Knowledge and competitive advantage

J. T. Pujitha PERERA

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At present most businesses are experiencing rapid change in the market requiring them to think out of the box to win an edge over competitors. However such thinking could only be possible if the organization has an effective knowledge base within the firm. Therefore knowledge can be considered as the most important strategic resource for an organisation and is probably the closest to competitive advantage.

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Though knowledge has wide definitions, in simplest meaning it refers to the repository of facts and ideas either recorded within the organization and articulated formally as pictures, models and documents or the personal know-how, intelligence, and creativeness inherent by people within the organization drawn through learning and education, experience and awareness.

The explicit knowledge referred above is more formal than tacit knowledge and hence it can be easily transformed into language and transmitted across the organization. The tacit knowledge on the other hand is more personal where an individual's interpretation of a given scenario may substantially vary depending on the intellectual ability of the person. However tacit knowledge is considered to be a better source of competitive advantage due to its ability to bring about unique change within the organization.

Knowledge Management

The process of identifying, mapping and sharing knowledge is referred to as Knowledge Management (KM). Though the concept of KM may not be as novel as many believe it to be, some organizations have yet to understand its true value to business. However certain organizations purposely ignore KM due to their strong resistance to change. It is commonly seen in many organizations, people are reluctant to accept new cultures and also to share their experiences and competencies as they perceived such actions will erode their bargaining power and supremacy (created as a result of know-how) presently being enjoyed at work.

Nonetheless most organizations have accepted change to be inevitable and hence no player can effectively sustain as a cost leader or a differentiator without being a "knowledge leader" in the market. Accordingly knowledge is the only form of survival in a complex and dynamic market.

Tacit knowledge

To establish an effective KM system, a business should have an environment conducive for knowledge sharing. Such environment should; view change as a strategy, allow people to learn from their mistakes, recognise creative ideas, encourage participation in decision-making, reward creativity and innovation and promote informal group discussions. It is important to note that whilst the explicit knowledge provides better understanding about the knowledge base of an organization it is the informal knowledge or the tacit knowledge that has the ability to create the uniqueness required in the market to gain competitive advantage.

To allow tacit knowledge to stream into the knowledge repository of the organization it is vital that knowledge workers are identified and retained within the firm. Knowledge workers are the people who could effectively contribute in harvesting the repository of knowledge of the organization.

They are people who have much desire to learn, acquire knowledge and think out of the box to identify creative and innovative solutions. Organizations should develop clear human resource policies which facilitate in locating, recruiting, developing and rewarding knowledge workers of the firm.

The best benefits of KM can only be derived when it is being viewed as part of organization's overall strategy. It is imperative that the top management carries a positive attitude on knowledge management for it to be successfully implemented within the organization. This positive approach not only motivates the knowledge workers but also will set an example to others who generally follow the foot steps of top management.

Knowledge gap

To derive competitive advantage through KM it is important that each organization obtains a critical understanding of its "knowledge gap". The "knowledge gap" refers to the difference between the organization's existing knowledge base and the required knowledge base. The required knowledge base demonstrates the level of knowledge an organization should have to outperform its rivals in the market. Upon recognising the knowledge gap the organization should identify alternative strategies to bridge the gap.

These strategies may include;

* recruiting experience knowledge workers for critical areas of business (e.g sales and marketing, production, research and development),

* developing effective communication channels to capture and disseminate external and internal information in a timely and comprehensive manner within the organization,

* Invest in knowledge based training models (e.g: web base training and e-learning, simulation models,) which focuses on developing the thinking ability of each individual within the organization, and

* Invest in knowledge management tools such as; collaborative software (also known as groupware) intranets, decision support systems, executive information systems and virtual systems.

Knowledge, in whatever way it is described has the true power to bring about sustainable competitive advantage to an organization. The essence of creative thinking blend with willingness to change will enable the organization to be a true leader in the market. Further the benefits of KM may include; promote learning and sharing culture, enhance cultivation of best practices, improve creativity and innovation and increase motivation among staff which are important aspects in creating a sustainable business.