Knowledge Management Business Definition and Importance

What Is Knowledge Management and Why Is It So Important?

Knowledge management is the process of capturing, storing, sharing and effectively managing the knowledge and experience of employees to increase the workforce's overall knowledge. Its primary goal is to improve efficiency, productivity and retain critical information within the company. By harnessing your most valuable asset, employee expertise and knowledge, you can maximize efficiency and empower employees to improve their decision-making ability.

This blog will explore knowledge management in more depth, why it's crucial to utilize this process in your organization and how you can make knowledge management more effective.

• The Main Areas of Knowledge Management
• Why Is Knowledge So Important?
• How to Make Knowledge Management More Effective

The Main Areas of Knowledge Management?

When thinking about effective knowledge management, it's beneficial to explore the different types of knowledge. Knowledge can be divided into two main types, tacit and explicit. Understanding how to access, manage and strategically distribute these types of knowledge within your organization is a key driver of overall business success.

Here's some more information about each one.

• Tacit: Tacit knowledge encompasses everything a person knows how to do but does not necessarily know how to explain.¹ It can be defined as skills, ideas and experiences that people have but are not written down and may not necessarily be easily expressed. With tacit knowledge, people are often unaware of the knowledge they possess or how it can be valuable to others.²

• Explicit: Also known as documented knowledge, explicit knowledge differs from tacit as the information is easy to pass along. It's documented, easily accessible and quick to articulate. All documented information in an organization including research reports, articles, datasheets and whitepapers are explicit knowledge.³

Tacit and Explicit Knowledge within Organizations

Transferring tacit knowledge often requires extensive personal contact and regular interaction.⁴ Employees will garner tacit, organizational knowledge through time by learning from experienced co-workers via training or mentoring sessions. Technology solutions that allow employees to document and facilitate tacit knowledge are also an essential part of effectively managing tacit knowledge.

Unlike tacit knowledge, explicit knowledge can be readily articulated, codified, stored and accessed. Explicit knowledge within an organization is easy for employees to access and co-workers to exchange. Explicit knowledge can range from company handbooks, to sales scripts to how-to videos on a Learning Management Platform.

Why Is Knowledge Management So Important?

Accumulating, storing and effectively sharing knowledge allows you to create a culture that can significantly improve efficiency and employee happiness. But ineffective knowledge management impacts the financial front and employee satisfaction levels.

The Cost of Ineffective Knowledge Management

• Fortune 500 companies lose at least $31.5 billion a year by failing to share knowledge, according to International Data Corp.⁵
• In the Critical Knowledge Transfer book, a survey highlighted that 53% of respondents claimed the knowledge-related costs of losing key employees could reach almost $300,000. In another estimate from the same source, 11% believed the costs associated with losing knowledge through employees leaving could be close to $1,000,000, while others said the cost was 'priceless.'⁶
• Research also shows that employees spend around 26 days each year searching for information, which is valuable time that could be undoubtedly better invested.

This failure to document and store knowledge results in wasted time, recreated solutions, lost productivity, repeated mistakes and the same questions answered repeatedly. In comparison, however, effective knowledge management has quantifiable benefits.

Key Benefits of Effective Knowledge Management

• Faster and more effective onboarding: Being able to find information quickly when an employee starts a new job boosts productivity and reduces the time required to be up and running, saving money in the process.

• Spend less time recreating existing knowledge: With effective knowledge management, everyone within the organization can spend less time answering repetitive questions and focus on more meaningful and enjoyable work.
• Speed up innovation: Employees benefit from access to expert knowledge to do their job effectively and efficiently. This access also allows them to leverage findings from other teams so mistakes aren't repeated and learnings spread quicker.

These are just a small snapshot of the benefits. According to a Gallup study, effective knowledge management boosts employee happiness and output.⁷ They can find information they need fast and disturb colleagues less. Plus, this wider spread of knowledge means more effective decision making from the top to the bottom of the organization.

There needs to be a knowledge management process in place that's followed organization-wide to unlock these and other benefits.

How to Make Knowledge Management More Effective

Following the refresher above on what knowledge management is and why it's important, here are some points to consider to make knowledge management more effective in your organization.

• Make it real-time: Real-time knowledge has tremendous value. Everything within an organization is updated and changed on a regular basis. Having access to up-to-date information is crucial as it ensures decisions are made based on the most accurate information, saving time and money.

• Remember knowledge management isn't a static project: Companies grow, evolve and change regularly. Knowledge and experience shifts.  Companies need to keep this in mind, plan for it and use it to their advantage.

• Decide how to capture knowledge: Identify all the sources of knowledge within your organization. Studies have shown that 51% of employees feel frustrated when they can't access a colleague's expertise, while 25% feel overwhelmed.⁸ It's essential to understand your organization's knowledge flow to see the gaps you need to fill.

• Work out where new and existing knowledge will be stored: Up to 80% of knowledge within an organization is undocumented or intangible.⁹ To ensure knowledge doesn't leave the organization, create a system that maps and categorizes knowledge in one place, especially as there's a vast amount of knowledge you'll likely need to store.

• Find the best place to share knowledge: Building or adopting a knowledge management solution is the first valuable step. However, employees need to understand how to use it to access information. Implement training sessions to increase the understanding of a new system, ensuring it's easy to access knowledge within your organization.
• Adopt a system that integrates into workplace tools: The most effective way to get employees to embrace a knowledge management system is ease-of-use. Implement a system that integrates into the tools employees already use. Integrations make it possible to provide employees with the knowledge that they need without having to use a separate platform.
• Encourage employees to ask and answer questions: Employees need a safe place to ask questions, and as research has shown, they want a place to share their knowledge. A platform that allows employees to ask and answer questions from basic FAQs to business-critical topics will increase productivity, efficiency and overall employee satisfaction.
• Ease concerns around public data access: When deploying a knowledge management system, you need to be aware of protecting your employees' private data. You still need to be attentive when using GDPR-compliant information.

With 61% of employees feeling they could contribute more knowledge and 83% happier at work when sharing knowledge, you need to search for an effective platform that is easy to implement and adopt, which gives employees the opportunity to share their expertise and learnings.

What defines an effective knowledge management tool?

For today's fast-paced businesses a knowledge management system powered by AI is the most effective solution.

• It's real-time and automatic, so knowledge is always relevant. Keeping knowledge up-to-date includes discarding information that is outdated.
• It integrates into workplace systems, so employees don't need to leave an app they're in to search for knowledge. Instead, knowledge is brought to them.
• An AI-powered knowledge management solution provides employees with a way to share their expertise and learn, therefore, increasing effectiveness and job satisfaction.
• FAQs can be answered immediately, while new questions can be routed to the best experts.
• Most importantly, tacit knowledge can be accessed and retained - a common problem in organizations. According to the Wall Street Journal, of the world's biggest companies, 84% of their resources are intangible or undocumented compared to 17% in 1985.¹⁰

While the idea of making as much knowledge as possible accessible to as many people as possible isn't groundbreaking, intelligent technology is.

Intelligent knowledge management platforms can provide access to the most powerful resource on earth, human intelligence. Implementing an intelligence platform is vital to gaining an edge on your competition, improving productivity and making your teams happier.

Learn how you can effectively implement a knowledge management system backed by AI in your organization.

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Knowledge Management Business Definition and Importance

Source: https://www.starmind.ai/resources/what-is-knowledge-management-and-why-is-it-so-important

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