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Unfortunately, there's no universal definition of Knowledge Management, just as there's no agreement  as to  what  constitutes knowledge in  the first place.  Some  of the  definitions which have been suggested are: 

• The process through which organisations generate value from their intellectual and knowledge-based assets.
• The capture, organisation and sharing of what employees know.
• The collection of processes that govern the creation, dissemination, and utilisation of knowledge.
• The management of the organisation towards the continuous renewal of the organisational knowledge base.
• An audit of "intellectual assets" that highlights unique sources, critical functions and potential bottlenecks which hinder knowledge flows to the point of use.
• Consists of activities focused on the organisation gaining knowledge from its own experience and from the experience of others, and on the judicious application of that knowledge to fulfil the mission of the organisation.
• Organising information from disparate sources into a context that reflects the business and the decisions and processes of the business.
• The way that organisations create, capture and re-use knowledge to achieve organisational objectives. 

Western Knowledge Management Programmes

In the West, knowledge management has been largely facilitated through Information Technology, using corporate intrawebs and other computer-based initiatives. Several US manufacturing corporations have publicised their knowledge management programmes.

One of the first corporations to target knowledge management, General Electric, began its Work-Out programme in 1989, in an attempt to create the opportunity for hidden knowledge to be made public.  One can speculate that the success of this programme enabled then CEO Jack Welch to implement the corporation's tough policy of firing the bottom 10% performers annually, without losing their knowledge.

Hewlett Packard embarked on several knowledge management initiatives to create a purposeful process of capturing, storing, sharing and profiting from what employees know.  One of the outcomes has been the formation of KnowledgeLinks, a programme in which an internal group based at their headquarters collected knowledge from one Hewlett Packard business and translated it so that other businesses could apply it. KnowledgeLinks intranet sites were established, enabling managers to receive documents, best practices and stories of how others had dealt with key management issues, such as Total Quality Management, decreasing time-to-market, outsourcing manufacturing and others. 

Texas Instruments and Chevron are both noted for sharing best practices, both internally and with benchmarking partners.  TI also spreads knowledge through "sharing sessions" and by transferring employees to other parts of the corporation.

Owens Corning has a vision of a future that requires a strategic focus for knowledge.  Its corporate headquarters represents that vision.  Knowledge sharing is a critical element of the building's design, which has the latest communication technologies and a multi-purpose Discovery Centre geared to self-improvement and business knowledge.

Apple values its Knowledge Management system as a vital resource in staying ahead of its competition.

Some companies have linked knowledge sharing to their reward system.  It has been reported that Ernst & Young base part of each consultant's compensation on knowledge sharing activities.  At IBM's Lotus division, part of each customer-support worker's performance evaluation is based on knowledge sharing.

Measuring Knowledge

Measurements help gauge and manage knowledge assets and support continuous improvement.  Scandinavian companies took the lead in developing measurement systems for their intangible assets and reporting the results publicly.  This was a result of the pioneering work of Karl-Erik Sveiby in Sweden, who developed a method of accounting for intangible assets in companies in the late 1980s.

These companies developed hundreds of indices and ratios in an effort to provide a comprehensive view of intellectual assets at hand. For example, they measure such things as "business development expenses as a percentage of total expenses", "percentage of production from new launches", "information technology investments as a percentage of total expense", "information technology employees as a percentage of total employees", "percentage of employees working directly with customers", and the like as indicators of intellectual capital.  These indices are then reported in the companies' annual reports to show how effectively intellectual assets are leveraged.  Skandia AFS, pioneered the process of transforming "human capital", which the company can't own, into "structural capital", such as software, patents, trademarks, and data, which the company does own.

Knowledge Management in Japan 

Japanese corporations owe their success not only to well known factors such as cheap capital, manufacturing prowess, excellent supply-chain management and employee relationships, but also to their skill in organisational knowledge creation.  Faced with a crisis, Japanese companies historically turn to organisational knowledge creation as a means of breaking away from the past and moving them into new and untried territories of opportunity.   

The approach of the Japanese to creating, storing and utilising knowledge is very different from that of the West.  In Japan, they do not see any value in simply managing and measuring existing knowledge in a mechanical and systematic manner. They doubt that this alone will enhance innovation.  They also recognise that knowledge expressed in words and numbers ("explicit" knowledge) represents only the tip of the iceberg.  They view knowledge as being primarily "tacit" - something not easily visible or expressible.  Tacit knowledge is highly personal and hard to formalise, making it difficult to communicate or to share with others.  Subjective insights, intuitions and hunches fall into this category of knowledge.

Tacit knowledge also contains an important "cognitive" dimension. It consists of beliefs, perceptions, ideals, values, emotions and mental models so ingrained in us that we take them for granted. Though they cannot be easily articulated, this dimension of tacit knowledge shapes the way we perceive the world around us.

The difference in the philosophical tradition of the West and Japan explains why Western managers tend to emphasise the importance of explicit knowledge whereas Japanese managers put more emphasis on tacit knowledge. The Japanese have long emphasised the importance of bodily experience. A child learns to eat, walk and talk through trial and error. We learn with our bodies, not only with our minds. There is a long philosophical tradition in the West of valuing precise, conceptual knowledge and systematic sciences.  In contrast, Japanese intellectual traditions value the embodiment of direct, personal experience. It is these traditions that account for the difference in the importance attached to explicit and tacit knowledge.

Knowledge Creation

The distinction between explicit knowledge and tacit knowledge is the key to understanding the differences between the Western approach to knowledge (knowledge management) and the Japanese approach to knowledge (knowledge creation). The West has placed a strong emphasis on explicit knowledge and Japan on tacit knowledge. 

Explicit knowledge can easily be "processed" by a computer, transmitted electronically, or stored in databases. But the subjective and intuitive nature of tacit knowledge makes it difficult to process or transmit the acquired knowledge in any systematic or logical manner. For tacit knowledge to be communicated and shared within the organisation, it has to be converted into words or numbers that anyone can understand. This conversion from tacit to explicit knowledge creates organisational knowledge.

Karl-Erik Sveiby explains that the reason why Western managers have not addressed the issue of organisational knowledge creation can be traced to their understanding of knowledge as being explicit. They have a view of the organisation as an arena for "scientific management" and a machine for "information processing". 

The Japanese emphasis on the cognitive dimension of knowledge gives rise to a wholly different view of the organisation - not as a machine for information processing but as a "living organism". Within this context, sharing an understanding of what the company stands for, where it is going, what kind of a world it wants to live in, and how to make that world a reality, becomes much more crucial than processing objective information. Highly subjective, personal and emotional dimensions of knowledge have virtually no chance for survival within a machine, but have ample opportunity to grow within a living organism.

Innovation takes on a whole new meaning once the concept of tacit knowledge is fully understood. It is not just about putting together diverse bits of data. The personal commitment of the employees to the company and its mission become crucial. Unlike information, knowledge is also about commitment and beliefs which can lead to a particular perspective or intention. It is as much about ideals as it is about ideas and it is that which fuels innovation. Similarly, unlike information, knowledge is also about action; it is always knowledge "to some end."

Sveiby describes four modes of "knowledge conversion": (1) from tacit to tacit, which is called socialisation, (2) from tacit to explicit, or externalisation, (3) from explicit to explicit, or combination, and (4) from explicit to tacit, or internalisation. 

Knowledge conversion is a "social" process between individuals as well as between individuals and an organisation. But in a strict sense, knowledge is created only by individuals. An organisation cannot learn nor can it create knowledge by itself. What the organisation can do is support creative individuals or provide the contexts for them to create knowledge. Organisational knowledge creation, therefore, should be understood as a process that "organisationally" amplifies the knowledge created by individuals and crystallises it as part of the knowledge network of the organisation.  

The West's practice with knowledge management reflects the bias towards explicit knowledge, which is the easier of the two kinds of knowledge to measure, control and process. Explicit knowledge can be much more easily put into a computer, stored into a database and transmitted online than the highly subjective, personal and cognitive tacit knowledge. Knowledge management deals primarily with existing knowledge. But in order to create new knowledge, we need the two kinds of knowledge to interact with each other through the actions of individuals within the organisation.

Colin Seftel CFPIM CSCP

References

Verna Allee,  12 Principles of Knowledge Management,  American Society for Training & Development.

Verna Allee, The Knowledge Evolution Expanding Organisational Intelligence, Butterworth Heinemann

Surendra Gera & Philippe Massé, Employment Performance in the Knowledge-Based Economy, Human Resources Development Canada.

Peter F. Drucker, Post-Capitalist Society, Harper Business.

Brian D. Newman, The Knowledge Management Forum, http://www.km-forum.org

Noel Tichy and Stratford Sherman, Control Your Destiny or Someone Else Will., Doubleday, 1993.

McInerney, C. , Knowledge Management and the Dynamic Nature of Knowledge, Journal of the American Society for Information Science and Technology, 2002.

Karl-Erik Sveiby, The New Organisational Wealth: Managing and Measuring Knowledge-based Assets, Berrett Koehler

Leif Edvinsson and Michael S. Malone, Intellectual Capital: Realizing Your Company's True Value by Finding Its Hidden Brainpower, Harper Business.

Thomas A. Stewart, Intellectual Capital: The New Wealth of Organisations, Doubleday.

Ikujiro Nonaka, Hirotaka Takeuchi, Hiro Takeuchi, The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation, Oxford University Press

Hirotaka Takeuchi, Beyond Knowledge Management: Lessons from Japan, 1998 paper.