Knowledge Management

"...the capacity to manage human intellect - and to transform intellectual output into a service or a group of services embodied in a product - is fast becoming the critical executive skill of this era..."

Tim Devinney in AFRBoss, 2001

Knowledge management is about

- embracing the challenge of radical innovation

- identifying barriers to innovation

- making a case for action

- stimulating business concept innovation

- discovering opportunities for radical innovation

As part of the ever-changing world, the importance of managing intangible assets , such as knowledge (including intellectual property) and innovation is being recognised as the key driver to future, long-term corporate growth. In fact, knowledge is fast becoming the prime factor of production, and as a result is becoming more important than land, labour and capital in the creation of wealth.

It should be noted that knowledge is different from all other kinds of resources. It constantly makes itself obsolete; with the result that today's advanced knowledge is tomorrow's ignorance. To manage this situation, both individuals and organisations are necessarily developing life-long learning processes. Knowledge is now subject to rapid and abrupt shifts; from a pharmaceutical emphasis to genetics in the health-care industry, and from PCs to the Internet in the computer industry. The implications of this are that the world economy will continue to be highly turbulent and highly competitive - prone to abrupt shifts as both the nature and the contents of relevant knowledge continually change.

It does not matter where knowledge comes from; the key to reaping a big return is to leverage that knowledge by replicating it throughout the organisation so that each unit is not learning in isolation and reinventing the wheel again and again. Furthermore, remember that knowledge management and innovation give several advantages

- patents, trade marks, copyrights, etc protect the organisation and give leverage into new markets (including favourable partnerships and licensing relationships, etc) and provide a competitive advantage. For example, the HBR stated that the value of royalties from patents, etc for IBM has increased from $US30 million in 1990 to around $US1 billion in 2000. This goes straight to the bottom line. These intangibles are additional ways of increasing shareholder value to the more traditional methods of increasing sales, creating new leading-edge product lines, or pursuing mergers and acquisition

- help increase productivity

- reduce costs

- help capture and share knowledge (IT) to solve problems

- keep staff motivated

Thus knowledge management encourages and helps the establishment and development of a culture of creative thinking and innovation throughout the organisation so that its activities are fully integrated into the mainstream. Furthermore, it encourages technology integration as part of research and development (R&D) into business development

Knowledge management and innovation requires looking outside both the organisation and industry. As Peter Drucker writes in HBR,

"...Currently around 90% of the traditional sources of information for an organisation are sourced from inside the organisation and/or the industry, yet around 50 % of the technology that affects an organisation and industry comes from outside..."

An example of outside influence is the impact of the computer industry on the banking industry, eg ATMs, Internet banking, etc.

Furthermore, to encourage knowledge management, after each activity/project is completed, it is essential to employ a strategy of asking some important questions of all participating stakeholders. The questions are

- how did we do it?

- what did we learn?

- how can we apply what we have learnt to next time?

Global organisations such as British Petroleum (BP) used this strategy to their competitive advantage when drilling for oil. For example, in 1995 it took 100 days to drill deep water wells. By using this technique and having all parties to a project involved , BP was able to reduce it to 42 days.

Managing information technology by computer networks using intranet as well as Internet facilities such as Web sites, has allowed people to work co-operatively and share knowledge quickly and easily regardless of time, distance and organisational boundaries. In many organisations this requires a new set of behaviours such as people being co-operative and open about what they know, and not possessive about information.

In the culture there needs to be explicit emphasis on

- adding value rather than operating on auto pilot

- quantum leaps rather than an incremental increase

- a holistic approach rather than piecemeal

- understanding a few key critical performance measures

- challenging the usual way of doing business

Sometimes the term organisational knowledge is used. The reality is that organisations are not knowledgeable. They may be data laden. People in the organisation hold the knowledge . Furthermore, organisations can ruin knowledge creating capabilities by:

- fearing that individuals will leave the organisation with valuable know-how that the organisation feels it owns

- failing to properly invest in individuals with a natural capacity to absorb knowledge

- not recognizing the importance of transferring knowledge to other parts of the organisation so that all employees can benefit

The value of knowledge is highly contextual and the way new knowledge is created varies considerably from organisation to organisation. One can think of generating knowledge by

- gathering more data (being more comprehensive)

- being more team-based in its usage (using more brains)

- being more creative with the application of the data/information/knowledge at your disposal (being smarter)

Creativity is the main driver of new knowledge creation and the generation of innovative outlets . Furthermore, knowledge management is more closely related to innovation management than IT

"...the impact of knowledge management systems on performance is almost wholly driven by the changes that it is has on the organisation's ability to innovate - either in better processes or better products and can manage the antecedents of knowledge creation - strong informal networks supported by effective formal databases, systems to encourage knowledge absorption, structure forums for the application as a transfer of learning - and you can measure the change brought about by innovative performance...."

Timothy Devinney, 2001

· Imagination is intrinsically linked with creativity and innovation . The gap - between what can be imagined, and what can be accomplished - has never been smaller. Today we are limited only by our imagination. Furthermore, in the age of revolution it is not knowledge that produces new wealth, but insight - insight into opportunities for discontinuous innovation. Furthermore, imagination is very important, if you want quantum leaps and not just continuous improvement.

"...Imagination is the preview of life's coming attractions..."

Albert Einstein as quoted in AFR Magazine, 2014a

What qualities are the most important for success?

"...You have to be an inventor and see the market place like nobody before you has seen it. You also have to be an athlete, because once you come up with the invention, you'll need to work your arse off to turn it into reality..."

Ruslan Kogan (Kogan Technologies ‐ A4300 m firm), 2014

"...The question isn't who is going to let me; it's who is going to stop me..."

Howard Roark as quoted by Ruslan Kogan, 2014

(sources: Gary Hamel, 2000; Timothy Devinney, 2001; Lyndall Crisp, 2007; Ruslan Kogan, 2014)

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