Intercultural Management: MBA Masterclass (MBA Masterclass Series)

What knowledge management is

Knowledge management is an emerging area of interest for management practitioners and academicians. The purpose of knowledge management for a global organization is threefold. The first is to understand the process by which knowledge is generated. The second is to document the existing knowledge base so that future global managers can tap it. The third is to facilitate the efficient dissemination of necessary knowledge across branches and cultures.

Knowledge management is thus concerned with the creation and management of intellectual capital. This is an important source of competitive advantage in modern global companies, but is particularly of the essence for companies whose core competence lies in the specialized knowledge of their employees . Examples of such global companies include professional companies such as financial services companies, consultancy companies, and research facilities like IBM's Research Laboratory profiled above. Many knowledge companies retain experts engaging in original knowledge generation primarily for that purpose. The gestation period allowed for the translation of their knowledge into viable products and services is longer than in traditional companies.

The observation made by Arthur (1999) is apposite. No industry can afford to say that it is outside the knowledge management loop, because it is only a matter of time before some player in that industry decides to enhance its competitive position by opting for global connectivity through knowledge systems.

Denning (1999) has described how the World Bank incorporated global knowledge management into its functioning, and became a more responsive and efficient global organization. Prior to using knowledge management systems, the World Bank used to take one month to one year to answer a specialized question. Now, with the aid of knowledge bases and knowledge management systems, it is able to respond to such questions in just one or two minutes. The effective application of knowledge management has also meant that the World Bank is now able to reach a considerably larger client base than was previously possible.

Handy (1989) has observed that knowledge management corporations are cutting-edge corporations that operate in changing environments. These corporations retain knowledge workers and managers as a central core of employees. Core workers have been described by Pollert (1988) as a cadre of permanent employees with a certain amount of job security and retirement benefits. Such employees are multi-skilled and cannot be pigeonholed into a single job category. Knowledge management corporations support the work of their central core with employees who are retained on a contractual basis. Services are also often outsourced. The central core of managers controls the operations and technology. The operations depend on the knowledge and creativity of these managers. These managers need quick access to pertinent information and contemporary developments. They also need to keep their minds constantly challenged and vigorous. Knowledge managers of all cultures are likely to be like this.

Some countries in Asia have recently become rich without having a stockpile of natural resources. They have emerged wealthy by nurturing and tapping the intellectual capital of their populace. Taiwan for instance became the global supplier of microchips for transnational corporations manufacturing computers. Taiwanese multinational Acer captured a significant portion of the market for computers. Likewise, Singapore earned a name for itself as a global supplier of disk drives , and Japanese laptops are sought after all over the world. In fact, it is the Asia-Pacific region that has provided the bulk of the components for computer hardware the world over.

Michael Elliot (2002) has the following comments to make about human capital and prosperity :

1. Recent economists have declared that human capital plays a pivotal role in societal development. Human capital, according to these economists, is a function of the skill-set and entrepreneurial abilities of a populace.

2. Human capital is shaped by education.

3. Human capital depends on a populace's aptitude for using technology.

4. Human capital is strengthened when a populace has exposure to working in multicultural environments.

5. All these conditions are dependent on the quality of education made available from primary school up to advanced university.

The quality of education varies from nation to nation. The World Competitiveness Yearbook, 2001 notes that eighth -grade students from Singapore, Japan, Korea, Hong Kong and Taiwan register among the highest in the world where science and mathematics abilities are concerned. However, the school systems in these countries are authoritarian. Emphasis is placed on a one-way transmission of knowledge from the teacher to the taught. Students spend most of their after-school hours doing homework. Cramming and rote learning are commonplace.

This type of educational pattern may be an outcome of culture. In these countries, society in general is hierarchically organized. Singapore, though affluent, is not a true democracy, and its citizens seem to have no problem with this. Many schoolchildren in these countries are 'nerds' in much the same way that students of the Massachusetts Institute of Technology are described as nerds.

The output from knowledge management work frequently has an immediate global market. The corporation BEA developed a software package called WebLogic that is now used worldwide in many cultures for online billing and support services. Several transnational corporations sell knowledge management systems along with informational technology services and hardware. The ongoing work of John Daugman and other ophthalmologists in the area of iris recognition, for instance, has resulted in enhanced security at airports from Frankfurt, Germany, to Charlotte in the United States. Heathrow Airport in London, England, is considering allowing passengers to enter the country without passport verification, providing they have registered at an internationally recognized iris database. Thus, the use of knowledge management systems can not only cut across international borders, but also require international cooperation to make applications possible (source: Time Magazine , 2000b).

An interesting trend in knowledge creation is that many inventors are thinking in terms of products with applications in many cultures. An example is Dean Kamen, founder of DEKA Research, who is working on a bicycle-like contraption that can transport people more quickly than a conventional bicycle, and with little physical effort. As he was putting together his invention, Kamen envisaged it as a means of transport to be used from Shanghai to Seattle.

The way the vehicle would be used would differ . In China, it is intended as the sole means of transport for millions of people. In America it is visualized as a vehicle to complement the car most people own. For China, Kamen recommends that cities be planned so as to accommodate his new vehicle. Mass-transit systems would have to be built to circum-navigate cities. Meanwhile the central parts of the cities would be free to accommodate pedestrians and people riding Kamen's invention. These central parts are those traditionally used to accommodate cars , buses and so on. In the United States, on the other hand, the roads , highways, tunnels and so on that support travel by automobiles would remain largely intact. Kamen's vehicle would be ridden on existing sidewalks ( Time Magazine , 2001j).