When you study something, you start to see it everywhere. I’m a competitive intelligence manager at work. I help sales people sell better or product teams build a better product, depending on who you talk to. Sometimes I do both. Lately I’ve been selecting knowledge management articles about knowledge transfer, competitive advantage, and learning. As Alex Vandergrift said,
“…It is reasonable to conclude that useful knowledge can be derived from a diverse array of sources, ranging from the upper management, to a college-aged coffee addict. The challenge, then, is figuring out an efficient way to channel all these sources of knowledge, and instilling an organizational culture conducive to continued knowledge acquisition and open innovation”.
I picked up the paper by Argote and Ingram (2000) because the title specifically talked about competitive advantage. As I mentioned, I’m part of a competitive intelligence team at work. One aspect of my job is to facilitate the transfer of our competitive knowledge to our key partners (related firms that are therefore NOT employees) so that their selling cycle is likewise improved. I am keenly aware that giving what might be our trade secrets to another firm means that they will eventually make their way back to the competitor. Therefore, we risk losing our advantage if the competitors modify their tactics, sales, products, etc., based on our information. Inherently, I can’t entirely trust that our partners will keep our secrets. So I’m careful not to give them too many secrets. Argote and Ingram point out, “Firms are most effective when they manage both to facilitate internal knowledge transfer and to block external knowledge spillover…Embedding knowledge in the subnetworks that involve people minimizes the likelihood of transfer to external organizations”. We saw in the article by Chen (2014) that trust is a huge factor in the knowledge transfer across organizations. And in Christy Chapman’s discussion of the Connelly (2012) article about knowledge hiding, she asked, “why even care about knowledge transfer”? I can give an answer to that question.
If my team gives out the appropriate information to our selling partners or to companies which resell our products, the better informed they are about our products, and in general the higher overall sales margin they will achieve. That is, they can effectively communicate the value of our product over that of the competition better and thus avoid having to unnecessarily discount the price. A higher sales margin, a higher profit margin and a customer who knows why they just bought the cadillac instead of the cheap volkswagen. (No offense to either brand manufacturer, I’m just using an old saw about value difference. Substitute your favorite comparisons). So I want to give our partners more information about the competition and thus, I want to transfer the knowledge we have (in order to hopefully get a better sales margin, etc.).
What I have yet to figure out is what Argote and Ingram mean by embedding the knowledge into the subnetwork, because that does not transfer well; thus the firm retains its competitive advantage. Is this some form of social capital? Meaning that the intellectual capital can be transferred more easily because of the social capital two internetworked individuals might have due to a trusted partnership? And that bringing that information back to the inner circle that is the employee’s community (of practice), knowledge can be effectively transferred? Thinking that this might be found in the idea of the people that are internetworked together, I picked up the research by Nahapiet and Ghoshal (1998). As Steven Antczak points, out, “… Trust is also required when it comes to sharing intellectual capital…. Future exchanges of knowledge between the companies
was going to be much more difficult because of the lack of trust…”.
So on that basis, I decided to look at Nahapiet and Ghoshal. @cmwilson mentions that “… Social capital facilitates intellectual capital by creating conditions for creation and exchange of knowledge” but I think that a more fundamental aspect of social capital is found in the networking:
“The fundamental proposition of social capital theory is that network ties provide access to resources. One of the central themes in the literature [about social capital theory] is that social capital constitutes a valuable source of information benefits (i.e., “who you know” affects “what you know)”.
Nahapiet & Ghoshal go on to mention that “…these information benefits occur in three forms: access, timing, and referrals. The term “access” refers to receiving a valuable piece of information and knowing who can use it, and it identifies the role oi networks in providing an efficient information screening and -distribution process for members of those networks. Thus, network ties influence both access to parties for combining and exchanging knowledge”. Well, I definitely can relate to that. Helping sales people is what I do. And they are always asking about how the competition positions themselves with respect to us. We have shown through internal studies that a well-informed salesperson closes deals faster, with a higher average deal size, and more consistently.
So how does an individual go on to leverage all this network capability and the social/intellectual capital that they have? I figured that an article about ” Personal information management effectiveness of knowledge workers”, Hwang, (2015) would have something to say about it. I immediately got sideways due to references about knowledge-based views of a firm, which argues that “knowledge resides within the individual and the primary role of the organization is to direct this knowledge toward organizational objectives” but this seems inconsistent with the views of Argote, et al., in that competitive knowledge is (somewhat) encoded into the subnetworks and processes of the firm. Hwang, et al., go on to say that additional research is need to clarify the explicit relationship between individual and organizational knowledge, and even mention IT as a tool that facilitate management of information, so I decided to keep an open mind. A key aspect that I think much of the knowledge management articles in the syllabus are missing is the degree to which sales and marketing staff have been studied and to which considerable optimization routines have been applied. In any business segment – such as high-tech, healthcare, pharmaceuticals – process manufacturing really – and many others, how sale personnel manage their time, resources, and information capital is an intensely social and intellectual capital exercise that is closely monitored by managers and the organization. Sales personnel have some of the most intensely scrutinized objectives and are very clear on the organization’s objectives and strategy; they get paid on things the organization wants them to do and paid nothing on things that should be avoided (or are not a priority). As I read on, the article continued to bring to mind the research by Schillewaert, et al. – that knowledge workers pick up individual information system technology because they think it will help them and they continue to use it 6 months later on because it is easy to use.
The model proposed by Hwang, et al. on the personal effectiveness of one’s ability to do the job, to use technology, to effectively and efficiently manage knowledge seemed more and more to correspond to my own experience of dealing with sales an marketing people over the past 20 years. Hwang concludes that “effective use of information by knowledge workers is a fundamental driver of a firm’s competitiveness”. That organizations then seek to limit the distribution of that knowledge to it’s employee base and to contain it by encoding it into it’s own processes is likely a response to the new knowledge developed and leveraged by the knowledge-able workers engaged inside the organization. It would seem to be an endless cycle. It brings to mind my earlier discussions about organizations that learn.
Bibliography:
Argote, L. & Ingram, P. (2000). Knowledge Transfer: A Basis for Competitive Advantage in Firms. Organizational Behavior and Human Decision Processes, 82, 150–169. doi: 10.1006/obhd.2000.2893
Chen, C.-J., Hsiao, Y.-C. & Chu, M.-A. (2014). Transfer mechanisms and knowledge transfer: The cooperative competency perspective. Journal of Business Research, 67, 2531–2541. doi: 10.1016/j.jbusres.2014.03.011
Connelly, C. E., Zweig, D., Webster, J. & Trougakos, J. P. (2012). Knowledge hiding in organizations. Journal of Organizational Behavior, 33, 64–88. doi: 10.1002/job.737
Hwang, Y., Kettinger, W. J. & Yi, M. Y. (2015). Personal information management effectiveness of knowledge workers: conceptual development and empirical validation.. EJIS, 24, 588-606.
Nahapiet, J. & Ghoshal, S. (1998). Social Capital, Intellectual Capital, and the Organizational Advantage. Academy of Management Review, 23, 242-266.
Schillewaert, N., Ahearne, M. J., Frambach, R. T. & Moenaert, R. K. (2005). The adoption of information technology in the sales force. Industrial Marketing Management, 34, 323–336. doi: 10.1016/j.indmarman.2004.09.013
There’s a lot going on here in this post. Let me first respond to the start. You have pic of two logos of two major tech companies, and both of those companies leverage proprietary knowledge to their advantage. BUT, what about those companies that leverage knowledge based on tech that’s completely open source, such as Linux. How does this challenge the ‘spillover’ effect and what such companies share with their sales staff? How does this challenge the competition between these companies? Etc.
I think ultimately the spillover effect is somewhat mitigated in all cases because the long-term competitive advantage accrues when the insights are inculturated into the operating processes. Those are much harder to transplant. When competitive knowledge is based on open source – that is, publicly available data – then the competitive sales activity is generally short-lived. It takes engineering effort to make a transformative differentiator. The long-term advantage that accrues to the teams building on open-source is in the strong-ties needed to create an ‘ecosystem’ of partners and extensions of technical capability. In software companies, you see this a lot.
“ecause the long-term competitive advantage accrues when the insights are inculturated into the operating processes. Those are much harder to transplant” — so, when that competitive advantage becomes tacit. And since there’s only so much that you, in that role describe above, can communicate, what you’re saying is that the risk is mitigated because so much of it is tacit. Right?
Yes, that is “true”. It is the form of the tacit knowledge – a process and a culture of doing things in a certain way – that is tacit and not the simple fact of being in one person’s head. It is the teamwork aspect that makes it hard to transplant.
Do you think it would be possible to transfer one of the members of that team into a new team in a different company and transfer their tacit knowledge to that group over time, or would it be extremely hard to do since the knowledge transferer most likely wouldn’t be able to recreate the process that leads the group to that knowledge?
Both. I think the tacit knowledge will transfer. Studies show that when you take an employee and put them in a new group as a swap exercise, the innovation occurs when they return to the original group. But that won’t happen to the process; the culture will push all that into a new process, thus changing the competitive posture – being different overall and thus not being completely a competitive change.