Knowledge Management: How Businesses Benefit from Use this Systems to Achieve Competitive Advantage - Literature review Example

Name : XXXXXXX Tutor : XXXXXXX Title : XXXXXXX Institution : XXXXXXX Date:@2008 Abstract Organizations implement knowledge management systems with the hope that the result will be an increase in organizational efficiency, competence, efficiency and competitiveness. The paper shows how businesses benefit from the usage of knowledge management to be able to achieve sustainable competitive advantage. The author gives a broad definition of knowledge management and explains how it promotes organizational learning. The reason as to why it is of great interest to business is extensively discussed. The researcher has provided a conclusion which summarizes the text through giving a personal point of view concerning the subject: competitive advantage can only exist when the value exceeds the cost of creating it. Introduction The programs of knowledge management are typically tied to the objectives of the organization such as improved performance, innovation in competitive advantage, the lessons learnt, for instance between projects as well as the general development of collaborative practices. Knowledge management is therefore frequently linked to the idea of the organization that is learning. It may be distinguished from organizational learning through focusing on specific knowledge assets as well as the development and cultivation of different channels through which knowledge is able to flow smoothly. How Businesses Benefit From Using Knowledge Management Systems to Achieve And Sustain Competitive Advantage. Pfeffer & Sutton (2000) asserts that the application of knowledge to the enterprise technologies as well as process help in producing a competitive advantage. He suggests that there exists a truly “knowing-doing gap” in the modern businesses whereby briefing, discussions together with planning sessions seem to take place of actions in various organizations. This is likely to create a passive form of culture whereby soundings smart is progressively rewarded in lieu of the real world outcome. This sort or arrangement creates an environment whereby the managers of various projects are highly interested in the acquisition of knowledge in place rather than at work. They also cripple the important “learning by doing” feedback loop which involves applying knowledge to a scenario which is new together with gaining contextual learning from that given application. Pfeffer &Sutton (2000) state that such newly gained form of knowledge does not just add to the knowledge bank but is also seen more a more reliable than more theoretical and abstract knowledge Gaining from knowledge application entails post-analysis as well as process evaluation. That kind of evaluation results in managerial learning regarding what kind of knowledge initiative produced recognized business results. This form of learning is quite difficult and is often neglected by the firm. What needs to be put into consideration is that it is very vital to maintain the wellspring of knowledge. This form of implementation of knowledge and critical review assist in bridging the gap that exists between the possession of theoretical knowledge and the real application. In this case, speculative ideas concerning what is likely to impact the bottom-line are tested in the real world. This is a very important step in advancing from esoteric conceptualization to a well refined knowledge which can have an impact on business decisions. Knowledge management, therefore, provide relevant knowledge which the knowledge workers in making appropriate that can determine the actions of the organization. The measure of the effectiveness of the organization is the creation as well as continuance of a competitive advantage that is measurable. The varied initiative for instance efficiency, advancement, the actualization of customer-centric products and services, core competency, and limitation of fixed costs of doing business can assist in achieving a sustainable competitive advantage in a given marketplace. Management of knowledge is expertise that designed to have an impact on the productivity and innovation in reflective ways. It represents technology that is new which is changing the scope of cotemporary business. Knowledge management can exploit demand-side and supply side economies of scale. Therefore, effective knowledge management has the capacity to influence on the way a firm carries out business activities right from a minor details of the operations that are carried out daily to the wide strategic processes of making decisions. It means that there will always be better ways of transforming inputs into outputs. This can only be achieved through a refinement of processes. Competitive advantage comes from the value which firms are able to create for their customers which exceeds the cost of producing that given value. These values can effectively be achieved through efficient management of knowledge. The most vital consideration is mainly to capture the value that is greater than the cost. There is also the importance of achieving sustainability of the competitive advantage to superior performance. An organization is able to achieve a competitive advantage when implements value-creating strategy which is not simultaneously being implemented by potential competitors and when the firms are not able to duplicate the benefits of the strategy. O’Dell (2004) states that the importance of knowledge management is not simply to share knowledge for the sake of it, but to enhance performance of the organization. Knowledge management, therefore, is a process that is targeted at creating value for an organization through systematically optimizing its knowledge base. Knowledge management provides an opportunity to an enterprise to be able to continue building collaborative, innovative as well as the sharing of knowledge which is always involved in the activity of learning. By doing this, there is building of competency which comes as a natural evolution within the organization that is involved. The main principle of knowledge management is an enterprise can be able to foster the capture and exchange of knowledge through various communities of practice. These include professional networks which identify issues, share different forms of approaches, and make the final results readily available to others. Any form of community of practice refers to a virtual community that is connected through interest and expertise in a given discipline. In addition to contributing to the technical briefings and product evaluation, the members of the organization make efforts that are geared towards sharing of experiences, identify some of the good practices, locate people with the needed expertise and also pin point the gaps in knowledge in the field. The information is then recorded in the knowledge repository for that particular organization. It has to in electric form for easier accessibility at any given time and available to many. This results in improved customer service which will be a natural outcome. Concerning competitive advantage, the expert in knowledge management Larry Prusak (1996, cited in The Information Advisor, (1997) asserts that one thing that provides an organization a competitive edge, something that is sustainable, is how fast it can be able to know something and what it knows. Organization knowledge is, therefore, its viable competitive advantage. Birkinshaw (2001) notes that in the current fast moving and increasingly competitive world, the only enduring source of advantage of the firm is knowledge, the employees’ knowledge and the knowledge which gets built in the organization. Knowledge management helps in ensuring that the right information is directed towards the right people at the right time to help them make the right decisions. This form of knowledge is valuable due to the fact that it is put in the right context and is more extensive and fully up-to-date and therefore it is very useful for making of decisions. It is inform of a library that which provides a repository for written information on a given subject. In addition to that, it makes knowledge that is in the heads of people available to the organization as a whole. Consulting firms, for instance, value knowledge management as a highly effective tool for ensuring that project teams can adequately communicate effectively and share important information. Various agencies have found that knowledge management enables capturing of the collective knowledge which ensures continuity of the institutional and the continued attainment of their strategic objectives. The Meaning of Knowledge Management Knowledge management involves various practices used in organizations to identify, create, present, distribute and assist in the adoption of various insights and experiences. These forms of insights and experiences are composed of knowledge which is either embodied in specific individuals or the organization processes. Various companies as well as non-profit organizations have the kind of resources that are fully dedicated to internal knowledge management as part of business strategy, human resource management or information technology departments. The efforts of knowledge management focus on the objectives of the organization, for example, improved level of performance, innovation, competitive advantage and the general improvement of the organization. The efforts of knowledge management enable individuals and groups to be able to share some of the valuable insights of the organization. This helps in reducing redundant work and time for training new employees. It also helps the organization to adapt to the changing environments and conditions of the markets. How Knowledge Management Promotes Organizational Learning Organizational learning is promoted in an organization in the existence of three conditions; cultivation of doubt in the current knowledge and practices, the presence of fresh ideas and the development as well as the transfer of knowledge among organizational factors. Promoting team members to question the common knowledge about an organization is vital. The interaction as teams in examining data is equally important. There is always a clear contrast between teams which examine the organizational data as a group and those that rely on the knowledge of an individual than exploring the data together. The acquisition of knowledge and ideas is the first step in learning. New ideas are essential for learning though they do not guarantee that learning will automatically follow. New ideas can be acquired from the experience of an individual and the best practices of other individuals and organizations, for instance, through experimentation. The data of an organization can provide answers to questions such as “who starts and does not finish? Why? What is being gained through learning and for which specific purpose? When teams examine data as a group, new idea occur to them. This can be achieved in two ways; increased awareness of inequities in the members of an organization prompt many team members in asking new questions about the causes and the consequences. Secondly, the team can mine the data more deeply and get engaged in the second data inquiry. The results are that there is promotion of organization learning. To create new ideas from the existing organizational data, it may be important to consider examining data which is traditionally reported externally, for instance, accrediting bodies to fulfill state as well as federal requirements. Weick (1979) developed a model that showed how groups or organization reduces the increased meanings that the members hold about a given phenomenon to a shared or even common understanding which can act as a basis for group action in future. He called this “organizing” process. He further theorized that something within the environment in triggering this kind of process which highly depended on interaction and communication among the organization members. When pieces of information or some events catch the members attention, they engage in repeated cycles of communication which is restricted by the rules as well as the norms embedded in the culture of the organization upon which they operate. As a result, they reach a common understanding that is finally stored in some manner of future use. Organizations learn when stored information and understanding are called into question. When the actors of the organization doubt what they have traditionally trusted, an opportunity for learning arises. The organization then treats the “past as a pest”. The members end up questioning the retained information as norms, rules as well as all other elements of organizational culture and operation that are often considered as sacrosanct and immutable. It is only unfortunate that the thick layering of various routines increases the vulnerability, meaning that discrediting is quite rare (Leidner &Dorothy 2002). The promotion of organization learning can also be achieved through assignment of projects. The projects train the members to be able to think critically in that they are put in a position to think critically. They can look at some of the methodologies and ask about supportive data. As the members examine the data, some of the commonly held assumptions or even myths are challenged. In some cases, their understanding of the ways things are is likely to be disapproved. An outsider is likely to act in a manner that is different from those that are found inside the culture. He or she is likely to ask some ignorant questions as well as those questions that may not be good for an insider to ask without bringing about negative consequences. In case bringing a consultant is impossible, the members of an enterprise have to force themselves to take the views of an outsider about the enterprise to be able to question the norms and beliefs which are part of the organizational fabric. One method of attaining this is to create a team with needy roles within the organization. In any given task, someone in the team, someone could function as an outside person. The most important distinctions are that where real teams are involved, there is fulfillment of cognitive function which is likely to enlarge the span of intelligence of an individual team member. This form of intelligence span is expounded when valuing various multiple perspectives which individual team members are not likely to achieve. According to Bensimon and Neumann (1993), reconsidering a problem using quite a number of lenses is likely to make the problem to be more complex and make a person have a feeling that the problem is unmanageable. However, when the problem unfolds, the largeness which was initially hidden facets is most likely to suggest solutions which were previously not seen when it was given in simpler terms. Data or information and knowledge play vital roles in organizational learning. According to Dat and Huber (1987), learning in an organization takes place in two dimensions: systems-structural dimension, which majors on the acquisition as well as the distribution of the information. The second dimension is interpretive dimension. This entails the interpretation of that information. The interpretation together with understanding of the information by the organizations actors is associated with knowledge. Daft and Huber note that organizations involve both types of activity and that both activities result into organizational learning (Jackson & Ann 2001). The area of knowledge management is specifically concerned with transferring, managing and maximizing knowledge that is held within the minds organization actors for the benefit of the organization as a whole. To be able to know what the actors know, the organizations set up structures for promoting social interaction aimed at sharing and creating knowledge. This form of transfer of knowledge is important ingredient of an organizational learning. Why Knowledge Management Is It of Great Interest to Businesses Knowledge management usually encompasses identification as well as mapping of intellectual assets within an organization it also involves generating new knowledge for the purpose of competitive advantage, making large amounts of corporate information to be easily accessible and sharing of the best forms of practices. (Birkinshaw & Julian 2001) Knowledge management is viewed as the real key that enables things to be done as well as creating new values. There is therefore an emphasis on the learning organization together with other approaches which stress internalization of the information by the use of experience and action. Businesses need knowledge management due to the fact that the market places are increasingly competitive. The rate of innovation is on the rise therefore there is need to create suitable grounds to be able to compete favorably among other competitors. Information and knowledge have emerged to be the medium upon which the problems of the business take place. As an end result, the management of knowledge presents the sole opportunity for attaining substantial savings, recognizable improvements in human performance as well as competitive advantage. Small organizations need formal approaches to the management of knowledge more due to the fact that they do not have the market leverage, sources and inertia that the big companies have. They are supposed to be more flexible and responsive. The major principle of knowledge management in a business is mainly to foster the capturing as well as exchanging of the knowledge through various communities of practice. They include professional networks which are aimed at identifying issues, sharing different forms of approaches, and make the final outcome easily available to the rest. Forms of community of practice involve a virtual community that is connected through interests and the expertise in the discipline in question (Butler &Yvonne 2000). In addition to contributing to the technical briefings and product evaluation, the members of the organization make efforts that are geared towards sharing of experiences, identify some of the good practices, locate people with the needed expertise and also pin point the gaps in knowledge in the field. The information is then recorded in the knowledge repository for that particular organization. It has to in electric form for easier accessibility at any given time and available to many. This results in improved customer service which will be a natural. Knowledge management enables better fostering of decision making. Achieve a desired goal in a business becomes easy because there is the availability of adequate knowledge that assists in quick decision making. As a result, the intended processes are carried out easily and quickly. Conclusion The research provides individual presentation about the concept of knowledge management as well as competitive advantage. The research has proved that the main purpose of knowledge management is to create value for an organization. The research also indicated that are able to achieve and sustain competitive advantage through creating values for their customers. In order for competitive advantage to be there, the value must be able to exceed the cost of creating it. Various searches of the literature provided quite a number of explanations of the linkages that exist between the management of knowledge and competitive advantage. The research shows that technology can be an enabler through which an organization can be able to increase its efficiency as well as effectiveness in the management of knowledge hence creating value at a reduced cost. This is a fundamental necessity for achieving and maintaining competitive advantage. Bibliography Pfeffer & Sutton, 2000, is there life after knowledge management? Longman publishers (2) 22-26. O’Dell, 2004, the future of knowledge management. New Jersey: Oxford University press (8) 6-9. Larry Prusak, 1996, Firm resources and sustained competitive advantage. Journal of Management, (17) 99-120 cited in The Information Advisor, 1997What is the meaning of competitive advantage. (6) 88-102 Barney, Jay B., 1995, “Information Technology and Sustained Competitive Advantage”: A resource-based analysis. Academic Press. (3) 45-66 Birkinshaw, J., 2001, making sense of knowledge management. Oxford: Blackwell Science. Broadbent, & Marianne, 1998, the phenomenon of knowledge management: what does it mean to the information profession? Oxford University Press. (6) 42-56. Butler, Y., 2000, Knowledge management: If only you knew what you knew. Longman publishers (2) 22-26. Coleman, D., 1998, Knowledge management: Bringing some value to information. Kaufmann, New York. (8) 33-40 Desenberg, Jon, 2000, moving past the information age: Getting started with knowledge Management. Oxford University Press. (9) 48-66. Dat & Huber, 1987, Knowledge management-fuel for innovation. Oxford University Press. (4) 178-199. Jackson, L. & Ann K, 2001, Knowledge management: Understanding the theory and developing Strategy. New York, Schocken. (1) 66-67. Leidner, L & Dorothy E., 2002, Studying knowledge management in information systems research: Discourses and theoretical assumptions. Bristol Swiss publisher. (3) 44-67 Read More