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Knowledge management: What is it and why do we need knowledge management systems?

Jan 18th 2022 product

Knowledge management: What is it and why do we need knowledge management systems?
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Are you knowledgeable about knowledge management?

Let’s start with the concept of knowledge as it applies to a corporate environment and drill down. Knowledge creation occurs naturally during the course of doing business. Basically, knowledge is usable, pertinent information that a company has gleaned from assorted facts and figures put into context.

Knowledge has always been considered an invaluable commodity. Back in 1597, Sir Francis Bacon proclaimed this fact when he came to the realization that “Knowledge is power.” 

A couple of decades later, in his book The Way to Wealth, Benjamin Franklin reflected that “If a man empties his purse into his head no man can take it from him. An investment in knowledge pays the best interest.” 

The advent of knowledge management

In the modern era, it dawned on thinkers that in order to make the most of knowledge, you’ve got to manage it.

When in modern times did knowledge management become hip?

Management consultant and author Peter Drucker came up with the phrase “knowledge management” in the 1980s as consultants were noticing that the Internet was a game changer. With the creation of tools like online dashboards, self-service customer support, content management systems, and intranets, they could easily see that finding ways to organize and share large amounts of information, as well as automate systems to facilitate that, was going to be key to improving business metrics. 

The term “knowledge management” became better known in the 1990s, when knowledge management strategy was, for all intents and purposes, born; several key people fleshed out the details. One architect of the concept was Tom Davenport, who (along with co-author Larry Prusak) wrote a 1997 bestseller called Working Knowledge: How Organizations Manage What They Know; it’s still considered the bible on the topic.

Successful knowledge management preserves and makes available an organization’s intellectual capital, leading to less re-creation of existing content, improved efficiency for employees, conceivably higher profit margins, and lots of other associated benefits.

Newly aware of these potential upsides, companies began investing in information management. 

They started consciously collecting it, documenting it, organizing it, and sharing it with relevant stakeholders. Doing this was also prudent given that the amount of corporate know-how was proliferating and data was stored in multiple locations — such as in paper documents, in different types of knowledge bases, and on websites — to the point that people searching for information didn’t always have the time or patience to scour every single prospective information source. 

The three types of organizational knowledge

What kinds of knowledge were companies seeking to collect and preserve? The consensus is that when it comes to corporate knowledge management programs, there are three types of knowledge: explicit, implicit, and tacit.

  • Explicit knowledge is the most concrete, seemingly obvious type: existing or formally documented, structured details, such as step-by-step procedures, customer data in databases, research reports, and case studies. Explicit knowledge generated in a corporate environment is likely to be preserved as a matter of course, which is a good thing as it can then be a help for designated groups, such as new employees.
  • Implicit knowledge is applied explicit knowledge — learned skills; what someone gains by understanding the best way of achieving something. This type of knowledge may be difficult to formally express or convert to explicit knowledge, but it may be just as valuable.
  • Tacit knowledge is more-“intuitively” gained information that someone might “get” as they’re learning a process, such as how to stay balanced on a bicycle. It could be real-time information that only a particular person has in their head. 

Tacit knowledge may be difficult to put into words, which can, of course, also make it difficult to convey to other people. According to Davenport, in terms of knowledge management systems in the workplace, not a great deal of tacit information is particularly relevant. Still, even a single piece of relevant tacit knowledge should arguably be collected.

What is knowledge management?

Davenport defined knowledge management as “the process of capturing, distributing, and effectively utilizing knowledge.” Other experts have said it involves defining, structuring, and retaining information.

Most applications of knowledge management revolve around information flow in the corporate world, which typically includes a variety of disparate information structures, such as content management systems, databases, and information technology help-desk interfaces.

One objective of managing corporate knowledge is to use organizational techniques and technology to leverage it. In an office environment, this would translate into a multipart process of identifying, organizing, storing, and sharing key information so that it can be easily found through enterprise search and efficiently accessed by the right people when they need it.

This relatively loose definition of knowledge management was adopted for a few years, until the Gartner Group decided to formulate and announce its own, more specific version: 

Knowledge management is a discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise’s information assets. These assets may include databases, documents, policies, procedures, and previously un-captured expertise and experience in individual workers.

Refining the original concept proved instructive, as more and more companies were creating and disseminating vast amounts of corporate knowledge, while also starting to realize the inherent value of their growing treasure troves of data. Statistics like these were being released and mulled over:

  • Fortune 500 companies lose at least $31.5 billion annually by not sharing knowledge. (IDC)
  • “Improved delivery of contextual knowledge to an employee or customer reduces a provider’s time to answer by 20–80%, raising competency and satisfaction.” (Gartner)

In short, it was looking like companies were needing some sort of comprehensive system to manage their burgeoning amounts of knowledge.

What’s a knowledge management system?

This one’s easy: a knowledge management system is an IT apparatus that a company uses to help it organize information and make it available to customers (both internal and external), or to other groups of people who need it for the express purpose of improving their understanding, as well as for ultimately facilitating collaboration and alignment in business processes.

There are various types of knowledge management systems. Some of them stand on their own as silos, while others may have areas of overlap, such as when a tech support portal is accessible through an HR intranet. A typical knowledge management system might house information in the forms of case studies, webinars, FAQs, tutorials, and a community user forum.

A knowledge management system can be exclusive to a particular team or organization, or it can be widely accessible by the entire company (employees and salespeople) or the public.

Some examples of knowledge management systems include:

 

  • Collections of documents. For example, medical patients’ filled-out forms, white papers, technical help articles, or industry-specific newsletter articles
  • Document storage systems for retaining various types of digital files, such as PDFs, text documents, and images
  • Document management systems. According to IBM, a document management system is a “system or process used to capture, track and store electronic documents such as PDFs, word-processing files and digital images of paper-based content” 
  • Content management systems (CMSes): software that lets people create structured and unstructured digital content, then edit, share, and publish it
  • Chatbots, programs that search databases and apply machine-learning technology to provide information seekers with accurate instant answers
  • Online training programs, for example, learning management systems (LMSes) containing courses for software engineers
  • Groupware systems, also known as “collaborative software,” which function like social networks for people working on a common task and let them share information, regardless of their geographical location. Groupware encompasses messaging tools such as Slack, which retains conversations and project notes for future reference via search
  • Wikis, online spaces for project organization, collaboration, and communal text editing  
  • Data warehouses. These support business intelligence activities, especially analytics. Companies use them to aggregate information from different sources and allow it to be extracted as needed
  • Intranets, internal searchable corporate networks, which are ideal for sharing productivity tools, documents, HR data, and work process information
  • Feedback databases. These allow groups such as sales representatives to provide input on products 

The knowledge management process

The knowledge management process typically consists of three stages (in some cases, four), which may vary based on an enterprise’s goals. 

Stage 1: acquiring and assembling information

This first step involves finding, identifying, and gathering up all the right information, plus documenting any missing details that should ideally be included. This information collection process is achieved in various ways, including:

  • Determining the best methods of finding the information (it helps to become aware of the ways organizational learning works in the company)
  • Identifying which data sources and systems should be searched
  • Combing through all relevant data sources to gather need-to-know information
  • Scanning documents and using optical character recognition to clean them up
  • If information must be captured but it’s not currently in an accessible format (e.g., it’s only in someone’s brain or handwritten notes), appropriately documenting it
  • Checking with stakeholders to make sure all information is accounted for

Stage 2: storing and organizing the information

This second stage revolves around setting up the right system so that knowledge will be easy and efficient to retrieve. The process could include:

  • Creating a workable organizational structure 
  • Categorizing and mapping the available information
  • Within content, providing appropriate links to related information
  • Assessment of how to effectively integrate the information in the organizational structure
  • Analysis to determine how to best make the knowledge accessible
  • Codification of the system’s best practices

Stage 3: sharing the information

Now comes the payoff: seamless distribution of the information so it can be utilized in whatever ways make sense to enhance efficiency, productivity, process improvement, and innovation. This final stage might include:

  • Sharing of the collected information and how to access it with relevant groups
  • Employee education about how to optimally use the knowledge management system
  • Getting employee feedback and fine-tuning functionality
  • Promotion of a corporate culture that advocates and values knowledge sharing
  • Circling back to keep the knowledge offerings current and relevant

Benefits of knowledge management

Let’s go back to Bacon’s old adage that knowledge is power. 

So how, specifically, can a company’s effectively organizing and managing its acquired knowledge improve its business processes and employee productivity to facilitate greater success?

 Let us count the ways. Effective management of key knowledge can facilitate:

  • Easy, instant access to information when employees need it
  • Elimination of information silos because all data has been stored and made accessible in a single system
  • Standardization of processes, which eliminates the need to spend time re-inventing how-tos 
  • Reduction of repetitive information gathering and any related making of mistakes
  • Better decision making due to having all relevant information at hand and providing access to people’s experiences and opinions, which can expand the collective perspective
  • Seamless goal alignment among team members
  • Team member collaboration through easy hand-off of shared information
  • Better onboarding and training, which minimizes the learning curve through providing only key information and best practices (as opposed to offering a gigantic data dump)
  • Employee satisfaction and retention due to people being able to quickly find and apply  the information they need
  • A great customer experience. Information sharing and collaboration can help a company provide answers more quickly, and could also reduce the amount of time needed to optimize a product or service
  • Provision of best practices to customers, which can enhance customer loyalty and, via positive word of mouth, help build the corporate brand
  • Reduction of operating costs through less time spent reinventing the collective knowledge wheel
  • Fewer mistakes. Information sharing can spotlight common mistakes and create awareness so that people sidestep landmines the next time
  • Illumination of gaps in skills, which can lead to the formation of new organizational structures and additional hiring
  • Efficiency. When employees can quickly locate details they need in order to complete projects, instead of starting from scratch and perhaps reconstructing existing information, they can save time
  • Data retention: the ability to automatically keep knowledge in-house if a long-term employee departs and fails to do an adequate knowledge transfer to colleagues
  • Productivity. Enabling people to find relevant information quickly reduces the amount of time they need to devote to doing research, which can lead to faster decision making, improved workflows, and cost savings
  • Promotion of innovation in the corporate culture by encouraging the sharing of key information and providing access to timely details

When considering all of these wide-ranging, tangible benefits, which can also cross-enhance each other for even greater gains, most ambitious organizations choose to embrace knowledge management. 

Of course, knowledge management is not a perfect science. 

Knowledge management solution challenges

Setting up an effective knowledge management system, groundbreaking is that may be, is only the first step. For optimal efficiency, the system must be actively maintained. Here are a few of the most commonly cited challenges and pitfalls that companies experience in their adventures with knowledge management:

  • Outdated knowledge. Information should be regularly reviewed and updated to keep it 100% relevant.
  • An aging infrastructure. A new knowledge management system’s “state-of-the-art” technology tools and processes may quickly deteriorate and start to negatively impact system facets. For instance, if a back-office process becomes cumbersome to access or clunky to use by modern standards, employees may ignore it or work around it
  • Lack of employee motivation to seek out and utilize available information. Without a continual corporate emphasis on knowledge sharing, managers may have a hard time motivating workers to take advantage of the available resources, put information to use, and share knowledge with teammates
  • Compromised information security if user permissions and security levels aren’t well maintained

Basically, a company could end up in a worse spot because of knowledge mismanagement. If the knowledge management system is not regularly revisited and maintained, what seemed like a great initiative in the beginning could quickly become an outdated mess or obsolete. 

Phew…that was a ton of blog-post knowledge to manage and share with you in an optimal way. 

To sum up what you’ve learned: knowledge management lets employees, customers, and other interested parties easily find needed information, which can vastly improve worker efficiency and productivity, which can lead to a competitive advantage and higher sales for the enterprise.

According to McKinsey & Company, an effective knowledge management system can reduce the amount of time people must search for information by up to 35%, plus improve organizational productivity 20–25 percent. So all in all, instituting an effective knowledge management system is considered a great investment for companies wanting to up their game.

Looking for the right knowledge management tools for your company? Algolia provides advanced search technology that lets employees and customers easily, efficiently access their data using a single search interface. Contact us to find out more.

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About the author
Catherine Dee

Search and Discovery writer

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