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KM Concepts Module 3: The Knowledge Process

What you will learn in this module:

This module will introduce you to the processes of knowledge management, including knowledge production, knowledge acquisition, and knowledge diffusion.

You will learn to:

  • define knowledge processes
  • define management as it relates to KM, and explain the difference between formal and informal management
  • distinguish between knowledge validation and knowledge quality    
  • describe knowledge acquisition and knowledge diffusion        
  • differentiate among knowledge production, knowledge acquisition, and knowledge transmission
  • differentiate between personal or individual knowledge and collective knowledge
  • identify why selling a knowledge claim is important
  • differentiate among tacit knowledge, unstructured knowledge, declarative, and explicit knowledge
  • recognize techniques that are utilized to formulate, refine and reformulate knowledge
  • identify how knowledge can be refined and interpret how knowledge might be tested
  • recognize what is meant by validating a claim, and identify various ways to transfer knowledge

As noted in the last section, disciplines develop different and specialized languages for talking about areas of common interest.  The same is true for KM.  When a new science is forming, it often borrows concepts and terms from others.  KM has borrowed many of its terms from sociology, cognitive science, economics, business management, information science, and anthropology.

Starting with the principal interest of KM, knowledge is a hierarchical network of rules about specific data or information that have explanatory, predictive, and functional power for people.  This network is held in intellectual, cultural, social, organizational, and physical memory.  People manage knowledge as individuals, as groups, as organizations, and as societies.  These rules are categorized as procedural and declarative.  Procedural rules are the “know-how” rules and declarative rules are the “know-what” rules.  Both types of rules work together to form human knowledge.

Before going further, let’s differentiate between different types of knowledge:

  • Know-what refers to knowledge about facts

  • Know-why refers to knowledge about principles and laws of motion in nature, the human mind, and society

  • Know-how refers to skills - i.e. the ability to do something.

  • Know-who  involves information about who knows what and who knows what to do. It is typically a kind of knowledge developed and kept within the boundaries of a group such as a firm or community of practice. As the complexity of the knowledge increases, co-operation between groups tend to develop.

Application exercise #1
Give a concrete example of related pieces of data, information and knowledge, and discuss how one is incorporated into the next.

The rules of knowledge are produced and managed in knowledge processes.  Knowledge processes are what individuals and collectives use to produce, transmit, acquire, store, and use knowledge.

Why would a business be interested in KM?  Organizations want to become "adaptive," "agile," "nimble," and "high velocity."  Good KM is a powerful way to achieve these states.

The most precious knowledge for an organization is knowledge that can help you achieve your goals faster and better.  Acquiring, producing, and acting on this "best" knowledge will enable a company to adapt more quickly and accurately to its economic climate.

Individuals and groups both process knowledge.  KM happens when knowledge processes are affected directly by a person or group, or indirectly by norms, beliefs, or cultural rules.  When those processes are affected, the quality of the knowledge products involved can improve, decline, or stay the same.  The purpose of KM is to improve knowledge products in a way that will help a person or group achieve goals faster and better.

Managing knowledge means monitoring and improving it by measuring and modifying knowledge processes and their environment.  Decisions to train a team for the purpose of improving knowledge diffusion or to hire a person because of her knowledge are KM decisions.  "Improving the environment" might involve restructuring it so that managers can better access the right knowledge at the right time in order to make better decisions.

KM uses the word management in two different ways: informal and formal.  Informal management represents the natural governance of human processes within a collective.  These processes exist without intentionally controlling or monitoring them.  Rather, the processes are an emergent property resulting from various forces and activities such as authority, leadership, influence, peer pressure, and norms.  Formal management is planning, organizing, commanding, coordinating, and controlling knowledge.

Knowledge Processes

Knowledge management deals with knowledge processes by changing a knowledge environment. There are three primary processes, each with several sub-processes: knowledge production, knowledge acquisition, knowledge diffusion, and knowledge usage

Knowledge production is a process that creates new knowledge through the reconstruction of older concepts as well as the invention of new ones.

Knowledge Management can be compared to managing the processes of a factory producing widgets, with humans being the factories and knowledge being the widget.  Knowledge is a natural resource that we create just as water is a natural resource created by the ecological system.  Managing knowledge is like managing water.  It cannot be managed directly, but we can refine it, reroute it, filter it, guide it, etc.  

The Knowledge Factory Model illustrates how knowledge is a product that can be produced, moved, inspected, rejected, and valued, just as a widget in a factory.

For firms to become maximally competitive, they must look at themselves as knowledge factories.  Scientific labs, universities, consulting firms, and other organizations are in the business of manufacturing knowledge so others can use it.  Consumers of knowledge have the right to demand better, cheaper, more functional knowledge from these knowledge factories. 

Application exercise #2
Using the model above, give an example of a customer need for knowledge and trace its steps through the "factory."

Click To DownloadBusiness process analysis concentrates on shortening the cycle-time of product production.  In KM, determining the current state of the company, its processes, and its technology are only preliminary steps to the real purpose of KM: measuring the speed of improvement.   By treating knowledge as a product under the same rules as any other product, the goals of Knowledge Management are to reduce cycle-time, improve quality, etc.

Contrary to popular belief, knowledge is not discovered like diamonds or oil.  It is constructed from concepts that we already have through further observation of objects and events.  In addition, "newness" depends on perspective.  What might be new for one person might be old to another.  KM distinguishes between personal, group, organizational, and global knowledge creation.  This distinction is especially important when discussing knowledge production within a business.

All knowledge creation (personal, group, organization, and global) occurs through learning.  When an individual learns, he creates personal knowledge even though that knowledge might not be new to other individuals.  Collective knowledge creation is when a knowledge claim -- a set of rules believed to be true -- is either submitted to the group by an individual or the group co-creates the knowledge claim through collaboration.  In this sense, a group learns.  The group’s knowledge claim might or might not be new to other groups within an organization.  If it is new, and a substantial number of peer groups believe the knowledge claim to be true, then the knowledge claim becomes organizational knowledge, and thus the organization learns.  If enough peer groups in various organizations believe the knowledge claim to be true, then it becomes global knowledge, and thus the world learns.  This last process is one of the aims of science.

In a final analogy, a factory has customers, assemblers, deliverers, inspectors, a warehouse of components, an engineering department for customizing an order to satisfy a customer's needs, etc.  In the same way, a knowledge factory has customers with knowledge needs, those who assemble the knowledge already in the warehouse, people who deliver knowledge, innovators (those who create new knowledge), and knowledge quality inspectors. 

Searching and Retrieving

When a question is asked or a hypothesis is developed, one step in knowledge production is to search for and retrieve older knowledge claims to try to prove the new hypothesis.  New knowledge is created when new concepts are reformulated from older concepts.  The formulation can produce leaps of knowledge or small improvements to current concepts that increase their explanatory and predictive power.  


Knowledge claims are constructed from other knowledge claims, ideas, data, and records.

The creation of a knowledge claim is fed by a supply chain of knowledge, information, and data.  For example, a knowledge claim can be constructed through knowledge gathering from classes/training, experts, seminars, previous knowledge, assumptions, social network, literature, etc., or a combination of these.

By owning a supply chain of knowledge, you can assemble many components, in various ways, and build a “stock” of knowledge.  Hence, through this knowledge stock, you are able to re-harvest your stock over and over again, into a number of combinations, and move the new knowledge claims out into the market.

This is a diagram of a software engineer creating new knowledge claims from a supply of other knowledge claims, data and information.




The quality of the supporting data, information, and knowledge claims affect the quality of new Knowledge Claims.  The further removed the claim is from Data and Records, the weaker the claim is.  In this example, Knowledge Claim 3 is a weaker claim than Knowledge Claim 2. 


Before leaving the factory "model," remember that this same knowledge production process can also go on in a “factory within a factory” such as a research and development department within the car factory or any department within a larger organization.  Every organization creates new knowledge.  Many organizations deliberately set aside research and development programs for this.  This knowledge production system is the knowledge factory within the organization.


To review:

  • Every organization creates new knowledge.
  • Many organizations deliberately set aside research and development programs for this practice.
  • This knowledge production system is the knowledge factory within an organization.

Knowledge is essentially a “claim” to be knowledge.  Knowledge to one person is not necessarily knowledge to another.  To be accepted as knowledge, a knowledge claim must be validated by some criteria.

Put another way, a knowledge claim is a message in a codified form with enough information for another person to understand and act on.  The amount of information needed to transfer it varies from person to person.  A knowledge claim is rule-based, that is, it can be put into an if/then statement – if A and B then C.  (More on these rules in the next module of this course).  Also, a knowledge claim does not have to be linear logic; it can be based on probability or “fuzzy logic.” 

Formulating, Refining, Reformulating


The process of knowledge formulation or creation produces new knowledge claims composed of rule sets from older rule structures.  Observing, hypothesizing, experimenting, brainstorming, and codifying tacit knowledge creates new ideas, which become concepts, which become knowledge claims, which go through a validation process to become new knowledge.

An extremely important activity in knowledge management is the improvement of the organization's validation process.  To determine the validity of a knowledge claim, it must be judged or weighed against certain criteria.  Although a set of knowledge claims may be judged as valid, their individual values may not be the same.  When faced with conflicting knowledge claims, we make a choice based on how it matches our validation criteria. 

The criteria used to validate a knowledge claim are standards and conditions unique to the individual or group seeking to validate the claim.  Some examples of these criteria include:

  • Questionable Analogy (falsely comparing or stretching the comparison of two things)

  • Provincialism (failure to look beyond one's own group)

  • Domino Theory (the conclusion that if A falls, then B falls, then C, and others will also fall)

  • Understandability (how understandable is the knowledge claim to a given audience with a given background)

  • Relevancy (how relevant is the knowledge claim to a given condition).

Application exercise #3
Give an example from your company or industry of each of the knowledge validation criteria listed above (understandability, etc.).



For knowledge to increase in quality and power, it needs to be continually tested, improved or removed.  Knowledge statements can be shortened, steps in a process can be reduced, and knowledge that was once relevant might become dated due to changing conditions, and therefore could be removed. 

When a knowledge statement changes in a significant way, it can become new knowledge.  If a routine for creating bread was shortened from 10 steps to 9 steps with the same output, this compression produced a new knowledge claim that only 9 instead of 10 steps are required.  Once it is validated, the old knowledge is replaced by the new.


Refinement leads to reformulating a new knowledge claim which requires a new process of testing and validation.

Knowledge claims are in constant competition with other claims.  Individuals try to sell (convince) a knowledge claim to their group or team.  If the group accepts that claim, the group might try to sell that claim to other groups.  Eventually, a majority of an organization, community, or world might accept that claim.  The claim that the earth is round took many generations for it to be accepted by a majority of people.  Some people still believe that this knowledge claim is false, such as the Flat Earth Society in England.

We measure the quality of knowledge by its ability to help an individual or organization achieve its goals faster and more effectively.  An organization uses its filtering process to accept or suppress knowledge claims.

In order to fully understand the concept of a knowledge claim receiving acceptance in an organization, try the Knowledge Claim Game.  Wad up different sized pieces of paper and place a target (such as a wastebasket) at a somewhat difficult distance from you in the room.  Instruct co-workers or associates to do the same thing.  Now, begin throwing all the balls into the wastebasket.

Perhaps what you saw was this:

  • Some balls make it to the target.  These are knowledge claims that find their way to the right person. 

  • Some balls bounce and land on the floor.  These represent knowledge claims that never found their way to the target.

  • Perhaps some people did not throw their balls as instructed.  This is an example of knowledge hoarding.

  • Some balls may bounce towards another person who then relayed them to the ultimate target.  This is an example of people relaying knowledge claims.

To determine the quality of a valid knowledge claim, it must be weighed against the values of other claims and against the criteria used to weigh it.  The quality of a knowledge claim is further dependent on the accuracy of the criteria used to weigh it.

The quality of a knowledge claim can be compared to that of a car.  The quality of the car is directly related to its ability to satisfy the consumer buying and driving it, while the quality of a knowledge claim is directly related to its ability to satisfy the consumer of that claim.  Just like products from a automobile company, the value of knowledge is based on its relevant conditions and environments.  For example, a car works well traveling on a smooth road, while a truck is valuable for hauling on rougher roads, and a Jeep is most appropriate for off-road driving.  Likewise, knowledge that is effective in one situation might not be as effective in another.  Business decisions made in an Eastern culture, for instance, might not be valid in a Western culture due to the different societal rules.


Thus, the value of a knowledge claim can vary by environment and conditions.


These are just some of the attributes that determine the quality of knowledge:

  • Understandability

  • Size

  • Perceived relative advantage over previous knowledge

  • Compatibility with previous knowledge

  • Observability - results of the knowledge can be observed

  • Complexity

  • Leverage - ability to do more with less

  • Predictive power

  • Explanatory power

  • Reliability of source

  • Usefulness

  • Relevance 

Knowledge claims have both a degree of utility and a degree of satisfaction.

To review:

Knowledge is created from other data and knowledge claims.  The quality of a new claim is affected by the quality of the data and claims from which it is built.  Claims built on other claims are weaker than those built on direct data.  Improving the quality of knowledge and data and the speed by which it is supplied to the innovator accelerates the knowledge production process.

We measure the quality of knowledge by its ability to help an individual or organization achieve its goals faster and more effectively.  Discovering the right combination of attributes to attain the highest quality is the challenge for KM.

Because the attributes vary per context, knowledge might be of high quality in one context and low quality in another.

The key to Knowledge Management is to identify the criteria that individuals and organizations use to judge the value of one knowledge claim over another.  Once the criteria are identified, the improvement of an organization's claim validation process accomplished by uncovering these criteria, improving them, and developing systems to manage knowledge based on them is the single most important activity in Knowledge Management.


Knowledge claims go through a process of refinement by testing them with experience, in a laboratory, or in the field, and submitting claims as trial balloons to peers for co-testing, review, and comment.  

Application exercise #4
Make a list of knowledge claims.  For each knowledge claim, make a list of attributes you feel are important to assess the value of each one.


Once a cluster of concepts becomes a knowledge claim through testing, it needs to go through an empirical and social validation process.  An individual can test her knowledge claim by testing it empirically.  If she believes that the desk is 10 feet from the door, all she has to do is measure the distance with a tape measure to validate the claim.  Group acceptance of a claim as knowledge requires both empirical and political testing.  Even though the individual is convinced that the knowledge is valid, the group will weigh many factors, such as the reliability of the measure and the authority and expertise of the source.  The group could also empirically test the claim.  Once the majority of the group accepts a knowledge claim, it becomes accepted knowledge for that group.


Once a knowledge claim is formulated, the author must sell the claim to others.  This requires sharing the knowledge claim in spoken or written form to peers, a group, a team, an organization, or a society.  Knowledge claims may be discovered as powerful long after their creation because the author was not good at selling them when they were originally formulated.  Many claims have also been successfully sold and later refuted.

A key component in selling a knowledge claim is having a knowledge validation strategy.  This consists of two steps:

  1. Identify criteria to determine the quality of the knowledge.
  2. Identify criteria for routing the knowledge to the right person at the right time.

The single most important activity of a professional Knowledge Manager is to develop a knowledge validation strategy.

Knowledge Acquisition

Knowledge acquisition presupposes that knowledge already exists and that there is a desire to capture that knowledge because of some perceived benefit for the acquirer. The company might, for example, want to capture the knowledge of another firm by acquiring the firm, hiring employees from that firm, reverse engineering one of their products, or reconstructing the knowledge by examining papers and articles published by the firm because it is perceived that there is important knowledge to be acquired.

Explicit Knowledge

A vast sea of written and verbal information is recorded on video, audio, and written format.  There are billions of lines of software code with scientific and corporate procedural knowledge taken from countless interviews and validation.  There are billions of documents and images, of which perhaps only 1% contain original knowledge.

Boiling down that information into rules is a gigantic task that will require advances in technology.  Although artificial KM is in its infancy, computer-based technology such as documentation managers, automated knowledge acquisition, scanners, voice scrubbers, optical character readers, and parsers have helped the process.  Using this technology can help extract knowledge from codified sources.

Tacit Knowledge

Tacit knowledge is the unspoken, non-codified sum of all the know-how, skills, and experience of individuals.  What makes a good teacher, writer, scientist, manager, or worker is often locked up in the unspoken procedural and declarative rules (knowledge) of the individual.

When firms look for ways to extract knowledge from an employee or consultant before he leaves the company or changes positions, the firm is trying to recover knowledge that would take time and money to replace.

Tacit knowledge is also a primary source for new knowledge in the knowledge production process.  By careful observation, questioning, and validation, the unrecorded know-how of an individual can be codified and turned into new knowledge.

Application exercise #5
If everyone in your organization shared knowledge, how would you know if that knowledge was of value to others in the organization?

Application exercise #6
 Knowledge Validation Game
Problem:  The fleet is threatened by a submarine pack.
Players:  You are one of the subordinates reporting to the admiral.
Action:  The admiral asks for information so he can decide what to do.
  • What information does he need?
  • How do we know the admiral received valid information?
  • How would he know which knowledge claims to accept?
  • What criteria might the Admiral look for in a knowledge claim?

This exercise illustrates why a knowledge validation strategy is so important.  In this case, it is imperative to get the right information to the right person at the right time.

Knowledge Diffusion

Even if vast pools of high-quality knowledge exist, the knowledge is worthless without effective diffusion.  A considerable amount of research has been devoted to this area in education and training.  There are also anthropologists interested in the diffusion of knowledge from one culture to another.

Knowledge diffusion is the process by which a piece of new knowledge is communicated through certain channels over time among the members of a social system.  This can occur in many different ways.

  • Education Diffusing knowledge effectively from an expert to a novice is an ancient method of knowledge diffusion.  Some teachers can transfer knowledge faster and better than others can.  Training teachers how to teach more effectively can reduce time and money needed on organizational education programs.

  • Sharing:   People share ideas and knowledge claims with other people.  Although there are many cultural and legal issues that prevent the free flow of knowledge claims through sharing,  facilitation, legal precedence and new reward systems will improve the process.

  • Storytelling This ancient technique of transmitting multiple dimensions of knowledge has many possible applications in the business arena.

  • Writing and Publishing Writing in a way that reduces the cognitive load of the reader while maximizing understanding is a skill.  Teaching business writers better techniques can result in more understandable documents.

  • Exposing Engineering the environment to expose knowledge workers to high quality sources of knowledge, understanding how to develop high quality knowledge sources, and knowing how to engineer organizational environments requires training.

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