**3. Changes in knowledge management and in the knowledge‐intensive organizations**

### **3.1. Knowledge‐intensive organizations**

In the case of the contents described in this chapter, the objective is to contribute to the understanding of the structures and contexts of utilization of knowledge‐based resources; the question is how complex implementation of the Internet of Things as a technological instrument effects on organizational changes and adaptation of knowledge processes; and to the understanding of the relationship between innovations of IoT technologies and organizational performance. According to Porter [29], a value chain represents a key source of competitive advantage. In this case, cost advantages and successful differentiations are tracked more effectively by considering the chain of activities that organization performs with the goal to deliver value to its customers. The most products of the knowledge‐intensive organizations are hidden assets. These invisible assets have presented knowledge about what the organization produces, how an organization is organized, and for what reasons [30].

Organization is an open system that is affected by the external environment with emphasis on the global nature and constantly changing requirements of customers, suppliers, and market conditions (nature conditions, the legislation, customs, taxes, and religion). The value of external system is featured as the ability to solve problems and needs of our customers. According to the information about customer behavior, organization can establish a policy for the customer relationship management (CRM) and suppliers develop a marketing strategy that provides market positioning and design of brand loyalty [3]. Web platforms become an important source of knowledge about the customers and with help from information getting from web platforms and Internet connected products, organizations have created the content value chain. This is achieved by linking complementary organizations and respective organizations with their distributors and customers [31].

The external effects on the organization are evident in organizational effectiveness and relevance of the activities in the field of R&D of individuals and groups within the organization and the organization's contribution to society [7]. The purpose of networking between organizations is the tendency to develop and implement technology solutions and processes that will enhance the organizational added value and bring added value to the customer in the form of utility value. Linked organizations that constitute the value chain have to reach decisions on strategies to increase the added value (e.g., acquisition, accumulation, and divestment) with a consensus with partners. In order for successful participation to occur in the value chain, organizations have to identify common goals, be complementary, and trust each other [32].

It must be realized that today the company due to globalization changes is exposed to more rapid changes in society and nature, which as such have the greatest impact on product development, operations, and ultimately to the success of the company [28]. This change caused the growth of importance of reaction in interaction with the environment in which the entity operates (headquarters, production), as well as the markets in which it sells. This means that the massive classical information passes into custom‐made information known user or target groups of users with high added value [27]. Such information is transformed into specialist advice and continuous monitoring of users, while education is increasingly necessary in the fields of encouraging companies for corporations, informing about the types of cooperation

**3. Changes in knowledge management and in the knowledge‐intensive** 

In the case of the contents described in this chapter, the objective is to contribute to the understanding of the structures and contexts of utilization of knowledge‐based resources; the question is how complex implementation of the Internet of Things as a technological instrument effects on organizational changes and adaptation of knowledge processes; and to the understanding of the relationship between innovations of IoT technologies and organizational performance. According to Porter [29], a value chain represents a key source of competitive advantage. In this case, cost advantages and successful differentiations are tracked more effectively by considering the chain of activities that organization performs with the goal to deliver value to its customers. The most products of the knowledge‐intensive organizations are hidden assets. These invisible assets have presented knowledge about what the organiza-

Organization is an open system that is affected by the external environment with emphasis on the global nature and constantly changing requirements of customers, suppliers, and market conditions (nature conditions, the legislation, customs, taxes, and religion). The value of external system is featured as the ability to solve problems and needs of our customers. According to the information about customer behavior, organization can establish a policy for the customer relationship management (CRM) and suppliers develop a marketing strategy that provides market positioning and design of brand loyalty [3]. Web platforms become an important source of knowledge about the customers and with help from information getting from web platforms and Internet connected products, organizations have created the content value chain. This is achieved by linking complementary organizations and respective organi-

The external effects on the organization are evident in organizational effectiveness and relevance of the activities in the field of R&D of individuals and groups within the organization

tion produces, how an organization is organized, and for what reasons [30].

and management of partnership development networks.

**3.1. Knowledge‐intensive organizations**

174 Knowledge Management Strategies and Applications

zations with their distributors and customers [31].

**organizations**

Internet saturation is influenced on changing the Internet architecture (architecture principles named Kondratieff cycle that began in 1970). The sixth Kondratieff cycle is started with new Internet technologies and it is predicted that IoT and big data will change the KM in next few years [33].

Drucker et al. [34] used the term "knowledge work" such as the fact that knowledge is a key resource in most organizations, not capital land or labor. Knowledge combined with experience helps in decision‐making and innovation. The economy, which is variable and uncertain knowledge, appears as nonstatic phenomenon.

Drucker [35] had, at the end of the 1980s, pointed to the emergence of a new organization based on knowledge, consisting of experts, subject to share their experiences (and thus gain quick response) with their colleagues, customers, and the leadership of the organization. He named it as the information‐oriented organization.

Zack [36] defines knowledge‐intensive organizations by their process, place, purpose, and perspective, which will be discussed briefly and including the case of smart health services.


Mahesh and Suresh [8] and Gummesson [9] identified three types of knowledge‐intensive organizations, based on knowledge perspective:


An example of a knowledge‐intensive organization and its features in the period of the fourth industry revolution is presented in case of the digital‐health companies and processes of a smart home health care.

In the case of a smart home, health care is going for the system where embedded computers and networks are monitoring and controlling the physical processes with feedback loops where physical processes affect computations and vice versa. All information is stored in clouds and digital‐health companies enable the exchange of health data [37].

The concept of the smart home health care enables ill people to stay home as much as possible and continue living a quality life. Such digital healthcare platform is not only influenced by organizational changes of a health‐service but also by decreasing costs of this service. McKinsey research showed that implementation of patient self‐services with using digital channels instead of the direct physician visit, or patient self‐management solutions can produce net economic benefits of 7–11% of total healthcare spending [38].

Control of vital human functions can be presented as a case study; this allows urgent health care through mobile applications, sensors in clothing, sensors, and surveillance cameras in flats (e.g., integrated in the house or smart phone application) monitoring the patient and sending information to physicians [10, 3].

In the case of a process of a smart home health care, the integration and sharing information are the key concept. It is going for the process of knowledge management 4.0 whose characteristics are defined by the following [39]:


## **3.2. Creation and the importance of knowledge management**

Mahesh and Suresh [8] and Gummesson [9] identified three types of knowledge‐intensive

• Manufacturing organizations: knowledge‐intensive work is limited to the research and development departments. A narrow group of employees is tied to creating knowledge‐ intensive decisions and creation of a value‐added chain within this context. Cognitive and social distances are lower among the employees in departments and higher at the entire

• Consulting firms, legal firms, and pure play technology organizations: knowledge constitutes a major part of the output. The value chain depends on the ability of processing specialist knowledge of employees in the firm. Social and cognitive distance is smaller in

• Information, communication, and consumer‐oriented technology organizations: these organizations have a diverse business network, producing and marketing a wide range of customized business and technology products and services. Investment in high technology and innovations represent key factors for their existence. This causes a perspective distance between the middle and the bottom level of hierarchy of the organizations. The consequences are visible in slower responses to market conditions. The measures cannot be thought cross the organizational hierarchy quickly. This has led to problems in achieving set goals of management at the business process level and the transfer of responses of

An example of a knowledge‐intensive organization and its features in the period of the fourth industry revolution is presented in case of the digital‐health companies and processes of a

In the case of a smart home, health care is going for the system where embedded computers and networks are monitoring and controlling the physical processes with feedback loops where physical processes affect computations and vice versa. All information is stored in

The concept of the smart home health care enables ill people to stay home as much as possible and continue living a quality life. Such digital healthcare platform is not only influenced by organizational changes of a health‐service but also by decreasing costs of this service. McKinsey research showed that implementation of patient self‐services with using digital channels instead of the direct physician visit, or patient self‐management solutions can pro-

Control of vital human functions can be presented as a case study; this allows urgent health care through mobile applications, sensors in clothing, sensors, and surveillance cameras in flats (e.g., integrated in the house or smart phone application) monitoring the patient and

In the case of a process of a smart home health care, the integration and sharing information are the key concept. It is going for the process of knowledge management 4.0 whose charac-

organizational changes from the lower to a higher management level.

clouds and digital‐health companies enable the exchange of health data [37].

duce net economic benefits of 7–11% of total healthcare spending [38].

sending information to physicians [10, 3].

teristics are defined by the following [39]:

organizations, based on knowledge perspective:

176 Knowledge Management Strategies and Applications

level of organization.

smart home health care.

all parts of the organization.

Marshall et al. [33] defined KM as a process in which we are trying to figure out what kind of human capital lies in the minds of individuals and the shift in organizational capital, to which he is able to access a large group of individuals, each of which depends on the development of the organization.

Nonaka [26] claims that the production of knowledge at the individual level, which is available to others, is the pivotal activity of the organization, based on knowledge‐creating company. The author emphasizes that it is a permanent process that takes place at all the levels within the organization, which may, in certain moments, occur in unexpected forms. He claims that the quantitative data acquisition of new knowledge—increase efficiency, reduction of costs and improvement of return on investment—is not sufficient for knowledge management. It recalls the importance of rapid response to customer needs, creating new markets, and innovative products.

Rowley [40] identified KM as a definition, acquisition, use, maintenance, and disposal of the assets of knowledge, for the purpose of increasing the value and benefits of all stakeholders.

Epistemology is claimed on what knowledge is valid in research, how that knowledge is presented, and what kind of knowledge is found in knowledge‐intensive organizations, society, environment, and specially with using and analyzing the information obtained from social media and Internet of Things in the virtual world (e.g., big data clouds storage) [15].

The creation of new knowledge is not just a matter of processing objective information. The point is that the creation of new knowledge depends on the exploitation of tacit knowledge and often highly subjective knowledge of each employee within the organization [20]. In addition to the tacit knowledge, it is necessary to be vigilant even in explicit knowledge (knowledge of official records, such as patents) and the importance of their mutual interaction in the development of new products or services [7].

Kogut and Zander [23] share knowledge in the organization on information and "know‐how." They believe that knowledge is based on the competencies of individuals and the principles of the organization, through which relations between individuals, groups, and members of the business connections are arranged and coordinated. The authors present the conclusion that organizations exist only because they are better able to transmit and share knowledge as a market. This conclusion follows from the premise that organizations are able to process and store large amount of information than individuals [41].

The development of knowledge management can be divided into three phases (**Table 2**). First phase appeared in the mid‐1990s, and it can be classified as a classical knowledge processes development phase. The main feature of this period is that knowledge is sought outside the organization. The task of the organization is to capture, decode, and share the knowledge in organization and its environment. The procedures of knowledge management begin after the creation of knowledge, and the next processes are knowledge development and its transformation into practice. Organizations were highlighted in this first phase of the integration of knowledge in business processes [42].

In the first period of development of knowledge management, it was lead to the conclusion that knowledge has to be produced in a social environment. It has been established that the knowledge is generated through the processes of individuals. The creators of knowledge are obliged to care for its accuracy. In the process of cooperation between individuals both within the organization and in the external environment, it comes to sharing knowledge [42, 43].

The second phase started around 2003 with the launch of the Internet 2.0‐based knowledge processes.

The second phase of knowledge management is characterized by the awareness of the importance of external information and knowledge to the organization. Providing access to external information and knowledge, including their involvement in the value chain creation is of utmost importance. Important characteristics of knowledge organizations are in their advantageous utilization of superior information technology and highly skilled employees (knowledge workers) that is able to implement its innovative activities into realization [44, 45].


Source: Ref. [39].

**Table 2.** Differences between classical knowledge processes and the IoT knowledge processes.

The emergence of the Web 2.0 has had a significant impact on the development of the third stage of KM. During the period after 2005, with the development of social media, web portals were integrated [7]. Knowledge thus became available outside the organization and management, which is one of the critical factors of business success [46]. Von Krogh [45] proposed the theory that the Web 2.0 applications are not necessarily included in the context of KM, but simply a means of enabling access to knowledge. By integrating information and communication technology (ICT) into products, the von Krogh theory is a basis for the understanding of next third phase of knowledge management development. The IoT has influenced the development of new knowledge management generation (**Figure 1**) that is arising from the phase of integration between people and people with documents and passes to the phase of connection between devices. KM processes are also located between the consumer and the manufacturer or service provider.

the business connections are arranged and coordinated. The authors present the conclusion that organizations exist only because they are better able to transmit and share knowledge as a market. This conclusion follows from the premise that organizations are able to process and

The development of knowledge management can be divided into three phases (**Table 2**). First phase appeared in the mid‐1990s, and it can be classified as a classical knowledge processes development phase. The main feature of this period is that knowledge is sought outside the organization. The task of the organization is to capture, decode, and share the knowledge in organization and its environment. The procedures of knowledge management begin after the creation of knowledge, and the next processes are knowledge development and its transformation into practice. Organizations were highlighted in this first phase of the integration of

In the first period of development of knowledge management, it was lead to the conclusion that knowledge has to be produced in a social environment. It has been established that the knowledge is generated through the processes of individuals. The creators of knowledge are obliged to care for its accuracy. In the process of cooperation between individuals both within the organization and in the external environment, it comes to sharing knowledge [42, 43].

The second phase started around 2003 with the launch of the Internet 2.0‐based knowledge

The second phase of knowledge management is characterized by the awareness of the importance of external information and knowledge to the organization. Providing access to external information and knowledge, including their involvement in the value chain creation is of utmost importance. Important characteristics of knowledge organizations are in their advantageous utilization of superior information technology and highly skilled employees (knowledge workers) that is able to implement its innovative activities into

> Information is accessed and stored via clouds and platforms like Google

> Internet 2.0 provides online relations between the customer and supplier. The discussion is limited to the matter of content and physical data

Business or private content is available on any device, any place, **IoT knowledge processes**

saved in clouds

between things

Big data acquired directly from the things and customers. Analyzed and

Real time. Content is available online. No limitations for sharing information between people or things

Information sharing and collaboration via wireless communications between people, between people and things, and

store large amount of information than individuals [41].

**Classical knowledge processes Internet 2.0‐based knowledge** 

**processes**

and Facebook

and any time

**Table 2.** Differences between classical knowledge processes and the IoT knowledge processes.

entry

knowledge in business processes [42].

178 Knowledge Management Strategies and Applications

processes.

realization [44, 45].

Knowledge based on the data acquired from the intranet, CRM. Data is saved in local servers

Local time and personal limited

Organization limited networking; information sharing and discussion

via email or intranet

Source: Ref. [39].

access

**Figure 1.** Implementation of the knowledge management system in small and medium company. Source: Authors.

Industry 4.0 is based on mobile computing, cloud computing, and big data. The importance of cloud computing and mobile computing for Industry 4.0 lies in the provision of services, which can be accessed globally via the Internet. Services can easily be integrated and used [2].

For the establishment of the IoT and the course of the processes of knowledge management, companies set up a circuit between product and service: (i) radio frequency identification (RFID); (ii) wireless sensor networks (WSN); (iii) middleware, (iv) cloud computing, and (v) IoT application software [37]. This system can operate both with the help of people and artificial intelligence. The data collected with the help of these systems is saved in clouds. Products integrated with cloud computing in the field can provide data that enable a predictive maintenance, and to provide information about optimization possibilities in production. The use of integrated networking and integration of products into Internet data will allow for far reaching possibilities to collect data [47]. Instead of single data points or short intervals, a continuous stream of data is now available. The huge amounts of data available can now be used to continuously analyze and optimize production. This enables fostering of predictive analytics [48]. Such system is based on big data analytics, which enables, for example, the informing of vehicles that are driven in a column, the distances between them, events on the road in front of them, weather conditions, etc. The drivers of vehicles—thus not only based on geostationary information—know the route, but with the help of sensors and connectivity between vehicles, receive notice of current dangers on the road [37, 15].

### *3.2.1. Processes of knowledge management in organizations*

Organization must develop an organizational culture to the level of employee awareness that knowledge sharing is presenting a fundamental concept for the firm, which enables further growth of the organization. The process includes the identification of the knowledge, sharing knowledge, knowledge acquisition, collection, and storage of knowledge and refresher [49].

Grower and Davenport [50] consider that the processes of KM are located between the information and the source of income of the firm (services rendered or products sold). The process is based on three sub processes: acquisition of knowledge, a definition (record) of knowledge, and the transfer of knowledge and realization. The general concept model of the process stems from the fact that by coordinating, coordinated and introduced operational processes occur. Together, these processes form the system of KM as important operational processes so representing [26]:


### *3.2.2. Organizational knowledge sources and their value*

Industry 4.0 is based on mobile computing, cloud computing, and big data. The importance of cloud computing and mobile computing for Industry 4.0 lies in the provision of services, which can be accessed globally via the Internet. Services can easily be integrated and used [2]. For the establishment of the IoT and the course of the processes of knowledge management, companies set up a circuit between product and service: (i) radio frequency identification (RFID); (ii) wireless sensor networks (WSN); (iii) middleware, (iv) cloud computing, and (v) IoT application software [37]. This system can operate both with the help of people and artificial intelligence. The data collected with the help of these systems is saved in clouds. Products integrated with cloud computing in the field can provide data that enable a predictive maintenance, and to provide information about optimization possibilities in production. The use of integrated networking and integration of products into Internet data will allow for far reaching possibilities to collect data [47]. Instead of single data points or short intervals, a continuous stream of data is now available. The huge amounts of data available can now be used to continuously analyze and optimize production. This enables fostering of predictive analytics [48]. Such system is based on big data analytics, which enables, for example, the informing of vehicles that are driven in a column, the distances between them, events on the road in front of them, weather conditions, etc. The drivers of vehicles—thus not only based on geostationary information—know the route, but with the help of sensors and connectivity

between vehicles, receive notice of current dangers on the road [37, 15].

Organization must develop an organizational culture to the level of employee awareness that knowledge sharing is presenting a fundamental concept for the firm, which enables further growth of the organization. The process includes the identification of the knowledge, sharing knowledge, knowledge acquisition, collection, and storage of knowledge and refresher [49]. Grower and Davenport [50] consider that the processes of KM are located between the information and the source of income of the firm (services rendered or products sold). The process is based on three sub processes: acquisition of knowledge, a definition (record) of knowledge, and the transfer of knowledge and realization. The general concept model of the process stems from the fact that by coordinating, coordinated and introduced operational processes occur. Together, these processes form the system of KM as important operational processes

• Need for skills: determine which skills the organization needs. This process also includes the sharing of the existing knowledge, because the purpose is to figure out which is the

• Acquisition and knowledge creation: new knowledge is often generated also by combining

• Documenting and storing knowledge: the results of the newly acquired knowledge that is

already known knowledge that could be helpful for the organization;

*3.2.1. Processes of knowledge management in organizations*

180 Knowledge Management Strategies and Applications

so representing [26]:

existing knowledge of the transfer;

documented and retained.

Knowledge has become a force, a power, which is providing to the organization a competitive advantage. In doing so, the organization shall establish all levers (for example, the establishment of corporate culture) that enable it to exploit and use internal organizational knowledge in daily operations [51, 30]. Knowledge, which is used in business processes, is called organizational knowledge [30]. Organizational knowledge can be found in databases, business papers, archive organization, and minds of individuals. Knowledge is in newly emerging companies typically fragmented, and it can be found in chunks throughout the organization. When an organization moves the initial period of operation and begins to grow, to make all these fragmented pieces integrated into the system KM the purpose of which is to collect, organize, and process the knowledge into a usable form, applicable to all employees (for example, in this end, the organization set up an intranet, ERP systems, CRM systems, etc.) [14].

An advantage of using the KM system is that it allows the conversion of intangible assets into useful business resources. In practice, for example, it shows in the event that the organization develops a commercial solution (technology, processes, designs presentations, etc.). In addition, hereinafter referred to license to offer in the form of advisory services (in the case of a consulting company) or in the form of licenses and franchises. An organization that purchases a license can use the existing knowledge to solve similar problems and create sources of revenue for the license vendor.

Organizations often include a KM system into the marketing strategy, especially when they want to reach out to their customer, and they are entrusted with the execution of a specific project (for example, the establishment of CRM and other software solutions to customer needs) by an external service provider. Through the system of KM as subscriber's they see what employees know about the project, which will be implemented, and what solutions have already been developed in the past.

In fact, KM as system has to ensure a more accurate communication between employees and thereby accelerate the settlement procedures and search, and providing solutions, which gives employees the ability to make better decisions [42]. It is necessary to understand that all of the obsolete knowledge that can be found inside or inside the organization is in various forms, which have to be physically moved into the KM system.

Organizational knowledge is being created on the basis of resources [9, 52]:


The system KM is formed on the basis of the organizational structure and the company's own needs. All databases connected into a whole have represented the KM as system (**Figure 1**).
