Blog de Jorge E. Betzhold

Thursday, June 28, 2007

Thinking in KM

Knowledge Management in Multinational Companies.

Human beings have an infinite ability to create knowledge. Add the convenient fact that unlike conventional assets, knowledge grows when it is shared and you have the most powerful features, which will change how we manage in the Knowledge Era.
Karl-Erik Sveiby

Introduction: Importance of Knowledge Management.

Due to the emergence of a new era of change, business success and survival have become increasingly difficult to ensure. Globalization, cultural changes, new technologies and a gradual process of breaking with traditional time and space frontiers have reshaped the world, and in the process the environment of businesses. Multinational organizations were forced to deal with these changes more rapidly than local businesses in order to maintain its global positions, so they evolve from traditional-structured-entities, into more fluid businesses. The emphasis is now on adaptability to the dynamic business environment, addressing market and customer needs and nurturing its human capital.

For businesses to succeed in a competitive climate, they need to get the right information, in the right place, and in good time, and be able to use it properly. Ten years ago it was difficult to obtain information; today, information overload is experienced at the desktop, and intelligent tools are needed to help limit the time spent searching, filtering, and selecting.

In this context, during the last decade, there has been a growing concern for knowledge creation, retention and usage, as behind this element can be found the key to gain and retain the competitive edge in this new era.

What is Knowledge Management?

A simplistic definition can state that Knowledge Management (KM), is the process of managing the knowledge process in an organization. But what exactly is it that is to be managed?

Knowledge Management refers to the process of orchestrate the elements in the diagram.

How to make Knowledge Management works

In order to reveal how Knowledge Management can play a central role in businesses, we will address 2 illustrative cases:
Case 1
(For more details in the role of networks and virtual teams to share knowledge I recommend “Building a Knowledge-Driven Organization” by by Robert H. Buckman)
Consider an organization that has key staff – that should be the case of almost any organization. This is clearly illustrated in the following quote from, Microsoft’s founder: “If 20 specific persons leaves Microsoft, the Company will broke down.”
Let us imagine that the key members of the staff, those 20 persons in Microsoft, for whatever reason, do not return to work tomorrow. In fact they never return again. How will the organization fare? Well, if the organization had been encouraging and facilitating knowledge sharing, if it creates contingencies, and engaged in realistic succession planning, the impact, although not trivial, will be far less than if it had done none of those things. This example of Knowledge Management, is related to one of the major concerns of service organizations today: knowledge retention.
We have been supporting multinational corporations in initiatives to strive for a better retention of the knowledge inside the business, thou concrete measures to generate organizational networks and applications that can organize the business intelligence that is inside the employees, and not just the key stuff, but the entire business knowledge.
Case 2
Multinational companies have mastered all traditional business improvements techniques, so how can they face stiff competition in its markets? The answer is new ideas. The creation of ideas, the new ways to market existing products, new versions of old products, and brand new products, identification of new needs or the creation of ones, are all based on ideas. In other words, they are based on knowledge creation.
Knowledge creation is a key factor in competitiveness in a global economy. How does one firm create knowledge rather than another? Well, it is not easy to force people to create knowledge, but firms can create the conditions under which staff may want to create knowledge, may feel empowered to create knowledge, and feel rewarded for creating knowledge.
In our experience advising and managing project in multinational companies, we saw initiatives to create such conditions like incentive schemes, a good working environment and proper culture for innovation (sometimes companies work this under the “continuous improvements” title), appropriate technology, and a myriad other factors.
Even if all this things can be seen in a short time scope purely as costs (bottom-line financial perspective), they are medium to long time investments. Multinational companies, that lead their industries, see the strategic benefits and recognize their investment as just that.
Knowledge creation is the reason that many large organizations have a research and development (R&D) department.

Types of Knowledge to Manage.

· "Know-how" refers to the knowledge needed to perform a particular task or activity, and the general knowledge on a certain tropic. This is concerned with the knowledge of how to get things done, and even if sometimes such knowledge is explicit in organizational policies and procedures, it is very often tacit, within peoples' heads.
· "Know-who" refers to the knowledge of identifying who can help and how to find him. Traditionally this is about people skills to generate and nurture a social networks, relying on the judgment to understand others' strengths and weaknesses. In our experience, most of today’s multinational organizations spend time and money in identifying who knows what, and creating easy access for everyone to contact them, so the social network is created and maintained by the organization itself.
· "Know-when" refers to the knowledge of timing your actions. For example, skilled stock market operators seem to have the knack of buying when everyone else is selling. Some companies have made a virtue of their timing of takeovers and market entry strategies.
· “Know-where” can mean knowing where knowledge may be obtained, and it can mean knowing where things are best carried out. Levers of change are often reinforced or reach critical mass in specific localities where people with specific skills congregate—places like the Silicon Valley for high technology, or the City of London or New York for international finance.
· “Know-why” refers to the wider context and the vision. This context knowledge allows individuals to go about unstructured tasks in the most appropriate ways. An example is doing what is right by a customer rather than slavishly following a procedure.
· “Know-that” is the basic sense of knowing. It represents accepted 'facts', but also experience and access to learning; in that sense it includes formal and informal organizational culture.

Closing words on Knowledge Management in Multinational Companies

Knowledge Management is about the orchestration of a series of elements in order to align intangible actives with organizational strategic goals. This is a key element to gain and retain competitive edge in the dynamic environment of the new economy. As Brian Lehaney point out in his book “Beyond Knowledge Management”, the shift in business culture has to be from “individual knowledge is individual power” to “organizational knowledge is organizational power”.

Many KM exponents place great emphasis on technological change, and some of today’s articles may give the impression that knowledge management is solely about technology. It’s important to state that technology plays a vital role in knowledge management today, because it changes what we can do, how we think, and how we work; however, from a business perspective, the point is not technology by itself; it is technology to achieve an organizational purpose and it is to manage the change process to ensure that the people act according to those purposes.