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THE GLOBALISATION AND VIRTUALISATION OF KNOWLEDGE

David J. Skyrme

This article first appeared in The Gyosei Journal, Vol 1, No. 3 (December 1997)

ABSTRACT

Knowledge, as a strategic business focus,has become a hot topic. After several years ofgroundbreaking articles, publications and pilotprojects, the years 1995-6 saw a surge ininterest among business managers. This isreflected in the number of conferences and newmanagement books and articles devoted tosome aspect of knowledge management1. Thesame period has also seen a phenomenaluptake of the Internet by the businesscommunity, representing an increasing'virtualisation of products and services. Theseapparently unrelated trends are both part of a'growing globalisation of information andknowledge related activities.

This paper explores how these convergenttrends - of globalisation, virtualisation andknowledge - are changing the shape of theenvironment within which we live and work.More subtly, these trends represent anotherconvergence - that of Western and Japanesethinking about the future global economy.

The Momentum of KnowledgeManagement2

The interest in knowledge as a strategiclever is not new. Some 400 years ago FrancisBacon wrote a treatise on knowledge and alsoexpressed an even earlier notion that"knowledge is power". In the 1970s and 1980s,there was a- growing body of work on artificialintelligence which was also a key part ofJapan's MITI's 'fifth generation' computerprogramme. However, knowledge basedsystems failed to fulfil their promise ofbecoming part of the mainstream of computers.Instead they are just a strand, albeit now agrowing and important one, of the overall

computer market. In retrospect it seems thatdevelopers focused too much on what has beendescribed as falling into the trap of trying todevelop "thinking machines" rather than usingmachines to augment human thinking"3.

A more general view of the growing andpervasive role of knowledge in businessactivities, came from several forward thinkingwriters, in different parts of the world, whosework was published in the early and mid 1980s,but was not widely recognised by the businesscommunity at the time. The two examples thatstand out in my mind are Sveiby4 and Masuda5.Sveiby, writing about the 'know-how company',described its characteristics and drewdistinctions between management andprofessional know-how. Masuda describedquaternary industries as distinct from the wellknown classification of primary (agricultural),secondary (manufacturing) and tertiary(services) industries. His quaternary categorieswere information, knowledge, arts and ethicsindustries, categories that we are now startingto recognise in the late 1990s, but which musthave taken some foresight to envisage when hisbook was first written (in Japanese) in 1980. Healso foresaw in his chapter on the `informationutility' many of the features of the Internet thatwe discuss later in this article.

These two strands are included amongothers from several parts of the world thatAmidon has portrayed in a time-line('hindsight') showing the evolution andconvergence of thinking and writing aboutknowledge as a strategic focus6. More recentand more widely published examples from theUS stream of the time-line includecontributions from Drucker7, Quinn8, andnotably Tom Stewart, whose articles in Fortunehave done much to bring the subject to theattention of senior executives9.

The Globalisation and Virtualisation of Knowledge The Gyosei Journal. Vol 1, No 3 (Dec 1997)David J Skyrme

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However, in my work as a consultant andresearcher on the subject, the one work that iscontinually cited to me by practitioners is theground breaking book The Knowledge CreatingCompany, by Ikujiro Nonaka and HirotakaTakeuchi110. Several ideas in this book werefirst published in an article of the same title byNonaka in Harvard Business Review in 199111.Perhaps at that time, Western businessmanagers were too preoccupied withdownsizing and business processreengineering, so it was only the publication ofthe book in 1995, coinciding as it did withgrowing business interest in the subject, thatattracted wider attention. The book is unique inthat it brings together Western ideas andJapanese experience. My discussions withmanagers indicate that the most singlecontribution it has added to their thinking is thedistinction between explicit and tacitknowledge and the conversion processesbetween them. Nonaka and Takeuchi describeexplicit knowledge as that which:

"can be expressed in words and numbers andcan be easily communicated and shared in theform of hard data, scientific formulae, codifiedprocedures or universal principles"

and contrast it with tacit knowledge which"is highly personal and hard to formalise.Subjective insights, intuitions and hunches fallinto this category of knowledge."

The four conversion processes they describeare:

• Tacit-to-tacit (socialisation) - whereindividualsacquire new knowledge directly from others;

• Tacit-to-explicit (externalisation) - thearticulation of knowledge into tangible formthrough dialogue;

• Explicit-to-explicit (combination) -combiningdifferent forms of explicit knowledge, such asthat in documents or on databases;

• Explicit-to-tacit (internalisation) - such aslearning by doing, where individualsinternalise knowledge from documents intotheir own body of experience.

The authors point out that these are thefundamental processes for creating newbusiness value through developing and sharingknowledge. My own observation is that mostpeople believe it is the conversion from onetype to the other (i.e. tacit-to-explicit and viceversa) that give the greatest value addingpotential. This seems reasonable in thatknowledge once in explicit form can be moreeasily transmitted and multiplied byautomation, but that it does need converting andassimilating into another person's tacitknowledge for application to a differentsituation.

In a recent conference presentation12

Takeuchi pointed out that the Japanese are moreat home working in and from the tacitknowledge domain, whilst Westerners are morecomfortable handling explicit knowledge. Thusthe Japanese innovate (turning tacit into explicitknowledge) through a high degree ofsocialisation and externalisation. He cites howhis own behaviour changes when he moveswith his work between the US and Japan.Research done for Business Intelligenceconfirms that the initial focus of knowledgemanagement programmes in many Westerncompanies is on explicit knowledge. The firstactivity addressed by many of them is thebuilding of knowledge databases (so thatcompanies get to "know what they know"),with human knowledge transfer processesbeing added only later13.

The interest in Nonaka and Takeuchi's bookis just another indication that the businessworld is now taking the subject of knowledgeseriously. It has also been fuelled by the activepromotion by several of the major managementconsultancies. For example, Arthur Andersen,as well as sponsoring a knowledge symposium,have developed a Knowledge Management andAssessment Tool (KMAT), which is used todiagnose the position of companies on anumber of knowledge managementdimensions. Ernst and Young's InnovationCenter based in Boston has evolved an earlierfocus on information management into one onknowledge management, and also runs a


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multi-client programme on the subject. PriceWaterhouse actively promotes their internallyused KnowledgeViewSSM knowledge databaseas an example of their credentials in this field.These consultancies recognise that they arepredominantly knowledge based businessesand that by reusing knowledge they alreadyhave they can benefit their clients and theirbottom line.

Amidon summarises the growing impetustowards managing knowledge as follows2:

"the momentum of knowledge management hasnow reached a stage of critical mass of insight.Dedicated expertise across all disciplines areexploring and defining new managementpractices fundamental to capitalising upon theknowledge based economy ".

The Role of Knowledge

Although the strategic importance ofknowledge is relatively obvious for amanagement consultancy, it plays anincreasingly important part in products andprocesses. For example, Botkin and Davisdiscuss the role of knowledge in products14.They describe six features of knowledge-basedbusinesses:

(1) The more you use knowledge-basedofferings, the smarter they get.(2) The more you use knowledge-basedofferings, the smarter you get.(3) Knowledge-based products and servicesadjust to changing circumstances.(4) Knowledge-based businesses can customisetheir offerings.(5) Knowledge-based products and serviceshave relatively short life cycles.(6) Knowledge-based businesses enablecustomers to act in real-time.

Examples of the growing intensity ofknowledge in products are the intelligent oildrill, which `knows' the shape of the reservoir it

SM Knowledge View is a service mark of PriceWaterhouse

is drilling, and the intelligent car, whose enginemanagement systems can monitor performanceof vital parts and `knows' when they needservicing.

Leveraging knowledge in processes meansapplying the best available knowledge to asituation, such as handling a customer query, anoperational problem or development of a newmarketing campaign. In the era of businessprocess engineering, much of the emphasis hasbeen on making existing repetitive processesmore efficient. Many of these are highlystandardised and automated i.e. explicitknowledge. As a growing number of businesseshave learnt to their cost, through this`streamlining', often accompanied bydownsizing, much implicit knowledge held bythose formerly intimately involved with theprocess has been lost to the front-line. It is noaccident that for certain crucial processes orincidents, companies will spare no expense tobring to bear the expertise needed. Thus oilcompanies have traditionally flown outknowledgeable experts to remote oil rigs tosolve operational problems, rather thanallowing on-site operatives to rely on theexplicit knowledge in the locally held fieldmanuals. In contrast BP has made virtualteamwork using videoconferencing a key plankof their knowledge strategy, thus avoiding suchtravel in many cases. Insurance companies likeCIGNA in their process reengineering forunderwriting have captured much of theimplicit knowledge known by their bestunderwriters into various help screens anddocuments that sit behind the standard processscreens.

These are companies that are aware of thecontribution 'of knowledge in their productsand processes that flow through to significantbottom line business benefits. A growingnumber of similar cases have been reported15.Some examples include:

• Hoffman La Roche who by considering theknowledge needed to prepare clinical trialsdocumentation for the approval authoritieshave contributed to faster time to market fornew drugs.


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• Price Waterhouse whose KnowledgeView®

brings existing knowledge of best practices totheir consultants world-wide and allowedthem to provide better solutions to theircustomers wherever they are located.

• NEC, the Japanese electronic company,whose articulation of its core knowledge base,helped redefine the company's mission as`computers and communications', markets inwhich it has shown continuing success.

• Dow Chemical whose attention to itsintellectual property in a languishing patentportfolio has generated significant additionalrevenues through licensing and otheragreements.

• Skandia, a Swedish based insurance company,whose management focus on intellectualcapital (the knowledge in its people andprocesses) has helped it grow from a smallregional company to number five in the worldin its market segment.

• Kao, a household and chemical productscompany, whose focus on open knowledgesharing among employees has helped propel itinto new markets.

Knowledge Management in Practice

So what is this topic of knowledge managementreally about? A useful working definition is"the systematic management of knowledgeprocesses - the gathering, creation, organising,storing, disseminating and use of knowledge".As the above examples show, some companies,or parts of them, have for some time understoodthe role of knowledge and have in placeprocesses and support mechanisms to help itscreation and flow, thus generating costs savingsor added value for customers. My currentresearch suggests that what is happening now isthat leading edge companies (at least in theWest) want to make knowledge content andprocesses a more explicit part of their strategy.This is partly driven by the often expressedfeeling that unless something is explicit (backto the Western comfort with explicitknowledge) and measured, it simply doesn't getproperly managed. Thus the last few years hasseen a growing number of appointments of`Chief Knowledge Officers' and people insimilar roles with job titles such as Vice

President of Intellectual Capital, Director ofKnowledge, Director of Innovation.

In practice, we have found that the keystrands of their responsibilities and the scope ofthe knowledge management programme whichthey initiate include the following:

• Knowing what you know - identification ofknowledge that actually exists within thecompany and is used on a regular basis.Simply recording such knowledge, as on aknowledge database, can save companiesmoney by stopping `reinventing the wheel'and buying in knowledge that already exists(the author knows of one company whocommissioned market research for knowledgethat already existed). It can also avoid thosedownsizing operations where only belatedlyis it realised what knowledge a company hasinadvertently lost.

• Clarifying what type of knowledge isimportant, for example to add value to currentoperations or to develop new products andservices. A tool found useful in manycompanies is that of developing knowledgemaps, showing the relationship of varioustypes of knowledge to key business processesand activities.

• Creating knowledge centres - such centres areboth physical (e.g. a library) and virtual (e.g.online databases), employing a mix of`knowledge editors' and people who liaisewith knowledge providers and users. Theirmain role is to coordinate knowledge and toact as a focal point for knowledge capture andsharing. Such a centre will act as a hub of aknowledge network - a point of contact forthose seeking or having knowledge.

• Introducing effective knowledge processes -very often this requires combining librarianand information systems skills. Activitiesinclude classification of material anddeveloping company-wide thesauri (acommon language has turned out to be apowerful part of many knowledgemanagement programmes)16.

• Developing supporting processes andinfrastructure. Important here are creating theclimate and culture for knowledge sharing andthe development of new ideas. This mayinvolve both physical elements, such as


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holding events such as 'knowledge fairs' andthe design of office space17, as well as `softer'cultural aspects such as training and personaldevelopment programmes, inducingappropriate behaviour patterns. Reward andrecognition systems in many cases also needattention.

• Developing a technology infrastructure forknowledge sharing. These are computernetworks, databases and various knowledgesupport systems and tools. Some are veryniche and focused, such as an expert systemsor a case based reasoning system. What weare finding, is that those making the mostcontribution are those that allow knowledgesharing on a large scale, connectingknowledge around an enterprise to anindividual's desktop. This is the focus of thevirtualisation aspect of this article.

• Embedding knowledge into strategicmanagement processes, especially planningand measurement processes. Companies(such as Skandia) that have made attempts tomeasure some of the intangible aspects oftheir business - the capabilities of theirpeople, the knowledge embedded inprocesses, customer capital, capacity ofinnovation, and so on - seem to gain a betterperspective on the contribution of knowledgeand therefore find the necessary investmentfor all the other support activities mentionedhere.

These activities, as noted earlier, are nowgaining a momentum of their own, at leastwithin a corporate context (intra-firm). We nowreview the other major trend, that ofvirtualisation, which can also dramaticallyaffect the nature of the knowledge managementprocess in the inter-firm arena.

Virtualisation

The advances in information andcommunications technologies (ICT) are almostunparalleled in the world of science andtechnology. MIT's landmark Management inthe 1990s18 study indicated that over a ten yearperiod, information technology showed a 25times price-performance improvement,compared to 1.4 times for six other major

product groups. Makridakis19 notes that theindustrial revolution, that caused such changewith our way of living and working, wasbrought about by a technology (steam power)that gave a mere 15 times improvement inprice-performance over previous technologies.Combining these facts, we see that the progressof computers and communications is like anindustrial revolution every seven years!

We have all witnessed the changes this hasbrought about. Today's personal computers aremore powerful than the mainframes of the1970s. They also come in a wide choice ofpackaging (laptops, notebooks, personal digitalassistants etc.), and have more functionality,such as multimedia. But the biggest change isthat of connectivity. It was much less than adecade ago when personal computers werecommonly interconnected through LANs (localarea networks) and often even less when theywere first interconnected through a corporatenetwork. For many people, it has only been inthe last year or so when such networks wereopened to the outside world throughcommunications gateways.

Add to these hardware changes the growingsophistication of communications software,particularly electronic mail and to a lesserextent groupware products such as Lotus Notes,and the opportunities to change ways ofworking are immense. Many of theseopportunities were experimented with bypioneering companies in the 1980s. Forexample, Digital exploited its internal network(DECnet) to develop successful products usingengineering teams distributed around theworld20. Others, like Xerox were usingdistributed and group meeting decision supportsystems for processes such as strategicplanning. A useful framework that epitomisesthese new opportunities is that of Johansen'sgroupware grid21 that shows the dimensions oftime and space (Figure 1).

Developments in ICT open up new ways ofexploiting the dimensions of time and place ofthis grid. Furthermore, the cost effectiveness of


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DifferentPlace

RemoteDispersed

"Tele-"

Asynchronous

SamePlace

Conventional- Meetings etc.

Message Centres

Same DifferentTime

Figure 1 - A Communications Framework

the technologies that are shrinking theimportance of time and space are causing arethink of conventional work patterns. Thus, formany purposes the notion of location becomesirrelevant. When you call a local phone numberfor customer service, it is highly likely that youwill be routed to a remote call handling centre.Locations such as County Wicklow in Irelandand Glasgow in Scotland have become theEuropean call handling centres of companieslike Dell and British Airways. Thisreconfiguration of work across time and place isleading to a growing number of so called 'tele-activities', such as teleworking (working fromhome or in a telecottage rather than in aconventional office), teleselling (dealing withcustomer over the phone rather than over thecounter), and even telemedicine (diagnosingover a video link rather than in a doctor'ssurgery).

Furthermore the location (or time) ofactivity does not have to be discrete as in a callcentre. Activities can be chunked as dispersedin a myriad of ways over time and space. Thenumber of possibilities is large. Even activitiesthat traditionally have required a physicalpresence, such as product development, cangenerally be reengineered and subdivided toopen up more opportunities. However, asCoulson-Thomas has identified in the COBRAresearch project, few companies have taken intoaccount this teleworking dimension or theopportunity to radically rethink their supplychain in their business process reengineeringinitiatives22.

This move to virtualisation has beendeveloping rapidly over the last few years andhas attracted a corresponding vocabulary.Indicative of this are book titles like The VirtualCorporation23 and Virtual Communities24, bothincidentally highly thought-provoking visionsof the future, but drawing on practices that arealready visible today. Some of the examples ofvirtualisation that are increasingly found are:

• Virtual Products and Services - sold throughelectronic networks e.g. telebanking,telemarketing; significantly reducing costs ofmany activities and creating opportunities toreach distant markets easily. Informationrelated products, such as newsletters andsoftware are now being widely distributedthrough the Internet.

• Virtual Offices and Workplaces25 -teleworkers, working in a locationindependent manner (sometimes at home),and flexible offices (with several desks peremployee); companies adopting teleworksave millions on their office real estate; andgain flexibility for rapid reorganisation.

• Virtual organisations and corporations -working in teams and co-operatively acrosscompany boundaries to create theorganisation needed for specific projects;gaining significant flexibility in the use ofpeople.

This is completely starting to create a new'information geography' different from physicalgeography. As far as software development isconcerned, India and the province of Bangalorein particular is the backroom software


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development office for a significant number ofUS and European organisations. Even theremote island of Mauritius, in the Indian Ocean,is positioning itself as "the informatics businesspark for data downloading and processing". Itsaim is to position itself as the Singapore ofAfrica26. Interestingly it seems to havedifficulty in defining which continent it reallyassociates with - it is geographically off Africa,over 60 per cent of its population are Indian inethnic origin, yet its entrepreneurial drive intoinformation world comes from Asian businesspeople. So it sees itself as "the meeting of the(Western) Cartesian mind and the Asian mind".

Although virtualisation has been availableto large companies with necessary networkinvestments, it is the rapid uptake of theInternet, a network of computer networkswhose use is reported to be more than doublingevery year27 is making much of thisvirtualisation accessible to all. It is global andaffordable. Although the US accounts for morethan 60 per cent of the 12 million hostcomputers connected, the faster rates of growthare in Europe and Asia. Some 40-50 millionpeople in over 140 countries are estimated tohave access to the Internet. Although theinfrastructure provision varies enormously bycountry, in developed countries it coststypically $20 a month or less (not countinglocal telephone call charges) for unlimitedaccess to the Internet.

In the UK, the Department of Trade andIndustry is actively promoting the use ofelectronic networks through its InformationSociety Initiative28. It provides strongarguments in terms of costs savings and accessto markets. However one study showed thatonly 5 per cent of all businesses were usingelectronic mail extensively29. This studysuggested three reasons for this low usagecompared to the US - lack of awareness,particularly by decision makers who mightthemselves not be intensive users of thetechnology, the capital cost (investment inhardware, software and more importantlytraining); the lack of critical mass in certainsectors. In other words there are insufficientmembers in a given business network

connected such that parallel conventionalprocedures are also needed.

For those that have taken the plunge, thebusiness benefits are very visible. Thus eventhe smallest organisations can participate and agrowing number of home users and consumersopen up new marketing possibilities for all.Some examples are:

• An international yacht broker whose businesshas significantly increased through use of theInternet • An Australian software companywho now selling its software world-widewithout incurring the costs of overseas agents

• A musician's database that helps to givemusicians access to opportunities notpreviously available to them cost effectively

• Virtual viewing of houses for home seekerscurrently located in other countries

• Sun Computer corporation who estimates itsaves several million dollars annually byproviding support to its customers through theInternet rather than via the previous preferredmethod of telephone

• The development of Yahoo into a world-widecorporate directory of Internet resources,started by two students at Stanford University.

The ways in which the Internet is helpingbusiness are through reduced costs, access towider markets (beyond the locality, treating theworld as a potential market), and new businessnetwork configurations. The latter applies toboth fixed and fluid networks. Thus, it becomescost effective to have suppliers who are outsideones normal supplier locality. For instance, Iuse a disabled person who lives 200 kilometresaway to do computer work for me, I alsocontract artwork from a design house in Finlandand I work cooperatively on a project with acolleague based in Boston. New opportunitiescome from developing. (virtually) closeworking relationships with those withcomplementary knowledge and skills, whereverthey may be located.

The Internet has generated such a wealth ofnew opportunities, by rethinking space andlooking at virtual business relationships, that todo it justice would be not be possible in this


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short article. For a general overview of thebusiness perspective I refer the reader to DoingBusiness on the Internet by Mary Cronin30. It ishowever worth emphasising here some keyfunctions of the Internet that are helpful toknowledge workers and will be referred to later:

• The World Wide Web (WWW): thiseffectively provides a global database ofinformation, one of whose key features arehypertext links.

• Structured information resources and retrievaltools. The ubiquitous `search engines', such asAlta Vista, that will search the 40 million (andgrowing) pages for keywords or text issupplemented by a growing number ofmeta-sources and directories - structured setsof knowledge resources.

• Discussion lists of newsgroups: around theInternet there are over 30,000 suchnewsgroups or lists to which individuals can`subscribe' and contribute. For manyknowledge workers they are a prime source ofnew knowledge and, more importantly,contacts and pointers to experts.

An important point to make is that onceknowledge is stored on computer andtransmitted over a network it is in effect onlyinformation or explicit knowledge. Manywriters enter debates and draw subtledistinctions between data, information,knowledge and wisdom31. In practicalsituations such distinctions are difficult to draw.One person's information may be anotherperson's knowledge. There is, however,something distinct between tangible codifiedinformation stored in a computer andknowledge that is in a human brain whoseretrieval and use is very dependent on thecontext of the knowledge holder. Therefore, theInternet converts and transmits knowledge fromthe sender, which the receiver may convertback to their frame of knowledge in a differentway.

The different facilities on the Internet offerdifferent levels of support in the knowledgeconversion processes mentioned earlier. Forexample, information stored in structured Webpages has been categorised according to some

persons classification, and their use in a givencontext may be limited. On the other handelectronic conversation, such as throughelectronic mail or the richer exploration oftopics afforded with multiple participants in adiscussion group, are getting closer to aknowledge user's needs. The user can explaintheir context, seek clarification, debate ideas.This is the real power of the Internet towardseffective knowledge networking i.e. not thestorage of codified information, but as a vehicleto enhance person-to-person information andknowledge exchange32.

Although the Internet has been described asthe first example of an informationsuperhighway, today it represents little morethan a rudimentary cart-track. Many Internetusers access it with modes operating at 14,400kbps or 28,800 kbps. Often there are reports ofcongestion, and even blockages33. The hope isthat more universal broadband access e.g. viacable modems will significantly increasethroughput, as well as making tools likevideoconferencing, more interoperable andaccessible.34 Once videoconferencing becomesmore universal then additional elements ofcommunication afforded by voice tone andbody language can add to the richness of theknowledge exchange. What the Internet does dotoday though, is show us the possibilities ofwidespread virtualisation on a global scale, andgives everybody the opportunity to experimentand learn the new skills that will be needed tosucceed in a global networked economy whereknowledge and virtualisation will be keys toprosperity.

Virtual Knowledge Opportunities

These two developments - the wider adoptionof systematic knowledge management practicesand the continual improvement of a globalinfrastructure for information and knowledgeexchange - along with general businessenvironment trends, such as the need for globalcompetitiveness and the increasing demands ofcustomers, are driving the virtualisation andglobalisation of knowledge. What does thisimply in practice? Some of the possibilities are:


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• Sourcing knowledge from wherever andwhenever it is available - globally. Thus around-the-clock support service can beoffered by having experts around the world ontap.

• Seeking business partners through placingrequirement on newsgroups and discussionlists. This is quite a common way of makingconnections for certain projects, especially innew areas where the participants may not bewell known to each other.

• Finding information on knowledge onparticular topics of relevance, whether it bemarket information, product information orgeneral business conditions in a new market.Many people use the Web and discussiongroups for this purpose

• Accessing the best available knowledge tosolve problems. For example, companies likeTeltech35 have a network of experts whosetalents are matched and pooled to solvespecific customer problems.

• Using the Internet as an electronic globalmarketplace of knowledge - outsourcing workto the lowest bidder or best expert. While suchfacilities have not yet been fully developed,there are already electronic auctions (spreadout over a few days) for tangible productssuch as specialist cars.

This shows that supply chains can be globallydistributed and either relatively fixed (anetwork whose participants have already metcertain criteria to belong to the network) orvariable (accessing unknown talent). There areexamples of many of these in practice rightnow. What is clear is that as more peoplebecome connected and large corporations seethe immense potential of gaining access toknowledge on a global scale, many of the wayswe have come to think about providingcustomer service and carrying out businessactivities will be drastically changed.

The essence of knowledge management isgetting the right knowledge at the right place atthe right time. Why go to the effort of gatheringit, structuring it and storing it yourself, in case itis needed? Why not adopt a kaizen strategy -just in time knowledge access - knowing thatout there is some database or someone who has

just the knowledge you need, or that there issomeone you would be comfortable with indeveloping new knowledge for mutualadvantage? The issue, of course, as exemplifiedby the consultancy companies, is determiningwhat knowledge has proprietary value. Ideally,there will develop efficient markets inknowledge objects (both of explicit knowledgeand access to human expertise) which can betraded in a number of ways electronically overthe Internet, just as stock and share anddatabases are traded in proprietary networkstoday.

While these knowledge structuring andmarket mechanisms have not yet been fullydeveloped, the making and nurturing of suitableknowledge connections can be somewhathaphazard. There will also be lurches in thewrong direction. Thus, as established marketplayers enter the electronic arenas, they oftenbring over inappropriate practices from theirestablished paradigm. For example, manycorporate Web pages are full of fancy imagescreated by conventional media agencies thatoffer little useful information to the potentialonline buyer, and are certainly not exploitingthe one-to-one relationship marketing that themedium is capable of supporting.

Another factor to bear in mind is thepersonal preference of many people in that theyneed to "talk eyeball to eyeball" before enteringcertain business arrangements. This is an areawhere Western and Japanese use of the Internetmay contrast. Doing business remotely andelectronically may come more naturally toWesterners than Japanese. That does not meanthat the first connection cannot be madeelectronically. I can recount one personalexperience where a Japanese employee of alarge company saw my Web pages about virtualcorporations36. We had an electronic dialogue,and finally my Japanese contact went out of hisway to meet me personally in London. I have toadmit though, that it was difficult to show himany of my virtual organisations in operation -simply because they are virtual and changingand don't have an office!

Until we develop more fully these new ways


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of working and trading there is much we can doin the meantime to prepare for this likelyeventuality. I suggest below some principlesthat should assist us through the transition.

Principles of Virtual KnowledgeProcessing

The following principles are offered as a guideto equip knowledge workers with the tools andskills they need to take advantage of a world ofvirtual knowledge processing. They areintended as illustrative rather than exhaustive.Although they are written from an individualperspective they can be adapted for teams andfor organisations. In fact the following havebeen developed from my experience in creatingand managing a market intelligence group andthen applying the same principles to my ownmode of working.

1. Develop a knowledge schema. This shouldguide all your collection and storage ofinformation. Your own organisation may havedeveloped a classification mechanism, but yourpersonal interests will focus more on someaspects and less on others. Being inmanagement I based mine initially on theLondon Business School library classificationand mapped my hard copy filing system,personal organiser and computer files on thisschema. I have subsequently refined andevolved it for the sorting of periodical cuttingsetc37.

2. Identify and log meta-knowledge sources.A growing number of organisations make theirmoney by providing directories and `resource'sites on the Internet38. Let them do the siftingand sorting, and the updating for you. But dowithin your schema create a set of useful'bookmarks' or links to these resource sites fromyour World Wide Web browser.

3. Subscribe to a customised informationservice. There are a growing number ofservices that will either electronically email youdaily information or news, provide customisedWeb pages or alert you to new items of interest.These can be expensive services such as MAIDor Individual's FIRST! geared to corporate

subscribers, or lower cost (or free) services onthe Internet (e.g Infoseek Personal).

4. Exploit intelligent agents. A newgeneration of intelligent agents, such asAutonomy, based on artificial intelligencetechniques, will roam autonomously over theInternet searching out information they thinkwill be relevant to you. These agents can be'trained' through indicating the relevance ofitems founds.

5. Identify knowledge meeting points. Theseare the places on the Internet - newsgroups,discussion lists, where people who share aninterest in your domains of knowledgecongregate.39

6. Develop your wider knowledge network.Your personal networks are one of the bestassets you can have in the knowledge age. Trycategorising them according to your schema.You need to be able to focus in quickly on thosemost likely to help. Also take advantage of youremail address book to store for future referencewith a short note those people who may beuseful to know in future.

7. Develop your inner network. These arepeople you really want to develop an ongoingrelationship with, since you will want toexchange knowledge regularly. Seek variety inyour inner network with a good range ofcomplementary skills. Again technology comesto help, since it is possible to maintain a largerinner network through regular emailcommunication than would be possible simplythrough phone or face-to-face.

8. Consider a document management ordatabase system. Computers, like filingcabinets have a tendency to hoard informationwhich you have difficulty in retrieving later.Efficient retrieval depends on properlyclassifying your information (according to yourschema) and have a decent retrieval system.This may be as semi-structured test retrievalsystem such as IdeaList, or a documentmanagement system that indexes a wide rangeof document types such as word processor files.


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9. Publish your thoughts before they arefinal. It is difficult for many knowledgeworkers, brought up on the notions of qualityoutput first time, to consider publishing 'halfdeveloped' ideas in any public forum. Yet this isoften how better thinking and better knowledgecreation and development takes place. If youinvest too much time in a document beforegoing public you are then more closed tocriticism because of the time you have investedin it. An iterative process, where a few ideas arediscussed and the document develops andgrows is a good technique. More people areusing discussion lists in this way. Howevergood use of such groups do need clearconventions about the status of messages anddocuments and the intended action of recipients- techniques and `netiquette'40 not yet welldeveloped in most cases. There is an art tosemi-structured electronic conversations.

The above selection shows a mix ofinformation, process, people and technologyaspects. This 'holistic' view is essential. Astechnology improves, for example by providingmany more facilities for manipulatingknowledge objects (chunks of text, ideas,concepts etc.) in a distributed environment, theleverage of humans working together onprojects on a global basis will expand. It isimportant, however, to explore and experimentwith what there is now, since that will providethe essential skills for the future. It is somethingI have tried to do in my own work as the nextsection illustrates.

Virtual Knowledge in Practice

A good example of the several of theseprinciples in operation comes from a project Iam personally involved in - European TeleworkDevelopment (ETD). ETD is one of over 150projects supported under the EuropeanCommission's ACTS (AdvancedCommunications and TelecommunicationsServices) programme41. This programme, itselfpart of the fourth R&D framework programme,aims to apply developments in communicationstechnologies, such as multimedia, broadbandand satellite communications, cordless office

environments, mobile voice and data telephony,into a wide range of practical applications,These include home shopping, distributedvideo production and collaborativeconstruction projects.

The formation of the ETD consortium wentthrough several phases - all of which used whatwe call `tele-cooperation' - workingcooperatively over electronic networks.

1. The idea for ETD was first discussed usingelectronic mail between people in the UK,Denmark and Belgium; the two mainproposers of the initiative first met throughthe Internet.

2. The main team was enlisted using similarmethods. Thus, people who became knownthrough their positive contributions tocertain discussion groups and CompuServeforums were approached and worked ondeveloping the proposals for six monthsbefore they first met in one placeface-to-face. This core team includes peopleworking in six European countries.

3. The main internal management and co-ordination takes place through acombination of closed email distributionlists, and what is effectively a team Intranetoperated over the public network. All teamdocuments are initially developed in WorldWide Web format for ease of access,compatibility and sharing.

4. The project publishes contact details for itscoordinator in 15 European countries, firstin email, then fax, then phone. A mediaservice is provided through NewsDesk42, aninnovative service for journalists thatdelivers press releases electronically.

5. The project embraces a mix of formaldocumentation, structured databases,bibliographic data, and on-line discussiongroups. We use a wide range of Internetfacilities, such as email, the Web43, listservers and a back-end database engine thatgenerates WWW resource pages on the fly.

In effect the main project team of seven is avirtual corporation, with its own ethos,procedures and computer systems (managedremotely from a location in the West ofEngland). All participants are teleworkers,


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some working exclusively from home, someworking only occasionally from home. Thereare several layers in the network, whichexhibits all the characteristics outlined byLipnack and Stamps44, with ebbs and flows, andnodes and linkages that work at many levels.The core represents the inner layer. Over 30subcontractors and associates represents thenext layer, while outer parts of the network arepeople who connect into us for specificactivities or projects. Although European infocus, the project managers believe that it isonly though participation in global networksand co-operating globally with other similarsites, such as Gil Gordon's TelecommutingWeb site45, and the Institute for DistributedWork in California46, will the full potential ofthese new methods be achieved in Europe.

In working on this project, I havecommissioned work from people operating inseveral different countries. Their ability tocommunicate electronically and perform thework satisfactorily is what defines theirsuitability, not their geographic location. In factI have switched some work from local supplierto an overseas one since the overseas one usesemail and the Web while the local supplier doesnot. ETD is just one of a number of growingexamples that demonstrates how informationand knowledge intensive work can be donevirtually. Some of the things we have learnedthrough our experience in ETD are:

- allow time for relationships to develop andteams to gel; the occasional face-to-facemeeting is an advantage, but with the rightskill at electronic communications, notessential

- develop technical support mechanisms to helppeople with their technical problems; the stateof the Internet, service provision and qualityof software is very variable across Europe(and the world)

- develop 'standards' for communication; theseinclude both technical standards e.g. usingMIME for email attachments, as well astemplates for different document types andWeb pages, and `rules of engagement' (suchas not automatically copying every recipienton an email when replying)

- structure information and messages well;apply the principles of information chunking(such as one topic per message) and use ofschema topics for titles, and status ofinformation (draft, revision number, idea,request for action etc.); good classificationand subject titling also helps the use ofinformation filtering on receipt of emails(fairly essential when over a hundredmessages a day are being received!)

- keep filing away those email contacts ofpeople who conduct themselves well overnetworks; it's an essential skill for virtualknowledge transfer and such people are thosewho will get up to speed quicker when youneed new knowledge.

ConclusionFigure 2 shows a simplified schematic of thetopics covered in this article. Knowledge is theapex of business strategy and is becoming morevirtual and global. Virtualisation is enabled bypeople (knowledge workers) working togethereffectively (tele-cooperating) over electronicnetworks (such as the Internet).

Today, while the Internet and electroniccommunications are growing rapidly, most usehas been for simple electronic mail orinformation retrieval from the World WideWeb. As these technologies evolve theopportunities to enhance various aspects ofknowledge processing, such as documentsharing through desktop conferencing, visualcues through videoconferencing, and ideageneration and sharing through collaboratingon knowledge objects and maps, expands.

The growing corporate interest inknowledge management as a key managementfocus will create new opportunities for thosecompanies who can extend their knowledgebase beyond the company to widerinter-company knowledge networks. All theelements are now coming into place. Today,however, only a minority of companies andindividuals are conversant with the strategicoptions and the profound changes in the natureof work that adopting these strategies entails.As my own experience over the last five years,and more recently on ETD, has shown, we all


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Figure 2 - Outline Schematic Positioning Knowledge

have much to learn and new skills to developfor these to become effective. Furthermore, thepace of new technology and diffusion of newmanagement ideas means that such learningwill never stop if we are to be successful.


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14

Notes and References

1 Examples of conferences include TheKnowledge Imperative Symposium, ArthurAndersen and the American Productivity &Quality Symposium, Houston (September1995) and Leveraging Knowledge forSustainable Advantage, Business Intelligence(March 1996).

2 I'm indebted to Debra M. Amidon for thisphrase - the title of her paper inResearch-Technology Management (May/June1996); also available in several languages onthe World Wide Web athttp://www.entovation.com/momentum/momentum.htm

3 `Knowledge Networking', David J. Skyrme,The Intelligent Enterprise, pp. 9-15 (Nov 1991)

4 Sveiby originally wrote on the topic in 1984in Swedish. English examples include K.E.Sveiby and T. Lloyd, Managing Knowhow,Bloomsbury (1987), now out of print, and morerecently `The Know How Company',International Review of Strategic Management,Karl Erik Sveiby, Vol 3, pp. 167-186 (1992).5 Managing in the Information society, YonejiMasuda, Basil Blackwell (1990), English;translated from the original Japanesepublication, The Information Society as aPost-industrial Society, Institute for theInformation Society, Tokyo (1980)

6 The Ken Awakening: Management Strategiesfor Knowledge Innovation, Debra M. Amidon,Butterworth-Heinemann (1997)

7 'The Coming of the New Organization',Peter F. Drucker, Harvard Business Review,(January-February 1988); Drucker is oftencredited with coining the phrase `knowledgeworker' in the 1950s.

8 The Intelligent Enterprise: A New Paradigmfor a New Era, James B. Quinn, Free Press(1992)

9 'Brainpower', Thomas A. Stewart, Fortune,pp.44-56 (3 June 1991); `Your Company's

Most Valuable Asset: Intellectual Capital',Thomas A. Stewart, Fortune, (3 October 1993)

10 The Knowledge Creating Company, IkujiroNonaka and Hirotaka Takeuchi, OxfordUniversity Press (1995)

11 'The Knowledge-Creating Company',Ikujiro Nonaka, Harvard Business Review,pp.96-104 (November-December 1991)

12 'The Knowledge Creating Company',Knowledge Management 96, BusinessIntelligence Conferences (December 1996)

13 Creating the Knowledge-Based Business,David J. Skyrme and Debra M. Amidon,Business Intelligence (1997)

14 'The Coming of Knowledge-BasedBusiness', Stan Davis and Jim Botkin, HarvardBusiness Review (September-October 1994)

15 Articles appear regularly in Knowledge Inc.,The Fast Company Magazine and the Journalof The Planning Forum.

16 For example, Price Waterhouse havedeveloped a common International BusinessLanguagesm to map business processes from awide range of industries and business functionssuch that global best practice comparisons canbe made.

17 Colin Hastings in The New Organization:Growing the Culture of OrganizationalNetworking, McGraw-Hill (1993) discusses thecontribution of office space design to improvedhuman networking.18 The Corporation of the 1990s, ed. MichaelS. Scott Morton, Oxford University Press(1991)

19 'Management in the 21st Century',Spyros;Makridakis, Long Range Planning, Vol22, No. 2 (1989)

20 Enterprise Networking: Working TogetherApart, Ray Grenier and George Metes, DigitalPress (1992)


15

21 Groupware: Computer Support for BusinessTeams, R. Johansen, Free Press (1998)

22 Business Process Re-engineering: Myth &Reality, Ed. Colin Coulson-Thomas, KoganPage (1995). There is also a short summary in'Re-engineering new patterns of work: Aholistic approach', I&T Magazine, EuropeanCommission, DGXIII (September 1996)

23 The Virtual Corporation, William H.Davidow and Michael S. Malone,HarperBusiness (1992)

24 The Virtual Community: FindingConnection in a Computerized World, HowardRheingold, Minerva Press (1994)

25 A useful taxonomy is provided in 'FlexibleWorking: Building a Lean and ResponsiveOrganization', David J. Skyrme, Long RangePlanning, Vol 27, No. 5, pp.98-110 (1994)

26 'A Tiger is Born off Africa', Business Week(13 Jan 1997)

27 Surveys such as those done by ForresterResearch base figures on numbers of users,although telecomms companies such as MCIreport actual traffic on networks is growing atover 300 per cent annually. A useful set ofstatistics will be found in Òff the Charts: TheInternet 1996', Internet World, pp.45-51(December 1996)

28 The Information Society Initiative,Department of Trade and Industry, London(1996). There are also a series of short guideson `How EDI (mobile telecommunications,email etc.) can work for you'. See also http://www.isi.gov.uk

29 A study by Management TechnologyAssociates for the DTI cited in ISI material andsummarised at http://www.mtanet.co.uk

30 Doing Business on the Internet, Mary J.Cronin, Van Nostrand Rheinhold (1995)

31 See for example Knowledge Management:Foundations, Karl M. Wiig, Schema Press

(1993) who also shows several taxonomies ofdifferent types of knowledge.

32 For an example in the context of marketintelligence gathering see `Global IntelligenceNetworking: technological opportunities andhuman challenges', David J. Skyrme, AGSIJournal, pp.106-113 (November 1995).

33 The most classic case is that of the intensetraffic to download NASA pictures of theShoemaker-Levy comet, which virtuallybrought the Internet on the West Coast ofAmerica for a short period in 1995. The 1996trade press reported stoppages at AOL, Netcomand other providers for particular periods (ofseveral hours to more than a day). See Ìnternet:The Year (1996) in Review', Internet World,(January 1997)

34 Videoconferencing, once hampered bystandards. Even today, though, most expertsreckon it advisable to check each particularone-to-one connection before relying on a fullyworking end-to-end connection (network,hardware and software).

35 Èxperts for Hire', Carol Hildebrand, CIO,pp.32-38 (15 April 1995).

36http://www.skyrme.com/insights/2virtorg.htm

37 For those who collect significant amount ofinformation, an information refining system,based on content analysis techniques of TomCarney and perfected by Trend MonitorInternational could be of value. See `TrendMonitor International', Jan I.C. Wyllie, AGSIJournal, pp. 121-123 (November 1992).

38 A classified set of business researchresources will be found athttp://www.brint.com.. For example, onecategory is on knowledge management andorganisational learning athttp://www.brint.com/OrgLrng.htm

39 A useful `list of lists' will be found at http://www.liszt.com


16

40 Network etiquette.

41 ACTS Programme Guide, EuropeanCommission, DGXIII-B, Brussels (1996). Seealso http:// www.infowin.org (ACTSInformation Window) which maintains projectdescriptions of each project.

42 http://www.newsdesk.com

43 The main Web site is http://www.eto.org.uk

44 The Age of the Network: OrganizingPrinciples for the 21st Century, Jessica Lipnackand Jeffrey Stamps, Oliver Wight Publications(1994)

45 http://www.gilgordon.com

46 http://www.isdw.org

The Author

David Skyrme is a strategic analyst andmanagement consultant with extensiveknowledge and experience of the IT industryand trends in management and computersystems. He runs his own consultancy companythat specialises in knowledge management andcollaborative technologies. Previously he heldvarious management roles in DEC, includingthat of UK Strategic Planning Manager. Hisacademic affiliations include the OxfordInstitute of Information Management atTempleton College, Oxford, a senior researchfellow of the Institute of Innovation, Creativityand Capital at the University of Austin, Texas.He is an Associate of the Gyosei Institute ofManagement Studies (GIMS).


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RETROSPECTIVE 2011

David J. Skyrme

It is over a decade since this paper was first written. At that time that both knowledge management andthe internet were in their ascendancy. Of the internet I wrote "although the internet has been described asthe first example of an information superhighway, today it represents little more than a rudimentarycart-track". Those were the days of transfer speeds of 0.014Mbps rather than the 8Mbps or more oftoday. As I look back over what I wrote then, the ways in which the trend of better connectivity, leadingto globalisation and virtualisation of work and business, have borne fruit in much the way as predicted.Below I summarise the main points that have struck me on re-reading, both in terms of what panned outas expected and what is different today.

Evolution of languageToday when one mentions virtualisation,

one immediately thinks of it in technologyterms, the use of computers acting as virtualmachines. In contrast, the virtualisation ofbusiness referred to in this paper is more oftensimply referred to as 'online'. Likewise termslike telebanking and telemedicine are nowreferred to simply as online banking and onlinemedicine.

It is in the area of technology that new termsare often applied to older concepts, perhaps inpart to alert people that technology is alwayschanging. Thus (terms not used in this paper)PDAs (personal data assistants) are now knownas smartphones, and computer bureaus as SaaS(software as a service). And how much longerwill these terms survive!

Interestingly, the terminology of knowledgemanagement remains virtually (did I mean touse that word!) unchanged. In this paper, onlythe term 'knowledge centre' is probably notwidely used today, though you will find a lot of'knowledge bases'.

What has changed?As noted above the notion of a knowledge

centre, an enhanced library, is not usually at theforefront of a KM programme. Just as todaymost of us never visit a physical library butbrowse online, so you will find a portal orintranet as a key part of most knowledgeinitiatives.

In the section 'principles of virtualknowledge processing' I suggested exploitingintelligent agents. These has turned out not tobe as prevalent as anticipated. I suspect thatalthough the technology is not as good as itshould be, that the main reason is that people dolike to have a high degree of control over whatthey do at their computer screen. Also untimelypop-ups such as "hey did you know that this is abetter document" is annoying. However, we areseeing some amount of intelligence and'presence awareness' in everyday computing,such as the Google's targeted ads based on yoursearch, and "the following contacts of yours arealso online" in various email and socialnetworking programmes.

Again, it is in the field of technology wheresome of the names have disappeared. Thesearch engine AltaVista (from my old AlmaMater DEC - Digital Equipement Corporation)has all but disappeared (it hangs in there, just,but not for long). And Google, which we oftenthink has been our companion since eternity,was still over a year away from being launched.Other services such as MAID and FIRST!were absorbed into larger organisations.

Overall, other than minor updating, it is thissection of principles that I would rewrite. Afterall, most of us are familiar with 'tagging' thesedays, but knowledge schemas may still be a bitesoteric!


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What's the sameThe most remarkable thing to me, and the

reason that I have spent time unearthing andreformatting this paper from its early MS Wordoriginal, is how consistent many of the themesand approaches are with today's practice. Yes,technology has continued to evolve, as hasknowledge management and online working,but the trends were well established by themid-1990s.

Take for example, the MIT's landmark studyManagement in the 1900s published in199118.It took a long-term view of the progressof technology and how it would affect the waywe all do business. The main themes of thispaper - the knowledge economy, globalisationand virtualisation (or rather online working!)are all made possible by greater and betterconnectivity. As noted earlier connectivity in1997 meant an internal local area network, towhich not every professional employee wasconnected, and a slow speed internet1, whereweb pages with images were frowned uponsince they slowed down access to textualinformation.

Today, we are connected fast and fromeverywhere and from a whole range of devices,including those PDAs, or rather smartphones(Blackberry's, iPhones and the like).

Another point made in the MIT study, andcovered in the paper, though perhaps not asmuch as it should have been, is the importanceof the human and organisational dimension invirtual practices - the bottom apex of thetriangle in Figure 2.

But taken as a whole, we note that most ofthe points in this paper stand us in good steadtoday, for example:

The momentum of knowledgemanagement continues - since 1997 it ismore pervasive, being applied in most

1 The 'internet' has gradually been losing itscapitalisation "Internet" since about 2002, initiallyoutside the USA. Even CNN eventually dropped thecapital I in 2010.

business functions and more widely aroundthe world, most notably in recent years inIndia and Asia.

The role of knowledge is unchanged. Thereare many more case examples reflecting theexperiences of the examples cited.

Knowledge management in practice todayuses most of the techniques listed, such asthe knowledge audit, but now adds morebesides - storytelling being a more recentexample.

Online businesses and working, the topicsin the section on 'virtualisation', is now moreprevalent but follows the approaches used inthe main paper.

Virtual knowledge opportunities are asplentiful as ever. There is no shortage ofinnovation in the market place.

Much of what was written was thinking aboutconventional and new businesses moving ontothe internet. There are perhaps two areas of'virtualisation' that were overlooked or notforeseen. The first of these is the growth ofonline gaming and the development of virtualonline communities / virtual worlds such asSecond Life. The second is the growth of socialnetworking, not just in the social spherethrough services like Facebook, but the moreprofessionally oriented services such asLinkedIn.

What this latter point reminds us of, and shouldhave perhaps been given more emphasis in thepaper, is the importance of the humandimension in every aspects of business and inparticular, the development of technologies thatserve a useful purpose. And as was noted onpage 8, the importance of "talking eyeball toeyeball" should not be under-estimated.

David J SkyrmeHighclereApril 2011

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