Knowledge Management KM a New Knowledge-Based Economy Term Paper

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Knowledge Management (KM)

A new knowledge-based economy of learning individuals, organizations and economies has evolved from the machine-based economy which dominated the developed world throughout the twentieth century. The emergence of a new type of firm is signaled by the familiar symptoms of corporate change such as devolution of managerial responsibilities, more flexibility and skill in the workforce, more recourse to outsourcing, and increased networking both inside and outside the firm the better to transform knowledge into business value. (Vickery and Wurzburg, 1996)

Any attempt to produce a single model of 'the new firm' is made impossible by the continuing importance of understanding the firm in the context of its organizational culture, and history. The strategic decision-making of even the most progressive firms is still influenced strongly by the fact that firms are social phenomena whose identity is influences, and determined by the individuals of the organization. Far from acting quite independently of one another, employees, management and hourly together, are profoundly affected by their own history and by the behavior of other firms in their industry. Fro example, in automobile or aircraft production, where many of the technologies are used in common, firms also depend on their management of long-term relationships with specific suppliers in order to maintain their competitive advantage, and their own uniqueness. Because of the mutually beneficial aspect of this relationship, inter-firm alliances and customer networks can be major components in the matrix of knowledge assets which give a successful firm its competitive edge.

In this competitive, and dependant environment, how does an organization respond to the turnover of employees who possess much of the company identity and information? If the company is to continue on an uninterrupted path toward effectiveness in the marketplace, the knowledge must be managed, and maintained within the company walls even when key people choose to exercise other employment options. For example, According to Business Week online (2000) Daniel H. Schulman had lofty goals when he joined AT& T. As a junior marketer in 1981. His plans included climbing to the top of the corporate ladder, where he could look forward to a hefty salary, a chauffeur-driven limousine, and a membership at the Baltustrol Golf Club. But last year, shortly after Schulman finally reached the pinnacle as head of the company's $24 billion Consumer Services Div., he exited stage right, and become president of Internet startup company Inc.

In the paradigm of the workplace of 20 years ago, Schulman would be seen as throwing away all he had worked for at AT& T. For nearly 20 years. But in the WWW world, the wild, Wild West of internet startup opportunities, his move was advancement. gave him a $100 million multiyear compensation package. More important: AT& T. could not touch when it came to producing an adrenaline rush. "You think about all the times in history you might have wished for a frontier to explore," says Schulman, 42. "The Net is one right here and now for our generation." (Business Week, 2000)

Unfortunately for AT& T, Schulman is not the only defector among its key executives. A dozen execs have left the company since the first of two new chairmen, C. Michael Armstrong arrived in late 1997 -- and they're still leaving in a steady stream long after his transition period ended. Some, like Schulman, were bitten by the startup bug. Others were impatient with AT& T's slow progress in transforming itself from a creaky old phone company into a speedy Internet player. In the presence of the competitive nature of the information industry and the increased mobility of talented employees the need for knowledge management is becoming more imperative.

According to Beazley,, (2002) in an environment which is experiencing a high level of turnover, managing the knowledge of a company creates a number of valuable, and specific benefits. Through KM, the organization is able to:

Smoothly transition through succession planning, even in the face of unexpected personal changes.

Manage downsizing choices. When the organization downsizes due to inescapable economic pressures, key operation information is maintained, not lost.

Creates standards for promotion criteria by managing the individual skills, objectives and functions of a job.

Can be used as a recruiting tool. The organization which has managed and retained knowledge can offer new recruits a faster entry transition, which encouraged a higher rate of transition success.

AT& T's Dilemma

The higher level of turnover to AT& T. began just as the organization entered a crucial stage in its 123-year history. The new CEO Armstrong's goal was to increase AT& T's offerings from regular phone connections to state-of -- the art services such as high-speed Internet access, global networks for businesses, and wireless voice and data services. He also spent $110 billion on cable TV acquisitions. (Business week, 2000) His next step in order to rebuild AT& T's standing as a global communication leader was to integrate those operations into an effective and profitable business. At the same time, he had to fend off the competition of the regional Bell companies into the long-distance market, and address the steady exit of key managers and executives.

While Armstrong admitted that his executives were prime targets for startup corporate headhunters, he did not consider that it was a serious problem. None the less the company's strong managers were highly sought after. "There is terrible demand on the AT& T. talent pool," Armstrong said. "The key question is whether the core executive strength is still there, and I feel very confident today that it is" -- a claim that at least some Wall Street analysts agree with. (Business Week, 2000)

According to Beazley,, (2002) when there is a direct successor to the exiting person, the task of knowledge management is made simpler. The new hire directly replaces the leaving employee, and therefore there can be a direct transfer of knowledge without any period of lag time. However, when there is an indirect succession, such as though downsizing, or a long period of time elapses, during which the vacated position is filled ad hoc, the knowledge transmission can be more problematic. For this reason, Beazley recommends that each position have a specification sheet on record. These informational files hold key data, and requirements for the positions. In this way, if the position is a direct or indirect succession, the incoming employee can manage and maintain consistent connection with the events which occurred before him. These data filed are termed knowledge profiles, and can be created through third party testing and review processed such as:

K-PAQ: knowledge management profile analysis questions

K-Quest: knowledge questionnaire

Preanswer construction of the knowledge-core questions in K-Quest. (Beazley, 2002)

By using these formalized third party surveys, the organization can create specific opportunities for knowledge transfer amongst the organizations personnel.


Another method for developing and managing the knowledge within an organization is mentoring. Mentoring matches a new recruit, or new hire with an experienced successful employee in order to facilitate the transfer of company knowledge and culture. The concept of mentoring has been quietly making its way back into the professional marketplace as a means to ensure the success of up and coming executives, and professionals in positions which require a high degree of skill training, and emotional adjustments to their careers. Mentoring has long been understood for it's positive benefits, but in the competitive based, and highly individualized American marketplace, mentoring had been slowly abandoned as a means of reproducing qualified employees. The American business culture is based on competition as the means of attaining success. As a result, the natural selection process, and the law of attrition have been used cultivate trained professionals. Throughout the last half of the 20th century, the terms "dog eat dog" and "survival of the fittest" have described the nature of the American career path in most professional fields

While this approach builds strong and successful professionals, when the supply of candidates shrinks, the 'dog eat dog' approach may be consuming valuable resources that could be developed for successful integration into the field. In the case of a highly mobile workforce, the dog-eat-dog approach to business development can create undercurrents of dissatisfaction within the ranks, and thereby encourage defections. Such is the case with Mr. Armstrong. His strong arm approach to business accelerated the departure of many key executives, and in the end, accelerated the ending of his short 3-year career with AT& T.

When the supply for a given profession is high, the competition within the field creates forces encourage the strongest and most talented candidate to rise to the challenge. However, when the supply drops, maintaining an environment designed to eliminate the weaker candidate may be unknowingly eliminating successful candidates. The result is a loss of the positive contribution which these candidates could make if they were trained, equipped, encouraged, and enabled to become a part of the organization quickly and effectively thorough mentoring..

A continuum exists between the independent, and self sufficient career professional and the unqualified novice…[continue]

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