**2. A typology of knowledge: Management choices**

As the idea of knowledge management made it into corporate practice, processes were put in place to make the idea operational. The field then grew to include a typology of knowledge; namely two major types – codified knowledge and tacit knowledge (Handy, 1989; Millar, 1998; Chalhoub 1997; Senge, 1990). While codified knowledge lends itself to being embedded in repetitive processes within daily operations, tacit knowledge requires various types of direct interaction in between parties for knowledge to be exchanged and ideas to evolve (Wetlaufer, 1999; Adva 2011). Codified knowledge requires what is called extraction processes and mechanisms so that companies could use it in the form of intranets, electronic or traditional media, and signs and symbols that could be interpreted by anyone acting independently or with minimal interaction (Chalhoub, 2010; Hansen et al. 1999). Although codification techniques have proven to be helpful especially in cases of turnover,

Performance Innovation Through Applied

disrupting operations?

performance level?

Knowledge Management: Thought Leadership in Organizations 101

knowledge inputs and results (as outputs) are laid out. This is not to be confused with process reengineering or workflow design. It rather helps the analyst set the stage for building a learning organization. The main question becomes: how does the organization create, disseminate, and channel those knowledge elements in the third layer of figure 1 to drive faster and better decision-making, while performing daily processes and without

Fig. 1. Schematic representation of knowledge elements in decision-making

partnerships. Therefore the first question that the knowledge worker needs to ask is:

Q1: what are the key decisions that I need to make better and faster than in my existing

Note that the question is phrased in a way that the point of reference is the existing or current performance and the aim is to exceed it into a superior or desired performance level. It is therefore understood that comparative business analyses, benchmarking, competitor analysis, environmental scan and the like should be implicitly practiced by the organization a priori, and that the manager should already be aware of where the organization stands with respect to its competitors. Therefore, knowledge management practices should embed comparative analyses to track changes in performance. The analyst at this point needs to

Consider the framework in figure 1. The practitioner can now focus her workshop or focus interviews on key research questions. The first question is related to decision-making. No matter how detailed or long-drawn is the process laid out for a certain department or in a certain company function, the main challenging points are those key decisions that the knowledge worker is expected to make to run the business or perform within that process. For example, if a person is ultimately responsible for the purchasing and procurement processes, he will always face decisions related to supplier selection, quantities ordered, or the set of quality or technical specifications to be met. A CEO, who is ultimately responsible for company strategy, will always face decisions about the choice of the next country of physical expansion, decisions about market entry, market exit, choice of alliances or strategic

tacit knowledge is favored by various schools of thought including Japanese corporate practice. Deeply rooted in Japan's cultural environment, the exchange of knowledge between workers is based on a dynamic interaction that results in idea generation, experience sharing, and applied advice (Nonaka and Takeuchi, 1995). Tacit knowledge requires ways to be created, evaluated, monitored, and most importantly utilized by its human resources for company performance. Interestingly, this soft asset turns out to be the hardest to duplicate by competitors (Zhang and Kim, 2011).

Knowledge mobility poses a challenge in linking it to performance measurement. As one of the managers that we interviewed in Pasadena, California, put it when describing his company "95% of our company assets and financial worth leave the company everyday …" he said "only to get them back in-house the following morning" describing the thousand and some engineers working in the premises. While mobility contributes to competitive advantage, it puts the organization in a vulnerable position if the latter does not have the requisite culture that appreciates and retains knowledge workers (Theriou and Chatzoglou, 2008; Nonaka and Takeuchi, 1995). This is the type of culture that keeps senior managers fully aware of, and concerned about, the well-being of knowledge workers to manage a paradoxical relationship: mobility yet stability (Zheng et al., 2010). Tacit knowledge is also attributed to corporate entrepreneurship whereby a network of knowledge workers collaborate and launch entrepreneurial activity embedded in an established corporation (Floyd and Wooldridge, 1999).

3M is known for its philosophy of competition through continuous innovation. The company instilled policies that encourage managers to look for new ideas and launch new products. But the company goes well beyond policies and processes in its philosophy; 3M relies on tacit knowledge. For tacit knowledge to be effective in driving performance, the company culture must foster sharing and collaboration. Despite the common perception that start-ups are usually more aggressive than older industry counterparts in terms of innovation, older companies such as 3M, which was founded in the 1890s, can be a role model for self-renewal through knowledge management.
