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Knowledge Creation & Management New Challenges for Managers - Book Review

1 March 2008
Dr. Moria Levy
book cover

Upon learning about the release of Nonaka and Ichijo's new book, I couldn't resist delving into its contents. Nonaka, undoubtedly one of the pioneers in knowledge management, co-authored "The Knowledge-Creating Company" with Takeuchi, a renowned work in the field. In the realm of knowledge management, where methodologies continually evolve and technological advancements enable capabilities that were unimaginable a decade ago, the significance of such a book, primarily authored by such esteemed figures, cannot be overstated. The compilation consists of essays, many of which were penned expressly in tribute to the book's influence. Nonaka and Ichijo crafted the book's framework, inviting seasoned experts in knowledge management to contribute their insights, ensuring unparalleled expertise and content.

Divided into three main sections, the book comprises many pertinent articles, each contributing to the holistic understanding of the subject matter. Every chapter encapsulates a realm of knowledge that could serve as the foundation for its publication.

Each reader will find value in exploring the abstract and pertinent practical knowledge tailored to their organizational needs. Happy reading!

The book encompasses the following topics:

  • The Theory of Knowledge Creation Companies: Understanding Organizational Differences (Nonaka & Toyama)

  • Organizational Knowledge Structures: Creating Competitive Value through Knowledge Creation, Distribution, and Utilization

  • Knowledge Creation and Transfer: From Team Dynamics to Organizational Integration

  • Knowledge Transfer within Lean Organizations

  • Incorporating External Insights: Leveraging Internal Networks for Learning and Knowledge Management (Mazvenski & Athanassiou)

  • Leveraging Knowledge for Competitive Advantage: Tools and Strategies (Ichijo)

  • Information Technology's Role in Knowledge Management (Davenport)

  • Strategic Management of Organizational Knowledge (Ichijo)

  • Market Research in Product Development within Lean Environments

  • Human Resource Management and Knowledge Development (Osterloh)

  • The Influence of Intangible Assets on Shareholder Value (Nonaka)

  • R&D Perspectives: Organizing and Managing Innovation in the Knowledge Economy (Augier & Teece)

  • Globalization of Local Knowledge (Gilbert)

  • Senior Management Information in High-Tech Companies (Lorsc)

  • Cultivating Social Capital for Effective Knowledge Collaboration

  • Enterprise Regeneration: Strategies for Sustaining Relevance (Chakravarthy & Mcevily)

The Theory of Knowledge Creation Companies: Understanding Organizational Differences (Nonaka & Toyama)

Nonaka and Toima present that societies diverge not through conventional measures such as marketing or performance failures but based on knowledge-based companies' theory principles. This divergence stems from the following key points:

  1. Societies are comprised of individuals with inherent differences, not only in their fundamental human nature but also in the subjectivity of their knowledge.

  2. The processes involved in knowledge creation vary among companies, constituting a blend of objective and subjective elements. Consequently, companies' goals and strategies differ, even within identical sectors. The emphasis here is embracing diversity rather than striving for uniformity among societies.

Nonaka and Toima articulate a model for the evolution of knowledge-creating companies structured around seven integral components:

  • Knowledge Vision: This is rooted in the company's overarching vision and centered on the question, "Why do we do what we do?"

  • Leading Goals: Practical concepts, goals, or norms that realize the envisioned future, linking knowledge processes to the company's vision.

  • Dialogue: The synthesis of thoughts that generates meaning and purpose for actions.

  • Experience and Integration of Action: Resolving contradictions from diverse contexts and cultivating knowledge through experiential processes.

  • Knowledge Assets: Derived from dialogues and experiential processes, it is crucial to maintain dynamism and avoid stagnation.

  • Knowledge Leadership: Emphasizing flexible and decentralized leadership, extending beyond organizational management to include and especially highlight middle-level leadership.

Organizational Knowledge Structures: Creating Competitive Value through Knowledge Creation, Distribution, and Utilization

Prosak and Weiss commence by analyzing the processes of first-generation knowledge management and the accomplishments attained thus far. Knowledge management has garnered recognition and legitimation through publications and writings on the subject or through conferences where practical success stories have been elucidated. Examining first-generation knowledge management also allows us to glean insights from past errors:

  • Strategic: Adopting a one-size-fits-all approach.

  • Content: Displaying an excessive focus on documents and structured knowledge without adequate filtering and focus.

  • Culture: Overlooking the importance of incentives and neglecting user treatment, as evidenced by popularizing the concept "if there is – they will come."

A crucial shift in perspective emerges, urging knowledge management from the standpoint of the knowledge worker—the user. This observation leads to efficient and valuable knowledge, ultimately enhancing organizational productivity. Key highlights include:

  • Emphasis on networks and connectivity, both among people and documents. Advocating for multiple and alternate channels to access documents and colleagues.

  • Facilitating the use of knowledge in various formats, such as video and blogs (ML), accompanied by notes and explanations, elucidating the significance of knowledge (e.g., notes in presentations).

The organizational focus in knowledge management leads in several directions:

  • Reducing the cost of knowledge work by minimizing physical and psychological time, trust barriers, technological difficulties, etc.

  • Enhancing the linkage between strategy and knowledge management, abandoning uniform solutions, and favoring more nuanced approaches.

In the future, knowledge management may either be seamlessly integrated into processes, as occurred with quality issues, or it may evolve to the point of disappearance. The authors advocate for integrating learning and knowledge management, two fundamental yet partially separate organizational components.

Knowledge Creation and Transfer: From Team Dynamics to Organizational Integration

Bettina Buchel's article zeroes in on development teams, a focus aligning with the core of innovation and cultivating a competitive edge. This emphasis on knowledge creation underscores its paramount importance within development teams. The research underlines that the success of new product development teams hinges on establishing a robust knowledge network within the team and creating bridges extending to the organization and beyond, fostering a conducive environment for the birth of new businesses. Knowledge network analysis, rooted in social capital and connectivity foundations, delves into the value of human capital and its contribution to enhanced performance within development teams.

The development team's human capital is assessed through two critical components:

  • Internal Network Density: This pertains to the connections among team members, fostering the creation of norms, trust, and collaborative efforts toward shared goals.

  • The centrality of Team Members: Examining the significance of individual team members in establishing multiple bridges within the team and the broader organization.

Internal connections are pivotal in shaping norms, building trust, and facilitating collaborative efforts toward shared goals. External connections, on the other hand, contribute by introducing additional perspectives to those formulated within the team. However, the dynamics of this interaction are intricate and influenced by time. Developing teams expect low internal connections; adding external connections introduces divergent perspectives. Over time, the team can enhance its performance through internal and external connections. Yet, a critical point is reached where stagnation sets in, leading to a decline in performance. The team may become insular in the advanced stages, struggling to integrate additional external perspectives. This signals the need for staff replacement or refreshment.

One of the article's key innovations highlights the significance of external connections, placing them on par with, and at times even above, the importance of internal connections. Team leadership plays a pivotal role in promoting these connections. The article concludes by underscoring the importance of active knowledge-sharing and development processes, emphasizing the sharing of knowledge that holds high significance for the user and reinforcing the organizational perspective that values only valuable knowledge relevant to the development team.

Knowledge Transfer within Lean Organizations

Leonard's article delves into the heart of knowledge management activities in most organizations –knowledge sharing and transfer. Knowledge transfer, a complex undertaking, involves several key factors:

  1. Knowledge is more than merely information or data; it often incorporates elements of both, making it challenging to delineate.

  2. Expressing certain types of knowledge, often labeled as "intuition," can be challenging.

  3. Knowledge is inherently "sticky," strongly tied to its context, making it challenging to detach from the circumstances in which it was studied and applied.

  4. Knowledge can be overly structured, challenging for the recipient to accept, or overly unstructured, making it difficult to understand.

  5. Documented knowledge is prone to ambiguity.

What factors contribute to effective knowledge transfer?

  1. Construction, despite the complexities mentioned earlier.

  2. Proximity between the sender and receiver.

  3. Knowledge is processed in a manner suitable for the recipient's specific scenario.

  4. Knowledge is exchanged between individuals sharing the same technical language, general language, culture, and values.

  5. An organization that prioritizes knowledge transfer as part of its mission.

Various techniques exist for knowledge transfer, recognizing the diverse learning styles of individuals (see an article summarizing Kolb's book on the subject - 2know 12/06). Depending on the subject and the recipients' learning style, appropriate methods must be selected to promote learning and understanding. Effective strategies may include:

  1. Lectures, presentations, and instructions.

  2. Rules of thumb.

  3. Storytelling.

  4. Socratic-style questioning.

  5. Learning from experience, as highlighted in Leonard and Swap's book on this topic.

Determining success in knowledge transfer can be defined in various ways. Some may gauge success based on the frequency of use, while others emphasize the recipient's internalization and adaptation of acquired knowledge. It is crucial to remember that transmitted knowledge is not duplicated verbatim; each use adapts and reconstructs it according to the specific context in which it is required.

Incorporating External Insights: Leveraging Internal Networks for Learning and Knowledge Management (Mazvenski & Athanassiou)

This article addresses managing relationships between an organization and its external environment, serving as a foundation for knowledge management and learning. While the boundary between internal and external domains has become less distinct, the article highlights the significance of explicit external connections and the knowledge derived from them. Optimal management of external knowledge involves leveraging existing relationships with external individuals or entities that operate against the organization. The emphasis is placed on interpersonal contact with knowledgeable individuals rather than mere knowledge transfer.

The importance of the relationship is underscored for three primary reasons:

  1. Connections reveal the existence of external knowledge sources.

  2. Connections serve as crucial conduits for the transfer of tacit knowledge.

  3. Connections facilitate access to overt external knowledge, which may be significant but only sometimes public.

Five key parameters define the nature of these relationships:

  1. Strength of the bond: Strong bonds are typically multi-layered or long-lasting.

  2. Flexibility of the knot: Rigid knots serve specific purposes and are challenging to extend beyond their intended benefits.

  3. Transferability of the relationship: A transferable connection allows knowledge to be conveyed through other individuals in the organization.

  4. Strength of the relationship: Power is derived from accessing important or rare information within a given context.

  5. Satisfaction derived from the relationship: Both parties should benefit, addressing business or personal needs.

In principle, the significance of these parameters contributes to the overall value of knowledge within the organization. Strong, flexible, transferable connections that are powerful and satisfying offer superior knowledge to the organization. The authors stress that managers should prioritize identifying and acknowledging existing relationships rather than focusing on creating new ones.

The article outlines four types of relationships and their optimal states across various parameters:

  1. Close specific relationships (e.g., customers, suppliers, consultants) are optimal for knowledge management - strong and flexible.

  2. Close broad contacts (e.g., peer meetings, conferences): Optimal for knowledge management - weak and flexible, with a few strong contacts.

  3. Specific distant connections (e.g., board members) are optimal for knowledge management - a combination of strong and weak, transferable connections.

  4. Broad and distant connections (e.g., open conferences, joint charitable activities): Optimal for knowledge management - weak and transferable, with a few strong connections.

The article also identifies three significant challenges in transferring knowledge from outside the organization inward:

  1. External knowledge transfer may be perceived as updating the entire organization, potentially leading to misunderstandings.

  2. Determining the importance of received knowledge and understanding its context is non-trivial.

  3. Reciprocity is expected when sharing knowledge, posing additional challenges.

Leveraging Knowledge for Competitive Advantage: Tools and Strategies (Ichijo)

This article delves into the pivotal role and position of enabling factors in creating and managing knowledge. In a world where knowledge is a critical asset for organizations, recognizing that it is neither possible nor practical to compel employees or organizations to produce or manage knowledge directly, our sole recourse is to prepare the appropriate environment conducive to fostering new knowledge creation and sharing existing knowledge. At the strategic level, an organization's competitive advantage based on knowledge includes the ability to:

  1. Facilitate knowledge creation.

  2. Promote knowledge sharing.

  3. Safeguard knowledge assets.

  4. Skillfully discern when to ignore or replace information, ensuring a timely update with new insights.

These endeavors are inherently intricate and challenging due to their reliance on processes connected to people – involving creativity, discourse, judgment, teaching, and learning, all inherently complex. The article identifies five enabling factors that significantly influence the capability to advance these objectives:

  1. Defining a knowledge vision rooted in the organizational vision and integrating it into the company's ethos.

  2. Fostering extensive dialogue within the organization, both formal and informal.

  3. Mobilizing knowledge activists and change agents (akin to knowledge coordinators) within the organization empowers all the above factors.

  4. Constructing a supportive organizational structure tailored to the organization's needs, facilitating optimal knowledge transfer within.

  5. Transforming local knowledge into a global organizational knowledge perspective.

It's worth noting that these factors are extensively detailed in the book by Nonka, Ichojo, and Von Kroch titled "Enabling Knowledge Creation," which was comprehensively covered in the monthly publication (2know - July 2007). In addition to these factors, Ichojo introduces another critical factor: managers' leadership. Effective leadership is pivotal in driving and motivating the factors above, encouraging a culture of learning by doing. Recognizing that the desired outcome of employees managing or developing knowledge is best achieved by cultivating the right environment, the article emphasizes the indirect approach of establishing a conducive setting rather than directly enforcing knowledge management.

Information Technology's Role in Knowledge Management (Davenport)

Tom Davenport, a familiar figure to us all, delves into an exploration of technologies supporting knowledge management in this article, proposing a unique and slightly surprising course of action. Davenport scrutinizes supporting technologies, emphasizing two key axes: knowledge complexity, ranging from simple systems supporting transactions and flow processes to intricate ones, and the sharing axis, transitioning from individual support to facilitating joint group activities. Davenport categorizes systems supporting complex knowledge into several types:

  • Systems integrated into the employee's computerized work environment include knowledge support systems aiding physicians in individual patient treatment, alerting about conflicting drugs, and systems supporting bank investments.

  • Portals designed for specific role holders: Tailored for customer managers or engineers.

  • Semi-automatic decision support systems, Such as those guiding loan decisions in banks. Davenport underscores the importance of retaining experts for complex cases and the need for cautious automation to avoid organizational and business risks.

  • Systems dedicated to specific professions, Such as managerial or computerized laboratory notebooks.

  • Experiential systems: Highlighting unproven concepts like social networking and blogging. Davenport particularly emphasizes that blogs are anything but efficiency support tools.

Transitioning to personal knowledge, Davenport underscores that successful knowledge management relies on individual behavior. Teaching individuals how to create, acquire, process, and use knowledge personally is as significant as engaging in organizational knowledge support systems. Davenport identifies three levels of organizations:

  1. Companies already "there": They adopt knowledge-supporting technologies but emphasize individual behavior and system usage from an organizational business perspective.

  2. Companies "on the way": Mainly focused on assimilating and engaging with technology.

  3. Companies recognize the issue's importance but have yet to take steps in that direction.

Within this framework, Davenport identifies "Masters" as knowledge workers and discusses common characteristics, notably personal content organization, seeking assistance from others, avoiding excessive preaching or coercion, educated tool usage, reliance on lists for self-management, and regular content filtering. The emphasis on the individual, even as a partial substitute for organizational knowledge management, is an innovative and thought-stimulating approach.

Strategic Management of Organizational Knowledge (Ichijo)

In the current era of knowledge-based companies, personal and organizational knowledge stand as the primary assets for the life of an organization. Companies must attract, nurture, and retain managers who can accumulate these knowledge assets. Managing knowledge strategically and holistically is essential for transforming it into a core competence and gaining a business advantage. The responsibilities of managers are twofold:

  1. Transform organizational knowledge into actions that generate value for the company.

  2. Ensure that existing public knowledge is utilized more effectively than by competitors.

Ichijo emphasizes that not all knowledge holds strategic business importance, and managers must progress from handling operational knowledge to managing strategic expertise at a higher level. Unique organizational knowledge must meet three criteria:

  1. Be valuable.

  2. Be challenging for competitors to imitate.

  3. Be challenging to replace with alternative solutions for the same need.

Unique knowledge serves as the foundation for an organization's strategic knowledge. Ichijo distinguishes between a survival strategy and a progress strategy. A survival strategy focuses on current profitability and aims to exceed market averages. This strategy involves sharing knowledge within the organization while safeguarding its value, ensuring it is difficult to copy or replace. Possessing knowledge uniquely is crucial; effectively conveying knowledge is sometimes more important than the content itself.

On the other hand, a progress strategy addresses future profitability and supports future profits. This strategy includes creating and safeguarding knowledge but also entails letting go of obsolete knowledge. While relinquishing old knowledge may involve risks, it is essential for entering new avenues and committing the mind to minimal risk analysis of existing knowledge. Managers often lean towards a progress strategy for obvious reasons, driven by rational considerations, fears, and apprehensions.

Organizations must find a balance between survival and progress strategies by sharing existing knowledge and actively developing new knowledge.

Market Research in Product Development within Lean Environments

The primary challenge in product and service innovation lies in aligning customer preferences with organizational production. Market research serves the purpose of addressing this issue, but current statistical research tools face limitations in capturing knowledge related to customer needs. While market research excels in analyzing the usability of existing products, it falls short in developing and conceptually testing new products or services. The key reasons for these limitations are as follows:

  1. Questionnaires are often formulated in a way that fails to open minds. Respondents in telephone surveys are preoccupied with various thoughts and may not provide insightful responses.

  2. Although focus groups are preferable to questionnaires, they are usually large and lack sufficient time to delve into individual thoughts and experiences. They also exhibit a herd mentality and distrust in dialogue with unfamiliar participants.

  3. Discrepancies exist between verbal expressions and heartfelt reflections.

The author suggests several non-traditional methods for innovative product and service market research. It is essential to note that these methods are more costly and unnecessary for studies that lack innovation or do not explore tacit knowledge. These methods include:

  1. Top user research involves engaging with technological leaders who develop personal responses to users' needs before commercial products are available. Their experiences can expedite the testing, filtering, and improvement processes.

  2. Metaphor-based research: This involves using metaphors and symbols to transmit tacit knowledge. Creating metaphor maps based on customer descriptions of desires and opinions can provide valuable directions for organizational improvement and new product development.

  3. Observations: Allow developers or planners to observe consumer behavior directly or involve social science experts (anthropologists) in observing and documenting behavior.

  4. Self-documentation by users: In some cases, users can be asked to record their activities, offering more authentic insights than external observations, albeit with certain disadvantages.

  5. Developer/planner as users: Turning developers or planners into users to examine their needs, combining their professional knowledge with consumer behavioral insights for unique perspectives.

Before concluding, Leonard acknowledges that no research is immune to misuse or unintended consequences. The tools described in the article should be introduced and taught before sharply transitioning from traditional to non-traditional market research methods. Behavioral market research on user needs, containing significant tacit knowledge, requires experimentation with less standard and less familiar tools beyond conventional marketing courses.

Human Resource Management and Knowledge Development (Osterloh)

One of the primary functions of human resources is to reward and incentivize employees, thereby increasing their efficiency and productivity. In recent years, with the rise of knowledge workers and their growing prominence among company employees, human resources departments are required to adapt the system of compensation and incentives. This adjustment is necessary because a) the needs of employees are different than in the past, and b) how rewards are possible has evolved (making it challenging to isolate success and pinpoint the person responsible for it). The notable distinctions between knowledge workers and traditional industrial workers include:

  1. Knowledge work is primarily a team endeavor.

  2. The effectiveness of team knowledge work arises from differences in employees' knowledge rather than uniformity.

  3. The product of knowledge work is new knowledge benefiting the entire organization.

  4. The dependence on knowledge workers is high, making them challenging to replace.

Practical team knowledge work is crucial for enhancing employee efficiency and creating a competitive advantage for the organization. Overcoming the social dilemma, where there is a fear of not wanting to contribute (the "sucker" feeling), requires structural organizational solutions and motivational strategies. Here are some suggestions:

Structural Solutions:

  • For example, establish a long-term employee/employer relationship by providing options or other future rewards.

  • However, transferring more authority and independence to profit centers presents challenges related to knowledge transfer and potential copying outside the organization.

Motivational Solutions:

  • Increasing motivation for work: "If you want people to want to do a good job, give them a good job to do."

  • Encouraging independence among employees.

  • Providing a sense that employees understand their work by sharing the "big picture" and not just the knowledge required for their tasks.

  • Establishing norms for equal distribution of rewards or distributions based on needs rather than status.

  • Enhancing the sense of process justice, ensuring individuals understand the cause of decisions, and allowing expression of opinions during the decision-making process.

  • Focusing on recruiting willing individuals to share, as most people are inclined to share conditionally.

  • Promoting face-to-face communication that encourages sharing over virtual communication.

  • Providing guidelines for sharing, as studies suggest, can increase willingness to share by up to 40%.

  • Maintain fixed salaries that do not depend on the level of GDP/sharing and avoid competition that fosters a desire to stand out at the expense of others.

While some of these recommendations may contradict traditional human resource management concepts, it is advisable to consider them positively, recognizing that we are no longer in an era where production workers are the primary focus.

The Influence of Intangible Assets on Shareholder Value (Nonaka)

This article primarily focuses on economic accounting, unveiling an aspect unfamiliar to knowledge management professionals. Nonke presents an in-depth study exploring the relationship between R&D investment (as a central representative of knowledge assets), profitability, and share value. While sparing readers from detailed mathematical models, we will review the study's results and components. The study's premise is that current R&D investment may reduce immediate revenues. Still, it creates organizational R&D capabilities, fostering the potential for future profits and potentially impacting the increase in share value—a claim investigated in the study.

The study was initially proposed in Japan and extended to the United States, Britain, Germany, France, Japan, Korea, Taiwan, Hong Kong, and Australia. Edge data and places lacking detailed R&D investment information were not considered. Four sectors were examined: information and communications, vehicle and traffic, electronics, and the chemical industry (including pharmaceuticals). Most of the examination focused on 2003 data, with some comparisons made against results from 2000-2002. Here are the essential findings and conclusions:

  • In Japan, the median investment in R&D constitutes 50% of total investments.

  • Based on the Gross Profit Margin (GPM) model, positive correlations between R&D investments and share value were found in the US, UK, Germany, Japan, Korea, and Taiwan.

  • Similarly, the ROE – Return On Equity model found positive correlations in the same countries.

  • No conclusive findings were reported for Hong Kong and Australia, potentially due to insufficient detailed data on R&D investments.

  • R&D investments are substantial, especially in knowledge-intensive industries like computers, software, semiconductors, chemistry, technology and communications, pharmaceuticals, and biotechnology—with the highest investment observed in the biotechnology industry.

Bottom Line:

  1. There is a statistically positive correlation between R&D investment and increasing share value, a significant observation given the potential success at the end of the process.

  2. This connection is evident across various countries and continents, including the Americas, Asia, and Europe.

  3. While R&D investments contribute to the increased value of shares, it is crucial to acknowledge that these investments primarily enhance organizational R&D capabilities, thereby influencing future revenues.

Point of Reference: Caution against complacency and excessive R&D investment. Given the scarcity of models for managing and controlling investments, it is evident that only a minority of investments succeed. Nonka proposes principles and models to adopt for prudent investment management.

R&D Perspectives: Organizing and Managing Innovation in the Knowledge Economy (Augier & Teece)

Today, there is no longer any doubt that technological innovation serves as the primary driver of economic growth. The creation and utilization of intangible assets are pivotal in establishing well-being. Innovation encompasses searching, discovering, developing, improving, adapting, and commercializing new processes, products, organizational structures, and procedures. It involves uncertainty, risk-taking, exploration, re-investigation, experimentation, trial and error, and testing. Pursuing innovation demands skills and an organizational framework fostering independence and entrepreneurship. It necessitates systems supporting a variety of alternatives to exploit technological and marketing opportunities, along with solid relationships with the scientific (academic) community and users. In the current landscape, innovation also requires expertise in protecting intellectual assets (IP) and strategies and structures to ensure a return on investment.

This article delves into the evolution of R&D laboratories and their innovation, primarily in the United States, from the early 20th century to the present day in the 21st century. Several significant insights emerge from this historical development and our current situation:

  • The industrial R&D lab, responsible for bringing products, services, and IPs to fruition, stands out as a key (if not the key) component in the knowledge creation engine within modern organizations.

  • Most major commercial companies now operate distributed laboratories, bringing development closer to users and focusing on industrial laboratories. Less emphasis is placed on basic research, partly due to the potential for replication or spin-offs benefiting the parent company more.

  • Connections with universities are strengthened yet remain limited due to the restricted resources available to academic researchers. Increasingly, connections are established with start-up companies involved in the development, although their resource advantages constrain these at the application level compared to basic research.

  • Knowledge development is dispersed among different companies and locations in the present innovation landscape. To thrive in such an environment, business organizations must be vigilant and place central emphasis on identifying and implementing technological and marketing opportunities. Knowledge management is a critical core competence enabling proper and intelligent conduct, especially in sectors where intangible assets confer a competitive business advantage.

Globalization of Local Knowledge (Gilbert)

Knowledge management is increasingly recognized as a crucial necessity within companies, and its importance becomes even more pronounced for global corporations. It is critical in generating added value and shifting from multinationalism to globalization. This article centers on the significance of local knowledge and its role in globalization. Many organizations erroneously assume that knowledge resides solely at the headquarters, primarily disseminating information to the field.

According to Gilbert, the correct approach involves globalizing local knowledge—collecting, amalgamating, and redistributing it to meet the needs of other branches. He contends that this is the optimal way to leverage knowledge for the benefit of the entire organization.

The challenge extends beyond legitimizing local knowledge for local use; it requires redeploying it to utilize it on a global scale effectively. The article's author offers various tools and tips to assist organizations in learning from their local knowledge, encompassing different learning patterns. Without delving into the in-depth analysis of the theoretical context for the various types of learning, here are some of these tools:

  • Committing to global learning and involving representatives of different nationalities in senior management as a preliminary stage to actual implementation.

  • Emphasizing the importance of feedback from the field and adapting global strategies based on the local input received.

  • Implementing career planning in global companies that involves rotations across different nationalities and exposure to diverse local knowledge.

  • Addressing the "Not Invented Here Syndrome" through workshops with representatives from different nationalities to analyze scenarios.

  • Encouraging managers in the field to seek feedback from counterparts in other locations.

  • Cultivating a culture that highlights local challenges as a tool to stimulate new ideas.

  • Incorporating lessons learned that involve outsiders with different perspectives in the process.

The author stresses that the globalization of local knowledge is a complex process. It relies not on central tools for knowledge management but on people, learning processes, and, most importantly, managerial leadership. In essence, transportation is a recurring theme throughout the discussion.

Senior Management Information in High-Tech Companies (Lorsc)

This article delves into the indispensable knowledge boards of directors required to make decisions in knowledge-intensive companies. However, the insights presented here are equally applicable to companies not governed by a board of directors and extend to internal processes. Consequently, reading for individuals dealing with knowledge-related issues at various organizational levels is recommended.

Two primary challenges confront the average board member:

  1. Lack of knowledge: The absence of a conflict of interest between the board member and the company often means that they refrain from regularly engaging in the company's activities, resulting in a knowledge gap.

  2. Lack of time: Board directors have limited exposure to their company, with most of their time spent externally or internally focused on specific divisions. This makes it challenging for directors to stay updated on all company-related information, particularly in knowledge-intensive companies where complex knowledge plays a crucial role in success.

Lorsch emphasizes the pertinent benchmark for knowledge companies, such as consultants, lawyers, and doctors, where knowledge is the service sold. To address these challenges, Lorsch refers to a 2002 study with Tierny, highlighting two key factors essential for the success of knowledge-intensive companies:

  • Robust relationships with customers: In knowledge companies, where customers may have limited knowledge about the service they purchase, trust and effective relationship management are as crucial as professional knowledge.

  • Talented and professionally motivated employees: These employees make a positive impression on customers at the point of entry and contribute to success through quality work. In many instances, knowledge companies rely on external knowledge workers, adding complexity to tasks like locating, attracting, motivating, and retaining such experts.

Boards of directors must consistently receive knowledge in two primary areas: customer satisfaction and employee satisfaction. This knowledge is inherently subjective, and there is no straightforward collection method. However, despite its limitations, feedback and surveys can be tools for focusing on the company's actual state.

Cultivating Social Capital for Effective Knowledge Collaboration

The networks formed by informal trust relationships, known as social networks, act as the infrastructure for sharing and developing knowledge within any organization. The intricate paths of these networks serve as the heart of social connections, allowing knowledge to flow most effectively. Consequently, social capital holds immense value for organizations, particularly those focused on knowledge sharing. Prioritizing investment in this capital becomes crucial for every knowledge-based organization and a central component of any knowledge management project. However, the challenge arises when attempting to cultivate social capital, as it cannot be commanded; instead, it must be genuinely nurtured and not artificially manufactured.

To foster the growth of social capital, authentic leadership is imperative, and the cultivation process should incorporate trust-building elements:

  • Even in the 21st century, face-to-face meetings remain essential for building trust.

  • Virtual meetings enhance the trust established in face-to-face interactions rather than substitute for it.

  • Identifying and empowering existing trust zones within the organization.

  • Emphasizing transparency and openness.

  • Encouraging the sharing of knowledge in public forums.

  • Trust in the individual can be demonstrated through actions like granting autonomy at work.

  • Cultivating decency in interactions.

  • Utilizing Social Network Analysis as a factor for preservation and empowerment.

Organizations like W.L. Gore and Associates exemplify successful strategies in defining organizational units. They emphasize units that are large enough to be autonomous yet small enough to allow personal acquaintance and trust among members. This example demonstrates how these components can be practically implemented. The more organizations are adept at building and nurturing trust, the more they will yield the benefits of effective knowledge sharing and overall organizational success. While this constitutes a long-term investment, the returns are undoubtedly substantial.

Enterprise Regeneration: Strategies for Sustaining Relevance (Chakravarthy & Mcevily)

The concluding article of the book symbolically explores strategies for ensuring continuous renewal in organizations, underscoring its necessity for those aspiring to excellence. This renewal process mirrors the organizational knowledge management process, involving protecting, leveraging, and developing new knowledge. Organizations undergo cyclical restructuring phases, vitality, and renewal, engaging with knowledge at each stage. However, only a few organizations are well-versed and can successfully navigate these stages. The article focuses on the aspects of knowledge that must be managed to guarantee constant renewal, recognizing knowledge as the core competency of organizations.

In the pursuit of constant renewal, four gradual yet parallel states are identified:

  1. Protection of knowledge: This involves safeguarding knowledge against replication, whether through formal means like patents or by elevating the difficulty of copying. The elevation is facilitated by tacit knowledge, specific knowledge (maintained as context-dependent), and complex knowledge. It's crucial to note that while protecting knowledge, efforts should also improve the existing market situation and expand products and services based on the existing foundation.

  2. Leveraging knowledge: This process entails adapting existing knowledge to new channels, offering dual benefits: maximizing the return on investment in knowledge and making tacit knowledge visible by exploring new opportunities and applications. Leveraging knowledge enables the company to enter new customer segments or markets.

  3. Knowledge building: This occurs when units within an organization achieve a significant new understanding. It can happen spontaneously during ongoing work processes or intentionally through learning processes. This process contributes to the creation of new core competencies for the company.

It's essential to recognize that pursuing performance may lead to leveraging or developing knowledge but can also result in defensive convergence. Therefore, intentional actions are necessary to transition to leveraging and building processes, even when it appears that existing knowledge has not been fully exhausted. Managers must be aware of potential tensions between the modes of protection, leverage, and development and actively work to resolve conflicts.

The path to ensuring renewal beyond average progress involves three key components:

  1. Dare and dream far away (Daring vision): Organizations must have ambitious and forward-thinking visions to propel them toward constant renewal.

  2. Create flexible commitments: This fosters adaptability and flexibility in organizational commitments to navigate changing circumstances effectively.

  3. Balance the factors of protection, leverage, and construction: Striking a balance between protecting, leveraging, and building knowledge is crucial for sustained renewal.

In summary, through education and intentional management, organizations can achieve constant renewal and attain excellence.

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