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Management
Information Systems
Reference Book:
Management Information Systems
MANAGING THE DIGITAL FIRM-12th
Edition,Kenneth C. Laudon & Jane P. Laudon
Chowdhury Ummeh Kulsum Tasnuva
Faculty Member
Department of Management
University of Chittagong
Email: [Link]@[Link]
Chapter 7
Managing Knowledge
Introduction
Knowledge management and collaboration systems are among the fastest growing areas of
corporate and government software investment. The past decade has shown an explosive growth
in research on knowledge and knowledge management in the economics, management, and
information systems fields.
Knowledge management and collaboration are closely related. Knowledge that cannot be
communicated and shared with others is nearly useless. Knowledge becomes useful and
actionable when shared throughout the firm.
Knowledge management has become an important theme at many large business firms as
managers realize that much of their firm’s value depends on the firm’s ability to create and
manage knowledge.
Studies have found that a substantial part of a firm’s stock market value is related to its
intangible assets, of which knowledge is one important component, along with brands,
reputations, and unique business processes.
Well-executed knowledge-based projects have been known to produce extraordinary returns on
investment, although the impacts of knowledge-based investments are difficult to measure.
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IMPORTANT DIMENSIONS OF KNOWLEDGE
There is an important distinction between data, information, knowledge, and wisdom.
Data is a flow of events or transactions captured by an organization’s systems that, by
itself, is useful for transacting but little else.
To turn data into useful information, a firm must expend resources to organize data into
categories of understanding, such as monthly, daily, regional, or store-based reports of
total sales.
To transform information into knowledge, a firm must expend additional resources to
discover patterns, rules, and contexts where the knowledge works.
Finally, wisdom is thought to be the collective and individual experience of applying
knowledge to the solution of problems. Wisdom involves where, when, and how to
apply knowledge.
IMPORTANT DIMENSIONS OF KNOWLEDGE
Knowledge is both an individual attribute and a collective attribute of the firm.
Knowledge is a cognitive, even a physiological, event that takes place inside peoples’ heads. It is
also stored in libraries and records, shared in lectures, and stored by firms in the form of
business processes and employee know-how.
Knowledge residing in the minds of employees that has not been documented is called tacit
knowledge, whereas knowledge that has been documented is called explicit knowledge.
Knowledge can reside in e-mail, voice mail, graphics, and unstructured documents as well as
structured documents.
Knowledge is generally believed to have a location, either in the minds of humans or in specific
business processes.
Knowledge is “sticky” and not universally applicable or easily moved. Finally, knowledge is
thought to be situational and contextual. For example, you must know when to perform a
procedure as well as how to perform it.
Table 11-1 reviews these dimensions of knowledge.
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IMPORTANT DIMENSIONS OF KNOWLEDGE
– Knowledge is a firm asset. – Knowledge has a location.
• Intangible • Cognitive event
• Creation of knowledge from data,
information, requires organizational • Both social and individual
resources • “Sticky” (hard to move), situated
• As it is shared, experiences network (enmeshed in firm’s culture),
effects contextual (works only in certain
– Knowledge has different forms. situations)
• May be explicit (documented) or – Knowledge is situational.
tacit (residing in minds)
• Know-how, craft, skill • Conditional: Knowing when to apply
• How to follow procedure procedure
• Knowing why things happen (causality) • Contextual: Knowing circumstances to
use certain tool
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IMPORTANT DIMENSIONS OF KNOWLEDGE
• Organizational learning
– Process in which organizations learn
• Gain experience through collection of data, measurement, trial and error, and feedback
• Adjust behavior to reflect experience
– Create new business processes
– Change patterns of management decision making
– Organizations that can sense and respond to their environments rapidly will survive
longer
Knowledge management value chain
• Knowledge management
– Set of business processes developed in an organization to create, store, transfer, and
apply knowledge
– increases the ability of the organization to learn from its environment and to
incorporate knowledge into its business processes.
• Knowledge management value chain:
– Each stage adds value to raw data and information as they are transformed into usable
knowledge
– Knowledge acquisition
– Knowledge storage
– Knowledge dissemination
– Knowledge application
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Knowledge management value chain
The Knowledge Management Value Chain
FIGURE 7-1 Knowledge management today involves both information systems activities and a host of enabling management
and organizational activities.
7.9 Copyright © 2016 Pearson Education Ltd.
Knowledge management value chain
1. Knowledge acquisition 2. Knowledge storage
• Documenting tacit and explicit • Creation of Databases
knowledge • Document management systems
– Storing documents, reports, • Role of management:
presentations, best practices – Support development of planned
– Unstructured documents (e.g., knowledge storage systems.
e-mails) – Encourage development of
– Developing online expert corporate-wide schemas for
networks indexing documents.
• Creating knowledge – Reward employees for
• Tracking data from TPS and taking time to update and
external sources store documents properly.
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Knowledge management value chain
3. Knowledge dissemination 4. Knowledge application
• Portals, wikis • To provide return on investment,
• E-mail, instant messaging organizational knowledge must become
• Search engines systematic part of management decision
• Collaboration tools making and become situated in decision-
support systems.
• A deluge of information by
Contemporary technology? – New business practices
– Training programs, informal – New products and services
networks, and shared management – New markets
experience help managers focus
attention on important
information.
Knowledge management value chain
• Organizational roles and responsibilities
– Chief knowledge officer executives
– Dedicated staff / knowledge managers
– Communities of practice (COPs)
• Informal social networks of professionals and employees within and outside firm
who have similar work-related activities and interests.
• Activities include education, online newsletters, sharing experiences and techniques.
• Facilitate reuse of knowledge, discussion.
• Reduce learning curves of new employees.
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Three major types of knowledge management systems
1. Enterprise-wide knowledge management systems
• General-purpose firm-wide efforts to collect, store, distribute, and apply digital content
and knowledge.
• Enterprise-wide knowledge management systems are platforms that oversee the
organization's collective knowledge. Their significance lies in their ability to centralize,
manage, and distribute knowledge across all levels and departments of an organization.
• Other enterprise-wide knowledge management systems include: Microsoft SharePoint:
SharePoint is a widely used EKMS that offers a comprehensive suite of features for
creating and managing knowledge-based content, including document libraries, wikis,
and social networking tools.
2. Knowledge work systems (KWS)
• Specialized systems built for engineers, scientists, other knowledge workers charged
with discovering and creating new knowledge.
3. Intelligent techniques
• Diverse group of techniques such as data mining used for various goals: discovering
knowledge, distilling knowledge, discovering optimal solutions
Three major types of knowledge management systems
FIGURE 7-2 There are three major categories of knowledge management systems, and each can be broken down further into
more specialized types of knowledge management systems.