Knowledge Sharing Cultures: A competitive advantage that can't be copied

"A company's value is not based on it physical assets such as plant, equipment, and machinery. Rather, it is based on knowledge, know how and intellectual assets – all embedded in people." (Dess & Lumpkin, 2002)

 

"Can knowledge sharing culture be a resource that provides a firm with a competitive advantage?"

 

Organisations are becoming increasingly aware of the importance of knowledge.

Specifically, the capacity to create knowledge-sharing environments, which become 'the way we do things around here' (aka 'culture') is emerging more and more as a source of competitive advantage that cannot be copied.

This discussion paper contends that knowledge sharing culture is a capability that provides the firm with a competitive advantage and that the intangible resources (1) of the firm, which includes the people within the organisation, are directly tied to the firm's ability to create, and then sustain, competitive advantage.

In this paper I will first discuss what organisational knowledge is, why it is important then some considerations as to how it may be applied as a resource that can secure knowledge sharing culture as a competitive advantage.

In times of turbulent and unpredictable change, companies that can profitably evolve with continually changing circumstances (Welch, 2001, p. 448) will have the advantage over their competition. Having the right organizational knowledge can provide this advantage because it is a corporate asset that grows over time, becomes 'the way we do things around here', enhances diversification within the firm and cannot be imitated.

What is organisational knowledge?

Organisational knowledge is collective knowledge held by individuals within the firm. Grant (2005, P. 139) posits that individual knowledge is a human resource that makes up the capabilities of the firm (2). At the end of the day, competitive advantage goes to the firm who can build products that a market is prepared to pay for faster than the competition (Prahalad & Hamel 1990, p. 81). A firm's core competencies are made up of its resources and capabilities and it is the application of these that will ultimately decide how well it can add value in the eyes of its customers thus determining its competitive position within its industry.

Why is organisational knowledge important?

Developing organisational knowledge is important to the firm for a range of reasons.

Being able to diversify and adjust to changing circumstances quickly is one reason; another reason is that intellectual capital is so difficult to imitate (Teece, 1998, p. 57; Barney 1995, p. 60; Senge, 1994, p. 11 and Dess & Lumpkin, 2002, p. 84) because it is made up of both explicit and implicit, or tacit, knowledge.

Tacit knowledge being the part of knowledge that we know but cannot tell (Polanyi, 1967, p.4). The fact that tacit knowledge is so hard to communicate is one of the reasons why organisational knowledge is such a benefit and corporate asset when systems and procedures work well within the firm because it cannot be imitated. Leading organisations believe they can 'get close' to capturing tacit knowledge cost effectively through the use of video which also captures body movements and verbal expressions that would be difficult to capture in a document.

Organisational knowledge is now recognised as a major feature in any firm's attempt to secure 'sustainable' competitive advantage and therefore warrants continued allocation of resources in time and money to develop. Senge (1994, p11) supports this argument by contributing that in the long run, competitive advantage will be sustainable by the firm who can learn faster than its competition. It follows that the better a firm is able to take advantage of its organisational knowledge and perform its tasks, the harder it will be for a rival to match its interlocked activities (Porter, 1996, p. 73).

How can knowledge-sharing culture as a resource secure competitive advantage?

A well functioning knowledge sharing culture means the environment is right for organizational knowledge that is used to 'get the job done' flows more consciously and intentionally and is able to not only sustain the organisation's 'how we did', and more importantly 'how to' next time, but to also render it more adept at adjusting to change, including unexpected employee departures, rapid learning for new-starts and profit enhancing innovation at the coal-face.

Securing knowledge sharing culture as a competitive advantage means appropriately aligning the knowledge held by individuals within the firm and arranging things so 'the way we do things around here' - when it comes to sharing knowledge - aligns with the firm's strategic intent whenever a new project (which always requires good team knowledge) is started.

According to Snowden (2005, p. 10) and Welch (2001, p. 448) ensuring that the starting conditions are right whenever a new project is started is critical when it comes to ensuring organisational knowledge will improve the company's competitive position. A well-functioning knowledge sharing culture means organizational knowledge needed 'to get the job done' cost effectively is always more readily at hand. More importantly though, a well functioning knowledge sharing culture gives the organsiation the capacity to create its own knowledge in a manner that is used and useful to those doing the work.

Recognising it is the material change that counts (Polanyi, 1958, p. 175), a well-functioning knowledge sharing culture means manager's can relax in the knowledge that increasingly standard approaches exist, that workers are happy to go along with, to create and transfer the knowledge needed to get the next job done.

At the end of the day, business leaders are looking for competitive advantage by increasing their successful strategies and actions, which result in increased stakeholder value. Having a well-functioning knowledge sharing culture in place delivers an organization that is more confident that it's knowledge creating capability can be usefully applied in a scalable way. This also generates an environment where senior management can strategise more creatively because they have more options to work with.

This leads to a firm that can become more innovative, which is the ultimate goal of any effective and properly functioning organisation. This does suggest that to take full advantage of what organisational knowledge and knowledge sharing culture has to offer, management often needs to reconsider how it views human resources.

For instance, departments would do well to move away from 'competing for money', a practice many view as 'sadly outdated' (Schemmerhorn et. al., 2004, p. 105), and to move towards 'competing for people' (Prahalad & Hamel, 1990, p. 87). Either way, to be able to recognise the contribution a resource like knowledge sharing culture can make, incoming managers need to be aware of the value it plays in overall organization performance which is best done by staying informed (Schemmerhorn et. al., 2004, p. 110) so as to avoid what DeTienne (2004, p. 26) refers to as failures arising from "misguided approaches and hurried excitement" - a view also shared by Collins (2001).

In conclusion, this discussion paper posits that knowledge-sharing culture is a resource that provides a firm with a competitive advantage because it is a corporate asset that grows over time, becomes 'the way we do things around here', enhances diversification within the firm and cannot be imitated.

 

References

Argyris, C. and Schön, D.A. (1996). Organizational Learning II: Theory Method & Practice. (Reading, MA: Addison-Wesley). Collins, J (2001) Good to Great (Boston: Harper Collins) Dess, G.G., & Lumpkin, G.T. (2002) Strategic Management: Creating Competitive Advantages. McGraw-Hill Irwin: Boston. DeTienne, B., et al. (2004) Toward a Model of Effective Knowledge Management and Directions for Future Research: Culture, Leadership, and CKOs, Journal of Leadership and Organizational Studies, Vol. 10 (4). Grant, R.M (2005), Contemporary Strategy Analysis, Fifth Edition, Blackwell: Malden USA. Nevis, E.C., DiBella, A.J. and Gould, J.M. (2000). Understanding organizations as learning systems, in R.L. Cross and S.B. Israelit (2000) (eds) Strategic Learning in a Knowledge Economy: Individual, Collective and Organizational Learning Process. (Boston: Butterworth-Heinemann), pp. 91-119. Polanyi, Michael (1958) Personal Knowledge: Towards a Post-Critical Philosophy, London :Routledge & Kegan Paul Polanyi, Michael (1967) The Tacit Dimension. London, Routledge & K. Paul. Porter, M.E. (1996) 'What is strategy?' Harvard Business Review, November-December, pp.61-78. Prahalad, C. & Hamel, G. (1990) 'The Core Competence Of The Corporation', Harvard Business Review, May-June, pp.79-91. Schermerhorn, Campling, Poole and Wiesner. (2004). Management: An Asia-Pacific Perspective, Chapter 4 Senge, P. et. al. (1994), The Fifth Discipline Field Book: Strategies And Tools For Building A Learning Organization. London : Nicholas Brealey, 1994. Snowden, D (2005) Multi-ontology sense making a new simplicity in decision making. Management Today, Yearbook 2005, Vol 20. Teece, D. (1998) 'Capturing Value From Knowledge Assets: The new economy, markets for know-how, and intangible assets', California Management Review, 40 (3), 55-79. Welch, J (2001) Jack Welch CEO, General Electric "What I've learned leading a great company and great people". Great Britain: Headline Book Publishing.

Endnotes

  1. See Appendix Figure 1.
  2. Grant claims that the other two categories that make up a firm's resources are 'Tangible' (financial & physical) and 'Intangible' (technology, reputation & culture).

Appendix

  1. Figure 1. The links among resources, capabilities, and competitive advantage

(Grant, 2005, p. 139)