Early KM activities mostly emphasised explicit knowledge capture through IT systems, while its teenage years focused on channels for tacit knowledge sharing. But now, KM is maturing into a more strategic activity for organisations, says management knowledge professor Jane McKenzie.

Senior executives are looking at KM in a new light. Research suggests many see it as a critical source of productivity gains over the next 15 years, while KM practitioners are starting to invest time and attention in fostering practices that stimulate faster, more profitable and more distinctive innovation.

The incessant demand for novelty to satisfy increasingly sophisticated customer expectations requires efficient, yet creative ways to combine the knowledge of many different specialists. It’s a critical capability for business in turbulent economic conditions.

Howdy partner

Most organisations recognise they can’t possibly develop and hold all the knowledge they need in house. It can be too expensive, too slow or too risky on the frontiers of knowledge creation. Instead, they are increasingly working with specialist partners around the world. This gives them the flexibility to respond to changing market dynamics and spread risk if the new knowledge produces goods and services that add less value than expected.

But partnering comes at a price. It’s hard enough to get knowledge flowing amongst specialists that understand each other fairly well and can talk face-to-face. Several more layers of complexity are added in the problem-solving process when trying to apply the knowledge of different specialists scattered around the world, across different time zones, all making sense of information filtered through national cultural values and different organisational priorities.

Cross-cultural understanding, virtual collaboration and boundary spanning capabilities are key development needs. Facilitation know-how is increasingly valued as a way to support people in these activities.

As relationships across globally distributed networks become more interwoven and more multicultural, social network analysis is becoming a more popular tool in large organisations. It helps them identify knowledge bottlenecks. When linked to age and an understanding of what knowledge is strategically important to the business, it is a way to identify critical succession planning issues and where mentoring might support the knowledge transfer process before key people retire. It also helps identify the natural boundary spanners so the business can develop their facilitation skills.

The customer is always right

Organisations are increasingly involving customers in their knowledge activities too, trying to find ways to bring them into the innovation equation. After all, they are the people who really know what is needed. For instance, Google releases products for customers to experiment with, Amazon uses customer reviews to improve the value of the products, and Lego facilitates knowledge sharing between customers to add value to existing kits and to find new product configurations.

So although traditionally quite internally focused, KM activities in many large businesses are now reaching out to support collaboration and knowledge sharing between distributed sources of expertise and new ideas outside of the immediate organisational context – partners, customers, contractors, suppliers. They are all potential sources of innovative new ideas but also sources of knowledge about your brand and what they value, as well as your products and what improvements could be made.

In a competitive environment, access to emerging knowledge in new domains is a key to future strategies. Some organisations are bringing in senior people from different industries with different mindsets to challenge deeply embedded knowledge and assumptions about what works in current markets. Overall, it’s a strategic challenge to see who can harness the bright sparks, both individuals and organisations, with the knowledge that makes a difference, wherever they are in the world.

However, here’s where even more challenges arise. Finding out where distinctive knowledge exists in the global talent pool is hard enough, but then you need to assess the risks and rewards of integrating it into your business model.

Knowledge on the move

Most HR departments are focusing attention on finding better ways to attract mobile knowledge professionals and keep them engaged. Such people often have sophisticated expectations about their standards of living and the stimulation of their work. Many also want more autonomy in their working arrangements too.

Location matters. Placing key offices in so called ‘knowledge cities’ is one solution; the cultural conditions are attractive, investment in local infrastructure makes information sharing easy and physical proximity to good universities and clusters of technical knowledge simplifies the relationship and communication management issues.

Alternatively, some firms get involved in online knowledge market places. Here, they sell off knowledge they may have developed but cannot use to create value in their own business model. If they pose problems, experts are paid to offer solutions. The pharmaceutical industry has some interesting success stories in this area, such as Innocentive and yet2.com.

Keeping the peace and the pace

Amidst all this complexity, organisations have to handle increasingly vociferous, peripheral stakeholders who can mobilise opinion globally to fight decisions they think are contrary to their interests.

Identifying strategic influences is fraught with uncertainty and unpredictability. Often, yesterdays experience and knowledge of the right way to approach a problem may not be adequate for tomorrow’s world. Making judgements meaningful to a broad constituency of people requires leaders who are confident in handling ambiguity and contradictory priorities. Personal coaching is one growing solution to this problem.

The opportunities for knowledge management to make a difference in terms of the strategic performance of an organisation are huge – for example, the coordination of a more dynamic knowledge network to deliver rapid innovation, driving more informed senior decision-making based on better access to emerging knowledge, improving knowledge sharing in relationships that span organisational and national cultural contexts, and finding different ways to engage knowledge professionals in stimulating projects.

A challenge lies in deciding where to invest limited time and resources to make the most difference. The key is in identifying which connections between people, groups and other organisation are conduits for the most critical knowledge, and taking action to improve both the social and technological connection channels between the key stakeholders in these areas.

Jane McKenzie is professor of management knowledge, learning director of school and director of funded research projects at Henley Management College.