Kai Mertins, Peter Heisig, Jens Vorbeck (Editors)
Springer - Verlag, Berlin (2001)

Introduction

Knowledge Management - Best Practices in Europe is a result of a large-scale empirical study undertaken to map the knowledge management practices of 1000 largest German and 200 largest European companies. The study was designed and conducted by the academic staff of "Competence Center Knowledge Management" based at Fraunhofer IPK (Production Systems and Design Technology Institute). The findings of the study were published as a book that documents the recent (3-5 years) knowledge management processes of the most prominent organizations across all business sectors across Europe creating a best practice framework for large organizations in knowledge management field.

Due to the highly scientific execution of the study that was based on the internationally recognized business process classification of the American Productivity and Quality Center (APQC), it required a theoretical approach, a knowledge management process model, as the guiding principle to the study. Without going into detail on the research design and methodology, it is important to note that the Fraunhofer IPK model and the study focused on the businesses' value crating processes and the model reflects the actual behavior of the businesses studied.

Fraunhofer IPK models knowledge management as an organizational core process that is supported by organizational, motivational and technical aspects. The "Core Process and Design Fields of Knowledge Management" model is depicted in the figure below.

In the model, the core process of knowledge management is broken down to core activities which are: Creation of New Knowledge; Knowledge Storage; Knowledge Distribution; and Knowledge Application supported by the definition of knowledge goals and the identification of knowledge in all areas and levels the organization. Knowledge support fields that include business processes, information systems, leadership, corporate culture, human resource management, and knowledge control/measurement activities influence the quality of the core knowledge management stages. These support fields can be considered as the general organizational design and development areas that ensure that knowledge creation and application is aligned with the overall corporate strategy and that the organization's culture, systems capability, human resource policies and qualitative and quantitative performance measurement indicators and systems reflect the importance of knowledge in the organizational value creation and the basis of sustainable competitive advantage.

A short definition of each of the core knowledge activities is given below and one will note that the Fraunhofer model closely resembles the general dynamic theory of knowledge creation first published by Nonaka and Takeuchi in 1997.

The Core Process of Knowledge Management

Creation of New Knowledge
Measures and instruments that promote the creation of knowledge including the acquisition of external knowledge (mergers, consultants, recruitment and patent acquisition), output from interdisciplinary project teams that include organization's customers, and the application of learning and methods to elicit tacit knowledge.

Knowledge Storage
This is knowledge that is stored in formalized knowledge repositories such as manuals, databases, case studies, reports, and knowledge that is stored either in explicit or tacit form in the minds of the employees and other stakeholders.

Knowledge Distribution
Provision of the right knowledge to the right person at the right time is the key aim of this core task. The methods and tools to accomplish this task are dominated by information technology applications such as the Internet and Intranet. However, these IT based tools only provide added value if trust and mutual understanding permeate the atmosphere across the organization. The development of common knowledge management language is also consider as a vital task. Other aspects of knowledge distribution are the transfer of experiences to new employees by training-on-the job, mentoring, and coaching.

Knowledge Application
According to the Fraunhofer survey, the application of knowledge is the most essential task of knowledge management. Knowledge management mainly provides methods to overcome the barriers of one-sided thinking rooted in existing organizational practices and paradigms.

Survey Results

The survey questions were organized in three categories: general understanding and status of knowledge management activities in the whole company; status of knowledge management activities in the business process the company considered as their best practice; and the demographic data about the company. It is not feasible to cover all survey outcomes in this short review but it is interesting to note that there were clear differences in the knowledge management approaches and orientation between service and industrial firms.

The results showed, that overall, knowledge management was understood neither as a technological term nor as an intangible asset. It was understood as a part of corporate culture and as a corporate approach. Knowledge management was considered to be the sum of procedures that determined the generation, storage, distribution, and application of knowledge to achieve organizational goals. In the service organizations, knowledge management was understood primarily (65% of respondents) as corporate culture. On the other hand, the majority of industrial firms interviewed (50%) considered knowledge management to be a corporate approach where it was understood to be the sum of procedures that serves to create, evaluate, distribute, and apply knowledge in order to attain predefined goals. Only 14% and 6% of respondents understood knowledge management as a technical term or an immaterial asset respectively.

Most interestingly the study confirmed that knowledge management offers great potential for savings and improvements. Over 70% of the companies surveyed reported noticeable improvements through knowledge management. Almost 50% of the companies who reported improvements saved time and money, or improved productivity. Around 20% of these companies either improved their processes, significantly clarified their structures and processes, increased level of customer satisfaction, or facilitated decisions and forecasts through the use of knowledge management.

However, there were differences between the reported benefits gained by service and industrial organizations. 28% of the service firms indicated an improvement in customer satisfaction levels compared with only 16% of industrial companies. On the other hand, industrial companies stressed improvements in quality with 23%, while only 15% of service firms noted qualitative improvements. Furthermore, answers to questions about the clarity of structures and processes showed yet another difference between service and industrial organizations. 26% of service organizations indicated process and structural improvements as opposed to only 14% in industrial firms. This may be a result of the differences in knowledge management focus between industrial and service organizations as approximately 40% of service firms started knowledge management with information management, while this was the case with only 25% of industrial companies. In the industrial sector, the greatest focus of knowledge management was initially the development of products and services. This was the case with only a third of the service companies.

The research outcomes presented in the book are supported by best practice case studies of European companies that validate the Fraunhofer knowledge management model. Based on the survey results that reveal the key business processes, most of the best practice case studies are concerned with core knowledge management benefits of "development of new products and services" and "understanding of markets and customers." The case studies make interesting reading and the main contribution of the research and the book is to show in quantifiable terms how to integrate knowledge management activities into the daily business tasks and processes. The book is targeted at practitioners, specialists, and managers who are looking to compare and contrast their own existing knowledge management initiatives against the Fraunhofer best practice companies. However, due to the style and tone of the book as a platform for research dissemination, I do not recommend this book for readers who are new to the knowledge management field, or for those who are looking for a more 'hands-on' guidance on knowledge management implementation.