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1
9068 KMAN_A01.QXD 7/7/08 12:38 PM Page i

Knowledge Management
9068 KMAN_A01.QXD 7/7/08 12:38 PM Page ii

We work with leading authors to develop the

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9068 KMAN_A01.QXD 7/7/08 12:38 PM Page iii

Knowledge Management
An Integrated Approach

Ashok Jashapara
Loughborough University
9068 KMAN_A01.QXD 7/7/08 12:38 PM Page iv

Pearson Education Limited

Edinburgh Gate
Harlow
Essex CM20 2JE
England

and Associated Companies throughout the world

Visit us on the World Wide Web at:

www.pearsoned.co.uk

First published 2004

© Pearson Education Limited 2004

The right of Ashok Jashapara to be identified as author of this work has been asserted
by him in accordance with the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without either the prior written permission of the
publisher or a licence permitting restricted copying in the United Kingdom issued by the
Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP.

ISBN: 978-0-273-68298-1

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Printed and bound by Ashford Colour Press, Gosport

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9068 KMAN_A01.QXD 7/7/08 12:38 PM Page v

This book is dedicated to the inspiring life of

Spud Bakhle
(1929–2003)

for our numerous conversations over a glass of wine

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1
9068 KMAN_A01.QXD 7/7/08 12:38 PM Page vii

Brief contents

Preface xi
Acknowledgements xiii

Part 1 Discovering knowledge

Chapter 1 Introduction to knowledge management 3

Chapter 2 Philosophical perspectives on knowledge 31

Part 2 Generating knowledge

Chapter 3 Organisational learning 57

Chapter 4 Knowledge management tools: component technologies 89

Part 3 Evaluating knowledge

Chapter 5 Knowledge management systems 127

Chapter 6 Strategic management perspectives 155

Part 4 Sharing knowledge

Chapter 7 Knowledge management and culture 185

Chapter 8 Change management 213

Part 5 Leveraging knowledge

Chapter 9 Knowledge management and the learning organisation 241

Chapter 10 Intellectual capital 265

Epilogue Knowledge Management

Epilogue 291

Glossary 307

Index 313
9068 KMAN_A01.QXD 7/7/08 12:38 PM Page viii

Contents

Preface xi Hume 37
Acknowledgements xiii Kant 37
Hegel 37
Pragmatists 38
Part 1 Phenomenology and existentialism 38
Discovering knowledge Wittgenstein 39
Contemporary philosophers: Ryle, Polanyi
1 Introduction to knowledge management 3
and Macmurray 40
Learning outcomes / Management issues 3 Burrell and Morgan’s framework on
Links to other chapters 3 philosophical paradigms 41
Opening vignette: Knowledge management in Competing philosophical positions in knowledge
law firms 4 management: positivism, constructivism,
Knowledge management: an integrated approach 5 postmodernism and critical realism 44
Part 1: Discovering knowledge 5 Current ‘knowledge’ frameworks within the
Part 2: Generating knowledge 6 knowledge management literature 48
Part 3: Evaluating knowledge 6 A realist theory of the structure of organisational
Part 4: Sharing knowledge 7
knowledge 49
Part 5: Leveraging knowledge 7
Case study: AMD 50
Introduction 8
Summary 51
What is knowledge management? 8
Questions for further thought 52
Is knowledge management a fad? 12
Further reading / References 52
What is the difference between data, information,
knowledge and wisdom? 14
Data 14 Part 2
Information 15 Generating knowledge
Knowledge 16
Wisdom 17 3 Organisational learning 57
Early history of knowledge management: Learning outcomes / Management issues 57
oral tradition to cuneiform 18 Links to other chapters 57
Knowledge management in Ancient Greece and Rome 20 Opening vignette: Organisational learning in the
Management of knowledge in monastic and design industry 58
cathedral libraries 22 Introduction 59
Paradigm shift from print to a digital age 24 Individual learning 59
Case study: Destruction of ancient knowledge from
Team learning 62
war in Iraq 26
Drivers of organisational learning: success or failure? 63
Summary 28
Single-loop and double-loop learning 65
Questions for further thought 28
Organisational learning frameworks 66
Further reading / References 29
Knowledge acquisition 70
Information distribution 71
2 Philosophical perspectives on knowledge 31
Information interpretation 71
Learning outcomes / Management issues 31
Organisational memory 73
Links to other chapters 31
Unlearning 73
Opening vignette: Plato and leadership 32
Organisational routines 75
Introduction 33
Dynamic capabilities 78
What is knowledge? Philosophers from Plato to
Politics and organisational learning 80
Wittgenstein 35
Case study: Outsourcing – leave it to the experts 82
Plato 35
Aristotle 35 Summary 83
Descartes 36 Questions for further thought 84
Locke 36 Further reading / References 84
9068 KMAN_A01.QXD 7/7/08 12:38 PM Page ix

Contents ix

4 Knowledge management tools: component Decision support systems 138

technologies 89 Group support systems 141
Executive information systems 143
Learning outcomes / Management issues 89
Workflow management systems 145
Links to other chapters 89
Customer relationship management systems 148
Opening vignette: Casmir 90
Economics of KM systems 150
Introduction 91
Case study: e-business KM systems 150
Organising knowledge tools 93
Summary 151
Ontology and taxonomy 93
Questions for further thought 152
Capturing knowledge tools 98
Further reading / References 153
Cognitive mapping tools 98
Information-retrieval tools 100
Search engines 104
6 Strategic management perspectives 155
Agent technology 105 Learning outcomes / Management issues 155
Personalisation 106 Links to other chapters 155
Evaluating knowledge 107 Opening vignette: Crucibles of innovation 156
Case-based reasoning (CBR) 107 Introduction 157
Online analytical processing (OLAP) 107 Strategic management: schools of thought 157
Knowledge discovery in databases – data mining 108 Industrial organisation tradition 158
Machine-based learning 110 Excellence and turnaround 161
Sharing knowledge 110 Institutional perspective 162
Internet, intranets and extranets 110 Resource-based view of the firm 166
Security of intranets 113 Information systems strategy 167
Text-based conferencing 113 Developing a knowledge management strategy 170
Groupware tools 114 Innovation and personalisation strategies 174
Videoconferencing 115 Case study: Knowledge management strategy
Skills directories: expertise yellow pages 115 at BG 177
E-learning 115 Summary 178
Storing and presenting knowledge 116 Questions for further thought 179
Data warehouses 116 Further reading / References 179
Visualisation 117
Case study: Technip-Coflexip 118 Part 4
Summary 120 Sharing knowledge
Questions for further thought 121
Further reading / References 121 7 Knowledge management and culture 185
Learning outcomes / Management issues 185
Part 3 Links to other chapters 185
Evaluating knowledge Opening vignette: Tough-guy, macho culture 186
Introduction 186
5 Knowledge management systems 127 Understanding organisational culture and climate 187
Learning outcomes / Management issues 127 Norms, artefacts and symbols 189
Links to other chapters 127 Values, beliefs, attitudes and assumptions 192
Opening vignette: New twists for old tricks 128 Typologies of organisational culture 194
Introduction 129 Measuring organisational culture 195
Systems thinking 130 Description of the twelve OCI styles 197
Drivers of KM systems: quality management Creating knowledge-sharing cultures 199
processes 132 Cultural stickiness: developing communities
Deming and Juran 132 of practice 203
Total quality management (TQM) 134 Case study: Knowledge ecology at Xerox 208
Business process re-engineering (BPR) 135 Summary 209
Lean production 136 Questions for further thought 210
Document management systems 136 Further reading / References 210
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x Contents

8 Change management 213 10 Intellectual capital 265

Learning outcomes / Management issues 213 Learning outcomes / Management issues 265
Links to other chapters 213 Links to other chapters 265
Opening vignette: War for talent 214 Opening vignette: Value added scorecard 266
Introduction 215 Introduction 267
The nature of change 215 What is intellectual capital? 268
Personal response to change 216 History of intellectual capital 270
Leadership and change 218 Problems of measuring organisational performance 270
Change management strategies 220 Frameworks of intellectual capital 273
Gaining commitment for change 222 Human and social capital 277
Employee involvement 224 Organisational capital 278
Training and development 226 Intellectual property and smart patents 278
Reward and recognition 229 Financial reporting of intellectual capital 281
Cultural change management 232 Intellectual capital as a narrative 281
Politics of change 233 Knowledge auditing in practice 283
Case study: Clifford Chance 234 Case study: Eti 284
Summary 235 Summary 286
Questions for further thought 236 Questions for further thought 286
Further reading / References 236 Further reading / References 287

Part 5 Epilogue
Leveraging knowledge Knowledge management

9 Knowledge management and the learning Epilogue 291

organisation 241 Introduction 291
Learning outcomes / Management issues 241 Wrestling with knowledge: some reflections 292
Links to other chapters 241 Knowledge management – is there an optimal
Opening vignette: The growing pains of business 242 approach? 294
Introduction 243 Organisational gymnastics: balancing learning
US contribution: The fifth discipline 245 with routines and dynamic capabilities 295
UK contribution: the learning company 247 Knowledge management technology and systems 296
Japanese contribution: the knowledge-creating Institutionalist perspective and the knowledge-
company 250 based view of the firm 298
The competitive learning organisation 252 Communities of practice 299
Power, politics and the learning organisation 256 Personal knowledge management 300
Empirical research and the learning organisation 258 Knowledge management between nations 302
Case study: Carly Fiorina, CEO, Hewlett-Packard 260 Concluding remarks 302
Summary 261 Further reading / References 304
Questions for further thought 262
Further reading / References 262 Glossary 307
Index 313

Companion Website resources

Visit the Companion Website at www.booksites.net/jashapara

For lecturers
● PowerPoint slides that can be downloaded and used as OHTs
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The A heading goes here xi

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xii Chapter 00 / The chapter title

Preface

The stimulus for this book came from the fact that I wanted a single knowledge man-
agement text for my postgraduate and doctoral students. During my deliberations, I
was surprised that I could not find a single book that covered the breadth and range of
material in knowledge management. Some of the scholarly offerings came from a
human resource perspective, some from practitioner orientations, while others came
from strong information systems directions. A cursory look at these texts showed that
there was little crossover between these three dominant dimensions. Scholars from one
perspective were rarely cited in the other and vice versa. The situation was as if each
perspective of knowledge management was engrossed in its little world without having
the language or foresight to engage in the other perspective.
Such a situation is not totally surprising given that knowledge management as a dis-
cipline is little over seven years old. There is currently a tremendous drive and
popularity in knowledge management as practitioners and academics have accepted
that we are collectively moving into a knowledge economy. To survive as individuals or
organisations in this knowledge economy, we need tools and shared understanding of
potential challenges and ways of dealing with them in knowledge-based organisations.
This book is intended for students and practitioners of knowledge management and
recognises the relevance of the book for students from a multitude of different indus-
trial sectors. The problems of managing knowledge and the everyday needs of
knowledge workers are common across many sectors. This book should appeal to stu-
dents and practitioners looking for a comprehensive coverage of theoretical debates
and best practice in knowledge management. The book is likely to be challenging as it
demands some philosophical introspection on the nature of knowledge given the argu-
ment that we cannot begin to manage knowledge until we know what knowledge is.
Certain management or information systems aspects may also appear daunting to the
uninitiated, particularly if this is not your background.
I suggest that you work through the uncomfortable feelings as I believe that the
strength of this emerging discipline lies in an integrated approach to knowledge man-
agement. There are rich rewards as we move into a new paradigm of work. The material
in this book is intended to provide you with some pertinent and practical frameworks
as well as offer a source of stimuli to think and find out more in depth where needed.
Even though there are questions within the text related directly to material found in
each chapter, the ‘Questions for further thought’ were designed to help you think ‘out-
side the box’ using material from your experience and wider reading.

Ashok Jashapara
April 2004

xii
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The A heading goes here xiii

About the author

Dr Ashok Jashapara is an internationally recognised

expert in the field of knowledge management and
Chair of the Knowledge Management Research
Group at Loughborough University. He has consider-
able consultancy experience in Europe and the
United States and has recently completed a knowl-
edge management assignment for the United
Nations in the Far East. He is Senior Lecturer in
Knowledge Management in the most prestigious
information science department in the UK. He has
published widely in leading books and journals and
has won a number of awards for his writing.

xiii
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xiv Chapter 00 / The chapter title

Acknowledgements

My special thanks go to my partner Karin. I would like to thank her for her tolerance of
my many absences from family life, as well as practical and moral encouragement
throughout the writing period. She was terrific! My two daughters, Nicole and Anna-
Tina, have been an inspiration to me and I have valued their hugs and mischief when I
have become overly involved with writing this book. My parents, Ramnik and Nilu,
have also provided much-needed warmth and reassurance over the past year.
A large number of people have helped me with the preparation of this book, not
least Jacqueline Senior at Pearson Education, whose assistance and advice guided my
perceptions of a good textbook. I would like to thank colleagues in the Department of
Information Science at Loughborough University for their kind words and feedback on
chapters and early drafts of the book, in particular Professor John Feather, Professor
Charles Oppenheim, Professor Ron Summers, Dr Mark Hepworth and Dr Ann O’Brien.
A special acknowledgement goes to members of the Knowledge Management Research
Group at Loughborough University who read draft chapters and gave me their valuable
comments that helped improve the final version. I would like to single out Ray Dawson
and Dr Tom Jackson in this regard.
I owe a debt of gratitude to my friends at the ‘Swan and Greyhound’ for their great
forbearance at my ramblings when I have needed to talk to someone outside the con-
fines of knowledge management. John Mack and Tony Zajciw at the ‘Swan’ have
provided perfect diversions into conversations around the arts. Similarly, Glen
Thumwood, Graham Farenden, Robin Page, Dick Smith and Dell Boy Morrison have
provided much-needed humour, wit and hilarity to balance the seriousness of writing a
book. I am similarly grateful to my biking friends Al, Onk, Stu, Debs, Ron, Chris,
Donna and Blossom at the ‘Coffin Scratchers’ for the long bike rides and music festival
diversions during the writing of this book. I cannot forget Roger Faulks and Manu
Frosch at Swithland Woods for their friendship and tacit encouragement in this
process.
Finally, I would like to thank the reviewers of the original proposal and draft chap-
ters. They steered the book into new and uncharted waters and, while I do not claim to
have incorporated all of their comments, they certainly caused some heart-searching
reflection.
During the course of writing this book, my close friend, Spud Bakhle, died. I would
like to dedicate this book to a celebration of his life and acknowledge our numerous
conversations and ideas that have found their way into this book. Spud Bakhle was a
Hegelian and Kantian scholar among other things and ideas around a dialectic are
directly attributable to him.

xiv
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The A heading goes here xv

Publisher’s acknowledgements

We are grateful to the Financial Times Limited for permission to reprint the following material:

Knowledge management in law firms, © Financial Times, 8 November 2000; AMD, © Financial Times, 8 July 2002; Casmir,
© Financial Times, 13 September 2001; Technip-Coflexip, © Financial Times, 16 October 2002; New twists for old tricks,
© Financial Times, 6 November 2002; E-business KM Systems, © Financial Times, 6 March 2002; Crucibles of innovation,
© Financial Times, 18 January 2002; Knowledge management strategy at BG, © Financial Times, 12 May 2000; Tough-Guy,
Macho Culture, © Financial Times, 13 February 2002; Knowledge Ecology at Xerox, © Financial Times, 6 September 2002;
War for talent, © Financial Times, 6 June 2001.

We are grateful to the following for permission to use copyright material:

Caught in the line of fire/Destruction of ancient Knowledge from War in Iraq from The Financial Times Limited,
5 February 2003, © Ted Smalley Bowen. This article first appeared in the 5 February 2003 U. S. edition of The Financial
Times; Organisational Learning in the Design Industry, from The Financial Times Limited, 10 October 2000, © Aziz Cami;
Outsourcing – Leave it to the experts from The Financial Times Limited, 24 November 2003, © Sarah Murray; Figure 1.5 ©
copyright The British Museum; Figures 1.6 (Scribe at Desk, Lansdowne 1179, f.34v.det ) and 1.7 (page from Gutenburg
Bible, C.9.3, page 1) by permission of the British Library; Figures 2.3 and 2.4 from Sociological Paradigms and Organizational
Analysis, Heinemann, London (Burrell, G. and Morgan, M. 1979); Figure 2.5 reprinted from Omega- The International
Journal of Management Science, 28, Goles, T. and Hirschheim, R., ‘The paradigm is dead, the paradigm is dead … long live
the paradigm: the legacy of Burrell and Morgan’, 249–268, (2000), with permission from Elsevier; Figure 3.1 from
Experiential Learning: Experience as the Source of Learning and Development, 1st ed., Pearson Education Inc (Kolb, D.A. 1984);
Figures 3.4, 3.5, 3.6 and 3.7 from ‘Organizational learning: the contributing processes and the literatures’ in Organization
Science, 2, 88–115 (Huber, G.P. 1991); Figure 4.12 is of The Starlight developed by John Risch at the Pacific Northwest
National Laboratory and can be found at www.cybergoegraphy.org/atlas/info_spaces.html; Figure 6.1 adapted from ‘Of
Strategies, deliberate and emergent’ in Strategic Management Journal Vol. 6 No.3 (Mintzberg, H. and Waters, J.A. 1985) ©
John Wiley & Sons Limited. Reproduced with permission; Figure 6.3 from ‘The effective organization: forces and forms’ in
Sloan Management Review, Winter, 93–107 (Mintzberg, H. 1991); Figure 7.3 from Understanding Organizations, Penguin
Books Ltd (Handy, C. 1985) Reproduced by permission of Penguin Books Ltd.; Figure 7.4 from Corporate Cultures: The Rites
and Rituals of Corporate Life, Reprinted by permission of The Peters Fraser and Dunlop Group Limited on behalf of: T. Deal
and A. Kennedy, © T. Deal and A. Kennedy; Figure 7.6 from Organizational Culture Inventory by R.A. Cooke and J.C.
Lafferty, 1983, 1986, 1987, 1989, Plymouth, Michigan, USA: Human Synergistics. Copyright 1989 by Human Synergistics,
Inc. Adapted by permission; Figure 8.3 from The Theory and Practice of Change Management, Palgrave, Basingstoke (Hayes, J.
2002); Figure 8.4 from Management of Organizational Behaviour: Leading Human Resources, 8th ed. Prentice Hall Inc (Hersey,
P. and K.H. Blanchard 2000); Figure 8.8 from Employee Development Practice, FT/Prentice Hall (Stewart, J. 1999); Figure 8.9
from Strategic Management of Human Resources: A Portfolio Approach, Jossey-Bass, San Francisco (Odiorne, G. S. 1984); Figure
9.2 from The Learning Organization, Gower, Aldershot (Garratt, B. 1987); Figure 9.3 from The Learning Company: A Strategy
for Sustainable Development, McGraw-Hill, London (Pedler, M., Burgoyne, J. and Boydell, T. 1991), reproduced with the kind
permission of the McGraw-Hill Publishing Company; Figure 9.5 from ‘Cognition, culture and competition: an empirical test
of the learning organization’ in The Learning Organization, Vol. 10, No. 1, 31–50 (Jashapara, A. 2003); Figure 10.1 from
Intellectual Capital: Navigating in the New Business Landscape, Macmillan Business, Houndsmills (Roos, J., Roos, G., Edvinsson,
L. and Dragonetti, N.C. 1997); Figure 10.3 from ‘The balanced scorecard as a strategic management system’ in Harvard
Business Review, Vol. 70, No. 1, 71–79 (Kaplan, R.S. and Norton, D.P. 1992); Figure 10.4 is taken from the following sources:
European Management Journal, Vol. 14, No. 4, Petrash, G., ‘Dow’s journey to a knowledge value management culture’, 365–373
© 1996, with permission from Elsevier; Strategic Management of Professional Service Firms, Handelshojskolens Forlag,
Copenhagen (Lowendahl, B. 1997), © Copenhagen Business School Press, 1997, www.cbspress.dk; Danish Confederation of
Trade Unions (1999) ‘Your Knowledge – can you book it?’, International Symposium Measuring and Reporting Intellectual Capital:
Experiences, Issues and Prospects, Amsterdam; Profiting from intellectual capital: extracting value from innovation (Sullivan, P.H.,
1998), © John Wiley & Sons Limited. Reprinted with permission; Intellectual Capital, Thomson Business Press, London
(Brooking, A. 1996).

Whilst every effort has been made to trace the owners of the copyright material, in a few cases this has proved impossible
and we take this opportunity to offer our apologies to any copyright holders whose rights we may have unwittingly
infringed.

xv
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1
9068 KMAN_C01.QXD 7/7/08 11:43 AM Page 1

PA RT 1
Discovering knowledge

DISCOVERING
KNOWLEDGE
Data, information & knowledge
History of managing knowledge
Philosophical perspectives on knowledge

LEVERAGING GENERATING
KNOWLEDGE KNOWLEDGE
Knowledge management Organisational learning
in the learning organisation Knowledge management
Intellectual capital Tools & technology
KNOWLEDGE
MANAGEMENT
CYCLE

SHARING EVALUATING
KNOWLEDGE KNOWLEDGE
Knowledge management Knowledge management systems
and culture Strategic management perspectives:
Change management Knowledge management strategy
9068 KMAN_C01.QXD 7/7/08 11:43 AM Page 2
9068 KMAN_C01.QXD 7/7/08 11:43 AM Page 3

Chapter 1
Introduction to knowledge management

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● distinguish between different perspectives in the knowledge management (km) literature;
● explain the diversity of disciplines and content that make up the field of knowledge management;
● describe the differences between the terms data, information and knowledge;
● assess the differences in the management of knowledge from ancient to modern times.

MANAGEMENT ISSUES

An introduction to the discipline of knowledge management implies these questions for managers:
● What is knowledge management?
● How can knowledge improve actions in an organisation?
● What is the difference between information management and knowledge management?

Links to other chapters

Chapter 2 examines the history of philosophical thought on the notion of knowledge which links
directly to the history of managing knowledge from the oral traditions to the storage of
knowledge in libraries.
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4 Part 1 / Discovering knowledge

OPENING VIGNETTE
Knowledge management in law firms FT
As professions go, ‘the oldest one is the biggest rev- Other US firms question their London rivals’
enue generator on the internet’, points out Paul claim to supremacy. ‘Internal knowledge manage-
Greenwood, director of knowledge and information at ment is the area where the New York firms are
Clifford Chance, the law firm. Resist any temptation investing and are probably ahead (of London),’ says
for cheap jokes about prostitution. Mr Greenwood’s David Lopez, a partner at Cleary Gottlieb Steen &
point is a serious one – and if he is right, the way legal Hamilton. The firm says its focus on ‘complicated,
services are delivered to clients could be transformed. cutting-edge transactions’ does not fit the online
He argues that technology can be used to escape
advice approach of breaking legal know-how into
from labour-intensive models of delivering services
generic chunks that companies can use without con-
face to face. ‘The top musical performers of a few
sulting a lawyer face to face. ‘If you are working in a
hundred years ago were strolling minstrels, earning
a pittance because they had no leverage,’ says Mr field where the answers are more settled, the provi-
Greenwood. Now, because they can sell a single per- sion of interactive legal advice is easier because there
formance around the world, stars earn millions. is less ambiguity,’ says Brent Miller, Cleary’s director
Clifford Chance aims to exploit its expertise in of knowledge management.
the same way, selling regulatory and legal advice Allen & Overy (A&O), another UK magic circle
online. It is putting money behind its hypothesis firm, uses an analogous argument to explain why it
and claims to have spent a seven-figure sum devel- has steered clear of selling online, despite investing
oping NextLaw, its subscription legal advice service an estimated £10 million ($14million) in e-business.
for e-business issues. ‘What we’ve tried to do is focus our efforts very
It is not the only enthusiast for online sales. much on our core practice,’ says partner Jonathan
Linklaters, another member of the ‘magic circle’ of Brayne. ‘What we’ve done will enhance about 75 per
UK law firms, has invested at least as much in its cent of our practice: the competition has opted to
Blue Flag range of subscription services. It is also bull- promote certain niche areas that lend themselves to
ish about the future. ‘We are seeing a lot of talk from
selling over the internet, which represent, say, 10 or
our so-called major competitors but not a reshaping
15 per cent of revenues.’
of the legal landscape, which is what Linklaters is
A&O will shortly [early 2001] announce a client
committed to doing,’ says partner Paul Nelson.
extranet – a system allowing global clients online
The company has invested ‘very many noughts’ in
Blue Flag, with the ultimate aim of an initial public billing and access to all their relevant documents.
offering as a separate company. It is in the final stages The service supplements A&O’s Fountain product –
of testing a capital markets product that combines designed to allow each lawyer electronic access to
documentation, online advice and transaction man- the firm’s collective legal knowledge – and its
agement. ‘We have cracked it now and will roll it out NewChange document and transaction manage-
to the rest of the firm, expanding into property, pen- ment system. NewChange also offers virtual deal
sions and mergers and acquisitions,’ says Mr Nelson. rooms – secure websites to which teams of lawyers
‘We are going to roll out into our Blue Flag effort and bankers involved in a big transaction can gain
everything that makes sense to “electronify”.’ access. To date it has opened 450 of these, involving
The two firms claim their approach is not only 8,600 users.
revolutionary but also streets ahead of their big US A&O is not alone in offering such services.
rivals. ‘Remarkably, most US firms are not off the Linklaters in September [2000] launched what it
starting block,’ says Christopher Millard of Clifford claims is the ‘most advanced extranet service yet
Chance. This is true to the extent that none of the
offered to clients in the legal world’. But does this
leading New York firms sells advice online. Davis
herald the start of a revolution in the legal services
Polk & Wardwell offers ‘custom publishing’ – tar-
clients receive? Some lawyers are sceptical. ‘It is a
geted information – but to selected clients only.
Michael Mills, director of professional services and unique period for law firms – we are all jostling for
systems, admits: ‘I don’t know that we have a clear position,’ says Mr Brayne. ‘But in a few years’ time
rationale for (this approach) except that it’s what we’ll be back to competing on whether we are good
our clients seem to need. We’re not nearly as big as lawyers or not.’
Clifford Chance or Linklaters.’ Source: Article by Jean Eaglesham, Financial Times, 8 November 2000
9068 KMAN_C01.QXD 7/7/08 11:43 AM Page 5

Chapter 1 / Introduction to knowledge management 5

Questions
1 Describe the advantages of a ‘strolling minstrel’ 3 Discuss the most likely aspects of ‘internal
variety of lawyer over the computer savvy one. knowledge management’ practices among New York
2 Evaluate the shortcomings of law firms that consider law firms.
e-business synonymously with knowledge
management.

Knowledge management: an integrated approach

The aim of this book is to provide a comprehensive and integrated discourse on the
various facets, emerging issues and perspectives on knowledge management. There are
numerous accounts of knowledge management as a process and a continuous cycle and
this representation has been used as a structure for this book, as shown in Figure 1.1.
The generic activities in the knowledge management cycle are subdivided into the five
parts of this book: discovering knowledge, generating knowledge, evaluating knowl-
edge, sharing knowledge and leveraging knowledge.

◗ Part 1: Discovering knowledge

Part 1 explores all the different aspects related to the notion of knowledge and knowl-
edge management. An historical perspective on how knowledge was managed across

DISCOVERING
KNOWLEDGE
Data, information & knowledge
History of managing knowledge
Philosophical perspectives on knowledge

LEVERAGING GENERATING
KNOWLEDGE KNOWLEDGE
Knowledge management Organisational learning
in the learning organisation Knowledge management
Intellectual capital Tools & technology
KNOWLEDGE
MANAGEMENT
CYCLE

SHARING EVALUATING
KNOWLEDGE KNOWLEDGE
Knowledge management Knowledge management systems
and culture Strategic management perspectives:
Change management knowledge management strategy

Figure 1.1 Knowledge management cycle

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6 Part 1 / Discovering knowledge

the centuries from the bardic oral tradition to the current digital revolution is provided.
Philosophy is not often taught in our universities and its central role in understanding
knowledge is examined. This will allow future students to move beyond the narrow
logical behaviourist perspective of tacit and explicit knowledge that is currently in
vogue in the literature.

● Chapter 1: Introduction to knowledge management. This chapter provides an exploration

of the emerging discipline and forwards an integrated model. The differences
between data, information and knowledge are examined. An historical perspective
on knowledge management illustrates the central function of libraries in knowledge
creation, sharing and transfer.
● Chapter 2: Philosophical perspectives on knowledge. This is a thought-provoking chapter
exploring issues of ontology and epistemology. What is the nature of knowledge and
reality? What are the aspects of knowledge that we can know? The contributions of
major philosophers in the knowledge debate are examined and the current notions
of knowledge in the knowledge management literature are assessed.

◗ Part 2: Generating knowledge

Part 2 is concerned with generating knowledge through people in the form of organisa-
tional learning and through the multitude of knowledge management tools and
technology. This part aims to bridge the gap between two disparate literatures where
there is often little overlap.

● Chapter 3: Organisational learning. This chapter outlines the nature of individual,

team and organisational learning. An information processing perspective is adopted
to examine the processes of knowledge acquisition, information distribution, infor-
mation interpretation and organisational memory. The development of
organisational routines and dynamic capabilities are discussed.
● Chapter 4: Knowledge management tools and technology. This chapter provides a
grounding in the variety of knowledge management tools that can be used at differ-
ent stages in the knowledge management cycle. These include ontology and
taxonomy tools, information retrieval tools, personalisation tools, data mining tools,
case-based reasoning tools, groupware tools, videoconferencing tools, e-learning
tools and visualisation tools.

◗ Part 3: Evaluating knowledge

Part 3 provides the analytical backbone to the book by examining how to evaluate the
effectiveness of knowledge through knowledge management systems and strategic man-
agement perspectives. The thrust of this part is to assess the impact of technological
systems on management processes and to explore how these improved management
processes can lead to competitive advantage.
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Chapter 1 / Introduction to knowledge management 7

● Chapter 5: Knowledge management systems. This chapter elaborates on a variety of

knowledge management systems including document management systems, deci-
sion support systems, group support systems, executive information systems,
workflow management systems and customer relationship management systems.
● Chapter 6: Strategic management perspectives. This chapter contrasts the difference
between three dominant strategy schools of thought: industrial organisation, excel-
lence and turnaround, and the institutionalist perspective.

◗ Part 4: Sharing knowledge

Part 4 presents the human resource aspects of sharing knowledge and implementing
knowledge management initiatives. All too often such initiatives fail as the more subtle
aspects of organisational culture, leadership and employee involvement interventions
are overlooked. The ability to optimise knowledge sharing in organisations is a major
challenge for knowledge management.

● Chapter 7: Knowledge management and culture. This chapters contrasts the literature on
organisational climate and culture and explores the debates around knowledge-
sharing cultures. Informal networks called ‘communities of practice’ are explained
along with the role of storytelling and narratives within them.
● Chapter 8: Change management. This chapter provides the latest thinking on the effective
implementation of knowledge management initiatives. It examines how high levels of
commitment can be developed through leadership and a variety of human resource
interventions. The role of politics in change management programmes is highlighted.

◗ Part 5: Leveraging knowledge

Part 5 explores the Utopian search for the fruits of knowledge management, namely,
the quest for a learning organisation and the generation of high levels of intellectual
capital. Knowledge is seen as the critical factor affecting economic growth and the dif-
ferent perspectives on how it can be cultivated and measured at an organisational level
are examined.

● Chapter 9: Knowledge management in the learning organisation. This chapter contrasts

the terms organisational learning and the learning organisation and articulates the
diversity of US and UK models associated with the learning organisation. Empirical
research in this field is assessed.
● Chapter 10. Intellectual capital. This chapter examines some of the limitations of tradi-
tional financial measures in performance measurement and the search for non-financial
measures such as intellectual capital to supplement these conventional sources. Several
models of intellectual capital are compared and generic notions of human capital,
social capital, organisational capital and customer capital are presented.
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8 Part 1 / Discovering knowledge

Introduction
Knowledge management has similar parallels with the rise of English as an academic
discipline in the early twentieth century. In the 1920s, it was unclear why anyone
should study English and, by the 1930s, it was a question of whether students should
study anything else at all. English was initially a poor man’s Classics and was taught in
working men’s colleges and mechanic institutes. The subject was considered an upstart
and rather amateurish affair compared with the traditional subjects such as Classics and
philology. Similarly, knowledge management in the twenty-first century has risen from
practitioner and consultancy knowledge and has only recently become a subject for
academic study. Today English is often associated with creative or imaginative writing.
However, in the eighteenth century, English covered all the valued writings in society
including history, philosophy, essays, letters and poems (Eagleton 1999; Palmer 1965).
Similarly, today knowledge management can be confused with information systems by
some commentators and human resource management by others. In reality, it has roots
in a wide variety of disciplines such as philosophy, business management, anthropol-
ogy, information science, psychology and computer science.
In fashioning knowledge management into a serious discipline, this chapter will
explore the nature of knowledge management and propose a definition of this field
from an interdisciplinary perspective. To provide a balanced appraisal of the literature,
a critical understanding of reservations in this field will be forwarded. The terms data,
information and knowledge can often be used synonymously in the literature and the
distinction between these terms is explored.
Knowledge, and the way it is managed, has been with humankind since the begin-
ning of time. This chapter shall proceed to explore the history of knowledge
management, taking a broad perspective and including the vital role of libraries in the
ancient and modern worlds. The development of oral knowledge from the oral tradi-
tions to the first writing of cuneiform among Sumerians is discussed. A journey is
conducted through the flourishing libraries in Ancient Greece and Rome such as the
Alexandria library and the Ulpian library. The influence of Christianity in the rise of
monastic and cathedral libraries is explained together with the emergence of early uni-
versities. The paradigm leap in knowledge creation and dissemination that has occurred
through the development of print, computers and telecommunications is fully explored.

What is knowledge management?

In the post-industrial economy, sometimes termed the ‘knowledge economy’ (Bell
1973; Drucker 1992), knowledge management has become an emerging discipline that
has gained enormous popularity among academics, consultants and practitioners. It
has been argued that it is no longer the traditional industrial technologies or craft skills
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Chapter 1 / Introduction to knowledge management 9

that drive competitive performance but instead knowledge that has become the key
asset to drive organisational survival and success.
To the uninitiated reader, the multitude of offerings on knowledge management in
books, journals and magazines can appear rather daunting and confusing at first. The
fact is that it is a relatively young discipline trying to find its way and recognising that
it has roots in a number of different disciplines. Some literature on knowledge manage-
ment is heavily information systems oriented, giving the impression that it is little
more than information management. Other literature looks more at the people’s
dimension of knowledge creation and sharing, making the subject more akin to human
resource management. These are the two most common dimensions and there is often
little crossover between them. Each world fails to comprehend the other as the lan-
guage and assumptions of each discipline vary significantly. However, it is precisely
these interdisciplinary linkages that provide the most rewarding advances in this field.
Given the interdisciplinary nature of this emerging field, conventional academic
demarcations in traditional subject areas do not help. For example, it is relatively rare for
computer or information science graduates to gain sufficient grounding in human
resource management and vice versa with traditional business management students. This
impasse is often based on fear on both sides about the nature and relative merits of their
respective skills and expertise. Beyond these two dominant dimensions, there are some
additional perspectives within the KM literature, ranging from strategy to cultural change
management. It is not surprising that there is little coherency between these offerings as
many authors orientate the subject area to their singular discipline perspective.

What does knowledge mean to you? If you were asked to detail your specialist Pause for thought
knowledge, how would you describe your knowledge? Have you ever thought of the
market value of your knowledge and what this may be? Given that there is a
competitive market for knowledge and skills, how do you ensure that your knowledge is
state-of-the-art and kept up to date?

The strength and challenge of knowledge management as an emerging discipline

comes from its interdisciplinary approach, as shown in Figure 1.2 (p. 10). For example,
if knowledge management was purely information systems, current tools and business
processes would suffice. However, the reality is that different information systems
approaches such as data processing, management information systems and strategic
information systems have been found wanting. There are numerous examples of major
investments made in this area, particularly in the financial services sector, that have
yielded little or no benefit to host organisations. Instead, the real synergies in knowl-
edge management are more likely to occur from boundary-spanning individuals who
can see beyond the narrow margins of their own disciplines and recognise the value of
dialogue and debate with other disciplines.
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10 Part 1 / Discovering knowledge

DIALOGUE

TACIT EXPLICIT
ACTIVITY
KNOWLEDGE KNOWLEDGE

DISCUSSION

C u lt ur e
ge I n t e ll e ct
a n m e nt c a p it a u
ge

ma Ch
ng io n l KM

al
na
t
o r g a n r ni
isa

sy
Lea

st e
S tra t e gic

ms
ge men
an a t CONTENT
m
O le ar ni ng l
a n is a ti o n a

K M t o ol
rg

s
INFO
G Y RMA
ATE SCIE TION
GY STR NCE COMPU
TER
PO LO SCIENCE
E DISCIPLINE
HRO RC PH
ANT I CS S OU T ILO
SO ROOTS
OM RE EN PH PSYC
ON M AN GEM Y HOLO
GY
C A
E HU AN
M MANAGEMENT
G Y
O C IOLO SCIENCE
S

Figure 1.2 Tree of knowledge management – disciplines, content and activity

Given the multidisciplinary nature of knowledge management, it is not surprising

that the variety of current definitions comes from a number of different perspectives, as
shown in Table 1.1 (p. 11). Some come from an information systems perspective
(Mertins et al. 2000) while others suggest a human resource perspective (Skyrme 1999;
Swan et al. 1999a). A few definitions have begun to adopt a more strategic management
perspective, recognising the importance of knowledge management practices for gain-
ing competitive advantage (Newell et al. 2002; uit Beijerse 2000). However, none of
these definitions expands on the alliances with particular strategic schools of thought,
and the basic assumptions of the nature of competitive environments (such as highly
turbulent) or strategic positioning (such as continuous innovation) need to be ques-
tioned (Newell et al. 2002). External environments may shift from turbulent to more
stable environments over time and competitive environments may favour efficiency
rather than innovation in a given period. The basic fact is that we live in uncertain
times and any assumptions about competitive environments and approaches to organi-
sational alignment and adaptability need to be considered carefully.
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Chapter 1 / Introduction to knowledge management 11

Table 1.1 Representative sample of knowledge management definitions

Author/s Definition Perspective
(Davenport and ‘Knowledge management draws from Integration
Prusak 1998) existing resources that your organisation (information systems
may already have in place – good and human resources)
information systems management,
organisational change management,
and human resources management practices.’
(Swan et al. 1999b) ‘… any process or practice of creating, Human resource process
acquiring, capturing, sharing and using
knowledge, wherever it resides, to enhance
learning and performance in organisations.’
(Skyrme 1999) ‘The explicit and systematic management of Human resource process
vital knowledge and its associated processes of
creating, gathering, organising, diffusion, use
and exploitation, in pursuit of organisational
objectives.’
(Mertins et al. ‘… all methods, instruments and tools that in a Information systems
2000) holistic approach contribute to the promotion
of core knowledge processes.’
(uit Beijerse 2000) ‘The achievement of the organisation’s goals Strategy
by making the factor knowledge productive.’
(Newell et al. 2002) ‘… improving the ways in which firms facing Strategy
highly turbulent environments can mobilise
their knowledge base (or leverage their
knowledge “assets”) in order to ensure
continuous innovation.’

From the definitions of knowledge management given in Table 1.1, it is clear that any
advancements in this field need to adopt an integrated (Davenport and Prusak 1998),
interdisciplinary and strategic perspective, as shown in Figure 1.3 (p. 12). The strategic
purpose of knowledge management activities is to increase intellectual capital and
enhance organisational performance (see Chapters 6 and 10). There is a human dimen-
sion of developing knowledge in individuals, teams and organisations and this
fundamentally occurs through different learning processes (see Chapter 3). Once knowl-
edge is created, the sharing of knowledge remains one of the fundamental challenges in
this field. As human beings, we need support to help us explore and exploit knowledge
(tacit – ‘know how’ – and explicit – ‘know what’, see Chapters 2 and 3) more fully. There
is a wide variety of tools, technologies and systems that can fulfil these functions, such
as the continuous cycle of knowledge creation, capture, organisation, evaluation, storage
and sharing (see Chapters 4 and 5). However, KM tools and organisational processes are
insufficient in themselves to achieve success. Many well planned initiatives have proved
futile as they have failed to acknowledge the cultural and change management dimen-
sions (see Chapters 7 and 8) of successful implementation.
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12 Part 1 / Discovering knowledge

Intellectual Organisational
capital performance

Strategy

Change
management

KNOWLEDGE Systems &

Culture
MANAGEMENT technology

Implementation

Organisational
learning

Exploration Knowledge
sharing
Exploitation

Figure 1.3 Dimensions of knowledge management

These different dimensions of knowledge management have been brought together

into an integrated definition. From an interdisciplinary perspective, knowledge man-
agement can be defined as:

‘the effective learning processes associated with exploration, exploitation and sharing of
human knowledge (tacit and explicit) that use appropriate technology and cultural envi-
ronments to enhance an organisation’s intellectual capital and performance.’

Is knowledge management a fad?

As is common with any new field of discourse, knowledge management has its critics
and antithesis. The most vociferous so far has come from information scientists who
appear threatened by the prospect that it may marginalise their own discipline (Ponzi
and Koenig 2002; Wilson 2002). This is clearly unjustified as information science is an
essential component of knowledge management, although not the solitary one. A
number of arguments have been put forward to show that knowledge management is no
more than ‘old wine in new bottles’ where, like Alice through the looking glass, terms
can mean what anyone chooses them to mean. Let us explore some of the arguments.
The first argument posed is that knowledge management is no more than a fad or a
fashion. The difference between a fad and a fashion is the duration of time over which
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Chapter 1 / Introduction to knowledge management 13

the phenomenon lasts. Fads develop a high level of interest in a short time, then die
away. However, fashions have a much longer maturity of interest. Bibliometric tech-
niques have been adopted to examine the volume of bibliographic records as an
indicator of discourse popularity over time. The assumption is that knowledge manage-
ment is similar to other management fads such as quality circles, total quality
management and business process reengineering. However, the empirical evidence goes
counter to these arguments. Bibliometric studies (1991–2001) show that knowledge
management has had almost exponential growth in the past six years and shows no
signs of abating (Ponzi and Koenig 2002).
The second argument posed by such critics is that knowledge management does not
stand up to rigorous analysis as it has emerged from consultancy practice (Wilson
2002). This is clearly not the case as knowledge has roots within organisational learning
and strategy literatures with a much older lineage of rigour. The organisation of knowl-
edge was being considered by some scholars as early as the 1960s (Etzioni 1964). More
recently, scholars have been debating the knowledge–based view of the firm (Grant
1996; Spender 1996) descending from a resource-based view of the firm (Barney 1991;
Barney 2001) and institutional theory (Penrose 1959; Selznick 1957). At practitioner
levels, there have been studies exploring knowledge management strategies and
approaches in eminent journals such as the Harvard Business Review (Hansen et al. 1999;
Nonaka 1991). The corpus of rigorous knowledge is emerging in this field, including
critical analysis of the literature as well as alternative insights such as postmodernist
orientations (Kalling and Styhre 2003; Styhre 2003).
The third argument against knowledge management is that many top business
schools have failed to respond to these advances in knowledge management in their
curricula (Wilson 2002). Some business schools may incorporate the material associated
with knowledge management on a variety of modules such as strategic management,
human resource management and information management strategy. It would be
remarkable if any business school ignored the learning base associated with knowledge
management. At some schools in the UK, such as the Open University Business School,
there is a specialised module on knowledge management attracting a significant
number of students. The knowledge management discipline is around seven years old
and it is not surprising that some business schools have been pioneering in this new
field whereas others have been assessing its likely impact.
The final argument is that knowledge management is no more than ‘search and
replace marketing’ (Wilson 2002). This means that many software houses purely relabel
their products with ‘knowledge’ or ‘knowledge management’ somewhere within their
brand. There is certainly an element of this. Such organisations may be forgiven for
cashing in on the popularity of knowledge management in the corporate marketplace.
An example of this is Lotus Notes software relabelling itself as ‘Knowledgeware’ rather
than groupware. However, knowledge management is more than software and systems,
even though they are important aspects of it. Some confusion may arise when critics
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14 Part 1 / Discovering knowledge

assume wrongly that knowledge management has developed an entirely new toolkit in
the past five years rather than building and adapting existing information systems to
serve its own ends. Future KM technologies are likely to explore ways of tapping into
the vast reservoir of tacit knowledge in organisations.
A convincing counter argument against many critics is the clear empirical evidence
demonstrating that knowledge management has become an accepted part of the corporate
agenda, particularly among large firms. Specialist roles have emerged such as chief knowl-
edge officers, knowledge managers and directors of intellectual capital (see Table 1.2 for a
list of typical KM job titles). For instance, a survey conducted by KPMG Consulting in
1999 (KPMG Consulting 2000) of 423 organisations in the UK, mainland Europe and the
US showed that 81 per cent were considering a KM programme, of which 38 per cent
already had one in place. This survey was conducted predominantly among executives
and chief executives of large organisations with a turnover exceeding £200 million a year.
The survey confirmed that 64 per cent of these firms had a knowledge management strat-
egy and the main drivers of KM strategy were senior management or board level
engagement. The most common KM problems encountered were information overload,
lack of time for sharing knowledge and the inability to use knowledge effectively. The
main causes of failure in KM initiatives revolved predominantly around human resource
issues. These included the lack of user uptake due to insufficient communication, inability
to integrate KM practices with normal working practice, the lack of time to learn and the
lack of adequate training. In addition to this survey, there are numerous well documented
examples of firms engaged in KM strategies and practices, such as Buckman Laboratories
and BP in the private sectors and World Bank and the United Nations in the public sectors.

Table 1.2 Some typical examples of knowledge management job titles

Typical knowledge management job titles advertised on the internet
Chief knowledge officer Director of knowledge management
Director of intellectual capital Knowledge department manager
Knowledge manager Knowledge economist
Knowledge consultant Knowledge resources librarian
Knowledge management analyst Knowledge administrator
Knowledge coordinator Knowledge management project manager

What is the difference between data, information,

knowledge and wisdom?

◗ Data
The dictionary definition of data is ‘known facts or things used as a basis of inference
or reckoning’. Let’s try to unravel this multifaceted term and show that a definition of
data depends on context. We acquire data from the external world through our senses
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Chapter 1 / Introduction to knowledge management 15

and try to make sense of these signals through our experience. This external data
becomes internal fact. The assumption about facts is that they are true. But our senses
can play games with us. An example is the optical illusions of Escher’s drawings that
can be seen in two different ways. Escher made an art of creating impossible figures
such as people ascending and descending stairs at the same time that were clearly
contradictory. We can also exclude data in a number of ways that can affect our infer-
ence or reckoning of it. The first is by not focusing on the data, such as with the
‘cocktail party’ effect where we are bombarded with lots of data but are able to ignore
most of it (background noise) and concentrate on the data of the person speaking to us.
We also exclude data as our senses are not able to respond to signals such as ultraviolet
light or ultrasound, and we may exclude data voluntarily by putting on a blindfold or
inserting ear plugs (Meadows 2001) or involuntarily through data overload.
So far we have explored data from the perspective of the receiver of the signal. In
this context, a signal is a set of data transmitted to our senses. What about the source of
the signal and the channel or medium through which it is transmitted? Each one of
these can have a distortion in them and affect the nature of data coming to us. The tra-
ditional game of ‘Chinese whispers’ at the dinner table shows how an initial message
can become totally distorted by the time it has gone around the table.
There are differences between quantitative and qualitative data. For example, the num-
bers 72 and 83 per cent are pieces of data that can have multiple meanings and are highly
context dependent. They may refer to mean examination scores or the performance of a
new carburettor undergoing trials. Hence, the data is meaningless out of context and
requires an association with something else. Qualitative data is much more troublesome as
it depends on the perceptions of the transmitter and receiver of the data. Ten participants
in a meeting are likely to provide ten totally different accounts of it depending on their per-
spective and their selective inclusion or exclusion of data. In this sense, data is also value
laden. An example of this is two artists, one European and the other Chinese, who painted
‘faithful representations’ of the same landscape in the English Lake district (Gombrich
1960). To European eyes, the painting by the Chinese artist was typical of a Chinese paint-
ing. This example shows the ‘conceptually saturated’ character of observation and data
where it is difficult to distinguish between what is observable (empirical) and what is unob-
servable (theoretical or conceptual). We may have ‘sensations’ in our eyes without
concepts, but we have no perception of data without concepts (O’Connor and Carr 1982).

◗ Information
The dictionary definition of information is ‘something told’ or ‘the act of informing or
telling’. However, this doesn’t help us distinguish between data and information.
Information could be considered as ‘systematically organised data’ (Meadows 2001). The
notion of systematic implies the ability to predict or make inferences from the data
assuming it is based on some system. If we are given a sequence of odd numbers such as
7, 9, 11, 13, we can predict from the information that the next number in the sequence
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16 Part 1 / Discovering knowledge

will be 15. To inform, the data needs to be organised. This may be done through some
form of classification scheme to provide a framework for our thinking. For example,
libraries classify their books using a bibliographic classification scheme. A common one
is the Dewey Decimal Classification which is based on dividing all of knowledge into ten
fields ranging from 0–999. Dewey has essentially followed a Darwinian model in which
different aspects and parts of knowledge are related to each other either by direct
descent or by collateral kinship. All knowledge is divided into genera and species using a
similar approach to Darwin. The ten encompassing classes (000, 100 … 900) are subdi-
vided, first into 401, 402 …, then 410, 411, and then by adding further numbers after
the decimal point, which are related to numbers which can also appear before the point
(an example is that the number after the decimal point is the same for the certain peri-
ods covered in related subject domains such as English history and English literature).
Another conception of information is data that is endowed with meaning, relevance
and purpose. This meaning does not have to be a scientific meaning such as the Dewey
classification system but may be a subjective meaning given by the receiver of the data
or message. Information gives shape to the data and makes a difference to the outlook or
insight of the receiver of the data. In this sense, it is the receiver of the data that deter-
mines whether a message is data or information. A consultancy report may be written to
inform senior managers of critical issues but may be judged as ramblings and noise by
the recipients (Davenport and Prusak 1998). Meaning in data often occurs through some
form of association with experience or relationships with other data.

Pause for thought From your experiences, can you describe situations where you have made decisions with
wrong data or information? How do you guard against this? What strategies do you
adopt to evaluate a situation with conflicting information or data? How do you manage
‘noise’ or irrelevant data or information related to a particular problem? How do you
manage too much data or the problem of ‘information overload’?

◗ Knowledge
In a practical sense, knowledge could be considered as ‘actionable information’, as
shown in the hierarchy of data, information and knowledge in Figure 1.4 (p. 17).
Actionable information allows us to make better decisions and provide an effective
input to dialogue and creativity in organisations. This occurs by providing information
at the right place, at the right time and in the appropriate format (Tiwana 2000).
Knowledge allows us to act more effectively than information or data and equips us
with a greater ability to predict future outcomes.
However, knowledge is much more complex than this simplistic notion. We have
devoted the whole of the next chapter to exploring how western philosophers have grap-
pled with the question of what is knowledge over the past two millennia. There is still no
consensus on the nature of knowledge except that it is based on perception that can pro-
vide a rational justification for it. Such perceptions are based on our ontological and
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Chapter 1 / Introduction to knowledge management 17

PURPOSEFUL ACTION

Truth

Wisdom
Truth

Knowledge
Wisdom

Information
Knowledge

Data
Information

Data

Figure 1.4 Data, information, knowledge and purposeful action

epistemological assumptions of reality. Put simply, we all wear ‘different coloured glasses’
whether we are aware of it or not. These glasses have assumptions about reality, such as
whether it is subjective or objective (ontology) and assumptions about what we can know
(epistemology). Continuing this analogy, the knowledge of a certain phenomenon is
likely to be different if one individual wears ‘pink’ glasses and another wears ‘blue’ ones.
Hence, for example, it is no surprise that the knowledge of costs and benefits of organisa-
tional restructuring is often viewed very differently by the workforce and by senior
management. The interpretation of the same data and information will vary significantly
based on these perceptions and the original knowledge base of the individual.
The most common notion of knowledge in the current KM literature has its roots in
the ideas of logical behaviourism based on the writings of Gilbert Ryle and Michael
Polanyi. From this perspective, knowledge exists along a continuum between tacit
knowledge (know how) and explicit knowledge (know what) (Polanyi 1967; Ryle 1949)
(See Chapter 2 for more in-depth coverage of knowledge frameworks and typologies.)
One of the major challenges in knowledge management is exploring creative ways to
convert the tacit knowledge base in organisations into explicit knowledge (Nonaka
1994). Organisational routines, practices and norms can also act as part of this tacit
knowledge base. Despite the logical behaviourist perspective of tacit and explicit
knowledge being dominant at present, there are numerous alternative perspectives on
the nature of knowledge. As the literature gains in maturity, it is likely that other per-
spectives such as postmodernism, critical theory and realism may provide new insights
and advances in this field.

◗ Wisdom
Wisdom and truth have been shown to have higher qualities than knowledge in the hierar-
chy of Figure 1.4. These terms are even more elusive than knowledge. Wisdom is the ability
to act critically or practically in a given situation. It is based on ethical judgement related to
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18 Part 1 / Discovering knowledge

an individual’s belief system. Wisdom is often captured in famous quotes, proverbs and say-
ings. Some examples of proverbs from around the world include the following:

● Children have more need of models than of critics (French).

● You can’t see the whole sky through a bamboo tube (Japanese).
● There is plenty of sound in an empty barrel (Russian).
● Trust in Allah, but tie your camel (Muslim).
● Wonder is the beginning of wisdom (Greek).

Truth is even more problematic as there is a growing realisation that social phenomena
are theory laden, as illustrated in the above example of the Chinese and European
artists. Theory-neutral observations do not exist as our tacit theories or conceptions of
the world affect our observations. The notions of ‘truth’ and ‘objectivity’ can appear
meaningless if the social world can be understood only through particular ways of
seeing. This implies that there are multiple truths rather than an absolute truth of
social phenomena. A pessimistic outlook on information, knowledge and wisdom has
been captured in the well cited lines from T.S. Elliot in the Choruses From The Rock:
Where is the life we have lost in living?
Where is the wisdom we have lost in knowledge?
Where is the knowledge we have lost in information?

Early history of knowledge management: oral tradition

to cuneiform
One of the oldest forms of managing knowledge is the oral tradition and the use of
human memory to store knowledge. This oral transfer of knowledge occurs through a
process of transmitting messages by word of mouth over time, as found in many bard
traditions around the world. The process of transmission begins when messages are
repeated over time and ends when they disappear for a variety of reasons. The message
may represent news such as eyewitness accounts, hearsay or visions, dreams and hallu-
cinations in some societies. The other group of messages are interpretations such as
reminiscences of childhood, explanatory commentaries and historic tales, poetry, songs
and sayings. Epic poems may be memorised to achieve a consistency over each recita-
tion but the fact is that actual wordings are likely to change over time. Songs provide
more faithful transmission of messages as their melodies act as mnemonic devices.

Pause for thought Think about your work or social life. What are your difficulties in people giving you
knowledge or information verbally? Despite these difficulties, what do you prefer about
the spoken word over other forms of communication? Have you ever played Chinese
whispers at dinner parties? What are the likely problems with passing down knowledge
second, third or fourth hand? Are there similar problems with spoken knowledge being
passed down over many years?
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Chapter 1 / Introduction to knowledge management 19

The unique characteristic of the oral tradition is that messages are intangible and
accumulate interpretations as they are transmitted. Successive accumulation and selec-
tion of interpretations can mean that messages from the oral tradition become
restrained by previous interpretations. Even though the reliability of messages from
oral traditions may be questionable, they do provide inside knowledge of news or inter-
pretations of a community of people.
The limitation of the oral tradition is the fallibility of our memories and the divergence
or direct contradiction with written sources. This can occur when certain groups or individ-
uals selectively discard certain knowledge and retain only that which they consider
important at the time. People may also add new meanings to the old knowledge, giving a
certain bias to the former knowledge. Oral traditions that are older than two or three gener-
ations can also suffer from the reliability of knowledge that is preserved (Vansina 1985).
Given the limitations of the oral tradition, the first signs of preserving knowledge
through writing dates back to around 3000 B.C. The Sumerians settled in southern
Mesopotamia and found that their rivers had a plentiful supply of good clay and reeds.
They fashioned the clay into tablets, the reeds into three-cornered writing instruments
or styluses and perfected a style of writing called cuneiform from simple lines and
wedges (see Figure 1.5). The combination of these simple wedges (Latin cunei) and lines
represented many hundred words and sounds. Scribes or ‘dubsar’ underwent many
years of training as apprentices to a headmaster or ‘ummia’. The scribes were highly
venerated in this society, ranking just below high priests in social status. The knowl-
edge recorded on these clay tablets ranged from administrative records, Hammurabi’s
laws and marriage contracts to legends and mythology.
Before long, collections of these clay tablets developed and the challenge became
one of organising knowledge in tablets into some form of cataloguing system. In 1980,
archaeologists discovered a room full of clay tablets at the ancient royal palace of Ebla
in Syria dating back to around 2300 B.C. The Eblaites gave us our primitive form of cat-
alogues in the shape of long lists of words, objects, place names and species. The palace

Figure 1.5 Example of cuneiform writing (this records delivery of 8 gin (about 64g) of gold
by Lu-Ninshubur to the palace) © Copyright The British Museum
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20 Part 1 / Discovering knowledge

library provided a training ground for scribes and promoted the creation and preserva-
tion of knowledge similar in nature to our modern universities (Lerner 1998).
One of the greatest stores of knowledge in the ancient world covered over 10,000
works contained in 30,000 clay tablets found at Assurbanipal’s palace library (around
650 B.C.) in Ninevah. These Assyrian collections were essentially archives created as a
public memory for the state. Scribes and scholars were employed to compile, revise and
edit different varieties of knowledge. The tablets were kept in earthenware jars, properly
arranged on shelves in different rooms. Each tablet had an identification tag showing its
precise location in a jar, shelf and room. There were also ‘catalog’ tablets in each room
providing a brief description of the tablets and their location in the room (Harris 1995).
Even though the library contained literary materials such as the Epic of Gilgamesh, omen
texts tended to predominate, reflecting some of the preoccupations of that society. These
included astrological omens, dream omens and practices to conduct exorcisms.
In Ancient Egypt, the chosen medium for transmission and storage of knowledge
was papyrus. This was made from the stem of the common reed found growing abun-
dantly on the Nile delta. Papyrus had the advantage over clay tablets of being much
lighter, easily transportable and much less brittle. Papyrus was essentially used for less
formal records. More formal records were inscribed on stone, as can still be seen on
many Egyptian monuments today. The most famous library of Pharonic Egypt was the
complex built by Rameses II called the ‘sacred library’ and inscribed with the phrase
‘Healing place of the Soul’ (Lerner 1998). The library contained texts on poetry, astron-
omy, history, engineering, agriculture and fiction that awaited the king in his afterlife.

Knowledge management in Ancient Greece and Rome

While literacy was the sole domain of scribes and scholars in Ancient Mesopotamia and
Egypt, it was much more widespread in Ancient Greece. Books were written on papyrus
even though parchment was also available. The central historic event of Ancient Greece
was the Trojan Wars, captured and shaped by Homer in the epic poems of the Iliad and
the Odyssey. These verses were recited and transmitted orally by generations of bards.
One of the early concerns was to establish a complete text of Homer’s epics. This was
attempted in the sixth century B.C. by the tyrant Peisistratus who also founded the first
public library in Athens (Lerner 1998).
The selling of knowledge through books was flourishing by the time of the famous
philosopher Socrates in 400 B.C. A few decades later, book collecting became more
common and it is most probable that Plato’s Academy and Aristotle’s Lyceum possessed
their own private libraries. Alexander the Great, a Macedonian, recognised the contribu-
tions that books and libraries made in the classical Hellenic culture he had conquered.
However, it wasn’t until his death in 323 B.C. that Ptolemy I, one of his generals, became
king of Egypt and commissioned the greatest library of antiquity in Alexandria. This library,
known as a Museum, flourished for many hundreds of years, attracting many noted writers,
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Chapter 1 / Introduction to knowledge management 21

poets, scientists and scholars and over 600,000 rolls of text. The Museum or ‘the place of
the Muses’, included works of history, philosophy, music and the visual arts. In addition, it
provided studies in language and literature and a multitude of commentaries, glossaries and
grammar on notable texts such as the Iliad and the Odyssey. Rare and archaic words found
in Homer were given meaning in a compilation by Philitas called Miscellaneous Works. This
glossary of difficult or metaphorical words was a tremendous success among many avid
readers of Homer. The great library of Alexandria came to an end in 48 B.C. when 400,000
rolls were accidentally destroyed in Caesar’s brief Alexandrian war.
The main rival to the Alexandria library was the Pergamon, built in the time of
Attalus I (247–197 B.C.). This possessed around 200,000 rolls and focused more on
Homeric studies, geometry and art criticism. There was tremendous rivalry between
Pergamon and Alexandria for scholarship and their collections. However, this came to
an end in 41 B.C. when the Pergamon came under Mark Anthony’s rule and he gave
the entire collection of 200,000 rolls to Cleopatra, presumably in compensation for the
losses by Julius Caesar in the library at Alexandria.

Imagine that you were tasked to collect all the knowledge and received wisdom in your Pause for thought
organisation. How would go about carrying out this assignment? Where would you
start? For example, what do you think would be the most appropriate medium for
storing your found knowledge? Do you think paper records could play a role? If so,
how? How would you go about organising all the knowledge you had collected? What
are the main difficulties with such an assignment?

Even though the Romans conquered Macedonia in 168 B.C., the invading forces
were considerably influenced by the richness of Greek culture and their collections of
books. Many of these books found themselves back in Rome as spoils of war. The learn-
ing captured in these books was revered by many generals such as Paulus Aemilius who
developed one of the first notable Roman libraries (Harris 1995). Julius Caesar commis-
sioned a public library in Rome to surpass the library in Alexandria, but the plan was
never realised due to his untimely death.
The first public library in Rome was founded in 39 B.C. by a politician and general
named Gaius Asinius Pollio. He had made a personal fortune from the conquest of
Damatia and used part of this to amass a number of private collections and form a
library in the Temple of Liberty (Atrium Libertatis) on the Aventine Hill, containing
both Greek and Latin books. The tradition of founding public libraries continued
throughout the Roman era, although private libraries were also common in this period
and their size was often related to the wealth of the owner. One of the greatest of
Roman libraries was probably the Ulpian library found in the Forum of Trajan and built
by Emperor Trajan in 114 B.C. This was a public library on a grand scale, with two large
chambers, one for the Greek collection and the other for the Latin one. Their sole
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22 Part 1 / Discovering knowledge

purpose was to serve the readers of their collections in large sumptuous surroundings.
The chambers were decorated with large sculptures, with lavish use of stone and marble
throughout. Books were easily accessible to the reader and not stacked in vast rows, as
was common in Greek libraries. The organisation of the library required the services of
a specialist for cataloguing, reshelving and repairing damaged rolls. Some remains of
the Forum of Trajan still exist in Rome near the Via dei Fori Imperiali (Casson 2001).
The knowledge contained in rolls among Roman libraries was susceptible to a
number of hazards. These included frequent fires, insect attack on the rolls and damp-
ness in the libraries. Various scholars and poets might also fall out of favour with an
emperor and have their entire collection banished from library shelves. This occurred
with Ovid under the rule of Augustus and the works of Livy and Virgil under the rule of
Caligula (Wiegand and Davis 1994). Hence, the selectivity of knowledge from the oral
tradition can apply equally to knowledge arising from written sources.

Management of knowledge in monastic and cathedral libraries

The rise of Christianity in the fourth century had a dramatic influence on the nature of
knowledge that was collected and stored in libraries. Religion was elevated above other
knowledge domains and libraries became associated more with churches and monaster-
ies. The most common western library for the next millennia was found in a monastery
where monks were involved with reading scripts, copying theological texts (scripto-
rium) and writing commentaries on key texts. This was the main form of learning in
this period. The Bible was of course the core text and numerous volumes and print sizes
would be kept. Other texts in these collections might include works by early church
fathers, lives of martyrs and saints, church service books, Latin textbooks and classics,
and local literature and history (Harris 1995). Many of these collections were kept in
book chests or small closets and were closely guarded under lock and key. Monks were
often allowed to gain access to only one book at a time.
Flavius Aurelius Cassiodorus, a politician and intellectual in Rome, abandoned public
life around 550 A.D. to set up a model monastery called Vivarium. The name derived
from a common daily activity conducted by monks of raising fish (vivaria). Cassiodorus’s
private collection became the core of the monastery’s library which contained Christian
writings and all the major ‘pagan’ Latin and Greek authors. His major contribution to
monastic life was the publication of Institututiones Divinarum et Saecularium Litterarum.
This provided the template for monastic practice and a curriculum of theological study
which influenced many future monasteries and cathedral schools. Cassiodorus elevated
the role of monks as scribes in the scriptorium (see Figure 1.6 (p. 23)) as one of the high-
est duties to God. Apart from reading and understanding the Bible, theological study
included history, science and mathematics as part of understanding God’s creation
(Casson 2001; Lerner 1998). Similarly, a key figure in western monasticism was St
Benedict. When he established Monte Casino and established his rule, a key element was
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Chapter 1 / Introduction to knowledge management 23

the requirement on all monks to read and copy manuscripts. The scriptorium and the
library became a central part of the Benedictine discipline. Like Cassiodorus, Benedict had
been educated in the classical and Christian traditions and did not ban the reading or
copying of pagan classical texts – a critical factor in their survival.
In the twelfth century, intellectual life was moving from the rural monasteries back to
urban centres as there was a need to educate and train people in the growing and increas-
ingly complex economies and governments of Europe. Cathedrals had traditionally acted
as training grounds for monks in theology, music and canon law. They took on the new
role and enlarged their book collections to include more secular interests such as arith-
metic, rhetoric and astronomy. Some cathedral libraries such as Canterbury contained
around 5,000 books by 1300. This led to the demise of many monastic libraries. The rule
of Henry VIII in England led to a further fall in scholarly collections with the dissolution
of the monasteries in the 1530s when numerous collections were scattered or destroyed
(Harris 1995). Yet despite the loss of thousands of manuscripts, relatively little knowledge
was lost compared with that lost in the fifth and sixth centuries when various Germanic
tribes destroyed the western Roman empire.
At the same time as the emergence of cathedral schools, certain cities became
renowned for groups of teachers with specialities in particular subjects such as law or
theology. This started to attract many students and before long teachers and students
were organising and regulatinge themselves. The resulting bodies were called universi-
ties or organised guilds. For example, the University of Paris evolved around 1200 and

Figure 1.6 Scribe comparing two texts in monastery

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24 Part 1 / Discovering knowledge

was renowned for theology. It gained recognition to certain rights and privileges
through a charter from King Philip II. In 1167, some English students withdrew from
the University of Paris and went back to England to form the start of Oxford University.
The undergraduate student was more of a twelve-year-old schoolboy and the six-year
curriculum contained the seven liberal arts (Lerner 1998). Surprisingly, classical litera-
ture from Greek and Rome was absent from this curriculum, being treated with great
suspicion. The trivium helped to train the student in reasoning and argumentation:

● grammar;
● rhetoric;
● logic.

The quadrivium helped to train the student in the natural laws of the universe:

● arithmetic;
● geometry;
● music;
● astronomy.

The early university libraries resembled monastic libraries. They were normally formed
through the bequests of ecclesiastical or lay patrons, such as the collection of Robert de
Sorbonne which led to the founding of the Sorbonne in 1257. The predominant part of
the collection was religious works, followed by classics and, lastly, the natural laws of
the universe (mathematics, medicine, astronomy and law). There were strict rules and
regulations on library membership and conduct in the library. For instance, students at
Oxford could use the library only if they had studied philosophy for eight years, and
there was a fine at the Sorbonne for leaving books lying open (Harris 1995). Books were
expensive and knowledge was for the privileged few.

Paradigm shift from print to a digital age

The dramatic change in the storage and dissemination of knowledge came with the
advent of print in 1455. Johann Gutenburg of Mainz is normally credited with the
invention of printing in the west even though it is most likely to have been a Chinese
invention in the eighth century. The first printed book in Europe was Gutenburg’s 42-
line Bible which resembled a fine manuscript. Manuscripts were expensive to produce,
whereas printed texts cut the cost of books and allowed much wider dissemination. An
example of Gutenburg’s fine print is shown in Figure 1.7 (p. 25). Soon thousands of
volumes were rolling off presses, with particular demand for Greek and Latin classics.
These books found their way to private collections as well as to communal use in
monasteries, cathedrals and the emerging universities.
The consequence of print was the striking rise in the size of libraries and their
complexity. This gave way to modern librarianship so that basic functions of collection,
organisation, preservation and access to this ubiquitous knowledge could be
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Chapter 1 / Introduction to knowledge management 25

Figure 1.7 Paradigm shift to print: an example of Gutenburg’s print

conducted. In 1545, Conrad Gesner, father of modern bibliography, published his

Bibliotheca Universalis to help keep track of the ever increasing volumes of books. An
early attempt to index and find an appropriate classification scheme in libraries was
made with the Index Librorum Prohibitorum in 1559.
The impact of this growth in libraries was to attract new readers and increase the
levels of literacy among ordinary people. The introduction of printed texts also allowed
lay people to have a private reading of the Bible which had been the select domain of
monastic and cathedral libraries in the past. Around the seventeenth century, there was
an explosion of learning and knowledge concerning science and it saw the formation
of many learned societies which started to disseminate the latest thinking and specialist
knowledge in their fields through journals (Eisenstein 1979; Wiegand and Davis 1994).
The next major quantum leap was the introduction of computers in the late twentieth
century which resulted in an explosion of ways in which knowledge was captured, organ-
ised, stored, shared and evaluated. Digital computers operate by converting symbols,
pictures and words into a binary digit called a bit (represented by 0 or 1). A string of eight
bits is called a byte. The advancement of computer technology has meant that greater
quantities of knowledge can be stored on computers at lower costs each year. A megabyte
(million bytes) of computer storage capacity is fairly common for individual users and
large organisations can have knowledge repositories measured in terabytes (1 trillion
bytes). The increase in microprocessor power has meant that some powerful computers
can process a single machine instruction in a nanosecond (a billionth of a second).
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26 Part 1 / Discovering knowledge

Pause for thought How important are computers in your everyday life? For example, do you feel you could
live without them? As the power of computers and telecommunications has increased,
what real differences have they made to your daily life? For example, how do computers
assist you in making better quality decisions or storing your personal knowledge for
later retrieval? Are there aspects of your personal knowledge that would be impossible
to store in a computer?

The major impact of computers has come through telecommunications, allowing

computers to link up and knowledge to be shared through networks across the world.
This can be local area networks (LANs) in an organisation or more global networks such
as the information superhighway (internet). Technology has also developed wireless
communication where knowledge can be transferred over a mobile phone or through
personal digital assistants (PDAs). The most common form of knowledge transfer is
electronic mail. The physical separation of people over long distances has become less
of a barrier. Groups of people can meet electronically over the phone through telecon-
ferencing or can modify data files simultaneously through data conferencing or meet
each other visually on video screens through videoconferencing. The World Wide Web
is at the heart of this knowledge explosion, with a subsequent rise in publishing of
knowledge over the internet. The increasing pace of technology development will pro-
vide new and exciting challenges for the future management of knowledge.

CASE STUDY

Destruction of ancient knowledge from war in Iraq FT

As the American juggernaut rumbles towards looting. For example, a bomb blast near the Arch of
Baghdad, rival groups of academics, curators and Ctesiphon in suburban Baghdad could crack or
collectors are scrambling to influence the cultural topple the third-century structure, which is the
agenda of a post-war, post-sanctions Iraq. Leaders of world’s largest parabolic arch built of brick. The arch
US organisations representing archaeologists and is perilously close to the Iraqi Atomic Energy Agency.
other Near East scholars on one hand, and museum Representatives of museum directors, collectors,
directors and collectors on the other are lobbying preservationists, Near East scholars and archaeolo-
State Department and Pentagon officials. Their mis- gists late last month met in Washington with
sion is to minimise destruction and looting of officials from the Defense Department and State
cultural property in the event of war, and with the Department to discuss their concerns. The talks were
White House sounding more bellicose by the hour an opportunity to ‘show our concern for antiquities
these efforts have gained urgency. sites and museums, as well as standing monuments’,
Modern Iraq covers the region bounded by the says McGuire Gibson, a professor of Mesopotamian
Tigris and Euphrates rivers that gave rise to some of archaeology at the Uiversity of Chicago and presi-
the earliest known civilisations. Its borders encom- dent of the American Association for Research in
pass some of the oldest evidence of agriculture and Baghdad. Professor Gibson has been leading efforts
artefacts from the fourth millennium BC develop- by the Archaeological Institute of America and the
ment of cuneiform writing. The country contains AARB, an academic group representing numerous
remnants of Sumerian, Akkadian, Assyrian and disciplines. He has also presented to the Defense
Babylonian empires, as well as biblical sites. A sus- Department a detailed catalogue of about 4,000 Iraqi
tained air and ground war would almost certainly sites, only a fraction of the archaeologically signifi-
damage some of these treasures and open the way for cant locations in the country, which could number
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Chapter 1 / Introduction to knowledge management 27

in the hundreds of thousands around the Tigris and They were apparently a very well run antiquities serv-
Euphrates. ‘In effect, the entire country is an archae- ice – one of the very best in the Middle East’,
ological site,’ Gibson says. according to Ashton Hawkins, president of the ACCP
Other interested groups include the American and former executive vice president and counsel to
Council on Cultural Policy, which includes private the Metropolitan Museum of Art in New York. He
collectors, museum directors and former government suggests that Iraq’s prohibition on sales of antiquities
officials, and which works closely with the American is basically appropriate. At the same time, he argues
Association of Art Museum Directors. Ultimately, the that the proper role of an antiquities department is to
various organisations have different approaches to identify and maintain seminal and emblematic arte-
preserving antiquities. Scholars of the region, particu- facts and to consider the selective sale of the rest in
larly archaeologists, have an interest in keeping
order to fund preservation of the former. ‘National
artefacts in context, while collectors and museum
patrimony doesn’t consist of everything. It consists of
directors are orientated towards acquisition.
the most important things,’ he says.
None of the groups, however, has weighed in on
Some US and international policies treat collecting
the appropriateness of a war with Iraq. But recalling
as a contributing factor to looting. ‘But on the whole,
the belated and flawed communication between the
collectors stay away from that kind of material now.
US government and experts during the 1991 Gulf
War, the experts ‘want to point out what happened in Reasonable intelligence (and) common sense should
the past and to try to suggest ways in which we can guide legitimate collecting. You should stay away
avoid that, if at all possible, or at least to mitigate the from Iraqi material that might come on to the
consequences,’ says Jane Waldbaum, AIA president. market in the next couple of years.’
After the Gulf War, looting from museums and It’s not clear how the destruction of Iraq’s cultural
dig sites was widespread and Iraqi antiquities property would be treated under international law.
flooded the international market. Food shortages led Neither the US nor the UK is a party to the 1954
people in the countryside to cultivate archaeological Hague Convention on the Protection of Cultural
sites. With the prospect of renewed warfare, the AIA Property in the Event of Armed Conflict, although
and AARB have urged the government to observe Iraq is one of the 103 state parties to the treaty. It bars
international treaties on cultural property, to work the targeting of cultural sites unless militarily neces-
to minimise damage to archaeological sites and arte- sary and calls on parties to prevent looting and the
facts, to prevent looting, and to facilitate the export of cultural property from occupied countries.
preservation of Iraqi cultural heritage in the wake of Carducci maintains that the Hague Convention’s
any conflict. main strictures are established in customary interna-
International law enforcement agencies must be tional law, and so would apply “erga omnes”, or to
vigilant against illicit trade in Iraqi antiquities, says the entire international community.
Patty Gerstenblith, a professor at DePaul University Unesco officials and western scholars say rebuild-
School of Law. The scholarly groups also urged com- ing the Iraqi antiquities agency and reviving the
pliance with the 1970 Unesco Convention on the country’s academic and professional infrastructure are
Means of Prohibiting and Preventing the Illicit keys to safeguarding its cultural heritage. But given
Import, Export and Transfer of Ownership of the increasing odds of widespread devastation,
Cultural Property, a treaty signed by the US and UK,
Carducci does not sound optimistic. ‘From a military
Iraq and more than 90 other countries.
point of view (protection of cultural property) is of
Iraq’s antiquities laws have their origins in the
course not the first priority. It’s always been like that.’
British administration of the League of Nations man-
Source: Article by Ted Bowen, Financial Times, 5 February 2003
date following the first world war. ‘We would want to
ensure that the current Iraqi antiquities law is main-
tained and enforced,’ says Jane Waldbaum. ‘They have Questions
very strict requirements for the sale and removal of 1 How could vestiges of human knowledge such as the
antiquities from the country. It’s virtually prohibited.’ cuneiform writing from Ancient Iraq have been
Unesco could have a role in determining future protected from the recent war?
Iraqi cultural policy, if asked by Iraq or the United 2 Evaluate the difficulties of international law
Nations, according to Guido Carducci, chief of the enforcement to protect Iraqi’s cultural heritage.
organisation’s International Standards Section in the 3 Is the scattering of knowledge found among books
Cultural Heritage Division. In working out the details, and artefacts inevitable after a war as found in other
‘the antiquities department should be given the episodes throughout history? How can this
resources it needs to resume doing what it was before. knowledge be preserved against future wars?
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28 Part 1 / Discovering knowledge

Summary
This chapter has elaborated on five key areas of knowledge management:
1 The different current definitions of knowledge management predominantly from
information systems or human resource management perspectives. The diverse dimen-
sions of knowledge management are brought together in an integrated definition from
an interdisciplinary perspective.
2 The arguments providing an antithesis to the emerging field debating that it is no
more than ‘old wine in new bottles’.
3 The distinction between data, information and knowledge, particularly acknowledg-
ing the role of the sender, receiver and medium of the messages and signals.
4 The bardic oral traditions presented as the earliest form of managing knowledge in
civilisation and their strengths and limitations. The movement of knowledge from
word of mouth to writing cuneiform on clay tablets is explained.
5 The central role of libraries in knowledge creation and dissemination from Ancient
Greece to the formation of university libraries. The quantum leap in knowledge transfer
occurring from the invention of print and the development of computers and internet
technologies are discussed.

QUESTIONS FOR FURTHER THOUGHT

1 Given the highly specialised nature of traditional academic research, how can interdisciplinary
research in fields such as knowledge management succeed and provide fresh insights?
2 What is the difference between information and knowledge management?
3 What are the strengths and shortcomings of academic knowledge and practitioner knowledge?
4 What does knowledge management mean to a small organisation?
5 How do you overcome the ‘theory laden’ nature of observations among managers in
organisations?
6 What are the difficulties in the notion of knowledge as ‘actionable information’?
7 How can lessons from the old bardic traditions assist modern-day knowledge management?
8 What are the advantages and disadvantages of different writing media such as clay, papyrus and
parchment for storing knowledge?
9 How fallible is modern-day storage of knowledge on computers when many software programs
become obsolete in less than ten years? How easy will it be to decipher the bytes on CD-ROMs in
1,000 years?
10 What lessons can we draw from ancient libraries and librarianship for the creation, storage and
preservation of knowledge?
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Chapter 1 / Introduction to knowledge management 29

Further Reading
1 Newell et al. 2002 is a good all-round book on knowledge management predominantly
from a human resource perspective and contains some good case study material.
2 Davenport and Prusak 1998 helped popularise the field of knowledge management and
comes from a consultancy and practitioner background.
3 Harris 1995 provides an excellent historic background on the development of libraries
and the management of knowledge through the ages.

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Chapter 2 / Philosophical perspectives on knowledge 31

Chapter 2
Philosophical perspectives on knowledge

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● describe the underlying philosophical traditions and their quest for knowledge;
● evaluate the competing paradigms in knowledge management;
● identify and understand the current typologies of knowledge within the knowledge management
literature.

MANAGEMENT ISSUES

The philosophical perspectives on knowledge imply these questions for managers:

● What are the problems of an action-oriented organisation?
● How can reflection be incorporated into organisational routines?
● How can tacit and explicit knowledge be managed effectively?
● How can ‘past experience’ be stored in a manner that is useful and meaningful to staff on a daily basis?
● Can a philosophical understanding promote double-loop learning in organisations?

Links to other chapters

Chapter 3 to understand some of the philosophical underpinnings of theory linked to individual,
group and organisational learning.
Chapter 9 to recognise the different approaches to cultural management and their philosophical bases.
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32 Part 1 / Discovering knowledge

OPENING VIGNETTE
Plato and leadership FT
The cult of the celebrity chief executive is closely con- his dialogues, Socrates. History views Socrates
nected with the current malaise in the business warmly, although he often maddened his contempo-
world. Pioneering, risk-taking CEOs were allowed to raries, not just with his lax sanitation and
create their own myths in the 1990s and the leader- drunkenness, but also by trapping them in concep-
ship archetypes, fawned over by business schools, tual mazes. If someone suggested that justice lay in
reflected the fashion. Crass as it now seems, swash- giving people their due, Socrates would ask whether
buckling figures from the past who rallied their they thought it wise to return a sword to a lunatic.
troops, junked all rule books and refused to give in, However, when Socrates said that nothing should
despite hopeless odds – the Nelsons, Churchills, be taken for granted, the point was not empty cyni-
Shackletons – were seen as sensible paragons for other cism but profound respect for truth. Wisdom could be
people who spend their lives travelling to meetings.
approached only by rigorous teleological questioning,
But it has taken Enron et al. to make a more con-
slicing through false argument and circling ever nearer
templative leadership style seem suddenly
to the goal of truth even if, finally, it proved unattain-
compelling. Leaders who plug away diligently for
able. The exercise of doubt was critical: a useful
decades, know their markets and organisations inti-
mately, see a quick buck as beneath them, and who principle in the selection of non-executive directors.
salute the importance of stability, balance and serv- Business leaders, of course, need to come to deci-
ice in management are the new heroes and heroines sions. But a Socratic approach to refined
– requiring entirely different exemplars. decision-making has had many supporters. In The
Plato believed leaders required a grounding in dis- Effective Executive, Peter Drucker wrote: ‘Decisions
ciplined thought: ‘Until kings become philosophers are not made well by acclamation. They are made
and philosophers kings, things will never go well well only if based on the clash of conflicting views,
with the world,’ he said. When he founded his the dialogue between different points of view, the
Academy in 387BC – an institution which was to choice between different judgments. One does not
last 500 years – it was partly with a view to ‘turning make a decision unless there is disagreement.’
around’ Athens, which, following the death of Faced with a consensus on the board, Alfred
Pericles, had fallen into a kind of destructive circu- Sloan, of General Motors, feared making a rash
larity in which self-serving individual leaders could choice: ‘I propose we give ourselves time to develop
too easily overwhelm the needs of the community. disagreement and perhaps gain some understanding
Moral confusion, Plato believed, was responsible of what the decision is all about.’
for Athens’ defeat in the Peloponnesian war. History Among Plato’s adversaries were the Sophists.
does not record the Attic version of ‘ethical deficit’. The Sophists were popular among the new
Unlike Heraclitus, the philosopher of flux and pre- Athenian rich as teachers of oratory and rhetoric
cursor of complexity theorists, Plato was concerned
– forefathers, perhaps, of today’s communication
with the source of permanent moral values, which
coaches. They advocated that the term ‘good’ was
he believed could be accessed by reasoning. The
really synonymous with being influential and suc-
point of philosophy was not happiness or pleasure,
cessful. Words such as ‘loyalty’, ‘justice’ and ‘truth’
but knowledge, which he defined as the justification
were subjective inventions with their own private
underpinning truth.
The one who knows is the one who can justify. meaning for individuals. Thrasymachus, one of the
Good judgement was emblematic of the character more skilful Sophists, even argued that moral codes
and values necessary among those entrusted with were a racket aimed at masking the fact that the
leadership – a concern that has rarely been more strong dominate the weak. The wise man does as he
contemporary. Indeed, Carly Fiorina, chief executive likes, but avoids being caught.
of Hewlett-Packard, sounded most Platonic recently Against such views, Plato assembled many argu-
when she said: ‘Good leadership means doing the ments, some of which seem flaky today (arguing
right thing when no one’s watching.’ that human beings aren’t designed to be immoral,
Pre-empting modern educationists, Plato banned for instance). But among his best was the highly
lecturing in the Academy, instead preferring joint modern idea that morality underpins life in a com-
analysis by students and teachers. This was the munity and that trust is in the long-term interest of
method of his mentor and protagonist of many of all. Leaders were repositories of collective behaviour,
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Chapter 2 / Philosophical perspectives on knowledge 33

he argued, so they had to exercise self-discipline in alists’. Bennis said there are four factors in great
leading ‘for the broad good’ and avoid the tempta- leadership – managing attention, managing mean-
tion to play to select audiences or mass fashions. ing, managing trust and managing self – and
In the 20th century, Plato’s ‘benevolent emphasised the importance of longevity, of leader-
guardians’ were found to be no good at running ship as a life’s work. ‘The worst problem in
countries. But there are strong grounds for hoping leadership is, basically, early success,’ he said.
they may fare rather better at running companies, Source: Article by Stephen Overell, Financial Times,
not least because they would understand the effi- 24 February 2003
ciency of trust. Plato would have applauded parts of
Douglas McGregor’s Theory X and Theory Y. ‘Trust is Questions
a delicate property of human relationships. It is 1 What are the merits of a ‘thinking’ style of
influenced far more by actions than by words. It leadership (Plato) over a ‘doing’ style of leadership
takes a long time to build, but it can be destroyed (Aristotle)?
very quickly.’ 2 Why does Plato advocate that leaders (kings) need
He would also have favoured the doctrines of to become philosophers?
Warren Bennis, the doyen of leadership gurus, who 3 How can a Socratic approach be destructive to
described the best leaders as ‘ideas people, conceptu- organisations.

Introduction
Much of the current literature in knowledge management is based on the writings of
two philosophers, Gilbert Ryle and Michael Polanyi. These names and their ideas of
logical behaviourism come out predictably within the literature and there seems to be
relatively little questioning of their underpinnings. This chapter intends to explore the
nature of knowledge more fully to enable the reader to gain a firm grounding of the
different perspectives and to engage in some level of philosophical introspection. For
example, the reader may find the competing postmodernist notion of production and
consumption of knowledge much more attractive than the traditional viewpoint of log-
ical behaviourism.
As a starting point, this chapter begins by looking at how western philosophers have
grappled with the ‘knowledge’ question over the centuries. This forms the rich tapestry
against which one can develop new perspectives and understandings of knowledge. As a
way of aiding the uninitiated reader, western philosophers have been grouped into idealist
and empiricist perspectives, as shown in Figure 2.1 (p. 34). This simplistic notion can act
as a useful basis for the reader’s future inquiry into the debates surrounding knowledge.
A closer examination is made of Gilbert Ryle’s notion of ‘knowing how’ and ‘know-
ing that’ and Michael Polanyi’s understanding that these concepts exist along a
continuum rather than occurring as distinct separate entities. The myriad epistemologi-
cal positions are developed using Burrell and Morgan’s framework and four common
philosophical positions are explored in greater detail: positivism, constructivism, post-
modernism and critical realism. The aim is to enable the reader to have a greater
understanding of the assumptions behind the writings of different scholars in the area
of knowledge management.
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34 Part 1 / Discovering knowledge

IDEALIST (BEING) TEAM EMPIRICIST (DOING) TEAM

PLATO ARISTOTLE
GROUP CAPTAINS
Perception Start with appearances
True judgement Work through puzzles
True judgement with account Come back to appearances

DESCARTES LOCKE

Cartesain doubt Knowledge comes from senses

Cogito ergo sum Knowledge is relationship
Thinking covers all conscious between ‘ideas’ from senses
experience Memory key to identity

KANT HUME

Synthetic yet a priori Truths of reason – a priori

Form of Sensibility Truths of fact – a posteriori
Knowledge bounded by ‘Uniformity of nature’ – no
possible experience grounds for proof

HEGEL PEIRCE

Thesis, antithesis, synthesis Abductive

Dialectic process Deductive
Reality is fundamentally Inductive
intellectual in the mind

HUSSERL JAMES

Conscious awareness Select theory on strength of

Intentionality evidence
Phenomenology – allow People are players in the
things to show themselves world, not mere spectators

HEIDEGGER DEWEY

Dasein Science as dynamic activity

Question of ‘being’ Knowledge bound with
Unsettling character of being activity
Learning and doing

SARTRE WITTGENSTEIN

Consciousness is nothing Language permeates reality

Consciousness not subject to Words are tools and
causality sentences are instruments
Primacy of human freedom ‘Language games’

Arrows represent rough chronology of ideas

Figure 2.1 Idealist and empiricist perspectives on knowledge

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Chapter 2 / Philosophical perspectives on knowledge 35

The different typologies of knowledge within the current knowledge management lit-
erature are forwarded to avoid confusion between different terminology used to describe
the same concepts of ‘knowing how’ and ‘knowing that’. A realist theory outlining the
structure of knowledge based on ‘past experience’ is presented that builds on Ryle’s con-
cepts and suggests that the occurrence of a reflection phase may determine the difference
between single-loop and double-loop learning within the structure of knowledge.

What is knowledge? Philosophers from Plato to Wittgenstein

◗ Plato
Plato (427–347 BC), as a pupil of Socrates, wrestled with a wide variety of moral and
philosophical questions in the form of dialogues. He expressed his ‘idealist’ doctrine
mainly through the mouth of Socrates in the form of ‘Socratic questioning’. Socrates
would start with a concept and get his pupils to understand the problems with the con-
cept until they formed an answer to the problem. In subsequent dialogue, Socrates
would then show the inadequacy of their answers by revealing contradictions within
them. The end result was not to provide a firm answer but to gain a better grasp of the
problem. As such, Plato believed that ‘conclusions’ did not have any special status as
our assumptions and beliefs are open to perpetual questioning.
In a later dialogue, Thaetetus (360 BC), Plato explores the nature of knowledge. Is
knowledge purely subjective and why is it better than opinion? Plato provides three
answers to the question of ‘What is knowledge?’:

● Knowledge is perception.
● Knowledge is true judgement.
● Knowledge is true judgement together with an account.

Each answer is knocked down in true Socratic style. There is no consensus to this day
about knowledge except that it is derived from perception that can provide a rational
justification for it.

◗ Aristotle
Aristotle (384–322 BC), Plato’s star pupil, saw philosophy as an on-going attempt to
explore the complexities of human experience. After a sharp reaction against
Platonism, he achieved a synthesis of the natural and rational aspects of the world in
The Metaphysics (350 BC). In every area, his approach was to start with ‘appearances’
(ordinary beliefs and language), work through puzzles (work through contradictions
and find beliefs that were most basic and central) and come back to ‘appearances’ with
increased structure and understanding.
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36 Part 1 / Discovering knowledge

Pause for thought Reflect on your way of looking at the world. Have you ever done any philosophical
introspection to understand your own position in amongst the diverse ways of looking
at the world? Are you more of a thinker or a doer? Do you think that this has any
impact on how you see the world? Have you ever thought about the effect that diverse
ways of thinking about a problem may have on the functioning of a team? What do you
think could be the implications of this?

◗ Descartes
René Descartes (1596–1650), a rationalist philosopher, struggled with the question
‘Can we know anything for certain and, if so, how?’ He saw ‘certainty’ as a state of
mind and ‘truth’ as a property of statements about the external world. He developed
scepticism to an art form and promoted doubt as a method which later became known
as ‘Cartesian doubt’. In Meditations (1641), Descartes provides three stages of doubt in
order to know something:

1 Lay aside things on common-sense grounds that are doubtful.

2 Doubt that at any given moment you are awake or perceiving anything at, i.e. you
may be dreaming.
3 Imagine that a malign spirit or a malicious demon has the sole intent to deceive you.

This led Descartes to his first certainty:

‘Cogito ergo sum’ or ‘I think, therefore I am.’

In Meditations, Descartes sees ‘thinking’ to mean all forms of conscious experience

including pain, perceptions and feelings. The true value of Descartes comes from his
questioning different aspects of knowledge:

● What do I know?
● What can I doubt?
● How can I know whether any of my beliefs are true?
● What is the difference between my beliefs and prejudices?
● Is there room for scepticism?

◗ Locke
John Locke (1632–1704), an empiricist, believed that everything we conceive or con-
struct has come from experience. His dictum was:

‘Don’t blindly follow convention or authority. Look at the facts and think for yourself.’

In an Essay Concerning Human Understanding (1690), he develops the concept of ‘idea’ as

something sensory that has the properties of a sensory image before the mind. An ‘idea’
can also cover thoughts, pains and emotions. He views reasoning as a mental operation of
these ‘ideas’ which leads to knowledge or belief. In this sense, knowledge is a perception
of relationships between ideas. He accepts that our senses provide us with knowledge of
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Chapter 2 / Philosophical perspectives on knowledge 37

the existence of things but not knowledge of their nature or essence. Locke saw Newton’s
laws as a kind of crude fact. They were a good description of how things behave but not
an explanation. He was keen to point out Newton’s most quoted words: ‘Hypotheses non
fingo’ (‘I’m not offering explanations’). Locke saw memory as key to personal identity as
each person’s awareness of history makes them the individual they are.

◗ Hume
David Hume (1711–76) knocked the bottom out of science with his insights into causal
links. He acknowledged that one could make ‘inductive inferences’ about ‘matters of fact’
such as A causes B from observation of A followed by B, such as day follows night and night
follows day. But he argued that past experience could not justify a conclusion about future
behaviour. Even though defenders of induction invoked the principle of ‘uniformity of
nature’, there were clearly no grounds to prove that this principle was correct. This insight
showed that scientific laws gained through observation were no longer universal statements
as previously held (Hume 1739). Subsequently, the doctrines of ‘logical positivism’ have
been derived from Hume. He divided propositions into ‘truths of reason’ (analytic or a
priori – from theory) and ‘truths of fact’ (synthetic or a posteriori – from practice).

◗ Kant
In Critique of Pure Reason (1781), Immanuel Kant (1724–1804) suggested a third proposi-
tion to Hume’s truths of reason and truths of fact. This proposition was synthetic yet a
priori, namely the Form of Sensibility, and concerned space and time. He argued that
space and time were inescapable modes of experience and could be specified in an a
priori manner (space with geometry and time with arithmetic). He saw knowledge as
bounded by ‘possible experience’.

◗ Hegel
Georg Wilhelm Friedrich Hegel (1770–1831) viewed the primary goal of knowledge as
the greater development of the mind towards freedom. In The Philosophy of History
(1837), he considered all concepts historically as part of a ‘dialectic process’. Using the
example of Greek society, the dialectic process starts with a ‘thesis’ where there is har-
mony between reason and desire in society. However, he argues that this stable
condition cannot persist indefinitely and gives rise to its ‘antithesis’ through ‘Socratic
questioning’ and the subsequent breakdown of Greek society. In turn, the dialectic
process moves forward to create ‘synthesis’ of these opposing views to give way to a
new thesis. Hegel’s view of reality is ‘Geist’ (mind or spirit) which is fundamentally
mental or intellectual in nature.
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38 Part 1 / Discovering knowledge

◗ Pragmatists
The primary contribution of the American Pragmatists (Peirce, James and Dewey)
towards knowledge was to create a link between belief, meaning, action and inquiry.
Charles S. Peirce (1839–1914), often seen as the father of pragmatism, was principally
focused on the question of how we are able to investigate the world rationally. In his
Theory of Inquiry (1867), he suggests that we inquire by testing hypotheses and holding
certain beliefs constant that may be revisable or fallible. In scientific inquiry, he pro-
poses the following phases in the development of knowledge:

● ‘abductive’ inquiry – presenting theories for consideration;

● ‘Deductive’ inquiry – preparing theories for test;
● ‘inductive’ inquiry – assessing results of the test.

William James (1842–1910) presents a pragmatic theory of truth where our beliefs
need to be in accord with the underlying evidence (1909). For instance, he suggests
that our preferences for one theory over another need be based purely on the strength
of the competing evidence. In circumstances where evidence is equal, James suggests
that we can use other criteria such as bias. He views people as players in the world
rather than mere spectators.
John Dewey (1859–1952) applied Peirce’s theory of inquiry to social and political
philosophy. In The Quest for Certainty (1929), he sees science as an activity and process
of ‘inquiry’ that is essentially dynamic in nature. He is against a ‘spectator’ view of
knowledge. Instead, he views human activity as a concern for survival in a dynamic
environment where knowledge is the most important survival mechanism. For Dewey,
knowledge was closely bound with activity, and notions of truth and meaning also
needed to have some connection with it. Dewey made a significant contribution to the
philosophy of education (Dewey 1899) by highlighting the interconnectedness of
learning and doing and the need to encourage children to learn by doing, by activity
and by adopting a problem-solving approach.

◗ Phenomenology and existentialism

Edmund Husserl (1859–1938) influenced a number of philosophers such as Heidegger,
Sartre and Merleau-Ponty and established a movement known as phenomenology. In addi-
tion, he made a crucial impact on the development of continental and analytic philosophy.

Pause for thought On many levels, the pragmatist perspective may be considered to be the most
appropriate one for managers. What do you think are the strengths and limitations of
this perspective? Can you think of any circumstances when a pragmatist perspective
could be detrimental to an organisation? Why do you think problem solving could be
enhanced by this perspective?
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Chapter 2 / Philosophical perspectives on knowledge 39

In his masterpiece Logical Investigations (1901) Husserl starts his general theory of
knowledge on the basis of our conscious awareness being undeniably certain. He contin-
ues that our consciousness is always an awareness of something and, in practice, it is
difficult to distinguish between states of consciousness and objects of consciousness. He
calls the directedness of mental content ‘intentionality’ and the aspect of the mind that
accounts for this directedness ‘intentional content’. He argued, for example, in his
account of intentionality that it didn’t matter whether there was a chair out there or not.
He could bracket it and perform a ‘phenomenological reduction’. This meant that all that
was needed was that he took there to be a chair in the world of objects. He further argued
that no one could experience anything without this directed mental content (intention-
ality). This became his unquestionable foundation for all understanding. For Husserl,
phenomenology was allowing things to show themselves as they are in themselves.
Martin Heidegger’s (1889–1976) predominant philosophical preoccupation was to
answer the ‘question of being’. In Being and Time (1927), he views human beings as
‘Dasein’, meaning existence, and sees activity characterised by humans coping in cer-
tain situations. Heidegger suggests that we become ‘Dasein’ when we conform to public
norms and become socialised in shared coping skills. Any Dasein is aware that the way
of the world is ungrounded. He uses the word ‘Unheimlich’ (not being at home) to
describe the anxiety in the form of guilt caused by the unsettling character of just
being. This notion is taken up by existentialists in their liberation philosophy to accept
no meaning in Dasein and the unsettling groundlessness of experience.
Jean-Paul Sartre (1905–80) was a student of Husserl and Heidegger and was also
greatly influenced by Descartes’ notion of human consciousness as free and distinct
from the physical universe. In Being and Nothingness (1943), Sartre describes conscious-
ness as ‘nothing’ (‘not-a-thing’) but an activity (‘a wind blowing from nowhere towards
the world’). As consciousness is nothingness, it is not subject to the rules of causality.
This is fundamental to Sartre’s thesis as it forwards the primacy of human freedom. He
argues that consciousness is always self-determining and follows a playful paradox:

‘It is always what it is not, and is not what it is.’

◗ Wittgenstein
Ludwig Wittgenstein (1889–1951) was primarily concerned with the role of language in
human thought and life. In Tractatus Logico-philosophicus (1922), Wittgenstein argues
that if language represents reality and sentences represent states of affairs, there must
be something in common between sentences and states of affairs. As part of his ‘picture
theory of meaning’, he regards sentences as a picture of possible fact and the funda-
mental unit of meaning. Furthermore, he views the arrangement of words (‘names’) in
sentences corresponding to possible arrangements of objects in the world. This leads to
his premise that the structure of the real world determines the structure of language.
In his later work, Philosophical Investigations (1953), Wittgenstein employs a ‘tool’
conception of meaning whereby words are tools and sentences are instruments. The
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40 Part 1 / Discovering knowledge

meaning of a word is its use in language and the structure of language determines how
we perceive the real world. Language is not strictly held together by a logical structure,
as argued earlier in the Tractatus, but consists of a multiplicity of simpler substructures
or ‘language games’. In this analysis, as language permeates all thinking and human
experience, the notion of thinking can exist only with expressions. This resulted in
some controversy over the ‘private language’ argument where critics argued that indi-
viduals could use words to name private sensations that no one else understood.

Contemporary philosophers: Ryle, Polanyi and Macmurray

The most dominant concepts within the current knowledge management literature are
the notions of ‘tacit’ and ‘explicit’ knowledge (Nonaka 1994). The underlying philoso-
phy of these constructs can be traced back to Gilbert Ryle (1900–1976) and Michael
Polanyi (1891–1976). In the same period that Wittgenstein held the Chair of
Philosophy at Cambridge, Ryle held a similar Chair of Philosophy at Oxford. In The
Concept of Mind (1949), Ryle’s major work, his philosophy of mind is focused on a
destruction of Cartesianism. He argues that the world of experience is composed of two
entities: physical things and mental things.
Ryle’s most important contribution is demonstrating the difference between ‘know-
ing how’ and ‘knowing that’. He makes a distinction between intelligence (‘knowing
how’) and possessing knowledge (‘knowing that’). For him, intelligence can have mean-
ing only in activity and is associated with the ability of a person to perform tasks. It is
the action that exhibits intelligence. In contrast, ‘knowing that’ is holding certain bits of
knowledge in one’s mind such as the names of Snow White’s seven dwarfs. He defends
his type of logical behaviourism by arguing against the Cartesian idealism that sees
knowledge and intelligence as part of the same mental process. He contends that when a
person does something intelligently, they are doing only one thing, not two. Knowing
how cannot be defined in terms of knowing that. For instance, a chef doesn’t recite his
recipes to himself (knowing that) before he can cook according to them (knowing how).
Michael Polanyi comes from a similar behaviourist background as Ryle in his book The
Tacit Dimension (1967) and develops the notion of tacit knowledge from a number of
experiments involving hypothetical shock treatments reminiscent of the stimulus-
response model of behaviour (Skinner 1938). His starting point of human knowledge is
‘the fact that we can know more than we can tell’. He uses Ryle’s distinction between
‘knowing that’ and ‘knowing how’ and suggests that each aspect of knowing is ever pres-
ent with the other. They are not distinct entities and his assumption is that they exist
together along a continuum, as shown in Figure 2.2 (p. 41). He uses the example of
riding a bicycle and the need to have tacit knowledge to stay upright. Staying upright
and engaged in the activity of riding is part of ‘knowing how’ to ride a bicycle.
However, many people may find it difficult to articulate clearly (knowing that) what
keeps them upright.
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Chapter 2 / Philosophical perspectives on knowledge 41

KNOWING HOW KNOWING THAT

RYLE
Intelligence Possessing knowledge
Activity orientation Container metaphor
Ability to perform task Being
POLANYI

CONTINUUM

TACIT KNOWLEDGE EXPLICIT KNOWLEDGE

(DOING) (BEING)

Figure 2.2 Philosophy of Gilbert Ryle and Michael Polanyi

How appropriate do you believe it is to define and classify roles in organisations under Pause for thought
‘know that’ and ‘know how’? When employers ask for skills and experience in person
specifications, are they purely looking for ‘know how’? Passing a football around an
organisation provides a useful metaphor for knowledge sharing in organisations. What
is wrong with this metaphor? Can you think of a better metaphor for describing
knowledge in organisations?

A recent revival in the writings of John Macmurray, a realist philosopher who held
the Grote Chair of Philosophy of Mind and Logic at London University from 1928 – 44,
saw realism as the unity of theory and practice. The realist position represented a radi-
cal departure from the dominant European idealist tradition which divorced theory
from action. Macmurray (1933) believed the primary function of thought was to enable
action to become ‘effective’ and ‘right’. He insisted that action was more primary than
thought with the assertion that:

‘Thought begins only where action fails.’

Macmurray (1961) claimed that western philosophy had become ensnared by adopt-
ing a position that was theoretical and egocentric. The self was treated as pure,
withdrawn and a detached subject. He recognised that to isolate mental activity as the
distinctive feature of the self was to exclude the possibility that action, the material
world and other persons were of definitive importance in understanding what it is to
be human. He suggested (1957) that we substitute the Cartesian dictum:

‘Cogito ergo sum’ (I think, therefore I am)

with
‘Ago ergo sum’ (I do, therefore I am).

Burrell and Morgan’s framework on philosophical paradigms

Burrell and Morgan (1979) have left a lasting legacy in the field of organisational stud-
ies by developing our understanding of the production of knowledge. As shown in
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42 Part 1 / Discovering knowledge

ONTOLOGICAL
ASSUMPTIONS

Whether reality is
external/objective or product
of internal consciousness
and mind?

EPISTEMOLOGICAL HUMAN NATURE

ASSUMPTIONS ASSUMPTIONS

What can we know? Free will

Can knowledge be acquired or Determinism
does it need to be personally
experienced?

METHODOLOGY

Figure 2.3 Assumptions about social science research (adapted from Burrell and Morgan 1979)

Figure 2.3, they begin their analysis by examining the ontological assumptions which
may underly any epistemological positions and assumptions. Ontology relates to our
assumptions of reality and epistemology relates to our grounds of knowledge and what
we can know. In turn, Burrell and Morgan argue that it is the epistemological assump-
tions together with assumptions about human nature that determine the nature of
methodology chosen by a particular perspective. The assumptions of human nature are
principally focused across the polarities of free will and determinism.
From these assumptions, they produce a map of four ‘sociological paradigms’ by
mapping the major belief systems of academics along a subjective–objective dimension
and a free will (sociology of radical change) – determinism (sociology of regulation)
dimension (see Figure 2.4 (p. 43)). Paradigm is used to mean a ‘commonality of per-
spective which binds together the work of a group of theorists’. The functionalist
paradigm is concerned with a positivist, realist and social engineering perspective
where organisational life is about creation and control and not letting matters fall
apart. The interpretivist paradigm seeks to understand reality through the realm of
individual consciousness and subjectivity. The radical structuralist paradigm empha-
sises the need to overthrow or transcend limitations placed on social and
organisational arrangements by analysing economic power relationships. The radical
humanist paradigm seeks radical change and emancipation by overcoming distorted
ideologies, power and psychological compulsions and social constraints.
The dominance of the functionalist paradigm and the paucity of radical structuralist
or humanist perspectives in knowledge management research makes the current reality
of research resemble much closer the representation forwarded by Goles and
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Chapter 2 / Philosophical perspectives on knowledge 43

FREE WILL
RADICAL HUMANIST RADICAL STRUCTURALIST

Anarchistic
individualism Contemporary
French Mediterranean Russian
existentialism Marxism social
theory
Critical
Postmodernism
SUBJECTIVE

OBJECTIVE
Solipsism

theory Conflict theory

Realism
Hermeneutics
Social
Phenomenology
systems
Constructivism theory Positivism
Interactionism
and social
action theory

INTERPRETIVIST FUNCTIONALIST
DETERMINISM

Figure 2.4 Burrell and Morgan’s four paradigms and different epistemologies (adapted from Burrell and
Morgan 1979)

Hirschheim (2000), as shown in Figure 2.5 (p. 44). This position has arisen from similar
searches for respectability of young and emerging fields to align themselves to the more
respectable ‘hard’ sciences and the failure of young researchers exploring different para-
digms to get published or obtain tenure due to the well-meaning constraints of
academic departments and journal editors. In addition, radical humanist and struc-
turalist perspectives can be seen as a threat to traditional organisations as they advocate
some form of rebellion against the current orthodoxy. In some quarters, this may be
seen as an unwelcome insurgence, in others as transformation of the organisation.
Fortunately, there has been a positive development of Burrell and Morgan’s contention
that the four paradigms are mutually exclusive and a greater move towards multipara-
digm research. Gioia and Pitre (1990) argue that the four paradigms can be bridged by
transition zones and provide examples of structuration theory, critical theory, Marxism,
Weberian theory and solipsism that can exist in more than one paradigm.

Look closely at Burrell and Morgan’s (1979) four paradigms. Why do you think that Pause for thought
there has been almost negligible management research from a ‘radical humanist’ or
‘radical structuralist’ perspective? What are the problems of ‘free will’ assumptions in
management research? Do you believe that the objective scientific approach is the best
perspective for management research and organisational problem solving? What may
be some of the limitations of this approach?
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44 Part 1 / Discovering knowledge

FREE WILL
RADICAL HUMANIST RADICAL STRUCTURALIST

SUBJECTIVE

OBJECTIVE
INTERPRETIVIST
FUNCTIONALIST

DETERMINISM

Figure 2.5 Proportional representation of Burrell and Morgan’s four paradigms in

knowledge management research (adapted from Goles and Hirschheim 2000)

Competing philosophical positions in knowledge management:

positivism, constructivism, postmodernism and critical realism
Given the large array of philosophical positions, it is not astounding that there are
often ‘paradigm wars’ between adherents of different epistemologies. It is also not
uncommon to find open warfare within the same camp where further distinctions of
epistemology are made by adding prefixes such as radical, post, critical and neo to the
philosophical positions. As positivist science tends to dominate research, there is an
uneasy tension between positivists and anti-positivists. The positivists view social phe-
nomena as essentially not different from the natural sciences with a distinct and
independent subject–object relationship as shown in Figure 2.6 (p. 45). In the ‘natural-
ism debate’, the argument against this position is that the social world is radically
different from the natural world. The independent subject–object framework excludes
social relations where subjects (let’s say academics) may have their own language com-
munity as well as being engaged as objects of the social phenomena (see Figure 2.6).
Another argument against the positivist stance is that social realities are often not
directly observable. This implies that knowledge of social phenomena is not as certain
as in the natural sciences as there are no ways of justifying or falsifying general state-
ments. Similarly, such knowledge does not tend to produce universal laws and logically
coherent theories.
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Chapter 2 / Philosophical perspectives on knowledge 45

S1 S2 O1 O2
S O S O
S3 S4 S5 O3

Relations in natural sciences Relations in typical social phenomena

S1, S2, ... Sn represents subjects represents social relations

O1, O2, ... On represents objects represents boundary of language community

Figure 2.6 The naturalism debate (adapted from Sayer 1992)

Criticism of the positivist stance is also levelled at its underlying premise that the
social world is characterised by a closed system. The absence of constant conjunctions
in the social world is echoed in the physical world. A closed system is one where such
conjunctions are invariant while open systems are those in which events do not follow
a regular, fixed and repeated pattern. In reality, it is almost impossible to create a closed
system in the social world similar to those obtained from laboratory practices. Some
commentators have argued that the variability of events in the social world may not be
due to the inherent uncertainty and chaos as suggested by the ‘turbulent environment’
thesis but rather the conjunction of real causal mechanisms at work in open systems.
In their classic The Social Construction of Reality (1966), Peter Berger and Thomas
Luckmann examine common-sense knowledge of what individuals take for granted as
real. They recognise that the ‘obvious’ facts of social reality may differ among people of
differing cultures and even within the same culture. The objective becomes the analysis of
the processes by which people come to perceive what is ‘real’ to them. The constructivist
perspective argues that our social and organisational surroundings possess no ultimate
truth or reality but are determined by the way in which we experience and understand the
world we construct in our interaction with others. Critics of this position have argued
that social constructivists selectively view certain features of social reality as objective
and others as socially constructed. In addition, this perspective fails to accept that there
may be broader social forces such as capitalism or materialism that act as powerful
influences on observable social outcomes.
One of the main exponents of a ‘postmodern’ perspective is Jean-François Lyotard in
his book The Postmodern Condition (1984). He argues that the notion of history shaping
phenomena and leading to progress has collapsed. He contests that there are no longer
any ‘grand narratives’ or metanarratives of history or society that make sense. As individu-
als are engaged in countless videos, films, TV programmes and websites, they come into
contact with a multitude of ideas and values that no longer have a basis in their personal
or external history. He rejects two influential metanarratives on the goals of knowledge
and asserts that there is no ultimate proof for settling disputes over these goals that:
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46 Part 1 / Discovering knowledge

● knowledge is produced for its own sake;

● knowledge is produced for people in a quest for emancipation.

Another important theorist of postmodernity is Jean Baudrillard (1988). He contends

that electronic media have destroyed our relationship to the past and reversed the
Marxist theory that history and economic forces shape society. Instead, he argues it is
signs and images from electronic communication and mass media that influence
people’s lives.
Michel Foucault is another key contributor to postmodern thought even though he
refuses to call himself a postmodernist. He forwards important ideas about the relation-
ships between power, ideology and discourse. The role of discourse is central to
understanding power and control in society. Power works through discourse to shape
popular attitudes towards social phenomena. For example, expert discourses can
become powerful tools to restrict alternative ways of thinking. In this way, Foucault
(1980) argues that knowledge becomes a force for control and is linked to technologies
of surveillance, enforcement and discipline.
Critics of the postmodernism viewpoint argue that attempts to understand social
phenomena or change the world for the better are doomed by this perspective. Also, it
impedes any development of general theories of the social world that can help us to
intervene and shape matters in a positive manner. One of the central planks of post-
modern theory was the discovery of the complexity of the social world, language and
meaning. For some critics, there was no possibility to encapsulate the complexity such
that postmodern theory became the complexity itself. This is reflected in the wildly
conflicting theories, practices and knowledge gained under the umbrella of postmod-
ernism. Some critics of postmodernism have argued that its influence is going out of
fashion at the start of the twenty-first century and that its most radical propositions are
no longer outrageous and have a clichéd ring about them. In opposition to the ambigu-
ity and complexity of this perspective, it is suggested that the clarity and simplicity of a
critical realist perspective may provide the explanatory power and utility to follow the
potential demise of this school of thought.
From a realist perspective, there are four misconceptions about knowledge (Sayer
1992), as shown in Table 2.1 (p. 47). First, knowledge can come from participation and
interaction with others as well as observation. Secondly, spoken and written forms of
language are not the only ways to communicate, appreciate and apply knowledge.
Everyday skills such as feelings of sight, sound and smell can give knowledge about,
say, being in a large crowd or a threatening environment. Thirdly, knowledge is not a
finished product but rather an ‘ever present’ and ‘continually reproduced’ outcome of
individuals. Lastly, science cannot be assumed to be the highest level of knowledge
derived from the first three misconceptions.
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Chapter 2 / Philosophical perspectives on knowledge 47

Table 2.1 Four misconceptions of knowledge (Sayer 1992)

1 That knowledge is gained purely through contemplation or observation of the world.
2 That what we know can be reduced to what we say.
3 That knowledge can be safely regarded as a thing or product that can be evaluated
independently of any consideration of its production and use in social activity.
4 That science can simply be assumed to be the highest form of knowledge and that other types
as dispensable and displaceable by science.

To ask for the cause of something is to ask what ‘makes it happen’, what ‘produces’,
‘generates’, ‘creates’ or ‘determines’ it. These are all metaphors by which change can
occur (Bhaskar 1975). Realism does not view causality as a relationship between dis-
crete events. Instead, realism is concerned with the ‘causal powers’ or processes and
structures that operate in the social world, as shown in Figure 2.7. The causal powers
can exist whether or not they are exercised. For instance, unemployed workers have the
power to work even though they are not doing so now. Knowing an event ‘A’ has been
followed by an event ‘B’ is not enough – we need to understand the continuous process
by which ‘A’ produced ‘B’. The process of change usually involves several causal mecha-
nisms. Depending on the conditions, operation of the same process can produce
different results or, conversely, operation of different processes may produce the same
results. The underlying structures can be identified through abstraction and looking for
what might produce the effects at issue. Examples of structures are bureaucracies, reli-
gious structures and structure of industries.

EVENTS E1 E2 E3 E4 E5 E6 E7 KNOWING THAT

PROCESSES M1 M2 M3 M4 M5 KNOWING HOW

STRUCTURES S1 S2 S3 S4 PAST EXPERIENCE

Figure 2.7 Realist theory of explanation

How would you describe your own knowledge? Do you use words such as ‘know how’ Pause for thought
and ‘know that’? Spend some time thinking about your own knowledge and make a list
of words that describe your knowledge base. Can you recognise any similarities or
differences in the words that you have used? Do your descriptions compare with any
words found in this chapter? If you have some atypical words and descriptions, could
they be used to formulate a new theory of knowledge?
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48 Part 1 / Discovering knowledge

Current ‘knowledge’ frameworks within the knowledge

management literature

Knowledge can have a nebulous connotation and can become confused with data and
information, especially when the terms are used interchangeably in organisations.
Davenport and Prusak (1998) view data as discrete objective facts about events that
may take the form of structured records of transactions in organisations. In contrast,
information is seen as a ‘message’ or flow of messages that informs the data and makes
some difference in outlook or insight to the receiver. Knowledge arising from this data
and information has taken the form of a logical behaviourist perspective within the
current literature and can be distinguished along the continuum of ‘knowing how’ and
‘knowing that’ (Polanyi 1967), as shown in Table 2.2.

Table 2.2 Typologies of knowledge

KNOWING CONTINUUM KNOWING
HOW THAT
Kogut & Know-how Information
Zander (1992)
Nonaka (1994) Tacit Explicit
Blackler (1995) Embrained Embodied Encultured Embedded Encoded
Spender Individual/Implicit Social Individual/Explicit
(1996, 1998) Social/Implicit knowledge Social/Explicit
Brown & Know-how Know-that
Duguid (1998)
Davenport & Experience Insight Values Data Information
Prusak (1998)
Cook & Knowing (tacit) Discourse Knowledge
Brown (1999) (explicit)
Pfeffer (1999) Knowing-Doing Knowledge
Hassard & Processual – Cultural Being in
Kelemen (2002) knowing the practices the world
world
Newell et al. Processual Structural
(2002) perspective perspective
Orlikowski Knowing Knowledge
(2002)

Kogut and Zander (1992) categorise knowledge as a difference between know-how

and information based on a similar distinction between declarative and procedural
knowledge as used in artificial intelligence. Nonaka (1994) makes a distinction between
tacit and explicit knowledge based on Polanyi’s (1967) original categories. He develops
a hypothesis for the four modes of knowledge conversion as:
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Chapter 2 / Philosophical perspectives on knowledge 49

● from tacit knowledge to tacit knowledge: process of ‘socialisation’ through shared

experience and interaction;
● from explicit knowledge to explicit knowledge: process of ‘combination’ through
reconfiguring existing knowledge such as sorting, adding, recategorising and recon-
textualising explicit knowledge can lead to new knowledge;
● from tacit knowledge to explicit knowledge: process of ‘externalisation’ using
metaphors and figurative language;
● from explicit knowledge to tacit knowledge: process of ‘internalisation’ through the
learning process.

Blackler (1995) provides a more detailed framework of the five types of knowledge
found in organisations. As shown in Table 2.2, embrained and encoded knowledge cor-
responds with ‘knowing how’ and ‘knowing that’ respectively and the three further
forms of knowledge are forwarded to exist along the continuum of knowledge. It is
important to clarify here that different terms are used for the same concept within the
literature, as illustrated in Table 2.2. For example, the action-oriented concept of ‘know-
ing how’ (Polanyi 1967) is treated as implicit knowledge (Spender 1996, 1998),
experience (Davenport and Prusak 1998), knowing (Cook and Brown 1999; Hassard and
Kelemen 2002; Orlikowski 2002), knowing-doing (Pfeffer and Sutton 1999), and a
processual perspective (Newell et al. 2002). Similarly, ‘knowing that’ has been consid-
ered as information (Davenport and Prusak 1998; Kogut and Zander 1992), explicit
knowledge (Cook and Brown 1999; Spender 1996, 1998), knowledge (Orlikowski 2002;
Pfeffer and Sutton 1999) and the structural perspective (Newell et al. 2002). Are these
reworkings purely another form of old wine in new bottles?
Hassard and Kelemen (2002) provide a refreshingly different perspective of knowledge
from the postmodern tradition. They draw heavily on Lyotard (1984) and Foucault (1980)
and view knowledge as ‘a set of cultural practices situated in and inextricably linked to the
material and social circumstances in which it is produced and consumed’. Production of
knowledge relies on resources cut away from its original creation and consumption of knowl-
edge occurs through ‘being in the world’ and social participation in a community of practice.

A realist theory of the structure of organisational knowledge

If one adopts a realist theory of knowledge, one can conceptualise ‘knowing that’ as the
events in social phenomena characterised by the production of knowledge. Similarly,
‘knowing how’ can be visualised as the processes and mechanisms that produce the
‘knowing that’. However, there is nothing within the current literature to illustrate the
structure of knowledge that informs ‘knowing how’ and ‘knowing that’. It is argued
here that the primary structure of knowledge is past experience, as shown in Figure 2.8
(p. 44). The past experience of human actors shapes the broad social, economic and
political networks within organisations.
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50 Part 1 / Discovering knowledge

EVENTS
KNOWING THAT

SINGLE-LOOP DOUBLE-LOOP
LEARNING LEARNING
KNOWING HOW

PROCESSES
REFLECTION

PAST EXPERIENCE

STRUCTURES

Figure 2.8 Structure of knowledge: routines and revolution

If a person is confronted with a totally new situation, it is likely that the person will
predominantly have recourse to their past experience and intuition to determine how
to manage in a given environment. This is closely linked with the process of sense
making (Weick 1995) whereby people turn knowledge into action. Intuition is assumed
to be an innate behaviour embedded within the fabric of experience. Past experience is
developed and nurtured in the form of a learning cycle informed and reinforced by
‘knowing how’ and ‘knowing that’, as shown in Figure 2.8. It is argued that these
behavioural cycles will produce organisational routines (Nelson and Winter 1982) and
single-loop learning (Argyris and Schon 1978) within organisations whereby these
processes maintain the central features of the organisation’s ‘theory in use’ by detecting
and correcting errors within a given system of rules. Individuals may take risks but this
will still be based on past experience, even though it is partial and difficult to justify.
In contrast, it is proposed that if a ‘reflection’ phase is incorporated regularly into
the cycle of ‘knowing how’ and ‘knowing that’ such that the underlying assumptions
and values of an organisation are questioned, this is likely to result in the higher cogni-
tive level within organisations referred to as double-loop learning (Argyris and Schon
1978). This is more likely to lead to ‘revolutions’ in organisational thinking which may
not always lead to the positive organisational outcomes envisaged. Double-loop learn-
ing can potentially result in a destabilising force within any organisation.

CASE STUDY

AMD FT
Jerry Saunders, chief executive and co-founder of However, he has some serious concerns about the
AMD, has just rung you (Hans-Raimund Deppe) as plant and wants to talk to you in person in three
the new general manager of the Dresden plant in days’ time. He will be flying in directly from the
former communist eastern Germany. He has con- headquarters office in California for this meeting.
gratulated you on your successful appointment and You are aware that Jerry Saunders will soon be
transition from the semiconductor subsidiary of retiring from the company and his overarching
Siemens. He reiterates that he has high hopes in vision is to be a sizeable competitor to the virtual
your abilities to take over from the successful start- monopoly established by Intel in the semiconductor
up established by your predecessor Jim Doran. market. His main concern is how you intend to
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Chapter 2 / Philosophical perspectives on knowledge 51

deliver on the projections of growth with a compar- you are aware that the factory is not equipped to
atively untrained workforce. Dresden has always make chips using the new technology based around
been a risky venture for him and he is keen to see it 300mm diameter wafers instead of the current
succeed in an environment of highly changing tech- 200mm wafers used at Dresden that contain fewer
nologies. You are now presiding over a $600 million chips. It is also almost certainly too expensive to
expansion to push up production at Dresden. switch the plant to the new technology. This raises
The production of microprocessors was started at concerns in your mind about whether the plant
this plant three years ago and employs 1,900 people. could survive more than five to seven years in its
Your annual production target is set to reach current state. Intel has already invested in 300mm
40m–50m chips next year. This will enable AMD to wafer technology and by the end of the year will
fulfil its dream of growth, assuming that there isn’t a have five microprocessor factories capable of making
downturn in the global market for microprocessors. chips with 0.13 micrometre line widths. The key
Jerry Saunders is keen to understand the detail of issue is how to compete with Intel on these terms
how you will make this happen. and to reduce their supremacy of the market. Last
During the start-up phase, twenty staff were year, AMD accounted for an estimated 20 per cent of
brought in from offices in California to lend their all microprocessor shipments while Intel was almost
expertise to the venture. In a dramatic move, 150 of totally responsible for the rest.
the more highly qualified workers were sent to the Source: Article by Peter Marsh, Financial Times, 8 July 2002
US for up to a year immediately before the plant
began production. They learnt about the more eso- Questions
teric aspects of making silicon circuits using a new
1 Discuss how you will manage your meeting with
process to be employed at the Dresden plant. This
Jerry Saunders and your action plan for the coming
used copper rather than aluminium within each chip
year.
to make the interconnections between different
2 Development and production of microprocessors
groups of transistors. In addition, the plant workers involves some of the most advanced skills in any
had to learn how to use a new generation of wafer industry. How do you intend to develop the ‘know
steppers. These are machines that define the size of how’ and ‘know that’ at the Dresden plant given the
electronic patterns on individual chips so that the rapidly changing technological environment?
spacing between individual circuits can be reduced to 3 How do you intend to set up ‘communities of
enable more circuits to be packed inside each chip. practice’ between AMD’s Californian workers and
By the end of the year, the Dresden plant is due your Dresden staff to encourage knowledge sharing
to make all the company’s chips including the new and innovation? Can you see any problems that
high-performance Hammer microprocessor with a could arise from your interventions?
feature size of 0.18 micrometres. On the downside,

Summary
This chapter has elaborated four main themes:

1 The development of western philosophy with its perpetual quest for an understand-
ing of knowledge underlies many contemporary justifications of the term. Broadly,
western philosophy has created a distinction between the idealist philosophers who
view knowledge as an entity within our minds and empirical philosophers who view
knowledge as arising from our senses.
2 The notions of ‘knowing that’ and ‘knowing how’ arising from Gilbert Ryle and
Michael Polanyi are considered to exist along a continuum rather than as separate
entities. The current typologies of knowledge within the literature are expressed as a
reworking of this form of logical behaviourism.
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52 Part 1 / Discovering knowledge

3 The competing philosophical positions are explored using Burrell and Morgan’s
framework, especially the more common perspectives of positivism, constructivism,
postmodernism and realism in knowledge management research.
4 A realist theory of the structure of knowledge is presented based on ‘past experience’
to underpin the processes of ‘knowing how’ and the outcomes of ‘knowing that’. It
is argued that a reflection phase is primary in transforming organisational routines
to double-loop learning in the underlying structure of knowledge.

QUESTIONS FOR FURTHER THOUGHT

1 Do you agree with the idealist notion that knowledge can only exist in our heads? If not, what
alternative can you provide to our current conception of knowledge?
2 What are the strongest arguments against an empiricist perspective of knowledge?
3 Using Hegel’s notion of the dialectic process, which one of the competing perspectives is likely to
provide a credible antithesis to the dominant positivist paradigm in management research?
4 From Husserl’s perspective, knowledge is linked to a directed mental content called
‘intentionality’ in our consciousness. What are the merits and drawbacks of this perspective in
knowledge management?
5 What are the likely consequences of an almost total lack of regard of issues concerning language
in knowledge management research?
6 How could a philosophical understanding of knowledge improve worker performance?
7 Philosophical debates are often excluded and denigraded as being esoteric and inappropriate for
management. Can this position be defended in the further quest for knowledge?
8 If knowledge is not purely about what we can say, how can we incorporate other forms of
communication such as non-verbal cues into our theory of knowledge?
9 What is the difference between data, information and knowledge in an organisation? How can a
manager effectively transform data and information into effective knowledge? How can
organisations manage competing and often conflicting interpretations of the same data and
information? What are the drawbacks of relying on position power in these circumstances?
10 If the underlying structure of knowledge is past experience, what are the drawbacks of
considering intuitions, hunches and insights as part of one’s past experience?

Further reading
1 Magee, B. 2000 is an excellent introduction to the thinking of western philosophers in
the form of a dialogue between Magee and academics who have spent a lifetime studying
particular philosophers.
2 Ryle, G. (1949) acts as the basis for much of the philosophical assumptions around the
notion of ‘knowledge’ in the current literature.

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into action’. California Management Review, 42, 92–3.
Plato (1992) Thaetetus, B. Williams and M. F. Burnyeat, eds, Hackett Publishing Co,
Cambridge, MA.
Polanyi, M. (1967) The Tacit Dimension, Doubleday, New York.
Ryle, G. (1949) The Concept of Mind, Hutcheson, London.
Sartre, J. (1968) Being and Nothingness, Routledge, London.
Sayer, A. (1992) Method in Social Science: A Realist Approach, Routledge, London.
Skinner, B. F. (1938) The Behaviour of Organisms: An Experimental Analysis, Appleton-Century-
Crofts, New York.
Spender, J. C. (1996) ‘Organizational knowledge, learning and memory: Three concepts in
search of a theory’, Journal of Organizational Change, 9, 63–78.
Spender, J. C. (1998) ‘Pluralist epistemology and the knowledge-based theory of the firm’,
Organization, 5(2), 233–56.
Weick, K. E. (1995) Sensemaking in Organizations, Sage Publications, Thousand Oaks, CA.
Wittgenstein, L. (1953) Philosophical Investigations, G. E. M. Anscombe, translator, Basil
Blackwell, Oxford.
Wittgenstein, L. (2001) Tractatus Logico-philosophicus, Routledge, London.
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PA RT 2
Generating knowledge

DISCOVERING
KNOWLEDGE
Data, information & knowledge
History of managing knowledge
Philosophical perspectives on knowledge

LEVERAGING GENERATING
KNOWLEDGE KNOWLEDGE
Knowledge management Organisational learning
in the learning organisation Knowledge management
Intellectual capital Tools & technology
KNOWLEDGE
MANAGEMENT
CYCLE

SHARING EVALUATING
KNOWLEDGE KNOWLEDGE
Knowledge management Knowledge management systems
and culture Strategic management perspectives:
Change management knowledge management strategy
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9068 KMAN_C03.QXD 7/7/08 11:47 AM Page 57

Chapter 3
Organisational learning

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● understand cognitive and behavioural approaches to learning;
● contrast single-loop and double-loop learning;
● present the nature of organisational learning from an information-processing perspective;
● explain how organisational routines are changed and transformed to dynamic capabilities;
● describe the role of politics in organisational learning.

MANAGEMENT ISSUES

An understanding of individual learning, team learning and organisational learning implies these
questions for managers:
● What learning environments can be developed to promote effective learning?
● How can complacency from successful ventures and defensive routines from failures be managed
effectively?
● When is it appropriate to maintain stability or challenge status quo to promote organisational
learning?
● Is an autocratic or participative leadership style more suitable for organisational learning?

Links to other chapters

Chapter 6 concerning how organisational learning can lead to competitive advantage.
Chapter 7 on the role organisational culture may have on the internal political climate and
organisational learning.
Chapter 8 on the human resource interventions that can be adopted to foster knowledge sharing
and organisational learning.
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58 Part 2 / Generating knowledge

OPENING VIGNETTE
Organisational learning in the design industry FT
Attitudes to the design industry are changing. loss of creativity. But to keep up with the pace of our
Increasingly, through government support and clients, and to support their changing needs, we
ongoing promotion by the Design Council, the must learn to view growth as an opportunity.
value of design to business in its many forms has Growth is not just about more money, but about
started to be more widely recognised. But there is developing people. There is a war for talent out
more to do before the business community accepts there, and we need to offer our people opportunities
design as an indisputable asset that adds value to the to develop their skills, or someone else will. We also
bottom line. As an industry, the onus is on us to need to implement the processes that go hand in
change the business community’s opinion, put hand with growth, such as better financial controls
design on the same level as other professional prac-
and people development skills.
tices and convince business that our creativity adds
Successful businesses embrace change and make
real financial value.
it part of their culture. The design industry must do
This will become easier as businesses and design-
the same. Ironically, creative people are often the
ers understand more about how creative ideas are
most intrinsically conservative, but to stand still in
born. For too long, creativity has been viewed from
a purely aesthetic perspective. Aesthetics are the business is the biggest danger of all. If we are not as
packaging of an idea. The real equity lies in the idea flexible as our clients in rapidly adapting to change,
itself and big creative ideas come from only one then how can we expect them to value us genuinely
source – identifying the specific commercial issues a as business partners?
business is trying to solve. To do that we, as cre- The design industry is reminiscent of a teenager on
atives, have to be able to understand business and the brink of adulthood, looking to management and
how it works. business for guidance in its evolution. In Britain, just
There are several elements of management and 25 per cent of the industry accounts for 80 per cent of
business practice we can draw on to help achieve the fee income. If our industry is to develop and this
this, not least the very language of business. As an ratio become more balanced, we need to address
industry we need to learn to talk in the same lan- these aspects of the business world and start to oper-
guage as our clients, and marry effectively creativity ate more like consultants, selling design as a serious,
and strategic thinking. Design businesses need professional, results-orientated activity.
strategists as well as creative thinkers to be involved But by the same token, clients need to learn from
in all parts of the process, so that the results will creatives to allow their own people to take more
always be based on solid business reasoning that our creative risks, which is, for us, a daily affair. And a
clients can understand. lot of fun.
The industry also needs to learn to be more entre-
Source: Article by Aziz Cami, Financial Times, 10 October 2000
preneurial in the way we gain our business
understanding. In the past, our (design) agency has
loaned people out to work in-house alongside our Questions
clients. This has helped us get better at identifying 1 How can design organisations learn to be more
how design will add value to their business, and made entrepreneurial? What skills are required to enable
us better able to express this using their language. The them to act differently?
ability to embrace growth is another business qual- 2 What conditions are necessary for design firms to
ity we would do well to adopt, bearing in mind that innovate rather than following their traditional
73 per cent of design businesses earn less than £1 patterns?
million a year in fees. Too many agencies still fear 3 How can the intrinsic creativity of design firms be
the prospect of expansion, associating it only with a channelled into effective business solutions?
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Chapter 3 / Organisational learning 59

Introduction
There is considerable fragmentation in the field of organisational learning and no
single framework has successfully encapsulated the diversity of its offerings. The disci-
pline of organisational learning has its roots in a number of wider disciplines of
psychology, management science, sociology, strategy and cultural anthropology
(Easterby-Smith 1997). The literature of organisational learning is much more mature
than the relatively recent literatures of the ‘learning organisation’ and ‘knowledge man-
agement’ and provides an essential cornerstone for the emerging knowledge
management literature.
This chapter begins by looking at how we learn as individuals and how we learn in
groups. It examines the role of success and failure in organisational learning and for-
wards the proposition that moderate levels of failure may act as important drivers in
the learning process. The notion of organisational learning is explored in terms of
single and double-loop learning and two commonly cited frameworks are investigated –
one from an ethnomethodology background and the other from an information-
processing one. The information-processing perspective (Huber 1991) of organisational
learning is further developed by considering the processes of knowledge acquisition,
information distribution, information interpretation and organisational memory.
The role of ‘unlearning’ is examined together with its importance in preventing stag-
nation and inertia in organisations. A common response to familiar problems in
organisations is to develop routines based on existing knowledge. Learning in the form
of organisational routines is explored and how these routines change in response to
performance gaps or new possibilities. It is assumed that many of these routines con-
tain tacit knowledge and are stored as procedural memory in organisations. A recent
conceptual development of organisational routines is the concept of ‘dynamic capabili-
ties’. The theoretical nature of these dynamic capabilities is explored and their role in
highly volatile environments. A much neglected area of organisational learning is the
impact of politics on learning. A model is forwarded showing a dialectic of cooperative
and competitive environments linked to potential asymmetry of power relations, emo-
tions and self-identities.

Individual learning
In an organisation’s infancy or in micro-firms comprising a few members, organisa-
tional learning could be considered synonymous with individual learning. However, as
organisations grow, a clear distinction develops between individual and organisational
learning. But are they one and the same? Argyris and Schon (1978, p. 9) articulate this
dilemma as follows:
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60 Part 2 / Generating knowledge

‘There is something paradoxical here. Organisations are not merely collections of individ-
uals, yet there are no organisations without such collections. Similarly, organisational
learning is not merely individual learning, yet organisations learn through the experience
and actions of individuals. What, then, are we to make of organisational learning?
What is an organisation that it may learn?’

The current theories of individual learning come from various branches of behav-
iourism and cognitive psychology. Some of the early behaviourist theories of individual
learning were based on a stimulus-response model of behaviour (Gutherie 1935;
Skinner 1938). These simplistic notions were extended by examining changes in
response probabilities from various stimuli in the learning process. Further behavioural
research in the 1950s was conducted on mechanisms of learning where learning
became connected with an acquisition of associations, conditioned reflexes and stimu-
lus-response bonds. Subsequent behavioural research explored the role of memory to
understand the process of strengthening and weakening associations through rote
verbal learning (Underwood 1964).
Another branch in learning theory came from cognitive psychology which saw learn-
ing as a change in states of knowledge rather than a change in the probability of response
(Bruner et al. 1956). This information-processing perspective laid an emphasis on prob-
lem solving. Further research in this area moved to investigate memory structures,
processing of information, organisation of knowledge and the process of problem solving
(Klahr and Wallace 1976). The advent of the information-processing perspective has led
to wide acceptance of computer simulation and modelling of the learning process.

Pause for thought Spend five minutes thinking about the different learning practices in your organisation
and make a list of them. Which ones have you found to be the most effective and why?
What do you consider are the main strengths and limitations of external courses such as
MBA programmes? How do you keep your knowledge up to date, particularly for
internal promotion opportunities and in a highly changeable and competitive external
job market?

A model of the learning process that is widely used in teaching, training and man-
agement is the Lewinian experiential learning model (Kolb 1984), as shown in Figure
3.1 (p. 61). Individual learning can be defined as (Kim 1993):

‘increasing one’s capacity to take effective action.’

The basic learning cycle from the experiential school of thought has appeared in a
variety of different management guises: Deming’s (1986) plan–do–check–act cycle,
Schein’s (1987) observation–emotional reaction–judgement–intervention cycle and
Argyris and Schon’s (1978) discovery–invention–production–generalisation cycle. Each
of the four aspects of the learning process have been developed into learning styles to
help individuals understand their strengths and weaknesses in the learning process. An
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Chapter 3 / Organisational learning 61

Observations
and reflections

Formation of abstract Concrete

concepts and generalisations experience

Testing implications of
concepts in new situations

Figure 3.1 The Lewinian experiential learning model

instrument commonly used by trainers is the Learning Styles Questionnaire devised by

Honey and Mumford (1986). This instrument provides individual profiles against the
four learning styles, activist, pragmatist, reflector and theorist, which are directly
related to the Lewinian learning model.
One of the main criticisms against this learning model is that it ignores the learner’s
motivation to learn. Without this motivation, or ‘fire under the belly’, it is unlikely
that the individual will have any incentive to learn. How do we ignite this fire in indi-
viduals to foster learning in organisations? Also, learning models assume that feedback
and reflection are central to the learning process. However, in many organisations,
there can be a tendency towards an action-fixated non-learning cycle (Garratt 1987)
where the reflection stage is ignored. People don’t necessarily have time to think and
reflect, being bombarded by urgent problems and pressing deadlines. Are there serious
consequences for individual learning in the ‘busy-busy’ cultures and environments we
inhabit? How is the space and time for reflection managed in organisations?
The traditional goals of the learning process are acquisition of knowledge (know
what), development of skills (know how) and a change in attitudes of the individual
learner. However, through introspection, a learner can also learn about their strengths
and weaknesses as a learner. Bateson (1987) coined the phrase ‘deutero-learning’ for
individuals who became effective at ‘learning to learn’ and more skilled at problem
solving. Defensive routines can create blockages in deutero-learning and inhibit further
learning. This is particularly evident among smart and professional people where there
may be a disparity between what they say (their ‘espoused theories’) and what they
believe (their ‘theories in use’) (Argyris 1991). The defensive reasoning often arises from
smart people’s high aspirations for success and their equally high fear of failure which
may lead to embarrassment and feelings of vulnerability and incompetence.
Reg Revans (1977) developed the notion of ‘action learning’ from observing man-
agers and recognising that their learning entails taking effective action rather than
purely recommending or making an analysis of a given situation. He stressed the need
to integrate cognition and action and theory and behaviour. Revans based his notion of
learning on the simple mathematical equation:

L (Learning) = P (Programmed Learning) + Q (Questioning Insight)

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62 Part 2 / Generating knowledge

Team learning
Team learning can be viewed as the capacity of a group to engage appropriately in dialogue
and discussion (Senge 1990). There are three characteristics of effective team learning:

● ability to think insightfully about complex issues and bring together the collective
intelligence of the team rather than the insight of the dominant individual;
● ability to provide innovative and coordinated action. This implies alignment of
minds between team members and a conscious awareness of other team members
and their actions. The example of great jazz ensembles provides a useful metaphor
for spontaneous and coordinated action;
● ability to share practices and skills between teams in organisations.

Dialogue is the free and creative exploration of complex issues involving active lis-
tening and suspending one’s own view. The purpose of dialogue is to go beyond one’s
own understanding and become an observer of one’s own thinking. This means sus-
pending one’s own assumptions and playing with different ideas. Dialogue means
letting go of power differentials between team players and treating each member
equally. It means exploring our assumptions behind our closely held views. Dialogues
are particularly useful for divergent thinking where we want a richer grasp of a complex
issue rather than fostering agreement. All the early western philosophers such as
Socrates, Plato and Aristotle used dialogue in their development of knowledge. Isaacs
(1993) provides a useful analogy of the dialogue process when it works well:

‘A flock of birds suddenly taking flight from a tree reveals the potential coordination of
dialogue: this movement all at once, a wholeness and listening together that permits
individual differentiation but is still highly interconnected.’

Discussion is complementary to dialogue and is best employed in situations of con-

vergent thinking and decision making, as shown in Figure 3.2 (p. 63). In discussion,
different views are presented and defended and there is the search for the best view and
arguments to support the decision that needs to be made (Senge 1990). Discussions
converge to a conclusion and a course of action. The assumption is that the best argu-
ment tends to win in discussions. However, it can be the best arguer using rhetoric or
emotive language rather than logic that wins as objective criteria against which the
quality of and validity of an argument are rarely tested.
However, there can be defensive routines that can block effective team learning, espe-
cially if an individual digs in their heels with their own perspective. This can lead to
team conflict, entrenched views and a block of energy flow in a team. Often the defen-
sive routines can arise from individuals not wishing to confront their own thinking to
save themselves from threat or embarrassment. This enables them to maintain an air of
confidence in a situation based on past judgements and obscures their ignorance.
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Chapter 3 / Organisational learning 63

The distinction between discussion and dialogue can be seen as the difference
between decision making and sense making. Weick (2002) describes how a leading fire-
fighter makes this distinction clear:

‘If I make a decision it is a possession, I take pride in it, I tend to defend it and not listen
to those who question it. If I make sense, then this is more dynamic and I listen and I
can change it. A decision is something you polish. Sense making is a direction for the
next period.’

Drivers of organisational learning: success or failure?

Is failure a prerequisite to organisational learning? If it is, many organisations do little
to cultivate it and learn the important lessons from it. Instead, we live in a dominant
culture where failure and mistakes are often not tolerated, leading to behaviours where
people don’t talk about them, dissociate themselves from them and never freely admit
to such experiences. Yet failures and mistakes occur on a daily basis in organisations
and they can be costly if there isn’t a culture of ‘error harvesting’ where people share
their mistakes and hard-won lessons with fellow colleagues. In large organisations, this
could prevent costly mistakes from recurring due to blame cultures that may be
dominant. Successful forms of ‘error harvesting’ cultivated in organisations have included
groups or work teams coming together on a regular basis and discussing problems, issues
and collective appraisals on remedial measures and future actions. Such reflective group-
ings have been called ‘quality circles’ or ‘action learning groups’ in the past.
What is the problem with success? Surely it provides a secure and reliable basis for
future action? If certain practices, procedures and routines have worked in the past,
why discard them for something new? Success tends to maintain the status quo

DIVERGENT THINKING CONVERGENT THINKING

Suspending
assumptions
Treating members
equally
Exploring BLOCKS
assumptions
Defensive routines
Feeling threatened
Hiding ignorance Best arguments
Decision making

DIALOGUE DISCUSSION

Figure 3.2 Team learning (Senge 1990)

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64 Part 2 / Generating knowledge

and short-term stability as people are rewarded for their successes and follow their tried
and tested ways. The danger is that success can lead to complacency, restricted search
and attention, risk aversion and homogeneity (Sitkin 1992).
Success can lead to little motivation to change our ways as existing behaviours are
reinforced. The tendency is towards risk-averse and conservative behaviours connected
with innovation or decision making. Managers want to guard themselves against the
embarrassment and dangers of undertaking risky options that may backfire. Firms
prefer to pursue the traditional ways that have worked in the past and have led to their
success. Given the nature of dynamic external environments, such ‘play it safe’ behav-
iours can provide reliable performance only in the short term. Some of the
characteristics of success and failure in organisations are shown in Figure 3.3.

Pause for thought Reflect on some successful projects or jobs based on your past experience. What specific
lessons did you learn from them and did you use your experience on later projects?
Similarly, now think of projects that were more like failures in your mind. How different
were the lessons from these projects? What types of projects or jobs have you found
valuable and have made a marked impression on you? Are there any connections with
successful or unsuccessful projects?

RESILIENCE

INNOVATION
EXPLOITATION
SUCCESS

Maintain status quo EXPLORATION Mistakes

Complacency Introspection
Risk aversion Error harvesting

EXPLOITATION
Short term Experimentation

FAILURE
EXPLOITATION Long term

EFFICIENCY

RELIABILITY

Figure 3.3 Success and failure in organisations

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Chapter 3 / Organisational learning 65

Failure allows organisations to learn through experimentation and making adjustments

from their mistakes. Major failures are to be avoided as they can lead to the ultimate
demise of any firm. However, modest failures could be tolerated to enhance the levels of
risk taking and foster experimentation. Failure challenges traditional norms and pro-
motes greater introspection and analysis of what went wrong. People tend to focus on
the inconsistencies of the outcome and draw attention to problems that may have been
overlooked. This stimulates much greater experimentation with new strategies, proce-
dures and processes. Such varied outcomes and resulting capabilities can lead
organisations to be more adaptable to unexpected environments. Hence, moderate levels
of failure can lead to increased innovation and improve an organisation’s resilience to
adapt to differing environments. As Shakespeare reminds us in Measure for Measure:

‘They say best men are moulded out of faults and, for the most, become much more the
better for being a little bad.’

It is clear that organisations can be weighed down by their history, their past experi-
ences and traditions laid down by their founding fathers. But how far is history a driver
for organisational learning? Organisational learning from history may be restricted to
small samples of experience in any given situation (March et al. 1991). If an organisa-
tion’s experience was successful in the past, the learning and behaviours may become
embedded in its actions. If there are different perspectives and cultures in an organisa-
tion, this may lead to several different lessons being learnt from the same experience
and increasing an organisation’s repertoire of interpretations.

Single-loop and double-loop learning

The nature of organisational learning will depend to a large extent on one’s definition
of an organisation. If one views the organisation as a political entity, the level of organ-
isational learning will depend on political theory and theory of socio-political
movements. In a similar way, if one views the organisation as a culture, the level of
organisational learning will depend on studies connected with anthropology, eth-
nomethodology and phenomenology. If one takes a cognitive school approach,
organisational learning may be viewed as a distinction between cognition development
and behavioural development (Fiol and Lyles 1985). These conceptions of organisa-
tional learning as a mental process have become embedded within the literature
through the notions of single-loop learning (behavioural) and double-loop learning
(cognitive) (Argyris and Schon 1978).
Single-loop learning refers to the process that maintains the central features of the
organisation’s ‘theory-in-use’ by detecting and correcting errors within a given system
of rules. This means that, given any set of problems, an organisation is likely to act in
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66 Part 2 / Generating knowledge

the same traditional ways and patterns. In contrast, the higher cognitive level of
double-loop learning is where current organisational norms and assumptions are ques-
tioned to establish a new set of norms. Firms do not continue with their age-old
patterns but question their assumptions and values. This often leads to new ways of
working and acting.
For example, a firm may be faced with the problem of drastically diminishing sales.
The firm may place the blame for the problem on the poor sales force and introduce
measures to make them work harder or face redundancy. This would be an example of
single-loop learning where the firm responds in a tried and tested manner but assumes
it can accomplish its goals by pushing harder. An example of double-loop learning
would be if the firm tried to assess the problem more closely and look at the underlying
assumptions. It might discover that the customers find its products or services dated,
unappealing and poor value for money compared with competitive offerings. In this
situation, the firm might decide to innovate its product or service by engaging the col-
lective talents of its marketing, design and operations teams. The new product or
service might compete more effectively in the changing competitive markets. Such
measures would be an example of double-loop learning.
This example illustrates the difference between exploration and exploitation in
organisational learning (March 1991). Exploration behaviours (double-loop learning)
are where organisations engage in risk taking, play with ideas, experiment, discover and
innovate. In contrast, exploitation behaviours (single-loop learning) are concerned
with the refinement of existing processes and emphasise efficiency goals. Both behav-
iours are important for an organisation depending on the context. If efficiency is the
driving force in the competitive environment, single-loop or exploitation behaviours
become important. However, there can be a continual flux between exploitation and
exploration as they compete for a firm’s scarce resources.
As exploration behaviours require risk taking and experimentation, their outcomes
can be less certain and have much longer time horizons. The exploration of new ideas,
markets and relationships and their likely outcomes are much more ambiguous than
exploiting and imitating current methods and relationships. It has been argued that as
firms adapt to the changing environments by refining exploitation behaviours more
rapidly than exploration ones, they are likely to be effective in the short term but self-
destructive in the long term.

Organisational learning frameworks

In the organisational learning literatures, there is an underlying assumption that learn-
ing will improve a firm’s performance. In contrast, a key premise in the strategy
literatures is that this will be achieved by close alignment of the firm to its environ-
ment. A definition of organisational learning based on action that encompasses such
assumptions is proposed by Fiol and Lyles (1985):
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Chapter 3 / Organisational learning 67

‘Organisational learning means the process of improving actions through better knowl-
edge and understanding’

A number of studies have investigated the disparate literatures of organisational

learning and tried to chart its varied terrain (Crossan et al. 1999; Easterby-Smith 1997;
Fiol and Lyles 1985; Huber 1991; Levitt and March 1988; Shrivastava 1983). Each exam-
ination has provided a somewhat different map of the landscape depending on the
epistemological perspectives and backgrounds of the researchers. A recent eth-
nomethodology framework of organisational learning (Bontis et al. 2002; Crossan et al.
1999) builds on the tension between exploration and exploitation in organisations and
places these notions at the heart of strategic renewal. Renewal is based on organisations
exploring and learning new ways while at the same time exploiting what they have
already learnt. This framework considers organisational learning at three levels: individ-
ual, group and organisational, as shown in Table 3.1. There are four learning processes
that flow naturally from one to another without any clear distinction of where they
begin or end. Also, there may be feedback loops from the learning processes between
the three levels.
Table 3.1 Organisational learning framework (Crossan et al. 1999)
Level Process Inputs/Outcomes
Individual Intuiting Experiences
Images
Metaphors
Intepreting Language
Cognitive map
Conversation/dialogue
Group Integrating Shared understandings
Mutual adjustments
Interactive systems
Organisation Institutionalizing Routines
Diagnostic systems
Rules and procedures

The four learning processes entail:

● Intuiting. This is largely a subconscious process that often requires some form of pat-
tern recognition. For instance, an expert may be able to foresee a pattern in a
problem that a novice may not. This pattern recognition will support exploitation.
However, intuition is also important for exploration to help generate new insights
and novel applications. Metaphors and the use of imagery can help provide the lan-
guage to communicate one’s insight to someone else.
● Interpreting. This is the process of explaining through words and/or actions an insight
or an idea to one’s self or to another person. We develop our own cognitive map of a
domain and can interpret the same stimulus differently due to our established cogni-
tive maps. In a group situation, this can result in multiple and potentially
conflicting interpretations of the best course of action.
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68 Part 2 / Generating knowledge

● Integrating. This learning process is about developing shared understanding and

taking coordinated action through mutual adjustment. Group dialogue and story-
telling are seen as major tools for developing new and deeper shared understandings.
● Institutionalising. This learning process is to ensure that routinised actions occur.
Successful actions over time often become embedded in organisational routines.
Such routines have an effect on the systems, structures and strategies of an organisa-
tion. One characteristic of institutionalisation is the endurance of the behaviour
over a period of time.

This model proceeds to suggest a dynamic between the four learning processes
through ‘feedforward’ and feedback loops. It does not elaborate on how these processes
assist organisations to find the balance between exploration and exploitation behav-
iours which are seen as critical for strategic renewal. Most of the innovation in this 4I
framework rests on the entrepreneurial intuiting in the first individual phase. Without
the ‘feedforward’ loops, it is unlikely that the institutionalised organisational routines
would be challenged, with a consequence of exploitation behaviours predominating
within any organisation. How could managers balance the wisdom of their experts
with the uneasy flair of the entrepreneurs? What effect would culture have on strategic
renewal? Dialogue may be valuable for developing divergent thinking but what are the
implications for actions requiring convergent thinking and decision making?
One criticism of this 4Is model is the tendency in management literature towards
prescriptions related to certain characters of the alphabet:, 4Ps in marketing and 4Is in
action learning (Mumford 1991). What distinguishes the effectiveness of Mumford’s
model based on 4Is of interaction, integration, implementation and iteration over the
Crossan et al. one? There appear to be similarities between interaction in one model
and interpreting in another, integration occurs in both models, and iteration could be
seen as a form of the feedback loops leading to institutionalisation.
Most empirical research in organisational learning tends to be qualitative in nature
and it is relatively uncommon to find many quantitative studies. This is mainly related
to the difficulties of developing valid instruments that measure organisational learning.
One can always develop a multitude of items from pilot interviews and theoretical
frameworks related to organisational learning. From statistical analysis, one can
demonstrate the strength of reliability of these constructs relatively easily. However, we
still don’t know whether what we are measuring is really organisational learning.
Evidence for validity of these instruments is often found wanting. The main reason is
that there isn’t a singular valid instrument in the public domain that has the consensus
of this academic community. If this was the case, one could develop new instruments
confidently, knowing that an element of a valid instrument was contained within the
questionnaire for empirical testing.
The second major issue is around sampling. Who do you send your questionnaires
to? How many people need to be sampled within a firm to get a reliable sample?
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Chapter 3 / Organisational learning 69

Assuming that the research has limited resources, do you sample many people in a few
firms or a few people in lots of firms to get greater generalisations from the results?
Some researchers have surveyed a single senior executive from each firm, assuming that
their position is likely to give them a ‘helicopter view’ of the organisation. Given the
complexity of these methodological issues, can the results from quantitative studies of
organisational learning be meaningful?
One of the seminal papers in this discipline comes from Huber (1991) who attempts
to understand and evaluate the diverse literatures of organisational learning under four
constructs, as shown in Figure 3.4. He adopts an information-processing perspective
defining organisational learning as follows:

‘An entity learns if, through its processing of information, the range of its potential
behaviours is changed.’

This framework adopts a behavioural rather than a cognitive perspective of learning

and assumes that the four constructs are inter-related. No attempt is made to show how
the processes in each construct integrate with one another. Knowledge acquisition is
seen as the process by which knowledge is obtained. Information distribution is the
process by which information is shared, which can often lead to new information or
understanding. Information interpretation is the process by which information is given
one or more interpretations. Organisational memory is the means by which knowledge
is stored for future use (Huber 1991).
The main criticisms of this perspective are around the problems of implementing
organisational learning (Easterby-Smith 1997):

● Political behaviours in organisations are not considered in the framework and can
lead to distortion and suppression of information. The political climate can also lead
managers to make decisions based on irrational grounds. The framework could be
considered as politically naïve.
● As the framework adopts a behavioural rather than a cognitive perspective, there is a
danger that it may lead to a tendency towards exploitation rather than exploration
in organisations.
● Behavioural perspective may create a tendency to hold on to old views and practices
rather than questioning them.

Knowledge acquisition

Organisational Information distribution

learning Information interpretation
Organisational memory

Figure 3.4 Organisational learning framework (Huber 1991)

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70 Part 2 / Generating knowledge

Knowledge acquisition
Organisations acquire new knowledge through the processes of congenital learning,
experiential learning, vicarious learning, grafting, and searching and noticing (Huber
1991), as shown in Figure 3.5. Congenital learning is the learning influenced by the
founding fathers of the organisation. This inherited knowledge can affect the way a
firm acts and interprets new knowledge. Experiential learning is acquired from direct
experience and can be found in a number of guises:

● Organisational experiments may take the form of pilot studies with feedback of find-
ings and recommendations to the organisation.
● Move from behavioural learning to cognitive learning through questioning key
assumptions and values.
● Enhancing adaptability as an experimenting organisation with a greater emphasis on
exploration rather than exploitation.
● Unintentional learning through the haphazard and multi-faceted lives of workers.
● Learning curves or ‘learning by doing’ show that as an organisation produces more
of a product, the unit cost of production decreases at a decreasing rate. The beauty of
this experiential learning is that performance over time can often be predicted using
a mathematical model. Such learning can be explained through individuals learning
over time as well as the organisation, such as the effective use of technology (Yelle
1979). Effective decisions can be made by managers on how best to balance technol-
ogy against working practices (Epple et al. 1996).

Often organisations don’t have the time to gain certain knowledge to meet competi-
tive pressures. They may seek to borrow competitors’ strategies, practices and
technologies. Such learning is termed vicarious learning and it adopts imitation or mim-
icry of other firms. Gaining the ‘know how’ of other firms is termed ‘corporate
intelligence’ and can be gained from consultants, professional meetings and publications.
Knowledge can also be acquired by ‘grafting’ or employing new members with the
knowledge and skills lacking within the organisation. This may be seen as preferable to
developing the knowledge and skills in-house through various human resource inter-
ventions. On a bigger scale, firms engage in acquisitions of other companies where the
acquisition may have core competences lacking within the parent firm.

Congenital learning
Experiential learning
Knowledge
acquisition Vicarious learning
Grafting
Searching and noticing

Figure 3.5 Knowledge acquisition constructs (Huber 1991)

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Chapter 3 / Organisational learning 71

Benchmarking is all the rage in some organisations. What do you think are the problems Pause for thought
of this form of vicarious learning? Similarly, what are the advantages and limitations of
using off-the-shelf solutions compared with building them in-house? From your
experience in organisations, what do you feel hinders them from learning? Many
organisations seem to make the same mistakes over and over again. What do you
believe could help organisations break such detrimental cycles?

Firms also acquire knowledge through intentional search and unintentional noticing
behaviours. Organisational search can take a number of forms (Huber 1991):

● scanning – a monitoring behaviour of organisations often conducted by senior man-

agers searching for non-routine but relevant information;
● focused search linked to a particular organisational problem;
● performance monitoring of internal targets and measures as well as satisfying the
needs of external stakeholders.

Information distribution
In small organisations, information distribution may remain at a very informal level.
However, the quality of information distribution may lead to new or more broadly
based organisational learning. Such information sharing can enable the development
of new information as well as new understanding (Krone et al. 1987). Information dis-
tribution highlights the role of organisational communication and the nature of the
internal political environments (Jashapara 1993) which may aid or hinder such com-
munication. There are technological aspects (see Chapter 5) of knowledge storage and
retrieval as well as social capital aspects such as the relationships between employees
(see Chapter 10) that will have an impact on the nature of information distribution
within an organisation.

Information interpretation
Information interpretation can be seen as the process by which information is given
meaning and the development of shared understanding (Daft and Weick 1984; Huber
1991). Is the goal to develop similar understandings or diverse understandings within
organisations? Would similar understandings result in greater cooperation and coher-
ence whereas more diverse understandings would lead to greater strife and conflict?
The shared understandings and interpretations of new information are affected by cog-
nitive maps and framing, media richness, information overload and unlearning, as
shown in Figure 3.6 (p. 72).
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72 Part 2 / Generating knowledge

Cognitive maps and framing

Information Media richness

interpretation Information overload
Unlearning

Figure 3.6 Information interpretation constructs (Huber 1991)

A person’s existing cognitive map determines how a piece of information is interpreted.

They may be influenced by their position within an organisational hierarchy, previous
experience and their current working team and environment. To establish uniformity of
shared interpretation, there needs to be uniformity in cognitive maps among the team.
This is easier when new information is framed in a consistent and familiar manner. If new
information is framed in a different manner around different divisional units, it is likely
that there will be a diversity of shared understandings of the information.
Media richness is the communication medium’s capacity to change mental represen-
tations within a specific time interval (Huber 1991). Managers often explore the most
effective media to communicate their message to develop shared meaning. For exam-
ple, the use of e-mail as opposed to face-to-face meetings to transmit a message may
convey very differing messages. Face-to-face communication has much greater richness
as it displays the person’s tone of voice and body language as well as the words, unlike
the monotone nature of e-mails.
Information overload has a direct effect on an individual’s capacity to interpret
information. In group situations, information overload may result in disparities of
shared understandings due to different levels of overload within the same group. Even
if there are consistencies in the levels of overload within a group, there are likely to be
diverse interpretations of the same message as individuals respond more to their own
internal state and perceptions than to the external stimulus.

Pause for thought We live in a world where we are bombarded with information and countless e-mails
every day. From your experience, describe your perceptions of information overload on
your job. How do you manage large quantities of information? If you discard much of
this information, how do you know what to discard? How does information overload
affect your emotions and reasoning? What practical strategies have you developed to
cope with information overload?

Unlearning is the process by which individuals discard obsolete or misleading

knowledge (Hedberg 1981). At an organisational level, unlearning can have the effect
of blocking the firm in areas where it used the misleading knowledge or behaviours. It
can also activate a firm to search for knowledge or behaviours to replace the obsolete
ones and encourage it to become more open to new forms of learning and knowledge.
Further elaboration of unlearning is provided on page 73.
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Chapter 3 / Organisational learning 73

Organisational memory
The old oral traditions utilised the human memory and highlighted its limitations.
Long periods of time were spent memorising information, leaving little room for criti-
cal evaluation. In an organisational context, organisational memory may reside in
people’s minds as repositories of organisational knowledge. However, as people leave a
firm, this precious organisational memory may be lost for ever. This ‘soft’ form of
organisational memory can be invaluable in a variety of circumstances:

● diagnosing an error in a complex piece of technology;

● knowledge of organisational skills, experts and resources;
● locating non-traditional information sources.

In the psychology literature, a distinction is made between semantic (general) and

episodic (context-specific) memory (Stein and Zwass 1995). Semantic memory comes
from shared interpretations of significant events that are not personally experienced
and may take the form of handbooks and procedural manuals. Episodic memory is
shared interpretations and collective understandings of personally experienced events.
The ‘hard’ forms of organisational memory relate to storage and retrieval processes
and computer-based organisational memory, as shown in Figure 3.7. The latest KM
component technologies related to effective storage and retrieval and data warehouses
are discussed in Chapters 4 and 5. Such notions of organisational memory treat the
construct as a set of repositories of stored information from an organisation’s history.
The repositories may contain knowledge about individuals, culture, transformations,
structure and ecology (Walsh and Ungson 1991).

Unlearning
Do organisations exist in closed or open systems? Often the tendency among decision
makers is to treat their subsystems and environments as closed systems, leading to a per-
ception of stability in organisational learning. This is fine if environmental changes are
low, stable and predictable. Typically after some delay, organisations will respond to
environmental changes by adjusting their goals and expectations and modifing their
decision-making behaviours. In benevolent environments, there is little incentive for
organisations to change their ways, which ultimately can lead to inertia and stagnation.

Storing and retrieving information

Organisational
memory
Computer-based organizational memory

Figure 3.7 Organisational memory constructs

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74 Part 2 / Generating knowledge

However, if the environmental changes are more substantial and discontinuous, the
traditional responses may need to be reconsidered, deleted and replaced to ensure
organisational survival. This is known as unlearning.

‘Unlearning is a process through which learners discard knowledge. Unlearning makes

way for new responses and mental maps.’ (Hedberg 1981)

Successful behaviours in the past may no longer provide a valid response to future
levels of environmental uncertainty. This requires organisations to pull down obsolete
mental maps showing the correct ways of doing things and starting afresh. If they don’t
do this, the environmental discontinuities may threaten an organisation’s survival. The
effective response in these circumstances is to unlearn old behaviours and learn new ones.
Unlearning is a difficult and cumbersome process as it threatens the organisation’s
way of doing things. To external observers, organisations undergoing unlearning can
appear incompetent and ineffectual. On the inside of organisations, unlearning can
lead to disorientation and upheaval where traditional benchmarks are lost. Unlearning
has three modes of operation (Hedberg 1981):

● challenge and negate (disconfirmation) processes for selecting and identifying stim-
uli. People and organisations unlearn their world views;
● challenge and negate (disconfirmation) any connections between stimuli and
responses so that people don’t know what responses to make to particular stimuli;
● challenge and negate (disconfirmation) any connections between responses so that
people no longer know how to assemble responses to new situations.

Unlearning can be unnerving at an individual level as the traditional points of refer-

ence are lost. So what can act as useful triggers for unlearning in organisations?
Effective triggers include problems, which can arise from cashflow shortages, declining
revenues and profits, financial losses and criticisms from stakeholders. Problems typi-
cally arise from the gap between performance and expectations. Organisations do not
respond in new ways to all problems. The deviation between performance and expecta-
tions needs to be large before any adjustments or reorganisations are likely to occur, as
shown in Figure 3.8.

ENVIRONMENT TRIGGERS LEARNING OUTCOMES

SUCCESSFUL
STABLE STAGNATION INERTIA
TEAMS

Disconfirm stimuli
and world views
PROBLEMS
Disconfirm linkages
UNSTABLE OPPORTUNITIES UNLEARNING between stimuli
PEOPLE and response

Disconfirm linkages
between responses

Figure 3.8 Environments and unlearning

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Chapter 3 / Organisational learning 75

Problems are not the only triggers, otherwise problem-ridden organisations would be
the best innovators (Hedberg 1981) and this is clearly not the case. The dilemma for many
organisations undergoing major problems and crises is that they cannot afford to take the
necessary risks implied in the unlearning process. Opportunities in the external environ-
ment such as development of niche markets can also provide triggers for unlearning.
The third trigger for unlearning is people, particularly when key individuals leave
the organisation, taking with them the experiences of procedures and processes from
the organisational memory.

Organisational routines
Organisational routines are an important aspect of organisational learning as they help
us to understand the interplay between an organisation’s structure, its processes and its
actions. Originally, routines were associated with an organisation’s operating proce-
dures and resembled the mechanical notions of computer programs with their routines
and subroutines (Cyert and March 1963; March and Simon 1958). This included an
organisation’s norms, conventions, rules and procedures and the way it operates on a
daily basis. They helped contribute to an organisation’s stability. These routines were
embedded in the organisation’s culture, beliefs and frameworks and could often contra-
dict rules found in operating manuals. In general, the routines were seen as
independent of individual actors and capable of surviving significant turnover in per-
sonnel (Levitt and March 1988). Routines also explained the inertia within
organisations through repeated patterns of behaviour bound by rules and customs
(Nelson and Winter 1982). Such routines were seen as regular and predictable patterns
of behaviour. In new circumstances, an organisation might draw from a pool of alterna-
tive routines (Levitt and March 1988).
Routines can be communicated through a variety of channels such as imitation,
socialisation, education and personalisation processes, and become part of the collec-
tive memory. It was initially assumed that organisational routines did not change, but
increasing empirical research shows that routines are subject to change (Feldman 2000;
Pentland and Rueter 1994). A number of definitions of this phenomenon are forwarded
in the literature:

‘An executable capability for repeated performance in some context that has been learned
by an organization in response to selective pressures.’ (Cohen et al. 1996)

‘An organizational routine is not a single pattern but, rather, a set of possible patterns –
enabled and constrained by a variety of organizational, social, physical and cognitive
structures – from which organizational members enact particular performances.’
(Pentland and Rueter 1994)

‘Recurring patterns of behaviour of multiple organizational members involved in

performing organizational tasks.’ (Feldman and Rafaeli 2002)
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76 Part 2 / Generating knowledge

Cohen and Bacdayan (1994) have argued that organisational routines are stored as
procedural memory. They make a distinction between ‘procedural’ memory and ‘declar-
ative’ memory arising in the psychology literature. Procedural memory stores the
cognitive and motor skills associated with an individual’s skilled actions and could be
considered as the individual ‘know how’. By nature, it is tacit, relatively automatic and
difficult to articulate. In contrast, declarative memory is the repository of facts, proposi-
tions and events and similar to an individual’s ‘know what’ or explicit knowledge. The
difference is similar to the more static notion of ‘organisation’ compared with the more
dynamic process of ‘organising’ (Weick 1979).
Routines are an important part of an organisation’s competence and without them
organisations would lack efficient methods of collective action. However, routines can
have detrimental consequences if they are automatically transferred to inappropriate
new situations. Working routines are seen as much more than standard operating pro-
cedures as official documents may or may not be followed. What happens in reality is
similar in distinction between espoused theories and theories-in-use in organisations
(Argyris and Schon 1978). They are produced gradually over time through multi-actor
learning engaged in a particular routine. The tacit and multi-actor nature of organisa-
tional routines makes them difficult to research effectively as the problem entails
surfacing, verbalising and externalising an organisation’s ‘unconscious’ memory
(Cohen and Bacdayan 1994). Changes in habitual routines in groups can be triggered
in a number of ways (Gersick and Hackman 1990):

● encountering a novel state of affairs;

● experiencing a failure;
● reaching a milestone in the life or work of the group;
● receiving an intervention that calls members’ attention to their group norms;
● having to cope with change in the structure of the group itself.

Pause for thought As human beings, we have been considered as creatures of habit. Such habits in
organisational terms may be considered as routines. How do you believe that such
stable patterns of behaviour or organisational routines can aid or hinder organisations?
From your experience, do you feel that all processes, no matter how new or innovative,
inevitably lead to organisational routines? Is it worth actively discouraging such routines
in organisations? If so, how?

An alternative conception of organisational routines is one that resembles a set of

possible patterns that are neither fixed nor automatic. A novel representation of rou-
tines is to use a grammatical model (Pentland and Rueter 1994). The ‘grammar’ analogy
to routines allows actors to use a set of possibilities to accomplish a task without speci-
fying a fixed outcome. This model acknowledges the importance of both the structure
and agency (actor) within routines rather than the earlier fixation on operating proce-
dures and the traditional elements of stimulus and automatic response. This approach
concurs with social theory that regards routines in social activity as achieved through
considerable effort (Giddens 1984).
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Chapter 3 / Organisational learning 77

A similar metaphor which demonstrates the stability and adaptability of routines is

the ballroom dance (Feldman and Rafaeli 2002). Individual actions in dances are
scripted beforehand but dances can allow flexibility depending on the context. Dancers
will adapt their styles to this context depending on the number of other dancers on the
floor, any obstructions in the floor, the competence of their partner and whether or not
they have danced the particular number before. Communication between the dancers
(similar to organisational routines) will allow flexibility in the dance to occur. Empirical
research suggests that changes in organisational routines can occur due to a number of
reasons (Feldman 2000):

● Repairing routines so that participants can produce intended and desired outcomes.
This occurs when actions do not produce the intended outcome or produce an unde-
sirable outcome.
● Expanding routines so that participants can produce new possibilities from outcomes.
The changed routine takes advantage of new possibilities.
● Striving routines so that participants can respond to outcomes that fall short of
ideals. This attempts to attain something that is difficult by nature.

Success and failure in outcomes can have a major impact on routines. Favourable
performance with an inferior routine can lead to its perpetuation and the denial of a
superior routine can lead to a competency trap (Levitt and March 1988). Sub-optimal
performance may persist with the use of familiar procedures, practices and technolo-
gies. Success reinforces successful routines whilst inhibiting other routines. As outlined
earlier in this chapter, failure or significant performance gaps may be the necessary
determinant to change organisational routines as organisations search for ones that can
match their desired outcomes.
Recent research has tried to unravel the processes that contribute to the stability and
change of organisational routines (Feldman and Rafaeli 2002). The starting point in
this theory is that organisational routines are a form of coordination used in organisa-
tions. The routines make ‘connections’ where connections are defined as the
interactions between people that enable them to transfer information. The outcomes of
the connection process are social support and information transfer (note the similarity
to social capital and knowledge transfer). The encounters in connections create varia-
tions in strong and weak ties between organisational members.
The connections enable shared understandings to occur. These arise through verbal
as well as non-verbal communication. The coming together of people in a routine
allows different interpretations to be explored and the development of a common
understanding. These understandings include aspects of the organisational context,
performance expectations, power relations and organisational identity. The organisa-
tional context concerns what an organisation does and why, as well as who are the
critical stakeholders. The power relations allow participants to understand the hierar-
chy and their status within the organisation. This theory assumes a time delay
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78 Part 2 / Generating knowledge

between routines and their development of connections and shared understandings

and rather like the same notion in social theory needs to be worked on over time. A
model providing a synthesis of the organisational routine literature is shown in
Figure 3.9 (Cohen and Bacdayan 1994; Feldman and Rafaeli 2002). A useful anology
to describe organisational routines was expressed vividly by an anonymous reviewer
as follows:

‘Routines are like ruts in a well-travelled road. They do not exactly determine where the
next wagon will go, but neither do they merely describe where past wagons have gone.’
(Pentland and Rueter 1994)

Dynamic capabilities
Dynamic capabilities as a concept is a relatively new phenomenon and has evolved
from research on organisational routines. In fact, there is confusion within the litera-
ture about where organisational routines end and dynamic capabilities begin. It is fair
to say that the literature on dynamic capabilities is based predominantly on theoretical
developments rather than on empirical research. On a simplistic level, dynamic capa-
bilities have been considered as ‘routines to learn routines’, similar to the notion of
deutero-learning (learning to learn). The following definitions of dynamic capabilities
illustrate some of the variations in the field:

‘Firm’s ability to integrate, build, and reconfigure internal and external competences to
address rapidly changing environments.’ (Teece et al. 1997)

Stories
PROCEDURAL
Paradigms
MEMORY
Frameworks

Connections
Social support
Information Shared
transfer understanding

TASK OR Context
ROUTINES Power relations
PROBLEM
Performance
Expectations
Identity

Performance
Routine
gap or new
change
possibilities

Figure 3.9 Organisational routines (adapted from Cohen and Bacdayan 1994; Feldman and
Rafaeli 2002)
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Chapter 3 / Organisational learning 79

‘The firm’s processes that use resources – specifically the processes to integrate, reconfig-
ure, gain and release resources – to match and even create market change. Dynamic
capabilities thus are organizational and strategic routines by which firms achieve new
resource configurations as markets emerge, collide, split, evolve, and die.’ (Eisenhardt
and Martin 2000)

‘A dynamic capability is a learned and stable pattern of collective activity through which
the organization systematically generates and modifies its operating routines in pursuit
of improved effectiveness.’ (Zollo and Winter 2002)

So are organisational routines and dynamic capabilities synonymous concepts? The key
distinction appears to be the level of change encountered as a factor of market
dynamism. In stable or static environments and market conditions, organisational rou-
tines predominate, characterised by stable patterns of behaviour. The routines can be
complex but are predictable and build on existing knowledge. They evolve slowly over
time and exhibit qualities of single-loop learning. However, in moderately dynamic or
highly volatile markets, the use of organisational routines can prove hazardous in their
automatic response to changed stimuli. Organisations can learn to adapt their routines to
the changed circumstances, which leads to the development of dynamic capabilities. If
this does not occur, core competencies can become core rigidities (Leonard-Barton 1992).
The fine line between organisational routines and dynamic capabilities arises due to
models that highlight similar stable and predictable modes of activity for each phe-
nomenon (Zollo and Winter 2002). In this conception, dynamic capabilities can be
viewed as modified operating routines following predictable mathematical arrange-
ments, as shown in Table 3.2. The primary distinction is systematic learning, which
implies a stable pattern of learning not dissimilar to single-loop learning. What hap-
pens in highly volatile market conditions when organisations cannot rely on
systematic learning and existing knowledge? Do organisations fall back on their old
tried and trusted learning mechanisms in the vain hope of achieving desired outcomes?

Table 3.2 Dynamic capabilities (adapted from Zollo and Winter 2002)
Dynamic capabilities = Systematic learning + Organisational routines
Systematic learning = Experience accumulation + Knowledge articulation
+ Knowledge codification

Experience accumulation is perceived as occurring from learning investments aimed at

developing a collective understanding of action-performance linkages. A principal aspect
of the learning process is ‘knowledge articulation’ when groups of people come together
in a variety of circumstances such as meetings and debriefing sessions and make their
understandings and interpretations of a situation explicit. This does not imply that there
needs to be agreement within the group, but through a process of dialogue and discus-
sion, a shared understanding is developed. Given that much of the knowledge is likely to
be tacit, this process of externalisation is important to make the knowledge explicit.
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80 Part 2 / Generating knowledge

Knowledge codification as part of the systematic learning allows further reflection on

existing routines to help understand which routines work, which don’t work, and why
(Zollo and Winter 2002). Knowledge codification may take the form of developing manu-
als, decision-support systems and blueprint guides of best practice.
Eisenhardt and Martin (2000) provide a clearer distinction between organisational
routines and dynamic capabilities. They suggest that in stable and moderately dynamic
market conditions, collective organisational activity resembles traditional predictable
routines where managers rely heavily on their existing tacit knowledge. However, in
high-velocity and volatile markets, organisational activity tends towards dynamic capa-
bilities where managers rely much less on existing knowledge due to the ambiguity of
the situation and more on situation-specific new knowledge. In these uncertain envi-
ronments, the dynamic capabilities are composed of simple routines consisting of very
few rules and a greater tendency towards improvisation. Flexibility of response becomes
an important determinant. Dynamic capabilities possess a number of key attributes
(Eisenhardt and Martin 2000):

● equifinality – firms develop similar dynamic capabilities even though they may have
different starting points and take unique paths;
● commonality of dynamic capabilities – such routines are transferable between con-
texts and industries;
● idiosyncrasy – firms may have commonalities in their dynamic capabilities but differ
in their levels of detail (firm specific) which leads to competitive advantage;
● prototyping – often used to test and gain new knowledge quickly through small
losses and feedback;
● real-time information – to allow adjustment and adaptation to occur due to chang-
ing circumstances;
● multiple options – parallel consideration of alternatives to allow managers to act
confidently and quickly;
● path dependent – a firm’s investments in certain routines historically tend to con-
strain its future behaviour.

Dynamic capabilities can lead to competitive advantage if they are valuable, rare,
inimitable and non-substitutable (VRIN attributes). However, it has been argued that
they are necessary, but not sufficient, conditions for sustainable competitive advantage
(Eisenhardt and Martin 2000). Their idiosyncratic nature may give them short-term
competitive advantage, but this cannot be sustained as they are substitutable due to
their equifinality and commonality characteristics.

Politics and organisational learning

The impact of politics and power relations has received little attention within the liter-
ature until recently (Coopey and Burgoyne 2000; Knights and McCabe 1998; Nissley
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Chapter 3 / Organisational learning 81

and Casey 2002; Vince 2001). Organisations exist in dynamic contexts where power
relations may vary considerably, resulting in internal environments fluctuating
between polarities of cooperative, consensual coalitions at one end and conflictive in-
fighting from deep political manoeuvrings at the other (Jashapara 2003).
In a broad societal context, politics can be seen as a way of ruling divided societies
based on conciliation rather than on coercion or undue violence (Crick 1982). Linked
with societal political structures is the notion of rights in most democracies: political
rights, social rights and civil rights (Coopey and Burgoyne 2000). As organisations do
not exist in a vacuum, the values and beliefs associated with these rights have a bearing
on organisational political processes. Organisations also have a variety of leadership
styles encompassing highly autocratic and highly participative ones. There is an inter-
play between top-down power relations and bottom-up ones. The leadership and
management styles as well as day-to-day relationships will have a bearing on assymetri-
cal power relations within an organisation. An individual may not have position power
but may have power gained through self -confidence and authority in their relation-
ships. A model showing the interplay between power, emotions, identity and the
dialectic of learning is provided in Figure 3.10.
The asymmetry of power relations gives rise to a variety of emotions such as joy or
fear. Often our learning in organisations is driven purely by anxiety and the way we
relate to people around us (Vince 2001). Such emotions and power relations will have an
important bearing on the nature of learning spaces created in organisations. At an indi-
vidual level, positive emotions are more likely to lead to greater self-expression in
discussions and dialogue with other group members, leading to a more self-assured iden-
tity. Even though there may be disagreements between organisational members, these
organisational spaces are more likely to foster cooperative and partnership forms of
working. In contrast, anxiety-driven emotions are more likely to result in the denial of

RELATIONSHIPS

COOPERATION

Organisational Self-
space expression

Assymetry Emotions Self-

Learning DIALECTIC
of power (joy/fear) identity

Denial of Communication
space difficulties

IN-FIGHTING

RELATIONSHIPS

Figure 3.10 Politics and organisational learning (adapted from Coopey and Burgoyne 2000;
Jashapara 2003; Vince 2001)
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82 Part 2 / Generating knowledge

organisational learning space where individual views and opinions become margin-
alised. This can lead to communication difficulties where individuals knowingly collude,
censor and subvert organisational processes to meet their own goals (Coopey and
Burgoyne 2000). This behaviour has a direct impact on a person’s self-identity and is
likely to breed political infighting. The cycle of fear can perpetuate indefinitely as rela-
tionships reinforce an individual’s emotional make-up. For organisational learning, this
can invoke the politics of remembering or forgetting (Nissley and Casey 2002). The poli-
tics of remembering are often associated with positive experiences whereas the politics
of forgetting involve discarding painful and negative experiences from a firm’s history.
Recent empirical research shows that effective organisations tend to fluctuate
between cooperative and competitive phases rather than becoming fixated on an ide-
alised form (Jashapara 2003). This provides a creative dialectic between opposites. There
may be limits to the levels of cooperation as ideology discourages change and if indi-
viduals perceive a need for change they may be forced to challenge the ideology which
breeds politics. Cooperation is more likely to foster single-loop learning where existing
routines are maintained and go unchallenged. In contrast, political environments are
more likely to foster double-loop learning as underlying assumptions and values are
questioned more frequently. Empirical research shows the need for a dialectic in the
central ground between cooperation and competition to promote short-term stability
and a healthy upheaval in underlying norms and patterns of behaviour.

CASE STUDY
Outsourcing – leave it to the experts FT
Faced with a tight schedule of product launches, As the outsourcing industry matures, however,
Avaya – a spin-off of Lucent Technologies – needed many of these fears can be allayed. In its early days,
a new approach to learning and development. Its many simply handed over their non-core business
geographically fragmented internal learning organi- processes to contractors and let them get on with it.
sation was ill-equipped to provide the training Today, relationships with suppliers tend to be
necessary to accelerate the introduction of new extremely close and bound by tight agreements.
products. Roughly 75 per cent of all learning events ‘Actually, you gain control,’ says Hap Brakeley,
were instructor-led, which represented a hefty president of Accenture Learning. ‘[The supplier] is
investment in both time and money. now managing that part of the business to specific
Avaya decided to outsource its training to Accenture objectives and service levels so companies feel they
have more control. It’s the same thing with content.
Learning. Accenture assumed the management of
You provide for the appropriate security and main-
Avaya University and is now responsible for more than
tain the rights to the content.’
1,800 product, technical and business courses. Using
Jo Rawbone, training consultant at MaST
online programmes, classroom sessions and laboratory-
International, a development and training consultancy,
based training, the company found it could deliver agrees. ‘You’re delivering to a standard that’s been
training quickly across a wide geographical range. An mutually agreed, that’s probably tighter than would be
ability to roll out training to a large number of people set with an internal organisation. Because it’s part of
at speed is often cited by training suppliers as one of the contract, if the supplier fails, you can terminate the
the benefits of outsourcing. But many companies contract, whereas internally that takes much longer.’
worry that, in the process, they will lose control of cru- These days, outsourcing suppliers recognise the
cial elements of the business, such as values and need to spend time learning about the company and
company culture. The risk of valuable data falling into its culture, even going as far as getting up to speed
the wrong hands is another concern. on terminology used by employees.
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Chapter 3 / Organisational learning 83

Many companies prefer to develop a relationship broader set of leadership capabilities and there we
with a supplier by simply buying its training materi- look to partners with specialists in particular areas in
als before embarking on a full-blown outsourcing different business schools,’ says Julie Morgan, UK
arrangement. ‘They might start at the narrow end head of learning and development at KPMG, which
and, if the relationship is right, work up to the fat enlists the expertise of specialists at institutions such
end of the wedge,’ says Ms Rawbone. ‘It’s more chal- as the London Business School, Cambridge’s Judge
lenging to secure a large outsourced contract with a Institute and Edinburgh business school.
client we’ve never worked with before as it requires a However, Ms Morgan does not favour outsourcing
big element of trust.’ the entire learning and development function. ‘It’s
Building up trust means the supplier must invest fine to outsource certain things like qualification
time and energy in meeting the client’s executives training. There’s no point in us reinventing the
and managers both before the contract is signed and wheel and putting valuable resources into it when
during the delivery of the training. ‘It’s about spend- there are experts in the marketplace. And there’s no
ing time with the organisation, understanding what competitive advantage to us having different train-
makes it tick,’ says Ms Rawbone. ‘The aim is to ing from the other firms,’ she says. ‘But when you’re
become a seamless part of the organisation so that looking at what we are about, our values and busi-
people don’t realise it’s being outsourced.’ ness strategy, you don’t get that if you have
But while training suppliers have matured, so outsiders coming in.’
have their clients and corporate learning depart- Source: Article by Sarah Murray, Financial Times, 24 November
ments are turning into savvy customers with strong 2003
views on how they want their training delivered.
With a growing range of training suppliers lining Questions
up to sell their services, there are certainly more
1 What are the benefits and limitations of outsourcing
options to choose from. For example, most business training and development to firms such as Accenture
schools and universities have executive education Learning?
departments, some of which are being spun off as 2 Despite the rhetoric of seamless integration, how
profit centres catering to the corporate sector. useful are outsourcing arrangements for atypical
KPMG’s UK learning and development unit is a forms of learning and development?
case in point. The company, which provides audit, 3 What factors would govern your decision to adopt
tax and advisory services, takes a mix and match ‘vicarious learning’ such as outsourcing
approach to buying training, and outsourced arrangements over ‘grafting’ an individual or a team
resources include professional exam training and with the prerequisite expertise into your
some elements of e-learning to reinforce the organisation?
classroom-based training. 4 How could outsourcing arrangements help a firm
It also turns to external specialists for its leadership gain competitive advantage?
development. ‘We’re investing quite heavily around a

Summary
This chapter has elaborated and argued five major themes associated with organisa-
tional learning:

1 Individual learning – the differences between a behavioural and a cognitive science

perspective on learning. The central role of motivation in individual learning that is
often overlooked in the traditional learning cycle. The importance of ‘deutero-learning’
or ‘learning to learn’.

2 Team learning as a distinction between discussion and dialogue and its function in
convergent or divergent thinking.
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84 Part 2 / Generating knowledge

3 Organisational learning conceived as single-loop and double-loop learning and

driven by moderate levels of failure and unlearning.

4 Adoption of an information-processing perspective linking organisational learning

to knowledge acquisition, information distribution, information interpretation and
organisational memory.

5 The development of organisational routines in stable environments and dynamic

capabilities in more volatile market conditions.

QUESTIONS FOR FURTHER THOUGHT

1 Most individual learning theory tends to focus on how we can change the external environment
to promote greater learning. How could we synthesise cognitive and behavioural approaches to
better understand our internal learning mechanisms?
2 By nature, some team members may be more argumentative whereas others may be more
reflective and deeper thinkers. How does one manage these two groups without developing
defensive routines in specific circumstances where discussion or dialogue may be required?
3 What measures can be taken to promote ‘error harvesting’ and sharing mistakes in
organisational environments where mistakes are concealed and never discussed?
4 What are the advantages of a ‘dialectic’ between single-loop and double-loop learning rather
than a preoccupation with double-loop learning for organisational success?
5 In what circumstances is it most appropriate to use vicarious learning or grafting in organisations?
6 How can a diversity of interpretations be managed effectively in an organisation?
7 What issues need to be considered when transferring organisational routines within the same
organisation or between organisations? How would global factors affect the transfer of these
routines?
8 What managerial competences are required to manage dynamic capabilities?
9 It has been argued that competitive advantage occurs from the unique resource configurations
and linkages between organisational routines. Given that routines are predominantly tacit in
nature, how can managers develop them to ensure they possess VRIN attributes (valuable, rare,
inimitable and non-substitutable)?
10 Knowledge sharing assumes a certain level of openness and cooperation between organisational
members. What are the dangers of highly cooperative environments for organisational learning?

Further reading
1 Cohen and Sproull 1996 provides a good overview of the debates and thinking in the
field of organisational learning.
2 Dierkes et al. 2001 offers a more theoretical perspective on some of the current debates in
organisational learning and knowledge.
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Chapter 3 / Organisational learning 85

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1
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Chapter 4
Knowledge management tools: component
technologies

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● describe different component technologies found in knowledge management;
● explain the different technologies for capturing, organising, storing and sharing new knowledge;
● contrast the functions of different component technologies;
● feel confident about selecting appropriate knowledge management technologies for particular
needs.

MANAGEMENT ISSUES

The use and application of knowledge management tools and technology implies these questions for
managers:
● What KM tools are most appropriate for a given business problem?
● What is the nature of different KM tools and technologies?
● How do these technologies help capture and share the valuable tacit knowledge or ‘know how’ in
an organisation?

Links to other chapters

Chapter 5 explains how the various KM component technologies are configured into a variety of
knowledge management systems.
Chapter 6 looks at strategic perspectives for integrating technology and human aspects of
knowledge management.
Chapter 8 examines the difficult aspects of implementing technological solutions within
organisations.
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90 Part 2 / Generating knowledge

OPENING VIGNETTE
Casmir FT
When Jim Hughes, co-founder of knowledge man- they had got to know Mr Keenan, they were nervous
agement company Casmir, recruited a new chief about the changes that he might make.
executive in March 2001 it was an intense experi- His first proposals came where they least expected
ence. ‘It was like giving my children to foster parents – and provoked considerable resistance. With several
while still living in the same house,’ says Mr programming projects running in parallel, Mr Keenan
Hughes. ‘While I knew intellectually that it was the was afraid another year would go by before the com-
right thing for the business, emotionally it was diffi- pany had a completed product to bring to the
cult. And at the time I wasn’t sure what it would market. He said they must focus the development
mean for my role in the company.’ effort on one tightly specified version of the software
Mr Hughes, together with fellow academic Elaine – even though this involved adopting a radically dif-
Ferneley and PhD student Brendan Berney, set up ferent approach. ‘I made clear that there wouldn’t be
Casmir in March 2000 to commercialise a collaborative enough money to finish the software if we pursued
search-engine technology that emerged from Mr all our development plans and that we needed a basic
Berney’s PhD thesis at Salford University. None of the version of the product before adding all the bells and
team had run a business but it was the height of the whistles,’ says Mr Keenan. ‘Unfortunately we didn’t
dotcom boom and they were seeing companies raising have time to sit around and discuss things. It was a
money for software projects that they felt were inferior fiery meeting and harsh words were spoken. But in
to their own. So they decided to take the plunge. the end we managed to come to an understanding.’
With the help of a specialist university team, For the founders, the initial months were diffi-
Casmir was spun out of the university, which cult. ‘At the beginning, we wanted to discuss all the
retained a small shareholding in the business. Mr decisions, as we had done previously,’ says Ms
Hughes became managing director, Mr Berney was Ferneley. ‘But as we began to see Sean’s impact on
chief technology officer and Ms Ferneley took the business, we learnt to trust his judgement. It was
charge of operations. But ‘there really wasn’t very still a bit of a surprise to discover that we had been
much specialisation; we would mostly sit and dis- doing so many things wrong.’
cuss things together, (as) we did in the university,’ Mr Keenan’s approach to the sales side of the busi-
says Ms Ferneley. ness came as a shock to Mr Hughes. ‘Where we had
A £30,000 start-up facility from the University of been happy with people showing interest in the soft-
Salford Enterprise Board and some revenue from ware, (he) wanted to know their exact commitment:
consultancy services kept Casmir afloat as its did they control a budget, or influence someone who
founders worked on the development of the did? Our prospects list was quickly whittled down by
Socialiser, an information-retrieval product for almost two-thirds,’ says Mr Hughes.
which the company had won a British Computer Mr Keenan also tried to use his contacts to sell
Society information technology award. the Casmir software. Working closely with Mr
Last September, Casmir secured an investment Hughes and sales executives Mr Keenan had brought
deal through corporate financiers Altium Capital. in from Logical, they developed low-cost pilot
Aim-listed development capital group Axiomlab schemes to enable clients to get to know the com-
invested £200,000 in the business and Internet pany and the Socialiser product.
Business Group a further £50,000, contingent on There are now several sites running the Socialiser
there being a new chief executive to strengthen the software, including a Fortune 500 company. Such
management team and add commercial focus. progress helped to persuade Axiomlab to put a fur-
It took about six months to find the right person. ther £500,000 into the business in May 2001 as part
Sean Keenan, formerly director of the e-business of a £1 million capital-raising exercise.
division of Logical, an international e-business inte- For the three founders, the new management
gration and services company, had vital commercial structure is working well. Mr Hughes wishes it had
experience and understood the knowledge manage- happened earlier. ‘For a start-up business, particu-
ment business. Most important, he was someone larly coming from academia, exposure to the chill
they all felt they could work with. winds of commerce is vital. And the sooner the
In the month following Mr Keenan’s arrival, there better. The cultures of academia and business are so
was a probationary atmosphere. He did not say or do different. Academics like to get a pat on the back,
much, they recall, but just watched and listened. And while in business it’s all about cheques in the bank.’
the founders were watching and waiting. Although Source: Article by Fergal Byrne, Financial Times, 13 September 2002
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Chapter 4 / Knowledge management tools: component technologies 91

Questions 3 How should Mr Keenan lead Casmir over the next

1 What skills are required to help technological few years? What are the likely pitfalls and threats
innovators become confident strategists? that Casmir may encounter?
2 In certain circumstances, why do ‘inferior’ technologies
outperform leading-edge technologies?

Introduction
For any aspiring purchaser of KM systems or technologies, the internet provides a mul-
titude of vendors promising to transform your business. But where do you start? How
do you understand the complexity of the offering and its effectiveness with your busi-
ness problem? In the highly volatile market of software engineering, it is likely that
many of these so-called ‘market leaders’ will cease trading in a few years’ time. As an
experiment in this book, it was found that fourteen ‘market leaders’ in KM tools
(Mertins et al. 2000) had ceased trading in a two-year time frame.
So how can we decipher the offerings of the multitude of technologies in the
market-place? The approach adopted in this chapter is to examine the component tech-
nologies that make up a knowledge management system or suite. The analogy of a hi-fi
purchase is used where each item has a certain function and purpose. I have grouped
various technologies in their ability to perform a knowledge function such as organis-
ing, capturing, analysing, storing and sharing knowledge, as shown in Figure 4.1. The

K N O W LE D GE
NE W

Organise
knowledge

Store Capture
knowledge knowledge

Share Evaluate
knowledge knowledge

N EW E
KN OW LEDG

Figure 4.1 A typology of knowledge tools and component technologies

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92 Part 2 / Generating knowledge

multitude of KM systems on offer in the marketplace is seen as a composite variation of

a number of these component technologies. Firms may decide to buy different compo-
nents off-the-shelf or develop their own tools to meet their needs.
As with purchasing hi-fi systems, one can purchase cheap or expensive KM technolo-
gies. Rather than becoming mesmerised by the power of these technologies, it is
important to remain focused on the organisational needs that are driving the procure-
ment of these technologies and whether an alternative may suffice; dare I say a
telephone and e-mail! As a rule of thumb, experience shows that no more than one
third of a knowledge management budget should be committed to technology (O’Dell et
al. 2000). Often, the focus of technology is on hardware and software and managers can
underestimate the value of knowledge content such as news feeds from Reuters. In a
1997 Ernst & Young survey, business managers indicated that the most important types
of knowledge that would help them act effectively were (Smith and Farquhar 2000):

● knowledge about customers (97 per cent);

● knowledge about best practice and effective processes (87 per cent);
● knowledge about competencies and capabilities of their company (86 per cent).

In the same survey, it is noteworthy that 46 per cent of the 431 US and European exec-
utives felt that their organisations were good at generating new knowledge but only 13
per cent of the respondents agreed that their organisations were good at transferring
existing knowledge (Ruggles 1998). The most common technologies employed by
organisations were:

● creating an intranet (47 per cent);

● creating data warehouses (33 per cent);
● implementing decision-support tools (33 per cent);
● implementing groupware to support collaboration (33 per cent).

The predominant KM tools used today tend to focus on explicit knowledge and its
reworkings even though the received wisdom acknowledges that it is the tacit knowl-
edge or ‘know how’ that leads to greater effectiveness in organisations. The future
challenge in this area is to develop tools to enable tacit knowledge to be made explicit
in an easy and effortless manner. One approach may be the development of multime-
dia technologies such as digital video that capture and store an individual’s ‘know how’
for storage, indexing and future retrieval via a search engine. This would enable a much
richer form of communication between individuals and allow the addition of a diver-
sity of audio-visual signals from the spoken word to tone of voice and body language.
Artificial intelligence (AI) is one of the oldest fields in computer science and provides
the foundation for many KM technologies illustrated in this chapter. Artificial intelli-
gence began by attempting to model the human mind and develop computer systems
that would be as intelligent as humans. It has not reached this ambitious goal as yet
but, it is fair to say, it has provided a lasting influence on the development of knowledge
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Chapter 4 / Knowledge management tools: component technologies 93

management tools. Artificial intelligence techniques have supported the development

of tools in knowledge representation, knowledge search and acquisition as well as ele-
ments of intelligent agent technology. Major advances in many knowledge discovery
tools could not have occurred without the support of artificial intelligence techniques.

Organising knowledge tools

◗ Ontology and taxonomy

Knowledge can come in a variety of forms: structured, semi-structured or unstructured,
as shown in Figure 4.2. In order to organise this knowledge, one starts by gathering
knowledge and working out a way to group, index or categorise it in some way. One
could present a schema conceptualising a vocabulary of terms and relationships to
represent the knowledge. This is called a ‘knowledge map’ or an ‘ontology’. If each one
of us tried to organise the same knowledge, we might come up with wide variations
depending on our understanding and perspective on the subject. In an attempt to pre-
vent this situation from occurring, we have developed ‘ontologies’ to improve our level
of information organisation, management and understanding. Gruber (1993) defines
ontology as:

‘a formal, explicit specification of shared conceptualisation.’

This implies that a domain ontology provides us with a formalised vocabulary for
describing a given domain. This is not the same as a philosophical understanding of
‘ontology’ which refers to our perceptions of ‘the nature of being’ and our assumptions
of the nature of reality. In the context of KM tools, the term ontology is often used
interchangeably with taxonomy as this may be the operational conceptualisation of a
domain chosen by a user. To clarify the distinction, it is important to recognise that an
ontology is an overall conceptualisation whereas a taxonomy is a ‘scientifically based
scheme of classification’, as shown in Figure 4.3 (p. 94). An ontology may have non-
taxonomic conceptual relationships such as ‘has part’ relations between concepts. In
contrast, knowledge taxonomies generate hierarchical classification of terms that are
structured to show relationships between terms. These ontologies and taxonomies have
a significant impact on our ability to deal with vast amounts of information such as
that found on the internet or corporate intranets.

Structured Semi-structured Unstructured

Financial data Cases Documents
Sales data Policies E-mails
Customer data Procedures Presentations
Demographic data Action plans Video

Figure 4.2 Different forms of knowledge

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94 Part 2 / Generating knowledge

‘has part’ ‘has part’

relation relation Domain

Domain

ONTOLOGY TAXONOMY
represent different ideas and concepts

Figure 4.3 Ontologies and taxonomies

The current norms are to generate ontologies manually. The English language com-
prises over half a million words and there is an almost infinite array of terms to convey
the same concepts. This can present semantic complications and ambiguities in classi-
fying, locating and retrieving knowledge. The scope of most ontologies is to provide a
clear, consistent and coherent conceptualisation that is extensible and easily reusable.
One doesn’t want to reinvent the wheel each time new knowledge is added to a partic-
ular domain. Uschold and Gruninger (1996) have provided a useful approach to build
ontologies manually to achieve these aims:

1 Identify purpose and scope.

2 Build the ontology via a three-step process.
a) ontology capture – identify key concepts and relationships;
b) ontology coding – commit basic terms such as class, entity and relations and
choose a representation language or write the code;
c) integrate existing ontologies.
3 Evaluate ontologies.
4 Document ontologies.
5 Provide guidelines for previous phases.

However, apart from being time consuming, manually generated ontologies have the
added problem of being prone to errors and can pose difficulties in maintaining and
updating them (Ding and Foo 2002). If there are significant delays in updating ontolo-
gies, this can cause problems in their usefulness and hinder their development. Some of
these factors have driven the current impetus towards semi-automated and fully auto-
mated ontology generation systems.
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Chapter 4 / Knowledge management tools: component technologies 95

Reflect on all the different aspects of your knowledge that you use in everyday life. Pause for thought
Spend five minutes drawing a map showing the diversity of your knowledge and the
relationships between the various stands. You may find the analogy of a knowledge tree
useful, with major branches and smaller branches of your knowledge. How could you
replicate such an approach to develop an ontology for an organisation? What may be
some of the limitations of this ontology? How could you get staff to cooperate in the
development of your organisational ontology?

The current state-of-the-art ontology generation technologies still use some seed
words provided by domain experts as the basis of ontology generation and have not yet
reached their ultimate goal of using learning ontologies. Concepts are extracted from
raw data using a variety of relatively mature techniques such as:

● ‘part-of-speech (POS)’ tagging to extract high-frequency words or phrases that could

be used to define concepts and may perform a syntactic analysis;
● ‘word sense disambiguation’ to extract relations such as ‘is-a’ and ‘associated with’
where the distinction lies in the linguistic property of the nouns;
● ‘tokenisers’ to break strings into a series of tokens between two delimiting characters
(such as the spacing between words) and determine the length of each string;
● ‘pattern matching’ – for example, a system may learn a semantic lexicon of paired
words with their meanings and have the ability to extract phrase-meaning pairs
from a document.

In recent years, automatic ontology generation or classification tools have advanced

to such a point that they are comparable to manual classifiers of ontology in a well-
organised operation. For example, the degree of accuracy of the best performing
algorithms in automatic classifiers can exceed 85 per cent on good quality data
(Marwick 2001). This degree of accuracy may be acceptable for many applications. A
fundamental aspect of the current generation of automatic classifiers is their use of
‘machine learning’ to train themselves from example data which can give rise to
refined distinctions given a wide variety of training data. Also, the new generation of
classifiers have a high level of reuseability, enabling easy application to new domains
and reducing overall costs of ontology generation.
Ontologies have been represented in a variety of ways depending on the technology.
In their most simplistic form, they can be represented as a conceptual hierarchy similar
to their related taxonomy. However, some classification tools use an algebraic extrac-
tion technique to generate a graph structure with thesaurus entries for all words. Others
store the results of text processing into annotations using XML-tagged text (Ding and
Foo 2002).
Current ontology generation tools are not free from problems. In part, this helps
drive the next generation of tools. For example, there can be problems with the sense
of a word in different contexts or the recognition of different phrases referring to the
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96 Part 2 / Generating knowledge

same concept. Machine learning techniques that enable the classifier tool to learn pat-
terns can be helpful, but many of these learning relationships are highly complex. A
general problem can be the ‘shallow’ semantics generated which can hide the richness
and depth of any domain. Also, there may be differences between the automatic gener-
ation of ontologies and the schematic conceptions of a community or a group of
experts. An almost classical conflict may arise from a group of artists who may have a
loose and highly visual conception of their domain and the ontology engineer who
may represent their ontology in a highly mathematical or hierarchical framework.
Ontologies are dynamic. Concepts and schemas do change their meaning and sense
relations over time. How can we reuse existing ontologies and incorporate new mean-
ings, relations, domains and knowledge over time? Given the overwhelming
production of knowledge in organisations each year, there is likely to be a need to inte-
grate existing ontologies with new domains. However, this can create numerous
problems, such as semantic inconsistencies and differences in knowledge formats.
Ontology mapping has developed as an area of research to address these problems. The
current approaches for integrating a number of ontologies (see Figure 4.4 p. 97) include
(Sofia Pinto et al. 1999):

● reusing available ontologies linking different domains;

● aligning ontologies by establishing links between them through some form of trans-
lation function using agent technology;
● merging ontologies to create a single ontology;
● integrating ontologies through clustering on the basis of similarities.

These approaches recognise that successful integration of ontologies requires a good

understanding of semantics to reconcile semantic similarities, discrepancies, compati-
bilities, relevance and relativity. Semantics are concerned with the meanings
individuals or groups give to a particular term or concept. It is understandable that con-
fusion may easily arise from different communities associating different meanings or
nuances of meaning to the same term. For example, the term ‘elegance’ may have con-
notations of aesthetics and beauty to an architect whereas the same term may imply
optimal use of materials to an engineer.
Given the continual information overload problem in many organisations, there is a
need to maintain and improve an existing ontology as it changes over time. Manual
maintenance of ontologies can be tedious and time consuming. Hence, a variety of
tools have been developed to assist the ‘ontology editor’ to semi-automate the tasks.
Certain tools exist to acquire new concepts and place these within the domain ontol-
ogy and some of these are based on machine learning techniques. It is notable that Tim
Berners-Lee, inventor of the world wide web, believes that the information overload
problems on the existing web will lead to a second generation which he calls a ‘seman-
tic web’. This will make explicit the semantics underlying all resources on the web and
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Chapter 4 / Knowledge management tools: component technologies 97

A
Sales

Desire of two separate domains

PROBLEM
with different ontologies to communicate

B
Finance

Existing

A
Sales
A
Existing
Sales
C Existing
Sales & off-the-shelf
Translation function
Finance ontology
B
Existing
Finance

B
Reusing available ontology Finance

Existing
Aligning ontologies

Existing
A
A
Existing
Sales
D Newly E
Sales & developed
Finance ontology
B
B
Existing
Finance

Merging ontology Existing

Ontology clustering

Figure 4.4 Ontology integration techniques

create a form of ‘global’ ontology. It is unclear whether this future ‘global’ ontology will
be reused to create local ontologies by standardising concepts and the relations
between them. An alternative route may be to use a universal classification system such
as Dewey to represent a ‘global’ ontology in order to comprehend the whole of human
knowledge, including that which is not yet known.
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98 Part 2 / Generating knowledge

Capturing knowledge tools

◗ Cognitive mapping tools

In any given area of knowledge, each one of us has our own ontology or ‘cognitive
map’ of that particular domain. The map is a visual representation of the domain
which makes explicit mentally the concepts that exist within that domain and the rela-
tionships between them. In many cases, this map is likely to be tacit and unarticulated
within an individual or an organisation. This tacit knowledge is a key source of compet-
itive advantage as it is difficult to articulate, imitate, is context specific and has direct
practical relevance (Ambrosini and Bowman 2002; Barney 1991; Grant 1996).
Cognitive mapping provides a valuable tool to represent an individual’s knowledge and
experience and their view of reality (Eden and Ackermann 1998; Weick and Bougon
1986). The mapping process is based on Kelly’s personal construct theory (1955). The
structuring technique of idea generation is based on the premise:

‘How do I know what I think until I hear what I say?’

Currently, the main application for cognitive mapping tools is in the area of map-
ping strategic knowledge (Huff and Jenkins 2002) through the use of causal maps.
Causal maps are cognitive maps that can establish multiple relationships between enti-
ties through causal links. For example, entity A may ‘cause’ entity B and D and the
complexity of other relationships can be depicted graphically, as shown in Figure 4.5.
The advantage of causal mapping tools is that they provide a way of ordering and
analysing something that is ‘fuzzy’ and vague and allow us to impose a structure on the
fuzziness and visualise the relationships between concepts (Ambrosini and Bowman
2002; Weick and Bougon 1986).
In terms of strategic management, it is not the individual tacit maps but rather the
organisational tacit knowledge that is likely to result in competitive advantage or
greater effectiveness. If one views an organisation as a social system with interdepend-
ent parts (Gharajedaghi and Ackoff 1994), tacit organisational knowledge can be
conceived as residing in a set of organisational routines (Grant 1996; Nelson and
Winter 1982; Spender 1996). Nelson and Winter (1982) argue that these formal and
informal routines are embedded in organisational activities and organisations remem-
ber them through action. These tacit routines are not codified and do not follow

A C E

Figure 4.5 Example of a cognitive map showing concepts and links

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Chapter 4 / Knowledge management tools: component technologies 99

standard rules and operating procedures. They are related to their specific context and,
by implication, there are limits to the extent to which they can be articulated (Grant
1991). However, cognitive mapping tools allow us to reveal ‘collective maps’ of tacit
routines from a process of group dialogue and discussion.
The most developed application of cognitive mapping tools has been in the field of
strategy making to help surface and explore tacit knowledge, assumptions, assertions,
values, beliefs, aspirations and concerns within a management team or board of direc-
tors (Eden and Ackermann 1998). This technique allows the important processes of
‘sharing meaning’ and ‘making sense’ to be facilitated and misunderstandings from
implicit assumptions to be minimised. In a group situation, the technique supports
important group processes such as negotiation and anonymity (Eden and Ackermann
2002). The resulting cognitive map comprises the collective thinking of a group of indi-
viduals which may contain conflicting views from a variety of perspectives.
The most common method of creating a cognitive map is through the ‘oval map-
ping technique’ and software that aids the mapping process (Decision Explorer™
[www.Banxia.com]) with effective representation, retrieval and analytical support, as
shown in Figure 4.6. These visual thinking tools allow ideas and their relationships
with other ideas to be made explicit. The process of oval mapping is as follows:

● Facilitator to ask group to focus on a question or issue.

● Ask participants to cover the working space such as a wall with flip chart paper.

Figure 4.6 Cognitive mapping software: Decision Explorer ™

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100 Part 2 / Generating knowledge

● Give participants a set of ‘oval’ cards and encourage them to focus on their expertise
and record their views for public display.
● Ask participants to write one idea per oval preferably.
● Inform participants that no ovals will be removed (except in cases of total agreement
by group) and they need to make disagreements explicit.
● Facilitator to organise ideas into clusters and subclusters. A ‘dump’ cluster can be used
to give facilitator time, particularly where themes or patterns may not be self evident.
● Facilitator to elicit linkages between different ideas and clusters of ideas by looking
at ‘means and ends’ or ‘options and desired outcomes’. In essence, whether one idea
causes or leads to another idea or cluster.

This public procedure, where each idea is considered equally valid, allows partici-
pants to look at the issues from alternative viewpoints and possibly change their
position without the need to defend their own viewpoint. The process encourages
social negotiation and greater commitment to the outcomes.
In strategy development, the causal maps are reorganised into clusters following a
‘tear drop’ model where aspirations and goals are at the top of the model (Eden and
Ackermann 1998), as shown in Figure 4.7 (p. 101). These are the concepts with ‘heads’
but no ‘out-arrows’ in terms of consequences. The next layer of clusters are the issues or
possible strategies supporting the aspirations and underlying them are the more
detailed strategic options that impact on the potential strategies. Further analyses can
be conducted on the cognitive map using the computer software such as:

● identifying the busiest concepts;

● calculating the centrality of a concept in the overall structure;
● exploring feedback loops.

In this example, cognitive mapping tools allow us to see how a business model or a
livelihood scheme (for not-for-profit organisations) can be realised with the necessary
intellectual and emotional commitment from key players. The logic and coherence of
different parts of the map can be shared across the organisation to facilitate the change
process by reducing the ambiguity of action programmes and demonstrating the
impact of singular tasks on multiple objectives.

◗ Information-retrieval tools
The key goal in information retrieval is to retrieve knowledge that may be useful or rel-
evant to a user. Traditionally, there have been two processes involved in information
retrieval. First is the creation of an index that enables the location of a text and docu-
ment structure. Textual data can be loaded into the system and en route it undergoes
transformation such as the removal of common words. This is often referred to as a log-
ical view of a document. An index has the advantage of speeding up the retrieval
process and reducing the computational costs. Otherwise each record would have to be
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Chapter 4 / Knowledge management tools: component technologies 101

GOALS or
DISASTROUS OUTCOMES

ISSUES or
STRATEGIES

OPTIONS or
ACTIONS

Figure 4.7 Strategy development ‘tear drop’ model

searched individually. All information-retrieval systems have an index which helps to

locate the full text records. Generally, they use an inverted file approach. The second
process is solving a user’s information needs in the form of a query through algorithms
and ranking the results in some form of relevance to the user.
One recent trend has been the development of compression technology that allows
direct indexing and searching on compressed text with high compression and decom-
pression speeds. Text can be compressed to 30–35 per cent of its original size. This can
be a critical consideration as text collections are increasingly becoming huge. A typical
process of indexing a text database is shown in Figure 4.8 (p. 102).

From your experience, what role has serendipity played when you’ve been trying to find Pause for thought
information? Can you describe these experiences and see any patterns within them? How
valuable have you found formal methods of information retrieval? What informal
methods do you use to find information? If search engines or your traditional sources fail
to provide you with your required information, what alternative strategies do you adopt?

Individual records such as full texts, news stories or market reports can be indexed
using a structured taxonomy of terms generated from the text, with the indexed terms
being attached to the record to enable retrieval. This approach has a long history in
library sciences. An example of such indexing is the addition of SIC (standard industry
classification) codes to documents. Another example of an index is the Dewey Decimal
Classification, a bibliographic classification system that is used in many libraries to
classify knowledge domains into 999 classes, each having a multitude of divisions to
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102 Part 2 / Generating knowledge

Signature
file

Text Text Automatic or manual Inverted

Index
database compression text transformation file

Suffix
file
Lexical Noun
Stopwords Stemming
analysis groups

Figure 4.8 Indexing a text database

cater for the subtleties of any knowledge domain. The index terms are often a collec-
tion of selected keywords or concepts whose semantics helps us find the document’s
main themes. Indexing can be performed either manually by a specialist or automati-
cally with text-classification tools. The accuracy of automatic text classification is
improving and in some cases can be comparable to human indexers. The steps
involved in the automatic classification process can utilise one or more of the following
technologies (Baeza-Yates and Ribeiro-Neto 1999):

● Lexical analysis is used to identify the words in the text from a stream of characters
including numerical digits, punctuation marks and hyphens.
● Stopwords that occur too frequently in a collection of documents are eliminated as
they do not provide good discriminators for the purposes of retrieval. An advantage
is that it results in compression of the index, though it may subsequently reduce the
level of recall.
● As nouns tend to carry most of the semantics in a given sentence, they are often
used as index terms rather than verbs, articles, adjectives, adverbs or connectives.
Nouns that appear near to one another in the text can be clustered into a single
indexing component called a noun group (e.g. human resource management). This
can make retrieval much more efficient.
● Stemming is the removal of the affixes (prefixes and suffixes) of a word to improve
retrieval performance. The premise is that a user may specify a variant of a word in a
search that may not successfully retrieve the necessary document. For example, the word
construct is a stem for the variants constructing, construction, constructions and constructed.

In lexical analysis and clustering of noun groups, there may be the additional associ-
ation with terms not found in the document index but which act as alternative
descriptors in the retrieval process. This can be done manually or automatically. Once
the text classification, if any, has been conducted, the three most common index struc-
tures are as follows:

● Inverted files. These are currently the best choice for most applications. An inverted
index is composed of the vocabulary or different words in the text and their
occurences in terms of their precise storage location.
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Chapter 4 / Knowledge management tools: component technologies 103

● Suffix trees. These form a tree data structure of the text rather than assuming the
text is a sequence of words. These indices are particularly helpful for answering com-
plex queries for non-word-based applications such as genetic databases.
● Signature files. These are index structures that divide text into blocks for analysis.
They help reduce the size of documents to speed retrieval but impose a sequential
mode of searching from one text block to another. The inverted file outperforms the
signature file in most applications.

After the text database has been indexed, the retrieval process can commence. This
comprises the user specifying their knowledge needs in the form of search terms on a
user interface, as shown in Figure 4.9. The search terms may have the same ‘text-
classification’ tools applied to form a query. Once a query is entered, this is processed
to produce a representation such as terms and structures. These tend to involve co-
occurence, frequency, position of terms and possibly semantic and syntactic processing.
Similarly, documents in the database are processed and essentially the representation of
the query is matched with the representation of the document. The query can be
expressed in a variety of forms:

● Boolean operators (such as OR, AND and BUT) have precise semantics and are used
most commonly by commercial systems. This is the most popular approach. The
main drawback is that exact matching of Boolean expressions may result in too few
or too many documents.
● Vector expressions assign weights to index terms according to their frequency in a
document. The premise is that the lower frequency of an index term is likely to have
much greater relevance in a search than a highly occurring index term.
● Probabilistic expressions try to assign probabilities to documents that it assumes
users will find relevant. This approach is problematic as it is almost impossible to

User feedback

Pattern
matching

User
User Index Rank User
information Query
interface (inverted file) documents Interface
needs

Search
algorithm

Boolean Vector Probabilistic

Figure 4.9 Information retrieval process

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104 Part 2 / Generating knowledge

compute probabilities of relevance without the necessary feedback loops and learn-
ing from the user.
● Fuzzy expressions use a thesaurus to expand the query into related terms to allow
additional documents to be retrieved.

The retrieved documents are subsequently ranked according to their likelihood of

relevance based on a boolean, vector or probabilistic notion of the query. Following
this, some systems enable the user to interact with the search process by specifying
whether a certain text is relevant. The information-retrieval system redefines the search
algorithm and, hopefully, retrieves similar texts. This is known as relevance feedback.
As databases grow at exponential levels in most organisations, there is a need to
develop search technologies that will enable retrieval of information efficiently and
speedily. One technique is to use parallel computing where several processors are used
simultaneously in the retrieval process, with each processor focusing on a different
aspect of the problem. An alternative is to use a distributed computing technique
whereby different computers connected to a common network are used to tackle a
search problem.

◗ Search engines
The above information-retrieval principles are applied in a wide range of environments
and for a range of purposes. Search engines work on a similar process. You search an
index and not the full text document. One of the main distinctions between traditional
information retrieval techniques and the web is that queries do not have access geo-
graphically to the full text of documents. Simply, it would cost too much to have every
page on the web stored locally and the retrieval times would be extremely slow, even
with the most powerful networks. In addition, the web contains highly volatile and
redundant data. It is estimated that 40 per cent of data on the web changes monthly
and 30 per cent of web pages are almost duplicates (Baeza-Yates and Ribeiro-Neto
1999). An intrinsic characteristic of the web is the diverse variety of data types and the
poor quality of the data as there are no editorial processes for publication. This can
result in the problem of search precision where most documents retrieved are irrelevant
to a user’s needs (Marwick 2001).
Search engines are the most common form of retrieving material on the web. They
are based predominantly on a crawler-indexer architecture, as shown in Figure 4.10
(p. 105). Crawlers are software programs using agent technology that send requests to
remote web servers looking for new or updated pages. The results of the crawling are
subsequently indexed centrally in the search engine. Most indices on the web use a
variant of the inverted file. The second part of the search engine deals with user needs
in the form of a query. The most common query on the web is two words and the aver-
age query length is 2.3 words (Marwick 2001). The search engine processes the index
through a variety of algorithms and ranks the results. It is suggested that this crawler-
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Chapter 4 / Knowledge management tools: component technologies 105

www servers

User
User
information Query Index Crawlers
interface
needs

Figure 4.10 Search engine: crawler-indexer architecture

indexer architecture may not be able to cope with the exponential growth of the web
in the future.
An alternative to the crawler-indexer architecture is a distributed approach using sev-
eral networked web servers to act either as ‘gatherers’ (similar to crawlers) or ‘brokers’
(providing the query and index interface) in a distributed mode of operation. There are
also ‘metasearchers’ on the web that work by sending a query to numerous search
engines and collating and ranking the replies for a user.

◗ Agent technology
To the uninitiated, agent technology can appear like something from science fiction
where certain computer systems act like robots (autonomously) to deliver the best solu-
tion in terms of their original design. In effect, agents are computer systems that are
capable of autonomous action in a given enviroment in order to fulfil their design objec-
tive. These systems can act without intervention from humans and take control over
their actions and internal state (Jennings and Wooldridge 1998). Agents are similar to
crawlers that identify specific material in terms of semantic content, structure and prop-
erties. ‘Tailored’ crawlers can learn and mutate in terms of results and user feedback.
An advancement on agent technology is the development of intelligent agents.
These computer systems are capable of flexible autonomous action where their flexibility
derives from their responsiveness to the environment, their opportunistic and proac-
tive behaviour, and their ability to interact with other agents or humans to optimise
their problem-solving abilities.
Agents are particularly powerful tools for dealing with complex systems. They
manage complex systems by making them modular. In essence agents take a large com-
plex problem and divide it into smaller, simpler and more manageable components.
This allows each agent to use the appropriate techniques to solve the smaller problem
at hand. The other technique used by agents in complex systems is abstraction. This
allows the complex system to be conceptualised as a series of cooperating autonomous
agents. Agent technology has had a wide range of applications including the following:

● Electronic mail filtering agents observe every action a user performs and treats it as a
lesson. After some time, the agents begin to predict the user’s behaviour based on a
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106 Part 2 / Generating knowledge

history of patterns. As the agent becomes more successful in its predictions, it pro-
vides suggestions for the user to help manage their e-mail. This is particularly
valuable for users experiencing information overload problems where they desire to
focus clearly on their information needs rather than wasting time (Maes 1994).
● In business process management, agents negotiate for services on behalf of depart-
ments or divisions with other agents for a mutually acceptable price, time and
degree of quality. This allows services in an organisation to be scheduled in a just-in-
time manner (Jennings et al. 1996).
● In large organisations, ‘agent wrappers’ are built to enable critical organisational
functions to be updated periodically by allowing software to interact with other
parts of the system.
● Summarisation includes processing text in documents to identify key sentences.
● Business news feeds in organisations filter, cluster, summarise and deliver relevant
news to users.

Nevertheless, agent technology does have its limitations which include (Jennings
and Wooldridge 1998):

● no overall system controller;

● good optimal solutions locally but a lack of globally optimal decisions;
● quite a learning curve before people can feel comfortable trusting them and delegat-
ing some responsibility for decision making over to them;
● problem of relevance in terms of the changing profile of users.

◗ Personalisation
Agent technology has led to a more proactive push technology that can be person-
alised. The primary goal of all personalisation technology is to provide the needs and
wants of every user perfectly. Without being asked, the technology tailors itself to fulfil
the user’s desire at any time. In information retrieval, personalisation technology may
be used to restrict a search to particular categories most often sought by the user or to
assign higher weights to documents from those categories. The technology can learn to
refine the search specifications by examining keywords used in browsed documents or
derived from profiles from communities of interest linked to the user. In addition, per-
sonalisation technology can analyse patterns of queries and query results in terms of
relevance to the user (Mack et al. 2001).
Personalisation technology has been exploited by marketers to gain better knowl-
edge of their customers’ behaviours and preferences. The commonly adopted tools are
called ‘cookies’. These cookies are small data files that are planted on an end user’s
computer to allow websites to identify them. Cookies infringe a user’s privacy and can
allow retrieval of their preferences from a database. Typically cookies store an identifi-
cation number and details of the last visit to a site. However, companies can associate
personal information gained in different ways to the user’s computer. There are privacy
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Chapter 4 / Knowledge management tools: component technologies 107

concerns that cookies may contain sensitive personal details as well as credit card infor-
mation that could be exploited. It is possible to block cookies but this can be a difficult
exercise for the average user. In many cases, users are unaware that their privacy has
been infringed.

Evaluating knowledge

◗ Case-based reasoning (CBR)

One of the subfields of artificial intelligence is case-based reasoning (CBR). CBR offers a
technique for acquiring and storing past problems, their solutions and the reasoning
behind them in a retrieval system. Users can type various problem descriptors and
check whether cases from the past can throw insights into their current problem. If the
case is able to help, the new case is tagged outlining the current problems, evaluations
and solutions with the original case for future retrieval. For example, the CBR frame-
work developed to assist effective delivery on a construction project had the following
case descriptors (Ribeiro 2001):

● problems – client requirements, client capabilities, project specifications, project

environment, allocation of risk factors and relationships;
● project delivery solutions – procurement methods, contract structure, forms of con-
tract and project management structure;
● project outcomes – schedule variance, budget variance, conformance with specifica-
tions, safety, servicing during operation, administrative burden, sustainability of
facility and project return.

CBR applications have been particularly successful for help desk and call centre
applications where users often face repetitive problems. The user can retrieve past solu-
tions and learning and utilise or adapt them for their own problem solving and add
their experiences and actions to the changing circumstances encountered.

What do you consider to be the main strengths and limitations of case-based reasoning Pause for thought
systems in organisations? How often do you use past lessons and experiences to solve
current problems? What would you consider to be the time limits, if any, of past
experience? Some managers may believe that past experiences hinder progress. How
would you answer such managers on the benefits of CBR systems?

◗ Online analytical processing (OLAP)

Spreadsheets can become limited when an individual wants to analyse a large set of
data from a variety of perspectives. They can be valuable for analysing data along two
dimensions and provide tools to display the results as graphs or pie charts. However,
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108 Part 2 / Generating knowledge

let’s explore an organisation that has thirty products in five regions and wishes to
analyse all this data in terms of sales, expenses and profits. For such cases, online ana-
lytical processing (OLAP) comes into its own. It provides a multidimensional tool to
analyse and manipulate the data into various categories. The OLAP Council defines
OLAP as enabling the user:

‘to gain insight into data through fast, consistent, interactive access to a wide variety of
possible views of information that has been transformed from raw data to reflect the real
dimensionality of the enterprise as understood by the user.’

OLAP uses the notion of a hypercube or a cube with more than three dimensions as
a central aspect of this technique. The most common form of reporting multidimen-
sional analysis is to rotate a cube by 90 degrees to show different analyses using the
multidimensional variables. The technique of rotating the cube is sometimes called
‘slice and dice’.

◗ Knowledge discovery in databases – data mining

The commonly used term ‘data mining’ can be misleading as the intention of the
process is to produce knowledge from structured data. From a young age, we are used to
observing and searching and discovering new things. The data mining or knowledge
discovery process is similar, including an iterative progression of data cleaning, data
analysis, model interpretation and integration of results. The development of knowl-
edge discovery in databases (KDD) or data mining over the past twenty years can be
charted in the following manner (Klösgen and Zytkow 2002):

● First generation (1980s): focused on single tasks such as building classifiers, finding
clusters in data and visualising data using one approach.
● Second generation (around 1995): led to data mining ‘suites’ which supported data
preprocessing and cleaning and performed multiple discovery tasks.
● Third generation: tightly integrated domain knowledge into discovery process to
provide solutions in areas such as marketing, fraud detection, production control
and the web.

Knowledge Discovery in databases is ‘the non-trivial process of identifying valid,

novel, useful and ultimately understandable patterns in the data’ (Fayyad et al. 1996). It
provides deeper insights than traditionally obtained from reports, queries, executive
information systems and OLAP. However, investigations in organisations collecting large
data sets such as NASA show that only 5–10 per cent of the data ever gets analysed.
Large organisations such as Walmart, the largest retailer in the US, have a strong urge
to tap the hidden knowledge that may lie within their huge customer databases (43
tera-bytes at the time of writing). The resulting analysis may provide the key basis for
improving their competitive advantage in their market.
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Chapter 4 / Knowledge management tools: component technologies 109

Statisticians believe that every time the amount of data increases by a factor of ten
we should rethink how we analyse it (Friedman 1997). This is a primary challenge in
knowledge discovery where complexity has increased with the large number of cases
and the high dimensionality or numbers of variables.
The tools used in knowledge discovery are simple, concise and easy-to-use algo-
rithms that model non-random (statistically significant) relationships or patterns.
These tools may include one or more ideas from the following models (Gargano and
Raggad 1999):

● Expert systems tend to mimic the reasoning of experts whose knowledge is assumed
to be deep in a narrow domain. The expert system consists of a knowledge base of
rules and data and a logic inference engine that creates new rules and data based on
accumulated knowledge. The weaknesses of expert systems are their narrow domain
of application, their reliance on the knowledge of the expert, their poor clarity and
internal inconsistencies. Attempts to resolve some of these problems have been
made by using fuzzy expert systems where the truth or falsity of a fact can be cap-
tured on a scale from 0 to 1 rather than traditionally assuming a fact had to be either
true or false.
● Decision trees are based on a simple tree model where every branch in the tree rep-
resents different classes and subclasses. Decision trees are effective when the user
wants an exploratory understanding of the data to get a gut feel.
● Rule induction uses statistical techniques to discover rules which relate to the fre-
quency of correlation, the rate of accuracy and the accuracy of prediction. Rules are
most commonly developed using IF/THEN statements.
● Genetic algorithms and genetic programming evolve complex data structures and are
based on biological mechanisms of natural selection. They are useful for finding solu-
tions to hard optimisation problems. The main weakness is the nonexplanatory aspect
of these models.
● Neural networks or backpropagation are tools designed to imitate the physical
thought processes of a biological brain in the form of neurons or nerves. The model
adapts weights for the interconnections among neurons to allow learning and
memory creation to take place. These neural network problems are particularly
suited to problems where a great deal of historic data exists for training purposes.
Their strength is that they can handle multidimensional and ‘noisy’ data. However,
neural network models do not provide much explanatory power and their training
periods may be long.
● Associative memories are where pairs of associated data are memorised using a long-
term memory network model. These associations can be retrieved at a later date and may
provide creative data associations for creative solutions in response to novel stimuli.
● Clustering techniques are ideal for classification and category prediction problems.
They tend to group together closely related data in a database. They can handle
noisy multidimensional data sets but can suffer from long training times.
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110 Part 2 / Generating knowledge

The knowledge discovery tasks to extract patterns from large datasets can be divided
into the following taxonomy (Shaw et al. 2001):

● dependency analysis – looking at associations and sequences;

● class identification – examining the mathematical taxonomies and clustering of concepts;
● concept description – attempting to summarise, discriminate and compare different
concepts;
● deviation detection – exploring anomalies and changes in the data;
● data visualisation – reporting the data analysis.

The key challenge in knowledge discovery is to provide intelligent systems that improve
the selectivity of a search and the ability to understand and respond to a user’s needs.

◗ Machine-based learning
Machine learning has been singled out as a vital tool in knowledge discovery in data-
bases applications due to its ability to focus on complex representations, ill-defined
problems and search-based methods (Domingos 2002). The flexibility of machine learn-
ing methods makes them well suited to problems where little is known about a
particular domain. The theory in this area has produced highly successful algorithms
such as ‘boosting’ (Littlestone 1997) and ‘support vector machines’ (Scholkopf et al.
1998). Machine learning has further developed into the realm of biases as biases are
what remain in the absence of generalised assumptions in ill-defined problems. It is
noteworthy that machine learning techniques are prolific and have found compelling
applications in many large databases.

Sharing knowledge

◗ Internet, intranets and extranets

The start of the internet can be traced back to 1969 when the Advanced Research Projects
Agency conducted research on networking to link scientists and academics around the
world. These networks were configured either as local area networks (LANs) to connect
computers via cables over short distances or as wide area networks (WANs) to connect
computers over longer distances using transmission lines similar to phone systems. The
internet was designed to connect these different networks (LANs and WANs) across the
world and performed this task using special computers called routers. In essence, it
became similar to a postal system and it needed a common system or set of rules whereby
computers could transmit and receive data. This common system or protocol was called
TCP/IP (transmission control protocol/internet protocol). The IP breaks any data or
information into sizeable packets to be sent to a computer across the network and the
TCP reassembles the packets of information when they reach their destination. Each
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Chapter 4 / Knowledge management tools: component technologies 111

computer on the internet has a unique IP address and allows each packet of information
to know its sender’s and destination address. A major application of the internet is using
electronic mail (e-mail). This is the modern postal system of the internet. It also allows
text, sound, video and image files to be sent with the e-mails as attachments.
All software used on the internet is based on client/server technology. This means
that the software either acts as a server offering services to other computers on the net-
work or acts as a client requesting a service from the server. All the data such as e-mails
and web pages are stored on servers. Client software requests information from a server
on a distant computer and server software sends the requested information to the
client via the internet.
The basic document on the web is a page with its own particular location. This loca-
tion or URL (uniform resource locator) is simply a web identifier starting with a string
such as ‘http’ or ‘ftp’. When you click on a link, your web browser (client) sends off a
packet to that address asking for the URL and, subsequently, the server sends back the
requested page to your computer. In the past, most pages have been written in a
markup language called HTML (hypertext markup language). Each HTML page contains
a number of tags or instructions on how text, video, graphics and sound are placed on
the page and how links to other documents can be created.
A recent development to markup languages has been the introduction of XML
(extensible markup language) to complement HTML and to improve the usefulness of
the web. Whereas HTML has provided a predominantly formatting function for data on
a page, XML provides valuable information on what the data means. For example, in
HTML, we may only know whether a numerical integer has a certain textual attribute
such as bold, body or title in the text. In contrast, XML will tell us what the integer
means, whether it’s a speed, a date or a sales figure. This extra information on a web
page allows new computer software to automatically interpret, manipulate and perform
operations without direct human intervention. This additional information is often
termed metadata or data about data.
Metadata is directly linked to the resource and provides direct access to it. In biblio-
graphic circles, a metadata standard or schema named ‘Dublin Core’ was developed in
1995 to allow greater bibliographic control over networked resources. The data ele-
ments include title, author, subject and keywords, description, publisher, other
contributor, date, resource type, format, resource identifier, source, language, relation,
coverage and rights management. Other standards are emerging across different indus-
tries and the standards are contained within an XML document type definition (DTD),
often simply called a dictionary. To allow internationalisation of the web, XML has
been firmly rooted in unicode which provides all kinds of text characters from different
languages around the world. XML incorporates the direction in which text moves
across a page (e.g. right to left in Arabic), hyphenation conventions and cultural
assumptions on ways of addressing one another.
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112 Part 2 / Generating knowledge

The beauty of XML is that it enables companies to provide access to their own data
to customers and suppliers at relatively low developmental costs by addressing the
schemas in the DTD for each party concerned. Another advantage of XML is that it
provides output in many forms and on different platforms such as PCs and PDAs from
one source document. As the information in XML documents is described so precisely,
it also means that quality of information retrieval from search engines is likely to
increase substantially. One casualty and potential danger may be the built-in bias on
XML-driven search engines towards specific information, opinions, products and serv-
ices based on future industry standards.

Pause for thought Reflect on how the internet and your company’s intranet have increased your
knowledge base. What are the strengths and limitations of this new medium? How can
the internet or extranet help your organisation share knowledge across your value
chain? Do you foresee any dangers in using the internet as a knowledge-sharing
medium? Are there any concerns over sharing ideas and intellectual property rights?
Given the widespread nature of the internet, what are the implications for you and your
future work using this medium?

The future direction of the web as described by Tim Berners-Lee, its inventor, is one
moving more towards a semantic web. This would allow the user to access precise infor-
mation for decision making immediately rather than having to browse through lots of
documents to find the information. The goal is to make the web more intelligent. The
language and schemas chosen for the semantic web are RDF rather than XML as infor-
mation found in RDF (Resource Description Framework) maps links directly and
unambiguously to a decentralised model and there are instruments known as parsers
that can decipher this information more easily.
With the expanding bandwidths and processing power, multimedia technology is no
longer an aspiration but a reality on the web. Image technology has advanced to an
extent whereby images can be sent as scalable vector graphics in small abstract packets
and reassembled on computers or small personal digital assistants in a style and resolu-
tion appropriate to the device. The quality of the image is much better than the
traditional pixel graphics found in GIF or JPEG files. The independence of device and
software has provided major advances in this area. Another standard called the syn-
chronised multimedia integration language (SMIL) has offered a direction for
integrating the different components of a multimedia experience into one.
Increasingly, the disabled user is being brought to the forefront of web developments
with an emphasis on supplying alternative mediums such as soundtracks with subtitles,
images with descriptions and mouse movements with keyboard alternatives.
An intranet is a network that exists exclusively within an organisation and is based
on internet technology. It can provide an e-mail system, remote access, group collabo-
ration tools, an application sharing system and a company communications network
(Laudon and Laudon 2000). It protects information from unauthorised use through a
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Chapter 4 / Knowledge management tools: component technologies 113

software mechanism called a firewall that blocks unwanted access from the outside but
allows internal users to gain access to the internet. Some traditional applications of
intranets are:

● access to databases;
● forum for discussion;
● distribution of electronic documentation;
● administering payroll and benefits packages;
● providing online training;
● frequently asked questions (FAQs) to provide answers to commonly raised questions.

When building intranets, organisations need to be mindful of the dangers of devel-

oping large and sophisticated solutions that nobody visits. The technology needs to be
user led to meet explicit needs. Another danger is the use of intranets to develop ‘elec-
tronic fences’ in organisations contrary to the espoused principle of knowledge sharing
(Swan et al. 1999).

◗ Security of intranets
Most organisations have adopted ‘firewall’ technologies to prevent intruders from gain-
ing access to their sensitive organisational information. The most important goals of
firewall systems are (Loew et al. 1999):

● access control at different levels;

● control at the application layer;
● user rights administration;
● isolation of certain services;
● proof back-up and analysis of the log;
● alarm facilities;
● concealment of internal network structure;
● confidentiality;
● resistance of firewall against attacks.

Firewalls examine every packet of information between networks (using packet fil-
ters) and analyse their characteristics to decide whether to deny any unauthorised
messages or access attempts. A high-level security firewall can be constructed using two
packet filters. The weakness of one packet filter is supported by the other. Attacks on
these servers will not endanger the internal network. However, there can never be any
guarantee of total security. In the future, it is likely that encryption technologies will be
used to strengthen the security of firewalls.

◗ Text-based conferencing
There are a number of text-based conferencing channels through which individuals can
share knowledge and information. Usenet newsgroups are worldwide discussion forums
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114 Part 2 / Generating knowledge

on a multitude of topics where discussions take place on an electronic bulletin board,

with individuals posting messages for others to read. Another public forum for sharing
knowledge within predefined groups is discussion lists that individuals can subscribe
to. These lists are generally moderated, in comparison with newsgroups which are not.
An individual subscribes and joins a discussion group and receives e-mail messages sent
by others concerning the topic. The individual can reply to the group and their offer-
ings are distributed to all subscribers to the group.
Various chat tools have been developed to allow two or more individuals on the
internet to hold live interactive conversations. If the number of contributors increases
substantially, chat groups can be divided into different themes and topic areas. Some
enhancements are providing voice chat capabilities. Individuals can arrange to meet at
predefined times to share their knowledge and ideas, particularly in cases where the
phone may not be the appropriate medium. Discussion groups can also be set up on a
variety of topics on an organisation’s intranet to enable knowledge sharing.
Sensitivities relating to the membership of these groups need to be considered so that
full, frank and open discussions and dialogues can be promoted. For example, in a work
context, people may be guarded in their contributions if they are aware that their boss
or senior management may be party to the conference.

◗ Groupware tools
The raison d’être behind groupware is to encourage collaboration between people to
enhance knowledge sharing. In commercial terms, the assumption is that greater col-
laboration will lead to increased productivity, lower costs and higher quality through
better decision making. Groupware, as a concept, tends to be applied to information
communication technologies (ICTs) that support collaboration, communication and
coordination of activities over space and time as well as shared information spaces
(Robertson et al. 2001). Two common technologies used in groupware are e-mail and
Lotus Notes discussion databases. Lotus Notes is generally considered as the first group-
ware product to provide discussion databases, e-mail with attachments, shared
databases, workflow automation and applications development. Other systems have
included (Williams 1996):

● group decision support systems (GDSS) with brainstorming, ideas generation and
voting systems;
● collaborative writing and whiteboards;
● computer-based conferencing;
● schedule meetings and diary organisers;
● e-mail systems used proactively.
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Chapter 4 / Knowledge management tools: component technologies 115

◗ Videoconferencing
Desktop videoconferencing (DTVC) provides a means for two or more people to see and
hear each other from their desktop computer, enabling them to collaborate and share
knowledge without leaving their desk. A small camera and microphone are attached to
the top of a PC and these relay the video information to a distant user. Using this tech-
nology, organisations can improve their workflows and save on travel time and costs.
Most products provide a simple shared workspace or ‘whiteboard’ so that users can
explain their ideas through drawings. More sophisticated applications allow users to
work together on the same documents or spreadsheets. Poor picture quality issues of
videoconferencing are normally associated with a lack of internet bandwidth.

◗ Skills directories: expertise yellow pages

To enable knowledge sharing in organisations, there is often a need to find the individ-
ual or groups with the necessary skills and expertise that may be required in another
part of the organisation. Many firms now produce ‘expert yellow pages’ and directories
of communities. Expert yellow pages comprise a listing of all the employees in an
organisation, with a summary of their knowledge, skills and expertise. This is accessible
to all employees who can access the ‘expert’ through keywords on an intranet-based
search engine. A similar searchable listing may be developed for communities, groups
and discussion lists within organisations.

◗ E-learning
E-learning is the generic term used to describe online learning, computer-based training
and web-based training. It is the application of internet technologies to support the
delivery and management of learning, skills and knowledge. E-learning does not have
to occur exclusively on the internet. More reputable offerings tend to provide an inte-
gration of various learning technologies such as:

● mentoring;
● chat forums;
● expert-led discussions;
● web seminars;
● online meetings;
● virtual classroom sessions.

E-learning initiatives need to be considered as part of an organisation’s portfolio of

HRD interventions to meet training and development needs rather than being adopted
as a panacea for cutting costs.
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116 Part 2 / Generating knowledge

Storing and presenting knowledge

◗ Data warehouses
A data warehouse is a large physical database that holds a vast amount of information
from a wide variety of sources. The data warehouse needs to serve as a neutral data stor-
age area that can be used for a variety of analytical tools. The characteristics of a data
warehouse are (Inmon 1992):

● subject orientation – data may be organised around business subjects;

● uniformity – common data elements related to multiple applications are treated
consistently;
● time variant – data is updated as conditions change;
● non-volatile – data is loaded into the warehouse and retrieved easily from it.

Data warehouses can be structured to contain data at various levels (as shown in
Figure 4.11) including current detail data, older detail data, lightly summarised data
(often for middle management), highly summarised data (for top management) and
meta data. The ‘older level of detail’ is often placed at the bottom of the data warehouse

Meta
data

Current
data

Lightly
summarised
INTERNAL DATA

Extraction Data
data
Analysis
DATA
Transformation OLAP
WAREHOUSE
Knowledge
Highly
Cleansing Discovery
summarised
data

Older data
2–3 years
old

External
data

Figure 4.11 Model of a data warehouse

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Chapter 4 / Knowledge management tools: component technologies 117

structure as it may be two or three years old and infrequently accessed (Ma et al. 2000).
Meta data is used to describe the meaning and structure of the data as well as how it
was created, accessed and used (Devlin 1997). The meta data can help the user locate
the contents of the warehouse and map their elements. In addition, it may provide a
guide to the algorithms used to summarise the data in different ways.
Relational database management systems (RDBMS) are widely used today as data
warehouses to store, manipulate and query large data sets in a variety of applications.
They are used in virtually every major organisation to manage tasks such as payroll,
sales and marketing.

Relational databases are very popular in organisations nowadays. What are your Pause for thought
experiences of using these databases? How useful do you find them, particularly
databases of customer records? Are there inherent limitations in using them for
particularly large databases? How would you rate your statistical skills and ability to
understand complex statistical analyses? Do you see any problems arising from
managers misinterpreting complex analyses from OLAP or data mining tools? How could
you overcome this potential problem?

◗ Visualisation
Visualisation is an emerging technology which allows users to understand the complex-
ity of information through the use of rich computer graphics. This can be an invaluable
tool, particularly for visualising analysis from data mining and information-retrieval
techniques, as shown in Figure 4.12 (p. 118). For example, data in an information
retrieval system can be represented and modelled in the following manner (Song 2000):

● 2-dimensional (2D) or 3-dimensional (3D) scatterplots;

● 2D or 3D vector field topology plots with geometric data points;
● tree or hierarchical visualisation techniques to simplify complex data by branching
data into levels;
● network techniques to represent information structures as spatial networks;
● maps related to a domain’s geography;
● bibliometric mapping techniques to represent authors and their writings on a land-
scape and clustering authors based on various commonalities.

More advanced visualisation techniques have adopted colour as well as a combina-

tion of rendering and photo-realism techniques (Cawkell 2001). Rendering is a
technique to make computer-generated images appear as realistic as photographs. The
emphasis is on modelling the way light creates shadows on surfaces, textures and
objects and removing the transparency of obscuring objects. In the film industry,
photo-realism techniques have been employed to create animation and special effects
so that computer-generated graphics can blend seamlessly into the action in movies.
These techniques have been used in films such as Star Wars, Jurassic Park and Titanic. It
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118 Part 2 / Generating knowledge

Figure 4.12 The Starlight Information Visualization System developed at the Pacific
Northwest National Laboratory. The Starlight software displays complex relationships
among large quantities of disparate information

is notable that one of the greatest challenges in photo-realism is the ability to render
human skin on animated objects. Many of these techniques are likely to enter knowl-
edge management domains as the complexity of information and related analyses
increases in the long term.

CASE STUDY
Technip-Coflexip FT
A glance through the 2001 annual report of adoption of new information technologies.
Technip-Coflexip, the big global engineering and The TechniPlaNet portal is essentially a secure,
construction group, might create the impression permanent, interactive e-business club that allows
that it was interested only in mega projects – mas- T-C’s operating centres, clients, subcontractors, ven-
sive ethylene steam crackers in Iran, refineries in dors and others to design and construct small- to
Egypt, nickel-cobalt complexes in New Caledonia, or midsize projects more cost effectively and faster,
high-tech chemical plants in China and Taiwan. without compromising quality. ‘This tool networks
‘Our main target is big or medium-sized projects,’ all the actors in the development and construction
says Riccardo Mollo, chief executive of alliances at of a project,’ says Mr Mollo. ‘It basically delocalises
Technip Italy. ‘But there is a significant level of mini- them. You need to be able to look at the job (with-
or micro jobs.’ The problem, however, was how to out having to go to the site). With this tool you can
take on these smaller jobs economically – the group relay information to local low-cost companies and
was simply too expensive for executing projects at they can send it back. We have been using e-mail
the doorstep of smaller customers, especially those in but that is not really enough. Now the deliverables
remote locations. ‘We kept on hearing these clients are sitting on a virtual desk accessible to all the
saying, ‘It’s too bad, we can only use the local engi- people involved in the workflow process.’
neering companies.’ These are cheap, but they are One of the key IT vendors behind TechniPlaNet is
poor on project management, process competences Intergraph PPO (for Process, Power and Offshore),
and value-added services,’ says Mr Mollo. the Alabama-based company which is one of the
The company’s solution was to use the internet. It two big names worldwide in engineering IT solu-
set up an e-collaboration portal, TechniPlaNet, which tions for the process, power and energy industries.
aims to combine the group’s global expertise with The other is Cambridge-based Aveva Engineering IT
local cost advantages, and thus allows it to execute (formerly Cadcentre), part of the UK’s Aveva Group.
smaller projects in innovative ways. It is one of the Intergraph PPO sees the internet and web-enabled
most ambitious initiatives so far to exploit the web in techniques as a key weapon in its assault on what it
an industry that has been relatively conservative in its calls ‘information erosion’ in the industries it serves.
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Chapter 4 / Knowledge management tools: component technologies 119

Plenty of attention is paid to efficiently creating and A lot of the benefits of web-enabled plant infor-
maintaining plant physical assets, but not enough, it mation management (PIM) have been achieved in
says, to doing the same job with information assets. the construction and operation of Statoil’s $4.4 bil-
These can produce a return on investment, just as a lion Asgard project. Anchored in deep water 200 km
physical asset can, but unfortunately information off Norway’s Atlantic coast, Asgard is the largest
can be eroded if it is not looked after. subsea development in the world. Statoil and
A few statistics and anecdotes from an Intergraph Intergraph established an e-engineering business
survey of owner/operators and engineering procure- partnership, based around a web-enabled, industry
ment contractors highlight the problems caused by standards-based PIM data warehouse to hold all the
inaccurate, poorly maintained information. One technical data for the project. Statoil’s aim was to re-
owner operator spent $12 million to ensure plant use this data throughout the plant’s lifecycle,
safety following a gas leak, when it was found that including the long commissioning, operations and
drawings and data did not reflect the actual plant. maintenance stages. ‘The data warehouse works as a
Another had to spend $1 million re-gathering ‘as- single source for sharing and exchanging informa-
built’ information before it could redesign an existing tion,’ says Adrian Park, Statoil’s PIM product
plant. A third found that 85 per cent of information responsible manager. ‘It gives much better control of
in more than 1,000 data sheets was inaccurate. plant configuration and change management.’
The solution, according to Intergraph, is an inter- The traditional ‘dump and run’ scenario at the
net-enabled approach that manages plant information handover stage between contractor and operator was
right through the lifecycle of the plant, from design avoided by ensuring that data was automatically
and commissioning through to operations and mainte- transferred each day from contractor Kvaerner Oil
nance. This lifecycle can be 30 years or more. and Gas to the Statoil PIM. ‘So we don’t get prob-
‘The tools we are producing now are greatly lems at the end, when people are leaving the
speeding up, opening up and improving communi- project,’ says Mr Park. By focusing on maximising
cation between different segments and groups in the the quality and speed of the information transfer,
industry,’ says Ben Eazzetta, Intergraph PPO’s execu- the company says the handover was the best it had
tive vice-president for global sales, marketing and ever achieved.
business development. Project engineers in remote In the operating phase, the web-based interface
locations and office workers can now look at the with the PIM system is bringing benefits because it is
same piece of data on a live site, helping to reduce easy to use and very intuitive, says Mr Park, and
errors caused by looking at old data. training needs have been less than expected. ‘No
As engineering contractors increasingly outsource one is frightened by it. It’s quite important during
work to low-cost centres such as India, South-east operations, when people might work for two weeks
Asia or Eastern Europe, and owners manage a wide offshore, then have leave for three weeks, then work
range of facilities in remote places, the need for for another two weeks and have leave for four weeks
widespread access to live data will grow, he says. A – they can forget the application they are meant to
web-based infrastructure, he adds, is very important, be using.’
as it avoids the need for major reworking of data The web interface also gives universal access to
and also anticipates wider use in the future of wire- contractors and suppliers, however geographically
less internet technology in the field. dispersed they are and however minimal the support
According to figures from Intergraph and inde- they receive.
pendent sources, using internet-enabled plant These are early days for such innovations in the
information management can save millions of dol- process industry, however, and both Technip-
lars in the various stages of the project. For example, Coflexip and Statoil are among the initial customers
the savings in the concept development stage range for such web-based systems. In the market for web-
from 10 to 30 per cent – typically $5 million – and based tools, some standards issues remain to be
in the commissioning stage from 30–60 per cent or, resolved, but Mr Eazzetta says the market ‘will set a
typically, $3 million-plus. standard. Something will emerge that people see a
The biggest savings can be made in the ‘handover’ value in’. He sees the industry as being at the begin-
process between the contractor and the owner oper- ning of an adoption curve lasting 2–5 years.
ator – 60 per cent savings or up to $10 million. But for the early adopters there is no turning
Intergraph sees this point in the information lifecy- back. The PIM programme has been so successful at
cle as critical – typically, owner operators have the Asgard project that it is now part of corporate
dumped all the project data into a variety of dis- best practice, says Mr Park, and will be implemented
parate databases, says Mr Eazzetta, so have not been in new offshore projects. As a result, Statoil is
able to derive much value from it. hoping to cut project development costs by 10–20
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120 Part 2 / Generating knowledge

per cent, and operating costs by 5–10 per cent, on is unlocking the value of information and encourag-
projects such as the $1.88 billion Kristin offshore ing contractors, suppliers and operators to hold it in
development in the Norwegian Sea and the massive equal respect with their rigs, platform and pipework.
$5.1 billion Snohvit LNG development in the Source: Article by Andrew Baxter, Financial Times, 16 October 2002
Barents Sea, northern Norway.
Meanwhile Technip-Coflexip, which deployed
Questions
TechniPlaNet early last year, has realised that the
system is not necessarily limited to small jobs. It is l Is the technology in this case another form of ‘old
wine in new bottles’? What innovative techniques
now migrating the tool to a much bigger IT platform
have been used to create, organise, store, share and
and BP has agreed to use it for the worldwide strate-
evaluate new knowledge?
gic alliance that it has in place with Technip Italy for
2 Given the over-reliance on small subcontractors from
the development of purified terephthalic acid (PTA) low-cost countries in these industries, what are the
production plants. These plants cost hundreds of likely consequences on training and effective use of
million dollars apiece, and TechniPlaNet is being these technologies?
used as a standardised knowledge database for all 3 How can new learning from past projects be stored
the different users involved in building them. in the data warehouse?
The IT side of the process, power and offshore 4 What are the difficulties of measuring and attributing
industry will always have a low external profile, cost savings to new technology for Technip-Coflexip
given the sheer size and environmental impact of its rather than arising from improved work processes,
physical assets. But within the industry the internet worker incentives or project learning?

Summary
This chapter has elaborated five main technologies in the development of new knowl-
edge in organisations:

1 Tools for organising knowledge emphasised the importance of ontology and taxon-
omy generation tools to categorise knowledge at an individual, organisational or
knowledge domain level.

2 Tools for capturing knowledge examined cognitive mapping tools to help make tacit
knowledge more explicit, information retrieval tools and the technology behind web-
based search engines. Automation of knowledge capturing tasks was explored in
relation to personalisation tools and agent technology.

3 Tools for evaluating knowledge considered the potential of case-based reasoning,

OLAP, data mining and machine-based learning tools.

4 Tools for sharing knowledge focused on the power of the internet and intranets and
how sharing could be facilitated through text-based conferencing tools, groupware
tools, videoconferencing, expertise yellow pages and e-learning techniques.

5 Tools for storing and presenting knowledge highlighted data warehouses and the
latest visualisation techniques.
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Chapter 4 / Knowledge management tools: component technologies 121

QUESTIONS FOR FURTHER THOUGHT

1 Assuming high developmental costs, what can organisations do if they find their intranets and
data warehouses are rarely visited by their employees?
2 How could second-generation semantic webs co-exist with first-generation HTML-based webs?
Are there potential opportunities and challenges for knowledge sharing?
3 In group processes, how do you manage conflicting ‘collective maps’ of tacit routines?
4 A 2002 thesis proposed by Stephen Wolfram, chief executive of Mathematica, was that all
knowledge could be described as an algorithm. How far do you agree with such a proposition
and is the end goal of KM tools to discover these underlying algorithms?
5 What are the barriers facing human-computer interaction and the ability of humans to place
greater trust in personalisation and agent technologies to meet their needs?
6 If knowledge discovery techniques can analyse only 5–10 per cent of data in large databases,
what are the dangers of making decisions and building strategies on partial information?
7 What parameters are likely to encourage the adoption of certain tools and technologies over
others in organisations?
8 Apart from saving travel costs, what are the likely advantages of using videoconferencing tools
in an organisation?
9 What is the best way of managing two large data warehouses in a merger or acquisition
situation?
10 When are traditional tools of knowledge creation and sharing such as a blank piece of paper or
telephone more useful than more sophisticated tools outlined in this chapter?

Further reading
Laudon and Laudon 2000 is an easily accessible text on some of the tools outlined in this
chapter. It also provides a good introduction to management information systems.

References
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Cawkell, T. (2001) ‘Progress in visualisation’, Journal of Information Science, 27(6), 427–438.
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Ding, Y. and Foo, S. (2002) ‘Ontology research and development. Part 1 – a review of ontol-
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1
9068 KMAN_C05.QXD 7/7/08 11:58 AM Page 125

PA RT 3
Evaluating knowledge

DISCOVERING
KNOWLEDGE
Data, information & knowledge
History of managing knowledge
Philosophical perspectives on knowledge

LEVERAGING GENERATING
KNOWLEDGE KNOWLEDGE
Knowledge management Organisational learning
in the learning organisation Knowledge management
Intellectual capital Tools & technology
KNOWLEDGE
MANAGEMENT
CYCLE

SHARING EVALUATING
KNOWLEDGE KNOWLEDGE
Knowledge management Knowledge management systems
and culture Strategic management perspectives:
Change management knowledge management strategy
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9068 KMAN_C05.QXD 7/7/08 11:58 AM Page 127

Chapter 5
Knowledge management systems

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● explain the component technologies involved in different km systems;
● describe the different quality management processes driving km systems;
● outline a plan for the selection and effective implementation of km systems for any given
business problem;
● construct a breakdown of overall costs for a KM system.

MANAGEMENT ISSUES

The use and application of knowledge management systems implies these questions for managers:
● How do you select an appropriate KM system to meet current and future business needs given the
multitude of offerings in the marketplace?
● What are the key factors that lead to effective implementation and adoption of KM systems?
● Can higher quality information from new KM systems lead to poorer quality decisions?
● Do KM systems achieve the necessary return on investment and expectations for the end customer?

Links to other chapters

Chapter 4 describes the component tools and technologies found in KM systems.
Chapter 6 explores the role of KM systems in knowledge strategies.
Chapter 8 concerns change management and the effective implementation of KM systems in
organisations.
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128 Part 3 / Evaluating knowledge

OPENING VIGNETTE
New twists for old tricks FT
Retailers have always devoted large parts of their it can ensure the right mix of products in store and
customer relationship management (CRM) budget to make personalised mailings and offers to customers.
technology, and now they are looking to new types The Nectar scheme illustrates another risk of new
of software to help them cross-sell and ‘up-sell’ – or CRM initiatives, however – technology that does not
encourage customers to buy a higher-grade product work. The Nectar website was overwhelmed by the
– and to ensure they are more loyal. initial response from consumers and online registra-
Many of these new developments are applying IT to tion was suspended.
activities which have long been common sense for A further area of CRM investment involves the
retailers. An example is a technique known as ‘clientel- medium through which the dialogue between
ing’. Top retail sales staff have always kept a ‘little retailer and customer takes place. As technology pro-
black book’ of customer contacts, says Monte Zweben, gresses this can occur through a customer’s PDA,
chief executive of Blue Martini Software, a US-based in-store electronic kiosks or handheld devices.
CRM vendor. This enables them to contact a customer All these CRM innovations require considerable
if a new product lines comes in which they know investment, but the return could come in many
might appeal to him or her. ‘Clienteling’ makes this ways. For one, it may reduce costs. Many retailers
more efficient; it allows customer information to be have staff churn of 30 per cent a year. Retraining is
shared among sales staff and for a larger range of cus- thus a major expense that ‘clienteling’ and similar
tomers to benefit from this sort of personal service. It technology may be able to minimise.
also helps with thank-you notes and follow-ups, allow- The cost of technology, although substantial,
ing retailers to project a more professional image, pales into insignificance in comparison to the mar-
while delivering the personal service that high-end tai- keting budgets of most large retailers, says Mr
lors and boutiques have always been able to offer. Muldoon. If even a tiny proportion of the marketing
Nordstrom, the US fashion retailer, is installing budget were diverted to IT investment, it would
clienteling applications developed by Blue Martini have a major impact, increasing sales. Even a 1 per
in its 137 stores. It involves point-of-sale terminals cent increase in sales could cover the cost of the
that will help the company manage customer prefer- technology, agrees Pete Abell, director of research at
ences and product information. The software assists AMR Research, referring to a pilot undertaken in
sales staff and marketing departments by building a Atlanta by Gap, the clothing chain.
picture of the customer’s behaviour. Personalised Costs may be further controlled by avoiding big
marketing material can then be prepared for events bang CRM and choosing an incremental approach.
such as a birthday or wedding. The software also This is possible, for example, with store cards,
allows marketing departments to create graphical according to GE Consumer Finance, which manages
workflow diagrams of any campaign and track many such programmes. Because the data is held
events as they occur. centrally and can be analysed on the company’s
Gathering information through such techniques, database system, an incremental approach can be
and the now ubiquitous loyalty programmes, pro- taken, controlling costs and measuring the success
duces a huge amount of available data. The danger, of each programme as it happens, says Seamus
however, is that the customer will be spammed with Smith, director of client services.
useless information, says Mike Muldoon, Europe Investment in CRM technology is likely to continue
business consulting services industry leader for retail increasing in the retail sector, mainly due to competi-
at IBM. ‘If technology companies, software compa- tive pressures. The first-mover advantage is significant,
nies and retailers don’t work together to ensure (the says Mr Abell – if one retailer finds a technology that
CRM effort) can have mass appeal, it will be point- increases profitability, the others must follow.
less,’ he says. Even so, the importance of technology in retail-
Nevertheless, many retailers believe such initia- ing, compared with human factors such as
tives will prove to be worthwhile. Sainsbury’s, the acknowledgement, respect and trust, can be over-
UK supermarket chain, which has just launched a stated. ‘CRM is about providing customers with
new loyalty scheme known as Nectar (with what they need at every touch point and in retailing
Debenhams, the department store group, BP and the majority of touch points are human,’ says Rob
Barclaycard, the credit card company), says that by Corrie, director at Spectra UK, a marketing analysis
using a combination of the picture built up by the and data solutions company.
loyalty card as well as profiling the local population, Source: Article by Paul Talacko, Financial Times, 6 November 2002
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Chapter 5 / Knowledge management systems 129

Questions 2 What are the potential dangers of using KM systems

1 What are the advantages of ‘clienteling’ software such as CRM in customer interactions?
over the traditional ‘little black book’ in retailing? 3 How can IT spend for KM systems be justified over
competing pressures from other parts of the firm?

Introduction
A multitude of knowledge management systems have been developed by configuring dif-
ferent component technologies shown in Chapter 4 and integrating them in different
ways. For certain business applications, generic and standard software has been developed
for mass market appeal. A frequent dilemma for firms is whether to acquire off-the-shelf
solutions or develop customised KM systems. A major issue concerning off-the-shelf solu-
tions is whether organisations want to follow practices and ontologies embedded within
the software. The underlying premise of KM systems is that they will meet expectations of
senior management for return on investment or increased effectiveness. The current reality
is that many KM systems have failed to deliver on these expectations due to their strong IT
orientation and little regard to links with business strategy and the end customer.
In determining the appropriateness of KM solutions, one needs to be mindful of the
five major concerns of senior executives related to IT investments in organisations
(PriceWaterhouse 1995):

● integrating IT with corporate objectives;

● transforming through IT;
● infrastructure;
● uncertainty;
● cost control.

This chapter opens by exploring the notion of a system and examines the key con-
tributors to systems thinking and methodologies. It argues that the dominant driver
behind the development of KM systems is the improvement of quality management
processes in organisations. In this regard, the chapter deliberates on the dominant con-
tributors of the quality management movement starting with Deming and Juran and
moving on to principles such as TQM (total quality management), BPR (business process
re-engineering) and lean production. To reach these continuous improvement goals, a
variety of KM systems are examined, including document management systems, deci-
sion support systems, group support systems, executive information systems, workflow
management systems and customer relationship management systems. The emphasis
throughout is to elaborate on the nature of these systems, their component technologies
and shared good practice on their effective implementation. The economic and hidden
costs of KM systems are also explored given the scaling back of IT spend in many organi-
sations globally. In a study of 431 US and European firms conducted in 1997 exploring
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130 Part 3 / Evaluating knowledge

what firms are doing to manage knowledge, the following project priorities (in descend-
ing order) were discovered related to KM systems (Ruggles 1998):

● creating an intranet (47 per cent);

● creating data warehouses and knowledge repositories (33 per cent);
● implementing decision support tools (33 per cent);
● implementing groupware to support collaboration (33 per cent);
● creating networks of knowledge workers (24 per cent);
● mapping sources of internal expertise (18 per cent).

These figures are likely to have changed dramatically in the interim in response to
changing organisational needs and market developments. The key question remains:
can KM systems deliver individual and management expectations around knowledge
creation and sharing? If not, what are the additional ingredients needed in the collec-
tive ‘knowledge management’ pot?

Systems thinking
Early management thinking tended to adopt a mechanistic view of reality and treat
organisations and people more like machines. This mechanistic view is typified by
Frederick Taylor’s theory of scientific management (Taylor 1911) and Weber’s notion of
bureaucracies (Weber 1947). Scientific management stresses repetitive work cycles,
detailed planning of work sequences and motivation based on economic rewards.
Bureaucracies are characterised by top-down authority hierarchies, breakdown of jobs
into routine and well-defined tasks, and a formal set of rules to ensure predictable
behaviour. Despite numerous criticisms of this mechanistic conception of organisation,
many commentators have argued that developments in information technology and
virtual organisations have tended to refine this perspective.
Systems thinking emerged in the 1940s in the biological sciences as the traditional
mechanistic view failed to explain the complexity of organisational phenomena. Soon
this new perspective found its way into organisational thinking with an adoption of
biological analogies such as survival, development and stability.
So what is a system? A system can be characterised as a series of elements connected
by relationships or links surrounded by a clearly defined boundary to the external envi-
ronment and with a role of transforming its inputs into desired outputs, as shown in
Figure 5.1 (p. 131). Each element and relationship has an attribute depending on how
they are measured, such as size, intensity and strength. The system is termed an open
system if the boundary allows inputs from and outputs to the environment. A state of
homeostasis is achieved when the system is able to control its internal environment
and maintain a dynamic steady state with its changing external environment.
One early conception of organisations by Eric Trist was to view them as ‘socio-technical’
systems (Trist 1959). The goal of such systems was to find a ‘best fit’ between the social
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Chapter 5 / Knowledge management systems 131

‘Environment’
Feedback loop

Element

INPUT

Relationship
OUTPUT

‘Environment’ ‘Environment’

Boundary

Figure 5.1 General characteristics of a system

(capabilities, needs, relationships) and the technical (material, apparatus, operational

stages) aspects of the system. Such a conception still has some relevance in knowledge
management with its preoccupations with technical or human resource aspects of knowl-
edge creation and distribution. In the field of systems science, a wide range of other
system methodologies has been forwarded, as shown in Table 5.1. There is currently no
consensus on the best systems methodology for a given knowledge management situation
but rather an understanding of the strengths and limitations of different systems method-
ologies as well as the advantages of combining methods to offer creative solutions to
complex and ill-defined situations (Gao et al. 2002).

Table 5.1 Summary systems methodologies (adapted from Gao et al. (2002)
Author Systems methodology and key points
Churchman (1970) Social systems design (SSD)
Uses dialectic process of thesis, antithesis and synthesis to better
understand a situation.
Beer (1972) Viable systems diagnosis (VSD)
Belief that system is viable if capable of responding to environmental
changes by achieving variety. Important role played by information
flows and organisational structure. Subsystems labelled as implementation,
coordination, control, development and policy.
Ackoff (1979) Interactive planning (IP)
Facilitates participation of all stakeholders in planning to generate
consensus, commitment; mobilises creativity and eases implementation.
Checkland (1981) Soft systems methodology (SSM)
Emphasises systems as cyclical learning processes.
1 Enter unstructured problematic situation
2 Express problem situation
3 Formulate root definitions: CATWOE – Customers, Actors,
Transformation process, Weltanschauung (view of the world), Owners,
Environmental constraints
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132 Part 3 / Evaluating knowledge

Table 5.1 Summary systems methodologies (adapted from Gao et al. (2002) (continued)
Author Systems methodology and key points
4 Build conceptual models
5 Compare models with real-world actions
6 Define feasible and desirable changes
7 Take action to improve problem situation.
Mason & Mitroff Strategy assumption surfacing and testing (SAST)
(1981) Useful for ill-structured problems with differences of opinion. Can be
adversarial, participative, integrative and managerial mind supporting.
Allows group formation, assumption surfacing, dialectic debate and
synthesis of perspectives.
Ulrich (1983) Critical systems heuristics (CSH)
Attempts to link systems with practical reasons of a problem. Encourages
debate in terms of practical relevance rather than theoretical justification.
Contains twelve critical heuristic categories.
Flood and Jackson Total systems intervention (TSI)
(1991) Finds strengths and weaknesses of available systems and uses a range of
systems to promote creativity. Supported by five pillars:
1 Critical awareness
2 Social awareness
3 Dedication to human emancipation
4 Complementarism at theoretical level
5 Complementarism at methodological level.
Linstone (1994) Technical, organisational and personal perspectives (TOP)
Views reality from multiple perspectives: scientific and technological, group
or institutional, individual and self.

Drivers of KM systems: quality management processes

The raison d’être of most organisations is to provide products and services that meet
the changing needs of their customers. For commercial organisations in highly compet-
itive markets, this means developing systems and processes continually that produce
higher quality services or products at a lower cost than competitors. The key driver of
knowledge management systems in organisations is argued to centre around improving
quality management processes linked to an organisation’s ability to capture, share and
apply new knowledge.

◗ Deming and Juran

The pioneers of quality management were Dr William Deming and Dr Joseph Juran.
Both quality ‘gurus’ were influenced by the principles of statistical quality control
(SQC) developed by Dr Walter Shewhart. Shewhart (1931) believed that every task had
controlled and uncontrolled variations that could be understood through simple statis-
tics, with the possibility of reducing or even eliminating the variations. In most cases,
Deming believed that the uncontrolled (his term was ‘special’ – under operator control)
variations accounted for around 15 per cent of the variations and the rest of the con-
trolled (‘common causes’) variations were to do with the systems and processes and the
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Chapter 5 / Knowledge management systems 133

responsibility of management. This emphasised the importance of leadership and the

responsibility of senior management for initiating change.
It is noteworthy that the ideas of these two pioneers were almost ignored in their
home country of America until the 1980s but found tremendous recognition in Japan.
After defeat in the war, Japan was a country in ruins. In 1950, Deming met a group
called the Union of Japanese Scientists and Engineers (JUSE), formed to promote revival
of Japanese industry, and spoke to packed audiences across Japan. He became acquainted
with the Kei-dan-ren, the association of Japan’s chief executives, and proposed the impor-
tance of statistical process control (an adaption of Shewhart’s ideas) to meet consumer
demands for high-quality products. Having lost all in the war, the Japanese followed
Deming’s advice and his conviction that it would make them supremely competitive in
global markets within five years. Japanese manufacturers went from strength to strength
and by the 1980s had become a major economic threat to the US. Deming was a hero,
with the national quality prize in Japan named after him, and was awarded the Second
Order of the Sacred Treasure by Emperor Hirohito in 1960.
Deming’s method of ensuring quality of every task was based on a form of learning
cycle, the PDCA (plan, do, check, act) cycle that could be applied repetitively and con-
tinuously to every task (Deming 1986). His beliefs can be summarised into the
following stages that lead from one to another:

● improve quality;
● costs decrease because of less rework, fewer mistakes, fewer delays, snags, better use
of machine time and materials;
● productivity improves;
● capture the market with better quality and lower price;
● stay in business;
● provide jobs and more jobs.

After publication of his book (Juran 1950), Dr Joseph Juran was invited by JUSE to
lecture in Japan. He developed the concept of company-wide quality management
(CWQM) as a way of disseminating quality throughout an organisation. This was based
on a trilogy linking together planning, control and improvement:
● planning – identify and ensure customer needs are easily understood by every
person. Ensure that the process will produce something to meet customer needs.
Produce a product for the customer;
● control – continuously monitor processes for variations. Management take responsi-
bility for the majority (80 per cent) of controlled variations in processes;
● improvement – take all necessary steps to improve system including attitude and
cultural change.

Juran’s lectures were translated and sold in kiosks across Japan as well as being
broadcast on radio. They were also used in ‘reading circles’ in organisations to help
improve literacy. These reading circles were a precursor to ‘quality circles’ and were
used to improve quality through joint problem solving in teams.
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134 Part 3 / Evaluating knowledge

Pause for thought Reflect on your own organisation. How important is Deming and Juran’s message to
your organisation? Describe how quality is managed in your organisation. To ensure
high and consistent levels of quality, what other factors do you think need to be
taken into account apart from statistical quality controls? How important are
customer perceptions of quality? One of the goals of modern-day marketing is to
achieve one-to-one marketing rather than mass marketing. How do your
organisational systems measure up to this goal in providing up-to-date knowledge
of each customer?

◗ Total quality management (TQM)

Following the discovery in the west of Deming’s work and in response to threats of
Japanese imports, the concept of total quality management (TQM) was developed.
TQM built on earlier concepts of quality control and quality assurance. Quality con-
trol was an extension of inspection to collect data and understand variations using
statistical techniques. In contrast, quality assurance was about developing organisa-
tional structures, procedures, processes and resources to ensure that tasks were
performed in a consistent manner. Some firms have opted to follow a quality standard
such as ISO 9000, which defines different aspects of their quality system and the
nature of third-party assessment. Verification in quality assurance is a major departure
from quality control and allows an independent assessment of quality systems and
procedures to be made.
TQM moves beyond the mechanistic orientation of quality assurance and empha-
sises the need to facilitate cultural change. It is linked with a commitment to total
customer satisfaction achieved through continuous improvement and encourages the
contribution and involvement of people in the process. It offers a multidisciplinary
approach to empower employees at all levels and moves beyond the conformance
needs to customer-driven needs. For example, in the automobile industry, TQM may
focus more on what delights the customer, such as electric windows, rather than
purely on the basic conformance needs such as the power of the engine. The key ele-
ments of TQM are:

● a total process involving all units in the organisation and led from the top;
● customer is king, with every strategy, action and process directed at satisfaction of
customer needs;
● information is gathered and analysed rationally using ICT;
● all organisational processes that add to costs of poor quality are examined;
● greater involvement of people as an untapped resource;
● the use of multidiscipline and multilevel teams to solve problems related to meeting
customer needs;
● the promotion of creative thinking to develop innovative solutions.
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Chapter 5 / Knowledge management systems 135

◗ Business process re-engineering (BPR)

In the mid 1990s, a controversial approach to quality and cost improvements was for-
warded called business process re-engineering (BPR). The pioneers of BPR (Davenport
1993; Hammer and Champy 1993) defined BPR as:

The fundamental re-thinking and radical redesign of business processes to achieve dra-
matic improvements in critical, contemporary measures of performance, such as cost,
quality, service and speed.

BPR offered a fresh start to organisational redesign, with a blank sheet of paper
ignoring past history or present structures and practices. It focused on the horizontal
analysis of work along an activity chain and challenged the very foundations of tradi-
tional operations. As most organisations are structured vertically around functions, BPR
represented a total shake-up of organisations into horizontal cross-functional processes.
One result of the BPR approach was to flatten hierarchies and remove many middle
managers with the necessary skills, knowledge and expertise. For some organisations,
this lack of regard to ‘context-specific’ issues has had untoward consequences. Many
senior executives have had to manage day-to-day operational issues for which their
expertise has been clearly lacking.
A typical BPR project has four stages (Huczynski and Buchanan 2001):

● process mapping – drawing flowcharts of work activity sequences;

● identifying ‘moments of truth’ – deciding which steps are critical, add value and
introduce errors;
● generating redesign proposals – streamlining processes and avoiding duplication and
overlap;
● implementation – putting the redesign into effect.

Some commentators argue that TQM has been overtaken by BPR whereas others
view each approach as complementary to another. Could TQM be seen as a form of
single-loop learning (Argyris and Schon 1978) and the radical redesign of BPR as
double-loop learning? The distinctions between the two methodologies are shown in
Table 5.2 (Hammer and Champy 1993).

Table 5.2 Differences and similarities between TQM and BPR

TQM BPR
Based on process flow to accomplish work Same
Starts with the customer of the process Same
Works within existing framework Seeks to break from existing practices
Based on continuous incremental improvement Seeks breakthrough
Focus on enhancing continually, facts, data, Focus on entirely new information systems, a
participation, teamwork, job design, based on ‘different approach to change management’
technology application
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136 Part 3 / Evaluating knowledge

◗ Lean production
In 1990, a new concept of ‘lean production’ was forwarded to explain the increased
performance and competitiveness of certain automobile manufacturers around the
world (Womack et al. 1990). The goal of lean production was to achieve increased pro-
ductivity, reduced lead times and costs, and improved quality across the organisation.
The principles and techniques in lean production have focused on manufacturing firms
and contain the following aspects (Sánchez and Pérez 2001):

● elimination of zero-value activities – anything that doesn’t add value to the product
or service (Womack and Jones 1996);
● search for continuous improvement in products and processes – involve production
teams and management to develop creative solutions to the identification and
adjustment of defective parts;
● multifunctional teams – to facilitate task rotation and flexibility to accommodate
changes in production levels. Increased training effort on quality control and remu-
neration to compensate for new flexibility in workforce;
● just-in-time (JIT) production and delivery – integration of automation equipment with
production information system to enable delivery of any part in the necessary quan-
tity at the right time. This contributes to the reduction of inventories and lead times;
● integration of suppliers – with key departments to enhance buyer-supplier relation-
ships such as R&D for new component prototypes;
● flexible information systems – to provide timely and useful strategic and operational
information to all levels. Strategic information may contain organisation’s produc-
tion plans and sales forecasts whereas operational information may contain the
factory’s current productivity or quality performance.

Document management systems

Organisations tend to publish a variety of documents for internal consumption or for
external sources such as suppliers, customers and shareholders. There is a growing ten-
dency for the volume of these documents to increase substantially each year and an
urgent need to manage them adequately for efficient storage and retrieval. Paper files
can take up a lot of space in filing cabinets, with the likelihood that they are rarely
retrieved for many years. Document management systems have developed to address
these problems and have typically employed the intranet as an electronic medium
rather than conventional document printing and circulation methods. The primary
driving force has been the cost savings compared with conventional publication and
distribution methods, together with the dynamic nature of intranets. Documents can
be published and updated on the intranet when needed and become available instantly
to all interested users (Frazee 1996). The types of documents may include policy and
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Chapter 5 / Knowledge management systems 137

procedure manuals, corporate phone directories, online help, human resource guide-
lines, sales and marketing literature, customer data, price lists and press releases.
Implementing a document management system constitutes an important stage in a
quality management strategy but may result in considerable resistance and even opposi-
tion within organisations. To overcome this resistance, many organisations have begun
with a pilot study using documents that were originally being delivered on paper and
where costs and results could be monitored and measured. Apart from emphasising the
reduced costs of intranet-based document management systems, the pilots have focused
on the value of enhanced access to information for users. Anecdotal statements focused
on value derived from the document management systems can help erode some of the
resistance to change. For example, value statements such as (Wen et al. 1998):

‘I was able to win three new accounts over the telephone because I had the information
at my fingertips, and I knew it was current. With the old system, I was always putting
the customer on hold and asking the other reps for information.’

Document management systems can be ‘cheap and cheerful’, operating on a limited

number of functions, or can be full-blown, expensive systems with a multitude of func-
tions and potentially frightening in terms of their impact on organisational processes
and administrative practices. The ‘value-adding’ facilities of document management
systems may include (Raynes 2002):

● control to ensure only one user modifies a document at a time;

● audit trail to monitor changes in a document over time;
● security processes to control user access to documents;
● organisation of documents into related groups and folders;
● identification and retrieval of documents according to text they contain (free-text
searching);
● recording information associated with the document as meta data such as author,
creation date and title;
● ability to route documents from one user to another in a controlled fashion based
on the workflow;
● converting paper documents into electronic format by scanning;
● organising documents into groups to enable them to be distributed to target audiences.

The choice of document management system is likely to influence the culture of the
organisation or, depending on its scale, may simply reflect the dominant culture. It is
important to consider clearly the current or future problems the system is likely to
solve and the advantages over traditional paper-based methods. The process of imple-
menting a document management system can be divided into a number of phases, as
shown in Table 5.3 (p. 138) (Rowley 1999).
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138 Part 3 / Evaluating knowledge

Table 5.3 Phases of implementing a document management system

Phase Description Initiated by
Identify content Identify a subset of documents to be indexed System administrator
and made available on the intranet
Database set-up Define a database template or framework for System administrator
the text database, which will store the indices
of the processed documents
Populate database Perform indexing and populate database with System administrator
the indices of the processed documents
Intranet enable/publish Once the documents are processed and User/client
appropriate intranet/internet connections are
made, an interface is created through which
users can enter their search requests
Process search requests Using the search criteria, the text-retrieval User/client
engine performs a search on the document
repository
Present results Displays search results in the form of a hit User/client
list. Users can make selections from hit list to
view particular documents
View/download original User can be presented document in a User/client
viewable format (such as PDF) or can download
the required file

Some of the typical remaining organisational challenges presented by document

management systems have included (Wen et al. 1998):

● privacy – the need to balance the desire to track visitors through site logs and the
need for privacy. Also, the need to deliver sensitive information in a largely anony-
mous manner;
● currency of information – whether documents are updated regularly. This can be
overcome by simply adding ‘date of last change’ to each page;
● performance – becomes an issue in high-volume, transaction–oriented applications.
This can be overcome by increasing the bandwidth of the network but results in
increased costs;
● security – to bar access to unauthorised personnel from sensitive financial, company
or personnel records.

Decision support systems

Decision support systems (DSS) combine data analysis and sophisticated models to sup-
port non-routine decision making. They are particularly useful in helping managers
make decisions on ill-defined problems in rapidly changing en vironments. They pro-
vide the user with an interactive interface and bring together analyses and models to
make sense of existing internal and external data. The major capabilities of DSS are that
they (Turban and Aronson 2001):
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Chapter 5 / Knowledge management systems 139

● provide support in semi-structured and unstructured situations;

● support several sequential and interdependent decisions;
● support intelligence, design, choice and implementation phases of decision making;
● support a variety of styles and processes;
● are adaptive and flexible over time;
● are user-friendly with strong graphical capabilities;
● improve accuracy, timeliness and quality of decision making;
● have substantial modelling capability to allow experimentation with different strate-
gies under different scenarios.

There is a multitude of DSS on offer in the marketplace. A simplistic distinction would

be to separate them into model-driven DSS and data-driven DSS, as shown in Figure 5.2.
Model-driven DSS provide a range of statistical, financial, forecasting and management
science models that may be applied at strategic, tactical or operational levels. They allow
the user to conduct ‘what if’ analyses under a range of scenarios. Typically, they are end
user-led such as the Bloomberg portal designed by a former financial trader to meet the
information needs of other traders in the financial markets. The DSS may contain
between a few and several hundred models encompassing strategic models, tactical
models, operational models and analytical models. Strategic models tend to help high-
level strategic planning processes within organisations. Tactical models assist in
allocating and controlling organisational resources such as capital budgeting and human
resource planning. Operational models help support day-to-day decision making, such as
loans approval and quality control processes. Analytical models may cover methods of
analysis such as statistical models or specific financial models.

Organisational
knowledge base

Internal data External data

DSS
Finance,marketing internet, online
database
operations, personnel database

Model Analytical OLAP

management & data mining
system tools

User interface

User

Figure 5.2 Typical configuration of decision support systems (DSS)

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140 Part 3 / Evaluating knowledge

Pause for thought Imagine your ideal decision support system. What would you consider to be the optimal
characteristics of a DSS that would allow you to solve organisational problems
effectively? Given that the reality for most managers is incomplete information in
decision making, how could a DSS be best employed? The quality of outputs in any
system is based primarily on the quality of inputs. What measures could you take to
ensure high quality of information was fed into a DSS in your organisation?

In contrast, data-driven DSS are more focused on examining patterns and relation-
ships in large amounts of data. As described in Chapter 4, they use knowledge
evaluation tools such as online analytical processing (OLAP) to provide multidimen-
sional analyses and data mining techniques looking at associations, sequences,
classifications, clustering and forecasting with the data (Laudon and Laudon 2000).
Associations are occurrences linked to a single event. Sequences are events linked over
time. Classification recognises patterns in certain groups such as loyal or fraudulent
customers. Clustering techniques can help determine different groupings of certain cus-
tomers where classifications don’t necessarily exist. Forecasting techniques can help
predict values for certain variables. Data mining techniques vary considerably in the
variety of approaches adopted, from fuzzy logic to neural networks (see Chapter 4 for
more details). The following uses in different industrial sectors illustrate typical analy-
ses that data mining techniques may help to uncover:

● Banking industry – identify patterns of fraud, conduct risk analysis of customers who
are habitually slow in mortgage payments, find hidden correlations between differ-
ent financial indicators, identify loyal customers and predict customers likely to
change credit card companies.
● Retail and marketing – discover buying patterns such as certain customers regularly
buying wine and cheese together, uncover associations in buying habits linked to demo-
graphics, forecast customer responses to advertising and perform a market-basket analysis.
● Insurance – discover patterns of behaviour of risky customers, perform claims analy-
ses and identify associations between claims.

In order to purchase a DSS, organisations need to decide between custom-made or

off-the-shelf solutions. The advantage of off-the-shelf solutions are the lower costs, flex-
ibility and applicability of many business problems in the same sectors. In contrast,
custom-made solutions allow organisations to differentiate themselves from competi-
tors and use a more sophisticated approach based on different configurations of the
following seven classifications (Holsapple and Whinston 1996):

● Text-oriented DSS – using technologies such as web-based documents, hyperlinks

and intelligent agents.
● Database-oriented DSS – featuring strong report generation and query searching
capabilities.
● Spreadsheet-oriented DSS – such as Excel which uses statistical and financial models
and techniques.
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Chapter 5 / Knowledge management systems 141

● Solver-oriented DSS – functions or procedures used for optimising certain variables

such as the optimal ordering quantities of certain resources based on historical data.
● Rule-oriented DSS – often expert systems linked to procedural and inferential
(reasoning) rules such as evacuation of a tall building in case of fire in certain parts of it.
● Compound DSS – containing two or more aspects of the above five classifications.
● Intelligent DSS – similar to rule-oriented DSS that can learn using agent technology
and machine learning techniques.

Group support systems

Teamwork is part of most organisations in one form or another. It is relatively rare to find
even freelance individuals purely working by themselves. In response to global and com-
petitive pressures, organisations are increasingly having their activities geographically
dispersed and using internet technologies to communicate over long distances. The
growth of teleworking since its inception in the 1960s has given rise to virtual teams and
virtual organisations. Distance and time differences globally are less of a barrier nowadays
with a variety of technologies employed such as e-mail, videoconferencing, mobile
phones and co-authoring systems. The important feature is the development of appropri-
ate technologies to facilitate collaboration and cooperation in groups and teams. The five
basic team processes supported by group support systems (GSS) and found in many com-
mercial products such as Lotus Notes and Microsoft NetMeeting are (Andriessen 2003):

● communication – these include easy, fast and cheap technologies such as e-mail,
voice-mail and video systems;
● knowledge sharing and learning – these include quick, reliable and inexpensive tools
for knowledge storage and retrieval;
● cooperation – these include document sharing and co-authoring facilities as well as
group decision support systems to support brainstorming, evaluating ideas and deci-
sion making;
● coordination – provided using synchronisers to synchronise work processes of a
team using group calendars and workflow tools;
● social interaction – using cameras and monitors near coffee machines or other loca-
tions where people can meet each other unintentionally. An example of such a
system is Media Space.

The term ‘group decision support systems’ can be misleading as teams may often
convene in virtual environments for short periods of time without the opportunity for
traditional face-to-face cohesion. They are designed to support simultaneous and
anonymous idea generation with group displays, the evaluation and structuring of
information, and the facilitation of agenda setting and group priorities. To meet social
needs, advanced video systems have been developed to give group members the sense
that they are sitting at the same table as colleagues. Further developments have moved
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142 Part 3 / Evaluating knowledge

Table 5.4 Typology of group support systems (Andriessen 2003)

Group process Support between Support for Support for
systems encounters: synchronous electronic synchronous
asynchronous encounters face-to-face
communication meetings
Different place/ Different place/ Same place/
different time same time same time
Communication ● Fax ● Telephone/
● E-mail Mobile
● Voice-mail ● Audio systems
● Video-mail ● Video systems
● Chat system
Knowledge sharing ● Document ● Tele-consultation ● Presentation
and learning sharing systems systems systems
● Message boards ● Co-browser
Cooperation ● Document ● Shared CAD, ● Group decision
co-authoring whiteboard, support systems
word processor,
spreadsheet
Coordination ● Group calender ● Notification ● Command and
● Shared planning systems, e.g. control centre
● Shared workflow active batch support systems
management systems
● Event manager
● Subgroup spaces
Social encounters ● Media spaces
● Virtual reality

to virtual spaces where symbols of group members are depicted in virtual reality. A
typology of group support systems is shown in Table 5.4 (Andriessen 2003).

Pause for thought Think about the ways you communicate with people in your organisation. What would
you say is your optimal approach? What role do face-to-face encounters play in your
relationships with colleagues? What technological or collaborative tools do you use for
communication and team working? If you use group support systems, how effective are
they? For true collaborative working, how can you enhance trust in your dealings with
colleagues using group support systems? Given the power of the internet to cover
geographical boundaries, how important are face-to-face meetings?

Experience has shown that the success of group support systems relies on more than
technology. Hence the development of future systems is likely to place the end user more
centrally in the design process through a better understanding of socio-technical
processes. Such group support systems are not a quick fix and may require a champion, a
pilot and an effective communications process for their success. A few noteworthy guide-
lines to improve the effectiveness of group support systems include (Andriessen 2003):

● if possible, start group with face-to-face meetings;

● learn about each other’s backgrounds through ‘yellow pages’ (expertise directory);
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Chapter 5 / Knowledge management systems 143

● prepare and structure synchronous meeting well, with minutes;

● use video links where possible to develop trust and cohesion;
● provide regular information on progress and milestones;
● pay attention to training and intercultural differences.

Even though group support systems provide a forum for knowledge sharing, learning
and enhanced problem solving, they can pose certain challenges for groups. For example,
there may be ‘free-riders’ relying on others to do all the work, a tendency to make
riskier decisions, compromised solutions of low quality and information overload.
However, improvements can be made through effective facilitation and by making
these dangers explicit to group members. The results can lead to decreased costs, saved
travel time and greater creativity through the anonymity of the systems. Group support
systems have also been successfully used for distance learning programmes in universi-
ties to increase a student’s learning experience through greater dialogue with peers and
the faculty tutors.

Executive information systems

Executive information systems (EIS) were developed in the mid 1980s with a primary
goal of enhancing the strategic planning and control processes of executives through
the provision of quality, timely, accurate and accessible information (O’Brien 1991). In
addition, to compensate for the computer illiteracy of many senior executives, they
were designed intuitively so that even a ten-year-old child could use such systems.
They provided a broad understanding of company information by summarising large
quantities of data and allowed the user to drill down to different levels of data to gain
insight into the detail of information. The challenges in EIS have been in understand-
ing the rich and complex nature of executive decision making and especially the
dynamic and fast-changing information needs of executives. As with many other sys-
tems, there has often been resistance to EIS from data owners in organisations who fear
loss of control over data and the potential implications for changes in power structures.
In addition, the high costs of EIS have been difficult to justify in comparison with
opportunity costs of using the same resources for other activities.
One dilemma facing the high-quality information requirements of EIS is the fact
that data is often input using unskilled and untrained operatives, which may lead to
gross errors and misleading analyses. Careful consideration must be taken to avoid the
dangers of ‘garbage in, garbage out’ syndrome and the potential risk of making the
wrong decisions. Research on the effective implementation of EIS has found a number
of factors linked with continuous improvement that increase the success of initiatives
(Zairi et al. 1998):

● need for a committed executive sponsor to drive project and provide feedback on
product quality and expectations for improvement;
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144 Part 3 / Evaluating knowledge

● need for a pro-active operating sponsor (often in an IT/IS department) to act as

market researcher with the executives, confidence builder, product designer and
operational line manager;
● the bringing together of business knowledge and IT skills through teamwork;
● coordinating systems and processes lower in the organisation with EIS to ensure
alignment of effort;
● visually attractive graphics.

The traditional alternative to EIS is having managers providing analyses of complex

data at board meetings. The arguments in favour of EIS are that it provides a tool as a
supplement to managerial knowledge and experience and allows decisions to be made
in dynamically changing environments where the privileged recourse to managers may
not always be available. The leading question is whether there is an alignment between
a manager’s decision-making patterns and the analyses generated from an EIS. The
answer may lie more closely in the distinction between EIS providing rational modes of
analyses and managers relying more on irrational information and political factors. A
comparison of TQM and effective EIS practices is shown in Table 5.5 (Zairi et al. 1998).

Table 5.5 Impact of TQM factors on effective EIS practices

TQM EIS practices
Goal
Customer satisfaction Meeting executives’ information requirements
Quality product/service Quality information
Cost effectiveness Reducing cost of decision making and communication
Concept
Customer–supplier chains Operational level – managers – executives
Customer requirements Identifying executives’ information requirements
Performance measurement Using key performance indicators (KPIs)
Failure prevention Preventing wrong decision making and error in data input
Implementation
Top management commitment Strong support from an executive sponsor
Involvement of every employee Everyone’s information system
Cross-function teamwork Teamwork including IT and business knowledge
Learning process Executives’ receptivity by learning
Benchmarking Internal and external (competitor) information
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Chapter 5 / Knowledge management systems 145

Workflow management systems

One of the ideal tools in business process re-engineering has been the use of workflow
management systems (WMS). WMS are a part of enterprise resource planning (ERP) and
may be considered as the back-office integration processes in organisations. An important
function of WMS is the modelling of workflows. WMS can be seen as repositories of an
organisation’s procedures and processes. They are predominantly suited to the efficient
processing of a large number of ‘cases’ within a small number of predefined processes. Ad-
hoc workflows with a separate workflow defined for each case is more likely to occur in
future developments of WMS. Examples of cases include customer orders, insurance
claims, university applications and tax returns. Each case (let’s say a university applica-
tion from Fred Bloggs) has a unique identity and a limited finite lifetime. The lifetime begins
from the moment the university receives Fred Bloggs’ application and ends when the uni-
versity notifies Fred Bloggs of the outcome of his application. In the case of Fred Bloggs’
application, the procedure may be broken down into a number of phases, each with a
number of conditions that need to be fulfilled before certain other tasks are carried out.
The conditions allows the user to see how far a case has progressed. The contents of the
case may be held manually in a filing cabinet or electronically in a database.
Tasks in a WMS are logical units of work such as writing reports and assessing candi-
dates, and can be manual, semi-automatic or automatic. The combination of a task and
a case is termed a work item and the application of a task on a case is seen as an activity.
There are a number of ways that a case can go through a process and this determines
the nature and order of tasks to be performed. This routing of a case may be sequential
(one task after another), parallel (tasks performed simultaneously) or selective (choice
made between two or more tasks depending on the case attributes). The spark or trigger
that initiates the work item may come from a resource such as an employee or an exter-
nal event or a time signal (van der Aalst and van Hee 2002).
The traditional and formal analysis of processes is the use of ‘Petri nets’ (see Figure 5.3)
to ensure precise definitions of processes and prevent ambiguities. A petri net enables

Send Interview
Letter Interview
Accept

Application Record Under Analyse Send Letter Complete

Consideration Application Reject

Figure 5.3 Example of a Petri Net for a university application

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146 Part 3 / Evaluating knowledge

processes to be described graphically and is composed of places and transitions. Places

indicate states within a process and are indicated with a circle whereas transitions may
denote different activities between states and are shown by a rectangle. Places and transi-
tions are often linked together using arcs shown by the arrows in the diagram.

Pause for thought Imagine you were asked to manage workflows in a virtual organisation. How would you go
about conducting this role? What KM systems would you employ to manage the changing
knowledge base of your supply chain from customers to suppliers? On a practical level,
what measures would you adopt to ensure that there weren’t any blockages in your
workflow particularly from staff illnesses or poorly performing sub-contract workers? How
influential do you consider time differences when working in a global virtual environment?

In a quest to develop standards with the multitude of WMS offerings, the Workflow
Management Coalition (WFMC) was set up to define terminology and provide standards for
exchange of data between different systems. The WFMC has produced a workflow reference
model as a general description of architecture in WMS, as shown in Figure 5.4 (p. 146).
The different aspects of WMS are as follows:

● Workflow enactment service – is at the heart of any WMS and creates new cases and
work items and ensures that activities are conducted in the right order at the right
time. It may be composed of several workflow engines that handle a certain number
of cases and processes.
● Process definition tools – comprise tools for modelling process definitions (using Petri
nets), resource classifications (such as qualifications and expertise of individuals, groups
and departments) and analysis (such as semantic correctness of process definitions).
● Workflow client application – is the main contact employees often have with a
WMS. Each employee has a worklist (in-tray) showing which work items need
action. Work items can be locked to a user or passed on to another employee. Figures
can be generated on individual or group performance.

Process
defintion
tools

Workflow enactment service Other

Administration Workflow Workflow
& monitoring engine engine
tools
Workflow enactment service(s)

Workflow
Invoked
client
applications
application

Figure 5.4 Typical workflow systems architecture (WFMC)

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Chapter 5 / Knowledge management systems 147

● Invoked applications – the performance of certain activities may require the starting
and use of various applications such as different spreadsheets and databases.
Applications are started by the workflow engine so that the activities may be com-
pleted satisfactorily. These applications may perform the tasks automatically, such as
a mathematical analysis, or may be interactive and require human intervention.
● Administration and monitoring tools – contain day-to-day operational management
tools as well as recording and reporting tools. Operational tools allow the user to
examine bottlenecks and faults in the systems from a case perspective, such as recon-
figuring the workflow system, or from a resource perspective, such as addition or
removal of employees due to illness or holidays. Recording and reporting tools allow
managers to analyse the performance of the WMS using indicators such as average
completion rates for cases, average waiting times and average resource capacity utili-
sation. As the magnitude of recording increases substantially, OLAP and data,
mining techniques can be employed to analyse the data, as shown in Chapter 4.

There are traditionally two methods of developing WMS using business process re-
engineering (BPR) or rapid application development (RAD). As shown earlier in this
chapter, BPR aims to discover the most efficient and effective business processes with-
out recourse to existing processes. The BPR lifecycle is traditionally initiated by senior
management and contains the four phases:

● diagnosis – an analysis of existing working processes and their problems;

● redesign – starting with a clean slate, new processes are designed looking at the most
efficient ways of converting inputs to desired outputs;
● reconstruction – the infrastructure to support the new processes are considered, such
as IT systems and organisational structures;
● operations – performance of processes is measured, analysed and modified accordingly.

In contrast, RAD uses a more evolutionary method for developing WMS and has a
strong emphasis on user participation. The RAD approach comprises four phases and there
is less of a distinction between separate and consecutive design and construction phases:

● requirements planning phase – intended results and functionality of system defined;

● user design phase – user consultation results in designers making clear specifications
in a CASE tool. Users can test specifications against prototypes of WMS;
● construction phase – WMS software is perfected and validated through testing by users;
● delivery phase – comprises acceptance testing by users and minor modifications as
well as user training.

The future trends in WMS are towards modelling ad-hoc workflows with separate
processes defined for each case (van der Aalst and van Hee 2002). More attention is
likely to be paid to the scheduling of people using sophisticated timetabling systems
and labour flexibility arrangements. The internet and corporate intranets provide
future challenges for developing effective WMS to cater for the burgeoning e-business
markets as well as providing easy access and protection to confidential information.
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148 Part 3 / Evaluating knowledge

Customer relationship management systems

In contrast to the back-office aspects of WMS, customer relationship management systems
are firmly rooted in front-office integration and revolve principally around marketing. The
motivation is to integrate technology and business processes to meet customer require-
ments at any given moment. Customer relationship strategy is about cementing
long-term, collaborative relationships with customers based on trust (Crosby 2002). Such
strategies are not about short-term revenue gains from customers but more about enhanc-
ing the customers’ lifetime value to the firm. In this sense, CRM technology needs to be
aligned with business goals of maintaining and enhancing customer relationships.
In the 1980s, firms were preoccupied with a marketing orientation based around cus-
tomer segmentation. This meant that firms tried to establish groups of customers with
similar needs and wants around characteristics such as demographics and behavioural
traits. This was a cost-effective method of satisfying many customer needs but by no
means all them. As competition increased in the 1990s, market segmentation was seen as
a starting point for many firms and the focus turned towards customer-centric orientations.
This perspective was about relationships with customers and treating each customer
individually and uniquely. It was one-to-one marketing. During this time advance-
ments in technology meant that fast, low-cost storage and retrieval of individual
customer preferences and needs became a reality. CRM emerged so that firms could
concentrate on a share of each customer in the long term rather than a share of the
overall market in the short term. The underlying premise was the difficulty and huge
resources involved in gaining new customers rather than retaining existing ones. This
resulted in a marked shift from mass marketing and communications towards focusing
on successful interactions with existing customers at every turn.

Pause for thought The ultimate goal in marketing is to achieve one-to-one marketing where each
customer is treated individually in terms of their preferences and needs. How could you
use CRM systems rather than purely segmentation marketing to achieve this goal? What
incentives could you provide customers to gather regular, up-to-date knowledge on
their changing needs? What ethical issues could such data collection present,
particularly in connection with the internet?

Effective CRM systems are not confined to partnerships between marketing and IT
departments but are likely to span divisional boundaries such as finance, operations
and human resources. The component technologies involved with CRM systems are
likely to include data warehousing, data mining techniques and world wide web inte-
gration through a website, intranet and phone support systems. The development and
integration of a CRM system within an organisation can be painful and fraught with
difficulties. There may be little user support and the user interfaces may not fit with
users’ working styles. There may be a tendency to focus on technology rather than
process improvements. The scope of the project may change frequently and political
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Chapter 5 / Knowledge management systems 149

infighting may result in lack of senior management commitment. Cost overruns and
substantial time delays may result in firm and user disillusionment. Also, the CRM
system may fail to integrate and support mobile communications (Corner and Hinton
2002). To overcome some of these problems, a CRM development plan based on a proj-
ect lifecycle is outlined below (Bose 2002):

● Planning – identifying how managers will use customer information at various levels in
the organisation and gaining senior management support. Identifying how, when and
where employees will interact with customers such as help desks, website, sales person,
mail or phone. Also, identifying decision interaction points on how managers and
executives will use the knowledge to improve the quality of their decision making.
● Research – assessment of the firm’s organisational structure, culture, hardware, soft-
ware, vendors and suppliers.
● Systems analysis – identifying employee information needs to interact successfully
with a customer. Exploring the need for automated interaction using web or auto-
mated phone systems. Implementing system in a number of stages. Integrating
customer data across a firm, expanding customer data profile to include non-
transactional information such as inquiries, management comments and com-
plaints, integrating with legacy systems where data may be functionally based.
Conducting a feasibility study.
● Design – to include a detailed specification of needs and core technologies. Any mod-
ifications required to link to existing KM systems.
● Construction – developing software to meet design plan.
● Implementation – including a solid training programme at all levels, including man-
agers and executives, particularly in areas such as data mining and statistics.
Erroneous conclusions may arise from managers confusing correlations with causa-
tion and using unreliable data.
● Maintenance and documentation – evaluation and modification of the system depend-
ent on data quantity and quality.
● Adaptation – continuous improvement of CRM system from learning more about
the customer.

There is a paradox with CRM systems. Even though CRM collects vast amounts of
data to allow managers to make better quality decisions, the contrary may be true.
Higher quality information may result in poorer decisions, especially where a decision
maker fails to interpret and understand the true relationships between different vari-
ables (Raghunathan 1999). Future developments in CRM systems are likely to result in
greater integration with decision support systems and executive information systems.
In addition, as partnerships and alliances develop due to competitive pressures, CRM
systems are likely to cross organisational boundaries and facilitate information sharing
between different partners in the supply chain. Data mining techniques will also need
to improve to cope with the needs of large data warehouses over and above the current
performance limitations concerned with analysing only 5–10 per cent of data in these
huge knowledge repositories.
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150 Part 3 / Evaluating knowledge

Economics of KM systems
Early development considerations of KM systems by senior management need to take
into account the overall costs of implementing and maintaining these systems. These
can be divided into costs related to implementing a KM system including overheads,
and the salary costs of employees with designated KM functions. The implementation
costs of KM systems include (Maier 2001) the following:

● Hardware – networked PCs, high storage capacity databases, web servers running
client-server applications, internet broadband connections and mobile technology
such as mobile phones, palmtops, laptops and bluetooth (wireless) technology.
● Software – for KM systems to meet specific organisational needs. May use off-the-shelf
solutions with significant customisation or develop own solutions.
● Training and education – continual communication about benefits of new system as
well as structured training programme for all levels on use of KM system.
● Literature, conferences, consulting and proactive participation in KM activities – KM
budget to spend on literature, funding (university) KM research programmes, attend-
ing conferences and employing consultants.
● Organisation of KM events – announcing and communicating KM initiative and facili-
tating ‘communities of practice’.
● KM overhead – to coordinate KM initiative.
● KM systems administration – especially to protect system against hackers.
● KM staff – salaries, overheads and expenses of staff taking different KM roles.

In contrast, the benefits of KM systems can be determined using a variety of intellec-

tual capital approaches outlined in Chapter 10.

CASE STUDY
E-business KM Systems FT
Portals are passé. Business-to-business online market- Customer relationship management was de
places have come and gone and the value of rigueur. This created huge demand for CRM software
customer relationship management systems is being that drew together all of the information regarding a
questioned. What has gone wrong with e-business customer’s past and present interactions with a com-
software? What is next? And why should business pany. Tens of millions of dollars were spent
managers still take note? implementing CRM, but software industry executives
Back in 1999, e-business software was going to now say fewer than half the systems lived up to cus-
change the world. Online marketplaces were her- tomers’ expectations. One in five executives surveyed
alded as a way to find alternative suppliers and last year by Bain & Co, the consulting group, said
lower prices. There was much talk of ‘disintermedia- CRM initiatives had damaged customer relationships.
tion’. Traditional distributors and wholesalers would It is tempting to write off e-business software as
be out of the picture as businesses switched to just another over-hyped technology bubble. Yet
buying and selling via the internet, many predicted. despite the failures – the software companies that
Entire industries would be restructured as even small have closed their doors and customer experiences
businesses would have worldwide reach. Trade and that have gone sour – e-business lives on and some
competition laws would have to be rewritten. would say its prospects are improving.
Yet most online marketplaces are now history. Several important lessons have been learnt. The
The opportunities and threats they seemed to pose first is that the internet is a business tool but it does
turned out to be hot air. not alter business fundamentals. The second is that
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Chapter 5 / Knowledge management systems 151

e-business applications evolved from enterprise soft- end up with weeks of wasted effort.’ An internet-
ware and they too are tools, not magic bullets. based collaboration environment in which
E-business automates or streamlines business information about design changes is rapidly dissemi-
processes but companies that attempt to map the nated can create big cost and time savings.
software to their traditional operating practices John Warniak, director, e-business speed, at
make a grave error. It is entirely possible to cus- Johnson Controls, is on the front lines. As a leading
tomise the value out of e-business software by car industry supplier, his company must now deal
rigidly applying traditional approvals processes, for with issues such as vendor-managed inventory and
example, or limiting the ability of employees and advanced quality planning. ‘We have to be able to
business partners to access information. interface with our customers and our suppliers with
To take full advantage of e-business, companies a common interface. There has to be a single source
must be ready to embrace change, even if it is disrup- of truth, of up-to-date information.’
tive. The old ‘command and control’ management Carmakers and their suppliers are not alone in
model is not compatible with e-business. adopting e-business collaboration. Hewlett-Packard
Another tough lesson that many have learnt is and Compaq Computer are planning their merger in
that systems integration is complex, time consuming virtual online work spaces, using eRoom software,
and expensive – yet integration of legacy systems is where documents and messages are shared and
essential to maximise value. However, it is not only e- saved. François Gossieaux, chief executive of eRoom,
business users who have learnt the hard way. Software expects his company’s products will increasingly be
vendors that focused on e-commerce have been hum- used for such partnerships between businesses, rather
bled as the centre of gravity of e-business has shifted than just internal communications.
from transactions to information sharing. Even CRM is finding a second wind. Bo Manning,
Collaboration is the new e-business buzz word and chief executive of Pivotal, which supplies software to
this time it is not just a fad. Rather, the technology is the mid-sized company CRM segment, is redefining
mirroring and accelerating the changing shape of man- his products to include ‘partnership relationship
ufacturing and other industries. ‘Outsourcing – whether management’. In other words, relationship manage-
it be of manufacturing or design or any other aspect of ment is shifting to include all the constituencies
a company’s operations – is driving demand for that are important to a business.
improved information sharing as the fortunes of a com- Now, B2B stands for ‘back to business basics’ and e-
pany become more closely intertwined with those of its business is the confluence of best business practices,
suppliers and business partners,’ says Mark O’Connell, the internet and software. It is a potent mix, not to be
chief executive of Matrix One, a supplier of collabora- ignored. Those 1999 predictions may yet prove pre-
tion software. ‘Every company is under pressure to scient. E-business software is perhaps the most
squeeze costs out of business processes and to speed disruptive technology to emerge in the past five years.
new products to market. Our customers are looking for In the world of technology, that is a very long time.
ways to get people to work together more effectively.’ Source: Article by Louise Kehoe, Financial Times, 6 March 2002
The car industry is a good example. Big US carmak-
ers have set goals to reduce the time it takes to bring a Questions
new vehicle to market, from three to four years to
1 Why do CRM systems often fail to deliver customer
only one to two years. This involves radical changes
expectations?
in the structure of the industry. ‘About 50 to 70 per 2 What are the differences between collaboration
cent of design work is now being done outside the big technologies in e-business and more traditional
auto manufacturing companies,’ says Bob Matulka, group support systems?
director of collaboration at Covisint, an online mar- 3 Strategic alliances and partnerships can become
ketplace created by the car industry. ‘There is a great vulnerable over time due to differing organisational
need to tie globally dispersed teams together.’ goals. What are the implications for knowledge sharing
Engineering design changes can play havoc with using aligned KM systems between a range of partners?
the product development schedule, he says. ‘You can

Summary
This chapter has argued that KM systems are primarily driven by an organisation’s desire
to improve quality management processes. Current trends in quality management are
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152 Part 3 / Evaluating knowledge

explored covering practices such as TQM, BPR and lean production. The intrinsic nature
of systems and the development of systems thinking and methodologies are explored.
Key KM systems are detailed, with an emphasis on their component technologies and
their effective implementation. The financial implementation costs of KM systems are
considered in greater depth. The KM systems elaborated in this chapter are:

1 Document management systems – getting the right information or knowledge to the

right person at the right time.
2 Decision support systems – creating and evaluating knowledge through data analysis
or using sophisticated models to support decision making.
3 Group support systems – systems designed to enhance communication, knowledge
sharing, cooperation, coordination and social encounters within groups.
4 Executive information systems – providing high-quality information and knowledge to
executives to aid strategic planning and control processes.
5 Workflow management systems – knowledge associated with workflows and aligning
‘cases’ with resources such as employees.
6 Customer relationship management systems – developing knowledge about customers’ individ-
ual preferences and needs using knowledge repositories and knowledge discovery techniques.

QUESTIONS FOR FURTHER THOUGHT

1 Are there differences between information management systems and KM systems? Or is it a

case of ‘old wine in new bottles’?
2 The complexity of a system increases with the addition of different perspectives and
subprocesses. How does one find a balance between simplicity and complexity of systems
models in problem solving?
3 If conformance quality is a given starting point in today’s competitive environment, how do
organisations develop KM systems in order to delight their customers?
4 How would you advise a firm about the strengths and pitfalls of a business process
re-engineering approach?
5 Decision support systems use a variety of models and analytical tools ranging from fuzzy logic to neural
networks. How would you interpret the range of findings from different DSS using the same data
warehouse? Are there lessons for designing the optimal DSS for structured and unstructured data?
6 If group support systems predominantly act to facilitate team meetings and coordination of tasks,
how can the systems be developed to generate greater cohesion and build longer-term relationships?
7 Should a course in statistics be a pre-requisite for all managers and executives using KM systems
for decision making?
8 How effective are workflow management systems for managing processes requiring high levels of
skills and expertise? Do WMS encourage Frederick Taylor’s view of scientific management with a
disregard for the psychological and social needs and capabilities of workers?
9 The customer-centric orientation of CRM systems nowadays can lead to firm’s holding sensitive
information about customers. In the quest for understanding each customer uniquely, how can
organisations prevent such information seen as private by some customers backfiring on them
and destroying the very trust they were hoping to build?
10 How can firms develop faith in their KM systems investments when the speed of change in
hardware and software may alter dramatically every 18 months?
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Chapter 5 / Knowledge management systems 153

Further reading
1 Flood and Jackson 1991 provides a good historical background on systems thinking and
methodologies.
2 Laudon and Laudon 2000 is particularly good as an introduction and general overview of
information and knowledge management systems.
3 Turban and Aronson 2001 is a more in-depth text on KM systems and focuses more on
decision support systems including groupware.
4 van der Aalst and van Hee 2002 provides an accessible and detailed text on workflow
management systems.

References
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Research Society, 30(3), 189–99.
Andriessen, J. H. E. (2003) Working with Groupware: Understanding and Evaluating
Collaboration Technology, Springer-Verlag, London.
Argyris, C. and Schon, D. A. (1978) Organizational Learning: A Theory of Action Perspective,
Addison-Wesley, Reading, MA.
Beer, S. (1972) Brain of the Firm, Allen Lane, London.
Bose, R. (2002) ‘Customer relationship management: key components for IT success’,
Industrial Management & Data Systems, 102(2), 89–97.
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Deming, W. E. (1986) Out of the Crisis, MIT Press, Boston, MA.
Flood, R. L. and Jackson, M. C. (1991) Creative Problem Solving: Total Systems Intervention,
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Hammer, M. and Champy, J. (1993) Re-engineering the Corporation: A Manifesto for Business
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Trist, E. L. (1959). ‘Socio-technical systems’, University of Cambridge: Department of
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Chapter 6
Strategic management perspectives

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● explain the differences between the industrial organisation tradition and the institutionalist
perspective in strategic thinking;
● understand the contribution of the resource-based view and the knowledge-based view of the firm
to strategic management;
● discuss the development of IS strategy and its influence on knowledge management strategies;
● apply different knowledge management strategies appropriately to different contexts.

MANAGEMENT ISSUES

The use and application of knowledge management systems implies these questions for managers:
● How far do you plan a knowledge management strategy or do you allow it to emerge through the
everyday processes of organisational learning?
● What are the core competences of your organisation and how do you exploit them for competitive
advantage?
● How do you manage the conflicting interests of the IS/IT department and HR department to
develop a coherent knowledge management strategy?

Links to other chapters

Chapter 3 provides an insight into organisational learning that contributes to our current
understanding of knowledge management strategies as a flux between codification
(exploitation) and personalisation (exploration) strategies.
Chapter 4 describes many of the technology tools used for sharing and storing knowledge inherent
in many KM strategies.
Chapter 5 considers the KM systems that may be necessary to support codification strategies.
Chapter 8 assesses the human resource issues necessary to implement a successful KM strategy.
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156 Part 3 / Evaluating knowledge

OPENING VIGNETTE
Crucibles of innovation FT
Every other article I read these days begins by trying because high levels of uncertainty make control
to terrify its readers. Doom, gloom, uncertainty and almost impossible. Further, radical innovators are not
the death of the company are popular themes. The like the rest of us. Controlling the four sources of
perpetrators of this bleak economic outlook are uncertainty is impossible. Monitoring them is feasible.
amazingly certain. They know what causes the prob- Fourth, develop a resource acquisition skill set.
lem: globalisation, hyper-competition, technological Long-term projects are difficult to resource. The inno-
change and a lack of innovation. vators are swimming in uncharted waters. Sharks are
So, too, are they certain of what companies should an ever-present threat to survival. Withdrawal of funds
do: transform themselves with radical innovations in can kill a project quickly. What aggravates this uncer-
products and/or services. Yet most companies con- tainty is the arrival and departure of vital players. Only
tinue to survive without such innovations. They plod the hub, as overseer, can ensure that the necessary
on. They copy rather than invent new products. They skills are available when and where they are needed.
rely on safe, incremental, ‘me too’ change. Fifth, accelerate project transition. Projects
In a recent paper*, three American academics cannot remain buried in research indefinitely. Their
report their findings from a six-year study of twelve destination is development. To the creative scien-
radical innovations in ten large, mature companies. tists, handing over their baby can be tantamount to
There are two forms of radical product innovation: kidnapping by second-rate scientists. It is probably
new products or a service with unprecedented per- unrealistic to assume either researchers or developers
formance features; and existing products that break are capable of handling this transition amicably. In
with the past to offer significant improvements in the successful cases in the study, a transition team
performance and/or cost. The innovations in research moved projects on. Members of this temporary team
included a digital X-ray imaging system (General included people from the project team, people from
Electric), an ionic transport membrane (Air Products), the receiving and operating units, transition man-
a new material emitting light (Du Pont), decompos- agement experts, market development specialists
ing polyester film (General Electric), a new generation and members of the project supervision board.
of communication chips (International Business Sixth, use people who drive radical innovation. A
Machines) and vertical and horizontal lifts (Otis). vital player is the champion who takes risks, breaks
The true test of radical innovation is whether it the rules, energises and rescues and re-energises the
will change existing markets or create new ones. To project. Once identified, he or she blossoms and
energise such change, four uncertainties are essen- becomes a performer with a market value. Turnover is
tial: technological uncertainty (will the product high. Loyalty to the company is low. They are ideal-
work?); market uncertainty (will they buy?); resource ists. The project, not the company, is their focus.
uncertainty (who will fund this project?); and inter- None of the ten American companies had developed
nal uncertainty (can the goals of the innovators and human resource strategies for coping systematically
the company be integrated?). with the personnel dimensions of radical innovation.
Radical innovation is not for the faint-hearted. The Seventh, mobilise the multiple roles of leaders. In
process is discontinuous. Work is sporadic, non-linear 90 per cent of the companies, those at the top recog-
and stochastic, with unpredictable external events. nised the importance of patronage. They were seen to
Ten years from start to launch is not unusual. be supporting specific projects. In turn, this reinforced
Nevertheless, the authors offer seven imperatives for positive values within the corporate culture about inno-
lifting your performance. vation. Consistency in patronage proved to be vital.
First, build a radical-innovation hub. A hub is a Where a patron left a company, 50 per cent of succes-
group of people who encourage and oversee innova- sors either slowed down his projects or killed them.
tion. It includes idea-hunters, idea-gatherers, However, we learn little about the people who had
internal venture capitalists, members of project eval- the bright ideas. After six years, what ‘imperatives’
uation committees, members of overseeing boards, emerged about them? Only that they differ from
and experienced but corporate entrepreneurs. idea-gatherers? Without them, no systems or hubs
Second, deploy hunters and gatherers. Work organ- will result in radical innovation.
isations have not been famous for generating ideas.
* Leifer R., O’Connor G. C. and Rice, M., ‘Implementing
The hub’s prime function is to nurture idea-hunters
and idea-gatherers from all over the company. radical innovation in mature firms: the role of hubs’,
Third, monitor and redirect projects. Projects like Academy of Management Executive, 2001, Vol. 15, No. 3.
these are notorious for apparent mismanagement Source: Article by John Hunt, Financial Times, 18 January 2002
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Chapter 6 / Strategic management perspectives 157

Questions 2 If none of the American companies developed

1 Given its radical nature, how can you effectively human resource strategies to cope with radical
foster innovation? Do the seven lessons provide a innovation, can one deduce that such innovations
useful template for planning innovation strategies are unmanageable and are more luck than design?
in organisations? 3 What lessons can we learn for knowledge
management strategies focused on innovation?

Introduction
The underlying assumption within the knowledge management literature is that
actions arising from KM practices will result in some form of competitive advantage.
But how is this likely to happen? One of the implications is that firms may need some
form of knowledge management strategy to achieve these goals. But what is the nature
of a KM strategy and how does it change over time? The two dominant pillars of
knowledge management are technology and human resource considerations. What are
the likely configurations of technology and human aspects to make such strategies
effective? The current situation is unclear as the literature on KM strategy is relatively
young and has been developing in the last few years.
An important starting point is to explore how KM strategies may relate to a firm’s
business strategy. Similar to philosophical perspectives, there is a diverse range of view-
points and schools of thought on the nature of strategy and competitive change. This
chapters begins by exploring the meaning of strategy in terms of deliberate and emer-
gent strategies as our goals and plans may not be realised as expected. Then three
dominant schools of strategic thought are examined showing their theoretical and eco-
nomic foundations. These schools are the industrial organisation tradition, excellence
and turnaround literature, and the institutionalist perspective. In the last decade, this
perspective has developed greater prominence as scholars have explored the resource-
based view (RBV) and knowledge-based view of the firm. A number of recent
publications have explored the notion of a ‘knowledge management strategy’ and the
resulting debates and arguments are considered towards the end of the chapter. There is
a distinction between codification strategies which are technology led and innovation
strategies that are people led. It is not surprising that this can give rise to confusion in
the KM literatures where articles are either technology oriented or human resource ori-
ented. Both types of literature are important in our understanding of the interplay
between them in KM strategies.

Strategic management: schools of thought

What is a strategy? Many people may say it is a plan of action linked to achieving one’s
goals. The assumption is that in any given situation, be it a football match, a war
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158 Part 3 / Evaluating knowledge

between nations or a product launch, the strategy or plan will deliver the desired out-
comes. However, it does not often happen that the intended or deliberate strategy
becomes the realised strategy. There may be some aspects of the strategy or plan that
are unrealised and get overlooked (or swept under the carpet!). The notion of strategy
as a plan gives much greater power to those in authority such as managers and execu-
tives to determine the effective plan/strategy for the organisation. But how often do
strategies achieve corporate goals and visions? The problem is that we live in dynamic
environments prone to change where sudden economic forces, competitor behaviour
and maybe even loss of key players can require a response from organisations that is at
odds with the intended strategy.
On the other hand, if you ask a group of people about their firm’s strategy in the
past year or five years, they will tend to describe a pattern of actions and behaviours
which have converged over time into a certain consistency. This is referred to as an
‘emergent strategy’ and is likely to have arisen through the firm’s learning over time
(Mintzberg and Waters 1985). The notion of strategy as a plan is more about control
whereas a pattern is more about learning. In reality, it is likely that executives will
respond to changing circumstances with a mixture of these two notions, as shown in
Figure 6.1 (p. 159).
The dominant school of thought in strategic management treats strategy as a plan
and is known as the ‘industrial organisation’ or microeconomic tradition. In contrast,
an alternative school of thought is concerned with the dynamics of competitive
processes and the contribution of learning and uncertainty in strategy. This school is
referred to as the institutionalist perspective. A new strategy literature developed in the
1980s in response to the Japanese threat to the west (see Chapter 5 on drivers of KM
systems) became known as the ‘excellence and turnaround’ school of thought in strat-
egy. This school was high on generic recipes and prescriptions but relatively low on
empirical foundations. Nevertheless, the excellence and turnaround movement has had
considerable influence on senior management thinking on strategy.

Pause for thought Reflect on the strategy in your organisation. Describe how you perceive the corporate
strategy of your organisation. To what extent were you consulted in the preparation of it?
In relation to your organisation, what do words such as ‘mission’, ‘vision’ and ‘strategy’
mean to you? How alive are those words in informing your everyday actions? How typical
are your views compared with those of colleagues in the organisation? Is there any advice
you would give to senior managers in the preparation of annual strategies?

Industrial organisation tradition

In the industrial organisation (IO) tradition, the relationship between the firm and
industry is central. The performance of a firm is determined by the structure of the
industry and its market structures. Many of the principal models about market
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Chapter 6 / Strategic management perspectives 159

External Strategy Deliberate Intended

forces as plan strategy strategy

Competitor Unrealised Realised

behaviour strategy strategy

Internal Strategy Emergent

Learning
forces as pattern strategy

Figure 6.1 Strategy as a plan and pattern (adapted from Mintzberg and Waters 1985)

structure and competition come from rational microeconomic theory. At its most basic
level, the market is concerned with the supply and demand of goods and services and
the elasticity or inelasticity of the demand curve. Ideally, firms want elastic demand
curves where price falls can still lead to revenue increases. Without labouring over the
intricacies of microeconomics, the market structure can lead to perfect competition
(large number of buyers and sellers), a monopoly (allowing the firm with the monopoly
to earn abnormal profits) or an oligopoly (competition among a few firms). The domi-
nant form of market structure in many countries is an oligopoly where firms tend to
fluctuate between intensely competitive and often unstable collusive behaviours.
The nature of competition in this school is determined by the number and relative
size of firms and the barriers to entry to that market (Bain 1956). From this perspective,
the raison d’être of the firm is to reduce the level of competition either by collusion,
creating higher barriers to entry, greater differentiation of their products and services,
or lowering costs. The intended consequence is to reduce the number of firms in the
market and lead to greater profits. The notion of differentiation has its roots in
Chamberlinian economics which recognises the unique capabilities of a firm, such as
its know-how and reputation, and tries to exploit the firm’s uniqueness through its
strategies (Chamberlin 1933; Pettigrew and Whipp 1991).
The industrial organisation tradition has been influenced by a design model and a
planning model of strategy (Ansoff 1965; Chandler 1962; Porter 1980). In the design
model, the central technique is to use a SWOT (strengths, weaknesses, opportunities
and threats) analysis in order to design a unique response following the dictum that
structure follows strategy (Chandler 1962). In the planning model, different generic
strategies are forwarded to respond to certain market conditions (Porter 1980):

● cost leadership – reducing the cost of product and services relative to competitors
with a drop in quality;
● differentiation – providing products or services which are unique or different and
valued by customers;
● focus – providing high perceived value justifying higher prices in certain market seg-
ments such as traditional corner shops compared with supermarkets.
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160 Part 3 / Evaluating knowledge

In the planning model, adopted by most MBA students and executives, the tradi-
tional approach to strategy is along the following rather mechanical lines (Johnson and
Scholes 2002):

● Conduct a PESTEL (political, economic, social, technological, environmental and

legal) analysis at a macro level within the external environment and its likely effect
on the firm.
● Conduct a SWOT (internal – strengths, weaknesses; external – opportunities and
threats) analysis and look at half a dozen critical success factors in a particular industry.
● Analyse the competitive environment using Porter’s (1980) five force framework
exploring the threat of entry of new players, the power of buyers and suppliers, the
threat of substitutes and the extent of competitive rivalry.
● Analyse the impact of the industry lifecycle such as growth markets that require
strategies to fight to increase market share compared with mature markets that
require strategies to maintain market share.
● Use scenario planning techniques to determine how different scenarios may affect
your strategy.
● Analyse resources in terms of Porter’s ‘value chain analysis’ where activities are isolated
that have a perceived value to the customer. Linkages between different activities are
seen as competitive, particularly where competitors cannot imitate them.
● Examine strategic options such as generic strategies and whether to follow different
directions for strategy development such as withdrawal, consolidation, market pene-
tration, market development, product development or diversification.
● Evaluate the strategic options and check for their suitability in terms of organisa-
tional structure and cultural fit. Use a BCG matrix (cash cows, stars, question marks
and dogs linked to a plot of market share and market growth) to determine which
products or services to divest or invest. Consider a strategic planning or financial
control style of operation.
● Manage strategic change through forcefield analysis to identify forces for and against
change and adopt suitable management styles to circumstances.

Despite the popularity of the industrial organisation tradition, it does have its short-
comings. The drawbacks of this approach include the following (Mintzberg et al. 1998;
Pettigrew and Whipp 1991):

● Only 10 per cent of formulated strategies get implemented.

● Separating thought from action by isolating the formulation and implementation
processes.
● Assuming that firms and individuals have perfect knowledge of market changes
when in reality there may be considerable ignorance leading to questioning of the
rationalist tenets of the microeconomic tradition.
● No real conception of competition as a process over time.
● Environments assumed to be predominantly stable.
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Chapter 6 / Strategic management perspectives 161

● Detachment of management from everyday actions and processes.

● Focused more on large businesses.
● Denial of internal social and political influences on strategy.

Excellence and turnaround

With the Japanese beating US competition in terms of design features, price, reliability,
speed to market and quality in the 1980s, there was an enormous need to show man-
agers how to respond effectively to these threats. This gave rise to an extensive
literature in excellence and turnaround based on a wide range of managerial remedies
and recipes of successful companies (Grinyer et al. 1988; Peters and Waterman 1982).
Many of these publications became bestsellers in airport lounges and made a consider-
able impact on management strategy.
In Search of Excellence (Peters and Waterman 1982) prescribed eight attributes that
characterised excellent and innovative companies: ‘a bias for action, close to the cus-
tomer, autonomy and entrepreneurship, productivity through people, hands-on/value
driven, stick to the knitting, simple form/lean staff, simultaneous loose-tight proper-
ties.’ Many similar books defined half a dozen or so prescriptions for success, with
amusing anecdotes to support them, and offered glib platitudes and panaceas in easy-
to-read form (Newstrom 2002). They confirmed the beliefs and attitudes of the typical
managers, providing them with simple lists for success where they were in control and
promoting universal application of their prescriptions across different sectors and envi-
ronments (Huczynski 1992). The effective management of cultural change often plays
an important role in these prescriptions. In order to win hearts and minds, ordinary
people are espoused to do extraordinary things thanks to the strength of corporate cul-
tures (Peters and Waterman 1982):

‘The top performers create a broad, uplifting, shared culture, a coherent framework within
which charged-up people search for appropriate adaptations. Their ability to extract
extraordinary contributions from very large numbers of people turns on the ability to create
a highly valued sense of purpose. Such purpose invariably emanates from love of product,
providing top-quality services, and honouring innovation and contribution from all.’

This literature continues to play a role in strategic development, particularly where

managers require ideas for quick-fix solutions. For example, a recent remedy to turn-
around situations suggests the following prescription for managers (Reisner 2002):

● Don’t miss your moment – the importance of timing in strategic initiatives.

● Connect change initiatives to your core business.
● Don’t mistake incremental improvements for strategic transformation (a call for
double-loop learning?).
● Be realistic about your limits and the pace of change.
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162 Part 3 / Evaluating knowledge

The shortcoming of this school of thought is the overemphasis on the firm and
internal processes rather than on competitive changes in the external environment.
There is also often a lack of empirical evidence to support the remedies prescribed. In
fact, it is hard to see how the excellence and turnaround literature has contributed to
further theory development in strategic thinking. In the face of objective scientific
inquiry, the remedies offer little evidence of reliability, validity, practicability and inte-
grating with a firm’s existing knowledge base (Argyris 2001). Ultimately, many of the
successful companies cited as following many of these bestseller prescriptions have
often declined in performance or in some cases ceased trading.

Institutionalist perspective
The institutionalist perspective draws heavily on Schumpeter’s (1934; 1950) stream of
microeconomics which argues against the rational and stable notions of competitive
forces and the external environment. Instead, this perspective suggests that competitive
forces are inherently unstable and in a continual process of ‘creative destruction’
(Schumpeter 1950). As one can imagine, this perspective does not sit comfortably with
strategic planners following the industrial organisation form of analysis.
Institutional economics places greater emphasis on agents (individuals) and suggests
that their economic relations are determined through their experience and learning
over time rather than through some form of rational maximisation behaviour. In this
explanation, economic activity is dynamic and is informed by social institutions that
interact with agents. In turn, competition is viewed as dynamic, impermanent and a
continual process informed by people’s day-to-day learning. This uncertainty in compe-
tition contrasts directly with the industrial organisation tradition that treats it as a
steady state affair. For strategic planners, their rational conjectures of competition led
to considerable shock waves in the 1970s when their assumptions of incremental
change were severely challenged as a result of an oil crisis. Subsequently, the notion of
discontinuous (uncertain) change has come into mainstream thinking and many strate-
gic planners have tried to rationalise it through the process of scenario planning. This
attempts to create a number of plausible scenarios and considers effective management
responses to them. However, one wonders how many scenario planners predicted the
consequences of discontinuous changes, such as the September 11 attacks in America,
the fall of the Berlin Wall in Germany and the end of apartheid in South Africa.
In the case of September 11, the events leading to it may be considered wholly
unpredictable in terms of location and timing, even though some may argue that con-
ceptually this was not the case. In this instance, we can deal only with the
consequences of the event. However, with the fall of the Berlin Wall and the end of
state socialism in Eastern Europe, a wide range of scenarios had been predicted with
reasonable accuracy. Similarly, the end of apartheid was not entirely unexpected,
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Chapter 6 / Strategic management perspectives 163

though few scenario planners would have envisaged the peaceful transition to democ-
racy and multiculturalism.
Strategy from an institutionalist perspective is seen as a process over time and con-
sidered synonymous with strategic change. Strategic change is informed by the
managers’ (or other agents) understanding and learning of a situation over time. This
includes their subjective and objective understandings of the competitive environment
in relation to their firm as well as the political dimensions pertaining to both. In this
respect, competition and strategic change are viewed as intimately linked (Pettigrew
and Whipp 1991). A contrast between the industrial school tradition and the institu-
tionalist perspective in terms of their approach to thought and action is shown in
Figure 6.2.
Mintzberg (1991) has provided a major strategic framework from an institutionalist
perspective that examines the dynamics of competitive forces in an organisation. This
framework doesn’t provide a blueprint for organisations but rather an understanding of
the interplay between competitive forces, as shown in Figure 6.3 (p. 164). The underly-
ing assumption of this model is that there is the potential for one or more of seven
forces to dominate an organisation at any given time:

● the force for direction is concerned with strategic vision and may relate to organisa-
tions in startup or turnaround situations;
● the force for efficiency is concerned with standardisation and formalisation of
processes and may relate to bureaucratic organisations where rationalisation and
restructuring are a major focus;

EL
ST Withdrawal Market Consoli Focus uct
PE SWOT Industry penetration dation Prod ent
lopm
THINKING lifecycle
s deve
c e
Differentiation e For planning
Cost le ’s Fiv Scenario Market BCG ma
adersh P orter trix
ip Diversification development

DOING Culture? FUZZY HRM?

Industrial organisation tradition

THINKING Understanding? FUZZY Learning?

s es
es tenc
oc Learning mpe
Pr Politics co
Stretch Core
DOING
Compe intent
titive f
Dynam
ic orces Strategic Leverag
e

Institutionalist perspective

Figure 6.2 Strategic thought and action: industrial organisation tradition and the institutionalist perspective
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164 Part 3 / Evaluating knowledge

Direction

TERMINOLOGY
Configuration
one force dominates
Combination Efficiency Cooperation Proficiency
no force dominates
Conversion
go from one force
to another
Cleavage
two or more forces Competition
confront each other

Concentration Innovation

Figure 6.3 Dynamic forces in organisations (adapted from Mintzberg 1991)

● the force for proficiency is concerned with tasks requiring high levels of knowledge
and skills and may relate more to professional organisations;
● the force for concentration is concerned with concentrating efforts on serving cer-
tain markets, particularly in large diversified firms;
● the force for innovation is concerned with discovering new things for the customer
and may relate to adhocracies comprising skilled experts or multidisciplinary projects.

The internal catalytic forces comprise forces of cooperation and competition. The
force for cooperation is concerned with the pulling together of ideology such as norms,
beliefs and values. At one extreme, dominant forces of cooperation may result in ideo-
logical organisations such as an Israeli kibbutz. The force for competition is concerned
with the pulling apart of politics and may relate to political organisations where in-
fighting is rife. There may be limits to levels of cooperation as ideology discourages
change and if individuals perceive a need for change, they may be forced to challenge
the ideology which breeds politics. From the industrial organisation perspective, the
force for efficiency and innovation could be seen as similar to generic strategies of ‘cost
leadership’ and ‘differentiation’ respectively.
In line with an institutionalist perspective, there is a recognition that these forces are
rarely static but rather tend to vary continuously over time. A state of ‘configuration’
occurs when one force dominates and the organisation is drawn towards a coherent
established form. However, configuration can lead to the problem of ‘contamination’
where the dominant force undermines other equally valid forces. For instance, a firm
dominated by the force of efficiency may be hindered from following the force for
innovation in response to critical changes in the marketplace.
In some periods, an organisation may go through states of ‘combination’ of different
forces where no single force dominates. This may result in periods of ‘conversion’ from
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Chapter 6 / Strategic management perspectives 165

one form to another. For example, an adhocracy may develop a highly successful prod-
uct or service and settle down into a bureaucracy to exploit it. The state of
‘combination’ may result in problems of ‘cleavage’ where two or more forces may con-
front each other and eventually paralyse the organisation. One can imagine only too
well the consequences of boardroom battles where different factions try to pull the
organisation in different directions based on their understanding of competitive
changes. The internal forces of competition and cooperation can act as useful catalysts
to manage the problems of ‘contamination’ and ‘cleavage’. Is this continual flux of
forces a ‘dialectical interplay between actions (practices and structures), meanings, and
actors’ (Zilber 2002)?
Two important concepts within this perspective are core competences and strategic
intent (Hamel and Prahalad 1989; Prahalad and Hamel 1990). The premise is that strat-
egy is based on learning and learning depends on capabilities (dynamic? See Chapter
3). The core capabilities or competences arise from collective learning in organisations,
especially from the coordination of skills and the integration of technologies. By
nature, core competences do not diminish in value but need to be nurtured as knowl-
edge and skills are lost over time. They are identified as roots of competitive advantage
and the idea of core competence is developed using the analogy of a tree (Prahalad and
Hamel 1990):

‘The diversified corporation is a large tree. The trunk and major limbs are core products,
the smaller branches are business units; the leaves, flowers and fruit are end-products.
The root system that provides nourishment, sustenance and stability is the core compe-
tence. You can miss the strength of competitors by looking only at their end-products, in
the same way you miss the strength of a tree if you look only at its leaves.’

As firms respond to competitive pressure, there may be an anomaly between their

resources and their aspirations. If a firm has considerable resources but low aspirations,
this could be considered as a low ‘stretch’ circumstance (Hamel and Prahalad 1993). On
the other hand, a firm may have very low resources but very high ‘stretch’ aspirations
driven by high ambitions. Such high aspirations or ‘stretch’ are insufficient to gain
competitive advantage and firms require leverage. Leverage entails (Hamel and
Prahalad 1993):

● concentrating resources effectively around a strategic focal point;

● accumulating resources more efficiently by extracting knowledge from experience
and grafting knowledge from other sources;
● complementing one resource with another to create synergy and higher value;
● conserving resources by recycling and partnering resources from other firms;
● resources from the market in the shortest possible time.

An additional drive to stretch and leverage is ‘strategic intent’ (Hamel and Prahalad
1989). Strategy is seen as revolution and strategic intent is a firm’s obsession with win-
ning in the short or long term. It is stable over time and provides the major driver for
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166 Part 3 / Evaluating knowledge

organisational commitment and motivation from employees. Strategic intent requires

the following demands of senior management (Hamel and Prahalad 1989):

● create a sense of urgency;

● develop a competitor focus at every level through widespread use of competitive
intelligence;
● provide employees with the skills they need to work effectively;
● give the organisation time to digest one challenge before launching another;
● establish clear milestones and review mechanisms.

Resource-based view of the firm

In situations of perfect competition, there is a competitive price for products and serv-
ices. However, in reality, firms may generate ‘superprofits’ or ‘rents’ for a variety of
reasons. The difference between the actual price of a product or service and its competi-
tive price is known as an ‘economic rent’. Rents are payments to assets that exceed
their competitive price (Ricardo 1817). This provides firms with their source of compet-
itive advantage. The key question in strategic management is how firms can do this
and sustain the competitive advantage over time.
One institutionalist response to increasing rents in firms is to suggest that it is the
firm’s resources that lead to competitive advantage, arising from a ‘resource-based
theory of the firm’ (Barney 1991; Wernerfelt 1984). Resources are the tangible and
intangible assets a firm uses to choose and implement its strategies (Barney 2001). One
of the historic tools used in strategic management has been the SWOT analysis where
attempts are made to give equal attention to the internal (strengths and weaknesses)
and external (opportunities and threats) factors affecting a firm. One could argue that
the industrial organisation has shifted the balance in this analysis more towards the
external industrial, market-based perspective (Porter 1980). The resource-based view of
the firm is an attempt by institutionalists to shift the balance back to the internal
aspects of the firm. A seminal paper in this area suggests a number of characteristics of
resources to achieve competitive advantage (Barney 1991):

● Resources are distributed heterogeneously across firms.

● Resources have a ‘stickiness’ and cannot be transferred from firm to firm without
a cost.
● Resources are rare – not widely held.
● Resources are valuable – they promote efficiency and effectiveness.
● Resources are not imitable and cannot be replicated easily by competitors.
● Resources are not substitutable – other resources cannot fulfil the same functions.
● Resources are not transferable and cannot be bought in resource markets.

A wide variety of resources that follow the above conditions has been suggested
to lead to sustainable competitive advantage in the current literature. These include
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Chapter 6 / Strategic management perspectives 167

information technology, strategic planning, human resource management, top man-

agement skills, trust and organisational culture (Priem and Butler 2001). One of the
highly influential concepts arising from the resource-based view is the notion of core
competence described earlier (Prahalad and Hamel 1990).

Many companies adopt the rhetoric that ‘people are our greatest assets’. What is your Pause for thought
experience of the difference between rhetoric and reality in your organisation? If
knowledge was considered the most critical resource in organisations, how would you
suggest that it was developed among colleagues and work teams? What role do social
networks play in your organisation for developing and sharing your knowledge base?

An outcome of the resource-based view of the firm is the development of the

‘knowledge-based view’ of the firm which assumes that knowledge (know how and
know what) is the firm’s most important resource (Grant 1996; Spender 1996). This
view revisits many of the tenets of individual knowledge (Polanyi 1967; Ryle 1949),
organisational learning (Huber 1991), conversion of one form of knowledge to another
(Nonaka 1991) and organisational routines (Levitt and March 1988) as potential
sources of competitive advantage. Knowledge sharing is seen as vital to this perspective
and there is a recognition of the difficulty of sharing tacit knowledge which may be pri-
mary to competitive advantage. The principal role of the firm is to integrate the
knowledge resident in individuals into their goods and services (Grant 1991). Hence,
the primary task of management is to coordinate the process of knowledge integration.
One potential aid in this integration process is to treat the firm as a dynamic sociotech-
nical and self-regulating system (Spender 1996).
There are a number of criticisms aimed at the resource-based view of the firm (Priem
and Butler 2001):

● How can resources be obtained?

● How and in which contexts do resources contribute to competitive advantage?
● How do resources interact and compare with other resources?
● How can a firm operate successfully through the denial of market context?

Information systems strategy

In our quest to develop knowledge management strategies, one can learn a great deal
from the more mature literature on information systems (IS). It is important at this
stage to make a distinction between information systems (IS) and information technol-
ogy (IT). IT is purely about technology such as hardware and software. In contrast, IS is
concerned with the effective interaction between technology and social phenomena
(people). It is possible for some IS to have no technology (where information is
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168 Part 3 / Evaluating knowledge

exchanged verbally between people) whereas other IS may be totally reliant on technol-
ogy. The importance of the IS is how they can aid effective action and decision making
(Checkland and Holwell 1998).
Organisations can become overwhelmed by technology where IT and IS become syn-
onymous terms. IT is not a strategy on its own and the purchase of hardware and
software without recourse to organisational issues and activities is unlikely to lead to
competitive advantage. It is easy to be seduced by applications (software designed to
meet certain business processes or activities) rather than examining whether they will
address key business problems in an effective manner and taking into account the com-
petence of the existing workforce.
The past decade has seen the dominance of e-commerce – conducting business elec-
tronically using internet technologies. This gave rise to the boom (and subsequent
collapse) of dotcom companies and there was a stage a few years ago where the mere
announcement of a firm’s name change to a dotcom company sent its share price soar-
ing without necessarily any other change in its business. E-commerce did exist in the
1980s when electronic data interchange (EDI) was used to exchange documents
between firms at a much reduced cost. Subsequently, financial EDI allowed the cus-
tomer into the loop by enabling them to issue electronic payment instructions to the
supplier directly. More recently the appearance of WAP (wireless application protocol)
has allowed individuals to use mobile devices (such as mobile phones and personal dig-
ital assistants) to browse the net and make purchases directly while on the move (Ward
and Peppard 2002). The use of mobile devices for conducting business transactions has
been termed m-commerce.
In the 1960s, the dominant IS/IT strategy was focused on ‘data processing’ (DP) where
the emphasis was to use technology to automate tasks. The rationale was to produce
twice as many products in half as much time through automation leading to greater effi-
ciency and profits. This data-processing approach did not change the business processes
or alter the overall corporate strategy. Modern-day examples of the data-processing
approach are the computerised reservation systems (CRS) used among airlines and the
electronic point of sale (EPOS) systems used in retailing. The aim of both these systems
is to increase the overall efficiency in the business process through efficient transaction
handling and resource control. The users of the data-processing approach tend to be
operators, clerical staff or first-line supervisors (Ward and Peppard 2002).
In the 1970s and 1980s there was a development in IS/IT towards management
information systems (MIS). The objective was to provide middle and senior managers
with information for monitoring and controlling business processes and to aid decision
making. The focus became the information needs of the users and there was a develop-
ment of information centres in many organisations to meet this need. The linkages
between MIS and organisational performance became much harder to justify than the
data-processing approach. The development of large databases characterised this
approach but they were not necessarily integrated between different parts of the firm.
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Chapter 6 / Strategic management perspectives 169

The contributions of DP and MIS are (Strassman 1985):

● IS/IT has increased the efficiency of information-based activities;

● returns on investment likely to be around 5–10 per cent;
● in terms of managerial effectiveness, good managers get even better, bad managers
get worse!
● IS/IT can speed up the mess if used inappropriately.

A further development of information systems and one that builds on DP and MIS is
known as strategic information systems (SIS) (Galliers and Somogyi 1987). The aim of
SIS is to improve the firm’s competitiveness through the effective deployment of IS/IT.
SIS is business driven in terms of competitors, suppliers and customers and links
directly to the firm’s corporate strategy. The four main types of strategic systems (Ward
and Peppard 2002) are those that:

● change the nature of the relationship with customers and suppliers by sharing infor-
mation through technology-based systems. This may include e-procurement,
web-based ordering systems and customers tracking their orders online through
workflow management systems;
● produce effective integration of information linked to a firm’s value-adding
processes. This has often been achieved through customer relationship management
systems or enterprise resource planning systems;
● enable a firm to develop and market new products or services based on information.
These have included online banking, online support and order-tracking initiatives;
● provide executive management with information (internal and external) to support
development and implementation of strategy. An example of this is the use of execu-
tive information systems for tracking market, customer and industry changes
through external databases as well as key internal indicators of performance.

Imagine you were given the position of IS manager in your organisation. What would Pause for thought
be your approach to strategy? Think of data processing, management information
systems, strategic information systems and information systems capability as potential
options for IS strategy. Given the nature of your organisation, which option or
combination of options would you adopt and why? How would you integrate and
justify your approach with your company’s strategy?

The most recent development in the IS/IT strategy literature is the notion of ‘IS capa-
bility’ (Bharadwaj 2000) that is likely to enhance a firm’s competitiveness. Instead of a
fixation on external changes, the focus of IS strategy becomes more internal. The sug-
gestion is the desire to embed IS capability into all the various practices and processes
within the organisation. IS capability takes on a resource-based theory of the firm and
appears to be reminiscent of the notions of dynamic capabilities and double-loop learn-
ing (Argyris and Schon 1978; Zollo and Winter 2002). Similar to March’s (1991)
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170 Part 3 / Evaluating knowledge

distinction between exploitation and exploration, there may be a tidal swing in the
direction of exploration and looking at things differently. As Hamel (2000) asserts
about the key factor affecting the competitiveness of e-commerce:

‘The real story of Silicon Valley is not “e” but “i”, not electronic commerce but innova-
tion and imagination…It is the power of “i” rather than “e” that separates the winners
from the losers in the twenty-first century economy.’

Developing a knowledge management strategy

As industrialised economies have moved from natural resources to intellectual assets, it
has been argued that the most important asset that a firm possesses is its knowledge. In
terms of economic theory, we are looking for strategies that will produce Ricardian
rents (or super profits) (Ricardo 1817) where the effective use of knowledge will enable
firms to sustain competitive advantage. There are other forms of rent, such as luck,
chance and history, but these rents cannot be managed (Liebeskind 1996). It is assumed
that knowledge in its tacit and explicit manifestations can be managed. But how do we
develop knowledge management strategies to effectively utilise this valuable resource?
Also, how do we protect the valuable knowledge from expropriation and imitation?
The KM strategy literature is relatively young and the forms of strategy proposed can
be characterised as a dialectic between the forces of efficiency and innovation
(Mintzberg 1991), as shown in Figure 6.4 (p. 171). Firms are never static and are
moving in one or another direction towards efficiency or innovation given a certain set
of market conditions. In this manner the firm’s KM strategy becomes aligned with the
overall business strategy. It is likely that a crisis or discontinuity will trigger the firm to
move from one force, say, efficiency to innovation. Discontinuities may arise from
sudden deregulation of markets, economic downturns or aggressive competitor behav-
iour resulting in drastic loss of market share.
Among management consultants, the most common forms of knowledge manage-
ment strategies are codification strategies and personalisation strategies (Hansen et al.
1999) as shown in Figure 6.5 (p. 171). For example, Andersen Consulting and Ernst &
Young have pursued codification strategies. Codification strategies are heavily based on
technology and use large databases to codify and store knowledge. The rationale of a
codification strategy is to achieve ‘scale in knowledge reuse’. After completion of a proj-
ect, consultants will retrieve key pieces of knowledge from the assignment and create
‘knowledge objects’ to store valuable knowledge such as key industry information,
market segmentation analyses, presentations, interview guides, programming docu-
ments and change management programmes. This knowledge is stored in a knowledge
repository so that others in the firm can use the same material for their assignments.
Put crudely, consultancy reports for clients become little more than a ‘cut and paste’
affair from knowledge and templates found in the repository. Of course, there is signifi-
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Chapter 6 / Strategic management perspectives 171

EFFICIENCY
Cost leadership
Codification strategy
Exploitation strategy

SLOW MARKET CHANGES

CRISIS DISCONTINUITY
RAPID MARKET CHANGES

INNOVATION
Differentiation
Personalisation strategy

Figure 6.4 The dialectic of knowledge management strategies

cant input from consultants about the specifics of the case, but the tools, techniques
and background knowledge come from the knowledge repositories. There is little room
for creativity and innovation in this approach and they are likely to be discouraged.
Instead, the tried and tested methods of consultancy are promoted. This is what the
clients are paying them for: a solid consultancy approach based on previous knowledge
without the potential risks of innovation. In this case, codification strategies are clearly

CODIFICATION PERSONALISATION
STRATEGY STRATEGY

Technology-led People-led
Explicit knowldege Tacit knowldege
orientation orientation
Codify knowledge Engage in dialogue
Use databases Channel expertise
High turnover High profits

Figure 6.5 Codification and personalisation strategies

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172 Part 3 / Evaluating knowledge

Pause for thought Think of the way knowledge is managed in your organisation. How would you assess
the level of personalisation or codification strategies involved? Has the emphasis
towards one or the other strategy changed over the past few years? What is your
involvement with strategy development? On a theoretical level, which one of these
strategies do you consider most appropriate for small organisations? Do you consider
personalisation strategies as the ultimate knowledge management strategy if
companies can afford them?

aligned with the consultancy firm’s business strategy focused on efficiency, cost savings
and cost leadership. What the clients value from such consultants is their reduced fees
(half or a third) compared with other consultants in the field.
Other consultants such as Bain or McKinsey tend to favour knowledge management
strategies focused on ‘personalisation’ strategies. These strategies are less about technol-
ogy and more about people. Bain and McKinsey are more interested in developing people
through brainstorming exercises and face-to-face communication and gaining deeper
insights into problems. They place considerable emphasis on knowledge sharing, either
face to face, over the phone, by e-mail or via videoconferences (Hansen et al. 1999). In
terms of KM technology, they tend to use expertise databases or internal ‘yellow pages’ to
find consultants with the right set of knowledge and skills for their problem. The focus is
on networking within the organisation and through dialogue developing creative solu-
tions for unique problems in their assignments. Knowledge sharing, mentoring and the
use of creative and analytical skills are key to this approach. As certain clients value this
approach, they are prepared to pay substantially higher fees for this personalised and
unique service. In this sense, a personalisation strategy is in alignment with the business
strategy focused on differentiation through innovative solutions.
Similar knowledge management strategies have been found in other industries
where firms have followed a codification strategy if they were led by efficiency or cost
leadership concerns and personalisation strategies where innovation forces and differ-
entiation concerns were foremost. In the US pharmaceutical industry, the knowledge
management strategies firms followed a similar pattern of codification strategies
(’exploiters’ and ‘loners’) and personalisation strategies (’explorers’ and ‘innovators’)
(Bierly and Chakrabarti 1996). Codification strategies rely on large investments in
knowledge repositories and proprietary search engines and use incentives to encourage
people to codify and store their knowledge in these large databases. On the contrary,
personalisation strategies require low levels of technology such as expertise databases
but high levels of reward for knowledge sharing and dialogue with their colleagues.
Firms that try to pursue both strategies simultaneously tend to fail, as with the prob-
lems of ‘cleavage’ in business strategy where the forces of efficiency and innovation
confront each other in the boardroom and can paralyse the firm if there are major divi-
sions in competitive response (Hansen et al. 1999; Mintzberg 1991).
Given the dominance of codifying knowledge, what is the best way of codifying
explicit knowledge that can be useful and valuable? For example, Ernst & Young has a
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Chapter 6 / Strategic management perspectives 173

three-level hierarchy in its knowledge repositories. There is an ‘elite’ database that has
its best knowledge on a topic. In the next level there are specific ‘knowledge objects’
containing consultancy reports, templates, market analyses and so on from previous
assignments. Finally, there are ‘holding tanks’ for a variety of materials (Hansen et al.
1999). A similar framework for mapping knowledge is to classify it under three levels of
core knowledge, advanced knowledge and innovative knowledge (Zack 1999):

● Core knowledge is the minimum knowledge required to function in any business or

public arena.
● Advanced knowledge is knowledge in process, cost or quality that enables a firm to com-
pete in a particular market and allows some knowledge differentiation between firms.
● Innovative knowledge is knowledge that is substantially differentiated and allows
the firm to lead the industry through doing things differently.

An alternative codification of strategic knowledge distinguishes between four types

of business knowledge and the tools associated with them (Drew 1999):

● What we know we know: knowledge sharing, access and inventory. Tools include
benchmarking and communities of practice.
● What we know we don’t know: knowledge seeking and creation. Tools include R&D,
market research and competitive intelligence.
● What we don’t know we know: uncovering hidden or tacit knowledge. Tools include
knowledge maps, audits, training and networks.
● What we don’t know we don’t know: discovering key risks, exposures and opportu-
nities. Tools include creative tension, audits, dilemmas and complexity science.

Once we have codified knowledge in an appropriate manner, how do we acquire,

integrate, store, share and apply the knowledge to achieve competitive advantage? It
has been argued that the key drivers and creative tension for strategic action arise from
a knowledge gap and strategic gap (Zack 1999). A knowledge gap is the difference
between what a firm must know and what it actually knows. Similarly a strategic gap is
the difference between what a firm must do and what a firm can do given its resource
base. From this gap analysis, there are two potential orientations to knowledge strategy
(Zack 1999):

● pursue a conservative knowledge strategy of exploiting past internal knowledge (sim-

ilar to a codification strategy);
● pursue an aggressive knowledge strategy that integrates exploration and exploitation
of internal and external knowledge (a combination of a codification and personalisa-
tion strategy). Whereas personalisation or exploration strategies may provide a useful
alternative in their own right, firms need to be mindful of the dangers of pursuing
both strategies at the same time (Hansen et al. 1999). This has often resulted in failure.

A knowledge management strategy needs to contribute to a firm’s bottom-line per-

formance. But who takes responsibility for knowledge management in an organisation?
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174 Part 3 / Evaluating knowledge

If the firm pursues a codification strategy, should the IS/IT department take the lead?
Alternatively, if a personalisation strategy is pursued, should the human resource
department provide the necessary direction? Our argument is that knowledge manage-
ment strategies need to be developed in consultation and partnership with both IS/IT
and human resource departments. We would go further to include the finance depart-
ment in these consultations as the benefits of a knowledge management strategy will
affect the firm’s financial performance and its intellectual capital. The relationship
between KM strategy and performance is shown in Figure 6.6.

Innovation and personalisation strategies

It appears that in times of crisis – rapid market changes or economic decline – many
firms may need to reconsider their position and move more towards personalisation or
innovation strategies. Their traditional codification or efficiency-related strategies may
not be enough. But how do we innovate, particularly if we are used to a totally differ-
ent way of working? This could be a wake-up call for many firms to change their ways
and look more closely at their processes of innovation.
Most people think of innovation as starting with an idea, an ‘aha’ feeling in the
bath, or as an invention. But ideas are not enough in themselves. They need to be
nurtured to prevent them from decay and need to be implemented in an organisational
context. A useful definition of innovation is as follows (Van de Van 1986):

‘The process of innovation is defined as the development and implementation of new ideas
by people who over time engage in transactions with others within an institutional context.’

Research in organisational innovation shows that the results from different studies
are inherently inconsistent and do not provide us with a clear road map of the best way
to proceed (Wolfe 1994). Ideas come from people and need champions to take them
forward. People carry, develop and marshal their ideas in a socio-political process of

Financial Intellectual
performance capital

Business strategy

KM strategy

IS/IT strategy HR strategy

Figure 6.6 KM strategy and performance

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Chapter 6 / Strategic management perspectives 175

dialogue and discussion with other people before they gain legitimacy and currency.
Ideas may go through a number of stages over time (Van de Van 1986):

● appreciation – a threatening, disruptive event leading to the idea;

● articulation – ideas may surface as solutions;
● adoption – ideas may galvanise through networks and political debate;
● institutionalisation – ideas gain legitimacy and are taken for granted;
● decay – ideas become outmoded.

This research has focused predominantly on what are the determinants of organisa-
tional innovation. Effectively the determinants fall into a variety of organisational,
innovation, managerial and environmental characteristics. The studies have followed
quantitative regression models where innovation is measured in terms of its magnitude
and speed of adoption. Parallel studies have focused on diffusion of innovation in
organisations. These studies have explored the pattern, extent and rate of diffusion of
innovation across an organisation. Again these studies have used cross-sectional sur-
veys looking at organisational, innovation and managerial characteristics of the
promoter of the innovation. Lastly, research has looked at innovation as a process to
see how it emerges, develops, grows and terminates over time. This has been done in a
qualitative manner by conceptualising innovation as a series of stages over time. The
common stages in the innovation cycle among many studies are (Wolfe 1994):

● idea conception;
● awareness;
● matching;
● appraisal;
● persuasion;
● adoption decision;
● implementation;
● confirmation;
● routinisation;
● infusion.

These processual innovations have had a profound effect on many organisations and
have occurred in forms such as business process re-engineering, lean production and
customer requirements management. They are affected considerably by cognitive,
social and organisational factors. The political dynamics, interests and power bases can
also considerably influence the innovation. By their nature, innovations can be irra-
tional, unpredictable and uncertain and fail to follow rationalised management
processes. These can lead to frustrations among managers about how to effectively
manage innovation. An alternative conceptualisation to the stages of innovation
shown above is the notion of innovation as four ‘episodes’, as shown in Figure 6.7
(p. 176). The four episodes emphasise that the different stages are overlapping and may
not occur in a linear manner.
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176 Part 3 / Evaluating knowledge

COGNITIVE
FACTORS

n
tio S
(k elec
n ta e ) no ti
e d g n
em le tio di wl on
pl ow nta ffu ed
sio ge
m
I (kn e
em n)
pl
im

Age

(kno isation
utili ledge
nda ledge
(kno tion)

n)
crea

satio
form

tin
w

w
Rou
atio
n
POLITICAL SOCIAL
FACTORS FACTORS

DISCONTINUITY

Figure 6.7 Episodes in the innovation process (Clark and Fujimoto 1992; Newell et al. 2002)

The agenda formation episode is principally about knowledge creation and acquisi-
tion. Firms can acquire knowledge internally through congenital or experiential learning
or externally through vicarious learning, grafting, searching and noticing (Huber 1991).
Given that many new ideas come from external sources, the firm’s ability to acquire new
ideas from external sources becomes critical. This is normally achieved through individu-
als engaging in external networks, acquiring new ideas and sharing them across the firm
(knowledge diffusion). It is argued that weak ties in these networks provide the most pro-
ductive source of ideas as they are more likely to challenge conventional thinking rather
than conform to it (Hansen 1999; Newell et al. 2002). The strength of networking is meas-
ured as a form of social capital (Adler and Kwon 2002) and determines the level and
quality of new ideas coming into the organisation from external sources.
New ideas on their own do not create innovation. They need to be developed and
merged into local conditions through organisational processes, practices and political
environments. The culture of the organisation can significantly influence whether these
ideas are accepted or rejected. Strong ties between organisational members are important
as they allow greater facility to engage in discussion and dialogue leading to a greater
opportunity for the idea to be implemented in a practice or process as an innovation
(Hansen 1999). These phases are part of the implementation and selection episodes. The
last episode in the innovation cycle is the routinisation episode concerned with the utili-
sation of knowledge and its efficient reuse. This episode has parallels with the
codification strategy where knowledge codification, storage and retrieval mechanisms are
developed. To be successful, an innovation that starts as an irrational idea but turns into a
codified, constrained and routinised form of knowledge. Exploration leads back to
exploitation. It needs a discontinuity to kick start the innovation process again.
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Chapter 6 / Strategic management perspectives 177

Exploitation strategies require ‘discipline’ in collecting knowledge for any given situ-
ation, developing alternatives and evaluating the one most likely to increase the value
of the firm. A form of convergent thinking towards a problem. In contrast, exploration
strategies require ‘imagination’ to go beyond the conventional methods of thinking
and promote divergent thinking towards a problem. The primacy of imagination in the
long term is illustrated by Einstein (Szulanski and Amin 2001):

‘Imagination is more important than knowledge. For knowledge is limited, whereas

imagination embraces the entire world, stimulating progress, giving birth to evolution.’

CASE STUDY
Knowledge management strategy at BG FT
‘A lot of businesses are like caterpillars, wanting to business was becoming tougher, and the scope for fur-
be sleeker, fitter and more sustainable,’ says David ther performance improvements appeared limited.
Varney, the chief executive of BG, the oil, gas and The aim of the consortium was to visit interna-
pipeline company formed from the upstream half of tional companies that were recognised as either
the old British Gas. ‘The trouble is that the caterpil- having gone through a lot of change or being lead-
lars often don’t realise they are blind, so when the ers in their industries. The companies were a
opportunity to become a butterfly comes along, they mixture of large and rapidly growing businesses.
say “this is not for me”.’ They included FedEx, International Business
Mr Varney may be unusual in his use of metaphor, Machines, Sears, Cisco Systems and 3M, and all
but his quandary is shared by many executives at the agreed to be interviewed on a confidential basis, pro-
head of large privatised companies. At BG, he found vided that they would receive the conclusions of the
that the company carried a lot of baggage from its consortium’s research. ‘We were amazed that all of
state-owned days. ‘Change’ was not a word everyone the companies we approached wanted to see us and
in the group recognised. He thought BG needed an took the exercise very seriously,’ says Mr Varney.
outside influence to counter the ‘dominant logic’, or The findings from the visits were shared at a two-
fixed ideas, that had developed within the company. day conference in Chicago, and then filtered back to
So when the Performance Group, a Norwegian- the participating organisations through further
owned management consultancy, approached him internal meetings. They have been compiled in CD-
to chair a global learning consortium, he eagerly Rom format and made available to all of the
took up the offer. Two years on, the results are in. companies involved.
And BG has in the past few weeks made a series of The consortium discovered that in order to
announcements that suggest the company is learn- increase the odds of successfully changing their busi-
ing to be radical. ness, companies had first to conduct an honest
Mr Varney’s consortium searched Europe for appraisal of themselves and be ruthlessly blunt
other companies that were facing similar challenges. about where they stood in the market. They then
It assembled a collection that included ABB, the had to develop their ability to look ahead. Only that
Swiss engineering group; SJ, the Swedish State way could the companies determine what threats
Railways cargo division; Posten, the Swedish postal and opportunities were coming along, and create
service; Wallenius Wilhelmsen Lines, the Nordic the energy and focus within the organisation to
cargo shipping group; and Unitor, the Norwegian implement the appropriate response.
shipping-services group. The last main conclusion was that companies too
‘People got involved because they had a need- often played to their traditional strengths and failed
driven appetite,’ explains David Oliver of the to recognise new ideas. The consortium advocated
Performance Group. Unitor, for instance, was facing that companies create a ‘question everything’ cul-
the challenge of global purchasing in the ship-main- ture and a ‘hothouse’, where ideas could develop
tenance industry. BG, for its part, was pondering how without being judged too early in the process.
to increase growth and value for shareholders. In Mr Varney says that, in all, his company spent
addition, the regulator that oversees BG’s gas-pipeline about two man-years on the exercise. Yet at first
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178 Part 3 / Evaluating knowledge

glance the conclusions appear to be fairly obvious from the international oil and gas exploration and
and none of the findings particularly new. So why production arm of the business. And it has created a
spend so much time and money, when the spade ‘venture laboratory’ to work on a few good ideas,
work could have been done by a management con- including natural-gas vehicles and small-scale com-
sultancy, and the lessons could have been gleaned bined heat and power plants.
from any one of hundreds of management manuals? In business, as in anything else, it helps to see
Mr Varney says the real value of the programme things for yourself.
lies partly in having the weight of real-life examples It remains to be seen how successful the consor-
behind him when he reported back to his own board, tium members will be in implementing their change
and partly in seeing first-hand how BG was analysed programmes, but Mr Varney is hopeful that it will
by a cross-section of companies. ‘People listen a lot help BG to succeed in becoming a top-quartile FTSE
more if you can say “this is what IBM did in that situ- 100 performer.
ation”. Consortium exercises like this catalyse activity Source: Article by Matthew Jones, Financial Times, 12 May 2000
and help to make the process of changing the com-
pany’s culture more transparent,’ he says. Questions
There were surprises, too. The most helpful com-
1 Is organisational transformation from a ‘chrysalis to
pany for BG to learn from was FedEx – a company it
a butterfly’ about a journey and learning rather than
‘would never have dreamed of looking at’, says Mr
a planned process? What is the value of the
Varney. ‘They were going from an asset-rich com-
consortium exercises rather than employing a
pany to an information-systems company which
cheaper management consultant?
told its customers where their parcels were.’
2 As BG is constrained considerably by its regulator, is
In the past few weeks BG has also embarked on
the most appropriate KM strategy likely to be a
an information-systems strategy. It has announced
codification strategy focused on efficiency and cost
that it will develop a network of fibre-optic cables savings?
and communications towers around its pipeline to 3 What are the drawbacks of a strategy based on
take advantage of the growing need for high-quality adding knowledge or information to your products
data transmission capacity. The group is also or services?
demerging Transco, its regulated pipelines company,

Summary
This chapter has elaborated five areas that need to be considered when developing a
knowledge management strategy:

1 Realised strategies may emerge from the way a firm develops through experience
rather than as an outcome of a deliberate plan or strategy. Many deliberate strategies
may be unrealised.

2 A clear understanding of strategy needs awareness of the different schools of thought

and their underlying assumptions. The dominant schools of thought in the knowledge
management literature are the industrial organisation tradition, the excellence and
turnaround literature, and the institutionalist perspective.

3 The resource-based and knowledge-based view of the firm place greater emphasis on
the firm’s resources (tangible and intangible assets) to achieve competitive advantage.

4 Information systems and information technology strategies have developed from

operational data-processing approaches to management information systems and
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Chapter 6 / Strategic management perspectives 179

strategic information systems. More recently, IS/IT strategies have adopted a resource-
based view of the firm and suggest that IS capabilities are the primary source of
competitive advantage.

5 Knowledge management strategies occur as a dialectic between codification

(exploitation) strategies and personalisation (exploration) strategies. Firms that follow
both strategies simultaneously are likely to fail. The dialectic or change between strate-
gies is likely to occur following a crisis or discontinuity.

QUESTIONS FOR FURTHER THOUGHT

1 At the extremes of KM strategy, is a codification strategy purely an IS/IT strategy and a

personalisation strategy a human resource (HR) strategy? What is the importance of the IS/IT
department and HR departments talking to one another for the development of a KM strategy?
2 Given the institutionalist perspective’s preoccupation with learning, how do we know that the
organisation is learning about the right things and responding to market changes in the
appropriate manner?
3 If only 10 per cent of formulated strategies ever get implemented, why do firms bother with
elaborate planning processes?
4 Why do people knock books and publications from the excellence and turnaround literature
when they have probably had more impact and influence on managers than literature from the
industrial organisation and institutionalist perspective put together?
5 Core competences are described using the analogy of the roots of a tree. How effective are these
core competences in times of discontinuity when the environment changes the soil nourishing
the roots of competence into sand?
6 Is there potential in development of strategic thinking by a synthesis of the best ideas from the
industrial organisation and institutionalist perspective?
7 What lessons can managers take from the innovation literature when the results of several
studies are inconsistent? Could literature hinder the very creative and innovative processes it is
trying to describe?
8 If we cannot predict the future, what is the point of codifying strategic knowledge into ‘what
we don’t know we know’ and ‘what we don’t know we don’t know’ (Drew 1999)? Is this the
same as the use of scenario planning in the industrial organisation tradition?
9 Is KM strategy development the domain of the finance director, the IS/IT director or the HR
director? If you propose a joint body, how do you overcome the communication difficulties
between the different areas, their interests and different languages?
10 What is the likelihood of codification strategies developing superficial learning and personalisation
strategies developing a deeper insight on any subject?

Further reading
1 Mintzberg et al. 1998 is an excellent exploration of the different strategy schools and their
underlying assumptions. The authors distinguish ten schools of strategic thought rather
than the three described in this chapter.
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180 Part 3 / Evaluating knowledge

2 Johnson and Scholes 2002 is a classic strategy text for MBA students. The main caution is
that it comes from a predominant industrial organisation background and needs to be read
in this context.

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PA RT 4
Sharing knowledge

DISCOVERING
KNOWLEDGE
Data, information & knowledge
History of managing knowledge
Philosophical perspectives on knowledge

LEVERAGING GENERATING
KNOWLEDGE KNOWLEDGE
Knowledge management Organisational learning
in the learning organisation Knowledge management
Intellectual capital Tools & technology
KNOWLEDGE
MANAGEMENT
CYCLE

SHARING EVALUATING
KNOWLEDGE KNOWLEDGE
Knowledge management Knowledge management systems
and culture Strategic management perspectives:
Change management knowledge management strategy
9068 KMAN_C07.QXD 7/7/08 12:05 PM Page 184
9068 KMAN_C07.QXD 7/7/08 12:05 PM Page 185

Chapter 7
Knowledge management and culture

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● explain the distinctions between organisational culture and organisational climate;
● understand the surface manifestations and deeper aspects of organisational culture;
● discuss different approaches to developing knowledge-sharing cultures;
● apply the notion of ‘communities of practice’ to organisations.

MANAGEMENT ISSUES

An understanding of cultural issues and the development of knowledge sharing-cultures and

communities of practice implies these questions for managers:
● How do you embed knowledge management technologies to a given culture?
● What types of cultures are likely to facilitate knowledge sharing and how do you achieve them?
● What is the role of the manager in cultivating communities of practice?

Links to other chapters

Chapter 6 examines knowledge management strategies where cultural factors and communities of
practice may play a central role.
Chapter 8 explores implementation of knowledge management initiatives and the role of cultural
management of the change process.
Chapter 10 concerns intellectual capital which is clearly an intended outcome of knowledge-sharing
cultures and communities of practice.
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186 Part 4 / Sharing knowledge

OPENING VIGNETTE
Tough-guy, macho culture FT
Of all the ideas propagated by Jack Welch, this must What a murky tale. The McKinsey consultants say it
be the most dangerous. Every year, the former is vital to get the legal details right when you nail your
General Electric boss says, you should fire the weak- bottom tenth. That is certainly true. If ‘10 per cent out’
est 10 per cent of your staff. It will get harder to do becomes a worldwide trend, no one will benefit more
as the years go by and you have got rid of the obvi- than the lawyers. Nor will the annual search for the
ous incompetents. But you must carry on weeding
Cs do much for those other corporate must-haves:
out that bottom tenth all the same.
trust and teamwork. How much knowledge sharing
Many do not have the heart. ‘Managers will play
every game in the book to avoid identifying their will there be in a team whose members spend their
bottom ten,’ Mr Welch writes in his autobiography. year calculating how to escape being one of the termi-
‘Sometimes they’ll sneak in people who were plan- nated tenth?
ning to retire that year, or others who have already There is another danger: that fear of being in the
been told to leave the organisation.’ One GE execu- bottom 10 per cent will encourage reluctance to
tive included an employee who had died two stand out from the crowd. Company recruitment
months previously. If you are that queasy a man- advertisements incessantly demand ‘out of the box
ager, Mr Welch says, it is time for you to go too. thinking’. But who is more likely to come up with
It is hard to argue with either GE’s success or Mr innovative ideas? Is it the raucous group that dis-
Welch’s. But what works at GE does not always work cusses the same television programmes every
elsewhere. GE, for example, has been a successful con-
morning, drinks together every night and heads off
glomerate. Other multibusiness groups, such as Tyco
en masse to play in the chairman’s golf challenge
in the US and Hanson in the UK, have proved less sus-
tainable. The perennial rout of the Cs may have each spring? Or are new ideas more likely to come
served GE well; I suspect that most companies would from Joe in the corner, who does not say much, does
make a mess of identifying their worst performers. not know a birdie from a bunker but can sort out all
Marks and Spencer, the once-great UK retailer, was his software glitches without bothering the help
last month defeated at an industrial tribunal by desk? And who is more likely to be labelled a C?
Michael Davies, a senior manager it had dismissed. Source: Article by Michael Skapinker, Financial Times,
Several newspapers reported that Mr Davies was sacked 13 February 2002
because he had been too modest in a self-assessment
exercise. M&S insisted this was untrue; his self-assess- Questions
ment scores were in line with those of his colleagues. It
was his line manager, Paul Nursaw, who had given him 1 How would you describe the cultural values at
low scores. Mr Nursaw told the tribunal he had placed General Electric?
Mr Davies in, wait for it, ‘the bottom ten’. M&S said it 2 What are the implications for knowledge sharing in
conceded the case because it accepted it had failed to a culture that fires the weakest 10 per cent of staff
follow proper procedures, although Mr Davies had each year?
agreed not to demand compensation beyond the 3 What are the advantages and drawbacks of a
£140,000 pay-off he had already received. ‘tough-guy, macho culture’ described in this article?

Introduction
The failure of many information or knowledge management systems is often as a result
of cultural factors rather than technological oversights. Culture, by its nature, is a nebu-
lous subject with a variety of perspectives and interpretations. In practice, we may be
left with expressions such as ‘We don’t do it that way around here!’. To the puzzled
inquirer, this chapter is about gaining some clarity about the notion of culture and its
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Chapter 7 / Knowledge management and culture 187

historic roots in the organisational climate literature. We explore the variety of surface
manifestations of culture in organisations as well as its deeper expressions in values,
beliefs, attitudes and assumptions. We follow this path so as to better understand the
emerging literature in knowledge-sharing cultures. The current literature suggests that
such cultures can be cultivated through the deployment of certain artefacts, the promo-
tion of certain values such as ‘care’ and a healthy dialectic between cooperative and
competitive cultures. We proceed to understand the nature of informal groupings
called ‘communities of practice’ in organisations and how they differ from more formal
groupings such as project teams. The importance of storytelling and narratives for
embedding tacit knowledge cognitively and socially is investigated in detail. The organ-
isational benefits of communities of practice are explored and a blueprint for their
development is provided.

Understanding organisational culture and climate

In an attempt to understand social environments and their effects or interactions with
individuals, there have been two distinct concepts that have developed in the litera-
ture: organisational climate and organisational culture. Organisational climate has
much older roots in psychology and was strongly influenced by field theory (Lewin
1948; Lewin 1951). In the Lewinian understanding of social environments, the individ-
ual is assumed to be separate from the environment, acting either as a subject or an
agent, and the underlying framework for field theory can be expressed simply as:
B = f(P,E)

where the social processes equate to B=behaviour, P=person and E=environment. In its
early conception, climate could be created through leadership styles which produced
dependable social situations in three categories, namely autocratic, democratic and
laissez-faire (Lewin et al. 1939). The climate literature comes from a positivist, function-
alist paradigm and measurement of this concept has been strongly influenced by the
quantitative measurement of attitudes using the Likert scale (Likert 1967). The use of
surveys has been predominant in this approach. One early example is a study of the
impact of organisational climate on individual motivation (Litwin and Stringer 1961)
which classifies organisational climate along nine dimensions: structure, responsibility,
reward, risk, warmth, support, standards, conflict and identity. Most research in this
area has focused on measuring either the individual’s perception of individual attrib-
utes (the ‘psychological climate’) or the perceptions of organisational attributes (the
‘organisational climate’). Hence, debate has continued on whether climate is a ‘shared
perception’ or a ‘shared set of conditions’ (Denison 1996).
The weakness in the organisational climate literature has been the lack of agreement
on metrics, the poor contingent relationships and the lack of clear categorisations of
climate that could be used by managers. In response to these weaknesses and a critique
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188 Part 4 / Sharing knowledge

of the dominant positivist paradigm of the climate literature, the study of organisa-
tional culture developed from strong anthropological and sociological roots. The
literature on organisational climate has been relatively neglected recently. Cultural
researchers have taken a more qualitative approach and become more interested in
inductive accounts to understand the complexity of social phenomena.
One of the most influential anthropologists in cultural studies has been Geertz’s (1973)
interpretative theory of culture. Geertz’s approach is ‘semiotic’ and focuses on language
and symbols to discern what ordinary people consider to be significant in the ‘organisa-
tional glue’ or social contexts that develop through interaction. Other anthropological
roots of cultural studies come from symbolic interaction (Mead 1934) and questioning
values and practices in western societies. The other main intellectual tradition of cultural
research is sociology, looking at social reality from a variety of social construction
perspectives (Berger and Luckmann 1966; Durkheim 1984; Weber 1947) such as myths,
rituals, symbols, norms and ambiguity. An interesting development of cultural scholar-
ship has been the promotion of culture from a postmodern and critical theory
perspective (Alvesson 2002). Culture is not inside people’s head but exists in the interac-
tions and material objects where symbols and meanings are publicly expressed.

Pause for thought Culture is often described as the way we do things around here. How would you
describe the culture of your organisation? How homogeneous would you describe this
culture? Are you aware of subcultures that exist within your organisation? How
prevalent are they? Have you observed any changes in your organisational culture over
the past few years? What were the driving forces for these changes and how effective
were these changes in your opinion?

As ontological and epistemological assumptions of climate and culture begin to merge,

it is clear that these two concepts become less differentiated (Ashkanasy et al. 2000b).
Quantitative survey-based research is seen in climate research (O’Reilly et al. 1991) and
interpretivist dimensions can be found in cultural studies. A realist perspective that tries
to integrate these two concepts and builds on the popular three-level model of culture
(Schein 1985b) is shown in Figure 7.1 (p. 189). Organisational climate is the static or tem-
porary phenomenon found in norms and organisational artefacts that can be determined
through traditional survey-based approaches. In contrast, organisational culture is the
result of processes that arise from dynamic interactions between individuals or members
of a social system. The ‘cultural soup’ or structures that underlie organisational cultures
are the deeply held values, beliefs, attitudes and assumptions in the organisation.
There are a multivariate number of definitions on organisational culture and climate
which are based on the ontological and epistemological positions of the researchers.
One definition that tends to contrast the widely accepted distinctions between the two
phenomena is (Denison 1996):
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Chapter 7 / Knowledge management and culture 189

People as separate from environment

EVENTS
CLIMATE STATIC / TEMPORARY
Quantitive approach
Norms and artefacts

People as members of social systems

PROCESSES
CULTURE DYNAMIC INTERACTIONS
Quantitive approach

Beliefs

STRUCTURE Values Attitudes ‘CULTURAL SOUP’

Assumptions

Figure 7.1 Distinction between culture and climate in organisational environments

‘Culture refers to the deep structure of organizations, which is rooted in the values, beliefs
and assumptions held by organizational members. Meaning is established through social-
ization to a variety of identity groups that converge in the workplace. Interaction reproduces
a symbolic world that gives culture both a great stability and a certain precarious and frag-
ile nature rooted in the dependence of the system on individual cognition and action.
Climate, in contrast, portrays organisational environments as being rooted in the
organisation’s value system, but tends to present these social environments in relatively
static terms, describing them in terms of a fixed (and broadly applicable) set of dimen-
sions. Thus, climate is often considered as temporary, subject to direct control, and
largely limited to those aspects of the social environment that are consciously perceived
by organisational members.’

Norms, artefacts and symbols

At a more surface or superficial level, we have the manifestation of culture as norms, arte-
facts and symbols, as shown in Figure 7.2 (p. 190). Norms are expectations of appropriate
and inappropriate behaviour. This may be norms about dress code or issues such as
expectations surrounding performance and handling conflict (bottling it up or con-
fronting it). Norms attach approval or disapproval to holding certain beliefs and attitudes
and acting in particular ways. They can vary along two dimensions (O’Reilly 1989):

● intensity of approval or disapproval attached to an expectation;

● degree of consistency with which a norm is shared.
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190 Part 4 / Sharing knowledge

Stories &
Buildings myths
Ceremonies,
& corporate rites &
identity rituals

Logos &
mission Heroes &
statements ARTEFACTS champions

Compel
to action
Emotive Frame
Intensity Consensus
response experience

NORMS SYMBOLS

SURFACE MANIFESTATIONS OF CULTURE

Figure 7.2 Surface manifestations of organisational culture

For example, there may be consensus over senior management values such as respect
and integrity but little intensity one way or the other. Or there may be strong approval
and disapproval for the same value such as excellence in the organisation leading to great
intensity but little consensus. When great intensity and consensus exists in an organisa-
tion, this leads to a strong culture where organisational members share a common set of
expectations. If there is a weak culture in the organisation (low intensity and consensus),
there is a greater likelihood of sub-cultures forming. An example of norms for promoting
innovation in organisations is provided in Table 7.1. These collective norms are based on
a study of over 500 managers from diverse industries sharing very similar expectations on
what they saw as necessary for innovation in organisations. A useful tool in a change
management program would be to conduct a survey of existing and desired norms and
base organisational interventions on assisting a convergence between these two norms.

Table 7.1 Examples of Norms that Promote Innovation (O'Reilly 1989)

Norms to Promote Creativity Norms to Promote Implementation

Risk Taking Common Goals

Acceptance of mistakes Eliminate mixed messages
No punishment for failure Build consensus
Rewards for Change Autonomy
Ideas are valued Freedom to act
Top management support and attention Minimise bureaucracy
Openness Belief in Action
Listen better Anxiety about timeliness
Encourage lateral thinking Eagerness to get things done
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Chapter 7 / Knowledge management and culture 191

Artefacts also provide us with shared systems of meaning that construct organisa-
tional life. They can exist as material objects, physical layouts, technology, language and
behaviour patterns as well as procedures and practices in organisations (Brown 1998).
Material artefacts can exist as company logos and mission statements. Company
logos give us clear signals of the meaning and values behind them. Mission statements
inform the reader about company aspirations in terms of its principal aims, beliefs and
values. However, there may be a serious gap between the senior management rhetoric
glossed over in these mission statements and the reality at ground level.
The corporate architecture and identity in terms of appearance and uniform also
provide clues about an organisation’s culture. The nature of the building, its external
appearance, its internal layout and furniture can provide signals to organisational
members about how the company values them and their interactions with others. For
example, the organisation may provide open-plan offices, water fountains and sub-
sidised restaurant facilities to encourage interaction and dialogue with different levels
of the organisation. Or the corporate building may be compartmentalised to prevent
dialogue and reinforce divisional or operational boundaries. In each case, we learn a bit
more about the organisational culture. Many large organisations commission buildings
by renowned architects to reinforce their identity and show clear signs of opulence.
Stories are powerful artefacts that tell us about problems and solutions, disasters and tri-
umphs. They also tell us about informal rules and procedures; how things are done around
here. War stories encourage an understanding of what happened and why in a particular
circumstance. They also convey indicators of status and the norms of compliance and devi-
ation from rules. Stories enable organisations to develop their own unique identity. A
common deviant of stories are myths. They are based on unjustified beliefs and recounted
as stories. They serve the purpose of influencing action in particular contexts. For example,
there may be myths about super-human characteristics of certain individuals or groups and
derogatory characteristics of some others. These may be perpetuated as part of the organisa-
tional culture even though they bear little resemblance to reality.
Recurrent patterns of behaviour such as ceremonies, rites and rituals remind and
reinforce organisational members of cultural values (Brown 1998). Ceremonies may
include presentations and prizes for high achievers. Corporate heroes or champions
may be celebrated in order to share their success stories and the values communicated
through them. Rites may be planned activities such as rites of passage from one role or
status to another. Rituals may include company retreats and away days. In each case,
these cultural artefacts help individuals develop a deeper sense of company values.
Organisational culture can be construed as a network of meanings or shared experi-
ences that provide members with a shared and accepted reality (Pettigrew 1979). This
shared reality can derive from certain symbols that may stand for a multiplicity of
meanings that serve to link emotions and interpretations and compel people to action.
For example, working late at night above one’s contracted hours may symbolise loyalty
to an organisation. Hence, symbols can act to reflect aspects of organisational culture,
frame experiences that may be vague or controversial, and mobilise members to action
through their emotional response to a symbol (Ashkanasy et al. 2000b). Symbols are
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192 Part 4 / Sharing knowledge

rich in meaning and can occur as a word, a statement, an action or a material phenom-
enon. There are private symbols and collective symbols which stand ambiguously for
something else or more than the object itself (Alvesson 2002).

Values, beliefs, attitudes and assumptions

All too often, senior managers and chief executives place considerable effort in formu-
lating their corporate values statement. However, why is it that many of these values
statements can be bland, hollow and meaningless? They may lack credibility and have
the undesired effect of generating cynicism, alienation and insincerity. The corporate
values may stand for nothing with organisational members and a gulf emerges between
organisational rhetoric and reality. Instead of differentiating a company by clarifying its
identity and motivating employees, they may actually have the opposite effect of being
destructive to the organisation. For example, the relatively meaningless corporate
values of Enron are: Communication, Respect, Integrity and Excellence.

Pause for thought What do you see as potential problems in a values led organisation or a values led
society? How would you describe your own values? From your experience, have you had
encounters where your values have differed dramatically from your organisation’s
values? If so, please describe the nature of disparity in values and how you managed the
situation? Given that many organisations work in multicultural environments, what
would you consider to be some pitfalls in organisational values?

In contrast, real values are far from being bland and can be painful for organisations
as they constrain strategic and operational freedom as well as individual behaviour.
They demand constant monitoring and may leave executives open to criticism for
minor breaches. Organisational values fall into four categories and it is important to
avoid confusion between them (Lencioni 2002):

● Core values are deeply ingrained principles that guide a company’s actions. They are
never compromised for convenience or economic gain and often reflect the values of
the company founders.
● Aspirational values are values to support a new strategy. They are values that the
company needs to compete in the future but currently lacks.
● Permission-to-play values are the minimum behavioural and social standards
required of employees in the organisation.
● Accidental values are values that arise spontaneously over time. They reflect the
common interests or personalities of employees. They may be positive, such as inclu-
sivity of employees, or negative, such as an ingrained mistrust of management.

But what is the best way of developing a corporate values statement? The traditional
method of the HR departments conducting numerous surveys and focus groups to build
consensus is to be avoided because such consensus may integrate values that do not
belong to the organisation and give an equal weighting to all employee contributions.
For example, senior managers may feel that certain values espoused by certain employees
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Chapter 7 / Knowledge management and culture 193

may better belong to other organisations than their own. Hence, a more appropriate
response to values statement development is to form a small team of executives including
the chief executive to discuss values over a long time frame and provide enough time for
reflection of the consequences of these values in the workplace (Lencioni 2002). Core
values guide every action and decision that a company makes. They form the fabric
underlying every recruitment, selection, appraisal and rewards policy. If the core values
are poorly implemented, they can lead to the mistrust and cynicism of senior manage-
ment motives. Core values require constant vigilance to make explicit what a firm stands
for and to act as a rallying call to employees to guide their action. They can reinforce
individual commitment and willingness to give energy and loyalty to an organisation.
Individuals may make sacrifices and investments based on corporate values.
Values have considerable potency as they tend to link the social, cognitive and
behavioural dimensions of an organisation. The social aspects characterise the history
of experiences and understandings of groups within the organisation. The cognitive
aspects draw on the history and experiences of individuals within these groups and the
behavioural aspects show how these values affect individual actions and interactions
(Ashkanasy et al. 2000b).
Beliefs are another core manifestation of culture and concern what people think is
true. For example, some executives may believe that focusing organisational efforts on
efficiency is more likely to lead to greater organisational performance whereas others
may believe it is an innovation strategy. Sometimes values and beliefs may be hard to
distinguish, especially where the belief and value such as innovation are closely related.
Values could be considered as enduring beliefs where certain actions are considered
socially more appropriate than others (Rokeach 1973).
Our attitudes connect our beliefs and values with feelings (Brown 1998). They are a
learnt predisposition to act in a favourable or unfavourable manner to a given circumstance
and involve evaluations based on our feelings. Attitudes are more enduring than opinions
and have an impact on an individual’s motivation. They can result in prejudices and stereo-
types, such as the negative attitudes towards quality circles in the United States as workers
did not feel that sitting down in groups and talking about quality was beneficial.
Basic assumptions are the taken-for-granted solutions to particular problems (Brown
1998). They are the ‘theories-in-use’ (Argyris and Schon 1978) that perpetuate organisa-
tional routines and single-loop learning. Assumptions are unconsciously held, making
them difficult to confront or make explicit. They are highly complex interpretations
based on our beliefs, values and emotions. One typology of basic assumptions considers
five dimensions (Schein 1985a):

● whether an organisation dominates the external environment or is dominated by it;

● whether truth and reality are received dogma, rules and procedures, a consequence
of debate or what works;
● whether people are inherently lazy or self-motivated;
● whether ‘doing’ and work are more primary than ‘being’ and valuing employees’
private lives;
● whether human interaction is based on individualism or collectivism.
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194 Part 4 / Sharing knowledge

Typologies of organisational culture

In the language of organisational culture, it may be useful to provide classifications for
different configurations of culture found in organisations. It is not expected that organ-
isations will necessarily fall into these idealised types, but their characteristics may help
organisations understand their social environments. Two popular typologies of organi-
sational culture are provided below (Brown 1998; Deal and Kennedy 1982; Handy 1985;
Scholz 1987). The Handy typology has been very influential among cultural scholars and
suggests four types of culture (Handy 1985), as shown in Figure 7.3:

● Power cultures are characterised as a web with a person or small group of people at the
centre. There are few rules and people tend to act politically and are more concerned
about ends rather than means. Such organisations can react quickly to environmental
changes but may suffer from high turnover rates if suitable people are not recruited.
● Role cultures are characterised by bureaucracies where rules, procedures and job
descriptions tend to predominate. They are successful in stable environments but
may have difficulties adapting to more turbulent environments.
● Task cultures are characterised by project or matrix organisations that bring together
the appropriate resources and competence required for effective team functioning.
Mutual respect is based on ability rather than status or age. These cultures can be
highly effective for innovative projects but are less successful where there is an
emphasis on cost rationalisation and economies of scale.
● Person cultures are characterised by individual autonomy and collective action based
on fulfilling individual self-interests. Individuals decide on their work allocations
rather than it being a function of a central body. Examples of person cultures may be
found in academia, among architects or barristers.

Another popular cultural typology is based on the degree of risk in company activities
and the speed of feedback on actions and decisions, as shown in Figure 7.4 ( p. 195, Brown
1998; Deal and Kennedy 1982). In this framework, the four idealised cultural typologies are:

Power Culture Role Culture

Task Culture People Culture

Figure 7.3 Handy’s typology of culture (Handy 1985)

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Chapter 7 / Knowledge management and culture 195

● tough-guy, macho culture characterised by high risks and fast feedback on actions.
This culture focuses on speed and can lead to internal competition and tensions as
individuals take high risks. These cultures are predominantly uncooperative and can
lead to high staff turnover. Similarities with the power culture?;
● work-hard, play-hard culture characterised by low-risk but quick-feedback environ-
ments. These cultures can be fun and action oriented but may suffer from ‘quick-fix’
solutions and lack of reflection in crisis situations. Similar to a task culture?;
● bet-your-company culture characterised by high-risk but low-feedback environ-
ments. There is a greater tendency towards cooperative endeavours and producing
innovations in such cultures. Similarities with a people culture?;
● process cultures exist in low-risk and slow feedback environments. Due to the low
levels of feedback, the organisations are characterised by procedures, rules and hier-
archies. They can be threatening in highly changeable environments as they are
unable to respond quickly. Similarities with a role culture?

Measuring organisational culture

Despite the strong anthropological and sociological roots of cultural research, there
have been numerous attempts to conceptualise and quantify the construct of ‘organisa-
tional culture’. In this sense, the quantification of culture as an instrument has adopted
the traditional methodologies found in climate research. This relates to the more
observable and accessible levels of culture, the surface manifestations. If one accepts
the realist notion of organisational culture as a process (see Figure 7.1), is it feasible or
meaningful to quantify this process?
Currently, there is little consensus about the nature of the ‘organisational culture’
construct and its various subconstructs. Hence, a number of instruments have been
developed with a varying level of homage to existing theory. The types of surveys can
be classified into two categories (Ashkanasy et al. 2000a):

● Typing surveys classify organisations into particular typologies such as the Handy or
Deal and Kennedy ones shown above. Such instruments attempt to generate a
number of organisational culture ‘types’ that have certain behaviours and values

Bet-your- Tough-guy,
company macho
High
(people?) (power?)
Degree
culture culture
of risk in
company
Work-hard,
activities Process
play-hard
Low (role?)
(task?)
culture
culture

Low High
Speed of feedback
on actions and decisions
Figure 7.4 Deal and Kennedy’s typology of culture
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196 Part 4 / Sharing knowledge

Self-actualising norms
Humanistic-encouraging norms
Concern for Conventional norms CONSTRUCTIVE
people or tasks Dependent norms CULTURE
Power norms
Competitive norms
PASSIVE/
DEFENSIVE
CULTURE
Achievement norms
Affiliative norms
Behaviour driven by AGGRESSIVE/
Approval norms
self-actualisation DEFENSIVE
Avoidance norms
or security needs CULTURE
Oppositional norms
Perfectionistic norms

SUBCONSTRUCTS PROFILE SURVEY TYPING SURVEY

Figure 7.5 The typing and profiling nature of the organisational culture inventory

linked with them. These surveys can provide senior managers with snapshots on
their current positions and their desired outcomes from a cultural change manage-
ment programme. The drawbacks with these typing surveys is that they assume that
organisations fit neatly into strictly defined categories rather than conforming to a
number of different types that demonstrate their uniqueness. The different types do
not assume a continuity between the different typologies.
● Profiling surveys aim to develop a profile of the organisation on multiple categories of
norms, behaviours and values. There are three types of profiling surveys, namely
effectiveness surveys, descriptive surveys and fit profiles. Effectiveness surveys tend to
assess organisational values associated with high levels of performance. Descriptive
surveys purely measure organisational values. Fit profiles tend to assess the level of fit
between an individual and an organisation.

Organisational culture instruments can be used in a variety of contexts: to monitor

and evaluate organisational change, to identify cultures of high-performing teams and
to facilitate mergers and acquisitions. There are numerous culture instruments available
but few that meet the acid test of high levels of reliability and show clear evidence of
validity (convergent, discriminant, nomological and known groups). One such instru-
ment that meets these rigours of instrument development and is widely used is the
‘organisational culture inventory’ (OCI) (Cooke and Lafferty 1987). The instrument is
based on two subconstructs of ‘concern for people or tasks’ and ‘behaviour driven by
security of self-actualisation needs’, as shown in Figure 7.5. The instrument provides a
typing survey in terms of three categories of culture as well as a profile survey of the
organisation against a variety of norms. The twelve norms for any organisation can be
plotted on an OCI circumplex, as shown in Figure 7.6 (p. 197), and the descriptions of
each norm are given below.
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Chapter 7 / Knowledge management and culture 197

SATISFACTION NEEDS
CO NST RU
C T IV
12 E ST
YLE
S
11 SELF-ACTUALISING H UM
AN I 1
T STIC
EN
EM -EN
H IE V CO
UR
AC AG
IN
G
IC
ST

AF
10 2
NI

FIL
TI O

IAT
FEC

IV E
PER

P EO P LE O
TASK ORIENTATION

COMPETITIVE

APPROVAL
STYLES

RIENTATION
9 3
ENSIVE F
/ DE

L
NA
VE

TI O
I

PO
ESS

EN
GR

ER

8 4

NV
AG

ES
CO

YL
ST
VE
OP
PO NT SI
EN
SI T
IO N DE EF
NA PE /D
L DE E
7 5 S SIV
AVOIDA NCE PA

SECURITY NEEDS

Figure 7.6 Organizational culture inventory circumplex.

Copyright 1987, 1994 by Human Synergistics, Inc. All Rights Reserved.
Reproduced by permission

◗ Description of the twelve OCI styles

The following text is from Organizational Culture Inventory by R.A. Cooke and J.C.
Lafferty, 1983, 1986, 1987, 1989, Plymouth, Michigan, USA: Human Synergistics.
Copyright 1989 by Human Synergistics, Inc. Adapted by permission.
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198 Part 4 / Sharing knowledge

Constructive norms (styles promoting satisfaction behaviours)

Achievement: an achievement culture characterises organisations that do things well
and value members who set and accomplish their own goals. Members are expected to
set challenging but realistic goals, establish plans to reach those goals, and pursue them
with enthusiasm. (Pursuing a standard of excellence)
Self-actualising: a self-actualising culture characterises organisations that value cre-
ativity, quality over quantity, and both task accomplishment and individual growth.
Members are encouraged to gain enjoyment from their work, develop themselves, and
take on new and interesting activities. (Thinking in unique and independent ways)
Humanistic-encouraging: a humanistic-encouraging culture characterises organisations
that are managed in a participative and person-centred way. Members are expected to
be supportive, constructive and open to influence in their dealings with one another.
(Helping others to grow and develop)
Affiliative: an affiliative culture characterises organisations that place a high priority on
constructive interpersonal relationships. Members are expected to be friendly, open, and
sensitive to the satisfaction of their work group. (Dealing with others in a friendly way)

Passive-defensive norms (styles promoting people-security behaviours)

Approval: an approval culture describes organisations in which conflicts are avoided
and interpersonal relationships are pleasant – at least superficially. Members feel that they
should agree with, gain approval of, and be liked by others. (‘Going along’ with others)
Conventional: a conventional culture is descriptive of organisations that are conserva-
tive, traditional and bureaucratically controlled. Members are expected to conform,
follow the rules and make a good impression. (Always following policies and practices)
Dependent: a dependent culture is descriptive of organisations that are hierarchically
controlled and non-participative. Centralised decision making in such organisations
leads members to do only what they are told and to clear all decisions with superiors.
(Pleasing those in positions of authority)
Avoidance: an avoidance culture characterises organisations that fail to reward success
but nevertheless punish mistakes. This negative reward system leads members to shift
responsibilities to others and avoid any possibility of being blamed for a mistake.
(Waiting for others to act first)

Aggressive-defensive norms (styles promoting task-security behaviours)

Oppositional: an oppositional culture describes organisations in which confrontation
and negativism are rewarded. Members gain status and influence by being critical and
thus are reinforced to oppose the ideas of others. (Pointing out flaws)
Power: a power culture is descriptive of non-participative organisations structured on
the basis of authority inherent in members’ positions. Members believe they will be
rewarded for taking charge, controlling subordinates and, at the same time, being
responsive to the demands of superiors. (Building up one’s power base)
Competitive: a competitive culture is one in which winning is valued and members are
rewarded for outperforming one another. Members operate in a ‘win–lose’ framework and
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Chapter 7 / Knowledge management and culture 199

believe they must work against (rather than with) their peers to be noticed. (Turning
the job into a contest)
Perfectionistic: a perfectionistic culture characterises organisations in which perfec-
tionism, persistence and hard work are valued. Members feel they must avoid any
mistake, keep track of everything and work long hours to attain narrowly defined
objectives. (Doing things perfectly)
In international contexts and particularly among multinational corporations, there
has been considerable interest in the role of national cultures on organisational
cultures. For example, do ‘American organisational cultures’ or ‘Japanese organisational
cultures’ lead to greater effectiveness? One seminal study in this area conducted a
descriptive survey of national culture across 40 nations and derived distinctions
between national cultures along four value dimensions (Hofstede 1980). The theoretical
basis for this study arises from a psychological, anthropological and sociological review
of national character (Inkeles and Levinson 1969). The four value dimensions that dif-
ferentiate national character are (Hofstede 1980):

● power distance – the extent to which the less powerful members of organisations and
institutions accept and expect that power is distributed unequally. (Example: high power
distance – Malaysia and Venezuela; low power distance – Sweden, New Zealand);
● individualism versus collectivism – the extent to which individuals are integrated into groups.
(Example: individualist – USA and Netherlands; collectivist – Ecuador and Indonesia);
● masculinity versus femininity – assertiveness and competitiveness versus modesty and
caring. (Example: Masculine – Japan and Mexico; feminine – Norway and Costa Rica);
● uncertainty avoidance – intolerance for uncertainty and ambiguity. (Example: high
uncertainty avoidance – Greece and Guatemala; low uncertainty avoidance –
Singapore and Denmark).

Reflect on situations where you have had cultural misunderstandings among friends or Pause for thought
colleagues at work. How did you manage those situations and what lessons did you
learn? How could some of those misunderstandings have been avoided and better
cultural understanding be promoted in your organisation?

Creating knowledge-sharing cultures

Many executives aspire to develop knowledge-sharing cultures where knowledge is shared
easily among organisational members through social and electronic networks. This aspira-
tion is also a primary assumption behind the knowledge management literature that
knowledge-sharing cultures are more conducive to knowledge creation and enhanced per-
formance. But how do we turn this aspirational value of knowledge sharing into a core
value? Let’s assume that the culture in many organisations may be hostile to knowledge
sharing and more conducive to knowledge hoarding. For example, ‘power’ or ‘tough-guy’
cultures may be highly political and uncooperative environments. What interventions are
likely to help senior managers in these circumstances steer a clear path in managing cultural
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200 Part 4 / Sharing knowledge

Tacit Tacit
knowledge knowledge

Socialisation Externalisation

Tacit Originating Interacting Explicit

knowledge Ba Ba knowledge

Tacit Internalisation Combination Explicit

knowledge knowledge
Exercising Cyber
Ba Ba

Explicit Explicit
knowledge knowledge

Figure 7.7 Knowledge conversion and characteristics of ‘Ba’ (Nonaka and Konno 1998)

change? (See next chapter.) If the interventions are successful, have we unintentionally
changed strong effective cultures with little consideration of their strategic impact?
Are there dangers in assuming that knowledge-sharing cultures are effective in all situa-
tions? If we follow this line of reasoning, one could argue that ultimately organisations
need to move towards idealised forms of cultures such as task or person cultures that pro-
mote knowledge sharing. However, we know that there is a diversity of cultures that are
equally effective in different industries. The reality is that cultural research in this area is
limited and has not begun to address the complexity of managing aspirational values of
knowledge sharing and their likely impact on the organisation. If such values are man-
aged wrongly, they may appear hollow, lack credibility and generate widespread
cynicism. Organisational members will pay lip-service to these perceived management
fads and the interventions will fail to win over ‘hearts and minds’.
Our current understanding of developing cultures for knowledge creation is based on the
deployment of artefacts (Nonaka and Konno 1998), the promotion of certain values (von
Krough 1999), a healthy cultural dialectic (Jashapara 2003) and certain prescriptions based
on a few case studies (McDermott and O’Dell 2001; Newell et al. 2002). The deployment of
artefacts, ‘Ba’ or spaces builds on an earlier ‘SECI’ model of knowledge conversion between
different forms of tacit and explicit knowledge (Nonaka 1991), as shown in Figure 7.7.
The concept of ‘Ba’ is new to many western palettes and translates to a place or space in
Japanese. This artefact of space or ‘Ba’ can be physical, virtual or mental. On first impres-
sions, this model is examining the surface manifestations of culture in terms of artefacts.
The model does not suggest whether the ‘mental spaces’ of ‘Ba’ go more deeply and mani-
fest as attitudes, beliefs and values. There are four types of ‘Ba’ which tend to facilitate the
different aspects of the knowledge conversion process (Nonaka and Konno 1998):

● Socialisation involves sharing tacit knowledge between individuals. Tacit knowledge

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Chapter 7 / Knowledge management and culture 201

is considered as more than ‘know how’ and can include intuitions, hunches and
insights. It is deeply embedded in a person’s values and beliefs. The space that con-
tributes to socialisation is ‘Originating Ba’ where individuals share feelings,
emotions, experiences and mental models. The values that support the transfer of
this tacit knowledge are care, love, trust and commitment.
● Externalisation involves the articulation of tacit into explicit knowledge. This conver-
sion normally occurs through dialogue and the use of figurative language, metaphors,
narratives, images and creative inference. The space required to facilitate this knowledge
conversion is ‘Interacting Ba’. The main characteristic of this artefact is dialogue where
individuals share their mental models and reflect and analyse their own understandings.
● Combination involves conversion of explicit knowledge into more complex explicit
forms. This may arise from capturing, collecting, sorting, editing and integrating
new explicit knowledge. Such conversions are promoted through ‘Cyber Ba’. These
cyber spaces encourage the documentation of knowledge and the use of databases
and groupware tools.
● Internalisation relies on converting explicit into tacit knowledge. This usually occurs
through experience (learning-by-doing) and training. The spaces that encourage
such conversions are ‘Exercising Ba’, characterised by reflection through learning,
training and mentoring.

A development of the ‘Originating Ba’ artefact promoting socialisation is the sugges-

tion that the primary value in knowledge creation is ‘care’ (von Krough 1998). Care is
characterised by considerable mutual trust, active empathy, access to help, lenience in
judgement and courage. Sounds like love but without the organisational embarrass-
ment! The emphasis is on organisations to cherish the value of care/love at all costs. If
this value is not nurtured, the likely consequences are the emergence of greater levels
of fear where members reinforce routines and scare stories, abandon good ideas and
stunt any transformations. The ways to cultivate care are:

● incentive schemes that encourage care-related behaviour;

● mentoring programmes to encourage senior members to transfer their knowledge;
● training programmes in care behaviour;
● project debriefings with sufficient time for reflection;
● social events to improve organisational relationships.

The assumption from the ‘care’ perspective is that supportive or cooperative cultures
are more likely to result in knowledge creation. This view is challenged as highly coop-
erative or supportive environments (such as a kibbutz) can discourage change and if
organisational members perceive a need for change, they may be forced to challenge
the dominant ideology which breeds politics and fear. Instead, research shows that
effective organisations tend to operate in a ‘zone of knowledge creation’ in a dialectic
between the internal forces of cooperation and competition (Jashapara 2003), as shown
in Figure 7.8 (p. 202). Extreme forms of these idealised cultures are likely to suppress
the very knowledge they are trying to create. In this conception, the dialectic of knowl-
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202 Part 4 / Sharing knowledge

COOPERATIVE
CULTURE

ZONE OF
KNOWLEDGE
CREATION

COMPETITIVE
CULTURE

Figure 7.8 The zone of knowledge creation and the dialectic between cooperative and
competitive cultures

edge-sharing cultures can be viewed as a continual struggle by groups of organisational

members to impose their values and identities on the role of others (Carroll 1995).
Efforts in cultural engineering are often doomed to fail if they do not support the

Pause for thought Reflect on your experiences of knowledge sharing. What social environments have made
you feel more comfortable about sharing your knowledge? Do you think that incentives
would help you share knowledge more easily in your organisation? If so, what form do
you think these incentives should take? Are there aspects of your knowledge base that
you would be unwilling to share under any circumstance? If so, can you elaborate on
the unique quality of this prized knowledge asset?

more deeply held organisational values and assumptions. An alternative approach

adopted by many effective companies is to build knowledge management interventions
that fit the embedded culture. In some organisations, such as PricewaterhouseCoopers
(PwC) and American Management Systems (AMS), knowledge sharing was explicit and
directly informed corporate strategy. Clear knowledge-sharing programmes were devel-
oped including reward and recognition initiatives, and distinct roles and responsibilities
related to knowledge sharing, such as the appointment of a chief knowledge officer. In
other organisations like Ford and Lotus Development, knowledge sharing was more
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Chapter 7 / Knowledge management and culture 203

implicitly embedded into everyday routines and projects. There were different degrees of
formal, informal and electronic networks to promote knowledge sharing. A number of
lessons arise from different attempts to create a knowledge-sharing culture (McDermott
and O’Dell 2001; Newell et al. 2002):

● make a visible connection between sharing knowledge and practical business goals;
● match the style of the organisation to the intervention (e.g. developing artefacts
such as social events, language and websites);
● promote appropriate reward and recognition interventions;
● provide adequate resources to encourage human networks of knowledge sharing
such as time to share ideas and information in communities of practice;
● try to link knowledge sharing with widely and deeply held core values rather than
aspirational values;
● encourage ‘boundary-spanning’ individuals who can translate knowledge and expe-
riences from one group to another;
● support a committed project champion who can enthuse and motivate others with
the knowledge-sharing initiative. Bring together people in the organisation who
already share ideas and knowledge.

Cultural stickiness: developing communities of practice

Explicit knowledge is relatively easy to codify, store and retrieve as knowledge objects
using traditional technologies. However, how do we tackle the externalisation, sharing
and integration of tacit knowledge that may be embedded within the minds of organi-
sational members? The holy grail of competitive advantage may be closely related to
exploiting the cognitive and social aspects of tacit knowledge. It is often through dia-
logue and interaction with others that we are able to contact the inner depths of our
tacit knowledge and generate new ideas and insights. Many organisations have recog-
nised the intrinsic value of water coolers, coffee machines, subsidised canteens and
common rooms as being instrumental in facilitating this creative process.
Another approach to cultivating tacit knowledge that moves beyond organisational
artefacts is the notion of ‘communities of practice’ (Brown and Duguid 1991; Lave and
Wenger 1991). Communities of practice are informal, self-selecting groups that are
open ended, without any deadlines or deliverables. They exist to serve a number of
cognitive and social interests, set their own agendas and elect their own leadership.
Communities of practice can be defined as follows (Wenger et al. 2002):

‘Communities of practice are groups of people who share a concern, a set of problems, or
a passion about a topic, and who deepen their knowledge and expertise in this area by
interacting on an ongoing basis.’

The World Bank sees communities of practice as the main component of its knowledge
management strategy in its attempts to become a ‘knowledge bank’. In this context, tacit
knowledge is acknowledged as embedded in organisational practice and interactions
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204 Part 4 / Sharing knowledge

rather than simply in the domain of an individual’s head. Communities of practice can
also exist online as communities of transaction (buying and selling), communities of
interest (related to a topic), role-playing communities and communities of relationships
(around a shared life experience) (Newell et al. 2002). But what are the characteristics of
communities of practice that distinguish them from other organisational groupings? A
comparison of different groupings in organisations is shown in Table 7.2.
In formal groupings, the common approach to team learning is to adopt tools such

Table 7.2 Characteristics of formal and informal groupings in organisations (Wenger and
Snyder 2000)
FORMAL GROUPINGS INFORMAL GROUPINGS
‘CANONICAL PRACTICE’ ‘NON-CANONICAL PRACTICE’
Work group Project team Informal network Community of
practice
What is their To deliver a To accomplish To collect and To develop members’
purpose? product or a specific task pass on business capabilities; to
service information build and exchange
knowledge
Who belongs? Everyone who Employees Friends and Members who
reports to group’s assigned by business select themselves
manager senior acquaintances
management
What holds it Job requirements Project’s Mutual needs Passion, commitment
together? and common goals milestones and identification
and goals with the group’s
expertise
How long does Until the next Until the project As long as people As long as there is
it last? reorganisation is completed have a reason interest in
to connect maintaining
the group

as brainstorming or cognitive mapping to encourage dialogue and discussion. However,

the success of such approaches may often depend on the motivations (or lack of) of
team members, their composition and power relations underlying the team and organi-
sational culture. For example, the use of ‘quality circles’ was highly successful in Japan
where team members got together regularly to share problems and discuss ways of
improving work practices. However, the same concept failed to gain acceptance in the
US or the UK due to major cultural reservations about discussing problems.
The major interest in communities of practice is that they provide significant bene-
fits to organisations than do more formalised forms of activity. On the social side, they
provide individuals with a sense of identity, confidence and trust through meeting like-
minded individuals who share similar problems and outlooks. In terms of tacit
knowledge, they provide a forum to facilitate knowledge creation through externalisa-
tion of tacit knowledge, the sharing of knowledge and increasing knowledge flows,
enhanced creativity and integration of collective knowledge. Some direct benefits of
communities of practice in organisations are (Wenger and Snyder 2000):
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Chapter 7 / Knowledge management and culture 205

● they help drive strategy;

● they start new lines of business;
● they solve problems quickly;
● they transfer best practices;
● they develop professional skills;
● they help companies recruit and retain talent.

The informal interactions of organisational members in communities of practice are

considered to encourage reflection of practice rather than simply reworking everyday
processes. People come together from similar backgrounds from around the organisa-
tion with a passion and interest in improving practice. Communities of practice can
allow organisational members to think outside the box and to question organisational
routines where appropriate. This does not necessarily mean that such questioning will
always lead to radical innovation, dynamic capabilities or double-loop learning (Swan
et al. 2002; Zollo and Winter 2002).
The commonly cited example of communities of practice is a network of technical
reps at Xerox who got together regularly over breakfast, lunch and coffee breaks to share
their ‘war stories’ about problems in servicing photocopiers (Orr 1996). Stories were cen-
tral to sharing such tacit knowledge and making sense of the collective knowledge. A
repertoire of stories formed the collective knowledge over time which was greater than
anything one could find in organisational repair manuals. In fact, repair manuals on
their own would be incapable of solving many of the problems encountered by these
reps. There was banter in their dialogue, laughing at mistakes and frequent questioning
of the storyteller to test their own understanding. One story recounted two highly com-
petent reps addressing a near impossible situation that defied all standard procedures. A
dialogue pursued between these two reps all afternoon where they went through their
reasoning associated with the collective knowledge and stories until they were able to
narrow down the potential causes and solve the problem through trial and error. This
story of course went back into the collective knowledge and psyche of the reps.

Reflect on different stories you may have heard in your organisation over the past few Pause for thought
months. Describe some of the stories that are foremost in your mind. What role do these
stories play in your working life? For example, do they help you to work much better? If
so, what aspects of stories have you found useful? How important is the storyteller and
can you describe their role in your organisation? How far do these stories make you feel
like a communal part of the organisation?

The role of storytelling and narratives for embedding tacit knowledge socially in a
community of practice is shown in Figure 7.9 (p. 206). Each story has a connection
with certain ideas, lessons and best practice. These ideas relate to different actors in the
community of practice who are joined together by strong and weak ties. It is these link-
ages that provide the embedding of collective tacit knowledge and make it ‘sticky’ (von
Hippel 1994) as it is difficult for other organisations to imitate the complexity of the social
and cognitive linkages. This can become a potential source of competitive advantage as it
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206 Part 4 / Sharing knowledge

COGNITIVE SOCIAL
EMBEDDING Strong EMBEDDING
ties Boundary-
spanning
individual

Weak
Ideas ties

Stories

Figure 7.9 The ontology of storytelling

is difficult to commodify the ‘sticky’ knowledge. Stories are self-perpetuating, creating

knowledge that reinforces and renews itself through these connections embedded in
work practice. Stories are a powerful way of understanding what happened in a sequence
of events and the causes of why they happened (Brown and Duguid 2000). They allow
preservation of knowledge and its subsequent diagnosis (Brown and Duguid 1991).
The use of stories and narratives for embedding knowledge in work practice may be con-
sidered as a ‘perspective making’ (Boland and Tenkasi 1995). This is the process by which a
community of practice develops and strengthens its knowledge domain and practices. But
how do communities of practice facilitate radical innovation or double-loop learning?
Many commentators suggest a need for some interaction between different communities of
practice as isolated communities can become self-reinforcing and self-deluding, turning
core competencies into core rigidities (Blacker 1995; Swan et al. 2002). Communication
that improves a community’s ability to take the knowledge of another community into
account is known as ‘perspective taking’ (Boland and Tenkasi 1995). Radical innovation
may require embedding new knowledge and work practices and, at the same time, discard-
ing obsolete practices and routines. The sharing of this new knowledge between
communities can be promoted in a number of ways (Brown and Duguid 1998):

● Organisational translators can frame the interests of one community in terms of

another’s perspective. They may be external mediators or consultants.
● Knowledge brokers or boundary-spanning individuals can participate in several com-
munities. The strength of their ‘weak ties’ may help facilitate knowledge flows
between communities.
● Boundary objects such as documents, contracts and architectural plans may coordinate
links between communities who may view the boundary objects from many different
perspectives. These boundary objects may also include the use of powerful metaphors.
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Chapter 7 / Knowledge management and culture 207

NON-CANONICAL CANONICAL
(INFORMAL) PRACTICE (FORMAL) PRACTICE

Community of Communities Networks

practice led of practice of practice

Communities Networks Network of

of practice of practice practice led

Figure 7.10 Communities of practice and networks of practice

In many organisations, some members may be engaged in professional or occupa-

tional networks outside the organisation. Such communities or ‘networks of practice’ are
different from traditional communities of practice as they are not self-selecting but rely
on formal institutional arrangements such as examinations to control membership.
They engender shared identity between professionals or occupational groups and could
be characterised as an intermediate form between canonical and non-canonical practice
(see Table 7.1). When communities of practice are composed more of professional net-
works or networks of practice as shown in Figure 7.10, the issue of power relations
between network members and managers becomes more prominent. Communities of
practice cease to fulfil many of the emancipatory needs of members as they pursue a
greater managerial or professional agenda (Swan et al. 2002). This breeds organisational
politics due to competing interests and power struggles requiring more conventional
interventions such as negotiation and persuasion of community members.
There are a number of measures that organisations can actively take to cultivate
rather than constrain communities of practice. Too much control and intervention
may have adverse consequences on their development. The following design features
are recommended as enhancing communities of practice (Wenger 2000):

● events to bring the community together and tuned to its sense of purpose;
● leadership – use of multiple leaders such as ‘community coordinator’, thought lead-
ers and pioneers;
● connectivity – brokering relationships between people to enhance trust and generate
dialogue;
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208 Part 4 / Sharing knowledge

● membership – critical mass of members but not too large to dilute participation or
interest;
● learning projects – taking responsibility for learning agenda;
● artefacts – producing documents, tools, stories, symbols and websites.

CASE STUDY
Knowledge ecology at Xerox FT
It is refreshing to find someone in Silicon Valley 3333 Coyote Hill Road. Less recognised is the work
who thinks that most information technology sucks. done by Mr Brown and others on learning, cognition
But John Seely Brown, chief scientist at Xerox and innovation. He notes, for example, that modern
Corporation and former director of its Palo Alto working practices often fragment the ‘communities
Research Centre (Parc), is not your archetypal techie. of practice’ that develop in companies. Professionals
Mr Brown has spent the best part of 30 years end up working in an endless stream of project teams
thinking about how technology works and how it is with a lifespan of a few weeks or months. Or process
used. He has little time for the trendy ‘knowledge re-engineering demands that field engineers work
management’ initiatives inflicted by many compa- from home rather than in a central office or depot.
nies on their employees. ‘Most knowledge ‘Formal processes may structure the work but it is
management is information management relabelled,’ communities of practice that do the work,’ says Mr
he says. ‘Usually there is no attempt to gain a deep Brown. ‘So how do we work as part of a cross-func-
understanding of how tacit knowledge works within tional taskforce while maintaining a sense of
an organisation, how the social practices compare presence to our specialist community?’
with the professional practices, or what communities Thankfully, he comes equipped with answers to
of practice exist within the enterprise. These ques- such teasers. New technologies such as instant mes-
tions have to do with how people really do work.’ saging, videoconferencing and workgroup software
This comment contains the marrow of the very can help companies repair the technologically
large bone that Mr Brown has to pick with how inspired vandalism done to their social fabric over the
technology is deployed. Myopic focus on business past decade. But, as ever, the technology will help
processes, how they can be streamlined and auto- only if the executive mindset is correct. Executives
mated using computers, means managers have lost who continue to think of their organisations as
sight of much messy, informal, value-creating work. machines to be controlled and directed will miss the
‘CEOs talk a lot about value when most of them point. ‘What you really want is an organisation with a
don’t see the value being created in their own work- different metaphor – a knowledge ecology. Think of
place. They see the movement of matter, not the your organisation as an ecology and you start to think
creation of ideas,’ he says. about diversity, cross-pollination of ideas, how social
Conversation with Mr Brown is like riding on a capital is created,’ he says, crossing the room to draw
supercharged Ferris wheel. You see a long way from another diagram on the whiteboard.
many perspectives, and end up feeling exhilarated and The bigger technological change Mr Brown sees
giddy. It is the sheer range of references that leaves his on the near-horizon is the emergence of a new,
interlocutors dizzy. Who else would pack the Toyota modular method of building software known as web
production system, Claude Levi-Strauss and instant services. The impact, he says, could be as profound
messaging software into a single train of thought? as anything since the dawn of commercial comput-
The breadth is not just for show. From its founda- ing in the 1950s. ‘The 21st century will bring about
tion in the early 1970s, researchers at Xerox Parc the reinvention of Adam Smith,’ he says. ‘In the
were encouraged to apply pioneering technology to industrial age he talked about the power of speciali-
how people think, work and learn. This brought to sation. Now we have a platform to bring together
Palo Alto not only hardcore electronic engineers but specialised services from all over. We have a chance
also, in 1978, the young Mr Brown, who had a back- to look for radical specialisation and all the produc-
ground in artificial intelligence and psychology. tivity enhancements that flow from that.’
This mix of talents produced some important The logic behind this is that computers have
breakthroughs. The modern graphical user interface, imposed a kind of tyranny on companies. First, get-
ethernet networking and the laser printer were devel- ting systems to talk with one another within
oped in the modernist glass-and-concrete building at corporations has proved so difficult that giant
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Chapter 7 / Knowledge management and culture 209

‘enterprise resource planning’ systems have been Midwest. Web services will let you discover and
imposed to tie everything together. Yet these sys- integrate with specialist service providers.’
tems are so cumbersome and difficult to change that It is a beguiling vision. The doubt is that busi-
the structure of the enterprise is, in effect, set in ness people have been burnt before by promises
stone. Second, getting systems to talk to one another
of flexibility, interoperability and plug-and-play
across corporate boundaries is so difficult that com-
computing. This time, however, the whole soft-
panies have become highly selective about which
suppliers they deal with. ware industry appears to be drinking the same
Web services, it is claimed, will break this alphabet soup of protocols that underlie web
tyranny by providing a lingua franca for computers, services. Moreover, progress can be made via
no matter which programming language, operating small steps, pilot projects, trial and error.
Source: Article by Simon London and John Seely Brown,
system or microprocessor architecture provides the
Financial Times, 6 September 2002
motive force. Mr Brown enthuses: ‘We’ve been in a
position where IT systems are like monolithic
Questions
blocks of concrete and are used as the reason for
1 If a manager is contributing scarce resources such as
not changing anything. Now here is a technology
people’s time or web services to a community of
that can get you out of monolithic thinking. You practice, how can these resources be evaluated and
can start to think about just-in-time outsourcing. effectively managed? When does a manger draw a
You don’t have to buy from just one provider line under these informal approaches?
because the systems integration is so difficult. You 2 Knowledge ecologies may suffer from lack of
can start to pick whatever provider is best for the participation. How can organisations engage
particular subservice you need. Think about risk members to participate and share their knowledge
in communities of practice?
assessment in a financial services company. The
3 How can communities of practice provide ‘just-in-
best provider for large buildings in New York is time’ knowledge?
probably not the best for small buildings in the

Summary
This chapter has elaborated five areas that need to be considered when developing a
knowledge-sharing culture and communities of practice:

1 The importance of norms, artefacts and symbols in providing explicit clues to a

given culture and how knowledge management interventions can be aligned to the
prevailing culture.

2 The development of core values that guide every action and decision in a company
to prevent them from becoming meaningless and generating cynicism with senior
management.

3 The different approaches to measuring culture fall into typing surveys or profiling
surveys such as effectiveness surveys, descriptive surveys and fit profiles.

4 The debates related to knowledge-sharing cultures arising from the promotion of dif-
ferent forms of ‘Ba’ (space) in the knowledge-conversion process or the development of
cooperative cultures through the values of ‘care’ or the result of an interplay or dialectic
between cooperative and competitive cultures.
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210 Part 4 / Sharing knowledge

5 Communities of practice as informal, self-selecting groups that are open ended, without
any deliverables. They play an important role in embedding tacit knowledge cognitively
and socially through storytelling and narratives shared regularly between actors.

QUESTIONS FOR FURTHER THOUGHT

1 If culture is so difficult to change let alone understand, why should managers concern
themselves with such a construct?
2 Communities of practice place considerable emphasis on stories and narratives for embedding
tacit knowledge. What are the dangers in the current literature for not considering other surface
manifestations of culture in communities of practice?
3 What issues need to be considered when the culture of different communities of practice may
differ significantly from the dominant organisational culture?
4 Is radical innovation or double-loop learning asking for cultural change when its tenets are to
question the underlying assumptions and values in an organisations?
5 What is the relevance of measuring organisational or group cultures?
6 How does the concept of ‘Ba’ add to the SECI model of knowledge conversion?
7 In what ways could the development of values of ‘care’ be detrimental to an organisation?
8 If communities of practice are the main component of a firm’s knowledge management strategy,
how do you evaluate them?
9 What are the advantages and disadvantages of online communities of practice or threaded
discussion groups?
10 How do you discard obsolete practices and routines that are embedded in a community of practice?

Further reading
1 Brown 1998 is an excellent book providing a grounding and elaboration of the organisa-
tional culture literature. It has a clear and easily accessible style.
2 Ashkanasy, Wilderom and Peterson 2000b provides a more heavyweight elicitation of the
current debates in the organisational culture and climate literature. This may be useful if you
wish to conduct a more in-depth study of this area.
3 Wenger, McDermott, and Snyder 2002 provides an erudite background to the different
approaches related to communities of practice.

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Ashkanasy, N. M., Broadfoot, L. E. and Falkus, S. (2000a) ‘Questionnaire measures of organi-
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Wilderom and M. F. Peterson, eds, Sage Publications, Thousand Oaks, CA.
Ashkanasy, N. M., Wilderom, C. P. M. and Peterson, M. F. (2000b) Handbook of Organizational
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Newell, S., Robertson, M., Scarbrough, H. and Swan, J. (2002) Managing Knowledge Work,
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Chapter 8
Change management

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● understand the different dimensions and interventions that contribute to successful change
management;
● successfully apply the different leadership and human resource interventions to a knowledge
management initiative;
● analyse the training and development needs at individual and job level in a change management
process;
● explain the critical factors that will lead to the successful implementation of knowledge
management practices.

MANAGEMENT ISSUES

The use and application of knowledge management systems implies these questions for managers:
● What are the most effective ways of implementing a knowledge management initiative?
● How can knowledge management programmes be managed with moderate levels of support from
senior managers?
● How can resistance to change be minimised?

Links to other chapters

Chapter 3 examines the different forms of learning linked with the change process resulting in
organisational routines and dynamic capabilities.
Chapter 6 concerns strategic management of knowledge management and institutional practices
linked with change and everyday learning.
Chapter 7 explores the nature of culture and climate rather than the effective management of
cultural change programmes.
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214 Part 4 / Sharing knowledge

OPENING VIGNETTE

War for talent FT

Do you hear the guns? How many casualties have you The rest of the organisation will feel demoralised
sustained and how many have you inflicted? There is and will make even less effort than before.
a corporate war on. It is a battle for talent and if you The thinking behind the ‘war for talent’ is at odds
do not know how to fight, telephone security down- with another prevailing management fashion:
stairs and tell them to run up the white flag. knowledge management. Stripped of the verbiage
The military metaphor is several years old. In that invariably accompanies it, knowledge manage-
1998, a group of McKinsey consultants sounded ‘a ment means spreading best practice throughout the
call to arms’. They said: ‘Companies are about to be organisation. It recognises that knowledge is found
engaged in a war for senior executive talent that will in all parts of the company. Employees who deal
remain a defining characteristic of their competitive directly with customers and machines may be low in
landscape for decades to come.’ the hierarchy but they often know more than
The latest word from the front is that the smoke anyone else. Prof Pfeffer particularly admires
of battle has grown thicker. A dispatch in the most Toyota’s ability to use the knowledge of all its
recent issue of the McKinsey Quarterly says: ‘The war people. He argues that the Japanese manufacturer’s
for management talent is intensifying dramatically.’ achievements cannot be replicated by companies
We can laugh but it’s all true, isn’t it? There is a that are preoccupied with the war for talent. ‘If you
shortage of talented staff and if you want to survive, hire the best people who think (or even know) they
you had better go out and recruit the best quickly. are the best, how likely are they to be willing to
As the magazine Fast Company said last year: ‘It’s listen and learn? How likely are they to treat others
hard to argue with the idea that the company with not as “smart” as they are with respect, as opposed
the best talent wins.’ to the contempt more often seen? One of the
In fact, it is easy to argue with the idea, says geniuses of Toyota was recognising that the people
Jeffrey Pfeffer, professor of organisational behaviour on the assembly line really knew something about
at Stanford Business School. The idea of a war for automobile assembly, regardless of the formal
talent is dangerous nonsense. It is not only that the degrees and their ability to talk smoothly.’
military analogy is inappropriate. ‘Even fighting the The ‘war for talent’ is a distraction from compa-
war for talent may be hazardous to an organisation’s nies’ real task: devising systems that get the most
health and detrimental to doing the things that will out of everyone. ‘As W. Edwards Deming and the
make it successful,’ Prof Pfeffer argues in a recent quality movement pointed out a long time ago – a
paper. lesson that we clearly need to relearn – what is
To understand what is wrong with the ‘war for important is not so much individual motivation or
talent’, think about Xerox, a company fallen on ability but the attributes of the system in which the
hard times. Is Xerox’s problem that it lacks talent? person works,’ Prof Pfeffer says.
Of course not. Xerox invented many of the tools of Is he right? Of course he is. The real difficulty is
the digital age. What Xerox lacks is not talent but finding the managers who can make that system work.
the management, systems and culture to exploit it. There are not many of them around. But they are just
The search for talent inevitably focuses on indi- as likely to be lurking in your own company as in
viduals, Prof Pfeffer says. And they are usually someone else’s. If you can find them, they will already
individuals who work for someone else. When you know your own organisation inside out and will proba-
recruit allegedly talented individuals, you set them bly have spent years brooding on how to make it
apart from the people you already employ. You have better. And they will be a lot cheaper than outsiders.
to pay the new recruits more than the rest of your Source: Article by Michael Skapiner, Financial Times, 6 June 2001
staff; you have already told them how much more
talented they are. And you send a message to your Questions
own staff that they are not quite talented enough.
1 How important are talented people in a change
But talented people cannot on their own achieve
process or KM initiative?
success in business, any more than they can in foot-
2 What are the dangers and drawbacks of talented
ball or basketball. They have to be part of a team,
people?
and a system, that works. That is less likely to 3 What are the other factors required for the
happen if the new recruits are seen as a group apart. successful management of a change process?
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Chapter 8 / Change management 215

Introduction
Change is an ephemeral word and its nature is increasingly uncertain and unpre-
dictable. It affects people in different ways and the traditional emotional response can
provide considerable resistance to change. All knowledge management initiatives such
as implementing new technical solutions or promoting knowledge-sharing cultures can
provide considerable challenges to their effective implementation. The reasoning
adopted in this chapter is that a contingency approach using different interventions
depending on context is more likely to be successful than a single solution. A KM
framework showing the different dimensions and interventions likely to lead to suc-
cessful implementation of KM initiatives is shown in Figure 8.1 (p. 216).
This chapter begins by examining the nature of change and the personal response to
it. Leadership is considered vital in any change programme and the nature of situa-
tional skills is explored for developing a vision and goal commitment towards the new
initiative. The change management strategy adopted follows a cycle of three phases of
unfreezing, moving and refreezing (Lewin 1951) and using a variety of interventions to
reduce the resistance to change (Kotter and Schlesinger 1979). The chapter then pro-
ceeds to explore in detail the variety of human resource interventions that can be used
in the change process. Of particular interest are the variety of employee involvement
practices, the diversity of training and development interventions, and the role reward
and recognition schemes can play to smooth the implementation of KM initiatives.
Finally, the chapter explores the politics of change and how they can undermine and
cause failure in a rationally determined change programme.

The nature of change

Change in organisations can occur at almost any time internally or externally. There
may be periods of ‘incremental change’ followed by periods of increased turbulence or
complexity as well as periods of major disequilibrium or ‘discontinuous change’. Such
patterns are often referred to as ‘punctuated equilibrium,’ as shown in Figure 8.2 (p. 217).
Prior to the 1970s, the dominant form of change experienced by many organisations
was ‘incremental change’, characterised by stable markets, the past repeating itself in
the future and predictable organisational challenges (Ansoff and McDonnell 1990). The
common tool adopted to meet these challenges was forecasting by extrapolating from
past experiences and figures and forecasting into the future. This worked well for
annual budgeting purposes but soon many organisations started to experience strategic
drift where they found their incremental change strategies were no longer moving at
the same pace as forces in the environment.
Change was no longer slow and predictable but showed much greater flux due to
increased internal complexity and turbulence in the external environment. Such
‘bumpy incremental change’ (Grundy 1993) or flux can often result in periodic reor-
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216 Part 4 / Sharing knowledge

ORGANISATIONAL POLITICS

Unfreezing HUMAN RESOURCE

LEADERSHIP
INTERVENTIONS
Vision
Employee involvement
Goal commitment Fairness
Employee communication
Situational skills Trust
Training and development
Symbolic acts Refreezing Moving Reward & recognition
Rites
Performance appraisals

Figure 8.1 KM initiatives and change management

ganisations to increase the organisation’s ability to respond to the quickening pace of

daily problems and perceptions of work overload (Senior 1997). The organisational
focus in periods of incremental change tends more towards ‘doing things better’ or
single-loop learning (Argyris and Schon 1978).
The logic of organisations responding incrementally to changes can also lead to seri-
ous consequences. For example, using the ‘boiled-frog’ analogy (Handy 1993) shows
that if a frog is placed in cold water and slowly heated, the frog will let itself be boiled
to death. Like the organisation, the frog attempts to respond slowly to the changing
environment until it is too late. In contrast, if a frog is placed in boiling water it will
jump straight out in order to survive.
In the 1970s, the consequence of the oil price shock forced many companies such as
Shell to reappraise how they conducted business. Such unpredictable surprises or dis-
continuous changes led to major periods of disequilibrium where unexpected events
occurred at a faster rate than the ability of organisations to respond to them. The old
ways of prediction and forecasting were no longer valid and new tools and techniques
were needed to manage such transformational change. One such tool developed by
Shell during this period was ‘scenario planning’ to obtain a number of plausible futures
against which to test organisational responses. The organisational focus in periods of
discontinuous change tends more towards ‘doing things differently’ or double-loop
learning (Argyris and Schon 1978).

Personal response to change

Organisations are about people. In order to manage change effectively, we need to
understand how change affects people at an emotional and cognitive level. There are a
number of relatively predictable transition phases that people encounter linked with
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Chapter 8 / Change management 217

Change

‘BUMPY’
INCREMENTAL INCREMENTAL DISCONTINUOUS
CHANGE CHANGE CHANGE

Time

Figure 8.2 The nature of change

their ability to exercise control over a new situation, as shown in Figure 8.3 (p. 218).
These transition phases in the cycle of change include (Hayes 2002):

● shock from an individual feeling overwhelmed and paralysed by the new situation
or event. This can lead to rejection of the change process and an assertion that the
change won’t happen;
● denial as the individual clings to the past and their everyday routines. Resistance to
change is at its highest level at this stage, leading to a defensive reaction. If the indi-
vidual panics, this may also lead to sabotage of the change process. This is
characterised by the individual response of ‘I’m not going to let this happen’;
● depression as the individual feels that the situation is beyond their control, resulting
in sadness, anger, confusion and withdrawal from the change process;
● letting go by the individual. The individual acknowledges and accepts the change but
does not necessarily like it. This represents a turning point in the change process;
● testing as the individual tries out new behaviours and ways of working;
● consolidation of new experiences and ways of behaving to develop new norms and
routines;
● internalisation, reflection and learning leading to effective adaptation of change
process. The individual response tends to be ‘things are changing, let’s work with it’.

Reflect on a time of major change in your life. Describe the nature of your feelings at Pause for thought
this time. What did you find helped or hindered you through this change process? What
lessons have you learnt from this personal introspection? How do you feel that your
experiences could help you in future change processes or if you were tasked with
leading a major change initiative?

This emotional response to change can lead to considerable resistance to change for
four primary reasons (Kotter and Schlesinger 1979):

● parochial self-interest as people feel that they will lose something of value through
the change such as resource allocation, career prospects and power imbalances;
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218 Part 4 / Sharing knowledge

Letting go

Depression Testing

Emotional response
Denial Consolidation

Adaptation

Shock

Time

Figure 8.3 Emotional response to change (Hayes 2002)

● misunderstanding and lack of trust arising from poor communication of the change
process and how it will affect individuals. Trust also depends on the background of
employee relations between senior management and staff;
● different assessments as conflicting views and interpretations arise about the nature
and benefits of the change process;
● low tolerance for change, especially when it means job losses, reskilling or relocation.

Leadership and change

It is clear that outstanding leaders can play a vital role in the change process and partic-
ularly in enabling effective transformations to occur. But what are the leadership skills
and abilities that are required? Firstly, leaders offer a vision of what is possible that
mobilises, energises and empowers people to reach that vision. Secondly, they play a
role in goal setting connected with building and articulating clearly accepted goals and
expectations. Lastly, they play a role in gaining commitment to the goals in the change
process. This is not purely an awareness of the goals (‘I know’) or a knowledge of the
goals (‘I understand’) or a belief in the goals (‘I can’) but a commitment to the goals (‘I
will’). This requires an active involvement of people in the development of goals. It is
noteworthy that there are no conclusive studies showing that certain leadership styles,
such as a participative style or an autocratic style, are more effective than others.
There is much debate about the distinctions between a leader and a manager. One
distinction is that managers ‘do things right’ whereas leaders ‘do the right thing’
(Bennis and Nanus 1985). Managers are more concerned with the activities related to
the formal structure and goals of the organisation whereas leaders are more concerned
with establishing a direction, aligning, motivating and inspiring people (Senior 1997).
The two main skills for managing people in the change process are:
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Chapter 8 / Change management 219

● creating energy through motivation by getting the right people in the right places in
the change programme. Selecting the right person is about more than purely their
skills and abilities. It is about their motivation and attitudes about the role. Does the
person enjoy their role and do they feel proud of their work? Choosing the right
person frees up energy for leadership as the leader isn’t sidetracked purely managing
resistance to change;
● channelling energy through leadership and goal commitment.

One common practice in the leadership of change is to adopt a three-phase

approach over roughly a three-month period. The first consultative phase is where the
leader asks questions and actively listens to managers, employees, customers, suppliers
and other stakeholders. This phase serves as a business analysis to understand problems
and opportunities. The leader also builds relationships and conducts a human resource
analysis to find out what managers are good at, what makes them tick, what they
would fight for or against and what turns them on. The second phase is testing out
reactions to a goal or a plan. The aim of this phase is to test for commitment to the
change process by simulating the benefits and challenges of the change. The third
phase is the announcement of the change process through conferences, meetings,
newsletters and other media. The aim of this phase is to encourage concrete action and
commitment to the change rather than further discussion and argument.
As we do not live in a perfect world, the leader may not be able to gain the perfect
commitment to a vision or goal as desired. In this case, leaders often rely on situational
skills. In order to influence people, the leader needs to understand the readiness of
people along two dimensions: job readiness (their knowledge, skills and experience)
and psychological readiness (their confidence, commitment and motivation). Once the
person or group’s readiness is understood as well as their level of supportive behaviour,
the leader can choose the appropriate situational skill as shown in Figure 8.4 (Hersey et
al. 2000). In cases of low levels of job and psychological readiness, the leader may use
‘telling’ or ‘selling’ styles depending on the level of support required. In contrast with
high levels of job and psychological readiness, the leader is more likely to use follower
directed styles of ‘participating’ and ‘delegating’. In high trust styles of delegation, the
person or group are given full responsibility for their work and the leader is kept
informed if they run into any problems.
The second situational skill used by many leaders is ‘reading the traffic lights’ to pro-
vide appropriate direction and control, as shown in Figure 8.4 (p. 220). If the lights are
‘green’ where things are running smoothly towards agreed goals, the leader recognises
that it would best not to intervene in these circumstances. If the lights are ‘red’, where
major problems are gathering, the leader is best informed to stop, change their agenda
and pay close attention to the problems. If not, the problems could mushroom out of
all proportion. The real challenge for leaders is reading the amber/orange lights on
whether or not to intervene: are the amber lights in a given situation on their way to
green or on their way to red? This is part of the armour of an outstanding leader.
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220 Part 4 / Sharing knowledge

RELATIONSHIP BEHAVIOUR
GREEN LIGHTS
High PARTICIPATING SELLING
‘Do nothing’

Support
AMBER LIGHTS
‘Think carefully’

RED LIGHTS
Low DELEGATING TELLING ‘Stop &
address problems’

Low Readiness High Readiness

TASK BEHAVIOUR READING THE TRAFFIC LIGHTS
(Guidance)

Figure 8.4 Leadership situational skills in change management (Hersey et al. 2000)

Change management strategies

The underlying assumption of the change management process among many managers
is that it follows a three-phase process. The three phases assume that there is a need for
some permanency or stability within organisations, even if this happens to be tempo-
rary. The three phases advocated for helping individuals, groups and organisations
manage change are (Lewin 1951):

● unfreezing and loosening current sets of behaviours, mental models and ways of
looking at a problem;
● moving by making changes in the way people do things, new structures, new strate-
gies and different types of behaviours and attitudes;
● refreezing by stabilising and establishing new patterns and organisational routines.

Even though this model is predominant in many organisations, it has been criticised
for its emphasis on stability, particularly when organisations are faced with turbulent
environments and discontinuous change. Such cycles may perpetuate single-loop learn-
ing in the refreezing process rather than double-loop learning through continual
adaptation to the external environment.
An important tool used by managers to understand the dynamics of change in any
given situation is a forcefield analysis (Lewin 1951), as shown in Figure 8.5 (p. 221).
This uses a military metaphor of examining the driving forces and restraining forces
that create a ‘quasi-stationary equilibrium’ at any given moment. The intention of any
manager is to strengthen the driving forces while reducing the influence of restraining
forces. Such an analysis will provide the manager with a number of problems to be
tackled to help drive the change process in the desired direction.
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Chapter 8 / Change management 221

QUASI-STATIONARY QUASI-STATIONARY QUASI-STATIONARY

EQUILIBRIUM EQUILIBRIUM EQUILIBRIUM

RESTRAINING FORCES

RESTRAINING FORCES

RESTRAINING FORCES
DRIVING FORCES

DRIVING FORCES

DRIVING FORCES
UNDESIRED FUTURE CURRENT STATE DESIRED FUTURE
STATE STATE

Figure 8.5 Forcefield analysis

Once a manager has understood the restraining forces and the change management
problems, there are a number of approaches and options for managing resistance to
change (Kotter and Schlesinger 1979):

● Education and persuasion. This involves explaining the problems and issues concerned
with current working practices and how the change management programme can
benefit individuals, groups and the organisation as a whole. Persuasion is about con-
vincing people about the benefits of changing practices and the costs of continuing
with current practices. Managers need to guard against defensive reactions from
overcritical analysis of current practices and the problems of misinformation or, at
worst, no information at all.
● Participation and involvement. This is an important approach to engage people and get
‘buy-in’ for the change process. It involves relinquishing some control and involving
organisational members in diagnosing the problems, addressing options, finding
solutions and implementing the change process. The result is that champions are
created with much greater motivation and shared understanding for the change pro-
gramme. It empowers individuals and reduces the victim mentality often associated
with change. The drawback is that the consultative process can be very time con-
suming and the people may not have the necessary technical expertise to conduct
an effective analysis of the current situation. The threat is that a suboptimal solution
may result from the consultation process (Hayes 2002).
● Facilitation and support. Resistance to change often results from the loss of something that
is valued by organisational members. Some of this can be overcome by offering individ-
ual opportunities for training and development in new skills. However, loss also implies
grief and staff may need emotional support and a listening ear in the change process.
● Negotiation and agreement. If an individual or a group such as the unions has signifi-
cant power to resist change, one approach is to engage in negotiations to secure an
agreement. In this case, the negotiations are about reaching a compromise so that
both parties can gain some benefits from the new situation. However, negotiations
can be time consuming and add costs to the change management programme.
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222 Part 4 / Sharing knowledge

● Manipulation and cooption. The common term used for this approach nowadays is
‘spin’. This involves a covert operation to bias information and communications in
an organisation in order to gain support. However, this can result in coopted mem-
bers feeling deceived in the long term and can act as a restraining agent.
● Coercion. This approach is used in more extreme cases where a manager has the abil-
ity to exercise power over granting or withholding a valued outcome, such as
promotion or pay, from an organisational member (Hayes 2002). Such threats tend
to be used when commitment to the change process is very low within a workforce.
The dangers of this approach are that it can lead to resentment and loss of goodwill
from organisational members.

Pause for thought Some managers adopt bullying tactics in order to manage change. As a manager, what
do you think could be some of the benefits or limitations of this approach? What do you
envisage could be some of the short-term and long-term consequences of bullying
behaviour? If one of your colleagues was being bullied, what would you advise them as
their best course of action?

Gaining commitment for change

For successful implementation of knowledge management practices and encouraging
knowledge-sharing behaviour, organisational commitment is a major asset to be nur-
tured. But what is the nature of commitment and its root causes? Commitment affects
how employees behave and their attitudes towards their workplace. Commitment can
be seen as an attitudinal consequence of the psychological contract (Guest and Conway
1997; Hislop 2002), as shown in Figure 8.6. The psychological contract is the percep-
tions that the individual and organisation bring to the employment relationship. The
core components of a psychological contract are fairness, trust and ‘delivering the deal’
by meeting expectations of key obligations and promises on both sides. Fairness in
daily practices relates to the level of equity in the way people are valued and rewarded
for their contributions. Trust concerns the level of confidence in an organisation to
meet expectations of future outcomes. Much depends on the mutual expectations
within a psychological contract.

Commitment
(attitudinal change)
Psychological contract
Expectations
Fairness Success of KM
Culture & climate
Trust intervention
HR practices
‘Delivery of the deal’
Motivation
(behavioural change)

Figure 8.6 Psychological contract and commitment (Guest and Conway 1997; Hislop 2002)
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Chapter 8 / Change management 223

There are criticisms of this model of commitment as it doesn’t take into account the
complexity of this construct. There may be different types of commitment and individ-
uals may be committed to certain parts of the organisation rather than the organisation
as a whole. Similarly, employees may develop psychological contracts with key individ-
uals or groups rather than with the organisation (Hayes 2002).
As knowledge-based organisations are dependent on the commitment and ideas of
their employees, the role of a fair process becomes crucial as it affects attitudes and behav-
iours of individuals to achieve superior performance. Employees will commit to a
manager’s decision even though they may disagree with it as long as they feel that the
process has been fair (Kim and Mauborgne 2003). They will cooperate freely with a situa-
tion even though they may not benefit from its consequences. However, if employees feel
that there is something deceitful in a manager’s actions and a general lack of respect, the
level of trust and commitment is likely to deteriorate. This will probably result in employ-
ees hoarding their knowledge rather than sharing it. Being valued is a basic human need
in all employees; people like to contribute their ideas and have them taken seriously.
There are three basic principles underlying a fair process (Kim and Mauborgne 2003):

● Engagement is about involving and consulting people in the decision-making

processes. Such engagement makes people feel valued and conflicting views help
sharpen understanding and gain commitment. There is ownership of the process.
● Explanation allows employees to understand the rationale behind certain decisions
and gain trust in a manager’s intention even though their own ideas may be ignored.
● Expectation clarity is about managers defining the new behaviours expected of
employees and the rewards and penalties for achieving certain standards. This allows
new rules and policies to be understood and minimises allegations of favouritism.

Average performance often occurs in organisations due to ‘distributive justice’. This

arises when employees receive outcomes they deserve (such as compensation) and feel
compelled towards a compulsory form of cooperation. However, superior performance
and strong knowledge-sharing behaviours are more likely to occur through ‘procedural
justice’. This involves a fair process building trust and commitment and leading to vol-
untary cooperation and behaviours where individuals go beyond their call of duty. It
affects people’s everyday attitudes and behaviours. There are often three stages in
achieving employee commitment (O’Reilly 1989):

● compliance, where an individual accepts the rules of the game in expectation of some
reward such as pay;
● identification, when an employee accepts influence to maintain a satisfying relation-
ships with individuals and groups;
● internalisation, when an employee finds the organisational values intrinsically
rewarding and aligned with their personal values.

Cults and religious groups exhibit high levels of commitment marked by the internali-
sation of group values with personal values.
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224 Part 4 / Sharing knowledge

Pause for thought As a manager, what strategies could you use to make your staff feel valued at work?
Think of your own experiences of being valued at work. What were effective
interventions that made you feel valued? One of the pitfalls of valuing some staff over
others is described as favouritism. How could you avoid this pitfall? What are the likely
consequences if you are unable to do so?

Employee involvement
In many organisations, there is an increasing shift away from control towards commit-
ment. As we have seen, an important factor in gaining this commitment is engagement
or employee involvement. But what is the nature of employee involvement and what
impact does it have on the power relations between a manager and their teams?
Employee involvement implies a certain loss of management prerogative in decision-
making processes. However, the spectrum of employee involvement practices can span
from one-way communication of management decisions to full-blown democratic sys-
tems in decision making. Employee involvement is time consuming and many senior
managers may feel that it detracts from their focus on tight cost control or other strate-
gic directions and leave themselves open to criticisms about lack of investment in
human resources such as training and development.
The history of involving the workforce in the decision-making process can be traced
back to the Second World War. In response to the strong demand for products and serv-
ices during the war, works committees or joint consultative committees were set up
across many organisations. These committees lost favour with unions and employers
alike soon after the war. Instead, direct collective bargaining between unions and
employers was preferred. In the 1960s and 1970s, there was a greater focus on ‘indus-
trial democracy’, with union members fulfilling consultative roles in organisations. The
extent of power delegated to them was unclear. In the 1980s, industrial democracy
interventions became tarnished by left-wing ideologies and ‘employee involvement’
schemes became much more popular. Power relations between management and the
workforce still play an important role in the nature of employee involvement. It has
been argued that there may be waves of participation, especially linked to the perceived
threat or loss of control of labour in some manner (Beardwell and Holden 2001).
A spectrum of different employee involvement practices linked to the level of man-
agement or worker control is shown in Figure 8.7 (p. 225). In reality, the nature of
employee involvement practices in organisations is likely to have significant overlaps
and behave more dynamically than shown due to environmental pressures. The nature
of employee involvement schemes can be divided into four groupings (Beardwell and
Holden 2001; Marchington et al. 1992):

● downward communication or one-way communication from management using company

newsletters, the intranet and regular team briefings. Newsletters are a popular form of
communication but can be seen as a medium to convey management rather than
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Chapter 8 / Change management 225

MANAGEMENT CONTROL WORKER CONTROL

INFORMATION COMMUNICATION CONSULTATION CO-DETERMINATION WORKER CONTROL

E-mail, Team briefings, Quality circles, Union representation, Cooperatives,
intranet, mass meetings, attitudes surveys, works council, JCC, worker
newsletter intranet, e-mails videoconference negotiations self-management

Figure 8.7 Spectrum of employee involvement

worker views. Team briefings are an effective face-to-face medium to allow management
goals to be addressed and any misunderstandings to be clarified. They involve small
numbers of people in short meetings with a question and answer session at the end;
● upwards, problem-solving forms which aim to capture employee knowledge and
expertise. These may include attitude surveys, quality circles, TQM and suggestion
schemes. Quality circles are about teams getting together focusing on problems,
using statistical techniques and presenting managers with potential solutions. They
have declined in popularity in many countries for cultural reasons (they originated
in Japan) and the fact that they may undermine union authority;
● financial participation which aims to link employee effort with performance of the
organisation. This may include organisation-wide rewards such as profit-sharing
schemes, share ownership or bonus schemes. The aim is to achieve greater identifica-
tion with the organisation among employees with the assumption that this will lead
to greater levels of commitment;
● representative participation of employees through their representatives such as union
members. These may include joint consultative committees (JCC), works councils,
co-determination and collective bargaining.

Even though there has been a decline in union membership in many countries,
there are still examples of industrial democracy such as co-determination practices, par-
ticularly in countries with a strong union presence. In Sweden, there is the
Co-determination at Work Act (MBL) which places an obligation on organisations to
extend their collective bargaining to areas of strategic management and operational
changes. Hence, the emergence of any new practices or organisational direction has to
be negotiated with the workforce, often through the unions.
In Germany, the co-determination law places similar obligations on employers to
consult and consider the views of their workforce through works councils, supervisory
boards and management boards. Employees and their representatives have a right to
participate in any personnel matters and planned changes in a company likely to affect
employees. The different committees can make suggestions to employers but they are
not obliged to necessarily accept them. The impact of co-determination schemes often
varies with economic cycles and the change in power relations between the govern-
ment, employers and the workforce. For instance, the power of unions during times of
recession may be weak and the role of works councils may be weakened.
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226 Part 4 / Sharing knowledge

Training and development

For change management strategies to be successful, one core element is the use of train-
ing and development to provide the necessary education, facilitation and support in
the change process. Training is a planned process to help modify the attitude, knowl-
edge or skill behaviour of an individual through a learning experience. Development is
more long term and can be associated with an individual’s maturity. Development can
be described as a journey starting with some level of confusion and leading to highs
and lows towards a new understanding. Nothing is changed at the end of the journey
but the individual is transformed internally (Daloz 1986).
Many organisations have a propensity to send their employees on courses as the
mainstay of their training programmes. However, this can result in the common prob-
lem of ‘Del the Delegate’. He returns from a course full of new ideas only to be faced
with scepticism and cynicism from colleagues and bosses. His enthusiasm is under-
mined and he reverts to old patterns of behaviour and routines. If this is to be avoided,
organisations need to adopt formalised or focused approaches to training and develop-
ment (Barham et al. 1987):

● formalised approach is linking the planned training and development programme

with performance appraisal and career planning processes;
● focused approach is linking training and development activities to organisational
goals and continuous learning.

The common approach to human resource policy and practice as well as individual
performance reviews is to adopt a systematic training cycle, as shown in Figure 8.8
(p. 227). The human resource development plan is based on establishing training needs
from business objectives as well as training needs of employees and determining the
gap between these two entities. Appropriate training methods are decided and the
human resource development plan contains material on responsibilities and how the
plan will be implemented, monitored and evaluated.
Training needs need to be linked closely to organisational objectives and exist at organ-
isation, job and individual levels. At the job level, it is the body of knowledge, the
range of skills and the necessary attitudes required to perform a certain job. At the
individual level, it is the gap between the knowledge, skills and attitudes (KSA) held by
the individual and those required for a job. At the organisational level, the training
needs are the summation of all the individual training needs or gaps in order to deliver
performance objectives. There are a number of analytical techniques that can be
adopted in a change management programme to identify training needs at individual or
job level (Reid and Barrington 2000):

● comprehensive analysis of all job tasks. This is useful for repetitive tasks that are diffi-
cult to learn and in which the potential cost of error is unacceptable;
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Chapter 8 / Change management 227

Identify
training
needs

Design
Evaluate
training
effectiveness
solutions

Implement
training
solutions

Figure 8.8 Systematic training cycle (Stewart 1999)

● key task analysis focusing on core tasks. This form of analysis is useful when a job is
changing and the focus is on the tasks critical for performance;
● problem-centred analysis. Here the need for training is urgent and resources are
unavailable to conduct an extensive analysis;
● stage and key points analysis. This provides a breakdown of training needs at stages
and key points;
● manual skills analysis. Isolates the knowledge and skills required by experienced
workers performing tasks requiring high levels of manual dexterity;
● faults analysis. Where certain faults are costly and keep recurring. A fault specifica-
tion is produced to help the trainee understand the nature of faults, what causes
them, who is responsible for them and how to best act when a fault occurs;
● critical incident analysis. Examines the training needs related to critical incidents in
problem situations;
● job-learning analysis. Looks at the processes in performing a job and the generic
learning skills required.

Once the training needs have been identified, the training solution can be designed
by considering a number of strategies and interventions. The appropriateness of the
training interventions will depend on how they meet organisational objectives, the
likelihood of learning transfer in terms of the organisational climate (‘Del the Delegate’
syndrome), the available resources and learner-related factors such as their learning
style. The common training and development strategies found in organisations include
(Reid and Barrington 2000):

● on-the-job training. This may involve learning by doing or ‘sitting next to Nellie’.
There is a potential danger that Nellie may not have the necessary skills to transfer
knowledge and skills effectively. Work shadowing can be another useful training
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228 Part 4 / Sharing knowledge

intervention. However, if poorly planned, trainees can feel unwelcome and be seen
by other workers as a hindrance to their everyday routines. Job rotation can provide
a good learning experience for workers, equipping them with new skills and provid-
ing greater flexibility for managers in times of crisis or change;
● planned organisation experience. This can involve mentoring or coaching. In mentor-
ing, a senior or experienced employee acts as an adviser to a trainee in terms of
professional and emotional support. The role is similar to a master-apprentice one.
Coaching has parallels to mentoring as they are both learning processes that support
and encourage learning to occur. The distinction is one of contextual roles. A mentor
seeks to develop a special relationship with an employee and is rarely a learner’s line
manager. In contrast a coach is more concerned with immediate performance results
and is more likely to be a person’s line manager (Parsloe and Wray 2000);
● In-house programmes. These may include part-time courses leading to externally vali-
dated qualifications. There is also a rise in using the intranet as a medium for
e-learning, particularly for developing technical knowledge and skills. Interactive
computer learning packages are also used for developing IT skills;
● planned experiences outside the organisation. These may include secondments to other
divisions or other companies. In addition, study tours and visits to competitors and
suppliers can provide fruitful learning experiences;
● external courses. These may comprise short full-time courses or more longer (usually part-
time) courses, often leading to a qualification. In both cases, it is important to examine
how well the courses meet the person’s training needs and link to the organisational
objectives;
● self-managed learning. This is an ultimate goal of employees rather than human
resource departments taking full responsibility for their learning. Logbooks and
records of progress are often used and provide a stimulus for further learning.

Pause for thought A common situation in many organisations is that training and development budgets
are insufficient to cover all training needs. How would you decide on the most effective
ways to prioritise these limited budgets? Can you suggest any internal low-cost training
alternatives that could be adopted? What could be some of the dangers of relying too
heavily on internally driven training solutions?

The staff appraisal process has become an important method for evaluating training
interventions. The trainee and line manager can discuss the effectiveness of certain
interventions and how they affected the individual’s performance. There are a variety
of other approaches used to evaluate training and often a combination of these is used
(Beardwell and Holden 2001; Harrison 2000):

● questionnaires or feedback sheets often known as ‘happy sheets’ on training courses;

● tests leading to qualifications help identify a trainee’s progress;
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Chapter 8 / Change management 229

● interviews with trainees and tutors to gain feedback on training;

● observation of training provision can provide additional valuable feedback;
● participation and discussion with participants at the end of a training intervention.

The change process may also need to address the management development needs
in the organisation. Without engaging in the debates about the precise nature of man-
agement, there are numerous interventions to meet a manager’s development needs.
Even though each manager has unique needs, some organisations have adopted a port-
folio approach to management development (Odiorne 1984), as shown in Figure 8.9
(p. 230). The portfolio approach allows resources to be targeted cost effectively to par-
ticular groups of managers where there is a higher likelihood of immediate or
long-term benefit to the organisation. At the same time, resources may be withheld
from poorly performing managers described as ‘deadwood’ in this model. The danger
with this approach is that certain managers may become stigmatised with certain labels
and their efforts to change perceptions through their performance may go unheeded.
Such an approach also has implications for the individual manager’s career progression.
A management development needs analysis can be conducted using the same tools
described above for training and development of employees. The traditional forms of
management development interventions are (Beardwell and Holden 2001):

● management education and training interventions such as MBA programmes;

● action learning through tackling problems that have defied solutions in the organisation;
● mentoring using a personal development plan. Checking that goals are ‘SMART’
(specific, measurable, achievable, relevant and timescaled). Mentor encourages
learner to solve problems and acts as a sounding board (Parsloe and Wray 2000);
● coaching, which can be hands-on for inexperienced learners or hands-off for more expe-
rienced learners relying on questioning and feedback skills (Parsloe and Wray 2000);
● secondments;
● outdoor management development to develop team and leadership skills by giving man-
agers physical, mental and emotional challenges in an unfamiliar outdoor environment;
● management team development involving workshop and game playing at informal
residential venues;
● self-development through self-learning groups, psychometrics, books, distance learn-
ing materials and e-learning.

Reward and recognition

Reward and recognition schemes are an important tool in the change management
process to increase employee motivation and gain commitment. For example, some organ-
isations have adopted ‘Miles for Knowledge Sharing’ schemes similar to Airmiles used by
travel companies and retail outlets. Each employee is given a notional number of miles,
say 500, and is able to give away different numbers of miles to others in the organisation
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230 Part 4 / Sharing knowledge

Problem
High Stars
employees

POTENTIAL
Low Deadwood Workhorses

Low High
PERFORMANCE

Figure 8.9 Portfolio approach to management development (Odiorne 1984)

for their helpful knowledge-sharing behaviours. Individual totals are added up at the end
of the year and prizes are awarded annually at an awards ceremony to those exhibiting
exceptional knowledge-sharing behaviours. Other companies, such as Buckman
Laboratories, have held one-off events at a fashionable resort with 150 employees attend-
ing who had exhibited the greatest knowledge-sharing behaviours. Each employee was
given a new laptop and participated in a workshop on how to improve knowledge man-
agement practices in the organisation. Such initiatives found that participation in
knowledge management practices rose dramatically (Newell et al. 2002).
The assumption behind reward and recognition schemes is that employee engage-
ment and effort will lead to greater performance. This performance will be rewarded,
leading to greater employee satisfaction and commitment, as shown in Figure 8.10.

Salary
Performance by results
Collective bonus
Performance-related pay

Employee benefits
Company car, flexible
Effort Performance Satisfaction Commitment
working hours, crèches,
pensions, office facilities

Recognition schemes
Award ceremonies,
medals, dinners,
newsletter articles,
holidays, cash prizes

Figure 8.10 Commitment through reward and recognition schemes (Beardwell and Holden 2001; Porter and
Lawler 1968)
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Chapter 8 / Change management 231

The rewards may be a combination of employee salary incentive schemes, employee

benefits and recognition schemes.
There are four broad types of incentive-based schemes (Casey et al. 1992):

● Individual payment by results (PBR). This depends on the relationship with incremental
pay and incremental output, the threshold output for receiving PBR over and above
an employee’s salary and the capping level of PBR. Such schemes can give employees
greater freedom and opportunities to achieve high earnings. However, they can
ignore the fact that many effective change processes are a result of team effort.
● Collective payment by results. This is similar to individual PBR but more focused on a group,
division and department. It acknowledges that individual PBR can be divisive for group
working and long-term knowledge sharing. Instead, it rewards cooperative behaviours.
● Collective bonus schemes. The aim of these schemes is to foster greater cooperation
between departments to achieve corporate objectives and to attract and retain the
right staff. They may include profit-sharing schemes in the form of company shares
or allow staff to buy company shares at a discount. A critical factor is the proportion
of bonuses to an employee’s total compensation. If it is small, it is unlikely to per-
suade individuals to change their behaviours.
● Performance-related pay (PRP). This is an incentive scheme based on an assessment of
performance, often conducted through a staff appraisal process. This can allow man-
agers to identify high-achieving employees as well as the ‘deadwood’. The aim of
PRP is to increase employee motivation and encourage certain behaviours and atti-
tudes in the change process through performance norms. Institutionalising
knowledge-sharing behaviours as part of these performance norms brings knowledge
management practices clearly on to the everyday agenda. However, PRP can under-
mine the cooperation and cohesiveness of a work group. Employee performance
cannot be judged in isolation but is often a result of group effort. Also, there is a
danger that the psychological contract is changed from relational to transactional.
Employees are more concerned with their performance (transactional) rather than all
the altruistic or helpful behaviours (relational) that allow an organisation to meet its
objectives (Beardwell and Holden 2001).

Reflect on your role as a knowledge worker. What reward and recognition schemes do Pause for thought
you feel are most appropriate for knowledge workers? Do you believe that PRP schemes
related to knowledge-sharing behaviours could work in your organisation? What are
the likely problems with this approach? How would you devise a scheme to measure
knowledge-sharing behaviours? As ‘game playing’ behaviours could distort the results,
how would you attempt to prevent game playing among staff?

Another aspect of the rewards package is the employee benefits for increasing
employee motivation and commitment to a change process. These are benefits that the
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232 Part 4 / Sharing knowledge

employee values and can be linked to performance and achievement of targets. The
benefits may be flexible, known as ‘cafeteria benefits’, where the employee chooses
from a selection of rewards and constructs their own benefits package. The types of
potential employee benefits include:

● company cars;
● flexible working practices;
● pensions;
● upgraded office accommodation and facilities;
● private healthcare;
● sports facilities;
● assistance with educational fees;
● assistance with crèches.

Lastly, organisations use recognition schemes to acknowledge and recognise the

efforts of high-performing individuals in the direction of the change process. This is
more than an everyday ‘pat on the back’ and may include:

● article or story in company newsletter;

● annual awards ceremony;
● medals, plaques and certificates for exceptional performance;
● paid luxury holidays;
● business accessories such as laptops;
● cash prizes.

Cultural change management

Organisational culture concerns the underlying values and assumptions that define pre-
vailing norms and behaviours. But what if the norms are not compatible with
organisational goals and objectives? What if the prevailing norms are knowledge-
hoarding behaviours rather than the desired knowledge-sharing behaviours? How do
organisations effect and manage a cultural change process? A widely accepted frame-
work for managing the cultural change process involves five stages (Kilmann 1984):

● surfacing actual cultural norms;

● articulating new directions;
● establishing new cultural norms;
● identifying gaps in cultural norms;
● closing gaps in cultural norms.

As shown earlier in this chapter, there are predominantly two drivers for cultural
change management: leadership and human resource interventions. Leadership and
commitment from senior managers is vital to the success of cultural change
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Chapter 8 / Change management 233

programmes. Leaders have tremendous power to influence employees through personal

enactment. They can resort to symbolic actions frequently and consistently to reinforce
certain beliefs values and assumptions. Symbolic acts can include the way they use
their time, such as visiting operational sites and customers to show what they consider
to be important. The way a chief executive announces new directions or ways of work-
ing with stories and anecdotes can shape individual understandings. Placing certain
topics continually at the top of the agenda in meetings informs employees about what
is important to a leader (Brown 1998).
Leaders can also employ rites to facilitate cultural change. Rites are organised and
planned activities. Existing rites can be modified to include new values and assumptions
in an organisation. Certain rites can be eliminated if they are no longer desirable and
maintain the status quo. A more risky approach is to develop new rites which express
the desirable beliefs and values in an organisation. For example, rites of passage involv-
ing recruitment, selection and induction procedures may shift from a legislation-led,
equal opportunities emphasis more towards valuing diversity in the organisation. Rites
of enhancement may reward employees for exhibiting behaviours associated with new
values and beliefs through various reward and recognition schemes as described above.
Leaders can use rites of degradation for demoting or removing employees resistant to the
change process. Other rites include rites of conflict reduction through committees
between warring factions and more informally using sporting contest or humour. Lastly,
the leader can use rites of integration to develop greater social cohesion through recre-
ational activities such as drinking, dancing and picnics.
Apart from clear leadership in the cultural change process, there are a number of
human resource interventions that can be employed to reinforce the desired norms,
beliefs and values. The ultimate goal is to have all aspects of the human resource pro-
gramme using a ‘consistent cues’ approach (Brown 1998) to ensure that consistent
signals are sent to achieve the desired cultural end state. The spectrum of human
resource interventions to manage culture includes:

● changes in recruitment and selection norms;

● changes in induction, socialisation and training norms;
● changes in performance appraisal norms;
● changes in reward and recognition norms.

Politics of change
Many organisational change programmes fail due to resistance to the change process.
People use organisational politics to resist and influence the change process particularly
if it is not going in their intended direction. The majority of managers find that politics
becomes more intense when change is radical, complex and wide ranging (Buchanan
et al. 1997). In fact, many managers feel that change programmes are likely to fail
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234 Part 4 / Sharing knowledge

unless managers and leaders are adept in political skills. A common approach in the
politics of organisational change is to focus on the ‘dominant coalition’. Such coali-
tions of senior executives have considerable influence over decisions and resources.
They decide organisational direction and what is important. Coalitions are dynamic
and can become unstable depending on the nature of external market changes, social
ties and internal politics.
Major changes such as delayering in organisations, use of teamwork and business
process re-engineering practices recently have meant that the prevalence of political
behaviour is a norm rather than an exception (Browning 2003). People are responding
less to rational reasons and more to egotistical motives such as personal security and
career advancement (Stone 1997). Research in this area can be a minefield as managers
are reluctant to discuss the subject in case it lowers their image, and managers often fail
to legitimise the power and influence of organisational politics (Paton and McCalman
2001). The political tactics often employed in organisations include (Carnall 1990):

● selective use of performance criteria to manage credibility;

● use of external consultants to validate their views;
● control of agenda in formal meetings;
● building internal alliances and coalitions;
● use of promotions;
● control of access to information and key decision-makers;
● group pressure for employee conformity.

CASE STUDY
Clifford Chance FT
The most poignant line in the now-notorious memo associates’ feeling that the firm had lost its moral
from junior lawyers at Clifford Chance in New York way. Padding was one example. Another was the
was this plea to the firm’s partners: ‘At least say firm’s attitude to pro bono work. One partner is
‘hello’ in the hallways. It sounds like a small thing, alleged to have said: ‘If you want to do pro bono,
but simply talk to us.’ that’s fine, but I don’t want to know about it.’ The
Much comment about the memo has, under- memo said the ‘animosity to pro bono is deplorable
standably, focused on the allegation that the firm and violates the ethical principles of our profession’.
was encouraging ‘padding’ – or charging for time With an admirable American belief that even the
not spent on customer business – by insisting each grubbiest glass can be topped up, the associates
lawyer bill clients for an enormous 2,420 hours a pleaded: ‘Let us help you construct the ideal firm.’
year. (The firm denies that padding occurred.) But What is the ideal firm? Few people know. In
for students of organisational pathology, the memo 1988, the management expert Peter Drucker called
reveals more than shabby behaviour towards clients. dealing with knowledge workers the ‘managerial
It demonstrates nearly everything that can go wrong challenge of the future’. It still is. Writing in the MIT
in a knowledge-based business. Sloan Management Review, Thomas Davenport,
Clifford Chance’s New York office is, on the evi- director of the Accenture Institute for Strategic
dence of the memo, a horrible place. Not only did Change, and two colleagues bemoan how little we
the partners not greet their juniors, the associate know about increasing knowledge workers’ produc-
lawyers, in the hallways. They often deleted their e- tivity. ‘Knowledge work thus far has no Frederick
mails without replying. Most significant was the Taylor or Henry Ford,’ they say.
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Chapter 8 / Change management 235

Long may that last. Taylor measured every aspect where trust comes in. People not only have to be
of a manual worker’s job. Ford developed the assem- trusted to do their jobs. They have to be able to trust
bly line. Their idea was to create uniform tasks, each other. Successful knowledge work requires col-
carried out with as little variation as possible. laboration. The most senior managers set the tone.
Knowledge work is the opposite. It involves inde- Openness and honesty are contagious; so are secrecy
pendent judgement, creativity and varying work to and deceit.
suit the circumstances. How do you know whether knowledge workers
Prof Drucker defined knowledge workers as are working? You don’t. That person staring out of
people who knew more about their jobs than their the window could be dreaming up an advertising
bosses did. Law, advertising, consulting, software campaign or just staring out of the window. You will
and architectural practices are knowledge-based soon find out. The work either gets done or it does-
organisations. So are newspapers, orchestras, hospi- n’t. You measure the outcome, not the input.
tals, universities and the research, design and How do you know what the right outcome is?
marketing departments of large companies. Prof Drucker wrote that a conductor can trust mem-
Prof Davenport and his colleagues devote much bers of an orchestra to play their instruments
of their article to discussing seating arrangements in because they all have the same score. All organisa-
knowledge-based organisations. One large open-plan tions need one of those – a common purpose, an
office for everyone or different layouts for different understanding of what they are trying to achieve. It
jobs? At Merrill Lynch, brokers and portfolio man- is what the Clifford Chance lawyers were crying out
agers get private offices. Traders sit in vast open-plan for: ‘Associates felt unsure of what the firm expected
spaces so that they can shout at each other. of them that year or over the course of their careers,
Information technology professionals have ‘semi- or what the firm even expected of itself.’
open offices with plenty of team spaces’. It is a question every organisation should ask
One of the many things that upset the Clifford when deciding what outcomes to measure: what do
Chance associates was a rumour that the partners we expect of ourselves? Let us hope the Clifford
had voted to move office without telling them. Chance partners are asking what they expect of them-
Offices matter in knowledge organisations. So does selves and, after reading their colleagues’ memo, have
IT, although Prof Davenport wisely steers clear of the concluded: not this.
many who think knowledge management is all Source: Article by Michael Skapinker, Financial Times,
about e-mail, webcasts and databases. 13 November 2002
But neither office layout nor information systems
will, in themselves, make organisations work. Many Questions
videoconferencing suites stand empty. Knowledge
1 Critically analyse the leadership at Clifford Chance.
workers, dizzy from open-plan babble, stay home to 2 As a consultant to the partners, discuss how you
get things done. would develop a successful change management
So what is managing knowledge workers about? I programme to energise, mobilise and empower the
believe it is about three things: trust, measuring the associates at Clifford Chance.
right outcomes, and common purpose. Knowledge 3 What special considerations, if any, need to be taken
workers have to be left to get on with it. There is no into account to gain commitment from knowledge
point hiring people with specialist knowledge if you workers rather than ordinary workers at Clifford
are going to monitor their every move. That is Chance?

Summary
This chapter has elaborated five key areas that need to be considered when developing
a change management plan or the successful implementation of a knowledge manage-
ment initiative:

1 The importance of leadership to develop a vision and goal commitment towards the
change process. This is done through getting the right people in the right place and
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236 Part 4 / Sharing knowledge

using situational skills. Additional leadership skills are the use of symbolic acts and
rites, especially in cultural change programmes.

2 Change is most effectively managed in a three-phase process of unfreezing, moving

and refreezing. A number of options can be used to overcome resistance to change
including education and persuasion, participation and involvement, facilitation and
support, negotiation and agreement, manipulation and cooption and coercion.

3 Fairness, trust and ‘delivering the deal’ are important components for generating
high levels of commitment towards a change programme.

4 Successful human resource interventions in a change process include the use of dif-
ferent levels of employee involvement, the use of training and development and
management development practices and a mixture of reward and recognition schemes.

5 The importance of politics in the change process cannot be underestimated.

QUESTIONS FOR FURTHER THOUGHT

1 As many of the interventions suggested in this chapter are time consuming, how can
organisations manage effectively in times of discontinuous change?
2 How would you manage redundancies as part of a KM initiative?
3 What are the dangers of the three-phase change management strategy of unfreezing, moving
and refreezing (Lewin 1951)?
4 What determines the nature and level of consultation given that a manager could lose control in
the change process?
5 What is the most effective approach to training and development if the organisation has limited
resources?
6 What are the ethical issues associated with a portfolio approach to management development?
7 Discuss the advantages and disadvantages of individual and collective incentive schemes.
8 What type of recognition schemes are likely to be most effective in knowledge management
initiatives?
9 Some commentators believe that cultural change programmes do not deliver their goals. How
feasible is it for human resource interventions to influence the deeper values, beliefs and
attitudes rather than purely affect surface level norms?
10 What is the best way of developing political skills in the change process?

Further reading
1 Senior (1997) is an excellent book covering the different approaches and challenges in the
change management process and explores the hard systems and soft systems approach to change.
2 Brown (1998) is strong on cultural change management.
3 Beardwell and Holden (2001) provides a contemporary text on different human resource
interventions in the change process.
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Chapter 8 / Change management 237

References
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Barham, K., Fraser, J. and Heath, I. (1987) Management for the Future, Ashridge Management
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Beardwell, I. and Holden, L. (2001) Human Resource Management: A Contemporary Approach,
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Bennis, W. and Nanus, B. (1985) Leadership: The Strategies for Taking Charge, Harper and Row,
New York.
Brown, A. D. (1998) Organisational Culture, Pearson Education Ltd, London.
Browning, G. (2003) ‘Office politics: the new game.’ Management Today, May, 54–59.
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the legacy of the nineties’, Leicester Business School Occasional Paper, De Montford University, 43.
Carnall, C. A. (1990) Managing Change in Organizations, Prentice Hall, Hemel Hempstead,
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Daloz, L. A. (1986) Effective Mentoring and Teaching, Jossey-Bass, San Francisco.
Grundy, T. (1993) Managing Strategic Change, Kogan Page, London.
Guest, D. and Conway, N. (1997) Employee Motivation and the Psychological Contract, IPD, London.
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Harrison, R. (2000) Employee Development, Chartered Institute of Personnel and
Development, London.
Hayes, J. (2002) The Theory and Practice of Change Management, Palgrave, Basingstoke.
Hersey, P., Blanchard, K. H. and Johnson, D.E. (2000). Management of Organizational
Behaviour: Leading Human Resources, Prentice-Hall, Upper Saddle River, NJ.
Hislop, D. (2002) ‘Linking human resource management and knowledge management via
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Kilmann, R. H. (1984) Beyong the Quick Fix: Managing Five Tracks to Organizational Success,
Jossey-Bass, San Fransico, CA.
Kim, W. C., and Mauborgne, R. (2003) ‘Fair Process: Managing in the Knowledge Economy’,
Harvard Business Review, January, 127–136.
Kotter, J. P. and Schlesinger, L. A. (1979) ‘Choosing Strategies for Change’, Harvard Business
Review, March/April(2), 106–114.
Lewin, K. (1951) Field theory in social science, Harper & Row, New York.
Marchington, M., Goodman, J. P., Wilkinson, A. and Ackers, P. (1992) New Developments in
Employee Involvement, Manchester School of Management, Manchester.
Newell, S., Robertson, M., Scarbrough, H. and Swan, J. (2002) Managing Knowledge Work,
Palgrave, Basingstoke, Hampshire.
Odiorne, G. S. (1984) Strategic Management of Human Resources: A Portfolio Approach, Jossey-
Bass, San Francisco.
O’Reilly, C. A. (1989) ‘Corporations, Culture and Commitment: Motivation and Social
Control in Organizations’, California Management Review, Summer, 9–25.
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Parsloe, E. and Wray, M. (2000) Coaching and Mentoring: Practical methods to improve learning,
Kogan Page, London.
Paton, R. A. and McCalman, J. (2001) Change Management: A guide to effective implementation,
Sage, London.
Pfeffer, J. (2001) ‘Fighting the war for talent is hazardous to your organization’s health’,
Organizational Dynamics, Vol. 29, No. 4, 248–259.
Porter, L. W. and Lawler, E. E. (1968) Management Attitudes and Performance, Irwin,
Homewood, Ill.
Reid, M. A. and Barrington, H. (2000) Training Interventions: Promoting learning opportunities,
Chartered Institute of Personnel and Development, London.
Senior, B. (1997) Organisational Change, Pearson Education Ltd, Harlow, Essex.
Stewart, J. (1999) Employee Development Practice, Pitman Publishing, London.
Stone, B. (1997) Confronting Company Politics, Macmillan, Basingstoke.
9068 KMAN_C09.QXD 7/7/08 12:20 PM Page 239

PA RT 5
Leveraging knowledge

DISCOVERING
KNOWLEDGE
Data, information & knowledge
History of managing knowledge
Philosophical perspectives on knowledge

LEVERAGING GENERATING
KNOWLEDGE KNOWLEDGE
Knowledge management Organisational learning
in the learning organisation Knowledge management
Intellectual capital Tools & technology
KNOWLEDGE
MANAGEMENT
CYCLE

SHARING EVALUATING
KNOWLEDGE KNOWLEDGE
Knowledge management Knowledge management systems
and culture Strategic management perspectives:
Change management knowledge management strategy
9068 KMAN_C09.QXD 7/7/08 12:20 PM Page 240
9068 KMAN_C09.QXD 7/7/08 12:20 PM Page 241

Chapter 9
Knowledge management and the learning
organisation

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● contrast the differences between organisational learning and the learning organisation;
● explain the characteristics of the dominant conceptual models in the field;
● describe the differences between a static, teaching and learning organisation;
● outline the different strategic dimensions of a learning organisation.

MANAGEMENT ISSUES

The use and application of the learning organisation implies these questions for managers:
● What is the most appropriate model of a learning organisation to adopt in your organisation?
● How can a shared vision of a learning organisation be developed?
● How can trust and commitment be developed to promote a true learning organisation rather than
a teaching organisation?

Links to other chapters

Chapter 3 explores the similarities and distinctions between the learning organisation.
Chapter 6 expands on institutionalist perspectives of the competitive learning organisation.
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242 Part 5 / Leveraging knowledge

OPENING VIGNETTE

The growing pains of business FT

The world's biggest companies are facing a growth the core, argues Mr Zook, the less likely they are to
crisis. So says a chorus of consultants-turned- succeed. Thus Gillette glided smoothly from male
Cassandras who, unlike the mythical prophetess of shaving products into female shaving and toiletries
Troy, are selling solutions as well as portents of doom. but got a nasty shock when it went further afield into
Take Adrian Slywotzky, a big wheel in strategy batteries (Duracell) and pens (Parker and Waterman).
practice at Mercer Management Consulting. His new Salvation, Slywotzky-style, lies elsewhere. In Value
book, How To Grow When Markets Don’t, notes that in Migration (1996) and The Profit Zone (1998), the don-
the 1990s only 7 per cent of US public companies nish Mr Slywotzky argued that the rules of corporate
achieved eight or more years of double-digit growth strategy had changed. It was no longer enough to
in revenue and operating profits. ‘As the growth crisis design great products, build market share and wait
worsens in the coming decade you can expect this for profits to flow. A new breed of competitors –
percentage to shrink significantly,’ he warns, ‘unless Dell, Southwest Airlines, Wal-Mart – were develop-
companies rethink their approach to growth.’ ing business models that could turn the economics
Dramatic stuff. But also familiar. Strategy wonks of an industry on its head. The buzz-phrase was
may recall Creative Destruction (2001) by Dick Foster, ‘business model innovation’. In his new book, Mr
an erudite senior partner at McKinsey, which pre- Slywotzky argues that competition is now so intense
sented data showing ‘a steel link between survival that even having a nifty business model is no guar-
and underperformance’ among large companies. antee of success. The next strategic wave, he says, is
Then came Profit From the Core (also 2001) by Chris ‘demand innovation’ – that is, ‘using your product
Zook, head of the strategy practice at Bain, a con- position as the starting-point from which to do new
sulting rival to both Mercer and McKinsey. Mr things for customers that solve their biggest prob-
Zook’s numbers demonstrated that throughout the lems and improve their overall performance’.
1990s fewer than one in five public companies man- Such as? Take Cardinal Health, quite possibly the
aged to increase revenues and profits at an average biggest US company you have never heard of. This
real rate of 5.5 per cent or above. $50 billion-a-year distributor of medicines used its
There is no reason to doubt these statistics and relationships with drugs companies and hospitals to
every reason to take them seriously – with an impor- expand into everything from manufacturing auto-
tant caveat. The fact that individual companies find mated drug-dispensing machines to providing
it hard to improve revenue and profits at above- outsourced product development for pharmaceuti-
average rates over long periods is not, in itself, sur- cals companies. An even better example, although
prising. Any company earning supra-normal returns not cited in the book, is International Business
on capital can expect to attract competitors. The Machines, which in the 1990s leveraged its position
effect will be to reduce returns. Such is capitalism. as a trusted supplier of computers to sell informa-
That said, growing fast is difficult, not impossible. tion technology services, outsourcing and
So which strategies do our gurus suggest are likely to consulting. IBM Global Services is now Big Blue’s
reignite the growth engines? The trick, says Mr biggest business.
Foster, is for companies to learn how to ‘change at So far, so convincing. Just do not be lulled into
the pace and scale of the (stock) market’ – develop- thinking that ‘demand innovation’, ‘profiting from
ing new businesses, selling old ones and cultivating the core’ or ‘learning to change at the pace and scale
a corporate culture that is ready to embrace change. of the market’ will, in isolation, solve your com-
The biggest enemy of sustained growth is ‘cultural pany’s growth problems. The uncomfortable truth is
lock-in’, the phenomenon by which managers get that the best growth strategies are much too com-
attached to existing products and processes. plex to be captured in single volumes of the
Mr Zook’s prescription is conservative by compari- Cassandra kind.
son: focus first on your core business. Only when the In his excellent 1998 book Strategy Safari, Henry
core is well defined and purring along should man- Mintzberg identifies no fewer than ten schools of
agers start to think about diversification. Even then, thought about what makes corporate strategy. These
they should focus on ‘adjacencies’ – products sharing fall broadly into two categories. First are the ratio-
customers, costs, channels, competitors or technolo- nalists who believe that strategy formulation is a
gies with the core. The further companies travel from discipline that requires an elaborate process, lots
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Chapter 9 / Knowledge management and the learning organisation 243

of all-day meetings and tools ranging from Swot focused on its Crotonville management centre. GE
(strengths, weaknesses, opportunities and threats) also broke many of the rules in Profit From the Core
analysis to game theory. This is the realm of Bruce on its way to becoming the most admired US com-
Henderson, the late founder of Boston Consulting pany of the decade.
Group, and Michael Porter, the Harvard Business ‘Managers love these menu-driven books because
School superstar who 20 years ago wrote it relieves them of the burden of having to think very
Competitive Strategy, the definitive (if unreadable) hard,’ observes Prof Hamel with customary pith. ‘The
work on industry analysis. It is also the tradition only thing that really matters about any strategy is
that Messrs Zlywotsky and Zook represent. how it is different from every other strategy.’
Second are the humanists, who believe that far Preston McAffee, an economics professor at Texas
from being handed down by senior executives, strat- University, is even more blunt in the preface to
egy arises from within organisations through a Competitive Solutions, his own guide to the real-world
messy process of experimentation, failure and feed- nuances of strategic thinking: ‘A book that promises
back. Big names here include Peter Senge, author of to provide a single vision, or even three visions, for
The Fifth Discipline, the 1990 book that popularised all firms in all circumstances should be discarded, or
the idea of ‘learning organisations’, and Gary Hamel should be read only to identify the activities unin-
and C.K. Prahalad, arguably the most influential spired competitors might choose.’
strategy writers of the 1990s, who argued that com- Harsh, but fair.
panies need to focus on developing ‘core Source: Article by Simon London, Financial Times, 5 May 2003
competencies’, strategic flexibility and a vibrant
company-wide market for ideas. Questions
Mr Foster, at least in Creative Destruction mode,
1 As chief executive of a large private organisation,
with his emphasis on the dangers of cultural lock-in,
which one of these Cassandra offerings would you
also lives on this side of the intellectual tracks.
use and why?
Needless to say, the best real-world strategies
2 Are concepts such as ‘business model innovation’
combine both rationalist and humanist elements,
synonymous with the ‘learning organisation’? If not,
put together in an original way. In the 1990s, for
what are the differences?
example, General Electric combined an elaborate
3 What is the best mix of a rationalist and humanist
formal planning process with a strong emphasis on
perspective for a high-growth company
cultural change and a vibrant market for new ideas

Introduction
The external environment for many organisations nowadays is characterised by turbu-
lence associated with globalisation, deregulation of markets, changing customer and
investor demands and increasing product-market competition (Jashapara 2003; Mitroff
et al. 1994). There is a growing need in organisations to move beyond solving existing
problems to improving continuously in the face of changing conditions (Hamel and
Prahalad 1994). Knowledge has emerged as the most strategically significant resource of
the firm (Grant 1996) and the ability of a firm to learn faster than its competitors as the
only sustainable form of competitive advantage (de Geus 1988).
These assumptions have given rise to the notion of a learning organisation. Much of
the literature tends to be conceptually based and prescriptive in nature with little
empirical work to support its assertions. There is also confusion between the terms
‘learning organisation’ and ‘organisational learning’ as some authors use the terms syn-
onymously and interchangeably. A useful distinction is to consider organisational
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244 Part 5 / Leveraging knowledge

Table 9.1 Distinctions between organisational learning and the learning organisation
Organisational learning Learning organisation
Means End
Process or activity Idealised form
Attainable Easily lost due to changes
Descriptive research Prescriptive research
Inductive Deductive (normative)
Academic and scholarly orientation Practitioner and consultancy orientation
Predominantly qualitative research Predominantly quantitative research
(little empirical evidence so far)
Theoretical orientation Action orientation

learning as the processes or activities in an organisation whereas a learning organisa-

tion can be considered as the end state. Some authors suggest that the learning
organisation exists only in an ideal form, creating an unattainable tension; a holy grail
(Jashapara 1993). Some major distinctions between organisational learning and the
learning organisation are shown in Table 9.1.
The learning organisation literature gained in popularity in the mid 1990s but interest
has declined as the concept of knowledge management has taken over (Swan et al. 1999).
Despite the fact that knowledge is often the output of the learning process, many key
contributors in knowledge management fail to acknowledge the processes of organisa-
tional learning or the learning organisation in their considerations (Davenport and
Prusak 1998; Svieby 1997). In the same way, exponents of the learning organisation liter-
ature say relatively little about the pervasive use of information systems and technology
to achieve competitive advantage in contemporary organisations. There currently exists
an opportunity to synthesise these two emerging literatures and bring together the tech-
nological and human dimensions into a coherent whole (Loermans 2002).
This chapter shall attempt to forward the major conceptual and empirical advances in the
learning organisation literature. It begins by examining the major US contribution of The
Fifth Discipline by Peter Senge that popularised the notion of the ‘learning organisation’ in
the early 1990s. It continues to explore some of the British contributions to the concept in
the early 1990s (Garratt 1990; Honey 1991; Pedler et al. 1991). The Japanese contribution of
Nonaka (1991) is recognised for its elucidation of transformation processes involved in con-
verting tacit and explicit knowledge from one form to another. None of these idealised forms
of learning organisations shows explicitly how they will lead to competitive advantage.
Instead a model of a ‘competitive learning organisation’ (Jashapara 1993; Jashapara 2003) is
forwarded showing how learning can be aligned to changes in the competitive environment.
The problems of ideology, power and politics in learning organisations and the potential
exploitation of the workforce are highlighted towards the end of the chapter to show
how the concept could be misused by organisations. As empirical research on the learning
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Chapter 9 / Knowledge management and the learning organisation 245

organisation is limited and has suffered from widespread anecdotes and assertions, the cur-
rent position of empirical research is examined (Jashapara 2003; Örtenblad 2002).

US contribution: the fifth discipline

Peter Senge was instrumental in popularising the concept of the ‘learning organisation’,
especially among consultancy and business school circles, and placing it firmly on the
academic agenda. He saw organisations as a product of how we think and how we
interact. His definition of a learning organisation was (Senge 1990):

‘Learning organizations [are] organizations where people continually expand their capac-
ity to create the results they truly desire, where new and expansive patterns of thinking
are nurtured, where collective aspiration is set free, and where people are continually
learning to see the whole together.’

He considered the quality movement as the first wave of the true learning organisation
and believed that the building blocks for such organisations revolve around practising
five distinct disciplines, as shown in Figure 9.1: personal mastery, team learning, sys-
tems thinking, mental models and shared vision.
Personal mastery is seen as developing our capacity to clarify what is important to us
in terms of our personal vision and purpose. This helps to develop a ‘creative tension’
between our current reality and our future vision. The qualities of perseverance and
patience become guiding principles. This assumes that individual commitment to one’s
own growth and a supportive environment are prevalent in the organisation. Cynics
often opposed to personal mastery are recognised as ‘frustrated idealists’ disappointed
when reality falls short of their high ideals.
Team learning is deemed to develop our capacity for conversation and balancing dia-
logue and discussion. In many decision-making processes there can be a tendency
towards engaging in ‘discussion’ where different views are presented and defended.

Systems Problem
thinking solving

Personal Team Experiential

Experimenting
mastery learning learning
SENGE GARVIN
(Learning organisation (Organisational learning
orientation) orientation)

Mental Shared Vicarious Knowledge

models vision learning sharing

Figure 9.1 The learning organisation (Garvin 1993; Senge 1990)

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246 Part 5 / Leveraging knowledge

This is useful in instances of convergent thinking where a quick decision needs to be

made and the best argument prevails. However, in many other instances that require
divergent thinking, engaging people in ‘dialogue’ is considered primary where different
views are presented as a means to discovering a new view. People are more receptive to
new and different views and willing to change their own views.
Systems thinking is seen as developing our capacity for putting the pieces together
and seeing wholes rather than disparate parts. This is the conceptual cornerstone of the
fifth discipline as it provides the incentive and means to integrate disciplines and
recognise the whole. This is seen as the major drawback with traditional management
approaches to problems that produce simplistic frameworks to understand complex
and dynamic systems and processes.
Mental models is our capacity to reflect on our internal pictures. This discipline
involves balancing our skills of inquiry and advocacy as well as understanding how our
mental models influence our actions. An example of mental models is the increasing
use of scenario planning which forces managers to examine how they would manage
under different conditions in the future.
Shared vision is concerned with building a sense of commitment in a group based on
what they would really like to create. In this respect, leaders and managers play an
important role in developing learning organisations through building shared visions
rooted firmly in personal visions.
There are a number of questions and reservations that arise from this notion of the
learning organisation. These are predominantly linked to the prescriptive nature of the
model. How did these disciplines arise? What empirical or theoretical background under-
pins this model? Why not have another five equally valid disciplines such as training,
mentoring, participation, partnerships and feedback? How realistic is the development of a
shared vision given the inherent difficulty of aligning individual goals and organisational
goals? Also, many organisations are unlikely to want to relinquish management control to
the extent suggested by this model in the quest for employee empowerment. The internal
political environments have been ignored. Instead, the lasting contribution of this model
has been the promotion of ‘dialogue’ in team learning and recognising the importance of
systems thinking for understanding complex and dynamic situations.
In response to the prescriptive and idealistic nature of the five disciplines, the signifi-
cant other US contribution (Garvin 1993) took the notion of a learning organisation
back to various aspects of organisational learning. Hence, it is not surprising that con-
fusion has persisted between these two related concepts to this day. The definition of a
learning organisation from this perspective is (Garvin 1993, pp. 80):

‘A learning organization is an organisation skilled at creating, acquiring, and transfer-

ring knowledge, and at modifying its behavior to reflect new knowledge and insights.’

Here we have an operational perspective of the learning organisation where learning

can be measured, is actionable and provides guidelines for practice. Given the fact that
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Chapter 9 / Knowledge management and the learning organisation 247

often what gets measured gets managed in organisations, are the right forms of learn-
ing being measured? Are there dangers that measures may show high levels of learning
that are misdirected? As shown in Figure 9.1, the five forms of organisational learning
or activities construed as important in this model are (Garvin 1993):

● systematic problem solving;

● experimentation;
● learning from past experiences and mistakes;
● learning from others – including vicarious learning and benchmarking;
● transferring and sharing knowledge across the organisation.

UK contribution: the learning company

Apart from the above US contributions, much of the activity in the learning organisa-
tion literature has occurred in the UK. This began with Bob Garratt (1987) who
proposed a model based on a three-level hierarchy, as shown in Figure 9.2. Garratt was
influenced by the principles of action learning (Revans 1977) and was critical of the
‘action-fixated non-learning cycle’ found in many organisations. He argued that there
was a tendency to ignore the reflection phase in this action orientation with a conse-
quence of people trying harder rather than thinking smarter on problems.
There are also important cultural dimensions related to a reflection orientation. For
example, in Japan, a manager sitting on his own in his office is less likely to be inter-
rupted due to the assumption that he is reflecting on important organisational
problems and matters. The fact that he may be thinking about lunch is immaterial!
This valuing of reflection is less common in the west.
This model of the learning organisation is based on a three-level hierarchy of policy,
strategy and operations. Organisational learning occurs at these three levels in the form
of double-loop learning with multiple feedback loops from information flows, direction
giving and monitoring environmental changes. The model provides a means of
processing and integrating these information flows by positioning the direction givers
(business brain) at the centre of organisational learning. This places a large responsibility

EXTERNAL
Reframing ENVIRONMENT
POLICY
loop (Effectiveness focus)

STRATEGY Business
brain
INTERNAL
Operations
OPERATIONS ENVIRONMENT
loop
(Efficiency focus)

Figure 9.2 A three-level hierarchy for the learning organisation (Garratt 1987)
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248 Part 5 / Leveraging knowledge

for learning on direction givers, even though senior executives can often exhibit major
defences to learning (Argyris 1991). This model suggests that organisational learning is
highly dependent on executive learning but fails to consider the political dimensions
of learning at this level.
Similar to Garvin’s model, another UK model was more focused on organisational
learning and valued experimentation highly (Easterby-Smith 1990). This central quality
of experimentation was promoted in a number of ways. The proposed model suggested
experimenting in people to generate creativity and innovation, experimenting in
organisational structures to introduce flexibility, experimenting in reward systems so
that risk takers were not disadvantaged, and experimenting in information systems by
focusing on unusual variations. The difficulty is that experimentation can be costly,
especially when it does not lead to any clear signs of creativity or innovation and les-
sons learnt from mistakes are not passed around the organisation.
Another UK perspective on the learning organisation saw the concept much more
simply as encouraging wanted behaviours in organisations and suppressing unwanted
behaviours. The role of managers from this behaviourist perspective was to discover the
triggers and reinforcers for wanted behaviours and suitable mechanisms to discourage
unwanted behaviours. Examples of potential wanted and unwanted behaviours in a
learning organisation are shown in Table 9.2 (Honey 1991).

Table 9.2 Potential wanted and unwanted behaviours in a learning organisation

Wanted behaviour Unwanted behaviour
Asking questions Acquiesing
Suggesting ideas Rubbishing ideas
Exploring alternatives Going for expedient, quick fixes
Taking risks/experimenting Being cautious
Being open about the way it is Telling people what they want to hear/
filtering bad news
Converting mistakes into learning Repeating the same mistakes
Reflecting and reviewing Rushing around keeping active
Talking about learning Talking anecdotes
(i.e. what happened, not what was learnt)
Taking responsibility for own learning Waiting for other people to do it
and development
Admitting inadequacies and mistakes Justifying actions/blaming other people or events

Pause for thought Imagine you were tasked with initiating a company-wide programme for surfacing
people’s mistakes and learning from them. How would you instigate such an ‘error
harvesting’ programme where mistakes were surfaced and errors were discussed? What
do you see as the primary difficulties in implementing such a programme? What cultural
factors would you need to consider and how could they be overcome?
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Chapter 9 / Knowledge management and the learning organisation 249

The most telling UK contribution has come from two conceptual models of a ‘learn-
ing company’ (Pedler et al. 1991). The definition of a learning organisation from this
perspective is:

‘The Learning Company is a vision of what might be possible. It is not brought about
simply by training individuals; it can only happen as a result of learning at the whole
organization level. A Learning Company is an organization that facilitates the learning
of all its members and continuously transforms itself.’

The first proposed blueprint of a learning company was composed of five compo-
nents, as shown in Figure 9.3. The authors were highly influenced by action learning,
double-loop learning and the quality movement (Argyris 1999; Deming 1986; Revans
1977) in their proposed model. They suggested that the five key clusters in a learning
organisation are:

● strategy includes a learning approach to strategy with small-scale experiments and

feedback loops to enable continuous improvement and participative policy making;
● looking in includes using IT to help individuals understand what’s going on and
using formative accounting and control to assist learning and delighting internal
customers. In addition, this cluster includes developing an environment of collabo-
ration between internal departments and exploring assumptions and values behind
the reward systems;
● structures implies the need for roles and careers to be flexibly orientated to allow for
experimentation, growth and adaptation;
● looking out includes regularly scanning and reviewing the external environment and
developing joint learning with competitors and other stakeholders for ‘win:win’
learning;
● learning opportunities includes a climate of continuous improvement where mistakes
are allowed and encouraged together with self-development opportunities for all.

The original model above can appear somewhat mechanical and lifeless. In order to
convey a greater dynamic to this model, Pedler, Burgoyne and Boydell went further to

Strategy

Looking in

LEARNING
Structures
COMPANY

Looking out

Learning opportunities

Figure 9.3 The learning company (Pedler et al. 1991)

Source: Pedler, M., Burgoyne, J. and Boydell, T. (1991) The Learning Company: A Strategy for Sustainable
Development, McGraw-Hill, London. Reproduced with the kind permission of the McGraw-Hill Publishing Company.
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250 Part 5 / Leveraging knowledge

propose an energy flow model based on four components: ideas and actions at the indi-
vidual level and policy and operations at the collective level. All of these four
components are connected through four figures of eight to represent double-loop learn-
ing. There is little elaboration of the potential drivers and retarders of this energy flow
in organisations or recommendations if the energy becomes stuck in organisations.

Japanese contribution: the knowledge-creating company

Instead of learning being the critical success factor in organisations, Nonaka (1991)
argues that it is knowledge that is more primary and the lasting source of competitive
advantage. He forwards the notion of a knowledge-creating company based on contin-
uous innovation through knowledge creation. Despite the fact that knowledge is the
output of learning, the major contribution in this model is the transformation process
of tacit knowledge to explicit knowledge and vice versa to create new knowledge, as
shown in Figure 9.4. He looks at six successful Japanese companies to discern the differ-
ent dimensions of innovative processes. He uses the distinction of tacit and explicit
knowledge (Polanyi 1967) and incorporates an individual’s mental models and beliefs
into the difficult-to-articulate concept of tacit knowledge.

Pause for thought Imagine that you have been asked to manage the development of a new product or
service in your organisation. Describe how you could use metaphors, slogans, symbols
and other figurative forms of language to fire the imagination of your team. What
interventions could you make if your initial approaches were not well received? Can you
think of any alternative approaches that could spark the creative spirit of your team?

LOGICAL
IMAGINATION THINKING
Metaphors
FIGURATIVE
LANGUAGE

ANALOGY

MODEL

Slogans

Symbols

Articulation
TACIT EXPLICIT
KNOWLEDGE KNOWLEDGE
New
knowledge
Socialisation Combination

New
knowledge
TACIT EXPLICIT
KNOWLEDGE KNOWLEDGE
Internalisation

Figure 9.4 The knowledge-creating company (Nonaka 1991)

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Chapter 9 / Knowledge management and the learning organisation 251

The knowledge-creating company uses four processes for creating knowledge.

However, it is only when one form of knowledge is transformed into another, such as
tacit to explicit or vice versa, that new knowledge is created. The four processes as
shown in Figure 9.4 are as follows:

● Socialisation allows tacit knowledge from one person to be passed to the other. For
example, this is traditionally how knowledge is passed in a master–apprentice rela-
tionship. Such knowledge does not become explicit and, hence, cannot be leveraged
and used by the whole organisation.
● Combination is about combining discrete pieces of explicit knowledge held by indi-
viduals. Such explicit to explicit knowledge transfer does not expand the
organisation’s knowledge base.
● Articulation is the conversion of tacit knowledge to explicit knowledge. Here new
knowledge is formed and made explicit in a form that can be shared around the
organisation.
● Internalisation allows individuals to broaden their knowledge base and create knowl-
edge by converting explicit knowledge to tacit knowledge.

In all the companies studied, articulation was a primary process for successful inno-
vation. This involved using people’s imagination, playing with abstract ideas and
moving them towards a model of logical thinking that could be exploited by the organ-
isation. To get the tacit knowledge and ideas moving in a group, there was considerable
recourse to figurative language. This allowed hunches, intuitions and insights in the
group to surface. For the development of a new car, Honda used the slogan ‘Theory of
Automobile Evolution’ with its design team. Such creative tension allowed the design
team to consider a car as a living organism and explore how it would evolve.
Metaphors were also used to express the inexpressible, even though they might have
multiple meanings and appear contradictory. The tension in meanings was seen as a
valuable resource in the creative process. Once the knowledge creation process was trig-
gered through figurative language and the use of imagination, there were two
additional steps to get those ideas into a workable solution. The first was the use of
analogy to reconcile differences and make clear distinctions between ideas. The second
was to create a model of the ideas to give them a logical coherency.
Nonaka sees the continual challenge of knowledge-creating companies as re-examin-
ing what they take for granted. In terms of organisational design, he promotes a
‘redundant organisation’ to encourage knowledge sharing and dissemination. By
redundancy, he means the conscious overlapping of company information, business
activities and responsibilities. This can be achieved by individuals and groups overlap-
ping information and responsibilities to allow greater dialogue and communication to
occur. Another approach is to promote job rotation so that employees can see the busi-
ness from a wide range of perspectives. In addition, internal competition between
groups on the same project is encouraged so that the merits and shortcomings of differ-
ent approaches and perspectives are aired and the most effective solution is chosen.
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252 Part 5 / Leveraging knowledge

The primary assumption behind the knowledge-creating company is that innova-

tion is vital to a company’s survival. Hence, one can see why the use of figurative
language in the articulation process can become so important. However, if the domi-
nant competitive force in the external environment is efficiency, the model says little
on how the same knowledge-creating spiral could be used to these ends. Also, as an
individual’s tacit knowledge is intrinsically linked to a person’s mental models and
beliefs, the model does not explore how disparities between individual values and
organisational values would be managed. There are implications in employee commit-
ment to the knowledge-creating process.

The competitive learning organisation

The major shortfall in many models of the learning organisation is the lack of emphasis
on the competitive performance of the organisation. This remains implicit in the
models and there is little discourse on how such learning organisations would lead to
sustainable competitive advantage. The organisational learning and operational aspects
are articulated but the strategic dimensions appear to be missing.
One dynamic model that pursues the strategic nature of organisational learning is
the ‘competitive learning organisation’ (Jashapara 2003), as shown in Figure 9.5
(p. 253). The model adopts an institutionalist perspective where competition and
strategic change are seen as intimately linked (Pettigrew and Whipp 1991). This means
that organisational learning cannot be viewed separately from competition and the key
to success is alignment between an organisation and its environment (Fiol and Lyles
1985). Competition is regarded as a process through people’s day-to-day learning rather
than as a steady state of affairs. The model rejects the planning school approach to
competition as the dynamic processes of competition are never explored. Instead, it
assumes that strategy formation is adaptive, incremental and a complex learning
process where ends and means are either specified simultaneously or are intertwined
(Jashapara 2003). A competitive learning organisation is defined as:

‘a continuously adaptive enterprise that aligns itself to the environment by focusing its
learning on the major competitive forces at a given time.’

This model comprises two aspects: an organisational learning one and a strategic
one. Organisational learning can be considered as a distinction between cognitive and
behavioural development. Behavioural development can be seen as new responses or
actions based on existing interpretations. In contrast, cognitive development can be
regarded as organisational changes that affect the interpretation of events and develop-
ment of shared understanding among organisational members. The behavioural
learning is referred to as ‘single-loop learning’ in the model and the cognitive level as
‘double-loop learning’ (Argyris and Schon 1978). Another way of looking at single-loop
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Chapter 9 / Knowledge management and the learning organisation 253

Direction

Single-loop
learning

Efficiency Cooperation Proficiency

Competition

Double-loop
learning
Concentration Innovation

Organisational learning Learning focus

Figure 9.5 Competitive learning organisation (Jashapara 2003)

learning is ‘doing things better’ in organisations whereas double-loop learning is ‘doing

things differently or doing different things’ (Hayes and Allinson 1998).
The model of a ‘competitive learning organisation’ argues that learning by itself is not
enough to achieve competitive advantage. What if the learning is misdirected? Instead,
the emphasis in the model is on how best to focus the learning. Would sending senior
executives on Japanese flower-arranging courses be suitable? Is sending all prospective
senior managers on MBA programmes the best way forward? The problem with any pre-
scriptive approach is that the external environment and competitive changes tend to be
left out of the equation. Instead, this model argues that any learning needs to be focused
on the predominant competitive force acting on an organisation at any given moment.
Undoubtedly, these forces are dynamic and change over time.

As a manager, how can you ensure that the collective learning of your team is Pause for thought
responding to changes in the competitive environment? How would you manage your
team learning in an uncertain and turbulent environment? What time frames do you
consider most workable for managing learning in your teams? How would you influence
your team to be more proactive and take greater responsibility for their learning?

The learning focus for a competitive learning organisation is based on a system of

seven forces identified in effective organisations (Mintzberg 1991), as shown in Figure
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254 Part 5 / Leveraging knowledge

9.5. There are five generic forces that act externally on an organisation and two diamet-
rically opposite internal forces. At any given time, one of these forces tends to
dominate and learning is focused on responding to this force as best as possible. For
example, if innovation is the dominant force, learning efforts may be driven towards
creativity through articulation of tacit knowledge and the use of figurative language
(Nonaka 1991). The dominant external forces impacting on an organisation due to
changes in the competitive environment are as follows:

● The force for direction is concerned with strategic vision and may relate to organisa-
tions in start-up or turnaround situations.
● The force for efficiency is concerned with standardisation and formalisation of
processes and may relate to bureaucratic organisations where rationalisation and
restructuring are a major focus.
● The force for proficiency is concerned with tasks requiring high levels of knowledge
and skills and may relate to professional organisations.
● The force for concentration is concerned with concentrating efforts on serving certain
markets, particularly in large diversified firms.
● The force for innovation is concerned with discovering new things for the customer and
may relate to adhocracies comprising skilled experts or multidisciplinary projects.

There are also two internal cultural forces that have an impact on a firm’s learning
and effectiveness: the forces of cooperation and competition. In this conception, organi-
sational culture is viewed as a product of continual struggles by groups of organisational
members to impose values and identities on the role of others (Carroll 1995). If the
forces of cooperation are dominant in an organisation, this may result in an ideological
organisation such as a kibbutz. In contrast, if the forces of competition are dominant,
this may result in the pulling apart of politics and a highly political organisation where
conflicting in-fighting takes over. There may be limits to the levels of cooperation in an
organisation as ideology discourages change and if individuals perceive a need for
change, they may be forced to challenge the ideology which breeds politics.
As competitive forces are rarely static and vary continuously over time, a state of
‘configuration’ may occur where one of the external forces described above dominates
and the organisation is drawn towards a coherent form (Mintzberg 1991). However,
configuration may lead to the problem of ‘contamination’ where the dominant force
undermines equally valid forces. For example, a firm may be so fixed on improving its
efficiency over five years that it fails to recognise that it needs to focus on innovation
given the market changes with new products and services.
In some periods, organisations may go through states of ‘combination’ where no
single force dominates. This may result in periods of ‘conversion’ from one form to
another. The state of ‘combination’ may result in problems of ‘cleavage’ where two or
more forces may confront each other and eventually paralyse the organisation. For
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Chapter 9 / Knowledge management and the learning organisation 255

instance, half the management board of an organisation may wish to focus organisa-
tional energies and learning on efficiency whereas the other half may see innovation as
a much greater priority. The internal forces of competition and cooperation can be
important catalysts for managing these problems of ‘contamination’ and ‘cleavage’.
The competitive learning organisation is seen as an ideal rather than an end state.
Metaphorically, such organisations can be seen as in a ‘continual quest for the Holy
Grail’ (Jashapara 1993). The Holy Grail represents a search for improved methods of
learning at all levels and an understanding of the changing nature of competitive bases
which act as a focus for organisational learning. The fluctuating nature of the competi-
tive environment and the fragility of competitive bases means that organisations are
likely to maintain their ‘competitive learning’ phase for very limited periods before
they slip into either a ‘teaching’ phase, or a ‘static’ phase as shown in Table 9.3.

Table 9.3 Development of a competitive learning organisation (Jashapara 1993)

Static organisation Teaching Competitive learning
organisation organisation
Level of organisational Poor Fair High
learning
Rate of learning Poor Fair High
Learning focus None Limited High
Level of communication Poor Fair High
Flow of communication None One way Two-way
Organisational performance Poor Fair High

The static organisation is characterised by a lack of learning. Such organisations may

view their workforces as costs to be minimised rather than assets to be developed. It is
inevitable that such organisations will face an internal crisis through lack of responsive-
ness to the external environment. This crisis may act to inhibit learning or result in a
transformation into a ‘competitive learning’ phase. Such crises can be seen as opportuni-
ties for growth or can herald the beginning of the eventual decline of an organisation.
The competitive learning organisation places high value on the learning of all its
employees at individual, group and organisational levels. Double-loop learning is
encouraged, with an emphasis on questioning underlying assumptions. The distribu-
tion of learning is facilitated through open channels of two-way communication
throughout the organisation. Each employee is committed to focused learning that
responds to forces in the external environment.
However, the problems of contamination and cleavage may become more evident or
major cultural changes (fluctuation in forces of cooperation or competition) may domi-
nate an organisation, forcing it to slip towards a ‘teaching organisation’ where the
overarching role of senior managers as teachers becomes important. Learning can
become prescriptive and the domain of human resource departments rather than the
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256 Part 5 / Leveraging knowledge

responsibility of each learner. As these organisations are characterised by one-way com-

munication from senior managers to employees, there is little scope for an equal
exchange of ideas and knowledge. The role of learning focus is left solely to organisa-
tional strategists and human resource departments. Learning becomes parochial and
employees may feel blocked due to a lack of challenge and responsibility for their learn-
ing. In such circumstances, firms may slip into static organisations. This model
promotes the nature of adaptive enterprises responding to the ideal of continuous
improvement similar to the quest for the Holy Grail. Each time they feel they have
arrived at this elusive destination, the goal posts change due to the dynamics of the
competitive environment.

Power, politics and the learning organisation

The concept of a learning organisation conveyed in this chapter has been conceived as
a Utopian ideal, but could it be a Foucauldian nightmare instead (Coopey 1998)? Is the
concept of the learning organisation prone to exploitation of workers by managers in
more devious ways to attain their own goals? Let’s explore the nature of reality in many
organisations nowadays. Directors are under increasing pressure to satisfy short-term
profit goals of shareholders and more concerned about potential underperformance
which may lead to predatory action. This nervousness often results in tight organisa-
tional controls where employees can be reduced to mechanical objects in a
performance-driven system. Employees don’t have the same voice through their repre-
sentatives (traditionally the trade unions) as the balance of power has moved more
towards employers in many western countries through successive government inter-
ventions and diminishing trade union membership.
There are two perspectives of the learning organisation. One is of a Utopian sunshine
forwarded by practitioners and consultants, the other a Foucauldian gloom promoted by
academics (Denton 1998; Driver 2002). From the Foucauldian gloom perspective,
human resource management can be seen as a device to organise and control the work
process. Any deviation from the norm is a cause for concern. Individuals lose their per-
sonal identity in the workplace as they are subsumed in an overarching ideology of
enterprise and competition. People are disempowered and maintain the ‘them and us’
attitude. This hides the crucial element of trust as employees have little confidence that
their personal interests and goals will be honoured by their line managers. If trust is in
short supply, this will have a direct influence on employee commitment to organisa-
tional learning or the Utopian goal of a learning organisation. Under the Foucauldian
gloom perspective, we have a teaching organisation where senior managers learn and
win. This contrasts with a Utopian sunshine perspective where everyone learns and wins
along the lines espoused in a competitive learning organisation.
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Chapter 9 / Knowledge management and the learning organisation 257

Reflect on any organisational situation where you feel power has been misused by your Pause for thought
line manager. Describe your general feelings and impressions over the situation. What
impact did the incident have on your performance and commitment to learning? How
could the incident have been handled differently? What lessons have you learnt in the
use of power as a manager?

The dangers of the learning organisation concept is that organisations can use it as
an ideology to disguise control but phrased in an emancipatory rhetoric. The conse-
quences are that employees may be manipulated through coercive controls or outright
exploitation (Driver 2002). In these teaching organisations, dominant coalitions may
form and decide on the nature and form of learning. True learning is discouraged as it
could disrupt established norms and become harder to control. Learning becomes radi-
cal and a challenge to those in power. There is little room for dissent or questioning
organisational values and assumptions. The power dynamics of such a scenario mean
that the organisation is caught in a perpetual single-loop learning cycle leading to its
eventual decline. Double-loop learning is considered too disruptive to the balance of
power in such organisations.
Group norms can also play a negative role on indoctrination and coercive persuasion
(Schein 1999). This can result in a suppression of conflict and diversity and greater con-
formity to the rhetoric of the dominant powerful coalitions in an organisation. In its
extreme form, there may be participatory control through group surveillance of an
individual’s behaviour. There is little room for dissent and personal identity is reduced
to a psychic prison from which employees may be unable to escape due to fear of job
losses or impact on career progression (Driver 2002).
Are there ways out of this Foucauldian nightmare scenario of the teaching organisa-
tion? How can diversity and conflict be managed effectively in learning organisations?
One suggestion is to move from an adversarial to an inclusive approach with stakehold-
ers (Coopey 1998). This implies greater employee involvement and a loss of
management control which may be unpalatable to some parties comprising the domi-
nant coalitions in organisations. In 1995, British Airways created a post of a ‘court
jester’ reminiscent of the medieval courts with kings (chief executive) and senior
courtiers (executives). The jester’s role was to provide unorthodox criticism couched as
harmless jest in an environment where questioning was not the norm. Being a fool
allows the jester to play with ideas and ask basic questions about buried assumptions
and ways of thinking.
A more challenging suggestion is to use theatre to explore roles, discourses and
power dynamics in organisations (Coopey 1998). This is about getting people to take
different roles that allow them to play out various perspectives, including their own,
and to explore different ways of approaching everyday scenarios. It is about giving
‘oppressed’ employees a voice and reducing their sense of powerlessness. An influential
form of this radical theatre is the ‘Theatre of the Oppressed’ or ‘Forum Theatre’ (Boal
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258 Part 5 / Leveraging knowledge

1979). This has been used to elicit employee views by commissioning live theatre by a
British local authority to solve communication difficulties. Drama stimulates the power
of imagination and allows people to play different roles from everyday scenarios and
explore different options and solutions to their problems. Such theatre celebrates diver-
sity and difference in social groups, though it can be seen to challenge hierarchy and
established norms. The central political problem is how organisations can explore
issues of power imbalances and their negative impacts on organisational learning. If
they succeed, they become a Utopian sunshine learning organisation. Otherwise, the
Foucauldian gloom of a teaching or static organisation beckons.

Empirical research and the learning organisation

Empirical research on the learning organisation and the role of knowledge within the
firm and links with a firm’s strategy has suffered from widespread reliance on anecdotes
and assertion rather than statistical evidence. Apart from small-scale, in-depth studies
of a few organisations, there is virtually no empirical work in this area. Even the related
discipline of organisational learning is characterised by qualitative research with a few
handful of studies involved with hypotheses development and testing. These tend to be
around earlier research on learning curves in organisations.
A recent inductive study with a small sample of ten Swedish people showed that their
understanding of a learning organisation arose from four perspectives, as shown in Figure
9.6 (Örtenblad 2002). The first perspective is that the learning organisation is synonymous
with organisational learning and is purely ‘old wine in new bottles’. The second perspective
is that the learning organisation is learning at work and connected with experiential and
action learning. The third perspective is an association with a learning climate. This is con-
cerned with positive attitudes and beliefs towards learning. The last perspective is that a
learning organisation is a learning structure where the ideal is an organic, flatter structure.

Organisational
learning

Learning Learning
climate at work

Learning
structure

Figure 9.6 Inductive typology of a learning organisation (Örtenblad 2002)

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Chapter 9 / Knowledge management and the learning organisation 259

Apart from this small-scale inductive study, there is currently only one empirical
study that has engaged in hypothesis testing of the concept of a learning organisation
(Jashapara 2003). This study used a large stratified random sample of 180 construction
executives in the UK and developed an instrument of a ‘competitive learning organisa-
tion’ and organisational performance. Much of this research was developmental as no
scales of the learning organisation existed. The questionnaire was composed of ten con-
structs comprising 125 items with at least eight items per construct. As individuals may
be prone to give socially desirable answers of their learning, this was controlled using a
shortened form of the Marlowe–Crowne social desirability scale (Ballard 1992).
Each construct in this study demonstrated high levels of reliability and there was con-
siderable evidence for convergent, discriminant, nomological and known groups
validity. The results showed that organisational learning in the form of double-loop
learning does lead to competitive advantage and provides support to the assumptions
underlying the learning organisation literature (de Geus 1988). The results also showed
that cooperative cultures are more likely to achieve competitive advantage. However, an
anomaly arose in the results showing that competitive or political cultures are more
likely to lead to double-loop learning. Hence, successful organisations are more likely to
have a flux between cooperative and competitive cultures rather than either extreme. At
the time of the study, the competitive dynamics showed that learning focused on effi-
ciency and proficiency led to increased performance in the UK construction industry.
The results of the stratified sample in this study could be developed into benchmarks
related to company size. However, this is to be discouraged as benchmarking can lead
to organisations developing imitative strategies more akin to single-loop learning rather
than strategies to align themselves to changing environments. Also, it is unlikely that
executives would engage in benchmarking exercises on a regular basis due to the strate-
gic and sensitive nature of the information supplied. In addition, the information
gathered in benchmarking exercises can have a very short shelf life if the competitive
environments are highly volatile. The greatest challenge in future quantitative studies
is to provide sufficiently large representative samples from within an organisation as
well as large representative samples across organisations. This may be a pipe dream and
it is not surprising that most studies in this area are of a qualitative nature. In current
studies, the assumption is that executives can accurately assess levels of organisational
learning given that they have a ‘helicopter view’ of their organisations. From our dis-
cussions of power and politics in organisations, this may prove to be insufficient.
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260 Part 5 / Leveraging knowledge

CASE STUDY
Carley Fiorina, CEO, Hewlett-Packard FT
I tell people inside HP that leadership requires a during the proxy battle and it does make a differ-
strong internal compass. A company can get thrown ence still. In the end it’s irrelevant to the job I have
off course if it isn’t clear about its goals. It can get to do. I don’t spend a lot of time worrying about it.
thrown off its moorings in terms of ethics and stan- But I think there is a real difference in media treat-
dards if it is tempted by the wrong things. A person ment. I think in some ways the media is behind the
can get buffeted by conventional wisdom that is fre- reality of the business world.
quently wrong. Remember, at the time of the proxy I don’t think there is a particularly male or female
battle, AOL Time Warner was a ‘brilliant’ deal and way to lead. I think there are common elements of
HP Compaq was a ‘stupid’ deal. Both are examples leadership and common stresses and strains of being
of conventional wisdom being dead wrong. a CEO that both men and women can understand.
So you have to learn to ignore a lot of conventional One of the reasons organisations like the Business
wisdom and a lot of talk that isn’t core to the purpose Roundtable and the Business Council work is that
of what you’re doing. I knew what we were doing was not only do CEOs talk about issues that are common
the right thing for the company. Therefore I had no to them, or form public policy positions, but it is
alternative but to keep doing it. Sure, [there were dark also lonely in these jobs and there are some things –
moments]. It is very hard on some days not to take dilemmas, or pressures, or choices – that only other
criticism personally and not to have moments of self- CEOs understand.
doubt. Those are moments when having a Certainly, there’s an opportunity to commiserate
tremendously strong and supportive board, who with other female CEOs. Marjorie Scardino [chief exec-
brought me in, not the other way round, helped; when utive of Pearson, the FT’s owner] and I have laughed
having tremendously supportive customers and part- about press coverage of the two of us. I have never felt
ners helped; when having a management team and the need to act like a man or look like a man. I’m
employees who would buck me up helped, and I could proud of being a woman. I don’t believe in trying to be
go home and talk to a wonderfully supportive family. someone I’m not. But I also think that you have to
I would think back to my mother and father and speak to people in language they understand.
what they would say: ‘You have to be who you are In the case of the Lucent acquisition of a company
and do what you think is right.’ They never pointed called Ascend [when she went on stage with three
me in a particular direction because I was a girl. socks stuffed down the front of her trousers], these
They were very demanding in a positive way, were guys who, to be direct, thought a lot about the
because of what they thought I was capable of. size of their balls. They were sales guys. It was a very
My mother had a lot of zest for life. She was very macho kind of culture. They thought they’d been
positive. From her I get fundamental optimism. Both taken over by a bunch of wimps and that they were
my parents [had] very high standards of integrity. going to run the place, and I needed to tell them who
Watching them I learnt that authenticity is everything. was in charge. I was trying to make a point and I
I have never thought about the next job. That’s made it extremely effectively and in a way that made
probably because most of the time when I started in them laugh. You’ve got to have a little humour some-
the business world, I was scared to death. I was times too. I found a way to laugh throughout the
scared I was going to fail. I didn’t think I knew proxy battle. Humour, and humanity, are part of
enough. Until I was in my early 40s, and opportuni- being able to keep going, and part of life.
ties started to come along, I had never really No change programme is unanimously supported.
thought about [being a chief executive]. The proxy battle in many ways became not about a
One of the things that I was very naive about merger. It became about: ‘Are we standing still or are
when I first came to HP was that I was totally unpre- we moving ahead?’ HP was such a great company, but
pared for and quite caught off-guard by the amount it was almost frozen in time. That is to take nothing
of publicity and scrutiny, in particular around my away from the legacy of my predecessors. However,
gender. It remains one of the most difficult parts of this was a company that in some ways had lost its
the job. I am disappointed to have to say: Yes, [I am ambition. Its rate of innovation had declined dramati-
treated differently as a woman]. I would not have cally. It was growing in single digits in the middle of
said that four years ago. I thought we had gone the biggest technology boom in history. There were
beyond that. But I think it did make a difference real danger signs. But this was a company that had not
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Chapter 9 / Knowledge management and the learning organisation 261

ever brought in an outsider at the top. When I arrived, judgement. Sometimes they had to do things over
50 per cent of our employees had been there less than and over because they hadn’t thought it through.
five years, but not in the senior ranks, which were gen- We said: ‘The goal is to be fast and thorough.’
erally built from within. That’s how we got through the integration. I don’t
We had to find a common language. One of the think the timing was luck, I think it was choice.
first things I did was not tell people what we were People asked me: ‘Why would you do this in a
going to do, but ask our customers, our leaders and downturn?’ We chose a downturn because it gives us
our people what we needed to do. I was reasonably time. Customers and competitors aren’t moving as
certain that people did know what needed to be fast. We will spend our time doing the tough things
done. I was also reasonably certain that without real we have to do, so when the economy begins to
leadership, and alignment around purpose and goal, recover we will be ready.
we weren’t going to get it done. I do believe in learning by mistakes. We did our
Because I was an outsider I couldn’t dictate, first lay-off in HP before the merger was announced.
knowing this was a strong and deep culture and I I knew it was going to be very traumatic. I was con-
was only one person. I know that big companies can cerned the organisation didn’t have the skills,
thwart a CEO. The organisation had to decide its experience or stomach to do what needed to be
vision, its goal and its willingness to change. Then I done and so we moved very fast. We provided a lot
of outside support and we didn’t involve middle and
could lead.
first-line supervisors in the process enough. I learnt
If you looked at our company values today, you
two things from that: I learnt that I had underesti-
would find they are the exact same values that have
mated in many ways the people of the company,
guided HP for 60 years, except that we have added
their appetite for change and their ability to do hard
‘speed and agility’. We don’t want to change the fact
things. And I learnt that sometimes you have to go
that trust and respect are part of our value system,
slow to go fast.
that contribution is important and that passion for
Source: Article by Alison Maitland, Financial Times,
customers is important. Those basic values originally
20 November 2003
were referred to as ‘the HP way’. Over time, the
phrase came to mean any defence against any
change. I would go into meetings where somebody Questions
would bring up a new idea and someone would say: 1 In what ways would you describe Hewlett-Packard as
‘We don’t do it that way, that’s not the HP way.’ a learning organisation?
Especially for a technology company, it is death if 2 What role did culture play in aiding or hindering
you stop trying new things. effective learning at Hewlett-Packard?
HP tended to be very process-intensive, which is 3 Describe the importance attributed to action and
reflection at Hewlett-Packard. How would you know
really important when you’re dealing with big, com-
whether you had got the balance right?
plex systems and problems. The downside is that
4 Given the process-intensive nature of its operations,
sometimes HP processed endlessly and never
how can Hewlett-Packard learn effectively from its
decided. Compaq tended to be fast and aggressive,
mistakes? In short, how can Hewlett Packard
which is good in a fast-moving market. The down- promote double-loop learning?
side was [that] sometimes Compaq lacked

Summary
This chapter has explored the latest thinking around the concept of a learning organisa-
tion and elaborated five key themes:
1 The distinction between organisational learning and a learning organisation.
Organisational learning is seen as a process and means in an organisation whereas a
learning organisation is an end and an idealised state.
2 The popular conception of a learning organisation by Peter Senge as five disciplines
of personal mastery, team learning, systems thinking, mental models and shared vision.
3 Different models of a learning organisation were articulated, some emphasising
organisational learning, some knowledge creation, some structures and others strategy.
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262 Part 5 / Leveraging knowledge

4 The problems of the learning organisation ideology were highlighted where the con-
cept could be used for management manipulation and control. Various approaches such
as the use of ‘court jesters’ and radical theatre were suggested as ways of overcoming
power imbalances and generating trust and commitment to learning in organisations.
5 The paucity of empirical research to test various assumptions in the conceptual
frameworks. Apart from some small sample inductive studies, there is little statistical
evidence to support the assertions of the various models of learning organisations.

QUESTIONS FOR FURTHER THOUGHT

1 What are the main differences between organisational learning and the learning organisation?
Is the notion of a learning organisation little more than ‘old wine in new bottles’?
2 How can an idealised notion of a learning organisation help organisations succeed?
3 What are the problems of high-stretch goals?
4 What are the advantages and drawbacks of a prescriptive approach to a learning organisation?
5 How can a shared vision be achieved in organisations?
6 What are the dangers of clusters of learning and equal clusters of non-learning in organisations?
7 In what ways can imagination be mobilised in organisations?
8 How can cooperative cultures be a liability for organisations?
9 What are the dangers of a Foucauldian nightmare conception of a learning organisation?
10 What are the advantages and limitations of quantitative empirical research on the notion of a
learning organisation?

Further reading
1 Senge 1990 is a must-read if only because it placed the concept of the learning organisa-
tion firmly on the academic and consultancy agenda.
2 Pedler et al. 1991 is the dominant UK contribution in this field and contains many useful
organisational development exercises to complement the conceptual models developed.
3 Nonaka and Takeuchi 1995 is useful from a knowledge management perspective as the
book elaborates on the whole knowledge-creation process.

References
Argyris, C. (1991) ‘Teaching smart people how to learn’, Harvard Business Review, 69(3),
99–109.
Argyris, C. (1999) On Organizational Learning, Blackwell, Oxford.
Argyris, C. and Schon, D. A. (1978) Organizational Learning: A Theory of Action Perspective,
Addison-Wesley, Reading, MA.
Ballard, R. (1992) ‘Short forms of the Marlowe–Crowne social desirability scale’, Psychological
Reports, 71, 1155–60.
Boal, A. (1979) Theatre of the Oppressed, Pluto Press, London.
9068 KMAN_C09.QXD 7/7/08 12:20 PM Page 263

Chapter 9 / Knowledge management and the learning organisation 263

Carroll, C. (1995) ‘Rearticulating organizational identity: exploring corporate images and

employee identification’, Management Learning, 26(4), 463–82.
Coopey, J. (1998) ‘Learning to trust and trusting to learn: a role of radical theatre’,
Management Learning, 29(3), 365–82.
Davenport, T. H. and Prusak, L. (1998) Working Knowledge: How Organizations Manage What
They Know, Harvard Business School Press, Boston, MA.
de Geus, A. (1988) ‘Planning as learning’, Harvard Business Review, 66(March/April), 70–4.
Deming, W. E. (1986) Out of the Crisis, MIT Press, Boston, MA.
Denton, J. (1998) Organizational Learning and Effectiveness, Routledge, London.
Driver, M. (2002) ‘The learning organization: Foucauldian gloom or Utopian sunshine’,
Human Relations, 55(1), 33–53.
Easterby-Smith, M. (1990) ‘Creating a learning organisation’, Personnel Review, 19(5), 24–28.
Fiol, C. and Lyles, M. (1985) ‘Organizational learning’, Academy of Management Review, 10(4),
803–13.
Garratt, B. (1987) The Learning Organization, Gower, Aldershot.
Garratt, B. (1990) Creating a Learning Organization: A Guide to Leadership, Learning &
Development, Director Books, Cambridge.
Garvin, D. A. (1993) ‘Building a learning organization’, Harvard Business Review, 71(4),
78–91.
Grant, R. M. (1996) ‘Toward a knowledge-based theory of the firm’, Strategic Management
Journal, 17, 109–22.
Hamel, G. and Prahalad, C. K. (1994) Competing for the Future, Harvard Business School Press,
Boston, MA.
Hayes, J. and Allinson, C. W. (1998) ‘Cognitive style and the theory and practice of individ-
ual and collective learning in organizations’, Human Relations, 51(7), 847–71.
Honey, P. (1991) ‘The learning organisation simplified’, Training and Development, July,
30–33.
Jashapara, A. (1993) ‘The competitive learning organization: a quest for the Holy Grail’,
Management Decision, 31(8), 52–62.
Jashapara, A. (2003) ‘Cognition, culture and competition: an empirical test of the learning
organization’, The Learning Organization, 10(1), 31–50.
Loermans, J. (2002) ‘Synergizing the learning organization and knowledge management’,
Journal of Knowledge Management, 6(3), 285–294.
Mintzberg, H. (1991) ‘The effective organization: forces and forms’, Sloan Management
Review, Winter edition, 54–67.
Mitroff, I. I., Mason, R. O. and Pearson, C. M. (1994). ‘Radical surgey: what will tomorrow’s
organizations look like?’, Academy of Management Executive, 8, 11–22.
Nonaka, I. (1991) ‘The knowledge-creating company’, Harvard Business Review,
69(November–December), 96–104.
Nonaka, I. and Takeuchi, H. (1995) The Knowledge-Creating Company: How Japanese Companies
Create the Dynamics of Innovation, Oxford University Press, New York.
Örtenblad, A. (2002) ‘A typology of the idea of learning organization’, Management Learning,
33(2), 213–230.
Pedler, M., Burgoyne, J. and Boydell, T. (1991) The Learning Company: A Strategy for
Sustainable Development, McGraw-Hill, London.
Pettigrew, A. and Whipp, R. (1991) Managing Change for Competitive Success, Blackwell
Publishers, Oxford.
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264 Part 5 / Leveraging knowledge

Polanyi, M. (1967) The Tacit Dimension, Doubleday, New York.

Revans, R. W. (1977) The ABC of Action Learning, Action Learning Trust, Luton.
Schein, E. H. (1999) ‘Empowerment, coercive persuasion and organizational learning: do
they connect?’, The Learning Organization, 6(4), 163–72.
Senge, P. M. (1990) The Fifth Discipline: The Art and Practice of the Learning Organisation,
Doubleday Currency, New York.
Svieby, K. (1997) The New Organizational Wealth: Managing and Measuring Knowledge-Based
Assets, Berrett-Koehler, San Francisco.
Swan, J., Scarborough, H. and Preston, J. (1999) ‘Knowledge management – the next fad to
forget people?’, Proceedings of the 7th European Conference on Information Systems, Copenhagen.
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Chapter 10
Intellectual capital

LEARNING OUTCOMES

After completing this chapter the reader should be able to:

● understand the differing conceptions and frameworks of intellectual capital;
● evaluate the need to have non-financial measures of intellectual capital to supplement traditional
financial measures;
● apply concepts of intellectual capital in practice;
● appreciate the different aspects of intellectual property such as patents and copyrights.

MANAGEMENT ISSUES

The measurement and management of intellectual capital implies these questions for managers:
● Are intellectual capital accounts likely to help a firm gain competitive advantage and how can they
enable a firm to critically review its practices and processes?
● What aspects of ‘knowing how’ and ‘knowing that’ can be reliably measured to be meaningful for
an organisation and its external stakeholders?
● How can intellectual capital accounts be produced using existing organisational processes. If new
processes are needed, what form should they take?
● How can a firm strategically manage its intellectual property?

Links to other chapters

Chapter 4 helps to understand the implications of intellectual capital measurement and
reporting on strategic development.
Chapters 7 and 9 recognise the implications of knowledge management systems and communities of
practice on organisational and human capital.
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266 Part 5 / Leveraging knowledge

OPENING VIGNETTE
Value added scorecard FT
Which companies are best at creating wealth? And these two ratios to be as high as possible. High value
how do they go about it? These questions – of vital added per worker indicates the employees are skilled
interest to managers across industry – are addressed at what they are doing, perhaps because they work
in an analysis of European businesses, published in ‘knowledge industries’ where intellectual property
today. The Value Added Scoreboard, produced by the is highly important. Workers in such sectors will
UK’s Department of Trade and Industry, focuses on a almost certainly be rewarded with high wages – a
measure of company output frequently neglected by good thing for the community as a whole.
investors, managers and other business observers. An above-average figure for value added divided
A company’s ‘value added’ is calculated by taking by costs is also positive, because it indicates the com-
its sales and subtracting the cost of buying in mate- pany is making profits that can be reinvested. A key
rials, components and services. When divided by the finding from the report is that value added ratios
number of employees, or the time they spend work- differ widely between different sectors, depending on
ing, it is the commonest definition of productivity – the inherent characteristics of the sector.
of interest to economists and politicians around the The 300 businesses in the report have an average
world. Put simply, value added depicts in one of the annual value added per employee of £49,900. The
purest possible ways how good a company is at turn- comparable figure for value added/costs is 153.2 per
ing ideas and physical goods into products and cent. However, certain sectors – the ‘elite’ group,
services that customers want to buy. including the oil and gas, banking and pharmaceuti-
The DTI set out to measure value added across cals industries – generally have both ratios above the
Europe’s 300 top value-creating companies, using average. Then there are the middle rankers, where
published data for either the 2000 or 2000/01 finan- typically (as in car making, diversified industrials
cial years. The businesses – in 34 sectors – created a and food processing) one ratio is above average and
total of £1,081 billion (sterling) in value added over one below average. The low scorers – including gen-
the period, equivalent to about a fifth of western eral retailing and support services – typically have
Europe’s gross domestic product. both ratios well below the average.
The finished report provides useful benchmarks Why some sectors have higher scores for these
for individual businesses in almost any sector to ratios than others is, in many cases, fairly easy to
measure how well they are performing in relation to understand. The oil and gas sector, for instance,
their peers. The document also sheds light on why buys in cheap raw materials and uses more capital
companies perform better or worse than others. At its equipment than human labour. Those workers it
most basic level, the report details which European does use tend to be highly skilled and paid above
companies are biggest in terms of value added. average. The sector also has tight control over the
DaimlerChrysler, the German/US car company, is at distribution mechanisms needed to channel prod-
the top of the tree, with an annual value added of ucts to the market – which is why it can charge high
£27 billion. Other well-known names including BP, prices. For all these reasons, both ratios for oil and
the oil company, Siemens, the electrical goods sup- gas are among the highest figures for any sector in
plier, and Deutsche Telekom are also in the top 10. the analysis, at £191,500 and 264 per cent.
But value added by itself indicates only the scale At the opposite end of the spectrum is retailing,
of a company’s operations. A manufacturer that where virtually all the goods sold are bought in from
makes most of its own parts has higher value added suppliers, employees are fairly numerous but low-
than a company of similar size that leaves this to skilled and – apart from areas such as marketing and
suppliers. To provide a clearer insight into how well logistics – companies have little intellectual capital
companies are performing, the scoreboard focuses to exploit to push up margins. General retailing,
on two key ratios. These are value added divided by therefore, has an average value added per person
the number of employees, which reflects companies’ of just £21,300, with a value added/cost figure of
skills in using workers to produce high-value goods 131 per cent.
and services; and value added divided by employee The main lesson from the report is that within
and equipment costs, which is a measure of underly- individual sectors, the performance of specific com-
ing profitability. panies varies widely. Thus Svenska Handelsbanken
Almost all companies – and the governments of of Sweden and Dexia of Belgium – neither of them
the countries where they are based – would like generally considered to be in the top league of
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Chapter 10 / Intellectual capital 267

European banks – score well on both ratios, while and profits performance of a top drugs company.
the main UK clearers such as Barclays are in the But within individual businesses, managers may be
middle ranks of the sector. In the support services able to do quite a lot – through tighter cost control
category, Adecco, the Swiss recruitment agency, and closer relations with suppliers or by moving
scores well for its sector on both counts, while TNT into new market niches – to improve their compa-
Post of the Netherlands does poorly. nies’ performance. By studying the wealth of data in
But what does this mean for managers? The report the report, managers should be able to make up
comes up with some tentative conclusions that com- their own minds about which specific companies
panies that have invested more in research and they can pick up lessons from – and which ones
development and capital equipment tend to have they would do better to ignore.
better scores for both key ratios. Thus in engineering Source: Article by Peter Marsh, Financial Times, 16 May 2002
– a generally low-scoring sector – Heidelberger
Druckmaschinen, a large German maker of printing Questions
equipment and a big investor, has some of the high-
1 What are the advantages and drawbacks of using
est ratios of its peers.
the value added scorecard for measuring a
Broader conclusions from the report are that to
company’s ability to create wealth?
some degree managers in individual industries are
2 What is the difference between intellectual capital
trapped by the limitations of their sector. It is futile, and the value added scorecard?
for instance, for someone managing a run-of-the- 3 Why could an analysis of value added benchmarks
mill catering business to aim for the productivity be misleading?

Introduction
In an international survey conducted in 1998, 82.3 per cent of the 1,300 firms ques-
tioned named intellectual capital as the critical factor for their future business success
(Bertels and Savage 1998). National governments have also recognised intellectual capi-
tal as a major factor in their country’s future prosperity. For example, the UK
government’s White Paper, Our Competitive Future: Building the Knowledge Driven
Economy, clearly recognises the power of knowledge to transform economic growth and
performance. An interesting trend of the so-called ‘knowledge-driven economy’ is that
shareholders are becoming better informed from a variety of financial and non-finan-
cial sources (often from the internet) and becoming more critical in their analyses of
companies. Jean-Claude Paye, Secretary General of the OECD, reinforced the impor-
tance of knowledge for economic performance (Skyrme and Amidon 1997):

‘Knowledge is now a critical factor underpinning economic growth. Producing goods and
services with high value-added is at the core of improving economic performance and
international competitiveness […] Increasing investment […] has become a major issue
for enterprises and governments.’

A great deal of the current literature on intellectual capital is about how we measure
this elusive entity. Measurement of any entity needs to consider its overriding purpose
and its likely market of recipients. This can raise a number of key questions:
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268 Part 5 / Leveraging knowledge

● Is measurement purely for internal consumption to improve management practices?

● Is measurement for external consumption by analysts, brokers, banks, customers or
any other stakeholders?
● Are there dangers in predominantly measuring the more easily accessible explicit
knowledge base of the firm at the expense of the potentially more valuable tacit
knowledge or ‘know how’?
● What is the time frame for such measures to be meaningful? Are snapshots annually
likely to be meaningful in highly fluctuating capital markets?
● Commonly accepted frameworks of intellectual capital are likely to lend themselves to
benchmarking among organisations. Are there likely dangers of benchmarking? Are
firms likely to reveal their sensitive knowledge assets for external monitoring purposes?

We start this chapter by considering the nature of intellectual capital from a variety
of perspectives as well as its historical background. The dangers of adopting a purely
financial approach to intellectual capital are highlighted and the need to build in non-
financial measures is explored. A multitude of intellectual capital frameworks is presented
and the notions of human capital and organisational capital are examined in greater
depth. We illustrate how intellectual property can be managed, especially through the use
of smart patents. An interesting recent development of intellectual capital as a narrative is
forwarded as well as a practical approach to the process of knowledge auditing.

What is intellectual capital?

‘Intellectual capital’ is a relatively new academic endeavour that is grounded in practice
and has its origins in consultancy and industry. There are currently no universally
accepted definitions of this term. A simplistic definition would be: ‘The difference
between the market value of a publicly held company and its official net book value is
the value of its intangible assets’ (Svieby 1997). One argument for existence of intellec-
tual capital is the marked way in which stock prices change in response to changes in
management of an enterprise. A general characteristic of knowledge-intensive organisa-
tions such as Microsoft, Oracle and SAP is that their market-to-book-value ratio is often
several times higher than that of traditional organisations. From a financial perspective
of intellectual capital, one recognises that intellectual capital can be a highly volatile
entity and dependent on daily fluctuations of capital markets. The inherent potential
of rapidly changing values of intellectual capital may create tangible risks for investors
and other stakeholders, such as witnessed by the collapse of some dotcom companies
with high market-to-book values.
Stewart (1997) has proposed that intellectual capital is the ‘intellectual material –
knowledge, information, intellectual property, experience – that can be put to create
wealth’. Some authors have used the term expressively ‘to refer to the knowledge and
knowing capability of a social collectivity, such as an organisation, intellectual community,
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Chapter 10 / Intellectual capital 269

or professional practice’ (Nahapiet and Ghoshal 1998). Other scholars have associated
the term more closely with human resources (Boudreau and Ramstad 1997) or with
information technology (Davenport and Prusak 1998). A workable definition of intel-
lectual capital has been offered by the Organisation for Economic Co-operation and
Development (OECD 1999):

‘The economic value of two categories of intangible assets of a company: organisational

(‘structural’) capital and human capital.’

There can be some confusion between intellectual capital and intangible assets. The
OECD definition treats intellectual capital as a subset of the overall intangible base of an
organisation such as its reputation. Structural capital refers to the tangible elements
within an organisation such as software and supply chains that remain after employees
go home at night. Human capital is what remains in employees’ heads when they go
home at night, such as customer relationships, know how and their creativity. A useful
map of the intellectual capital terrain is proposed by Roos et al. (1997) who make a dis-
tinction between efforts focused on a strategic perspective or a measurement perspective,
as shown in Figure 10.1. A strategic perspective is interested in the management of intel-
lectual capital to increase value of the organisation whereas a measurement perspective
focuses on reporting mechanisms of a quantitative or qualitative nature.
A critical aspect of these definitions is that intellectual capital is not an object or a
stable entity (such as knowing that) but rather a consequence of certain elements of
collectivity. In this conception, intellectual capital is a dynamic entity and closely
linked with the processes and practices of knowledge management.

Learning
organisation
Knowledge Conservation
development management

Innovation
Strategy
Knowledge
management
Knowledge Core
leverage competencies
Inellectual
capital Invisible assets

Human resource Intangible

accounting asset monitor

Measurement Balanced

Scorecards Financial

Figure 10.1 Conceptual roots of intellectual capital (Roos et al. 1997)

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270 Part 5 / Leveraging knowledge

Pause for thought Reflect on your personal knowledge assets. How would you describe your personal
intellectual capital? Do you believe this is a function of your academic or professional
qualifications or more concerned with your general skills and experience? How far
would you factor the strength of your contacts and relationships into your intellectual
capital? How would you ascribe a market value to your intellectual capital?

There have been considerable efforts to capture the concept of intellectual capital
with a number of frameworks forwarded to encapsulate the term. In its current stage of
development, it is important to recognise the shortcomings of the different schemas
proposed by asking the ‘so what?’ questions (Andriessen 2002): For example:

● As an employee, what does it mean to be told that the share of employees with
higher degrees has gone up and line manager satisfaction rating has gone down?
● As a senior manager, how would an instrument of intellectual capital assist you in
your change management programmes or strategic development plans?
● As an investor, how would the notion of an intellectual capital account help you to
decide whether or not to invest in a company?

History of intellectual capital

Intellectual capital has emerged from the accounting discipline in a quest to find more
comprehensive measures of organisational performance. The roots of the accounting
profession can be traced back to its father, Luca Pacioli, whose starting point in 1494
was to measure tangible assets linked to factors of production. However, the interest in
intellectual capital is much more recent. In the 1980s, James Tobin’s q ratio highlighted
the major differences between the market value and book value of firms as they entered
the information age. During this time, there was a recognition of the inadequacy of tra-
ditional financial measures and a search began to incorporate non-financial measures
into the analysis. The first major turning point in intellectual capital came from
Skandia, the Swedish financial services firm, which in 1990 appointed Leif Edvinsson as
‘Director of Intellectual Capital’ and published an intellectual capital supplement to its
annual accounts in 1994. A rough history of intellectual capital is depicted in Table
10.1 (p. 271) with a number of milestones presented.

Problems of measuring organisational performance

Conventional measures of organisational performance tend to favour the more widely
available financial information. This has arisen due to requirements in law where compa-
nies must disclose specific financial information annually. For instance in the UK, a public
limited company has to disclose a profit and loss account, a balance sheet and a funds flow
statement. From these accounts, analysts can calculate a number of financial performance
ratios such as return on capital employed (ROCE), return on investment (ROI) and so on.
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Chapter 10 / Intellectual capital 271

Table 10.1 History of intellectual capital

Period Milestones
1969 Tobin’s q ratio established to compare a firm’s market to book ratio.
1969 John Kenneth Galbraith first coined phrase ‘intellectual capital’ in a letter to economist
Michael Kalecki: ‘I wonder if you realise how much those of us in the world around have
owed to the intellectual capital you have provided over these past decades.’
Early 1980s Accounting profession uses the term intangible assets predominantly in the form
of goodwill.
Mid 1980s Gap between market and book values widens for many IT-related firms.
1988 Establishment of the European Foundation for Quality Management promoting
non-financial indicators of excellence.
1989 Attempts by Svieby to measure intellectual capital in the form of an ‘invisible
balance sheet’.
1990 Leif Edvinsson is appointed ‘Director of Intellectual Capital’ at Skandia AFS.
1992 Kaplan and Norton introduce concept of ‘balanced scorecard’.
1994 Skandia and Rambøll publish a supplement on intellectual capital to their
company’s annual accounts. Went on to develop an instrument for measuring
intellectual capital called ‘Skandia Navigator’. Dow Chemical collaborates with
Skandia and pursues an intellectual capital framework forwarded by Petrash.
1995 World Trade Organisation (WTO) negotiates agreement on Trade Related Aspects
of Intellectual Propert Rights (TRIPS). Celemi uses a ‘knowledge audit’ to provide a
detailed assessment of its intellectual capital.
1997 Roos et al. propose a single ‘intellectual capital’ index to group the different
indicators. Stewart develops an instrument called the ‘Intellectual Capital Navigator’.
1998 ‘Method of doing business’ (MDB) is given right to be patented under US case law.
Danish Agency for Trade and Industry sponsors a report on the preparation of
‘intellectual capital accounts’ based on the experience of ten companies. UK
government publishes White Paper entitled Our Competitive Future: Building the
Knowledge Driven Economy. In Spain, 23 companies form ‘Club Intellect’ to
promote measurement of intellectual capital.
1999 OECD co-sponsors an international symposium on intellectual capital in Amsterdam.
Danish Confederation of Trade Unions proposes a framework for intellectual capital.
European Union funds research project ‘MERITUM’ to examine intellectual assets.
2000 Launch of academic Journal of Intellectual Capital dedicated to an international
exchange of research and best practice on all aspects of managing intellectual
capital in organisations.
2002 Mouritsen et al. propose the addition of a narrative to intellectual capital accounts.

However, these conventional measures are not free from accounting manipulations,
as witnessed by the collapse of the US giant Enron. For example, Smith (1992) identi-
fied 45 leading UK companies that used five or more debatable ‘financial engineering’
techniques to massage financial figures and present a spurious reflection of the firm’s
performance. These financial engineering techniques included questionable approaches
to undervaluation of assets, provisions, capitalisation of costs, depreciation, goodwill,
brands and off-balance-sheet finance. For instance, BAA increased the economic life of
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272 Part 5 / Leveraging knowledge

its terminals and runways from 16 and 23.5 years respectively to 50 and 100 years. This
resulted in the reduction of annual depreciation costs and a subsequent major increase
in profits with comparatively little change in its organisational practices.
Despite the potential for accounting manipulations, one financial method for evalu-
ating intellectual capital from an external perspective is Tobin’s q derived from the
Nobel Prize winner and economist James Tobin (1969). The Tobin q ratio compares the
market value of an asset with its replacement cost (book value). If the quotient q
(known as the ‘market-to-book value’) is less than 1, the market value of the product or
service is lower than its cost of reproduction. If the firm enjoys a high q, it is likely to
generate higher profits and income. Assuming that similar sized firms have comparable
tangible assets, the difference in competitive performance can be said to arise from
intellectual capital.
There are hazards of measuring intellectual capital from the market-to-book value. In
high-growth markets, the intellectual capital may become inflated purely due to specu-
lations of investors. For instance, Bill Gates lost $5 billion during the ‘Russia crises’
between August and September 1998 even though the ‘intellectual capital’ of Microsoft
remained relatively unchanged (Reinhardt et al. 2001). Additional external influences
that can affect Tobin’s q are the interest rates, inflation rates, money supply and cycli-
cal shifts from bonds and shares. The book value of a firm can be distorted and is not
entirely free of accounting manipulations. Hence, even though knowledge manage-
ment practices and processes may increase within a firm, they may not be supported by
external perceptions of the firm through such ratios.
There has been an increasing call to supplement the small set of traditional financial
performance measures with non-financial indicators that provide an understanding of
the processes behind them (Eccles and Nohria 1992). In addition, there has been a
recognition that a new paradigm of performance measurement is required that regards
it as an ongoing evolving process. The European Foundation for Quality Management
(EFQM), formed by 14 leading European companies in 1988, has established an annual
European Quality Award for the most successful exponent of Total Quality
Management (TQM) in Europe. It is revealing that the performance categories deemed
critical for excellence in organisational performance are rather sparse of financial meas-
ures, as shown in Figure 10.2 (p. 273).
The measurement of intellectual capital can be viewed as a continuation of the his-
torical approaches used to measure human resource performance. Morgan (1992)
identified three dominant approaches to measuring human resource performance. The
first approach attempts to identify meaningful and reliable human resource measures
of greatest concern to the organisation. This approach can be costly, time-consuming
and may result in no clear guidelines for action. There is also the danger of creeping
numeration as every measure deemed relevant is turned into the official measurement
system (Eccles and Nohria 1992).
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Chapter 10 / Intellectual capital 273

ENABLERS RESULTS

People
People
results

Key
Policy & Customer
Leadership Processes performance
strategy results
results

Partnerships Society
& resources results

INNOVATION AND LEARNING

Figure 10.2 EFQM excellence model

The second approach is to develop measures whose potential benefit outweigh the
expense or difficulty of data collection. The rationale is to keep things simple and to
avoid information overload by developing a few measures to help managers gauge the
state of affairs. This approach runs the risk of being too superficial as it does not tell a
manager why an outcome may have occurred and how to incorporate the lessons
learnt into the system.
The third approach to human resource performance is the use of benchmarking.
This involves a comparison of selected performance indicators with other firms in the
same industry. It can help managers to establish whether certain human resource prac-
tices are within or outside a given norm in a particular sector and to take appropriate
action. The most common form of human resource benchmarking is salary surveys.
Benchmarking does have its limitations. There can be a difficulty in finding standard
and acceptable indicators and a reluctance within companies to divulge sensitive infor-
mation. It can be a time-consuming and expensive process and promote a culture of
imitating competitors’ practices rather than encouraging innovative ‘leading-edge’
practices. Also, the data collected does not provide the highly prized (qualitative) infor-
mation of the processes that enabled certain outcomes to occur. Clearly the same issues
are likely to be apparent if a common benchmarking framework for intellectual capital
is developed. At the current time, a number of frameworks for intellectual capital have
been forwarded but none has been universally accepted.

Frameworks of intellectual capital

When considering various frameworks and indices to measure intellectual capital, one
has to be mindful of the old adage that what gets measured gets managed but what is
not understood is ignored. Some key questions in determining the effectiveness of vari-
ous frameworks and indices includes:
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274 Part 5 / Leveraging knowledge

● Does it add value to the customers?

● Can it offer potential for the future?
● How can one interpret it during a recession?
● Does it provide a unique competitive advantage?
● Is it sustainable over some years?
● Is it firmly anchored within the organisation?
● Does it engender a proactive transformative approach?

In 1992, Robert Kaplan and David Norton (1992) developed the first approach to
intellectual capital that took into account a number of perspectives apart from the tra-
ditional financial one. They suggested that a ‘balanced scorecard’ that included a
customer perspective, a financial perspective, an internal business perspective and an
innovation and learning perspective was likely to provide senior managers with a fast
single report on organisational performance. This approach has become popular, as
shown in Figure 10.3, as it provides management with extra internal indicators to
establish cause-and-effect relationships and examine performance drivers. However, it
is less appropriate for external reporting.

Pause for thought Using the balanced scorecard approach, how would you go about measuring the less
tangible dimensions such as the ‘internal business process’ perspective in your
organisation? What do you see as potential difficulties in comparing these measures
historically? In your opinion, how realistic is the use of the balanced scorecard to report
performance across an industry? What are the pitfalls of an industry benchmarking
exercise in this area?

In 1993, Leif Edvinsson reported the ‘hidden’ intellectual assets of Skandia AFS as a
supplement to the annual report. It was the first time that the term ‘intellectual capital’
was used rather than the accounting term ‘intangible assets’ (Edvinsson and Malone
1997). Using the intellectual capital framework shown in Figure 10.4 (p. 276), Skandia

Financial
perspective

Customer Vision & Internal business

perspective stategy process perspective

Innovation &
learning perspective

Figure 10.3 The balanced scorecard (from Kaplan and Norton 1992)
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Chapter 10 / Intellectual capital 275

went on to develop the ‘Skandia Navigator’ for managing intellectual capital. The aim
of managing these invisible assets was to create further sustainable value for the organi-
sation. The intellectual capital reports published subsequently in the accounts provided
concrete display of different indicators of intellectual capital:

● financial focus;
● customer focus;
● human focus;
● process focus;
● renewal and development focus.

Dow Chemical was another pioneering company to measure intellectual capital at

this time and its efforts were based on a similar framework forwarded by Petrash (1996).
The dotted lines between the three major forms of intellectual capital (see Figure 10.4)
depict the dynamic management of these assets. Dow Chemical collaborated with
Skandia and based its definition of intellectual capital on this simple formula:

Intellectual Capital = Human Capital + Organisation Capital + Customer Capital

There has been a growing trend towards developing a single index for intellectual capi-
tal rather than reporting a multitude of differing indicators. Roos et al. (1997) found
Skandia used 24 different indicators to measure intellectual capital. They proposed
grouping the different indicators together into an ‘intellectual capital’ index. Such an
index would encourage managers to discuss any areas that were uncertain and enable
benchmarking to occur.
Lowendahl (1997) provides an alternative perspective of intangible assets based on com-
petence and relational resources, as shown in Figure 10.4. He further divides these entities
into individual or collective resources depending on their specific focus. Competence is the
ability of the individual or firm to do things. In contrast, relational resources are based on
the reputation, client loyalty and reputation of the firm or individual.
As shown in Figure 10.4, Sullivan (1998) develops a model primarily based on
human capital. He defines human capital as the capabilities of employees, contractors
and suppliers to solve customer problems. This capability is based on collective experi-
ence, know how and skills of employees. The human capital is supported by structural
capital such as computers, information systems and physical buildings. Effective man-
agement of the human capital is likely to lead to increased intellectual assets and
intellectual property. Another similar framework is proposed by Annie Brooking (1996)
based on four aspects of intellectual capital: market assets (such as brands, customers,
distribution channels and backlog), human-centred assets (problem-solving abilities),
intellectual property assets (such as patents, trademarks and copyrights) and infrastruc-
ture assets (such as culture, processes, databases and communication systems).
In comparing the different frameworks forwarded, one needs to be mindful of the
assumptions underlying them. For instance, is the goal of the measurement framework
(such as Sullivan) to enable managers to extract value from the know how of human
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276 Part 5 / Leveraging knowledge

Human Organisational
capital capital

Value

Human
Customer Intellectual capital Customer
capital capital Structural capital Innovation
capital Organisational capital
capital Process
capital

IC framework by Petrash (1996) IC framework by Edvinsson and Malone (1997)

Knowledge
Individual Skills
Aptitudes The
Competence people
Databases
Collective Technology
Intangible
Procedures
assets
Individual
Reputation The The
Relational Loyalty systems market
Relationships
Collective

IC framework by Lowendahl (1997) IC framework by the Danish Confederation

of Trade Unions (1999)

Intellectual
assets
Documents
Drawings
Programs
Human Data
capital Inventions
Processes
Experience
Know how Market
Skills assets
Creativity Intellectual Human-centred
property assets
Intellectual
Patents capital Intellectual property
Copyrights assets
Trademarks
Trade secrets Infrastructure
assets
IC framework by Sullivan (1998) IC framework by Brooking (1996)

Figure 10.4 Sample of varying intellectual capital frameworks

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Chapter 10 / Intellectual capital 277

capital and possibly lead to higher profits? Or is the goal focused on value creation
which is concerned with the creation of knowledge through managing training and
development, developing relationships and managing organisational culture?

Human and social capital

Human capital theory has its roots in the 1960s (Becker 1964; Schultz 1961). The preoc-
cupation at the time was the levels of investment required in education and the likely
returns on this investment in the form of economic growth and profitability. Becker
defined the development of human capital as:

‘activities that influence monetary and psychic income by increasing the resources in people.’

The ‘black box’ notion of human capital with certain inputs leading to prescribed
outputs has lingered, with more recent attempts to link individual competences with
organisational competencies. In their theory of core competencies, Hamel and Prahalad
(1994) argue that the success of any company lies in the optimal utilisation and
development of its core competencies rather than its products or services or current
markets. The core competencies consist of a combination of intangible assets which
flourish in a given culture. The problem of considering core competences as intangible
assets is that they do not fit the traditional accounting transaction-based model.
Intangible assets can increase or decrease without a transaction taking place. Intangible
assets are difficult to identify and do not lend themselves to simple addition of their
separate values. The benefits of intangible assets are uncertain and their competitive
advantage can be lost almost overnight (Andriessen 2002).
A human capital approach to intellectual capital needs to take into account three con-
siderations (Reinhardt et al. 2001). First, that economic theory has not dealt adequately
with the problem of knowledge creation (Machlup 1984). Secondly, human capital flows
and their transformations are predominantly discussed from an individual or organisa-
tional learning perspective. Lastly, there is a distinction between human embodied
knowledge (human capital) and non-embodied knowledge (organisational capital).
A closely related aspect of human capital is social capital. This concept has its roots
in community studies examining functioning of city neighbourhoods and the relation-
ships inherent in the development of young children. In an organisational context,
this concept is based on the premise that a firm’s capabilities are best developed
through cooperating individuals. It has its organisational origin in Barnard’s (1956)
conception of an organisation as a cooperative entity made up predominantly of rela-
tionships. This view has resulted in the notion of organisations as social communities
(Kogut and Zander 1996; Nahapiet and Ghoshal 1998). There are intrinsically three
dimensions to social capital:

● structural dimension showing the linkages and connections between actors such as
the density and hierarchy of networks;
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278 Part 5 / Leveraging knowledge

● relational dimension that provides the history of interactions between individuals

resulting in certain levels of trust, norms and expectations;
● cognitive dimension that leads to shared meanings, interpretations, mental models
and alignment of views.

Pause for thought Given the diversity of individual personalities in a team, what measures could you take
to maintain or increase your team’s social capital? For example, how would you get
more introverted colleagues to develop social networks across and outside your
organisation? In addition, how could you promote shared understanding of problems
and alignment of views? How would you gauge whether the level of your team’s social
capital has risen or decreased from one year to the next?

Organisational capital
The roots of the concept of organisational capital come from research exploring ways of
increasing efficiencies in organisations where employee effort was considered to be sub-
optimal (Tomer 1987). Hence, organisational capital has been seen as an extension of
human capital as it contains both organisational and behavioural variables (Reinhardt
et al. 2001). It is based on the level of knowledge sharing, cooperative effort and con-
flict resolution within organisations.
Tomer (1998) identified two types of organisational capital: a pure form (such as its
organisational structure) and a hybrid form (embodied in individuals through invest-
ment in activities such as socialisation). The assumption underlying this concept is that
investment in organisational capital will lead to a range of benefits in terms of worker
productivity. The types of intervention may include (Tomer 1987):

● changing formal and informal relationships and patterns of activity within the
organisation;
● changing certain attributes key to organisational effectiveness;
● developing information to match the optimal worker to a given situation.

It is clear that the literature on organisational capital is closely linked with the con-
cept of structural capital within the intellectual capital literature. However, there is a
danger of the hybrid conception of organisational capital creeping into intellectual cap-
ital frameworks and resulting in confusion between human and organisational capital.

Intellectual property and smart patents

The collective experience, skills and general know how of a firm lead to the develop-
ment of intellectual assets. These intellectual assets may be in the form of documents,
drawings, software programs, data, inventions and processes (Sullivan 1998). As these
explicit assets are codified, tangible or contain physical descriptions of a firm’s knowl-
edge and processes, a firm has the right to claim ownership to this intellectual property
in the form of patents, copyrights, trademarks and trade secrets. In an increasingly
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Chapter 10 / Intellectual capital 279

knowledge-based economy, strategic management of intellectual property may well

lead to competitive advantage where value is generated from protecting the knowledge,
skills, processes and ideas of a firm. It can no longer be left purely as a technical or legal
imperative in successful organisations.
Patents are a common form of intellectual property and provide a high level of pro-
tection. They can enable firms to gather valuable sources of revenue through licensing
agreements. In the US, there has been a marked growth in software patents and, since
1998, a ‘method of doing business (MDB)’ has been given the right to be patented under
case law. Hence, a firm can provide an effective barrier to entry if it owns a software
patent and an MDB patent for at least the twenty-year life of the patent (Lang 2001).
However, the real life of patents is typically 15–17 years from the original date of appli-
cation. MDB patents can include information systems, investment systems, e-commerce
systems, insurance systems and training methods. Maxwell (2002) shows that the life of
the patent can be extended almost indefinitely by using a smart patent in the form of a
continuation patent, as shown in Table 10.2. This has the benefit of rewarding honest
innovation and discouraging competitors that may try to exploit a patent’s weakness.

Table 10.2 Characteristics of patents and continuation patents

Patent Continuation patent
Description of invention Allows changes to original patent
Citations of ‘prior art’ Can add new ‘claims’
Related publications and patents Can add newly discovered ‘prior art’
‘Claims’ – descriptions of exclusive rights Can be modified taking into account
of patent holder competitor’s product

The process of securing a patent involves filing a patent application at a Patent

Office. The proposed patent undergoes an ‘examination period’ often lasting a few
years where the examiner enters into a dialogue with the inventor about the precise
language to be used in the patent. Once the patent is issued, it has a life of twenty
years. However, if the inventor files an application for a continuation patent (child of
the original patent) before the original patent (parent) issues, the examination period
for the patent is extended to allow the inventor to make changes that may take into
account competitor offerings. This process can be continued for generations, creating
grandchildren patents and so on where each continuation patent is filed just before its
parent issues (Maxwell 2002), as shown in Figure 10.5 (p. 280).
Copyright is primarily rights to the owner in the distribution medium to prevent
infringements on copying, distributing, performing or displaying material. It protects the
original works for a longer period of 100 years. In the case of the creator’s death, copyright
lasts for 70 years. However, in our age of digital networks, because of the ease of distribu-
tion and the minimal cost of making perfect copies on digital printers, there is a
pertinent threat to copyright unless digital information can be encrypted.
Ignoring or mismanaging intellectual property rights can have disastrous results for
firms. One example illustrating the minefield of intellectual property rights is the case
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280 Part 5 / Leveraging knowledge

File
Patent Issue Issue Issue
Application Date Date Date
Examination Period
(may last a few years) Extend Examination Period Extend Examination Period

File
PARENT
Continuation
ORIGINAL
Patent
PATENT
File
CHILD
Continuation
CONTINUATION
Patent
PATENT
File
GRANDCHILD
Continuation
CONTINUATION
Patent
PATENT
GREAT
GRANDCHILD
CONTINUATION
PATENT

Time

Figure 10.5 Smart patents: using patents and continuation patents

of Kodak in 1975. Polaroid had erected vast patent barriers in the high-growth instant
camera market. Kodak was well aware of these patents but it was advised by its lawyers
that they were invalid. Kodak took a calculated risk but was found to have infringed
Polaroid’s patents soon after it launched a line of instant cameras and films. Kodak was
ordered to pay $925 million in damages to Polaroid, shut down its manufacturing plant
and retrieve the 16 million cameras sold to consumers between 1976 and 1985 (Rivette
and Kline 2000). This example illustrates the strategic importance of intellectual capital
and how it can result in the potential demise of a company.
There can be considerable differences in laws on intellectual property and their
enforcement in countries worldwide. There have been attempts by the World Trade
Organisation to promote harmonisation of intellectual property laws. In 1995, the
WTO negotiated an agreement on Trade Related Aspects of Intellectual Property Rights.
This agreement establishes the right of member states to impose sanctions on TRIP sig-
natories that do not fulfil their obligations under TRIPS. It is interesting to note that
TRIPS protects computer programs as literary works under the Berne Convention.

Pause for thought What might you consider patenting in your organisation? How would you decide on the
strategic importance of a patent? How would you scan the competitive environment to
ensure that your intellectual property rights were not being infringed? From your
experience, how effective do you find patents as a barrier to entry for competitors?
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Chapter 10 / Intellectual capital 281

Financial reporting of intellectual capital

The basic problem for international accounting bodies has been how one captures the
present value of a highly volatile asset, namely, intellectual capital. Conventional
reporting methods are not sufficiently responsive and may lead to risky investments
from unreliable reports. This risk has the potential to lead to reduced economic growth
from the increased cost of capital and reduced liquidity in the markets. The Financial
Accounting Standards Board (FASB) has got together with a number of international
accounting bodies to take action. They have concluded that the measurement of finan-
cial instruments such as intangible assets needs to be tackled with the notion of fair
value (Kossovsky 2002). The FASB (1999) describes fair value as:

‘an estimate of the price an entity would have realized if it had sold an asset or paid if it
had been relieved of a liability on the reporting date in an arm’s-length exchange moti-
vated by normal business conditions.’

The European Commission (2000) describes fair value as:

1. a market value, for those items for which a reliable market can readily be identified.
Where a market value is not readily identifiable for an item but can be identified for its
components, the market value of that item may be derived from that of its components; or

2. the value resulting from establishing valuation models and techniques, for those items
for which a reliable market cannot be readily identified. Such valuation models and
techniques should ensure a reasonable approximation of the market value.

It is worthy to note that traditional intangibles such as brand equity, patents and good-
will could not be reported in financial statements until recently unless they met strict
recognition criteria (International Accounting Standards Committee (IASC) 1998;
International Federation of Accountants (IFAC) 1998). In these circumstances, it is not sur-
prising that more novel forms of intangibles such as customer loyalty, staff competences
and computer systems have not received the recognition they merit. There may be a sea
change in the pipeline as the Securities and Exchange Commission in the US has indicated
that it would like to see an intellectual capital supplement to companies’ annual accounts.

Intellectual capital as a narrative

If one accepts that the aim of measurement of intellectual capital is to grasp the knowl-
edge management processes that underlie this unstable entity, our focus needs to be
directed to a qualitative understanding of this term. Roos et al. (1997) suggest the
notion of ‘intellectual capital as a language for thinking, talking and doing something
about the drivers of companies’ future earnings’. Intellectual capital comprises relation-
ships with customers and partners, innovation efforts, company infrastructure and the
knowledge skills of organisational members. In this sense, knowledge may be usefully
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282 Part 5 / Leveraging knowledge

presented and interpreted in the form of a narrative (Mouritsen et al. 2002). This
insight was gained from the experience of Danish firms working to develop intellectual
capital statements. They found the notion of knowledge as a narrative most useful
when it was centred around the ‘value to a user’.
A narrative is seen as a plot of a certain phenomenon that leads one through a sequence
of events and highlights the linkages between the events. The narrative may highlight ‘pos-
itive’ things that happen along the way as well as ‘problems and pitfalls’ to allow the
narrative to succeed (Boland and Schultze 1996; Czarniawska 1997). A narrative is more
than a story and provides a real-life example of the trials and tribulations of an organisa-
tion. It is deeply embedded in the culture and identity of the firm and presents the raison
d’être of its decisions, processes and activities (Mouritsen et al. 2002). To complement the
notion of knowledge as ‘value to the user’, the strategy for managing knowledge is organ-
ised around a knowledge narrative that explains the relevance of a firm’s knowledge to a
group of users. Mouritsen et al. (2002) suggest three elements to a narrative as:

● a product/service;
● an account of value to user;
● presentation of firm’s ‘intellectual production function’.

In each of the cases examined, a simplistic map is provided of the intellectual capital
statement containing the knowledge narrative or value proposition, management chal-
lenges, efforts and indicators, as shown in the example in Figure 10.6.
The difficulty in this approach arises where one may have multiple potentially con-
flicting value propositions in a large organisation engaged in a highly turbulent
environment where the simplicity of these maps may not fulfil the necessary value to
user nor aid investors in their decision making. Also, how much would the knowledge

Value proposition Management Efforts Indicators

(knowledge narrative) challenges
# Groups
Insight into Dialogue groups # New ideas
users’ situation Customer satisfaction Satisfaction
Measures

Investments/QC
Q-performance
Quality of Quality Quality control Certification
life control systems Complaints
Self-organised WG

R&D expenses
#patents
Patenting #new patents
Research &
Investments #new products
development
New products Revenues from
new products

Figure 10.6 Example illustrating framework for key components of an intellectual capital
statement (adapted from Mouritsen et al. 2002)
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Chapter 10 / Intellectual capital 283

narrative reveal about the firm’s potential with new and challenging environments
rather than a historical review of the past year? Are there likely to be biases in this
approach where the positive aspects of the narrative are embellished and the negative
aspects are curtailed or even not reported? Who would take on the role of the inde-
pendent storyteller and narrator of the firm’s knowledge narrative? How could one
determine the reliability of the narrative?

Knowledge auditing in practice

It has been argued that traditional tools of financial reporting are losing relevance in a
world where the most valuable assets are information, expertise, technology and skill
(Svieby 1997). The problem for companies is how they can identify these elusive
knowledge assets when they often don’t know what they know. There has been a ten-
dency in earlier attempts at mapping knowledge assets to concentrate on the explicit
knowledge and produce long inventories that are difficult to use. An important charac-
teristic of any knowledge audit is that it needs to capture the explicit as well as the
more dynamic tacit knowledge within organisations.
From consultancy experience in knowledge management, Truch (2001) has proposed a
‘value-based knowledge management’ approach to auditing a firm’s intellectual capital
based primarily on an information-processing perspective. He suggests that the evaluation
of knowledge assets is most effective when linked to a firm’s key processes and aligned to its
strategic development. This approach comprises three stages, as shown in Figure 10.7:

STRATEGIC REVIEW
Core competences
Critical success factors
Strategic intent
Scenario building
SYNTHESIS
Cost-benefit analysis
PROCESS REVIEW
Key business processes
Key knowledge assets

KNOWLEDGE ASSET VALUE CHAIN

TACIT KNOWLEDGE (KNOW HOW)

Gathering Storing Analysing Sharing Applying

data data data information knowledge

EXPLICIT KNOWLEDGE (KNOW THAT)

Figure 10.7 Process of knowledge auditing (adapted from Truch 2001)

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284 Part 5 / Leveraging knowledge

1 Strategic review. This comprises a top-down review of business strategy including the
critical success factors as well as the core competences required for success in the
business. The stage may include capturing the strategic intent of the senior managers
and developing potential scenarios for the future.
2 Process review. This comprises a bottom-up identification of key business processes and
the knowledge assets they produce in terms of tacit and explicit knowledge. Existing
process maps formed as part of a quality assurance system such as ISO 9000 can be used
to map key business processes. Each knowledge asset is analysed further in terms of the
‘knowledge value chain’, as shown in Figure 6.7. This allows a better understanding of
the tacit and explicit assets which may follow different but interlinked value chains. A
knowledge inventory of tacit and explicit knowledge is developed at this stage.
3 Synthesis. This comprises of an evaluation of the knowledge inventory (Stage 2) in
the context of the core competencies and critical success factors (Stage 1) and con-
ducting a cost-benefit analysis of current and potential knowledge assets.

Pause for thought Imagine you were asked to produce an intellectual capital account for your
organisation. How would you go about reporting such an account in practice? What
forms of data collection would you adopt? How cost intensive is your approach? How far
could your intellectual capital accounts be used for external reporting? How valuable do
you think shareholders would assess these accounts over and above conventional financial
reporting and material available through other sources such as the internet? How could
you guard against potential filtering of bad news from senior executives in such accounts?

During the synthesis stage, Truch (2001) suggests that a cost-benefit analysis can be
conducted on each knowledge asset by identifying the additional value or leverage they
provide to key business processes. The value may be derived from new synergies in
areas such as revenue from new business opportunities, new markets and efficiency
gains. In contrast, the cost of each knowledge asset needs to consider factors such as
training people, IT infrastructure, special software, external data, expert consultants
and any other resources. Each knowledge asset can then be plotted on a 2 × 2 grid of
value of knowledge asset (or benefit) against cost of knowledge asset (high or low). This
would allow decisions to be made about future knowledge investments or divestments
from a company’s knowledge portfolio.

CASE STUDY
Eti FT
You have just finished a meeting with Marzio Basile, has informed potential bidders that an ‘intellectual
chief executive of Eti, Italy’s state-owned tobacco capital account’ is likely to be published shortly.
groups. He has appointed your firm to conduct an Marzio Basile’s intentions for the commissioned
‘intellectual capital account’ of Eti for publication in intellectual capital accounts are to secure and hold
three weeks’ time. The Italian treasury has the estimated sale price if volatility of the capital
announced terms of the sale yesterday of this state- markets continues downwards and possibly to increase
owned tobacco monopoly by private placement and the sale price by demonstrating the significant trans-
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Chapter 10 / Intellectual capital 285

formations he has undertaken in the business over the end of next year. This is likely to increase productiv-
past three years. The sale of this business is estimated ity rates to 45,000 kilos per capita.
to fetch between €1.5 billion and €2.0 billion despite Mr Basile has also renegotiated two production
the negative fallout from a chain of tobacco litigations and distribution agreements with Philip Morris. The
and anti-smoking campaigns in the Italian media. first four-year production partnership allows Eti to
Ente Tabacchi Italiano (Eti) is one of the world’s manufacture 16 million kilograms of cigarettes for
last state-owned tobacco groups in a country of Philip Morris on a cost and fee basis. This deal
heavy cigarette smokers. Italy is one of the largest accounts for 35 per cent of Eti’s annual cigarette pro-
markets for cigarettes in Europe, second only to duction. The second agreement involves a three-year
Germany. The current state monopoly controls a distribution deal for Philip Morris brands in Italy.
major distribution network of 58,000 tobacconists The tobacco group’s distribution company has estab-
(sale e tabacchi) around the country. These tobac- lished an e-commerce joint venture with the Italian
conists are a familiar part of the Italian landscape post office and the Italian Federation of
and hold the same high regard as Vespa scooters and Tobacconists to offer internet services to the
Fiat 500s in the Italian psyche. The tobacco group national network of tobacconists. Sales for this
also owns an e-commerce venture firm that supplies financial year will total €650 million, with a gross
this network of tobacconists, who are slowly trans- operating profit expected at around €150 million.
forming themselves into small retail outlets or The potential bidders include tobacco multina-
betting shops. In addition, Eti manufactures on tionals wishing to enter one of Europe’s largest
behalf of Philip Morris, a US multinational, 25 per tobacco markets and provide a threat to the leading
cent of cigarettes sold in Italy by this group. market share of Philip Morris. These multinational
Mr Basile, a 53-year-old Neopolitan, was brought include British American Tobacco (one of the world’s
in by the government three years ago to transform largest cigarette manufacturers, second only to Philip
and restructure the unwieldy and inefficient state Morris), Altadis (a Franco-Spanish group with 1 per
monopoly into a leaner, more competitive group. He cent share of current market), JTI-Japan Tobacco (5–6
had had considerable experience of liquidating or per cent of current market share) and Swedish Match
privatising complex and troubled state-owned assets (heavily focused on cigars). The main rivals to these
such as hospitals and steel plants. At the outset, he multinationals are Italian investors wishing to invest
found Eti was an inefficient public sector entity that in the distribution power of the tobacconists and to
was responsible for tobacco as well as state salt develop stylish cigarettes and cigars. The potential
mines. It had managed to give over a major share of Italian candidates include Imprenditori Associati (a
the Italian cigarette market to Philip Morris in a mis- group of Italian entrepreneurs), Lottomatica (a group
guided licensing agreement. Eti controlled more that has close ties with the network of tobacconists
than 73 per cent share of the Italian tobacco market and operates the Lotto gambling game) and various
more than twenty years ago, with Philip Morris Italian banks and venture capitalists.
having less than a 20 per cent share. Now, Philip Source: Adapted from article by Paul Betts, Financial Times,
Morris commands 62 per cent of the market com- 31 July 2002
pared with 27 per cent for domestic brands.
Mr Basile based his transformation strategy on Questions
refocusing Eti on its core tobacco business and shed-
1 Discuss how you intend to produce an ‘intellectual
ding non-tobacco assets such as its salt mines. He capital account’ within the short time frame of three
improved productivity of the tobacco operations weeks, taking into account the nature of potential
and rejuvenated the cigarette and cigar brands bidders.
through increased advertising as well as launching 2 How do you suggest that a valuation model can be
two new brands. Productivity was extremely low, developed to assess a fair value for intellectual
with a rate of 11,000 kilos a year per employee com- capital given that Eti is currently a state-owned
pared with a European benchmark of 35,000 to group? Is any estimated figure likely to be
40,000 kilos a year per employee. Mr Basile closed meaningful?
seven of Eti’s sixteen plants and reduced the staff 3 If you were to produce a narrative on intellectual
from 7,000 to 3,500 employees. These reductions capital, how would this differ from the marketing
resulted in no strikes as they were managed through material already supplied by the Italian treasury to
early retirements, redeployments and other incen- each potential bidder?
tives. The annual per capita productivity rate has 4 If you were to be retained by the successful bidder
risen as a result to around 30,000 kilos. Eti has also to produce its annual intellectual capital accounts,
secured a union agreement to reduce staff by a fur- discuss how your approach may differ from the
ther 1,300 people down to 2,200 employees by the current assignment.
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286 Part 5 / Leveraging knowledge

Summary
This chapter has elaborated five main themes:

1 An international consensus among firms, governments and regulatory bodies that

intellectual capital is the critical factor in future growth and prosperity.

2 Traditional financial measures cannot capture the richness and diversity of intellec-
tual capital within an organisation.

3 Intellectual capital frameworks used in practice tend to centre around the notions of
human capital, organisational capital and customer capital.

4 Increased importance of firms to strategically manage their intellectual property.

5 The use of narratives for reporting intellectual capital accounts.

QUESTIONS FOR FURTHER THOUGHT

1 David Bowie has undergone several transformations from Ziggy Stardust to the Thin White Duke
over three decades in the music industry. The capital markets have seen considerable value in his
talents. He became the first person in the music industry to float a bond issue for a total cost of
$50 million. The entire issue was sold within one hour. Can we consider David Bowie’s talents as
intellectual capital? How would you have reliably valued his talents earlier in his life when he
was Ziggy Stardust?
2 How does one identify an emerging knowledge process and add a value to it when one may not
know whether it will contribute to the future success of an organisation or not? Is developing
scenarios enough?
3 What are the likely positive and negative consequences of ‘method of doing business’ patents?
How would patent offices be able to distinguish between two MDB patents such as toasting a
piece of bread?
4 How could you determine the shelf life of intellectual capital? For example, is any attempt to
measure intellectual capital valid for only three months?
5 How can we reliably account for the depreciation in intellectual assets in a firm?
6 How can the manipulation of intangible assets be curtailed?
7 What are the dangers of high levels of social capital within an organisation?
8 Are intellectual capital accounts likely to increase spurious reporting and financial engineering
of company accounts?
9 What are the advantages and disadvantages of an international agreement on intellectual
capital accounts led by the WTO or OECD?
10 If an intellectual capital narrative is based on a company’s culture and values, how can an
analyst make meaningful comparisons between firms in the same industry or other industries?
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Chapter 10 / Intellectual capital 287

Further reading
1 Stewart 1997 provides a well-researched and readable book on intellectual capital.
2 Edvinsson and Malone 1997 shows how intellectual capital was first used in Skandia’s
annual report and how the ‘Skandia Navigator’ was developed for managing a firm’s intel-
lectual capital.

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J. Child and I. Nanaka, eds, Oxford University Press, Oxford, 794–820.
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9068 KMAN_C11.QXD 7/7/08 12:25 PM Page 289

EPILOGUE
Knowledge management

DISCOVERING
KNOWLEDGE
Data, information & knowledge
History of managing knowledge
Philosophical perspectives on knowledge

LEVERAGING GENERATING
KNOWLEDGE KNOWLEDGE
Knowledge management Organisational learning
in the learning organisation Knowledge management
Intellectual capital Tools & technology
KNOWLEDGE
MANAGEMENT
CYCLE

SHARING EVALUATING
KNOWLEDGE KNOWLEDGE
Knowledge management Knowledge management systems
and culture Strategic management perspectives:
Change management knowledge management strategy
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9068 KMAN_C11.QXD 7/7/08 12:25 PM Page 291

Epilogue

Introduction
The depth and breadth of material in this book has tried to demonstrate that knowledge
management is more than a management fad or buzzword and has established itself as an
important area of inquiry for practitioners, consultants, researchers and academics. The
fact that this emerging discipline is highly fashionable need not detract from the fact that
it aims to contribute to real-life problems and issues which organisations face today.
Knowledge is not new and has been part of human experience from the beginning
of time. The current challenge is developing our theoretical and practical understand-
ing of this concept. One approach is to engage practitioners, researchers and
consultants with fellow philosophers on this journey to help move beyond our simplis-
tic notions of this prized entity. In general, philosophy tends to be neglected in many
business schools and for years the relevance of ontological and epistemological issues
on academic curricula has been widely debated. This is not surprising as business stud-
ies as a major academic discipline has a pedigree from around the1960s. In its attempt
to gain legitimacy as a serious discipline, it has adopted the rigours of the scientific
approach in the main. However, there have been healthy signs questioning this ortho-
doxy and its shortcomings. The emergence of knowledge management may help shape
those debates as it is critical that we understand the nature of knowledge beyond a sci-
entific paradigm before we attempt to manage it.
The importance of knowledge management derives from an assumption that we are
moving into a post-industrial society or a knowledge-based economy (Bell 1973).
Former factors of production in the economy such as technical and craft skills of mass
production are less important than the more intangible and intellectual skills concern-
ing ‘knowledge’. These intangible resources are considered valuable as they constitute
the difference between an ‘excellent’ and a mediocre organisation. Such assumptions
imply significant changes in our society, particularly as new classes emerge on the basis
of their control over knowledge (Kalling and Styhre 2003).
Even though the notion of knowledge management may have a recent lineage, the
idea of managing knowledge has existed among practitioners and scholars for much
longer than is commonly assumed (Etzioni 1964). The literature concerning knowledge
management derives from the more mature field of organisational learning and the
more recent applications of information technology to capture, organise, evaluate,
share and store knowledge in organisations. Without this technology, knowledge man-
agement would have laid dormant within the organisational learning and strategy
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292 Epilogue / Knowledge management

literatures. Technology, and in particular web-based technologies, have provided major

advances in this field but have been found wanting with their preoccupation with his-
toric and explicit knowledge. The Holy Grail of knowledge management is the ability
for organisations to capture and use their tacit knowledge in original and creative ways
that differentiate them from their competitors. In the financial sector, the life of many
newly developed financial instruments has been shown to be limited to a maximum of
three months. Firms make their profits during this brief period before competitors copy
the instruments and profit margins disappear. Such knowledge-intensive industries are
indicative of competitive environments pervading more traditional industries such as
construction where knowledge and creativity have become key drivers.
The rest of this chapter shall attempt to draw on key lessons learnt on our journey of
knowledge management throughout this book and summarise the current status of this
discipline, its shortcomings and potential ways forward.

Wrestling with knowledge: some reflections

How do we develop a consensus on the nature of knowledge in organisations when
philosophers have been unable to derive a consensus on this valuable asset from their
studies over 2,000 years? A useful starting point might be that an absolute consensus
on the nature of knowledge may remain elusive indefinitely and that any conclusion
about its nature can be only temporary as we wrestle with the shortcomings of our own
arguments in relation to it. A Socratic approach to questioning is suggested as the opti-
mal way forward.
From a scholarly perspective, another approach is the recognition that each scholar
views knowledge from a particular ontological and epistemological perspective (Burrell
and Morgan 1979), as shown in Figure 11.1 (p. 293). A useful analogy is to imagine
practitioners, researchers and consultants wearing ‘invisible coloured glasses’. Each of
these glasses bears different assumptions written all over them whether the wearer is
aware of them or not. In the final analysis, these ‘coloured glasses’ or our ‘theory-laden’
perceptions are ‘value neutral’, implying that no particular ontological or epistemologi-
cal understanding of reality has a monopoly over truth. Each has its contribution to
knowledge which adds to the richness and diversity of our understanding of organisa-
tions. Such a liberal or possibly a radical perspective to some will undoubtedly be
challenged by the dominant orthodoxy in any discipline but it acts to question the
established norms and values within a field. For example, the dominant positivist,
functionalist paradigm pervasive in management research and literature can suffocate
scholarship and threaten the development of new possibilities in this field. A frequent
response to the failure of aspiring doctoral students to explore different paradigms or
‘coloured glasses’ found at the Academy of Management was (Morgan 1990):

‘Those who do so will fail to “get published”, and fail to “get tenure”.’
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Chapter 11 / Epilogue 293

FREE WILL
RADICAL HUMANIST RADICAL STRUCTURALIST

Anarchistic
individualism Contemporary
French Mediterranean Russian
existentialism Marxism social
theory
Critical
Postmodernism
SUBJECTIVE

OBJECTIVE
Solipsism

theory Conflict theory

Realism
Hermeneutics
Social
Phenomenology
systems
Constructivism theory Positivism
Interactionism
and social
action theory

INTERPRETIVIST FUNCTIONALIST
DETERMINISM

Figure 11.1 Burrell and Morgan’s four paradigms and different epistemologies (adapted from Burrell and
Morgan 1979)

In a similar manner, the current dominant notions of knowledge are the distinctions
between ‘tacit’ and ‘explicit’ knowledge (Polanyi 1967; Ryle 1949). This book has
argued that many of the current typologies of knowledge are little more than abstrac-
tions to denote the continuum between ‘know how’ and ‘know that’. However, there
are green shoots developing in the literature that are providing a more sophisticated
and critical postmodernist perspective (Hassard and Kelemen 2002; Kalling and Styhre
2003; Styhre 2003). This increasing diversity within the literature and continued ques-
tioning of the dominant tacit–explicit distinction is likely to lead to a deepening and
greater maturity of our understanding of knowledge management.
At practitioner level, knowledge tends to be characterised in its relation to data and
information. Simplistically, data is perceived as a signal acquired through our senses. It
is important to recognise that our senses and our minds are not ‘theory neutral’, meaning
that we project our stored mental images on to any data we may observe. We are not
neutral observers and are informed by our experiences and cultural backgrounds.
Information can be considered as organised data where we endow meaning,
relevance and purpose to it (Meadows 2001). In this conception, many scholars con-
sider knowledge as information that allows us to act in any given situation or context.
Action becomes the distinguishing feature of knowledge. However, action may come at
the price of reflection. In many organisations, there may be dangers of neglecting the
‘reflection’ phase of knowledge development, particularly if organisations are engaged
in ‘action-fixated’ learning cycles. In pressurised business environments focused
on results, it is not difficult to see the negative consequences of a lack of reflection or
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294 Epilogue / Knowledge management

foresight on impending problems, particularly when there are continual competitive

demands on people’s time.
The practical implication of these debates is to ascertain the most effective way to
conceptualise knowledge in organisations. Is it using the distinction between tacit and
explicit knowledge? Or is it considering knowledge as ‘actionable information’? The
predominant difficulty arises in articulating the subtle differences in common language
between notions such as tacit knowledge, knowing and intelligence in organisations.

Knowledge management – is there an optimal approach?

Numerous knowledge management models and frameworks have been forwarded in
the literature. There is little consensus among practitioners or academics on the opti-
mal approach but these are early days on a burgeoning literature. However, there are
some strands and commonalities that link them together. Some models come from a
human resource perspective, focusing more on learning processes, whereas others come
from a technological perspective, focusing more on information systems to transform
an organisation. The approach adopted in this book has been to integrate these two
dominant dimensions of knowledge management under a coherent model, as shown in
Figure 11.2.

Intellectual Organisational
capital performance

Strategy

Change
management

KNOWLEDGE System &

Culture
MANAGEMENT technology

Implementation

Organisational
learning

Exploration Knowledge
sharing
Exploitation

Figure 11.2 Integrated model of knowledge management

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Chapter 11 / Epilogue 295

An alternative and popular framework in knowledge management literature is one that

develops a hypothesis of the four modes of knowledge (tacit and explicit) conversion
(Nonaka 1991; Nonaka 1994). Processes are forwarded such as ‘externalisation’ where an
organisation may use metaphors and figurative language to help convert its tacit base to
explicit knowledge. The conceptual gap in this framework is that it considers tacit and
explicit knowledge as distinct entities rather than existing along a continuum as com-
monly understood (Polanyi 1967). The assumption is that organisational knowledge can
somehow be ‘ground, lost or reconstituted’ (Tsoukas 1996). Tacit knowledge as an entity
is much more sophisticated and may come in different forms. The fashionable knowledge
conversion framework does not acknowledge that things may remain unspoken in a
workplace (tacit knowledge) based on a wide variety of reasons such as (Boisot 1998):

● things that everyone understands and takes for granted;

● things that nobody understands;
● things that may have a personal cost to the individual if spoken.

Organisational gymnastics: balancing learning with

routines and dynamic capabilities
Moderate levels of failure may be good for organisations, as shown in Figure 11.3. This
is our conclusion from studying the organisational learning literature. Success can
result in maintaining the status quo, complacency and risk aversion as managers follow
tried and tested patterns of behaviour. This ‘exploitation’ of past behaviours may lead
to greater efficiency in organisations but may not save them in dynamic environments
where greater innovation rather than efficiency is required. In contrast, moderate levels

RESILIENCE

INNOVATION
EXPLOITATION
SUCCESS

Maintain status quo EXPLORATION Mistakes

Complacency Introspection
Risk aversion Error harvesting
EXPLOITATION

Short term Experimentation

FAILURE

EXPLOITATION Long term

EFFICIENCY

RELIABILITY

Figure 11.3 Success and failure in organisations

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296 Epilogue / Knowledge management

of failure and making mistakes can lead to ‘exploration’ behaviours where people are
more inclined to reflect and experiment with new strategies, procedures and processes.
One of the enduring organisational learning frameworks that has attempted to inte-
grate different dimensions of the literature comes from an information-processing
perspective and focuses on four constructs (Huber 1991): knowledge acquisition, infor-
mation distribution, information interpretation and organisational memory. A
common criticism of this approach is that it tends to focus more on the outputs of
learning rather than its processes. To overcome this criticism, one can explore the dif-
ferent facets of organisational learning in relation to processes characterised as
single-loop and double-loop learning. Single-loop learning is considered as behavioural
learning where organisations follow their traditional ways and patterns in response to a
problem. In contrast, double-loop learning is considered as cognitive learning where
organisations question their underlying assumptions and values and explore new ways
of responding to a problem (Argyris and Schon 1978).
There are similarities between single and double-loop learning and the more recent
notions of organisational routines and dynamic capabilities. Organisational routines are
regular and predictable patterns of behaviour whereas dynamic routines are a firm’s abil-
ity to integrate, build and reconfigure its competences to address dynamic
environments. One could argue that the former concept appears to be a reworking of
single-loop learning whereas the latter one is of double-loop learning. Is this an example
of old wine in new bottles or are there real and major distinctions with earlier concepts?

Knowledge management technology and systems

A useful typology for grouping different knowledge technologies is one that acknowl-
edges the knowledge development cycle, as shown in Figure 11.4 (p. 297). Even though
many technologies tend to focus on explicit knowledge, tools for capturing the elusive
tacit knowledge can be found in:

● tools for capturing knowledge, particularly using cognitive mapping and mind map-
ping tools;
● tools for sharing knowledge, particularly utilising the power of the internet, intranet,
extranets and e-mail to share tacit knowledge over a firm’s value chain. The technologies
can be used to develop virtual communities of practice online to help share ideas and
tacit knowledge. Another tool is ‘expertise yellow pages’ to assist in finding the right
people with the relevant tacit knowledge to solve pressing organisational problems. This
cannot be underestimated in large organisations. The use of videoconferencing allows
organisations to share tacit knowledge over geographic boundaries and maintain the
richness of communication which derives from a combination of our body language,
spoken words and tone of voice.

More traditional tools for codifying, storing and evaluating explicit knowledge include:
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Chapter 11 / Epilogue 297

K N O W LE D GE
NE W

Organise
knowledge

Store Capture
knowledge knowledge

Share Evaluate
knowledge knowledge

N EW E
KN OW LEDG

Figure 11.4 A typology of knowledge tools and component technologies

● Tools for organising knowledge, which include ontology and taxonomy generation tools.
The challenge is maintaining taxonomies with high levels of flexibility so that they can
respond dynamically to our changing perceptions of concepts and schemas over time;
● Tools for storing knowledge, which include sophisticated datawarehouses that have the
ability to store and summarise internal and external data over different time horizons;
● Tools for evaluating knowledge, which include data mining, OLAP, case-based rea-
soning and machine-based learning tools. Interpretation of knowledge using these
tools needs to be carefully handled as patterns and relationships may be suggested
that are misleading to the untrained eye. Most tools tend to adopt statistical and
probabilistic analyses rather than more qualitative insights into a particular problem.

The types of KM systems employed in many organisations include:

● document management systems – involve getting the right information or knowl-

edge to the right person at the right time;
● decision support systems – entail creating and evaluating knowledge through data
analysis or using sophisticated models to support decision making;
● group support systems – designed to enhance communication, knowledge sharing,
cooperation, coordination and social encounters within groups;
● executive information systems – provide high-quality information and knowledge to
executives to aid strategic planning and control processes;
● workflow management systems – integrate knowledge associated with workflows and
alignment of ‘cases’ with resources such as employees;
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298 Epilogue / Knowledge management

● customer relationship management systems – develop knowledge about customers’

individual preferences and needs using knowledge repositories and knowledge-
discovery techniques.

Institutionalist perspective and the knowledge-based

view of the firm
Much strategic management theory and practice today is based on assumptions of the
industrial organisation tradition (Ansoff 1965; Chandler 1962; Porter 1980). Here the rela-
tionship between the firm and the market structures of any given industry is deemed
critical. Rational microeconomic theory is the mode of analysis concerned more with the
price elasticity or inelasticity of demand. Firms can reduce competition by collusion, cre-
ating higher barriers to entry, differentiating their products and services or lowering their
costs. This industrial organisation tradition has influenced the dominant planning
approaches to strategy prevalent on MBA programmes across the world. The assumption
is that executives can use their prized strategy tools to plan ahead effectively each year.
The fact that these strategic plans have often been found wanting on implementation
strategies is often telling. It is not surprising that only a small proportion of formulated
strategies ever gets implemented in organisations (Mintzberg et al. 1998).
An alternative approach that has been argued in this book is the institutionalist per-
spective (Barney 2001; Penrose 1959; Selznick 1957). Institutional theory tries to
explore the homogeneity between organisations in an industry and places greater
emphasis on the individual in an organisation and their day-to-day learning. Strategy is
considered synonymous with strategic change and is informed by a manager’s learning
and understanding of a situation over time. From this perspective, competition and
strategic change are intimately linked. Core competences of a firm (Prahalad and
Hamel 1990) become much more important in defining superior performance as the
collective learning of a firm depends on these capabilities.
Such core competences or firm’s resources that lead to competitive advantage are
premised on the ‘resource-based theory’ of the firm (Barney 2001). This assumes that it is the
firm’s internal resources, tangible and intangible, that lead to competitive advantage. These
internal resources are seen as rare, valuable and not easily replicated or transferable. One
subset of the resource-based view of the firm has been the emergence of a knowledge-based
view (Grant 1996; Spender 1996). Here the most important internal resource of an organisa-
tion is argued to be its tacit and explicit knowledge. Knowledge sharing and knowledge
integration become key factors in achieving competitive advantage from this perspective.
From a knowledge-based view of the firm, the most common form of knowledge
management strategies found among US management consultancy firms were ‘codifica-
tion’ and ‘personalisation’ strategies (Hansen et al. 1999). A dialectic of knowledge
management strategies that develops these findings is shown in Figure 11.5 (p. 299).
Codification strategies are heavily based on technology and use large databases to
codify and store explicit knowledge. In contrast, personalisation strategies are less about
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Chapter 11 / Epilogue 299

EFFICIENCY
Cost leadership
Codification strategy
Exploitation strategy

SLOW MARKET CHANGES

CRISIS DISCONTINUITY
RAPID MARKET CHANGES

INNOVATION
Differentiation
Personalisation strategy
Exploitation strategy

Figure 11.5 The dialectic of knowledge management strategies

technology and more about getting people together to share their tacit knowledge over
any given problem. As suggested in Figure 11.5, codification strategies are likely to be
more prevalent in organisations where competitive forces based on efficiency are
dominant. Similarly, personalisation strategies are likely to be found in firms where cre-
ative insight and innovation are prevailing forces. Knowledge management strategies
have been conceptualised as a dialectic as firms exist in dynamic market environments
where the strength of external competitive forces may vary considerably over time.

Communities of practice
One of the key channels for enhancing tacit knowledge sharing in organisations is the
promotion of ‘communities of practice’. The World Bank sees communities of practice
as the main component of its knowledge management strategy to fulfil its aims of
becoming a ‘knowledge bank’. Communities of practice are informal, self-selecting
groups that are open ended without any deadlines or deliverables (Wenger et al. 2002).
They can be informal groups that meet regularly around physical environments such as
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300 Epilogue / Knowledge management

COGNITIVE SOCIAL
EMBEDDING Strong EMBEDDING
ties Boundary-
spanning
individual

Weak
Ideas ties

Stories

Figure 11.6 The ontology of storytelling

water coolers or canteens or they may be virtual communities that meet in discussion
forums over the internet. They are not formalised work groups or project teams but are
like-minded individuals who share similar problems and outlooks.
The informal interactions found in communities of practice tend to encourage
reflection of practice rather than simply reworking everyday processes. Storytelling and
narratives play an important role in embedding tacit knowledge socially and making it
‘sticky’, namely, making it difficult for competitors to replicate such socially embedded
knowledge. One of the potential dangers of communities of practice is that they may
become self-reinforcing and self-deluding, turning core competencies of an organisa-
tion into core rigidities. An ontology of storytelling showing how stories embed tacit
knowledge cognitively in the form of ideas or socially in the relationships between
community members is shown in Figure 11.6.

Personal knowledge management

If knowledge is likely to be the core commodity of future ‘knowledge’ markets, there is
relatively little literature on its implications for the individual. Each individual’s worth
on the market could be described as their personal capital. Like other forms of capital
on the stock market, personal capital has a value dependent on the demand for certain
capabilities and a cost related to acquiring certain levels of knowledge and skills. In a
knowledge era, it is argued that each of us needs to take our personal capital seriously
and take ownership for the development and maintenance of our knowledge. Like
many commodities, it may soon become outdated and valueless.
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Chapter 11 / Epilogue 301

One model forwarded for exploring ways we acquire and distribute our personal capi-
tal is the ‘K-profile’ (Cope 2000), as shown in Figure 11.7. This model is based on
different facets of an individual knowledge cycle from discovering new knowledge to
delivering it to market. The model makes a distinction between our tacit and explicit
knowledge base (termed ‘knowledge stock’) and our knowledge currency. The knowledge
currency is the different ways we use to acquire new knowledge and exchange it with
the world. It is suggested that this knowledge currency has three principal components:

● head – representing our thinking and cognitive abilities;

● hand – representing how we act or behave in a situation;
● heart – representing our emotions and ways we manage our relationships with our-
selves and others.

The three components of knowledge currency are easily identified in relation to

explicit knowledge. However, these distinctions can break down in relation to tacit
knowledge. Do intuitive insights or knowledge arise as a consequence of a person’s cog-
nitive or emotional abilities or both? Also, the model does not acknowledge that tacit
and explicit knowledge may exist along a continuum rather than behave as distinct
entities. However, the strength of the model is its ability to allow individuals the ability
to reflect on different dimensions of their personal capital along a knowledge cycle,
from discovering new knowledge to delivering it to market. Like the use of psychomet-
rics in the field of personality measurement, the K-profile allows individuals to assess
their strengths and weaknesses in relation to their personal capital and take restorative
measures as necessary.

Discover Delay Discard Diffuse Deliver

Personal K-profile New Stored Redundant Shared Market
knowledge knowledge knowledge knowledge knowledge

HEAD
(our thoughts) Store Sell
Acquire
EXPLICIT

codified Discard Share codified

HAND new
knowledge codified codified knowledge
(our actions) codified
for later knowledge knowledge in the
knowledge
HEART retrieval market
(our emotions)
HEAD
(our thoughts) Store Sell
Acquire
intuitive Discard Share intuitive
TACIT

HAND new
knowledge intuitive intuitive knowledge
(our actions) intuitive
for later knowledge knowledge in the
knowledge
HEART retrieval market
(our emotions)

Figure 11.7 The personal knowledge map or K-profile (Cole, 2000)

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302 Epilogue / Knowledge management

Knowledge management between nations

As with personal knowledge management, the current literature has paid scant atten-
tion to knowledge flows and exchanges between nations, assuming that we are moving
towards a global knowledge-based economy. The unit of analysis in knowledge man-
agement has remained at the level of the organisation. Many bodies such as the World
Bank and the United Nations have become increasingly concerned at the relative lack
of knowledge transfer to local communities on major funded projects. There are diffi-
culties in sustaining knowledge generated on these projects or embedding knowledge
deeply in everyday roles and practices of local communities. Such development proj-
ects can provide an insight into knowledge management between nations, particularly
when there is a diverse number of countries involved and collaborating over a common
concern. Civil servants in each country act as guardians of governmental knowledge
and can play an important role in promoting knowledge sharing or inhibiting its
progress. Political sensitivities come to the fore as well as cultural and historic differ-
ences between countries. Tensions may also exist between different government
ministries that may contribute towards a lack of cooperation and knowledge sharing
resulting in suboptimal practices.
For example, a United Nations Development Programme project named ‘PEMSEA’
involving twelve nations in the Far East (Ganapin et al. 2003) showed that there were
differences in organisational learning within local communities in each of these coun-
tries. One major distinction was between ‘centralised learning’ and ‘decentralised
learning’, as shown in Figure 11.8 (p. 303). Project sites based in command economies
such as China and Vietnam favoured centralised learning aimed more at mobilising
committees rather than communities. Progress in these countries appeared much faster
due to the strong committee decision-making structures in local government. In con-
trast, decentralised learning was much more evident at project sites such as Bali based
more on community-oriented decision making. Progress appeared to be much slower as
greater efforts were made to mobilise community leaders and local stakeholders.

Concluding remarks
Conclusions have no major status in Socratic dialogue. They are purely temporary and
tell us which point we have reached in our understanding at any moment in time.
They are dynamic and likely to change dependent on our continuous questioning of
the status quo. The starting point behind the current knowledge management literature
is that it is no longer resources such as land, technology or manual labour that are pri-
mary factors of production in society but rather intellectual resources such as
knowledge that are the dominant concern. This assumption has led to the emergence
of notions such as knowledge economies and knowledge societies.
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Chapter 11 / Epilogue 303

In the knowledge management arena, there still exist two dominant camps, champi-
oned on one side by human resource professionals and on the other by technologically
oriented information systems ones. Similar in fate to modern-day architects and engi-
neers, the language and discourse of each side can be incomprehensible to the other. This
book has been an attempt to break down these barriers and integrate these two perspec-
tives by providing a language for mutual dialogue (Styhre 2003). Each has valuable
lessons to challenge and enhance the other. One cannot remain blind to the incredible
technological advances such as the internet that allows us to almost instantaneously
share knowledge across the world. Nor can firms remain blind to the fact that their intel-
lectual capital is primarily driven by people. Out of organisational necessity, firms need to
foster and develop their human and social capital as a matter of competitive survival.
Beyond these two common approaches, the book has examined knowledge manage-
ment strategy in organisations from an institutionalist perspective and has challenged the
common orthodoxy of the industrial organisation tradition. The individual and the spoils
of their learning are placed more centrally in an organisation as the source for competitive
success. Such assumptions have led to the emerging knowledge-based view of the firm.
The most pressing challenge in knowledge management today is around fostering and
cultivating knowledge sharing in organisations. Explicit knowledge is relatively easy to
codify and transfer around an organisation using tools such as data warehouses. However,
the ability to share tacit knowledge is much more elusive. Much of the knowledge-sharing
literature is concerned with how the more intangible tacit knowledge can be transferred, dif-
fused and disseminated in an organisation. This may occur through formal teams, formal
and informal networks and across organisational boundaries (Kalling and Styhre 2003).

COMMITTEE-BASED Sihanhoukville Bataan COMMUNITY-BASED

FASTER PROGRESS Cambodia Philippines SLOWER PROGRESS

Danang
Vietnam
Batangas Bay
Philippines
Port Kiang
Malaysia
Xiamen CENTRALISED DECENTRALISED
PR China LEARNING LEARNING

Chonburl
Thailand Bali
Indonesia
Nampo
DPR Korea

Shihwa Sukabumi
RO Korea Indonesia

Figure 11.8 Organisational learning at national levels

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304 Epilogue / Knowledge management

One of the principal aspects of knowledge sharing appears to be the ability of organi-
sations to create environments that foster dialogue between related groups. The
importance of dialogue is that it allows us to tap into the rich tacit base in organisa-
tions and to play with ideas. It is unclear whether formal groupings can suffice in
generating this tacit knowledge through tools such as brainstorming or whether there
is a need for more informal groupings termed as ‘communities of practice’.
Finally, as a caution, the reader needs to guard against the ‘old wine in new bottles’
syndrome that may exist in some writings in this field. Like Alice in Wonderland, differ-
ent terms can become confused as they mean the same thing. Despite this shortcoming,
this book has demonstrated the breadth and depth of the corpus of knowledge underly-
ing a serious and emerging discipline. Knowledge management and its practices have
significant contributions to make in the reality of a knowledge-based economy. Like the
development of English as a discipline in the early twentieth century, the study of knowl-
edge management is here to stay and likely to pervade every facet of organisational life.

Further reading
1 Newell et al. 2002 is a good all-round book on knowledge management predominantly
from a human resource perspective and contains some good case study material. I have used
it successfully with postgraduate students.
2 Davenport and Prusak 1998 helped popularise the field of knowledge management and
comes from a consultancy and practitioner background.
3 Styhre 2003 is an excellent book providing a much-needed critique of our current under-
standing of knowledge management from a postmodern perspective.
4 Cope 2000 is the only book that explores the notion of personal knowledge management. This
may be useful for readers wishing to reflect on their personal capital profiles and explore ways of
overcoming blocks or shortcomings such as marketing their knowledge more appropriately.

References
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Barney, J. B. (2001) ‘Resource-based theories of competitive advantage: ten-year retrospective
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Bell, D. (1973) The Coming Post-industrial Society, Basic Books, New York.
Boisot, M. H. (1998) Knowledge Assets: Securing Competitive Advantage in the Information
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Burrell, G. and Morgan, M. (1979) Sociological Paradigms and Organizational Analysis,
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Chandler, A. D. (1962) Strategy and Structure. Chapters in the History of the Industrial Enterprise,
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Cope, M. (2000) Know Your Value? Value What You Know, Prentice Hall, Harlow, Essex.
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They Know, Harvard Business School Press, Boston, MA.
Etzioni, A. (1964). Modern Organizations, Prentice-Hall, Englewood Cliffs, NJ.
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Chapter 11 / Epilogue 305

Ganapin, D., Burbridge, P. and Jashapara, A. (2003) Building Partnerships in Environmental

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Copenhagen Business School Press, Copenhagen.
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A Guide to Managing Knowledge, Harvard Business School Press, Boston, MA.
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1
9068 KMAN_Z01.QXD 7/7/08 12:28 PM Page 307

Glossary

Cleavage paralysis arising from two or more forces

A confronting each other in an organisation.
A posteriori presupposes our sensory experience Clustering techniques the grouping together of
and reasons information derived through our sense closely related data.
perceptions. Coaching where instructor observes student
A priori is taken to be independent of sensory completing tasks and provides helpful hints,
experience and reasons from abstract general suggestions and feedback as needed.
premises. Codification strategy heavily based on technology
Abductive inquiry presenting theories for and uses large databases to codify and store
consideration. knowledge.
Adaptability the ability of an organisation to adapt Cognitive mapping visual representation of a
to internal or external changes in its environment. domain through concepts and their
interrelationships.
Agent technology computer systems that are
capable of autonomous action in certain Cognitive perspective the study of mental processes
environments to fulfil their design objectives. associated with perception, learning, reasoning and
memory.
Artefacts can be material objects, physical layouts,
Communities of practice groups of people who
technology, language and behavioural patterns.
share a common concern or passion and interact
Associative memories where pairs of associated informally on an ongoing basis.
data are memorised using a long-term memory Configuration competitive state when one external
network model. force dominates.
Congenital learning learning influenced by the
B founding fathers of an organisation.
Contamination problem when the dominant exter-
Ba’ physical, virtual or mental space for helping nal force undermines equally valid forces.
convert tacit into explicit knowledge and vice versa. Conversion move from one competitive force and
Balanced scorecard a balanced approach to form in an organisation to another.
organisational performance which takes into Core competence proposition that competition
account the customer, innovation and learning and between firms is as much a race for competence
internal business processes as well as traditional mastery as it is for market position and power.
financial measures.
Crawlers software programs that send requests to
Behaviourism body of psychological theory remote web servers looking for new or updated pages.
concerned with identifying conditions that
Customer capital the value of organisational
stimulate patterns of human behaviour.
relationships with customers including their
Boolean operators locate records containing intangible loyalty.
matching terms (AND, NOT, OR) in specified fields.
Customer relationship management (CRM) systems
Business process re-engineering (BPR) rethinking systems that integrate technology and business
and radical redesign of business processes. processes to meet customer requirements at any
given moment.
C
D
Case-based reasoning information retrieval systems
that allow the storage of past problems, their solutions Data known facts or things used as a basis of
and their reasoning for future retrieval. inference or reckoning.
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308 Glossary

Data processing (DP) use of technology to Executive information systems (EIS) systems to
automate tasks. enhance strategic planning and control by
Data warehouses large physical databases that hold summarising large quantities of data and allowing
vast amounts of information. the user to drill down to different levels of detail.
Decision support systems (DSS) systems that Existentialism emphasises the primacy of
combine data analysis and sophisticated models to individual existence and its unqualified freedom.
support non-routine decision-making. Experiential learning learning acquired from direct
Decision tree a graphical representation of a experience.
decision process drawn as branches of a tree Expert systems systems designed to mimic the
stemming from the initial decision point to the reasoning skills of experts.
final outcomes.
Expertise ‘yellow pages’ list of employees in an
Deductive inquiry preparing theories for test. organisation with a summary of their knowledge,
Dialectic fundamental process of development in skills and expertise.
thought and reality from thesis to antithesis to
Explicit knowledge ‘know that’.
synthesis.
Exploitation learning to perform the same
Dialogue involves active listening and the
processes better or faster.
suspension of one’s assumptions to explore complex
issues and divergent thinking. Exploration experimenting with new strategies,
Discussion involves presentation and defence of procedures and processes to work differently.
different views to find the best view to support a
decision or convergent thinking. F
Document management systems the systematic
management of documents in an organisation. Figurative language not literal form of speech.
Double-loop learning doing things differently or Forcefield analysis examines the driving and
doing different things. restraining forces in any change process.
Dynamic capabilities the learning abilities of Fuzzy expressions use a thesaurus to expand a
organisations to adapt their daily routines to meet query into related terms.
the challenges of volatile environments.

G
E
Genetic algorithms involve complex data structures
Economic rent profits to any asset whose sale and are based on biological mechanisms.
exceeds its competitive price. Grafting employing new members with the
Effectiveness the ability to meet customer knowledge or skills required rather than developing
requirements on product or service features at a them in-house.
given cost. Group support systems systems to aid
Efficiency developing cost advantages of communication, knowledge sharing, cooperation
operations. and coordination in groups.
E-learning education delivered via the internet. Groupware tools software that allows groups of
Empiricism reliance on experience as the source of people to collaborate on a project using the internet
ideas and knowledge. or intranet.
Employee involvement engagement of employees
in order to gain commitment. H
Encryption security measure to prevent non-
authorised party from reading or changing data. Human capital the value on the knowledge, skills
and abilities that allow individuals to produce
Epistemology relates to our grounds of knowledge
and what we can know. goods and services.
Excellence and turnaround perspective centred Human resource management a managerial
around managerial remedies and recipes of successful perspective which argues for integrated personnel
companies. policies in alignment with organisational strategy.
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Glossary 309

Knowledge economy an economy based

I fundamentally around knowledge rather than other
factors of production such as labour or technology.
Idealism belief that only mental entities are real, so
that physical things exist only in the sense that Knowledge management the effective learning
they are perceived. processes associated with exploration, exploitation
Inductive inquiry assessing results of test. and sharing of human knowledge (tacit and
explicit) that use appropriate technology and
Industrial organisation tradition design and
cultural environments to enhance an organisation’s
planning model of strategy where the
intellectual capital and performance.
relationships between the firm, industry and market
structures are central to competitive advantage. Knowledge workers individuals who need to use a
high level of knowledge in their everyday activities.
Information systematically organised data.
Information overload the saturation of information
by an individual leading to impaired reasoning and L
judgement.
Leadership situational skills learning the appropriate
Information systems interrelated components use of ‘telling’, ‘selling’, ‘participating’ and ‘delegating’
working together to collect, process, store and interventions.
disseminate information to aid organisational
activities. Lean production form of manufacturing that uses
Information systems (IS) capability relates to an less human effort, manufacturing space, tools,
organisation’s information system’s capability as a hours and inventory compared with mass
source of competitive advantage. production.
Institutionalist perspective belief that experience Learning organisation organisation that sustains
and learning of individuals is central to competitive competitive advantage through learning faster than
advantage. its competitors.
Intellectual capital the economic value of two Lexical analysis identifies the words in the text and
categories of intangible assets of a company: their interrelationships.
organisational capital and human capital.
Intellectual property the collective intellectual M
assets such as documents, drawings, software
programs, data, inventions and processes. Machine-based learning the ability of a machine to
Intelligence know how or tacit knowledge. improve its performance based on previous results.
Internet an international collection of computer Management information system (MIS) system to
networks. provide managers with information for monitoring
and controlling their business processes.
Intranet a collection of private computer
networks within an organisation. Mentoring learning process where a mentor can
serve as a role model, counsellor or teacher.
Inverted file a list of words in a set of documents
and their occurrences in terms of their precise Metaphor imaginative use of a name or description
storage locations. for an object or action to which it is not literally
applicable.
Method-of-doing business (MDB) patent patent to
J
provide protection of a firm’s business methods.
Just-in-time production (JIT) integration of
automation with production information system to N
deliver any part in the necessary quantity at the
right time. Networks of practice more formalised networks
such as professional networks where power relations
may become more prominent.
K
Neural networks tools to mimic the physical
Knowledge philosophically there is no consensus thought processes of the brain.
on term. Practically may be regarded as actionable Norms expectations of appropriate or inappropriate
information or tacit or explicit knowledge. behaviour.
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310 Glossary

Noun groups clustering nouns found near each Pragmatism explains meaning and truth in terms
other into a single indexing component. of the application of ideas or beliefs to observable
actions.
O Probabilistic expressions assign probabilities to
documents that the query assumes users will find
Online analytical processing (OLAP) allows relevant.
organisations to analyse large sets of data along
more than three dimensions.
R
Ontology (philosophy) relates to our assumptions
of reality such as whether it is external or a Rationalism reliance on reason as the only reliable
construct of our minds. source of human knowledge.
Ontology (systems) overall conceptualisation of a RDF Resource Description Framework is a metadata
field of knowledge that may not be represented in a
standard.
hierarchical manner.
Realism belief that universals exist independently
Organisational alignment the ability of an
of the particulars that instantiate them.
organisation to align its processes with changes in
the external environment. Resource-based view belief in the firm’s resources as
the principal determinant of (RBV)
Organisational capital the value of the knowledge
assets remaining in the organisation when people competitive advantage.
have left their workplace. Rule induction statistical techniques to discover
Organisational climate an understanding of social rules related to frequency of correlation and
environments where individuals are considered accuracy of predictions.
separate from their environments.
Organisational culture a study of social S
environments predominantly from an
anthropological or sociological perspective. Semantic web an extension of the current web in
Organisational learning the processes of which information is given well-defined meaning,
improving organisational actions through better better enabling computers and people to work in
knowledge and understanding. cooperation.
Organisational routines repeated patterns of Signature files index structures that divide text into
behaviour and processes in organisations. blocks for analysis, primarily to aid retrieval.
Single-loop learning doings things better.
P Slogan a short catchy phrase.
Smart patents a method of extending the life of a
Personal knowledge management ways of
patent through using continuation patents.
developing and managing an individual’s personal
capital. Social capital the value on the strength of linkages,
Personalisation strategy focused on gaining deeper connections, interactions and shared understandings
insights into problems through people rather than among social networks in organisations.
technology. Stemming removal of affixes of a word to improve
Perspective making process by which a community retrieval.
of practice develops its knowledge domain. Stopwords words that occur too frequently in the
Petri nets allow processes to be described text that do not provide good discriminators for the
graphically in terms of places and transitions. purposes of retrieval.
Phenomenology the description of experience Strategic information systems (SIS) systems that
through careful analysis of intellectual processes. integrate customers more fully in business process,
Positivism belief that the natural sciences comprise develop new products based on information and
the whole of human knowledge. provide support for strategy development and
implementation.
Postmodernism expresses grave doubts about
universal truth, rejects artificially sharp dichotomies Strategic intent a firm’s obsession with winning in
and delights in the ironies of language and life. the short or long term.
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Glossary 311

Strategic management includes an understanding

of a firm’s strategic position, its strategic choices U
and ways of turning its strategy into action.
Unlearning process by which individuals discard
Strategic positioning is concerned with impact of obsolete or misleading information.
strategy on the external environment, a firm’s internal
resources and expectations of its stakeholders.
Strategy plan of actions to achieve one’s goals. V
Suffix file forms a tree data structure of words in Vector expressions assign weights to index terms
the text. linked to their frequency in a document.
Symbols can occur as words, statements, actions or Vicarious learning imitating strategies, practices or
a material phenomenon. technologies of competitors.
Systems thinking focuses on the way that a Videoconferencing conferencing with people
system’s constituent parts interrelate and how through the use of video and computer technology.
systems work over time and within the context of
Visualisation technology that allows users to
larger systems.
understand complex information through use of
rich computer graphics.
T
Tacit knowledge ‘know how’ or intelligence. W
Taxonomy the hierarchical structuring of Wisdom ability to act critically or practically in a
knowledge in subcategories related to its essential given situation.
qualities.
Workflow management systems effectively model
Team learning ability to balance dialogue and organisational processes into workflows and allow
discussion in groups as necessary. the efficient processing of large numbers of cases
Text-based conferencing internet-based discussion through predefined cases.
forums or chat groups.
Tobin’s q ratio compares the market value of an
asset with its replacement cost (book value).
X
Total quality management (TQM) structured
system of integrating the business environment and XML eXtensible Markup Language. A subset of
continuous improvement with development, SGML constituting a particular text markup
improvement and cultural change. language for interchange of structured data
9068 KMAN_Z01.QXD 7/7/08 12:28 PM Page 312

1
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 313

Index

access 173 Andersen Consulting 170

accidental values 192 appreciation 175
achievement culture 198 approval culture 198
acquisition of knowledge 70–1 Aristotle 20, 34, 35–6, 62
action 38 artefacts 189–92, 200, 203, 208
– fixated non-learning 61 articulation 175, 251
learning 61, 63, 229, 249 articulation of knowledge 79
activist learning 61 artificial intelligence 92–3
adaptation 149 aspirational values 192
adoption 175 assessments, different 218
advanced knowledge 173 assets 277
Advanced Research Projects Agency 110 associative memories 109
affiliative culture 198 assumptions 192–3
agenda formation episode 176 Assurbanipal’s palace library 20
agent Assyrian collections 20
technology 105–6 Atrium Libertatis 21
wrappers 106 Attalus 121
agreement 221 attitudes 192–3
Alexander the Great 20 auditing of knowledge in practice 283–4
Alexandria library 8 Augustus 22
algorithms 109 avoidance culture 198
AMD 50–1
American Management Systems 202 ‘Ba’ 200
analysis 226–7 BAA 271–2
analytical models 139 backpropagation 109
comprehensive 226 Bain & McKinsey 172
dependency 110 balanced scorecard 274
faults 227 banking industry 140
forcefield 160, 220–1 Baudrillard, J. 46
key points 227 BCG matrix 160
key task 227 behavioural learning see single-loop
lexical 102 learning
manual skills 227 behavioural perspective 69
online analytical processing 107–8, 140 belief 38, 192–3
problem-centred 227 benchmarking 259, 273
stage 227 Benedict, St 22–3
SWOT 159,160,166 Berger, P. 45
systems 149 Berne Convention 280
value chain 160 bet-your-company culture 195
Ancient Egypt 20 bibliographic classification scheme 16
Ancient Greece 8, 20–2 Bloomberg portal 139
ancient knowledge in Iraq, destruction of 26–7 bonus schemes 231
Ancient Rome 8, 20–2 Boolean operators 103
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 314

314 index

boosting 110 Christianity 8

boundary objects 206 class identification 110
British classification scheme 16
Airways 257 cleavage 165, 172, 254–5
Gas 177–8 Cleopatra 21
Petroleum 14 Clifford Chance law firm 234–5
brokers 105 climate 189
of knowledge 206 organisational 187, 188
Buckman Laboratories 14, 230 psychological 187
Burrell, G. 41–4 clustering techniques 109, 140
business Co-determination at Work Act (Sweden) 225
news feeds 106 co-determination law (Germany) 225
process management 106 coaching 229
process re-engineering 129, 135, 175 codification 80, 170, 171, 172, 173, 174, 298–9
coercion 222
Caesar, Julius 21 cognitive
cafeteria benefits 232 dimension 278
Caligula 22 learning see double-loop learning
Canterbury library 23 mapping 71, 72
capabilities 59, 78–80, 295–6 tools 98–100
capital organisational 277, 278 collective bonus schemes 231
social 277–8 collective payment by results 231
structural 269 collectivism 199
see also human capital; intellectual capital combination 49, 164, 165, 201, 251, 254
capturing knowledge 296 commitment 222–4
care 201 commonality 80
Cartesianism 40, 41 communication 141–2, 224–5
case-based reasoning 107 communities of practice 203–8, 299–300
Casmir 90 company-wide quality management 133
Cassiodorus, Flavius Aurelius 22–3 competition/competitive
cathedral libraries 22–4 culture 198–9
causal maps 98 forces 164
centralised learning 302 learning 252–6, 259
ceremonies 191 compliance 223
change management 213–36 component technologies 89–121
Clifford Chance law firm 234–5 Casmir 90
commitment 222–4 evaluating knowledge 107–10
cultural 232–3 sharing knowledge 110–15
employee involvement 224–5 storing and presenting knowledge 116–18
and leadership 218–19 Technip-Coflexip 118–20
nature of change 215–16 tools, organisation of 93–7
personal response to change 216–18 see also tools, capturing of
politics of 233–4 compound decision-support system 141
reward and recognition 229–32 comprehensive analysis 226
strategies 220–2 computerised reservation systems 168
training and development 226–9 concentration force 164, 254
‘war for talent’ 214 concept description 110
China 302 conferencing 150
‘Chinese whispers’ 15 text-based 113–14
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 315

Index 315

video 115 measurement 195–9

configuration 164, 254 norms, artefacts and symbols 189–92
congenital learning 70 oppositional 198–201
connectivity 207 organisational 188, 196–7
consciousness 39 perfectionistic 199
consolidation 217 personal 194, 200
construction 149 power 194, 198, 199–200
constructive norms 198 process 195
constructivism 33, 44–7 role 194
consulting 150 self-actualising 198
contamination 164, 165, 254–5 stickiness: communities of practice 203–8
control 133 task 194, 200
conventional culture 198 tough-guy, macho 186
conversion 164 typologies 194–5
cookies 106–7 values, beliefs, attitudes and assumptions 192–3
cooperation 141–2 work-hard, play-hard 195
forces 164 cuneiform 18–20
cooption 222 currency of information 138
coordination 141–2 customer
copyright 279 centric orientation 148
core relationship management systems 148–9, 298
competencies 165, 277, 298 requirements management 175
knowledge 173 segmentation 148
tasks 227 ‘Cyber Ba’ 201
values 192, 193
corporate intelligence 70 Darwinian model 16
cost leadership 159, 164 Dasein 39
Costa Rica 199 data 14–15
courses 228 mining 108–10, 140, 148, 149
crawlers 104–5 processing 168, 169
creation 173 visualisation 110
creative destruction 162 warehousing 116–17, 148
critical database-oriented decision-support system 140
incident analysis 227 decay 175
realism 33, 44–7 decentralised learning 302
theory 43 decision
culture 185–210 support system 140, 141
achievement 198 support systems 138–41, 297
affiliative 198 trees 109
approval 198 Decision Explorer 99
change management 232–3 declarative memory 76
and climate, understanding of 187–9 defensive routines 62
competitive 198–9 definition of knowledge management 8–12
conventional 198 Del the Delegate 226, 227
dependent 198 delegating style 219
humanist-encouraging 198 Deming, W. 129, 132–4
interpretative theory 188 democracy 224
knowledge ecology at Xerox 208–9 denial 217
knowledge-sharing cultures, creation of 199–203 Denmark 199, 282
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 316

316 index

dependency analysis 110 point of sale 168

dependent culture 198 embrained knowledge 49
depression 217 emergent strategy 158
Descartes, R. 34, 36 empirical research 258–9
see also Cartesiansim employee involvement 224–5
descriptive surveys 196 encoded knowledge 49
design 149 energy
industry 58 channelling 219
model 159 creation 219
deutero-learning (learning to learn) 61,78 engagement 223
development 226–9 0 Enron 192, 271
of knowledge management strategy 170–4 episodic (context-specific) memory 73
deviation detection 110 epistemology 17, 42, 44
Dewey Decimal Classification 16, 34, 97, 101–2 equifinality 80
dialogue 62–3 Ernst & Young 170, 172–3
differentiation 159, 164 error harvesting 63
digital age 24–6 espoused theories 61
direction force 163, 254 Eti 284–5
discontinuous change 215 Europe 14, 23, 92, 129, 272
discovery-invention-production-generalisation cycle European Commission 281
60 European Foundation for Quality
discussion 62–3 Management 272–3
document management systems 136–8, 297 European Quality Award 272
document type definition (DTD) 111, 112 evaluating knowledge 107–10, 297
documentation 149 events 207
double-loop learning 135, 169, 206, 296 excellence 161–2
change management 216, 220 executive information systems 143–4, 297
learning organisation 247, 249, 250, 252–3, 255, ‘Exercising Ba’ 201
257, 259 existentialism 38–9
organisation/organisational learning 59, 65–6, 82 existing knowledge 59
philosophical perspectives 35, 50 expanding routines 77
Dow Chemical 275 expectation 223
downward communication 224–5 experiential learning 60, 61, 70
Dublin Core 111 expert systems 109
dynamic capabilities 59, 78–80, 295–6 expertise yellow pages 115
explanation 223
e-business 150–1 explicit knowledge (know what) 11, 17, 293–5, 298,
e-commerce 168 301, 303
e-learning 115 component technologies 92
e-mail 114 culture 200–1, 203
early history 18–20 intellectual capital 283, 284
economics of knowledge management systems 150 learning organisation 244, 250–1
Ecuador 199 organisation/organisational learning 61,76,79
education 75, 150, 221, 229 philosophical perspectives 40, 41, 48–9
effectiveness surveys 196 strategic management 167
efficiency force 163, 164, 254 exploitation 66, 69, 176–7
electronic exploration 66, 173, 176–7, 296
data interchange 168 exposures 173
mail filftering agents 105–6 extensible markup language (XML) 111, 112
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 317

Index 317

external courses 228 glossary 307–11

externalisation 49, 201 grafting 70
extranets 110–13 grammatical model 76
Great Library of Alexandria 21
facilitation 221 Greece 199
Far East 302 see also Ancient Greece Greek classics 24
faults analysis 227 group
feedback loops 68 learning 67
feedforward loops 68 process systems 142
femininity 199 support systems 141–3, 297
fifth discipline 245–7 groupware tools 114
financial growing pains of business 242–3
participation 225 Guatemala 199
reporting 281 Gutenburg of Mairtz, J. 24
Financial Accounting Standards Board 281
Fiorina, C. 260–1 hardware 150
firewall technologies 113 Hegel, GM.F. 34,37
firm Heidegger, M. 3, 4, 3, 8, 3, 9
knowledge-based view 298–9 Henry VIII 23
resource-based view 166–7 Hewlett-Packard 260–1
fit profiles 196 hidden knowledge 173
five force framework 160 Hirohito, Emperor 133
focused history 18–20
approach 159, 226 Homer 20, 21
search 71 Honda 251
forcefield analysis 160, 220–1 human capital 269, 275, 277–8
forces 163–4, 254 humanist paradigm 42
Ford 202 humanist-encouraging culture 198
forecasting techniques 140 Hume, D. 34, 3 7
Form of Sensibility 37 Husserl, E. 34, 3 8, 3 9
formalised approach 226 hypertext markup language 111
‘Forum Theatre’ 257
Foucauldian gloom 256–7, 258 identification 223
Foucault, M. 46, 49 idiosyncrasy 80
framing 71 imitation 75
free-riders 143 implementation 68, 149, 176
functionalist paradigm 42 implicit knowledge 49
fuzzy expressions 104 improvement 133
in-house programmes 228
Gaius Asinius Pollio 21 incremental change 215, 216
garbage in, garbage out syndrome 143 index 100–2, 103
Garratt, B. 247 individual
gatherers 105 learning 59–61, 67
generic strategy 160 payment by results 231
genetic individualism 199
algorithms 109 Indonesia 199
programming 109 industrial
Germany 225 democracy 224
Gesner, C. 25 lifecycle 160
GIF files 112 organisation tradition 158–61
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 318

318 index

information 15–16, 80, 138 involvement 221

distribution 71 Iraq, destruction of ancient knowledge in 26–7
interpretation 71–2 ISO 9000 134, 284
overload 71, 72 iteration 68
-retrieval tools 100–4
systems 143–4, 167–70, 297 James, W. 34, 3 8
capability 169 Japan 133, 204
technology 148, 167–8, 169, 174 culture 199, 200
innovation 156 knowledge-creating company 250–2
force 164, 254 learning organisation 244, 247
strategies 174–7 strategic management 158, 161
innovative knowledge 173 job-learning analysis 227
inquiry 38 JPEG files 112
institutionalist perspective 68, 158, 162–6, 175, 298–9 Juran, J. 129, 132–4
insurance 140 just-in-time production 136
intangible assets 277
integrated approach 5–7 K-profile 301
integration 68 Kant, 1. 3 4, 3 7
of knowledge 298 kei-dan-ren 133
intellectual capital 265–87 key points analysis 227
definition 268–70 key task analysis 227
Eti 284–5 know how see tacit knowledge
financial reporting 281 know what see explicit knowledge
frameworks 273–7 ‘knowing that’ 33, 35, 40, 48, 49, 5 0, 293
history 270 knowledge 16–17
human and social capital 277–8 base view 167, 298–9
knowledge auditing in practice 283–4 creating company 250–2
as a narrative 281–3 ecology 208-9
organisational capital 278 frameworks, current 48–9
organisational performance, problems of measuring gap 173
270–3 map 93
and smart patents 278–80 seeking 173
value added scorecard 266–7 Kodak 280
intelligence 70 KPMG Consulting 14
intelligent decision-support system 141
intentional search 71 language 40
‘Interacting Ba’ 201 synchronised multimedia integration language 112
interaction 68, 188 see also extensible markup language; hypertext
internalisation 49, 201, 217, 223, 251 markup language
International Accounting Standards Committee 281 Latin classics 24
International Federation of Accountants 281 law firms 4–5
internet 110–13 leadership 32–3, 159, 164, 207, 218–19
interpretative theory of culture 188 lean production 129, 136, 175
interpretevist paradigm 42 learning 295–6
interpreting 67 activist 61
intranets 110–13 by doing 70
intuiting 67 centralised 302
inventory 173 company 247–50
inverted files 102 competitive 252–6, 259
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 319

Index 319

congenital 70 machine-based learning 95 –6, 110

decentralised 302 Macmurray, J. 40–1
deutero-learning (learning to learn) 61, 78 maintenance 149
experiential 60, 61, 70 Malaysia 199
group 67 management 175
individual 59–61, 67 information systems 168–9
machine-based 95–6, 110 quality 132–6
opportunities 249 systems 117, 136–8, 145–7, 148–9, 297, 298
pragmatist 61 team development 229
projects 208 see also change management; strategic management;
reflector 61 total quality management
self-managed 228 manipulation 222
sharing of 141–2 manual skills analysis 227
styles questionnaire 61 Mark Anthony 21
systematic 79 marketing 140
team 62 3, 245–6 Marlowe-Crowne social desirability scale 259
theorist 61 Marxism 43, 46
vicarious 70 masculinity 199
see also action learning; meaning 3 8
double-loop learning; learning media richness 71, 72
organisation; organisational Media Space 141
learning; single-loop learning; membership 208
unlearning memory 73, 76
learning organisation 241–62 declarative 76
competitive 252–6 mental models 246
empirical research 258–9 mentoring 229
fifth discipline (United States) 245–7 Merleau-Ponty 38
growing pains of business 242–3 Mesopotamia 19, 20
Hewlett-Packard 260–1 meta data 117
knowledge-creating company (Japan) 250–2 metasearchers 105
learning company (United Kingdom) 247–50 method of doing business 279
power and politics 256–8 Mexico 199
letting go 217 Microsoft 268, 272
Lewinian experiential learning model 60, 61 NetMeeting 141
lexical analysis 102 Miles for Knowledge Sharing schemes 229
libraries 8, 16, 21–5 misunderstanding 218
monastic and cathedral 22–4 monastic libraries 22–4
Likert scale 187 Morgan, M. 41–4
literature 150 moving 220
Livy 22 multiple options 80
local area networks 26, 110
Locke, J. 34, 36–7 narratives 205, 281–3, 300
looking in 249 NASA 108
looking out 249 nations, knowledge management between 302
Lotus Development 202 negotiation 221
Lotus Notes 13, 114, 141 Netherlands 199
Luckmann, T. 45 networks of practice 207
Lyceum 20 neural networks 109
Lyotard, JA. 45, 49 New Zealand 199
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 320

320 index

Newton, 1. 37 ‘Originating Ba’ 201

non-volatility 116 outdoor management development 229
norms 189–92, 198 outsourcing 82–3
Norway 199 oval mapping technique 99
noticing 70 overheads 150
nouns 102 Ovid 22
Oxford library 24
observation-emotional
reaction-judgement-intervention papyrus 20
cycle 60 Paris University 23–4
on-the-job training 227–8 parochial self-interest 217
online analytical processing 107–8, 140 part-of-speech 95
ontology 17, 42, 93–7 participating style 219
Open University Business School 13 participation 150, 221, 225
operational models 139 Patent Office 279
opportunities 173 patents 278–80
oppositional culture 198 path dependency 80
optimal approach to knowledge management 294–5 pattern matching 95
Oracle 268 Paulus Aemilius 21
oral tradition 18–20 payment 231
organisation 150 Peirce, C.S. 34, 38
Organisation for Economic Co-operation and Peisistratus 20
Development 269 perfectionistic culture 199
organisational performance 138
capital 277, 278 monitoring 71
climate 187, 188 related pay 231
culture 188 Pergamon library 21
culture inventory 196–7 permission-to-play values 192
knowledge, realist theory of structure of 49–50 person culture 194, 200
learning 57–84, 243–4, 252 personal
design industry 58 digital assistants 26
drivers of 63–5 knowledge management 300–1
dynamic capabilities 78–80 mastery 245
frameworks 66–9 personalisation strategy 75, 106–7, 170–7, 298–9
individual learning 59–61 perspective making 206
information distribution 71 perspective taking 206
information interpretation 71–2 persuasion 221
knowledge acquisition 70–1 PESTEL analysis 160
organisational memory 73 Petri nets 145–6
organisational routines 75–8 pharmaceutical industry 172
outsourcing 82–3 phenomenology 38–9
and politics 80–2 Philip 11, King 24
single-loop learning and double-loop learning 65–6 Philitas 21
team learning 62–3 philosophical perspectives on knowledge 31–52
unlearning 73–5 AMD 50–1
memory 73 Aristotle 35–6
performance, problems of measuring 270–3 Burrell, G. and Morgan, M. 41–4
routines 75–8 current knowledge frameworks 48–9
translators 206 Descartes, R. 36
organising knowledge 297 Hegel, G.W.F. 37
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 321

Index 321

Hurne, D. 37 project
Kant, 1. 37 delivery solutions 107
Locke, J. 36–7 outcomes 107
Macmurray, J. 40–1 prototyping 80
phenomenology and existentialism 38–9 psychological climate 187
Plato 32–3, 35 Ptolemy 120
Polanyi, M. 40–1 punctuated equilibrium 215
positivism, constructivism, postmodernism and critical
realism 44–7 quadrivium 24
pragmatists 38 qualitative data 15
realist theory of structure of organisational quality
knowledge 49–50 circles 63, 133, 193, 204, 225
Ryle, G. 40–1 control 132
Wittgenstein, L. 39–40 management processes 132–6
photo-realism techniques 117–18 movement 249
plan-do-check-act cycle 60, 133 see also total quality management
planned experiences outside the organisation 228 quantitative data 15
planned organisation experience 228 query 104
planning 133, 149, 159
Plato 32–3, 34, 35, 62 radical
Plato’s Academy 20 humanist paradigm 42
Polanyi, M. 40–1 structuralist paradigm 42
Polaroid 280 Rameses II 20
politics 69, 80–2, 233–4, 256–8 reading circles 133
portfolio approach 229, 230 ‘reading the traffic lights’ 219
positivism 33, 44–7 real-time information 80
post-modernism 33, 44–7 realism 41, 47
power 256–8 critical 33, 44–7
culture 194, 198, 199–200 realist theory of structure of organisational knowledge
distance 199 49–50
relations 81 reasoning 107
pragmatist 38 recognition 229–32
learning 61 reflector learning 61
presenting knowledge 116–18 refreezing 220
PricewaterhouseCoopers 202 relational database management systems (RDBMS) 117
print 24–6 relational dimension 278
privacy 138 rendering 117
proactive, participation 150 rents 166
probabilistic expressions 103–4 repairing routines 77
problem-centred analysis 227 repository of knowledge 170–1
problems 107 representative participation 225
problem-solving forms 225 research 149, 258–9
procedural memory 76 reservation systems 168
process Resource Description Framework (RDF) 112
cultures 195 resource-based
definition tools 146 theory 298
review 284 view 157, 166–7
systems 142 retail 140
proficiency force 164, 254 retrieval 73
profiling surveys 196 reward 229–32
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 322

322 index

risks 173 organisation/organisational learning 59, 65–6, 79,

rites 191, 233 82
rituals 191 philosophical perspectives 35, 50
role cultures 194 Skandia 270, 274–5
routines 62, 75–8, 295–6 Navigator 275
routing 145 skills directories 115
routinisation episode 176 slice and dice 108
rule smart patents 278–80
induction 109 social
oriented decision-support system 141 capital 277–8
Ryle, G. 40–1 desirability scale 259
interaction 141–2
‘sacred library’ 20 socialisation 49, 75, 200–1, 251
sampling 68–9 sociology 188
SAP 268 Socrates 20, 35, 37, 62
Sartre, J.-P. 34, 38, 39 software 150
satisfaction behaviours 198 solipsism 43
scanning 71 solver-oriented decision-support system 141
scenario planning 160, 216 Sorbonne library 24
search engines 104–5 Sorbonne, R. de 24
searching 70, 71, 105 spreadsheet-oriented decision-support system 140
Securities and Exchange Commission 281 staff 150
security 138 stage analysis 227
intranets 113 standard industry classification 101
segmentation 148 static phase 255
selection episode 176 statistical quality control 132
self-actualising culture 198 stemming 102
self-development 229 stickiness 203–8
self-interest 217 stopwords 102
self-managed learning 228 storage 73
selling style 219 storing knowledge 116–18, 297
semantic storytelling 191, 205–6, 300
memory 73 strategic
web 96–7 gap 173
semantics 96 information systems 169
semi-structured knowledge 93 intent 165
Shakespeare, W. 65 management perspectives 155–80
shared vision 246 British Gas 177–8
sharing knowledge 110–15 141–2, 173, 296, 298 development of knowledge management strategy
culture 199–203 170–4
Shell 216 excellence and turnaround 161–2
Shewhart, W. 132–3 industrial organisation tradition 158–61
shock 217 information systems strategy 167–70
signature files 103 innovation 156, 174–5
Singapore 199 institutionalist perspective 162–6
single-loop learning 296 personalisation 174–7
change management 216, 220 resource-based view of the firm 166–7
culture 193 schools of thought 157–8
knowledge management system 135 models 139
learning organisation 252–3, 257, 259 review 284
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 323

Index 323

strategy 249 learning organisation 244, 250–1, 252

striving routines 77 organisation learning/organisational 59, 61, 70, 76,
structural capital 269 79, 80
structural dimension 277 philosophical perspectives 33, 35, 40, 41, 48–9, 50
structuralist paradigm 42 strategic management 167, 173
structuration theory 43 tactical models 139
structured knowledge 93 task culture 194, 200
structures 249 tasks 227
style 219 taxonomy 93–7
subject orientation 116 Taylor, F. 130
suffix trees 103 teaching phase 255
Sumerians 8, 19 team learning 62–3, 245–6
summarisation 106 teardrop model 100– 1
superprofits 166 Technip-Coflexip 118–20
support 221 technology 296–8
systems 138–43, 297 agent 105–6
vector machines 110 firewall 113
surveys 195–6 see also component technologies
Sweden 199, 225, 258 telling style 219
SWOT analysis 159, 160, 166 testing 217
symbolic interaction 188 text-based conferencing 113–14
symbols 189–92 text-oriented decision-support system 140
synchronised multimedia integration language (SMIL) theatre 257–8
112 ‘Theatre of the Oppressed’ 257
synthesis 284 theories-in-use 61, 65–6, 193
Syria 19 theorist learning 61
systematic learning 79 time variance 116
systems 296–8 Tobin’s q 272
administration 150 tokenisers 95
analysis 149 tolerance, low 218
of knowledge management 127–53 tools 296, 297
customer relationship management systems 148–9 tools, capturing of 98–107
decision support systems 13 8–41 agent technology 105–6
document management systems 136–8 cognitive mapping tools 98–100
e-business 150–1 information-retrieval tools 100–4
economics of knowledge management systems personalisation 106–7
150 search engines 104–5
executive information systems 143–4 tools, organisation of 93–7
group support systems 141–3 total quality management 129, 134, 135, 144, 272
new twists for old tricks 128 tough-guy, macho culture 186, 195, 199–200
quality management processes 132–6 Trade Related Aspects of Intellectual Property Rights
systems thinking 130–2 280
workflow management systems 145–7 training 150, 226–9
thinking 246 Trajan, Emperor 21
translators 206
tacit knowledge (know how) 11, 17, 293–6, 298–301, transmission control protocol/internet protocol
303–4 (TCP/IP) 110–11
component technologies 92, 98 trivium 24
culture 200–1, 203, 204, 205 trust, lack of 218
intellectual capital 283, 284 truths of fact 37
9068 KMAN_Z02.QXD 7/7/08 12:30 PM Page 324

324 index

truths of reason 37 analysis 160

turnaround 161–2 of knowledge 284
typing surveys 195–6 values 192–3, 200
vector expressions 103
Ulpian library 8, 21 Venezuela 199
uncertainty avoidance 199 vicarious learning 70
unfreezing 220 video conferencing 115
uniform resource locator (URL) 111 Vietnam 302
uniformity 116 Virgil 22
unintentional search 71 visualisation 117–18
Union of Japanese Scientists and Engineers 133
United Kingdom 14, 204 Walmart 108
intellectual capital 267, 270, 271 Weber, M. 43, 130
learning company 247–50 White Paper 267
learning organisation 248, 249, 259 wide area networks 110
Open University Business School 13 wireless application protocol 168
United Nations 14 wisdom 17–18
Development Programme 302 Wittgenstein, L. 34, 3 9–40
United States 14, 161, 172, 193, 298 word sense disambiguation 95
component technologies 92, 108 work-hard, play-hard culture 195
culture 199, 204 workflow
fifth discipline 245–7 client application 146
intellectual capital 271, 279, 281 enactment service 146
knowledge management system 129, 133 management coalition 146
learning organisation 244, 246 management systems 145–7, 148, 297
unlearning 59, 71, 72, 73–5 World Bank 14, 203, 299, 302
unstructured knowledge 93 World Trade Organisation 280
Utopian sunshine 256, 258 World Wide Web 26, 148

value added scorecard 266–7 Xerox 205, 208–9

value chain
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