DECODING THE SECRET CODE

DECODING THE SECRET CODE FOR IMPLEMENTATION OF BLUE PRINTS FOR KNOWLEDGE MANAGEMENT
YEONG-LONG CHEN
Office of Research and Development, National Taiwan University of Science and Technology
IB9F, NO.43 Sec.4, Keelung Rd. Taipei, 106, Taiwan
chen@office.com.tw
CHIAO-HAN WANG
Graduate Institution of Management, National Taiwan University of Science and Technology
MA403, No.43 Sec.4, Keelung Rd. Taipei, 106, Taiwan
isis0718@gmail.com
It has been more than 10 years since the launching of the knowledge-economy. Knowledge management has become a crucial issue for entering the era of knowledge economy for business development. Response to the importance of intellectual property rights for knowledge business has gradually enhanced the capability of enterprises to develop innovative thinking, integration of virtual and real resources, circulation and application of knowledge. This study proposes the development of the first generation of knowledge management KM 1.0, the second generation KM 2.0, and the third generation KM 3.0, which evolves from Web 2.0. We also discuss detailed changes corresponding to environmental changes, and the development of knowledge management, its confines, contents, values and the measuring of differences of various phases. This study dismantles the abbreviation “KM” to discover that the successful codes for knowledge management promoting successful business should include: information, information technology, sharing, integration, virtual team work, innovation, knowledge, management, financial performance and a mobile knowledge repository. We also propose the implementation blue prints for knowledge management which include the aspects of strategy, organization, process, content, technology, culture, and innovation. The above 7 aspects are used to discuss the procedures of 29 businesses, providing referential directions for implementation of business strategies to lead into the stages of knowledge management.
1. The background and motives
The author of The world is flat, Mr. Friedman has mentioned the concept of “Globalization 3.0”, that the world is no controlled by big enterprises, but determined by individuals and freelancers (Friedman, 2005). In the Web 2.0 situation (O’Reilly, 2005) it has also been pointed out that the web-based wisdom of the masses has been increasing rapidly, from social networking through community web sites through access to such sites as Wikipedia. For the latter, two full-time workers can handle seven times the amount of data as included in the British Encyclopedia in a very short period of time, with a professional level just a little bit lower than that of the British Encyclopedia with its thousands of professional writers (Lin, 2006).
The concept of third generation KM appeared as early as 2002 in relation to the emergence of Snowden’s Knowledge-Ecology-Approach to third generation knowledge management (Snowden, 2002). This study proposes a somewhat different concept of the third generation knowledge management. The so-called third generation simply means that “experts of hiding will be eliminated soon, and replaced by experts of sharing, thinking and understanding, or by crowds of sharing, collaboration and integration”. For enterprises attempting to find knowledge in unrelated fields, they cannot solely rely on an internal manpower/knowledge base. This is because we are now entering the era of shared global manpower. Information technology is what moves the knowledge economy. The sharp rise of Web 2.0 has also advance the growth of knowledge management from the first generation to the third generation. In today’s third generation, innovative capability and thinking skills is replacing information tech and manpower, becoming the new focus of knowledge applications. Also the confines of knowledge are shifting from real, internal knowledge to synchronized management of virtual and real knowledge resources. Knowledge property is shifting to integration, which should be combined with intellectual capital and innovative thought.
Firstly, this study will propose the idea we call KM 3.0, then dismantle the term “KM” to discover the successful code hidden behind it, and ultimately suggest the implementation of blue prints in order to provide the small and medium enterprises with referential directions.
2. The third generation of knowledge management
The Organization for Economic Cooperation and Development (OECD) issued a report on the knowledge economy in 1996. They contended that an economy based on knowledge will change the patterns of global economic development. Knowledge has become the main motive of promotion of productivity and economic growth. Following the fast development and heavy application of information communication technology, output, employment and investment will obviously turn to the more knowledge-intensive industries (OECD, 1996; Davenport & Prusak, 2000). The selection of the Most Admired Knowledge Enterprise (MAKE) was first launched in 1998 (Chase, 2004). This has been going on for ten years. According to a KPMG survey report (2003), knowledge management was in the exploratory stages in 1998. Most enterprises were still carrying out feasibility studies. The participation of senior managements were not aggressive. The effectiveness of implementation of knowledge management has gradually become apparent since 2000, leading to better decision making by managers, faster response to external changes, better handling of customers, improved worker skills, etc. Enterprises have started to endeavor to discover and manage tacit knowledge (KPMG, 2000). The survey from 2002 to 2003 exhibited that knowledge management has entered a more mature stage. The focus has shifted from internal employees to external customers and suppliers, partners and so on, and steps forward to the development of future business opportunities (KPMG, 2003).
According to Dave Snowden (2002) the first age in which the word knowledge itself was not problematic, The focus was on distributing information to decision-makers through information technology and business process re-engineering. The second age was initiated by the SECI model of Nonaka and Takeuchi (1995). Its focus was on the transfer of knowledge between tacit and explicit states. In the third age the focus is on studying the paradoxical nature of knowledge in complex systems and understanding knowledge flows and transformations between complex, knowable, known and chaos domains (Snowden, 2002). Mark McElroy (2003) distinguished two, not three KM generations. First-generation supply-side KM was focused on capturing, codifying and sharing valuable knowledge and on getting the right information to the right people at the right time. Second-generation demand-side KM enhanced the capacity of the organization to produce new knowledge.
With respect of the development phases of knowledge management, this study proposes the first generation of knowledge management KM 1.0, the second generation KM 2.0, and the third generation KM 3.0, which is an evolution in response to the appearance of Web 2.0, and detailed changes corresponding to environmental changes, and the development of knowledge management, its confines, contents, values and the measuring on differences of various phases (Chen and Yeh, 2007).
2.1 The first generation of knowledge management, KM 1.0
KM 1.0 focused on information tech, which became the main carrier of knowledge. Knowledge management was confined within enterprises and concentrated in the internal knowledge of the workers. The key concern of many enterprises was measuring the amount of stored knowledge and the frequency of viewing of knowledge documents. Document management became the core item of knowledge management, and consequently, made up the main modules of the knowledge management system. Value was added to enterprise knowledge by the amount of knowledge sored in the knowledge management system, and how that knowledge was extracted and applied. The value of knowledge was expressed as follows “Possessing knowledge represents owning power and competiveness”, In the sharing culture this stage will be enhanced more.
2.2 The second generation of knowledge management, KM 2.0
The era of KM 2.0 refers to the second generation of knowledge management, which is based on human beings (Chen, 2003). Problems resulting from knowledge differences and mistaken expectations are adjusted. It was discovered that carriers of knowledge were not solely on the information tech system, Intellectual capital is more important. The emphasis of enterprises promoting knowledge management gradually shifted from internal employees to collaborative external sharing paths related to customers, partners and suppliers. Knowledge evaluation was not only narrowly concerned with the amount of documents, but also included the possibilities of combinations with finance, customer, process and growth, as highlighted with a more balanced scorecard. Knowledge document management was not the sole source of knowledge content. The knowledge-map-frame came to include knowledge repositories, knowledge communities and expert yellow pages. They became the fundamentals of knowledge management. Enterprises gradually recognized how to combine virtual and real knowledge into an information system which would maximize the effectiveness of the knowledge spiral. Enterprises started to build up totally new more transparent knowledge value, because of mutual sharing, and being relatively easier to obtain.
2.3 The third generation of knowledge management, KM 3.0
Following the sharp rise of Globalization 3.0 (Friedman, 2005) and Web 2.0 (O’Reilly, 2005), individual power has increased and the wisdom of the multitudes more developed. Thus the trend of KM 3.0 has led to the upgrading of the level of knowledge management.
Innovative capability and thinking skill are beginning to replace information tech and intellectual capital as the new focus of knowledge applications. The boundaries of knowledge are also shifting from real, internal enterprise knowledge to the synchronized management between virtual and physical knowledge resources. The so-called virtual knowledge resources include: virtual teamwork management, virtual relationship management, or new concepts, new processes and so on. Physical knowledge resources include: new tech, new tool, knowledge base, expert base, etc. As knowledge becomes more transparent, a society with multiple value systems also forms quickly. Thus, enterprises should set multiple goals and build up multiple value systems, in order integrate a knowledge value chain between internal and external facets of knowledge. Knowledge content should target integration. KM and EC, CRM, SCM, and ERP should be combined with intellectual capital and innovative thought, for further application. Knowledge does not solely highlight sharing and value adding, but also aggressively absorbs new knowledge from other-fields. Systematic thinking is taken advantage of to discover more innovative ideas and create more potential opportunities. Hence, the capabilities of understanding and comprehending knowledge will bring more competitiveness.
As new knowledge is generated constantly, a certain point is reached in the sharing culture where everyone could be a knowledge creator. The knowledge expert would just be one of a group who possess on knowledge or experience. Furthermore, accumulated knowledge bases are easy to access, experts at hiding will gradually be eliminated and be replaced by experts at sharing, thinking and understanding, or groups for sharing, learning and collaboration.
The evolutionary process is illustrated in Table 1. The features from KM 1.0 through KM 3.0, in terms of knowledge carriers, knowledge confines, knowledge measuring, knowledge content, knowledge activity and knowledge value are outlined.







Table 1 The evolution of KM 3.0
KM 1.0 KM 2.0 KM 3.0
Knowledge carrier Focus on IT Gradual focus on people Innovative ability and thinking skills become the new focus of knowledge application
Knowledge confine Internal knowledge of workers for enterprises Collaborative sharing between internal and external customers, partners Synchronized management between virtual and real knowledge resources
Knowledge measuring Amount of stored knowledge documents and viewing frequency Combined with the four aspects for a balanced scorecard and integrating of the effects of KM with organization performance To form multiple goals and multiple value system, build up the knowledge value chain of internal and external enterprise knowledge.
Knowledge content Storage of knowledge documents Establishments and links between knowledge repositories, building a knowledge community, setting up expert yellow pages Integration of KM and EC, CRM, SCM, ERP, intellectual capital, innovative thoughts
Knowledge activity Focus on storage, extraction and re-use in KMS Shifting of focus to the combination of real activities and information systems, and proceeding with the value adding knowledge spiral The new focus is on cross-field training, system thinking, understanding of knowledge
Knowledge value Stored knowledge, possession of knowledge represents possessing power KM enters a highly mature state, knowledge becomes more abundant, transparent and easy to obtain Everyone can be a knowledge creator, the knowledge expert will just be the one among many
3. The secret code for successful knowledge management
3.1 The secret code for successful KM
KM is an abbreviation for knowledge management. This study discovers that there are some notable secret-codes hidden within the letters K and M; see figure 1. In following sections, we will discuss these codes point by point, providing new referential directions for those enterprises encountering bottlenecks or under considering the next step in knowledge management.

Figure 1 Secret for successful KM
3.2 The key of codes hidden in KM
Currently, some enterprises encounter problems when undertaking KM. This study dismantles “K” into “I” and ”＜”. “M” into “I”, “V” and “I”, in an attempt to discover the core factors of KM.
3.2.1 “I”: Information
Huseman and Goodman (1999) suggested that data mean objective descriptions without any judgment, viewpoint or condition; whereas information represents relative or purposeful data; and knowledge is the mix of information, individual experience, truth, judgment, intuition and value. The accumulation of knowledge comes from the daily collection of data, which can generate useful information. Information is the input end of knowledge, namely, knowledge must based on information. Information can be transformed into knowledge through learning and value acknowledgement. If useful information contributes to the individual or organization, it becomes valuable knowledge.
3.2.2 “I”: IT (Information technology)
Thanks to information technology (IT), KM can be developed more effectively, to spread valuable information among employees at various levels. The key to running a business is speed. No matter whether discussion upward, bulletin downward, cross-section advice and so on, the fast delivery of information in an enterprise increase its competitivity. In the 21th century, due to the considerable improvement in the development of IT, the storage of knowledge combined with IT helps widen the information base, and building up the flow patterns of digital information to enhance transmission efficiency, allowing the employees to access information easily, which flows fast into the organization. Gu (2000) contended that, from a broad point of view, overall flowing information and knowledge are both within the confines of an enterprise’s knowledge management system. IT is the tool for digitizing KM, to establish information systems for KM, search engines, statistical and analytical mechanisms for a data base. The combinations of tech, not only increase the speed of information flow, but also the spped of response to commercial changes in the outer environment.
3.2.3 “<”: Sharing
This symbol “<” implies that the knowledge worker should have a “smaller me” mind. Within an organization, everyone is a member of a successful team. As the organization becomes broader, a mobile work team will replace the traditional, functional organization patterns. Under a collaborative framework, individual members share knowledge with the group, and group knowledge is shared with individuals in return. The organization will offer feed-back after knowledge integration. This type of circulation pattern is the physical realization of knowledge spiral (Nonaka, 1991, 1995). Dyer (2004) described the concepts of collaborative cooperation and extended-enterprise in the book Collaborative Advantage. He suggested that “Extended enterprise is a group of suppliers in the value chain, who form a team by collaborative cooperation, to achieve the virtual integration.” Hence, not only the members of an organization, but also big organizations, should have a “smaller me” mind, to undertake cross-border, cross-field, cross-industry, and cross-section cooperation. The application of knowledge will not merely highlight sharing and value adding, but also absorb knowledge from different fields, leading to mutual learning.
3.2.4 “I”: Integration
This is a new era tool for new process, new resources, new thought and new action. Knowledge requires not only sharing, but also intensive integration, including the integration between internal employees and external customers, real resources and virtual resources, individuals and groups and organizations. The channels of value adding and innovation must be opened after these integrations, so as to form a knowledge value chain. In the course of promoting knowledge management, it requires the integration of digital mechanisms (like EIP, EC, ERP, CRM, SCM, etc.), organizational learning resources (like e-learning, HRD, etc.), and knowledge mapping (like document management, knowledge community, expert yellow pages, etc.), in order to facilitate the comprehensive effects of knowledge management.
3.2.5 “V”: Virtual teamwork
In recent years, virtualization of organizations and manpower has become an irresistible trends (Lipnack and Stamps, 2000; Nemiro, 2004). The so-called virtual teamwork means the work team has identical goals and benefits, communicates by means of advanced tools (like mobile phone, computer, internet, video) to complete pre-set missions or jobs following a sharing approach. This is a new working pattern. After digitalization, many enterprise resources can be re-allocated taking advantage of new long distance communication (synchronized, unsynchronized) and collaborative tools (video, audio, groupware software). The development of such tools facilitates global and borderless work patterns.
3.2.6 “I”: Innovation
Chesbrough (2003) mentioned in the book Open Business Model, that open-innovation-trend is sweeping across the world. Knowledge is gradually becoming more expressible and more concrete. Knowledge innovation occurs taking advanced approaches and achieves practical applications. That is, no matter what sort of innovation in terms of product, process, skill, organization or strategy, as long as it is developed by knowledge, causing further changes of application, it can operate effectively. When workers can obtain knowledge equally, and understand it, this can lead to cross-filed innovation, the key for future knowledge innovation. Following Globalization 3.0 and the rapid rise of Web 2.0, the power of the individual is getting stronger and crowd wisdom more developed. Innovative capability and thinking skill are replacing IT and manpower capital, becoming the new focus of knowledge applications. Hence, enterprises make effort to open the channels of knowledge and innovation more aggressively.
3.2.7 ”K”: Knowledge
The more people use conventional or tangible properties, the less the value of the properties; however, knowledge itself does not depreciate or wear out. Moreover, the more people use it, the more value it provides. The most remarkable change in the 20th century has been the appearance of blue-collar workers, followed by the replacement of knowledge workers for blue-collar ones. The biggest difference between them is that the knowledge workers can handle the production of tool-knowledge. The value of knowledge flow is the right knowledge worker, at the right time, by the right channel. Hence, the opening the knowledge channels (via the building of information systems, facilitating a sharing culture, activating experience exchange, etc.), and promoting the value of knowledge (transforming tacit to explicit knowledge, spreading individual knowledge among group members), are the keys to increasing the flow of knowledge.
3.2.8 “M”: Management
KM is an issue in cross-field management involving organization, processes and tech integration, as well as knowledge repository, knowledge community and knowledge/expert integration (Chen, Wang and Huang, 2008). To efficiently and properly control and apply knowledge, except for internal data collection, filtration and selection of useful information are necessary. To build the knowledge base we need to take advantage of virtual resources to set up virtual community in order to satisfy employee interests, relationships, fantasies and transactions. There are 4 main demands overall (Armstrong and Hage, 1997), along with collaboration from the internal information unit, R&D unit, planning unit, manpower unit, and outside knowledge workers needed to promote internal and external knowledge learning ability, so as to form an enterprise culture and acquire values helpful for knowledge innovation.
3.2.9 “M”: Money
KM can increase investment and administrative potential. The purpose of potential knowledge resources is to promote knowledge properties and intellectual capital. Chase (2004) proposed MAKE as a way to prove the theory that “Managing enterprise knowledge can effectively bring remarkable rewards for shareholders.” Based on his research and survey of the MAKE enterprises, the TRS of those going public in the NYSE and NASDAQ, from 1992 through 2002, was 19.6%, 2.2 times as much as the average rate of the Fortune 500 companies. Furthermore, the average ROCE of the MAKE enterprises in 2003 was 30.4%, while for the Fortune 500 this value was only 18.5%. For another index, return of property, the average MAKE rate was more than five times as much as that of the Fortune 500 companies (Yeh, 2006). Financial experts evaluate an enterprise’s market value, by examining not only the profitability of tangible properties, but also intangible knowledge properties, and management ability. All these are assessed altogether. The figures above show us that the implementation of KM can promote an enterprise’s core value, and contribute positively to its financial performance.
3.2.10 “M”:Mobile
The world is entering the era of ubiquitous trends (Digital Taiwan Biyearly, 2007), where the PDA, cell phone, laptop computer and smart mobile phone help generate a virtual, personalized mobile office. The coming of mobile communication enhance the application of knowledge management, the main factor of concern to the KM-knowledge worker, to ensure that they can manage knowledge and learning anytime, anywhere, by any device. In other words, the establishment of the mobile-knowledge-base or mobile-think-tank will be a trend for future development. The establishment of a mobile-office able to apply knowledge at a distance, exchange documents and share resources, will be in the mainstream of future KM.
4. Implementation blue-prints for KM
This study sorts the parameters of KM implementation by the dimensions of strategy, organization, process, content, technology, culture and innovation. The steps for execution are divided into 29 key points, as outlined below (Figure 2).

Figure 2 Implementation of the blue print for knowledge management

(i) Strategy aspect
a) Interview and diagnosis: Interview top managers, the chief knowledge officers by the team implementing KM. This involves designing various interview forms, in order to know the strategies and goals of KM projects.
b) Knowledge auditing: Utilize a systematic questionnaire, including the categories and sources of enterprise knowledge, to classify and compile knowledge documents, community knowledge, and expert/yellow page lists.
c) Linking the enterprise strategy: Use a strategy map and balanced scorecard approach to link the vision, mission and strategy goals of an enterprise, so as to discover its plan of action and key KM performance index.
d) Generate white papers: Before implementing the KM plan, determine short, medium and long term plans, as well as concrete descriptions of the execution organizations, project schedule, and implementation of expected goals.
(ii) Organizational aspect
a) Determine the project team: The top management acts as the chief of knowledge, and the KM team as core members, along with the representatives selected by each unit, to move the KM altogether.
b) Determine the participants: In addition to the core members, as the plan starts, consider the involvement of overall employees, or select groups for the leading or pilot operations.
c) Training system: Enhance the fundamental concept of KM by undertaking various training courses for top management, all employees and owners of knowledge communities.
d) Certification of knowledge workers: Certification of knowledge experts encourages active KM. Realize the sharing of experience and knowledge.
(iii) Process aspect
a) Determine the action scheme: Map the strategy for deploy KM with strategy goals, and set a concrete action scheme.
b) Value adding activity: Through analysis of knowledge spiral, set the activities of knowledge sharing, in terms of face to face, team to team, group to group, and on site practice.
c) Activity of knowledge promotion: Issue e-news and announcements of meetings for knowledge application or community knowledge activities, within the organization; and publish writings and achievement, outside the organization. Both are helpful for knowledge promotion.
d) Index of achievement assessment: The index can be determined in terms of IT, non-IT, quantitative and qualitative matrixes.
(iv) Content aspect
a) Valuable knowledge base: Set evaluation criteria, process and committee of knowledge documents for the selection of valuable knowledge. Allow activities for knowledge document sharing and value adding to take palce at regular intervals.
b) Knowledge community: Establish a knowledge community that can perform the knowledge sharing, explore tacit knowledge, encourage creativity, speed up project communication, offer prompt trouble shooting, open new communication channels for knowledge workers.
c) Expert yellow pages: File lists comprised of internal and external experts, along with relative data and experience, for easier access and inquiries by coworkers.
d) Organizational learning centers: Found both cyber and real learning centers to realize the best transit of practices, allowing for mutual assistance, learning, and growth among coworkers.
e) Virtual teamwork: Create a new mind in relation to using virtual resources and digitalized tools, breaking the traditional habit of face to face meetings, and face to face communications, allowing for the development of a collaborative team pattern over distance to form a new working environment.
(v) Technology aspect
a) Assessment of outsourcing developers: Shall the development of information system be done itself, or by outsourcing? If by outsourcing, develop a set of criteria to evaluate suitable developers.
b) Specification of the information system: The system can be divided into three layers, seven layers or nine layers, by such tools as the knowledge portal, document management, groupware platform, search engine, and so on. All of these should meet the development specifications.
c) Infrastructure assessment: First completely understand the infrastructure and web frame work, then analyze the current conditions of the hardware and software available to the enterprise.
d) Inspection and testing: Whether developed by themselves or outsourced, inspection and testing are need before completion, with modifications based on the results. These are crucial jobs before formal application of the system.
(vi) Culture aspect
a) Sense of knowledge value: Knowledge enterprise should establish a new sense of knowledge value in compliance with knowledge-transparency, and respecting multiple-values. In this particular, Buckman’s the “Code of Ethics” (2004) is a most worthwhile standard to refer to.
b) Sharing culture: Knowledge enterprises should eliminate the sense that hiding knowledge may retain power or competiveness. Rather they should build up the enterprise culture of encouraging and motivating by sharing among employees.
c) Advantageous transformation: Discover the core strengths and competitive advantages of units and workers, along with developing links with outside trends, to achieve a successful transformation through knowledge.
d) Motivation activities: Discover the motives that can encourage knowledge workers to share. Design a system to realize these motives, so as to activate the sharing culture of the enterprise.
(vii) Innovation aspect
a) Intersectional innovation: Encourage coworkers to properly use the three driving forces of intersectional innovation, that is the movement of people, the convergence of science, and the leap of computation (Johansson, 2004).
b) Integral application of knowledge: Combination of KM, digitalization and e-trend projects as well as the integration of knowledge documents, knowledge community, and listing of expert yellow pages for integration of KM and working process.
c) Collaborative sharing of knowledge: The focus of KM shifts from the sharing of internal knowledge to the one of outer knowledge. The confines of the application of KM will expand to customers, suppliers and partners.
d) Knowledge-value-chain: Input knowledge comes from several sources and will converge toward an enterprise-information portal (EIP). Value-added knowledge activities are based on socialization, externalization, combination, and internalization of knowledge (Chen, Yang and Lin, 2004).
5. Summary and suggestions
KM 1.0 focused on document-storage, quantitative-index-measuring and information-system-development. KM 2.0 was “based on people”, “sharing and value adding of knowledge”. In this study we further arrange and summarize the important aspects of these concepts and take a look at the evolution of KM. We propose the features of KM 3.0, and highlight that from the standpoint of innovative thinking, everyone could be a knowledge creator.
We dismantle the concept of “KM” to discover the codes for a successful business. Promoting knowledge management should include: information, information technology, sharing, integration, virtual team work, innovation, knowledge, management, financial performance and a mobile knowledge repository.
This also outlines blue-prints of implementation of knowledge management which includes the seven aspects of strategy, organization, process, content, technology, culture, and innovation. The above 7 aspects include 29 procedures leading to the stages of knowledge management.
This paper is only a summary of KM and the underpinning tools and techniques. In future research, we can apply the concept of KM 3.0 to the organizations that will start a KM-project. Besides, the application of implementation of the blue-prints for knowledge management can be further discussed in the future.
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