In today’s extremely competitive business environment knowledge managements is understood to be a crucial part of an organisations strategic assets. Efficient and effective knowledge management is recognised by firms as away of gaining sustainable competitive advantage. The concept of knowledge is still being heavily debated by organisation business thinkers and a definition that everyone accepts is hard to find.
The definition which I feel best explains knowledge management is by Malhotra (1997) who maintains that knowledge management “embodies organisational processes that seek synergistic combination of data and organisational processing capacity of information technologies, and the creative and innovative capacity of human beings.” This definition is good because it discuses the concept that knowledge management has both “soft” and “hard” components, further more it deals with the idea that knowledge is centered around human beings.
The iPod is an MP3 digital personal music player produced and distributed by Apple. The design, production, distribution and marketing of the iPod have all been developed with different types of knowledge. The iPod overall has high levels of embodied knowledge and was the first product of its kind to be released into the personal music market The idea of the iPod was started in 2001 when apple introduced iTunes for the Macintosh. iTunes is a program that converts audio CDs into compressed digital audio files, organizes digital music collections, and plays Internet radio. Later that year the first iPod was made which enabled users to download their favourite songs onto a portable MP3 player. Today Apple has sold over ten million iPod’s.
The development and diffusion of the iPod and iTunes uses formal knowledge also known as codified knowledge. Codified knowledge is knowledge that can be expressed in an explicit and formal way e.g. books and journals. Prior to the iPod apple had spent a lot of time and money on research and development; the knowledge they learnt was documented and noted by scientific theories and mathematic techniques. Apple as an organisation was able to benefit from formal knowledge due to there employment policies as they hired well educated people who had specialist education and training. Formal knowledge is typically gained by formal education and training.
The production of the iPod is the only area of the iPod’s development where Apple needed to share and trade knowledge with other organisations. Apple lacked the instrumental and embedded knowledge needed to effectively and efficiently produce the iPod. Embedded knowledge is knowledge that resides in systemic routines. Embedded knowledge is analysable in systems terms, in the relationships between, for example technologies, roles, formal procedures, and emergent routines. As a result of this lack of knowledge they outsourced production of some components to other firms who have a higher level of instrumental and embedded knowledge for example Hitachi produce and design the iPod’s hard drives. The outsourcing of production was a very shrewd move by the senior managers of apple as a survey of iPod users shows that they like they way it looked, how easy they were to use and their reliability.
Apple is a very large and well established firm with many employees who are experts in their respective fields and have vast experience. As a result Apple benefits from high levels of informal knowledge. Informal knowledge is generally limited to a few individuals and is practically based as well as being verbally communicated. Due to the high number of experienced employees Apple is able to understand “best practices” and “tricks of the trade” that would not otherwise be available to the firm. This gives Apple a large competitive advantage over their competitors.
In the 1990’s Tony Fadell created the pioneering idea to create a music player that combined both music software and hardware. This idea was not seen as revolutionary by the first few firms that Fadell pitched to, however it was Apple who understood his vision and gave him the resources and backing he needed. This idea was revolutionary and gave apple’s iPod the embodied and tacit knowledge needed to be the industry leaders. Tacit knowledge is knowledge that people posses in their minds and is hard to communicate or transform into explicit form. Having a high level of embodied knowledge in apples iPod resulted in them having very few competitors and enabled Apple to saturate the market. As a result of Apples success they enjoyed a large market share and profits were at an all time high.
