Journal of Knowledge Management Practice, March 2005

The Role of Training and Development in Using Knowledge Networks to Build Intellectual Capital

Kathy Napierala, Loren Weiss Selig, Zane Berge, UMBC

ABSTRACT:

This paper explores the concept of intellectual capital and how organizations are using knowledge networks to build it. In the current resource-scarce, results-driven climate, organizations are realizing that intellectual capital - employees' brainpower, know-how, knowledge, and processes - is a source of competitive advantage. Knowledge networks are important in building and sharing intellectual capital. Knowledge networks have always been central to organizational health. As workers develop effective ways of doing their jobs, they share information with each other and knowledge networks grow organically. Knowledge networks can be simply defined as who communicates with whom, and who learns from whom. The emerging trend is that organizations today are working to formalize and jump start knowledge networks, so that best practices, ideas and innovations can be efficiently refined and shared. Training and development professionals contribute to this effort by creating course and performance support structures that both nurture and take advantage of knowledge networks..



The Role Of Training And Development In Using Knowledge Networks To Build Intellectual Capital

Workplaces are changing rapidly in today’s environment. Job descriptions are revised as quickly as new workplace trends occur. In order to fully navigate those transitions, training and development professionals must learn how to effectively manage not only the change, but continue to value the employees who must make those transitions. Two factors, intellectual captial (IC) and knowledge networks (KN) play key roles in effectively managing those changes and in influencing the workplace. By building upon existing knowledge networks, training and development professionals will help increase not only the intellectual capital of a company, but also the skill set of the employees involved.

Defining Intellectual Capital And Its Benefits

Before we can discuss the benefits to companies, we must first define what is meant by intellectual capital. The definition of IC needs to be broad enough to encompass the full range of knowledge-based resources, and specific enough to guide management decisions and organizational action (Zhou & Fink, 2003). Intellectual capital includes the company’s data, information, and wisdom as well as the tools that supplement the use of this information and knowledge (Department of the Navy, 2000; FAA, 2004). Additionally, IC may be the information members of the organization that can be assessed a financial value or that has been specified as a highly valuable asset. Information capital uses knowledge, applied experience, and professional skills to improve customer relationships and provide a competitive edge in the marketplace. (CHRPCanada, 2004).

The Components Of Intellectual Capital

As organizations seek to grow and measure their intellectual capital, it has been necessary to build models that identify the many factors that contribute to organizational knowledge. The Skandia Intellectual Capital Model developed by Edvinsson (Zhou & Fink, 2003) is representative, and breaks intellectual capital into human capital, structural capital, customer relations capital, organizational capital, innovation capital, process capital, intellectual property and intangible assets.

The Importance Of Intellectual Capital

Keeping in mind the definition of IC, why is it important to the workplace? In the transition from the industrial economy to the knowledge economy, intellectual capital is being recognized as the basis for success (Zhou & Fink, 2003). Tangible assets are less important than ever before. For example, the market value of Microsoft was 1reported to be 1.2 times its tangible asset value in 1996, and 13.3 times in 2000 (Zhou & Fink, 2003). In 2000, Marriott International sold off almost all hotel properties to focus on the core skill of hospitality management, placing more value in know-how than real estate. And in the current climate of high-stakes testing, schools and other education facilities are judged by the expertise of their staff.

According to Optima Media Group (2003), companies that measure intellectual capital report better alignment of knowledge management activities with business strategy, better focus on managing knowledge resources, improved communications with stakeholders and a deeper insight into sources of corporate value. Optima’s work has shown:

        Sears Roebuck uses a measurement model that is based on an evolving set of processes for data collection, analysis, modeling and experimentation. This has enabled managers to identify the key business drivers. The model has been attributed as having increased revenues by $200 million over 12 months.

        At DHL the introduction of the Performance Prism has enabled quarterly reviews to focus on business fundamentals instead of merely a set of numbers.

        The systematic approach to Intellectual Asset Management used at Dow Chemical Company, along with the TechFactor method of valuation, has generated over $125 million in additional revenues.

        SA Armstrong Limited, a Canadian engineering firm, aligns measures with business strategy and value creation through its Enterprise Capital Framework. With their desktop computer system, users can track measures through several levels of intellectual capital.

        Human capital at Ericsson is a key area of intellectual capital. Ericsson’s competency management model is designed to protect and grow human capital, develop job profiles, assess individuals against profiles and design programs for personal development.

        Celemi published its first intangible assets scorecard as part of its annual report in 1995. At this learning tools supplier, managers claim that the monitor helps ensure the company is growing in line with its strategic plan and alerts them to untapped potential (Optima Media Group 2003).

These examples show that companies that take a systematic approach to intellectual capital sustain a competitive advantage. Building intellectual capital requires that knowledge is gained, stored, transferred, and shared (Allee, 2000).

Knowledge Networks And Intellectual Capital

Knowledge and learning are social in nature. In the workplace, tacit and explicit knowledge are built and transferred through many types of interaction. Tacit knowledge is what individuals bring to the workplace with them – all their experiences, education and know-how (Allee, 2000). Explicit knowledge includes information that is deliberately shared, documented and communicated. One school of thought believes that there is no knowledge outside of people, that stored data is only information until it is applied in context by people (Krebs, 1998).

The structures and relationships that allow workers to share information, brainstorm, refine ideas and create innovations are called knowledge networks. Workers in today’s economy add value to the organization by synthesizing and analyzing information, then planning and making decisions based on that information. The work that builds intellectual capital – especially customer relations capital, organizational capital, innovation capital, process capital, intellectual property and intangible assets (Zhou & Fink, 2003) – requires problem-solving skills and the ability to apply judgment. These skills and abilities develop over time, thus, workers require mechanisms to allow them to access sustained, appropriate support and contact with others at the moment of need in order to problem-solve and make decisions (McCabe & Leighton, 2002).

Organic Knowledge Networks

Communities in companies self-organize naturally around common problems, interests, customers, and complex knowledge areas. It is within these networks where core competencies of organizations are stored, shared, nurtured and enhanced. Individual learning is facilitated by being a member of one or more of these knowledge networks (Krebs, 1998). In addition, many people also participate in external knowledge sharing groups, such as electronic mailing lists and professional associations, interacting in both the larger social system and the company. In effect, many people working for a company’s success are not even part of the company. These informal knowledge networks extend through organizations, economic clusters and technology networks that may be either local or global (Allee, 2000).

The Benefits Of Knowledge Networks

Knowledge networks help individuals develop the skills and competencies needed to do their jobs, provide a stable sense of community with colleagues, provide ways for workers to stay current and challenged, and foster a learning-focused sense of identity. The members of a knowledge network have the opportunity to gain personal satisfaction as contributors, along with a means to connect with power and influence with the formal parts of the organization..

For the organization, knowledge networks push strategy forward and enable faster problem solving. Knowledge and expertise are distributed more rapidly in the larger population for operational excellence, and ideas can be cross-fertilized to spur innovation. In addition, knowledge networks aid in developing, recruiting and retaining talent, and provide for retention of knowledge when employees leave the company (Allee, 2000).

Training And Development Practitioners And Knowledge Network Development

Because creating and supporting knowledge networks requires an understanding of the conditions that lead to their successful formation and the environment in which they can function and grow (Allee, 2000), training and development practitioners are natural participants in the process. Organizations often seek to engineer knowledge networks when they require more skilled people than can be recruited or retained, a situation that also spurs training initiatives. Knowledge networks are an extension of training; they come into play when training and continuing education cannot keep pace with the scope of knowledge required for high quality performance (Gaines, 2003). Consider these aspects of knowledge networok development:

        Knowledge network developers must take the time to truly discover the educational needs in terms of technologies being used and estimated timeframe of applying knowledge. (Fraser, 2004).

        Detailed formats for knowledge exchange must be created (Butschler, 2002).

        Technologies used must make critical and sometimes strategic impacts, with participants benefiting from the sharing of not only book knowledge, but also production project experience (Fraser, 2004).

        Knowledge networks need to support conversational interaction between people or groups, social feedback and social networking, and build trust and break down knowledge silos while retaining participant privacy (Kaplan-Leiserson, 2003).

As the knowledge transfer network grows, additional issues and concerns will emerge and require adaptation. Periodic reassessment of the network's goals, knowledge, and accomplishments is necessary, along with gathering lessons learned and best practices for future iterations (Butschler, 2002).

All of these factors are familiar to training developers as analysis, design, development, implementation and evaluation. Since we have seen that the effective utilization of knowledge and learning requires both culture and technology (Krebs, 1998), the best practice model for building knowledge networks is a blend of ISD and knowledge management; KM using ISD techniques (McCabe & Leighton, 2002).

The Process Of Creating Knowledge Networks To Build Intellectual Capital

Knowledge networks can be seen as knowledge management efforts that focus on learning communities (Allee, 2000). The first step in creating knowledge networks is to identify organizational goals and how increased knowledge flow can help to reach them (Butschler, 2002). Strategic plans and other extant material are key to this effort. Analysis of training objectives provides taxonomies that may be used to characterize organizational knowledge needs (Gaines, 2003).

The next step is a needs analysis of the organizational areas that most effect strategic goals, to identify where information flows smoothly and effectively, and where it bogs down. It is best to do this on an organizational level, a process level, and an individual level (Butschler, 2002). Data is gathered, either thorough surveying or brainstorming meetings, on knowledge acquisition and sharing activities that are already part of the organization. These constructs may be idiosyncratic to particular groups or individuals (Gaines, 2003). They reveal who helps who learn and make sense of what is happening in this business process. When these constructs are mapped, a picture emerges of how expertise is shared. Nodes that are central in the map are experts that others seek out for help when they need critical information and knowledge (Butschler, 2002). These individuals are an invaluable resource for discovering what works in your organization and for developing new knowledge network patterns to further organizational goals and nurture intellectual capital. 

Once existing knowledge exchange patterns are mapped, the organic networks can be compared to desired knowledge exchange. By applying human performance technology techniques to the identified performance gaps, training, structure or human resource interventions can be planned. When decisions about which current patterns can be left alone to thrive and which must be created or encouraged have been made, strategies and structure can be developed and tested. Infrastructures and technologies are purchased or built in this production phase (Krebs, 1998).

In addition to developing effective processes and creating resources (whether social or electronic) for communication, those who are intended to benefit from the knowledge network must learn how to use the network to interact with each other. Beyond becoming adept at accessing the network’s structures, they need to understand each other’s goals and priorities. Early teambuilding issues will help form the network's identity and speed the process of making the network an ingrained part of the work life of the members (Butschler, 2002). The social element of the interaction is what makes the human component and the technology blend into a comprehensive educational experience (Fraser, 2004).

Knowledge Network Strategies Available To T&D Professionals

Even when technology is the focus and the medium for knowledge networks, the point is facilitating peer conversation, experimentation, and shared experiences (Allee, 2000). Some proven strategies for creating and nurturing knowledge networks are mentoring, coaching, and communities of practice. These strategies can be supported by a variety of technologies.

Mentoring

A facilitated mentoring process can create a continuous learning climate, if aligned with other human performance improvement strategies and integrated into organizational structure (Murray, 1999). A mentor is a more experienced worker who helps a less experienced person learn and grow (transfers skills and experience) by tutoring, coaching, listening, counseling, teaching, modeling, giving feedback, demonstrating, guiding and facilitating desired performance. Benefits to the organization include practical career development, overseen by direct participants, and succession planning. Also productivity, development of skills, lower costs, recruitment, retention, organizational image, strategic goals, transfer of organizational culture, updating skills of long term employees.

Coaching

Coaching features an employee learning by working alongside an experienced co-worker or specialist who knows when and how to intervene and transfer information. It is distinguished from mentoring in that coaching tends to be focused on a specific task or skill, while mentoring is a more general and encompassing relationship (Jacobs, 1999). Although individualized coaching is often part of programs for executive and management development, it can help all levels of employees identify and address their strengths and areas that need inprovement. It is most successful when a structured, systematic approach is used throughout the organization, but coaching design must be flexible enough to address specific individual and organizational needs that may emerge. The coach and trainee must agree on objectives, who is responsible for doing what, and how success will be evaluated (Jacobs, 1999).

Successful coaches must learn to interact with trainees in a way that is supportive and compelling. A coach must know how to overcome the resistance the trainee may exhibit when confronted with discrepancies between his or her self-evaluation and feedback from others and when asked to make changes in his or her behavior (Nowack & Wimmer, 1997). Coaching provides a low-risk relationship in which employees can hone performance as well as explore new ideas and work methodologies that can then be exported to the larger community (Zweibel, 2003).

Communities of Practice

As workers move beyond routine processes into more complex challenges they rely heavily on peer networks as a primary knowledge resource to quickly access share information, strategies, tips, tricks and skills (John Seely Brown, VP and Chief Scientist at Parc Xerox, cited by Allee, 2000). These networks, characterized by a common sense of purpose, are known as communities of practice. They are different from teams because they are defined by knowledge rather than task, and their life cycles is defined by the value created for members, not by project deadlines. Goals are not imposed by any type of management, but negotiated among members. Members are usually self-selected with people participating because they personally identify with the topic and purpose of the group (Allee, 2000).

An individual may belong to multiple communities of practice, both inside and outside their organization. For example, a developer of online training materials seeking a solution for a distribution problem may consult the members of his or her work team (either in person or electronically) for ideas, then send an email to a global authoring software support community and receive suggestions and advice from peers around the world, some of whom may be internationally recognized experts. The developer may then check the electronic mailing list announcements for a local professional organization and discover a seminar to attend that may provide insight into the problem. All of these activities serve to build intellectual capital by bringing new ideas and methodologies into the organization.

Knowledge Networks For Intellectual Capital: The Future Of T&D

As the nature of the economy evolves and the need to develop intellectual capital grows, industry experts agree that involvement in knowledge network development is an avenue for professional success (or survival) for the T & D practitioner. According to Tamar Elkeles, vice president of learning and development at QUALCOMM, “There’s a convergence of training and information roles and if you’re solely focused on training, you’re missing the boat. You need to be broader and to do more than just help employees learn specific skills. In a learning organization, you need to help people learn about the company, the culture, the industry, the market, and so on.” (Galagan, 2003, pp. 30)

Allison Rossett, Professor of Educational Technology at San Diego State University and member of Training magazine's HRD Hall of Fame, advocates a “big-tent conception of technology for learning and support, where active education, information, and advice surrounds people and boosts their performance by its very presence” (Galagan, 2003, pp. 33). What are the benefits to training and development professionals for adopting this big-tent point of view? “We can continue to put knowledge and information into people, and technology has made that much more interesting, but there is more we can do,” says Pat McLagan of McLagen International, an authority on competencies and organizational change. “Many organizations today are trying to implement strategies that far exceed their capacity to implement. If a knowledge specialist were in the room when those strategies we re conceived, there would be better understanding of what strategic change means in terms of learning and development and change management processes. I believe there would be fewer failures in strategy implementation than there are today.” (Galagan, 2003, pp.28) That type of value is what will define the most valuable players in the training and development field in the intellectual capital market.

Conclusion

The development of knowledge networks provides great long term benefit to the organization. The net increase of intellectual capital leads to greater customer service, increased productivity, and higher output of relevant products. In the rapidly changing workplace, developing knowledge networks in order to increase intellectual capital is increasingly becoming an important aspect of the training and development profession.

References

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Contact the Authors:

Zane Berge, Associate Professor, UMBC, 1000 Hilltop Circle, Baltimore MD 21250; berge@umbc.edu