Understanding Knowledge Management... Do We Know How to Do That? KMA model…

Abstract

An alignment or “fit” between an organizations’s strategy for performance and knowledge management (KM) practices needs to be established in order for the organization to fully utilize its knowledge assets and to derive competitive advantages. Currently the levels in an organization are fragmented and with help of proposed Knowledge Management Alignment Model (KMA) study it will give an insight to the organization for deploying a holistic approach for Knowledge Management that spans across business strategy, information system (IS) strategy, organization culture and human factors to gain better organizational performance and competitive advantage.
This paper proposes the strategic alignment between knowledge strategy and business strategy – Knowledge Management Alignment-Business Strategy (KMA-BS) and the strategic alignment between knowledge strategies and Information System strategy – Knowledge Management Alignment-Information System/Information Technology (KMA-IS/IT) in organizations with the help of Knowledge Management Alignment Model (KMA). The aim is to understand impacts of Knowledge Management Alignment-Business Strategy (KMA-BS) and Knowledge Management Alignment-Information System/Information Technology (KMA-IS/IT) on the organizational performance. Knowledge is the main resource in an organization, and by aligning this resource with the business strategy and IS strategy, the alignment will contribute positively on the performance of the organization.



Introduction

Like water, this rising tide of data can be viewed as an abundant, vital and necessary resource. With enough preparation, we should be able to tap into that reservoir and ride the wave by utilizing new ways to channel raw data into meaningful information. That information, in turn, can then become the knowledge that leads to wisdom. In an organizational context, data represents facts or values of results, and relations between data and other relations have the capacity to represent information. Patterns of relations of data and information and other patterns have the capacity to represent knowledge. For the representation to be of any utility it must be understood, and when understood the representation is information or knowledge to the one that understands. Yet, what is the real value of information and knowledge, and what does it mean to manage it?
We are living in a world of rapid change driven by globalization, the knowledge-based economy coupled by ever-fast development of information, communication and technology (ICT). This change, however, not only poses some challenges, but also offers opportunities for both private and public sectors alike. In order to gain competitive advantage for their survival and competence against discontinuous environmental change, most of the large companies in the private sector have been actively taking initiatives to adopt new management tool, techniques and philosophies. History shows that most of the management philosophies were first practiced in the large company. Once they gained foot in the field, then become adopted in the other sectors. Examples include; enterprise resource planning (ERM), business process re-engineering (BPR), and total quality management (TQM). Now comes the turn of KM. KM is no exception.
KM efforts typically focus on organizational objectives such as improved performance, competitive advantage, innovation, the sharing of lessons learned, and continuous improvement of the organisation. KM efforts overlap with Organizational Learning, and may be distinguished from that by a greater focus on the management of knowledge as a strategic asset and a focus on encouraging the sharing of knowledge. KM efforts can help individuals and groups to share valuable organizational insights, to reduce redundant work, to avoid reinventing the wheel per se, to reduce training time for new employees, to retain intellectual capital as employees turnover in an organisation, and to adapt to changing environments and markets.
Now a days, world is moving from product based economy to customer centric and now finally towards knowledge based economy. In late 90’s all the organizations have realized the importance of their knowledge assets which is very complex to manage because of the two different dimensions of it. One is Explicit Knowledge, which can be expressed in words and numbers in the form of data, manuals, and specifications in electronic forms. Second dimension of KM is Tacit Knowledge which is highly personalized and difficult to express, share, communicate to others makes the management of knowledge very complex. Again tacit knowledge can also be divided in to two groups. One is Technical that is based on skills of humans and second is Cognitive that is intuitive. We can not understand and formulate the knowledge based organization without understanding its relationship with strategy of business as well as the IS strategy and HR strategy of the firm or industry. Concept of alignment or relationship of knowledge management with different other types of strategy need to be understand first to formulate the strategy based on knowledge. The concept of alignment between business strategy (BS), Information system strategy (IS), Human and cultural factors, organizational structure can be served as the important building blocks of any knowledge based organization which wants to get competitive advantage .

Challenges faced by organizations in today’s environment

Change is the word which brings challenges to the business world. As change is a universal aspect of every enterprise. Every enterprise must meet the challenge of continually reorganizing itself to achieve its target goals. Challenges faced by the organization are generally in terms of change in technology, government policies, competitors in terms of technology which brings re-engineering process, suppliers, demand of customers, market research, publicity, availability of resources, decision making by the management.
Organizations are facing different challenges in today's environment like: Technology
Only 20 years ago, few workers used fax machines or e-mail, and computers occupied entire rooms, not desktops. Advances in information and communication technology have permanently altered the workplace by changing the way information is created, stored, used, and shared.Diverse WorkforceA diverse workforce refers to two or more groups, each of whose members are identifiable and distinguishable based on demographic or other characteristics like gender, age group, education etc. Several barriers in dealing with diversity include stereotyping, prejudice, ethnocentrism, discrimination, tokenism, and gender-role stereotypes.Multiple StakeholdersStakeholders are those who have interests in the organization. Multiple stakeholders for an organization include the customers, suppliers, consumers, investors, lenders, etc.
ResponsivenessAn organization has to be responsive to the challenges and threats that it faces from within the internal or external environment. It requires quick responsiveness to meet the challenges and opportunities arising out of these changes.Rapid ChangesDue to changing internal and external environment, rapid changes in the organization occur. Organization has to be flexible to adjust to those changes.GlobalizationManagers are faced with a myriad of challenges due to an array of environmental factors when doing business abroad. These managers must effectively plan, organize, lead, control, and manage cultural differences to be successful globally.



Concept of Knowledge Management

In recent years, many organizations are positioning themselves strategically based on their tangible and intangible internal resources, and their capabilities rather than on their products and services. It is also recognized that competitive advantage based on resources and capabilities is more important in contributing to superior performance and sustainability than just solely based on products and market positioning. Therefore organizations need to identify, know and analyze their knowledge-based resources and capacities in order to uncover their most superior or distinctive assets.
However, not all the resources identified by the organization are strategic or are capable to achieve a competitive advantage. Even if the resources are unique, competitors might imitate it or develop an adequate substitute. The most unique and inimitable resource however is the organizational knowledge. There are many characteristics of organizational knowledge that make it the organizations’ most precious resource. Unlike other resources in the organization such as technology, market share, capital, or products, knowledge is the only resources that cannot be copied, and is difficult to imitate. Moreover, knowledge is different from material resources which decrease when used. On the other hand, knowledge asset increases with use. Both resource-based and knowledge-based theories have viewed the competitive advantages based on the organizational internal resources and capabilities are much more important. The resource-based view treats knowledge as a generic resource rather than having special characteristics. On the other hand, knowledge-based theory considers knowledge as the most strategically significant resource of the firm. This approach perceives knowledge is usually difficult to imitate and socially complex. Hence, heterogeneous knowledge bases and the unique capabilities among firms are the major determinants of sustained competitive advantage and superior corporate performance.

KM perspective of alignment

Nowadays knowledge is a key asset for an organization’s survival and advancement. Knowledge is also claimed by many researchers to have an enabling role in the formulation of successful strategies and achieving the organizational overall objectives. Academicians and researchers both the groups have advocated that the true power of knowledge lies in its ability to positively influence, and enable the business strategy. It’s been stated by the famous research(Zack), for instance, suggested that the vital role of knowledge and its management should be reflected by the organizational related strategies in order to achieve the organizational desired competitive advantage.
A survey conducted by a famous consulting firm in the year 2008 on 500 organizations all over the world, confirmed that the KM initiatives in 75% of these organizations were derived by the senior management or board level engagement. This illustrated that top-management believe that KM must be an organization-wide initiative. There are clear empirical researches demonstrated that KM has become a part of many large corporations’ strategic agenda. A survey conducted by the European Foundation for Quality Management (EFQM) in 2007 and 2008 confirmed that 63% of respondents reported that KM is still a hot topic in their strategic agenda, and that 15% of them reported that KM had became a natural way of doing business. Strategists at times need to make certain that the managing of knowledge is not a separate managing activity and it should be an integral part of the organizations day-today activities.
Zack stated that:
"…… the most important context for guiding KM is the firm's strategy. Knowledge is the fundamental basis of competition. Competing successfully on knowledge requires either aligning strategy to what the organization knows, or developing the knowledge and capabilities needed to support a desired strategy."
Furthermore, it is recognized that the effective use of knowledge to drive competitive advantage depends upon using a holistic approach that spans five key business considerations: Knowledge Management (KM), Business Strategy (BS), Information Systems (IS), Information Technologies (IT), organizational culture, and human factors. Researchers have argued that the effective management of KM system involves managing the entire system, people, structure, processes, culture, and technology to ensure there is holistic collaboration and participations in all the KM processes.
Despite the fact that KM literature strongly reveals the importance of the KM alignment, rather less attention has been paid to answer questions such as: Understanding KM, how to align KM with the organizational strategies, which element(s) of KM should be aligned, and at which management levels should KM be aligned. Building on the existing investigation and discussion of the IT strategy alignment, the current study contributes to the field of KM by providing an investigation of the issues related to the concept of alignment in KM. This study provides an investigation into the different perspectives of KMA; in addition, the study puts forward a discussion of different types of KM alignment, and their performance significance with the help of proposed KMA model.

Facets of KM

Researchers admitted that the focus of KM has changed from an operational perspective for the purpose of improving efficiency and quality, to a strategic perspective for the support of enterprise innovation and broad effectiveness. Moreover, we identified two major types of KM: operational KM and strategic KM. On one hand, the main concern of operational KM is to connect people to the process of distribution and transfer of knowledge. On the other hand, strategic KM is a process that links organizational knowledge with the organizational structure and business strategy. In this study, two types of KMA are therefore identified as strategic KM alignment and functional (or operational) KM alignment as shown Figure (1).
KM can be considered from different perspectives: strategy, HR process, and IT or IS strategy.
First, the strategy perspective of KM recognizes KM as a strategic process aimed at helping organization in achieving its goals by making the factor knowledge productive, and mobilizing its knowledge based resources in order to ensure continuous innovation.
Second, the HR process perspective of KM highlights the human dimension of developing knowledge in individuals, teams and organizations which occurs through different learning processes. Third, KM has been perceived as IT or IS and accordingly it is defined as a holistic system that includes all methods, instruments and tools that are used to contribute to the promotion of core knowledge processes.
Accordingly, three different types of KMA are identified: KM and business strategic alignment (KMA-BS), KM and IS/IT strategic alignment (KMA-IS/IT), and, KM and HR strategic alignment (KMA-HR). Moreover, there is another perspective of alignment concerning the relationship between KM and the organizational environment. The KMA between KM and business strategy or IS strategy can be considered as strategic alignment, while the alignment between KM and the IT strategy, HR, or organizational environment can be considered as operational (or functional) alignment.

Fig 1 Knowledge Management at the strategic and Functional levels

Definition of KMA

The concept of alignment in the KM field is complex as it addresses both KM and organizational strategies. The complexity of the organizational strategy is related to the market place uncertainty, market share, profit growth, customer retention, and competition. KM is complex as it touches human behaviors, attitudes and capabilities, business philosophies, operations and practices, and complicated technologies. KM can not be copied because it is a reflection of human intellectual capabilities, and based on tacit and explicit knowledge. Although some research has made an attempt to provide definitions for the alignment of Knowledge Management, researchers have tended to focus on Knowledge Management for Business Strategy. Most of these definitions however have overlooked the alignment between KM and IS strategy, HR strategy and the organization's environmental elements.

Figure 2 Knowledge Management Model
The various perceptive of KM in addition to the fundamental complexity of the KMA do necessitate the establishment of appropriate definitions for the alignment of Knowledge Management. For each of these facets (KMA-BS, KMA-ITIS, and KM-HR management strategy) KMA could imply different kinds of relationship such as supportive and integrated. The supportive relationship entails that KM strategy considered as a separate strategy that is supporting or is supported by the other strategies. Whereas the integrated relationship presumes that KM strategy is an integrated part in the other strategies. Thus, the definition for KMA-BS may have a different perspective than that for the alignment between KM strategy and HRM strategy or IS strategy. The primary objective of this study is to present a model to understand the alignment between KM strategy and both business strategy and IS strategy. By considering the above mentioned points, we will identify different definitions for KMA-BS and KMA-ISIT respectively.

The alignment between knowledge strategy and business strategy (KMA-BS)

This alignment has been extensively discussed and emphasized by academics and researches in the KM and management disciplines. The literature has identified different perspectives for the alignment between KM and business strategy according to the role played by knowledge and their strategies in formulating the business strategy and which of (business or KM strategies) them are built upon the others.
We believe that business strategy and KM strategy should feed upon each other and need to work interdependently. Researches state that "Knowledge drives strategy and strategy drives knowledge management", and, "without a clearly articulated link between knowledge management and business strategy, even the world's best KM system will deliver nothing." Organization's competitive strategy must drive KM strategy, and KM strategy, on the other hand should reflect its competitive strategy. Knowledge based strategies begin with strategy, not knowledge. Knowledge based strategy requires the organization first understand the business needs, in term of technical, human and structural aspects, as bad choices or decision hurt the organizational productivity. Thus in order to formulate a KM strategy, the Chief Knowledge Officer (CKO) needs to be fully conversant with all aspects of the business strategy. The Chief Executive Officer (CEO), however, should be able to articulate the organization knowledge-related activities with the organization strategic activities and strategic plan. This perception of KMA revealed that KM must support business strategy, which means that there are two separate strategies, one for business and the other for KM. In this case, the term linkage and coherent can be used to describe KMA-BS. Therefore, the alignment can be defined as the degree to which the KM missions, objectives, and plans supported and are supported by business mission, objective and plans.
Alternately, researchers argued that the management of knowledge becomes an integral part of the organizational strategies. Thus, the organization will have one integrated strategy that is changing according to its internal and external environmental changes. KM is either integrated within the overall business strategy or treated as a separate business strategy in parallel with other strategies. Thus, they declared that KM and BS should be one strategy and not separated strategies. In this case, KM needs to be in harmony with business strategy. Fusion or harmony is the suitable terms to describe the relationship between KM and business strategy in which there should be a unity between organizational strategies and KM strategy. Based on the above discussion and despite the different perspectives of the KMA-BS, for the purpose of the current study the following definition was identified for KMA-BS:
The degree to which knowledge resources and capabilities provided by the knowledge strategy, is supporting and supported by the strategic and intellectual requirements of the business strategy in order to manage the strategic and knowledge gap.
The impacts of KMA-BS on the performance and the organization competitive advantage have been revealed by many researchers. Intuitively, it makes sense that the organization that knows more about its customers, products, technologies, markets, and optimizing the synergy between them should perform better. Nevertheless, in order to gain competitive knowledge, organizations need to be able to enhance what they know and predicate what they must know and to recognize the kind of value it intends to provide and to whom. Thus an organization needs to capitalize on what they know and need to align their strategic goals and the strategies of KM argued that the existing objectives set by the organization for serving customers and beating competitors needs to be linked to the new organizational intellectual capital (intellectual resources and capabilities), otherwise all the organizational learning, technical capabilities and skills, or knowledge-based processes are "mere costly diversions".
Researchers however, drew attention to the importance of the alignment between business strategy and the strategies of KM at both the strategic and operational strategic levels. While at the strategic level the alignment between KM and business strategy or KMA-BS is vital for enhancing the strategic decision making processes, the organization needs to practice effective operational KM to ensure that it brings all the required knowledge to execute their strategies. Furthermore, the organization’s fundamental capabilities relating to its culture, technology and system, and management need to be supported and leveraged by the knowledge assets. An empirical study conducted by Liu et al. (2005) on the correlation between the KM methods and new product development revealed that the integration of the internal and external knowledge in the organization and in maintaining good management will lead to a positive effect on new product development performance. Therefore, it can be concluded that the organization's strategic context is essential for identifying the KM initiatives that support the organization purpose or mission, strengthen its competitive position and create shareholder value.
Unfortunately, KMA-BS, while often talked about, has been widely ignored in practice.
We feel that "while many of the organizations recognize the importance of developing a strategic rationale for investing in knowledge creation and exploitation, they continue to be, for the most part, are driven by focus on short-term, first-order outcomes rather than by broader, longer term strategic goals".

The alignment between knowledge strategy and IS strategy (KMA-IS/IT)

The second facet of KMA is the alignment between KM and IS strategy. KM strategies need to be developed in consultation and partnership with both IS strategy and HR department. However, many organizations are still misleading the relationship between technology and knowledge. In practice, it is not enough to consider KM as an isolated construct, but effective management of knowledge should be based on sound information management. In fact, the focus on knowledge and its management has led to an increased attention towards IT as one of the most important sources of competitive advantages. The role of IT in KM is a vital consideration for any company wishing to exploit emerging technologies to manage their knowledge assets and a critical success factor in the development of an effective KM system.

KMA-IS can then be defined as:
The degree to which IS/IT resources (technological infrastructure, computer system applications, and organizational information) are influenced, leveraged and executes knowledge strategic choices to manage the organizational knowledge gaps or surpluses and permit knowledge to flow effectively.
The relationships between KM and IT have been approached from the capabilities of IT infrastructure and from the processes of KM. Researchers have discussed the role of IT in KM as a mechanism to facilitate knowledge creation and transfer. This role lies in the new IT capabilities to support communication and collaboration in order to enable collaborative learning. IT is also capable to radically change the production and distribution of products and services, thereby bringing about fundamental socioeconomic changes.
The critical role of IT lies in the ability to support communication, collaboration, and search for knowledge and information dynamically instead of just getting information from static repositories of best practices. Studies by American Productivity and Quality Center (APQC) (1996, 1997) consider technology as a significant enabler for KM and organizations embarking on KM initiatives must establish a suitable IT infrastructure in order to successfully accomplish the goals of the organization.
IT and its supportive strategy should be aligned and integrated with the organization’s knowledge strategy and to attempt to combine IT with the organizational structure, business process, organization culture and human factors. As a result of this integration, KM initiative can provide better services to the customers, leveraging knowledge for innovation and empowering employees through the exchange of knowledge with others in the business environment have assessed the degree of fit between IT and KM strategy. They mentioned that certain uses of IT may be more common for certain types of KM strategies than others. They have identified two types of KM strategies: knowledge transfer strategy and knowledge creation strategy. They argued that IT can support knowledge transfer strategy in leveraging their knowledge assets, and knowledge creation strategy in creating knowledge network and enabling communication between those who need the knowledge and those who have it. In addition, many researches agreed on the IT support for codification and personalization KM strategy.
There have been some attempts to show a direct relationship between effective information management, KM practices and corporate performance. Well-organized information management and KM are seen to be complementary with both required to operate effectively to ensure adequate supply of both “old and new knowledge”. However, IT should be understood less in its capacity to store explicit information and more in its potential to aid collaboration and co-operation between people to enhance the tacit knowledge.
Thus IT has a supporting role, not the main role, in a KM program. The increasing capabilities of IT which look promising for facilitating KM process and program can certainly support just some aspects of KM. Researches have demonstrated that the misuse or misalignment of IT with the KM strategy can lead to adverse effects on the organization. For examples, tacit knowledge may be neglected by an organization as a result of the overemphasizing on digitalization of explicit knowledge. This could have a negative impact on the organization’s ability to create and maintain sustainable competitive advantages. While numerous research works have been done in integrating IT with the business strategy, few attempts were done in discussing and exploring the relationship between IT and KM. Most of the published research work develop recommendations for successful KM, or discuss the technological tools available for supporting the management of the tacit or explicit knowledge without an empirical basis. Although the studies have investigated the relationship between IT and KM as they discussed the integration between IT outsourcing and KM, they did not derive a detailed model or framework for the IT/KM integration which can be employed for the purpose of this study.

Limitation

This paper presents an empirical study for an organization to utilize the knowledge assets while aligning it with Business Strategy, IS/IT strategy and Human Strategy. While taking into considerations the pain points which are prevalent in the industry today we have tried to propose a model aligning the critical aspects of organization to gain competitive advantage. This proposed model KMA is yet to be tested. We intend to take this model to a next level by studying cluster of companies in different verticals and present a research paper. Still in this model with respect to organizational context we have not presented the alignment of Knowledge Management with HR Strategy as it is difficult to quantify human behavior. We will consider this as a probable candidate for our future research scope.

A Road Ahead…

The value of Knowledge Management relates directly to the effectiveness with which the managed knowledge enables the members of the organization to deal with today's situations and effectively envision and create their future. Without on-demand access to managed knowledge, every situation is addressed based on what the individual or group brings to the situation with them. With on-demand access to managed knowledge, every situation is addressed with the sum total of everything anyone in the organization has ever learned about a situation of a similar nature.
The KMA model presented illustrates two different conceptualizations hypothesizing the different relationships between knowledge strategies, business strategy and IS strategy. The first conceptualization illustrates the KMA-BS and KMA-IS/IT, and an investigation on the contribution of these alignments on the organizational performance. The conceptualization of the research model will also help at investigating the impact of different types or profiles of KMBS-SA and KMIS-SA on the organizational performance.
The model will help organizations analyze strong association between knowledge strategy and business strategy and that KMA-BS clearly influenced the organizational performance. Organizations should take KMA-BS and KMA-IS/IT challenge seriously and should consider the alignment implication before moving ahead to implement a strategic plan. Organizations need to determine different profiles for their knowledge strategy in order to support all aspects of business strategy and IS strategic dimensions that are most important for the organization. They should then direct the organizational knowledge resources to support these profiles. Finally, the model recommends that the organizations should define and establish a position in KM in order to oversee the knowledge strategy and KM issues.