TEAM LinG i Knowledge-Based Enterprise: Theories and Fundamentals Nilmini Wickramasinghe Illinois Institute of Technology, USA Coventry University, UK Dag von Lubitz Med-SMART, USA & Central Michigan University, USA Hershey • London • Melbourne • Singapore IdEa Group puBlIshInG TEAM LinG ii Acquisitions Editor: Krisitn Klinger Development Editor: Kristin Roth Senior Managing Editor: Jennifer Neidig Managing Editor: Sara Reed Assistant Managing Editor: Sharon Berger Copy Editor: Larissa Vinci Typesetter: Amanda Appicello Cover Design: Lisa Tosheff Printed at: Integrated Book Technology Published in the United States of America by Idea Group Publishing (an imprint of Idea Group Inc.) 701 E. Chocolate Avenue, Suite 200 Hershey PA 17033-1240 Tel: 717-533-8845 Fax: 717-533-8661 E-mail: cust@idea-group.com Web site: http://www.idea-group.com and in the United Kingdom by Idea Group Publishing (an imprint of Idea Group Inc.) 3 Henrietta Street Covent Garden London WC2E 8LU Tel: 44 20 7240 0856 Fax: 44 20 7379 0609 Web site: http://www.eurospanonline.com Copyright © 2007 by Idea Group Inc. All rights reserved. No part of this book may be reproduced, stored or distributed in any form or by any means, electronic or mechanical, including photocopying, without written permission from the publisher. Product or company names used in this book are for identication purposes only. Inclusion of the names of the products or companies does not indicate a claim of ownership by IGI of the trademark or registered trademark. Library of Congress Cataloging-in-Publication Data Wickramasinghe, Nilmini. Knowledge-based enterprise : theories and fundamentals / Nilmini Wickramasinghe and Dag von Lubitz, authors. p. cm. Summary: “This book provides comprehensive coverage of all areas (people, process, and technology) neces- sary to become a knowledge-based enterprise. It presents several frameworks facilitating the implementation of a KM initiative and its ongoing management so that pertinent knowledge and information are always available to the decision maker, and so the organization may always enjoy a sustainable competitive advantage”--Pro- vided by publisher. Includes bibliographical references and index. ISBN 1-59904-237-1 (hbk.) -- ISBN 1-59904-238-X (softcover) -- ISBN 1-59904-239-8 (ebook) 1. Knowledge management. I. Von Lubitz, Dag K. J. E. II. Title. HD30.2.W523 2007 658.4’038--dc22 2006033748 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. All work contributed to this book is new, previously-unpublished material. The views expressed in this book are those of the authors, but not necessarily of the publisher. TEAM LinG iii dedication For our mothers TEAM LinG iv Knowledge-Based Enterprise: Theories and Fundamentals Table of Contents Foreword .viii Michael J. Ginzberg, University of Delaware, USA Preface . xi Section.I:.Understanding.Knowledge Chapter.I Overview.of.the.Networked.Knowledge.Economy 1 Introduction 1 What is the Knowledge Economy? . 2 Managing in the Knowledge Economy with Knowledge Management 5 KM Drivers 7 How to Become a Knowledge-Based Enterprise 11 Chapter Summary 13 Chapter.II Understanding.the.Knowledge.Construct 16 Introduction 16 Historical Understanding of Knowledge . 17 Data, Information, and Knowledge 18 Types of Knowledge 23 The Organizational Knowledge Life Cycle 30 Why is Knowledge Valuable . 34 Chapter Summary 37 TEAM LinG v Chapter.III Creating.Organizational.Knowledge . 42 Introduction 42 The Socio-Technical Perspective for KM . 43 Duality and the Knowledge Construct . 45 Frameworks for Knowledge Creation 47 A Socio-Algorithmic Approach to Knowledge Creation 55 Chapter Summary 60 Section.II:.Infrastructures.Required.to.Support. Knowledge-Based.Enterprises Chapter.IV The.KM.Business.Infrastructure . 65 Introduction 65 Systems Thinking 66 Historical Development of Information Processing . 68 Business Process Re-Engineering (BPR) . 69 Total Quality Management (TQM) . 71 Enterprise Resource Planning Systems, Supply Chain Management, and Customer Relationship Management . 75 Enterprise Integration 84 Chapter Summary 91 Chapter.V The.Organization’s.Human.Infrastructure 96 Introduction 96 Knowledge Workers 97 Capturing Knowledge from Knowledge Workers . 98 Organizational Considerations 105 Change Management . 106 Organizational Culture and Structure 107 Management and Leadership 116 Chapter Summary 124 Chapter.VI The.KM.Technological.Infrastructure 129 Introduction 129 Knowledge Architecture . 130 Establishing a Knowledge Management Infrastructure . 133 Knowledge Management Infrastructure Design 136 Knowledge Management Tools and Techniques 141 Chapter Summary 161 TEAM LinG vi Section.III:.Becoming.a.Knowledge-Based.Enterprise Chapter.VII KM.and.Strategy . 166 Introduction 166 Generic Structures 166 Industry Analysis 168 Internal Analysis Porter’s Value Chain Model 170 The Reverse Value Chain . 171 McFarlan’s Strategic Grid . 173 Designing a KM Strategy . 174 Competitive Advantage and Value Creation 178 Incorporating KM into the Strategic Vision . 180 Chapter Summary 183 Chapter.VIII Managing.Knowledge.Complexity 187 Introduction 187 An Organizational Model for KM 188 Prepared vs. Ready . 190 Role of Training . 198 The OODA Loop 203 Key Success Factors for KM 214 Implications for Knowledge-Based Enterprises . 219 Chapter Summary 220 Chapter.IX Learning.Organizations . 226 Introduction 226  LearningOrganizations:Denition . 227 Types of Learning . 229 Importance of Knowledge Management (KM) for Learning Organizations 234 Organizational Memory . 235 Chapter Summary 239 Section.IV:.Realities.for.Knowledge-Based.Enterprises Chapter.X International.Case.Studies . 245 Introduction 245 TEAM LinG vii Case Study 1: IT Platform for Study and E-Collaboration 246 Witold Abramowicz, Poznan University of Technology, Poland Tomasz Kaczmarek, Poznan University of Technology, Poland Marek Kowalkiewicz, Poznan University of Technology, Poland Case Study 2: Distributed Knowledge Networks: Construction Industry Modernization: Innovating a Digital Model for the Construction Industry: A Distributed Knowledge Management Approach . 257 Mogens Kühn Pedersen, Copenhagen Business School, Denmark Case Study 3A: Keller Williams Realty: Framing a Structure for Knowledge Sharing . 274 Roberta Lamb, University of California, Irvine, USA Case Study 3B: Keller Williams Realty: Cementing the Relationships of Knowledge Management . 286 Roberta Lamb, University of California, Irvine, USA Case Study 4: Contingency-Driven Knowledge Management in Palliative Care 291 Graydon Davison, University of Western Sydney, Australia Case Study 5: Managing Knowledge in Project-Based Organizations: The Introduction of “Checkboards” at ConstructCo 305 Jacky Swan, University of Warwick, UK Anna Goussevskaia, University of Warwick, UK Mike Bresnen, University of Warwick, UK Case Study 6: Knowledge Management in Practice: A Case Study in the Semiconductor Industry . 323 Brian Donnellan, National University of Ireland, Ireland Martin Hughes, National University of Ireland, Ireland William Golden, National University of Ireland, Ireland Chapter Summary 344 Appendix Knowledge, Information, and Knowledge Systems: Explaining the Conceptual Confusion . 346 Elie Geisler, Illinois Institute of Technology, USA Glossary 357 About the Authors 370 Index 376 TEAM LinG viii Foreword Wickramasinghe and von Lubitz begin Chapter IX of this book with a quote from Michael Porter: The nations that will lead the world into the next century will be those that can shift from being industrial economies based upon the production of manufactured goods to those that possess the capacity to produce and utilize knowledge successfully. This basic idea is both the reason for and the foundation of this book. Managing knowledge—capturing it, storing it, recalling it, and using it—is the fundamental process that will distinguish between successful and unsuccessful “organizations” of all sizes—from small groups to entire economies—in the 21 st century. The authors take this assertion for granted requiring no further comment or proof. We live in a knowledge economy, one where knowledge is the critical resource, more important than any of the other traditional economic resources. What must an organization do in order to gain control of and effectively use the knowledge resource? To answer that question, we should begin by clarifying what we mean by knowledge and the knowledge economy. That is where Wickramasinghe and von Lubitz begin this book. The rst three chapters of the book focus on the nature of knowledge, the ways that knowledge is “created,” and the centrality of knowledge to organizational performance. Knowledge goes beyond data or information, though these are its fundamental building blocks. Knowledge is not passive and implies the applica- tion and productive use of information. Knowledge exists in an organization and in its environment, but the organization does not automatically benet from that knowledge. It must be able to capture the knowledge, represent, store it, and make it available for recall, dissemination, and use. An organization that can capture, store, recall knowledge, and then apply it in relevant situations is at great advantage in today’s economy. The rst section of the book concludes by laying out a framework for thinking about knowledge management. The authors choose to adopt a socio-technical TEAM LinG ix perspective as their framework for thinking about knowledge management. In this perspective, three elements are key: people, process, and technology. Understanding knowledge management in any particular setting (organization) requires that we consider all of these elements. Wickramasinghe and von Lubitz discuss all three elements and describe knowledge management approaches focused primarily on the people involved (psycho-social aspects) or the technology employed. They prefer, however, to emphasize the process, and examine how the other elements of the framework impact on each stage in the knowledge management process. The advantages of this approach are that it is broad and context sensitive, and thus can be used to understand the variety and nuance in knowledge management situations across disparate organizations. The middle portion of the book examines three critical knowledge management infrastructures—the business process infrastructure, the human infrastructure, and the technology infrastructure. Business processes are central to the functioning of all organizations, whether they are business organizations or not, and the function- ing of these processes is critically dependent on the knowledge available to them. As a consequence, knowledge management can be viewed as the basis for success of these processes. Knowledge workers are an ever-growing part of modern organizations, and they comprise the critical human infrastructure for knowledge management. The authors identify a range of issues that are important to an understanding of this human infrastructure, including: • How a knowledge worker’s knowledge can be captured and retained; • Monitoring and controlling knowledge workers’ actions; • Managing change in dynamic environments; • The organization’s culture and how it supports (or fails to support) knowledge management efforts; and • The role of leadership in assuring the success of knowledge management ef- forts. All of these are important aspects of the human infrastructure that should be exam- ined in order to understand knowledge management in any specic situation. The nal infrastructure presented is the technological infrastructure. The authors suggest a three-layer architecture useful for thinking about knowledge management. At the top is the knowledge presentation layer, the knowledge portal. In the middle, the knowledge repository performs the technical tasks of knowledge management. And, at the bottom, there is a data sources layer, which may include multiple da- tabases as well as other sources. The chapter discusses many specic technologies that may be used to support one or more of these layers. TEAM LinG [...]... Carlsson, B., & Karlsson, C (19 99) The linkages among entrepreneurship, SMEs, and the macroeconomy Cambridge: Cambridge University Press Alavi, M., & Leidner, D (20 01) Review: Knowledge management and knowledge management systems: conceptual foundations and research issues MIS Quarterly, 25 (1) , 10 7 -13 6 Churchman, C (19 71) The design of inquiring systems: Basic concepts of systems and organizations New York:... York: Harper Collins Drucker, P (19 99) Beyond the information revolution The Atlantic Monthly, 4757 Gold, A H., Malhotra, A., & Segars, A H (20 01) Knowledge management: An organizational capabilities perspective Journal of Management Information Systems, 18 (1) , 18 5- 214 Halliday, L (20 01) An unprecedented opportunity Information World Review, (16 7), 18 -19 Hope, J., & Hope, T (19 97) Competing in the third... of Knowledge Management and Innovation, 1( 1) Courtney, J., Croasdell, D., & Paradice, D (19 98) Inquiring organizations Australian Journal of Information Systems, 6 (1) Davenport, T., & Grover, V (20 01) Knowledge management Journal of Management Information Systems, 18 (1) , 3-4 Davenport, T., & Prusak, L (19 98) Working knowledge Boston: Harvard Business School Press Drucker, P (19 93) Post-capitalist society... and perhaps not sufficient resources or understanding to manage all of it, is of critical importance and relevance to all 21st century organizations KM is not a simple activity, rather it requires thoughtful and careful evaluation of, and understanding of numerous external and internal factors before an organization can even begin to make the transition to a knowledge-based enterprise We shall expand... The value of these cases is to help us understand the range of situations where knowledge management is appropriate, while appreciating the importance of context and the differences across situations Knowledge-Based Enterprise: Theories and Fundamentals is a great starting point for someone who is beginning to explore the field of knowledge management, and provides a comprehensive introduction to this... synchronize to support and facilitate effective and efficient organizational processes which in turn equip the firm to attain its stated business goals, objectives and strategies Before we can understand how to appropriately apply the tools, techniques, technologies, and strategies of knowledge management to transform the firm into a knowledge-based enterprise, it is essential first to understand the underlying... globalization and rapid technological change has been the generation of vast amounts of raw data and information, and the concomitant growth of the capabilities to process them into pertinent information and knowledge applicable to the solutions of business problems Knowledge has become a major organizational tool in gaining and sustaining competitive advantage Traditionally, economists have emphasized land and. .. technology plays an integral part in expanding economic potential (Persaud, 20 01) Such economic potential is primarily reliant on maximizing the firm’s intangible assets and requires the fostering of innovation and creation To support such initiatives information is required However, this information serves a dual purpose; it reduces operating costs and also facilitates idea generation and creativity For example,... have tools in the form of IC2T that support and facilitate large scale data capture and gathering, transforming this data into pertinent information and relevant knowledge as well as the ability to extract and then apply appropriate and germane knowledge to a particular context in a timely fashion Hence, IC2T have served to dramatically increase the scale and scope of all information processing activities... resources (time and money) and has no benefit at all to the organization (Alavi & Leidner, 20 01) However, this is not the fault of knowledge management but rather the superficial understanding of this business strategy and poor implementation of the KM initiative A strong foundation in KM can only be achieved by becoming a knowledge-based enterprise, not through the spouting of rhetoric and quick fix . (an imprint of Idea Group Inc.) 7 01 E. Chocolate Avenue, Suite 200 Hershey PA 17 033 -12 40 Tel: 717 -533-8845 Fax: 717 -533-86 61 E-mail: cust@idea-group.com Web. bibliographical references and index. ISBN 1- 59904-237 -1 (hbk.) -- ISBN 1- 59904-238-X (softcover) -- ISBN 1- 59904-239-8 (ebook) 1. Knowledge management.