fW). J65~~ r"'t . Jfs ~ 9 A Methodology to Manage Intra-organisational Knowledge Sharing Kwok-Tung Yeung Churchill College Cambridge --- CAMBRIDGE UNivtRSITY UBRARY A dissertation submitted for the degree of Doctor of Philosophy Decision Support Group Cambridge University Engineering Department January 2003 Wise men store up knowledge ... (Proverb 10:14) Dedicated to Lai Lee Abstract In the 1990s, the level of research into knowledge management increased greatly. Nowadays, knowledge is widely regarded as the key competitive resource, more significant even than traditional factors of production such as land, labour and capital. Hitherto there have been four main thrusts to knowledge research: (1) theoretical research: emphasising the epistemology of knowledge, (2) measurement-oriented research: measuring the stock of intellectual assets, (3) technology-oriented research: employing information management systems to increase the efficiency of knowledge workers, and ( 4) organisational research: investigating such knowledge processes in terms of organisational learning and knowledge flow. Organisational knowledge research centres on the investigation of two key problems: how knowledge is created and how knowledge is shared. This research focuses on knowledge sharing and specifically on identifying the most effective means for intra- organisational knowledge sharing. A management framework and methodology have been developed and embodied as tools for enabling companies to effectively leverage their critical knowledge resources across multiple organisational units with the aim of enhancing and sustaining their competitive advantage in the marketplace. This research is motivated by: (1) the fact that hitherto there has been no theoretically sound managerial frame ork that integrates the diverse and yet inter-related theories of knowledge, and more importantly, (2) the need for a practical conceptual tool to help practitioners put their knowledge-sharing strategies into operation in order to realise the benefits of managing knowledge. The novelties of this research are twofold. Firstly, a new holistic management framework- the Knowledge Sharing Management Framework (KSMF)- has been developed to integrate theories of organisational learning and cognition, communication and media selection, culture and motivation, organisational structure, information management and knowledge networks. This new holistic framework establishes knowledge-based competitive advantage as the conceptual foundation for Ni (BLOCK justifying the value of a knowledge sharing initiative. It consists of a five-stage process model (adoption, adaptation, absorption, integration and dissemination) and four generic knowledge-sharing strategies (concentrating on sharing channels, organisational infrastructure, human factors and technology provision). Secondly, knowledge research has, on the whole, moved from investigating 'what' knowledge is to investigating 'why' and 'how' it should be shared. This work contributes to the next phase of knowledge management development by designing a new methodology _the Knowledge Sharing Management Methodology (KSMM)- as a practical 'how- to' guide for practitioners. This novel methodology establishes the crucial link between strategic and operational level decision-making by examining an organisation's current knowledge sharing practice from a business process perspective. The KSMM provides a structured method of identifying areas of an organisation's knowledge sharing practice for improvement so that managers can have a tool for guiding them when putting knowledge strategies into practice. The application of the KSMM is demonstrated by means of two case studies. These take the form of collaborations with industrial partners in the manufacturing engineering sector. In these, the firms' current organisational knowledge sharing practices were systematically examined in order to investigate the enablers and blockers influencing knowledge sharing between organisational units, and t~ identify areas for improvement. These two case studies provided empirical evidence for researching the multi-faceted and 'sticky' nature of organisational knowledge sharing and for identifying the key factors for success in its management. Key words: Knowledge management, knowledge sharing, knowledge process, organisational learning, intellectual assets, methodology -11- Acknowledgements This research could not be completed had I not had the support from the following people. I want to thank first and foremost my supervisor Dr. Tony Holden for his encouragement and guidance throughout my years in Cambridge. His help in arranging the two case studies have been critical to the completion of this work. I also want to thank colleagues from the Decision Support Group, Minsoo Shin, Steve Chong, Tengku Shahrir Tengku Adnan and Matee Serearuno, for the numerous sessions of discussions I had with them, for their comments on some of my research papers and for their friendship. Dr. Godfrey Yeung and Jeff Wood's help in proofreading the manuscript is also very much appreciated. Due to the confidentiality agreement with our industrial partners, the names of the companies and the staff who were involved in assisting the two case studies cannot be revealed. In particular, I wish to express my gratitude to the Director of Business Development, the Corporate Development Manager and the Strategic Planning Manager at PowerSys; and the Director of R&D, the Group Information Officer and the General Manager at PrintCo and many others whom I cannot name individually. Without their participation in interviews, their help in providing the necessary data and their interest in this research it could not be completed. This research would not ave been possible in the first instance without generous funding from the Cambridge Overseas Trust and the Churchill College. I am most grateful to both organisations for their financial support. I am immensely indebted to my family and friends for their continuous support. I want to thank my wife Lai Lee for her understanding and patience for the past four years. My parents and my brothers Michael and Godfrey have been an invaluable source of encouragement over the years. Last but not least I want to thank especially Johnny and Alice Wong for their friendship and the help they have given and continue to give to both Lai Lee and myself. - 111- Ni (BLOCK Declaration This dissertation is entirely the result of my own work and includes nothing which is the result of work done in collaboration. Any reference to the work of other researchers is clearly indicated in the text. This dissertation has not been submitted in whole or in part as consideration for any other degree or qualification at this University or any other institute of learning. This dissertation contains 301 pages and fewer than 65,000 words. ~~ -IV- NJ (BLOCK .I .. .. . . •' ... • • Table of Contents Abstract. ............................................................................................................ i Acknowledgements ............................................ : ............................................ 111 Declaration ...................................................................................................... iv Table of Contents ............................................................................................. v List of Tables ................................................................................................... x List of Figures ...... ........................................................................................... xi 1. Introduction ................................................................................................ I 1.1 Managing Knowledge Sharing ......................................................................... 3 1.2 The Motivation For This Research ................................................................... 5 1.3 The Scope and Domain of the Case Studies ...................................... .... ........... 7 1.4 Research Objectives and Contributions ............................................................ 9 1.5 Research Questions and Assumptions ............................................................ 10 1.6 The Research Methodology ........................................................................... 12 1. 7 Thesis Outline ...................................................................... .. ........................ 17 2. Knowledge Management Review ............................................................. 19 2.1 Introduction ................................................................................................... 19 2.2 The Knowledge Economy .............................................................................. 20 2.2.1 Socio-Econo~ Changes ... ..................................................................... 20 2.2.2 Organisational Changes ........................................................................... 24 2.2.3 The Productivity and Strategic Challenges .............................................. 26 2.3 The Four Thrusts of Knowledge Research ...................................................... 28 2.3 .1 Theoretical Research ............................................................................... 29 2.3.1.1 The Epistemology of Knowledge ...................................................... 29 2.3.1.2 Idiosyncrasies ofK.nowledge ............................................................ 33 2.3 .2 Measurement Research ............................................................................ 40 2.3.2.1 Intellectual Asset Management ......................................................... 40 2.3.2.2 Performance Measurement ............................................................... 42 2.3.2.3 Discussion ........................................................................................ 44 2.3.3 Technological Research ........................................................................... 46 2.3.3.1 Information Management ................................................................. 46 2.3.3.2 Communication & Collaborative Tools ............................................ 49 2.3.3.3 Discussion ........... ... ..... · ............... ........ .. ... ......... ..... ...... ... .... ..... .. ....... 50 - v- Nl (BLOCK 2.3.4 Organisational Knowledge Research:··········· ······ ····································· 5~ 2.3.4.1 Organisational Knowledge Sharmg Management ............................. 5 2.3.4.2 Organisational Forms ....................................................................... 56 2.3.4.3 Learning and Knowledge Sharing ..................................................... 58 2.3.4.4 Organisational Learning Impediments ...................... ... ..................... 59 2.4 Knowledge Artefacts .................................. .. ................................................. 60 1 d E t •t ················ 61 2.4.1 Know e ge n I y ··········:··················································...... 61 2.4.1.1 Knowledge as an Object .................................................................. . 2.4.1.2 Knowledge as a Process .................................................................... 61 2.4.2 Knowledge Transfer·······:········································································~~ 2.4.2.1 Knowledge Transactions and Exchange Market.. ....... · .. ···················· 2.4.2.2 Knowledge Sharing Communities ................................ ·· · ············· ···· 66 2.5 Summary ....... .... .............................. ..... ............................ ......... . ··················· 67 3. The Knowledge Sharing Management Framework ................................ 71 3.1 Aspects ofKnowledge Sharing ...................................................................... 71 1 d Stak h ld S ................ 72 3.1.1 Know e ge e o er .... ................................................... .. 3.1.2 Knowledge Taxonomy and Intellectual Assets ........................................ 75 3.1.3 The Dynamic Knowledge Development Lifecycle ................................... 79 3.1.4 Summary ......................................... ........................................................ 83 k ······················ 84 3.2 'fhe Framewor ............................... · · ·. · · · · · · ·· · · · · · · · ·· · · · · · ·· · · ·· · ······ · 3.3 Business Context and Business Drivers .......................................................... 85 3.3.1 Knowledge and Risk ........ ....... .. ..... ....... ........ ........................ .... ...... ........ 94 3.4 The Knowledge Sharing Process Model (KSPM) .......... · · ·. · · · · · · · · · · · · · ·· · · ·· · ··· ···· 105 3.4.1 The Role ofthe KSPM ......................................................................... . 10~ Ad . . ............... .... 10 3 4 2 option ......................................................................... .. . . d . ················· 108 3.4.3 A aptation .......................................................................... . b . ················ 109 3.4.4 A sorption····································· ······································· 9 . ········ ·· ·········· 10 3.4.5 Integration ......... .................... .... .. ........... ..... ........ ............. . . . t' ··················· 109 3.4.6 Dtssemma ton··········································· ····~ ········· ··· ·· ·· ···· 3.5 The Four KS Strategies ................................................................................ 109 3.5.1 Sharing Channels .................................................................................. 110 3.5.2 Organisational Infrastructure ................................................................. 112 F t ·················· 113 3.5.3 Human ac ors ................................................................... . 3.5.4 Technology Provision ............................................................................ 113 1 d . Sh · St t t'es · · · · · · · · · · · · · · · · · 114 3.6 Know e ge armg ra eg ................................................... . 3.7 Summary ....... .............. ............. ..................................... .... ........ . ····· ······ ···· ·· 115 4. The Knowledge Sharing Management Methodology ........................... 117 4.1 Phase 1: Business Process Analysis ......................... ······· ·· ·············· ···· ········· 118 4.1.1 Step 1: Identifying KS Objectives············:·····:···································· .. ~~~ 4.1.2 Step 2: Identifying the Scope ofthe Investigation .................. ............... . -vi- 4.1.3 Step 3: Modelling the Business Process ................................................. 126 4.2 Phase 2: Knowledge Sharing Practice Review ................................ ..... ......... 130 4.2.1 Step 4: Mapping Knowledge Stakeholders ......... ................................. .. 130 4.2.2 Step 5: Auditing Knowledge Sharing Channels ..................................... 132 4.2.3 Step 6: ConStructing A Knowledge-Sharing Network Map ................ ... . 135 4.3 Phase 3: Critical Assessment ofKS Practice ................................................ 137 4.3.1 Step 7: Mapping The Business Process onto The KSPM ........................ 138 4.3.2 Step 8: Filling In The Knowledge-Sharing Analysis Grid ...................... 140 4.3.3 Step 9: Calculating Knowledge-Sharing Scores ..................................... 143 4.4 Phase 4: Knowledge Sharing Improvement Analysis .................................... 146 4.4 .1 Step 1 0: Analysing KS Gaps ................................................................. 146 4.4.2 Step 11: Correlating the KS Gaps with KS Management Levers ............ 148 4.4.3 Step 12: Carrying Out A Fill-Gap Analysis ........................................... 149 4.5 Summary ..................................................................................................... 151 5. The PowerSys Case Study ...................................................................... 153 5.1 Introduction ................................................................................................. 153 5.2 Phase 1: Business Process Analysis ....................... ..... ........... .. .................... 154 5 .2.1 Step 1: Identifying KS Objectives ... .......... .. .. ...... ................ .... ... ........... 154 5.2.2 Step 2: Identifying the Scope ofthe Investigation .................................. 160 5.2.3 Step 3: Modelling the Business Process ...... .. ......................................... 163 5.3 Phase 2: ~owledge Sharing Practice Review .............................................. 165 5.3.1 Step 4: Mapping Knowledge Stakeholders ............................................ 165 5.3.2 Step 5: Auditing Knowledge Sharing Channels ..................................... 170 5.3.3 Step 6: Constructing A Knowledge-Sharing Network Map .................... 175 5.4 Phase 3: Critical Assessment ofKS Practice ................................................ 176 5.4.1 Step 7: Mapping The Business Process onto The KSPM ........................ 176 5.4.2 Step 8: Filling n The Knowledge-Sharing Analysis Grid ...................... 177 5.4.3 Step 9: Calculating Knowledge-Sharing Scores ..................................... 185 5.5 Phase 4: Knowledge Sharing Improvement Analysis .................................... 186 5.5.1 Step 10: Analysing KS Gaps ................................................................. 186 5.5.2 Step 11: Correlating the KS Gaps with KS Management Levers ............ 189 5.5.3 Step 12: Carrying Out A Fill-Gap Analysis .. ............................... .......... 194 5.6 Summary .... ; ................................................................................................ 197 6. The PrintCo Case Study ......................................................................... 201 6.1 Introduction ...... ............... ................................. ....... ................ .................... 201 6.2 Phase 1: Business Process Analysis ............................................................. 202 6.2.1 Step 1: Identifying KS Objectives .... , .................................................... 202 6.2.2 Step 2: Identifying the Scope ofthe Investigation .................................. 208 - Vll- Ni (BLOCK 6.2.3 Step 3: Modelling the Business Process ................................................. 2 11 6.3 Phase 2: Knowledge Sharing Practice Review ............................................ .. 214 6.3.1 Step 4: Mapping Knowledge Stakeholders ......... ... ................................ 2 14 6.3.2 Step 5: Auditing Knowledge Sharing Channels .................... .. ............... 2 17 6.3.3 Step 6: Constructing A Knowledge-Sharing Network Map .................... 2 22 6.4 Phase 3: Critical Assessment of KS Practice .............................................. .. 223 6.4.1 Step 7: Mapping the Business Process onto The KSPM .... ... ......... .. ..... .. 2 23 6.4.2 Step 8: Filling In The Knowledge-Sharing Analysis Grid ...................... 2 23 6.4.3 Step 9: Calculating Knowledge-Sharing Scores ..................... .... ............ 2 32 6.5 Phase 4: Knowledge Sharing Improvement Analysis ................................... . 233 6.5.1 Step 10: Analysing KS Gaps ..................................... ............................ 2 33 6.5.2 Step 11: Correlating the KS Gaps with KS Management Levers ............ 2 34 6.5.3 Step 12: Carrying Out A Fill-Gap Analysis ........................................... 2 39 6.6 Summary ................................................................................................... .. 240 7. Conclusion .............................................................................................. 2 43 7.1 Findings .................................................................................................... ... 243 7.2 Critical Evaluation ..................................................... ............................... .. . 245 7.2.1 The Business Context ...................................................... ..................... . 246 7 .2.2 The Knowledge Sharing Process Model (KSPM) .................................. 246 7.2.3 The Four KS Strategies ......................................................................... 247 7 .2.4 The Knowledge Sharing Management Methodology (KSMM) .............. 248 7.2.5 Changes Made to the KSMM ................................................................ 2 49 7.3 Discussion and Conclusion ....................................................................... ... 250 7.3.1 Meeting The Objectives ........................................................................ 250 7.3.2 Answering the Research Questions ........................................................ 251 7.3.3 Novelty ofThis Research ...................................................................... 253 7.3.4 Summary and Discussion of Key KS Issues .......................................... 253 7.3.5 Guidelines ............................................................................................. 2 61 7.4 Further Work ........................................................................................... .... 262 Appendix A. Templates .. ........................................................................... . 265 A.1 Business Area Identification Table ........................................ ................... ... 265 A.2 Business Process Selection Table ..................... .. ...................................... ... 266 A.3 Business Process Activities Identification Table ....................................... ... 267 A.4 Knowledge Stake holder Map ......................... .......................................... ... 268 A.5 Sharing Channels Audit Table .................................................................... . 269 A.6 Knowledge Flow Network Table ........... .. ........................................... ... .... .. 270 A.7 Knowledge Sharing Analysis Grid ................................... ......................... .. 271 - Vlll- A.8 Fill-Gap Analysis Table ···················· ···················· ···················· ·················· 279 Appendix B. Definition of Terms ··················· ··················· ··················· ······ 280 B.1 Knowledge Property ........ ............................... ... ................................. .. .... ... 280 · B.2 Sharing Channels ... .. . .. .. .. .. .. .. ... . .. .. .. .. .... . .. .. .. .. .. 280 B.3 Organisational Infrastructure ........................................ .. . .................... .................... .................... ........... 281 B.4 Human Factors ···················· ···················:···················································· 282 B.5 Technology Provision .................... .................... .................... .................... . 282 References ............... . ····················· ····················· ····················· ···················· 285 . -IX- NJ (BLOCK List of Tables Table 3-1 Categorisation ofknowledge assets .......................................................... 79 Table 3-2 Risk versus competence view on KS ........................................................ 92 Table 3-3 Knowledge demand and supply ..................................................... .......... 93 Table 3-4 Operational risk management activities .................................................. 105 Table 3-5 Relationship between the type ofknowledge and media richness ........... 111 Table 4-1 Procedure and deliverables of the KSMM ....................... .... ........... ........ 117 Table 5-1 Business area identification table ............................. .. ............... ..... ....... . 159 Table 5-2 Business process activities identification table ....................................... 164 Table 5-3 Knowledge stakeholder map ..... ... .................. ................... .. ................... 169 Table 5-4 Sharing channels audit table ................................................................... 174 Table 5-5 Knowledge flow network table ........................... .................................. . 175 Table 5-6 Fill-gap analysis table .............. .... ..... .............. .. ............................. ........ 194 Table 5-7 Findings ofthe PowerSys case study ...................................................... 197 Table 6-1 Business area identification table ........................................................... 208 Table 6-2 Business process selection table ...................... ...... .......... ....... ................ 210 Table 6-3 Business process activities identification table ......... ................... ........... 213 Table 6-4 Knowledge stakeholder map .................................................. ........ ........ 216 Table 6-5 Sharing channels audit table ........... .. ............................. .. ....................... 221 Table 6-6 Knowledge flow network table ...... ........................................................ 222 Table 6-7 Fill-gap analysis table .. .......................................................................... 239 Table 6-8 Findings ofthe PrintCo case study .......................... ..... ... ....................... 241 Table 7-1 Findings ofthe two case studies .... ........... ................................ ....... ...... . 243 Table 7-2 Recommendations made to PowerSys and PrintCo ................................ 244 Table 7-3 Lessons learnt about the KSMF and the KSMM .......................... ........ .. 245 Table 7-4 Cross-reference between key issues in §2.5 and lessons learnt ...... ......... 253 -x- List of Figures Figure 1-1 Thesis outline ......................................................................................... 18 Figure 2-1 Four areas ofknowledge research ........................................................... 29 Figure 2-2 Pyramid ofvalue creation ....................................................................... 38 Figure 2-3 Organisational forms .............................................................................. 56 Figure 3-1 Units ofknowledge ......... .. ............. .......... .......... ... ...................... ..... ...... 74 Figure 3-2 Relationship between knowledge and time ............................................. 81 Figure 3-3 Knowledge transfer cost and the knowledge development lifecycle ........ 83 Figure 3-4 The three aspects ofKS .......................................................................... 83 Figure 3-5 The KSMF ........................................... .................................................. 85 Figure 3-6 Knowledge stakeholders' actions and their effects .................................. 85 Figure 3-7 Value ofKS ............................................................................................ 91 Figure 3-8 Relationship between KS management and risk management ............... 100 Figure 3-9 The role ofthe KSPM ........................................................................... 107 Figure 3-10 Five ~tages ofthe KSPM .................................................................... 108 Figure 3-11 KS factors ............................ ................... ........................................... 110 Figure 3-12 KS and its results ........................................................... ..................... 115 Figure 4-1 Diagrammatic onventions for the KS network map ....... ...................... 136 Figure 4-2 The five stages of the KSPM ................................................................ 138 Figure 4-3 The four KS strategies .................................... .. ........... ......................... 141 Figure 4-4 Renaming the KS analysis grids' headings .......................................... .. 142 Figure 5-1 Availability of intelligence and decision making ................................... 158 Figure 5-2 Organisational structure ........................................................................ 161 Figure 5-3 Knowledge transfer paths ................. ... ..... ................. .... ....................... 162 Figure 5-4 Business process model.. .................................... ........ ..................... ..... 165 Figure 5-5 KS network .......................................................................................... 176 Figure 5-6 Mapping business process model onto the KSPM ............ .................. ... 176 - Xl- Ni (BLOCK ·················································· 186 Figure 5-7 KS score ............................................ . Figure 5-8 KS score -by factor ............................................................................. 189 193 Figure 5-9 KS score- detailed .............................................................................. . . . 1 t t ········· ···························· 204 F" ure 6-1 Orgamsatlona s rue ure ... · · · · · · · · · · · · · · · ·· · · · · · · · · · · ·· · · · Ig 213 Figure 6-2 Knowledge transfer paths··········································· ····· ····~··············· · 214 F. ure 6-3 Business process model ....................................................................... . ~ m Figure 6-4 KS network ......................................................................................... . . M · b m· ess process model onto the KSPM · · · · · · ·· · · · ··· ··· · · · · · · · · · · · · · · · · 223 F1gure 6-5 appmg us . ······························································· 233 F1gure 6-6 KS score ...... ......................... . b ~ t ································ 235 Figure 6-7 KS score - y 1ac or·················· ············· ··········· ... d t "1 d ··········································· 238 Figure 6-8 KS score - e a1 e . · ··· · · · · · · ···· ·· · · · ··· · .... · · · · · ·· · - Xll- 1. Introduction "In order to generate extraordinary value for shareholders, a company has to learn better than its competitors and apply that knowledge throughout its businesses faster and more widely than they do ". Sir John Browne, Chief Executive of BP "Knowledge has become the key economic resource and the dominant- and perhaps even the only- source of comparative advantage ". Peter Drucker, 1995 The increase in productivity in general, and that of knowledge workers in particular, holds the key to sustainable economic development and wealth generation for nations (Mathews, 1996; World-Bank, 1999). This is true for developing countries and even more so for developed and matured economies (Drucker, 1991). Globalisation and the establishment of free trade zones have gradually dismantled national boundaries and market entry barriers (Fraser & Oppenheim, 1997). Corporations are facing increasingly stiff local and global competition. World-class efficiency and quality have become the minimum requirements for entering, let alone succeeding, in an increasingly competitive global market. In the midst of all these changes, knowledge and intellectual capability have become a company's dominant economic resource and the fundamental source of its competitive advantage (Drucker, 1995; Drucker, 1998). What is less widely known is the fact that epistemological philosophers have been trying to understand he nature of knowledge, of knowing and of the knower. For generations masters of various crafts had been passing down secrets of their trades to apprentices. However, not until the mid-1990s that it suddenly dawned on researchers and practitioners alike that a company's capability to make more effective use of its critical resource - knowledge - is vital to its competitiveness and performance. Modern companies depend upon two fundamental intellectual capabilities to derive competitive advantage from their knowledge resources: knowledge creation and knowledge sharing (Kogut & Zander, 1992). Having realised the importance of knowledge resources, a substantial amount of research has been conducted by academics (Blackler, 1995; Conner .& Prahalad, 1996; Fransman, 1994; Kogut & CAM8.1i0Gt: UNIVERSITY UBHARY , Ni (BLOCK Page 2 Chapter 1 Introduction Zander, 1993; Murray & Myers, 1999; Nonaka & Takeuchi, 1995; Spender, 1996) and practitioners (Day & Wendler, 1998; De Long, 1997; KPMG, 1999; KPMG, 1998c; KPMG, 2000; Lotus, 1998; Waite&Company, 1997) to investigate the creation (Brown & Duguid, 1991; Cohen & Levinthal, 1990; Leonard & Sensiper, 1998; Nemeth, 1997; Nonaka & Konno, 1998; Nonaka & Takeuchi, 1994; Nonaka, 1991) and sharing (Arrow, 1969; DeCarolis & Deeds, 1999; Dyer & Nobeoka, 2000; Kogut & Zander, 1992; Szulanski, 1996; Teece, 1977) ofknowledge in organisations. While research in organisational knowledge creation emphasises creativity, innovation (Cohen & Levinthal, 1989; Leonard-Barton, 1995; Stata, 1989) and new product development (Spivey et al., 1997; Sutton & Hargadon, 1996), knowledge sharing research focuses on organisational learning (Argyris, 1999; Levitt & March, 1988; March, 1991; Senge, 1990; Senge, 1992), transfer impediments (Hansen, 1999; M t al 1996· O'Dell & Grayson, 1998; Szulanski, 1996; Teece, 1977), owery e ., , communication channels (Daft et al., 1987; Granovetter, 1973; Lengel & Daft, 1988; Powell, 1998) and the use of technology to augment sharing capabilities (Attewell, 1992; Borghoff & Pareschi, 1997; Lipnack & Stamps, 1997; Marwick, 2001; . McDermott, 1999; Sviokla, 1996; Ruggles, 1997). Knowledge creation develops new problem-solving capabilities that, by generating the .technological know-how needed to design the next generation of products, increase a company's likelihood of attaining its goals. Knowledge creation is important to a company because it generates opportunities for future growth. But having a knowledge creation capability alone is not enough. Newly created intellectual capabilities that lay dormant and are left unused do not contribute to a company's economic performance. It is not uncommon for companies that have high knowledge creation capability to generate myriad innovative technologies that remain hidden away in their research laboratories. Furthermore, the relationship between a company's knowledge creation capability and its profitability can be uncertain (Arrow, 1969; Kim & Mauborgne, 1999; Markides, 1998; Nemeth, 1997). Knowledge sharing, on the other hand, is concerned with knowledge flow and knowledge utilisation. When knowledge flows smoothly in a company the organisational actors will be connected in such a way that critical knowledge is being transferred to those who require it using the most effective channels. Knowledge Chapter 1 Introduction Page 3 utilisation facilitates the transformation of innovative ideas into products in the marketplace; by spreading best-in-class practices from one business unit to other parts of the company, it increases the overall performance of the company. 1.1 Managing Knowledge Sharing Much confusion in knowledge sharing (KS) literature has been caused by the interchangeable use of several related terms. It is useful to distinguish terms such as "knowledge transfer", "knowledge flow" and "knowledge sharing" from one another. Knowledge transfer is a dyadic exchange between a provider and a seeker where knowledge held by the provider is (partially) replicated by the seeker (Szulanski, 1996). Knowledge transfer is intentionally directional with set routes and pre-defmed recipients. Knowledge sharing is more than a dyadic exchange or provision of access to valuable knowledge. In KS, the provider imparts his knowledge and experience to the seeker. In addition to communication of the content, KS involves a learning process that enables the seeker to understand and interpret the received knowledge properly. Thus effective KS co~otes internalisation, that the seeker can apply and use the received knowledge to effect actions. KS is a performance-oriented applicative approach, where the seeker's intellectual capability will be enhanced. Knowledge flow is used describe the collective state ofknowledge movement in an organisation where knowledge resources and intellectual capabilities are being mobilised to attain organisational goals. Knowledge flow may be described as either as stagnant or flowing to indicate the effectiveness of an organisation's use of its knowledge. Another major confusion is due to the advancement of the argument that knowledge cannot be managed (McDermott, 1999; Takeuchi & Nonaka, 2000). This argument is based on two points: the philosophy of knowledge and the nature of knowledge creation activities. Traditionally, Western philosophy champions the separation of knowledge from the knower in order to detach 'objective knowledge' from 'the NJ (BLOCK Page 4 chapter 1 Introduction subjective self (ibid.). Such a point of view regards knowledge as packets of objective knowledge. Once knowledge is externalised it can be separated from its human bearer, forming artefacts of representations that are machine process-able as computational objects. By contrast, Japanese thinkers have traditionally viewed knowledge as a bodily experience. Since bodily experience is an embodiment of knowledge, knowledge and its human knower are inseparable (ibid.). Since the two are inseparable, the Japanese view does not attempt to 'purify' knowledge from the 'subjectivity' of the knower. It regards knowledge and the knower as a whole - knowledge can only be created, received, interpreted and analysed through human bodily experience. The Japanese idea that knowledge is inseparable from its knower leads to the conclusion that knowledge per se cannot be managed (ibid.). It was postulated by Nonaka that an individual's knowledge could not be managed without managing his bodily experience, and that knowledge of an organisation could not be managed without changing its path of historical development. However, from a Western perspective, managing knowledge is to manage the entities of externalised knowledge representations in computational machines. Failure to distinguish knowledge from activities that create or transfer knowledge causes this 'unmanageability' confusion. Dependent on which school of thought is adopted, knowledge per se may or may not be manageable. But the organisational actor's activities associated with knowledge creation and KS are always manageable. The third cause of confusion is the failure to recognise the dichotomy between knowledge creation and KS activities. Knowledge creation is about innovation and crt?ativity, but creative and inventive activities can be resistant to management co- ordination and control (Nemeth, 1997). Knowledge may be acquired as a result of deliberate seeking, but it is equally likely to come about by chance, without any dedicated allocation of resources; serendipity plays a major role in research and in scientific discovery (Arrow, 1969). The inconsistent correlation between knowledge creation outcome and management co-ordination leads organisational advocates to call for less management control and more leeway for creative knowledge workers (ibid.). However, it is different forKS activities. KS requires trust, and reso.urces must be allocated for I?eople to expend time and effort in building relationships and mutual trust. A KS organisational culture must be established, with management leadership and guidance. Management cannot leave KS to its own course. Chapter 1 Introduction Page 5 1.2 The Motivation For This Research It is one thing for a company with superior knowledge creation capability to know more than its competitprs, but it is quite another to be able to utilise that knowledge and translate it into competitive advantages in the marketplace. The main problem of modern knowledge-intensive companies is not that they suffer knowledge drought, but they do not have an organised system to apply the knowledge they possess in a co- ordinated and effective manner (Ruggles, 1998). It is not uncommon for companies to have islands of knowledge scattered around different parts of the organisation whilst this knowledge remains trapped in local business units risking under-leverage and obsolescence (Prusak, 1997). Evidence indicated that the variation in intra-firm KS was substantial (10:1 to 2:1 difference), even when confidentiality or legal obstacles were minimised in internal knowledge transfer between peer organisational units (Szulanski, 1996). General Motors was reported to have great difficulty in transferring manufacturing practices between divisions and IBM h d 1· "t d · , a 1m1 e success m transferring re-engineered logistics and hardware design processes between business units (ibid.). Consistent evidence also showed that 80% of companies were ineffective in sharing knowledge or exploiting the full potential of their intellectual capabilities (KPMG, 1998b;,KPMG, 2000). When they coined the famous phrase "if only we knew what we know", both Lew Platt, the former chairman of Hewlett-Packard, and Jerry Junkins, the late chairman and CEO of Texas Instruments, recognised the fact that t~e vast potential of their organisations, with their pockets of excellent practices, remamed untapped (O'Dell & Grayson, 1998). If only a company "knows what it knows", can it derive 1 value from its intellectual assets (Davenport & Prusak, 1998). No less than 90% ofthe 431 US and European corporations surveyed agreed it was important to deliberately manage the way existing knowledge was being leveraged "thin · · · Wl orgamsatlons m order to improve performance (Ruggles, 1998). This high level of consensus was substantiated when 85% of senior European corporate executives in another survey, claimed that organisations would be far more productive if everyone who worked in a company shared their expertise and could capitalise on each other's knowledge to increase productivity, save costs and improve customer satisfaction (Murray & Myers, 1999). N1 (BLOCK Page 6 Chapter l Introduction When an organisation does not share knowledge effectively, its productivity suffers (Lotus, 1998). Organisations risk duplication of effort, repeatedly expending resources to re-invent the wheel. Common symptoms as a result of KS failure include inability to learn from past experience, or incapacity to leverage best practices to reuse expertise gained in one business unit in other parts of the organisation. When a company does not share its knowledge, gaps develop between what is known within the company and what is put to use. This phenomenon, where substantial difficulty is associated with intra-firm KS among internal business units, is described by Szulanski (1996) as 'stickiness'. This 'stickiness' constrains an organisation's ability to apply its most critical resource to establish a competitive edge in the marketplace and derive higher economic return. Previous attempts have been made by companies to mitigate KS stickiness, with huge investments in information technology that were meant to improve knowledge flow (Covin & Stivers, 1997; Davenport et al., 1998; KPMG, 1998a; KPMG, 1998b; KPMG, 2000; Lotus, 1998; Murray & Myers, 1999; Ruggles, 1998). Many of the companies regard KS improvement as simply a matter of successfully implementing Intranet- or Web-based portal systems. But the results showed that the majority of systems implemented were either ignored or under- utilised. Ironically, knowledge workers' productivity actually fell whereas the technology was meant to increase it (McDermott & O'Dell, 2000; McDermott, 1999). Though making effective use of telecommunication infrastructure and IT systems is one necessary condition forKS to succeed, the availability oftechnology per se is an insufficient condition. The bigger question of how KS can actually be improved in the broader sense needs to be addressed. Why do organisations continue to suffer from KS 'stickiness'? Why do organisations still not know what they know when huge resources have been invested? How can companies mitigate the problem? These are the questions this research sets out to address. On the theoretical side, it is useful to bridge the gulf between KS management theories and industrial practices. Many knowledge management (KM) projects undertaken in industry have hitherto concentrated mainly on the technological aspect (Davenport et al., 1998). A majo~ity ofthe initiatives were driven by IT departments which failed to address the more difficult human and cultural aspects of the problem . . This research bridges this gap between practice and theory by providing a theoretically sound holistic metl;lodology for practitioners. A methodology is a Chapter l Introduction Page 7 comprehensive, step-by-step approach that guides the development of a business system or process, detailing what the steps have to be taken and how problems may be solved (Nissen et al., 2000). Hence, it is a useful practical conceptual tool to help practitioners put their KS strategies into practice and realise the promised benefits of KS management. Secondly, the holistic approach adopted suits the multi-faceted nature of the KS stickiness problem. Hitherto, there has been a deluge of discrete theories examining various aspects of organisation behaviours relevant to KS management. This research builds on this established foundation to integrate these diverse yet inter-related theories and strengthen the link between them. 1.3 The Scope and Domain of the Case Studies The KSMM was applied in two comprehensive case studies in collaboration with industrial partners in the manufacturing engineering sector. The first case study applied the KSMM to analyse the KS practice of a power system provider's (PowerSys 1) business intelligence community. Studies have demonstrated that a company's profitability is closely linked to the level of satisfaction with its business intelligence programs (Groom & David, 2001) and those companies that had well-organised programs to monitor their competitors' activities performed better in the marketplace than those without such programs (Subramanian & IsHak, 1998). A business intelligence program contributes valuable input to strategic and tactical decision-making in the areas of formulating corporate strategy, long-term planning, and marketing or busine development by scanning external environments for new market entrants, competitor manoeuvres, novel technologies, new routes to customers, other market opportunities and threats. The main challenge senior executives face with business intelligence is not their companies' inability to gather intelligence, since 70% - 90% of their intelligence required is already held by employees somewhere within the organisation (Fuld, 1991; Groom & David, 2001 ), but to be able to disseminate crucial competitor and customer knowledge to key decision-makers (Groom & David, 2001; Metayer, 1999; Prescott & Smith, 1989) so that actions can be taken in time to pre-empt imminent threats and exploit market opportunities. Ofthe 1 Names are disguised in order to protect the identities of our industrial partners. NJ (BLOCK Chapter 1 Introduction Page 8 large corporations that have an intelligence program in place, 50% of them lack a formal process to share intelligence (Groom & David, 2001). Business intelligence is by nature fuzzy, incomplete, inaccurate and full of confusing and contradictory signals. Although intelligence may be gathered on a regular basis, more often than not it may be demanded on an ad hoc and unpredictable basis, in response to unanticipated changes in external conditions. But when it is required, relevant intelligence must reach decision-makers timely before narrow windows of opportunities disappear. This need to provide timely intelligence is complicated further by the fact that most intelligence flow involves inter-business unit KS that cuts across organisational boundaries. An effective business intelligence community must be able to filter relevant documented and anecdotal intelligence and yet disseminate it throughout the organisation in a timely and reliably fashion. I~ must deal with a wide spectrum of subject matters: customers, competitors, suppliers, markets and technologies. Any failure on the part of the community to share intelligence effectively could pose a real risk to marketing and strategic planning departments. In the case study the KSMM provided PowerSys managers with a structured and systematic approach to analyse the current KS practice of its business intelligence community so that specific improvement could be recommended. The second case study applied the KSMM to analyse the problem of sharing technical product knowledge and implementation experience between the engineering and sales units of a specialist printing company, PrintCo. PrintCo's hi-tech industrial printing equipment is a key component in their clients' production lines. The printing equipment has to inter-operate seamlessly with the myriad permutations of hardware and software configurations encountered at clients' factories. Compatibility with different k~ds of equipment is a prerequisite. With intense competition, it is critical for PrintCo to be able to deliver printing solutions that worked flawlessly when their products are ~st installed in clients' premises. This 'right-first-time' approach was crucial in keeping to the minimum the costs and time involved in product sales and delivery, as well as ensuring customer satisfaction and thus the company's continued growth and succes~. The case study investigated ways of sharing lessons learnt during after-sales implementation in order to integrate that knowledge back into the product design and sales operations so that implementation experience gained could be Chapter 1 Introduction Page 9 leveraged to support the process of recommending and delivering correct workable printing solutions to customers more fully. 1.4 Research Objectives and Contributions In view of the pressing need for effective KS management tools, the objectives of this research are: • To identify a common set of KS practices observable in modern knowledge- intensive companies; to assess critically the observed practices in order to draw out key strengths and weaknesses so that a generic template can be formed to characterise the criteria of success. • • • • To clarify the relationship between KS, operational risk, intellectual capabilities and competitive advantages. The investigation should examine the means by which the crucial linkage between KS and business value might be conceptualised. To develop a practical KS management methodology as a conceptual 'how-to' tool to support managers' decision-making to improve organisational KS practice. The tool should be easy to learn and should, as far as possible, make use of concepts that are familiar to practitioners. To include a systematic procedure within the methodology to identify and compare an organisation's current state of KS. Managers should be able to compare the KS performance of different units at a glance and juxtaposition the strengths and weaknes es oftheir KS practices. To devise a structured method within the methodology to help reveal the gap between existing and targeted KS practices so that a strategy may be formulated for managers to take forward their business operations. The novelties of this research are twofold. Firstly, the holistic approach adopted in the development of the .KSMF applies hitherto diverse yet inter-related sets of theories of organisational learning and cognition, communication and media selection, culture and motivation, organisational structure, information management technology and knowledge networks in a cohesive and integrated way. The KSMF consists of three components: the business context, the KS process model and the four KS strategies. NJ (BLOCK Page 10 Chapter 1 Introduction The business context establishes knowledge-based competitive advantage as the conceptual foundation for justifying the value of a KS initiative. It grounds knowledge-based competitive advantage on mitigated operational risk and enhanced . . . ; . core knowledge-based competence. The KS process model consists of the five progressive stages of adoption, adaptation, absorption, integration and dissemination, which are supported by the four strategies concentrating on sharing channels, the organisational infrastructure, human factors and the provision of technology. The process model describes an idealised KS process while the strategies denote the four approaches managers can adopt. With each strategy, there is a group of key factors that managers can leverage to improve a company's KS practice. Secondly, the KSMM establishes the crucial linkage between strategic and operational level decision-making by examining an organisation's current KS practice from a business process perspective. This novel methodology provides a structured way of identifying and closing gaps in organisational KS practice so that managers can have a gu,ided tool in putting their KS strategies into practice. Knowledge research in general has moved from investigating questions of 'what' to questions of 'why' and 'how'. This research contributes to the next phase of KM development by providing a practical 'how-to' guide that practitioners can use to improve KS practice and effect change.s. 1.5 Research Questions and Assumptions This research addresses specifically the following questions. • What 1s the conceptual relationship between operational risk and KS management? This research clarifies the relationship by arguing that organisations may appreciate the value of their knowledge resources and intellectual assets more by linking them to the operational risk mitigated and competitive advantages accrued as a result of effective knowledge resources mobilisation. • What are the different KS strategies observable in modem knowledge-intensive organisations? What are the key enablers and blockers to effective KS? • How does an organisation assess its current KS practice? Knowledge activities in general, and KS in particular, are often described as omnipresent as knowledge work is so ubiquitous and KS is manifested in so many different ways. Managers often fmd themselves distracted and lose sight of their primary objectives when Chapter 1 Introduction Page If • they do not know where a KS project should start and what to focus on. Many examples of failed KS initiatives are due to the inappropriate selection of business areas (Davenport & Prusak, 1998) and ignorance of the wider impact a KS program will have on the organisation (McDermott & O'Dell, 2000). This research develops a methodology to focus managers' attention on the most critical business processes in support of their effort to evaluate their organisation's current KS practice. How does an organisation 1mprove its current KS practice? Gaps are often discovered between an organisation's current practice and its strategic objectives. In addition to supporting an organisation's self-assessment of its KS practice, the methodology also guides decision making in implementing KS improvement initiative. In effect, the methodology helps to identify effective ways to harness, sustain and enhance intellectual capabilities. Organisations may increase performance of their knowledge-intensive functions and extract more value fiom their intellectual resources. It is assumed that target users ofthe KSMM (middle managers) are sufficiently well informed about their businesses, though they may be less well versed in KM. The KSMM does not require users having prior experience in any knowledge-related program of study, even though in reality many are already familiar with KM to a certain extent and therefore, the concepts may not be completely novel to them. There has been lively epistemological debate about the nature of knowledge, what knowledge is and is no, in particular, how knowledge differs from information. Hitherto there has been no consensus on a generally accepted definition that clearly distinguishes the two, causing enormous confusion. However, it is widely accepted that understanding and interpretation of knowledge requires tacit knowing, and hence, tacit knowledge. Since tacit knowledge is embedded in the mind and embodied with the experience of the knowledge worker, it is assumed that knowledge interpretation is a human act. While intellectual capability has been shown to relate positively to the productivity of a knowledge-intensive company, industry and .economy (DeCarolis & Deeds, 1999; Drucker, 1991; Dyer & Nobeoka, 2000), the relationship between the long-term N, (BLOCK Page 12 Ch apter l Introduction market valuation of these knowledge-intensive companies and the quantity of the knowledge they possess as suggested by some (Edvinsson & Malone, 1998; Leonard- Barton, 1995; Stewart, 1997) is less clear. In fact, there is counter evidence suggesting that traditional factors (e.g. earnings, inflation, or interest rates) are the dominant determinants of capital market valuation, which in the long run follow closely the predictable economic performance (Koller & Williams, 2001). One ofthe reasons that break the chain of relationship between intellectual capabilities, productivity improvement, profitability and market valuation in the long-term is the introduction of extraneous variables (e.g. market positioning, pricing, demand-supply elasticity, interest rates, or industry performance, etc.), which are outside the scope of this research. Thus, in order to limit the number of variables, improvement in performance as a result of increase in intellectual capability is taken as improvement in productivity (as opposed to profitability or earnings), since this relationship has been well established. 1.6 The Research Methodology The research methodology can be described along four dimensions: (1) the type of evidence used in the inquiry, (2) the research strategy employed, (3) the chosen data collection method (Eisenhardt, 1989; Yin, 1981) and (4) the philosophical perspective (Myers, 1997). Each aspect is discussed below with justifications for the rationale behind choosing one approach over others. • The type of evidence. This research used qualitative evidence to examine KS practices observed in industrial partners. Qualitative data enables the researcher to understand and explain the observed phenomena (Myers, 1997) from cognitive, cultural and socio-econornical perspectives. Due to the inseparability between knowledge and knower, 'hard' quantitative analysis and statistical data has its limitations in providing insights (Bell, 1987) into how knowledge may be processed by cognitive functions in human minds, and how organisational culture, professional praxis and social milieu may influence people's willingness to engage in KS. The limitations of a 'hard' quantitative approach in organisational studies have also been noted in the related area of organisational learning (Argyris & Schon, 1996). Furthermore, for the 'measurability difficulty' (Fahey & Prusak, Chapter 1 Introduction Page 13 1998) and the 'valuation problem' (Miles et al., 1998), that due to the intangible nature of knowledge, quantification is still facing great difficulty and direct measurement of intellectual asset is still open to much debate (Teece, 1998). Much work is required before these difficulties may be resolved. • The philosophical perspective. This concerns the underlying epistemology and assumptions about what constitutes 'valid' research, and how any understanding of reality may be obtained (Myers, 1997). The philosophical perspective adopted influences one's research design and the selection of appropriate research methods. This research adopted an interpretive approach, which takes the stand that access to reality is through social constructions of language and shared meanings (ibid.). To understand KS one must first understand, specific to a given context, the meaning of knowledge to an individual, and the meaning of knowledge shared among people in social constructs such as teams and communities and organisational constructs such as workgroups and business units. Hermeneutics (the study of the methodological principles of interpretation) provides the philosophical foundation to understand KS phenomenon through the shared meanings of knowledge that people assign to and derive from various social interactions. This research consists of a descriptive and a prescriptive component, following the logic of"frrst observe and describe 'as it is', then prescribe design 'as it ought to be'" (p. 61) (Keen Morton, 1978). Describing an organisation's current KS practice 'as it is' grounds the results of the research empirically, while prescriptions for organisational designs 'as they ought to be' provide the basis for making theoretically sound recommendations for improvement. Both components are informed by and consistent with the interpretive approach. The positivist approach, characterised by the assumption that reality is objectively given and can be understood by quantifiable properties independent of the researcher (Myers, 1997), is rendered inappropriate due to the 'measurability difficulty' and 'valuation problem' discussed above. For the critical approach, characterised by deliberate dialectic to highlight the oppositions and contradictions in order to reveal the fallacious status quo . and the need for change (ibid.), is rendered N. (BLOCK Page 14 Chapter 1 Introduction inappropriate given the approach is confrontational that can potentially cause too much conflict. • The research strategy. This refers to the "strategy of inquiry which moves from the underlying philosophical assumptions to research design and data collection" (Myers, 1997). This research employed case study strategy to investigate in-depth the KS practices of the two companies. Case study as a research strategy is particularly suitable for investigating empirically a "contemporary phenomenon within its real-life context" (ibid.) especially when "boundaries between phenomenon and context are not clearly evident" (p.59) (Yin, 1981 ). While other experiment-based strategies may deliberately separate a phenomenon from its context into control variables, a case study is particularly suitable for KS research, since knowledge is situated and context sensitive. Proper interpretation of received knowledge relies upon effective communication of the context. Furthermore, knowledge research in general has moved from questions of 'what' to questions of 'why' and 'how'. A deeper understanding of knowledge activities is required in order to develop a prescriptive methodological procedure as ·a·'how- to' guide to improve KS in organisations. Case study research enables the researcher not only to identify the relationship but also explain the factors involved (Eisenhardt, 1989). Although both case studies involved close collaboration between the researcher and practitioners (Argyris & Schon, 1996), and the prescriptive results of both cases contributed to resolving the informants' practical concerns and immediate problematic situation (Myers, 1997), it should be emphasised that the research strategy employed could not be considered action research because it was non- participative and no change in actions was pursued on the part of the practitioners. Furthermore, although many knowledge-related studies employed ethnography to understand the questions of 'how' and 'why' (for e.g., the study of face-to-face brainstorming meetings to generate new knowledge (Sutton & Hargadon, 1996), the shift of power to knowledge holder (Zuboff, 1988), or the investigation of knowledge work processes (Davenport et al., 1996)), the ethnographic strategy was not chosen due to the pragmatic consideration of the significant amount of time which would be required to immerse oneself in the case organisation (Bell, Chapter 1 Introduction Page 15 • 1987; Myers, 1997). But more importantly, a purely descriptive narrative of the phenomenon, often the result of ethnographic participant observation, would not satisfy one of the research objectives: that of producing prescriptive recommendations for KS improvement. The data collection method A well-structured and clearly-defmed research framework not only makes research reports easier to read and write, it also systematises data collection and enhances the reliability of 'within-case' analysis by focusing attention on the research questions (Yin, 1981). Based on literature reviews, the Knowledge Sharing Management Framework (KSMF) was first developed to guide the design ofthe rest of the research as well as the selection of research instruments. The analysis was made at the organisational unit level, i.e. intra-firm KS among formal business units or informal workgroups. A total of fifteen and five interviews were conducted with PowerSys and PrintCo between 2000 and 2001 , involving a total of seventeen and six informants respectively. The descriptive component of the research employed semi-structured interviews with senior executives and middle managers as well as content analysing internal reports and email correspondence to gather primary data. In order to reduce interview bias (Cochrane, 1973; Williams, 1964), documentary evidence was cross-referenced with terview data, providing a triangulation of the two research instruments to further enhance the reliability of 'within-case' analysis (Eisenhardt, 1989). Research results were then presented to informants to verify that the fmdings were realistic and objective accounts, reflecting the actual KS practice in place. Assessment scores were then calculated, based on practitioners' input summarising the strengths and weaknesses of their current KS practices. The prescriptive component of the research involved discussions and critical assessment of case companies' current practices in order to identify effective ways of improving KS. Sets of guidelines were drawn up and recommendations were made with regard to the pra?tical steps that informants could implement to take forward their business operations. The KSMM was evaluated based on the feedback from informants. NJ (BLOCK Chapter 1 Introduction Page 16 The principle of theoretical sampling (Eisenhardt, 1989) was used instead of statistical random sampling, i.e. cases were chosen based on theoretical needs to examine the polar (extreme) types of phenomena, in order to· achieve better generalisation, case replication and better conceptual understanding (Yin, 1994). The business intelligence community of the PowerSys case involved mostly unstructured knowledge that comprised a substantial amount of judgement and opinion. PowerSys was mostly dependent on its analysts' human network to share intelligence with one another. The sharing of technical knowledge and implementation experience between the engineering and the sales units of the PrintCo case involved a more clearly defmed subject domain, with emphasis on accurate and reliable knowledge of the company's own products. PrintCo was mostly dependent on its telecommunication infrastructure to facilitate knowledge flow. Due to the limited number of samples, and in order to reduce the bias of specific idiosyncrasies found in the unique context of a single case study, fmdings from the two cases were compared to achieve 'cross-case' generalisability (Yin, 1981). Comparative case studies should aim to maintain a coherent 'chain of evidence' from data collection to within-case analysis to cross-case comparison to overall fmdings and conclusions (ibid.). This coherency may be preserved b'y maintaining within-case similarities and inter-case differences (Eisenhardt, 1989). Both case companies were selected from a population that indicated interests in KM and had various forms of KS practices already or about to be in place. Both case companies were hi-tech manufacturing engineering companies and leaders in their respective fields that thrived on their technological know-how and excelled at capitalising that know-how in R&D to produce innovative products to maintain their market leadership. The two however were different in size (one a large FTSE-1 00 corporation, the other a medium-size enterprise) and at different stages of development (one a well-established incumbent, the other a growing organisation). The juxtaposition of different company sizes, stages of development and types of knowledge activities enables the researcher to examine 'cross-case' patterns of KS among formal business units and informal workgroups. The comparative case study approach allows research results to be Chapter 1 Introduction Page 17 generally applicable for organisational KS m the manufacturing engineering sector. 1. 7 Thesis Outline Chapter 1 introduces the latest developments in KS management and discusses the motivation and business case for this research. This chapter sets forth the objectives, the scope of the program, and nature of the problem, followed by descriptions of the research method and the case studies domain. The problem domain discussion should serve to provide a clear scope for who should benefit from results of this research. Chapter 2 reviews KS management literature. This chapter brings us up-to-date with the latest concepts and theories relevant to KS management, argues why now is the pivotal moment to manage sharing in light of the wider changes happening in the business world, as well as being the precursor to introducing the terminology and fundamental concepts that serve to build the foundation for later discussion. Chapter 3 describes the Knowledge Sharing Management Framework (KSMF) as the theoretical -foundation for the development of the Knowledge Sharing Management Methodology (KSMM). In explaining the detailed components of the KSMF, this chapter delineates the relationship between KS and operational risk and the critical organisational factors contributing to the design of successful KS programs. This chapter is the platform that establishes a common frame of reference and explains what are the adopted framework and the problem-solving approach. Chapter 4 describes the KSMM in detail. This chapter consists of the 'how-to' guide to operationalise the KSMF discussed in the preceding chapter. The 'how-to' guide provides managers with a tool to actually go about managing operational risk employing a KS-based solution. Chapters 5 and 6 illustrate the KSMM by applying the methodology in two case studies with our industrial partners. The frrst case study in chapter 5 evaluates the effectiveness of PowerSys's KS practice in their business intelligence community in support of its corporate strategic planning unit. The second case study in chapter 6 ~ ' .... . ... {"~ (;''1 11 'i·U 1 1 ... I UN!VEHS!TY LIBRARY NJ (BLOCK Page 18 Chapter 1 Introduction examines the state of knowledge flow between PrintCo's sales and R&D business units in their effort to achieve right-frrst-tirne product implementation. These two ·case studies also allow rigorous testing of the methodology in a real-world situation. Chapter 7 concludes the thesis with a critical evaluation of the KSMM in the light of the feedback gathered in the two case studies. Key lessons learnt from this research are then discussed, followed by a set of generic management guidelines drawn from the experience of this research. Chapter 1 Introduction & Problem Domain (who-should) Chapter 2 Literature Review (why-now) Chapter 7 Conclusion & Discussion Figure 1-1 Thesis outline 2. Knowledge Management Review This chapter reviews KM literature. It brings us up-to-date with the latest concepts and theories relevant to KS management~ It describes the fundamental socio- economic changes that have brought about the knowledge revolution. In additional to introducing the terminology and fundamental concepts, this chapter argues why now is the pivotal moment to manage sharing in light of the wider changes happening in the business world. It is then followed by succinct descriptions of the four main thrusts of KM activities. They cover KM research from a theoretical and a practical point of view. The descriptions serve to outline the existing diverse state of KM theories. These inter- related theories are then consolidated to provide conceptualisations of knowledge and knowledge transfer processes. In particular, it is posited that ~owledge may be conceptualised as an object or as an organisational process, and knowledge transfer process as a transaction in an exchange market between self-interest actors or as an. altruistic act of helping fellow members in a community out of shared interests, common objectives, goodwill and selfless generosity. 2.1 Introduction The idea of managing knowledge is not entirely new (Prusak, 2001). For centuries, masters of their trades ave passed down secret knowledge to their apprentices (Hansen et al., 1999). But it was not until the 1990s that a phenomenal increase in research into knowledge management (KM) took place (Ruggles, 1997a). As a practice, KM has barely started to gain the attention of senior managers (KPMG, 1998; KPMG, 2000; Murray & Myers, 1999; Ruggles, 1998). Yet the knowledge companies possess is widely recognised as their key economic resource: the one which, in the 21st century, will prove more significant than traditional factors of . production such as capital, land or labour (Drucker, 1995; Drucker, 1998). The intellectual capability to exploit this knowledge to solve business problems is now perceived as companies' most valuable intangible asset in developing and sustaining their competitive edge (Senge, 1990; Stata, · 1989). Organisations ignoring the. implications of this knowledge revolution risk eclipse in the global marketplace. NJ (BLOCK Page 20 Chapter 2 Knowledge Management Review 2.2 The Knowledge Economy The transformation of economic activity from the production of physical goods by traditional industrial organisations to the offering of knowledge-intensive products and services by modern knowledge-based companies is well documented (Alvesson, 1993; Cohen, 1998; Ruggles, 1997a; Prusak, 1997). Unlike the situation in the traditional production economy, in the knowledge economy (Neef, 1998) knowledge is hailed as the singly most important factor of economic life, the primary raw material organisations buy, sell and work with (Stewart, 1997). It is widely recognised that the foundation for creating organisational wealth is a company's accumulated stock of knowledge coupled with the intellectual capability to exploit it (Sveiby, · 1997). Evidence ofthe arrival of the knowledge economy is not confmed to the often cited activities of the software, consultancy, pharmaceutical, health care, scientific research or professional services sectors, but can be found in the operations of almost all companies of various ages and sizes. Whether they operate in the manufacturing or the service sector, companies make use of knowledge as their fundamental resource (Drucker, 1998). The following section describes major changes that have taken place in the nature of work and in socio-economic conditions, propelling executives to address the burning issue of how best to manage organisational knowledge. 2.2.1 Socio-Economic Changes Products are increasingly embedded with knowledge The knowledge component of today's products accounts for an increasingly high proportion of their cost (Ruggles, 1997a). On the whole, products are increasingly complex and capable; more and more of them are equipped with 'smart' capabilities to self-diagnose, to interact in a human-friendly manner and to adapt to a particular user's preferences. This steady increase in product sophistication is paralleled by the continuing rise in the proportion ofR&D expenditure (an indication ofthe knowledge component) in the costs of goods sold (Prusak, 1997). Today's products not only embed a huge amount of the designers' knowledge, but companies often bundle products with support and after-market services that further increase the knowledge component of what is sold (ibid.). Company profitability depends increasingly upon how much better than its competitors it is in gathering and exploiting its knowledge of Chapter 2 Knowledge Management Review Page 21 customers, markets and technology. If we imagine activities which acquire and apply knowledge at one end of the economic production function and activities which produce physical outputs at the other, then a knowledge economy is characterised by the predominance of knowledge acquisition over physical production activities (Arrow, 1969). This shift in the emphasis in economic activities from the production and distribution of physical goods towards knowledge was observed as early as the sixties when an increase in the efficiency of utilising capital and labour resources could not account for a major proportion of the increase in the per capita income of developed countries (ibid.). While this gradual shift has been made more palpable with the continued rise of knowledge-intensive products and services, it is fundamentally different from innovations in previous generations where emphasis was on saving labour (through automation) or on saving capital (through economies of scale). Knowledge and intellectual capability determine the activities of this knowledge-based economy (Nonaka & Takeuchi, 1995; Takeuchi & Nonaka, 2000). The nature ofwork While products have increased in sophistication and in the amount of knowledge embodied, work has also become more knowledge intensive as organisations have become more aware of the value of the specialist knowledge possessed by their employees (Prusak, 1997; Myers, 1996). Compared to traditional administrative and production work that is characterised by standardised and mundane repetitions of daily routines, knowledge-intensive work is characterised by its variety, autonomy and lack of structure (Davenport et al., 1996). Knowledge work involves the cognitive activities of reasoning, analysing, thinking and problem-solving (Fahey & Prusak, 1998) and is thus largely elusive to automation (McDermott, 1999; Sviokla, 1996). Instead knowledge work is performed by workers who possess huge bodies of specialist knowledge- the intelligent and highly qualified professionals (Quinn et al., 1996b ). These knowledge workers trade in their expertises in acquiring, creating, packaging and applying knowledge (Alvesson, 1993) to their employing companies to help them develop new products, generate revenue and create shareholder value. Generally knowledge workers possess the knowledge of how best to perform a piece of work and understand intimately local conditions (Crozier, 1996; Zuboff, 1988), N (BLOCK Page 22 Chapter 2 Knowledge Management Review since they often are the ones who actually design and execute the work (Davenport & Stoddard, 1994). Since it is impractical for individual knowledge workers to become expert in more than a handful of specialised areas, it is common to fmd groups of knowledge workers working in teams, collaborating to address complex problems. Knowledge-intensive work is thus often communication-intensive (Blackler, 1995) and invo Ives the collective efforts of a number of experts. KS among knowledge workers then becomes an intrinsic part of knowledge-intensive work. However, the sharing of knowledge among knowledge workers carmot be forced; it can be achieved only through voluntary co-operation (Kim & Mauborgne, 1999). Even when mandated to share their knowledge, knowledge workers frequently withhold their ideas and full co- operation if trust and a positive working relationship are not established (Kim & Mauborgne, 1997). Knowledge workers tend to resist prescribed and highly rigid work practices, especially when the prescribed methods fly in the face of their professional praxes, even though the methods may benefit the organisation. An example of this is the ' not invented here' syndrome where engineers tend not to re-use other engineers' designs thinking re-use compromises design originality (Davenport et al. , 1996; Leverment et al., 1998). On the other hand, it is more likely that knowledge workers will adopt and take ownership of necessary changes if the ideas originate from themselves or if they are intellectually 'won over' by critical analyses of potential benefits (ibid.). Realising this fact, managers have generally empowered knowledge. workers (Bahrami, 1992; Nonaka & Konno, 1998; Senge, 1992; Tampoe, 1993) with more autonomy and freedom in designing their own patterns of work than their administrative or blue-collar counterparts (Sviolda, 1996). The style of management has shifted from traditional command-and-control to being more supportive. Rather than micro-managing the activities of production workers, managers of knowledge workers should sustain an environment conducive to irmovation. The corollary of this new facilitating role is that the balance of power has shifted, from the managers to the knowledge workers who hold knowledge crucial to the organisation, and which few or if anyone else in the organisation possess (Crozier, 1996; Zuboff, 1988). Chapter 2 Knowledge Management Review Page 23 From efficiency to flexibility and effectiveness Macroscopic changes including globalisation and the accelerated pace of change have drawn senior managers' attention to knowledge creation and use (Ruggles, 1997a; Prusak, 1997; Myers, 1996). Globalisation has brought about opportunities to leverage technical knowledge and business skills across national boundaries (Devan & Tewari, 2001) and has opened up new markets (Fraser & Oppenheim, 1997), but it has also exposed companies to fierce global competition. Deregulation has exposed many industries to global competition, with new market entrants bringing in novel knowledge and new working practices (Sviokla, 1996). Rapidly changing market conditions time compress product lifecycles, squeeze profit margins and increase business environment uncertainty. In the process of increasing market segmentation, mass production strategies that used to work well with standardised products must be changed to mass customisation strategies that address individual customers' requirements. With each new generation of technology, · accelerated technological advances transform the way business is conducted. But it also requires new know- how to exploit such technology and realise its potential benefits. While there is less time to learn new capabilities, companies need greater agility in responding to volatile markets and dynamic customer demands. And they require increasingly specialist knowledge to cater for niche markets. World-class efficiency and product quality that used to give companies a competitive edge.have now become the minimum standard required to enter the global market. To stave off the challenge posed by the dynamic global market, companies not only need process efficiency, cost discipline and quality management. They need the ability to irmovate, flexibility, adaptability and speed (Magretta, 1998). The implications of all these developments are that companies must learn and irmovate more rapidly and etiectively than their competition in order to render their opposition's knowledge base obsolete (the Schumpeterian "creative destruction") (Kim · & Mauborgne, 1999). Companies must be able to spot global market opportunities and become knowledgeable about customers, suppliers, technologies and markets more quickly than their competitors (Prusak, 1997). N (BLOCK Page 24 Chapter 2 Knowledge Management Review 2.2.2 Organisational Changes Having discussed broad changes in the business environment, we turn to changes applicable to individual organisations that drive KM efforts. The complexity of organisations Companies have increased in scale and in the scope of their activities (Ruggles, 1997a; Prusak, 1997). Modem corporations have become too complex for a few leaders at the top to learn and know on behalf of others in the organisation (Argyris & Schon, 1996). It is simply not feasible to depend upon a few individuals to "figure it all out" (Senge, 1990). While organisations adapt by increasing the division oflabour, such as by the establishment of functional departments and business divisions, this segregation and specialisation of work creates isolated pockets of knowledge. Expertise and experience gained by one organisational unit is used solely within that unit. Efforts are duplicated and mistakes made by one unit are repeated by another when past lessons remain unleamt. Furthermore, organisational structures evolve to keep abreast of companies' expansion (ibid.). It is common for companies to form alliance and partnership networks or to have remote units operating at geographically dispersed locations around the globe (Badaracco, 1996; Dyer & Nobeoka, 2000; Inkpen, 2000; Lang, 1997; Mowery et al., 1996; Quelin, 1997). Deliberate efforts to manage cross- organisational boundary knowledge flow are critical in the prevention of the under- utilisation of valuable know-how. The benefits of alliance networking cannot be realised if network members are not able to leverage each other's core intellectual capabilities. Clearly, kn~wledge transfer and inter-organisational unit communication are vital ingredients of success in the knowledge economy. Chapter 2 Knowledge Management Review Page 25 Re-engineering, wol'kforce mobility and knowledge attrition In the ·1980's many companies focused their attention on downsizing and cost cutting through zealous re-engineering and de-layering programs (Prahalad & Hamel, 1990). "Slack" in a worker's day was removed, employees (often the most experienced) were laid off to reduce headcounts (Ruggles, 1997a; Prusak, 1997) and layers of middle management were pruned in restructuring initiatives designed to shed corporate overhead and 'fat' (Hamel & Prahalad, 1994). But then companies discovered that the removal of "slack" working hours was detrimental to knowledge creation and sharing (K.PMG, 2000; Take,uchi & Nonaka, 2000). They found cutting headcount resulted .in 'work intensification' (Leverment et al., 1998) and put a strain on organisational knowledge activities (Prusak, 1997). Re-engineering had driven away the very knowledge workers who held the key asset for competitive advantage in the knowledge economy. New recruits could not learn from experienced staff about the company's products and history, nor socialise with them to adapt to the organisation's culture and unique way of getting things done (Ruggles, 1997a). The knowledge embedded in the company's routines and the models of reasoning used in decision- making were lost (Borghoff & Pareschi, 1997). Although there were valuable lessons ~ to be learnt about re-engineering (such as process rationalisation and integrated IT infrastructure), the dogmatic belief in short-term cost cutting (Leverment et al., 1998) at the expense of knowledge workers resulted in the 'corporate amnesia problem' (Blair et al., 1998). Companies ended up having to re-hire some of the knowledge workers they had shed, b t at a much higher cost, as they had often become highly paid consultants (Leonard & Sensiper, 1998). Furthermore, re-engineering left a harmful legacy (Prusak, 2001) of mistrust and disloyalty between a company and its knowledge workers. This exacerbated workforce mobility and knowledge attrition (ibid.). Today, companies have to tackle the problem of workforce mobility and knowledge attrition more than ever before. On average companies lose half of their knowledge learnt from invaluable lessons every five years (Reichheld & Teal, 1996). With each instance of staff turnover, the organisational knowledge base is eroded further (ibid.) and the problem of 'corporate amnesia' is accelerated. In addition, knowledge workers nowadays are often more committed to their profession than to the company -- NJ (BLOCK Page 26 Chapter 2 Knowledge Management Review in which they are employed (Khorana, 1996). When they leave the organisation, they take their knowledge with them. The company is not left with any residue from the knowledge workers. The value of KS is to have individual knowledge workers share their knowledge with others in the company. Then that collective pool of knowledge can become a transferable organisational asset belonging to the company. 2.2.3 The Productivity and Strategic Challenges What are the implications of all the socio-economic and organisational changes described above for business managers? They may be analysed from two perspectives: (1) optirnising the operational productivity of knowledge workers and (2) addressing the strategic implications of knowledge-intensive work and organisations. The productivity of knowledge workers Modem companies not only engage increasingly in knowledge-intensive work, they are staffed by a higher proportion of knowledge workers than ever before (Alvesson, 1993). Research has estimated that in 2000, 85% of all jobs in the US and 80% of those in Europe were knowledge-based and generated the preponderance of value on top of conventional production activities (Quinn et al., 1996a). On~e companies realise that knowledge workers are becoming the backbone of any gain in productivity and performance (Prusak, 1997), many attempt to control the knowledge workers they hire (Sviokla, 1996). Companies recognise that over an extended period of time productivity is the only true source of comparative advantage (Drucker, 1991). Since nowadays the bulk of work is knowledge-intensive, a company' s improved productivity relies heavily on the increase in productivity of its knowledge workers. Raising the productivity of knowledge workers is therefore a priority for managers than the more efficient use of capital- or labour-intensive resources. Strategic implications The greatest strategic challenge to managers is to extract the maximum value from their knowledge workers' increasing productivity and to determine their companies' Chapter 2 Knowledge Management Review Page 27 competitive positions based on comprehensive reviews .of their firms ' intellectual capabilities. Although knowledge is stipulated as the factor of production, its value can only be realised when it is ·put to use; knowledge has no 'shelf value ' . To realise the potential of organisational knowledge assets, companies must develop and exploit their intellectual capabilities better than their competitors do, utilising them to design new and distinctive ways of doing things in order to provide more value for their customers. The value of knowledge to an organisation is related to the organisation's ability to apply the unique knowledge it possesses to solve business problems and attain goals. It is this knowledge-based intellectual capability, together with ability to acquire and develop it faster than competitors manage to (Senge, 1990; Stata, 1989), that provides companies with a sustainable source of competitive advantage in the marketplace. Strategies are commonly formulated using a SWOT analysis of a company' s internal capabilities and external factors influencing its competitive environment (Zack, 1999a). In conventional strategic management thinking; comp~nies are t~eated as 'black boxes' where their actions and performance are determined by external market conditions (Kim & Mauborgne, 1999). The strategy is for a company to choose a favourable industry where it can erect barriers to new entrants, undermine competitors' efforts to market substitutable products and dictate the terms to suppliers and customers, wp.ile positioning its own products in desirable niches to achieve either product differentiation or cost leadership (Porter, 1980). To capitalise on opportunities and rnitiga. threats, the company is to make the best fit between internal systems and capabilities and external market conditions, conditions that are assumed to lie beyond the influence of individual companies (Earl et al., 1995). However, the implication that a company's strategic competitiveness and growth potential in the long run (Hamel & Prahalad, 1994) rely on its internal abilities to develop and leverage organisational knowledge resources (Quinn et al., 1996a) means strategy must focus on internal factors such as learning and other intellectual capabilities. This emphasis on internal intellectual capabilities is based on the resource-based view of the firm (Barney, 1996; Conner & Prahalad, 1996; Grant, 1991; Teece, 1984) where companies can influence their individual performance by utilising knowledge resources available to ·them more effectively than their competitors can. Instead of defining · their strategies based on market positioning, N (BLOC:B Page 28 Chapter 2 Knowledge Management Review product portfolio or geographical location advantage, companies should strategically position themselves based on their unique combination of firm-specific, inimitable and valuable intellectual capabilities (Kim & Mauborgne, 1999; Zack, 1999a). Leveraging intellectual capabilities across many markets and products, rather than targeting specific products for specific markets, becomes the strategic driver. Thus rather than by hoarding unique knowledge resources and restricting the supply of intellectual capabilities to seek high premiums, strategic value is created through synergy ofKS. KS management is about value creation. Knowledge workers' increase in operational productivity contributes to the realisation of strategic value of KS. The next section reviews the four main thrusts of knowledge research that attempt to clarify the relationship between these two ends (strategic and operational) of the spectrum of knowledge activities. 2.3 The Four Thrusts of Knowledge Research This section reviews the four main thrusts of knowledge research: (1) the theoretical, (2) the measurement-oriented, (3) the technology-oriented and (4) the organisational thrust. The diagram below highlights relationships among different branches of knowledge research. KM research has been inter-disciplinary. This has implications for professionals practising in the fields of information technology, accountancy, general management, human resources training and education. Chapter 2 Knowledge Management Review Page 29 Measurement Thrust Intellectual Capital Management Non-financial Performance Measurement Information Management I RDBMS I 11 D~u~nl 11 ~l~ogy 1 11 Portal: I l l Data Mgmt Thesaurus Intranet 1 Strategic Alliance Communities of Warehouse Internet & Extended Practice & I MuiW.e~all . . IITuoo~l 11 Enterprise Knov.Aedge Networ1< Search Citation Sunvnari- Intelligent Engine Anillyser sation Agent t I Encodng l G [§] Scheme Mimng Organisational Communication Communication & Collaboration Channel & I Groopware 11 11 11 Worl