Feature

posted 10 Jun 2003 in Volume 6 Issue 9

The next generation

Knowledge management is well established as a management discipline, but it is also subject to continual development and improvement. Karl Wiig discusses the fundamental principles that define new-generation knowledge management, a revised take on traditional KM that is already bearing fruit in a number of leading knowledge-based enterprises.

The practice of knowledge management[1] has become a central management concern throughout the world. The pressures and opportunities of globalisation, coupled with the growth of world-wide communications, have helped spread the understanding that an increased emphasis on personal and structural intellectual-capital (IC) assets is a necessary cornerstone of competitive advantage in the knowledge economy. However, KM still needs extensive development; the discipline is still in its infancy. Over the past 15 years, KM has changed from one generation to the next through constant improvements and the development of new perspectives. As a result, a ‘new-generation’ knowledge management (NGKM) is emerging, with fresh objectives, methods and results. Enterprises that practise NGKM are pursuing broader concepts than were encompassed by early-generation KM, by understanding and exploiting underlying mechanisms, be they economic, social, psychological, organisational or technical.[2]

The tail has been wagging the dog

Recent informatics-based (information management/information technology – IM/IT) forays into KM have largely been ad hoc and not solidly founded on a deeper understanding of such fundamentals as the cognitive processes of people at work, business functions or management philosophies and practices. Many organisations are still surprised to find that, after acquiring an KM/ERP system, they have installed not only a broad-ranging IM/IT capability, but also a rigorous system of management and operations that sits at odds with their existing management philosophies and beliefs, organisational culture, and business strategy. Other problems that have surfaced include:

Idealistic KM-system implementers working in isolation from senior management often create capabilities that match their personal understanding of best-practice operating procedures rather than those preferred by the enterprise as a whole. The organisation is thereby provided with a capability that may not be fully used, or that may force the imposition of operating practices that are not in the firm’s best interests;
KM systems have been hyped to the point that companies develop unrealistic expectations, leading to inevitable frustration and disappointment;
Instead of focusing on business needs and opportunities, the tendency has been to introduce KM as a generic capability of unquestioned but unspecified value. Not surprisingly, many such KM efforts have been found to be of limited business value;
Many KM efforts have failed after having been introduced without the allocation of sufficient resources, funding and staffing;
There is a general lack of understanding of the length of time required before initial KM efforts translate into bottom-line results.

Most KM practitioners are aware of such problems and are hard at work to heighten the level of understanding of what KM requires at an organisational level. It is as a result of these efforts that new-generation KM is emerging.

Advances in new-generation KM

KM touches human behaviour, attitudes and capabilities, business philosophies, models, operations and practices, and information-based technologies. Creating KM capabilities involves numerous separate disciplines, often requiring integration to provide functions that are of appropriate strategic and operational support and use within the target operations.

The world around us also changes constantly. Businesses invent and pursue new strategies, develop innovative products and services, and devise better ways of running their operations. Scientists make discoveries and extend our understanding in many fields. Technologists create new solutions and methodologies. All these changes in turn bring new opportunities for development and, when implemented, progress. Two broad areas of development in KM are advancing in parallel and will greatly influence the perceived value and acceptance of the discipline. These two areas represent ‘demand/pull’ and ‘supply/push’:

The development of management and operating philosophies and practices to pursue IC-related capabilities in order to make enterprises perform more effectively. The resulting culture reflects positive practical experiences with KM, marketplace and societal pressures to increase focus on IC assets for competitive reasons, and greater understanding about KM approaches and technologies;
Science and technology developments that make it possible to create new solutions built on solid, relevant and practical understandings of the underlying principles.

Of the many areas in which we can expect future developments, the following are particularly important.

A focus on people

Cognitive-science research that provides practical insight into how people learn, possess knowledge, use knowledge in different kinds of work, innovate and become motivated. These developments provide the foundation required to create approaches to KM that will effectively support work environments and gain broad-based acceptance;
Research on the nature, role and use of stories and other KM-related knowledge-sharing processes that fit naturally and easily into people’s work styles and enterprise business functions. This research includes new methods for transferring cognitive skills between people;
Approaches to building and teaching meta-knowledge, for example to build competence in tackling unfamiliar challenges and opportunities;
Methods to provide the means for people to build libraries of mental reference models relevant to the work complexities they face;
Increased understanding of how to prepare and furnish IC assets to individuals and organisations to improve knowledge work. This includes business and work-function simulators and games for fast and effective training, and the creation of work-related, operational, mental-model libraries for routine work and for the development of critical thinking and abstract mental models for tackling more general and infrequent challenges;
Knowledge-related situation handling and other analysis and action-oriented behavioural models that explain and provide frameworks for analysis and development of KM capabilities. As indicated in figure 1, from a situation-handling perspective, decision making is an integral part of a chain of tasks starting with the observation of situational information, and ultimately resulting in action.

Figure 1 – the knowledge processes that lead to effective action
© Knowledge Research Institute, Inc., 2002. Reproduced with permission.

A focus on technology

Broad artificial-intelligence technologies that automate the process of reasoning in operations, diagnostics and troubleshooting, research and creative exploration, and information management;
Natural-language understanding and reasoning for information-management tasks such as abstracting, prioritising and routing, and for automated situation handling of cases with varying complexity;
Automated performance-support systems to complement knowledge workers with reasoning and other capabilities for complex tasks;
Mathematical modelling of business and social processes to support ‘soft computing’ and other exploratory and computational synthesis methods;
Greater reasoning sophistication of computer-based systems to reduce operating costs, improve reliability of routine tasks and free employees to perform higher-value work;
State-of-the-art information-technology-based infrastructure to support communication, collaboration and many other processes.

A focus on the enterprise

Understanding that competitiveness depends on innovating and learning faster than competitors and that deliberate and systematic KM is the key to achieving business objectives;
Understanding that strategies are implemented by the rank and file, and that the workforce needs in-depth understanding of enterprise goals and of how they, as individuals, contribute and benefit from delivering effective work;
New approaches to educate personnel at all levels about business strategies and about how they, as individuals, can participate in implementing those strategies;
Powerful new methods for transferring personal knowledge into structural IC, including targeted ontologies;
Knowledge diagnostics and related analytical approaches to identifying, describing and locating the means to address critical knowledge functions and opportunities. Most of these approaches require expertise and insight into several disciplines, as indicated in figure 2, and are based on an understanding of the underlying knowledge-related mechanisms that affect work and performance.

New-generation knowledge management

One difference from earlier generations of KM is the degree to which NGKM is integrated with the enterprise’s philosophy, strategy, goals, practices, systems and procedures. Furthermore, NGKM focuses on overall enterprise performance and on utilising all the available scientific and professional insights to provide the best possible KM-based support for the enterprise. These differences prompt NGKM practitioners to pursue approaches to knowledge management that are systematically combined with all other practices and activities, both within the enterprise and in interactions with outside parties. The key characteristics of NGKM are listed below.

Broad and proactive business philosophy and management beliefs, rather than static and mechanistic control

NGKM pursues an anti-Tayloristic and an anti-command-and-control management model. This model rests on the need to provide clear leadership, and the understanding and belief that people perform better and support the enterprise more effectively when they are fully informed, given appropriate, action, freedom and authority, work in a supportive culture, and are held accountable for their actions. The management model, as practised by many organisations, relies extensively on management and leadership examples, a proactive mentality, and agile and adaptive behaviours to take advantage of emerging opportunities and adapt to changes. The model is also supportive of employees’ welfare and motivations. Furthermore, it rejects the technology-based view of KM, adopting instead a people-centric view of the enterprise’s work, its ability to innovate and learn, and the role of human intellectual capital in the enterprise’s capital accounting.

The philosophy and beliefs behind this management model embrace perspectives that are much broader than those usually found in business. In particular, and in addition to considering short-term operational and survival needs (to meet financial obligations, for example), there is a deliberate focus on the long-term viability of the enterprise. Such considerations are not new, however. They have been observed by enterprises for centuries and are common traits within organisations that have been in existence for over 100 years.[3]

Figure 2 – the disciplines contributing to effective knowledge diagnostics
© Knowledge Research Institute, Inc., 2002. Reproduced with permission.

Knowledge-focused business strategies and practices

Enterprises that pursue NGKM exploit IC-related opportunities and strengths in their strategies. Some target new markets with specially developed IC capabilities, for instance developing the expertise of customer-service representatives in the financial industry in order to deliver new areas of advice to clients. Others collaborate deliberately and extensively with clients and suppliers to develop new products and services that are based on specific IC assets. These approaches differ from regular research and development activities in their specific focus on creating and leveraging knowledge flows in new ways.

Intellectual-capital stewardship

NGKM practitioners seek to develop broad-based mindsets across their organisations. This typically focuses on two aspects:

The psychological, social, organisational, economic and technical mechanisms that allow IC assets to strengthen operational and strategic situation handling and the effectiveness of resulting actions;
How IC assets need to be managed from operational-performance and investment points of view to support the enterprise and its stakeholders (including the employees themselves).

This mindset embraces a proactive, exploratory and innovative perspective, based on the careful and responsible management of IC assets. The mindset amounts to a benevolent intellectual-capital-stewardship mentality (ICSM), which brings constructive and actionable IC perspectives to everyday situations, automatically and naturally. An ICSM is achieved by helping people to understand the options for developing, obtaining and leveraging IC assets for everyday work; by providing them with role models; by motivating them on a day-to-day basis; and by helping them to understand the advantages for themselves, their customers and stakeholders, and the enterprise as a whole.

In organisations that pursue NGKM, this mentality has become a natural part of everyday work, resulting in automatic operational consideration of how to acquire and apply the best possible expertise by collaborating, discussing with experts and peers, accessing knowledge bases, using computer models and so on. From a strategic perspective, it allows people to consider their options in terms of how to invest time, effort and resources to build IC assets for future needs.

Systemic, self-sustaining, and self-renewing KM practices

NGKM practices are systemic. They are distributed, understood and generally pursued by employees throughout the enterprise. The wide distribution and utilisation of these practices promotes widespread adoption by people across the enterprises, to the point where they become self-sustaining. In addition, people at all levels are encouraged to work to improve KM practices on an ongoing basis.

Systems perspective of the enterprise and the environment

In the proactive enterprise, managers and people at every level tend to adopt systems perspectives of knowledge-related processes. They perceive the enterprise as consisting of many closely related dynamic systems or processes that influence each other and change as a result of external influences and internal dynamics. They also see the enterprise as being part of a larger system: society, the environment, the economy and so on.

When working with systems perspectives, people tend to think of their work as being part of a much larger whole. In extreme cases, this could precipitate an inability to deal with what may be seen as an impossibly complex world. However, healthy systems perspectives set priorities and focus on expediency and target processes, while at the same time considering the wider implications.

Application of state-of-the-art KM practices and infrastructure capabilities

KM methods and practices are subject to constant development and improvement. Increasingly, emerging approaches build on an improved understanding of IC-related processes and mechanisms, which may be cognitive, psychological, social, organisational, economic or technical in nature. NGKM practitioners adopt those KM approaches that fit the needs and limitations of the enterprise as a whole.

NGKM practitioners also develop abstract models of how to manage knowledge. They form advanced plans for how to exploit KM to improve strategy formulation and general operations. Practitioners develop management philosophies that build on insights from state-of-the-art KM concepts and the experiences of other organisations. When conducting benchmarking, NGKM practitioners focus not just on what others have done successfully, but also on such conceptual questions as: what was the context? Why was the project done in a particular way? What did it require in terms of added expertise, management and operating practices? Were any cultural changes necessary? How were personal motivations influenced? What problems were encountered and how were they overcome? These factors differ from traditional benchmarking considerations, but are equally important for obtaining the required insights.

Emerging opportunities: implications for the enterprise

Enterprises that pursue NGKM operate differently from other organisations in several ways. Most importantly, they plan strategic moves based on the ability to develop IC assets to pursue new directions. They create increased competitive value through innovation, expertise and the exploitation of the intellectual capital at their disposal. They foster and maintain open and supportive, yet goal-oriented and accountable, environments by pursuing an IC-stewardship mentality. This mentality is promoted by senior-management participation in KM activities. The focus is on maximising enterprise effectiveness and performance, and on adopting long-term perspectives and performance objectives that are also subject to short-term health and survival. They pursue interdisciplinary approaches to NGKM to provide the most conducive conditions to facilitate effective work, motivation and employee dedication.

Raising the bar: implications for researchers, vendors and practitioners

NGKM provides new opportunities but also many challenges for researchers and IC-related capability suppliers, be they consultants, technology suppliers or other parties. Researchers in areas like cognitive sciences, epistemology, social sciences, organisational sciences, management theory, economics, AI and informatics will need to tackle a range of issues. Many of these in turn require further investigation into how people and organisations create, possess, transfer and utilise IC, and how one might enhance and deal effectively with these processes with operational methods and technologies.

KM products are becoming more sophisticated, and suppliers need to develop the capability to build products and services based on a firm understanding of underlying processes and mechanisms. In future, we can expect a clearer distinction between supplier types, such as:

Providers of services to create KM capabilities and associated management systems;
Providers of tools for knowledge audits and analysis, such as knowledge mapping, knowledge diagnostics, knowledge-inventory management, etc;
Providers of KM-capability-development tools, such as automatic reasoning tools, knowledge discovery in databases, tools to build structural knowledge from personal knowledge, tools to create ontologies, and so on;
Providers of support facilities for KM capabilities such as collaboration environments;
Providers of KM capabilities such as expertise knowledge bases, educational systems, etc.

A new direction

In summary, NGKM provides a new direction for corporate leadership and KM practices, as several organisations have already demonstrated. It requires a new approach from both suppliers and user organisations. NGKM practices are better engineered, cognitively, socially and technically, and are as such easier and more natural to use. They should become the preferred means of operation for managers and workers alike. New-generation knowledge management fosters progress in many areas, leading to higher levels of effectiveness and performance in innovation, operation and in securing a firm’s long-term competitiveness and viability.

References

1. We view KM as the management and orchestration of knowledge and other IC-asset-related activities, processes and capabilities, be they personal or organisational. KM involves creating maintaining, deploying and exploiting these assets. KM also involves planning, facilitating, monitoring and governing from enterprise and stakeholder perspectives. In this article we use the terms ‘knowledge’ and ‘intellectual-capital assets’ interchangeably
2. Among the organisations that are already practising new-generation knowledge management (without necessarily calling it as such) are the SAS Institute, Nokia, Chaparral Steel, Buckman Laboratories, W.L. Gore & Associates and Malden Mills, to name a few
3. See De Geus, A., The Living Company (HBS, 1997)

This article is based on selected excerpts from Karl Wiig’s forthcoming book People-Focused Knowledge Management.

Karl M. Wiig is chairman of the Knowledge Research Institute, Inc. He can be contacted at kmwiig@krii.com