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42 Chapter 2

The fi nal step in the Bukowitz and Williams KM cycle is the divest step. The orga-
nization should not hold on to assets — physical or intellectual — if they are no longer
creating value. In fact, some knowledge may be more valuable if transferred outside
the organization. In this step of the KM cycle, organizations need to examine their
intellectual capital in terms of the resources required to maintain it and whether these
resources would be better spent elsewhere. This involves understanding the why,
when, where, and how of formally divesting parts of the knowledge base. An oppor-
tunity cost analysis of retaining knowledge should be incorporated into standard
management practice. This cost analysis is necessary in order to understand which
parts of the knowledge base will be unnecessary for sustaining competitive advantage
and industry viability.
Traditional divestiture decisions regarding knowledge include obtaining patents,
spinning off companies, outsourcing work, terminating a training program and/or
employees, replacing/upgrading technologies, and ending partnerships, alliances, or
contracts. However, KM requires a planned and purposeful form of divesting. This
means that the decision to be made is a strategic one, not an operational task. Ideally,
unnecessary knowledge should not have been acquired in the fi rst place — the organi-
zation should put into place processes to clearly discriminate between forms of knowl-
edge that can be leveraged and those that are of limited use. Knowledge that is a drain
on resources should be converted into value. This often involves converting rather
than getting rid of knowledge, for example, by redeploying the knowledge elsewhere,
either within or outside of the organization.
The Bukowitz and Williams KM cycle introduces two new critical phases: the learn-
ing of knowledge content and the decision as to whether to maintain this knowledge
or divest the organization of this knowledge content. This KM cycle is more compre-
hensive than the Meyer and Zack cycle as the notion of tacit as well as explicit knowl-
edge management has been incorporated.

The McElroy KM Cycle
McElroy (1999) describes a knowledge life cycle that consists of the knowledge pro-
cesses of knowledge production and knowledge integration, with a series of feedback
loops to organizational memory, beliefs, claims, and the business-processing environ-
ment. The high-level processes are shown in fi gure 2.5 .
McElroy emphasizes that organizational knowledge is held both subjectively in the
minds of individuals and groups and objectively in explicit forms. Together, they
comprise the distributed organizational knowledge base of the company. Knowledge
use in the business-processing environment results in outcomes that either match