Knowledge management and collaboration systems are among the fastest growing areas of corporate and government software investment. The past decade has shown an explosive growth in research on knowledge and knowledge management in the economics, management, and information systems fields. Knowledge management and collaboration are closely related. Knowledge that cannot be communicated and shared with others is nearly useless. Knowledge becomes useful and actionable when shared throughout the firm. In this chapter, we will focus on knowledge management systems, and be mindful that communicating and sharing knowledge are becoming increasingly important.
We live in an information economy in which the major source of wealth and prosperity is the production and distribution of information and knowledge. An estimated 37 percent of the U.S. labor force consists of knowledge and information workers, the largest single segment of the labor force. About 45 percent of the gross domestic product (GDP) of the United States is generated by the knowledge and information sectors (U.S. Department of Commerce, 2012). Knowledge management has become an important theme at many large business firms as managers realize that much of their firm’s value depends on the firm’s ability to create and manage knowledge. Studies have found that a substantial part of a firm’s stock market value is related to its intangible assets, of which knowledge is one important component, along with brands, reputations, and unique business processes. Well-executed knowledge-based projects have been known to produce extraordinary returns on investment, although the impacts of knowledge-based investments are difficult to measure
IMPORTANT DIMENSIONS OF KNOWLEDGE
There is an important distinction between data, information, knowledge, and wisdom. . To turn data into useful information, a firm must expend resources to organiz data into categories of understanding, such as monthly, daily, regional, or store-based reports of total sales. To transform information into knowledge, a firm must expend additional resources to discover patterns, rules, and contexts where the knowledge works. Finally, wisdom is thought to be the collective and individual experience of applying knowledge to the solution of problems. Wisdom involves where, when, and how to apply knowledge.
Knowledge is both an individual attribute and a collective attribute of the firm. Knowledge is a cognitive, even a physiological, event that takes place inside people’s heads. It is also stored in libraries and records, shared in lectures, and stored by firms in the form of business processes and employee know-how. Knowledge residing in the minds of employees that has not been documented is called tacit knowledge, whereas knowledge that has been documented is called explicit knowledge. Knowledge can reside in e-mail, voice mail, graphics, and unstructured documents as well as structured documents. Knowledge is generally believed to have a location, either in the minds of humans or in specific business processes. Knowledge is “sticky” and not universally applicable or easily moved. Finally, knowledge is thought to be situational and contextual. For example, you must know when to perform a procedure as well ashow to perform it. Table 11.1 reviews these dimensions of knowledge.
We can see that knowledge is a different kind of firm asset from, say, buildings and financial assets; that knowledge is a complex phenomenon; and that there are many aspects to the process of managing knowledge. We can also recognize that knowledge-based core competencies of firms the two or three things that an organization does best are key organizational assets. Knowing how to do things effectively and efficiently in ways that other organizations cannot duplicate is a primary source of profit and competitive advantage that cannot be purchased easily by competitors in the marketplace.
We live in an information economy in which the major source of wealth and prosperity is the production and distribution of information and knowledge. An estimated 37 percent of the U.S. labor force consists of knowledge and information workers, the largest single segment of the labor force. About 45 percent of the gross domestic product (GDP) of the United States is generated by the knowledge and information sectors (U.S. Department of Commerce, 2012). Knowledge management has become an important theme at many large business firms as managers realize that much of their firm’s value depends on the firm’s ability to create and manage knowledge. Studies have found that a substantial part of a firm’s stock market value is related to its intangible assets, of which knowledge is one important component, along with brands, reputations, and unique business processes. Well-executed knowledge-based projects have been known to produce extraordinary returns on investment, although the impacts of knowledge-based investments are difficult to measure
IMPORTANT DIMENSIONS OF KNOWLEDGE
There is an important distinction between data, information, knowledge, and wisdom. . To turn data into useful information, a firm must expend resources to organiz data into categories of understanding, such as monthly, daily, regional, or store-based reports of total sales. To transform information into knowledge, a firm must expend additional resources to discover patterns, rules, and contexts where the knowledge works. Finally, wisdom is thought to be the collective and individual experience of applying knowledge to the solution of problems. Wisdom involves where, when, and how to apply knowledge.
Knowledge is both an individual attribute and a collective attribute of the firm. Knowledge is a cognitive, even a physiological, event that takes place inside people’s heads. It is also stored in libraries and records, shared in lectures, and stored by firms in the form of business processes and employee know-how. Knowledge residing in the minds of employees that has not been documented is called tacit knowledge, whereas knowledge that has been documented is called explicit knowledge. Knowledge can reside in e-mail, voice mail, graphics, and unstructured documents as well as structured documents. Knowledge is generally believed to have a location, either in the minds of humans or in specific business processes. Knowledge is “sticky” and not universally applicable or easily moved. Finally, knowledge is thought to be situational and contextual. For example, you must know when to perform a procedure as well ashow to perform it. Table 11.1 reviews these dimensions of knowledge.
We can see that knowledge is a different kind of firm asset from, say, buildings and financial assets; that knowledge is a complex phenomenon; and that there are many aspects to the process of managing knowledge. We can also recognize that knowledge-based core competencies of firms the two or three things that an organization does best are key organizational assets. Knowing how to do things effectively and efficiently in ways that other organizations cannot duplicate is a primary source of profit and competitive advantage that cannot be purchased easily by competitors in the marketplace.
For instance, having a unique build-to-order production system constitutes a form of knowledge and perhaps a unique asset that other firms cannot copy easily. With knowledge, firms become more efficient and effective in their use of scarce resources. Without knowledge, firms become less efficient and less effective in their use of resources and ultimately fail.
Organizational Learning and Knowledge Management
Organizational Learning and Knowledge Management
Like humans, organizations create and gather knowledge using a variety of organizational learning mechanisms. Through collection of data, careful measurement of planned activities, trial and error (experiment), and feedback from customers and the environment in general, organizations gain experience. Organizations that learn adjust their behavior to reflect that learning by creating new business processes and by changing patterns of management decision making. This process of change is called organizational learning. Arguably, organizations that can sense and respond to their environments rapidly will survive longer than organizations that have poor learning mechanisms.
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