Knowledge-based organizations perform well in terms of innovation

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This essay focuses on the significance of knowledge management in an organisation in terms of Innovation and efficiency. The essay also emphasises on the extent to which the information systems will be able to overcome some of the knowledge management issues that are faced by these organisations.

Recently, management of knowledge assets in an organisation has gained more importance because of the better performance and results that can be achieved out of it. Also, the knowledge management assets and its effective utilization are critical for a company's success, in terms of providing greater benefits to its customers with a competitive advantage. Knowledge being the competitive feature for many corporations, in reality it is considered to be the driving factor for continued development of powerful methods and tools. (Wiig, K. M, 1997).

Keywords: Knowledge, Tacit knowledge, explicit knowledge, Knowledge management systems, Information systems, knowledge conversion.

Current trends in Knowledge based organizations:

In the current period, Innovation poses much greater challenges for managing knowledge work. This is basically due to the massive growth in the service sector. The pressure to develop, not just new products and technologies, but also new ways of dealing with shifting user needs and demands, often on a global scale, are, it is argued, significantly greater now than in years past. Innovation is not about inventing new form of knowledge but, how best and how differently to use the available knowledge and put them into use. Innovation denotes elaborate knowledge management processes of identifying and utilizing ideas, tools, and opportunities to create new or enhanced products or services (Subramaniam and Youndt 2005).This illustrates that with better knowledge management, there is more innovation.But, the major challenge here is, how to use the right information and transform it into useful knowledge for organization's growth. Hence, some of the organizations face difficulties in managing the knowledge properly in terms of efficiency. This can be addressed by applying some of the best practices that have been fostered by Information systems.

Definition of Knowledge:

To begin with, we need to understand the definition of knowledge in terms of an organization perspective and also distinguish the types of knowledge such as tacit knowledge and explicit knowledge that are essential to be diffused in organization processes and practices.

Knowledge can be defined as "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 knowers. In organizations, it often becomes embedded not only in documents or repositories but al-so in organizational routines, processes, practices, and norms." (Tom Davenport and Laurence Prusak, 1998). This indicates that knowledge plays a vital role in an organization and is the driving factor for many knowledge-based organizations. Explicit knowledge is the knowledge that can be articulated whereas Tacit knowledge is the knowledge that cannot be articulated. Thus, any knowledge has to be identified, captured, stored, interpreted and used appropriately at the right time. It is not easily possible for a knowledge worker to transfer the tacit knowledge possessed as tacit knowledge is something that emerges from the experience of the worker.In most of the knowledge-based companies there is happens an interaction between this tacit and explicit knowledge.This is called as 'Knowledge conversion'.

Importance of Knowledge Management:

In today's scenario, where companies are striving to create complex products and services, it is imperative for the companies to merge the knowledge from diverse nation skills. (Leonard, D. Sensiper, S.1998).The organization should learn to maintain a balance between the tacit and explicit knowledge. As Wah(1999) states, 'the knowledge management is important for an organisation to leverage and reuse resources that already exist in the organisation so that people seek out best practices rather than reinvent the wheel'. Irrespective of any industry or domain, most of the companies today are demonstrating the knowledge management practices in their projects mainly to create knowledge repositories, improve knowledge access, enhance knowledge environment and manage knowledge as an asset. (Davenport, T. H., D. W. DeLong and M. C. Beers 1998).Knowledge is being recognised as the most important resource in any organisation. (Ipe, M., 2003).

Knowledge sharing practices in organisations:

In many organizations, Knowledge sharing is directly linked to the knowledge creation, organizational learning and performance achievement. Knowledge sharing within projects has been adopted to assimilate the knowledge throughout the organisation appropriately and to avoid reinvention of knowledge. This is normally implemented with the help of information technology, such as databases, seminars, technology fairs, emails and groupware. This enables the knowledge sharing behaviours to be recorded, and many organizations even try to validate that knowledge.

For example, in Infosys technologies (the second largest IT company in India), there is a database system for knowledge management called 'K-Shop' which can be accessed by any employee at any time through the company's intranet. The k-shop will be helpful for any project reference or performance management guidance and even case studies of critical projects. The employees can also submit their own documents to share their knowledge with other employees. Basically, the purpose of this knowledge sharing practice is to transfer the knowledge that exists in one part of the organisation to be used in another part of the organization. (Dixon, N. M., 2001).

Apart from this, knowledge sharing is also practised by conducting several sessions and quizzes to ensure that there is an appropriate level of expertise among the team members in a project. Having worked as a knowledge management prime for a team of 20 members, I understood that knowledge management is very important for a project to be executed successfully. I have conducted several healthcare domain sessions and also enabled all the team members to participate by sharing their knowledge on several healthcare topics during the sessions. So, the question that arises here is what is the benefit for an employee by sharing knowledge? What is the motivation factor behind the employees to proactively share their knowledge to improve the company's performance as a whole?

Predominantly, many organisations utilise the reward systems to encourage the employees to share their knowledge with others. Similarly, in Infosys, the performance of an employee is also evaluated based on the number of knowledge sharing documents the employee has created during a period. This provides a support for the employee to demonstrate his/her performance during the appraisal presentation. (Bartol, K. M. Srivastava, A., 2002).

Like the individual performance, team performance is also equally important in terms of knowledge sharing. This can be influenced by incentives provided by the company. Thus, the employees in a team are motivated to share their knowledge among the other team members in order to achieve the team based rewards (Bartol, K. M. Srivastava, A., 2002). Thus, the employees are encouraged to be innovative, which is crucial for economic performance. Osterloh and Frey (1997) argue that in order to transfer the tacit knowledge from one person to another, the person must have a motivation from within.

Knowledge management in terms of efficiency:

In many organizations, innovation is seen as a rational process, where the knowledge management practices are followed based on the rules defined. Innovation is created based on decisions made by the organizations to adopt new forms. But, this concept is very misleading in terms of efficiency. It is through the knowledge repository that the company is able to innovate new products and services in order to have a competitive advantage over the others. The problem arises when the company concentrates more on the process of identifying competence types and levels, defining competencies needed for particular jobs, and rating of individuals' performance based on the competencies, and gives less attention to the implemented competency system.

It has been observed that, Knowledge sharing also happens through informal interactions and the emerging communities of practice in organizations. However, these methods of knowledge sharing are not controlled by the organization. It is seen that in spite of accumulating knowledge using technology, there doesn't seem to be a big difference in organisation efficiency in terms of knowledge sharing. (Newell, S. Bresnen, M. Edelman, L. Scarbrough, H. Swan, J., 2006).Although there are effective process based tools such as activity based costing, business process reengineering and Total Quality management to measure the efficiency of employees and organisation as a whole, there are many invisible networks that are not being identified by these tools .These invisible networks help the employees perform their tasks across functional, hierarchical and business unit boundaries. (Cross, R. L. Martin, R. D. Weiss, L. M. (2006)).This is mainly because, a drastic increase in globalisation of organisations and specialization of knowledge - based work has required collaboration within and among organizations to be very crucial for its growth.

However, this sharing of knowledge among employees across boundaries has not been very effective. This also happens mainly due to the inability of the organisation to identify its networks and effectively map them for collaborative activities which in turn would help the organization to reduce complexity, redefine roles and allocate the resources appropriately and provide efficient customer service. Hence, Network analysis plays a major part to overcome this issue. It is not enough for the companies to just map the interactions among various networks but they should also be able to quantify the benefits and costs of collaboration. (Cross, R. L. Martin, R. D. Weiss, L. M. (2006)). The systems built for innovation is not supporting in terms of efficiency. Each and every day, new technologies are getting added up with the organization processes, design and strategy. We need to bring the employees together as face-to-face and improve the expertise in their corresponding specialised areas. Focus should be more on mapping the right expertise of people in right job at the right time, instead of just bringing the experts into the industry.

The information technology systems that are currently available for knowledge sharing competency are more of a rationalistic view. Although, these systems are productive in job-based organizations, for a more dynamic trend currently, such as in knowledge based organizations, there is demand for better IT support and best practices for a competitive advantage. According to Todd and Benbasat (2000), Information technology can support only the problem solving tasks, but certain tasks that are normally covered in the underlying decision problem cannot be identified with the technical support. The IT applications will also not be able to remove the cultural barriers among the employee networks in an organization.

This can be overcome by following some of the best practices, while sharing knowledge the knowledge internally and externally in an organization.The Information technology has to be utilised in the most efficient way to leverage knowledge sharing. The answer to all these issues can be solved only through efficient implementation of information systems for knowledge management.

Knowledge management systems refer to a class of information systems applied to managing organizational knowledge. That is, they are IT-based systems developed to support and enhance the organizational processes of knowledge creation, storage/retrieval, transfer, and application. (Alavi, M. Leidner, D. E., 2001).

'Knowledge as Processes' and not just Knowledge processes:

It is understood that, it is quite difficult to support the knowledge processes within an organization with just IT. IT systems are limited to its applications and functionalities in knowledge management projects. Whereas, if the same knowledge itself is viewed as a process, the focus is more on the individual employees, their social interactions and their learning in knowledge creation. "Knowledge as process" view claim to focus on the flows of knowledge among people, rather than on knowledge as an object to be stored, accessed, and reused via knowledge management processes and knowledge repositories (Fahey and Prusak, 1998).

Role of Information systems in knowledge-based organizations:

In 20th century, most of the organizations were following the 'Taylorism' model to manage its employees and its processes, which was more of a rational and hierarchical practice. The jobs were already predefined and the employees were expected to perform only the job assigned to them. There was no sign of knowledge sharing during that time. However, now the industrial revolution has been transformed significantly in terms of how the workers perform their job. In the 21st century, knowledge working performance is one of the biggest management challenges. (Drucker, P. F., 2006).This indicates that knowledge is now being created as a 'community of practice' which delivers better results from the employees when they tend to work together as a team. Various circumstances have to be considered while trying to design the information systems for better knowledge management.

Information systems should be designed in such a way that, the knowledge management is well organized and supported. The systems should be able to identify every individual's knowledge activities and complement them. It should also be able to enhance the knowledge collectivity. To achieve this, the information systems should be able to capture the knowledge effectively from all the resources and transform it into productive results.

For instance, if the knowledge process involved in an organization covers both the expertise as an individual or as a group, then the Information systems should be flexible enough to work in a wide range of situations. As described earlier, if the knowledge process is more cognitive and deliberative, rather than very procedural, then the information systems should provide users with many alternatives, must take advantage of the user's knowledge.

Nowadays, the workers in an organization are seen as a very valuable resource in terms of the knowledge they possess and their contribution to the company's success. Thus, instead of thinking of jobs in terms of a relatively fixed position occupied by a person, it seems to be more suitable to see the person as a knowledge resource working for an organization (cf., Lawler, 1994).Also, the knowledge workers perform their role mostly based on their own experiences (tacit knowledge) and hence, there is possibility for them to not completely follow the routine. As (McClelland, 1973) states, Competence is comprehended as the relation between humans and work tasks, that is, the concern is not about knowledge and skills in itself, but what knowledge and skills are required to perform a specific job or task in an efficient way.

The traditional way of managing the information systems however does not suite or is not enough to deal with the current work practice. It is essential that the current knowledge based organizations must be based on a richer understanding of competence including interest-driven working practice.

Thus, the knowledge based organizations are required to continuously mainly and develop their knowledge repository to sustain their performance capability. (Nonaka, 1994).Knowledge workers are the main performers in any knowledge based company and as Starbuck (1992) describes the organization-individual relation could be described as 'I pay you to think and not just to do'. For the past few years, the outlook of working pattern in knowledge based industries has drastically changed from a narrow focus of performing specific tasks into a collaborative effort made by teams with diverse skills. This requires the team to coherently work together in order to gain recognition both individually as well as a team. The organization gathers lot of information, they do not implement properly at the right place in the right time. This is because the decision making has not been followed properly. Although policies are implemented, there doesn't seem to be any difference in its results. (Choo, C. W., 1996).

The information systems part in a business is increasingly becoming important to a company's success and competitiveness. The knowledge based organisations of 21st century are basically distinguished by continuous changes in their process and practices, unforeseen requirements, continuous learning and constant need for innovation. This requires the company to constantly update with competency systems that are more dynamic and promising. The information systems should be able to identify the real-time status of the organizations. (Lindgren, R. Stenmark, D. Ljungberg, J., 2003).

For instance, to overcome the network barriers among the employees in an organisation, information technology has to be used in the best suitable way like the Buckman laboratories.Buckman Laboratories uses an online interactive forum where user comments are threaded in conversational sequence and indexed by topic, author, and date. This has reportedly enabled Buckman to respond to the changing basis of competition that has evolved from merely selling products to solving customers' chemical treatment problems (Zack 1998a).

Also, the application of frameworks will help the companies to develop new business models based on its structure and business environment that is generally characterized by dynamic and radical changes. (Malhotra, Y., 2000).Conversely, the possibility to identify the human behaviours by information systems has not been possible till now. Down the line, information technology will be developing some interactive information systems which can capture the human behaviour.(Kirk, Joyce ,1999)

Just by implementing sophisticated information systems does not bring a productive change in a knowledge based company. The knowledge management should also able to bring out necessary changes in organizational policies and practices.


Industries and organizations that follow the most systematic and successful methodologies for a knowledge - worker productivity, are expected to be the leaders of the world economy in the next fifty years. (Drucker, P. F., 2006). We can conclude by saying that, the organizations cannot achieve the knowledge management benefit if they are just technologically strong, they should also be able to appropriately align their cultural and managerial elements. (Alavi, M. Leidner, D. E., 2001).Information systems contribute a lot to the organization accomplishments.