. Brainwave

Developing Human Capital and Knowledge Management

S. Rangnekar

Department of management studies, Indian Institute of Technology, Roorkee

The Organization, Economy and Information Technology are inextricably intertwined to develop organisation culture. Organisation culture depended on technology for many years to process basic transactions. Today the technology is responsible for new organization structures. Communication and workgroup technology create virtual organizations and electronic communities. Members of the organization are connected through networks that extend worldwide, allowing people to communicate easily. The challenge for us is to understand the changes and accommodate them at proper requirement.

The organizations are creating the values and ultimately build a culture whether it is social economical or technical may be and develop an image of the organization. “An organisation's capacity to improve existing skills and learn new ones.(Prahalad and Hamel, 1990)''. Herein lies the nature and rational of knowledge management in organization.The dynamic efficiency and effectiveness with which organizations produce and deliver value in terms of their products and services, determines their competitive advantage. The competitive advantage of an enterprise, however, is neither static nor lasting. Its nature and direction are continually defined and driven by the expertise and capabilities, creativity and innovation of the companies competing in an open market.

What is Knowledge Management?

Development and deepening of existing and/ or creation of newskills, competencies, capabilities and expertise, depend on a continual cultivation, sharing and use of knowledge by organization members. A systematic and integrative coordination of organization-wide activities of acquiring, creating storing, sharing, diffusing, developing, and deploying knowledge by individuals and group's in pursuit of organizational goals, defines the nature and scope of knowledge management. Knowledge management is a business process. It is based on learning, involves creativity and innovation as knowledge generating activities, and leads to the creation of expertise, skills, competencies and capabilities as usable forms of knowledge. The latter constitute the dynamic bases of a firm's competitive advantage. In this sense, "Knowledge has become the key economic resource" says Drucker (2003), "and the dominant, perhaps even the only source of competitive advantage". "Leveraging organizational knowledge is not only important", adds Drucker, "but may be the most important job, management has". Knowledge management is the process through which firms create and use their institutional or collective knowledge. It includes three sub-processes (Sarvary, 1999):

1. Organizational Learning-the process through which the firm acquires information and/ or knowledge.

2. Knowledge Production-the process that transforms and inte-grates raw information into knowledge which, in turn, is useful to solve business problems; and

3. Knowledge Distribution-the process that allows members of the organization to access and use the collective knowledge of the firm. Knowledge management (KM) comprises knowledge-focussed activities. Eight major categories of such activities are (Ruggles,1998):

1.Generating new knowledge,

2.Accessing valuable knowledge from outside sources,

3.Using accessible knowledge in decision making,

4.Embedding knowledge in processes, products, and/or services

5.Representing knowledge in documents, databases and soft ware,

6.Facilitating knowledge growth through culture and incentives,

7.Transferring existing knowledge in to other parts of organisation

8.Measuring the value of knowledge assets, and/ or the impact knowledge management

KM is a systematic leveraging of information and expertise to improve organizational innovation, responsiveness, productivity, and competence (Lotus- IBM ).

Why is KM Important and Necessary?

The imperative importance and rationale of managing knowledge has a crucial competitive resource is brought out in a compelling manner in the stated way so the The survival of firms today is so hazardous in an increasingly unpredictable environment that their day –to day activities are dependent on the day-to-day mobilization of every once of intelligence. For us, the core of management is the art of mobilizing and puttingtogether the intellectual resources all employees in the service of the firm ..., Only by drawing on the combined brain power of allows members of its employees can a firm face up to the turbulence and constraintsive knowledge of of today's environment (Rastogi, 1998).

Today's turbulent business environment is, in part, an outcome of a very powerful shift in the world's economic system. A massies are (Ruggles, production based economy is being is placed by an economy based on information and knowledge. In such an economy, intangible attributes like speed, flexibility , and imagination; and intangible assets like 3Cs-concepts, competencies, and connections-are more sources, important for business success, than tangibles like mass, size, or physical assets.

The competitive edge today, more than ever, resides in creativity and capabilities, expertise and skills, improvement and innovation. All of them have their source and locus in the pursuit of learning and the cultivation and use of knowledge. In their absence, a company is apt to be paralyzed when markets shifts suddenly, competitive advantages become transient, and the threat of obsolescence is ever present. Says Nonaka (2002). In economy where the only certainty is uncertainty , the one sure source of lasting competitive advantage is knowledge. When markets shift, technologies proliferate, competitors multiply, and products become obsolete virtually overnight; successful companies are those that consistently create new knowledge, disseminate it widely throughout the organization, and quickly embody it in new technologies and products. These activities define the knowledge-creating company, whose sole business is continuous innovation.

Globally competitive firms today are those which have the insight and foresight to develop mobilize, and allocate their knowledge resources to ever new productive uses. Continuing development and expanding productivity of their knowledge resources are the most important determinants of their sustained high performance. Their practice of knowledge management Is based on their belief that if they do not live in the future today, they will live in the past tomorrow. For this purpose, they have become engines of inquiry .They constantly and obsessively question their operations and processes, their theory of business, and the logic of their business models.

Knowledge Management Operations Management of knowledge by a firm is driven by its strategy. Strategic objectives specify the desired business results. The latter pecify the requirements of knowledge for decisions and actions in support of strategic goals. For meeting the requisite requirements of knowledge, firms plan and implement a set of KM operations as follows:

1. Identification of the nature, kinds and modes of knowledge equired for a competitively effective implementation of enterprise strategy. The knowledge may be explicit i.e., in the form of structured information or it may be tacit (subjective)i.e. in the form of of implicit operational know-how, or heuristics.

2. Mapping the existing and available knowledge (including expertise and skills in terms of its context, relevance, and locations. Preparation of 'knowledge maps' assists employees to ( find out who knows what. Company 'Yellow pages', skills inventory and expert databases denote various forms of such maps.)

3. Capturing the existing knowledge through its formalized representation.

4. Acquiring needed knowledge and information including know-how from external sources as necessary.

5. Storing existing, acquired and created knowledge in properly indexed and inter-linked knowledge repositories.

6. Sharing knowledge through its automatic access and distribution to users on the basis of their need and interest. It includes transfer and diffusion of best practices. Tacit knowledge can however, be shared only through interpersonal interaction. This KM operation hence also supports and facilitates knowledge work collaboration among people through colocated and/or virtual teams.

7. Applying i.e. retrieving and using knowledge including best practices, in support of decisions, actions, problem-solving, automating routine work, providing job aids, and training. The notion of putting the combined knowledge of the firm at an employee's disposal at his/her work site is the essence of KMSs. The basic goal of a KMS is to take key items of data and information from various sources, such as Group Ware, database, applications and people's minds, and make them easily available to users in an organized and logical forml.

8. Creating i.e., generating or discovering new knowledge through R&D, experimentation, lessons learned, creative thinking, and innovation. This is the most vital stage of KM in a firm. Knowledge repositories occupy a central place in any knowledge management system. A knowledge repository is an online, computer-based storehouse of organized information.

The latter may range from business intelligence and customer relationship management to supply chain management or new strategic initiates. Creation of a knowledge repository involves collection, summarization organization and integration of knowledge across multiple information sources. They serve as foundations and knowledge sources for supporting problem-solving, performance improvement, skills/ capability development, and process reengineering efforts. The Importance of Metadata in KM Operations Metadata is data about data. Its purpose is to document, describe, and explain the otherwise meaningless numbers and characters that are stored in a database. It explains what it is, how it is represented, and how it is used. In effect, Metadata provides a business model of the organization, its customers, products and business rules, allowing data items to be related to each other to provide meaningful information. "it is like adding roads and railways to a map that contains only towns". Metadata also contains integrity rules to :validate entries in order to prevent errors. Metadata is stored within the data base itself. This means that it is spreadthroughout the organization in every database in different formats. Few enterprises have created enterprise Metadata, and few tools exist for doing so. The issue of Metadata has come to the fore with the creating of a data warehouse architecture that provides a separate database of data for end-users of access for decision support. It is essential that a business use a standard set of data definitions and .terminology that everybody understands. This is important for improving communication and bringing different business departments or units together.

KM Implementation Problems and Difficulties

Implementation of a KM programme is neither easy, nor simple. It is beset with numerous problems and difficulties. A survey of literature, reveals the following implementation challenges:

Motivating employees to search, accept and adopt best industry practices-.

Developing metrics towards appraising the effectiveness of a KM programme and measuring its results.

Motivating employees to share knowledge-.Making knowledge usable i.e., storing it in an easy to under-stand form and enabling the employees to relate it to their work..Identifying suitable people for staffing and implementing the KM programme. The programme demands a multi-disciplinary background and people management skills of a high order.Changing people's perceptions and behaviour.

Identifying and representing the organization's existing knowl-edge.

Defining the scope of KM initiative.

Lack of common understanding of the company's business model and strategic drivers-

Changing bureaucratic culture and organization structure. Staff turn over with special reference to attracting and retaining talented people. If these difficulties are further compounded by a weak commitment of the firm's top management, the development of a knowledge. management programme cannot take off But even when strong support of top management for the programme is in evidence, the programme may still fail to realize its promise and potential if the following eleven deadliest sins" are not avoided (Fahey and Prusak, 1998):

1.Not developing a working definition of knowledge i.e., failure to distinguish between data, information, and knowledge; and lack of a shared understanding of what the knowledge-driven company is all about.

2. Emphasizing knowledge stock to the detriment of knowledge flow.

3. Viewing knowledge as existing predominantly outside the heads of individuals.

4. Not understanding that a fundamental intermediate purpose of managing knowledge is to create a shared context (through dialogue) .

5. Paying little heed to the role and importance of tacit knowledge.

6. Disentangling knowledge from its uses.

7. Downplaying thinking and reasoning i.e., failing to challenge the prevailing modes of thinking and reasoning assumption and beliefs.

8. Focussing on the past and present, and not on the future.

9. Failing to recognize the importance of experimentation.

10. Substituting technological contact for human interface i.e., face to face dialogue.

11. Seeking to develop direct measures of knowledge.

Action Imperatives for KM

  The foregoing problems and difficulties, constraints and impediments in the implementation of a KM programme, are not easily rectifiable. There are no easy or simple solutions. What an organization may however usefully do, is to initiate a concerted set of measures towards progressively building up the company's capacity for resolving and overcoming the problems and difficulties. These measures are focused on building a learning organization. The latter is an imperative prerequisite for effectively implementing a KM programme. The action requirement may be listed briefly as follows. They entail a coordinate recasting of the firm's training, incentives, a communications programmes, along with organizational policies, procedures, rules and routines. The action requirements/measures are:

•  Creating and stressing continuous learning opportunities for people.

• Providing opportunities for people to engage in dialogue and inquiry .

• Encouraging and rewarding collaboration and team learning in a sustained manner.

• Establishing systems to capture and share learning in a sustained manner.

• Establishing systems to capture and share learning.

• Identifying and developing leaders who model and support learning at the individual, team, and organizational levels.

• Developing shared understanding first at local levels since the locus of learning and use of knowledge resides largely at local levels; and then gradually moving towards the level of a company as a whole.

• Providing individuals frequent occasions for discussing debating, and clarifying for themselves as to what constitutes knowledge in their areas of work.

• Helping people identify the role, requirements, and implications of knowledge for their work performance.

• Focusing more on the flow of knowledge than its stocking.While benchmarking of processes of other companies of comparison and learning; managers must not lose focus of what may be unique in their own company's situation. Creating a 'boundary less' organization. 'Boundary less ness' -means 'behaviour that is open, where people act without regard to status or functional loyalty , and also look for ideas from any where ("Uack Welch)..Remembering that in any successful innovation and change there is a crucial common factor: a strong and motivating goal that anyone in a team can easily understand and embrace. Introducing a skill-based pay plan as a part of a wider system of incentives, rewards and recognition. In a skill-based plan, employees are paid more for developing and mastering new~: skills that are relevant to the company's strategic concerns., Such a plan (or plans) helps create a multi-skilled workforce, and foster a culture which values and rewards continuous learning by people.

Developing Human Capital

The role of managers in general, and of senior managers in particular, needs to be reoriented around coaching and mentoring. They need to help plan and facilitate the development of the firm's human capital. In terms of such a reoriented goal, they need to combine both teaching and learning toward helping employees along the following lines:

(i) Helping employees to identify their skills gaps, and recognize areas of inadequacy to improve current performance.

(ii) Motivating employees to keep up with developments in their professions, and to anticipate how changes in the organization and industry, ,may demand new work skills, capabilities, and knowledge from them; and preparing for the same.

(iii) Enabling employees to acquire insights into enterprise goals,performance requirements, and their readiness to meet the firm's expectations.

(iv) Motivating employees to look for ideas and insights in both traditional and non traditional places.

Encouraging employees' self-development by:

(a) Understanding the employees' perspectives, aptitudes, and aspirations.

(b) Providing helpful performance feedback, treating poor performance as a difficulty to be overcome, rather than a focus for criticism.

(c) Providing behavioural choices for learning.

(d) Communicating new opportunities for learning and changing requirements of skills and knowledge and

(e) Enabling and facilitating individuals becoming responsible for their own development, and providing resources in support of this objective.

Individuals engaged in self-development actively seek and use feedback, set development goals, get involved in learning and developmental activities, and monitor their own progress and performance. Developing human capital for and through a KM programme, requires patient efforts over time. The KM programme of a firm, in this context, should start in a small way in the form of one or two small pilot projects at first. The objectives of such pilot projects should be:

1.To provide an early evidence of high potential value of KM

2.To enable the testing of various practices and routines on a small manageable scale .

3.To help create an understanding of the nature and importance of IT support infrastructure.

4. To focus very clearly on one or a few clear goals like reduction of cycle times, reduction of cost and complexity, facilitation of product development, or customer satisfaction.

5.To achieve an early success to create a successful learning experiences, and thereby strengthens the people's motivation and self-confidence.

6.To provide a prototype for further KM projects, and a template for a scaling up of the KM programme.

The planning and implementation of all the foregoing actions and initiatives would require concerted efforts of managerial lead ership. These efforts, would be guided, shaped, and coordinated by the new role position of the CKM. To the extent, all the foregoing efforts toward building a learning organization, and developing human capital are successful, they would engender and enhance a company's 'corporate IQ''.


Drucker,P., (2003). Managing in a time of Great change, Butterworth-Heineman, Oxford .

Fahey,L.&L Prsak, (1998). The Eleven Deadliest Sins of Knowledge Management .California Management Review, Spring 1998.

Nonaka,L. (2002). The Knowledge Creating Company.Harvard Business Review.

Prahalad C.& Hamel, “The core competence of a Corporation' Harvard Business Review,May-June,1990

Rastogi P.N., (1999). HRD in the New Millennium. New Delhi TaTa McGraw-Hill Publishing Company Limited. pp 186-203