ST4S39-V1 – Section B: Strategic Knowledge Management

Assessment 2

Rasha Elbanna

R1805D5376972

Tutor: Pedro Longart

MBA - Master of Business Administration V2

Module- ST4S39-V1

09/12/2018

FACULTY OF BUSINESS AND SOCIETY

ST4S39-V1 – Section B: Strategic Knowledge Management

“Before we measure something we must ask whether we understand what it is we are

trying to measure.” (Gray et al, 2015)

Abstract

The application of the concept of strategic thinking and/or strategic planning in any organization

would be based on knowledge. Reasoning from this fact I would appraise or strengthen the

statement. “Before we measure something we must ask whether we understand what it is we are

trying to measure.” (Gray et al, 2015).The essay will highlight the importance of knowledge

management, intellectual capital, communities of practice and their relation to social networks.

In addition it will present the application of knowledge management and its importance in

healthcare sector and its effect in delivering high quality service to patients.

Keywords: Knowledge Management; Intellectual Capital, Community of Practice, Performance

Management; Measurement; Healthcare,

Introduction

In approach to understand the importance of knowledge management, its relation to intellectual

capital, performance management and social networks, it is important to initially explore the

definition of knowledge. Johnson et al (2011) defined knowledge as “Knowledge is awareness,

consciousness or familiarity gained by experience or learning” (Johnson, Scholes & Whittington

2011).Similarly, Muir Gray refers to knowledge as the key. He ensures its importance in decision

making ,by stressing that knowledge is not only required to operate, but the knowledge of when

to operate – and indeed whether to operate or not is equally important . On the same track Toyota

Company claims its organization as a knowledge business. Knowledge is an uncountable

precious asset .So, it is of great importance to manage this assets like any other tangible one.
ST4S39-V1 – Section B: Strategic Knowledge Management

Although knowledge is an intangible asset, it is this intangible asset which protects and improves

the performance of the tangible ones as well as other intangible assets. In the same harmony, P.N

Rastogi (2002), states that Information is the feedstock of knowledge. Relevantly, methodical

information represents knowledge. In the absence of sustainable learning, erudition, and

inventive utilization of knowledge; people and enterprises cannot improve and innovate.

Knowledge is power, is a common saying referring to its importance. Knowledge would be of no

use unless shared. According to , Grayson and O’Dell (1998), knowledge is what people know

about their organization customers , products , process , mistakes and successes .What is

sometimes known as the know-how concept, becomes an accumulated data base , which is build

the sharing of experience and best practices, attained from both internal and external

environment of the organization.

Sharing of experience, knowledge or best practices would move us to the concept of

communities of practice or interest. A community of practice is a constitution of people

associated in an action of common/joint learning or of similar interest in a common discipline.

For example, people working in healthcare sector with similar problems trying to lay down best

practices to achieve high standard of patient’s welfare, a group of engineers working on similar

problems, group of researches producing a certain medical revolution, or a gathering of first-time

managers helping each other cope.

Social network is a sociological notion for a series of social linking between network segments

that merge, distinctly individuals within a specific network. Network constituents could also

include social class/ sector, teams, sections within an establishment or the organization as a

whole. Social network and Knowledge management have a synergistic connection whereby one
ST4S39-V1 – Section B: Strategic Knowledge Management

would not prevail in absence of the other. Additionally, social networks a natural result of

Knowledge management, both are essential in order to succeed. Studies proved that employees,

who constantly connect or network, convey knowledge more effectively. From that perspective,

supporting the notion of group networking is a significant factor of knowledge management,

especially for tacit knowledge. Incorporating social networking into knowledge management

systems would elevate communication within employees/ individuals which results in expansion

or improvement in degree of certainty and stimulate more productive association and

communication.

In the same context, discussing concepts of knowledge management, communities of practice as

well as social networking would present human characteristics. Humans are the intangible value

or asset of any organization. Intellectual capital is this intangible component. Intellectual

capital is defined as the intangible value of a business, incorporating its people (human capital),

the value associated to its connections (relational capital), and the total that is left when

the employees go home (structural capital), of which intellectual property (IP) is but one

component. Similarly, A. Lönnquist and P. Mettanen characterized intellectual capital as

invisible, closely associated to knowledge and employees’ experiences as well as customers and

organizational technology. This encourages better chances of a successful organization in future.

With the knowledge revolution, a number of experts encourage the argument that intellectual

capital is necessary in attaining performance in an organization (Sydler, Haefliger, &Pruksa,

2014). Performance is not directly influenced by intangible but the link can be recognized via

cause and effect. (Kaplan and Norton, 2004).According to Roos and Roos(1997), it is intellectual

capital that motivates organizational performance and promotes its value.

ST4S39-V1 – Section B: Strategic Knowledge Management

Knowledge Management (KM)

Knowledge Management (KM) strategy is a proposal that represents the effective manner of an

organization in dealing with information and knowledge, for the best interest of that organization

and its stakeholders. A beneficial KM strategy is closely associated with the organizations

overall strategy and objective.

Gorelick and Monsou (2006) refer to Knowledge Management as a system that supports

collaborative environment for grasping and distribution of existing knowledge, creating

opportunities to initiate novel knowledge, and yield the tools and approaches needed to

implement what the organization knows in its effort to meet its strategic goals. Similarly,

according to P.N. Rastogi Knowledge management (KM) represents a firm’s continual

endeavour to learn, acquire, create, develop, share, use, and apply knowledge in support of the

firm’s customer value proposition, competitive logic, and integrated activity system. Based on

Robins (Ray, 2008) knowledge management can be defined as the process of organizing and

disseminating an organization's common wisdom, so the right information reaches to the right

people at the right time. In the same context, Gold et el (2001) believe to accomplish an ideal

knowledge management and generation of advanced knowledge, firms must initiate the

absorptive capacity- the ability to use previous knowledge to identify the value of new

information, comprehend it, and apply it to deliver new knowledge and capabilities.

According to Gholamian et al (1385) knowledge management is of great importance as it is

the key for empowerment , support and strength for significant functions including the process

of detecting and/ or formulating new knowledge and its filtration ( knowledge inventory

formation), as well as transmission of this knowledge within individual and across the
ST4S39-V1 – Section B: Strategic Knowledge Management

organization ( managing the flow of knowledge) and the utilization of this knowledge on daily

basis, ( application of knowledge). Parallel, Ray (2008) emphasizes on the value of

implementing knowledge management in organizations as knowledge is as important as physical

and financial asset. Its value becomes evident at the time a specialist leave a workforce.

Application of knowledge management system confirmed its contribution in minimizing wastage

and elevating productivity of an organization. The two major aims of knowledge management

are innovation and reuse, where innovation presents promotion of new knowledge and linking to

the existing one. Dalkir (2011, p.312) endorse that innovation can only be created by

accumulated experience not in isolation i.e., the concept of trial and error, what works and what

does not. Reuse models the foundation for organizational learning and must be looked upon as a

means of circulation of innovation. Dalkir (2011,p.313) also states that knowledge management

strategy provides the basic building blocks used to achieve organizational learning and

continuous improvement ,to avoid time waste by repeating mistakes and provides awareness of

new and better approaches of thinking and doing .

Sveiby (2001) developed a framework for categorizing the various types of knowledge
management initiatives:
External structure initiatives
Internal structure initiatives
Competence initiatives.
External structure initiatives presents for instance knowledge acquired from customers, internal

structure initiatives mean constructing a knowledge sharing culture, generating new returns from

current knowledge, acquiring individual's tacit knowledge, storing, spreading and reusing it, and

assessing knowledge creating processes and producing intangible assets. Competence initiatives

present designing careers based on knowledge management, creating microenvironments for

knowledge transfer and learning from simulations and pilot projects. The resources and skills
ST4S39-V1 – Section B: Strategic Knowledge Management

required to develop a knowledge management strategy depend on the size and complexity of the

organizational unit and on the depth of information gathering and analysis.

Fig. 1: Basic Components of a Knowledge-Based Firm

Source: Adapted from Nonaka, Sasaki and Senoo (2004).

On the other hand, Polyani (1966) categorized knowledge into explicit and tacit knowledge.

Dummett (1991) explained Explicit knowledge as being the knowledge that the knower

expresses clearly .Individuals are considered to have explicit knowledge of something if he

clearly discloses it or it is extracted by suitable means. This is also sometimes referred to as

codified knowledge for example documents, database etc. Similarly, (Brown & Duguid 1998

presented Tacit knowledge as the know-how .Tacit knowledge is knowledge obtained from

experience and is sometimes referred to as non codified and often personal/experience-based

knowledge. According to Both et al (2008) Tacit knowledge is located the brain box of

individuals, which is an outcome of cultural beliefs, values, attitudes, mental models, etc. as well

as skills, capabilities and expertise. Tacit knowledge has also been referred to as “soft”

knowledge and explicit knowledge as being “hard” (Hildreth and Kimble, 2002).
ST4S39-V1 – Section B: Strategic Knowledge Management

According to Aristotle, humans are by nature social animals. It is through socialization, the

process of knowledge transfer occurs from generation to generation since the very first days of

communication. Socialization is a key stage in the knowledge transfer and hence in KM. Sharing

has always been a crucial task for knowledge management. Marin and Wellman define a Social

Network as “a set of socially relevant nodes connected by one or more relationships. Social

network are like homophiles, meaning that individuals with similar traits are more likely to form

social ties with one another, which also often impacts their actions. Social groups or

teams, organizational units or whole organizations can also be network elements in the

organization.

Nonaka and Takeuchi’s (1995) presented socialization as the first step in the effort of knowledge

sharing in their SECI model. SECI model for Socialization, Externalization, Combination, and

Internalization which was proposed by Ikujiro Nonaka contemplates a spiraling interaction

between explicit knowledge and tacit knowledge. In this model Fig 2 knowledge pursue a

sequence in which tacit knowledge is derived to produce explicit knowledge, and explicit

knowledge is’re-internalised' into tacit knowledge.

Fig.2 -The Knowledge Spiral as described in "The Knowledge-Creating Company - How

Japanese Companies Create the Dynamics of Innovation" (Nonaka, Takeuchi, New York Oxford
1995).
ST4S39-V1 – Section B: Strategic Knowledge Management

Communities of Practice (CoP) and Organizational learning.

In 1991 Lave and Wenger developed the concept of Communities of Practice which relates the

strong link between a learning theory and the social construction of knowledge. Community of

practice is composed of members who connect with one another for their pursuit of a common

practice. This shared communal action associates individuals jointly within formal organizational

boundaries and divisions, and creates the community.

Communities of Practice can yield positive outcomes. Community of practice (CoP) is an

effective tool in managing, capturing, and sharing knowledge within an organization

(Wenger, 1998; Wenger et al., 2002). On the same line, to Wenger and Snyder (2000: p. 140),

people in communities of practice share their experiences and knowledge in unconstrained,

visionary manner which promotes novel outlook to complications. These contemporary

perspectives can permit beneficial outcomes. Communities of Practice render a media for

knowledge circulation (Storck and Hill, 2000) and facilitate the leveraging of intellectual assets

throughout an organization .All this would lead in the advancement of organizational

performance which shall be discussed later. Communities of Practice is an extremely useful

approach for organizations desire to value their knowledge and information assets.

Nevertheless, one of the challenges faced in the application of communities of practice , is that

the value earned by a communities of practice would entail a significant period to sense its

impact (Scarso and Bolisani, 2008).Moreover, the advantages of its implication , such as

development in the quality of decisions and expanding the prospect or view for a current

problem (Wenger et al., 2002) would be intangible and very complicated to be quantified.
ST4S39-V1 – Section B: Strategic Knowledge Management

Consequently, it would be considered as a hidden asset owing to the difficulty in estimating their

contribution, and hence would never appear on an organization chart or balance sheet.

Communities of Practice are proposed as a prospective Knowledge management tool. The mode

through which knowledge is generated and transmitted by a CoP, would bring benefit to an

organization, both in the short‐term and long‐term, in terms of tangible and intangible benefits

(Wenger et al., 2002). Tangible business performance indicators, such as improvements in

productivity, are used to observe if such management initiatives practically yield benefit,

therefore offering support in rationalizing resources invested.

Lesser and Storck (2001: p. 836) recognized various tangible benefits which includes decrease in

the learning curve of employees, speed in response to customer needs and inquiries, minimize

and prevent of rework and producing new ideas for products and services.

A community of Practice influence on performance is crucial in overcoming intrinsic

complications of a stagnant traditional hierarchy in an advanced virtual economy. Communities

of practice would be considered as a beneficial process for organizations to deal with

indeterminate problems and to share knowledge across the traditional structural boundaries.

Moreover, the community concept is recognized as a mode of initiating and preserving long-term

organizational memory .Several organization adopted intentionally the concept of CoPs in their

organizations with the expectation that organizational performance will be improved and

strategic advantages leveraged (Saint,Onge and Wallace, 2003; Meeuwesen and Berends, 2007;

Schenkel and Teigland, 2008).

ST4S39-V1 – Section B: Strategic Knowledge Management

Intellectual Capital (IC) and Social Networks (SC)

Intellectual capital is considered as wealth of any organization. Intellectial Capital (IC) is

considered as Intangible Asset (IA). It is of great importance to conserve such wealth in such a

mean to avoid its transfer from one organization to another. Brooking (1997, p. 13) indicated IC

as “market assets,” “human-centered assets,” “intellectual property assets,” and “infrastructure

assets” when integrated with organization’s other productive resources would lead to worthful

initiation. It is intellectual capital that motivates organizational performance and promotes its

value. Rastogi (2003) defines it as the holistic prowess and potential of a firm, for making or

creating value. Sveiby (1997) categorized Intellectual capital into

1. Social Capital – Relationships within & outside the organization.

2. Human Capital – The people within the organization.

3. Structural Capital – The processes and operations of the organization.

According to Stewart (2001), a combination of knowledge and intelligence produces Intellectual

capital, if the power of intellectual freedom fulfils explicit financial benefits through careful

processing of intangible assets.

Andreou et al. (2007, p. 53) state that the business enterprise in this knowledge era has a need to

become “intelligent” about its environment to gain knowledge from its environment and

subsequently value its intangible resources.

The Challenge of Performance Measurement

Performance management is the activity and set of processes that aim to sustain and enhance

employee performance which matches an organization’s objectives. It’s strategic as well as

ST4S39-V1 – Section B: Strategic Knowledge Management

operational, as its aim is to confirm that employees contribute positively to business objectives

Performance measurement permits managers to assess, if an organization’s business results

satisfy strategic goals. To implement an effective performance management system it is

necessary to identify the objective, Critical success factors (CSFs): for each objective and Key

performance indicators (KPIs) for each CSF. The British Olympic cyclic teams are a great

example on effective usage of performance measurement as part of their strategizing in complex

systems. The point behind measurement is to comprehend the dimensions of something, record

the way it works, reduce the complexity of the world, and give a sense of control and to be able

to develop. Measurement is assisted by the so called ‘Performance Management Systems’.

‘Dashboards’, ‘Quality Improvement Systems’ and ‘The Balanced Scorecard. Such systems aid

management in appraising business outcome across an organization’s different divisions and

how the different parts of an organization work together to process business results. Observing

such interrelationships between groups, managers can make more informed decisions—such as

increasing a budget, adding new hires, or streamlining a business process. The concept of

measurement system would appraise the statement “Before we measure something we must ask

whether we understand what it is we are trying to measure.” (Gray et al, 2015). This is clear in

Essex Police Implementing a Performance Management Framework and in identifying its key

performance indicators (KPI) key through identifying relevant Key Performance Questions

(KPQs). KPQs enable a full and focused discussion on how well the organization is delivering its

objectives and serve as an important bridge between organizational goals and KPIs.. Moreover,

Measurement is crucial not only in systematic management of hidden values but also in

providing a deeper insight of future growth and reveals vital values to the organizational strategic

future. (Edvinsson, 1997). The rise in organizational performance is an outcome of technical

ST4S39-V1 – Section B: Strategic Knowledge Management

progress, innovation and quality of human, structural and relational factors that, in turn,

influenced by investment in knowledge -education, research and development (Seleim, Ashour,

& Bontis, 2004).

Healthcare sector and knowledge management

Although implications of robotic systems tend to be in use nowadays, knowledge of employees

still, forms the base in the quality of service to patients. Healthcare sector, still rely on their

knowledge of their employee rather than on physical assets. A very explicit model of social

network is the rapport built with patient during communicating as well as educating them. Such

networks provide a huge database base utilized in various healthcare analysis, as well as diseases

prevention, adverse effect etc. A knowledge based healthcare system provides the base in

efficient decision making. Solving problems and making optimal decisions in healthcare is

highly influenced by retrieval of knowledge. Knowledge management improvement is always

one of the strategic objectives which include performance improvement, creating innovative &

learning environment, integration, and continuous improvement.

Conclusion

Application of knowledge management can offer an efficient and productive utilization and flow

of information and knowledge. The ability to take advantage of individuals within an

organization i.e. effective use of the intellectual capital and maximizing its value would lead to

elevating organizational performance .To build a healthy Community of Practice it is essential to

analyze and understand the culture within a workplace i.e. networking, work habits, ways of

communication etc. Therefore in the aim of building a valuable intellectual asset would require a

proper knowledge management system is required.

ST4S39-V1 – Section B: Strategic Knowledge Management

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