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posted 12 Jun 2002 in Volume 5 Issue 9

It’s a small world

The effects of globalisation on knowledge management

The process of globalisation has gathered force in recent years, to the point now where the context in which businesses operate has changed irredeemably. Simon Lelic talks to representatives from Brint, CSC, Fujitsu Services, Macroinnovation Associates and the University of Auckland, and asks how globalisation has impacted upon knowledge management strategy and what organisations can do to ensure they are best placed to take advantage of the opportunities they now face.

Like any well-used cliché, the idea that the world is getting smaller has solid reasoning behind it. The political repercussions of the Second World War paved the way for a new breed of corporate internationalism, which has only gathered force since the collapse of the physical and ideological barriers erected by the Cold War. And perhaps more than any other development in modern times, the emergence of web technologies and the internet has generated opportunities in markets that would otherwise have remained unreachable for the majority of businesses. More so than ever before, companies are competing on a global basis: customers are no longer obliged to buy goods or services in person; employees can carry out their work from offices or hotel rooms anywhere in the world; and multi-million pound transactions can be processed with the click of a mouse.

The implications of these developments on knowledge management are immense, both in practical terms and from a broader social perspective. Taking a high-level view of the concepts embodied in the discipline, it becomes clear that the potential contribution knowledge management has to make towards solving many of the negative effects of globalisation is significant. Mark McElroy, president of Knowledge Management Consortium International, as well as Macroinnovation Associates, hypothesises that irrational, dysfunctional behaviours at the level of business processing (ie, what we see when we observe the actions of multinational corporations engaging in social and environmental degradation as a by-product of globalisation) are in turn the product of irrational, dysfunctional learning systems at the level of social systems. “To the extent that maintaining and improving the health of learning systems is of primary interest to KM, solving the world’s globalisation ills could well turn out to be a KM issue of the highest importance,” he says.

On a more practical level, knowledge management has the capacity to help companies counter what Tom Knight, principal consultant at Fujitsu Services, describes as the tendency towards diseconomies of scale where knowledge is concerned. “The larger and more far-flung an organisation becomes, and the more expertise is dispersed, the less effective ‘natural’ knowledge sharing mechanisms become,” he says. “Hence the absolute necessity for organisations to consciously manage knowledge – the larger an organisation becomes, the more self-aware it needs to be about how it values information and knowledge.” As Marcus Speh Birkenkrhe, visiting professor at the University of Auckland Business School, puts it: “Globalisation drives KM, and KM drives globalisation. On the one hand, globalisation – the process of increased connectivity and networking – drives the need for better managing knowledge. On the other, companies that are better at managing knowledge are better prepared to expand markets and product lines, and to craft a global strategy rather than a local one.”

In a sense, therefore, and as Birkenkrahe himself says, the relationship between globalisation and knowledge management represents something of a chicken and egg situation. But there is a general consensus that KM has only gained in importance as the world, from a corporate perspective, has contracted. Partially, as McElroy points out, it is simply a case of KM being in the right place at the right time. “Anything that might improve the performance of business in the face of intensified competition accelerates the development of related fields. KM was simply one of many such fields affected by the rising intensification of business competition in the 1990s,” he says. Yogesh Malhotra, founding chairman and CKO at Brint Institute, has no doubts, though, that globalisation, in conjunction with the pervasive availability of powerful, web-based communications and collaboration tools, has raised interest in KM at every level. As Knight says: “Most large organisations are starting to exploit KM thinking, whether they accept the label or not.”

Undoubtedly, this is largely due to the number of cultural challenges the process of globalisation has presented to companies. Language and time barriers are perhaps the most obvious of these, but as Knight suggests, organisations that are looking to expand their operations on a global scale must also recognise that working practices differ immensely from country to country, and even from region to region. Birkenkrahe, for instance, highlights the discrepancies between western and eastern cultures that would undermine a common approach to encouraging employees to contribute to a knowledge base – self-promotion may work well as an incentive in western countries, but it is unlikely to prove much of a motivator in the far east, for example. Likewise, says Knight, business models differ greatly between organisations, countries and cultures. Global organisations face the difficult decision of whether to impose a single centralist operational structure (which, in the name of efficiency, runs the danger of destroying individual cultures) or to foster a devolved decision-making capacity, which may in fact prove more productive in the long run.

Clearly there can be no standard, ‘right’ approach to knowledge management, as Birkenkrahe is keen to emphasise. “Global knowledge is not the same as local knowledge,” he says. “Many failures of KM implementations go back to management not understanding the difference. For instance, ‘best practice’ is often automatically understood to be universal – that is, independent of time and space. But this is not necessarily true. Local best practices may be global worst practices, for example when the mechanism to motivate people in a local context is indeed very local, based on rewards that are not understood or appreciated outside of that context.” More often than not, he continues, it is the other way around: global best practices are often only successful if they refer directly to the globalised situation. Hence the existence of local stock markets to provide knowledge on local companies, and of HR policies that deal only with the employees of a particular country.

Nevertheless, knowledge management offers firms the ability to draw strength from the diversity operating at a global level brings. “There is no bigger helper to bridging cultural differences than knowledge,” says Birkenkrahe. “Ignorance of local knowledge is what leads to disaster. KM is a must if a company goes trans-local or global. The history of all the large companies of the world shows this clearly.” Malhotra echoes this idea. “By defining, designing and developing the pragmatic foundations for getting the best from the synergy of smart minds and smart technologies, KM provides a basis for developing a highly agile and adaptive model of the business enterprise,” he says. “Knowledge management, when understood in terms of leveraging the strengths in diversity of technologies, minds and viewpoints, can help organisations in meeting many of the challenges [associated with globalisation] effectively.”

This level of operational support is by no means a given, however. Because no single approach to knowledge management will meet all the needs of a diverse organisational culture, McElroy recommends studying the existing knowledge processing environments across the distributed organisation and assessing the diversity that is found there, well before making any attempt to design a monolithic KM system, much less deploy one. Similarly, Knight argues the case for conducting local pilot schemes, before global ambitions are even considered. “With good case studies focusing on delivering positive business results that chime with the ambitions of the organisation more generally, there is a chance of getting something bigger off the ground,” he says. “Initiatives driven top-down have mostly been failures. The sensible route is to use local pilots to generate learning and identify specific issues, building momentum, which may in time grow into something with global reach.” Eric Tsui, chief research officer (Asia Pacific) for Computer Sciences Corporation, on the other hand, advises beginning with a top-down approach, but one that allows for local input for variations and refinements. Attention to cultural differences, he says, is crucial.

There is perhaps a tendency in large corporations to rely on technology in global knowledge management implementations, fuelled by the belief that an expensive KM system will solve most of the associated problems. There can be no argument against the idea that some form of technical support for a KM initiative can prove invaluable. As Knight says, e-mail is a prime example of a tool that has dramatically lowered communications costs and helped to bridge many of the gaps (in terms of distance and time) that globalisation has enunciated. But as Malhotra says: “Knowledge sharing technologies do not by themselves enable knowledge sharing in the absence of organisational cultural aspects such as trust, motivation and respect for imagination, innovation and creativity.” McElroy believes a misguided dependence on technology may even have done more harm than good. “It has contributed to the rejection of KM in the minds of many managers, since the mistaken premise of first-generation thinking – that we can improve performance by cataloguing best practices and distributing them to a workforce via global technology platforms that we dub ‘KM’ systems – becomes more deeply rooted in global implementations as opposed to local ones,” he argues.

Clearly there are no short-cuts when it comes to developing a global KM programme, and while globalisation has certainly accelerated the growth in interest in knowledge management, a consistent approach to the discipline is still a long way off. Yet linking with the idea that many firms still demonstrate an over-reliance on technology when it comes to KM, McElroy is positive that globalisation has at least helped to generate a situation where organisations operating in different parts of the world are able to learn from each other. “For example, clear distinctions of theory and practice can be seen between the American and European bodies of thought,” he says. “In the US, most of what is being preached and practised fits squarely within what we have come to recognise as first-generation KM. This is a particularly shallow point of view, in which knowledge and information are seen as equivalent, and for which technology always seems to provide the answer. The European view is a decidedly more enlightened one. Thanks to globalisation, much of what is going on in Europe is open to inspection by practitioners in the US and elsewhere.”

Whether globalisation is regarded as a negative, largely destructive force that should be resisted or as a source of opportunity that should be embraced, it is clear that the context in which businesses operate has changed dramatically, and perhaps irreversibly. It is not that all differences have gone away, as Malhotra says, but the challenge for businesses now lies in realising how they can draw strength from this diversity. Knowledge management can surely help in this process, both in supporting organisations as they look to overcome the challenges globalisation has presented, and in providing the means by which they can position themselves to take full advantage of the world that is opening up to them.

This month’s participants:

Tom Knight is principal consultant at Fujitsu Services. He can be contacted at: tom.knight@services.fujitsu.com

Yogesh Malhotra is founding chairman and CKO of Brint Institute. He can be contacted at: yogesh.malhotra@brint.com

Marl McElroy is the president of Knowledge Management Consortium International, and Macroinnovation Associates. He can be contacted at: mmcelroy@vermontel.net

Marcus Speh Birkenkrahe is a visiting professor at the University of Auckland Business School. He can be contacted at: m.birkenkrahe@auckland.ac.nz

Eric Tsui is chief research officer (Asia Pacific) at Computer Sciences Corporation. He can be contacted at: etsui2@csc.com.au


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