Internal Knowledge Markets

Introduction: Internal Knowledge Markets

In recent years, the issue of KM or Knowledge Management has been pushed to the centre stage because of the need for consolidating the knowledge across the organization, the imperative to share and collaborate within the organization and the impetus to achieve synergies as a result of these converging dynamics. The theme of Internal Knowledge Markets or the prevalence of structures of knowledge sharing and collaboration that harness pockets of knowledge existing within the organizations in disparate members and collectively brings them to the fore with material as well as non material incentives providing the glue which binds the sharing of knowledge has meant that the whole concept of KM is witnessing a paradigm shift. It is the case that internal knowledge markets are valuable not only in locating individual excellence in terms of knowledge but also to provide a medium or a forum where such knowledge can be shared across the organization.

Dynamics of Internal Knowledge Markets

The design and evolution of internal knowledge markets along with the pricing mechanisms by which companies reward the employees for contributing their knowledge is critical to the success of the companies in so far as effective knowledge sharing is concerned. It is the opinion here that internal knowledge markets are effective mechanisms for transmission and sharing of knowledge across the length and breadth of the organization and for effective transmission to take place, the “wisdom of the crowds” as well as the top down imperative should work in tandem to produce the desired results.

The overriding theme of internal knowledge markets hinges on the participation of employees and the “push” by senior management and it is only when these two forces come together that effective KM can take place. The pertinent aspect of knowledge markets is that only when the individual contributions of the employees matches that of the collaborative efforts in sharing knowledge can there be effective functioning of internal knowledge markets.

Coopetition vs. Competition

The point about the design of internal knowledge markets being done in such a way so as to take into account the need to balance cooperation with competition (to evolve what can be called “Coopetition”) is something that would be discussed in detail in the subsequent answers. Suffice to state that with internal knowledge markets in place, companies are likely to achieve the “quantum leap” necessary for synergies to kick in and hence be at the cutting edge of innovation and growth. Given the fact that in the uber competitive marketplace of the current times companies have an imperative to stay ahead of the curve, the presence of internal knowledge markets does indeed contribute to the continued success of the companies.

Reducing Knowledge Hoarding

There are two aspects to reduce knowledge hoarding by utilizing internal knowledge markets. The first part is the obvious part where the prevalence of internal knowledge markets can significantly bring down knowledge hoarding as employees are encouraged to bring out into the open the knowledge that they possess and hence share it with others.

The second part of the answer is in the way in which the internal markets themselves do not serve the purpose for which they have been created. For instance, the knowledge hoarding might take place because of the fact that colleagues can turn competitors and hence there needs to be a mechanism where “absolute” rewards are given instead of “relative” rewards for hoarding. By this, the organization can ensure that not only the top contributors but anyone who contributes above a certain threshold on a relative scale is rewarded leading to providing motivation to the employees to participate. As mentioned in the opening sentence, hoarding can occur because of the lack of internal knowledge markets as well as due to the presence of the same. Hence, the design of the internal knowledge markets must be done in such a way that encourages cooperation above competition and rewards contributors for their information instead of picking out the “top sellers” and rewarding them alone. This ensures a healthy sense of competition which is stimulating rather than stifling and allows for greater participation from the employees.

Material and Non-Material Incentives for Knowledge Sharing

Material incentives for knowledge sharing alone are not enough for effective functioning of the internal knowledge markets. They need to be backed up with a combination of social and other incentives that operate on three dimensions: spendable currency, recognition for expertise and the opportunity to have a positive impact. These would ensure that the employees’ who are contributing have their material as well as non material needs like self actualization and the stimulation of intellect taken care of.

Providing material incentives alone would mean that employees put a “price” on the knowledge that they share and as so happens with market mechanisms, they might decide to withhold information or provide information of poor quality if they feel that the price is not right. Providing cash incentives or incentives like frequent flyer miles etc produces a sort of compartmentalization of the knowledge that is being shared as employees typically tend to coalesce around those incentives that provide the highest return and neglect the “lower paying incentives”.

Conclusion: Market Based and other Approaches to Knowledge Management

The point here is that as we have seen in recent years, the market mechanism is not the sole answer to all the problems of society. Only when emotional and intellectual needs are met can there be an effective market mechanism in place. For this to happen, material incentives are not by themselves enough. As for the dangers of using material incentives, they have been discussed in the opening sentences. To add to that, material incentives spark a competitive race that might result in hoarding as well as relegating those tasks that do not fetch adequate rewards. Hoarding as a phenomenon in the internal knowledge markets has been described earlier and can lead to undesirable consequences for the companies involved. Hence, material incentives are accompanied by some inherent dangers which can be avoided by a well thought out reward structure.


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