Understanding The Key Aspects Of Knowledge Commerce Essay

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Before we even discuss about knowledge management, a brief description of knowledge will help us to have a deep understanding of knowledge management. The theory of knowledge has been studied for thousands by many philosophers around the world. It is very hard to give the specific definition of knowledge. Whenever speaking of knowledge, we usually use the word "knowledge" to mean basically two concepts: the knowledge of knowing that (data and information), the knowledge of knowing how (ability to do something). There are plenty of ways for people to get knowledge, it can be learned from books or others, and it can also be the experience of something has been done regular. No matter how we get the information, as long as we translate it into "meaningful set of relationship which can be understood and applied by an individual" it can be known as knowledge. ( Debowski, S). With knowledge people can make excellent decisions, and idea can be turned into tangible products. Knowledge is divided into two types:

Tacit knowledge: This can be described as "know-how" knowledge which is very difficult for people to explain how they apply it in the specific situation. It also hard to deliver from individual experience or belief to another. The tacit knowledge is believed that it is essentially in personal nature and this is something that people carry in their mind. (Sanchez, 2004). To make the wider use of knowledge in the organizations, managers try to arrange the interaction among their staffs in order to create the interaction and through that they can give the best performances or even create new idea that maybe useful for organizations. Besides that, the organizations cannot just make people to share their knowledge; they should train the employees of sharing informations to each other, what they should share, how to share and then use the knowledge effectively. (Plunkett, P. 2001) However, tacit knowledge is obscure and difficult to obtain, sometimes the organizations are not aware of the knowledge that individual posses. They do not know what specific kind of knowledge that their employees carry. This common state has been said by Lewis Platt, CEO of Hewlett- Packard (1992-1999) "If we only knew what we know, we would be 30 percent more productive". Even though tacit knowledge is hard to share, organization depends much on it to ensure the good quality and judgment of business. If any staffs have the high level of tacit knowledge they can developed through the knowledge they have.

Explicit knowledge: In contrast of tacit knowledge, explicit knowledge is the knowledge that can be documented, transmitted to other informations and illustrate it through pictures or explanations. Explicit knowledge can be categorized into declarative knowledge, the simple knowledge such as set of principles and facts, which can be explained. Procedural knowledge enables the application process of something can be done. (Debowski, S). The important form of explicit knowledge is work premise, where it is believed that the organization can help individual to articulate the knowledge they have to create the knowledge asset. Within the organization, explicit knowledge can be disseminated through documents, drawings, manuals the best practice. Information systems also play a big role in facilitating the dissemination of explicit knowledge assets in the organization intranet of via the internet. Usually, when the company believes that knowledge can be made explicit which means it can be created through structure and learning process, it can improve the organization knowledge asset. (Sanchez, R). Explicit knowledge is a human way of expressing thought, idea, belief and even emotion. We gain knowledge by "contextualizing" and "understanding" those informations and then turn them into explicit knowledge. (Blunt,2001)


"Knowledge is at the heart of much of today's global economy and managing knowledge has become vital to companies' success." (Kluge et al, 2001).

Knowledge management becomes one if the hottest topics in the global economy world today, more and more organizations start to take the responsibility in managing knowledge. But how do managers can manage the knowledge that individual carries in the head, the experiences they have been through or the reason of why they do something? The simple answer is yes, we can manage knowledge by encourage people to share what they know to each other and then together they will create the value for organizations. Managing knowledge is moved from the concept that knowledge is power and knowledge is productivity. This is the way organization develop their mindset. "Unfortunately, there's no universal definition of KM, just as there's no agreement as to what constitutes knowledge in the first place. For this reason, it's best to think of KM in the broadest context." (Santosus, M & Surmacz, J. 2005). Knowledge management is the process of identifying and organizing the intellectual asset that the organization has, it is the impact of the long term performance of business. The goal of knowledge management is not manage all the knowledge of every single staff but just manage the knowledge that is necessary for the organization. Knowledge management involves three components. First, people create then share and use knowledge. Second, processes acquire, organize and transfer knowledge. Lastly, with the help of technology, knowledge is stored and people can access to knowledge. Technology and process are concerned to be very important in KM but people are the factor of deciding success. People must willing to share their knowledge within the organization otherwise it will slow down the business. The size of the organization is also important, if there are less than 150 people, the knowledge will be easier to share since they know each other. And when they need a specific knowledge in one field, they can go directly to the person whom is the expert in the particular matter. This makes the communication getting stronger, and together they will bring success to the organization.


1. Competitive advantage

After we explore about the detail of knowledge and knowledge management, we might ask why knowledge management is so important nowadays. Knowledge management is based on the idea that the most valuable knowledge is people. That is why for many years, organization have been trying to manage good their "human resource". Moreover, the world keep changing and knowledge management has state its role in business, when nearly all the business involve "knowledge work" and when people work together they can create the "key driver to new idea". Knowledge management is a main part of gaining competitive advantage. "Competitive advantage is normally defined as the ability to earn returns on investment persistently above the average for the industry" (Porter, 1985).

In today business world, where thousands even millions of people try to make money by copying each other idea and compete in the same area of business, it push companies must to create something different from others. Competitive advantage increased and being considered as the most important key drives of the long term success of the organization in 21st century. This is the ability of organization to achieve superior position in the industry. Moreover, knowledge is the source of competitive advantage, the primary asset from the view of organization especially "knowledge-based" (Grant, 1991). Organization has to use the knowledge which is unique from the competitors and with the help of knowledge management system they can make the difference. From the point of view of organization, knowledge-based is the organization's ability to "create and utilize knowledge", competitive advantage definitely the source. (Grant, 1991). The knowledge based theory state that organization is also distributor of knowledge systems, meaning they can "create the knowledge embodied individual and social interaction" (Kibet; Samuel; Mague; Nyaga, 2010). The value of knowledge result is the organization is able to combine knowledge and capabilities to the productivity. When the organization uses the capabilities of knowledge, it can gain competitive advantage which is harder for competitors to copy (Armistead et. Al 2002 cited in Kibet; Samuel; Mague; Nyaga, 2010). For example, some companies may likely to concentrate on specific products or services rather than expand it or create new things. Look at Apple products, we can easily find the similar in the product line, most of them tend to focus on the touch- screen such as: Iphone, Ipad, Ipod etc.

2. Improve performance

Doing business is all about making and manages all the processes which are defined as the "life blood of organization" (KK Aw, n.d). Based on it we can easily distinguish knowledge intensive and transaction. Knowledge intensive processes are being known as the strategic in nature. Knowledge management system just only support the infrastructure, it also must enhance the knowledge in organization work effective toward to improve performance of organization's business. It is very important to make sure that the knowledge management system support for multiple current and future businesses.(KK Aw, n.d). Let's take an example, if Apple finds out that there is a particular employee who is currently working as technical engineer but he has many good ideas about designing new Iphone product, then that person should be ship to work in design department to maximize the potential asset of company. Indeed, improve company's performance does not mean just focus on employee but they key is how to train people so they can give the best performance to company, this will require the good training system. According to Cedar Crestone there are seven enablers used to support knowledge management: Information: The organization must have basic data support business activities like customer contact, financial report, and product list/ detail. Knowledge bases: As I mentioned organizations also need to have information organized in clear document such as common problems the organization may faced and how to solve them. Skill modules: This is standard knowledge for training staffs through classes or interactive training. Collaboration: Organization should provide staffs chances to help each other and share knowledge through conferences or meetings. Action records: Record all the documents, project or decisions that have been made in the past. Outcome data: the organization can easily recall to past actions whenever needed. Last but not least, Shared insights: These are new ideas or recommendations which can help organizations to reach better result.

When the organization finally has a clear view of what effect their performance and the knowledge needed, they can easily to reach success. With the effective solution in which can be used every day, this can be benefit for business to large scale development. The good solution to deal with organization's problems can clearly illustrate the improvement of performance.


If the staffs of an organization only need to sharing knowledge and work together toward a specific goal, then being a manager is much harder task to do. Managers must take a wider view of the importance of knowledge management; it is not only about manage information and technology but more importantly is managing people. The scholars from Faculty of management in Slovakia has identified the necessary abilities, roles and skills managers must have in managing business, part of leadership skill (Papula, 1995, p.28 cited in Papulova; Mokros, 2007):

Creativity: Manager must be able to create idea and find new solution for business.

Intuition: Manager should have experience in developing business in order to predict the future.

Goal- oriented: Manager also have specific goal in order to help the organization work toward it.

Scrupulosity: whenever manager makes decision it should support the social value and norm of the country he works in.

These are only some of abilities which I listed here according to the article "Importance of managerial skills and knowledge in management for small entrepreneurs" (Papulova; Mokros, 2007) that can help manager in leading business through times and develop it. Moreover, manager also needs some managerial skills such as:

Technical: Manager is able use particular methods and techniques in managerial work. Indeed, these are not skills related to technology like engineer. The technical skills only help manager in "represent usage methods such as prepare and conduct a structure interview." ( Papulova; Mokros,2007).

Interpersonal: Manager needs to know how to lead people, because people are the most valuable source in any company, they hold the knowledge of asset in any organization. With this skill manager can motivate workers, solve conflicts and communicate with people. Interpersonal skill is important to all level of management.( Papulova, Mokros,2007)

Conceptual: This is the must-have skill for middle and top manager. The ability to see the organization as a whole and surrounding with relevant priorities and important issues. (Papulova; Mokros,2007).

Communication: Beside the verbal communication which is very important for manager. Manager should be able to gather necessary in order to make right decision by distinguish verbal information, feeling. ( Papulova; Mokros,2007).

In addition, the knowledge life cycle model it can help manager makes intelligent decision based on the resource and facility of organization. I will introduce about the Wiig (1993) life cycle model according to Dalkir (2005), there are 4 steps: Building, holding, pooling and applying knowledge. These steps are seemed like a sequence because each of them follows each other in decision making. Let's take an example: Samsung is one of the major competitors of Apple in providing touch-screen products. In order to do that, whenever Apple release a new product such as the Ipad, Samsung may buy it and open it then start to learn how Apple do it. That is the first step in knowledge life cycle, building knowledge, Samsung build their knowledge by observe another product then learn their weakness, finally they have new idea in creating a product that can compete with Ipad. Next is holding knowledge step, not many people know about it because they still did not turn it to action yet, just different ideas and it must be keep as an unorganized secret. After that, they will try to pool of these ideas together and choose the best one out of them; this is the pooling knowledge stage. Finally, when they already have the clear idea and how to turn it into real product, this is the action stage where knowledge will be turn into tangible product, applying knowledge stage. This is how Samsung can be able to compete with Apple by providing the Galaxy Tab. (Dalkir 2005 pp. 38-42). Many researches have shown that organization's business will be successful when the managers know how to exploit knowledge by using good leadership skills and managerial skills. If management is about control, manage resource that already exist then with leadership skill will help manager focus on the individual skills which is considered to be the most import knowledge resource. (Skyrme, 1997)


Knowledge management in the world today is the most major support in organization, it not only helpful for manager but also for other staffs. With the use of efficient knowledge management, it can transform organization to a new level of success operation. Through the advantage of technology and information available, the business manager can discover and learn by gathering right informations in order to have new opportunities and achieve business goal. Everyday the process of knowledge management is just simply identify which knowledge can be re-use turn into "new" concept. As I mentioned, knowledge management is the key divers of organization effectiveness, maximizing profit and competitive advantage. However, it is not simple and easy to applying knowledge management in business, they have to overcome many issue such as technology, organization culture and strategy. When they can do that, the business will grow not only in short term but for long term plan of making money also.