Working Knowledge : How
Organizations Manage What They
Know
By Thomas H. Davenport
And Laurence Prusak
Elridge D'Mello
Graduate Student in Computer Engineering
Ch 1: What do we talk about
when we talk about knowledge?
 Data
 Information
 Knowledge
 Related, but not interchangeable!
Data
 Set of discrete, objective facts about events.
 Organizational context: structured records of
transactions.
 Needed by all organizations especially Banks,
insurance companies, government agencies
 More not always better
 Can be difficult to make sense of in large volume
 No inherent meaning in data
 Why is data important?
 It is the essential raw material for the creation of
information
Information
 “Data endowed with meaning and
relevance” – Peter Drucker
 Data that makes a difference
 Data sent from sender to receiver
intended to alter the receiver’s
perception of something
 Moves in hard and soft networks
 Traditional networks – hard networks
 A note, an FYI – soft network
How to add value to Data





Contextualized
Categorized
Calculated
Corrected
Condensed
Information
Data
Knowledge
 Knowledge derives from minds at
work.
 Definition:
 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.
How to Transform Information
into Knowledge
 Comparison: how does this info compare
with other situations we’ve known?
 Consequence: what implications does the
information have for decisions and actions?
 Connections: how does this bit of
knowledge relate to others?
 Conversation: what do other people think
about this information?
 These knowledge creating activities take
place within and between humans
How do we know if it's any good?
Quantitative Measure
Qualitative Measure
Data
Cost
Speed
Capacity
Timeliness
Relevance
Clarity
Information
Connectivity
Transaction
Informativeness
Usefulness
Knowledge
What are the resultant
decisions or actions?
Difficult to trace the path
between knowledge and
action
Components of knowledge
 Experience
 Knowledge develops over time, through
experience
 Provides a historical perspective from which to
view and understand new situations and events.
 Firms hire experts – buy experience-based
insights.
 Ground Truth
 Knowing what really works and what does not.
 Army’s “After Action Review” (AAR) program.
Components of knowledge
 Complexity
 Knowledge is not a rigid structure that
excludes what doesn’t fit it; it can deal with
complexity in a complex way.
 Knowledge is aware of what it doesn’t know.
 Judgment
 It judges and refines itself in response to new
situations and information.
 When knowledge stops evolving, it turns into
opinion or dogma.
Components of knowledge
 Rules of Thumb and Intuition
 Those with knowledge don’t have to build an
answer from scratch every time, thus offering
speed.
 Intuition is “compressed expertise”
 Values and Beliefs
 Values and beliefs are integral to knowledge
 “Knowledge, unlike information, is about
beliefs and commitment.” -- Nonaka &
Takeuchi
Knowledge as a Corporate Asset
 Effect of the Changing Global Economy
 No room for inefficient production.
 Organization that knows how to do new things
well and quickly will thrive over the next
decade.
 Product and Service Convergence
 Knowledge and related intangibles are
increasingly becoming part of the “products”
firms offer
 The intangibles that add value to most
products and services are knowledge-based.
Knowledge as a Corporate Asset
 Sustainable Competitive Advantage
 Today, it is very easy for competitors to
figure out the “secrets” of a company’s
products – use of reverse engineering,
information flow, advanced technology.
 But knowledge can provide a sustainable
advantage.
 Unlike material assets which decrease
with use, knowledge assets increase
with use.
Information Technology and
Knowledge Exchange
 Caveat: Having more information
technology will not necessarily improve
the state of information/knowledge.
 E.g. TV was supposed to be device that
bridged culture gaps and foster world
understanding.
 Networked computers can be used as
knowledge enablers.
Case Study: British Petroleum (BP)
 British Petroleum’s Virtual Teamwork Program
 BP Exploration: 42 separate business assets
 Goal: Agility of small company with resources of a
large one
 Implementation



Stressed corporate behavior vs. technology
Coaches and teams: Coaches helped team members
link business objectives to system capabilities;
challenged individuals
Emphasis: person-to-person interaction and
understanding vs. system requirements
Case Study: British Petroleum (BP)
 Results:
 4 of the 5 pilot groups had great success:
 Measurable savings (time and money)
 Participant enthusiasm
 Volume of use
 Case in point: Equipment failure on mobile
drilling ship
 Utilized communication media to consult a remotely
located expert and fixed the problem in a few hours
 huge financial savings of avoided downtime.
Ch1: Summary
 Data – Information – Knowledge
hierarchy
 Knowledge – fluid; in people’s minds
 Knowledge is the way to maintain a
sustainable economic advantage
Knowledge
Information
Data
Ch2: The Promise and Challenge of
Knowledge Markets
 Knowledge is exchanged, bought, bartered,
found, generated, and applied to work.
 Knowledge transactions occur because all
the participants expect the transactions to
provide “utility”.
 Fact of life: people rarely give away
valuable possessions (including knowledge)
without expecting something in return.
 Important fact to realize for any knowledge
initiative: there are markets for knowledge.
Political Economy of Knowledge
Markets
 Meet the players:
 Buyers
 Knowledge seekers looking for insights, judgments
and understanding.
 Seeks answers imbued with emotional subtexts that
are key to our sense making.
 Sellers
 People with an internal market reputations for having
substantial knowledge about a process or subject.
 Brokers
 Gatekeepers, boundary spanners.
 Examples: Managers, corporate librarians.
Factors that affect the Price
System
 Reciprocity
 Most important factor
 Seller will spend time and effort needed
to share knowledge effectively if he
expects the buyers to be willing sellers
when he is in the market for their
knowledge, a.k.a. “The favor bank.”
 Related to the next most important
factor – Repute.
Factors that affect the Price
System
 Repute
 Intangible, but produces tangible results
 Importance of repute is increasing
 Workers at all levels feel considerable
pressure to heighten their individual repute
for their demonstrated knowledge, skills,
and competencies.
 Altruism
 The seller is just a “nice guy/gal”
The Trump card – Trust!
 An essential condition of a functioning
knowledge market.
 Established in the following ways:
 Must be visible
 Must be ubiquitous
 Must start at the top
 A firm’s knowledge market must be
founded on mutual trust.
Knowledge Market Signals
 Indicate both where knowledge actually
resides and how to gain access to it.
 Position and Education
 Not a consistent signal
 Informal Networks
 Possibly the best knowledge market signals flow
during chats at the water cooler, cafeteria, etc.
 Disadvantage: undocumented; not readily available
to all who need them
 Communities of Practice
 Employee initiated common interest groups.
Knowledge Market Inefficiencies –
Responsible Factors
 Incompleteness of Information
 Lack of maps and yellow pages to guide
the buyers to the sellers.
 Asymmetry of Knowledge
 Some asymmetry is needed, strong
asymmetry prevents knowledge from
getting to where it is needed.
 Localness of Knowledge
 People usually get knowledge from their
organizational neighbors
Knowledge Market Pathologies
 Monopolies
 Knowledge will come at a high price
 Not be there to benefit the company
 Artificial Scarcity
 Monopoly is one form
 Downsizing can cause a scarcity as well
 Trade Barriers
 Refusal to accept new knowledge
 Status difference between seller and buyer
 Lack of good knowledge transfer infrastructure
Developing Effective Knowledge
Markets
 Using Information Technology Wisely
 Tech developments can change market
dynamics dramatically.
 Pitfalls and Limitations of using IT
 Trying to force fluid knowledge into rigid
data structures
 Focusing too much on the system and not
enough on the content
Developing Effective Knowledge
Markets
 Building Marketplaces
 Create virtual spaces dedicated to knowledge
exchange
 Members of an organization must be given
time to shop for knowledge
 “Talk rooms”, knowledge fairs, live and electronic
forums
 Creating and Defining knowledge Market
Value
 Recognize, promote, reward employees for
sharing knowledge
Peripheral Benefits of Knowledge
Markets
 Higher Workforce Morale
 Employees see that their expertise is valued
 Greater Corporate Coherence
 Shared awareness of corporate goals and
strategies
 Richer Knowledge Stock
 Continuously refined and validated
 Stronger Meritocracy of Ideas
 Test official beliefs and expose flaw
Ch2: Summary
 Knowledge markets exist
 Important factors – reciprocity,
repute.
 Trust is the key!
 Organizations should value knowledge
 Reward knowledge sharers
 Promote culture of sharing
Ch3: Knowledge Generation
 Modes of Knowledge Generation
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Acquisition
Dedicated resources
Fusion
Adaptation
Networking
Modes of Knowledge Generation
 Acquisition
Knowledge does not have to be newly created
“Well stolen is half done” – Spanish proverb
Most effective way – buy it!
Increasingly, firms acquire other companies for
their knowledge
 Knowledge acquisitions can be problematic –
must be handled with care
 Various agencies trying to create metrics to
quantify value of knowledge

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Modes of Knowledge Generation
 Rental
 Knowledge can be leased or rented
 Funded research, consultants
 Likely to include some knowledge
transfer
 Make sure to take steps to retain it too!
Modes of Knowledge Generation
 Dedicated Resources
 Establish units or groups specifically for
that purpose
 Research and Development (R&D) groups
 Fusion
 Bringing together people with different
perspectives to work on a project
 Group members must find some
common ground – need to understand
one another
Modes of Knowledge Generation
 Adaptation
 External (and internal) changes cause
businesses to adapt. E.g. new competitors
products, new tech., etc.
 The business world has become aware that
success can lead to unwillingness to adapt
 Ability to adapt based on:
 have existing resources and ability to change
 being open to change
 It is important to adapt new knowledge before
a crisis occurs
Modes of Knowledge Generation
 Networks (communities of knowers)
 People brought together by common
interests (informally)  often generates
new knowledge within firms
 Consulting and service firms have
organized their previously informal
networks into formal networks, with
budgets, coordinators, librarians, etc
Common Factors to the Modes of
Knowledge Generation
 All these efforts need adequate time and
space devoted to knowledge creation or
acquisition
 Critical that managers recognize
 Knowledge generation is both an important
activity for success
 It must be nurtured
 The firm that fails to generate new
knowledge will probably cease to exist!!
Ch3: Summary
 Various modes of knowledge
generation
 Acquire (buy/rent), Dedicate resources,
Fusion, Adapt, Network
 Organizations need to be flexible
 Process takes time
 Must be done carefully
Ch4:Knowledge Codification and
Coordination
 Codification means converting knowledge
into accessible and applicable formats
 Basic principles to codify knowledge:
 What goals will be served
 Identify appropriate forms to reach goal
 Evaluate utility and appropriateness for
codification
 Identify an appropriate medium for codification
and distribution
Major challenge: Codifying Tacit
Knowledge
 Tacit knowledge
 Internal to the knower; difficult to
articulate
 E.g. the distinctive style of a master
musician
 Codification
 Usually limited to locating someone with
the knowledge and interacting
 This method is more efficient than trying to
capture it electronically or on paper.
Mapping Knowledge
 A knowledge map is a picture of what
exists and where it is located
 Developing a knowledge map involves
 Locating important knowledge in the org
 Publishing a list or picture showing
where to find it
 Can be used as a tool to evaluate the
corporate knowledge stock
 Reveal strengths… and weaknesses!!
Assembling the Map
 Every employee has a piece of the map in
his/her head
 Creating an org wide map is a matter of
combining these individual “mini-maps.”
 Technology can be useful for mapping
 “Yellow-pages”
 Continuously updated  better than paper
 Common tools: Lotus notes/intranet systems
 Word of caution
 Politics of mapping knowledge!
 Knowledge matters
Back to Capturing Tacit Knowledge
 As mentioned earlier, very difficult, but tacit
knowledge has substantial value  worth the
effort
 Narratives very useful
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Knowledge communicated most effectively through a
convincing narrative delivered with elegance and
passion
Recall AAR program: “war stories” that convey “ground
truth”; very effective to communicate knowledge
 Embedded Knowledge

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Some tacit, internal knowledge can be externalized in a
company’s products or services
Knowers use their expertise to develop a process or
product
Codifying Knowledge in Systems
 History of AI: excessive claims of ability of
computers
 Bounded, unambiguous, rule-based
knowledge can be embedded in an expert
system. E.g. Deep-Blue
 Evaluating Explicit Knowledge
 Some forms of knowledge already codified and
explicit: patents
 Evaluating codified knowledge and making it
available is integral to the codification process
Continuing Codification Challenge
 Challenge is to codify knowledge and still
leave its distinctive attributes intact,
putting in place codification structures that
are as flexible as the knowledge itself.
 Stories and rhetoric provide the richest and
most flexible approach to this task
 For the near future: this is more art than
science
Ch4: Summary
 Difficult, not impossible to codify
knowledge
 Explicit knowledge codification
 Usually possible to document
 Implicit/tacit knowledge codification
 Difficult
 Utilize narratives
 Develop knowledge maps (of where the
knowledge is)
 Utilize electronic communication resources to keep
the knowledge fresh.
Cross Cutting Themes
 Knowledge resides within people
 Intangibility and fluidity of knowledge pose
new challenges for organizations
 Organizations should be willing to pay the
price for an intangible asset - knowledge
 Organizations must be aware of what they
know/don’t know
 Effective knowledge management is the
key to success in today’s economy
Comments
 Authors present well rounded view of
the subject
 Plenty of examples
 Illustrates authors’ expertise in the field
 Use their own experiences as examples
 Convincing argument for effective
knowledge management
Reviews and References of
“Working Knowledge”

“Knowledge management is a business issue for competitive
advantage, not just an information technology issue. It will become
increasingly important, especially for large enterprises needing to
create, share, and reapply knowledge on a global scale. Working
Knowledge is as thorough and complete a book on this subject as
exists today.” --Todd A. Garrett, Senior Vice President and Chief
Information Officer, Procter & Gamble

News article in the Financial Times, The challenge of managing
knowledge, that references “Working Knowledge”
 http://www.sbs.ox.ac.uk/html/news_article.asp?ID=62
 Presents the practical challenges that arise in trying to implement
a system based on “Working Knowledge” and other similar books

“Building a Knowledge Culture” – Whitepaper by A. Andrew Anderson


http://www.robbinsgioia.com/library/whitepapers/Knowl
edgeMgmt.pdf
Presents practical steps in implementing a KM system
Additional Resources
 Interview with the authors:
 http://www.brint.com/km/davenport/wo
rking.htm
 Davenport’s website with list of latest
books, articles
 http://www.tomdavenport.com/
Questions?