Knowledge Management and Innovation

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Knowledge Management and Innovation

• Professor Dr. Lorna Uden
• Faculty of Computing, Engineering and Technology,
  
• Staffordshire University,
• Beaconside, Stafford, ST18 0AD. UK
• Email l.uden_at_staffs.ac.uk

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• Introduction
• Knowledge management
• Innovation
• KM and Innovation
• Conclusion

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Introduction

• Innovation and knowledge management are no longer
  luxury items.
• They are means of economic development and
  competitiveness.
• Knowledge and innovation are inseparable.
• Innovation and knowledge management are closely
  related.

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Knowledge

• Knowledge is the most important resource in
  organizations and a key differentiating factor in
  business today.
• KM can bring about the much needed innovation and
  improved business performance
• Can also be defined as know-why, know-how and
  know-who, or an intangible economic resource
  from which future resources will be derived
  (Rennie 1999).

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• Built from data, which is first processed into
  information (i.e. relevant associations and
  patterns).
• Information becomes knowledge when it enters the
  system and when it is validated (collectively or
  individually) as a relevant and useful piece of
  knowledge to implement in the system (Carrillo et
  al 2000).
• There are various kinds of classification of
  knowledge formal (explicit) and tacit
  (expertise) knowledge foreground and background
  knowledge knowledge of business environment or
  knowledge for control activities (Carrillo et al
  2000).

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Knowledge management

• Is defined as a dynamic human process of
  justifying personal belief towards the truth
  (Nonaka Takeuchi 1995).
• Is referred to as the process creating, codifying
  and disseminating knowledge for a wide range of
  knowledge intensive tasks. (Harris et al 1998).
• According to Brelade and Harman (2001), Knowledge
  management (KM) is obtaining and using resources
  to create an environment in which individuals
  have an access to information and in which
  individuals obtain, share and use this
  information to raise the level of their knowledge.

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• Knowledge is the key resource that must be
  managed if improvement efforts are to succeed and
  businesses are to remain competitive in global
  markets (Drucker 1993 Davenport Prusak, 1998).
• Better management of knowledge within the firm
  will lead to improved innovation and competitive
  advantage. Sustainability requires special
  content and processes for Knowledge Management.
• Main purpose of knowledge management is to
  enhance exploitation (i.e. where existing
  knowledge is captured, transferred and deployed
  in other similar situations) or exploration
  (i.e., where knowledge is created) (Levinthal
  March 1993).

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• According to Gloet and Terziovski (2004),
  knowledge management is the formalisation of and
  access of experience, knowledge and expertise
  that creates new capabilities, enables superior
  performance, encourages innovation and enhances
  customer value.
• Knowledge management is about supporting
  innovation, the generation of new ideas and the
  exploitation of the organisations thinking power
  (Parlby Taylor 2000). It also includes the
  capture of insight and experience to make them
  available and usable when, where and by whom they
  are required.

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• Parlby and Taylor (2000) argue that knowledge
  management allows easy access to expertise and
  know-how, whether formally recorded or in
  someones mind. In addition it allows
  collaboration, knowledge sharing, continual
  learning and improvement.
• du Plessis (2007) defines knowledge management as
  a planned, structured approach to manage the
  creation, sharing, harvesting and leverage of
  knowledge as an organisational asset, to enhance
  a companys ability, speed and effectiveness in
  delivering products or services for the benefit
  of clients.

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• Typically takes place on three levels
  individual, team and organisation.
• Is also a holistic solution incorporating a
  variety of perspectives such as people,
  processes, culture and technology.
• KM not only focuses on innovation, but it creates
  an environment conducive for innovation to take
  place.
• According to Liebowitz (2003), knowledge
  management means creating value from an
  organisations intangible assets and how to best
  leverage knowledge internally and externally.

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The Advantages of Knowledge Management

• Can reduce risk
• Can increase effectiveness of the organization
• Provides added value to the organization
• Allows better decisions to be made
• Can learn from successful projects
• Encourage transfer of knowledge between
  employees
• Reduces unnecessary processes and streamlines
  operations
• Increases employee retention rates
• Offers better productivity.

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Innovation

• Is a process through which the nation creates and
  transforms new knowledge into useful products,
  services and processes for national and global
  markets leading to both value creation for
  stakeholders and higher standards of living.
• The difference between invention and innovation
  is that invention is a new product, whereas
  innovation is a new value (Szmytkowski, 2005).
• To turn invention into innovation requires
  different types of knowledge, capabilities,
  skills and resources.

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Definition for innovation

• Drucker (1975) defines innovation as the process
  of equipping in new, improved capabilities or
  increased utility.
• Innovation is the process of introducing new
  ideas to the firm which result in increased
  performance.
• According to Rogers (1998), innovation is
  concerned with the process of commercialising or
  extracting value from ideas.

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• Chan and others (2004) define innovation as the
  introduction of a new combination of the
  essential factors of production into production
  systems.
• Innovation is defined by Herkema (2003) as a
  knowledge process aimed at creating new knowledge
  geared towards the development of commercial and
  viable solutions.
• Gloet and Terziovski (2004) described innovation
  as the implementation of discoveries and
  interrelations and the process by which new
  outcomes, whether products, systems or processes,
  come into being.

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• Schumpeter (1934) identified five different types
  of innovations
• New product.
• New methods of production.
• The exploration of new market of production.
• New source of supply.
• New ways to organise business.

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Innovation is the mainstay of an organisation

• For organisations to remain competitive,
  innovation is essential.
• Innovation depends intensively on the
  availability of knowledge.
• Knowledge management has important implications
  for innovation therefore it is imperative that
  we understand the role of KM in innovation.

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Knowledge Management For Innovation

• Three main drivers of the application of
  knowledge management in innovation (du Plessis
  2007),
• The role of knowledge management in innovation is
  to create, build and maintain competitive
  advantage through utilisation of knowledge and
  through collaboration practices.
• The role of knowledge management in innovation is
  that knowledge is a resource used to reduce
  complexity in the innovation process, and
  managing knowledge as a resource is critical in
  innovation.

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• The benefit of knowledge management applied to
  the innovation process is the integration of
  knowledge both internal and external to the
  organisation by making it more available and
  accessible. Knowledge integration means that
  knowledge can be exchanged, shared, evolved,
  refined and made available at the point of need.
  Knowledge integration via knowledge management
  platforms, tools and processes must facilitate
  reflection and dialogue to allow personal and
  organisational learning and innovation. Chen and
  others (2004) argue that without effective
  information and knowledge management that drives
  knowledge integration, which in turn underpins
  innovation, organisations could be
  under-utilising knowledge as an innovative
  resource.

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Functions that Knowledge and Knowledge Management
play in Innovation (du Plessis 2007)

• Knowledge management enables the sharing and
  codification of tacit knowledge.
• Knowledge management and its role in the
  innovation process through the use of explicit
  knowledge.

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• Knowledge management enables collaboration in
  innovation.
• Knowledge management enables the managing of
  various activities in the knowledge management
  life cycle.
• The creation of a culture conducive for knowledge
  creation, sharing and collaboration.

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• The value proposition of knowledge management in
  the innovation process is as follows
• Knowledge management assists in creating tools,
  platforms and processes for tacit knowledge
  creation, sharing and leverage in the
  organisation, which plays an important role in
  the innovation process.
• Knowledge management assists in converting tacit
  knowledge to explicit knowledge.

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• Knowledge management facilitates collaboration in
  the innovation process.
• Knowledge management ensures the availability and
  accessibility of both tacit and explicit
  knowledge used in the innovation process, using
  knowledge organisation and retrieval skills and
  tools such as taxonomies.
• Knowledge management ensures the flow of
  knowledge used in the innovation process

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• Knowledge management provides platforms, tools
  and processes to ensure integration of an
  organisations knowledge base.
• Knowledge management assists in identifying gaps
  in the knowledge base and provides processes to
  fill in the gaps in order to aid innovation.
• Knowledge management assists in building
  competencies required in the innovation process.

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• Knowledge management provides organisational
  context to the body of knowledge in the
  organisation.
• Knowledge management assists in steady growth of
  the knowledge base through gathering and
  capturing of explicit and tacit knowledge.
• Knowledge management provides a knowledge-driven
  culture within which innovation can be incubated.

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The Knowledge Management Cycle

• Metaxiotis Psarras (2006) described the
  knowledge management cycle as follows.
• This process consists of four key steps, as shown
  in Figure 1.

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Figure 1 The Knowledge Management Cycle
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• Step 1, knowledge identification and capture
  refers to identifying the critical competencies,
  types of knowledge and the right individuals who
  have the necessary expertise and experience that
  should be captured. One approach is to conduct a
  knowledge audit or the use of intranets.

1
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• Step 2, knowledge creation is the most critical
  step of the knowledge management cycle as this
  involves innovation. Knowledge creation is a
  process that involves tacit and explicit
  knowledge (Popadiuk Choo 2006). Tacit knowledge
  is closely related to knowledge exploration,
  while explicit knowledge is more concerned with
  knowledge exploitation.

2
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• Step 3, knowledge application is concerned with
  taking the shared knowledge and internalising it
  within ones perspective and worldview.

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4

• Step 4, knowledge sharing culture needs to be
  created in the organisation.

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Conclusion

• Effective knowledge management involves
• (a) identifying knowledge.
• (b) creating new knowledge .
• (c) building competence.
• (d) effective management of innovation.
• (Enkel et al 2002).
• Knowledge creation is the first step to
  facilitating innovation in the company.

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• New knowledge is the most important source of
  innovation. The process of knowledge creation
  shows that it takes place in five phases.
• These phases are
• 1) sharing tacit knowledge,
• 2) creating a concept,
• 3) justifying the concept,
• 4) building a prototype and
• 5) cross-levelling the knowledge
• (von Krogh, Ichijo Nonaka 2000).

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• A knowledge creating company needs to create an
  appropriate environment and offer an appropriate
  space (Nonaka Konno 1998), for creating new
  knowledge (Nonaka, Takeuchi 1995).
• According to von Krogh and others (2000)
  knowledge creation can be enabled through the
  following activities
• a) Instilling a knowledge vision,
• b) managing conversations,
• c) mobilizing knowledge activists,
• d) creating the right context, and
• e) globalizing local knowledge.

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• Better management of knowledge within the firm
  will lead to improved innovation and competitive
  advantage.
• It is important to investigate how to create the
  desired innovation and which specific
  requirements and critical factors can support
  innovation.
• Effective knowledge management can lead
  enterprises to successful innovation.

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• Thank you for listening.
• Any questions?