The five categories of the human mind

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Literature review

According to Russell Ackoff (1989), the human mind can be classified into five categories :

Data: Symbols.

Information: data that are processed to be useful; provides answers to "who", "what", "where", and "when" questions.

Knowledge: Application of data and information; answers "how" questions.

Understanding: appreciation of "why".

Wisdom: evaluated understanding.

Figure 1: Transition of Data, Information and Knowledge (Ackoff, 1989)

That information, in turn, can then become the knowledge that leads to wisdom. (Les Alberthal, 1995). Therefore, the organisations should put many efforts to select the critical and important information that implement the good knowledge. Knowledge is of crucial importance, because incorrect or deficient knowledge may lead to unsatisfactory solutions (Haux et al., 1996). There whey, the knowledge play main factor for the banks on their processes and operations.

There is no standard definition for the knowledge management (KM). It generally refers to how organizations create, retain, and share knowledge (Argote, 1999; Huber 1991). Relating to King (2007), it is the planning, organizing, motivating and controlling of people, processes and systematic in the organization to ensure that its knowledge-related assets are continuously improved and effectively employed. Thus, the knowledge creation, processing, sharing, and utilizing is the most important key asset of KM.

KM remains the tool that facilitates the collection, recording, organization, filtering, analysis, retrieval, and dissemination of explicit and tacit knowledge (Tiwana 2002). Where, both explicit and tacit knowledge become valueless unless they can be applied to the management decision-making (Sandars and Heller, 2006). The management decisions can be affected by either explicit or tacit knowledge.

Knowledge management, in terms of defining, understanding and applying the available knowledge to their own advantage, provides the decision-makers with a useful tool for directing their organization (Moss, 1999).Therefore, many organizations, specifically financial organizations are paying a high attention to the knowledge management system to derive an excellent benefit. As Addicott, McGivern & Ferlie (2006) argues that many large companies and non-profit organizations have resources dedicated to internal KM efforts, often as a part of their business strategy, information technology, or human resource management departments.

The decision-makers rely on their decisions on the KM, which sufficiently lead to reasonable decisions. That clearly exposed in Alberts et al. (2006) articles, where a more knowledgeable organization, one in which the situation is familiar to a large number of individuals, can distribute decision rights further than one in which less knowledge is present or knowledge is concentrated. Such knowledge is used by the management to maintain leverage, renew, and develop its available resources and assets (Borgonovo, 2006).

Alberts et al. (2006) defined the effective decision-making as: the capability to form focused and timely decisions that proactively and accurately respond to these emerging opportunities and threats with available means and capabilities. He discussed the important of effective decision-making using all the available resources.

The value of the knowledge in decision-making depends on how well it has been defined for the intended use, and how effectively it can be used to impact future choices (Feldman and March, 1981). Knowledge Management has enabled a dynamic assignment of decision rights, where depending on the situation, various actors, can at different stages, gain access to the decision making process (Alberts et al., 2006). Successful utilization of high-quality economic evaluation knowledge requires sufficient resources and skills, as well as an evidence-based approach to decision-making (Weatherly et al., 2002; Iglesias et al., 2005). The most valuable of knowledge utilization in the organization, is the most efficiency and effective decision-making. Where that valuable knowledge, cannot be achieved unless the organization shed a light on improving and enhancing the resources. And that's why the organization has to select the best information to use so as to achieve a effective respite, capturing and avoiding as much as possible inefficiency in the decision making process (Barney, 2002). For organisation to become a knowledge-base, it should understand the value of the information. As well as motivating the research knowledge that definitely affect the decision-maker's intellectual capacity.

Miettinen and Korhonen (2005) argues that, utilization of diverse knowledge is voluntary, and depends on the decision-maker's own initiative and willingness to use it. However, The managers should motivate their employees to share knowledge and come up with new creative ideas that helps the organisation to achieve its maximum benefits. However, the organisational members should have some basic skills, shared language, and technical knowledge, built through effective people management practices (Minbaeva 2005).

As a consequence, organisation that does not have formal knowledge sharing practices will fail to leverage its employees' intellectual capital for business innovation and growth (O'Neill & Adya, 2007). The knowledge sharing enable exchange of experiences, that transfer the knowledge among the employees and customers to sustaining competitive advantage since it affect the decision taking to improve the quality of services provided. Therefore, Barachini (2009) supported that it is imperative that these organisations continuously motivate their employees to share valuable information so that their intellectual capital can be leveraged.

Information technology will then give the banking management a new dimension in managing its knowledge and help in carrying out and maximizing the management's initiatives in harmonizing the appropriate strategies in the short and long-term (Edmondson, 2002). As well as the development of information technology enables utilization of a continuously expanding knowledge base (Haux et al., 1996). So, the information technology plays a major factor in expanding the dimension of knowledge management base in the financial organizations by processing the knowledge management, to gain the highest benefits, as Tanriverdi (2005) finds that IT relatedness of business units enhances the cross-unit KM capability of the firm, which then has a direct impact on corporate performance.

In decision-making, the professional roles and familiarity with task content are highlighted, and the professionals usually act according to the prevailing values of their own professional groups (Zwart-van Rijkom et al., 2000). So, the roles should be clearly defined to achieve effective decision making. However, the decision-makers should be aware and fully knowledgeable with the organisation position compared to the competitors in the market, and how to grow up sufficiently, according to Jennings and Wattam (1994) strategic decisions have to answer two fundamental questions: in which activities should the organisation be involved in and how will it compete in its various business areas.

Nonaka and von Krogh (2009) returned to the more recently work, an attempt to move the debate about knowledge conversion forwards. And Singh (2005) who extends management research to consider collaborative networks as determinants of knowledge diffusion patterns. That will lead defiantly to success future actions. That is why in recent years, numerous researchers and scholars had placed a great deal of emphasis on the need to create a KS culture in organisations and to implement business strategies that are more knowledge friendly. At the same time, organisations worldwide have been trying to undertake initiatives in introducing effective KM by embedding KS practices in their daily work process in achieving organisational performance (Ali & Ahmad, 2006).

To raise up the financial organisational capability and enhance their level of competition in the market, the financial organisations should understand the dimensions of the knowledge management, and clearly define and develop the resources in case of human, technology, internal operations...etc, and manage them well across the organisational boundaries. However, establishing the link between knowledge and decision making is, at best tricky. Then, they will be capable to broaden the decision-makers intellectual capacity that impacts the future actions.