Institutionen för informatik

Change and Knowledge Management

Critical Factors for Knowledge

Management in Project Business

Author: Hafez Shurrab

I

ABSTRACT

Project-based business is significantly growing in different sectors due to multiple

advantages projects can offer. However, one major concerns of projects is being a

temporary business with high possibilities of losing organizational knowledge, and greater

difficulties in assuring teams’ commitment, causing slowness in organizational learnability

and capability to evolve and become more competitive. Therefore, many project-based

organizations consider knowledge management initiatives to fill that gap. Nevertheless,

many of such initiatives fail to deliver the expected results due to different failure factors

and barriers, while others could be more successful due to a group of success factors and

enablers. This article discusses a conceptual model consisted of six success factors that

contribute to the overall success of KM initiatives in project-based organizations.

II

TABLE OF CONTENTS

ABSTRACT ................................................................................................................................ I

TABLE OF CONTENTS ........................................................................................................... II

1. INTRODUCTION .......................................................................................................... - 1 -

2. CONCEPTUAL FRAMEWORK ................................................................................... - 1 -

2.1. Conceptual Model of Factors ............................................................................. - 1 -

2.2. Knowledge-Management Initiatives .................................................................. - 2 -

3. EMPIRICAL STUDY .................................................................................................... - 3 -

4. DISCUSSION ................................................................................................................. - 3 -

5. CONCLUSION .............................................................................................................. - 4 -

6. REFERENCES ............................................................................................................... - 5 -

- 1 -

1. INTRODUCTION

Running a business may not be difficult, while sustaining it under the fierce

competition of today’s business is definitely more complicated. One of the major concerns

is that the acceleration of business development in all life’s facets is going in a high pace.

For that, business leaders are not only asked to reserve the corporate memory, but also to

keep abreast of relevant updates and absorb the best of them in a form of practices and

techniques. In view of such a challenge, knowledge management is becoming more and

more crucial, notably, from a competitiveness point of view (Prencipe & Tell, 2001). The

main mission of KM is to make sure that the knowledge asset is diffused across the

organization as optimum as possible.

Nowadays, knowledge is regarded as a key sustainable competitive entity for almost

all forms of business. The improvements and developing projects of KM are injected to

businesses in a form of KM initiatives (Ithia, 2003). One business form showed high

constant growth is the project-based business. None the less, this type of business

encounters greater challenge in terms of KM due to several concerns stem from

technologies, cultures, knowledge contents, and project management frameworks (Chua &

Lam, 2005). Therefore, KM initiatives are more apt to fail in delivering the promised

value. This article addresses a conceptual model proposed by Ajmal et al. (2010, pp. 156-

168) for six success factors of KM initiative in project-based business. An empirical study

has been conducted to examine the model on project-based companies in Finland.

2. CONCEPTUAL FRAMEWORK

2.1. Conceptual Model of Factors

The proposed conceptual model encompasses several factors whereby KM initiatives

are influenced in a cotext of project-based business. The factors are as the following:

1. Familiarity: The more familiar are members of an organization with KM

initiatives and practices to be undertaken, the more responsive and productive are

they, and thus, the more successful is the integration of these initiatives (Pieris et

al., 2003).

2. Coordination: KM initiatives rely heavily on organizational communication and

sharing. Moreover, project teaming is greatly essential for PM. Therefore, there

should be organized practices for coordinating communication and knowledge

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sharing activities. The model incorporates two steps of the four-step model

(socialization, externalization, combination, and internalization) of knowledge

creation introduced by Nonaka and Takeuchi (1995), which are socialization and

combination.

3. Incentive: KM initiatives as well as any other type of effort requires commitment

of the employees, especially in PM (Porter & Lilly, 1996). Incentive

programmes are highly considered for the success of KM initiatives (Massey et

al., 2002). Project team can be motivated extrinsically (to achieve objectives

irrelevant to the work boundary) and intrinsically (to achieve objectives in which

increase personal satisfaction from doing the work). (Amabile, 1997). The later

one is found to be more contributing for knowledge creation and sharing

(Osterloh & Frey, 2000).

4. Authority: Project team should be authorized to exercise the power of knowledge

utilizing and sharing within the organization, not only motivated to create that

knowledge.

5. System: The value of knowledge is kept apart from the required level if it is dealt

with as asset, and not element of an embedded system (Ruppel & Harrington,

2001). However, a system could not be regarded as robust and efficient if it does

not provide a project-based organization with ease of communication, and

collection and re-use of knowledge.

6. Culture: Since organizational culture is one of the unique elements for every

organization (Hofstede, 1980), project-based organizations show more

uniqueness because of professionals overlapping that belong to various cultural

background. According to Long (1997), the organizational culture frames both

the value of knowledge as competitive advantage for particular organization, and

the knowledge type to be managed.

2.2. Knowledge-Management Initiatives

The main objectives of KM initiatives boils down to enhancing the intelligence

behaviour of organizations so that they become more successful, and optimizing the

effective use of knowledge assets (Wiig, 1997). The success of KM initiatives could be

indicated by the resource growth attached to the project in terms of people and budget, the

improvements added to knowledge content and usage dimensions, the capability of a

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project to sustain regardless particular individual contribution, and undoubtedly the

financial effect in from of profitability and ROI (Davenport et al., 1998).

As any other framework, KM initiatives maybe enhanced by enablers (success

factors) or impeded by barriers (failure factors). At one extreme, Moffett et al. (2003) sums

up ten enablers including friendly senior management leadership and commitment,

organizational culture, employee involvement, employee empowerment, trustworthy

teamwork, employee training, information systems infrastructure, benchmarking,

performance measurement, and knowledge structure. At the other extreme, Chua and Lam

(2005) suggest four categories of barriers to successful KM initiatives, and that include the

negative impact of technology (in terms of connectivity, usability, over-reliance and

maintenance cost), culture (in terms of politics, management commitment, perceived

image and knowledge sharing), knowledge content (in terms of relevance and currency,

structure, coverage and knowledge distillation), and initiative project management (in

terms of technical and business expertise, project cost, conflict management and roll-out

strategy). The conceptual model proposed by Ajmal et al. (2010, pp. 156-168) is derived

from and drawn upon the indicators, enablers and barriers of successful KM initiatives

previously stated.

3. EMPIRICAL STUDY The six-factor model is supported by an empirical study. 400 of project-based

companies in Finland have been considered for answering an online questionnaire. 10.45

% (41) of the respondents completed the questionnaire. Each factor represented a section,

and a five-point Likert-type scale was used as barrier weight for the questions. The results

show that, for Finnish companies, the absence of appropriate incentive programs and

systems were the highest in relative weight, and the lake of coordination and familiarity

were second in importance, while the readiness of culture and lack of authority were the

least relevant barriers to the success of KM initiatives in Finnish project-based context.

4. DISCUSSION

The proposed conceptual model contributes heavily to the general pool of change

and knowledge management. The framework of proposed success factors could be

generalized to involve all business types, in addition to project-based organizations. My

argument is that project-based businesses have much more complicated concerns with

respect to knowledge assets and corporate memory. That may include the temporary

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duration of project life-cycle, need of broad set of internal and external professional skills

for project planning and execution, high project uncertainty levels, and unique entities built

in the project structure. As such, the success factors of the conceptual model could be

proposed as techniques and recommendations for handling organizational transformation

(change and knowledge management) in general. For example, the conceptual model

suggests familiarity and incentives as two out of six main factors to the success of KM

initiatives. This also means that familiarity and incentives are crucial to the change and

knowledge management. There should be effective incentive programs in organizations

that maintain the commitment of employees to be more adaptive with the changes and

knowledge handling updates. Similarly, employees would be more mature, committed and

productive if they are familiar with the objectives and methodologies of the new

techniques, practices and routines. On the other hand, the results of the empirical study

could not be generalized due to the location of sample, where every place is characterized

by its own culture and priorities.

5. CONCLUSION

To conclude, the paper suggests six success factors as a conceptual model that

enables successful dedication of KM initiatives in project-based organizations. These

factors have been concluded drawing upon the historical literature of successful KM

initiatives in a form of enablers, barriers, and indicators. As a whole, organizations should

be familiar with what is planned and why. The knowledge creation and sharing within an

organization should be authorized, motivated by satisfying incentive program, coordinated

by capable management, and supported by appropriate system. Everything in the

organization should be tailor-made to be appropriate with the internal and surrounding

culture. As evidence to the conceptual model, an empirical study has been done on Finland

to investigate the order of the success factor with respect to the significance and priority.

The study resulted in incentive as the most absent factor, while authority is the most

present factor. However, the results could not be generalized because the location studied

is limited to only one country.

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6. REFERENCES

Ajmal, M., Helo, P. and Kekäle, T. 2010. Critical factors for knowledge management in

project business. Journal of Knowledge Management, 14 (1), pp. 156-168.

Amabile, T.M. (1997), ‘‘Motivating creativity in organizations: on doing what you love

and loving what you do’’, California Management Review, Vol. 40 No. 1, pp. 39-58.

Chua, A. and Lam, W. (2005), ‘‘Why KM projects fail: a multi-case analysis’’, Journal of

Knowledge Management, Vol. 9 No. 3, pp. 6-17.

Davenport, T.H., De Long, D.W. and Beers, M.C. (1998), ‘‘Successful knowledge

management projects’’, Sloan Management Review, Vol. 39 No. 2, pp. 43-57.

Hofstede, G. (1980), Culture’s Consequences, Sage Publications, Beverly Hills, CA.

Ithia, A. (2003), ‘‘UK lawyers spend more on KM’’, KM Review, Vol. 5 No. 6, p. 11.

Long, D.D. (1997), ‘‘Building the knowledge-based organizations: how culture drives

knowledge behaviors’’, working paper, Center for Business Innovation, Ernst & Young

LLP, Cambridge, MA.

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Moffett, S., McAdam, R. and Parkinson, S. (2003), ‘‘An empirical analysis of knowledge

management applications’’, Journal of Knowledge Management, Vol. 7 No. 3, pp. 6-26.

Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating Company: How Japanese

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Osterloh, M. and Frey, B.S. (2000), ‘‘Motivation, knowledge transfer, and organizational

form’’, Organization Science, Vol. 11 No. 5, pp. 538-50.

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empirical study to identify critical factors and performance measures’’, Measuring

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Porter, T. and Lilly, B. 1996. The effects of conflict, trust, and task commitment on

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Prencipe, A. and Tell, F. (2001), ‘‘Inter-project learning: processes and outcomes of

knowledge codification in project-based firms’’, Research Policy, Vol. 30 No. 9, pp.

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Ruppel, C.P. and Harrington, S.J. (2001), ‘‘Sharing knowledge through intranets: a study

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Professional Communication, Vol. 44 No. 1, pp. 37-52.

Wiig, K.M. (1997), ‘‘Knowledge management: an introduction and perspective’’, Journal

of Knowledge Management, Vol. 1 No. 1, pp. 6-14.