The concept and importance of Knowledge Management
Knowledge Management Concept and Importance
A new word for the consumer in today’s market, ‘prosumer’, refers to the consumer who is no longer in the passive market where goods are offered at the exact face value. Prosumers are more educated consumers, and they demand more. They provide feedback to manufacturers regarding the design of products and services from a consumer perspective. This has initiated new and radical changes in the business world. Even with recent technology developments such as networking, e-mail and the web, business KM has already demonstrated a number of benefits and has offered justification for further implementation. The internet facilitated its development and growth via fast and timely sharing of knowledge. By sharing knowledge, an organisation creates exponential benefits from the knowledge as people learn from it. This makes business processes faster and more effective and empowers employees in a unique way. For example, Microsoft’s Hotmail service advanced the wide use of e-mail that allowed users to exchange information through any Web browser. Today’s web-based interface is the norm for most internet service providers.
KM has had a positive impact on business processes. The goal is to capture the tacit knowledge required by a business process and encourages knowledge workers to share and communicate knowledge with peers. With such knowledge, it is easier to determine which processes are more effective or less effective than others. The main constraint in KM, however, is initially capturing it. However, if an organisation can succeed in capturing and dispersing knowledge, the benefits are endless. A company can leverage and more fully utilise intellectual assets. It can also position itself in responding quickly to customers, creating new markets, rapidly developing new products and dominating emergent technologies.
Another benefit of KM is the intangible return on knowledge sharing rather than knowledge hoarding. Too often, employees in one part of a business start from ‘scratch’ on a project because the knowledge needed is somewhere else but not known to them.
As a result of KM, systems have been developed to gather, organize, refine and distribute knowledge throughout the business. In this study of Smart Business, Botkin (1999) suggests six top attributes of knowledge products and services.
Learn: The more you use them, the smarter they get and the smarter you get too.
Improve with use: These products and services are enhanced rather than depleted when used, and they grow up instead of being used up.
Interactive: There is two-way communication between you and them.
Remember: They record and recall past actions to develop a profile.
Customise: They offer a unique configuration to your individual specifications in real time at no additional cost.
KM has changed the business environment and introduced new competitive imperatives. Among them are:
Reacting instantly to new business opportunities, which led to decentralised decision making (and competency) at the front lines, where the action is. With that came the desire to build mutual trust between knowledge workers and management and to co-operate in handling time-sensitive tasks.
Building better sensitivity to ‘brain drain’. It has been said that ‘expertise gravitates toward the highest bidder’. More and more companies realize the importance of managing and preserving expertise turnover. For the human resourced department, the key question is ‘how does the firm replace expertise when it retires, resigns, or simply leaves?’
Ensuring successful partnering and core competencies with suppliers, vendors, customers and other constituents. Today’s technology has enabled companies to re-engineer the ways to do business. Getting partners up to your speed requires more than fast technology. Knowledge workers and others within the company should ensure that co-operation and co-ordination of work are practiced for the good of the firm.