Uniwersytet Szczeciski
Summary
The term New Economy serves to underline two fundamental determinants for a competitive advantage based on knowledge: globalization and the newest informa-tion technologies. The New Economy is characterized by the role of informainforma-tion, the dynamically developing information technologies as well as the globalization proc-esses.
Knowledge management is an effective solution in order to achieve a competi-tive advantage, though companies must take into account relacompeti-tively high expendi-tures for the creation of an adequate information infrastructure (through appropri-ate techniques and technologies), for measures connected with the training of em-ployees, in order for them to be able to benefit from knowledge resources as well as for the continued training of employees. A company that applies knowledge man-agement will achieve a competitive advantage through an adequate selection of em-ployees and by providing appropriate conditions for their development as well as access to the best techniques of knowledge transfer.
Keywords: knowledge management, new economy, information. 1. Introduction
The term New Economy serves to underline two fundamental determinants for a competitive advantage based on knowledge: globalization and the newest information technologies. The term is connected with the application of electronic techniques and technologies for the generation, acquisition, storage and exploitation of knowledge in order to achieve and maintain competitive superiority. The extraordinary progress in information transfer techniques and technologies as well as globalization are the two phenomena and forces, which are at the root of the changes in all areas of life in the 21st century. Information issues are at the centre of attention. The New Economy is characterized by the role of information, the dynamically developing information technologies as well as the globalization processes.
The New Economy has not yet been explicitly defined, however the almost universally ac-cepted view is, that globalization as well as the development and spreading of technological solu-tions have fundamentally changed business, management and marketing practices. Nosolu-tions such as electronic trade or virtual organization describe the new environment for conducting business activities.
It is already possible to distinguish certain basic features of this new paradigm the world economy is part of: computerization, globalization, network connections of everything and every-one, sovereignty of customers and the key role of knowledge.[6]
2. Meaning of new economy and knowledge management
Today’s economy is defined as an economy based on knowledge – the Knowledge Economy. Knowledge and competence are becoming the main factors of competitive advantage for the com-panies working in contemporary economic realities and that is why knowledge management is developing into an essential business process. Companies are faced with the challenge of learning how to function under the conditions of a knowledge economy.
Knowledge in the era of globalization and the internet is at the same time resource, wealth and capital. The pace of the economic transformations as well as the processes and phenomena that appear in the changing environment imply and even enforce the need to understand the essence and the tremendous significance of knowledge application. For contemporary organizations desir-ing to survive and to have a chance of further development, knowledge should represent a crucial strategic resource. This means the need to develop and implement a knowledge management sys-tem in each area of activity in the organization, as an integral process and indicator of the realiza-tion of the accepted strategic aims.[2]
Of particular significance for contemporary service companies is the intellectual capital in-cluding highly qualified employees with the necessary knowledge and the ability to apply that knowledge for the design of modern technological systems for the organization of production and services as well as of management means and techniques enabling the company to fulfil customer expectations.[4] The growing complexity, the dynamics and the lack of continuity of the environ-ment, the widening of its borders and the ever greater influence it has on the fate of service com-panies result in the need to acquire, process and exploit more and more information in a shorter and shorter time. The rapidly changing environment forces service companies to concentrate strongly on unconventional and innovative behaviour in order to achieve a competitive advantage. Knowledge is dynamic and is becoming the most sought after product and capital. Therefore everything begins in the minds of the people, with their attitudes, sensitivity, cognitive limitations, and their competence and motivation system. Knowledge is more than just information embodied in people. Knowledge is a domain of human beings, not machines. A carrier of information can be for example a computer, whereas only a human being is able to acquire, improve and process knowledge and to pass it on to others. The worth of a human being is therefore defined by how much it can communicate to others. Knowledge that does not serve others, remains useless.[5]
Knowledge as a company resource is characterized by: • the difficulty to define property rights,
• constant propagation,
• the impossibility to measure or evaluate it.
The difficulty to establish the property rights with regard to the resource, which is knowledge, results above all from the fact, that the knowledge holders are usually people who can migrate between companies. It is therefore essential to adequately remunerate holders of knowledge for they determine the competitive advantage of the company. Apart from that, knowledge is a re-source that is constantly propagated due to the fact that it is universally available, it must therefore be continuously updated or replaced by new knowledge. It is necessary to invest in the renewal of knowledge or in its continued improvement, because inadequate knowledge, e.g. outdated knowl-edge, will bring the opposite effect from what is intended. Knowledge can also not be evaluated, as there are no universally applicable methods or means for the evaluation of the worth of knowl-edge.
Information and knowledge travel within an organization via the same structures, but they ful-fil different functions and assume different forms. Wisdom and knowledge are always embodied in a human being, are acquired and exploited by a learning person. Knowledge can be divided into the following categories:[1]
• know-what – similar in form to information and can be transferred by data,
• know-why – explains a reality and refers to the principles and laws of movement, requires the understanding of fundamental principles, rules and ideas,
• know-how – refers to the skills and abilities of people and teams to do something, that are not described by patents and licences but indispensable for the transfer of technology, this type of knowledge requires direct experience,
• know-who – defines the knowledge holders and describes the knowledge they possess, also refers to social skills of cooperation and communication with external experts; is useful, when the access to knowledge from different areas, fields or scientific disciplines is indispensable. In a service company knowledge can be divided according to specific aspects within the com-pany. Two fundamental types of knowledge can be distinguished in a service company:[2]
• explicit, open knowledge, • tacit, hidden knowledge.
Explicit knowledge is also referred to as externalized knowledge. Knowledge of this kind is clearly specified and systemized. It can be presented in a formal manner with the help of words, numbers, signs and symbols. Sources of explicit knowledge are documents, data bases and other forms of written information the purpose of which is to be of help to people in taking the right decisions. Although explicit knowledge is expressed in explicit forms, it often cannot be fully exploited. Information is contained in many places and different forms and it is not always obvious where to find a given piece of information. In addition it may be problematic to combine informa-tion, that will in turn generate useful knowledge, as well as to separate relevant knowledge from outdated knowledge.
Tacit (hidden) knowledge is knowledge that is revealed during the everyday activities and cannot be completely specified. The problem is to formalize this knowledge and to transfer it to other people. Tacit knowledge is collected together with experience within each human being as the basis of its personal judgement or intuition and is therefore difficult to store and preserve. The traditional form of transmitting this type of knowledge is by word or common experience. In small service companies this can be an effective means of knowledge acquisition but more problematic the bigger the company. This form of transmission is then less and less effective, since the number of required communication channels grows at a geometrical rate in relation to the number of em-ployees. According to estimates, tacit knowledge represents about 80% of the knowledge within a company, so that the management of this kind of knowledge has become a necessity.[2]
3. Stages of knowledge generation in a service company
The most important thing is to properly understand the essence of knowledge and thereby to learn how to acquire, to develop as well as to effectively and successfully use it. Knowledge should be identified with the notion of competence and understood in terms of efficiency as the ability to successfully use and exploit the information that is essential from the point of view of the given organization. The basic element of knowledge is the corresponding information, which in
itself, however, is not knowledge.[7] The following illustration presents the stages of knowledge generation in a service company.
Fig. 1. Stages of knowledge generation in a service company Source : our illustration
The first stage of knowledge acquisition in a company consists in analysing the information in the possession of the company, the verification of the information gaps occurring in the organiza-tion and the definiorganiza-tion of sources and methods for the acquisiorganiza-tion of new informaorganiza-tion. This is a very important process with a direct impact on the quality of the knowledge generated in this manner. The next stage in the process of knowledge acquisition is the research, acquisition and collection of the missing information. The final stage is the interpretation of the information. It must be pointed out, that information can be interpreted in various ways and that the acquisition of adequate information alone does not necessarily result in an effective exploitation of that informa-tion.
Both the means of knowledge generation and its exploitation are extremely varied depending on the management staff, the specific activity of a given company, its history, culture, organization as well as its management methods and environment.
Open knowledge is any form of information and experience that can be explicitly articulated, codified, considered as durable and propagated. It is easy to spread among the employees of an organization. It is the only perceptible form of knowledge in a company.
Open knowledge on the other hand expresses what we know. In most companies hidden knowledge is an unwritten common code of values, visions, habits, behaviour patterns, attitudes
• ANALYSIS AND ORGANIZATION OF THE
INFOR-MATION IN THE POSSESSION OF THE COMPANY
• RECOGNITION OF GAPS IN THE STORE OF
IN-FORMATION
• DEFINITION OF ACQUISITION SOURCES AND
METHODS
RESEARCH, ACQUISITION AND COLLEC-TION OF MISSING INFORMACOLLEC-TION
INTERPRETATION OF ACQUIRED INFOR-MATION
ACQUISITION OF
KNOWL-EDGE
and opinions which rule the actions of the group. Hidden knowledge is pragmatic, of experimental character and situational. It grows from direct experience and actions and is therefore also often referred to as practical knowledge. This knowledge is applied subconsciously by the employees, it is difficult to articulate and usually transmitted through direct contacts in form of narratives and common experience.
A competitive advantage based on knowledge can be perceived in different ways. This con-cerns both the technical and the scientific knowledge applied by a company, although the company usually did not create this knowledge itself. „Competitive advantage depends on the control of applications, which is in itself the knowledge and secret of a company. It requires investment of financial and intellectual capital and is not universally accessible, although it can be copied by other companies at much lower expenditures.”[4] However, such imitations (which are simply a kind of benchmarking) bring lesser benefits, since a competitive advantage achieved in this man-ner is usually more short-lived. A broader approach to competitive advantage based on knowledge results from recognizing as knowledge any kind of useful information, that is the exclusive posses-sion of the company and which the company is able to exploit in order to achieve or strengthen its competitive advantage.
The technological progress does not only provide support in the ever more rapid economic development, but also begins to influence its shape. Better and better techniques of information transfer, aggregation and processing considerably improve the effectiveness of company manage-ment leading to a tremendous wave of fusions and take-overs in the world.
The technological revolution alone is not enough to advance the socio-economic progress in the era of globalization. It is able to overcome physical borders and from this point of view there are already no more economically significant but inaccessible corners of the world, which means, that are also no regions where, from the purely technological point of view, it would be impossible to invest, produce, sell or buy.[3] Yet it is necessary to create a new institutional order on an inter-national scale, with the help of information transfer techniques and an adequate exploitation of knowledge.
In fact, thanks to the applied techniques and technologies, neither the scope nor the pace of in-formation transfer represent a barrier nowadays, but rather the ability to exploit these opportunities in a sensible way.
A condition for the expansion of knowledge management in companies is a sufficiently de-veloped information infrastructure. High expenditures have to be incurred for the investment in knowledge. Above all for the training and development of skills, for scientific research and for development in the broader meaning of this term.
4. Knowledge management models
There are certain knowledge management models and tools that are applied in service compa-nies. To the primary knowledge management models belong:
1. the Japanese model, 2. the process model. The Japanese model[2]
The authors of this model are Nonaka and Takeuchi. This model is called the “spiral of knowledge” and is considered as one of the most innovative models, which points the way for-wards. This model distinguishes two forms of knowledge: tacit and explicit knowledge. The es-sence of tacit knowledge is well described in the sentence: „We know more than we can say”.
Explicit knowledge on the other hand is codified knowledge, put down in a formal and systemized language.
The Japanese model assumes that hidden knowledge can become open knowledge and not only the other way round. Nonaka and Takeuchi differentiate four processes of knowledge proc-essing:
Socialization – the transformation of tacit knowledge into tacit knowledge through the (inter-nal) sharing of tacit knowledge during common activities of the members of an organization;
Externalization (manifestation) – consists in the change of tacit knowledge into explicit knowledge;
Combination – this is the transformation of explicit knowledge into another form of explicit knowledge through the communication, propagation and systemization of explicit knowledge;
Internalization (learning) – consists in the change of explicit knowledge into tacit knowledge (exploitation of experience and know-how acquired by others) through the transformation of ex-plicit knowledge into actions, practices, processes and initiatives.
The individual elements of the model concern the internal organization of the company (im-plementation and integration of new tools and technologies) as well as its environment (import of knowledge) and embrace the present time (common solving of problems) as well as experimenta-tion. Certain key abilities represent the element which integrates them into one coherent and effec-tive system.
Knowledge in the model of Nonaka has an individual, a collective, an organizational and an inter-organizational dimension.
The spiral of knowledge generation within an organization can, according to Nonaka, be initi-ated by fulfilling the following postulates:
• the spiral is driven by the intentions, aspirations and objectives of the organization – it is necessary to present them to the employees and to ensure that they become also their aims;
• the autonomy of the employees must be ensured, as it is a catalyst for new ideas and a source of positive motivation;
• the organization should be characterized by creative chaos and instability. They accustom the employees to the breaking of routines and to cooperation in a rapidly changing envi-ronment. They also ensure confident and fast reactions in case of crises;
• the organization should offer an excess of information – information that goes beyond the needs of the operational activities;
• the internal life of the organization should be as differentiated as its environment. Mem-bers of an organization more easily adapt to the environment, if they are different from each other.
The process model
This model puts the main stress on the „source of knowledge”. This concept was developed in the first half of the 90s of the 20th century, as the result of research on the innovativeness of indus-trial companies. According to this model, for an effective knowledge management the existence of the following five elements is essential:
• key abilities, including physical and technical management systems, the knowledge and abilities of the employees as well as norms and values,
• experimentation,
• implementation and integration of new tools and technologies, • import of knowledge.
To the main knowledge management tools in a service company belong:[2] • reference projects,
• work communities,
• competence development models,
• assessment of the effectiveness of the activity, • an AKM system.
Reference projects offer the possibility to present the previous experience of the company to the customer, at the example of similar ready projects. This tool consists in the storage of earlier realized projects in order to make them available to future customers. In addition, this system forces consultants to enter information about currently realized projects into the database, which means that it can be used by other consultants. The reference project data base is widely appreci-ated and has a global dimension.
Work communities represent one of the most important tools in the process of knowledge management. They can be defined as groups of informally associated experts with common abili-ties and interests in a common enterprise. This tool is the basis for the common solving of prob-lems and the creation of new solutions, since each member of such a group possesses knowledge resources in a given theme area.
Competence models are an inestimable support for managers responsible for human resource management: they provide them with coherent employee evaluation, remuneration and recruitment criteria. They supply also a professional constructive framework for the development of training programmes and a reference point for a precise assessment of the training effectiveness. The cen-tral point of competence development models is the positioning of the employees in a matrix. The matrix for competence development models has two dimensions consisting of areas of profession-alism and the degree of competence. Each area of professionprofession-alism is subject to an evaluation in a 5 degree scale. A newly recruited employee is positioned on the first level, but with the development of his competence grows also his position in the hierarchy of the model.
The criteria for the assessment of the effectiveness of business activity are the time manage-ment of consultants and the time dedicated to the work with the customer and to self-developmanage-ment. Subject to an evaluation is also the time, the consultant invests in the search for information in the database of available knowledge and in the extension of the database by his own experience.
The tool for the assessment of effectiveness are questionnaires for consultants, which are used to assess the satisfaction of a consultant with a realized project. This tool contains an independent set of criteria thanks to which it is possible to assess the extent to which a consultant exploits the knowledge available in an organization.
The AKM system is a knowledge management system including the additional tasks of human resource and customer relationship management. This system comprises a collection of packages from the areas of business consultation and information technology. The AKM system includes the following components:
Organizational strategy – the selection and evaluation of priorities in the areas of work, un-solved problems and untaken decisions.
Work and content management methods – coordination of work and the flow of information in order to optimize the level of activity and the decision-taking process as well as to facilitate the solving of problems.
Human resource organization and management – the synchronization of a universally avail-able work model through the development of smooth organizational structures, the implementation of a motivation system and of career paths for the employees.
Other knowledge management tools include:[8]
• document management systems – they serve to efficiently collect and classify documents in order to facilitate the future access to them and the introduction of modifications;
• workflow systems – their objective is to support the realization of procedures for the treatment of documents and databases and the information acquisition mechanisms contained in these systems are used to collect the necessary material for content generation;
• groupware systems – they are the basis for a free flow and sharing of knowledge. They are used in order to improve cooperation and thereby to generate and transfer knowledge between the individual employees. They ensure the access to the information resources of an organiza-tion for every employee and enable them to conduct interactive discussions;
• data warehouses – these are data bases containing information from numerous sources, they support the decision-taking processes in a company;
• decision support systems – these are interactive computer systems used to realize planning functions and to take decisions.
• Intranet – the intranet is a network of www pages on the company server; it enables the em-ployees of an organization to obtain information in the possession of the company and to ex-change existing knowledge. This considerably shortens the time needed to search for neces-sary data and speeds up the internal knowledge flow as well as the reactions of the organiza-tion to external stimuli. An addiorganiza-tional possibility is to connect the intranet with the internet.1 • corporate portals – they offer the possibility to gather and organize information coming from
practically all data sources within a given company in one place and to access it via an inter-net browser.
The introduction of knowledge management in a company has a.o. the following effects: • improvement of communication,
• faster decision-taking processes,
1 In the past years the concept of the intranet developed within a network of the type of the extranet in order to offer
busi-ness partners or customers access from outside, via the internet to the internal network of the company and thereby to improve the distribution of the company knowledge. The application of the extranet also improves communication and facilitates the management and automization of many business processes. The reason why networks such as the intranet and the extranet are becoming more and more popular as management tools for company knowledge, is the fact that they use the public internet infrastructure and thus provide universal and cheap access to unlimited resources of information. The intranet is defined as a local or extensive network belonging to a company, based on internet technology – above all TCP/IP as well as HTTP and HTML protocols. Thanks to this different types of computers functioning in one company have the possibility to freely communicate with each other from a distance. The functions for which the intranet can be used, are analogous to the functions fulfilled by the internet, with the difference that they concern the information flow within the company. This concerns above all the browsing of internal www pages, correspondence by e-mail, files transfer and access to the external internet. The internal nature of the intranet ensures the confidentiality and security of data transmissions in comparison with the universally accessible internet. In case of the connection of the intranet with the external internet, the principal technology ensuring the security of the intranet data are systems with the pictorial name of firewalls.
• higher innovativeness of the company, • faster creation of an extensive product offer, • faster solution of key problems,
• improved effectiveness of the market activity of the company, • expansion of the competences of the employees
• expansion of the knowledge of the employees. 5. Conclusion
Knowledge management is an effective solution in order to achieve a competitive advantage, though companies must take into account relatively high expenditures for the creation of an adequate information infrastructure (through appropriate techniques and technologies), for measures connected with the training of employees, in order for them to be able to benefit from knowledge resources as well as for the continued training of employees. A company that applies knowledge management will achieve a competitive advantage through an adequate selection of employees and by providing appropriate conditions for their development as well as access to the best techniques of knowledge transfer.
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Agnieszka Budziewicz-Gu lecka Anna Drab-Kurowska
Uniwersytet Szczeciski
Wydział Zarzdzania i Ekonomiki Usług
Katedra Ekonomiki i Organizacji Telekomunikacji Katedra Polityki Gospodarczej
Cukrowa 8, 71-004 Szczecin
e-mail agnieszka.budziewicz@wzieu.pl Anna.drab@wzieu.pl
