Knowledge Management

Nowadays, enterprises are realizing that it is really important to “know what they know” and make maximum use of that knowledge. The most valuable asset that companies in general have is the knowledge of their employees. Firms now realize how important this is, and are starting to focus more on the field of knowledge management for it results in more efficiency, which leads to competitive advantages.

This knowledge we are talking about can be divided into two parts: tacit knowledge, or knowledge found in the minds of employees, gained through their own personal experience, and explicit knowledge, which is knowledge that is documented or found in books and databases. The objective of knowledge management is to share tacit knowledge throughout the organization, and thereby transforming it into explicit knowledge that will benefit the rest of the employees.

What knowledge management is

There is no agreement on a specific definition for knowledge management. What we can say is that knowledge management is the “process through which organizations generate value from their intellectual and knowledge-based assets”. Generating value from such assets involves sharing them among employees, departments and even with other companies in an effort to devise best practices.

The following items can be identified as integral components of KM: 

  • Generating new knowledge
  • Accessing valuable knowledge from outside sources
  • Using accessible knowledge in decision making
  • Embedding knowledge in processes, products, and/or services
  • Representing knowledge in documents, databases, and software
  • Facilitating knowledge growth through culture and incentives
  • Transferring existing knowledge into other parts of the organization

Importance of knowledge management

Knowledge can be identified as the ultimate competitive advantage for the modern firm. It is a resource that is difficult and sometimes impossible to imitate or co-opt, giving its possessor a unique and inherently protected commodity. Therefore, any techniques or methods which sustain knowledge growth and distribution are basic to the success of today’s organizations.

A variety of factors have contributed to the growth of and interest in knowledge management, some are:

  • Accelerating pace of change
  • Staff attrition (especially that resulting from years of downsizing and reengineering)
  • Growth in organizational scope · Geographic dispersion associated with globalization of markets
  • Global integration
  • Increase in networked organizations
  • Growing knowledge-intensity of goods and services
  • Revolution in information technology

Intellectual or knowledge-based assets

It is important for an organization to know which information is valuable and can contribute to the improvement in its work process. It’s up to individual companies to determine what information qualifies as intellectual and knowledge-based assets.

Intellectual and knowledge-based assets fall into one of two categories: explicit or tacit. Included among the former are assets such as patents, trademarks, business plans, marketing research and customer lists. Explicit knowledge consists of anything that can be “documented, archived and codified”, often with the help of IT. On the other hand, the concept of tacit knowledge can be defined as the “know-how contained in people’s heads”. The challenge of tacit knowledge is “figuring out how to recognize, generate, share and manage it”.

Benefits of knowledge management

Some companies benefit directly from the use of knowledge management, and this shows in their revenues or savings, while others benefit by gaining strategic competitive advantages or even simple collaborative organizational improvement. To get the most value from a company’s intellectual assets, knowledge must be shared and should serve as a foundation for collaboration. Knowledge management can result in improved efficiency, higher productivity and increased revenues in practically any business function.  Knowledge management basically helps a company do one or more of the following:

  • Encourage innovation by allowing free flow of ideas
  • Improve customer service by improving their response time
  • Get products and services to the market faster, which would boost revenues
  • Enhance employee retention rates by recognizing the value of employees’ knowledge and rewarding them for it
  • Streamline operations and reduce costs by eliminating redundant or unnecessary processes

Challenges of knowledge management

1. Getting Employees on Board
Most problems that occur in knowledge management are usually the result of companies ignoring the people and cultural issues. What companies need to do is create an environment where an individual’s knowledge is appreciated and rewarded, thus establishing a culture that recognizes tacit knowledge and encourages employees to share it.

2. Allowing Technology to Dictate Knowledge Management
Knowledge management is not a technology-based concept. Technology can support knowledge management, but it is not a starting point of a knowledge management program. First we make knowledge management decisions based on who (the people), what (the knowledge), and why (business objectives), then the how (the technology) comes last.

3. Not Having a Specific Business Goal
A knowledge management program should not be divorced from a business goal. While sharing best practices is a commendable idea, there must be an underlying business reason to do so. Without a solid business case, KM is a futile exercise.

4. Knowledge Management Is Not Static
The value of knowledge can wear away, and sometimes the relevance of knowledge management changes with time. That is why the content in a knowledge management program should constantly be updated, amended and deleted. Knowledge management is a constantly evolving business practice.

5. Not All Information Is Knowledge
Quantity rarely equals quality. Companies have to be aware of information overload. The point of a knowledge management program is to identify and disseminate the needed and relevant knowledge from all the available information.

Technologies that support knowledge management

Generally, tools fall into one or more of the following categories: knowledge warehouses, expertise access tools, e-learning applications, discussion and chat technologies, synchronous interaction tools, and search and data mining tools. Knowledge management tools can also range from “standard e-mail packages” to sophisticated collaboration tools designed specifically to support “community building” and “identity”. Examples of such tools are group support systems and decision support systems.

The knowledge management process

Knowledge management activities or the knowledge management process can be summarized in 5 steps. First, knowledge needs to be collected. Second, this captured knowledge needs to be transformed into value. Third, this knowledge needs to be organized and categorized, making it easier to access and add new contributions to. Fourth, IT applications or infrastructures can be developed to help distribute and access this knowledge. Finally, the employees should learn this knowledge, and learn how to use the systems and participate in contributing other personal knowledge if available.

Basic knowledge management activities:

  1. Knowledge capture – putting all the information available into a computer system.
  2. Adding value to knowledge – editing, packaging, and pruning the information captured.
  3. Developing knowledge categorization approaches and categorizing new contributions to knowledge.
  4. Developing information technology infrastructures and applications for the distribution of knowledge.
  5. Educating employees on the creation, sharing, and use of knowledge.


As a conclusion, knowledge management helps organizations become more efficient, overcome problems, gain strategic advantages, and innovate. In whatever field or way it is used, knowledge management will always benefit organizations since knowledge is value.

To further illustrate the situation, we chose one of many company success stories. Bristol-Myers Squibb (BMS), America’s 5th largest pharmaceutical company, produces products ranging from simple headache tablets to complex cancer treatments. Because of the high competition in this field, BMS needed to create a source of new “revenue-generating ideas” to improve the business. To do this, they decided to turn to their employees for they are the experts in the field. A large percentage of BMS employees hold PhDs and advanced degrees, so the management saw great potential in increasing employee participation in solving business problems. In other words, the management saw a vast amount of tacit knowledge that could be harnessed within the corporation.

BMS was searching for a knowledge management solution. They needed a low cost system that could handle large numbers of ideas and organize them for evaluation. BMS eventually selected Imaginatik’s Idea Central application, an idea management tool. They installed the application on the company’s intranet making it available to over 30,000 employees. The software’s user-friendly design and web-based format made it easy to use, and kept training costs to a minimum. Employees would submit ideas to a shared space, and these ideas would be reviewed or criticized by other employees.

BMS collected thousands of ideas and implemented many of them. This process not only led to a multi-million dollar increase in revenue, but also motivated the employees because of greater involvement. Because of this success, BMS now plans to “expand the use of Idea Central into other divisions within the company including international operations”. They are also looking forward to giving system access to outside contributors, such as suppliers, physicians and patients. Once again, this shows that one should not underestimate the power of knowledge management, for it might be the most powerful and important means for success nowadays.




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