“An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage” Jack Welch, Former CEO of General Electric
It might take quite some time before organizations understand the importance of knowledge management. It is a topic more aligned with big corporations, while smaller businesses may not ever have heard about this concept.
But not having heard about it doesn’t mean they don’t unknowingly practice it. Knowledge management has been around for ages, existing whether we acknowledge it or not.
There is no universal definition of knowledge management and no real agreement as to what constitutes it. Some define knowledge management as the collection of processes that govern the creation, dissemination, and utilization of knowledge within an organization. What is clear is that it’s a value-creating process, “through which organizations generate value from their intellectual and knowledge-based assets.”
These processes have a strong effect on the decisions made and the actions taken, since both decisions and actions are enabled by some kind of knowledge. Organizations without a formal knowledge management program would be better off implementing steps to improve the quality of the processes that are taking place without supervision. In turn, they will improve the quality of those actions and decisions.
In The Knowledge Management Forum, Brian Newman highlighted that knowledge management is about the “entire process of discovery and creation of knowledge, dissemination of knowledge, and the utilization of knowledge,” which makes it much more than a “technology thing” as many managers label it.
Knowledge management requires the codification of what stakeholders know, and sharing the information back with stakeholders in an effort to drive best practices. Because it requires the gathering and codification of information, the process is commonly associated with IT, but it is not technology by itself.
CIO.com points out the relevance of understanding that knowledge-based assets are for each individual company. Every organization must determine what information qualifies as intellectual and knowledge-based assets in order to make the most out of their management.
Generally, intellectual and knowledge-based assets are categorized in two types: explicit or tacit. Explicit types of assets include patents, trademarks, business plans, marketing research and customer lists. This category “consists of anything that can be documented, archived and conflicted, often with the help of IT.”
Tacit knowledge, on the other hand, is more complicated to understand and document. It is the know-how contained in people’s heads. It is a challenge to figure out how to recognize, generate, share and manage this know-how. IT is also used for these processes, in the form of e-mail, groupware, and instant messaging. These technologies “can help facilitate the dissemination of tacit knowledge.”
Benefits of KM
CIO.com highlights some of the benefits of implementing formal knowledge management processes. Benefits can be seen directly through savings in the bottom-line, or they can be implicit and hard to quantify.
But if an organization has an effective knowledge management program in place, it should see the following results:
- Higher innovation by encouraging the free flow of ideas
- Improved customer service by streamlining response time
- A boost in revenues by getting products and services to market faster
- Enhanced employee retention rates by recognizing the value of employees’ knowledge and rewarding them for it
- Streamlined operations and reduce costs by eliminating redundant or unnecessary processes
A creative approach to knowledge management can bring high efficiency and productivity levels, while boosting revenues for the organization.
No matter the size, any company must understand the importance of managing intellectual and knowledge-based assets as a crucial part of business.
The case of Cisco is a good example of the benefits that proper knowledge management brings.
Cisco might be one of the best examples of a knowledge organization, not because the management is extremely creative, it probably is not. But Cisco management is a champion in identifying and implementing smart solutions. They let clients collect, through web-based chat boxes, the main ideas for innovation. They realized substantial cost cutting in a few years: 70% of support calls are resolved by a visit to the companys website, 80% of orders are placed on line, 70% cut in order cycle (from 6-8 weeks to 1-3 weeks), 40% inventory reduction, and 55% of the sold goods never touch a production place from the company, etc.
Ciscos acquisition and partner policy is a great success. More than 90% of the CEOs from the acquired companies are still in the company after a few years, benefiting from the great culture and option plan. Ciscos website states: “Our strategic alliances are designed to help deliver a customer-centric, total solutions approach to solving problems, exploiting business opportunity, and creating sustainable competitive advantage for our customers. This shared commitment to deliver solutions and services encompassing products, applications, systems integration, and best practices, will help make our customers successful as globally