I Knowledge Management Knowledge Management Edited by Pasi Virtanen and Nina Helander In-Tech intechweb.org Published by In-Teh In-Teh Olajnica 19/2, 32000 Vukovar, Croatia Abstracting and non-prot use of the material is permitted with credit to the source. Statements and opinions expressed in the chapters are these of the individual contributors and not necessarily those of the editors or publisher. No responsibility is accepted for the accuracy of information contained in the published articles. Publisher assumes no responsibility liability for any damage or injury to persons or property arising out of the use of any materials, instructions, methods or ideas contained inside. After this work has been published by the In-Teh, authors have the right to republish it, in whole or part, in any publication of which they are an author or editor, and the make other personal use of the work. © 2010 In-teh www.intechweb.org Additional copies can be obtained from: publication@intechweb.org First published March 2010 Printed in India Technical Editor: Sonja Mujacic Cover designed by Dino Smrekar Knowledge Management, Edited by Pasi Virtanen and Nina Helander p. cm. ISBN 978-953-7619-94-7 V Preface Knowledge is nowadays recognized as a signicant factor of production. However, as the area of interest is still relatively new, there are multiple views and angles to the phenomenon. This book is a compilation of writings handpicked in esteemed scientic conferences that present the variety of ways to approach this multifaceted phenomenon. The challenge in all research is to know where to draw the line, to make limitations for what to include and what to exclude in one’s study. It is often seen as a sign of a good scholar when the borders of the subject in one’s study are clear to see. Quite often the writer has to dene the outlines for the study articially, for example, in management there is no management without the organization and on the other hand there is no organization without people and structures. All this falls beneath the umbrella of knowledge management. The question remains, which are the relevant parts in accordance with one’s own study and its focus. One has to theorize on something that is both tangible and intangible as well as their interactions. Knowledge management as a research eld divides further into several schools including such orientations or focusing areas as intellectual capital, information systems, communal direction (communities of practice), social networks and complexity, to name but a few. It is also extremely important to recognize that also the roots of knowledge management lie on several disciplines and focus areas, like general management, human relations management and information systems management and their respective literature. First studies in leadership and management arose among the military issues and date back centuries. One of the rst ones, if not the rst one, was written some 2300 years ago. This refers to Sun Tzu’s The Art of War (Sun Tzu 1993), which is quite widely read especially among the eastern leaders (Wee 1994), but also in the western hemisphere. After that there are names such as Machiavelli (1993, orig. 1531) and von Clausewitz (1998, orig. 1832) that surely ring a bell among those interested in these matters. However, this area is still not nished. Knowledge management might also be seen as a descendant of the so called human relations - school that dates back to the nineteen twenties and thirties. Up until then the dominant way of how management was seen, had been the classic theory of management in which the labor is looked upon an asset like all the other assets for manufacturing businesses, the employee could even have been thought of as a part of a machine. The so called scientic management is one the best known examples of this movement. In 1924 General Electric’s plant in Hawthorne near Chicago, US, authorized a group of scholars from Harvard to conduct a study on the effects of lighting on productivity. The results of these experiments were somewhat surprising and although later at least some of the implications were questioned, they still gave a start to VI more human-centered viewpoint to management and began to clearer divide management and leadership from one another. Since the thirties this more humane approach has been attracting scholars in certain amount but not en masse. After the war in the forties and later in the fties the human side began to win on popularity also among academia. This may be seen for example in the increased amount of literature that goes in this direction. In all, it can be argued, that the roots of the scholars in knowledge management are mostly to be found in the human relations school. There are quite a few overlapping and shared elements in human relations schools writings and in writings that may be later dened to be knowledge management literature. Penrose (1958) wrote already in the late fties about a new way to regard a business enterprise and knowledge management as a discipline is being born. Later Peter F. Drucker introduced the term knowledge worker (1970). The early years were perhaps neither easy nor successful but the thoughts remained in the under current. They may be seen as re-emerged at the latest in 1995 when the Knowledge-Creating Company was published by Nonaka and Takeuchi (1995). Although the role of human relations and leadership, i.e. the softer side of knowledge management, is highly important and can be seen as the origin of knowledge management approach, we cannot ignore the fact that effective knowledge management in practical business life needs also solid understanding and utilization of information systems. In fact, in some occasions this kind of “harder” side of knowledge management is more concrete thing for the managers to grasp the big umbrella of knowledge management – there needs to be a solid starting point for every new idea and approach. In this book, knowledge management is seen as an integral part of information and communications technology (ICT). The theme is approached rstly from the more general angles, starting by discussing knowledge management’s role as a medium towards increasing productivity in organizations. This also relates to the discussion of intellectual capital and its measurement methods, without forgetting the viewpoint of manufacturing operations. In the starting chapters of the book, the duality in between technology and humans is also taken into account. In the following chapters, one may see the essence and multifaceted nature of knowledge management through branch specic observations and studies. Towards the end of the book the ontological side of knowledge management is illuminated. The book ends with two special applications of knowledge management. We hope that this book gives fresh ideas for applying and practicing knowledge management in different organizations, especially those operating in the ICT sector, as well as opens new directions for future studies in the growing eld of knowledge management research. Editor Pasi Virtanen and Nina Helander VII Contents Preface V 1. Cuttingcostsandmakingprotsthroughknowledgemanagement 001 NinaHelander,MarianneKukkoandPasiVirtanen 2. KnowledgeManagement(IntellectualCapital)Assessment usingFuzzyExpertSystem 015 MehdiFasanghari 3. TheKnowledgeManagementStrategicAlignmentModel(KMSAM)andIts ImpactonPerformance:AnEmpiricalExamination 025 Yue-YangChenandHui-LingHuang 4. TheIntelligentManufacturingParadigminKnowledgeSociety 035 IoanDumitracheandSimonaIulianaCaramihai 5. Actor-networkingengineeringdesign,projectmanagementandeducation research:aknowledgemanagementapproach 057 JoséFigueiredo 6. ManagingKnowledgeinCollaborativeSoftwareMaintenanceEnvironment 073 MohdZaliMohdNor,RusliAbdullah,MasrahAzrifahAzmiMuradandMohdHasanSelamat 7. KnowledgeManagementinVirtualCommunitiesofPractice 093 JúnioCésardeLima,CedricLuizdeCarvalhoandAnaPaulaLaboissièreAmbrósio 8. LinkageKnowledgeManagementandDataMininginE-business:Casestudy 111 Ming-ChangLee 9. MalaysianBusinessCommunitySocialNetworkMappingontheWebBasedon ImprovedGeneticAlgorithm 137 SitiNurkhadijahAishahIbrahim,AliSelamatandMohdHazSelamat 10. AnOntologicalFrameworkforKnowledgeManagementinSystemsEngineering Processes 149 OlfaChourabi,YannPolletandMohamedBenAhmed 11. OntologicalKnowledgeRepresentationforResolvingSemanticHeterogeneityin SoftwareRequirementsTraceability 169 NamfonAssawamekin,ThanwadeeSunetnantaandCharnyotePluempitiwiriyawej VIII 12. ClassifyingExpertiseinaSpecialInterestGroupKnowledgePortal UsingaPoint-BasedSemi-AutomaticExpertise(PBASE)Method 181 AisyahIsmail,ShahidaSulaiman,MazianiSabudin,RosniAbdullahandSarinaSulaiman 13. TowardstheOptimizationofClientTransportServices:NegotiatingbyOntology MappingApproachbetweenMobileAgents 195 SawsanSaad,HayfaZgayaandSlimHammadi 14. StudyonProductKnowledgeManagementforProductDevelopment 221 ChunliYang,HaoLiandMingYu 15. TheContributionofTechnologicalFactorsonKnowledgeSharingQualityamong GovernmentOfcersinMalaysia 239 MohdBakhariIsmailandZawiyahM.Yusof 16. TowardsaCollection-BasedKnowledgeRepresentation:theExample ofGeopoliticalCrisisManagement 255 Pr.FrancisRousseauxandKevinLhoste Cuttingcostsandmakingprotsthroughknowledgemanagement 1 Cuttingcostsandmakingprotsthroughknowledgemanagement NinaHelander,MarianneKukkoandPasiVirtanen x Cutting costs and making profits through knowledge management Nina Helander (Ph.D.), Marianne Kukko (M.Sc.) and Pasi Virtanen (M.Sc.) Tampere University of Technology Finland 1. Introduction The commonly recognised primary idea of a business enterprise is to make a profit for its owners. There are three conditions that a company must meet in order to survive: it should be financially sound and solvent, it should have liquidity, and it should be profitable. Making a profit means that the enterprise should be viable; it should be capable of maintaining a certain amount of income and keeping costs down. Furthermore, in order to be successful it should do this in some way better than its competitors. Today, as most companies possess or at least may gain access to the infrastructure generally used in their chosen field of operations, they have to seek a competitive edge elsewhere. That advantage can be achieved by finding a unique way of combining the more traditional tangible assets with intangible ones such as individual and organisational knowledge (Spender & Grant 1996). It is exactly this combination of different types of knowledge that makes each and every company different from its peers, as there simply are no two companies exactly alike. Knowledge is widely recognised as an asset, but it is also a vital factor of production (Zack 1999a). This means that the general perception of knowledge is changing. Knowledge is no longer seen as something one needs, or even is allowed to, hold on to oneself; instead, personnel are encouraged to share it. Companies will have to alter their ways of thinking about knowledge and start to look at it as they looked upon raw materials or finances some decades ago. The state of affairs is somewhat contradictory, since the financial means, flows of money, are in general kept under rather good control while knowledge, which is often even more important - as it may control and aid in monitoring the other flows - is only just reaching this point. One feature of knowledge is that it multiplies when shared (Allee 2000). One can only hope that this would apply also for financial assets. As indicated above, knowledge is an essential resource for contemporary organisations (Penrose 1995, 79-80), especially according to the knowledge-based view of the firm, under which theory knowledge is seen even as a critical element in many organisations' success (see, e.g., Grant 1996). The modern company must evaluate its assets and resources, which include knowledge, and where there is shortage, they must acquire the deficient or entirely lacking asset so that production, whatever its nature, can commence anew, or continue efficiently and economically. One way to utilise this resource is to optimise the use of existing knowledge in the company. As knowledge is a focal component of an organisation's success, 1 KnowledgeManagement2 critical knowledge should first be recognised, after that it may and should be utilised effectively. Knowledge management (KM) is the tool for recognising and utilising this knowledge. In this chapter, KM is elaborated upon through a real-world example. The chosen example is a software company operating in business-to-business markets; i.e., the company produces software solutions and sells these to other organisations. In this company, the business unit management realised that there is a large amount of overlapping work, as the software production teams tend not to be aware of the big picture. Thus, the teams start their software production with a clean slate regardless of the work already done and knowledge created elsewhere in the company. All projects have more or less the same costs, because each team creates software code covering all aspects of the functionality, whether or not the same features already have been created by another team for another project or software product. If the latter features could be thought of as a common component in and of software rather than merely lines of code relevant to a single project, a significant amount of working costs could be saved. The company's management sought a solution in componentisation - which translates into codification in the language of knowledge management. To be more precise, this chapter is meant to clarify the use of componentisation as a way and example of putting codification strategy to use as part of KM in the context of software production. 2. What is knowledge management? On a general level, knowledge management can be seen as managing the sharing and application of knowledge, as well as improving knowledge creation (Marchand & Davenport 2000). Essential elements in knowledge management are administration and goal-oriented management of knowledge, skills, competence, and communication (Suurla 2001). On the basis of these statements, it may be concluded that, as these concepts cover the whole enterprise and its operations, they belong to the jurisdiction of the board of directors. Basically it can be said that one of the main ideas in knowledge management is effective diffusion and promotion of the reuse of existing resources (Wah 2000) throughout the organisation. Thus, to move knowledge and experience in the organisation from their origin to places where they are novel can be seen as one of the tasks of knowledge management (Ainamo 2001). The knowledge should be shared openly, which, in turn, means that, from the organisation's point of view, the only proprietary view is that of the company itself. However, getting people to talk and share their knowledge could be considered to be the greatest obstacle to effective knowledge management (Desouza 2003). It has been stated that an attitude of wisdom is required within an organisation (i.e., the members of the organisation willing to search for knowledge inside the organisation and also willing to share their own knowledge) if knowledge management is to work well there (Hansen et al. 1999). This implies that knowledge management also is a function that has a close connection or an interface with human resource management and leadership in companies. The attitude of wisdom inside the organisation can be enhanced and encouraged by social interaction. Through social interaction, organisational units have more opportunities to share their resources and ideas. Social interaction also promotes trust and reduces uncertainty among employees (Tsai 2000). Despite all this, many companies lack an attitude of wisdom, as the employees see their knowledge as their personal capital rather than something benefiting the whole work community. Still, exactly this attitude of wisdom would be needed for unrestricted knowledge flows to occur more commonly. One reason for this lack might be that even if the different organisational units are expected to collaborate with each other, in fact they still quite often compete with each other (Tsai 2000). It can be said that it is exactly social interaction that is indispensable in creation of the attitude of wisdom that is needed for sharing knowledge among the various units in companies. Among the benefits cited for inter-unit knowledge-sharing are innovativeness (Tsai & Ghoshal 1998) and efficiency in project completion times (Hargadon 1998a); these, in turn, are among the success factors of a modern enterprise. A question may arise as to whether an organisation can perform knowledge management without knowing it. We state that the distinction in this context is to be drawn between implementing carefully planned operations in KM and doing things that match the definition of KM. In the first case, we say that KM is being applied; in the latter case, we claim that the organisation in question is simply managing its knowledge. Problematics with knowledge management and knowledge acquisition especially are sometimes divided into two: sharing knowledge and creating new knowledge. Sharing of knowledge may on some occasions also be called knowledge transfer. This question is further elaborated upon later in this chapter. Concerning the creation of new knowledge, the founding fathers of KM, Nonaka & Takeuchi (1995), wrote that it is to be divided into a fourfold table, which they named the SECI model. This model shows that knowledge is created in different ways between different actors in organisations. The model derives its name from these means of transfer: socialisation, externalisation, combination, and internalisation. In brief, socialisation occurs when two knowledgeable persons share experiences (i.e. tacit knowledge, not previously explicated) and both learn something new from the combined knowledge base. Externalisation happens when a knowledgeable person makes his or her tacit knowledge explicit for the rest of the organisation. Combination refers to the situation in which there are two separate explicit sources from which facts can be drawn together to create new knowledge. Internalisation describes the situation wherein an individual takes in explicit knowledge and processes this within the framework of his or her experiences and creates new tacit knowledge. (Nonaka & Takeuchi 1995) Each of these processes can be found in organisations; they may be realised in an orderly manner or spontaneously. It may well be said that knowledge management consists of carefully designed operations in which these forms can be realised through proper planning and management, rather than just to choose the laissez-faire policy of not trying to influence knowledge utilisation and creation but instead just letting them happen if they occur at all. In effect, knowledge management may also be said to be there to channel and govern the human capital and intellectual properties of an organisation (Ståhle & Grönroos 1999) to maximise performance and to make the most of the efforts of the organisation. According to Ansoff (1965, 5), the main problem of an enterprise is how 'to configure and direct the resource conversion process in such way as to optimize the attainment of the objectives'. This problem for decision-makers involves all sub-segments of the company and their functions. As most businesses are meant to be continuous endeavours, they need to carefully plan their actions on a day-to-day basis but also in the long term. Daily operations are run in terms of operational tasks. The tool for long-term planning is strategy, where strategy refers to 'the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals' (Chandler 1966, 16). [...]... Facilitating Tacit Knowledge Exchange Communications of the ACM Vol 46, No 6 (June), 85-88 Grant, R M 19 96 Toward a Knowledge- based Theory of the Firm Strategic Management Journal Vol 17 , Winter Special Issue, 10 9 -12 2 Hansen, M T., Nohria, N & Tierney, T 19 99 What's Your Strategy for Managing Knowledge? Harvard Business Review Vol 77, No 2 (March/April), 10 6 -11 6 Hargadon, A 19 98a Firm As Knowledge Brokers:... these goals' (Chandler 19 66, 16 ) 4 Knowledge Management As already shown, knowledge is an important part of the asset repertoire of an enterprise, so it and its use must be included in these plans This also means that knowledge management should be grounded within the context of business strategy (Zack 19 99b, 14 2) Whether there is need for a specific KM strategy or KM should be part of the overall business... its knowledge Problematics with knowledge management and knowledge acquisition especially are sometimes divided into two: sharing knowledge and creating new knowledge Sharing of knowledge may on some occasions also be called knowledge transfer This question is further elaborated upon later in this chapter Concerning the creation of new knowledge, the founding fathers of KM, Nonaka & Takeuchi (19 95),... human side of knowledge management (tacit knowledge) should not be neglected One of the challenges for organisations is the difficulty of recognising what knowledge is needed in which situation (Lave 19 88; Reeves & Weisberg 19 94; Thompson, Gentner & Loevenstein 19 98 as cited by Hargadon 19 99) Organisations typically face a big problem in employees not knowing about all of the available knowledge existing... its point is to get people to share knowledge in the form of components that are creations of others' knowledge After reflection on the above-mentioned aims of knowledge management, one can state that the idea of componentisation - i.e., reuse of work already done and existing resources - is very closely tied to the central idea of knowledge management 6 Knowledge Management 3 A practical example of... organised knowledge management in the organisation In our example organisation, the main idea behind the componentisation is, as noted above, an attempt to avoid overlapping work and to utilise existing knowledge better across team and project boundaries Thus, the role of effective knowledge management and especially of knowledge- sharing is recognised in the organisation However, there remain several knowledge- management- related... activities that are needed to embed knowledge management in the organisation (Seeley & Dietrick 19 99) This also should include a timetable for actions, so that the actual tasks become scheduled and not only planned With proper strategic grounding, the investments in knowledge management will be better focused and prioritised, providing competitive advantage (Zack 19 99b, 14 2) The main idea of KM is to make... that is needed for sharing knowledge among the various units in companies Among the benefits cited for inter-unit knowledge- sharing are innovativeness (Tsai & Ghoshal 19 98) and efficiency in project completion times (Hargadon 19 98a); these, in turn, are among the success factors of a modern enterprise A question may arise as to whether an organisation can perform knowledge management without knowing... this division it is quite easy to recognise the elements that are important in knowledge management Only by noticing both aspects (despite the fact that the emphasis might be on codification strategy) can one discern an approach to knowledge management that is appropriate for software development No matter what the knowledge management strategy is, both technology and human issues should be considered... tacit knowledge (Nonaka & Takeuchi 19 95) Each of these processes can be found in organisations; they may be realised in an orderly manner or spontaneously It may well be said that knowledge management consists of carefully designed operations in which these forms can be realised through proper planning and management, rather than just to choose the laissez-faire policy of not trying to influence knowledge . Issue, 10 9 -12 2. Hansen, M. T., Nohria, N. & Tierney, T. 19 99. What's Your Strategy for Managing Knowledge? Harvard Business Review. Vol. 77, No. 2 (March/April), 10 6 -11 6. Hargadon, A. 19 98a search for knowledge inside the organisation and also willing to share their own knowledge) if knowledge management is to work well there (Hansen et al. 19 99). This implies that knowledge management. managing its knowledge. Problematics with knowledge management and knowledge acquisition especially are sometimes divided into two: sharing knowledge and creating new knowledge. Sharing of knowledge