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The companies of the future will live in an environment where competitors are multiplying, technology is proliferating, markets are constantly shifting, and products are becoming obsolete overnight. In the emerging knowledge society, knowledge systems that can identify, create, represent, and distribute knowledge will be the most decisive factors for maintaining or achieving success in a competitive global economy. Knowledge management is a proven multi-billion dollar system used in a vast world market; however, corporate executives are now demanding better justification for investments in Knowledge Management System infrastructures and their expected business performance outcomes. Many of these executives want to know how their investments in new Knowledge Management System architectures and its supposed “solutions” would contribute to the adaptability of their organization amidst the unprecedented rate of change in today’s rapidly growing business world. Executives must recognize that survival in a constantly changing world requires the creation of a viable Knowledge Management System that attends to the fundamentals of agility and flexibility, while establishing the agenda for digitization of their enterprises. Although the adaptability of Knowledge Management Systems to the business world yield results for some, many of its implementations have failed to demonstrate success. However, with a study of these failures, countermeasures can be made to detect the problems early, avoid them, and prevent the likelihood of such failures from occurring. By imposing knowledge facilitators that determine what knowledge to contribute, enable knowledge collection, and that represent knowledge, executives can combat the limitations of the computer-based component by verifying the quality of submitted information and by motivating its members to adopt the system.

For Knowledge Management solutions to be effective, organizations must balance two conflicting demands: they must have as much information as possible available while still providing users with a solution that they can be comfortable with. Knowledge Management approaches can fail when they attempt to create a monolithic organizational memory. Because the distribution of such organizations may have conflicting goals, companies that have tried to develop a monolithic organizational memory for an entire organization are prone to failure. In an analysis of the CyberCorp telephone hotline group, a monolithic organization would not be capable of adapting to the spontaneity of the new and constant flow of information. CyberCorp’s hotline group was a call center that specialized in answering human resource questions about benefits and personnel policies for its employees. Many of these answers to these questions came from both a combination of the call center employee’s memory and from external memory sources. These external memory sources include, but are not limited to an information intake that involves: sporadic or seasonally asked questions, new questions that arise, facts that must be re-checked, while new conditions make old answers become obsolete. Knowledge Management approaches should be designed to practice and support a more communal form of organizational memory that can adapt with constant change. The goal of an organization should be assessed to determine whether it represents a single, communal memory, or if it should be further subdivided. Being an organization of a single, communal memory implies that its members share the same interests which allow for consistency in the quality of knowledge to positively impact the mutual success of the whole. An important guideline to a common organization memory is to impose a restriction on the target community; therefore, its members share similar goals in delivering the processes they want to impact. A business organization that shares communal work practices, while being a singular community that focuses on a variety of contexts, can meet the desired characteristics in a community for a successful Knowledge Management approach. The results of which lead to employees sharing the same goals, employees that encourage innovation, positive criticism, and supervisors that are more likely to be role models in knowledge sharing.

Another reason knowledge management approaches may fail is when they do not integrate processes, humans, and technology with failure justified by the importance and limitations of each component. Processes are the key component in the delivery of organizational goals; an approach that is not associated with processes will tend to fail or be perceived as a failure. Humans alone tend to be slow, having only limited capabilities, while technology cannot even be considered alone because it is limited to supporting humans due to its variable accuracy levels when performing otherwise mundane human tasks. Moreover, humans serve as knowledge facilitators that are responsible for complementing and compensating for the limitations of technology. A retail computer software company founded in 1984 called Egghead Software grew into an impressive chain with over 200 locations in the United States. By 1998 however, confronted with declining revenues, the company closed all of its retail locations and shifted its focus to strictly online business with a strategy to eliminate human interaction and commission on sales to focus on quality. Because the human factor and processes were ignored and instead only technology was stressed, a once 350 million dollar company is now merely a banner ad on Amazon. The human component should consist of knowledge facilitators that work in conjunction with processes relevant to the company, while concurrently mastering the technology that will make them more productive and expand their capabilities. Each individual component (process, humans, technology) by itself cannot support a successful Knowledge Management approach and, therefore, must be combined if any positive results are to be achieved. Integration of humans as knowledge facilitators, processes that are impacted by knowledge of the company, and technology that expands human productivity allows for the identification of gaps in the knowledge base to be detected and a faster response time in preventing and filling them when they occur.

A knowledge management approach can also fail when it is created without input from all of its stakeholders. This occurs when design and system analysis ignores organizational culture and the community process; moreover, this lack of attention increases resistance in the adoption of the approach. As a community, design is believed to be important because it is viewed as the creation of tools that are used to achieve a common goal. A prime example is the 7.5 million dollar H.M.S. Titanic which was believed to be unsinkable but fell victim to an Atlantic iceberg on April 14, 1912. The ship’s design included a double-bottomed hull divided into 16 compartments of which 4 could be flooded without an effect on its buoyancy. However, the 16 compartments were not sealed off at the top enabling water to fill each compartment and the rest is history. Because the designers failed to correctly model the interaction of uncertainty in the environment within the dynamics of the system, the interaction between the iceberg and the water flow between the compartments was ignored, thus, unable to predict. Businesses often share similar fates which can be avoided if Knowledge Management systems are designed in collaboration with all stakeholders. Only the combined efforts of stakeholders and designers can an organization perform a proper analysis through which the context of the organization’s processes are taken into account. Initially, design and analysis elements should be based on a study of countermeasures; once the main principles of the basic design are explained and understood by the stakeholders, other factors should be discussed in context to the processes that are relevant to the organization.

Attention to detail can often be the difference between success or failure and there is a level of specificity that makes knowledge worth transferring. When contributors do not know the ideal specificity of knowledge, knowledge management systems tend to fail. Contributors can be unsure of the level of generality that makes knowledge useful, which causes them to either submit useless information or to not submit anything at all. In the year 2000, another dot com company called Boo.com failed in its attempts of knowledge transfer. This UK based website sold branded fashion apparel online but was poorly designed for its target audience; furthermore, poor management and the lack of specific knowledge transfer resulted in many growing costs that went unnoticed. Especially in the scope of international organizations, knowledge transfer should have a level of specificity that is considered useful by the majority of its users and that level must continually be monitored by knowledge facilitators to prevent new knowledge artifacts from going unnoticed. With the constant and rapid change of business and the implementation of technology, knowledge can be transferred explicitly (e-mail, phone, reports) or tacitly (meetings, assignments); neither of which having a specific strategy or structure. To combat these irregularities and differences in organization, the adoption of a more cyclic knowledge transfer system allows the organization to revise the specificity that was originally adopted.

There are many reports that project failure rates that are still very high with industry research showing a 50-60 % failure rate amongst all projects, with most of the research casting blame on poor project management and/or lack of executive sponsorship. Many knowledge management approaches may fail because of leadership support that overlooks the importance of knowledge transfer and sharing. From 1857-2003, Bethlehem Steel Corporation was the 2nd largest steel producer in the United States and one of the largest shipbuilding companies in the world; even with all its success, declared bankruptcy due to a decline in the U.S. steel industry and major management problems. Some of the company’s major projects included the Golden Gate Bridge, the Empire State Building, the Hoover Dam, and over 1,000 military vessels produced for the U.S. However, this powerhouse company didn’t fail simply because of inexpensive foreign steel imports, but because of the failure of management to innovate, assimilate new technology, and improve its labor conditions. For knowledge management to succeed, their approach should be strongly supported by the project management leaders. Management should financially contribute with the understanding that the investment will promote mutual success among leadership and its members. In order to avoid the member/leadership conflict, there must be a symbiotic system of checks and balances between knowledge facilitators, leaders, and contributors. Only after knowledge sharing can the financial contributors fully realize the benefits of investing in leadership support that will allow for more flexibility in the face of change, together, as a more cohesive unit.

In relation to job security, knowledge management systems can fail when users are too afraid of the consequences of their contributions. Because contributions can be subject to scrutiny and evaluation, users sometimes believe that withholding their knowledge is the solution to their security. WorldCom was an American telecommunications company went bankrupt on July 24, 2002 and for a time was the United States’ second largest long distance phone company with its growth coming largely from acquiring other telecommunications companies. It later became in debt due to falling stock prices and a failed merge with Sprint. The company executives between 1999 and 2002 began using false accounting methods to hide its declining earnings by painting a picture of false financial profitability and growth to shoot up the price of WorldCom’s stock. The executives, in fear of their company’s security, underreported telephone line costs and inflated revenues to mask their failures, sealing the fate of the already sinking company. Withholding knowledge may not have doomed this company but it greatly contributed to its demise when management themselves were too afraid to be criticized. Organizations should practice a knowledge management system that encourages innovation and constructive criticism on all levels. Implementation of such a system will combat the problem of job competition that inevitably prevents knowledge sharing. However, criticism is a very strong element in modern business and should be approached in a manner which criticism and innovation are justified to commend contributions rather than just the elimination of its members. It is the job of management and knowledge facilitators to use positive criticism to motivate their members otherwise their investments will be made useless. Knowledge facilitators must be in support of the members by explaining their contributions, their support, the task they apply to and their context. This allows for an easier interpretation amongst management, knowledge facilitators, and members alike without the constant fear of consequences.

The way knowledge is stored may also lead to failures in knowledge management. Knowledge that is stored in unrestricted text representations tend to be too long, difficult to interpret and time consuming; therefore, rendering the knowledge useless and its retrieval impractical. In a sense, it would be like searching the internet without search engines, a very daunting task that would drastically limit all of its users. While knowledge storage can be implemented easily in a textual format, intelligent retrieval methods cannot be. Commerce One was an e-commerce company that went bankrupt in 2004 due to complexity of the IP requirements preferred by its members. At a time it was the world’s second largest maker of relational database software with its stock rising by more than 1000% by the end of 1999. One of the company’s founders, Mark Hoffman, envisioned a time when the internet would be used to automate the dealings between companies, saving billions of dollars in costs. But in efforts to combine technology with another German company SAP, far too many resources were focused resulting in too much money being lost. Successful knowledge management systems should implement knowledge that has a specific set of fields that can guide and restrict users. In creating these concise and specific representations, it will be easier to recognize the information’s applicability and usefulness while also providing context to aid in interpretation. To be most effective with its users, knowledge fields should be easy to interpret, highlight the process/es it impacts, its support, usefulness, and what it teaches.

Knowledge management approaches require technology to manipulate knowledge; however, if that technology is inadequate and only deals with data and information, then knowledge management approaches fail. Technology is to be used in conjunction with humans; in turn, humans submit knowledge when interacting with a tool that is limited in its ability to understand that knowledge. Inadequate technology leads to excess unnecessary interpretation, thus, making the tool of technology ineffective and not user friendly. Thomas Edison was a great inventor but a very poor business man but build a technology-centered phonograph that failed to take into account his customer’s needs and was too complicated for office use. With the original taking up to two weeks to learn to operate, it has taken almost a hundred years for it to evolve into what it has today. His technology was useful but complication led to its demise. Knowledge management systems must attempt to use technology only when it is applicable to a certain task. Management must realize that if technology is inadequate for the completion of certain tasks, then those tasks should be left to humans to complete. Therefore, Edison’s phonograph that took two weeks to learn could have easily been replaced by an assistant with a pad and pen. It is the job of knowledge facilitators to verify the validity of submitted knowledge and indexes; of that knowledge should include a process and information as to its context. With this organization of the indexes, knowledge applicable to specific tasks are much easier to attain while incorporating elements necessary for reasoning and strategy rather than simply the storage and manipulation of data.

Yet another reason knowledge management approaches may fail is when they are outside the process context. This is caused by information that is failed to be spread out of its storage. Stored information, because of its standalone architecture that is housed outside the target organization’s processes, makes knowledge more difficult to share and reuse, limiting what processes they can impact. With knowledge outside the process context, users are forced to know if the repository exists, have time to search and view it, asses whether the repository contains useful information, and asses if knowledge reuse it beneficial. As mentioned before, CyberCorp had problems because of monolithic organization of knowledge that didn’t leave much room for change. A call center deals with customer needs that can change in an instant and knowledge that is stored must be able to keep pace with customer needs while still serving the employees of the company. Approaches in knowledge management systems need to be integrated into the context of the organization’s processes by making the information explicitly indicate the process in which they impact. Whether it is through the monitored distribution approach (computer context) or by active casting (non computer context), knowledge must be distributed based on the users’ area of interest to accomplish their activities. This knowledge transfer problem can be avoided by providing a repository of information using a system that allows for the identification of information gaps.

Knowing one’s weaknesses is an important factor when it comes to survival in a business world which knowledge management approaches fail by ignoring impediments to knowledge transfer. The flow of knowledge can be stopped if it cannot communicate the factors that make the information applicable under changing circumstances and could be hindered by knowledge that fails to include a description of how it was learned. Many companies are relying more and more on technology and are sometimes ill prepared in case there is a problem with that technology. Some businesses cannot function at all without computers even though they did before without incident. Knowledge management systems should have methods for solving the problem those types of knowledge impediments cause. Repositories with information covering strategies and contents, relative to the target organization, would aid in eliminating the need for explicit instructions of how strategy and solution relate. The unprovenness of knowledge that lacks a description is solved by demanding the inclusion of facts or a description of how the strategy was learned. Users of the system should be knowledgeable of the processes to better understand how to retain new knowledge even with out the use of current technology. In avoiding impediments, knowledge must be verified in terms of completeness, correctness, legitimacy, relevance, clarity, and adequate specificity.

The final reason that knowledge management may fail is when it does not enforce managerial responsibilities. Determining knowledge, representing knowledge, enabling knowledge collection, overseeing its reuse, monitoring knowledge transfer, verifying and validating knowledge, and embedding knowledge in a targeted process are some of the responsibilities of management. Ignoring such duties sets bad examples for subordinates and can possibly leave employees with knowledge that doesn’t contribute to the goals of the organization having ill effect on productivity. Lernout & Hauspie Speech Products was another company that had problems due to scandal and the lack of proper management. Through fictitious transactions and improper accounting methodologies, the founders of this company were arrested in April 2001. The loss of company stock and pride of management caused the company to be sold when it had a market capitalization of almost 10 billion dollars at one point. Scandals usually don’t have much to with company performance; however, when executive management makes decisions, it affects the company as a whole with all of their problems traveling down to their employees. Good knowledge management systems should have a means of enforcing the responsibilities of management incorporated into the organizations design and training programs. The incorporation of knowledge that is relevant to the organization’s processes should be a part of that design to collect, monitor, and verify information. It is not the responsibility of users of a knowledge management system to oversee the verification, collection of the knowledge that they contributed but that of management. Knowledge facilitators aid in knowledge transfer by creating workshops or tutorials that are tailored to enforce adequate representation of the community, to train the users how to submit information to management properly. The need for knowledge sharing cannot be stressed enough and there must be a design set in place to make information more transparent, thus making collaboration between management, knowledge facilitators, and members much more efficient.

There are many factors listed and not listed that contribute to the failure of knowledge management approaches; moreover, in knowing these factors makes them easier to avoid, detect, and solve. Even though many of these factors have solutions, many of them were not sufficiently effective from the start. With technology constantly moving towards the future and the speed of the business world increasing, knowledge management approaches can be effective simply if an organization is united, knowledge is shared, and all of its members have the realization of a common goal. Adhering to and correctly practicing a knowledge management system can lead to success in any business venture, but slight mistakes, miscommunications, and not putting constraints on the system may lead to its downfall.