In todays world Knowledge Management (KM) is applied across the globe, in all types of organizations government & private, profit & non-profit, humanitarian organizations, educational institutes and so on. The purpose of knowledge management is not only to gain knowledge in a particular area, but to create, transform, transfer and apply the knowledge effectively to gain the ultimate objective of the organization.
It is one of the key drivers to create innovative ideas, unique services and solutions. So it is not surprising to see that some of the modern businesses are completely knowledge-based.
This article discusses the key concepts of knowledge management and why it is critical for organizations to manage their knowledge to survive the competition.
Key Concepts of Knowledge Management
“Most activities or tasks are not one-time events. Whether its drilling a well or conducting a transaction at a service station, we do the same things repeatedly. Our philosophy is fairly simple: every time we do something again, we should do it better than the last time”.
Sir John Steely Browne, BP, Harvard Business Review, 1997.
Different organizations and individuals may have different perspective of knowledge management. At a high level, organizational knowledge management is something that enables an organization to collectively and systematically capture, transform, distribute and apply its knowledge effectively to meet its objective. It is common to see that the KM initiatives and its outcomes are directly linked to the organizations goals like higher productivity, better customer experience, better quality and so on. In most of the modern companies, it is treated as a separate discipline with dedicated resources, tools, and knowledge workers. It covers a range of activities like identification, capture, creation, sharing and distribution of knowledge. In most cases Information Technology plays a crucial role in carrying out the above activities.
A learning organization relies heavily on its knowledge. It makes significant investments in this direction. Capability planning for individual employees based on their roles is done across the company. Well-structured knowledge organization with clear roles, responsibilities and policies are present in these organizations. Often these organizations have a Chief Knowledge Officer, advanced tools, technologies, infrastructure and well-structured communication mechanisms.
Why Knowledge Management
As per Nonaka and Takeuchi (1995), effective practice of the management of explicit and tacit knowledge acts to increase the effectiveness and profitability of an organisation. Every organization has a business model. For any organization to survive, its business model has to be a successful one. It is essential to have one or more unique differentiator(s) that differentiates it from its competitors. E.g. excellent time-to-market record, high quality, significantly reduced cost due to high productivity, high customer satisfaction due to very low defect density, and high level of automation in business processes and so on. To achieve all the above, it is not only enough to have skilled and trained individuals, but also essential to utilize the collective knowledge of the organization in an effective manner. An organization could be into its existence for several years. Over several years, employees would have executed several assignments, some successfully and some unsuccessfully. There is learning from each and every such experience. All these are collectively known as the experience of the organization. This knowledge must be used effectively. The above can be explained with the help of a scenario. A global consulting firm operates in multiple geographies across the world. It maintains its annual sales data for every region. However it is not making the desirable profit margins since the last 2 years. Now the company has embarked on an exercise of coming up with a global sales strategy. But before coming up with a strategy, it needs to understand its internal strength and weaknesses as well as the external opportunities and threats. The global sales data can be a starting point. At the moment, it is just data. It has to be compiled and transformed into meaningful information. The information needs to be analysed carefully and the trend that emerges from it should be examined and understood. E.g. the company might be doing very good in certain geographies and not so good in others. It might be very effective in certain industries but not so effective in other sectors. Various parameters like the economic and political situation of those geographies, availability of skilled resources in certain sectors, cost of resources and many other factors could be contributing to this outcome. Once this knowledge is available, the sales strategy can be formulated based on this learning. This is a classic example of how organizations take decisions and survive based on the knowledge available to them.
Sometimes the knowledge is used to respond faster to a situation; sometimes it enables the employees not to repeat a mistake, and sometimes to understand its customers and other stakeholders better. Some of the most common objectives for the organizations to manage its knowledge are reduced cost, faster response time, higher productivity and profitability, improved products and services. In todays world the organizations need to learn and develop competencies fast in order to expand and grow fast.
It will not be inaccurate to say that in modern times, knowledge management is not optional any more for an organization. The basic functions of a KM is knowledge capture, storage, knowledge internalization, knowledge re-use and exchange. At the end learn from the captured knowledge and take informed decisions based on the same