Nanyang Technological University
Wee Kim Wee School of Communication and Information
Academic Year 12/13
KM 6301
FOUNDATIO...
Introduction
The world is changing, more and more organizations have started to realize the importance and
the potential o...
Innovation and Knowledge Management
Innovation is not something that would happen in a day – a lot of factors need to be s...
inherent meaning to it. Any data or information is useless unless it‟s turned to knowledge – this
knowledge can then furth...
described as „boundary spanning knowledge construction‟ by Nonaka and Takeuchi (1995)
and this holds good as long as the o...
Innovation attained through Knowledge Codification
Codified sources of knowledge play an important role in improving innov...
Relevance of Knowledge tacitness in epistemic communities:
For example consider an example of an epistemic community, US s...
conclude that a R&D based growth model can be motivated by increase in returns over and
above returns earned before innova...
more creative and innovative, they have to create and import knowledge through codified and
uncodified business practices ...
Innovative Policy in Knowledge and Learning Process
Innovative policy refers to monitoring Knowledge management activities...
Adopting a language in policy making does not actually relate to learning in a policy. Even
though a certain number of stu...
Fig.1. Interactive model of innovation (Emmanuel D.Adamides, 2010)
Individuals from diverse functions are usually involved...
as the enabler for the formation of virtual teams so as to execute the innovation process
(Emmanuel D.Adamides, 2010, p. 6...
3. Give everyone writing material so that they can write down their ideas.
4. Write the problem on a flip chart so that ev...
the café‟s topic and the facilitator will poses one or two key open-ended questions. For example,
if the topic is knowledg...
so as to better communicate, collaborate, learn, and share knowledge with one another through
the cluster. The term is use...
How to Use Knowledge Clusters
Step 1 Become aware of the knowledge clusters that exist in your industry sector and join th...
Conclusion
In the light of the report, innovation and knowledge management can be implementing on all
organizations regard...
References:
Shahedul Alam, M. (2005). Knowledge Codification helps innovation and its diffusion: A state
of codified knowl...
Emmanuel D.Adamides. (2010). AN INTEGRATED IS FRAMEWORK FOR MANAGING
INNOVATION.
Garcia, M. L. (2005). Vulnerability Asses...
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Innovation & Knowledge Management

  1. 1. Nanyang Technological University Wee Kim Wee School of Communication and Information Academic Year 12/13 KM 6301 FOUNDATIONS OF KNOWLEDGE MANAGEMENT TERM PAPER: SEMESTER 1 Innovation and Knowledge Management Prepared by: Narayanan Mohan Kumar (G1200852L) Chan Zi Yao (G1200877C) Sreekanth Krishnan (G1200844G)
  2. 2. Introduction The world is changing, more and more organizations have started to realize the importance and the potential of knowledge and this in turn has created an economy that is heavily reliant on knowledge. The human capital of an organization is the deciding factor when it comes to the amount of knowledge the organization possess – as knowledge is something that resides in the brains of employees. Although explicit knowledge that people possess can be codified with different tools, the feasibility of capturing tacit knowledge without any loss is considered a thing of the future. Defining Innovation and Knowledge Innovation is the process of developing new solutions for changes that arise in the industry in a way that it meets the customer demands – but in entirely new ways. According to the management guru Peter Drucker, innovation is driven by a number of factors including changes in the industry or market structure, technology or people‟s perception. As Rudy & Ross (1997) state in their paper, innovation is a key driver for value in organizations and is particularly helpful when the organization is cutting on its costs or growing. For a company to grow into something better innovation is key and this is the factor that has been driving a number of innovation based industries like 3M and Rubbermaid. Innovation may be serendipitous or even promoted by a conducive environment in the organization and as Anil & Raj notes it in their paper, innovation also needs an effective knowledge management system in place. Creativity and innovation goes hand in hand and innovation is considered to be nigh impossible without creativity and proper application of thought. Be it a process or a product, when one collects information about the same and articulates it with reference to the market, what we end up with is knowledge – the knowledge of the product or the process. Innovation when combined with this knowledge helps organizations in a lot of ways and this is essentially what our paper would examine.
  3. 3. Innovation and Knowledge Management Innovation is not something that would happen in a day – a lot of factors need to be studied if you think that your organization lacks innovation. Like it has been mentioned earlier, innovation is something that is born in the brains of your employees and the first step towards innovation lies in the staff recruitment process whereby selecting individuals with an innovative outlook and attitude would certainly benefit in the long run. And, if you thought that innovation would happen automatically, you might want to think again. Would people just innovate without a reason? Would you try to change a process in an organization where there are too many levels of approvals? The most obvious answer for this would be a no – most people wouldn‟t be willing to innovate if the organization just doesn‟t promote or encourage innovate thought. This essentially means that organizational culture is something that needs to be clearly defined if you are looking to create an organization teeming with innovative thoughts and ideas. The various hindrances that come up associated with innovation in organizations also need to be addressed when it comes to this point – a typical example would be an organization which would prefer to avert risks and not deep dive into new things even when their business is on a downfall. Changing the organizational outlook on issues like this and embracing the innovative approach to resolving the issues with the already existing knowledge in the organization would ideally be something that organizations should consider in this case. Another important aspect of this innovative culture is the rewards system for innovative ideas – the organization needs to come up with suitable rewarding schemes based on what the innovation was and what kind of incentive the employee would prefer. There might be employees who would be happy with incentives like a promotion or job security rather than just monetary benefits. Identifying such innovative people and rewarding them appropriately is essentially important to keep the culture strong in the organization. Knowledge management is the effective utilization of the knowledge base in an organization and giving it an edge over its competitors. And for knowledge management to get its edge over its competition, innovation is what people need to properly utilize the already existing knowledge. As Davenport & Prusak (2000) puts it in their book, knowledge is information and data with an
  4. 4. inherent meaning to it. Any data or information is useless unless it‟s turned to knowledge – this knowledge can then further be innovated in turn used to leverage the competitive advantage of the organization. Creative problem solving process and Knowledge Management Creative problem solving process was developed in the 1950‟s by Dr. Sidney Parnes and Alex Osborn and revolves around the methodology of solving problems with the input of creative ideas and thoughts. The creative problem solving approaches the problem with the following steps – i) Exploring the challenge – The stage where the goal is identified and the necessary information about the same is collected; also included in this step is the identification of the problems that needs to be resolved using this approach. ii) Idea Generation – The next stage is what demands for creativity and this is the stage where ideas are generated to counter some of the problems. Ideally brainstorming is considered to be a great way to generate ideas. Brainstorming also helps in coming up with innovative solutions to the problem. iii) Action phase – This phase involves moving the idea to an actionable phase and implementing the same to overcome the problem. It is to be noted here that the whole creative problem solving approach is used by a number of organizations to counter issues that they encounter in their process or products. Though creativity is used in solving the problem, the same wouldn‟t be successful if the knowledge of what was happening didn‟t exist. The knowledge of the organization that is gathered in its practices and process are first studied and only after doing this can the problem – if any be rectified with a creative approach. The application of innovation to the creative problem solving process not only requires and uses the knowledge capital in the organization but also helps in continuously updating the same as and when people come up with innovative thoughts and ideas. Innovation was
  5. 5. described as „boundary spanning knowledge construction‟ by Nonaka and Takeuchi (1995) and this holds good as long as the organization promoted innovation at the work place. Supporting Innovation with Knowledge Management It becomes all the more meaningful to have a good knowledge management practice in place in the organization which can facilitate and foster innovation at different levels. “Knowledge is the accumulation of everything an organization knows and uses in the carrying out of its business” Smith and Webster (2000) – this knowledge inherent in an organization is useful only as long as it facilitates the growth of the business failing to do which the knowledge becomes “stale”. Innovation in the organization is what would prevent this knowledge from going “stale”. The innovation process model in an organization can be compared to the likes of a greenhouse; Randy and Ross (1997) where the organizational environment is seen as the greenhouse itself and the managers as the gardeners who try to reap the fruits from the plants when its ripe – the fruits here refer to the innovative ideas generated in people‟s brains and the plants refer to the people themselves. As long as the environments and the gardeners give the plants the perfect temperature and moisture and conditions, the plants would bear fruits which in turn translate as profit. What needs to be noted here is that the „food‟ and the „sunlight‟ for the plants are organizational resources like tools that facilitate the whole innovation process and the knowledge that has been assimilated. With introspection and brainstorming, this knowledge sparks creative thoughts when in the right environment and conditions. As noted earlier, the right amount of creativity along with the knowledge resources present in the organization can help leverage their business and the existing processes. This being said and with the right culture, innovation would surely serve the purpose of enriching the already existing knowledge.
  6. 6. Innovation attained through Knowledge Codification Codified sources of knowledge play an important role in improving innovative behaviour. Multinational organizations and medium scale enterprises use codified sources of information for research purposes. Despite considerable interest in work on the codification of knowledge and the changing nature of innovation due to the use of information and communication technologies, there are relatively few empirical studies that probe the role of codified sources of information in the innovation process. (David & Foray, 1995) Knowledge can be either in a highly codified state or non-codifiable state depending upon the nature of knowledge. Codified knowledge is commonly referred to as the knowledge which can be easily transmitted and shared without being diminished unlike other commodities that executives or marketers deal with. It contains information, experience, qualities and capabilities of the holder of knowledge. The relationship between codified knowledge and innovative behavior can be classified into three parts. 1. Frequency of use of codified knowledge in various organizations. 2. Assessing the bond between innovation strategies and codified knowledge. 3. Examining possible complementary relationship between modes of transferring codified knowledge and other mediums that exchange different categories of knowledge. Arora and Gamberdella argued that it is becoming highly important that codified knowledge must be used in the innovation process. Codification process involves converting the information which enables it to be stored and reproduced at a much reduced cost. They suggested that increasing knowledge codification would improve organizations innovative performance in two ways. First, it brings science and technology together so that it allows them to be benefitted from each other‟s developments. Second, it increases the speed of product innovation by decreasing the reliance on predefined experimental conditions. In order to corroborate their previous statements, they added that a distribution system is required to analyze the problems posed by information and knowledge.
  7. 7. Relevance of Knowledge tacitness in epistemic communities: For example consider an example of an epistemic community, US steel mini mills engineers as described in Von Hippel‟s (1987) analysis of informal know how analysis. A group of people have a common understanding of certain procedural agreements that are required to conduct a research or project and norms on what type of knowledge should be shared with whom. Epistemic communities have an upper hand than researches and technicians when it comes to developing new models or languages because they can easily reap information from codification. Knowledge can be codified in order to store and transmit information technology tools and it becomes even more attractive when innovative activities (Lissoni, 2001) are involved: Work is carried out by team described as an “epistemic communities”. Carried out in a stable technological environment. Detailed knowledge about previous innovation attempts, both success and failures. Relied mostly on combining and re-use of parts, modules, techniques etc. Steinmueller (2000) emphasizes that several investments have to be made for codification to be successful namely strengthening appropriability means, or improving the freedom of access to members of the epistemic community. The former has to be implemented to avoid the diversion of innovative rents. The latter involves in gathering resources for developing software, buying hardware equipments to provide logistic services. Knowledge Codification in R&D activities: Experts and researches use tacit knowledge to effectively implement codified knowledge or to create new forms of codified knowledge. Innovative activity creates both tacit and codified knowledge through which the former is embodied in innovators (Tetsugen, 2009). An important characteristic of codified knowledge is that it is non-rivalry. R&D workers are more prone to generate innovative activity as new codified knowledge is created. However tacit knowledge has a degree of excludability because a person ability to convert existing codified knowledge to create new codified knowledge is not transferrable to other researches directly but it involves a costly learning process. Innovators therefore must calculate the return on investment from creating codified by jointly producing tacit knowledge. Based on this inference it is easy to
  8. 8. conclude that a R&D based growth model can be motivated by increase in returns over and above returns earned before innovation. In an economy where there is no monopoly rent, returns from tacit knowledge inside innovators is sufficient enough to handle any R&D activity or technical progress. Creativity, Innovation and Business practices in Knowledge Management Creativity is measured with a question in mind, How product and process innovation created by one organization or jointly created by a number of organizations together. We‟ll hereby discuss how creativity and knowledge became variables of innovation. An innovation survey was conducted in several manufacturing firms in Canada. The data used in his survey were used to measure creativity by using it as a dependent variable. Dependant variable was classified into three categories: Individual innovation, joint innovation or no innovation. Knowledge Management is defined as process to foster knowledge for developing innovation (John & Dominique, 2001). It focuses on: 1. Creating Knowledge. 2. Knowledge obtained through uncodified business practices. 3. Converting codified knowledge into innovation. Several research studies stress upon knowledge and innovation, but most of them undergo two deficiencies: One, testing the impact of knowledge management on innovation is scanty. Other, models eliminate the need for degree of novelty of innovation. Knowledge is assumed to be one of most powerful drivers of innovation. In order to pressurize firms to innovate, it is important to know the business practices of knowledge management. According to the Oslo Manual (1996) innovation was measured indirectly in terms of patent and R&D indicators. But later after organizations faced questions like “Do your organization introduce new or significantly improved products”. The results were conclusive and it was found that innovations did not require any R&D investments or patents. Landry, Lamari and Amara (2000) indicated the proportions of firms introducing has been rapidly increasing from region to region. Firms using knowledge to develop innovation does not solely lie on possession of knowledge but also how they are structured to manage knowledge. For the purpose of firms to be
  9. 9. more creative and innovative, they have to create and import knowledge through codified and uncodified business practices of knowledge management. Import of knowledge through codified business practices: Extensive use of advanced technologies can be perceived as an indicator for knowledge inside equipment because such imports of knowledge are explicitly made in investment plans and abide by tax incentives. A mechanism used by organizations to capture knowledge to develop new or improved products is yet another indicator for importing knowledge through codified business practices. However, acquisition of a new core competency is only possible through a joint venture to transfer technology to maximum potential. Import of knowledge through uncodified business practices: Social capital is used by firms to acquire knowledge to developed improved products or process. It contributes in the reduction of research, analysis and transfer of knowledge. It also enhances the reliability of knowledge exchanged (Maskel, 1999). It can take three different forms: Trust, Norms, and Networks. Trust is developed over a course of time by social interactions and diligent performance. Norm is organizational behavior monitored by knowledge exchange. Networks are to create an image for reliability and ability to effectively communicate information over different departments in an organization. Capacity of knowledge management in firms: A total workforce including workers, engineers, directors etc. can be used as indicator of their capacity to create knowledge for developing innovative products or processes. Barriers for knowledge exchange: Knowledge sharing in developing new products or generating ideas can be affected by lack of mutual co operation with other organization, educational institutions as well as lack of technologies required to develop innovative products or processes.
  10. 10. Innovative Policy in Knowledge and Learning Process Innovative policy refers to monitoring Knowledge management activities with an organization or a region. Due to wider variation of knowledge, knowledge management in an innovative policy is the area where there is too much ambiguity, complexity and creativity. Meeting the challenges of innovation policy in a knowledge economy requires a better perspective on how our policy and technological systems are intact (John & Dominique, 2001). During the early stages of work on innovative policy, not much attention was attributed to analyze the policy learning process or how policy organization created, measured or transformed information into policies. Experts believe that their organizations are bad at probing because of knowledge acquisition and learning by policy organizations. Organizations are being portrayed as not good knowledge managers. Knowledge management and culture of learning are not made as a mandatory requirement. This results in poor decision making and indirectly affects the policy maker. Enormous number of groups formed inside an organization will compete with each other on knowledge based agendas with their biased views and objectives which can be detrimental for policy development. Chris Argyris states that policy organizations find great difficulty in questioning their own policy problems within groups. In today‟s world, there is an increasing demand to be more flexible and responsive. New strategies have to be identified to value and store knowledge. Self evaluation is an important tool to correct organizational errors. Policy learning is a process through which organizations attempt to take actions from what they learn and focus primarily to manage knowledge to address and negotiate innovation policy issues. Learning in innovation policy making: Organization learning is a method of collective learning which is most relevant to study of innovation policy making and change. With increase in policy studies in recent years researchers and scientists emphasize on knowledge is promoted and even political leaders realized there is a need for outside advice in policy decision making. In an ambiguous and messy environment where are multiple policy goals, decision makes sometimes do not know what questions should be put forward and what are the consequences of their decision that they make (Jervis, 1997).
  11. 11. Adopting a language in policy making does not actually relate to learning in a policy. Even though a certain number of studies are done in policy change, most of them focus only on top individual policy makers. Three characteristics that restrict organizational learning are “uncommitted thinking”, “grooved thinking” and theoretical thinking (Steinbruner, 1974). The approach to organizational learning focuses on top decision maker and does not reiterate about the integration and coordination of policy streams which rewards good culture and behavior. Such innovation policies are being addressed in organization setting, are therefore very promising and will be pursued. Innovation in IS as a knowledge management process In order for the design of an Information Systems platform to support innovation, it is very important to understand innovation as a core business process. The holding view of the structure and functions of this business process with respect to the organizational structure has already evolved over the years as the whole will never stop evolving, from the purely sequential linear models of “technology push” and “market pull” to a coupling and matching process where interaction are identify as the critical element refer to (figure 1) (Emmanuel D.Adamides, 2010, p. 4). Current models see innovation as a continuous multi-actor process that is requires having high levels of integration at both the inter- and intra-firm levels. In such a perspective, information technology in the form of collaboration-supporting systems can enhance systemic integration, support flexible and also can customized response to internal and external signals(Emmanuel D.Adamides, 2010, p. 5).
  12. 12. Fig.1. Interactive model of innovation (Emmanuel D.Adamides, 2010) Individuals from diverse functions are usually involved in different innovation activities which can be categorized into four phases, which are not necessarily executed in a linear fashion and are usually iterated. During the scanning phase, ideas on exploiting internal or external opportunities are placed for consideration. Discussion, filtering and structuring for decision making takes place through organizational routines and procedures. During the strategy development phase is focus on what the organization is concerned on and what to do with the innovation concepts developed in the previous phase. Once the strategy for the qualified concept has been decided, during the next phase, we must consider the resources required for its implementation. Dilemmas issues such as make or buy have to be resolved during this phase. Finally once all dilemmas issues and resources have been resolved, we will be in the implementation phase, the actual development activities such as design, prototyping, testing are examined for their feasibility(Emmanuel D.Adamides, 2010, p. 5). From the knowledge management point of view, information and communication technologies basically act as a medium which different organizational structures are formed to combine efficiently unconnected bodies of knowledge. The outcome we achieved from these combinations is organizational learning and the ability of the form is to develop innovative products and processes making and responding to its own technological and organizational capabilities, it also dealt with existing and emerging market needs. The involvement of diverse knowledge sources in innovative product and process development has been greatly emphasized because they formed as an importance element in knowledge management. It has been proven that with the use of cross-functional teams with diverse occupational and intellectual backgrounds wills likely to increases the likelihood of combining knowledge in novel ways (Emmanuel D.Adamides, 2010, p. 6). In such teams, the amount and variety of information available to members has been increasing, it can enable the proposal and evaluation of different design alternatives by looking from a number of different perspectives (Emmanuel D.Adamides, 2010, p. 6). Furthermore, in the modern multisite enterprise, these teams not only functionally diverse, but are also spatially. Thus, further emphasizes the role of IT
  13. 13. as the enabler for the formation of virtual teams so as to execute the innovation process (Emmanuel D.Adamides, 2010, p. 6). Essential Knowledge Management (KM) Methods and Tools Knowledge Management (KM) Methods and Tools was compiled and was agreed by the Asian Productivity Organization (APO) KM methods and the tools expert team from Singapore in August 2009. It represents methods and tools implemented by the most successful organizations around the world. There are two types of KM methods and they are Non-Information Technology (IT) Methods and Tools and IT Methods and Tools(Ronald.Young, 2010, p. 14). Non–IT Methods and Tools Brainstorming What is Brainstorming? Brainstorming basically is a simple way of helping a group of people to generate new ideas. The process is actually split into two phrases: divergence and convergence phrase. During the divergent phase, everyone in a group agrees to delay their judgment. Therefore, all ideas will be treated as valid. During the convergent phrase, all the participants will use their judgment but they will do so in a 'positive' manner, they will first look for what they like about the ideas before they start finding flaws from the ideas (Ronald.Young, 2010, p. 16). Why Use This Tool? Brainstorming is appropriate whenever you need to generate a range of options. Examples might include • All the places where people could gain customer insights from, • Using different ways to learn from the competitors, • Different ways to reward employees for knowledge capture. How to Brainstorm 1. Agree who will facilitate on the activity. 2. Make sure everyone is aware of the basic guidelines of brainstorming.
  14. 14. 3. Give everyone writing material so that they can write down their ideas. 4. Write the problem on a flip chart so that everyone can see it all the time. 5. Ask everyone if they can understand the problems and whether there is anything that needs to be clarify. Deal with any information needs, if required. 6. Potentially, have a group discussion about the criteria that will be used for idea selection. 7. Ask everyone to start writing down their ideas on a sticky note, ideally use one sticky note per idea and hand them to the facilitator, who then sticks them on the flip chart. If there are no sticky notes, alternatively ask people to shout out their ideas, one idea at a time so that the facilitator can write them down. When to Use Brainstorming (and When Not) Brainstorming is only useful when there is a need to generate a relatively large numbers of options or ideas. It is not appropriate when a problem is known to have only a single correct solution that is requires careful analysis to determine. For example, using brainstorming about possible solutions solve a mathematical problem would probably be a waste of time (Ronald.Young, 2010, p. 17). Where to Use Brainstorming Brainstorming can be used in almost any situation you just simply need a group (consisting at least two or more people) can find a space to work together for example a small table with some blank pieces of paper(Ronald.Young, 2010, p. 17). Knowledge Cafe What is a Knowledge Café? A Knowledge Café is also known as world cafe is a way to have a group discussion to develop and share any thoughts and insights that will emerge, in a non-confrontational way. Knowledge Café suspends all judgment and normally helps to developing deeper insights and sharing than usual (Ronald.Young, 2010, p. 38). The knowledge café begins with the participants seated in a circle of chairs. The knowledge café will be led by a facilitator, who will begin the event by explaining the purpose of conducting knowledge cafés and the role of conversation in business life. The facilitator will then introduces
  15. 15. the café‟s topic and the facilitator will poses one or two key open-ended questions. For example, if the topic is knowledge sharing, the question for the group might be: „What are the barriers to knowledge sharing in an organisation, and how do we overcome them?‟ When the introduction session is completed, the group breaks out into smaller groups, with about five people in each group. Each small group discusses the questions for about 45 minutes. After the 45mins of groups‟ discussion, the participants will then return to the circle, and the facilitator will continue to leads the group through the final 45-minute session, in which people reflect on the small group discussions and share any thoughts and ideas on the topic that may have emerged. A knowledge café will be most effective when there are between 15 and 50 participants. Thirty will be an ideal numbers of people. One to two hours is required for a worthwhile knowledge café. The only hard and fast rule is that the meeting is conducted in such a way that most of the time is spent in conversation (Ronald.Young, 2010, p. 38). Why Use a Knowledge Café? In an organization, people are not often given the opportunity to 'reflect' on discussions. Therefore, much of the value that could be gained or obtained from good discussion is lost. Periodic Knowledge Cafés provide the opportunity for people to better discuss and reflect. Normally, after people leave Knowledge Cafés they became more motivated and inspired. Often, people realized that they have received some valuable insights (Ronald.Young, 2010, p. 38). IT Methods and Tools Building Knowledge Clusters What is a Building Knowledge Cluster? Based on history, organizations have grouped together in various types of cluster to be able to be more effective. For example, guilds, societies and networks will help to support and develop their members (Ronald.Young, 2010, p. 63). The term 'Knowledge Cluster' is a term given to a group as a result of coming together in this new way of creating, innovate, and disseminate new knowledge. In other words, different individuals, teams or even organizations can now come together as one, virtually, on the Internet,
  16. 16. so as to better communicate, collaborate, learn, and share knowledge with one another through the cluster. The term is used, for example, to represent a group of companies that are in the same industry sector, e.g., high technology knowledge cluster, biotechnology knowledge cluster (Ronald.Young, 2010, p. 63). There are also Regional Knowledge Clusters where groups of organizations will come together, regardless of their size. Often, there is a high incidence of innovation centers that are linked to local universities. At the center of the cluster, usually there will be a research and development (R&D) topic with high research potential. The system can also involve the participation of organizations and other groups that are from both inside and outside the region. A Knowledge Cluster may be viewed as a type of Community of Practice (COP) or rather Knowledge Cluster can be consider as a more focused COP, normally with the aim of combining knowledge resources so as to generate or create new innovative products and services in order to compete in new ways so as to win larger business contracts (Ronald.Young, 2010, p. 64). Why Use This Tool? There are many good reasons to form and/or join a Knowledge Cluster(Ronald.Young, 2010, p. 64). It is very importance to use Knowledge Clusters for small and medium-sized enterprises (SMEs). This enables them to gain access to and even participate in, new knowledge networks with new knowledge resources. SMEs can now be able to communicate, collaborate, learn, share, and apply their knowledge in a much faster way and at a much higher quality. Most importantly, SMEs will be able to create a Knowledge Cluster that can effectively compete with large organizations. For example, small regional legal firms have formed successful national legal Knowledge Clusters. As a result from the Internet, they will be able to maintain lower operating overheads as compared to the higher overheads of large organizations. As a result, SMEs will become more price competitive, more resource flexible, and SMEs can often respond and act much faster than the larger organizations(Ronald.Young, 2010, p. 64).
  17. 17. How to Use Knowledge Clusters Step 1 Become aware of the knowledge clusters that exist in your industry sector and join them. And contact your local university for Knowledge Cluster initiatives if any. If none exists, then you can consider forming a new knowledge cluster. In any case, by understanding the key knowledge areas of the organization are one of the most critical successful factors. Step 2 Become competent in participating in Web-based collaborative knowledge working and Consider developing the competencies for effective personal and team virtual knowledge. Step 3 Must Understand and become active in the knowledge cluster by simply applying the principles of working in a Community of Practice. Building trusting relationships with other players is very important in order to achieved successful knowledge clusters. Step 4 Must always consider knowledge clusters as a key strategic resource and competitive tool within your business strategy.
  18. 18. Conclusion In the light of the report, innovation and knowledge management can be implementing on all organizations regardless of the size by using various methods that have been discussed in the report such as innovation activities can be implemented in an organization by simply followed the four phases of methodology and also with the use of organization learning which is a method of collective learning which can help on the study of innovation policy making and change. Finally, by using IT methods or Non-IT methods we can generate new creative and innovative ideas which can help the organization to form a better business strategy and it will also help SMEs to have a better competing edge against larger organizations.
  19. 19. References: Shahedul Alam, M. (2005). Knowledge Codification helps innovation and its diffusion: A state of codified knowledge also signals new innovation. Carsten Sorensen, Ulrika Snis (2001). Innovation through knowledge codification. Special issue on Knowledge Management of Journal of Information Technology, 16(2):83-9. Francesco Lissoni (2001). Knowledge Codification and the geography of innovation: the case of Breschia mechanical cluster. Argyris, C. (1982). Reasoning, Learning and Action, San Francisco: Josey-Bass. Tetsugen, H. (2009). Competitive innovation with codified and tacit knowledge. Robert Cowan & Gert Van de Paal (2001). Innovation Policy in a Knowledge based Economy. Landry, R., Amara, N., Lamari, M. (2000). “Does Social Capital Determine Innovation? To What Extent?”, Technological Forecasting and Social Change. Jervis, R. (1997). System effects: Complexity in Political and Social Life, Princeton: Princeton University Press. John de la Mothe and Dominique, F. (2001). Knowledge Management in the Innovation Process. Massachusetts: Kluwer Academic Publishers. David, P.A. and Foray, D. (1995). “Accessing and Expanding the Science and Technology Knowledge”, STI Review, No. 16. Maskel, P. (1999). “Social Capital, Innovation and Competitiveness”. (Garcia, 2005; Gupta; Kuczmarski, 2003; Little, 1997; McAdam, 2000; Prusak, 2000; Smith, 2000)
  20. 20. Emmanuel D.Adamides. (2010). AN INTEGRATED IS FRAMEWORK FOR MANAGING INNOVATION. Garcia, M. L. (2005). Vulnerability Assessment of Physical Protection Systems Retrieved from http://ECU.eblib.com.au/patron/FullRecord.aspx?p=294440 Gupta, A. S. R. K. Leveraging knowledge management for organizational innovation and creativity Kuczmarski, T. (2003). Innovation: Leadership Strategies for the Competitive edge. Little, R. R. R. (1997). Knowledge Management and Innovation. McAdam, R. (2000). Knowledge Management as a Cataalyst for Innovation within Organizations. Knowledge and Process Management, 7. Prusak, D. (2000). Working Knowledge: Harvard Business Review Press. Ronald.Young. (2010). Knowledge Management Tools and Techniques Manual. Smith, J. a. L. W. (2000). The knowledge economy and SMEs: a survey of skills requirements.

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