OTTO-VON-GUERICKE UNIVERSITÄT Magdeburg

FACULTY OF ECONOMICS AND MANAGEMENT

UNICERT IV Winter semester 2001/2002

Knowledge

Its significance for organizations

and

the reason for a new management task

Anja Berthold 5th semester BWL/Int. Management Bunter Weg 6/6 39118 Magdeburg

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Abstract

In times of globalization, knowledge has a great significance for the future of an organization.

Concerning the effect knowledge has on society and work, this paper will try to show that

knowledge management will be essential for organizations to compete against others and to

sustain this competition.

Key words

Knowledge, knowledge society, knowledge worker, knowledge management

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Table of contents

0. Introduction ……………………………………………………………………………. 3

1. Knowledge ……………………………………………………………………………...3

1.1. Why is knowledge important? ………………………. ………………………3

1.2. Definition of knowledge …………………………………………………….. 5

1.3. Explicit and tacit knowledge ………………………………………………… 5

1.4. Peter Drucker’s view on knowledge ………………………………………… 6

1.5. Knowledge Creation ………………………………………………………… 7

2. The knowledge society and the knowledge worker …………………………………...10

3. Knowledge Management ……………………………………………………………...14

4. Conclusion …………………………………………………………………………….19

Appendix ……………………………………………………………………………….…21

Bibliography ……………………………………………………………………………...22

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0. Introduction

Due to globalization and the struggle to survive, business environments are changing rapidly.

Today, dealing with knowledge will increasingly be of great importance to organizations.

Knowledge will become the future factor of production provided that integrated knowledge

management approaches are developed.

This paper will show that there is a need for knowledge management in the knowledge

society. Because of various approaches found in literature attention will be directed at the

strategic view of knowledge management. However, in order to see the necessary aspect of

knowledge management this paper follows a certain structure.

Part one will give an explanation of why knowledge is important. After some general

definitions of knowledge, emphasis will be laid on three points: first the definition of explicit

and tacit knowledge, second Peter Drucker’s approach to defining knowledge, and third the

creation of knowledge. Part two will describe the impact of knowledge on society creating

the knowledge society and the knowledge worker. The information of the first and the second

part then will be of help and partly taken as a basis when coming to the last part showing that

knowledge management is important to an organization.

1. Knowledge

1.1. Why is knowledge important?

Knowledge has become increasingly relevant for organizations since the shift from an

industrial economy based on assembly lines and hierarchical control to a global,

decentralized, information-driven economy. Nowadays, organizations work, compete, and

co-operate on a worldwide scale because of the global economy. Consequently, they have to

be capable of maintaining and reproducing their core competencies and corporate identity

regardless of geographical distance, linguistic and cultural differences of the markets they

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operate in. Simultaneously, they must have the ability to creatively enrich such competencies

with knowledge coming from the local communities participating in their global workforce.

In addition, they have to show that they can keep up with the quick pace of worldwide

competition by being highly innovative in their products and services. Finally, organizations

have to use their maximum strength to preserve, reuse, and generate intangible assets, i.e., in

the form of competencies, image, and reputation. Tangible assets, such as land and labor,

have prices and are traded in the global marketplace, whereas intangibles do not offer this

opportunity since their value is tightly bound to the specific and unique organizational

context in which they originate.1

The global economy went through an epoch making evolution. The industrial age that has

affected human life since the late 18th century is quickly disappearing. The evolution of

technology, due to such developments as inexpensive networks for data transmission like the

Internet, is shifting the focus of economic activities from the production and consumption of

material things to the production and consumption of information. As a matter-of-fact,

without the existence of a global information infrastructure, the global economy would be

unable to survive.2

Therefore, information now serves as a commodity which is able to connect people directly

with one another without being affected by geographic and physical barriers. However, this is

not like the way information was spread during the industrial age. At that time, there was a

need for applying hierarchical, centralized distribution processes that resulted directly from

geographical barriers and physical constraints. The typical media for this means of spreading

information were local central authorities such as national governments and management

pyramids. The information age is using a transnational global village based on shared

decision making from bottom-up instead of this institutional apparatus. In addition, it

1Borghoff and Pareschi , 1998, p.3 2Ibid.

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changed the pattern of ‘intellectual work.’ During the industrial age, this type of work was

“essentially viewed as the continuation in the office of the assembly line on the shop floor.”3

Consequently, white collar workers did not differ from blue collar workers in their

application of fixed procedures and compliance with standardized information schemes. In

contrast, a new type of intellectual work is appearing known as knowledge work. This new

work can be described as “turning information into knowledge through the interpretation of

incoming highly non-standardized information for the purposes of problem solving and

decision making.”4 Furthermore, once new knowledge is generated, a basis will be laid for

the innovative process of organizations.

1.2. Definition of knowledge

In a dictionary, knowledge is generally explained as the information, understanding and skills

gained through education, experience or discovery.

Schlöhmer describes knowledge as a combination of numerous components. Mentioning only

some of them, there are creativity, qualification, level of education, craftsmanship and

individual experiences.5 According to Bodendorf et al., knowledge is always the result of

digested and interpreted information with due regard to the environment from which it was

taken.6

1.3. Explicit and tacit knowledge

In addition, explicit and tacit knowledge will be defined in the following in order to prevent

‘confusion’ when mentioned in further parts of the paper. Explicit knowledge is formal

knowledge that can be packaged as information. It can be found in the documents of an

3Ibid., p.4 4Ibid. 5Schlöhmer, 2001, p. 15 6Bodendorf, 2001, p. 56

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organization, such as reports, articles, manuals, patents, pictures, images, video, sound

software, etc., and in the representations that an organization has of itself, such as

organizational charts, process maps, mission statements, etc. Tacit knowledge is personal

knowledge embedded in individual experience. It is shared and exchanged through direct,

face-to-face contact. It can be communicated in a direct and effective way whereas explicit

knowledge can be acquired only indirectly. It must be decoded and recoded “into one’s

mental models where it is then internalized as tacit knowledge.”7

Both types of knowledges play an important role in the overall knowledge of an organization.

Explicit knowledge is organizational knowledge defining “identity, competencies, and

intellectual assets of an organization independently of its employees.”8 Tacit knowledge,

however, is practical knowledge which is needed in order to get things done. Therefore,

having a rich background of tacit knowledge is everything an organization needs to have its

explicit knowledge grow and be sustained.

1.4. Peter Drucker’s view on knowledge

At this point, special emphasis should be laid on Peter Drucker’s9 approach of defining

knowledge. Drucker assigns knowledge to the three classic resources of production, i.e.,

capital, labor and land. However, one difference to the other resources is “that knowledge

cannot be inherited or bequeathed”10, and therefore has to be developed in a new and

different way by every individual beginning with the same lack of knowledge or information,

i.e., ignorance. According to him, this knowledge can be acquired only through schooling,

once it is put in a form in which it can be taught and once it becomes public.11

7Borghoff, 1998, p. 6 8Ibid. 9According to Daly, Drucker is “...the preeminent business philosopher of the 20th century...” and “...the guru of management.” 10Drucker, 2001, p. 12 11Ibid.

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Knowledge is not tied to any country since it is portable and therefore it can be created

everywhere fast and cheaply. Furthermore, no boundaries are set to knowledge since there is

neither domestic knowledge nor international knowledge. “There is only knowledge.”12 In

addition, Drucker sees knowledge as non-hierarchical saying that there is no higher or lower

knowledge. “What is knowledge in one situation, ..., is only information, and not very

relevant information”13 in a different situation. For example, when a German executive, who

is fluent in Chinese, is posted to Peking, his fluency in Chinese is knowledge. However, after

a few years once he has to think through his company’s business strategy for doing work in

China, his fluency in Chinese is only information that is not very relevant.

1.5. Knowledge Creation

Referring to Sena et al., this section is going to show how knowledge is created and can lead

to wisdom which is the intellectual capital of organizations. Intellectual capital or

organizational wisdom is the application of collective knowledge within the organization.

This is illustrated in Figure 1 in the appendix.

Data is the first point of the progression. Objective facts about some event are entered into a

record keeping or transaction processing system, e.g., a payment for a purchase. The data is

evaluated based on typical validation criteria. Quantitatively, these transactions or data events

are viewed in terms of data management. How fast is the entry and processing of

transactions? How much does the system cost and how efficient is it? Qualitatively, the

organization is concerned about the timeliness of the transaction events. Can the records be

accessed when they are needed and are they understandable? Transaction processing systems

(TPS) are the foundation for organizational operations. However, this storage of operational

12Drucker, 1994 13Ibid.

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data can become overwhelming, keeping in mind that more data is not always better than

less. Data is essentially raw material for information.14

Information is meant to change the way the receiver perceives something and affects the

decision maker’s judgment and behavior. Seen from a business perspective, “the organization

interprets, analyzes, and massages the data to produce reports or screen displays - anticipating

what the business user or knowledge worker may want to see to perform their duties.”15 The

data is arranged and placed into data banks. Current data is frequently called operational data

stores (ODS), whereas historical data is often summarized and aggregated based on time

intervals and placed into a data bank called a data warehouse (a constant, time-based

repository in which knowledge workers can access, question, and analyze information in a

variety of forms and arrangements to see trends over extended periods of time). Possible

questions at this point could be: What was the company’s financial position in the same

quarter for the past five years? What products in a specific segment were sold over those

quarters?16

However, neither the ODS nor the data warehouse would be particularly useful without some

form of collective connectivity. Organizations nowadays depend on their communication and

network structure. Using this formal network in addition to phone calls, written memos and e-

mail, information is spread throughout the organization. Companies use groupware products

(such as Lotus Notes or Microsoft Exchange) to improve the efficiency of those networks.

When properly used they increase the value of data and information, and thus they are

creating knowledge.17

Although having already defined knowledge, it is of great importance here to propose another

definition. According to Davenport and Prusak in Sena et al., knowledge is

14Sena and Shani, 1999, p. 8-3 15Ibid. 16Ibid., p. 8-4 17Ibid.

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“a fluid mix of framed experience, values, contextual information, and expert

knowledge providing a framework for evaluating and incorporating new

experiences and information. It originates and is applied in the minds of knowers.

In organizations, it is often embedded not only in documents or repositories but

also in organization routines, processes and norms.” 18

From this it follows that the company’s management information systems, the operational

data stores, the data warehouses, and other institutional resources must be available for

‘knowers.’ Their knowledge is applied within the organization based on experience, intuition,

and judgment.

An individual’s applied knowledge is useful and important in an organization, but

collectively deployed it is of greater value. To illustrate, managers would rather consult

people they believe to possess knowledge and expertise than look for information in

databases. Considering this case, knowledge should be recognized as a corporate asset and

therefore, it needs to be managed and invested with the same care as tangible assets.19

Finally, wisdom, also “managerial knowledge”20, can be conceived of as objective and

universal techniques and common sense. Going beyond the idea of standardized methods

which are needed to create knowledge, it involves a process of transforming observations and

interpretations of work-related events into some form of representation. Managerial

knowledge is then created once various representations are combined.

18Ibid. 19Ibid. 20Ibid., p. 8-5

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2. The knowledge society and the knowledge worker

As already mentioned, the industrial economy has shifted to an information-driven economy.

In literature, the epoch following the industrial society is often called the information society

or knowledgeable society (also knowledge society). In 1972 the term information society

appeared for the first time in a report written by the Japanese government, and was later

established in Marc Porat’s publication “The Information Society” (1977). The term

knowledgeable society was used for the first time by Robert E. Lane in the middle of the

1960s. This term describes the society whose largest amount of the gross domestic product

(GDP) is produced in the field of information and knowledge of the service sector, and whose

vast majority of the employees works there. Knowledge is the most important factor for the

development of the economy and society.21

With regard to quantity and quality, rapid growth of different information media is taking

place in the knowledge society. Intervals between the invention of new media are becoming

shorter. For example, in 1861 the telephone was invented by Phillip Reis, and 37 years later

the film22. After a short time, radio, television, tape, satellite-TV, fax, PC, CD, and many

other inventions followed.

It is interesting to note that the reason for the development from an industrial to a knowledge

society is the ‘new’ need for information. While past epochs had to handle problems, such as

the daily search for food, transportation of goods or generation of energy, our society has to

supply and transport information. Referring to Schlöhmer, characteristics of the knowledge

society are as follows:

��People acquire knowledge in order to explain and realize their goals and moral concepts.

21Schlöhmer, 2001, p. 31 22Ibid. p. 47

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��Knowledge is accumulated, organized and interpreted, in order to be able to apply it on

expedient occasion.

��In contrast to earlier epochs, a great part of resources are used for research.

��Research follows the rules of scientific argumentation.

��Science penetrates every area of life.

��People want to seek extensively for ideas about themselves, nature and society.

��Cognitive factors, knowledge, creativity, and information increasingly determine the

success of an organization.23

The last mentioned characteristic, which is that knowledge increasingly determines the

success of an organization, will be of chief concern when talking of knowledge management.

According to other sources, it was Peter Drucker who launched the revolution that has led us

into the knowledge age.24 He originally coined the terms ‘knowledge work’ and ‘knowledge

worker’25 around 1960.26 Referring to his article “The Age of Social Transformation” from

1994, the knowledge society is characterized and led by knowledge workers, who “...may not

be the ruling class of the knowledge society, but ... are already its leading class.”27 With

regard to their characteristics, social position, values, and expectations, they distinguish

themselves “from any other group in history that has ever occupied the leading position.”28

To start with, knowledge workers gain access to jobs and social positions through formal

education and advanced schooling. Their work requires highly developed manual skill

including substantial work with one’s hands, e.g., formal education and theoretical

23Ibid., p. 50 24www.kmworld.com/publications/magazine/index.cfm?action=readarticle&article_id=464&publication_id=1 25The term ‘knowledge worker’ was coined by Peter Drucker in a 1959 book, Landmark of Tomorrow. 26Drucker, 2001, p. 8 27Drucker, 1994 28Ibid.

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knowledge will never enable anyone to be a neurosurgeon unless he also shows the manual

skill and vice versa. It may be noted here that education needed for knowledge work, makes

no difference between low and high requirements of knowledge, and can only be acquired

through formal schooling and not through apprenticeship. Therefore, education becomes the

center of the knowledge society, and school its key institution.29 Acquiring knowledge does

not stop after the age of formal schooling when work begins, due to the fact that knowledge

“becomes obsolete incredibly fast.”30 This is possible through educational processes beyond

traditional school such as weekend seminars or online training programs.

As a result, the performance of an individual, an organization, an industry or a country is

measured on how well knowledge is acquired and applied. Thus, the key competitive factor

of the knowledge society is created and determines success or failure. Moreover, knowledge

for the most part exists only in application in this society. Nothing of what an information

technologist has to know can be applied to teach Chemistry. For that reason the central work

force in the knowledge society will consist of highly specialized people, i.e., people who have

learned how to acquire additional specialties quickly in order to move from one kind of job to

another, for example, from market research into management. In this context, Drucker

believes that applied knowledge is effective only when it is specialized. In fact, the more

highly specialized the more effective it is. Consequently, this implies two new requirements,

which are that knowledge workers have to work in teams and as members of an organization.

In other words, an organization is needed in order to convert the specialized knowledge of the

knowledge worker into performance. To illustrate, a surgeon needs a diagnosis in order to

yield performance.31

Contrary to society previous to the knowledge society, knowledge workers own the means of

production through their pension funds and other savings. In the industrial society, the

29Ibid. 30Daly, 2000, p. 139

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relationship between the wage fund and the capital fund was of great importance, e.g., if the

two conflicted or benefited each other. The wage fund consists of everything that goes into

consumption, while the capital fund is “that part of the total income stream that is available

for investment.”32 However, in the knowledge society, wage fund and capital fund both

merge. According to Drucker, “the pension fund is ‘deferred wages,’ and as such is a wage

fund.”33 Additionally, its significance as the main source of capital for the knowledge society

increases. Legally each knowledge worker is an employee, whereas in a team they are

capitalists. Instead of investing in machines and tools, the knowledge society has to invest in

the knowledge of the knowledge worker because without that knowledge the machines are

unproductive.34

Furthermore, the knowledge society is characterized as a “society of mobility,”35 in which

people no longer have roots. They no longer stay where they were born considering

geography, social position and status. This society provides opportunities to more people than

ever before to be successful. However, this also means that more people than ever before can

fail or come in second. 36

Regarding the above mentioned, knowledge work can be described as work which requires a

certain formal education and the ability to acquire and to apply theoretical and analytical

knowledge. Recent studies in knowledge work show that knowledge workers are commonly

employed in sectors being in direct relation to content creation which are research, design,

consulting, computer software, advertising, and media, to name just a few. In addition, they

show an evolution towards knowledge work in traditional white collar organizations, often

31Drucker, 1994 32Ibid. 33Ibid. 34Ibid. 35Ibid. 36Ibid.

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found in sales, insurance and financial services. This forces them to achieve higher

productivity in the context of global competition.37

Taking into account that business processes involve the creation, diffusion, renewal, and

application of knowledge in order to sustain and survive, an organization needs a framework

in which it sees all its processes as knowledge processes. This framework is knowledge

management.

3. Knowledge Management

According to Drucker, “the essence of management is to make knowledges productive”38 but

he puts more stress on “productive” than on “management” meaning that knowledge workers

have to be deployed where they can foster the development of the company with their

specialized knowledge.39 Finding the solution in knowledge management (KM), he

complains that “no one yet really knows how to do it”40 even though everybody talks about it.

Indeed, there are many different approaches to KM, as found in literature, making it more

difficult to give one single definition. For this reason, it is first of all best to think of KM in

the broadest context. Quoting Liebowitz, “knowledge management deals with the process of

creating value from an organization’s intangible assets.”41 Once again, this paper

concentrates on the strategic view of KM showing also some examples of companies which

have so far successfully applied KM.

When talking of strategy, two terms play an important role, i.e., core competencies (things an

organization knows how to do well) and capabilities (things an individual knows how to do

well). In both terms, knowledge is an important component but other factors are also

necessary. In this case, it can be stated: if sufficient amounts of resources and management

37Borghoff and Pareschi, 1998, p. 4 38Drucker, 1994 39Drucker, 2001, p. 18 40Ibid.

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attention is given, individual capabilities can aggregate to organizational competencies.

Knowing this, it is obvious that these concepts are decisive to the relationship between

knowledge and strategy. As mentioned before, knowledge originates and is applied in the

mind of knowledge workers. Therefore, when talking of KM and strategy, one should not

neglect what those knowledge workers actually know.42

From a strategy perspective, the key issue around competencies and capabilities is the

decision of which ones are important to have. According to Davenport, looking back at

companies that had performed successfully and explaining their performance by regarding

what the organization or its employees knew how to do, is by far not enough. Additionally,

organizations need to decide which competencies and capabilities are necessary to

accumulate or build. Honda, to take an interesting example, has been successful because of

its competency in small engine design. However, as a manager at Honda, one should also

take into consideration if more experts in small engine design should be hired or if the

production of engines is already successful enough which would rather increase the need for

knowledge of body design, market research, or car recycling.43

In order to determine what competencies and capabilities will be necessary to succeed in the

future, an organization should make use of “strategic vision, industry knowledge, and market

intuition in addition to extrapolation of existing customer and market trends.”44

First and foremost, “knowing what knowledge is necessary is only the beginning.”45

Secondly, an organization must be aware of what capabilities each person within the

organization has, and the ability to connect human resource investments to desired skills and

knowledge. Along with the above statement that education becomes the center of the

41Liebowitz, 1999, p. 3 42Davenport, 1999, p. 2-6 43Ibid. 44Ibid. 45Ibid.

16

knowledge society, it should be noted here, that it is important for an organization to teach its

employees and also to know when this teaching is necessary. For example,

“Microsoft has a system to keep track of what system development capabilities

lay within the organization. When Bill Gates decided that more of Microsoft’s

employees needed Internet development capabilities, the system allowed the

company to know the extent of the problem and to monitor progress.”46

This system also enabled Microsoft to combine internal and external educational programs to

the specific capabilities which were needed by the company.

Next, an organization needs to define a knowledge management strategy in order to force its

managers to make choices about main the aspects of their knowledge environment. Based on

Davenport, some of such choices are in the following:

��What is more important to manage - tacit or explicit knowledge?

��What knowledge domain is most important to the company? Is it customer knowledge,

competitor knowledge, product knowledge, supplier knowledge, etc.?

��In which field does the knowledge environment most need improvement? Is the company

good, e.g., at creating knowledge, but weak at applying and using it?

��Should the company make or buy its knowledge in specific areas of business?47

One should also take into consideration that knowledge environments change rapidly

meaning there is no end to KM. Factors influencing the knowledge environment are for

example new technologies, management approaches, and customer concerns. Additionally,

46Ibid. 47Ibid. p. 2-7

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strategies and organizational structures of companies change. Therefore, descriptions of

knowledge environments should not take a considerable time, or otherwise the environment

would no longer exist by the time one is finished.48

Furthermore, it is of great importance that companies “ensure that they focus on the synergy

of data and information processing capacity of information technologies, and the creative and

innovative capacity”49 of their knowledge workers. On the one hand, advanced information

technologies can then be used to accomplish ‘programmable’ tasks traditionally done by

knowledge workers. Being programmable, a procedure can then be delegated to information

technology, thus achieving efficiency and optimization. On the other hand, to achieve this

synergy, knowledge workers need to apply new technologies to their business contexts

without any efforts. Consequently, they are able to delegate programmable tasks to

technologies in order to concentrate their time and efforts on value-adding activities

demanding creativity and innovation.50 It may be noted here that this leads again to the fact

that education is of great importance since technologies change rapidly and the knowledge

worker needs to be up-to-date.

Similarly important is the use of specific software, as for example is used by Proctor &

Gamble. This kind of knowledge sharing software will enable users to locate, catalog,

transfer and maintain employee knowledge. Additionally, they will have the ability to

identify qualified individuals with relevant expertise, to submit questions or business

problems to individuals, to receive solutions from colleagues, and to respond immediately

and effectively. Answers and solutions that are transferred via the software are stored in a

knowledge base enabling employees to reuse them in the future.51 Thus, knowledge can be

applied in situations where it is relevant. If this method of sharing information, resources and

48Davenport, “Some Principles of Knowledge Management” 49Yogesh, 1998 50Ibid. 51http://www.kmworld.com/resources/featurearticles/index.cfm?action=readfeature&feature_id=263

18

employees across business units cannot be employed, another form of knowledge transfer can

be processed when employees move from one business unit to another, e.g., successfully

applied within Hewlett-Packard.52 In this way, an organization can gain a competitive

advantage by making use of the mobility of the knowledge workers.

In view of the knowledge worker, workspace has to be designed in order to follow a certain

strategy in KM. As already mentioned knowledge workers need to work in teams. Therefore,

it is optimal to use “non-hierarchical, high-touch, open workspaces”53 thereby reducing

barriers and improving knowledge worker collaboration. The company should create a

culture where knowledge workers feel comfortable asking for and offering help, as seen at

British Petroleum (BP). There, employees are encouraged to become members of lateral

networks across the organization where they belong to communities with similar interests.54

According to Deakins (the BP technology vice president) the sharing of learning and ideas

will be the basis for creation and innovation thus reaching the growth goals of the

corporation.55 Another proposal to share and exchange knowledge, especially tacit

knowledge, is to prohibit eating at the desk or workspace. Some G-8 countries, unlike the

USA, have already such requirements providing a learning experience since the knowledge

workers get the opportunity to dine with colleagues “in a shared, trustful environment.”56

Finally, KM will be efficient if knowledge workers believe their labor is honored and their

need to earn a livelihood respected. The best method to encourage knowledge transfer and

team work is by rewarding teams of workers instead of specific individuals, for example with

bonus awards, time off awards and other benefits.57

52 Davenport, “If only HP Knew What HP Knows...” 53www.kmworld.com/resources/featurearticles/index.cfm?action=readfeature&feature_id=32 54Browne, 2000 55Deakins 56www.kmworld.com/resources/featurearticles/index.cfm?action=readfeature&feature_id=32 57Adams

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When introducing a new management strategy concept, it is also of great importance to

regard benefits that the concept will have. In order to use KM efficiently, it should help a

company do one or more of the following:

��Promote the development of innovation by encouraging the free flow of ideas

��Improve customer service by streamlining response time

��Increase revenues by getting products and services to the market faster

��Improve the efficiency of operations and reduce costs by eliminating redundant or

unnecessary processes

Those are the most common examples. A creative approach to KM can result in increased

productivity, efficiency and revenues in practically any business function. 58

4. Conclusion

To sum up, organizations have gone through a change in the past half century. The shift from

an industrial economy to an information-driven economy led to the knowledge society, the

knowledge work, and the knowledge worker. It affected organizations in that way to seeing

knowledge as the key factor of production. Noticing that great potential lies within the

knowledge of the knowledge workers, organizations have to make this knowledge

productive. However, to do so organizations need to change their values and establish a new

focus on creating, renewing, sharing, and applying knowledge.

58 Santosus and Surmacz

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As discussed in the paper, this requires a new form of management that is knowledge

management. Helping the flow of information, which creates knowledge, more egalitarian

and more dynamic organizational structures must be developed instead of keeping the old

standard, militaristic hierarchical structure. Knowledge workers need to be taught within their

organization in order to be aware of the newest changes in doing business, the newest

changes in the market, and to be able to use the newest tools supporting their work. By being

entirely up-to-date, an organization is then able to compete with others. Additionally, there is

an interdependence between an organization and a knowledge worker. The organization has

to show its knowledge worker that he or she is needed while the knowledge worker needs the

infrastructure of the organization and conversations with other knowledge workers to use,

share and create knowledge.

As learned from different examples, knowledge management is already applied in some

organizations. To give a prognosis, the assumption can be made that to a few knowledge

management is already there and to others it will be the new challenging task in organizations

in order to make knowledge work productive and to avoid reinventing the wheel.

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Appendix

Source: Sena and Shani (1999)

22

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