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Article Excerpt
Abstract
We adopt a systems perspective to explore the challenges that organizations face in harnessing knowledge. Such a perspective draws attention to mutually causal processes that have the potential to generate both vicious and virtuous circles. Based on a longitudinal study at Infosys Technologies, we conclude that knowledge management involves more than just the sponsorship of initiatives at and across different organizational levels. It also involves an active process of steering around and out of vicious circles that will inevitably emerge.
Keywords: Knowledge management, increasing returns, systems dynamics, vicious circles
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Introduction
Knowledge is an important organizational resource (Penrose 1995; Winter 1987). Unlike other inert organizational resources, the application of existing knowledge has the potential to generate new knowledge (Leonard 1998; Zuboff 1984). Not only can knowledge be replenished in use (Giddens 1986; Schon 1983), it can also be combined and recombined to generate new knowledge (Garud and Nayyar 1994; Grant 1996a; Hargadon 2003; Kogut and Zander 1992; Okhuyzen and Eisenhardt 2002). Once created, knowledge can be articulated, shared, stored and recontextualized to yield options for the future (Sambamurthy et al. 2003). For all of these reasons, knowledge has the potential to be applied across time and space to yield increasing returns (Fortune 1991; Shapiro and Varian 1999).
Harnessing knowledge for increasing returns, however, is not an easy task. Leidner (2000), for instance, pointed out that many knowledge management initiatives have yet to yield significant organizational improvements. Others have written about "knowledge management as a double edged sword" (Schultze and Leidner 2002), the "deadliest sins of knowledge management" (Fahey and Prusak 1998) and "knowledge traps" (Soo et al. 2002). Some have documented unsuccessful knowledge management efforts, concluding that managing knowledge is not easy (Nidumolu et al. 2001).
These difficulties arise because knowledge processes have to be managed at and across different organizational levels (Nonaka and Takeuchi 1995). At each level, there are forces at work that can easily stifle the generation of new knowledge (March 1991). Across levels, the coupling of different knowledge processes can give rise to unanticipated negative consequences (Senge 1990).
Over time, processes that yield such negative outcomes can degenerate into vicious circles (Masuch 1985). Vicious circles arise when mutually causal processes feed back into one another to lock a system into a mode of operation that yields progressively negative outcomes (Maruyama 1963; Masuch 1985; Senge 1990; Weick 1969). In contrast, virtuous circles are those that yield increasing returns. The challenge for an organization is to harness its knowledge processes to generate a virtuous circle of increasing returns despite the ever existing potential for vicious circles to emerge.
We adopt a systems perspective (Maruyama 1963; Masuch 1985; Perrow 1984; Senge 1990; Weick 1969) to gain an understanding of the micro-processes that give rise to this challenge. Such a perspective conceptualizes knowledge processes unfolding at and across different organizational levels as a system. It also draws attention to the mutually causal processes constituting the organization's knowledge system.
We apply this perspective to a longitudinal study of knowledge initiatives at Infosys Technologies, a company acknowledged globally for its knowledge management practices. We explore how Infosys attempted to couple knowledge processes at and across the individual, group, and collective organizational levels. We find that the very initiatives undertaken to harness an organization's knowledge system by generating a virtuous circle of knowledge accumulation, reuse, and renewal can just as easily generate vicious circles. Based on these findings, we suggest that knowledge managers must employ process interventions to steer an organization's knowledge system around or out of the vicious circles that are bound to arise.
Organizing for Knowledge
Organizing is a knowledge intensive activity. It involves all of the resources that an organization possesses: its employees and the patterns of interactions among them, its knowledge repositories, and its rules and routines that provide cohesion. In other words, knowledge management issues pervade an organization's people, structures, systems, and processes (Govindarajan and Gupta 2001; Grant 1996b; Hutchins 1995; Subramaniam and Youndt 2004).
Much research has focused on knowledge processes and techniques with the potential to yield increasing returns. Consider, for instance, Nonaka and Takeuchi's (1995) knowledge spiral. The knowledge spiral is based on employee interactions which result in repeated conversions of knowledge between its tacit and explicit forms. As such interactions and conversions occur, knowledge spirals up from the individual to the collective levels of the organization, thereby generating a virtuous circle.
In drawing attention to interactions at and across different levels of an organization, the knowledge spiral sensitizes us to a need to manage knowledge processes within an organization as a system (Spender 1996). A system is a set of relationships among constituent variables, and the fate of the system is determined not by any single relationship, but by an overall pattern. This is because system variables are coupled by mutually causal relationships (2) that have the potential to generate complex nonlinear dynamics (Maruyama 1963; Weick 1969). Indeed, as Nonaka and Takeuchi concluded, "the actual process by which organizational knowledge creation takes place is nonlinear and interactive" and "knowledge creation is a never-ending, interactive process" (p. 225).
Senge (1990) pointed out that mutually causal processes, which constitute a system, have to be maintained in a dynamic balance between forces that provide continuity and those that bring about change (see also Jelinek and Schoonhoven 1990). Such a balance must be maintained at and across organizational levels, and a failure to do so can easily generate negative consequences. Often, these negative consequences are manifest only after a time lag, thereby resulting in interventions that compound problems instead of mitigating them.
Employing a systems perspective as an interpretive frame, we provide a summary review of the vast and growing literature on knowledge management. In our review, we focus on opposing forces that arise at and across different organizational levels (see Figure 1 for a summary). Such an approach facilitates a deeper understanding of the processes that render the management of knowledge a rewarding yet challenging task.
Dynamics at Each Organizational Level
Individual level dynamics. Employees play a critical role in generating and applying knowledge within organizations. As "men on the spot" (Hayek 1945), they deal with emergent situations in meaningful, contextualized ways without relying on instructions from above (Markus et al. 2002; Tsoukas 1996). In deploying available knowledge to address emergent situations, these employees have the potential to generate new knowledge. Such "exploration" through "exploitation" (March 1991) can happen to the extent that employees have the capacity to reflect-in-action. As Schon (1983, p. 68) noted,
When someone reflects-in-action, he becomes a researcher in the practice context. He is not dependent on the categories of established theory and technique, but constructs a new theory of the unique case. Because his experimenting is a kind of action, implementation is built into his inquiry.
Yet, opposing forces may drive out such reflection. Specifically, employees accumulate and refine the knowledge required to deal with their contexts through a process of learning-by-doing (Argote 1999; Arrow 1962; Dutton and Thomas 1985). Although learning-by-doing can generate expertise in a specific area, it can also lead to a "competency trap" (Levitt and March 1988). This is because learning-by-doing is a path dependent process (David 1985). Consequently, in the very act of refining existing knowledge within a taken-for-granted framework, employees may forgo opportunities to renew and expand their knowledge tool kit (Swidler 1986). Moreover, as habituation sets in through learning-by-doing, an employee's very capacity to reflect-in-action may be compromised.
In sum, learning-by-doing can be at odds with reflection-in-action. Whereas learning-by-doing represents single-loop learning, reflection-in-action represents double-loop learning (Argyris and Schon 1978). The balance that an organization strikes between these two types of learning can have an important bearing on whether or not it can harness its knowledge system to yield a virtuous knowledge circle.
Group level dynamics. A dynamic balance also needs to be maintained between the continuity that an epistemic community offers and the impetus for change that connections across epistemic communities can provide. To appreciate the need for this balance, consider two key perspectives on group knowledge. A "community of practice" perspective (Brown and Duguid 1991; Lave and Wenger 1994; Orlikowski 2002; Orr 1990) draws attention to shared identities and beliefs among a community of practitioners with a common "thought world" (Dougherty 1992). As Lave and Wenger (1994, p. 98) pointed out,
[FIGURE 1 OMITTED]
[A] community of practice is an intrinsic condition for the existence of knowledge, not least because it provides the interpretive support necessary for making sense of its heritage. Thus participation in the cultural practice in which any knowledge exists is an epistemological principle of learning.
Group cognition is also constituted by the set of connections established between members of a work group. Within a work group, group cognition is constituted by the strength of the ties between members with different epistemological leanings (Garud and Kotha 1994; Sandelands and Stablein 1987; Weick and Roberts 1993). Because work group members have different epistemologies, it is possible for the work group to "respond as a complete system to meet situational demands even though the complexity of the task is beyond the cognitive capabilities of individual team members" (Faraj and Sproull 2000, p. 1556). Such a response is possible to the extent that unproductive conflict is minimized by carefully shaping interdependencies among group members with different epistemologies (Raghuram et al. 2001).
Organizations attempt to reconcile knowledge generated within epistemic communities with that generated by workgroups (Levina 2002). In many dynamic systems, we may observe a duality over time, with epistemic communities driving work group connections and vice versa. In some instances, however, knowledge derived through connections within workgroups may diverge from knowledge generated within epistemic communities. (3) How an organization addresses this divergence between these two bases of knowledge has an important bearing on its ability to generate and sustain a virtuous knowledge circle.
Collective level dynamics. The mindful application of knowledge by individuals and structural arrangements within work groups clearly shape behavior and learning within organizations. Yet, as March and Simon (1993, p. 8) highlighted, the "retrieval of experiences preserved in an organization's files or individuals' memories" is also important. Indeed, an organization can enhance the benefits accruing from knowledge processes unfolding at and across various levels if a repository exists for stocking knowledge flows.
Here, the metaphor of organizations as knowledge repositories (Walsh and Ungson 1991) comes to mind. Such a metaphor has become all the more important as information technologies enable the creation of digital assets and options (Markus 2001; Miller 2002; Sambamurthy et al. 2003). In this regard, corporate intranets and knowledge portals serve as digital repositories within which codified organizational knowledge accumulates. It is far easier for employees to retrieve and reuse knowledge from today's digital repositories than from the memory banks of yesteryear. Such ease of use enhances the options value of digital repositories (Miller 2002; Sambamurthy et al. 2003).
Despite these benefits, digital repositories can create information overload (Brown and Duguid 2002; Davenport and Prusak 1998). It has become all too easy to accumulate knowledge in digitized form. However, after a point, search and recontextualization costs outweigh the potential benefits from reusing the knowledge. Categorization of digitized knowledge in repositories may mitigate this problem of information overload (Bowker and Star 2000); however, categorization schemes themselves can create other problems. Specifically, as "layers of technology accrue and expand over space and time," these technology infrastructures inherit "the inertia of the installed base of systems that have come before" (Bowker and Star 2000, p. 33). Consequently, users' requirements may remain unmet (Markus 2001), thereby reducing knowledge reuse and the potential for a virtuous knowledge circle to emerge.
Interactive Dynamics Across Levels
Managing opposing forces at each organizational level is a difficult enough task (Alavi and Leidner 2001). To complicate matters, as Grover and Davenport (2001, p. 8) pointed out, knowledge processes are "recursive, expanding, and often discontinuous. Many cycles of generation, codification, and transfer are concurrently occurring in businesses." Therefore, coupling these knowledge processes, which are unfolding across levels to generate a virtuous circle, may give rise to new challenges.
To illustrate these challenges, we consider several initiatives that organizations undertake to couple knowledge processes within and across...
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