Knowledge Management in the New Business Environment
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- Knowledge Management in the New Business Environment (623 KB PDF)
- Volume 2: Supplementary Case Studies (394 KB PDF)
Managing knowledge is a key tool of trade for every business no matter how small or large. But how do organisations use knowledge to gain a competitive advantage, and how canknowledge be managed anyway? Through case studies, this report identified a number of ways that successful organisations are managing knowledge, not merely through the use of IT systems, but through building stronger relationships and knowledge flows among key staff and between ket staff and suppliers, customers and other clients.
Effective knowledge management is predicated on a workplace culture that fosters knowledge sharing and problem solving, a high degree of trust and mutual support and a commitment to individual and organisational learning.
Overview & Comments
Background
This project was commissioned and funded by the Australian Business Foundation and was undertaken by Dr Richard Hall of the Australian Centre for Industrial Relations Research & Training, University of Sydney.
The project was inspired by the Australian Business Foundation's call for research proposals investigating 'the new skills and capabilities essential for business leaders and managers in light of the fundamental changes underway in the broader business environment'.
In response, this project places knowledge and knowledge management at the forefront of the challenges being faced by Australian business and its leaders. It was reasoned that the rise of knowledge management stands at the intersection of many of the most profound changes currently occurring in the global business environment. It was posited that the ability of Australian firms and their managers to adapt to the new imperatives of managing knowledge more effectively will be a decisive determinant of business success in the future.
What We Learnt
Enterprises that manage organisational and individual knowledge well will deal
best with the challenges of the new business environment.
This is the key message from the Australian Business Foundation's latest research undertaken by Dr Richard Hall of the University of Sydney's Australian Centre for Industrial Relations Research & Training (acirrt), entitled Knowledge Management in the New Business Environment.
Knowledge and the effective management of knowledge are seen as critical to an organisation's competitive advantage and ability to respond to the challenges posed by the speed of business imitations, changing organisational structures, advances in information and communications technology and mobile labour markets.
Many Australian enterprises have realised that there is little future in trying to compete in a globalised fast-paced world economy with high volume, low cost products and services. Their competitive edge must come from new value-added products and services that are more attractive to customers and that can command a premium price.
This means competing based on superior use of knowledge – of markets, customer preferences and needs, industry trends, product attributes and capabilities, to name a few.
Knowledge management is not just about IT systems, but about achieving business goals by building stronger relationships and knowledge flows among key staff and between key staff and suppliers, customers and clients.
All of the successful businesses studied here were characterised by the clarity of their strategic business objectives and their appreciation of how better use of individual and organisational knowledge can lead to better business outcomes. IT systems follow, not lead, good knowledge management.
The type of knowledge needed depends on the type of business. For example, if keeping and servicing customers is key, then information on what your customers think of you and on the quality control of your products and services is crucial; but if you are in a volatile, fast-changing business environment, it is vital that you have up to date information on market and industry trends and the latest product developments and customer preferences.
The key lesson is that businesses are interested not in storing or protecting knowledge, but in acquiring it, sharing it, and using it to boost their competitiveness.
The improved management of knowledge has a major part to play in the business competitiveness of both large and small enterprises in Australia.
While there is no single business case or rationale for knowledge management, it can contribute to the enhanced business competitiveness of both large and small enterprises in the following ways:
- providing a better understanding of customers, their needs, preferences and pressures, resulting in improved customer service;
- building stronger, longer term, more profitable partnership-style relationships with customers;
- helping companies to be known as leaders in their field, as innovators on top of emerging trends, issues and new developments affecting their industry;
- allowing organisations to drive out costs from business and production processes and to improve speed and quality; and
- assisting organisations to use the lessons learnt from previous jobs, projects and tasks as a means of improving their future performance.
Much of the knowledge needed for improved competitiveness already resides in and around the organisation – but it needs to be turned into distinctive organisational capabilities.
Translating individual knowledge held by key personnel into useful, long-lasting organisational knowledge is a key imperative, achieved in various ways, like:
- embedding routine processes and procedural knowledge into standard operating procedures;
- codifying implicit knowledge through 'lessons learnt' programs;
- drawing out 'deep' tacit knowledge through mentoring programs.
New knowledge was acquired in a variety of ways – incentives programs to encourage new ideas for better products or services, improvement to businesses processes, or securing new customers or markets; using intelligence from national and international industry and professional bodies; accessing R&D, technology or know-how from global parent companies; or learning from suppliers and customers.
Knowledge management is not a technical stand-alone activity, but embedded in organisational policies and practices and motivated by inspirational, open and proficient business leaders.
Knowledge management is most effective when it is supported by an appropriate 'eco-system' of complementary processes and practices, like: supportive HR policies that recognise and reward knowledge-sharing behaviour; the use of cross-divisional teams to encourage knowledge flows and communication outside traditional functional groups; and the use of expert circles and networks, learning communities and communities of practice for key employees to collaborate on a regular basis, to develop and share new insights jointly and to establish networks that can be relied on in the future.
Business leaders cannot simply direct their staff to share knowledge or use knowledge to benefit the business, they must motivate them to do so. This may be achieved by reciprocal arrangements where tangible benefits flow to those engaged in knowledge management activities. Or it may rely on business leaders who 'walk the talk' on knowledge management and inspire others to 'learn by doing', share their knowledge and generate new ideas. They do this by being committed, open and accessible and passionate about the better use of knowledge and proficient at establishing workable knowledge organisation, capture and dissemination programs.
Knowledge management – the new frontier for productivity?
The study speculates that if Australia has reached the limit of its productivity improvement through greater efficiencies and working assets harder, then better knowledge management may be the answer to the future competitiveness and performance of Australian business.
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