Section I: Background and Context

Section I: Background and Context

Chapter I. Introduction
Chapter II. Knowledge Management
Chapter III. What is Soft Knowledge?
Chapter IV. Going Virtual

Chapter I: Introduction

The case study features a distributed international Community of Practice (CoP). CoPs are currently playing a major role in Knowledge Management (KM), and as organisations need to operate in a global economy, CoPs are having to function more and more in distributed environments. This chapter provides a context and background for the study by exploring the need for organisations to capitalise on their knowledge.


Commercial organisations operating in the modern business environment face a range of pressures, of which globalisation, downsizing, and outsourcing are prime examples. These three pressures are each impacting on the knowledge of an organisation and have led to knowledge being recognised as a valuable resource that needs to be managed.

Downsizing and outsourcing mean a reduction in personnel. As people leave an organisation, it has been noticed that they take valuable knowledge with them. The organisations have lost not only people, but also part of their experience base. They have lost replaceable expertise, for example, knowledge of facts and figures or skills that can be brought in or perhaps even automated. Davenport and Prusak (1998) observe that after employees have left an organisation as a result of downsizing it is realised that the organisation has lost some essential knowledge, and efforts are made to buy in the equivalent of this knowledge from outside.

Downsizing and outsourcing also result in the loss of a less easily replaced knowledge, over and above the replaceable skill that has been lost; that is the experience of how work is done in the organisation. As companies have cut out middle management, they are finding out that they have lost people who knew the details of the organisation—how to deal with different people, who to approach for specific problems, who best to use for different tasks, in short, who knew how to make things happen, and who had the knowledge required to get things done. Leonard and Sensiper (1998) noticed the same: "tacit knowledge also underlies many competitive capabilities—a fact driven home to some companies in the wake of aggressive downsizing, when undervalued knowledge walked out of the door" (p. 112).

The problem is not new. Rainbird reported in 1986 on the impact of new technology in the workplace. The technology was used to monitor highs and lows in labour demand thus enabling a greater use of part-time and temporary labour. It had, however, not been recognised that people accumulate experience and knowledge that they then apply while undertaking their work. The result, according to Rainbird, was that:

In their haste to let people go, they lost skills which were essential to production. These skills, though not formally recognised, had been acquired through experience and were based on knowledge of the system, the product and an ability to identify faults in the functioning of production linesthe company had to bring back these unskilled women workers who had been made redundant, many of whom had subsequently found alternative employment, to train the new employees (p. 11).

This trend has continued up to the present as companies continue to outsource and downsize or euphemistically, "rightsize," but they continue to have the same problems. It is not so long ago that companies were proudly stating that their people were their greatest asset. Now some of those companies are getting rid of people to cut costs, but they don't realise what they are losing. In some cases they have lost whole swathes of middle management—the very people who knew how things worked and how to get things done.

This intangible aspect was evident in a description by Button and Sharrock (1994) of a group of software engineers who were developing the embedded software for a new photocopier. When using a method (for example, Structured Systems Analysis and Design Method—SSADM), it is sometimes assumed that the method can be followed and that cheaper, less experienced personnel can be used. Button and Sharrock's example shows that this is not the case: the software project had problems, not least with lack of access to the original designers and difficulties with language. The project was only a success in the end because of the experience of the team who had to make the method work. This all shows that loss of personnel could create a problem as organisations move to cheaper, less knowledge-rich workers. This loss of knowledge causes a historical problem, in that the knowledge of skilled people needs to be available for those who come later.

Globalisation is a separate issue that impacts most organisations in some way—even the smallest companies may depend on goods that are produced abroad. It affects their knowledge resource in a different way from outsourcing and downsizing. Castells (1996) observes that the development of globalisation has been rapid and has led to an informational and global economy. It is informational in that—partly due to the influence of new electronic communication media—the success of many participants in the global economy is dependent on their ability to create and process electronic information. It is global in that most of the important parts of the economy are organised on a global scale. This may be through multinationals, networks of smaller organisations, or smaller organisations that work with the larger corporations, perhaps in the form of suppliers. Even those companies that do not expand or restructure to take advantage of the global marketplace are finding that they are being subject to competition from companies that are doing exactly that (de Geus, 1997). Globalisation means that transactions, collaboration, cooperation, and the sharing of data, information and knowledge occur over vast distances. This means that organisations must cope with the difficulties posed by physical and temporal distance, and organisational and national cultural differences. Information and Communication Technologies (ICTs) have been both drivers and enablers in the internationalisation of business operations, and there have been studies to explore the issues that arise when Information Technology (IT) is applied in the international field (Deans, Karwan, Goslar, Ricks, & Toyne, 1991).

Global competition is forcing some organisations to undergo some restructuring in order to operate successfully in the new global arena. Multinational companies have been in existence for many years, but new forms, such as international, global, and transnational have been identified (Ives & Jarvenpaa, 1992; Karimi & Konsynski, 1991). Recent years have also seen many mergers and acquisitions, joint ventures, and alliances. These have led to a structural form described by Castells (1996) as a Network Enterprise. These are networks formed by corporations of all sizes working together and are based on extensive application of networked communication media. Similar organisational forms have also been discussed by Barnatt (1997), and Lincoln, Ahmadjian, and Mason (1998), who observed how networks of small specialist companies could outperform large corporations. These changes mean that information and knowledge will have to be shared between companies who might never have imagined having to work together, but it is the sharing of the knowledge and expertise that will make a network enterprise successful. The successful organisation will be one that is able to process information quickly and generate new knowledge. The global economy changes rapidly in terms of both culture and technology and to be successful organisations need to be able to respond quickly and be innovative—and for this they need to capitalise on the knowledge within the organisation.

The Need to Manage the Knowledge Resource

The result of the downsizing, outsourcing, and globalisation pressures is a need to share knowledge distributed.

  1. Over time: downsizing and outsourcing result in a need to share knowledge between people in two different time periods. It is a historical perspective in that knowledge has to be taken from people who are in the organisation at one time and be kept and passed on to people who come later.

  2. Over space: globalisation has resulted in a need for knowledge sharing distributed over space, that is, a physical distribution between people in different locations.

This means that organisations must realise that knowledge is a valuable resource, with Nonaka (1991) describing it as the "one sure source of competitive advantage" (p. 96). The importance of knowledge can also be seen in the growing number of "knowledge workers" in commercial organisations. Knowledge workers use the knowledge they have learned in education rather than using strength and muscle as do manual workers. Drucker (1992) points out that they still use tools (for example, computers, technical instruments, etc.), but previously the worker was subordinate to the machine in that what he or she did and when he or she did it was defined by the machine; whereas in the case of the knowledge worker, the machine is unproductive without the skill and knowledge of the knowledge worker. Knowledge workers are more capable of solving a problem themselves using what they know, rather than having to stick rigidly to some externally defined procedure. Their experience is an essential part of their ability to do their jobs. Kidd (1994) explained that knowledge workers see their value in being able to understand some specific body of knowledge and from that understanding can generate new interpretations and knowledge that may benefit the organisation and the customer in some way.

They are highly motivatedactively to learn can change their thinking throughout their careers. This means that if the individual doing a job changes, then the company gets a different product as a result. This is not true for other kinds of workers (p. 187).

Organisations have also realised that, as a valuable resource, knowledge needs to be managed. Knowledge Management (KM) is a fast growing field that claims to tackle the need to share knowledge in both the temporally and physically distributed environments. As a result it has attracted much attention in both academic and commercial circles. The field of KM is interdisciplinary and the researchers and practitioners working in the field of KM represent a wide range of backgrounds. A glance through a KM journal reveals contributions from business and management specialists, psychologists, social scientists, information scientists, and computer scientists.

KM is a field that is now well established. For a long time KM was pursued through Artificial Intelligence (AI), viewing knowledge as a commodity that can be stored, transmitted, and codified. Expert systems were created to "capture" the knowledge of experts. Efforts were also made to capture knowledge in databases, manuals, books, and reports and then share them in this hard form. Emphasis was also placed on managing codified knowledge assets that were tangible in the form of patents, trademarks, and documents. It is only recently, however, that attention has been paid to other forms of knowledge that are more subtle than that currently pursued by the AI field. The newer KM strand sees knowledge as being less structured (Allee, 1997; Kidd, 1994; Manville & Foote, 1996; Skyrme 1998) and not so easily abstracted, codified, and stored for sharing. This means that in downsizing and outsourcing there is a type of knowledge lost that is not easily replaced. Examples of such knowledge might be skill, expertise, and intuition. Craftsmen making musical instruments work to fine tolerances but they "know" when a part is not up to standard, when it does not "feel right" (Cook & Seely Brown, 1999). Such knowledge cannot simply be captured and recorded for future workers. When a worker leaves the organisation, the skill and expertise also leaves. As it cannot easily be abstracted and captured, it is also not easy to share. Knowledge, which is easily captured in books, leaflets, and instructions, can be transmitted all over the world using modern technologies. The sharing of more subtle knowledge clearly poses different problems if it cannot easily be abstracted and captured. Global working leads to an increased need to share knowledge but poses further problems for the sharing of more subtle knowledge in the forms of time and distance.

In this book we will explore this less structured knowledge in more detail and see how it can be "managed" through communities called Communities of Practice (CoPs) where this type of knowledge is created, sustained, and nurtured. Despite the importance of the current trend to globalisation, these are communities that, up until recently, have been explored in co-located situations. There is, therefore, scope for exploring how CoPs function in the distributed international environment, and what particular requirements there may be for this to happen. This should provide insights into how the more subtle kinds of knowledge may be managed in such environments.