Volume 1                                        Number 2                        Fall/Winter 2000

Managing Organized Knowledge: A Systemic Proposal

Heinrich W. Ahlemeyer


If we  look  for bridges among past, present, and future, our searchlight will almost inevitably get knowledge into its focus. Knowledge comes from the past; it is presently present; and by changing the presence it points into the future.

Modern organizations and societies are currently observed as going through a time of upheaval towards knowledge based systems. Next to power and money, the traditional communicative media, knowledge is described as increasingly gaining weight as an operational condition and as a resource in steering social systems (Willke 1998a; b).

The current renaissance of knowledge as a topic comes neither from sociology nor from political science but typically from management theory. After Amitai Etzioni’s Active Society (1971) and Daniel Bell’s Post-Industrial Society (1976), knowledge as a subject was dormant for almost two decades before it was rediscovered by the works of Quinn (1992) on the “Intelligent Organization”, Reich’s concept of knowledge work by “symbolic analysts” (1991) and Peter Drucker’s description of “The Post-Capitalist Society” (1994). The idea of the intelligent organization can presently be observed thriving both in the theory and in the praxis of management (see, for instance, Senge 1990; Chawla and Renesch 1995).

Three recent publications by system thinkers, however, indicate a renewed sociological interest in the subject and promise some challenging views on the way in which organizations deal with knowledge (Willke 1998a; b; Baecker 1999; Luhmann 2000). In this article, we shall take up some of their ideas and concepts and examine them for implications they might have for the practical management of knowledge in organizations. Both the volume and the degree of complexity of the theoretical concepts to which we refer prevent any claim of complete or adequate reproduction of the works we quote. We also accept the responsibility for the practical consequences that we propose in the last section.

Our inquiry indicates that organized knowledge cannot escape self-referentiality: by dealing with knowledge, it is referred to its own ignorance/knowledge. To break this self- reverential circle, we anticipate the concept of knowledge, developed in section three, and describe it as a complex operation of examination. The leading question for this examination asks to what extent results of systemic research on organizations may inform and support a practical management of knowledge? We set out to analyze the implications that an organization as a social system has on the production and use of knowledge, and we inquire in what ways organizations are prepared, in what ways they are structurally restricted in dealing with knowledge? What do the distinctive features of organized social systems mean for the production, use and spread of knowledge? What is regarded as knowledge within an organization? And finally, what practical consequences can be drawn from a systemically informed analysis for managing knowledge? We suggest that organizations are basically handicapped in dealing with knowledge and for an effective management of knowledge they need to resort to other social system types, such as networks and communities. First, however, we shall to examine the concept of organizations as autopoietic social systems.

2.    The Autopoietic Concept of Organized Social Systems

The concept of organizations as autopoietic social systems begins with a circular definition: “An organization is a system which produces itself as an organization” (NL 2000a: 45). Organizations are unpredictable, incalculable, historical systems that proceed from a presence for the constitution of which they themselves have contributed. They are autopoietic to the extent that they produce and reproduce themselves. This implies a self-description as an organization. Otherwise, an external observer would not know whether or not he is dealing with an organization; neither would the organization itself. A system that produces itself has to be able to observe and discriminate itself as different from its environment.

The basic unit of an autopoietic system has the chronological form of an ‘event’, an incident that makes a difference between ‘before’ and ‘after’. In the very moment of their coming into being, events fade away. The basic units are also called ‘operation’, and the basic operational mode of organizations is decision.   It is by the operation of decision that organizations differ from other autopoietic social systems, such as interaction or society (Luhmann 1997).

In this perspective, organizations are conceived as social systems consisting of decisions (Luhmann 1988). They produce the decisions they consist of by the very decisions they consist of (Ahlemeyer 2001). Organizations have to turn everything that is important for them and their continued existence into an object of their decision. This extends, as we shall see, to knowledge, too. The organization reproduces itself by decisions that go back to past decisions and point to future decisions (Baecker 1999). The operative units are connected recursively. Every decision has to take care of its connectivity to decisions that have previously been made and to those that might follow in the future. The only constancy in the elementary operation mode is to be found in its discontinuity. The ongoing disintegration on the basis of the underlying operative events demands a continued repetition of selections of a following event. In this sense, organizations are inherently restless.

To direct and program this ongoing selection on the level of their elementary units, autopoietic systems have to refer to their self-observation. They use their identity, however, not as a fixed object with certain stationary properties, but rather as a focal point for constantly adopting new qualities and shedding those no longer needed or used (Luhmann 2000: 47).

The theoretical concept of autopoiesis has far reaching consequences for the relationship of system and environment. No doubt: self-referentially closed systems require by necessity an environment and cannot exist without it. They are, however, not determined in any direct or immediate sense by an input of the environment, but they create their own environment by selecting themselves what they receive. The environment always appears according to internal processes of observation. Closure on the operative level does not mean that an organization would not communicate with its social environment. Society provides for these possibilities of communication across the borders of subsystems. As a recipient of communication, the organization regulates with its own structures what information may appear on its internal screens and stimulate its internal processes. As a sender, it decides what to communicate and what to keep to itself (Luhmann 2000: 52).

The environment is an internal construction of the system and in this sense specific to the system. Information in the system is always information about the environment, not information from the environment, as there is no direct contact between system and environment. An autopoietic system can thus only inform itself, and information in the system assumes the function of selectively limiting the possibilities for continuing its basic operations. The system uses information to get from one event fading away to the next one coming into being. The connection between the two is achieved by information. Information reproduces the borders of the system, and therefore it cannot transcend them, neither from the outside to the inside nor vice versa (Luhmann 2000: 56ff).

The description of organizations as information processing systems requires an explanation of the notion ‘information’. For this, we resort to Gregory Bateson who proposed: “The technical term ‘information’ can temporarily be defined as any difference that makes a difference at some later event.” Or, even shorter, in his famous definition, which is at the core of every systemic methodology: “Information consists of differences which make a difference” (Bateson 1982: 123). It may be useful to add that systems react only on differences that they themselves have produced internally.

One important consequence of the theory of autopoietic systems is a shift of emphasis from adaptation to learning. The operations of the system serve to continue its autopoiesis, not to improve its adaptation to the environment (Luhmann 2000: 74f). Information about the environment is used to create system-internal problems–problems of consistency with what the memory of the system claims. And by working out solutions, the system improves the adaptation to itself. In this sense, learning requires knowledge (Luhmann 1984: 447ff). Furthermore, it is a general prerequisite of learning that the system, that is the organization, is able to tell the difference between success and failure of learning. The system finds this distinction only within itself, as a system-internal construction. And one may add that it then depends on the current state of the system whether or not it allows itself to be impressed by successes or failures on this level (Luhmann 2000). If these are some basic outlines of the systemic concept of organization, how can we grasp and understand the concept of knowledge?

3.    Knowledge

Knowledge belongs to the constitutive characteristics of social systems, as communication (by language) requires knowledge: without knowledge, no communication. Knowledge, however, is never made fully explicit in communication.

Luhmann (1990) and Baecker (1999) suggest conceiving knowledge not as something that is principally worth knowing, but as a ‘complex operation of examination’ (Luhmann 1990: 129) that both individually and socially has its own conditions. According to this concept, knowledge is neither just a storable stock nor a learnable process, but a structure that facilitates dealing with information. This structure allows for accepting information as new or for rejecting it as irrelevant, for comparing it with other information or to combine it to a new, a third kind of, information. Knowledge encompasses and surmounts the difference of informations and, as a structure, it changes with the information that is currently selected and accepted. These informations are generalized and transformed onto a selective level that then may be observed in respect to its selectivity, its contingency and its stability in time.

The temporalization, which the concept of social system proposes, does not exempt knowledge: knowledge is described as immediately bound to the ongoing operations of its reference system that disappear in the very moment of their coming into existence. Von Foerster (1969) has shown that memory, too, operates only in a topical manner. It consists of momentary examinations of consistency, in which new information is related to information remembered, and in this sense memory implies much more than just a use of things past. There is no timeless cognition. Knowledge assumes an object-related form, but in order to be known, it has to be actualized at a particular moment. Memory operates only when it operates. We hold in mind Luhmann’s proposal of conceiving knowledge not as a kind of time resistant stock, but rather as a complex operation of examination of differences (Luhmann 1990: 129; also Baecker 1999).

In this respect, knowledge refers to ‘structure’, which stands as one of its prerequisites. Structures, too, have their own temporal dimension. They, too, are structures only to the extent that they are used as structures. Their function is to help the autopoiesis get from one event to the next one. Structures reduce the arbitrariness of the ensuing event. They render redundancy possible and thus allow for an accelerated speed in the production of the events that follow. Only that functions as a structure what is used in the current operations to help join another operation. In this way, a system gains an important advantage: the advantage of forgetting, of using a structure no longer.

Every kind of time consistency, and that implies the time consistency of knowledge repositories, is thus the performance of an observer for whose very operations the same holds true (Luhmann 1990: 130). The observer, for his part, is free to use a time pattern thus constructing consistency. He may find the knowledge as having been known in the past and probably continuing to be known in the future. The ‘normal’ knowledge user does not use a time pattern. He is thirsty and opens the refrigerator, as he knows there is milk inside. Only when he (or some one else) wants to know what he knows, does he transfer structure into the time dimension.

That gives way to a theorem of improbability of knowledge: we can see that every cognition, every kind of integration with eigen states and with the environment disappears immediately after occurring. Without this mechanism of forgetting, the system would soon be overloaded with accumulated considerations.

If knowledge always refers to the operations of a system and only a minimum fraction of potential knowledge can be actualized from moment to moment, the central question an organization faces is less what is known, but how can it provide for appropriate topicalizations of what is known and how can it link knowledge to decisions.

4.    Knowledge in Organizations: Certainty and Uncertainty

The notion of knowledge awakens positive connotations with most contemporaries. Knowledge is valuable; the more you know, the better; knowledge seems to promise consensus and certainty. One may question some of these premises and propose, for instance, that organizations have a paradoxical relation to the dimension of certainty/uncertainty. They need uncertainty as much as they need to pretend certainty. They have an equally ambiguous relationship to knowledge. For the ongoing production of decisions, ignorance may sometimes be as necessary and functional as knowledge is. And one can argue, as Dirk Baecker does, that the communication of knowledge in organizations runs particular risks of being doubted and raising objections.

Organizations are communication systems that consist of decisions. In contrast to communication in general, which allows for a fairly high tolerance of indeterminacy, decisions have to attach great importance to very specific connections with earlier, but also with future decisions. Organizations achieve this combination of self- specificity and the search for specific connections by concealing their own uncertainty. In their decisions, they refrain from communicating their own uncertainty. March and Simon (1958) have called this premise of every kind of organizational reproduction ‘uncertainty absorption’.

The organization leaves its own uncertainty uncommunicated. The system lives off over- estimating itself. It pretends to dispose of more certainty than it actually has. In the ongoing communication of decisions, it conceals its own uncertainty as it assumes that a continued display of its uncertainty would obstruct its members in fulfilling their tasks.

In his latest book on “Organization and Decision”, Luhmann has dedicated a whole chapter to the subject of uncertainty absorption (2000: 183ff). He uses this concept to replace what classical organizational theory had termed ‘goal orientation’. Luhmann sees uncertainty as resulting from the simultaneous incidence of both knowledge and ignorance, because of this very difference. Both knowledge and ignorance, he contends, are social constructs developed in the system that uses this distinction. In the case of organizations, uncertainty results from the ongoing production of decisions that serve to produce further decisions (2000: 184).

Relating uncertainty to the distinction of knowledge and ignorance, Luhmann emphasizes that uncertainty must not be misunderstood as a dysfunctional state to be remedied as soon as possible, but that–in contrast to what the system itself may perceive–uncertainty constitutes an important resource for the autopoiesis of the system. Without uncertainty there would be nothing left to decide and in a state of complete self-determination the organization would wither and finally cease to exist through lack of activity.

Ignorance can only be produced and fought with the help of knowledge. Therefore each organization, which sets out to invent its own future, has to refer to what it has already achieved. “An organization can never know what it thinks or wants until it sees what it does” (Weick 1977: 195). For an organization, this means that ignorance cannot be reduced by knowledge, but only by decisions. These decisions may, for instance, refer to the direction and method of searching for knowledge. Organizations create their future by help of decisions, not by knowledge. Uncertainty absorption for them is a decision process, not a scientific quest. The distinctions of certainty/uncertainty and knowledge/ignorance are produced recursively, by the system making decisions that are recursively bound to earlier decisions. This implies that knowledge/ignorance and certainty/uncertainty do not exist as such, but only system-specifically (Luhmann 2000: 186- 87).

In every operation, in everything that happens in the system, the difference of knowledge and ignorance is reproduced, as a difference. The absorption of uncertainty conveys to this difference just a different form, a less disturbing one. At the same time, one can often observe in organizations that available knowledge is not used in decisions and even that ignorance is intentionally produced or maintained, as an evidence of its innocence, for instance. The management did not know about serious security gaps; therefore, it argues, it cannot be blamed for the accident. Seeing the consequences of knowledge, one may prefer not to know. For participating in organized social systems as a member a sophisticated art of not knowing may be as much required as the art of getting the right kind of information. Producing and preserving ignorance may be just as functional for making decisions as the production and preservation of knowledge.

5.    Knowledge Communication

Does knowledge need to be communicated in the social system in order to manifest itself as knowledge? This is a difficult question. On the one hand, knowledge always refers to the operations of the system, and the operational mode of social systems consists of communication. From this perspective, one would tend to affirm the tie of knowledge to communication. On the other hand, knowledge is never made fully explicit in communication. There is always more to be known than can be communicated. Knowledge may also be acquired by observation, or by experience, or by participation. With reference to Polanyi (1985), we can distinguish explicit knowledge and implicit knowledge. Explicit knowledge is clearly and openly stated, communicated and often even documented as knowledge, while the other typically remains unrevealed, uncommunicated and opaque even to the knowing person who does not know that he/she knows. As observers, we find ourselves referred to two different system levels, which are both undeniably implied when we deal with knowledge: individual psychic systems that process thoughts and perceptions and interpersonal social systems that process communication. One of intriguing questions that ensues is whether or not communication systems also have access to implicit knowledge.

Much knowledge remains implicit. When it is imparted, however, it encounters not just the usual difficulties, which Luhmann has summarized pointedly with his expression of the ‘improbability of communication’, but because of the impositions implied, communicated knowledge meets even more obstacles.

Communicated knowledge provokes doubt and objection beyond the degree that every other communication act risks being rejected. Each kind of knowledge communication contains for instance a claim of knowledge that may put others into the uncomfortable situation of thinking of themselves as unknowledged. The acceptance of knowledge seems easier, when it is more implicit. To make knowledge explicit in the communicative dimension means exposing it to possible rejections.

The improbability of its acceptance can be observed in all three basic dimensions of the social system. It may be rejected in the object-related dimension, because one has a different view of the matter in question. It may be rejected in the social dimension, because one rejects the imposition to regard something as knowledgeable (or to admit a missing knowledge) where others present themselves as knowing. And it may be rejected in the time dimension because one doubts whether the communicated knowledge is up to date or because one cannot tell the consequences for one’s own future (Baecker 1998: 12ff).

Knowledge does not go together easily with the organizational operation of making decisions; often it even disturbs it. By producing doubt and objection, it runs counter to the organizational imperative of uncertainty absorption. Therefore, organizations often find it easier to refute knowledge than to process it. The extent to which a decision uses a specific knowledge must rather be concealed than communicated, as knowledge provokes doubt and objection even when there is a general readiness to accept the decision itself (Baecker 1999: 16). Knowledge

always plays a precarious part in organizations; in order to become organizationally relevant, it needs to find connections to the ongoing decision-making operations of the system.

6.    Dimensions of Knowledge Management

Following Luhmann we have described organizations as autopoietic social systems that process decisions by decisions and we have tried to understand some implications of knowledge for such systems. We have pointed to the temporalized properties of knowledge and memory and identified some basic obstacles to knowledge in the elementary operation of decision-making in the organizational imperative of uncertainty absorption and in the impositions of knowledge communication. In this final section, we are interested in practical implications of this approach for the management of knowledge in organizations. Here, we question Luhmann’s claim that systems theory needs no praxis, but is content with containing its own program of amelioration (2000: 474). We advocate, in contrast, an approach that overcomes the alternative between praxeologies void of theory and theories lacking practical relevance. We regard a reflexive view which tries to understand the other side of the difference as a productive form of loose coupling from which both theory and praxis profit.

One instance of the practical relevance of theoretical findings may be found in the very concept of knowledge management itself as it takes up and affirms the distinction between individual and organizational knowledge. Luhmann had opened up his sociology of knowledge by the end of the 1980’s by proposing to loosen the hitherto almost unshakable attribution of knowledge to individual systems of consciousness (1990: 11). Chrys Agyris and Donald Schön, the creators of the idea of organizational learning, pointed out how almost unthinkable it was to suggest that there is knowledge and learning beyond the individual level:

To the distinguished social scientists who were repelled by the idea when we first broached it in the early 70s, organizational learning seemed to smell of some quasi-mystical, Hegelian personification of the collectivity. Surely, they felt, it is individuals who may be said to learn, just as to think, reason, or hold opinions. To them, it seemed paradoxical, if not perverse, to attribute learning to organizations (1996: 4).

In the mean-time, some researchers have shown that the intelligence of organizations may well be distinguished from the individual intelligence of its members so that parliaments, for instance, stand out as rather smart organizations consisting of usually average members in contrast to universities which comprise many intelligent individuals, but gain little praise for their organizational intelligence, in Germany anyway (Willke 1997).

The practical relevance of this distinction of individual and organizational knowledge is obvious: in knowledge-based companies, as in the software industry for instance, or in consulting, one of the most pressing concerns is to prevent core business knowledge from emigrating when key knowledge holders suddenly leave the organization, following perhaps a competitor’s offer. For the management of these organizations, building up and taking care of an organized knowledge base that is independent of individual consciousness systems ranks among the top priorities.

Much current knowledge management can be covered and systematized by taking up two

basic systemic distinctions: the distinction of individual/organizational knowledge and the distinction of explicit/implicit knowledge. By cross-tabulating these distinctions, we gain four types of transitional activity that can be used for grasping present activities in the praxis of knowledge management (Aibel and Snowdon 1998a, b).

   Individual  Organizational
    explicit  I   making tacit individual knowledge explicit  II   sharing explicit knowledge
    Tacit  III   sharing implicit knowledge between individuals apprenticeships, workshops  IV   more trusting use of tacit knowledge community of practice

Corresponding to this four-field pattern, there are different tasks to be taken care of in the management of knowledge:

  1. One needs to identify which artifacts hold explicit knowledge (databases, filing cabinets, articles, etc.) and create a strategy for optimizing the use of these artifacts and making them available.
  2. Where the asset is tacit, management must decide whether it should and could be made explicit. It is important to observe the environment carefully for the degree of complexity and uncertainty involved. As a rule of thumb: the more complex and uncertain the environment is, the more it may be advisable to retain knowledge in its tacit form (Cf. also Aibel and Snowdon1998a, b; Ahlemeyer and Königswieser 1997).
  3. Where it has been decided to make the knowledge asset explicit, artifacts need to be created to act as repositories (databases, manuals, articles). With the evidence of the temporalized operation mode of memories in mind, it seems equally crucial to create an awareness in the organization that recalls the existence of these artifacts and encourages their use.
  4. Where the asset is tacit and it has been decided best to be kept in that state, one needs to create and manage communities who assume the function of ‘repositories’, of personal bearers and producers of knowledge.

Much current knowledge management presently focuses on squares (I) and (II). It is generally assumed that knowledge management is about making tacit knowledge explicit and distributing it widely in the organization by artifacts of modern information technology.

Important as these activities are, squares (III) and (IV) must not be neglected. They accept and acknowledge the essential role and qualities that knowledge has to offer in the aggregate, implicit form. Especially when gaining competitive advantages by creating new knowledge is at stake, implicit knowledge proves even superior: it is more adaptable, more flexible and much more quickly mobilized. Any effective knowledge management program will involve a balanced portfolio of all four transitional activities.

The creation of communities of competence is one important step in knowledge management. The observations offered above have pointed out the principal difficulties that organizations encounter in dealing with knowledge. Other obstacles appear on the level of decision premises and organizational culture: where career structures and reward systems are geared towards individual gain, there is little structural encouragement for making tacit personal knowledge explicit and sharing it with competitors. In many organizations, members still hold to the deeply internalized norm that you had better treat knowledge like money and invest it only very selectively. The message of knowledge management announces just the opposite: knowledge grows by sharing.

Considering these obstacles in organizations, it may be helpful to remember the difference between organization on the one hand and network and community on the other. Neither notion is by necessity more comprehensive than the other one. There are organizations within and between communities and networks, and there are communities and networks within organizations.

More loosely coupled social systems, such as networks and communities, seem to be better suited for meeting the challenges of knowledge management than organizations are. Liberated from the autopoietic operation of decision-making, they also find it easier to deal with knowledge, particularly in its aggregate, implicit form. To manage knowledge successfully, organizations need networks and communities. As Geyer (1990) demonstrated, these modern communities in high-complexity environments have little in common with communities in the traditional sense. They are more temporary. They do not require normative conformity. They are comprised of people bound by common interests or causes. They allow for, even demand a maximum degree of self-expression and, based on win/win-relationships, they reject collision course patterns of win/lose constellations (Covey 1989). Most of all, these communities develop on the build-up of trust.

In fast changing and complex environments knowledge in general and implicit knowledge in particular become increasingly important assets. Often there is not enough time to wait and rely on processes rendering important knowledge explicit. Tacit knowledge corresponds with the generally temporalized quality of knowledge in autopoietic social systems. Because of its fleeting quality, especially implicit knowledge needs a focal point, ‘a system in charge’, whose function is to remind the organizations, in its autopoietic operation, of existent knowledge assets and to explain, apply, promote, protect, and develop them. The creation and support of communities of competence as such focal points is one crucial core component of all knowledge management. One does not have to be a prophet to see that knowledge is going to change the form and function of organizations dramatically in the years to come.


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