Focus on knowledge management in e-business

Knowledge management has an important role within e-business since business success is criti­cally dependent on staff knowledge about all aspects of the micro-environment such as customers, suppliers, intermediaries, competitors and how to shape internal processes to best deliver customer service.

Knowledge management is a significant topic which is only intro­duced here. A more detailed coverage of how knowledge management can support business processes is available in Chaffey and Wood (2005).

With the move towards globalization and responding more rapidly to changing market conditions knowledge transfer is a key to competitiveness. Knowledge management is also a change management response to the problems of staff retention referred to earlier. As Saunders (2000) puts it:

Every day, knowledge essential to your business walks out of your door, and much of it never comes back. Employees leave, customers come and go and their knowledge leaves with them. This information drain costs you time, money and customers.

1. What is knowledge?

The concept of knowledge is more difficult to state than that of data or information. How­ever, knowledge can be regarded as the next level of sophistication or business value in the cycle from data through information to knowledge. Knowledge management (KM) seeks to share this experience within a company. Useful summaries have been produced by Mekhilef etal. (2004):

Knowledge is the combination of data and information, to which is added expert opinion, skills and experience, to result in a valuable asset which can be used to aid decision making. Knowledge may be explicit and/or tacit, individual and/or collective.

Knowledge Management is the management of activities and processes for leveraging knowledge to enhance competitiveness through better use and creation of individual and collective knowledge resources.

Theorists have identified two different types of knowledge, and different approaches can be used to disseminate each type of knowledge within an organization:

• Explicit – details of processes and procedures. Explicit knowledge can be readily detailed in procedural manuals and databases. Examples include records of meetings between sales representatives and key customers, procedures for dealing with customer service queries and management reporting processes.
• Tacit – less tangible than explicit knowledge, this is experience on how to react to a situ­ation when many different variables are involved. It is more difficult to encapsulate this knowledge, which often resides in the heads of employees. Techniques for sharing this knowledge include learning stories and histories. Examples include knowing how to react when changes occur in the marketplace, such as a competitor launching a new product or a major customer looking to defect. Knowing how to analyse and respond to information in management reports depends on tacit knowledge. To acquire tacit knowledge may rely on sharing knowledge with partners outside the company or others in different sectors. So knowledge management should not be considered solely as confining corporate knowl­edge within the firewalls.

It follows that one goal of knowledge management is to turn tacit knowledge into explicit knowledge which can then be shared between employees and used to train new employees.

A framework for the different activities that comprise knowledge management is given in Figure 10.11. The main activities are:

• Identify knowledge. This is an analysis of the availability of existing knowledge to support the activities forming existing processes and a gap analysis showing what is missing.
• Create new knowledge. This reviews methods to create new knowledge. At the personal and team levels, recommended techniques are through training, process problem improve­ment sessions or brainstorming. At the departmental or organizational levels, knowledge creation can occur through benchmarking against other organizations and through estab­lishing expert groups known as ‘communities of practice’ or use of consultants or other companies to acquire new knowledge.
• Store knowledge. Mekhilef et al. point out that much knowledge is typically ‘stored’ in people’s brains and so will often remain there as ‘tacit knowledge’. Knowledge can also be embedded or become part of the ‘organizational memory’ through revising processes that form team routines. Storing explicit knowledge requires a structured approach to selecting, updating, organizing or categorizing knowledge within information systems.
• Share knowledge. This increases knowledge availability to ensure it is available in the right context – i.e. for the right person, at the right time to support their current activity. Mekhilef et al. (2004) identify the stock method of distribution where knowledge is made available through databases and the flow method where knowledge is transferred directly from person to person through collaboration, workshops or mentoring.

These authors also say that approaches to support knowledge sharing include: intranets or portals, databases, collaboration, communities of practice, job rotation, coaching, semi­nars and training. Technology can be used to assist this through making information avail­able through an intranet which enables browsing and searching of document databases or more collaborative approaches such as ‘wikis’ (web-based discussions which can be authored by several people) or ‘webinars’ (staff learn through dialling into a presentation or discussion hosted by an expert member of staff).

• Use knowledge. Since a lot of knowledge remains under-utilized, the authors suggest that the purpose of this stage is to ensure that all effort that is spent in the previous activities pays off! It also involves managing further additions to the knowledge base.

Sveiby (1997-2000) suggests that one of the best ways to understand knowledge manage­ment is by looking at how people use the term ‘knowledge management’. This includes academic researchers, consultants and industry practitioners. The two different views of knowledge management are:

• IT-based view of knowledge management. In this view, knowledge can be stored as objects within databases and information systems.
• People-track view of knowledge management. In this view, knowledge management is about trying to improve individual skills and behaviour.

Objectives of knowledge management

The reasons for moving to knowledge management are highlighted by a 1999 IDC survey.

The main reasons given by 355 US IS manager respondents were:

• Improving profit/growing revenue (67 per cent)
• Retaining key talent/expertise (54 per cent)
• Increasing customer retention and/or satisfaction (52 per cent)
• Defending market share against new entrants (44 per cent)
• Gaining faster time to market with products (39 per cent)
• Penetrating new market segments (39 per cent)
• Reducing costs (38 per cent)
• Developing new products/services (35 per cent).

It is evident that although employee retention is important, knowledge management is also seen as a competitive force for acquiring and retaining customers. Unlike other e-business initiatives cost reduction is relatively unimportant.

Sveiby (1997-2000) identifies an evolution of knowledge management objectives through time starting with a realization around 1992 that many companies were reinventing the wheel by not applying the experience acquired through previous, similar projects. Sharing knowledge was achieved by using best-practice databases using groupware such as Lotus Notes. Later the database was again the focus as companies aimed to learn more about their customers through data warehousing and data mining. The third phase is, he says, associ­ated with sell-side e-commerce and learning more about interactions with customers through web-based forms and online purchases.

2. Implementing knowledge management

The reasons for difficulties in moving to knowledge management (KM) are also highlighted by the 1999 IDC survey. The main problems noted were:

• Lack of understanding of KM and its benefits (55 per cent)
• Lack of employee time for KM (45 per cent)
• Lack of skill in KM techniques (40 per cent)
• Lack of encouragement in the current culture for sharing (35 per cent)
• Lack of incentives/rewards to share (30 per cent)
• Lack of funding for KM initiatives (24 per cent)
• Lack of appropriate technology (18 per cent)
• Lack of commitment from senior management (15 per cent).

Note that lack of the appropriate technology is not a major issue, although selecting the right technology may be important. All the main barriers relate to organizational structure and culture. A key finding seems to be the need to explain the benefits of knowledge man­agement, develop skills and encourage sharing. A quote from Marianne Hedin, Research Manager at IDC Research (IDC, 2000) highlights this. She says:

It is impossible to achieve full benefits from knowledge management unless individuals are willing and motivated to share their knowledge or unless organizations lose their structural rigidity to permit information and knowledge flow.

David Snowden (2002) puts it more simply when he says:

Knowledge can only be volunteered – it cannot be conscripted.

Hansen et al. (1999) suggest that incentives are required to encourage staff to share knowl­edge such as making knowledge sharing a factor in the employees’ performance review, assessed by recording knowledge electronically or transferring it from person to person.

An example of how staff can be successfully incentivized is provided by ShareNet, a knowledge management system at Siemens where contributors could collect points called ShareNet shares, similar to frequent-flier miles. Users earned shares for entering knowledge objects into the library (20 shares for a success story), answering urgent requests (3 shares), re-using knowledge and rating one another’s contributions (single shares). In May 2000, the top 50 point collectors were invited to New York for a conference on ShareNet. Redemption of shares was possible against prizes such as text books, mobile phones, computers, PDAs, business trips. One share was roughly equivalent to one euro at the time. Different countries and business units were then compared on their success in generating shares.

3. Technologies for implementing knowledge management

The implementation of e-business applications can support knowledge management through providing different applications which support the five different steps of knowledge management described above. Binney (2001) identifies six different classes of KM appli­cations as follows:

• Helpdesk and customer service applications.
• Data warehousing and data mining for CRM applications.
• Asset management. Document and content management.
• Process support. Total quality management, benchmarking, BPR, Six Sigma (see isixsigma.com for further information).
• Enhancing staff skills and competencies – training and e-learning.
• Innovation and creation. Communities, collaboration and virtual teamwork.

Vendors now offer many tools for knowledge management, but it must be recognized that these tools only facilitate knowledge management. Many may simply be re-badged infor­mation management tools – do they truly support knowledge management? Major changes to knowledge creation and dissemination processes within the organization are likely to be required to reap the benefits of this technology.

Alternative tools for managing knowledge include:

• Knowledge capture tools such as software for devising knowledge maps and mind maps
• Knowledge sharing techniques such as chat, discussion groups, wikis, webinars and video­conferencing
• Knowledge delivery tools such as intranets and e-mail
• Knowledge storage in document databases or knowledge bases such as Lotus Notes/Domino and content management systems
• Electronic document management systems such as Interleaf publisher
• Expert systems used to capture specific task-based knowledge and deliver a solution.

Chaffey and Wood (2005) point out that intranets have an important role within knowledge management and tend to have three stages of sophistication for knowledge management:

• Basic web pages stored on a web server. Information publishing is centrally controlled. Employees browse and search for information but do not interact. Content is refreshed on an irregular basis. The danger at this stage is that the intranet will become a silo of under­used information, employees will not trust the intranet as a tool to assist in knowledge work.
• The intranet evolves into a dynamic environment developing around the knowledge needs of employees. Publishing becomes a regular process that many employees are involved with. Discussion boards and bulletin boards are introduced. Employees start to develop trust in using the intranet to share and locate knowledge.
• Collaborative electronic workspace. The intranet becomes a ‘self-service’ environment where all employees are empowered to share knowledge via publishing mechanisms and collab­orative tools. It becomes the starting point for discovering explicit knowledge. All core business processes will take place across the intranet platform.

We will now look at some examples of how these different tools have been combined with different strategies for sharing knowledge in organizations. Hansen et al. (1999) identify two contrasting approaches for implementing knowledge management which they illustrate through case studies of management consultancies. They refer to these approaches as ‘codifi­cation’ and ‘personalization’. They found that companies tend to focus on one approach or the other, although there was some overlap. In the codification approach, used by Andersen Consulting and Ernst & Young, knowledge is codified or translated into a form suitable for searching using a database. Hansen et al. (1999) give the example of a partner in the Los Angeles office of Ernst & Young who needed assistance in creating a bid for implementation of an ERP system. Since he did not have this type of implementation he tapped into the knowledge management repository to find similar bids completed by others in the past. The re-use of a previous bid made it possible to complete the bid in half the normal period of four to six weeks, even though the partner was relatively inexperienced in this area. The codi­fication process has been a major initiative at Ernst & Young with over 250 employed at the Center for Business Knowledge to codify information and help others perform searches. In addition, each of Ernst & Young’s forty practice areas has a specialist in codifying documents.

The personalization approach has been adopted more by strategy consulting firms such as Bain and McKinsey. Hansen et al. (1999) relate the case of a partner in the London office of Bain who had to advise a UK financial institution how to solve a particular strategy dilemma. This assignment required knowledge of different market and geographical sectors and creative input. She used the Bain people-finder system to find those with suitable infor­mation, then convened a meeting in Europe that involved video-conferencing with others in Singapore and Sydney. Over the next four months, the partner then consulted regularly through e-mail, video-conferencing and phone. As well as using these technological approaches, McKinsey also fosters knowledge transfer by moving staff between offices, by having directories of experts and by having a culture that encourages prompt return of calls.

Like other strategic initiatives involving significant organizational change and the deploy­ment of new technology, knowledge management has been beset by difficulties of project implementation. Storey and Barnett (2000) review the literature on project failure and report on a detailed case study. They highlight six key learnings:

• Listen very carefully to the expectations, agendas and wants of all parties involved. They may appear to be using the same language and to be supporting the programme but in fact their understandings and plans may be very different.
• Check continuously that top management support is continuing and is delivered in a practical and public way.
• Be alert to the potential differences between a paradigm based on knowledge management which is IT-led and infused with priorities relating to knowledge capture, archiving and mining, and one based on the learning organization concept which may be inspired by wider developmental values. If handled with extraordinary skill the two approaches may reinforce each other but this cannot be expected simply to occur by happenchance.
• It will be found useful to ensure that the purpose and reason for expending effort on knowledge sharing is clarified and understood by everyone involved. It needs to be seen to be useful to those who are, in effect, being asked to behave differently.
• The interrelationship between knowledge sharing, knowledge creation and organiz­ational change needs to be understood and realized. Reversal to traditional ways of operating based on low trust and direct command are too easily adopted when prob­lems arise as our case demonstrates.
• If knowledge is to be more widely shared and more readily created and used, there is an implication that innovation in process and probably service or products will also ensue and indeed should be sought. There are different types or levels of organiz­ational KM systems: at the lower level, expert practitioners simply make available their operating routines and information. At the second level, the new knowledge is used as a basis for the shift in the kind of products and services offered to customers.

Using Web 2.0 approaches for knowledge management

Throughout this book we have discussed the power of Web 2.0 approaches for web com­munications. But these approaches are increasingly used within business. Web 2.0 concepts such as social networks, blogs and microblogging (Chapter 3) are increasingly being used for knowledge management within companies. Here are some approaches:

• Use of content management systems such as Microsoft Sharepoint Server for managing intranet content;
• Use of internal blogs where staff can blog about project work in different categories;
• Use of microblogging using tools like Yammer which has been dubbed Twitter for business (see Mini Case Study 3.4 on Twitter);
• Use of social networks within a business. Services such as Ning (ning.com) can potentially be used for this. There is also an open-source knowledge management solution CY.in (www.cyn.in) which will support this. CY.in allows users to ‘create organized work­spaces to collaborate with colleagues. Permissions can be selectively allocated to view, edit and review the space content. Content can be collaboratively created inside spaces using the various applications like wiki, file repositories, discussion boards, event calendars, blogs and galleries;
• Use of wikis as shown by Case Study 10.2, described by Nathan Wallace of Janssen-Cilag.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).