Benchmarking in the knowledge era

Geovanni Schiuma,

Benchmarking in the knowledge era

About the eBook

In today’s highly turbulent and dynamic business environment, knowledge is widely recognized as the only true and sustainable resource for competitiveness. Over the past decade, an increasing amount of contributions has been made to the management literature, both from academics and practitioners, stressing the relevance of knowledge as well as its management for organisational competitiveness; focusing the attention both on the assessment of knowledge assets and intellectual capital (see Haanes and Lowendhal, 1997; Marr and Schiuma, 2001; Roos et al., 1997) and their management (see Davenport and Prusak, 1998; Grant, 1991; Nonaka and Konno, 1998; Ruggles, 1998; Teece, 2000).

Nowadays, it is accepted that knowledge is at the heart of organizational capabilities and the need for organizations to continuously generate and refresh their knowledge has never been greater. Leading organizations see themselves, and operate, as learning organisms able to continuously adapt to the competitive context and change their business processes looking for new and improved performance. They recognize that knowledge assets are key strategic resources while tangible assets are a value transient and generally do not play, specifically in the medium and long term, a pivotal role in achieving a strategic competitive advantage. Thus, in order to acquire and maintain competitive advantages organizations must explicitly manage their cognitive resources. They need to appreciate how they can identify and evaluate existing knowledge assets within the organization and how to manage these assets in order to achieve competitive advantage. In this context, we advocate that the assessment and the management of knowledge assets are two main building blocks of company’s performance management system. By knowledge assessment, organisations can identify and evaluate their knowledge assets which are at the basis of performance, and by knowledge management it is possible to define the managerial processes and projects which enable organisations to acquire, create, continually renew and effectively apply their knowledge assets in order to generate value. In order for this to work, it is prudent that organistions have a clear view of what benefits they could expect. This demands an understanding of the link between knowledge management and business performance. This understanding would support the validation of knowledge management investments and can contribute to explain what knowledge should be managed and developed within an organisation to achieve performance improvement. Upon analysing the current research (see Armistead, 1999; Chong et al., 2000; Firestone, 2001), it becomes evident that there is no straight-forward generic link between knowledge management and business performance, but rather a complex set of relationships which appear to be company specific.

However an important feature emerging from the literature is the relevant role of the company’s strategy in defining the knowledge management initiatives which can have a positive impact on company business performance. Therefore, the starting point to define any knowledge management initiative is company’s strategy, which should be It is this perspective that drove this special issue on how benchmarking can contribute to exploring and exploiting the link between knowledge management initiatives and business performance for organisational value creation. We believe that benchmarking represents a fundamental lever to stimulate and sustain the knowledge management mechanisms of an organisation. It can be considered as a multifaceted technique to perform competitive analysis, by collecting performance data and measures of leading performers, and to identify operational and strategic organizational shortcomings in order to identify best practices that can be applied to close any existing performance gaps (see Shetty, 1993; Tucker et al., 1987; Yasin, 2002). Benchmarking can have an internal as well as an external focus and allows an organization to understand its current performance levels and to set future targets by identifying, understanding and adopting outstanding practices (see Camp, 1989; O’Dell and Grayson, 1998; Zairi and Whymark, 2000). It can help organizations implement knowledge management initiative by mapping their knowledge domain in order to understand what are their strategic knowledge assets, what is their nature, where they reside within the company, how they can be reached, and who manages them. By benchmarking, an organization can codify its knowledge, particularly when it sets up best practices to support knowledge and capabilities transfer processes both internally and externally.

This special issue aims to explore the role of the benchmarking in the knowledge era and to contribute to the debate about how knowledge management can support companies in improving their performances.

Firstly, the relevance of benchmarking for assessing organizational intangible assets is addressed. Looking at the role of intellectual capital as a prime value driver in today’s knowledge based economy, Marr focuses the attention on the measurement and benchmarking process of intellectual capital. The paper explores techniques of benchmarking for the operational management of intellectual capital. Using the results of a longitudinal action and case research in an R&D organization, Marr demonstrates how the failure to benchmark intellectual capital management practices between two seemingly identical subsidiaries has implications for the measurement and benchmarking of intellectual capital. He concludes that it is critical to understand the context, organizational epistemology and value creation pathways before organizations start any attempt to benchmark intellectual capital. Subsequently Castka, Bamber and Sharp discuss the self-assessment and benchmarking of intangible assets in teamwork development. The authors propose a model (the TEaM model), based on the EFQM Business Excellence framework, as a self-assessment and benchmarking tool. The TEaM model is presented as a framework based on ten criteria (enablers and results) and the authors demonstrate how it can be applied in organizations and how this tool reflects the emerging trends in benchmarking practice. This is followed by a paper analyzing how benchmarking can support knowledge management processes in order to improve company performance and an attempt to investigate the link between benchmarking and knowledge transfer. Albino, Garavelli, and Gorgoglione adopt a cognitive analysis to investigate the knowledge transfer process in order to find out efficient and effective support strategies. The authors propose a model describing knowledge transfer, and stress that a better understanding of the knowledge transfer process can be achieved by distinguishing organizational similarity from dissimilarity, training from fertilization, and autonomous from interactive practice. The model appears to be particularly helpful in order to discuss the role and value of technology in supporting knowledge transfer processes. Following on from that, Leung, Chan, and Lee focus their attention on the autonomous knowledge transfer, specifically on the role modification of the knowledge recipients. Benchmarking is proposed as a suitable methodology to identify, compare and adopt practices from other organizations and/or professions to support autonomous knowledge transfer.

The role of benchmarking in supporting organizational innovation dynamics is investigated by Massa and Testa who highlight how benchmarking can be adopted as a process to acquire explicit and tacit knowledge external to the organization. Benchmarking is proposed as an approach for looking outside the company’s boundaries, searching for a comparison with best performance companies, in order to acquire new knowledge to be integrated with the internal organisational knowledge. This allows a company to support continuous performance improvement and to develop its innovation processes. The paper, based on a three year research in the maintenance services sector, shows the role of benchmarking as a model that integrates aspects of knowledge management and innovation. Finally, benchmarking can be seen as a managerial approach to promote and to measure the learning capability of a learning organization. This is the focus of Laise’s paper which specifically proposes a multi-criteria methodology, founded on the notion of outranking, for the benchmarking and measurement of the organizational learning capability. The paper proposes the application of the multi-criteria methodology based on the outranking, illustrating the advantages over the traditional approach in terms of greater flexibility and realism.

Overall, this special issue sheds light on the different facets, applications and effects of benchmarking in the knowledge economy which goes to emphasize the continuing relevance, and global spread, of benchmarking as an approach for continuous improvement and learning.

Giovanni Schiuma

Previously published in: Benchmarking, Volume 11, Number 6, 2004

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