Further Praise for People-Focused Knowledge Management
“Drucker may point the way of a knowledge economy, a knowledge business, a
knowledge worker, but Karl Wiig instructs us precisely how to take advantage of a
dynamic knowledge strategy. In People-Focused Knowledge Management, he sim-
plifies the complex, makes the concepts relevant and actionable and leaves the
(inevitable) results to us. Finally, we have a resource for creating a compelling knowl-
edge value proposition linking economics, behavior and technology. For decades, his
remarkable graphics and penetrating analysis has been a cornerstone for manager-
ial excellence in all corners of the globe and all sectors of the economy. Few can
match his roots and vision in this field; and no one will be disappointed with this
newest triumph.”
— Debra Amidon, Founder and CEO, Entovation International,
Ltd., and Author of The Innovation Superhighway
“Melding theory with application, Wiig has created an invaluable ready reference
for everyone who works in the knowledge management arena. He is uniquely qual-
ified to provide such a thorough and thought-provoking analysis of the role of
knowledge and knowledge management in meeting the business challenges that we
all face.”
— Alex Bennet; Mountain Quest Institute; Co-Author of Organizational Survival
in the New World: The Intelligent Complex Adaptive System; former Chief
Knowledge Officer of the U.S. Department of the Navy
“This book distills the practical and theoretical wisdom of one of the true pioneers
in the field of Knowledge Management. The constant interplay of case analysis and
fundamental propositions signals the coming of age of the discipline. It takes sea-
soned practitioners and students alike to the strategic and systematic perspective of
management that is required to release the power of knowledge in action.”
— Francisco J. Carrillo, Professor of Knowledge Management, Center for
Knowledge Systems, ITESM
“In People-Focused Knowledge Management, Karl Wiig goes beyond the boundaries
of traditional knowledge management and integrates this with recent cognitive

NOWLEDGE
R
ESEARCH
I
NSTITUTE
, I
NC
.
AMSTERDAM • BOSTON • HEIDELBERG • LONDON
NEW YORK • OXFORD • PARIS • SAN DIEGO
SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO
An imprint of Elsevier
PR.qxd 5/3/04 2:31 PM Page v
Elsevier Butterworth–Heinemann
200 Wheeler Road, Burlington, MA 01803, USA
Linacre House, Jordan Hill, Oxford OX2 8DP, UK
Copyright © 2004, Elsevier Inc. All rights reserved.
No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior
written permission of the publisher.
Permissions may be sought directly from Elsevier’s Science & Technology
Rights Department in Oxford, UK: phone: (+44) 1865 843830, fax:
(+44) 1865 853333, e-mail: [email protected]. You may also
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Recognizing the importance of preserving what has been written, Elsevier
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Library of Congress Cataloging-in-Publication Data

The Global Economy Challenge, 4
The World Requires Us to Change, 6
Knowledge-Intensive Work, 7
The Misunderstanding of Knowledge-Intensive
Work, 7
Knowledge Intensity, 8
Work Is Becoming Increasingly Complex and Valuable, 9
Complex Work Creates Greater Value, 12
The Six Major Challenges, 12
Four Management Initiatives, 17
Enterprise Effectiveness Requires Good Intellectual
Capital Assets, 19
Examples of Structural Intellectual Capital, 22
The Role of Knowledge Workers, 23
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Chapter 2
The Effective Enterprise 26
Premise 2-1: Individual Actions Lead to Overall Enterprise
Performance, 26
Premise 2-2: Effective Enterprise Behavior Leads to
Success, 26
The Proactive and Decisive Company Example, 26
Management Philosophy, 27
Management Choices, 27
Knowledge-Related Practices and Actions, 28
Resulting Behavioral and Cultural Traits, 29
The Company’s Business Results, 29
What Does It Mean That an Enterprise Is Effective?, 29
Good Enterprise Performance Results from Effective

Premise 3-1: The Machinery of the Brain Metaphor Is a Useful
Beginning, 63
Premise 3-2: The Mind-As-Machine Metaphor Does Not Cover
Everything, 63
The Personal Reasoning Example, 64
Have We Misunderstood How People Think, Make Decisions, and
Act?, 65
Thinking, Reasoning, and Knowledge, 69
Associations and Biases Govern Our Actions, 72
Information Is Not Knowledge!, 73
The Purpose of Knowledge Is Action; the Purpose of
Information Is Description, 73
On Information, Knowledge, and Discontinuity, 76
Good Reasoning Matches Knowledge and Information, 77
Knowledgeable and Informed Decisions Deliver
Performance, 80
Goal-Directed Reasoning Relies on Goals, Information,
and Knowledge, 81
Personal Knowledge Is Built from Mental Models, 83
On Mental Models, 85
Many Mental Models Are Based on Metaknowledge, 86
The Importance of Metacognition, 87
The Importance of Implicit Learning, 89
The Personal and Enterprise Knowledge
Evolution Cycle, 89
The Needs to Increase People’s Knowledge, 93
Knowledge Required to Act Effectively, 93
Examples of Approaches to Develop Mental Models
in People, 96
Contents

The Knowledge-Based Situation-Handling Model, 122
The Customer Service Example Revisited, 125
The Four Situation-Handling Tasks, 126
Sensemaking and Situational Awareness, 127
Sensemaking, 127
Situational Awareness, 128
Decision-Making/Problem-Solving and Action Space
and Innovation Capability, 131
Decision-Making, 131
Single-Stage and Multistage Decision-Making, 133
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Mental Simulations, 135
Problem-Solving, 135
Action Space, 140
Innovation Capability, 141
Implementation and Execution Capability, 142
Implementation, 143
Execution Capability, 143
Monitoring and Governance Competence and
Perspectives, 144
Monitoring, 144
Governance Competence and Perspectives, 147
The Expert and the Novice: When Situations Are Not
as First Believed, 147
Story-Based Models Provide Situation-Handling
Knowledge, 148
Topic Domain Knowledge, 149
The Mental Reference Models in
Situation-Handling, 150
Understanding Adjacent Operations, 152

Monitoring and Governance Competence and
Perspectives, 192
Monitoring in the Enterprise, 194
Enterprise Governance Competence and
Perspectives, 198
Enterprise Situation-Handling Has Many Levels, 200
The Importance of the Situation-Handling Model, 200
Enterprise Situation-Handling Model Insights, 202
Why Should We Be Concerned with Details?, 204
Appendix: Action Program Details of the Enterprise
Situation-Handling Example, 206
Chapter 7
People-Focused Knowledge Management
in Daily Operations 213
Premise 7-1: Knowledge Drives Enterprise Performance, 213
Premise 7-2: Knowledge Must Be Managed, 213
Premise 7-3: Effective Knowledge Management Must Be People-
Focused, 213
Premise 7-4: Six Factors Determine Personal Knowledge-Related
Effectiveness, 213
The Vigilant Knowledge Company Example, 214
New Generation Knowledge Management, 216
New Generation Knowledge Management Is Different, 218
New Opportunities Require New Efforts and
Directions, 222
Perspectives on New Generation Knowledge
Management, 222
Deliberate and Systematic Knowledge Management, 225
New Generation Knowledge Management Foci, 227
xii

What Future Knowledge Management Business Users May
Expect, 252
The Business Environment Is Under Pressure, 254
Success Relies on Knowledgeable Behavior, 255
Expected Knowledge Management Developments, 257
The Changing Workplace, 263
Knowledge Will Be Bought and Sold, 266
Societal Side-Effects, 267
We Are Far From Finished!, 268
Contents
xiii
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New Enterprises and Integrative Management, 269
Objectives of Integrative Management, 270
In Complex Businesses, Better Practices Are Required, 272
Intellectual Work Is Indeed Complex, 273
How Do We Implement Integrative Management?, 274
Final Thoughts, 276
Our Present Direction, 276
The Societal Conundrum — What Shall We Do?, 278
Appendix A
Examples of Knowledge Management
Analysis Approaches 281
Knowledge Vigilance Survey Approaches, 281
Knowledge Surveys and Knowledge Audits, 283
Knowledge Assets Mapping — Intellectual Capital
Inventorying, 283
Knowledge Landscape Mapping, 284
Knowledge Mapping (K-MAPs), 286
Competitive Knowledge Analysis, 287

Priming Memory, 322
Abstract Knowledge Objects, 323
Routines, Operational Models, Scripts, Schemata,
General Principles, and Metaknowledge, 323
Routines, 323
Operational Models, 324
Scripts, 325
Schemata, 325
General Principles, 326
Metaknowledge and Metacognition, 326
Metacognition, 327
Glossary, 329
References, 347
Index, 357
Contents
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A
CKNOWLEDGMENTS
This book could only be possible by the continued support by
Elisabeth, my wife of many decades, who with her own research,
deep insights, and collaboration has encouraged my investigations
and allowed me to channel my efforts into this venture.
I am also grateful for the support of Serina Lai and her associates
at Angel Net Universal Company, Ltd.
For the insights and contents of this book, I thank my many clients
and professional collaborators over the past 40 years. They have
continually pointed me in directions — and shown me solutions —
that for the most part would have eluded me. I am particularly

appropriate resources.
᭿
When people are treated “right,” productivity advantages may
exceed 25 percent (Lawler 2003).
᭿
Employees imitate as role models their leaders whose behavior
reflects their basic philosophies.
᭿
All employees must be held accountable for their actions, and
everyone must be part of the enterprise’s governance.
People Acquire, Possess, and Use Knowledge in
Remarkable Ways!
This book builds its case on our present understanding of how
people work with their minds, the role of knowledge in conducting
work, and how that translates into effective actions for the enter-
prise, the people themselves, and other stakeholders. It also builds on
understanding recent cognitive science and management theories,
resulting in new insights that have replaced conventional thinking
and in premises such as the following:
᭿
Conceptual integration (blending) of prior knowledge into new
mental models that are applicable to new situations represents
a unique human aptitude — not a preprogrammed function that
operationalizes prior knowledge as has mistakenly been
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suggested by “Mind-as-Container” or “Mind-as-Machine” and
similar metaphors (Bereiter 2002; Fauconnier & Turner 2002).
᭿
Expertise is a tacit and abstract personal capability used to inno-

tive education, and conducting knowledge diagnostics.
᭿
People learn and remember stories and concepts better
than facts.
xx
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F
OREWORD
At the beginning of the twenty-first century, there is increasing
evidence that the world sees the human mind as the new frontier.
Mind-altering medications such as Prozak are commonplace. In two
consecutive issues recently, Time magazine provided multipage arti-
cles supported by colorful pictures based on functional magnetic res-
onance imaging (fMRI) to illustrate mental functions that may be
improved or changed to our benefit (Stein 2003; Gorman 2003).
These and many other events indicate that we are clearly expected to
better manage aspects of how we use or influence our minds to func-
tion, giving better performance and better quality of life.
Ever so slowly, we see that the general interest in the new frontier
is penetrating the corporate world, although thinkers like Peter
Drucker, Charles Handy, and Arie de Geus have told us so for
many years. We are beginning to understand how we can provide
stewardship and facilitation to make people work more intelligently
and more effectively by building and making available knowledge
and conducive work environments, cultures, and resources. However,
most managers still consider technology and other physical resources
to be critical success factors instead of focusing on the human
mind. As long as they do not know how to “manage knowledge,”
they will find it simpler to focus on aspects that can be seen and

to change. Changes include improvements and opportunities as well
as external and internal challenges and problems. In this turmoil,
managers at every level do their best not only to “keep the ship
afloat” but also to improve performance to remain viable and suc-
cessful. Under these circumstances, management is indeed difficult
and complex. The old adage of “keep it simple stupid” (KISS) does
not seem to work. Worse, KISS may often do harm by inappropri-
ately narrowing the focus and ignoring significant implications.
Many try to circumvent challenges and requirements by manipula-
tion and the creation of false impressions. Those who insist on fol-
lowing such paths frequently find themselves in serious trouble, as is
evidenced by many recent examples.
Old mainline approaches to business management and operations
have less validity. Vibrant and novel management approaches and
operational practices need to be pursued. Many of these have been
practiced in outstanding organizations for centuries, although new
perspectives and scientific findings provide additional foundations
and conceptual supports.
The business environment itself is changing. Globalization and
increased competition are emerging with new driving forces result-
ing from more sophisticated consumer populations. The new world
is upon us, as numerous companies and public institutions realize.
It has significantly changed the attitude of stakeholders of all kinds,
of employees, of customers, of suppliers, of whole regions and
countries where the economy and quality of life are supported by
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industries and institutions. Investors and sponsors of public institu-
tions are changing their understanding of what constitutes appropri-

of the perspectives expressed in this book will be subject to debate
and change as we learn more. Models and philosophies for what
makes enterprises successful vary widely. No two enterprises are the
same or have identical requirements. To allow for such disparities,
we examine basic knowledge-related premises for what makes the
enterprise effective and viable. We will explore what it means to “act
effectively.” We will study factors and conditions that promote and
maintain effective-acting behaviors and prevent dysfunctional ones.
We will examine what it means for an enterprise to achieve “durable
viability.” We will focus on many aspects of how situations can be
Foreword
xxiii
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handled effectively. We will discuss how Knowledge Management can
assist in achieving enterprise objectives. And we will explore some of
the implications that may be expected from better people-centered
Knowledge Management. In the appendices, we introduce models for
implementing KM in proactive organizations and for showing what
is required of KM professionals in terms of services provided and
expertise needed.
Views vary on the economic and social roles of the enterprise, as
well as on the relative importance of the roles and behaviors of key
individuals and business leaders. Nevertheless, an emerging school of
thought bases success and viability on business ethics and properly
prepared and motivated individual contributors. That view is
pursued here. It is our belief that motivated, contributing, and
accountable knowledge workers are the linchpins that secure and
sustain the successful operation of the enterprise machinery.
However, they must be supported by well-designed organizational
structures and infrastructures. They must also be provided with

done and what may be expected from different actions under various
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