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Knowledge strategy


Here's a quiz to test your knowledge: 

1. Which company developed the first stand alone personal computer with keyboard, video monitor and mouse? 

2. Which company developed the first WYSIWYG (What you see is what you get) word processor? 

3. Which company invented a "page description language" that could send text and graphics to a laser printer? 

4. Which company originated the idea of network computing? 

5. Which company developed the first functional computer operating system with a graphic interface and clickable icons, windows, and menus? 

The answer to all of these questions, surprisingly, is one company - Xerox. But who today thinks of Xerox as either an innovator or an important presence in the computer industry? The lesson is that knowledge itself is necessary, but not sufficient, to succeed in the marketplace. 

Indeed, there are second - and third - chapters to the Xerox story that are equally instructive. For the company that succeeded in putting all the technological pieces that Xerox had assembled into a neat little package was Apple. And while Apple did succeed in creating a sensation when it introduced its Macintosh computer in 1984, the biggest winner of all turned out to be Microsoft, which understood that the secret of success wasn't to get a segment of the market to choose your box instead of your competitor's box, but to get everyone in the world to put your system into their box. 

And so Microsoft, without having to worry about parts procurement and inventory maintenance, is now the 100 billion dollar concern, while Apple struggles to survive and Xerox remains for many people a word that means photocopy. 

Michael Zack, professor in management science at Boston's Northeastern University, would say the failures at both Xerox and Apple can be attributed to poorly conceived knowledge management strategy. Knowledge strategy? Zack explains that a company always needs to know more than it ever does at any given moment in order to fill what he calls the "knowledge gap". Likewise, a company's ability to do what it wants lags behind its aspirations. That he terms the "strategic gap". 

"The alignment between what you need to know and what you do know to execute your strategy is what I call 'knowledge strategy'," says Zack. 

The successful company is constantly assessing the state of its internal knowledge to gauge its knowledge gap. It is also looking at its ability to execute its strategy to determine the severity of its strategic gap. And that company is implementing programs to acquire the knowledge needed and the tools and resources required to reach its goals. Zack cites the Internet book and CD seller,, to explain how this works. 

"They don't know anything about books and they don't know anything about CD's, but they sure know a whole lot about retailing those things online. They've decided that what they must do is use that template to enter different markets that are similar to what they've done and to establish themselves as the leading online retailer. Now they've opened up a new department called and essentially, they've transferred their knowledge and said 'we know how to run this kind of an operation, we're two years ahead of everybody else, and if we continue to learn, we'll always stay ahead: That's the essence of using knowledge in a strategic fashion." 

Internal benchmarking 
But Zack points out that selling drugs may not be the same as selling books or CDs, so it is incumbent upon to look at the potential knowledge and strategic gaps that may exist when the switch is made from running an online bookstore to an online drugstore (dealing with insurance companies and third~party payment systems, for example, or marketing to a very different consumer profile). "Their knowledge strategy would be to set up a knowledge management program to close any gaps around their strategic move and to close the gaps in knowledge that are required to support the strategy," he says. "That way they would know that the knowledge they are creating and the knowledge management programs they are putting in place really are driven by their strategic concerns, as opposed to just creating a program that's not going to fundamentally support the strategy of the business." 

Companies that are in the forefront of Knowledge Management, constantly assess their own capabilities - internal benchmarking - as well as their capabilities in comparison with their competitors. 

Are they in possession of core knowledge, advanced knowledge, or innovative knowledge? How does it compare to the competition? 

"If your knowledge is innovative and the rest of the industry is operating at a core or maybe advanced level, then you have an advantage because there's something unique about what you are doing. However, if the reverse is true, and it turns out that your strategic position is based on core knowledge, you may be in a vulnerable position. Because it's not enough to know that you can execute your strategy. There has to be something unique about what you do." 

Reprinted from News & Views Management Magazine, published by Akzo Nobel, May 1999

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