Why Knowledge Management Gives Companies a Powerful Advantage

The knowledge cycle model focuses on inside flows that executives use for strategic management decision-making.

Training Magazine

Once the critical paradigm of knowledge management was accepted by both the academy of management and executive scholars, the knowledge cycle model began to make sense. The focus of this article is based upon the critical role of the knowledge cycle model, which allows a rich basis to understand the mechanisms by which competitive advantage is created.

 A Birds-Eye-View of Knowledge

Knowledge can be classified into personal and collective knowledge with its comprehensive classifications. Executives recruit followers based on their knowledge, which refers to the individual’s skills, prior knowledge, and proficiencies, sometimes referred to as competencies. Collective knowledge, on the other hand, has been defined as “organizing principles, routines and practices, top management schema, and relative organizational consensus on past experiences, goals, missions, competitors, and relationships that are widely diffused throughout the organization and held in common by a large number of organizational members.” 1 Thus, collective knowledge is part of the executive’s protocol and comes pretty natural at the higher echelons of the organization. Executives follow Thomas Davenport and Laurence Prusak’s concern that if an executive cannot inspire their followers to share their knowledge with others, this intimate knowledge is not valuable to the organization.2

Individual knowledge can become an invaluable resource by developing an organizational climate of openness for members to exchange their ideas and insights. Executives must create an environment of trust and transparency for individuals to share personal knowledge. New technologies drawing on social-software systems through sharing intimate knowledge around the organizations can positively contribute to creating collective knowledge. Therefore, executives should build an atmosphere of trust and openness and use technology to convert individual knowledge into valuable resources for their organization to close the performance gap and help organizations prosper.

Knowledge can also be classified using individual, social, and structured dimensions. Individual knowledge comprised the skills gained by personal experiences and learned as rules and instructions formulated by executives for followers to use as a guide. On the other hand, social knowledge is categorized as intimate knowledge shared to become collective knowledge. Executives can use structured knowledge from the informal language from annual reports, memos, and other means of communication to be represented as statements. Therefore, executives can classify knowledge in this way so that it emerges at three levels—-individual (i.e., human), group (i.e., social), and organizational (i.e., structured).

Executives now have a good handle on knowledge in corporations. It is safe to say that knowledge is a component of the more critical competence of a leader, which is knowledge management. This next section provides a formalized application that executives can implement when creating a competitive advantage for companies.

Can Knowledge Cycle Model Create A Sustainable Competitive Advantage?

Executives know that discontinuity exists at all levels of products and services, and they do not want to find themselves caught off guard and obsolete. To remain competitive, executives realize that they have to quickly create and share new ideas and knowledge to be more responsive to market changes. Importantly, knowledge held by organizational members is the most strategic resource for competitive advantage, and the way executives manage it. Executives can enhance knowledge accumulation associated with coaching and mentoring activities by sharing experiences gained by imitating, observing, and practicing. Executives can help followers add meaningfulness to their work by enhancing a shared understanding among members to improve engagement.

In the integration process, organizational knowledge is articulated in formal language representing official statements. Corporate knowledge is incorporated into standard language and becomes available to be shared within organizations. Executives have their internet technology departments create a combination that reshapes existing organizational understanding to more systematic and complex forms by, for example, using internal databases. Organizing knowledge using databases and archives can make knowledge available throughout the organization—–organized knowledge can be disseminated and searched by others. Most importantly, in knowledge integration, organizational knowledge is internalized through learning by doing, which is more engaging.

It is important to note that executives have found that shared mental models and technical know-how become valuable assets. Organizational knowledge, reflected in moral and ethical standards and the degree of awareness about corporate visions and missions, can be used in strategic decision-making. Therefore, organizational learning can be converted to create new abilities that executives can view and implement immediately in managerial decision-making—applying knowledge to provide better decision-making and work-related practices and creating new knowledge through innovation.

Finally, when executives agree to share knowledge with other organizations in the environment, studies have shown that learning is often difficult to share externally. One reason is that other organizations have too much pride in accepting knowledge or are apprehensive about exposing themselves to the competition. Therefore, executives may lack the required capabilities to interact with other organizations. Learning in organizations is the outcome of knowledge reconfiguration by which organizational knowledge is created and acquired by connecting learning with other companies that want to share successes and failures. This leads to converting acquired knowledge into administrative processes and activities to improve processes that contribute to success. Executives can now see that a company’s capability to manage the organizational knowledge cycle is the most crucial factor in a sustainable competitive advantage. This core-competitive advantage relies on and among people.

In Conclusion

Executives are aware that activities related to managing knowledge at the individual level and the practices associated with knowledge management at the organizational level are handled at different points on the organizational chart. Therefore, for executives to lead between the lines, they need to focus on the interactions among the facets of knowledge to minimize the possible limitations of managing all aspects of the business units and components on an organizational chart.

The knowledge cycle model focuses on inside flows that executives use through embracing knowledge management processes for strategic management decision-making. This model takes a task-based approach by translating knowledge management into various organizational functions. Accordingly, the knowledge cycle model develops a firm-specific system by which organizational knowledge contributes to business objectives through the context-dependent way it is managed.


1. Matusik, S.F. (1998). The Utilization of Contingent Work, Knowledge Creation, and Competitive Advantage. The Academy of Management Review, 23(4), 680-697.

2. Davenport, T.H., & Prusak, L. (1998). Working knowledge, Boston, MA: Harvard Business School Press. Why Knowledge Management Gives Companies, a Powerful AdvantageWhy Knowledge Management Gives Companies a Powerful Advantage

Mostafa Sayyadi, CAHRI, AFAIM, CPMgr, works with senior business leaders to effectively develop innovation in organizations, and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and long-time contributor to HR.com and Consulting Magazine.