Description
Knowledge management (KM) has been evolving as one of the prominent management concepts in recent years. Business and multilateral organizations are developing its processes, tools and techniques. It was born of the need to achieve better productivity and effectiveness from the intangible assets or intellectual capital of the organizations.
Reading Material
Residential Programme
On
Knowledge Management Practice & Application
June 25-29, 2007
Kodaikanal
NATIONAL PRODUCTIVITY COUNCIL
Lodi Road, New Delhi - 110003
1
CONTENT
Sno Content Page No
1 Knowledge Management Concepts
Need for KM
Trends in knowledge management
KM in government and international organizations
Knowledge Management Benefits
2
2 KM Processes
KM Life Cycle
PPT Model
Factors preventing knowledge transfer
Promoting knowledge management
18
3 Knowledge Management and role of technology
Technology & functionality
Knowledge Network
Knowledge Audit and Mapping business process
27
4 KM Tools
Community Of Practice
Knowledge conversion, discovery
Knowledge discovery tools
36
5 Intellectual Capital management 49
6 Knowledge Management (KM) for E-government
Knowledge management (KM) toolbox for e-government
Knowledge Management Cycle
Ten Guiding Principles for introduction of knowledge management (KM)
in e-government
61
7 KM and its Application In India
Infosys, Airtel, TCS, ITC Ltd
69
8 MAKE Report 2006 75
2
KNOWLEDGE MANAGEMENT: CONCEPT, ELEMENTS AND PROCESS
Introduction
Knowledge management (KM) has been evolving as one of the prominent management
concepts in recent years. Business and multilateral organizations are developing its processes,
tools and techniques. It was born of the need to achieve better productivity and effectiveness from
the intangible assets or intellectual capital of the organizations. Governments are also moving
ahead to manage knowledge as a part of the development of public administration and an
initiative to improve governance. Managing knowledge is not a new idea to an organization or a
government. But the concept of KM as it is evolving focuses on the reinforcement of the
established tools from the perspective of improving the management of knowledge resources
(creating, storing, sharing, and transferring) within an organization and outside world. Efficient
and effective management of knowledge is critical to secure benefits from the knowledge
resources (data, information and knowledge) developed and obtained over a period of time.
Concept of knowledge and knowledge management
Knowledge is basic to human being. We all possess some knowledge. Being a subject of
everyone’s interest, knowledge is susceptible to multiple interpretations. The following
definitions might help to gain the perspectives of knowledge:
1. Awareness, consciousness or familiarity gained by experience or learning.’
2. Information and skills acquired through experience and education.
3. Knowledge is understanding the why, what, how, who, when, and relative to taking some
action. Knowledge is the product of organization and reasoning applied to raw data.
4. Knowledge is a fluid mix of framed experience, values, contextual information, and
expert insight that provides a framework for evaluating and incorporating new experiences and
information. It originates and is applied in the minds of knower. In organizations, it often
becomes embedded not only in documents and repositories but also an organizational routines,
processes, practices and norms.’
5. Knowledge is intrinsically a human characteristics manifested in the thinking, learning,
artistic, behavioral, and problem solving capabilities of human beings acting in a social context.
3
The function of knowledge is to make a sense of things. Knowledge is high-value form of
information that is ready to apply to making decisions and taking actions. It includes information,
ideas, experience, insights and awareness. It is the synthesis of information or what we know or
the state of knowing in-depth. Knowledge is often referred as the culmination of information
about the context and the consequence of events. Information that has a purpose or use is
knowledge.
Data leads to information and information leads to knowledge which confers a capacity for
effective action. KM involves the mental processes of comprehension, understanding and
learning through one or more means such as application of knowledge and skills, education, self-
study, observation and dialogue. Its main features are as follows:
? Knowledge is the core of human competence. The skill to identify critical knowledge
resources and use them in an objective manner enhances competence, develops self-
confidence and leads to effectiveness.
? Knowledge is built and enhanced through education, training, work experience, dialogue,
participation and social interactions.
? Knowledge is used to improve performance and to solve problems and contributes to career
and personality development.
? Knowledge should be constantly reviewed and updated to make it relevant and effective.
The notion of knowledge may be different in the context of an institution and an individual.
Institutional knowledge is the collective knowledge of all members of an institution. It is the
combination of ideas, understanding and lessons learned over a period of time and accessible to
4
the future members of the institutions. It encompasses information that has practical value in
making decisions, performing tasks and evaluating the results of performance. An individual
gains and enhances knowledge through multiple processes including constant and meaningful
application of skill and intelligence in performing specific tasks, continuous learning, social
interaction and analyzing performance results. It is an aggregate of capabilities built through
experience, applying skills and accessing knowledge resources. It is applied to accomplish tasks,
to make decisions, to advance career and to achieve higher productivity.
Knowledge can be general and specific, tacit and explicit.
Specific knowledge – implies the knowledge created and advanced through study, training
and working in a specific institution and work environment over a period of time. This
knowledge contributes in achieving specialization.
General knowledge – means the knowledge gained through the process of socialization,
education, self-study, and observation. It helps to widening the vision of an individual but
does not focus on specialization.
Explicit knowledge – refers to knowledge that can be expressed, captured, documented and
maintained in the forms of records and publications. Knowledge that is more or less explicit
can be embedded in procedures or represented in documents and databases and transferred
with reasonable accuracy.
Tacit knowledge – means to a hidden type of knowledge that is gained through socialization,
observation, on-the-job training, and mentoring and joint activities such as meetings and
teaming up for a project and interaction with environment. It is highly personal and hard to
formalize. It deals mainly with communication and collaboration between people. ‘The
challenge inherent with tacit knowledge is figuring out how to recognize, generate, share and
manage it.’ Subjective insights, intuitions and hunches fall into this category. ‘Tacit
knowledge is personal, context specific knowledge that is difficult to formalize, record, or
articulate: it is stored in the heads of people. It is mainly developed through a process of
interaction, debate, and trial and error encountered in practice.’ Such knowledge can be
transferred from one person to another through extensive personal contact, experience sharing
and story telling.
Good combination of factual, contextual, procedural and social knowledge makes individual
and institutional knowledge comprehensive, relevant and effective.
5
1. Factual knowledge means knowing the fact (what happened and what was the consequence,
result or output). A person who was involved in a specific event or had witnessed that event
possesses such knowledge.
2. Contextual knowledge implies knowing the context of any specific event or decision. A
person who was involved in the process of developing a policy, program or interactions with
related parties and implementation process possesses such knowledge.
3. Procedural knowledge refers knowing the procedures to be followed or to be adopted to
perform a task. Compliance with established procedures to ensure rule of law and legitimacy
of the works accomplished. Fundamentally all those who are involved in the implementation
are expected to have the knowledge of procedures to be complied with because of the
accountability requirements to be met at various stages of development, approval and
implementation of a policy, program or project or delivery of goods/services. People with the
supervisory responsibility should be thoroughly aware of the procedures to be followed.
4. Social knowledge implies knowing those aspects which helps in understanding and
addressing social issues such as the skill of building networks, managing social interactions
and negotiations among competing forces.
KM is the art of creating value from an organization’s intangible assets. It is the disciplined
way of connecting people with knowledge resources and the process of applying intellectual
capital effectively to enable to make informed decisions. KM is defined in different ways. Some
of its definitions are as follows:
1. Knowledge management is the way organizations create, capture, enhance, and reuse
knowledge to achieve organizational objectives. The word management is a misnomer, as
knowledge cannot be managed. What needs to be managed are the processes by which
knowledge is created, acquired, stored, acquired, validated, disseminated, and applied.
2. Knowledge management can be viewed as the process of identifying, organizing and
managing knowledge resources.
3. Knowledge management is an organize effort to espouse, develop and support a program of
change to create and operate a knowledge environment within an organization.
4. An integrated, systematic approach to identifying, managing and sharing an organization’s
knowledge and enabling persons to create new knowledge collectively and thereby help
achieve the objectives of organization.
6
5. Knowledge itself cannot be managed, but the environment, in which, it is created and shared
can be managed. In this respect, knowledge management can be defined as the creation and
the effective organization and use of knowledge for development results.
6. Systematic approaches to help information and knowledge emerge and flow to the right
people, at the right time to create value.
Knowledge Management (KM) Definitions
Author Definitions
Wigg (1997:7)
O’Dell and J ackson
(1998:4)
Darroch and
McNaughton
(2000:6)
Turban et al., (2003)
KM is the systematic, explicit, and deliberate building, renewal, and
application of knowledge to maximize an enterprise’s knowledge-
related effectiveness and returns from its knowledge assets.
KM is a conscious strategy of getting the right knowledge to the right
people at the right time and helping people share and put information
into action in ways that strive to improve organizational performance.
KM is the management function that creates or locates knowledge,
manages the flow of knowledge within the organization and ensures
that knowledge is used effectively and efficiently for the long-term
benefit of organization.
KM is the process of accumulating and creating knowledge, and
facilitating the sharing of knowledge so that it can be applied
effectively throughout the organization
By summarizing the above definitions, KM can be defined as a systematic and integrated
process of creating, analyzing, storing and disseminating knowledge resources, intangible assets
or intellectual capital. These assets may include structured databases, textual information such as
policy and procedure documents, and most importantly, the tacit knowledge and expertise that
reside in head of people.
In 2002, the Organization for Economic Co-operation and Development (OECD) launched a
survey of KM practices of ministries/departments/agencies of central government in member
7
countries. The survey used the term ‘knowledge management’ loosely to refer to a broad
collection of organizational practices related to generating, capturing, disseminating know-how
and promoting knowledge sharing within an organization, and with outside world, including:
• Organizational arrangements (decentralization of authority, opening up bureaucratic
divisions, use of information and communication technologies etc.);
• Personnel development (mentoring and training practices, mobility etc) and management of
skills;
• Transfer of competencies (database of staff competencies, outline of good work practices
etc.);
• Managerial changes and incentives for staff to share knowledge (staff performance,
assessment and promotion linked to knowledge sharing, evolution of the role of managers,
etc).
Need for Knowledge Management
KM helps an organization to better acquire, store and utilize knowledge resources and to gain
insight and understanding from its own experience. The KM ensures that decision maker has the
best information available. It encompasses the process of identifying, organizing and managing
knowledge resources which include explicit knowledge (information), know how (learning
capacity), know who (customer capacity) and tacit knowledge in the form of skills and
competencies. It encompasses the processes of
(a) the systematic, explicit and deliberate building, renewal, and application of knowledge
resources for an institution’s interests,
(b) securing return from knowledge resources. KM empowers many minds and provides benefits
to the organization by helping people to work together. Its main features are as follows:
(a) KM is about behavior, culture, learning attitudes and trust among people. Its motive is to
better acquire, store and utilize knowledge. It depends on the competencies of human
resources, their intuition, ideas and motivations. Mutual trust must be built and sustained
to encourage efficient knowledge sharing and transferring.
(b) KM is systematic and objective. The overall purpose of KM is to boost the efficiency and
effectiveness of organization by creating, obtaining (receiving), analyzing, verifying,
storing, preserving, retrieving and disseminating knowledge resources systematically. It
supports organizations to achieve their goal by managing and using information that is
8
most meaningful, practical and purposeful. KM is inextricably linked to the strategic
objective of the organization.
(c) KM is ever-changing. The management of knowledge is an on-going process. Change is
inevitable in an organization’s life. Knowledge resources identified as critical at a certain
point of time may not remain equally relevant due to a number of reasons in course of
time. Therefore, knowledge resources should be constantly reviewed, tested and updated
to stay relevant.
(d) KM is value-added. KM adds value by supporting organizations to achieve their goals by
providing reliable and relevant knowledge resources at the time of need and preserving
those resources in a systematic manner.
(e) KM is complimentary. KM plays complimentary role in enhancing organization’s
effectiveness. It supports the management of other resources of an organization by
supplying critical information and preserving knowledge resources developed in course
of time.
There is some degree of misunderstanding in KM practitioners on its scope. Some of them
consider that KM has to do is only with
(1) databases, and
(2) information and communication technology (ICT).
Databases and ICT are definitely critical to KM, but not limited to these two elements. ‘KM
requires cultural change and it is certainly not just the automation of processes.’ Policy, people,
process and technology are the integral elements of KM. Its main aspects are knowledge sharing
and transferring.
a) Knowledge sharing – It is about stimulating the exchange of experiences, ideas and
thoughts between people through social interaction. Sharing of knowledge among
colleagues and organizing debates helps to refine and enrich knowledge. ‘The human
factor in knowledge sharing focuses on the drivers that trigger people to do what they do,
on the possible levels of a person, and on the roles an individual play in an organization.’
Three conditions (social, organizational and technological) support in sharing knowledge.
Social conditions imply motivation, values, attitude, moods, emotions, skill levels and
roles. Organizational conditions refer to strategy, structure, systems, and style and shared
values in organizations. These elements significantly determine how a particular
9
organization plans to share the knowledge resources among its members to empower
them and to enhance their skills. Technological conditions imply knowledge repository,
knowledge route map and platform for sharing knowledge. A major tool of knowledge
sharing is ICT which connects people or with the sources of explicit knowledge.
b) Knowledge transfer (KT) - It is the process of transferring ideas, knowledge and
understanding from one person to another. It makes potential users aware of knowledge
and/or technology opportunities and helps support, facilitate and accelerate its evaluation
and eventual utilization. It involves two actions:
(a) transmission (sending or presenting knowledge to a potential recipient), and
(b) absorption (understanding of transmitted knowledge).
Knowledge that is not absorbed by the recipient is not transferred in real sense. Efficient
absorption contributes in enhancing recipient’s performance.
Trends in Knowledge Management
Knowledge is important because it makes people and organization powerful. No organization
can be better than its people. Knowledgeable people are respected and requested for consultation
and advice. History has shown that an organization and a state can prosper by the support and
dedication of its people and their knowledge not by the quantity of resources they own. People
and organization managing knowledge (reviewing and updating knowledge resources
periodically) and using them efficiently contribute substantially in raising the standards of living.
‘Understanding how people and societies acquire and use knowledge – and why they sometimes
fail to do so – is essential to improving people’s lives – especially the lives of the poorest.’ Lack
of knowledge and skill to use available resources and capability to develop resources are the
major reasons of backwardness. In the modern age of information, knowing is winning.
‘Knowledge and innovation have played an important role in the development of society
throughout history. The key to economic success is always linked to the advances in knowledge
creation and innovation and the ability to translate that knowledge into products and services.’
Change is an inevitable and an on-going process. Rapid changes in internal and external
environment have posed serious challenges to modern organizations. Efficient management of
knowledge resources and securing optimum benefit from those resources is one of the ways of
staying relevant. The cost of creating and capturing knowledge may be very high. Efficient
10
management of knowledge can save time and resources. Organizations that succeed KM consider
it as an effective tool for the creation, retention, sharing and transfer of knowledge.
The major motivations for focusing on KM are:
(a) To achieve organizational efficiency,
(b) To stay ahead of the competition,
(c) To maximize organization’s potential, and
(d) To manage intellectual capital which involves human, customer, structural and business
intelligence.
One of the main contributors of success is responsiveness. Comprehensive understanding of
stakeholders and their expectations and the availability of accurate and useful information tailored
to the organization’s needs is critical to enhance responsiveness. Continuous improvement in
operational efficiency and productivity is essential to long-term growth. The key to economic
success is always linked to the advances in knowledge creation and innovation and the ability to
translate that knowledge into products and services. Gathering correct information and using
them properly is critical to stay ahead of competition. The ability of an organization to innovate
depends largely on the capacity of managing knowledge.
Good reasons to pay attention on KM are as follows:
Technological breakthrough has made the world a global village. The concepts of
liberalization and globalization and the adoption of the open market policies have promoted
competition. Adopting and promoting measures that support in making organization
competitive is the only way of survival. Knowledge is one of the main bases of
competitiveness. The traditional factors of production (capital, markets and raw materials)
remain important but increasingly secondary to knowledge in establishing competitiveness in
the new global market place. Economists, development workers and business managers are
seeing the birth a new global economy, where knowledge is outstripping material resources
and capital as a source of wealth. Knowledge economy is a recently coined term that refers to
the stage of economic growth in which knowledge, as opposed to land, labor, and capital, is
the key factor of production.
11
Every member of organization irrespective of position is required to make some decisions.
Many decisions require historical and contextual information. Decision makers always look
for information that helps them in making right decisions. A well functioning KM system
supports in making useful information available for informed decision making.
Institutions spend substantial resources in developing policies, strategies and making
decisions of strategic importance. Some decisions may be implemented at various stages and
by multiple units independently or in collaboration. Managers implementing decisions require
credible data and information on the context and basis of strategies and decisions for
planning, programming, budgeting, implementation, monitoring and evaluation purposes.
An effective KM system contributes in:
(a) improving the level of performance by ensuring continuity and consistency in the
ways of doing things;
(b) promoting transparency in decision making; and
12
(c) saving resources in making decisions by retaining critical information; and
(d) Managing operations smoothly by bridging the information gap between the departing
and incoming member of the organization.
Organizations have to continue operations even people change. Systematic process of
knowledge transfer helps new staff members to learn about the work procedures, resources
and environment which contributes in enhance professional skill and adopting them in an
efficient and effective manner.
KM protects intellectual capital from deterioration, augments intelligence and provides
increased flexibility. Knowledge is applied to problem solving and learning, forming
judgments and opinions; decision making, forecasting and strategic planning; generating
feasible options for actions to achieve desired results.
KM helps networking to enable people to access knowledge resources developed by other
regions and countries. This also helps learning what worked well and what not. International
development institutions such as the UNDP, the World Bank (WB) and the Asian
Development Bank (ADB) consider that such networking will be beneficial to its staff and
also to member countries. Highlighting three dimensions of KM, Vice-President of the ADB
says ‘to understand KM, it’s important to understand its three dimensions. One is to manage
within ADB efficiently. For instance, if somebody is designing a project in Pakistan, that
person should be able to look at similar project in Indonesia and benefit from its experience.
The second dimension is to learn from DMCs. The third dimension is sharing knowledge
among countries with ADB as a regional bank well positioned to be a broker.’
Knowledge management in government and international organizations
As mentioned earlier, the KM is not a new concept and practice. Organizations were
managing knowledge resources in records. KM concept gained prominence in recent years
mainly because organizations realized that other resources can be more efficiently utilized and
operations can be cost-effective if knowledge resources are well managed and supportive to their
objectives. In addition, it was also recognized that having knowledge resources is not sufficient
for development, but it must be constantly reviewed, updated and properly maintained to
facilitate easy access. The aim of strengthening KM is to bring strategically important knowledge
resources into effective and common use. ‘Governments are often thought to be late comers in
management reforms, sometimes for good reasons such as policy continuity, the need to ensure
13
that good checks and balances are in place, or concerns for equity; often also because institutions,
public processes of civil service rules are designed in such a way that management changes are
more difficult to implement. The result of the OECD survey (2002) highlighted the importance of
KM for governments mainly for the following reasons:
1. Knowledge has become a critical determinant of competitiveness for the public sector.
2. Private firms produce goods and services that are increasingly intensive in intangible capital,
directly competing with the goods and services traditionally produced by the public sector.
3. Ageing civil servants and faster staff turnover also create new challenges for the preservation
of institutional memory and the straining of new staff.
4. Increasingly knowledgeable citizens require governments to be on top of newly created
knowledge, as it is increasingly rapidly produced by more differentiated actors.
5. Public policy goals have become more ambitious and complex than before.
Finland is one of the OECD countries where KM is advanced. Political, cultural and social
factors are behind the success. Reform in public administration has been the part of political
agenda which encompasses KM and strategies on information society, legislation focusing
openness, making openness a commitment of public officials, carefully listening to the citizen’s
needs and be prepared to take their feedback for consideration are contributing factors.
i
International organizations are emphasizing on KM as part of the initiatives for managing
development results and enhancing cost-effectiveness. The Asian Development Bank (ADB)
states that its KM framework is based on the following guiding principles:
(a) Fostering a knowledge-supportive environment – ADB considers that a corporate culture
that values learning and knowledge sharing is essential to it. The KM framework aims to
establish an enabling culture for effective knowledge management to promote staff
contribution to knowledge activities, encouraging every staff member to be a knowledge
worker.
(b) Ensuring results orientation and continued improvements – The KM framework is
designed to sharpen the results focus in undertaking KM initiative.
(c) Enhancing operational relevance – To ensure that knowledge management initiatives will
improve operational effectiveness, the KM framework will prioritize actions that have
strong operational relevance.
14
In 1996, former President of the World Bank J ames Welfensohen announced a change in the
way the bank would accomplish its unchanging mission of reducing global poverty. ‘He
contended that the bank should become a knowledge bank, as focused on disbursing the
knowledge assets to poor and developing countries needed as it was about providing economic
support for development projects.’ The vision of the knowledge bank focuses on the following:
(a) Creating knowledge through economic and sector work research, through learning from
the outside world and learning from successes and failures.
(b) Applying knowledge through products and services.
(c) Sharing knowledge with clients and partners.
The World Development Report, 1998 was focused on knowledge for development and
concluded that knowledge has perhaps the most important factor in determining the standard of
living. The WB assumes that ‘putting knowledge at the center of our development efforts will
bear fruit in two areas.
The first is increased social benefits – the more effective provision of public goods, including
better air and water quality, greater educational attainment and higher enrollments, improved
health and nutrition, and expanded access to essential infrastructure. These benefits will accrue to
the poor as well as to others in society.
The second is in better-functioning markets – for credit, education, housing, and land that
more efficiently coordinate resources and allocate opportunities across society. These
improvements will benefit the poor most, because they bear more than their share of the burden
of information failures.’
UNDP recognizes itself as the UN’s global development network, advocating for change and
connecting countries to knowledge, experience and resources to help people build a better life and
the need of managing knowledge to improve its effectiveness. UNDP’s Knowledge Management
Roadmap (April 2004) states ‘UNDP generates a wealth of development knowledge.
Unfortunately, the organization does not know what it knows. It neither fully understands what its
knowledge assets are, nor is it set up to leverage them to achieve maximum return. It has
identified six priority knowledge gaps and target deficiencies in the organization’s ability to:
1. Leverage to global development and operational experiences more effectively;
2. Maintain consistently high professional standards for project design and development;
15
3. Attract, retain and ensure the continued professional growth of top-notch problem-solvers and
practitioners;
4. Identify, convene and deploy the best possible teams for specific assignment, tasks and
projects;
5. Tap the full potential of the virtual networks and other existing collaborative tools; and
6. Provide timely and thorough reporting on development impacts and results.
ii
United Nations Economic and Social Commission for Asia and Pacific (UNESCAP) consider
KM as an initiative to help attain its three objectives:
(a) managing globalization;
(b) reducing poverty; and
(c) addressing emerging social issues.
The Office of Internal Oversight Services of the United Nations (UNOIOS) recently
published a report on the thematic evaluation of knowledge management networks in the pursuit
of the goals of the Millennium Declaration. According to the report, ‘there is no common
understanding of KM or knowledge sharing in the Secretariat, and knowledge and information
confused. Many develop KM strategy that typically outlines how the organization:
Communicates knowledge about programs and projects within and outside the organization.
Connects staff interested in cross-cutting topics to share ideas, help each other and move the
organization’s understanding of those topics forward.
Learns from projects that make learning accessible to people in other parts of the
organization.
Captures and organizes critical knowledge of staff as they transfer or retire.
Ties knowledge sharing to organizational goals.
Deepens and develops knowledge critical to the organization’s success.
Other international organizations engaged in the management of development cooperation
have also initiated the process of strengthening KM to achieve their objectives in a more cost
efficient and effective manner. Business organizations are focusing on KM to achieve optimum
benefit from the investment they have made to develop intellectual capital and intangible assets
and secure them from the affect of staff turnover.
16
Knowledge Management Benefits
Knowledge Management benefits are significant in terms of intangible and derived
tangible value to the organization and the stakeholder. Benefits are broadly classified in
terms of knowledge benefits – faster access to best knowledge, intermediate benefits –
promotes efficient operation and organizational benefits – faster innovation and
productivity improvement, and improved customer service. Efficient process of information
and
o Productivity improvement through operational innovation and excellence : KM
enables organization to reduce cycle time for new product and service
development, supply, installation etc., by preventing reinvention or duplicate activity
and promotes concurrent working on a task through collaboration. This approach
leads to savings and reduces costly mistakes.
o Enhanced value to Stakeholders’ : Increased bottom-line and stronger revenue
growth of an organization leads to satisfied employees and shareholders. Increased
responsiveness to customer and partners leads to business innovation and quicker
problem solving. KM enables organization to get predictive trends which lead to
value added features in products and services results in customer success.
o Competitive advantage : KM enable organization to new opportunities – new
markets, new products and services by systematic capture and sharing
knowledge from both internal and external environment(customers, prospects,
markets, competition, experts). Knowledge audit and mapping process enables
decision maker to quickly respond to the business requirements.
o Efficient Human Resource management – organization can identify the real
contributors, capture knowledge and introduce expert system for mission critical
function and thereby reduce the vulnerability due to churning out of
employees (resignation, retirement, transfer). Prevention of knowledge loss -
knowledge retention. Out-sourcing is easier as the real knowledge is codified and
not visible to the user.
o Improved decision-making : Auto creation of flags & Reports through
17
knowledge discovery and knowledge mapping process.
o Adaptability and flexibility.
o Maximization of knowledge re-use.
o Paves way for learning for better work and may require less direct supervision.
o Improved Quality – Product and services enhancements.
o Knowledge assets development – internal process and external knowledge.
18
Knowledge Management Process
An organization can generate value from its intellectual and knowledge-based assets by
managing those assets in a systematic and integrated manner. ‘To get the most value from an
organization’s intellectual assets, knowledge must be shared and provide the foundation for
innovation in products and services, enhanced employee retention, process improvement,
strategic decision making, improved client relationships and greater prosperity.’ Organizations
need to create an environment of trust and collaboration to retain good employees, to share and to
transfer knowledge. One step toward creating an environment of trust is to instill the sense of
belongingness in the employees, and giving them more active role in building the future of their
organizations. It makes them feel that they are making an important contribution to its success.
Knowledge embodied in documents does not necessarily translate into useful and usable
knowledge unless it is read, digested, manipulated and communicated from one person to another.
KM requires an infrastructure capable of supporting the creation and maintenance of knowledge
repositories, and an environment to facilitate knowledge sharing and organizational learning.
The major processes of KM are as follows:
(a) Identification of Knowledge – Creation of knowledge is a gradual process of adding
value to previous knowledge through a number of measures including innovation, work
experience, study, dialogue and interaction. The process of preserving and maintaining
knowledge resources commences only after they are created. Explicit knowledge can be
captured at various stag of its development in the form of documents, publications and
decision. It can also be obtained through website. Tacit knowledge can be created and
captured by promoting dialogue, interaction and attending seminars and workshops. Out
of three components of knowledge resources, knowledge is created and enhanced through
application of skill in specific work environment, assessment of results and
environmental factors etc. whereas data and information may be created manually or
though the application of computerized systems. Knowledge resources relevant to the
operation of the organization should be assimilated in a structured manner to enhance
their usefulness.
(b) Acquisition & Development (Verification and classification) – All information received
or generated internally may not be of same value for the future. An organization creates
and receives a number of data and information and makes decisions every day. Whether
all these data and information should be assimilated to the knowledge base? This matter
19
needs to be carefully addressed by managers in day to day operations so that over flow of
data and information can be prevented. Storing and preserving all knowledge resources
generated and received today may not be practical for a number of reasons. Therefore, it
is critical to verify and to analyze their relative significance to determine accuracy and
relevance before preserving them.
(c) Storage of Knowledge (Preservation and maintenance) – Critical knowledge resources
including knowledge in people’s head (tacit knowledge), maintained in organization’s
records, documents and publications should be preserved safely. These resources can be
stored in hard copy or in electronic format including microfilm. Organizations must have
their records management policy including retention period to systematize the
preservation of knowledge resources. International Standards Organization (ISO) also
focuses that ‘organizations should define and document a policy for records management.
The objective of the policy should be the creation and management of authentic, reliable
and usable records, capable of supporting business functions and activities for as long as
they are required. Organization should ensure that the policy is communicated and
implemented at all levels in the organization.’ Deterioration in the quality of preserved
knowledge resources could create negative consequences. Physical security is very
important in addition to proper recording of preserved knowledge resources. In modern
days, organizations depend more on information and communication technology (ICT)
ACQUISITION AND
DEVELOPMENT OF
KNOWLEDGE
IDENTIFICATION
OF KNOWLEDGE
APPLICATION OF
KNOWLEDGE
DISTRIBUTION /
SHARING OF
KNOWLEDGE
Knowledge Management Process
STORAGE OF
KNOWLEDGE
CONTINUOUS EVALUATION
OF KNOWLEDGE
20
for preserving knowledge resources. Organizations that have no sufficient ICT resources
maintain knowledge resources in hard copies.
(d) Sharing (Retrieval and dissemination) – Knowledge resources needs to be retrieved in
future to secure historic or contextual information mainly for making decisions and
solving problems. The impact of knowledge resources becomes minimal without proper
dissemination. Ensuring efficient dissemination of knowledge resources is critical to add
value in the system and processes of operation. Selection of right means of dissemination
is critical in case of tacit knowledge. Proper indexing and referencing can enhance
efficiency in disseminating knowledge resources.
Knowledge Management Life cycle process
Building of Knowledge Management is viewed as life cycle that encompasses review of
existing knowledge and planning, cost-benefit analysis and justification, and determining the
hardware and software for structure to knowledge requirements of the organization.
Identification of immediate, intermediate and long-term requirements of prospective
Knowledge Management system is essential. Well-defined life cycle is paramount for
successful development of knowledge management system.
Knowledge Management Life cycle begins with knowledge capturing, followed by
knowledge organization, knowledge refinement, knowledge transfers, and use or re-use as
shown in fig 5. Knowledge management Life cycle process is shown in fig below. This
process is centered primarily on business strategy and Knowledge Management objectives of
the organization. This process to be reviewed periodically and improvised wherever needed.
All identified business information is captured, codified and tested before this knowledge is
shared and transferred. The knowledge is made available to all needed users for its
effective use in their mission. Predictive models pertaining to the business requirements
can be developed to ‘alert’ users through automated process by ‘flagging’ or e-mail and
ensures that all prospective users know the new knowledge and used without being idle in
repositories. Knowledge Management system to be attuned with the organizational culture
and facilitate flow of knowledge, and encourage people to share insights, experiences and
know-how, while ensuring that the right information is available with right person in right
time.
21
PPT Model
Effective combination of policy and strategy, process, technology and human resources
(people) is critical to make KM meaningful.
(1) Policy, strategy and approach – First of all, governing body of the organization should
establish its KM policy and communicated at all levels. It should focus on the need of
strengthening knowledge base. KM strategy should focus on managing the knowledge
resources to support organizational change, the creation of opportunities, and rapid
adaptations to changing market realities and cover the following matters explicitly.
(a) Contribution of knowledge resources in achieving organization’s objectives.
(b) Categories of knowledge resources that need to be created and shared at different
levels to facilitate smooth operation at various purposes levels.
(c) An outline of a plan for preserving and maintaining knowledge resources that
addresses issues related to people, process and technology.
(d) An outline of criteria to measure success in managing knowledge resources.
There are three approaches for KM. Mechanistic approach focuses on use of information
technology (IT) in the management of knowledge resources. Cultural/behavioral approach
focuses on work culture and organizational behavior to encourage people to share, transfer
22
and preserve those resources. Systematic approach focuses on on-going process of refining
and updating knowledge resources and rational analysis of knowledge related problems and
resolving techniques. A willingness to learn and encourage learning is something that has
to be fostered in the organizational culture to be innovative and to stay relevant.
(2) Process – Organizations should identify and develop the methods and processes of KM
considering nature of operations, geographical dispersion, stakeholders, type and
interrelation between knowledge resources. Process should encourage knowledge sharing
culture. Due to the complexity associated with associated with knowledge sharing, a culture
of knowledge sharing needs to be instilled and cultivated within an organization.
In the knowledge economy, education is a key to create new knowledge, adapting the fast
changing working environment, acclimatizing to new socio-political structures and dealing
with the increasing amount of information created every day. Four types of interactions
(socialization, externalization, combination and internalization) within and beyond an
organization help in managing explicit and tacit knowledge and converting them from one
to another.
? Socialization refers to the process of sharing tacit knowledge between people. People
feel confidence through socialization which can be promoted by forming informal
groups and by encouraging people from different disciplines. Knowledge sharing can
be between one-to-one, one to many, and many to may interaction.
? Externalization refers to the process of articulating and codifying tacit knowledge.
Tacit knowledge is gradually converted into explicit knowledge through this process.
People with specialized knowledge and experience are to be encouraged to express
themselves so that their unique experience can be documented.
? Internalization refers the process of absorbing and utilizing explicit knowledge to
covert into tacit. This requires processing and analyzing external knowledge or
information, understanding it, and then internalizing it to create tacit knowledge.
Individual gains practical skill and enhances his/her confidence by internalizing explicit
knowledge.
? Combination refers to the process of converting explicit knowledge into complex sets
of explicit knowledge. It can be shared and transferred via documents and e-mails.
After an individual has accessed and retrieved the information, a reinforcing process
takes place whereby information is sorted, understood and conceptualized in different
23
situations. Knowledge maintained in documents and publications needs to be translated
into actions to enhance their practical value. Knowledge gained in different situation
and information generated through application of knowledge and skill has to be used to
refine current level of knowledge.
(3) People – As the overall objective of KM is to enhance productivity and effectiveness of
organization, people have the lead role to play in making it happen. Senior management
should consider how knowledge sharing fostered and people related issues such as training,
succession planning, mentoring, and job rotation and cross training can be addressed to
facilitate KM. Tacit knowledge cannot be transferred without encouraging people to
interact and share their experience, understanding and skill. As knowledge is power,
making knowledge widely available through sharing might been seen as threat to career
progression, hoarding knowledge becomes a natural phenomenon. But hoarding of
knowledge does not help organization. The system of reward and recognition can be
introduced to encourage knowledge sharing and reuse. A group of knowledge professionals
can be set up in an organization to support KM. Informal networks and community of
practice can also make positive contributions. Succession planning is critical to protect
from the loss of critical skills. In addition, job rotation also helps in bridging knowledge
gap.
People Process Technology
(4) Technology – KM is not about technology. But it plays important role in KM by facilitating
the information dissemination process, connecting people and systems and enhancing
access to large depositories of information. Technology facilitates the storage and
organization of information. Information technology (IT) is widely used to generate data
and information and preserve them. ‘Collaborative applications such as e-mail, calendaring,
scheduling, shared folders/databases, and threaded discussions promote knowledge sharing
and transfer.’
iii
Internet is the well recognized as the platform for communication and
PPT
Model
24
collaboration between people around the world and biggest repository of knowledge
resources. However, information technology can capture only explicit knowledge.
Issues and Prospects
Planning and a supportive organizational culture are critical in enhancing the effectiveness
of KM. Organizations recognize the importance of KM for their continued relevance and to
achieve effectiveness but fail in addressing issues that really contribute the systems and processes
of KM. Highlighting the issues in knowledge sharing, the UN OIOS report states ‘knowledge
sharing in support of the MDG’s is not sufficiently strategic, focused or well integrated with
organizational objectives. Different departments take different approaches to internal knowledge
sharing, which are mostly not systematic. The most common knowledge-sharing tools, such as e-
mail, meetings and websites, while useful, do not work best in connecting staff seeking each
other’s insights, experiences and ideas. Information and knowledge sharing is not consistently
integrated with daily work. Mechanisms and processes capturing and transferring good practices,
lessons learned and knowledge from departing staff are generally inadequate. Technology and
knowledge sharing is generally available but not always used.’
iv
This situation may also be
applicable to other organizations. Potential factors preventing effective KT and possible solutions
are as follows:
Inhibiting Factors (Friction) Possible Solutions
Lack of trust Build relationship and trust through face-to-face
meetings.
Different culture, vocabularies and
frames of references.
Create common ground through education,
discussion, publication, teaming, and job rotation.
Lack of time and meeting places;
narrow idea of productive work.
Establish time and place for knowledge transfers:
fair, talk rooms, conference reports.
Status and rewards go to knowledge
owners.
Evaluate performance and provide incentives based
on sharing.
Lack of absorptive capacity in Educate employees for flexibility; provide time for
25
recipients. learning; hire for openness to ideas.
Belief that knowledge is prerogative of
particular groups, not-invented-here
syndrome.
Encourage nonhierarchical approach to knowledge;
quality of ideas more important than status of
source.
Intolerance for mistakes or need for
help.
Accept and reward creative errors and collaboration;
no loss of status from not knowing everything.
Promoting trust is essential to build supportive environment. Lack of trust may lead to selfish
practices and poor communication which makes negative impact on the organization culture.
Educating people at all levels about what, why and how of KM and their respective roles and
responsibilities is first step towards consolidating KM approach.
Promoting Knowledge Management
Modern organizations have to promote its intangible assets and encourage members to make
best use of those assets to enhance effectiveness and optimize the return from the factors of
production. The value of KM relates directly to the effectiveness with which the managed
knowledge enables the members of the organization to deal with today’s situation effectively
envision and create their future.
The following measures should be considered to promote KM.
Decentralization and delegation of authority – KM is a participative and dynamic process.
People working at various levels possess operational, tactical and strategic knowledge.
Offices located at field, regional and central level should be encouraged to manage their
knowledge resources under the organization’s KM strategy. Decentralization policy should
recognize that knowledge resources at local levels are equally important as in central level for
effectiveness. Delegation of authority encourages managers to adopt flexible approach to
manage knowledge sharing.
Improvement in managerial capacity to facilitate knowledge and information sharing –
Managerial capacity should be enhanced to make managers capable to facilitate and monitor
the process of sharing knowledge and information both horizontally and vertically. Collective
knowledge of people at different levels makes up the knowledge resources of an organization.
Facilitating horizontal and vertical sharing of information enriches such resources and
supports in building capacity. As KM is emerging as a new discipline, the capacity of
managers must be enhanced to adopt appropriate measures of KM.
26
Incentives to staff to share knowledge and information – Sharing of knowledge requires
certain incentives. People normally question why they should spend time in sharing
knowledge which could reduce their importance and even challenge career opportunity.
Therefore, staff should be encouraged to sharing tacit knowledge so that members of
organization feel that they have required knowledge to manage operations.
Investment and improvement in ICT – Organizations are increasingly dependent on
information and communication technology (ICT) in their operations. Organizations should
constantly review and update their ICT capacity in the context of changing technology and
operations. Investment to ensure sustainable delivery of ICT services is essential to improve
KM infrastructure. In addition, the physical quality of storage should be well maintained so
that knowledge resources are well secured and retrieved efficiently.
27
Knowledge Management & Role of Technology
Knowledge management is being perceived as so seamlessly intertwined with information
technology that its true critical success factors may soon be lost in the pleasing hum of servers
and software.
Knowledge is the critical resource of business activity in this era. The technology gurus, as well
as hardware and software providers, define knowledge management in terms of understanding the
relationship of data, identifying and documenting rules for managing data and assuring its
accuracy and integrity. The convergent and consensus-building emphasis on such systems might
be congenial to stable and predictable organizational environments. However, such interpretations
of knowledge management, based primarily on rules and procedures embedded in technology,
seem wrongly aligned with a dynamically changing business environment.
(1) IT investments seem to have no direct correlation with business performance or knowledge
management. In the last 20 years, US industry has invested more than $1 trillion in information
technology but has realized little improvement in the efficiency and effectiveness of its
knowledge workers. This failure is due to the organizations' ignorance of ways in which
knowledge workers should operate through innovation, collaboration, sharing knowledge and
building on each other's ideas.
(2) The same dollar spent on the same system may give a competitive advantage to one company
but only expensive paper weight to another. Hence the key factor for the higher return on IT
investment is the effective utilization of information as it relates to organizational performance.
How corporate executives go about deciphering the mantra of effective utilization, however,
remains a debatable issue.
(3)The new world of knowledge-based business ought to involve a continuous redefinition of
organizational goals, purposes and "ways of doing things". Today's new business environment is
characterized by radical and discontinuous change and demands cautious responses from
organizational members who need to carry out the mandate of a faster cycle of knowledge
creation and action based on this knowledge.
28
(4) Many organizations rely on information technology infrastructure; but no matter how
sophisticated, it is not the key to effective knowledge management. Success depends more on the
social system in which people operate. The social ecology of the company drives people's
expectations, defines who will fit in, shapes individual's freedom to pursue actions without prior
approval and affects how they interact with both insiders and outsiders.
(5) Management. And the myths are as follows:
First myth: Information technologies can store human intelligence and experience Databases and
groupware applications store bits and pixels of data. But they do not store the skills that people
possess for making sense of data bits. Moreover, information is context sensitive. The same
assemblage of data can evoke different responses from different people. Many say that while
people come and go their experiences can be stored in databases. But unless a person's mind can
be scanned and stored directly into a database, one cannot assume that somebody else can get
back the experience of the first person.
Second myth: Knowledge management technologies deliver the right information to the right
person this idea mirrors an outdated business model. The new business model of the information
age, however, is marked by fundamental, not incremental changes. Business cannot plan long-
term; instead they must shift to a more flexible "anticipation-of-surprise" model. It is impossible
to build a system that predicts who the right person at the right time is, let alone what constitutes
the right information.
Third myth: Information technology can distribute human intelligence. This assumes that the
company can predict the right information to distribute and the right people to distribute it to.
And bypassing the distribution issue by compiling a central repository of data for people to access
does not solve the problem either. The fact of information in the database does not ensure that the
people would see or use the information. While most of our knowledge management technology
concentrates on efficiency and creating a consensus-oriented view, the data therein is rational,
static and without context. And such systems hardly account for renewal of existing knowledge
and creation of new knowledge.
7) The confusion between knowledge and information has caused managers to waste billions of
dollars in information technology ventures that have yielded marginal results. It is necessary for
29
the business managers to realize that unlike information, knowledge is embedded in people and
knowledge creation occurs in the process of social interaction.
(8) A recent Mckinsey report points out that most of the companies do a poor job of managing
their talent. With so many other things in the realm of Information Technology the missing
ingredient is people. While focusing on hardware and software, most companies overlook the
importance of the organizational structure and skills, which are absolutely necessary for
successful use of data and for decision-making. Only human beings can take the central role in
knowledge creation. Computers are merely tools, however great their information-processing
capabilities may be. The changed business environment imposes the need for variety and
complexity of human interpretation of information outputs generated by computer systems.
(9) Some of the corporate giants are realizing this fast. Ford, for instance, has been using
PeopleSoft package not for handling basic HR transactions but for capturing and managing HR
knowledge for purposes of talent management, general HR analysis and decision making.
(10) Nonlinear change imposes upon organizations the need for devising nonlinear strategies.
Such strategies cannot be predicted based on a static picture of information residing in the
company's databases. Rather such strategies will depend upon developing interpretive flexibility
by understanding multiple views of the future. In this perspective, the objective of business
strategy is not to indulge in long-term planning of the future. On the other hand, the emphasis
should rather lie on understanding the various future world scenarios using suitable techniques.
(11) A focus based on strategic planning was pioneered and chronicled by Arie de Geus, the
strategy chief of the multinational Royal Dutch/Shell as follows:
o View the organisation as a human community capable of providing diverse meanings
to information outputs generated by the technological systems.
o Give more explicit recognition to tacit knowledge and related human aspects, such as
ideals, values, or emotions, for developing a richer conceptualisation of knowledge
management.
Implement new, flexible technologies and systems that support and enable communities of
practice, informal and semi-informal networks of internal employees and external individuals
based on shared concerns and interests. Make the organisational information base accessible to
30
organisation members who are closer to the action, while simultaneously ensuring that they have
the skills and authority to execute decisive responses to changing conditions.
(12) The implementation of these issues can be viewed in terms of the shift from the traditional
emphasis on transaction processing, integrated logistics and work flows to systems that support
competencies for communication building, people networks and on-the-job learning. The three
architectures enabling such competencies are:
o A new information architecture that includes new languages, categories and
metaphors for identifying and accounting for skills and competencies.
o A new technical architecture that is more social, transparent, open, flexible and
respectful to the individual users.
New application architecture oriented towards problem-solving and representation rather than
output and transactions.
(13) It was the company's social ecology that contributed to Nucor Corp's success in becoming
one of the most efficient steel producers in the world. Through effective management of
knowledge, Nucor developed and constantly upgraded its strategic and proprietary competencies.
The social ambience of the company allowed excellence in the tasks associated with sharing and
mobilizing knowledge: identifying opportunities to share knowledge, encouraging individuals to
share knowledge, building effective and efficient transmission channels and convincing
individuals to accept and use the knowledge received.
(14) At Dow Chemicals, the head of the strategic planning department sponsored an effort to
figure out how to use SAP data in new reporting processes. The IT organization worked with its
users within the organization to create a number of function-specific and process-specific data
marts. Over 50,000 people, from the factory floor to the CEO's office, were trained to structure
and process data, access techniques and analyze tools.
(15) The workforce of a forward-looking company must be able to process and manipulate
knowledge as well as perform particular skills, says Dorothy Leonard-Barton in Wellsprings of
Knowledge. Top management must encourage creative chaos, cross-fertilization among
31
disciplines within the company and benchmarking with competitors. Those companies that are
most enthusiastic about pursuing knowledge are those most likely to harness the power of
innovation.
(16) Knowledge management embodies organizational process that seeks synergistic combination
of data processing capacity of information technologies and the creative and innovative capacity
of human beings. The knowledge workers need to be facile in the application of new technologies
to their business contexts so that they can delegate "programmable" tasks to technologies and
concentrate their time and efforts on value-adding activities that demand creativity and
innovation. More importantly, they should have the capability of judging if the organization’s
"best practices" are aligned with the dynamics of their business environment. Such knowledge
workers are the critical elements of the double loop learning and unlearning cycle that should be
designed within the organizational business processes.
(17) Given the need for autonomy in learning and decision making, such knowledge workers
would also need to be comfortable with self-control and self-learning. They would need to act in
an intrapreneurial mode that involves a higher degree of responsibility and authority as well as
capability and intelligence for handling both. Such creativity and inquiry-driven learning will,
obviously, be difficult to achieve within traditional command-and-control paradigm.
(18) In an industry-wide analysis of IT investments, economist Paul Strassmann, has observed in
his book The Squandered Computer (Economic Press, 1997) that elevating computer to the level
of a magic bullet may diminish what matters the most in any enterprise: educated, committed and
imaginative individuals working for organizations that place a greater emphasis on people than on
technologies.
(19) Managers need to develop a greater appreciation for their intangible human assets, captive in
the minds and experiences of their knowledge workers. Without these assets, companies are
simply not equipped with a vision to foresee or to imagine the future.
Technology and functionality
S.N. Functionality Information and Communication Technologies (ICTs)
1 Searching Search Engines
2 Categorizing Computer Languages (XML, RDF)
32
3 Composing Office Suite Applications
4 Summarizing Artificial Intelligence
5 Storing Storage Media
6 Distributing Networks
7 Workflow Groupware
8 Content Management Content Management Systems
9 Customer Relationship Customer Relationship Management (CRM) Software
10 Metadata Standards and
Interoperability
Semantic Web Technologies
Knowledge Network
Knowledge is available in individual, tools, documents, databases, knowledge bases, group, function,
particular SBU and corporate. Organization to recognize the new knowledge that gets created as a by-
product while individual’s carrying out an activity or task or product or project or service. This knowledge
is effectively useful only when it is dynamically transferred and shared as and when the knowledge is
created. Knowledge Network enables knowledge transfer. Knowledge Network connects individual to
organization and vice versa. Knowledge network alongwith other knowledge process can be used to
capitalize this new knowledge. In Knowledge Management system, knowledge is captured, transferred,
shared, synthesized and transacted in
33
real-time with all authorized individual. Utilization by any part of the function or department or organization
independent of location leads to organizational competency.
D Di ir re ec ct t K Kn no ow wl le ed dg ge e N Ne eu ur ra al l s sy ys st te em m
K Kn no ow wl le ed dg ge e N Ne et tw wo or rk k p pe er rs sp pe ec ct ti iv ve e : :
Process : Bundle of connection ‘within’ & ‘between’ tasks, functions, SBU’s, Corporate and
SBU, and Environment – customer, vendor, other expert knowledge centers etc. Dynamic
knowledge exchange takes place..
Outcome: Speedy organisation’s actions & Reponses to customer or tasks
K Kn no ow wl le ed dg ge e s sy ys st te em m : :
Process : Knowledge is acquired, processed, stored & retrieved from
1. Individual knowledge,
2. Corporate culture of learning & transmitting knowledge,
3. Knowledge embedded in organizational processes,
4. Physical archives,
5. Organizational structure
D Di ir re ec ct t K Kn no ow wl le ed dg ge e N Ne eu ur ra al l
I In nd di ir re ec ct t K Kn no ow wl le ed dg ge e N Ne eu ur ra al l s sy ys st te em m
C Co or rp po or ra at te e
Indirect knowledge
SBU-
Transfer
D Di ir re ec ct t k kn no ow wl le ed dg ge e
T Tr ra an ns sf fe er r
Strategic Business Unit
SBU1 SBU2 SBU3 SBU4 SBU5 --n--
D
D D D D D
• Centralization allows use of scare resource to multiple purposes.
• Apply Corporate knowledge to tasks & form a portfolio of Organizational competencies.
• Intensity of knowledge transfer depends on relatedness of SBU’s(Strategic Business Unit)
& degree of centralization.
• Knowledge transfer take place between SBU’s to corporate and then to other SBU’s; or
SBU to another SBU and then to yet another SBU or corporate. This is an indirect
knowledge transfer.
I In nd di ir re ec ct t K Kn no ow wl le ed dg ge e N Ne eu ur ra al l N Ne et tw wo or rk k
Technology that is available is potentially adequate to connect all knowledge workers in real-
34
time. Speed, accuracy, volume, distance, security and maintenance are critical factors to build a network.
Intranet, Internet, Extranet, Local area network, Wide Area Network, dial-up links, and Legacy networks
are widely used depending upon the size and requirement of the organization. Increased connection
between employees will be productive knowledge transfer and leverage the expertise of an individual
across the organization. Knowledge Networking enhances the individual and organizational learning
which will aid business requirements. Knowledge network constitutes of both ‘Direct knowledge neural
network’ and ‘Indirect knowledge neural network’ as shown in fig above SBU’s can be geographically
distributed in different location or some SBU’s can be distributed in one country or across many
countries, and all can be connected in Knowledge network. This feature facilitates collaboration
and execution of activities concurrently. Neural system is dynamic. Interrelation continuously
transforms and activates various functions depending upon the stimuli from environment and/or within
organization.
Knowledge Audit and Mapping business process
Knowledge Audit
Knowledge audit is a systematic appraisal of the organization’s intellectual resources and
capabilities with respect to identification of existing knowledge, adequacy, gaps, sources, sinks, flows
and recommend measures to augment the required knowledge. Audit reveals on how the knowledge that
exists and not exploited, knowledge required but not explored, and the extent of utilization of
organizational knowledge flows around. Knowledge audit provides evidence-based qualitative
assessment to i ndi vi dual , team, function, SBU and corporate. Identification of knowledge
sources within the organization and the best external sources leads to quicker acquisition of
knowledge required for the business. Knowledge audit enhances the stakeholder value by this process.
Various Knowledge audit methods are used. Snowden (1999) believes that the best
representation for knowledge map is stories that contain context, value, and the message. Dataware
(1998) believes that productive analysis require to answer questions like What knowledge we have,
what knowledge is missing, who needs this knowledge, and how it will be used? Wiig’s (1993)
knowledge analysis is summarized below:
• Questionnaire-based knowledge surveys are used to get an overview of various operations
of an organization.
• Middle management target group sessions are used to understand their need for
management support.
• Task environment analysis is used to understand the existing knowledge and its extent
of application.
• Verbal protocol analysis is used to identify knowledge elements.
• Basic knowledge analysis is used to identify aggregated knowledge.
35
Critical factors Available Not
available
Who has
Design
knowledge
Yes
K
Production
knowledge
Yes
L
Strategic
planning
No
• Knowledge mapping is used to develop concept maps as hierarchies or nets.
• Critical knowledge function analysis is used to identify knowledge-sensitive areas.
• Knowledge use and requirement analysis is used to identify how the knowledge is used for
business purposes and how situations can be improved.
• Knowledge scripting and profiling is used to understand the details of knowledge intensive
work and the role knowledge plays in delivering the quality products.
• Knowledge flow analysis is used to gain an overview of knowledge exchanges, losses, inputs of
the business processes.
Knowledge Mapping Knowledge mapping
Knowledge map is a visual contextual
representation in graphs used to codify the
knowledge. Formal, informal, explicit, tacit,
internal and external knowledge can be
represented in knowledge map to identify the
business issue. Knowledge map is used to
generate job specific knowledge requirements, to
communicate complex process, develop
knowledge structure that represents concepts and
their relationship, building employee knowledge
competency and understanding. Various methods are
used to create knowledge map and few are
illustrated in fig.. Marketing function has
Production
P P P P
P P P
Engineering
P P P P
P P P
Finance
P P P P
P P P
Marketing
P P P P
P P P
very less interaction with Engineering and more interaction with Finance as depicted in
bidirectional arrow line(P-person). Where as the interactions to be otherwise as Marketing need
to have more interaction with Engineering than with Finance.
Subject Expert name
1 R
2 S
3 T
4 U
If the subject 1, 2 & 4 are
associated, then the expert R
Knowledge map
is very useful. Suppose 1, 2, 3 & 4 are totally different, then the earlier assumption will not hold. Fig.17
illustrates the area of concern as Strategic planning and depicts who has knowledge in each function.
Knowledge mapping is very useful for effective decision-making.
36
Knowledge Management Tools
Community of Practice
Individual knowledge is shared with the other team members during the discussions or correspondences,
when they work on a subject or find solution for a problem or carrying out a task or a job or jointly working
on a project. Knowledge is still available with the individual but not with the team. Individual behavioral
traits, motivational factors - recognition and rewards, organizational culture and company strategies and
polices have an impact on this knowledge sharing process as shown in fig below
When the team collaborates with the common purpose over an extended period, the ideas, alternative
approaches, expertise and solution to a subject do emerge. This knowledge is captured and shared
to other teams within the department(s) or functions or strategic business
37
unit or corporate. Following such practice within a community enables social learning, nurturing new
knowledge, stimulating innovation or sharing the existing tacit knowledge within the organization.
A typical illustration is shown in fig. below.
Knowledge creation via Team
Team
perform a job
Initial Knowledge
New
Knowledge
Outcome
realized
Knowledge
Captured
& codified
Outcome
Compared
to action
New
experience
From the above process, the
individual learning startlingly
increases through collaborative
learning and also the organization
benefits by the business solution.
Moreover, the organizational
learning increases and the
knowledge get accumulated in
corporate memory. After review and
approvals, the organization can share
Reusable by same
team
Knowledge usable
by others
Knowledge
gained
this new knowledge to other allied
communities within the same
industry or anyone who seeks similar
knowledge could use readily without much effort. This social learning shared practice within
community is known as Community of Practice (CoP). Generally, CoP is formed within a single
discipline so that the effort can be focused. Technology that exists today ameliorates multi-
disciplinary participation.
38
Etienne Wenger (1998) has described CoP in terms of interlaying four fundamental dualities
such as ‘participation vs reification’, ‘designed vs emergent’, ‘identification vs negotiability’ and
‘local vs global’. ‘Participation vs Reification’ duality is of utmost interest to knowledge
management. Reification is an abstract form and represented in document. Reification is
necessary to avoid teamwork turning into informal group activity in the name of co-ordination and
mutual understanding. Participation is an active involvement in teamwork or social process. Involvement
of an individual must go beyond repeating the reified description and must challenge and
readdress its meaning.
Community Practices – Features
o
Promotes innovation through problem-solving, learning, knowledge creation, Self
manage
& Self-govern.
o Combats isolation. Support one another to enhance learning and performance.
o Enable productive inquiry for creation of job-critical knowledge and exchange. Members create
knowledge base. Enhance speed of response to customer.
o Share knowledge through collaborating and learning.
o Use a variety of synchronous and asynchronous collaborative tools via multiple channels
including face-to-face meetings and on-line platform Supported by the organization as a
valid way to learn and collaborate. Increases capabilities and meta-capabilities. Creates
competitive advantage.
39
Knowledge conversion
Merely storing structured knowledge constitutes only some part of knowledge management.
Every process used to create, communicate and apply tacit knowledge will result in new
knowledge e.g.: a worker applies knowledge from a similar problem / resolution from Database and the
final solution may differ in some way. This successful resolution to be documented and saved and will
now expand the organizations knowledge base. To convert tacit knowledge to explicit knowledge,
following goals are required to be achieved to address this objective.
• Prevention of Knowledge Loss due to employee turnover on transfer, retirement,
resignation, mindset of individual etc,.
• Prevention of duplicate activity. Everyone need not re-invent when somebody within the
organization had already done that activity.
• Adaptability and Flexibility – allows employees development to better grasping power of their work
and may require less direct supervision and fewer interventions.
• Capturing of Technical Problems and Solutions can be easily referred during problem analysis
thereby reduce time.
• Promote collaborative learning through Communities of Practice.
• Motivate individual with reward system for knowledge sharing and capture in document for further
transfer.
Fig
For conversion of tacit knowledge to
explicit knowledge, the process to be
developed by identification of
mission critical functions,
formulation of systems, format
structure and key factors that are to be
captured, content, procedures, and
measures required to promote
40
involvement of individuals and associated functions or departments
Externalization
Knowledge conversion process is
shown in fig 2. Nonaka and
Takeuchi (1995) developed four-
stage spiral model for knowledge
conversion within business process.
Tacit knowledge of the expert or key personnel within the organization can be made explicit by
documenting the knowledge one posses or procedure or steps followed up in completing a given task
and the experience gained. This codified manuals can be shared and incorporate this
41
knowledge in development of other products and services. This process of converting tacit knowledge
to explicit knowledge is known as externalization.
Internalization
The reverse process of conversion from explicit knowledge to tacit knowledge is known as
internalization. The codified context specific explicit knowledge to be reviewed and absorbed by
the employees so that the formal rules and procedures can be adapted in the same way when such similar
requirement arises during the development of new product and services.
Socialization
This is a conversion from tacit knowledge to tacit knowledge through sharing of experiences, models,
imitations and practices. This type of knowledge transfer takes place during coaching, apprenticeship,
presentation, seminars, meetings, conferences, training, workshop and any other informal interactions
within and outside the organization.
Combination
The accumulated knowledge is disseminated by sharing among one another or within the
function(s) or group(s) or community or communities. It is a conversion of explicit knowledge to explicit
knowledge This transfer process is a primary way to leverage knowledge.
Knowledge use and reuse
Knowledge based system known as ‘Expert system’ is developed with business specific domain knowledge
from one or more experts. The expert system can have features of ‘fully automatic’
for closely repetitive process or ‘semi-automatic’ for varying repetitive process and ‘manual’ option
for first time creation. Expert system is essential for organization that has high-level of know-how
experience and expertise and cannot be easily transferred to other members. Thorough review of
business process with respect to the following key factors is essential before deciding on substitution of
‘Expert system’ to the existing process.
• Criticality of the process (e.g engineering, production, marketing etc).
42
• System / methods currently followed for development of new product or engineering of
equipments or custom-built equipment for a given plant or services.
• Identify the current knowledge level and the missing knowledge.
• Percentage of application or reuse of the existing design knowledge (part or component,
equipment information), additional information added to complete the activity.
• Cumbersome or expertise required for an individual process is high.
• Productivity requirements - Present cycle time and required to address market
requirements and capacity utilization.
• Rework or repair resulting out of a particular process due to inconsistency or overlapping
in certain steps followed in that process.
Knowledge dissemination
To use knowledge to deliver products and
Programmable
services-, make knowledge to solve
problems and the like. Dissemination is the
primary way to leverage knowledge
Quick
Knowledge
Broad based
Knowledge
throughout the organization. Both explicit and
tacit knowledge is shared in a real-time
Local
Global
environment that will assist employee to
perform unique functions effectively. By
Interest
Knowledge
Complex
Knowledge
this process, individual can access to divers
resources and new expertise. Such cross-
fertilization of knowledge creates value to an
organization.
Unique
Fig. Knowledge sharing
43
Knowledge transfer is done by working together, learning by doing, apprenticing, face-to-face
discussion, or embedding knowledge through procedures and document exchange. The collective learning
of an organization is gleaned from learning of its members as well its stakeholders and customers.
Collaborative technologies are used to aid in effective knowledge flow. Knowledge sharing recognizes
the nature of knowledge and classifies them as ‘quick knowledge’, ‘broad based knowledge’, ‘interest
knowledge’ and ‘complex knowledge’ and accordingly shared as shown in fig.. The term share is an
exchange of knowledge between individuals, between or within teams or between individuals and
knowledge bases, repositories, and so forth.
Knowledge security
Captured knowledge is treated as a competitive weapon. The security levels for knowledge sharing
need to be deliberated in all business process levels. It is also felt that it is potentially dangerous to
share the documentation, as the credibility of the users cannot be established concretely. However,
an attempt has to be made to underline the need of security of information while deciding the sharing of
information among the working groups. Knowledge Management system must be secured from any
unauthorized access either internal or external. In addition, it must allow secure access for any
authorized user, no matter where they are. The system should support security features like electronic
signatures, firewalls, encryptions, HTTPS etc.
• Build security features like electronic signatures, firewalls, encryptions, HTTPS etc,.
• Protecting the data from external threats.
• Protection against network attack, malicious code, virus, unauthorized application execution,
Security at desktop level, User management etc.,
• Implementation of access control at different levels such as user level, functional role level, etc.,
to control access to the Knowledge Management system.
• Create and maintain an access control list for each object created within the system.
• Build an audit mechanism to keep track of access, check-in/check-out, status change etc
Customization of Policy based integrated enterprise level security software to be introduced for
44
protection against network attack or malicious code or virus or unauthorized downloadable
application execution etc. is to be prevented through access control, Security and Firewall systems.
Knowledge Discovery
Knowledge discovery is used for knowledge creation in Knowledge Management system such as
discovery of business intelligence, insights, new relationship, trends, patterns etc., from various
functions or processes. Various information from different or associated processes are to be
captured, classified, compared, synthesized and derive the insights, trends, patterns etc using software
tools that exists today or customized tool to suit the required business process. From this knowledge
discovery process, Knowledge Management system is to enable creation of management information
report automatically and alert the user by flag or e-mail in addition to provision of business process
interlocks between processes. Knowledge discovery process aids organization to solve inter-
disciplinary problems, improve business process efficiency, productive and proactive.
Knowledge discovery system to provide unified access to information assets, regardless of format,
repository or media type and increases user productivity by reducing the time and cost of finding
information in the sea of data. Filtering new information in real-time, convert data to knowledge
discovery, personalize and organize the retrieved information in folders, or share expertise with
associates shall stimulate knowledge discovery across the enterprise. It shall utilize a variety of
indexing, concept and entity extraction, and content filtering methods regardless of content type –
unstructured, semi-structured, and structured.
• Create high level abstract business insights, trends, patterns etc and make it available for effective
decision-making.
• Knowledge discovery system shall be scalable and have consistent taxonomies for
categorization and pragmatic classifications for information access.
• Create semantic Indexing based on domain-specific application indexes
• Develop strategies for Data Management and applications.
o Data sources – Flat files, Relational databases, Data warehouses, Business unit wise
databases, Time series databases, geographical databases, etc,.
o Taxonomy of Data –Business transactions, Technical design methodology and
calculations, Process related, Testing related, personnel related, Text and
45
documents, repositories etc,.
o Data preparation – Evaluating data quality, Handling missing data, Processing outliers,
Normalising data, Quantifying data etc,.
• Model building – Association rules, Classification trees, Neural networks.
An overview of knowledge discovery tools and techniques are summarized below :
Case based reasoning (CBR)
CBR can assist in capturing of tacit knowledge from process-centered activities and manage procedural
knowledge. Interactive CBR techniques are widely used for knowledge discovery in knowledge
Management system.
Text mining
Text mining involves extracting patterns, behaviors and general knowledge from large collection
of textual information, which are found in knowledge repositories. Text knowledge mining process
aids to develop Self-Organizing Maps (SOM’s), clusters and productive models (Rules). SOM brings
together related concepts and shows their intensity or frequency within the data/text based as well as
their proximity to other concepts. Fuzzy clusters provide a spatial analysis of documents and semantic
concepts in the form related aggregations.
Neural networks
Neural networks are used to infer patterns from data, knowledge and image e.g.: GUESS
(Generically used experts scheduling system). Push Technology, Quantitative analysis, Data mining
tools etc are also used for knowledge recovery.
Data mining
Data mining is a process that uses sophisticated statistical analysis and modeling techniques to uncover
patterns, correlation and relationships that exist within the data but are not recognizable using
conventional data analysis techniques. Data mining provides response to extracted patterns,
selection of the right action, learning from past actions, and turning action into business values.
46
OLAP (On-Line Analytical Processing)
The need for non-static reporting system has led to the development of On Line Analytical
Processing. It is possible to drill down into the ultimate detail of a parameter and zoom up for a general
view. OLAP have the ability to answer what-if and why questions along with
Multidimensional views of data, Calculation intensive capabilities, and Time intelligence.
Knowledge Management and Organizational culture
Organizational culture is to be conducive for knowledge transfer and knowledge
sharing. Knowledge transfer provides knowledge to someone else whereas knowledge
sharing is an exchange of knowledge between individuals or teams and knowledge bases.
Individuals will resist sharing for competitive and self growth. Almost any organization and all
global ones have multiple cultures. Organization also must make employees to believe that
their services are required for long-term and not as replaceable commodity, which will
enable them to share knowledge between peers. Organization must provide tools-for
capturing, storing, sharing; training and education; time-to absorb, use and share new
knowledge; and empowerment to use knowledge. Making knowledge available and sharing
with employees or sharing between individuals connotes certain level of trust. For a
positive knowledge sharing, co-operation, collaboration and collective learning, building
altruistic culture by development of on-line and off-line systems of knowledge
dissemination promotion and measurement system with motivational drivers like
reward, recognition, compensation etc is essential. Positive organizational
cultural values are Leadership, understanding the mission, internalizing the management
practices, and trusting one another.
Top management must have conviction, commitment and support in word and deed for
implementation of Knowledge Management as this endeavor calls for change management in the
area of process, values and business strategy. Otherwise, Knowledge
management implementation efforts will be strained due to the diversity of interests.
Organizational cultural change takes time to attune to the knowledge based strategy driven
culture and particularly the outcome depends on leadership. Organization requires having
patience and persistence while certain employees resists for change. Knowledge exchange
process will also certainly enable positive change in the organizational culture.
47
Precursors to success
• Top management conviction, commitment and leadership endorsement
• Shared sense of purpose and ownership
• Self-initiated view of learning and readiness to learn from each other
• Climate of trust and involvement
• Partnering mindsets and capabilities
• Strong technology platform
• Constructive suggestion to take KM implementation forward
Pitfalls
• Looking for the ideal approach under all circumstance
• Resistance. Excuses for not sharing content
• Emphasizing only on concept and planning, over execution
• Top management ambiguity. Emphasizing only on what’s already there
• Underestimating the technology that exist today
• Failure to identify organization’s position with respect to global competitors.
• Inadequate focus and value for development of core competency for New Product
development, Facility and overall process system improvement
• • Senior internal executives not freed-up to drive KM program due to exigency of work
Overview of software tools and solutions for KM
Diverse products and services are provided by organization(s) to different market segments.
Technology varies for different product, process and services do. Also the requirements and KM
strategy of different organization will also vary. Knowledge audit and scoping needs includes
requirement gathering, understanding the existing process and IT systems, review of best
practices, review of software products, vendor evaluation, visits to the organization where KM is
already implemented, taking support from KM consultants, proof of concepts demo etc will have
to be done before selecting the software and hardware products. There is no single software
addresses all requirements of all organization and some combination of software tools are
required for KM. e.g. for engineering enterprise, integration of many discipline and software, and
exploitation of software features for different business process are critical while selecting the
software for KM.
48
Some vendors have homogeneous solution for many requirements of KM. Few vendors have
built-in knowledgeware in their software products which will provide bidirectional, synchronous
and asynchronous features for applications. Many of the vendors use all KM jargons but it is felt
that the degree of their product features is varying widely. Few vendors are having software that
will meet only few KM requirements and they get different software from different vendors and
integrate them to meet the total KM requirements. In this scenario, the solution is offered from
heterogeneous sources. Many vendors specify software architecture as web-centric but the
method of realization and features are also varying widely. Architecture, product development
roadmap, integration compatibility, software customization capability, human resource capability
size, financial stability, partners, risks and the total life cycle cost are the key evaluation
criteria’s. Merger, acquisition, geographical dispersion, change in business strategy after
acquisition and obsolescence declaration, etc are all serious concerns as KM is a long-term
strategic decision.
For a comprehensive KM solution, both software tools and their implementation partners are to
be carefully evaluated for their ability to deliver, support, maintain and enhance the KM solution.
Capability and competency of this implementation team is critical for understanding of the
business process of the organization, best practices and the software product knowledge for
successful implementation.
49
Human Resource Management
The key strength comes of any organization is its human capital. It is the expertise of its employees
which ensures that customers are acquired and retained, and the processes work efficiently to satisfy
the customer's needs. That human capital is the basis for the creation of customer and structural
capital.
For a knowledge base on the knowledge worker
In the information technology (IT) industry, this section starts examining the issues relating to the
human capital of an organization. If people hold the key to prosperity anywhere, it is more so in the
IT industry, which employs knowledge workers. Here, human capital is not merely one component
of capital; it is the critical component that forms the basis for other forms of capital: People with
their expertise are the sole creators of value to the customer and people through their effort are the
key to the optimization of its process efficiency.
Perhaps the natural corollary to this is the high attrition rate in the IT industry. So IT organizations
have a critical need to know the value they would forego when they are about to lose a person. This
knowledge is important in taking appropriate action, in making counter-offers, in keeping up a
constant preventive effort to fine-tune the compensation structure. All these should always be in line
with the value being pro-vided by the employees.
Competency mapping
An employee has a bundle of competencies, each of which needs to be valued. In the computer
software field, classifying competencies under five major heads - domain, technology, project
management, initiative and leadership. A software project attempts to computerize applications such
as production scheduling in a manufacturing organization, trade settlement in a stock exchange or
recoveries for an insurance company. An analyst developing the requirements for the system must
have expertise in the specific business area such as manufacturing, securities trading or insurance.
We call this business knowledge the domain expertise. A software designer must be knowledgeable
about the technology that provides the platform for the system and makes it work. Similarly, project
management is an essential area of expertise for a person leading a part or whole of a project, to
ensure that resources are marshaled to yield effective results in the required time. Besides these,
what makes a person valuable to the organization is the consummate acumen for enterprise and
50
execution - the generation of ideas and the speed of implementation. These come under the umbrella
of initiative.
Finally comes the quality of being an inspiration to others: Is a person a thought leader? The ability
to apply a new technology in ways unanticipated is one example of displaying thought leadership.
A person has a set of competencies and a value is assigned to each of these competencies. The sum
total of it is the value of an employee and the sum total of the value of all employees is the human
capital of the organization. This human capital, together with the customer and structural capital
produces the revenue.
When an employee leaves, an organization loses that much of capital as determined by the valuation
given above. The organization's response to this situation should be guided by the value being lost.
Unfortunately, there may be no escalation when a valuable employee leaves. The senior
management gets into the act only when a very experienced employee leaves, irrespective of
whether he has a higher or lower value than a less experienced person. An organization needs to
look for a system for the scientific computation of employee values, stored in a constantly updated
database, and with triggers for intimation to top management based on employee valuation.
Management can then be made to sit up and take notice whenever high-value employees leave,
irrespective of the years of service. In fact, compensation across the board can be structured to be in
line with this valuation system. The Process of recruiting the substitute person will also involve cost
for the organization.
Human resources valuation has remained an academic exercise and largely ignored even in
industries where the expertise of employees is the key differentiating factor. The process of
valuation is complex and challenging.
The factors, which play an important role in retention of knowledge workers
Recruiting and hiring
Training and Professional development
Work Space deployment
Compensation
Employee Friendly Workspace
Aligning employees performance expectation with competencies
Establishing valuable result oriented measures of individual and group
Providing rating and feedback that shows the difference between performers
51
Continuous learning and improvement
The culture and mind of managers towards their work force is constantly monitored
J ob Process tools and mission support : The jobs , tools and support are designed such that it
always improves the performance of the employees.
Hire and retain people according to competencies
HUMAN RESOURCES MANAGEMENT ISSUES
The speed with which global operations are being established in the service sector is faster than
previous global expansion seen in the manufacturing sector. For many organizations, the time to
build the business case, select outsourcing vendors or staff “captive” operations, and start operating
is less than a year. One U.S.-based high-tech company grew its Indian operations over 2.5 years
from 1 employee – the HR person – to 4,500 employees across two cities. The current plan is to
increase the number to 10,000 employees by the end of 2005. Such short timeframes for launching
and growing offshore ventures make decisions regarding human resources management absolutely
critical to the success of these global operations. The human resource implications of global talent
sourcing in the services sector are vast, affecting professionals in both the U.S. and “offshore”
locations. However, the specific HR challenges vary depending on the business model chosen, how
home country employees’ jobs are affected by the creation of offshore operations, and the extent of
communication and integration of workflow across multiple geographies. In general, a company’s
pursuit of a captive, outsourced, or hybrid business model has greater impact on the HR activities
and challenges in the offshore location than in the home country.
For companies newly expanding captive operations in India, for example, virtually every area of
human resource management needs to be addressed: recruiting, selection, training, management
development, compensation and benefits, building a consistent company culture, and planning
tactics to improve retention or manage turnover. Companies pursuing an outsourced business
model have far fewer hands-on HR challenges because the day-to-day management of employees
is handled by the outsourcing vendor.
HR activities in the home country are more affected by decisions regarding the future
employment of home country staff than by the business model in the offshore location. For
instance, when offshoring leads to the reduction or reallocation of work among existing home
country employees, active communication, change management, and transition assistance
facilitate the successful introduction of an offshoring strategy and help maintain morale among
52
the affected employees.
In all offshore business models, business leaders must decide how home country and
offshore staff will interact. As a result, HR professionals face many challenges associated with
managing disparate workforces, incorporating stylistic and cultural differences in communication
and problem solving, and developing flexible policies appropriate for multiple labor markets.
Cross-cultural relations are perhaps one of the most important issues companies face in managing
offshoring arrangements. The following sections address the variety of HR challenges associated
with the global sourcing of talent.
HR Issues for the Home Country Workforce
The global sourcing of talent impacts the home country workforce irrespective of the
configuration chosen for offshored operations. That being said, a captive business model will likely
require more active early-stage involvement from senior HR leaders in the home country than other
business models, particularly while the company’s leaders select an offshore location and recruit
local management. HR professionals have a central role in communicating the offshoring decision
and its underlying strategic imperative to the workforce, and in facilitating the transition of work and
employees affected by it. This section examines three main challenges in the domestic context:
communicating the initial offshoring decision, transitioning affected employees to new roles, and
getting buy-in, particularly from middle managers, for organizational changes.
Communicating about Global Sourcing
Communicating the intention of global sourcing initiatives is an essential place for HR intervention.
More and more C-level executives visit potential locations as part of the offshoring decision, and are
generally returning to corporate headquarters enthusiastically supportive and driving the mandate for
global expansion of outsourcing. Often, the top-level strategic thinking is not clear to the workforce,
seriously jeopardizing buy-in, and undermining the strategy’s success. Demonstrating the linkage
between business strategy and the global sourcing initiative, and developing an effective action plan
for transitioning affected employees is a key role for HR. This role is considerably more
challenging when domestic employees need to be laid off.
A major financial services company that outsourced much IT work to India provided a
53
good example of an effective communications plan. The company announced its intention to
outsource IT work offshore in a series of “town hall meetings” with employees in the technology
groups affected by the company’s outsourcing decision. To stem speculation among employees,
whose departments had recently experienced two rounds of layoffs, “We told them what the whole
process was going to look like and said they were not going to lose their jobs,” recalled the former
HR business partner to the IT organization. “These people were working on technology that
customers needed – not a legacy system – so there were other IT roles in the company for them.”
As the outsourcing was implemented, the company continued to hold town-hall style meetings
every two to three weeks, during which the the CIO, head of strategy, managers for the products
involved, IT leaders, and the HR leader for the IT organization participated, candidly answering
questions and taking suggestions.
Transitioning Employees
Effectively facilitating the transition of employees whose workload is going to be sourced elsewhere
is important for morale and the company’s public image. When work moves to another location,
there are three options for transitioning affected employees: they can be reassigned, redeployed, or
laid off. The distinction between “reassigned” and “redeployed” is subtle in language but significant
in practice. To be “reassigned,” the company actively manages the transition, looking for other
opportunities in the organization that are appropriate for the individual’s skill set and experience. To
be “redeployed,” in contrast, places the responsibility for finding a new position in the company
squarely on the employee. The former approach conveys the message that while labor arbitrage is
making it economically necessary to transfer an individual’s work to a lower cost location, that
individual’s knowledge and experience is still valuable to the organization. The latter approach
conveys a message that once critical talent is now expendable, with work performed by the lowest
bidder, which can be demoralizing for the employees directly affected as well as their co-workers,
though not as demoralizing as lay-offs.
Both “reassignment” and “redeployment” can be managed more easily when an effective workforce
management system already exists, such as having an inventory of employees’ skills and work
experiences, a comprehensive database of current vacancies and anticipated future openings, and a
recruiting platform that matches internal candidates with appropriate roles. Variable staffing
models, in which contingent workers provide additional flexibility for companies to scale up or
down based on project loads, also help to shelter “core” employees for reassignment elsewhere in
54
the company. The financial services company mentioned earlier hoped employees would stay with
their teams in order to train the vendor’s staff, while at the same time helping employees find jobs in
other divisions of the company. If a match was found, the company allowed the employees to start
other jobs before the outsourcing transition was complete thereby demonstrating the company’s
commitment to the employees’ careers.
Change Management and Getting Buy-in
Getting buy-in from middle managers is particularly important to the success of offshoring
initiatives, as these managers are responsible for ensuring the effective knowledge and process
transfer to the offshore location. To make offshoring work, they often have to redeploy or lay off or
reassign U.S. team members whose work is being offshored as well as manage a faraway team.
Another important aspect of change management is knowledge transfer, which may be achieved
differently depending on the offshore business model. With outsourcing arrangements, vendor
representatives often come to the home country for several months to learn about the business and
specific work tasks. The impact of on-site vendors on home country employees’ morale depends in
large part on whether the employees are “training their replacements” and how the company has
communicated about the offshoring strategy.
A Boston-based software company pursued an aggressive offshoring strategy in 2003-2004 in order
to reduce its cost of operations. The company transferred software development work from
Massachusetts, Michigan, and Northern California to its existing captive operation in Pune, India,
growing the Pune office from 300 employees to between 500 and 600. U.S. employees were laid off
and the transition was intended to occur in a two-month period. For the “leads” who had the
technical knowledge and project management capability to transfer knowledge to Indian
counterparts, the company paid significant retention bonuses – between 50% and 100% of their
annual pay – in a 90-day period. The interim costs of the transition, which was done explicitly for
cost saving purposes, were high.
In addition, several other factors made the software company’s offshoring transition a
difficult change management situation. The number of employees affected triggered the U.S.
Worker Adjustment and Retraining Notification Act (WARN), which required the company to
55
provide 60 days’ advance notice to people who were going to be laid off, which had negative
consequences for employee productivity and morale.
Second, the development staff was under a tight timeframe to achieve a critical product launch, so
needed to continue working at a high level of productivity. Third, while top executives knew
offshoring was needed to keep the company alive, the mid-level managers who led R&D and
product marketing for the products affected were not as supportive of the transition. Lastly, the
individuals whose jobs were being eliminated had the longest tenure of any segment within the
company. Laying these people off
“gutted the heart of the company,” including its product knowledge and shared history, according to
the HR executive interviewed. Compounding these U.S.-based change management challenges was
the need to train new staff in Pune on the company’s sophisticated design modeling software,
increasing the time it took to transfer capabilities to the offshore location.
HR Issues in the Offshore Location
In the following sections we provide an introduction to some of the HR issues specific to
the offshore location. The types of HR issues a company will face in the offshore location depend
primarily on the business model. As Table 6 illustrates, a captive model requires more hands-on
involvement in establishing and managing day-to- day operations, while an outsourcing
arrangement leaves most of the tactical people- management responsibilities with the vendor.
Because of the greater complexity of HR issues associated with captive operations, the following
sections focus more on these challenges than on those experienced by companies outsourcing their
offshore operations to a third party.
56
Table: Offshore Location HR Issues and Challenges by Business Model
Captive Business Model Outsourced Business Model
o
Involves establishing office from
scratch;
need to build brand as a good
employer.
o
Responsible for all recruiting, training,
retention
o
Manage day-to-day operations
o
Expatriates likely involved
o
Need to stay current on compensation
o and benefits trends
o
Need to develop management
capabilities
o No direct control over day-to-
day operations
o Foster collaboration with client
employees across organizational
and
o geographic boundaries
o
Have short-term expatriate
representative
o from client in offshore vendor location
The experience of Convergys, an employee and customer care services company, provides an
example of the HR issues associated with establishing captive operations.
The company, which employed more than 63,000 people and generated nearly $2.5 billion in
annual revenue in 2004, created Convergys India Services (CIS) in 2000 as a wholly owned
subsidiary with operations in Gurgaon and Bangalore. In establishing CIS, the company
customized best operating practices developed in its U.S.-based contact centers with input from the
Indian management team. Attracting the right candidates and careful screening were critical issues
as CIS employed 3,500 people initially and grew by late 2004 to 10,000 employees across seven
locations in four cities. The company announced plans in February 2005 to grow employee
headcount in India to 20,000 within two years through organic growth and possible acquisitions.
To support the rapid recruiting activity, the company used multiple recruitment sources, including
online, print advertisements, college campus recruiting, referrals, and the company’s database of
qualified applicants.
Early in its operations CIS placed a quarter-page help-wanted advertisement for customer service
staff in a weekday edition of a target publication. The HR department received over 7,300
resumes within three days of the advertisement’s publication. CIS managers interviewed over
1,000 candidates, of which over 300 were considered qualified. In contrast to the talent pool from
which Convergys was able to recruit call center staff in the U.S., all candidates in India were
college graduates and 60% had previous business experience, 25% of whom had previous contact
center work. Following screening and background checks, CIS’ selection rate was 1 out of 35.
57
The company ultimately extended 150 job offers from this single recruitment source.
Recruitment
Setting up a captive offshore operation is similar in some ways to starting up a new venture,
beginning with selection of the location to establish operations. When selecting the appropriate
offshore location some of the HR issues to analyze include characteristics of the local labor market –
such as English language skills, percentage of technical or business college graduates, wage rates,
and competition from other employers. Whereas a company may be widely recognized as a top
employer at home, in other countries the company’s hiring managers may find themselves starting
from scratch and competing against well-established global employer brands such as American
Express, GE, IBM, Proctor & Gamble and Unilever, as well as against leading Indian companies
such as Infosys, Tata or Wipro. As evidence of the availability of talent in India and the tough
competition for the best applicants, both Infosys and Wipro received more than one million
applications in 2004 for little more than 10,000 positions.
The challenge to build captive operations
quickly puts significant pressure on companies to fill middle- and top-management positions fast,
potentially leading to lower quality hires. HR executives we interviewed, both in the U.S. and India,
stressed the importance of adapting screening and hiring practices to Indian conditions. The ideal
candidate profile should be localized to reflect the education level and business workflow in the
offshore location; companies cannot simply search for the same profile of those in the home country.
For example, one company establishing a technical support call center Thomas L. Friedman, “A
Race to the Top,” The New York Times, J une 1, 2005, A27. that initially screened resumes and
hired for technical knowledge. What the company found, however, was that an individual’s accent –
and the ability of that accent to be “normalized” – was a more important hiring criterion than
technical capabilities. It was much easier to provide training to create technical competency for
provision of a high service level than it was to “normalize” the accent to enable the person to
communicate effectively with the U.S. customer. The company changed its hiring process and began
telephoning promising candidates as its first screening mechanism, in which it assesses the
candidate’s accent. This company then moves forward with the recruiting process only if the accent
is acceptable. If necessary, the company makes up for its new employees’ deficiency in technical
knowledge with training.
58
Recruiting the Family
In India, strong family ties often mean a job candidate’s parents are actively involved in the
recruitment process. Dell, for example, recognized that parental influence was significant,
particularly for the young workforce hired into Dell’s customer and technical support call centers.
“If parents don’t know about the company or what their child is doing, they generally have a
tendency not to support those roles,” said an individual involved in managing Dell’s HR activities in
India in 2003 and 2004. Dell not only sends a quarterly letter to employees’ homes providing an
update on the employee’s progress but also invites the parents to attend an event where their son or
daughter is going to receive a recognition award. Dell also holds a “family day,” attended by the
country’s vice president and general manager, to allow employees’ families to see where their
children or family members work. In addition, while on a visit to Dell’s operations in India,
Chairman Michael Dell invited employees’ families to an event where he welcomed them into the
Dell family.
Background and Reference Checks
Screening candidates for global operations can be challenging, due to the lack of information
comparable to a criminal background check in the U.S. However, multinationals can work with
reputable local HR consulting companies that can assist in this process.
Longer Notice Periods
The Boston-based software company that doubled its staff in India in 2003-04, observed that
new recruits provided relatively long notice periods to their employers when resigning their
positions. Whereas the standard notice period in the U.S. is two weeks, the company
experienced notice periods of two months while recruiting staff for its operations in Pune. The
extended timeframes provided more opportunities for the original employer to make a counter-
offer or for other employers to recruit away the hired employees. As a result, the local HR
manager had to stay in contact with the new hires during this interim period to manage any of
the transitioning employee’s emotions or concerns and to prevent the new hire from rescinding
the acceptance of the job prior to the start date.
59
Compensation and Benefits
Although wage rates in offshore locations are low compared to the U.S., total
compensation increases dramatically in India as a professional matures and develops expertise.
According to one high-tech executive, companies can hire recent college graduates in India and
China for 15-20% of the labor cost for technical jobs relative to U.S. salaries. But for an
experienced manager, the cost differential narrows significantly. Salaries in the Indian IT sector, at
both Indian and multinational companies, rose an average of 19% from 2003 to 2004; those with
more than 10 years experience fared better, earning an average pay increase of 26%.
12
Perks
frequently provided to managers in India include transport to and from the office, which is often
located in an office park on the outskirts of the city, either via employee shuttle or a car with
driver, and providing for a maid or other household support. Figure 3 shows the changing types of
perks and benefits companies provided in the IT sector in 2003 and 2004.
Employee Retention: Setting Expectations
High employee turnover is an issue cited by many companies that have offshored BPO and IT
services work in India. One senior HR executive from a high-tech company characterized the
mistakes his company made by saying:
"We've put the wrong people in the wrong jobs, in the wrong career paths, with the wrong
training. Essentially, as we now realize, the Indian workforce, particularly college grads, has the
same expectations and ambitions as their U.S. counterparts. They feel undervalued by U.S.
employers and/or the world. They do not want to answer phones, and they need career
challenges consistent with their skills. Their aspired career path, upon hire, is to be in technical
support for no more than six months, then software development, then move to the U.S. The best
performers at call centers and in technical support are promoted, perhaps two to four levels in 18
months, by age 22.” Different retention strategies are being used for employees with varying
levels of experience and work roles. The contrast between retention in BPO operations versus
technology services provides an example. BPO operations are more likely to employ unskilled
recent university graduates who are good English speakers. BPO operations also employ women
more often than men. However, the nature of the work (e.g., data entry), night shift work
schedules, and lack of career paths help to fuel turnover rates as high as 40%.
13
A 2004 survey
of employees in the BPO sector highlighted three top reasons for joining a BPO company: good
60
work environment (72%), high growth opportunity (69%) and good salary (56%).
14
The same
survey provided a different perspective on the challenges companies face when retaining
employees, with salary being the most cited reason (at 47% of respondents) for leaving a
company, followed by no growth opportunity or lack of promotions (45%). As part of efforts to
manage perational continuity despite high employee turnover in the BPO sector, companies are
building staffing models and business processes that take into account the anticipated or likely
turnover. Highly skilled technical professionals, in contrast, often possess skills valued highly in
their employing organizations. The expanding array of perks provided in the IT sector (shown in
Figure in the previous section) are evidence that employers take action to provide compelling
remuneration for valued technical employees. In addition to perks, learning opportunities
through job rotations or working visits to the U.S. have been used as retention techniques with
technical professionals.
61
Knowledge Management (KM) for E-government
At the macro level knowledge management (KM) may be defined as leveraging of knowledge
for attaining objectives of productivity and competitiveness of a national economy. At the level
of a government, knowledge management (KM) for government (KM4G) may be defined as
leveraging knowledge for improving internal processes, for formulation of sound government
policies and programmes and for efficient public service delivery for increased productivity.
Finally, knowledge management (KM) for e-government (KM4Eg) may be defined as
management of knowledge for and by e-government for increased productivity. KM4Eg is a
management tool for government decision makers and its programme implementers.
Government has been the principal user of knowledge since times immemorial. Primary
function of government is decision-making and e-government provides unique support to
decision-making. Government also has largest repositories of information and databases and e-
government helps in their efficient management. Government always had access to the best
available technology of the day to manage its affairs and e-government provides some of the
latest and best available technology. There has also been information explosion in recent years
and e-government provides an important tool to cope up with it. Office documents lead in
storage on paper, which highlights the need for paperless office, and which is an important
promise of e-government.
Importance of Knowledge Management (KM) for E-Government (KM4Eg)
Print, film, magnetic, and optical storage media produced about 5 exabytes of new information
in 2002 (SIMS 2003) (1 exabyte=10
18
bytes). 92% of the new information was stored on
magnetic media, mostly in hard disks. Film represents 7% of the total, paper 0.01%, and optical
media 0.002%. Almost 800 MB of recorded information is produced per person each year
(ibid.). Governments, therefore, face information explosion and KM4Eg can help governments
in coping with information explosion leading to better policy formulation, better programme
implementation and need-based skill formation for increased productivity. KM4Eg is no longer
a choice but an imperative if economies have to survive in the unfolding era of privatization,
liberalization and globalization.
62
Figure: The decision-making process in government supported by e-government
KM4Eg may be viewed from a variety of perspectives, for example, process perspective, user
perspective, technical perspective, organizational perspective, legal perspective, knowledge
perspective, cultural, societal and political perspective (Wimmer 2002).
S.N. Type of Content Terabytes
1 Books 39
2 Newspapers 138.4
3 Office Documents 1,397.5
4 Mass market periodicals 52
5 J ournals 6
6 Newsletters 0.9
7 Total 1,633.8
Source: How much information 2003 (SIMS 2003)
Table: Worldwide production of printed original content: Storage content: Paper
Decision-Making
Process
INPUT OUTPUT
KNOWLEDGE
Policies, Programmes,
Implementation
Supported by E-government
63
Exploding Five Myths in Knowledge Management for E-government
Myth 1: KM is a fad.
Wrong. It is here to stay whether we call it by this or any other name.
Myth 2: KM is not for government.
Wrong. Government being knowledge-based, it is very much for government.
Myth 3: KM is not for civil servants
Wrong. Being knowledge workers, civil servants are very much concerned with KM.
Myth 4: KM is not for e-government champions.
Wrong. KM being an integral part of e-government, e-government champions, whether
politicians or civil servants, are vitally concerned with it.
Myth 5: KM is theoretical discipline.
Wrong. It is a practical management tool, which has tremendous potential for increased
productivity and competitiveness.
Issues in Knowledge Management for E-government
A number of issues, some old and some new, have arisen in knowledge management for and by
e-government in government, for example,
(i) information is not up to date.
(ii) required information is not available,
(iii) too much information is collected,
(iv) very little information is used in actual decision-making,
(v) there has been information explosion and
(vi) new areas like information and communication technology (ICT) and e-government have
emerged calling for collection of new information.
Knowledge Pyramid for E-government
Knowledge pyramid is frequently used by knowledge management (KM) scholars (see, for
example, Cong and Pandya (2004) section 1. Knowledge management (KM) for e-government
has four components of
(a) data, which consists of facts and figures,
64
(b) information, which is interpreted data (data +interpretation),
(c) knowledge, which is use of information ( data +interpretation +use), and
(d) wisdom, which is application of knowledge (data +interpretation +use +application). Note
that wisdom, defined here as application of knowledge, and not knowledge per se, is the highest
form of knowledge.
Knowledge management (KM) toolbox for e-government
A number of knowledge management (KM) tools and techniques exist for e-government. For
example,
1. After Action Reviews (AARs) (Pioneered by U.S. Army; for learning lessons from an activity
or project),
2. Communities of Practice (COPs) (killer app of KM for sharing of knowledge),
3. Knowledge Audit (A systematic process to identify an organisation’s knowledge needs,
resources and flows, as a basis for understanding where and how knowledge can add value - de
Brun 2005. Also comparison of performance against preset standards).
4. Knowledge Plan (Based on knowledge strategy)
5. Exit Interviews (Capturing knowledge of departing employees)
6. Sharing Best Practices (Identifying, capturing in one part of organisation and sharing with all
others)
7. Knowledge Centres (Connecting people, information, databases)
8. Knowledge Harvesting (Capturing knowledge of “experts” and making it available to
others).
9. Peer Assists (Learning from experience of others before undertaking an activity or project)
10. Social Network Analysis (Understanding relationships between people, groups and
organisations as to how they facilitate or impede flow of knowledge)
11 Storytelling (Ancient art of sharing knowledge still widely used), and
12 White Pages (Preparing a directory of Experts) (Source: Adopted from De Brün 2005)
Knowledge Management Cycle
KM can be viewed as a cycle consisting of six successive phases: 1.Undertake Knowledge
Audit, 2 Create Knowledge, 3 Capture Knowledge, 4. Store Knowledge, 5. Use Knowledge,
and 6 Review Knowledge.
65
Phase I Undertake Knowledge Audit
Ask questions like: Who collects what information? Why is it collected? Is it collected in time?
Is collected knowledge put to any use? Is there a better way of collecting knowledge?
Is required information being collected?
Phase II Create Knowledge
Take stock of existing knowledge. Assess knowledge needs of the organization. Determine
who will create what information, when and in what format Use knowledge management (KM)
tools for knowledge creation.
Phase III Capture Knowledge
Transform tacit knowledge into storable explicit knowledge (Neve 2003). Record one-to-one
conversations. Record a brainstorming session Record minutes of the meetings and other
proceedings Record success profile of individual e-government champions.
Phase IV Store Knowledge
Organize knowledge into codifiable and noncodifiable categories (Warren et al. 2006). Use
electronic media for knowledge storage. Open a knowledge centre in the ministry/department.
Identify and use “best practices” in knowledge storage.
Phase V Use Knowledge
Knowledge captured and stored should be made accessible to all concerned personnel.
Distribute and share knowledge. Set up knowledge distribution and knowledge sharing
mechanisms. Provide knowledge inputs to policy makers. Monitor knowledge use
Phase VI: Review Knowledge
Scan the horizon to anticipate knowledge needs of ministry/department Review the existing
stock and flow of knowledge. Make use of simple but effective knowledge indicators. Involve
stakeholders in knowledge review. Has knowledge led to better decision making and/or higher
productivity? The knowledge management cycle may be seen in Figure 4.
66
Ten Guiding Principles for introduction of knowledge management (KM) in e-
government
Guiding Principle1: Develop a knowledge management (KM) strategy for the organisation
Leverage knowledge for achieving organisational goals and serving citizens and non-citizens.
Guiding Principle 2: Proceed step-wise, from simple to the complicated.
Adopt modular approach. Do not attempt anything highly ambitious in the initial stages.
Guiding Principle 3: Do not re-invent wheel. Make use of existing knowledge and insights.
Undertake knowledge needs assessment. Only then plan the next step.
Guiding Principle 4: Make use of information and communication technologies (ICTs)
But do not forget GIGO, garbage in, and garbage out.
Guiding Principle 5: Make use of people, process and technology (PPT) model.
But do not forget: Computers: fast, accurate, dumb, People: slow, sloppy, smart
Guiding Principle 6: Prepare a simple and modular knowledge sub-plan incorporating
knowledge management (KM) strategy.
Do not use any complicated knowledge management (KM) tool or mechanism that cannot be
successfully implemented.
Guiding Principle 7: Include knowledge management (KM) sub-plan in the e-business plan of
Ministry/Department.
Do not prepare any stand-alone knowledge management (KM) sub-plan. It is more likely
to fail than succeed.
Guiding Principle 8: Secure top management support to knowledge management (KM)
sub-plan.
Remember, no plan can succeed without top management buy-in. This is to be a priority.
Guiding Principle 9: Demonstrate results.
Remember, the best way to convince any one about practical utility of knowledge
67
management (KM) is to show concrete, verifiable results.
Figure: The Knowledge Management Cycle
Guiding Principle 10: Review the implementation of knowledge management (KM) sub-plan
from time to time.
Review the implementation of the knowledge management (KM) sub-plan against the
following three criteria: Has the implementation of the knowledge management (KM) sub-plan
1
Undertake
Knowledge
Audit
5
Use
Knowledge
6
Review
Knowledge
2
Create
Knowledge
3
Capture
Knowledge
4
Store
Knowledge
The
Knowledge
Management
Cycle
68
resulted in: (a) better decision-making by government, (b) better service delivery to citizens and
non-citizens, and (c) better performance by civil service.
69
Knowledge Management & Its Application in India
CASE-1
INFOSYS TECHNOLOGIES
Infosys Technologies is the first Indian company to be inducted into the Global Most Admired
Knowledge Enterprises (MAKE) Hall of Fame. Infosys features among 22 other global
organizations including Dell, General Electric (GE), Hewlett Packard (HP), Accenture, IBM and
Microsoft. Infosys has been recognized for its organizational learning and for transforming
enterprise knowledge into shareholder value. It is also the first and only Indian company to win
the Global MAKE award for the third consecutive year.
The 2005 Global MAKE Winners were recognized by a panel of senior Global Fortune 500
executives and internationally recognized knowledge Management experts as leaders in:
• Creating a corporate knowledge-driven culture
• Developing knowledge workers through senior management leadership
• Delivering knowledge-based products/solutions
• Maximizing enterprise intellectual capital
• Creating an environment for collaborative knowledge sharing
• Creating a learning organization
• Delivering value based on customer knowledge
• Transforming enterprise knowledge into shareholder value
The award stands as a testimony to clients, emphasizing the strength of their partner. The 2005
Global MAKE award winners offer long-term potential due to their intellectual capital-driven
wealth creation. A total of 10 Global MAKE Winners rank among the global top 100 companies
by market capitalization. Similarly, for the publicly traded 2005 Global MAKE Winners, return
on assets was nearly four times that of the Global Fortune 500 company median. Infosys
Technologies ranked among the highest in this category.
Acknowledging the award, Nandan M Nilekani, CEO, President and MD, Infosys Technologies
said, “At Infosys, Knowledge Management (KM) is central to a core strategy of providing
differentiated value to customers and enabling their business growth. KM has helped us develop a
70
pervasive culture of beneficent knowledge exchange across geographies. We are therefore
extremely delighted to be ranked among the world's Most Admired Knowledge Enterprises and to
be inducted into the Global MAKE Hall of Fame.”
Rory Chase, Managing Director of Teleos, which administers the MAKE program, said: "The
Global MAKE Winners are effectively transforming enterprise knowledge into wealth-creating
ideas, products and solutions. They are building portfolios of intellectual capital and intangible
assets which will enable them to out-perform their competitors in the future. "
Commenting on the award, Dr. J .K. Suresh, Principal Knowledge Manager, Infosys Technologies
Limited, said, “At Infosys, we consider KM as a powerful medium for creating sustainable
networks of people across intra-organizational boundaries. It also provides a symbolism for
aligning individual initiative and creativity with organizational growth.
CASE - 2
E-ENABLING RELIANCE
Reliance intends to provide customised, and personalised services, to its customers, drawing upon
the power of the Internet.
It intends to implement suitable Supply Chain Management (SCM), Customer Relationship
Management (CRM), and Knowledge Management (KM) strategies, substantially cutting
inventories, increasing responsiveness, and hence provide enhanced services to customers. The
entire procurement cycle - forecasting, planning, replenishment, supply chain financing, and
transportation - will be automated, leading to significant cost savings.
CASE – 3
HINDUSTAN LEVER LIMITED (HLL)
Hindustan Lever Limited (HLL) has identified 9 new business initiatives, which along with the
present businesses, will drive the company’s ambition to double its turnover every four years. The
71
9 new growth engines comprise entry into categories new to HLL, and unique business systems
for specific channel or segment opportunities.
Rural Business System: HLL has developed appropriate products for rural India. It deploys
communication and information technology to establish connectivity in the distribution system at
a scale never attempted before. Finally, in a win-win partnership, it will join hands with rural self-
help groups; the initiative will create critically needed sustainable jobs for thousands of villagers,
while for the company it will translate into extending its distribution into hitherto unexplored
territory.
The Internet Opportunity: HLL has developed a 3-pronged strategy to leverage the Internet. First,
the company will Connect. The web-enabled extended supply chain of stockists, suppliers, banks
and even potentially top retailers will create the most capital-efficient supply chain optimised for
handling product, cash and information flow. Second, HLL will Attract consumers, and further
strengthen relationships by becoming the preferred online provider of information, products and
services on health, beauty and nutritional needs.
CASE - 4
ASIA'S MOST ADMIRED KNOWLEDGE ENTERPRISE
In the late 1990s, Tata Steel began to introduce knowledge management initiatives in the
company. It started with a small group of people from within the organization. The group formed
a "knowledge repository", where all the employees shared their experiences and knowledge. One
year after the knowledge repository was formed, the company formed "knowledge communities",
which was a platform for like-minded people to meet and share their experiences. In 2001, Tata
Steel developed a "KM index" to evaluate the performance of individual employee in the KM
initiative. Later, it linked performance evaluation to KM and used a balanced scorecard to
monitor the performance of individual employees, divisions, as well as the organization as a
whole, in KM. All these initiatives of Tata Steel seem to have paid off; in early 2003, Tata Steel
was recognized as one of Asia’s Most Admired Knowledge Enterprises. It was the only steel
company in the world to have received the MAKE award.
72
In 2003, Tata Steel was chosen as one of Asia's Most Admired Knowledge Enterprises (MAKE).
It was the only company in the manufacturing sector in India and the only steel company in the
world to receive this award. The award was in specific recognition of Tata Steel's knowledge
management (KM) initiatives, which were started in late 1990s. Tata Steel was the only
manufacturing company in India to have implemented KM. Tata Steel's management expected
KM to play a key role in establishing intellectual assets, rather than physical assets, as the growth
driver of the company.
KM was also expected to be an important source of competitive advantage for Tata Steel. Tata
Steel was early to recognize the significance of KM for the success of a company. It made it
compulsory for all its employees to participate actively in its KM program. The company based
its new performance assessment program on the participation of each individual employee in the
KM program through the introduction of a "KM index ".
The index tallied the points achieved through participation in the KM program, giving the
employees a benchmark for their participation. Tata Steel also encouraged employees to
experiment with new ideas, for which they were rewarded.
Tata Steel's KM initiatives were successful and the number of hits at KM sites of Tata Steel in
2001-02 was 1100 compared to Shell's (second most admired company in Europe) 1000 hits,
even though Tata Steel had only 3000 registered users as compared to Shell's 10000 registered
users. Through Tata Steel's KM initiatives, expert skills became available throughout the
organization and productivity increased. As employees were encouraged to come out with
innovative ideas, their job satisfaction increased, and another benefit was a reduction in the R&D
expenditure.
CASE - 5
SATYAM COMPUTERS
Satyam Computer Services Limited has received the IBM Lotus Award in the Knowledge and
Content Management Solution category for the Tenth Annual IBM Lotus Awards (formerly
73
known as the Lotus Beacon Awards). IBM Lotus Awards recognize exceptional IBM
PartnerWorld business partners that specialize in Lotus software solutions and have excelled at
providing quality products, innovative solutions and superior services to customers.
For the R&D branch of an Indian Fortune 500 customer in the oil industry, knowledge
management was a prime corporate initiative. Satyam helped the organization treat its wealth of
scientific knowledge much like any capital asset, improving collaboration and efficiency on R&D
projects.
The interactive Web-based solution integrates IBM software technologies like IBM WebSphere
Portal and a suite of Lotus Products, to offer more than 200 scientists a better way to collaborate
and share vital knowledge and information.
CASE - 6
ITC Ltd
A digital transformation
ITC began the silent e-revolution of rural India with soya growers in the villages of Madhya
Pradesh. For the first time, the stereotype image of the farmer on his bullock cart made way for
the e-farmer, browsing the e-Choupal website. Farmers now log on to the site through Internet
kiosks in their villages to order high quality agri-inputs, get information on best farming
practices, prevailing market prices for their crops at home and abroad and the weather forecast –
all in the local language. In the very first full season of e-Choupal operations in Madhya Pradesh,
soya farmers sold nearly 50,000 tons of their produce through the e-Choupal Internet platform,
which has more than doubled since then. The result marks the beginning of a transparent and
cost-effective marketing channel. Bringing prosperity to the farmers' doorstep.
74
Smart Cards enable farmer identification to provide customised information on the echoupal.com
website. Online transactions are captured to reward farmers for volume and value of usage.
Linking farmers to remunerative markets
Farmers grow wheat across several agro-climatic zones, producing grains of varying grades.
Though these grades had the potential to meet diverse consumer preferences, the benefit never
trickled down to the farmers, because all varieties were aggregated as one average quality in the
mandis. Enter ITC's e-Choupal intervention. The e-Choupal site is now helping the farmers
discover the best price for their quality at the village itself. The site also provides farmers with
specialised knowledge for customising their produce to the right consumer segments. The new
storage and handling system preserves the identity of different varieties right through the 'farm-
gate to dinner-plate' supply chain. Encouraging the farmers to raise their quality standards and
attract higher prices.
75
2006 Indian Most Admired
Knowledge Enterprises (MAKE) Report
Executive Summary
The Indian Most Admired Knowledge Enterprises (MAKE) study is part of Teleos’ MAKE
research program. The Indian MAKE study was established in 2005 to recognize organizations
(founded and headquartered in India) for their ability to create shareholder wealth (or in the case
of public and non-profit organizations to increase societal capital) by transforming new as well as
existing enterprise knowledge into superior products/services/solutions.
The Indian MAKE research is based on the Delphi methodology. This research tool employs an
expert panel’s perceptual knowledge to identify critical issues – in the case of the Indian MAKE
study to identify those organizations which are leaders in creating organizational intellectual
capital and wealth through the transformation of individual/enterprise knowledge into world-class
products/services/solutions. Through several rounds a consensus is developed among the panel’s
experts. It is this consensus of expert opinion which provides the validity to the Delphi, and
Indian MAKE study results.
A blue ribbon panel of senior Indian business executives and leading Indian-based knowledge
management / intellectual capital experts selects the Indian MAKE Winners. In the Indian MAKE
study there are three rounds of consensus building. In the first round, members of the expert panel
nominate enterprises founded and headquartered in India.
In the second round, each member of the expert panel selects a maximum of three organizations
from the list of nominations. Those organizations selected by at least 10% of the expert panel are
recognized as Indian MAKE Finalists. In the third and final round, the Indian MAKE Finalists are
ranked against each of the eight knowledge performance dimensions which form the MAKE
framework and are the visible drivers of wealth creation:
•creating an enterprise knowledge-driven culture.
•developing knowledge workers through senior management leadership.
•delivering knowledge-based products/services/solutions.
•maximizing enterprise intellectual capital.
76
•creating an environment for collaborative knowledge sharing.
•creating a learning organization.
•delivering value based on customer knowledge.
•transforming enterprise knowledge into shareholder value.
A total of 37 organizations were nominated as 2006 Indian Most Admired Knowledge Enterprises
2006 Indian MAKE Finalists
Enterprise Industry
o Bharti Airtel Telecommunications
o Eureka Forbes Consumer products
o Infosys Technologies IT solutions
o Larsen & Toubro Construction & engineering
o MindTree Consulting IT consulting & solutions
o Patni Computer Systems IT solutions
o Satyam Computer Services IT solutions
o Tata Consultancy Services IT solutions
o Tata Steel Metal fabrication
o Wipro Technologies IT solutions
Table 1: A total of 10 organizations were selected as 2006 Indian MAKE Finalists (based on
nominations from at least 10% of the Indian MAKE expert panel).
A total of 7 Indian MAKE Finalists were recognized as 2006 Indian MAKE Winners (based on
the total composite scores). The 2006 Indian MAKE Winners are shown in alphabetical order in
Five organizations repeated as Indian MAKE Winners: Eureka Forbes, Infosys Technologies,
Tata Consultancy Services, Tata Steel and Wipro Technologies. For the first time, Tata Steel was
recognized as the 2006 overall Indian MAKE Winner. Last year’s inaugural overall Indian
MAKE
Winner was Infosys Technologies.Newcomers to this year’s Indian MAKE Winner’s circle are:
Bharti Airtel and MindTree Consulting. Enterprises failing to repeat as Indian MAKE Winners
are: i-flex solutions and Satyam Computer Services.
2006 Indian MAKE Winners
77
Enterprise Industry
1. Bharti Airtel Telecommunications
2. Eureka Forbes Consumer products
3. Infosys Technologies IT solutions
4. MindTree Consulting IT consulting & solutions
5. Tata Consultancy Services IT solutions
6. Tata Steel Metal fabrication
7. Wipro Technologies IT solutions
Senior executives tend to look through the ‘lens’ of high-level strategic issues and how well
organizations are meeting these challenges. Nominations from this group are influenced by strong
leadership and the results of knowledge-driven metrics, such as market capitalization, expanding
intellectual capital assets, customer loyalty and shareholder value.
The panel of chief knowledge officers and knowledge management / intellectual capital experts
tend to see things through the ‘lens’ of the development and implementation of enterprise
approaches and strategies leading to knowledge-driven excellence in terms of superior
products/services/solutions.
Enterprises Receiving the Most 2006 Indian MAKE Nominations
Indian Senior Executives CKOs and Leading KM/IC Experts
o Bharti Airtel Bharti Airtel
o Eureka Forbes Eureka Forbes
o Infosys Technologies Infosys Technologies
o Tata Consultancy Services Tata Steel
o Wipro Technologies Wipro Technologies
Key Findings
•Many of the Indian MAKE leaders adopted their corporate knowledge strategies during the late
1990s and early 2000s. Although starting several years after pioneering Western companies,
Indian-based organizations have been very successful at benchmarking and transferring
knowledge best practices found in Asian, European and North American MAKE Winners. Today,
only a few Indian MAKE leaders have reached parity with their Western MAKE counterparts –
most Indian organizations still lag behind regional and global MAKE leaders.
78
•Indian MAKE leaders are focusing on intellectual property, intellectual assets and brands, but as
a rule still do not have in place enterprise-wide intellectual capital management strategies.
•Advanced IT-enabled collaborative knowledge sharing tools are now a core competency for
MAKE Winners. It appears, however, that Indian, Asian and North American MAKE leaders are
more ‘innovative’ in applying new Internet-based tools to effectively share and reuse knowledge
in an increasingly global workplace.
• European and North American MAKE Winners have improved their scores in managing
customer knowledge. Many Indian organizations continue to fall well below the MAKE leaders’
standards. In order to move into higher value-adding product/service segments, Indian enterprises
must focus on this important knowledge performance dimension.
•Financial reporting for Indian companies is more opaque than found in North America and
Europe. As a result, Indian companies have placed less emphasis on managing, measuring and
reporting their effectiveness in transforming enterprise knowledge into increased shareholder
value. Investors and national/global financial regulators are increasingly demanding greater
‘transparency’ in reporting this information. Indian firms will come under growing pressure to
implement best practices in this area.
•According to the MAKE expert panel, the Indian knowledge-based economy is driven by the
following key business sectors (based on the number of MAKE Finalists in each industry): IT
software/solutions, manufacturing and telecommunications.
•The second annual Indian MAKE study has revealed that the country’s knowledge leaders are
few and concentrated in one business sector – IT solutions. This large concentration of Winners
from a single business sector indicates that there are few knowledge ‘role models’ available
throughout Indian business and industry.
•It also should be noted that there is a significant gap (in the total composite score) between the
ten Indian MAKE Finalists and other nominated organizations. The result is a two-tier Indian
knowledge league table. In other words, the Indian MAKE Finalists have knowledge processes
which match those of MAKE leaders from around the world. However, the remaining Indian
MAKE nominees are still in the early stages of implementing their enterprise knowledge
strategies and must spend more time and effort before they can join the Indian MAKE Winners’
circle.
• The Indian government and national business associations face the challenge of creating
programs that encourage and facilitate the sharing of best knowledge practices between the Indian
79
MAKE Winners and the rest of country’s business and industry. This structured transfer of
knowledge skills and competencies will enable all of Indian business to more effectively compete
in today’s global knowledge economy.
Overall 2006 Indian MAKE Winner – Tata Steel
Established in 1907 by its founder J . N. Tata, Tata Steel is India’s largest integrated private sector
steel company with annual sales of US $5 billion and over 40,000 employees. Over the years,
Tata Steel has emerged as a thriving, nimble, steel enterprise due to its ability to transform itself
rapidly to meet the challenges of a highly competitive global economy and commitment to
becoming a supplier of choice by delighting its customers with services and products. Constant
modernization and introduction of state-of-the-art technology at Tata Steel has enabled it to stay
ahead in the industry and successfully meet the expectations of all sections of stakeholders.
The company’s fifth phase of the Modernization Program focused on leveraging the intellectual
capabilities of its employees to generate sustainable value for the stakeholders. Now, as Tata
Steel marches towards its goal of becoming a Global Leader, the Knowledge Management
initiative is working as an enabler to grow and utilize the physical assets to the maximum. The
2006 Indian MAKE panel has recognized Tata Steel for creating an environment for its
knowledge-driven organizational culture (1st place) collaborative knowledge sharing (1st place),
organizational learning (1st place), and managing customer knowledge (1st place).
2006 Indian MAKE Winners
The remaining 2006 Indian MAKE Winners are (in alphabetical order):
Bharti Airtel
Bharti Airtel is a part of Bharti Enterprises, and is India’s leading provider of telecommunications
services. The company has annual revenues of US $2.5 billion, employs 10,000 people, and has
over 27 million customers. Bharti Airtel is structured into three individual strategic business
units: mobile services, broadband & telephone services (B&T), and enterprise services. The
mobile services group provides GSM mobile services across India in 23 telecom circles, while the
B&T business group provides broadband & telephone services in 92 cities. The Enterprise
80
services group has two sub-units -- carriers (long distance services) and services to corporations.
All of the services are provided under the Airtel brand.
The 2006 Indian MAKE panel has recognized Bharti Airtel for its organizational learning, and
managing customer knowledge.
Eureka Forbes
Eureka Forbes, part of the Shapoorji Pallonji Group, has single-handedly created markets for
“concept product categories,” such as water purification systems, vacuum cleaners and air
purifiers through the direct selling method. The company’s vision is: “A happy, safe and
pollution-free environment built on trust and lasting relationships with customers.”
Headquartered in Mumbai and expanding throughout South-East Asia, the company has over
6,000 employees known as Eurochamps (including a 5,000-strong direct sales force). In the fiscal
year ending March 2006, Eureka Forbes reported revenues of US $153 million.
The 2006 Indian MAKE panel has recognized Eureka Forbes for its knowledge-based
products/services/solutions (1st place), and transforming enterprise knowledge into shareholder
value (1st place).
Infosys Technologies
Infosys Technologies provides consulting and IT services to clients globally. With 2005 annual
sales of US $2.2 billion and employing over 66,000 people worldwide, the company uses a low-
risk Global Delivery Model (GDM) to accelerate schedules with a high degree of time and cost
predictability.
During the past several years, Infosys has made a concerted effort to provide an integrated
solution to meet the knowledge needs of the organization in the four basic dimensions of
knowledge management: people, process, technology and content.
The 2006 Indian MAKE panel has recognized Infosys Technologies for maximizing the firm’s
enterprise intellectual capital.
MindTree Consulting
MindTree Consulting, an international IT and R&D services company, was established in 1999
by 10 industry professionals who came from Cambridge Technology Partners, Lucent
81
Technologies and Wipro. The company, co-headquartered in Somerset, New J ersey, USA, and
Bangalore, India, has annual revenues of US $100 million and employs over 3,000 people.
MindTree develops applications to help companies enhance their enterprise operations. The
company also delivers product development services and designs reusable building blocks for
high-tech companies.
The 2006 Indian MAKE panel has recognized MindTree Consulting for its knowledge-driven
organizational culture, developing knowledge workers through senior management leadership (1
st
place), and managing customer knowledge.
Tata Consultancy Services
Tata Consultancy Services (TCS) is a leading information technology consulting, services and
business process outsourcing organization. Founded in 1968, TCS has annual sales of US $2.8
billion and employs over 78,000 consultants located in more than 35 countries. TCS has
engineered some of the world’s most complex applications and next-generation IT infrastructures.
TCS’s unique ‘web of participation’ structure enables the company to maximize the benefits of its
depth, diversity and delivery capability to offer innovative solutions across business and
technology domains.
The 2006 Indian MAKE panel has recognized Tata Consultancy Services for maximizing the
firm’s enterprise intellectual capital (1st place).
Wipro Technologies
Wipro Technologies provides comprehensive IT solutions and services, including systems
integration, information systems outsourcing, package implementation, software application
development and maintenance, and research and development services. The company has more
than 40 ‘Centers of Excellence’ that create solutions around specific needs of industries. Wipro
Technologies has annual sales of US $1.6 billion and employs over 30,000 people.
82
The 2006 Indian MAKE panel has recognized Wipro Technologies for organizational learning,
and transforming enterprise knowledge into shareholder value.
This 2006 Indian MAKE study sets a benchmark for future Indian MAKE research. It is an
invaluable baseline for measuring the progress of Indian organizations as they strive towards
becoming world-class knowledge-driven enterprises.
The Most Admired Knowledge Enterprises (MAKE) research program is providing Indian
business leaders, practitioners and researchers with a clearer ‘picture’ of how organizations are
using knowledge as a key competitive differentiator in the 21st century economy. As our
understanding grows, so will our ability to manage knowledge for the benefit of the individual,
the organization
and Indian society.
Teleos
Teleos, an independent knowledge management and intellectual capital research firm, administers
the Most Admired Knowledge Enterprises (MAKE) program. The KNOW Network is a Web-
based global community of organizations dedicated to achieving superior performance through
benchmarking, networking and best practice knowledge sharing.
2006 Indian MAKE Nominees
A total of 37 organizations were nominated as 2006 Indian Most Admired Knowledge
Enterprises:
1. Bharti Airtel (Telecommunications)
2. Bharat Petroleum (Oil & gas)
3. Bhilai Steel (Metal fabrication)
4. Byrraju Foundation (Non-profit)
5. Dr. Reddy’s Laboratories (Pharmaceuticals)
6. Essar Group (Diversified manufacturing)
7. Eureka Forbes (Consumer products)
8. Grasim Industries (Diversified manufacturing)
9. HCL Technologies (IT solutions)
10. Hero Motors (Vehicle manufacturing)
83
11. Hindustan Construction Company (Construction & engineering)
12. Hindustan Lever (Consumer products)
13. Honeywell Technology Solutions Labs (IT solutions)
14. i-flex solutions (IT solutions)
15. ICICI Bank (Financial services)
16. Indian Defense Research & Development Organization (Government agency)
17. Indian Oil (Oil & gas)
18. Infosys Technologies (IT solutions)
19. Larsen & Toubro (Construction & engineering)
20. Mahindra & Mahindra (Diversified manufacturing)
21. MindTree Consulting (IT consulting & solutions)
22. Nihilent Technologies (IT solutions)
23. Oil & National Gas Corporation (Oil & gas)
24. Pantaloons (Retail)
25. Patni Computer Systems (IT solutions)
26. Polaris Software Labs (IT solutions)
27. Premier Evolvics (Testing & measurement equipment)
28. Reliance Industries (Diversified manufacturing)
29. Satyam Computer Services (IT solutions)
30. Steel Authority of India Limited (Metal fabrication)
31. Sundram Fasteners (Metal fabrication)
32. Tata Chemicals (Chemicals)
33. Tata Consultancy Services (IT solutions)
34. Tata Steel (Metal fabrication)
35. 3i-Infotech (IT solutions)
36. Wipro Technologies (IT solutions)
37. Zensar Technologies (IT solutions)
doc_415131591.pdf
Knowledge management (KM) has been evolving as one of the prominent management concepts in recent years. Business and multilateral organizations are developing its processes, tools and techniques. It was born of the need to achieve better productivity and effectiveness from the intangible assets or intellectual capital of the organizations.
Reading Material
Residential Programme
On
Knowledge Management Practice & Application
June 25-29, 2007
Kodaikanal
NATIONAL PRODUCTIVITY COUNCIL
Lodi Road, New Delhi - 110003
1
CONTENT
Sno Content Page No
1 Knowledge Management Concepts
Need for KM
Trends in knowledge management
KM in government and international organizations
Knowledge Management Benefits
2
2 KM Processes
KM Life Cycle
PPT Model
Factors preventing knowledge transfer
Promoting knowledge management
18
3 Knowledge Management and role of technology
Technology & functionality
Knowledge Network
Knowledge Audit and Mapping business process
27
4 KM Tools
Community Of Practice
Knowledge conversion, discovery
Knowledge discovery tools
36
5 Intellectual Capital management 49
6 Knowledge Management (KM) for E-government
Knowledge management (KM) toolbox for e-government
Knowledge Management Cycle
Ten Guiding Principles for introduction of knowledge management (KM)
in e-government
61
7 KM and its Application In India
Infosys, Airtel, TCS, ITC Ltd
69
8 MAKE Report 2006 75
2
KNOWLEDGE MANAGEMENT: CONCEPT, ELEMENTS AND PROCESS
Introduction
Knowledge management (KM) has been evolving as one of the prominent management
concepts in recent years. Business and multilateral organizations are developing its processes,
tools and techniques. It was born of the need to achieve better productivity and effectiveness from
the intangible assets or intellectual capital of the organizations. Governments are also moving
ahead to manage knowledge as a part of the development of public administration and an
initiative to improve governance. Managing knowledge is not a new idea to an organization or a
government. But the concept of KM as it is evolving focuses on the reinforcement of the
established tools from the perspective of improving the management of knowledge resources
(creating, storing, sharing, and transferring) within an organization and outside world. Efficient
and effective management of knowledge is critical to secure benefits from the knowledge
resources (data, information and knowledge) developed and obtained over a period of time.
Concept of knowledge and knowledge management
Knowledge is basic to human being. We all possess some knowledge. Being a subject of
everyone’s interest, knowledge is susceptible to multiple interpretations. The following
definitions might help to gain the perspectives of knowledge:
1. Awareness, consciousness or familiarity gained by experience or learning.’
2. Information and skills acquired through experience and education.
3. Knowledge is understanding the why, what, how, who, when, and relative to taking some
action. Knowledge is the product of organization and reasoning applied to raw data.
4. Knowledge is a fluid mix of framed experience, values, contextual information, and
expert insight that provides a framework for evaluating and incorporating new experiences and
information. It originates and is applied in the minds of knower. In organizations, it often
becomes embedded not only in documents and repositories but also an organizational routines,
processes, practices and norms.’
5. Knowledge is intrinsically a human characteristics manifested in the thinking, learning,
artistic, behavioral, and problem solving capabilities of human beings acting in a social context.
3
The function of knowledge is to make a sense of things. Knowledge is high-value form of
information that is ready to apply to making decisions and taking actions. It includes information,
ideas, experience, insights and awareness. It is the synthesis of information or what we know or
the state of knowing in-depth. Knowledge is often referred as the culmination of information
about the context and the consequence of events. Information that has a purpose or use is
knowledge.
Data leads to information and information leads to knowledge which confers a capacity for
effective action. KM involves the mental processes of comprehension, understanding and
learning through one or more means such as application of knowledge and skills, education, self-
study, observation and dialogue. Its main features are as follows:
? Knowledge is the core of human competence. The skill to identify critical knowledge
resources and use them in an objective manner enhances competence, develops self-
confidence and leads to effectiveness.
? Knowledge is built and enhanced through education, training, work experience, dialogue,
participation and social interactions.
? Knowledge is used to improve performance and to solve problems and contributes to career
and personality development.
? Knowledge should be constantly reviewed and updated to make it relevant and effective.
The notion of knowledge may be different in the context of an institution and an individual.
Institutional knowledge is the collective knowledge of all members of an institution. It is the
combination of ideas, understanding and lessons learned over a period of time and accessible to
4
the future members of the institutions. It encompasses information that has practical value in
making decisions, performing tasks and evaluating the results of performance. An individual
gains and enhances knowledge through multiple processes including constant and meaningful
application of skill and intelligence in performing specific tasks, continuous learning, social
interaction and analyzing performance results. It is an aggregate of capabilities built through
experience, applying skills and accessing knowledge resources. It is applied to accomplish tasks,
to make decisions, to advance career and to achieve higher productivity.
Knowledge can be general and specific, tacit and explicit.
Specific knowledge – implies the knowledge created and advanced through study, training
and working in a specific institution and work environment over a period of time. This
knowledge contributes in achieving specialization.
General knowledge – means the knowledge gained through the process of socialization,
education, self-study, and observation. It helps to widening the vision of an individual but
does not focus on specialization.
Explicit knowledge – refers to knowledge that can be expressed, captured, documented and
maintained in the forms of records and publications. Knowledge that is more or less explicit
can be embedded in procedures or represented in documents and databases and transferred
with reasonable accuracy.
Tacit knowledge – means to a hidden type of knowledge that is gained through socialization,
observation, on-the-job training, and mentoring and joint activities such as meetings and
teaming up for a project and interaction with environment. It is highly personal and hard to
formalize. It deals mainly with communication and collaboration between people. ‘The
challenge inherent with tacit knowledge is figuring out how to recognize, generate, share and
manage it.’ Subjective insights, intuitions and hunches fall into this category. ‘Tacit
knowledge is personal, context specific knowledge that is difficult to formalize, record, or
articulate: it is stored in the heads of people. It is mainly developed through a process of
interaction, debate, and trial and error encountered in practice.’ Such knowledge can be
transferred from one person to another through extensive personal contact, experience sharing
and story telling.
Good combination of factual, contextual, procedural and social knowledge makes individual
and institutional knowledge comprehensive, relevant and effective.
5
1. Factual knowledge means knowing the fact (what happened and what was the consequence,
result or output). A person who was involved in a specific event or had witnessed that event
possesses such knowledge.
2. Contextual knowledge implies knowing the context of any specific event or decision. A
person who was involved in the process of developing a policy, program or interactions with
related parties and implementation process possesses such knowledge.
3. Procedural knowledge refers knowing the procedures to be followed or to be adopted to
perform a task. Compliance with established procedures to ensure rule of law and legitimacy
of the works accomplished. Fundamentally all those who are involved in the implementation
are expected to have the knowledge of procedures to be complied with because of the
accountability requirements to be met at various stages of development, approval and
implementation of a policy, program or project or delivery of goods/services. People with the
supervisory responsibility should be thoroughly aware of the procedures to be followed.
4. Social knowledge implies knowing those aspects which helps in understanding and
addressing social issues such as the skill of building networks, managing social interactions
and negotiations among competing forces.
KM is the art of creating value from an organization’s intangible assets. It is the disciplined
way of connecting people with knowledge resources and the process of applying intellectual
capital effectively to enable to make informed decisions. KM is defined in different ways. Some
of its definitions are as follows:
1. Knowledge management is the way organizations create, capture, enhance, and reuse
knowledge to achieve organizational objectives. The word management is a misnomer, as
knowledge cannot be managed. What needs to be managed are the processes by which
knowledge is created, acquired, stored, acquired, validated, disseminated, and applied.
2. Knowledge management can be viewed as the process of identifying, organizing and
managing knowledge resources.
3. Knowledge management is an organize effort to espouse, develop and support a program of
change to create and operate a knowledge environment within an organization.
4. An integrated, systematic approach to identifying, managing and sharing an organization’s
knowledge and enabling persons to create new knowledge collectively and thereby help
achieve the objectives of organization.
6
5. Knowledge itself cannot be managed, but the environment, in which, it is created and shared
can be managed. In this respect, knowledge management can be defined as the creation and
the effective organization and use of knowledge for development results.
6. Systematic approaches to help information and knowledge emerge and flow to the right
people, at the right time to create value.
Knowledge Management (KM) Definitions
Author Definitions
Wigg (1997:7)
O’Dell and J ackson
(1998:4)
Darroch and
McNaughton
(2000:6)
Turban et al., (2003)
KM is the systematic, explicit, and deliberate building, renewal, and
application of knowledge to maximize an enterprise’s knowledge-
related effectiveness and returns from its knowledge assets.
KM is a conscious strategy of getting the right knowledge to the right
people at the right time and helping people share and put information
into action in ways that strive to improve organizational performance.
KM is the management function that creates or locates knowledge,
manages the flow of knowledge within the organization and ensures
that knowledge is used effectively and efficiently for the long-term
benefit of organization.
KM is the process of accumulating and creating knowledge, and
facilitating the sharing of knowledge so that it can be applied
effectively throughout the organization
By summarizing the above definitions, KM can be defined as a systematic and integrated
process of creating, analyzing, storing and disseminating knowledge resources, intangible assets
or intellectual capital. These assets may include structured databases, textual information such as
policy and procedure documents, and most importantly, the tacit knowledge and expertise that
reside in head of people.
In 2002, the Organization for Economic Co-operation and Development (OECD) launched a
survey of KM practices of ministries/departments/agencies of central government in member
7
countries. The survey used the term ‘knowledge management’ loosely to refer to a broad
collection of organizational practices related to generating, capturing, disseminating know-how
and promoting knowledge sharing within an organization, and with outside world, including:
• Organizational arrangements (decentralization of authority, opening up bureaucratic
divisions, use of information and communication technologies etc.);
• Personnel development (mentoring and training practices, mobility etc) and management of
skills;
• Transfer of competencies (database of staff competencies, outline of good work practices
etc.);
• Managerial changes and incentives for staff to share knowledge (staff performance,
assessment and promotion linked to knowledge sharing, evolution of the role of managers,
etc).
Need for Knowledge Management
KM helps an organization to better acquire, store and utilize knowledge resources and to gain
insight and understanding from its own experience. The KM ensures that decision maker has the
best information available. It encompasses the process of identifying, organizing and managing
knowledge resources which include explicit knowledge (information), know how (learning
capacity), know who (customer capacity) and tacit knowledge in the form of skills and
competencies. It encompasses the processes of
(a) the systematic, explicit and deliberate building, renewal, and application of knowledge
resources for an institution’s interests,
(b) securing return from knowledge resources. KM empowers many minds and provides benefits
to the organization by helping people to work together. Its main features are as follows:
(a) KM is about behavior, culture, learning attitudes and trust among people. Its motive is to
better acquire, store and utilize knowledge. It depends on the competencies of human
resources, their intuition, ideas and motivations. Mutual trust must be built and sustained
to encourage efficient knowledge sharing and transferring.
(b) KM is systematic and objective. The overall purpose of KM is to boost the efficiency and
effectiveness of organization by creating, obtaining (receiving), analyzing, verifying,
storing, preserving, retrieving and disseminating knowledge resources systematically. It
supports organizations to achieve their goal by managing and using information that is
8
most meaningful, practical and purposeful. KM is inextricably linked to the strategic
objective of the organization.
(c) KM is ever-changing. The management of knowledge is an on-going process. Change is
inevitable in an organization’s life. Knowledge resources identified as critical at a certain
point of time may not remain equally relevant due to a number of reasons in course of
time. Therefore, knowledge resources should be constantly reviewed, tested and updated
to stay relevant.
(d) KM is value-added. KM adds value by supporting organizations to achieve their goals by
providing reliable and relevant knowledge resources at the time of need and preserving
those resources in a systematic manner.
(e) KM is complimentary. KM plays complimentary role in enhancing organization’s
effectiveness. It supports the management of other resources of an organization by
supplying critical information and preserving knowledge resources developed in course
of time.
There is some degree of misunderstanding in KM practitioners on its scope. Some of them
consider that KM has to do is only with
(1) databases, and
(2) information and communication technology (ICT).
Databases and ICT are definitely critical to KM, but not limited to these two elements. ‘KM
requires cultural change and it is certainly not just the automation of processes.’ Policy, people,
process and technology are the integral elements of KM. Its main aspects are knowledge sharing
and transferring.
a) Knowledge sharing – It is about stimulating the exchange of experiences, ideas and
thoughts between people through social interaction. Sharing of knowledge among
colleagues and organizing debates helps to refine and enrich knowledge. ‘The human
factor in knowledge sharing focuses on the drivers that trigger people to do what they do,
on the possible levels of a person, and on the roles an individual play in an organization.’
Three conditions (social, organizational and technological) support in sharing knowledge.
Social conditions imply motivation, values, attitude, moods, emotions, skill levels and
roles. Organizational conditions refer to strategy, structure, systems, and style and shared
values in organizations. These elements significantly determine how a particular
9
organization plans to share the knowledge resources among its members to empower
them and to enhance their skills. Technological conditions imply knowledge repository,
knowledge route map and platform for sharing knowledge. A major tool of knowledge
sharing is ICT which connects people or with the sources of explicit knowledge.
b) Knowledge transfer (KT) - It is the process of transferring ideas, knowledge and
understanding from one person to another. It makes potential users aware of knowledge
and/or technology opportunities and helps support, facilitate and accelerate its evaluation
and eventual utilization. It involves two actions:
(a) transmission (sending or presenting knowledge to a potential recipient), and
(b) absorption (understanding of transmitted knowledge).
Knowledge that is not absorbed by the recipient is not transferred in real sense. Efficient
absorption contributes in enhancing recipient’s performance.
Trends in Knowledge Management
Knowledge is important because it makes people and organization powerful. No organization
can be better than its people. Knowledgeable people are respected and requested for consultation
and advice. History has shown that an organization and a state can prosper by the support and
dedication of its people and their knowledge not by the quantity of resources they own. People
and organization managing knowledge (reviewing and updating knowledge resources
periodically) and using them efficiently contribute substantially in raising the standards of living.
‘Understanding how people and societies acquire and use knowledge – and why they sometimes
fail to do so – is essential to improving people’s lives – especially the lives of the poorest.’ Lack
of knowledge and skill to use available resources and capability to develop resources are the
major reasons of backwardness. In the modern age of information, knowing is winning.
‘Knowledge and innovation have played an important role in the development of society
throughout history. The key to economic success is always linked to the advances in knowledge
creation and innovation and the ability to translate that knowledge into products and services.’
Change is an inevitable and an on-going process. Rapid changes in internal and external
environment have posed serious challenges to modern organizations. Efficient management of
knowledge resources and securing optimum benefit from those resources is one of the ways of
staying relevant. The cost of creating and capturing knowledge may be very high. Efficient
10
management of knowledge can save time and resources. Organizations that succeed KM consider
it as an effective tool for the creation, retention, sharing and transfer of knowledge.
The major motivations for focusing on KM are:
(a) To achieve organizational efficiency,
(b) To stay ahead of the competition,
(c) To maximize organization’s potential, and
(d) To manage intellectual capital which involves human, customer, structural and business
intelligence.
One of the main contributors of success is responsiveness. Comprehensive understanding of
stakeholders and their expectations and the availability of accurate and useful information tailored
to the organization’s needs is critical to enhance responsiveness. Continuous improvement in
operational efficiency and productivity is essential to long-term growth. The key to economic
success is always linked to the advances in knowledge creation and innovation and the ability to
translate that knowledge into products and services. Gathering correct information and using
them properly is critical to stay ahead of competition. The ability of an organization to innovate
depends largely on the capacity of managing knowledge.
Good reasons to pay attention on KM are as follows:
Technological breakthrough has made the world a global village. The concepts of
liberalization and globalization and the adoption of the open market policies have promoted
competition. Adopting and promoting measures that support in making organization
competitive is the only way of survival. Knowledge is one of the main bases of
competitiveness. The traditional factors of production (capital, markets and raw materials)
remain important but increasingly secondary to knowledge in establishing competitiveness in
the new global market place. Economists, development workers and business managers are
seeing the birth a new global economy, where knowledge is outstripping material resources
and capital as a source of wealth. Knowledge economy is a recently coined term that refers to
the stage of economic growth in which knowledge, as opposed to land, labor, and capital, is
the key factor of production.
11
Every member of organization irrespective of position is required to make some decisions.
Many decisions require historical and contextual information. Decision makers always look
for information that helps them in making right decisions. A well functioning KM system
supports in making useful information available for informed decision making.
Institutions spend substantial resources in developing policies, strategies and making
decisions of strategic importance. Some decisions may be implemented at various stages and
by multiple units independently or in collaboration. Managers implementing decisions require
credible data and information on the context and basis of strategies and decisions for
planning, programming, budgeting, implementation, monitoring and evaluation purposes.
An effective KM system contributes in:
(a) improving the level of performance by ensuring continuity and consistency in the
ways of doing things;
(b) promoting transparency in decision making; and
12
(c) saving resources in making decisions by retaining critical information; and
(d) Managing operations smoothly by bridging the information gap between the departing
and incoming member of the organization.
Organizations have to continue operations even people change. Systematic process of
knowledge transfer helps new staff members to learn about the work procedures, resources
and environment which contributes in enhance professional skill and adopting them in an
efficient and effective manner.
KM protects intellectual capital from deterioration, augments intelligence and provides
increased flexibility. Knowledge is applied to problem solving and learning, forming
judgments and opinions; decision making, forecasting and strategic planning; generating
feasible options for actions to achieve desired results.
KM helps networking to enable people to access knowledge resources developed by other
regions and countries. This also helps learning what worked well and what not. International
development institutions such as the UNDP, the World Bank (WB) and the Asian
Development Bank (ADB) consider that such networking will be beneficial to its staff and
also to member countries. Highlighting three dimensions of KM, Vice-President of the ADB
says ‘to understand KM, it’s important to understand its three dimensions. One is to manage
within ADB efficiently. For instance, if somebody is designing a project in Pakistan, that
person should be able to look at similar project in Indonesia and benefit from its experience.
The second dimension is to learn from DMCs. The third dimension is sharing knowledge
among countries with ADB as a regional bank well positioned to be a broker.’
Knowledge management in government and international organizations
As mentioned earlier, the KM is not a new concept and practice. Organizations were
managing knowledge resources in records. KM concept gained prominence in recent years
mainly because organizations realized that other resources can be more efficiently utilized and
operations can be cost-effective if knowledge resources are well managed and supportive to their
objectives. In addition, it was also recognized that having knowledge resources is not sufficient
for development, but it must be constantly reviewed, updated and properly maintained to
facilitate easy access. The aim of strengthening KM is to bring strategically important knowledge
resources into effective and common use. ‘Governments are often thought to be late comers in
management reforms, sometimes for good reasons such as policy continuity, the need to ensure
13
that good checks and balances are in place, or concerns for equity; often also because institutions,
public processes of civil service rules are designed in such a way that management changes are
more difficult to implement. The result of the OECD survey (2002) highlighted the importance of
KM for governments mainly for the following reasons:
1. Knowledge has become a critical determinant of competitiveness for the public sector.
2. Private firms produce goods and services that are increasingly intensive in intangible capital,
directly competing with the goods and services traditionally produced by the public sector.
3. Ageing civil servants and faster staff turnover also create new challenges for the preservation
of institutional memory and the straining of new staff.
4. Increasingly knowledgeable citizens require governments to be on top of newly created
knowledge, as it is increasingly rapidly produced by more differentiated actors.
5. Public policy goals have become more ambitious and complex than before.
Finland is one of the OECD countries where KM is advanced. Political, cultural and social
factors are behind the success. Reform in public administration has been the part of political
agenda which encompasses KM and strategies on information society, legislation focusing
openness, making openness a commitment of public officials, carefully listening to the citizen’s
needs and be prepared to take their feedback for consideration are contributing factors.
i
International organizations are emphasizing on KM as part of the initiatives for managing
development results and enhancing cost-effectiveness. The Asian Development Bank (ADB)
states that its KM framework is based on the following guiding principles:
(a) Fostering a knowledge-supportive environment – ADB considers that a corporate culture
that values learning and knowledge sharing is essential to it. The KM framework aims to
establish an enabling culture for effective knowledge management to promote staff
contribution to knowledge activities, encouraging every staff member to be a knowledge
worker.
(b) Ensuring results orientation and continued improvements – The KM framework is
designed to sharpen the results focus in undertaking KM initiative.
(c) Enhancing operational relevance – To ensure that knowledge management initiatives will
improve operational effectiveness, the KM framework will prioritize actions that have
strong operational relevance.
14
In 1996, former President of the World Bank J ames Welfensohen announced a change in the
way the bank would accomplish its unchanging mission of reducing global poverty. ‘He
contended that the bank should become a knowledge bank, as focused on disbursing the
knowledge assets to poor and developing countries needed as it was about providing economic
support for development projects.’ The vision of the knowledge bank focuses on the following:
(a) Creating knowledge through economic and sector work research, through learning from
the outside world and learning from successes and failures.
(b) Applying knowledge through products and services.
(c) Sharing knowledge with clients and partners.
The World Development Report, 1998 was focused on knowledge for development and
concluded that knowledge has perhaps the most important factor in determining the standard of
living. The WB assumes that ‘putting knowledge at the center of our development efforts will
bear fruit in two areas.
The first is increased social benefits – the more effective provision of public goods, including
better air and water quality, greater educational attainment and higher enrollments, improved
health and nutrition, and expanded access to essential infrastructure. These benefits will accrue to
the poor as well as to others in society.
The second is in better-functioning markets – for credit, education, housing, and land that
more efficiently coordinate resources and allocate opportunities across society. These
improvements will benefit the poor most, because they bear more than their share of the burden
of information failures.’
UNDP recognizes itself as the UN’s global development network, advocating for change and
connecting countries to knowledge, experience and resources to help people build a better life and
the need of managing knowledge to improve its effectiveness. UNDP’s Knowledge Management
Roadmap (April 2004) states ‘UNDP generates a wealth of development knowledge.
Unfortunately, the organization does not know what it knows. It neither fully understands what its
knowledge assets are, nor is it set up to leverage them to achieve maximum return. It has
identified six priority knowledge gaps and target deficiencies in the organization’s ability to:
1. Leverage to global development and operational experiences more effectively;
2. Maintain consistently high professional standards for project design and development;
15
3. Attract, retain and ensure the continued professional growth of top-notch problem-solvers and
practitioners;
4. Identify, convene and deploy the best possible teams for specific assignment, tasks and
projects;
5. Tap the full potential of the virtual networks and other existing collaborative tools; and
6. Provide timely and thorough reporting on development impacts and results.
ii
United Nations Economic and Social Commission for Asia and Pacific (UNESCAP) consider
KM as an initiative to help attain its three objectives:
(a) managing globalization;
(b) reducing poverty; and
(c) addressing emerging social issues.
The Office of Internal Oversight Services of the United Nations (UNOIOS) recently
published a report on the thematic evaluation of knowledge management networks in the pursuit
of the goals of the Millennium Declaration. According to the report, ‘there is no common
understanding of KM or knowledge sharing in the Secretariat, and knowledge and information
confused. Many develop KM strategy that typically outlines how the organization:
Communicates knowledge about programs and projects within and outside the organization.
Connects staff interested in cross-cutting topics to share ideas, help each other and move the
organization’s understanding of those topics forward.
Learns from projects that make learning accessible to people in other parts of the
organization.
Captures and organizes critical knowledge of staff as they transfer or retire.
Ties knowledge sharing to organizational goals.
Deepens and develops knowledge critical to the organization’s success.
Other international organizations engaged in the management of development cooperation
have also initiated the process of strengthening KM to achieve their objectives in a more cost
efficient and effective manner. Business organizations are focusing on KM to achieve optimum
benefit from the investment they have made to develop intellectual capital and intangible assets
and secure them from the affect of staff turnover.
16
Knowledge Management Benefits
Knowledge Management benefits are significant in terms of intangible and derived
tangible value to the organization and the stakeholder. Benefits are broadly classified in
terms of knowledge benefits – faster access to best knowledge, intermediate benefits –
promotes efficient operation and organizational benefits – faster innovation and
productivity improvement, and improved customer service. Efficient process of information
and
o Productivity improvement through operational innovation and excellence : KM
enables organization to reduce cycle time for new product and service
development, supply, installation etc., by preventing reinvention or duplicate activity
and promotes concurrent working on a task through collaboration. This approach
leads to savings and reduces costly mistakes.
o Enhanced value to Stakeholders’ : Increased bottom-line and stronger revenue
growth of an organization leads to satisfied employees and shareholders. Increased
responsiveness to customer and partners leads to business innovation and quicker
problem solving. KM enables organization to get predictive trends which lead to
value added features in products and services results in customer success.
o Competitive advantage : KM enable organization to new opportunities – new
markets, new products and services by systematic capture and sharing
knowledge from both internal and external environment(customers, prospects,
markets, competition, experts). Knowledge audit and mapping process enables
decision maker to quickly respond to the business requirements.
o Efficient Human Resource management – organization can identify the real
contributors, capture knowledge and introduce expert system for mission critical
function and thereby reduce the vulnerability due to churning out of
employees (resignation, retirement, transfer). Prevention of knowledge loss -
knowledge retention. Out-sourcing is easier as the real knowledge is codified and
not visible to the user.
o Improved decision-making : Auto creation of flags & Reports through
17
knowledge discovery and knowledge mapping process.
o Adaptability and flexibility.
o Maximization of knowledge re-use.
o Paves way for learning for better work and may require less direct supervision.
o Improved Quality – Product and services enhancements.
o Knowledge assets development – internal process and external knowledge.
18
Knowledge Management Process
An organization can generate value from its intellectual and knowledge-based assets by
managing those assets in a systematic and integrated manner. ‘To get the most value from an
organization’s intellectual assets, knowledge must be shared and provide the foundation for
innovation in products and services, enhanced employee retention, process improvement,
strategic decision making, improved client relationships and greater prosperity.’ Organizations
need to create an environment of trust and collaboration to retain good employees, to share and to
transfer knowledge. One step toward creating an environment of trust is to instill the sense of
belongingness in the employees, and giving them more active role in building the future of their
organizations. It makes them feel that they are making an important contribution to its success.
Knowledge embodied in documents does not necessarily translate into useful and usable
knowledge unless it is read, digested, manipulated and communicated from one person to another.
KM requires an infrastructure capable of supporting the creation and maintenance of knowledge
repositories, and an environment to facilitate knowledge sharing and organizational learning.
The major processes of KM are as follows:
(a) Identification of Knowledge – Creation of knowledge is a gradual process of adding
value to previous knowledge through a number of measures including innovation, work
experience, study, dialogue and interaction. The process of preserving and maintaining
knowledge resources commences only after they are created. Explicit knowledge can be
captured at various stag of its development in the form of documents, publications and
decision. It can also be obtained through website. Tacit knowledge can be created and
captured by promoting dialogue, interaction and attending seminars and workshops. Out
of three components of knowledge resources, knowledge is created and enhanced through
application of skill in specific work environment, assessment of results and
environmental factors etc. whereas data and information may be created manually or
though the application of computerized systems. Knowledge resources relevant to the
operation of the organization should be assimilated in a structured manner to enhance
their usefulness.
(b) Acquisition & Development (Verification and classification) – All information received
or generated internally may not be of same value for the future. An organization creates
and receives a number of data and information and makes decisions every day. Whether
all these data and information should be assimilated to the knowledge base? This matter
19
needs to be carefully addressed by managers in day to day operations so that over flow of
data and information can be prevented. Storing and preserving all knowledge resources
generated and received today may not be practical for a number of reasons. Therefore, it
is critical to verify and to analyze their relative significance to determine accuracy and
relevance before preserving them.
(c) Storage of Knowledge (Preservation and maintenance) – Critical knowledge resources
including knowledge in people’s head (tacit knowledge), maintained in organization’s
records, documents and publications should be preserved safely. These resources can be
stored in hard copy or in electronic format including microfilm. Organizations must have
their records management policy including retention period to systematize the
preservation of knowledge resources. International Standards Organization (ISO) also
focuses that ‘organizations should define and document a policy for records management.
The objective of the policy should be the creation and management of authentic, reliable
and usable records, capable of supporting business functions and activities for as long as
they are required. Organization should ensure that the policy is communicated and
implemented at all levels in the organization.’ Deterioration in the quality of preserved
knowledge resources could create negative consequences. Physical security is very
important in addition to proper recording of preserved knowledge resources. In modern
days, organizations depend more on information and communication technology (ICT)
ACQUISITION AND
DEVELOPMENT OF
KNOWLEDGE
IDENTIFICATION
OF KNOWLEDGE
APPLICATION OF
KNOWLEDGE
DISTRIBUTION /
SHARING OF
KNOWLEDGE
Knowledge Management Process
STORAGE OF
KNOWLEDGE
CONTINUOUS EVALUATION
OF KNOWLEDGE
20
for preserving knowledge resources. Organizations that have no sufficient ICT resources
maintain knowledge resources in hard copies.
(d) Sharing (Retrieval and dissemination) – Knowledge resources needs to be retrieved in
future to secure historic or contextual information mainly for making decisions and
solving problems. The impact of knowledge resources becomes minimal without proper
dissemination. Ensuring efficient dissemination of knowledge resources is critical to add
value in the system and processes of operation. Selection of right means of dissemination
is critical in case of tacit knowledge. Proper indexing and referencing can enhance
efficiency in disseminating knowledge resources.
Knowledge Management Life cycle process
Building of Knowledge Management is viewed as life cycle that encompasses review of
existing knowledge and planning, cost-benefit analysis and justification, and determining the
hardware and software for structure to knowledge requirements of the organization.
Identification of immediate, intermediate and long-term requirements of prospective
Knowledge Management system is essential. Well-defined life cycle is paramount for
successful development of knowledge management system.
Knowledge Management Life cycle begins with knowledge capturing, followed by
knowledge organization, knowledge refinement, knowledge transfers, and use or re-use as
shown in fig 5. Knowledge management Life cycle process is shown in fig below. This
process is centered primarily on business strategy and Knowledge Management objectives of
the organization. This process to be reviewed periodically and improvised wherever needed.
All identified business information is captured, codified and tested before this knowledge is
shared and transferred. The knowledge is made available to all needed users for its
effective use in their mission. Predictive models pertaining to the business requirements
can be developed to ‘alert’ users through automated process by ‘flagging’ or e-mail and
ensures that all prospective users know the new knowledge and used without being idle in
repositories. Knowledge Management system to be attuned with the organizational culture
and facilitate flow of knowledge, and encourage people to share insights, experiences and
know-how, while ensuring that the right information is available with right person in right
time.
21
PPT Model
Effective combination of policy and strategy, process, technology and human resources
(people) is critical to make KM meaningful.
(1) Policy, strategy and approach – First of all, governing body of the organization should
establish its KM policy and communicated at all levels. It should focus on the need of
strengthening knowledge base. KM strategy should focus on managing the knowledge
resources to support organizational change, the creation of opportunities, and rapid
adaptations to changing market realities and cover the following matters explicitly.
(a) Contribution of knowledge resources in achieving organization’s objectives.
(b) Categories of knowledge resources that need to be created and shared at different
levels to facilitate smooth operation at various purposes levels.
(c) An outline of a plan for preserving and maintaining knowledge resources that
addresses issues related to people, process and technology.
(d) An outline of criteria to measure success in managing knowledge resources.
There are three approaches for KM. Mechanistic approach focuses on use of information
technology (IT) in the management of knowledge resources. Cultural/behavioral approach
focuses on work culture and organizational behavior to encourage people to share, transfer
22
and preserve those resources. Systematic approach focuses on on-going process of refining
and updating knowledge resources and rational analysis of knowledge related problems and
resolving techniques. A willingness to learn and encourage learning is something that has
to be fostered in the organizational culture to be innovative and to stay relevant.
(2) Process – Organizations should identify and develop the methods and processes of KM
considering nature of operations, geographical dispersion, stakeholders, type and
interrelation between knowledge resources. Process should encourage knowledge sharing
culture. Due to the complexity associated with associated with knowledge sharing, a culture
of knowledge sharing needs to be instilled and cultivated within an organization.
In the knowledge economy, education is a key to create new knowledge, adapting the fast
changing working environment, acclimatizing to new socio-political structures and dealing
with the increasing amount of information created every day. Four types of interactions
(socialization, externalization, combination and internalization) within and beyond an
organization help in managing explicit and tacit knowledge and converting them from one
to another.
? Socialization refers to the process of sharing tacit knowledge between people. People
feel confidence through socialization which can be promoted by forming informal
groups and by encouraging people from different disciplines. Knowledge sharing can
be between one-to-one, one to many, and many to may interaction.
? Externalization refers to the process of articulating and codifying tacit knowledge.
Tacit knowledge is gradually converted into explicit knowledge through this process.
People with specialized knowledge and experience are to be encouraged to express
themselves so that their unique experience can be documented.
? Internalization refers the process of absorbing and utilizing explicit knowledge to
covert into tacit. This requires processing and analyzing external knowledge or
information, understanding it, and then internalizing it to create tacit knowledge.
Individual gains practical skill and enhances his/her confidence by internalizing explicit
knowledge.
? Combination refers to the process of converting explicit knowledge into complex sets
of explicit knowledge. It can be shared and transferred via documents and e-mails.
After an individual has accessed and retrieved the information, a reinforcing process
takes place whereby information is sorted, understood and conceptualized in different
23
situations. Knowledge maintained in documents and publications needs to be translated
into actions to enhance their practical value. Knowledge gained in different situation
and information generated through application of knowledge and skill has to be used to
refine current level of knowledge.
(3) People – As the overall objective of KM is to enhance productivity and effectiveness of
organization, people have the lead role to play in making it happen. Senior management
should consider how knowledge sharing fostered and people related issues such as training,
succession planning, mentoring, and job rotation and cross training can be addressed to
facilitate KM. Tacit knowledge cannot be transferred without encouraging people to
interact and share their experience, understanding and skill. As knowledge is power,
making knowledge widely available through sharing might been seen as threat to career
progression, hoarding knowledge becomes a natural phenomenon. But hoarding of
knowledge does not help organization. The system of reward and recognition can be
introduced to encourage knowledge sharing and reuse. A group of knowledge professionals
can be set up in an organization to support KM. Informal networks and community of
practice can also make positive contributions. Succession planning is critical to protect
from the loss of critical skills. In addition, job rotation also helps in bridging knowledge
gap.
People Process Technology
(4) Technology – KM is not about technology. But it plays important role in KM by facilitating
the information dissemination process, connecting people and systems and enhancing
access to large depositories of information. Technology facilitates the storage and
organization of information. Information technology (IT) is widely used to generate data
and information and preserve them. ‘Collaborative applications such as e-mail, calendaring,
scheduling, shared folders/databases, and threaded discussions promote knowledge sharing
and transfer.’
iii
Internet is the well recognized as the platform for communication and
PPT
Model
24
collaboration between people around the world and biggest repository of knowledge
resources. However, information technology can capture only explicit knowledge.
Issues and Prospects
Planning and a supportive organizational culture are critical in enhancing the effectiveness
of KM. Organizations recognize the importance of KM for their continued relevance and to
achieve effectiveness but fail in addressing issues that really contribute the systems and processes
of KM. Highlighting the issues in knowledge sharing, the UN OIOS report states ‘knowledge
sharing in support of the MDG’s is not sufficiently strategic, focused or well integrated with
organizational objectives. Different departments take different approaches to internal knowledge
sharing, which are mostly not systematic. The most common knowledge-sharing tools, such as e-
mail, meetings and websites, while useful, do not work best in connecting staff seeking each
other’s insights, experiences and ideas. Information and knowledge sharing is not consistently
integrated with daily work. Mechanisms and processes capturing and transferring good practices,
lessons learned and knowledge from departing staff are generally inadequate. Technology and
knowledge sharing is generally available but not always used.’
iv
This situation may also be
applicable to other organizations. Potential factors preventing effective KT and possible solutions
are as follows:
Inhibiting Factors (Friction) Possible Solutions
Lack of trust Build relationship and trust through face-to-face
meetings.
Different culture, vocabularies and
frames of references.
Create common ground through education,
discussion, publication, teaming, and job rotation.
Lack of time and meeting places;
narrow idea of productive work.
Establish time and place for knowledge transfers:
fair, talk rooms, conference reports.
Status and rewards go to knowledge
owners.
Evaluate performance and provide incentives based
on sharing.
Lack of absorptive capacity in Educate employees for flexibility; provide time for
25
recipients. learning; hire for openness to ideas.
Belief that knowledge is prerogative of
particular groups, not-invented-here
syndrome.
Encourage nonhierarchical approach to knowledge;
quality of ideas more important than status of
source.
Intolerance for mistakes or need for
help.
Accept and reward creative errors and collaboration;
no loss of status from not knowing everything.
Promoting trust is essential to build supportive environment. Lack of trust may lead to selfish
practices and poor communication which makes negative impact on the organization culture.
Educating people at all levels about what, why and how of KM and their respective roles and
responsibilities is first step towards consolidating KM approach.
Promoting Knowledge Management
Modern organizations have to promote its intangible assets and encourage members to make
best use of those assets to enhance effectiveness and optimize the return from the factors of
production. The value of KM relates directly to the effectiveness with which the managed
knowledge enables the members of the organization to deal with today’s situation effectively
envision and create their future.
The following measures should be considered to promote KM.
Decentralization and delegation of authority – KM is a participative and dynamic process.
People working at various levels possess operational, tactical and strategic knowledge.
Offices located at field, regional and central level should be encouraged to manage their
knowledge resources under the organization’s KM strategy. Decentralization policy should
recognize that knowledge resources at local levels are equally important as in central level for
effectiveness. Delegation of authority encourages managers to adopt flexible approach to
manage knowledge sharing.
Improvement in managerial capacity to facilitate knowledge and information sharing –
Managerial capacity should be enhanced to make managers capable to facilitate and monitor
the process of sharing knowledge and information both horizontally and vertically. Collective
knowledge of people at different levels makes up the knowledge resources of an organization.
Facilitating horizontal and vertical sharing of information enriches such resources and
supports in building capacity. As KM is emerging as a new discipline, the capacity of
managers must be enhanced to adopt appropriate measures of KM.
26
Incentives to staff to share knowledge and information – Sharing of knowledge requires
certain incentives. People normally question why they should spend time in sharing
knowledge which could reduce their importance and even challenge career opportunity.
Therefore, staff should be encouraged to sharing tacit knowledge so that members of
organization feel that they have required knowledge to manage operations.
Investment and improvement in ICT – Organizations are increasingly dependent on
information and communication technology (ICT) in their operations. Organizations should
constantly review and update their ICT capacity in the context of changing technology and
operations. Investment to ensure sustainable delivery of ICT services is essential to improve
KM infrastructure. In addition, the physical quality of storage should be well maintained so
that knowledge resources are well secured and retrieved efficiently.
27
Knowledge Management & Role of Technology
Knowledge management is being perceived as so seamlessly intertwined with information
technology that its true critical success factors may soon be lost in the pleasing hum of servers
and software.
Knowledge is the critical resource of business activity in this era. The technology gurus, as well
as hardware and software providers, define knowledge management in terms of understanding the
relationship of data, identifying and documenting rules for managing data and assuring its
accuracy and integrity. The convergent and consensus-building emphasis on such systems might
be congenial to stable and predictable organizational environments. However, such interpretations
of knowledge management, based primarily on rules and procedures embedded in technology,
seem wrongly aligned with a dynamically changing business environment.
(1) IT investments seem to have no direct correlation with business performance or knowledge
management. In the last 20 years, US industry has invested more than $1 trillion in information
technology but has realized little improvement in the efficiency and effectiveness of its
knowledge workers. This failure is due to the organizations' ignorance of ways in which
knowledge workers should operate through innovation, collaboration, sharing knowledge and
building on each other's ideas.
(2) The same dollar spent on the same system may give a competitive advantage to one company
but only expensive paper weight to another. Hence the key factor for the higher return on IT
investment is the effective utilization of information as it relates to organizational performance.
How corporate executives go about deciphering the mantra of effective utilization, however,
remains a debatable issue.
(3)The new world of knowledge-based business ought to involve a continuous redefinition of
organizational goals, purposes and "ways of doing things". Today's new business environment is
characterized by radical and discontinuous change and demands cautious responses from
organizational members who need to carry out the mandate of a faster cycle of knowledge
creation and action based on this knowledge.
28
(4) Many organizations rely on information technology infrastructure; but no matter how
sophisticated, it is not the key to effective knowledge management. Success depends more on the
social system in which people operate. The social ecology of the company drives people's
expectations, defines who will fit in, shapes individual's freedom to pursue actions without prior
approval and affects how they interact with both insiders and outsiders.
(5) Management. And the myths are as follows:
First myth: Information technologies can store human intelligence and experience Databases and
groupware applications store bits and pixels of data. But they do not store the skills that people
possess for making sense of data bits. Moreover, information is context sensitive. The same
assemblage of data can evoke different responses from different people. Many say that while
people come and go their experiences can be stored in databases. But unless a person's mind can
be scanned and stored directly into a database, one cannot assume that somebody else can get
back the experience of the first person.
Second myth: Knowledge management technologies deliver the right information to the right
person this idea mirrors an outdated business model. The new business model of the information
age, however, is marked by fundamental, not incremental changes. Business cannot plan long-
term; instead they must shift to a more flexible "anticipation-of-surprise" model. It is impossible
to build a system that predicts who the right person at the right time is, let alone what constitutes
the right information.
Third myth: Information technology can distribute human intelligence. This assumes that the
company can predict the right information to distribute and the right people to distribute it to.
And bypassing the distribution issue by compiling a central repository of data for people to access
does not solve the problem either. The fact of information in the database does not ensure that the
people would see or use the information. While most of our knowledge management technology
concentrates on efficiency and creating a consensus-oriented view, the data therein is rational,
static and without context. And such systems hardly account for renewal of existing knowledge
and creation of new knowledge.
7) The confusion between knowledge and information has caused managers to waste billions of
dollars in information technology ventures that have yielded marginal results. It is necessary for
29
the business managers to realize that unlike information, knowledge is embedded in people and
knowledge creation occurs in the process of social interaction.
(8) A recent Mckinsey report points out that most of the companies do a poor job of managing
their talent. With so many other things in the realm of Information Technology the missing
ingredient is people. While focusing on hardware and software, most companies overlook the
importance of the organizational structure and skills, which are absolutely necessary for
successful use of data and for decision-making. Only human beings can take the central role in
knowledge creation. Computers are merely tools, however great their information-processing
capabilities may be. The changed business environment imposes the need for variety and
complexity of human interpretation of information outputs generated by computer systems.
(9) Some of the corporate giants are realizing this fast. Ford, for instance, has been using
PeopleSoft package not for handling basic HR transactions but for capturing and managing HR
knowledge for purposes of talent management, general HR analysis and decision making.
(10) Nonlinear change imposes upon organizations the need for devising nonlinear strategies.
Such strategies cannot be predicted based on a static picture of information residing in the
company's databases. Rather such strategies will depend upon developing interpretive flexibility
by understanding multiple views of the future. In this perspective, the objective of business
strategy is not to indulge in long-term planning of the future. On the other hand, the emphasis
should rather lie on understanding the various future world scenarios using suitable techniques.
(11) A focus based on strategic planning was pioneered and chronicled by Arie de Geus, the
strategy chief of the multinational Royal Dutch/Shell as follows:
o View the organisation as a human community capable of providing diverse meanings
to information outputs generated by the technological systems.
o Give more explicit recognition to tacit knowledge and related human aspects, such as
ideals, values, or emotions, for developing a richer conceptualisation of knowledge
management.
Implement new, flexible technologies and systems that support and enable communities of
practice, informal and semi-informal networks of internal employees and external individuals
based on shared concerns and interests. Make the organisational information base accessible to
30
organisation members who are closer to the action, while simultaneously ensuring that they have
the skills and authority to execute decisive responses to changing conditions.
(12) The implementation of these issues can be viewed in terms of the shift from the traditional
emphasis on transaction processing, integrated logistics and work flows to systems that support
competencies for communication building, people networks and on-the-job learning. The three
architectures enabling such competencies are:
o A new information architecture that includes new languages, categories and
metaphors for identifying and accounting for skills and competencies.
o A new technical architecture that is more social, transparent, open, flexible and
respectful to the individual users.
New application architecture oriented towards problem-solving and representation rather than
output and transactions.
(13) It was the company's social ecology that contributed to Nucor Corp's success in becoming
one of the most efficient steel producers in the world. Through effective management of
knowledge, Nucor developed and constantly upgraded its strategic and proprietary competencies.
The social ambience of the company allowed excellence in the tasks associated with sharing and
mobilizing knowledge: identifying opportunities to share knowledge, encouraging individuals to
share knowledge, building effective and efficient transmission channels and convincing
individuals to accept and use the knowledge received.
(14) At Dow Chemicals, the head of the strategic planning department sponsored an effort to
figure out how to use SAP data in new reporting processes. The IT organization worked with its
users within the organization to create a number of function-specific and process-specific data
marts. Over 50,000 people, from the factory floor to the CEO's office, were trained to structure
and process data, access techniques and analyze tools.
(15) The workforce of a forward-looking company must be able to process and manipulate
knowledge as well as perform particular skills, says Dorothy Leonard-Barton in Wellsprings of
Knowledge. Top management must encourage creative chaos, cross-fertilization among
31
disciplines within the company and benchmarking with competitors. Those companies that are
most enthusiastic about pursuing knowledge are those most likely to harness the power of
innovation.
(16) Knowledge management embodies organizational process that seeks synergistic combination
of data processing capacity of information technologies and the creative and innovative capacity
of human beings. The knowledge workers need to be facile in the application of new technologies
to their business contexts so that they can delegate "programmable" tasks to technologies and
concentrate their time and efforts on value-adding activities that demand creativity and
innovation. More importantly, they should have the capability of judging if the organization’s
"best practices" are aligned with the dynamics of their business environment. Such knowledge
workers are the critical elements of the double loop learning and unlearning cycle that should be
designed within the organizational business processes.
(17) Given the need for autonomy in learning and decision making, such knowledge workers
would also need to be comfortable with self-control and self-learning. They would need to act in
an intrapreneurial mode that involves a higher degree of responsibility and authority as well as
capability and intelligence for handling both. Such creativity and inquiry-driven learning will,
obviously, be difficult to achieve within traditional command-and-control paradigm.
(18) In an industry-wide analysis of IT investments, economist Paul Strassmann, has observed in
his book The Squandered Computer (Economic Press, 1997) that elevating computer to the level
of a magic bullet may diminish what matters the most in any enterprise: educated, committed and
imaginative individuals working for organizations that place a greater emphasis on people than on
technologies.
(19) Managers need to develop a greater appreciation for their intangible human assets, captive in
the minds and experiences of their knowledge workers. Without these assets, companies are
simply not equipped with a vision to foresee or to imagine the future.
Technology and functionality
S.N. Functionality Information and Communication Technologies (ICTs)
1 Searching Search Engines
2 Categorizing Computer Languages (XML, RDF)
32
3 Composing Office Suite Applications
4 Summarizing Artificial Intelligence
5 Storing Storage Media
6 Distributing Networks
7 Workflow Groupware
8 Content Management Content Management Systems
9 Customer Relationship Customer Relationship Management (CRM) Software
10 Metadata Standards and
Interoperability
Semantic Web Technologies
Knowledge Network
Knowledge is available in individual, tools, documents, databases, knowledge bases, group, function,
particular SBU and corporate. Organization to recognize the new knowledge that gets created as a by-
product while individual’s carrying out an activity or task or product or project or service. This knowledge
is effectively useful only when it is dynamically transferred and shared as and when the knowledge is
created. Knowledge Network enables knowledge transfer. Knowledge Network connects individual to
organization and vice versa. Knowledge network alongwith other knowledge process can be used to
capitalize this new knowledge. In Knowledge Management system, knowledge is captured, transferred,
shared, synthesized and transacted in
33
real-time with all authorized individual. Utilization by any part of the function or department or organization
independent of location leads to organizational competency.
D Di ir re ec ct t K Kn no ow wl le ed dg ge e N Ne eu ur ra al l s sy ys st te em m
K Kn no ow wl le ed dg ge e N Ne et tw wo or rk k p pe er rs sp pe ec ct ti iv ve e : :
Process : Bundle of connection ‘within’ & ‘between’ tasks, functions, SBU’s, Corporate and
SBU, and Environment – customer, vendor, other expert knowledge centers etc. Dynamic
knowledge exchange takes place..
Outcome: Speedy organisation’s actions & Reponses to customer or tasks
K Kn no ow wl le ed dg ge e s sy ys st te em m : :
Process : Knowledge is acquired, processed, stored & retrieved from
1. Individual knowledge,
2. Corporate culture of learning & transmitting knowledge,
3. Knowledge embedded in organizational processes,
4. Physical archives,
5. Organizational structure
D Di ir re ec ct t K Kn no ow wl le ed dg ge e N Ne eu ur ra al l
I In nd di ir re ec ct t K Kn no ow wl le ed dg ge e N Ne eu ur ra al l s sy ys st te em m
C Co or rp po or ra at te e
Indirect knowledge
SBU-
Transfer
D Di ir re ec ct t k kn no ow wl le ed dg ge e
T Tr ra an ns sf fe er r
Strategic Business Unit
SBU1 SBU2 SBU3 SBU4 SBU5 --n--
D
D D D D D
• Centralization allows use of scare resource to multiple purposes.
• Apply Corporate knowledge to tasks & form a portfolio of Organizational competencies.
• Intensity of knowledge transfer depends on relatedness of SBU’s(Strategic Business Unit)
& degree of centralization.
• Knowledge transfer take place between SBU’s to corporate and then to other SBU’s; or
SBU to another SBU and then to yet another SBU or corporate. This is an indirect
knowledge transfer.
I In nd di ir re ec ct t K Kn no ow wl le ed dg ge e N Ne eu ur ra al l N Ne et tw wo or rk k
Technology that is available is potentially adequate to connect all knowledge workers in real-
34
time. Speed, accuracy, volume, distance, security and maintenance are critical factors to build a network.
Intranet, Internet, Extranet, Local area network, Wide Area Network, dial-up links, and Legacy networks
are widely used depending upon the size and requirement of the organization. Increased connection
between employees will be productive knowledge transfer and leverage the expertise of an individual
across the organization. Knowledge Networking enhances the individual and organizational learning
which will aid business requirements. Knowledge network constitutes of both ‘Direct knowledge neural
network’ and ‘Indirect knowledge neural network’ as shown in fig above SBU’s can be geographically
distributed in different location or some SBU’s can be distributed in one country or across many
countries, and all can be connected in Knowledge network. This feature facilitates collaboration
and execution of activities concurrently. Neural system is dynamic. Interrelation continuously
transforms and activates various functions depending upon the stimuli from environment and/or within
organization.
Knowledge Audit and Mapping business process
Knowledge Audit
Knowledge audit is a systematic appraisal of the organization’s intellectual resources and
capabilities with respect to identification of existing knowledge, adequacy, gaps, sources, sinks, flows
and recommend measures to augment the required knowledge. Audit reveals on how the knowledge that
exists and not exploited, knowledge required but not explored, and the extent of utilization of
organizational knowledge flows around. Knowledge audit provides evidence-based qualitative
assessment to i ndi vi dual , team, function, SBU and corporate. Identification of knowledge
sources within the organization and the best external sources leads to quicker acquisition of
knowledge required for the business. Knowledge audit enhances the stakeholder value by this process.
Various Knowledge audit methods are used. Snowden (1999) believes that the best
representation for knowledge map is stories that contain context, value, and the message. Dataware
(1998) believes that productive analysis require to answer questions like What knowledge we have,
what knowledge is missing, who needs this knowledge, and how it will be used? Wiig’s (1993)
knowledge analysis is summarized below:
• Questionnaire-based knowledge surveys are used to get an overview of various operations
of an organization.
• Middle management target group sessions are used to understand their need for
management support.
• Task environment analysis is used to understand the existing knowledge and its extent
of application.
• Verbal protocol analysis is used to identify knowledge elements.
• Basic knowledge analysis is used to identify aggregated knowledge.
35
Critical factors Available Not
available
Who has
Design
knowledge
Yes
K
Production
knowledge
Yes
L
Strategic
planning
No
• Knowledge mapping is used to develop concept maps as hierarchies or nets.
• Critical knowledge function analysis is used to identify knowledge-sensitive areas.
• Knowledge use and requirement analysis is used to identify how the knowledge is used for
business purposes and how situations can be improved.
• Knowledge scripting and profiling is used to understand the details of knowledge intensive
work and the role knowledge plays in delivering the quality products.
• Knowledge flow analysis is used to gain an overview of knowledge exchanges, losses, inputs of
the business processes.
Knowledge Mapping Knowledge mapping
Knowledge map is a visual contextual
representation in graphs used to codify the
knowledge. Formal, informal, explicit, tacit,
internal and external knowledge can be
represented in knowledge map to identify the
business issue. Knowledge map is used to
generate job specific knowledge requirements, to
communicate complex process, develop
knowledge structure that represents concepts and
their relationship, building employee knowledge
competency and understanding. Various methods are
used to create knowledge map and few are
illustrated in fig.. Marketing function has
Production
P P P P
P P P
Engineering
P P P P
P P P
Finance
P P P P
P P P
Marketing
P P P P
P P P
very less interaction with Engineering and more interaction with Finance as depicted in
bidirectional arrow line(P-person). Where as the interactions to be otherwise as Marketing need
to have more interaction with Engineering than with Finance.
Subject Expert name
1 R
2 S
3 T
4 U
If the subject 1, 2 & 4 are
associated, then the expert R
Knowledge map
is very useful. Suppose 1, 2, 3 & 4 are totally different, then the earlier assumption will not hold. Fig.17
illustrates the area of concern as Strategic planning and depicts who has knowledge in each function.
Knowledge mapping is very useful for effective decision-making.
36
Knowledge Management Tools
Community of Practice
Individual knowledge is shared with the other team members during the discussions or correspondences,
when they work on a subject or find solution for a problem or carrying out a task or a job or jointly working
on a project. Knowledge is still available with the individual but not with the team. Individual behavioral
traits, motivational factors - recognition and rewards, organizational culture and company strategies and
polices have an impact on this knowledge sharing process as shown in fig below
When the team collaborates with the common purpose over an extended period, the ideas, alternative
approaches, expertise and solution to a subject do emerge. This knowledge is captured and shared
to other teams within the department(s) or functions or strategic business
37
unit or corporate. Following such practice within a community enables social learning, nurturing new
knowledge, stimulating innovation or sharing the existing tacit knowledge within the organization.
A typical illustration is shown in fig. below.
Knowledge creation via Team
Team
perform a job
Initial Knowledge
New
Knowledge
Outcome
realized
Knowledge
Captured
& codified
Outcome
Compared
to action
New
experience
From the above process, the
individual learning startlingly
increases through collaborative
learning and also the organization
benefits by the business solution.
Moreover, the organizational
learning increases and the
knowledge get accumulated in
corporate memory. After review and
approvals, the organization can share
Reusable by same
team
Knowledge usable
by others
Knowledge
gained
this new knowledge to other allied
communities within the same
industry or anyone who seeks similar
knowledge could use readily without much effort. This social learning shared practice within
community is known as Community of Practice (CoP). Generally, CoP is formed within a single
discipline so that the effort can be focused. Technology that exists today ameliorates multi-
disciplinary participation.
38
Etienne Wenger (1998) has described CoP in terms of interlaying four fundamental dualities
such as ‘participation vs reification’, ‘designed vs emergent’, ‘identification vs negotiability’ and
‘local vs global’. ‘Participation vs Reification’ duality is of utmost interest to knowledge
management. Reification is an abstract form and represented in document. Reification is
necessary to avoid teamwork turning into informal group activity in the name of co-ordination and
mutual understanding. Participation is an active involvement in teamwork or social process. Involvement
of an individual must go beyond repeating the reified description and must challenge and
readdress its meaning.
Community Practices – Features
o
Promotes innovation through problem-solving, learning, knowledge creation, Self
manage
& Self-govern.
o Combats isolation. Support one another to enhance learning and performance.
o Enable productive inquiry for creation of job-critical knowledge and exchange. Members create
knowledge base. Enhance speed of response to customer.
o Share knowledge through collaborating and learning.
o Use a variety of synchronous and asynchronous collaborative tools via multiple channels
including face-to-face meetings and on-line platform Supported by the organization as a
valid way to learn and collaborate. Increases capabilities and meta-capabilities. Creates
competitive advantage.
39
Knowledge conversion
Merely storing structured knowledge constitutes only some part of knowledge management.
Every process used to create, communicate and apply tacit knowledge will result in new
knowledge e.g.: a worker applies knowledge from a similar problem / resolution from Database and the
final solution may differ in some way. This successful resolution to be documented and saved and will
now expand the organizations knowledge base. To convert tacit knowledge to explicit knowledge,
following goals are required to be achieved to address this objective.
• Prevention of Knowledge Loss due to employee turnover on transfer, retirement,
resignation, mindset of individual etc,.
• Prevention of duplicate activity. Everyone need not re-invent when somebody within the
organization had already done that activity.
• Adaptability and Flexibility – allows employees development to better grasping power of their work
and may require less direct supervision and fewer interventions.
• Capturing of Technical Problems and Solutions can be easily referred during problem analysis
thereby reduce time.
• Promote collaborative learning through Communities of Practice.
• Motivate individual with reward system for knowledge sharing and capture in document for further
transfer.
Fig
For conversion of tacit knowledge to
explicit knowledge, the process to be
developed by identification of
mission critical functions,
formulation of systems, format
structure and key factors that are to be
captured, content, procedures, and
measures required to promote
40
involvement of individuals and associated functions or departments
Externalization
Knowledge conversion process is
shown in fig 2. Nonaka and
Takeuchi (1995) developed four-
stage spiral model for knowledge
conversion within business process.
Tacit knowledge of the expert or key personnel within the organization can be made explicit by
documenting the knowledge one posses or procedure or steps followed up in completing a given task
and the experience gained. This codified manuals can be shared and incorporate this
41
knowledge in development of other products and services. This process of converting tacit knowledge
to explicit knowledge is known as externalization.
Internalization
The reverse process of conversion from explicit knowledge to tacit knowledge is known as
internalization. The codified context specific explicit knowledge to be reviewed and absorbed by
the employees so that the formal rules and procedures can be adapted in the same way when such similar
requirement arises during the development of new product and services.
Socialization
This is a conversion from tacit knowledge to tacit knowledge through sharing of experiences, models,
imitations and practices. This type of knowledge transfer takes place during coaching, apprenticeship,
presentation, seminars, meetings, conferences, training, workshop and any other informal interactions
within and outside the organization.
Combination
The accumulated knowledge is disseminated by sharing among one another or within the
function(s) or group(s) or community or communities. It is a conversion of explicit knowledge to explicit
knowledge This transfer process is a primary way to leverage knowledge.
Knowledge use and reuse
Knowledge based system known as ‘Expert system’ is developed with business specific domain knowledge
from one or more experts. The expert system can have features of ‘fully automatic’
for closely repetitive process or ‘semi-automatic’ for varying repetitive process and ‘manual’ option
for first time creation. Expert system is essential for organization that has high-level of know-how
experience and expertise and cannot be easily transferred to other members. Thorough review of
business process with respect to the following key factors is essential before deciding on substitution of
‘Expert system’ to the existing process.
• Criticality of the process (e.g engineering, production, marketing etc).
42
• System / methods currently followed for development of new product or engineering of
equipments or custom-built equipment for a given plant or services.
• Identify the current knowledge level and the missing knowledge.
• Percentage of application or reuse of the existing design knowledge (part or component,
equipment information), additional information added to complete the activity.
• Cumbersome or expertise required for an individual process is high.
• Productivity requirements - Present cycle time and required to address market
requirements and capacity utilization.
• Rework or repair resulting out of a particular process due to inconsistency or overlapping
in certain steps followed in that process.
Knowledge dissemination
To use knowledge to deliver products and
Programmable
services-, make knowledge to solve
problems and the like. Dissemination is the
primary way to leverage knowledge
Quick
Knowledge
Broad based
Knowledge
throughout the organization. Both explicit and
tacit knowledge is shared in a real-time
Local
Global
environment that will assist employee to
perform unique functions effectively. By
Interest
Knowledge
Complex
Knowledge
this process, individual can access to divers
resources and new expertise. Such cross-
fertilization of knowledge creates value to an
organization.
Unique
Fig. Knowledge sharing
43
Knowledge transfer is done by working together, learning by doing, apprenticing, face-to-face
discussion, or embedding knowledge through procedures and document exchange. The collective learning
of an organization is gleaned from learning of its members as well its stakeholders and customers.
Collaborative technologies are used to aid in effective knowledge flow. Knowledge sharing recognizes
the nature of knowledge and classifies them as ‘quick knowledge’, ‘broad based knowledge’, ‘interest
knowledge’ and ‘complex knowledge’ and accordingly shared as shown in fig.. The term share is an
exchange of knowledge between individuals, between or within teams or between individuals and
knowledge bases, repositories, and so forth.
Knowledge security
Captured knowledge is treated as a competitive weapon. The security levels for knowledge sharing
need to be deliberated in all business process levels. It is also felt that it is potentially dangerous to
share the documentation, as the credibility of the users cannot be established concretely. However,
an attempt has to be made to underline the need of security of information while deciding the sharing of
information among the working groups. Knowledge Management system must be secured from any
unauthorized access either internal or external. In addition, it must allow secure access for any
authorized user, no matter where they are. The system should support security features like electronic
signatures, firewalls, encryptions, HTTPS etc.
• Build security features like electronic signatures, firewalls, encryptions, HTTPS etc,.
• Protecting the data from external threats.
• Protection against network attack, malicious code, virus, unauthorized application execution,
Security at desktop level, User management etc.,
• Implementation of access control at different levels such as user level, functional role level, etc.,
to control access to the Knowledge Management system.
• Create and maintain an access control list for each object created within the system.
• Build an audit mechanism to keep track of access, check-in/check-out, status change etc
Customization of Policy based integrated enterprise level security software to be introduced for
44
protection against network attack or malicious code or virus or unauthorized downloadable
application execution etc. is to be prevented through access control, Security and Firewall systems.
Knowledge Discovery
Knowledge discovery is used for knowledge creation in Knowledge Management system such as
discovery of business intelligence, insights, new relationship, trends, patterns etc., from various
functions or processes. Various information from different or associated processes are to be
captured, classified, compared, synthesized and derive the insights, trends, patterns etc using software
tools that exists today or customized tool to suit the required business process. From this knowledge
discovery process, Knowledge Management system is to enable creation of management information
report automatically and alert the user by flag or e-mail in addition to provision of business process
interlocks between processes. Knowledge discovery process aids organization to solve inter-
disciplinary problems, improve business process efficiency, productive and proactive.
Knowledge discovery system to provide unified access to information assets, regardless of format,
repository or media type and increases user productivity by reducing the time and cost of finding
information in the sea of data. Filtering new information in real-time, convert data to knowledge
discovery, personalize and organize the retrieved information in folders, or share expertise with
associates shall stimulate knowledge discovery across the enterprise. It shall utilize a variety of
indexing, concept and entity extraction, and content filtering methods regardless of content type –
unstructured, semi-structured, and structured.
• Create high level abstract business insights, trends, patterns etc and make it available for effective
decision-making.
• Knowledge discovery system shall be scalable and have consistent taxonomies for
categorization and pragmatic classifications for information access.
• Create semantic Indexing based on domain-specific application indexes
• Develop strategies for Data Management and applications.
o Data sources – Flat files, Relational databases, Data warehouses, Business unit wise
databases, Time series databases, geographical databases, etc,.
o Taxonomy of Data –Business transactions, Technical design methodology and
calculations, Process related, Testing related, personnel related, Text and
45
documents, repositories etc,.
o Data preparation – Evaluating data quality, Handling missing data, Processing outliers,
Normalising data, Quantifying data etc,.
• Model building – Association rules, Classification trees, Neural networks.
An overview of knowledge discovery tools and techniques are summarized below :
Case based reasoning (CBR)
CBR can assist in capturing of tacit knowledge from process-centered activities and manage procedural
knowledge. Interactive CBR techniques are widely used for knowledge discovery in knowledge
Management system.
Text mining
Text mining involves extracting patterns, behaviors and general knowledge from large collection
of textual information, which are found in knowledge repositories. Text knowledge mining process
aids to develop Self-Organizing Maps (SOM’s), clusters and productive models (Rules). SOM brings
together related concepts and shows their intensity or frequency within the data/text based as well as
their proximity to other concepts. Fuzzy clusters provide a spatial analysis of documents and semantic
concepts in the form related aggregations.
Neural networks
Neural networks are used to infer patterns from data, knowledge and image e.g.: GUESS
(Generically used experts scheduling system). Push Technology, Quantitative analysis, Data mining
tools etc are also used for knowledge recovery.
Data mining
Data mining is a process that uses sophisticated statistical analysis and modeling techniques to uncover
patterns, correlation and relationships that exist within the data but are not recognizable using
conventional data analysis techniques. Data mining provides response to extracted patterns,
selection of the right action, learning from past actions, and turning action into business values.
46
OLAP (On-Line Analytical Processing)
The need for non-static reporting system has led to the development of On Line Analytical
Processing. It is possible to drill down into the ultimate detail of a parameter and zoom up for a general
view. OLAP have the ability to answer what-if and why questions along with
Multidimensional views of data, Calculation intensive capabilities, and Time intelligence.
Knowledge Management and Organizational culture
Organizational culture is to be conducive for knowledge transfer and knowledge
sharing. Knowledge transfer provides knowledge to someone else whereas knowledge
sharing is an exchange of knowledge between individuals or teams and knowledge bases.
Individuals will resist sharing for competitive and self growth. Almost any organization and all
global ones have multiple cultures. Organization also must make employees to believe that
their services are required for long-term and not as replaceable commodity, which will
enable them to share knowledge between peers. Organization must provide tools-for
capturing, storing, sharing; training and education; time-to absorb, use and share new
knowledge; and empowerment to use knowledge. Making knowledge available and sharing
with employees or sharing between individuals connotes certain level of trust. For a
positive knowledge sharing, co-operation, collaboration and collective learning, building
altruistic culture by development of on-line and off-line systems of knowledge
dissemination promotion and measurement system with motivational drivers like
reward, recognition, compensation etc is essential. Positive organizational
cultural values are Leadership, understanding the mission, internalizing the management
practices, and trusting one another.
Top management must have conviction, commitment and support in word and deed for
implementation of Knowledge Management as this endeavor calls for change management in the
area of process, values and business strategy. Otherwise, Knowledge
management implementation efforts will be strained due to the diversity of interests.
Organizational cultural change takes time to attune to the knowledge based strategy driven
culture and particularly the outcome depends on leadership. Organization requires having
patience and persistence while certain employees resists for change. Knowledge exchange
process will also certainly enable positive change in the organizational culture.
47
Precursors to success
• Top management conviction, commitment and leadership endorsement
• Shared sense of purpose and ownership
• Self-initiated view of learning and readiness to learn from each other
• Climate of trust and involvement
• Partnering mindsets and capabilities
• Strong technology platform
• Constructive suggestion to take KM implementation forward
Pitfalls
• Looking for the ideal approach under all circumstance
• Resistance. Excuses for not sharing content
• Emphasizing only on concept and planning, over execution
• Top management ambiguity. Emphasizing only on what’s already there
• Underestimating the technology that exist today
• Failure to identify organization’s position with respect to global competitors.
• Inadequate focus and value for development of core competency for New Product
development, Facility and overall process system improvement
• • Senior internal executives not freed-up to drive KM program due to exigency of work
Overview of software tools and solutions for KM
Diverse products and services are provided by organization(s) to different market segments.
Technology varies for different product, process and services do. Also the requirements and KM
strategy of different organization will also vary. Knowledge audit and scoping needs includes
requirement gathering, understanding the existing process and IT systems, review of best
practices, review of software products, vendor evaluation, visits to the organization where KM is
already implemented, taking support from KM consultants, proof of concepts demo etc will have
to be done before selecting the software and hardware products. There is no single software
addresses all requirements of all organization and some combination of software tools are
required for KM. e.g. for engineering enterprise, integration of many discipline and software, and
exploitation of software features for different business process are critical while selecting the
software for KM.
48
Some vendors have homogeneous solution for many requirements of KM. Few vendors have
built-in knowledgeware in their software products which will provide bidirectional, synchronous
and asynchronous features for applications. Many of the vendors use all KM jargons but it is felt
that the degree of their product features is varying widely. Few vendors are having software that
will meet only few KM requirements and they get different software from different vendors and
integrate them to meet the total KM requirements. In this scenario, the solution is offered from
heterogeneous sources. Many vendors specify software architecture as web-centric but the
method of realization and features are also varying widely. Architecture, product development
roadmap, integration compatibility, software customization capability, human resource capability
size, financial stability, partners, risks and the total life cycle cost are the key evaluation
criteria’s. Merger, acquisition, geographical dispersion, change in business strategy after
acquisition and obsolescence declaration, etc are all serious concerns as KM is a long-term
strategic decision.
For a comprehensive KM solution, both software tools and their implementation partners are to
be carefully evaluated for their ability to deliver, support, maintain and enhance the KM solution.
Capability and competency of this implementation team is critical for understanding of the
business process of the organization, best practices and the software product knowledge for
successful implementation.
49
Human Resource Management
The key strength comes of any organization is its human capital. It is the expertise of its employees
which ensures that customers are acquired and retained, and the processes work efficiently to satisfy
the customer's needs. That human capital is the basis for the creation of customer and structural
capital.
For a knowledge base on the knowledge worker
In the information technology (IT) industry, this section starts examining the issues relating to the
human capital of an organization. If people hold the key to prosperity anywhere, it is more so in the
IT industry, which employs knowledge workers. Here, human capital is not merely one component
of capital; it is the critical component that forms the basis for other forms of capital: People with
their expertise are the sole creators of value to the customer and people through their effort are the
key to the optimization of its process efficiency.
Perhaps the natural corollary to this is the high attrition rate in the IT industry. So IT organizations
have a critical need to know the value they would forego when they are about to lose a person. This
knowledge is important in taking appropriate action, in making counter-offers, in keeping up a
constant preventive effort to fine-tune the compensation structure. All these should always be in line
with the value being pro-vided by the employees.
Competency mapping
An employee has a bundle of competencies, each of which needs to be valued. In the computer
software field, classifying competencies under five major heads - domain, technology, project
management, initiative and leadership. A software project attempts to computerize applications such
as production scheduling in a manufacturing organization, trade settlement in a stock exchange or
recoveries for an insurance company. An analyst developing the requirements for the system must
have expertise in the specific business area such as manufacturing, securities trading or insurance.
We call this business knowledge the domain expertise. A software designer must be knowledgeable
about the technology that provides the platform for the system and makes it work. Similarly, project
management is an essential area of expertise for a person leading a part or whole of a project, to
ensure that resources are marshaled to yield effective results in the required time. Besides these,
what makes a person valuable to the organization is the consummate acumen for enterprise and
50
execution - the generation of ideas and the speed of implementation. These come under the umbrella
of initiative.
Finally comes the quality of being an inspiration to others: Is a person a thought leader? The ability
to apply a new technology in ways unanticipated is one example of displaying thought leadership.
A person has a set of competencies and a value is assigned to each of these competencies. The sum
total of it is the value of an employee and the sum total of the value of all employees is the human
capital of the organization. This human capital, together with the customer and structural capital
produces the revenue.
When an employee leaves, an organization loses that much of capital as determined by the valuation
given above. The organization's response to this situation should be guided by the value being lost.
Unfortunately, there may be no escalation when a valuable employee leaves. The senior
management gets into the act only when a very experienced employee leaves, irrespective of
whether he has a higher or lower value than a less experienced person. An organization needs to
look for a system for the scientific computation of employee values, stored in a constantly updated
database, and with triggers for intimation to top management based on employee valuation.
Management can then be made to sit up and take notice whenever high-value employees leave,
irrespective of the years of service. In fact, compensation across the board can be structured to be in
line with this valuation system. The Process of recruiting the substitute person will also involve cost
for the organization.
Human resources valuation has remained an academic exercise and largely ignored even in
industries where the expertise of employees is the key differentiating factor. The process of
valuation is complex and challenging.
The factors, which play an important role in retention of knowledge workers
Recruiting and hiring
Training and Professional development
Work Space deployment
Compensation
Employee Friendly Workspace
Aligning employees performance expectation with competencies
Establishing valuable result oriented measures of individual and group
Providing rating and feedback that shows the difference between performers
51
Continuous learning and improvement
The culture and mind of managers towards their work force is constantly monitored
J ob Process tools and mission support : The jobs , tools and support are designed such that it
always improves the performance of the employees.
Hire and retain people according to competencies
HUMAN RESOURCES MANAGEMENT ISSUES
The speed with which global operations are being established in the service sector is faster than
previous global expansion seen in the manufacturing sector. For many organizations, the time to
build the business case, select outsourcing vendors or staff “captive” operations, and start operating
is less than a year. One U.S.-based high-tech company grew its Indian operations over 2.5 years
from 1 employee – the HR person – to 4,500 employees across two cities. The current plan is to
increase the number to 10,000 employees by the end of 2005. Such short timeframes for launching
and growing offshore ventures make decisions regarding human resources management absolutely
critical to the success of these global operations. The human resource implications of global talent
sourcing in the services sector are vast, affecting professionals in both the U.S. and “offshore”
locations. However, the specific HR challenges vary depending on the business model chosen, how
home country employees’ jobs are affected by the creation of offshore operations, and the extent of
communication and integration of workflow across multiple geographies. In general, a company’s
pursuit of a captive, outsourced, or hybrid business model has greater impact on the HR activities
and challenges in the offshore location than in the home country.
For companies newly expanding captive operations in India, for example, virtually every area of
human resource management needs to be addressed: recruiting, selection, training, management
development, compensation and benefits, building a consistent company culture, and planning
tactics to improve retention or manage turnover. Companies pursuing an outsourced business
model have far fewer hands-on HR challenges because the day-to-day management of employees
is handled by the outsourcing vendor.
HR activities in the home country are more affected by decisions regarding the future
employment of home country staff than by the business model in the offshore location. For
instance, when offshoring leads to the reduction or reallocation of work among existing home
country employees, active communication, change management, and transition assistance
facilitate the successful introduction of an offshoring strategy and help maintain morale among
52
the affected employees.
In all offshore business models, business leaders must decide how home country and
offshore staff will interact. As a result, HR professionals face many challenges associated with
managing disparate workforces, incorporating stylistic and cultural differences in communication
and problem solving, and developing flexible policies appropriate for multiple labor markets.
Cross-cultural relations are perhaps one of the most important issues companies face in managing
offshoring arrangements. The following sections address the variety of HR challenges associated
with the global sourcing of talent.
HR Issues for the Home Country Workforce
The global sourcing of talent impacts the home country workforce irrespective of the
configuration chosen for offshored operations. That being said, a captive business model will likely
require more active early-stage involvement from senior HR leaders in the home country than other
business models, particularly while the company’s leaders select an offshore location and recruit
local management. HR professionals have a central role in communicating the offshoring decision
and its underlying strategic imperative to the workforce, and in facilitating the transition of work and
employees affected by it. This section examines three main challenges in the domestic context:
communicating the initial offshoring decision, transitioning affected employees to new roles, and
getting buy-in, particularly from middle managers, for organizational changes.
Communicating about Global Sourcing
Communicating the intention of global sourcing initiatives is an essential place for HR intervention.
More and more C-level executives visit potential locations as part of the offshoring decision, and are
generally returning to corporate headquarters enthusiastically supportive and driving the mandate for
global expansion of outsourcing. Often, the top-level strategic thinking is not clear to the workforce,
seriously jeopardizing buy-in, and undermining the strategy’s success. Demonstrating the linkage
between business strategy and the global sourcing initiative, and developing an effective action plan
for transitioning affected employees is a key role for HR. This role is considerably more
challenging when domestic employees need to be laid off.
A major financial services company that outsourced much IT work to India provided a
53
good example of an effective communications plan. The company announced its intention to
outsource IT work offshore in a series of “town hall meetings” with employees in the technology
groups affected by the company’s outsourcing decision. To stem speculation among employees,
whose departments had recently experienced two rounds of layoffs, “We told them what the whole
process was going to look like and said they were not going to lose their jobs,” recalled the former
HR business partner to the IT organization. “These people were working on technology that
customers needed – not a legacy system – so there were other IT roles in the company for them.”
As the outsourcing was implemented, the company continued to hold town-hall style meetings
every two to three weeks, during which the the CIO, head of strategy, managers for the products
involved, IT leaders, and the HR leader for the IT organization participated, candidly answering
questions and taking suggestions.
Transitioning Employees
Effectively facilitating the transition of employees whose workload is going to be sourced elsewhere
is important for morale and the company’s public image. When work moves to another location,
there are three options for transitioning affected employees: they can be reassigned, redeployed, or
laid off. The distinction between “reassigned” and “redeployed” is subtle in language but significant
in practice. To be “reassigned,” the company actively manages the transition, looking for other
opportunities in the organization that are appropriate for the individual’s skill set and experience. To
be “redeployed,” in contrast, places the responsibility for finding a new position in the company
squarely on the employee. The former approach conveys the message that while labor arbitrage is
making it economically necessary to transfer an individual’s work to a lower cost location, that
individual’s knowledge and experience is still valuable to the organization. The latter approach
conveys a message that once critical talent is now expendable, with work performed by the lowest
bidder, which can be demoralizing for the employees directly affected as well as their co-workers,
though not as demoralizing as lay-offs.
Both “reassignment” and “redeployment” can be managed more easily when an effective workforce
management system already exists, such as having an inventory of employees’ skills and work
experiences, a comprehensive database of current vacancies and anticipated future openings, and a
recruiting platform that matches internal candidates with appropriate roles. Variable staffing
models, in which contingent workers provide additional flexibility for companies to scale up or
down based on project loads, also help to shelter “core” employees for reassignment elsewhere in
54
the company. The financial services company mentioned earlier hoped employees would stay with
their teams in order to train the vendor’s staff, while at the same time helping employees find jobs in
other divisions of the company. If a match was found, the company allowed the employees to start
other jobs before the outsourcing transition was complete thereby demonstrating the company’s
commitment to the employees’ careers.
Change Management and Getting Buy-in
Getting buy-in from middle managers is particularly important to the success of offshoring
initiatives, as these managers are responsible for ensuring the effective knowledge and process
transfer to the offshore location. To make offshoring work, they often have to redeploy or lay off or
reassign U.S. team members whose work is being offshored as well as manage a faraway team.
Another important aspect of change management is knowledge transfer, which may be achieved
differently depending on the offshore business model. With outsourcing arrangements, vendor
representatives often come to the home country for several months to learn about the business and
specific work tasks. The impact of on-site vendors on home country employees’ morale depends in
large part on whether the employees are “training their replacements” and how the company has
communicated about the offshoring strategy.
A Boston-based software company pursued an aggressive offshoring strategy in 2003-2004 in order
to reduce its cost of operations. The company transferred software development work from
Massachusetts, Michigan, and Northern California to its existing captive operation in Pune, India,
growing the Pune office from 300 employees to between 500 and 600. U.S. employees were laid off
and the transition was intended to occur in a two-month period. For the “leads” who had the
technical knowledge and project management capability to transfer knowledge to Indian
counterparts, the company paid significant retention bonuses – between 50% and 100% of their
annual pay – in a 90-day period. The interim costs of the transition, which was done explicitly for
cost saving purposes, were high.
In addition, several other factors made the software company’s offshoring transition a
difficult change management situation. The number of employees affected triggered the U.S.
Worker Adjustment and Retraining Notification Act (WARN), which required the company to
55
provide 60 days’ advance notice to people who were going to be laid off, which had negative
consequences for employee productivity and morale.
Second, the development staff was under a tight timeframe to achieve a critical product launch, so
needed to continue working at a high level of productivity. Third, while top executives knew
offshoring was needed to keep the company alive, the mid-level managers who led R&D and
product marketing for the products affected were not as supportive of the transition. Lastly, the
individuals whose jobs were being eliminated had the longest tenure of any segment within the
company. Laying these people off
“gutted the heart of the company,” including its product knowledge and shared history, according to
the HR executive interviewed. Compounding these U.S.-based change management challenges was
the need to train new staff in Pune on the company’s sophisticated design modeling software,
increasing the time it took to transfer capabilities to the offshore location.
HR Issues in the Offshore Location
In the following sections we provide an introduction to some of the HR issues specific to
the offshore location. The types of HR issues a company will face in the offshore location depend
primarily on the business model. As Table 6 illustrates, a captive model requires more hands-on
involvement in establishing and managing day-to- day operations, while an outsourcing
arrangement leaves most of the tactical people- management responsibilities with the vendor.
Because of the greater complexity of HR issues associated with captive operations, the following
sections focus more on these challenges than on those experienced by companies outsourcing their
offshore operations to a third party.
56
Table: Offshore Location HR Issues and Challenges by Business Model
Captive Business Model Outsourced Business Model
o
Involves establishing office from
scratch;
need to build brand as a good
employer.
o
Responsible for all recruiting, training,
retention
o
Manage day-to-day operations
o
Expatriates likely involved
o
Need to stay current on compensation
o and benefits trends
o
Need to develop management
capabilities
o No direct control over day-to-
day operations
o Foster collaboration with client
employees across organizational
and
o geographic boundaries
o
Have short-term expatriate
representative
o from client in offshore vendor location
The experience of Convergys, an employee and customer care services company, provides an
example of the HR issues associated with establishing captive operations.
The company, which employed more than 63,000 people and generated nearly $2.5 billion in
annual revenue in 2004, created Convergys India Services (CIS) in 2000 as a wholly owned
subsidiary with operations in Gurgaon and Bangalore. In establishing CIS, the company
customized best operating practices developed in its U.S.-based contact centers with input from the
Indian management team. Attracting the right candidates and careful screening were critical issues
as CIS employed 3,500 people initially and grew by late 2004 to 10,000 employees across seven
locations in four cities. The company announced plans in February 2005 to grow employee
headcount in India to 20,000 within two years through organic growth and possible acquisitions.
To support the rapid recruiting activity, the company used multiple recruitment sources, including
online, print advertisements, college campus recruiting, referrals, and the company’s database of
qualified applicants.
Early in its operations CIS placed a quarter-page help-wanted advertisement for customer service
staff in a weekday edition of a target publication. The HR department received over 7,300
resumes within three days of the advertisement’s publication. CIS managers interviewed over
1,000 candidates, of which over 300 were considered qualified. In contrast to the talent pool from
which Convergys was able to recruit call center staff in the U.S., all candidates in India were
college graduates and 60% had previous business experience, 25% of whom had previous contact
center work. Following screening and background checks, CIS’ selection rate was 1 out of 35.
57
The company ultimately extended 150 job offers from this single recruitment source.
Recruitment
Setting up a captive offshore operation is similar in some ways to starting up a new venture,
beginning with selection of the location to establish operations. When selecting the appropriate
offshore location some of the HR issues to analyze include characteristics of the local labor market –
such as English language skills, percentage of technical or business college graduates, wage rates,
and competition from other employers. Whereas a company may be widely recognized as a top
employer at home, in other countries the company’s hiring managers may find themselves starting
from scratch and competing against well-established global employer brands such as American
Express, GE, IBM, Proctor & Gamble and Unilever, as well as against leading Indian companies
such as Infosys, Tata or Wipro. As evidence of the availability of talent in India and the tough
competition for the best applicants, both Infosys and Wipro received more than one million
applications in 2004 for little more than 10,000 positions.
The challenge to build captive operations
quickly puts significant pressure on companies to fill middle- and top-management positions fast,
potentially leading to lower quality hires. HR executives we interviewed, both in the U.S. and India,
stressed the importance of adapting screening and hiring practices to Indian conditions. The ideal
candidate profile should be localized to reflect the education level and business workflow in the
offshore location; companies cannot simply search for the same profile of those in the home country.
For example, one company establishing a technical support call center Thomas L. Friedman, “A
Race to the Top,” The New York Times, J une 1, 2005, A27. that initially screened resumes and
hired for technical knowledge. What the company found, however, was that an individual’s accent –
and the ability of that accent to be “normalized” – was a more important hiring criterion than
technical capabilities. It was much easier to provide training to create technical competency for
provision of a high service level than it was to “normalize” the accent to enable the person to
communicate effectively with the U.S. customer. The company changed its hiring process and began
telephoning promising candidates as its first screening mechanism, in which it assesses the
candidate’s accent. This company then moves forward with the recruiting process only if the accent
is acceptable. If necessary, the company makes up for its new employees’ deficiency in technical
knowledge with training.
58
Recruiting the Family
In India, strong family ties often mean a job candidate’s parents are actively involved in the
recruitment process. Dell, for example, recognized that parental influence was significant,
particularly for the young workforce hired into Dell’s customer and technical support call centers.
“If parents don’t know about the company or what their child is doing, they generally have a
tendency not to support those roles,” said an individual involved in managing Dell’s HR activities in
India in 2003 and 2004. Dell not only sends a quarterly letter to employees’ homes providing an
update on the employee’s progress but also invites the parents to attend an event where their son or
daughter is going to receive a recognition award. Dell also holds a “family day,” attended by the
country’s vice president and general manager, to allow employees’ families to see where their
children or family members work. In addition, while on a visit to Dell’s operations in India,
Chairman Michael Dell invited employees’ families to an event where he welcomed them into the
Dell family.
Background and Reference Checks
Screening candidates for global operations can be challenging, due to the lack of information
comparable to a criminal background check in the U.S. However, multinationals can work with
reputable local HR consulting companies that can assist in this process.
Longer Notice Periods
The Boston-based software company that doubled its staff in India in 2003-04, observed that
new recruits provided relatively long notice periods to their employers when resigning their
positions. Whereas the standard notice period in the U.S. is two weeks, the company
experienced notice periods of two months while recruiting staff for its operations in Pune. The
extended timeframes provided more opportunities for the original employer to make a counter-
offer or for other employers to recruit away the hired employees. As a result, the local HR
manager had to stay in contact with the new hires during this interim period to manage any of
the transitioning employee’s emotions or concerns and to prevent the new hire from rescinding
the acceptance of the job prior to the start date.
59
Compensation and Benefits
Although wage rates in offshore locations are low compared to the U.S., total
compensation increases dramatically in India as a professional matures and develops expertise.
According to one high-tech executive, companies can hire recent college graduates in India and
China for 15-20% of the labor cost for technical jobs relative to U.S. salaries. But for an
experienced manager, the cost differential narrows significantly. Salaries in the Indian IT sector, at
both Indian and multinational companies, rose an average of 19% from 2003 to 2004; those with
more than 10 years experience fared better, earning an average pay increase of 26%.
12
Perks
frequently provided to managers in India include transport to and from the office, which is often
located in an office park on the outskirts of the city, either via employee shuttle or a car with
driver, and providing for a maid or other household support. Figure 3 shows the changing types of
perks and benefits companies provided in the IT sector in 2003 and 2004.
Employee Retention: Setting Expectations
High employee turnover is an issue cited by many companies that have offshored BPO and IT
services work in India. One senior HR executive from a high-tech company characterized the
mistakes his company made by saying:
"We've put the wrong people in the wrong jobs, in the wrong career paths, with the wrong
training. Essentially, as we now realize, the Indian workforce, particularly college grads, has the
same expectations and ambitions as their U.S. counterparts. They feel undervalued by U.S.
employers and/or the world. They do not want to answer phones, and they need career
challenges consistent with their skills. Their aspired career path, upon hire, is to be in technical
support for no more than six months, then software development, then move to the U.S. The best
performers at call centers and in technical support are promoted, perhaps two to four levels in 18
months, by age 22.” Different retention strategies are being used for employees with varying
levels of experience and work roles. The contrast between retention in BPO operations versus
technology services provides an example. BPO operations are more likely to employ unskilled
recent university graduates who are good English speakers. BPO operations also employ women
more often than men. However, the nature of the work (e.g., data entry), night shift work
schedules, and lack of career paths help to fuel turnover rates as high as 40%.
13
A 2004 survey
of employees in the BPO sector highlighted three top reasons for joining a BPO company: good
60
work environment (72%), high growth opportunity (69%) and good salary (56%).
14
The same
survey provided a different perspective on the challenges companies face when retaining
employees, with salary being the most cited reason (at 47% of respondents) for leaving a
company, followed by no growth opportunity or lack of promotions (45%). As part of efforts to
manage perational continuity despite high employee turnover in the BPO sector, companies are
building staffing models and business processes that take into account the anticipated or likely
turnover. Highly skilled technical professionals, in contrast, often possess skills valued highly in
their employing organizations. The expanding array of perks provided in the IT sector (shown in
Figure in the previous section) are evidence that employers take action to provide compelling
remuneration for valued technical employees. In addition to perks, learning opportunities
through job rotations or working visits to the U.S. have been used as retention techniques with
technical professionals.
61
Knowledge Management (KM) for E-government
At the macro level knowledge management (KM) may be defined as leveraging of knowledge
for attaining objectives of productivity and competitiveness of a national economy. At the level
of a government, knowledge management (KM) for government (KM4G) may be defined as
leveraging knowledge for improving internal processes, for formulation of sound government
policies and programmes and for efficient public service delivery for increased productivity.
Finally, knowledge management (KM) for e-government (KM4Eg) may be defined as
management of knowledge for and by e-government for increased productivity. KM4Eg is a
management tool for government decision makers and its programme implementers.
Government has been the principal user of knowledge since times immemorial. Primary
function of government is decision-making and e-government provides unique support to
decision-making. Government also has largest repositories of information and databases and e-
government helps in their efficient management. Government always had access to the best
available technology of the day to manage its affairs and e-government provides some of the
latest and best available technology. There has also been information explosion in recent years
and e-government provides an important tool to cope up with it. Office documents lead in
storage on paper, which highlights the need for paperless office, and which is an important
promise of e-government.
Importance of Knowledge Management (KM) for E-Government (KM4Eg)
Print, film, magnetic, and optical storage media produced about 5 exabytes of new information
in 2002 (SIMS 2003) (1 exabyte=10
18
bytes). 92% of the new information was stored on
magnetic media, mostly in hard disks. Film represents 7% of the total, paper 0.01%, and optical
media 0.002%. Almost 800 MB of recorded information is produced per person each year
(ibid.). Governments, therefore, face information explosion and KM4Eg can help governments
in coping with information explosion leading to better policy formulation, better programme
implementation and need-based skill formation for increased productivity. KM4Eg is no longer
a choice but an imperative if economies have to survive in the unfolding era of privatization,
liberalization and globalization.
62
Figure: The decision-making process in government supported by e-government
KM4Eg may be viewed from a variety of perspectives, for example, process perspective, user
perspective, technical perspective, organizational perspective, legal perspective, knowledge
perspective, cultural, societal and political perspective (Wimmer 2002).
S.N. Type of Content Terabytes
1 Books 39
2 Newspapers 138.4
3 Office Documents 1,397.5
4 Mass market periodicals 52
5 J ournals 6
6 Newsletters 0.9
7 Total 1,633.8
Source: How much information 2003 (SIMS 2003)
Table: Worldwide production of printed original content: Storage content: Paper
Decision-Making
Process
INPUT OUTPUT
KNOWLEDGE
Policies, Programmes,
Implementation
Supported by E-government
63
Exploding Five Myths in Knowledge Management for E-government
Myth 1: KM is a fad.
Wrong. It is here to stay whether we call it by this or any other name.
Myth 2: KM is not for government.
Wrong. Government being knowledge-based, it is very much for government.
Myth 3: KM is not for civil servants
Wrong. Being knowledge workers, civil servants are very much concerned with KM.
Myth 4: KM is not for e-government champions.
Wrong. KM being an integral part of e-government, e-government champions, whether
politicians or civil servants, are vitally concerned with it.
Myth 5: KM is theoretical discipline.
Wrong. It is a practical management tool, which has tremendous potential for increased
productivity and competitiveness.
Issues in Knowledge Management for E-government
A number of issues, some old and some new, have arisen in knowledge management for and by
e-government in government, for example,
(i) information is not up to date.
(ii) required information is not available,
(iii) too much information is collected,
(iv) very little information is used in actual decision-making,
(v) there has been information explosion and
(vi) new areas like information and communication technology (ICT) and e-government have
emerged calling for collection of new information.
Knowledge Pyramid for E-government
Knowledge pyramid is frequently used by knowledge management (KM) scholars (see, for
example, Cong and Pandya (2004) section 1. Knowledge management (KM) for e-government
has four components of
(a) data, which consists of facts and figures,
64
(b) information, which is interpreted data (data +interpretation),
(c) knowledge, which is use of information ( data +interpretation +use), and
(d) wisdom, which is application of knowledge (data +interpretation +use +application). Note
that wisdom, defined here as application of knowledge, and not knowledge per se, is the highest
form of knowledge.
Knowledge management (KM) toolbox for e-government
A number of knowledge management (KM) tools and techniques exist for e-government. For
example,
1. After Action Reviews (AARs) (Pioneered by U.S. Army; for learning lessons from an activity
or project),
2. Communities of Practice (COPs) (killer app of KM for sharing of knowledge),
3. Knowledge Audit (A systematic process to identify an organisation’s knowledge needs,
resources and flows, as a basis for understanding where and how knowledge can add value - de
Brun 2005. Also comparison of performance against preset standards).
4. Knowledge Plan (Based on knowledge strategy)
5. Exit Interviews (Capturing knowledge of departing employees)
6. Sharing Best Practices (Identifying, capturing in one part of organisation and sharing with all
others)
7. Knowledge Centres (Connecting people, information, databases)
8. Knowledge Harvesting (Capturing knowledge of “experts” and making it available to
others).
9. Peer Assists (Learning from experience of others before undertaking an activity or project)
10. Social Network Analysis (Understanding relationships between people, groups and
organisations as to how they facilitate or impede flow of knowledge)
11 Storytelling (Ancient art of sharing knowledge still widely used), and
12 White Pages (Preparing a directory of Experts) (Source: Adopted from De Brün 2005)
Knowledge Management Cycle
KM can be viewed as a cycle consisting of six successive phases: 1.Undertake Knowledge
Audit, 2 Create Knowledge, 3 Capture Knowledge, 4. Store Knowledge, 5. Use Knowledge,
and 6 Review Knowledge.
65
Phase I Undertake Knowledge Audit
Ask questions like: Who collects what information? Why is it collected? Is it collected in time?
Is collected knowledge put to any use? Is there a better way of collecting knowledge?
Is required information being collected?
Phase II Create Knowledge
Take stock of existing knowledge. Assess knowledge needs of the organization. Determine
who will create what information, when and in what format Use knowledge management (KM)
tools for knowledge creation.
Phase III Capture Knowledge
Transform tacit knowledge into storable explicit knowledge (Neve 2003). Record one-to-one
conversations. Record a brainstorming session Record minutes of the meetings and other
proceedings Record success profile of individual e-government champions.
Phase IV Store Knowledge
Organize knowledge into codifiable and noncodifiable categories (Warren et al. 2006). Use
electronic media for knowledge storage. Open a knowledge centre in the ministry/department.
Identify and use “best practices” in knowledge storage.
Phase V Use Knowledge
Knowledge captured and stored should be made accessible to all concerned personnel.
Distribute and share knowledge. Set up knowledge distribution and knowledge sharing
mechanisms. Provide knowledge inputs to policy makers. Monitor knowledge use
Phase VI: Review Knowledge
Scan the horizon to anticipate knowledge needs of ministry/department Review the existing
stock and flow of knowledge. Make use of simple but effective knowledge indicators. Involve
stakeholders in knowledge review. Has knowledge led to better decision making and/or higher
productivity? The knowledge management cycle may be seen in Figure 4.
66
Ten Guiding Principles for introduction of knowledge management (KM) in e-
government
Guiding Principle1: Develop a knowledge management (KM) strategy for the organisation
Leverage knowledge for achieving organisational goals and serving citizens and non-citizens.
Guiding Principle 2: Proceed step-wise, from simple to the complicated.
Adopt modular approach. Do not attempt anything highly ambitious in the initial stages.
Guiding Principle 3: Do not re-invent wheel. Make use of existing knowledge and insights.
Undertake knowledge needs assessment. Only then plan the next step.
Guiding Principle 4: Make use of information and communication technologies (ICTs)
But do not forget GIGO, garbage in, and garbage out.
Guiding Principle 5: Make use of people, process and technology (PPT) model.
But do not forget: Computers: fast, accurate, dumb, People: slow, sloppy, smart
Guiding Principle 6: Prepare a simple and modular knowledge sub-plan incorporating
knowledge management (KM) strategy.
Do not use any complicated knowledge management (KM) tool or mechanism that cannot be
successfully implemented.
Guiding Principle 7: Include knowledge management (KM) sub-plan in the e-business plan of
Ministry/Department.
Do not prepare any stand-alone knowledge management (KM) sub-plan. It is more likely
to fail than succeed.
Guiding Principle 8: Secure top management support to knowledge management (KM)
sub-plan.
Remember, no plan can succeed without top management buy-in. This is to be a priority.
Guiding Principle 9: Demonstrate results.
Remember, the best way to convince any one about practical utility of knowledge
67
management (KM) is to show concrete, verifiable results.
Figure: The Knowledge Management Cycle
Guiding Principle 10: Review the implementation of knowledge management (KM) sub-plan
from time to time.
Review the implementation of the knowledge management (KM) sub-plan against the
following three criteria: Has the implementation of the knowledge management (KM) sub-plan
1
Undertake
Knowledge
Audit
5
Use
Knowledge
6
Review
Knowledge
2
Create
Knowledge
3
Capture
Knowledge
4
Store
Knowledge
The
Knowledge
Management
Cycle
68
resulted in: (a) better decision-making by government, (b) better service delivery to citizens and
non-citizens, and (c) better performance by civil service.
69
Knowledge Management & Its Application in India
CASE-1
INFOSYS TECHNOLOGIES
Infosys Technologies is the first Indian company to be inducted into the Global Most Admired
Knowledge Enterprises (MAKE) Hall of Fame. Infosys features among 22 other global
organizations including Dell, General Electric (GE), Hewlett Packard (HP), Accenture, IBM and
Microsoft. Infosys has been recognized for its organizational learning and for transforming
enterprise knowledge into shareholder value. It is also the first and only Indian company to win
the Global MAKE award for the third consecutive year.
The 2005 Global MAKE Winners were recognized by a panel of senior Global Fortune 500
executives and internationally recognized knowledge Management experts as leaders in:
• Creating a corporate knowledge-driven culture
• Developing knowledge workers through senior management leadership
• Delivering knowledge-based products/solutions
• Maximizing enterprise intellectual capital
• Creating an environment for collaborative knowledge sharing
• Creating a learning organization
• Delivering value based on customer knowledge
• Transforming enterprise knowledge into shareholder value
The award stands as a testimony to clients, emphasizing the strength of their partner. The 2005
Global MAKE award winners offer long-term potential due to their intellectual capital-driven
wealth creation. A total of 10 Global MAKE Winners rank among the global top 100 companies
by market capitalization. Similarly, for the publicly traded 2005 Global MAKE Winners, return
on assets was nearly four times that of the Global Fortune 500 company median. Infosys
Technologies ranked among the highest in this category.
Acknowledging the award, Nandan M Nilekani, CEO, President and MD, Infosys Technologies
said, “At Infosys, Knowledge Management (KM) is central to a core strategy of providing
differentiated value to customers and enabling their business growth. KM has helped us develop a
70
pervasive culture of beneficent knowledge exchange across geographies. We are therefore
extremely delighted to be ranked among the world's Most Admired Knowledge Enterprises and to
be inducted into the Global MAKE Hall of Fame.”
Rory Chase, Managing Director of Teleos, which administers the MAKE program, said: "The
Global MAKE Winners are effectively transforming enterprise knowledge into wealth-creating
ideas, products and solutions. They are building portfolios of intellectual capital and intangible
assets which will enable them to out-perform their competitors in the future. "
Commenting on the award, Dr. J .K. Suresh, Principal Knowledge Manager, Infosys Technologies
Limited, said, “At Infosys, we consider KM as a powerful medium for creating sustainable
networks of people across intra-organizational boundaries. It also provides a symbolism for
aligning individual initiative and creativity with organizational growth.
CASE - 2
E-ENABLING RELIANCE
Reliance intends to provide customised, and personalised services, to its customers, drawing upon
the power of the Internet.
It intends to implement suitable Supply Chain Management (SCM), Customer Relationship
Management (CRM), and Knowledge Management (KM) strategies, substantially cutting
inventories, increasing responsiveness, and hence provide enhanced services to customers. The
entire procurement cycle - forecasting, planning, replenishment, supply chain financing, and
transportation - will be automated, leading to significant cost savings.
CASE – 3
HINDUSTAN LEVER LIMITED (HLL)
Hindustan Lever Limited (HLL) has identified 9 new business initiatives, which along with the
present businesses, will drive the company’s ambition to double its turnover every four years. The
71
9 new growth engines comprise entry into categories new to HLL, and unique business systems
for specific channel or segment opportunities.
Rural Business System: HLL has developed appropriate products for rural India. It deploys
communication and information technology to establish connectivity in the distribution system at
a scale never attempted before. Finally, in a win-win partnership, it will join hands with rural self-
help groups; the initiative will create critically needed sustainable jobs for thousands of villagers,
while for the company it will translate into extending its distribution into hitherto unexplored
territory.
The Internet Opportunity: HLL has developed a 3-pronged strategy to leverage the Internet. First,
the company will Connect. The web-enabled extended supply chain of stockists, suppliers, banks
and even potentially top retailers will create the most capital-efficient supply chain optimised for
handling product, cash and information flow. Second, HLL will Attract consumers, and further
strengthen relationships by becoming the preferred online provider of information, products and
services on health, beauty and nutritional needs.
CASE - 4
ASIA'S MOST ADMIRED KNOWLEDGE ENTERPRISE
In the late 1990s, Tata Steel began to introduce knowledge management initiatives in the
company. It started with a small group of people from within the organization. The group formed
a "knowledge repository", where all the employees shared their experiences and knowledge. One
year after the knowledge repository was formed, the company formed "knowledge communities",
which was a platform for like-minded people to meet and share their experiences. In 2001, Tata
Steel developed a "KM index" to evaluate the performance of individual employee in the KM
initiative. Later, it linked performance evaluation to KM and used a balanced scorecard to
monitor the performance of individual employees, divisions, as well as the organization as a
whole, in KM. All these initiatives of Tata Steel seem to have paid off; in early 2003, Tata Steel
was recognized as one of Asia’s Most Admired Knowledge Enterprises. It was the only steel
company in the world to have received the MAKE award.
72
In 2003, Tata Steel was chosen as one of Asia's Most Admired Knowledge Enterprises (MAKE).
It was the only company in the manufacturing sector in India and the only steel company in the
world to receive this award. The award was in specific recognition of Tata Steel's knowledge
management (KM) initiatives, which were started in late 1990s. Tata Steel was the only
manufacturing company in India to have implemented KM. Tata Steel's management expected
KM to play a key role in establishing intellectual assets, rather than physical assets, as the growth
driver of the company.
KM was also expected to be an important source of competitive advantage for Tata Steel. Tata
Steel was early to recognize the significance of KM for the success of a company. It made it
compulsory for all its employees to participate actively in its KM program. The company based
its new performance assessment program on the participation of each individual employee in the
KM program through the introduction of a "KM index ".
The index tallied the points achieved through participation in the KM program, giving the
employees a benchmark for their participation. Tata Steel also encouraged employees to
experiment with new ideas, for which they were rewarded.
Tata Steel's KM initiatives were successful and the number of hits at KM sites of Tata Steel in
2001-02 was 1100 compared to Shell's (second most admired company in Europe) 1000 hits,
even though Tata Steel had only 3000 registered users as compared to Shell's 10000 registered
users. Through Tata Steel's KM initiatives, expert skills became available throughout the
organization and productivity increased. As employees were encouraged to come out with
innovative ideas, their job satisfaction increased, and another benefit was a reduction in the R&D
expenditure.
CASE - 5
SATYAM COMPUTERS
Satyam Computer Services Limited has received the IBM Lotus Award in the Knowledge and
Content Management Solution category for the Tenth Annual IBM Lotus Awards (formerly
73
known as the Lotus Beacon Awards). IBM Lotus Awards recognize exceptional IBM
PartnerWorld business partners that specialize in Lotus software solutions and have excelled at
providing quality products, innovative solutions and superior services to customers.
For the R&D branch of an Indian Fortune 500 customer in the oil industry, knowledge
management was a prime corporate initiative. Satyam helped the organization treat its wealth of
scientific knowledge much like any capital asset, improving collaboration and efficiency on R&D
projects.
The interactive Web-based solution integrates IBM software technologies like IBM WebSphere
Portal and a suite of Lotus Products, to offer more than 200 scientists a better way to collaborate
and share vital knowledge and information.
CASE - 6
ITC Ltd
A digital transformation
ITC began the silent e-revolution of rural India with soya growers in the villages of Madhya
Pradesh. For the first time, the stereotype image of the farmer on his bullock cart made way for
the e-farmer, browsing the e-Choupal website. Farmers now log on to the site through Internet
kiosks in their villages to order high quality agri-inputs, get information on best farming
practices, prevailing market prices for their crops at home and abroad and the weather forecast –
all in the local language. In the very first full season of e-Choupal operations in Madhya Pradesh,
soya farmers sold nearly 50,000 tons of their produce through the e-Choupal Internet platform,
which has more than doubled since then. The result marks the beginning of a transparent and
cost-effective marketing channel. Bringing prosperity to the farmers' doorstep.
74
Smart Cards enable farmer identification to provide customised information on the echoupal.com
website. Online transactions are captured to reward farmers for volume and value of usage.
Linking farmers to remunerative markets
Farmers grow wheat across several agro-climatic zones, producing grains of varying grades.
Though these grades had the potential to meet diverse consumer preferences, the benefit never
trickled down to the farmers, because all varieties were aggregated as one average quality in the
mandis. Enter ITC's e-Choupal intervention. The e-Choupal site is now helping the farmers
discover the best price for their quality at the village itself. The site also provides farmers with
specialised knowledge for customising their produce to the right consumer segments. The new
storage and handling system preserves the identity of different varieties right through the 'farm-
gate to dinner-plate' supply chain. Encouraging the farmers to raise their quality standards and
attract higher prices.
75
2006 Indian Most Admired
Knowledge Enterprises (MAKE) Report
Executive Summary
The Indian Most Admired Knowledge Enterprises (MAKE) study is part of Teleos’ MAKE
research program. The Indian MAKE study was established in 2005 to recognize organizations
(founded and headquartered in India) for their ability to create shareholder wealth (or in the case
of public and non-profit organizations to increase societal capital) by transforming new as well as
existing enterprise knowledge into superior products/services/solutions.
The Indian MAKE research is based on the Delphi methodology. This research tool employs an
expert panel’s perceptual knowledge to identify critical issues – in the case of the Indian MAKE
study to identify those organizations which are leaders in creating organizational intellectual
capital and wealth through the transformation of individual/enterprise knowledge into world-class
products/services/solutions. Through several rounds a consensus is developed among the panel’s
experts. It is this consensus of expert opinion which provides the validity to the Delphi, and
Indian MAKE study results.
A blue ribbon panel of senior Indian business executives and leading Indian-based knowledge
management / intellectual capital experts selects the Indian MAKE Winners. In the Indian MAKE
study there are three rounds of consensus building. In the first round, members of the expert panel
nominate enterprises founded and headquartered in India.
In the second round, each member of the expert panel selects a maximum of three organizations
from the list of nominations. Those organizations selected by at least 10% of the expert panel are
recognized as Indian MAKE Finalists. In the third and final round, the Indian MAKE Finalists are
ranked against each of the eight knowledge performance dimensions which form the MAKE
framework and are the visible drivers of wealth creation:
•creating an enterprise knowledge-driven culture.
•developing knowledge workers through senior management leadership.
•delivering knowledge-based products/services/solutions.
•maximizing enterprise intellectual capital.
76
•creating an environment for collaborative knowledge sharing.
•creating a learning organization.
•delivering value based on customer knowledge.
•transforming enterprise knowledge into shareholder value.
A total of 37 organizations were nominated as 2006 Indian Most Admired Knowledge Enterprises
2006 Indian MAKE Finalists
Enterprise Industry
o Bharti Airtel Telecommunications
o Eureka Forbes Consumer products
o Infosys Technologies IT solutions
o Larsen & Toubro Construction & engineering
o MindTree Consulting IT consulting & solutions
o Patni Computer Systems IT solutions
o Satyam Computer Services IT solutions
o Tata Consultancy Services IT solutions
o Tata Steel Metal fabrication
o Wipro Technologies IT solutions
Table 1: A total of 10 organizations were selected as 2006 Indian MAKE Finalists (based on
nominations from at least 10% of the Indian MAKE expert panel).
A total of 7 Indian MAKE Finalists were recognized as 2006 Indian MAKE Winners (based on
the total composite scores). The 2006 Indian MAKE Winners are shown in alphabetical order in
Five organizations repeated as Indian MAKE Winners: Eureka Forbes, Infosys Technologies,
Tata Consultancy Services, Tata Steel and Wipro Technologies. For the first time, Tata Steel was
recognized as the 2006 overall Indian MAKE Winner. Last year’s inaugural overall Indian
MAKE
Winner was Infosys Technologies.Newcomers to this year’s Indian MAKE Winner’s circle are:
Bharti Airtel and MindTree Consulting. Enterprises failing to repeat as Indian MAKE Winners
are: i-flex solutions and Satyam Computer Services.
2006 Indian MAKE Winners
77
Enterprise Industry
1. Bharti Airtel Telecommunications
2. Eureka Forbes Consumer products
3. Infosys Technologies IT solutions
4. MindTree Consulting IT consulting & solutions
5. Tata Consultancy Services IT solutions
6. Tata Steel Metal fabrication
7. Wipro Technologies IT solutions
Senior executives tend to look through the ‘lens’ of high-level strategic issues and how well
organizations are meeting these challenges. Nominations from this group are influenced by strong
leadership and the results of knowledge-driven metrics, such as market capitalization, expanding
intellectual capital assets, customer loyalty and shareholder value.
The panel of chief knowledge officers and knowledge management / intellectual capital experts
tend to see things through the ‘lens’ of the development and implementation of enterprise
approaches and strategies leading to knowledge-driven excellence in terms of superior
products/services/solutions.
Enterprises Receiving the Most 2006 Indian MAKE Nominations
Indian Senior Executives CKOs and Leading KM/IC Experts
o Bharti Airtel Bharti Airtel
o Eureka Forbes Eureka Forbes
o Infosys Technologies Infosys Technologies
o Tata Consultancy Services Tata Steel
o Wipro Technologies Wipro Technologies
Key Findings
•Many of the Indian MAKE leaders adopted their corporate knowledge strategies during the late
1990s and early 2000s. Although starting several years after pioneering Western companies,
Indian-based organizations have been very successful at benchmarking and transferring
knowledge best practices found in Asian, European and North American MAKE Winners. Today,
only a few Indian MAKE leaders have reached parity with their Western MAKE counterparts –
most Indian organizations still lag behind regional and global MAKE leaders.
78
•Indian MAKE leaders are focusing on intellectual property, intellectual assets and brands, but as
a rule still do not have in place enterprise-wide intellectual capital management strategies.
•Advanced IT-enabled collaborative knowledge sharing tools are now a core competency for
MAKE Winners. It appears, however, that Indian, Asian and North American MAKE leaders are
more ‘innovative’ in applying new Internet-based tools to effectively share and reuse knowledge
in an increasingly global workplace.
• European and North American MAKE Winners have improved their scores in managing
customer knowledge. Many Indian organizations continue to fall well below the MAKE leaders’
standards. In order to move into higher value-adding product/service segments, Indian enterprises
must focus on this important knowledge performance dimension.
•Financial reporting for Indian companies is more opaque than found in North America and
Europe. As a result, Indian companies have placed less emphasis on managing, measuring and
reporting their effectiveness in transforming enterprise knowledge into increased shareholder
value. Investors and national/global financial regulators are increasingly demanding greater
‘transparency’ in reporting this information. Indian firms will come under growing pressure to
implement best practices in this area.
•According to the MAKE expert panel, the Indian knowledge-based economy is driven by the
following key business sectors (based on the number of MAKE Finalists in each industry): IT
software/solutions, manufacturing and telecommunications.
•The second annual Indian MAKE study has revealed that the country’s knowledge leaders are
few and concentrated in one business sector – IT solutions. This large concentration of Winners
from a single business sector indicates that there are few knowledge ‘role models’ available
throughout Indian business and industry.
•It also should be noted that there is a significant gap (in the total composite score) between the
ten Indian MAKE Finalists and other nominated organizations. The result is a two-tier Indian
knowledge league table. In other words, the Indian MAKE Finalists have knowledge processes
which match those of MAKE leaders from around the world. However, the remaining Indian
MAKE nominees are still in the early stages of implementing their enterprise knowledge
strategies and must spend more time and effort before they can join the Indian MAKE Winners’
circle.
• The Indian government and national business associations face the challenge of creating
programs that encourage and facilitate the sharing of best knowledge practices between the Indian
79
MAKE Winners and the rest of country’s business and industry. This structured transfer of
knowledge skills and competencies will enable all of Indian business to more effectively compete
in today’s global knowledge economy.
Overall 2006 Indian MAKE Winner – Tata Steel
Established in 1907 by its founder J . N. Tata, Tata Steel is India’s largest integrated private sector
steel company with annual sales of US $5 billion and over 40,000 employees. Over the years,
Tata Steel has emerged as a thriving, nimble, steel enterprise due to its ability to transform itself
rapidly to meet the challenges of a highly competitive global economy and commitment to
becoming a supplier of choice by delighting its customers with services and products. Constant
modernization and introduction of state-of-the-art technology at Tata Steel has enabled it to stay
ahead in the industry and successfully meet the expectations of all sections of stakeholders.
The company’s fifth phase of the Modernization Program focused on leveraging the intellectual
capabilities of its employees to generate sustainable value for the stakeholders. Now, as Tata
Steel marches towards its goal of becoming a Global Leader, the Knowledge Management
initiative is working as an enabler to grow and utilize the physical assets to the maximum. The
2006 Indian MAKE panel has recognized Tata Steel for creating an environment for its
knowledge-driven organizational culture (1st place) collaborative knowledge sharing (1st place),
organizational learning (1st place), and managing customer knowledge (1st place).
2006 Indian MAKE Winners
The remaining 2006 Indian MAKE Winners are (in alphabetical order):
Bharti Airtel
Bharti Airtel is a part of Bharti Enterprises, and is India’s leading provider of telecommunications
services. The company has annual revenues of US $2.5 billion, employs 10,000 people, and has
over 27 million customers. Bharti Airtel is structured into three individual strategic business
units: mobile services, broadband & telephone services (B&T), and enterprise services. The
mobile services group provides GSM mobile services across India in 23 telecom circles, while the
B&T business group provides broadband & telephone services in 92 cities. The Enterprise
80
services group has two sub-units -- carriers (long distance services) and services to corporations.
All of the services are provided under the Airtel brand.
The 2006 Indian MAKE panel has recognized Bharti Airtel for its organizational learning, and
managing customer knowledge.
Eureka Forbes
Eureka Forbes, part of the Shapoorji Pallonji Group, has single-handedly created markets for
“concept product categories,” such as water purification systems, vacuum cleaners and air
purifiers through the direct selling method. The company’s vision is: “A happy, safe and
pollution-free environment built on trust and lasting relationships with customers.”
Headquartered in Mumbai and expanding throughout South-East Asia, the company has over
6,000 employees known as Eurochamps (including a 5,000-strong direct sales force). In the fiscal
year ending March 2006, Eureka Forbes reported revenues of US $153 million.
The 2006 Indian MAKE panel has recognized Eureka Forbes for its knowledge-based
products/services/solutions (1st place), and transforming enterprise knowledge into shareholder
value (1st place).
Infosys Technologies
Infosys Technologies provides consulting and IT services to clients globally. With 2005 annual
sales of US $2.2 billion and employing over 66,000 people worldwide, the company uses a low-
risk Global Delivery Model (GDM) to accelerate schedules with a high degree of time and cost
predictability.
During the past several years, Infosys has made a concerted effort to provide an integrated
solution to meet the knowledge needs of the organization in the four basic dimensions of
knowledge management: people, process, technology and content.
The 2006 Indian MAKE panel has recognized Infosys Technologies for maximizing the firm’s
enterprise intellectual capital.
MindTree Consulting
MindTree Consulting, an international IT and R&D services company, was established in 1999
by 10 industry professionals who came from Cambridge Technology Partners, Lucent
81
Technologies and Wipro. The company, co-headquartered in Somerset, New J ersey, USA, and
Bangalore, India, has annual revenues of US $100 million and employs over 3,000 people.
MindTree develops applications to help companies enhance their enterprise operations. The
company also delivers product development services and designs reusable building blocks for
high-tech companies.
The 2006 Indian MAKE panel has recognized MindTree Consulting for its knowledge-driven
organizational culture, developing knowledge workers through senior management leadership (1
st
place), and managing customer knowledge.
Tata Consultancy Services
Tata Consultancy Services (TCS) is a leading information technology consulting, services and
business process outsourcing organization. Founded in 1968, TCS has annual sales of US $2.8
billion and employs over 78,000 consultants located in more than 35 countries. TCS has
engineered some of the world’s most complex applications and next-generation IT infrastructures.
TCS’s unique ‘web of participation’ structure enables the company to maximize the benefits of its
depth, diversity and delivery capability to offer innovative solutions across business and
technology domains.
The 2006 Indian MAKE panel has recognized Tata Consultancy Services for maximizing the
firm’s enterprise intellectual capital (1st place).
Wipro Technologies
Wipro Technologies provides comprehensive IT solutions and services, including systems
integration, information systems outsourcing, package implementation, software application
development and maintenance, and research and development services. The company has more
than 40 ‘Centers of Excellence’ that create solutions around specific needs of industries. Wipro
Technologies has annual sales of US $1.6 billion and employs over 30,000 people.
82
The 2006 Indian MAKE panel has recognized Wipro Technologies for organizational learning,
and transforming enterprise knowledge into shareholder value.
This 2006 Indian MAKE study sets a benchmark for future Indian MAKE research. It is an
invaluable baseline for measuring the progress of Indian organizations as they strive towards
becoming world-class knowledge-driven enterprises.
The Most Admired Knowledge Enterprises (MAKE) research program is providing Indian
business leaders, practitioners and researchers with a clearer ‘picture’ of how organizations are
using knowledge as a key competitive differentiator in the 21st century economy. As our
understanding grows, so will our ability to manage knowledge for the benefit of the individual,
the organization
and Indian society.
Teleos
Teleos, an independent knowledge management and intellectual capital research firm, administers
the Most Admired Knowledge Enterprises (MAKE) program. The KNOW Network is a Web-
based global community of organizations dedicated to achieving superior performance through
benchmarking, networking and best practice knowledge sharing.
2006 Indian MAKE Nominees
A total of 37 organizations were nominated as 2006 Indian Most Admired Knowledge
Enterprises:
1. Bharti Airtel (Telecommunications)
2. Bharat Petroleum (Oil & gas)
3. Bhilai Steel (Metal fabrication)
4. Byrraju Foundation (Non-profit)
5. Dr. Reddy’s Laboratories (Pharmaceuticals)
6. Essar Group (Diversified manufacturing)
7. Eureka Forbes (Consumer products)
8. Grasim Industries (Diversified manufacturing)
9. HCL Technologies (IT solutions)
10. Hero Motors (Vehicle manufacturing)
83
11. Hindustan Construction Company (Construction & engineering)
12. Hindustan Lever (Consumer products)
13. Honeywell Technology Solutions Labs (IT solutions)
14. i-flex solutions (IT solutions)
15. ICICI Bank (Financial services)
16. Indian Defense Research & Development Organization (Government agency)
17. Indian Oil (Oil & gas)
18. Infosys Technologies (IT solutions)
19. Larsen & Toubro (Construction & engineering)
20. Mahindra & Mahindra (Diversified manufacturing)
21. MindTree Consulting (IT consulting & solutions)
22. Nihilent Technologies (IT solutions)
23. Oil & National Gas Corporation (Oil & gas)
24. Pantaloons (Retail)
25. Patni Computer Systems (IT solutions)
26. Polaris Software Labs (IT solutions)
27. Premier Evolvics (Testing & measurement equipment)
28. Reliance Industries (Diversified manufacturing)
29. Satyam Computer Services (IT solutions)
30. Steel Authority of India Limited (Metal fabrication)
31. Sundram Fasteners (Metal fabrication)
32. Tata Chemicals (Chemicals)
33. Tata Consultancy Services (IT solutions)
34. Tata Steel (Metal fabrication)
35. 3i-Infotech (IT solutions)
36. Wipro Technologies (IT solutions)
37. Zensar Technologies (IT solutions)
doc_415131591.pdf