"Knowledge Creation and Knowledge Propagation" ⁽¹⁾

We can safely assume that the Knowledge Revolution will change the way we live and work at least as significantly as the Industrial Revolution did. The question is, how will it change, and how can we affect those changes? To answer that question, we first need to understand what is knowledge. How does knowledge differ from information or data?

• "The temperature is 72 degrees", is data and is inert by itself. 
• "That is pretty warm for this area" is information, a context into which data becomes meaningful. 
• "Let's have lunch on the terrace" is knowledge, a conclusion or decision based on the information and data. 

Nonaka describes more formally, how knowledge is similar to and yet different from information. 

"First knowledge, unlike information, is about beliefs an commitment. Knowledge is a function of a particular stance, perspective, or intention. Second, knowledge, unlike information, is about action. It is always knowledge 'to some end.' And third, knowledge, like information, is about meaning. It is context specific and relational. Tacit knowledge is personal, context-specific, and therefore hard to formalize and communicate. Explicit or "codified" knowledge, on the other hand, refers to knowledge that is transmittable in formal, systematic language." (8) 

Nonaka goes on to demonstrate that a knowledge creating company needs to convert tacit to codified or explicit knowledge in order to become more innovative, and more productive. Once knowledge is made explicit, it is easier to store, reference, transfer, and redeploy. 

David Teece, the Director of the Institute of Management, Innovation & Organization at the Haas School of Business - UC Berkeley (better known informally as the Knowledge Institute) in an August 1999 paper "The role of Firm Structure and Industrial Context" (unpublished), describes some structural issues for the knowledge creating organizations: 

"The migration of competitive advantage away from tangible assets to intangible helps highlight some fundamental aspects of the business firm. In the global economy we now confront, it is intangible capital which are preeminent; but in addition to protecting such capital against recontracting hazards, one must also focus on generating, acquiring, transferring, and combining such assets as to meet customers needs. In order to be successful, firms must have a set of attributes, which include: flexible boundaries - favoring outsourcing and alliances; high powered incentives - to encourage aggressive response to competitive developments, non-bureaucratic decision making - decentralized, or possibly autocratic, shallow hierarchies - both to facilitate quick decision-making, and rapid information flow from the market to decision makers, innovative and entrepreneurial culture which favor rapid response and nurturing of specialized knowledge. The modern corporation, as it accepts the challenges of the new knowledge economy, will need to evolve into a knowledge generating, knowledge integrating, and knowledge protecting organization." (9) 

So what is knowledge worth? Paul Strassman, VP of Strategic Planning for Xerox Corporation in the 1980's makes the startling observation: 

"As individuals, the researchers at Xerox Palo Alto Research Center (PARC) were respected as being among the most knowledgeable researchers of their time. Years later, they stimulated the creation of a number of multibillion ventures. Yet, as employees, their contribution to the knowledge capital while employed by Xerox was zero - probably negative" (10) 

Strassman, who later became Deputy Assistant Secretary of Defense, went on to establish what is the worth of an employee: 

"It is not how much you pay your workforce or how many computers you give them that matters, it is how well an organization leverages the latent capabilities of its workforce that yields economic value. Knowledge Capital is a reflection of how well an organization integrates the talents of employees, the needs of customers, the skills of the suppliers and its capacity to adapt to external conditions" (11) 

To prove his point, Strassman calculates the Knowledge Capital per employee of five pharmaceutical firms. As he points out, these firms are for all practical purposes undistinguishable. They are of comparable size; they employ people of similar qualifications, they draw from the same labor pools, they are located in geographical areas with similar socio-economic structures. Their research staff learn about progress from the same sources, they attempt to satisfy the needs of similar groups of customers, they are subject to identical regulatory requirements, have access to identical computing technologies, and operate undistinguishable manufacturing processes. Yet, by Strassman's computation Merck & Co. Knowledge Capital per Employee is $1,423,916 and Warner-Lambert is only $261,847. Glaxo Welcome with $784,215, Abbott laboratories with $702,468 and Johnson & Johnson with $562,568 are somewhere in-between those two extremes. What can possibly explain the 544 percent difference between Merck & Co. and Warner-Lambert. Strassman's hypothesizes that "knowledge capital is the way an organization extracts wealth from its information resources."

 Strassman analysis drives home Drucker's earlier statement that "knowledge has become the key economic resource and the dominant - and perhaps only - source of comparative advantage." What are firms doing to manage knowledge and what else do they think they should be doing, and what do they feel are the greatest barriers they face in their efforts? The Ernst & Young Center for Business Innovation, in 1997, conducted a study of 3431 U.S. and European organizations. The E&Y team first proposed eight major categories of knowledge focused activities: 

• Generating new knowledge 
• Accessing valuable knowledge from outside sources n Using accessible knowledge in decision making 
• Embedding knowledge in processes, products, and/or services 
• Representing knowledge in documents, databases, and software 
• Facilitating knowledge growth through culture and incentives 
• Transferring existing knowledge into other parts of the organization
• Measuring the value of knowledge assets and/or impact of knowledge management 

Curiously the study failed to recognize a ninth category; 

• Facilitating knowledge creation and distribution through the physical environment 

As reported by Rudy Ruggles in California Management Review, Spring 1998, , the survey provides some valuable insights. 

"The executives who responded did not hold high opinions of their organization's performance in any of the categories. Only 13 percent thought that they were adept at transferring knowledge held by one part of the organization to other parts. Even "generating new knowledge," the process about which respondents had the highest confidence in their organization's capabilities, still received above-average ratings from fewer than half (46%) of the executives. However, 94 percent of the executives agreed that it would be possible, through more deliberate management, to leverage the knowledge existing in their organization to a higher degree." (12) 

The survey later indicated that 56 percent of the executives found that 'changing people's behavior' was the single biggest difficulty in managing knowledge. As we will see in Section 4, the importance of knowledge management to the valuation of the firm together with the difficulties identified in managing knowledge provide the design profession with an unprecedented opportunity to generate value. But first, in Section 3, we will recognize the characteristics of the future of work and identify some of its enhancers.

For more detailed information on how workplace productivity is related to workplace design, please see the paper we presented to the  AIA Conference in  Portland

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