Knowledge Management

CT024-3-M

Knowledge Strategy 2
- Knowledge Mapping

Dr Alan Eardley
Staffordshire University
Based on the work
of Prof. Michael Zack
Northeastern University College
 Learning Outcomes

• Analyse Zack’s Strategic Knowledge Map

• Explain Knowledge gap analysis.
• Explain explorer and exploiter of knowledge
• Explain Internal and External knowledge
• Distinguish between Conservative strategy and
Aggressive strategy

Knowledge Management Introduction

 Strategic Knowledge Map

• Desired knowledge (to assess its internal

knowledge gaps) and its competitors (to assess
its external knowledge gaps)
• Applied by area of competency or by SBU, by
division, product line, function, or market position
etc.
• Knowledge categorises - core, competitive or
innovative
• Need to indicate and close the ‘gaps’

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 Zack’s Strategic Knowledge Map

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 Zack’s Types of Knowledge

Core knowledge

• The minimum knowledge required just to be in

business
• Will not necessarily assure the firm’s long-term
competitive
• Presents a basic industry knowledge barrier to
entry
• Tends to be common in an industry - little
advantage for individuals

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 Zack’s Types of Knowledge

Advanced knowledge

• Enables a firm to be competitively viable

• Content varies among competitors, enables
knowledge differentiation.
• Firms may compete directly on knowledge or to
differentiate their knowledge.

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 Zack’s Types of Knowledge

Innovative knowledge

• Firm can lead its industry and differentiate itself

from its competitors
• Often enables a firm to change the rules of
competition in an industry

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 Gap Analysis

‘Knowledge gap’
and ‘strategic gap’
must be identified
and ‘closed’ by
developing a
knowledge
strategy to match
the business
strategy

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 Dynamic knowledge

• Knowledge is not static - innovative knowledge

today will become core knowledge tomorrow
• Defending & expanding a competitive position
requires continual learning & knowledge
acquisition
• Organisional learning (OL) may provide strategic
advantage
– accumulating knowledge from its experiences
– reapplying that knowledge is a skill or competence

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 Exploration & Exploitation

– Organisation has lower level of knowledge

• close its internal knowledge gap
– has less knowledge than the ‘industry level’
• close its external knowledge gap
– high level of knowledge in rapidly changing
industry
• has to create new knowledge just to keep pace
explorer - a creator or acquirer of the knowledge
required to become & remain competition.
exploiter - firm’s knowledge exceeds

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 Internal vs. External Knowledge

Internal knowledge – tends to be unique:

• Within peoples’ heads or in behaviour,

procedures etc. (i.e. tacit)
• Recorded in various documents or stored in
databases and online repositories (i.e. explicit)
• Strategically valuable - it is unique and more
difficult to imitate

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 Internal vs. External Knowledge

External knowledge
• Obtained from publications, research agencies,
professional bodies, etc.
• More abstract
• costly to obtain
• more widely available to competitors
• Can provide fresh thinking and help with
‘benchmarking’ internal knowledge

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 Internal vs. External Knowledge

Provincial
• firms acquire most of their knowledge internally
Cosmopolitan
• firms acquire most of their knowledge externally
Boundless
• firms seek to acquire knowledge without regard
for boundaries:
– seamlessly integrate their internal and
external knowledge
– do whatever they must to acquire the
knowledge they need

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 Aggressive vs. Conservative

• Firms exploiting internal knowledge exhibit the

most conservative knowledge strategy
• Unbounded firms show the most aggressive
strategy
• An aggressive knowledge strategy in knowledge-
intensive industries outperform competitors who
pursue less aggressive strategies
• An aggressive knowledge strategy will be
required in cases where an organisation's
knowledge lags behind its competitors or it
defends a knowledge advantage

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 Mapping the Knowledge
Strategy

Firms may have

internal to unbounded
knowledge and may
be exploiters to
Innovators.

This can be used to

plot their strategy
from ‘conservative’
to ‘aggressive’

Where does the firm

want to be?

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 Industry Learning Cycles

• Knowledge strategy cannot be formulated in

isolation of what competitors are doing.
Comparing aggressive and conservative
strategies requires an examination of knowledge
‘flow’ in an industry
• Nonaka's model of knowledge flow in
organisations applies here:
– Knowledge creation is based on the exchange of tacit
knowledge within a community of practice (CoP).
– Knowledge transfer to other CoPs requires it to be
made explicit
– Knowledge is subsequently made internal and may be
made tacit again through its re-application

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 Nonaka’s Knowledge Flow
Model

Within an organisation
Knowledge flow
can be categorised
in one of four stages:
creation, ‘explication’,
transfer and
‘internalization’
(Zack 1998)

Knowledge will tend

to go through all of
these stages in an
organisation and
between organisations
See Figure 6

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 Nonaka’s ‘Interfirm’ Flow Model

Between organisations
Firms create tacit
knowledge internally,
‘explicate’ it to
transfer it and reuse
it within the firm, &
may attempt to
create barriers to
transfer into the
industry – or to
overcome them

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 Firms taking a Conservative
Strategy…

• Often view knowledge primarily as a proprietary

asset to be protected and financially exploited
(e.g. copyright)
• Create tacit knowledge internally, explicate it to
ease its transfer and reuse within the firm, and
attempt to create barriers to its diffusion or
transfer into the industry
• Will receive little external knowledge back from
the industry in industries where this is common

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 Barriers to Knowledge Transfer

Avoid knowledge transfer by erecting barriers –

• patents may provide sufficient protection in some
industries (e.g. pharmaceuticals)
• industries based on technologies whose transfer is
‘sticky’. Stickiness may occur where for instance:
– the technology does not adhere to an industry
standard or no standard exists, making adoption risky
(e.g. 56K modem, VHS vs Betamax video, Apple OS
vs MS Windows)
– the technology is embedded in a web of interfacing
technologies, requiring tight coupling to the other firms’
technologies, making adoption difficult and complex
(e.g. ERP packages)

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 Barriers to Knowledge Transfer

• Adoption may be costly or diffusion irrelevant

where knowledge is Highly specific to the
source-firm’s context for application and use.
• Some knowledge may be just too difficult to
understand for the rest of the industry as a
whole to understand and adopt

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 Firms taking an Aggressive
Strategy…

• Rather than waiting for competitors to reduce the

value of their knowledge, these firms
aggressively seek to replace their own
knowledge, always staying one step ahead of the
competition.
• Develop tacit knowledge that they ‘explicate’ to
exploit but are less concerned than ‘conservative’
firms with erecting barriers to transfer
• Rather than erecting barriers, they protect their
knowledge resources by encouraging a
‘knowledge creating culture’.

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 Firms taking an Aggressive
Strategy…

• explicit knowledge may diffuse out of the firm,

the richer tacit knowledge (giving the firm its
sustainable advantage) stays with it and can be
recreated or replaced
• firm’s advantage comes from being able to
absorb external knowledge and integrate it with
its internal knowledge to develop innovations
faster than its competitors – a ‘fast knowledge
cycle’
• An aggressive strategy, if implemented from a
strong position and aided by OL, should allow
more knowledge to be gained then lost

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 Firms taking an Ultra-aggressive
Strategy…

• Proactively transfer their knowledge out of the

firm to accelerate the industry learning cycle.
One approach is to transfer only part of the
knowledge, creating a knowledge dependency
on the remainder of the knowledge that is more
highly protected – creating a ‘knowledge alliance’
• Some software companies protect their main
source code but distribute sufficient knowledge of
the program functions to enable others to
develop compatible programs & seamless
interfaces

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 Firms taking an Ultra-aggressive
Strategy…

• Others offer their knowledge in hopes of creating

or influencing industry standards (e.g. Netscape,
which made public its core source code to take
advantage of innovations others may develop)
• Firms in some industries may have to adopt an
aggressive knowledge strategy or fall behind in
competition
• Firms without an OL capability or the KM
infrastructure to support unbounded innovation
may need to change strategic position

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 Knowledge is a Fundamental Basis of
Competition

Competing on knowledge requires either aligning

strategy to what the organisation knows, or
developing the knowledge to support a strategy

• There is nothing as valuable as a good idea……

except experience.
– Where resources do not differentiate firms, capabilities
or knowledge can
– Recruitment, training & ‘knowledge culture’ add to
knowledge assets
– Conversely, broad downsizing and early retirement
programs can just as significantly undermine a
competitive position

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 Knowledge is a Fundamental Basis of
Competition

• Find an advantage and nurture it

– Unlike traditional resources, increasing returns to
knowledge enable an organization to sustain a
knowledge advantage
– The key is to identify unique and valuable knowledge
assets and to focus the KM effort on developing or
maintaining them
• Use your organization as an experimental
laboratory…be proactive
– Rather than accept learning opportunities that ‘just
happen’, a firm should stage activities that accelerate
its OL in strategic arenas

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 Knowledge is a Fundamental Basis of
Competition

• Knowledge is becoming a focal product or service:

– Knowledge can change the way an organization
positions itself in its industry and change the
organization itself
• Time is a constraint
– Time constraints may impose an order to addressing
the issues identified during a knowledge strategy
audit. See Figure 7.
– Because of the time required to develop knowledge,
most short-term efforts tend to be focused on
knowledge exploitation rather than exploration and on
technical rather than organizational fixes.
– Short-term initiatives are primarily oriented toward
using IT in short term

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 Knowledge is a Fundamental Basis of
Competition

• KM initiatives should be developed with the

longer-term in mind, so that:
– they either provide a step in the right direction
– do not create a barrier to executing the longer-term
knowledge strategy.

In the absence of a long-term knowledge strategy,

most KM initiatives take an internal exploitation
strategy. A strategically oriented firm should realise
that these efforts are a first step and not an end in
themselves

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 Short Term vs. Long Term
Strategy

A KM initiative may
be constrained by
time – exploitation
tends to be short
term, exploration
long term

IT is often a short
term ‘fix’
OL is often a long
Term strategy

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 Reading

• Zack M.H. (1999) Developing a Knowledge Strategy.

California Management Review, Vol. 41, No. 3, Spring,
Pp. 125-145.
• Nonaka, I. (1994) A Dynamic Theory of Organizational
Knowledge Creation“. Organization Science, Vol. 5, No.
1, Pp.14-37.
• Sharkey, R. (2003) Knowledge creation and its place in
the development of competitive advantage. Journal of
Knowledge Management. 7(1) Pp20-31.

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 Questions

1. What is strategic gap analysis and knowledge

gap analysis?
2. How internal knowledge differs from external
knowledge?
3. Is it necessary for an organization to be an
‘explorer’? Why?
4. What are the barriers for Knowledge transfer?

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