Knowledge as advantage

August 02, 1999

Knowledge is becoming the key economic resource of comparative advantage in today's world. I consulted with a firm having difficulty with several state-of-the-art projects. Three vital areas power supply design, electromagnetic shielding, and non-metallic housing design had no dependable, recognized source of expertise. Each project team designed more-or-less from ground zero, and no one passed along important tacit knowledge that they learned to the other project teams. As a consequence, non-optimum designs were created. This was costly in terms of development time, product performance, manufacturing problems, product cost, and the bottom line.

Firms like this one must take action. They should gather and develop the required knowledge both explicit and tacit from within and without the firm, and effectively disseminate it throughout the organization.

The problem. Most firms have some difficulty even managing their explicit knowledge, e.g., knowledge related to preparing and updating designs and documenting processes and procedures.

Management of tacit knowledge is often left to incidental, informal word-of-mouth interactions. This is particularly true when employees are given little or no motivation or incentive to share such knowledge, and are working under deadline to meet project schedules.

Team members will usually combine and build on prior experiences to create new techniques or ideas for their project, although these creative solutions are not often shared with other teams. Few professionals are encouraged to take the time to extract, reflect upon, and disseminate the valuable lessons and knowledge they gain as they proceed with their daily project activities. Also, useful knowledge tends to be lost over time, unless the firm finds a way to institutionalize it.

An emerging solution. The centers of excellence concept is an emerging innovation for firms as they develop and upgrade leading-edge knowledge in areas they consider vital. Centers of excellence help firms leverage and communicate this knowledge to those who need it, when they need it.

The centers concept covers a wide spectrum, from an individual guru to a small group of people. As a collateral responsibility, the guru should be the most knowledgeable in a particular area and should consult others in that area. The small group identifies emerging practices, and perhaps product opportunities, and shares them with others.

Such centers are appropriate for all areas in a business. They support project-type organizations, virtual network organizations, and traditional line organizations.

There is no one best way to introduce the centers of excellence concept into an organization, however, it helps when everyone is enthusiastic about it. A firm can start a center on a small experimental basis, one area of expertise at a time.

Some will see the concept as an opportunity to add to their storehouse of knowledge. Others might resist if they think that withholding their knowledge serves as some sort of job insurance. The best job insurance should result from the firm's improving performance.

Centers may require some culture change, if staff are unfamiliar with sharing knowledge or working as a team. Take care that those assigned as centers are qualified and enthusiastic about their new tasks and receive management support.

The lifecycle of centers

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