Knowledge as a Contingency Variable for Organizing Knowledge ...

Proceedings - LEAD 2009 Conference

KNOWLEDGE AS A CONTINGENCY VARIABLE FOR ORGANIZING KNOWLEDGE MANAGEMENT SOLUTIONS Amy Javernick-Will 1 and Raymond Levitt 2 ABSTRACT The knowledge-based-view (KBV) of the firm has received wide acceptance and support. This view recognizes that knowledge is an asset with as much importance as capital to an organization. With this recognition, many scholars and organizations have stressed the importance of sharing their knowledge globally. As a result, many organizations have attempted a variety of knowledge management programs.

However, important knowledge to an

organization (or subset of an organization) can vary drastically based on knowledge characteristics, including the half-life of the knowledge. companies organize and share their knowledge.

This can impact the ways that

As a result, the rate of obsolescence of

knowledge can be viewed as a contingency variable that influences effective organization design and strategy.

Using KBV, organization theory, and contingency theory, this paper begins to

analyze how knowledge characteristics of important knowledge for different types of firms and different types of communities within firms influences the ways they manage knowledge. It suggests that organizations that account for the characteristics of important knowledge when designing and implementing a knowledge management program can have a strategic advantage over competitors.

KEYWORDS: Knowledge Management; Contingency Theory; Organizations INTRODUCTION Organizations have begun to recognize knowledge as a resource that can be a competitive advantage if managed effectively.

In order to integrate and capitalize on the combined

knowledge of employees across the organization, many organizations have attempted to

1

Assistant Professor, Department of Civil, Environmental and Architectural Engineering, University of Colorado at

Boulder, Campus Box 428 UCB, Boulder, CO 80309 USA; [email protected] 2

Professor, Department of Civil and Environmental Engineering, Stanford University, Stanford, CA

Proceedings - LEAD 2009 Conference

implement knowledge management initiatives and programs. Unfortunately, although estimates vary, over 50% of knowledge management systems implemented in practice fail to achieve their original goals (Akhavan et al. 2005). Thus, many firms spend time and money implementing a strategy that is ineffective for their organization. There are many reasons why knowledge management systems fail. Reasons abound, including a lack of resources and time, the culture of the organization (McDermott and O'Dell 2001), lack of employee support for the program, and an overemphasis on technology (Damodaran and Olphert 2000). In many cases, it appears that an organization fails to take a holistic view of people, processes and technology (Tregaskes et al. 2004), or, in other words, connecting people, the organizations structure and the right way to transfer this knowledge. We acknowledge that there are many reasons why knowledge management programs succeed or fail; however, for this paper, we specifically argue that knowledge must be treated as a contingency variable for effective organization and community knowledge management design. The characteristics of knowledge that is important to an organization or subset of an organization should influence the choice of design and structure for managing this knowledge. We build upon past work regarding knowledge types (Nonaka 1994; Winter 1987) to include the half-life of knowledge, emphasize the contextual nature of knowledge, and relate this to knowledge management design and structure. We start by reviewing literature and our proposed research methodology. We conclude with a discussion of preliminary results and our proposed plan to enlarge the study with other firm types. POINTS OF DEPARTURE Our focus on knowledge as a contingency variable for organization and knowledge management design leads us to build upon literature related to knowledge management and organizational theory, including contingency theory. Knowledge Management Knowledge has always been fundamental to organizations; however, the knowledge-based-view of the firm brought new meaning to the value of knowledge to an organization by identifying knowledge as a resource with as much importance as capital (Conner and Prahalad 1996; Grant 1996; Spender 1996).

Viewing knowledge in this regard leads many firms, scholars and

consultants towards managing the knowledge like any other valuable resource.

As a result,

Proceedings - LEAD 2009 Conference

knowledge management systems have proliferated in recent years.

Even the construction

engineering industry, which tends to be slow to adopt change, has been embracing knowledge management programs in an attempt to combine and share their knowledge more effectively. A recent survey of firms in the UK found that approximately 40% of engineering design and construction organizations have a knowledge management strategy and another 41% plan to have one within a year (Carrillo et al. 2004). Although companies are anxious to manage and exploit their organizational knowledge more efficiently, many of the knowledge management systems implemented in practice fail to meet their initial goals (Akhavan et al. 2005). Many studies have identified a conflux of barriers for sharing knowledge effectively (Carrillo and Chinowsky 2006; Fong and Chu 2006), etc.. Some of these reasons include a lack of time and resources, a tendency to rely on technology, organizational and cultural issues, and individual personnel issues such as hoarding knowledge for power. Recent studies have also identified differences in the implementation and choice of knowledge management strategy depending on the type and size of the firm. For instance, Carrillo and Chinowsky (2006) found that the large design firms involved in their study had specific initiatives and funding for sharing knowledge whereas the construction companies tended to have less of a focus on knowledge management, combining it with business development initiatives. We found similar results during a recent study regarding the sharing of institutional knowledge amongst developers, contactors and engineers (Javernick-Will and Levitt).

In this study, all six of the engineering firms had varying degrees of knowledge

management initiatives. Three of these firms had a formal intranet system that combined people and technology. In comparison, only one of the five construction firms was starting to develop a formal knowledge management intranet system and none of the four developers had a formal system in place. There is no definitive answer regarding why some knowledge management systems fail for organizations; however, it is likely that a “one size fits all” solution will not work. The observation that different types of firms rely upon different types of knowledge sharing practices appears to be promising.

Because these firms have different types of important knowledge to

share, there is likely a strong correlation between knowledge type and choice of knowledge management strategy. Thus, instead of adopting a “one size fits all” strategy, additional research

Proceedings - LEAD 2009 Conference

is needed to examine the link between the variables of knowledge types that are important to an organization or community within an organization and its knowledge management strategy. We provide a brief overview of Contingency Theory before discussing knowledge dimensions and types. Contingency Theory Simply put, contingency theory argues that there is not one best way for all companies to organize. Rather than arguing that all organizations should be structured similarly, contingency theory argues that an organization must chose a structure that is contingent on a wide variety of factors, including environmental complexity (Lawrence and Lorsch 1967), organization strategy (Chandler 1962), and technology and techniques of production (Thompson 1967; Woodward 1965). Under this view, contingency theory indicates that a relationship exists between various contingent variables and an organizations structure. Thus, superior performance should result if an organization can appropriately link the correct structure to the contingent variables. The recent interest in knowledge as a competitive resource has many firms racing to implement knowledge management systems.

However, with so many firm’s knowledge

management systems failing to meet their goals, it seems likely that knowledge can be viewed as a contingent variable for organizing these systems. Recent work by Birkinshaw and colleagues studied R&D units and found a strong association between the dimension of knowledge and organization structure, indicating that organizations should take into account the characteristics of a firms knowledge base (Birkinshaw et al. 2002). Their work focused on two dimensions of knowledge: observability, or how easy it is to understand the knowledge or activity, and system embeddedness, the extent to which the knowledge is embedded in a particular context. We seek to add to this work by expanding attention to knowledge embeddedness and focusing on how additional knowledge dimensions, including obsolescence, influence the ways companies organize to share their knowledge. Knowledge Dimensions and Transfer Mechanisms Winter (1987) proposed four key dimensions of knowledge that affect the ease of transfer of the knowledge asset: complexity, tacitness, observability, and system dependence. Thus, if a type of knowledge is complex, tacit, hard to observe, and embedded in a system or location, it will be

Proceedings - LEAD 2009 Conference

hard to transfer. On the other hand, if the knowledge is simple, explicit, easily observable and not dependent on a location or system, it will be easier to transfer. Table 1: Winter's Knowledge Dimensions

Hard to Transfer

Easy to Transfer

Complex

Simple

Tacit

Explicit

Hard to Observe

Easily Observable

Embedded

Independent

Nonaka’s theory of knowledge conversion (1994) expanded from Winter’s classification to address the transfer of knowledge, specifically focusing on tacit and explicit knowledge. He theorized that knowledge is created and converted through a spiral-like process involving four steps: •

Socialization: tacit to tacit knowledge transfer through shared experiences such as mentoring and on-the-job training

•

Combination: explicit to explicit knowledge transfer through mechanisms such as meetings, information processing and technology

•

Externalization: the conversion and transfer of tacit knowledge to explicit knowledge through questioning and reconstruction of perspectives and decisions

•

Internalization: the conversion and transfer of explicit knowledge to tacit knowledge through learning and the awareness of knowledge

Some scholars have looked beyond knowledge characteristics to identify other influencing factors in an organization’s knowledge strategy, including focusing on not only the knowledge the organization possesses, but how it practices (Cook and Brown 1999)(Brown and Duguid).

However, for the purpose of this paper we focus primarily on knowledge

characteristics and relate this to knowledge transfer strategy. Half-life of Knowledge In addition to Winter’s (1987) dimensions, we propose that organizations must also consider the “half-life” of important knowledge to the organization. The definition for the half-life of

Proceedings - LEAD 2009 Conference

knowledge is the time span in which half of the knowledge becomes obsolete. The amount of knowledge in the world is expanding rapidly—some estimates indicate that the amount of knowledge in the world has doubled in the past 10 years and is doubling every 18 months (Gonzalez 2004). However, the rate at which knowledge becomes out of date varies enormously from industry to industry (Haindl 2002). For instance, certain scientific principles have been valid since they were conceived. However, other types of knowledge become obsolete quickly. In the IT sector, for instance, there is general acceptance of a half-life of approximately one-year (Haindl 2002).

In comparison, the principles of structural engineering remains relatively

unchanged with the exception of new technologies to make the work faster. Drawing from Winter’s knowledge dimensions and expanding this to include the concept of the half-life of knowledge, our research seeks to explore the question: How do characteristics of knowledge that is important to an organization influence their knowledge transfer strategies? RESEARCH METHODOLOGY The novelty of this topic and the need to gain informative insights regarding knowledge sharing practices necessitated a case based methodology for this study. The research topic originated from insights from our past case studies with 113 participants in fifteen international firms. We collected data from these case studies regarding the mechanisms companies used to share various types of knowledge, including technical, institutional and company processes. For this research, we selected two of the engineering companies who participated in the original research for this study. These companies were selected because they have well-known and established “interactive online systems” that have been in use for many years. These combine social and formal methods of transferring knowledge through an online platform that contain processes and procedures, but also connect people through forums, people searches and other means.

In addition, these companies have many sub-communities, or communities of

practice, which use this system. A "community of practice", described by Lave and Wenger (Lave and Wenger 1991) refers to formal and informal groups of practitioners where members learn from and acquire the sociocultural practices of the community. The communities in our study are based upon functional (i.e. structural, mechanical) or business (i.e. strategy) lines. Being able to compare communities within the same firm, which has the same knowledge sharing processes, attention to knowledge management, resource commitment, etc. helps us to

Proceedings - LEAD 2009 Conference

eliminate some of the external factors that could skew the data. Finally, and most importantly for our data collection, these two firms collect statistics regarding the use of the system and provided access to this data. Many knowledge transfer processes cannot be tracked to provide statistics. Because these interactive online platforms provide these statistics, we can compare the use of the system with the community type to compare knowledge characteristics with transfer mechanisms and community structure. Information was collected from the company’s knowledge management divisions regarding the number of participants in each of the communities and statistics regarding the various functions of the interactive online platforms each community uses to share their knowledge. In addition, the first author is currently asking selected community leaders questions regarding the ways knowledge sharing methods change based on the type of knowledge and community via email and telephone interviews. To expand the study, we plan to recruit additional companies from other sectors to compare the methods they use to share various types of knowledge. After the conference, we plan to contact two additional companies to collect additional data. One company manages federally funded research and development centers in four critical areas, including aviation systems development and homeland security, with eleven different community-based subsets, such as cybersecurity and health transformation. The other is a science and technology firm that focuses on five critical areas of expertise, including energy and national security, with twelve community-based areas, such as industrial products and medical devices. These firms were involved in a “Working Knowledge Group” with one of the Engineering Firms in this study and have a formal knowledge management strategy. PRELIMINARY RESULTS AND DISCUSSION We focus on two primary knowledge dimensions—contextual/tacitness and our proposed new dimension of the half-life of knowledge—and relate this to knowledge management strategy— principally whether the knowledge is shared through technical or social means. Contextual/Tacitness Nonaka’s work focused on combining and converting tacit and explicit knowledge. As a result, he found that the transfer of tacit knowledge occurs primarily through shared experiences and social mechanisms while explicit knowledge can be transferred through information technology and other processes. As part of our study on how multinational firms transfer institutional

Proceedings - LEAD 2009 Conference

(regulative, normative and cultural-cognitive) knowledge (Javernick-Will and Levitt 2009), we observed differences based on the knowledge type and how employees within the firm obtained knowledge from others for their projects. Studying institutional knowledge meant that most of the knowledge would be specific to the given location from which the knowledge was derived, but that it would vary based on the degree of tacitness and contextual nature of the knowledge. From our data and analysis, as the knowledge changed from regulative to normative to culturalcognitive, the knowledge generally became both more tacit and more embedded within a given context, requiring different means and richer media channels to transfer the details of the knowledge. This falls in line with media richness theory (Daft and Lengel 1986), which argues that richer, more personal forms of communication are more effective for communication and transfer than less rich media.

For instance, formal processes to transfer knowledge, such as

project databases, written reports and company processes and procedures were used more frequently for regulative knowledge, which tends to be more explicit and, in many cases, more easily understood and translatable.

As this knowledge became more tacit and difficult to

understand for normative and cultural-cognitive knowledge, the relative frequency of using formal processes declined. On the other hand, social mechanisms, such as personal discussions, meetings and reviews, which can often translate the contextual and tacit details of knowledge to the recipient, were used to transfer all types of institutional knowledge. Organizations that had interactive online knowledge management solutions facilitated social connections through forums and people searches. For instance, an employee could search for a topic and find answers to forum posts posted by a particular employee who they could then contact regarding their question. Alternatively, they could search for people with experience in a particular area. One of the people on the knowledge management team described this process: “Employees search for people approximately one out of four times… in approximately 80% of the cases, employees first search for content and then connect to the author. People will contact others directly when they have very specific project related questions”. In order to facilitate searches, this same company asks its employees to tag their forums or knowledge objects with a title, description and context. Tagging the contextual details allows explicit, context-specific knowledge to be transferred through formal, IT processes. In addition, it eases the process of searching for and applying the knowledge. With so many different businesses, they want to make sure that employees understand the application and context of the

Proceedings - LEAD 2009 Conference

knowledge posting, whether it is a particular area, project type, etc. to avoid using data for projects erroneously. Proposition 1: If knowledge that is important to an organization is tacit and context-specific, the organization should focus its knowledge management strategy on social processes to facilitate person-toperson connections to transfer this knowledge. Proposition 2: If knowledge that is important to an organization is explicit and context-specific, the organization can focus its knowledge management strategy on an IT solution provided that they require employees to “tag” the knowledge with appropriate details and allow social processes for employees to obtain additional contextual details. In order to add other dimensions for consideration of knowledge management strategy for organizations based upon knowledge type, we requested statistics from the two large, global engineering companies on the global use of their interactive programs based upon community type. We then requested the number of employees within each community in order to get statistics on the use of each of the features per community member. Table 2 presents data regarding the communities that use forum reads and forum submits the most and least for Company 1. Table 3 presents data regarding the communities that use forum threads most and least for Company 2. In addition, Company 2 has a feature that formalizes knowledge through an in-depth review process. Only two communities currently use this feature for more than one piece of knowledge: the Structural and Mechanical Community. Half-Life of Knowledge In addition to confirming the contextual dimension discussed above, after reviewing the statistics, it also appears that forums are read most frequently for communities that have a longer half-life of knowledge. For example, some of the communities with the least read forums include Contract Management, Strategy & Business Intelligence and Risk. These communities contain knowledge that can change quickly, require contextual specific details or sensitive information.

On the other hand, the communities with the most read forums—Process

Technology, Coker, and Civil/Structural/Architectural—contain knowledge that has a longer half-life and may contain knowledge that is less contextual across projects and locations. In addition, for Company 2, the two communities that are using the formalized knowledge feature

Proceedings - LEAD 2009 Conference

(this feature requires a formalized review process including outside company citations) are from disciplines (Structural and Mechanical) whose knowledge is not changing as rapidly as, for instance, their sustainability community.

Communities that have knowledge that is quickly

changing and becoming outdated are less likely to want to invest the time and resources required to go through the process of formalizing their knowledge. Proposition 3: If knowledge that is important to an organization has a long half-life, that is, the knowledge remains valid for a lengthy period of time, the organization should invest in technology that can collect and formalize the knowledge through a technical platform to allow the knowledge to be easily transferred amongst all of its employees. Table 2: Company 1 Interactive Online Platform Data for the last 90 days (printed 5/14/2009) Communities with the Greatest Number/Community Communities with the Least Number/Community Member Member Forum Reads Process Technology 9.15 Contract Management 0.00 Coker 6.73 Strategy & Business Intelligence 0.06 Civil/Struct/Arch 6.45 Knowledge Manager Training 0.09 Piping 5.86 General Corporate 0.10 Control Systems 4.60 Risk 0.11 Polysilicon 4.40 Upstream Oil & Gas 0.12 Mechanical 4.33 Infrastructure 0.12 Electrical 3.03 Life Sciences 0.14 Forum Submits Polysilicon 0.20 Community Relations 0.00 Process Technology 0.18 Contract Management 0.00 Piping 0.16 Infrastructure 0.00 CSA 0.12 Life Sciences 0.00 Ops & Maintenance 0.12 Offshore structures 0.00 Mechanical 0.11 Risk Strategy & Business Intelligence 0.00 Travel 0.00 Upstream Oil & Gas 0.00 Table 3: Company 2 Interactive Online Platform Data over lifetime (2009 employee count) Communities with the Greatest Number/Community Communities with the Least Number/Community Member Member Forum Threads Mechanical Services 6.46 People & Org Change 0.00 Project Controls 4.63 Computational Optimization 0.07 Acoustics 4.05 Knowledge 0.09 Electrical 3.70 Risk Forum 0.18 Structural Skills Forum 3.51 Logistics 0.37 Fire Engineering 3.44 Applied Geology 0.43 Number of Formalized Knowledge Postings Structural 370 Mechanical 18

Proceedings - LEAD 2009 Conference

We acknowledge that there may be outside factors that influence the use of the community features within the online platform. For instance, it may be easier to codify the knowledge within the “hard sciences”—structural, mechanical, etc.—easier than the “soft sciences”, thereby rendering it easier to share knowledge through an online platform.

In

addition, the communities may have different socio-cultural practices that emerge within the community. However, we believe that the half-life of knowledge is an important aspect that firms should consider. The investment required to transfer knowledge is not negligible and thus, investing the resources to convert knowledge into an explicit form and have the technologies ready and available to transfer it will receive greater payback for knowledge that will be valid long enough to gain value from the investment. As such, we request feedback on alternative means to measure the half-life of knowledge to further the work. We plan to supplement any statistics collected with additional data collected through ethnographic interviews. Based upon our work to date, along with work by Winter and Nonaka, we believe that companies need to determine the characteristics of knowledge that is important to their organization or community within their organization before determining a knowledge management strategy. If, after observation, the important knowledge to the organization is explicit, non-contextual, easily understandable and observable, and has a long half-life, the company should consider a technical solution. On the other hand, if the important knowledge is tacit, context-specific, difficult to understand and observe and/or has a short half-life, the company may want to only invest in a social solution. Table 4: Knowledge Management Solutions based upon Knowledge Characteristics Technical Solution

Social Solution

Explicit

Tacit

Non-contextual or tagged for Context

Context-Specific

Long Half-Life

Short Half-Life

DISCUSSION/CONCLUSION This paper reports on the early stage of research we are undertaking to investigate knowledge characteristics as a contingency variable for how companies organize to share their knowledge. We postulate that organizations that determine the important types of knowledge for their organization and then base a knowledge management program on the characteristics of this knowledge can have a strategic advantage over competitors. In addition to expanding focus and

Proceedings - LEAD 2009 Conference

attention on the context specific nature of knowledge, we propose that companies must also consider the half-life of knowledge when determining a knowledge management strategy and structure. In addition to considering the knowledge dimensions of tacitness, observability, context and half-life, we also noted other items that organizations must also consider, including how they distribute work and employee’s group identification when considering a knowledge management strategy. For instance, a knowledge manager from Company 1 indicated that they believe their knowledge management efforts are more successful than the efforts of other companies because they distribute work globally. Because multiple offices work together on the same projects, employees are accustomed to collaborating with other offices through technical platforms. In addition, because they work on the same projects, they have less competition between the offices. He commented: “Our employees see more value in enterprise wide collaboration than other companies who work independently. Distributing work across offices drives the use of [our KM solution], making it valuable. In comparison with other firms who have tried online solutions that are regionally siloed and don’t have to share knowledge, we have less competition between offices and our employees are forced to communicate across offices. It has become integrated in the way they execute work”. We also observed differences based upon the use of the system for different community titles based upon group identification. For instance, if people feel connected to a particular group, they will be more apt to take part in that group’s activities and share their knowledge. One knowledge manager commented: “I believe that communities are most successful when people feel a natural affinity to the community and work collaboratively in that environment… for instance, the polysilicon community is a business sector that is growing rapidly. However, the community does not receive a lot of activity. Employees will ask questions through the structural community, not polysilicon, because they identify themselves with the structural community”. We are currently seeking to expand the study to other types of firms in order to better compare dimensions of knowledge with a knowledge management solution. In addition, we are actively soliciting comments and feedback concerning how to measure the half-life of knowledge for comparison.

Proceedings - LEAD 2009 Conference

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