Knowledge Management for the Competent Enterprise

by Karl M. Wiig, Senior Consultant, Cutter Consortium

KNOWLEDGE MANAGEMENT

The concept of "knowledge management" (KM) has been around for 25 years and is known to most business practitioners. Therefore, conventional aspects of KM may be of less interest for the proactive enterprise than new perspectives on the contexts of KM and some recent advances and practices. This Executive Report attempts to emphasize what is important from new perspectives, although for thoroughness, established KM approaches are also included.

Making people more knowledgeable and operations smarter have been pursued informally and implicitly as long as people have conducted business. In the current business environment, structured and deliberate KM is commonplace and is pursued to varying degrees in most large and small enterprises around the world. In any enterprise, KM's objective is to provide effective approaches to improve knowledge-related performance in the short and long terms. Knowledge management, as covered in this report and practiced by competent enterprises, is defined as:

The systematic, explicit, and deliberate management of knowledge-related processes and intellectual capital (IC) assets and the creation of capabilities to build, renew, utilize, and safeguard knowledge to maximize the enterprise's knowledge-related effectiveness and returns from its IC assets -- operationally, tactically, and strategically. ¹

The purpose of managing knowledge -- that is, the active and systematic initiatives to facilitate and guide knowledge-related processes, activities, and human behaviors -- is to attain the enterprise's goals in the short and long terms. Knowledge management is not a single discipline; instead, it is an integrated field that draws on many disciplines, which allows it to pursue initiatives in many domains and on several levels within the enterprise. KM works operationally to facilitate and promote use of existing knowledge assets with a "now" horizon in support of ongoing daily work. Operationally, it also works with a "forward-looking" horizon to create new knowledge assets and knowledge-related capabilities. These range from knowledge harvesting, codifying, and embedding into knowledge systems to providing education and training, conducting R&D, and building related infrastructure. The wider domain of KM engages in tactical and strategic activities. Examples of these facets of KM are illustrated in Figure 1.

KNOWLEDGE MANAGEMENT INITIATIVES INTRODUCE CHANGE

Typically, valuable knowledge-related interventions must be created based on conceptualization of how business and detailed work should be done differently. Consequently, KM interventions (initiatives) introduce changes that require effort to implement and may be met with resistance unless approached appropriately.

A major change in many organizations is the deliberate reliance on systematic KM to strengthen the organization's strategic directions in addition to making its tactics and daily operations more effective. Another change is the adoption of multidisciplinary capabilities to make knowledge management more effective in support of the enterprise. That has led to the pursuit of advanced technologies and integration within the management, cognitive, social behavior, and library sciences disciplines, to name a few. A third area of change is the extended penetration of the Internet and related technological and social developments such as the Semantic Web, wikis, and powerful human interfaces designed to support knowledge-worker cognition for support of both regular and difficult work.

Whereas much of the effort is focused on perfecting and broadening existing knowledge gathering, organizing, and utilizing using technology, knowledge managers are realizing that most important business knowledge is tacit and cannot be captured at will. Furthermore, existing knowledge may be less helpful in addressing important complex work and novel challenges that require new approaches. These situations often need collaboration and creativity to develop new insights, judgments, and both targeted and general knowledge that will be used to handle the particulars of the situation.

Enterprises of all kinds are challenged to be successful and viable by servicing their stakeholders competitively and effectively. Nowhere are these challenges more important than helping people to understand their work, make good decisions, and execute them to implement actions that will contribute to enterprise performance. Challenges come from economic, political, and social changes that affect how enterprises need to conduct strategies, tactical steps, and daily operations. Challenges also come from advances in business practices, better knowledge, increased IC assets, and in business-related technology. These issues force business leaders -- and in our context, CIOs -- to devise the best approaches to create and maintain capabilities that make the enterprise successful and viable.

THE IMPORTANCE OF KNOWLEDGE

A basic premise for knowledge management is that improved access and application of better knowledge will result in better and quicker situation-handling (including decisions), increased innovation, and a greater ability to achieve goals. Knowledge, it is argued, is the dominant factor that fuels human intellect, makes effective performance possible, and also leads to the creation of new knowledge. Knowledge is the driver of economic growth in people, in organizations, and in society. Without knowledge, intelligent and effective behavior -- the ability to interpret, assess, understand, innovate, decide, act, and monitor -- will not be possible even if the best information is made available.

Based on these considerations, deliberate and systematic KM is required to provide the intellectual growth and renewal required for enterprise viability and success and makes it more effective in internal operations, customer understanding, marketplace success, financial performance, and general stakeholder relations -- all measures of enterprise performance.

Organizations pursue KM with different focuses and with many different perceptions of what KM entails. Some consider KM to be a people-centered organizational learning (OL) focus. Others pursue KM with technological solutions to make structured knowledge readily available at points of use or to provide infrastructure capabilities that facilitate knowledge exchange and communication between people. Still others rely on KM to maximize the financial value of intellectual property (IP) assets such as patents and proprietary practices. However, according to James Quinn et al., "Surprisingly little attention has been given to managing professional intellect." ² The focus is still often on observable aspects of IC -- such as documented personal knowledge, kinds of structural knowledge and related information while paying less attention to personal tacit knowledge and knowledge embedded in systems and procedures or implicit in practices and traditions.

THE INFORMED, COMPETENT ENTERPRISE

Enterprises need to be competent to perform well and succeed. However, it is often less clear what enterprise competence means. In our context of knowledge management, we focus on ways in which knowledge contributes to competence and how KM-related initiatives must be considered to maintain and build it.

The notion of "being competent" in a particular domain focuses on the ability to handle tasks within the domain proficiently and effectively to achieve satisfactory outcomes. Competence requires several abilities: the ability to recognize and understand task situations within the objectives and scope of their contexts; to identify options and decide how to handle the situations; and to act appropriately to implement the chosen actions effectively while also monitoring the appropriateness of each facet.

For an enterprise to be competent, it must have the resources to perform regular operational work well, that is, the work that results in provision of enterprise deliverables such as revenue-producing products and services. It must consistently innovate and create new products and services to be competitive and to satisfy stakeholders. In addition, the enterprise as a whole needs to handle changes well, reestablish operational and managerial practices and systems and procedures, and change organizational structures and infrastructure to operate effectively under new conditions.

Within any enterprise, many domains require competence ranging from managerial and leadership competence to operational competence by people who deliver daily operational work. The basic building blocks of enterprise competence consist of the competence of its overall workforce -- of every individual at all levels of the organization. Other building blocks include the implicit competence that is provided by its systems and procedures, its organizational structure, its management and operational practices, its infrastructure, its relationship with stakeholders, and other capabilities. These competencies result from the IC assets -- knowledge -- that has been built into all of these capabilities by upgrading the workforce through education and training, by deliberate design of systems and procedures, and by implicitly and unconsciously selecting approaches that work better.

Many competent enterprises try to avoid conditions where lack of knowledge in task areas with knowledge-intensive work will lead to simplified understandings and inferior situation-handling of complicated situations resulting in less-than-desirable performance. Instead, they attempt for lower ranks to make informed and authoritative decisions by possessing sufficient knowledge with access to expertise. Their rationale is that competent decisions made locally will be made faster, with a better understanding of the situation than higher-ups will have and result in quicker, and cost-saving, actions. They delegate authority to coordinate, to decide, to shape situation solutions, and to prepare implementations. They use KM in coordination with IS, HR, and the operating department to ascertain that appropriate knowledge will be at the point-of-action to handle the expected work categories. When work challenges are beyond the assigned scope, situation-handling is shifted to individuals with greater expertise and responsibility.

Skills and Knowledge Are Not Sufficient!

Consider the "competent performer" (explained in more detail later in the report) who possesses good skills and knowledge. However, good skills and knowledge are not sufficient. In order to deliver acceptable work, the competent performer must have a good attitude, conviction that he or she is doing the right thing, and an understanding of how to support enterprise intents and strategy. In addition, and most important, the competent performer must have appropriate access to pertinent information that describes the actual task situation. This makes information management a crucial cocontributor to enterprise performance.

Owners, managers, and individuals in the workforce all work to make their enterprises succeed. Commercial enterprises have goals to be profitable and viable by operating effectively, satisfying customer expectations, and attaining competitive market positioning. Noncommercial enterprises also seek to fulfill strategic goals and satisfy stakeholders. For enterprises to perform as expected, they must create and pursue effective strategies that they implement with good tactical and operational actions. They must also understand the environments in which they operate and operate efficiently and effectively to produce and deliver products and services. They must foresee and build capabilities to guard against and handle oncoming problem situations and challenges and innovate to improve their products, services, and operations. Finally, they must be agile to handle changes flexibly. In short, they must be able to operate effectively in "chaordic" environments. ³

In the "informed enterprise," effective knowledge management provides the initiatives required to create a shared understanding throughout the enterprise about its intents and strategy. It has been demonstrated by many that this understanding is a prerequisite for enterprise excellence and success. Enterprises as widely distributed as GE, Nokia, Analog Devices, and SAS Institute have achieved such shared understanding. For the organization to be an effective, informed enterprise, it also needs to be ethical and transparent. ^{4, 5} Ethics and transparency foster trust and cooperation amongst others and thereby reduce dysfunctional tendencies such as silos and not-invented-here propensities. In the informed enterprise, knowledge workers understand the degree to which their personal fortunes are tied to enterprise performance.

Hence, we must now consider the KM field to provide highly important capabilities needed for the enterprise's welfare and success. The major problem with knowledge management, however, is that its successful practice is difficult and bridges disciplines and enterprise silos that traditionally have not been integrated or communicated. As a result, its history provides statistics of initiatives that have not lived up to expectations, fallen quickly into disuse, or have failed outright.

THE PURPOSE OF KNOWLEDGE MANAGEMENT IN THE ENTERPRISE

The notion behind knowledge management is that personal and organizational knowledge -- be it tacit, explicit, embedded, or implicit -- provides the foundation for the enterprise's competence. This makes it not only desirable, but mandatory, to manage short-term and long-term knowledge-related processes deliberately and systematically throughout he enterprise.

The purpose of KM is to build, maintain, make available, and safeguard IC assets in the short and long term and thereby to ascertain that the state of IC assets of all kinds are beneficial to the enterprise's mission. Deliberate and targeted KM makes it possible for people -- and to some extent, automated systems -- to make better, more knowledgeable decisions and to generally perform work better so as to secure desirable enterprise performance. Another role is to promote a shared understanding of how to implement enterprise strategy through tactical and operational work and to share such disparate areas as the details of operational work between teams. In many enterprises, knowledge management also serves to ascertain that IC assets are safeguarded and that their value is appropriately exploited. However, these perspectives may be too broad to be helpful for effective KM as practiced by a CIO.

If all future work were to consist of simple continuations of today's work, existing knowledge would be all one needed to consider devising and conducting effective knowledge management. However, as indicated above, today's enterprises are chaordic and much of their work, often the most important work, must effectively deal with internal and external changes as well as unanticipated opportunities and challenges. Hence, effective KM must also address ways to prepare the enterprise from a knowledge point of view to meet these largely unknown demands.

Knowledge Work

Knowledge work in the enterprise can be separated into operational work, tactical work, and strategic work. The daily activities of selling, producing, and delivering goods and services are part of operational work. So are back-office operations and staff work such as many HR activities and regular maintenance of stakeholder relations. Most operational work comprises the activities that directly generate revenues or fulfill the operational mission of the enterprise. Therefore, they are of central value, particularly in the short term by implementing the enterprise's mission and strategic intents on a daily basis.

Supporting work with KM requires understanding of the nature of knowledge needed for different kinds of tasks -- hence the need to categorize work, knowledge, and proficiencies. Specificities include categories of work-by-work complexity, categories of workers by skill and knowledge levels, categories of work domains by the functions performed for the enterprise, and categories of knowledge. Let's now examine each work type in detail.

Operational Work

Most operational work is basic or near routine work that can be conducted by workers without extensive training or education. More demanding work is performed by apprentices and competent, proficient performers who have extensive training and expertise. For operational work to be executed efficiently, reliably, and accurately, operational workers must possess considerable, albeit targeted, skills and knowledge that regularly must be expanded and renewed to handle changes in requirements. Intelligent automated work systems must also update its embedded knowledge to be appropriate and up to date. Established systems and procedures must be built to reflect best-available knowledge, which by nature will be embedded implicitly and must be updated.

Operational work requires task-specific skills and knowledge, and such knowledge is well suited for KM support. Some operational work also needs good world and methodological knowledge, ⁶ particularly to deal with abnormal problem situations that should be dealt with onsite and just in time. One example is the broad knowledge required by logistics dispatchers when they must handle external logistics systems problems.

Tactical Work

Tactical work can be relatively well defined to support enterprise strategy by interpreting operational requirements and securing and operationalizing resources and capabilities needed for implementation. Tactical work also supports operations by ascertaining that operational capabilities are renewed and maintained as required and that tactical and operational innovation are brought to bear to improve products and services and making operations as effective as possible. Tactical work by nature is more complicated and complex than operational work. On an individual day's work basis, tactical work is more valuable than operational work by securing the enterprise's effectiveness in the marketplace and among its customers. Tactical work requires relatively broad world and industry knowledge and excellent enterprise and methodological knowledge. These knowledge areas are good candidates for KM support, particularly for less dynamic knowledge.

Strategic Work

Most strategic work is not well defined and much of it deals with redetermining the enterprise's direction and intents as external and internal conditions and capabilities change. This work can be complex and often involves developing understanding of what the changes are and what their consequences might be. Strategic tasks must also address numerous internal issues to shape the enterprise's capabilities such as deciding on which new product and service lines should be developed and which organizational structure will best serve the new strategies.

Strategic work requires broad knowledge covering general world knowledge, specific industry knowledge, and knowledge of the enterprise's strengths, weaknesses, and general characteristics. Strategic work also requires methodological knowledge -- perhaps the best-defined knowledge that usefully can be supported by KM.

Complexity of Work

Enterprise situations vary widely. Some work situations, such as fast, reliable, and error-free assembly, are well known and require routine, even automatized knowledge in people's minds. Other situations such as project work to find solutions to stubborn operating problems are complex and require extensive, and, at times, abstract knowledge and metaknowledge. Even in well-known routine cases, effective situation-handling involves many steps and requires specialized knowledge. Most work is "simple" to a considerable extent. In many organizations, much of the simple work is automated using technologies such as robotics in manufacturing or simple logic and operations or knowledge-based systems in clerical and professional work. Hence, we consider seven categories of knowledge work as follows:

1. Basic routine work. This is simple, repetitive, and well-understood work that in the aggregate is important to the enterprise. This work can be scheduled with confidence. Some can be performed by unskilled workers and novices.

2. Near routine work. This is logical and common variations of daily routine work that can be planned with good certainty. In the aggregate, this often is the bulk of important daily work. Some can be performed by apprentices while competent and proficient performers provide most of the work.

3. Regular complicated work. Complicated extensions of routine work are required for high-quality results and regularly require competent performers for good execution. In the aggregate, this work is important and can be forecasted and planned with some certainty. Operational planning often falls into this category.

4. Uncommon complicated work. This is uncommon and unexpected less known variations of routine work that can only be forecasted and planned with uncertainty. This work is important for daily and future operations. It is often needed to avert problems and typically requires proficient performers for successful completion. Planning for organizational and operational changes falls into this category.

5. Complex work. Whereas this work may be partially understood by specialists, it often includes resolution of conflicts and, for effective results, typically requires systems perspectives and integration of areas that cannot be known in detail. Complex work requires expert and elite performers and is very important for enterprise viability. Part of it can be planned whereas other situations can only be expected with uncertainty. Determination of strategic directions, enterprise organization, and strategic partners falls into this category.

6. Chaotic work challenges. This work represents difficult, not-understood, and ill-defined situations that cannot be expected with any certainty. Although they are of great enterprise importance, they are unusual "wicked" problem situations outside of expected work scopes that require expert and elite performers. Unexpected market and technological challenges fall into this category.

7. Black Swan events. These challenges cannot be foreseen and are totally unexpected without precedence and can have monumental or catastrophic impact. They must be dealt with by the best expert and elite performers available. Unexpected terrorist attacks, social unrest, and economic crashes fall into this category. ⁷

Functional Activity Areas in the Enterprise

For determination of needed knowledge to perform work by worker category, we identify five functional activity areas for the enterprise, as illustrated in Figure 2 and described as follows:

1. Perform daily work and regular operational functions to market, deliver, and service the enterprise's basic deliverables such as revenue-producing products and services by utilizing the best-available enterprise capabilities; provide operational support such as information and communications technology (ICT) services and conduct back-room operations and regular HR functions such as hiring, firing, education, and training; mostly involves basic routine, near routine, and regular complicated work.

2. Innovate to improve regular operational functions to achieve greater efficiency (reduced operational efforts and costs), improve quality of work, and foster organizational agility in order to improve customer satisfaction and provide greater enterprise performance; plan and schedule changes and modifications of capabilities; mostly involves near routine, regular complicated and uncommon complicated work.

3. Perform tactical functions to secure and organize enterprise resources and capabilities needed to implement enterprise strategy and to proactively improve management and operational practices, systems, and procedures as well as organizational structures and infrastructure; prepare tactical directions needed to implement enterprise strategy; examples include introduction of totally new products and services, entering new markets, and new generation ICT capabilities; mostly involves regular complicated, uncommon complicated, and complex work.

4. Perform general management functions to manage all levels and operations of the enterprise, prepare the enterprise to handle challenges, establish strategic relationships, build budgets, develop plans, and explore options and opportunities to be pursued; mostly involves uncommon complicated, complex, and chaotic work.

5. Perform strategic functions to devise the enterprise's future by shaping its strategy, establishing enterprise management principles and policy, and handling difficult challenges effectively; mostly involves complex and chaotic work and Black Swan events.

For illustrative purposes, worker competencies for areas 1, 2, and 3 in Figure 2 are shown to be limited. Clearly, that is not realistic since any functional area should have top performers within their ranks.

The Value of Work

For many enterprises, the short- and long-term economic and success value of the total of its daily operational work will be greater than the value of all its tactical and strategic work. That is the case for mature organizations with stable operating and marketing environments where strategic changes are slow, orderly, and predictable. Many public service organizations and mature or declining enterprises have these characteristics. Normally, work in these organizations ranges from basic routine work to uncommon complicated work. However, the majority of successful enterprises are both proactive and agile. They actively explore and innovate to improve their products and services; make their operations more effective; improve relationships with customers, suppliers, and other stakeholders; and pursue strategies that will provide the best performance. Their behaviors and culture require savvy and knowledgeable situation-handling, which also requires extensive, pertinent, and reliable information. Proactive organizations require that people at every level make good decisions for uniform performance.

Operating, tactical, and strategic functions are dynamic with frequent changes that often are significant in both extent and value. They work to pursue new opportunities, correct problems, and, in some cases, avert disasters. The complexity of work covers the full range from basic routine work to chaotic work challenges, and, at rare times, Black Swan event challenges. Their environments are chaordic and require strong capabilities to deal effectively with chaotic effects of external and strategic changes while at the same time provide orderly and stable conditions needed to achieve desirable operating conditions. ⁸ In these enterprises, the long-term value of strategic work tends to have the greatest value by securing enterprise viability, compared to tactical and operational work. For these enterprises to perform well, they need highly competent people at every level of the organization. For long-term viability, they also need deliberate initiatives to renew every competency.

ON KNOWLEDGE, INFORMATION, INTELLECTUAL CAPITAL, WORKERS, AND SITUATION-HANDLING

Existing knowledge reflects experiences, understanding, judgments, and developments -- that is, how past work has led to new reflections beyond what was experienced -- of past work challenges and expectations for new opportunities and contexts. Existing knowledge in its most tangible forms is explicit -- often in documents or organized into knowledge bases (KBs), embedded in automated systems, and in manual systems and procedures, while it is implicit in work practices and understandings of what works and what does not. However, the greater part of existing knowledge is tacit and possessed by people in ways that they cannot make explicit but which they can access and even share with others while conducting real work and solving problems. ⁹ The mechanisms by which tacit knowledge are made available are understood from recent research. ^10-12

Knowledge and Information Are Different

The different operational purposes of knowledge and information in the enterprise are quite clear, albeit explicated knowledge is typically communicated as information in one form or another. When considering how knowledge affects personal decision making and reasoning, we need to understand what knowledge is and how it relates to information.

Knowledge consists of facts, perspectives, concepts, mental reference models, truths, beliefs, judgments, expectations, methodologies, and know-how. The purpose of knowledge is to determine and implement effective action, partially by providing people with capabilities with which to reason. In part, knowledge also consists of understanding of how to juxtapose and integrate seemingly isolated information items to develop new meanings -- to create new insights with which to approach effective handling of target situations. Knowledge is used to evaluate and handle situations, that is, assess, decide, problem solve, plan, act, and monitor. As such, knowledge is mostly tacit, implicit, difficult to examine, and, for the most part, cannot be managed directly, only indirectly by managing knowledge-related processes.

Information consists of data organized to characterize a particular situation, condition, context, challenge, or opportunity. The purpose of information is to describe and specify conditions, things, concepts -- any kind of describable concrete or abstract objects. As such, information is explicit, readily examined, and its management requires conscientious and detailed attention to mechanical manipulation, storage, presentation, and distribution. Since both the purpose and nature of information is different from knowledge, it implies that KM is fundamentally different than information management. Knowledge and information are not part of a continuum and need to be managed separately and diligently by separate disciplines.

Information Is Subordinate to Knowledge

The different roles of knowledge and information in support of work of any kind are indicated in Figure 3, which also illustrates why KM and information management are both separate and necessary. However, one very important issue that has been overlooked in many organizations is the need for information and knowledge to match, and, in particular, for information to match the situation-handling that is governed by the application of available knowledge. For knowledge to be fully applicable, it must have access to information that matches in timeliness, granularity, and all other dimensions of concern. Ideally, information must also be accessible in ways that do not impede situation-handling.

Intellectual Capital

When considering the broader responsibilities of KM in the enterprise, we need to include the perspectives of IC. IC is one of the two building blocks of "corporate capital." The second building block is "physical capital," as shown in Figure 4. The concept of IC was established in the early 1990s and is still a subject of extensive analysis and debate. However, the version presented in Figure 4 is generally accepted.

In general, IC accounts for current assets -- that which is in existence now. This, in part, differs from KM, which also pursues development of future capabilities. The elements of IC that have direct interest for KM include the HR and workforce segment of stakeholder resources -- apart from the many forms of structural capital, which includes explicit, embedded, and implicit knowledge. The workforce assets represent knowledge possessed by people at all levels of the enterprise. However, all the enterprise's stakeholder resources must be considered to be "on loan" in that they do not in any sense "belong" to or can be controlled by the enterprise. The enterprise can only influence and promote these assets by facilitating behaviors and incentives.

The IC elements of structural capital are often considered to be most important for KM in that they generally are easier to deal with, visible, tangible, and measurable. The fact that they are of less importance to enterprise performance than people's knowledge is not considered.

Knowledge Workers and the Importance of the Individual

The performance of the enterprise is based on its employees' voluntary actions in support of the organization's intents and goals. Each worker's actions are based on deeply internalized tacit values, beliefs, judgments, understandings, and specific knowledge. The overall enterprise performance and viability result from innumerable small actions by individuals and automated systems. As illustrated in Figure 5, the small individual actions combine with larger departmental and enterprise actions, which combine to create the consolidated behavior and performance of the whole organization. The quality and extent of knowledge possessed by people -- their competence -- and the private and structural IC assets otherwise available to them determine the realized enterprise performance.

Only in the last decades have we started to understand the cognitive functions of knowledge workers when they engage in knowledge work. There is an increasing understanding of the complexity, utility, and business value of how proficient knowledge workers apply the knowledge they possess to analyze and interpret situations to decide and deliver quality work. We are learning how to strengthen workers' intellectual processes by providing them with just-in-time collaboration, automated decision support systems (DSSs), and other sources of knowledge. By providing workers with DSSs and access to experts, it is possible to reduce needs to educate or train them to handle rarely encountered tasks. The function of personal knowledge, understanding, and judgments to achieve effective organizational performance is also becoming clearer. Early on, managerial emphasis on work procedures and methods was placed on observable work. Later, it included information and information flows, which are also observable. Focus has now shifted to include cognition and knowledge. Whereas it has always been understood that know-how and expertise influence quality of work, the knowledge focus has targeted the individual's educational and training background. Now, systematic perspectives for broader work processes or knowledge mechanisms within organizations are also considered. There is additional understanding of invisible work, particularly on how workers think and utilize knowledge when performing tasks ranging from simple to complex.

Knowledge Management Must Support the Work Needs of the Individual

Understanding the working individual's knowledge functions and needs makes it possible to create more effective KM initiatives. That is achieved by understanding what type of knowledge that individuals must possess to perform effective work and how much additional knowledge can be obtained from KM systems and from collaborators and experts. The scope of KM must support efforts to realize the desired performance by building needed knowledge assets systematically and explicitly. To support planning and implementation, we distinguish between seven proficiency categories for workers in terms of their knowledge and skill levels (refer back to Figure 2):

1. Unskilled. These are workers who are unaware of specific job requirements with limited understanding or judgment who can perform basic routine work with minimal training.

2. Novice/beginner. These are workers who are vaguely aware of a field; they are innocent with no real experience (amateurish).

3. Apprentice/advanced beginner. These are workers who are aware and partially informed but relatively unskilled.

4. Competent performer/journeyman. These are workers who are competent, broadly skilled, and knowledgeable in selected areas.

5. Proficient performer/craftsman. These are workers who are highly proficient in a particular area and generally knowledgeable.

6. Expert performer/master. These are workers who have a high level of expertise in many areas and are broadly knowledgeable.

7. Elite performer/grand master. These are workers who are world-class experts in all areas of the knowledge domain.

Situation-Handling

Understanding how people and organizations handle situations, including decision making and problem solving, is important for successful knowledge management. ¹³ Understanding requires insights into areas as diverse as situation-handling practices, cognitive sciences, knowledge-transfer methods, microeconomics, management principles, and supporting IT. Such insights are required to diagnose knowledge-related operations, conceptualize KM initiatives, implement capabilities, and assess and monitor utilization of knowledge-related resources and practices. Acquiring the requisite understanding of knowledge-related mechanisms on the personal and organizational levels takes KM professionals into new fields and requires them to view work and operations from perspectives that may be new to most.

People handle work tasks and challenges (situations) by identifying what they are about; exploring and making decisions about what to do to handle them appropriately; implementing the decisions (that is, the selected actions); and monitoring what is happening, explicitly or tacitly. Situation-handling can be separated into four primary tasks: (1) sense making; (2) decision making/problem solving; (3) implementation; and (4) monitoring. A simplified schematic overview of the relationships between these four tasks is indicated in Figure 6. The functional capabilities needed to operationalize each primary task are: situational awareness; action space and innovation capability; execution capability; and governance competence and perspectives. The proficiency of these capabilities is highly dependent upon the extent and quality of knowledge that people possess or otherwise make available to tackle the tasks by support systems and automation. If knowledge is limited or the competence is otherwise reduced, the capabilities will become constraints that reduce the effectiveness of the overall performance. Figure 6 indicates some connecting variables and paths along which information and knowledge enter the process.

DETERMINING KNOWLEDGE MANAGEMENT STRATEGY AND INITIATIVES

For the enterprise to benefit fully from knowledge management, broad options must be explored to determine where and how to direct the efforts. On paper, a host of KM alternatives are possible -- even potentially beneficial. However, several factors make some of the choices more attractive than others. The enterprise's special needs, its professional capabilities, its resources, and its culture and practices all determine the attractiveness and feasibility of alternatives. In addition, determining factors also include the employee's understanding of the KM realm in general, what is possible within the enterprise, and how it would work operationally, and, in particular, how the changes introduced by the KM alternative would impact the enterprise.

An important issue for KM deals with planning and setting priorities for KM initiatives, particularly according to where maximum returns for KM efforts can be obtained. This is only feasible when it is understood what type of work is to be undertaken, by whom, for which purpose, and what the relative value is of the different kinds of work, as explained earlier.

Long-Term Plans Must Be Driven by Enterprise Strategy

The general opportunities and needs to coordinate enterprise strategy and KM are highlighted in a statement by Thomas L. Sporleder and H. Christopher Peterson from the agrifood industry:

This evolving shift in the basis of rivalry among firms puts increasing demands on corporate strategy. A future challenge for agrifood firms is to embrace strategy that includes, at least conceptually, knowledge as a strategic asset of a firm. Knowledge and its management are emerging in contemporary thought as a potential source of sustainable competitive advantage. ¹⁴

It is clear that to support the enterprise in its goals to be progressive and viable, KM must consider the full range of operational, tactical, and strategic needs. This is a change from traditional KM and requires involvement of senior management in new ways.

Operational KM Considerations

Operational KM perspectives focus on creating and fostering general KM practices and initiating and managing individual knowledge processes. Examples include implementing KM practices such as life-long learning programs and expert networks to assist decision makers in specific functions. Operational KM objectives emphasize collecting, organizing, transferring, and utilizing knowledge. Included are creating and operating KM systems, establishing external KM connections, and partnering.

Tactical KM Considerations

Tactical KM perspectives focus on exploiting knowledge processes to achieve more effective operation. Examples include KM-supported innovation to reduce unnecessary bureaucratic procedures, time required to provide service, and employee turnover. Tactical KM objectives facilitate operational knowledge management by creating KM infrastructure, building KM staff capabilities, and establishing KM practices.

Strategic KM Considerations

Strategic KM perspectives focus on creating and expanding relationships with employees, customers, suppliers, partners, and other stakeholders to meet societal goals. Examples include the development of new approaches based on knowledge capabilities and the outsourcing of innovation to suppliers. Strategic KM objectives include assisting enterprise strategy creation by providing insights into how knowledge management can support, improve, or expand enterprise strategy and determining direction for KM based on how KM needs to support and implement enterprise strategy, tactical efforts, and daily regular operations.

Examples of KM Agendas on the Strategic, Tactical, and Operational Levels

Traditionally, KM has focused on operational activities, that is, how knowledge is collected, organized, shared, and utilized. This focus has, in many enterprises, been on the use of technology, while in others it has been on people-centric, learning organization approaches. With the increasing importance of the application of effective knowledge at all levels of the enterprise, a broader focus for knowledge management is required -- that of serving strategic and tactical facets of conducting business in addition to the customary operational aspects. The broader perspectives hence result in strategic and tactical KM requirements as indicated by the examples presented earlier in Figure 1.

KM support of operational work is relatively straightforward since it often is possible to define and describe normal tasks and their situation-handling concisely and concretely. Also, knowledge for operational work tends to be less dynamic than for tactical and strategic work and therefore may lend itself better for explication and inclusion in KBs and DSSs. However, most operational work will also have surprises -- problem situations that may require onsite decision making and a need for fast action to avert greater problems -- or just to expedite work by lessening operational friction.

Tactical, and particularly strategic, work is more challenging than operational work. However, the value of this work tends to be high by leading to significant enterprise activities. The nature of KM for tactical and strategic work falls into different areas, such as ICT-supported knowledge-based modeling for complicated what-if analysis; knowledge mining in unstructured natural language; social software for collaboration; and communities of practice (CoP) support and general infrastructure capabilities. However, the major challenges result from the broad range of tasks that these functions must address -- many of which deal with novel situations that need creative solutions or new knowledge.

Knowledge Pathways and Options

There are several important modes of KM in the enterprise. In part, these modes reflect the knowledge pathways that are engaged. The operational objective of knowledge management is to ascertain that the best-available knowledge consistently is applied to knowledge work to assure competent handling of business tasks and other situations. Hence, the objective is to ascertain that decisions and implemented actions will lead to good performance. In practice, one aspect of operational KM deals with transferring knowledge from subject matter experts -- knowledge holders (KHs) -- to knowledge workers (KWs), or to automated systems. This is the case when KWs need existing expert knowledge and when new knowledge is created in the minds of experts and other KHs through learning, experience, and innovation. Other aspects of operational KM deal with transferring knowledge from external sources to internal parties.

Figure 7 presents examples of transfer pathways from KHs to KWs and automated business systems. Some paths are largely technology-based and result in creation of knowledge-based systems. Others are people-based with KHs and KWs in direct or indirect contact and increasingly supported by technology capabilities of many kinds. The examples of technology-based paths result in the creation and use of many kinds of automated business systems (ABSs), DSSs, and KBs. DSS and KB capabilities are used directly by KWs, while ABSs are mainstays of IS in the enterprise and generally perform their tasks without human interaction.

The examples in Figure 7 distinguish between explicit and tacit knowledge, which as indicated earlier, are significant elements of IC. In addition (not shown) is the embedded knowledge in automated systems. People primarily possess tacit knowledge and cannot explicate more than a small portion of this knowledge -- less than 10% of relevant knowledge. However, people are able to use tacit knowledge when performing real-life tasks. ¹⁵

Explicit knowledge transfers require that KHs contribute what they can explain or demonstrate to capture and document pertinent knowledge. Explicit knowledge may be provided as narrative, videos, graphics, text, equations, ontologies, computer code, and so on. Transferring explicit knowledge into successfully usable forms requires considerable resources and expertise in several fields beyond the target subject and conventional KM. Disciplines needed for this work include advanced computer sciences and artificial intelligence (AI), cognitive sciences and ergonomics, branches of philosophy, and management sciences. Specifically, expertise is required to elicit knowledge competently, organize knowledge into structures and systems that facilitate effective use, create efficient technical systems, and create powerful man-machine interfaces, including sophisticated search features that facilitate efficient execution of business tasks. The human interfaces must match the cognitive approaches that KWs engage in during knowledge work. This will differ for KWs who deal with routine work and those who deal with more complex work, as discussed earlier.

Other knowledge pathways include knowledge from external sources, such as research organizations, universities, consultancies, and other knowledge holders. In some instances, this also includes collaboration and outsourcing knowledge-building through targeted R&D projects. Other pathways involve the gradual inclusion of implicit knowledge into routines, practices, culture, and traditions.

Knowledge Diagnostics: The Least Understood Aspect of Knowledge Management

Not all KM initiatives are successful. They may fail to live up to expectations and may have copied "best practices" from other organizations without addressing the enterprise's business problems or opportunities. Hence, failed KM initiatives do not make significant impacts and may not be supported by people in daily operations. Most unsuccessful KM efforts are attempted without sufficient KM diagnostic efforts, and many KM practitioners do not understand this area.

When diagnosing operating and other business problems, the understanding of the underlying factors and how to deal with them is dependent upon the understanding of situation-handling mechanisms. Competent knowledge diagnostics require considerable expertise about the details of knowledge-related processes. The situation-handling model provides important support for organizational knowledge diagnostics by providing functional structure, definition, and identification of the main process tasks and variables. As indicated in Figure 8, the model supports knowledge diagnostics by providing specific comprehension of intellectual work understanding with additional insights into KM solutions.

Root-cause diagnosis of knowledge-related issues may be the least understood aspect of KM although many advanced enterprises routinely pursue in-depth knowledge-related analysis and conceptualization. They conduct knowledge diagnostics of target situations and use this approach to develop candidates for KM intervention. However, most enterprises still pursue conventional symptom-oriented "industrial engineering" diagnosis and devise remedial solutions accordingly. When such enterprises pursue KM, they may utilize KM surveys and screenings methods such as knowledge mapping or they pursue KM based on what has been successful elsewhere without a deep understanding of the knowledge-related mechanisms in the target situation.

Generally, knowledge-related problems or opportunities can only be observed indirectly and by people with relevant expertise. By their nature, these situations are different from traditional operational, tactical, and strategic circumstances that can be measured and often are visible. Knowledge-related situations involve how people think instead of what physically happens. They deal with the intellectual (mental) processes that determine how a task situation is handled, that is, how the situation is understood, how options are developed, which action is chosen and implemented, and the determination of reasons for why it is chosen rather than just what happens.

Enterprises may lack the ability to diagnose situations from knowledge perspectives and instead limit investigation to physical or observable characteristics, such as process flows, information flows and issues, resource availabilities, and so on. Understanding of underlying knowledge-related mechanisms and processes are needed to analyze situations and to conceptualize KM interventions and actions. Target situations should be analyzed as critical knowledge functions (CKFs) where KM initiatives would make important changes. (See the Appendix for more information CKFs.) CKFs may be important for several reasons. Needed knowledge may be in short supply or not well known at the point of use or in general. Knowledge may be vulnerable when only one or few people possess it, and key people are in line for promotion, are close to retirement, or plan to leave. The CKF may have available proficient knowledge but have limited capacity with greater capacity only to be obtained by developing more experts. The CKF may be geographically separated from where expertise resides and therefore introduces limitations and so on. CKFs consist of five basic characteristics:

1. Types of knowledge, expertise, or skill required for effective task performance

2. Business use, or the operational purpose, of knowledge in support of the enterprise functional activity area

3. Constraints, vulnerabilities, or unrealized opportunities resulting from insufficient knowledge or conditions that prevent knowledge to be utilized fully

4. Alternatives for managing (i.e., improving or correcting) the CKF

5. Business value of releasing the knowledge constraint or exploiting the opportunity

Effective KM diagnostics on the individual level require an understanding of how personal knowledge and IC assets are applied to deliver competent and competitive work. On the organizational level, KM diagnostics requires analysis of how IC-related factors affect operations of business functions, the delivery and performance of products and services, and so on. In general, KM diagnostics require awareness of representative knowledge-related issues by having familiarity with symptoms and underlying processes such as:

• Quality problems caused by assembly line workers who make minute mistakes when they misunderstand how tolerances affect field performance of product, such as when they do not understand how to identify when parts have problems or when they do not know how to repair parts with minor problems and use them anyway

• Low individual productivity and unnecessary delays caused by insurance underwriters who are uncertain about how to proceed in nonroutine cases when they only possess routine and operational knowledge, while lacking broader script and schema knowledge that would allow them to operationalize such knowledge to apply to different cases and situations

• Wrong customer advice provided by service representatives who misunderstand customer situations or lack sufficient knowledge of the enterprise's products, services, and systems and procedures and therefore address customer situations improperly

• Inappropriate design solutions by engineers who misunderstand product application requirements because of insufficient knowledge of how to apply technology in the target context

• Misdiagnosis and faulty repairs by office machine and instrument technicians who make hasty conclusions based on assumptions derived from limited experience

More complex knowledge-related problems include situations where sales per employee fall below industry average or may be attributed to visible factors, such as excessive rework, equipment downtime, delayed parts supplies, or badly organized work. In-depth KM diagnostics often indicate that such difficulties are caused by knowledge-related problems of various types. Problems may be caused by lack of knowledge sharing between development and production departments, by operators lacking equipment diagnostics expertise, or by insufficient structural knowledge embedded in systems and procedures. Effective KM diagnostics build on insights provided by many fields ranging from savvy management experience, organizational psychology, management sciences, cognitive sciences, and advanced computer sciences, including AI.

When considering CKFs from a knowledge perspective, the resulting KM alternatives are often not "natural." That is, from conventional perspectives, they are not obvious or well known as direct implications of customary responses. It is rare that the best option is to "train a replacement for the departing expert" and otherwise let business go on as usual as in the examples above. Often, in addition to introducing IC-related interventions, it may be desirable to simplify operations, combine tasks, shift responsibilities and tasks between different functions, or automate some tasks that previously were manual by leveraging the available knowledge and use of technological options.

One of the critical first steps in any KM initiative is to conduct a knowledge audit. A meaningful knowledge audit is not just a business needs assessment, but also a cultural evaluation and an examination of what knowledge is required, available, applied and contained. In short, a knowledge audit is a practical way of getting to grips with "knowing what you know," and some of its tasks are to develop the business case for KM intervention.

KNOWLEDGE MANAGEMENT APPROACHES

Numerous effective KM approaches are available to the competent KM practitioner. Many prepackaged solutions can be acquired directly from software systems vendors. Some enterprises that have obtained such systems have been surprised to learn after the system is installed that not only have they received a KM system, they have also acquired the built-in operating practice and management philosophy that clash unproductively with their environment and culture. Other approaches, better tailored to the enterprise's specific needs and environment, can be obtained from consultancy organizations. Such organizations have a variety of specialties ranging from KBs to creating knowledge-based DSSs to implementing tailor-made ontologies.

The KM literature in books and journals is vast and can be quite helpful. For example, among a total of 12 articles in a recent journal, three describe how to ensure KM initiative effectiveness; ¹⁶ KM approaches to address the "leaving expert" issues; ¹⁷ and KM methods for new product development. ¹⁸ Most KM practitioners take advantage of the available literature and should be encouraged to continue to do so.

People-Focused Knowledge Management

The largest area of deliberate and systematic KM is people-focused. As such, it deals with several areas that traditionally are not perceived to be part of KM, often because of the traditional operational perspectives, while excluding strategic and tactical perspectives that are as concerned with IC-related capabilities as with current tools and practices. Hence, broad and long-term KM includes initiatives such as succession planning, hiring and firing, education and training, and establishing "corporate universities," to name a few.

Explicit people-focused KM (PFKM) addresses cognitive support of people who are engaged in knowledge work. Its perspective, in addition to technology-based KM, comes from cognitive and social sciences and emphasizes how single individuals, teams, and whole organizations can be strengthened by KM. PFKM approaches include broad areas, such as the learning organization, and knowledge-sharing methods, such as CoP ¹⁹ within the enterprise and networks of practice (NoP) ²⁰ among professionals in different, and, at times, competing enterprises.

Technology-Based Knowledge Management Capabilities

Practitioners are aware of numerous technology-based KM approaches. KBs of different architectures and many types of DSSs are well known. DSSs may range from simple guides to more complicated rules-based or case-based reasoning systems to advanced search support applications that use semantic or natural language processing (NLP) technology. Other KM approaches include technological-based KM support infrastructure, social software including wikis, and knowledge mining in databases. However, care with systems design and implementation must be taken since technology-based KM solutions are difficult and fail much too often. ²¹

Knowledge Management Support Infrastructure

KM support infrastructure includes capabilities for collaboration, organizational memory, knowledge transfer, and IC. Within these areas are technical facilities such as videoconferencing, document morgues, e-mail, wikis, social software ontologies, search engines, knowledge-base structures, and portals. KM infrastructure also includes KM-related policies such as established enterprise approaches for lessons learned capture and reuse, accessing experts, structured collaboration practices, sharing in IP after inventions, and so on.

Knowledge Management and Social Software

Social software covers a wide range of support applications. Among these are collaborative software and groupware, instant messaging, and wikis. Effective collaborative software and groupware are sophisticated Internet or intranet applications that may support the following: multiple windows for participant video and voice communications; video, PowerPoint, and other presentations; sharing text and graphics; and private notes and documents. Collaborative software has become important for CoP, team collaboration, as well as for briefings, education, and other multiple-party functions in the enterprise.

One area of importance within this area is the use of wikis. From one perspective, wikis allow people to work together online similarly to how they work face-to-face by having threaded discussions to explore ideas or deepen their understanding of a knowledge area. Another use of wikis is the creation and continual updating of KBs by any approved participant.

Knowledge Management and Advanced Search: Semantic Search

Advanced search procedures are of great value to knowledge workers who are engaged in conceptual work. These procedures may rely on preindexed information that may be organized by semantic principles. They may also -- and this is increasingly important -- operate on unstructured materials such as report and document text in archival databases or in the public domain. The latter search procedures may use dictionaries of synonyms and phrase relationships or powerful NLP to perform semantic and even concept-based searches.

Recent Advancements in Knowledge Management

Several advances in KM are able to deliver new levels of support for knowledge work. Among these, we highlight the following examples:

• The development and application of targeted ontologies ²² that describe knowledge categories and elements and the relationships between them. Using ontologies as the organizing structure improves the general understanding of task knowledge and increases the application value of KBs and DDSs. Ontologies are important for development of data dictionaries by ascertaining that the relationships between knowledge and information are coordinated.

• The incorporation of NLP to provide extended capabilities for applications such as knowledge mining in unstructured databases, advanced concept-based search procedures, machine translations, man-machine interfaces, speech recognition, and many more

• The use of wikis for collaboration support and general knowledge sharing

• Data visualization in multidimensional and other complicated databases

Advanced Computer Sciences and Artificial Intelligence

AI has contributed many approaches to advanced computer sciences and indirectly to KM. This has often been done in combination with other disciplines, such as cognitive sciences, library sciences, social sciences, and engineering design. Among AI-originated methods are NLP, advanced text and image search methods, trainable neural nets for automated systems, DSSs, and evolutionary computing, among many others.

Evolutionary computing may be particularly interesting since it generates good solutions to difficult problems, often in ways that elude experts. For the method to be applicable, the problem realm needs to be modeled in one form or another, and the problem performance must be measurable. A simple overview of the technique is shown in Figure 9 where the "generate and test" method illustrates one approach to proceed with evolution. Evolutionary computing has been used to design satellite antennas for NASA and propellers for ships. It has also been used to generate project schedules for very complicated projects.

A Knowledge Management System Example: Lessons Learned Systems

Whenever exceptional situations occur, there are opportunities for learning valuable lessons. But to be learned, such opportunities need to be captured, described, preserved, and made accessible for future use. In this way, new knowledge is built to enhance the ability to act intelligently when confronted with difficult or unusual situations.

Learning from experiences with undesirable or desirable situations is an integral part of the learning organization, and it is part of continued improvement and keeping ahead of one's competitors. Unfortunately, important learning opportunities are often not analyzed and captured. At best, they have been ephemeral and become part of the workplace folklore and what could have been learned is forgotten only to be rediscovered after similar situations occur again. Thus, important situations may prompt later comments such as "It happened before and we should have known...!"

Knowledge professionals can help capture learning opportunities by establishing structured approaches to become part of the organization's normal operating practice. Such approaches must lead to insightful analysis of the original situation by taking advantage of in-depth information of what it was all about. Equally important, the analysis must be based on detailed understanding and knowledge of the processes within which the situation took place.

An effective and powerful approach to learning from noteworthy situations is used with success. Soon after the situation has occurred, a small team of two to four (at times more) is assembled to analyze and describe what can be learned. Team members must collectively have in-depth familiarity with the situation, its setting and context, its value or cost impacts, and the management and business role of the function within which the situation occurred. If the situation is of a technical nature, theoretical expertise must also be represented.

An effective lessons learned approach must be supported by a structured protocol to guide the process and document the situation and associated learnings. Each organization might develop special approaches to reflect culture, operating environment, and methods for storing and disseminating the lessons learned. Typical protocols include:

• Summary of lessons learned

• Situation description

• Description of lessons learned

• Codification of lessons learned

• Why was the situation valuable, or how could it be handled better?

• Members of lessons learned team

In addition, several factors facilitate continued operation of the lessons learned system:

• Institute organizational requirements to learn from all significant situations and reinforce these requirements with managerial and budgetary support and monitoring.

• Be quick to organize situation-specific lessons learned teams with requisite expertise and familiarity of situation. Teams consist of from one to six members and work fast; they are one-time task forces, not committees!

• Provide a structured approach to document and codify lessons learned.

• Organize repositories to cumulate knowledge from lessons learned. These must be managed to organize and prioritize learnings, ascertain quality, and cull obsolete knowledge. But they must not become bureaucracies!

• Develop efficient practices to share lessons learned and make them available through appropriate networking and by other means.

The lessons learned team should be assembled quickly after it has been recognized that a significant situation has occurred. The team should work fast and deliberately. At times, this process might take a fraction of a day by one person. For more complex situations of greater importance, the process may take a week or longer by four or more people, some of whom may be outsiders with special expertise. It is important that a lessons learned system be created to organize, compile, and distribute the descriptions of lessons learned as these are received. When a formal "knowledge representation" is used to codify the lessons learned, competent knowledge professionals may assist with the knowledge elicitation and codification process.

FINAL OBSERVATIONS

This report furnishes the background of a framework for knowledge-related work and organizational activities that provide the basis for deliberate and systematic pursuit of KM for the competent enterprise. The nature, management, creation, and utilization of IC within any organization are complex and affect how the organization is organized and operates -- business-wise and as a social system -- how people work, how technology is applied, and what its capabilities and resources are. Hence, for knowledge management to be effective, it needs to be practiced with multidisciplinary perspectives and capabilities.

For competent performance in the global knowledge economy, enterprises need broader KM practices than often has been the case. Traditionally, KM has focused on support of current operations with approaches such as CoPs and technology-based KBs and DSSs. Whereas that focus supports effectiveness of the enterprise's daily operations and therefore is crucial, the scope of KM in advanced enterprises has expanded to include support for strategic and tactical considerations to ascertain that tomorrow's IC assets and capabilities will be adequate.

KM practices continue to improve. New computer science technology and practical experiences provide more powerful systems that support knowledge workers better than ever before. Cognitive sciences give us better insights into how people use knowledge to perform work -- from simple, repetitive routine work to dealing with complex challenges that require innovation and new knowledge. Management sciences and microeconomics provide insights into the value of KM initiatives and their priorities. All of these inputs make KM increasingly powerful and helpful in the quest to make the enterprise more competent.

ENDNOTES

¹ Wiig, Karl M. "Enterprise Knowledge Management." White Paper, Knowledge Research Institute, Inc., 2007.

² Quinn, James Brian, Phillip Anderson, and Sydney Finkelstein. "Managing Professional Intellect: Making the Most of the Best." Harvard Business Review, March-April 1996, pp. 71-80.

³ Hock, Dee W. Birth of the Chaordic Age. Berrett-Koehler Publishers, 2000.

⁴ Badaracco, Jr., Joseph L. Leading Quietly: An Unorthodox Guide to Doing the Right Thing. Harvard Business School Press, 2002.

⁵ Lawler, III, Edward E., and Chris Worley. Built to Change: How to Achieve Sustained Organizational Effectiveness. Jossey-Bass, 2006.

⁶ A discussion of different kinds of knowledge is presented in: Wiig, Karl. People-Focused Knowledge Management: How Effective Decision Making Leads to Corporate Success. Butterworth-Heinemann, 2004.

⁷ Taleb, Nassim Nicholas. The Black Swan: The Impact of the Highly Improbable. Random House, 2007.

⁸Hock. See 3.

⁹Wiig. See 6.

¹⁰ Fauconnier, Giles, and Mark Turner. The Way We Think: Conceptual Blending and the Mind's Hidden Complexities. Basic Books, 2003.

¹¹ Gazzaniga, Michael S. (ed.). The Cognitive Neurosciences III. 3rd edition. The MIT Press, 2004.

¹² Gazzaniga, Michael S., Richard B. Ivry, and George M. Mangun. Cognitive Neuroscience: The Biology of the Mind. 3rd edition. W.W. Norton, 2008.

¹³Wiig. See 6.

¹⁴ Sporleder, Thomas L., and H. Christopher Peterson. "Challenges to Future Agrifood Corporate Strategy: Knowledge Management, Learning, and Real Options." Proceedings from the International Food and Agribusiness Management Association Annual Meeting, Cancun, Mexico, 20-21 June 2003 (www.ifama.org/tamu/iama/conferences/2003Conference/presentations/sporleder.pdf).

¹⁵Wiig. See 6.

¹⁶ Bishop, James, Dino Bouchlaghem, Jacqueline Glass, and Isao Matsumoto. "Ensuring the Effectiveness of a Knowledge Management Initiative." Journal of Knowledge Management, Vol. 12, No. 4, 2008, pp. 16-29.

¹⁷ Hofer-Alfeis, Josef. "Knowledge Management Solutions for the Leaving Expert Issue." Journal of Knowledge Management, Vol. 12, No. 4, 2008, pp. 44-54.

¹⁸ Pitt, Martyn, and Jason MacVaugh. "Knowledge Management for New Product Development." Journal of Knowledge Management, Vol. 12, No. 4, 2008, pp. 101-116.

¹⁹ Wenger, Etienne. Communities of Practice: Learning, Meaning, and Identity. Cambridge University Press, 1999.

²⁰ Brown, John Seely, and Paul Duguid. The Social Life of Information. Harvard Business School Press, 2002.

²¹ Neville, Kelly, Robert R. Hoffman, Charlotte Linde, William C. Elm, and Jennifer Fowlkes. "The Procurement Woes Revisited." IEEE Intelligent Systems, Vol. 23, No. 1, January-February 2008, pp. 72-75.

²² For more on ontologies, see: Di Maio, Paola. "Ontology: Making the Business Case." Cutter Consortium Business Intelligence Executive Report, Vol. 7, No. 7, 2007; Di Maio, Paola. "Ontology-Driven Architecture." Cutter Consortium Business Intelligence Executive Update, Vol. 8, No. 13, 2008; Di Maio, Paola. "Making Sense of Collective Intelligence." Cutter Consortium Business Intelligence Executive Report, Vol. 8, No. 9, 2008; Fensel, Dieter. Ontologies: A Silver Bullet for Knowledge Management and Electronic Commerce. Springer, 2003; McComb, Dave. "The Enterprise Ontology." Data Administration Newsletter, 1 July 2006 (www.tdan.com/view-articles/5016); and "Ontology." Wikipedia (http://en.wikipedia.org/wiki/Ontology).

APPENDIX: CRITICAL KNOWLEDGE FUNCTIONS

There are several categories of critical knowledge functions (CKFs):

• The type of knowledge (or expertise or skill) that is involved in performing a function or task; examples include:

  • Expertise in operating a chemical reactor during both routine and unstable operating conditions

  • Proficiency in diagnosing automotive and truck diesel engine failures

  • Skill to design miniaturized compressors for extreme environmental conditions

  • Competence in underwriting group health insurance for small companies with hazardous operating conditions

  • Understanding of how to deliver outstanding customer service

• The business use of that knowledge; examples include:

  • Providing the capability to produce high-quality specialty chemicals with minimal process interruptions and just in time

  • Enabling enterprises to decide least lifecycle cost solutions for repairing diesel powered trucks for use within the organization

  • Supplying the competence to design, build, and market high-margin, long-life, and reliable compressors, which allow the enterprise to become the market leader

  • Allowing the company to offer competitive health insurance with acceptable risk-return characteristics

  • Creating opportunities to develop highly competitive customer loyalty

• Constraints that prevent the knowledge to be utilized fully, the vulnerability of the situation, or the unrealized opportunity that is not taken advantage of; examples include:

  • There are too few knowledgeable operators available and as a result many reactors are not run well (constraint).

  • The master diagnostician only has time to diagnose 25% of the trucks with problems and this leads to improper and expensive repairs that take too long (constraint).

  • The idea that "our design knowledge is superb compared with competition, and we can therefore consider to offer a broader line of highly specialized custom designs to create a larger and more profitable market" (opportunity).

  • The expert will retire at the end of the year, and we have not trained anyone to replace him or her (vulnerability).

  • The expert customer service representatives are not motivated to share their expertise with others, and, as a result, we have an average customer service that falls below our objectives (opportunity, constraint, and vulnerability).

• Opportunities and alternatives for managing (i.e., improving or correcting) the CKF; examples include:

  • Creating a knowledge-based system (KBS) that allows limited capture and automation of expert operator knowledge on reactor operation and making it available around the clock to all operators. Also, eliciting the expert operator's concepts for sharing through discussions with the other operators (alleviating constraint).

  • Training additional engine diagnosticians by letting them work as apprentices to the master diagnostician for several months (alleviating constraint).

  • Introducing new product lines of compressors that are custom-designed for new environments, which previously were not served well, and therefore providing the opportunity to break into new markets (exploiting opportunity).

  • Eliciting and codifying accessible portions of the expert's knowledge before he or she retires. Videotaping the expert as he or she tells stories to other underwriters about how they dealt with challenging cases. Also, after retirement, retaining the expert for a time as a consultant to shadow and help the new underwriter (minimizing vulnerability).

  • Changing the reward system to provide bonuses to all customer service representatives as a group instead of only recognizing the top performers. Also, providing recognition for helping and sharing knowledge (exploiting opportunity, alleviating constraint, and minimizing vulnerability).

• The incremental value of releasing the knowledge constraint, minimizing the vulnerability, or taking advantage of (exploiting) the opportunity to use knowledge for operation, services, and products; examples include:

  • Improved operations, which lead to decreased chemical manufacturing costs, increased revenues, increased profit, and increased market share

  • Reduced repair costs and time, which leads to increased net profit and reduced capital investment (due to higher utilization factor of vehicles in fleet)

  • Additional high performance compressor designs for new applications, which make possible profitable market expansion

  • Continued underwriting expertise, which allows the company to continue its lucrative business in the niche market

  • Improved customer service delivery competence, which increases customer service acceptance and loyalty

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