What is knowledge organizations?

Dec, 18 2024.

To understand how technology impacts organizations we need to examine how technology enables efficiencies in business operations. Effectiveness in an organization context is about increasing the ratio between inputs and outputs in service of profit¹. In knowledge organizations, the input is knowledge, the "manufacturing process " is knowledge work, and the output is knowledge. A knowledge organization seeks the profitable exchange of data, information, and knowledge at its boundaries. An insurance company and a bank are two pure examples of knowledge organizations.

Manufacturing organizations as a parallel

Let's look at a manufacturing organization and a traditional supply chain. We can then use our. Manufacturing organizations take the material as input and convert this material through manufacturing processes into a tangible output. At the end of the process (at the organization's boundary), a value exchange occurs: a truck full of goods drives out of the manufacturing organization's gates, and an envelope with cash enters the organization's gates. It is worth noting that the manager in a manufacturing organization does the supply chain management task. They manage the flow of goods through the organization.

Knowledge organizations

A knowledge organization's "supply chain" is in an information flow. Data, information, and knowledge flow in, are transformed, and flow out; the role of management in knowledge organizations is to manage these information flows². Knowledge management is defined as the process of identifying, organizing, storing and disseminating information within an organization³.

Insurance organisation as a knowledge organization

Consider an insurance company. The value proposition to customers is suitable risk coverage reflected in policies sold at value-for-money premiums backed up by a reliable claims process. An insurance company could be successful if it consistently acts towards a set of key outcomes. The outcomes and an example of knowledge artefacts that support the outcome are listed in the table below.

	Outcome	Example Knowledge Artifact
1	Write policies efficiently and effectively while settling claims.	the policy document (information about the agreement between an insurer and the customer), the claim assessment (information about a claim and whether a policy covers it) and the payment agreements (the established monetary flows, which in a modern world are also simply information flows)
2	Manage the risk portfolio associated with policy sales.	Risk rating and pricing models which are codified priori knowledge. See the example in this post. The thoughts on Software as Knowledge Artefact applies to any computation approach to rating also.
3	Invest working capital profitably to support potential future claims.	the legal contracts, such as a share or bond certificate, the core knowledge artefacts that manifest in the investment side of an insurance organization.
4	Remain compliant with regulations and ,aintain trust with the customer base.	Regulatory compliance reports and certification documents.
5	Reliably execute routine operational processes (e.g., payroll).	Again, think of payment transactions and financial statements surfacing knowledge and information in Financial departments, and narrative (written, audion, visual) as information and knowledge surfacing from the Marketing department ³.

To solidify this point, consider again the underwriting process: suppose a manager wants to establish an efficient and effective insurance line. In this case, it needs to develop a coherent flow of information from relevant customers through underwriting operations, back to the customer, through claims operations, and again back to the customer. At the start of the customer journey, you can also include the information flow from marketing and sales operations to the customer. You can also include the information flows between the finance operations, banks and customers. The more effective this information flows are the more effective the customer moves through the customer journey. Each of these flows demands several knowledge workers to collaborate in coherently transforming knowledge artefacts.

Regulation as information flow

Implementing regulations and evidencing compliance plays a massive role in the insurance industry. When considering an insurance organization as an effective and efficient knowledge organization, it is important to specifically consider regulations. Is it that the process of regulatory compliance fundamentally involves establishing effective information flows?

Information flows into the organization as new regulation; this information is integrated into existing flows to condition how these flows interact with each other to inform regulated decision-making and action. Similarly, several information flows compress together towards the organization's boundary into a decision point that legitimizes an organization as compliant or not compliant into a wider information system. When the decision is non-compliance, additional information flows are triggered. Consider these as feedback flows, which lead to decisions and actions aimed at establishing information flows that are compliant.

Information flows, artefacts and technology

At its core, an insurance business manages the legitimized creation, dissemination, and storage of knowledge artefacts⁴. Information technology provides the infrastructure for insurance companies to manage knowledge artefacts and the information flows that come together to create them at scale.

Notes

This post is part of a series. See here.

Footnotes and references

This worldview is fundamentally flawed and needs to shift in service of a sustainable world. That is another thread of thought to unpick at some point. ↩
See Information in organizations: directions for information management. ↩
See What is Knowledge Management by IBM. ↩ ↩²
Legitimacy here is the belief that knowledge artefacts can be inacted. Ligitamacy assures the convertability of knowledge artefacts to relevant action. For example, a contract states that a future payment should be made between two parties. This is enforacable given that the contract is ligitamized by laws. ↩