denotes premium content | May 20 2013 Feature
posted 1 Oct 1997 in Volume 1 Issue 2
A Framework for Corporate
Knowledge
In the first of a two part article, Jeffrey D.
Kenyon
introduces one possible
framework for the organisation of corporate knowledge, which provides an easily
grasped model for the communication of knowledge management concepts. This
article describes a framework for understanding the organisation of corporate
knowledge, using the dimensions of function, formality, and strategic value. The
use of this framework leads directly to useful observations on the direction of
corporate knowledge management efforts, and cautions in restructuring and
downsizing.
Introduction
Corporations lose key, critical
business knowledge every day, for a number of reasons. Some of those reasons
have always been around (e.g., skilled workers eventually retire), and others
are a result of changing work patterns and work force demographics. In spite of
this constant haemorrhage of knowledge, most corporations survive. So why is
knowledge management important? The answers are diverse.
Much of the knowledge 'belonging' to a
company actually exists only in the minds of the employees. If there is no
attention paid to knowledge management, then that corporate asset leaves the
company with the employee.
Companies must continually pay to
reacquire lost knowledge. They pay via training budgets, and through the cost of
reduced productivity (both of the worker and, potentially, their co-workers who
must mentor them) in the learning curve.
The failure of a company to act or
respond intelligently results in customer dissatisfaction.
Poor business decisions, based on
an inadequate understanding of the internal dynamics of a company, or an
inadequate knowledge of the environment in which the company operates, have a cost.
The field of systems dynamics has illustrated, over and over, that local,
seemingly 'rational behaviour can lead to disastrous macroresults' (Meadows, 1991).
The reasons listed above bear hidden costs. There are no accounting spreadsheet
columns for 'loss of knowledge' or 'failure to use available knowledge.' However, the costs
appear in other places; in training budgets, in loss of market share, and in
static or declining productivity numbers. Sometimes, costs are simply accepted
because of underlying assumptions (e.g., 'job x requires y weeks of formal
training, followed by z weeks of on-the-job training'). In such an environment,
if there is no direct pressure to reduce costs, there is little or no motivation
to change.
Knowledge management is the practice of identifying, protecting, and
leveraging the intellectual resources an organisation needs to perform its
business functions. To manage knowledge effectively requires an understanding of
how it is organised and used in meeting business needs.
This paper introduces one possible
framework for the organisation of corporate knowledge. The purpose of this
framework is to provide an easily grasped model for the communication of
knowledge management concepts. The model also serves to illustrate a number of
key observations about corporate knowledge management.
Conceptual Framework
Discussions of knowledge
management generally leave the concept itself only loosely defined. Its recent
definition in product marketing literature is generally 'those types of
knowledge that our product can manage.' The truth is that corporate knowledge is
staggering in both scope and complexity.
There are a number of ways to dissect
knowledge; for example, a common set of categories drawn in the world of
computer science:
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Declarative knowledge (logical statements of fact) |
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Procedural knowledge (the knowledge of how to do things) |
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Episodic knowledge (the knowledge of experiences) |
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Meta knowledge (the knowledge of what is known and not known) |
Alternatively, knowledge can be cast in terms of deep models of expertise versus shallow models, knowledge versus knowledge of how that domain expertise is applied, or any number of other divisions. None of these provide a useful framework for knowledge from the corporate viewpoint. In this document, we characterise knowledge assets in terms of three dimensions:
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Functionality |
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Strategic Value |
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Formality |
Each of the three dimensions of this framework is described below.
Functionality
Enterprises are organised hierarchically, into functional areas of responsibility (e.g., sales, manufacturing, marketing, etc.), and further subdivided as necessary. The functional area dimension approximates this arrangement. Each division contains the knowledge necessary to perform the tasks required of it by the level above, and to guide the sub-divisions below.
While this dimension may reflect an organisational chart (for example, if all functional knowledge about manufacturing widgets is under a single organisation), it does not need to be. For example, knowledge about installing and configuring a specific telecommunications switch may be 'owned' by several dozen managers in a company where management is organised along geographical lines. In short, knowledge in a particular functional area may be concentrated under a single manager, or be developed independently, and perhaps redundantly, in multiple locations throughout the enterprise.
Strategic Value
In the arena of competitive endeavours, there is a distinction between tactical knowledge (knowledge of specific procedures designed to accomplish a clearly defined purpose) and strategic knowledge (knowledge of how to conduct operations to achieve organisational goals). In war, setting and executing an ambush is a tactic; it can be employed in a variety of broader strategies (e.g., to demoralise the opposition, to maximise the effect of an outnumbered force, to slow an advancing unit). In business, pricing a product at less than the cost to produce it is an example of a tactic. In a strategy to abandon a line of business, this tactic helps a manager liquidate an inventory as quickly as possible. If the strategy is to capture a market in a given area, this tactic (known in this context as predatory pricing) can accelerate the growth of market share and may drive competitors out of the business.
In the world of corporate knowledge, every organisation has its core competencies, or ability to provide the products and/or services upon which the business depends. For a telecommunications provider, one such core competency may be the ability to deliver high-quality data communications to the targeted customer base within its area of service. This knowledge is a tactical knowledge asset.
Moving up the organisational hierarchy, the knowledge increasingly focuses upon how to best utilise the tactical knowledge to meet the strategic goals of the enterprise. To continue the previous example, management uses knowledge of market forecasts, budgetary constraints, the current makeup of the network itself, and other factors, to determine the placement of additional generic facilities to meet market demand, and ensure the retention of market share in competitive environments.
At the highest levels of the organisation, the knowledge employed is strictly strategic in nature. To quote Nonaka (1994), 'top management provides 'visions for direction' and also the deadline by which the visions should be realised...top management articulates the dreams of the firm, lower managers look at the reality.' The types of knowledge employed should include both a detailed understanding of the enterprise as it is (in accounting terms, and in understanding the complex interactions between the business processes), and an understanding of the environment in which it exists. The latter knowledge is available, to a certain degree, through market and technical forecasts, knowledge of social trends, etc. Without this knowledge, any strategic plan will fail, or at best, will reach its goal only after a series of errors.
An alternative way of viewing this dimension is in terms of time. Jacques (1990) notes that the quality of the problems faced, and hence the quality of the knowledge required to solve the problems, changes at each level of a properly constructed organisational hierarchy. If, as he concludes, these differences in quality are a result of the respective 'time horizons' for each problem (i.e., the difference between a task requiring one week to complete and judge the outcome, versus a task that may require several years to bring to fruition), it provides a potential means of judging strategic value more objectively.
Formality
The dimension of formality, also referred to as the explicit/tacit knowledge distinction (Nonaka, 1994), is useful in characterising the knowledge assets required in a given functional area.
Formal (or explicit) knowledge consists of those assets that are in tangible form (documented procedures, databases, spreadsheets, software systems, etc.). Formal knowledge is relatively safe; it does not 'walk out the door,' although it can be lost through poor management decisions or neglect. Potential causes for the loss of formal knowledge assets include ill-considered or incorrectly implemented document destruction plans, hardware conversion efforts that sacrifice software assets, and reengineering efforts that turn off one system before a replacement incorporating all necessary functionality is up and running.
Informal (or tacit) knowledge is that which exists in the minds of employees; their expertise gained through experience, their knowledge of business processes and process workarounds, their domain expertise, and their interconnections with other individuals sharing similar or identical responsibilities, commonly referred to as a community of practice (Brown and Duguid, 1991).
Every functional area has the formal/informal boundary in a different place (which is why the line in the drawing above is dashed, rather than solid). One group may generate documentation and support systems to standardise how they perform their tasks and make decisions, while in another group, all the knowledge about how to perform the job rests in the minds of the employees and their social networks.
It is also important to realise that knowledge can be captured in representations that, while permanent, cannot be easily used or leveraged. Examples of this include key information buried in large, poorly indexed documents, or expert knowledge captured only on video or audio tape.
As a rule, knowledge assets become increasingly informal as the strategic benefits increase. Employees at lower levels tend to focus on what Simon (1960) refers to as structured problems (routine problems for which standard solutions exist). At higher levels of management, the problems become increasingly unstructured, and no single 'right' answer exists. Structured problems lend themselves to formalisation or automation, and the value of that effort is often obvious; for unstructured problems, systems that support or qualitatively improve human decision making are a more appropriate solution.
Corporate
Knowledge Model
Within the context of the framework described above, a number of observations about corporate knowledge are clear:
Each functional area has a discrete body of knowledge, which may or may not be useful to other areas. The form the knowledge takes is likely to vary widely, depending upon the functional needs of an area, and the evolution of the knowledge assets over time. Because of this diversity, 'one size fits all' schemes for knowledge representation and management are risky.
For knowledge that is not useful to other areas, the owners and users resolve knowledge management issues locally. As long as individual organisations achieve the goals of corporate knowledge management efforts, they should be permitted wide latitude in the means of achieving those goals.
Knowledge that is useful to other areas should be managed at the highest appropriate level, but not higher. While it might be useful for a telecommunications provider to develop knowledge on switch operation and maintenance, it is not probably not necessary for that knowledge to be widely available to the executive staff.1
Because strategic knowledge assets are, by their nature, more difficult to formalise than tactical knowledge assets, knowledge management issues become more complex and risky as strategic value increases. However, the potential for return also increases, as do the negative costs of not capitalising on existing knowledge.
Restructuring or downsizing of functional areas where knowledge is largely informal (in the minds of employees, or in community of practice) risks the loss of that knowledge to the corporation.
Perhaps the most important point to emerge from the model, from the perspective of determining how corporate knowledge should be managed, is its recursive nature; at every level, from the most specific core competency, to the loftiest strategic goals, there are knowledge management decisions to be identified and resolved. There are few (if any) positions within most enterprises where knowledge management is irrelevant.
A recognition of these levels of corporate knowledge should also influence the manner in which management reaches and implements decisions. Decision-making should be supported and validated by the abstractions of knowledge percolating up from lower levels; knowledge not only of the core competencies and business processes involved, but of how those processes interact with one another. In turn, after making a decision, the responsibility for implementing that decision should be passed back down the chain, becoming more specific at each level, as the strategic plan is broken down into the necessary tactical steps. This is important because it inherently recognises that each level and area has the ownership of its knowledge; decisions relevant to that body of knowledge should stay in that area when implementing a decision.
At every level, knowledge owners must ask and answer the following questions:
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What are my core competencies or functional responsibilities? |
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What knowledge assets do I need on an ongoing basis to support those activities? |
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How safe are those assets, and what are the visible threats to that knowledge? Can the company lose the asset? |
After addressing these basic issues, ask these questions:
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How can I leverage those assets to support my work, or my customers? |
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How can I leverage to re-design my work? |
Conclusion
As noted at the beginning of this article, the development of corporate knowledge assets is not an end in itself; effective knowledge management relies on the education of the corporate population not only to identify, develop, and evolve assets, but also to raise awareness of the assets that already exist.
Jeffrey D. Kenyon is at the Knowledgebase Engineering Group U S WEST Information Technologies, Inc. 1801 California Street, Suite 1640 Denver, CO 80202. He can be contacted at:
jkenyon@uswest.com
References
Brown, J. S. & Duguid, P. (1991). Organisational Learning and Communities of Practice: Toward a Unified View of Working, Learning and Innovation. Organisational Science, 2(1), 40-57.
Jacques, E. (1990). In Praise of Hierarchy. Harvard Business Review, January-February 1990, No. 1, pp 127-133.
Meadows, D. (1991). The Global Citizen. Washington, D.C.: Island Press.
Nonaka, I. (1994). A Dynamic Theory of Organisational Knowledge Creation. Organisational Science, 5(1), 14-37.
Schein, E. H. (1996). Three Cultures of Management: The Key to Organisational Learning. Sloan Management Review, 38(1).
Simon, H. (1960). The New Science of Management Decision. New York, NY: Harper & Row.
Webster s New Collegiate Dictionary (1974). Springfield, MA: G. & C. Merriam Company.
