From BetterManagement.com: Knowledge Exchange and Knowledge Creation: Should the Emphasis Shift in a Competitive Environment? (pdf) by INSEAD authors Elie Ofec and Miklos Sarvary discusses how consulting firms have responded to the market downturn and how other firms might respond as well.
There are two extremes represented in the paper. Either reduce KM efforts as part of cost cutting, or expand and reinforce KM efforts as a means of investing for the future of the firm.
For professional consulting firms, knowledge is the "lifeblood of the organization" and should be treated as such. The authors make a parallel to manufacturing organizations in that knowledge systems are akin to machines: without them the firm has nothing to sell. With this perspective it only makes sense to ensure that the machine operates as effectively as possible - it certainly isn't something that should be downsized to help reduce costs.
The authors also refresh the idea of increasing returns of good knowledge systems: Good knowledge-centric processes lead to business, which leads to more knowledge (particularly in consulting businesses), which starts the cycle again.
The authors split knowledge processes into knowledge exchange processes and knowledge creation processes. This distinction is important to the article because these types of knowledge processes have different dynamics in competitive vs. highly differentiated markets. The authors set up an economic simulation to take into account a variety of factors with the aims of determining what combination of knowledge exchange and creation makes the most sense in various types of markets.
While each firm operates differently, the authors suggest that knowledge exchange processes tend to be more valuable during times of heavy competition, since the firms that are best able to deliver solutions to their clients tend to gain advantage over their competition (price / speed). When competition drops, companies need to develop new means of attracting business, thus knowledge creation becomes more important. This suggests a balancing act within these organizations and the need for continued vigilance of market conditions to determine which knowledge processes to emphasize.
For industries other than consultancies, the authors focus on customer interaction being an ongoing source of potential value to the organization. This may come directly from the customer support organization, through direct interactions with customers, and through online communities that discuss the company and its products. Organizations that are able take advantage of the information from these sources via reasonable approaches should be able to gain the advantage in the marketplace.
Of course, there are many other ways for knowledge processes to positively impact the bottom line of the organization. It would have been nice to hear the author's perspectives on the wide variety of knowledge initiatives and how these relate to the market in which companies find themselves.
This article comes from BetterManagement.com's focus on Business Intelligence. This is a new resource for me, but it looks to have interesting commentary on knowledge management (as well as the data warehousing and business analytics that you might expect from "business intelligence").
[link via the km-kw YahooGroup]