Chapter 1: Introduction

WHAT IS KM ?

There are numerous definitions of KM, quite literally scores of them. At the very beginning of the KM movement, Davenport,T. (1994) offered the following:

“knowledge management is the process of capturing, distributing, and effectively using knowledge”

This definition has the virtue of being simple, stark, and to the point. A few years later, the Gartner Group created the second definition of KM, which is perhaps the most frequently cited one (Duhon, 1998):

A discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise’s information assets. These assets may include databases, documents, policies, procedures, and previously uncaptured expertise and experience in individual workers.

The third definition by McInerney, C. [2002] is:

“KM is an effort to increase useful knowledge within the organization.Ways to do this include encouraging communication, offering opportunities to learn, and promoting the sharing of appropriate knowledge objects or artifacts.”

     1) Classic Library and Information Science and Information Retrieval.

     2) ICT, Information and Communication Technology.

     3) HR, Human Relations, changing the culture of the organization to facilitate knowledge sharing and use.

THE HISTORY AND DEVELOPMENT OF KM

The appearance of the term “Knowledge Management” is a rather recent phenomenon. It appeared operationally only in the mid-1990s. The earliest print reference appears to have been used first in the context of library and information work. Marchand, D. [1985], then Dean of the School of Information Studies at Syracuse University, coined it in the 1980s as a descriptor for the final level in his stage hypothesis of information systems development [Koenig,M., 1992a]. However, the term, as presently used, appears to have been re-coined more or less anonymously somewhere among the major accountancy and consulting firms. The earliest reports seem to be from McKinsey & Co. Brook Manville, the first Director of Knowledge Management at McKinsey, reports that McKinsey launched an internal study whose title included the phrase Knowledge Management in 1987 (Manville, personal communication toMEDK, 2007). Larry Prusak, one of the acknowledged pioneers of the field, in a very corroborative communication, reports that Ernst & Young started using the term in 1992, and that McKinsey & Co. was using it “a bit earlier – about 1988?” (Prusak, personal communication to MEDK, 2007). Note that the early definition of KM cited above by Davenport (1994) stems from his work at Ernst & Young.

In the article entitled “Where Did Knowledge Management Come From” written in 1999, Prusak states thatKMfirst appeared “about seven years ago,” i.e., in 1992, and describes a conference in Boston in 1993 as “a good milestone to mark the beginning of the knowledge management time-line” [Prusak, L., 1999]. The conference was held at the Four Seasons Hotel in the spring of 1993 and was sponsored by the Center for Business Strategy of Ernst & Young (Prusak, personal communication to MEDK, 2007).

The earliest instances of KM, as the term is understood today, derive from the consulting world, from which the principles of KM eventually spread to other disciplines.The consulting firms quickly realized the potential of the Intranet flavor of the Internet for linking together their own geographically dispersed knowledge based organizations. They then understood that the expertise they had gained was a product that could be sold to other organizations. That product needed a name, and the name chosen, or at least arrived at, was Knowledge Management. In his article discussing the origins of KM, Prusak in fact, felt it appropriate to say “some skeptics may believe that consultants developed knowledge management to replace declining revenues from the waning re-engineering movement” [Prusak, L., 1999]. The two enthusiasms, KM and re-engineering, are related in that both were driven by increased ICT (Information and Communication Technologies) capabilities.However, the timing, though convenient for the consulting firms, was driven not by their convenience, but by the straightforward dynamics of ICT capability growth. KM was dependent upon the appearance of the Internet, while pre internet, ICT already enabled the major restructuring of an organization’s work flows and processes. In a sense, KM also has roots in the implementation of Supply Chain Management (SCM) software and business process reengineering (BPR) as well as the more recent development of Enterprise Resource Planning (ERP). IT development has always displayed a pattern, of growth from more structured data to less tractable, less well structured, or comparatively unstructured data. Remember that text processing was at one time called “string handling,” because to people brought up on handling numeric data, text was most conveniently thought of as a string of symbols. In that sense, SCM & BPR & ERP to KM, represent a logical and predictable progression toward unstructured information and knowledge.

Another aspect of KM’s relationship to ICT is that KM emerged at approximately the same time as the cost of personal computers dropped to the degree that PC’s became cost effective and affordable desktop tools for the ordinary person. PC adoption made it clear that the ease of personal computing was going to allow individuals to readily share what they knew and what they wrote about through file transfer and email. Collections of data and information files stored in shared files and attached to email messages could be moved without the risk of losing manila folders filled with important paper reports. Even early “if-then” projections on Visicalc (the pioneer spreadsheet program) were an enormous boost to managers and entrepreneurs who required flexible and malleable financial data to inform decisions. Even though spreadsheets deal with data, it is the ability to manipulate data and learn from them and form decisions that must also be considered as one of the rudimentary foundations of knowledge management.

Today there are numerous voices critical of the name “Knowledge Management.” These objections arise from a perceived inadequacy of the term Knowledge Management, which detractors say lacks strong description while conflicting with the concept that one cannot inherently manage knowledge. “The Nonsense of Knowledge Management” (Wilson,T. [2002]) is the best of the genre. The argument that one cannot manage knowledge is, however, not very persuasive; after all, Webster’s Collegiate Dictionary (10th edition) has nine flavors of meaning for ‘manage’ and eight for knowledge’, and a number of those 72 possible combinations do indeed make good sense.

The argument that KM is a very poor descriptive term has much more merit. The replacement phrase most often suggested is “Knowledge Sharing.” One of the more recent substitutions for the term ‘Knowledge Management’ is ‘knowledge flow management,’ preferred and used by Leistner, F. [2010] in his book Mastering Organizational Knowledge Flow. Leistner, Chief Knowledge Officer in SAS’ Global Professional Services’ division, has a background in computing and experience with IBM’s KM Institute. He is deeply conversant with the social issues inherent in knowledge sharing and the way knowledge is developed. Although he claims that everyone makes up his or her own definition of knowledge management, Leistner says that knowledge must be connected with people to be a viable term.

Such substitutions, however well merited, are unlikely ever to be made. The situation with KM is quite analogous to the very similar concern a few decades back that “word processing” was a lousy descriptor. One processed meat, of course, but surely not words.Words made poetry.However, word processing was the term the industry, then principally IBM andWang, chose to use, and that is the term that stuck.Now we take the term word processing for granted, seldom giving it a second thought, and only old timers remember the vitriol with which it was attacked. The adoption of a new term to replace “knowledge management” is no more likely than it was for “word processing.”

One of the more recent substitutions for the term ‘Knowledge Management’ is ‘knowledge flow management,’ preferred and used by Leistner, F. [2010] in his book Mastering Organizational Knowledge Flow. Leistner, Chief Knowledge Officer in SAS’ Global Professional Services’ division, has a background in computing and experience with IBM’s KM Institute. He is deeply conversant with the social issues inherent in knowledge sharing and the way knowledge is developed. Although he claims that everyone makes up his or her own definition of knowledge management, Leistner says that knowledge must be connected with people to be a viable term.

Given this background information, another good functional definition of KM and how it developed is the equestrian metaphor of “by the intranet out of intellectual capital” [Koenig,M., 2000a].By this definition,KMhas two parents, the enthusiasm for and the appreciation of intellectual capital, and the development of the Internet and its offspring, intranets and extranets. Intellectual Capital is, in turn, a token of the larger recognition of the importance of information and knowledge. “Intellectual Capital” representing the awareness that as PeterDrucker [Hibbard, J., 1997, p. 46] put it:

We now know that the source of wealth is something, specifically human knowledge. If we apply knowledge to tasks that we obviously know how to do, we call it productivity. If we apply knowledge to tasks that are new and different, we call it innovation. Only knowledge allows us to achieve those two goals. Indeed, Drucker is clearly one of the intellectual fathers of KM. His Post Capitalist Society, which appeared in 1993, is about the shift fromindustrial capitalism to the knowledge society.Almost one full page of an 11 page index is devoted to knowledge or knowledge phrases such as knowledge workers, yet the phrase knowledge management is surprisingly absent [Drucker, P., 1993].The early use of the phrase ‘Knowledge Management’ is sometimes attributed to Drucker, but at this point, it appears to be still unsubstantiated. Given Drucker’s stature and his emphasis on knowledge and knowledge workers, it is almost inevitable that such an attribution would arise. It may be noted, however, that while Drucker did, carefully, claim a first for the phrase KnowledgeWorker, he does not appear to have made any similar claim for the phrase Knowledge Management, and he was certainly active and involved well into the KM time frame in which he likely would have made such a claim if the thought it warranted.

Tom Peters was an early user of and promoter of the phrase Knowledge Management, or as it was known then Knowledge Management Structure (KMS). In his 1992 book Liberation Management [Peters,T., 1992], he has four chapters specifically named Knowledge Management Structures (I – IV:Taking Knowledge Management Seriously; Getting Physical; Knowledge Bases, Expert Systems, Computer Augmented Collaboration; and Developing and Tapping Expert Power in the Hierarchy-less Organization), almost 10% of a very large book. Although the KMS phrase did not take hold, Peters was clearly writing about KM as it came to be understood.

INTELLECTUAL CAPITAL DEVELOPS AND DECLINES

A brief review of the development of Intellectual Capital (covered in detail elsewhere: [Koenig,M., 1996, 1998, Sullivan, P., 2000] is vital to understanding the origins and development of KM. A pioneer in the Intellectual Capital (IC) field was Karl-Eric Sveiby [Sveiby, K., 1989, 1997, 2001], whose book The Invisible Balance Sheet was a key work in the development of thinking about Intellectual Capital.From this early writing, Sveiby’s ideas developed smoothly and rapidly into KM.

The work of Buckman, R. [2004] at BuckmanLaboratories and Hubert St.Onge [Chatzkel, J.,2000] at the Canadian Imperial Bank of Commerce and Clarica Insurance were key implementations in operationalizing the concept and in popularizing IC. Also very important was the Stewart,T. [1994] article in Fortune magazine, “Intellectual Capital, Your Company’s Most Valuable Asset.”

The first blush of enthusiasm for Intellectual Capital centered on quantifying and measuring it [Edvinsson, L., 1994, Edvinsson and Malone, 1997b]. Measuring such an ill-defined commodity as intellectual capital, however, proved to be difficult. Clearly, if it was so important, it needed to be measured. However, as the difficulty of measuring such an amorphous commodity as information, much less knowledge, became apparent to the business community, the enthusiasm for intellectual capital decreased, as evidenced by the reduced volume of related publications.The best metrics system to use for quantifying the “amount” of knowledge shared or the value of KM in the organization are still key questions for researchers who study the field.

THE INTERNET EMERGES

As the Internet emerged, the business world realized that the Internet could be used to link an organization together. This was the take off point for large scale recognition of KMas an important innovation, and it was the stimulus for its development [Koenig,M., 1996, 1998].

THE STAGES OF KM DEVELOPMENT

In observing the development ofKMas practiced, described, and discussed at professional meetings, conferences, and trade shows, one can observe three clear stages.

STAGE ONE

The initial stage of KM was driven primarily by information technology, or IT. Organizations, particularly the large international consulting organizations, realized that their stock in trade was information and knowledge. These groups also realized that internal communication and information sharing was often lacking. If knowledge could be shared more effectively, then the efficiency would increase business and the bottom line would improve. When the internet emerged, they realized that the intranet flavor of the internet provided a valuable tool to accomplish knowledge coordination and sharing. The first stage ofKMfocused on the deployment of new technology to accomplish these information sharing goals.

Those large international consulting organizations, then realized quickly that many of their customers shared exactly the same problems, and that the expertise they were building for themselves could also function as a product, an expertise that they could purvey to those customers. A new product needs a name and a theme or rationale. The name for their new product was Knowledge Management. The crucial thematic justification for KM was intellectual capital, a theme that had emerged as a burgeoning topic in the business literature just a few of years earlier. To revisit a much quoted aphorism, the first stage might be described as the “If only Texas Instruments knew what Texas Instruments knew” stage [Davenport and Prusak, 1998a, O’Dell and Jackson, 1998]. The hallmark phrase of Stage 1 was first “best practices” to be replaced by the more politic “lessons learned,” all dependent to some extent on a technological framework.

STAGE TWO

The second stage of KM can be described simply as adding the recognition of the importance of the human and cultural dimensions.The second stage might be described as the, ’if you build it they will come’ is a fallacy stage. In other words, the recognition that building KM systems alone is not sufficient and can easily lead to quick and embarrassing failure if human factors are not sufficiently taken into account. As this recognition unfolded, two major themes from the business literature were brought into the KM fold. The first was Senge’s work on the learning organization in his seminal work, The Fifth Discipline: The Art and Practice of the Learning Organization [Senge, P., 1990].The second was Nonaka andTakeuchi’s [1995] work on tacit knowledge and how to discover and cultivate it, The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. Both were not only about the human factors of KM implementation and use, they were also about knowledge creation as well as knowledge sharing and communication.The hallmark phrase of Stage 2 was “communities of practice,” an important concept taken up later in Stage 3 by EtienneWenger, Richard McDermott, andWilliam M.Snyder (2002) in their key work Cultivating Communities of Practice: A Guide to Managing Knowledge.

STAGE THREE

The third stage was the awareness of the importance of content, and, in particular, an awareness of the importance of the retrievability and, therefore, of the importance of the arrangement, description, and structure of that content. Since a good alternate description for the second stage of KM is the “it’s no good if they don’t use it” stage, then in that vein, perhaps the best description for the new third stage is the “it’s no good if they can’t find it” stage, or perhaps “it’s no good if they try to use it, but can’t find it.” Another bellwether is that TFPL (a major U.K. information and knowledge management consultancy), in their report of the October 2001 CKO (Chief Knowledge Officer) Summit that they hosted, reported that for the first time taxonomies emerged as a topic, and it emerged full blown as a major topic. The hallmark phrases emerging for the third stage are content management (or enterprise content management) and taxonomies. In 2006, a two-day long “Taxonomy Boot Camp” was added to the KMWorld conference.KMWorld is both a journal and a website devoted to Knowledge Management concepts, practices, and events.

NOW, STAGE FOUR?

Is KM entering a new growth stage, a fourth stage, or is it merely maturing?

Perhaps a fourth stage of KM may be emerging, although the delineation of this fourth stage is not nearly as clear as for the previous stages. This stage can be characterized by the awareness of the importance of information and knowledge external to the organization.

The inclusion of information and knowledge external to the organization is not new to KM, one need only think of the World Bank and the high visibility of their KM program and their very deliberate development of communities of practice (CoPs) specifically designed to encompass experts external to the bank, to make that point [Srikantaiah,T., 2004].That being said, however, the overwhelming emphasis of KM to date has been to mobilize and make accessible the organization’s information and knowledge and to rely on technology to make that happen. Perhaps the most basic mantra of KM has been the “if only we knew what we knew,” the classic metaphoric example of what KM is all about, i.e., making an organization’s knowledge more useable and more productive. If one returns to the definitions of KM at the beginning of this lecture, one can clearly see that organizational emphasis. Several threads have converged to drive this new emphasis: The extension of Intranet based KM systems to Extranet based systems. The first and most obvious application of Internet technology was to make an “intranet” of it, to use the Internet as an access controlled network for the company. A next logical step was to use the same access control mechanisms to build an “extranet” so that persons outside the organization, vendors, suppliers, dealers, major customers, etc., could be included. This has proceeded much more slowly, since security, particularly for for-profit corporations is a major concern (discussed later in this book). How do you know that your competitor is not posing as a vendor of your products, or has not acquired a vendor of your products precisely so as to have access to some of your information? It was this lack of concern about competitive information that allowed theWorld Bank to so quicklymove into extranet based communities of practice [Srikantaiah,T., 2004]. However, as security techniques have improved, the willingness of corporations to extend communities of practice onto extranets so as to incorporate the knowledge of “outsiders” has correspondingly increased. A good example is Caterpillar Inc. [Stuedemann, R., 2007], who brought in dealers and independent repair facilities to their communities of practice. They agonized for months over what sort of non disclosure form

to use to allow access from outside the organization, produced what they jokingly called ‘the mother of all non-disclosure forms,’ and then discovered that those outside the firm barely glanced at it before signing [Stuedemann, R., 2004].

Concern about the soon to be lost knowledge held by post-war baby-boomers as they begin to hit retirement age. Corporations are beginning to realize that KM,in the form of communities of practice, is a wonderful tool to address this lost knowledge issue. If retirees are encouraged to remain as active members of one or more communities of practice, then their knowledge is not lost, and the retiree may well be able to contribute valuable knowledge (Delong, D. [2004]). This is discussed in Chapter 7. A repeat of the same broadening phenomenon that occurred with MIS, Management Information Systems.

After Management Information Systems (MIS) were introduced in the 1970s, there came a rebound of disillusionment with the field of MIS. Much of that disillusionment was a function of the fact that what the MIS system contained was typically only the organization’s raw and partially aggregated transaction information, purchases, production data, sales, etc., useful data and information to be sure, but not the information constituting the bulk of what an executive typically needed for those decisions near the top of the managerial decision making pyramid. For those decisions, what was typically needed was external contextual data, not the transactional data in the typical MIS system. This realization drove an awareness of the importance of external information, and it also drove a partial rebranding of MIS, re-launched as DSS, Decision Support Systems, a terminology designed to avoid overselling those transactional data based systems and to avoid implying that they had all the data or information that an executive needed. That same awareness is now developing in the KM world, the awareness that much of the key information needed for critical decisions lies outside the corporation or organization, and that the ideal KM system should provide appropriate links to the world outside the organization.

The result is a greatly increased emphasis upon external information. It should also be noted that another emphasis emerging simultaneously is that of the importance of situating information and knowledge in context. This is, in fact, another facet of the same evolution, the awareness that the importance, the usability, and the value of information is a function of how it relates to other information.New knowledge derives from the combination of information, either the juxtaposition of existing information, or the addition of new information to existing knowledge. If I have seen further than others, it is because I have stood on the shoulders of giants.

Is this really a new Stage 4? Or just a maturation of KM? Probably the best answer is the latter. The distinction is hardly so clear as those between the previous stages, and the continuity is greater, with context emphasis long apparent in many cases. Yet it is a very heightened emphasis, and that emphasis is an important theme of this book.