Stock, flow and growth strategies are alternative knowledge strategies (Hansen et al., 1999). Approaches to knowledge management are dependent on knowledge focus in the client organization. Distinctions can be made between expert-driven, experience-driven and efficiency-driven businesses. An expert-driven business solves new problems with new methods. An experience-driven business solves new problems with experienced methods. An efficiency-driven business solves known problems with known methods.
The knowledge management strategy of an efficiency-driven business will be the stock strategy, while the flow strategy is more appropriate for the experience-driven business and the growth strategy is more appropriate for the expert-driven busi- ness.
P10:.Knowledge management systems in outsourcing relationships are less important when the client is an expert-driven business.
Approaches to knowledge management are dependent on knowledge focus in the organization. Distinctions can be made between expert-driven, experience-driven and efficiency-driven businesses:
• Expert-driven business solves large, complex, risky, new and unusual prob- lems for customers. Competitive advantage is achieved through continuous improvisation and innovation. Knowledge workers apply general high-level knowledge to understand, solve and learn. Learning from problem solving is important to be able to solve the next new and unknown problem for custom- ers. An expert-driven business is characterized by both new problems and new methods for solution.
• Experience-driven business solves large and complicated problems for cus- tomers. The problems are new, but they can be solved with existing methods in a specific context every time. Competitive advantage is achieved through effective adaptation of existing problem solving methodologies and techniques.
Continuous improvement in effectiveness is important to be able to solve the next problem for customers. An experience-based business is characterized by new problems and existing methods for solution.
• Efficiency-driven business solves known problems. The quality of the solu- tion is found in fast and inexpensive application to meet customer needs.
Competitive advantage is achieved in the ability to make small adjustments in existing goods and services at a low price. An efficiency-driven business is characterized by known problems and known methods for solution.
Few knowledge-intensive firms are only active in one of these businesses. Most firms are active in several of these businesses. For example, medical doctors in a hospital are mainly in the experience-driven business of solving new problems with known methods. Sometimes, they are in the expert-driven business of solving new problems with new methods. Similarly, lawyers in a law firm are often in the expert-driven business, but most of the time in the experience-driven business. In some engineering firms, engineers are often in the efficiency-driven business, but most of the time in the experience-based business.
Knowledge focus will be different in expert-driven, experience-driven and effi- ciency-driven businesses. In the expert-driven business, learning is important, while previous knowledge becomes obsolete. In the experience-driven business, know-how concerning problem solutions is important, while knowledge of previous problems becomes obsolete. In the efficiency-based business, all knowledge concerning both problems and solutions is important in an accumulation of knowledge to improve efficiency. These differences lead us to make distinctions between the following three knowledge management strategies of stock strategy, flow strategy and growth strategy as suggested by Hansen et al. (1999):
• Stock.strategy: Focused on collecting and storing all knowledge in information bases in the organization. Information is stored in databases and made avail- able to knowledge workers in the organization and in knowledge networks.
Knowledge workers use databases to keep updated on relevant problems, relevant methods, news and opinions. Information on problems and methods accumulate over time in databases. This strategy can also be called person- to-knowledge strategy.
• Flow.strategy:.Focused on collecting and storing knowledge in information bases in the organization as long as the information is used in knowledge work processes. If certain kinds of knowledge work disappear, then information for those work processes become obsolete and can be deleted from databases. This is a yellow-pages strategy where information on knowledge areas covered by individuals in the firm is registered. The link to knowledge sources in the form of individuals is made specific in the databases, so that the person source can be identified. When a knowledge worker starts on a new project, the person will search company databases to find colleagues who already have experience in solving these kinds of problems. This strategy can also be called person-to- person strategy.
• Growth.strategy: Focused on developing new knowledge. New knowledge is developed in innovative work processes taking place when knowledge workers
Characteristics Stock.strategy Flow.strategy Growth.strategy
Knowledge focus Efficiency-driven
business Experience-driven
business Expert-driven business Important persons Chief knowledge officer
Chief information officer Database engineers
Chief knowledge officer Experienced knowledge
workers
Management Experts
Knowledge base Databases and
information systems Information networks Networks of experts, work processes and learning environments Important
elements Access to databases and
information systems Access to knowledge space
Access to networks of experts and learning
environments Management task Collecting information
and making it available
Connecting persons to experienced knowledge
workers
Providing access to networks
Learning Efficiency training applying existing
knowledge
Experience accumulation applying existing
knowledge
Growth training developing new
knowledge
Figure 6.5. Characteristics of knowledge management strategies
have to solve new problems with new methods for customers. Often, several persons are involved in the innovation, and together they have gone through a learning process. When a knowledge worker starts on a new project, the person will use the intraorganizational and interorganizational network to find information on work processes and learning environments, which colleagues have used successfully in previous innovation processes.
There is a strong link between these three knowledge management strategies and the three alternatives of expert-driven, experience-driven and efficiency-driven busi- nesses. In Figure 6.5, characteristics of the three strategies are presented. Typically, efficiency-driven businesses will apply the stock strategy, while experience-driven businesses will apply the flow strategy and expert-driven businesses will apply the growth strategy.