Knowledge management has propelled many organizations to amass a competitive edge that is as intrinsic to the properties of the brands and the organizations, just important as the patents, trademarks technology, and human resources that the organizations possess. Leading edge technology and market domination must be built upon prior level of excellences, thus firms would be very anti-competitive if they don’t value the R&D and the experiences cultivated through the organization’s existence. This paper will illustrate the fundamental theory of knowledge management and its significance to the organization; with focus placed upon the processes of knowledge capturing, codification, transfer and creation.Illustration of the principle in practice is found in the application of Coca-Cola Company in protecting its IPs, upholding its rich history and innovation in management practices.
The knowledge management life cycle:
Based on the research of Birmingham and Sheehan (2002), Knowledge has a life cycle. It has many different types of cycle. Knowledge can proceed through four stages of knowledge life cycle: Creation, Diffusion, Mobilization and Commoditization.
In this initial state of knowledge formation, people cannot define or understand completely the idea or emerging knowledge, even for the person who proposes it due to the perplexing nature of knowledge creation. Knowledge creation with respect to its commercial viability can be tested at the early stage of the life-cycle. A nurturing business environment that is open to new ideas and adaptable to changes is necessitated for creativity and experimentation. In order to create that culture, adjustments must be made in the following areas1:
Informal Knowledge System: Management must grant level of access, rewards and options to grant the employees the privileges and responsibilities to experiment, and open access to training programs and conferences in order to develop knowledge effectively.
Information Technology Systems:Collaboration tools and knowledge base library to be accessed, utilized via Intranet, Extranet, Internet, Cloud and portable computing must be provided to technology driven workforce – who have an interest in sharing the new idea at the highly specialized forums – rather than to codify and store emerging knowledge which have little value.
Human Resources:HR department should hire people willing to adopt the knowledge management system and its application.
External Relationship:Contacts with the customers or external suppliers can be the stimulants for development of new ideas in synergistic partnership.
In this stage, continuous knowledge improvement will lead to further value extraction for the organization. Firms must mobilize knowledge internally and protect its IPs. The approaches are detailed as following1:
Informal Knowledge System:Internal company networks must be created so that the employees can transfer the knowledge through experience.
Information Technology Systems: The IT department will implement and maintain a collaboration resource such that meet the needs of users’ base to create, share, access, and commenting on subjects of interest as easily and securely as possible.
Human Resources: Thinkers, doers, mavericks and pragmatists are needed in order to fully transform new ideas into valuable knowledge.
External Relationships:Evolving interaction fostered by close relationship with customers and partners will be as vital.
This stage will see the actualization and commercialization of the ideas and knowledge accumulated and improved upon earlier. So there will be a diffusion of the knowledge out of the firms to paying customers who place a value toward the attainment of the knowledge in question. Again, managers should be aware of following facets1:
Informal Knowledge Systems:Standardized knowledge can be more easily transferred and adopted. Thus firms must emphasize on employees training and knowledge application.
Information Technology Systems: During this state, the extensive knowledge databases will be very helpful for the companies through the diffusion and commoditization stages. Ease of access to information will enhance the firms’ competitive advantages.
Human Resources:Knowledge workers must realize the importance of application of knowledge base to solving customer’s problems and concerns.
External Relationship:Great businesses derive maximum profit while satisfying the needs of increasing customer base in a sustaining economic sector. Firms must increase their goodwill via PR campaign to leverage brand image and product & services’ values.
In this state, the basic knowledge is already diffused completely and the firm must manage to maintain it efficiently. There are various chances to extract value from current knowledge that has reached commodity status. Extraction techniques are as follow:
Informal Knowledge Systems: In this state, higher grading is credited to formal knowledge systems. “The organizations must concentrate on supplying best practices that can add more value to well-developed processes” (Birkinshaw and Sheehan, 2002). Moreover, the company’s systems are necessary to encourage new ways of commercializing existing knowledge.
Information Technology Systems:Effort is dedicated to the development of querying and retrieval techniques of existing databases. The efficient of the system is as effective to the filtering of irrelevant data which have accrued overtime.
Human Resources:Demand for knowledge and experience is lessened at this stage, thus contract employees can be quickly trained to perform application built upon the knowledge base where human interaction is a necessity(ie. Outcall center, support and sales department).
UNDERSTANDING KNOWLEDGE CAPTURE, CODIFICATION, TRANSFER AND CREATION
In the context of international integration into WTO of world economies, wherein competition among firms is increasingly fierce, businesses had no choice but to start building their model for knowledge management. It is an effort for firms to quickly improve the competitiveness of enterprises by exploiting maximum intellectual capital internal to the business as modern technology investments gets ever more affordable for small businesses alike, and easier to maintain.
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Questions that linger in the mindset of the entrepreneur: as the how toof building a lasting business – How to strengthen the competitiveness of enterprises? How to keep and attract good employees staying on bard during terms of integration? Etc. The solution to those concerns may come from practical utilization of web 2.0 applications that drive much of the innovation in the enterprise. There are cost-effective solutions as well as free applications, such as Skype for real-time video conferencing, real-time collaboration tools such as Google’s Calendar, Google Doc, Writely for editing and sharing documents, project management suite such as Basecamp which is almost a simplified web-based version of Microsoft Outlook and Project combined, albeit lacking the ability to integrate with Microsoft Exchange. Free web conferencing such as vyew.com -letting people collaborate across different OS with a high-speed connection- obviously freeing the knowledge workers from the desk to converse and work in real time at any mobile location. 37Signals – the makers of online project management suite Basecamp – has devised a new tool for the iPad which let users collaborate on ideas via simple drawing in real-time, using touch sensitive interface of the iPad -a medium which is most familiar to the human tactile sense. All of these inexpensive Web 2.0 technologies when coupled with maturing enterprise level solution such as FTP server, SQL databases driven by competing Oracle or IBM solutions for the retail, merchandising, manufacturing industries can leverage any knowledge based workers to be a key player in a team-based setting (cross-functional/ divisional/ project based) in the pursuit of corporate’s objective. It is much more affordable now for firms to perform market research and targeted marketing to segment of customers via Internet micro-ads solutions from Google and Yahoo. Firms can inquire customers and product’s fan base to improve product features and hasten product development cycle via Internet forum and email responses. This knowledge base can be archived with keywords, dated, and ranked by characteristics of: being the most relevant demands, most requested features, most easily implemented, and least development cycles for examples. Account executives can delegate subordinates to serve select clientele with precise information on transaction and a level of personal service made possible by CRM & ERM suites. Documents relevant to the business deal can be archived into pdf, phone calls can be recorded, and commenting on transaction process is made by previous representative, reminders can be made in detail specific to client’s birthdays or dealings. Mass mailing with customer’s name in the headline can be made at ease. Such abundant of data archival and manipulation made possible by innovation in IT transform business to be more enjoyable for a human-to-human interaction. These tools and application assist knowledge workers throughout the life cycle of KM, which consist of:
3.1 Knowledge capture:
Civilization is built upon knowledge assimilated by fore-founders. Human lifespan is too short for one to start afresh and create the level of technology and utilities enjoyed by citizens of modern economies. The need for knowledge sharing is as important as knowledge creation and finding. There is a memory system pertaining to any organization either large or small. The success of the organization,therefore, is dependent upon the employee’s knowledge, and knowledge’s store of the company. Capturing the knowledge is technologies-driven but IT is not the only factor. The impediment of KC is also dependent on: human resources, organizations culture pertaining to collaboration effort and idea sharing. Thus, knowledge capture is the basis to individual’s role in combining and creating new knowledge. Tacit and explicit knowledge capture plays quintessential role in every organization.
3.2 Knowledge codification:
The next important process in KM life cycle is knowledge codification, which is the process of implementing the reuse of knowledge being the asset of individual members. This conversion of organization knowledge into more accessible and useful types is made possible by the following tools/methodologies:
3.3 Knowledge Transfer
KT is a fundamental process by which the documents, data, or other types of resources are captured and stored in formats and media to allow recovery by the others as needed. For example, the firm’s information must be kept secure whereas consistent sharing permissions must be set according to incumbent position. Intranet and portal sites are likely application for project teams to build sites for the capturing and sharing of knowledge. Files can be collaborated upon in different formats using the latest software versions. For example, Adobe Contribute is a suite which let non-web programmers make update to the content easily and not having to worry about the structure of the site. Google Doc, Dropbox are excellent tools to use for the online backup, synchronization and sharing of files across platforms. Campfire from 37signals is another good choice for instant messaging, collaboration between designers, developers and clients on email and IM. Basecamp is an online project management app with excellent status report that can be run through browsers. These apps should aid in the four types of knowledge transfer:
Tacit to tacit (Socialization): Socializationis the first interactive process between individuals and society with feedback mechanism, through which individuals learn, perceive, derive notion of cultural values andsocial norms in anopportunity to integrate into society and meet the expectations.
Tacit to explicit(Externalization): Externalization allows conversion of knowledge into substance of clarity. Knowledge transfer requiresknowledge of more explicit form.
Explicit to explicit (Combination): is the process of creating the new knowledge by connecting, classification, unify and synthesis existence knowledge.
Explicit to tacit (Internalization):is the conversion process of organizations’ knowledge into individual’s knowledge.It depends on an individual’s ability to make sense out of explicit information.
3.4 Knowledge Creation
Knowledge creation is always starting with an individual or a group of individuals, who come up with new opinions, definitions, products or innovation processes. New knowledge is created on the foundation ofexisting knowledge and synergies of knowledge sharing, where the sum is greater than the part. Knowledge creation may occur through research, innovation projects, test, examinations, training procedures, etc.
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A succinct definition of the “Learning organization” may be given as: an organization that is strong in the pursuit of research and operational analysis and willing to apply its findings to be more efficient operational wise. It can be any entity (such as schools, economic organizations, government agencies, etc.) These organizations must utilize their limited resources to achievecertain goals and visions.Organization will assess the collective leadership and unity through hierarchy. An organization must perfect its craft inthe conversion of individual knowledge into organization knowledge to be a sustaining learning organization. The extent of management commitment to accept individual contribution and anemployee’sbenefit program must be in place for the full recognition of motivational effect.
4.1 Coca cola’s learning organization – Company Overview
Coca-Cola (is often referred as Coke) is a freshwater was registered trademark of the Coca-Cola Company in United States since 1893). In 1886, Coca-Cola was first introduced to the public and has sincebecome the most successful soft and drink beverages company globally. Today, the name Coca-Cola Company is synonymous with American culture as real as steaks and cowboys. The brand pervasiveness has staying power in more than 200 countries around the world. The company strives to enter emerging market, enriching the workplace condition&environmental protection, and strengthening public relation.
Coca-Cola Company have assigned a VP for knowledge, learning or intellectual capital whose task is to create knowledge management systems that enable them to quickly adopt development tendencies, thus fulfilling the needs of the customers, competitors, bottlers, distributors and suppliers in more imaginative ways than ever.
4.2 Coca-Cola and its competitive models
The soft drinks industryis dominated by two big firms in the world: Coca-Cola Co. and Pepsi Co. As such, the barriers to entry in the form of capital investment for bottling plans, building up a sustainable consumer base through massive marketing effort can be seen as high where the competition is very real. Coca-cola has strong brands under its holdings (Sprite, Fanta Orange, Cherry Coca-cola, Barq’s root beer) and is well received by customers due to perceived level of superior quality and standardization worldwide.Its corporate mission states that partners should be nurtured in a winning network of customers and suppliers, for together the company will create mutual, enduring value, and that people would be inspired to be the best they can be to work at Coca-cola.
There are threats to the business as consumers and media attention has favoured organic fruit juice and herbal teas as of late for health concern. Coke has been criticized for using HFCS in place of real fructose sugar. To be highly competitive globally and still remaining big, Coca cola perfected its operations into franchising its names and formulas to sell to bottling company. Marketing activities and feedback can be shared worldwide between its affiliated companies worldwide.This competitiveness must be derived from KM system in place, and the division and decentralization enabling managers to operate in level consistent with local market’s minute shift of preference. KM library of the company allow manager worldwide to derive lessons learnt from marketing campaign worldwide and/or reuse elements of prior activities as it may remain suitable for local market. The regional bottlers who hold territorially exclusive contracts would source the syrup from Coca-Cola Co. but it can adjust the sweetness of the drinks for local markets. Innovation in one plant can be quickly multiplied in other plants and so new soft drinks & beverages can be quickly introduced to new market once formulation is determined. Such feature is multinational companies’ prowess for knowledge of each area of operations in individual country can be developed separately or in a joint effort, continuously over time. The drawback lies in the management and application of such massive internal knowledge library consistently. Culture of innovation at Coca-cola was seen in its product placement effort when it decided to consolidate new Coke and Classic Coke into one line, for fear that Classic brand may conjure image of stifle innovation. Products research and development is shared throughout company. Billboard placement and TV spot may be adapted to local languages and market, constrained only by authorized legal representation of signed celebrities and models in different countries.For the World Cup event, Coke has brokered deals with FIFA to have its bottles addressed with such theme and sales boosted.Coca-Cola Co. seeks to double its business in the next decade as it caters to the expected billion people worldwide who will join the middle class by 2020. CEO Muhtar Kent said that sales have doubled in the decade since 1997, and they’ll do so again because of growth in countries like India and China, most notably relying on cost cutting procedures in the future. Cost of running marketing campaign will be huge, but seen as being paid for by billions of people, so the cost of a Coke will not increase in long term with disregard to inflation. Such is the economy of scale benefit to be enjoyed by a multinational company. Annual savings of $500 million to be realized from decrease in general and administrative costs by 2011 by consolidation of redundant departments, as told by a company’s press. Coca-Cola is on path to further consolidation as it has acquired the assets and liabilities of Coca-Cola Enterprises’ North American businessin a deal that will result in about $4 billion in cash to shareholders of the soft-drink giant’s largest bottler. Coca-cola has addressed execution phase for Total Quality Implementation including management support, customer satisfaction and employee feedback and make available the marketing audit, strategic fit and situational, financial analysis to management executives of the bottlers plan worldwide.
Graph. Stock chart of Coca-Cola as its profit climbs 20% on international
growth despite continuing slump in America
The organizational model at Coca-cola Bottlers is centralized. They are responsible for producing can & bottle products, selling, distribution, and merchandising of Coke to retail stores and vending machines. Top management makes rational decision in relation to package positioning, trade discounts and advertisements. They get support from overseas division and all the knowledge library can indicate what works and doesn’t work. The economy of scale is leveraged by synergistic dependencies of Coca-cola divisions. Given the task of a Coke salesman,he has a set objective for each term to fulfill tasks of finding new customers, retaining existing ones, reactivation of discontinued accounts. MBO guidelines suggest that manager is responsible for performance and achievement of operational goals and should guide the sales representative with feedback and training for the achievement of objectives. The salesman should oversee 100 plus outlets and make frequent visit to each outlets to track sales and provide support. Such level of commitment must be tracked and recorded by proprietary ERM system. The manager can oversee activities of the salesman for the day, the weeks and the months. Aggregate reports for end of quarter regional performance can be compiled and compared. Deficiencies in product quality can be traced back to batch and plants number with implementation for serviceman to do field repair. Managers can log in to company’s network to share inquiries and hold regular conferences. The multinational corporation therefore acts more like a coherent body in spite of being disconnected by geographical positions.
The professional management of corporate knowledge.
The competitive edge of developing corporate KM body is leveraging employees the capacity for change, be motivated to learn new skillset and work with people of different cultures and barriers for the optimum flow of information and values. System culture change in positive manner is fundamental to management practice that generates innovation. Management must have adaptive response mechanism to act in booming growth or economic downturn with body of corporate knowledge enriched by prior strategies. Creativity and innovative action taken to develop a conceptual framework to complement the process of collaborative work, will be the key of focus beyond traditional business system. Leadership styles, continuous quality & performance improvement, teams building, productivity are all the current business channels for KM support.
As large corporations are gradually asserting themselves in the international arena and need for product differentiation is pronounced, KM is necessitated just as protected IPs and patents may be sought for. The firms are gradually improving operational process, and create a culture of sharing and dependencies between workers. Coca-Cola has adopted programs such as: “Management Training “, aimed at training students /recent graduates, managersto be suitable for administration task and employment at the company in the future. Additionally, the company has regularly organizes training courses, conferences for company employees, company executives and managers in the domestic and foreign markets. Company held picnics give groundsfor building bondsbetween employees. Companies may enjoy the cost saving features of collaboration tools and cut down in habilitation cost. Employees can train, learn new skills at the own pace in their own time at home using the Internet to access corporate portals. Real-time market data can be analyzed with exactness to give managers the spontaneity to improvise on marketing, production, distribution and logistics with support from overseas peers and HQ office. Rapid rate of technology diffusion and market shift demand Coca-cola to experiment with a host of different approaches to product and process development, the successful rate of those project may not be 100% but these approaches will provide new insights that could be applied to future endeavors. The benefit of the learning organization structure can be lasting, as it will attract and retain productive employees bound by similar virtues. Employees turnover will be low so higher revenue growth can be achieved with high employee performance and cut down in training cost. Consumer needs are appropriated promptly and valued by the company. Employees can make decisions based on shared knowledge with minimum management supervision. A strong bond is created between learners who conform to corporate objectives and their skills repository is poised to bring future growth and success for the firm.
With the combined capture, codification, transfer and creation it has created a strong association, to help managers to better manage the work, allowing employees the freedom to create, share information with others and vice versa. Great company is where individual growth is nurtured and contribution is recognized. Support between dependencies parties of the organization in project or divisional based setting is made feasible by IT applications and workers can collaborate on work and share ideas. Cost of making legacy software compatible with Web 2.0 apps can be a hindrance for large company to innovate but not a question of concern for small ones since they can purchase complete off-the shelves suites afresh and focus instead on building KM library instead. Simple KM may start with a public blogging and portal sites where consumers and clients can make their voice be heard. More complex modules of KM can be found when knowledge workers make it mandatory to have transparency of record in situational expertise. Core management functions comprising of strategic planning, formulation and implementation can be done with much effectiveness as managers learn lessons of the past and need not reinventing the wheels so much. Solidified, accessible body of knowledge is central to cost cutting procedures, producing innovation throughout the sourcing, production, distribution, marketing effort.KM allows firms to increase focus on the market as they can respond to the needs of consumers, customers and partners and make execution in the marketplace with urgency and be responsive to change. Building learning organizations requires workers to see their organization as an organic system, always evolving and their purpose is to develop personal mastery, to experiment and collaboratively reframe problems. In learning organizations, leaders and employees learn to accept, embrace, and seek-not simply change-but transformation. KM decreases the risk of downsizing and employee turnover by capturing the knowledge residing in the minds of their employees so it can be easily shared across the enterprise.
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