Why Knowledge Management Crucial for the Realization of National IBS Roadmap

IBS DIGEST (CIDB) ISSUE NO.2 2006

Authors :Nik Ahmad Faizul, Industry Development Director, Innovacia Sdn Bhd & Wan Amrul Wan Mustafa, Chief Knowledge Architect, Innovacia Sdn Bhd

Knowledge was the driving force behind the Industrial Age. It was somehow subsided and nearly forgotten until the next wave arrived which is the Digital Age. This new age has re-surfaced knowledge again as one of the key dimension to propel global growth. Hence, Knowledge Management (KM) is now an important discipline and an essential source that our economy cannot afford to do without, if we are to have competitive advantage and remain relevant.

In Wikipedia, KM refers to a range of practices used by organizations to identify, create, represent, and distribute knowledge for reuse, awareness and learning across the organization.From business standpoint, Harvard Business Review refers KM as the way companies generate, communicate, and leverage their intellectual assets.

We have also seen over the last ten years, highly significant event took placed on the advancement and explosion of information and communication technology (ICT) driven by the liberalization of global economies. This has lead to tremendous transformation in the manner businesses are being executed. The world is not only becoming borderless but also flatter instead of round as the bestseller writer, Thomas L Friedman put it. Information are now highly accessible and being exploited to an unimaginable scale. The rat race for market positioning is as fierce as ever through the capitalization of information, knowledge and innovation.
This scenario has also lead major economies to have greater access than ever before into countries such as India and China to exploit its competitive resources leading to a more competitive product and services in the marketplace.

With this challenging phenomenon, it is now overdue and absolutely critical that we need to expedite our readiness, the know-how and competitiveness of our Malaysian Construction Industry in order to survive and sustain; an industry which is now minus 1.6% growth based on year 2005 government statistic. The fragmented nature of our industry need to be consolidated and reconstructed in order to realize the government’s aspirations on the National IBS Roadmap which targets the industry to be industrialized by the year 2010.

As part of efforts to steer various sectors towards our Vision 2020, the Malaysian government has also launched the National Knowledge-Based Economy Masterplan which was first announced by the government in the Budget 2000. This masterplan marks yet another key government initiative to further accelerate the development of the nation into a knowledge-based economy. It provides strategic framework outlining the changes to the fundamentals of the economy.

These National IBS Roadmap and Knowledge-Based Economy Masterplan have provided a good base information related the policy targets and objectives. However, this information alone will not progress our industrialisation effort. It is only a reference document on policy direction. As such, strategies still need to be formulated downstream within each sector. In doing so, we need to capture our industry knowledge, consolidate, reconfigure and strategise to our best competitive advantage, in order to progress.

To one of KM guru, the late Peter Drucker, leaders often mistake information for knowledge. Information is data endowed with relevance and purpose. Converting data into information thus required knowledge. And knowledge, by definition, is specialized.
Another misconception on KM is that it is ICT oriented. ICT is purely a tool to an end. It should not be treated as the driving factor for KM. Business strategies and direction instead, are the true drivers for KM.

With a cohesive and collaborative effort involving government and industry, we are in position to consolidate our fragmented industry information and ignite our latent intellectual assets. We believe such assets do exist based on our exposure in national mega infrastructural projects over the past 15 years as well as the world is now being flatten with information at the press of a button.

“A company(as an industry member) is not a machine but a living organism”.- Ikujiro Nonaka, KM Guru specialising on Japanese Business Strategies. However, efforts on the ‘HOW TO’ for the National IBS Roadmap seems way behind and need to be urgently accelerated. One of the key factor for this delay is that the industry by nature, is very much project based instead of program based. The soft aspect has not been fully exploited especially on the management of industry knowledge.

A knowledge based construction industry would induce a conducive environment to propel the acceleration of our IBS Roadmap. However, current mindset on ‘information protectionism’ need to be phased out. This is very much due to the current ‘Red Ocean’ overcrowded marketplace whereby companies are engaged in head-to-head competition struggling to survive, let alone to sustain.

IBS on the other hand, is a new industry with endless opportunities. In order to commence with this exploration, it has to start with knowledge sharing as the new working culture within the industry. This approach encourages investment on ‘trust’ which in turn, will lead companies who used to be in competition, to better understand each other and collaborate for improved market positioning in this new ‘Blue Ocean’ industry.

It is only with this ‘Open Collaboration’ environment that we are able to induce participation, develop and steer, impactful downstream strategies to support the roadmap implementation.
This effort on KM however, need to be driven from both top and bottom ends of industry heirarchy. Apart from being policy driven, each industry organization plays an equally crucial role in developing industry’s intellectual capability. This effort will result in the organization to be more specialize and therefore provides an improved strategic positioning for the industry as a whole.

“ To remain competitive – maybe even to survive, businesses will have to convert themselves into organizations of knowledgeable specialists.” - Peter Drucker

Based on the above, we need to create our own speciality and niche in order to sustain. It is only through KM that this can be achieved and therefore, necessitates companies to review their internal organizational strategies and methodologies.

The essence of KM in an organization is best put forward by Alex Bennet, former Chief Knowledge Officer of US Department of Navy. She describes the essence of knowledge management is built on intellectual capital, which includes human capital, social capital and corporate capital. All three are essential components of enterprise knowledge (see diagram).
Human capital is our greatest resource. It is made up of an individual’s past, present and future. Social capital related to communications, human and virtual networks, relationship, collaborations, etc. As for Corporate Capital, it covers intellectual property, corporate assets and organizational processes. Knowledge Management can be viewed as a process for optimizing the effective application of intellectual capital to achieve organizational objectives.

The current industry however, perceived as having assets, financial capital and staff would be sufficient to realize company objectives. It is more focus on the tangible aspect of the organization. The crucial intangible elements were completely overlooked and this has impacted our competitiveness.

In conclusion and as way forward, we clearly need to diagnose ourselves as individual, company, associations, industry as well as the policy makers on how far are we in our positioning to persevere the demanding and exhaustive rat race for market positioning, and most critically our existence and sustainability in the current Globalization era.

The ultimate way forward is for us to inject into ourselves intellectual knowledge which will lead us to the Know-How by becoming the specialist within the marketplace. This can be achieved by being more open minded, unbiased, neutral, patriotic, emotional and aggressive in our efforts to support and participate in the realization of the National IBS Agenda.