knowledge management in organisations

December 30, 2007

Was reading the book
Knowledge Creation and Management
edited by
Kazuo Ichijo
Ikuijoro Nonaka
Oxoford University Press, 2007

In 1492-1800, at globalization 1.0 period, enterprises were entering to the global markets. 1800-2000 was the period of globalization 2.0 with global competition of enterprises. Starting from year 2000 globalization 3.0 has started with newfound power for individuals to collaborate and compete globally through knowledge work.

Why do firms differ. The theory of the knowledge-creating firm
by I.Nonaka & R.Toyama
Theories explain that differences between firms originate from imperfections of profit-maximizing like blocked barriers (cannot get certain confidential resources or mobility problems); high cost (too costly to acquire resources, high transaction costs); limited capabilities of managers (firms fall into path dependencies and are ecologically dying out).
Firms differ also because of their management vision (values, commitment of employees) differs, they envision different futures (maximizing profit versus making a good car).

It has been claimed (Teece, 2003) that firms are passive entities in the environment, that take information and produce products and services, but they merely adapt to the environment and never try to shape it. Nonaka and Toyama view firms as dynamic knowledge-creating entities that interact with the environment (an ecosystem of knowledge) reshaping the environment and even itself by creating and intaking knowledge assets and the environment as an ecoystem of knowledge and multilayered ba, through knowledge creation.

The knowledge-based theory of the firm rests on two elements:

1) basic view of human beings (human subjectivity in the company’s information-processing machine is not a noise)
The difference in human subjectivity (how we view the world) in companies helps to create new knowledge. Humans are not replaceable parts of machines. An individual transcends himself/herself through knowledge creation (Nonaka, Toyama, Konno, 2000). In organisational knowledge-creation process, individuals interact with each other to transcend their own boundaries and, as a result change themselves, others, the organisation, and the environment.

2) process of organisational knowledge creation (where knowledge includes values and ideals).
Knowledge-creation theory treats knowledge as fallible and influenced by subjective factors. However, in organisational knowledge-creation this subjective tacit knolwledge, held by individuals, is externalized into objective explicit knowledge to be shared and synthesized within and beyond organisations, and newly created knowledge is, in turn, embodied by individuals to enrich their subjective tacit knowledge. Organisational knowledge-creation is an ongoing social process of validating truth in which knowledge keeps expanding (Nonaka & Takeuchi, 1995).

The firm’s knowledge vision (Why do we exist and do what we do?) inspires organisation members so that they are encouraged to create knowledge and defines a consistent value system to evaluate and justify the created knowledge within the organisation. Firms need the concept/goal/action standard as a driving objective of knowledge-creating process that helps to realize the vision.

Knowledge creation is guided through the synthesis of contradictions (Nonaka & Toyama, 2003) – accepting dualities and synthesizing them through dialectical thinking and action in dialogues. Contradictions that cannot be solved through objective analysis alone can be solved by synthesizing subjective views and intuitions that have accumulated through practice.

A foundation for knowledge-creating activity is baa shared context in motion at certain time and space.At ba one can be open to the others by losing oneself, seeing itself in relation to the others, accepting their views and values. The boundary of ba must be permeable so that it can accept new contexts. Ba needs the participation of multiple perspectives.

The ecosystem of knowledge consists of multilayered ba, which exists across organisational boundaries and is continuously evolving. A knowledge-creating firm needs to manage a multilayered ba, which stretches across organisational bondaries. At the same time firm needs to protect its knowledge assets as sources of competitive advantage.

Knowledge assets are not knowledge just created but it also includes social capital that is shared in the organisations. One of the most important knowledge asset is firm-specific kata, a pattern or way of doing things in dialogues and practices. Three steps of kata, creative routines, are: shu (learn), ha (break) and ri (create).

Leadership of knowledge-creating firm requires active commitment from all members of the organisation, not just from elite members using the middle-up-down mechanisms.Middle managers break down the vision or driving objectives, create ba and lead dialogues and practices. Knowledge is the source of power that exist outside the hierarchy of organisation. Leaders provide visions, develop and promote sharing of knowledge assets, energize and connect ba, protect ba from outside contexts so that it can develop in its own contexts according to organisation vision, enable the spiral knowledge creation.

Knowledge in organisational settings.
L.Prusak & L.Weiss
Early knowledge management initiatives collected individual knowledge assets without contextualizing them in team contexts. New view of knowledge management has increased attention to the adding context to content and the group knowledge (opposite to individual knowledge) is made easier to access, secondly the social networks must be made viewable making it easier to find knowledge workers with whom to establish relationships.

Knowledge creation and Transfer. From teams to the whole organisation.
B. Büchel
There are two key measures of social networks that indicate the organisational capabilities and use of social capital: density of networks within teams, and number of external contacts. Performance is more effective if density of networks in group creates cohesive understandings, however, too cohesive groups with stabile perpectives lose effectiveness and are unable to integrate diverse perspectives from external contacts.

Knowledge transfer within organisations
D. Leonard
Transfer is always two-way.
Knowledge assets must be replicated to hold stability within firm, but understanding the core knowledge and practices these assets hold is essential to apply them in situational contexts.
Knowledge assets must be evaluated and changed through reuse in different situations.
Initiating creative fusions to cooperate at multiple levels.
Types of knowledge to be transferred: know-what, know-why, know-how, know-who.
Barriers of knowledge transfer: too rigid or too vague knowledge assets, culturally sticky knowledge (difficult to separate from source), the gap between the initial source and the receiver of knowledge assets.
Transfer is aided if knowledge is made explicit and if there is physical proximity of the knowledge source and the receiver.

Bringing the outside in
M. Mazevski & N. Athanassiou
Knowledge is personal – social networks and social capital.
Relationships may be:
strong/weak: stong relationships are built with the kind of interaction necessary for establishment of shared tacit knowledge, they are characterised by trust
flexible: participants share many areas of knowledge and expertise, they have willingness to share and learn
transferable: transferable relationships can be given to someone else, people are reluctant to transfer strong relationships unless they are aware that new contact is worthy
power: power is the access to resources that are important and scare, powerful relationships provide access to such resources.
satisfying: if needs are fulfilled reciprocally

Human resources management and knowledge creation
M. Osterloch
Creating synergies constitutes collective good that can be used by people who have not contributed their share to its production.
In contrast to manual teamwork, pure knowledge teamwork raises productivity of the team if different knowledge is dispersed among different people (Hayek, 1945).
The result of knowledge teamwork is at least in part new explicit knowledge that can be used by others outside the team.
Knowledge workers in teams have more bargaining power than manual workers do, the people cannot be easily replaced.
Motivation is the key of knowledge work:
- enjoyment based intrinsic motivation: the individual acts as homo ludens (Huizinga, 1986), pleasure is derived from activity itself and not from compensation, flow experience
- prosocial intrinsic motivation takes into account the well-being of others, the welfare of the community, people want to contribute to common good of their community or company
extra-role behaviour: willingness to cooperate, willingness to keep organisational citizenship behaviour (protecting other members if rules are violated)
How to increase intrinsic motivation:
The perception of autonomy decreases if people perceive that their self-determination is reduced when doing intrinsically interesting activity. They feel that they are not the origins of their behaviour.
Feeling of competence grows if individuals understand what they are doing and when they feel responsible for outcome. If people feel that they are competent, they make greater contributions to the community (Kollock, 1998). But individuals must get positive feedback about the outcome of their contributions that does not eclipse their feeling of autonomy. Feedback must be perceived as supporting not controlling. Second, individuals must believe that their participation is important for the provision of the community good. Feedback, whether other members have received and used the contributions, and training possibilities are important. Providing opportunities to personal contacts increases motivation.

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