• Communication To make knowledge management work, managers
must put everyone in the big picture. Companies can do this by
communicating frequently, clearly and with force of intent. Communication
can, and should, have many different reinforcing channels,
such as policy documents, speeches, newsletters, bulletin boards
and symbolic rituals. Usually, however, strategic priorities are best
communicated when words are followed by reinforcing actions captured
in the form of hard decisions and policies, and by instituting
sharing-led reward and accountability systems.
Thus, for knowledge management to work, it must be aligned and integrated
with the strategic goals of the company. If it is disjunct with
the business and strategic goals, then knowledge management will be
doomed to fail (Liebowitz, 2005). The knowledge management plan
must also be well conceived and designed, and should be congruent
with the company’s organizational culture.
• How can our customers, suppliers and other stakeholders improve the
competence of the employees?
• How can we improve the conversion of individually held competence
to systems, tools and templates?
• How can we improve individual competence by using systems, tools
and templates?
• How can we enable conversations among our customers, suppliers
and stakeholders so that they improve their competence?
• How can competence from the customers, suppliers and other stakeholders
improve our systems, tools, processes and products?
• How can our systems, tools processes and products improve the
competence of the customers, suppliers and other stakeholders?
• How can our systems, tools, processes and products be effectively
integrated?
Since knowledge management has a long-term vision and deals with
intangible assets, some managers may be reluctant to invest resources in
this area. However, management support (both company and project) is
critical in paving the way for knowledge management in project-based
companies. According to Liebowitz (2005), organizations are now integrating
knowledge management as part of their human capital strategy:
for the project-based company it is crucially important to do the same.
Moreover, the competitiveness of project-based companies in all types of
industries depends on two sets of competencies (Chandler, 1990). Strategic
competencies are required to monitor internal operations and adjust
strategies to a changing environment. Functional competencies, in turn,
organized in projects, are required to produce project deliveries.
The process of building a knowing and learning project-based company
is a dynamic, relentless and iterative one. It demands continual
effort by many managers to generate and exploit knowledge capabilities
in an ever-changing world. As the business environment fluctuates,
the company must evolve. Managers of highly successful project-based
companies constantly reinforce and revitalize the company’s strategic
intent by ensuring that the pieces dovetail to form the big picture. Knowledge
programmes succeed not so much because they have some brilliant
and complex magical potion, but because they harmoniously blend and
combine knowledge activities and processes (cf. Ahmed et al., 2002).
For a variety of logical reasons, more and more project-based companies
are thus moving toward strategic partnerships in bidding and
implementing projects of a wide range. The impact of this impetus
toward inter-organizational knowledge sharing will be profound.
De Long (2000) has identified four ways in which culture can influence
the behaviours central to strategic knowledge production, sharing
and use:
• Culture shapes assumptions about what knowledge is and which
knowledge is worth valuable.
• Culture defines the relationship between individual and organizational
knowledge, determining who is expected to control specific
knowledge, as well as who must share it and who can own it.
• Culture creates the context for social interaction that determines how
knowledge will be used in particular situations.
• Culture shapes the processes by which new knowledge, with its
accompanying uncertainties, is produced, and shared within organization.
Understanding the influence of knowledge in this regard
is the first critical step in developing a strategy and specific interventions
to align the company’s culture with the knowledge management
strategy.
Sveiby (2001), in turn, indicates nine important knowledge strategy
questions:
• How can we improve the transfer of competence between people in
our organization?
• How can our employees improve the competence of customers,
suppliers and other stakeholders?
Strategic intellectual capital management
Intellectual capital also provides a basis for creating a sustainable competitive
advantage for project-based companies. According to many
authors (e.g. Drucker, 1993a; Brooking, 1997; Stewart, 1997), intellectual
capital has much greater value than any tangible assets such as buildings,
machinery and land, all of which provided the companies with
a competitive advantage in the past. This is not to say that the traditional
production factors of land and buildings are not important, only
that they have changed in position and priority. According to Drucker
(1993a), as long as there is knowledge, the other production factors are
easy to obtain. Thus, the most important challenge for the project-based
company is to find a methodology, a discipline, or a process with which
knowledge can be made productive. This is the role that the learning
and knowledge sharing initiates, described earlier in this book, have
come to fill. Intellectual capital is therefore nowadays the project-based
companies’ most valuable resource.
One of the tools for assessing the intellectual capital of a project-based
company is a report of its hidden values. This ‘balance sheet’, which complements
the regular financial balance sheet, helps management of the
company to define and visualise its hidden values such as tacit knowledge
and organizational culture. In other words, an intellectual capital
balance sheet enables management and other stakeholders of a company
to obtain an integrated, comprehensive view of all the company’s assets,
to learn about its potential for future growth, to make a more reliable
assessment of them and to navigate the company towards the realization
of its goals and vision (cf. Pasher and Horsky, 2005). Naturally,
these assessments are rather arbitrary since, basically, intellectual capital
resides in the worldviews of organization members. Talents, skills, tacit
knowledge, etc. are all meaning structures in the worldviews of people,
who may not themselves be totally aware of them.
The Skandia Navigator (Edvinson and Malone, 1997) provides a balanced
and holistic picture of both financial capital and intellectual
capital. According to this Navigator, there are four areas of focus with
regard to intellectual capital: customer, human, process and renewal
and development. These areas are used as the basis for assessing the
intellectual capital within a competitive environment (Figure 7.2).
The Navigator for measuring intellectual capital uses the ‘house’ as
a metaphor for the organization. Financial focus constitutes the ‘roof’
of the house, and reflects the organization’s history and achievements
of the past, which do not necessarily enlighten the company in terms
of future achievements. The supporting ‘columns’ are process and customer
focuses, and they are the areas upon which the present operations
of the company are based. Renewal and development focus, which is
found in the ‘centre’ of the house, interacts with all the different focal
points. Human focus, which is also found in the ‘centre’ of the house,
interacts with all the different focuses. The human focus is the heart of
the company – i.e. the capabilities, expertise and wisdom of its people.
It is the role of the organization to assist, guide, and support its people
towards realization of their vision and strategic goals: