THE FOUR FACTORS INFLUENCING
EFFECTIVE KNOWLEDGE MANAGEMENT
ASSESSING THE PRECONDITIONS CONCERNING STRATEGY,
STRUCTURE, TECHNOLOGY AND CULTURE AT DIVISION Y
Master thesis, MscBA, specialization Change Management
University of Groningen, Faculty of Management and Organization
December 2008
JOS JAGER
Student number: 1272268
Kuipersstraat 164 hs
1073 EV Amsterdam
Phone number: +31(0)6-50614468
E-mail: jk_jager@hotmail.com
Supervisors University
drs. ing. H.L. Faber
dr. B.J.M. Emans
Supervisor Division Y
drs. ing. P.M.G. Bartholomeus
PREFACE
Groningen, December 2008
After five months of hard work I have finished my thesis. This educative period gave me the opportunity to finally apply the knowledge acquired during my studies. It was very interesting for me to experience how things work out in practice and to see that theory does not always fit practice. However, I could not have accomplished this research project without the help of others and therefore I would like to thank the people who have assisted and supported me while I was conducting my research and writing this thesis.
First of all, my thanks goes out to my supervisor at Division Y, Mr. Pierre Bartholomeus, for giving me the opportunity to do my research. He gave me the freedom to do what I thought was necessary and provided me with useful advice about the content and process of my research project. In addition, Pierre has given me valuable insights that were not directly related to this study. He has taught me a lot about the functioning of an organization and the important issues, processes and interventions you have to deal with as a managing director.
In addition, I would like to show my appreciation to Henk Faber who was my supervisor from the faculty of Management and Organization at the University of Groningen. Thank you for giving me useful feedback and critical assessments on former draft versions of my thesis. Our turbulent brainstorming sessions were particularly helpful to me for developing my ideas and conducting the research described in this thesis.
I would also like to thank the interviewees and other employees of Division Y. Besides the input they provided for this study, I really appreciated the chitchat during coffee breaks, the lunches, and our other activities outside working time. Without the contribution of these people my research could not have been accomplished successfully.
Of course I would like to thank my parents, brothers and friends who made it possible for me to study two different studies and to do all things I wanted to do during my seven years as a student. Particularly, I would like to thank Michael Dickinson and Nynke Bottinga for checking my English in this thesis.
Finally, I especially would like to thank my partner Milon Galema who supported me during the whole process of my research project. She has had to make many sacrifices last year, and consequently, it was sometimes difficult for her when I had to spend the evenings and weekends to accomplish study and research activities. However, she was always patient and understanding and provided me with useful feedback concerning the content of my thesis. Milon thanks!
MANAGEMENT SUMMARY
Due to the strategic repositioning of Company X and the near retirement of a large part of the employees, some people at Division Y experienced a sense of urgency to develop and preserve essential knowledge for the future. Therefore, the aim of this research project is to determine to what extent the preconditions concerning the implementation of knowledge management initiatives are present at Division Y. The four critical factors strategy, structure, technology and culture, which determine the necessary preconditions, were assessed in this study. Based on the research results interventions were described that will enhance the current situation at Division Y.
Research data was collected among 14 employees by means of semi-structured interviews. Furthermore, qualitative data was gathered among three comparable organizations – Company A, Company B and Company C – which already have experiences with KM implementation and maintenance. Consequently, their lessons learned were used to provide useful recommendations.
The results of this research show that the preconditions concerning the factors strategy, structure, technology and culture at Division Y are not yet sufficient for successful implementation of knowledge management. The preconditions concerning the culture of Division Y especially need modifications.
Interventions that will be developed at Division Y should particularly be focussing on preserving and developing tacit knowledge, should be focussing on the long term, should be practical for employees, and should be mainly implemented simultaneously. From the results I recommend that first commitment for KM initiatives has to be created among the board of directors. Furthermore, a knowledge manager should be appointed to centrally coordinate KM activities at Company X level. To enhance commitment for KM among the employees, and to optimize knowledge sharing and development, specific discussion groups have to be set up. Reward systems should be better explained and mostly focussing on young employees.
CONTENT MANAGEMENT SUMMARY...2 CONTENT ...3 1. INTRODUCTION ...4 1.1 Company X ...4 1.2 Division Y...4
1.3 Central topic of this study ...5
1.4 Goal and research questions ...6
2. THEORY...9
2.2 Knowledge management...11
2.2.1 Knowledge development ...12
2.2.2 Knowledge preservation ...13
2. 3 The four critical factors influencing the effectiveness of KM ...13
2.3.1 Strategy...13 2.3.2 Structure ...14 2.3.3 Technology ...15 2.3.4 Culture...16 3. METHODOLOGY ...18 3.1 Data collection ...18 3.2 Data analysis...19 4. RESULTS ...20 4.1 Strategy ...20 4.2 Structure ...21 4.3 Technology...23 4.4 Culture ...24
4.5 Knowledge management in comparable organizations ...27
5. DISCUSSION...31
5.1 Answering research questions...32
5.1.1 Strategy...32
5.1.2 Structure ...32
5.1.3 Technology ...33
5.1.4 Culture...33
5.2 Recommendations for interventions...34
5.2.1 Criteria for recommended interventions...34
5.2.2 Strategy...35
5.2.3 Structure ...35
5.2.4 Technology ...36
5.2.5 Culture...37
5.3 Reflections and future research ...39
REFERENCES ...41
APPENDIX A: ABBREVIATIONS AND DESCRIPTIONS...45
APPENDIX B: INTERVIEW SCHEME...48
APPENDIX C: ORGANIZATIONAL STRUCTURE OF DIVISION Y ...51
1. INTRODUCTION
Nowadays, the environment of organizations is becoming more and more complex due to globalization, development of new technologies and political issues. As a result, the basis of organizations’ competitive advantages is fundamentally changing, so that resources like labour, capital and materials are pushed to the background in favour of a new one: knowledge (Alvesson, 2004; Grant, 1996; Nonaka, 1998; Weggeman, 2001). To remain competitive in their changing environment, organizations will have to convert themselves into knowledgeable specialists (Drucker, 1998). This new competitive advantage stems mainly from ‘core’ competencies based on the distinctive knowledge created within them over time (Prahalad & Hamel, 1990). Therefore, successful organizations are those that consistently create new and further develop current knowledge (Nonaka, Toyama & Konno, 2000; Teece, 2000).
The situation described above is also relevant for organizations operating in the European gas market. In this market demand for gas is increasing while domestic output of the European countries is declining (Kjärstad & Johnsson, 2007). As a result Europe is forced to import more gas from abroad and is becoming more dependent on foreign governments and organizations. In addition, due to liberalization of the European gas market, competition has become stronger. Therefore, gas companies are losing their monopoly position and have to operate more commercially. However, these same organizations are also receiving incentives to cooperate more. This is due to the fact that the networks of gas pipelines and other gas activities are exceeding their own boundaries and will be further expanded to Russia and other gas producing countries. Finally, European gas companies have to anticipate political constraints like a forced split up between gas transmission and gas sales.
1.1 Company X
One of the organizations facing the changes described above is Company X. Company X has been founded in 1963 after the discovery of natural gas nearby the Dutch municipality of Slochteren and is one of Europe’s largest gas transporters. Nowadays they own more than 12,000 kilometres of gas pipelines and around 1,100 custody transfer stations. Furthermore, Company X provides work for almost 1,750 employees.
On 1 July 2005 Company X was split up in two independent companies: Company X focussing on gas transport and Company Z focussing on the trade of gas. After the separation of the gas trading part, Company X has been transformed into a new owner structure. Since then the Dutch Ministry of Finance became the company’s sole shareholder.
1.2 Company X Engineering & Technology
the knowledge and consultancy centre for gas infrastructure and utilisation and executes knowledge intensive projects concerning the transmission and use of gaseous fuels. The expertise of this division extends over the entire gas value chain, from gas well to gas stove.
The strategic transformation of Company X into a gas infrastructure company has led to a bigger and more specific need for knowledge. Furthermore, the population of Company X employees is relatively old and a large part of it has to be replaced within a few years. This is an important aspect, because in technical orientated organizations, like Company X, the majority of employees are, what Leonard and Swap (2004) call, ‘Deep Smarts’. These employees possess essential knowledge which is not well documented and archived, but resides in their hands and heads. Because of these two issues, some people at Division Y experienced urgency to develop and preserve essential knowledge for the future. To anticipate the situation described above, Division Y will be transformed into a so called ‘Expert Centre’ where all core knowledge of Company X is bundled and stored. Furthermore, in this new function Division Y will foster the development and acquisition of essential knowledge. New knowledge particularly concerns the topics of ‘footprint reduction’*, ‘green gas’∗, clean and efficient gas technologies, and Carbon Capture and Storage. In that sense, the ‘Expert Centre’ professionalizes the management of knowledge within Company X. However, momentarily there is not a clear understanding of how the professionalization of knowledge management (KM)∗ at Division Y should
be organized and to what extent the preconditions for an effective implementation of KM initiatives are present.
1.3 Central topic of this study
In order to professionalize KM and consequently transforming Division Y into an ‘Expert Centre’, an organizational change project will be started. However, it is often difficult to meet objectives determined in advance. Quinn (2004) estimates that nearby fifty percent of all change efforts do not generate optimal results. In addition, KM implementation projects are even more complex and comprehensive than other change projects, since KM is interconnected with almost all other aspects of the organization (King, 2008). Like Kakabadse, Kakabadse and Kouzmin (2003) argue, KM is not just about implementing new systems or structures, but rather about changing entire business cultures and strategies of organizations.
Consequently, not all organizations are equally disposed for a successful launch and maintenance of KM initiatives (Gold, Malhortra & Sergars, 2001). Actually, in practice only few organizations have realized benefits from the professionalization of KM (Murray & Myers, 1997). Furthermore, the implementation of change projects is very costly in terms of financial resources, employee and managerial time investment, and often in terms of employee morale (Kotter & Schlessinger, 1979). Therefore, the identification and assessment of preconditions concerning an effective implementation of KM initiatives at Division Y is needed.
*
Like Galbraith (2002) argues, four organizational key factors play a crucial role in the overall performance of organizations, namely: strategy, structure, technology and culture. In addition, these four factors can be found in all prominent business models like the 7S model of Peters and Waterman (1982) and the ESH model of Weggeman, Wijnen and Kor (2000).
In the extension of this solid foundation, the KM literature collectively declares that these four factors are vital for the implementation of effective KM within organizations. As a result of assessments within the practitioner literature on KM, extended research has proven the predictability of strategy, structure, technology and culture among large companies and Small and Medium sized Enterprises (SME’s)* all over the world and across multiple sectors (e.g. Chan & Chao, 2008; Davenport, De Long & Beers, 1998; Gold et al. 2001; Siemieniuch & Sinclair, 2004) .
Within each key factor the right preconditions have to be present for a successful implementation of KM at Division Y (Rhodes, Hung, Lok, Ya-Hui Lien & Wu, 2008; Siemieniuch & Sinclair, 2004). For example, the translation of strategy into KM activities is vital for the development and preservation of knowledge. Further common prescriptions include a culture in which employees are encouraged to explore and experiment and technology applications that foster the sharing of knowledge.
Therefore, I will use the organization’s strategy, structure, technology and culture as the leading topics in this research project of study, which will determine to what extent Division Y is ready for the implementation of KM initiatives.
1.4 Goal and research questions
As described above, the Company X division Division Y wants to implement KM in order to develop and preserve essential knowledge for the future. Therefore, the main goal of this research project is “to determine to what extent the preconditions concerning the implementation of KM initiatives are present at Division Y”. As discussed in paragraph 1.3, the four factors that determine the preconditions necessary for implementing KM initiatives are the organization’s strategy, structure, technology and culture. These factors and their relations within this study are shown in the conceptual model depicted in Figure 1. Based on the results of this study, interventions can be fruitfully developed and implemented. As a result, the current situation at Division Y can be enhanced and optimized.
Regarding this conceptual model, it should be noticed that the strategy is placed outside the fencing of this study. I will not so much discuss and assess the strategy of Division Y or Company X, but will only take into account the relationship between the organization’s strategy and the successful implementation of KM.
*
FIGURE 1 Conceptual model
To accomplish the goal of this study, the main research question is as followed:
To what extent are the preconditions concerning the implementation of knowledge management initiatives present at Division Y?
In order to answer the main research question, the following four sub-questions will have to be answered:
1. To what extent is the strategy of Division Y used in the development and preservation of essential knowledge?
2. To what extent is the structure of Division Y suitable for effective development and preservation of essential knowledge?
3. To what extent is the technology of Division Y suitable for effective preservation and development of essential knowledge?
In chapter 2 I will elaborate the theoretical foundation underlying this study. The definitions of knowledge and knowledge management will be described first. Following, the critical factors strategy, structure, technology and culture will be dealt with. Consequently, the preconditions needed for implementing KM initiatives will be given for each factor.
2. THEORY
In this chapter I will first discuss what knowledge and knowledge management (KM) are in the case of Division Y∗. Following, I will elaborate the critical factors that constitute the preconditions
concerning the implementation of KM initiatives.
2.1 Knowledge
As Winter (1987) has argued, definitions of knowledge are usually incomplete because they deal with a rather slippery subject. Even famous thinkers like Plato, Wittgenstein and Popper have tried to tackle this topic, however all failed to reach a clear consensus about a definition of knowledge. Despite this, past history has shown that confusion about a clear definition of knowledge often leads to enormous organizational expenses for all kinds of bad suited or unnecessary KM initiatives (Davenport & Prusak, 1998; Kalkan, 2008).
Therefore, it is necessary to determine exactly what knowledge means for this study before we can say something useful about a design for Knowledge Management (KM). In the organization and management literature, many definitions of knowledge can be found. To provide an impression, table 1 shows some frequently used definitions.
TABLE 1
Definitions of knowledge Author Definition
Bertrams (1999, p. 18)
‘Knowledge is that thing what enables someone to fulfil a certain task by selecting, interpreting, combining and valuing information.’
Davenport, De Long & Beers (1998)
‘Knowledge is information combined with experience, context, interpretation, and reflection.’
Davenport & Prusak (1998, p. 5)
‘Knowledge is 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.’
Nonaka & Takeuchi (1995, p. 13)
‘Knowledge (different from information) has to do with belief (knowledge is based on a specific view, attitude, intention), action (knowledge serves some purpose) and meaning (knowledge is context specific). Knowledge is a dynamic human process in which personal belief by justification becomes ‘true’.’
TABLE 1 (Continued)
Nooteboom (1996)
‘Knowledge is understanding plus ability to transform into actions (skills), which yields performance’
Probst, Raub & Romhardt (2000, p. 24)
‘Knowledge is the whole body of cognition and skills that individuals use in order to solve problems. Knowledge is based on data and information, but unlike them, it is always bound to persons.’
Weggeman (2003, p. 38)
‘Knowledge is the capability through which someone can execute a certain task. Furthermore, this capability is a metaphoric function of someone’s Information, Experience, Skills and Attitude at a certain moment: K= ƒ (I.ESA).’
Although the definitions in table 1 vary one to another, all of them agree that knowledge is broader than just data or information. However, in practice knowledge is often used interchangeable with data and information (Davenport & Prusak, 1998; Kakabadse et al., 2003).
Data are symbolic depictures about quantities, numbers, facts and meanings that, in or of themselves, may be of little use (Weggeman, 2003). Information on the other hand comes into existence when a person is giving a meaning to the perceived data while linking it with other data and converting it into a context for specific use (Nonaka & Takeuchi, 1995; Weggeman, 2003). Consequently, information cannot exist outside the people using the data. Finally, information becomes knowledge when it is interpreted by individuals and is anchored in their beliefs and commitments (Nonaka, 1994). In conclusion one could state that information is interpreted data and that knowledge is interpreted information.
Knowledge can be split up in two different types: explicit knowledge and tacit knowledge (Bertrams, 1999; Nonaka & Tacheuchi, 1995; Polanyi, 1966). Explicit knowledge can be expressed in formal and systematic language and can be shared in the form of data, scientific formulae, specifications, and manuals (Nonaka et al., 2000). Therefore, this kind of knowledge can relatively easily be processed, documented and handed over to others.
In contrast, tacit knowledge is embedded in the minds of individuals and can not easily be written down in documents or saved in a digital database. It is deeply rooted in action procedures, routines, commitments, ideals, values and emotions (Nonaka et al., 2000). Tacit knowledge includes professional know-how, skills, individual insights and creativity, personal experience, and intuition (Nonaka, 1994).
Following the distinction mentioned above, knowledge in this study is defined 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 organisations, it often becomes embedded not only in documents or repositories but also in organisational routines, processes, practices and norms” (Davenport & Prusak, 2000: p. 5).
This definition of Davenport and Prusak reflects best the issues that are of major importance concerning the transformation of Division Y into an ‘Expert Centre’, since it focuses on both explicit and tacit knowledge. Especially the latter is important, because the nearby replacement of retiring ‘deep smarts’ at Company X emphasizes the urgency for preserving knowledge embedded in routines, processes, experiences, practices, and values. Furthermore, Davenport and Prusak’s definition also incorporates the innovating process through which new knowledge can be developed. This is essential for Division Y, since the strategic repositioning of Company X has resulted in a more specific need for knowledge.
2.2 Knowledge management
Despite the widely recognized importance of organizational knowledge, there is little understanding of how organizations can fruitfully manage the processes leading to the development and preservation of knowledge (Nonaka et al, 2000). Most often, organizations see Knowledge Management (KM) from different perspectives and focus just on a particular aspect like technology or information (Kalkan, 2008). However, designing and implementing effective KM initiatives requires to see the whole picture. This is due to the fact that KM is not a specific goal, but should support the organization’s strategy to accomplish organizational goals (Bertrams, 1999; Greiner et al., 2007).
In order to successfully implement KM initiatives, research has shown that the organizational key factors strategy, structure, technology, and culture are of major importance (Chan & Chao, 2008; Davenport, De Long & Beers, 1998; Gold et al., 2001). Consequently, KM has to foster these four factors in such a way that an organizational environment can be established that enables the development and preservation of essential knowledge.
Organizations differ from one another and, therefore, it depends on the requirements of the specific organization what the scope and focus of KM should be (Teece, 2000). Technical orientated organizations like Company X provide work to highly educated people. Thus, for these kinds of organizations it is important to focus especially on the tacit part of knowledge (Leonard & Swap, 2004).
2.2.1 Knowledge development
Most academics and managers speak about creating new knowledge when discussing processes of innovation. However, in practice not much new knowledge is ‘created’. In fact, most new knowledge is the result of extending, combining and further developing current knowledge (Nonaka, 1994). Therefore, in this study I will use the term ‘knowledge development’ when referring to the processes of innovation. However, these processes are more comprehensive than they look at first. Besides generating knowledge, assessing the knowledge available and the knowledge needed is essential (Weggeman, 2003). In addition, analyzing competitors and customers provides useful information concerning valuable knowledge for the future (Grant, 1996). As a result, reinventing the wheel will be prevented and opportunities can be sensed and seized quickly and proficiently.
Another point of attention concerns the nature of knowledge development. Developing knowledge is a continuous process without a clear beginning and ending (Nonaka et al., 2000). Therefore, these processes should be embedded in the daily routines and activities of individual employees (Weggeman, 1993; Song, Van der Bij & Weggeman, 2006). Furthermore, organizations do not develop knowledge by itself (Nonaka, 1994). At the fundamental level, individuals develop knowledge and the organization has to facilitate this process by creating a supportive and stimulating environment.
The development of explicit and tacit knowledge requests learning on both the individual and organizational level (Weggeman, 2003). In practice, learning comes into existence by means of sharing and disseminating experiences (Nonaka, 1994). Consequently, interaction between individuals is essential (Inkpen & Dinur, 1998). In practice, learning activities at one part of the organization often trigger others in other group units (King, 2008). The development of tacit knowledge, which specifically is important for Division Y, is mainly developed through experiences like on-the-job training, alliances with other organization, and working together with experienced colleagues (Leonard & Schwab, 2004; Kakabadse et al., 2001). In addition, the more experiences will be gathered, the more will be learned, and the more new knowledge will be developed.
The most valuable experiences will be derived by means of experimentation and the critical factor concerning this kind of activities is individual autonomy (Nonaka, 1994). Autonomy increases the chances of finding valuable information and motivating organisation members to develop new knowledge. Consequently, employees should have enough time, space and resources to work on their own ideas and projects without pressing limitations of their superiors (Burnes, 2004).
2.2.2 Knowledge preservation
In order to stay competitive, organizations have to preserve essential knowledge (Nonaka, 1994). The reuse of knowledge saves work, reduces communication costs, and allows organisations to take on more projects. However, most often organizations do not have to preserve all the knowledge available within the organization (Weggeman, 2003). Customer needs determine the focus of the organization’s strategy, and consequently, determines which knowledge should be preserved for the future.
Explicit knowledge can be stored easily in (digital) databases, but their tacit counterpart should be preserved through other activities due to its complex character. Since most of the organization’s essential knowledge is embodied in human resources, the preservation of tacit knowledge needs the most attention (Haesli & Boxall, 2005). In addition, it is worth noticing that tacit knowledge possessed by one expert may be unrecognized by others in the organization and is of little value if not supplied to the right people at the right time (Teece, 2000).
Although harder to preserve than explicit knowledge, tacit knowledge can be hand over to others under certain circumstances (Kakabadse et al., 2001). It can partly be made explicit or even codified, whereby codifying is making available to multiple recipients (King, 2008). To transfer tacit knowledge from individuals into a repository, organizations usually use community-based electronic discussions (Davenport et al., 1998). Nonetheless, most of the time this is not possible and should tacit knowledge be converted through application and shared experiences, whereby it is important that each employee is aware of everyone else’s knowledge repertoire (Davenport & Prusak, 1998; Grant, 1996). Consequently, formal and informal person-to-person contact is essential, so that spontaneous, non structured knowledge transfer can be established (King, 2008).
2. 3 The four critical factors influencing the effectiveness of KM
For a successful implementation of KM it should not be isolated in an organization (Hansen et al., 1999). Instead, it should be coordinated with four critical factors, namely the organization’s strategy, structure, technology and culture. Both literature and practice (e.g. Chan & Chao, 2008; Davenport, De Long & Beers, 1998; Gold et al. 2001; Siemieniuch & Sinclair, 2004) show that these four factors are generally accepted as the major factors to determine to what extent the preconditions of a certain organization are suited for an effective implementation of KM initiatives. Therefore, in the next paragraphs the essential preconditions concerning strategy, structure, technology and culture will be elaborated and specified for the case of Division Y.
2.3.1 Strategy
2000; Nonaka & Takeuchi, 1995). Consequently, the strategy concerning knowledge issues should be translated into operational goals on the level of groups and individuals (Greiner, Böhmann & Krcmar, 2007)
It is important to notice that the strategic architecture of an organization is the link between the short and the long term (Hamel & Prahalad, 1994). Management should take care for the performance on both daily activities and future targets. Consequently, organizations have to envision future knowledge needs to determine which knowledge should be developed and preserved today (Sharkie, 2008). However, not all the knowledge developed today will directly add value to the organization. In knowledgeable organizations, management need to create and sustain attention for looking over the edge, since innovation means looking forward and go where others did not go before (Song et al., 2006).
Furthermore, it is top management’s role to articulate the organization’s knowledge vision and communicate it throughout (and outside) the organization (Siemieniuch & Sinclair, 2004). However, this should not be seen as an on time activity like a presentation, but should be articulated continuously. In addition, it can be hard and demotivating for employees to work on something that does not show short term wins (Burnes, 2004). Consequently, management should give good example themselves, so that the employees will follow and put down their fears.
2.3.2 Structure
Literature shows that structures can facilitate the achievement of the organization’s goals (Siemieniuch & Sinclair, 2004). Consequently, these structures can also fruitfully support and stimulate the development and preservation of essential knowledge. Like O’Dell and Grayson (1998) argue, organizational structures are the result of the way different divisions within the organization are organized. Consequently, in this research structure is defined as the rules, policies, procedures, processes, hierarchy of reporting relationships, incentive systems, and departmental boundaries that organize tasks within the organization (Gold et al., 2001).
In order for structures to successfully facilitate KM initiatives, it is essential to find the right balance between hard and soft elements of KM (Davenport et al., 1998). On one hand knowledge is fuzzy and closely linked to the people who hold it and on the other hand it is difficult to develop and transfer knowledge when there are no clear structures for communication, working together, and storing knowledge. In practice most organizations are only focussing on the hard elements of KM.
be clear and employees need to know what can be expect when exercising certain activities and initiatives.
The development of knowledge operates at the edge between chaos and order. Consequently, the fundamental problem concerning effective KM is achieving purposeful, coordinated action from the individuals with the organization (Grant, 1996). Because communication and interaction contribute to the amplification and development of new knowledge, organizational structures can fruitfully facilitate these activities (Nonaka, 1994). However, they do not have to be focused on groups or units, but might span departmental or even organizational boundaries (Nonaka, 1994). Effective KM requires that activities concerning the preservation and development of tacit knowledge are decentralised, while they should be centralized in the case of explicit knowledge.
To establish an environment that facilitates the participation and communication needed, a flat and flexible organisational structure should be established (Nonaka et al., 2000). Furthermore, the units within this structure should be interlinked by information networks. However, hierarchical coordination fails when individuals have to share tacit knowledge (Teece, 2000). Consequently, DIVISION Y needs a flat, less bureaucratic, less hierarchical, fast and highly responsive organization when taking the importance of knowledge as a leading focus (Gold et al., 2001).
2.3.3 Technology
Nowadays, technology plays a key role in the effective implementation of KM initiatives (O’Dell & Grayson, 1998; Song et al., 2006). Different kinds of technology features enable the mobilizing of explicit and tacit knowledge resided within organizations and their environment. Furthermore, technology systems determine how knowledge flows throughout the organization, how this knowledge is accessed and which people can posses which knowledge at which point of time (Leonard, 1995).
Through the linkage of information and communication systems, previously fragmented flows of data, information and knowledge can be integrated (Teece, 1998). Furthermore, technology systems can overcome the physical boundaries between different parts of the organization, so that employees are able to communicate and share information easily (Leonard, 1995). Since technology covers several aspects of the organization, it is necessary to create a comprehensive technology framework to support the development and preservation of knowledge. Literature and research (e.g. Grant, 1996; Leonard, 1995; Siemieniuch & Sinclair, 2004) show that the important technology features which should be present at every knowledgeable organization are as follow:
and economic environment represents the context in which the organization is operating and has to react on (Leonard, 1995).
A second condition that needs to be incorporated in the technology framework concerns the generation of knowledge about partners, customers, suppliers and employees (Porter, 2008; Song et al., 2006). Consequently, organizations need opportunity generation technologies that enable the management to determine which products will generate the most value for the organization and, furthermore, give insights for setting up the production process in the most efficient and effective manner. Besides, the knowledge generated through these applications helps management to create a stronger bargaining position towards internal and external interest groups.
Third, interaction between employees should be facilitated, because collaboration is one of the key factors concerning the development and preservation of knowledge (Grant, 1996; Nonaka & Takeuchi, 1995). Collaboration and distributed learning technologies can eliminate both structural and geographical barriers so that employees can communicate and share information easily. Using this sort of technologies enables employees to see what other people are working on and which knowledge is already present in the organization. Consequently, employees are prevented from reinventing the wheel and furthermore, are supported to learn from each other.
Fourth, technical systems to support the storing, retrieving and use of both explicit and tacit knowledge are essential (Grant, 1996; Nonaka & Tacheuchi, 1995). Regarding explicit knowledge, it is important to have a system that is much like a traditional library (Nonaka, 1994). In this case, the system should comprise a large cache of documents combined with search engines that enable employees to find and use the documents they need. On the other hand, tacit knowledge requires a system that allows individuals to find people possessing specific knowledge (Grant, 1996). In that sense one does not search for the knowledge itself, but for the source that can provide the knowledge needed.
2.3.4 Culture
Although organizational strategy, structure and technology are important preconditions for successful implementation of KM initiatives, literature (Davenport et al., 1998; Scholl, Koening, Meyer & Heising, 2004) shows that the most pressing and challenging issue is giving priority to human factors. People have to comply with the strategy, structures and technologies for optimal performance of the organization and therefore KM initiatives fail when employees resist changing their behaviours in line with these factors (Kanter, 1985).
First, knowledgeable organizations need an environment in which employees notice and acknowledge the importance of essential knowledge and feel the urgency to develop and preserve it (Nonaka, 1994). Without collective ambitions and collective ideas about the role of knowledge, organizations create a ‘knowledge=power’ environment (Weggeman, 2003). Because knowledge is a way to create power and tacit knowledge is more difficult to protect when explicated, individuals might be motivated to keep it for themselves. Therefore, it is the duty of the management to create a working environment in which employees feel safe codifying and sharing knowledge (Davenport et al., 1998).
Creativity is important for the development of essential knowledge. Therefore, positive attitudes towards innovation processes should be established, so that employees will be stimulated to transcend normal activities in order to try something new (Leonard, 1995). To change the employees’ attitudes in a positive direction, the knowledge friendly attitudes should be communicated extensively and their consequences for the employees’ daily activities should be explicated (Kanter, 1985).
Another cultural precondition for developing knowledge is stimulating experimentation and acquiring new knowledge (Nonaka, 1994). To make optimal use of experimentation, a blame-free atmosphere is required within the organization (Siemieniuch & Sinclair, 2004). Employees should not have fear to make mistakes, since people learn from both good and bad experiences. Consequently, fostering love, care, trust and commitment is important. (Nonaka et al., 2000). In addition, people should be provided with enough time, space and resources to experiment and to extend their current knowledge-base.
Not only management can support the experimentation that is necessary for innovation processes. Also colleagues play a crucial role in this (Beer, 1997; Siemieniuch & Sinclair, 2004). Employees are able to stimulate each other and can function as the trigger to develop and obtain new knowledge (Nonaka, 1994). Consequently, the development of knowledge requires a culture that supports and stimulates interaction, dialogue and participation between employees (Davenport, et al., 1998; Leonard, 1995). In addition, these factors are also of major importance for the sharing of particularly tacit knowledge. Still, for optimal communication between employees it is necessary that everyone in the organization speaks a common language, since this permits organization members to share and integrate aspects of knowledge which are not common between them (Grant, 1996).
Like almost every other type of change program, KM initiatives benefit from senior management support (Davenport et al., 1998; Sharkie, 2008). However, the knowledge developing process can not be managed in the traditional sense of ‘management’ that is centred on controlling the flow of information. Therefore, management should act more as coaches and not so much as leaders towards the employees (Beer, 1997; Bertrams, 1999).
3. METHODOLOGY
In this chapter I will describe how this study was set up in order to answer the previously described research questions. In addition, I will explain how the data collection and data analysis were executed in order to obtain and process the data needed.
3.1 Data collection
In order to answer the research questions, data was gathered by means of semi-structured interviews and desk research. Information on the preconditions concerning the organization’s strategy, structure, technology and culture of the organization was collected by conducting semi-structured interviews∗. In addition, annual reports and other organization documents were used to complete the
information needed to answer the sub-questions about these critical factors.
Furthermore, case studies from other companies with the same organizational characteristics were used to recommend Division Y about fruitful initiatives concerning the implementation and maintenance of KM initiatives. As a result, reinventing the wheel and making well known mistakes can be overcome. This additional information was collected by conducting semi-structured interviews among three respondents of Company A, Company B and Company C.
These organizations already have experiences in implementing KM initiatives and execute activities comparable with Division Y. The interviews particularly focused on the preconditions of their organization, the obstacles they faced during the implementation of KM initiatives, and finally, positive experiences concerning the implementation and maintenance of KM. In addition, extra information was gathered from the websites of these three companies.
The interviews regarding the preconditions of Division Y were conducted among 14 employees of Division Y, selected from the population of 110 people. This selected group is representative for the total population of Division Y and consisted of management trainees, managers, senior- and junior scientist, and technicians. Individuals within the sample varied in department, age and the total employment period at Company X. None of the selected employees refused participation.
Before the study took place two pilot interviews were held. During these pilots the respondents provided information about the following order, clarity and missing or unnecessary questions. As a result, the interview design was modified by adding questions and clarifying others. The actual interviews, those with the employees of Division Y and the respondents of Company A, Company B and Company C, were conducted individually in a closed and silent room. Furthermore, the interviews were taped on a voice-recorder. However, before interviewing the attendants, they were asked if they had any problems concerning the recording of the interview. None of the participants, both employees of Division Y and respondents of the other organizations, refused. Furthermore, participants were informed that none of the published data would be reducible to a single person. This confidentiality allowed the participants to answer all the questions honestly.
Next, the topic of KM and the four critical factors were introduced, and furthermore, the structure of the interview scheme was explained. The interview was set up in four parts: Strategy, Structure, Technology and Culture. Each of these factors contained several items that concerned the individual situation of the employee and how they perceived this situation (See Appendix B for the items of these four critical factors).
The strategy topic consisted of 6 items (e.g. ‘Do you know what the strategy of Division Y is?’), the structure topic consisted of 12 items (e.g. ‘To what extent facilitates the structure of your department the interaction and sharing of knowledge with colleagues?’), the technology topic consisted of 10 items (e.g. ‘To what extent allows the technology of Division Y the monitoring of competition and business partners?’), and finally, the culture topic consisted of 15 items (e.g. ‘To what extent are you encouraged and challenged to explore and experiment?’).
The items of the four critical factors and their preconditions were derived from various sources (e.g.: Gold et al. (2001), Davenport et al. (1998), and Siemieniuch & Sinclair (2004). At the end of the interview people could add their own ideas concerning the enhancement of the development and preservation of essential knowledge within Division Y. All of the 14 participants added ideas on different topics (See Appendix D).
3.2 Data analysis
In order to generate results from the interviews, various kinds of analyses were used. The information collected by the items concerning the preconditions of the four critical factors strategy, structure, technology and culture of Division Y were first checked with the information provided by the annual reports 2006 and 2007 of Company X, other organization documents and the intranet. Following, the results acquired with the interviews were compared with each other to develop a general picture about the current situation of these preconditions. As mentioned in paragraph 3.1, the information from the interviews was gathered from employees of different functions, departments, background, and total employment time.
4. RESULTS
This chapter presents the results of this study and pertains to the outcomes of the desk research and the interviews held among 14 employees of Division Y. However, the additional suggestions are displayed in Appendix D. Furthermore, the information received from the respondents of Company A, Company B and Company C is also presented.
4.1 Strategy
The aim of Company X is contributing to the further integration of the European gas market and the increased security of gas supply. Therefore, the strategic goals of Company X focus on three pillars:
1. Safe, reliable and sustainable gas transport (‘operational excellence’)
2. Expansion of the national gas transport network in response to demand from the market 3. Securely connecting the Company X network to future international gas flows
Since the repositioning of Company X the focus of the Division Y strategy is primarily on actively contributing to Company X’s strategy and mission by means of research, development and innovation. Consequently, the main components within the strategy of Division Y are:
1. Sustainability
2. Business development 3. Exchange of knowledge
The four elements of sustainability component are: 1. reducing Company X’s emissions 2. transport and possibly storage of CO2 3. pursuing clean energy applications 4. inclusion and certification of green gas. The business development component focuses on the development and maintenance of cooperative links with key partners such as leading gas companies, customers and knowledge partners. The third component states that Division Y has to make a contribution to the public debate on energy transition and other issues, based on its knowledge position and on Company X’s sense of corporate social responsibility.
The results of this study show that the employees of Division Y know the main topics of the Division Y strategy that has been abstracted from the Company X strategy. All respondents could name the first component and the responding elements. The second component was only known by two respondents. In practice this seems not to be a problem, since most of the respondents maintain relationships with external organizations and experts. Finally, the third component of the Division Y strategy was well known to all respondents.
Eleven respondents took a positive stance concerning the role of the management in the communication, explication and translation of the Division Y strategy. One respondent even answered: “I think management puts enough time and effort in explaining the strategy. The reason why I do not exactly know the strategy is more due to my lack of interest for this topic than to any fault of the management “. However, five respondents said employee commitment will increase when the strategy is communicated more often and is translated more thoroughly into daily activities. Remarkably, no relation existed with age, total employment period or function concerning this topic.
Ten of the respondents indicated that they actively use the strategy of Division Y when starting up projects or developing new ideas. As one of them remarked: “Within Company X it is important you can sell and defend your projects, and therefore, it is important to know what Company X expects”. Five respondents experienced difficulties using the strategy and seeing their role in the bigger picture. In addition, the results show that these employees had all been working for the organisation for more than 8 years.
4.2 Structure
Nowadays, Division Y (internally known as DE∗) is divided into the operating departments
Deelnemingen Engineering Transport (DET) and Deelnemingen Engineering Energy (DEE) and the staff departments Marketing (DEM) and Support (DES). Each of the operating departments exhibits certain sub departments (See appendix C). However, at the end of 2008 this structure will be changed (See appendix C). As a result the organizational structure of Division Y will become more decentralized and more managers will be appointed so that the span of control diminishes. Therefore, some employees will move to another department.
Although all of the respondents said the Division Y’s structures do not inhibit the discovery and development of new knowledge, they were divided about the degree to which they facilitate these activities. The many organizational changes that took place over the last past years are the main reason for this. Like four of the interviewees said: “The structure within Division Y has been changed so many times in a short period that I am only looking over the organization’s formal structures”. In addition, three respondents had problems with the fact that the members of their department are scattered all over the building.
All of the respondents agreed that the major factor concerning the discovery and development of knowledge are not so much the structures of Division Y, but the employees’ personality. Like one of them answered: “I actually do not know if the current structures are facilitating me. When I need someone I just go to that person one way or another.” In addition, it is necessary to notice that the impending organizational structure change of Division Y will not be of major influence. The current organizational structure will become even flatter and more flexible.
As result of a successful pilot in November, Division Y will start with what they call ‘Intervisie’. This is a meeting that takes place outside the regular departmental meetings. During these meetings groups of employees discuss opportunities, problems, bottlenecks and other topics under the supervision of an external professional. In addition, attendants of these meetings will give presentations about topics they are working on. As a result, employees will be better able to see what is going on in other departments. Participation in these meetings is on a voluntary basis and will take place once every eight weeks. The composition of the groups is mixed and exists of both experienced and less experienced employees from different departments. To stimulate participation and openness, management is excluded from these meetings.
The annual report 2007 shows Company X plays an active role in a number of partnerships and institutions that disseminate knowledge and technology on energy and gas. Twelve of the participants confirmed having links with other organizations. Specifically, Division Y maintains links with a number of research institutes like the University of Groningen and Hanzehogeschool Groningen. Furthermore, projects like the Energy Delta Research Centre in which there is cooperation with organizations like Company A, Company D and Company E exist. In addition, October 2008 Division Y has started a new energy research facility with Company F and Company G. Finally, Company X is a member of various “lobbying organisations” like EnergieNed.
Interaction between and participation of employees are only partially facilitated by the different structures of Division Y. Often project teams are small and are composed of the same employees. Consequently, employees are not really communicating with others within Division Y and Company X. Interaction with colleagues within a specific department takes place by means of departmental meetings. In addition, the major part (9) of the respondents noticed that it is particularly difficult to maintain fruitful interaction with headquarters of Company X. However, in this case again, the blame for this lies with the employees. Like one of the respondent said: “Actually, for my own projects it is not so much necessary to communicate with a large group of employees. However, it lies within my nature that I am curious what others are doing”.
The major part of the respondents experienced sufficient stimulation from organizational structures to search for knowledge outside the structural boundaries of their own department. However, this does not automatically mean that everyone reacts to these stimulations in a positive way. Four respondents gave a negative response. Communication with employees at headquarters is a problem particularly. The reason for this was that there have been negative experiences with employees working there. Consequently, it is sometimes not clear for employees at Division Y which knowledge is accessible at the headquarters of Company X.
a key role in this. Young employees experience this kind of performance rating as positive, while older employees who have been with the organization longer see it as negative. Like one of the older employees answered: “This kind of performance rating does not interest me. I am just doing my projects as well as possible and when it is not sufficient I will hear it. You should not put creative people in that position, otherwise they will leave”.
Within Division Y there are no reward systems concerning the sharing of knowledge. Although all respondents were positive towards this sharing, most participants experienced not having enough time for these activities. Five of the respondents even stated that they sometimes skip useful meetings and other sharing activities because of a lack of time. Due to the Service Level Agreement (SLA) employees have to write 82, 5 % direct production hours. The other 17, 5 % have to be used for education, training and knowledge sharing. In practice, this “free” space is not sufficient for employees to exercise all the knowledge activities they would like to do. As one of the interviewees said: “Of course I would like to share my knowledge: I would even like it very much. However, activities like reading e-mails, attending training and getting education have more priority. For example, I Division Y bad comments when not answering e-mails, but no one blames me for not telling other employees about my projects”.
4.3 Technology
Within Division Y, sufficient means are available to gather information about competitors, business partners and market developments. Employees use the internet to look up articles and websites to collect useful information. Furthermore, Division Y houses the Energy Knowledge Centre (EKC), which is part of the library of the University of Groningen. Here employees can place requests for information about al kinds of topics. In addition, it is possible to subscribe to the digital database of the University library and to scientific journals. Finally, Division Y has a ‘knipselkrant’ which appears on a monthly basis. In this organizational journal relevant articles and information can be read. However, one remark has to be made; only three of the respondents make optimal use of the technological possibilities mentioned above. Besides, not all respondents were aware that all these technological possibilities are available.
The major part of the respondents (12) experiences no difficulties in communicating with colleagues within the organization. However, as result of the flat structure most respondents make use of face to face contact. On the other hand, communication outside the organization is done by e-mail, telephone, and telephone conferences. In addition, no external digital fora or other technological means are used.
Employees can place and find documents on the internal websites Portal and DIS∗. On DIS
one can find manuals and on Portal one can download documents about executed projects. However, the nature of this information is mainly formal and lacks practical information. Consequently, it is not possible to reproduce a project in practice by means of DIS. Furthermore, Portal and DIS are not used
to their full advantage by every employee. Like one of the respondents said: “I know I can look up information on DIS or Portal, but actually I do not really know what to do with it. I prefer asking a colleague”. Nine respondents using DIS and Portal think the interface should be more simplistic and easier to use. In the current situation information is rather dispersed in different systems and databases. One participant added: “It looks like DIS and Portal are designed by ICT people for ICT people. I actually think they forgot to ask the people who have to work with these systems during the development process”. In addition, four people thought the reason for this could be the absence of a person like a CIO∗ at the corporate level being responsible for information flows.
Sometimes it is difficult to find necessary information within the organization. By means of the intranet one can search for departments or persons. However, it is not possible to search for personal expertise or specific fields of knowledge. In addition, only few employee profiles are up to date and complete. Like one of the respondents said: “Actually, when I need information I ask my colleagues which person I need. Although I know it is possible to find information on the intranet, I do no actually use it in that way”.
4.4 Culture
Although Company X’s annual report 2007 states that KM is a vital element for the performance of the organization, not many fruitful activities were established yet. At this moment only some local initiatives have been set up and they do not seem to be coordinated centrally. For example, besides Division Y, Division Z also started a KM implementation project, but there has been virtually no communication about this between the different parties.
All respondents experienced a sense of urgency to develop and preserve essential knowledge. Like one of the respondents argued: “It is the duty of Division Y to develop valuable expertise for Company X. Without the knowledge development activities we could better close up shop”. Some of the interviewees have questioned if other Company X divisions experience the same sense of urgency concerning the development and preservation of essential knowledge. For example: “To me it looks like we (Division Y, red.) are the only people that take the knowledge issue serious. If we would leave it up to other divisions, Company X would stop existing within 10 years”.
Project teams are composed of young, old, experienced, and less experienced employees. Sometimes people outside Company X participate in projects, which particularly is the case for issues about sustainable energy. During projects, participation by all project members is requested and employees are stimulated to obtain information elsewhere when needed.
The results show that all respondents are eager to share their knowledge with project members and other colleagues. However, due to the SLA∗ normal working activities are often not sufficient to
transport tacit knowledge. On the other hand, most respondents (11) experienced having enough time to attend training, education and congresses. Although they should fall within the SLA, it is easier to obtain extra hours for these activities. Consequently, this has a positive effect on knowledge development. Like one of the respondents noticed: “Because management propagates the message that self-employment is important, I am very driven to obtain knowledge outside the obligatory courses”.
The major part (12) of the respondents feel appreciated by colleagues and management for their expertise. In addition, the results show that respondents also appreciate their colleagues’ expertise: “Without the expertise of person X a large part of this building could be closed. The same goes for person Y and person Z”. However, eight respondents experienced opposing feelings towards headquarters of Company X. As one of the interviewees answered: “Appreciation from headquarters is based only on output and not so much on expertise. These people are positive when they can use me and otherwise I cannot expect much appreciation”. In addition, four respondents noted that seen from the perspective of career and salary, it is preferred to move to headquarter instead of specializing for a certain field of research at Division Y.
Four of the respondents said it was better not to be too critical towards management in the past. Although it has greatly improved since then, these people still feel tendencies the tendency not to be too critical and to keeps one’s ideas to oneself. One of them even stated: “I have learned to be not too critical. It only costs you lots of time and energy and most of the time it generates zero result. On the contrary, it could work out negatively for you”. It seems a relation exist with the total employment time, because all four attendants had been working for the organization for more than ten years. However, people with a shorter time of employment were more positive about the management. They experienced management extensively supporting their ideas.
In table 2, which is depicted below, the main results generated from the interviews among the employees of Division Y are summarized. The preconditions of the four critical factors Strategy, Structure, Technology, and Culture are presented separately.
TABLE 2
Summary results preconditions Strategy, Structure, Technology and Culture at Division Y
Strategy
All 14 respondents know the main elements of the strategy of Division Y
Approximately 80 % of the respondents think management sufficiently makes clear what Division Y’s strategy and goals are
Approximately 70 % of the respondents actively use the strategy of Division Y
Structure
Structures at Division Y do not inhibit the discovery and development of knowledge
Structures at Division Y facilitate interaction and communication within Division Y (80%), but are not sufficient to communicate with headquarters according to approximately to 55 %
Approximately 65 % of the respondents experiences personality to be more important than structure concerning the discovery and development of new knowledge and the interaction between employees
Division Y has common projects and alliances with other organizations and institutions
Reward systems exist concerning the development and preservation of essential knowledge, but none of the respondents know how this works exactly
Technology
Within Division Y there are sufficient technology features to develop and preserve knowledge
Information is dispersed over different databases and systems which are not connected
Approximately 85 % of the respondents experiences the Energy Knowledge Centre is essential for developing and knowledge
Approximately 20 % of the respondents know and/or use all the technological features available at Division Y
Culture
All of the respondents noticed the importance of essential knowledge for Division Y
Approximately 45 % of the respondents think they have enough time and opportunities to experiment and explore, while approximately 55 % of the respondents think they need more time and space for these activities
Approximately 95 % of the respondents feel they are appreciated by their colleagues at Division Y
Approximately 60 % of the respondents feel not being appreciated by headquarters
Approximately 80 % of the employees working longer than eight years for Company X is not very critical towards management because of past experiences
4.5 Knowledge management in comparable organizations
In this section I will describe the results generated from the interviews conducted among (senior) managers of the organizations Company A, Company B and Company C. However, from each of these three organizations only one person was interviewed, and therefore no hard conclusions can be drawn from this information. Consequently, these interviews are only used to acquire exploratory insight into the implementation and maintenance of KM initiatives.
Company A
Just like Company X in 2005, the energy company Company A had to split the infrastructure and commercial energy activities. Furthermore, Company A also acknowledges their social responsibility and set great store by innovation in the area of sustainability.
Due to the split up about 3,500 employees of Company A will leave the infrastructure company to join the new commercial company. Furthermore, issues like CO2 reduction and sustainable energy request new developments. However, particular the near exodus of employees has had not much attention within the organization yet. One reason for this could be that Company A does not have a centrally run KM department, but organizes the knowledge activities more dispersed over the different departments.
According to Company A, implementing KM is improving what you already have and do. Consequently, Company A puts a lot of energy in ‘lean’: the continuous improvement of processes and products. To structure lean activities, Company A has an internal consultancy department which other departments can call upon when they experience problems or have questions. This department has expertise at different knowledge areas in which lean is one of them. However, each department also has its own lean experts. Consequently, employees have to continuously bring in and share their ideas and improvements. Furthermore, Company A has a technical traineeship in which KM is the main topic.
To stimulate the development of new ideas some people at Company A are busy developing an ‘ideas funnel’ concerning the topic of social responsibility. This initiative has to tackle the difficulties employees face when trying to bring in their ideas into the organization. Furthermore, this initiative gives employees the possibility to check if their ideas already exist. In practice, a tool will be placed on the intranet where every individual employee can drop his or her ideas and see the ideas of others. In addition, some people will be appointed to analyze the value of these ideas and redirect them to the right person.
