W7: Intellectual Capital & Strategic Management Perspectives

Intellectual Capital and Strategic Management, what does it mean?

Intellectual Capital, one of the biggest assets against the ever-growing threat of mechanical automation in the workplace.

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Intellectual Capital refers to the knowledge a company and/or employee has, and treats it as an asset. This counters more traditional interpretations of company ‘assets’, i.e. property, equipment, fleet, financial capital. IC is essential for organisations in order for them to stay relevant in ever-changing, experience-needing competitive business environments. As Stahle & Hong summarise, IC is…

“…the source of success is the intelligence, flexibility and innovativeness of people, organisations and nations.”

Knowledge is a part of IC and knowledge management is part of managing an organisations IC.

According to Horibe, Seleim & Khalil, IC can be broken down into three main types:

Human Capital (HC)
– Knowledge and experience people bring to the organisation  

It’s been quoted by so many different people now that it’s impossible to find its origin, but it holds true – “company is only as good as its people”. If you are a company without good people, you need to do what you can to invest in finding those people. Knowledge and experience that comes with good people, is invaluable.

Organisational or Structural Capital (OC)
– The infrastructure that facilitate converting human capital into wealth for the organisation
– Organisational structure, systems, processes, computers, physical buildings and so forth to connect people to each other, and to capture and store human capital and make it available for others

As touched upon above.

Customer Capital or Relational Capital
– The value added to the organisation through its relationship with customers

Just as critical, if not more so than the first two points. A company may not only be as good as its people, but a company does not exist without customers!

Just as fundamental as having Intellectual Capital, is having a business strategy. Business strategies are born out of knowing your marketplace, knowing your legal limitations and knowing your competitors. Organisations develop their strategy based on the resources they have available. This is where IC plays a key role: knowledge as intellectual capital is a valuable resource to companies. More so if it is tacit knowledge, as it is harder for competitors to replicate.

But how do they relate to KM?

Intellectual Capital and Strategic Management work in conjunction with KM. By using the intellectual knowledge resources available, organisations are able to make smarter business decisions. The better access (through KM) to higher quality IC, means that allocation of business resources (like money, time, reputation) will be achieved with more favourable outcomes. Other more precise strategic activities are born out of KM and IC too, for example major investments can be made as a result of the new innovations through IC and KM… not to mention marketing campaigns, acquisitions, targeting growth markets and product specials, to name a few.

What is the role of knowledge and KM in strategic and operational management?

In order for organisations to achieve their long-term goals, it is important that they implement organisational strategies (OS) that include knowledge strategies (KS). Knowledge is essential in strategic planning, and in order for organisations to achieve their OS, support from KS is essential. Knowledge management is a tool implemented in conjunction with the knowledge strategy, with the aim of providing up to date, quality, intelligence, from which organisations are able to make decisions.

 

References:

Horibe, F. (1999). Managing knowledge workers: New skills and attitudes to unlock the intellectual capital in your organization. Toronto: John Wiley & Sons.

Pirjo Stahle & Jianzhong Hong. (2002). Dynamic intellectual capital in global rapidly changing industries

Seleim, A. A. S., & Khalil, O. E. M. (2011). Understanding the knowledge management -intellectual capital relationship: A two-way analysis. Journal of Intellectual Capital, 12(4).

 

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W5: OL, BI, IM, A(nalytics) and Big D

Organisational Learning, Business Intelligence, Information Management, Analytics and Big Data

On first glance, a jumble of buzz-words, but in reality these terms basically summarise the back-bone of Organisational Knowledge Management.

Organisational learning: According to KMT.net, OL can be defined through two approaches. It is important to note that these approaches can work in harmony with one-another. The first definition looks at the organisation as a whole from a “cognitive” perspective. What this means is that the business is treated like a “large brain”, with each area of the brain having a cognitive function that acts as an “individual member” within that organisation. This ‘brain’ is interconnected, constantly sharing and processing information. The second view looks at learning as ‘community’ based, in where the business acts as a community. Lave & Wenger (1991) originally coined this term, where they imagined ‘community based practice’ as:

“…collective social practice that links individuals together across official organisational boundaries and departments, and makes up the community.”

Business intelligence: is essentially a system that assists in informed business decision making. This process can be achieved by businesses, through the use of technology to analyse data. Search data management summarises this, stating that:

“Business intelligence (BI) is a technology-driven process for analysing data and presenting actionable information to help corporate executives, business managers and other end users…”

Information Management: can appear in a number of forms. From a physical customer service team, who take orders and connect product managers to customers. To online cloud-based information management systems, on which data is inputted in such a way that it produces valuable information. I.e. Customer Relationship Management (CRM) software like SalesForce. Both of these examples have their pro’s and con’s, but they both strive to deliver the same outcome of enabling businesses to work smarter, think faster and ultimately deliver.

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Analytics: is the process in which data sets are analysed using hardware and/or software, with the goal of trying to find patterns and characteristics within the data that can be turned into information.

Big Data: is like analytics on steroids. The shear size and volume of the data available complicates analytics due to being so large and accurate. Most of this data increases every day too. Gone are the days of eyeballing numerical reports, nowadays organisations can access a wide range of different platforms, including (but not limited to) images (Imgur, Flickr, Instagram), video (Youtube, Vimeo) and personal information (Facebook, Email). Big Data is now essential for companies, helping them to gain access to more accurate information, allowing them to stay ahead of the curve and always be one step ahead of the customer.

Organisational purpose?

All of these systems are designed so that businesses are able to utilise them, in order to make more informed decisions. They are essential in that businesses who are not constantly seeking out what it is their customers require and desire, will likely be left behind by their competitors.

Contrast and compare – same-same but different??

You could argue that organisational learning and business intelligence fall into their own category, while information management, analytics and big data, fall into another. OL and BI might refer to the tacit knowledge within a workplace. The raw intuition gained through years of experience, and the ability to take ‘data’ and ‘information’ and apply some tangible wisdom to it. IM, analytics and BD, could be better referred to as ‘tools’, and although they are powerful tools, they are only as effective as the people operating them.

“KM academics and practitioners must add to their own knowledge base so that they clearly understand the technologies and potential capabilities, as well as the risks, that big data/analytics bring to the organisation. If we do not have the knowledge to ask critical questions of the vendors who sell these systems, the techies who run them, the operational engineers who program the algorithms, and the data scientists who analyse the data then we will cede control to these people”

 

References:

http://www.knowledge-management-tools.net/organizational-learning.html

http://searchdatamanagement.techtarget.com/definition/business-intelligence

David Pauleen William Yu Chung Wang , (2017),” GUEST EDITORIAL Does big data mean big knowledge? Knowledge management perspectives on big data and analytics “, Journal of Knowledge Management, Vol. 21 Iss 1 pp.

W2: Knowledge Management

So what is Knowledge Management?

There is much academic literature written about ‘managing knowledge’. A quick search for “Knowledge Management” on Amazon books results in over 20,000 searches.

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This huge number of resources might be a reflection of the value that businesses put on KM. But in a corporate environment, what does it mean exactly? In a layman’s summary of the definition given in www.knowledge-management-tools.net, knowledge management is the processing and utilization of tacit and/or explicit knowledge to achieve some sort of competitive advantage, strategic planning, for better decision-making.

Personally, as an employee of a corporate super-giant, and as such it has become apparent to me that ‘Knowledge Management’ is very much front of mind for our executive team. With a strict ’hire to retire’ policy, there is a constant battle in ensuring that the experience and tenure of the employees is made transferable to the new employees rising up the ranks.

In an increasingly competitive marketplace, it is more important than ever to gain and maintain a competitive edge. This a difficult to achieve without employees who are either experienced, or have access to the appropriate tools. It can become incredibly costly to a business when they lose experienced employees. A huge amount of time is invested into establishing relationships and navigating the marketplace.

“There is nothing so useless as doing efficiently that which should not be done at all.”

 Peter F. Drucker

Being able to effectively harness KM means that an organisation has better access to resources that can be used for competitive advantage, decision-making and strategic planning.

How is Knowledge Management used?

As mentioned earlier, Knowledge Management is used to draw on competitive advantages, strategic planning and decision-making. It is also important to mention that any organisation using KM needs to be very clear about what they are using it for, and how best to you use it for those reasons.

What are the most significant issues that concern KM?

There are a number of areas to focus on in regards to potential issues around Knowledge Management in the workplace.

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Organisational issues: can be a result of misguidance, lack of experience or lack of direction. It is tough to try and implement KM into these environments because without a firm direction and objective, time, energy and resource is wasted in the effort to seek out tacit and explicit knowledge.

Knowledge issues: can be present in a few areas. Namely the quality of the knowledge – how can we be certain this particular information is correct or relevant. Also the value of the knowledge – if it is tacit knowledge, and is specialised in such a way that it is hard to translate into explicit knowledge, then why would that individual want to give that information away? If this knowledge effectively makes them more valuable, then understandably there is a reluctance to share. This sort of attitude can turn into a liability for a business, and a lot of effort needs to be made to ensure businesses have access to that knowledge.

Trust issues: similar to the above, trust issues can be made apparent in situations where the employee may not feel like their job is safe. For example, an experienced sign maker may be reluctant to pass on his tacit knowledge to another sign maker, as it would then lesser their bargaining position in pay discussions, or ultimately make him ‘less valuable’.

 

Resources:

http://www.knowledge-management-tools.net/knowledge-management-definition.html

 

W3: Personal Knowledge Management

In 1968, the late teacher and story-teller, Idries Shah prophesied just how complicated our lives were becoming.

“People today are in danger of drowning in information; but, because they have been taught that information is useful, they are more willing to drown than they need be. If they could handle information, they would not have to drown at all.”

Fast-forward 50 years and we are having information force-fed to us 24 hours a day. We live in a world where we are in a constant state of inter-connectivity. We become uncomfortable if we do not know where our mobile phone is. We have access to millions of hours of video, right at the tips of our fingers. We live in a world where we can answer almost any question, instantly. But what does this mean for the way we consume information? Is the external ‘white noise’ distracting us from what is important in our jobs and our personal lives? With so much information everywhere, we need to be able to decide what is useful and what is not. A deeper look into Personal Knowledge Management can assist with that. Through identifying PKM attributes, we can be smart about what sort of knowledge you process.

PERSONAL KNOWLEDGE MANAGEMENT

Personal Knowledge Management is an evolving set of skills, abilities and knowledge, that allows us as individuals to survive and prosper as the world around us changes. It focuses more on helping us as individuals, be more effective. Not just in work, but in life as well.

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One of the core focuses of PKM is personally enquiry. The quest to find, connect, learn and explore. If we are able to harness the management of our own personal knowledge, enabling us to work more effectively as individuals, the flow on is such that we will be able to work more effectively as employees.

DIFFERENCES TO KNOWLEDGE MANAGEMENT

The fundamental difference between PKM and KM is that the former focuses on the individual, while the latter focuses on the business.

KM is vital to any corporation (as touched on in the WK2 blog), these corporations employ KM metrics and ideologies with the goal of enabling the corporation to be more effective by ‘recording’ what their people know. Basically they seek out employees tacit knowledge, extract it, encode it and upload it into their information systems.

The obviously difficulties here is that there is no simple way of achieving this. Many organisations have tried and failed to capture tacit knowledge. In some cases it may not be emphasised enough how important individuals tacit knowledge is, and more work needs to be done with their people.

The attitude of PKM may be summed up more simply – “what’s in it for me?”

What steps can I be taking, in order to be more effective in my job, and in my life?

ENHANCING PERSONAL AND ORGANISATIONAL EFFECTIVENESS THROUGH PERSONAL KNOWLEDGE MANAGEMENT

Very simply we need to ask ourselves – “what do I need to know?”

What areas do I need to focus on in order to get ahead? What do I need to work on now, that is going to set me up for the next 3 months, 6 months, 12 months, 24 months, 60 months?

PKM is a tool that can help us understand what information I need to seek out now, so that I may begin to evaluate and bring into my knowledge-base, ready for the future. PKM is about getting ahead, through managing and anticipating what I need.

W1: Data, Information and Knowledge

What does it all mean?

Data, information and knowledge. The backbone of any organisation, but useless without understanding how to manage any and all three. Before we can discuss the intricacies of knowledge management, let us first attempt to understand what these words mean exactly.

Data
“Data is a set of discrete facts.”

Data can be interpreted as sets of analytics (i.e. numbers, results, performances) that with the correct context, can turn into information.

“Usually considered facts and figures, information”.

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Information

Information is what is a result of processing data. Upon sourcing data and organising it in a way that is able to be processed, we may be able to produce meaningful insight which upon learning, gives people knowledge. Information is very powerful in business, but only as much as how it is interpreted.

Knowledge

Knowledge is essentially the understanding of the information. Knowledge is the key in the pyramid. The more you as an individual know, the more valuable you become. Knowledge needs to be applied before you start gathering data or using information. Bear in mind that it always pays to be critical of the data and of the information, where it is sourced, how reliable it is and whether it is relevant. This includes your own knowledge.

Wisdom

Very simply, wisdom is the ability to use the knowledge in order to make the right decisions.

What does it mean, to “know”?

Philosophical question. We “know” something when we have a justified true belief, we believe something to be true based on our experience. Only then can we say we know something.

  • Can be refuted logically/socially/culturally, as we all seem to “know” different things. We all seem to have justified “true beliefs” that are contrary.
  • We can still have a definition of “knowing” that is able to be applied to KM.

Classification of explicit knowledge vs. tacit knowledge

There are a number of key defining differences between explicit and tacit knowledge. Explicit knowledge refers to knowledge that has been ‘codified’ and expressed as information in databases, documents or other sources that is able to be read and processed. Tacit refers basically refers to the knowledge that is in people’s heads.

Tacit knowledge:

  • Knowledge that is ‘inside our heads’
  • Based on our learned experience
  • Sometimes difficult to convey on to others, due to the personalised way we have interpreted it and processed it against our own experiences
  • More difficult to share – “requires person-to-person interaction, shared mental models, good relationships.”

Explicit knowledge:

  • Knowledge that has been encoded, transcribed.
  • In writing, or in symbol that can be read or understand.
  • Easier to share – is able to be put it in an information system from which it can be accessed and understood.

Other types:

  • Functional knowledge
  • Structural knowledge
  • Embedded knowledge

Embedded knowledge is another taxonomy of knowledge, it refers to the knowledge that is locked into processes, products, cultures, routines, artefacts or structures.

This type of knowledge is best-managed through rules, processes, manuals, organisational culture, code of conduct, ethics, etc. While this can be viewed as explicit knowledge, these tools are considered embedded as the knowledge itself is not explicit i.e. it is not immediately apparent why conducting in such a way is beneficial to an organisation.

References:

  1.  Podcast week 2, David Pauleen.
  2. KM Basics
  3. The Different Types of Knowledge
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