Chapter 2: Knowledge Management Foundations

2.1 Knowledge Management Foundations:

Infrastructure, Mechanisms, and Technologies
2.1.1 Knowledge Management Solutions and Foundations
2.1.2 Knowledge Management Infrastructure
2.1.3 Knowledge Management Mechanisms
2.1.4 Knowledge Management Technologies
2.1.5 Knowledge Management Processes
2.1.6 Knowledge Management Systems
2.2 Organizational Impacts of Knowledge
Management
2.2.1 Impact on People
2.2.2 Impact on Processes
2.2.3 Impact on Products
2.2.4 Impact on Organizational Performance 1
 2.1.1 KM Solutions and Foundations
KM solutions refer to the variety of ways in which
KM of an can be facilitated through two components:
◦ KM processes
◦ KM systems
KM solutions depend on KM foundations.
KM foundations refers to the basis upon which KM
solutions of any organization’s stands or is
supported, this includes:
◦ KM infrastructure,
◦ KM mechanisms and
◦ KM technologies.

2
 2.1.2 KM Infrastructure
 KM infrastructure refers to the enablers to
develop knowledge and stimulate the creation and sharing
of knowledge within the organization. 
 It reflects the long-term foundations for KM.
 In an organizational context, KM infrastructure includes five major
components: organization culture, organization structure,
organization's IT infrastructure, common knowledge, and physical
environment.
1. Organization culture(OC)
 reflects the norms and beliefs that guide the behavior of the
organization's members.
 It is an important enabler of KM in organizations.
 Attributes of enabling OC include understanding the value of KM
practices, managing support for KM at all levels, incentives that
reward knowledge sharing, and encouragement of interaction for
the creation and sharing of knowledge. 3
2. Organization Structure (OS)
An OS is the established pattern of relationships between the
components of an organization, outlining communication, control and
authority patterns.
KM depends to a considerable extent on the organization structure. 
OS determines the manner and extent to which roles, power, and
responsibilities are delegated, controlled, and coordinated, and how
information flows between levels of management
There are a number of key terms that apply to organizational structures:
◦ span of control- the number of staff that a manager has responsibility for
◦ chain of command- the route by which instructions and communications
flow from the top to the bottom of a business, explaining who is answerable
to whom
◦ de-layering- a process where a business removes layers of its management
to make its structure more flat
◦ delegation- a process where tasks are given to members of staff, who then
give tasks to employees further down the chain of command
◦ subordinates- members of staff below a manager in the chain of command
4
 The following sections are devoted to the examination and
presentation of the KM process in the most four common
organizational structures:-
 Functional Structure (FS) and Knowledge Management
 The functional design is the most basic one.
 The idea is to group employees who perform similar tasks
and activities in one department of an organization.
 The FS tends to centralize coordinating and decision making
at the top organizational level.
 There is a good flow of knowledge and information within a
department thanks to the similarity of tasks and activities.
 Such circumstances also foster knowledge creation, because
specialists in the same discipline are grouped together in one
department.
5
 Their common field of interests and similar education facilitates
organization of training courses within the department.
 Another advantage is that such conditions are favorable for organizing
databases.
 The collected information can be kept in one central library,
administrated by specialized staff, and catalogued in a logical way,
e.g. each department has access to the most important information
related to its field of activity.
 The major disadvantage is a poor flow of information and knowledge
between departments.
 Members are often isolated or even hostile to one another as a
result of strict functional division.
 Moreover, the lack of coordination across the functions results in
low innovativeness – ideas for new products and
 the implementation of new methods and technologies often get lost
because of the need to communicate or to generate support across
departments.
6
 Divisional Structure and Knowledge Management
 The divisional design means that all activities needed to produce a good or
service are grouped together into an autonomous unit.
 It tends to decentralize decision making by pushing authority and
responsibility down to the lower level.
 KM in the divisional structure differs significantly from the type
discussed above.
 Generally the flow of knowledge and experience is efficient within the
divisions were set apart.
 Flows between particular divisions however are limited and poor.
 Low functional specialization does not facilitate learning and specializing
processes.
 Employees are obliged to handle all activities related to the business units
they are hired in: from supply, logistics and production, to sales,
marketing and finance.
 So individuals have good conditions for creating and developing more
general rather than specialized knowledge.
7
Horizontal flows of information and knowledge do not
exist in the divisional structure.
Because of the large size of organizations and their
diversified activity, numerous problems with the location
of database or knowledgebase appears within an
organization.
How to manage it? Who should be responsible for data
storage and sharing? Should it be centralized or
decentralized?
These and many other questions arise when we organize
knowledge identification, collection and distribution in a
large company.
One universally correct does not exist. For this reason each
case should be studied individually so that the most effective
model could be found.
8
 Matrix Structure and Knowledge Management
 Due to an increase in the complexity and changeability of the
organizational environment, the matrix design appeared.
 It is a stable and permanent form of organization based on horizontal
and vertical relationships (both functional and divisional structures
concentrated on vertical ones).
 It combines functions with products, projects, or markets, as the
result of which each unit reports simultaneously to two directors.
 The information and knowledge flows are multidirectional in this case
and most experts regard the sharing of information as the major
strength of the matrix form.
 Also knowledge creation can be more effective if various specialists
cooperate with each other and are all engaged in problem solving and
knowledge creation and update processes.
 To conclude, in spite of its weaknesses that are exemplified in
practice, the matrix organization is a good form in terms of KM.
9
 Project Structure and Knowledge Management
 Organic organizational forms like project structures or task forces,
which are based on temporary teams, seem to be the most flexible
and suitable for the knowledge management process.
 Many authors present this kind of structures primarily in terms of
its advantages.
 Specialists and experts engaged in projects are members of
particular teams and they focus mainly on goals, dates, and
budgets, rather than on creating knowledge or sharing experience.
 There is no place, tools, and motivation for such an exchange.
 Individuals meet to perform particular tasks or solve
problems, and after completing the tasks, each of them goes their
own way taking his knowledge and experience with them.

10
 In a traditional organization all specialists in the same discipline, even if
they complete different tasks and work on different projects, share
rooms, report to the same supervisor, attend the same courses and
meetings, etc.
 In the pure project structure they do not have an opportunity to
generate new organizational knowledge and share their experience,
which can be seen as the major disadvantage of the organic form.
 Is there any possibility to make use of the flexibility of the organic
structure and avoid the above mentioned obstacle? Nonaka developed
the “hypertext organization”, which blends the strengths of bureaucratic
 efficiency and standardization with those of task force flexibility and
dynamism. The hypertext organization
 combines the “business system layer”, the “project team layer”,
with a value-added feature of the hypertext
 organization called the “knowledge base layer”.
 In the business system layer routine, day-to-day operations are carried
out.

11
It operates along the lines of the bureaucratic model.
It is here that products and services are delivered and it is
here where the vast majority of tacit knowledge is found
within the organization.
The business system layer is that part of the organization
that deals directly with the customers and whole
environment.
The project team layer is where multiple project teams
engage in knowledge-creating activities, such as new
strategies or product development.
This layer operates along the lines of the task force model
whereby individuals are drawn from their normal
responsibilities to participate in a project team with a
specific objective and time frame for completion.
12
 This is where knowledge conversion takes place, pulling tacit
knowledge from individuals from the business system layer and
engaging this knowledge towards developing new concepts,
ideas and products.
 Once the project is completed, individuals return to their normal
roles and responsibilities within the business system layer.
 The knowledge base layer is where knowledge generated in the
above two layers is codified and stored to ensure accessibility to
everyone in the organization.
 The most effective organizational knowledge base is structured
around organizational intent – vision, long-term objectives,
performance expectations.
 What very important is that staff must be capable of moving
between these three layers with relative ease and ability to
separate their mindset and business practice.
13
3. Organization's IT infrastructure
The ITI is the combination of data processing,
storage, and communication technologies and
systems (databases, servers, computers, information
devices, etc) and the processes that make it all work.
It comprises the entire spectrum of organization's IS,
including transaction processing systems and
management information systems.
It consists of databases and data warehouses, as well
as enterprise resource planning systems.
The organization's overall ITI are developed to
support the organization's ISs needs, also facilitates
KM.
14
4. Common Knowledge (CK)
 CK knowledge that the majority of organizations’ members
are familiar with it. 
 CK refers to the organization's cumulative experiences in
comprehending a category of knowledge,
 activities and the organizing principles that support
communication and coordination.
 It enhances the value of an individual expert's knowledge by
integrating it with the knowledge of others.
 CK provides unity to the organization. And it includes:
◦ a common language and vocabulary,
◦ recognition of individual knowledge domains,
◦ shared norms, and
◦ elements of specialized knowledge that are common across
individuals sharing knowledge
15
5. Physical Environment
The physical environment within the organization is
often taken for settled.
Coffee rooms, cafeterias, water coolers, and
hallways do provide venues where employees learn
from and share insights with each other.
Physical environment can foster KM by providing
opportunities for employees to meet and share ideas.
Key aspects of the physical environment include:
◦ the design of buildings and the separation between them;
◦ the location, size, and type of offices;
◦ the number and nature of meeting rooms; and so on.
16
2.1.3 Knowledge Management Mechanisms (KMMs)
KMMs are organizational or structural means used to
promote KM.
They enable KMSs, and they are themselves supported
by the KM infrastructure.
Examples of KMMs include: learning by doing, on-the-
job training, learning by observation, and face-to-face
meetings.
More long-term KMMs include the hiring of a Chief
Knowledge Officer, cooperative projects across
departments, traditional hierarchical relationships,
organizational policies, standards, initiation process for
new employees, and employee rotation across
departments.
17
2.1.4 Knowledge Management Technologies (KMTs)
 KMTs also support KMSs and benefit from the KM
infrastructure, especially the ITI.
 KMTs constitute a key component of KM systems.
 Technologies that support KM include artificial
intelligence (AI) including those used for knowledge
acquisition and case-based reasoning systems, electronic
discussion groups, computer-based simulations,
 databases, decision support systems, enterprise resource
planning systems, expert systems, management information
systems, expertise locator systems, videoconferencing, and
information repositories including best practices databases
and lessons learned systems.
 KMTs also include the emergent Web 2.0 technologies, such
as wikis and blog.
18
 2.1.5 Knowledge Management Processes
 KM processes: is the procedure by which the various knowledge
assets that make up the organization are discovered, captured,
shared and applied.
 It is development of organizational knowledge and aims to create
value and to increase/sustain competitive advantage for the
organization
 Because there are different types of knowledge, it can be a
challenge to document and store each one accurately.
 The KM process helps by outlining the steps needed to collect the
various knowledge sets scattered across the many departments and
team members that comprise the organization.
 There are four main KM processes, and each process comprises
two sub-processes:
 Knowledge discovery: Combination and Socialization
 Knowledge capture: Externalization and Internalization :
 Knowledge sharing: Socialization and Exchange
19
 Knowledge application: Direction and Routine
2.1.6 Knowledge Management Systems
KMS: which are the integration of technologies and
mechanisms that are developed to support the four KM
processes.
KMS helps automate the KM process and
creates efficiencies by providing key players with more
time to spend learning from and applying data insights,
information, and knowledge.
KM is Not a Technology Solution in Itself.
Whilst a KMS is a technology solution and the overall
task of KM is facilitated by technology, KM itself is not a
technology discipline,
KM as a process has been around for decades, emerging
long before the internet and even computers themselves. 20
It is correct that a modern KMS is heavily reliant on
technology, however, the task of KM itself incorporates
several other factors such as organizational processes and
its people.
A KMS simply supplements the KM process by providing
data capture functionality, configurable processes, and the
means to analyze, monitor, and share data, information,
and organizational knowledge.
For any company irrespective of size and industry, the
utilization of a robust KMS is critically important for
ongoing success,
particularly for organizations like Amazon, etc. that rely
on data, knowledge, and information as part of their day-
to-day operations.
21
 2.2 Organizational Impacts of Knowledge Management
 Organizations are the sum of their collective knowledge, and they
succeed or fail based on how they capture, store, share and effectively
manage that information in pursuit of business goals.
 When employees can access knowledge easily, they’re more
productive.
 When they can’t, they are inefficient and become frustrated.
 Many problem-solving approaches involve communicating and
knowledge transfer in a natural, informal way. This downside is that
teams miss out on undocumented, tacit knowledge.
 They spend extra time searching for inaccessible information or
“reinventing the wheel” by repeatedly solving commonly asked
questions. 
 By contrast, intentional and effective KM helps teams quickly access all
available information and follow up with internal experts for additional
questions. 
 Specifically, the organizational impacts of KM includes the following:
22
People, Processes, Products and Organizational performance
 2.2.1 KM Impact on People
KM can have the following impacts on people:
◦ KM can facilitate employee learning and adaptability and cause employees to
become more flexible and
◦ KM can also enhance employee job satisfaction.
KM Impacts on Employee Learning : This can be accomplished
through:
◦ Externalization, e.g., writing a report on lessons learned from a project;
◦ Internalization, e.g., when employees preparing for a later project, can read it;
◦ Socialization, e.g., through joint activities, such as, meetings or informal chats;
◦ Communities of Practice - an organic and self-organized group of individuals
who are dispersed geographically or organizationally, but communicate
regularly to discuss issues of mutual interest KM Impacts on Employee
Adaptability.
The KM can impact employee adaptability as follows:
◦ Employees are likely to adapt, when they interact with each other.
◦ They are more likely to accept change and
◦ They are more prepared to respond to change and less likely to be caught by
surprise! 23
KM Impacts on Employee Job Satisfaction:
Employees feel better because of their knowledge
acquisition and skill enhancement.
KM also provides employees with solutions to problems
they face, in case those same problems have been
encountered earlier, and effectively addressed.
Providing tried & tested solutions to the employees,
amplifies employees’ effectiveness in performing their
jobs, & keeps employees motivated.
Additional increases in employee job satisfaction derived
from KM practices as follows:
◦ Mentoring and training are excellent motivators for employees.
◦ Communities of Practice provide intimate and socially validated
control to the employees over their own work practices.
24
 2.2.2 KM Impact on Processes
KM enables improvements in organizational processes
such as marketing, manufacturing, accounting,
engineering, and public relations.
These impacts can be seen along three major dimensions
as follows:
 Effectiveness: is performing the most suitable processes
and making the best possible decisions.
KM can enable organizations to become more effective
by helping them to select and perform the most
appropriate processes, so that there are fewer mistakes.
KM enables organizations to quickly adapt their
processes according to the current circumstances, thereby
maintaining process effectiveness in changing times.
25
 Efficiency: is performing the processes quickly and in a low-
cost fashion.
 KM can enable organizations in productivity improvement
and cost savings.
 Managing knowledge effectively can also enable
organizations to be more productive and efficient.
 Degree of innovation: Innovation is performing the processes in a
creative and novel fashion that improves effectiveness and efficiency.
 Organizations can increasingly rely on knowledge shared
across individuals to produce innovative solutions to
problems.
 KM has been found to enable frequent improved
brainstorming, thus enhancing process innovation.
 KM can enable organizations by better exploitation of new
ideas.
26
 2.2.3 KM Impact on Products
KM Impact on products can be:-
 KM Impacts on Value-Added Products: KM
processes can help organizations offer new products
or improved products that provide a significant
additional value as compared with earlier products.
Value-added products also benefit from KM due to
the effect the latter has on organizational process
innovation.
 KM Impacts on Knowledge-Based Products: KM
can have a significant impact on products that are
knowledge based, e.g. Consulting & Software
development.
27
Consultants can quickly access and combine the best
available knowledge and bid on proposals that would
otherwise be too costly or too time-consuming to put
together.
Company can place solutions to software problems of
customer in a shareable knowledge base.
Let customers download software patches based on their
answers to an automated “wizard” system that prompts
customers with a series of questions aimed at diagnosing
the customer needs.
In knowledge-based industries, KM is often necessary just
for mere survival.
Knowledge based products can sometimes play a
significant role in traditional manufacturing firms, too.
28
2.2.4 Impact on Organizational Performance
“Ideas are capital. The rest is just money.” –
Deutsche Bank ad in Wall Street Journal.
It reflects the belief that investments in KM should
be viewed as capital investments, to produce long-
term benefits to the entire organization, instead of
assets providing value only at the present time.
Organizational performance refers to how well an
organization is doing in reaching its vision,
mission, and goals.
means the actual output or results of an
organization as measured against its intended
outputs. 29
 The organizational performance can be improved through the
following: Scale economies, Scope economies and Sustainable
competitive advantage.
 Economy of Scale: A company’s output is said to exhibit economy
of scale, if the average cost of production per unit decreases with
increase in output.
 economies of scale focuses on the cost advantage that arises when
there is a higher level of production of one good.
 For example, To produce tap water, water companies had to invest in
a huge network of water pipes stretching throughout the country.
 The fixed cost of this investment is very high. However, since they
distribute water to over 25 million households, it brings the average
cost down.
 Reasons:
◦ Possibilities for specialization increase as production increases and
◦ Greater likelihood of discounts from suppliers when production is large-scale.
30
Economy of Scope: A company’s output is said to
exhibit economy of scope when the total cost of that
same company producing two or more different
products is less than
the sum of the costs that would be incurred if each
product had been produced separately by a different
company.
It focuses on the average total cost of production of
a variety of goods.
For example, a gas station that sells gasoline can sell
soda, milk, etc.
Reasons:
◦ Joint use of production facilities, marketing,
administration and distribution channels. 31
KM can contribute to economies of scale and scope
by:
◦ improving the organization’s ability to create and influence
knowledge related to products, customers, and managerial
resources across businesses;
◦ enabling sharing of products designs, components,
manufacturing processes, and expertise across businesses,
thus reducing development and manufacturing costs,
accelerating new product development, and supporting
quick response to new market opportunities;
◦ enabling cross-selling of existing products or development
of new products, by sharing knowledge of customer
preferences, needs, and buying behaviors;
◦ enabling the deployment of general marketing skills and
sales forces across businesses.
32
 Impacts on Sustainable Competitive Advantages: are a set of assets,
characteristics, or capabilities that allow an organization to meet its
customer needs better than its competition can.
 It allows a business to be more successful than its competitors over a
long period of time:
 Knowledge can enable an organization to develop and exploit other
tangible and intangible resources better than the competitors can, even
when the resources might not be unique.
 Unlike most traditional resources, knowledge cannot easily be
purchased in a ready-to-use form.
 To obtain similar knowledge, competitors have to engage in similar
experiences but obtaining knowledge through experience takes time.
 So competitors are limited in the extent to which they can accelerate
their learning through greater investment.
 To achieve sustainable competitive advantage, an organization should
realize how to create, distribute and utilize knowledge.
End of chapter 2
33