CHAPTER FIVE

5. KNOWLEDGE MANAGEMENT
5.1. Introduction
There has been a surge of interest in knowledge management, and knowledge
management systems have become one of the fastest-growing areas of corporate
and government software investment. Knowledge management has become an
important theme at many large business firms as managers realize that much of
their firm’s value depends on the firm’s ability to create and manage knowledge.

There is an important distinction between data, information, knowledge, and

wisdom. Data is defined as a flow of events or transactions captured by an
organization’s systems that, by itself, is useful for transacting but little else. To
turn data into useful information, a firm must expend resources to organize data
into categories of understanding, such as monthly, daily, regional, or store-based
reports of total sales. To transform information into knowledge, a firm must
expend additional resources to discover patterns, rules, and contexts where the
knowledge works. Finally, wisdom is thought to be the collective and individual
experience of applying knowledge to the solution of problems. Wisdom involves
where, when, and how to apply knowledge.

Knowledge is both an individual attribute and a collective attribute of the firm.

Knowledge is a cognitive, even a physiological, event, that takes place inside
peoples’ heads, but it is also stored in libraries and records; shared in lectures; and
stored by firms in the form of business processes and employee know-how.
Knowledge residing in the minds of employees that has not been documented is
called tacit knowledge, whereas knowledge that has been documented is called
explicit knowledge.

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5.2. Organizational Learning and Knowledge Management

Like humans, organizations create and gather knowledge using a variety of

organizational learning mechanisms. Through collection of data, careful
measurement of planned activities, trial and error (experiment), and feedback from
customers and the environment in general, organizations gain experience.

Organizations that learn then adjust their behavior to reflect that learning by
creating new business processes and by changing patterns of management decision
making. This process of change is called organizational learning. Arguably
organizations that can sense and respond to their environments rapidly will survive
longer than organizations that have poor learning mechanisms.

5.3. Knowledge Management Practices

In order for organizations to improve their competitive advantage, they should

have knowledge management processes that can enable them to acquire new
knowledge for it to apply, share and preserve vital knowledge (Kridan and
Goulding, 2005). There are different authors, who forwarded the knowledge
management process and let us look at the three processes that knowledge
management basically involves, which were mentioned by Laudon and Laudon,
2006; knowledge acquisition, knowledge storage and dissemination and
responsiveness to knowledge.

KNOWLEDGE ACQUISITION

Organizations acquire knowledge in a number of ways, depending on the type of

knowledge they seek. The first knowledge management systems sought to build
corporate libraries of documents, reports, presentations, and best practices and
encouraged employees to create documents based on their experiences. These

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efforts have been extended to include unstructured documents, such as e-mail
(Laudon and Laudon, 2006). In other situation organizations acquire knowledge by
developing online expert networks so that employees can “find the expert” in the
company who has the knowledge in his or her head.

According to Mosoti and Masheka (2010), Firms capture and use knowledge
obtained from other industry sources such as industrial associations, competitors,
clients and suppliers and from public research institutions including universities
and government laboratories. Firms are dedicated resources to detect and obtain
external knowledge and communicate it in the firms and encourage workers to
participate in project teams with external experts.

KNOWLEDGE STORAGE

Once knowledge is discovered, documents, patterns, and expert rules must be

stored so they can be retrieved and used by employees. Knowledge storage
generally involves the creation of a database. Document management systems that
digitize, index, and tag documents according to a coherent framework are large
databases adept at storing collections of documents. Communities of expertise and
expert systems also help corporations preserve the knowledge that is acquired by
incorporating that knowledge into organizational processes and culture.

KNOWLEDGE DISSEMINATION

Knowledge dissemination is transmitting knowledge to target receivers for

absorbing and to be used by people (Bagorogoza and others, 2011). Knowledge
dissemination creates opportunities to maximize the organization’s ability to meet
these needs and generates solutions and efficiencies that provide a business with a
competitive advantage. This stage of knowledge management process deals with

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organizing and applying knowledge that has been created or acquired in ways that
make it formalized and accessible. Sharing knowledge creates a more powerful
company (Ibid). By creating a pool of knowledge and sharing it with others in the
organization, employees can develop knowledge faster and more effectively.

RESPONSIVENESS TO KNOWLEDGE

This phase refers to the processes of sharing, transferring, disseminating and

distributing knowledge once it has been organized and stored. Knowledge that is
kept solely in an individual’s domain is of little value to an organization.
According to Laudon, Regardless of what type of knowledge management system
is involved, knowledge that is not shared and applied to the practical problems
facing firms and managers do not add business value. Bagorogoza and others,
citing Kholi and Jaworski, defined organizational responsiveness as the actions
taken in response to the knowledge gathered and filtered. They also indicated that
the more KM is used, the more valuable it becomes for the people and the
organization(s) involved.

5.4. Types of Knowledge Management Systems

There are essentially three major types of knowledge management systems:

enterprisewide knowledge management systems, knowledge work systems, and
intelligent techniques.

Enterprise wide knowledge management systems

They include capabilities for storing both structured and unstructured data; tools
for locating employee expertise within the firm; and capabilities for obtaining data
and information from key transaction systems, such as enterprise applications and
from Web sites. They also include supporting technologies such as portals, search
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engines, and collaboration tools (including e-mail, instant messaging, and
groupware) to help employees search the corporate knowledge base, communicate
and collaborate with others inside and outside the firm, and apply the stored
knowledge to new situations. Systems for managing employee learning are
emerging as another supporting technology for enterprise-wide knowledge
management.

Categories of enterprise wide knowledge management systems

Type of knowledge Knowledge content Category of knowledge

management system
Structured knowledge Formal documents Structured knowledge
systems
Semi structured e-mail, memos, and other Semi structured knowledge
knowledge unstructured documents systems
Network(tacit) Expertise of individuals Knowledge network
knowledge systems

Knowledge work systems

The enterprise-wide knowledge systems we have just described provide a wide

range of capabilities that can be used by many if not all the workers and groups in
an organization. Firms also have specialized systems for knowledge workers to
help them create new knowledge for the firm.

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Knowledge Workers and Knowledge Work

Knowledge workers include researchers, designers, architects, scientists, and

engineers who primarily create knowledge and information for the organization.
Knowledge workers usually have high levels of education and memberships in
professional organizations and are often asked to exercise independent judgment as
a routine aspect of their work. For example, knowledge workers create new
products or find ways of improving existing ones.

Knowledge workers perform three key roles that are critical to the organization and
to the managers who work within the organization:

 Keeping the organization current in knowledge as it develops in the external

world-in technology, science, social thought, and the arts
 Serving as internal consultants regarding the areas of their knowledge, the
changes taking place, and opportunities
 Acting as change agents, evaluating, initiating, and promoting change
projects

Most knowledge workers rely on office systems, such as word processors, voice
mail, e-mail, videoconferencing, and scheduling systems, which are designed to
increase worker productivity in the office. However, knowledge workers also
require highly specialized knowledge work systems. These knowledge work
systems (KWS) are specifically designed to promote the creation of knowledge and
to ensure that new knowledge and technical expertise are properly integrated into
the business. Moreover, knowledge work is segmented into many highly
specialized fields, and each field has a different collection of knowledge work
systems that are specialized to support workers in that field.

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Examples of Knowledge Work Systems

Major knowledge work applications include computer-aided design (CAD)

systems, virtual reality systems for simulation and modeling, and financial
workstations. Computer aided design (CAD) automates the creation and revision of
designs, using computers and sophisticated graphics software.

Intelligent techniques

Artificial intelligence and database technology provide a number of intelligent

techniques that organizations can use to capture individual and collective
knowledge and to extend their knowledge base. Expert systems, case-based
reasoning, and fuzzy logic are used for capturing tacit knowledge. Neural
networks and data mining are used for knowledge discovery. They can discover
underlying patterns, categories, and behaviors in large data sets that could not be
discovered by managers alone or simply through experience. Genetic algorithms
are used for generating solutions to problems that are too large and complex for
human beings to analyze on their own. Intelligent agents can automate routine
tasks to help firms search for and filter information for use in electronic commerce,
supply chain management, and other activities.

Expert systems are an intelligent technique for capturing tacit knowledge in a very
specific and limited domain of human expertise. These systems capture the
knowledge of skilled employees in the form of a set of rules in a software system
that can be used by others in the organization. The set of rules in the expert system
adds to the memory, or stored learning, of the firm.Loan Underwriting Expert
System is one typical example of expert systems.

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In case-based reasoning (CBR), descriptions of past experiences of human
specialists, represented as cases, are stored in a database for later retrieval when the
user encounters a new case with similar parameters. The system searches for stored
cases with problem characteristics similar to the new one, finds the closest fit, and
applies the solutions of the old case to the new case. Successful solutions are
tagged to the new case and both are stored together with the other cases in the
knowledge base. Unsuccessful solutions also are appended to the case database
along with explanations as to why the solutions did not work.

Fuzzy logic is a rule-based technology that can represent such imprecision by

creating rules that use approximate or subjective values. It can describe a particular
phenomenon or process linguistically and then represent that description in a small
number of flexible rules. Organizations can use fuzzy logic to create software
systems that capture tacit knowledge where there is linguistic ambiguity.

For example, FordMotor Company developed a fuzzy logic application that backs
a simulated tractor trailer into a parking space. The application uses the following
three rules:

 IF the truck is near jackknifing, THEN reduce the steering angle.

 IF the truck is far away from the dock, THEN steer toward the dock.
 IF the truck is near the dock, THEN point the trailer directly at the dock.

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