1. Introduction
2. Characteristics of Knowledge-Based Competition
3. The Knowledge Advantage
4. The Transition of Knowledge-Based Organization
5. Knowledge Management
6. Asian Knowledge Management Award
7. Training and Development

INTRODUCTION

The emergence of a knowledge economy is bringing about a change in the competitive dynamics of the modern business environment. The globalisation of business assets and growing competition from new economies requires a critical rethinking of the traditional view of management.

Traditionally, Asian companies used a little knowledge or technical know-how combined with huge physical assets (land, labour, materials, capital or natural resources) to produce their goods and services. They are now in transition, and are forced to compete openly in the global market. In the knowledge economy, the emphasis is reversed: Asian companies must use more knowledge and technical expertise in conjunction with diminishing physical assets.

Under competitive pressure, companies have to withdraw from activities in which they are less competent and focus on their 'core capabilities'. They have to collaborate with other companies to create synergy and grow by reaching new customers, discovering new cost-reduction techniques and increasing process speed.
To ensure the smooth flow of crucial information and knowledge within their organisation as well as to outside partners and subcontractors, companies increasingly rely on knowledge networks.

A new management paradigm is thus emerging: the mastering of information and the introduction of knowledge-intensive means of management has become the key to competitiveness, and even survival. Knowledge is recognised as the driver of productivity and growth, leading to a new focus on the role of information, technology and learning in the performance of Asian companies.

CHARACTERISTICS OF KNOWLEDGE-BASED COMPETITION

Globalisation, technology and new dimensions of economic factors are reshaping the rules of competition.

Globalisation enables companies to enter new markets, to develop and exploit new technologies and global business assets, and to reduce their costs and risks.

Telecommunication technology brings about global, open, digital networks for business activities. The impact of this technology means that companies are more open and inter-connected. Where Asian companies have traditionally thrived on a very distinct hierarchy, there now exists a solid network infrastructure.

Companies that are best able to leverage their knowledge in innovation and information technology will increasingly account for a greater proportion of total output. Knowledge workers, who are able to identify complex problems, provide new solutions to customers and manage the skills of information processing, have become the major assets of a company.

Due to this external changing environment, Asian companies can no longer rely on their domestic markets or neighbours as the safe, steady markets they once were. They are facing a world of new technologies, new competitors, new customer attitudes and new dimensions of economic factors both at home and in overseas markets. They are forced to participate in a knowledge-based competition.

The characteristics of knowledge-based competition are as follows:

1. Competition will shift from focusing on physical entities to knowledge and related intangible capital.
2. As the world moves toward an 'unbounded' global economy, the competitive dynamics depend on speed, connectivity and innovation, instead of economies of scale.
3. Communities of companies are using digital networks to trade with one another and share knowledge to compete.
4. Large companies no longer have an inherent advantage, based on the economies of scale they achieve. Many smaller companies will emerge that use e-commerce to compete on equal terms with large-scale multinationals.
5. The notion of product differentiation becomes meaningless where companies can customise goods for individual customers.
6. Knowledge, products and services become obsolete rapidly due to rapid changes in technologies. The ability to create new knowledge in the form of new offerings increasingly becomes critical.
7. Influenced by the convergence of industries, companies have to co-operate and compete with cross-industry players. The term 'co-optition' means companies may co-operate in one sector of business and compete in the other sector.
8. The ability to reach the critical mass is the rule of competition. Critical mass is the point at which customers actually perceive a real increase in value, due to the law of increasing returns.
9. Customers are able to buy directly from a manufacturer, bypassing traditional channel intermediaries.

THE KNOWLEDGE ADVANTAGE

For most of Asian companies, the sources of competitive advantages were economies of scale, lower factor costs, lower capital costs and wider distribution channels. The rationale was that a company succeeded through 'structural advantage', in which a company streamlined operations through economies of scale, and was characterised by planning, control and hierarchy. Under the model of structural advantage, companies competed with physical assets - larger factories, more physical inputs, bigger stores of cash and more physical outlets.

However, most physical assets are subject to diminishing returns, that is, assets decline in value as more people use them.

For a long time, the rapid growth of the 'tiger' economies of Asia depended on the structural advantage model. However, such notion of an 'economic miracle' was attacked by Paul Krugman, a Stanford University Economics Professor, who published an influential article 'The Myth of Asia's Miracle', in Foreign Affairs in November 1994.

Krugman argues that total factor productivity increases suggest that the Asian miracle is not quite so miraculous as was imagined. He says much of the Asia miracle is due to growth in physical assets, which are subject to the law of diminishing returns.

In the global, digital and knowledge-based economy, quality, speed, connectivity and innovation become pre-requisites for business success. They are nourished and driven by knowledge-based capabilities and by knowledge management systems that leverage these capabilities.

The rules by which the game of business has conventionally been played are therefore disappearing. Today, Asian companies have to rebuild their capabilities, competencies and strategies, and to compete through knowledge assets, instead of physical assets.

Knowledge, in the form of complex problem solving, technological innovation, creative exploitation of new markets and new customers and the development of new offerings, equips companies with a better competitive advantage.

Knowledge also adds value to a business through people because competitive advantages become increasingly dependent on access to ideas, human capital and the ability to create innovative offerings faster than competitors.
The knowledge advantage is sustainable because it generates 'increasing returns' and continuing advantages. Systematic creation and use of knowledge assets enables not only a competitive advantage, but also a stream of value creation through innovation and improvement.

THE TRANSITION TO KNOWLEDGE-BASED ORGANISATION

As the economy shifts steadily away from a base of physical assets to one of knowledge assets, Asian companies need to change and adopt the new ways of doing business.

Japanese and South Korean conglomerates have long promised employees a job for life, but they now have to reduce workforce sizes in order to gain a leaner corporate architecture. Part of the restructuring of corporate Asia can be attributed to the practice of outsourcing as a necessary part of lean production and indeed survival. The knowledge-based part of the economy demands flat hierarchies, and the new workplace is less dependent on management control than on a solid knowledge infrastructure.

In an effort to regain or maintain their competitive position, Asian companies are in need of change to transform themselves into knowledge-based organisations. But what changes?

Firstly, companies need a knowledge management framework as a conceptual model in the evolution of knowledge management from values, tools and principles to a discipline structure.

Secondly, they need a knowledge management standard to help develop knowledge management systems to optimise the creation, flow, learning and sharing of knowledge.

Thirdly, they need a defined structure and roles for managing knowledge.

Fourthly, they need the development, testing, and evaluation of knowledge management processes that explicitly link learning efforts to measures of performance.

Fifthly, they need to develop knowledge management programmes in alignment with knowledge strategies and objectives.

Finally, they must create and nurture a culture of knowledge sharing, creativity, teamwork and continuous learning for the creation of new knowledge assets.

Knowledge management is an organisation-renewal process that requires changes in strategy, systems and culture. Change requires leadership and support. Leadership can be encouraged by promoting, recognising and rewarding people who demonstrate sharing behaviour, as well as those who adopt knowledge management practices.

KNOWLEDGE MANAGEMENT

Knowledge management is generating a growing interest in today's business and academic communities, and encouraging the efforts of many companies to meet the challenges of competition in the global knowledge economy.

It is a term used in many different ways by different parties and encompasses a very broad range of perspectives.

In particular, it embodies organisational processes that seek a synergistic combination of the information processing capacity of information technologies and the creative capacity of human beings. It also represents the classical view of strategy, which focuses on the development of competitive advantages through the reconfiguration of knowledge assets, competencies and linkages. At the same time, it engages with human intellectual processes, involving tacit knowledge, improvement and innovation processes, values and culture.

As President of the Asian Knowledge Management Association, I define it as follows:

'Knowledge management is the strategy, the process, the tools and the set of management principles that enable the identification, collection, retention and distribution of knowledge assets, the development of new knowledge, the sharing of existing knowledge as well as the establishment of a corporate culture to create value for all stakeholders.'

ASIAN KNOWLEDGE MANAGEMENT AWARD

With an increasing demand for knowledge management among Asian enterprises, there is a need for a formalised framework to work with. The Asian Knowledge Management Award has therefore been developed to enhance competitiveness within the region. The purpose of this Award is threefold:

The Asian Knowledge Management Award provides a framework that explains how knowledge management affects every aspect of an organisation's drive to achieve its strategic objectives by associating knowledge management activities with eight strategic thrusts or 'categories'.

The framework applies to companies of any size and can be regarded as a conceptual model for the evolution of knowledge management from values, tools and principles to a discipline structure - a basis for defining all requirements and relationships and for creating and extending a meaningful body of knowledge. It consists of the following eight categories:

The framework applies to companies of any size and can be regarded as a conceptual model for the evolution of knowledge management from values, tools and principles to a discipline structure - a basis for defining all requirements and relationships and for creating and extending a meaningful body of knowledge. It consists of the following eight categories:

The criteria of the Asian Knowledge Management Award are built on a set of values and concepts, and are descriptive, not prescriptive. They describe a desired outcome rather than a set of instructions of how to achieve it. The criteria are as follows:

The institutional part of the Asian Knowledge Management Award concerns itself with the way that a knowledge management programme may induce a 'multiplier effect' throughout different sectors of society, including business, manufacturing, government, university and public utility. This is pursued in the following three ways:

Communication - In an effort to regain a competitive position, organisations are looking to make changes. But what kinds of changes? The Award criteria define the concepts and guidelines for changes, making it easier to foster communication across organisational boundaries and among different sectors of the economy.

Assessment - Organisations can use the Award criteria for self-assessment and improvement, comparing themselves to other organisations and identifying areas needing improvement.

Involvement - Like every other type of change programmes, knowledge management requires involvement and support from senior management. Leadership involvement may be demonstrated by describing how senior management are involved in planning, reviewing progress, recognising employees, providing and/or receiving training and/or meeting with other stakeholders to communicate knowledge management.

TRAINING AND DEVELOPMENT

The success of a company in knowledge management depends on the capabilities of employees, opportunities to learn and the application of new skills. A company must adopt a systematic approach to determine the specific skills and training needed for each position within the organisation.

However, up to now, there have been few universities or academic institutions offering a comprehensive course of study in knowledge management.

It is therefore the hope of AKMA that a holistic approach to the training and development of knowledge management can be developed. AKMA now provides a platform for professional learning, networking, research and cooperation among governments, academicians, business practitioners and knowledge workers, through consultancy, training programmes, workshops, seminars and publications.

Our strategies for training and development are:

1. We work with universities, training institutions and professional bodies as strategic partners to provide training programmes covering two major areas: knowledge management and intellectual property.
2. A registration system is set up for practitioners, trainers and consultants who are interested in developing a career in the field of knowledge management.
3. Registered KM professionals will be listed in our newsletters periodically and referred to business and academic communities for conducting workshops, seminars and/or trainings upon request.
4. A set of performance standards in knowledge management is to be developed for organisations interested in work-based learning for employees. Participating employees will be assessed based on work-based projects and awarded certificates by AKMA accordingly.
5. Participating organisations are invited to make applications for the Asian Knowledge Management Award and for certification of our KM8000 series of Standards.