Knowledge Management and Innovation

Professor Dr. Lorna Uden

Faculty of Computing, Engineering and Technology, Staffordshire University, Beaconside, Stafford, ST18 0AD. UK Email: l.uden@staffs.ac.uk

Introduction Knowledge management Innovation KM and Innovation Conclusion

Introduction
Innovation and knowledge management are no longer luxury items. They are means of economic development and competitiveness. Knowledge and innovation are inseparable. Innovation and knowledge management are closely related.

Knowledge
Knowledge is the most important resource in organizations and a key differentiating factor in business today. KM can bring about the much needed innovation and improved business performance Can also be defined as know-why, know-how and know-who, or an intangible economic resource from which future resources will be derived (Rennie 1999).
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 Built from data, which is first processed into information (i.e. relevant associations and patterns). Information becomes knowledge when it enters the system and when it is validated (collectively or individually) as a relevant and useful piece of knowledge to implement in the system (Carrillo et al 2000). There are various kinds of classification of knowledge: formal (explicit) and tacit (expertise) knowledge; foreground and background knowledge; knowledge of business environment or knowledge for control activities (Carrillo et al 2000).
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Knowledge management
Is defined as a dynamic human process of justifying personal belief towards the truth (Nonaka & Takeuchi
1995).

Is referred to as the process creating, codifying and disseminating knowledge for a wide range of knowledge intensive tasks. (Harris et al 1998). According to Brelade and Harman (2001), Knowledge management (KM) is obtaining and using resources to create an environment in which individuals have an access to information and in which individuals obtain, share and use this information to raise the level of their knowledge.
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 Knowledge is the key resource that must be managed if improvement efforts are to succeed and businesses are to remain competitive in global markets (Drucker 1993; Davenport & Prusak, 1998). Better management of knowledge within the firm will lead to improved innovation and competitive advantage. Sustainability requires special content and processes for Knowledge Management. Main purpose of knowledge management is to enhance exploitation (i.e. where existing knowledge is captured, transferred and deployed in other similar situations) or exploration (i.e., where knowledge is created) (Levinthal & March 1993).
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 According to Gloet and Terziovski (2004), knowledge management is the formalisation of and access of experience, knowledge and expertise that creates new capabilities, enables superior performance, encourages innovation and enhances customer value. Knowledge management is about supporting innovation, the generation of new ideas and the exploitation of the organisations thinking power (Parlby & Taylor 2000). It also includes the capture of insight and experience to make them available and usable when, where and by whom they are required.
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 Parlby and Taylor (2000) argue that knowledge management allows easy access to expertise and know-how, whether formally recorded or in someones mind. In addition it allows collaboration, knowledge sharing, continual learning and improvement. du Plessis (2007) defines knowledge management as a planned, structured approach to manage the creation, sharing, harvesting and leverage of knowledge as an organisational asset, to enhance a companys ability, speed and effectiveness in delivering products or services for the benefit of clients.
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 Typically takes place on three levels: individual, team and organisation. Is also a holistic solution incorporating a variety of perspectives such as people, processes, culture and technology. KM not only focuses on innovation, but it creates an environment conducive for innovation to take place. According to Liebowitz (2003), knowledge management means creating value from an organisations intangible assets and how to best leverage knowledge internally and externally.
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The Advantages of Knowledge Management

Can reduce risk; Can increase effectiveness of the organization; Provides added value to the organization; Allows better decisions to be made; Can learn from successful projects; Encourage transfer of knowledge between employees; Reduces unnecessary processes and streamlines operations; Increases employee retention rates; Offers better productivity.
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Innovation
Is a process through which the nation creates and transforms new knowledge into useful products, services and processes for national and global markets leading to both value creation for stakeholders and higher standards of living. The difference between invention and innovation is that invention is a new product, whereas innovation is a new value (Szmytkowski, 2005). To turn invention into innovation requires different types of knowledge, capabilities, skills and resources.
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Definition for innovation

Drucker (1975) defines innovation as the process of equipping in new, improved capabilities or increased utility. Innovation is the process of introducing new ideas to the firm which result in increased performance. According to Rogers (1998), innovation is concerned with the process of commercialising or extracting value from ideas.
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 Chan and others (2004) define innovation as the introduction of a new combination of the essential factors of production into production systems. Innovation is defined by Herkema (2003) as a knowledge process aimed at creating new knowledge geared towards the development of commercial and viable solutions. Gloet and Terziovski (2004) described innovation as the implementation of discoveries and interrelations and the process by which new outcomes, whether products, systems or processes, come into being.
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Schumpeter (1934) identified five different types of innovations: New product. New methods of production. The exploration of new market of production. New source of supply. New ways to organise business.
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Innovation is the mainstay of an organisation

For organisations to remain competitive, innovation is essential. Innovation depends intensively on the availability of knowledge. Knowledge management has important implications for innovation; therefore it is imperative that we understand the role of KM in innovation.
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Knowledge Management For Innovation

Three main drivers of the application of knowledge management in innovation (du Plessis
2007),

1. The role of knowledge management in innovation is to create, build and maintain competitive advantage through utilisation of knowledge and through collaboration practices. 2. The role of knowledge management in innovation is that knowledge is a resource used to reduce complexity in the innovation process, and managing knowledge as a resource is critical in innovation.
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3. The benefit of knowledge management applied to the innovation process is the integration of knowledge both internal and external to the organisation by making it more available and accessible. Knowledge integration means that knowledge can be exchanged, shared, evolved, refined and made available at the point of need. Knowledge integration via knowledge management platforms, tools and processes must facilitate reflection and dialogue to allow personal and organisational learning and innovation. Chen and others (2004) argue that without effective information and knowledge management that drives knowledge integration, which in turn underpins innovation, organisations could be under-utilising knowledge as an innovative resource.
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Functions that Knowledge and Knowledge Management play in Innovation (du Plessis 2007)
1. Knowledge management enables the sharing and codification of tacit knowledge. 2. Knowledge management and its role in the innovation process through the use of explicit knowledge.

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3. Knowledge management enables collaboration in innovation. 4. Knowledge management enables the managing of various activities in the knowledge management life cycle. 5. The creation of a culture conducive for knowledge creation, sharing and collaboration.

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The value proposition of knowledge management in the innovation process is as follows: Knowledge management assists in creating tools, platforms and processes for tacit knowledge creation, sharing and leverage in the organisation, which plays an important role in the innovation process. Knowledge management assists in converting tacit knowledge to explicit knowledge.
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 Knowledge management facilitates collaboration in the innovation process. Knowledge management ensures the availability and accessibility of both tacit and explicit knowledge used in the innovation process, using knowledge organisation and retrieval skills and tools such as taxonomies. Knowledge management ensures the flow of knowledge used in the innovation process

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 Knowledge management provides platforms, tools and processes to ensure integration of an organisations knowledge base. Knowledge management assists in identifying gaps in the knowledge base and provides processes to fill in the gaps in order to aid innovation. Knowledge management assists in building competencies required in the innovation process.
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 Knowledge management provides organisational context to the body of knowledge in the organisation. Knowledge management assists in steady growth of the knowledge base through gathering and capturing of explicit and tacit knowledge. Knowledge management provides a knowledgedriven culture within which innovation can be incubated.
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The Knowledge Management Cycle

Metaxiotis & Psarras (2006) described the knowledge management cycle as follows. This process consists of four key steps, as shown in Figure 1.

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Figure 1: The Knowledge Management Cycle

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 Step 1, knowledge identification and capture refers to identifying the critical competencies, types of knowledge and the right individuals who have the necessary expertise and experience that should be captured. One approach is to conduct a knowledge audit or the use of intranets.

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 Step 2, knowledge creation is the most critical step of the knowledge management cycle as this involves innovation. Knowledge creation is a process that involves tacit and explicit knowledge (Popadiuk & Choo 2006). Tacit knowledge is closely related to knowledge exploration, while explicit knowledge is more concerned with knowledge exploitation.

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 Step 3, knowledge application is concerned with taking the shared knowledge and internalising it within ones perspective and worldview.

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 Step 4, knowledge sharing culture needs to be created in the organisation.

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Conclusion
Effective knowledge management involves
(a) identifying knowledge. (b) creating new knowledge . (c) building competence. (d) effective management of innovation.
(Enkel et al 2002).

Knowledge creation is the first step to facilitating innovation in the company.

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 New knowledge is the most important source of innovation. The process of knowledge creation shows that it takes place in five phases. These phases are:
1) sharing tacit knowledge, 2) creating a concept, 3) justifying the concept, 4) building a prototype and 5) cross-levelling the knowledge
(von Krogh, Ichijo & Nonaka 2000).
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 A knowledge creating company needs to create an appropriate environment and offer an appropriate space (Nonaka & Konno 1998), for creating new knowledge (Nonaka, & Takeuchi 1995). According to von Krogh and others (2000) knowledge creation can be enabled through the following activities:
a) Instilling a knowledge vision, b) managing conversations, c) mobilizing knowledge activists, d) creating the right context, and e) globalizing local knowledge.
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 Better management of knowledge within the firm will lead to improved innovation and competitive advantage. It is important to investigate how to create the desired innovation and which specific requirements and critical factors can support innovation. Effective knowledge management can lead enterprises to successful innovation.
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Thank you for listening. Any questions?

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