Proceedings of I-KNOW ’04 Graz, Austria, June 30 - July 2, 2004
Knowledge Management and Collaborations: Knowledge Strategy and Processes in the Knowledge Networks Daniela Canzano (University of Rome “Tor Vergata”, Italy Faculty of Engineering, Department of Industrial Engineering
[email protected])
Michele Grimaldi (University of Rome “Tor Vergata”, Italy Faculty of Engineering, Department of Industrial Engineering
[email protected])
Abstract: This paper focuses on knowledge management in organizations going beyond traditional boundaries, through collaborations based on intangible assets. The analysis has been focused on the implications generated from the blend between the network organizational structure and knowledge management. A theoretical framework is provided in order to evaluate the impact of knowledge networks on knowledge management systems, identifying the most appropriate knowledge management strategies and processes, on the basis of network characteristics. Key Words: Knowledge Management, Knowledge Networks, Knowledge Strategy, Knowledge Processes Category: H.1
1 Introduction In the current economic context, characterized by more and more global competition and complexity, companies recognize the necessity of adapting to market changes, requirements and needs. Firms should focus on exclusive resources in terms of imitation and accessibility, such as knowledge and capabilities. These resources need to be renewed and improved continuously. This exigency has generated some changes in the organizational structure of companies: it becomes necessary to design and plan new directional structures in order to share and combine intangible resources. Knowledge networks are knowledge-based relationships, which enable companies to take advantage of potential cognitive synergies. In this paper, after a brief description of the research methodology and an introduction to the concept of network organizations, we describe the existing classifications of knowledge network, analysing the implications generated from the blend between the network organizational structure and knowledge management. Thereafter, we present a framework to evaluate the impact of each typology of network on knowledge strategies and processes, providing the most appropriate initiatives in order to take advantage of network features. Finally, this is complemented in our conclusions.
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2 Research Objectives and Methodology The research question concerns Knowledge Management (KM) strategies and processes in Knowledge Networks and the impact of this particular organizational structure on a Knowledge Management System (KMS). The objective of this research is to provide a qualitative framework to aid companies to understand the most appropriate KM strategies and processes in order to take advantage of the structure of the knowledge network in which they are involved. The original intent of this paper is to explore the influence of a KMS on knowledge networks, focusing contemporaneously on the formulation and the implementation of the knowledge strategy. Therefore, our initial research methodology has regarded the exploration of literature about networks and knowledge networks: the existing taxonomies have been analyzed and a classification of knowledge networks has been provided. The continued research goal has been related to the identification and the use of the KM strategy and processes in knowledge networks. For each typology of network, the most appropriate KM strategies and processes have been suggested.
3 Knowledge Management and Collaborations Knowledge has assumed the role of strategic resource for companies searching for a sustainable competitive advantage [Davenport and Prusak, 1998; Nonaka and Takeuchi, 1995; Tiwana, 2000; Zack, 1999]. First of all, it is important to consider that available knowledge, even if exclusive and difficult to imitate, does not guarantee a large-scale competition: the internal development of the necessary capabilities has become more difficult for any single organization; secondly, it is no longer necessary to have the exclusive ownership of an asset in order to profit from it. Moreover, the performance of a company is not exclusively depending on its resources, because it relies on those coming from the external environment. Finally, the reduction of geographical, industrial and organizational boundaries is required in order to operate and compete in local and global markets. As a consequence, organizations should develop their capacity to form and manage collaborations in order to create and apply knowledge [Ritter and Gemunden, 2003; Tonchia et al., 2003; Hung, 2002; Wilkinson and Young, 2002]. Knowledge networks are organizational systems with a modular structure, which enable companies to transfer and share available intangible assets and, in particular, their own knowledge. Through this structure, every company is able to exploit the maximum knowledge advantage and to reach the maximum economic value from knowledge application. Knowledge networks, indeed, enable companies to apply in an innovative way the already existing knowledge and to explore new links among different typologies of knowledge [Buchel and Raub, 2002]. Knowledge network should consist in an integrated collaboration based both on tacit and explicit knowledge. A knowledge network based only on explicit knowledge limits the knowledge generation process: it impedes the proper advantage from the collaboration, because knowledge tends to be tacit in the “formative” phases of knowledge creation. On the other side, a knowledge network based only on tacit knowledge does not encourage the knowledge sharing and application processes.
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Through the involvement in networks, companies receive several advantages [Hakansson and Ford, 2002]. The generated benefits in terms of scale, scope and diversification economies represent only some of the advantages that characterize network structures. The integration of networking into KM generates other great benefits. First of all, knowledge networks allow the firms to improve the access, the transfer and the integration of knowledge. Secondly, they are more able in generating and transferring knowledge than a single firm. Finally, knowledge networks enable companies to increase competencies, to use co-developed technologies and to share common tacit knowledge [Belussi and Arcangeli, 1998; Lorenzoni and Lipparini, 1999]. In order to obtain the above mentioned benefits, a company involved in the knowledge network should adopt an appropriate KMS, including the knowledge strategy, the knowledge processes and the KM tools. In particular, the KMS should be coherent with the knowledge resources and the business targets of each involved company, in view of the existing interrelationships among the companies of the network. Therefore, the KMS moves from a “single company” point of view toward a network point of view. It is possible to assert that KM needs to be adequate and adjusted to this particular organizational context. The knowledge network influences the formulation of the knowledge strategy in terms of knowledge resources and knowledge gaps/surpluses, i.e. the negative/positive difference between the knowledge possessed and that necessary to achieve business goals. Indeed, in the formulation of the knowledge strategy, it is important to consider not only the existing knowledge gaps or surpluses among companies within the network, but also those between the entire network and the external environment [see Section 4.1]. Once the knowledge strategy has been clarified, the firm must implement it, defining and performing the knowledge processes. Also the KM processes are influenced by the knowledge network: they assume different applicability depending on characteristics and typologies of the relationships among companies. 3.1 Knowledge Networks Classifications Knowledge networks come out from a business de-integration process which requires a joined effort in building the appropriate infrastructure for knowledge diffusion and for the coordination of business activities [Davidow and Malone, 1992]. Knowledge networks are organized with the participation of many companies and can be configured in several ways and forms, because of the typology and the size of participating companies, their goals, their knowledge assets, the business context, and also the strategic position in the market. Analyzing the existing literature, we have identified three main approaches of knowledge networks classification. A first approach is based on the typology of relationships among companies of the network. In particular, two categories are identified: horizontal and vertical relationships. The former regard peer-to-peer relations and focus on resource pooling processes, in which information and knowledge are exchanged. In the latter, instead, goods and services are exchanged and the processes are based on resource transferring. Analyzing this approach, it is possible to assert that companies move towards networks in order to acquire both tangible and intangible resources, which are not available internally neither achievable autonomously. A second approach [Magnusson, Nilsson, 2003] regards a distinction of knowledge integration and interaction among the partners of the network. In this approach, three types of
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network are identified: the Supply-Chain Network, the Business Network and the Research Network. The Supply-Chain Network presents a low degree of knowledge integration and characterizes the evolvement of supply chain partners towards a network. In this network, KM activities are finalized to production targets. The Business Network is a constellation of firms built up by a “central actor” in order to satisfy its business requirements, monitoring every KM activity. Ultimately, in Research Network, the primary target of collaboration is the creation of new knowledge: the research activity is carried out by every partner of the network, without a leading company. Finally, a third approach [Buchel and Raub, 2002] is based on two dimensions: the amount of managerial support and the benefit level. Four types of network are identified: Hobby Network, Professional Learning Network, Best Practices Networks and Business Opportunity Network. Hobby Network focuses on individual interests and usually does not receive management support. In Professional Learning Network, knowledge transfer is supported by the management, but it is spontaneous, because the value of knowledge to be transferred is determined by the potential users who declare an interest in the transfer. In Best Practice Network, every network member is involved in the knowledge transfer and can learn from all the others, thanks to management coordination role. Finally, Business Opportunity Network is a business-driven network, in which the focus resides in innovative and attractive growth perspectives.
4 A Framework for Knowledge Networks 4. 1 Knowledge Strategy and Processes Before describing the influence of knowledge networks on knowledge strategy and processes, it is important to analyze the necessary formulation and implementation steps in order to take the maximum advantage of a KMS. In the first step of a KM program, companies should formulate a knowledge strategy, with the aim of aligning the available knowledge resources to their business goals [Nohria and Hansen, 1999; Tiwana, 2000; Zack, 1999]. In order to formulate a knowledge strategy, the companies need to perform a knowledge audit, which represents a useful technique able to provide a high-level outlook of all the knowledge within the organization and its characteristics. The knowledge audit allows the firm to understand and clarify which knowledge and competencies already exist in its boundaries and how they are distributed. The target of this analysis consists in finding out the distribution of the knowledge gaps, to be filled, and of the surpluses, to be exploited. In order to reduce or eliminate the knowledge gaps, firms need to choose an exploration strategy, i.e. to create knowledge or to “acquire” it externally [Zack, 1999]. According to [March 1991], exploration consists of such activities as search, experimentation, discovery and innovation. On the other side, in order to exploit the surpluses, firms should adopt an exploitation strategy that consists of such activities as refinement, choice, selection and implementation of knowledge [March, 1991] and enables to obtain benefits from the already existing knowledge. Knowledge strategies can also regard the knowledge diffusion mode. Indeed, according to [Tiwana 2000] and [Nohria and Hansen, 1999], codification is a particular knowledge strategy, based on such activities as codification, storage, indexing, retrieval and reuse of knowledge, applied above all in companies that perform repetitive actions. On the contrary,
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personalization is focused on activities that facilitate the relationships among knowledge workers and is frequently adopted in companies where individual experience and tacit knowledge represent primary resources. Once knowledge strategy has been defined, the second step regards its implementation, through KM processes. When an organization implements its knowledge strategy, it should involve four main processes [see Davenport and Prusak, 1998; Heisig, 2000; Nissen, 1999; Ruggles, 1997; Tyndale, 2002]: knowledge generation, knowledge storage, knowledge sharing and knowledge application. The knowledge generation process assumes a fundamental and very complex role in knowledge-based organizations. It consists in the creation or the identification of knowledge, and represents a pervasive and continuous process, which enables companies to develop interactions, making use of their human skills, competencies, capabilities and practices. The generated knowledge requires being preserved, organized and easy accessible. The importance of the knowledge storage process refers to the ability of maintaining, structuring and justifying knowledge, both tacit and explicit. The knowledge sharing process concerns the diffusion and the distribution of knowledge among organizational members. Knowledge sharing activities are based both on human interactive processes and on information technology infrastructures and needs to be supported by the organizational culture. Finally, the knowledge application process regards the utilization and the exploitation of previously generated, stored and distributed knowledge. Indeed, through this process companies can apply available knowledge in daily business activities in order to achieve business goals. 4.2 Influence of Knowledge Network on Knowledge Management Systems In [Section 3.1] we have considered some knowledge network taxonomies, based on different features, such as the collaboration modalities, the knowledge transfer policies and the targets and benefits to join in network. But, the most important feature affecting the knowledge strategy formulation and implementation is represented by the organizational structure of knowledge network, which is not adequately considered in the previous classifications. Therefore, in order to analyze the impact of a KMS on knowledge networks, it becomes necessary to provide a knowledge network classification, which is based on the organizational structure and takes account of the previous classifications. As a consequence, we adopt a classification, based on gravity centre, which distinguishes four typologies of network [Butera, 1990]: Hierarchical Network, Concentrated Gravity Centre Network, Multiple Gravity Centres Network and No Gravity Centre Network. But, in order to emphasise KM facets, we analyze these networks under a knowledge perspective, renaming them as follows [see Figure 1]: Hierarchical Knowledge Network, Concentrated Gravity Centre Knowledge Network, Multiple Gravity Centres Knowledge Network and No Gravity Centre Knowledge Network.
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KNOWLEDGE STRATEGY
KNOWLEDGE PROCESSES Knowledge Storage
Hierarchical Multiple Gravity Centres Concentrated Gravity Centre No Gravity Centre Business No Gravity Centre Research
Knowledge Generation
Knowledge Generation
Knowledge Application Knowledge Sharing
Exploitation/ Codification Exploration/ Personalization
Knowledge Sharing
Knowledge Application
Exploitation/ Personalization
Knowledge Sharing
Knowledge Application
Exploitation/ Personalization
Knowledge Sharing
Exploration/ Personalization
Figure 1: Knowledge Strategies and Processes for Knowledge Networks The Hierarchical Knowledge Network model regards productive organizations, which are hierarchically structured and based on high rates of outsourcing. In this kind of network, influence and negotiate relations with other small and medium sized enterprises are also considered. In the hierarchical network, companies are involved in the application of the guidelines provided by the leading company [Butera, 1990]. In this top-down configuration, knowledge sharing is limited, because knowledge is transferred in a unique direction. Moreover, this particular structure refers to longtime relationships, such as supply chain or co-production systems. As a consequence, the knowledge generation process is not facilitated. Instead of that, knowledge storage assumes a great importance because these companies need to manage efficiently the knowledge acquired by the leading company. Knowledge application represents the core knowledge process, because companies join in hierarchical networks in order to utilize and apply their knowledge, respecting the business aims of leading company. From the strategic point of view, the companies involved in a hierarchical network should follow an exploitation strategy to obtain the maximum advantages from the already existing knowledge, available in the entire network. The knowledge diffusion approach should be based on a codification strategy, because the organizational structure does not encourage informal communications and knowledge exchange among the different levels of the network. In the Multiple Gravity Centres Knowledge Network, the rate of decentralization is deeper and companies interchange themselves in the time in leading the network. As a consequence, the influence relations are unstable and more complex than in the previous model [Butera, 1990]. This network is typical of joint ventures and collaborations based on diversified expertise and practices. An intense knowledge sharing process characterizes this configuration: the involved companies are similar both in the size and in the decision level and the knowledge diffusion is equilateral. The knowledge generation process is favored by the structure of this network and
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assumes great relevance. The most appropriate knowledge strategy is the exploration strategy. Indeed, companies join in this kind of network in order to generate and share their knowledge and competences with the aim of achieving a shared purpose for the entire network. About the knowledge diffusion mode, the absence of routine activities and the opportunity of sharing knowledge through informal relationships lead companies to adopt a personalization strategy. The Concentrated Gravity Centre Knowledge Network is characterized by a unique company which detains key resources and establishes technical, commercial and economical conditions to be respected by other autonomous enterprises [Butera, 1990]. The leading company conducts influence and negotiate relations: this model can be assimilated to the virtual network enterprise. This network represents an intermediate typology between the hierarchical and the multiple gravity centers model, because the decision level is concentrated in a unique strategic company as in the former, while the involved companies have similar size as in the latter. In this configuration, knowledge application assumes great importance and knowledge generation is not relevant as in hierarchical network; on the contrary, knowledge storage is not relevant while knowledge sharing assumes great importance as in multiple centres gravity knowledge network. Also the knowledge strategy is combined between the two kinds of network: companies should adopt an exploitation strategy, as in hierarchical networks, with a knowledge diffusion approach based on personalization, as in multiple centres networks. Finally, the No Gravity Centre Knowledge Network is characterized by the absence of a central management and by reciprocal relationships among autonomous companies. This structure reflects the strategic aims of the involved companies and highly differs from the typical network organization [Butera, 1990]. This network can be distinguished by its purpose: business oriented and research oriented. This dichotomy derives from the high flexibility of this structure and from the different impact of KMS on the two cases. In the business oriented networks, such as the industrial districts, the most involved knowledge processes are the knowledge sharing and the knowledge application, because companies intend to apply already generated knowledge for business aims, above all through informal relationships among companies. Therefore, in this case, the knowledge strategy should focus on exploitation activities and on a personalization knowledge diffusion approach. Instead, in the research oriented networks, knowledge sharing process maintains its importance, but the key process is represented by knowledge generation and, in particular, by knowledge creation: the purpose of these networks regards innovation and refers to not yet available knowledge. For this reason, companies should adopt an exploration strategy and focus on a personalization knowledge diffusion approach.
5 Conclusions In this paper, we have focused on the influence of knowledge networks on KMS. Companies join in network and establish particular relationships depending on their specific business and cognitive aims. We have suggested a framework that identifies the KM initiatives to adopt in each typology of knowledge networks (Hierarchical, Concentrated Gravity Centre, Multiple Gravity Centres and No Gravity Centre), which have been classified on the basis of their organizational structure and their
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characteristics. In particular, we have identified the most involved knowledge processes, selected among knowledge generation, knowledge storage, knowledge sharing and knowledge application, and the most appropriate knowledge strategy, considering the exploitation/exploration dimension and the knowledge diffusion approach (codification/personalization) for each kind of knowledge network.
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