Knowledge
Management for E-Business Performance:
Advancing Information Strategy to
‘Internet Time’
Download Printable PDF Copy
From: Global Risk Management Network's Book on Knowledge Management (www.kmbook.com),
"...the first book on knowledge-driven organizations and knowledge workers that can survive and thrive in the new world of uncertainty and risk...."
Yogesh Malhotra, Ph.D.
Founder,The Knowledge Management Think Tank
e-Mail: yogesh.
Published in Information
Strategy: The Executive's Journal, vol. 16(4), Summer 2000, pp. 5-16
Within the last few years, the topic of knowledge
management has gathered a lot of interest in the corporate sectors. Although
there is no commonly agreed upon definition of knowledge management, companies,
governments, institutions and organizations are demonstrating an increasing
interest in the topic. The key argument of this article is that most current
interpretations of knowledge management are relevant to the industrial world of
business of the past era. Given their origin in the ‘old world’ of business,
many such interpretations of knowledge management may have serious and adverse
implications for information strategy of enterprises, governments and
institutions.
The discussion surfaces the key assumptions about
information strategy and how they need to be considered afresh given the
changing assumptions about business strategy and competitive business
environment. Based on this discussion a new perspective of knowledge management
is proposed followed by suggestions for the managers to effectively deploy it
in the ‘new world’ of e-business. For the purpose of this article, the focus of
discussion is on e-business enterprises as most observations are already
evident in such organizations. However, most of the arguments, observations and
conclusions are relevant to executives interested in information strategy and
business transformation for the twenty first century.
Disconnect between IT Expenditures
and Organizational Performance
Information strategy executives observed some
significant transitions over the last quarter of the twentieth century:
information technology (IT) as a lever of competitive advantage; the IT
outsourcing bandwagon effect characterized by consideration of information as a
‘utility’ just like electric power or phone connection; and more recently the
e-everything phenomena with the emergence of Internet and electronic commerce
as key factors in business and IT strategy.
While some researchers suggested that same
investments in information systems would yield different benefits in
competitive advantage, others, such as the IT-economist Paul Strassmann,
concluded that there is no relationship whatsoever between computer
expenditures and company performance. John Seely Brown, director of Xerox Parc
observed that despite investments of over $1 trillion in technology over two
decades of this era, U.S. industry had realized little improvement in the
efficiency and effectiveness of its knowledge workers. The confusion between
knowledge and information has caused managers to sink billions of dollars in
information technology investments that have often yielded marginal results.
The disconnect between IT expenditures and the
firms' organizational performance could be attributed to an economic transition
from an era of competitive advantage based on information to one based on
knowledge creation. The earlier era was characterized by relatively slow and
predictable change that could be deciphered and ‘controlled’ by most formal
information systems. During this period, information systems based on
programmable recipes for success were
able to deliver their promises of efficiency based on optimization for given
business contexts. Discussing the case of organizations that were slow to adapt
their strategy to changing business environment, Peter Drucker has argued that
such organizations were hobbled by their past recipes of success. Archetypes of
such organizations have included IBM and GM that have created historical
records in terms of annual corporate losses.
Another way to understand the prevailing
disconnect between information technology investments and organizational
performance is to reflect upon the difference between knowledge and information.
The intent of this article is not to offer another definition in terms of
semantics, but to offer a more pragmatic perspective. More specifically, knowledge is interpreted in terms of potential for action and distinguished
in the following discussion from information
in terms of its more immediate link with performance. This interpretation is
consistent with what the information systems philosopher and professor Charles
West Churchman had observed three decades ago in his pioneering work The Design of Inquiring Systems:
“knowledge resides in the user and not in the collection of information… it is
how the user reacts to a collection of
information that matters
.” More recently, Nonaka and Takeuchi, the
authors of the best seller The
Knowledge-Creating Company has re-emphasized that only human beings can
take the central role in knowledge creation. They argue that computers are
merely tools, however great their information- processing capabilities may be.
While information generated by computer systems is not a very rich carrier of
human interpretation for potential action, knowledge resides in the user's
subjective context of action based on that information.
From Continuous Improvement to Radical Redesign
In between the transitions mentioned earlier,
information strategy executives participated in another significant transition
over the last few years: that from Total Quality Management to Business Process
Reengineering (BPR) as illustrated in Figure 1. In contrast to the traditional
emphasis on continuous marginal improvements in existing processes, the
proponents of BPR emphasized IT-intensive radical redesign of business
processes. They proposed a clean-slate approach to re-build the company’s
information architecture and information strategy by rethinking the company’s
business in terms of business processes rather than discrete functions and
hierarchies. An overemphasis on information technology at the cost of human
involvement and commitment resulted in major implementation failures of BPR
initiatives to the tune of 70%.
However, there were some
problems with the proposed paradigm of BPR as it couldn’t scale to the later
shift to the networked paradigm enabled by the Internet and WWW. The ERP
systems developed by the BPR-vendors such as SAP were expected to provide
lock-step regimented sharing of data across various business functions. These
systems were based on top-down model information strategy implementation and
execution, and primarily focused on coordination of companies’ internal
functions. While providing for unprecedented level of data sharing across internal
functions, they straitjacketed the flexibility of information processing for
each of the locked-in functions. Not surprisingly, such models couldn’t scale
for permitting multi-direction inter-organizational information flows with
suppliers and customers needed for effectively supporting e-Business functions
like Supply Chain Management and Customer Relationship Management. Recent ERP
implementation fiascos in case of companies such as Hershey and Whirlpool are
representative of this problem. Not accounting for the Net-based global
enterprise paradigm resulted in loss of market leadership of SAP to new
startups such as Siebel and Ariba. (More recent developments such as mySAP.com
are attempting to remedy this loss of market share for Siebel.)
The evolution of the information-processing
paradigm over the last four decades to build intelligence and manage change in
business functions and processes has generally progressed over three phases:
1. Automation: increased efficiency of
operations;
2. Rationalization of procedures:
streamlining of procedures and eliminating obvious bottlenecks that are
revealed by automation for enhanced efficiency of operations; and,
3. Re-engineering: radical redesign of
business processes that depends upon information technology intensive radical
redesign of workflows and work processes.
The
deployment of information technologies in all the three phases was based on a
relatively predictable view of products and services as well as contributory
organizational and industrial structures. Despite increase in risks and
corresponding returns relevant to the three kinds of information technology
enabled organizational change, there was little, if any, emphasis on business
model innovation – ‘rethinking the business’ -- as illustrated in Figure 2.
As demand for a company’s
products becomes more fickle with increasing role of customers, suppliers and
intermediaries in dynamic pricing models such as eBay, mysimon.com,
priceline.com and a host of other ‘vertical’ portals, external market information plays a much greater role in
determining the internal logistics of the product and service lines. Ongoing
shift from the ‘economy of atoms’ to ‘economy of bits’, coupled with
competition encountered by brick-and-mortar
stores (such as Toys R Us) from click-and-mortar
stores (such as eToys) has resulted in reassessment of traditional economic
factors of production. Renewed emphasis on information assets, or more
correctly, knowledge assets, intangible assets and intellectual capital has fed
the IPO-frenzy in which virtual companies have often achieved valuation many
times over of their brick-and-mortar analogues. Most Net-based startups have
realized that although technology is important, however business model
innovation is the key lever for global market share. Examples of such new
business models include Amazon.com and e-Toys, relatively new entrants that are
threatening traditional business models embodied in organizations such as
Barnes and Noble and Toys R Us. It is not that the traditional brick-and-mortar
companies were not leading users of information technologies, however, the new
Net-based companies have fundamentally redefined the value equations related to
their internal value chains and supply chains. Such business model innovations
represent ‘paradigm shifts’ that characterize not transformation at the level
of business processes and process workflows, but radical rethinking of the
overall business model as well as the information flows between organizations
and industries. As noted by the business strategist Gary Hamel at an Academy of Management international
meeting, the paradigm shifts characterizing the transition from the old world
of business to e-world of business could account for as much as seventy percent
of the known competitive players for
many established. Taking this as a rough approximation in terms of risks and
returns, one may speculate that more than 70% of risks as well as returns will
depend upon companies’ e-business model innovation strategy compared with 30%
that will depend upon use of information technologies for BPR, rationalization
of workflows and automation.
From
Business Process Redesign to e-Business Model Innovation
Brian Arthur, the proponent of ‘increasing
returns’ working with the Santa Fe Institute, has described the new world of
information enabled business enterprises as a ‘world of re-everything.’ In this
new world of business, most enterprises success or failure would be depend upon
their ability to incessantly question and adapt their programmed logic
underpinning their business models and business processes to the sustained
dynamic and radical changes in the business environment. The ‘old world’ of
pre-determined and pre-defined recipes of success would still exist
side-by-side with the world of re-everything in most business enterprises.
However, companies’ competitive survival and ongoing sustenance would primarily
depend on their ability to continuously redefine and adapt organizational
goals, purposes, and an organization's "way of doing things." Steve
Kerr has described the state of business strategy for the new world in Planning Review: “The future is moving
so quickly that you can't [predict] it...We have put a tremendous emphasis on
quick response instead of planning. We
will continue to be surprised, but we won't be surprised that we are
surprised. We will anticipate the
surprise.”
Figure 4 provides a synopsis of the transition
from the ‘old’ world of business to the e-world of business.
The new world of business puts less premium on
playing by pre-defined rules and more on understanding and adapting as the
rules of the game-as well as the game itself-keep changing. Examples of such
changing business rules, conventions, and assumptions are evident in the
emergence of virtual corporations and business ecosystems, and are most
prominently visible in dot-com enterprises living in ‘Internet time’. The
essence of the discussion is that corporate world is now encountering not only
unprecedented pace of change but also radical discontinuities in such change
that make yesterday’s best practices tomorrow’s core rigidities. In the new
world of e-business, literally “everything is up for grabs” including
traditional concepts of industries, organizations, products, services and channels
of marketing, sales and distribution. The new world imposes a greater need for
ongoing questioning of the programmed logic, very high level of adaptability to
incorporate dynamic changes into the business and information architecture and
ability to develop and grow systems that can be readily adapted for the
dynamically changing business environment. Organizations operating in the new
business environment therefore need to be adept at creation and application of
new knowledge as well as ongoing renewal of existing knowledge archived in
company databases.
From
Information Processing to Knowledge Creation
The information processing view, evident in
scores of definitions of knowledge management in the trade press and academic
texts, has often considered organizational memory of the past as a reliable
predictor of the dynamically and discontinuously changing business environment.
Most such interpretations have also made simplistic assumptions about storing past knowledge of individuals in the
form of routinized programmable logic, rules-of-thumb and archived best
practices in data bases for guiding future
action. However, there are major
problems that are attributable to the information-processing view of
information systems. These problems are described below as three key myths
about knowledge management as relevant to the new world of e-business.
Myth 1: Knowledge management technologies can deliver the right information to
the right person at the right time.
This idea applies to an outdated business model. Information systems in
the old industrial model mirror the notion that businesses will change
incrementally in an inherently stable market, and executives can foresee change
by examining the past. The new business model of the Information Age, however,
is marked by fundamental, not incremental, change. Businesses can't plan
long-term; instead, they must shift to a more flexible
"anticipation-of-surprise" model. Thus, it's impossible to build a
system that predicts who the right person at the right time even is, let alone
what constitutes the right information.
Myth 2: Knowledge
management technologies can store human intelligence and experience. Technologies such as databases and
groupware applications store bits and pixels of data, but they can't store the
rich schemas that people possess for making sense of data bits. Moreover,
information is context-sensitive. The same assemblage of data can evoke
different responses from different people. Even the same assemblage of data
when reviewed by the same person at a different time or in a different context
could evoke differing response in terms of decision-making and action. Hence,
storing a static representation of the explicit representation of a person’s
knowledge -- assuming one has the willingness and the ability to part with it –
is not tantamount to storing human intelligence and experience.
Myth 3:
Knowledge
management technologies can distribute human intelligence. Again, this
assumes that companies can predict the right information to distribute and the
right people to distribute it to. And bypassing the distribution issue by
compiling a central repository of data for people to access doesn't solve the
problem either. The fact of information archived in a database doesn't ensure
that people will necessarily see or use the information. Most of our knowledge
management technology concentrates on efficiency and creating a
consensus-oriented view. The data archived in technological ‘knowledge
repositories’ is rational, static and without context and such systems do not
account for renewal of existing knowledge
and creation of new knowledge.
Toward
Knowledge Management That Makes Sense
Given the dangerous perception
about knowledge management as seamlessly entwined with technology, “its true critical success factors will be
lost in the pleasing hum of servers, software and pipes” as observed by the
author’s interviewee in a recent CIO
Enterprise magazine. A few years ago, technologies such as intranets, Lotus
Notes, MS-Exchange were being considered as enablers of knowledge management.
The more recent interest is on technologies related to knowledge portals and
still-on-horizon products such as Lotus’ Raven. Despite significant advancement
in technologies and substantial investment by companies in such technologies,
most organizations are still trying to find answers to simple questions such
as: How to capture, store and transfer knowledge? How to ensure that knowledge
workers share knowledge? Given the quest for answers to such questions, it
becomes imperative for organizations to clearly understand the above strategic distinction between knowledge and information. This strategic difference is not a matter of
semantics, but has critical implications for managing and surviving in an
economy of information overabundance and information overload. As most new
media and Net executives competing for ‘eyeballs’, ‘mindshare’, and virtual
communities, would realize, in the new world of e-business, the scarce resource
is not information, but human attention.
Based on the above arguments, it
seems logical to account for human attention, innovation and creativity needed
for renewal of archived knowledge, creation of new knowledge and innovative
applications of knowledge in new products and services that build market share.
In the context of enabling e-business strategy, the proposed conceptualization
of knowledge management is depicted in Figure 5.
Related to the preceding
schematic, a working definition of knowledge management is proposed here: Knowledge
management caters to the critical issues of organizational adaptation,
survival, and competence in face of increasingly discontinuous environmental
change. Essentially, it embodies organizational processes that seek synergistic
combination of data and information-processing capacity of information
technologies, and the creative and innovative capacity of human beings.
Unlike most conceptions of knowledge management
proposed in information systems research and in trade press, this conception is
better related to the new model of business strategy discussed earlier. Its
primary focus is on “How can knowledge management enable business strategy for
the new world of business?” and “What strategic outcomes should knowledge
management try to achieve?” rather than
“What goes into the nuts and bolts of the machinery that supports knowledge
management?” It relates more closely to the dynamic view of business strategy
as driver of the corporate information strategy. Furthermore, unlike most
prevailing definitions, this interpretation explicitly addresses the strategic distinction between knowledge and information explained earlier.
Reconciling
Knowledge Management and e-Business Strategy
Prior discussion in this article has explained
why most current interpretations of knowledge management that are often based
upon an outdated model of business strategy may have serious and adverse
implications for information strategy and e-business strategy. The arguments
made in the discussion also made a case for re-analyzing key assumptions based
upon the new perspective of knowledge management that is better suited to the
‘new world’ of e-business.
Related to the strategic notion
of knowledge and knowledge management, there are some fundamental shifts that may be
characterized as ‘paradigm shifts’ characterizing the transformation from the
old world of business to the new world of e-business. These transitions are
labeled as ‘paradigm shifts’ as they represent changes of unprecedented
proportions having implications for turning the ‘tried and tested’ management
theories and assumptions on their head. These shifts are in terms of how
managers think about business strategy, information technology, role of senior
management, organizational knowledge processes, corporate assets and
organizational design as depicted in Figure 6. As evident, these are
interrelated issues, as each of these issues has implication for one or more of
the other issues.
Paradigm Shift in Business Strategy
The new world of business
imposes the need for variety and complexity of interpretations of information
outputs generated by computer systems. Such variety is necessary for
deciphering the multiple worldviews of the uncertain and unpredictable future.
Instead of long-term prediction, the emphasis is on understanding the multiple
future world-views by using techniques such as scenario planning. An example is
the strategic planning process facilitated by Arie de Geus, the author of Living Company, while he was the
strategy chief of the multinational Royal Dutch/Shell.
Within the proposed model of
knowledge management, organizational planning activities are not eliminated.
Instead of embodying a set of instructions for what should be done, such
activities are used as ideological devices for building constituency and
defining the limits of responsible opinion. In this view, the organization
plans for its futures, but does not rely on its plans. This observation is more
representative of several Internet-based startups that question their business
logic everyday and often consider execution of paramount importance while
competing in Internet time. Acute attention and response to
market needs is a key determinant for most business organizations, however for
Net enterprises such as Yahoo!, ivillage.com and etoys.com it had implications
in terms of market leadership, stellar business performance and multi-billion
dollar IPOs.
The implications
of this paradigm shift are in terms of a faster cycle of knowledge-creation and
its application, by enabling continuous and rapid detection and correction of
any discrepancies between the ‘theory of business’ and the dynamically changing
business environment. In this model, access to organizational information base,
authority to take decisive action, and the requisite skills are embedded at the
frontlines where real action takes place so that strategy is devised and
implemented in real time.
Paradigm Shift in Design and Use of
Technology
With increasing computerization
in organizations, organizational routines originally embedded in standard
operating procedures and policies become embedded in the firm’s dominant logic
embedded in programs and databases in the form of 'best practices'. Such
formalized information systems tend to be inflexible and are often based upon
designers’ belief that they have already identified the organizational and
environmental properties. However, with increasingly rapid, dynamic and
non-linear changes in the business environment, static assumptions embedded in
such systems become vulnerable. Growing realization of such vulnerabilities is
behind increasing interest in designing information systems that can take
dynamic and diverse interpretations of changing information into account. For
example, dynamic market changes currently underpin comparison-shopping agents
such as mysimon.com (recently acquired by c|net) and dynamic and flexible
pricing pioneered by web sites such as priceline.com and e-bay.
Brook Manville, while with
McKinsey, viewed implementation of these issues in terms of the shift from the traditional
emphasis on transaction processing, integrated logistics, and work flows to
systems that support competencies for communication building, people networks,
and on-the-job learning. His point about implementing new, flexible
technologies and systems that support and enable communities of practice, informal and semi-informal networks of
internal employees and external individuals based on shared concerns and
interests is also echoed in Net Gain
and Net Worth, two recent books
authored by McKinsey’s Hagel and Armstrong.
Not surprisingly, developing virtual communities of consumers and users
is among key priorities of vertical portals and specialized industry portals
such as one being developed by General Motors. Regardless of the decision to
‘build or buy’, the challenge of walking the tightrope between adoption of
latest technologies and remaining up to speed with ongoing business and
technology developments is becoming more acute in the e-world of business.
Paradigm Shift in the Role of Senior Management
Many of the new age scholars and
practitioners are de-emphasizing the adherence to the "way things have always been done" so that such
prevailing practices may be continuously assessed from multiple perspectives.
As noted by Chris Argyris, the explicit bias of command and control systems for seeking compliance makes such
systems inadequate for motivating divergence-oriented interpretations that are
necessary for ill-structured and complex environments. Knowledge management
systems designed to ensure compliance might ensure obedience to given rules,
however they do not facilitate detection and correction of errors. Hence, it
has been suggested that the role of the senior management needs to change from command and control to sense and respond. Furthermore, if
knowledge, unlike information, is about beliefs
and commitment, as noted by Nonaka
and Takeuchi, the new emphasis should be on building commitment to organizational vision rather than compliance to rules and pre-specified
best practices.
Senior managers need to view the
organization as a human community capable of providing diverse meanings to
information outputs generated by the technological systems. The also need to
make the organizational information base accessible to organization members. This
is important given the increasingly fast-paced and dynamic business environment
that creates disconnects between the process of decision-making at the top and
implementation of such decisions at the grassroots. Emphasis on multiple and
diverse interpretations of information also helps in development of a large
repertoire of responses needed for deciphering the complexity inherent in
dynamic changes of the business environment.
Paradigm Shift in Organizational Knowledge
Processes
Institutionalization of 'best
practices' by embedding them in IT might facilitate efficient handling of
routine and predictable situations. However, greater proactive involvement of
human imagination and creativity is needed to facilitate greater internal
diversity to match the variety and complexity of the ‘wicked environment’. Often, effective knowledge management in
such environment may need imaginative suggestions more than it does concrete,
documented answers. While the earlier emphasis of information systems was in
defining the optimal programmed logic and then executing that logic to squeeze
the highest efficiencies. However, increasing dynamics of the business
environment mandate greater emphasis on ensuring doing the right thing than on doing
the thing right. With ongoing reassessment of key assumptions, the emphasis
is more on ongoing renewal of existing knowledge, creation of new knowledge and
its application in business practices. This contrasts with the ‘old world’
model of archiving the knowledge in organizational databases devoid of human
re-interpretation of its context and content.
The traditional information-processing model for the
‘old world of business’ assumes a problem as given and the solution as based
upon the pre-specified understanding of the business environment. In contrast,
the proposed model constructs the definition of the problem from the knowledge
available at a certain point in time and context. While individual autonomy in
the proposed model facilitates the divergence of individual personal perspectives,
the organizational vision facilitates the various views to converge in a given
direction. This process avoids premature closure or convergence to surface
multiple possibilities, opportunities and threats that could lie within the fog
of unknowingness enveloping the company’s future.
The two
interpretations of knowledge management may be highlighted by contrast between
perspectives of two US companies published in trade press. A US-based global
communications company had indicated its preference for the
information-processing model of knowledge management: What's important is to find useful knowledge, bottle it, and pass it
around. In contrast, the knowledge
management model proposed in this article is illustrated in the methodology of
a US-based global pharmaceutical firm: There's
a great big river of data out there.
Rather than building dams to try and bottle it all up into discrete
little entities, we just give people canoes and compasses.
Paradigm Shift in Economics of
Organizational Assets
The astronomical market caps of
several Net-based companies has led to reassessment of traditional valuation
models of business organizations. Peter Drucker, among others, has argued that
in the emerging economy, knowledge is the primary resource for individuals and
for the economy overall; land, labor, and capital - the economist’s traditional
factors of production - do not disappear, but they become secondary. In the
recent history of the Net, companies born in virtual forms on the Net, such as
etoys and amazon.com, have gained valuation of multiple times compared with
their brick-and-mortar counterparts despite limited investments in traditional
factors of production.
Similar
observations are unraveling traditional accounting procedures that cannot
account for new factors of production including knowledge capital, intellectual
capital and intangible assets. Those interested in these issues may like to
read Tom Stewart’s best-seller Intellectual
Capital. Success of Net companies and information-centric companies such as
Microsoft are attributed by some to ‘increasing returns.’ The traditional
factors of production are limited by a threshold of scale and scope as every
marginal increase in land, labor or capital results in diminishing returns on
the additional investment. In contrast, information assets and knowledge
capital seem to be governed by a different law of economic returns: investment
in every additional unit of information or knowledge created and utilized
results in a higher return. This is often also attributed to externalities of the network, as the
strength and utility of the network increases with increasing membership in the
information or knowledge network.
Paradigm Shift in Organization Design
The
information-processing model of knowledge management is constrained by its
overemphasis on consistency that is often institutionalized in the form of
'best practices.' The proposed model of
knowledge management is expected to break this cycle of reinforcement of
institutionalized knowledge. While the traditional business logic was based on
a high level of structure and control, the dynamics of the new business
environment demands a different model of organization design. Often
characterized as ‘living on the edge of chaos’, this model is characterized
relative lack of structure and lack of external controls as described by Kevin
Kelly in Out of Control. This model
assumes the existence of only a few rules, some specific information and a lot
of freedom. Within the proposed model, the designers of organizational
knowledge management systems can, at best, facilitate the organization's
'self-designing'. In this organization design, not only would the
organization's members define problems for themselves and generate their own
solutions, the members would also evaluate and revise their solution-generating
processes. By explicitly encouraging
experimentation and rethinking of premises, it promotes reflection-in-action
and creation of new knowledge.
It
is being increasingly realized that differences in perspectives may have a very
positive role in innovation that feeds new product and service definitions and
business models. Characterized by some management thinkers as ‘creative
abrasion’, this view encourages promotion of individual autonomy in experimentation
and learning. Going beyond the NIH (‘not invented here’) and the ‘NIH yet I did
it’ syndromes, it encourages questioning of all given assumptions, regardless
of their legitimization, for their ongoing and continual reassessment. Instead
of emphasizing 'best practices' archived in databases, this model encourages
continuous pursuit of better practices
that are aligned with dynamically changing business environment.
Conclusion
Over the last few years, the
corporate world has seen the emergence of interest in knowledge management and
adoption of the term by information technology vendors and industry solution
providers. However, despite the popularity of the buzzword, most such
implementations have been based on an outdated business model and related information-processing
view. It may be even argued that in several cases, it is difficult to justify
why specific information technology solutions fall in the realm of knowledge
management rather than within the scope of good old information management or
data management. This ambiguity about what is knowledge management and how it
contributes to business performance has led some consultants to recently remark
that knowledge management is a fad.
As argued in this article, the
news of the death of knowledge management is highly exaggerated. There is need
for developing better and more accurate understanding of knowledge management
as enabler of information strategy for the e-world of business. Departing from
the information-processing perspective of knowledge management that was
relevant to the industrial world of business of the past era, a new perspective
of knowledge management is presented. The presented conceptualization of
knowledge management is based on the need for synergy between the capabilities
of advanced information technologies and human creativity and innovation to
realize agility demanded by emerging business environment. A clear explanation
of the ‘strategic’ notion of knowledge
and knowledge management is offered
to distinguish the proposed model from the outdated perspective.
A number of examples from the
world of Net businesses and more traditional companies were presented to
illustrate the key arguments of the article. The article underscored the
transition from the old world of business to the new world of e-business in
terms of fundamental transitions or paradigm shifts in key assumptions about
organizations. The article explained how information executives should rethink
fundamental assumptions about business strategy, design and use of information
technology, the role of senior management, organizational knowledge processes,
economics of organizational assets, and organization design for business model
innovation. Better and accurate understanding of the strategic relevance of knowledge
and knowledge management is expected
to contribute to more effective e-business strategies that result in sustained
business performance.
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Dr. Yogesh Malhotra is the founder and chief knowledge architect of @Brint.com: The BizTech Network, WWW Virtual Library on Knowledge Management and
Knowledge Management Think Tank. He
is the lead author of two forthcoming books Knowledge
Management and Virtual Organizations and Knowledge Management for Business Model Innovation. He may be
contacted at yogesh..
