisational performance by implementing a standard knowledge strategy to increase intellectual capital. There is no simple choice to make between personalisation and standardisation. An effective knowledge strategy must be carefully tailored for the particular organisation and its particular stage of knowledge maturity. Knowledge is messy.

Perfect knowledge is a dangerous unachievable myth

The knowledge ecology where every human actor knows all that is useful and known by every other human actor in the ecology does not exist.

Mary from marketing in Ohio will never know everything that John in production knows – even though John works in the same building as Mary. Further, Mary will never know everything that the vice president of R&D, Annabelle, knows in Israel. Even the most effective knowledge strategy ever conceived will not enable this.

The idea of delivering the right information to the right person at the right time is nonsense. The role of a knowledge strategy is to generate a more productive, more valuable knowledge ecology than would exist without the implementation of the strategy. In other words, to increase the organisation’s intellectual capital in a way that increases organisational performance – not to perform an organisational Vulcan mind-meld.

The role of a knowledge strategy is not to produce a perfect knowledge ecology, but to increase organisational performance by improving the knowledge ecology. Improving a firm’s knowledge ecology to improve organisational performance is difficult and cannot be done without sustained cultural change and changes to behaviours and processes.

Knowledge-management projects have a notorious reputation for failing to deliver value, although in fairness most were commenced without any identification of the value to be delivered, and were poisoned by the myths outlined above.

As a knowledge strategy is about making changes to behaviours and process to improve organisational performance, unless the organisation is prepared to achieve the difficult goal of sustained cultural change and changes to behaviours and processes, the result of a knowledge initiative will be limited to the creation of a process or artifact that will be abandoned within two years.

Irrespective of the quality of the strategy, the level of investment or the championing by a senior executive, it will be useless without sustained cultural change, and is highly susceptible to being killed by the organisation’s immune system of established culture and power structures. Witness the revolving-door leadership positions in knowledge initiatives within professional services firms over the last decade, the number of senior knowledge executives who have become consultants, or the depth of cuts currently being made in knowledge-management programmes. An effective knowledge strategy is tricky stuff and not for the faint hearted. The score so far is immune system 10, knowledge leaders 2.

These 11 concepts and the organisational knowledge ecology provide a common language and context to approach the discussion of knowledge within organisations, and to help dispel the myths that so often plague knowledge initiatives. The next piece of the conceptual framework is a framework to measure the return on knowledge-strategy investment – all knowledge is not valuable for all organisations. After all, intellectual capital is important, but it is not cash.

Less than successful knowledge programmes of the last decade have generally focused on impersonal knowledge strategies, invested large sums, implemented technology solutions, ignored the firm’s knowledge culture and its social capital, and failed to identify the increase in organisational performance that was to be generated. Seduced by the plain meaning of the knowledge-management buzzword, they believed that to have knowledge managed was the end in itself. With such success of knowledge management, it is time indeed to move to a new conceptual framework for knowledge in organisations that will neither confuse management, nor launch misguided investment.

Matthew Parsons is former director of know how and online products at international law firm Mallesons Stephen Jaques, and is the author of the forthcoming book, Effective Knowledge Management for Law Firms, which will be published in June 2004. He can be contacted at parsonsmt@adelphia.net.