Process and Product Approaches in Knowledge Management

Knowledge and Knowledge Management

The task of developing and applying knowledge management as a new discipline is a challenging endeavor. This new discipline must successfully respond to the diverse needs of companies in a timely fashion. However, despite a wealth of books, reports, and studies, neither researchers nor practitioners have an agreed definition of knowledge management. The term is used loosely to refer to a broad collection of organizational practices and approaches related to generating, capturing, and sharing knowledge that is relevant to the organization's business. There are many interpretations as to what it exactly means and how to best address the emerging questions about how to effectively use its potential power (see, e.g., Nonaka & Takeuchi, 1995; Davenport & Prusak, 1998; Edvinsson & Malone, 1997; Wiig, 1995). Some would even argue that knowledge management is a contradiction in terms, being a hangover from an industrial era when control modes of thinking were dominant.

Whatever the term and the definition employed to describe it, knowledge management is increasingly seen, not merely as the latest management fashion, but as signaling the development of a more organic and holistic way of understanding and exploiting the role of organizational knowledge in the processes of managing and doing work.

A definition that is suitable for our purposes is the one given by Davenport and Prusak (1998), who define knowledge as "a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organizations, it often becomes embedded not only in documents or repositories, but also in organizational routines, processes, practices, and norms." This definition highlights two important types of knowledge—explicit knowledge and tacit knowledge (see also Nonaka & Takeuchi, 1995).

Tacit knowledge refers to that knowledge which is embedded in individual experience such as perspective and inferential knowledge. Tacit knowledge includes insights, hunches, intuitions, and skills that are highly personal and hard to formalize, making them difficult to communicate or share with others. Tacit knowledge is also deeply rooted in an individual's commitment to a specific context as a craft or profession, a particular technology or product market, or the activities of a work-group or team. In other words, tacit knowledge is deeply ingrained into the context, i.e., the owner's view and imagination of the world and into his/her experience, which is previously acquired knowledge.

Explicit knowledge is knowledge that has been articulated in formal language and can be easily transmitted among individuals. It can be expressed in scientific formulae, codified procedures, or a variety of other forms. It consists of three components: a language, information, and a carrier. The language is used to express and code knowledge. Information is coded externalized knowledge. It is potential knowledge that is realized when information is combined with context and experience of humans to form new tacit knowledge. The carrier is able to incorporate coded knowledge and to store, preserve, and transport knowledge through space and time, independent of its human creators.

Both explicit knowledge and tacit knowledge are important for the organization. Both must be recognized as providing value to the organization. It is through the conversion of tacit to explicit knowledge and explicit to tacit knowledge in the organization that creativity and innovation are released and the potential for value creation arises. The goal, then, is to leverage both explicit knowledge and tacit knowledge, and to reduce the size of the organizational knowledge gaps.

The business and popular press abound with real-world industrial examples of initiatives that attempt to address these goals. Such initiatives may be classified within three strands. First, some companies, like Dow Chemical, address innovation in product development initiatives, either by making sure that knowledge is embedded in their products, or by identifying and reusing knowledge. Second, organizations like Texas and Chevron develop process and operational improvement initiatives that focus on the transfer of best practices by creating best-practice databases and organizing best-practice sharing events. Third, many companies (e.g., in the telecommunications and the banking sectors) develop customer and market initiatives, in which they mine customer data to make sense of who buys and why, and how to keep clients buying.

The Process and Product Approaches in KM

Knowledge management has moved from an early premature phase—characterized by considerable hype and confusion—to a state of relative maturity, in which the value it brings to business and government organizations is not disputed. The adopters of this new discipline have followed different approaches with varying emphasis on technology and cultural, organizational, and managerial issues. Nevertheless, if one looks into the research landscape as well as into the business applications of KM, it is easy to notice that two main perspectives for knowledge management are usually employed (see, e.g., Hansen, Nohria, & Tierney, 1999; K hn & Abecker, 1997; Spek & Spijkevert, 1997). Let's call them the "product" and the "process" approaches.

The product approach implies that knowledge is a thing that can be located and manipulated as an independent object. Proponents of this approach claim that it is possible to capture, distribute, measure, and manage knowledge. This approach mainly focuses on products and artifacts containing and representing knowledge; usually, this means managing documents, their creation, storage, and reuse in computer-based corporate memories. Examples include: best-practice databases and lessons-learned archives, case-bases that preserve older business-case experiences, knowledge taxonomies and formal knowledge structures, etc. This approach is also referred to as the 'content-centered' or 'codification' approach.

Adopting a product-centric approach to KM means treating knowledge as an entity separate from the people who create and use it. The typical goal is to take documents with explicit knowledge embedded in them—memos, reports, presentations, articles, etc.— and store them in a repository where they can be easily retrieved. Examples of companies that aim at a continual enhancement of their knowledge base—the collection of best practices, methods, and reusable work products—include General Motors, Glaxo Wellcome, and DaimlerChrysler.

The process approach puts emphasis on ways to promote, motivate, encourage, nurture, or guide the process of knowing, and abolishes the idea of trying to capture and distribute knowledge. This view mainly understands KM as a social communication process, which can be improved by collaboration and cooperation support tools. In this approach, knowledge is closely tied to the person who developed it and is shared mainly through person-to-person contacts. The main purpose of information and communication technology (ICT) in this case is to help people communicate knowledge, not store it. ICT tools in this case comprise, e.g., e-mail, videoconferencing, workflow management systems, systems for the distributed authoring of hypertext documents, group-decision support systems, etc. This approach has also been referred to as the 'collaboration' or 'personalization' approach.

Firms adopting a process-centric approach in their KM initiatives focus on the creation of communities of interest or practice (self-organized groups that 'naturally' communicate with one another because they share common work practices, interests, or aims), to address knowledge generation and sharing. The emphasis in this case is on providing access to knowledge or facilitating its transfer among individuals. For example, companies like British Petroleum, Skandia, Buckman Laboratories, and Matsushita strive to create corporate environments that nurture knowledge communities, in order to facilitate the exchange of ideas and collaboration across the organization.

The existence of these two approaches in knowledge management can be attributed no less to its different origins. Artificial intelligence and knowledge engineering for instance have historically focused on technologies for codification and organization, in contrast to organizational theory that has always treated knowledge independently of the people that own it.

Table 1 summarizes the basic characteristics of the two approaches in terms of their strategic, technological, and human resource-related directions (see also Hansen et al., 1999, for an analysis).

Table 1: Characteristics of the Process- and Product-Centric KM Approaches

	Product-centric approach	Process-centric approach
Focus	Knowledge is represented as objects. The emphasis is on capturing, organizing and sharing knowledge objects. Utilization of products and systems that contain codified knowledge.	Knowledge is associated with the individual that owns it. Knowledge sharing is accomplished through human contacts and relations.
Strategy	Exploitation of organized, codified and easily re-usable knowledge. Linking of people with systems that capture and disseminate knowledge.	Exploitation and empowerment of individual and team knowledge. Development of networks for linking people, promotion and facilitation of discussions so that tacit knowledge can be shared.
Human Resources	Employment of professionals who are well suited to the reuse of knowledge. Training is facilitated passively (through courses, presentations, computer-based courses). Rewarding focuses on using and contributing to the organizations knowledge base.	Employment of highly creative professionals that work in teams. Training is facilitated through on-the-job learning, group brainstorming sessions, and one-to-one mentoring. Rewarding focuses on group performance and knowledge sharing between professionals.
Information Technology	Heavy investment in IT. Tools include document repositories, search and retrieval tools.	Moderate investment in IT. Tools include discussions databases, real-time communication and collaboration tools, net conferencing and push technologies.

The Need to Integrate the Two Approaches

The question that arises is: which companies and when, should adopt one or the other approach? The choice of the overall approach to be followed by a KM initiative should not be arbitrary, neither should it be ad hoc; it depends on the company characteristics, the ways the company delivers its products and services, its financial characteristics, and its organizational culture.

One solution proposed in the literature is to relate the choice of the most appropriate approach to the vital characteristics of a company's product or service (see Hansen et al., 1999, and Table 2).

Table 2: Relation of KM Approach to Product Characteristics

	Standardization of product or service	Maturity of product or service
Knowledge as a "Product"	Standardized	Mature
Knowledge as a "Process"	Customized	Innovative

The product-centric approach is more likely to be followed by companies whose business strategy is based on standardized and mature products. The processes for developing and selling such products involve well-understood and well-organized tasks, and the product knowledge is relatively rigid—thus more easily codified. In such cases, developing a strategy around the "knowledge as a product" approach seems more suitable.

The process-centric approach on the other hand is more likely to be followed by companies whose value proposition is based on developing highly customized and/or extremely innovative products or services that meet unique customer needs. Because these needs vary dramatically, codified knowledge is of limited value. In those cases, adopting a "knowledge as a process" approach that mainly supports the sharing of knowledge, expertise, and judgment seems more appropriate.

Such a roadmap may be useful for some extreme cases, but seems to be of limited value in supporting the decisions of companies that operate within the constantly challenging e-business world in which there is a clear need toward delivering product-service hybrids with distinct characteristics: their life time is linked to the life of the customer need; their major cost element is the cost of design; their main revenue model is subscription and user-fees; and their marketing objective is building communities of satisfied clients.

Hence the challenge faced by firms in the digital era is to effectively exploit the intangibles that add value to these 'offerings': technical know-how, design of the offering, marketing and presentation, understanding of the customer need, etc., so that they can 'integrate' knowledge in their offerings and create new value by designing and developing new offerings.

These challenges call for the integration of the "knowledge as a process" approach (which will facilitate the leveraging of tacit, intangible knowledge) with the "knowledge as a product" approach (which will enable the consistent management of explicit knowledge, like best practices). So there is a real need for a balanced fusion of the two KM views. Such a fusion should clearly focus on the knowledge assets of the company, link strategic and operational issues in a consistent manner, and enable leveraging the key knowledge of the firm at various levels, i.e., at the individual, team, and organizational levels.

The next section outlines the conceptual framework of our approach, which aims at explicitly providing for such a fusion.