 Welcome back to Knowledge Clip 8 about knowledge in organizations. In the previous clips I talked about knowledge in individuals and how individual learning happens. In this clip I'll take you to the next level. I'll talk about knowledge in organizations. After this clip you'll understand four things. First, I'm going to talk about knowledge-based theory. In order to share knowledge at the group level and to use it, we need to have some understanding what actually happens when knowledge is shared at the group level. Furthermore I'll talk about the transfer of knowledge and what it is and how it happens actually. Finally, I will present in the next clip information about knowledge creation and innovation and about knowledge storage and retrieval. To start with, where does knowledge reside? In the previous clip we've seen that knowledge is something that happens in people's minds. It's in their head, so to speak. However, by sharing knowledge from one person to the next, we can have the same knowledge. So although knowledge is shared in one individual's mind, it can be shared, stored and retrieved because we exchange knowledge. If I have knowledge I can share it with my friends and with my students and they can have the same knowledge. In fact, we use this shared knowledge to make things happen, to do things. And if people interact and integrate their knowledge, they can create new knowledge. So knowledge sharing, storage and retrieval make the people in organizations at all levels can actually share the knowledge and use it. And all this sharing and using the knowledge eventually is very important if you want to improve things in organizations. So this knowledge sharing between individuals in the level of the organization is actually an important source for organizational innovation. One of the key thinkers in the domain of shared knowledge is Grant. In 1996 he developed a knowledge-based theory. This is different from individual knowledge theories. This is really an organizational level theory about what drives production processes in organizations and how this contributes to organization performance. And Grant said that actually everything that happens in organizations is to be dated back to what people have in their minds. So actually an organization is a social structure that enables people to use their knowledge in order to do things. So knowledge comes before behavior and actions. Grant's theory has a number of elements that I would like to share with you. So the first and foremost important thing is that he claims, indeed, that knowledge exists in individuals. So it's impossible to take the knowledge out of somebody's mind and just plug it into a computer and use it there. I know you really have to work with this individual to understand what he or she knows. Organizations can be organized in such a way that it either enables the use of knowledge by individuals or hinders the use of knowledge. And the idea behind that is that people in groups, they form social structures. And within a social structure people can do things that are expected in a certain way. So some people can be asked to contribute, but social structures can also inhibit people to use their knowledge. For example, if you don't feel that you're valued, then expressing what you know or putting your knowledge to use is hindered. So the use of knowledge, an important thing, if you want to be successful as an organization, want every employee to contribute their knowledge and use it in the best way to help the organization. So the knowledge used means that the products are realized, the services can be delivered, and that organizations basically meet their goals. What organizations can do is to facilitate this process. So facilitate that people are happy about using their knowledge in the organization. Structures, they ensure that there is coordination between individual knowledge. So imagine that you have a team and every individual in the team has specific knowledge. Then for example, installing a manager and having negotiations with the team and having team meetings. These are all structures that can help to unleash the knowledge, share it and learn from each other and then make the best use of it in practice. According to Grant, if you look at knowledge from this perspective, it's an important source of competitive advantage. So remember when we discussed the resource-based view, when we talked about unique capabilities, well, the shared knowledge in organizations and the way that it is shared, this knowledge-based structures, these are actually unique for every organization and they can be an important source for competitive advantage. So what does it mean if we look at human resource management? Well, it basically means that you need to have a critical look at your organization structures. Imagine an organization as is illustrated on the left-hand side of the slide. You see a hierarchical organization where people are nested in teams of two or three employees and reporting to a manager who's reporting to another manager. Imagine that the two people on the left want to share their knowledge with the persons on the right. And imagine that this organization has no connections in between these departments. So that means that they first need to talk to their manager who needs to talk to their manager, who then needs to go back to the manager who has to talk to their employees before that the information is exchanged. So you can imagine that a very hierarchical organizational structure is actually hindering the exchange of knowledge. So Grant's conclusion, for example, is for effective organizations, they should have more flat organization structures so that people are more easily run into one another and can exchange their knowledge. Another important implication for human resource management is to have a close look at the job design of individual workers. So imagine a job where you're just told to be done what your manager says is important. So for example, you're in the production line and your only task is to do the task that you were given that day. So you're not invited to share your knowledge, you're not invited to think along. In such situations, actually, the structure hinders that individuals can contribute their knowledge to improve, for example, this production line. So an important implication of the knowledge-based theory for job design is that you think about how can we make jobs more richer so that employees can actually contribute what they know to the organization and to their peers. So think about, for example, task complexity. Maybe it's possible to add a little bit more to the task so that people actually have to think about how one part of the job connects to another. Think about having authority over what you do. Think about the possibility to make improvements to your job. Think about what kind of decisions are you allowed to take together with whom. Think about what kind of goals can you make. Think about teamwork. So all these things relate to how jobs in organizations are designed and can contribute to effectively exchanging knowledge and putting their knowledge into action and make the organization, therefore, more effective. So let's take a moment to think a bit deeper about how grants theory, about knowledge being so important, can actually contribute to it being a resource for unique capabilities. When we discuss the resource-based view, we discuss that in order to be a unique and contributing resource, it should be difficult for competitors to also buy it or to just copy it. Well, knowledge is a bit weird from that perspective. If you look at knowledge from the explicit view, remember the things that are written down and you can easily retrieve from the internet but also just by going to an organization and spy on their innovations, for example, explicit knowledge can be easily shared. You can just copy it and bring it somewhere else. Tested knowledge, on the other hand, is everything that is implicit that's stored in the minds of individuals and we know already that it's much more difficult to transfer test knowledge than explicit knowledge. So in terms of unique capability, it's more likely that the test knowledge that resides in an organization is the plus-plus-plus when it comes to unique capabilities. This is the firm's specific knowledge. It's the human capital, the unique capability for competitive advantage. Is it impossible to keep explicit knowledge to an organization? To some extent, you can think about systems, for example, for protecting your innovations and making sure that their license is on it, for example. However, these all have limitations over time. If it comes really to unique capability, you need to think in the direction of tested knowledge. Then, a definition in between. Central in the theory of the knowledge-based theory is the idea of knowledge transfer. So knowledge transfer is defined as a process in which knowledge holders, so one person and another person, share their knowledge with others who learn from this knowledge so that they can apply it. This is different from knowledge sharing. Knowledge sharing means, here is my knowledge, good luck. Knowledge transfer really means a process where the knowledge is digested and subsequently used in practice. You can understand why it's important, because if you want to improve anything, basically, if you want to improve a process in an organization, for example, you really need to also apply what you've learned to the organization in order to benefit from it. Well, in practice, there are a lot of hindrances that make the sharing of the transfer of knowledge difficult. For example, there are obstacles in the center. Within organizations, it can be really, really beneficial to have knowledge that others don't. So it's an important source of power. People who are unwilling to share their knowledge, you can think of some times of situations where they have their position because they know things or because they know where to find everyone in an organization. If they would share this knowledge, that would mean that they would lose this power. Another hindrance for the willingness to share knowledge is self-efficacy. Imagine, for example, that you're quite young and you come into an organization and you know things that obviously would be beneficial for the senior people working there. However, speaking up in a group of seniors is to do with status and maybe they don't like you that much afterwards. So self-efficacy, the confidence of speaking up and sharing your knowledge can also be a hindrance or an obstacle in sharing knowledge. Same is true for the other side. The receiver also has obstacles when it comes to the effective transfer of knowledge. It all starts with the willingness to listen and that, again, depends on the status of the sender. If you're somebody really young or somebody who is seen as not a valuable source of information, then the willingness to listen will not be so good. Also, it depends a lot on what kind of relationship you have with the sender. Remember when we talked about social capital, that good quality relationships are really important for organizations to function well. So this relates to that. If you have a good quality relationship with the sender, the likeness that you will listen to what they have to say is larger. And also it has to do with the intelligence of the receiver. So are they able to understand what they are being told? Further, there are some organizational hindrances. Think, for example, about the lack of time, lack of resources. So there are many things that can actually hinder effective knowledge transfer. How bad is it? Or actually to turn the question around, how valuable is it when there is effective knowledge transfer? And luckily we have a lot of research available on that. So the media analysis by Van Dijk and Janssen, they show that when there is a lot of knowledge transfer in strong and trustworthy relationships, then there is a lot of performance in the organization. Knowledge transfer happens when there is trustworthy relationships, both internal in the organization as well as external to the organization. On external, you have to think about relationships with suppliers, with universities, employers associations, with government. So literally every relationship that you can use to invite information into your organization and to be able to use it. For all these relationships, it's important to have a close cooperation. So just saying that you will work together with a university by signing some kind of document that you will do so in the future is not going to lead to a lot of knowledge transfer. Only when researchers go actively to these organizations and for example team up and doing research with organizations, only then there is a close cooperation and learning and the side of the organization will happen. There will be knowledge transfer to the organization that they can actually use. In the context of evidence-based human resource management, this is of course very interesting. So organizations who want to use the insights from university when it comes to managing people in organizations, it's not a bad idea to reach out and actually work with a researcher or a student. All these corporations are important because they eventually also result in test knowledge transfer and you remember test knowledge is important to actually use the explicit knowledge and make it something that you can use in the organization so mix the explicit knowledge with the test knowledge. This brings me to the next part because if you have a structure that facilitates the exchange of knowledge, the transfer of knowledge both within the organization by having good organization structures, having rich job descriptions and you have this nice network with all these relationships with whom you can transfer all this knowledge, then the next step is to use this knowledge to your advantage and create new knowledge. New knowledge is created when people transfer what they know, when they internalize it and when they apply what they've learned. The value of individual group and corporate knowledge grows exponentially when it's shared and increases its value with use. I'm going to take you and show you in the next clip how this creation of knowledge can be conceptualized using the theory of Nonaka and Takuchi. For now, after this clip, you know what the essentials of knowledge base theory until you know that knowledge is eventually what makes organization stick, what makes them work. You have seen how test and explicit knowledge always also exist in the group and organization level and that transferring between all these levels is really important for effective functioning. Knowledge and the individual and the group level are both a resource for unique capabilities and therefore for competitive advantage. In the next clip, like said, knowledge creation, storage and retrieval.