A Overview Of Knowledge Management Commerce Essay

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The article mainly handles the key concepts of the module. Knowledge management is an approach to share data and information, handle it effectively for future. Initially it handles the basic of what is Knowledge management and information management, the difference between IM and KM followed by advantages and the disadvantages of managing Information and knowledge in an organization. Later have drawn link on how business intelligence would render success to enterprise by effective ways / approaches of handling knowledge.

At the later part, the article discusses about the case study Celltech, the organization before 1990 and after 1990, the effective leadership and strategic approach of Dr. Fellner and the new team. Finally, the article handles the Information /knowledge management policy for Celltech, the issues they had in defining and the approaches they could follow in developing a policy have been discussed. The module has helped to mould the knowledge of managing information and using it effectively with the righteous strategy, which is required for a professional business graduate.

What is Knowledge Management?

Knowledge Management is defined as "Treating the Knowledge component of business activities as an explicit concern of business reflected in strategy, policy and practice at all levels of the organization. It also makes a direct connection between an organization's intellectual assets - both explicit and tacit and positive business results".

For an effective policy, the organization should focus on the attributes such as captivating and transferring knowledge into services for innovative knowledge management. (Skyrme, 2002)

Knowledge is generally of two types, implicit and explicit. Implicit knowledge is nothing but one being possessed by every individual. It is developed by continuous learning, understanding and experience, whereas explicit knowledge is the one available externally in the form of books, web articles or journals. In an organization, KM should be approached tactically and strategically.

The tactical knowledge helps in understanding the opportunities and market demands where strategic knowledge helps in attaining the long term goals in macro environment. (Prusak, 2001)

KM Process

Figure 1 : KM Process (Bukowitz & Williams, 2001)

The organization should learn to share the knowledge and should be innovative to be sustaining in the market. They should be transparent and organized

Knowledge management has an effect not just on creating a explicit knowledge and tacit knowledge. It has an impact of being innovative in various aspects for an organization. It is also suggested that on various investments made by organization for its development, KM is one of the significant asset to a learning organization. It is very important for an organization to learn from its mistakes and also its success, which would always keep them growing. It would also be effective to find ways to measure the knowledge management and maintain the best practices and develop a policy to adhere to it. The major factors for which knowledge management is an required process would be

The practice which has been traditional to manage implicit and explicit knowledge, individual's knowledge, knowledge retentions to maintain the organizations intellectual heritage

Secondly, for the current business survival every organization needs to be innovative and creative to withstand the current economy slowdown

Finally, they need to measure the intangible and tangible benefits have made organization to apply a tool or mechanism to manage the knowledge in the current IT environment. (OECD, 2004)

Figure 2: Learning Curve (Lavanya 2009)

The above curve specifies that learning is a continuous process. It is to be observed that organization should learn from its success and failure of the projects. It is seen that when the time changes, the success stories or the failures are remembered hence the repetitive mistakes do occur in organization. For instance, the case of Challenger & Columbia crash, which was due to engineers/ Management of NASA's repetitive mistakes and the negligence of continuous learning. So it is essential to record or develop an approach to handle the information / knowledge gained at every stage in an organization for its future growth.( Boisot, 1998)

Difference between IM and KM

Literally, information means data and knowledge means the truth (absolute). ( Saint Onge, 2002)

Information Management is all about organizing, planning policy, maintaining & developing integrated systems & services, optimizing the flow of information and to tackle the leading technology for the functional demand of the consumers (Butcher and Rowley, 1998).

According to the Strategy guru Davenport et al (2000), Information management can be utilized to make decisions, automate processes and to recover information by codifying the information which is in the form of algorithm, symbols and standards.

Terra and Angeloni (2003) says that the human perspective is related to KM than IM as they could transfer their own knowledge into books and journals. IM is only about information and data handling where as KM is about the process of learning, validating, codifying and sharing knowledge in wider perspective. Information is also termed as explicit knowledge. Information is easily handled but not knowledge as it is implicit. Knowledge can be transformed into codified information and be represented in the form of documents.

But Krogh et al (2000) says that it is critical to manage knowledge. As knowledge is a justified true belief, managerial actions and decisions would affect the creation of knowledge in an individual. KM is generally used for supporting the human perspective.

Advantages of Enterprise having IM and KM

Many organizations have IM and KM in their process which is a basic component to achieve excellence and meet the demands strategically. Managing information in an organization helps in providing data for decision making, adds value to the alliances, improves business communications, maintain good customer relation, to improvise ROI, knowledge sharing and create innovative products with supportive business process (Synaptica, 2008)

It is essential for every organization to have an effective learning procedure for effective market leadership. Prusak(2001) has explained that many organization like McKinsey, HP, General Motors and IBM have applied various knowledge management practices by creating many human network repository for information sharing and to transfer the implicit knowledge. The knowledge management by transferring codified knowledge from an individual to a group of people is termed as Knowledge transfer with reference to IT industry; it is a quality process to maintain the transparency and improve efficiency of the employees.KM is an widely significant process in the consulting industry. They need to manage the codified and personalized knowledge of their experience. As specified above the knowledge is stored in database and this codified knowledge management approach is widely utilized/ followed in major IT firms like Accenture. The personalized way of approach is to create strategic knowledge which gives solution to current problems and challenges; such system is adopted in McKinsey. Hence it depends on the organization to choose the right kind of approach for KM.

Knowledge management Model (Figure 2) describes 4 modes KM - innovative, explorative, stabilized and reusable which are essential for organization services. IT also plays a vital role in KM, data warehousing, data mining, artificial intelligence, knowledge creation systems are some of the widely used IT applications. (Kim and Trimi (2007)

Introduction to Business Intelligence (BI)

Business Intelligence is an essential feature in an organization for effective decision making and strategic development. The current globalized organization is in demand to meet the customer expectation, economic slowdown, technological developments and challenging competitions. This can be handled effectively using Business Intelligence. The various processes in BI are explained below.

Fast and better decision making

BI helps in analyzing and making decisions which are usually based on the experience, organization process and procedures. It adds value to the shareowners and business with such strategic approach.

Converting data into knowledge

Data collected should be effectively converted to information which is used for decision making, it has been found that a gap exist between the data collected and the required information which can be termed as knowledge gap. To bridge the gap, organization has to use IT tools like data mining/ data warehousing to analyze which is a business intelligence process.

Intellectual approach to management

It should involve innovative strategy to attain long term goals of organization by understanding the business requirements, culture and the employees in decision making.

Data warehousing helps the manager / executive to make a better decisions with its collective technologies.( Jarke et al. 2000)

Introduction to Celltech

Celltech was started in 1980. It initially started off with manufacturing and developing based on contract, though they had few in house investments in R & D. Though they had been manufacturing drug to cure osteoporosis their stakeholders where not satisfied. Later, by 1990 they started to through their light on therapeutics.

In 1990 Celltech was taken over by new management headed by Dr. Peter Fellner as CEO. His new strategy was to make Celltech innovative and successful by developing drugs for oncology, inflammation and immune modulation. They need to study and improvise their R & D skills rather being very technical in making a mix of given chemical composites for a contract. Thus, it leads to a flat structured organization with diversified skill sets.

It helped Celltech to develop its business and economy. They became one of the leading companies in therapeutics development with brand image and reputation.

Challenges faced by Celltech

Celltech was involved in the contract business and was economically stagnant. It was only on the contract drug development. There was huge pressure on Celltech for return of the capital. The share value got down as the production did not meet the deadlines and was not as planned. Hence, Dr. Fellner who became the CEO of Celltech in 1990, wanted to improvise Celltech strategically and innovatively. As he was also interested in R & D, he decided to do drug development which would render huge profit. This was widely accepted and supported by the management.

Celltech had major problem such as cash burn, pressurizing stakeholders. Hence, the new management strategy was to invest in R & D and to come up with new drug and obtaining the patents for it. They did it by reorganizing; they focused on short term goals to reduce the cash burn. They also worked on the skill set and the staff required. They divided the organization into two one focusing on Biologics and the other Therapeutics.

Though they had technological skill it was just used to mix the components, contract manufacturing. Then Dr. Bloxman wanted to change strategically Celltech into an innovative developing business. It was an essential change as the stakeholders were asking for the capital and also to improvise the market capitalization. Initially they started developing product/ medicine for asthma, oncology and anti TNF.

It is to be noted that there was effective communication flow in the team. The team was innovative and had varied skill sets. The team was very transparent to the management. They decided to focus on manufacturing drug and the reorganization helped them to assign specialist specific task. It transformed the hierarchical structured Celltech to a flat structured one.

Figure 3 : Organization Structure - Celltech

This led the team of scientist and the researchers to work in an interdisciplinary team. They supported the management in the reorganization and showed interest in learning new skills and improving their knowledge in biology which helped in developing new drugs to serve humans effectively. The diversified management team, gave different cultural and skill set which helped them to learn and explore their talents.

Celltech had to increase the shareholders confidence and market share, so they launched their anti TNF product into market with the collaboration of Bayer, leading Pharmaceutical Company. There were many tie up and collaboration with many firms such as Merck, Zeneca and Schering - Plough to explore their R & D unit which gave Celltech a platform to develop them strongly. Bayer's collaboration gave success to Celltech; it also helped them to grow financially stronger. Celltech was able to focus completely on drug development and they were able to finance for their own production of drugs. They also planned a procedure for their proposal. PDP - Product development proposal had the lifecycle of the product to be developed. It consists of various stages of drug development like - Clinical data, trial runs, targets and end points.

In contrast, Celltech failed in CDP 571 - trail II and they declared that they would not be able to carry forward any developments. It did not affect the market capitalization as that of 1993. Hence, Celltech withdrew from Bayer without any loss. It is significant to analyze that effective contract documentation enabled Celltech to terminate Bayer without any legal issues. Thus, it is clear that every organization should learn from its success & failure and keep updating its knowledge in order to be in par with the market demand and competent.

Rejuvenation of Celltech was basically done with the following strategic thoughts. First one was based on renewal and the other was based on exploring models for financial growth. It was prominent from the above discussion that flat structure helped Celltech to become successful. It is evident that Celltech had information dynamics before 1990. They purely worked on contract drug manufacturing by mixing the components which involved huge information which was codified, abstracted and diffused only by agents into the market.( Namara and Fuller 1999)

Figure 4 : Information Dynamics - Before 1990

From the figure 4 it is clear that Information dynamics was in the form of abstraction where the codified information of manufacturing drug was diffused into product and was given to the agents. Later, the absorbed information was again transmitted to develop the drug / improvise it.

Figure 5 : Information Dynamics - After 1990

Celltech was able to learn from its success and failure, especially with Bayer. Though it did not meet the expectation of Bayer, they terminated the project as there was clear contract which did not affect the financial part. After 1990, the knowledge dynamics is discussed in the above diagram (figure 5) which involved the social learning cycle (SLC) in their product development. SLC is clearly explained in the appendix 1

This significantly shows that Celltech followed the right KM and IM policies, which helped them to become a strategic and continuous learning company.

Knowledge and Information Management Policy

As the current market trend is very dynamic and turbulent. Organizations had started exploring their core capabilities to exploit themselves into varied sectors of business. It is rather an essential factor for the organization to understand and utilize the Intellectual Capital (IC), the people's knowledge. The KM policy should focus on the management of IC for the benefit of the organization. As it is crucial for an organization to bring up the policy as it has to manage the information dynamics. It is a good practice to analyze and create a procedure using the framework and methods. Hence, the Earl's 7 schools of taxonomy (2001) and the Jordan and Jones (1997) were used to formulate the policy.

The process involved in KM is compared with Celltech. The researchers use external or internal method to acquire knowledge. In internal, the knowledge is shared where as if they require information for particular problem they need to get externally. The internal knowledge is shared and accumulated for future, as in the case of Socialization (Seci Ba).

Problem - Solving can be divided into 4 segments, location, procedure, activity and scope. In location, it could be individual or team level. In team it can be solved with the group of people whereas as an individual person can become expertise in solving it. The procedure, it can be either by trial & error method or by lateral thinking. Thirdly, activity would describe on the ways the problems are being solved either by using technique (abstract) or by experimenting. Finally, scope explains the focal point to the solution which may be incremental or drastic, which can be compared to Single loop / Double loop learning. Drastic would be due to innovative ideas, where as incremental would be to improvise the existing drug development in a better standards. The process and the breadth are the attributes of dissemination. Process explains the way in which the information is shared. Celltech has shared both, informally and formally. The depth in which the knowledge is explored focus on learning the solution or the problem. Owning the knowledge is ownership. When knowledge is personal it is termed as identity, rather few may think knowledge is their personal. But sharing the knowledge depends on the organizational evaluation systems. Once who wish to share and enhance their knowledge can be encouraged by the organization.

Celltech has knowledge as intellectual assets, where the specialized knowledge is available in the specialists. Generally, the knowledge is stored in memory. Knowledge can be stored in database as explicit and codified or it can be stored in brain which would be un-codified.

The difficulty in codification and diffusions can be understood better by the Earl's (2001) taxonomy of KM. KM practices were evolved in 1990. Initially it was a resource and later it was defied as IC. It is also found that research should be encouraged to use right KM framework and CKO ( Chief Knowledge Officer) could implement it. Celltech, a learning organization would have used similar frameworks to manage their IC. Earl (Appendix 2) have explained the seven taxonomies for effective KM which are termed as 'Schools of KM' for effective KM strategies in the organization.

Celltech would use the frame work of Jordan and Jones (1997) and the strategy proposed by the Taxonomy policies Earl (2001) for the creation of their own policy as it has a high intellectual capital. The business strategy could be linked with the KM. The KM process can be initiated as the organizational goal is aligned with the value of knowledge in the organization. Celltech would lack in few places like the motivation factors, issues in developing the product and quality assurance. Such gaps could be analyzed using various tools and frameworks such as SWOT analysis. Later, they should find the ways in which such gaps are being filled by managing knowledge. The CFO's should understand the process and exploit it which would lead to a new business goal. The framework for knowledge management strategy are given below

Knowledge Business Vision

2. Business Performance Gap

3. How Could Knowledge

Make a Difference?

4. Alternative Knowledge

Management initiatives

5. Degree of Fit

and Feasibility

6. Knowledge Management


Fig 6 : FW for KM Strategy ( Earl 2001)

Once the organizational goal is obtained, after that the gap is analyzed and in the later stage the knowledge obtained has to be analyzed. They should determine how the knowledge would help them in making a change. They should initiate the KM practices, where the strategy and the schools play the major role. They should also determine which would best suit their requirement which further leads to the various KM procedures. Usage of proper frameworks would help the organization to solve their problems and for better implementation of the policies of KM and IM.

There were few issues for Celltech in developing a policy, especially using the manpower and the IC. Thus, the flat structure helped them to grow drastically with the creativity and innovative ideas. The frameworks as specified like the SWOT, Poter's five forces, McKinsey 7's and Force field analysis could be used to position them strategically and identify their opportunities and success factors. Thus, by managing knowledge they would be able to handle the policy and would learn to store the knowledge and the learnt experience for future.


Business Intelligence module has helped to gain knowledge management concepts. It helped in understanding the concept of Knowledge management and Information management. The module helped to understand the various frameworks and the session with deliverables helped to critically analyze every framework which was thought. It also helped to correlate it to Celltech and understand the case study effectively. The link between the business intelligence and the policies by reading various journals and articles from Pursak and Davenport helped in gaining the strong concepts of KM and necessity for the organization to develop a KM policy. It was also understood that KM process is an effective and the necessitate one for any organization especially like Celltech. Have also correlated the concepts learnt to determine the KM policy for Celltech.


Social Learning Cycle

The social learning cycle (SLC) - (Boisot,1998) is an effective tool to analyze Celltech before and after Rejuvenation. It clearly depicts that Celltech was a learning organization. It clearly depicts that the codified knowledge was present before 1990 which is bold ellipses. Later, there was knowledge sharing through various informal and formal gathering which helped in managing Knowledge and also helped Celltech to grow after 1990 which is depicted in ash ellipses.

Fig : SLC for Celltech

Taxonomy of KM - Earl (2001)

KM Schools