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Arun Hariharan


How to Profit From Your Knowledge Assets

New knowledge evolves from existing knowledge

Published: Wednesday, November 4, 2015 - 15:11

When I visited one of the world’s most advanced car manufacturing plants at Toyota City, Japan, one of the many things about the manufacturing process that struck me as remarkable was that from start to finish, whether molding steel sheets into body parts or fitting those various parts together, almost all the work was done by machines and robots. This is, of course, true of nearly every car manufacturer today.

Take another story. When I opened my first bank account nearly 30 years ago, I had to fill out an application form, attach some documents to it, and submit it to the bank. The bank employee did a whole lot of work—all on paper. Some days later (or weeks, if I remember right), I had my bank account. Recently, when my daughter Lakshmi needed a new bank account, most of the process that used to be done manually was now done by computers. Lakshmi had her new bank account almost instantly.

In both these examples, work that used to be done by people has been “taught” to machines. In other words, the knowledge that was inside people’s heads has been transferred to the machines.

Some time ago, I worked with a global consulting firm that had more than 70,000 people and operated in more than 140 countries. I was selected to be part of a team of four consultants for an assignment at a large petrochemicals company. Between the four of us, we had a fair amount of knowledge and experience in the kind of work we needed to do for this client. However, there were also occasions when we found that we didn't have the knowledge required for a specific component of the project. However, this was never a problem because we had online access to the firm’s global “knowledge base,” which stored documented knowledge, case studies, and project files from all work done by the firm worldwide. In almost every such situation, we were able to find documented knowledge relating to a similar project done by other consultants in the firm, which we were able to quickly learn and use in our project.

On rare occasions, we’d be confronted by a particularly difficult problem, or one requiring highly specialized knowledge and experience that only a few experts in the firm had. In such cases, we’d again turn to the firm’s global knowledge base, not for documented knowledge but to find out who and where in the world these experts were. In a matter of minutes or a few hours (allowing for time zones across 140 countries), we would have access to an expert who could advise us and our client.

In all the three of these examples, it’s the knowledge in people’s heads that was captured and deployed by the organization. In other words, these companies have converted individual knowledge into “organizational knowledge.” If you think about it, you’ll notice that there are three ways in which organizational knowledge is deployed:
1. The most obvious and foolproof way is to “teach” it to machines as in the examples of the automaker and the bank.
2. For work that must be done by people and not machines, knowledge from past experience (of the firm, or even from outside), if properly documented and stored with easy search-and-retrieval capability, becomes permanent organizational knowledge that can be reused by its people when they need it. This type of documented knowledge is called “explicit knowledge” by knowledge management (KM) experts.
3. Obviously, not all knowledge can be documented. Some knowledge will always flow from an expert’s intuition, which comes from years of experience. KM experts call this “tacit” knowledge. In large, multi-location organizations such as the global consulting firm I talked about, knowing who and where the expert is for a particular type of knowledge that you need, and being able to find the person quickly, can in itself be a challenge. Here, what KM does is to quickly identify and facilitate access to the experts.

The car manufacturer continues to make cars, and the bank continues to add new customer accounts. These processes continue to work even if individual employees who were experts in these jobs leave the organization. This is because the organization has internalized the knowledge by teaching a good part of these jobs to machines. Advances in technology make it possible to teach increasingly complex jobs to machines.

The consulting firm, too, has internalized knowledge that was held by individuals, to the maximum extent possible. However, in this case, the work isn’t a repetitive task, unlike fitting seats to a car or opening a new bank account. No two consulting assignments are exactly alike, and a certain amount of intelligence must be applied at the time of actually delivering the final “product” to the client. Such jobs can’t be completely taught to machines. However, our experience in the consulting firm was that a considerable amount of reinvention of the wheel was avoided, and significant time and cost were saved for the firm as well as clients by the firm’s practice of systematically documenting and making relevant knowledge available where required.

The companies in these examples are doing knowledge management in one form or another. Does this mean that KM is a replacement for people and their skills? In my experience, by no means. What KM does is to enable repetitive tasks to be taught to machines, and prevent or minimize the amount of knowledge relevant to the firm’s business from walking out the door when individuals leave.

As we saw in the consulting firm, KM can’t be a complete replacement for people’s skills, experience, expertise, and intuition. However, KM can help the firm and individuals to deploy available knowledge more effectively and efficiently.

Moreover, most new knowledge evolves from existing knowledge. For example, the horse-cart could be invented because knowledge about the wheel already existed; the automobile could be invented because the horse-cart already existed, and so forth.

However, new knowledge usually doesn’t evolve on its own: It requires people. Having said that, if the existing knowledge is available in an organized fashion (as in the example of the consulting firm, or with most scientific knowledge), it can better facilitate the evolution of new knowledge. Thus, even in the domains of innovation and inventions, KM can’t be a replacement for people, but can be a useful enabler or aid.

Figure 1: Types of knowledge and the role that knowledge management plays in each type of knowledge relevant to your business. Click here for larger image.

Organizational knowledge is a strategic asset. Your organization must profit from it. To help organizations do this, I recently wrote The Strategic Knowledge Management Handbook (ASQ Quality Press, 2015) to share my experiences and lessons learned in knowledge management.


About The Author

Arun Hariharan’s picture

Arun Hariharan

Arun Hariharan, author of Continuous Permanent Improvement (ASQ 2014), and The Strategic Knowledge Management Handbook (ASQ 2015) is a strategic quality, knowledge management (KM), and performance management practitioner with nearly three decades of experience in these fields. He has worked with several large companies and helped them achieve substantial and sustained results through quality and customer focus. He is the founder and CEO of The CPi Coach, a company that provides partnership, consulting, and training in business excellence and related areas. Former roles held by Hariharan include president of quality and knowledge management at Reliance Capital Ltd, and senior vice-president of quality and knowledge management at Bharti Airtel Ltd, India. He is a frequent speaker at quality and KM events around the world. He is also the author of more than 50 published papers on quality and KM.