The Importance of Knowledge Management

Most companies are focused on producing a product or service for customers. However, one of the most significant keys to value-creation comes from placing emphasis on producing knowledge. The production of knowledge needs to be a major part of the overall production strategy.

One of the biggest challenges behind knowledge management is the dissemination of knowledge. People with the highest knowledge have the potential for high levels of value creation. But this knowledge can only create value if it's placed in the hands of those who must execute on it. Knowledge is usually difficult to access – it leaves when the knowledge professional resigns.

β€œThe only irreplaceable capital an organization possesses is the knowledge and ability of its people. The productivity of that capital depends on how effectively people share their competence with those who can use it.” – Andrew Carnegie

Therefore, knowledge management is often about managing relationships within the organization. Collaborative tools (intranets, balanced scorecards, data warehouses, customer relations management, expert systems, etc.) are often used to establish these relationships. Some companies have developed knowledge maps, identifying what must be shared, where can we find it, what information is needed to support an activity, etc. Knowledge maps codify information so that it becomes real knowledge; i.e. from data to intelligence.

For example, AT&T's knowledge management system provides instant access for customer service representatives, allowing them to solve a customer's problem in a matter of minutes. Monsanto uses a network of experts to spread the knowledge around. Employees can lookup a knowledge expert from the Yellow Page Directory of knowledge experts.

In the book Value Based Knowledge Management, the authors advocate that every organization should strive to have six capabilities working together:

  1. Produce : Apply the right combination of knowledge and systems so that you produce a knowledge based environment.
  2. Respond : Constantly monitor and respond to the marketplace through an empowered workforce within a decentralized structure.
  3. Anticipate : Become pro-active by anticipating events and issues based on this new decentralized knowledge based system.
  4. Attract : Attract people who have a thirst for knowledge, people who clearly demonstrate that they love to learn and share their knowledge opening with others. These so-called knowledge professionals are one of the most significant components of your intellectual capital.
  5. Create : Provide a strong learning environment for the thirsty knowledge worker. Allow everyone to learn through experiences with customers, competition, etc.
  6. Last : Secure long-term commitments from knowledge professionals. These people are key drivers behind your organization. If they leave, there goes the knowledge.

Knowledge professionals will become the dominant force behind the new economy, not unlike the farmer was once the key player behind the agricultural age. By the year 2010, one-third of the workforce in the United States will be comprised of knowledge professionals. It is incumbent upon all organizations to embrace this need for managing knowledge. Just take a look at those organizations that seem to create value against the competition. You will invariably find a strong emphasis on knowledge management.

matt evans photo Written by: Matt H. Evans, CPA, CMA, CFM | Email: | Phone: 1-877-807-8756

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