An earlier article (DN, 7/20/89) introduced the concept of intellectual capital and defined it as the product of knowledge-based competence and commitment. Intellectual capital is important to every firm that seeks success in the 21st century.
Let's consider some aspects of the knowledge component as it relates to these firms.
In his book Managing in a Time of Great Change, Peter Drucker writes that "knowledge has become the key economic resource and the dominant and perhaps even the only source of comparative advantage." Knowledge management is more than the latest "buzzword." It is more than just another sales pitch. It is an approach for adding and creating value by actively leveraging the know-how, experience, and judgment residing within the organization or in some situations, outside the organization.
Since 1990, when Peter Senge described "the learning organization" in his book "The Fifth Dimension," management interest in the concept of knowledge has dramatically increased. The long list of related articles, books, and conferences reflects that interest.
The nature of knowledge in a business context can be viewed as a continuum with structured, codified, or explicit knowledge at one extreme and unstructured, uncodified, or tacit knowledge at the other.
How meaningful is codified knowledge? Stand-alone codified knowledge--such as blue prints, instructions, formulae, and computer code--can be easily identified, stored, and transferred using one of many communication channels, such as lectures, print, radio, TV, and data networks. It is important to remember that how much meaning someone derives from such knowledge depends upon how familiar that person is with the code, the context in which it is used, and how accurately it is coded and presented.
Uncodified (or tacit) knowledge is much more personal, and, as a result, more difficult to formalize. It includes subjective insights, intuition, and hunches. It is a product of an individual's actions and experience, as well as his or her ideals, values, and emotions. It is important to remember that tacit knowledge is not easily identified, stored, or communicated to or shared with others, especially when so much of it is unconscious in nature.
The tacit approach to driving. I learned to drive using an old Chevy that had a stick shift, a sticky clutch, and a transmission without synchro-mesh gearing. The codified knowledge was to push the clutch pedal in to disengage the motor from the drive train, move the gear-shift lever to the desired position, then release the clutch pedal to re-engage the drive-train with the motor.
Guess what? For quite some time, my best shifting efforts caused the Chevy to jerk along and sometimes stall. Usually the gears made loud grating noises.
Why? No one had given me the tacit knowledge I needed. During the shifting process, the driver had to develop a "feel" for moving the clutch pedal in or out while moving the gear-shift lever. Those actions are not binary in nature. This aspect of driving is more of an "art" than a science. Actually, once I got the feel for it, I was even able to shift gears relatively cleanly without always depressing the clutch pedal!
Ask the Manager
Q: How significant will the impact of the Y2K situation be as we enter the year 2000?
A: No one really knows the answer to your question, but here is some food for thought and discussion on the subject. As you are aware, the basic Y2K task is simple in concept. All that must be done is to review every line of suspected software code, fix it, and then test it against whatever systems it interfaces with to assure the new year is recognized and acted upon as the year 2000 and not as the year 1900.
If this task is not completed the instant we enter the year 2000, disruptions could affect telephones, electrical service, manufacturing, distribution, banking services, social security and government offices, credit card services, and much more.
The media, consultants, software vendors, and lawyers who see the Y2K problem as an opportunity to make a lot of money stress these chaotic possibilities. There is nothing wrong with entrepreneurs making money. However, some of the Y2K pressure might be no more than self-serving doom and gloom.
Currently, a wide gap exists between what some experts warn and what some Wall Street analysts say. Many analysts are reassuring investors that there is little to worry about.
To gather more information, the Securities and Exchange Commission has issued new guidelines asking that companies provide more complete information about what they are doing to assess and eliminate Y2K risks. Companies should include this information in their quarterly and annual reports.
This information should provide a snapshot of corporate America's Y2K readiness. My guess is that there will be some problems, and I hope they will be small.