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Knowledge Management > Book Reviews > Knowledge Management and Business Model Innovation >

Knowledge Management and Business Model Innovation

by Yogesh Malhotra

2001 Idea Group Publishing, London (UK) and Hershey, PA (USA)

454 pages

Review by Madanmohan Rao


Published at a time of waning euphoria about the dotcom boom, this hefty tome offers new perspectives on the importance of knowledge assets and intellectual capital for unleashing business model innovation.

The 25 chapters are drawn from 34 contributors in the U.S., Europe, Asia and Latin America; the compiled material is divided into four sections: KM frameworks, knowledge work, knowledge assets valuation, and organizational aspects of business model innovation. The writing styles are varied, and differing perspectives are offered at the cutting edge of the KM curve.

Yogesh Malhotra is the founder of @Brint.com BizTech Network, an e-learning enterprise focused on new business practices. He is the author of "Knowledge Management and Virtual Organisations" (2000, Idea Group Publishing).

IT investments have not always been in lock-step with productivity increases, Malhotra rightly begins. For instance, ERP implementations led to an unprecedented level of information sharing across organisational functions - but straitjacketed the information flexibility of information processing for each of the locked-in functions.

Increasing empowerment of online customers, suppliers, partners and other intermediaries have led to a greater impact of external environments on internal logistics of a company, a trend well-exploited by Net pioneers like Amazon.com.

"It is not that traditional brick and mortar companies were not leading users of IT; however, the new Net-based companies have fundamentally redefined the value equations related to their internal value chains and supply chains," says Malhotra.

"The new business model of the Information Age is marked by fundamental, not incremental, change," he argues. Current KM approaches haven't dealt adequately with the "creative abrasion and creative conflict" that are necessary for business model innovation today.

KM should embody the organisational processes that seek synergistic combination of data and information-processing capacity of information technologies on the one hand, and the creative and innovative capacity of human beings on the other, Malhotra advocates.

Management strategies need to shift from command and control - to sense and respond. KM processes should be focused on doing the right thing (effectiveness), not just doing the thing right (efficiency). KM is not merely about bottling water from rivers of data, but about giving people canoes and compasses to navigate in these rivers of data. Instead of just codified best practices and enterprise portals, the emphasis should be on unlearning ineffective best practices and the continuous refinement and pursuit of better practices.

Other KM framework writers in the book also agree with some of these positions. Dealing with complexity, equivocality, uncertainty, and ambiguity in today's environment can lead to information overload and collapse of sense-making in a company.

KM practices can differ according to the nature of the organization: project-based (eg. construction industry), umbrella corporations (eg. GE), virtual business communities (eg. the Linux movement on the Internet), and the multi-directional network (eg. lobbies of SMEs in Taiwan).

In terms of new approaches to knowledge work, Malhotra advocates a movement away from hi-tech hidebound KM systems to one of more creative chaos, greater social interaction, playfulness in organisational choices, and strategic planning as anticipation of surprise.

At the KM tool level, researchers and entrepreneurs are racing to create the next generation of effective KM applications and infrastructure, including communication, storage, gathering, dissemination, and synthesis. Ernst&Young predicts that KM has the potential to exceed ERP as an application opportunity.

CKOs play a key role in organizations, in managing corporate knowledge capital and championing knowledge-centric cultures; they require a blend of technical, human and financial skills.

In sum, this is a comprehensive collection of case studies and analysis at the cutting edge of KM practice. The diverse range of material makes for an interesting and informative for advanced KM professionals.


The book rightly identifies some of the powerful contributions that IT (especially Intranets) can make as an enabler of KM - but also cautions against an excessive faith in pure information-processing systems as carriers of knowledge activity.

The globalised economy in the Information Age - with flattened management, reliance on contracts and consultancies, and diversified knowledge workers -- calls for more cybercentric KM approaches (eg. those that enable 'high-tech intimacy') rather than merely geocentric approaches. Communities of practice are useful for leveraging 'soft' knowledge, as opposed to hard knowledge which can be easily captured, codified and storied.

But despite contributions of IT via phases like automation, streamlining of procedures, and process re-engineering, there has been little emphasis on business model innovation or rethinking the overall business, argues Malhotra.

In today's hyperturbulent and discontinuous environment, he identifies shortcomings in much of the current KM thinking, whose simplistic assumptions may inadvertently make yesterday's archived best practices tomorrow's core rigidities.

Malhotra warns that IT-driven KM strategy should not become mechanistic and objectify and calcify knowledge into static, inert information, thus disregarding the role of tacit knowledge.

There is a much wider range of material presented in this book as compared to others - but as is the case with many compiled volumes, not all of it would appeal to all readers.

The book also has useful case studies, though not as detailed and in-depth as those offered in Nancy Dixon's "Common Knowledge: How Companies Thrive by Sharing What They Know."

One case study focuses on KM at Arthur Andersen in Denmark, which spends $15,000 in education for each consultant each year; the KM infrastructure includes a Proposal Toolbox, Global Best Practices, online workflow, and benchmark data.

Another case study focuses on Buckman Labs, which established four international online Tech Forums from 1992-97, coupled with reward systems, KM participation policies, and top-level support.

A very interesting chapter offers an example of assessing knowledge capital at the national economic level, while planning for growth and performance for the entire country.

Going beyond measures of GDP, a joint Swedish-Israeli study assessed Israel's intellectual assets in 1997 in terms of financial capital (productivity, exports), market capital (diffusion of new products, openness to different cultures, language skills), process capital (Internet usage, newspaper circulation, student-teacher ratio, entrepreneurship) human capital (equal employment opportunities, percentage of book distribution, health rates), and renewal and development capital (civilian R&D expenditures, scientific publications, patents, startups).

Another chapter extends such valuation considerations to public-private partnerships, involving academia, industry and government, which are becoming increasingly necessary as no organization or country can on its own generate all the knowledge it may need.

Overall, this book offers some provocative insights into KM frontlines at multiple levels, along with future trends and challenges in the KM field.


This book is geared largely towards CKOs and academics. Some of the chapters will also be useful for CIOs looking for architectural tips on KM support. CLOs and CTOs are better off with other publications. The material assumes a reasonable foundation in KM concepts and practice, and is better suited for advanced knowledge professionals in organizations which already have a KM practice and are seeking to take it to the next level.


This is definitely an informative read for advanced knowledge professionals and particularly for academics. The breadth and diversity of material is much greater than most other KM books, reflecting the growth and maturity of the field. In sum, a hefty but interesting read.


The reviewer can be reached at madan@techsparks.com


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