Knowledge Management as a Strategic Choice
Firm’s knowledge management (KM) process and tools must be aligned to its competitive strategy: it depends on the way the company serves its clients, how it creates value and the people it hires. Choosing the wrong strategy can quickly undermine firms’ businesses.
According to Hansen et. al. (1999), companies can choose between a codification strategy and a personalization strategy. The first centers on the computer: knowledge is codified and stored in databases, where it can be easily accessed and used by anyone in the company. The latter motivates people to share knowledge mainly through direct contacts with others. Computers are used only to help people disseminate knowledge, not store it.
The choice between codification and personalization strategies determines how companies will generate value exploring economies of scale. The codification strategy pursues increases in efficiency and costs reductions through knowledge reutilization economies (supply-side economies of scale). Personalization focuses on enhancing the quality of the products/services offered by the firm, through the creation of newer and deeper knowledge. Network externalities (demand-side economies of scale) are generated as better products/services leads to new levels of client’s satisfaction.
As Ofek & Sarvary (2001: 1443) poses: “…the focus firms place on each form of increasing returns directly affects their competitive standing”. A deeper understanding of KM strategies and their impact on firm’s value creation can be harvested in the articles that follow:
HANSEN, M.T., Nohria, N. and Tierney, T. What’s Your Strategy for Managing Knowledge? Harvard Business Review, p. 106-116, March-April 1999.
OFEK, E. and Sarvary, M. Leveraging the Customer Base: Creating Competitive Advantage Through Knowledge Management. Management Science, vol. 47, no. 11, p. 1441-1456, November 2001.
According to Hansen et. al. (1999), companies can choose between a codification strategy and a personalization strategy. The first centers on the computer: knowledge is codified and stored in databases, where it can be easily accessed and used by anyone in the company. The latter motivates people to share knowledge mainly through direct contacts with others. Computers are used only to help people disseminate knowledge, not store it.
The choice between codification and personalization strategies determines how companies will generate value exploring economies of scale. The codification strategy pursues increases in efficiency and costs reductions through knowledge reutilization economies (supply-side economies of scale). Personalization focuses on enhancing the quality of the products/services offered by the firm, through the creation of newer and deeper knowledge. Network externalities (demand-side economies of scale) are generated as better products/services leads to new levels of client’s satisfaction.
As Ofek & Sarvary (2001: 1443) poses: “…the focus firms place on each form of increasing returns directly affects their competitive standing”. A deeper understanding of KM strategies and their impact on firm’s value creation can be harvested in the articles that follow:
HANSEN, M.T., Nohria, N. and Tierney, T. What’s Your Strategy for Managing Knowledge? Harvard Business Review, p. 106-116, March-April 1999.
OFEK, E. and Sarvary, M. Leveraging the Customer Base: Creating Competitive Advantage Through Knowledge Management. Management Science, vol. 47, no. 11, p. 1441-1456, November 2001.
posted by João Marcelo Alves at 10:04 PM
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