Scholars and observers from disciplines as disparate as sociology, economics, and management science agree that a transformation has occurred — knowledge is at center stage.1 Knowledge is information combined with experience, context, interpretation, and reflection. It is a high-value form of information that is ready to apply to decisions and actions. While knowledge and information may be difficult to distinguish at times, both are more valuable and involve more human participation than the raw data on which we have lavished computerization during the past forty years. Given the importance of such an asset, it is not surprising that organizations everywhere are paying attention to knowledge — exploring what it is and how to create, transfer, and use it more effectively. Knowledge management, in particular, has recently blossomed.2
Unfortunately, however, abstract musings on the importance of knowledge, or on the emergence of knowledge-based economies and organizations, too often dilute discussions. Conceptual analysis is of little use to practitioners faced with questions about what specifically they should do as managers of knowledge.
In this article, we address the practical realities of the sometimes heady subject of knowledge management by focusing on a tangible, pragmatic entity, the knowledge management project. Such projects are attempts to “do something useful” with knowledge, to accomplish organizational objectives through the structuring of people, technology, and knowledge content. It is through projects and initiatives, however disjointed, that most significant change happens in organizations. Knowledge management projects are changing businesses today, and we believe it is time to examine them and learn from them.
Of course, by selecting the knowledge management project as the unit of analysis, we gain some benefits while forgoing others. None of these projects is optimal. Some beg the question of whether it is really “knowledge” that is being managed, and many are quite limited in impact. Very few contribute to the much touted goal of “organizational transformation.” As one might expect, it is proving far easier to talk and write about organizational transformation than it is to achieve it. Nevertheless, for many industries, the importance of knowledge as the basis of future competition is an established fact. Hyperbole and fantasies aside, the question remains: How can organizations use knowledge more effectively?
To understand how companies are managing knowledge today, we studied thirty-one knowledge management projects in twenty-four companies. Where possible, we mention the names of the firms; some sites requested anonymity.
1. Harvard sociologist D. Bell presented one of the earliest analyses of the changes that might accompany the increase in knowledge. See:
D. Bell, The Coming of Post-Industrial Society, second edition (New York: Basic Books, 1973, 1976).
Peter Drucker provides a historical perspective into which the most recent economic changes can be framed and understood and speculates about their implications for business. See:
P. Drucker, Post-Capitalist Society (New York: HarperCollins, 1993).
Stanford economist P.M. Romer published the first quantitatively rigorous treatment of how knowledge intensiveness affects economic growth. See, for example:
P.M. Romer, “Human Capital and Growth: Theory and Evidence,” Carnegie-Rochester Conference Series on Public Policy, volume 32, 1990, pp. 251–286.
2. Thomas Stewart has written extensively about the subject. See, for example:
T.A. Stewart, “Your Company’s Most Valuable Asset: Intellectual Capital,” Fortune, 3 October 1994; and
T.A. Stewart, Intellectual Capital (New York: Doubleday/Currency, 1997). Other recent books on the subject include:
I. Nonaka, The Knowledge-Creating Company (New York: Oxford University Press, 1995);
D. Leonard-Barton, Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation (Boston: Harvard Business School Press, 1995); and
T.H. Davenport and L. Prusak, Working Knowledge: Managing What Your Organization Knows (Boston: Harvard Business School Press, 1998).
3. We refined our ideas during two review sessions with participants. Many of these companies were taking part in a sponsored research program on multiple aspects of knowledge management; this was only one focus. The broader project, Managing the Knowledge of the Organization, emanates from Ernst & Young’s Center for Business Innovation in Boston. Seventeen companies sponsored this program in 1996. D. De Long and M. Beers were employees of the E&Y Center at the time of the research.
4. For a description of knowledge management in customer support, see:
J. Morron, D. Morales, and P. Klahr, “Developing and Deploying Knowledge on a Global Scale,” Proceedings of the Thirteenth National Conference on Artificial Intelligence (Menlo Park, California: AAAI Press, 1996).
5. I. Nonaka, “A Dynamic Theory of Organizational Knowledge Creation,” Organization Science, volume 5, February 1994, pp. 14–37.
6. L.G. Zucker, “The Role of Institutionalism in Cultural Persistence,” in W.W. Powell and P.J. Dimaggio, eds., The New Institutionalism in Organizational Analysis (Chicago: University of Chicago Press, 1991), pp. 83–107; and
J.S. Brown and P. Duguid, “Organizational Learning and Communities of Practice: Toward a Unified View of Working, Learning, and Innovation,” Organization Science, volume 2, 1991, pp. 40–57.
7. For Skandia’s approach to identifying intellectual assets, see:
L. Edvinsson and M. Malone, Intellectual Capital (New York: HarperBusiness, 1997).
8. R.G. Eccles, “Performance Measurement Manifesto,” Harvard Business Review, volume 69, January–February 1991, pp. 131–137; and
R.S. Kaplan and D.P. Norton, “The Balanced Scorecard — Measures That Drive Performance,” Harvard Business Review, volume 70, January–February 1992, pp. 72–79.
9. D.V. Gibbons and E.M. Rogers, R&D Collaboration on Trial (Boston: Harvard Business School Press, 1994).
10. S. Shulman, “Patent Medicine,” Technology Review, volume 98, November–December 1995, pp. 28–36.
11. R.H. Russell, “Providing Access: The Difference between Sharing and Just Reporting Corporate Information,” Information Strategy, Winter 1996, pp. 28–33.
12. Many of these studies are reported in:
T.J. Allen, Managing the Flow of Technology (Cambridge, Massachusetts: MIT Press, 1977).
13. T.H. Davenport, S. Jarvenpaa, and M.C. Beers, “Improving Knowledge Work Processes,” Sloan Management Review, volume 37, Summer 1996, pp. 53–65.