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Challenge of Knowledge Markets. Topic. Knowledge has a market like goods & services Players in knowledge market Price system Reciprocity Repute Altruism Trust Knowledge market signal Position & education Informal networks Communities of practice. Topic.
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Topic • Knowledge has a market like goods & services • Players in knowledge market • Price system • Reciprocity • Repute • Altruism • Trust • Knowledge market signal • Position & education • Informal networks • Communities of practice
Topic • Knowledge Market Inefficiencies • Incompleteness of information • Monopolies • scarcity • Trade barriers
Topic • Developing effective knowledge markets • Using information technology wisely. • Building marketplaces • Creating and defining knowledge market value • The peripheral benefits of knowledge markets • Higher workforce morale • Greater corporate coherence • Richer knowledge stock • Stronger meritocracy of ideas
If we want knowledge to move and be utilized more effectively, we need to better understand the forces that drive it.
Knowledge market likes markets for goods and services The knowledge market has buyers and sellers who negotiate to reach a mutually satisfactory price for the goods exchanged. It has brokers who bring buyers and sellers together and even entrepreneurs who use their market knowledge to create internal power bases.
When Transaction occurs • Knowledge market transaction occur because • All of the participants in them believe that they will benefit from them in some particular way. • They expect the transactions to provide “ utility”.
People search for knowledge because • they expect it to help them succeed in their work. • We all try to reach knowledgeable people when we see the need to deliver a solution to a problem. • When we supply knowledge, • we expect to benefit too.
Payment exists for a knowledge transaction. Within organizations, cash is usually not involved in these transactions, but that should not disguise the fact that a market price system exists and payment is made or assumed. The knowledge market, like any other, is a system in which participants exchange a scarce unit for present or future value.
Knowledge market needs to manage as other markets Understanding that there are knowledge markets and that they operate similarly to other markets is essential to managing knowledge successfully in organizations.
Many initiatives based on utopian assumption Many knowledge initiatives have been based on the utopian assumption that knowledge moves without friction or motivating force, that people will share knowledge with no concern for what they may gain or lose by doing so.
People don’t give valuable possessions without return • Companies install e-mail or collaborative software and expect knowledge to flow freely through the electronic pipeline. • When it doesn’t happen, they are more likely to blame the software or inadequate training than to face a fact of life: • People rarely give away valuable possessions (including knowledge) without expecting something in return.
Even social transactions are generally based on some sort of exchange. Just because the object of exchange is intangible does not mean that the market forces are less strong. Knowledge initiatives that ignore the dynamics of markets (and, of course, human nature) are doomed to fail.
The first step in any knowledge initiative is recognizing that there are markets for knowledge
Making market work well • We believe the only way to have a market that works well is • To recognize that market forces exist • To try to understand how it functions • To make it more efficient
Buyers • Knowledge buyers or seekers • Are usually people trying to resolve an issue whose complexity and uncertainty precludes an easy answer. • Knowledge seekers are looking for insights, judgments, and understanding. • Such as “What is this particular client like?” • How did we manage to win that sale? • That require complex answers • They seek knowledge because it has distinct value to them. • It will help them make a sale or accomplish a task more efficiently • It will improve their judgments and skills and help them make better decisions. • In short, it will make them more successful at their work.
Sellers Knowledge sellers are people in an organization with an internal market reputation for having substantial knowledge about a process or subject. Some sellers keep themselves out of the market because they believe they benefit more from hoarding their knowledge than they would from sharing it. One of the challenges of knowledge management is to ensure that knowledge sharing is rewarded more than knowledge hoarding.
Knowledge Brokers • Brokers make connections between buyers and sellers: those who need knowledge and those who have it. • Managers are potential knowledge brokers. • They enjoy exploring their organizations, finding out what people do and who knows what. • They like to understand the big picture, which puts them in a position to know where to go for knowledge.
Corporate Librarians Librarians role as information guides to make people-to-people, people-to-text connections. Because corporate libraries often serve the whole organization, librarians are among the employees who have contact with people from many departments. They come to understand a great deal about the various knowledge needs and resources of the company.
Informal knowledge brokers Some Informal knowledge brokers are really knowledge entrepreneurs. They intentionally set out to become experts on who has knowledge and how to exploit it. They then “sell” this expertise, not for money but in exchange for future favors and repute. In effect, they develop an internal knowledge business.
All markets have a price system so that value exchanges can be efficiently rendered and recorded. • What is the price system of the knowledge market? • What sort of currency do participants exchange? • What are the necessary market conditions?
When firms buy knowledge from outside their organizations, they frequently pay with cash. A lawyer, consultant can make several thousand dollars per day because the client company perceives that his special knowledge is worth that much. Within organizations, the medium of exchange is seldom money, but there are agreed-upon currencies that drive the knowledge market.
Sellers as well as buyers exchange knowledge because they believe they gain from the transaction.
This scenario raises the question of what kinds of payment exist in the knowledge market. • We have come to the conclusion that there are at least three factors at work. • Reciprocity • Repute • Altruism • And plus “trust” which knowledge market can operate effectively.
Reciprocity A knowledge seller will spend the time and effort needed to share knowledge effectively if he expects the buyers to be willing sellers when he is in the market for their knowledge.
Time, energy, and knowledge are finite. They are very scarce resources in most people’s workdays. We won’t spend scarce resources unless the expenditure brings a meaningful return.
Repute A knowledge seller usually wants others to know him as knowledgeable person with valuable expertise that he is willing to share with others in the company. Repute may seem intangible, but it can produce tangible results. Having a reputation as a valuable knowledge source can also lead to the tangible benefits of job security, promotion, and all the rewards and trappings of a company guru. Although a seller does not receive cash directly, he may receive a higher salary or bonus from sharing knowledge with others.
Altruism It is possible that a sharer may be a nice guy who wants to help whether or not he gets anything beyond a “thank you” in return. Or he may be so passionate about his knowledge that he is happy to share it whenever he gets a chance. Many sharers are motivated in part by a love of their subject.
Trust is an essential condition of a functioning knowledge market, as it is of any market that does not depend on binding and enforceable contracts. Of course, even transactions bound by written contracts entail some degree of trust. But the market with no written contracts and no court of appeals – is very much based on credit, not cash.
When we sell knowledge within an organization, we will gain repute for a knowledge transaction only if the buyer gives us credit for it. If he pretends the knowledge was his all along, we gain nothing. If someone claims our research results as his own, we are no more likely to make further knowledge available to him. A buyer who fails to give credit and recognize his debt to us is also unlikely to reciprocate when we need knowledge.
Similarly, management that pays lip service to the value it attaches to knowledge sharing but rewards employees who hoard knowledge will not create the level of trust needed to make the knowledge market effective.
The role of trust in knowledge transactions helps explain why knowledge initiatives based solely on the belief that infrastructure creates communication seldom deliver the expected benefits.
Trust • Without trust, knowledge initiatives will fail, regardless of how thoroughly they are supported by technology and rhetoric. • Trust must be established in the following ways • Trust must be visible • Trustworthiness must start at the top
Trust must be visible • The members of the organization must see people get credit for knowledge sharing. • They must directly experience reciprocity. • There must be direct evidence of trust; • a declaration of the importance of trust in the corporate mission statement is no sufficient.
Trust must start at the top Trust tends to flow downward through organizations. Upper management’s example can often define the norms and values of the firm. If top managers are trustworthy, trust will seep through and come to characterize the whole firm.
Groupware is Impersonality The impersonality of groupware allows anyone to post information and invites anonymous access to that information. However, it does not create the same confidence in the quality of knowledge that personal acquaintance and reputation can inspire. The promise of reciprocity in such a system is also weak. The buyer who downloads an item from a server does not feel the same obligation to the provider that he would if he got the same material through a phone call or meeting.
This is why the most successful groupware systems are moderated to assure that posted material is accurate and timely. Some even have mechanisms for metering the use of posted items and crediting the suppliers.
Knowledge Market Signals • We mean information that indicates both • Where knowledge actually resides in the organization • How to gain access to it. • There are formal and informal signals in knowledge markets. • Title or position is the most common formal signal indicating who has or should have valuable knowledge.
Position • If we need to learn about a particular research project, it makes sense to go to the project manager • If we need to know what is happening in marketing, why not ask the director of the marketing department? • This commonsense approach can work, but not consistently.
