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Knowledge Management and Technology

Published
  • September 01 1998, 1:00am EDT

There is little doubt that we have entered a knowledge-based economy where what organizations know has become more important than the traditional sources of economic power which they command. The value attributed by stock markets to companies in sectors such as software development and biotechnology far outweighs their tangible assets. Even in industries as traditional as manufacturing, companies are obtaining competitive advantage through technological know-how, product design skills, problem-solving expertise, personal creativity and the ability to innovate. The most effective way to store knowledge is in people's heads--the human mind is still more powerful than any computer at storing, sorting and retrieving the sort of knowledge which is most valuable to companies. Transferring such knowledge between individuals is usually best done verbally to capture details and nuances. But relying on individuals can be fraught with risk. When individuals leave an organization, their knowledge is lost or goes to a competitor. Yet in many companies today there is little provision for capturing, sharing and disseminating critical knowledge assets.

This is where technology can help. Technology is not a panacea, and we are not suggesting that technology alone solves all the issues in knowledge management (KM). But storing knowledge in electronic formats means that, at the very least, it can be used for other applications. Searching for it becomes easier. And as certain technologies become more powerful, exploitation of knowledge becomes easier still.

The technologies that facilitate knowledge management are already in place in many organizations. According to a recent survey on KM by KPMG, 90 percent of respondents said they have implemented Internet access. Two-thirds of respondents have implemented intranets, and two-thirds use document management systems. Nearly half have groupware, and over a third have data warehousing, data mining and decision support systems. A few have implemented extranets as well. It follows then that many organizations have the necessary technological infrastructure to support knowledge management.

However, while organizations have the various technologies in place, they are not necessarily using them with knowledge management in mind. In our view, many organizations are good at identifying which types of knowledge are important to their business. But they are less effective at using appropriate formats to store and share it.

In addition, where organizations are using technology, its application has not been wholly focused. Approximately a third of respondents said that knowledge of their methods and processes was available electronically to all who needed it, but this was considered by respondents to be the area of least importance. In general, the less critical the type of knowledge was to an organization's business, the easier respondents said it was to locate. For example, a quarter of respondents said it would take five minutes to locate someone in their organization who could translate a document from Spanish. But over half of respondents said it would take them up to 15 minutes to obtain a list of their company's products and services or to find a report showing the organization's sales performance for the first quarter. Yet these two items of knowledge are so critical to an organization that even if they are not made available to all employees, their whereabouts should be common knowledge.

Respondents were also asked about the principal ways in which different types of information were stored in their organization. Over a third stored information about customers and markets in non-technological formats (such as people's heads or on paper). Only 10 percent of respondents made knowledge of competitors available electronically to all who needed it, and only nine percent did the same for knowledge of employees' skills. Yet these are the types of information which respondents consider to be the most important to their business.

Having implemented the necessary technology, organizations need to populate it with data to make it worth using and to add real benefit. This, in turn, means that companies must focus on keeping the information up to date on an ongoing basis.

In order to obtain the full benefits, organizations need to take a fresh look at their technology infrastructure from a knowledge management perspective to see the potential benefits. For most organizations, the single, overwhelming reason behind their KM initiatives was better decision making. Eighty-six percent cited it as their primary reason, and the same percentage said their organization had achieved it as a result. Eighty-six percent also cited faster response time to key issues, and two-thirds said they had achieved it. These--and additional findings for improved productivity and reduced costs--are high levels of attainment, which confirm that those organizations pursuing a knowledge management initiative believe they are gaining benefits from it. Benefits were also realized in other areas such as creating new business opportunities (50 percent), sharing best practices (60 percent) and better staff retention (42 percent).

In conclusion, the fact remains that basic problems experienced in the past can be overcome by the effective use of technology to support an organization's knowledge management initiatives. We believe that knowledge and its management should be at the heart of business strategy and that technology is the key enabler.

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