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Implementation of Knowledge Management Systems

Underlying the concept of knowledge management systems is the simple aim of making the best use of the collective human knowledge and talent of an organization. Systems try to encourage individuals to be creative and investigative, to share their knowledge and ideas, and to apply ideas from other people, as well as their own. It is a concept that has come of age, with 62 per cent of leading organizations in Europe and the US reporting they have, or are setting up, a knowledge management system, according to a KPMG survey this year. In theory, knowledge management initiatives can be very diverse, from information technology projects, to organizational structures to human resource policies. In practice, KPMG found systems are five times more likely to be led by an information technology department than by human resources or operations. In fact, most knowledge management initiatives are built around an intranet, database, or group software that allows people to communicate, share ideas and engage in discussions.

For example, Andersen Consulting's knowledge management system is based on a Lotus Notes database that allows thousands of consultants around the world to exchange experiences, methods and tools. The system provides electronic mail and adds the ability to navigate easily through specialized databases and to post contributions to the database. Consultants are encouraged to add developments from their own projects to the knowledge repositories, and are invited to participate in knowledge-building dialogues across the company. Participation is voluntary and there are no explicit sanctions for not contributing. This type of knowledge-sharing system, which has been widely adopted by consulting companies and is moving into other industries, is called a "knowledge repository" or "discretionary database".

The strong focus on information technology in most knowledge management initiatives has perhaps overshadowed the importance of human issues. Technology may provide a useful tool, but knowledge has more to do with brains than with bits. When asked companies about the most important problems they were facing in implementing knowledge management initiatives, only 7 %  mentioned technical problems. The rest were more worried about: people not using the system because of communication problems (20 %); difficulties integrating the system with work (19 %); lack of time to use the system (18 %); lack of training (15 %); and lack of benefits (13 %).

Knowledge exchanges are complex social processes bringing significant costs and benefits to all parties. To ensure that investment in knowledge management yields the desired effects, we need to understand the social and psychological dynamics of knowledge transactions and try to build an organizational environment that takes them into consideration.

Knowledge-Sharing Dilemmas

To illustrate this, consider the choice faced by a sales executive in a telecommunications equipment manufacturer who, by working closely with a cellular phone client, has developed a valuable understanding of the client's needs. The executive's company has an intranet knowledge repository to help sales, production and research personnel share knowledge and discuss ideas about products. With relatively little effort, the executive could post a report on the knowledge repository. The posting could perhaps initiate a discussion with research staff about new trends, and it could give sales people from other divisions hints about how to introduce their products to the client.

While these outcomes carry a clear value for the company, it may not be such a good idea from a personal standpoint. Writing and posting the report would take time that might be invested in more profitable tasks - sharing knowledge does not yield commission. Even if we disregard the time issue, sharing knowledge may dilute an individual's competitive edge within the organization. If bonus and promotion decisions are primarily based on sales, the last thing a sales executive might want to do is to help others. The situation can be even worse if the organization is, ay, making people redundant: would you share knowledge that might save your job? In organizations where knowledge is a source of personal power, it may be naive to expect people to share ideas just by installing technology to make it possible.

The choice faced by an individual in such a situation is known to sociologists as a social dilemma. In such a dilemma, individual rationality (behavior guided exclusively by individual pay-offs) leads to collective irrationality. Consider, for example, a group of herders sharing a pasture. For each herder, there is a benefit in having as many cows as possible on grazing land, but if all herders followed suit, the land would be damaged to the point where no one would benefit. This situation, known as the "tragedy of the commons", constitutes a dilemma because individual attempts to maximize pay-off result in collective damage. The social dilemma that best represents the dynamics of a knowledge repository is probably the so-called public good dilemma. A public good is a shared resource from which every member of a group may benefit irrespective of whether they personally contribute to its provision. Since access to the public good is not restricted to contributors, there is a temptation for individuals to "free-ride", that is, to enjoy the resource without contributing to its provision.

After all, not co-operating yields the best individual result regardless of what everyone else does. If everyone else co-operates and I do not, I enjoy the good for free. If no one else or very few others co-operate, I will be saving a wasted contribution. Most people in a public good dilemma would prefer to enjoy the good and pay their individual contribution, rather than not enjoy the good and save the cost. The problem is that there is no guarantee of contribution; if there were, most people would gladly contribute. This is where the dilemma resides: if everyone acts "rationally" from an individual standpoint, no one would co-operate, and everyone would suffer the consequences. Furthermore, once an uncooperative equilibrium is reached, there is no individual incentive to break it, so the group gets trapped behind a "social fence" that prevents the group benefiting from co-operation.

A knowledge repository creates a public good dilemma among employees for the same reasons. If everyone contributes to the repository with ideas, everyone has the chance to improve performance by learning from others. However, the knowledge repository is accessible irrespective of any contribution, which creates an individual incentive not to contribute. As in most public good situations, it only takes a few participants to free-ride for the entire group to get trapped in an uncooperative equilibrium, thus sending investments in knowledge management technology down the drain.

How To Skip Over The Social Fence

Existence of a social dilemma does not imply that all public goods will be under-supplied. There are many examples of successful public goods in society and plenty of examples of successful knowledge sharing in organizations. These examples have helped social  searchers understand the circumstances under which co-operation is more likely to take place. This research may help organizations devise interventions that will help them skip over the social fence and create co-operative environments where knowledge management systems are likely to succeed.

There are three conditions under which social co-operation is more likely to take place. The first concerns the cost of individual contributions. The less costly it is for people to contribute to the common good, the less likely they will be to withhold their contributions.

The second condition has to do with the perceived effect of contributing. The more clearly people can see the impact of their contributions, the more motivated they are to make the effort.

The third condition has to do with the size and composition of the group. Smaller groups, for example, tend to enact social pressure mechanisms that foster co-operation. Each of these three conditions suggests specific interventions, most of which have been proven to work with public good dilemmas.

Reducing The Cost Of Contributing

The most straightforward way to reduce the cost of sharing knowledge is to provide adequate resources to do so. These resources may include well-designed technology as well as time. However, the major cost incurred by a knowledge contributor is the dilution of personal competitive edge and the vulnerability created by revealing a personal insight. To compensate for this, it is important for organizations to revise their appraisal and incentive systems by incorporating an assessment of each person's contributions to the knowledge repositories.

IBM, for example, requires a minimum level of contributions before anyone is considered for promotion. Group incentives such as stock options may also help reduce the perceptions of cost by making everyone a beneficiary of everyone else's performance. These incentives reduce the value of hoarding knowledge, because revealing a personal insight can contribute to overall performance and, consequently, to collective rewards.

Increasing Efficiancy

Human behavior is determined to a great extent by outcome expectations. People will generally choose to act if their action is likely to have a positive outcome. So someone will be more inclined to make a personal contribution if it will clearly add value to the shared resource. Knowledge management technology can play an important role in increasing contributors' perceptions of adding value by setting up feedback mechanisms about their contributions.

For instance, a knowledge exchange system could inform contributors of the number of "hits" by readers on their contributions. Or it could allow readers to send back comments on other people's contributions. Anything which helps individuals know what effect their contributions are having will raise the overall level of contributions. To guarantee a minimum level of quality in the knowledge repository, thus increasing individual perceptions of impact, some organizations are experimenting with editorial filters. These may include reviews by subject, matter, experts or knowledge managers as well as by peers.

Managing Group Size And Composition

The effect of group size on participation rates is not straightforward. On the one hand, there needs to be a minimum number of potential contributors for the repository to be worth anyone's while. If the number of contributors falls short of that threshold, the value drawn from the repository may not be enough to compensate individual efforts, and group members may be better off not wasting their time formalizing their knowledge exchanges. However, just as small groups may not constitute the best ground for organizational knowledge exchange, having too large a group may bring other problems.

As groups become larger, individuals may perceive that their contributions do not make a difference. Also, as group size grows, it becomes more difficult to monitor and sanction individual participation, and the informal mechanisms of social pressure tend to lose their power. Research shows that the likelihood of co-operation increases when: interactions among participants are frequent and durable; participants are easily identifiable; and there is sufficient information available on each individual's actions. If it is likely that the individuals will not interact again, or if the identity of other participants is unknown and there are no records of past interactions, there will be an incentive for individuals to free-ride because there will be no way to make people accountable.

Although technology can help promote these social accountability mechanisms, the effectiveness of social control may be hindered by group size. In summary, knowledge communities need to be large enough to provide an enriching exchange of knowledge, yet not so large that people will lose their sense of community. The larger the community, the greater efforts will need to be taken to keep people involved.

When setting up knowledge communities, we also need to pay attention to group composition. In every organization people have varying levels of expertise and backgrounds. Whereas interdisciplinary communities may yield useful and creative exchanges, wide variation in terms of level of expertise may be harmful, among other reasons because experts may not find it useful or challenging enough to interact with novices.

Conclusions

In an era when competition is based more on what an organization knows rather than on what it owns, managers face the challenge of creating environments that foster knowledge creation and diffusion. Information technologists have developed tools that enable individuals to exchange insights across time and distance barriers. However, technology is just one ingredient in implementing a knowledge management system.

More important than technology is a social environment that encourages knowledge creation and sharing. While the value of sharing knowledge may seem obvious to managers, not sharing may be the safest option for employees. Research on social dilemmas reveals why co-operation may be hard to elicit and provides hints on how to make it more likely. Organizations must tackle three problems to make knowledge sharing a reality.

First, they need to recognize and reduce the costs of revealing  personal knowledge. Second, they need to devise mechanisms by which individuals can see the effects of their contributions. Finally, they need to manage the size and composition of knowledge communities. In some cases, these solutions may impose design constraints on technology. But more often than not, solutions will take the form of organizational and human resource interventions.

Q&A

Q: How can information be transformed into knowledge?

A: Let me start with some meta-thinking here: For example AskMe.com itself probably is one of the best examples how information can be successfully transformed into knowledge for a big audience. I would define this transformation as an ongoing process where a planned given structure empowers and encourages people to share and exchange information. Every time this process is successful, value is added to information and new knowledge is born. There is a set of common rules, and one of this rules is to freely share information and let the participants decide, if they want to share a piece of knowledge in public. This open atmosphere needs to be founded on the principles of freedom of speech, win-win philosophy and the passion to contribute for the common best, without expecting any reward.

I decided almost one year ago to contribute 1-2 hours every week to all of us by writing articles for an online trade bulletin and answering questions here. I don't get paid for that (in most cases I even use a nickname) and I do not expect anything in exchange for it. Actually my biggest reward is always to have the feeling I could help other people making important changes in their life. Because my field of expertise is business based, most of these changes are business related, but they often have an impact that goes beyond the borders of "trade and money". So, the very first and most important requirement for a working knowledge management system is definitely to implement this philosophy, and it's the very hardest part of the process. This needs time, passion and true principle based management strategies - there is no simple short cut solution. Everything else is easy: Good software can of course improve the process, but a simple message board or even free email system can work. One of the most successful examples is the AIB - International Business Discussion Group, hosted by the Association of International Business, where more than 11.000 executives from all over the world share very valuable knowledge in a simple email list. ( http://www.aib-world.org )

In many organizations it might help also to have a person who is dedicated to moderate and mediate the process. Most important is to constantly focus the flow of information, and not the software or set of rules - these should be just helpful tools, not more.

Q: How do you think that an organization can integrate knowledge management in its training?

A: There are 2 different issues involved, a passive and an active one. Using KM as a tool for training and education, and train your people to use KM as a valuable tool in their life. Both will need the basement of principles as described above.

I received very good results using a message board to bridge the time between seminar units, giving the people a base to continue their communication and help them to recap what the have learned. As their trainer I received also valuable feed-back from seminar participants using this tool. But there is still a need to actually and physically meet, don't
underestimate it.

Q: How much do you think having or not having knowledge management can have an impact on the success of an organization? In other words, do you think that knowledge management is vital to a company's success?

A: In my experience KM is not really relevant to success, but the above described implementation of shared good principles is absolutely vital in long term for every organization. If your business is based on them, KM can help you to additional support and create success.

Q: Do you think that organizations in underdeveloped countries like Lebanon are well-established to introduce knowledge management in their systems (Do they have the necessary resources such as IT, Human Resources, etc)?

A: Sorry to say, but I don't know Lebanon. All I know is it's great heritage. I do have some experience with other underdeveloped countries, and there I always found that physical resources might be poor, but human resources and social values are some times even better developed than in certain parts of the "civilized word". As described above, the major requirements are human, not technical and therefore I think that organizations in your country have good chances to succeed.

Q: What steps are needed in order to integrate knowledge management in a company?

A: Please see above my answer to your first question. There is an additional major rule: Always let the participants themselves integrate and improve the KM system. After all, you might understand now why this is important.

Further reading:

2000 Structured Communication Corp.,

"Structured Communication -  The Secret Global Village Language"

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