KM for the Knowledge Economy

Big business can provide good models for the knowledge economy but there are differences that hamper the transfer.

By Tom Young and Nick Milton

The ‘knowledge economy’ is a phrase you hear increasingly in political speeches, on the news and in the business press. It sounds impressive – it sounds like a great idea and it sounds like the next step after the ‘information society’. It also sounds as if knowledge management would be a major supporting discipline for the knowledge economy. But how?

What exactly is the knowledge economy?
There seem to be many views as to what comprises the knowledge economy. Is it R&D? Is it the financial sector? Is it the dot.com bubble? Is it the web-based economy? Does it even exist? Is it all hype?
At a recent conference in London, it was suggested that the knowledge economy is “Where distinctive know-how is vital to competitive services and products”. In global terms, this is the high value end of the chain. Supply chains nowadays cross geographic boundaries. Much of the trade around the world is not in finished goods; it is in components, designs, ideas. The high end of the value chain lies with those countries that supply the knowledge, rather than those countries that supply the labour or the raw materials.
That sounds like home ground for knowledge management, doesn’t it? Distinctive and vital know-how? Competing on ‘what you know’?
And yet there is no clear vision for how KM and the knowledge economy might work together. Surely there must be some lessons that the economy as a whole can learn from those businesses where knowledge management has been a long-term, documented success?

Big business – learning-ground for economies?
Can business be an analogy for an economy? In some ways there are similarities. A business contains internal supply chains, internal customers and internal suppliers, which can be an analogy for supply chains in an economy. A multinational business already operates global supply chains and an internal knowledge economy. A business contains many teams, each with its own targets, budgets and objectives. If knowledge management can help enable the performance of teams, and thus the performance of the company, can knowledge management help enable the performance of both companies and the economy?
Below we explore some of the ways in which the economy can learn from business, and how the KM models proven to work in industry can be upscaled to work for an economy. However, there are some crucial differences between teams in a business, and businesses in an economy, when it comes to knowledge sharing.

First, businesses have far more influence over the working practices of their internal teams than economies and governments. A business can request, require, or mandate the way teams operate and the processes they use. A government can only influence and incentivise.
Second, there is far more competition between businesses in an economy than there are between teams in a business. In a business, teams are (in theory) allies, working together for the success of the company, which includes sharing and building knowledge for business success. In an economy, the companies compete with one another. If one company is successful, it doesn’t really care about the economy as a whole. It would probably rather see its rivals fail than the economy, as a whole, succeed.
Third, a company can keep its proprietary knowledge secure. Confidentiality agreements, knowledge security and staff awareness of company secrets can all make a company’s boundaries effectively impermeable to knowledge leakage. The same cannot be true of economies, at least not on a national scale. In a global free market knowledge is freely traded just as goods are freely traded. You cannot ring-fence knowledge within a national economy.

What successful KM looks like?
Knowledge management has been a recognisable term for over a decade now. When the topic first hit the headlines in the late 1990s, it attracted a huge amount of hype. Almost anything to do with information, data or documents was rebadged as ‘Knowledge Management’. Now that hype is fading, or shifting attention to Web 2.0 and the social media. Once the hype is gone, what remains is a long-term, sustainable, distinctive knowledge management. Such robust, success-case KM models have three components;

A management focus on knowledge. Management realises that knowledge is vital for company success, and makes its expectations for managing knowledge clear. All staff are aware of what KM means and their own responsibilities within it.
An effective and complete system for managing knowledge. Processes, accountabilities, structures and technologies are in place for KM, both within teams and projects, and between teams and projects.
Facilitation, monitoring and measurement. The company works to facilitate knowledge management, providing training and expert assistance where required. It monitors compliance against expectations, and measures the effectiveness of the KM system. If it’s not working or not being used, then this is recognised, and action taken.

Key lessons for the knowledge economy
So how can we translate the lessons from long-term industry success in KM, to create long-term success for a knowledge-based economy?

KM standards
Any company that is really successful in knowledge management has a clear definition of what KM really means, and of what the component teams should be doing to add value to the company. This is certainly a concept that can be upscaled to apply to economies—the concept of a KM standard. However creating a KM standard is likely to be a tricky undertaking.
In 2003, there was a first attempt at a British Standard for KM. In some ways this was a very early stage at which to attempt a standard, with only five years or so of history on the topic. There were very few case examples of KM success. There was still a huge amount of confusion over what the term meant. And there were multiple views on the key components of KM. As a result, the British Standard was more like a set of principles and examples, and was therefore badged as a ‘Guide to Good Practice’.
Things have moved on. The picture is becoming clearer, but even now there is a lot of confusion – is KM all about communities of practice? Is it all about Web 2.0? Is it all about lessons learnt? Is it all about content management and taxonomy? Despite the confusion, those companies that have made KM a long-term component of their success, have developed models which are looking increasingly similar. A good case could now be made for defining a standard approach to KM, and a government-sponsored KM standard would allow companies to understand the basics of knowledge management.

Learning how to learn
Countries that are serious about the knowledge economy invest heavily in education. They know that knowledgeable individuals are vital to economic success. But companies serious about knowledge management know more than that – that learning is not just an individual attribute. Knowledge management is about ensuring that teams learn, and share learning with one another. Team learning is not a natural skill – teams need to learn how to learn. Similarly, if businesses are to succeed in, and drive, a knowledge economy, they need to learn continuously and strategically, by learning how to learn. A government that helped organisations learn how to learn, by providing leadership and coaching in Organisational Learning, KM and Innovation, could provide valuable support for a knowledge-based economy.

Incentivise, facilitate learning behaviours
Companies serious about knowledge management,provide incentives for teams who share and apply knowledge. The incentives do two things – they support the behaviours they reward, and they send a clear message – that we, the company, believe in knowledge management. These companies also facilitate the exchange of knowledge.
Countries and governments could do the same, to stimulate national knowledge economies. They could provide incentives and facilitation for knowledge networking, for example, setting up free focused facilitated knowledge-exchange meetings. They could sponsor knowledge capture from successful innovative firms on how they learn and share learning within the company. They could publicly recognise and honour those companies that take a lead in knowledge-based services. They could send the message: – “Our knowledge is important, we will recognise those who use it well, we will support those who manage it properly, and we will incentivise those who invest in the development and deployment of distinctive know-how”. ?

Tom Young and Nick Milton can both be reached at Knoco Ltd, a knowledge management consulting firm in the UK www.knoco.co.uk]. Contact Tom Young at tom.young@knoco.co.uk or Nick Milton at nick.milton@knoco.co.uk.