Strategic Importance of Knowledge Management

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Abstract

Today the world has more and more of free flow of information leading to transfer of knowledge from a person or an organization to others. Whereas this invariably leads to faster development, it also impacts the competitive advantage held by the innovators of processes or technology. It has therefore become strategically important for one and all in business to understand the knowledge, processes and controls to effectively manage the system of sharing and transferring the information in the most beneficial fashion.

This paper dwells upon definition, types, scope, technology and modeling of knowledge and Knowledge Management while examining its strategic importance for retaining the competitive advantage by the organizations.

What is knowledge?
Plato first defined the concept of knowledge as ‘‘justified true belief'' in his Meno, Phaedo and Theaetetus. Although not very accurate in terms of logic, this definition has been predominant in Western philosophy (Nonaka and Takeuchi, 1995). Davenport et al. (1998) define knowledge as ``information combined with experience, context, interpretation and reflection''.

The terms ‘‘knowledge'' and ‘‘information'' are often used inter-changeably in the literature and praxis but a distinction is helpful. The chain of knowledge flow is data-information-knowledge. Information is data to which meaning has been added by being categorized, classified, corrected, and condensed. Information and experience, key components of definitions of knowledge, are put into categories through the process of labeling with abstract symbols. This allows the process of synthesis to occur more efficiently than when dealing with masses of individual bits of information. Information coded into symbols to make it "knowledge" may be stored both inside and outside the individuals. Thus, knowledge may be stored within a person in his mind or outside the person in books, manuscripts, pictures, and audio and videotapes or discs. However, while only the individual himself may retrieve knowledge stored within his mind, knowledge stored outside can be retrieved by anybody familiar with the storage systems.

In organizations, knowledge is often embedded not only in documents and presentations but also in "organizational routines, processes, practices, and norms," and through person-to-person contacts. Even the simplest information about the environment requires the use of rules for interpreting it. This means that for information to become knowledge, people make interpretations, apply rules, and create knowledge. "People with different values ‘see' different things in the same situation" and organize information so as to create different kinds of knowledge (Davenport and Prusak, 1998).

Types of Knowledge
Systemic knowledge
Systemic knowledge is a sort of knowing how we know. Systemic knowledge is both a process and a product. As a process it is expressed by Maturana and Varela (1987) as - "reflection is a process of knowing how we know". As a product it is knowledge on how we think. Systemic knowledge has bearing on the perspectives of individuals, i.e. what is seen and how this is perceived. In this way, systemic knowledge directly influences the people's perception as to what type of explicit knowledge is relevant and meaningful for the organization. The more uniform this perspective is among the most important actors of the organization, the more influential this perspective will be as to what knowledge type (e.g. explicit versus tacit) is critical to the competitive position of the organization.

Explicit knowledge
Explicit knowledge is the part of the knowledge base that can be easily communicated to others as information. Explicit knowledge involves knowing facts (Sveiby, 1997). Explicit knowledge can be objective and inter-subjective. Bunge (1983) defines objective knowledge in the following way: "Let p be a piece of explicit knowledge. Then p is objective if and only if (a) p is...
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