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HB 1902006

Success through knowledge: A guide for small business

This Australian Handbook was prepared by Committee MB-007, Knowledge Management. It was approved on behalf of the Council of Standards Australia on 22 February 2006. This Handbook was published on 7 September 2006.

The following are represented on Committee MB-007: Australian Industry Group Australian Library and Information Association Australian Securities and Investments Commission Australian Society of Archivists Adelaide Graduate School of Business Committee IT-021 Liaison Computer Human Interaction Special Interest Group CSIRO Department of Communications, Information Technology and the Arts Griffith University Institute for Information Management Records Management Association of Australasia University of Technology, Sydney RMIT University

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Standards Australia wishes to acknowledge the participation of the expert individuals that contributed to the development of this Handbook through their representation on the Committee and through public comment period.

up-toKeeping Standards up-to- date

Australian Standards are living documents that reflect progress in science, technology and systems. To maintain their currency, all Standards are periodically reviewed, and new editions are published. Between editions, amendments may be issued. Standards may also be withdrawn. It is important that readers assure themselves they are using a current Standard, which should include any amendments that may have been published since the Standard was published. Detailed information about Australian Standards, drafts, amendments and new projects can be found by visiting www.standards.org.au Standards Australia welcomes suggestions for improvements, and encourages readers to notify us immediately of any apparent inaccuracies or ambiguities. Contact us via email at mail@standards.org.au, mail@standards.org.au or write to Standards Australia, GPO Box 476, Sydney, NSW 2001.

HB 1902006

Handbook
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Success through knowledge: a guide for small business

First published as HB 1902006.

COPYRIGHT Standards Australia All rights are reserved. No part of this work may be reproduced or copied in any form or by any means, electronic or mechanical, including photocopying, without the written permission of the publisher. Published by Standards Australia, GPO Box 476, Sydney, NSW 2001, Australia ISBN 0 7337 7670 1

HB 1902006

Preface
Standards Australia acknowledges the importance of small enterprises to the Australian economy. In 2004 Standards Australia recognised that the generic text of some management standards might require restructuring to meet the specific needs and context of the small business sector. This Handbook, designated HB 1902006 has been written to provide guidance to small businesses on the interpretation and implementation of the Australian Standard AS 50372005 Knowledge Managementa guide, referred to as the Standard in the following text.
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This Handbook was written by: Sue Halbwirth, Senior Lecturer, Knowledge Management, Faculty of Humanities and Social Sciences at University of Technology Sydney Dr. Helen Hasan, Associate Professor, Information Systems, School of Economics and Information Systems, Faculty of Commerce, University of Wollongong.

Professionals with experience in small business and/or knowledge management and two Standards Australia technical committees; the SME Committee (MB-013) and Knowledge Management Committee (MB-007) supported the development of this Handbook. The authors acknowledge the contribution of: David Williams, General Manager, Diversified Portfolio Managers Limited Jim Madden, Founding member and Bruce Polain, Life member, Golden Era Auto Racing Club Inc Kathy Polak, Director, Polak Business Solutions Pty Ltd Lisa Koch, Director, Fyusion Asia Pacific Pty Ltd The development of this handbook has been informed by: Desk research There is substantial literature on both knowledge management and the small and medium enterprises (SME) sector. Selected literature was reviewed, analysed and incorporated into this handbook. Key documents from Standards and industry bodies SAI Global: AS 50372005 Knowledge managementa guide HB 1892004, Knowledge management readingsan Australian guide Australian Business Foundation: Knowledge management in the new business environment (prepared by Dr.Richard Hall, acirrt, University of Sydney) 2003 terminology and

HB 1902006

British Standards Institute: PD 7501:2003, Managing culture and knowledge: guide to good practice PAS 2001:2001, Knowledge management European Committee for Standardization (CEN): CWA 14924-3:2000, European guide to good practice in knowledge management: SME implementation Case studies Owners and operators of small enterprises were interviewed in order to document stories about the role of knowledge and how it was created, used and shared. These stories identified examples of both better practice and opportunities for improving the focus on knowledge.
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Community discussion and input Standards Australia established an informal community of those interested in knowledge management and SMEs. This community used an online discussion list as the primary channel of communication, support by occasional meetings (including teleconferencing). A survey of small business operators was also undertaken.

Acknowledgments
This handbook recognises and thanks the small businesses, individuals and the knowledge management community that gave generously of their time and experience.

HB 1902006

Contents
Page 1 The way we work 1.1 1.2 1.3 1.4
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Introduction ................................................................... 8 Small business today .................................................... 8 The knowledge lens ...................................................... 9 What is knowledge? .................................................... 10 Knowledge management and the small business........ 11

1.5 2

Knowing where to start with mapping 2.1 2.2 2.3 2.4 2.5 Understanding your knowledge environment ............. 13 How well do you know your business?........................ 14 Asking the hard questions ........................................... 15 Transforming your organisation with knowledge ......... 18 Moving forward............................................................ 18

Putting knowledge to work 3.1 3.2 Acting through knowledge interventions...................... 20 The distinction between Building and Operationalising ......................................................... 22 3.3 3.4 Learning what works for you ....................................... 22 Moving to full implementation...................................... 24

Introduction to the case studies: KM in action 4.1 Why collect stories? .................................................... 25

In action: developing and growing a knowledge network of small businesses 5.1 Introduction to Diversified Portfolio Managers Limited (DPM).......................................................................... 27 5.2 5.3 5.4 Mapping the knowledge ecosystem ........................... 27 Building/operationalising knowledge ........................... 29 Knowledge opportunities ............................................. 30

In action: using knowledge for business revitalisation and growth 6.1 6.2 6.3 Introduction to XXX Company .................................... 31 Mapping the knowledge ecosystem ............................ 32 Building/operationalising knowledge ........................... 34

HB 1902006

6.4 7

Knowledge opportunities ............................................. 35

In action: Sharing knowledge in community 7.1 Introduction to Golden Era Auto Racing Club Inc (GEAR) ....................................................................... 36 7.2 7.3 7.4 Mapping the knowledge ecosystem ............................ 37 Building/operationalising knowledge ........................... 37 Knowledge opportunities ............................................. 39

In action: Creating and leveraging knowledge through strategic alliances 8.1 Introduction to Fyusion Asia Pacific Pty Ltd ................ 40 Mapping the knowledge ecosystem ........................... 40 Building/operationalising knowledge ........................... 41 Knowledge opportunities ............................................. 42

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8.2 8.3 8.4 9

In action: The knowledge environment of a home-based business 9.1 9.2 9.3 9.4 Introduction to Polak Business Solutions Pty Ltd ........ 44 Mapping the knowledge ecosystem ............................ 44 Building/operationalising knowledge ........................... 46 Knowledge opportunities ............................................. 47

10

Taking up the challenges 10.1 Understanding the challenges..................................... 48 10.2 Lessons from the case studies.................................... 48 10.3 Enablers for small business ........................................ 50 10.4 Determining the impact of knowledge management in an organisation ................................................................ 50 10.5 Getting started on the journey ..................................... 51

HB 1902006

Foreword
The Australian Bureau of Statistics shows that the number of Australian small businesses increased by 2.7% per annum over the three years from 1997-98 to 2000-01 and that the 1.1 million small non-agricultural businesses operating in Australia in 2000-01 employed 3.3 million people. Defining the small business sector is difficult; however there are some characteristics that are useful in understanding the sector. Such as:
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informal personalised ownership, independent of external control often have a short range perspective while big business uses capital for competitive advantage, small business uses labour a focused product/service range a small/limited market share too small to dominate their market often affected by unpredictable changes from the external marketplace often in horizontal networks that make them reliant on either supply chain relationships or closely dependent on the actions of partner companies are based on the specialised skills of the founders and or owners.

There is wide spread recognition that the small business sector is a major employer and in some industries, is known for innovation. However, studies on small businesses have found that they often have difficulties with growth and adapting to what some describe as a complex and ever changing business environment. Managing the knowledge of an enterprise can assist in making it adaptable within a contemporary business environment characterised by accelerated rates of change; competitive and complex marketplaces; a need for ever shorter product and service cycles; improved information and communication technology ; increases in regulatory and compliance requirements; changing expectations and patterns of work; and global interdependencies and connections.

This handbook has been prepared to show how Knowledge Management can be used to improve business performance. It is easy to read and sets out the stepping stones that will enable small businesses to grasp Knowledge Management concepts to assist them in growing their businesses. 6

HB 1902006

On behalf of Standards Australia SME Committee I congratulate Sue Halbwirth and Dr Helen Hasan for a job well done. Tony Steven Chairman Committee MB-013 SMEs.

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HB 1902006

1 The way we work

1.1 Introduction
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Much has been written about the current pressures on business and the implications of the knowledge era, an era where knowledge and skills are core resources, capability and assets for organisations. It is no longer only what we produce but what we know and how we use knowledge that is a key factor in organisational strength and survival. As a small business owner/operator you do it all yourselffrom finance to human resources to marketing. Your knowledge, and that of your employees are key assets of your business. But how often do you pay attention to this valuable asset? This Handbook has been designed to assist small businesses to understand and better use their knowledge to achieve improved business performance. A small home based business historically only serviced customers in the local community. It can now serve a global customer base using improved information and telecommunications infrastructures such as the internet. However, success will depend on not merely the technology but also the ability to effectively share knowledge about its products and processes to a diverse and distributed community. (Adapted from BSI PAS 2001)

1.2 Small business today

Is work today different from twenty years ago? Through history communities have shared knowledge via personal relationships and societies have recorded knowledge in written and visual forms. To date many businesses have successfully managed some of their knowledge both through personal interactions e.g. meetings and by codifying (or writing down) knowledge into manuals and documents. So what is new? Businesses are increasingly challenged to work faster and smarter, share knowledge across wider geographic and stakeholder networks and keep up to date with changing marketplaces and regulatory environments. There are business imperatives and value in creating, sharing and using knowledge more effectively. 8
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HB 190-2006, Success through knowledge: a guide for small business

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