Knowledge Management for E-Business Performance: Advancing Information Stragety to ‘Internet Time

Many companies use models of knowledge management that suit the industrial epoch. Far from benefiting these organizations, these outdated models seriously undermine their information strategies. This article examines the key assumptions of any information strategy and demonstrates why they should be considered afresh. Based on this discussion, the author proposes a new perspective on knowledge management and suggests how managers can effectively deploy it in the new world of E-business. nformation strategy executives observed some significant transi-tions during the last quarter of the twentieth century: information tech-nology (IT) as a lever of competitive advantage; the IT outsourcing bandwagon effect characterized by consideration of information as a “utility ” just like electric power or the telephone; and more recently, the E-everything phenomenon with the emergence of the Internet and electronic commerce as key factors in business and IT strategy. While some researchers suggested that same investments in information systems would yield different benefits in competi-tive advantage, others, such as the IT econ-omist Paul Strassmann, concluded that there is no relationship whatsoever between computer expenditures and company per-formance. John Seely Brown, director of Xerox Parc, observed that despite invest-ments of over $1 trillion in technology over two decades of this era, U.S. industry had realized little improvement in the effi-ciency and effectiveness of its knowledge workers. The confusion between knowledge and information has caused managers to sink billions of dollars into information technology investments that have often yielded marginal results. The disconnect between IT expenditures and the firms ’ organizational performance could be attributed to an economic transi-tion from an era of competitive advantage based on information to one based on knowledge creation. The earlier era was characterized by relatively slow and pre-dictable change that could be deciphered and “controlled ” by most formal informa-tion systems. During this period, informa-tion systems based on programmable recipes for success were able to deliver their prom-ises of efficiency based on optimization for given business contexts. Discussing the cas