Digital Transformation and Knowledge Management

Lucia Marchegiani

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000379976
• Edition: 1
• Topic: Business
• Subtopic: Knowledge Capital
• Index: Business

Knowledge capital is at the core of the socio-economic global system. Profit and not-for profit firms, institutions, and organizations, in general, face unique opportunities and threats related to knowledge management. Digital technologies and digital transformation offer a wide array of opportunities for value creation. At the same time, organizations need to foster newer, faster, and more dynamic ways of mobilizing and managing knowledge. Emerging trends, such as artificial intelligence, collective intelligence, agile methodologies, open innovation, and co-creation enable new business models and managerial paradigms that need to be understood and conceptualized.

This book offers an extensive overview of the most recent trends in knowledge management and the most advanced theoretical approaches, while, at the same time, providing a wide array of case studies and evidence-based knowledge management practices. It takes into account the interrelation between ICT and knowledge management challenges, in terms of human/non-human interactions, which requires extraordinary organizational change and renewal. Further, the book presents an up-to-date examination of and guidance for the implementation of knowledge management in an era of unprecedented human/non-human interaction.

The book conveys the results of more than a decade of research and applied experience in the field of knowledge management carried out by the author.

It is intended not only for students and academics but also for managers and practitioners who are interested in deepening their understanding of knowledge and learning.

Chapter 1
ORIGINS AND EVOLUTIONS OF KM

SUMMARY: 1.1. Where do we stand? – 1.1.1. The internet Revolution, when It All Started – 1.1.2. The 4^th Industrial Revolution – 1.1.3. The Rise of the Knowledge Economy – 1.2. Where Do We Go from Here? The Digital Age – 1.2.1. Innovative Organizing: Tacit and Explicit Knowledge – 1.2.2. Innovative Organizing: Intermediate and Multi-Sided – 1.2.3. Innovative Organizing: Networks and Platform Organizations (by Lucia Marchegiani and Andrea Grieco) – 1.2.4. Innovative Organizing: Mass Collaboration – 1.3. Evolution of Knowledge in Management – 1.3.1. Data, Information, Knowledge – 1.3.2. Approaches to Knowledge Management – 1.3.3. Network Perspective in Knowledge Management – 1.4. Why Do We Still Need to Manage Knowledge? – 1.4.1. Knowledge Management and Innovation – 1.4.2. Knowledge Management and People Management – 1.4.3. The Pyramid of Knowledge, Revisited – 1.4.4. Much Ado about Knowledge, here Comes the Pandemic!.

1.1. Where Do We Stand?

We currently live in a world where digital technologies and the Internet play a fundamental role in our daily lives. Technological advancements offer benefits and advantages to us all-be it as individuals, communities, businesses, or organizations-by expanding the boundaries of information availability, enhancing efficiency and agility, and reducing costs.

As a society, we perceive that we are surrounded by constant and rapid technological innovations, especially thanks to our continuous exposure to media. In spite of our perception, and despite living in the so-called Digital Age, the transition to a fully-fledged digital society is not yet complete. The term Digital Transformation has become familiar as one of the most compelling managerial trends. Yet, the organizations that embrace this transformation most of the time underestimate the organizational consequences and the impact on human resources. Generally speaking, the digital transformation requires a profound organizational change that includes, but does not end with, digital information technology. In order to understand this complexity, it is necessary to step back and look at the past decades, when the seeds of the digital age were laid.

Information Technology refers to the technological applications that are developed to drive information and to favor the exchange of information among remotely connected points. The advent of the Internet and electro- nic settings (e-business, e-commerce, e-marketplaces, etc.) boosted the relevance of information technology, and Information Systems started to be at the center of academic and managerial attention. Those are systems where the different Information-based components are intertwined and integrated. The overall aim of such complex systems is to optimize the exchange of information, selecting the relevant contents, in a connected input-output series of nodes.

1.1.1. The Internet Revolution, when It All Started

In the late ‘90s, the convergence between Information Technology and Telecommunication gave birth to Information and Communication Technology. The pace of innovation activities dramatically boosted and Moore’s law became famous, stating that the power of ICT doubled every second year.

The first notion of Information Age can be traced back to the early ‘80s, when the advent of more and more refined technological applications for Information processing, alongside with social transformation, gave rise to the idea that a completely new world was about to be born (Naisbitt & Bisesi, 1983). It is interesting to recall the Megatrends of the Information Society that were detected at the end of the 1980s:

1. A clear pattern emerged from the Industrial Society to Information Society;
2. From mechanical relations with Forced Technology to High Tech/High Touch (FAXs that can be touched, cut, pasted, colored, etc.);
3. From a limited National Economy to the broader World Economy;
4. From perspectives based on the Short Term to Long Term views;
5. From a general approach towards Centralization to Decentralization;
6. From the belief on Institutional Help to the emergence of Self-Help;
7. From passive forms of Representative Democracy to more active Participatory Democracy;
8. From Hierarchies to Networking;
9. From a North-centric perspective to South;
10. From the dyad “Either/Or” to Multiple Option.

Over twenty years later, these megatrends are still valid. The Interconnected world (Malhotra, 2000; Muegge, 2013) has become indeed a commonly used expression. This impels a deep investigation of what happens in a large complex system of interconnected agents. This kind of society has plenty of consequences, from social life to the economic sphere. From a sociological perspective, it has been said that the whole world has become smaller, and that distances may have been nullified by the existence of digital highways. A widely appraised author is Manuel Castells, who traced back the origins of the Information Economy to three interrelated processes, namely:

• the IT revolution,
• the fall of capitalism and statism, and
• the rise of new social movements.

According to the Author, together these three processes have caused a new social structure (a network society), a new economy (a global informational economy), and a new culture (a culture of ‘real virtuality’) (Castells, 1996, 1997, 1998).

The Internet Revolution started at the beginning of the 21^st century with a boom in informatics, in terms of a rapidly increasing number of Internet users and of web content (Figure 1.1). These changes brought heavy impacts on the economy, but also on society and individual lives. The rise of e-commerce was favored both by an increasing offer through websites and by the users who welcomed this new way of shopping online.

Figure 1.1. The rise of the Internet Revolution.

Source: author’s elaboration.

Such a Copernican revolution implied that information flows are at the center of the economic cosmos, instead of the firms’ assets and competencies. Information flows are not only internal to firms. Instead, they are ubiquitous, and firms should be able to capture relevant information, where it appears and grows. At a closer look, the revolution laid on technological as well as socio-economic drivers, such as:

• Technology:
  • – The diffusion of the Internet, and of high-speed Internet connections;
  • – The increasing amount of data available on the World Wide Web;
  • – The diffusion of devices such as PC and mobile devices: these are the gateways to access the Internet and WWW and serve multiple purposes, such as typewriters, archives, libraries, post offices, banks, supermarkets, newspapers, weather forecasting, TV, cinemas, games, financial markets, videoconferences.
• Economic drivers:
  • – The increasing globalization of markets;
  • – The decreasing regulation;
  • – The privatization of former public monopolist TLC companies.
• Sociological drivers:
  • – New lifestyles;
  • – Standardization;
  • – The increasing appeal of instant communication.

If the revolution started with technologies that drive information and knowledge, it then became pervasive and caused a radical change, such as:

• The shift from industrial capitalism to cultural capitalism;
• The emergence of a new renaissance, which considers man and technology at the core of the universal values;
• The rise of innovation and creativity: the revolution allowed the reinvention ofgoods and services, new businesses emerged, and e-commerce boomed.

These are the basics of the dawn of the Digital Age. With Information becoming one of the strategic assets of firms, a large part of the economics principles has changed. When it comes to understanding the kind of revolution that firms have had to embrace to capture their competitive advantage, it is straightforward that information plays a pivotal role. Nowadays it is meaningless to ponder access to natural resources or scale and scope economies as sources of competitive advantage. Most of the time what makes the difference is the ability to orchestrate intangible assets, such as knowledge and competencies, and to deploy them over time in what are called dynamic capabilities (Teece, 2007; Teece et al., 1997).

1.1.2. The 4^thIndustrial Revolution

The Internet Revolution was just a preamble to a wider industrial revolution. In the history of modern economies, this is labeled as the 4^th Industrial Revolution (Figure 1.2).

Figure 1.2. The four Industrial Revolutions, over time.

Source: author’s elaboration.

The 1^st Industrial Revolution, that marked the proto-industrialization period, started at the end of the 18^th century to the beginning of the 19^th century in Great Britain. Due to mechanical automation, the handicraft model of production converged into a machine model of production, with prevalence in the textile-metallurgical sector and the use of inanimate energy sources such as coal, steam, and waterpower. The invention of the steam engine created a new type of energy that later on also helped to speed up the manufacturing of railroads. The changes that affected the structure of the production system also influenced the economic structure, completely changing the set-up of the social system with the birth of the working class and the expansion of cities.

The 2^nd Industrial Revolution occurred between the end of the 19^th cen- tury and the beginning of the 20^th century, mainly in the United States. It brought major innovations in transportation, communication, and manufacturing, thanks to advancements in the field of industries that helped the emergence of new sources of energy: electricity, gas, and oil. The production system changed in 1908 when Henry Ford planned the production of cars in bulk due to mass production. In 1913 the process of industrialization took off, with the increasing usage of the conveyor belt and mass manufacturing. The Bessmer process to produce steel and new plastic materials was responsible for the expansion of the rail and telegraph networks, which later culminated in inventions such as the telephone, aircraft, and cars. The increasing interactions of trades, ideas, and people led to a new socioeconomic scenario, where mobility started to affirm itself as a societal value. Nonetheless, despite the improved standards of living, unemployment and the social divide increased.

The 3^rd Industrial Revolution started in the middle of the 20th century with the rise of electronics, telecommunications, and computers. Through these new technologies, the third industrial revolution opened the doors to space expeditions, research, and biotechnology. Two major inventions, Programmable Logic Controllers (PLCs) and Robots, helped give rise to an era of high-level automation. Also, the first experimentation of digital technologies appeared, leading the way to the Information Age.

What we are currently living in is referred to as the 4^th Revolution, although some authors state that we are still living in the long effects of the third revolution. Indeed, we are living a revolution that is completely different from the previous ones, as digital technologies have completely disrupted the old ways of doing business, and the living standards as well. Mechanical or electronic-analogical systems have become obsolete, and digital is now the key. This is the time of the Smart Automation due to fully digital Cyber-physical systems that are central to the development of a Digital Age. For the first time, the world has become fully interconnected, and efficient mobile communication systems have made the world smaller.

Innovative digital technologies (which will be extensively discussed in Chapter Two) are the new enablers of this new phase called the Digital Age.

One of the key factors driving the development of the economy in the d...