University of Oxford

Organizational Culture in Knowledge Management

Introduction

Information which is further added by context, experience and interpretation is known as knowledge. In today’s era of extreme competition in every field, it is very difficult for an organization to maintain its competitive advantage. The product that one organization manufactures can be easily copied and be sold at a lower or much lower price. The process can be known to all with the passing years. Then, what is it that the world cannot facsimile? It is the knowledge of the resource called humans. No book no Google can take the place of the knowledge which is stored in the minds of the employees. It is an intangible asset of the company. To facilitate this knowledge so as to use it when needed is called knowledge management.

According to (Cohen, 1990) firms must develop “absorptive capacity”. It is a process where the former knowledge is used to realize the knowledge of the present information and further integrate it and apply it to generate new knowledge. At the core, every new resource, including knowledge is generated through two generic processes, combination and exchange. Combination and exchange of knowledge for conception of new knowledge entails the existence of social capital.  According to (Nahapiet, 1998) social capital is “the sum of actual and potential resources embedded within, available through, and derived through network of relationships possessed by social unit.”

Ironically organization culture is known to be the main obstacle to knowledge management (Ribiere, 2003) yet hardly anyone has thrown a light on how organization culture contributes in knowledge management.

 

Knowledge Management in Practice

According to a survey of European firms by KPMG Peat Marwick (Institute, August, 1998) half the companies admitted to have suffered losses by losing its key staff. 43% faced diminished clients or suppliers relations and 13% faced loss of income because of a loss of a single employee. The primary goals of knowledge management are better decision making, faster response time to key issues, increasing profitability, improving productivity, creating new or additional business opportunities, reducing costs, sharing best practice, increasing market share and better staff attraction and retention. Knowledge management aims to develop a knowledge intensive culture by encouraging people to share knowledge by proactively asking for and offering it.

Effective knowledge management involves classification system that has distinctive classes. According to (Lundall B., 1994) there are following categories of relevant knowledge.

Know why – scientific knowledge of principles

Know how – the ability to organize resources to achieve desired outcomes

Know who – who controls the resources needed in a particular situation.

Know when/where – economically useful knowledge about markets

Know what – catalogue knowledge.

 

 

Organizational Culture and Climate

Researchers and practitioners have accepted the impact of organizational culture and organizational climate on the accomplishment knowledge management. Organizational climate is the subset of organizational culture. According to (Vecchio, 1997) “Organizational Culture can be defined as the share values and norms that exist in an organization which involve common beliefs and feelings, regulataries of behavior and a historical process of transmitting values and norms.”

Organizational success is not dependent on the warehouse of knowledge that it has, rather on the vigorous social process through which knowledge is enriched and transformed. Cultural variations have been noted to be critical to success aspects in knowledge management programs. Some advice those for extensive knowledge sharing, essential changes are required in many organizational cultures. These changes lead to a visionary environment where knowledge is selflessly shared amongst the members of the organization at all levels for a common benefit. To bring an organization to this level, a considerable cultural shift would be required and also mindset of the people would need to be transformed.

 

Knowledge Creation

According to (Nonaka I. &., 2003) “Knowledge creation is a process in which various contradictions are synthesized through dynamic interactions among individuals, the organization, and the environment.” They claim that knowledge integrates opposing concepts of – order and chaos, macro and micro, explicit and tacit, part and whole, body and mind and creativity and efficiency.

 

The methodology focuses on the flow of knowledge which takes birth in the mind of the individual and then is accessible for usage by others. The methodology focuses on the transformation of tacit knowledge to explicit knowledge. As per (Kakabadse, 2001) tacit knowledge is based on a person’s experience and insights and it often cannot be easily expressed. Explicit knowledge is can be easily communicated, understood and applied.A model by (Nonaka I. &., 1995) highlights that knowledge should not be restricted to an individual’s mind. It should be of use to all. Knowledge conversion is a social process. He explained the SECI(Socialization-Externalization-Combination-Internalization) model.

Socialization is when individuals meet and share their experiences. Externalization is when tacit knowledge is converted into explicit knowledge. Combination is when person tries to relate and systemize the knowledge which he has and what the other person is sharing. It is a complex process where he applies his explicit knowledge. Internalization is when a person after accepting other person’s knowledge interprets it and then that explicit knowledge becomes tacit knowledge.

 

The Cultural Barriers in Knowledge Sharing

Some companies work hard on the concept of knowledge management and sharing. They develop and adapt technologies where employees can the information and integrate it with their own so as to contribute better towards organizational goals. But sometimes the individuals do not support it and restrict themselves from sharing and using. According to (McDermott, 2001) this problem of not gel well of technology and human resource is called cultural wall. Let us understand that what stops the employees to share and use knowledge. As per what is stated in (Disterer, 2001) there are:

Individual Barriers: Individuals think that if they reveal the knowledge that they have about clients, procedures, policies etc, then the exceptionality of that knowledge is reduced. Also, they think that why should others take advantage of their labor. They think that other people might use it and their chances of getting promotions or increase in salary might increase. Sometimes individuals are not confident about their knowledge. They don’t know if their findings are presentable or true or would they be appreciated by all.

Social Barriers: Sometimes in organizations new ideas and innovation is not supported. The company wants to keep working with whatever knowledge it has. Here employees do not feel motivated to share knowledge even if it’s for the benefit of the company. At times there is a difference between personal objectives and those of the company. This acts as barrier for an employee to speak his mind.

When organizations aspire to develop further modest knowledge management platform a thorough transformation of organizational culture may not be a good idea. Even if the company starts recognizing the efforts of the individuals and gives rewards and incentives, even that would motivate employees to share their tacit knowledge. An organization can create an environment where there is less formality and individuals socialize with each other. This way when they interact more, it might take a shape of a healthy competition where more recognition is given to those who share more knowledge and who help others in making explicit knowledge tacit to them. As per (Knights, 1995) all of these methods will improve knowledge management to an extent. Knowledge now would be increasingly seen as a product of exchange, as a foundation of political power, as a form of security and identity.

 

Industry Analysis – The Use of Knowledge Management in Different Industries

Banking

As per (Cross R, 2001) in the banking sector today, there is no question if knowledge management is an asset to the company. This sector realizes its importance. The question is how knowledge management can help this particular sector more effectively. The knowledge covers the range from that bank’s internal information to clients’ information to the data of customer transactions. The overall purpose of banking sector is to increase customer satisfaction which in turn would result in higher profits. It is thought that knowledge management ought to be an integral part of banking sector as it is a purely service sector but that is not the case. According to Cross and Weller insurance sector takes more advantage of knowledge management as compared to banking sector. Skill at knowledge management has become a serious proficiency for survival of banking sector in the 21st century. According to (Sorrentino, 24 September 1999) whether a firm recognizes the worth of knowledge management or not, the fact is that it would always need a person or persons who can actually store, manage and disperse the knowledge. According to (Marshal, 1997) the fields where knowledge management is mostly used in banking sectors are risk management, customer relationship management, marketing management and performance measurement. In this sector, records of customers are needed to be recorded and shared amongst all. Be it bank account number personal information, account balance, transactions made, every record has to be shared amongst all the departments and among all the branches of the company be it in just one country or many. This sector heavily uses decision support system, data warehousing and data mining. For sorting out and tracking relationships over the time through transactions, it is essential to focus on two matters. Banks have all the information about their customers but they face difficulty in using that knowledge for practical purpose at the time of interaction with customer.

 

Marketing

In the world of today customers have such varied interests that it wouldn’t be appropriate to consider as a homogeneous market. Each customer’s need is unique. According to (Holtz, 1992) through the records of the transactions made by the customers a lot of data can be collected. These databases are helpful enough for the company to segment the market and also to look for their potential customers. But to use these databases a technique is needed which can analyze the customer buying behavior. In marketing, knowledge management can be used for 3 main purposes – customer profiling, deviation analysis and trend analysis.

Customer profiling means understanding the customer, recognizing his characteristics, realizing its demographic status. It helps to determine – frequency of purchases, size of purchases, recency of purchases, identifying typical purchase group, computing customer, computing customer life time value, prospecting, success and failure of marketing programs.

Deviation analysis is done when there is a sudden increase or decrease, growth or shrink of any outcome. The company wants to know that why has this change occurred. At this time, data mining tools help to understand the reason. Once the reason has been discovered, if it’s for the benefit of the business, the marketer would in future make sure that this change remains constant. On the other hand, if the reason discovered is of some harm to the business, the marketer would curb it as soon as it’s possible.

Trend analysis is the study of the behavior of the consumer done for over a period of time. They could be short term or long term. Visualization, a data mining tool is help to detect some of the very subtle data hidden in a data base which might have been missed while using traditional tools like scatter plots.

 

Healthcare

In healthcare, having the right information at the right time is very important because sometimes the information needed is very urgent and also because of the vast amount of ever expanding knowledge. The volume of medical knowledge doubles itself in every 17 years. According to (Metaxiotis, 2006) the healthcare industry is trying to become a knowledge based community which connects clinics, physicians, hospitals, pharmacies an customers for sharing knowledge, reducing the administrative cost and improving the care quality.

For example, as per (B. Stroetmann, 2012) Siemen’s Clinical Knowledge-Base – The Online Platform for Disease Specific Information: The Clinical Knowledge Base is a specialized database that targets to ensure that Siemens Healthcare has access to high-quality medical knowledge in a comprehensive and accurate way. It allows online access to review articles, scientific medical information and graphical representation of disease by the members. The knowledge provided here is beneficial to everyone and is freely available for all. The content is periodically updated and everyone can take advantage of the knowledge of other’s experience and judgment. One of the benefits is that employees avoid performing the same task twice by making use of the information available to them through this common platform.

Construction

In the construction industry, the requirement for knowledge management is driven by the need for improved business performance, innovation and client satisfaction. The industry operates within a vibrant and changing environment. The demand for its products is related to the state of economy. When there is inflation in any country, construction business also increases as people have a lot of money and they want to invest their money for long term benefits. As per (Egan, 1998) “In recent years, the environment for construction has been changing. Clients are becoming classier and insisting on better value for money.” People now want to know each and every detail of the plot/ house/ office that they want to buy. This information that they want to know may be about type of installments plan, number of buyers, the value of their investment after few years etc. This allows continuity of association of certain people, either across different projects sponsored by the same client or across different stages of the same project. All this information is stored so as to be answerable to the clients of all variety for all the projects and moreover in the same project also there is a lot of information. Various IT tools (e.g. groupware systems) are used in support of knowledge management activities. As per (Robinson, 2001) “If these activities are not implemented within a coordinated strategy, the anticipated benefits of knowledge management will not be realized.” Informal way to store and communicate information might not become knowledge for either the client or the builder himself.

 

Conclusion

After studying the importance of knowledge management it can be concluded that knowledge management is no more an option for any industry. If an organization wants to grow, it has to adapt to knowledge management environment as it gives the company a competitive edge. Certainly there are individual and social barriers to it but can be served. The most effective way to create a knowledge sharing culture is first to start to practicing it at your level. Be the change you want to see in others. There are still some booming sectors which still have not applied knowledge management in there industry but the day is not far when every organization would be dependent on it.

 

 

 

 

 

 

 

 

 

 

 

 

References

B. Stroetmann, a. A. (2012). Medical Knowledge Management in Healthcare. World Academy of Science, Engineering and Technology.

Cohen, W. a. (1990). Absorptive Capacity. 128-152.

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Disterer, G. (2001). Individual and social barriers to knowledge transfer. Proceedings of the 34th Hawaii.

Egan, J. (1998). Rethinking Construction: Report of the Construction Task Force on the Scope for Improving the Quality and Efficiency of UK Construction. London.

Hallin, C. A. (2008). Knowledge management in the hospitality industry: A review of empirical research. 366-381.

Holtz, H. (1992). Databased Marketing — Every Manager’s Guide to the Super Marketing Tool of the 21st Century. New York.

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Lundall B., a. J. (1994). The Learning Economy. Journal of Industry Studies, 23-42.

Marshal, C. P. (1997). Financial risk and the need for superior knowledge managment. Knowledge in Organizations.

McDermott, R. O. (2001). Overcoming cultural barriers to sharing knowledge. Journal of Knowledge Management,, 76-85.

Metaxiotis, K. (2006). Healthcare Knowledge Management. Encyclopedia of Knowledge Management, 204-210.

Nahapiet, J. a. (1998). Social Capital. 242-258.

Nonaka, I. &. (1995). The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. Oxford University Press.

Nonaka, I. &. (2003). ‘The knowledge-creating theory revisited: Knowledge creation. 2-10.

Ribiere, V. &. (2003). Critical role of leadership in nurturing a knowledge supporting. 39-48.

Robinson, H. S.-G. (2001). “Perception and barriers in implementing knowledge management strategies in large construction organisations. RICS COBRA Conference, (pp. 160-451). Glasgow.

Sorrentino, M. (24 September 1999). “Notes on Knowledge Management in Banking. Barcelona:Spain.

Vecchio, R. H. (1997). Organisational Behaviour. Harcourt Brace.

 

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