PERSPECTIVES OF KNOWLEDGE MANAGEMENT SYSTEM
APPLICATION IN INNOVATION PROCESSES
A Study based on Experience of Polish IT Company
Magdalena Jurczyk-Bunkowska
1
and Krzysztof Jungowski
2
1
Institute of Processes and Products Innovation, Opole University of Technology, Opole, Poland
2
NetLine Group Company, Wrocław, Poland
Keywords: Innovation management, Innovation process, Knowledge management system, Information, IT.
Abstract: The article focuses on knowledge management system (KMS) as a support in innovation management. It
presents one aspect of the research carried out in NetLine Group, a Polish IT company. IT market is highly
competitive and constantly changing, often rapidly and unpredictably. For this reason, the company's
development strategy must be directed at the implementation of the idea of 'continuous innovation'. An
original approach to innovation management process, based on Theory of Constraints has been proposed in
order to implement this strategy. This approach provides a conceptual base for the elements, which are
constitutive of the system of innovation management. One of them is the KMS, which relates to this article.
Based on the experience of NetLine Company, the importance of KMS in the context of problems of
innovation management is pointed out. Assumptions and concept of KMS development in an innovation
area was defined. Article also highlights the expected benefits of the implementation of KMS and identifies
potential threats associated with it.
1 INTRODUCTION
Nowadays, we can see a growing interest in
knowledge and innovation. The reason for this is the
awareness that only the constant development of the
company can ensure the survival in the global
competitive world. Changeability of the social and
economic environment, which results mainly from
technological progress, primarily information
technology. The only way for companies is therefore
to follow the strategy of 'continuous innovation'.
However, it requires a change in approach to the
organization's resources, and consideration of
knowledge as a part of them. In the context of
innovation process knowledge is a strategic
corporate asset that needs to be gathered, retained,
updated, disseminated and applied to future
organizational problems (Drucker, 1994).
Control of the effectiveness of the innovation
process and shortening the cycle of innovation are
the main objectives of innovation management. In
the literature there are many different terms grouped
under the notion of innovation. In the literature
concerning the management, it is understood in a
broad sense, as a process of activities resulting in a
‘something new’ (Tidd, 2005). Here the term
“innovation” will be understood similarly – as the
process leading to changes in organization. The
changes can be associated with different functions of
a firm and they can feature not only a various degree
of improvement but also diverse levels of
management as well. A common attribute of the
changes is observed in their purposefulness because
they are organized and intended in a way that leads
to benefits for a company.
In the article the following concepts: ‘innovative
project’ and ‘innovation process’ are used. It is
assumed that the innovative project is a part of the
process of innovation. The project has a clearly
defined target, this occurs only part of the innovation
process.
In the case of the innovation process
comprehensive and solid knowledge recorded and
analyzed by a computer system is so far unavailable.
However, this is the basis for the proper
management, understood as a sequence of decisions.
Continuous innovation is already a part of everyday
life in the companies in IT sector. Their experiences
can offer a perfect field of research focusing on
issues around innovation.
287
Jurczyk-Bunkowska M. and Jungowski K..
PERSPECTIVES OF KNOWLEDGE MANAGEMENT SYSTEM APPLICATION IN INNOVATION PROCESSES - A Study based on Experience of Polish
IT Company.
DOI: 10.5220/0003621102870293
In Proceedings of the International Conference on Knowledge Management and Information Sharing (KMIS-2011), pages 287-293
ISBN: 978-989-8425-81-2
Copyright
c
 2011 SCITEPRESS (Science and Technology Publications, Lda.)

Decisions regarding innovative processes in
various phases require structured knowledge and
access to information. These resources are therefore
treated as a key in pro-innovative organizations.
Unfortunately, it is expensive to acquire and keep it.
Therefore, companies are looking for ways to most
effectively manage knowledge in innovation
processes. Efficiency is understood as the provision
of information and knowledge that is adequate for
the realization of the innovation process, in due
time, to the right person.
Exploration in this direction has also been
undertaken by one of the leading Polish IT
companies, NetLine Group. This article presents a
part of the wider research into the management of
the innovation process. Subjects discussed here can
be represented by the following questions:
− why Knowledge Management System (KMS) is
important in the innovation process,
− how Knowledge Management System is
connected to the success of the innovations,
− how Knowledge Management System should be
designed to support the innovation process.
The first point of the article, based on experience
NetLine Group, has identified major problems in
managing innovation projects. They are related to
the needs regarding knowledge and information. The
model of the knowledge management system, which
is proposed in this article corresponds to the original
concept of innovation management. That approach is
based on the concept of Theory of Constraints and
special classification of innovation in respect of their
duration and scope. The idea of this approach is
presented in the second section of this article.
The third section presents the basic principles for the
KMS, which is being established. They correspond
to the approach to innovation management presented
in second section. The fourth part of the paper
indicates the expected benefits from application of
KMS. It also contains obstacles that need to be
aware of to maintain utility of the KMS.
Conclusions refer to the impact of KMS on an
innovation culture of the organizations and
inversely.
2 PROBLEMS IN THE
MANAGEMENT OF
INNOVATION PROJECTS
Analysis of various innovation processes, which
have been undertaken in NetLine Group, allowed the
authors to identify the main problems in their
management.
NetLine Company assesses and analyzes all
innovation processes which were finished. This is
done by project manager whose task is to complete a
special form. The form mainly consists of standard
questions meant to indicate one of several responses.
This allows to automate the analysis from different
perspectives e.g.: time periods, types of projects,
contractors, etc. Detailed analysis is conducted only
for selected problems, which under given conditions,
seems to be significant.They overlap to a large
extent, the barriers that are referred in publications
relating to innovation management (Van der Panne,
2003).
Increasingly shorter Duration of Innovations
Projects. This applies to all phases of the innovation
process: front-end, development, and commercial-
lization phases. The response from the company to
emerging needs of innovative solutions has to be fast
to ensure its comprehensiveness.
Changeability of environmental Conditions
during the Course of realization Innovation
Projects. Changes can be very violent and often not
indicate any symptoms. It happens that they are so
extensive that it is necessary to adjust the
fundamental assumptions of the project.
The Difficulty in Controlling the Course of
Implementation of Innovative Projects. First of all, it
is about the possibility of identifying the progress of
work, the measures involved in it and the signals
regarding the disruptions in the event of any.
Especially in the early phase of innovation
processes. The difficulty of monitoring the
innovation process increase along with the
involvement of partners from outside the company.
Establishing Priorities for Innovation Process.
This is connected mainly to the lack of possibility
for the determination of their profitability. The
degree of the impact of innovation project in the
strategic objectives of the Company would be
helpful in this respect.
Difficulties in Staff Motivation. Symptoms of the
smaller involvement of staff in innovative projects
are being noticed. Employees take into account the
need of considerable autonomy in decision making
and a higher probability of failure. They also realize
the need of demonstrate the high organizational
skills. It is difficult to properly assess these factors,
especially in the case of an adverse end of an
innovation process.
Problems of Communications and Decision-
making. NetLine Company demonstrates an
innovative culture. This company has implemented
and has operating procedures and routines in the
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management of the innovation processes. Despite
this, it situations are noted where:
− next steps are not taken, because information
about the completion of the previous stages of
the innovation process has not been transferred,
− the required analysis has not been carried out in
due time,
− making decisions are delayed or are left for the
consideration of the team,
− two different task teams solve the same or a
similar problem concurrently.
All of these obstacles could be at least
minimized by the efficient functioning of the
knowledge management system in innovation
processes.
The concept of such a system is presented later
in this paper. The presented model is linked to a
specific approach to innovation management. The
idea of this approach is defined in the next section.
3 CONCEPT OF INNOVATION
MANAGEMENT
The effective innovation process management
system should primarily provide effective
management of appropriate innovations.
The word ‘appropriate’ means such innovations
which in given conditions will contribute to the
development of the company in accord with its
strategy. From the perspective of the experience of
NetLine Company it follows that the allocation of
resources in the appropriate innovation is a key
factor of their success.
A popular and commonly used concept in
management that is based on continuous
improvement is the Theory of Constraints. It applies
an algorithm of continuous increasing of system
throughput based on five steps run repeatedly.
(Goldratt, 1986). Theory of Constraints is
successfully employed in various areas of
management (Mabin and Balderstone, 2000). Apart
from successful employment of TOC in
management, it also provides another advantage
which is worth mentioning and it is a possibility to
focus on an effect of an innovation in relation to the
whole system. Such a broad view on the whole
system provides a good perspective for evaluating a
success of an innovation. One of barriers for
innovations to be implemented is uncertainty
concerning outcoming results and doubts whether
investments are accurately directed.
This is the first base of the proposed approach to
innovation management. Its application enables the
identification of areas of the operation of a company,
in which innovative solutions will contribute to the
true development of the company (increase the
system throughput).
The second basis of the presented approach to
innovation management involves the distinction
between three categories of innovation processes
(Jurczyk, 2011). The reason for introducing this
classification is the use of tools and methods
relevant to the requirements of the particular
category of innovation processes.
This distinction had its origin in innovation
processes analyses which were carried out to show
that some problems are typical for one category of
projects, and not so common for others.
In this way, three classes of innovative processes
in every organization are identified:
− innovation of current needs horizon, which is
implemented in the short term (funded from
current budget) and focuses on a single area of
activity;
− innovation of potential development horizon,
middle term (covering 2 or 3 business periods)
having an impact on a few associated activities
creating a part of process or whole process;
− innovation of creating new business horizon,
long term range (associated with strategic
financial decisions), which could create new
possibilities for whole business e.g. a new
product or technology.
This distinction offers a development of the concept,
which appeared in (Moore, 2007). In the paper, the
author points out the importance of each category of
innovations for companies development. He also
offers examples of the need for a different approach
to the management in the particular categories of
innovations in marketing. Following the proposals
submitted by G. Moore an assumption is made in
this paper that innovative processes in each of the
three categories should be realized simultaneously.
Figure 1 illustrates the concept of innovation
management approach modeled on the basis of TOC
five-step algorithm. This algorithm is identical for
each category of innovation. However, methods and
tools used in various steps will be different.
PERSPECTIVES OF KNOWLEDGE MANAGEMENT SYSTEM APPLICATION IN INNOVATION PROCESSES - A
Study based on Experience of Polish IT Company
289

Figure 1: Base for innovation management approach
modeled on TOC ‘5 steps’.
The essence of the proposed approach involves
the identification of an area ('innovation area'), in
which innovation is needed. It is determined by the
constraints on the achievements of the goals
assumed by a company'. This constraint is indicated
based on an analysis of the internal and external
environment in the context of increase the system
throughput in a short, medium and long perspective.
The exploration for innovative solutions should
focus around such a specified area.
It should be noted that each of the categories of
innovation will be associated with:
− another detail for the indication of the innovation
area,
− various tools used in the implementation of
management functions, such as for example
environmental analysis, estimating the duration
of the process, etc.,
− different meaning the purposes for company
development,
− different levels of decision-making,
− different approaches to risk management,
− etc.
The designed knowledge management system has to
be compatible with the presented concept of
innovation management. Therefore, three presented
categories of innovation processes it should be taken
into account in carrying out the functions of
knowledge management.
4 KNOWLEDGE MANAGEMENT
SYSTEM FOR INNOVATION
PROCESS MANAGEMENT
Knowledge in an organization enables one to
undertake such processes of innovation that are
consistent with a company’s strategy. Following the
warning ‘Don’t blindly copy best practices.’
(Loewe, 2006), NetLine Group develops its own
system of management of innovation process and the
associated knowledge management system (KMS).
Knowledge management includes various
processes such as acquisition, creation, renewal,
archivization, dissemination and application
(conversion of new knowledge into action or
behavior modification) of knowledge. The processes
of collecting, organizing, classifying and
disseminating information are served well by the
searching, indexing, collating, archival and
transmission capabilities of new technologies.
Each of the functions of knowledge management
is carried out for a specific phase of the innovation
process. Figure 2 shows that the knowledge
management system has to support each stage of the
innovation process including the identification the
input and output parameters and their measurement.
It is assumed that the KMS will enable one to
apply the knowledge developed in innovation
processes conducted concurrently with it.
Accelerating the process of learning, so important in
managing innovation.
Knowledge is the basis for rational decision
making. In the context of decision-making March
(March, 1999) lists the following aspects of
knowledge: knowledge of alternatives, knowledge of
consequences of alternative actions, consistent
preference ordering, and a decision rule by which to
select a single alternative of action.
Information technologies are a key component of
modern knowledge management systems. However,
we cannot expect the capability of artificial
intelligence systems of creating knowledge that is
indispensable to carry out innovation processes.
Opinions that the use of IT in knowledge
management may even impair the ability of an
organization to create knowledge are encountered in
the literature of the subject (Gill, 1995). One has to
take these observations into account when the
formation of a knowledge management system is
Focusing
resources and
funds for
identified areas
in order to find
innovation which
are adequate to
the needs.
The verification
and evaluation of
innovation
through fit to the
needs and system
development in
the context of
strategic
objectives.
Identification of
the need the
implementation of
innovations.
Indication of area
that requires
changes.
Analysis of the
system's constraints
in the context of
strategic goals.
Referring to
functions,
processes and tasks
realized by the
com
p
anies s
y
stem.
Quantitative
determination of
innovation effects in
the context of system
throughput. To
establish a
quantitative change,
which is worth of
paying.
5 step
3 step
1 step
Innovation
management
concept based
on TOC 5 steps
algorithm
4 step
2 step
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undertaken around process that require creative
approach by its very specific features. Use of IT
solutions in this case seems to be necessary because
of the complexity of innovation processes. They
cover the whole organization, and are stretched
across time require a high coordination. In addition,
the speed of access to knowledge is also important.
Figure 2: Location of knowledge management system and
information management system to innovation process.
Key tasks to be fulfilled by a system of
knowledge management in innovation processes are
as follows:
The Application of Knowledge and Information
for Identification of Appropriate Areas of
Exploration, followed by Implementation of
Innovation. This feature follows from approach
based on the Theory of Constraints which has been
described in section 2 of this paper. For each of the
three categories of innovation processes, this
function will be performed using other tools of
environment analysis.
Drawing up of Plans for the Innovation Process
and the Alternatives to any Emergencies. KMS is
designed to enable faster and more accurate planning
by providing the required knowledge about the
framework of the plans in relation to a particular
category of innovation processes.
Appropriate selection of information to ensure
proper picture of the decision-making situation.
Indication of decision-making criteria for each of the
categories of innovation processes.
The Possibility of early Detection of
Disturbances based on the Experience in Similar
Projects over the past Period. Allowing for
estimating cost and duration of the innovation
process. An assumption of different level of detail
for each category of innovation is possible and
necessary.
Storage of Knowledge on the rejected Proposals
for Solutions in the Subsequent Stages of an
Innovation Process. This will enable one to more
efficiently realize innovation processes by
supporting non-linear models of management. This
is particularly important in the early stages of the
innovation process. Examples of such procedures are
offered by Cooper’s Stage Gate model (Cooper,
2009) vs. Koen P. front-end of innovation model
(Koen, 2001). In the process of the concept
development, there may be a need of a return to the
solutions proposed in the earlier stages of the
innovation process.
Assisting the Distribution of Knowledge inside
the Organization and in Collaboration with External
Partners. This will lead to faster and more efficient
learning process. In this field, it is also important to
indicate the generators and consumers of the
particular categories of information.
5 EXPECTATIONS REGARDING
KNOWLEDGE MANAGEMENT
SYSTEM IN INNOVATION
PROCESSES
It is quite costly to create, implement, and maintain
knowledge management systems. Therefore, the
potential benefits in the operation of KMS and the
potential barriers in obtaining them should be
examined. The benefits and obstacles of KMS
referred to in this section are taken from experience
of NetLine Group Company, where the research was
conducted. However one can predict that they will
be similar in other companies as well
The key benefit is to reduce the hazard of losing
knowledge. IT companies have to expect high staff
turnover. This applies particularly to Poland, where
the salary conditions differ from world-top. The next
group of benefits focus on the improved efficiency of
innovation processes. In this field one should take
into consideration the following factors:
I
nnovation process
Knowledge management system: acquisition,
creation
,
renewal
,
archival
,
dissemination and a
pp
lication
INPUT
tangible (R&D facilities,
knowledge in technologies)
+ intangible (competencies,
organizational culture)
OUTPUT
tangible (new/improved
products or services) +
intangible (experience)
Front en
d
Develo
p
men
t
Co
m
m
ercialization
Information management: collecting,
or
g
anizin
g,
classif
y
in
g
and disseminatin
g
innovation of current needs horizon
innovation of potential development horizon
innovation of creating new business horizon
PERSPECTIVES OF KNOWLEDGE MANAGEMENT SYSTEM APPLICATION IN INNOVATION PROCESSES - A
Study based on Experience of Polish IT Company
291

− providing relevant knowledge at the right time
and to the right people,
− faster access to knowledge and, as a
consequence, faster problem solving,
− offering the inspiration to create new solutions,
− more efficient management of resources in
innovation processes,
− non-confrontational division and allocation of
tasks between team members 'knowing who is
doing what' and connected with it the increasing
sense of responsibility,
− determination of levels for decision-making with
regard to various categories of innovation
processes,
− allowing the control of output of the particular
phases of innovation process.
Another group of factors is associated with long-
term aspects of company development. They include
following benefits:
− subordination of the innovation process to the
company's strategy,
− orientation on creating a culture of 'continuous
innovation', inter alia, by increasing the courage
to undertake innovative projects,
− providing access to the knowledge generated
throughout the organization, the motivation in
order to create and share knowledge,
− access to the best solutions of the similar
problems created inside and outside of the
company,
− offering the basis for the creation and
improvement of standards of cooperation within
the company and with external partners,
− more advanced prioritization of innovation
processes.
The main problem, which is seen in the context
of knowledge management in innovation processes
is associated with a considerable share of tacit
knowledge. Its creation is to a large degree the result
of social interactions. One must take into account the
fact that the introduction of such a system does not
reduce the growth of knowledge in an organization,
paradoxically. This happens particularly when KMS
design assumptions involve a large support of IT in
the knowledge management system. This will occur
in geographically dispersed organizations. On the
other hand, we are better and better able to create the
relationships only through online communication.
Another set of obstacles is considered in the
context of functioning KMS within a company and
in connection with external partners in the
undertaking of an innovation process. First of all,
you need to be aware of fears of some workers in the
company about losing their status. excessive
concentration of on solutions brought forward in the
past, without attempting to seek new and better
solutions may also form a threat. Implementation of
KMS can also reduce the incentive of staff to
cooperate and work as a team. This could turn in the
long term, to cause of conflicts between teams and
within them.
Another threat that must be monitored is the
weakening of the sense of responsibility for the final
success and de-motivation in new skill development.
In the contacts with external partners language is not
an obstacle because in the case of IT companies,
English is the standard. However, the question of
cultural differences remains in place. Such
differences may affect:
− selection of persons to teams, team building
mechanisms,
−
the possibility of using some solutions from
other projects,
− communication standards.
6 CONCLUSIONS
The main resource used in the process of innovation
is knowledge. Bearing in mind that innovation forms
a key factor of competitive advantage a financial and
organizational effort needs to be taken to develop a
knowledge management system in the area of
innovation.
The task of the KMS discussed in the article is to
support innovation management at NetLine
Company. Only the starting phase of this work was
realized. The conclusions which can be drawn at this
stage are as follows:
− Different categories of innovation processes
require to focus one`s attention differently
according to certain management problems. For
example, the variability of the environment is the
most important factor for the innovation of
potential development horizon. In relation to
these kind of innovation processes, changeability
must be monitored constantly and carefully. In
case of innovation of current needs horizon any
changes show up immediately without a special
analysis whereas an innovation of creating new
business horizon, monitoring of environment
change is periodic and has a more general nature.
− The steps of management the innovation process
will be the same for each category of the
innovation process (figure 1). The differences
appear in the used methods and tools.
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− The similarity of tasks carried out in phases of
the innovation process and in the type of
information which are collected is high in one
category of innovation processes. However,
differs significantly among categories.
− The main threats that have been identified are
associated with the process of implementation
and use of KMS and less with the design of its
structure.
The originality of created IT system supporting
the management of innovation in NetLine Group, is
related to two aspects.
1. The structure of KMS must comply with used
management system, in this case important is the
use of different methods and tools for each of the
three categories of innovation process.
2. A Part of the KMS will constitute a decision
support system that will identify areas of
innovation, i.e. tasks, processes or functions in
which is worth to implement innovative changes.
The primary motivation for the development of
KMS was necessity for sharing of information
between various employees and need to retain
knowledge within the organization after the person
who has created it leaves the company. However,
long-term objective of KMS, is to create framework
for a culture of ‘continuous innovation’ at the
company. The achievement of this idea is possible
only when organization is oriented on creation,
acquisition and sharing of knowledge. As it is
indicated in the article, despite some risks, it is
necessary to support such a system with IT tools.
The usefulness of KMS that is widely covered in the
article will result from the efficiency of the system
itself but also from the relationships within the
organization and its policies. In this perspective it
should be noted that KMS will support the creation
of pro-innovation culture, while on the other hand,
can not function properly without it.
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