☄☄☄There’s no way to understate the importance of Knowledge Management in the 21st-century organisation. There’s a saying “Knowledge is Power,” and in the past few decades there has been a boom in the creation and sharing of knowledge.
Today organisations are spending enormous amounts of money in knowledge management systems. If knowledge management is super important, they wouldn’t be spending so much on it.
Understanding the importance of knowledge management is crucial for any person involved in a knowledge-based organisation, business, and even a student.
That is, if you are person creating, sharing or accessing any knowledgeable content then you need to understand the importance of knowledge management.
Also, you might also want to read our guide on creating your own knowledge Management website.
What is Knowledge Management?
Based on the type of knowledge that an organisation intends on leveraging, there will be different approaches and definitions to knowledge management, and so there is no single definition for knowledge management.
In general, knowledge management is the process of creating and sharing knowledge thereby, maximising their potential that makes them intangible assets of the organisation. Knowledge management is about making significant knowledge available to the people who require it. In other words, a knowledge management system makes it easier and quicker to find the information or the people who hold the information that is necessary for another person.
An organization may use a knowledge management system to create, share, organize, distribute and institutionalize tacit(implied) and explicit knowledge. Specific systematic processes are used to create value and improve the performance of both the employee and the organization.
Importance of Knowledge Management
The importance of Knowledge Management cannot be understated. It can help any organization to grow and to evolve. They are listed below:
Contextual Knowledge in Decision Making
It is a well-known fact that a knowledge management environment can provide the basis for making good decisions. However, knowledge management has evolved to the point that it could help us understand under what context the decisions are made. There are smart systems which store the knowledge with reference to the context so that we not only gain the knowledge but also understand the context.
This kind of knowledge allows decisions to be based on actual experience and so practical lessons are learned. With knowledge management it is not just about faster decision making, it’s about making quick decisions which we do not regret later, and decisions are made with the future in mind.
Knowledge Management and Organizational Learning
If you know to cook, you would know that even after knowing the recipe and ingredients, it may not be possible to replicate the exact taste of the dish. It happens all the time, especially if you are trying be cook your mother’s dish.
It is the same with Organizational Learning. When knowledge is shared within a big organization, people usually get superficial things rather than in-depth knowledge. Organizations need to implement appropriate knowledge management system in order to provide a rich learning experience to their people. So that, employees can get in-depth knowledge and so that their business goals and other goals could be achieved.
Knowledge as an Asset
All information is not considered to be knowledge. Knowledge is the understanding of the implication of the given information. The knowledge management process identifies, analyses and improves information and this information is communicated as actionable knowledge and insights. The members/employees are invaluable assets of an organization; therefore the knowledge they possess also becomes intangible assets of the organization.
In his famous quote, Lew Platt, former CEO of Hewlett-Packard, once said: “If HP knew what HP knows, we would be three times more productive.”
A person could gain much knowledge through continuous work in an organization and would wish to pass this knowledge to others in the organization, most probably his successors. Here the knowledge in his mind must be communicated and the person not only should understand it, but also internalize it so that they can effectively use this knowledge. When a knowledge management system is used it ensures that this knowledge is well documented and is available to anyone who requires it.
Wilful Nature of Knowledge Management
The best aspect of knowledge management is that it encourages individuals to share their knowledge willfully. This knowledge can be found in various methods starting with storytelling. There are companies which have made the submission of contents mandatory. They have created shared knowledge repositories, such as databases. However, because of their mandatory nature, there is a lot of other supplementary information which is lost and there is bulk information collected which could be considered as Junk.
Stimulates a Cultural change
Learning is only possible is someone willfully gives the information and someone wants the information. There is a sense of social engagement. To encourage this willful learning many companies use an enterprise-wide social network. Having a public knowledge platform gives an everyone has a voice, and everyone can add to what knowledge is being shared, and you get a collective knowledge. This stimulates free flow of ideas which leads to having an innovative culture within an organization.
Creating a knowledge platform which is best suited for the purpose and implementing standards process and procedures helps to change the culture thereby leading to high-quality results.
Knowledge Management could create a ‘Network effect’ by allowing to connect people with the purpose of sharing knowledge, making that knowledge more easily accessible. Imagine that there are various groups of people working for a company like Developers, Testers, Marketing and Customer relations. The knowledge that is possessed by each of this group, on the whole, helps the success of the company. The communication that is between each of these departments is of relevance to all other departments. KM devises a way to best transfer this communicated knowledge to relevant people, to be able to take advantage of it or to ensure that relevant knowledge is not lost.
Failures and Learning Routine
“To move ahead, one must often first look behind” and “A productive failure is better than an unproductive success” is some of the words of wise men.
Knowledge management provides a way to investigate the failures in order to identify the shortcomings and reasons for failures in organizations. It helps to share success and failures in the organization to create a culture of mutual trust and belief. Blaming others for failures leaves less chance for learning.
For example, the United States Army has created a learning organization called the After Action Reviews (AARs) to assess their units continuously and to look for ways to improve. After every significant activity or event, Army teams review assignments, identify successes and failures, and seek ways to perform better the next time.
Innovation and the Bigger Picture
When an organization grows, the number of members also grow. A systematic creation and transfer of knowledge which makes use of the knowledge possessed by each and every member (their ideas and expertise) could trigger the innovation process.
Any small member of could have the knowledge to solve a problem that is required to resolve an issue in the other end of the organization.
Imagine knowledge as dots and knowledge management as the network that connects the Dots. This network can help to identify the picture that remained hidden under the Dots. This could help you to understand and identify the potential markets which were right under your nose but you failed to notice because of the ignorance to see the bigger picture.
Often projects and initiatives create duplicated knowledge within an organization and knowledge may not be properly shared within different teams of the same organization. This could lead to “reinventing the wheel.” Knowledge management increases efficiency and productivity and allows you to work better, reducing the tendency to “reinvent the wheel.”
Increase in Customer Satisfaction
Organizations who value customer success are more likely to have increased revenues. It is expensive to hire customer support personnel to meet all your customer support needs. Providing a self-serve customer service portal with the help of a knowledge management system is an excellent way to scale customer support without increasing support costs. Having a knowledge management system for your customer support can improve your overall customer experience, and you get customer success as a return of investment.
Knowledge Management in Artificial Intelligence
Looking at the way the world is growing in Artificial Intelligence (AI), it is obvious that AI’s would replace most of the work done by humans in the future. Assuming that they could have equal access to the knowledge of the world. Their only difference could be in their Knowledge Management System which determines how an AI would effectively use this knowledge.
Many Companies have Invested in Knowledge Management
Many of the multinational companies have already invested in Knowledge Management systems.
General Electric(GE) has a Corporate Executive Council (CEC) to help executives cut through the noise, share information, and improve their decision-making. The CEC is composed of the heads of GE’s fourteen major businesses, and the two-day sessions are forums for sharing best practices, accelerating progress, and discussing successes, failures, and experiences.
Microsoft has a project called Skills Planning Development (SPUD) through which they have invested time and resources into identifying and maintaining knowledge competencies. It is built to maintain employees competency in order to gain a strategic advantage over competitors. This project has increased communication among employees and also the advantage margin over the competition.
Ernst & Young (EY) have an Accelerated Solutions Environment which involves the rapid application of knowledge, models and approaches to client situations. They have several teams involved in creating the knowledge, storing the knowledge, and automating knowledge. This system has led to a 44 percent increase in revenues. The knowledge transfer through this system has enabled their consultants to remain competitive.
Knowledge Management for your Organization
Now that you know that knowledge management is really important for any organization or company, you may also want a knowledge management system for your company. I would like to suggest out product HelpieKB. Helpie is the most advanced knowledge base plugin for WordPress.
May it be an internal collaborative environment for your organization, which could be password protected or a customer self-service portal for your product, with Helpie you can create the ultimate environment.