In today's digital age, organizations can use knowledge management to achieve and sustain competitive advantage. Evidence from a broad range of research sources-professional journals, magazines, books, and commercial web sites-was used to support this thesis.
In the essay, individual presentations of the concepts associated with knowledge management and competitive advantage were presented to establish a foundation for exploring how knowledge management can be used by organizations in achieving and sustaining competitive advantage using technology as an enabler.
This essay adds to the body of knowledge by linking knowledge management to competitive advantage through the common concept of value, an integral element of both knowledge management and competitive advantage; specifically, the value created by consciously managing knowledge can be used to achieve and sustain competitive advantage.Introduction
"Knowledge is power."
The introductory quotation attributed to Sir Thomas Bacon in 1597 (Butler, 2000) simply, yet eloquently, introduces the topic of knowledge management and its importance as a tool for achieving and sustaining competitive advantage. Knowledge is at least as important in today's competitive environment as it was more than four hundred years ago when Bacon made his famous proclamation supporting his claim that "the more one knows, the more one will be able to control events" (The Dictionary of Cultural Literacy, 1998).
This essay responds to the question "How can organisations use knowledge management to achieve and sustain competitive advantage in today's digital society?" The essay begins with summaries of the concepts of knowledge management and competitive advantage to establish a foundation for discussing how knowledge management can be used to achieve and sustain competitive advantage using technology as an enabler. A conclusion will summarize results of the research and analysis.
Knowledge Management and Competitive Advantage Concepts
The term knowledge management appears to have flowed from management guru Peter Drucker's late 1980s description of knowledge workers as people whose stock in trade was knowledge (Coleman, 1998). Establishing a working definition for knowledge management is a daunting task as there is yet no consensus definition for the term (Shahnon, 2000; Trigg, 2000; Dueck, 2001). A review of the literature revealed the following representative selections of definitions ranging from fairly simple descriptions to those of greater complexity:
• Knowledge management involves "putting the collective intelligence of your company at the users' fingertips when they want it, and in the desired format" (Ragsdale, 1999).
• Knowledge management is "[t]he process by which individual learning and experience is accessed, reflected upon, shared and used to foster enhanced individual knowledge and organizational value" (Coleman, 1998).
• Knowledge management is "[t]he harnessing and organisation of information assets that reside in the databases of an organisation or in its employees' collective brainpower" (Shahnon, 2000).
• "[Knowledge] management means that knowledge (information) is available, easily found, and reusable" (Russell, 2002).
• "Knowledge management can be viewed as a process for optimizing the effective application of intellectual capital to achieve organizational objectives," expressed another way as "the application of management to knowledge…the processes involved in creating, generating, classifying, storing, distributing, communicating, tailoring, and reusing knowledge" (Pollock, 2001).
As definitions for knowledge management abound, no effort was made to offer yet another in this context; rather, the analysis was focused on discerning and articulating the essence of knowledge management. That essence seemed to flow from a commonality discovered in the selected definitions-a process orientation; that is, there was an indication of a series of steps or states through which an organization's knowledge moves during its life cycle, beginning with creation and including harnessing, storage and organization, distribution and communication, access and reusability, and tailoring for specific user needs. Interestingly, however, none of the definitions address the retirement of knowledge when it is no longer needed, a possible weakness in the definitions of knowledge management, although Desenberg (2000) seems to hint at the problem in his claim that organizations are "drowning in information" and his position that organizations should be selective in its management of knowledge.
In considering knowledge management, experts seem to agree that knowledge management is more than just manipulating information; it is about creating value for the organization (Trigg, 2000) . Russell (2002) contends that "the simple exchange or transfer of knowledge is not knowledge management." O'Dell (2004) writes that "the goal [of knowledge management] is not to share knowledge for its own sake," but to "enhance organizational performance." Knowledge management, then, appears to be a process targeted at creating value for an organization through systematically optimizing its knowledge resource.
Now attention shifts from knowledge management to the concept of competitive advantage. The modern concept of competitive advantage can be attributed in large part to Michael Porter who, in 1985, defined the term as follows:
"Competitive advantage grows fundamentally out of value a firm is able to create for its buyers that exceeds the firm’s cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation."
Essentially, according to Flint (1999), "competitive advantage comes from the value that firms create for their customers that exceeds the cost of producing that value." Flint notes that the most important consideration for an organization is to capture the value that is greater than its cost and stresses the importance of sustainability of competitive advantage to superior performance. Barney (1991, cited in Flint, 1999) provides insight into the differences between "achieving" and "sustaining" competitive advantage. An organization has achieved competitive advantage, according to Barney, when "it is implementing a value-creating strategy not simultaneously being implemented by any current or potential competitors." Barney continues, writing that an organization has "a sustained competitive advantage when it is implementing a value-creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy." Barney (1995) also defines several related terms such as "temporary competitive advantage," "comparative parity," and "competitive disadvantage," but these terms are outside of the scope of the current discussion.
This section was focused on knowledge management and competitive advantage as individual concepts. The research showed that knowledge management involves conscious management of knowledge to create value for an organization. The research also showed that achieving and sustaining competitive advantage involves the value organizations create for their customers, value that exceeds the cost of creating it.
Using Knowledge Management to Achieve and Sustain Competitive Advantage
Attention now turns from describing knowledge management and competitive advantage as two distinct terms to a discussion of how knowledge management can be applied in achieving and sustaining competitive advantage with a special emphasis on how, in today's digital age, technology can be leveraged to assist organizations in their knowledge management activities.
From the foregoing discussion of the individual concepts of knowledge management and competitive advantage, one similarity comes to the fore; that is, value stands out as an important element in the description of each term-knowledge management is used to create value for the organization and competitive advantage requires value created for customers. This common element-value-provides the foundation for knowledge management to play a part in assisting organizations in their efforts to achieve and sustain competitive advantage.
Leidner (2002) writes that "[o]rganizations are implementing knowledge management practices and technologies on the promise of increasing their effectiveness, efficiency, and competitiveness." Shahnon (2000) suggests that organizations which "promise more knowledge as part of their services" position themselves more competitively, adding that organizations should fully use their embedded knowledge resources. Gantz (1998) contends that if "knowledge-intensive firms can implement knowledge management, they can gain competitive advantage." An article in The Information Advisor (1997) claims that management gurus Peter Drucker, Tom Peters, and others go so far as to contend that "the only real competitive advantage a firm can count on today is the skills, expertise and knowledge of the staff." Drucker (1995, cited in Broadbent, 1998), in fact, wrote: "Knowledge is increasingly seen as a primary business asset and knowledge management as a key differentiator between firms."
On the issue of sustaining competitive advantage, knowledge management expert Larry Prusak (1996, cited in The Information Advisor, 1997) claims that "”the only thing that gives an organization a competitive edge-the only thing that is sustainable-is what it knows, and how fast it can know something new.” Shahnon (2000) writes that an organization's knowledge is its "only sustainable competitive advantage." Birkinshaw (2001) contends that "in a fast moving, increasingly competitive world a firm's only enduring source of advantage is its knowledge-the knowledge of its employees and the knowledge that gets built into the organization."
The business literature is replete with references supporting the role of knowledge management in achieving and sustaining competitive advantage, including those quoted in the preceding paragraphs and others (Jackson, 2001, citing Hedlund, 1994; Evans, 1997; Hibbard, 1997; Martinez, 1998; Trussler, 1998). In today's digital age, technology can be used to leverage knowledge through the application of knowledge management as an enabling tool in assisting organizations in their efforts to achieve and sustain competitive advantage. In the earlier discussion of knowledge management the steps or states through which knowledge passes-creation, harnessing, storage and organization, distribution and communication, access and reusability, and tailoring for specific user needs-were identified. The reason that technology, specifically information systems technology, is appropriate to knowledge management can be attributed to its capacity to "organize and manipulate data" (Webopedia, 1998) which is fundamentally and ideally suited to these tasks.
Some feel that knowledge management is an "IT [information technology] problem looking for a solution" (Abell, 2002). Others, as Shahnon (2000) suggests, contend that "knowledge management has little to do with technology" and more to do with organizational culture. To put technology in its proper perspective vis-à-vis knowledge management, it is important to note that it is one of three components, each of which is vital for success: technology, people, and processes that "bring people and information together" (Trigg, 2000). O'Driscoll (2002) echoes Triggs assessment, calling knowledge management strategy "a tripartite and systematic focus on process, people and technology." In this context, information technology serves as an enabler as was suggested in the introduction to this essay; it enables people to perform knowledge management processes more efficiently and effectively. This combination of people, processes, and technology and the resulting efficiencies and effectiveness it produces are what provide an organization with "value…that exceeds the cost of producing that value," as Flint (1999) suggests.
Today, technologies applied in knowledge management depend heavily on information architecture and content management (Abell, 2002). Information architecture is "the design of the structure and navigation of a Web site, allowing a site’s users to readily find information and perform important tasks" (PR Newswire, 2000). Content management is the approach to managing documents for internet and intranet Web sites (Computer Desktop Encyclopedia, 2002). Shahnon (2000) lists other supporting knowledge management technologies that are already familiar to information technology professionals: groupware, data mining, document management, and search and retrieval. Caldwell (2004) claims that technologies such as "[d]esktop personal knowledge search, instant messaging, Google, free VOIP, P2P file sharing and collaboration suites, social networks, RSS, blogs and wikis are all making it possible for individual knowledge workers to take control of the management of intellectual capital within the enterprise."
The essay opened with individual presentations on the concepts of knowledge management and competitive advantage. The research indicated that the purpose of knowledge management was to create value for an organization. Likewise, the research indicated that organizations achieve and sustain competitive advantage by creating value for their customers. For competitive advantage to exist, this value must exceed the cost of creating it. A search of the literature provided numerous explanations of the linkage between knowledge management and competitive advantage. The research showed technology to be an enabler through which an organization can increase its efficiency and effectiveness in managing knowledge thereby creating value at a reduced cost-a fundamental requirement for achieving and sustaining competitive advantage.
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