Why should organisations care about KM? - Malta Business School
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Why should organisations care about KM?

The rapid growth in interest in Knowledge Management (KM) within the context of the so-called “knowledge economy” is of increasing interest and recognition, both within organisations and by the financial markets, of the value of intellectual capital/intangible assets.  This article examines the KM challenges that organisations, large and small and across industry sectors, are facing.

KM is not a new phenomenon. As organisations have evolved over time, the skills and experience of their owners, managers and employees have traditionally been passed down through formal and informal processes. Informally, organisations rely upon the personal relationship and proximity between the “storyteller” and the “listener”, such as a skilled person talking to his or her apprentice.  Formally the knowledge and experience of employees are documented through databases, intranets and portals.

The reason that KM is appearing formally on management agendas is that business models have become more complicated coupled with an ever faster rate of change that impact all types of organisations. Organisations are facing a world in which sharing knowledge no longer means sticking your head out into the corridor and shouting, but a world which the accelerated rate of change means that any explicit body of knowledge (such as an instruction manual) is often already out of date at the moment it has been copied, bound and distributed.

Definitions of KM

A common definition of KM by Royal Dutch/Shell is: “the capabilities by which communities within an organisation capture the knowledge that is critical to them, constantly improve it and make it available in the most effective manner to those people who need it, so that they can exploit it creatively to add value as a normal part of their work”

The key point is that KM should be closely aligned with the mission and business strategy of that organisation.  Figure 1 suggests that KM ought to be approached from the “people, process and technology” and alternatively, “culture, structure, and technology” point of views.

KM figure 1

Figure 1 – An organisation’s approach towards Knowledge Management

KM is first and foremost a people issue and as Figure 2 shows, it should be aligned with the organisation’s core values.  Getting an organisation’s culture (e.g. values and behaviours) “right” for KM is typically the most important and yet often the most difficult challenge. When embarking upon a KM programme, organisations need to consider such factors as trust, privacy, proximity to stakeholders, barriers to sharing experiences, transparency and motivation.

KM figure 2

Figure 2 – The core values of knowledge sharing

Structure: In order to improve knowledge sharing, organisations may need to make changes to the way their internal business processes are structured, and sometimes they may even need to adjust the organisational structure itself. For example, if an organisation today has regional profit and loss centres, then members of the team in one regional centre may not feel any incentive to share their knowledge with team members in another regional centre, since they may not directly feel any benefit from so doing (e.g. in terms of any increased profit share).

Technology: Although many vendors aggressively market their products as “KM solutions”, successful KM can rarely, if ever, be achieved by the implementation of a set of software tools alone. Yet given the increased scale of many organisations and their relationships with a growing variety of internal and external stakeholders, technology should be considered as a crucial enabler of KM. In any case, technology should be seen as a manifestation of culture, rather than as kind of some opposing force, since human culture has always been partly defined by its tool making capacity – i.e. by its use of technology.

KM’s role within the knowledge economy

To serve customers well and remain in business in the knowledge economy, organisations will have to reduce their cycle times, operate with lower overheads (people, inventory and facilities), shorten product development time, improve customer service, empower employees, innovate and deliver high quality products, enhance flexibility and adaptation, capture information, create knowledge, share and learn. None of this is possible without a continual focus on the creation, updating, availability, quality, and use of knowledge by all employees and teams, at work and in the market place. Faced with such challenges, a valuable first step for an organisation can be to try and “know what it already knows”, through an audit of its knowledge assets.

Increasingly, organisations in the knowledge economy will be judged upon their KM capabilities, in that they will all be competing for the:

  • Best clients: customers will increasingly evaluate their suppliers on the basis of how knowledge about them is solicited, collated and shared, as well as on how that they can collaborate with their suppliers.
  • Best alliance/merger partners: a good KM infrastructure will be vital when organisations try to collaborate with or integrate new partners or suppliers quickly.
  • Best talent: in particular, new recruits will demand excellent KM infrastructures, since many are likely to be already very IT-literate and used to sharing knowledge across virtual networks before they even join the workforce.

Client relationship challenges

New competitive threats can emerge unexpectedly.  Yet many organisations continue to struggle with the most basic client relationship management challenges, and lack the tools and processes to really manage customer knowledge well. This is why many organisations are turning formally to Customer Relationship Management (CRM), a discipline that involves capturing customer information and interactions, examining them to discover useful knowledge, and then using that knowledge to manage the end-to-end customer lifecycle.

For many, CRM is an absolutely crucial consideration, since individual product managers within organisations are often unaware of corporate-wide customer relationships and can unwittingly jeopardise profits in other divisions. In such cases, coherent solutions must be applied across the entire customer relationship, regardless of who “owns” each individual product or divisional profit and loss account. This means that a co-ordinated approach to CRM is probably the only way that many organisations will be able to retain customers who might otherwise jump to other suppliers offering a more coherent proposition around price, quality, or service.

Risk management challenges in focus

In addition to CRM and the other challenges outlined earlier, a whole host of further organisational challenges are emerging, nearly all of them relevant in a KM context. Many of these challenges are risk-related.  The following are often found in most organisations.

Confidentiality – Employees in all organisations should at all times treat all knowledge as strictly confidential.

Copyright – It is vital that all employees recognise the existence and significance of copyright, in order that organisations can both protect their own rights and avoid infringing the rights of others.

Privacy – Legislation in this area governs the processing (including collection, storage, transmission and use) of any data that identifies an individual subject, directly or indirectly. Data protection rules provide restrictions upon the use of personal data.

Security – organisations ought also to consider installing such protective measures as data encryption, digital certification of users, personal/corporate firewalls and anti-virus software to prevent content ending up with the wrong people or becoming corrupted. Figure 3 provides some recommendations that organisations ought to consider to meet their organisational challenges.

KM figure 3

Figure 3 – Organisational Challenges which require a KM response

In conclusion, developing an effective KM intranet or knowledge community can play a major role in making individual employees better informed and more effective by streamlining internal business processes for the individual, by reducing the time and frustration involved in searching for content and by helping new employees integrate quickly into an organisation.

References

Kelleher & Leven, 2001 “Knowledge Management – A Guide to Good Practice”, British Standards Institute

Angus, 2000 “KM: Ridiculous, Out of Favor and Absolutely Mandatory” , Lighthouse Consulting Group

“The Knowledge Web – Merrill Lynch on the Knowledge Economy”, May 2000

“Competitiveness through the Knowledge Economy in Europe”, at https://www.ert.be