Innovation, Leadership and Knowledge Management

Business gets done when people are communicating.

Knowledge Management(KM) is about helping people communicate and share

information. people are the experts. They need a place–both physical and virtual–that fosters collaboration and learning. The knowledge they bring to bear is made up of content, processes or rules–things. 

A lot has been written in the past year about KM and what it can do to improve productivity and efficiencies within businesses. According to consultants at Gartner Group, the KM market is expected to grow to $4.5 b by the end of next year. By 2003, they predict that more than half the Fortune 1000 companies will implement KM to increase responsiveness and innovation.

They will successfully use these capabilities to widen the gap between themselves and competitors.

KM is a logical extension of IBM’s successful ebusiness initiative. It is enables knowledgeable communities to leverage information and expertise to improve organizational innovation,

responsiveness, productivity and competitiveness. Some vendors believe that KM is solely about technology. We believe, and our customers and consultants also confirm, that a KM vendor must provide an end-to-end solution including people and technology.

The five core areas that are integral to creating KM solutions

include–business intelligence, collaboration, knowledge transfer, knowledge discovery & mapping, and expertise–as well as services. The need is to integrate these elements to provide customers with high-value KM solutions that address real business needs. These technology pillars alone, however, will create value only if implemented. This implementation must recognize the critical importance of the impact of knowledge sharing and innovation on culture and process, and sustain knowledge creation, application and distribution.

To understand KM, you need to understand how people work, share ideas and information. We know that in business, work gets done when people interact. One of our perspectives in this area is that KM is very much about the creation of management communities in which people can communicate.

Knowledge, to me, is the ability to create value from information. It’s largely in people’s heads. I’m sure all of you are familiar with this distinction between tacit knowledge and explicit knowledge. Explicit knowledge is what’s written down. There’s another kind of knowledge in organizations that we call–embedded knowledge. Embedded knowledge is knowledge that is implicit in our processes. Then there is tacit knowledge. It is what we know. It’s our intuition. In some ways, it is our belief. It is our experience or gut feeling.

Another way of considering this is to look at information as explicit knowledge–what’s written down, and experience as tacit knowledge–what’s in people’s heads. Some people say that KM is a great tool for searching and analyzing information. But that completely ignores the importance of tacit knowledge, because tacit knowledge is not written down. You can have the greatest search engine in the world, but it cannot detect tacit knowledge in an organization. So if you have a definition of KM that declares that it is only about great tools to find, search and analyze information, then that becomes a definition of a new term referring to the same old technology. However, if you expand the topic to include tacit knowledge, then KM really is something new. 



An even more important factor is understanding the difference between data, information and knowledge. There is a business story that explains that difference quite well. It is a story about a man, who, for years has been dealing with a great legal problem. He consults attorney after attorney, but no one can help solve his problem. Finally, he encounters a very experienced attorney who others say, can help. He explains the problem for about fifteen minutes.

The attorney listens, then gets up and walks over to the wall and pulls a book out of the shelf. He thumbs through it, points to it and remarks, “This is the issue.” Suddenly all becomes very clear to the bemused man. The man exclaims, “My God. Thank you! Thank you!” He feels relieved off a huge burden. Then, at the end of the month, he gets a bill for twenty thousand rupees. He calls the attorney and enquires, “How could you send me a bill for twenty thousand rupees? I was in your office for twenty minutes.” And the attorney calmly says, “Sir, I didn’t charge you for the twenty minutes you were in my office, I charged you for the twenty years of experience that taught me what book to look in.” Information is what’s in the book. Knowledge is knowing where to look. Knowledge is all the years of insight, intuition, experience and wisdom put together. The important knowledge is really in people’s heads. 

Business intelligence is about explicit knowledge. It’s centered around

assembling and examining huge volumes of data to discover new and valuable relationships. There is the classic example of how a large retailer, after having gone through this process with the shopping habits of consumers, discovered that men who purchase diapers often also buy beer at the same time. This is not something the company would have thought to investigate, but having uncovered the relationship, they would gain a major advantage over competitors, in applying that knowledge to the implementation of effective new merchandising.

In many respects, business intelligence is about things. But the second pillar of KM, collaboration, is about people and places. Having the ability to

collaborate and share data instantly through groupware provides a tremendous toolset for sharing explicit and tacit knowledge. 

The third pillar, of KM, knowledge transfer, is an area that is exploding all around the world these days. When you apply this to an IT infrastructure throughout a global enterprise, it points to what we call distributed learning, which is also known as distance learning or web-based instruction and training. Distributed Learning is burgeoning both among universities and within training departments of corporations. It consists of three primary areas:

self-paced learning, asynchronous learning and real-time learning. Self-paced learning means the student chooses the time, location and the medium either via CDs, or web-based databases of learning. Asynchronous learning pertains to the learning methodology of geographically dispersed students at asynchronous times in a virtual community, via messaging and shared databases. In real-time learning, elements of the first two methods are combined with the real-time immediacy of seeing and interacting, with all the other students and the professor online. Since distributed learning is such an incredible efficiency engine for corporate training departments, we are experiencing it as the fastest growing area of KM.

The fourth KM pillar is knowledge discovery and mapping. This pertains to a body of knowledge, to either discover the structure that exists in it, or impose a structure on it.

In doing this, we cluster and classify documents, integrate visualization tools to illustrate where documents fit in a structure and how they are related to one another. This technological infrastructure of KM is essential to allow an enterprise lay out the appropriate roadmaps for discovering, sharing and harvesting tacit knowledge. These tools are extremely flexible, since they need to be made applicable to different areas within a company to attain different objectives.

The fifth pillar is one which we feel has the most tremendous potential to revolutionize the IT industry. It is based on the premise that most of what an enterprise knows is tacit knowledge. A relatively small percentage of that tacit knowledge can be made explicit because most of the knowledge assets in the organization exist in the employees’ heads. What exists in their heads is expertise, and that is the fifth pillar of KM. The challenge of KM around expertise is identifying it, organizing it and facilitating all others in the organization to find it.

In many respects today when so many products and even systems are becoming commodities, a company is little more than the sum total of what it knows, how it coordinates what it knows and how fast it can know something new. That total, provides what is really sustainable and unique to that organization, and what will bring to it a source of revenues and profits. This is a result of the knowledge economy. Here, companies are selling expertise in their specific areas, and their growth is dependent upon their ability to effectively respond to challenges from competitors and to develop new areas of expertise.

The greatest success of the network era has been to turn data into information and then information into knowledge. Knowledge workers have discovered that groupware and collaborative applications provided them with a means to move beyond email.