People-focused knowledge management

The Importance of Information Technology
During the last decade, the perception was often that technology
was central to success. However, the business world is increasingly
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The Effective Enterprise
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realizing that the effectiveness of enterprises rests upon people. It is
people’s personal knowledge and IC assets — their expertise and
motivation to be engaged in work — that are the distinguishing
factors for success. Clearly, management and operational practices,
financial assets, and physical assets such as production machinery,
plants, distribution systems, and other capabilities are also important
and necessary. Information technology (IT) and related technologies
are significant, but secondary factors. They serve mostly as passive
infrastructure and are not as central for competitive superiority as it
was generally thought in the 1990s. This may change if IT becomes
smarter and more sophisticated. Then IT will take on more active
tasks, thus liberating people to pursue more complex challenges.
However, making really smart systems outside the laboratory has
proven more difficult than anticipated, and we can expect decades,
possibly centuries, of development.
Productivity Is Not Always What We Expect!
Enterprise competitiveness is in part determined by its productiv-
ity — by its ability to bring added value to customers through prod-
ucts and services. Productivity is highly dependent on how smartly
and effectively operations and interactions are performed and on how
time and other resources are utilized to create and deliver high-
quality results. Productivity is primarily a function of the application
of available know-how — the understanding of what to do in every
normal and expected situation and how to do it, as well as the com-
petence required to handle more complex and novel situations.
Know-how includes the effectiveness of work process arrangements,
sophistication of work-related artifacts and technology, and work
and operating practices (Sveiby & Lloyd 1987).
Most common measures of productivity are traditional perfor-
mance measures for physical production systems. Productivity may
be biased toward production of physical goods and delivery of
revenue-bearing services when defined as a ratio of output divided
by input. These metrics don’t take into account key aspects of orga-
nizational performance, such as competitive differentiation, market
share, completion of services and products on schedule, quality of
services and products, or how well they fit with national goals. In
addition, productivity gains typically are achieved with the support
of other resource-consuming factors such as monetary capital and
natural resources (Sardina & Vrat 1987). Knowledge work, because
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People-Focused Knowledge Management
of its complex nature and the difficulties of isolating what the precise
consequence of knowledge contributions is, has historically been
excluded from productivity evaluation but has now become central
in the knowledge era.