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Knowledge Management within Corporate Banking

The past 20 years has seen the term knowledge management evolve to represent the changing nature of the workplace a true paradigm shift. It is widely accepted that organisations consciously invest in the creation of new knowledge through research and development activities or through more informal learning processes tend to do better than those that ride on the coat-tails of knowledge created by others (Boisot, 1998). Peter Drucker argued that land, labor and capital the classical factors of production had been largely replaced by knowledge (Drucker, 1993), that knowledge has become the resource, rather than a resource, is what makes our society post-capitalist (p.45). Having worked for myself as a business consultant for over 15 years with all my clients being within Corporate Banking (Learning Organisation), I can relate to Boisot and Drucker. A sector which traditionally considered knowledge being who you knew, rather than what you knew as a way forward for business growth and for furthering your career has gad a radical wakeup call in recent years. In some cases their first step towards acknowledging that knowledge management in the back offices was a powerful tool was to bring me in. Therefore as a preliminary consideration, I will examine the concept of a learning organiation (LO representing Corporate Banking) and knowledge management to show that they are inextricably linked. The LO concept is increasing in relevance to current leadership and management because of the increasing complexity, uncertainty and rapidity of change of the organisational environment (Malhotra, 1996). Therefore, it is important to understand what is an LO, what are its characteristics and how it relates to knowledge management. Kim (1998) defined organisational learning (OL) as increasing an organisations capability to take effective action. The LO is defined as an organisation that embraces the principles of organisational learning and supports an environment where organisational learning can flourish (Loermans, 2002). Schein (1997) says OL is learning by individuals and groups, while LO is learning by the organisation as a total system. According to Kezar (2005), LO tends to focus more on external threats as the reason for fostering learning while OL tends to focus more on internal concerns for performance and learning. In addition, (Addleson, 1999), proposes that the term LO becomes meaningful only when it used to describe organisations characterized by generative learning processes that builds and maintains a climate which encourages formal and informal learning. Globalization, rapid change, downsizing, turnover, information overload and the need to share best practices have been significant factors in the growth of Knowledge Management. According to Pearlson (2001), being able to effectively manage knowledge within an organisation can yield great benefits, including the achievement of competitive advantage. This has led to an explosion of interest in the field of KM. A 1998 Delphi Group survey found that over half of respondents in the corporate
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world report active KM efforts in their organisations, nearly half see KM as a strategic issue and four-fifths see KM as making important contributions to business practice. Traditionally, KM was often referred to as an application of information systems, since such systems provide an infrastructure for capturing and transferring certain kinds of knowledge. Pearlson (2001) highlighted that information systems are important to modern KM but they do not actually create knowledge or guarantee that it will be shared or used. An information system is just one aspect of KM. Davenport and Prusak (1998) suggested that KM must be viewed from multiple perspectives in order to be fully understood. Swan et al. (1999) defines knowledge management (KM) as any process or practice of creating, acquiring, capturing, sharing and using knowledge, wherever it resides, to enhance learning and performance in organisations. By including wherever it resides in the definition, the authors have addressed the issue of tacit knowledge. While explicit forms of knowledge are systematic and easy to communicate in the form of hard data or codified procedures, tacit knowledge is subconsciously understood or applied, difficult to articulate, developed through direct action and experience, and shared through conversation, story-telling, etc. Tacit knowledge includes lessons learnt, know-how, judgment, rules of thumb, and intuition, which are key characteristics of a learning organisation (Bollinger and Smith, 2001). It is also to be asserted that unfortunately very few organisations handle explicit and tacit knowledge effectively; the exceptions are learning organisations which are skilled at creating, acquiring and transferring knowledge and at modifying their behavior to reflect new knowledge and insights (Garvin, 1993). Banking culture is prime example of tacit knowledge in general. If you want be part if the team you must be seen to part of the culture. This in many cases working long hours and socialising after work with your peers and senior management. This is the story telling hour, where lesson learnt are shared. The informal meeting is a place used to discuss and share information which is frowned upon within office walls. KM is a process that facilitates knowledge sharing and establishes learning as continuous process within an organisation. Therefore, KM and learning go hand in hand in organisations (Lopez et al., 2004). Pan and Scarbrough (1999) states despite the growing tendency to emphasize the role of information technology in knowledge management, a growing number of studies are starting to provide powerful arguments for a more holistic view which recognizes the interplay between social and technical factors. Demerest (1997) identified four phases of KM within an organisation: Knowledge Construction Dissemination Use Embodiment
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Demerests model recognizes that there are both scientific and social contributions to the construction of knowledge in an organisation. Constructed knowledge is embodied within an organisation through explicit programs as well as social interchange. The next phase is disseminating the espoused knowledge throughout the organisation and its environments. Therefore, knowledge is seen as being of economic use in regard to organisational outputs. This model outlines my role within an organization, I am the knowledge I come into construct change or implement improvements by spreading my ideas through programs in turn my knowledge being of economic use. Bollinger and Smith (p.14, 2001) rationalized that the knowledge management process is not so much about control as it is about sharing, collaboration and making the best possible use of a strategic resource. Since, knowledge is both produced and held collectively rather than individually in tightly knit groups or communities of practice, therefore, organisational knowledge is social in character (Lang, 2001). To echo Garner (1999), although a variety of technologies can support it, knowledge management is really about changing peoples behavior to make their experience and expertise available to others. An inherent feature of both is the sharing of ideas to create and develop new knowledge, enhanced by conducive organisational structures and culture and supported by effective KM systems. A LO can be regarded as the system, which includes the subsystem KM. This is in accordance with Senges idea that systems thinking must be the conceptual cornerstone (Senge, 1990). Consequently, a change in KM affects the organisation, and a change in the organisation, e.g. the culture, affects KM. As a result the process to become a LO must take place on both levels. Enabling organisations to become learning organisations therefore requires introducing LO as well as KM. A LO has a climate and a culture which sees knowledge sharing and learning as something necessary and positive. Therefore, a LO requires KM, and KM in turn assumes a LO. Figure 1 illustrates the roles of, and relationships between organisational learning and KM.

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Figure 1. A Conceptual Model of LO and KM Note: Taken from Aggestam, L. (2006). Learning organisation or knowledge management-which came first, the chicken or the egg? Information Technology and Control, 35(3A), 300. Retrieved June 15, 2011, from http://itc.ktu.lt/itc353/Aggestam353.pdf The work of Senge (1990) about the five disciplines is seen as the central part of this conceptual model LO and KM are two inseparable parts when an organisation wants to become a learning organisation. A LO can be compared to a learning system with distinctive characteristics that are able to meet the demands of its internal and external demands as shown in Figure 1. The importance of a shared vision is well stated in the literature. Senge (1990) declares that there cannot be a learning organisation without a shared vision. Learning and knowledge creating is performed by individuals, but it is important for the organisation to provide the appropriate context for them (Nonaka and Takeuchi, 1995). As Kezar (2005) states a LO is an environment that promotes a culture of learning, and that ensures that individual learning enriches and enhances the organisation as a whole. This environment requires a shared vision. To build this type of culture including a common vision is the responsibility of the leadership and management. KM aims to create value for the organisation (Wong, 2004). It enables individual learning, and in an organisational perspective this individual learning contributes to
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both the organisational learning and processes to meet organisational goals. Loermans (2002) states that KM must also be integrated and adapted into every critical business process. When an individual learns something he or she obtains new knowledge, which will be stored in their personal memory and used both in its present form but also as a basis of transformation to new knowledge. In order to stimulate learning of other members in the organisation the knowledge has to be stored in the organisational memory, e.g. in books, documents, databases etc. Learning results in more potential knowledge to store and in this perspective, the organisation can learn. Therefore, organisational learning depends on individual learning, and when an individual has learnt the organisation as a whole has learnt. This is in accordance with Senges (1990) systems thinking. Knowledge leadership is a participative leadership that creates a climate to promote and support learning process at individual and group level and inspires followers toward continual development. Viitala (2004) proposes a four dimensional leadership model as shown in Figure 2.

Figure 2. Main dimensions of knowledge leadership Note: Taken from Viitala, R. (2004). Towards knowledge leadership. The Leadership & Organisation Development Journal, 25(6), 528-544. Retrieved on June 6, 2011 from http://www.emeraldinsight.com/fig/0220250604002.png The dimension of orienteering of learning consists of activities through which the leadership show and help others to see a direction of learning. Important guidelines for learning include the vision, strategies and goals of an organisation as well as needs of customers, feedback, performance ratings, quality indicators and measurement. Senges (2000) notion of a leader as an architect and the role of a leader as a facilitator presented by Ellinger and Bostrom (1999) share common qualities with the role of orienteer. This has an important role to play in creating less
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formal systems for knowledge building and transfer alongside the more formal systems. The importance of this dimension is emphasized as a prerequisite for organisational learning (Nonaka and Takeuchi, 1995; Senge, 1990). Senges (2000) notion of a leader as a teacher share common traits with this dimension. The foremost implication of this model is that leading knowledge management in learning organisations is a multilevel and multistage process requiring an integrated micro (individual), meso (group) and macro (systems) approach. This requires powerful and empowered formal and informal leaders who are capable and willing to intervene across levels to manage knowledge for the purpose of learning. Therefore, KM is a prerequisite for a LO, the learning culture must assume that accurate and relevant information must be capable of flowing freely in a fully connected network (Schein, 2004), but KMs efficiency is in turn dependent on the LO. This is slowly becoming the norm in Banking but it is a very slow process. This could be due to the competiveness of banking sector, with the added pressure of internal competition in a Bank. Sharing knowledge is seen as giving away your bonus or pay rise or could even cost you your job. So if you dont share your knowledge you become indispensable therefore securing your future in a very turbulent market.

Conclusion
History is full with examples of organisations that fail to learn and adapt their internal processes to maintain congruence with the evolving external environments. The LO is evolutionary as it involves sharing, questioning and modifying of knowledge to produce higher knowledge base for growth. According to Pemberton and Stonehouse (2000), the development of knowledge-based core competences is crucial for an LO. This will not only enable the LO to adapt and increase its responsiveness to the external environment, but also ensures that competitors will have difficulty in identifying, understanding and emulating such competences. Due to the competitiveness within the banking sector KM is a concept that needs be adopted at every level to ensure they stay ahead. Therefore, the challenge for leadership in Banking is to continually shift towards knowledge management to prioritize human factors above technological ones and integrate it seamlessly into business processes to equip themselves for the demands of global business in the twenty-first century. This realisation has been fed down to the education system, with core subjects being changed as well as the methods used to teach them, hoping the next generation of workforce will be able to embrace the concept of knowledge management within leadership. With an increase of change management consultants and system specialists Banking is working towards being a total learning organisation.

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