Critical Success Factors for KM within consulting companies.

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Critical Success Factors for KM within consulting

companies.

Author B.S Knol

Student Number s1432508

E-Mail bramknol@gmail.com

Educational Institute University of Groningen

Study MSc Business Administration, Business & ICT Examinators D. Seo

T.W. de Boer

Location Groningen

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2 Acknowledgements

This master thesis will end my educational study at the University of Groningen. I am particularly thankful to those who supported me during the period of writing this thesis. First of all, from the University of Groningen. Special thanks are owed to D. Seo for providing me with feedback and support me during the graduation period. Furthermore I would like to thank T.W. de Boer for being my secondary examiner.

Last of all, I especially express my gratitude towards P. Blaauw who gave me the chance to do my graduation thesis. I also want to thank the studied company that supported me with advice and feedback during the graduation period.

Without their input, it would have been impossible to finish this paper and therefore, I am grateful that they dedicated the spare time they have got and helped me collecting the information needed.

Bram Sebastiaan Knol

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3 Summery

The consultancy industry is characterized as a turbulent, rapidly changing, complex and competitive environment, with consultants activities often being highly knowledge-intensive. Specialized expert knowledge, problem-solving and know-how are the unique selling points of consulting companies. Within the consultancy industry, there is a growing awareness to manage these aspects through knowledge management (KM) activities. The intention of KM is to link and develop internal and external knowledge to meet current and future consultant and client needs. To be able to fulfill these needs effective usage of knowledge is crucial. The effective usage of knowledge is to design a unique solution for internal or client problems. This can be seen as knowledge application within consulting companies. The focus on knowledge application also entails that consulting companies must shift the focus of KM from a creation perspective to an application perspective since consulting characteristics are more associated with knowledge application than with knowledge creation.

Although consulting companies have organized knowledge for several years, limited research is conducted at knowledge management for consulting companies. Moreover, assessing the success factors for knowledge application within the consultancy industry is lacking since previous studies do not incorporate the distinctive aspects of consulting companies.

This research aims to theoretical investigates the issues outlined above by focusing on success factors in enabling knowledge application for consultant companies. The main objective, therefore, is to decide which critical success factors are significant for knowledge application within consultant companies. In an effort to achieve this research objective, this study employed a theoretical study to investigate: KM activities relates to consultancy, characteristics of consultancy, origins of KM. Complementary, a case study is conducted that is conducted within a consulting company. In doing so, theoretical and practical insights are derived to decide which success factors knowledge application facilitates.

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Introduction

The effective reuse of knowledge is significant for organizations, especially for consultant companies, because it is related to organizational effectiveness. Currently, with a significant amount of academic research papers are written and published [Davenport, Javenpaa and Beers, 1996; Davenport and Prusak, 1997; Teece, 1998; Murray, 2002; Li Sijing, 2004; Lei et al., 2005; Deng and Yu, 2006; Orzano et. al, 2008; Nevo et. al., 2008]. These developments reflect the importance of knowledge management within the academic literature. Additional, consultant companies engage into more initiatives for knowledge sharing than before. More organizations become aware of the significant need for intellectual property. Intellectual capitals become the strategic resource of an organization that plays a significant role in establishing competitive advantages. Knowledge management offers a way to exploit this intellectual capital.

The intention of KM is to link internal and external knowledge to meet the current and future needs of an organization [Mcann and Buckner, 2004]. In this study the capability perspective is used: one that focuses on knowledge-related activities to facilitate knowledge creation, capture, transformation and use with the ultimate goal to achieve organizational objectives through KM initiatives. In such a process, knowledge management activities interact in a cycle pattern to support organizational knowledge flows. Knowledge circulate in these interactions and forms a lifecycle, where the „body‟of knowledge is enlarged by every process step. Strategically, this KM process receives input from its context and produces valid knowledge that can be justified by achieving organizational objectives [Kalling, 2003; Diakoulis et, al, 2004].

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practices across various boundaries, leading to knowledge-based intensive activities with a focus on effective knowledge application [Chan et. al., 2000]. The need to manage these challenges within the consultancy calls for a insight into critical success factors.

As competition among IT-consulting organizations increases, the source for competitive advantage has migrated from tangible resources to knowledge and know-how [Huber, 2004] In addition, the ability to apply knowledge is a firm-specific resource that can generate new revenue, opportunities and enable organizations to respond rapidly to their environment [ Argote, Mcevily, Reagans, 2003].

This research aims to conceptualize critical success factor for knowledge application since no conceptual success factor model is yet developed for knowledge application within consultancy. The main objective of this research, therefore, is to identify critical success factors for knowledge application process within consultancy. This study advances theoretical development on KM in two ways. Firstly, this paper investigates models for knowledge management. Secondly, an attempt is made to choose critical success factors for knowledge application for consulting companies.

Research Method: this paper compares and reviews existing CSFs that exist within secondary literature. By combining these factors, the author then proposes a set of CSFs for knowledge application within the consultancy. This set is created by analyzing the consultancy industry in particular knowledge application. To give a better understanding how knowledge is applied, a small case study is conducted at a consultant company that highlight significant insights. The case study is performed by analyzing project diagrams that are found at the studied company. The method that is used for this empirical data is observation and informal conversations.

Through reviewing existing studies on knowledge management success factors and insights from the case study are derived that can be combined into the crucial aspects for the success of knowledge application. The research scope of this study is of consultancy orientation, focusing on the KM processes that drive performance in a consulting industry.

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search structure is to provide insights that can enhance the understanding of KM success factors and distinctive aspects of the consultant companies.

Diagram 1, Research Search Strategy

Besides the selection of the database and keywords limiters are set. These limiters are: .pdf full text, academic journal, and scholarly journals. The keywords are used to search in subject and title terms only. Various combinations of the earlier mentioned key words are used to retrieve the correct literature from the databases. Abstracts are reviewed and appropriate articles that meet the criteria are reviewed completely and used within this research. Literature is then read and analyzed with the aim to enhance understanding of crucial consulting activities and the success factors that determine knowledge application. This is done by identifying shortcomings by researchers in KM and consultancy and determine CSFs for knowledge application to overcome these drawbacks. The next section will provide an outline of the research with corresponding chapters.

Business Source Premier EBSCO host research database

EBSCO host research database

Keywords

Knowledge Management Knowledge Management Succes factors Consultancy Characteristics Limiters set Abstract Reviewed Articles Reviewed Literature Valuable Criteria: - Cross references of article - Year of publication - Association with research topic

.pdf full text; academic journals and scholarly

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8 Outline of research: following the introduction of this research, presented in this chapter. Chapter 2 will provide perspectives on knowledge management. Definitions of knowledge and corresponding types are reviewed and categorized by the author.

Chapter 3: this chapter identifies holistic knowledge management models and introduces the concept of knowledge management systems.

Chapter 4: outlines significant theories that describe the nature of the consultancy industry. Furthermore the focus of this research is explained in more detail. Therefore, transfer of knowledge, knowledge application approaches, and knowledge solutions are described.

Chapter 5: presents a case study that is conducted at a consultant company. In this case study insights are retrieved that reinforces the need for consulting companies to change their perspective on knowledge management.

Chapter 6: describes various success factors for Knowledge Management that have been suggested by previous authors. These factors are than analyzed to the extent that they are appropriate for knowledge application within consultant companies.

Chapter 7: describes knowledge management traps that occur in consulting companies.

Chapter 8: outlines the proposed success factors for knowledge application for consultant companies. These success factors are mandatory to fulfill for knowledge application in consultant companies.

Chapter 9: Provides limitations concerning this research. Besides this, suggestions for future research options are presented.

Chapter 10: presents the conclusions that are made in this research made by the author.

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2. Perspectives on Knowledge Management

Strategic management incorporates the importance of tacit and explicit knowledge in the protection of organizational core competences from competitors [Baumard, 1999]. Baumard argues that human competence cannot be copied exactly. To acquire similar knowledge, competitors must engage in similar activities and experiences which will take a lot of time [Gittschalk, 2005]. Thus, knowledge assets are perceived as a undefeatable strategic barrier for new entrants into the consultancy industry.

In organizational strategic literature, two perspectives are mentioned that are complementary to each other. The first perspective is the resource-based view of organizations (RBV), which discusses that performance and competitive advance are created based on valuable unique resources [Barney, 1999]. The strategy based on this view focuses on the creation or acquisition of unique, rare, or specialized resources, that firms turn into sustainable competitive advantage [Murray, 2000].

Extending the perspective of the RBV, the knowledge based view (KBV) discusses that knowledge implies sustainable resource distribution, is hard to transfer, and posits that knowledge based assets produce sustainable competitive advantage [Kalling, 2003]. Accordingly, knowledge is a type of asset that organizations should use to obtain competitive advantages. Thus from a strategic perspective, knowledge assets can be described as a justified belief that increases the organizational capability for effective future action [Nonaka and Takeuchi, 2004].

In contrast, the industrial organization view (IOV) [Porter, 1985] focuses on environmental fit and ensuring that organizations strategy is congruent to the environment. It can be concluded that RBV details knowledge of strategic resources and usage in work related activities, though the IOV details knowledge closer to the market. Competitive advantages are likely to be achieved through the IOV by focusing organizational resources on particular environmental opportunities [Murray, 2002].

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2.1 Definitions of Knowledge

The question of defining knowledge has occupied the minds of researchers for a long time. It is unnecessary, for the purpose of the master thesis, to get engaged into a debate of probe, or redefine the term knowledge from the perspective of ancient or modern philosophy. However, it is useful in the scope of this research to consider the manifold views of knowledge that are discussed in organizational literature. This will uncover some assumptions of organizational knowledge and knowledge management processes.

In IT literature, authors address the question of defining knowledge by distinguishing data, information, knowledge and wisdom. For example Vance [1997], defines information as data that is interpreted into a framework whereas knowledge is information that has been thought true. Maglitta [1996] concludes that data are numbers and facts, information is processed data, and knowledge is information that has been made practicable. Additionally, Spiegler [2000] concludes that data should be turned into information for added value. Information is turned into knowledge by gaining insights and understanding. Wisdom originate through action such as value, skills, and experience. Furthermore, Huber [1991] defines knowledge as a justified belief that increases individuals and organizational potential for effective action. In this perspective, data refers to a symbolic representation. Information is raw material for the creation of knowledge that exists in various sources and form. In turn, knowledge is information that is processed by individuals and, or organizations through a process of deliberation, learning and thought. Parkikh [2001], indicates that data are raw facts gathered from activities. Data that is tagged with a label or category is information as Parkfikh [2001] concludes. When information is applied in a context and evaluated based on a model or view of the world, knowledge is established. Stollberg et al., [2004] define data as un-interpret indication with no relevance while information is data applied in a situation, knowledge is information used for problem solving which represents a realistic stage. Finally Alryalat and Alhawari [2008], states that data is unprocessed facts retrieved from organizational activities with no value or purpose. He states that information is processed data with business value purpose. Knowledge is then an interpretation of information to improve the understanding of purpose. Wisdom includes the activity to achieve that purpose.

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data, information, and knowledge. They argue that a train timetable is data, a platform announcement is information, a passengers interpretation that the next train will not reach the desired destination is knowledge. What is the key to distinguish data, information, and knowledge if it does not reside in the content, structure, source, accuracy or utility nor the supposed information or knowledge. Rather, knowledge is information possessed in the mind of individuals; it is personalized information related to facts, procedures, ideas, concepts, people, observations and judgments. From the above example, if the passenger needs to check platform announcements every 10 minutes because he is unable to remember the departure time, he did not acquire knowledge. However, if the passenger is able to recall from what platform his train departs, than he has acquired some knowledge. Consistent with this view, this research, posit that knowledge is not radically different concept than information. Information is converted into knowledge once it is possessed in the mind of individuals and becomes information when it is presented in the form of words and graphics.

Rather than defining knowledge in relation to information or data, Schubert [1998] defines knowledge as (1) a state of mind, (2) an object, (3) a process, (4) a condition of having access to information, or (5) a capability. Schubert [1998] propose that knowledge is “a state of knowing” achieved by experience or study, the sum of what has been perceived, discovered or learned. This means that knowledge is a cognitive state of mind.

Mcqueen [1998] contributes to this perspective that knowledge is “understanding”. McQueen states that it is not possible to mechanize knowledge. From this point of view, the role of IT in KM is to provide resources for searching and retrieving information so that individuals can expand their personal knowledge and apply it to organizational needs.

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the perspective of knowledge as a process it implies that the focus is on the flow and process of creation, sharing and distribution of knowledge. The view of knowledge as a capability suggests a knowledge management approach for building core competences, and understanding strategic advantage of know-how. It must be noted that these views are complementary to each other and can be used simultaneously.

Having described definitions of knowledge, it is significant to illustrate knowledge aspects. Explanation of several knowledge aspects is important to demonstrate its multi-faceted origins of organizational knowledge. It must be noted that the choice for a particular knowledge aspect depends on the contextual factors according to the author. Since consultant companies interact with many industries they face various contextual factors. Therefore, this study is not able to choose a knowledge aspect that is superior to other knowledge aspects.

Descriptions Implications for KM Source

Data Unprocessed facts with no

value or purpose

Not of any value Vance [1997],

Stollberg [2004] Information Processed facts with value

and purpose

KM focuses on exposing potentially useful information

Parkikh [2000], Knowledge Interpretation of

information

KM focuses on transforming data into information

Huber [1991]

Wisdom Interpretation of

information for a particular purpose

KM focuses on the application of knowledge

Spiegler [2000],

State of Mind State of knowing and understanding

KM focuses on exposing potentially useful information

Schubert [1999], McQueen [1998]

Object Knowledge are objects that

can be stored

KM will be focusing on managing knowledge stocks.

Zack [1998]

Process Knowledge is the process

of expertise

KM should be focusing on knowledge flows between the various knowledge stages

Schubert [1998]

Access to information Knowledge is a condition to information access

KM focuses on retrieval and access of information

McQueen [1998] Capability Knowledge will influence

future actions.

KM is seen as a core competence and a sustainable competitive advantage.

Carloson et al. [1998]

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2.2 Knowledge aspects

A frequent cited aspect of knowledge, created by Nonaka [1994], is the distinction between tacit and explicit knowledge. Tacit knowledge is unarticulated knowledge, origins in actions, experience, and context. Explicit knowledge refers to knowledge that is presented in some symbolic form. According to Nonaka, tacit knowledge is originated in action, experience, and involvement in a context. Further, tacit knowledge consist of both cognitive and technical elements. The cognitive element refers to individual mental models. The technical element refers to „know-how‟ that is applied in a specific context.

Classification based on Nonakas‟ dimension is frequently used by organizations, however the threat of this classification is the assumption that tacit knowledge is more valuable than explicit knowledge.

Other academics, such as Cole [1998] illustrate that despite tacit knowledge is more complex than explicit knowledge, explicit is more valuable. In addition to the tacit-explicit dimension of knowledge, Nonaka [1994] suggests two other knowledge aspects: individual and social knowledge. Individual knowledge is created by individuals and exists within individuals. Social knowledge is created by collective actions and interaction among members in groups.

Another classification of knowledge does not rely on tacit-explicit dimensions of Nonaka [1994]. Zack [1998] offers knowledge aspects that does not incorporates tacit and explicit dimensions. The classification consists of declarative [know about], procedural [know how], causal [know why], conditional [know when] and relational [know with]. This distinction is important to obtain a fit between the KM strategy and knowledge attributes. Moreover, the distinction in knowledge aspects adds value because it allows organizations to map their existing intellectual knowledge and assess their knowledge position relative to competitors. Other authors take a pragmatic approach to classify knowledge.

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includes “best practices”, know-how, patterns, business processes, and models. Junnarkar and Brown [1998] suggests that tacit knowledge is that which is implied but not actually documented assuming that it is tacit not because one is not able to articulate it, but because it has not been documented yet. This perspective can be more useful because some tacit knowledge may be more valuable than explicit knowledge [Nonaka, and Takeuchi, 2004].

Knowledge aspects and corresponding definitions are displayed in table 2. The utility of this overview lies in cataloging existing intellectual capital and compare these intellectual properties against competitors and client needs. These comparisons are valuable for managing knowledge when a knowledge strategy is formulated and for the evaluation of the supports information systems (IS). The knowledge aspects described in this section illustrate the complex nature of organizational knowledge. It is significant to note that these knowledge aspects are mutually constituted and highly interdependent. Therefore, there is not a knowledge aspect that is superior to others. The knowledge aspects in table 2 demonstrate the variety of organizational knowledge. The distinction among several knowledge aspects can inform the design of KM systems by stressing the importance of different aspects of organizational knowledge aspects. Furthermore, an understanding of the concept of knowledge and knowledge aspects are important, because theoretical developments in this area are influenced by the distinction among several aspects of knowledge.

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15 Knowledge Aspects Definition Sources

Tacit Knowledge consists of actions and

experience within a specific context.

Nonaka [1994], Cole [1998], Snyder [1998]

Explicit Generalized documented knowledge Nonaka [1994], Cole [1998], Snyder [1998

Individual Created by and inherent in the individual Nonaka [1994]

Social Created by and inherent in the collective

mind and or actions of groups

Nonaka [1994]

Objective Codified knowledge in a social system Junarkar and Brown [1998], Mccann and Buckner [2004

Collective Tacit knowledge of a system

Declarative Know – about Zack [1998]

Procedural Know – how Zack [1998]

Causal Know – why Zack [1998]

Conditional Know – when Zack [1998]

Relational Know – with Zack [1998]

Pragmatic Usage of organizational knowledge Mccann and Buckner [2004]

Nonaka and Takeuchi [2004]

Table 2, aspects of knowledge

From the above table can be concluded that there are many aspects of knowledge. It can be argued that knowledge does not consist of all the aspects. For example, a project diagram within a KMS. This project diagram has explicit , social, collective, declarative, and procedural aspects for example. Since it is a general diagram available within the entire consulting company one cannot assume that individual aspects are part of the project diagram. Therefore it is usefull to note that a combination of aspects can be used in a KM initiative but it is not necessary to use all the knowledge aspects.

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3. Knowledge Management and Knowledge Management Systems

It is suggested that both Knowledge Management Systems (KMS) and Knowledge Management (KM) focus on organizational potential to support future effective actions on the basis of knowledge assets. Both KMS and KM disciplines study knowledge related activities, however, with various focus. KM focuses on managing knowledge-related activities to convert knowledge into organizational performance. KMS is a technological solution that supports KM. [Diakoulis et. al., 2004]. While KMS and KM are important disciplines for this master thesis, this research emphasis on KM in relation to the consultancy industry. Before this research goes into detail about the consultancy industry, KMS will be explained and KM models are described to highlight drawbacks of existing studies.

3.1 Knowledge Management Systems

Knowledge management systems (KMS) are special type of information systems that support activities associated with KM. Alavi and Leidner [2001] describe that KMS refers to the facilitation of knowledge acquisition, generation, codification, storage, transfer, retrieval and use of organizational knowledge.

There are two perspectives for approaching KMS, the technical perspective and the social-technical perspective. The social-technical perspective views KMS as a complex combination of technology, infrastructure, culture, knowledge and people. On the other hand, the technical perspective views KMS purely as an technology. The main idea behind a KMS is to enable employees to have access to organizational knowledge, information and solutions. Employees that share knowledge could potentially lead to more effective problem solving and could also lead to more innovative ideas.

An common support function of KMS is internal benchmarking with the aim of sharing internal best practices. Another support function of KMS is the creation of corporate knowledge directories, this can be seen as mapping internal expertise. A third application of KMS is the creation of knowledge network which are indicated by Ruggles [1998].

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organizational knowledge access, knowledge sharing as well as communicating through collaboration and managing knowledge. [Abdullah et. al, 2005]. The origin of KMS is to enable employees to have access to organizational facts, sources of information, and solutions. The purpose is to increases effectiveness which leads to competitive advantages. Thus, KMS should be deployed to support KM processes with the purpose of utilizing organizational capabilities.

3.2 Knowledge Management Processes

Given that knowledge is a strategic resource, its application serves a certain purpose. Knowledge management is initiated by organizational intentions, which is viewed by the organization aspiration to its goals. Usually, this is achieved by a strategy with the essence of establishing a vision of knowledge needs and development of organizational capabilities. [Nonaka and Takeuchi, 2004]. Rather than conducting a full research on KM, the purpose here is to address key literature that influence KM. To fulfill this purpose, various KM process models are described that highlight important processes of KM. Eventually, an overview is provided in table 3 of these various KM models to graphically illustrate previous research on KM. Out of a review of academic literature the researcher found nine studies that are relevant[ Davenport, Javenpaa and Beers, 1996; Davenport and Prusak, 1997; Teece, 1998; Murray, 2002; Li Sijing, 2004; Lei et al., 2005; Deng and Yu, 2006; Orzano et. al, 2008; Nevo et. al., 2008].

Davenport, Jarvenpaa and Beers [1996] present four knowledge processes: finding knowledge, creation of new knowledge, packaging created knowledge, and externally usage of existing knowledge.

According to Davenport and Prusak [1997], all KM initiatives have three aims. (1) to make organizational knowledge visible through maps. (2) to develop a knowledge culture by encouraging behaviors for knowledge sharing. (3) and to build a technical knowledge infrastructure.

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Phillip Murray [2002] views KM from a strategic perspective that transforms organizational intellectual assets into more productivity, added value, and increased competitiveness. According to Murray [2002], knowledge management educates employees to produce and optimize skills as a collective entity.

Li Sijing [2004], describes seven stages for knowledge management which the author empirically tested. These KM stages are: identification, acquisition, analysis, storage, dissemination, sharing and evaluation.

Deng and Yu [2006] propose KM processes with five stages : identifying, capturing, selecting, storing and serving. The process starts with identifying organizational knowledge. The identified knowledge is captured and transformed into a form that is compatible for computers. Knowledge selection evaluates knowledge based on relevance, accuracy, and value before it is stored in the repository. Additional, the selected knowledge will be stored in a repository. Finally, upper management should provide support to knowledge seekers and rousers.

Lai. et al. [2008] divides KM into seven stages : Initiation, Generation, Modeling, Repository, Distribution, Transfer, Use and Retrospect. The first stage deals with requirements for knowledge. The second stage generation, identifies what organizational knowledge exist and who owns it. Additionally, this stage concerns about importing and collecting knowledge from external sources. Modeling justifies produced knowledge by employee‟s. Distribution and transfer refers to transfer of knowledge among individuals. Knowledge use explains organizational knowledge usage with a purpose and a commercial value. The final stage deals with the examination of the different knowledge management processes.

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creating describe issues that allow organizational members to create new understandings, innovations, and an understanding of the organizational knowledge that already is known.

Nevo et al [2008] extends the knowledge management process of Lei et al. [2008]. Nevo [2008] suggests the stages: creation, conversion, codification, transfer, and application. Knowledge creation can be defined as process of developing new knowledge from data, information, and personal experience. Secondly knowledge conversion, concerns the process of continues conversion between the tacit knowledge of individuals and the explicit organizational knowledge. Furthermore knowledge codification, this stage is primarily concerned with the capture, representation, and storage of knowledge in IT repositories. The authors describe knowledge transfer as the movement of knowledge from one location to another. The last stage highlighted knowledge application, involves the significant importance of encouraging knowledge use besides knowledge contribution.

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20 Author Knowledge Management Models

Stages

Nevo [2008] Creation Conversion Codificati

on Transfer applicati on Lai et al. [2008 ] Initiation Generatio n Modeling Repositor y Distribution and Transfer Use Retrospe ct De Long [1997]

Capturing Transferring Usage

Orzano [2008]

Finding Sharing Developi

ng Li Siing

[2004]

Identification acquisition Analysis storage Dissemination Sharing evaluatio n Deng and Yu

[2006]

Identify knowledge

Capture Select Stored service

Orzano et al. 2008

Finding Sharing Developi

ng Davenport, Jarvenpaa and Beers [1996] Finding Knowledge Creation of Knowledge Packaging of created knowledge Externall y usage of knowled ge

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4. The Consultancy Industry

To return to the central question and provide answers to the research question namely: to provide success factors for knowledge application within consulting companies, fundamental theories about the consultancy industry are described. These fundamental theories illustrate theoretical foundations of consulting activities. The following theories are used to describe the nature of consultancy. These theories are: theory of affordance, distributed cognition and the situated learning theory will be explained. These theories clarify the central activity of consultancy namely, applying consultant knowledge to design solution for client problems.

Problem solving seems to be the central activity in consultancy practice [Davenport and Prusak, 2005]. Consultants apply knowledge to support the core process problem solving. Furthermore consultants transfer their knowledge to clients, and demonstrate “best practices” at clients. It can be argued that knowledge is the unique selling point of consulting companies instead of problem solving.

However, companies hire consultants primarily to solve problems. Companies hire consultants since they posses knowledge about particular subjects that can be used to solve a particular problem. Knowledge that a client of the consulting company does not possess.

Despite the criticism about the outcomes of consultant reports and analyses, organizations continue to use consultants to gain access to consultancy expertise and knowledge [Werr, 2002]. Werr [2002] indicates that skillful application of knowledge, practice of knowledge, is more important for the success of consulting assignments than the possession of organizational intellectual capital. Nevertheless, literature does not clarify further exploration to the doing of consultancy itself and the success factors for knowledge application. Therefore, some background theories for consultancy are described in this section.

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This research paper argues that application of knowledge is the selling point for consultancy, as most knowledge in this industry is generated in ongoing client assignments. Collecting and making knowledge available from individual projects to the rest of the organization can be seen as a core process, which is closely linked to strategic added value of consultancy [Hansen, Nohria, 1999].

The theory of affordance, developed by Gibson [1977], gives useful insights into the central activity of consultancy, namely problem solving. For Gibson [1977], perception of a given situation is guided by opportunities for application that make particularly situational affords. For example a tree in the park, affords us an opportunity to get shelter in the sun on a hot day. An affordance is thus an opportunity for an agent in a given situation [Gaver, 1994]. Applying the affordance theory to consultancy, a process consultant may redesign a process to afford more opportunities for effective and efficient actions. However, environments change, thus the perceptions of the opportunities afforded to us change too. For example, on a rainy day, an agent sees that the same tree affords the opportunity to stay dry. Despite the environmental changes, opportunities are still created by agents. A consultant responds to the constraints given by the problem space through adjustments. These adjustments are called attunement according to Gibson [1997]. A standardized project plan, for example, sets out prescribed actions that have no association with a specific situation. As a result, consultants often adjust and tailor the project plan for a given situation.

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The distinction between client and consultant is blurred as each contributes and learns from what is collectively known and established within communities of practice. With the concept of participation in a community of practice by consultants, the situated learning theory provides answers for the practice of learning. As a learner, participation in the community of practice is marginal; moving towards full participation as one gains experience and the ability to successfully perform various actions. According to the situated learning theory, the focus broadens to include intentions to the design of the context, so that it can afford greater opportunities for participation. In the consultancy context this would be the creation of a designated space for the project team.

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4.1 Application within the consultancy

In an approach based on knowledge creation, clients and consultant roles are static and based on knowledge possession. In an approach based on application, practice of knowledge is primarily where client and consultant roles are diverse. The focus shifts from possession of knowledge to the application of knowledge. Thus, the focus of problem solving shift from accuracy to actions, taking advantage of situational affordance and abilities. Since this research provokes focuses on knowledge application, the process of application will be described in detail. From this descriptions various success factors are derived that enable the success of knowledge application within the consultancy industry.

Knowledge Application is defined by the author as an strategic asset that is used and created by consultant to design solutions or products for client.

Knowledge Creation is defined by the author as knowledge that is created by consultants without the condition that it is an strategic asset or can be applied at clients.

As an independent business object, every consultancy organization will have an open system that receives information from both internal and external environment [Fu et al, 2003]. Consultants receive information from their clients and must combine this information with their own intellectual assets. This information, which ranges from task-specific instructions to strategic information dictates the guidelines of the organizational development of clients, is retained and utilized to guide new projects.

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4.2 Knowledge application

The purpose of consultancy is to present a solution for clients in an appropriate manner. The solution activity receives input from current relevant knowledge. To be able to design a solution for the problem, consultants use the knowledge aspects that are listed in chapter 2.2. Combining these various aspects entails that knowledge is transferred and shared among consultants and clients. This knowledge is combined with roused knowledge from the current relevant knowledge and combined with client knowledge.

Consultancy is about designing a solution in an appropriate manner for clients by using knowledge as an strategic asset. The solution is designed by combining various knowledge aspects as is explained in chapter 2.2.

As stated before, an important characteristic of the consultancy industry is that the source of competitive advantages resides in the application of knowledge rather than in knowledge itself [Alavi and Cook, 2002]. Thus, the purpose of knowledge application is to present a solution to clients and other consultants in an appropriate manner.

Moreover, Alavi and Cook [2002] concluded it is significant to accumulate various knowledge and to settle on what knowledge should reside in the repository. Updating knowledge inside a repository is an important task, that must be assigned to specialized knowledge workers. Since knowledge is a strategic asset, updating the knowledge state is important to be competitive and up to date. Updating is the output of the evaluation knowledge flow in which is decided whether or not applied knowledge should be stored. These knowledge workers will also be assigned to remove absolute information.

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Although these integration alternatives are challenges, IT can support overcome these challenges. IT can enhance knowledge integration and application by supporting teamwork and collaboration. By increasing the size of individuals internal networks and by increasing organizational knowledge that can be applied, information technology allow organizational knowledge to be applied across time and space. This will increase organizational capability in which changes can be applied, which is essential for the consultancy industry.

Technological collaboration can support knowledge application by embedding knowledge into organizational routines and is therefore seen as a success factor. Consultancy must be aware that they do not position themselves into repeating the same, or better and better with declining marginal returns. Therefore, embedding “best practices” into the KMS might facilitate efficient handling of routine, linear, predictable situations.

4.3 Knowledge transfer

When transfer of specific knowledge from consultant company to a client takes place, it is extracted from its original context. The original context lies within the knowledge state of the consultant company. One crucial aspect of knowledge application within consultant companies is that the client knowledge state does not overlap with the consultancy companies knowledge state. Every organization faces restricting conditions within their current relevant knowledge state. These restricting dimensions result in job opportunities for consultant companies. The ideal situation is when the consultant company and the client are familiar with each other. This entails that they are well-known with each others project methods and ways of doing business.

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Figure 3 illustrates two knowledge points that can be applied at an organization. Since both points are utilized by the consulting company, these are points that can be applied at clients. However, there is one distinctive aspect between the two points. Point A has overlap with the client knowledge state while point B exist outside the knowledge state of the client. The figure suggests that the application of knowledge point A requires lower levels of transfer than the level for point B.

In the case that the consultant company and client do not maintain there relation, overlap between the knowledge states will fade away. This is the state in which there is no overlap between the knowledge states of client and consultant.

Figure 4, Possible Knowledge Points, clarify that consultancy is about knowledge.

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4.4 Knowledge application Approaches

To be successful in knowledge application, consultant companies rely on a clear, well-designed application approach tailored to the consulting overall business strategy [Wong and Aspinwall, 2002]. Two application approaches are described in literature that can be used: codification and personalization.

A clear application approach must be used to guide consultancy companies to apply their knowledge at clients. The extent in which success factors are used to deploy knowledge applications successfully is depended on this choice. In addition, the choice of approach must be related to the application perspective of KM since that is a predecessor for the success of KM within consultancy. Developments in IT have offered tools to collect and codify knowledge within consultants repositories. IT can enable information sharing among consultants and prevent redundancy while offering immediate access to information [Malhorta, 2000]. Meanwhile, technology gives insight into limitations due the changing environment of consultancy and to the diverse interpretations that users have about the available information provided by KMS. It is clear that a tension arises between technology and people. Hansen [1999] distinguish two main strategies: “codification” and “personalization”. Codification refers to the storage at a systematic way in a repository and personalization focuses on personal communication among employees.

Codification approach entails mostly explicit knowledge that is stored within an electronic repository.

Personalization approach focuses on individual tacit knowledge and communication through an personal direct channel.

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various personal perspectives [Malhorta, 2005]. Personalized/decentralized KMS seems to argue that knowledge is a process that consists of a set of skills, know-how etc. that is constantly changing.

Therefore, it seems that the codification or centralization strategy follows an IT approach. The KMS is usually managed from the top. In collecting and codifying knowledge their aim is to redistribute best practices with high speed and conformity. This in turns means that a high level of standardization is needed.

Type of Strategy Management KMS based on Degree of standardization

Codification Top management Technology Centralization

Personalization Bottom-Up approach People Decentralization

Personalization has a people approach [Malhorta, 2005]. According to Malhorta [2005] interactions between employees is coordinated to a limited extent which gives employees a more open and central role.

On the basis of the previous reasoning, the choice of one approach or the other must impact the overall operation of the consulting company as well as be consistent with the overall business strategy. As mentioned earlier, a KMS seems to have different degrees of standardization. The choice for a codification approach seems to entail that KM is standardized and centrally managed. Technical knowledge is easier to codify, store and share through IT support [Hansen, Nohria and Tierney, 1999]. Therefore, codification approaches seems to be appropriate for activities that do not require intensive personal contact.

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Choi and Lee [2002] argue that organizations should create the right balance between the two approaches. More specifically, Hansen et. al [1999] recommend using the 80:20 rule, spending 80 per cent of resources on one approach and 20 per cent on the other. It is important to combine the two approaches since knowledge exist of tacit and explicit aspects. Tacit aspects are hard to apply and share through a codification approach. This indicates that the personal approach should be used. The codification approach can be used for example to provide and share project diagrams.

Furthermore, Jodan and Jones [1997] emphasis that there must be a balance between the two approaches to encourage the development of more innovative knowledge. Thus, both approaches are important to use and are enabled by success factors that ensure that the chosen combination is applied appropriate. If an consulting company does not maintain the right balance between the codification and personalization approach is may find itself in one of the pitfalls that will be described in chapter seven.

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5. Case Study at an consulting organization

In this section details are provided of the studied company and their knowledge application process for internal and external projects. The case study is important since it clarifies the need to view KM in consultant companies from a application perspective.

Introduction to the company: The studied company is a leading IT and business services company, employing 37,000 people across 36 countries. The organization has a proven reputation for excellence across various services, from business consulting and system integration, to IT and business process outsourcing services. It provides business consulting, systems integration, and IT and business process outsourcing services. The studied company works closely with its customers to release their potential. It applies its deep industry knowledge, technical excellence and global delivery expertise to help its customers build leadership positions in their markets. Customer expectations rise significantly because of the existing pressure in the environment of clients and the urgent need to run effective and efficient operations.

In the past years the company engaged into numerous initiatives to convert knowledge that resides in employees into codified knowledge that can be shared among consultants. An enterprise-wiki is created, an internal best practice system is generated, information pages per consultant. The enterprise-wiki is a collaborative website where users can create and edit pages.

These systems typically generate large quantities of raw data and are generally used by employees to enrich their knowledge mindset. The initiatives, however, are not a integral part of how employees work. Serving instead as a content store where references are made on an as-needed analyses.

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5.1 Evaluating knowledge support at the studied company.

Understanding the application of knowledge in the studied company requires insights into the company overall value creation process. Value creation at the company involves applying existing knowledge to clients to deliver benefits for long-term competitive advantages. Thus, knowledge can be seen as a core competence and need to be managed successful to create sustainable advantages. This paper uses project knowledge to explain how knowledge is applied and created during ongoing assignments for internal and external projects.

As noted previously, the main challenge for consultants is to apply knowledge in a specific situation. This can be seen as a process in which methods and old cases are used as reference. Besides these reference materials, unique solutions are created. This entails that certain activities are eliminated and regarded as irrelevant for a specific case, as well as adding components to the new project that are relevant. In this context, consultant go outside the black box and create a new approach or tool for a specific case [Werr, 1999]. Creating an approach that fits a specific case requires experience from other cases, which is regarded to a large extent as tacit knowledge.

By examining various knowledge resources at the studied company, project methods and old cases play a critical role in knowledge application. In the following section the role of explicit forms of knowledge in the studied company generation and application of knowledge will be described.

Tools and Methods: Methods can be defined as the steps taken to fulfill a client project. Tools can be seen as facilitators for the steps. Methods are procedures that are used in an organization. In the studied company tools and methods exist for internal and external usage. However their use and origin is different. Internal methods exist for a large number of areas and at many different levels of detail. They are stored in a knowledge database. However, these methods and tools are not continuously developed and enhanced in order to reflect the experience gained in ongoing internal projects. Instead, evaluation is discontinuous and made couple times a year. Methods are seen as providing a basic structure for the internal projects at the studied consultancy organization. It can be assumed that this basic structure is primarily important to inexperienced consultants, as the methods give an activity structure as a point of departure for internal activities.

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approach. This entails that the project is fulfilled according to the preferences of the client. However, evaluating, assessing, and storing the methods and tools that are preferable by customers is not commonly used at the studied company. Evaluation of the external project is a standard activity, but assessing whether this activity is applicable for further actions or developments is not included in the work process.

A central contribution of methods for the studied company is thus the availability of structure and language for different activities for consulting project. However, methods and tools used in external projects are discussed but not evaluated to the extent that they are valuable for further actions. Instead, evaluation of the external projects is depended on requests of clients. Furthermore, internal methods are not continuously developed with knowledge gained from ongoing internal projects.

Current project approaches: In designing a project approach, the studied company based their approaches on similar previous cases, which are used as models for the design of a new project. The search activity for old cases is facilitated by the organizations world-wide knowledge database and standard methods and tools of that the organization use for internal projects.

Previous projects approaches are an important source of knowledge. However, consultants rarely use other external projects as templates. Still, documentation of old cases still remains an important issue. However they are used differently for internal or external usage. For external usage, previous project approaches are an important knowledge source to complement tacit knowledge. Whereas for internal projects the methods and tools are standardized and are obligated to use for an internal project.

The strategies for making use of experience derived from projects are similar to Hansen, Nohria, and Tieneys [1999] personalization and codification. However, there are some limitations to these strategies that are observed in the studied company. Nohria and Tieney [1999] describe codification as strategy that involves efforts to articulate knowledge into methods and tools that could be stored in databases.

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34 Knowledge Application: This case study indicates that the application of knowledge is generated from a general method to a specific situation which is crucial for the consultancy. Consultants use general methods and tools or cases to guide future actions. These methods or cases do not suggests solutions for a specific situation but tries to generalize the specific situation. Despite the effort to codify knowledge, no cases or methods are copied exactly for new projects.

Consultants at the studied company do not use methods, tools and cases as direct guides for actions. Because, methods and tools do not suggest solutions for specific situations but try to generalize knowledge. This is both a weak as a strong point. The generality of the methods make them applicable to various different cases of general significance. On the other hand, because the methods are general they cannot be applied in specific situations.

Creating an approach that fits to a client is described by Werr [1999] as an aspect of experience, which is to a large extent related to tacit knowledge.

The adoption of earlier approaches as described in methods and project reports are used for continues development of external projects, and directly updating the organizational knowledge at the studied company.

Methods and tools influence the aim, purpose and design of the project plan. Consequently, the use of a given method limits the range of actions and thereby knowledge gained. The above description indicates that methods and tools are used with experience to design solutions to unique problems. The case study shows that for internal projects consultants reproduce knowledge and in the case of external projects there is space for innovation and creativity.

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35 Consistency problem: among existing KMS, a shared framework is only provided at a strategic level. However, the KM initiatives act independent of each other with the result that the issue of consistency occurs. A lack of consistency among the initiatives threatens the application efforts of the studied company.

Categories are provided for document storage by more than one system leading to the question which taxonomy should be used by the consultants to codify their new knowledge. Although the company appears to provide support for feedback with review and evaluation capabilities incorporated in various system, the question raises regarding the effectiveness of the review and evaluation capabilities and how knowledge is handled across the various KM initiatives.

Another potential concern is derived from the physical storage. After observing the various electronic information repositories it can be concluded that knowledge is stored in various electronic stores. This suggests that redundancy and inconsistence exist between the various storage systems.

Resulting from the consistency issue comes the application issue that is outlined below.

Application problem: as stated before the studied organization does not provide common taxonomies or categories. This suggest that the studied organization designed their electronic storage places to accumulate knowledge without deciding what knowledge valuable is. Thus, instead of using an application approach the studied organization uses a creation approach.

The studied company views their KM initiatives through a creation perspective since they create knowledge within their KM initiatives without the need that it is or will be applied at clients.

Although consultants are able to search and retrieve information from all the systems, it is hard to retrieve desired knowledge because of the lacking taxonomies or categories in which knowledge is stored. It seems that the studied organization focuses on knowledge creation instead of knowledge application.

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adjusted by rousers. When the approach to this enterprise-wiki is changed from creation to application the posted article was never allowed since it has no added value for the organization.

Furthermore, by focusing on knowledge application the studied company enforces that agreement exist on categories in which knowledge is stored that is significant to achieve organizational objectives. The development of knowledge for future actions can be supported with review and evaluation capabilities. These capabilities assess whether knowledge is valuable or not. Although the studied company appears to provide support for feedback on current knowledge with review and evaluation capabilities, the question raises regarding the effectiveness of these implemented capabilities.

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6.

Key success factors from empirical research

A broad range of success factor are mentioned in academic literature. An appropriate set of Critical Success Factors will help consultant companies to keep in mind the issues that should be dealt with when implementing a KM initiative. As noted previously, no integrative work exist on linking critical success factors with the application of knowledge with the consultancy as background. For the research purpose it is therefore necessary to identify success factors for KM.

What are Critical Success Factors

CSFs can be defined as areas in which results will ensure competitive performance for the organization [Rockart, 1979]. In a more recent study. CSFs are described as a set necessary conditions for the success of a particular initiative [Williams Ramaprasad, 2005]. In terms of KM, conditions can be viewed as those activities and practices that should be addressed in order to ensure successful application. These factors should be either natured or be developed in the case they do not exist. However, since these CSFs are hard to measure it can be stated that we identify failure factors. If an consultancy organization is not able to influence the chosen factors they will fail in their KM initiative.

Previous studies in KM success factors.

From reviewing academic and practitioner literature regarding CSFs for KM implementation, this research found eleven relevant studies [Davenport et. al., 1998; Hosapple and Joshi, 2000; Jarrar and Zairi, 2000; Skyrme and Amidon, 2001; Ryan and Prybutok, 2001; Goh, 2002; Bot and de Bruijn, 2002; Alzami and Zairi, 2003; Egbu, 2004; Hung et. al., 2005; Wong and Aspinwall, 2005].

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Holsapple and Joshi [2000] investigated factors that influenced knowledge management. They propose three significant issues of influence (managerial, resource, and environment) with different factors within each class. Managerial influence compromised four main aspects: coordination, control, measurement, and leadership / top management support. Resource factors includes: knowledge, human, and financial resources; whereas environmental factors consists of: competition, market, time pressure, government and economic factors. The authors found that leadership and top management support are crucial success factors for KM. However, the authors did not explicitly presented culture as a significant factor. Rather, they postulate that culture is a sub-element for the success of KM initiatives. Other factors are also missing in this research such as communication, training, education, strategy, and reward issues.

Jarrar and Zairi [2000] conducted research to indentify CSFs for the effective transfer of internal best practices. They identified the following success factors: employee involvement, training, and open communication. This research was limited in the scope and focused on the internal transfer of best practices and did not cover the external transfer of knowledge. Moreover, factors such as management support and leadership were not included in the research.

Based on insights gained from Jarrar and Zairi [2000], Skyrme and Amidon highlighted seven critical success factors. These include linkage to a business imperative, vision and architecture, knowledge leadership, creation and sharing culture, continuous learning, technological infrastructure and organizational knowledge processes. However, factors such as measurement, top management support and training are not covered in the conducted research.

A survey study among IT executives was conducted by Ryan and Prybutok [2001]. They aimed to specify KM CSFs for KM technology adoption. The classified the CSFs into three classes: organizational factors, environmental factors, and technological factors. The found that organizational and technological factors are more important than the environmental factors. The research only focused on technology aspects of KM. Factors such as measurements, and learning and training were not covered.

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research can only be applied to the transfer of knowledge and not to other stages of the knowledge management process.

Judging KM initiatives through the value chain is the best way to asses according to Bot and de Bruijn [2002]. The factors that they identified for successful KM initiatives were: vision, external developments, internal developments, strategy and policy, determination of knowledge needs, sharing of knowledge, and application of knowledge.

Qualitative and Quantitative methods are combined by Alazmi and Zairi [2003] to study the CSF‟s of the implementation process in the public sector. They classified the success factors into four main categories: top management commitment, change management, KM processes, and technology. Significant factors such as top management support, HRM and KM measurement were not included in this research.

Egbu [2004] constructed a questionnaire at construction organizations to determine innovation success factors. Egbu concluded that there are six CSFs for the success of innovation. Having a vision, innovative supporting culture, innovation champion, abilities to manage tacit and explicit knowledge, systems and technology, and integration of individuals and teams around the service or product. This study concentrated on the knowledge creation process and therefore may not be applied to other stages. However, since the application of knowledge entails creation of knowledge this research is of significant value this research paper.

Hung et al. [2005] carried out research to assess the CSFs for adoption of KM systems. The suggest seven critical factors, namely: benchmark the strategy, organizational culture, employee involvement and training, leadership and commitment of top management, learning environment, training and education, and Information Technology. This research is however limited in the extent in can be applied to consultancy since the research was conducted at pharmaceutical industry.

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Although the presented success factors in previous research are logical and understandable. A comprehensive set of factors that is necessary for the application stage of KM within consultancy. Table 4, provides a summary of the main issues of the described studies.

Reference

Proposed Critical Success Factor Objective of research Davenport

et al [1998]

1. Knowledge-oriented culture

2. Technical and organizational infrastructure 3. Top management support

4. Link to economic value 5. Purpose and goals 6. Motivational aids 7. Knowledge structure

8. Multiple channels for knowledge transfer

To identify factors that contribute to the success of KM projects Holsapple and Joshi [2000]

Factors classified into three categories: 1. Managerial influences 2. Resource influences 3. Environmental influences

To develop and assess a framework for characterizing the factors that influence KM

Chourides et. al. [2003]

Factors classified into five main categories: 1. Strategy 2. HRM 3. Information Technology 4. TQM 5. Marketing To derive CSFs for best practices and performance measures for KM

Egbu [2004] 1. Vision and innovation strategy

2. Innovative supporting knowledge culture 3. Ability to manage organizational knowledge 4. Ability to build knowledge enhancing approaches 5. Systems and technology

6. Integrations of individuals and teams around core products and services

To develop success factors for the construction industry on the subject KM and innovation

Hung et al. [2005]

1. Benchmark strategy and knowledge structure 2. Organizational culture

3. Information technology

4. Employee involvement and training

5. Leadership and commitment of top management 6. Learning environment

7. Evaluation

To develop and test factors that determines successful Knowledge Management Systems Wong and Aspinwall [2005

1. Management Leadership and support 2. Culture

3. Strategy and Purpose 4. Resources

5. Processes and Activities 6. Training and Education 7. HRM 8. Information Technology 9. Motivational Aids 10. Organizational infrastructure 11. Measurement Empirically tested success factors for KM implementation.

Critical Success Factors for KM within consulting companies.