-- KNOWLEDGE MANAGEMENT –

Is it a fad or is ita necessity in the new economy?

Professor AK Sengupta*

In traditional management literature, land, labour and capital are recognized as the three primary factors of production in the Industrial economy. These relate to physical assets. The economic prosperity in the post second world war industrially developed countries happened primarily by efficient exploitation of these assets. Between 1950s and 1980s, the emphasis was on Agriculture and Manufacturing, where availability and effective utilization of money, manpower and machines (the three Ms) played key roles. In the eighties, services industry came into prominence - in health, education, tourism, finance, business processes and so forth. Then came the Information Age, mainly through rapid developments that took place in computer technologies, both in terms of hardware and software. Together with galloping advances in the communication technologies, internet systems as well as the physical sciences, the nineties heralded the age of Knowledge Society. In the 21st century the health of all businesses, whether in Manufacturing, in Services or in Information sectors, will be determined primarily by how effective the organizations are in exploitation of existing knowledge and development or creation of new knowledge, and not by the physical assets alone.


What is Knowledge? It is more than data and information that have been accumulated in the past, or gets collected everyday. Experience, value judgment, insight, contextualisation, intuition, evaluation and belief are some of the process elements that go into converting data and information into what can be called Knowledge. In other words, development or creation of Knowledge is an intellectual process, originating in human minds. From an organization perspective, however, it is often embedded in collective practices, processes, routines, systems, and norms. They are the intangible assets of a Company, that are exemplified by the academic expertise, competency and skill in the people, the breakthroughs and intellectual property like patents and research outputs, the innovative business ideas, customer loyalties and feedback, the past experiences (both in terms of achievements and failures) and so forth.


In the industrial world today, the ability to make use of the intangible assets in the Company is far more decisive than its ability to exploit its physical assets. Managing Knowledge is as important as managing financial capital or physical plant. As the market shifts, uncertainty dominates, technologies proliferate, competitors multiply, and products and services become obsolete rapidly, successful Companies are characterized by their ability to create new knowledge consistently, quickly get it disseminated and absorbed, and embody it in their new products and services. Today’s mantra is “innovate, innovate, innovate”.In the era of Knowledge economy, the command-and-control management model of the industrial past will not work. The Knowledge Asset for the most part is not exactly corporate property stored somewhere in the files or warehouse in the Company. It is to be found in the heads of its Knowledge Workers. The employees now have to be considered assets, not liabilities, because most, if not each, of them hold some Knowledge. To quote Peter Drucker,“Post capitalist society is the Knowledge Society, where Knowledge is not just another resource, but the only meaningful resource…..Knowledge worker will play the central role in such a society…He is the single greatest asset.”


Knowledge Management (KM) is essentially about managing people, and creating an environment in which employees share what they know and innovation is encouraged. It is more of a corporate organizational and cultural challenge. It is concerned with providing a mechanism for creating, capturing, sharing and integrating the tacit (residing in the minds of people) and explicit (documents and records) knowledge within and outside the organization, and applying them as strategic resource to gain competitive advantage in the “marketplace”. The primary organizational requirement for KM is to institutionalize open communication, limited top-down control and a flat and flexible structure that promotes readiness to continually change and adapt.


To underpin the KM processes of acquisition, creation, sharing and utilization of Knowledge, there are lots of Information and Communication Technology (ICT) tools available, such as Search Engines, Web Portals, CAD systems, Decision Support Software, Groupware, Intranet, email. These tools facilitate codification, differentiation, categorization, storage, dissemination and retrieval of Knowledge. It is however most important to re-iterate that KM is not merely an IT based software system, but that it has to combine the Information system with people. It is not just about building an enterprise wide smart intranet or a wireless network, but its main focus is to help right people apply right knowledge at the right time.


There are those who believe that Knowledge Management is just another fad. They are wrong. It is as certain as the reality of Knowledge economy. There is of course much yet to be learned about how to manage knowledge most effectively, but in today’s globalised market economy, the future of many Companies could be in jeopardy if serious efforts are not undertaken to assess the knowledge needs and build capacity to expand the existing knowledge. Knowledge Management is several steps ahead of the Information Management, since the thrust changes from collating, storing, disseminating and retrieving information to using it to create, innovate and cope with competition.
________
* Author is currently teaching courses on KM and Entrepreneurship & SmallBusiness Development at IMI