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Knowledge-based
Management(KM) - New Alternative for Asian Companies - Simon Kwak 1. Introduction 1.1
Traditional Elements of Production Since the development of capitalism in 18th
century land, capital and labor have been regarded as essential elements to production. So
when an entrepreneur wanted to increase the quantity of his products, he could get it by
simply increasing the elements mentioned above.
1.2 The importance of knowledge in Recent
Business As computer
technology advanced rapidly and the information revolution began in the early 1990s, the
elements that were recognized as important in the former age have contributed less to
production than in earlier times. Instead, information and the ability to deal with
information have become more and more important to production. Especially with the rapid
growth in semi-conductors, the products could be made smaller and smaller, resulting in
less necessity of land to make factories and to store them. Furthermore, as factory
automation progressed, labor has become less important than before. In contrast, the
accumulated knowledge became a critical factor in business. Western companies which once
were very engrossed in defending their markets from the attacks of Asian companies could
recover competitiveness with KM. Recently they came to overcome the Asian companies in
international markets.
1.3 The Definition of knowledge-based
management
There is not an
agreed definition yet on what the knowledge-based management is. But it can be defined as
follows (Yogesh, M. 1997) : “knowledge-based management caters to the critical issues
of organizational adaptation, survival and competence in face of increasingly
discontinuous environmental change. Essentially it embodies organizational processes that
seek synergetic combination of data and information processing capacity of information
technologies, and creative and innovative capacity of human being”1) . As
stated above, KM is a product of an era full of uncertainty and unpredictable for survival
and success. KM can be defined as using knowledge in strategic level to look for best
practice in the organization. 2 The background of
development of KM 2.1 The short history of KM There was an assertion by Peter Drucker in the 1950s that knowledge was an important factor in production.2) But at that time supporting tools such as highly-developed computers, internets and intranets were not introduced. So the concept was not spread widely. In the early 1990s, with rapid growth in information technologies, the gaining and transferring of information was made easy, resulting in fundamental change in business paradigm looking into knowledge. 2.2 The contributors to KM Peter Drucker created the term “knowledge
worker” in the 1950s. After many years passed until knowledge became widely used in
business. As in the early 1990s the internet became one of the universal methods for
business communication, many scholars have come to acknowledge the importance of knowledge
in business, among whom Nonaka and Stewart have been famous preachers of KM3).
They all can be called contributors to KM. 3 Recent Successful Cases
of KM – BP case4) There are many cases in industrial fields that by using KM companies increased the productivity and reduced the costs. Especially British Petroleum, Hewlett-Packard, Hoffmann-LaRoche and Monsanto are highly commended to use KM well at strategic level. In 1995 in North Sea there broke out severe equipment failure in BP’s exploration team. It faced the situation that would need a drill ship which might cost the company US150,000$ a day. Instead, they hauled the faulty hardware in front tiny of a video camera connected to a newly installed workstation. Using a satellite link, they dialed up a BP drilling equipment expert in Aberdeen. Then he guided them quickly through the visual system. At last they could repair the equipment in a relatively short time. It was possible because the company established a project team called “Virtual Teamwork” beforehand. Its members were drawn from diverse parts of the company. Its task was to support collaboration across the barriers of distance and organizational structure with sophisticated technology. The “Virtual Teamwork” spent a lot of time challenging and helping the parts of the company to exploit their capabilities to serve their business needs. In the process the ability to confront the unpredictable was enhanced in each part. So the North Sea case was possible without much difficulty. 4 Necessary elements in the
success of KM 4.1 Transformation of Organizational
Environment To do KM in a business organization requires
having a person who is totally responsible for gathering information and sharing it
throughout the organization (he is called Chief Knowledge Officer : CKO). All the
information must be gathered in the knowledge center and it must be categorized in a form
so that all the members may use the knowledge easily.
4.2 Producing and Transmitting System of
Knowledge Producing knowledge cannot be done by one person or by one department of an organization but only it can be done with the participation of all members of the organization . So it is possible only when all the members recognize the importance of knowledge. All the workers should find the best practices for their tasks and transmit them to the knowledge center. So constructing an Intranet system is an essential factor for the success of KM.
4.3 Measurement and Compensation System Compensation is one of the most important factors for success of any system. But how to measure performance should be established first. Measurement should be done not only at individual level but also at team level. And measurement is to be done not only in quantitative base but also by the degree of contribution to the organization. After the measurement problem is settled, the compensation should follow the results of measurement. 5 Why KM can be a
breakthrough for Asian Companies? 5.1 Traditional view of information and
culture in Asian Companies Traditionally in
Asian countries, information and corporate culture were not evaluated highly. Only command
and obedience was emphasized. Furthermore, knowledge was not gained systemically and was
not spread throughout a business organization. It was partly because one could survive
only when one could keep knowledge or secrets to oneself. This fact compelled the members
of Asian companies to lay the same foundation for themselves, resulting in the waste of
time and energy. Another reason is
that Asian culture has been affected considerably by Confucianism that emphasized
obedience to established authorities and silence forbidding people to assert their own
opinions. Consequently, creativity was hindered in developing. Still more important
reason is that almost all the decisions have been made in the way far from democratic
procedures. Many Asian companies have been owned by just a few families in the form of
conglomerate. Important decisions have been made within the families, resulting in the
alienation of members with ability and creativity.
5.2 Recent failures in Asian Companies and the Causes Even with the deadly weak points, the
command and obedience seemed to bring success to many Asian companies in the industrial
age. But as the era drew near when creativity was the first virtue in industry, the Asian
companies could not endure any more the harsh counter-challenge of western companies that
armored themselves with creativity. Many Asian companies went into bankruptcy or were
taken over by western companies, including the famous Nissan Motors and Mazda Motors in
Japan. Even, South Korea went into the IMF bailout System. It was the cultural failure of
Asian companies in gaining knowledge systemically and sharing it throughout the
organization, which is contrary to that of western companies.
5.3 A New Alternative to Asian
Companies-KM If Asian companies want to survive and succeed in
an era of global competition, they must transform themselves to perform KM. First of all,
all the CEOs must recognize that knowledge is the most important production factor. They
also must adopt democratic procedures, for in an authoritarian environment creative
thinking is impossible for the members of their companies. Furthermore, they should exert
themselves to accumulate knowledge and distribute it throughout the organization. It
requires that management by just a few families be liquidated which hinders democratic
procedures in the decision making.
6. Conclusion KM is not an
accessory to business but only a system that has come out as a result of anguish to break
through the discontinuous and unpredictable managerial situation. As stated above, it can
be an alternative for Asian companies that recently have lost the competitiveness in
international markets. But the premise must be sufficient beforehand as mentioned above. Whether KM can
succeed or not totally depends on the attitudes of Asian companies’ CEOs. But when
they can see the reality of managerial environment, they cannot but adopt the KM. Bibliography 1) http://www.brint.com/interview/maeil.htm 3) Skyrme, D. 1997.
From information to knowledge management : are you ready?.
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