Jürgen Kluge

Transferability: knowledge on the move

We have just seen how communication is a key component of overcoming subjectivity. Communicating knowledge is only possible because knowledge can readily be transferred. This characteristic of knowledge allows companies to open new business fields or find new sources for value generation by detaching knowledge from its original context and applying it to a different one. This happens every day in business: an employee finds a successful way of performing a certain task, and, if the results are positive, the employee tries to replicate the success with other pending tasks. From small tasks to huge, business-changing tasks, this is how the transferability of knowledge is primarily exploited.

Perishability: capturing value quickly

The value of knowledge tends to decline over time. This trend can be interrupted by sudden and unpredictable bursts of value, but these spikes are rarely sustainable. While a company can garner windfall rewards from such sudden updrafts, measures in this area must concentrate on coping with the perishing value of your corporate knowledge base.

Spontaneity: sparking profits

The outbreak of new knowledge cannot be scheduled or predicted accurately. Dispatching an individual or team to solve a problem or work toward a breakthrough innovation will likely result in some knowledge being formulated, but whether it is the right knowledge at the right time, the best solution, remains anyone’s guess until the process is well underway. That moment when an idea finally erupts or when a consistent picture emerges from seemingly disconnected thoughts is an individual experience. Neither the timing nor the content can be forced because the appearance of new knowledge is spontaneous. But it can be anticipated and encouraged, at least in broad terms. The mistake that companies make, however, is to equate spontaneity with randomness.

Knowledge pull required

Many companies we visited had already tried to introduce knowledge management programs, and at times these efforts were quite substantial. But despite management commitment and healthy budgets, these programs often floundered or failed. In each case something was missing. A vital ingredient of the knowledge management recipe had not just been left in the cupboard; it was not even on the shopping list. All these companies lacked the right cultural context that would create and nurture reciprocal trust, openness and cooperation.

Coming to terms with the knowledge economy

Knowledge management has been a fashionable topic in business circles for more than a decade, but our survey showed that many companies can talk the talk, but few can walk the walk. This is probably because the theme has been surrounded by a general mystique that makes many dyed-in-the-wool business leaders uncomfortable. It is time to throw out the jargon. Soon, it will be useless to distinguish knowledge workers from non-knowledge workers or knowledge companies from non-knowledge companies.

Self-reinforcement: starting the chain reaction

Knowledge is a more ethereal concept than money or any of the other traditional corporate assets. But it is precisely because it is unquantifiable that another characteristic comes into play. We call this trait self-reinforcement to emphasize that sharing knowledge does not normally lead to a decline in its use or value. Self-reinforcement is not a trait of other assets. A machine can only be in one place at one time, and sharing €100 means that you end up with less than €100. But sharing knowledge produces different results. The original knowledge holder keeps the knowledge even after it has been shared, and the knowledge receiver gains the knowledge, which means it can be applied more widely, creating value, or, combined with the recipient’s own knowledge, creating even more value.

Subjectivity: reading from the same page

In addressing knowledge management problems, the inherent subjectivity of knowledge can be like sand in the gearbox. On first inspection, everything looks fine, but still the machinery is not working quite right. If the machine must be used anyway, the results will be spotty at best, but most people will choose to abandon the machine altogether. Likewise, grains of subjectivity can spoil an otherwise well-designed initiative. Efforts to move in a common direction can be scuttled by misunderstandings, for instance, or readily available solutions may be ignored because employees do not see how they can be applied.

Embeddedness: mining a rich vein

Everyone recognizes that knowledge is not readily quantifiable. It has no line on a balance sheet, and we even lack the vocabulary to describe a quantity of knowledge, reverting to nuggets, chunks, pieces, and, more generically still, amounts. Mining your company’s knowledge is necessary, but it is difficult to know how rich the seam is because a core characteristic of knowledge is that it is embedded, hidden from view. Companies must come to terms with this if they are to have a successful knowledge management program.

Kicking off a knowledge management program

Design to cost, design to ease of manufacture, overhead value analyses … we could go on. The list of tools for improving operations and the profitability of a business is long. And for each one, a proven approach is readily available. Most use three or four distinct steps to solve the problem: there is typically diagnosis followed by program design, then implementation is started in a pilot before the concept is rolled out broadly. Some of these elements are well suited to improving a company’s knowledge management, but the broad approach differs significantly. Good knowledge management should certainly help to improve operations, but a fully fledged knowledge management program is more comparable to the development and implementation of company strategy than to a classic operational improvement program. A knowledge management program should be conducted with parallel, rather than linear, phases. This means implementing some measures very early in the diagnosis to capture the low hanging fruit. It also means continuing to do analyses of various aspects during the major period of implementation.

Why knowledge is important

As industrialization swept through most of the world, individual entrepreneurs and global corporations have had to grapple constantly with the ebb and flow of factors of production. At various stages over the past few hundred years, a succession of factors have formed bottlenecks to efficiency, threatening to strangle growth or asphyxiate industries entirely.