Demystifying Knowledge Management for Micro, Small and Medium-Sized Enterprises in Africa
Introduction
There is absolutely no doubt in the fact
that all over the world, the micro, small and medium-sized enterprises (SMEs)
sector have been acknowledged for playing major roles in the economic
development of many countries, especially in the so-called first-world nations. SMEs constitute the largest proportion of
businesses and play tremendous roles in employment generation, provision of
goods and services, creating a better standard of living, as well as
contributing significantly to the gross domestic products (GDPs) of all
developed countries (OECD 2000). In this
article, our aim is to simplify the concept of Knowledge Management (KM) to
entrepreneurs, promoters, managers and other stakeholders in the micro, small
and medium-sized enterprises (MSMEs) sector in Africa. Although the concept of KM has been around
for over a decade, it is still relatively new, still growing and has gained significant
recognition all over the world.
Our focus here is to demystify the
general understanding of the concept of knowledge management and to discuss the
enormous potential benefits awaiting African SMEs who choose to adopt a
‘deliberate’ KM initiative into their overall organizational strategy. We would also examine the symptoms and
crucial need for a KM project, the building blocks of KM, the modes of
knowledge transfer, and provide hands-on tips for SMEs interested in designing
and implementing an effective KM programme within their organizations.
Why the Focus on African SMEs?
Over the last few decades, it has been
observed that despite the enormous potentials of the SMEs sector and its
immense contribution to the economic development of the developed countries,
the performance of the sector still falls short of expectation in many
developing countries especially in Africa
(Arinaitwe, 2006). This has contributed
to further widening the gap between the developed and developing countries,
resulting into more requests for aids, grants and policy formulations in
support of developing countries.
The Africa Growth and Opportunity Act
(AGOA) project of America, Millennium Development goals (MDGs) and other
international trade policies of the World Trade Organisation (WTO) – such as
the policy against trade dumping – are all targeted towards supporting the sustainable
economic development of African countries and stimulating their export
potentials. However, whether or not
African businesses and SMEs choose to take advantage of such policies and
opportunities is entirely up to Africans and not the developed countries.
There is an old adage that says:
“knowledge is power”, and not just knowledge, but “the application of knowledge.” Nevertheless, many managers still wonder why
some businesses tend to succeed and others fail, or why some businesses make
huge profits and others make abysmal losses.
It is neither an issue of size nor capital; it’s more often about how knowledge is being managed within organizations. The question that then comes readily to mind
is: what really is knowledge? Although
there appears to be no single definition for the term knowledge, it still simply refers to the consciousness/awareness
that provides any sort of advantage/benefit over the lack of such
consciousness/awareness.
What is Knowledge Management?
Having looked at a simple definition of
knowledge, what then is Knowledge Management (KM)? On the first sight or hearing of KM, people
readily think it is a fad concerning the introduction of massive computer
systems, very high volumes of data, too much grammar and requires the help of
external consultants, gurus, etc. This
first-timer perception towards KM is worsened by the fact that, just as there
is no universally accepted definition of ‘knowledge’, there is also no single
definition for KM. This does not mean
that some KM initiatives do not involve the use of computer systems or the aid
of experts and external consultants (especially within large organizations),
but our focus here is to understand the central meaning of the concept of KM, its fundamental principles
and how it can be applied to SMEs.
In this light and for the purpose of
this article, we prefer to adopt a simplistic perspective of the concept of KM
in order to aid our understanding for SMEs.
Simply put, the concept of KM refers to how businesses can leverage on
the experiences of their managers, employees, customers, competitors and other
stakeholders, alongside the understanding of their product and service
offerings and the market/business environment.
All these can be used to the organizations’ best advantage, thus
generating greater value (Santosus and Surmacz, 2001).
Putting Knowledge Management to Work
The concept of KM can be better
understood with the aid of analogies, stories and case studies. To give us a better understanding of how the
concept can be utilised in a small to medium-sized enterprise in the African
context, let us examine two case studies. The first case is that of a small-sized
hairdressing salon with the owner and six other employees in Ahoada, Nigeria. The second case is that of an experienced
baker in a medium-sized bakery in Bukoba ,
Tanzania
Case Study 1: The Hairdressing Salon in Ahoada, Nigeria
Consider the case of a professional hair
stylist in Ahoada as a knowledge worker.
She does more than simply braiding and plaiting or washing and styling the hair
of her clients. In the process of beautifying their hairs, or when asked by
clients, the professional stylist would gladly provide useful advice and tips on
how to look after their hair, such as: ‘make sure you use pink oil/conditioner
on your hair each time you re-touch’; ‘don’t carry your braids for too long in
order to prevent your hair from breaking-off’ or ‘XYZ Relaxer is better for
your hair, because it is milder and more gentle on the scalp” and so on. For
such a stylist, accurate advice may lead to generous financial tips at the end
of the hair session. On the other hand, clients who have benefitted from the
tips rendered by the stylist are more likely to use the services of her Salon
again, and possibly introduce their friends to the Salon. Now, if the professional stylist is willing
to share what she knows with other stylists, then all the other stylists could
eventually become more professional, and in the process improving the Salon’s client
base and revenue.
How would a KM initiative make this
happen? The owner of the Salon can decide to reward stylists for sharing their
professional tips with others by offering them incentives. Once the best tips
are gathered, the manager/owner would discuss them with all her stylists. She
can also get the tips typed, printed and distributed to all the stylists. The end result of a well-designed KM initiative
is that everybody benefits: bigger tips, more hair dressing deals and better
professional outlook for stylists. In addition, clients are made to look more
beautiful with better-maintained hairs due to the collective knowledge of
stylists. Furthermore, the Salon owner also wins because there would be repeat
business from satisfied clients, who could even act as a medium of
advertisement to friends and relatives in Ahoada and surrounding towns.
Case Study 2: The Bakery in Bukoba, Tanzania
Conversely, consider the case of an
experienced baker who started working in a bakery at the age of eleven due to
financial constraints from his family to send him to school, so he lacks formal
education. Over the past thirty-five years, he has worked in all sections of
the bakery and is highly skilled at every stage in the production process.
Mtembe Foods Ltd recently took over a medium-sized bakery in Bukoba for bread
production and has engaged the services of this experienced baker. The new
manager of the bakery is finding it difficult to plan the work schedules for
the experienced baker, thereby overloading him with menial work. Moreover, the manager plans to introduce new
varieties into the production line because the experienced baker has little
formal education. Therefore, it is difficult for him to conduct lessons for the
other less experienced employees.
How can KM solve this problem? The manager needs to understand that he can
still get the experienced baker to transfer his knowledge through some other
means. If the baker is willing to share his experience, and if the manager
decides to reward him for sharing, then four other apprentice bakers can be
placed under the experienced baker to shadow his operations, thereby gaining
knowledge through repeated practice of what they see from the experienced
baker. The manager should allow for a flexible work environment that encourages
free-flow of ideas and discussion in the language that everyone understands. This socialisation process is a mode of transferring
tacit knowledge (discussed below). Eventually, the bakery would have improved the
skills of its employees, its production quality and output, and successfully introduced
its new products. Meanwhile, the experienced baker would have been rewarded and
the residents of Bukoba would derive more satisfaction from the new bread
varieties.
A well-designed and implemented KM
programme always produces win-win outcomes to all its stakeholders. The two above case studies are practical
examples of how KM can be used effectively in SMEs. Concisely, two basic
thoughts from the above cases: first, that KM initiatives have to do with
people i.e. it involves the use of human resources/capital; second, management
plays a very crucial leadership role towards ensuring the success of the programme.
Benefits of Adopting a Knowledge Management Initiative
There are vast potential benefits
awaiting African SMEs who choose to adopt a KM initiative as part of their overall
strategy. These benefits include:
·
it
enhances improvement in turnover rate and increases profitability by
facilitating the production of new appropriate products and services suited to
meet the needs of consumers;
·
it
can brings about improvement in an
organisation’s customer service management;
·
it
encourages high employment retention rates by recognising the value of employees’
knowledge and sharing ability;
·
it
streamlines company operations and leads to reduction in costs by eliminating
redundant or unnecessary processes;
·
it
enhances organisational learning and improves the creative abilities within the
organisation;
·
it fosters the free flow of ideas, thereby
stimulating timely product/service development and innovation;
·
it
creates a sense of identity, security, loyalty, responsibility and commitment
in employees since they know the company values them and their contribution
towards its success;
·
it
strategically positions a company and offers readiness for penetrating into new
markets; and
·
it
improved organisational efficiency and effective use of available resources etc.
Symptoms of Knowledge Management Need
In most organisations today, especially in
SMEs, it is not very difficult to identify when a KM initiative is lacking. The
following symptoms below are evident of organisations that need to have KM
initiatives (Shelton, 2006):
1. An organisation where decision making,
is slow due to the absence of one or a few key persons. This is a common trend in many SMEs, where
the absence of the entrepreneur or manager tends to cripple the operations of
the firm;
2. A company where delegation of
responsibilities are frequently, duplicated due to communication gaps;
3. A company where there are high rate of
recurring mistakes;
4. An organisation that lack professional
interpersonal relationship;
5. Where innovation and development
strategy is Top- Bottom, i.e. employees are not motivated to be creative and
initial new ideas;
6. Where consumer relations are strained
and customers tend to complain frequently of being dissatisfied with a product
or services;
7. Where a company competes on only price
and cannot keep up with the market leader in the industry;
8. Where employees do not feel any sense of
loyalty or commitment to the company;
9. Where a company’s rate of launching new
products and services is very slow; and
10. Where customers service processes and technologies,
are understood by only some few employees within the company.
The Crucial Need for a Knowledge Management Initiative: Forms of
Knowledge
Generally, the concept of KM is still a
growing field of management. It has been suggested that many managers
irrespective of the varying sizes of their firms, still do not understand the
principal essence of the concept due of its broadness and its subjectivity to a
range of interpretations by speakers, consultants and writers; making KM uneasy
to be purchased as a service or completed within a year (Orlov, 2004).
Nevertheless, the fundamental need for
KM within an organisation is under-pinned by two key factors. First, more companies are losing their members
of staff due to the on-going recession, budget cut- back resignations,
retirements etc., after spending huge amounts of resources to train and develop
them. This is a challenge for MSMEs, and Delong (2004) noted that in far too
many organisations, knowledge is in the danger of disappearing along with the
employees who acquired it. MSMEs in Africa are the worst hit in this current
economic climate because they lack resources to either pay high salaries, or
execute training and development, thus limiting their capacity to retain their
staff for a long-term agreement. It would also appear to be a waste of scarce
resources for an MSME, if an employee the company has spent money to train and
develop suddenly decides to leave on her/his accord for a bigger/blue chip
company without sharing his/ her knowledge with other staff members.
Second, two broadly identified forms of knowledge,
that is the explicit knowledge, and the tacit knowledge underscore KM. Explicit
knowledge is the codified or hard knowledge as is sometimes referred to, which
remains within the four walls of an organisation at the end of a normal workday
in the form of manuals, regulations, handbooks, information on databases etc.
The tacit or soft knowledge, which leaves the organisation at the end of the day’s
work, i.e. knowledge gained from experience leading to certain intuitions, insights,
and hunches comfortably seated in the heads and minds of employees and other
stakeholders. As such, the crucial need
for a KM initiative and the challenge for a company is to ensure that as tacit
knowledge goes home to sleep or out of the organisation due to retirements,
resignations and in search of other opportunities. There are spare copies stored in
organisational databases, handbooks, manuals and in the heads and minds of
other staff members.
Building Blocks of Knowledge Management: A Basic Framework for
SMEs
For a KM initiative to be effective and
for any organisation to benefit from an effective KM programme, there needs to
be strict adherence to at least one basic framework. Some authors have described this as the
streams of knowledge or the stages of KM. Whatever it is termed, SMEs need to understand
the basic model for designing an effective “tailor-made” KM programme. They are discussed below:
·
Needed
Knowledge: irrespective of the size of any company, the very first stage in
designing a KM initiative is in identifying what knowledge is needed for the
organisation to meet its goals, aims, and objectives. This would require an SME to undertake a
strategic analysis of its industry, and it would involve some form of environmental
scanning, interviews customers, suppliers and other stakeholders. It would also involve some brainstorming and
the development of a number of scenarios of the emerging trends and likely
future occurrences within the industry.
·
Available
Knowledge: after identifying the needed knowledge, the next step is to
determine what knowledge is presently available within the organisation. This would require carrying out an analysis
of the organisation’s strengths, weaknesses, opportunities and threats (SWOT),
core competence and business position.
These analyses would consider issues such as the organisation’s
personnel profiles and experience, understanding of the relevant laws and
regulations, its industry, organisational culture, corporate image, products
and services, customers and other stakeholders.
·
Knowledge
Gap: this is basically the difference between the “Needed Knowledge” and the
“Available Knowledge”. This is a very
salient aspect in the design of a KM programme because a sound insight into the
knowledge gap would help the organisation understand how best to strategically
close up the gap in order to gain competitive advantage.
·
Knowledge
Creation: is the ability to bridge the gap that has been identified within the
organisation knowledge needs. Here,
several techniques of knowledge creation would be used such as researching,
training, and studies into customers buying patterns and satisfaction.
·
Knowledge
Base: after knowledge have been created and developed, there needs to be a systematic
and structured manner through which the knowledge is stored/locked i.e. kept on
board. This involves the creation of a
“knowledge base” whereby knowledge can be determined and made available for
everyone to access. Knowledge bases
could include setting up computer databases, installing internal communication
networks, and keeping project files and other hard or physically accessible
documents.
·
Knowledge
Sharing and Transfer: this is another core aspect of the KM process because
after knowledge have been created and stored, it should be communicated,
transferred and shared amongst employees, between managers and employees, as
well as between departments. This
heavily depends on the structure and culture of the organisation, because it
requires a flat structure and culture that encourages free flow of
communication, mutual knowledge sharing and ensures that the appropriate
knowledge gets to the appropriate person at the appropriate time. Knowledge can be communicated, shared, and
transferred using different techniques. Detail discussions below.
·
Knowledge
Application: is at this stage that “knowledge” is usually referred as “power”. Here, insights from the knowledge created, locked,
and shared can now be strategically utilised to give the organisation a
particular advantage in order to gain a competitive edge within the
industry. This stage forms the principal
element in the knowledge management process and prominently driven by the
management of the organisation.
·
Evaluation
of Applied Knowledge: this stage is also very important in fine-tuning and streamlining
the KM process. Here, an assessment
implementation on the effectiveness of the KM programme and the result
generated from the applied knowledge.
The assessment evaluation is using several techniques such as internal
and external audit, project evaluation, customer, and employees’ satisfaction
and benchmarking. This evaluation forms
a critical part of identifying the new knowledge gap for further improvements;
and the strengths of the KM initiative that can be further maximised and horned
for better competitive advantage.
From the building blocks of KM discussed
above i.e. the Needed Knowledge stage through to the final Evaluation stage,
provides us with an understanding that the KM process is an unending process
because it drives continuous improvements within the organisation. This process can be broadly categorised into
three phases which can simply be termed as the “Knowledge Management Trilogy”
as represented below:
Figure I: Knowledge Management Trilogy
Modes of Knowledge Transfer, Sharing and Communication
In every organisation, it is the
responsibility of managers to ensure that knowledge created within the
organisation is properly disseminated and utilised. According to Nonaka and Takeuchi (1995), the
emphasis here is not on individual knowledge but organisational knowledge,
because if individual knowledge is not shared, it will have very little effect
on the organisational knowledge base. The
onus on managers is therefore to facilitate the sharing, transfer and
communication of knowledge and its movement from one part of the organisation
to another. As mentioned earlier, there
needs to be a knowledge base or lock, where explicit knowledge is collected and
allowed to interact with tacit knowledge.
Again, Nonaka and Takeuchi (1995) termed the interaction between the two
forms of knowledge as “knowledge conversion” and their model known as the SECI
4-mode process remains one of the most acceptable models of knowledge
conversion:
A. Socialisation: this refers to the conversion from
tacit to tacit knowledge i.e. converting new tacit knowledge through shared
experiences. Individuals can use new
experiences to recount old ones. This
interaction can be one-to-one, one-to-many, many-to-many e.g. oral reports,
meetings between employees and customers, mentoring of younger employees,
training sessions and getting less experienced employees to shadow more
experienced ones. The case of the
experienced baker in the Bukoba bakery above is a good example of
socialisation.
B. Externalisation: this conversion is from tacit to
explicit knowledge through emails, books and manuals, tapes etc. This can involve the presenting of practical
experiences of employees that can be codified and put into a book form or
computer database for easy access. A
good example of this is the case of the hair stylist in Ahoada discussed above.
C. Combination: this conversion is from explicit to
explicit knowledge through more structured, complex and systematic arrangements
such as the use of computers, intranets, internets, and websites which are
mainly found in large organisations. It
can also be through workshops, seminars, and trainings too for both large
companies and SMEs.
D. Internalisation: this is conversion from explicit to
tacit knowledge and it depends on an individual’s ability to make sense out of
the explicit information. Organisational
libraries and computer applications can help people recognise patterns and aid
their understanding.
Tips for African SMEs on Designing and Implementing an Effective
KM Initiative
1. Entrepreneurs and SME-managers should
firstly understand that every KM programme needs their full and concerted
support to be effective.
2. Strong leadership is very crucial to the
success of any KM initiative. The role
of the entrepreneur or SME manager must shift from being the sole source of
knowledge to managing and networking the stream of information, its uses. Leadership should no longer perch at the top
of the organisation, but at the centre.
This is because true leadership hinges on the ability to grasp the
value-creating potentials within the firm as opposed to having an “I know all”
mentality and handling the whole work load alone (Bukowitz and Williams, 1999).
3. SMEs should imbibe a culture that
encourages the continuous learning and development of all employees and
engenders the ability of “learning to learn” from their experiences and
experiences of others. Periodic training
and development needs to be incorporated into their operational system so that
employees can learn new skills, update their professional knowledge and have
the freedom to creatively play around with new ideas.
4. SME managers should learn to structure a
base within the firm where knowledge can be collected; and then encourage
transfers and sharing of the stored knowledge.
Managers should beware of barriers of knowledge transfers such as
insecurity that brews among employees.
5. Entrepreneurs and managers must have the
sense of duty to reward employees who choose to share their knowledge with
others. This is because when employees
feel they are giving more than what they are getting, it gives them the
opportunity to seek greener pastures where their contributions will be
appreciated better.
6. Since KM is about people and ideas,
entrepreneurs should give employees a sense of identity within the SMEs, their
mission and vision; and also allowing them to learn from mistakes.
7. SMEs should learn to take advantage of
social networks in order to expand their customer base. They should also create strategic alliances
that can help improve their market position.
8. Entrepreneurs and SMEs need to
understand that knowledge management is not a one-off project in the life of a
firm, but a continuous project that helps an organisation to re-invent itself
towards better performance.
It is no longer news that we presently
live in a knowledge-driven world, and it has become clearer that the so-called
‘thin line’ that differentiates business successes from failures is “knowledge”. The central point is in understanding the
knowledge gap, create and store the appropriate knowledge and embody the
knowledge in their products and services.
This is because the slogan for businesses today is gradually becoming
“manage-your-knowledge or die.”
In conclusion, for SMEs operating in
Africa to take advantage of the available opportunities and expand their
business capabilities they need to strategically and effectively initiate KM within
their organisations. I hope you have been able to derive a
better understanding into the world of KM from this article. You too can begin
to think of your own small or medium-sized business in the light of the above
analogies, building blocks and tips; and see what you can put into perspective.
It is salient to mention that the concept of KM is relevant and practicable to
every field of human endeavour and to every strata of the society, from public
to private sector, profit making to non-profit making, religious bodies, and
large to medium, small and micro-sized organisations. Until next time, keep managing your knowledge effectively.
References
·
Bukowitz,
W. R. and Williams, R. L. (1999). Looking Through the Knowledge Glass. CIO
Enterprise Magazine [online] Available from: http://www.cio.com/archive/enterprise/101599-book.html
[Accessed: 02 Feb. 2006]
·
Delong,
D. W. (2004). Lost Knowledge: Confronting the Threat of an Aging Workforce , USA :
Oxford University
·
Nonaka,
I. and Takeuchi, H. (1995). The
Knowledge-Creating Company: How Japanese Companies Create the Dynamics of
Innovation. Oxford : Oxford University
·
Organisation
for Economic Co-operation and Development (OECD) (2000), “Small and
Medium-sized Enterprises: local Strength, global reach”, OECD Policy Review,
June, pp.1-8.
·
Orlov,
L. M. (2004). When You Say ‘KM’, What Do You Mean? CIO Enterprise Magazine
[online] Available from: http://www2.cio.com/analyst/report2931.html.
[Accessed: 02 Feb. 2006]
·
Santosus,
M. and Surmacz, J. (2001). ABCs of Knowledge Management, CIO Magazine [Online].
·
Shelton University of
Central England , UK
This piece is a modified version of two
articles earlier published by the author in the Business Connect Newsletter of
the Abuja Enterprise Agency; and later updated and published online in January
2008. The author still considers the subject interesting and relevant, hence
the re-publication on his personal blog. Please be kind enough to leave your comments and feedback.
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