----------------------- Page 1-----------------------

----------------------- Page 2-----------------------

Key Issues in the New

Knowledge Management

----------------------- Page 3-----------------------

About KMCI Press

Powerful Knowledge for Knowledge Professionals

KMCI Press is an exciting publishing partnership that unites the

Knowledge Management Consortium International (KMCI), the leading
organization for knowledge management professionals, and the Business
group and Digital Press imprints of Butterworth–Heinemann, one of the
premier publishers of knowledge management books.

KMCI Press publishes authoritative and innovative books that educate

all knowledge management communities, from students and beginning
professionals to chief knowledge officers. KMCI Press books present
definitive and leading-edge ideas of the KMCI itself, and bring clarity
and authoritative information to a dynamic and emerging profession.

KMCI Press books explore the opportunities, demands, and benefits

knowledge management brings to organizations and define important
and emerging knowledge management disciplines and topics, including:

# Professional roles and functions

# Vertical industry best practices and applications
# Technologies, including knowledge portals and data and document
management
# Strategies, methodologies, and decision-making frameworks

The Knowledge Management Consortium International (KMCI) is the

only major not-for-profit member organization specifically for knowl-
edge management professionals, with thousands of worldwide members
including individuals in the professional and academic fields as well as
leading companies, institutions, and other organizations concerned with
knowledge management, organizational change, and intellectual capital.

For information about submitting book proposals, please see our Web
site at http://www.kmci.org.
Titles from KMCI Press
The Springboard: How Storytelling Ignites Action in Knowledge-Era
Organizations Stephen Denning
Knowledge Management Foundations Steve Fuller
World Congress on Intellectual Capital Readings Nick Bontis
Enterprise Information Portals and Knowledge Management Joseph
Firestone
The New Knowledge Management—Complexity, Learning, and
Sustainable Innovation Mark McElroy

----------------------- Page 4-----------------------

Key Issues
in the New
Knowledge
 Management

Joseph M. Firestone, Ph.D.

Mark W. McElroy

An imprint of Elsevier Science

Amsterdam Boston Heidelberg London New York Oxford Paris
San Diego San Francisco Singapore Sydney Tokyo

----------------------- Page 5-----------------------

Butterworth–Heinemann is an imprint of Elsevier Science.

Copyright © 2003, Executive Information Systems Inc. and Mark W. McElroy. All
rights reserved.

No part of this publication may be reproduced, stored in a retrieval system, or

transmitted in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior written permission of the publisher.

Recognizing the importance of preserving what has been written, Elsevier

Science prints its books on acid-free paper whenever possible.

Library of Congress Cataloging-in-Publication Data

Firestone, Joseph M.
Key issues in the new knowledge management / Joseph M. Firestone,
Mark W. McElroy.
p. cm.
Includes bibliographical references and index.
ISBN 0-7506-7655-8 (pbk. : alk. paper)
1. Knowledge management. 2. Organizational learning. I. Title: New
knowledge management. II. McElroy, Mark W. III. Title.

HD30.2.F57 2003
658.4¢038—dc21
2003045315

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library.

The publisher offers special discounts on bulk orders of this book.

For information, please contact:

Manager of Special Sales

Elsevier Science
200 Wheeler Road
Burlington, MA 01803
Tel: 781-313-4700
Fax: 781-313-4882

For information on all Butterworth–Heinemann publications available, contact

our World Wide Web home page at: http://www.bh.com

10 9 8 7 6 5 4 3 2 1

Printed in the United States of America

Cover art created by Svend-Eric Filby of Svend Design in Lebanon, NH

(www.svend.com)
----------------------- Page 6-----------------------

Contents

Preface, xiii
Acknowledgments, xvii
Introduction: What Is the New Knowledge
Management (TNKM), and What Are Its Key
Issues?, xix
What Is the New Knowledge Management? xix
What Are Its Issues? xxi
Who this Book Is For, xxvi
How to Use This Book, xxvi
References, xxvi

Chapter 1
The Knowledge Conundrum 1

Introduction, 1
On Definition, 2
Definitions of Knowledge, 3
World 2 Definitions, 11
World 3 Definitions, 13
Data, Information, Knowledge, and Wisdom, 17
World 3 Data, Information, Knowledge, and
Wisdom, 17
World 2 Data, Information, and Knowledge, 19
Tacit Knowledge and Explicit Knowledge, 20
Polanyi, Implicit Knowledge, and Popper, 21
Individual Level World 2 Knowledge and Motivational
Hierarchies, 23
Different Types of Knowledge, 26

----------------------- Page 7-----------------------

vi Contents

Conclusion, 26
References, 29

Chapter 2

Origin of the Knowledge Life Cycle 32

Introduction, 32
The Organizational Learning Cycle (OLC)/Decision
Execution Cycle (DEC), 33
New Problems, Double-Loop Learning, and Popper’s
Tetradic Schema, 37
Learning and Knowledge Production: Combining
Argyris/Schön and Popper, 39
A Transactional Systems Model of Agent Interaction, 41
The Motivational Hierarchy, 41
Aspects of Motivational Behavior in the Transactional
System, 43
Sense Making in the Transactional System, 47
The Knowledge Life Cycle (KLC): The Expression of a
Change in Instrumental Motivation, 48
Conclusion, 57
References, 58

Chapter 3

Information Management and

Knowledge Management 60

Introduction: Approach to KM, 60

Complex Adaptive Systems, 61
The Natural Knowledge Processing System (NKPS), 61
Hierarchical versus Organic KM, 62
Some Definitions of Knowledge Management, 63
Information Management and Knowledge Management, 69
Knowledge Processes and Information Processes, 70
Definition and Specification of Knowledge Management, 70

----------------------- Page 8-----------------------

Contents vii

Levels of Knowledge Management, 71

Breadth of KM Processes, 76
Targets of Knowledge Management, 80
Social and Technological, Policy and Program
Interventions, 81
The Classification of KM Activities, 83
More on How Information Management Differs from
Knowledge Management, 84
Conclusion, 85
References, 86

Chapter 4

Generations of Knowledge Management 88

Three Views of Change in Knowledge Management, 88

The Three Stages of Knowledge Management, 90
Difficulties with the Three-Stages View, 91
The Two Ages of Knowledge Management (with a Third
Yet to Come), 94
Difficulties with the Two-Ages View, 95
The Two Generations of Knowledge Management, 97
Snowden’s Forecast? A Third Age of KM, 104
KM and Scientific Management, 105
KM, Content Management, and Context, 105
Knowledge: Process or Outcome? 110
Sense Making, Complex Adaptive Systems, and the Third
Age, 113
The Cynefin Model and Its Problems, 115
Cynefin Conclusions, 132
Conclusion: The Three Stages, the Three Ages, the Two
Generations, and Comparative Frameworks, 134
References, 136

----------------------- Page 9-----------------------

viii Contents

Chapter 5

Knowledge Claim Evaluation:

The Forgotten Factor in
Knowledge Production 142

Introduction, 142
Where Knowledge Claim Evaluation Fits into Knowledge
Production, 143
The Kind of Knowledge Produced by Knowledge Claim
Evaluation, 144
A Framework for Describing Knowledge Claim
Evaluation, 146
Knowledge Claim Evaluation: Specific, 147
An Approach to Evaluating Knowledge Claim Evaluation and
Knowledge Claims, 156
Success Criteria for Knowledge Claim Evaluation, 157
Realizing Knowledge Claim Evaluation Effectiveness:
The Theory of Fair Comparison, 158
Knowledge Claim Evaluation Software, 167
Key Use Cases in KCE Software, 168
Structural Features of KCE Software, 169
Conclusion: Significance and Questions, 171
References, 173

Appendix to Chapter 5

Two Formal Approaches to

Measuring “Truthlikeness” 177

Introduction, 177
An AHP-Based Ratio Scaling Approach, 178
A Fuzzy Measurement Approach to “Truthlikeness,” 187
Other Approaches to Combining Criterion Attributes of
“Truthlikeness” and KM Knowledge Production, 191
References, 191

----------------------- Page 10-----------------------

Contents ix

Chapter 6

Applications of The Knowledge Life

Cycle (KLC) Framework 193

Introduction, 193
The Knowledge Life Cycle (KLC), 196
Knowledge Management Strategy Formulation, 200
Knowledge Management and Knowledge Audits, 204
Modeling, Predicting, Forecasting, Simulating, Impact Analysis,
and Evaluation, 206
Metrics Segmentation, 210
Sustainable Innovation, 213
Methodology, 218
Information Technology Requirements, 220
Intellectual Capital, 222
Education and Training, 225
The Open Enterprise, 227
New Value Propositions for Knowledge Management, 230
Conclusion, 234
References, 235

Chapter 7

Knowledge Management as Best Practices

Systems—Where’s the Context? 238

Best Practice: The Lack-of-Context Problem, 238

Knowledge Claims, 239
Metaclaims as Context, 241
A Better Way, 242
Metaclaims in Action, 245
Conclusion, 247
References, 248

----------------------- Page 11-----------------------

x Contents

Chapter 8

What Comes First: Knowledge Management

or Strategy ? 249

Introduction, 249
Biased Methodologies, 250
The Strategy Exception Error, 251
Strategy and the New Knowledge Management, 254
Where Knowledge Management Belongs, 256
Conclusion, 257
References, 259

Chapter 9

Knowledge Management and Culture 261

Introduction, 261
Alternative Definitions of Culture, 261
Culture or Something Else?, 264
What Is Culture, and How Does It Fit with Other Factors
Influencing Behavior?, 264
Do Global Properties Exist?, 270
Culture and Knowledge, 271
Conclusion: Culture and Knowledge Management, 272
References, 273

Chapter 10

A Note on Intellectual Capital 275

Introduction, 275
Social Innovation Capital, 278
False Linearity, 279
A False Orientation, 283
Two Systems, Not One, 284
Conclusion, 287
References, 289

----------------------- Page 12-----------------------

Contents xi

Chapter 11

Conclusion 290

Vision of the New Knowledge Management, 290

The New Knowledge Management Landscape, 294
More on Defining Knowledge, 296
The Origin of the KLC, 298
Knowledge Process Management and Information
Management, 299
Supply- and Demand-Side Knowledge Processing, 302
Meta-Claims and Best Practices, 304
Knowledge Claim Evaluation, 305
The Centrality of the Knowledge Life Cycle, 309
KM and Strategy, 312
KM and Culture, 315
The Open Enterprise, 317
Intellectual Capital, 319
Information Technology and the New KM, 321
The Future of the New KM, 323
SECI Model, 323
The EKP, 325
Framework for Analysis of KM Software, 325
Role of Credit Assignment Systems in KM Software, 326
TNKM Metrics, 326
TNKM and Terrorism, 326
The Open Enterprise, Again, 328
Communities of Inquiry (CoI), 329
Knowledge Management Methodology, 329
Value Theory in Knowledge Management, 330
The New Knowledge Management and Knowledge
Management Standards, 332
References, 335

Glossary of Acronyms, 337

Index, 339
About the Authors, 351

----------------------- Page 13-----------------------

This Page Intentionally Left Blank

----------------------- Page 14-----------------------

Preface

In early 1998, the Knowledge Management Consortium (KMC), later

to become the KMCI (“I” for International), was just getting started
and one of us (Firestone) became a founding member, soon to be fol-
lowed by the other (McElroy) in October 1998. We first met at a
KMCI mini-conference session at the KM Expo Conference in
October 1998 in Chicago. At the time, Joe was working on knowl-
edge management metrics and thereafter on basic knowledge man-
agement theory, and on Artificial Knowledge Management Systems
(AKMSs), a concept very closely related to his previous Distributed
Knowledge Management System (DKMS) idea. He was also working
on epistemology for Knowledge Management and on complex adap-
tive systems, as well. Mark was working in the areas of sustainabil-
ity, systems modeling, and complex adaptive systems.
Joe’s work on the AKMS/DKMS paradigm developed through
the fall of 1998, and he produced a paper on enterprise knowledge
management modeling and the DKMS for the KM Expo-hosted
conference already mentioned and also two working papers for a
rather premature, but very exciting, KMCI standards conference
held in Silver Spring, Maryland, in January 1999. One of these papers
was on a Knowledge Base Management System (KBMS) standard,
and the other was on an Artificial Knowledge Management System
(AKMS) standard. Both papers, and a number of others written since
that time, as well as a recent book, helped to develop work in the
Enterprise Knowledge Portal (EKP) area as reflected in a number of
chapters in this book.
Before meeting Joe in the fall of 1998, Mark had become deeply
involved in the study of management applications of complexity
theory via the New England Complex Systems Institute (NECSI). In
April 1998, he presented a paper at NECSI’s first conference on com-
plexity in management in Toronto entitled, “Complexity, IT, and the
Interprise.” In his paper, Mark introduced the idea of “unmanaging”

xiii

----------------------- Page 15-----------------------

xiv Preface

knowledge, an early reference to what would later become the Policy

Synchronization Method (discussed variously throughout this book),
according to which enhancements in innovation can be achieved
not so much by managing knowledge, but by managing the con-
ditions in organizations in which knowledge is produced and
integrated. Mark’s interest in the development of a complexity-
inspired approach to KM became the basis of his introduction to Joe
later that year and of their affiliation ever since.
At about the same time that Joe published the first article on the
EKP (in March 1999), both of us continued to be involved in signifi-
cant work at the KMCI on the foundations of knowledge manage-
ment. That work, done primarily in collaboration with each other,
led to the initial formulation of the Knowledge Life Cycle (KLC)
framework for knowledge processing and to the first sharp dis-
tinctions among business processing, knowledge processing, and
knowledge management. The KLC also became the basis for Mark’s
definition of the second-generation knowledge management con-
cept in 1999, and its subsequent adoption as the KMCI orientation
to KM.
We have continued to collaborate in developing the KLC concept
since its origination in the spring of 1999 and in developing a knowl-
edge management framework based on it. Many of our publications
on the foundations of KM are available at www.dkms.com, at
www.macroinnovation.com, and at www.kmci.org. Mark has also
published The New Knowledge Management (2003), while Joe has
published Enterprise Information Portals and Knowledge Manage-
ment (2003), both in the same KMCI Press series in which this book
appears. Both are milestone publications in the development of The
New Knowledge Management (TNKM).
All of our recent work has been done against the backdrop of, and
with an eye toward, the broader work in TNKM. That work now
encompasses not only the foundations of knowledge management
and conceptual frameworks of the KLC and KM, but additional
work on sustainable innovation, social innovation capital, KM strat-
egy, the open enterprise, knowledge management metrics, knowledge
management framework methodology, and the relationship of enter-
prise information portals and the full range of IT products to knowl-
edge management.
The context for this work is all of the above. The more specific
context, however, lies in the KMCI Certified Knowledge and

----------------------- Page 16-----------------------

Preface xv

Innovation Manager (CKIM) KM certification program. It is in that

program that our key issues approach to KM has been developed.
From it, we have confirmed the idea that the most important value
proposition for Knowledge Management (KM) is to enhance orga-
nizational intelligence, the ability of an organization to adapt to its
environment. Adaptation ultimately is based on new, relevant, and
effective knowledge. So to adapt over time, an organization must be
able to innovate sustainably. It must be able to recognize problems,
to respond to them with tentative solutions (new ideas), to eliminate
those solutions that have errors, and thus to create or produce
high-quality knowledge that can support more effective decisions.
The idea of error elimination is particularly important here, since its
systematic employment is one of the prime distinguishing elements
in TNKM from other approaches in second-generation knowledge
management.
In the course of enhancing organizational intelligence, moreover,
it turns out that openness in Knowledge Processing is a requirement
that is paramount in realizing this goal. Such openness, in turn, is a
protection against malfeasance and corruption. So, it turns out that
TNKM, in seeking organizational intelligence, is at the same time
providing an antidote to the poison of corporation corruption and
its corrosive effects on commerce, the capital markets, and the inter-
national economic system, more generally. Knowledge Management
is primarily about management activities performed with the inten-
tion of enhancing Knowledge Processing. And this book is about
beginning to lay out the key issues besetting systematic study of
how this might be done from the perspective of TNKM, a new KM
paradigm. These issues include the nature of knowledge, the origins
of knowledge processing in business processing, the nature of KM,
change in KM, applications of the KLC, KM best practices and their
context, the position and status of KM strategy in the enterprise, the
role of culture in KM, the nature of a normative model for KM called
the open enterprise, the role of IT in KM, the state of the field of
intellectual capital, and much more that we don’t have the space to
cover in this book.
What we do hope to accomplish is to raise consciousness about
TNKM, to demonstrate its attractiveness as an approach to KM,
some of the specific accomplishments it already has to its credit, and
to indicate the full range of problems it points to that are crying out
for solutions. You shall know the quality of a new paradigm by the
----------------------- Page 17-----------------------

xvi Preface

fruitfulness of the problems it identifies and by the solutions to these

problems it suggests. We want you to get to know the new knowl-
edge management paradigm, its problems, and some of its solutions
through this book. If we are successful, you will join us in the great
work of “practicing” TNKM with the objective of making our orga-
nizations, both public and private, more open, agile, resilient, adap-
tive, and innovative in the face of change, and more honest and
ethical in the face of temptation.

Joseph M. Firestone, Ph.D.

Alexandria, Va.

Mark W. McElroy
Hartland Four Corners, Vt.

October 15, 2002

----------------------- Page 18-----------------------

Acknowledgments

There are many we would like to thank for contributing to this book.
Some were other authors that greatly influenced our views. Others
are friends or colleagues who read our work at one time or another,
or heard one of our presentations and were kind enough to provide
us feedback that was important in developing our ideas further.
Others helped with production of the book.
Among the authors who have been most influential in shaping
our views were Karl Popper for his theory of knowledge and its gen-
eration; Charles Sanders Peirce for his fallibilism and open-minded
pragmatism; Carl Hempel and Willard Van Orman Quine for their
writings on theoretical networks; Everett W. Hall for his work on
value theory; John Atkinson and David Birch for their research on
motivation and action; Thomas L. Saaty for his pioneering work
on the Analytic Hierarchy Process (AHP) and on the theory of ratio
scale measurement; Henry Mintzberg for his research into the behav-
ior of executives; John Holland for his work on complex adaptive
systems and emergence; Paul Thagard for his work on scientific
change and revolution; Ralph Stacey for his application of complex-
ity theory to learning in human social systems; Mark A. Notturno
for his work on Karl Popper, especially his very fine book Science
and the Open Society; and Verna Allee for her recent work on value
networks.
Among friends, some of whom are also authors, we’d like to thank
Steven A. Cavaleri, former President of KMCI and our collaborator
in this work; Arthur J. Murray for his help in improving the KMCI
Certified Knowledge and Innovation Manager program; Professor
Richard W. Chadwick, who some years ago collaborated with Joe in
developing the flow of behavior framework used in the book; and
Dr. Kenneth W. Terhune, who collaborated with Joe in developing
the motivational framework used here. We thank all of you for the
attention you’ve paid to our work and for the help you’ve given us.

xvii
----------------------- Page 19-----------------------

xviii Acknowledgments

Those who were important in producing this book include

Professor Francisco Javier Carrillo, who reviewed our book proposal
and encouraged us to proceed with this project. We have worked
most closely on this book with Karen Maloney of Butterworth–
Heinemann, who as chairperson of the KMCI Press Board approved
the adjustments and changes that occur in any substantial book
project; and Katie Hennessy and Kyle Sarofeen, who managed the
editorial work for B–H. We thank you all for your help in produc-
ing this book. Finally, Joe would like to thank Bonnie, who is un-
failing in her good humor and support for his various writing projects
and who frequently seems even more enthusiastic than he is in bring-
ing them to a successful conclusion; and Mark would like to thank
Amy, whose encouragement and belief in his work during the past
five years has meant everything to him.

Joseph M. Firestone
Alexandria, VA

Mark W. McElroy
Hartland Four Corners, VT

October 15, 2002

----------------------- Page 20-----------------------

Introduction:
What Is The New
Knowledge
Management
(TNKM), and What
Are Its Key Issues?

What is the New Knowledge

Management (TNKM)?

At its core, “The New Knowledge Management” (TNKM) is the

name for the body of issues, models, and practices representing the
broadening of scope of knowledge management from a concern with
knowledge sharing, broadcasting, retrieval, and teaching, collectively
knowledge integration, to a concern with these things, as well as
knowledge making, or knowledge production. The idea of TNKM
arises from McElroy’s (1999) analysis of two fundamental types of
KM concerns.
McElroy (1999) has characterized the concern with Knowledge
Integration as “supply-side” knowledge management, because it
assumes that knowledge already exists in the enterprise and that the
problem of KM is to facilitate the supply of the right preexisting
knowledge to the right person at the right time. He has further
characterized (1999) the concern with knowledge making as
“demand-side” KM, because it assumes that knowledge must be

xix

----------------------- Page 21-----------------------

xx Introduction

produced in response to the demand for it, and that people self-
organize around the demand for knowledge production to create
structures that will succeed in fulfilling the demand. While the theory
and practice of knowledge management first concerned themselves
mainly with supply-side considerations (first-generation KM), KM
has broadened in recent years and is now concerned with both
supply- and demand-side issues (second-generation KM).
First-generation knowledge management is the set of frameworks,
models, practices, techniques, etc., that reflect supply-side-only con-
cerns. Second-generation knowledge management is the set of frame-
works, models, practices, techniques, etc., that involve treatment of
both supply- and demand-side side concerns. The New Knowledge
Management (TNKM) is a variant of second-generation thinking
that includes specific developments underway at the Knowledge
Management Consortium International (KMCI), including the open
enterprise, the enterprise knowledge portal, the KM metrics frame-
work, positions on KM standards, intellectual capital, the role of
complex adaptive systems (CAS), sustainable innovation, KM
methodology, and other new developments. One way to look at
TNKM is to consider it a new “paradigm,” but in using that term
we do not want to carry over Kuhn’s (1970) connotation of a rela-
tively closed political ideology impervious to fundamental criticism.
Rather, we agree more with Karl Popper’s view of paradigms (1970)
as frameworks that can always be transcended by developing still
broader frameworks containing the older ones. If we accept that
TNKM is a paradigm that is open to change and further develop-
ment, then clearly that paradigm needs detailed articulation of its
various components and aspects, so that it may be developed further
through critical examination, error elimination, and learning. That
articulation is a process the authors have been undertaking through
many previous and projected articles, presentations, classes and
workshops, and books on TNKM.
KMCI Press has already published two books that reflect the
TNKM perspective: The New Knowledge Management, by Mark W.
McElroy (2003), and Enterprise Information Portals and Knowledge
Management, by Joseph M. Firestone, Ph.D. (2003). The purposes
of this book are to go more deeply into many of the subjects raised
in the earlier works; to set TNKM in the context of the social
sciences; and to encourage the evolution of KM as a discipline. Most
important, however, it is intended to look at TNKM from the point

----------------------- Page 22-----------------------

Introduction xxi

of view of the issue, so that its most important subject areas may be
distinguished, the core of TNKM revealed, and the significance of its
key problem areas brought home to the KM Community.
Key Issues in The New Knowledge Management is a pivotal book
in the development of the TNKM paradigm, because it is this book
that moves from the general statement of TNKM principles and
outlook to a statement of a set of issues, problems, and “puzzles”
that are identified as critical to the paradigm and that are illuminated
by it. This book covers many of the primary problem areas in
TNKM, but for reasons of space we leave many such areas for a
future work.
Having identified TNKM in broad and general terms, let us now
turn to the various issues we will address in this book.

What Are Its Issues?

There are many key issues in knowledge management, but there are
few books that look at KM from an issues point of view. So we think
the field is ready for an issues book and that this one will fill that
need. Here are the issues we have selected, the reasons why we
selected them, and the features that will emerge from our treatment
and that we hope will make this book a significant contribution for
readers interested in KM.

The Knowledge Conundrum (Knowledge Wars)

The nature of knowledge is a perpetual issue in Knowledge Man-

agement. As Verna Allee (2002) says: “How you define knowledge
determines how you manage it.” It is a mark of the lack of integra-
tion of this field that so many definitions of knowledge, many dia-
metrically opposed to one another, still circulate and are given some
measure of credence. Progress will not be made in KM until there is
a macro-level attempt to address a few key concepts of knowledge.
TNKM has a point of view on this issue, and Chapter 1 on the
knowledge conundrum will provide a comprehensive analysis of the
warring concepts of knowledge and then will present the TNKM
point of view as one that integrates most of them. For readers, this
chapter will provide a guide to the perplexed and an alternative that

----------------------- Page 23-----------------------

xxii Introduction

they can use in coming to their own decisions about the monistic,
dualistic, or pluralistic character of knowledge.

The Nature of Knowledge Processing (Origin and Character

of the Knowledge Life Cycle)

Knowledge processes produce knowledge. They are the primary focus

of KM. In TNKM, McElroy (2003) described the Knowledge Life
Cycle (KLC) framework and demonstrated its organizing power for
those who practice Knowledge Management. But he could not, for
reasons of space, provide an in-depth examination of the foundations
of the KLC in individual and group motivation. Chapter 2 will
provide a theory about how the KLC arises and what its relationship
is to the Organizational Learning Cycle (OLC), or as we like to call
it, the Decision Execution Cycle, or DEC. This chapter will also
provide an analysis of double-loop learning (Argyris 1993), Popper’s
problem-solving model (Popper 1972), a transaction-based social
psychological framework of sociocultural interaction, and “sense
making” (Weick 1995)—a very hot topic in KM currently—in DEC
and KLC processes.

Information Management or Knowledge Management?

Here is a truly central issue defining the boundaries of Knowledge

Management. The very existence of the field depends on this dis-
tinction. If it cannot be made coherently, then everything reduces to
information management, and there is no basis for the practice and
discipline of KM. TNKM has its own perspective on this distinction.
It is a clear perspective and in developing it in Chapter 3, we will
provide a clear, bright line distinguishing KM from IM. We will also
provide a framework of KM activities to guide KM practice.

Generations of Knowledge Management: Three Views

One of the bases of TNKM is in Mark McElroy’s distinction between

first- and second-generation knowledge management. Now there are
two other views of change in KM: a “three-stage” theory offered in

----------------------- Page 24-----------------------

Introduction xxiii

a recent issue of KM World by Mark Koenig (2002), and an “age”

theory offered by David Snowden (2002). Chapter 4 will examine all
three views of change, compare them, and will show that the TNKM
view is the only viable alternative among the three. In the process,
it will critique Snowden’s increasingly popular Cynefin Model and
demonstrate that TNKM offers all of its advantages in addressing
change, dynamism, complexity in organizations, and variety, without
having to embrace the oversimplicity, paradox, contradiction, and
inaccuracy in historical reconstruction that beset Cynefin.

The Role of Knowledge Claim Evaluation

in Knowledge Production

Many current approaches to KM ignore the essential role of

knowledge claim evaluation, or validation, a key subprocess in the
KLC, in producing knowledge. Chapter 5 addresses this issue and
presents a framework for knowledge claim evaluation in produc-
ing organizational knowledge. It will also discuss the relevance of
the framework for software applications. This framework will be
the first of its kind in KM. It will provide a basis for firms to cus-
tomize their own methodologies for knowledge claim evaluation,
knowledge production, and, by extension, innovation, and will also
provide a basis for software applications such as enterprise knowl-
edge portals.

Applications of the Knowledge Life Cycle Framework:

Theory and Practice in TNKM

Increasingly, theorists in knowledge management are offering con-

ceptual frameworks or models of knowledge processing. The proof
of a conceptual framework is in the assistance it provides in enhanc-
ing KM practice by supplying a set of categories and relationships
that may be used for description, analysis, and planning. Chapter 6
will examine the issue of what the KLC is good for. Specifically,
it will provide an account of the support provided by the KLC
framework in various areas of practice including: strategy formula-
tion, KM and knowledge audits, modeling, predicting, forecasting,
simulating, metrics segmentation, policy and program formulation,

----------------------- Page 25-----------------------

xxiv Introduction

methodology, IT requirements, Intellectual Capital, and education

and training.
KM as Best Practices Systems—Where’s the Context?

A mainstay of first-generation KM has been the best practice system,

a database solution that catalogs information and stories about
business process approaches that were apparently associated with
successful outcomes in the past. The guiding idea is that the best
practices described in these cases may be reused successfully when
similar situations arise. Chapter 7 questions this idea by discussing
the problem of “context” in best practices, and by providing an
answer to this problem. This answer shows that present best prac-
tices systems are anything but that.

What Comes First: KM or Strategy?

Few issues in knowledge management provoke more fiery debate

than the question of how KM relates to strategy and who it should
report to. Is KM the servant of strategy? Or does KM somehow tran-
scend it? Should KM initiatives be independent of strategy and not
subordinate or answerable to their makers? Should strategy be seen
as just another kind of knowledge claim, a product of knowledge
processing? If so, and if KM is all about enhancing knowledge pro-
cessing, then isn’t business strategy arguably downstream from KM,
and not the reverse?
Further, if strategy is indeed nothing more than just another (set
of) knowledge claim(s), then instead of viewing KM as a tactical tool
for the fulfillment of strategy, shouldn’t we, instead, be thinking of
strategy as an outcome of knowledge processing, the quality of which
is the chief concern of KM, and not the fulfillment of strategy? Or is
KM an implementation tool for strategy? And if so, should the
complexion and mission of KM change whenever business strategies
change? In Chapter 8 we will examine these issues, as well as the
closely related question of where KM should reside in the manage-
ment hierarchy.

----------------------- Page 26-----------------------

Introduction xxv

Is Culture a Barrier in KM?

It’s become almost cliché to attribute failures in KM programs to

the effects of culture. In Chapter 9 we confront this issue head-on,
analyze various reasoning patterns using the idea of culture, and
place culture in the context of many other factors that impact the
success or failure of KM. We also analyze the relationship of culture
to knowledge, a topic that has not generally been addressed clearly
in the KM literature. The reader will come away from this chapter
with (a) an understanding that culture is composed in large part of
knowledge predispositions, and (b) an extension of the conceptual
framework of TNKM, enabling clear thinking about the role of
culture in KM.

Foundations of Intellectual Capital Frameworks and

the Need to Broaden Them

Intellectual Capital (IC) models usually take the form of taxonomies.

Market Value is at the top of a hierarchy; types of capital contribut-
ing to market value are at the lower levels. IC models are used to
segment indicators or metrics, which may then be used to evaluate
the market value of companies. Chapter 10 examines the pattern of
models of Intellectual Capital and then critiques the thinking that
lies behind it. Out of this comes the idea of innovation-related social
capital as a new, legitimate form of intangible capital missing from
contemporary models and also the view that what conventional
accounting desperately needs in order to resolve its quandary over
IC is a strong dose of new thinking from complexity science, orga-
nizational learning, and TNKM.

Conclusion: The Knowledge Management Landscape, the

Vision of Knowledge Management, and the Future of TNKM

We end in Chapter 11 by presenting the vision and program of

TNKM. In particular, we will draw from the previous analysis an
account of the major problems and issues that we must continue to
address to advance TNKM’s program of development.

----------------------- Page 27-----------------------

xxvi Introduction

Who This Book Is For

Communities that would be interested in the book include:

# The KM community
# The organizational learning community
# The innovation management community
# The IT and portal communities
# The R&D community
# The HR and OD communities
# The intellectual capital management community
# The “complexity theory as applied to business” community
# The systems thinking community
# The “system dynamics as applied to business” community

The following management communities will also be interested:

# CIOs (interested in tracking developments in KM)

# HR directors (interested in business methods that lead to
improvements in the value of “human capital” and learning
strategies)
# OD practitioners (interested in anything that relates to strate-
gies for improving organizational performance)
# CFOs (rapidly rising interest in growing and “valuing” intel-
lectual capital and reporting on same via the finance function)
# CEO/Executive (interested in any approach that results in
increased rates and relevance/quality of innovation as a source
of competitive advantage)

How to Use This Book

Read the first three chapters first. Chapters 4 to 9 may be read in any
order. Chapters 10 and 11 are best read last.

References

Allee, V. (2002), “12 Principles of Knowledge Management” American

 Society for Training and Development, Alexandria, VA.
Argyris, C. (1993), Knowledge for Action, San Francisco, CA: Jossey-Bass.

----------------------- Page 28-----------------------

Introduction xxvii

Firestone, J.M. (2003), Enterprise Information Portals and Knowledge

Management, Boston, MA: KMCI Press/Butterworth–Heinemann.
Koenig, Michael E.D. (2002), “The Third Stage of KM Emerges,” KMWorld
11, No. 3 (March, 2002), 20–21, 28.
Kuhn, T. (1970), The Structure of Scientific Revolutions, Chicago, IL: Uni-
versity of Chicago Press (1970 edition).
McElroy, M.W. (1999), “The Second Generation of KM,” Knowledge Man-
agement (October 1999) pp. 86–88.
——— (2003), The New Knowledge Management: Complexity, Learning,
and Sustainable Innovation, Boston, MA: KMCI Press/Butterworth–
Heinemann.
Nonaka, I. and Takeuchik, H. (1995), The Knowledge Creating Company,
New York, NY: Oxford University Press.
Popper, K.R. (1970), in I. Lakatos and A. Musgrave (eds.), “Normal Science
and Its Dangers,” Criticism and the Growth of Knowledge, Cambridge,
UK: Cambridge University Press.
Popper, K.R. (1972), Objective Knowledge, London, England: Oxford
University Press.
Snowden, D. (2002), “Complex Acts of Knowing; Paradox and Descriptive
Self-Awareness”, Journal of Knowledge Management , forthcoming.
Weick, K. (1995), Sense Making In Organisations, Beverly Hills, CA: Sage
Publications.

----------------------- Page 29-----------------------

This Page Intentionally Left Blank

----------------------- Page 30-----------------------

Chapter 1

The Knowledge
Conundrum

Introduction

Since knowledge management became a popular phrase in the mid-

1990s, practitioners have labored under the burden of varying and
sometimes vague definitions of the field. It is a frequent occurrence
at meetings of practitioners discussing KM Metrics, KM Methodol-
ogy, or KM approaches that someone suddenly asks, “What do we
mean by knowledge management?” It’s a still more frequent occur-
rence that multiple answers are forthcoming in such meetings. Part
of the reason for this lack of consensus on a basic definition distin-
guishing the fundamental process characterizing KM from other busi-
ness processes is lack of consensus about how to define “knowledge”
itself. Most writers about knowledge management apparently believe
that they should keep discussion of the nature of knowledge to a
minimum and either use the term implicitly, or alternatively, offer the
definition they prefer with little or no explanation about why they
prefer that specific definition.
This chapter critically surveys alternative definitions of knowledge
used in the KM literature, and on the basis of this critique proceeds
to offer our own construction of this key term and relates our views
to other important questions related to knowledge. The topics we
will cover include:

----------------------- Page 31-----------------------

2 Key Issues in the New Knowledge Management

# On definition
# Definitions of knowledge
# World 2 definitions
# World 3 definitions
# World 2 data, information, and knowledge
# Tacit knowledge and explicit knowledge
# Polanyi, implicit knowledge, and Popper
# Individual level World 2 knowledge and motivational hierarchies
# Different types of knowledge

On Definition

Many in Knowledge Management (KM) prefer to avoid defining it.

Their view is that definition is a sterile, time-wasting pastime con-
tributing little or nothing to the real work of KM. Our view is dif-
ferent. It is that definition is an important early step on the road to
specifying one’s cognitive map of knowledge processing and KM and
to ultimately developing quality models useful for developing KM
solutions. We also think that arguments over definition are not fruit-
less arguments, but important exchanges about what is a good start-
ing point for developing a cognitive map of KM.
The purpose of a definition is not to provide necessary and suffi-
cient conditions for its use. Instead, its purpose is to answer a ques-
tion like: “What do you mean by knowledge management?” with a
short, incomplete answer that:

# allows the questioner to infer something more of the cognitive

map (or conceptual map, or semantic network) of the target of
the question; and
# facilitates the beginning of further communication and perhaps
learning relative to that cognitive map.

A definition, in other words, is the “elevator speech” (the 30-second

expression of the idea; see Moore 1991, 159–162) representing,
however imperfectly, the cognitive map of the person offering it. That
is, when communicating with others about any term, you can:

# Refuse to explain it;

# Define it;

----------------------- Page 32-----------------------

The Knowledge Conundrum 3

# Specify it;
# Construct a cognitive map of it.

Which would you rather do in response to a basic question from

someone either at the beginning of a conversation or at a briefing?
Do nothing? Give the “elevator speech?” Give the five-minute over-
view? Or give the whole briefing?
And if there’s disagreement over a specific definition there are a
number of good reasons why that might be the case, other than mere
love of philosophical disputation. First, the definition may not
provide enough of the definer’s cognitive map to evaluate his or her
statements using the concept. Second, the definition may not distin-
guish the concept from other concepts. Third, the definition may
redefine the term beyond common usage in a manner that promotes
confusion in communication. (This is a frequent occurrence due to
the desire of communicators to acquire the “halo effect” of certain
terms for their frequently different concepts.) And fourth, those dis-
agreeing may forecast that a bad model will result (in wasted time
and effort) from the starting place for model construction provided
by a particular definition.
So, once again, why bother to define? Answer: to save time in
responding to a questioner, to create a basis for further communica-
tion with others, and last, to specify a cost-effective starting place for
further specification, measurement, and modeling.

Definitions of Knowledge

There is no consensus on the nature of knowledge. Nor has there

ever been in the history of human thought (Jones 1952). Here’s a
brief and far from comprehensive survey of definitions offered by
writers and researchers in knowledge management.
Knowledge is:

# “Justified true belief”: This is the venerable definition of many

philosophers, especially of empiricists who believe knowledge
claims can be justified by facts (Goldman 1991). It also is the
definition adopted by Nonaka and Takeuchi (1995, 58).
# “Information in context”: This is a definition that may have its
roots in Cartesian rationalist epistemology. In that conceptual

----------------------- Page 33-----------------------

4 Key Issues in the New Knowledge Management

framework, its import is that a knowledge claim is valid if it

fits without contradiction and adds to the systematic coherence
of a larger framework of knowledge (Aune 1970). That is, the
rationalist view that knowledge is information in context and
that context is what makes it knowledge derives from the more
complete idea that information is justified as knowledge when
it is coherent with a larger deductive system within which it fits.
In this formulation, the validity criterion and the theory of truth
are the same. They form a coherence theory of truth and vali-
dation, where coherence means that a knowledge claim is con-
sistent with its broader context. In other words, according to
the Cartesian rationalist version of the information in context
view, information is knowledge when and if (because) it is val-
idated by consistency with its context.
The rationalist view of knowledge as information in context
is only one variant of that view. A second is the pragmatist
idea that information that is useful in a situational context of
decision and action is knowledge. This view does not focus on
logical consistency with other knowledge claims in a system.
 Instead, it focuses on how instrumental a piece of informa-
tion is as a tool for action. A further variant of the pragmatist
view results from those who do not believe that mere infor-
mation, our linguistic expressions recorded in documents,
information systems, or other cultural products can ever be
knowledge. This variant views knowledge as belief and sug-
gests that the utility of information in context is determined
by the belief knowledge that exposure to the information
produces.
# “Knowledge is understanding based on experience”: This is an
idea that is central to modern pragmatism and its associated
epistemology (James 1907). It’s also a standard definition found
in English language dictionaries. Since it refers to “under-
standing,” it is clearly a definition of knowledge focused on
belief.
# “Knowledge is experience or information that can be commu-
nicated or shared” (Allee 1997, 27). Even though Allee refers
to experience here, her emphasis is clearly on sharable infor-
mation and community, not beliefs (27).
# “Knowledge, while made up of data and information, can
be thought of as much greater understanding of a situation,

----------------------- Page 34-----------------------

The Knowledge Conundrum 5

relationships, causal phenomena, and the theories and rules

(both explicit and implicit) that underlie a given domain or
problem.” (Bennet and Bennet 2000, 19). Here Bennet and
Bennet refer to knowledge as “understanding” of situations,
relationships, and causal phenomena but associate data, infor-
mation, theories, and rules, and also “understanding” of them
with knowledge.
# “Knowledge can be thought of as the body of understandings,
generalizations, and abstractions that we carry with us on a per-
manent or semi-permanent basis and apply to interpret and
manage the world around us . . . we will consider knowledge to
be the collection of mental units of all kinds that provides us
with understanding and insights.” (Wiig 1998). Wiig clearly
defines knowledge as a form of belief.
# “The most essential definition of knowledge is that it is com-
posed of and grounded solely in potential acts and in those signs
that refer to them” (Cavaleri and Reed 2000, 114). This is
another definition originating in pragmatism and specifically in
the work of Charles S. Peirce. A definition offered in the same
spirit is “knowledge is social acts,” provided by Ralph Stacey
(1996).
# “Knowledge is the capacity for effective action.” This defini-
tion is the one favored by the organizational learning commu-
nity (Argyris 1993, 2–3).
# “Knowledge is a fluid mix of framed experience, values, con-
textual information, and expert insight that provides a frame-
work for evaluating and incorporating new experiences and
information. It originates and is applied in the minds of
knowers. In organizations it often becomes embedded not only
in documents or repositories but also in organizational rou-
tines, processes, practices, and norms” (Davenport and Prusak,
1997, 5).
We will discuss these views shortly, but first we want to introduce
the framework we prefer for looking at knowledge.
We distinguish three types of knowledge:

# World 1 knowledge—encoded structures in physical systems

(such as genetic encoding in DNA) that allow those objects to
adapt to an environment;

----------------------- Page 35-----------------------

6 Key Issues in the New Knowledge Management

# World 2 knowledge—beliefs and belief predispositions (in

minds) about the world, the beautiful, and the right that we
believe have survived our tests, evaluations, and experience;
# World 3 knowledge—sharable linguistic formulations, knowl-
edge claims about the world, the beautiful, and the right, that
have survived testing and evaluation by the agent (individual,
group, community, team, organization, society, etc.) acquiring,
formulating, and testing and evaluating the knowledge claims.

All three types of knowledge are about encoded structures in one

kind of system or another that arguably help those systems to adapt.
The World 1, World 2, and World 3 distinctions were introduced by
Karl Popper (1972, 1994, Popper and Eccles 1977). Popper also
defined the distinction between World 2 and World 3 knowledge
(1972, 106–122, 1994, Chap. 1) (Popper and Eccles, 1977, 36–50).
But he did not define either type of knowledge in precisely the terms
we have used.
It is comparatively easy to accept Popper’s distinction between the
World 1 material and World 2 mental objects that underlies the dis-
tinction between World 1 and World 2 knowledge. It is much harder
however, to accept the reality of World 3 objects and therefore World
3 knowledge. Following Popper, we propose that there are things that
affect our behavior which (1) are not part of World 1 or World 2,
(2) are made by intelligent beings, (3) are sharable among us in that
they provide sharable content for those exposed to them, and (4) are
partly autonomous once created by us. World 3 objects include the-
ories, arguments, problems, works of art, symphonies, constitutions,
public policy statements, and all the cultural objects that express
content.
While Popper called these objects “World 3,” he was quick to rec-
ognize that such objects come in many varieties and indicated that
he thought that World 3 had many different regions. He had no
strong feelings about whether these regions should all be called World
3 products or whether we should break things out into a number of
distinct worlds based on the differences among art, science, music,
law, truth, beauty, justice, and other cultural products. We agree with
his views and also think that it makes little difference how we label
the different World 3 regions as long as we recognize that all are cul-
tural products, that humans create them, and that their function is
to help us adapt.

----------------------- Page 36-----------------------

The Knowledge Conundrum 7

Among World 3 products, we have already named problems and

knowledge claims as key objects. Thus, knowledge claims exist
within any organization or social system and are among its World 3
products. Among World 2 objects we have distinguished beliefs and
belief predispositions of various kinds. Later on we will present a
much richer view of the psychology of psychocultural interaction.
So in World 2 we have beliefs and belief predispositions, and in
World 3 linguistic expressions in the form of knowledge claims.
Where, then, is knowledge? As we indicated earlier, knowledge is
found in both World 2 and World 3 in those beliefs, beliefs predis-
positions, and knowledge claims that have best survived our attempts
to test and evaluate them against competitors. Thus, in our view,
knowledge is a term applied to the best performing beliefs, belief pre-
dispositions, and knowledge claims of an agent—that is, the indi-
vidual or group that holds the belief or belief predisposition, or
expresses the knowledge claims in question—in the course of the
agent assessing the performance of those claims.
Our definitions of Worlds 2 and 3 knowledge do not require that
knowledge be true. In fact, our position is that knowledge claims are
fallible and that while a particular knowledge claim may be true, and
that its function is to state what is true, even those that we call
“knowledge” may prove false in the future if they fail to survive our
tests. If knowledge need not be true, then clearly it cannot be called
objective on grounds that it is true.
Further, World 2 belief knowledge, even though it has survived
individual tests and evaluations, since it is fallible, also has the
problem that it is not sharable among agents. Thus, such knowledge
is personal and psychological, and the beliefs that constitute it do not
exist outside the knowing subject that holds them. In exactly this
sense, World 2 belief knowledge is subjective.
On the other hand, World 3 knowledge claims, once created, do
exist outside the knowing subjects that created them, do not die with
these subjects, and, in addition, are sharable among these knowing
subjects and others that may not encounter them until years after
their creation. Further, the track record of testing and evaluating
knowledge claims also exists outside the knowing subjects involved
in creating it and is sharable among knowing subjects interested in
the knowledge claims. So this sharability of knowledge claims and
their track records makes them “objective” in a way that beliefs and
belief predispositions are not.

----------------------- Page 37-----------------------

8 Key Issues in the New Knowledge Management

If knowledge claims are “objective,” what may be said about the

objectivity of World 3 knowledge itself? We have already defined
World 3 knowledge as composed of the best surviving knowledge
claims of an agent. But this notion implies that knowledge is the
product of a classification decision by the agent producing that
knowledge. So what, exactly, is “objective” about this classification
decision that may well be dependent on ideological or political cri-
teria that are biased and therefore essentially subjective in nature?
The answer is that in the general case there is nothing necessarily
“objective” about such decisions, nor need there be to ensure that
the knowledge produced by the decision is “objective.”
The reason for this is that the classification decision need not be
correct for the resulting “knowledge” to be objective. Nor need it
follow a decision procedure that conforms to any recognizable
notion of rationality (though the knowledge that emerges from it
would certainly be higher quality if it did, and therefore an “objec-
tive” decision procedure is certainly preferable to one that is not
objective).
Rather, the objectivity of the knowledge produced lies in the
sharable nature of the knowledge claims that have been classified as
knowledge and the metaclaims constituting the track record of testing
and evaluation. The sharable nature of these claims always makes
the decision to classify a knowledge claim as knowledge subject to
review. Thus, it has no effect on the objectivity of knowledge that
the classification decision is made by one particular agent rather than
another, because the designation “knowledge” for a particular
knowledge claim carries no greater connotation of “objectivity” than
the objectivity that inheres in the unclassified knowledge claims
themselves.
The distinction between World 2 and World 3 knowledge, and par-
ticularly the use of the term “knowledge” for World 3, is frequently
hard to accept. A particularly direct objection to our characteriza-
tion is the following.
World 3 expressions of knowledge are not the same as knowledge
in the World 2 sense because they are expressions of knowledge, not
knowledge. They are vestiges of knowledge. To call them knowledge
is a little bit like calling a person’s shadow a form of “person”
because it expresses the shape of a person whose very essence can be
deciphered from a study of the shadow. Therefore, shadows are
“objective” people.

----------------------- Page 38-----------------------

The Knowledge Conundrum 9

This argument, though trenchant and attractive, has many prob-

lems. First, we do not say that World 3 knowledge claims are the
same as World 2 knowledge. World 2 knowledge is belief knowledge;
most of it is not even reducible to language; most of it is predisposi-
tional in character and is not even conscious. And all of it is subjec-
tive in the sense that it cannot be shared with other agents. Second,
World 3 knowledge claims are not expressions of belief knowledge
as claimed just above.
It is a fallacy to think that we can faithfully express or copy our
belief knowledge except in the most superficial sense. Rather than
being expressions of belief knowledge, knowledge claims are simply
products that we create in an effort to help us solve problems. They
are one type of linguistic expression. What do they express? What
the claims say, not what the authors believe. We do not know the
correspondence between what the authors say and what they believe.
Nor does the truth of the expressions—the knowledge claims—have
anything to do with the truth of a person’s beliefs. Truth as a coher-
ent philosophical construct is a relationship between linguistic enti-
ties and facts. It is not a relationship between beliefs and facts. It is
not even clear what the analogous relationship between beliefs and
facts is, but it is not truth.
Third, World 3 knowledge claims are not “vestiges of knowledge.”
They are not because they are a resultant of belief knowledge, situ-
ational forces, cultural and social structural influence, and individual
creativity expressed in the creation of World 3 objects. So, much more
goes into creating them than just belief knowledge.
They are also not vestiges because as linguistic objects, they have
an entirely different character than beliefs and are in no sense a
“leftover” or “vestige” of them. They are also not vestiges because
while beliefs cannot be shared with others, these knowledge claims
can be shared, and this sharability characteristic makes them more
testable, more open to evaluation, more open to gradual refine-
ment over time, and more useful in both solving problems and in
generating new problems that can lead to further progress than
beliefs can.
Finally, in the passage: “To call them knowledge is a little bit like
calling a person’s shadow a form of ‘person’ because it expresses the
shape of a person whose very essence can be deciphered from a study
of the shadow. Therefore, shadows are ‘objective’ people,” such ideas
express an entirely false analogy. In the analogy, the person is the

----------------------- Page 39-----------------------

10 Key Issues in the New Knowledge Management

reality and the shadow is the representation of it we use to try to

divine its essence. But in the World 2/World 3 contrast, reality is
the system and environment within which we have to act, and our
problem is to understand that reality so that we can achieve our goals
in that context. At any given time, our belief knowledge is the
“shadow” of reality present in our minds, and our problem is to
refine this shadow, this understanding, so that we can use it to act
more successfully. How do we do that?
We do it by combining with others to create linguistic expressions,
cultural products that are representations of reality themselves, more
shadows. But there are differences between these shadows and the
belief shadows. First, unlike belief shadows, with these knowledge
claim-based shadows, we can at least formulate the idea of truth
correspondence coherently. Second, we can test and evaluate these
knowledge claims in collaboration with other people, so that we can
create organizational knowledge. Third, we can share these shadows
with others in order to refine them and to test them against alterna-
tive shadows, so that eventually we can arrive at a shadow that has
performed better in the face of our tests. Fourth, when our con-
struction of our knowledge claim shadows is, for the time being, com-
plete, we can use these shadows to reshape our belief shadows, so
that these “belief shadows” that we must rely upon to make deci-
sions, provide us with better results.
This last point is of paramount importance. Following Popper’s
account (Popper and Eccles 1977, 120–147), evolution begins within
World 1. When biological creatures evolve, they first achieve their
goals through limited adaptive and learning capabilities. They have
brains but do not have minds. Minds evolve as control mechanisms
for the brain. And as we have seen, minds allow agents to develop
belief “shadows” for tracking reality and enhancing adaptation.
However, the shadows created by mind alone cannot incorporate an
objective shared perspective on reality. Therefore their fit with exter-
nal conditions is less than ideal.
So evolution proceeds further. It creates creatures that not only
have brain, mind, and consciousness, but also creatures that have
language and culture. These creatures can use language and culture
to create “shadows” that do incorporate a sharable perspective on
reality, and this perspective, in turn, with continued inquiry, can
produce “shadows” that benefit from this shared perspective and that
can even correspond closely with reality. In other words, the creation

----------------------- Page 40-----------------------

The Knowledge Conundrum 11

of language and culture creates more objective “shadows” (knowl-
edge claims) that place constraints on the personal, subjective
“shadows” (beliefs) of the mind. These subjective shadows, in turn,
help it to better understand reality, which it must do if it is to fulfill
its role as the controller of behavior.
This brings us to the end of our attempt to introduce our own
knowledge framework. Later we will expand it to cover knowledge
outcomes in detail, and still later knowledge processing and knowl-
edge management. In conclusion, we note that in many organiza-
tions, there is little concern with World 1 knowledge, and with the
beautiful, and only slightly greater concern with the right, so we are
left with Worlds 2 and 3 knowledge of reality as the outcomes of
knowledge processes that are of primary concern to knowledge man-
agement. Let us now consider some of the definitions of knowledge
surveyed earlier in light of their internal difficulties and the World
2/World 3 distinction.

World 2 Definitions

# The definition of knowledge as “justified true belief” has the

difficulty that we cannot know for certain that any knowledge
belief, no matter how well validated, is true. Yet some knowl-
edge claims, the well validated ones, are what we mean by
knowledge. It also has the additional difficulty that “justifica-
tion” of knowledge claims cannot be accomplished through the
testing and evaluation processes that comprise validation,
because no finite amount of evidence can provide a warrant
for inferring that a knowledge claim is true. And nether can a
finite amount of evidence force one to accept the conclusion
that a knowledge claim is false. In short, the problem with jus-
tified true belief as a definition of knowledge is that we can
neither “justify” knowledge claims nor ever know for certain
whether they are true. So, if knowledge is justified true belief,
we are led to the conclusion that there is no knowledge, a con-
clusion that is unacceptable as a foundation for knowledge
management.
# The definition of World 2 knowledge we provided earlier
implies that knowledge is not the same thing as “understand-
ing” whether qualified by experience, or greater understanding,

----------------------- Page 41-----------------------

12 Key Issues in the New Knowledge Management

or insight. Understanding, for one thing, is conscious. When we

understand something, we are aware of our understanding in
consciousness. Knowledge in World 2, on the other hand, can
refer to unconscious predispositions of various kinds that we
cannot make conscious. Further, we may hold beliefs that we
have not tested and evaluated, understand those beliefs com-
pletely, but not believe that those beliefs are knowledge because
they have not been tested and evaluated. For at least these two
reasons, “understanding” is not a sufficient condition of knowl-
edge, and therefore the pragmatist (James), Bennet and Bennet,
and Wiig definitions are called into question.
# Nor is World 2 knowledge the same thing as experience we can
share. Some tacit knowledge, as characterized by Polanyi
(1958, 1966), is inexpressible. We know it but cannot tell it.
 This kind of World 2 knowledge is impossible to share. So if
we accept Polanyi’s idea of personal, tacit knowledge, on those
grounds alone we must also accept that knowledge is not
always experience we can share. Even beyond such tacit knowl-
edge, however, there is an even more important reason why
World 2 knowledge is not the same thing as experience we can
share, and that is that World 2 knowledge whether tacit or not
is internal to our minds and ultimately private. Since no one
has direct access to the mind of another, there is no way to
directly share the experience of another.
# Other than through ostensive demonstration, which does not
share personal experience, the way we attempt to share expe-
riences with others is primarily by using language-based
communication, visuals, and art, in other words, World 3
knowledge claims, to describe our experiences to others. But
clearly neither our descriptions of our experiences, nor our
demonstrations, are the same as our subjective experiences.
There is an irreducible epistemic gap between these external
things and our inner experience. What we are sharing with
others is not our World 2 beliefs, but our World 3 expressions
of knowledge claims resulting from these beliefs, or our expres-
sions of these World 2 beliefs, or our demonstrations comprised
of actions reflecting our beliefs.

So the above definitions of World 2 knowledge have serious difficul-

ties as accounts of it. In our view, World 2 knowledge is belief that

----------------------- Page 42-----------------------

The Knowledge Conundrum 13

the agent holding it has “justified” by subjecting it to the agent’s

testing and evaluation process. But it need not be true, and it cannot
be “justified” by logical rules of whatever kind. World 2 knowledge
is an immediate precursor of our decisions, and we use it to make
them. Such knowledge is “subjective” in the sense that it is agent-
specific and cannot be directly shared with others.
World 2 knowledge exists at levels above the individual, as well
as at the individual level of analysis. That is, an “agent” “holding”
World 2 knowledge can be a group, a team, an organization, even a
nation, as well as an individual. Much research on culture (Triandis
et al. 1972, Bateson 1972, Kluckhohn and Strodtbeck 1961, Morris
1956, McClelland 1961, Firestone and Oliva 1971, Glenn 1966,
DeCharms and Moeller 1962), national character (Terhune 1970,
Duijker and Frijda 1960), civil strife (Firestone 1972), and politi-
cal integration (Deutsch 1963, Merritt 1966, Namenwirth 1969,
Feierabend and Feierabend 1966), suggests that group cognitive pre-
dispositions (including belief and knowledge predispositions) are a
useful concept in accounting for group behavior. If we do not rec-
ognize the existence of such predispositions, we restrict World 2
knowledge to the level of the individual. Such individual World 2
knowledge is “personal,” in the sense that other individuals do not
have direct access to one’s own knowledge in full detail, and there-
fore cannot “know” it as their own belief. We will return to the idea
of group cognitive predispositions in Chapter 9.

World 3 Definitions

Five of the knowledge definitions we surveyed earlier may be viewed

as World 3 definitions. These are knowledge as “information in
context,” knowledge as “a potential act,” knowledge as “social
acts,” knowledge is the “capacity for effective action,” and knowl-
edge is “a fluid mix of framed experience, values. . . . All five defini-
tions have severe problems. Here they are:
First, the idea that knowledge is information in context suggests
that knowledge is linguistic in character because the term “infor-
mation” is almost never used to characterize belief and World 2
objects. But this definition doesn’t distinguish knowledge from infor-
mation, because information can have every bit as much context as
knowledge.

----------------------- Page 43-----------------------

14 Key Issues in the New Knowledge Management

What distinguishes knowledge from information from the view-

point of the agents distinguishing one from the other is the content
of the validation contexts of knowledge, and the extent to which it
tests and evaluates competing knowledge claims. The history of an
organization’s tests of knowledge claims and their competitive per-
formance determines the validity of such claims. So the validation
context is the aspect of context that is all-important in distinguish-
ing knowledge from information, and if we wish to use the infor-
mation in context idea to define knowledge, it would be much closer
to the mark to define knowledge as information in its validation
context, rather than simply as information in context.
Second, World 3 knowledge is also not the same thing as a “poten-
tial act” and “those signs that refer to them,” or as “social acts.” To
see this, first note that potential acts are not beliefs, but abstractions,
forecasts that are World 3 objects themselves. And we express such
potential acts, as Peirce indicated, with the signs that refer to
them.
However, not every potential or social act is a knowledge claim,
much less a tested or evaluated knowledge claim. Though every
potential act may either be or imply a knowledge claim relating the
act to its anticipated consequences, unless we already have validated
the knowledge claim implied by the potential act, it is just informa-
tion, no different than any alternative potential knowledge claim act.
So the definition of knowledge as a potential act raises the question
of how potential acts that are knowledge claims are tested and
evaluated.
Third, the definition of knowledge as “social acts” raises the same
concerns as we just expressed for knowledge construed as potential
acts. Social acts are also not beliefs but are either material (World 1)
in character, or insofar as they are potential social acts, they are, as
we have said, World 3 objects. And as World 3 objects we must
address the question of whether they are knowledge claims, and if
they are, whether they have been tested and evaluated and whether
they have survived better than competitive alternatives.
Fourth, “knowledge is the capacity for effective action” is a World
3 definition insofar as the capacity referred to is the possession of
sharable knowledge resources such as problems, theories, models
arguments, information systems, policies, programs, etc. This defin-
ition of knowledge has the political scientist’s problem. That is,
knowledge may be a necessary condition for effective action. But it

----------------------- Page 44-----------------------

 The Knowledge Conundrum 15

is not sufficient. Effective action also requires (a) the intention to use
one’s knowledge, and (b) the capability or power to take those effec-
tive actions.
Our fifth World 3 definition is Davenport and Prusak’s:

Knowledge is a fluid mix of framed experience, values, contextual infor-

mation, and expert insight that provides a framework for evaluating and
incorporating new experiences and information. It originates and is
applied in the minds of knowers. In organizations it often becomes
embedded not only in documents or repositories but also in organiza-
tional routines, processes, practices, and norms (Davenport and Prusak
1997, 5).

This definition, with its reference to “framed experience,” “contex-

tual information,” “framework,” and “embedding in documents,”
etc., is squarely in the World 3 rather than the belief camp. But as
with the other definitions reviewed it ignores the role of testing
and evaluating knowledge claims in distinguishing knowledge from
information.
Instead of any of the above definitions, we think that World 3
knowledge consists of models, theories, arguments, descriptions,
problem statements, etc., that have survived our tests and evalua-
tions. It consists of linguistic formulations or expressions (World 3
information also exists). It is not psychological in nature or even
sociological, though it is made by intelligent agents. We talk about
the truth, or nearness to the truth of such World 3 objects,
and of knowledge defined as descriptions, models, theories, or argu-
ments that are closer to the truth than their competitors (Popper
1972).
This kind of knowledge is not an immediate precursor to deci-
sions. It impacts decisions only through the impact it has on
(World 2) beliefs. These beliefs, in turn, immediately impact deci-
sions. This kind of knowledge (World 3 objects), further, is
“objective.”
It is objective in the sense that it is not agent specific and is shared
among agents as an object whether or not they believe in it. It is also
not “personal,” because (a) all agents in the organization have access
to it, and (b) it emerges from the interaction of a number of agents.
Finally, it is objective because, since it is sharable, we can sensibly
talk about its organizational validation. To understand the essence

----------------------- Page 45-----------------------

16 Key Issues in the New Knowledge Management

of World 3 knowledge we can do no better than to quote Karl Popper

(1972, 116) who first formulated this idea of “objective knowledge,”
on the objective knowledge content in books:

A man who reads a book with understanding is a rare creature. But even
if he were more common, there would always be plenty of misunder-
standings and misinterpretations; and it is not the actual and somewhat
accidental avoidance of misunderstandings which turns black spots on
white paper into a book or an instance of knowledge in the objective
sense. Rather, it is something more abstract. It is its possibility or poten-
tiality of being understood, its dispositional character of being
under-
 stood or interpreted, or misunderstood or misinterpreted, which makes
a thing a book. And this potentiality or disposition may exist without
ever being actualized or realized.
To see this more clearly we may imagine that after the human race has
perished, some books or libraries may be found by some civilized suc-
cessors of ours (no matter whether these are terrestrial animals that have
become civilized, or some visitors from outer space). These books may
be deciphered. They may be those logarithm tables never read before, for
argument’s sake. This makes it quite clear that neither its composition by
thinking animals nor the fact that it has not been actually read or under-
stood is essential for making a thing a book, and that it is sufficient that
it might be deciphered.
Thus, I do admit that in order to belong to the third world of objec-
tive knowledge, a book should—in principle or virtually—be capable of
being grasped (or deciphered or understood, or “known”) by somebody.
But I do not admit more.

The distinction between World 2 and World 3 knowledge raises the

issue of which type of knowledge should be the object of KM.

# Can World 2 knowledge be managed by organizations?

# To what extent is World 2 knowledge about an organization
determined by organizational interaction, rather than individ-
ual predispositions and interactions not manageable by the
organization?
# Where does the distinction between Worlds 2 and 3 knowledge
leave the much better known distinction between tacit and
explicit knowledge?

----------------------- Page 46-----------------------

The Knowledge Conundrum 17

# Or the less well known distinction between “implied knowl-

edge” and codified knowledge? These questions will be con-
sidered in due course.

Data, Information, Knowledge, and Wisdom

Many writers have addressed the distinctions among data, informa-

tion, and knowledge. (See, for example, Allee 1997, Bellinger 1998,
Beller 2001, Murray 2000, Barquin 2001.) Our own version will
provide a necessary background to taking up future issues on the dis-
tinctions between data management and knowledge management,
and information management and knowledge management. What are
the differences among data, information, and knowledge in human
organizations? That depends on whether we’re talking about World
3 or World 2 phenomena. Let us consider World 3 first.

World 3 Data, Information, Knowledge, and Wisdom

What are the differences among World 3 data, information, and

knowledge in human organizations? Data, information, and knowl-
edge all emerge from the social process. They are global properties
of an organization, or its constituent agents, depending on the
organizational level that is the focus of analysis. They are inter-
subjective constructs, not personal data, information, or knowledge.
Organizational data, information, and knowledge are World 3
objects.
 A datum is the value of an observable, measurable, or calculable
attribute. Data are more than one such attribute value.
Is a datum (or are data) information? Information is always pro-
vided by a datum, or by data, because data are always specified in
some conceptual context. And, it is important to note, the concep-
tual context is one that expresses data in a structured format.
Without that structured format we would not call it “data.” So data
are a type of information. They are a type of information whose con-
ceptual context provides the data with structure and whose purpose
is to represent observation.
Information, in more general terms, is data plus concep-
tual commitments and interpretations, or such commitments and

----------------------- Page 47-----------------------

18 Key Issues in the New Knowledge Management

interpretations alone. Information is frequently data extracted, fil-

tered or formatted in some way.
Organizational knowledge is a subset of organizational informa-
tion, not a superset. But it is a subset that has been extracted, fil-
tered, formatted—that is, processed, in a very special way. It is
information that has been subjected to and that has passed tests and
evaluations aimed at eliminating errors and seeking the truth. It is
information that has been enhanced by the record and experience
provided by the validation process. Ideally, this enhanced informa-
tion is that which is most truthlike (see Chapter 5).
This brings us to the Case of the Misconceived Pyramid. In treat-
ing the distinctions among data, information, and knowledge, it is
often assumed that these are arranged in a pyramid with data, the
most plentiful type, at the bottom; information produced from data
above it; knowledge produced from information through the hard
work of refining, or “mining,” above it, and wisdom produced from
knowledge, the rarest of all, at the top. This makes a nice picture
(Figure 1.1). But if data and knowledge are also information, what
happens to the pyramid?
Figure 1.2 presents a new picture. In it, information is not
made from data. Data and knowledge are made from preexisting
information. That is, “just information,” data, knowledge, and prob-
lems are used in the knowledge life cycle to produce more informa-
tion, including new knowledge. In effect this figure is saying, “Get

If data and knowledge are Information,

what happens to the pyramid?

Wisdom

Knowledge

Information

Data

Figure 1.1
The Case of the Misconceived Pyramid

----------------------- Page 48-----------------------

The Knowledge Conundrum

19

Data, knowledge and “just information” are types of information!

Information is not made from data. New data and knowledge are
made through the Knowledge Life Cycle from preexisting information,
that is: from “just information,” data, knowledge, and problems.

Information

Data Just Information Knowledge

A Problem The Knowledge Life Cycle

Figure 1.2
Get Rid of the Pyramid, Get On to the Cycle

rid of the pyramid; get on to the cycle.” We will go into much greater
detail about the nature of the Knowledge Life Cycle (KLC) in later
chapters.
What has happened to wisdom in this new image? Wisdom is
knowledge of what is true or right coupled with “just” (in the sense
of justice) judgment about action to achieve what is right. Another
definition is the application of knowledge expressed in principles to
arrive at prudent, sagacious decisions about conflict situations. Both
these definitions are consistent with the parable of Solomon, but they
suggest that wisdom is ambiguous. It is either (a) a form of knowl-
edge (i.e., also information) about doing what is right or (b) a kind
of decision (in which case it’s not information, but a type of action
in a business process). That is, depending on how it is defined,
wisdom may not be the same kind of thing as data, information, or
knowledge.

World 2 Data, Information, and Knowledge

Earlier, we defined World 2 knowledge as beliefs (in minds) about

the world, the beautiful, and the right that have survived our tests
and evaluations. What if the beliefs do not survive or we cannot
decide if they have or not? Then we have information. Are surviving

----------------------- Page 49-----------------------

20 Key Issues in the New Knowledge Management

beliefs “information,” as well as knowledge? They are nonrandom

structures, and as such fit Shannon’s (1948) definition of informa-
tion. So, there is no reason to deny knowledge the appellation infor-
mation, as well.
Where do data come into this picture? “World 2 data” must refer
to beliefs about observational experiences. These beliefs are like other
beliefs in that we view them as validated, unvalidated, or invalidated
by our experience, and also they fit into and relate to the general
structure of the rest of our beliefs. So they, like World 2 knowledge
and information, are also information.
What about the pyramid? Does the pyramid image (see Figure 1.1)
make sense for World 2 data, information, and knowledge? Again,
our experience argues against it. Data are not the foundation from
which we produce information, from which we produce knowledge,
from which we produce wisdom. Instead, we are born with geneti-
cally encoded knowledge (World 1 knowledge) that enables us to
interact with the external world and to learn (Popper 1972, 71–73).
This knowledge is more plentiful in quantity than all of the knowl-
edge we will acquire through learning for the rest of our lives. We
use it to approach the world with predispositions and beliefs. With
these we create and structure experience, and from the process of
doing this we produce new data, information, and knowledge con-
tinuously and in no particular order.
How do we do this? Once again it is through the Knowledge Life
Cycle (KLC). The KLC, visualized in Figure 1.2 (and in a more
detailed fashion in later chapters), produces both World 3 and World
2 data, information, and knowledge. And within its processes, World
2 and World 3 phenomena alternate in influencing the production of
each other as the KLC operates through time.

Tacit Knowledge and Explicit Knowledge

A widely recognized distinction in knowledge management circles is

Polanyi’s distinction (1958 and 1966) between tacit, personal knowl-
edge and explicit, codified knowledge. By tacit knowledge, Polanyi
meant “committed belief” that is contextual in character and diffi-
cult to express. In fact, he characterized some tacit knowledge as
inexpressible, or “ineffable,” and stated that “we can know more
than we can tell.” He also saw knowledge as inhering in mental

----------------------- Page 50-----------------------

The Knowledge Conundrum 21

models that provide the knower with a gestalt. Moreover, the context
of the gestalt provides one way in which we can understand the tacit
component of knowledge. In a gestalt, we can distinguish the por-
tions we focus attention on from the background context that helps
to establish the pattern of the gestalt, or that is used as a tool to inte-
grate the focal portions into a more comprehensive whole. The
“focal” knowledge in the pattern receives our attention and notice.
The “tacit” or background knowledge, on the other hand, while
much more extensive and absolutely necessary to the pattern, is not
noticed and remains unarticulated.
The importance of the tacit/explicit distinction for KM is empha-
sized in Nonaka and Takeuchi’s (1995) account of The Knowledge
Creating Company. They assume that knowledge is created through
the interaction between tacit and explicit knowledge, and they pos-
tulate four different modes of knowledge conversion:

# from tacit to tacit (called socialization);

# from tacit to explicit (externalization);
# from explicit to explicit (combination); and
# from explicit to tacit (internalization).

Since the appearance of Nonaka and Takeuchi’s very popular book,

the distinction between tacit and explicit knowledge and the idea that
knowledge management is about encouraging these four modes of
conversion in a kind of spiral model of upward progress has informed
the knowledge management programs of many companies.

Polanyi, Implicit Knowledge, and Popper

In considering Polanyi’s distinctions, let us begin by noticing that the

tacit/explicit distinction is a dichotomy that oversimplifies his more
detailed account of knowledge and the gestalt concept. That is,
Polanyi indicates that much tacit knowledge can be made explicit,
and that there is some that remains ineffable and can never be
expressed. Further, he even distinguishes “implicit beliefs,” (1958,
286–294), suggesting a third category of knowledge: implicit beliefs,
defined as those “held in the form of our conceptual framework, as
expressed in our language” (ibid., 286–287).

----------------------- Page 51-----------------------

22 Key Issues in the New Knowledge Management

In short, Polanyi identifies tacit knowledge that can’t be expressed,

tacit knowledge that can be made explicit, and implicit knowledge
as defined above. So, we believe that the Nonaka and Takeuchi inter-
pretation of Polanyi’s work is too simple. If we agree that tacit knowl-
edge is sometimes composed of beliefs we cannot express, and that
explicit knowledge is made of expressed beliefs, then that leaves a
third category: those cognitions or beliefs that, while not focal or
explicit, are expressible, given the environmental conditions effective
in eliciting them. We will call this category implicit knowledge, while
recognizing that it contains not only those nonfocal or assumed
portions of our conceptual frameworks, but any nonfocal beliefs
that can be brought into focus and made explicit. So now we have a
three-way distinction relevant to the study of knowledge conversion:
explicit, implicit, and tacit. It is also useful to view this three-way
classification from the point of view of Popper’s distinction between
World 2 and World 3. That is, Popper’s objective knowledge (World
3) is obviously all explicit and codified, and involves the expression
of Polanyi’s “focal knowledge.” To the extent that we can think of
“implicit knowledge” in the World 3 sense, its character is very dif-
ferent from World 2 implicit knowledge. The latter is based on a
psychological association with focal knowledge that is part of a
gestalt. World 3 implicit knowledge, in contrast, is knowledge that
is logically implicit in explicit knowledge (in linguistic formulations),
in the sense that it can be derived from such knowledge.
On the other hand, some of Popper’s World 2 mental phenomena
are obviously personal and “tacit” in the sense that (by definition)
they may represent mental objects that cannot be focused in
expressible psychological orientations. Other World 2 mental phe-
nomena represent objects that can be focused in such orientations
and are therefore implicit. Finally, there are still other World 2
phenomena that represent explicit, focal beliefs, situational orienta-
tions that express explicit linguistic knowledge in the mind. Such
tacit, implicit, and explicit phenomena in the mind are all unob-
servable abstractions or “hidden variables.” They are hypothetical
constructs (MacCorquodale and Meehl 1948) whose characteristics
must be inferred using measurement instruments, models, surveys,
observation, etc.
Note, also, that all explicit statements are not about World 3
objects and all personal, tacit knowledge is not about World 2. Thus,
if we say that we know that the “many-worlds” interpretation of

----------------------- Page 52-----------------------

The Knowledge Conundrum 23

quantum theory is true, this explicit statement is about our belief that
the many-worlds interpretation is true. It is an explicit statement
about a World 2 object. It converts our implicit knowledge (our vali-
dated belief) into an explicit knowledge claim about our belief. It is
not a direct statement about the (World 3) many-worlds model. It
also does not convert our implicit knowledge orientation into explicit
linguistic knowledge in the sense that we have fully and faithfully
transformed our implicit psychological orientation into an explicit,
codified form. That cannot be done because our implicit belief is not
a linguistic formulation, and the epistemic gap between internal, non-
linguistic psychological connections and internal or external linguis-
tic formulations is irreducible.
On the other hand, if we say that the many worlds interpretation
of quantum theory is true, this explicit statement is about quantum
theory, the linguistic formulation, itself. It is about a World 3 object,
not our World 2 belief. It is a description of the relationship that we
claim exists between quantum theory and reality and is in no way a
claim about what we believe.
On the other hand, we can also hold subjective knowledge (beliefs)
about either subjective states or about World 1 or World 3 objects.
Our procedural knowledge about how to make lamb stew is about
World 1, for example, because it is made up of World 2 belief pre-
dispositions about how to act (World 1) to manipulate the (World 1)
components to make the stew. So subjective knowledge is in no way
restricted to knowledge about World 2 objects.

Individual Level World 2 Knowledge and

Motivational Hierarchies

It is a general characteristic of the various current discussions

about the nature of (World 2) knowledge and the foundations of
knowledge management that the relation of such knowledge to psy-
chological motivation is not explicitly considered. One can see this
clearly by noting that tacit/implicit and explicit knowledge are all
viewed as situationally oriented beliefs by contemporary writers on
KM. (See, for example, Nonaka and Takeuchi 1995, 57–61). But
what are beliefs? They are cognitions, or perhaps at most cognitions
combined with evaluations, and both of these represent situationally
fixed psychological orientations, rather than general psychological

----------------------- Page 53-----------------------

24 Key Issues in the New Knowledge Management

predispositions. The knowledge management literature simply does

not recognize World 2 knowledge predispositions of individuals even
though it is these predispositions that are the product of an agent’s
knowledge processing experience and the motivator of its knowledge
processing decisions.
Figure 1.3 presents the agent, the individual, group, team, or orga-
nization as a decision-maker executing the transactions that are the
atomic components of business processes. World 2 knowledge is con-
tained in the goal-directed agent and is composed of the memories,
values, attitudes, and situational orientations of agents. World 3
knowledge is contained in the cultural conditions that make up part
of social ecology. Thus, Figure 1.3 illustrates the role of World 2
knowledge as an immediate precursor of decisions and transactional
behavior in the organizational system, as well as the role of World 3
knowledge as a cultural factor shaping psychological orientations in
general and World 2 knowledge in particular.
Figure 1.4 illustrates the incentive system of an agent (see Birch
and Veroff 1966, Atkinson 1964, Atkinson and Birch 1978), the
complex of motivational predispositions that intervenes between the
situational stimuli and the behavior of any agent. Figure 1.4 shows

The Network of Agent Behavioral

Processes j, k, . . ., n, including
Social
Ecology and Goal-Directed Agents j,
k, . . .,
n.

.
.
a
,
n
k
s
,
a
j
c

,
n Agent Behavioral Process

k
o
i

,
t

.
c
.
a

.
s

n
n
a
r Goal-Directed Agent (I)
T
Decision Execution Cycle
i
Decisions Desired
Social Ecology

Social, Cultural,
Transactions and Ecology
Memory, Values, Attitudes,
Geographical,

Economic Conditions
Situational Orientations, Goals

Figure 1.3
The Flow of Behavior Among Agents

----------------------- Page 54-----------------------

The Knowledge Conundrum

25

Value Orientation
Availability X Expectancy X Incentive The
psychological
E
N motivation of
an
i V Goal-Striving Tendency
l I individual or
the
u
m R
i Attitude Level 1 culture of a
t O
S N
l Availability X Expectancy X Incentive group-level
agent
a M
t E is defined by
the
n N Goal-Striving Tendency
e T value
orientations,
m
n A Attitude Level n attitudes,
and
o L
 r
i Availability X Expectancy X Incentive goal-
striving
v
n S tendencies in
the
E T
I Goal-Striving Tendency
box. The
M
U environmental
L Discrete Situational Orientation
stimuli
include
Availability X Expectancy X Incentive
social
ecology
and
transactions.
Behavior

Figure 1.4
The Incentive System of an Agent

the goal-directed agent depicted in Figure 1.3 in more detail. It views

agent behavior as the product of an interaction of the agent’s situa-
tion with a hierarchy of motivational predispositions, including value
orientations (Kluckhohn and Strodtbeck 1961, Morris 1956), and
various levels of increasingly focused attitudinal predispositions.
These predispositions, combined with the external situation, finally
produce a situational orientation which is the immediate precursor
of goal-striving, instrumental behavior, such as business process
behavior, and which includes both the tacit and explicit knowledge
responsible for decision making and behavior.
The availability and expectancy factors in Figure 1.4 refer to an
agent’s predispositions to perceive certain classes of behavior alter-
natives and resources as available for acting (availability), and certain
expected consequences as likely to result from implementing the
various alternatives (expectancy). The incentive factor refers to the
negative or positive attraction, the intensity of affect or emotion,
which the perceived consequences of particular alternatives have
for the agent. The motive factor is the strength of the goal-striving
predispositions resulting from the interaction of the other three
factors. The availability and expectancy factors in this framework

----------------------- Page 55-----------------------

26 Key Issues in the New Knowledge Management

are cognitive in character, and the incentive factor is emotional or

affective. Interactions of these factors are knowledge or belief pre-
dispositions of agents, and they are an essential part of the World 2
knowledge system of an agent. They play a vital role, not only in
decision making, but in learning. And they provide a large part of
the continuity of individual behavior and knowledge seeking that
we observe in the knowledge life cycle and other business process
behavior.

Different Types of Knowledge

Our discussion so far has highlighted a number of different defini-
tions and conceptions of knowledge. Some of these we have rejected
as confused, ambiguous, vague, or contradictory, and others we have
distinguished as identifying different types of knowledge. Table 1.1
summarizes the discussion so far and adds some more information.
Its categorization is based on the following distinctions:

# Worlds 1 (material), 2 (mental) and 3 (artifact-based)

knowledge
# Situational knowledge and knowledge predispositions
# Tacit, implicit, and explicit knowledge
# Psychologically implicit knowledge and logically implicit
knowledge

Table 1.1 provides a framework that is our proposal for solving the
knowledge conundrum. The types defined there are World 1 knowl-
edge; World 2 situational, tacit, implicit, or explicit knowledge;
World 2 predispositional knowledge; World 3 types of explicit
knowledge (24 types); and by implication World 3 implicit knowl-
edge (also 24 types depending on the type of knowledge it may be
derived from).

Conclusion

We believe that if the classification framework in Table 1.1 does not

solve the knowledge conundrum, it at least provides a much better
foundation for knowledge management than has existed previously.

----------------------- Page 56-----------------------

Table 1.1
A Knowledge
Typology

Domains/ World 1 World 2 Situational World 2 Knowledge

World 3 Knowledge
Attributes Knowledge Knowledge Predispositions

Encoded ✔ ✔ ✔
✔
Validated ✔ ✔ ✔
✔
Tacit NA ✔ NA
NA
Implicit NA Knowledge that is NA
Knowledge that may be derived from explicit
2
associated with
knowledge using logic
7 other knowledge,

not explicit, but

can be made so
Explicit NA ✔ NA
1. Structured database knowledge claims

2. Descriptive factual statements

3. Conceptual models

4. Data models object models

5. Computer simulation models

6. Planning models

7. Analytical models

8. Measurement models

9. Predictive models

(Continued)

----------------------- Page 57-----------------------

Table 1.1
(Continued)

Domains/ World 1 World 2 Situational World 2 Knowledge

World 3 Knowledge
Attributes Knowledge Knowledge Predispositions

10. Impact models

11. Assessment models

12. Application software

13. Validation criteria, perspectives and frameworks

2

14. Methods
8
15. Methodologies

16. Formal language utilities

17. Semiformal language utilities

18. Meta-knowledge claims

19. Planning knowledge claims

20. Descriptive knowledge claims

21. Factual knowledge claims measurements of

abstractions

22. Knowledge claims about impact, cause, and effect

23. Predictive knowledge claims

24. Assessment knowledge claims

----------------------- Page 58-----------------------

The Knowledge Conundrum 29

It resolves the conflict between those who believe in mental knowl-

edge and those who believe in knowledge embedded in artifacts by
pointing out that these are different types of knowledge, and that
they in turn differ from knowledge embedded in biological organ-
isms or other agents in the material world. It introduces the im-
portant distinction in the area of mental knowledge between
predispositional knowledge and situational knowledge, a distinction
that has been largely ignored in KM in all of the hubbub surround-
ing the discussion of belief knowledge. It recognizes the distinctions
among tacit, explicit, and implicit knowledge. And finally, it recog-
nizes that implicit beliefs and knowledge claims implied by preexist-
ing explicit knowledge are two different things. We will return to this
framework and its distinctions frequently in chapters to follow. And
we will find that all its types of knowledge are accounted for by, and
have their place in, knowledge processing and specifically in the
knowledge life cycle, to whose origins we now turn.

References

Allee, V. (1997), The Knowledge Evolution: Expanding Organizational

Intelligence, Boston, MA: Butterworth–Heinemann.
Allee, V. (2000), “Reconfiguring the Value Network,” available at:
http://www.vernaallee.com/reconfiguring_val_net.html.
Argyris, C. (1993), Knowledge for Action, San Francisco, CA: Jossey-
Bass.
Atkinson, J. (1964), An Introduction to Motivation, New York, NY: Van
Nostrand.
Atkinson, J.W. and Birch, D. (1978), Introduction to Motivation (2nd

edition), New York, NY: Van Nostrand.

Aune, B. (1970), Rationalism, Empiricism, and Pragmatism, New York, NY:
Random House, 1970.
Axelrod, R. (1976), The Structure of Decision, Princeton, NJ: Princeton
University Press.
Barquin, R. (2000), “From Bits and Bytes to Knowledge Man-
agement,” January–February, 2000, www.e-gov.com also available at:
www.barquin.com.
Bateson, G. (1972), “The Logical Categories of Learning and Communica-
tion,” in G. Bateson, Steps to an Ecology of Mind, New York, NY:
Chandler Publishing, Company.

----------------------- Page 59-----------------------

30 Key Issues in the New Knowledge Management

Beller, S. (2001), “The DIKUW Model.” National Health Data Systems,

April, 2001, available at www.nhds.com/toc.htm.
Bellinger, G. (1998), “Data, Information, Knowledge and Wisdom” at
http://www.radix.net/~crbnblu/musings/kmgmt/kmgmt.htm.
Bennet, A. and Bennet, D. (2000), “Characterizing the Next Generation
Knowledge Organization” Knowledge and Innovation: Journal of the
KMCI, 1, no. 1, 8–42.
Birch, D. and Veroff, J. (1966), Motivation: A Study of Action, Belmont,
CA: Brooks/Cole.
Cavaleri, S. and Reed, F. (2000), “Designing Knowledge Generating Pro-
cesses”, Knowledge and Innovation: Journal of the KMCI, 1,no. 1, 109–131.
Cavaleri, S. and Reed, F. (2001), “Organizational Inquiry: The Search for
Effective Knowledge,” Knowledge and Innovation: Journal of the KMCI,
1, no. 3, 27–54.
Cox, E. (1994), The Fuzzy Systems Handbook, Cambridge, MA: Academic
Press.
Cox, E. (1995), Fuzzy Logic for Business and Industry, Rockland, MA:
Charles River Media.
Davenport, T. and Prusak, L. (1997), Working Knowledge: How Organi-
zations Manage What They Know, Boston, MA: Harvard Business School
Press.
DeCharms, R. and Moeller, C. (1962), “Values Expressed in American Chil-
dren’s Readers: 1800–1950,” Journal of Abnormal and Social Psychol-
ogy, 64, 136–142.
Deutsch, K. (1963), The Nerves of Government, New York, NY: The Free
Press.
Duijker, H. and Frijda, N. (1960), National Character and National Stereo-
types, Amsterdam, NV: North-Holland.
Feierabend, I. and Feierabend, R. (1966), “Aggressive Behavior within Poli-
ties: A Cross-National Study,” Journal of Conflict Resolution , 10, 249–271.
Firestone, J. (1972), “The Development of Social Indicators from Content
Analysis of Social Documents,” Policy Sciences, 3, 249–263.
Firestone, J. and Oliva, G. (1971), “National Motives and National Attrib-
utes: A Cross-Time Analysis,” General Systems, 16, 93–124.
Glenn, E. (1966), “A Cognitive Approach to the Analysis of Culture and
Cultural Evolution”, General Systems, 11.
Goldman, A. (1991), Empirical Knowledge, Berkeley, CA: University of
California, 1991.
James, W. (1907), Pragmatism, New York, NY: Longmans.
Jones, W.T. (1952), A History of Western Philosophy, New York, NY:
Harcourt, Brace and World.

----------------------- Page 60-----------------------

The Knowledge Conundrum

31

Kluckhohn, F. and Strodtbeck, F. (1961), Variations in Value Orientations,

New York, NY: Harper & Row.
Kosko, B. (1992), Neural Networks and Fuzzy Systems, Englewood Cliffs,
NJ: Prentice-Hall.
MacCorquodale, K. and Meehl, P. (1948), “On a Distinction between
Hypothetical Constructs and Intervening Variables,” Psychological
Review, 55, 95–107.
McClelland, D.C. (1961), The Achieving Society, Princeton, NJ: Van
Nostrand.
Merritt, R. (1966), Symbols of American Community: 1735–1775, New
Haven, CT: Yale University Press.
Moore, G. (1991), Crossing the Chasm, New York, NY: HarperBusiness.
Morris, C. (1956),Varieties of Human Value, Chicago, IL: University of
Illinois Press.
Murray, A. (2000), “Knowledge Systems Research,” Knowledge and Inno-
vation: Journal of the KMCI, 1, no. 1, 68–84.
Namenwirth, J. (1969), “Some Long and Short-Term Trends in One
American Political Value: A Computer Analysis of Concern with Wealth
in 62 Party Platforms,” in Gerbner, G. et al., (eds.) Analysis of Commu-
nications Content, New York, NY: John Wiley & Sons.
Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating Company,
 New York, NY: Oxford University Press.
Polanyi, M. (1958), Personal Knowledge (Chicago, IL: University of
Chicago Press, 1958).
Polanyi, M. (1966), The Tacit Dimension, London, UK: Routledge and
Kegan Paul.
Popper, K.R. (1972), Objective Knowledge, London, England: Oxford
University Press.
Popper, K.R. (1994), Knowledge and the Body-Mind Problem, (edited by
Mark A. Notturno), London, UK: Routledge.
Popper, K.R and Eccles, J.C. (1977), The Self and Its Brain, Berlin,
Germany: Springer.
Shannon, C.E. (1948), “A Mathematical Theory of Communication,” Bell
System Technical Journal, 27, 379–423, 623–656.
Stacey, R.D. (1996), Complexity and Creativity in Organizations, San
Francisco, CA: Berrett-Koehler Publishers.
Terhune, K. (1970), “From National Character to National Behavior: A Re-
formulation for Prediction”, Journal of Conflict Resolution , 14, 203–263.
Triandis, H.C. et al. (1972), The Analysis of Subjective Culture, New York,
NY: Wiley.
Wiig, K. (1998), in Yogesh Malhotra’s compilation at www.brint.com.

----------------------- Page 61-----------------------

Chapter 2

Origin of the
Knowledge Life
Cycle

Introduction

The journey to knowledge management may begin, as we have in

Chapter 1, with the formulation of a basic conceptual framework for
defining and specifying knowledge, but it must continue with a con-
sideration of the processes that produce knowledge and with a con-
ceptual framework that provides a cognitive map of these processes.
Such a framework is sometimes called a Knowledge Life Cycle (KLC)
framework.
KLC frameworks (McElroy 1999, 2000, 2000a, 2003; Firestone
1999, 2000, 2000a, 2000b, 2003) are getting increasing attention as
people begin to accept that knowledge management is about man-
aging the KLC. Alongside the KLC concept, though, many others
have been concerned with the Organizational Learning Cycle (OLC)
concept and its role in knowledge processing and KM. Some even
believe that there is no separate KLC and that only the OLC exists.
This chapter shows that the KLC is a separate framework from the
OLC, and that, in fact, KLC processes originate in the OLC and
then feed back into it. The alternation between KLCs and OLCs is

32

----------------------- Page 62-----------------------

Origin of the Knowledge Life Cycle 33

both basic to knowledge processing and grounded in human psy-

chology, both at the individual level and group level. This alterna-
tion is the foundation of knowledge management as a distinct process
and discipline.
 The Organizational Learning Cycle
(OLC)/Decision Execution Cycle (DEC)

The organizational learning literature provides a number of examples

of frameworks that depict a cyclic-agent behavioral process of deci-
sion, action, experiential feedback, and then adjustment followed by
new action. Such frameworks are not new. For example, Ackoff
(1970, 100) specifies a decision cycle of four steps: (1) decision
making, (2) implementation, (3) evaluation, and (4) recommendation,
with information being fed into each of the four steps. More recently,
David Kolb and Roger Fry (1975) and Kolb (1984) identify an “expe-
riential learning cycle” composed of (a) active experimentation, (b)
concrete experience, (c) reflective observation, and (d) abstract con-
ceptualization. Firestone (1997, 1997a, 1998, 2000a) identifies a
decision execution cycle including (1) acting, (2) monitoring, (3)
evaluating, and (4) planning, and specifies “use cases” for each of
these steps. Haeckel (1999, 75–92) distinguishes (a) Act, (b) Sense,
(c) Interpret, and (d) Decide, and characterizes the sense and interpret
steps as “sensing,” or creating meaning out of noise. He also associ-
ates the act and decide steps in the cycle as adaptively “responding”
to the environment, and further, characterizes organizations as
“sense” and “respond” systems on the basis of this “adaptive loop.”
Haeckel also points out (81) that “adaptive loops may or may not
be learning loops.” By this he means that many adaptive loops are
“learned processes” that involve responses to environmental changes
based on predetermined rules. Real learning, he believes, only occurs
in response to changes in environmental context that stimulate orga-
nizations to create new adaptive responses. We will return to this
point a bit later.
Another slightly different formulation of the OLC idea was pre-
sented by Ralph Stacey (1996). Stacey distinguishes three steps: (1)
act, (2) discover, and (3) choose. “Discover” incorporates activities
similar to the sense and interpret, and monitoring and evaluating
activities identified by others.

----------------------- Page 63-----------------------

34 Key Issues in the New Knowledge Management

X1 )
0
t
(
e
t a = The Perceived
a
t
S Predecision
l a
a
o Instrumental Behavior Gap
G

d )
e t
v (0
i e
e t
 c a
r t
e S
P l
a
X , X , X = Transaction u
1 2 3 t
c
or Attribute Dimension A
X
2

X
3

Figure 2.1
The Gap Motivating Action

Our own formulation of the OLC or decision cycle idea is based

on Firestone’s previous formulations (1997, 1997a, 2000a). In this
view, the Decision Execution Cycle (DEC) is motivated by a perceived
gap between an agent’s goal state and the actual state of the world
the agent is trying to manage. Figure 2.1 expresses the gap idea.
The DEC is instrumental behavior whose purpose is to close the
perceived instrumental behavior gap. Figure 2.2 illustrates the DEC.
The generic task patterns or phases of any decision/execution cycle
are: planning, acting (including deciding), monitoring, and evaluat-
ing. Planning is a knowledge production and knowledge integration
activity. It means setting goals, objectives, and priorities, making fore-
casts as part of prospective analysis, performing cost/benefit assess-
ments as part of prospective analysis, and revising or reengineering
a business process. It involves capturing and using data, information,
and knowledge to produce a plan, an instance of World 3 planning
knowledge.
Acting means performing the specific domain business process (to
be defined later) or any of its components. Acting involves using plan-
ning knowledge, along with other World 3 and World 2 knowledge,
to make and implement decisions, but acting does not by itself
produce new knowledge.

----------------------- Page 64-----------------------

Origin of the Knowledge Life Cycle

35

Previous
Monitoring Knowledge

The DEC
Acting applies to any
business Evaluating

process

Planning &
Previous Decision Making
Knowledge

Figure 2.2
 The Decision Execution Cycle

Monitoring means retrospectively tracking and describing activi-

ties and their outcomes. Monitoring involves gathering data and
information, modeling processes, and using previous knowledge to
produce new descriptive, impact-related, and predictive knowledge
about the results of acting. Monitoring is another activity involving
(this time World 2 and World 3) knowledge production and knowl-
edge integration.
Evaluating means retrospectively assessing the previously moni-
tored activities and outcomes as a value network (Allee 2000). Eval-
uating means using the results of monitoring along with previous
knowledge to assess the results of acting and to produce knowledge
about the descriptive gaps between business outcomes and tactical
objectives and about the normative (benefits and costs) impact of
business outcomes. Evaluating is yet another form of activity that
produces and integrates both World 2 and World 3 knowledge.
Note that the DEC applies to any business process in a manner to
be discussed shortly and that monitoring, evaluating, planning, and
acting (including decision making), use previous knowledge. Where
does the previous knowledge used in the DEC come from? It
comes most immediately from what we call the Distributed Organi-
zational Knowledge Base (DOKB). The DOKB is the combination of
previous (World 2) knowledge beliefs and belief predispositions of
enterprise agents and artifact-based validated (and explicit) knowl-
edge claims, and meta-information (or metaclaims) stored in both

----------------------- Page 65-----------------------

36 Key Issues in the New Knowledge Management

Figure 2.3
Previous Knowledge: The Distributed Organization
Knowledge Base

electronic and nonelectronic enterprise repositories (World 3). Figure

2.3 illustrates the DOKB.
The role of the DOKB may be expressed clearly using Argyris and
Schön’s notion of single-loop learning (1974). Figure 2.4 illustrates
the idea that the DOKB provides the governing knowledge that
agents use to adjust their behavior in the face of new knowledge
about events and conditions based on monitoring following action.
The governing knowledge combines with knowledge gained from
perceptions of events and conditions to produce what Argyris and
Schön call single-loop learning.
The DOKB is an aspect of all structures incorporating organiza-
tional knowledge such as normative business processes, plans, orga-
nizational cultural expressions, organizational strategy, policies,
procedures, and information systems. Coupled with information

----------------------- Page 66-----------------------

Origin of the Knowledge Life Cycle 37

Single-loop learning involves adj ustment

of behavior based on previously developed
general and specific knowledge in the DOKB
and new knowledge of specific events and conditions!
 Knowledge Use

Governing
Events and
Knowledge: Actions Conditions
The DOKB

Single-Loop Learning

Figure 2.4
Single-Loop Learning Based on Argyris and Schön

from external sources, the knowledge in these structures impacts

behavioral business processes through the acting phase of the
Decision Execution Cycle. The DEC, in turn, through its monitor-
ing, evaluating, and planning phases generates new adaptive prob-
lems as well as new knowledge about specific conditions for later
increments of the DEC.

New Problems, Double-Loop Learning, and

Popper’s Tetradic Schema

Single-loop learning involves only the use of previously generated

knowledge, to produce new knowledge about specific events and con-
ditions and to make adjustments to actions. The process presents no
problems (i.e., epistemic gaps) to be solved. But when single-loop
learning doesn’t work in adapting to changes in the environment,
agents must solve problems by creating new governing knowledge.
This process of arriving at solutions to problems and thus creating
new governing knowledge is what Argyris and Schön called “double-
loop learning” (DLL) (1974). The relevance of the double-loop
metaphor is illustrated in Figure 2.5.
Argyris and Schön’s DLL concept doesn’t tell us very much about
how problems are solved and new knowledge created. For that we

----------------------- Page 67-----------------------

38 Key Issues in the New Knowledge Management

What if single-loop learning doesn’t work?

Governing
Events and
Knowledge: Actions Conditions
The DOKB

Single-Loop Learning
Epistemic
Double-Loop Learning Problem

Double-loop learning involves adj ustment of behavior

based on creative problem solving resulting in change
in the previous general and specific knowledge in the DOKB!

Figure 2.5
Double-Loop Learning (Loosely) Based on Argyris and Schön

turn to Karl Popper’s problem-solving framework (1972, 1994;

Popper and Eccles 1977). Popper saw the growth of knowledge as
basic to human experience, to our nature as adaptive creatures, and
as an emergent consequence of our trial-and-error efforts to solve
adaptive problems while relying both on our previous knowledge and
our experience. His view of knowledge production, illustrated in
Figure 2.6, is simple but focused on essentials.
One begins with a problem (P1), then through conjecture (we call
it knowledge claim formulation) one arrives at a tentative solution
(typically at multiple tentative solutions) (TS). Next, one tests and
evaluates the tentative solution (refutation) in order to eliminate
errors (EE), as Popper suggests before they eliminate us. We call this
knowledge claim validation, or evaluation.
The result is that some solution or solutions will have survived our
testing and evaluation better than others. These and the results of
our efforts at error elimination are new knowledge. But invariably
new knowledge suggests new problems (P2 ), which, in turn, trigger
successive episodes of Popper’s schema. The measure of our progress
is that the new problem resulting from our efforts is a better one to
have than the old problem. So, over time, we observe the growth of
knowledge and the emergence of more and more sophisticated
problems.

----------------------- Page 68-----------------------

Origin of the Knowledge Life Cycle 39

A Problem Error Elimination

P1 Æ TSÆ EE Æ P2

Tentative New
Solution Problem

‘Problems’ in this context are epistemic problems

Tentative Solutions are produced by ‘Knowledge Claim Formulation’

Error Elimination will later be called ‘Knowledge Claim Evaluation’

Figure 2.6
Popper’s Tetradic Schema: A Framework for Adaptation

An interesting implication of the distinction between single- and

double-loop learning and the focus on problem solving as a process
that is different from merely applying already existing governing
knowledge is the change in the immediate focus of motivation, as we
move from single-loop adjustments followed by immediate action
to double-loop problem solving followed by new governing knowl-
edge. In brief, instrumental behavior focused on action producing
new governing knowledge represents a shift in motivation from
instrumental behavior focused on action intended to close the origi-
nal gap driving the DEC to a focus on action intended to produce
new governing knowledge. Or to put this another way, the shift to
problem solving represents a shift to a second DEC, one focused on
problem solving or knowledge production alone. We will return to
this idea shortly.

Learning and Knowledge Production:

Combining Argyris/Schön and Popper
Though this has somehow escaped notice before, it is plain that
Popper’s tetradic schema fits nicely into Argyris and Schön’s DLL
idea, providing more flesh to its bare bones. Figure 2.7 combines the

----------------------- Page 69-----------------------

40 Key Issues in the New Knowledge Management

Governing
Events and
Knowledge: Actions Conditions
The DOKB

Single-Loop Learning

Error Epistemic
Theories
Elimination Problem

Double-Loop Learning (DLL)

Since DLL involves adj ustment of behavior after

creative problem solving, we identify it with Popper’s theory.

Figure 2.7
Double-Loop Learning—Combining Argyris/Schön and Popper

main ideas of Argyris/Schön and Popper and expresses the key idea
that problems can arise out of the DEC that cannot be solved by mere
single-loop adjustment—and that these problems are solved through
the double-loop problem life cycle and the tetradic schema laid out
by Popper, rather than through the initial DEC focused on a direct
business goal.
Figure 2.7 also has important implications for an account of
knowledge production. Knowledge is produced both in DECs
through single-loop learning and in Problem Life Cycles (PLCs)
through double-loop learning. The kind of knowledge produced by
DECs, once again, is knowledge about specific events and conditions
including what they are (monitoring based on sensory perceptions
and available technology), our assessment of them (evaluating based
on available valuational perspectives) and how we deal with them
(planning according to the routine application of preexisting knowl-
edge). The DEC, then, is the process we follow in order to close oper-
ational gaps in our lives.
The kind of knowledge produced by PLCs, on the other hand, is
knowledge about specific conditions based on new perspectives and
generalized knowledge relating to new theories and models, new
ontologies, epistemologies, and methodologies. It is knowledge pro-
duced and integrated in response to adaptive problems that goes
beyond knowledge about mere adjustments to behavior based on pre-
existing knowledge available from the DOKB. Thus, the PLC is the

----------------------- Page 70-----------------------

Origin of the Knowledge Life Cycle 41

process we follow in order to close epistemic gaps in our lives, not

operational ones.
 A Transactional Systems Model of
Agent Interaction

We have presented the origin of the problem life cycle as the response
to a failure in single-loop learning to adjust behavior in the DEC to
meet the challenges of the environment. But what is the context and
motivational basis for problem solving adaptive responses arising out
of the DEC? First, it is the transactional social system environment
of agent behavioral responses illustrated in Figure 1.3. In the figure,
all agents are viewed as part of the social network that is this social
system. Within this network, all agents respond to transactions and
social ecology constrained by their motivational hierarchies or incen-
tive systems.

The Motivational Hierarchy

Take a closer look at the agent behavioral process from the view-
point of the specific agent highlighted at the bottom of Figure 1.3.
Figure 2.8 illustrates the incentive system of an agent (See Birch and
Veroff 1966, Atkinson 1964, Atkinson and Birch 1978) by identify-
ing two levels of motivational predispositions that intervene between
the situational orientation, environmental stimuli, and behavior of
any agent. Figure 2.8 views agent behavior as the product of an inter-
action of the agent’s situation with a hierarchy of motivational pre-
dispositions, including value orientations (Kluckhohn and Strodtbeck
1961, Morris 1956), and one level of more focused attitudinal pre-
dispositions. These predispositions, combined with the external
situation, produce a situational orientation which is the immediate
precursor of goal-striving, instrumental behavior, such as business
process behavior, and which includes both the tacit and explicit
knowledge responsible for decision making and behavior.
Alert readers will recognize the above as a simplified version of the
process illustrated in Figure 1.4 and described in Chapter 1. Here we
want to make clear the evolution of the simple three-level framework
to the more complex concept described in Chapter 1. The bridge to

----------------------- Page 71-----------------------

42 Key Issues in the New Knowledge Management

Value
Orientation
Prebehavior Situation
Predispositions
Including the Behavior
of Other Agents

Attitudinal
Predispositions

Agent
Behavior
Situational
Orientations

Figure 2.8
The Immediate Prebehavior Context: A Three-Level
Motivational Hierarchy
that more generalized concept is in Figure 2.9, which shows the inter-
action of the external situation with a motivational or attitudinal
level defined at some arbitrary level of specificity “k.” Figure 2.9
shows that for any arbitrary attitudinal level “k,” there will always
be an arbitrary level of greater situational generality above it and an
arbitrary level of greater situational specificity below it. Thus, the
number of attitudinal levels between value predispositions and
situational orientations is potentially infinite, because that number is
a matter of the modeler’s choice.
Figure 1.4 illustrates the motivational hierarchy in its most com-
plete form and highlights the availability, expectancy, incentive, and
motive aspects of motivation. The availability and expectancy factors
refer to an agent’s predispositions to perceive: certain classes of behav-
ior alternatives and resources as available for acting (availability), and
certain expected consequences as likely to result from implementing
the various alternatives (expectancy). The incentive factor refers to
the negative or positive attraction, the intensity of affect or emotion,
which the perceived consequences of particular alternatives have for
the agent. The motive is the strength of the goal-striving predisposi-
tions resulting from the interaction of the other three factors. The
availability and expectancy factors in this framework are cognitive in

----------------------- Page 72-----------------------

Origin of the Knowledge Life Cycle

43

The External Prebehavior

Situation
Goal-Striving Tendency from
Including
Material/Ecological
Motivational Systems Defined
Conditions, Social Conditions,
and
at the Kth-1Level
the Behavior of Other Agents.
All
of Specificity Defined at the Kth Level

of Specificity

System Predispositions to
Directed Transactions
and/or
Behavior Defined at the Kth
Cumulated Transactions
Level of Specificity

Goal-Striving Tendency
From Motivational Subsystem
Defined at the Kth Level
of Specificity
Situational Orientations
of Agents

Figure 2.9
Generalization: A Motivational Subsystem
character, and the incentive factor is emotional or affective. Inter-
actions of these factors are knowledge or belief predispositions of
agents, and they are an essential part of the World 2 knowledge system
of an agent. They play a vital role, not only in decision making, but
in learning. And they provide a large part of the continuity of indi-
vidual behavior and knowledge seeking that we observe in the knowl-
edge life cycle and other business process behavior.

Aspects of Motivational Behavior in

the Transactional System

What are the relationships among motivation, learning, knowledge,

and behavior? To understand these we need to consider how agents
interpret the environmental stimuli they perceive.

# An agent interprets environmental stimuli in

terms of
whether they constitute resources and opportunities (social

----------------------- Page 73-----------------------

44 Key Issues in the New Knowledge Management

ecology) or cooperation (transactions). This is environmental

encouragement.
# An agent interprets environmental stimuli in terms of whether
they constitute constraints (social ecology) or conflict (trans-
actions). This is environmental resistance or inertia.
# Any situation involving instrumental behavior has an environ-
mental encouragement/resistance mix.
# To social encouragement, the agent responds with goal-striving
tendencies and transactions perceived as contributing to reach-
ing the goal-state. This we call steering behavior.
# To social resistance, the agent responds in a variety of ways
depending on its expectancy concerning the ease or difficulty
involved in closing the instrumental behavior gap in the face of
social resistance. If resistance is seen as “moderate,” the agent
will respond with coping behavior.
# There are two classes of coping behavior:
# A habitual pattern of regulatory behavior applying previous
knowledge more or less according to a procedure, routine,
or rule, and producing new knowledge about specific events
and conditions based on such procedures, routines, or rules.
This is single-loop learning.
# A novel development and selection among tentative solu-
tions and decision alternatives involving learning new
ways of coping with the environmental resistance. This, of
course, is double-loop learning and Popperian problem
solving.

Habitual/regulatory coping behavior continues instrumental behav-

ior toward its original goal. But problem solving represents a tem-
porary interruption of instrumental behavior in whose first step a
new problem is defined: a problem viewed in terms of a gap between
what we know and what we need to know to cope with environ-
mental resistance. So a problem-solving situation encountered in the
context of coping behavior, with its gap between what we know and
what we need to know, arouses its own incentive system, the incen-
tive to learn. And this motivation, reinforced by the initial motiva-
tion toward goal attainment, drives what we might call a problem,
or adaptive, life cycle.

----------------------- Page 74-----------------------

Origin of the Knowledge Life Cycle

45

The Problem Life Cycle (PLC) is appropriately called that because

it is about the birth and death of problems. Their birth occurs in the
context of coping behavior when regulatory behavior fails and trial-
and-error search behavior begins. Their death occurs when the
problem is solved and the agent returns to the DEC with new gov-
erning knowledge. Problem Life Cycles are basic to the motivation
of all intelligent agents.
Figure 2.10 illustrates the DEC again, this time with the idea that
the monitoring, evaluating, and planning phases in the DEC may
involve the selection of either regulatory or problem-solving coping
behavior on the part of an agent. If regulatory behavior is selected,
then single-loop learning applies along with use of the DOKB. If
problem-solving behavior is selected, that “kicks-off” double-loop
learning and the Problem Life Cycle (also including use of the
DOKB).
The relationship of the PLC to the DEC is illustrated in Figure
2.11. The Problem Life Cycle is a process composed of many Deci-
sion Execution Cycles all motivated by the learning incentive system!
This view is suggested by Popper’s tetradic schema. The development
of tentative solutions (Knowledge Claim Formulation), followed by
error elimination (Knowledge Claim Evaluation), will clearly involve

DLL including
Monitoring the
PLC/DOKB

The DEC Sometimes

Acting applies to any Evaluating epistemic
problems
business arise
process

DLL including
Planning & the
Decision Making PLC/DOKB

Figure 2.10
The Decision Execution Cycle “Kicks Off” the Problem Life
Cycle (PLC)

----------------------- Page 75-----------------------

The Problem Life Cycle

Previous
Previous
Previous

Monitoring
Monitoring
Monitoring

Knowledge
Knowledge
Knowledge

(Sensemaking)
(Sensemaking)
(Sensemaking)

The DEC
The DEC
The DEC

The DEC
The DEC
The DEC
Acting
applies to any
Acting applies to any
Acting applies to any
Problem
applies to any Evaluating
applies to any Evaluating
applies to any Evaluating

business
business
business

business
business
business

process
process
process

process
process
process

DLL Loop
DLL Loop
DLL Loop

DLL Loop
DLL Loop
DLL Loop

Planning & including the

Planning & including the
Planning & including the

including the
including the
including the
Previous
Decision Making problem
Previous Decision Making problem
Previous Decision Making problem

problem
problem
problem
Knowledge
Knowledge
Knowledge

Previous

Monitoring Previous
Monitoring Knowledge
Monitoring Previous

(Sensemaking) Knowledge
(Sensemaking)
(Sensemaking) Knowledge

The DEC

The DEC
The DEC

The DEC
The DEC

Acting applies to any

The DEC
New Acting
applies to any
applies to any

applies to any
Evaluating Acting
applies to any

Evaluating business
applies to any

business
business
Evaluating

business
business

process
business

process
process
process
process
Knowledge
DLL Loop process

DLL Loop
DLL Loop

DLL Loop
DLL Loop

Planning &
Planning & including the
DLL Loop

including the
including the Planning &

including the
including the

Previous Decision Making problem

including the
Previous
Decision Making problem
problem

problem
Previous Decision Making problem
Knowledge
Knowledge
Knowledge problem

The Problem Life Cycle is a process composed of many Decision

Execution Cycles, all motivated by the learning incentive
system,
and all
directed at closing an epistemic gap!

Figure 2.11

Problem Life Cycles and Decision Execution Cycles

----------------------- Page 76-----------------------

Origin of the Knowledge Life Cycle 47

many different activities that must be generated by multiple DECs.

These are related to one another in that all are motivated by the moti-
vational response aroused by the gap between what the agent knows
and what it needs to know.
Since the PLC is made up of DECs, and since all DECs may spawn
PLCs, it is relevant to ask whether DECs comprising a PLC may
initiate higher-level PLCs. The answer is yes. DECs comprising
knowledge claim formulation or knowledge claim validation may
themselves initiate new PLCs, which contribute to the primary PLC
initiated by the original DEC motivated by the original instrumental
behavior gap.

Sense Making in the Transactional System

Recently, writers in knowledge management such as Ralph Stacey

(2001) and David Snowden (2002) have begun to rely on ideas about
“sense making” developed by Karl Weick (1995) over the past 30
years. These ideas are based on the outlook of those who believe that
“reality is socially constructed” (Berger and Luckmann 1967). While
the perspective presented here is different in many ways from Weick’s,
it has many similarities to that perspective. In particular, the impor-
tance of the following characteristics is common to sense making and
the transaction framework:

# Identity construction (the idea that agents and systems create

their own identities in the process of adapting to their envi-
ronments);
# Monitoring (sense making) after action (the idea that monitor-
ing is a response to action and that it involves filtering and inter-
pretation of external stimuli and is not a process that “mirrors”
reality in any recognizable way);
# Sense making partly shapes (enacts) sense making environ-
ments; social interaction shapes social ecology (the idea that
sense making considered broadly as monitoring and evaluating
determines action, which in turn impacts social ecology over
time);
# Sense making occurs in social settings (monitoring occurs in the
social interaction framework); and
# Sense making (and DEC activity) is ongoing.

----------------------- Page 77-----------------------

48 Key Issues in the New Knowledge Management

In general, the transactional systems framework differs with the sense

making outlook on two points. First, we don’t accept that reality is
socially constructed. Our knowledge of reality is certainly mediated
by our social networks, along with our psychological predispositions
and biological heritage, but it is also influenced by reality itself, which
exists, we believe, apart from our social construction of it. And
second, we also believe, in contrast to many who espouse the sense
making orientation, that knowledge claims should not be validated
by social consensus, but by continuing testing and evaluation aimed
at error elimination. Apart from these two very important departures,
the outlooks of sense making and the transactional systems approach
are similar.

The Knowledge Life Cycle (KLC):

The Expression of a Change in
Instrumental Motivation

The Knowledge Life Cycle (KLC), in an organizational context, is a

description of instrumental behavior and motivation which, rather
than being aimed at achieving an operational or business outcome
goal-state, is focused instead on reaching a certain epistemic or
knowledge outcome goal-state. Having provided a framework
explaining in general terms how this shift occurs and how the PLC
originates from the DEC, we will now explain how the DEC and the
PLC relate to business processes, knowledge processes, and knowl-
edge management.
Figure 2.12 illustrates the idea that any behavioral business process
(including knowledge and knowledge management processes) may be
viewed as a network of linked activities driven by World 2 knowl-
edge, aimed at producing outcomes of value to those performing the
activities. A linked sequence of activities performed by one or more
agents sharing at least one objective is a task. A linked, but not nec-
essarily sequential, set of tasks producing results of measurable value
to the agent or agents performing the tasks is a task pattern. A cluster
of task patterns, not necessarily performed sequentially, often per-
formed iteratively, incrementally, and adaptively, is a task cluster.
Finally, a hierarchical network of interrelated, purposive activities of
intelligent agents that transforms inputs into valued outcomes, a
cluster of task clusters, is a business process.

----------------------- Page 78-----------------------

Origin of the Knowledge Life Cycle

49

The Business
Process Level BP1

Business processes
The Cluster of ultimately break
CTP
Task Patterns 1 down to activities,
Level and these, as we
The Task have seen, are
TP
Pattern Level 1 produced by Decision
Execution Cycles.
The Task Level T
1

The Activity
A
DEC Level 1

Figure 2.12
The Activity to Business Process Hierarchy

Business processes ultimately break down to activities, and these,

as we have seen, are produced by decision execution cycles. Business
processes are performed and managed by agents. Agents, if they’re
groups, have an internal culture. At the same time the cultural com-
ponent of social ecology also impacts the agent decision execution
cycles that ultimately comprise business processes.
Business processes and business management together constitute
the business processing environment that produces business out-
comes such as sales, profits, and ROI in an enterprise. Figure 2.13
illustrates this simple relationship.
Since business processing environments are comprised of decision
execution cycles, they will, from time to time and as illustrated in
Figure 2.14, spawn problems. These problems can be solved only
through problem life cycles or double-loop learning cycles. In the
context of organizations we call these knowledge processes (added
in Figure 2.15) or knowledge life cycles (added along with the DOKB
in Figure 2.16).
 Figure 2.16 shows that the knowledge life cycle is comprised
of (1) problems generated by business processes, (2) knowledge
processes, and (3) the DOKB containing the outcomes of knowledge
processes, as well as knowledge about special events and condi-
tions produced in the DEC. The DOKB is also used in the business
processing environment, and this environment, in turn, creates
new problems and new instances of the KLC. We have seen that

----------------------- Page 79-----------------------

50 Key Issues in the New Knowledge Management

Business Processing Environment

e.g., Sales, Marketing,
Business Process Management

Business Outcomes
e.g., Profit, Revenue, ROI

Figure 2.13
The Business Processing Environment and Business Outcomes

Since Business Processing

Environments are comprised
of Decision Execution Cycles,
Epistemic they will, from time-to-time,
spawn
Problems epistemic problems

Business Processing
Environment

Business Outcomes

Figure 2.14
The Business Processing Environment and Epistemic Problems

Epistemic problems require problem-solving processes or problem

life cycles! In organizations we call these knowledge processes.

Epistemic
Knowledge Processes
Problems

Business Processing
Environment

Business Outcomes

Figure 2.15
Knowledge Processes

----------------------- Page 80-----------------------

Origin of the Knowledge Life Cycle

51

The Knowledge Life Cycle is the Problem

The Knowledge Life Cycle! It is comprised of DECs.
 Life Cycle (KLC)

Epistemic Knowledge Processes

Problems

Business Processing Knowledge

Outcomes:
Environment
The DOKB
The DOKB
impacts
Business
Processing Business Outcomes
through the
DEC

Figure 2.16
Knowledge Outcomes: The Distributed
Organizational Knowledge Base

business processes are comprised of DECs and that these pro-

cesses spawn problems if these DECs cannot adapt to environmen-
tal stimuli through regulatory behavior and therefore must turn to
Problem Life Cycles (PLCs). In the organizational context these PLCs
are called KLCs, and they too are comprised of DECs, that, in turn,
can spawn their own problems and new higher-level instances of
the KLC.
A more granular view of the KLC is presented in Figure 2.17.
Knowledge production is initiated in response to problems pro-
duced by decision cycles in business processes. It produces new Orga-
nizational Knowledge (OK), including Surviving Knowledge Claims
(SKCs), Undecided Knowledge Claims (UKCs), and Falsified Knowl-
edge Claims (FKCs), and information about the status of these. All
of the above are codified, explicit, World 3 objects. OK is composed
of all of the foregoing results of knowledge production. It is part of
what is integrated into the enterprise by the Knowledge integration
process.
The knowledge production process, in combination with pre-
vious agent predispositions, also produces beliefs related to the
World 3 knowledge claims. These are World 2 objects, predisposing
various organizational agents to action. In some instances, they are

----------------------- Page 81-----------------------

Knowledge Production
Knowledge Integration

Info

about

SKC

Broad-
Individual
casting
and Group
SKC
Learning
Info

about Searching

FKC
Knowledge
Knowledge
Claim CKC
Claim OK
Formulation
Evaluation

FKC

Teaching

Info

about

UKC
Information
Acquisition
Sharing

UKC

5
Experiential Feedback
2 External Inputs

Business
Processing Environment

DOKB
Feedback
(including the Business Process
DOKB Containers
detection of Behaviors
· Agents (Indiv. & Groups) · Objective Knowledge
epistemic problems)
· Subjective Knowledge
of Interacting Agents
· Artifacts (Docs., IT, etc.)

CKC = Codified Knowledge Claim

= Knowledge Processes
COK = Codified Organizational Knowledege

DOKB = Distributed Origanizational Knowledge Base

FKC = Falsified Knowledge Clain

OK = Organizational Knowledge
 = Knowledge Sets
SKC = surviving Knowledge Claim

UKC = Undecided Knowledge Claim

Figure 2.17
The Knowledge
Life Cycle: A More Granular View

----------------------- Page 82-----------------------

Origin of the Knowledge Life Cycle 53

predispositions that correspond to organizational knowledge; in

other instances they are predispositions that reflect awareness of val-
idated or surviving knowledge claims but contradict them, or sup-
plement them, or bear some other conceptual relationship to them.
At the individual level these beliefs are in part tacit, since all of them
are not expressible linguistically by the individuals holding them, or
implicit since some that are neither tacit nor explicit may not have
been verbally expressed but can be. Where these beliefs have been
validated by the individuals, or other intelligent agents holding them,
they constitute World 2 knowledge held by those agents. But they are
not organizational knowledge. Rather, they are outputs of the orga-
nizational knowledge processing system experienced at the level of
individual agents.
The knowledge integration process takes organizational knowledge
and, by integrating it within the organization, produces that portion
of the DOKB constituting new knowledge produced by the KLC, in
contrast to the portion of it produced by the DEC through single-loop
learning (e.g., implicit knowledge of balance while riding a bicycle).
Integrating means communicating organizational knowledge content
to the organization’s agents with the purpose of making them fully
aware of existing organizational knowledge. This also requires
making the knowledge available in knowledge stores that agents can
use to search for and retrieve knowledge. The result of knowledge
integration is that the content of new codified organizational knowl-
edge is available in both accessible and distributed knowledge stores
and, in addition, is reflected in the predispositions of agents all across
the enterprise. As we indicated earlier, the DOKB is the combination
of distributed World 3 and World 2 knowledge content.
The DOKB, in its turn, has a major impact on structures incor-
porating organizational knowledge such as normative business
processes, plans, organizational culture, organizational strategy, poli-
cies, procedures, and information systems. Coupled with external
sources, these structures then feed back to impact behavioral busi-
ness processes through the acting phase of the DEC. The DEC, in
turn, generates new problems in the planning, monitoring, and eval-
uating phases to be solved in the next round of knowledge process-
ing, i.e., in new KLCs.
“Drilling down” into knowledge production, the KLC view is that
information acquisition, and individual and group learning in the
service of problem solving, impact on knowledge claim formulation,

----------------------- Page 83-----------------------

54 Key Issues in the New Knowledge Management

which, in turn, produces Codified Knowledge Claims (CKCs). These,
in their turn, are tested in the knowledge claim evaluation task
cluster, which entails a critical examination of knowledge claims
including, but not limited to, empirical testing, which then produces
new Organizational Knowledge (OK).
The Individual and Group (I&G) Learning task cluster or sub-
process is recursive in the sense that I&G learning is itself a KLC
at the level of system interaction just below the global level, while
I&G learning at the second level is itself a KLC at the level below,
and so on until individual learning and knowledge production
is reached. KLCs, therefore, occur at the group and individual
levels of analysis as well as at the organizational level of analysis.
They produce knowledge claims that have been validated from
the perspective of the individual or the group as the case may be,
but from the perspective of the organization they are unvalidated
information, or unvalidated claims. Figure 2.18 illustrates the re-
cursive nesting of KLCs and the DECs that comprise them in an
organization.
The key task cluster that distinguishes Knowledge Production
from information production is Knowledge Claim Evaluation (or
validation). It is the subprocess of criticism of competing knowl-
edge claims, and of comparative testing and assessment of them,
that transforms knowledge claims from mere information into

Organization

Community

Group

Team

Individual

Figure 2.18
Nesting of Knowledge Life Cycles in an Orgnization

----------------------- Page 84-----------------------

Origin of the Knowledge Life Cycle 55

tested information, some of which passes organizational tests and

therefore becomes, from the organizational point of view, new
knowledge (i.e., truthlike information).
In other words, as we stated in Chapter 1, the difference between
information and knowledge is validation. But what is validation? Is
it testing and evaluation of knowledge claims (World 3), or testing
and evaluation of beliefs (World 2)? Testing and evaluation of knowl-
edge claims is public and sharable in the sense that the claims them-
selves are sharable, and the tests and their results are sharable. That
is why World 3 knowledge is objective. Testing and evaluation of
beliefs is private and personal. It is this difference that makes World
2 knowledge subjective. In the context of the enterprise, then, knowl-
edge claim evaluation involves the testing of World 3 objective
knowledge, not World 2 subjective knowledge.
Validation is not the same thing as justification. Justification is
the process of proving that a knowledge claim is true. Validation, or
knowledge claim evaluation, never proves anything with certainty. It
simply provides (a) a record of how well competing knowledge
claims stand up to our tests or (b) personal experience of how well
competing beliefs stand up to our tests. Justification of knowledge
claims and beliefs is impossible, but validation or evaluation of them
is not.
Since validation is just our process of testing and evaluating
knowledge claims or beliefs, the practice of it will vary across
individuals, groups, communities, teams, and organizations. A par-
ticular entity may use validation practices based on explicit rules
or specified criteria to compare knowledge claims, but it need not.
Agents are free to change their tests or criteria at any time, to invent
new ones, or to apply ad hoc tests and criticisms in validation. That
is, validation is a free-for-all; it is just the process by which knowl-
edge claims and beliefs run the gauntlet of our skepticism and our
criticism.
Looking at knowledge production from the viewpoint of agents at
different levels of organizational interaction, and keeping the role of
knowledge claim evaluation in mind, it follows that individual and
group learning may involve knowledge production from the per-
spective of the individual or group. But from the perspective of the
enterprise, what the individuals and groups learn is information, not
knowledge. Similarly, information acquired may be knowledge from

----------------------- Page 85-----------------------

56 Key Issues in the New Knowledge Management

the perspective of the external parties it is acquired from, but not

knowledge to the enterprise acquiring it, until it has been validated
as such.
Figure 2.17 also illustrates that knowledge validation has a feed-
back effect on individual and group learning. This occurs because
individuals and groups participating in knowledge claim evaluation
are affected by their participation in this process. They both produce
World 3 organizational knowledge in the form of codified and
validated knowledge claims, and also experience change in their own
“justified” beliefs (i.e., they generate World 2 knowledge) as an
outcome of that participation.
Drilling down into knowledge integration, organizational knowl-
edge is integrated across the enterprise by the broadcasting, search-
ing/retrieving, teaching, and sharing task clusters. These generally
work in parallel rather than sequentially. And not all are necessary
to a specific instance of the KLC. All may be based in personal non-
electronic or electronic interactions.
Knowledge production and knowledge integration, their sub-
processes, task clusters, etc., like other value networks, are, like the
PLCs discussed earlier, composed of decision cycles through which
agents execute their roles in these value networks. This means that
planning, acting, monitoring, and evaluating also apply to knowl-
edge processes and to activity in the KLC, though here the instru-
mental motivation is focused on learning rather than on primary
business outcomes.
That is, KLC processes are executed by agents performing KLC
DECs, and therefore engaging in planning, acting, monitoring, and
evaluating oriented toward knowledge production and knowledge
integration goals. But there is also an even higher level of knowledge
processing. The higher level knowledge producing and knowl-
edge integrating activities initiated by problems occurring in KLC
DECs are KM-level knowledge producing and knowledge integrat-
ing task clusters, because they address problems in knowledge pro-
cessing about how to plan, how to monitor, how to evaluate, or how
to implement activities in order to attain knowledge processing goals.
These problems are solved by producing and integrating KM-level
knowledge. Figure 2.19 illustrates the origin of KM knowledge
processes in problems originating in KLCs and in other knowledge
management processes that are goal-directed toward managing
knowledge processing.

----------------------- Page 86-----------------------

Origin of the Knowledge Life Cycle

57

Knowledge Processing
Problems KM Knowledge Processes

Other KM Processes
Socio/Techno Outcomes

Epistemic Knowledge Processes

Problems

Business Processing Knowledge

Environment Outcomes:
The DOKB

Business Outcomes

Figure 2.19
Knowledge Management

Conclusion

In this chapter we have explained the origins of the KLC. We have

shown that the KLC is a separate framework from the DEC/OLC.
KLC processes both originate in the DEC/OLC, are comprised of
DECs themselves, and then feed back into DECs at the business
process level. Yet KLCs are not the same as DECs. Rather, they are
higher-level processes or value networks, patterns of DECs integrated
by motivation toward knowledge production and integration goals,
rather than primary business goals commonly found in sales, mar-
keting, manufacturing, and other business processes.
We have seen that the alternation between KLCs and OLCs is both
basic to knowledge processing and grounded in human psychology,
both at the individual level and group level. It is an alternation
between different types of motivation, and this alternation is the
foundation of a distinction between business processing and knowl-
edge processing, and between the latter and knowledge management.
This last distinction is the basis of knowledge management as a dis-
tinct process and discipline. Without it there can be no knowledge
management—a point we will examine in much greater detail in
Chapter 3.

----------------------- Page 87-----------------------

58 Key Issues in the New Knowledge Management

References
Ackoff, R. (1970), A Concept of Corporate Planning, New York, NY:
Wiley-Interscience.
Allee, V. (2000), “Reconfiguring the Value Network,” available at:
http://www.vernaallee.com/reconfiguring_val_net.html.
Argyris, C. (1993), Knowledge for Action, San Francisco, CA: Jossey-Bass.
Argyris, C. (1991), “Teaching Smart People How to Learn,” Harvard Busi-
ness Review (May–June, 1991). 99–109.
Argyris, C. and Schön, D. (1974), Theory in Practice: Increasing Profes-
sional Effectiveness, San Francisco: Jossey-Bass.
Atkinson, J.W. (1964), An Introduction to Motivation, New York, NY: Van
Nostrand.
Atkinson, J.W. and Birch, D. (1978), Introduction to Motivation, (2nd

edition), New York, NY: Van Nostrand.

Berger, P. and Luckmann, T. (1967), The Social Construction of Reality,
Garden City, NY: Doubleday Anchor.
Birch, D. and Veroff, J. (1966), Motivation: A Study of Action, Belmont,
CA: Brooks/Cole.
Firestone, J.M. (1997), “Object-Oriented Data Warehousing”, White Paper
No. 5, Executive Information Systems, Inc., Wilmington, DE, August,
1997, Available at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1997a), “Distributed Knowledge Management Systems
(DKMS): The Next Wave in DSS”, White Paper No. 6, Executive Infor-
mation Systems, Inc., Wilmington, DE, August 23, 1997, Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1998), “Basic Concepts of Knowledge Management”, White
Paper No. 9, Executive Information Systems, Inc., Wilmington, DE, June
24, 1998, Available at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1999), “The Metaprise, the AKMS, and the Enterprise
Knowledge Portal,” Working Paper No. 3, Executive Information
Systems, Inc., Wilmington, DE, May 5, 1999, Available at :
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000), “Accelerated Innovation and KM Impact,” Finan-
cial Knowledge Management (Q1, 2000), 54–60.
Firestone, J.M. (2000a), “Knowledge Management: A Framework for
Analysis and Measurement,” White Paper No. 17, Executive Information
Systems, Inc., Wilmington, DE, October 1, 2000, Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000b), “Enterprise Knowledge Portals: What They
Are and What They Do,” Knowledge and Innovation: Journal of the

----------------------- Page 88-----------------------

Origin of the Knowledge Life Cycle 59

KMCI, 1, no. 1, 85–108. Available at :

http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2003), Enterprise Information Portals and Knowledge
Management, Boston, MA: KMCI Press/Butterworth–Heinemann.
Haeckel, S.H. (1999), Adaptive Enterprise, Boston, MA: Harvard Business
School Press.
Kluckhohn, F. and Strodtbeck, F. (1961), Variations in Value Orientations,
New York, NY: Harper & Row.
Kolb, D. (1984), Experiential Learning, Englewood, Cliffs, NJ: Prentice-
Hall.
Kolb, D. and Fry, R. (1975), “Toward an Applied Theory of Experiential
Learning”, C. Cooper (ed.), Theories of Group Process, London: John
Wiley & Sons.
McElroy, M.W. (1999), “The Second Generation of KM,” Knowledge Man-
 agement (October 1999) pp. 86–88.
McElroy, M.W. (2000), “Integrating Complexity Theory, Knowledge Man-
agement, and Organizational Learning,” Journal of Knowledge Manage-
ment Vol. 4 No. 3 (2000), pp. 195–203.
McElroy, M.W. (2000a), “The New Knowledge Management,” Knowledge
and Innovation: Journal of the KMCI 1 (October 15, 2000, Vol. 1,
No. 1), pp. 43–67.
McElroy, M.W. (2003), The New Knowledge Management: Complexity,
Learning, and Sustainable Innovation, Boston, MA: KMCI Press/
Butterworth–Heinemann.
Morris, C. (1956), Varieties of Human Value, Chicago, IL: University of Illi-
nois Press.
Popper, K.R. (1972), Objective Knowledge, London, England: Oxford
University Press.
Popper, K.R. (1994), Knowledge and the Body-Mind Problem (edited by
Mark A. Notturno), London, UK: Routledge.
Popper, K.R. and Eccles, J.C. (1977), The Self and Its Brain, Berlin,
Germany: Springer.
Snowden, D. (2002), “Complex Acts of Knowing; Paradox and Descriptive
Self-awareness,” Journal of Knowledge Management , 6, no. 2 (May)
1–14.
Stacey, R.D. (1996), Complexity and Creativity in Organizations, San
Francisco, CA: Berrett-Koehler.
Stacey, R.D. (2001), Complex Responsive Processes in Organizations:
Learning and Knowledge Creation, New York, NY: Routledge.
Weick, K. (1995), Sense Making In Organizations, Beverly Hills, CA: Sage
Publications.

----------------------- Page 89-----------------------

Chapter 3

Information
Management and
Knowledge
Management

Introduction: Approach to KM

Some approaches to knowledge management seem to view any

manipulation of knowledge as knowledge management. In this view,
knowledge sharing, knowledge production, and knowledge transfer
are knowledge management. In this view, knowledge use is knowl-
edge management. In this view, knowledge management is part of
every business process. But is knowledge management really every-
thing and anything having to do with knowledge and knowledge
processing?
The obvious answer is no. We sharply distinguish knowledge
use and knowledge processing from knowledge management. Knowl-
edge use occurs whenever any agent makes a decision. It is part of
every business process (See Figure 2.17). Knowledge processing is
knowledge production and knowledge integration (McElroy 1999,
Firestone 1999), two distinct knowledge processes constituting
the Knowledge Life Cycle (KLC) (see Figure 2.17).

60

----------------------- Page 90-----------------------

 Information Management and Knowledge Management 61

Knowledge management is knowledge process management; that

is, the management of knowledge production, knowledge integra-
tion, the KLC, and their immediate outcomes (Firestone 2000,
2000a, McElroy 1999). A key aspect of knowledge process manage-
ment is innovation in knowledge processes to enhance performance
of the KLC.

Complex Adaptive Systems

A Complex Adaptive System (CAS) is a goal-directed open system

attempting to fit itself to its environment. It is “. . . composed of inter-
acting” adaptive “agents described in terms of rules” (Holland 1995,
10) that are applicable with respect to some specified class of envi-
ronmental inputs. “These agents adapt by changing their rules as
experience accumulates” (ibid.). The interaction of these purposive
agents, though directed toward their own goals and purposes, results
in emergent, self-organizing behavior at the global system level. This
emergent behavior in a sustainable CAS is, itself, adaptive.
Emergent behavior is behavior that cannot be modeled based on
knowledge of the system’s components. It is the ability of CASs to
adapt, along with their emergent behavior that distinguishes them
from simple adaptive systems and from Newtonian systems that lack
adaptive capacity.

The Natural Knowledge Processing

System (NKPS)

The NKPS is a CAS. It is a system marked by ongoing, conceptually

distinct, persistent, adaptive interaction among intelligent agents (a)
whose interaction properties are not determined by design, but
instead emerge from the dynamics of the interaction process itself;
and (b) whose agent interactions produce, maintain, and enhance the
distributed knowledge base produced by the interaction. An enter-
prise NKPS includes mechanical and electrical organizational com-
ponents, such as computers and computer networks, as well as
human and organizational agents. An intelligent agent is a purposive,
adaptive, self-directed object. The notion of a Distributed Organiza-
tional Knowledge Base (DOKB) was defined in Chapter 2.

----------------------- Page 91-----------------------

62 Key Issues in the New Knowledge Management

Hierarchical versus Organic KM

A central issue in KM is whether it should be hierarchical in nature,

focusing on designing and implementing a set of well articulated rule-
governed business processes implementing knowledge production or
knowledge integration, handed down by knowledge managers, and
implemented in a manner reminiscent of business process re-
engineering; or whether KM should be organic in the sense that
it focuses upon implementing policies that support “natural” ten-
dencies of existing knowledge processing patterns occurring in
communities of practice and generally outside the formal lines of
organizational authority. The hierarchical approach is frequently
called “Newtonian,” while the organic approach is often called the
“knowledge ecology” approach.
 The organic approach gets a boost from scientific research on
Complex Adaptive Systems (CAS) (Holland 1995, 1998, Kauffman
1995). CAS theory supports the idea that there is an NKPS in any
organization that is comprised of independent, autonomous individ-
uals, teams, and groups, whose self-organized interaction produces
emergent knowledge. This knowledge, in turn, is the chief means
organizations use to adapt to their environments and maintain their
identity.
Put simply, the objective of KM is to leverage and enhance the
natural tendencies toward knowledge production of the NKPS with
appropriate policies and above all to do nothing to interfere with
these natural tendencies. The motto of organic KM is: “Above all,
do no harm!”
CAS theory is very different in character from the essentially
Newtonian classical theory of economics based on supply and
demand. But it shares with it the idea that the system in question, in
this case the NKPS, will naturally, and without interference from
management, perform well in producing and integrating knowl-
edge. There is a disposition, then, among those who believe in CAS
theory to be conservative about interfering with existing KM and
knowledge processing patterns under the assumption that they are
natural. The issue, however, is: Are they “natural,” or are they simply
the result of previous management interventions that distort the
natural tendencies of the organizational system to produce and
integrate knowledge? If the situation is the latter, then the implica-
tion is that KM should not take a hands-off attitude, but instead

----------------------- Page 92-----------------------

Information Management and Knowledge Management 63

should attempt to intervene to restore the natural, productive ten-

dencies of the NKPS.
Thus, concrete situations in real enterprises may require different
postures toward KM interventions. But we lack clear criteria for eval-
uating when we have an NKPS that requires laissez-faire KM, and
when we have one that requires a more active approach. Without
such criteria for making evaluations, the policy posture that follows
from a belief in organic KM is hard to apply and should be
approached with caution. The same applies to the reengineering
approach. It can easily exacerbate problems in knowledge process-
ing caused by previous ill-advised interventions.

Some Definitions of Knowledge Management

Rather than doing a full survey of the field (not consistent with our
desire to focus on a number of issues in a relatively small space), our
purpose here is to raise and address key issues arising from typical
attempts to define KM. To fulfill this purpose it is convenient to rely
on a range of definitions provided at Yogesh Malhotra’s (1998) well
known web site and a variety of views beginning with Malhotra’s
own definition.

Malhotra (1998)

Knowledge Management caters to the critical issues of organizational

adaptation, survival, and competence in the face of increasingly discon-
tinuous environmental change. . . . Essentially, it embodies organizational
processes that seek synergistic combination of data and information pro-
 cessing capacity of information technologies, and the creative and inno-
vative capacity of human beings.

Malhotra looks at KM as a synthesis of IT and human innovation!

While information generated by computer systems is not a very rich

carrier of human interpretation for potential action, knowledge resides
in the user’s subjective context of action based on that information.
Hence, it may not be incorrect to suggest that knowledge resides in the

----------------------- Page 93-----------------------

64 Key Issues in the New Knowledge Management

user and not in the collection of information, a point made two decades
ago by West Churchman, the leading information systems philosopher.

In this definition, it is not clear what management is. Or what

knowledge is. It is not clear what information is. If knowledge is per-
sonal, does that mean that Malhotra rules out organizational knowl-
edge? And why is information, as well as knowledge, not personal?
Does Malhotra think there is something about personal information
that automatically makes it valid and therefore “knowledge”? Is
everything we believe “knowledge” just by virtue of our believing it?
If so, this is a highly subjectivist view of knowledge and derivatively
of KM.

Sveiby (1998)

. . . Both among KM-vendors (researchers and consultants) and KM-users

(read short descriptions of what companies and other practitioners are
doing) there seem to be two tracks of activities—and two levels. Track
KM = Management of Information. Researchers and practitioners in this
field tend to have their education in computer and/or information science.
They are involved in construction of information management systems,
AI, reengineering, groupware, etc. To them, knowledge = objects that can
be identified and handled in information systems. This track is new and
is growing very fast at the moment, assisted by new developments in IT.

This definition begs the question of defining KM. It doesn’t define

“management” or “knowledge.” And it doesn’t distinguish knowl-
edge from information, or knowledge management from information
management.

Track KM = Management of People. Researchers and practitioners in this

field tend to have their education in philosophy, psychology, sociology or
business/management. They are primarily involved in assessing, chang-
ing and improving human individual skills and/or behaviour. To them
Knowledge = Processes, a complex set of dynamic skills, know-how, etc.,
that is constantly changing. They are traditionally involved in learning
and in managing these competencies individually—like psychologists—

----------------------- Page 94-----------------------

Information Management and Knowledge Management 65

or on an organisational level—like philosophers, sociologists or organi-

sational theorists. This track is very old, and is not growing so fast.
“Knowledge” is clearly not a process. “Learning,” “KM,” and
“knowing” are processes, but knowledge itself, the outcome of
processes such as learning and knowing, is not a process.
Sveiby’s two alternative “definitions” of KM are presented by him
as originating with others, identifying two schools of thought. Our
remarks just above are not intended to state that either view is sub-
scribed to by him as the correct definition of KM. Rather, our
remarks should be interpreted as directed at the views stated without
the implication that Sveiby subscribes to them. We note, however,
that his statement of them declines to offer a critique of either, and
that he prefers to remain above the fray.

Ellen Knapp (PWC) (1998)

We define knowledge management as “the art of transforming informa-

tion and intellectual assets into enduring value for an organization’s
clients and its people.”

Knapp thinks it is more important to tell us that KM is an “art” than

it is to tell us what management is and what exactly it is we are man-
aging. “Intellectual assets” is far too vague a construct to define the
scope of KM. “Transforming” is not managing, and things other than
knowledge can have “enduring value.” In other words, this defini-
tion confuses acting upon information with managing knowledge;
and knowledge processing with knowledge management. It is a char-
acteristic error, committed again and again in knowledge manage-
ment circles.

University of Kentucky (1998)

Knowledge is a vital organization resource. It is the raw material, work-

in-process, and finished good of decision making. Distinct types of
knowledge used by decision makers include information, procedures, and
heuristics, among others. . . . A variety of computer-based techniques for

----------------------- Page 95-----------------------

66 Key Issues in the New Knowledge Management

managing knowledge (i.e., representing and processing it) have been and
will continue to be devised to supplement innate human knowledge man-
agement skills. As a field of study, knowledge management is concerned
with the invention, improvement, integration, usage, administration,
evaluation, and impacts of such techniques.

Rather than being the “finished good of decision making” (a nice

turn of phrase), knowledge is the finished good for decision making.
In any event, it is hard to see the distinction between information
and procedures and heuristics, since these appear to be information
also. Moreover, this definition limits KM to “computer-based tech-
niques,” a limitation neither acceptable to the KM community in
general, nor justified by the common concept of management, which
encompasses far more than computer techniques.

Karl Wiig (1998)

Knowledge management in organizations must be considered from three

perspectives with different horizons and purposes:
Business Perspective—focusing on why, where, and to what extent the
 organization must invest in or exploit knowledge. Strategies, products
and services, alliances, acquisitions, or divestments should be considered
from knowledge-related points of view.
Management Perspective—focusing on determining, organizing,
directing, facilitating, and monitoring knowledge-related practices and
activities required to achieve the desired business strategies and
objec-
tives.
Hands-On Operational Perspective—focusing on applying the exper-
tise to conduct explicit knowledge-related work and tasks.

Karl Wiig, one of the more systematic thinkers in the field of knowl-
edge management today, is the closest so far on the management side.
The business perspective focuses attention on resource allocation,
certainly a managerial activity. The management perspective identi-
fies a number of management activities. The “hands-on” perspective
recognizes that knowledge managers must also do knowledge pro-
cessing. But as we’ve seen in Chapter 1, Wiig’s definition of knowl-
edge as “understandings” and “mental units” is highly debatable and

----------------------- Page 96-----------------------

Information Management and Knowledge Management

67

clearly falls entirely on the World 2 side of things. So his definition

of KM doesn’t orient us toward managing, producing, and/or
integrating World 3 knowledge, or toward managing how either
World 2 or World 3 information is validated and hence becomes
“knowledge.”

R. Gregory Wenig (1998)

Knowledge Management (for the organization): consists of activities

focused on the organization gaining knowledge from its own experience
and from the experience of others, and on the judicious application of that
knowledge to fulfill the mission of the organization. . . .
Knowledge: Currently, there is no consensus on what knowledge is.
. . . The definition that I have found most useful when building systems
is as follows: knowledge is understanding the cognitive system possesses.
It is a construct that is not directly observable. It is specific to
and
not residing outside the cognitive system that created it. Information,
NOT knowledge, is communicated among cognitive systems. A cognitive
system can be a human, a group, an organization, a computer, or some
combination.

Wenig’s definition is strong on many of aspects of World 2 knowl-

edge, especially on the distinction between individual knowledge and
collective knowledge, and on the idea that it is a kind of information
(World 3 knowledge) and not World 2 knowledge that is communi-
cated among cognitive systems. But Wenig’s definition is weak on the
activities comprising KM and how they are distinguished from
knowledge processing activities.

Philip C. Murray (1998)

Our perspective at Knowledge Transfer International is that knowledge

is information transformed into capabilities for effective action. In effect,
 knowledge is action. . . .
For KTI, knowledge management is a strategy that turns an organi-
zation’s intellectual assets—both recorded information and the talents
of its members—into greater productivity, new value, and increased

----------------------- Page 97-----------------------

68 Key Issues in the New Knowledge Management

competitiveness. It teaches corporations, from managers to employees,

how to produce and optimize skills as a collective entity.

If knowledge were action, we wouldn’t need two words. In fact, there

is a great gap between knowledge and action and even between
knowledge and the capability for action. As we have seen in Chapter
1, knowledge is a necessary condition for effective action, but it is
not sufficient by itself. Not only knowledge, but also power and other
resources are required for effective action to occur, as is the will to
take such action. Also, let us not forget that information combined
with capability and intention is also sufficient for action, but not for
success. Finally, KM is a process and not a strategy as specified in
Murray’s view.

Tom Davenport (1998)

Knowledge is: “information with value, from the human mind”

(adapted from Information Ecology, by Tom Davenport).
KM is: “Processes of capturing, distributing, and effectively using
knowledge” (Davenport 1994).
“Information with value” is getting close to knowledge. But what
kind of value? Information can have value for producing knowledge
and yet not be knowledge itself. Thus, in producing knowledge, one
may select from among a number of competing models. All may be
of value in providing the context for an assessment which validates
only one of them as knowledge, but that doesn’t change the fact that
all but one are just information.
This specific definition of KM, further, does not cover the inter-
personal and decision-making aspects of KM. Moreover, why are
“capturing,” “distributing,” and “using” knowledge, distinctively
knowledge management, as opposed to knowledge processing, which
consists of activities that all knowledge workers as well as knowl-
edge managers engage in? Here, then, is another case of someone
confusing knowledge processing with knowledge management.
Most definitions of KM suffer from the lack of careful treatment
of both “management” and “knowledge.” It’s almost as if KM
experts think that “knowledge management” is not a form of “man-
agement” and therefore does not have to be defined or characterized
in a manner consistent with well established meanings of that term.

----------------------- Page 98-----------------------

Information Management and Knowledge Management 69

The above definitions are striking in that they tell us so little. Why
do KM definitions tell us so little about (a) the activities that are part
of KM and (b) the target of those activities?
The situation with respect to “KM” is very similar to what we
have already found with regard to “knowledge.” There is no con-
sensus on definition and attempts to define KM are relatively super-
ficial. It is a case of another key concept in KM being defined so
vaguely and ambiguously that research and writing on KM is
weighed down with conceptual baggage and difficulties in commu-
nication, inhibiting both the search for KM knowledge and effective
KM decision making. Our own attempt to solve the problem of def-
inition begins with consideration of the differences between infor-
mation management and knowledge management.

Information Management and

Knowledge Management

What is the difference between Information Management (IM) and

Knowledge Management (KM)? Both concepts refer to managing
(handling, directing, governing, controlling, coordinating, planning,
organizing) processes and the products of those processes. In addi-
tion, since knowledge is a form of information (see Chapter 2), it
follows that KM is a form of IM. More specifically, KM is a more
robust form of IM that provides management of activities not nec-
essary in specifying the concept of information management.
One difference between basic IM and KM is that basic IM focuses
on managing how information is produced and integrated into the
enterprise, while KM does the same with respect to knowledge. A
second difference between basic IM and KM is that basic IM focuses
on managing a more narrow set of activities than KM. The two in-
formation processes managed by an organization are information
production and information integration. The two basic knowledge
processes are knowledge production and knowledge integration.
Since knowledge processes are more inclusive in the sense that
there are classes of activities in knowledge processes not found in
basic information processes, let us first examine a framework for
looking at knowledge processes. Then we will be able to arrive at
how basic information processes are different from augmented
information/knowledge processes, by cutting out some of the

----------------------- Page 99-----------------------

70 Key Issues in the New Knowledge Management

knowledge activities in knowledge processes. After completing that

examination, we will begin to address knowledge management and
basic information management in more detail.

Knowledge Processes and Information Processes

Knowledge production includes (a) knowledge claim formulation, (b)

individual and group learning, and (c) information acquisition. It also
includes (d) knowledge claim evaluation activity. Knowledge inte-
gration includes (a) knowledge broadcasting, (b) searching/
retrieving), (c) teaching, and (d) knowledge sharing. The two knowl-
edge processes, once again, may be viewed as part of the KLC, a
knowledge “value network” (Allee 2000). The KLC and the inter-
action of the two knowledge processes are illustrated in Figure 2.17.
The major task clusters within knowledge production and knowledge
integration are also illustrated in Figure 2.17.
Basic information processes are different from knowledge pro-
duction and integration processes in that they lack knowledge claim
evaluation and therefore fail to distinguish between knowledge
claims that are surviving, falsified, or otherwise. Information Pro-
duction includes information acquisition, individual and group learn-
ing, even knowledge claim formulation, but excludes knowledge
claim evaluation. So the information “life cycle” or value network is
incomplete in comparison with the knowledge life cycle. Similarly,
information integration includes broadcasting, searching/retrieving,
teaching, and sharing, but what is being broadcasted, searched for,
retrieved, taught, and shared is information rather than knowledge.
Let us now turn to a more detailed discussion of the nature of KM
interventions before returning to the question of differences between
KM and IM.

Definition and Specification of

Knowledge Management

KM is a management discipline that seeks to enhance organizational

knowledge processing. KM is also human activity that is part of the
interaction constituting the Knowledge Management Process (KMP)
of an agent or collective.

----------------------- Page 100-----------------------

Information Management and Knowledge Management 71

This last definition reduces KM to the definition of the KMP. The

KMP is an ongoing, persistent, purposeful interaction among human-
based agents through which the participating agents manage (handle,
direct, govern, control, coordinate, plan, organize, facilitate, enable,
and empower) other agents, components, and activities participating
in basic knowledge processing (knowledge production and knowl-
edge integration), with the purpose of contributing to the creation
and maintenance of an organic, unified whole system, producing,
maintaining, enhancing, acquiring, and transmitting the enterprise’s
knowledge base.
This definition in effect defines the KMP as a process aimed at the
management of knowledge processes and their outcomes. But this is
only the beginning in specifying the character of KM. We need now
to specify KM by providing a classification based on a multidimen-
sional view of KM activities.
We can distinguish among organizations along five important KM
dimensions, thereby providing the basis of a useful classification.
These are:

# the number of levels of knowledge management interaction an

organization has implemented;
# the breadth of knowledge management activities it has imple-
mented at each level;
# the target(s) of knowledge management activity;
# whether a knowledge management intervention is a social
process intervention or a technology intervention; and
# whether the intervention is a policy or program intervention.

Levels of Knowledge Management

By levels of knowledge management interaction, we mean to

distinguish multiple levels of KM process activity arranged in a hier-
archy. In principle, and, at least with respect to knowledge produc-
tion, the hierarchy has an infinite number of levels. The hierarchy is
generated by considerations similar to those specified by Bertrand
Russell (Russell 1919, Whitehead and Russell 1913) in his theory of
types, and Gregory Bateson (1972) in his theory of learning and
communication.

----------------------- Page 101-----------------------

72 Key Issues in the New Knowledge Management

Knowledge processes occur at the same level of agent interaction

as other business processes, even though they are about those
processes. Let us call this business process level of interaction Level
Zero of enterprise Complex Adaptive System (CAS) interaction
(Waldrop 1992).
At this level, preexisting knowledge is used by business processes
and by knowledge processes to implement activity. And in addition,
knowledge processes produce and integrate knowledge about busi-
ness processes using (a) previously produced knowledge about how
to implement these knowledge processes, (b) infrastructure, (c) staff,
and (d) technology, whose purpose is to provide the foundation for
knowledge production and knowledge integration at Level Zero. But
from where does this infrastructure, staff, knowledge, and technol-
ogy come? Who manages them, and how are they changed?
They do not come from, by, and through the Level Zero knowl-
edge processes—these only produce and integrate knowledge about
business processes such as sales, marketing, or manufacturing
processes. Rather, this is where Level One of CAS interaction, the
lowest level of knowledge management, comes in.
This Level One KM process interaction is responsible for produc-
ing and integrating knowledge about Level Zero knowledge produc-
tion and integration processes to knowledge workers at Level Zero.
It is this knowledge that is used at both Level Zero and Level One
to implement knowledge processes and KM knowledge and infor-
mation processing. Let us call this Level One knowledge the Enter-
prise Knowledge Management (EKM) model.
The KM process and EKM model at Level One are also responsi-
ble for providing the knowledge infrastructure, staff, and technology
necessary for implementing knowledge processes at Level Zero. In
turn, knowledge processes at Level Zero use this infrastructure, staff,
and technology to produce and integrate the knowledge used by
the business processes. The relationships between Level One KM
and Level Zero knowledge and business processes are illustrated in
Figure 3.1.
Knowledge about Level Zero knowledge processes, as well as
infrastructure, staff, and technology, change when Level One KM
process interactions introduce changes. That is, changes occur: when
the Level One KM process produces and integrates new knowledge
about how to implement Level Zero knowledge processes; and when
it adds or subtracts from the existing infrastructure, staff, and tech-

----------------------- Page 102-----------------------

Information Management and Knowledge Management 73

Figure 3.1
Relationships Between Level One Knowledge Management and
Level Zero Knowledge and Business Processes

nology based on new knowledge it produces. There are two possible

sources of these changes.
First, knowledge production at Level One can change the EKM
model, which, in turn, impacts on (a) knowledge about how to
produce or integrate knowledge about (Level Zero) business
processes, (b) knowledge about how to acquire information or inte-
grate knowledge about Level One information acquisition or inte-
gration processes (c) staffing, (d) infrastructure, and (e) technology.
This type of change, then, originates in the KM Level One process
interaction itself.
Second, knowledge expressed in the EKM model about how to
produce Level One knowledge may change. This knowledge,
however, is only used in arriving at the Level One EKM model.
It is not explained or accounted for by it. It is determined, instead,
by a KM Level Two process and is accounted for in a Level Two
EKM model produced by this interaction. Figure 3.2 adds the KM
Level Two process to the process relationships previously shown in
Figure 3.1.

----------------------- Page 103-----------------------

74 Key Issues in the New Knowledge Management

KM/K P1

EKM
1

Level
KMR1 KM/K I1 Two

KM/K P
EKM

Level
KMR KM/K I KML KMO One

KP
EM KI

Level
Business Processes Zero

KM = Knowledge Management EM = Enterprise Model

KI = Knowledge integration EKM = Enterprise KM Model

KP = Knowledge Production KMR = Changing KP and KI Rules

KML = KM Leadership KMO = Other KM Processes

Figure 3.2
Adding Knowledge Management Level Two to the Relationshop

Instead of labeling the three levels of processes discussed so far as

Level Zero, Level One, and Level Two, it is more descriptive to think
of them as the knowledge process level, the KM or metaknowledge
process level, and the meta-KM or Metaprise level (Firestone 1999)
of process interaction, respectively. There is no end, in principle, to
the hierarchy of levels of process interaction and accompanying EKM
models. The number of levels we choose to model and to describe
will be determined by how complete an explanation of knowledge
management activity we need in order to accomplish our purposes.
The knowledge process level produces knowledge about business
processes and uses knowledge about how to produce (how to inno-
vate) knowledge about business processes. This level cannot change
knowledge about how to produce knowledge. But it can change
knowledge about business processes.

----------------------- Page 104-----------------------

Information Management and Knowledge Management 75

The KM (metaknowledge) process level produces knowledge about

how to produce knowledge about business processes (i.e., knowledge
processing knowledge). The KM level also uses knowledge about
how to produce KM level knowledge about how to produce knowl-
edge about business processes (again, knowledge processing knowl-
edge). This level can change knowledge about how to produce
knowledge but cannot change knowledge about how to produce KM-
level knowledge.
The meta-KM, or first Metaprise level (i.e., Level Two), produces:
(a) knowledge about how to produce knowledge about KM knowl-
edge processes at Level One, and (b) knowledge about how to
produce KM level knowledge (again, at Level One) about how to
produce knowledge about knowledge processes for use at Level Zero.
It uses knowledge about how to produce meta-KM level knowledge
about how to produce knowledge about KM knowledge processes.
This level can change knowledge about how to produce KM-level
knowledge but cannot change knowledge about how to produce
meta-KM level knowledge.
Level Three, the meta-meta-KM process, or second Metaprise level
of interaction, produces knowledge about how to produce meta-KM
level-produced knowledge about how to produce knowledge about
KM knowledge processes, and uses meta-meta-KM level-produced
knowledge about how to produce knowledge about meta-KM level
knowledge processes. This level can change knowledge about how to
produce meta-KM level knowledge, but cannot change knowledge
about how to produce meta-meta-KM level knowledge.
Level Two (the first Metaprise level), then, seems to be the
minimum number of levels needed for a view of KM allowing one to
change (accelerate) the rate of change in KM level knowledge. And
in some situations, where we need even more leverage over our
knowledge about how to arrive at knowledge about KM processes,
we may even need to go to levels higher than Level Two.
Keeping in mind the above distinctions among enterprises accord-
ing to the level of knowledge management practiced in them, let us
talk about KM, meta-KM, meta-meta-KM level enterprises, and so
on. It should be possible to usefully characterize the successful
twenty-first century intelligent enterprise, at least on a business-
domain specific basis, as a Level X Metaprise, when we have more
empirical evidence on how many KM levels are needed for compet-
itiveness in any business domain.

----------------------- Page 105-----------------------

76 Key Issues in the New Knowledge Management

Thus, the relative effectiveness of enterprises practicing different

levels of KM is an empirical question, not something we should
assume as given. While it is very likely that effectiveness will increase
as enterprises move from the KM level to higher levels, there may be
a point at which diminishing returns set in. Or there may even be a
point at which movement up the ladder of levels leads to negative
returns relative to the investment required to add a KM level, or leads
to fewer returns than alternative investments in other areas. ROI con-
siderations must apply to enterprise KM enhancements, as well as to
other enterprise business processes.

Breadth of KM Processes

By breadth of knowledge management processes, we mean the extent

to which all of the major KM activities are implemented at any spec-
ified KM level of the enterprise. So what are these major KM activ-
ities? Here is a conceptual framework that begins to specify them.
Consider Figure 2.12, “The Activity to Business Process Hierar-
chy.” This hierarchy, ranging from activities to processes, applies to
knowledge and KM processes as well as to operational business
processes. Enterprise KM activities may be usefully categorized
according to a scheme of task clusters which, with some additions
and changes, generally follows Mintzberg (1973). We use Mintzberg’s
categorization of activities because it was developed from an exten-
sive empirical study of managerial behavior.
There are three types of KM task clusters: interpersonal behavior,
information (and knowledge) processing behavior, and decision
making. The task clusters are broken down further into nine more
specific types of task pattern activities.
Interpersonal KM behavior includes:

# figurehead
# leadership
# external relationship-building activity

Information and knowledge processing behavior includes:

# KM knowledge production
# KM knowledge integration

----------------------- Page 106-----------------------

Information Management and Knowledge Management 77

Decision making includes:

# changing knowledge processing rules

# crisis handling
# allocating KM resources
# negotiating agreement with representatives of other business
processes

In the following pages we will specify these nine areas of KM

activity.

Interpersonal Behavior

Figurehead or Ceremonial Representation KM Activity

This activity focuses on performing formal KM acts such as signing

contracts, attending public functions on behalf of the enterprise’s KM
process, and representing the KM process to dignitaries visiting the
enterprise. Such symbolic representation is an aspect of all manage-
rial activity. Managers have authority. Part of what maintains that
authority is the symbolism used and manipulated by them to express
the legitimacy of their authority and to claim it.
Figurehead activity in the KM area is similar to that in other areas
of executive activity. Methods such as personal networking, meet-
ings, public appearances, Web-enabled representing, and infrastruc-
ture such as intranet facilities used for figurehead activity, conference
and presentation rooms, fax, telephone facilities, etc., are also similar.
What is perhaps different is the focus of figurehead activity on con-
ferences, meetings, and events where knowledge processing and
knowledge management are the primary topics of interest.

Leadership

This includes setting policy, hiring, training, motivating, monitoring,

and evaluating KM and some knowledge processing staff. It also
includes persuading non-KM agents within the enterprise of the
validity of KM process activities. That is, KM leadership activity
includes building political support for KM programs, projects, and
knowledge processes within the enterprise and influencing the climate
and norms within which knowledge processing will occur, so that

----------------------- Page 107-----------------------

78 Key Issues in the New Knowledge Management

knowledge production will be enabled. Finally, leadership activities

cut across all the other nine categories of KM activities. That is, lead-
ership is an aspect of each of the nine classes of KM activities.
That leadership activities are central to KM is axiomatic. Leader-
ship is a key management activity in any business process, and knowl-
edge and KM processes are business processes. Again, what is
different here is the focus on leadership of knowledge production and
integration activities and on changing knowledge processing rules
such as those impacting knowledge claim evaluation. And in the area
of resource allocation, the focus on allocating software applications
supporting knowledge production, integration, and management is
different.

Building Relationships with Individuals and Organizations

External to the Enterprise

This is another political activity designed to build status for KM and

to cultivate sources of support for KM external to the enterprise. To
build new external relationships requires joining professional associ-
ations, serving on committees, attending and presenting at confer-
ences, visiting colleagues and allies, forming strategic alliances and
partnerships, and networking individual contacts. There is no magic
here, just the need to design and implement a systematic program to
generate alliances and close relationships with individuals. These per-
sonal relationships are essential for information acquisition at the
KM level. Some information can only be acquired through personal
networks. Building external relationships means performing those
activities intended to produce friendships, alliances, and “partner-
ships” with decision makers external to one’s own company. These
relationships are essential for providing “role models” for knowledge
managers.

Knowledge and Information Processing

Knowledge Production Is a KM as Well as a
Knowledge Process

KM knowledge production is different in that it is here that the

“rules,” frameworks, perspectives, and methodologies for knowledge
production used at the level of knowledge processes are specified.

----------------------- Page 108-----------------------

Information Management and Knowledge Management 79

Keep in mind that knowledge production at this level involves

planning, descriptive, cause-and-effect, predictive, and assessment
knowledge about the two fundamental Level Zero knowledge pro-
cesses, as well as these categories of knowledge about Level One
interpersonal, knowledge integration, and decision-making KM
activities. The only knowledge not produced by Level One knowl-
edge production is knowledge about how to accomplish knowl-
edge production at Level One. Once again, the rules, perspectives,
etc., constituting this last type of knowledge are produced at
Level Two.

KM Knowledge Integration

KM knowledge integration is affected by KM knowledge production

and also affects knowledge production activities by stimulating new
ones. KM knowledge integration at any KM level also plays the crit-
ical role of diffusing “how-to” knowledge to lower KM and knowl-
edge process levels. But the essential character of knowledge
integration at the KM level is unchanged from that at the basic KLC
at Level Zero.

Decision-Making Activities

Changing Knowledge Processing Rules

The task clusters of information acquisition, individual and group

learning, knowledge claim formulation, knowledge claim evaluation,
broadcasting, searching/retrieving, teaching, and sharing are all com-
posed of tasks. Knowledge workers execute these tasks, and knowl-
edge managers produce the processing “rules” contributing to the
execution of the tasks. Knowledge managers also change the rules
once they produce new knowledge about them. Essentially this
involves making the decision to change knowledge processing rules
and causing both the new rules and the mandate to use them to be
transferred to the lower level. The term “rules” here should be inter-
preted liberally, as signifying perspectives, customs, frameworks, etc.,
as well as rules. We are not claiming that Rules produced by knowl-
edge managers necessarily govern, or should govern, all or even most
knowledge production. On the contrary, rules govern most knowl-
edge production in business process DECs. But in KLCs knowledge

----------------------- Page 109-----------------------

80 Key Issues in the New Knowledge Management

is frequently produced through the use of novel perspectives and

frameworks as well as rules.
Crisis Handling

Crisis handling involves such things as meeting CEO requests for new
competitive intelligence in an area of high strategic interest for an
enterprise and directing rapid development of a KM support infra-
structure in response to requests from high level executives. Crisis
handling does not occur in KM as frequently as it does in other man-
agement processes. But when it does occur, it is a significant KM
activity.

Allocating Resources

Allocating resources for KM support infrastructures, training, pro-

fessional conferences, salaries for KM staff, funds for new KM
programs, etc., is also an important KM activity. KM software imple-
mentation falls into this category.

Negotiating Agreements

Negotiating agreements with representatives of business processes

over levels of effort for KM, the shape of KM programs, the ROI
expected from KM activities, etc., is another important area of KM
activity. Once again, this activity is not unique to KM. But its lack
of distinctiveness makes it no less essential to the practice of KM.

Targets of Knowledge Management

In Chapter 2 and the development above, we indicated that knowl-

edge management manages knowledge processes and their outcomes.
Thus, these, rather than business processes and business outcomes, are
the targets of knowledge management. This relationship is expressed
in Figures 2.19, 3.1, and 3.2, and again in Figures 3.3 and 3.4.
In Figure 3.5, we list the 10 most generalized targets of KM, the
KLC subprocesses and their outcomes. This 10-category taxonomy
is highly expandable, since each of the subprocesses may be broken
down further into task clusters and patterns.

----------------------- Page 110-----------------------

Information Management and Knowledge Management

81

KM Outcomes Used
KM Processes by Knowledge
Processes

Knowledge
Knowledge Outcomes Used
Processes by Business
Processes

Business Processes Business Outcomes

e.g., Sales, Marketing e.g., Profit,
Revenue, ROI,
Sustainability

Figure 3.3
From Knowledge Management Processes to Business Outcomes
 KM, The Function
KM

Knowledge Processes
KM’s impact on
business processes
and outcomes
is indirect!
Business Operating
Environment Business Processes

Profit/Standing/ Business Outcomes

Performance

Figure 3.4
A Reference Model for Knowledge Management

Social and Technological, and Policy and

Program Interventions

The social dimension of KM interventions deals with people and

processes using a variety of tools and methods including recruiting,
communities of practice, knowledge cafés, social process redesign,
and many others. The technological dimension, of course, deals with

----------------------- Page 111-----------------------

82 Key Issues in the New Knowledge Management

• Information Acquisition • Broadcasting

• Individual and Group • Searching/Retrieving
Learning • Teaching
• Knowledge Claim • Sharing
Formulation
• Distributed
• Knowledge Claim Organizational
Evaluation Knowledge Base
• Organizational
Knowledge To enhance the KLC !

And KM business processes are comprised of tasks

which, in turn, are comprised of Mintzberg activities

Figure 3.5
Knowledge Management Business Processes Have Different
Purposes and Targets

Demand-Side KM Supply-Side KM

• Individual Learning • Training Programs

• Group Learning • Communities of
Social Dimension • Innovation & IC Mgmt Practice (CoP)
(People and Process) • Communities of Inquiry • Knowledge Capture
• KAIZEN Events in Mfg • Storytelling
• Think Tanks • KM Cultural
Initiatives
• Management Planning • Operations Mgmt

• Knowledge Portals • Information Portals

 • Innovation Mgmt Tools • Intranets
• Groupware • Information Mgmt
Technology
- Collaboration Apps • Work Product Mgmt
Dimension
- Virtual Teaming Tools • Content Mgmt
(IT) - E-mail • Imaging

• Listserv Discuss’n Grps • Groupware

Figure 3.6
Some Examples of Common Knowledge Management Initiatives

technology-based interventions, such as enterprise

knowledge
portals, community support software, text-mining software, and
other KM-related applications. Figure 3.6 provides examples of KM
interventions classified by the social versus technology and demand-
side (knowledge production) versus supply-side (knowledge integra-
tion) dichotomies. In the classification we are forming here, the
demand- and supply-side categories are further broken down into
KLC subprocesses and outcomes.

----------------------- Page 112-----------------------

Information Management and Knowledge Management

83

P R O G R A M S

P Demand-Side Supply-Side
Demand-Side Supply-Side
O Social KM Social KM
Social KM Social KM
L
I
C
I
E
S Demand-Side Supply-Side
Demand-Side Supply-Side
Technology KM Technology KM
Technology KM Technology KM

Figure 3.7
Policies versus Programs in Knowledge Management Initiatives

Policy and program KM interventions differ, of course, in their

intent and generality. Policies are supposed to be highly general and
may require several programs to implement. Programs are more spe-
cific in their focus on social and technological targets. Here are two
examples:
Policy: Employees shall have meaningful opportunities to engage
in self-directed learning.
Program: 3M’s Fifteen Percent Rule (Employees may spend up to
15% of their time on self-chosen, self-managed learning, with full
management support.)
Thus, we can see that when we add the policy versus program
dimensions to the demand- versus supply-side and social versus tech-
nology intervention matrix shown in Figure 3.6, we get an even richer
framework for categorizing KM strategies and intervention types (see
Figure 3.7).

The Classification of KM Activities

This classification of nine KM categories or task clusters is not

complete. There are likely other task clusters and patterns we have
overlooked. But this classification of activities is specific enough to

----------------------- Page 113-----------------------

84 Key Issues in the New Knowledge Management

(along with the level, target, social/technological, and policy/program

dimensions) provide the capability to define many types of KM
interventions which may then be analyzed for impact and effective-
ness. If we assume only two KM levels on the Metaprise dimension,
the 9 KM activity categories, the 10 target categories, the two
social/technological, and the two policy/program categories, then
the KM taxonomy that results specifies a 720-category classification
of KM interventions. And this is only the beginning of differentia-
tion, since further category segmentation can easily be developed in
both the KM activity and target dimensions and perhaps almost
as easily in the social/technological and policy/program dimensions
as well.

More on How Information Management Differs

from Knowledge Management

IM activities can be defined in analogy to KM activities. There are

three categories of IM activities in the information management
process: interpersonal behavior; information processing behavior;
and decision making.
Interpersonal IM behavior includes:

# figurehead
# leadership
# external relationship-building activity

Information processing behavior includes:

# IM information production (no knowledge claim evaluation)

# IM information integration (only broadcasting, searching/
retrieving, teaching, or sharing information, but not knowledge)

Decision making includes:

# changing information processing rules

# crisis handling
# allocating IM resources
# negotiating agreements with representatives of other business
processes

----------------------- Page 114-----------------------

Information Management and Knowledge Management

85
The differences between information processes at the IM level and
knowledge processes at the KM level therefore arise from the absence
of knowledge claim evaluation activity in IM. As a result, broad-
casting, searching/retrieving, teaching, and sharing at the IM level are
all focused on information and not on knowledge.

Conclusion

There have been many attempts to define KM, but remarkably few
attempting to specify the activities or processes comprising it. This is
one of the mysteries of KM literature. It is as though KM theoreti-
cians have gone from KM abstractions to stories, case studies, tools,
software, and the rest of the diversity we see in KM without devel-
oping further the core concept of the field, and thereby leaving a huge
gap (see Figure 3.8) between core definitions and the more concrete
objects named above.
If we fill this gap we gain:

# a better understanding of the scope and meaning of KM,

because specification is even more important for understanding
than definition;

KM Definition

Specification Gap
Stories
Models

Tools Metrics
Case
Software Studies

We need to fill the gap to make further progress!

Figure 3.8
A Specification Gap

----------------------- Page 115-----------------------

86 Key Issues in the New Knowledge Management

# necessary language for developing the conceptual framework

that can provide the measurement architecture for KM; and
# concepts that become the focus of efforts to develop metrics of
KM inputs to the KLC.

On the other hand, if we fail in this specification, we get continued

confusion about what KM is and continued inability to evolve a pro-
fessional discipline that might be based on KM in any sort of mean-
ingful context.
In this chapter, we have developed a KM conceptual framework
and contrasted KM and information management. We began with a
discussion of differences between KM and IM, then developed a
clear definition of KM, and then went on to specify a 720-category
classification of KM intervention types based on the Metaprise levels,
KM activities, KLC targets, social/technological, and policy/program
dimensions. We believe that this framework fulfills the basic need for
clarification of the middle ground between definition and various
KM objects that has existed in KM for some time. It therefore also
provides a new foundation for KM policies, programs, and projects,
a foundation that goes way beyond the simple 2 ¥ 2 frameworks
that have so far been so popular as a basis for KM programs. Let us
hope that the days of oversimplification in KM program design,
based on such 2 ¥ 2 frameworks, are over and that the days of real-
istic consideration of the variety of KM phenomena have arrived. If
they have, then this KM framework is a contribution to TNKM that
will shortly flourish.

References

Allee, V. (2000), “Reconfiguring the Value Network,” available at:

http://www.vernaallee.com/reconfiguring_val_net.html.
Bateson, G. (1972), “The Logical Categories of Learning and Communica-
tion,” In G. Bateson, Steps to an Ecology of Mind, New York, NY:
Chandler Publishing Company.
Davenport, T. (1994), Quoted in Y. Malhotra, “Compilation of definitions
of knowledge management” at www.brint.com.
Davenport, T. (1998), quote in Y. Malhotra, “Compilation of definitions of
knowledge management” at www.brint.com.

----------------------- Page 116-----------------------

Information Management and Knowledge Management 87

Firestone, J.M. (1999), “The Metaprise, the AKMS, and the Enterprise
Knowledge Portal,” Working Paper No. 3, Executive Information
Systems, Inc., Wilmington, DE, May 5, 1999, Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000), “Accelerated Innovation and KM Impact,” Finan-
cial Knowledge Management, 1, no. 1, 54–60, also available at
http://www.dkms.com.
Firestone, J.M. (2000a), “Knowledge Management: A Framework for
Analysis and Measurement,” White Paper No. 17, Executive Information
Systems, Inc., Wilmington, DE, October 1, 2000, Available at:
http://www.dkms.com/White_Papers.htm.
Holland, J.H. (1995), Hidden Order. Reading, MA: Addison-Wesley.
Holland, J.H. (1998), Emergence. Reading, MA: Addison-Wesley.
Kauffman, S. (1995), At Home in the Universe. New York, NY: Oxford
University Press.
Knapp, E. (1998), quote in Y. Malhotra, “Compilation of definitions of
knowledge management” at www.brint.com.
Malhotra, Y. (1998) “Compilation of definitions of knowledge manage-
ment” at www.brint.com.
McElroy, M. (1999), “The Second Generation of KM,” Knowledge Man-
agement Magazine (October, 1999), 86–88.
Mintzberg, H. (1973), “A New Look at the Chief Executive’s Job,” Orga-
nizational Dynamics, AMACOM, Winter, 1973.
Murray, P. (1998), quote in Y. Malhotra, “Compilation of definitions of
knowledge management” at www.brint.com.
Russell, B. (1919), Introduction to Mathematical Philosophy, London, UK:
Allen and Unwin.
Sveiby, K. (1998), quote in Y. Malhotra, “Compilation of definitions of
knowledge management” at www.brint.com.
University of Kentucky, quote in Y. Malhotra, (1998) “Compilation of
definitions of knowledge management” at www.brint.com.
Waldrop, M. (1992), Complexity, New York, NY: Simon and Schuster.
Wenig, R.G. (1998), quote in Y. Malhotra, “Compilation of definitions of
knowledge management” at www.brint.com.
Whitehead, A.N. and Russell, B. (1913), Principia Mathematica, London:
Cambridge University Press.
Wiig, K. (1998) quote in Y. Malhotra, “Compilation of definitions of knowl-
edge management” at www.brint.com.

----------------------- Page 117-----------------------

Chapter 4

Generations of
Knowledge
Management

Three Views of Change in Knowledge

Management

Knowledge management, new as it is, is changing. There are at least

three accounts of how it is changing and about how we should view
The New Knowledge Management (TNKM). One account, by Mark
Koenig (2002), sees KM as a field that was originally driven by infor-
mation technology, the Internet, best practices, later lessons learned,
and most important, knowledge sharing. This theory sees a second
stage of KM as about human factors, organizational learning, and
knowledge creation viewed as the conversions among tacit and
explicit knowledge. The third stage of KM is the stage of the arrange-
ment and management of content through taxonomy construction
and use, and like the first is also heavily biased toward information
technology.
The second view of change, by David Snowden (2002), is a bit
more subtle than the first. According to this theory, the first age
of knowledge management is one in which the word knowledge
itself was not at first “problematic,” and in which the focus was on

88

----------------------- Page 118-----------------------

Generations of Knowledge Management 89

distributing information to decision makers for timely use in deci-

sions. The second age replaced the information technology focus with
one on tacit/explicit knowledge conversion inspired by Nonaka’s
SECI model. It is just ending. Snowden contends that the third age
will be one in which: knowledge is viewed paradoxically as a thing
and a flow; context, narrative, and content management will be
central to our view of KM; there will be an understanding of orga-
nizations as engaged in sense making through utilization of complex
adaptive systems phenomena constrained by human acts of free will
attempting to order them; and finally, the use of the insights and
practices of scientific management will be restricted to appropriate
contexts, while “insights and learnings” from theories of chaos
and complexity will supplement them in contexts where these new
insights are relevant.
The third view of change, first presented by Mark W. McElroy
(1999) based on work hosted by the Knowledge Management
Consortium International (KMCI) and continuing partly under its
auspices since then, views first-generation KM, also called “supply-
side KM,” as primarily about integrating (“supplying”) previously
created knowledge through knowledge distribution, sharing, and
other integrative activities. It is typically associated with two well-
known phrases that serve as the mantras for advocates of the “knowl-
edge sharing” side of KM: (1) It’s all about capturing, codifying, and
sharing valuable knowledge, and (2) It’s all about getting the right
information to the right people at the right time. The third view sees
second-generation KM as first appearing in the mid-1990s and as
being focused not only on “supply-side” knowledge processing such
as knowledge sharing, but also on “demand-side” knowledge pro-
cessing, or “knowledge-making” in response to problem-induced
demands. This combined focus on knowledge integration and knowl-
edge production is the defining characteristic of Second Generation
KM (SGKM), or alternatively, The New Knowledge Management
(TNKM). But an important aspect of it is also the recognition that
organizations are permeated with complex adaptive systems phe-
nomena and that knowledge management in them is about using KM
to enable or reinforce self-organization in knowledge processing
for the purpose of achieving accelerated sustainable innovation in
support of organizational adaptation.
So in light of these contrasting views, questions arise. Which of
the three views is correct? Are there two generations, stages, or ages

----------------------- Page 119-----------------------

90 Key Issues in the New Knowledge Management

of KM? Is a third age about to begin? Or are there already three?

Are the changes best seen as occurring along the information tech-
nology dimension? Or along linguistic dimensions, such as taxonomy
construction, context, and narrative? Or in terms of whether we view
organizations as mechanisms, or CASs, or CASs modified by human
“promethean” interventions? Or just in terms of the popularity of
different intervention types from one period to another? Or is change
in KM best viewed as occurring in terms of the shifting focus of
management on the scope of knowledge processing as identified by
McElroy? We will answer these questions after we have examined
each of the three views in more detail.

The Three Stages of Knowledge Management

In Mark Koenig’s view (2002, 20), “The initial stage of KM was

driven primarily by information technology. That stage has been
described . . . as ‘by the Internet out of intellectual capital.’”
By this, Koenig means that the development of the Internet and
the use of its technology to implement intranets provided the enter-
prise with an unprecedented tool for knowledge sharing and trans-
fer. Knowledge management was the name introduced to describe the
management activity concerned with implementing such solutions, in
order to gain competitive advantage and increase productivity and
effectiveness.
Further, this activity could be rationalized by its proponents
(including large consulting organizations selling their own newly
developed expertise in implementing such solutions) in terms of
increasing the value of an enterprise’s Intellectual Capital (IC). The
notion of IC had appeared a few years earlier to account for the
increasing disparity between the market value of real world enter-
prises and their book value as computed using measurable financial
indicators and conventional formulae for computing company valu-
ations. In addition to the above, the first stage of KM was also char-
acterized by a focus on “best practices,” later revised to a focus on
“lessons learned.” But it is not clear from Koenig’s account what
“best practices” and “lessons learned” in KM have to do with the
IT focus supposedly dominant in stage one.
So for Koenig, the first stage of KM was about applying technol-
ogy to accomplish knowledge sharing and coordination across the

----------------------- Page 120-----------------------

Generations of Knowledge Management 91

enterprise. The second stage, on the other hand, was primarily a

recognition that KM was not all about applying technology, but
rather had also to include a focus on human and cultural factors as
essential in implementing KM applications, if failures were to be
avoided. Koenig calls attention to the work of Senge (1990) on orga-
nizational learning and Nonaka and Takeuchi (1995) on the SECI
model and its applications as essential to phase two. Koenig also
calls attention to the focus of these works on organizational learn-
ing and knowledge creation, but not on systems thinking, which
was an important element in Senge’s treatment and in the rising
popularity of stage two activities. Koenig also mentions the impor-
tance of communities of practice in stage two, but neglects to make
the connection between the communities of practice emphasis and
the thinking of Senge and Nonaka and Takeuchi, or for that matter,
between communities of practice and knowledge creation and
innovation.
Koenig thinks that the third stage of KM (2002, 21) “is the
awareness of the importance of content—-and, in particular, an
awareness of the importance of the retrievability and therefore of
the arrangement, description, and structure of that content.” In
particular, the third stage is about finding relevant content and
about taxonomy development and content management to facilitate
this goal.

Difficulties with the Three-Stages View

There are a number of difficulties in Koenig’s account of the devel-

opment of knowledge management. First, the dates in his account of
development are unclear. His theory is one of the onset of new KM
stages which then exist along with the old. If such a stage theory of
KM development is to be applied we need either clear dates to
distinguish the beginning of each successive stage, or a clear period
of transition in which the previous stage is gradually supplemented
by the features of the new stage. Without these criteria it is very
hard to characterize a particular period as stage one rather than stage
two and to confirm that analysis. Specifically, Koenig claims that
stage one precedes stage two and that stage one is about applying
IT, while stage two is about the human element in KM. Yet Senge’s
book, identified as a stage two milestone was written in 1990 much

----------------------- Page 121-----------------------

92 Key Issues in the New Knowledge Management

before the trend toward intranets and knowledge sharing applica-

tions, supposedly characteristic of stage one, gained momentum. Karl
Wiig’s work (1989) introducing KM as a field was also written much
before the widespread adoption of Internet-based technology in
enterprises, and even before Senge’s book. And then Wiig wrote three
books from 1993 to 1995, looking at KM comprehensively. Even
Nonaka and Takeuchi dates from 1995, a date that surely preceded
the heyday of so-called stage one KM with its emphasis on intranet-
based knowledge sharing and coordination applications.
The same difficulty applies to the supposed transition from stage
two to stage three KM. If we are to believe Koenig, it was not until
2001 that content management and taxonomy development became
important for KM. However, the 1998 combined KM World/AIIM
conference held in Chicago had a major content management
element. In fact, attendees were frequently heard by these authors to
complain that content management was dominating the conference
and that such applications were not KM applications, and that claims
to the contrary were merely “vendor speak” hiding the fact that
vendors had very few KM applications to offer.
Following that conference, moreover, the conference circuit began
to see an explosion of content management and portal conferences.
These were frequently closely associated with so-called KM applica-
tions. Both types of conferences included sessions on tools for
taxonomy development and for increasingly efficient retrieval of
information through application of search technology.
While there is no question that the interest in content management
and taxonomy development continues to increase, there is no reason
to claim that this trend is either later than the second stage or even
that such activities are new and go beyond the concerns of the second
stage. After all, the concern with taxonomy and content management
is about more efficiently retrieving knowledge or information that
already exists. Thus, its core motivating concern is not different from
Koenig’s stage one. That is, taxonomy development and content man-
agement are primarily about coordinating and sharing already exist-
ing knowledge and only secondarily about aiding knowledge making.
So there is a good argument for asserting that Koenig’s stage 3 is
really just an extension of his stage 1.
Second, another difficulty with Koenig’s account is the ad hoc char-
acter of its classification of the three stages of KM, apparently based

----------------------- Page 122-----------------------

Generations of Knowledge Management 93

on anecdote and personal observation. There is no underlying con-

ceptual framework organizing the analysis of change. KM suppos-
edly begins as an IT field. Then suddenly, under the influence of Senge
and Nonaka, it begins to incorporate the human element, and this
element is apparently either discontinuous with what has gone
before, or a response to the perceived failure of the IT applications
implemented in the first age. It is presented as if it is a mere adapta-
tion to a problem, the problem of getting organizations to accept IT
interventions defined as KM projects. Further, a similar ad hoc adap-
tation is viewed as triggering the move from stage 2 to stage 3. That
is, Koenig seems to think that we have a new stage of KM because
people realize that they can neither share nor create knowledge
without good Web-based navigation to help them “find” it.
The third difficulty with Koenig’s view is that its lack of a
conceptual framework provides only limited guidance for the further
development of KM. He points to the fact that his view suggests that
librarians may have an important part to play in taxonomy devel-
opment as a positive reason for taking it seriously. But what does his
analysis imply about knowledge management activities or policies
more generally, or about knowledge production, organizational
learning, sustainable innovation, intellectual capital, KM metrics,
methodologies, and IT requirements for KM applications? That is,
once you understand his account, what can you do with it? The
answer is very little. Unless one is interested in content management
and taxonomy development, there is little of interest in it, or of
general significance for the further development of KM. Thus it pro-
vides both an inadequate analysis of the past and fails to provide a
road map for the future.
In brief, we believe that Koenig’s approach to the analysis of stages
of KM is much too ad hoc in character, focusing on tools and
techniques and not on the broad purposes of KM. As a result, his
typology only records shifting fashions, not fundamental shifts in
disciplinary concerns. Thus, he cannot recognize that both IT appli-
cations in support of KM and taxonomy/content management
concerns are not about central issues of knowledge management
orientation, but rather are about techniques and tools for support-
ing such KM orientations. The development of these techniques
and tools, however, is driven by the basic orientations and purposes
themselves.

----------------------- Page 123-----------------------

94 Key Issues in the New Knowledge Management

So, current content management, taxonomy, and portal applica-

tion concerns are about supporting knowledge coordination and
transfer applications. They are not yet about supporting knowledge
making, production, and creation. This is true because first genera-
tion KM is still dominant, while Second Generation Knowledge
Management (SGKM) (originating as a coherent orientation toward
the subject somewhere in the period 1995–1999) is still in the process
of taking hold. This point will become clearer as we get into the dis-
cussion of the Snowden and McElroy views on change in KM.

The Two Ages of Knowledge Management

(with a Third Yet to Come)

According to Snowden (2002, 2) the first age of KM, prior to 1995,

was about “the appropriate structuring and flow of information to
decision makers and the computerisation of major business applica-
tions leading to a technology enabled revolution dominated by the
perceived efficiencies of process engineering.”
He calls this age “information for decision support.” And his char-
acterization of it, as the above quote implies, does not distinguish it
from Business Process Reengineering (BPR). In fact, for Snowden,
KM in the first age seems to be a species of BPR, which proceeded
without recognition of knowledge gained through experience or
person-to-person processes of knowledge transfer. Since it ignored
these aspects of knowledge, Snowden thinks that the word knowl-
edge itself became problematic in knowledge management by the end
of the first age.
Snowden further contends (2002, 2) that the second age of knowl-
edge management began in 1995 with “the popularisation of the
SECI Model” after the publication of Nonaka and Takeuchi’s The
Knowledge Creating Company (1995). But he also says that “to all
intents and purposes knowledge management started circa 1995”
with the publication of this book. That statement, combined with his
characterization of the first age as one of information for decision
support, raises the question of why there is a first age in his change
framework at all, or more properly, why his second age of knowl-
edge management is not his first age.
The second age of KM, in Snowden’s view, is characterized by a
focus on the SECI model’s four processes describing the conversion

----------------------- Page 124-----------------------

Generations of Knowledge Management 95

of knowledge from: explicit to tacit (socialization) tacit to explicit

(externalization), explicit to explicit (combination), and tacit to
tacit (internalization). He goes on to comment about the mis-
understanding of Polanyi’s (1958, 1966) views on the nature of the
relationship between tacit and explicit knowledge that is pre-
valent in the second age, specifically that it was “dualistic, rather
than dialectical,” in contrast with both Polanyi’s and Nonaka’s
understanding of the relationship. But he says little else about the
second age, leaving the impression that there was little else to this
age of KM.

Difficulties with the Two-Ages View

Before moving on to Snowden’s characterization of the coming

third age of knowledge management, note that his description of
the first two ages of KM leaves a lot of open questions. First, was
there really no more to the first age of KM than “information for
decision support”? If so, then why was the term KM used at all?
After all, the field of business intelligence provides information
for decision support. So do data warehousing and data mining. So
does the still broader category of Decision Support Systems (DSS).
So what was the term KM supposed to signify that those other terms
do not?
Second, if there was no more than information for decision
support to the first age, then what were the attempts to distinguish
data, information, knowledge, and wisdom about? What was the
development of Xerox’s community of practice for the exchange of
knowledge among technicians about? What was knowledge sharing
at Buckman Laboratories in 1987 and 1992 (Rumizen 1998) about?
Where does Hubert St. Onge’s (see Stewart, 1999) work on the
relationship of customer capital to the learning organization fit? Or
Senge’s (1990) work on systems thinking? Or Karl Wiig’s early intro-
ductions to KM (1993, 1994, 1995)?
In brief, Snowden’s characterization of the first age of KM as
focused on providing information for decision support and imple-
menting BPR schemes suggests much too heavy an emphasis on KM
as primarily composed of IT applications to reflect the full reality of
the first age. In fact, his failure to take account of the human side of
KM during the first age suggests a desire for the same kind of neat

----------------------- Page 125-----------------------

96 Key Issues in the New Knowledge Management

distinction we find in Koenig’s analysis. In effect, Snowden, like

Koenig, seems to want to say that the first age was about technology
and the second age was about the role of people in Nonaka’s four
modes of conversion.
Third, in describing the second age of KM, Snowden’s account is,
once again, far too spare in its characterization. No doubt the
Nonaka and Takeuchi book has had an important and substantial
impact on knowledge management, but the period since 1995 has
seen important work done in many areas not explicitly concerned
with knowledge conversion.
These areas include semantic network analysis, the role of complex
adaptive systems theory in knowledge management, systems think-
ing, intellectual capital, value network analysis, organizational
learning, communities of practice, content management, knowledge
sharing, intellectual capital, conceptual frameworks for knowledge
processing and knowledge management, knowledge management
metrics, enterprise information portals, knowledge management
methodology, and innovation, to name some, but far from all, areas
in which important work has been done. Finally, as indicated by the
title of Nonaka and Takeuchi’s book, their concern, and a central
concern of second generation KM as we shall see shortly, is about
“knowledge creation,” or knowledge production. It is only secon-
darily about knowledge conversion.
Nonaka mistakenly identified knowledge creation wholly with
knowledge conversion. In our view, however, knowledge conversion
only produces belief or psychological knowledge. In the area of pro-
ducing organizational knowledge as a cultural product, the role of
knowledge conversion is focused on only one subprocess in knowl-
edge production: the subprocess of knowledge claim formulation. It
doesn’t address knowledge claim evaluation or validation, a critical
subprocess in the creation of explicit, shared, culturally based
knowledge.
Snowden’s account of the coming third age of knowledge man-
agement is developed much more carefully in his work than his
account of the other two ages. But it will be much easier to develop,
understand, and critique his forecast of a third age if we provide the
third view of change in knowledge management first, and along with
it some additional comments on both the Snowden and Koenig inter-
pretations of generations. We now turn to that task.

----------------------- Page 126-----------------------

Generations of Knowledge Management 97

The Two Generations of

Knowledge Management

The third perspective on the evolution of KM distinguishes between

two “generations”: first and second generation KM (first developed
in McElroy 1999). According to this view, a distinction can be made
between “supply-side” knowledge management, in which interven-
tions are aimed at knowledge integration, or sharing, and demand-
side KM, which is focused, instead, on knowledge production, or
making. In the first case, the practice of KM is predicated on the
assumption that valuable knowledge already exists; the purpose of
KM, then, is to capture, codify, and share it. In the second, no such
assumption is made. Before knowledge can be shared, much less cap-
tured and codified, it has to first be produced. Thus, supply-side KM
focuses on enhancing the “supply” of existing knowledge to workers
who need it, whereas demand-side KM seeks to enhance our capac-
ity to satisfy our “demands” for new knowledge.
First generation KM, according to this view, was (and continues
to be) supply-side only in its orientation. Second generation practice,
however, is both supply- and demand-side oriented. Of crucial impor-
tance to this view of KM, then, is the contention that knowledge is
not only something we share, but is also something we make. Indeed,
we can only share knowledge that exists, and knowledge can exist
only after it is created—by people.
A cyclical view of knowledge making and sharing—or, more
generally, production and integration—therefore comes sharply into
focus as a consequence of this third perspective. Rather than assume,
as first generation thinkers do, that valuable knowledge already exists
and that the sole task of KM is merely to enhance its distribution,
second generation thinkers contend, as well, with the problem of
knowledge production. It is because of this that second generation
KM is more closely aligned with the fields of organizational learning
and innovation management than the second age envisioned by
Snowden.
Of additional foundational importance to this third view of
KM is the distinction it makes between knowledge processing and
knowledge management. This rather fundamental distinction is
not made in either the Koenig or Snowden accounts of the evolution
of KM. Knowledge processing is precisely the cycle referred to

----------------------- Page 127-----------------------

98 Key Issues in the New Knowledge Management

above, through which people in organizations, in response to prob-

lems arising in business processes, collectively engage in knowledge
production and integration. Knowledge processes, therefore, are
social processes through which organizations make and share their
knowledge.
Knowledge management, on the other hand, is a management
activity that seeks to enhance knowledge processing. Not all organi-
zations support formal knowledge management functions, but all
organizations do engage in knowledge processing. The purpose of
KM according to this view is to enhance an organization’s ability
to perform knowledge processing, and ultimately by improving it to
enhance the quality of its business process behavior and its ability to
adapt to its environment.
Also central to the generational view of KM is the position that
knowledge processing in human social systems is a self-organizing
affair. That is, people in organizations tend to self-organize in emer-
gent, pattern-like ways around the production and integration of
knowledge. We can generally describe the shapes of these patterns
using terms like problem detection, intrinsically motivated learning,
group and community formation, communities of inquiry or prac-
tice, problem solving, knowledge evaluation and adoption, knowl-
edge sharing, and so forth. That these activities are self-organizing
and pattern-like in their appearance is explained with the aid of com-
plexity and complex adaptive systems theories in the generational
view of KM. Indeed, SGKM is deeply rooted in the application of
complex adaptive systems theory to knowledge processing in human
social systems, a perspective it applies backwards and forwards in its
characterization of how KM has evolved over the years.
While the generational view of KM does point to two distinct
bodies of practice that are supply-side on the one hand and demand-
side on the other, it does not suggest that the second one started only
after the first one ended. Rather, the two streams of practice are con-
current in use and will probably carry on in this way for some time
to come.
Consider, for example, the field of Organizational Learning (OL),
which is arguably focused on nothing if not demand-side knowledge
processing. This is a field that clearly started long before KM (the
term) came into fashion in the mid-1990s. The same can be said for
the fields of Innovation Management (IM), Organizational Develop-
ment (OD), and even Human Resources Development (HRD), which

----------------------- Page 128-----------------------

Generations of Knowledge Management 99

has always been concerned with the transfer of knowledge in the

form of training and other knowledge sharing programs.
What we have, then, according to the generational view of KM, is
two distinct bodies of practice that are separate in content but not
necessarily in time. That said, the first generation of KM arguably
began quite some time ago, even as early as the late nineteenth/early
twentieth centuries with the work of Frederick Taylor (1912), whose
scientific management system explicitly called for the capture, codi-
fication, and use of what we today would refer to as “best practices.”
This was supply-side KM in action, since its intent was to enhance
knowledge capture and sharing. Later on in the twentieth century,
work related to enhancing knowledge production began to appear.
This took many forms, including the evolution of R&D and its
various methodologies and management schemes, innovation
management, organizational learning, and institutionalized science,
which has always been concerned with the production of new knowl-
edge. From this perspective, supply- and demand-side KM is more
than 100 years old.
Despite this, the term “KM” is considerably younger in age. Its
initial appearance in the mid-1990s was clearly tied to supply-side
KM, and it wasn’t until 1999 that the formal distinction between that
sense of the term and the new, or second, sense was introduced
using the supply-side/demand-side language. Indeed, it wasn’t until
McElroy (1999) and his colleagues at KMCI (Firestone 1999, 1999a,
1999b, 1999c) began to think of differences in KM practice as being
somehow related to the separate and distinct notion of social knowl-
edge processing that the combined form of supply- and demand-side
KM was viewed as adding up to a new and unique body of practice
(SGKM) deserving of special recognition.
So even though we can say that both supply- and demand-side
KM were theoretically being practiced in various forms prior to
the advent of “KM” as such in the 1990s; they were clearly not
being practiced, much less compared to one another, in these terms.
Nor were they being tied to a formal conceptual distinction between
knowledge processing and KM. That dates from the end of the
1990s, following the advent of KM in the mid-1990s in its supply-
side form.
Comparing this third view to the other two, we can see important
differences. The Koenig view, as we have said, presents an ad hoc
classification scheme in which the three “stages” of KM are based

----------------------- Page 129-----------------------

100 Key Issues in the New Knowledge Management

more on anecdote and personal observation than on any sort of

underlying conceptual framework related to knowledge process-
ing and how it is practiced. The third, generational view, by
contrast, relies explicitly on a vision of social knowledge processing,
against which all forms of practice in KM can be seen and under-
stood. Indeed, it is SGKM that is associated with a formal articu-
lation of this vision for just this purpose. That articulation is
the knowledge life cycle framework, or KLC, as developed and
refined by Firestone (Firestone 1999c, Firestone 2000, 2000a,
2000b, 2001, 2002), McElroy (1999, 1999a, 2000a, 2000b, 2002,
2002a, 2002b) and other members of the Knowledge Management
Consortium International (KMCI) (Cavaleri and Reed 2000) over
the past four years. The KLC framework is illustrated again in
Figure 4.1.
Next, because the scope of the KLC is comprehensive in its

representation of knowledge processing in human social systems, all

forms of KM practice, both current and future ones, can be related
to it. Everything we do in KM is designed to have impact on one or
more elements of the KLC. A generation of KM, therefore, should
not, according to SGKM, be defined in terms of a Koenig-like
focus on practice types, tools, or trends. Indeed, such a definition
risks losing sight of the central purpose of KM interventions and
tools. The appearance and/or departure of different kinds or styles
of interventions need not—and should not—have anything to do
with our attempts to make sense of them in terms of what their basic
purpose is.
What is of more fundamental relevance to analysis of the evolu-
tion of KM is what its practitioners are trying to do, not what
their tools and methods are. Of course, we must be interested in tools
and methods, too, but only after we’ve settled on a purpose, and
used it to define the basic thrust of KM. Different flavors of tools
come and go, but the purpose of KM is always to enhance knowl-
edge processing.
SGKM’s conceptual framework for knowledge processing gives
rise to another important distinction between it and the Koenig view
of stages. As stated earlier, the Koenig view seems to begin and end
with an appreciation of the importance of taxonomy development
and content management. Under this logic, the very next issue to
pop up on the KM landscape would give rise to a fourth stage, a fifth
one after that, and so forth. This is what happens when we define

----------------------- Page 130-----------------------

Knowledge
Production Knowledge
Integration

Info

about

SKC

Broad-

Individual
casting
and
Group SKC

Learning
Info

about Searching

FKC

Knowledge Knowledge

Claim CKC Claim OK

Formulation Evaluation

FKC

Teaching

Info

about

UKC

Information

Acquisition
Sharing

UKC

1
Experiential Feedback
0 External
Inputs
1

Business Processing Environment

DOKB
Feedback
(including the
Business Process DOKB Containers
detection of
Behaviors · Agents (Indiv. & Groups) ·
Objective Knowledge
epistemic problems)
· Subjective Knowledge
of
Interacting Agents · Artifacts (Docs., IT, etc.)

CKC = Codified Knowledge Claim

COK = Codified Organizational Knowledege

=
Knowledge Processes DOKB =
Distributed Origanizational Knowledge Base
FKC = Falsified Knowledge Clain

OK = Organizational Knowledge
=
Knowledge Sets SKC = surviving
Knowledge Claim

UKC = Undecided Knowledge Claim

Figure 4.1

The Knowledge Life Cycle (KLC)

----------------------- Page 131-----------------------

102 Key Issues in the New Knowledge Management

evolution from the perspective of tools and styles of interventions—

each stage becomes too narrow, too tightly bounded, with nowhere
else to go, driven by short-term problems and adaptations. Such a
specification of stages is ad hoc and lacks depth of insight into what
KM is ultimately trying to achieve or have impact on (i.e., to enhance
knowledge processing).
By contrast, the third, generational view of KM is relatively free
of bias toward intervention types or styles. According to the genera-
tional view, new tools and methods are constantly being created and
tested, and there’s nothing wrong with that. But what shouldn’t (or
doesn’t) change along the way, except very infrequently, is the
intended target of their use. Why? Because tools are used in the
service of theory, and until such time as theory changes, no funda-
mental shift in thinking can be said to have occurred. That, and not
fluctuations in tool sets or methods, must be the standard of evalu-
ation. Practitioners of KM either seek to have an impact on knowl-
edge production, knowledge integration, or both. Variations in the
tools we use don’t change such basic objectives.
In comparing the third, generational view of KM to that of
Snowden’s, the generational perspective can help us add to our earlier
critique of his account of the first two ages of KM. First, his account
seems to suffer from the same lack of an underlying conceptual
framework used to organize his analysis of change.
In the first age, we are encouraged to envision individuals at work
whose momentary needs from time-to-time require informational
support. Then KM comes to the rescue (or is it IM?), delivers the
information, and declares victory. In this view, there is no social
system, only individuals. And in this view, there is only the momen-
tary and discrete decision transaction that frames the backdrop for
KM, thus failing to distinguish KM, as we pointed out earlier, from
data warehousing, business intelligence, or DSS. From the perspec-
tive of the third generation view of KM, however, this is an act of
knowledge integration (supply-side KM). But this only makes sense
in the context of a more comprehensive knowledge processing frame-
work that can help us distinguish knowledge integration from knowl-
edge use. It is a distinction that Snowden does not make, but that is
fundamental to first generation, supply-side KM.
In Snowden’s second age we are suddenly thrust into the realm of
knowledge conversion using Nonaka’s SECI model as a reference.
This is indeed an improvement over his first age, since his account
----------------------- Page 132-----------------------

Generations of Knowledge Management 103

of the second age characterization at least employs a conceptual

framework—some vision of knowledge processing, which arguably
goes on between individuals and other individuals, and between
groups and individuals and other groups. Nonetheless, we are still
left with a fairly narrow frame of reference and a failure to place the
Nonaka model into a broader context of knowledge processing or a
framework of KM concepts and practice.
This narrow frame of reference, of course, is determined by the
scope of the SECI model that Snowden has selected to conceptualize
the second age. In the SECI model, knowledge processing is reduced
to four kinds of transactions—the “knowledge conversion” transac-
tions reviewed earlier. In using this model as the basis of his second
age, Snowden reduces all of KM practice between the years of 1995
and today to a concerted effort on the part of KM professionals to
get these four transactions to work better.
Never mind the much broader scope of KM activity observable
since 1995 and discussed earlier. Never mind that he takes us from
“information delivery” in the first age to “knowledge conversion” in
the second, without explaining the difference between information
and knowledge in the transition, or why the SECI model is only about
knowledge and not information. And never mind, for that matter,
that the SECI model, since it, too, does not address this question,
could just as easily be seen as a way of converting “misinformation”
or “falsified knowledge” from one party to another. Or that it could
be seen as a model for generating unvalidated knowledge claims
rather than knowledge (Firestone 2000, 2001). Or that it fails to
make the distinction among tacit, explicit, and implicit knowledge
(see Chapter 1, Firestone 2001, 2002; Chapter 7), and not just
between tacit and explicit knowledge.
Regarding the term “knowledge,” Snowden tells us that it was not
problematic at the beginning of the first age, but became so at its end
because the first age did not recognize the character of knowledge
that was embedded in social interaction and in minds. In the first age,
then, we can infer that Snowden thinks that the terms “information”
and “knowledge” were used loosely relative to one another, if not
interchangeably. Knowledge in the second age, however, took on
some special meaning, although he never really tells us what that is.
Its special meaning is somehow tied in with the SECI model, the
touchstone of the second age. Still, none of this would seem to
support the assignment of “age” status to either period in Snowden’s

----------------------- Page 133-----------------------

104 Key Issues in the New Knowledge Management

account. Why? Because even if we can agree to include the pre-1995

period in which he describes the handling of information and not
knowledge at all, these distinctions, from a generational point of view
are, like Koenig’s ideas, nothing more than “a story” about evolu-
tion in tools and methods. They do not point to evolution in the
underlying conceptual or analytical frameworks of KM and knowl-
edge processing.
The generational view, on the other hand, has a much easier time
of accommodating the phenomena just mentioned without having to
resort to the declaration of new ages, stages, or generations. Indeed,
they are all mainly about information and/or knowledge transfer
or integration. Add them to a long list of other techniques aimed at
enhancing knowledge sharing or transfer, and you’re still left with
one stream of practice: supply-side KM. Thus the generational view
comprises a much broader framework than the SECI model, in that
it incorporates all of the varied activities of KM practice listed earlier
in this paper as occurring since 1995. In fact, SGKM is broad enough
to include much, perhaps most, of the aspects that are supposed to
distinguish Snowden’s third age from SGKM itself. We’ll explore this
and other problems in the next section on Snowden’s forecast.

Snowden’s Forecast? A Third Age of KM

Snowden (2002) contends that the third age will be one in which:

# knowledge is viewed paradoxically as a thing and a flow;

# context, narrative, and content management will be central to
our view of KM;
# there will be an understanding of organizations as engaged in
sense making through utilization of complex adaptive systems
phenomena constrained by human acts of free will attempting
to order them; and
# scientific management with its mechanistic models will be
applied to carefully selected targets where it is appropriate, while
the outlooks of chaos and complexity theory will be applied to
other targets and situations where they are appropriate.

There are a number of ways to look at this forecast. Let us start with
its implicit factual claim that the present condition of KM is not char-
acterized by the above attributes.

----------------------- Page 134-----------------------

Generations of Knowledge Management 105

KM and Scientific Management

Is it true that KM does not now restrict scientific management and

its mechanistic models to carefully selected situations where these
may be relevant? We think the answer to this question is yes.
We don’t know of a single writer on KM who endorses scientific
management and its mechanistic models as the dominant approach
to KM, and we know of many writers who explicitly reject the
relevance of such an approach to most human-based interactions.
These writers include: Allee (1997), Amidon (1997), Brown (1995),
Brown and Duguid (1991, 2000), Carrillo (1998, 2001) Davenport
and Prusak (1997), Denning et al. (1998), Denning (2001), Firestone
(1999, 1999a, 2000, 2001), Kuscu, 2001, Leonard-Barton (1995),
McElroy (1999, 1999a, 1999b, 2000, 2002), Senge (1990),
Wheatley and Kellner-Rogers (1996), among many others. In short,
it is simply false that third generation knowledge management, if
there is to be one, will be unique in restricting mechanistic manage-
ment models to only those situations in which they are relevant, since
that restriction has already come to pass.

KM, Content Management, and Context

Is it true that KM is not now characterized by context, narrative, and

content management, and that therefore this would be a distinctive
development in a coming third age or generation of KM? In review-
ing Koenig’s views we have already pointed out that content man-
agement has been a concern in KM for some years now, and also that
the 1998 combined KM World/AIIM conference held in Chicago had
a major content management element. In fact, many vendors have
long confused content management and knowledge management, as
if there were nothing more to KM than that.
And since 1998, the ties between knowledge management and
content management have grown stronger with the connection that
is currently made between enterprise information portals (with sub-
stantial content management capabilities) and knowledge processing
and KM. In our view, that connection is greatly overdrawn (Firestone
2003, Chaps. 15 and 17). But from Snowden’s point of view, content
management is at the heart of the third age of KM, even though it
certainly has not been far from the attention of KM practitioners

----------------------- Page 135-----------------------

106 Key Issues in the New Knowledge Management

since the mid-1990s. Snowden in fact recognizes the close connection

between content management and KM prior to the third age. He says
(2002, 3):

Stacey accurately summarises many of the deficiencies of mainstream

thinking, and is one of a growing group of authors who base their ideas
in the science of complex adaptive systems. That new understanding does
not require abandonment of much of which has been valuable, but it does
involve a recognition that most knowledge management in the post 1995
period has been to all intents and purposes content management.

So clearly, content management is not a distinctive characteristic of

any forecasted third age.
Regarding context, Snowden’s (2002) use of that term is not trans-
parent. Linked as it is with content management (p. 3) by Snowden,
our first interpretation was that he was mainly referring to context
analysis in the context of content analysis and management. But his
primary concern with context instead comes from the notion that
(ibid.):

. . . human knowledge is deeply contextual, it is triggered by circum-

stance. In understanding what people know we have to recreate the
context of their knowing if we are to ask a meaningful question or enable
knowledge use . . .

In other words, the knowledge people have that is directly related

to knowledge use is the set of situational beliefs they use to perform
acts. And these beliefs are not determined outside of situational con-
texts, but through the interaction of people with those contexts.
Moreover—turning to Stacey (2001)—Snowden suggests that these
beliefs (knowledge) are ephemeral, precisely because of their ground-
ing in momentary experiences, or contexts. He seems to be saying
that because experiences are fleeting, so, too, must knowledge evoked
in the course of experiences be fleeting, as well. In any case, he is
clearly suggesting that knowledge beliefs and use are at least partly
determined as a function of situational contexts.
Now, as it happens, this last is not a new idea. It is one that
has been well known in the social sciences for many decades, and
has certainly been well known in social psychology for many, many

----------------------- Page 136-----------------------

Generations of Knowledge
Management
107

The Network of
Agent Behavioral
Processes j,
k, . . ., n, including Social
Ecology and Goal-
Directed Agents j, k, . . .,

n.

T
.

r
.

a
.

,
k
n

c
l
t

o
 s
n
n
o
s
i Agent Behavioral Process
j
t

c
a
k

,
s
.

n
.

a
.
r

T
Goal-Directed Agent (I)

Decision Execution Cycle

i

!
Social Ecology
Decisions Desired

Social, Cultural,
Transactions and Ecology
Memory, Values, Attitudes,
Geographical,

Economic Conditions
Situational Orientations, Goals

Figure 4.2
The Flow of Behavior Among Agents

years. Figure 4.2 illustrates the idea of an agent making decisions

and engaging in transactions with other agents. The beliefs affect-
ing behavior in the diagram are within the agent. The beliefs closest
to behavior are the “sense” (Weick 1995, Haeckel 1999) that the
agent has made out of the situation. The context is provided by the
transactions directed at the agent and also by the social ecology box
in the figure, including its physical, social, structural, and cultural
components.
The process of interaction going on inside the agent may also be
viewed as the decision execution cycle of the agent, illustrated in
Figure 4.3. In the figure, sense making is represented by the step
called “Monitoring.”
Figure 4.4 provides the psychological context of the formation of
situational knowledge and beliefs. It shows a hierarchy of psycho-
logical predispositions of any agent that are aroused by the external
situational context, that form an internal psychological context, and
that themselves affect the formation of contextual knowledge beliefs.
This hierarchy, called an incentive system (Birch and Veroff 1966),
produces a situational orientation of the agent. The availability and
incentives represent the “sense” the agent has made of the situation.

----------------------- Page 137-----------------------

108 Key Issues in the New Knowledge Management

Monitoring Feedback
(Sense Making)

The DEC
Acting applies to any Evaluating

business
process

A Double-
Planning & Loop
Decision Making Learning
Process

Figure 4.3
The Decision Execution Cycle

The situational incentive refers to the affective orientation produced

by the predispositional hierarchy toward the situation. The behavior
is the result of the goal-striving produced by the interaction of the
availability, incentive, and affective components.
The notion presented in Figure 4.4 is oversimplified in that it
ignores the overwhelmingly high probability that behavior in any
concrete situational context will simultaneously be motivated by
more than one incentive system. A contemplated action, in other
words, may be associated with a likely outcome having multiple and
either conflicting or reinforcing incentive values or value expectations
for an agent. So the depiction of a single goal-striving tendency at
the bottom of Figure 4.4, just prior to the discrete situational orien-
tation, is incorrect. Instead, visualize a number of conflicting goal-
striving tendencies, G . . . G , all firing in parallel, and take the
1 n

resultant of these, along with the environmental stimuli, as affecting

the discrete situational orientation.
Nor is this kind of conception of situational knowledge being
formed in a context new to knowledge management. Firestone
(2001) proposed this framework in an article explicating the notion
of “subjective culture” for use in second generation KM. His devel-
opment of this framework is not connected to any fundamental gen-
erational change beyond SGKM, but only to an attempt to strengthen
its foundation by clarifying the role of knowledge as belief or belief

----------------------- Page 138-----------------------

Value
Orientation
Availability X
Expectancy X Incentive The psychological
E
N
motivation of an
V Goal-Striving
Tendency
i
l I
individual or the
u
R
m
culture of a
i Attitude
Level 1
t O
S N Availability X
Expectancy X Incentive group-level agent
l
a M
t
n E
is defined by the
e N Goal-Striving
Tendency
m T
value orientations,
n
o A
r Attitude
Level n attitudes, and
i L
v
n Availability X
Expectancy X Incentive goal-striving
1
E S
0 T
tendencies in the
9 I Goal-Striving
Tendency box. The

M
U
environmental
L Discrete
Situational Orientation

stimuli include
Availability X
Expectancy X Incentive
social ecology

and transactions.
Behavior

Figure
4.4
The Incentive System
of an Agent

----------------------- Page 139-----------------------

110 Key Issues in the New Knowledge Management

predisposition; knowledge as a cultural product; and culture, itself,

in business, knowledge, and knowledge management processes.
If the notion of contextual knowledge is not, as Snowden implies,
new to KM, is it true that his conceptual development of the idea of
context, combining abstraction and culture, is significant enough that
it should form the basis of a reorientation of KM and therefore a
third age? We believe that the answer to this question is clearly no
because:

# descriptions of context in terms of abstraction and culture are

much too simple without much more detailed development of
the framework;
# context alone neither comprises nor determines knowledge pro-
duction and integration processes; and
# a revision in the idea of how to categorize context for pur-
poses of description and analysis is not the kind of funda-
mental change in orientation that signals a new generation, or
a new age.

Thus, why wouldn’t such a change just fit into the second age? It may
not do so, if one defines the second age, as Snowden does, as essen-
tially one in which activity is focused on the SECI model, but if one
takes the broader SGKM or TNKM point of view, changes in how
we categorize or describe context for the purpose of affecting knowl-
edge production and knowledge integration are just “par for the
course” and involve nothing more than further development of the
TNKM point of view, rather than a departure from it into a new
generational outlook.

Knowledge: Process or Outcome?

Is it true that knowledge is not now viewed paradoxically as a thing

and a flow and that this view needs to be adopted in order to get
past the difficulties associated with viewing knowledge as a thing?
Our answer to this challenge is to agree that “knowledge” is not now
viewed paradoxically as both a thing and a flow, but also to state in
no uncertain terms that to adopt such a view would not solve the
problems of knowledge management, but rather would only deepen
the degree of confusion and conflicts existing in the discipline.

----------------------- Page 140-----------------------

Generations of Knowledge Management 111

Let us now examine our reasons for this conclusion by offering

responses to some of Snowden’s comments on the nature of knowl-
edge as a process and then both a “thing” and a “flow.”
Some of the basic concepts underpinning knowledge management
are now being challenged: “Knowledge is not a ‘thing,’ or a system,
but an ephemeral, active process of relating.” (2002, 3).
Taken from Stacey (2001), this definition suffers from, or at
least creates, a process-product confusion. It is fueled by a desire to
focus on the dynamics of knowledge creation, rather than only on
explicit codified outcomes or mental beliefs. However, we can do
this without becoming confused just by distinguishing knowledge
processes from knowledge products or outcomes. Knowledge pro-
cesses are not any less important because we call them “knowledge
processes” rather than “knowledge” (the “ephemeral active process
of relating”).
If we take the view that knowledge is a process, we can no longer
talk about knowledge as embedded in cultural products, or even
knowledge as beliefs or predispositions in minds. Or knowledge as
“true” or “false,” since processes are neither true nor false, but only
existent or nonexistent.
Also, if we take this view, it doesn’t account for the content of
cultural products or beliefs or predispositions in minds. So we are
left with the problem of finding words other than knowledge to
describe these very real phenomena. The real question is: What do
we gain by calling knowledge “an ephemeral, active process of relat-
ing”? What does it do for us? In our view it provides only additional
confusion in a field that is already replete with it, because people
insist on using words for their halo effect rather than for their
descriptive value.
To us it seems clear that knowledge is not a process but an outcome
of knowledge production and integration processes. In other words,
we believe that knowledge should be viewed as a “thing,” not as a
process. We also believe that as specified elsewhere (Firestone 2001),
knowledge is not a single thing but is divided into three types: phys-
ical, mental, and cultural. All are things, and more specifically are
encoded structures in systems that help those systems to respond and
adapt to changes in their environments.
Next, Snowden says (ibid.):

----------------------- Page 141-----------------------

112 Key Issues in the New Knowledge Management

. . . mainstream theory and practice have adopted a Kantian epistemol-

ogy in which knowledge is perceived as a thing, something absolute,
awaiting discovery through scientific investigation.

To say knowledge is a thing may be Kantian, or sometimes even Pla-

tonist for that matter, but to label it in this way is not to criticize the
idea on its merits. Furthermore, to say that knowledge is a thing
is not to say that it is “absolute,” or that it is “awaiting discovery
through scientific investigation.” That is, knowledge can be (a) a
thing; (b) produced by social processes of many kinds, and not just
processes of scientific investigation, much less awaiting discovery by
the latter; and (c) also can be either false or true. So there is nothing
“absolute” about it.
Snowden also says (ibid.):

In the third generation we grow beyond managing knowledge as a thing

to also managing knowledge as a flow. To do this we will need to focus
 more on context and narrative, than on content.

As far as the third generation (or age) being about managing knowl-
edge as a flow is concerned, if by “flow” Snowden means knowledge
processing, then we do not agree that this is distinctively third gen-
eration but think it is second generation KM and is at least a few
years old now, as our discussion of SGKM above indicates. But is
this, in fact, what he means by “flow”?
Again, Snowden says (ibid.):

Properly understood knowledge is paradoxically both a thing and a flow;

in the second age we looked for things and in consequence found things,
in the third age we look for both in different ways and embrace the con-
sequent paradox.

Here we see a shift in Snowden’s view. As we saw above, he begins

by characterizing knowledge as a process and creating a process-
product confusion, but ends by claiming that it is both a “thing” and
a “flow,” thereby creating a process-product redundancy (to wit,
flows are things), which he denies is a redundancy, treats as a seeming
contradiction, and terms a “paradox.” He then defends paradox, by
pointing out that philosophers have learned much from paradox and

----------------------- Page 142-----------------------

Generations of Knowledge Management 113

also that physicists have had to live for many decades with the
paradox that electrons are both particles and waves.
This is all very neat, but it is also very problematic: (1) philoso-
phers have learned much from paradox, but this doesn’t mean that
paradox in the definition of knowledge is good for KM, especially if
there is no paradox. (2) It is not true that physicists have concluded
that electrons are both particles and waves. Rather, electrons are
things that may be described using a particle model under certain
conditions and a wave model under others. The reason why there is
no contradiction or paradox in this view is that physicists know
enough not to claim that electrons are both waves and particles, but
that they are a third thing entirely. Indeed, this is the key lesson
embodied in the Heisenberg uncertainty principle.
And (3), and most important, Snowden hasn’t established the
need to call knowledge both a thing and a flow and thereby embrace
paradox, contradiction, or redundancy, much less another age of
KM founded on paradox. All we need do, instead, as we in fact have
done in SGKM, is to say that knowledge is an outcome or product
(thing) that is produced by human social processes (process). Thus
we have the ability to deal with both dynamics and outcomes in such
a conceptualization, an ability that has always existed in systems
theory.
So, the effort to establish knowledge first as a process, and then
as a “thing” and a “flow,” is not persuasive to us. It seems to offer
no advantages that the process-product view of SGKM is not already
delivering. On the other hand, it offers the disadvantages of logical
contradiction, redundancy, or, perhaps, paradox, if one accepts
Snowden’s assertion, that can only lead a third generation founded
on it into unnecessary confusion and perplexity. Our conclusion is
that we don’t need such a third generation, but that what we do need
to do is to continuously tighten the conceptual foundations of SGKM
and continue to develop its program of research and practice.
Sense Making, Complex Adaptive Systems,
and the Third Age

Is there already an understanding in knowledge management of orga-

nizations as engaged in sense making through utilization of complex
adaptive systems phenomena constrained by human acts of free will

----------------------- Page 143-----------------------

114 Key Issues in the New Knowledge Management

attempting to order them? Or is this a distinctive feature that might

provide the foundation for a third generation of KM?
Recognizing the role of complex adaptive systems phenomena in
human organizations, “sense making” and knowledge production is
very important in understanding the emergence of organizational
behavior, organizational knowledge predispositions, organizational
learning, and organizational intelligence from interactions among
organizational agents. But whether or not recognition of the impor-
tance of CAS phenomena and their interaction with purposeful
knowledge management interventions creates the need for a new
KM generation depends very much on one’s view about previous
generations.
If you accept Snowden’s view that the second age of KM is about
knowledge conversion and the Nonaka/Takeuchi program alone, and
that it (a) did not focus on knowledge processing, (b) had no empha-
sis on the situational character of knowledge, (c) is committed to
development of mechanistic models of knowledge management, and
(d) did not recognize the role of CAS in knowledge processing and
knowledge management, then to declare the need for a new genera-
tion may make sense. But if you view SGKM, as we do, as a profes-
sional discipline developing since 1995 to:

1. emphasize the distinctions among knowledge, sense making,

knowledge processing, knowledge management, business out-
comes, business processing, and business management;
2. add a focus on knowledge production (rather than just knowl-
edge conversion) and sustainable innovation to a previous
focus on knowledge integration;
3. arrive at a conceptual framework that emphasizes the situa-
tional character of sense making and belief knowledge; that
breaks knowledge production and knowledge integration
into subprocesses; that identifies knowledge management
activities and their targets in knowledge processing; that
makes clear the link between knowledge processing, explicit
knowledge production, belief knowledge production, and
knowledge use; and that relates all of this to the situational
context of sense and decision making and organizational
learning cycles;
4. recognize patterns of knowledge processing that emerge from
CAS-based interaction tempered by KM initiatives;

----------------------- Page 144-----------------------

Generations of Knowledge Management 115

5. recognize that KM initiatives must be synchronized with CAS

phenomena in order to succeed;
 6.deny the relevance of mechanistic management models for
knowledge management;
7. emphasize the central role of knowledge claim evaluation (or
validation) in KM;
8. emphasize the important role of communities of practice in
mobilizing CAS-based interaction and contributing to both
knowledge production and knowledge integration;
9. recognize the role of culture in providing a context for knowl-
edge processing and knowledge management;
10. emphasize a coherent theory of knowledge that distinguishes
it from data, information, and wisdom;
11. develop a systematic approach to knowledge and KM-related
metrics;
12. place the role of information technology in context as an
enabler of knowledge processing and KM processing;
13. recognize a model of intellectual capital that sees social inno-
vation processes as an aspect of such capital; and
14. develop and use methodology that incorporates all of the
above elements and that is oriented toward problem solving;

then you may feel that everything that is distinctive and useful in
Snowden’s forecasted third age already exists in the second genera-
tion, that is, in TNKM. So from the point of view of TNKM, there
is no third age and no need for one.
But even if all of the above is correct, what about Snowden’s
Cynefin model? Doesn’t it suggest that a third age is upon us?

The Cynefin Model and Its Problems

Our treatment of the Cynefin model will be detailed and follows the
following pattern: We summarize a bit of the model and then present
commentary and criticism. We then repeat this pattern until the
analysis is complete. We then offer a summary of the whole discus-
sion and some general perspectives.
The Model: The Cynefin model uses the distinctions between
the poles of the context dimensions: high and low abstraction, and

----------------------- Page 145-----------------------

116 Key Issues in the New Knowledge Management

teaching and learning cultures to initially create four types. In

Snowden’s words (2002, 6):

Cynefin creates four open spaces or domains of knowledge all of which

have validity within different contexts. They are domains not quadrants
as they create boundaries within a centre of focus, but they do not pretend
to fully encompass all possibilities.

The Cynefin model not only specifies four open spaces or domains
of knowledge. It also views those spaces (Snowden, 2002, Figure 2)
as common sense-making environments.
Commentary: The first problem with the Cynefin model is with
the specification of the two context dimensions used to formulate it:
culture and abstraction.
Snowden bases his concept of culture on Keesing and Strathern’s
(1997) work. They distinguish between the sociocultural system
(what people do and make) and the ideational system (or what people
 High Abstraction

Informal/ Professional/
Interdependent Logical
(The Informal Organization, S (Communities of Practice,
Social Networks) E Known Membership
N and Objectives)
S
E
Learning Teaching
CULTURE M
A
K
Uncharted/ I Bureaucratic/
Innovative N Structured
(Temporary Communities, G (Coherent Groupings,

Disruptive Space) Largely Information)

Low Abstraction

Figure 4.5
The Cynefin Model: Cultural Sense Making (Adapted from
David Snowden, 2002)

----------------------- Page 146-----------------------

Generations of Knowledge Management 117

learn) as two different types of culture. Snowden, however, also notes

that the first type of culture is teaching culture and the second type
of culture is learning culture. In forming the Cynefin model he then
uses the dimension teaching/learning to define an aspect of variation
among sense-making environments.
Now, the problem with this is the gross oversimplification of the
Keesing/Strathern distinction between the two types of culture. The
two types are based on numerous dimensions in Keesing and Strath-
ern, not on the distinction between teaching and learning. To suppose
that the teaching/learning distinction is all that is meaningful in the
notion of culture for specifying sense-making environments is to
make a wildly optimistic and obviously incorrect assumption.
The second context dimension (high/low abstraction) is also
specified inadequately by Snowden. Snowden (2002) does not define
what he means by abstraction. In Snowden (2000) he comes closer
to defining abstraction in the following passage:

Such communities are working at a high level of abstraction. Abstraction

is the process by which we focus on the underlying constructs of data.
As Boisot (1998) admirably demonstrates, the process of abstraction is
focused on concepts, not percepts. Percepts “. . . achieve their economies
by maintaining a certain clarity and distinction between categories, con-
cepts do so by revealing which categories are likely to be relevant to the
data-processing task” or information creation. “Abstraction, in effect, is
a form of reductionism; it works by letting the few stand for the many.”

But this definition of “abstraction” is still unclear. Specifically, we

now know that abstraction is a process, but we don’t know (from
Snowden’s account) what we actually do when we abstract and we
don’t know what “high abstraction” and “low abstraction” mean to
Snowden in sense-making environments. We do receive the further
information in both Snowden articles that level of abstraction is
inversely related to cost of disembodiment or codification. But this
idea seems to imply that abstraction is an outcome (actually an
attribute of information) rather than a process, as Snowden has
designated it in the above quote. In short, we don’t know what
Snowden means by abstraction. So it’s very difficult to evaluate his
description of common sense-making environments in terms of
high/low abstraction.

----------------------- Page 147-----------------------

118 Key Issues in the New Knowledge Management

The above considerations immediately call into question the

Cynefin model. If we have no clear idea of what is meant by “abstrac-
tion,” and if the distinction between teaching and learning cultures
oversimplifies contextual variations due to culture, then how are we
to understand the relation of these dimensions to common sense-
making environments?
The Model: In Snowden’s Figure 2, the domains are labeled
“Common Sense Making,” so that each of the four constitutes a dis-
tinctly different environment for sense making.
Commentary: Snowden’s immediate purpose in constructing
Cynefin was to specify four distinct sense-making environments that
sense makers encounter in their everyday experience in organizations.
But is sense making really the primary goal of knowledge process-
ing? And is it the same thing as knowledge production?
Undoubtedly, sense making is an important activity. According
to Figures 2, 3, and 4, sense making is a critical step in the decision
execution cycle underlying all action and all business process be-
havior including knowledge process behavior. But sense making,
business processing, and knowledge processing are not equivalent.
This lack of equivalence raises the question of where sense making
stands in relation to knowledge management. Knowledge manage-
ment is management of knowledge processing and its immediate
knowledge outcomes, and business management is management of
business processes, generally, and their outcomes. Since sense making
is a part of all business process behavior, it falls under the general
purview of business management rather than knowledge manage-
ment, unless the sense making in question is specifically tied to
decision execution cycles comprising the various subprocesses of
knowledge production and knowledge integration.
This argument raises the question of the specific relevance of a
sense-making model such as Cynefin to knowledge processing and
knowledge management. Of course, it has some relevance to knowl-
edge processing and knowledge management. Both areas are areas of
business process behavior, and so both, at the lowest level of deci-
sion making and acting involve sense making. But sense making is
only one activity in the DEC, and, in addition, patterns of sense
making don’t speak directly to the dynamics of knowledge sub-
processes such as information acquisition, individual and group
learning, knowledge claim formulation, and knowledge claim evalu-
ation, and the various knowledge integration subprocesses. So at

----------------------- Page 148-----------------------

Generations of Knowledge Management 119

most even a good model of sense making would not be broad enough
in its relevance to define the scope of knowledge management in its
third age.
On the other hand, since sense making relates to all decision
making through the DEC, a good model of sense making will add to
our theoretical and practical understanding of the actions that are
the foundation of knowledge processing and knowledge manage-
ment. So sense making models certainly have a place in providing a
better understanding of the decision-making foundation of SGKM
processes.
Here is the first of the four environments:
The Model: bureaucratic/structured; teaching, low abstraction
This common sense-making environment emphasizes formal orga-
nization, policies, rules, procedures and controls. Snowden empha-
sizes the explicit, open nature of language, training, and the corporate
intranet as important features. He also points out that “its shared
context is the lowest common denominator of its target audience’s
shared context” (2002, 6). In other words, the level of abstraction
characterizing the shared context of communications is low.
Commentary: Here, Snowden does not explain why an ideal type
of bureaucratic/structured, learning and high abstraction, would
not be equally useful as a common sense-making environment—
or, for that matter, why the other two ideal type variations based
on the teaching/learning and high abstraction/low abstraction
dichotomies, bureaucratic/structured, learning and low abstraction,
and bureaucratic/structured, teaching and high abstraction, should
not also be selected. In other words, he provides no explanation why
he settled on the above pattern as the only sense-making environment
within the bureaucratic structured category. In other words, he
doesn’t explain the logic behind his specification of the above spe-
cific bureaucratic/structured sense-making environment as one of his
four primary types of common sense-making environments.
Here is the second of the four environments:
The Model: professional/logical; teaching, high abstraction
This common sense-making environment is characterized by a
high level of abstraction in the shared context for communica-
tions. It is also characterized by professional individuals, expertise,
training, specialized terminology, textbooks, communities of prac-
tice, and “efficient knowledge communication,” especially among
experts.

----------------------- Page 149-----------------------

120 Key Issues in the New Knowledge Management

Commentary: A similar comment can be provided here as

we offered for the bureaucratic/structured types. Why specify
teaching/high abstraction along with professional/logical? Could not
professional/logical sense-making environments involve both learn-
ing and low abstraction as well as teaching and high abstraction? Or
other combinations of these categories? Of course they can. Do other
combinations make sense? We don’t know, but we do know that the
rationale presented by Snowden for the type he prefers is not clear
to us and, we suspect, to other readers as well.
Here is the third of the four environments:
The Model: informal/interdependent; learning, high abstraction
This environment has a high level of abstraction in the shared
context of experiences, values, symbol structures, and beliefs. It is
focused on the informal organization and its “network of obliga-
tions, experiences and mutual commitments.” It is also character-
ized by trust, voluntary collaboration, storytelling, the ability of
symbolic languages to efficiently convey large amounts of informa-
tion through reliance on highly abstract symbol associations, and
shared symbol structures. This information can include “simple rules
and values that underlie the reality of that organization’s culture”
(Snowden 1999).
Commentary: Again, the pattern specified by Snowden is not the
only pattern that can be specified for informal/interdependent sense-
making environments. In particular, we think that low abstraction in
the shared context of experiences, values, symbol structures, etc., is
also possible in such environments, as is teaching.
Further, the specification that an informal/interdependent envi-
ronment is characterized by trust and voluntary collaborations is
certainly only one possibility. Informal/interdependent sense-making
environments may also be characterized by mistrust and socially
coerced collaboration, as well. Of course, such a sense-making envi-
ronment may be less effective at sense making than the one specified
by Snowden. But we don’t know that yet based on research, while
we do know that expectations based on simple ideal types are often
frustrated by complex reality.
Here is the fourth of the four environments:
The Model: uncharted/innovative; learning, low abstraction
This environment presents entirely new situations to an organiza-
tion. It is “the ultimate learning environment,” and it is character-

----------------------- Page 150-----------------------

Generations of Knowledge Management 121

ized by low abstraction in the shared context of communications

among agents in this common sense-making environment.

Here we act to create context to enable action, through individuals or

communities who have either developed specific understanding, or who
are comfortable in conditions of extreme uncertainty. Such individuals or
communities impose patterns on chaos to make it both comprehensible
and manageable (ibid.).

Commentary: Is this really the perfect learning environment? Why

would one think that one can learn better without context than with
it? This would be true only if one assumes that context is always
more constraining than chaos. But certainly this is not always true.
In a very real sense, chaos may be the best unlearning environment,
the opposite of what Snowden suggests. Further, why is the environ-
ment characterized by low abstraction? If it is truly uncharted, then
decision makers can create their own context, with a level of abstrac-
tion appropriate to them.
The Model: Snowden tells us that the Cynefin model we have
just outlined is based on the distinctions among chaotic, complex,
and complicated systems. By complicated systems he means
those systems whose cause-and-effect structure is either known or
knowable. By complex systems he means those with coherent struc-
tures and processes whose cause-and-effect structure cannot be
known and whose global behavior is emergent, but which is not
explainable in terms of a system’s components and their relation-
ships. By chaotic systems he means those systems in which “all con-
nections have broken down and we are in a state of turbulence or
eternal boiling.”
 Commentary: We believe that this typology of systems is incom-
plete, and that human social systems are not Natural Complex
Adaptive Systems (NCASs), such as insect social systems, but
Promethean Complex Adaptive Systems (PCASs). That is, we find
CAS behavior in them, but such behavior is moderated by the con-
tinuous efforts of human agents to create predictable structures that
serve their interests. These efforts use normative processes that
attempt to simulate cause-and-effect sequences by treating humans
as if they are objects that will respond to prescribed stimuli in pre-
scribed ways. However, the behavioral processes corresponding to

----------------------- Page 151-----------------------

122 Key Issues in the New Knowledge Management

these normative processes are not processes in complicated systems;

rather, they are “complex” processes, always subject to human adap-
tation and innovation in the face of changing conditions. So PCASs
follow neither CAS, nor complicated, nor chaotic patterns, but rather
their own patterns that oscillate constantly between different states
of relative complexity.
Also, we need to note at this point that the boundary between com-
plicated and complex systems is not hard and fast in the sense that
it is obvious when a system belongs to one class or the other. To be
a CAS or a PCAS, rather than a complicated system, it is necessary
that a system not be “knowable.” However, a system that today
seems unknown or unknowable may tomorrow be knowable or
known. So we can never say for certain that a particular type of
system fits into one category or another.
The Model: After introducing these distinctions Snowden asserts
that these three system types “map on to the Cynefin model.” Chaotic
systems map on to the uncharted/innovative common sense-making
environment; complex systems map on to the informal interdepen-
dent environment; and complicated systems map on to either the pro-
fessional/logical or bureaucratic/structured environments, depending
on whether the targets of decision making are “knowable” compli-
cated systems, or “known” complicated systems.
Commentary: Snowden does not explain the above mappings
and it’s not at all obvious that they make sense, or even what he
means by “mapping.” Does he mean to say that the bureaucratic/
structured sense-making environment is a known system? Or that
the professional/logical sense-making environment is a “knowable”
system? Or that the informal/interdependent sense-making environ-
ment is a complex system? Or that the uncharted/innovative sense-
making environment is a chaotic system? If that is the meaning of
“mapping,” it seems invalid on its face, because all organizational
sense-making environments are part of a single system, the organi-
zational system. And that system is a type that we have previously
called a PCAS. Its nature cannot be changed by interpreting sense-
making environments as though they were autonomous systems
without risking serious misunderstanding of the dynamics of the
organizational system.
Indeed, Stacey (1996, 184) himself makes this point in the fol-
lowing passage, in which he discusses the possibility (or not) of
human agents being able to separate themselves from the organiza-

----------------------- Page 152-----------------------

Generations of Knowledge Management

123

tional environments of which they are a part in their attempts to

manage the creative dynamics of human social systems:

Do human consciousness and self-awareness somehow enable us to alter

the dynamics of the systems that we are a part of and that we constitute
with each other when we interact?
At the level of the organization, as at the levels of the individual mind
and the group, the answers to these questions must be no. First, it
is
extremely difficult for members of an organization to sustain enough
emotional distance from their roles as participants to also operate as
observers. . . . Even when we manage to reflect collectively on the orga-
nization we are a part of, we are still not able to alter the fundamental
dynamics of that system.

An alternative interpretation and the one we favor because it is

most in accord with the interaction philosophy at the base of sense
making (see Weick 1995, Smythe 1997), is that Snowden is seeking
to correlate his previous construction of sense-making types in the
Cynefin model with the types of target systems that each of these
environments is most suited for, in terms of the likely success of sense-
making activities in these environments in “making sense” of the
target systems and successfully dealing with them over time. In other
words, this second interpretation is that the sense-making environ-
ment Snowden is talking about is comprised of the interaction
between a Cynefin sense-making type and one of the four types of
target systems he specifies. Such a relationship is illustrated in Figure
4.6. But even though this interpretation initially seems most plausi-
ble, further consideration indicates that it, too, would indicate an
error by Snowden.
Why should we, for example, use an uncharted, innovative sense-
making environment to make sense of a chaotic system? It seems to
us that any sense-making environment would work, so long as
through it we can recognize that the system that is the target of our
sense-making efforts is, in fact, a chaotic system. Similarly, why
should an informal, interdependent sense-making environment be
necessary to decide that a target system we are interested in is, in
fact, a complex system?
So if the second interpretation is correct, Snowden seems to have
fallen prey to a subject/object confusion of the organization and
the target system that is the object of its sense making. If that’s true,

----------------------- Page 153-----------------------

124 Key Issues in the New Knowledge

Management

The Target System:

Complicated,

Complex, or

Chaotic
n
 .
T
.
r

k
s

c
j

o
l

s
n
n
s

j
o

,
i

c
k

a
.

n
r
T

Goal-Directed Agent (I)

i
Decision Execution Cycle
Decisions
Desired
Social Ecology

Social, Cultural,
Transactions and Ecology
Memory, Values, Attitudes,
Geographical,

Economic Conditions
Situational Orientations, Goals

Figure 4.6
An Interactive Sense-Making
Environment

then no mapping of the type of the target system to the type of sense-
making environment can be taken at face value, and Snowden needs
to explain why other mappings of sense-making environments to
target systems (e.g., professional/logical to complex systems) are not
equally valid.
The Model: Snowden next develops the Cynefin model by associ-
ating various characteristics with the four Cynefin sense-making
environment/system type combinations. Known space (the domain of
bureaucratic structured/teaching/low abstraction/known systems) is
associated with best practices, the ability to predict behavior, to pre-
scribe specific policies, and a “feudal” leadership style. Snowden also
thinks that people can transform complex or chaotic systems into
known systems “through laws and practices that have sufficient uni-
versal acceptance to create predictable environments.” Once these
known systems are created, decision making can proceed by catego-
rizing incoming stimuli and responding “in accordance with prede-
fined procedures” (Snowden 2002, 8).
Commentary: Why should “known space” be associated with a
feudal leadership style? Evidently this hypothesis is based on the
notion that since the target system in known space is complicated,
one needs a bureaucratic/structured sense-making environment
----------------------- Page 154-----------------------

Generations of Knowledge Management 125

governed by feudal leadership, because this is the only type of sense-

making environment capable of understanding a complicated known
system. Surely this is an instance of the confusion of subject and
object in mapping the original Cynefin model onto the systems typol-
ogy used by Snowden.
Snowden also thinks that known systems can be created from
chaotic or complex ones through instituting laws, policies, proce-
dures, etc. All we have to say to that hypothesis is, “Good luck.”
Known systems cannot be created by fiat. Rather, a known system is
a real system that is successfully described by some cause-and-effect
theory we have developed. If no such cause and effect structure can
be formulated, then normative human social processes cannot sub-
stitute for such a structure. Rather, the result of imposing laws and
structures on complex systems is a Promethean CAS, not a known
system. More likely, it’s a dysfunctional PCAS.
As for the idea that chaotic systems may be transformed through
leadership into knowable or known systems, this idea is also con-
fused. That is, if a system is really a chaotic system, there are no
cause-and-effect relationships that are understandable within it. So
how can human agency have any predictable effect on such a system
without destroying it? Indeed, is a chaotic system even a system, if
its patterns are not understandable even after the fact?
The Model: Knowable space (the domain of professional/
logical/teaching/high abstraction/knowable systems) is associated
with good practice, expert explanations and predictions of behavior,
expertise-enabled management by delegation, codification of expert
language, entrainment of thinking, oligarchic leadership based on
community “elders,” and sensing and responding based on expert
understanding. In knowable space, as in known space, humans
impose order. But here the order is more “fluid” than in known space.
To manage this space, it is necessary to periodically disrupt the body
of expert knowledge and shared context, because it can be a barrier
to the creation and growth of new knowledge.
Commentary: Why is “knowable space” associated with “entrain-
ment of thinking” to a greater extent than known space? Are pro-
fessional/logical environments more vulnerable to closed-mindedness
than bureaucratic/structural environments? We doubt it. Why is
oligarchic leadership necessary to make sense of knowable space?
Clearly, it’s not. Why should “knowable space” imply that profes-
sional/logical sense-making environments using experts, rather than

----------------------- Page 155-----------------------

126 Key Issues in the New Knowledge Management

informal/interdependent sense-making environments using knowl-

edge workers, are necessary to make sense of them?
Why are periodic disruptions of the social structures of knowable
space necessary to ensure continued effective sense making in this
space? The need for periodic disruptions is connected to the assump-
tion that the content of knowledge is determined by an elite that
supports a dominant paradigm that in turn controls the growth of
knowledge. But what if knowledge production in an organization
doesn’t work that way? What if knowledge claim evaluation works
through continuous testing and evaluation and openness in the eval-
uation process? What if knowledge is not developed based on con-
sensus, but emerges through a continuous and open evaluation and
testing process? This open enterprise model of knowledge produc-
tion (McElroy 2002, Chap. 1, Firestone and McElroy 2002) would
not need periodic disruptions to function well, because it is always
open to new ideas. In fact, disruption would not improve knowledge
production in such a system. Instead, it would disrupt the function-
ing of the open knowledge production process and might result in a
system of Kuhnian paradigms (Kuhn 1970) supported only by con-
sensus, a system that would require periodic disruption.
The Model: Complex space (the domain of informal/
interdependent/learning/high abstraction/complex systems) is associ-
ated with self-organization, global pattern emergence, fluidity, sta-
bility at the edge of chaos, and emergent leadership based on natural
matriarchal or patriarchal authority and respect. Here, according to
Snowden, managers should recognize pattern formation early and
manage patterns by stabilizing some and disrupting others based
on goals, objectives, and values. They may even “seed the space” in
hopes of encouraging desirable patterns. But prediction of emergent
patterns is not possible in complex space. In this space, agents cannot
sense and respond. They must probe first to stimulate and/or under-
stand patterns. Only then can they sense and respond successfully.
Commentary: We agree that leadership in complex space is emer-
gent, but it is also true that in a PCAS emergent leadership must
contend with imposed leadership. Also, what is the significance of
the comment that emergent leadership in complex space is matriar-
chal or patriarchal? Is Snowden saying something more here than
that such leaders may be either female or male? If so, what?
Also, note the very Promethean tenor of Snowden’s comments
about complex space. The idea that we can disrupt some patterns

----------------------- Page 156-----------------------

Generations of Knowledge Management 127

and reinforce or stabilize others, and even seed still others suggests
scientific management. Since, according to Snowden, we cannot
predict emergent patterns in complex space, our ability to predict the
outcome of our Promethean interventions is also problematic.
Even if we probe first “to stimulate and understand patterns” and
then sense and respond, we don’t know whether or not our response
will stimulate emergent responses from the system that are unin-
tended. In other words, the possibility of emergent side effects in
complex systems suggests care in intervening and a search for as
much cause-and-effect, statistical, and expert assessment knowledge
about the system as we can muster. We should always keep in mind
that something we’ve categorized as a complex system, may not, in
fact, be one. Continued attempts to analyze complex systems as if
they are “knowable” are therefore rational, if only to establish the
degree to which they are not knowable.
The Model: Chaos (the domain of uncharted/innovative/
learning/low abstraction/chaotic systems) is associated with lack of
structured linkages among components, unpredictable, unfathomable
connectivity among these components, and tyrannical or charismatic
leadership. According to Snowden, chaotic systems require active
crisis management, lead to the disruption of entrained thinking in
managers, require regular immersion to “immunize” organizations
against chaotic systems, and can be used to advantage if leadership
can impose order without loss of control. Snowden also thinks “that
what to one organization is chaotic, to another is complex or know-
able.” Management must proceed in this domain by acting and only
then sensing and responding.
Commentary: Why do chaotic systems require active crisis man-
agement? Such systems cannot be understood and their behavior
cannot be predicted. That is their nature. So why should crisis man-
agement of such systems work? Also, how can we immunize our-
selves against chaos by immersing ourselves in such systems? Each
chaotic system is unique and lacks a cause-and-effect structure.
Would repeated exposures to multiple chaotic systems make the next
chaotic system any less chaotic or unpredictable? We don’t think so.
So how can familiarity with them help us to cope?
Snowden also seems to believe in the relativity of chaos to the
perspective of the organization beholding it. But this is certainly an
unfortunate way of speaking. Surely, systems are either chaotic or
not. It is our models of real systems that may vary, so that sometimes

----------------------- Page 157-----------------------

128 Key Issues in the New Knowledge Management

we mistake complex or knowable systems for chaotic ones. And what

we thought was chaos is therefore either at its edge or even orderly.
Finally, does it really help management, as Snowden suggests, to act
before sensing and responding to chaotic systems? If they really lack
causal structure and are not subject to emergent patterns, then how
can our acting first result in a better foundation for sense making
and responding? Such systems should be equally unfathomable and
uncontrollable regardless of how we proceed through time.
The Model: A central tenet of Snowden’s third age proposal is
his contention that knowledge will be viewed, paradoxically, as both
a thing and a flow. In his first reference to knowledge as flow,
Snowden states that “Complex adaptive systems theory is used to
create a sense-making model that utilises self-organising capabilities
of the informal communities and identifies a natural flow model of
knowledge creation, disruption and utilisation.” (Snowden 2002, 1).
Later on in his discussion of the first age of KM prior to 1995, he
says that the focus was on “the appropriate structuring and flow of
information to decision makers” (ibid., 2). Next, in what appears to
be a reference to flow, he quotes Stacey (2001) as saying, “Knowl-
edge is not a ‘thing,’ but an ephemeral, active process of relating”
(ibid., 3).
Later on, Snowden refers to flow in terms of the movement of
knowledge in his discussion of the dimension of Abstraction in his
Cynefin model as follows: “The upper and lower levels represent the
range of shared context and therefore the range of possible knowl-
edge flow” (ibid., 4). He goes on to say that both forms of culture
he depicts in his model are “key to the flow of knowledge within an
organization. We need to transfer to new members, in both the
society and the organization, knowledge that has been painfully
created at cost over previous generations” (ibid., 5).
Finally, in a subsection of his paper entitled “The Natural Flow of
Knowledge,” Snowden says, “We can now see the sensible pattern of
flow of knowledge within an organization,” a claim he makes fol-
lowing his presentation of a view of the Cynefin model in which flows
are depicted between his four domains. He summarizes his perspec-
tive on knowledge flow as follows: “From this perspective we see
knowledge as flowing between different states, with different rules,
expectations and methods of management” (ibid., 12).
Commentary: Given the importance of the view of knowledge as
“flow” to both Snowden’s third age and the Cynefin model, it is

----------------------- Page 158-----------------------

Generations of Knowledge Management 129

critical to understand what he means by the term, and why he claims

it is paradoxical in relation to the view of knowledge as a “thing.”
Earlier we noted the confusion caused by this language by pointing
out that flows are things. Putting that aside, however, we fail to see
either the claimed contradiction between the terms in this case, or
the paradox between them.
To say that knowledge is something that flows, as most of his
statements above would suggest, is not to invoke a contradiction at
all or even a paradox. On the other hand, if Snowden were to claim
that knowledge is both a thing that does not flow, on the one hand,
and a thing that does on the other, then we would indeed have a
contradiction or a paradox. But this does not seem to be what he
is saying at all. Rather, what he seems to be saying is that knowl-
edge flows—not that knowledge is flow, but that it (as a “thing”) is
subject to movement. With this we agree. But where’s the paradox
in that?
Another possible interpretation of Snowden’s claims about knowl-
edge as flow is that he’s really not talking about knowledge at all.
Rather, he’s talking about a process whose outcomes are knowledge
(i.e., learning and innovation). But here we encounter, once again,
the product/process confusion we covered before. The flow of knowl-
edge (process) should not be regarded as knowledge. Both are things
but they are not the same things. The flow of knowledge occurs
between various stages (or states) in the processes of knowledge pro-
duction and integration, but to say that knowledge flows between the
stages of a process is not to say that knowledge is a flow.
Turning to other sources for what “flow” could possibly mean to
Snowden in this context, we see the term heavily used in two fields
closely related to Knowledge Management. One is Complex Adap-
tive Systems (CAS) theory, a bedrock of Snowden’s own hypothesis,
and the other is System Dynamics, a closely related field in which the
nonlinearity of complex systems is modeled and studied.
To CAS theorists, flows are movements of things between nodes
and across connectors in networks (Holland 1995, 23). In Holland’s
treatment of this subject, he states: “In CAS the flows through these
networks vary over time; moreover nodes and connections can
appear and disappear as the agents adapt or fail to adapt. Thus
neither the flows nor the networks are fixed in time. They are pat-
terns that reflect changing adaptations as time elapses and experi-
ence accumulates.” (Holland 1995, 23). Now, if this is what Snowden

----------------------- Page 159-----------------------

130 Key Issues in the New Knowledge Management

(and Stacey) mean by “ephemeral, active process[es] of relating,”

(Snowden 2002, 3), again, we fail to see the paradox and see only
confusion instead. Holland and other CAS theorists are not claim-
ing that the things that flow across ephemeral networks are the same
things as the ephemeral networks themselves. A sharp distinction
between the two is made with no paradox involved, nor any need
for one. And so we fail to see how the use of the term “flows” in the
literature on CASs could be used to support Snowden’s claim of a
paradox in the view of knowledge or the Cynefin model.
In the System Dynamics arena, “stocks and flows” are central to
the lingua franca of the field. Flows in System Dynamics refer to
streams of things (which are otherwise held in “stocks”) moving at
different rates of speed and with different degrees of frequency, with
or without delays. But flows as things are never confused with the
things that they carry. And so here again, we fail to see how the his-
torical use of the term “flows” necessarily leads to any sort of con-
tradiction or paradox.
In sum, while Snowden purports to use the term “flow” as a noun
(as in, knowledge is flow) in his definition of knowledge, his actual
use of the term in his discussion seems confined to its use as a verb
(as in, knowledge flows). Thus, he never manages to deliver a satis-
factory definition for knowledge as flow. On the other hand, to the
extent that he implies that flow may be a process, the process he refers
to is arguably one that produces and/or transfers knowledge, but
which is not the same as knowledge itself. For all of these reasons,
we find Snowden’s claim of a paradox in the third age definition of
knowledge to be unpersuasive and full of confusions.
The Model: What Snowden’s Cynefin model seems to be most
fundamentally about is the dynamics of knowledge production and
transfer in organizations. As discussed immediately above, this seems
to be the thrust of his use of the term flows, although in most cases
he seems to be talking more about transfer than production, an
understanding which is encouraged by his graphical representation
of flows across the boundaries contained in his model (Snowden
2002, Figure 4, p. 9). This seems clearly intended to depict the flow
of knowledge (things) from one Cynefin domain to another.
In further support of this view, many references in Snowden’s
account of the flows within and between his four domains can be
found in his description of the model, including the following state-
ment (ibid., 10):

----------------------- Page 160-----------------------

Generations of Knowledge Management 131

In the third generation, we create ecologies in which the informal com-

munities of the complex domain can self-organize and self-manage their
knowledge in such a way as to permit that knowledge to transfer to the
formal, knowable domain on a just in time basis.

Elsewhere, he makes similar repeated references to identifying and

codifying knowledge, conveying it, transferring it, communicating
it, and sharing it. Separately, he refers to knowledge creation, sense
making, pattern forming, learning, and innovation—all presumably
references to knowledge production, not knowledge sharing or
transfer.
Commentary: When viewed from the generational view of KM
(McElroy 1999, 2003), Snowden’s emphasis on knowledge flows
within and across the Cynefin model (sharing and transfer) seems
decidedly supply-side in its orientation. Separately, his lesser em-
phasis on knowledge production would seem to be demand-side in
focus. If this is true, what Snowden is attempting to say is that
knowledge production and integration are both social processes
which occur in different organizational settings, or ecologies, the
awareness of which by managers should trigger different styles of
interventions and oversight to cope with their effects. But if this is
the case, what’s the difference between Snowden’s account of the
coming third age of KM and the second generation of KM that
was first identified (McElroy 1999) and articulated four years ago?
Further, from a second generation KM point of view, why should
we view the Cynefin model as anything other than a personal and
parochial depiction (or theory) of knowledge processing that can
easily be accommodated within the existing framework of the second
generation KLC framework?
Indeed, Snowden’s implicit claim that people in organizations
tend to self-organize around the production and integration of
knowledge is part and parcel of the KLC framework first articulated
four years ago—as was the intentional and careful application of CAS
theory to KM. Similarly, the view that behavioral patterns in knowl-
edge processing form as a consequence of such self-organizations,
and that they tend to oscillate between order, chaos, and complexity
was also explicitly embraced in the second generation view of KM
developed four years ago. And finally, the notion of choosing
management interventions on the basis of awareness of all of this
is an idea that first appeared in 1999 (McElroy, ICM speech, April

----------------------- Page 161-----------------------

132 Key Issues in the New Knowledge Management

1999a), and which later led to at least one formally defined method
(McElroy and Cavaleri patent, 2000, The Policy Synchronization
Method).
So even the idea of crafting management policies with the inten-
tion of synchronizing them with the self-organizing patterns of social
knowledge processing behaviors in organizations is at least three
years old, and is very much a part of second generation thinking. On
the basis of all of this, then, we continue to see no compelling reason
to accept the claim that a new age in KM is upon us. What is upon
us, perhaps, is a new model, formulated in a highly questionable and
confusing fashion, that fits within the conceptual framework of
second generation thinking, but not a new conceptual framework
that would suggest the arrival of a new generation, stage, or age.

Cynefin Conclusions

The Cynefin model is an elaborate construct full of implications and

hypotheses, but it is (1) also full of many difficulties and confusions,
and (2) as presented by Snowden it does not provide the conceptual
framework one needs to compare his coming third age of KM to the
first two. We will consider this second conclusion in the next section
in a more general context. Here we note the many questions we raised
about the Cynefin model in almost every detail. In our view the model
should only survive if its foundations are formulated much more rig-
orously and systematically. The following is a summary of our con-
clusions about Snowden’s Cynefin model:

# The reduction of the concept of cultural variation to the

teaching/learning dichotomy should be abandoned even if it
costs Snowden his four-category classification of common sense-
making environments. Simplicity and ease of exposition to
executives desperately trying to understand knowledge man-
agement must give way to reality in modeling sense-making
environments.
 # The concept of abstraction needs to be clarified so its meaning
is clear to readers.
# If there are more than four types that can be composed out of
the Cynefin fundamental attributes (as is indicated by our ques-
tions about alternative sense-making environments that may

----------------------- Page 162-----------------------

Generations of Knowledge Management 133

have been specified), they should be presented by Snowden. A

classification framework must be evaluated as a whole, so that
we can better understand the principles behind it. It should not
be presented by describing only the categories its author thinks
are important, because the unimportant categories may contain
important insights that either reinforce or call into question
the whole framework. Snowden’s mention of, and decision to
overlook, his fifth domain in the middle of the Cynefin model
is unfortunate in this regard.
# The number of systems used to describe sense-making envi-
ronments should increase. The existence of PCASs suggests
that Snowden’s system classification is incomplete. But even
if one declined to explore the “mapping” of system types on
to sense-making environments, it is very clear that Snowden’s
four types exhaust only a fraction of the logical possibilities
suggested by his underlying concepts, and he provides no
reasons for restricting Cynefin to his initial selection of four
types.
# The confusion between subject and object in talking about
sense-making environments should be clarified, and the one-
to-one mapping of system to Cynefin categories should be
abandoned.
# The many small questions we have raised above on issues such
as how leadership correlates to the different types should be
answered.
# The concept of “knowledge as flow” needs to be clarified so
its meaning is clear to readers, especially the sense in which its
meaning supposedly leads to the paradox claimed by Snowden.
Short of that, the “paradox” claim should be abandoned.
# The degree to which the Cynefin model constitutes a material
or conceptual departure or evolution from the currently exist-
ing (and previously developed) articulation of second genera-
tion KM, if at all, should be demonstrated. Short of that, the
Cynefin model should be seen as nothing more than a particu-
lar, and evidently highly questionable, expression of second
generation thinking, the essence of which has already been
widely articulated (Albors 2001, Allee 1997, Kelly and Allison
1999, Bennet and Bennet 2000, 2001, Carrillo 1998, 2001,
Cavaleri and Reed 2000, 2001, Courtney, Chae, and Hall 2000,
Firestone 1998, 1999, 1999a, 1999b, 1999c, 2000, 2000a,

----------------------- Page 163-----------------------

134 Key Issues in the New Knowledge Management

2000b, 2001, 2001a, 2001b, 2002, Kuscu 2001, Loverde 2001,

McElroy 1999a, 1999b, 2000a, 2000b, 2001, 2002a, 2002b,
2003, McMaster 1996, Murray 2000).
Even if all of the above points were met and the Cynefin model were
made more multidimensional, it could still not serve as the basis for
a new generation of knowledge management. The reason for this is
that Cynefin is about sense making and decision making; it is not a
general conceptual framework that can function as an intellectual
umbrella for all activities in the field of KM. Instead, it illuminates
one corner of the concerns of KM, the corner that deals with the
foundations of (and immediate precursors to) action. It is an impor-
tant corner, even a fundamental one. But it does not provide a frame-
work for approaching knowledge production and integration, or the
role of knowledge claim evaluation in knowledge production, or
knowledge management, or KM-related metrics, or sustainable inno-
vation, or a comprehensive information technology system support-
ing KM, or KM software evaluation, or intellectual capital, or the
type of enterprise that will support accelerated sustainable innova-
tion, or many other subjects that are important for the emergent dis-
cipline that is KM.

Conclusion: The Three Stages, the Three Ages,

the Two Generations, and
Comparative Frameworks

Perhaps the most important differentiator between the three views

of change in KM we have analyzed here is the methodology used to
analyze change in the three instances. Basically, Koenig and Snowden
take a storytelling approach to analyzing changes in the KM evolu-
tionary process, whereas McElroy bases his case for fundamental
change on the KLC knowledge processing framework and the dis-
tinction between knowledge processing and KM.
Koenig takes an IT approach to KM and basically tells a story of
changes in IT-related concerns. Thus, he starts by noting that the first
stage of KM was about using the Internet for knowledge sharing and
transfer. The second stage was a reaction to the failure of the first
to live up to its promise by failing to take account of human factors
essential to make IT applications successful, and the third stage is

----------------------- Page 164-----------------------

Generations of Knowledge Management 135

about improving the IT side by making it easier for humans to

navigate to the information or knowledge they want or need.
This story of changes occurring in response to a desire to make IT-
based KM solutions successful does not specify a conceptual frame-
work based on concepts of knowledge, KM, business processing and
outcomes. Lacking such a framework, Koenig has no tool to compare
the three stages of KM in order to evaluate the comprehensiveness
of change in its key elements. That is why his analysis seems ad
hoc and questionable from the standpoint of whether the changes he
records are really so fundamental as to suggest new stages in the KM
evolutionary process.
The situation is little better with Snowden’s approach. Boiled down
to its essentials, he almost seems to be saying:

# the first age was about applying the BPR notions of Hammer
and Champy (1993) on a foundation of Taylor (1912);
# the second age was about applying the vision expressed in
Nonaka and Takeuchi (1995);
# the coming third age will be about applying the vision expressed
 in his own Cynefin model, coupled with Stacey’s notions about
the paradoxical character of knowledge, and expanded through
its synthesis with the Cynefin systems typology.

So, Snowden’s story of change is not guided by a conceptual frame-

work providing us categories setting a context for describing
change, but rather is a claim that KM proceeds from vision to vision
expressed in great books and/or articles. His view provides no guide
about what the next fundamental change in KM will bring, because
how can we know what the rest of a story might be?
McElroy’s (1999) approach to change uses the conceptual frame-
work of the Knowledge Life Cycle (KLC) to analyze the change in
KM that he believes suggests there have been two and only two
generations so far. The KLC framework clearly distinguishes knowl-
edge production and knowledge integration processes as the two
processes comprising knowledge processing behavior. In turn, these
fundamental processes are divided into four subprocesses for each
process. Figure 4.1 above provides enough detail to allow one to
recognize that knowledge processing activities are clustered in either
the knowledge production or knowledge integration categories and
that KM initiatives have also primarily been concerned with either

----------------------- Page 165-----------------------

136 Key Issues in the New Knowledge Management

one or the other. Once that recognition was made it was easy to
see that the early period of formal KM, from the early 1990s to at
least 1999, has primarily been about knowledge integration, and that
SGKM, the fusion of concern about knowledge integration with
knowledge production, begins only in the late 1990s and is first
explicitly formulated against the backdrop of the Knowledge Man-
agement Consortium International (KMCI), including the authors’
prior works (Firestone 1998, 1999, 1999a, 2000, and McElroy 1999,
1999a, 1999b).
The SGKM “paradigm” of fusion between supply- and demand-
side KM now exists alongside the continuing practice of supply-side
KM, which is still dominant in the field. But the growing concern
with innovation in corporate, government, and intellectual capital
circles suggests that further fundamental change in KM is unlikely
until there is a much wider embrace of demand-side problems. If,
however, fundamental change were to occur, the KLC framework
suggests that it will revolve around a reconceptualization of knowl-
edge processing, involving a specification of some new fundamental
process in addition to knowledge production and integration, or
perhaps a fundamental reconceptualization of knowledge production
or knowledge integration processes. The fact that neither the Koenig
nor Snowden views of change focus on such an evolution in how we
see knowledge processing explains why the changes they focus on do
not add up to a new stage, age, or generation of KM.

References

Albors, G.J. (2001), “Knowledge Creation in an SME Environment”,

Knowledge and Innovation: Journal of the KMCI, 1, no. 2, 145–160.
Allee, V. (1997), The Knowledge Evolution: Expanding Organizational
Intelligence, Boston, MA: Butterworth–Heinemann.
Amidon, D. (1997), Innovative Strategy for the Knowledge Economy: The
Ken Awakening, Boston, MA: Butterworth–Heinemann.
Bennet, A. and Bennet, D. (2000), “Characterizing the Next Generation
Knowledge Organization,” Knowledge and Innovation: Journal of the
KMCI, 1, no. 1, 8–42.
Bennet, A. and Bennet, D. (2001), “Exploring Relationships in the Next
Generation Knowledge Organization,” Knowledge and Innovation:
Journal of the KMCI , 1, no. 2, 91–109.

----------------------- Page 166-----------------------

Generations of Knowledge Management 137

Birch, D. and Veroff, J. (1966), Motivation: A Study of Action, Belmont,

CA: Brooks/Cole.
Boisot, M. (1998), Knowledge Assets, Oxford University Press.
Brown, J.S. (1995), “The People Are the Company,” Fast Company, 1.
Brown, J.S. and Duguid, P. (1991), “Organisational Learning and Commu-
nities of Practice,” Organisation Science, March, 40–57.
Brown, J.S. and Duguid, P (2000), The Social Life of Information,
Cambridge, MA: Harvard Business School Press.
Carrillo, F.J. (1998), “Managing Knowledge-Based Value Systems”, Journal
of Knowledge Management, 1, No. 4 (June), 280–286.
Carrillo, F.J. (2001), “Meta-KM: A Program and a Plea”, Knowledge and
Innovation: Journal of the KMCI, 1, no. 2, 27–54.
Cavaleri, S. and Reed, F. (2000), “Designing Knowledge Generating
Processes”, Knowledge and Innovation: Journal of the KMCI, 1, no. 1,
109–131.
Cavaleri, S. and Reed, F. (2001), “Organizational Inquiry: The Search for
Effective Knowledge,” Knowledge and Innovation: Journal of the KMCI,
1, no. 3, 27–54.
Courtney, J., Chae, B. and Hall, D. (2000), “Developing Inquiring Organi-
zations,” Knowledge and Innovation: Journal of the KMCI, 1, no. 1,
132–145.
Davenport, T. and Prusak, L. (1997), Working Knowledge: How Organi-
zations Manage What They Know, Boston, MA: Harvard Business School
Press.
Denning, S. (2001), The Springboard, How Storytelling Ignites Action in
Knowledge-era Organizations, Boston, MA: KMCI Press/Butterworth
Heinemann.
Denning, S. et al. (1998), What Is Knowledge Management? Washington,
DC: World Bank.
Firestone, J.M. (1998), “Knowledge Management Metrics Development: A
Technical Approach,” Executive Information Systems White Paper,
Wilmington, DE, June 25, 1998. Available at
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1999), “Enterprise Knowledge Management Modeling and
Distributed Knowledge Management Systems,” Executive Information
Systems White Paper, Wilmington, DE, January 3, 1999. Available at
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1999a), “The Artificial Knowledge Manager Standard: A
Strawman,” Executive Information Systems KMCI Working Paper No. 1,
Wilmington, DE, Available at http://www.dkms.com/White_Papers.htm.

----------------------- Page 167-----------------------

138 Key Issues in the New Knowledge Management

Firestone, J.M. (1999b), “Enterprise Information Portals and Enterprise

Knowledge Portals,” DKMS Brief, 8, Executive Information Systems, Inc.,
Wilmington, DE, March 20, 1999.
Firestone, J.M. (1999c), “The Metaprise, the AKMS, and the Enterprise
Knowledge Portal,” Working Paper No. 3, Executive Information
Systems, Inc., Wilmington, DE, May 5, 1999, Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000), “Accelerated Innovation and KM Impact.” Financial
Knowledge Management (Q1, 2000), 54–60.
Firestone, J.M. (2000a), “Knowledge Management: A Framework for
Analysis and Measurement,” White Paper No. 17, Executive Information
Systems, Inc., Wilmington, DE, October 1, 2000, Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000b), “Enterprise Knowledge Portals: What They Are and
What They Do,” Knowledge and Innovation: Journal of the KMCI, 1,
no. 1, 85–108. Available at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000c), “Enterprise Knowledge Portals and e-Business
Solutions,” White Paper No. 16, Executive Information Systems, Inc.,
Wilmington, DE, October 1, 2000, Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2001), “Key Issues in Knowledge Management”, Knowl-
edge and Innovation: Journal of the KMCI, 1, no. 3, 8–38. Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2001a), “Knowledge Management Process Methodology”,
Knowledge and Innovation: Journal of the KMCI, 1, no. 2, 85–108. Avail-
able at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2001b), “Enterprise Knowledge Portals, Knowledge
Processing and Knowledge Management,” in Ramon Barquin, Alex
Bennet, and Shereen Remez (eds.) Building Knowledge Management
Environments for Electronic Government, Vienna, VA: Management
Concepts.
Firestone, J.M. (2003), Enterprise Information Portals and Knowledge Man-
agement, Boston, MA: KMCI Press/Butterworth–Heinemann.
Firestone, J.M. and McElroy, M.W. (2002), Certified Knowledge and Inno-
vation Manager (CKIM) Level I Course Notes (Section on the Open Enter-
prise available from the authors).
Haeckel, S.H. (1999), Adaptive Enterprise, Boston, MA: Harvard Business
School Press.
Hammer, M. and Champy, J. (1993), Re-engineering the Corporation, New
York, NY: HarperBusiness.
Holland, J.H. (1995), Hidden Order. Reading, MA: Addison-Wesley.

----------------------- Page 168-----------------------

Generations of Knowledge Management 139

Keesing, R. and Strathern, A. (1997), Cultural Anthropology: A Contem-

porary Perspective (3rd edition), Belmont, CA: Wadsworth.

Kelly S. and Allison, M.A. The Complexity Advantage (New York, NY:
Business Week Books/McGraw-Hill, 1999).
Koenig, Michael E.D. (2002), “The third stage of KM emerges,” KMWorld
11, no. 3 (March, 2002), 20–21, 28.
Kuhn, T. (1970), The Structure of Scientific Revolutions. 2nd Edition,

Chicago, IL: University of Chicago Press, (1970 edition).

Kuscu, I. (2001), “An Adaptive Approach to Organisational Knowledge
Management”, Knowledge and Innovation: Journal of the KMCI, 1,
no. 2, 110–127.
Leonard-Barton, D. (1995), Wellsprings of Knowledge, Boston, Harvard
Business School Press.
Loverde, L. (2001), “Intellectual Capital: An M & A Approach,” Knowl-
 edge and Innovation: Journal of the KMCI, 1, no. 3, 58–88.
McElroy, M.W. (1999), “The Second Generation of KM.” Knowledge Man-
agement (October 1999), pp. 86–88.
McElroy, M.W. (1999a) ICM Speech in Miami, FL, April 1999: “The
Knowledge Life Cycle, An Executable Model for the Enterprise.” Avail-
able at http://www.macroinnovation.com/images/KnlgLifeCycle.pdf.
McElroy, M.W. (1999b) “Double-Loop Knowledge Management,” Systems
Thinker (October 1999, Vol. 10, No. 8), pp. 1–5.
McElroy, M.W. (2000) “Using Knowledge Management to Sustain Innova-
tion,” Knowledge Management Review (Sept./Oct. 2000, Vol. 3, Issue 4),
pp. 34–37.
McElroy, M.W. (2000a), “Integrating Complexity Theory, Knowledge Man-
agement, and Organizational Learning,” Journal of Knowledge Manage-
ment Vol. 4 No. 3 (2000), pp. 195–203.
McElroy, M.W. (2000b) “The New Knowledge Management,” Knowledge
and Innovation: Journal of the KMCI (October 15, 2000, Vol. 1, No. 1),
pp. 43–67.
McElroy, M.W. (2001), “Where Does KM Belong? A Better Solution,”
Knowmap: The Knowledge Management, Auditing and Mapping Maga-
zine (Vol. 1, No. 4, 2001) (www.knowmap.com).
McElroy, M.W. (2002a), “Social Innovation Capital,” Journal of Intellec-
tual Capital (Vol. 3, No. 1, 2002), pp. 30–39.
McElroy, M.W. (2002b) “A Framework for Knowledge Management,”
Cutter IT Journal (March 2002, Vol. 15, No. 3), pp. 12–17.
McElroy, M.W. (2003), The New Knowledge Management: Complexity,
Learning, and Sustainable Innovation, Boston, MA: KMCI Press/
Butterworth–Heinemann.

----------------------- Page 169-----------------------

140 Key Issues in the New Knowledge Management

McElroy, M.W. and Cavaleri, S.A. (2000), “Policy Synchronization

Method”, Patent application filed with the U.S. Patent and Trademark
Office in September 2000.
McMaster, Michael D. (1996), The Intelligence Advantage: Organizing for
Complexity, Boston, MA: Butterworth–Heinemann.
Murray, A.J. (2000), “Knowledge Systems Research,” Knowledge and Inno-
vation: Journal of the KMCI, 1, no. 1, 68–84.
Nonaka, I. (1991), “The Knowledge-Creating Company,” Harvard Business
Review, November–December.
Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating Company.
New York, NY: Oxford University Press.
Polanyi, M. (1958), Personal Knowledge, Chicago, IL: University of
Chicago Press.
Polanyi, M. (1966), The Tacit Dimension, London, UK: Routledge and
Kegan Paul.
Rumizen, M. (1998), “How Buckman Laboratories ‘shared knowledge’
sparked a chain reaction”, The Journal for Quality & Participation 1,
34–38.
Senge, P. The Fifth Discipline: The Art & Practice of the Learning Organi-
zation. New York, NY: Currency Doubleday, 1990.
Smythe, E. (1997), “Life in Organizations: Sensemaking or Appreciation?
A Comparison of the Works of Karl Weick and Geoffrey Vickers,”
“Unpublished draft”, available at:
http://mis.commerce.ubc.ca/smythe/weick.pdf.
Snowden, D. (1999), “Liberating Knowledge” Introductory chapter to
Liberating Knowledge CBI Business Guide, Caspian Publishing October
1999.
Snowden, D. (2000), “Cynefin: a sense of time and space, the social ecology
of knowledge management”, in Knowledge Horizons: The Present and
the Promise of Knowledge Management, ed. C. Despres & D. Chauvel.
Butterworth Heinemann October 2000.
Snowden, D. (2002), “Complex Acts of Knowing; Paradox and Descriptive
Self-awareness”, Journal of Knowledge Management , 6, no. 2 (May)
1–14.
Stacey, R.D. (1996), Complexity and Creativity in Organizations, San
Francisco, CA: Berrett-Koehler.
Stacey, R.D. (2001), Complex Responsive Processes in Organizations:
Learning and Knowledge Creation, New York, NY: Routledge.
Stewart, Thomas (1999), Intellectual Capital: The New Wealth of Organi-
zations, New York, NY: Currency Doubleday.

----------------------- Page 170-----------------------

Generations of Knowledge Management 141

Taylor, F. (1912), Testimony at Congressional hearing, January 25, 1912.

Weick, K. (1995), Sense Making In Organisations, Beverly Hills, CA: Sage
Publications.
Wenger, E. (1999), “Communities of Practice: The Key to Knowledge
Strategy,” Knowledge Directions: The Journal of the Institute for Knowl-
edge Management, 48–63.
Wheatley, M. and Kellner-Rogers, M. (1996), A Simpler Way, San
Francisco, CA: Berrett-Koehler Publishers.
Wiig, K. (1989), Managing Knowledge: A Survey of Executive Perspectives,
Arlington, TX: Schema Press.
Wiig, K. (1993), Knowledge Management Foundations—Thinking about
Thinking—How People and Organizations Create, Represent, and Use
Knowledge, Arlington, TX: Schema Press.
Wiig, K. (1994), Knowledge Management: The Central Focus for Intelligent
Acting Organization, Arlington, TX: Schema Press.
Wiig, K. (1995), Knowledge Management Methods: Practical Approaches
to Managing Knowledge, Arlington, TX: Schema Press.

----------------------- Page 171-----------------------

Chapter 5

Knowledge Claim
Evaluation: The
Forgotten Factor
in Knowledge
Production

Introduction

A lot of attention is paid to acquiring, formulating, distributing,

retrieving, and sharing knowledge claims in Knowledge Manage-
ment, but little attention is devoted to how they are tested and eval-
uated. Knowledge claim evaluation (KCE), at least in the field of
Knowledge Management, is the forgotten factor in knowledge pro-
duction. In this chapter, we develop a viewpoint on knowledge claim
evaluation and discuss how it is and may be carried out. We cover:

# where knowledge claim evaluation fits into knowledge

production
# the kind of knowledge produced by knowledge claim
 evaluation

142

----------------------- Page 172-----------------------

The Forgotten Factor in Knowledge Production 143

# a framework for describing knowledge claim evaluation

# an approach to evaluating knowledge claim evaluation
# knowledge claim evaluation software

Where Knowledge Claim Evaluation Fits

into Knowledge Production

KCE is the subprocess of knowledge production that produces both

World 3 organizational knowledge and World 2 (belief) feedback to
the participants in knowledge production at the organizational level.
It is a behavioral subprocess in which agents interact with one
another to consider and evaluate previously formulated knowledge
claims. The subprocess, like other subprocesses in the KLC, is com-
posed of many Decision Execution Cycles (DECs), which, in their
turn, combine into tasks, task patterns, and eventually the subprocess
itself.
All the subprocesses in knowledge production are necessary for
completing it. But KCE is the only subprocess that distinguishes
knowledge production from information production in that it is not
necessary for information production, while it is for knowledge pro-
duction. And as we saw in Chapters 1 through 4, its outcomes are
the only ones that distinguish knowledge from information and allow
us to lower our risk in decision making, because its outcomes dis-
tinguish information that has survived our tests from information
that has not and information about which we are undecided. So in
a sense, knowledge claim evaluation is the very foundation of, and
should be the first priority of, knowledge management, since if it is
badly performed, its outcome will be higher risk and erroneous infor-
mation, rather than higher quality knowledge claims that have sur-
vived our attempts at testing and evaluation.
Moreover, since knowledge claim evaluation determines what
knowledge is for any agent, including an organization, it also deter-
mines what is to be integrated into the organization during knowl-
edge integration, the second primary process in the KLC. In short,
knowledge claim evaluation is at the very center of knowledge
processing and is also at the core of the distinction between The
New Knowledge Management (TNKM) and the earlier first genera-
tion of KM. It is knowledge claim evaluation, after all, that provides
the basis for distinguishing knowledge from information and for

----------------------- Page 173-----------------------

144 Key Issues in the New Knowledge Management

removing the difficulty, characteristic of first generation KM, of dis-

tinguishing knowledge management from information management.
Knowledge claim evaluation is also the focal point of the distinc-
tion between Second Generation Knowledge Management (SGKM)
and TNKM. SGKM views knowledge production as one of the key
processes in knowledge production, and also views KCE as the key
subprocess in knowledge production. However, SGKM is not neces-
sarily oriented toward error elimination and falsification as the basis
of KCE. Other approaches for validating knowledge claims, such as
consensus-based or authority-based schemes, are alternatively taken
by competing schools of SGKM thought. In contrast, TNKM takes
a Popperian approach to KCE and views error elimination and fal-
sification as the heart of the matter.

The Kind of Knowledge Produced by

Knowledge Claim Evaluation

As we indicated in Figure 4.1, KCE produces World 3 Organizational

Knowledge—more specifically, linguistic expressions that have sur-
vived testing and evaluation. Figure 5.1 presents a classification of
the outcomes of KCE. There are six categories of outcomes illus-
trated in the figure: Falsified Knowledge Claims (FKC), Undecided
Knowledge Claims (UKC), Surviving Knowledge Claims (SKC),
and information (actually, meta-information or metaclaims) about
knowledge claims in each of the first three categories. These
categories, characteristic of TNKM, reflect a falsificationist and
error-elimination perspective because they reflect logically possible
outcomes from knowledge claim testing and evaluation. Thus, the
emphasis is on testing and evaluating knowledge claims and on
embracing only those claims that survive our testing. These are World
3 knowledge.
This classificatory representation is only one among many that
could be used for knowledge outcomes. Fuzzy set representations
comparing knowledge claims are one alternative representation
(Firestone 1998), as is a ratio scale (ibid.) of the extent to which
knowledge claims have been falsified. We prefer the simple classifi-
cation here, because knowledge claim evaluation in real organiza-
tions is largely qualitative in most situations and, at least in the
beginning, consideration of knowledge outcomes as categories is

----------------------- Page 174-----------------------

The Forgotten Factor in Knowledge Production

145

Info
About
SKC

SKC

To: Knowledge
Info
About Integration
UKC

UKC
From: Knowledge UKC - Undecided Knowledge
Production Claims
(Knowledge Claim Info SKC - Surviving Knowledge
About Claims
Evaluation) FKC
FKC - Falsified Knowledge
Claims

FKC
 Figure 5.1
New Organizational Knowledge (Artifact-Based)

precise enough for most purposes. We need to be clear, though, that

the simple categorization suggested above is not the only com-
parative framework available, and that especially at the boundaries
of the SKC, UKC, and FKC sets, classification will be somewhat
arbitrary.
In addition to producing new organizational knowledge, KCE also
produces both World 2 and World 3 knowledge for those agents
involved directly in it. At the organizational level, this means that
any teams, groups, departments, or individuals participating in KCE
not only produce organizational knowledge (see Figure 4.1), but also
are affected by their experiences and specifically by the transactions
they receive and the environment they must deal with in the course
of their participation in KCE and in their own DECs that contribute
to the KCE. This immersion in the process (see Figures 1.4, 1.5, 2.7,
2.8, and 2.9) produces new World 2 and World 3 knowledge for the
agents at the same time it produces contributions to KCE at the orga-
nizational level.
To understand this clearly, think about the DECs that comprise the
KCE process. Like any other DECs, they are the focus of single loop

----------------------- Page 175-----------------------

146 Key Issues in the New Knowledge Management

learning and also the initiators of double loop learning processes by

the agents performing the DECs. Such learning processes produce the
new World 2 and World 3 knowledge at the agent level we mentioned
just above.

A Framework for Describing Knowledge

Claim Evaluation

The key subprocess that distinguishes knowledge production from

information production is knowledge claim evaluation. It is the sub-
process of criticism of competing knowledge claims, and of com-
parative testing and assessment of them, that transforms knowledge
claims from mere information into tested information, some of which
survives our organizational tests and attempts at error elimination and
therefore becomes, from the organizational point of view, knowledge.
In other words, the difference between information and knowledge
is testing and evaluation of knowledge claims (World 3), or testing
and evaluation of beliefs (World 2). Testing and evaluation of knowl-
edge claims is public and sharable in the sense that the claims them-
selves are sharable and the tests and their results are sharable. That
is why we say that World 3 knowledge is objective. Testing and eval-
uation of beliefs, however, is private and personal. It is this differ-
ence that makes World 2 knowledge subjective.
Knowledge claim evaluation is not the same thing as justification.
Justification is the process of proving that a knowledge claim is true.
KCE never proves anything with certainty. It simply provides (a) a
record of how well competing knowledge claims stand up to our tests
or (b) personal experience of how well competing beliefs stand up to
our tests. Justification of knowledge claims and beliefs is impossible,
but evaluation of them is not.
Since KCE is just our process of testing and evaluating knowledge
claims or beliefs, the practice of it will vary across individuals,
groups, communities, teams, and organizations. A particular entity
may use evaluation practices based on explicit rules or specified cri-
teria to compare knowledge claims, but it need not. Agents are free
to change their tests or criteria at any time, to invent new ones, or
to apply ad hoc tests and criticisms in evaluation. That is, KCE is a
free-for-all; it is just the process by which knowledge claims and
beliefs run the gauntlet of our skepticism and our criticism.

----------------------- Page 176-----------------------

The Forgotten Factor in Knowledge Production 147

Looking at knowledge production from the viewpoint of agents

at different levels of organizational interaction, and keeping the
role of knowledge claim evaluation in mind, it follows that individ-
ual and group learning may involve knowledge production from
the perspective of the individual or group, but from the perspective
of the enterprise, what the individuals and groups learn is informa-
tion, not knowledge. Similarly, information gathered through infor-
mation acquisition may be knowledge from the perspective of the
external parties it is acquired from, but not knowledge to the enter-
prise acquiring it, until it has been evaluated and has survived
its tests.
Figure 4.1 also illustrates that knowledge claim evaluation has a
feedback effect on individual and group learning. This occurs because
individuals and groups participating in knowledge claim evaluation
are affected by their participation in this process. They both produce
World 3 organizational knowledge in the form of codified and eval-
uated knowledge claims, and also experience change in their own
beliefs (i.e., they generate World 2 knowledge) as an outcome of that
participation.

Knowledge Claim Evaluation: Specific

Knowledge claim evaluation is a subprocess of knowledge produc-

tion in which knowledge claims are subjected to competitive testing
and evaluation against alternatives with reference to organizationally
held criteria, perspectives, and frameworks to determine the value
and veracity of knowledge claims. It is critical in distinguishing
knowledge processing from information processing, because it is the
only subprocess that is necessary for knowledge processing but not
information processing—all other subprocesses in the KLC are
common to both.
The evaluation and testing process in real organizations is not a
cut-and-dried process in which fixed knowledge claim rivals take pre-
scribed tests and are evaluated against static criteria or fixed rules.
Instead, knowledge claim evaluation in organizations is a vortex in
which many competing knowledge claims are considered simultane-
ously against criteria, perspectives, and frameworks that are often
being reweighted, reformulated in various ways, and even introduced
to or expelled from the decision execution cycles of KCE.

----------------------- Page 177-----------------------

148 Key Issues in the New Knowledge Management

Surviving, falsified, and undecided knowledge claims emerge from

this vortex of conflict and collaboration in a manner that is not pre-
dictable from any simple model. An organization may develop and
try to develop and apply a fixed process to be used by agents for
knowledge claim comparison and evaluation, so that we can sensi-
bly describe a normative knowledge claim evaluation value network.
But the actual KCE subprocess will vary from this normative pattern
and will present to the analyst and modeler a CAS pattern of
emergence (Holland 1998).

Knowledge Claim Evaluation Contexts

Knowledge claims may be tested and evaluated in the context of

interaction with any of the following internal organizational sources:

# Interpersonal peer communications including those found in

communities of practice
# Interpersonal expert communications including those found in
communities of practice meetings
# E-mail messages
# Web documents
# Web-accessed databases
# Non-Web accessed databases
# Web-enabled communications in communities of practice
# Web-enabled collaborative applications
# Media (CDs, tapes, etc.)
# Printed documents

We offer the above list to emphasize that there are many types of
contexts of KCE, but there is little knowledge about the relative effec-
tiveness of each type or combinations of them in supporting KCE
interactions. The effectiveness of the context will depend upon the
predispositions, situational orientations, and situational contexts that
characterize interaction in that context and the nature of the inter-
actions themselves (see Chapters 1, 2, and 4). The predispositions, in
particular, must support knowledge claim evaluation and testing. If
they constrain it unduly, then the interactions that result partly from
them will be ineffective in producing successful KCE. This brings us
to process descriptors.

----------------------- Page 178-----------------------

The Forgotten Factor in Knowledge Production 149

Process Descriptors

Descriptors of KCE are classified into process descriptors, infra-

structure descriptors, and knowledge claim descriptors. This section
will present the process descriptors of the framework:

# KCE cycle time: every act, sequence of acts, task, etc., in the
KLC or any of its subprocesses, such as the KCE, takes time.
We refer to the time involved as the cycle time. An increase in
efficiency is synonymous with a decrease in cycle time. But
increasing efficiency in KCE may conflict with its effectiveness
in distinguishing knowledge from information, and specifically
may lower it. Everyone is familiar with the trade-off between
efficiency and effectiveness. It is expressed in such homilies as
“haste makes waste” and “in the long run we’re all dead.” But
in KCE, this trade-off is particularly sensitive, since the desire
for efficiency can easily lead to inadequate testing and evalua-
 tion and to the survival of a disproportionate number of false
knowledge claims. So attempts to decrease cycle time should
be sensitive to side effects on effectiveness and other aspects of
the KCE subprocess.
# KCE velocity and acceleration (Firestone 2000): the idea of
KCE cycle time leads naturally to the notion of KCE velocity,
the number of KCE cycles in an organization per unit time (it
will be a small number if time is measured in seconds, minutes,
hours, days, or even weeks). Velocity, in turn, leads to the idea
of acceleration, the change in KCE velocity divided by the
change in time. Both of these attributes of KCE are useful in
comparing its level of efficiency across organizations, and the
direction and magnitude of change in efficiency that they are
experiencing.
# Intensity of collaborative activity in KCE: the production of
knowledge at the organizational level is a collaborative activ-
ity. Collaboration refers to agents working together on a sus-
tained basis to achieve their goals. These goals may or may not
be held in common (the collaborative process may be deliver-
ing different benefits to each participant and serve different
purposes for each). The intensity of their collaborative activity
refers to the frequency with which they work together. Collab-
oration does not mean the absence of conflict. People may work

----------------------- Page 179-----------------------

150 Key Issues in the New Knowledge Management

together and cooperate, or they may work together and come

into frequent conflict.
# Intensity of cooperative behavior in KCE: the intensity of co-
operative behavior refers to the frequency with which people,
whether or not on a sustained basis, engage in transactions that
actually facilitate or support each others’ instrumental behav-
ior. Much of that cooperation may occur outside of explicitly
collaborative contexts.
# Intensity of conflict behavior in KCE: the intensity of conflict
behavior refers to the frequency with which people, whether or
not on a sustained basis, engage in transactions that actually
constrain, inhibit, or block each others’ instrumental behavior.
Much of that conflict behavior may occur within, as well as
outside, explicitly collaborative contexts.
# Extent of withdrawal from interaction with other agents as an
outcome of collaborative KCE activity: the conflict and frus-
tration that accompany collaborative activity can sometimes
result in a withdrawal from interaction with other agents in
collaborative contexts. People, that is, as a result of too much
collaboration-related conflict, can become disillusioned with
teams, communities, and other collaborative social structures,
and can simply withdraw from such collaborative activities.
Such a withdrawal, in turn, can mean restriction of the KCE
process to a small elite and ultimately a failure to vet knowl-
edge claims appropriately.
# Extent of inequality of access to previous knowledge claims: the
degree to which inequality of access to previous knowledge
claims exists in KCE has a pronounced effect on KCE out-
comes. Those with more access are in a better position to criti-
cally evaluate knowledge claims and generally to participate
in KCE processing. Those with little access are effectively
 disenfranchised.
# Extent of inequality of access to sources and methods support-
ing KCE: inequality of access to sources and methods for KCE
can be as damaging to critical evaluation of knowledge claims
as inequality of access to previous knowledge claims. If all are
to participate in KCE, all must have access to the sources and
methods needed to perform it.
# Ratio of messages received by an agent to messages sent by that
agent related to KCE: this descriptor promises to be important

----------------------- Page 180-----------------------

The Forgotten Factor in Knowledge Production 151

in distinguishing different types of KCE subprocesses. Thus,

hierarchical KCE processes will tend to be characterized by
agents with either very high or very low ratios of messages sent
to messages received, while more peer-oriented KCEs involving
widespread participation will tend more toward one-to-one
ratios.
# Use and frequency of use of methods of interpersonal knowl-
edge claim evaluation: knowledge claim evaluation frequently
involves interpersonal methods of collaboration. It is likely that
the mix of interpersonal methods, as well their frequency of
use, has an impact on the efficiency and effectiveness of KCE
activities. Some examples of interpersonal methods that may be
useful for KCE include the Delphi Technique (Helmer 1966),
Knowledge Café (Isaacs 1999), Nominal Group Technique
(Delbecq and Van de Ven 1971), Joint Application Design
(JAD), Joint Requirements Planning (Martin 1990; Wood and
Silver 1989), focus groups, personal networking, project meet-
ings, board meetings, and company meetings, communities of
inquiry, and credit assignment processes.
# Use and frequency of use of methods of electronic support for
knowledge claim evaluation: there are various ways in which
electronic methods and tools can support the interpersonal/
social process methods of KCE. Here is a nonexhaustive list of
some of these methods:

• Text mining
• Database querying
• Modeling (e.g., statistical and econometric, neural networks,
system dynamics, fuzzy modeling, CAS simulations, etc.)
• KCE assessment modeling, using methods such as: the
Analytic Hierarchy Process (AHP) (Saaty 1990, 1990a,
ExpertChoice 2002) (see Appendix)
• Web-enabled searching/retrieving of knowledge claims
• Web-enabled collaboration
• Portal-enabled, server-based automated arbitration of agent-
based knowledge claims (Firestone 2000a, 8)
• Credit assignment for participating in knowledge claim eval-
uation (Firestone 2000a, 12–13)
• Business intelligence and OLAP reporting and analysis reports
(Kimball et al. 1998, Thomson 1999, Firestone 1997, 1997a)

----------------------- Page 181-----------------------

152 Key Issues in the New Knowledge Management

Knowledge Claim Evaluation Outcome Descriptors

Here we cover the type of knowledge claims expressed and the char-
acteristics of the distributed organizational knowledge claim base
(the World 3 portion of the DOKB) resulting from KCE.

Type of Knowledge Claim: A Somewhat Ad Hoc

Classification of Knowledge Claim Types

We have used the term knowledge claim frequently in this book and
in developing this knowledge claim evaluation framework. But we
have not yet presented an account of the variety of different types of
expressions that this general label represents. So here is a list of
knowledge claim types:

# Structured database knowledge claims

# Descriptive factual statements
# Conceptual frameworks
# Data models
# Object models
# Computer models
# Planning models
# Analytical models (mathematical or logical constructs)
# Measurement models
# Predictive models
# Impact models
# Assessment models (see Firestone 2001)
# Application software
# KCE criteria, perspectives, and frameworks
# Methods (routine step-by-step procedures for accomplishing
intermediate goals)
# Methodologies (assemblages of methods)
# Metaknowledge claims (metaclaims)
# Planning knowledge claims
# Descriptive knowledge claims
# Factual knowledge claims
# Measurements of abstractions
# Knowledge claims about impact and cause and effect
# Predictive knowledge claims
# Assessment knowledge claims

----------------------- Page 182-----------------------

The Forgotten Factor in Knowledge Production 153

Characteristics of the Knowledge Claim Base

Here we cover architectural, integration/coherence, scope, degree of

relevance, level of measurement, model type, formal language type,
semiformal language type, method type, methodology, and software
application characteristics of the knowledge claim base. This set of
characteristics illustrates the diversity represented in the knowledge
claim base of any organization and may be used to develop descrip-
tions of its knowledge claim base.

# Distributed/centralized architecture of knowledge claim base:

This will affect circulation of and access to knowledge claims.
If the necessary level of connectivity is present, a distributed
architecture supports greater circulation and production of
 knowledge claims; if not, a distributed knowledge claim base
may mean isolation.
# Degree of integration/coherence of knowledge claim base
within or between knowledge claim types or domains: In
theory, the more highly integrated the knowledge claim base,
the more effective it is in providing a foundation for generat-
ing new knowledge claims. But we really know little about how
this integration/coherence factor works in real organizations,
and it may be the case that knowledge claim bases that are too
highly integrated decrease creativity. This is an area that cries
out for research and study.
# Scope of the knowledge claim base within and across informa-
tion types or domains: The broader the scope, the more effec-
tive the knowledge claim base.
# Degree of relevance of knowledge claims produced to problems
motivating the KLC: Clearly, knowledge claims must be rele-
vant to the problems motivating their formulation.
# Level of measurement of attributes in the knowledge claim
base within and across domains (Ellis 1966, Stevens 1959):
Models whose level of measurement requirements are not
being fulfilled cannot be fairly tested and evaluated against their
competitors.
# Types of models used in the knowledge claim base (e.g., con-
ceptual, analytic, data models, measurement models, impact
models, predictive models, assessment models, object models,
structural models). Generally, all types of models should be

----------------------- Page 183-----------------------

154 Key Issues in the New Knowledge Management

represented, since all have their role in adaptation. There

should not be an overconcentration in any one or a few areas.
# Types of formal languages used in the knowledge claim base
(set theory, mathematics, fuzzy logic, rough sets, XML, HTML,
SGML, etc.). Some problems can only be addressed by for-
malisms. Thus, there should be representation of formal lan-
guages in the knowledge claim base.
# Types of semiformal languages used in the knowledge claim
base (e.g., Unified Modeling Language [UML], Knowledge
Query Modeling Language [KQML], etc.). A similar argument
holds for semiformal languages as for formal languages.
# Types of methods (features, benefits, specifications): A wide
range of methods should be available in the knowledge claim
base.
# Types of methodologies (features, benefits, specifications):
Methodologies in the knowledge claim base should be adap-
tive, iterative, and incremental.
# Software applications (features, benefits, specifications, perfor-
mance, interface): Software applications embed all sorts of
knowledge claims including claims about what they are
intended to do for users.

Other Outcome Descriptors

These fall into four categories: (1) types of meta-information (meta-

claims) describing evaluated knowledge claims, (2) history of knowl-
edge claim evaluation events, (3) types of rewards provided for
participation in knowledge claim evaluation, and (4) extent of satis-
faction with rewards for knowledge claim evaluation.

Types of Meta-Information (Metaclaims) Describing Evaluated

Knowledge Claims

The following types of meta-information may be used to describe

networks of knowledge claims resulting from knowledge claim
evaluation. Some of these criteria are also normative and should
be applied in evaluating KCE processes, and not just in describing
them. They are defined more fully in the section below on fair
comparison. Others, primarily useful for description, are briefly
explained here.

----------------------- Page 184-----------------------

The Forgotten Factor in Knowledge Production 155

# Extent of logical consistency

# Extent of empirical fit
# Extent of simplicity
# Extent of projectibility
# Extent of commensurability
# Extent of continuity
# Extent of systematic coherence of knowledge claims
# Extent of systematic fruitfulness
# Extent of heuristic quality
# Extent of completeness of the comparison set
# Extent of consensus over truth, utility, and relevance of the
competing knowledge claims: The extent to which consensus
exists in an enterprise over the truth, utility, and relevance of
competing knowledge claims is thought to be very relevant by
those who believe that knowledge is distinguished from infor-
mation by the degree of agreement in a community about the
validity of related claims. This may be called the democratic
political criterion.
# Cognitive maps of test and evaluation meta-information.
Like other information, this kind can be modeled in a cogni-
tive map.
# Extent of pragmatic priority of surviving knowledge claim
components

History of Knowledge Claim Evaluation Events

This is another class of KCE outcome descriptors. It is important

because it provides the opportunity to learn about the patterns of
KCE in an enterprise over time, and to develop historical explana-
tions of why KCE patterns and outcomes are what they are in a given
organization.

Types of Rewards Provided for Participation in

Knowledge Claim Evaluation

What do people get out of participating in knowledge claim evalua-

tion? Recognition? Peer group approval? Influence? Reduction of
risk? Financial gain? The list of rewards available for participation
covers the same range as for participation in other processes. But the
distribution of rewards is likely to be different as an outcome of each

----------------------- Page 185-----------------------

156 Key Issues in the New Knowledge Management

organization’s KCE process. One of the main issues in analyzing KCE

is to determine what its outcomes are in this area.

Extent of Satisfaction with Rewards for Knowledge

Claim Evaluation

This outcome is an aspect of the legitimacy of the KCE process in an

organization. When satisfaction is too low, the results of KCE are
not likely to be accepted in the community.

Descriptors of Growth and Change in Surviving

Knowledge Claim Outcomes

All of the knowledge claim outcomes listed above may be formulated

as growth and change attributes. In this form, they are actually
more useful for modeling causation, impact, and dynamics. That is,
if we look at an attribute value at any point in time, we have no basis
for the analysis and modeling of cause, impact, or dynamics. After
all, what is an effect? It is always a change in an attribute or attrib-
utes from an initial state of affairs based on a change in another
attribute. Here are a few examples of change attributes constructed
from some of the previous attributes. Readers can construct others
as necessary:

# Growth/decline of various types of validated knowledge claims

# Changes in validated knowledge claim base architecture
centralization
# Growth/decline in integration/coherence of validated knowl-
edge claim base
# Increase/decrease in scope of the validated knowledge claim
base

An Approach to Evaluating Knowledge Claim

Evaluation and Knowledge Claims

One of the most important activities of knowledge management is

changing knowledge processing rules, including any rules that may
be applied in KCE. But decisions on rule changing are based on
implicit or explicit normative theory that evaluates rules and then is

----------------------- Page 186-----------------------

The Forgotten Factor in Knowledge Production 157

capable of specifying how they should be changed. This section

describes an approach to such a theory. It provides both success
criteria for KCE and also specifies KCE normative criteria and an
outline of a normative process that is likely to bring success (to fulfill
the success criteria) in knowledge claim evaluation.

Success Criteria for Knowledge Claim Evaluation

Key success criteria for the knowledge claim evaluation subprocess

are discussed below.

Improvements in Cycle Time without Degradation

in Quality (Efficiency)

Other things being equal, greater efficiency in knowledge claim

evaluation is desirable, because it enables organizations to resolve
more of their problems. But, as in other areas of endeavor, efficiency
is not everything, and all things are not equal. Efficiency in the
sense of decreased cycle time fails to encompass quality in the
results of knowledge claim evaluation. If tested and evaluated knowl-
edge claims may be false even though they have survived our tests,
we may suspect that improvements in cycle time gained at the
expense of careful testing are frequently correlated with lower
rates of error elimination and lower quality of surviving knowledge
claims.

Increase in Production of Surviving Knowledge

Claims that are Relevant to the Problems Motivating
the Knowledge Life Cycle (Effectiveness)

Since knowledge claims in KLCs are formulated in response to prob-

lems (epistemic ones), there is a strong tendency for them to be rel-
evant to these problems. But it is also true that knowledge claims
may be offered as solutions to problems and may even be tested and
evaluated without refutation before it is realized that they don’t offer
solutions to the original problems at all. Thus, relevance is always
an issue and must be a success criterion for KCE. When changing the
rules in KCE, an increase in production of surviving, relevant knowl-
edge claims is an important criterion of success.

----------------------- Page 187-----------------------

158 Key Issues in the New Knowledge Management

Increase in Production of Surviving Knowledge Claims

that Are Successful in Use (Effectiveness)

KCE must produce knowledge claims that work when applied in

business decision making. KCE processes in some organizations,
however, do not always produce knowledge that is close enough to
the truth that it adequately supports business decision making (i.e.,
KCE may not be effective). When this happens too frequently, as
judged by the organization executing its KCE process, it suggests that
improvements in KCE are necessary. And such improvements are
another important criterion of success for enhancing the KCE
process.

Increase in Production of Surviving Knowledge

Claims of Sufficient Scope to Handle Problems Motivating
the Knowledge Life Cycles of the Enterprise (Effectiveness)

This success criterion goes beyond that of effectiveness expressed

merely in terms of relevance and requires that changes in KCE also
result in an increase in surviving knowledge claims covering the range
of problems that affect the adaptation of the organization. An
increase in this dimension makes the enterprise more adaptive and
eventually impacts business outcomes favorably.

Realizing Knowledge Claim Evaluation Effectiveness:

The Theory of Fair Comparison
The idea of “fair comparison” of competing knowledge claims is fun-
damental to our perspective. Not only, then, is the new KM (TNKM)
differentiated from other approaches to KM by virtue of its ground-
ing in fallibilism and falsificationism, it is further distinguished from
other second-generation approaches by the manner in which it spec-
ifies how KCE should occur. Here, we make the distinction between
what we shall call “biased” approaches to KCE and the TNKM
approach, which is knowledge-claim-centric, nonbiased, and deeply
rooted in the principle of fair comparison.
Thus, we can contrast “biased” knowledge claim evaluation with
knowledge claim evaluation through fair comparison, and it is our
claim that KCE is more effective, in the sense that it fulfills the success

----------------------- Page 188-----------------------

The Forgotten Factor in Knowledge Production 159

criteria just specified, when it is characterized by fair comparison and

less effective when it is characterized by bias. Thus, we also believe
that KM-induced changes in knowledge processing rules and criteria
that increase the degree of fair comparison also increase KCE effec-
tiveness, and changes that increase the degree of bias decrease its
effectiveness.
Normatively, then, one should seek to increase KCE effectiveness
and therefore increase the degree of fair comparison. We believe this
can be done at the level of knowledge processing by:

# First, fulfilling background requirements (the necessary condi-

tions) for fair comparison among the members of a set of com-
peting knowledge claims;
# Second, implementing comparisons among the members of this
fair comparison set, based on a number of criteria that allow
us to choose among the knowledge claims of the set based on
how its members perform on various tests.

Let us first examine the background requirements and then consider

the criteria of comparison themselves. Keep in mind, however, that
the criteria presented below provide the outlines of a theory of fair
comparison, and that this theory is itself a knowledge claim in need
of testing and evaluation. Furthermore, this is clearly a preliminary
theory of fair comparison, so it is very unlikely that the criteria
included are an adequate set either in the fair comparison require-
ments category or in the knowledge claim comparison category
that follows from it (the theory). The adequacy of the set of criteria
certainly needs to be demonstrated as research and applications
in knowledge claim evaluation unfold, and the likelihood that
criteria may be added to, or deleted from, the sets described below
is high.
Nevertheless, when all qualifications are said and done, this pre-
liminary theory of fair comparison represents a new departure in
Knowledge Management, in that it formulates a normative standard
for knowledge managers to aim at in changing knowledge process-
ing rules. No such standard has been formulated in KM until now.
Indeed, KCE has hardly been addressed in the Knowledge Manage-
ment literature at all. Hopefully this situation will change, for if it
does not, Knowledge Management will not succeed in enhancing
knowledge production and innovation processes, and since this is the

----------------------- Page 189-----------------------

160 Key Issues in the New Knowledge Management

true heart of knowledge management, in the long run, if it does not,

it will fail.

Fair Comparison Requirements Criteria

There are four requirements that must be fulfilled (i.e., they are nor-
mative) in setting up fair comparisons of knowledge claims: (1) equal
specification of members of the comparison set, (2) continuity, (3)
commensurability, and (4) completeness of the comparison set:

# Ensuring an equal degree of specification of competing knowl-

edge claims is necessary for fair comparison. For example,
specification of systems of knowledge claims occurs in stages.
Theories often begin as highly abstract knowledge claims. Then
they are specified in greater detail conceptually and then
empirically specified by providing them with an interpretation
in terms of “observables” and metrics. To compare theories
fairly, it is necessary to bring them to an equal degree of spec-
ification if they are not already there. Thus, if two or more
knowledge claims are competing and one has been empirically
specified with metrics and the other has not, fair comparison
requires empirical specification of the second.
# Continuity with previous versions of the knowledge claims to
be compared is another requirement of fair comparison (i.e.,
the extent to which each alternative theory or model in a
comparison set is faithful to its previous expressions). This
criterion is a particularly subtle one. Theories evolve over time;
they are changed and refined to meet challenges and criticism.
It is easy to change a theory so much that its core identity
is destroyed while its name remains the same. In situations
like this, the original theory has been abandoned and is
not part of current knowledge claim evaluation. On the other
hand, a theory may change substantially in its details without
changing its core identity. In such instances, the theory may
be fairly compared with its competitors in knowledge claim
evaluation.
If we are evaluating theory A versus theory B, then both eval-
uated theories must be traceable, without change of identity,
to previous versions of each theory. Otherwise, the conclusion
cannot be drawn that one of the theories named is preferable

----------------------- Page 190-----------------------

The Forgotten Factor in Knowledge Production 161

to the other (even though one of the theories tested may be

better than the other), and the eventual consequence of such
lack of continuity is destruction of the cumulative character of
knowledge production.
# Commensurability must be created if it is not present. Com-
mensurability refers to the extent to which alternative theories,
models, or other knowledge claims may be expressed using a
common conceptual framework (Popper 1970; Kuhn 1970).
Knowledge claims being compared must be expressed in a
common conceptual framework to achieve fair comparison.
This is a requirement that grows out of the debates triggered
 by Kuhn’s work on incommensurability in the 1960s (Kuhn
1970a; Lakatos and Musgrave 1970), by Feyerabend’s (1970,
1970a) challenge to critical rationalism, and by the Duhem-
Quine thesis (Duhem 1954, Quine 1953) that theories face our
evaluation efforts as wholes, that all of our observations are
theory-laden, and that there is no common conceptual basis on
which to compare theories. The answer of Popper (1970) and
other critical realists (see Niiniluoto 1999) has been to deny
incommensurability as an irresolvable condition in com-
parisons and, at least in the case of Popper (1970) to argue that
it is always possible to create commensurability even where
incommensurability exists. Accepting Popper’s notion that com-
mensurability can always be constructed even when it does not
initially exist, we suggest that for fair comparison to occur,
commensurability must be created whenever and wherever it
does not already exist.
# Completeness of the comparison set must be sought. This refers
to the extent to which the set of alternative models evaluated
(the comparison set) includes all reasonable competitive alter-
natives. This is not a precise criterion, but rather a regulative
ideal. There is no way of knowing that a comparison set is in
fact complete, just as there is no way of guaranteeing that a
knowledge claim is true. New models may always be formu-
lated and older models may easily be overlooked in searches of
the literature. Still, if KCE is to be fair, its comparisons of alter-
natives directed at solving problems must not, intentionally or
through negligence, exclude models from the comparison set on
ad hoc grounds or in an effort to “stack the deck” in favor of
the models or theories one prefers. Thus, a legitimate criticism

----------------------- Page 191-----------------------

162 Key Issues in the New Knowledge Management

of testing and evaluation involving a comparison set is that it

cannot be viewed as decisive if an important competitor was
excluded from the comparison set.

Direct Comparative Knowledge Claim Evaluation Criteria

(These require fulfillment of fair comparison criteria before the com-

parisons they produce may be considered “fair.”)
These include: logical consistency, empirical fit, projectibility, sys-
tematic fruitfulness, heuristic quality, systematic coherence, simplic-
ity, and pragmatic priority. All are briefly discussed below:
Logical consistency or coherence. This is a traditional criterion for
testing and evaluation (Popper 1959), and the extent to which it is
present is an important variable for distinguishing and evaluating
KCE processes. It provides that logical arguments in explanations be
consistent, that conclusions follow from premises, and that critics
have the right to bring a consistency challenge against a network of
knowledge claims, but not that one’s entire theoretical network be
formalized.
That is, logical consistency is of special importance to us because
we can isolate conclusions whose content is inconsistent with their
premises. And where we find inconsistency, we can either choose to
reject (falsify) the argument’s conclusion (i.e., the claim) and retain
its premises, or reject (falsify) one or more of its premises. Or, in cases
where we agree with the conclusion and also the premises, we can
retain all of them. The point is that we can make progress and grow
our knowledge when there is inconsistency, following which we are
forced to falsify at least one of our premises, or failing that, the
argument’s conclusion.
But in no such case as the above can we conclude that a proof of
truth has occurred. All we can safely say is that we believe that a
conclusion deductively follows from its premises or it doesn’t. As
Mark Notturno puts it, “The best that a logical argument can do is
test the truth of a statement.” (Notturno 2000, 86). It “cannot force
us to accept the truth of any belief,” (ibid., 87) because all beliefs are
fallible. “But it can force us, if we want to avoid contradicting our-
selves, to reexamine our beliefs, and to choose between the truth of
some beliefs and the falsity of others—because the falsity of the con-
clusion of a valid argument is inconsistent with the truth of its
premises” (ibid.). But is this enough? Indeed it is, for as Notturno

----------------------- Page 192-----------------------

The Forgotten Factor in Knowledge Production 163

says, “so long as we regard contradictions as unacceptable, it is really

quite a lot” (ibid.).
Empirical fit. The importance of this descriptor derives from the
fact that it reflects the traditional empiricist requirement that deduc-
tions from models not be inconsistent with independently arrived at
descriptions of the facts. If they are, logical inconsistency is incor-
porated into the system. This criterion is not as straightforward as it
may seem, however. What if one model fits the facts better than
another? Does that mean that the first model is to be favored in eval-
uation? Not necessarily. Sometimes, due to limitations in measure-
ment or errors in observation, a model may be correct in its deduction
of what empirical evidence should show and the measurement in
question may be wrong. Alternatively, models may also be “force
fitted” to data, as when too many variables are used in statistical
estimation or too many nodes in a neural networking model, thus
exhausting degrees of freedom of estimation. In these instances,
models that fit data less closely will be the ones that will perform
better on other criteria for evaluating knowledge claims.
Projectibility. This refers to extending generalized knowledge
claims to new cases successfully (forecast validity). It has to do with
plausibility of projections and after-the-fact measurements of predic-
tive success (Goodman 1965), or survival of predictions in the face
of reality. Organizations will vary greatly in the extent to which their
knowledge claims are projectible, and this variance will be related to
success in adaptation. Projectibility is one of the most important of
normative criteria. The higher it is, the better.

# Plausibility of projections. This is a dimension of projectibility

that involves judgments. And as with simplicity, these judg-
ments may be derived from an AHP process (see the Appendix
for a more thorough discussion of the AHP process).
# After-the-fact measurements of predictive success. This dimen-
sion of projectibility can be more “objectively” measured by
keeping a track record of empirical fit comparing competing
predictions.

Systematic fruitfulness. This refers to the disposition to encourage

deduction of new knowledge claims implicit in knowledge claims or
knowledge claim networks produced by knowledge claim formula-
tion—in other words, the extent of our ability to facilitate deduction

----------------------- Page 193-----------------------

164 Key Issues in the New Knowledge Management

of new knowledge claims from previous knowledge claim networks.

Some networks perform better than others in giving rise to deduc-
tions of new knowledge claims implicit in the networks.
Heuristic quality. This refers to the disposition of knowledge
claims or knowledge claim networks produced by KCE to encourage
formulating new conjectural knowledge claims. Some knowledge
claim networks serve as heuristics for formulating new ideas. Here
again, then, we’re talking about the extent of knowledge claim net-
works to facilitate new conjectural knowledge claims; that is, some
knowledge claim networks are more successful than others in sup-
porting future knowledge claim formulation. They serve as heuristics
for formulating new ideas. Organizations will differ in the extent to
which the outcomes of KCE exhibit such heuristic qualities.
Systematic coherence. Networks of knowledge claims may be more
or less integrated by specified linguistic relationships. And organiza-
tions may vary in the extent to which their KCE processes produce
such coherence. Knowledge claim networks should be systematically
coherent, both in general and in the area of relationships between
abstractions and observables (measurement modeling). The effects of
systematic coherence on knowledge integration and future knowl-
edge production are not clear, though they are likely to be very
significant.

# Coherence of measurement modeling. The extent to which mea-

sures and descriptors are related through the propositions of
a model’s semantic network (Firestone 1971, Firestone and
Chadwick 1975) is an aspect of systematic coherence. The con-
nections between indicators or measures and the abstractions
they are intended to measure are frequently not clearly speci-
fied in theories (Firestone 1971). Thus, the coherence of the
semantic network in such theories is low and these theories’
“empirical deductions” about expected indicator values don’t
really flow from the theories’ premises.

Simplicity. This is another traditional validation criterion. Often

called “Occam’s razor,” simplicity seems to be an intuitively clear
criterion, but it is difficult to rigorously formulate, as was shown
some time ago (Ackermann 1960, Goodman 1958, Rudner 1961). In
any event, organizations will differ widely in the importance they
place on simplicity in KCE. To apply this criterion normatively, the

----------------------- Page 194-----------------------

The Forgotten Factor in Knowledge Production 165

analytical structuring and subjective estimation techniques of the

AHP process (see Appendix) may be used to compare knowledge
claims on simplicity.

# Simplicity of mathematical form of model. The aspect of sim-

plicity defined by the mathematical form of models is easier to
assess than simplicity in linguistic expressions in general. Here,
again, the AHP process (see Appendix) may be used to com-
 paratively rate different functional forms on a ratio scale of
simplicity created using the AHP Methodology (Saaty 1990,
1990a; ExpertChoice 2001).
# Economy in number of attributes or variables entering a formal
model. Here again, the rule is the fewer the better, other things
being equal. The aspect of simplicity called economy is rela-
tively easy to measure since it is formulated in terms of the
number of attributes used in a model.

Pragmatic Priority. Knowledge claim networks have descriptive and

valuational aspects to them. They are networks with both descrip-
tive and value interpretations (Firestone 2001, 2003, Chap. 4). And
they may be compared in terms of the priority values across networks
of benefits resulting from actions as specified by each knowledge
claim network (or theory or model). This attribute of pragmatic pri-
ority also encompasses relevance. Thus, the greater the benefit spec-
ified in a knowledge claim network, the more relevant is the network
from the pragmatic standpoint of the consequences of actions in
closing gaps between goal states and actual states.
When knowledge claim networks are compared according to their
pragmatic priority, we are not engaging in a comparison of epistemic
values, but rather one of the estimated costs and benefits specified by
each network in the comparison set. In committing to the rejection
of knowledge claims as false, and relying on surviving knowledge
claims in actions, the risks we take are a combination of the likeli-
hood that our evaluation rejecting particular knowledge claim net-
works is in error, and the benefit/cost consequences of such errors.
As a result, we might suffer the consequences predicted by the true
knowledge claim network we have rejected. Thus, pragmatic prior-
ity requires that epistemic criteria be weighted by the risk of error in
developing a comparative evaluation of knowledge claims and
knowledge claim networks. This criterion does not involve wishful

----------------------- Page 195-----------------------

166 Key Issues in the New Knowledge Management

thinking in the sense that we will value most highly those knowledge
claims that predict the greatest benefits, but rather, modest pessimism
in that epistemic values are reduced based on the risk of error
involved in not rejecting the surviving knowledge claim networks and
in rejecting their alternatives.

Combining Comparative Evaluation Criteria

in Knowledge Claim Evaluation

To make a decision rejecting some knowledge claim alternatives while

failing to reject others, we need procedures for combining the eval-
uation criteria used to compare knowledge claims. The key point to
note about combining criteria in order to support decisions is that
the procedures used can range from the very informal to the highly
formal.
Informality in combining criteria is what we normally do. That is,
when we have a set of factors to be considered in choosing among a
set of alternatives in KCE, we most frequently vet the alternatives
with others, and may even subject them to a kind of “free-for-all”
critical process, and/or weigh them using intuition and common
sense, and then make our decision about which alternatives are false,
which we are unsure about, and which are true (or at least most
“truthlike”). The process may involve considerable critical interac-
tion with others and often may be collaborative, since many per-
spectives are better than one in appreciating the importance of the
various factors in a decision.
Much of the time, an informal process of vetting and weighing is
also the most appropriate way of combining criteria. It is so because
there may be no time for a more formal and systematic approach, or
because the resources may not be available to implement one, or
because what is at stake in the KCE decision may not be important
enough to justify one, or because we need informality to surface
criticisms, creativity, and new ideas in KCE. So, whether we should,
once fair comparison requirements are fulfilled, implement a formal
and systematic approach to multicriterion decision making, or an
intuitive approach or something in between, depends upon available
resources, time, the need for new ideas, and the cost involved—com-
pared to what is at stake in avoiding error. If resources, time, avail-
able formal frameworks, and cost are not “right,” the appropriate
decision method to use in KCE may well be an informal one.

----------------------- Page 196-----------------------

The Forgotten Factor in Knowledge Production 167

If we decide to go beyond interpersonal interchange accompanied

by intuition, however, there are well established techniques one can
use that have been developed over a long period of time in the field
of multicriterion decision making. Multi-Attribute Utility Theory
(MAUT) (Keeney and Raiffa 1976) and the Analytic Hierarchy
Process (AHP) (Saaty 1990, 1990a) (see Appendix) are two con-
trasting approaches that focus on quantitative combination of crite-
ria. The MAUT approach develops intervally scaled composites that
may be normalized to the interval -1.00 > 0 > +1.00. The AHP
approach develops ratio-scaled composites (that is, they have an
absolute zero). Other approaches have focused on ordinal rankings
(Hwang and Linn 1987, Cochrane and Zeleny 1973), and still others
on fuzzy set approaches (Cox 1994, 1995) (see Appendix).
Our approach is to develop ratio-scaled composite models that
map the component evaluation criteria to a ratio scale of “truthlike-
ness” (See Popper 1963; Niiniluoto 1987, 1999). “Truthlikeness” is
similarity to the truth. The smaller the distance between a knowledge
claim and the true (perhaps unstated) knowledge claim in its com-
parison set, the more truthlike it is. When the distance becomes zero,
the knowledge claim is true. But the distance, as in the Kelvin tem-
perature scale, can never fall to zero, because our measurement of
“truthlikeness” is always subject to error. In evaluating knowledge
claims, our purpose is to separate the false, least truthlike knowledge
claims from the more truthlike claims that survive our tests and from
those claims about which we cannot decide.
Two alternative techniques for developing composite measures of
“truthlikeness” are presented in the Appendix to this chapter. The
presentation requires some technical background. Readers who have
the background and interest should find the Appendix interesting as
a demonstration that formal approaches to measuring “truthlike-
ness” are available if the need and desire for a formal comparison of
alternatives exists. Other readers may skip the Appendix since it is
not critical to the main line of argument in this chapter.

Knowledge Claim Evaluation Software

Software does not yet provide systematic support for knowledge claim
evaluation. In Chapter 11 we present the concept of the Enterprise
Knowledge Portal (EKP) (Firestone 1999, 2000a, 2000b, and 2003),

----------------------- Page 197-----------------------

168 Key Issues in the New Knowledge Management

which provides support for KCE within the context of a broader

application supporting all knowledge and knowledge management
subprocesses. Here, we will describe the functionality of an applica-
tion focused on KCE alone and a few structural requirements as well.

Key Use Cases in KCE Software

Based on the above analysis of knowledge claim evaluation, we

believe that such an application must provide support for:

# A high level use case (Jacobson et al. 1992, Jacobson et al.

1995, Jacobson, Booch, Rumbaugh 1999) for supporting
humans in fairly comparing competing knowledge claims for
“truthlikeness” or “survivability,” including:

• Constituting comparison sets of competing knowledge claims

• Testing against fair comparison requirements criteria for
comparison sets of competing knowledge claims
• Applying direct comparative validity criteria to a compara-
tive assessment of knowledge claims
• Creating composites and making decisions ordering or
rating competing knowledge claims
• Collaborating in KCE
• Partially automated testing of competing knowledge claims
• Tracking of results and history of KCE

This use case is suggested rather directly by the preceding section and
provides direct support for comparing and rating knowledge claims.

# KCE applications should also provide support for a second high

level use case for creating KCE models, including support for:

• Formulating and changing KCE criteria, frameworks, and

normative models
• Supporting KCE in KCE modeling

This use case supports knowledge managers in their efforts to create

KCE models that would be used by the first high level use case.

# A third high level use case, supporting automated KCE by

servers and intelligent agents (IAs), should include support for:

----------------------- Page 198-----------------------

The Forgotten Factor in Knowledge Production 169

• IAs tracking and analyzing human KCE patterns and com-

paring these with machine KCE patterns (from other IAs and
from the servers)
• IAs learning their own KCE patterns from human and server
interaction using their own learning capability
 • Servers tracking and analyzing human and IA KCE patterns
and taking them as inputs
• Servers learning KCE patterns from all inputs using their
own learning capability
• IAs and servers applying their own KCE capability in eval-
uating knowledge claims coming from the IAs representing
humans and tracking these for later use by humans in KCE

This high level use case provides for server and intelligent agent
support for KCE. The knowledge claims emerging from automated
KCE are retained for human consideration.

Structural Features of KCE Software

Structural features of KCE software include knowledge claim objects

and various technical features of IAs and servers. First, Knowledge
Claim Objects (KCOs) (Firestone 2003, Chaps. 10, 11, and 13)
are distinguished from ordinary software business objects by the
presence of metadata (meta-information, also metaclaims) about
“truthlikeness” encapsulated in the software object. Such metadata
compares the KCO to alternative, competing KCOs and may be
expressed in many different forms.
The “metadata” (metaclaims) may be qualitative or quantitative,
or they may be in the form of textual content where KCE has
remained relatively informal. In the relatively infrequent but impor-
tant special cases involving formal techniques of KCE, metadata may
involve quantitative ratio-scaled ratings of a knowledge claim com-
pared to its competitors. When the KCO is accessed by a user, data,
metadata, and methods are all available, so the user can evaluate the
KCO as a basis for decision against competing KCOs.
Second, a KCE application must employ an Artificial Knowledge
Server (AKS) (see Firestone 2003, Chap. 10) with knowledge claim
object state management and synchronization capability. Such
capability provides for dynamic integration of continuous changes

----------------------- Page 199-----------------------

170 Key Issues in the New Knowledge Management

occurring in knowledge claim objects. The AKS must look for

changes in shared objects and additions to the total pool of objects
and relationships, alert all system components sharing the objects
of such changes, and also make decisions about which changes
should be implemented in each affected component throughout the
system.
In addition, the AKS uses a persistent representation of the enter-
prise object model including its KCOs. The objects in the object
model are reflexive—aware of their present state and any change of
state. The AKS accomplishes proactive monitoring and coordinating
of changes in its shared objects through their reflexivity and capac-
ity for event-driven behavior. Since KCOs encapsulate validity meta-
data and the means of their manipulation, the ability to manage
KCOs is the ability to manage and track the history of the KCE
process in the enterprise using KCE application software.
Third, rule inference engines supply the IAs or servers in the system
with the capability to respond to events as specified in the agent or
server knowledge base.
Fourth, Simple Network Management Protocol (SNMP) engines
provide a multithreaded capability for system wide bidirectional
communications, monitoring, and control across distributed agents
and servers.
Fifth, modeling capability provides the ability to model from text
(including XML), semantic networks, cognitive maps, or knowledge
maps communicated to or created by the agent, as well as workflows
and interpersonal network.
Sixth, Complex Adaptive Systems (CAS) learning capability begins
with the cognitive maps of agents or servers. Reinforcement learning
through neuro-fuzzy technology modifies connection strength or
removes connections. Creative learning through genetic algorithms
and input from human agents or IAs adds nodes and connections
that are then subject to reinforcement learning. So, IAs interact with
the local environment in the KCE system and with external compo-
nents to automatically formulate and evaluate local knowledge
claims.
These knowledge claims are then submitted to the next higher level
in the KCE system hierarchy, which tests and evaluates them against
previous knowledge and claims submitted by other IAs. This process
produces partially automated organizational knowledge claim eval-
uation and partially automated adaptation to local and global envi-

----------------------- Page 200-----------------------

The Forgotten Factor in Knowledge Production 171

ronments. We say “partially,” because the KCE system is in constant

interaction with human agents.
Seventh, in addition to the above general capabilities, a software
capability to implement the AHP, or another tool providing the capa-
bility to build hierarchies, create ratio scales, and create composite
models is also a requirement following rather directly from the use
cases specified earlier.
Eighth, the use case requirement for collaboration suggests that
a collaborative application providing support for communities of
practice is necessary for KCE (e.g., Intraspect 2002, XeroxConnect
2002).
Ninth, the requirement for normative modeling presupposes a
capability to model the KCE process as is, and this in turn requires
both modeling applications such as Ventana’s Vensim (2002), High
Performance Systems’ iThink and Stella (2002), FuzzyTech’s
FuzzyTech (2002), knowledge discovery in database/data mining
applications, such as SAS Enterprise Miner (2002), SPSS Clementine
(2002), and Statsoft’s Statistica Miner (2002).

Conclusion: Significance and Questions

In this chapter, we have moved from a framework for description of

knowledge claim evaluation to a normative theory, providing a high
level conceptual outline of how to do KCE, to an outline of the
requirements and structure of a projected KCE software application.
We believe that this is significant for KM, since very few in the field
are writing about knowledge claim evaluation, much less offering
frameworks and techniques for implementing this critical activity in
knowledge production.
Of course, for reasons of space, we have glossed over many details
and potential difficulties. We can, however, indicate what they are
and summarize them.
First, the approach taken to knowledge claim evaluation will be
doubted by many on grounds that KCE is highly contextual in char-
acter, and that to approach it, as we have, by proposing a set of cri-
teria and a set of rules in what is basically a normative approach
simply violates the nature of the KCE process as a “form of life”
requiring unique adaptations to its challenges. To those who bring
objections such as this to the table, it must seem that the approach

----------------------- Page 201-----------------------

172 Key Issues in the New Knowledge Management

just taken is a throwback to a pre-Kuhnian philosophy of science

when many believed that norms of scientific method could be for-
mulated and prescribed for scientific practitioners. And it may further
seem that this throwback is in conflict with history, sociology, and
psychology of science approaches that seem to eschew prescription
in favor of description.
Our response to objections of the above sort is that they accept
far too readily the supposed accomplishments of subjectivist
approaches to the explanation and understanding of scientific and
other knowledge production activity. We think we can do better than
that. Further, we do not think historical, sociological, and psycho-
logical accounts of scientific activity (not necessarily subjectivist, inci-
dentally) preclude normative theory at all, because there is nothing
inherent in them that suggests the impossibility of appropriate nor-
mative prescriptions enhancing the knowledge production process.
Such studies have shown that simplistic normative prescriptions, such
as full formalization of scientific theories, or value-free assessments
of alternative models, face impossibility objections, but they do not
show that new normative prescriptions based on better theory would
necessarily share that difficulty.
Furthermore, the alternative to normative theory for enhancing
knowledge production is abandonment of attempts to enhance
knowledge production at all. This construal, then, restricts knowl-
edge management to knowledge integration alone, and for reasons
explained in Chapter 4, to do that is to abandon the distinction
between knowledge and information and to attack the very founda-
tions of Knowledge Management. This last argument does not imply
that the anti-normative theory position in KM is necessarily incor-
rect, but it does indicate its inconsistency with the complex of ideas
that lie at the foundation of KM as a discipline.
Second, our previous account of the component criteria for eval-
uating knowledge claims was overly simple in that it did not
make clear that terms such as empirical fit, simplicity, systematic
coherence, and others are themselves complex attributes whose
measurement requires construction of more composites. Thus, the
evaluation scheme developed earlier is not a two-level hierarchy with
“truthlikeness” at the top and the component attributes at the
bottom, but rather a multilevel analytical hierarchy, of the kind best
treated with the AHP method (see Appendix), in which the second
criterion level must be broken down into a third, fourth, or even fifth

----------------------- Page 202-----------------------

The Forgotten Factor in Knowledge Production 173

level of attributes before a schema for measuring “truthlikeness” is

complete.
Third, the set of second-level criteria we offered in the normative
model may well be incomplete, and some of its components may be
incorrect. So applications of it should be free-wheeling, and modifi-
cations of it should also be undertaken freely. Moreover, the ques-
tions of the form of the composite models and the weighting used in
them is left open by us, even though we provided a couple of exam-
ples of combination approaches. We believe that these aspects of the
normative KCE model will vary across enterprises and that until we
have much more experience in applying the model, it would be pre-
mature to suggest generalization of these aspects of it.
In short, we believe that the criteria, the form of KCE composite
evaluation models, and the weights used in such models must all be
open to innovation themselves, especially in an environment where
we know little about the details of formal methods for evaluating
KCE processes. Thus, we present the above normative framework as
a working theory of KCE, as a first effort in a new direction that we
need to take in Knowledge Management. We hope and believe that
though this may be the first attempt at a normative model in the KM
literature, it will be far from the last, and we look forward to being
joined by others quickly on this important road not previously trav-
eled in Knowledge Management.

References

Ackermann, R.J. (1960), Simplicity and the Acceptability of Scientific The-

ories, Doctoral Dissertation, East Lansing, MI Michigan State University.
Cochrane, J. and Zeleny, M. (eds.) (1973), Multiple Criteria Decision
Making, Columbia, SC: University of South Carolina Press.
Cox, E. (1994), The Fuzzy Systems Handbook, Cambridge, MA: Academic
Press.
——— (1995), Fuzzy Logic for Business and Industry, Rockland, MA:
Charles River Media.
Delbecq, A. and Van de Ven, A. (1971), “A Group Process Model for
Problem Identification and Program Planning.” Journal of Applied Behav-
ioral Science, 7, no. 4.
Duhem, P. (1954), The Aim and Structure of Physical Theory, Princeton,
NJ: Princeton University Press.

----------------------- Page 203-----------------------

174 Key Issues in the New Knowledge Management

Ellis, B. (1966), Basic Concepts of Measurement. Cambridge, UK:

Cambridge University Press.
ExpertChoice Inc. (2001) http://www.expertchoice.com.
Feyerabend, P. (1962), “Explanation, Reduction, and Empiricism”, in H.
Feigl, and G. Maxwell, (eds.), Minnesota Studies in the Philosophy of
Science, III, Minneapolis, MN: University of Minnesota Press.
Feyerabend, P. (1970), “Problems of Empiricism, Part II”, in R. Colodny
(ed.), The Nature and Function of Scientific Theory, Pittsburgh, PA:
University of Pittsburgh Press.
Feyerabend, P. (1970a), “Against Method: Outline of an Anarchistic Theory
of Knowledge”, M. Radner, and S. Winokur, (eds.), Minnesota Studies
in the Philosophy of Science, IV, Minneapolis, MN: University of
Minnesota Press.
Firestone, J.M. (1971), “Remarks on Concept Formation: Theory Building
and Theory Testing,” Philosophy of Science, 38, 570–604.
Firestone, J.M. (1997), “A Systems Approach to Dimensional Modeling in
Data Marts”, White Paper No. 1, Executive Information Systems, Inc.,
Wilmington, DE, March, 1997, Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1997a), “Evaluating OLAP Alternatives”, White Paper
No. 4, Executive Information Systems, Inc., Wilmington, DE, March,
1997, Available at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1998), “Knowledge Management Metrics Development: A
Technical Approach,” Executive Information Systems White Paper,
Wilmington, DE, June 25, 1998. Available at
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1999), “Enterprise Information Portals and Enterprise
Knowledge Portals,” DKMS Brief, 8, Executive Information Systems,
Inc., Wilmington, DE, March 20, 1999. Available at
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000), “Accelerated Innovation and KM Impact,” Finan-
cial Knowledge Management (Q1, 2000), 54–60.
Firestone, J.M. (2000a), “The Enterprise Knowledge Portal Revisited,” White
Paper No. 15, Executive Information Systems, Inc., Wilmington, DE,
March 15, 2000. Available at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000b), “Enterprise Knowledge Portals: What They Are
and What They Do,” Knowledge and Innovation: Journal of the KMCI,
1, no. 1, 85–108. Available at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2001), “Estimating Benefits of Knowledge Management Ini-
tiatives: Concepts, Methodology, and Tools,” Knowledge and Innovation:

----------------------- Page 204-----------------------

The Forgotten Factor in Knowledge Production 175

Journal of the KMCI , 1, no. 3, 110–129. Available at:

http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2003), Enterprise Information Portals and Knowledge
Management, Boston, MA: KMCI Press/Butterworth–Heinemann.
Firestone, J.M. and Chadwick, R.W. (1975), “A New Procedure for Con-
structing Measurement Models of Ratio Scale Concepts,” International
Journal of General Systems , 2, 35–53.
FuzzyTech (2002) at www.fuzzytech.com.
Goodman, N. (1958), “The Test of Simplicity,” Science, 128, 1064–1069.
Goodman, N. (1965), Fact, Fiction, and Forecast, 2nd edition, Indianapolis,

IN: Bobbs-Merrill.
Helmer, O. (1966), Social Technology. New York, NY: Basic Books.
High Performance Systems (2002) at www.hps-inc.com.
Holland, J.H. (1998), Emergence. Reading, MA: Addison-Wesley.
Hwang, L. and Linn, M. (1987), Group Decision Making under Multiple
Criteria, New York, NY: Springer-Verlag.
Intraspect Inc. (2002), http://www.intraspect.com.
Isaacs, David (1999), “Knowledge Café Presentation,” Enterprise Intelli-
gence Conference, December 7, 1999, Lake Buena Vista, FL.
Jacobson, I., Christerson, M., Jonsson, P., and Overgaard, G. (1992),
Object-oriented Software Engineering. Reading, MA: Addison-Wesley.
Jacobson, I., Ericsson, M., and Jacobson, A. (1995), The Object Advantage.
Reading, MA: Addison-Wesley.
Jacobson, I., Booch, G. and Rumbaugh, J. (1999), The Unified Software
Development Process. Reading, MA: Addison-Wesley.
Keeney, R., and Raiffa, H. (1976), Decisions with Multiple Objectives. New
York, NY: John Wiley & Sons.
Kimball, R., Reeves, L., Ross, M., and Thornthwaite, W. (1998), The
Data Warehouse Life Cycle Toolkit, New York, NY: John Wiley
& Sons.
Kuhn, T. (1970), “Logic of Discovery or Psychology of Research,” in I.
Lakatos and A. Musgrave (eds.), Criticism and the Growth of Knowl-
 edge, Cambridge, UK: Cambridge University Press.
Kuhn, T. (1970a), The Structure of Scientific Revolutions 2nd edition, revised

and enlarged, Chicago, IL, International Encyclopedia of Unified Science,

University of Chicago Press.
Lakatos, I., and Musgrave, A. (eds.) (1970), Criticism and the Growth of
Knowledge, Cambridge, UK: Cambridge University Press.
Martin, J. (1990), Information Engineering: Design and Construction, Book
III, Englewood, Cliffs, NJ: Prentice-Hall.

----------------------- Page 205-----------------------

176 Key Issues in the New Knowledge Management

McElroy, M.W. (2003), The New Knowledge Management: Complexity,

Learning, and Sustainable Innovation, Boston, MA: KMCI Press/
Butterworth–Heinemann.
Niiniluoto, I. (1987), Truthlikeness, Dordrecht, NL: D. Reidel.
Niiniluoto, I. (1999), Critical Scientific Realism, Oxford, UK: Oxford
University Press.
Notturno, M. (2000), Science and the Open Society, Budapest, Hungary:
Central European University Press.
Popper, K.R. (1934), Logik der Forschung, Vienna, AU: Springer.
Popper, K.R. (1959), The Logic of Scientific Discovery, London, Hutchinson.
Popper, K.R. (1963), Conjectures and Refutations, London, UK: Hutchinson.
Popper, K.R. (1970), in I. Lakatos and A. Musgrave (eds.), “Normal Science
and Its Dangers,” Criticism and the Growth of Knowledge, Cambridge,
UK: Cambridge University Press.
Popper, K.R. (1972), Objective Knowledge, London, England: Oxford
University Press.
Popper, K.R. (1994), Knowledge and the Body-Mind Problem (edited by
Mark A. Notturno), London, UK: Routledge.
Popper, K.R. and Eccles, J.C. (1977), The Self and Its Brain, Berlin,
Germany: Springer-Verlag.
Quine, W. (1953), From a Logical Point of View, Cambridge, MA: Harvard
University Press.
Rudner, R. (1961), “An Introduction to Simplicity,” Philosophy of Science,
28, No. 2.
Saaty, T. (1990), The Analytic Hierarchy Process: Planning, Priority Setting,
Resource Allocation 2nd edition, Pittsburgh, PA: RWS Publications.

Saaty, T. (1990a), Decision Making for Leaders, Pittsburgh, PA: RWS

Publications.
SAS (2002) at www.sas.com.
SPSS (2002) at www.spss.com.
Statsoft (2002) at www.statsoft.com.
Stevens, S. (1959), “Measurement, Psychophysics and Utility,” in C.W.
Churchman and P. Ratoosh (eds.), Measurement: Definition and Theories,
New York, NY: John Wiley and Sons.
Thomson, E. (1997), OLAP Solutions. New York, NY: John Wiley & Sons.
Vensim (2002) at www.vensim.com.
Wood, J. and Silver, D. (1989), Joint Application Design , New York, NY:
John Wiley & Sons.
XeroxConnect (2002), at www.xeroxconnect.com.

----------------------- Page 206-----------------------

Appendix to Chapter 5
 Two Formal
Approaches to
Measuring
“Truthlikeness”

Introduction

Sometimes the need or desire may arise to do formal comparisons

among knowledge claims regarding their “truthlikeness.” This could
happen if one among a set of competing models will be used as a
basis for important decisions—for example, competing models of the
side effects of new drugs, or competing models about damage to the
environment resulting from a new power plant, or competing sales
forecasting models. In short, any comparison that may produce a
basis for a course of action that is pregnant with consequences and
not easily adjustable once taken may be a worthwhile candidate for
a formal comparison if the time and resources exist to perform one.
This Appendix presents two alternative formal approaches to devel-
oping ratio scales of “truthlikeness” using the framework presented
in Chapter 5. The first is the Analytic Hierarchy Process approach
(AHP), and the second is the “fuzzy measurement model approach.”
This Appendix is for readers interested in formal comparisons among

177

----------------------- Page 207-----------------------

178 Key Issues in the New Knowledge Management

knowledge claims. Others may skip it. The figure numbers follow
consecutively the order used in Chapter 5.

An AHP-Based Ratio Scaling Approach

Assuming the component attributes of the “truthlikeness” com-

posite are not statistically correlated, one procedure begins with
performing pairwise comparisons of the relative ability or priority
of each of the criterion attributes of the composite in representing
truthlikeness. For example, a knowledge worker might be asked to
perform pairwise comparisons of the various criteria for comparison
of knowledge claims using judgments of equal ability, weakly greater
ability of one criterion over the other; essential or strong ability of
one over the other; very strong or demonstrated ability of one over
the other; absolute ability of one over the other; and intermediate
positions between these five judgments. Thus, the rater may use one
of nine ordinal judgments of degree of ability of one criterion pair-
member over the other.
Sometimes judgments such as the above are elicited through use
of a questionnaire. In that case, illustrated in Figure 5.2, respondents
are asked to indicate their verbal judgments only by placing checks
in the appropriate positions on the instrument. Sometimes, when the
judgments are elicited, raters are told that they can enter numbers
associated with the verbal judgments in place of these. In these
instances, “equal ability” is assigned the value 1, and then each pro-
gressively stronger verbal rating including the intermediate ones
receives the next integer value, until “absolute ability” receives the
value 9.
Once the judgments are elicited, and sometimes as part of the judg-
ment process, they are associated with the integer values 1 through
9 as indicated just above, and then assembled in a matrix. In the
present example, our own pairwise comparison judgments for each
criterion’s relative ability to contribute to “truthlikeness” are pre-
sented in Figure 5.3. The integer values associated with our judg-
ments are contained in the cells of the matrix above the 1.00 values
in the diagonal. In the cells below the diagonal, the reciprocals of
these values have been entered. In this way, the judgments have been
interpreted and assembled in a positive reciprocal matrix and are
now ready for calculations that will produce ratio scale ratings of the

----------------------- Page 208-----------------------

Two Formal Approaches to Measuring “Truthlikeness”

179

Rate the relative ability to contribute to meeting your query

performance requirements of the left-hand platform compared to
the right-hand one, by placing a check in the appropriate position
below.

Abso- Very Very Abso-

lute Strong Strong Weak Equal Weak Strong Strong lute

L. Consistency
Empirical Fit
_ _ _ ÷ _ _ _ _ _

L. Consistency
Projectibility
_ _ _ _ _ ÷ _ _ _

L. Consistency
Simplicity
_ ÷ _ _ _ _ _ _ _

Empirical Fit
Projectibility
_ _ _ _ _ _ _ ÷ _

Empirical Fit
Simplicity
_ _ _ _ _ _ _ _
÷

Projectibility
Simplicity
_ _ _ _ _ _ _ _
÷

Figure 5.2
Questionnaire Instrument for Eliciting Pairwise
Comparisons of Knowledge Claim Evaluation Criteria

LC EF PR S

L. Consistency
1 3 2 1/3
(LC)
 Empirical Fit
1/3 1 2 1/4
(EF)

Projectibility 1/2 1/2 1 1/4

(PR)

Simplicity 3 4 4 1
(S)

Figure 5.3
Example of Pair Comparison Judgements of the Relative
Ability of Criteria to Contribute to Evaluating Truthlikeness
Arrayed in a Positive Reciprocal Matrix

----------------------- Page 209-----------------------

180 Key Issues in the New Knowledge Management

evaluative criteria relative to “truthlikeness” as well as for consis-

tency tests of the matrix of judgments.
Saaty’s (1990) preferred method of eliciting comparative judg-
ments is justified on various grounds. The most important are: (1)
the use of verbal judgments is an advantage with decision makers
who often feel that quantitative pairwise comparisons are artificial,
and (2) the method is by now amply justified by successful empirical
work using it. This empirical work establishes that such judgments
combine well enough with the AHP’s mathematical methods for
deriving ratio scales and consistency tests to produce useful scale
numbers and tests showing high logical consistency in judgments. In
addition, comparative studies evaluating the 1–9 scale against numer-
ous others have shown that the 1–9 scale is at least as good and
perhaps better than the alternatives tested.
While agreeing that Saaty’s method of eliciting comparative
judgments through verbal judgments and the 1–9 scale is certainly
successful, it is important to note that analysis using the AHP
methodology does not require the 1–9 scale. Psychometric methods
provide other techniques for eliciting judgments that have been just
as successful as Saaty’s methods, and more important, that maybe
seem more natural to raters in certain situations. Two such methods
are the constant sum and proportional comparison methods.
In the constant sum method, raters are asked to split 100 points
to judge the relative ability of one member of a pair compared with
another. Figure 5.4 provides an instrument for eliciting pairwise com-
parison judgments using the constant sum method of scaling. The
figure continues with the example we’ve been using and provides
judgments, in constant sum terms, of the pairs relative to their
“ability” to contribute to “truthlikeness.”
Once the constant sum judgments are elicited, one arrives at the
positive reciprocal matrix of ratio judgments by first dividing the left-
hand rating in Figure 5.4 by the right-hand rating to get the top half
of the reciprocal matrix, and then taking the reciprocals of the top
half to populate the cells below the diagonal elements. Of course, the
diagonal values are still 1.00, since we are comparing each element
with itself.
In the proportional comparison method, illustrated in Figure 5.5,
raters are asked to judge the greater or lesser ability to contribute
to meeting query performance requirements of the right-hand pair
----------------------- Page 210-----------------------

Two Formal Approaches to Measuring “Truthlikeness”

181

Compare the relative ability to contribute to evaluating

truthlikeness
of the left hand criterion compared to the right hand one.

To make your comparisons, assume that each pair of criteria has a total
of 100
p oints of ability. Split these 100 points between the two criteria of each
pair according
to your judgement of their relative degree of ability. For example, if
you
are comparing Logical Consistency and Empirical Fit, you might assign 10
points
to Empirical Fit and 90 points to Logical Consistency. This would be the
same as
saying that Logical Consistency has 9 times greater ability
to contribute to evaluating truthlikeness than Empirical Fit.

Split 100 Points Between the Boxes Beside Each Pair Member

90 L. Consistency //Empirical Fit 10

80 L. Consistency // Projectibility 20

98 L. Consistency // Simplicity 2

30 Empirical Fit // Projectibility 70

80 Empirical Fit // Simplicity 20

90 Projectibility // Simplicity 10

Figure 5.4
Pair Comparison Judgments Using Constant Sums

member versus the left-hand pair member in terms of the number of

points given to the right-hand member compared to a baseline of 100
points assigned to the left-hand member. The instructions for the
instrument indicate that the rater may evaluate the ability of the
right-hand member as anything from a small fraction of that of
the left-hand member to many times that of the left-hand member.
To assemble the positive reciprocal matrix from these judgments,
again divide the left-hand rating (100 points) by the right-hand rating
to get the top half of the matrix. Then populate the bottom half with
the reciprocals of the top half and the diagonal cells with 1.00s.
The constant sum and proportional comparison methods have a
long and successful history in psychometrics. More important,
though, they, too, have been successful in generating ratio scales
backed by consistency tests and empirical validation of the useful-
ness of the resulting ratio scales.

----------------------- Page 211-----------------------

182 Key Issues in the New Knowledge Management

 Rate the greater or lesser ability to contribute to evaluating
truthlikeness
of the right-hand pair member versus the left-hand pair member.
Do this by assigning points to the right-hand pair member. Decide on the
number of
points to assign the right-hand pair member by judging its ability in terms
of the
baseline value of 100 points assigned to the left-hand member. If the
ability of the
right-hand pair member is greater, assign it more than 100 points. If
equal, assign
it 100 points. If lesser, assign it less than 100 points. If 1/5 the left-
hand pair, assign
it 20 Points. If 10 times the left-hand pair assign it 1000 points, and so
on. Assign
as many, or as few points as you need to make the comparison.

100 L. Consistency // Empirical Fit

100 L. Consistency // Projectibility

100 L. Consistency // Simplicity

100 Empirical Fit // Projectibility

100 Empirical Fit // Simplicity

100 Projectibility // Simplicity

Figure 5.5
A Pair Comparison Instrument Using Proportional Comparison

The constant sum method was used in a variety of related studies

performed over a five-year period (1977–1981) for both the U.S.
Census Bureau and the U.S. Farmers Home Administration (FmHA).
For the Census Bureau, panel studies employing the Group Value
Measurement Technique (GVMT) were used to measure urban dis-
tress and rural need. Studies were done in the Detroit and Hartford
metropolitan areas (under contract from the Office of the Secretary
of Commerce), and in ten states (under contract from the Farmers
Home Administration). Work continued at FmHA in 1981, and panel
studies of rural development need were performed in three more
states. Much of the urban distress work is reported in Brounstein,
Firestone, Clark, Kelly, and Spoeri (1977). The work of the ten-state
study is summarized in Firestone and Brounstein (1981). Four
detailed technical reports on the ten-state study were also produced
at FmHA.
These studies measured either suburban distress or rural develop-
ment need for FmHA assistance and developed ratio scales measur-

----------------------- Page 212-----------------------

Two Formal Approaches to Measuring “Truthlikeness” 183

ing amount of distress or need, indicator importance, and in some

instances, issue or subissue importance ratings. Invariably the scales
derived from pair comparison ratings were validated well in multi-
variate analyses using empirical aggregate data. They were also
shown to have very high statistical reliability across panels of raters
(over .99 in certain instances), and in addition were shown to be
highly consistent ratio scales using a measure called Percent
Discrepancy from Perfect Consistency, which is structurally similar
to the Chi-Square statistic.
The proportional comparison method was used in a forecasting
study performed for the Washington, D.C., government in 1981–
1982. The study used the method to compare the base year 1980
with 1985, 1990, 1995, and 2000 relative to various social indica-
tors such as birth rate, single-family owned housing, death rate, etc.
Three clusters of respondents were defined based on groupings of
pair comparison responses, and some 47 ratio scales were derived
from the clustered proportional pairwise comparison judgments
using an approximation to Saaty’s eigenvalue method (Saaty 1990)
and employing the Consistency Index (CI) defined by Saaty for AHP
work.
The results of the analysis indicated very high consistency of the
ratio scales derived for the clusters. The mean consistency index for
the 47 scales was .0006, and the standard deviation of index values
was .0005. The maximum CI value (greatest inconsistency) was
.0019, and the minimum CI was .0001. Saaty’s criterion for accept-
ability of the logical consistency of a matrix of reciprocals with a
derived ratio scale is CI < .10. In other words, the maximum level of
logical inconsistency observed in the study was only 1/50 of the min-
imally acceptable value specified by Saaty, while the minimum level
of observed logical inconsistency was only 1/1000 of that minimally
acceptable level.
In sum, there are a number of alternatives you can use to elicit
judgments for “truthlikeness” criteria using the AHP. You are safe
with any of the methods discussed here and probably with other psy-
chometric methods as well. Our recommendation is: at the beginning
of an evaluation, experiment with different judgment methods. See
which one the decision makers you are working with find most con-
genial. See which one they are most psychologically confident of and
most logically consistent in using. Keep in mind that whatever
method you use should produce results that can be assembled in a

----------------------- Page 213-----------------------

184 Key Issues in the New Knowledge Management

positive reciprocal matrix. This is the requirement for proceeding

further to derive ratio scale values and consistency results from their
ratings.
Look again at the positive reciprocal matrix of Figure 5.3. Ignore
the bottom half of this matrix. Notice that the top half contains n(n-
1)/2 ratio estimates, where n is the number of rows, or the number
of columns, or the number of objects being compared. Thus, a 4 ¥
4 reciprocal matrix contains 6 ratio estimates, a 5 ¥ 5 matrix con-
tains 10 ratio estimates, a 6 ¥ 6 matrix contains 15 ratio estimates,
and so on. Indeed, the number of ratio estimates increases by n-1 as
the order of a positive reciprocal matrix increases.
How many ratio estimates does one need to derive a ratio scale?
Suppose one has a 5 ¥ 5 matrix, including the ratios:

( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
S 1 S 2 = 1 5; S 1 S 3 = 1 7 ; S 1 S 4 = 1 3; and S 1 S 5 = 1 4.

Suppose one assigns S(1) = 5. Then obviously,

 ( ) ( ) ( ) ( )
S 2 = 25; S 3 = 35; S 4 = 15; and S 5 = 20.

Four ratio estimates are needed to derive 4 values of the 5-value ratio
scale, with the initial value determined by assignment. The rule sug-
gested by this example holds generally. It takes n-1 ratio estimates
and an assigned anchor value to derive a ratio scale of n values.
But in the example of a 5 ¥ 5 reciprocal matrix, there are more
than n-1 (or 4) ratio estimates. In fact, according to the rule stated
above there are 10 ratio estimates, six more than necessary to derive
a ratio scale. So, looking at 3 more of the 10 ratio estimates, what
happens if:

( ) ( ) ( ) ( ) ( ) ( )
S 2 S 3 = 1 8 S 2 S 4 = 1 3 S 2 S 5 = 1 6
; ; ;
( )
and the other judgments are as before, with S 1 5
= ?

Then

( ) ( ) ( ) ( )
S 2 = 25; S 3 = 200; S 4 = 75; and S 5 = 150.

The two scales (specifically the values of S(3), S(4), and S(5)) implied
by these judgments are in conflict.

----------------------- Page 214-----------------------

Two Formal Approaches to Measuring “Truthlikeness” 185

So, deriving ratio scale ratings from comparative ratio judgments

is not straightforward. There are alternative derivations of scale
assignments depending on which set of n-1 ratio estimates one
chooses to use in deriving scale values. Since there are n(n-1)/2
observed ratios available in any positive reciprocal matrix, there is
generally more than enough information to allow for the logical pos-
sibility of different and conflicting ratio scales. On the other hand,
the different sets of n-1 ratios may not imply different scales. It is
also a logical possibility that they are consistent with each other and
imply the same scale.
This situation gives rise to both a problem and an opportunity.
The problem is that inconsistency can occur in the ratio estimates
of the matrix. If it does, any derived ratio scale of priorities will be
arbitrary, in the sense that it will be purely a function of our deriva-
tion procedure and will fail to represent the inconsistencies that, in
fact, characterize the ratio estimates.
We can solve this problem by using AHP analytical techniques
to arrive at a set of scale values, a relative ability or priority vector
from which one can generate a new matrix of ratio estimates
having minimal inconsistency with the original matrix of judgments.
After arriving at such a scale and performing consistency tests, if it
turns out that inconsistency is too high despite our efforts to
minimize it, part or all of the comparative judgment task may be
repeated until the scales derived from the judgments are consistent
enough to satisfy us.
And this, of course, represents the opportunity. It is one of deriv-
ing a priority vector that:
 # represents a logically consistent matrix;
# can be shown to represent it through a consistency test;
# therefore represents a logically coherent set of empirical judg-
ments by decision makers comparing knowledge claim evalua-
tion criteria or other objects being evaluated; and
# finally, is defined on a valid ratio scale that allows values to be
added, subtracted, multiplied, and divided, created not from
aggregate statistics or “hard data,” but from human judgments
provided by participants in the evaluation process.

There are two primary approaches to deriving ratio scale values of

a priority vector from comparative judgments in such a way as to

----------------------- Page 215-----------------------

186 Key Issues in the New Knowledge Management

minimize inconsistency and test for it. The method most associated
with the AHP is Saaty’s Right Eigenvector Method (EM) (1990).
An older method also used by Saaty and other researchers, either
as an approximation to EM estimates or in its own right, is the
Logarithmic Least Squares Method (LLSM), used by Torgerson
(1958), Firestone (Firestone and Brounstein 1981, Brounstein et al.
1977), Saaty (1990), and Crawford (1987). The LLSM method is
the easier of the two methods to implement, since it requires only a
calculator that computes logarithms or a spreadsheet, but the EM
is also no problem. A commercial program called ExpertChoice
(2001) was developed by Professor Ernest H. Forman with Saaty’s
collaboration. This program makes the EM accessible in the con-
text of providing general support for implementing the AHP. In
addition, any commercial program specializing in math computa-
tions such as MATHEMATICA (2002), MATLAB (2002), etc.,
can easily be used to implement the EM, as can more advanced
spreadsheets.
Results from both the EM and the LLSM are effective and very
close when matrices are not very inconsistent (CI < .10). In cases of
inconsistency, Saaty (1990, A164–A166) has proven that the EM
method is preferable from a mathematical viewpoint and from the
viewpoint of maintaining rank preservation, though LLSM has
advantages over EM even in this context. The advantage of EM in
cases of inconsistency may not be relevant, since there seems no
reason to accept inconsistent results anyway, without revising com-
parative judgments until consistency is reached. We will not go into
the details of computing EM and LLSM estimates but refer the reader
to Saaty (1990) and Torgerson (1958) instead.
Once logically consistent judgments are forthcoming from the
ratings task, it produces a set of relative ability ratio scaled values of
weights to be applied to the criterion attributes in computing the
“truthlikeness” composite. The “truthlikeness” ratio scale itself is
next computed from an algorithm that multiplies the weights by the
values established for each of the component criteria of “truthlike-
ness.” The algorithm normalizes and translates each of the attributes
so that their values prior to the computation of the final scores are
calibrated to one of the component criterion attributes already
defined as a ratio scaled metric. The calibration is done through
simple linear regression against the criterion attribute variable and is

----------------------- Page 216-----------------------

 Two Formal Approaches to Measuring “Truthlikeness” 187

part of the algorithm. The algorithm then proceeds to compute the

composite by weighting the transformed data variables, or trans-
formed functions of these variables (if theoretical considerations
dictate using something other than a simple linear composite), and
then summing the weighted transformed scores.
The result is a ratio scale since both the relative ability weights and
all the component attributes in the composite have been defined on
such a scale. An alternative to using regression against one of the
component attributes in order to normalize all attributes to the same
input ratio scale is to use a ratio-scaled criterion variable for regres-
sion that is external to the composite. The zero point for such a cri-
terion may be established nonarbitrarily, if there are enough objects
available having the ratio scaled abstract attribute to support another
round of pair comparisons.
Specifically, objects can be rated comparatively in relation to
the attribute being measured. Following consistency tests and
computation of ratio scale values, an attribute directly scaling the
objects relative to the underlying attribute is produced. At this
point the procedure is completed by regressing the composite pre-
dictor of “truthlikeness” against the directly scaled attribute, or by
regressing the attributes entering the composite directly against the
criterion attribute. Once the composite is calibrated in this way, it
can be used without the criterion variable to produce ratio scaled
values.

A Fuzzy Measurement Approach

to “Truthlikeness”

The second alternative technique for producing ratio scaled com-

posites is based on fuzzy measurement modeling. The first step is
to map the quantitative criterion attributes into fuzzy linguistic
variables, composed of fuzzy term subsets. This mapping is called
“fuzzification.”
A fuzzy linguistic variable is an abstraction that maps a quantita-
tive variable into a set of overlapping, categorical subdivisions. The
overlapping categories are the values of the linguistic variable. A
fuzzy term subset is one of these linguistic categories. Each fuzzy term
subset is specified by a surface, called a membership function, which

----------------------- Page 217-----------------------

188 Key Issues in the New Knowledge Management

mm
mm Low Medium
High

Value of
Membership 0.6

Function
0.4

0
 0.0 0.25 0.4 0.5 0.75
1.0

Degree of Empirical Fit

Figure 5.6
Mapping a Quantitative Variable to a Linguistic Variable with a
Membership Function

maps the values of the underlying quantitative variable into the

interval [0,1].
The significance of the mapping is that it measures the extent to
which a value of the underlying quantity is a member of the fuzzy
term subset whose surface determines the mapping. An illustration
of such a mapping and its associated quantitative and linguistic vari-
ables and term subsets is in Figure 5.6.
Figure 5.6 shows a fuzzy linguistic variable with three fuzzy term
subsets accompanied by three overlapping membership functions.
The values of the quantitative variable are on the horizontal axis.
The vertical axis provides the values of the membership functions
corresponding to various points on the surfaces of these functions.
The surfaces map values on the horizontal to both the term subsets
and degrees of membership on the vertical axis.
In Figure 5.6, the value 0.4 units for degree of systematic coher-
ence of knowledge claims maps to both the low and medium term
sets. Its degree of membership in the low term set is 0.4. Its degree
of membership in the medium term set is 0.6. Every other value on
the horizontal axis is also mapped by one of the overlapping mem-
bership functions. The figure represents a measurement model for the
quantitative variable systematic coherence1 relative to the
linguistic
variable systematic coherence2 and its fuzzy term subsets.
Once the mapping of quantitative to fuzzy linguistic variables and
term sets is complete for all components of the composite, the output

----------------------- Page 218-----------------------

Two Formal Approaches to Measuring “Truthlikeness” 189

variable (“truthlikeness”) is easy to estimate. Select the fuzzy term

sets for the composite index, the shape of the membership functions,
and the appropriate metric scale of the output quantitative variable.
Degree of “truthlikeness” has a theoretical zero point, and “truth”
has a theoretical (but unrealizable) value of one, so one can specify
the interval between zero and one as the infinite range of values for
the metric.
Next, the model can be used to formulate fuzzy rules connecting
the input linguistic variables to the truthlikeness index. In the com-
posite situation, each of these rules has the form:

If LVI(1) is A(1), and LVI(2) is A(2),

and . . . LVI(n) is A(n) then LVO is B(1)

where the LVI(1) . . . LVI(n) are linguistic variables input, A(1) . . . are
fuzzy subsets (term sets), LVO is the linguistic performance output
variable, and B(1) is a fuzzy output subset. The rules are linguistic
expressions. An abbreviated example of such a rule is:
If degree of systematic coherence is high, and extent of empirical
fit is moderate, then truthlikeness is moderate.
 In a composite with ten attributes, with seven term subsets per
variable, and one output variable also with seven term sets, the
number of possible rules is more than 282 million, a prohibitive
number to model. Fortunately, Kosko (1992, 322–326) has shown
that all multiantecedent rules in a Fuzzy Associative Memory (FAM)
can be composed from single antecedent rules and therefore add no
new information. In the ten-attribute example, there are 490 such
rules, a much more manageable number. Moreover, a system pro-
grammed with appropriate fuzzy logic algorithms will automatically
generate the rules in a manner transparent to the users.
Once the rules are generated, a person needs to specify the degree
of support for each rule. Degree of support is used in fuzzy inference
to specify the actor’s hypothesis about the validity of each rule.
Degree of support can therefore be used to weight each rule in the
process of inference from input to output fuzzy term subsets.
To arrive at the degree of support, the actor performs pair com-
parisons of the relative ability of each of the attributes of the com-
posite to represent the abstract quantity as in the first method
discussed above. The procedure produces a set of relative ability

----------------------- Page 219-----------------------

190 Key Issues in the New Knowledge Management

ratio scaled values of weights. These are the degrees of support to

be applied in fuzzy inference. Degree of support is constant for all
rules of a given linguistic variable but varies across linguistic vari-
ables. In the case of a ten-attribute composite, there would only be
ten weights, each applying to 49 rules. A system incorporating an
appropriate algorithm would transparently assign weights to rules
for users.
When fuzzy inference is used in this type of measurement model,
the scale values of the original attributes entering the composite are
transformed into ratio scaled membership function values (varying
between zero and one) by the membership functions specifying
the term sets (see Figure 5.6). A nonzero membership function value
of a member of a term set activates a fuzzy rule connecting a lin-
guistic antecedent with a consequent to the degree represented by
the membership function value. This degree of membership value
is passed from the antecedent to the consequent in the inference
process. So when inference is carried out, both a term set value
(e.g., “performance is moderate”) and a degree of membership
value (e.g., 0.8) in the consequent term set are deduced when using
a fuzzy rule.
The values generated from a single rule are one element in a fuzzy
surface generated by the full set of rules as they are applied to attrib-
utes describing an object. This fuzzy surface is the full information
outcome of the fuzzy inference process.
To get from this outcome to a single ratio scale composite value,
the actor needs to perform “defuzzification.” In defuzzification,
the output surface generated by the fuzzy inference process is
transformed into a single value most representative of the surface.
Depending on the specific situation, different concepts of “most
representative” can lead to different defuzzification calculations.
Here the centroid method of arriving at a single-valued output of
the measurement process will be used. This method is essentially an
average of the degree of membership values passed from the
antecedent to the consequent terms during the fuzzy inference process
(ibid., 315–316). Since the method operates on ratio scale values
produced by the inference process, and computes a result based on
the membership function values, the result is itself a ratio-scaled
metric. In fact, in the truthlikeness case outcome values inferred by
the fuzzy measurement model will vary over the interval from zero
to one.

----------------------- Page 220-----------------------

Two Formal Approaches to Measuring “Truthlikeness” 191

Other Approaches to Combining Criterion

Attributes of “Truthlikeness” and KM
Knowledge Production

The AHP and fuzzy measurement model to combining criteria of

“truthlikeness” are only two examples of many techniques that
may be used for this purpose. It is important to note that there is no
shortage of techniques and that each technique provides a different
interpretation of the model of “truthlikeness” proposed here, even if
no change is made either in the set of criterion variables or in the
requirements for fair comparison. So each technique represents an
alternative model of “truthlikeness” itself subject to knowledge claim
evaluation, at the level of knowledge management knowledge pro-
duction distinguished in Chapter 3. It should also be clear that such
a comparative evaluation of models of “truthlikeness” will itself
require a model of “truthlikeness” or some other focal epistemologi-
cal goal at the level of knowledge management.

References

Brounstein, S., Firestone, J., Clark, V., Kelly, P., and Spoeri, R.
(1977),
Suburban Classification Project: Phase I Report, Center for Census Use
Studies, Bureau of the Census, U.S. Department of Commerce, Suitland,
MD, December 29, 1977.
Cox, E. (1994), The Fuzzy Systems Handbook, Cambridge, MA: Academic
Press.
Cox, E. (1995), Fuzzy Logic for Business and Industry, Rockland, MA:
Charles River Media.
Crawford, G. (1987), “The Geometric Mean Procedure for Estimating the
Scale of a Judgment Matrix,” in Luis G. Vargas and Thomas L. Saaty
(eds.) Mathematical Modelling.
ExpertChoice Inc. (2001) http://www.expertchoice.com.
Firestone, J.M. (2001), “Estimating Benefits of Knowledge Management
Initiatives: Concepts, Methodology, and Tools,” Knowledge and Innova-
tion: Journal of the KMCI, 1, no. 3, 110–129. Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. and Brounstein, S.H. (1981), Strategic Evaluation and Plan-
ning System (STEPS): The Needs Assessment Capability (NAC)—A

----------------------- Page 221-----------------------

192 Key Issues in the New Knowledge Management

Description of Products. Hyattsville, MD: Program Evaluation Staff,

Farmers Home Administration, USDA, September, 1981.
FuzzyTech (2001) at www.fuzzytech.com.
Kosko, B. (1992), Neural Networks and Fuzzy Systems, Englewood Cliffs,
NJ: Prentice-Hall.
Mathematica (2002) at www.wolfram.com.
Matlab (2002) at www.mathworks.com.
Niiniluoto, I. (1987), Truthlikeness, Dordrecht, Netherlands: D. Reidel.
Saaty, T. (1990), The Analytic Hierarchy Process: Planning, Priority Setting,
Resource Allocation 2nd Edition, Pittsburgh, PA: RWS Publications.

Torgerson, W. (1958), Theory and Methods of Scaling, New York, NY: John
Wiley & Sons.

----------------------- Page 222-----------------------

Chapter 6

Applications of
the Knowledge
Life Cycle
(KLC) Framework

Introduction

By now, it should be clear to readers of this book that the knowl-

edge life cycle, or KLC, is very much at the center of the new knowl-
edge management. Why this is so has already been discussed in
Chapters 2, 4, and 5, in particular. Now we pick up where those dis-
cussions left off and discuss several practical applications of the KLC,
how it is used, and of what value it is to us as practitioners of KM.
But first, let us review the basic purpose of the KLC and the general
role it plays in the new KM.
In the new KM, we sometimes define KM as a management dis-
cipline that seeks to enhance Knowledge Processing (KP). Thus, we
distinguish between KM the management discipline, KM the process,
and knowledge processing, the range of individual and collective
behaviors we’re trying to enhance. This immediately presents us
with a problem. How can we purport to have impact on a system,
or even begin to try, until or unless we have a theory about how the

193

----------------------- Page 223-----------------------

194 Key Issues in the New Knowledge Management

system of interest to us works? In other words, how can KM lay

claim to valued outcomes without first presenting us with a theory
as to how knowledge processing happens in human social systems
(e.g., organizations)?
This illustrates the importance of modeling in KM. When we say
that a certain kind of KM investment or intervention will produce a
valued outcome, we are at least implicitly invoking a model of how
the target system operates and how it will—or should—respond to
our efforts. Further, even if (as is often the case in first-generation
KM) our goal is merely to speed up information retrieval, we must
still employ models of how information retrieval generally or already
occurs. Against this “as-is” benchmark, we forecast what we expect
the impact of KM will be—or should be—upon it.
And how could it be otherwise? There’s always a business case
being made of some kind—hopefully—in support of investments
being proposed for KM, and all such business cases invariably rest
on some foundational theory of how people do their work, what
aspect of their work KM will have impact on, and what the likely
improvement or benefit received will be. This is modeling, if only per-
formed implicitly, or “on the fly,” as it were.
So if we can agree that all KM strategies rely on models of how
their targets operate, what are the scope of those models, and what
do they, in fact, say about how their inhabitants operate? What is it
about those models that we should find compelling? Why should we
accept a vendor’s claim that a portal product or what have you will
have a positive impact on business performance, or, for that matter,
that it will have any impact at all on knowledge processing? What
models are KM vendors and practitioners, in fact, using in the devel-
opment of their strategies? What assumptions are they making about
how knowledge is produced, shared, integrated, and adopted into
practice by people in business? Do they even have an explicit model
for any of this, or is their mental model a set of inchoate, unexam-
ined, and probably false assumptions?
Let’s further consider the implications for modeling of what we
typically see in first-generation (or old) KM. Much of what we’ve
seen there has arguably been business-use transactional in the sense
that the purpose of KM has been seen as enhancing the delivery of
information for use in episodes of business decision making and
action. Investments in KM, then, are predicated on a model, a
microcosmic one, that is fixated on the delivery of information in

----------------------- Page 224-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 195

response to sudden and unpredictable needs for it in business

processes, the conditions beforehand and after which, however, are
of no concern to KM. For all intents and purposes, there are no such
conditions. Life, for much of what passes for first-generation KM, is
nothing more than unspecified experience punctuated by periodic
needs for information, the effective delivery of which is KM’s
primary concern. Hence, our reference to its basic orientation as
“business-use transactional.”
Here it is worth pointing out that the well known SECI model,
put forth by Nonaka and Takeuchi (1995), is also fundamentally
business-use transactional in character. For a period of time in the
late 1990s—and still for many people today—KM was all about
making knowledge conversions possible. The SECI model defined
four such conversions, and whole bodies of KM practice sprang forth
with the express purpose of making them happen more easily.
Consider, for example, the tacit knowledge capture and conversion
business (or movement). There, the scope of KM was pretty much
confined to eliciting so-called tacit knowledge (nuggets of it) from
the minds of knowers, hopefully in advance of their departure from
their organizations. Once converted and codified, KM would declare
victory and end, at least for those kinds of conversions (i.e., tacit to
explicit ones). Three other kinds of conversions were possible in the
SECI model, and KM positioned itself accordingly.
Other foundational models can be found in other corners of
practice in KM, including the communities of practice arena. What
are the models there? Mostly they revolve around visions of what
happens in groups and the manner in which groups both create and
distribute knowledge. KM to holders of those models is largely about
making group formation and operation possible, the broader context
of which is often lost in the process. This, too, then is transactional
in scope, this time involving group transactions as opposed to indi-
vidual ones. Narrowly focused communitarians, then, believe that
KM should be aimed at making the formation of groups or com-
munities possible and fruitful in their affairs. How this fits into the
broader enterprise picture is not always clear because the underlying
models are themselves too limited or incomplete to tell.
What many of the models in KM, explicit or otherwise, seem to
suffer from is not only their limited, transactional focus, but also
their apparent detachment from the bigger picture of knowledge pro-
cessing. In other words, why should we be taking steps to enhance

----------------------- Page 225-----------------------

196 Key Issues in the New Knowledge Management

knowledge conversions or to create the conditions in which commu-

nities of practice can evolve and flourish? What do the models behind
these ideas tell us about their value propositions or how they fit into
the bigger picture of what people are trying to do in organizations?
Unfortunately, they tend to tell us very little, precisely because of their
limitations. What we hear, instead, are propositions that are them-
selves bounded and transactional.
The purpose of KM, many say, is to enhance knowledge sharing.
Well, sharing for what purpose? And how does enhanced sharing
enhance organizational performance? And where does the knowledge
we hope to share more effectively come from? How do we know
knowledge when we see it, and how is it different from information?
In short, we need to know what the whole knowledge processing
landscape looks like, not just some of the discrete transactions that
occur within parts of it.

The Knowledge Life Cycle (KLC)

Enter second-generation (aka, the new) knowledge management. In

the new KM, we begin by adopting a model of what we call knowl-
edge processing in all of its dimensions, business-use transactional
and otherwise. Knowledge processing, as we have said, is not the
same as KM. Knowledge processing is composed of social processes
that account for the production and integration of knowledge in
organizations. The purpose of KM is to enhance knowledge process-
ing. But no such enhancements are possible, much less any sort of
meaningful practice of KM, in the absence of a prior understand-
ing of how knowledge processing fundamentally happens in organi-
zations, a model for which is badly needed. Indeed, how can we
expect to have impact on a system without first having an under-
standing of what its shape and dynamics are? KM must be predicated
on a model of knowledge processing, the absence of which in
someone’s work should be a warning to the wise: “Stay away, you’re
wasting your time.”
The underlying model of knowledge processing in the new KM
was largely formulated by the authors, working together with several
others under the auspices of the Knowledge Management Consor-
tium International (KMCI) over the past four years. It is known as
the KMCI Knowledge Life Cycle, or KLC (see Figure 6.2). The KLC,

----------------------- Page 226-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 197

then, is a descriptive model of how knowledge is produced and inte-

grated in organizations. As such, it is not a normative or prescriptive
model. It is a model of what is, not what should be. It is an attempt,
therefore, to describe the natural patterns associated with individual
and collective learning in human social systems. Its pedigree, if you
will, is that it is a creature of systems theory, with a particular ori-
entation toward Complex Adaptive Systems (CAS) theory. It also
owes much to Karl Popper’s ideas on problem solving (1972, 1994)
and the role of problems: detecting them (while engaged in business
processing), arriving at tentative solutions (knowledge claim formu-
lation), and then performing error elimination (knowledge claim
evaluation) to produce knowledge.
As both a product of CAS theory and of Popper’s tetradic schema
(see Chapter 2, Figures 2.6 and 2.7), the system described by the KLC
is an emergent one. Not only do knowledge processing patterns form
as a consequence of people interacting with one another in organi-
zations to achieve common goals, but the order that follows is both
emergent and has regularity to it. In short, knowledge processing is
self-organizing and patternlike. Our model, then, begins with the
belief that knowledge processing in human social systems is emer-
gent. Moreover, because of its patternlike behaviors, we can describe
it, though perhaps not predict it in detail, in fairly reliable ways. And
by describing the pattern, we provide ourselves with a means of antic-
ipating it (to at least some degree) and recognizing its appearance in
organizations, as well as a basis for making KM strategies and inter-
ventions intended to enhance it. Our knowledge of the general pat-
tern of its behavior and attributes in advance of our efforts makes it
possible for us to anticipate to a limited degree its most likely reac-
tions in response to them (i.e., in response to our interventions). This
is vintage new KM—not to be found in the old KM.
At this point, astute readers may very well ask, “How can knowl-
edge processing be emergent and yet predictable in form at the same
time? Doesn’t emergence preclude the possibility of prediction?”
Here, as elsewhere in our explication of the new KM, we turn to
complexity theory for guidance. Why? Because complexity science
is the study of orderly behaviors in decidedly disorderly systems.
Its relevance here stems from the fact that human social systems
are disorderly, and yet they often display broad patterns of behavior
that seem consistent and pattern-like to us. In the science of com-
plexity, such broad patterns are referred to as “attractors,” or

----------------------- Page 227-----------------------

198 Key Issues in the New Knowledge Management

“strange attractors” (Gleick 1987, 119–153). The term attractor is

used here metaphorically, like something that pulls or “attracts”
behaviors into certain patternlike formations, much like the effect a
magnet has on a pile of metallic filings. The precise configurations
that form from successive applications of the magnet are never
exactly the same, but the broad patterns of filings that form under
its influence, however, are.
There are many visual illustrations of attractors to be found in
the literature, one of which we include here as Figure 6.1. Note in
this illustration that no two trajectories of the pattern shown are the
same, and yet all seem to follow the same general pattern. The same
is true for knowledge processing in human social systems: every
instantiation or expression of them is different, and yet they always
follow the same broadly predictable pattern. That pattern is the KLC,
of course (see Figure 6.2). The knowledge life cycle is precisely the
descriptive pattern of behavior that concerns us in the new KM, the
sum total of which is what we mean by “knowledge processing.”
Unlike the business-use transactional focus of most old KM prac-
tices, then, the new KM is utterly holistic. It and its model look at
the whole social system, and not just at discrete transactions found
within it. Thus, the new KM is macro-KM, if you will, as well as
micro-KM. It seeks to enhance whole knowledge processing systems,
not just the piecemeal capture, codification, or movement of infor-

Figure 6.1
The Lorenz Attractor

----------------------- Page 228-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 199

mation from one mind, group, or department within an enterprise to

another.
Value propositions in the new KM are, therefore, themselves not
expressed in transactional terms. In the new KM, our understand-
ing of organizational knowledge processing as expressed by the KLC
makes it possible for us to work with whole-system outcomes. This
allows us to formulate and move toward the achievement of actual
ends, not just means. Indeed, one of the perennial shortcomings of
first-generation KM is that its transactional focus never really allows
us to move beyond a focus on the means to our ends and instead
often commits the mistake of confusing the two. KM, according to
that perspective, is judged independently of organizational outcomes.
The means become the ends. Or alternatively, KM is sometimes used
to describe knowledge use in business processes. Thus, the ends also
may become the means.
Enhancing knowledge sharing, for example, while laudable, may
or may not lead to enhanced organizational performance, higher
profitability, or what have you. It is a means to an end, not the end
itself. The minute we allow it to become the end, we lose sight of
the bigger picture. And so value propositions or claims of that sort
always leave us hanging. We never really know for sure whether or
not our investments in KM are actually having beneficial impacts at
the level of the whole system or at the level of the enterprise. How
could we? The models that lie behind such interventions are narrowly
confined to discrete transactions, as are the measurements we take of
their status. The enterprise view is utterly missing.
Let us now, then, try to illustrate the value of the holistic view of
knowledge processing to the practice of the new KM by considering
its impact on several specific areas. The key issue here is what does
the KLC do for us? What value does it offer to us in practice? To
help answer these questions, we will discuss the application of the
KLC to several common areas of practice in KM, including the for-
mulation of KM strategies and some typical underlying interventions.
Here are the application areas we will consider:

# Strategy formulation
# KM and knowledge audits
 # Modeling, predicting, forecasting, simulating, impact analysis,
and evaluation
# Metrics segmentation

----------------------- Page 229-----------------------

200 Key Issues in the New Knowledge Management

# Sustainable innovation
# Methodology
# IT requirements
# Intellectual capital
# Education and training
# Open enterprise
# New value propositions for KM

Knowledge Management Strategy Formulation

If the purpose of KM is to enhance knowledge processing at an orga-

nizational level, how would we formulate a KM strategy in order
to do so? What would its dimensions be? Its targets of impact?
How can the KLC inform us of how best to articulate and express
KM strategy?
Let us confine our responses to these questions to the notion of
KM strategy in terms of its own externally aimed business processes.
In other words, we are not discussing strategy for the KM function
itself, or for its own internally aimed operations. Rather, we are talk-
ing about the expression of what a KM function would do in terms
of the initiatives it would undertake as it interacts with the target
knowledge processing environment of interest to it.
This last statement, then, already begins to illustrate the applica-
tion and value of the KLC to the development of a KM strategy. That
is, the new KM brings a conception of knowledge processing as a
social process to the table, a vision that in a very material way gives
KM something to work with. It’s not about enhancing business-use
transactions directly. It’s about enhancing an end-to-end social value
network (Allee 2000) called knowledge processing that is described
by a model we call the KLC. The beneficial influence of the KLC on
strategy, then, is that it helps us to focus on and frame the bound-
aries of the environment that is the target of our strategies.
Next, consider the distinction we make between the knowledge
production side of the KLC and the knowledge integration side (see
Figure 6.2).
To put a more purposeful spin on this, we can also say that the
knowledge integration side of the KLC is “supply-side” in scope,
since its purpose is to enhance the supply of evaluated knowl-
edge claims to its constituents (see Figure 6.3). And the knowledge

----------------------- Page 230-----------------------

Knowledge Production
Knowledge Integration

Info

about

SKC
Broad-
Individual
casting
and Group
SKC
Learning

Info

about Searching

FKC
Knowledge
Knowledge
Claim CKC
Claim OK
Formulation
Evaluation

FKC

Teaching

Info

about

UKC
Information
Acquisition
Sharing

UKC

2
0
Experiential Feedback
1 External Inputs

Business Processing
Environment

DOKB
Feedback
(including the Business Process
DOKB Containers
detection of Behaviors
· Agents (Indiv. & Groups) · Objective Knowledge
epistemic problems)
· Subjective Knowledge
of Interacting Agents
· Artifacts (Docs., IT, etc.)

CKC = Codified Knowledge Claim

= Knowledge Processes
COK = Codified Organizational Knowledege

DOKB = Distributed Origanizational Knowledge Base

FKC = Falsified Knowledge Clain

OK = Organizational Knowledge
= Knowledge Sets
SKC = surviving Knowledge Claim

UKC = Undecided Knowledge Claim

Figure 6.2
The
Knowledge Life Cycle (KLC)

----------------------- Page 231-----------------------

Demand-Side KP Supply-Side KP

2
0
2

Figure 6.3
Supply- and Demand-Side Knowledge Processing

----------------------- Page 232-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 203

production side is, in turn, “demand-side,” in the sense that its activ-
ities and subprocesses make it possible for people in organizations
to satisfy their demands for new knowledge. So we have supply-side
knowledge processing (KP) on the one hand, and demand-side KP on
the other.
With this characterization of the KLC now firmly in mind, we
can begin to formulate many different kinds of KM interventions
that would be targeted at enhancing supply-side KP or, alternatively,
demand-side KP. Let us say, then, that some KM interventions might
be supply-side in scope while others would be demand-side in scope.
So we can have supply-side KM and demand-side KM, just as we
have supply-side KP and demand-side KP (McElroy 1999). The
purpose of supply-side KM is to enhance supply-side KP; the pur-
pose of demand-side KM is to enhance demand-side KP. Here again,
we can attribute the beginnings of a KM strategy to the insights we
receive from our understanding of the KLC, because in some orga-
nizations enhancements to demand-side knowledge processing may
be more urgently needed than enhancements to supply-side knowl-
edge processing or vice versa. Depending on what the priority is, our
KM strategy is impacted accordingly.
Next in our analysis of the application of the KLC to formulating
KM strategy is the recognition that the tools and methods we use to
make interventions can be of two kinds: social and technological, the
latter being IT-based (McElroy 2002a). Some of our interventions,
therefore, could consist of the implementation of IT-based systems
to enhance supply- or demand-side knowledge processing. Other
interventions may have nothing to do with technology and may be
comprised, instead, of the implementation of new social technologies
or operating models, such as communities of practice programs,
training, group decision-making processes, or what have you. This
last option, in particular (i.e., social interventions), rises to our atten-
tion thanks largely to the influence of the KLC on our thinking. Social
interventions make sense, we can see, because the KLC makes it clear
to us that knowledge processing (our target environment), above all,
involves social processes. We can also support it in many ways using
technology, but KM is, first and foremost, a social science, not a tech-
nological one.
When we combine the supply- and demand-side KM orientations
with the potential use of social versus technological tools and inter-
ventions, we get a strategic framework that shows us what the

----------------------- Page 233-----------------------

204 Key Issues in the New Knowledge Management

possibilities are in terms of how we might structure a very high-level

plan to, in fact, make interventions (see Figure 6.4).
By formulating and expressing KM strategies in this way, we
can clearly establish the relevance of our individual KM initiatives
(within a particular planning period) to their individual and col-
lective impact on knowledge processing as a whole. Were it not
for our understanding and application of the KLC, this would not
be possible. Today’s KM strategies would be largely defined and
carried out like yesterday’s: very business-use transactional, and very
means-oriented, with little or no capability for determining what
the overall impact on knowledge processing will be at the level of
the whole organization, much less its further impact on business
outcomes.

Knowledge Management and Knowledge Audits

In a vision of KM inspired and informed by an understanding of

the KLC, what is the relevance of so-called knowledge audits or
even, say, of knowledge mapping? Here we can turn to an expanded

K
n
P o
r w
I o l
n c e Supply/
t e d
e s g Demand-Side Supply-Side
r s e
v Demand-Side
e i
n n KP KP
t g
i
o KP
n
s

Social Demand-Side Supply-Side S/DS

Social Social Social
Interventions
 Interventions Interventions Interventions

Technological Demand-Side Supply-Side S/DS

Technological Technological Technological
Interventions
Interventions Interventions Interventions

Socio/Techno Demand-Side Supply-Side S/DS

Integrated Integrated Socio/Techno
Interventions
Interventions Interventions Interventions

Figure 6.4
A Framework for KM Strategy

----------------------- Page 234-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 205

definition of KM: a management discipline aimed at enhancing the

quality of knowledge processing and its outcomes. KM audits, then,
can be aimed at both knowledge processing and related knowledge
claim outputs. And it can also be aimed at itself. In other words, we
can perform audits of either knowledge processing or knowledge
management, the clear separation of which is revealed to us by our
understanding of the KLC and the new KM in general.
Of particular interest to us here, however, are audits aimed at the
processes contained in knowledge processing. Why? Well, in part
because the KLC informs us of their existence and the crucial role
they play in producing valuable organizational knowledge and
other important outcomes. Naturally, we’re also interested in build-
ing awareness of outcomes, as well (i.e., knowledge claims of various
types). But the quality of our ongoing capacity to adapt has more to
do with the health and well-being of our knowledge processes than
with the scope and content of our knowledge base at any single point
in time, though both are admittedly important.
So how would a KLC-inspired audit proceed? First, it is important
to understand that such an audit is a very important initial and
ongoing step in the formulation and administration of a KM strat-
egy. How can we know, for example, what kinds of KM inter-
ventions should be used or prioritized in our attempts to enhance
knowledge processing if we haven’t first taken steps to assess the
current system? What exactly, then, would we assess?
Turning to the KLC for answers, we can see that part of our assess-
ment should be focused on knowledge production while the rest
should be on knowledge integration (see Figure 6.2). Drilling down
from there, we can see that in knowledge production we should
be trying to assess the quality and value of individual and group
learning, information acquisition, knowledge claim formulation,
and knowledge claim evaluation (see Chapter 5). Similarly, on the
knowledge integration side of the fence, we should be trying to deter-
mine the quality of sharing processes, broadcasting processes,
searching/retrieving, and teaching. By the time we’re done, we have
been able to stitch together a total picture of how knowledge pro-
cessing is currently performed today, who participates in it, what
their influence on it is, what infrastructure they use, and what its
strengths and weaknesses are. And yes, we can also add to that a
profile of where knowledge currently resides, what it is, who has it,
and who doesn’t.
----------------------- Page 235-----------------------

206 Key Issues in the New Knowledge Management

Many tools can be applied to this interpretation of how to conduct

knowledge audits—knowledge processing audits, that is. Social
Network Analysis (SNA) tools, for example, can be used to discover
and document the strength of Communities of Practice, or groups
of other kinds, who engage in group learning, knowledge claim for-
mulation, or knowledge sharing. Similarly, other tools such as
CapitalWorks’ Learning Effectiveness IndexTM (CapitalWorks 2002)

can be applied to determining how employees in a firm acquire their

work-related knowledge. Information about CapitalWorks’ Learning
Effectiveness IndexTM and other tools and methods of theirs can be

found at their Web site. Verna Allee’s (2000, 2003) Value Network
Analysis may be used to map out value exchanges occurring in the
KLC. Tools like this make it possible to bring current individual
learning processes into full relief, as well as the potential areas of
future investment that KM may wish to consider.
In this respect, conducting an audit of current KLC processes
and their outcomes should be seen as both an initial and ongoing
task that makes strategy formulation possible on a continuing
basis. Indeed, there’s a gap analysis going on here. First we develop
a descriptive understanding of how knowledge processing currently
happens and what the disposition of its outcomes is. Then, using
our modeling tools (more on that below), we analyze what the effects
of potential interventions and strategies for improvement might be.
We then define the hoped-for outcomes and build our strategy from
there, casting it as we do in terms of policies and programs, imple-
mentations, etc., designed to close the gaps. Later on, we return to
reassess the KLC; formulate new interventions; develop new strate-
gies; and ply our trade again, as needed. A capability to perform
knowledge processing audits is therefore of paramount importance
to the new KM, and the basis for doing so is utterly dependent upon
us having a prior understanding of the KLC.

Modeling, Predicting, Forecasting, Simulating,

Impact Analysis, and Evaluation

As discussed earlier, the practice of KM is uniquely dependent upon

the use of models for predicting, forecasting, and simulating the
potential effects of our interventions, even if the models we use are
only mental ones. How else can we be expected to credibly forecast

----------------------- Page 236-----------------------

Contributions to Applied
Medical Staff
Learning
Clerical Support

Study Aggregate
20%

15%
 10%

5%

0%
2
Company- Interactions Formal
Contact with Conferences Intellectual
0 provided with co- education
outside Capital
7 training workers
professionals database

Contributions to Applied Learning

Indicators of applied learning contributions to the

development of job proficiency in a regional service network of the
Veterans Health Administration, U.S. Department of
Veterans Affairs for Medical and Clerical Staff respondents in
comparison to the Learning Effectiveness Index™ Study
aggregate as compiled and maintained by CapitalWorks, LLC
through its Learning Value Analysis (LVA)™ methods.

Figure 6.5
Learning Effectiveness IndexTM
(sample)

----------------------- Page 237-----------------------

208 Key Issues in the New Knowledge Management

the likely outcomes of our efforts in systems as complex as human

organizations without the aid of models? No, we must have models
in the practice of KM because we must have a basis upon which we
can reliably choose and carry out our strategies and interventions and
then measure their impact. The KLC fulfills this requirement. How?
By providing us with a representation of our target environment,
thereby making it possible for us to simulate our KM interventions,
observe related impacts, and evaluate their effects long before we
commit ourselves to action or investments of any kind.
What, then, would a useful model for KM look like? What would
its scope be? Its attributes? Questions of this sort can be answered
by referring to the KLC for guidance. A useful model must, for
example (if it is comprehensive in scope), reflect the dynamics of
knowledge processing in all of its subprocesses and relevant dimen-
sions. Further, it must support our needs as interventionists, so to
speak, by helping us to determine what the likely impact on knowl-
edge processing will be as a consequence of our efforts. Let us con-
sider one such example using a model developed in 2001 by one of
us (McElroy), the Macroinnovation model.
Later on below, we discuss the application of the KLC to the choice
of policies and rules related to knowledge processing. Certain rules
and policies can have the effect of enhancing knowledge processing,
while others may, in fact, inhibit it. More on this below. For now, let
us consider how the use of a model would allow us to forecast and
hopefully predict the effects of different alternative interventions—
policy interventions, in this case.
The tool used to develop the Macroinnovation model was a system
dynamics tool called iThink, developed by the late Barry Richmond
of High Performance Systems in Hanover, New Hampshire. By relying
explicitly on the dynamics of knowledge processing reflected in the
KLC, a model was built that made it possible to simulate the innova-
tion behaviors of people in a fictitious organization. Here, more specif-
ically, is the introduction to the model, which currently appears on the
Macroinnovation Associates Web site (www.macroinnovation.com,
2002):

Structure and Dynamics of the Macroinnovation Simulation

The fictitious organization featured in the Macroinnovation simulation

is a for-profit business consisting of 100 workers and a supervising man-

----------------------- Page 238-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 209

agement function. Workers account for the generation of revenue in the

model, in accordance with the proportion of time they spend working
versus the time spent in learning or knowledge production activities. The
distribution of their time across these various activity types is, in turn,
governed by knowledge-related policy choices made by management—
that is, by YOU [i.e., the knowledge manager].
When you interact with the model, you assume the policy-making
powers of management on matters related to knowledge production,
sharing, and integration; and the effects of your choices are reported back
to you in terms of what their impact has been on the rate and quality of
business innovation, as well as the “bottom line.”

A full description of the innovation simulator, and the simulator

itself, can be found on Macroinnovation Associates’ Web site. We
will return to this model for more discussion in our treatment of
the KLC’s application to sustainable innovation shortly. For now,
though, it should be seen as an illustration of the manner in which
the KLC can (should) be used to inspire the creation of models that
practitioners need to simulate the likely effects of their interventions.
Knowledge of the KLC can also result in the choice of many dif-
ferent kinds of models, not just the system dynamic ones of the sort
used in the Macroinnovation model. Since organizations and their
KLCs are populated with individuals, for example, each of whom has
the capacity to act autonomously and to produce and integrate his
or her own knowledge, agent-based models taken from the develop-
ment of CAS theory can also be useful in forecasting the impact of
KM interventions on, say, individual learning.
One of the more interesting kinds of models—again, inspired by
an understanding of the KLC—is a model that we might call a
CAS/SD, or a “Cassidy,” model. A Cassidy model would make it
possible to simulate the emergent behaviors of organizations at an
enterprise-wide level while linking such behaviors at the same time
to the individual learning and adaptive behaviors of their members
“below.” System dynamics models or CAS models by themselves are
incapable of simulating both, even though we know that the systems
we’re trying to model (organizations) behave in accordance with pre-
cisely those dynamics—i.e., the emergent behavior of organizations
at the top level is very much connected to the lower-level learning
and adaptive behaviors of their members, albeit in nonlinear ways.
The CAS models cover the lower-level learning, while the SD models
cover the emergent behavioral outcomes at the top level. We know
----------------------- Page 239-----------------------

210 Key Issues in the New Knowledge Management

of very little work being done in this area, although Professor Jim
Hines of the Massachusetts Institute of Technology claims to have
built and tested models of this sort in some detail.

Metrics Segmentation

Next in our discussion of KLC applications is the subject of metrics

in KM, and the role that knowledge of the KLC can play in our use
of them. The first consideration of importance when contemplating
the use of metrics in a management discipline is to ask, “Metrics for
what?” We can begin to answer this question from the perspective
of the new KM by first referring to the new KM reference model (see
Figure 6.6). There, as we discussed before, the KLC can be found
framed on the one side by knowledge management and on the other
by business processing. What are the implications for metrics?
First, the KLC is a framework for knowledge processing (KP), not
KM. Knowledge management, however, has an impact on knowledge
processing—indeed, that is its purpose. So right away, we can say

For
example:
Knowledge Knowledge Management (KM) • Knowledge
Processing
(KP)
Strategies
Management • KP
Policies and Rules

• KP
Infrastructures
(Meta-Epistemic
Behaviors) KM Outcomes • Learning
Programs

Knowledge Knowledge Processing (KP)

Processing For
example:

• Business
Strategies
(Epistemic
Behaviors) Knlg. Processing Outcomes •
Organizational Models
• Business
Processes
• Product
Strategies

Business Business Processing

Processing
For
example:
(Operational •
Profitability
 Behaviors) Business Outcomes •
Market Share

•
Growth
•
Sustainability

Figure 6.6
The New Knowledge Management Reference Model

----------------------- Page 240-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework

211

that no framework of metrics in our broader treatment of KM should

be regarded as complete unless it distinguishes between KM and KP
and provides us with metrics for both. Moreover, since the purpose
of enhancing KP is to improve business processing performance, we
must also be prepared to correlate changes in knowledge processing
to changes in states of affairs (outcomes) in business processing,
thereby calling for the inclusion of business processing metrics in our
scheme, as well.
From the argument set forth above, we can easily see that a frame-
work for metrics in KM must have at least three levels to it (see
Figure 6.7). We say “at least” because we could also, in theory, add
levels of metrics above the KM level, taking into account separate
activities we might undertake in order to have impact on KM
itself. These might be the “meta-KM” and “meta-meta-KM” levels
(Firestone 1999), etc. For simplicity’s sake, however, we show only
the KM level at the top of our model.
Let us now stop here and recognize that our knowledge of the KLC
and the relationship that exists between knowledge processing and
the KM level above and the business processing level below, is a
unique consequence of the KLC itself, and the role it can play in our

Outcomes
Agents Processes Internal* External*

Knowledge
Management Metrics Metrics Metrics Metrics

Knowledge Metrics Metrics Metrics Metrics

Processing

Business
Metrics Metrics Metrics Metrics
Processing

Outcome Outcome
State at T State at T
1 2
Processing by Agents

T1 T2

*Internal Outcomes = Impacted states at same level (KM, KP, or BP).

*External Outcomes = Impacted states in target environment.
 Figure 6.7
Metrics in the New Knowledge Management

----------------------- Page 241-----------------------

212 Key Issues in the New Knowledge Management

thinking. Further, our specific knowledge of the KLC has a material

and equally specific impact on our formulation of the approach we
should take to metrics in our practice of KM—the new KM. But
there’s more to the story here.
To continue, we can also say that each level (or row) of the matrix
shown in Figure 6.7 can be further broken down into its constituent
elements, consisting of agents (people and organizational units), pro-
cesses (the behaviors and patterns of tasks they display), and out-
comes (the conditions brought about by agent behaviors). When we
map these three dimensions into our three-level framework, we see
that what results is a KM matrix for metrics that has at least nine
cells inside of it. But there are actually twelve shown, aren’t there?
Why is that?
The outcomes dimension of the matrix has two sublayers: inter-
nal outcomes and external outcomes. What do we mean by that?
Internal outcomes are outcomes local to the level. For example, some
KM activities might actually be aimed at enhancing the KM func-
tion itself and not the knowledge processing level below it. Our KM
metrics, then, should make it possible for us to measure the state of
affairs inside the KM function itself and not just the conditions
present in its target environment—knowledge processing (KP).
On the other hand, KM does, of course, engage in making invest-
ments and interventions in KP, thereby leading to changes of various
sorts in the KP environment. From the perspective of KM, these kinds
of changes or outcomes are external to itself. Note, as well, that what
is external to KM can be seen as internal to KP, hence the diagonal
mapping we show with arrows between the two levels. The same is true
for external KP outcomes and internal business processing outcomes.
We should also point out that there are at least twelve categories
of metrics required in the practice of the new KM, and that the com-
posite view we have presented is a direct application (and result) of
the KLC and its influence on our thinking. Any other approach to
the specification of metrics for KM should be held to the same test:
how do they distinguish between KM versus KP in their orientation,
and do they, in turn, show the relationships between metrics for
both, as well as between themselves and related metrics for business
processing? Or do they even, for that matter, make any such dis-
tinctions at all?
Finally, in Figure 6.8 we show a more detailed illustration of the
manner in which metrics for knowledge processing, in particular,

----------------------- Page 242-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework

213

Outcomes
Agents Processes Internal*
External*
 Information
Metrics Metrics Metrics
Metrics
Acquisition

Individual and
Metrics Metrics Metrics
Metrics
Group Learning

Knowledge Claim
Metrics Metrics Metrics
Metrics
Formulation

Knowledge Claim Metrics Metrics Metrics

Metrics
Evaluation

Broadcasting Metrics Metrics Metrics

Metrics

Searching Metrics Metrics Metrics

Metrics

Teaching Metrics Metrics Metrics

Metrics

Sharing Metrics Metrics Metrics

Metrics

*Internal Outcomes = Impacted states in same subprocess or in KLC as a whole.

*External Outcomes = Impacted states in business processing environment.

Figure 6.8
Knowledge Processing Metrics in the New Knowledge Management

should be structured. This amounts to taking the knowledge pro-

cessing row shown in Figure 6.7 and exploding it into more detail.
The specification of the details comes from an understanding of the
KLC, the subprocesses of which constitute the dimensions of metrics
for knowledge processing that should be of interest to us.
It should be clear, then, that none of what we have shown in
Figures 6.6 or 6.7 would have come about were it not for the bene-
ficial influence of the KLC on our thinking.

Sustainable Innovation

In our earlier discussion of the KLC’s impact on “modeling, predict-

ing, forecasting, simulating, impact analysis, and evaluation,” we
made reference to a KLC-based model known as the Macroinnova-
tion model, which was developed to help illustrate the potential
impact of KM interventions on knowledge processing. Reference
to that model was made purely for illustrative purposes to show
how the KLC can be applied in the formulation of models used by

----------------------- Page 243-----------------------

214 Key Issues in the New Knowledge Management

practitioners in the new KM. As it turns out, however, that particu-
lar model was developed to highlight the kinds of impacts that poli-
cies and related programs can have on knowledge processing and,
therefore, on innovation. That line of thinking, too, is a direct con-
sequence of the KLC and its impact on our thinking, as we will now
show in more detail.
A very important aspect of the thinking behind the KLC is that
knowledge processing is an emergent property of organizational life.
Even in the utter absence of management, much less knowledge man-
agement, KLCs form. And they do so at multiple levels of scale (see
Figure 6.9). They emerge at the levels of individuals, groups, teams,
communities, departments, divisions, and certainly whole enterprises.
They even emerge at higher levels, such as industries, nations, soci-
eties, coalitions, etc. To varying degrees of intensity and with differ-
ent levels of effectiveness, KLCs emerge under their own steam as a
natural consequence of interaction between people in social systems
and their periodic detection of problems. The KLC is a problem-
solving system that naturally arises as a by-product of decision
processing whenever we (people) encounter epistemic problems in the
course of our lives (work lives or otherwise).
What, then, might the KM implications of this insight be? How
should this particular knowledge of the KLC and its nature influence
choices we make about how best to practice KM?

Organization

Community

Group

Team

Individual

Figure 6.9
Nested Knowledge Life Cycles

----------------------- Page 244-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 215

When we say that the KLC is emergent, we are expressing the new
KM view that knowledge processing in human social systems is a self-
organizing phenomenon. When confronted with problems (epistemic
ones), people in social systems, especially organizations, tend to self-
organize around the production and integration of new knowledge.
The KLC is the pattern of collective behaviors they form as they do
so. Complete cycles of knowledge processing can be seen as episodes
of innovation. Here, we define innovation in terms of the KLC. Let
us pause and recognize for a moment, then, that the composition of
the KLC provides us with valuable insight into the anatomy of inno-
vation and also helps us understand that innovation, at its best, is a
self-organizing social phenomenon.
What this tells us, first off, is that no special management is
required in order for knowledge processing to occur—knowledge
processing is a natural social occurrence. Strictly speaking, then,
no formal or organized knowledge management is required, either.
Knowledge processing has always occurred in the absence of such
influences, although background or low levels of knowledge man-
agement have always been with us, as well. Why, then, should we
have formal, organized knowledge management?
Despite the emergent, self-organizing nature of knowledge pro-
cessing, its quality and performance is variable. Knowledge man-
agement, then, can be applied in an effort to enhance knowledge
processing, or to somehow change its performance in specific ways.
But this, of course, is consistent with everything we’ve said in this
book about KM—i.e., its purpose is to enhance KP; we never said it
was to create it.
Given this understanding of the nature of the KLC, it is useful,
we think, to consider various styles and methods of KM practice
in terms of deterministic approaches versus nondeterministic ones.
Deterministic approaches work best when working with causally
determined systems. Systems that are self-organizing, however,
should be approached differently. We don’t create or determine them.
Nor are they caused by any set of conditions or event we can specify.
They either already exist or organize themselves according to an
emergent pattern. If we’re happy with the general thrust of their
behavior, though, we can consider supportive interventions as
opposed to ones intended to control the system. And since we are
indeed happy with the general thrust of knowledge processing in
organizations (i.e., it serves a useful purpose for us), this principle

----------------------- Page 245-----------------------

216 Key Issues in the New Knowledge Management

has its place in the new KM. More specifically, there is a place for
supportive policy and supportive programs in the new KM, a style
of KM practice that is predicated on a view of knowledge process-
ing as a self-organizing phenomenon, not a deterministic one.
In conventional management—including first-generation KM—
policy is very much used in determinate ways: “Do this because we
said so,” the voice of policy says. The theory is that desired behav-
iors follow from policy. In the new KM, however, the reverse is true:
policy follows from desired behaviors. If the desired behaviors of
interest to us already exist, the proper role of policy is to defer to
them by supporting, strengthening, and reinforcing them.
The proper approach to the design of policy, then, when dealing
with self-organizing systems is to make policy deferentially, not pre-
scriptively. Here, policies should be less prescriptive than they are
permissive. What we should have in such cases are policies that
are determined by an understanding of the preexisting characteristic
behaviors and dynamics in the systems of interest to us. If individual
and group learning, for example, is an important element of knowl-
edge processing—and it is—then we should have policies that stress
its importance and which support its expression to the fullest extent.
That is, our policies and programs should enhance the processing of
knowledge claims by individuals and groups such that error elimi-
nation is enhanced and more robust knowledge claims survive the
knowledge claim evaluation subprocess than before.
One example of this approach to KM is formally known as the
Policy Synchronization Method, or PSM (McElroy and Cavaleri
2000). It gets its name from the idea of choosing policies that are
synchronized with the self-organizing dynamics of knowledge pro-
cessing in human social systems. By doing so, knowledge managers
can enhance knowledge processing by managing the conditions in
which it naturally occurs. It can do so, the PSM method reasons, by
recognizing that the “conditions” of importance to us here are poli-
cies and programs. If we get the conditions right, we can enhance the
emergence and performance of knowledge processing. In the wrong
conditions, it withers. But none of this thinking could have occurred
in the first place if the KLC hadn’t been used as a source of inspira-
tion in the development of the PSM method, as it has for every other
method or practice in the new KM. How could we have conceived
of the very idea of “deferential policy making” had we not, first,
come to appreciate the self-organizing nature of knowledge process-

----------------------- Page 246-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 217

ing, and the key subprocesses of knowledge production and integra-

tion that are the manifestation of this self-organization? That insight
was handed to us by the KLC.
The connection to programs in this context is quite simple.
Whereas policies take the form of guidelines (prescriptive, permis-
sive, or otherwise), programs are their action-oriented implementa-
tions. They are the action consequences of policies—the fulfillments
of policies, if you like. Programs are therefore downstream from
policies and can be thought of as the reifications of policy. Thus, the
implementation of the program side of the policy synchronization
method could be thought of as program synchronization—the imple-
mentation of knowledge processing programs that seek to reinforce
the self-organizing dynamics of the KLC.
Now comes the idea of sustainable innovation. If the KLC is a self-
organizing phenomenon, it is endowed with an endogenous capacity
to carry out its affairs, with or without formal KM interventions
being needed to enhance it. That is, it has a certain endemic sus-
tainability—a significant degree of autonomy and independence, if
you will. Anything we might do that could conflict with or inhibit
the behavior of the KLC will therefore run afoul of it, so to speak,
and should not be regarded as sustainable. Here we could say that
artificial knowledge processing behaviors are those that are unsus-
tainable, to one degree or another, because of the conflicts (the fric-
tion) they encounter between themselves and the natural KLC. The
KLC is, in this regard, stubborn and irrepressible.
Knowledge management strategies, tools, and methods that, in
turn, fail to recognize this principle and which, instead, encourage
the implementation of non-KLC-compliant knowledge processing
outcomes are themselves unsustainable, because their issue will even-
tually come back to haunt them in the form of a surfeit of negative
and unanticipated costs, both monetary and organizational.
If one’s work products are unsustainable, one’s work itself is
not long for the world. Similarly, unsustainable knowledge pro-
cessing can have its undesirable effects in the other direction: it
can precipitate unwanted (and unsustainable) business processing
behaviors and their outcomes. So we can see that sustainability in the
conduct of human affairs has strong ties to sustainability in knowl-
edge processing and sustainability in KM, all of which is deeply
rooted in the self-organizing nature of the KLC. We believe the
implications of this insight are profound, and we will return to the

----------------------- Page 247-----------------------

218 Key Issues in the New Knowledge Management

discussion of sustainability in Chapter 11 and in future works on the
Open Enterprise.

Methodology

Perhaps the most significant contribution of the KLC to the practice

of KM is in the area of methodology. Consider, for example, the broad
questions of methodology and practice in knowledge management.
What methodologies should we have, and what should they do for
us? What is it, after all, that we’re trying to accomplish? Is it to
enhance knowledge sharing? Information retrieval? Collaboration?
When we look at a body of KM practice, then, what do we see? What
are its followers and practitioners actually doing? What is their fun-
damental purpose, and what methods do they use to fulfill it?
As we will discuss in Chapter 8, many KM methodologies are
conceived of as instruments of strategy—their purpose is to con-
tribute to the fulfillment of business strategy by enhancing informa-
tion retrieval and knowledge sharing. As we shall argue, however,
this is not the vision of the new KM. Information Management (IM)
is important, but it is not the same as knowledge management, as
we have shown at some length in Chapter 3. KM is not IM. Rather,
in the new KM, we begin by making the all-important distinction
between knowledge management and knowledge processing. From
there, it’s a short hop to recognizing that the purpose of KM is to
enhance knowledge processing—that is, to enhance the KLC!
Does this mean that KM is completely divorced from the fulfill-
ment of strategy? Of course not. But why confuse KM with IM? And
if we do, who’s left to watch the knowledge processing store, as it
were? No, KM is a unique and distinct management discipline, the
purpose of which is to enhance the health and well-being of the KLC.
And in so doing it enhances its hosts’ capacity to fulfill business
strategy and to generally perform all of their business processes more
competently, precisely because of the impact it has on knowledge
processing.
But what should its methodology be?
First, let’s pause for a moment to acknowledge that this concep-
tion of KM as a management discipline aimed at enhancing the KLC
is a direct consequence of the KLC itself. Were it not for our recog-
nition of the KLC, its role in organizations, and its characteristic

----------------------- Page 248-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 219

pattern, there would be no such separate notion of what KM is. Thus,

the KLC has informed us in a very important and fundamental way
of what our understanding of KM itself should be. Now, let’s con-
sider the methodological implications more directly.
If the purpose of KM is to enhance the health and well-being of
knowledge processing, then any and all KM methodologies should
be held to that test. Do they support us in our goals to enhance the
KLC or not? If not, then we should seriously question their relevance
to our purpose. If they do, then how do they do so, and are they
effective?
Here, a strong case can be made for the role of various kinds of
interventions aimed at enhancing the KLC as a basis for KM method-
ology. Further, gap analysis techniques can also be helpful. As we
consider this approach to KM, it is sometimes instructive to recall
that in the new KM, it’s not “knowledge management,” it’s “knowl-
edge process management.” In other words, it’s KLC management;
moreover, the only way that knowledge can be managed is through
the impact of KM on the KLC. Changes in the KLC, in turn, then,
have an impact on knowledge outcomes.
From a methodological perspective, then, we can see that we must
begin the practice of KM (the new KM) with an attempt to under-
stand the current complexion of knowledge processing (KP) in a firm.
We must follow by modeling and analyzing the likely impact of our
contemplated interventions. And last, by making the interventions
themselves aimed at improving knowledge processing (i.e., KLC)
performance. In other words, our interventions should be designed
to help close the gaps between what we see in a current KP envi-
ronment and what we think we’d like to see, or what we believe
ought to be. But to arrive at interventions that will do that, our
methodologies must be processes that model our interventions and
their anticipated and actual effects on the KLC. Thus, the new
knowledge management has produced KM Framework Methodology
(KMFM) (Firestone 2001), a nonlinear adaptive methodology that is
focused on producing increasingly detailed models of interventions
and their impacts on the KLC.
To fully populate a KM practice with appropriate tools, tech-
niques, and methods, then, we need to consider (a) the kinds of ana-
lytical tools needed to capture an understanding of current KLC
environments, including the state of their underlying subprocesses, as
well as (b) the kinds of tools, techniques, and methods required to

----------------------- Page 249-----------------------

220 Key Issues in the New Knowledge Management

improve them. Thus, we may use a tool like “social network analy-
sis” to get a feel for how well group learning, knowledge claim eval-
uation, or knowledge sharing is taking place. Or we may use “object
modeling” to formulate impact models that allow us to predict the
effects of our contemplated interventions, while we turn to other
tools, such as communities of practice, or IT or decision processing
methods, in formulating our interventions.
In any case, this approach to methodology in the new KM would
not exist were it not for the KLC itself, for without the KLC, there
would be no knowledge processes to enhance, no separate concep-
tion of KM as a management discipline for doing so, and no model-
ing of the impact of interventions on the KLC.

Information Technology Requirements

The use of IT in the new KM logically follows the thinking set forth
above for methodology. If the practice of KM is to enhance knowl-
edge processing, then all related applications and uses of IT should
also serve the same purpose. This claim, however, has two sides to
it. First, there is the use of IT as a tool for knowledge managers to
use in their attempts to enhance knowledge processing. Thus, knowl-
edge managers might implement IT-based solutions in their attempts
to enhance knowledge processing in some way or another. Second,
however, there is the potential use of IT to support the KM function
itself—that is, to support its own business processes as opposed to
the makeup of knowledge processing in its target environments. Let’s
consider these distinctions further.
First, on the knowledge processing side of the coin, there is the use
of IT to enhance and support the KLC and all of its subprocesses.
Here, then, we can easily envision the use of IT to support informa-
tion acquisition in knowledge production, or sharing in knowledge
integration. In Chapter 11, however, we go beyond the obvious uses
of IT such as these and instead consider the evolution of portals that
will not only make it possible for us to create, codify, share, and
retrieve knowledge claims, but to manage the content of related meta-
information or metaclaims, as well. Here, then, the unique impor-
tance of the KLC once again shines through.
Knowledge, as reflected in the KLC, consists of claims that have
survived testing and evaluation (our efforts at error elimination) and

----------------------- Page 250-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 221

which are therefore treated as being closer to the truth than their
competitors. The record of such testing and evaluation, then, is of
critical importance to the new KM. It should be possible, for
example, for us not only to retrieve a so-called best practice from an
IT-based repository of such things, but also to retrieve the evidence
and arguments in its favor. Why?
Because, as we discuss in Chapter 7, so-called best practices are
nothing more than knowledge claims about practices. As such, they,
like all other knowledge claims, are fallible. How are we supposed
to know the good claims from the bad ones, or the tested claims from
the untested ones, or the basis of their exponents’ thinking without
having access to the metaclaims that lie behind them? IT can play a
significant role in helping us to gain that access, an observation that
is inescapably rooted in our conception of the KLC.
On the other side of the coin is the role that IT can play in support
of the KM function itself. To the extent that IT has been deployed
in support of knowledge processing, it presents KM with unique
opportunities to measure, monitor, and observe knowledge process-
ing activities as a by-product of related applications. The use of IT
in support of communities of practice, for example, can also provide
reports on related levels of activity (e.g., How many communities
exist? What is their frequency of formation? Their longevity? Levels
of membership in them? Degrees of activity? etc.). Similarly, usage
levels and patterns related to IT systems deployed in support of
information acquisition, knowledge claim formulation, knowledge
sharing, broadcasting, etc., could also be generated. All of this and
more can be of enormous help to KM in ways that go beyond direct
support of knowledge processing.
Once again we see an application of the KLC at work here. First,
it informs us of the specific role that IT can play in supporting knowl-
edge processing, first, by virtue of its having called knowledge pro-
cessing to our attention, and, second, through its articulation of the
nature of the underlying subprocesses of the KLC. IT can then be tar-
geted in very specific ways with an eye toward regulating its impact
on the whole of knowledge processing. Next, since the distinction we
see between KM and KP is, too, a function of the KLC’s influence on
our thinking, we can envision the separate use of IT to support KM
itself. None of this is possible without first recognizing the KLC, and
so its application to even the narrow consideration of how best to
apply IT in the practice of KM is palpable.

----------------------- Page 251-----------------------

222 Key Issues in the New Knowledge Management

 Moreover, the specific concept of the Enterprise Knowledge Portal
(EKP) is directly related to the idea of the KLC and therefore to
TNKM. The first formulation of the EKP concept (Firestone 1999a),
relied on a concept of knowledge processing that used categories that
were a precursor of and highly similar to the KLC. Moreover, further
developments of the EKP concept (Firestone 2000, 2000a, 2001a,
and 2003) all rely heavily on the KLC. Specifically, the EKP is
viewed as an application that must support all subprocesses within
the KLC, as well as all of the management activities specified earlier
in Chapter 3.
Apart from portals, the KLC is also relevant to the more general
notions of Artificial Knowledge Management Systems (AKMSs) and
Distributed Knowledge Management Systems (DKMSs) (Firestone
1999b, 2003). These two are also developed from the viewpoint of
the KLC in Firestone (2003).

Intellectual Capital

Much has been said and written about so-called intellectual capital
(IC) in the years since 1994, when Tom Stewart, a journalist for
Fortune magazine at the time, first started writing about it (Stewart
1994). Since then, knowledge management has been firmly linked to
intellectual capital in various ways. Chief among them has been
to generally regard knowledge—personal and organizational—as
worthy of the term “capital,” deserving of all of the respect and
recognition we attach to capitals of other kinds, thanks largely to the
halo effect of the term. What exactly the term IC means, however, is
still the subject of much debate, as is the question of how to measure,
not to mention manage it. What is clear, though, is that the financial
value of a corporation usually exceeds the so-called “book value”
of its tangible assets, and so intangibles, as well, must have value—
financial value. Has the new KM solved these problems or cracked
the secret code of intangible assets? No, not entirely, but it does bring
a fresh perspective to the table, one which, again, is an application
of the KLC.
First, the new KM provides us with a framework for understand-
ing knowledge and its various forms in organizations. In Chapter 1,
we covered the related distinctions between World 2 (personal and
subjective) knowledge and World 3 (linguistically expressed and

----------------------- Page 252-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 223

objective) knowledge claims. These distinctions are, in turn, reflected

in the KLC, both in terms of where they fit in knowledge processing
and the forms that they take. Given the fundamental nature of these
insights and the distinctions we can make between the different kinds
of “knowledges,” the new KM has some very basic and valuable con-
tributions to make to IC, and yet the IC community has yet to fully
appreciate them.
Second, there is the notion of what we call “social innovation
capital,” or SIC. In an earlier examination carried out by one of us
(McElroy 2002) in which competing theories on IC, then and now,
were reviewed, McElroy asked the question, “Where’s the KLC?” If
IC is all about reflecting the value of intangibles in its attempts to
compute their impact on corporate valuations, then the capacity
to produce and integrate knowledge itself should somehow figure
prominently in related schemes. In other words, the only thing
potentially more valuable to a firm than its prized intellectual capital
should be its institutional and ongoing capacity to produce it! What
form does that capacity take? Why, the KLC, of course. What he
found, however, surprised us.
Consider an early (and now admittedly outdated, but still often
cited) model of IC put forth at Skandia AFS by Leif Edvinsson and
his team in the early 1990s (see Figure 6.10).
While outdated, the Skandia model (called “Navigator”) is still
emblematic of the IC community’s broader failure to take social
capital, in general, fully into account. While we see evidence of this
omission in the early Skandia model and in many others since then,
we have yet to see any truly rigorous attempts to incorporate social
capital into the taxonomies of IC being debated in leading academic
and management circles. This presents a problem for us, because the
KLC is nothing if not a form of social capital. It is social in the sense
that it is a particular kind of process carried out by people in social
settings, and it is capital in the sense that its performance can add
value (financial and otherwise) to the lives of people involved and the
enterprises of which they are a part. Clearly, the quality and perfor-
mance of knowledge processing has financial valuation implications
in a firm.
The name we gave, then, to the particular kind of social capital
represented by the KLC was “social innovation capital.” In other
words, the KLC is social capital of an innovation sort. Why innova-
tion? Because we can define innovation as a social process that

----------------------- Page 253-----------------------

224 Key Issues in the New Knowledge Management

Market Value

Financial Capital Intellectual Capital

Human Capital Structural Capital

Customer Capital Organizational

Capital

Innovation Capital
Process Capital

Intellectual Property Other Intangible

Assets

Adapted from Intellecual Capital,

by L. Edvinsson and M. Malone

Figure 6.10
Skandia’s Navigator Model

embodies knowledge production and integration, the two major

process clusters of the KLC. According to this logic, strong KLCs
should add value to an organization, financial value. The capacity to
innovate—sustainably so and with regularity and reliability—such
as we see in companies like 3M, should be treated as deserving of
value itself. We believe, therefore, that no comprehensive attempt
to reflect the categorization of IC should be seen as complete until
and unless it includes (a) social capital broadly, and (b) social innova-
tion capital, in particular. We express this view, for illustrative pur-
poses, in a modified version of the Skandia taxonomy taken from a
paper on the subject published in early 2002 by McElroy (2002) (see
Figure 6.11).
The influence of the KLC on the new KM’s perspective on IC is
dramatic and direct. Intellectual capital schemes, we have argued,
should explicitly reflect the value contributions of the social capac-
ity to produce and integrate knowledge, and not just the value of its
outcomes (i.e., knowledge). Indeed, as we have said, the only thing
more valuable than valuable organizational knowledge may be the
organizational capacity to produce it. The KLC is perhaps the most
complete, most rigorous attempt to specify the dimensions of such

----------------------- Page 254-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework

225

Market Value

Financial Capital Intellectual Capital

Human Capital Social Capital Structural

Capital
Social Capital

Intrasocial Intersocial Innovation Capital

Process Capital
Intrasocial Intersocial
Capital Capital Social
Capital Capital Social
Innovation
Innovation
Capital l IP Other IA
Capita
Egocentric Sociocentric
Egocentric Sociocentric
Social Social
Social Social
Capital l Capital
Capita Capital

Customer Capital Partner Capital

Customer Capital Partner Capital

Figure 6.11
McElroy’s Modified Navigator Model with Social
Capital Thread Added

capital, and it therefore has a significant role to play in the further

development of IC management schemes. (See Chapter 10 for more
discussion of the new KM’s perspective on intellectual capital mea-
surement and management schemes.)

Education and Training

There are two senses of this subject that have been impacted by the
KLC and its insights. The first is how we should regard the role of
education and training in organizations, and the second is the
educational and training implications for KM itself. In other words,
armed with our knowledge of the KLC, what sort of training should
knowledge managers themselves be seeking? Let’s examine these per-
spectives separately.
The purpose of education and training in most organizations is
generally understood to be enhancing performance. People need to
learn the skills required to carry out their roles and responsibilities
in organizations. But is training through, say, formal corporate pro-
grams or other structured approaches really the best way to go about

----------------------- Page 255-----------------------

226 Key Issues in the New Knowledge Management

it? Are there other less formal and even less prescribed sources of
learning that people can turn to? Well, of course there are, but it
wasn’t until two years ago, when a small firm called CapitalWorks
LLC in Williamstown, Massachusetts, actually studied the question
of where knowledge in use at work actually comes from, that the
pattern was more clearly understood.
CapitalWorks, led by Jeff Kelley, conducted a survey at that
time, in which hundreds of corporate workers were asked to
characterize the distribution of knowledge sources relative to
knowledge actually used on the job. Of the eleven categories used
to classify responses, some represented formal sources while others
were informal. Fully 75% of the sources cited for knowledge
used on the job were informal, while only 25% were formal (see
Figure 6.5).
Despite this, however, the same companies’ investments in educa-
tion and training were almost exclusively aimed at formal programs
in exactly the opposite proportions (75% of the investments being
made in learning were aimed at formal programs, with the remain-
der being aimed at informal ones). The disconnect between how
companies were investing in learning versus the actual means and
sources that employees turn to and rely on was striking.
Among the very interesting conclusions reached by Kelley and his
team at CapitalWorks (CapitalWorks 2002) was that without spend-
ing any additional money at all on education and training, most
companies could dramatically improve ROI from their investments
in learning simply by shifting spending from formal sources to infor-
mal ones. Indeed, doing so even as overall spending is reduced might
fetch better results!
What does any of this have to do with the KLC, you ask? As a
self-organizing system, the KLC is, in a sense, an informal learning
system. It is not a designed system, it is an emergent one. Further,
many of its constituent subprocesses are themselves also informal.
Communities of Practice, for example, are often informal, especially
the most prolific ones. To wit, the very idea of the KLC itself and all
that we discuss in this book and others are the products of an entirely
informal group of like-minded individuals who banded together in
late 1997 to form a new KM. The Knowledge Management Con-
sortium International (KMCI) was/is the organizational outcome of
that effort, and the KLC and many of the other ideas discussed in
this book are the outcomes of its KLC.

----------------------- Page 256-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 227

 So a case can be made for aiming more corporate investments
toward informal learning and less on formal learning. But when we
speak of “shifting spending from formal sources to informal ones”
for the purpose of enhancing learning, then, exactly where should
those dollars go? To enhancing the KLC, of course! In fact,
bankrolling the start-up of a new KM effort in a company could
come, at least in part, from dollars shifted out of training and into
KM efforts to enhance the KLC. More important, Kelley’s study at
CapitalWorks adds fuel to the fire of the movement behind the new
KM, which claims that it is the informal learning process at both
the individual and collective levels that we should be seeking to
support and reinforce above all else. And enhancing the KLC is the
blueprint for doing so. Enhance and invest in the KLC, we argue,
and higher performance in both learning and business processing will
follow.
This application of the KLC, valuable as it is, also has the effect
of calling into question the conventional wisdom of how people
should be expected to learn in business. At the very least, we argue,
managers should be attempting to strike more of a balance between
investments made in formal versus informal learning programs.
Kelley and his team at CapitalWorks (CapitalWorks 2002) refer to
this as managing “Learning Portfolios.” Is there a one-size-fits-all
formula for this? Of course not. But it should be sufficient for pur-
poses of getting started to (a) make the distinction between formal
versus informal learning, (b) understand that informal learning
should be prioritized from an investment point of view, and (c) that
investments made on the informal side of the fence should be aimed,
in particular, at strengthening the KLC and its constituent sub-
processes. Even investments in formal learning programs should be
seen and evaluated in light of their place in (and impact on) the KLC,
since they, too, are reflected therein.

The Open Enterprise

As we discuss later on in Chapter 11, one of the most important ideas

to come out of the new Knowledge Management is the concept of
the Open Enterprise. Openness, in this context, is an application of
the great twentieth-century philosopher Karl Popper’s epistemology,
whose vision of the Open Society (1945) stood in opposition to the

----------------------- Page 257-----------------------

228 Key Issues in the New Knowledge Management

kinds of oligarchical and coercive knowledge processing regimes

associated with dictatorships and other totalitarian forms of govern-
ment. But this is not surprising. Popper was a victim of such oppres-
sion, both before and during World War II, thanks to which he was
forced to flee his home country of Austria and settle in New Zealand
and then later on in Great Britain.
Underlying Popper’s philosophy was the idea that humans can
never really know for sure whether they have found the truth. Rather,
the best we can do is to eliminate falsity (or error) wherever we find
it, but to be certain that we know the truth requires a degree of omni-
science that we simply do not have. This does not, however, prevent
us from seeking the truth or from striving to eliminate our errors.
The regulative ideal here is the truth. The activity involved is
truth-seeking. And the outcome expected is enhanced closeness or
proximity to the truth. We can achieve such proximity by focusing
on error reduction, and sometimes we may even discover or find
the truth, but even then we can never know for sure that we have
done so.
Popper’s (1972) focus on error reduction and his rejection of
justificationist and foundationalist approaches to epistemology is
known as fallibilism. Popper, along with the great American prag-
matist philosopher Charles Sanders Peirce (1966), was a fallibilist.
Popper (1934, 1959) was also a falsificationist—indeed, he was the
founder of falsificationism, the idea that while universal knowledge
claims cannot be confirmed or verified by empirical testing, they can
be falsified, but also not with certainty (fallibilism).
We have taken Popper’s fallibilist and falsificationist epistemology,
which he previously applied in a societal context, and applied it to
business. Hence, we go from Popper’s vision of the open society to
our own vision of the Open Enterprise. And here is where the KLC
comes into play—in two important ways.
First, we have already made the very important distinction
between knowledge processing (the KLC) and business processing.
This is of foundational importance to the new KM. Having done
so, we can see not only the distinction between them, but also the
relationship they share. Knowledge use (in business processing) relies
heavily—is dependent upon—knowledge processing, for without
knowledge processing there would be no knowledge to use in busi-
ness. Therefore, when we find problems with knowledge use, such as

----------------------- Page 258-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 229

corporate behaviors we disagree with or condemn, the remedy can

be found not only in making changes in business practices (which is
knowledge use), but more fundamentally in knowledge processing.
How, we can ask ourselves, does illicit or illegal behavior get that
far in a firm? What must its knowledge processing systems be like if
poor judgment can escalate from the level of ideas to the realm of
practice?
Second, while our understanding of the KLC makes it possible to
see both the distinctions and the connections between knowledge
processing and business processing, it also gives us a place to go in
terms of specific remedies. What we mean by remedies here are solu-
tions to problems found in knowledge processing which, in turn,
manifest themselves in unwanted business processing behaviors.
More specifically, we can reasonably claim that knowledge pro-
cessing regimes that are, in a sense, politically closed can be seen
as being responsible for the illicit or unwanted business processing
behaviors that follow. The cure for unwanted business behaviors,
then, may lie more in the remediation of knowledge processing than
in the reform of business processing behaviors themselves. The
former leads to the latter, while the latter does not necessarily lead
to the former or to sustained change of any kind.
Achieving the vision of the Open Enterprise, therefore, amounts
making interventions at the level of knowledge processing in such a
way that it (a) becomes more transparent to, and inclusive of, the
stakeholder population it serves, and (b) revolves around the merits
of knowledge claims and not their exponents. The validity of a
knowledge claim should be a function of its internal merits, not the
rank or status of its promoters. Thus, the Open Enterprise is open in
the sense of participation and open in the sense that knowledge
claims, or as Popper called them, conjectures, are unrestrictedly open
to criticism and refutation, no matter what their source. The vari-
ables used to specify, regulate, and manage this kind of openness are
precisely the attributes of the subprocesses identified in the KLC. Our
knowledge and management of the KLC, then, is an indispensable
element of any effort to make organizations more open, more respon-
sible, and more adaptive. Achieving the Open Enterprise is both an
important application of the KLC, as well as an illustration of how
KM can be used to achieve knowledge processing outcomes, this time
with enhancing organizational openness and accountability in mind.

----------------------- Page 259-----------------------

230 Key Issues in the New Knowledge Management

New Value Propositions for

Knowledge Management

Perhaps the most fruitful illustration of how the new KM adds value
to the KM profession is made by simply calling attention to what
are, in fact, its value contributions or propositions to business. At the
heart of the matter is the KLC, a vision of knowledge processing that
is utterly missing from the conventional practice of KM, or what
we sometimes refer to as “first-generation KM.” Let us first quickly
review what its propositions are.
Most of what passes for KM tends to revolve around the idea of
enhancing knowledge sharing. While it’s true that the KLC featured
in second-generation thinking includes sharing as well, it is by no
means confined to it. First-generation thinking, however, does tend
to focus almost exclusively on what we can think of as “sharing
transactions.” A sharing transaction would consist of one person
sharing “knowledge” with another, either in person, electronically in
real-time, or through use of some delayed means such as portals or
IT-based repositories of other kinds. In all such cases, the business
processing context is extremely narrow. It begins with someone need-
ing information, searching for it, finding it, and acquiring it. These
discrete episodes of sharing transactions are the first-generation
KM equivalent of the KLC. They form the basis of most of what we
see in the conventional practice of KM.
What, then, is the value proposition of first-generation KM? There
are two of them. First is the ability to expedite sharing transactions.
People can theoretically satisfy their demands for knowledge more
quickly in the presence of a first-generation system. We call such
approaches to KM “supply-side” in scope because they are designed
to enhance the supply of existing knowledge from one party in an
organization to another.
The second value proposition for first-generation KM is enhanced
business processing performance. By shortening the cycle time of shar-
ing transactions, less time is taken away from business processing; hence
business processing behavior improves, or is at least more efficient.
Thus, the ultimate value received from investments in first-generation
(aka the old) KM is reduction in business processing cycle times.
Now comes the new KM, and with it a considerably wider
view of knowledge processing (the KLC). It encompasses the first-
generation view of sharing transactions but is not confined to them.

----------------------- Page 260-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 231

Rather, it develops a significantly wider and deeper view of knowl-
edge processing that includes knowledge sharing but positions it as
only one form of knowledge integration. Further, it rejects the first-
generation tendency to simply assume that valuable knowledge
exists and thereby takes up the question of how we produce it.
Knowledge production processes figure prominently in the KLC for
that reason.
But the new KM takes another crucial step that is entirely missing
from previous formulations of KM: it defines the difference between
information and knowledge and brings that to the table. Notice how,
in the following statement heard almost universally in KM circles,
the distinction between the two is glossed over and obfuscated:

It’s all about getting the right information to the right people at
the right time.

How many times have we heard that phrase offered up as the driving
vision for KM? The value proposition inside it is clear: expediting
the delivery of information to people who need it in order to expe-
dite, in turn, their business processing performance. But where is
“knowledge” in this claim? We see only “information.” Or are the
two, from a first-generation KM perspective, equivalent? And if so,
then what does “KM” bring to the table that wasn’t already there in
the form of IM (information management)? And where do we turn
in the literature of first-generation thinking for answers to our ques-
tions? Frankly, there are none. The distinction between information
and knowledge has never been satisfactorily addressed in the KM lit-
erature until, that is, the arrival of second-generation thinking, or the
new KM.
Now this issue alone is worth the price of admission to the new
KM because of the following reason: what if the information deliv-
ered “to the right person at the right time” is, in fact, false? Of what
possible value could that be to the person who needs it? Or will any
old information do? No, we not only need information as quickly as
we can find it, we need valid information, as well. Without that, we’re
at best simply trading effectiveness for efficiency, because anyone
can deliver false information quickly, but only valid information can
make us more effective. And, at worst, by basing our decisions on
false information we are assuming the risk that we will have to cope
with the unexpected consequences specified in the true knowledge

----------------------- Page 261-----------------------

232 Key Issues in the New Knowledge Management

claims we have ignored or rejected. This last is the risk of relying on

information in preference to knowledge.
This absence of focus on the relative validity of information
managed and used by workers in organizations is the quiet scandal
of first generation KM. How could a discipline that refers to itself
using the “K” word (knowledge) be so devoid of considerations
related to testing and evaluating the information it so eagerly serves
up to its customers? How can it be so devoid of an emphasis on error
elimination in knowledge claims?
And if the difference between information and knowledge does
involve differences in the track record of competing knowledge claims
in surviving testing, evaluation, and error elimination, then where do
we go for knowledge about the distinction? What other branch of
management theory and practice do we turn to for help not only in
delivering information more quickly, but in delivering tested, evalu-
ated, and reliable information, as well? The answer is the new KM,
with its emphasis on error elimination through knowledge claim
evaluation as its centerpiece.
We fully appreciate that our remarks here amount to an indict-
ment of KM in its conventional, normal forms, but we make no
apologies for declaring that the emperor has no clothes. People
looking for ways of expediting the delivery of information should
turn to IM, not KM. Information management has a long history of
doing that, even while it, like first-generation KM, washes its hands
of the validity issue and makes no representations whatsoever as to
the validity of the claims contained in the objects it handles. Garbage
in, garbage out, right?
Here, then, is what is perhaps the new KM’s most significant
value proposition: the ability to differentiate between “just informa-
tion” and information that has survived our tests of validity over
time: “knowledge.” When we produce new knowledge, it exists only
in the form of claims or hypotheses. Before it deserves recognition
by us as something more than “just information,” it must be sub-
jected to tests, criticism (openly so), error reduction, and refutation,
if appropriate. Knowledge claims (information) that survive that
process thereby warrant special recognition, the name for which is
“knowledge.”
Notice that in the paragraph above, the process described is
embodied in the formulation of the KLC shown in Figure 6.2. The
KLC is, in fact, the source of this insight. But apart from the details,

----------------------- Page 262-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 233

notice as well that the KLC has had the effect of raising the valida-
tion issue, that it has exposed the nudity of the first generation KM
emperor. “What about the truth or falsity of the information we’re
receiving?” we can ask ourselves. What about that? Don’t we care
about the quality or relevance of the information we’re receiving, or
is it only about speed of retrieval? Of course we care, and the new
KM provides us with a strategy for what to do about it, and the KLC
is its road map.
Let us conclude this section by briefly calling attention to several
other value propositions that are available to us as a consequence of
the new KM and the KLC. Here they are:

# A Unified Theory of Knowledge: The KLC makes it clear to us

that there are two kinds of knowledge in organizations and that
both have an impact on each other, our learning, and the knowl-
edge we individually and collectively practice. The first is sub-
jective knowledge, knowledge in minds; the second is objective
knowledge, or claims expressed in linguistic form. Both forms
of knowledge play significant roles in the KLC and are explic-
itly shown in what the KLC identifies as the DOKB (Distributed
Organizational Knowledge Base). (See Chapters 1 and 2 for
more discussion on the meaning of knowledge in the new KM.)
# The Enterprise Knowledge Portal: Consistent with our discus-
sion above, the new KM makes a sharp distinction between
information and knowledge, highlighting the record of testing
and evaluation behind claims as the difference that makes a
difference. Thus, IT systems that purport to be “knowledge
 management” systems should support our need for this kind
of meta information and without that should be seen by us as
nothing more than information systems. Where and how to
position such systems is revealed to us through close examina-
tion of the KLC. Moreover, the same systems should support
the KM function itself which, as we have explained at length,
is not the same as KP (knowledge processing), but is just as
much in need of support. There are currently no portal prod-
ucts or otherwise in the market that support these applications
(Firestone 2003), but the new KM and its conception of the
KLC point to what KM needs from IT.
# New Perspective on the KM Function: As noted above, the
idea of the KLC, and the new KM in general, makes the very

----------------------- Page 263-----------------------

234 Key Issues in the New Knowledge Management

important distinction between KM and KP (knowledge pro-

cessing). If we are to have a meaningful and useful form of KM,
then, we must approach it with the separate treatment that it
deserves. KM is not knowledge sharing; it is a management dis-
cipline that seeks to enhance knowledge sharing and all of the
other aspects of the KLC. The KM function itself is indepen-
dent of knowledge processing, but it, too, has a KLC inside of
it that produces and integrates its knowledge. Here we can envi-
sion a KM function that has a practice layer (people who make
interventions in target KLCs); a management layer (people who
manage the KM function itself); and a KLC layer (a knowl-
edge processing environment that supports the KM function
only and not the business processing environment of its target
population).
# Learning and Adaptivity: Ultimately, the most beneficial impact
of enhancing the KLC is that it improves an organization’s
capacity to learn and adapt. This is especially true in cases
where the KM strategy, in particular, strives to achieve
enhanced levels of openness in knowledge processing (see
Chapter 11). It should be clearly understood, then, that the
KLC is the main engine room of innovation, organizational
learning, agility, and adaptivity. It is where all of those things
happen. Managers wishing to improve their organization’s
capacity to learn and adapt in the marketplace should look no
further. The secret to enhanced performance in business is in
the care and feeding of the KLC. Enhancing its performance
therefore leads to improvements in business processing, since
all business processing behaviors are, after all, nothing more
than knowledge in use.

Conclusion

There are many other areas of interest to practitioners of KM where

the KLC has a valuable role to play. The scope of its influence on the
practice of KM is extensive, and our discussion has focused on only
a few areas. Nevertheless, the breadth and significance of the appli-
cations discussed illustrate the centrality of the KLC to KM and
also its utility from the point of view of practice. It also illustrates
that the KLC changes everything for KM. Its implications penetrate

----------------------- Page 264-----------------------

 Applications of the Knowledge Life Cycle (KLC) Framework 235

every nook and cranny of KM as a discipline and every area of KM

practice.
Again, the importance of the role that a conceptual framework or
model of knowledge processing plays in the practice of KM cannot
be overstated. It is absolutely critical that we begin the practice of
KM with a framework or model describing in broad outline how
knowledge is produced and integrated in human social systems. From
there we can begin to formulate practice but always with reference
to our theory. We must have grounding. All bodies of practice in
KM should be held to this standard. What are their interventions?
What methods do they use? How are their methods and interven-
tions related to knowledge processing? Indeed, what is their theory
of knowledge processing? Do they even have one? If not, how do
they account for knowledge production and integration, and how
does their practice relate to their theory? If not, why should we accept
their value claims?
As we sometimes say, the only thing worse than all theory and no
practice is all practice and no theory. In truth we need both—prac-
tice grounded in theory. In the new KM, the KLC is the most impor-
tant focus of our theory. Many of our practices, then, are grounded
in and upon it, and from the point of view offered to us by the KLC,
the mission of the new knowledge management—to enhance knowl-
edge processing—is clear!

References

Allee, V. (2000), “Reconfiguring the Value Network,” available at:

http://www.vernaallee.com/reconfiguring_val_net.html.
Allee, V. (2003), The Future of Knowledge, Boston, MA: Butterworth–
Heinemann.
CapitalWorks, LLC (2002) www.capworks.com.
Edvinsson, L. and Malone, M. (1997), Intellectual Capital, New York, NY:
Harper.
Firestone, J.M. (1999), “The Metaprise, the AKMS, and the Enterprise
Knowledge Portal,” Working Paper No. 3, Executive Information
Systems, Inc., Wilmington, DE, May 5, 1999, Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1999a), “Enterprise Information Portals and Enterprise
Knowledge Portals,” DKMS Brief, 8, Executive Information Systems,

----------------------- Page 265-----------------------

236 Key Issues in the New Knowledge Management

Inc., Wilmington, DE, March 20, 1999. Available at

http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (1999b), “The Artificial Knowledge Manager Standard: A
Strawman,” Executive Information Systems KMCI Working Paper No. 1.
Wilmington, DE, Available at http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000), “The Enterprise Knowledge Portal Revisited,” White
Paper No. 15, Executive Information Systems, Inc., Wilmington, DE,
March 15, 2000, Available at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000a), “Enterprise Knowledge Portals: What They Are
and What They Do,” Knowledge and Innovation: Journal of the KMCI,
1, no. 1, 85–108. Available at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2001), “Knowledge Management Process Methodology”,
 Knowledge and Innovation: Journal of the KMCI, 1, no. 2, 85–108. Avail-
able at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2001a), “Enterprise Knowledge Portals, Knowledge Pro-
cessing and Knowledge Management,” in Ramon Barquin, Alex Bennet,
and Shereen Remez (eds.) Building Knowledge Management Environ-
ments for Electronic Government, Vienna, VA: Management Concepts.
Firestone, J.M. (2003), Enterprise Information Portals and Knowledge
Management, Boston, MA: KMCI Press/Butterworth–Heinemann.
Gleick, J. (1987), Chaos—Making a New Science, New York, NY: Penguin
Books.
Macroinnovation Associates, LLC (2002), at:
http://www.macroinnovation.com/simulator.htm.
McElroy, M.W. (1999), “The Second Generation of KM,” Knowledge Man-
agement (October 1999), pp. 86–88.
McElroy, M.W. (2002), “Social Innovation Capital,” Journal of Intellectual
Capital (Vol. 3, No. 1), pp. 30–39.
McElroy, M.W. (2002a), “A Framework for Knowledge Management,”
Cutter IT Journal (March 2002, Vol. 15, No. 3), pp. 12–17.
McElroy, M.W. (2003), The New Knowledge Management: Complexity,
Learning, and Sustainable Innovation, Boston, MA: KMCI Press/
Butterworth–Heinemann.
McElroy, M.W. and Cavaleri, S. (2002), The Policy Synchronization
Method was developed by McElroy and Cavaleri and is the subject of a
U.S. business method patent application field in September, 2000.
Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating Company,
New York, NY: Oxford University Press.
Peirce, C. (1966), “Types of Reasoning,” in A. Rorty (ed.), Pragmatic Phi-
losophy, Garden City, NY: Anchor Books, Doubleday.

----------------------- Page 266-----------------------

Applications of the Knowledge Life Cycle (KLC) Framework 237

Popper, K.R. (1934), Logik der Forschung, Vienna, AU: Springer.

Popper, K.R. (1959), The Logic of Scientific Discovery, London, Hutchinson.
Popper, K.R. (1972), Objective Knowledge, London, England: Oxford
University Press.
Popper, K.R. (1994), Knowledge and the Body-Mind Problem (edited by
Mark A. Notturno), London, UK: Routledge.
Stewart, T. (1994), “Your Company’s Most Valuable Asset: Intellectual
Capital,” Fortune (October 13, 1994) cover story.

----------------------- Page 267-----------------------

Chapter 7

Knowledge
Management as
Best Practices
Systems—Where’s
the Context?

Best Practice: The Lack-of-Context Problem

One of the many preconceived notions swirling around knowledge

management for years has been that KM is all about the codification of
business processes or tasks within them—that is, that KM makes it pos-
sible for knowledge workers to quickly access and apply so-called best
practices on an as-needed basis. Workers with difficult decisions about
what to do when faced with uncertainty are seen as spontaneously
turning to KM systems for the answers—IT-based ones, of course.
More recently, this approach to KM has fallen from favor as many
knowledge managers have encountered what we will refer to as “the
lack of context problem.” Their complaint? That knowledge man-
agement systems do an adequate job of delivering codified best prac-
tices but are terrible at providing insight about when to use them,
much less context of any other kind that might aid in the decision
about which ones to, in fact, adopt and when.

238

----------------------- Page 268-----------------------

Knowledge Management as Best Practices Systems 239

The devil in the details here is the precise definition of what people
mean when they refer to context in, well, this context. Context is
one of those words like culture (see Chapter 9): we all use it a lot,
but it’s not always clear what we mean by it (see the discussion in
Chapter 4). What exactly, for example, would constitute the right
kind of context in a KM system that would satisfy users and knowl-
edge managers? Would it be more information about the circum-
stances in which a recommended practice should be used or not used?
If so, what kind of information, in particular, would make the
difference?
We agree with the concern that recommendations made in the
absence of context are a problem, and that KM systems predicated
on such propositions are shaky at best. The fact is that people on the
front lines of business are always operating in a context of some kind,
and the suitability of past practices for present day use cannot always
be presumed. Indeed, this is precisely the question we ask ourselves,
if only unconsciously, whenever we are faced with the option of
invoking past practice for current needs. Will a decision to do so fetch
the desired results? Further, what was it that made the practice desir-
able in the past, and what were its outcomes?
What we disagree with is (a) the tendency of many people who
wrestle with this issue to put specificity aside in their definitions of
context, and (b) the manner in which the questions themselves are
framed. To do a proper job of resolving the lack-of-context problem,
we must begin by adjusting our thinking about what a “best prac-
tice” is in a KM system.

Knowledge Claims

Strictly speaking, best practices systems (computer-based ones)

do not contain best practices at all. What they contain are claims
about best practices. Practices are human behaviors, not claims in
computer systems. So we can think of the references to best practices
in computer systems as knowledge claims, no more. Each claim, in
turn, can be thought of as an argument or an assertion, which
takes the form of a linguistic, semantic network—digitally codified,
of course.
Let’s take management consulting, for example. In the prepara-
tion of recommendations for clients, all consultants are called upon

----------------------- Page 269-----------------------

240 Key Issues in the New Knowledge Management

to perform cost-benefit analyses in which the cost of implement-
ing and maintaining business solutions are laid out in some detail.
But there’s more than one way to do that, some of which may be of
use to a particular client while others may not. What, then, would
a best practice be in situation A versus situation B? The answer,
if it exists, would take the form of a claim that might read as
follows:

Whenever faced with client situations of types 1, 2, or 3, use

method A to prepare implementation and maintenance cost pro-
jections; when faced with situations 4, 5, or 6, use method B.

The implicit claims in these two statements are as follows:

Method A generally works best when faced with situations 1, 2,

or 3. Method B generally works best when faced with situations
4, 5, or 6.

While not expressed in precisely these terms, the purpose behind

every best practices system is quite clear: to prescribe behaviors of
particular kinds as the best courses of action to take in response to
situations of particular kinds: If you encounter A, do X; if you
encounter B, do Y. This is generally as far as most systems go. They
present the claim (in this case a rule), but not the basis behind it.
Users of such systems are expected to simply accept the claim and
apply it without question. Or, if discretion is allowed, the absence of
evidence or arguments in support of the claim makes it all but impos-
sible to determine its suitability.
We know from our discussion of information versus knowl-
edge (see Chapters 1 through 5) that the difference between the
two is determined by whether or not claims are accompanied by
information about claims—i.e., by claims about claims, or meta-
claims, if you like. Claims made in the absence of metaclaims are
merely information. Think of them as unsupported assertions.
Only claims that have survived our testing and evaluation made
with the support of metaclaims can be seen as passing for knowl-
edge, because they provide the argument and/or the evidence
needed to help us differentiate truth from falsity. But this, of course,
is exactly what most so-called best practices KM systems lack:
metaclaims.

----------------------- Page 270-----------------------

Knowledge Management as Best Practices Systems 241

Metaclaims as Context

Metaclaims, to our way of thinking, comprise the most important

kind of context that all knowledge processing systems should have
in order to be useful. Why? Because unless we’re talking about
workers who function as virtual automatons, people faced with
uncertainty almost always rely on their own final judgments about
what to do. This is consistent with the notion of being accountable
for performance and the general trend in favor of empowering indi-
viduals and encouraging them to take risks and to act in accordance
with their own initiative. Work is becoming more complex and more
unpredictable, not less so. Under these conditions, decision making
is less centralized and more decentralized, of necessity. The act of
choosing between two or more alternatives is a distributed act that
goes on in the minds of countless workers—knowledge workers, that
is. That’s why we call them knowledge workers.
That said, it should be clear that what knowledge workers need
are not just computer-based repositories of other peoples’ ideas about
what they should do, but also insights about why they (the other
people) think so. If, in someone’s opinion, method A should always
be used in situations 1, 2, or 3, then it is incumbent upon that
someone to also explain why. Why should we use method A? What
is the reasoning behind that claim—its basis? And more important,
what has its track record of success and failure been when used in
the past? In other words, what we need in best practices systems (or
in any knowledge processing system, for that matter) are metaclaims
that accompany knowledge claims, and which furnish us with the
record of testing and evaluation for the claims they contain. No
knowledge processing system should be viewed as complete unless it
contains such a metaclaim dimension (see Figure 7.1).
Once we recognize the fact that people instinctively look for and
rely on metaclaims as a basis for discovering and choosing among
multiple, competing knowledge claims, it’s a short hop from there
to appreciating that that’s the kind of context sorely needed in knowl-
edge processing systems and that its absence is fatal. Best practices
systems that fail to provide their users with insight as to why claims
are being made, what the arguments are in support of them, and what
their histories of performance have been will always leave their users
dissatisfied and unfulfilled. Why? Because these are the kinds of ques-
tions we ask ourselves when confronted with competing claims, and

----------------------- Page 271-----------------------

242 Key Issues in the New Knowledge Management

Content of System

Metaclaims

Scope of treatment
Scope of treatment in a ‘best
practices’
in a ‘best practices’ Claims system created by KM

system created by IM

IM = Information Mgmt.
KM = Knowledge Mgmt.

Figure 7.1
Metaclaims and Best Practices in Knowledge Management

so a system that overlooks or ignores them is bound to disappoint

us and fall short of the mark. When this happens, we simply turn
elsewhere for answers.
Unfortunately, most attempts to build and deploy best practices
systems not only fail to address the metaclaim issue, they compound
the problem by forcing people to populate their repositories with cod-
ified descriptions of practices, work products, and the like. Efforts to
do so are unduly time consuming, disruptive, and are seen as having
dubious value. As a result, resentment builds, and the systems them-
selves become distrusted, since most people come to see their content
as more the result of indentured servitude than any genuine attempt
to capture truly useful information or knowledge. Further, their own
firsthand experience in using the system, since it consistently fails to
address their basic needs for metaclaims, ultimately comes home to
roost, and the reputation of KM suffers accordingly.

A Better Way

Tom Davenport, who along with Larry Prusak, published one of the
first well-known books dedicated to KM (Working Knowledge,
1998), recently published an article in Harvard Business Review

----------------------- Page 272-----------------------

Knowledge Management as Best Practices Systems

243

coauthored with John Glaser, entitled “Just-in-Time Delivery Comes

to Knowledge Management” (2002). In their very interesting account
of KM at the Boston-based health care provider Partners HealthCare,
Davenport and Glaser described a system that “bakes specialized
knowledge into the jobs of highly skilled workers [i.e., physicians]—
to make the knowledge so readily accessible that it can’t be avoided”
(ibid., 108). They do this by embedding knowledge related to the
physicians’ order entry process into the technology used to support
it (the order entry process).
Here is Davenport’s and Glaser’s (ibid., 109) account of how it
works:

Let’s say Dr. Goldszer [a physician at one of Partners’ hospitals] has a

patient, Mrs. Johnson, and she has a serious infection. He decides to treat
the infection with ampicillin. As he logs on to the computer to order the
drug, the system automatically checks her medical records for allergic
reactions to any medications. She’s never taken that particular medica-
tion, but she once had an allergic reaction to penicillin, a drug chemi-
cally similar to ampicillin. The computer brings that reaction
to
Goldszer’s attention and asks if he wants to continue with the order.
He asks the system what the allergic reaction was. It could have been
something relatively minor, like a rash, or major, like going into shock.
Mrs. Johnson’s reaction was a rash. Goldszer decides to override the
computer’s recommendation and prescribe the original medication,
judging that the positive benefit from the prescription outweighs the
negative effects of a relatively minor and treatable rash. The system
lets him do that, but requires him to give a reason for overriding
its
recommendation.

In sharing this account, Davenport and Glaser go so far as to suggest

that integrating KM functionality into the fabric of business processes
and supporting applications (IT) “could revolutionize knowledge
management in the same way that just-in-time systems revolution-
ized inventory management—and by following much the same phi-
losophy” (ibid., 108). It is perhaps worth pausing here to note the
important distinction we make throughout this book between knowl-
edge management and knowledge processing. Since the system devel-
oped by Partners HealthCare is designed to help physicians close their
epistemic or knowledge gaps, it is a knowledge processing system,
not a KM system. Knowledge management, however, can take credit
----------------------- Page 273-----------------------

244 Key Issues in the New Knowledge Management

for the design and implementation of the system. Deploying a knowl-

edge processing system is an act of knowledge management; using it
afterward is not.
That said, what we find most interesting about the Partners
HealthCare case are two things. First is the manner in which meta-
claims figure into the picture. As we have said, having access to the
metaclaims that lie behind so-called best practices (or any other kind
of claim) is crucial to knowledge processing. This, then, is an impor-
tant step in the right direction. But recognition of the specific con-
tribution of metaclaims as the difference that makes a difference in
this case does not appear in the authors’ analysis. This is unfortu-
nate, for the hidden role that metaclaims play in their case study is
the most important part of the story.
Second, we agree that the integration of knowledge processing
functionality with business processes at Partners is important, but the
lesson in it has more to do with the extent to which IT-based knowl-
edge processing has been tightly integrated with order entry (also IT-
based, in this case), and the degree to which both have been
positioned in direct, promiscuous support of the physicians’ business
processes. But since our primary concern here is with the pivotal role
of metaclaims in best practices systems, we will only be examining
the first of these two observations in the remainder of our remarks.
The Partners HealthCare system is arguably a best practices system
because of the manner in which it attempts to prescribe business pro-
cessing decisions and related behaviors. From the perspective of The
New Knowledge Management, the vignette above features a physi-
cian engaged in a business process (order entry), who is using knowl-
edge. The physician is therefore operating in a business processing
mode, which is the behavioral domain in which knowledge use
occurs.
Periodically, however, the physician experiences “problems,” that
is, epistemic gaps—gaps in the knowledge required to take effective
action. When this happens, the physician effectively steps out of the
business processing mode and enters the knowledge processing mode.
The knowledge processing mode is where knowledge production and
integration occur. In other words, the physician kicks off a KLC, or
knowledge life cycle (see Chapter 2), in order to produce or discover
the knowledge needed. Once the knowledge is produced or obtained,
the physician reverts to his business processing mode and proceeds
with his order entry. Let’s look at the Davenport and Glaser anec-

----------------------- Page 274-----------------------

Knowledge Management as Best Practices Systems 245

dote more closely to see where this dynamic occurs, and the crucial
role that metaclaims play in the process.

Metaclaims in Action

Upon first logging onto the system, the physician develops a need to
know what the patient’s history of allergic reactions might be to med-
ications. This “problem” (or epistemic gap) crops up and is detected
in the business processing mode, thereby triggering a KLC at the level
of the physician. The physician then steps out of the business pro-
cessing mode and enters the knowledge processing mode. And since
the physician has granted a knowledge production proxy to his
employer, he effectively skips through the knowledge production part
of the KLC and goes directly to knowledge integration. The patient’s
pertinent medical history is thereby broadcasted to him; he receives
the answers he was looking for, and he exits the knowledge process-
ing mode and reenters business processing.
Next, since the IT-based knowledge processing application re-
ported that the patient did, in fact, once have an allergic reaction to
a drug similar to the one the physician plans to prescribe, the com-
puter system effectively challenges the claim that doing so would be
proper. Here we have two competing knowledge claims going on, one
that says ampicillin is an appropriate drug to use in this case, and
another that says it might not be—or isn’t. In a conventional best
practices system, this might be as far as things would go. The system
would advise against a certain action, or in favor of another one,
leaving the user hanging, as it were, as to which alternative he should
choose.
In the Partners case, however, the physician has the opportunity
to challenge the computer’s claim by referring to the metaclaims that
lie behind it. The computer’s implicit claim in this case could be inter-
preted as follows:

Ampicillin should be avoided in this case, since the patient has had
adverse reactions to the use of similar drugs, specifically penicillin,
in the past.

The physician, however, decides to challenge this claim by observing

that not all adverse reactions are sufficiently undesirable to outweigh

----------------------- Page 275-----------------------

246 Key Issues in the New Knowledge Management

the benefits of ampicillin in cases where symptoms of the sort his

patient displays are present. Here again the physician is operating in
a knowledge processing mode—this time minus the proxy he earlier
invoked with regard to his patient’s records. So instead of simply
accepting the computer system’s claim, he subjects it to scrutiny and
to his own knowledge claim evaluation (KCE) process. In other
words, he is operating in the knowledge production mode of the KLC
and is subjecting a knowledge claim to his own testing and evalua-
tion process.
In this case, the physician exercises his KCE process by referring
to the metaclaims associated with the claim that he should avoid pre-
scribing ampicillin. The computer system, in turn, fetches the meta-
claims consisting of the patient’s previous, adverse reaction to
penicillin, relying further on the metaclaim that penicillin is similar
to ampicillin and that adverse reactions to one can foretell adverse
reactions to the other.
Not yet satisfied, the physician digs even deeper into the meta-
claims and requests more information about the symptoms previ-
ously displayed by his patient. The answer? A rash. Armed with this
metaclaim, the physician then makes a KCE decision: he rejects the
computer system’s claim and adopts his own:

Ampicillin can be used in this case, despite the patient’s prior

adverse reactions to the use of similar drugs, because the reactions
 were minor, are easily treatable, and do not outweigh in consid-
eration the anticipated positive benefits of ampicillin.

The physician then integrates his new, tested, and evaluated knowl-
edge claim into his own knowledge base (i.e., his portion of the orga-
nization’s broader Distributed Organizational Knowledge Base, or
“DOKB”), returns to the business processing mode, and applies his
new claim (now “knowledge” for him).
Finally, because the computer system has a metaclaim dimension
to it, the physician’s reasoning behind why he rejected one claim and
adopted another is of interest to its makers (i.e., the knowledge
managers who produced it). Thus, in allowing the physician to over-
ride the system’s claims, the knowledge processing system at Partners
still “requires him to give a reason for overriding its recommenda-
tion.” In other words, the system asks for the physician’s metaclaims
about his own claims, presumably because the system adds such

----------------------- Page 276-----------------------

Knowledge Management as Best Practices Systems 247

claims to its content, just as it tracks the percentage of its recom-

mendations (claims) actually accepted by physicians versus those that
are not.
Davenport’s and Glaser’s account does not elaborate on how the
Partners system handles counter-claims and counter-metaclaims. It
does, however, give us a glimpse into how its own claims and meta-
claims are produced—namely, they are developed by committee.
Apparently, the official knowledge production and integration
process at Partners (i.e., the KLC behind the knowledge-based order
entry system) is staffed by panels of experts. In this way, claims are
formally produced and integrated into the system, as are the meta-
claims that lie behind them.

Conclusion

In the future, we believe that the kind of system in use at Partners

will become more common. We do not, however, believe that their
growth and success will be determined by the degree to which the
knowledge contained in them is baked “into the jobs of highly skilled
workers” (Davenport and Glaser 2002, 108). Rather, we think that
the success of such systems will stem from the extent to which they
make access to metaclaims possible, and by how well they reveal
the relationships between metaclaims and best practices. After all,
best practices systems contain nothing but claims about business
processes, and all claims are predicated on metaclaims. Without hav-
ing access to metaclaims, people using best practices systems are
reduced to guesswork, or worse yet, uninformed decision making.
Next, we think a comment or two on this business of integrating
knowledge processing functionality (they call it “KM”) with business
processes is warranted. That idea, and the related just-in-time
metaphor that Davenport and Glaser use, is somewhat misleading.
First, all knowledge processing applications are intended for use in
an integrated fashion with business processes. What could the alter-
native possibly be? Have all knowledge processing systems histori-
cally been designed for use in a disintegrated fashion? Were they
meant to be used apart from the business processes they were
designed to support? Of course not. No, what is new and different
in the case of Partners HealthCare is the extent to which IT-based
knowledge processing has been tightly integrated with order entry

----------------------- Page 277-----------------------

248 Key Issues in the New Knowledge Management

(also IT-based), and the degree to which both have been positioned
in direct, promiscuous support of the physicians’ business processes.
Further, we think the just-in-time metaphor is also misleading.
Haven’t all knowledge processing systems been designed with real-
time usage in mind? Or were all knowledge processing systems pre-
viously contemplated with after-the-fact use in mind? Of course they
weren’t. The idea has always been that as users encounter epistemic
gaps, related knowledge processing systems would be available to
them on an as-needed basis, in real time. Indeed, supply-side knowl-
edge processing systems have always been about getting the right
information to the right people at the right time.
Without a doubt, timing of delivery is important, but the real sig-
nificance of the Partners HealthCare system, in our view, is the extent
to which it features a metaclaims dimension. That, and not the
degree of its business process integration, is the sine qua non of a
best practices system. The same is true for knowledge processing
systems of any other kind. If it doesn’t deal with metaclaims, it’s not
a knowledge processing system. Indeed, that’s the kind of context
that matters most in knowledge processing, and yet few systems have
it. In the “new KM,” however, metaclaims are ubiquitous.

References

Davenport, T. and Glaser, J. “Just-in-Time Delivery Comes to Knowledge

Management,” Harvard Business Review (July, 2002), pp. 107–111.
Davenport, T. and Prusak, L. (1998), Working Knowledge, Boston, MA:
Harvard Business School Press.

----------------------- Page 278-----------------------

Chapter 8

What Comes
First: Knowledge
Management
or Strategy ?

Introduction

Few issues in knowledge management provoke debate more fiery than

the question of how KM relates to strategy and who it should report
to. Is KM the servant of strategy? Or does KM somehow transcend
it? Should KM be independent of strategy and not subordinate or
answerable to its makers? Should strategy be seen as just another kind
of knowledge claim, a product of knowledge processing? If so, and if
KM is all about enhancing knowledge processing, then isn’t business
strategy arguably downstream from KM and not the reverse?
Further, if strategy is indeed nothing more than just another (set of)
knowledge claim(s), then instead of viewing KM as a tactical tool for
the fulfillment of strategy, shouldn’t we instead be thinking of strat-
egy as an outcome of knowledge processing, the quality of which is
the chief concern of KM, and not the fulfillment of strategy? Or is KM
an implementation tool for strategy? And if so, should the complex-
ion and mission of KM change whenever business strategies change?

249

----------------------- Page 279-----------------------

250 Key Issues in the New Knowledge Management

In this chapter we will examine these issues, as well as the closely

related question of where KM should reside in the management hier-
archy. Whether or not KM is the servant of management (and its
strategy du jour) would seem to be of enormous importance to the
question of who KM should report to, and where it should fit in the
organizational structure.

Biased Methodologies

Clues to the presumed relationship between KM and strategy can be

found in many mainstream methodologies. One of us (McElroy)
encountered one such methodology while working at IBM in its KM
consulting practice in 1999. In general, IBM’s methodology, then and
perhaps still now, unfolded in the following characteristic way:

# Step 1: Identify current business strategy.

# Step 2: Determine information resources required to success-
fully implement current strategy.
# Step 3: Perform IT and other organizational projects required
to make information resources easily accessible and supportive
of business processing.

While usually expressed in more granular or elaborated forms, this

three-step pattern of activity in KM methodologies is archetypical for
the field. KM methods almost always begin by taking a deferential
stance toward strategy, followed quickly by a specification of the
information resources needed to support it. Next comes a series of
projects aimed at capturing, codifying, and/or deploying related
information. Even communities of practice programs are typically
conceived with “knowledge sharing” in mind—a social means of
deploying information resources as opposed to a technological one.
It’s as though the unspoken, yet assumed purpose of KM is always
to leverage information in support of strategy. This is the bias of most
KM methods.
Let’s look at another case in which the relationship between KM
and strategy is codified in the form of a methodology. In a special
report published by KM Review entitled “Crafting a Knowledge
Management Strategy,” authors Chuck Seeley and Bill Dietrick
(1999) claim that “The realization of corporate goals must always

----------------------- Page 280-----------------------

What Comes First: Knowledge Management or Strategy ? 251

be the aim of a Knowledge Management strategy, and it’s therefore

wise to ensure that investments in Knowledge Management are con-
sistent with other corporate investments, and with the pattern of deci-
sions made for the corporate strategy” (ibid., 4).
According to this logic, legitimate KM is only that form of KM
that is consistent with current strategy. Indeed, Seeley and Dietrick
hammer this point home when they say, “Those involved in crafting
the Knowledge Management strategy must understand and build
upon the corporate strategy to ensure that Knowledge Management
is used to help realize the strategic intent of the organization” (ibid.,
5). How? By “putting in place the capabilities (organizational, behav-
ioral, technological, and informational) to unlock the organizational
asset that is key to strategic realization—the knowledge and ideas of
the people in the organization . . .” (ibid.).
Here we see another very clear case of KM strategy being defined
in terms of deference to business strategy. It’s all about KM being
used to help marshal the resources required to fulfill strategy. If this
sounds reminiscent of first-generation KM, there’s a good reason for
that—it is first-generation KM. To wit, Seeley and Dietrick go on to
invoke one of first-generation KM’s best-known slogans in their own
way: “A significant challenge for organizations undertaking a Knowl-
edge Management initiative is to distribute the right content to the
right people at the right time” (Seeley and Dietrick 2000, 8)—also
known as getting the right information to the right people at the right
time, a dead giveaway for first-generation thinking.
It should be clear, then, that there are several hallmarks of first-
generation (i.e., the old) KM, including two that we discuss in this
chapter: (1) a supply-side orientation, and (2) strategy-centricity. Let
us continue by examining these orientations further, as well as the
assumptions that lie behind them in the context of strategy (business
strategy, that is).

The Strategy Exception Error

KM methodologies that begin by treating existing (business) strategy

as a given commit what we shall call the strategy exception error.
That is, they start out by assuming that current strategy is valid and
then proceed to make investments in supporting it. Poorly conceived
strategies thereby beget wasted investments in KM, a problem that

----------------------- Page 281-----------------------

252 Key Issues in the New Knowledge Management

advocates of strategy-centric KM methods seem unconcerned with.

But why do we call this an exception error?
From the perspective of second-generation (i.e., the new) KM,
strategies are nothing more than knowledge claims produced by strat-
egy makers in organizations. As such, their content and nearness to
truth is questionable. Moreover, it is not the purpose of KM to round
up the information resources required to support a strategy—that
role falls to any number of other organizational functions, such as
IT, MIS, IS, and a host of other business-specific functions like
Finance, HR, and what have you. No, the role of KM in a firm is to
enhance knowledge processing and its outcomes. Unfortunately,
however, most KM strategies are not expressed in these terms.
The fact that first-generation KM and its methods generally fail to
make the distinction between knowledge management and knowl-
edge processing leads to constant confusion in the industry. Consider
the following statement from Seeley and Dietrick: “A Knowledge
Management strategy is, therefore, a specific plan of action, laying
out the activities necessary to embed Knowledge Management into
the organization within a specified period of time” (ibid., 4). Accord-
ing to this view, then, there is no difference between KM and the
targets of its interventions, much less a clear picture of what the
targets are.
 On the other hand, if what we are being told is that KM is sup-
posed to enhance knowledge sharing, then it is enhanced knowledge
sharing that KM interventions are meant to achieve, and not just
more KM. The point here is that there is a difference between KM
(the management discipline) and knowledge processing (the organi-
zational process that KM seeks to enhance). So to say that the
purpose of KM is to encourage more KM is to confuse the subject
of KM interventions with their targets.
This confusion is easily resolved by simply recognizing the fact that
knowledge processing occurs in all organizations—independent of
KM—including in firms where there is no KM. KM, then, is a man-
agement discipline that we can elect to use in our attempts to enhance
knowledge processing. Knowledge processing, in turn, includes
things like knowledge production and integration, including knowl-
edge sharing. In any case, knowledge management is simply not the
same as knowledge processing.
In this analysis, note that from the perspective of the new KM, the
purpose of KM is not to support the fulfillment of strategy nor any-

----------------------- Page 282-----------------------

What Comes First: Knowledge Management or Strategy ? 253

thing of the kind. Rather, the purpose of KM is to enhance knowl-

edge processing (i.e., the organizational capacity to solve problems,
that is, close epistemic gaps through knowledge production), includ-
ing the integration of associated solutions (e.g., knowledge sharing).
First-generation KM takes a different point of view. According to
first-generation thinking, we should all begin by granting strategy an
exception to the rule of fallibility of all knowledge claims—that is,
by making the assumption that strategy knowledge is valid and that
all else that follows should proceed on that assumption. There is no
conception of knowledge production as of interest to KM, only
knowledge sharing, nor is there any recognition of the distinction
between KM and knowledge processing or knowledge processing and
business processing. Strategy making and its outcomes, as well, are
seen as outside the reach of KM, upstream from it, and not subject
to KM’s impact on knowledge processing.
The political overtones to this approach are palpable. Without
saying as much, what first-generation KM practitioners are effectively
saying is that some knowledge claims (and their makers) are more
sacrosanct than others—untouchable, as it were. We like to think of
this as Orwellian KM, a takeoff on George Orwell’s Animal Farm
(1946), in which some animals were described as being “more equal
than others.” According to first-generation thinkers, KM should
follow from strategy, not the reverse, because some knowledge claims
are more equal than others—KM should not focus on strategy knowl-
edge production, they argue, only on strategy fulfillment. The proper
focus of KM should, therefore, follow from strategy.
But if first-generation thinking regarding the relationship between
KM and strategy is valid, then what have we been doing all these
years as investments were being made in the implementation of infor-
mation systems in business? Were they not intended to position
information resources at the disposal of workers who presumably
needed them in order to carry out strategy? Or has IT been engaged
in some other enterprise all these years, somehow spending time and
resources on building information systems that were not intended to
support strategy? We doubt it. And if, in fact, there is no difference
between past practices in information management (IM) and what
passes for KM today, then we should stop pretending that there is
and finally declare that the KM emperor has no clothes. On the other
hand, if there is a difference between first-generation KM and past
practices in IM, then let the exponents of first-generation thinking

----------------------- Page 283-----------------------

254 Key Issues in the New Knowledge Management

come forward and tell us what it is, because for many of us the dif-
ference has and continues to escape us.

Strategy and the New

Knowledge Management

KM strategies, then, that begin by making the strategy exception

error are arguably not KM at all. They are IM (see Chapter 3), and
they have only the narrowest impact on knowledge processing, a
social process vital to the survival of all organizations. Second-
generation KM, by contrast, sees strategy as merely one class of
knowledge claims. Strategy is an outcome of knowledge processing,
but only one of many such outcomes. The chief concern of the new
KM relative to strategy, then, is to see to it that the knowledge pro-
duction process associated with strategy (i.e., strategy claims pro-
duction) is the best it can be, with an eye toward making it possible
for firms to produce the best strategies they can. KM, according to
this view, precedes strategy formulation, not the reverse.
Where KM and IM part company in the integration (e.g., sharing)
of strategy-related claims or information about them is in the funda-
mental manner in which knowledge is treated differently from just
information (see Chapters 1 and 5). The difference that makes the dif-
ference, from a second-generation point of view, is the evidence in
support of claims. Of particular importance to us is the record of
testing and evaluation that accompanies knowledge claims, and the
means by which we have access to that (the metaclaims), and not just
the claims themselves. And so, while second-generation KM sees a
useful role for information management and information processing,
it is mostly about the support of knowledge processing, not informa-
tion processing, and therein lies one of the key differences between
KM and IM.
Let us now put strategy in the context of KM and KP (knowledge
processing) in more direct terms. In the Seeley/Dietrick article cited
above, the authors (1999) quote James Brian Quinn as defining strat-
egy as “The pattern or plan that integrates an organization’s major
goals, policies, and action sequences into a cohesive whole.” Fair
enough. But why have a strategy in the first place? Clearly a strategy
is a solution to a problem: the problem of a business or its managers
not knowing what to do, or more precisely, what the general direc-

----------------------- Page 284-----------------------

What Comes First: Knowledge Management or Strategy ? 255

tion of the business ought to be. This is an epistemic problem, a

problem of a gap in the knowledge needed to take action, not a busi-
ness value problem, a gap between business goals or objectives
and previous business outcomes. It triggers what Chris Argyris and
Donald Schön (1974) have described as double-loop learning, and
what Popper (1959, 1972, 1994) has called the method of trial
and error elimination in problem solving.
We can say, then, that leaders in organizations charged with the
definition of strategy must from time-to-time engage in knowledge
production (i.e., strategy creation) in response to the organizational
problem of not knowing how best to specify and integrate organiza-
tional “goals, policies, and action sequences into a cohesive whole”
(i.e., in response to the problem of not having a strategy). The
answers to these questions (i.e., the solutions to the epistemic
problem of not having a strategy or knowing what to do) is a plan
that contains claims in response. Thus, strategy is nothing more than
a set of claims, usually formulated by management, about how best
to configure an organization’s “goals, policies, and action sequences
into a cohesive whole” within and for a specified period of time.
And that’s all it is—a series of knowledge claims. It is no more valid
than claims of any other sort in the enterprise, including business
processes, organizational models, HR policies and programs, or any
other domain of policy, procedure, or operations. It therefore is just
as fallible as any other claim and deserves no more special status or
exception from our principles of knowledge processing. Strategy, too,
is fallible and is something that we produce.
In this light, we can see that the development and integration of
strategy-related knowledge claims is an instantiation of knowledge
processing that is performed on a periodic basis by strategy makers
in organizations. In other words, it is a KLC or Knowledge Life Cycle
(see Chapters 2 through 5). As such, the strategy-making process
itself, and not the IM consequences of its outcomes, is the proper
concern of KM, because that concern is the care and feeding of
knowledge processing in all of its forms throughout the enterprise.
There is no strategy exception to this rule, and there is no need for
one.
In fact, if there is one set of knowledge claims that ought to
be restricted from ever receiving special dispensation in a firm, it is
precisely the set of claims that constitute strategy. Why? Because the
cost of errors in a business strategy can be enormous. Small errors

----------------------- Page 285-----------------------

256 Key Issues in the New Knowledge Management

in market assessments, product direction decisions, or transaction

models can potentially escalate into financial ruin or failure in the
marketplace. From this perspective, anything close to granting busi-
ness strategy a “bye” in the formulation of KM strategy is irrespon-
sible at best. KM methodologies that codify and institutionalize this
approach are invalid because they ignore a key area of knowledge
processing in both private and public enterprises. Such approaches
to KM should be severely challenged.

Where Knowledge Management Belongs

Once it becomes clear that KM must provide oversight to the strat-

egy-making process, rather than be subordinate to it, the next step
is to consider anew the question of where KM belongs or should be
fitted in the enterprise. In the article cited above, Seeley and Dietrick
(2000) speak of the KM function at Seeley’s former employer
(Warner-Lambert) as one that reported to the “Corporate Strategic
Management function.” This is not surprising. A conception of KM
that exists for no other reason than to distribute information to fulfill
strategy would naturally be found within and subordinate to the
strategy function itself. We, of course, disagree with this and have a
different perspective to offer.
If strategy is, itself, an outcome of knowledge processing and if the
persistent quality of knowledge processing in a firm is of paramount
interest and importance to its stakeholders, then why would we con-
tinuously expose ourselves to the vicissitudes and even conflicting
interests of our temporal management regimes? Do we, for example,
take this approach in the management of our financial affairs? Do
we defer to personal standards of accounting and reporting—be they
high ones or low ones—that managers carry along with them as they
come and go? Or do we, instead, hold all managers accountable to
our own independent standards for financial reporting, the makeup
of which transcends them and their designates? We of course do the
latter. Why? Because it enhances our ability to perform quality
control over managers. Further, it enhances the likelihood of our pro-
ducing higher-quality knowledge claims (e.g., business strategies),
and decreases the likelihood of bad ones surviving and escalating into
bad practice. As the philosopher Karl Popper would have put it, we
must always strive to kill our bad ideas before they kill us!

----------------------- Page 286-----------------------

What Comes First: Knowledge Management or Strategy ? 257

Knowledge management, therefore, should effectively report to the

board of directors in a firm. Similar to a board’s fiduciary role, we
envision a comparable role for the new Knowledge Management, one
that makes it possible for boards to provide oversight on the manner
in which knowledge is being produced and integrated throughout the
organization. The logic here is simple and straightforward. Risk and
shareholder value are largely determined by what managers and their
chains of command do in the marketplace. Organizational action, in
turn, can be seen as nothing more than prevailing knowledge in use,
including knowledge that derives from current strategy and related
operating models. Strategy and operating models, in turn, are
claims—claims about what markets to pursue, how to organize, what
investments to make, and how to operationalize and do business with
customers. These claims are, in turn, produced as a consequence of
knowledge processing. Their quality, then, is subject to the quality of
knowledge processing itself, the standards for which should not be
determined solely by its users. Oversight is required here, and the
board is the best place for it.
The implementation of Board oversight for knowledge processing
might take the form of an ombudsman function in the firm, the name
of which we could give knowledge management. The role of KM
in this model would be to support the board’s duty of maintaining
rigorous standards for knowledge processing in the firm, thereby
helping to serve shareholders’ interests in seeing to it that knowledge
claims in use (e.g., management strategies and operating models) are
the best they can be from a production and integration point of view.
Note that this model would tie nicely into the Open Enterprise (OE)
vision we briefly discuss in Chapter 11, since it would provide for
the enforcement and supervision of the OE by specifically placing
KM under the authority of the board and not in the hands of those
who would abuse it, or turn it to their own potentially conflicting
immediate purposes.

Conclusion
This chapter raises some of the most fundamental questions con-
cerning the role and purpose of KM in a firm and challenges the con-
ventional (first-generation) view that KM is subordinate to strategy.
In so doing, we have argued that KM is not an implementation tool

----------------------- Page 287-----------------------

258 Key Issues in the New Knowledge Management

for strategy and that attempts to position it as such leave us with

virtually no difference between KM today and IM over the past
40 years. Indeed, we believe that there is no difference between much
of what passes for KM today and what constituted IM in the past
(and present, for that matter). Because of this, commonly used KM
methodologies should be seen as not being about KM at all; rather,
they’re about IM. Or, as we have asked, are we expected to believe
that all past practices in IM were somehow never about the fulfill-
ment of strategy, were divorced from it, and that KM, having recently
spotted the disconnect, has now come to the rescue? This, of course,
strains credulity.
Having rejected the claim that KM is somehow different from past
practices in IM, we further contend that the question of difference
between the two misses the more important point: that strategy is,
itself, a knowledge processing outcome. Not only does it not deserve
to receive any special dispensation, as if it were infallible, but KM,
as well, has nothing to do with the use of information resources in
the fulfillment of strategy. That vision of KM is a first-generation
idea, a kind of hangover from IM. There are plenty of preexisting
management methods and IT solutions to make that happen without
having to drag a new false god into the fray or trot out IM in its new
more fashionable clothes. Indeed, that vision of KM doesn’t hold
water.
In its place we offer a vision of KM that begins by making the all-
important distinction between KM and KP (knowledge processing).
Described elsewhere in this book as the Knowledge Life Cycle (Chap-
ters 2 through 6), knowledge processing is a social process that orga-
nizations rely on in order to produce and integrate their knowledge.
The purpose of Knowledge Management, then, is to enhance knowl-
edge processing. Knowledge processing outcomes, in turn, provide
people with the knowledge needed to resolve epistemic problems,
the behavioral outcomes from which we can observe in business
processing.
Strategizing, then, is a type of knowledge making or knowledge
producing activity. And strategy is a knowledge processing outcome
that flows from knowledge production, the quality itself of which we
can enhance by making KM interventions of various kinds. This is
second-generation thinking in KM, and it has nothing to do with
using KM to round up information resources needed to fulfill a strat-
egy. It’s all about enhancing knowledge processing, and not the

----------------------- Page 288-----------------------

What Comes First: Knowledge Management or Strategy ? 259

implementation of some vision embodied by a strategy du jour. And

if this is not the case, we ask, then who’s minding the knowledge
processing store?
Finally, the willful subordination of KM to strategy while com-
mitting what we refer to as the strategy exception error raises fun-
damental issues about how and where to position KM in a firm. In
our view, KM should receive the same kind of attention and inde-
pendence we give to the management of a firm’s financial affairs,
including direct accountability for oversight of knowledge process-
ing being assigned to the board. Errors in judgment can be just as
costly to a firm as errors in accounting. In fact they can cause delib-
erate errors in accounting that can lead to a firm’s destruction.
No management regime has a corner on the knowledge processing
market, nor should they be allowed to behave as though they do.
On a going-forward basis, boards of directors should be held
accountable for the manner in which knowledge is produced, evalu-
ated, and integrated into practice with the shareholders’ interests in
mind. After all, there is nothing inherent in the concept of fiduciary
responsibility that limits the idea to financial reporting. We see no
reason to stop there. The integrity of knowledge processing in a firm
must also be safeguarded.
Indeed, if we have learned anything from the rogues’ gallery of
corporate miscreants that littered the news wires and business pages
since the fall of Enron, it was that the integrity of the knowledge-
making process itself must be protected. Bad knowledge leads to bad
practice, and bad knowledge is the product of bad knowledge pro-
cessing. Even strategy must be accountable!

References

Argyris, C. and Schön, D. (1974), Theory in Practice: Increasing Profes-

sional Effectiveness, San Francisco: Jossey-Bass.
Orwell, G. (1946), Animal Farm, New York, NY: Harcourt, Brace, and
Company.
Popper, K.R. (1959), The Logic of Scientific Discovery, London, Hutchinson.
Popper, K.R. (1972), Objective Knowledge, London, England: Oxford
University Press.
Popper, K.R. (1994), Knowledge and the Body-Mind Problem (edited by
Mark A. Notturno), London, UK: Routledge.

----------------------- Page 289-----------------------

260 Key Issues in the New Knowledge Management

Quinn, J.B. (1980), Strategies for Change: Logical Incrementalism,

Homewood, IL: R.D. Irwin.
Seeley, C. and Dietrick, W. (1999), “Crafting a Knowledge Management
Strategy, Part 1,” Knowledge Management Review, 2, no. 5 (November/
December, 1999).
Seeley, C. and Dietrick, W. (2000), “Crafting a Knowledge Management
Strategy Part 2,” Knowledge Management Review, 2, no. 6, (January/
February, 2000).

----------------------- Page 290-----------------------

Chapter 9

Knowledge
Management and
Culture

Introduction

What is culture, and what is its relationship to knowledge and knowl-

edge management? “Cultural” barriers are often held responsible for
failures to share and transfer knowledge in organizations. It is
frequently said that knowledge management must undertake the
difficult task of changing an organization’s culture to achieve the
knowledge sharing and transfer necessary to realize the full value of
the organization’s knowledge resources. But “culture” is one of those
terms used loosely, in a multiplicity of ways, to cover a multitude of
sins, so when we are told that the culture must be changed to solve
a problem in KM we don’t always know what that really means.

Alternative Definitions of Culture

Here are some alternative definitions of culture, summarized by John

H. Bodley (2000) of the University of Washington from a longer list
of 160 definitions compiled in 1952 by the great anthropologists
Alfred L. Kroeber and Clyde Kluckhohn (1952):

# Topical: Culture consists of everything on a list of topics, or

categories, such as social organization, religion, or economy.
(We don’t think this definition is very relevant for KM.)

261

----------------------- Page 291-----------------------

262 Key Issues in the New Knowledge Management

# Historical: Culture is social heritage, or tradition, that is

passed on to future generations. (This may be relevant to KM
in that organizations may have traditions that are difficult
to change. But to use this concept in KM, we need to be very
specific about which traditions in an organization impact
either KM practices or activities or knowledge processing activ-
ities, and we need to realize that “traditions” generally change
very slowly and most frequently as a response to behavioral
change.)
# Behavioral: Culture is shared, learned human behavior, a way
of life. (This definition is used successfully in the analysis of
cultures at a societal level. To use it at the organizational level,
we need to distinguish shared, learned behavior among indi-
viduals in an organization that results from general socializa-
tion as opposed to shared, learned behavior that results from
organizational socialization. This may be difficult to measure.
But its measurement may be important because learned behav-
ior resulting from organizational socialization may be much
easier to change than learned behavior resulting from general
socialization.)
# Normative: Culture is ideals, values, or rules for living. (One
could map organizational ideals, values, and “rules for living,”
but measurement is difficult. If you use behavior to measure
these things, you have the problem of explaining KM, knowl-
edge processing, and organizational behavior in terms of such
behavior, rather than in terms of ideals, values, and rules for
living. On the other hand, if you don’t use behavioral measures,
you pretty much have to do analysis of cultural products or
surveys to develop measures [Firestone 1972]. In any event,
ideals, values, and rules for living are emergent properties of
social systems. They, like traditions, respond to changes in
behavior but do not change very easily in response to organi-
 zational manipulation.)
# Functional: Culture is the way humans solve problems of adapt-
ing to the environment or living together. (This definition is
difficult for KM, because knowledge processing tempered by
knowledge management is the way humans solve such prob-
lems. So this definition does not explain or predict knowledge
processing and knowledge management as much as it equates
culture with these things.)

----------------------- Page 292-----------------------

Knowledge Management and Culture 263

# Mental: Culture is a complex of ideas, or learned habits, that

inhibit impulses and distinguish people from animals. (This
is the “psychologized” version of the normative definition.
As stated, it is debatable because certain higher animals—e.g.,
primates and dolphins—also have learned habits and ideas,
so this definition may not distinguish people from animals
after all.
More important, this definition does not link the ideas or
learned habits people have with any shared socialization. That
is, ideas or learned habits resulting from individualized experi-
ences are not distinguished from ideas or learned habits result-
ing from shared societal or organizational experiences. The
term culture can only coherently be applied to the second class
of ideas.
When this idea is used in KM, it is important to recognize
the importance of measuring such “subjective culture” as the
result of shared organizational experiences, e.g., in “boot
camps,” organizational ceremonies, committee meetings,
performance reviews, etc. That is, when claiming that culture
is a factor accounting for characteristic patterns of knowledge
processing, it is necessary to show not only that attitudes,
cognitive orientations, and other mental phenomena are affect-
ing knowledge processing behavior, but also that such phe-
nomena result from some shared experiences the organization
is implementing.)
# Structural: Culture consists of patterned and interrelated ideas,
symbols, or behaviors. (We think this definition is too broad
and doesn’t distinguish between culture and other aspects of
information, knowledge, or KM.)
# Symbolic: Culture is based on arbitrarily assigned meanings
that are shared by a society. (This is a societal concept. Is it
perhaps also useful at the organizational level for KM, but this
usage seems to us to be marginal.)

The upshot of this brief survey of “culture” is that when someone

says that knowledge can’t be shared or transferred due to cultural
barriers, one really has to ask for clarification to know which sense
of culture is intended. Is culture really the barrier to effective KM it
is frequently made out to be? The answer may well depend on what
the questioner means by “culture.”

----------------------- Page 293-----------------------

264 Key Issues in the New Knowledge Management

Culture or Something Else?

Indeed, it is even possible that when people talk about cultural bar-
riers that they are not talking about culture at all. Thus, when orga-
nizational politics is opposed to knowledge sharing and transfer, that
is not culture, and while it may be difficult to change, politics is easier
to change than culture. Similarly, when the organizational incentive
system affecting knowledge worker behavior must be changed to
facilitate knowledge sharing and transfer, that is not “culture,” and
it is certainly easier to change.
In fact, the claim that knowledge sharing and transfer do not occur
because of culture sometimes sounds plausible because of the tacit
assumption that we must somehow make knowledge workers altru-
istic before they will share and transfer, and that this, in turn, requires
a fundamental change in “culture.” But the idea that we must make
knowledge workers unusually altruistic to get them to share and
transfer knowledge ignores the many examples of social systems and
organizations in which collaboration is based on “normal” motiva-
tions including self-interest.
We believe that the problems besetting KM are not, primarily,
cultural problems in the historical, behavioral, normative, or mental
senses of the term discussed earlier (the only possibilities that apply).
Instead, they are problems of structural organization and change that
can be managed by political means. Structural changes can align indi-
vidual motivational/incentive systems, whether of individual or cul-
tural origin, with organizational incentive systems to affect behavioral
changes without cultural change. In fact, in social systems, behavioral
and structural changes frequently precede and cause cultural changes.

What Is Culture, and How Does It Fit with

Other Factors Influencing Behavior?

As one can see from the above brief survey, there is great diversity in
definitions of “culture.” Is there a definition more or less consistent
with previous usage that is also useful for KM? We will propose such
a definition below and discuss its implications for the role of culture
in KM and the relationship of culture to knowledge.
It will help in defining culture if we begin by noting that for every
group and for the organization as a whole, we can distinguish

----------------------- Page 294-----------------------

Knowledge Management and Culture 265

analytical properties, structural properties, and global properties.

These distinctions were originally introduced by Paul Lazarsfeld in
the 1950s (Lazarsfeld and Menzel 1961), and later used by Terhune
(1970) in a comprehensive review of the national character literature.
Analytical properties are derived by aggregating them from data
describing the members of a collective (a group or a system).
Examples of analytical attributes include:

# GNP
# GNP per capita
# Per capita income
# Average salary
# Total sales
# Sales per sales representative
# Number of accumulated vacation days
# Number of lost work days due to injury
Structural properties are derived by performing some operation on
data describing relations of each member of a collective to some or
all of the others. Examples of structural properties are:

# Extent of inequality of training

# Extent of inequality of knowledge base distribution
# Extent of inequality of knowledge access resource distribution
# Extent of inequality of knowledge dissemination capability
# Extent of inequality of power
# Intensity of conflict behavior
# Intensity of cooperative behavior
# Ratio of e-messages sent to e-messages received by an agent

Last of all, global properties are based on information about the

collective that is not derived from information about its members.
Instead, such properties are produced by the group or system process
they characterize, and, in that sense, they may be said to “emerge”
from it, or from the series of interactions constituting it. Examples
of emergent global attributes include:

# Value orientations (reflected in social artifacts) (Kluckhohn and

Strodtbeck 1961)
# Achievement orientation

----------------------- Page 295-----------------------

266 Key Issues in the New Knowledge Management

# Self-realization orientation
# Power orientation
# Mastery over nature
# Lineality (preference for a hierarchical style in social
organization)
# Extent of democratic organization of the knowledge life cycle
# Innovation propensity (the predisposition of an organization to
innovate)

The classification of social system properties into analytical, struc-

tural, and global attributes is exhaustive. To define culture, let’s first
ask whether we should define it as an analytical, structural, or global
attribute—or some combination of these?
Culture, first, is not an analytical attribute. Culture is not an arith-
metical aggregation of survey results or individual man-made char-
acteristics. It is not the percent of knowledge workers who trust their
fellows, believe in systems thinking, believe in critical thinking, or are
favorably disposed toward knowledge sharing. Why not? Because (a)
culture influences behavior; statistical artifacts don’t. And (b) the
above attributes are social psychological, not cultural.
Second, culture also should not be defined as a set of structural
attributes derived from relations among individual level attributes.
Why not? Because “culture” refers to something comprehensive and
regulative that accounts for and determines structure, and also
because if we define culture as structural in character we are assum-
ing that we can model the structural relations defining it. Do we want
to assume that, or do we want to assume that culture is global in
character and emergent, or some combination of the three types of
attributes?
Third, the alternative of culture as a combination of attribute types
may at first seem attractive, but the following considerations argue
against it. (A) The character of analytical attributes as arithmetic
aggregations of individual level properties is not changed by defining
a construct that includes such attributes with structural and global
ones. (B) Analytical attributes still are not reflective of process or
system-level attributes that are regulative or comprehensive. At best
they are indicators of conditions caused by structural and global level
attributes and are not causal in themselves.
As for culture being a combination of structural and emergent
attributes, our objection to this view lies in how we think we want

----------------------- Page 296-----------------------

Knowledge Management and Culture 267

to use “culture.” If we want to use it as an explainer or predictor of

structural patterns, it is ill-advised to confound structure with
culture, that is, to confound the “form” of a social system or orga-
nization with its predispositions or “spirit.” In other words, defining
culture as a global attribute rather than as a combination of global
and structural attributes appears most consistent with previous usage
and also with our strategic need to use “culture” as a tool to account
for “structure” in our models.
If culture is a global attribute of agents, we still must decide what
kind of global attribute it is. The World 1-World 2-World 3 distinc-
tion of Popper’s (1972, 1994), discussed in Chapter 1, is also impor-
tant here. It suggests that we may distinguish three types of culture.
A key characteristic of all three types is that each is man-made (or
generalizing this concept, made by an intelligent agent). World 1 arti-
facts are material products, so World 1 products are material culture.
World 2 culture we will call subjective culture (Triandis et al. 1972).
And World 3 culture we will call objective culture.
The subjective culture of a group or organizational agent is the
agent’s characteristic set of emergent high-level predispositions to
perceive its environment. It includes group or organizational level
value orientations and high-level attitudes and the relations among
them. It is a configuration of global attributes that emerges from
group interactions—that is, from the organization and pattern of
transactions among the agents within a group.
The objective culture of a group or organizational agent is the
configuration of value orientations and high-level attitudes expressed
in the agent’s characteristic stock of emergent problems, models,
theories, artistic creations, language, programs, stories, etc., reflected
in its documents, books, art galleries, information systems, dictio-
naries, and other containers. It is a configuration of global attributes
expressing the content of its information, knowledge, art, and music,
apart from both the predispositions the group or its agents may have
toward this content, and the material form of the artifact expressing
the content. The objective culture of an organization is an aspect of
the social ecology of its group agents, the cumulated effects of
previous group interactions. As such, the perception of it by group
agents (part of their subjective culture or psychology, depending on
the type of agent) influences their behavior.
Subjective culture affects behavior within groups or organizations
at two levels:

----------------------- Page 297-----------------------

268 Key Issues in the New Knowledge Management

 # It affects agents at the decision-making level of interaction
immediately below the level of the cultural group by predis-
posing these agents toward behavior (see Figure 9.1).
# It affects the behavior of the group itself by predisposing it
toward behavior (see Figure 9.2).

The context of objective culture in social ecology and its relationship

to interaction within a group or organization is also illustrated in
Figure 9.2. The focus of the illustration is the decision-making agent
at the bottom left. The agent may be an individual agent or a group
level agent, depending on context.
Looking at the right hand side of Figure 9.2, transaction inputs
received from other agents and previous social ecology (the feedback
loop on social ecology), determine the current social ecology (includ-
ing objective culture) affecting an agent’s decision. Next, trans-
actions, social ecology, and previous decisions (the goal-striving
outcome feedback loop) are viewed as “impacting” on the goal-
directed typical agent, whose internal process then produces decisions
which result in transaction outputs from agent (i) directed toward
other agents j, k . . . n. These transaction outputs are inputs into the

To KP

Epistemic
Problems DOKB ‘Containers’
incorporating
Organizational Knowledge:

# Individuals
Business Process Behavior # Teams
Found in # Groups
From
Agent Behavioral # Communities
KI
Processes # Departments
# The Organization
# Information Systems
# Technology Resources
# Documents

Business
Transaction
Space

Figure 9.1
Business Process Behavior and Containers of Knowledge

----------------------- Page 298-----------------------

Knowledge Management and Culture

269

The Network of Agent Behavioral

Processes j, k, . . ., n, including
Social
Ecology and Goal-Directed Agents j, k, . .
.,
n.
 n

.
.
a
,
n
k
s
,
a
j
c

,
n Agent Behavioral Process

k
o
i

,
t

.
c

.
a

.
s

n
n
a
 r Goal-Directed Agent (I)
T
Decision Execution Cycle
i
Decisions Desired
Social Ecology

Social, Cultural,
Transactions and Ecology
Memory, Values, Attitudes,
Geographical,

Economic Conditions
Situational Orientations, Goals

Figure 9.2
The Flow of Behavior Among Agents

decision processes of these other agents. The interaction within and

among agents j, k . . . n, illustrated by the Network of Agent Behav-
ioral Processes at the top, finally, produces transactions directed at
agent (i) at a later time, and thereby closes the loop.
What goes on inside the goal-directed agent (i)? So long as (i) is a
group level agent and its components are also groups, then the inter-
action process may be viewed in the same way as in Figure 9.2, but
specified at a lower level. But if one decides to move from a trans-
actional to a motivational perspective on a group level agent (i), then
the conception is somewhat different.
Figure 9.3 presents a decision-making process in a prebehavior
situation. Here, the prebehavior situation is filtered through the
decision-making system of a group-level agent, specifically through
value orientations and through attitudes existing at increasingly
domain specific levels of abstraction. Subjective culture lives at
the value orientation and higher-level attitude locations in this
decision-making system. The interaction between the external world
and the agent’s predispositional reality “screens” produces a discrete
situational orientation, a “definition of the situation,” which in turn
feeds back to the predispositional (including the cultural) levels in
search of choice guidance. This guidance then determines the final

----------------------- Page 299-----------------------

270 Key Issues in the New Knowledge Management

Subjective

Culture
Value Orientation

Availability X Expectancy X Incentive

E
N
i V Goal-Striving Tendency
l
u I
m R
i Attitude Level 1
t O
 S N
l Availability X Expectancy X Incentive
a M
t E The
culture of a
n N Goal-Striving Tendency
e T group-
level agent is
m
n A Attitude Level n defined
by the
o L
r
i Availability X Expectancy X Incentive value
orientations,
v
n S high-
level attitudes,
E T
I Goal-Striving Tendency and high-
level goal-
M
U striving
tendencies
L Discrete Situational Orientation
in the
box. The
Availability X Expectancy X Incentive

environmental
stimuli
include
Behavior
social
ecology
and
transactions.

Figure 9.3
The Incentive System of a Group-Level Agent

situational orientation, which leads to behavior and to new feedbacks

to the situational orientation, and to attitude and value orientation
predispositions.
The predispositions in Figure 9.3 represent psychological attrib-
utes when the agent involved is an individual, but when the agent is
a group, these are the group’s characteristic set of emergent predis-
positions to perceive its environment, including group level value
orientations and high-level attitudes and the relations among them.
That is, the high-level emergent predispositions in Figure 9.3 are
group subjective culture. Moreover, as in the case of the individual
agent discussed in Chapter 1, the availability, expectancy, and incen-
tive elements of high-level predispositions in combination represent
subjective cultural knowledge predispositions.

Do Global Properties Exist?

Regarding the critics of the collective properties view, the objections

are at the level of ontological assumptions. None of the critics can
explain group level attributes that suggest there are such predisposi-

----------------------- Page 300-----------------------

Knowledge Management and Culture 271

tions by rigorously explaining them in terms of shared mutually held

individual predispositions. In fact, the doctrine of emergence suggests
that such an explanation will never be possible. Therefore, the claim
that group level predispositions don’t exist and that “there is no there
there” is simply a bias on the same level as the bias of some materi-
alists who believe that “mind” really doesn’t exist, and that mental
phenomena will one day be explained entirely in terms of the brain.
We agree with Bateson (1972) and accept the idea of group-level
consciousness. Recall the figure about the motivational system for
both individuals and groups and the presence of situational orienta-
tions shown in Figure 9.3. Situational orientations with cognitive,
evaluative and affective components cannot exist without thinking
and, therefore, “mind.” The question is: How much consciousness is
there?

Culture and Knowledge

Based on the above account of culture and its relationship to behav-

ior, and on the accounts of knowledge provided in Chapter 1 and the
origin of the KLC in Chapter 2, a number of conclusions about the
relationship of culture to knowledge are immediately suggested:

# First, there is an organizational objective culture that is part of

the social ecology of every group and individual in the organi-
zation, and which therefore is a factor in the decision making
of agents at every level of corporate interaction. Organizational
objective culture is composed, in great part, of high-level
generalized knowledge claims, or expressions about values,
ontology, epistemology, value orientations and generalized
viewpoints about the way the world works, some of them
validated and surviving (World 3 knowledge), which is shared.
But not in the sense that all agree with what it says or assent
to it. Indeed, it may be contradictory in many and visible ways.
But it is shared in the sense that all members of the group have
access to this objective culture and its World 3 content.
# Second, each group level agent, each team, each community of
practice, each formal organizational group, each informal
group has a group subjective culture, largely composed of
knowledge predisposition (World 2) components of value

----------------------- Page 301-----------------------

272 Key Issues in the New Knowledge Management

orientations and high-level attitudes, which affects their group

decision making. So the behavior of group agents is influenced
both by their internal subjective and objective cultures and also
by objective organizational culture, and all three types of
culture are in large part composed of knowledge.
# Third, the most pervasive, but also the weakest subjective
cultural predispositions in intensity, are the highest-level ones—
those most far removed from situational stimuli. These are the
most abstract value orientations and attitudinal predispositions
 in the hierarchy of Figure 9.3.
# Fourth, though value orientations and high-level attitudes are
both the most pervasive and the weakest influences on imme-
diate behavior, they are also the hardest knowledge predisposi-
tions to change in a short time. This is true because they emerge
and are maintained as a result of reinforcement from behavior
patterns in diverse concrete situations experienced by agents
in the group or organization. These most abstract patterns
of any subjective culture are self-reinforcing through time. To
change them, one needs to break down the structure of self-
reinforcement and the integration of the many, many subsidiary
patterns supporting this structure.

Conclusion: Culture and Knowledge Management

As we have argued in Chapters 2 through 4, we can distinguish KM

processes, knowledge processes, and business processes. And knowl-
edge processes may be viewed in terms of the KLC framework. KLC
processes produce knowledge that is used in the other business
processes of the enterprise. And these, in turn, produce business out-
comes. Figure 9.4 illustrates this chain of influences.
Moreover, KM processes, knowledge processes, and business
processes are performed by decision-making, behaving agents. As we
have seen, agents, if they are groups, have an internal culture, both
subjective and objective. At the same time, the objective cultural com-
ponent of social ecology also impacts agent decisions. Finally, knowl-
edge and KM processes are affected by culture through the influence
it has on behavior constituting these processes. In turn, these
processes are keys to producing new knowledge and consequently
changes in objective and subjective culture.

----------------------- Page 302-----------------------

Knowledge Management and Culture 273

KM Outcomes Used
KM Processes by Knowledge
Processes

Knowledge
Knowledge Outcomes Used
Processes by Business
Processes

Business Processes Business Outcomes

e.g., Sales, Marketing e.g., Profit,
Revenue, ROI

Figure 9.4
From Knowledge Management Processes to Business Outcomes

So culture is pervasive in KM, knowledge processing, and knowl-

edge outcomes. It is part of their context, and it is also, in the long
run, produced by them. But many other factors (social ecology, situa-
tional factors, transactional inputs; see Figure 9.2), also contribute
to the complex interactions associated with knowledge-related pro-
cesses and outcomes. Thus culture is only a small part of all there is
to KM, knowledge processing, or any other business process, and
therefore there remain substantial problems in measuring and ana-
lyzing its precise impact on KM or KM’s impact on culture. Culture
is not so much an answer to difficulties in KM as it is an issue
and a problem in itself. And prescriptions that suggest that we
must “change the culture” to perform effective KM and to enhance
knowledge processing are not solutions to problems, but only
prescriptions for movement down the wrong track toward a single
factor explanation of knowledge management and knowledge
processing.

References

Bateson, G. (1972), “The Logical Categories of Learning and Communica-

tion,” in G. Bateson, Steps to an Ecology of Mind, New York, NY:
Chandler Publishing Company.

----------------------- Page 303-----------------------

274 Key Issues in the New Knowledge Management

Bodley, J.H. “What is Culture,” Available at:

http://www.wsu.edu:8001/vcwsu/commons/topics/culture/
culture-definitions/bodley-text.html.
Firestone, J. (1972), “The Development of Social Indicators from Content
Analysis of Social Documents,” Policy Sciences, 3, 249–263.
Kluckhohn, F. and Strodtbeck, F. (1961), Variations in Value Orientations,
New York, NY: Harper & Row.
Kroeber, A. and Kluckhohn, C. (1952), “Culture: A Critical Review of Con-
cepts and Definitions,” Papers of the Peabody Museum of American
Archaeology and Ethnology, 47, (1), (1952).
Lazarsfeld, P. and Menzel, H. (1961), “On the Relation Between Individual
and Collective Properties,” in Amitai Etzioni (ed.), Complex Organiza-
tions, New York, NY: Holt, Rinehart and Winston.
Morris, C. (1956), Varieties of Human Value, Chicago, IL: University of
Illinois Press.
Popper, K.R. (1972), Objective Knowledge, London, England: Oxford
University Press.
Popper, K.R. (1994), Knowledge and the Body-Mind Problem, Mark A.
Notturno (ed.), London, UK: Routledge.
Stacey, R.D. (1996), Complexity and Creativity in Organizations, San
Francisco, CA: Berrett-Koehler Publishers.
Terhune, K.W. (1970), “From National Character to National Behavior: A
Reformulation,” Journal of Conflict Resolution , 14, 203–263.
Triandis, H.C. et al. (1972), The Analysis of Subjective Culture, New York,
NY: John Wiley & Sons.

----------------------- Page 304-----------------------

Chapter 10

A Note on
Intellectual
Capital

Introduction

Even the most casual observers of Knowledge Management, the

profession, can appreciate the strong links that exist between KM
and the equally active field of intellectual capital (IC). Here, we’d like
to make some of those connections explicit, particularly in terms that
relate to the new KM. Before we do, however, we should briefly set
the stage by pointing out that the jury is still out—way out—on how
best to address intellectual capital measurement and reporting. Like
KM itself, the related field of IC is in a state of early, fundamental
development. Competing theories abound on what intellectual
capital is, how to measure it, and how to report it. The divisions
among them are enormous.
It should also be useful to point out that the problems and ques-
tions posed by IC theoreticians and practitioners are almost always
framed in terms of accounting. In other words, the IC problem is
universally seen as an accounting problem, a narrow problem of
computing a certain type of intangible value. What, then, is the IC
problem?

275

----------------------- Page 305-----------------------

276 Key Issues in the New Knowledge Management

Beginning approximately in 1980, something strange started to

happen on the New York Stock Exchange: the value of stocks started
to exceed the book values of its member companies by unprecedented
margins (see Figure 10.1). By 1990, the value of the Dow Jones
Industrial Average was actually double the book values of its 30
constituent companies; by the late 1990s, the intangibles-to-book
ratio had risen to 3:1—all this, despite the fact that the sources of
these values were utterly unaccounted for on the balance sheet. That,
then, was—and still is—the IC problem.
As a result of the way in which the IC problem was articulated,
the quest for solutions was launched by accountants, for accountants,
and within accounting. There is nothing wrong with that, of course.
It was a natural reaction to the problem. But we do think the manner
in which a problem or question is asked, or the situational context
that lies behind it should, itself, be scrutinized in the search for

10500

y
9000 m
e o
g n
a knowledge
r o
e 7500 c
v
A e brand equity
l
a e
i
r g
t innovation
s 6000 d
u e
d l intellectual property
n
I
w
s o
 e 4500 business models
n n
o k
J

w e
o 3000 h
D t
intangible
assets
1500

hard
0 assets

1920 1930 1940 1950 1960 1970 1980 1990 1999

Note: Adapted from Fourth Generation R&D: Managing Knowledge, Technology, and
Innovation by William L. Miller and Langdon Morris (Wiley & Sons,
2000). Used by permission of Langdon Morris.

Figure 10.1
Book Values versus Intangible Assets

----------------------- Page 306-----------------------

A Note on Intellectual Capital 277

answers to seemingly intractable problems. Why? Because the

questions themselves may be wrong. Further, history shows that
with intractability sometimes comes the rejection of old knowledge
and the science behind it, followed by the arrival of new knowledge
and new science behind it. The inability of old or established knowl-
edge to answer or resolve new issues raised by new problems is a
historically significant signal that the old knowledge may have all but
run its course.
In his well known book on scientific revolutions, Thomas Kuhn
(1970, 5) described this phenomenon in the following way:

Sometimes a normal problem, one that ought to be solvable by known

rules and procedures, resists the reiterated onslaught of the ablest
members of the group within whose competence it falls.

This would seem to be a fairly accurate description of what’s going

on in the accounting world today. We have the economic value of
companies (as reflected in their market capitalizations) exceeding the
capacity of our “normal” accounting systems to, well, account for
them. In response, we have the “ablest members” of the accounting
profession working feverishly to solve the problem. And how do they
see and express the problem? How to render this slippery stuff we
call intellectual capital—or “intangibles,” in its broader form—mea-
surable. Why? So we can squeeze it into the balance sheet where they
think it belongs, and thereby make the measurement system comport
with what the marketplace is doing.
In sum, we think this is misguided for several reasons. Chief among
them is the falsity of the claims embedded in the manner in which
the questions are being asked; how the problem is being framed; and
the assumptions about what a satisfactory solution would look like.
What’s required here, we think, is not so much a “normal” solution
consistent with our existing knowledge; rather, what’s needed here,
we think, is a revolution of sorts—a new theory of accounting. As
Kuhn puts it, what’s required here is the assimilation of a new theory
that involves “the reconstruction of prior theory and the reevalua-
tion of prior fact, an intrinsically revolutionary process that is seldom
completed by a single man and never overnight.”
Our objections to the current manner in which solutions are being
sought to the IC problem, then, are fourfold. First, there is no recog-
nition of the economic value of social capital, in any meaningful

----------------------- Page 307-----------------------

278 Key Issues in the New Knowledge Management

or complete sense, by any of the prevailing IC schemes now being

advanced. Second is that the solutions being sought mistakenly
assume linear relationships among the components of the IC scheme.
Third, there is an undue accounting-centric orientation to the
formulation of the problem. And fourth, present IC schemes fail to
see the market in which corporate valuations are made as a separate
system that lies outside of the enterprise. We begin with the social
capital issue.

Social Innovation Capital

Earlier in this book (Chapter 6), we discussed an application of

the Knowledge Life Cycle (KLC) that pertained to intellectual capital.
There we made the point that most, if not all, intellectual capital
valuation and reporting schemes now being bandied about fail to
take social capital fully into account. The new KM, therefore, has an
important contribution to make to the developing field of IC: the
addition of social capital (and its economic value) to the balance
sheet and, in particular, the addition of social innovation capital to
the mix of things that account for corporate valuations (McElroy
2002).
Our logic here is simple. While most IC valuation and reporting
schemes tend to focus only on objects or outcomes in their approach
to measurement, processes, too, can add value. Further, we have
argued that the capacity to continuously learn and innovate on a
high-performance basis is, itself, more valuable to a firm than any IC
outcomes it might produce, such as patents or technologies. Why?
Because all knowledge is fallible and much of it is proven false or
eventually expires, in that it is only relevant in light of some current
situational context. That new or existing knowledge will eventually
be displaced or made obsolete is highly probable. The value of most
innovations is therefore ephemeral, and so learning itself must not
be, but must be a continuous source of new knowledge and innova-
tion responding to the epistemic problems that almost always arise
from our existing knowledge.
The upshot of our remarks concerning the absence of social capital
(and social innovation capital, in particular) from mainstream ideas
on how to measure and report IC might first lead to the conclusion
that social capitals should be added to the balance sheet. In fact, we

----------------------- Page 308-----------------------

A Note on Intellectual Capital 279

should consider adding social capital in its various forms to either

side of the balance sheet. A firm’s capacity to innovate, for example
(i.e., its social innovation capital), could be so poorly configured that
it actually detracts from the value of a firm by dampening its capac-
ity to learn and, therefore, adapt. A firm’s social innovation capital
could in some cases, therefore, be seen as not an asset at all, but as
a liability. Indeed this may very well be the case in many corpora-
tions. Let’s examine this closer.
Clearly, the KLC is a major source of competitive advantage in
a firm, assuming it’s strong and responsive, as, for example, is the
KLC in an open enterprise. In such cases, we could easily see the KLC
as an asset. In other cases, however, the knowledge processing
environment in a firm might actually dampen or suppress learning
and innovation by maintaining social conditions such as high levels
of mistrust that have the effect of discouraging learning and innova-
tion. One of us (McElroy) clearly remembers being told by a super-
ior of his at IBM not to waste his time focusing on internal problems
there— “You’re not going to change anything,” he said. At least for
one part of IBM at the time, then, knowledge processing was
narrowly controlled by senior management and was closed to the rest
of us. That kind of environment arguably detracts from corporate
value and should be accounted for accordingly. It’s a form of
negative social capital that is a liability, not an asset. And this raises
the more general question of why IC models attempting to take
account of intangibles do not consider intangible liabilities as well as
intangible assets.

False Linearity

Among the first principles of the new KM is the view of organiza-

tions as complex adaptive systems. Outcomes are the nonlinear,
emergent results of countless interactions between agents, who each
have their own rule sets, are autonomous, and who at times collec-
tively work together toward achieving common goals, but at other
times work either independently or against one another and still
achieve their goals. In complex adaptive systems, 1 plus 1 plus 1 is
more likely to add up to 5 than 3. On other occasions it may be 6,
7, or 10, but never 3. This is anathema to conventional accounting.
Balance sheets and income statements are the products of linear, or

----------------------- Page 309-----------------------

280 Key Issues in the New Knowledge Management

at least reductive, thinking. There is no place in them for taking

account of emergent processes. Acceptable solutions when conceived
from the perspective of conventional accounting, therefore, can only
be ones that comport with a linear or otherwise mechanistic model
of the world.
But linear and mechanical solutions are not to be had in knowl-
edge processing. Value outcomes may be describable and explainable
in retrospect, but they are not predictable in practice. Neither
process, however—explanation or prediction—is dependent upon the
use of linear models. Here, value is not reducible to its simple com-
ponents. It is greater than the sum of its parts. By contrast, as a crea-
ture of linear and mechanical thinking, conventional accounting is
entirely reductionist. The value of something can always be reduced
to the value of its parts, and the values of the parts always add up
to the value of the whole. Such reductionism is just plain false in the
case of knowledge processing and its outcomes.
 In these areas, the values of global attributes are not reducible to
the sum of their parts, nor are their values specifically predictable.
In order to solve the IC problem, then, those who would do so must
abandon their dependence on linear and mechanical models and con-
sider the possibility of using other tools or approaches that deal with
nonlinearity and emergence. The science of complexity comes rushing
to mind here. But the more general point is that global attributes of
systems are generally determined by relationships among attributes
that must be described by nonlinear dynamical theories and models
and that often are emergent and defy explanation in terms of any
model, whether linear or nonlinear in character.
The inability to predict nonlinear, dynamical outcomes has another
practical implication on related accounting theories and approaches:
there are no certain formulas or principles available on how best to
create intellectual capital, only theories. And even the best of our the-
ories are subject to revision or replacement in response to unexpected
events that contradict them and surprise us. We do not control the
production of IC in any simple cause-and-effect sense at all, so
how can we purport to do so in ways that are as predictable and
standardized as, say, the manner in which we manage fixed assets
and reflect their values on a balance sheet?
Consider the following example. Three people in a department
decide to collaborate with one another on the basis of their shared
interest in solving a particular problem. No one asked them to do so;

----------------------- Page 310-----------------------

A Note on Intellectual Capital 281

they just self-organized. After many rounds of discussions and

interactions, they come up with a solution that solves the problem,
lowers costs, and raises revenue. The income statement reflects these
effects, and a patent they later acquire shows up on the balance sheet,
as well.
Meanwhile, the market notices these changes and the company’s
stock price increases such that its market value becomes triple
its book value. Previously, its market and book values were equal.
Recognizing the chain of events that led up to this new good fortune,
management is then faced with two problems: (1) how to account
for the new, intangible value manifested in its stock price, and (2)
how to manage the firm differently in the future so that (a) it
holds onto its new higher value, and (b) more of what happened
happens again.
In response to the first problem, management notices that the pro-
portion of market value now attributable to its new intellectual
capital vastly exceeds the appraised value of its patent and the effects
on its revenue. What’s going on here, they ask? Upon reflection, they
realize that part of what the market is doing is recognizing
and rewarding their capacity to innovate and adapt—not just in
terms of the outcomes themselves, but the newly demonstrated insti-
tutional capacity to learn. In other words, the market is placing a
premium on their social innovation capital, and the higher price of
the stock reflects it. But what are the units of measurement for social
innovation capital, they ask? How do we reduce it to its constituent
parts for accounting, valuation, and reporting purposes?
The truth is, they can’t. Nor should they feel the need to. The
driver of such questions is, itself, the problem here, not the inability
to measure social innovation capital in conventional terms. What’s
happening is that a vestige of old knowledge (generally accepted
accounting principles and their linearity) is having unwanted effects
on our efforts to solve a new problem. We simply cannot measure
nonlinear phenomena with linear tools, and we should stop trying to
do so. Further, we need to shift our focus from the outcomes to the
causal influences that produce them. Hence, our focus should be
more on the social processes we call social innovation capital (and
their quality) than on the quality and impact of their outcomes. This
takes us to the second problem.
Should management conclude, as a result of the success they
observed, that all problems from then on should be tackled by groups

----------------------- Page 311-----------------------

282 Key Issues in the New Knowledge Management

of three employees? Or that the process followed by the three who

solved the earlier problem should be codified into a pattern and
replicated throughout the firm? This, too, would be a mistake
because the outcome experienced by the original three was itself an
emergent outcome unaccounted for by either linear or nonlinear
models. Indeed, the same three people if faced with the same problem
at a different time (if even only a day later) would very likely produce
a different outcome. Similarly, if the two of us sat down tomorrow
or next week instead of today to write this chapter again, it would
undoubtedly be different. This is the butterfly effect writ large in
knowledge processing and innovation. Chances are, then, that any
attempt to codify what worked well the first time would utterly
undermine creativity every time thereafter.
In light of the above, we believe a credible case can be made for
simply reflecting the cumulative effects of organizational activity on
a company’s intangible market value in one line item of the balance
sheet: organizational and market intangibles. This would simply be
the difference between market capitalization and book value. Any-
thing that cannot be accounted for in tangible book-value form
would be lumped into this new category. From there we enter the
realm of management theory, insofar as we may have an interest in
determining how the value of organizational and market intangibles
is produced and how we can have an impact on it. If the manage-
ment regime believes that making investments in strengthening social
innovation capital will increase the organizational and market intan-
gibles value of the firm, they can have at it and give it a whirl. Others
can pursue their own competing theories, as well.
By reflecting the value of intangibles in a single category, the
emergent outcomes of both the internal organizational dynamics of
a firm and the separate external influence of the marketplace could
be reflected in what is otherwise a linear or at least mechanistic
tool for measurement and reporting. And since unlike the rest of
the balance sheet’s contents, emergent assets (and liabilities) are
not subject to prediction or to reductionist constructions, we could
relieve the accounting profession’s frustration with its inability to do
so and relegate the whole problem to the realm of new theory and
practice. We, of course, believe that the key to growth and sustain-
ability in the value of organizational and market intangibles lies
mostly in efforts to manage the strength and composition of social
innovation capital. That is where investments should be made in

----------------------- Page 312-----------------------

A Note on Intellectual Capital 283

growing the value of a firm, and recognizing the nonlinear trajectory
of related outcomes is key to their accounting.

A False Orientation

Here our remarks are only very brief because of what we have already
said above. In surveying the landscape of competing ideas and theo-
ries about how best to address the IC problem, it is worth noting,
we think, that the problem was born of, raised in, and will very well
die of the accounting perspective. In fact, the IC problem may very
well die at the hand of accounting which, when all is said in done,
may wind up producing the conclusion that the problem never really
was an accounting problem to begin with. Or if it was, it was the
wrong accounting problem. What do we mean by this?
Why should there necessarily have to be a place in a linear/
mechanistic accounting and reporting system for organizational
and market “intangible” phenomena? Why must we find a way to fit
the value of intangibles and their emergent character into tools
that were conceived of, and designed for, linear/mechanistic analysis
and reporting? Next, if the purpose of reporting is to enhance the
quality of information provided to existing and would-be investors,
what in the world makes us think that accountants know anything
at all about organizational and market intangibles? How, then, can
a solution for the measurement of emergent behaviors, processes, and
outcomes possibly be hatched from within the accounting profession?
In a sense what we have here is the “right problem” being addressed
by the “wrong profession” using the “wrong tools.” The orientation
to the problem and its probable solution are, therefore, arguably
false.
What we need here are social scientists, complexity theorists, and
yes, knowledge managers (especially ones of the new KM variety)
who can help take this problem out of the accounting box in which
the solution is presumed to be found, and who can then recast it
anew. Why? Because the first and most fundamental questions relate
to the causes of intangible value in a firm. These are not accounting
questions; they are social ones. They have more to do with social
science, epistemology, value theory, social psychology, and economic
dynamics than with bookkeeping and financial reporting. What we
need is good social theory on how nonlinear value happens in human

----------------------- Page 313-----------------------

284 Key Issues in the New Knowledge Management

social systems, after which we can take up the related accounting

issues. We, of course, believe that the KLC and other new KM models
provide us with a large part of the answer and that investments made
in strengthening KLC dynamics and KM processes should be seen as
causally linked to changes in IC outcomes and related market values.
But this kind of thinking is not a creature of accounting theory. Not
in the least.

Two Systems, Not One

Our last criticism of the approaches taken thus far in the quest
to solve the IC problem is that they all fail to recognize the fact
that in looking at corporate valuations, we are dealing with two
social systems (at least), not one. The first is the enterprise (any
publicly traded one) and the second is the securities market(s) in
which its shares are traded. Managers and employees inhabit the first
system; shareholders, potential shareholders, the press, regulators,
and financial analysts inhabit the second one. When we take up the
question of conventional financial reporting, we are by definition
speaking of value found within the former and controlled by its
inhabitants, especially its managers. When we speak of intangible
values, however, it is important to recognize that these are produced
by the latter and controlled by its inhabitants, especially its stock-
holders, and then conferred by them onto the former. Let’s explore
this idea further.
Managers in businesses can in a very real sense control the book
value of their companies’ assets and liabilities. They can buy assets,
invest in them, sell assets, depreciate them, build new buildings, sell
business units, borrow money, and so on. In terms of intellectual
capital, they can even buy intellectual property, sell it, license it, and
reflect it in material terms on their balance sheets. In this sense, intel-
lectual property is not “intangible” at all and should not be seen or
treated as anything like social innovation capital, the composition
and value of which is often nebulous at best. Ironically, the most
conspicuous form of so-called intellectual capital (patents) may be
precisely the one that least deserves to be included in the new cate-
gory of organizational and market intangibles discussed above. Why?
Because its value can be determined like any other object of asset-
based accounting. Patents are, for all intents and purposes, tangible

----------------------- Page 314-----------------------

A Note on Intellectual Capital 285

assets that can be produced, purchased, sold, licensed, and valued

as such.
Managers, however, do not control the value of things above and
beyond the value of their organizations’ tangibles. Why not? Because
such additional value is imposed on organizations following its
formulation or emergence in another system (the market), which
exists outside of, and separate from, the companies that operate
within it. Such value is formulated, that is, by agents (especially
investors) as a consequence of the dynamics at play in their system,
the market, rather than in the system inhabited by managers and their
staff (i.e., the enterprise). Enterprises then experience or inherit the
effects of the emergent, nonlinear outcomes of the dynamics of their
decision making as a consequence of the effect on members of the
other, external system (i.e., in the form of shareholders’ valuations of
what the company’s stock price should be as filtered through the
mechanism of supply and demand). But for managers to reflect the
value that such outsiders place on the firm in the same way that they
measure, report, and manage tangible asset values would be mis-
leading and mistaken. That value (intangibles) is something that
managers and the enterprise, in general, receive and that they do not
control.
From the perspective of the new KM, an enterprise is simply a
complex adaptive system, one of many. Complex adaptive systems,
in turn, have relationships with one another—ecological ones. They
exchange valued things with each other, and they assign value(s) to
each other, as well. The valued material (and services) that the trees
in an apple orchard receive from the bees that pollinate them is in
no way controlled or managed by the trees themselves. The bees,
instead, confer a value to the trees while receiving value from them,
as well. Indeed, the trees reciprocate by conferring value to the bees
and their hives as a food source to them, but it would be a mistake
to think that the bees are in any way managing the added value
received by them from the trees they rely on. Both the trees and the
bees have value (to themselves), part of which is directly managed
while another part is not managed at all. Rather, the latter part is
inherited as a by-product of their place in the ecology.
To further illustrate the point here, consider the addition to our
analogy (the bees and the trees) of an orchard grower and a bee-
keeper. In contemplating the purchase of the orchard (by the grower)
and the beehives (by the beekeeper), each considers the tangible value

----------------------- Page 315-----------------------

286 Key Issues in the New Knowledge Management

of the assets of interest to them. But the grower also notices the
healthy state of the local ecology and especially the presence and
favorable impact of the local bees on the quality of the orchard. He
adjusts his estimate of the orchard’s value upward, accordingly. The
beekeeper, in turn, makes a similar observation: that the size and
proximity of the orchards nearby contributes to the health of the
hives. He, too, adjusts his estimate of the value of his target purchase
upward. Thus, we can see that the economic intangible value of a
commercial enterprise is determined not so much by its managers,
but by the separate determinations of agents in external systems with
which the enterprise has ecological relationships. In fact in this case,
there were two such external systems: (1) the market in which the
buyers were situated, and (2) the orchard and the bee hives that had
impacts on each others’ economic valuations in the minds of the
buyers.
What can we conclude from this with regard to the IC problem?
First, we can say that to try and reflect the value of intangibles using
conventional reporting tools is to undermine the spirit and intent
behind them. Why? Because their purpose in capital markets is to
report on things that managers can control, and not on things that
they merely inherit as if they were controlled. Does this also mean,
then, that managers should forget about trying to control the size
and makeup of organizational and market intangibles? Not at all.
But here again, we’re still operating at a point in the development of
the discipline where all we have are theories. Standardized reporting
schemes, like balance sheets and income statements, call for more
than that. Let the theories come forth and compete with one another
on a level playing field, we say, and standards for reporting will
follow. In the meantime, let’s at least reflect the value of intangible
outcomes in the form of the line item we have suggested: organiza-
tional and market intangibles (market capitalization minus book
value). First things first.
As for how to manage in complex dynamical systems, the fact
that the orchard owner cannot strictly control the attractiveness of
his trees to the bees, or the value they (the bees) place on his trees,
should not stop him from testing and evaluating different strategies
for enhancing whatever he might think might make them inviting
to bees. Indeed, some of his efforts may clearly enhance the growth
of his trees and the extent of their flowering. But he could never
manage all of the variables that contribute to assessments of value

----------------------- Page 316-----------------------

 A Note on Intellectual Capital 287

by bees any more than he could manage the many other factors that
influence the behavior of bees, such as the weather or other factors
outside his control. And even if he could, the nature of the system
dynamics that operate between them (the variables) would seem
mysterious and capricious to him. No, the best he can do is to tinker
with the factors he does control, recognizing, however, that they are
all still part of a larger emergent system that has a life and trajectory
of its own.
The moral of this analogy, then, is that organizational and market
intangible values are not at all controlled in the same sense that the
value of tangible, book values are, nor are they even formulated from
within the same system—the enterprise. Hence, we should stop
pretending that they are by trying to fit them within our linear
models (our reporting tools). Intangible values are determined by
other actors in systems outside of the enterprise (stockholders and
would-be stockholders in markets, etc.) whose independent judg-
ments of value are extended to enterprises as projections of their
values, not managers’. These intangible values are, therefore, con-
ferred to enterprise systems by market-based stockholder systems and
are therefore inherited by enterprises, not produced by them.

Conclusion

Underlying all of our comments in this chapter regarding the unsuit-

ability of conventional accounting perspectives in the treatment of
intangible values are four key points:

1. The most important source of intangible economic value in a

firm is external to itself—not found at all within the firm, and
therefore not directly manageable by it. The origin of such value
is in the minds of current and prospective stockholders, whose
valuations of a firm are determined within the dynamics of their
system, not the enterprise’s. Their values are then projected
onto the enterprise, which in turn receives it as a kind of gift
or inheritance—an inheritance, however, that is always subject
to adjustment and even return.
2. Apart from being determined by agents outside of the enter-
prise, reflecting the value of intangibles using conventional
accounting tools as though they were internally managed

----------------------- Page 317-----------------------

288 Key Issues in the New Knowledge Management

suffers from another problem, as well. Balance sheets are static

models. They are predicated on the assumption that it is
possible to start with a market value that can then be broken
down into its additive elements. Knowledge and the processes
that produce and integrate it, however, are anything but addi-
tive. What we need in order to account for them both are
dynamic models—nonlinear ones—not static ones. These, in
turn, should come into play in conjunction with the theories of
emergence they support, the composition of which will suggest
reporting models and tools of their own. This is the path to
solving the so-called IC problem. Ramming new realities into
old frameworks simply will not work.
3. All of our warnings concerning the inability to manage
 emergent systems and outcomes have been precautionary but
not absolute. While it’s true that processes and outcomes in
complex adaptive systems are emergent beyond the absolute
control of managers, it is possible to have impacts on them,
nevertheless—even intended impacts that give rise to corre-
sponding (hoped for) outcomes. This, however, does not entail
conventional management. Rather, management in such envi-
ronments must begin with recognition of organizations as social
complex adaptive systems, subject to the mostly unpredictable
effects of system dynamics and emergence. Armed with this
insight, it is possible to build models of organizations and their
environments that are nonlinear in form and to use such models
for predicting the potential outcomes of alternative manage-
ment strategies, including the effects that management decisions
of one kind or another might have on the externally produced
value judgments assigned by markets to the enterprise. In this
way, managers can have impact on the value of their organiza-
tions’ organizational and market intangibles, which, so far as
we’re concerned, makes such values manageable.
4. That said, we are only prepared at this point to support the
reflection of intangible values in the lump sum fashion we have
proposed. It is simply too soon to suggest any other, more
granular treatment of intangibles on the balance sheet. What’s
required, instead, is a period of trial and error, or experimen-
tation, in which competing theories of how intangible values
are produced can be tested and evaluated. As a consequence
of that process, we can conceive of a point in time when the

----------------------- Page 318-----------------------

A Note on Intellectual Capital 289

momentum behind one or more models of how intangible

values are produced matures and informs us of their manage-
ment, measurement, and reporting implications. Then and only
then will we have a solid basis for suggesting how best to report
on the value of intangibles to stockholders. Until then, it’s
premature.

On the basis of the closing remarks above, we believe that the

accounting profession should undertake a concerted effort to bring
the additional, nonaccounting disciplines into the process of trying
to discover the nature of intangible value and the role it plays in
corporate valuations. These would include complexity scientists,
social scientists, and knowledge managers of the second-generation
(new KM) type. Until we do, and until we find ourselves testing and
evaluating the use of nonlinear models, not linear ones, we should
expect, as Kuhn (1970) put it, to encounter nothing but problems
that seem to indefatigably resist “the reiterated onslaught of the
ablest members of the group [accounting] within whose competence
it [the IC problem] falls.”

References

Kuhn, T. (1970), The Structure of Scientific Revolutions (2nd Edition

Enlarged), Chicago, IL: University of Chicago Press.

McElroy, M.W. (2002), “Social Innovation Capital,” Journal of Intellectual
Capital (Vol. 3, No. 1), pp. 30–39.
----------------------- Page 319-----------------------

Chapter 11

Conclusion

Vision of the New Knowledge Management

The new Knowledge Management is more than just the second gen-
eration of KM—it is a new science, a social science. It is a science
because its theory and practice are testable and falsifiable, yet sys-
tematic and formal, and it is a social science because of the nature
of its focus on how to get human social systems to learn and adapt
as best they can. The new KM can also be seen as an application of
a much broader “new science”: complexity science. Thus, it is a new
application of Complex Adaptive Systems (CAS) theory, a vision of
how living systems adapt to changes in their environment by evolv-
ing their knowledge. And because of the human social setting of its
focus, the new KM also relies on organizational learning (OL) (as
well as social psychological, sociological, and political) theory to
round out its views. Not only do individuals learn, but the groups
and organizations of which they are a part also learn. In this way,
organizational learning theory, along with other social sciences that
contribute to KM, help us put a human face on CAS theory, thereby
accounting for the unique blend we see between OL, other social
science disciplines, and CAS in the new KM.
Despite their contributions to KM, organizational learning, other
social sciences, and complexity theories still need to be supplemented
in one very important area: epistemology. This is (or was) a problem.
After all, we can’t have a discipline called “Knowledge Management”

290

----------------------- Page 320-----------------------

Conclusion 291

that fails to adequately define its own vocabulary, or to ground itself

on a theory of knowledge. For that we turned to Karl Popper (1963,
1972, and 1994; Popper and Eccles 1977). Popper’s notion of the
three “worlds” of existence is comprehensive and convincing. Not
only does it account for knowledge held in minds (beliefs), it also
provides for so-called “objective” knowledge—knowledge held in
linguistic expressions, such as speech, documents, and other mater-
ial recordings. In organizations, we find both “subjective” knowledge
held in minds and “objective” knowledge held, or expressed, in lin-
guistic forms.
Popper’s epistemology is also highly compatible with organiza-
tional learning and complexity theory. To the former (as we have
shown in Chapter 2), he adds the dynamics of knowledge claim for-
mulation and trial-and-error as the means by which “double-loop
learning” occurs; to the latter, a focus on the elimination of errors in
our thinking and how error elimination can enhance our capacity to
adapt. In addition, his theory of the emergent evolution of the three
ontological worlds emphasizes the adaptive significance of World 2
(subjective) and World 3 (objective) knowledge in human evolution
(see Chapter 1). That is, according to Popper (1972, 1994; Popper
and Eccles 1977), both types of knowledge are for adaptation, and
the ability to produce both has been selected for by the environment.
This is the significance of knowledge in human evolution.
Indeed, Popper’s views give managers, and other members of
adaptive systems who wish to adapt, a better and more effective place
to go in terms of how to approach the production of their own
knowledge than do alternative theories of knowledge. That is, his
views make it clear that knowledge production by them is a legiti-
mate and natural process that they must engage in if they and their
organizations are to adapt. Similarly, Popper’s epistemology gives
new meaning to the practice of KM—the new KM, that is—by ori-
enting organizations toward seeking out and eliminating the errors
in their knowledge claims. Institutionalizing related processes on an
enterprise-wide basis is an important aspect of the mission and
purpose of the new KM, because of the centrality of error elimina-
tion to adaptation.
The old KM—still widely practiced in many circles—is not entirely
free of theoretical foundations itself. And it may even qualify, for
some, as a science. But on both fronts, it is quite different from the
new KM and considerably narrower. While mostly unspoken, we

----------------------- Page 321-----------------------

292 Key Issues in the New Knowledge Management

could say, for example, that the theory of first-generation KM goes

something like this: that we can assume the existence of pre-existing
knowledge and that KM is about getting that “knowledge” (actually
“information”) to the right people at the right time. The scope of
first-generation KM’s interests, therefore, is (and has been) the deliv-
ery of existing information. We say “information” and not “knowl-
edge” because no persuasive distinction between the two has ever
been made in the conventional practice of (old) KM, and the term
“information” is used in the KM literature at least as often, it seems,
as the term “knowledge” is.
Thus, the old KM is largely predicated on the view that valuable
knowledge simply exists and that the purpose of KM, therefore, is to
enhance its delivery to people who need it. But since no meaningful
distinction between knowledge and information has ever been made
in the practice of first-generation KM, we feel safe in concluding that
the old KM has not been about “knowledge” management at all—
it’s been about “information” management (see Chapter 3).
Further, the assumption that knowledge (information) simply
exists and that KM’s role should merely be to aid in its capture and
delivery is also unfounded, or at least arbitrary. While it may be con-
venient for some to ignore the means by which knowledge is pro-
duced—and not just shared or delivered—that still leaves the rest of
us, who actually from time to time have a need to learn, innovate,
and adapt, dissatisfied. More important still, the essence of life, and
of individuals and human organizations, is adaptation to changes in
the environment. The old KM is not about such adaptation, and
therefore it is basically incrementalist in orientation and not focused
on the most essential of organizational functions. Compared to the
new KM, then, it is unimportant, a mere diversion from the funda-
mental questions of organizational existence and development.
The new KM, then, is aimed at enhancing the whole cycle of
knowledge production and integration, not just the easier and more
convenient tasks of rounding up documents and other artifacts for
access and distribution in computer-based repositories. Its scope of
attention is, therefore, considerably broader and deeper than its
first-generation cousin, as are its value propositions. Moreover, the
distinction it makes between knowledge and information takes it
(and us) into utterly new areas of insight and opportunity. There is
a difference between knowledge and information, and the new KM
opens our eyes to it for the first time in the practice of KM.

----------------------- Page 322-----------------------

Conclusion 293

Perhaps the most dramatic example of this new perspective is the

connection we have drawn between KM and corporate malfeasance.
Turning to Popper, we can interpret such behaviors as error-ridden
knowledge in practice, employed by unscrupulous corporate execu-
tives, whose knowledge in use is not only faulty, but whose knowl-
edge in use somehow managed to get a great deal farther along than
it should have. Thus, such knowledge in use is riddled with errors,
and the processes in place that produced and validated it (i.e., the
knowledge processing processes) are dysfunctional, as well.
By focusing on enhancing the quality and integrity of organiza-
tional knowledge processing, the new KM can play an extremely
valuable role in helping to reduce corporate malfeasance. Indeed, by
calling attention to the dimensions of errors in our knowledge and
to the importance of the processes used to produce and evaluate it,
we can have a material impact on improving the quality of the busi-
ness processing outcomes that follow. But since the old, first-genera-
tion KM makes no distinction between knowledge processing and
business processing—much less between knowledge and information
in terms of errors, validity, or anything else—no such role for KM
could possibly come out of it. Its sole purpose is to enhance the deliv-
ery of information.
Deep in the heart of the new KM are two principal claims that
perhaps underlie its practice more than anything else. The first, taken
from Popper (1959) and from Peirce (1955), is that there can be no
certainty of truth and therefore no certain knowledge. All human
knowledge is fallible. We can, however, endeavor to get closer to the
truth, and the way we can is by seeking to find and eliminate the
errors in our thinking. This approach to learning is what Popper
(1963) referred to as fallibilism.
The second insight follows closely on the heels of the first in the
sense that what people, in fact, seem to do as they go about the
process of making decisions and learning is problem recognition,
solution formulation, and error elimination through trial and error.
In this book (Chapter 2) and in other places we have described
how trial and error works in the Decision Execution Cycle (DEC)
(Firestone 2000, Firestone 2003), and also in knowledge claim for-
mulation and evaluation in the KLC.
When we combine these two ideas, what we get is a fundamental
dynamic found in all humans: the need to solve problems by reach-
ing tentative solutions and then eliminating the errors in them

----------------------- Page 323-----------------------

294 Key Issues in the New Knowledge Management

through trial-end-error processes of testing and evaluation as a pre-

cursor to decisions and action. Thus, the difference between knowl-
edge and information is that while both consist of claims about the
world, beauty, and truth, only knowledge consists of claims that have
survived our tests and evaluations of whether they are in error. This
doesn’t make them necessarily true, but it does make them preferable
to us as a basis for decisions and action, and that is why we pay so
much attention to the idea of metaclaims and the role that they play
in knowledge processing in the new KM.
Metaclaims are the claims about claims that we rely on (and that
we also produce) as we seek to weigh the closeness to the truth of
one claim against another by deciding which of the claims has sur-
vived our tests. Trying to distinguish surviving knowledge claims
from false ones in the absence of metaclaims is a little bit like trying
to find “middle C” on a piano keyboard whose black keys are
missing. Without them, there’s no way to distinguish one white key
from any other.
Knowledge, then (but not truth), is entirely relative to the re-
sults of our tests and evaluations. What passes for knowledge to us
(Firestone and McElroy) may amount to false or untested claims to
you because your record of testing and evaluation may differ from
ours. Moreover, some knowledge claims may be closer to the truth
than others, and some may even be true, but in the end all human
knowledge is fallible, and so we can never know with certainty which
of our beliefs or claims are actually closest to the truth, or even coin-
cident with it.
The best we can do is to demonstrate the absence of errors in our
knowledge to the best of our ability by subjecting it to continuous
criticism, testing, and evaluation. People and organizations that do
this well stand a better chance of adapting and surviving in the face
of change because the quality of their knowledge claims will be
higher, and so their performance using them will also be superior.

The New Knowledge Management Landscape

In this book we have tried to illustrate the many ways in which

The New Knowledge Management (TNKM) differs from its first-
generation cousin using key issues as a vehicle for doing so. We
have covered:

----------------------- Page 324-----------------------

Conclusion 295

# The difficulties KM has had in arriving at a cogent account of

knowledge;
# The problem of explaining the origin of the distinction between
business processing and knowledge processing and of the origin
of the KLC;
# The distinction between information management and KM and
the specification of a KM framework;
# The theory of change in generations of KM;
# The nature of knowledge claim evaluation and a framework for
analyzing it and performing it;
# The significance of the KLC and some of its many applications;
# The meaning of best practices and some requirements for viable
best practices systems;
# The problem of KM strategy, its independence of operational
management, and the question of its independent role and
status in the adaptive organization;
# The problem of the role of culture in KM and the overestima-
tion of this role in KM to date;
# The progress of the field of intellectual capital and its failure to
 take account of Social Innovation Capital (SIC).

There are, however, many other aspects of the landscape of The New
KM (TNKM) that, for lack of space, we have left for examination
in a future volume. These additional key issues on the KM landscape
include:

# The SECI Model (Nonaka and Takeuchi 1995) and the need
for an expanded knowledge conversion framework;
# Is KM ready for standards?
# Portal progress and KM;
# A framework for analysis and evaluation of KM software;
# TNKM metrics;
# The open enterprise and sustainable innovation;
# TNKM and the terrorism crisis;
# The role of credit assignment systems;
# Communities of practice versus communities of inquiry;
# KM methodology: linear life cycle versus adaptive “tool box”
approaches;
# KM methodology: knowledge audits versus knowledge process
audits;
# KM methodology: the role of the KLC in KM methodology.

----------------------- Page 325-----------------------

296 Key Issues in the New Knowledge Management

We will come back to these in our discussion of the future of TNKM.

Let us now review, in summary form, a few of the most important
ideas that arose from our discussion of the issues covered in the
preceding chapters, while keeping in mind that our discussion
neglected or only touched upon many important issues in the KM
landscape.

More on Defining Knowledge

In addition to the analysis already offered in our section on the vision

of TNKM, here are a number of other conclusions on the nature of
knowledge in TNKM. In the old KM, the terms “knowledge” and
“information” are used synonymously and without distinction, but
in the new KM, as indicated in Chapter 1 and many other chapters
in this book and the last section, we address the issue of making the
distinction head-on. We do so by calling attention to the general ideas
of knowledge claim evaluation and error elimination and to the
testing and evaluation of knowledge claims. Closely associated with
these ideas is the idea of claims and metaclaims, and the crucial role
that metaclaims play in helping us to pick and choose from among
knowledge claims based on how well they stand up to our tests—our
attempts to falsify them.
In addition to knowledge in the form of claims, knowledge also
exists in the form of unexpressed beliefs and belief predispositions.
This kind of knowledge, unlike claims, is held in minds—it is mental
knowledge, not artifact-based or cultural knowledge. Since one
person can never directly know what another one believes, mental
knowledge is personal and subjective. In order to share knowledge
and make it accessible to others, it must be expressed in some way—
linguistically—thereby producing “objective” knowledge in the form
of a claim. But this claim is not identical to the unexpressed belief or
belief predisposition. There is an irreducible epistemic gap between
what we believe and what we say.
In the organizational setting, we find both kinds of knowledge:
subjective knowledge (what we believe) and objective knowledge
(what we say). Further, both kinds of knowledge can be held, or
expressed, in different ways, such as tacitly, implicitly, and explic-
itly. Indeed, in the new KM we expand greatly beyond the SECI
conversion model (see Figure 11.1) put forth by Nonaka and

----------------------- Page 326-----------------------

Conclusion
297

Tacit To Explicit

Tacit Socialization Externalization

Adapted From: The

From Knowledge Creating
Company, By I.
Nonaka
and H. Takeuchi
Explicit Internalization Combination

Figure 11.1
The SECI Model

Takeuchi (1995), first by asserting the existence of not just tacit

and explicit knowledge, but implicit knowledge, as well; and, second,
by applying all three forms to both subjective and objective knowl-
edge. In a future work of ours, we will return to this idea and elab-
orate on it in more detail. Its significance, however, is that the SECI
model greatly oversimplifies knowledge conversion, and therefore
KM programs based upon it neglect many important forms of knowl-
edge conversion. We will say a little bit more about the SECI model
below.
What, then, are the KM implications of the claims and metaclaims
perspective in the new KM? Most important, this perspective tells us
that not only is there a difference between knowledge and informa-
tion, but that artifact-based knowledge is a particular kind of infor-
mation. Information is not a subset of knowledge; knowledge is a
subset of information! What kind of subset?
In the case of objective knowledge, it is a linguistic subset
consisting of claims that have survived our tests and evaluations at-
tempting to falsify it and whose record of testing and evaluation is
accessible to us. Thus, we can say that a knowledge processing system
(be it social or technological in character) should not be regarded by
us as a bona fide knowledge processing system unless it reveals and
reports both knowledge claims and their metaclaims. Similarly, a KM
strategy or intervention is not about KM at all unless it concerns the
implementation or management of systems (social, technological or
otherwise) that deal directly with the distinction between claims and
metaclaims.

----------------------- Page 327-----------------------

298 Key Issues in the New Knowledge Management

Here, we point out that according to the new KM, most instanti-
ations of KM in the past have not been about KM at all. Perhaps
this, in large part, accounts for the degree to which KM has been
received with such ambivalence, reticence, and downright distrust to
date. It never really was about knowledge management at all.

The Origin of the KLC

In Chapter 2, we provided a step-by-step development of the

origin of the KLC in the Decision Execution Cycles (DECs) (some-
times referred to as Organizational Learning Cycles, or OLCs) that
account for activity in human social systems and that, when inter-
related by goals and objectives, form business processes. We offered
a theory of how DECs (see Figure 11.2), when characterized by
perceived inadequate belief knowledge, can provide a context for
recognition of a gap between what the decision maker knows and
what he or she needs to know to make a decision. This epistemic
gap is what we mean by a “problem.” Problems, in turn, arouse a
learning incentive system that motivates performance in a set of inter-
related DECs aimed at closing the epistemic gap or solving the
problem.
This set of interrelated DECs is, in fact, the KLC pattern, where
DECs are structured into information acquisition, individual and

Previous
Monitoring Knowledge

The DEC
Knowledge
Acting applies to any Use
business Evaluating

process

Knowledge
Use
Planning &
Previous Decision Making
Knowledge

Figure 11.2
The Decision Execution Cycle (DEC)

----------------------- Page 328-----------------------

Conclusion 299

group learning, knowledge claim formulation, knowledge claim eval-

uation, broadcasting, searching/retrieving, sharing, and teaching.
These are the subprocesses of the KLC (see Figure 11.3)—processes
of knowledge production and integration that produce the distrib-
uted organizational knowledge base, all of the mental and artifact-
based knowledge that originates in the enterprise.
We have seen (in Chapter 2) that the alternation between DECs
in business processing and DECs in knowledge processing is basic to
adaptation and grounded in human psychology, both at the individ-
ual and group levels. It is an alternation between different types of
motivation, and this alternation is the foundation of a distinction
between business processing and knowledge processing and between
the latter and knowledge management. This last distinction is the
basis of knowledge management as a distinct process and discipline.
Without it there can be no knowledge management.

Knowledge Process Management and

Information Management

A second key insight, now plainly obvious to many of us thanks to

the new KM (see Chapters 3 and 4), is that managing “knowledge”
as an outcome—even with our clarified understanding of what it is—
has been a mistaken notion all along. KM is not just about knowl-
edge (claims and metaclaims) outcomes management; rather, it’s
about knowledge process management, as well. Once we recognize
and come to terms with the fact that knowledge is produced in orga-
nizations by way of a social process, it’s a short hop from there to
realizing that we can only manage the outcomes of such a process
through managing the process itself.
Here is where the new KM reveals another crucial weakness of the
old KM—the premise that valuable knowledge already (or simply)
exists and that the proper role of KM is merely to find it, codify it,
and help make it more easily accessible to people who need it. But
clearly this is not the entire story. Knowledge does not simply exist.
People in organizations produce it, and they do so in regular, pat-
ternlike ways.
In addition, once they produce it, they integrate their knowledge
into the distributed knowledge base of the organization—also in
regular, patternlike ways. To help better understand the combination

----------------------- Page 329-----------------------

Knowledge Production
Knowledge Integration

Info

about

SKC

Broad-
Individual
casting
and Group
SKC
Learning

Info

about Searching

FKC
Knowledge
Knowledge
Claim
CKC Claim OK
Formulation
Evaluation

FKC
Teaching

Info

about

UKC
Information
Acquisition
Sharing

UKC

3
0

Experiential Feedback
0
External Inputs

Business
Processing Environment

DOKB
Feedback
(including the Business
Process DOKB Containers
detection of
Behaviors · Agents (Indiv. & Groups) · Objective
Knowledge
epistemic problems)
· Subjective Knowledge
of
Interacting Agents · Artifacts (Docs., IT, etc.)

CKC = Codified Knowledge Claim

= Knowledge
Processes COK = Codified
Organizational Knowledege

DOKB = Distributed Origanizational Knowledge Base

FKC = Falsified Knowledge Clain

OK = Organizational Knowledge
= Knowledge
Sets SKC = surviving Knowledge
Claim

UKC = Undecided Knowledge Claim

Figure 11.3

The Knowledge Life Cycle (KLC)

----------------------- Page 330-----------------------

Conclusion 301

of such patternlike knowledge production and integration processes,

the new KM has given us the Knowledge Life Cycle, or KLC—a
descriptive model of knowledge processing in human social systems
that is unique in the field (see Figure 11.3).
The origin of the KLC (see Chapter 2 and just above) can be traced
to individual and organizational learning theories and also to theo-
ries about how living systems learn on an emergent basis as expressed
in complex adaptive systems (CAS) theory. In addition, we see aspects
of the KLC that are deeply rooted in psychology and cognitive science
(personal knowledge), social psychology (sense making), and episte-
mology. When we put all of this together, we see the manner in which
decision making and action are tied to sense making and the use of
existing knowledge, as well as sense making and the production and
integration of new knowledge. These are processes, not outcomes,
and they can be strengthened, reinforced, and enhanced. As one of
us (McElroy 1999) once remarked (to himself), “It’s not knowledge
management, stupid, it’s knowledge process management.”
The difference between information management (IM) and knowl-
edge management (KM) was analyzed in Chapter 3. There we
concluded that the essential difference between the two is in the area
of Knowledge Claim Evaluation (KCE). KCE is a primary target
for KM, but it is not logically required by the definition of IM.
Moreover, the outcome of KCE is artifact-based knowledge that is
distinguished from information by the tests and evaluations per-
formed in KCE. Thus, the management of KCE lies at the heart of
the new KM because it (KCE) is the immediate source of artifact-
based knowledge and its outcomes are the basis for the distinction
between information and knowledge. Without management of the
KCE there is only IM, not KM! With management of KCE, KM pre-
sents us with its own autonomous foundation, both as a process and
as a discipline.
In Chapter 3 we also raised the question of how KM may be spec-
ified in the form of a framework that offers a middle ground between
definition and measurement and that provides a platform on which
measurement may be based. We answered this question by provid-
ing a framework based on Mintzberg’s (1973) classification of exec-
utive activities, the distinctions among levels of KM activity, KLC
targets, social/technological, and policy/program dimensions. This
framework provides the most extensive foundation for classifying
KM interventions yet proposed.

----------------------- Page 331-----------------------

302 Key Issues in the New Knowledge Management

Supply- and Demand-Side Knowledge Processing

Once the KLC starts to come into view, we can make a further dis-
tinction (see Chapters 4 and 5) on how its presence in organiza-
tions relates to what we do in commerce—that is, its role and impact
on our business processing affairs. When we engage in business
processing, we engage in knowledge use. Turning to the Decision
Execution Cycle once again (see Figure 11.2), we can see that pre-
existing knowledge is used by us as a precursor to action whenever
we monitor, evaluate, plan, and make decisions. On occasion,
however, as we explained in Chapter 2, our preexisting knowledge
fails us. This gives rise to epistemic gaps—gaps in what we know
versus what we need to know. Cycles of knowledge processing
driven by the learning incentive system then follow in order to close
such gaps.
Once inside knowledge processing (the KLC), we can see that one
cluster of goal-directed activity is focused on knowledge production
(problem solving), while another concentrates on knowledge inte-
gration. Here we sometimes find it useful to refer to these two clus-
ters in a shorthand manner by referring to knowledge production as
“demand-side” knowledge processing and knowledge integration as
“supply-side” knowledge processing. Why? Because knowledge pro-
duction is triggered by the demand for new knowledge in response
to epistemic gaps; knowledge integration, in turn, is focused on the
supply of knowledge only after it has been produced. Knowledge
integration is all about the propagation, diffusion, and supply of
existing (old or new) knowledge across personal and organizational
boundaries.
This understanding of demand- and supply-side Knowledge Pro-
cessing (KP) quickly leads to a similar distinction we can make
between demand- and supply-side KM (see Figure 11.4). Demand-
side KM consists of KM strategies and interventions aimed at enhanc-
ing demand-side knowledge processing, or knowledge production;
supply-side KM consists of KM strategies and interventions aimed at
enhancing supply-side knowledge processing, or knowledge integra-
tion. In truth, the best KM strategies are ones that cross both bound-
aries and which deal comprehensively with the whole life cycle, not
just parts of it. Nonetheless, we can make the demand- and supply-
side distinctions, and it is often useful to do so as we consider nar-
rower, more targeted interventions in our work.

----------------------- Page 332-----------------------

Demand-
Side KP

Knowledge Production
Knowledge Integration

Demand-
Side KM • Individual and
• Sharing

GroupLearning
• Information Knowledge
Knowledge Organizat’l • Broadcasting

Acquisition Claims
Claim Knowledge • Searching
• Knowledge
Evaluation
Claim
Formulation
• Teaching

3
0
3
 Feedback Business Process
Environment
(Including the Business Process
Organizational Knowledge Distributed Supply-
Detection of Behaviors of
‘Containers’ Organizational
Epistemic Interacting Agents •
Individuals and Groups Knowledge Side KM
Problems) •
Artifacts& Codifications Base
(Knowledge Use)

Internal/External Events

Solutions

Supply-

Side KP

Figure 11.4
Demand- and Supply-Side Knowledge
Management

----------------------- Page 333-----------------------

304 Key Issues in the New Knowledge Management

Metaclaims and Best Practices

That the new knowledge management is so focused on the im-

portance of knowledge claims and metaclaims is unique in the
field. No other brand or style of practice in KM shares this per-
spective. Still, the idea seems obvious to us. Why shouldn’t we think
of knowledge that we express in, say, objective linguistic form as
being anything other than a claim? To proclaim something as true is
merely to claim it as such (PRO-CLAIM). And as a claim, an asser-
tion is of course not necessarily true, for which of us can also claim
to have direct contact with the truth, direct knowledge, or omni-
science of a sort? No, all knowledge claims, as well as metaclaims,
are fallible.
Adhering to fallibilism, we also agree with Popper that we can
make choices between statements or claims that we believe to be true
and others that we don’t. And we can do this through the use of
deductive logic, which exposes inconsistency (see Chapter 5) and
forces us to choose between premises and conclusions of arguments
and therefore to falsify some of our statements and grow our
knowledge.
The practical implications for KM and for people operating in
business processing modes of the idea that we can falsify our knowl-
edge claims and to select among them from the survivors are enor-
mous. Consider the case of “best practices,” for example, as we did
in Chapter 7. What is a codified “best practice” if not merely a
knowledge claim? It is a claim of truth about what patterns of busi-
ness processing behavior will fetch the best or most desirable results.
But what are its premises? What makes its advocates think so? And
why should we, as would-be users of such claims, accept them as true
or as close to the truth? Where are the claims that lie behind the
claims—where are the metaclaims?
The inescapable fact of such great importance to KM and to the
new KM, in particular, is that people naturally rely on metaclaims
for evaluating knowledge claims as a basis for choosing to accept
some knowledge claims over others (or not), even if the systems
that support such decisions do not explicitly support metaclaim pro-
duction, integration, or use. In other words, the processes we use to
evaluate knowledge claims, such as “best practices” claims, are
always broader in scope than the systems we have historically relied
on to support us have been.

----------------------- Page 334-----------------------

Conclusion 305

A conventional IT-based best practices system will always report

claims, but rarely will it provide us with the evaluative metaclaims
that lie behind them. Nonetheless, we still subject such knowledge
claims to our own search for the metaclaims behind them, and then
we always subject all of that (the claims and their metaclaims) to our
tests of consistency, simplicity, projectibility, and other evaluation cri-
teria or perspectives. Rarely do individuals simply accept a claimed
best practice and put it into use without at least asking themselves,
does this make sense?
Metaclaims that evaluate knowledge claims, like the black keys
on a piano, are the context that matters most in knowledge pro-
cessing, for how can we safely conclude that “middle C” is where we
think it is without them? I know where it is because of where it sits
relative to the black keys behind it, and it always sits thus so. In
knowledge management, this changes everything. There is no KM in
the absence of metaclaims that evaluate, only IM (Information
Management). Nor is there any knowledge processing in the absence
of metaclaims. The truth is that people in organizations—indeed, all
of us—rely heavily on the content of metaclaims from one minute to
the next as we constantly try to sort between claims that we ought
to accept and the ones we shouldn’t. Knowledge management
systems, then, conceived with the idea of enhancing knowledge pro-
cessing, must make and support the distinction between claims and
metaclaims in order to be useful and complete, and this means that
management of the knowledge claim evaluation subprocess is a
central fulcrum of KM (see Figure 11.5).

Knowledge Claim Evaluation

In Chapter 5, we presented a framework for description of knowl-

edge claim evaluation, then a normative theory, called the theory of
fair comparison, providing a high level conceptual outline of how to
do KCE, and last an outline of the requirements and structure of a
projected KCE software application. We believe that this analysis is
significant for KM, since very few in the field are writing about
knowledge claim evaluation, much less offering descriptive frame-
works, normative models, and techniques for implementing this crit-
ical activity in knowledge production.

----------------------- Page 335-----------------------

306 Key Issues in the New Knowledge Management

 Knowledge Claims

Metaclaims
evaluating
Claims
Meta-claims

Scope of treatment
Scope of treatment in a ‘best practices’
in a ‘best practices’ Claims system created by KM

system created by IM

Figure 11.5
Claims versus Metaclaims

The idea of “fair comparison” of competing knowledge claims is

fundamental to our perspective. We contrast “biased” knowledge
claim evaluation with knowledge claim evaluation through fair com-
parison and assume further that KCE is more effective, in the sense
that it fulfills certain success criteria, when it is characterized by fair
comparison and less effective when it is characterized by bias. Thus,
we believe that KM-induced changes in knowledge processing rules
and criteria that increase the degree of fair comparison also increase
KCE effectiveness, and changes that increase the degree of bias
decrease its effectiveness.
Normatively, of course, one should seek to increase KCE effec-
tiveness and therefore increase the degree of fair comparison. We
believe this can be done at the level of knowledge processing by:

# First, fulfilling background requirements (the necessary condi-

tions) for fair comparison among the members of a set of com-
peting knowledge claims; and
# Second, implementing comparisons among the members of this
fair comparison set, based on a number of criteria that allow
us to choose among the knowledge claims of the set based on
how its members perform on various tests.

----------------------- Page 336-----------------------

Conclusion 307

The theory of fair comparison specifies equal specification of

members of the comparison set, continuity, commensurabiliy, and
completeness of the comparison set as four necessary conditions of
fair comparison. It also names logical consistency, empirical fit,
projectibility, systematic fruitfulness, heuristic quality, systematic
coherence, simplicity, and pragmatic priority as criteria for evalua-
tion of competing alternatives once a fair comparison set is con-
stituted. In Chapter 5, we discussed what we mean by each of the
above criteria, and also pointed out that in KCE our procedures for
combining criteria can range from the very informal to the highly
formal.
Informality in combining criteria is what we normally do. That is,
when we have a set of factors to be considered in choosing among a
set of alternatives in KCE, we most frequently vet the alternatives
with others, and may even subject them to a kind of free-for-all crit-
ical process and/or weigh them using intuition and common sense,
and then make our decision about which alternatives are false, which
ones we are unsure about, and which are true (or at least most “truth-
like”). The process may involve considerable critical interaction with
others and often may be collaborative, since many perspectives are
better than one in appreciating the importance of the various factors
in a decision.
Much of the time an informal process of vetting and weighing is
also the most appropriate way of combining criteria. It is so because
there may be no time for a more formal and systematic approach.
Or because the resources may not be available to implement one. Or
because what is at stake in the KCE decision may not be important
enough to justify one. Or because we need informality to surface crit-
icisms, creativity, and new ideas in KCE. So whether we should, once
fair comparison requirements are fulfilled, implement a formal and
systematic approach to multicriterion decision making, or an intu-
itive approach or something in between, depends upon available
resources, time, the need for new ideas, and the cost involved, com-
pared to what is at stake in avoiding error. If resources, time, avail-
able formal frameworks, and cost are not “right,” the appropriate
decision method to use in KCE may well be an informal one.
Knowledge claim networks, including metaclaims, have descrip-
tive and valuational aspects to them. They are networks with both
descriptive and value interpretations (Firestone 2001, 2003, Chap. 4).

----------------------- Page 337-----------------------

308 Key Issues in the New Knowledge Management

And they may be compared in terms of the priority values across net-
works of benefits resulting from actions as specified by each knowl-
edge claim network (or theory or model). The criterion attribute of
pragmatic priority listed above also encompasses relevance. Thus, the
greater the benefit specified in a knowledge claim network, the more
relevant is the network from the pragmatic standpoint of the conse-
quences of actions in closing gaps between goal states and actual
states.
When, during KCE, knowledge claim networks are compared
according to their pragmatic priority, we are not engaged in a com-
parison of epistemic values, but rather one of the estimated costs and
benefits specified by each network in the comparison set. In com-
mitting to the rejection of knowledge claims as false, and relying on
surviving knowledge claims in actions, the risks we take are a com-
bination of (a) the likelihood that our evaluation rejecting particular
knowledge claim networks is in error, and (b) our assessments of the
benefit/cost consequences of such errors—and that, as a result, we
might suffer the consequences predicted by the true knowledge claim
network we have rejected. Thus, pragmatic priority requires that
epistemic criteria be weighted by the risk of error in developing a
comparative evaluation of knowledge claims and knowledge claim
networks. This criterion does not involve wishful thinking, in the
sense that we will value most highly those knowledge claims that
predict the greatest benefits, but rather modest pessimism in that epis-
temic values are reduced based on the risk of error involved in not
rejecting the surviving knowledge claim networks, and in rejecting
their alternatives.
We expect that the set of direct comparative evaluation criteria we
offered in the normative model may well be incomplete and that
some of the model’s components may be incorrect. So applications
of the model should be freewheeling and adaptive, and modifica-
tions of it should be undertaken freely. Moreover, the issues of the
form of the composite models and the weighting used in them are
left open by us, even though we provide a couple of examples of com-
bination approaches in Chapter 5. We believe that these aspects of
the normative KCE model will vary across enterprises and that until
we have much more experience in applying the model it would be
premature to suggest generalization of these aspects of it.
In short, we believe that the criteria, the form of KCE composite
evaluation models, and the weights used in such models must all be

----------------------- Page 338-----------------------

Conclusion 309

open to innovation themselves, especially in an environment where

we know little about the details of formal methods for evaluating
KCE processes. Thus, we present the normative framework of
Chapter 5 as a working theory of KCE, as a first effort in a direc-
tion that we need to take in knowledge management. We hope and
believe that though this may be the first attempt at a normative model
in the KM literature, it will be far from the last, and we look forward
to having others join us quickly on this important road not previ-
ously traveled in knowledge management.

The Centrality of the Knowledge Life Cycle

What is perhaps most surprising about the old, first-generation

KM is its failure to specify the nature or behavior of its target in any
sort of systematic or rigorous way. Worse yet may be its failure to
acknowledge that a target of its interventions exists. What do we
mean by this?
In the new KM, when we make a KM strategy or engage in an
intervention of some kind, we are always seeking to enhance the per-
formance of knowledge processing in human social systems. The
target of our interventions, that is, is a social process that we are
trying to improve. Moreover, the social process of interest to us has
a particular shape and content. It has internal elements, subprocesses
that we understand in advance of our efforts and which we can target
more narrowly if we choose (see Figure 11.6). This social process
that we speak of is, of course, the Knowledge Life Cycle, or KLC.
In the new KM, the KLC is of central importance. It is as impor-
tant to us as practitioners of KM as knowledge of the patient is to a
physician. And just as patients and their illnesses figure prominently
in the practice of medicine, so do the KLC and its illnesses figure
prominently in the practice of the new KM. It is our job, that is, to
ensure the health of the KLC and to enhance its performance when-
ever we can. And just as a patient in a hospital has a mind and a
body for physicians to work with, so does the KLC have substance
and regularity to its form. We can see it, touch it, measure it, antic-
ipate its behaviors, alter its behaviors, change the conditions in which
it operates, tinker with its internals, and experience its outcomes. In
a very real sense, the KLC is a living system, and it falls to the new
KM to ensure its well-being.

----------------------- Page 339-----------------------

310 Key Issues in the New Knowledge Management

Knowledge
 Production

Knowledge Enterprise-Wide
Processing Knowledge Processing
Environment

Knowledge
Integration

Knowledge
Management

Figure 11.6
Knowledge Management versus Knowledge Processing

What, then, could the equivalent of the “patient” possibly be in

the practice of first-generation KM? For all of the obsessive talk of
enhancing knowledge sharing that occurs on that side of the fence,
we can only guess that it must be the act of offering someone else
one’s knowledge. Or is it the act of accepting or retrieving such
knowledge once offered? In any case, in first-generation KM, there
is no distinction between knowledge management and knowledge
processing. There is no social process that comprises knowledge pro-
cessing. There is no model or framework of knowledge processing
that can serve as a target of KM interventions or strategies of any
kind. There seems only to be life in organizations that is periodically
punctuated by sudden needs for information (not knowledge, mind
you), backed up by constant browbeating (or stories, or shallow
incentives) from management to get people to share it.
Indeed, in the old KM, the raison d’etre for KM strategies and
interventions seems singularly aimed at knowledge sharing and use
events that, from the perspective of the new KM, are isolated trans-
actions in a much bigger knowledge processing system. And while
the new KM sees knowledge processing as the heart of the adaptive
engine that makes organizations tick and helps them to survive, the

----------------------- Page 340-----------------------

Conclusion 311

old KM seems inexorably fixated on only their transactional needs.

Ensuring that individual acts of sharing and information retrieval
occur as best they can is the sole priority of the old KM. Never mind
that the firm may be sinking fast, or that managers are looting the
treasury, or that the broader adaptive performance of the company
is trending downward. There is no higher purpose in the old KM, no
KLC, no knowledge processing system, no complex adaptive system,
no decision execution cycle—none of that. There are only people who
have information and others who need it.
If in the new KM, we can say that the Knowledge Life Cycle lies
at the heart of its practice, in the old KM it must be the Information
Delivery Cycle (IDC). The IDC has two parts to it: (1) information
sharing and (2) information retrieval. And if this is true, then what
is the difference between information management and knowledge
management in the old KM when all is said and done? The answer
is unclear. But in the new KM, the makeup and purpose of the patient
is clear. The organization is a complex adaptive system, and the
knowledge life cycle is its adaptive engine. It has a “physiology” with
recognizable regularity to it that we can clearly observe, understand,
and have impact on. Our purpose, then, is equally clear—to enhance
the health and performance of the KLC!
In Chapter 6 we illustrated the centrality of the KLC by illustrat-
ing various areas of its application. There we discussed how the KLC
is applied to KM strategy, KM and knowledge audits, modeling, pre-
dicting, forecasting, simulating, impact analysis and evaluation,
metrics segmentation, sustainable innovation, methodology, IT
requirements, intellectual capital, education and training, the open
enterprise, and new value propositions for KM.
There are many other areas of interest to practitioners of KM
where the KLC has a valuable role to play. The scope of its influence
on the practice of KM is extensive, and our discussion in Chapter 6
focused on only a few of them. Nevertheless, the breadth and sig-
nificance of the applications discussed illustrate the centrality of the
KLC to KM and also its utility from the point of view of practice. It
also illustrates that the KLC changes everything for KM. Its impli-
cations penetrate every nook and cranny of KM as a discipline and
every area of KM practice.
Again, the importance of the role that a conceptual framework or
model of knowledge processing plays in the practice of KM cannot
be overstated. It is absolutely critical that we begin the practice of

----------------------- Page 341-----------------------

312 Key Issues in the New Knowledge Management

KM with a framework or model describing in broad outline how

knowledge is produced and integrated in human social systems. From
there we can begin to formulate practice, but always with reference
to our theory. We must have grounding. All bodies of practice in KM
should be held to this standard. What are their interventions? What
methods do they use? How are their methods and interventions
related to knowledge processing? Indeed, what is their theory of
knowledge processing? Do they even have one? If not, how do they
account for knowledge production and integration, and how does
their practice relate to their theory? If not, why should we accept
their value claims?
As we sometimes say, the only thing worse than all theory and no
practice is all practice and no theory. In truth we need both—prac-
tice grounded in theory. In the new KM, the KLC is the most impor-
tant focus of our theory. Many of our practices, then, are grounded
in and upon it, and from the point of view offered to us by the KLC,
the mission of the new knowledge management—to enhance knowl-
edge processing—is clear!

KM and Strategy

Another of the most common mistakes made in the practice of

the old KM is what we call the “strategy exception error.” The
strategy exception error mostly shows up in the composition of first-
generation KM methodologies. The error is committed by turning to
existing business strategy as the starting point for KM strategy. The
logic behind the error is that (1) the purpose of KM is to help fulfill
strategy (business strategy), and (2) that all KM interventions must
therefore be planned by first making reference to the content of
current business strategy. The error continues, then, by making yet
another one—that there is no difference between information and
knowledge (no claims and metaclaims) and that the proper role of
KM is to improve information delivery in the service of strategy.
 KM methodologies that commit this error usually go on to specify
steps that run something like this:

# Step 1: Identify current business strategy.

# Step 2: Determine information resources required to success-
fully carry out current strategy.

----------------------- Page 342-----------------------

Conclusion
313

# Step 3: Perform IT and other organizational projects required

to make information resources easily accessible and supportive
of business processing.

The result, of course, is a transactional one. In other words, at best,

KM strategies carried out according to this methodology wind up
improving fleeting acts of information sharing and retrieval, but not
necessarily anything else. Here again, this has the effect of reducing
KM to nothing more than information management trotted out in
today’s more fashionable clothes, even as it breeds ill will in the busi-
ness community for what appears to be a grand deception, or at least
an irresponsible form of self-delusion. We’re here, of course, to point
out that the old KM emperor, in fact, has no clothes.
What, then, is the relationship of strategy to KM? Quite simply,
strategy is an outcome of knowledge processing. So in
order to
answer the question, one must first be equipped with an under-
standing of the difference between business processing, knowledge
processing, and knowledge management (see Figure 11.7). Business

For
example:
Knowledge Knowledge Management (KM) •
Knowledge Processing
(KP)
Strategies
Management • KP
Policies and Rules

• KP
Infrastructures
(Meta-Epistemic
Behaviors) KM Outcomes • Learning
Programs

Knowledge Knowledge Processing (KP)

Processing For
example:

• Business
Strategies
(Epistemic
Behaviors) Knlg. Processing Outcomes •
Organizational Models
• Business
Processes
• Product
Strategies

Business Business Processing

Processing
For
example:
(Operational •
Profitability
Behaviors) Business Outcomes •
Market Share

•
Growth
•
Sustainability

Figure 11.7
The New Knowledge Management Reference Model

----------------------- Page 343-----------------------

314 Key Issues in the New Knowledge Management

processing is the domain of business strategy and related behaviors.

Knowledge processing, however, is where business strategies are
hatched. They (strategies) are the manifest resolutions of epistemic
gaps between what managers in organizations need to know about
strategy and what they, in fact, do know. Thus, a business strategy
is a network of knowledge claims produced as a consequence of
knowledge processing.
Knowledge management, in turn, is not subject to strategy, nor is
it supposed to help fulfill it. That role falls to information manage-
ment and to operational business processes, not KM. KM’s role tran-
scends strategy. KM’s role is to enhance the quality and performance
of knowledge processing behaviors, not business processing ones.
Indeed, the quality of a business strategy depends heavily on the
quality of knowledge processing, its source, and thus indirectly, as
well, on the quality of KM. But strategies, like all knowledge claims,
are fallible; they come and go. KM, though, like good financial man-
agement practices, is permanent and transcends strategy. It’s above
and apart from strategy, not within or below it.
This perspective on the proper role and positioning of KM in a
firm raises another important issue for which the new KM has an
emphatic answer. The question is where KM belongs in the functional
configuration of a company. The answer, we believe, is that it should
be reporting directly to the board of directors and to no one else.
Why? Because maintaining the independence and integrity of knowl-
edge processing in a firm is a fiduciary matter, just as the quality of
financial management is. Oversight for both, therefore, is best placed
at the level of the board.
Anyone who has any doubt about this need not think for long
about what’s happened in the United States over the past year or so.
When we look at the crises that occurred at such firms as Enron,
Worldcom, ImClone, Tyco, and others, what we see are bad strate-
gies, or parts of them, in use. What we can ask ourselves, then, is
what must the knowledge processing systems be like in such firms
that knowledge claims of such poor quality manage to survive their
internal tests and evaluations? Who was watching the knowledge
processing store there? Was anybody watching it?
 Perhaps it can be said that one consequence of the information
or knowledge age that few of us fully appreciate is that with the
ascendance of knowledge as the new prized asset in corporations
has come the need to exercise oversight on its production. The time

----------------------- Page 344-----------------------

Conclusion 315

has come for boards in businesses (especially publicly traded ones)

around the world to formally embrace oversight for knowledge pro-
cessing as a fiduciary duty, and to recognize the fact that the knowl-
edge we practice in organizations is the knowledge we produce.
Boards must rise to this challenge, and the new KM can help show
them the way.

KM and Culture

What is culture, and what is its relationship to knowledge and knowl-

edge management? “Cultural” barriers are often held responsible for
failures to share and transfer knowledge in organizations. It is fre-
quently said that knowledge management must undertake the diffi-
cult task of changing an organization’s culture to achieve the
knowledge sharing and transfer necessary to realize the full value of
the organization’s knowledge resources. In Chapter 9, we showed
that this viewpoint is incorrect, and that the widespread belief in it
is probably due to the use of the term to describe many different
factors that are social, political, or psychological, rather than cultural
in character. Our analysis produced the following definitions of
culture.
The subjective culture of a group or organizational agent is the
agent’s characteristic set of emergent high-level predispositions to
perceive its environment. It includes group or organizational level
value orientations and high-level attitudes and the relations among
them. It is a configuration of global attributes that emerges from
group interactions—that is, from the organization and pattern of
transactions among the agents within a group.
The objective culture of a group or organizational agent is the
configuration of value orientations and high-level attitudes expressed
in the agent’s characteristic stock of emergent problems, models,
theories, artistic creations, language, programs, stories, etc., reflected
in its documents, books, art galleries, information systems, dictio-
naries, and other containers. It is a configuration of global attributes
expressing the content of its information, knowledge, art, and
music, apart from both the predispositions the group or its agents
may have toward this content, and the material form of the artifact
expressing the content. The objective culture of an organization is an
aspect of the social ecology of its group agents, consisting of the

----------------------- Page 345-----------------------

316 Key Issues in the New Knowledge Management

cumulated effects of previous group interactions. As such, the per-

ception of it by individual and group agents (part of their subjective
culture or psychology, depending on the type of agent) influences
their behavior.
As we argued in Chapters 2 through 4 and just above, we can dis-
tinguish KM processes, knowledge processes, and business processes.
And knowledge processes may be viewed in terms of the KLC frame-
work. KLC processes produce knowledge that is used in the other
business processes of the enterprise. And these, in turn, produce busi-
ness outcomes. Figure 11.8 illustrates this chain of influences.
Moreover, KM processes, knowledge processes, and business
processes are performed by decision-making, behaving agents. As we
have seen, agents, if they are groups, have an internal culture, both
subjective and objective. At the same time, the objective cultural com-
ponent of social ecology also impacts agent decisions. Finally, knowl-
edge and KM processes are affected by culture through the influence
it has on behavior constituting these processes. In turn, these
processes are keys to producing new knowledge and consequently
changes in objective and subjective culture. The interplay between
KM processes and culture is bidirectional.
So culture is pervasive in KM, knowledge processing, and knowl-
edge outcomes. It is part of their context, and it is also, in the long
run, produced by them. But many other factors (social ecology, sit-

KM Outcomes Used
KM Processes by Knowledge
Processes

Knowledge
Knowledge Outcomes Used
Processes by Business
Processes

Business Processes Business Outcomes

e.g., Sales, Marketing e.g., Profit,
Revenue, ROI

Figure 11.8
From Knowledge Management Processes to Business Outcomes

----------------------- Page 346-----------------------

Conclusion
317

The Network of Agent Behavioral

Processes j, k, . . ., n, including
Social
Ecology and Goal-Directed Agents j,
k, . . .,
n.

.
r
.
a
,
n
k
s
,
a
j
c

,
n Agent Behavioral Process

k
o
i

,
t

.
c

.
a

.
s

n
n
a
r Goal-Directed Agent (I)
T
Decision Execution Cycle
i
Decisions Desired
Social Ecology

Social, Cultural,
Transactions and Ecology
Memory, Values, Attitudes,
Geographical,

Economic Conditions
Situational Orientations, Goals
 Figure 11.9
The Flow of Behavior Among Agents and the Role of Culture

uational factors, transactional inputs; see Figure 11.9) also contribute

to the complex interactions associated
with knowledge-related
processes and outcomes. Thus, culture is only a small part of what
there is to KM, or any other business process, and therefore there
remain substantial problems in measuring and analyzing its precise
impact on KM, or KM’s impact on culture. Culture is not so much
an answer to difficulties in KM as it is an issue and a problem in
itself. And prescriptions that suggest that we must “change the
culture” to perform effective KM and to enhance knowledge pro-
cessing are not solutions to problems, but only prescriptions for
movement down the wrong track toward a single-factor explanation
of knowledge management and knowledge processing.

The Open Enterprise

This is perhaps the most exciting idea to come out of the new KM.
In a phrase, the Open Enterprise (OE) is a normative model for
knowledge processing and knowledge
management designed to
achieve sustainable innovation and transparency in management. It

----------------------- Page 347-----------------------

318 Key Issues in the New Knowledge Management

is the antidote to Enron-like styles of management even as it also

enhances innovation and the organizational capacity to adapt. Unlike
the KLC, which is a descriptive model, the open enterprise is a pre-
scriptive one. The OE is largely specified in terms of the KLC’s sub-
process dimensions, with a particular emphasis on problem detection
in business processing, knowledge claim formulation, and knowledge
claim evaluation.
What makes the OE so exciting to us is that it is the first com-
prehensive, normative vision of knowledge processing to appear on
the KM landscape. As such, it can equip knowledge managers with
a specific target environment, a to-be picture of what to shoot for in
the area of KM strategy and practice. It therefore provides us with
a description of how knowledge processing ought to be in a firm, in
terms specific enough that we can translate them into KM strategy
and action. And unlike the narrow, transactional bandwidth of
the old KM, according to which the to-be environment is confined
to individual acts of information sharing and retrieval, the OE is
system- and process-wide in scope. It offers a vision of what high-
performance knowledge processing should (or can) look like in all
of its dimensions and at all levels—enterprise-wide.
The Open Enterprise has several important value propositions
not found elsewhere on the KM landscape. First, it enhances an
organization’s capacity to detect epistemic problems by effectively
engaging the whole firm in the process, not just the designated elites
in management who can’t possibly have the full range of view
required to detect problems on a distributed basis. Second, it imple-
ments its policy of broad inclusiveness by enfranchising all of the
organization’s members in the knowledge production side of the
KLC, especially in terms of knowledge claim formulation and eval-
uation. Thus, the full human resource complement in a firm, as
opposed to only a fraction of it, becomes engaged in knowledge
processing.
Also different in the OE are the rules that relate to knowledge
processing. No longer is information or knowledge held close by
management hierarchies. Instead, knowledge processing itself is
more distributed as is the previous knowledge that informs it. In
the OE, the separation of business processing and its management
from knowledge processing and its management are made explicit.
The monopoly on knowledge processing control once held by
business processing managers is repealed. Knowledge processing

----------------------- Page 348-----------------------

Conclusion 319

becomes open to all stakeholders in a firm, not just its man-

agers. This, however, does not mean that management is “under-
mined.” To the contrary, the power to control and direct resources
remains with management on the business processing side of the
equation.
Considering the issue of terrorism, to be discussed in more detail
below, we believe that the specific contribution the new KM can make
to the quest for security in the United States and elsewhere is to show
how knowledge processing can be improved by bringing powerful
new normative (i.e., prescriptive) models, such as the OE, to the
table. Only when knowledge processing systems are fully open in
terms of the kinds of structural and operational attribute values
present in the OE pattern will intelligence be capable of operating
fully at its peak. Had the U.S. intelligence system been operating in
accordance with our vision of the OE, it may well have been able to
“connect the dots” long before the attacks of 9/11/01 took place. We
hope to substantiate this claim in more detail as the full scope of the
OE is developed in the months ahead.

Intellectual Capital

Underlying all of our comments in Chapter 10 regarding the unsuit-

ability of conventional accounting perspectives in the treatment of
intangible values are four key points:

1. The most important source of intangible economic value in a

firm is external to itself—not found at all within the firm, and
therefore not directly manageable by it. The origin of such value
is in the minds of current and prospective stockholders, whose
valuations of a firm are determined within the dynamics of their
system, not the enterprise’s. Their values are then projected
onto the enterprise, which in turn receives it as a kind of gift
or inheritance—an inheritance, however, that is always subject
to adjustment, and even return.
2. Apart from being determined by agents outside of the enter-
prise, reflecting the value of intangibles using conventional
accounting tools as though they were internally managed
suffers from another problem, as well. Balance sheets are static
models. They are predicated on the assumption that it is

----------------------- Page 349-----------------------

320 Key Issues in the New Knowledge Management

 possible to start with a market value that can then be broken
down into its additive elements. Knowledge and the processes
that produce and integrate it, however, are anything but addi-
tive. What we need in order to account for them all are dynamic
models—nonlinear ones—not static ones. These, in turn,
should come into play in conjunction with the theories of emer-
gence they support, the composition of which will suggest
reporting models and tools of their own. This is the path to
solving the so-called IC problem. Ramming new realities into
old frameworks simply will not work.
3. All of our warnings concerning the inability to manage emer-
gent systems and outcomes have been precautionary, but not
absolute. While it’s true that processes and outcomes in
complex adaptive systems are emergent beyond the absolute
control of managers, it is possible to have impacts on them,
nevertheless—even intended impacts that give rise to corre-
sponding (hoped for) outcomes. This, however, does not entail
conventional management. Rather, management in such envi-
ronments must begin with recognition of organizations as social
complex adaptive systems, subject to the mostly unpredictable
effects of system dynamics and emergence. Armed with this
insight, it is possible to build models of organizations and their
environments that are nonlinear in form and to use such models
for predicting the potential outcomes of alternative manage-
ment strategies, including the effects that management decisions
of one kind or another might have on the externally produced
value judgments assigned by markets to the enterprise. In this
way, managers can have impact on the value of their organiza-
tions’ organizational and market intangibles, which, so far as
we’re concerned, makes such values manageable.
4. That said, we are only prepared at this point to support
the reflection of intangible values in the lump-sum fashion we
have proposed. It is simply too soon to suggest any other, more
granular treatment of intangibles on the balance sheet. What’s
required, instead, is a period of trial and error, or experimen-
tation, in which competing theories of how intangible values
are produced can be tested and evaluated. As a consequence of
that process, we can conceive of a point in time when the
momentum behind one or more models of how intangible
values are produced matures, and informs us of their manage-

----------------------- Page 350-----------------------

Conclusion 321

ment, measurement, and reporting implications. Then and

only then will we have a solid basis for suggesting how best to
report on the value of intangibles to stockholders. Until then,
it’s premature to attempt such a report.

On the basis of these remarks, we believe that the accounting pro-

fession should undertake a concerted effort to bring additional,
nonaccounting disciplines into the process of trying to discover the
nature of intangible value and the role that it plays in corporate
valuations. These would include complexity scientists, social scien-
tists, and knowledge managers of the second-generation (new KM)
type. Until we do, and until we find ourselves testing and evaluating
the use of nonlinear models, not linear ones, we should expect, as
Kuhn (1970) put it, to encounter nothing but problems that seem to
indefatigably resist “the reiterated onslaught of the ablest members
of the group [accounting] within whose competence it [the IC
problem] falls.”

Information Technology and the New KM

No summary of the landscape of KM (new, old, or otherwise) would

be complete without making some remarks about the IT implications
of related practice. In the case of the new KM, the story, we’re afraid
(see Firestone 2003, Chaps. 10–19), is a short one. At present, there
are no software applications that we know of that explicitly address
the claim/metaclaim distinction so central to the new KM, or provide
explicit support for knowledge claim evaluation.
In particular, the Enterprise Knowledge Portal (EKP) (Firestone
1999, 2000a, 2003, Chap. 13) is an application that comprehensively
supports knowledge processing and knowledge management. Despite
claims to the contrary, such an application does not yet exist. But the
last two years have brought progress toward achieving this essential
objective of TNKM. Firestone’s (2003) review of various KLC and
KM categories of TNKM framework provides a view of the gap
between the current state of portal progress and what is needed for
an EIP that would support knowledge processing and knowledge
management—that is, for an EKP.
Specifically, current EIPs provide support for those subprocesses
in knowledge processing and knowledge management that are

----------------------- Page 351-----------------------

322 Key Issues in the New Knowledge Management

common to KM and information processing and information man-

agement. However, they don’t support individual and group
learning, knowledge claim formulation, knowledge claim evaluation,
knowledge outcomes, the DOKB, KM knowledge processing,
resource allocation, or negotiation well.
The most glaring departure from TNKM requirements is in the
area of knowledge claim evaluation. Here, current portal products
provide almost no support and the idea of providing it is apparently
not even on the radar screen of any vendor. Perhaps that will change.
But we are still probably years away from having a real knowledge
portal. In Firestone (2003, Chaps. 13, 17, and 19), we outlined “how
to get there from here.”
Slow progress is perhaps due to the relative obscurity of ideas
about the KLC, KCE, and metaclaims in conventional KM circles.
We hope, of course, that this book and other writings of ours will
help to change this and that progress will be made in recognizing the
centrality of the KLC and KCE and the role that claims and meta-
claims play in our knowledge processing affairs.
That all said, the landscape here is not entirely barren. Using the
KLC as a backdrop, we can easily see existing technologies and appli-
cations that support aspects of knowledge processing. E-learning
systems, for example, clearly support individual learning on the
knowledge production side of things—though not yet very well in a
work-oriented problem-solving context—as well as training on the
knowledge integration side. Similarly, communities of inquiry that
support at least the human interaction, if not the recording and track-
ing side of error elimination in knowledge processing, can be sup-
ported by a wide range of tools aimed at collaboration and group
learning. And certainly the information acquisition subprocess is
extensively supported by a whole host of applications, some of which
have been around for some years.
Of particular interest to us, however, are the new technologies that
support the analysis and management of knowledge claims in arti-
facts. Tools that rely on semantic network analysis, neural network
analysis, fuzzy logic, and other technologies aimed at teasing out
claims and the metaclaims behind them in e-mail messages, docu-
ments, and other electronic files are particularly promising here. But
the best in new KM technologies is yet to come, as we discuss in the
next section on the future of the new KM.

----------------------- Page 352-----------------------

Conclusion 323

The Future of the New KM

In Popperian epistemology, the development of new knowledge

always raises new problems, and therefore a need for more new
knowledge. The new KM is no exception. As a new science, much of
its content and methodology is still not fully defined, and many of
the new questions it raises have not yet been answered. In some cases,
these are entirely new questions; in others they are old questions
answered by the old KM, for which the new KM has new answers
to offer. What we offer here, then, are some brief discussions of new
KM perspectives on some new and old problems in KM. In forth-
coming works of ours, we plan to address each of these issues in more

detail. For now, simply naming and describing the problems to be

worked on will do.

SECI Model

Among the many important implications of the new knowledge

management is that the once, and perhaps still, popular SECI model
put forth by Ikujiro Nonaka in his 1995 book with Hirotaka
Takeuchi, The Knowledge-Creating Company, may be, as we indi-
cated earlier, materially incomplete and seriously flawed. While
the reformulation of Nonaka’s model by us is not yet fully com-
pleted, we can say that the original SECI model (Socialization/
Externalization/Combination/Internalization) suffers from two im-
portant oversights.
First, the SECI model has many flaws at the level of psychologi-
cal and cognitive theory. Thus, it neglects to include consideration of
implicit knowledge and in the process provides us with an ambigu-
ous rendition of tacit knowledge. As Michael Polanyi, an early source
of theory for the nature and meaning of tacit knowledge, pointed
out, some tacit knowledge consists of that which one can know but
never tell— “. . . we can know more than we can tell.” (Polanyi 1966,
4). Tacit knowledge is, therefore, inexpressible. There is no conver-
sion from it to explicit form, thus Nonaka’s notion of externaliza-
tion (acts of converting tacit knowledge to explicit knowledge) is
misleading. Implicit knowledge, however, can be converted to explicit
form. But Nonaka and Takeuchi made no provisions for implicit

----------------------- Page 353-----------------------

324 Key Issues in the New Knowledge Management

forms of knowledge, even though Polanyi mentions it in his work
(Polanyi 1958, 286–288).
Further, the SECI model also fails to distinguish between knowl-
edge predispositions and situational orientations. The distinction
between tacit and explicit knowledge may either be interpreted as
applying to predispositions or to orientations. But if it’s applied to
predispositions, it has no meaning because there are no predisposi-
tions that are explicit. On the other hand, if tacit knowledge is
applied to orientations, then it is clear that much of the “tacit knowl-
edge” that people have referenced in examples, such as the ability to
ride a bicycle, doesn’t fit such a notion of tacit knowledge, because
such abilities are predispositional in character.
Second, with the arrival of the new KM comes the distinction
between subjective knowledge in minds and objective knowledge in
artifacts. This, too, materially expands the range of possible forms
from which knowledge can be converted. Instead of just tacit,
implicit, and explicit forms of knowledge, we now have all three for
both subjective and objective knowledge to consider. Thus, we have
up to six categories of knowledge to deal with in the new KM knowl-
edge conversion model, not just two as in the case of Nonaka’s SECI
model. In truth, however, there are only five such categories since we
have already rejected the notion of tacit objective knowledge, or tacit
knowledge held in anything other than minds.
All of this leaves us with a dramatically expanded matrix, which
takes us from a two-by-two matrix with four cells to a five-by-five
matrix with twenty-five cells. The implications of this insight are
enormous. Among other things, it means that all of the KM practices
and practitioners out there that have been basing their knowledge
conversion efforts on the SECI model may have been engaging in
fantasy for the past several years. There is no conversion of tacit
knowledge to explicit knowledge; there never has been and never will
be. At best, they’ve been dealing with implicit knowledge, not tacit
knowledge, but the SECI model never allowed for that. Here we see
a dramatic example of how theory matters greatly to practice. Faulty
theory can lead to faulty practice, which can, in turn, lead to colos-
sal wastes of time.
In sum, then, the landscape of ideas contained in the new KM
raises several important questions about the falsity and usefulness of
the Nonaka SECI model, thanks to the new KM’s identification of
implicit knowledge, objective knowledge, and subjective knowledge

----------------------- Page 354-----------------------

Conclusion 325

as forms of knowledge that the SECI model simply overlooks. In a

future work of ours, we plan to unveil a fully reformulated knowl-
edge conversion model that corrects these errors—which, of course,
will be nothing more than a new knowledge claim complete with its
own set of new questions and epistemic problems.

The EKP

A vital task for the new KM is development of the Enterprise

Knowledge Portal (EKP), because it is that application that provides
comprehensive support for both the KLC and for KM. In addition,
the EKP is vital for the open enterprise as well. In Firestone (2003,
Chap. 13), one of us outlined the steps that should be taken to
advance from present EIP platforms to the EKP. The Enterprise
Knowledge Portal is an application on the verge of development. The
technology it requires is in existence now. The cost of its develop-
ment is low as software applications go, since its implementation is
largely a matter of systems integration, with the exception of its Intel-
ligent Agent (IA) component that exceeds current IA capabilities. On
the other hand, the benefits associated with the EKP are great. They
are nothing less than realization of the promise of the Enterprise
Information Portal (EIP) to achieve increased ROI, competitive
advantage, increased effectiveness, and accelerated innovation.
EIPs are risky because (neglecting data quality applications
which involve relatively superficial quality issues) they fail to evalu-
ate the information they produce and deliver for quality and valid-
ity. Nothing, including EKPs, can ensure certainty about information,
models, or knowledge claims. But EKP applications incorporate a
systematic approach to knowledge claim testing and evaluation that
eliminates errors and produces quality assured information. In the
category of portal technology they, not EIPs, are the best we can do.
They, not EIPs, are the future of portal technology.

Framework for Analysis of KM Software

The EKP concept provides the basis for a comprehensive frame-

work for evaluating knowledge processing and KM software. Cur-
rently there is no such framework. Vendors offer claims about the

----------------------- Page 355-----------------------

326 Key Issues in the New Knowledge Management

support they provide for KM, but there is no benchmarking frame-

work against which to evaluate such claims. A future task for the
new KM development is to use the EKP concept to produce such a
framework.

Role of Credit Assignment Systems in KM Software

The New KM (TNKM) suggests that the primary motivation for

using KM software will be the desire to solve problems. However, a
long-recognized problem in the old KM has been that of “incenting”
people to participate in knowledge sharing initiatives and specifically
in software designed to support knowledge sharing. Thus, a natural
question is whether the same problem will exist in TNKM. That is,
what kinds of incentives will be needed to encourage knowledge
worker participation in TNKM software applications? Will credit
assignment systems be necessary? Or will it be sufficient to simply
involve people in KLCs by giving them free rein to solve their own
problems?

TNKM Metrics

In Chapter 6, we discussed the application of the KLC model to

metrics development and showed how it could be used as a guide to
metrics segmentation. Of course, the KM approach developed in
Chapter 3 can also be used to supplement the KLC. Preliminary work
has been done in this area by Firestone (2000) and Firestone and
McElroy (2002). However, previous work has only initiated the
process of KM metrics development. This will be a primary and
ongoing activity of TNKM.
TNKM and Terrorism

After the 9/11/01 attacks, much of the criticism levied against U.S.
intelligence agencies revolved around their failure to “connect the
dots.” Critics argued that internal warnings and red flags should have

----------------------- Page 356-----------------------

Conclusion 327

been noticed and that sufficient evidence existed prior to the attacks
to suggest that danger was imminent.
From our perspective, the failure of U.S. intelligence agencies to
potentially anticipate the 9/11 attacks was a failure of knowledge
processing. Using the KLC as an analytical tool, we could say that
there was a breakdown in knowledge claim formulation on a grand
scale, but also that on a micro scale certain knowledge claims made
by specific agents in the system were too quickly discarded or over-
looked. In that case, it was knowledge claim evaluation that failed
us, because authoritarian and bureaucratic rather than epistemic and
appropriate value criteria were used to falsify promising knowledge
claims in favor of others that proved false in the end.
Intelligence is an industry that is in the knowledge processing
business. It exists for no other reason than to close epistemic gaps—
gaps in the knowledge we need about threats to our security versus
the knowledge we have. One could argue, therefore, that there
is no more important, more urgent need for the new KM than in
the intelligence business, for the KLC provides it, and us, with a
roadmap of how knowledge processing happens, and therefore a
framework for aiming strategies, tools, and interventions at its
improvement.
Further, it may also be the case that the most urgent software appli-
cation for an interagency intelligence system is an EKP. Indeed, if the
open enterprise can be described as an enterprise-wide knowledge
processing system with maximum inclusiveness, then the EKP can be
seen as its indispensable IT infrastructure. From the perspective of
the EKP, every stakeholder in a firm is a full participant in knowl-
edge processing. If a memorandum written by some far-flung agent
in Phoenix, Arizona, suggests that terrorists are going to fly fully
loaded passenger jets into the World Trade Center towers in New
York City, the EKP picks up on that, connects the dots, and broad-
casts its knowledge claims—without fail and without additional
human intervention—to appropriate stakeholders in the system.
Why? Because the OE is a knowledge-claim-centric construct, not a
management-centric one. A credible claim is a credible claim, regard-
less of who develops it or what their rank or status is in the firm.
The knowledge processing ethic of the OE is blind to such things,
and the EKP does nothing but doggedly hunt for dots and explore
ways of connecting and evaluating them.

----------------------- Page 357-----------------------

328 Key Issues in the New Knowledge Management

The Open Enterprise, Again

The Open Enterprise (OE) is a vital part of the future of TNKM. In

future work of ours, we will be developing the model of the OE com-
prehensively and in much more detail than was possible in this book.
Out of this work will come new and potentially powerful applica-
tions of the OE for enhancing national security and reducing terror-
ism, as the approach the OE prescribes will make it possible for
intelligence agencies to dramatically enhance their capacity to detect
and solve epistemic problems.
The OE ethic of inclusiveness and aggressive knowledge claim
formulation will have equally dramatic effects in less urgent set-
tings such as businesses. This, of course, will be its most common
application. In businesses, the OE will, by definition, lead to greater
transparency and inclusiveness, since its most important precept is
that knowledge processing must be a politically open process. While
there will always be a place for secrecy, privacy, and confidentiality
in the OE, a great deal of what today passes for closely held knowl-
edge in organizations will be more widely shared in the OE.
The effects? Greater transparency will lead to fewer cases of man-
agement malfeasance as inherently bad ideas get swept aside long
before they escalate into practice. In addition, the advent of such
tools as free employee presses in which employees can openly review
and critique management decisions, related strategies, and assump-
tions will make it easier for stockholders to witness and understand
management’s actions and intent, as well as the risks associated with
both. And finally, the rate and quality of innovation will improve, as
more of the firm’s employees and other stakeholders become directly
involved in problem detection and knowledge production.
Of additional importance to the OE will be normative models for
OE-related KM tools and methods. In other words, if the OE is an
attractive end-state model, the next question, and one we will devote
much attention to in our future work, is how do we get there from
here? Much work in the new KM has already occurred here, in that
a technique known as the Policy Synchronization Method (PSM) has
been developed and continues to be refined (McElroy and Cavaleri
2000). PSM is a KM method predicated on the view of knowledge
processing as a self-organizing complex adaptive system. It therefore
concentrates its focus not so much on the system itself, but on its
background conditions instead. Getting a knowledge processing

----------------------- Page 358-----------------------

Conclusion 329

system to function at its peak capacity, according to the PSM method,

is best accomplished by managing its background conditions so that
they are synchronized with the problem-solving predispositions of
people and groups inside of it (the system). Once such conditions are
properly set, sustainable innovation and high-performance knowl-
edge processing flourish.
The importance and significance of the open enterprise cannot be
overstated here. The potential contribution that the OE can make to
business and society in general is enormous. Anything that can
improve our collective capacity to detect problems, eliminate errors
in our knowledge, and choose actions that enhance the sustainabil-
ity of our course is desperately needed at this time. This is the promise
of the OE. It is a normative model for knowledge processing in
human social systems designed to enhance our capacity to learn,
avoid errors, and adapt.

Communities of Inquiry (CoI)

The old KM is much concerned with Communities of Practice (CoPs)

because of their usefulness for knowledge sharing. Practitioners in
the CoP area often believe that they are useful for knowledge pro-
duction too. But TNKM perspectives raise the concern that knowl-
edge production in CoPs is likely to be characterized by the use of
consensus as a validation criterion for knowledge claims. This com-
munitarian form of knowledge production is inconsistent with falli-
bilism and an orientation toward error elimination. Therefore,
TNKM must develop an alternative model to the CoP construct spec-
ifying the attributes and characteristics of communities dedicated to
the discovery and elimination of errors in knowledge that differ from
CoPs in behavior and intent. We call such communities Communi-
ties of Inquiry (CoI). Thus, CoIs are the counterpart to the OE at the
group or community level.

Knowledge Management Methodology

KM project methodology (Firestone 2001a) is another important

aspect of TNKM we have not been able to cover in this work. Clearly,
however, it must be a continuing concern of TNKM. In a future work

----------------------- Page 359-----------------------

330 Key Issues in the New Knowledge Management

on TNKM, we will take up three TNKM methodology issues. First,

should TNKM methodology be a life cycle methodology or should
it be an adaptive, iterative, incremental methodology? Second, what
implications does TNKM have for the form of that most common of
KM initiatives: the knowledge audit? And third, what is the role of
the KLC in KM methodology?

Value Theory in Knowledge Management

In Chapters 5 and 10 in passing, we introduced the idea that valua-

tional knowledge claims enter the Knowledge Claim Evaluation
(KCE) process. That raises the more general question of the place of
valuational models in TNKM. We can approach this question
through the KLC. If we do, it is immediately apparent that problem
recognition, as well as every subprocess of the KLC, involves making
value judgments. However, the subprocess where the value judgments
we make seem most controversial is the KCE process. And the reason
for that is the legacy of “value free,” “objective” inquiry—an idea
that was dominant in scientific philosophy for a good part of the last
century, but which is far from dominant now.
In TNKM, our notion of objective inquiry views value theory as
playing a vital role in the KCE process. Let’s review that role and see
what it implies. In developing our normative model for KCE
we included a category of criteria called pragmatic priority. All the
other criteria discussed fall into the category of traditional epistemic
criteria for comparatively evaluating factual knowledge claims.
But pragmatic priority involves taking account of the valuational
consequences of rejecting knowledge claims as false and relying on
surviving knowledge claims as a basis for action.
The risks we take are a combination of the likelihood that our
evaluation rejecting particular knowledge claim networks is in error,
and the benefit/cost consequences of such errors. If we are in error
in our falsifications, we must suffer the valuational (cost and benefit)
consequences predicted by the true knowledge claim network we
have rejected. To take account of these risks in estimating pragmatic
priority, we must formulate valuational knowledge claims that
provide a value interpretation of our descriptive knowledge claim
network. So, to estimate pragmatic priority we have no choice but

----------------------- Page 360-----------------------

Conclusion 331

to formulate a value theory and to use it in making our estimates and

in comparatively evaluating factual knowledge claims.
Now, taking this one step further, the value theory we use to esti-
mate pragmatic priority is only one of a set of alternative value inter-
pretations that might be applied in the specific KCE context in
question. And just as we have constructed a fair comparison set of
factual knowledge claims that our KCE process must test and eval-
uate, we also must construct a fair comparison set of alternative value
interpretations for testing and evaluation and seek to eliminate error
in that comparison set.
So the implication of the role of valuational knowledge claims in
KCE that we have just outlined is that objective inquiry requires not
only the formulation of valuational knowledge claims, but their
testing and evaluation as well. Valuational knowledge claims are just
as important as factual knowledge claims in our knowledge claim
networks, and they are just as approachable as factual claims through
applying Popper’s method of conjecture and refutation focused on
error elimination.
In the case of factual knowledge claims, the goal that regulates
inquiry is the truth. In the area of value inquiry, the goal is “the legit-
imate.” But in both cases, the Popperian tetradic schema for problem
solving can still be applied to grow our knowledge. Because in each
area, inquiry starts with a problem, continues with tentative solu-
tions, proceeds to error elimination, and then gives rise to a new
problem. And the orientation of TNKM and the open enterprise are
both just as relevant to the production and integration of value
knowledge as they are to the production and integration of factual
knowledge.
In the last several paragraphs we have expanded on our account
in Chapter 5 and presented a broader perspective on the role of value
theory in KCE. That role has implications for the future of TNKM.
First, part of our program must be to refine the normative model pre-
sented in Chapter 5 and evolve it toward a KCE methodology.
Second, we must clarify in future work how value interpretations and
value theories are formulated. One of us (Firestone 2001) has per-
formed previous work on value interpretations. Third, we must
develop a parallel normative model for evaluating the legitimacy of
valuational knowledge claims, i.e., the value interpretations that
transform factual theories into valuational theories. And fourth, we

----------------------- Page 361-----------------------

332 Key Issues in the New Knowledge Management

must, in TNKM, begin to formulate value interpretations along with

our theories about fact.

The New Knowledge Management and

Knowledge Management Standards

We close this chapter and the book itself with some final words about
standards for KM. We offer our remarks by first acknowledging that
there are currently many efforts around the world now under way to
develop standards for KM, though generally these are not coordinated.
We believe that all such standard formulation efforts are premature at
best and seriously misguided at worst. They have the potential of doing
great damage to the continued growth and evolution of the field. How?
By locking KM and knowledge processing in the industry into patterns
of behavior that may, in fact, be harmful to sustainable innovation,
organizational intelligence, and organizational adaptation.
Jan Hoffmeister, one of our colleagues on the board of the Knowl-
edge Management Consortium International, points out that in the
development of any new field, there are three basic stages of devel-
opment. The first stage is the stage of relative chaos. Hoffmeister,
who serves as Skandia’s Global Director of Intellectual Capital
Reporting, has seen this firsthand in his own immediate field, intel-
lectual capital (reporting), for which there presently are no standards.
This is the stage, then, in which many competing and discordant ideas
are bandied about, even in the absence of commonly held views on
what the questions are, or the guiding principles that help determine
the answers.
The second stage is the stage in which commonly held principles
start to form. In knowledge management, for example, we could say
that if the frameworks put forth in the new KM, such as the KLC
and the unified theory of knowledge that it embraces, rise to the level
of commonly held knowledge, the second stage of KM will have at
least begun. And once it has, and after it has established itself on a
more stable footing, it will be time to proceed to the third stage and
to consider the development and adoption of standards for KM. But
not before!
We are nowhere near the third stage of development in KM, nor
are we barely beyond the first. That scene has yet to be played out.
At best, we are in the early period of the second stage, but even that

----------------------- Page 362-----------------------

Conclusion 333

is mere speculation. To undertake the development of standards for

KM at this juncture in time borders on the irresponsible. Let’s con-
sider some of the errors reflected in many of today’s KM standards
efforts to help illustrate why current efforts at forming KM standards
are highly premature.
First, how can we possibly have standards for KM when most such
efforts fail even to make the most rudimentary distinction between
knowledge management and knowledge processing? Worse yet is the
constant confusion that continues to exist about the two, the result
being that some of what we see in related standards efforts are
arguably KM-related while others are clearly knowledge processing
related. This, of course, is necessarily accompanied by expressions of
what KM is that are foggy at best. Is it to enhance knowledge pro-
cessing? Is it to enhance knowledge sharing? Is it to help harvest the
economic value of “intellectual assets”?
A quick survey of the many KM standards efforts now under way
will reveal that apparently it’s all of the above. Which, of course,
means that it’s none of them, for how can we have standards for the
same thing in different places around the world that in very mater-
ial ways contradict one another? The answer is we can’t, or at least
we shouldn’t. If ever there was a case of standards-making efforts
being launched prematurely, this is it. We’re now actually codifying
our prematurity in the form of conflicting sets of standards.
Second, it is embarrassing to watch the deeply ironic manner in
which standards in KM are being pursued in venues that, themselves,
are engaging in KM without the slightest bit of self-consciousness
about what it is they are doing. The American National Standards
Institute (ANSI), the British Standards Institute (BSI), and the Inter-
national Standards Organization (ISO) are three that come immedi-
ately to mind, although KM standards development efforts are
now also under way under the auspices of several other standards-
making organizations around the world. But what is a standards-
making organization if not a formal knowledge management system,
itself? And what, for that matter, is a standard if not a set of codi-
fied knowledge claims? And what is a KM standard if not a set of
knowledge claims about knowledge management or knowledge
processing?
Indeed, the processes that organizations like ANSI, BSI, ISO, and
others prescribe and enforce are normative knowledge processing
systems, the purposes of which are to produce validated knowledge

----------------------- Page 363-----------------------

334 Key Issues in the New Knowledge Management

claims (i.e., standards). The irony here is palpable! Let us put it in

explicit terms. If a group of people is interested in developing stan-
dards for how organizations and their managers should go about
managing knowledge processing, why not just adopt the processes
already in use by the standards-making organizations themselves,
which they (the would-be KM standards developers) apparently
already find acceptable? Why not just take the ANSI process, or the
ISO process or what have you, embrace it as the KM standard,
declare victory, and move on?
It would be even more ironic if any of the now underway KM
standards efforts were to actually produce outcomes that conflicted
with those enforced by the standards-making bodies under whose
auspices their work occurred. The hypocrisy here would be over-
whelming. How can a group accept the validity of one set of rules
for knowledge processing and yet ratify another, even as it relies on
the legitimacy of the first set (which it then implicitly rejects) as the
basis for producing the latter? No, intellectual honesty would seem
to demand that any KM-standards related group that subordinates
itself to the standards-making procedures of an ANSI, BSI, ISO, or
what have you should immediately be seen as having embraced, and
thereby endorsed, the knowledge management model of their over-
seers and the knowledge processing systems they prescribe. Why,
then, continue with the development of yet another, new set of KM
(or knowledge processing) standards as if the ones practiced and
enforced by the overseers didn’t already exist?
Third, in light of this criticism of KM standardization efforts, what
can we say about the future of such efforts? (1) We can safely assume,
we think, that the maturity of standards that conflict with one
another in KM will have precisely the opposite effect of what their
makers hope for. The only thing worse than conflicting theories and
practices in KM is standards that codify them rigidly into place.
(2) It is our hope that the overseers now reigning supreme in the
development of KM standards efforts will themselves be seen as
enforcers of an approach to KM and knowledge processing that is
unduly determinative of outcomes and biased in its effects. Why?
Because even a cursory inspection of the standards-making processes
enforced by ANSI, BSI, ISO, and the rest will reveal the fact that they
are (a) KM organizations themselves whose methods we are expected
to adopt, and (b) whose enforced knowledge processing system is
fundamentally communitarian and therefore deeply flawed.

----------------------- Page 364-----------------------

Conclusion 335

Communitarian systems employ consensus as the basis of knowl-

edge claim evaluation in their knowledge processing schemes.
According to that logic, a standard could (and will) be adopted
simply by virtue of its popularity or the degree to which a consensus
builds behind it. Once this consensus is reached, communitarian
systems are not open to continuous testing and evaluation of the
knowledge claims backed by the consensus, for the simple reason that
the criterion of truth in such systems is the consensus that has already
been reached. Never mind the veracity of the claims themselves or
their closeness to the truth. Communitarian systems seek harmony
and agreement amongst their stakeholders, regardless of the quality
or integrity of the knowledge they produce.
Let us conclude our remarks on this subject, and the book itself,
then, by pledging to do whatever we can to continue to call atten-
tion to the prematurity and hypocrisy of KM standards-making
efforts under current industry and institutional circumstances. This,
too, is liable to change under the influence of the new KM in the days
ahead.

References

Firestone, J.M. (1999), “Enterprise Information Portals and Enterprise

Knowledge Portals,” DKMS Brief, 8, Executive Information Systems,
Inc., Wilmington, DE, March 20, 1999. Available at
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000), “Knowledge Management: A Framework for Analy-
sis and Measurement,” White Paper No. 17, Executive Information
Systems, Inc., Wilmington, DE, October 1, 2000, Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2000a), “Enterprise Knowledge Portals: What They Are
and What They Do,” Knowledge and Innovation: Journal of the KMCI,
1, no. 1, 85–108. Available at: http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2001), “Estimating Benefits of Knowledge Management
Initiatives: Concepts, Methodology, and Tools,” Knowledge and Innova-
tion: Journal of the KMCI, 1, no. 3, 110–129. Available at:
http://www.dkms.com/White_Papers.htm.
Firestone, J.M. (2001a), “Knowledge Management Process Methodology”,
Knowledge and Innovation: Journal of the KMCI, 1, no. 2, 85–108.
Available at: http://www.dkms.com/White_Papers.htm.

----------------------- Page 365-----------------------

336 Key Issues in the New Knowledge Management

Firestone, J.M. (2003), Enterprise Information Portals and Knowledge

Management, Boston, MA: KMCI Press/Butterworth–Heinemann.
Firestone, J.M. and McElroy, M.W. (2002), Certified Knowledge and Inno-
vation Manager (CKIM) Level I Course Notes, Hartland Four Corners,
VT: KMCI.
Kuhn, T. (1970), The Structure of Scientific Revolutions (2nd Edition
 Enlarged), Chicago, IL: University of Chicago Press.
McElroy, M. (1999), “The Second Generation of KM,” Knowledge Man-
agement Magazine (October, 1999), 86–88.
McElroy, M. and Cavaleri, S. (2000), “The Policy Synchronization Method”
is the subject of a U.S. patent application filed in September 2000
by
McElroy and Cavaleri. It currently holds patent-pending status.
Mintzberg, H. (1973), “A New Look at the Chief Executive’s Job,” Orga-
nizational Dynamics, AMACOM, Winter, 1973.
Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating Company,
New York, NY: Oxford University Press.
Peirce, C. (1955), “The Scientific Attitude and Fallibilism,” in J.
Buchler
(ed.) Philosophical Writings of Peirce, New York, NY: Dover Publica-
tions, 1955.
Polanyi, M. (1958), Personal Knowledge, Chicago, IL: University of
Chicago Press, 1958.
Polanyi, M. (1966), The Tacit Dimension, London, UK: Routledge and
Kegan Paul.
Popper, K.R. (1959), The Logic of Scientific Discovery, London,
Hutchinson.
Popper, K.R. (1963), Conjectures and Refutations, London, UK: Hutchinson.
Popper, K.R. (1972), Objective Knowledge, London, England: Oxford
University Press.
Popper, K.R. (1994), Knowledge and the Body-Mind Problem (edited by
Mark A. Notturno), London, UK: Routledge.
Popper, K.R. and Eccles, J.C. (1977), The Self and Its Brain,
Berlin,
Germany: Springer-Verlag.
Rudner, R. (1953), “The Scientist Qua Scientist Makes Value Judgments,”
Philosophy of Science, 20, 1–6.

----------------------- Page 366-----------------------

Glossary of
Acronyms

AHP Analytic Hierarchy Process

AKMS Artificial Knowledge Management System
AKPS Artificial Knowledge Processing System
AKS Artificial Knowledge Server
ANSI American National Standards Institute
BP Business Processing
BPE Business Processing Environment
BPR Business Process Re-engineering
BSI British Standards Institute
CAS Complex Adaptive Systems
CEO Chief Executive Officer
CFO Chief Financial Officer
CIO Chief Information Officer
CKO Chief Knowledge Officer
CoI Community of Inquiry
CoP Community of Practice
DEC Decision Execution Cycle
DKMS Distributed Knowledge Management System
DLL Double-Loop Learning
DOKB Distributed Organizational Knowledge Base
DSS Decision Support Systems
EIP Enterprise Information Portal
EKM Enterprise Knowledge Management
EKP Enterprise Knowledge Portal
FGKM First-Generation Knowledge Management
HR Human Resources
HRD Human Resources Development
HTML Hyper-Text Markup Language
IA Intelligent Agent

337

----------------------- Page 367-----------------------

338 Key Issues in the New Knowledge Management

IC Intellectual Capital
IDC Information Delivery Cycle
IM Information Management
ISO International Standards Organization
IT Information Technology
KBMS Knowledge Base Management System
KCE Knowledge Claim Evaluation
KCF Knowledge Claim Formulation
KLC Knowledge Life Cycle
KM Knowledge Management
KMCI Knowledge Management Consortium International
KMFM Knowledge Management Framework Methodology
KP Knowledge Processing
KP Knowledge Processing
NKMS Natural Knowledge Management System
NKPS Natural Knowledge Processing System
OD Organizational Development
OE Open Enterprise
OLC Organizational Life Cycle
PCAS Promethean Complex Adaptive System
PLC Problem Life Cycle
PSM Policy Synchronization Method
ROI Return on Investment
SECI Socialization/Externalization/Combination/Internaliza-
tion per Nonaka and Takeuchi
SGKM Second-Generation Knowledge Management
SIC Social Innovation Capital
SLL Single-Loop Learning
TNKM The New Knowledge Management™
XML Extensible Markup Language

----------------------- Page 368-----------------------

Index

A Artificial knowledge server (AKS),

Agent interaction, transactional 169–170
systems model of, 41–48
coping behavior classes, 44 B
interpreting environment stimuli, Behavior flow among agents,
43–44 107
motivational behavior aspects, Best practices systems, 238–248
43–47 conclusions, 247–248
motivational hierarchy, 41–43 fallibility of, 221
sense making, 47–48 first stage of knowledge
Ages of knowledge management, management and, 90, 99
88–89, 94–97; see also information-based, 305
Generations of knowledge knowledge claims, 239–240
management knowledge management as,
difficulties with, 95–97 xxiv, 238–248
Snowden on, 94–95, 96 lack of context problem,
third age and sense making and 238–239
complex adaptive systems, metaclaims as context,
113–115 241–242, 304–305, 306
third age forecast by Snowden, metaclaims in action, 245–
104–134 247
Allocating resources, 80 Building relationships with
Analytic hierarchy process (AHP), individuals and organizations
171, 172, 177, 191 external to enterprise, 78
consistency index (CI) and, Business process
183 decision executive cycle and, 49,
logarithmic least square method 51
(LLSM) and, 186 definition, 48
ratio scaling approach based on, environment, 49, 50
178–187 hierarchy and activity, 49
right eigenvector method (EM) knowledge process level and,
and, 186 74
Artificial knowledge management Business process reengineering
systems (AKMs), 222 (BPR), 94

339

----------------------- Page 369-----------------------

340 Index

C global attributes, 265–266

CapitalWorks Learning global properties question,
Effectiveness Index, 206, 207 270–271
CAS. See Complex adaptive introduction, 261
systems knowledge and, 271–272
Cassidy model, 209 objective, 267, 268, 271, 272,
Codified knowledge claims (CKCs), 315–316
54, 56 structural properties, 265
Communities of inquiry (CoI), 329 subjective, 267–268, 270,
Communities of practice, 91, 226, 271–272, 315, 316
250, 329 Cynefin model, xxiii
Complex adaptive systems, xx, 61, abstraction definition for,
62, 106, 113–115, 290 117–118
application of, 131 changes needed for, 132–134
Cynefin model and, 121–122, commentary about, 116,
128, 129–130 117–118, 119, 120, 121,
ecological relationships, 285 122–124, 125–126,
false linearity and, 279 127–128, 129–130,
generational view of knowledge 131–132
management and, 98 conclusions about, 132–134
knowledge claim evaluation and, diagram of, 116
148, 170, 209 information about, 115–116,
knowledge life cycle and, 197, 118, 119, 120, 121, 122,
301 124, 125, 126, 127, 128,
Level Zero knowledge and, 72 130–131
natural, 121 problems of, 115–132
Promethean, 121, 122, 125, purpose of, 118
126–127, 133
 sense making and, 113–114 D
viewing, 90 Data versus information versus
Content management, 92, 94, 100 knowledge versus wisdom,
third age of knowledge 17–20
management and, 105–110 Davenport’s definition of
Crisis handling, 80 knowledge management, Tom,
Culture, 261–274, 315–317 68–69
analytic attributes, 265 DEC. See Decision Execution Cycle
barrier question, xxv, 264 Decision Execution Cycle, xxii,
conclusion, 272–273 33–37, 39
definitions, alternative, 261–264, acting and, 34
315 of agent, 107, 108
fitting with other factors business processes and, 49, 51
influencing behavior, diagram of, 35, 108, 298
264–271 evaluating and, 35

----------------------- Page 370-----------------------

Index 341

knowledge claim evaluations role of, 36

and, 143, 145, 146 World 2 and World 3
knowledge integration process knowledge and, 53, 152
and, 53 DLL. See Double-loop learning
knowledge life cycle and, 56, DOKB. See Distributed
57, 298, 299 organizational knowledge base
knowledge produced by, 40 Double-loop learning, xxii, 37–38,
monitoring and, 35 39, 40, 45, 49
motivation of, 34 combining with tetradic schema,
phases of, 34, 35, 36 39–41
planning and, 34 knowledge gap and, 255
pre-existing knowledge and, 302 means for, 29
problem life cycle and, 45–47 Duhem-Quine thesis, 161
problem solving adaptive
responses arising out of, E
41–48 Education and training, 225–227
purpose, 34, 35 EIP. See Enterprise information
rules and, 79 portal
sense making and, 119 EKM model. See Enterprise
trial and error in, 293 knowledge management
Decision-making activities, 77, model
79–80, 84 EKP. See Enterprise knowledge
Decision Support Systems (DSS), portal
95, 102 Emergent behavior, 61
Demand-side knowledge, xix–xx, Enterprise information portals,
89, 97 105, 321–322, 325
age of, 99 Enterprise knowledge management
concerns, xx model
focus of, 97 Level One knowledge in, 72, 73
generational view of knowledge Level Two knowledge in, 73
management and, 98 Enterprise Knowledge Portal,
processing, 202, 203, 302–303 167–168, 222, 233, 321, 325,
Distributed knowledge management 327
systems (DKMs), 222 Experimental learning cycle, 33
Distributed organizational Explicit knowledge
knowledge base, 35–37, 45, Polanyi on, 95
49, 61, 246 tacit knowledge and, 20–21, 22
knowledge integration process World 3 knowledge and, 22, 23
and, 53
 knowledge life cycle and, 49, F
51, 233 Fallibilism, 228, 304
problem life cycles and, 40, Falsified knowledge claims (FKCs),
45–47, 51 51, 144, 145

----------------------- Page 371-----------------------

342 Index

Figurehead or ceremonial Implicit knowledge, 21–23

representation knowledge Incentive system of agent, 107,
management activity, 77 108, 109
Future of new knowledge Individual and group (I&G)
management, 323–335 learning, 54
Fuzzification, 187–190 Information delivery cycle (IDC),
Fuzzy Associative Memory (FAM), 311
189 Information management
knowledge management and,
G xxii, 60–87
Generations of knowledge differences, 69–70, 84–85
management, xxii–xxiii, interpersonal behaviors, 84
88–141 knowledge management versus,
change in knowledge 69–70, 84–85, 218, 301
management, three views of, knowledge process management
88–90 and, 299, 301
conclusion, 134–136 knowledge processes versus, 70
first generation shortcoming, 199 validity, 231–233
knowledge claim evaluation and, Information processing and
144 knowledge, 76, 78–79
knowledge life cycle and, 230, Information production, 70
231 Information technology
Snowden’s forecast of third age to enhance supply- or demand-
of knowledge management, side knowledge processing,
104–134 203
start of first generation, 99 as initial stage of knowledge
strategy and, 253, 254 management driver, 90, 91,
theory of first generation, 292 93, 95
two generations, 97–104 new knowledge management
and, the, 321–322
H requirements for knowledge life
Hierarchical versus organic cycles, 220–222
knowledge management, Information versus data versus
62–63 wisdom, 17–20
Human organizations, data versus Information versus knowledge, 14,
information versus knowledge 55, 143, 146, 240
versus wisdom in, 17–20 Innovation management (IM), 98,
World 2, 19–20 99
World 3, 17–19 Intellectual capital, 90, 222–225,
275–289, 319–321
I accounting and, 275–278,
IC. See Intellectual capital 283–284, 287–289, 321
IM. See Information management appearance of term, first, 90

----------------------- Page 372-----------------------

Index 343

conclusion, 287–289 paradox in definition of,

false linearity, 279–283 112–113
 false orientation, 283–284 process or outcome question,
frameworks foundation, xxv 110–113
introduction, 275–278 types of, 5–6, 28
knowledge life cycle and, typology table, 26–27
222–225, 278 World 2 definitions of, 11–13
problem, 275–278 World 3 definitions of, 13–17
social innovation capital, Knowledge audits, 204, 205–206
278–279 Knowledge claim evaluation, 38,
as two social systems, 284–287 45, 142–176, 296, 305–309
Intelligent agents (IAs), 168–169, artificial knowledge server and,
170 169–170
Interpersonal knowledge base characteristics, 153–154
management behavior, 76, commensurability, 161
77–78 comparative evaluation criteria
Introduction, xviii–xxvii combined with, 166–167
IT. See Information technology complex adaptive systems and,
148
J component criteria, 172–173
Justification of knowledge, 55, 146 contexts, 148
decision executive cycle and,
K 143, 145, 146
KCE. See Knowledge claim direct comparative criteria,
evaluation 162–166
KLC. See Knowledge Life Cycle distributed/centralized
KM. See Knowledge management architecture of, 153
KMP. See Knowledge management effectiveness, 158–167, 306
process electronic support for, 151
Knapp’s definition of knowledge empirical fit, 163
management, Ellen, 65 evaluation approach, 156–157
Knowledge events history, 155
culture and, 271–272 fair comparison requirements
data versus information versus criteria, 160–162
wisdom versus, 17–20 fair comparison theory
defining, 296–298 realization, 158–167, 331
definitions, 3–11, 111; see also framework for describing,
Knowledge conundrum 146–156
information processing and, groups participating in, 56
78–79 heuristic quality, 164
information versus, 14, 55, 143, improvements in cycle time, 157
146, 240 information management versus
methodology, 329 knowledge management, 301

----------------------- Page 373-----------------------

344 Index

integration degree, 153 Knowledge claim objects (KCOs),

interpersonal methods for, 151 169, 170
introduction, 142–143 Knowledge conundrum, xxi–xxii,
knowledge life cycle and, 143, 1–31
147, 205 conclusion, 28–29
knowledge produced by, definition discussion, 2–3
144–146 importance of defining, 2–3
knowledge production and, 70 introduction, 1–2
languages used, 154 solution proposal, 26–27
logical consistency or coherence, tacit and explicit knowledge,
162–163 20–21
metaclaims described, 154– Knowledge conversion, 96
155 knowledge models and,
 outcome classifications of, 144, 195–196
145 SECI model and, 103
outcome descriptors, 152–156 Knowledge ecology. See Organic
pragmatic priority, 165–166 knowledge management
process descriptors, 149–151 Knowledge integration, xix, 79
production increase, 157–158 definition, 53
projectibility, 163 included in, 70
relevance, 153 knowledge life cycle and, 205
reward types, 155–156 organizational knowledge and,
role of, xxiii 56
significance and questions, process, 53
171–173 result of, 53
simplicity, 164–165 Knowledge Life Cycle
software, 154, 167–171 applications, xxiii–xxiv,
specific, 147–156 193–237
success criteria for, 157–158 Cassidy model, 209
support, lack of, 322 centrality of, 309–312
systematic coherence, 164 changes in knowledge
systematic fruitfulness, 163– management and, 135
164 character, xxii
task cluster, 54 complex adaptive systems and,
testing, 148 197, 209
types classifications, 152 conclusion, 57
as validation, 85 Cynefin model and, 131
World 2 knowledge and, 143, decision execution cycles versus,
145, 146, 147 57
World 3 knowledge and, 143, description of, 196–200
144, 145, 146, 147 diagrams of, 52, 101, 203, 300
Knowledge claim formulation, 38, education and training and,
45, 53, 70, 197, 205 225–227

----------------------- Page 374-----------------------

Index 345

elements of, 18–19 World 2 and World 3

execution of processes, 56 knowledge and, 20
as expression of change in Knowledge management. See also
instrumental motivation, The New Knowledge
48–57 Management
framework applications, activities classification, 83–84
193–237 ages of, 88–89, 94–97, 104–134
framework of, 100, 101 approach to, 60–61
individual and group learning as best practices systems, xxiv
and, 54 change in, three views of, 88–90
information technology complex adaptive systems and,
requirements, 220–222 62
intellectual capital and, culture and, 315–317
222–225, 278 definition and specification of,
introduction, 32–33, 193–196 70–84
knowledge audits and, 204, definitions, 63–69; see also
205–206 Knowledge conundrum
knowledge claim evaluation and, diagram, 57
143, 147 dimensions of, 71
knowledge management strategy generations of, xxii–xxiii,
formulation and, 200–204 88–141
learning and adaptivity, 239 hierarchical versus organic,
Macroinnovation model based 62–63
on, 208–209, 213 information management and,
methodology, 218–220 60–87
metrics segmentation, 210–213 information management versus,
models, 206, 208–210 69–70, 84–85, 218, 301
nested, 214 initiatives examples, 82
nesting, 54 knowledge processing versus,
open enterprise and, 227–229 97–98, 196, 243–244, 252,
organizational learning cycle 310
versus, 32–33 levels of, 71–76
origin, xxii, 32–59, 298–299, methodology, 329–330
300, 301 modeling importance, 193–195
social innovation capital and, objective of, 62
278, 279 policies versus programs
sustainable innovation and, initiatives, 83
213–218 process or outcome question,
unified theory of knowledge 110–113
and, 233 processes breadth, 76–80
as value propositions for processes to business outcomes
knowledge management, diagram, 273
230–234 producing and integrating, 56

----------------------- Page 375-----------------------

346 Index

purpose of, 219 information production versus,

specification gap, 85 54, 146
stages of, three, 88, 90–94 knowledge claim evaluation role
standards and, 332–335 in, xxiii, 142–176
strategy formulation, 200–204, knowledge life cycle and, 53–54
312–315 as knowledge management and
strategy versus, xxiv knowledge process, 78–79
targets of, 80–81, 82 learning and, 39–41
task cluster types, 76–77 levels, 71
tools and their unimportance in second generation of knowledge
measuring, 101–102 management and, 97
value theory in, 330–332 Knowledge validation, 55–56
where it belongs, 256–257 Knowledge wars, xxi–xxii
Knowledge management process, Knowledge workers, 241
70–71, 299, 301, 316 KP. See Knowledge processing
Knowledge mapping. See
Knowledge audits L
Knowledge processes, 49, 50 Leadership, 77–78
information processes and, 70 Levels of knowledge management,
knowledge production as, 78–79 71–76
level, 72, 74 Level One, 72, 73, 75, 79
outcome versus, 110–113 Level Three, 75
Knowledge processing, 56 Level Two, 73, 75, 79
adapting model of, 196 Level Zero, 72, 73, 75, 79
fair comparison and, 159 other names for, 74
information technology and, relationship diagram, 73, 74

221 Lorenz attractor, 198

knowledge life cycles and, 198,
200 M
knowledge life cycles and Macro-knowledge management,
organizational learning 198
cycles and, 57 Macroinnovation model, 208–209,
knowledge management versus, 213
97–98, 196, 243–244, 252, Malhotra’s definition of knowledge
 310 management, 63–64
metrics segmentation and, Management
212–213 key issues, xix
nature of, xxii Metaclaims, 8, 296
rules, changing, 79–80 in action, 245–247
self-organizing nature of, 215 best practices and, 241–247,
Knowledge production 304–305
from agents viewpoint, 55–56 claims versus, 240, 306
included in, 70 as context, 241–242

----------------------- Page 376-----------------------

Index 347

definition, 294 as knowledge-claim-centric

knowledge claim evaluation construct, 327
software and, 169, 170 model of knowledge production,
knowledge claim evaluations 126
and, 144, 154–155 terrorism and, 319
role of, 322 value propositions, 318
Metaknowledge management, 74, Organic knowledge
75, 211 hierarchical knowledge
Metaknowledge process level, 74, management versus, 62–63
75 motto of, 62
Meta-meta-knowledge Organizational development (OD),
management, 75, 211 98
Methodologies, biased, 250–251 Organizational knowledge (OK),
Metrics segmentation, 210–213 51, 53, 54
Micro-knowledge management, knowledge integration and, 56
198 predispositions, 114
Murray’s definition of knowledge Organizational learning (OL), 98,
management, Philip C., 67–68 99, 114, 290
Organizational Learning Cycle,
N xxii, 33–37
Natural complex adaptive systems knowledge life cycle versus,
(NCASs), 121 32–33, 298
Natural knowledge processing
system, 61 P
complex adaptive systems and, PLC. See Problem Life Cycle
62–63 Policy synchronization method
Negotiating agreements, 80 (PSM), 216, 328–329
NKPS. See Natural knowledge Popper’s tetradic schema, 38–39,
processing system 45
combining with double-loop
O learning, 39–41
Objective knowledge, 16 knowledge learning cycle and,
OE. See Open enterprise 197
OLC. See Organizational Learning Problem Life Cycle, 40, 49, 56
Cycle decision execution cycle and, 40,
Open enterprise, 227–229, 45–47, 51
317–319 as knowledge life cycle, 51
board oversight of knowledge knowledge produced by, 40–41
management and, 257 as motivation of intelligent
future of The New Knowledge agents, 45
Management and, 328–329 Promethean complex adaptive
knowledge processing and, systems (PCASs), 121, 122,
318–319 125, 126–127, 133

----------------------- Page 377-----------------------

348 Index

S Standards, 332–335
Scientific management and Strategy
knowledge management, 105 biased methodologies, 250–251
SECI model. See definition, 254, 255
Socialization/Externalization/C exception, 251–254, 259
ombination/Internalization introduction, 249–250
model knowledge management versus,
Sense making, xxii, 113–115 xxiv, 249–260, 312–315
complex adaptive systems and, The New Knowledge
113–114 Management and, 254–256
Cynefin model and, 118–120, where knowledge management
123–125 belongs with, 256–257
decision executive cycle and, Strategy-centricity, 251, 252
119 Supply-side knowledge, xix, xx,
in transactional system, 47–48 89, 97, 230
Simple Network Management age of, 99
Protocol (SNMP), 170 concerns, xx
Single-loop learning, 36, 37, 39, 45 focus of, 97
knowledge integration process generational view of knowledge
and, 53 management and, 98, 99,
Social acts, 14 102, 104
Social and technological, and processing, 200, 202, 203,
policy and program 302–303
interventions, 81, 82–83 Supply-side orientation, 251
Social innovation capital (SIC), Surviving knowledge claims
223, 224, 225, 278–279, 281 (SKCs), 51, 53, 144, 145
Social Network Analysis (SNA), Sustainable innovation, xx,
206 213–218
Socialization/Externalization/Comb Sveiby’s definition of knowledge
ination/Internalization model, management, 64–65
89, 195, 296–297
falibility of, 103–104, 110, T
323–324 Tacit knowledge
future and, 323–325 capturing, 195
stage 2 of knowledge explicit knowledge versus,
management and, 91, 20–21
94–95, 102–103 Polanyi on, 12, 20–21, 22, 95
Software Targets of knowledge management,
analysis framework, 325–326 80–81, 82
for knowledge claim evaluation, Task, task pattern, task cluster, 48,
154, 167–171 54, 56, 70, 79
Stages of knowledge management, Task clusters of knowledge
three, 88, 90–94 management, 76–80

----------------------- Page 378-----------------------

Index 349

Tetradic schema. See Popper’s approaches to measuring, two

tetradic schema formal, 177–192
The New Knowledge Management. definition, 167
See also Knowledge developing composite measures
management of, 167
characteristic, defining, 89 introduction, 177–178
definition, xix, 193 knowledge claim evaluation
future of, 323–335 software and, 169
 information technology and, knowledge management
321–322 knowledge production
introduction to, xix–xxvii combining criterion of, 191
issues, xxi–xxv, 295 measurement approach to,
landscape, 294–335 fuzzy, 187–190, 191
metrics, 326
open enterprise and, 328–329 U
as a paradigm, xx Undecided knowledge claims
reference model diagram, 210, (UKCs), 51, 144, 145
313 University of Kentucky’s definition
software usage reason, 326 of knowledge management,
standards, 332–335 65–66
strategy and, 254–256
terrorism and, 326–327 V
theory and practice in, Validation of knowledge, 55–56
xxiii–xxiv Value Network Analysis, 206
viewing, 88–90 Value theory in knowledge
vision of, 290–294 management, 330–332
TNKM. See The New Knowledge
Management W
Training and education, 225– Wiig’s definition of knowledge
227 management, Karl, 66–67
Transactional systems model of Wenig’s definition of knowledge
agent interaction, 41–48 management, R. Gregory,
coping behavior classes, 44 67
interpreting environment stimuli, Wisdom versus data versus
43–44 information versus knowledge,
motivational behavior aspects, 17–20
43–47 World 1 knowledge, 23
motivational hierarchy, 41–43 culture and, 267
sense making, 47–48 definition, 5
“Truthlikeness” evolution and, 10–11
analytic hierarchy process-based genetically encoded knowledge
ratio scaling approach to, and, 20
178–187, 191 World 2 versus, 6

----------------------- Page 379-----------------------

350 Index

World 2 knowledge World 3 versus, 8–10, 12,

beliefs, 7 16–17, 22, 23
culture and, 267, 271 World 3 knowledge
data, information, and claims, 7–8, 51
knowledge, 19–20 as cultural factor, 24, 267, 271
definitions, 6, 11–13 data, information, knowledge,
distributed organizational and wisdom, 17–19
knowledge base and, 53 definitions, 6, 8, 13–17
explicit knowledge and, 22, 23 distributed organizational
in goal-directed agent, 24, 25 knowledge base and, 53,
knowledge claim evaluation and, 152
143, 145, 146, 147 implicit knowledge and, 22, 23
motivational hierarchies and, included in, 6–7
individual level, 23–28 knowledge claim evaluation and,
objects, 7, 51 143, 144, 145, 146, 147
as subjective, 55, 146, 222, as objective, 55, 146, 222–223,
291 291
system of agent, 43 World 2 versus, 8–10, 12,
World 1 versus, 6 16–17, 22, 23
----------------------- Page 380-----------------------

About the Authors

Joseph M. Firestone , Ph.D., is vice president and Chief Knowledge

Officer (CKO) of Executive Information Systems (EIS) Inc. Joe has
varied experience in consulting, management, information technol-
ogy, decision support, and social systems analysis. Currently, he
focuses on product, methodology, architecture, and solutions devel-
opment in enterprise information and knowledge portals, where he
performs knowledge and knowledge management audits, training,
and facilitative systems planning, requirements capture, analysis, and
design. Joe was the first to define and specify the Enterprise Knowl-
edge Portal (EKP) Concept, and he is the leading writer, designer,
commentator, and trainer in this area. He is widely published in the
areas of decision support (especially enterprise information and
knowledge portals, data warehouses/data marts, and data mining),
and knowledge management, and he has completed a full-length

----------------------- Page 381-----------------------

industry report entitled “Approaching Enterprise Information

Portals.” He is also the author of Enterprise Information Portals and
Knowledge Management.
Joe is a founding member of the Knowledge Management Con-
sortium International (KMCI), its corporate secretary, and executive
vice president of education, research, and membership, the CEO in
these areas directly responsible to KMCI’s board. He is also the direc-
tor of the KMCI Knowledge and Innovation Manager Certification
(CKIM) Program (see http://www.kmci.org/Institute/certification/
ckim_details.htm), and director of the KMCI Research Center. Joe is
also a frequent speaker at national conferences on KM and portals
and a trainer in the areas of enterprise information portals, enterprise
knowledge portals, and knowledge management (KM). He is also
developer of the Web site www.dkms.com, one of the most widely
visited Web sites in the portal and KM fields.

Joseph M. Firestone, Ph.D.

Chief Knowledge Officer
Executive Information Systems Inc. (EIS)
Executive Vice President, Education, Research, and Membership
Knowledge Management Consortium International (KMCI)
(703) 461-8823
eisai@comcast.net

----------------------- Page 382-----------------------

Mark W. McElroy is a thought leader, consultant, and award-winning

author in the fields of knowledge management, organizational learning,
intellectual capital, and innovation. He is a twenty-five year veteran of man-
agement consulting, including time spent at Price Waterhouse and KPMG
Peat Marwick. While at KPMG, he served as U.S. national partner-in-charge
of the enterprise networks practice. He was also a principal in IBM’s knowl-
edge management practice in Cambridge, Massachusetts.
At present, Mark is president and CEO of Macroinnovation Associates
LLC, a management consultancy based in Windsor, Vermont. He is the prin-
cipal developer of the “Policy Synchronization Method” (PSM), a patent-
pending technique for enhancing transparency, openness, and innovation in
business. The PSM method is based on a unique blend of organizational
learning and complexity theory and is offered to end-user organizations
around the world through free and perpetual licenses.
Mark is also president of the Knowledge Management Consortium Inter-
national (KMCI), the largest professional association of KM practitioners
in the world. He serves on the board there, as well, and has been affiliated
with KMCI since 1998. He is also the author of The New Knowledge
Management—Complexity, Learning, and Sustainable Innovation.

Mark W. McElroy
President and CEO
Macroinnovation Associates LLC
10 Ogden’s Mill Road
Windsor, VT 05089
(802) 436-2250
www.macroinnovation.com
mmcelroy@vermontel.net