Large parts of my PhD thesis are based on a theory by Morten T. Hansen, Nitin Nohria, and Thomas Tierney . In their article the authors analyze different consulting companies and define two basic strategies for knowledge management: The codification and the personalization. An organization has to follow one of those, the one that fits to the competitive strategy best.
Note: Most of the text from this post is directly taken from my PhD thesis. That is also the reason why this text is so long and detailed…
Sorry for that. 🙂
The goal of codification is the re-use of knowledge. The underlying idea is to extract the knowledge from people and store it somehow. This approach is especially used by process-driven companies, which focus on documentation. Here, employees are supposed to fill out forms and create reports about on-going work or intermediate results. The company’s processes intend to codify the gained knowledge, to constantly build up a knowledge base with formalized content about specific tasks or problems. This knowledge base should then be accessed, when similar problems occur in future projects. The target is to learn from the past and approach current problems in similar ways as in the past (similarity-based). Hansen et al. call this approach the codified knowledge management strategy or codification.
To utilize codified knowledge two aspects are of high importance. First, it requires a precisely described problem domain. Without that, finding a fitting report according to the current needs can get more complicated. Second, pursuing the strict formalisms is a vital task. The reported results can be difficult to find, if they do not follow the intended structure sufficiently. This is supported by fine-grained and highly specific input fields. Employees have to understand where they can find the desired information or enter their experiences (people-to-documents).
The codification strategy’s goal is to provide scaffolds that lead to standardized reports. These then are collected in a knowledge base. This standardization makes it easy to search for the documentation of previous results, which, if similar enough, can help in the current situation.
Hansen et al. explain that a competitive strategy, which would apply the codified knowledge management strategy, typically aims to provide high quality solutions that are reliable and specialized in a certain field. A company that produces high-end solutions to a specific problem for different customers is an example for that.
The codification process is often executed by higher organizational hierarchies. Creating reports is in many cases related to responsibilities and act like a communication channel between the different hierarchy levels. These reports are commonly used as a controlling tool in crucial and complicated tasks such as project management, where previous reports act as guidance. So the reports follow two targets at the same time, to communicate between organizational hierarchies and to build up a knowledge base.
Supporting Knowledge Management System
A knowledge management system in the codified knowledge management strategy has to take care of managing this form of documentation and providing help for its users to find the desired information. Hansen et al. specifically state that heavy investment in IT is essential as “the goal is to connect people with reusable codified knowledge”.
Codified knowledge, e.g., stored in form of reports, has to be comparable and computable to fulfil its purpose. This is achieved by following a consistent structure, which makes spread sheet or database applications typical implementations. So called enterprise systems are applications that also fit into this category, they commonly handle data in forms and support a company-wide analysis; typical for codification. Today, most companies have an enterprise system applied for operational support. Employees are able to insert and access information in a formalized way. Additionally, many enterprise systems have features that verify the data inputs or automatically create an analysis based on previously entered data.
The experience factory by Basili is a good example for a knowledge management system supporting codification. Separated from the actual problem solving, the gained experiences are packaged by employees. These experience packages are then stored in a form of repository. To make the experience re-usable, the packaging has to fulfil certain standards. It has to be assured that each package contains all necessary input, in order to provide assistance for the experience’s consumers. This completeness contains aspects like a problem definition, a generalization, an analysis and the description of the execution. Potentially helpful experience packages can then be located by filtering the available ones for the needed input. The strict formalization here supports the finding, as every user of such a knowledge management system has an awareness of where to expect what kind of information. Searching is further simplified through the uniform coding of the packages and its contained information.
A knowledge management system that supports codification has to follow strict patterns, in both the way it is used and the way it takes care of the involved knowledge. All employees are active users and access the system when the company’s processes expect them to. Guidelines define how to codify knowledge in order to simplify the access.
The focus of personalization is on people and their direct communication among each other. Especially in companies, that follow flat organizational structures, the internal communication is important. Encouraging the employees to exchange ideas and experiences is the main principle here. Thus, the employees continuously build up and improve their social network within the company, which they utilize to localize desired knowledge or experts in the case of need (goal-oriented). Hansen et al. call this approach the personalized knowledge management strategy or personalization.
A company, which is following a personalization strategy, typically tries to support creative and individual approaches to unique tasks. It faces only very special problems, embracing the difference of each project and customer in order to provide a specialized solution, where different levels and areas of expertise are important. Therefore, the knowledge management is more focussed on connecting the employees (person to person). This is often supported by an open company culture that aids personal communication and provides circumstances to share knowledge (e.g., in form of meetings). Especially tacit knowledge plays an important role here.
A competitive strategy that applies the personalized knowledge management strategy typically concentrates on customized solutions of high complexity and quality. It is very common for this kind of companies to have different customers in different domains. Hansen et al. point out that the corporate network is then used to find people with expertise (e.g., knowledge, experience, interest, etc.), who then share their knowledge. The result is that specialists work on solutions and share their knowledge, which increases the company-wide expertise.
Supporting Knowledge Management System
A knowledge management system in personalization has the purpose to organize direct communication. Hansen et al. state that moderate investment into IT is sufficient, as “the goal is to facilitate conversations and the exchange of tacit knowledge”. The authors explain further that “Knowledge is shared not only face-to-face but also over the telephone, by e-mail, and via video-conferences”. It becomes clear that the focus is on direct communication between two parties, the knowledge-owner and the knowledge-seeker.
The major task in this strategy is the establishment of networks that help spotting a knowing person, who could help solving a problem. The communication itself is considered a minor aspect, technologically. This could be solved by simple e-mail, instant messaging or other peer-to-peer solutions. But IT can support the networking as well. The internet is heavily used to connect to people and establish and deepen the contacts nowadays. Good examples for that are LinkedIn or Facebook. Both connect people and provide different features to communicate, however, Facebook focuses on personal life and LinkedIn focuses on business contacts. Either system allows you to insert personal information, like in a curriculum vitae, after registration. Then you can connect to other people, see their information and contact them directly. These systems are thus implementations of the personalization strategy, as people build networks and can contact the person of interest.
Systems like these are called social web or web 2.0 and rose in the first decade of the 21st century. Before that, Hansen et al. published their article in 1999, they could therefore not foresee the impact on enterprises and their knowledge management approaches. Different forms of social web applications provide different possibilities. Not all of them have a focus on the networking aspect, like LinkedIn or Facebook. Others emphasize the communication, like wikis.
Contrary to the statements by Hansen et al., a higher investment in knowledge management systems can improve the communication between employees. Social software was not considered in their article. Its influence on communication increased in the recent decade and the use of tools in communication changed a great deal through systems of the social web.
Combination of Strategies
Researchers show in different examples and case studies, that the coexistence of both strategies in an equal share is counterproductive and would do harm. A company should find the one that suits its needs best. Hansen et al. argue though, that choosing a primary strategy, supported by the other one can be a successful blend. They suggest realizing that in an 80-20 split: 80% of one, the main knowledge management strategy, and 20% of the other, the supporting knowledge management strategy. A 50-50 share is counterproductive as none of the characteristics of a company is suitably supported or emphasized.
While Hansen et al. suggest one corporate strategy to be followed throughout the whole company, a study by other researchers took a different route. They dealt with a unit in a company, which provides seven different services. The authors assigned four of these services to follow a codification strategy and the other three of them to follow a personalization strategy. They successfully showed that differentiation in different areas within the same company is feasible and makes sense, because the different services followed different aims and an overall strategy for all of them would diminish some of the services.
Finally, it has to be mentioned, that there is not one strategy generally better than the other. One might fit the company better than the other or the employees of a specific company might relate better to one than the other. A general statement however cannot be made; it differs from case to case. Researchers particularly state that formalized knowledge is equally relevant as other types of knowledge. Choosing one over the other is an important choice and has to be made wisely as a wrong decision can confuse employees or lower the quality of results.
 Morten T. Hansen, Nitin Nohria, and Thomas Tierney. »What’s Your Strategy for Managing Knowledge?«, Harward Business Review, Vol. 77, No. 2, Pages 106-116, 1999.