The knowledge economy has sparked considerable interest in Knowledge Management [KM] over the last decade. This interest has encouraged numerous scientific disciplines to address knowledge issues in a variety of different ways. The result is the proliferation of models and concepts developed by different schools of thought. Effective intra-organizational KM suggests: (1) a need for the integration of these various models, concepts and perspectives to service the overall knowledge needs and interests of organizations and (2) a holistic approach to KM that leverages the different human and technical aspects presently under consideration in many organizations. Since all of these concepts and models aim to increase the value of goods and services produced by organizations, a need exists to assess them using value creation measurement tools and techniques. Such an approach will help in the achievement of a certain level of maturity in KM through which the appropriate choice of KM tools and mechanisms support the integration of organizational resources. In this article, the literature on KM and value creation is reviewed to determine possible connections among the various models and concepts and determine how KM can be assessed from a value creation perspective. By establishing a relationship between knowledge concepts, which form the basis of individual skills, and organizational competencies and value creation concepts, which measure the value of organization, a foundation upon which to build an integrated organizational model for KM is provided.
Knowledge that is unique and specific to an organization is now viewed as a key asset that can lead to a sustainable competitive advantage (Nonaka et al., 2000). Information and knowledge are recognized as driving forces behind the creation of organizational value (Cuganesan, 2005).
The designation of knowledge as an organizational asset in need of development and protection requires a paradigm shift on the part of managers (Edvinsson, 2001). In contrast with the traditional paradigm under which asset value depreciates over time, knowledge increases with use and the number of users (Barthelme-Trapp and Vincent, 2001). As a result, the creation of organizational value through knowledge is linked to the presence of strong, effective interrelationships among its members (Russ and Darling, 2000).
An intra-organizational knowledge management system is, in the image of the system it serves, a [translation] “… set of mutually interrelated units” (Durand, 2002). The dynamic complexity of the knowledge transfer system arises, among other things, from its nonlinearity, the interval between short-term reaction and long-term response resulting from the production, dissemination and absorption of knowledge as well as from the temporal delay between the causes and effects (Roos et al., 1997; Sterman, 2001).
The management of an intra-organizational knowledge system calls for another paradigm shift. The manager must make the change from the traditional value chain to a dynamic and complex value network (Allee, 1999; Sveiby, 2001). Modern management principles need to reflect the reality of intangible assets that propel the new economy (Lev, 2002). In contrast with tradition, the modern organization is a place where value is created within a network setting. The value chain is evolving into a value network. Strategic management of knowledge exchange is the key value creation element in this value network (Sveiby, 2001). Knowledge is an intangible asset, and the alignment and integration of intangible assets within an organization, while complex, have become crucial issues in value creation (Kaplan and Norton, 2004).
Administration of an organizational knowledge management system requires the sustainable integration of various theoretical concepts and approaches relating to knowledge management (Glot and Berrell, 2003). The following are the ways how knowledge can be created in an organisation.
Knowledge update can mean creating new knowledge based on ongoing experience in a specific domain and then using the new knowledge in combination with the existing knowledge to come up with updated knowledge for knowledge sharing.
Knowledge can be created through teamwork.
A team can commit to perform a job over a specific period of time.
A job can be regarded as a series of specific tasks carried out in a specific order.
When the job is completed, then the team compares the experience it had initially (while starting the job) to the outcome (successful/disappointing).
This comparison translates experience into knowledge.
While performing the same job in future, the team can take corrective steps and/or modify the actions based on the new knowledge they have acquired.
Over time, experience usually leads to expertise where one team (or individual) can be known for handling a complex problem very well.