VDT-KS: Simulating the Impact of Flexible Knowledge Sharing Across the Internet

The information processing view of organizations, first conceived by March and Simon (1958), and introduced to managers by Jay Galbraith (1974), proposed that knowledge workers process information until they encounter “exceptions”— situations in which the information required to execute a non-routine task exceeds the information available to the person performing the task. They then refer exceptions upward in the hierarchy to find someone who can provide the needed information to resolve the exception. In this perspective on organizations, which underlies much of organizational contingency theory (Burton and Obel, 1998), the supervisory hierarchy is the primary resource available to workers for resolving their exceptions. The Virtual Design Team (VDT) computational modeling and simulation framework (Levitt et al, 1994; Kunz et al, 1998; Jin and Levitt, 1999) operationalized and extended Galbraith's framework to predict the both individual and organizational performance of project teams engaged in fast-paced knowledge work, assuming hierarchical exception handling. Modern organizations are attempting to leverage the Internet for more flexible knowledge sharing to resolve exceptions. VDT-Knowledge Sharing (VDT-KS) extends the VDT framework to model and simulate two kinds of more flexible knowledge sharing strategies: “Connective Knowledge Management Solutions” whereby organizations facilitate direct knowledge sharing between individuals by publishing knowledge directories and instituting incentives for experts to share their knowledge with others; and “Communal Knowledge Management Solutions” whereby organizations develop knowledge content repositories that can be accessed asynchronously, around the clock and around the world. This paper presents the VDT framework, and shows how VDT-KS extends VDT to model and simulate Communal and Connective knowledge sharing across the Internet. 1 This paper is based on work supported by the Center for Integrated Facility Engineering, and by the National Science Foundation under Grants No. IIS-9907403-001 and IIS-9980109. Any opinions, findings and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect those of the Center for Integrated Facility Engineering or the National Science Foundation. 2 Dept. of Civil and Environmental Engineering and, by courtesy, Dept. of Medicine, Stanford University. 3 Center for Integrated Facility Engineering, Stanford University 4 Dept. of Civil and Environmental Engineering, Stanford University Page 2 Knowledge Networks: Augmenting the Hierarchy Classical organization theory dating back to Max Weber and Henri Fayol views the supervisory hierarchy not only as the primary means for resolving exceptions, but as the only legitimate means for sharing knowledge in an organization. In 20th-century organizations that were implemented in accordance with classical management guidelines, a worker who encountered an exception—any situation in which the worker lacked some required information or knowledge to proceed with a task—would ask his or her supervisor for advice to resolve it. If the first level supervisor did not possess the knowledge or authority to resolve this exception, he or she would pass the exception up to the next level, until it could be resolved. The information to resolve the exception would then be passed back down the hierarchy to the worker who initially generated the exception. Of course, even early 19th-century workers had informal access to peers from whom they could seek advice, but such access was practically limited to a relatively small group of peers within their local workgroups. Galbraith (1974) helped to formalize the notion of matrix organizations in which multiple hierarchies overlap, so that many workers have two or more supervisors—for example, a project supervisor and a functional supervisor—to whom they can refer different kinds of exceptions. However, Galbraith still viewed these supervisory hierarchies as the primary knowledge management device for handling exceptions. Galbraith's early work focused on both the information processing limitations (the “bounded rationality”) of workers and their supervisors, as well as the information communication limitations of earlier low bandwidth communication technologies such as memos and textual computer printouts. He asserted that bottlenecked supervisors and clogged information channels were the major limitations on the effectiveness of fast moving project teams, and proposed two kinds of generic strategies for addressing the information overload problem: reducing information processing demand, and increasing information processing capacity. Strategies to Reduce Information Processing Demand Galbraith's first strategy proposed that organizations attempt to reduce their information processing demand. He proposed that they (1) decentralize decision-making to autonomous subunits to reduce the need for referring exceptions to senior managers, and (2) increase “slack”—i.e., loosen technical performance requirements, budgets and schedules—to decrease the number of exceptions arising from violated technical, cost or schedule constraints. The former depends on the divisibility of tasks and the availability of competent, low-level leaders; the latter trades off lower product value and higher direct costs to reduce information processing costs. For many modern organizations, neither of these solutions is viable. The components and subsystems that comprise custom products and solutions are highly interdependent with one another. Designing and manufacturing each of the components or subsystems of a custom system within autonomous, decentralized subunits would almost certainly lead to subsystem incompatibilities, with resulting product quality problems. At the same time, increased global competition and Internet-empowered customers are rapidly driving the last ounce of technical, cost and schedule slack out of every transaction in the global economy, so increasing slack is not an option that managers can employ to reduce information processing demand. Indeed, manufacturing theory and practice suggest strongly that reducing slack is a fundamental strategy in controlling and improving system performance (Galbraith and Lawler, 1993). Information processing demand on organizations is thus likely to continue to increase rather than decrease for the foreseeable future. Strategies to Increase Information Processing Capacity Galbraith's second strategy proposes that organizations find ways to increase their information processing capacity. To increase organizational information processing capacity, he recommended